As filed with the United States Securities and Exchange Commission on
August 8, 2008
1933 Act Registration No. 33-57340
1940 Act Registration No. 811-07452
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X]
Pre-Effective Amendment No. [ ]
---------
Post-Effective Amendment No. 36 [X]
|
and/or
REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940
Amendment No. 35 [X]
AIM VARIABLE INSURANCE FUNDS
(Exact Name of Registrant as Specified in Charter)
11 Greenway Plaza, Suite 100, Houston, TX 77046-1173
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, including Area Code (713) 626-1919
John M. Zerr, Esquire
11 Greenway Plaza, Suite 100, Houston, TX 77046-1173
(Name and Address of Agent for Service)
Copy to:
Peter Davidson, Esquire E. Carolan Berkley, Esquire Invesco Aim Advisors, Inc. Stradley Ronon Stevens & Young, LLP 11 Greenway Plaza, Suite 100 2600 One Commerce Square Houston, Texas 77046-1173 Philadelphia, Pennsylvania 19103 Approximate Date of Proposed Public Offering: As soon as practicable after the effective date of this Amendment. |
It is proposed that this filing will become effective (check appropriate box)
[ ] immediately upon filing pursuant to paragraph (b)
[ ] on (date)pursuant to paragraph (b)
[ ] 60 days after filing pursuant to paragraph (a)(1)
[ ] on (date) pursuant to paragraph (a)(1)
[X] 75 days after filing pursuant to paragraph (a)(2)
[ ] on _______________, 200_ pursuant to paragraph (a)(2) of Rule 485.
If appropriate, check the following:
[ ] This post-effective amendment designates a new effective date for a previously filed post-effective amendment.
The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.
SUBJECT TO COMPLETION -- DATED AUGUST 8, 2008
AIM V.I. POWERSHARES ETF ALLOCATION FUND
Series I shares
Shares of the fund are currently offered only to insurance company separate accounts funding variable annuity contracts and variable life insurance policies. AIM V.I. PowerShares ETF Allocation Fund's investment objective is to provide total return consistent with a moderate level of risk relative to the broad stock market.
This prospectus contains important information about the Series I class shares (Series I shares) of the fund. Please read it before investing and keep it for future reference.
As with all other mutual fund securities, the Securities and Exchange Commission has not approved or disapproved these securities or determined whether the information in this prospectus is adequate or accurate. Anyone who tells you otherwise is committing a crime.
An investment in the fund:
- is not FDIC insured;
- may lose value; and
- is not guaranteed by a bank.
RISK/RETURN SUMMARY 1 - - - - - - - - - - - - - - - - - - - - - - - - - PERFORMANCE INFORMATION 1 - - - - - - - - - - - - - - - - - - - - - - - - - FEE TABLE AND EXPENSE EXAMPLE 2 - - - - - - - - - - - - - - - - - - - - - - - - - Fees and Expenses of the Fund 2 Expense Example 2 HYPOTHETICAL INVESTMENT AND EXPENSE INFORMATION 2 - - - - - - - - - - - - - - - - - - - - - - - - - INVESTMENT OBJECTIVE, STRATEGIES AND RISK 3 - - - - - - - - - - - - - - - - - - - - - - - - - Objective and Strategies 3 Risks 4 DISCLOSURE OF PORTFOLIO HOLDINGS 6 - - - - - - - - - - - - - - - - - - - - - - - - - FUND MANAGEMENT 7 - - - - - - - - - - - - - - - - - - - - - - - - - The Advisors 7 Advisor Compensation 7 Portfolio Managers 8 OTHER INFORMATION 8 - - - - - - - - - - - - - - - - - - - - - - - - - Purchase and Redemption of Shares 8 Excessive Short-Term Trading Activity Disclosures 8 Trade Activity Monitoring 9 Fair Value Pricing 9 Risks 9 Pricing of Shares 9 Taxes 10 Dividends and Distributions 11 Share Classes 11 Payments to Insurance Companies 11 - - - - - - - - - - - - - - - - - - - - - - - - - OBTAINING ADDITIONAL INFORMATION Back Cover - - - - - - - - - - - - - - - - - - - - - - - - - |
The AIM Family of Funds, AIM and Design, AIM, AIM Funds, AIM Funds and Design, AIM Investments, AIM Investor, AIM Lifetime America, AIM LINK, AIM Institutional Funds, aimfunds.com, La Familia AIM de Fondos, La Familia AIM de Fondos and Design, Invierta con DISCIPLINA, Invest with DISCIPLINE, The AIM College Savings Plan, AIM Solo 401(k), AIM Investments and Design and Your goals. Our solutions. 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 and myaim.com are service marks of Invesco Aim Management Group, Inc. AIM Trimark is a registered service mark of Invesco Aim Management Group, Inc. and AIM Funds Management Inc.
No dealer, salesperson or any other person has been authorized to give any information or to make any representations other than those contained in this prospectus, and you should not rely on such other information or representations.
Shares of the fund are used as investment vehicles for variable annuity contracts and variable life insurance policies (variable products) issued by certain insurance companies. You cannot purchase shares of the fund directly. As an owner of a variable product (variable product owner) that offers the fund as an investment option, however, you may allocate your variable product values to a separate account of the insurance company that invests in shares of the fund.
Your variable product is offered through its own prospectus, which contains information about your variable product, including how to purchase the variable product and how to allocate variable product values to the fund.
INVESTMENT OBJECTIVE
The fund's investment objective is to provide total return consistent with a
moderate level of risk relative to the broad stock market.
PRIMARY INVESTMENT STRATEGIES
The fund is a "fund of funds" that invests its assets primarily in underlying
funds rather than directly in individual securities. The underlying funds in
which the fund principally invests are exchange-traded funds (underlying
PowerShares ETFs) advised by Invesco PowerShares Capital Management LLC
(PowerShares). The underlying PowerShares ETFs will invest primarily in equity
and fixed income securities of both domestic and foreign issuers. The fund and
the underlying PowerShares ETFs in which the fund invests are part of the same
group of investment companies. Invesco Aim Advisors, Inc. (the advisor or
Invesco Aim), advisor to the fund, and PowerShares are affiliates of each other
as they are both indirect wholly-owned subsidiaries of Invesco Ltd.
In looking to balance risk across a broad mix of markets and tactically allocate among the markets, the portfolio managers use a proprietary quantitative research model based on fundamental investment principles to select portfolio securities in which to invest.
PRINCIPAL RISKS
The fund's investment performance depends on the investment performance of the
underlying PowerShares ETFs in which the fund invests. Therefore, the risks
associated with an investment in a fund of funds, such as the fund, are also the
risks associated with an investment in the underlying PowerShares ETFs. Among
the principal risks of investing in the fund and the underlying PowerShares
ETFs, which could adversely affect the fund's net asset value, yield and total
return are:
Fund of Funds Risk Foreign Securities Risk U.S. Government Obligations Risk Developing Markets Securities Risk Exchange-Traded Funds Risk Derivates Risk High-Coupon U.S. Government Agency Liquidity Risk Non-Diversification Risk Equity Securities Risk Mortgage-Backed Securities Risk Prepayment Risk Market Risk Interest Rate Risk Reinvestment Risk Sovereign Debt Risk Market Capitalization Risk Leverage Risk Management Risk Emerging Markets Sovereign Debt Risk Credit Risk Active Trading Risk High Yield Risk |
Please see "Investment Objectives, Strategies and Risks" for a description of these risks.
There is a risk that you could lose all or a portion of your investment in the fund and the income that you may receive from the fund may vary. The value of your investment in the fund will rise and fall with the prices of the securities held by the underlying PowerShares ETFs in which the fund invests.
An investment in the fund is not a deposit in a bank and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other governmental agency.
No performance information is available for the fund because it has not completed a full calendar year of operations. In the future, the fund will disclose performance information in a bar chart and performance table. Such disclosure will give some indication of the risks of an investment in the fund by comparing the fund's performance with a broad measure of market performance and by showing changes in the fund's performance from year to year.
FEES AND EXPENSES OF THE FUND
The following table describes the fees and expenses that are incurred, directly
or indirectly, when a variable product owner buys, holds, or redeems interest in
an insurance company separate account that invests in the Series I shares of the
fund but does not represent the effect of any fees or other expenses assessed in
connection with your variable product and if it did, expenses would be higher.
SHAREHOLDER FEES - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - (fees paid directly from your investment) SERIES I SHARES ------------------------------------------------------------------------------------------------ Maximum Sales Charge (Load) N/A Maximum Deferred Sales Charge (Load) N/A ------------------------------------------------------------------------------------------------ |
"N/A" in the above table means "not applicable."
ANNUAL FUND OPERATING EXPENSES (SERIES I SHARES) - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - (expenses that are deducted from Series I share assets) SERIES I SHARES ------------------------------------------------------------------------------------------------ Management Fees [ ] Other Expenses [ ] Acquired Fund Fees and Expenses [ ] Total Annual Fund Operating Expenses [ ] ------------------------------------------------------------------------------------------------ |
EXPENSE EXAMPLE
This example is intended to help you compare the costs of investing in the
Series I shares of the fund with the cost of investing in other mutual funds.
This example does not represent the effect of any fees or other expenses assessed in connection with your variable product, and if it did, expenses would be higher.
The expense example assumes you:
(i) invest $10,000 in the fund's Series I shares for the time periods indicated;
(ii) earn a 5% return on your investment before operating expenses each year; and
(iii) incur the same amount in operating expenses each year (after giving effect to any applicable contractual fee waivers and/or expense reimbursements).
To the extent fees are waived and/or expenses are reimbursed voluntarily, your expenses will be lower. Although your actual returns and costs may be higher or lower, based on these assumptions your costs would be:
SERIES I SHARES 1 YEAR 3 YEARS -------------------------------------------------------------------------- AIM V.I. PowerShares ETF Allocation [ ] [ ] -------------------------------------------------------------------------- |
The settlement agreement between Invesco Aim Advisors, Inc. and certain of its
affiliates and the New York Attorney General requires Invesco Aim Advisors, Inc.
and certain of its affiliates to provide certain hypothetical information
regarding investment and expense information. The chart below is intended to
reflect the annual and cumulative impact of the fund's expenses, including
investment advisory fees and other fund costs, on the fund's return over a 10-
year period. The example reflects the following:
- You invest $10,000 in the fund and hold it for the entire 10-year period;
- Your investment has a 5% return before expenses each year; and
- The fund's current annual expense ratio includes any applicable contractual
fee waiver or expense reimbursement for the period committed.
There is no assurance that the annual expense ratio will be the expense ratio for the fund for any of the years shown. To the extent that Invesco Aim Advisors, Inc. and certain of its affiliates make any fee waivers and/or expense reimbursements pursuant to a voluntary arrangement, your actual expenses may be less. The chart does not take into account any fees or other expenses assessed in connection with your variable product; if it did, the expenses shown would be higher, while the ending balance shown would be lower. This is only a hypothetical presentation
made to illustrate what expenses and returns would be under the above scenarios; your actual returns and expenses are likely to differ (higher or lower) from those shown below.
SERIES I YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5 YEAR 6 YEAR 7 YEAR 8 YEAR 9 YEAR 10 ----------------------------------------------------------------------------------------------------------------------------------- Annual Expense Ratio(1) Cumulative Return Before Expenses Cumulative Return After Expenses End of Year Balance Estimated Annual Expenses ----------------------------------------------------------------------------------------------------------------------------------- |
(1) Your actual expenses may be higher or lower than those shown.
OBJECTIVE AND STRATEGIES
The fund's investment objective is to provide total return consistent with a
moderate level of risk relative to the broad stock market. The investment
objective may be changed by the Board of Trustees without shareholder approval.
The fund seeks to meet its objective by employing a tactical asset allocation strategy which includes making active allocations across a global array of asset classes. As a fund of funds, the fund expects to invest, normally, at least 80% of its assets in a portfolio of underlying PowerShares ETFs. The fund's target allocation is to invest approximately 40% to 70% of its total assets primarily in underlying PowerShares ETFs that invest primarily in equity securities (equity ETFs) and 30% to 60% of its total assets primarily in underlying PowerShares ETFs that invest primarily in fixed-income securities (fixed-income ETFs). Additional allocations will be made within each group of equity ETFs and fixed-income ETFs. For instance, with respect to the fund's investment in fixed income ETFs, the weighting between emerging market and high yield debt will vary over time. With respect to the fund's investment in equity ETFs, the weighting between emerging equity and developing markets, between U.S. and the world, between Asia-ex Japan and the world, between Europe and the world will all vary over time based on the fund's tactical asset allocation strategy described below.
A list of the underlying PowerShares ETFs and their range of weightings as of, 2008 is set forth below.
UNDERLYING POWERSHARES ETFS RANGE OF WEIGHTING ------------------------------------------------------------------------------------------- PowerShares FTSE RAFI US 1000 Portfolio 0% - 20% ------------------------------------------------------------------------------------------- PowerShares FTSE RAFI US 1500 Small-Mid 0% - 14% Portfolio ------------------------------------------------------------------------------------------- PowerShares FTSE RAFI Europe Portfolio 0% - 16% ------------------------------------------------------------------------------------------- PowerShares FTSE RAFI Japan Portfolio 0% - 16% ------------------------------------------------------------------------------------------- PowerShares FTSE RAFI Asia Pacific ex-Japan 0% - 14% Portfolio ------------------------------------------------------------------------------------------- PowerShares FTSE RAFI Developed Markets ex-US 0% - 16% Small-Mid Portfolio ------------------------------------------------------------------------------------------- PowerShares FTSE RAFI Emerging Markets 0% -12% Portfolio ------------------------------------------------------------------------------------------- PowerShares High Yield Corporate Bond 0% - 12% Portfolio ------------------------------------------------------------------------------------------- PowerShares 1-30 Laddered Treasury Portfolio 15% - 45% ------------------------------------------------------------------------------------------- PowerShares Emerging Markets Sovereign Debt 0% - 20% Portfolio ------------------------------------------------------------------------------------------- TOTAL ------------------------------------------------------------------------------------------- |
AS THE FUND'S PORTFOLIO SECURITIES ARE CONSISTENTLY REVIEWED BY THE PORTFOLIO MANAGERS, THE WEIGHTINGS OF UNDERLYING POWERSHARES ETFS SHOWN IN THE ABOVE TABLE MAY BE CHANGED AT ANY TIME WITHOUT SHAREHOLDER NOTICE. BOTH ADDITIONAL UNDERLYING POWERSHARES ETFS, AND ADDITIONAL UNDERLYING PORTFOLIO SECURITIES, MAY ALSO BE ADDED OR REMOVED AT ANY TIME WITHOUT SHAREHOLDER NOTICE.
In seeking to outperform its benchmark index -- a style-specific index made up as follows: the Index ( %), the Index ( %) and the Index ( %) -- the portfolio managers rely on both strategic and tactical asset allocation.
The portfolio managers set the strategic allocation for the portfolio based on a proprietary allocation approach that focuses on balancing the risk contributed by each asset to the portfolio. After setting the strategic allocation, the portfolio managers create allocation ranges around each strategic weighting that allows them to implement tactical asset allocation decisions. The portfolio managers make the tactical asset allocation decisions by applying a three-step process.
The first step is fundamental research used to understand the distinctive characteristics of various markets generally in which the underlying portfolio securities invest, generate hypotheses about how the distinctive characteristics of each asset will respond to various economic and market conditions, and then test the hypotheses using historical data and statistical techniques.
The second step involves translating the research generated in step one into quantitative models. Inputs to the quantitative models include market valuations, which provide information about the longer-term return prospects for each market, and dynamic factors which provide
information about nearer-term return prospects. The portfolio managers combine these valuations and factors to determine the probability that one market will outperform another.
The final step is portfolio strategy. The portfolio managers directly map their model within the fund's underlying PowerShares ETF allocation and other assets. Allocation ranges around target allocations for each decision are determined through the portfolios managers' proprietary risk budgeting process which is based on the number of available allocation decisions in which to implement the model, the amount of expected aggregate portfolio outperformance and the risk characteristics of each available decision. The resulting allocation is then invested primarily in underlying PowerShares ETFs
The fund may invest up to 80% of its assets in underlying PowerShares ETFs that invest in foreign securities.
The fund's investments in the type of securities described in this prospectus vary from time to time and, at any time, the fund may not be invested in all types of securities described in this prospectus. Any percentage limitations with respect to assets of the fund are applied at the time of purchase.
The fund typically maintains a portion of its assets in cash, which is generally invested in money market funds advised by the fund's advisor. The fund holds cash to handle its daily cash needs, which include payment of fund expenses, redemption requests and securities transactions. The amount of cash held by the fund may increase if the fund takes a temporary defensive position. The fund may take a temporary defensive position when it receives unusually large redemption requests, or if there are inadequate investment opportunities due to adverse market, economic, political or other conditions. A larger amount of cash could negatively affect the fund's investment results in a period of rising market prices; conversely it could reduce the magnitude of the fund's loss in the event of falling market prices and provide liquidity to make additional investments or to meet redemptions. As a result, the fund may not achieve its investment objective.
RISKS
The principal risks of investing in the fund are:
Fund of Funds Risk -- The fund pursues its investment objective by investing its assets in underlying PowerShares ETFs rather than investing directly in stocks, bonds, cash or other investments. The fund's investment performance depends on the investment performance of the underlying PowerShares ETFs in which it invests. An investment in the fund, because it is a fund of funds, is subject to the risks associated with investments in the underlying PowerShares ETFs in which the fund invests. The fund will indirectly pay a proportional share of the asset-based fees of the underlying PowerShares ETFs in which it invests.
There is a risk that the advisor's evaluations and assumptions regarding the fund's broad asset classes or the underlying PowerShares ETFs in which the fund invests may be incorrect based on actual market conditions. In addition, at times the segment of the market represented by an underlying PowerShares ETF may be out of favor and under perform other segments (e.g. growth stocks). There is a risk that the fund will vary from the target weightings in the underlying PowerShares ETFs due to factors such as market fluctuations. There can be no assurance that the underlying PowerShares ETFs will achieve their investment objectives, and the performance of the underlying PowerShares ETFs may be lower than the asset class which they were selected to represent. The underlying PowerShares ETFs may change their investment objectives or policies without the approval of the fund. If that were to occur, the fund might be forced to withdraw its investment from an underlying PowerShares ETF at a time that is unfavorable to the fund.
The advisor has the ability to select and substitute the underlying PowerShares ETFs in which the fund invests, and may be subject to potential conflicts of interest in selecting underlying PowerShares ETFs because the advisor and/or PowerShares, the advisor for the underlying PowerShares ETFs and an affiliate of the advisor, may receive higher fees from certain underlying PowerShares ETFs than others. However, as a fiduciary to the fund, the advisor is required to act in the fund's best interest when selecting underlying PowerShares ETFs.
Exchange-Traded Funds Risk -- An investment by the fund in underlying PowerShares ETFs generally presents the same primary risks as an investment in an AIM mutual fund. In addition, underlying PowerShares ETFs may be subject to the following risks that do not apply to AIM mutual funds: (i) the market price of an underlying PowerShares ETF's shares may trade above or below its net asset value; (ii) an active trading market for an underlying PowerShares ETF's shares may not develop or be maintained; (iii) trading of an underlying PowerShares ETF's shares may be halted if the listing exchange's officials deem such action appropriate; (iv) underlying PowerShares ETFs are not actively managed and may not fulfill their objective of tracking the performance of the index they seek to track; (v) underlying PowerShares ETFs would not necessarily sell a security because the issuer of the security was in financial trouble unless the security is removed from the index that the underlying PowerShares ETF seeks to track, and (vi) the value of an investment in underlying PowerShares ETFs will decline, more or less, in correlation with any decline in the value of the index they seek to track.
In addition, a significant percentage of certain underlying PowerShares ETFs may be comprised of issuers in a single industry or sector of the economy. If the underlying PowerShares ETF is focused on an industry or sector, it may present more risks than if it were broadly diversified over numerous industries or sectors of the economy.
Non-Diversification Risk -- The fund is "non-diversified", meaning it can invest a great portion of its assets in the obligations of securities of any single issuer than a diversified fund. In addition, certain of the underlying PowerShares ETFs in which the fund invests are non-diversified. To the extent that a large percentage of the fund's assets, or the assets of the underlying PowerShares ETFs, may be invested in a limited number of issuers, a change in the value of the issuers' securities could affect the value of the fund or the underlying PowerShares ETFs more than would occur in a diversified fund.
Because the fund is a fund of funds, the fund is subject to the risks associated with the underlying PowerShares ETFs in which it invests. The risks of an investment in the fund and the underlying PowerShares ETFs are set forth below:
Market Risk -- The prices of securities held by the fund and the underlying PowerShares ETFs may decline in response to certain events, including those directly involving the companies whose securities are owned by the underlying PowerShares ETFs; general economic and market conditions; regional or global economic instability; and currency and interest rate fluctuations.
Market Capitalization Risk -- Stocks fall into three broad market capitalization categories -- large, medium and small. Investing primarily in one category carries the risk that, due to current market conditions, that category may be out of favor with investors. Small and mid-sized companies tend to be more vulnerable to adverse developments and more volatile than larger companies. Investments in small and mid-sized companies may involve special risks, including those associated with dependence on a small management group, little or no operating history, little or no track record of success, and limited product lines, markets and financial resources. Also, there may be less publicly available information about the issuers of the securities or less market interest in such securities than in the case of larger companies, each of which can cause significant price volatility. The securities of small and mid-sized companies may be illiquid, restricted as to resale, or may trade less frequently and in smaller volume than more widely held securities, which may make it difficult for the fund or an underling PowerShares ETF to establish or close out a position in these securities at prevailing market prices.
Credit Risk -- Credit risk is the risk of loss on an investment due to the deterioration of an issuer's financial health resulting in an inability to make interest payments and/or repay the principal on its debt. Such a deterioration of financial health may result in a reduction of the credit rating of the issuer's securities, which may further affect the issuer's inability to honor its contractual commitments.
Foreign Securities Risk -- The dollar value of the fund's or an underlying PowerShares ETF's foreign investments will be affected by changes in the exchange rates between the dollar and the currencies in which those investments are traded. The value of an foreign investments may be adversely affected by political and social instability in their home countries, by changes in economic or taxation policies in those countries, or by the difficulty in enforcing obligations in those countries. Foreign companies generally may be subject to less stringent regulations than U.S. companies, including financial reporting requirements and auditing and accounting controls. As a result, there generally is less publicly available information about foreign companies than about U.S. companies. Trading in many foreign securities may be less liquid and more volatile than U.S. securities due to the size of the market or other factors.
Derivatives Risk -- The value of "derivatives" -- so-called because their value "derives" from the value of an underlying asset (including an underlying security), reference rate or index -- may rise or fall more rapidly than other investments. For some derivatives, it is possible to lose more than the amount invested in the derivative. If the fund uses derivatives to "hedge" a portfolio risk, it is possible that the hedge may not succeed. This may happen for various reasons, including unexpected changes in the value of the rest of the fund's portfolio. Over the counter derivatives are also subject to counterparty risk, which is the risk that the other party to the contract will not fulfill its contractual obligation to complete the transaction with the fund.
Equity Securities Risk -- The prices of equity securities change in response to many factors including the historical and prospective earnings of the issuer, the value of its assets, general economic conditions, interest rates, investor perceptions and market liquidity.
Interest Rate Risk -- Interest rate risk refers to the risk that bond prices generally fall as interest rates rise; conversely, bond prices generally rise as interest rates fall. Specific bonds differ in their sensitivity to changes in interest rates depending on specific characteristics of each bond. A measure investors commonly use to determine this sensitivity is called duration. The longer the duration of a particular bond, the greater is its price sensitivity to interest rates. Similarly, a longer duration portfolio of securities has greater price sensitivity. Duration is determined by a number of factors including coupon rate, whether the coupon is fixed or floating, time to maturity, call or put features, and various repayment features.
Leverage Risk -- The use of derivatives may give rise to a form of leverage. Leverage may cause the fund's portfolio to be more volatile than if the portfolio had not been leveraged because leverage can exaggerate the effect of any increase or decrease in the value of securities held by the fund.
Active Trading Risk -- Certain of the underlying PowerShares ETFs may engage in active and frequent trading of portfolio securities to achieve their investment objective. If an underlying PowerShares ETF does trade in this way, it may incur increased costs, which can lower the actual return of the underlying PowerShares ETF and the fund. Active trading may also increase short term gains and losses, which may affect the taxes that must be paid.
U.S. Government Obligations Risk -- The fund and certain of the underlying PowerShares ETFs may invest in obligations issued by agencies and instrumentalities of the U.S. Government. These obligations vary in the level of support they receive from the U.S. Government. They may be: (i) supported by the full faith and credit of the U.S. Treasury, such as those of the Government National Mortgage Association; (ii) supported by the right of the issue to borrow from the U.S. Treasury, such as those of the Federal National Mortgage Association; (iii) supported by the discretionary authority for the U.S. Government to purchase the issuer's obligation, such as those of the former Student Loan Marketing Association; or (iv) supported only by the credit of the issuer, such as those of the Federal Farm Credit Bureau. The U.S. Government may choose not to provide financial support to the U.S. Government sponsored agencies or instrumentalities if it is not legally obligated to do so, in which case, if the issuer defaulted, the fund holding securities of such issuer might not be able to recover its investment from the U.S. Government.
High-Coupon U.S. Government Agency Mortgage-Backed Securities Risk -- These provide a higher coupon at the time of purchase than current prevailing market interest rates. The fund and certain of the underlying PowerShares ETFs may purchase such securities at a premium. If these securities experience a faster principal prepayment rate than expected, both the market value of and income from such securities will
decrease. The prices of high-coupon U.S. Government agency mortgage-backed securities fall more slowly when interest rates rise than do prices of traditional fixed-rate securities. Some of the securities purchased by the fund and the underlying PowerShares ETF are not guaranteed by the U.S. Government. The issuer of a security may default or otherwise by unable to honor a financial obligation.
Reinvestment Risk -- Reinvestment risk is the risk that a bond's cash flows (coupon income and principal repayment) will be reinvested at an interest rate below that on the original bond. If interest rates decline, the underlying bond may rise in value, but the cash flows received from that bond may have to be invested at a lower interest rate.
Management Risk -- There is no guarantee that the investment techniques and risk analyses used by the fund's or the underlying PowerShares ETFs' portfolio managers will produce the desired results.
High Yield Risk -- High yield risk is a form of credit risk. High yield bonds or "junk bonds" are bonds rated below investment grade or deemed to be of comparable quality. They are considered to be speculative investments with greater risk of failure to make timely payment of interest and principal (to default on their contractual obligations) than their investment grade counterparts. High yield bonds may exhibit increased price sensitivity and reduced liquidity generally and particularly during times of economic downturn or volatility in the capital markets.
Developing Markets Securities Risk -- The risk associated with investments in foreign securities may affect the value of securities issued by foreign companies located in developing countries more than those in countries with more mature economies. For example, many developing countries, in the past, have experienced high rates of inflation or sharply devalued their currencies against the U.S. dollar, causing the value of investments in companies located in those countries to decline. Transaction costs are often higher in developing countries and there may be delays in settlement procedures.
Liquidity Risk -- Certain of the underlying PowerShares ETFs' assets are likely to be invested in loans and securities that are less liquid than those traded on national exchanges. Loans and securities with reduced liquidity involve greater risk than securities with more liquid markets. Market quotations for such loans and securities may vary over time, and if the credit quality of a loan unexpectedly declines, secondary trading of that loan may decline for a period of time. In the event that the underlying PowerShares ETF voluntarily or involuntarily liquidates portfolio assets during periods of infrequent trading, it may not receive full value for those assets.
Prepayment Risk -- The ability of an issuer of a floating rate loan or debt security to repay principal prior to maturity can limit the potential for gains by an underlying PowerShares ETF. Such prepayments may require the fund to replace the loan or debt security with a lower yielding security. This may adversely affect an underlying PowerShares ETF's yield.
Sovereign Debt Risk -- Investments in sovereign debt securities involve special risks. The governmental authority that controls the repayment of the debt may be unwilling or unable to repay the principal and/or interest when due in accordance with the terms of such securities due to: the extent of its foreign reserves; the availability of sufficient foreign exchange on the date a payment is due; the relative size of the debt service burden to the economy as a whole; or the government debtor's policy towards the International Monetary Fund and the political constraints to which a government debtor may be subject. If an issuer of sovereign debt defaults on payments of principal and/or interest, the underlying PowerShares ETF may have limited legal recourse against the issuer and/or guarantor. In certain cases, remedies must be pursued in the courts of the defaulting party itself, and the underlying PowerShares ETF's ability to obtain recourse may be limited. Certain issuers of sovereign debt may be dependent on disbursements from foreign governments, multilateral agencies and others abroad to reduce principal and interest arrearages on their debt. Such disbursements may be conditioned upon a debtor's implementation of economic reforms and/or economic performance and the timely service of such debtor's obligations. A failure on the part of the debtor to implement such reforms, achieve such levels of economic performance or repay principal or interest when due may result in the cancellation of such third parties' commitments to lend funds to the government debtor, which may impair the debtor's ability to service its debts on a timely basis. As a holder of government debt, the fund may be requested to participate in the rescheduling of such debt and to extend further loans to government debtors.
Emerging Markets Sovereign Debt Risk -- Government obligors in emerging market countries are among the world's largest debtors to commercial banks, other governments, international financial organizations and other financial institutions. Historically, certain issuers of the government debt securities in which certain of the underlying PowerShares ETF may invest have experienced substantial difficulties in meeting their external debt obligations, resulting in defaults on certain obligations and the restructuring of certain indebtedness. Such restructuring arrangements have included obtaining additional credit to finance outstanding obligation and the reduction and rescheduling of payments of interest and principal through the negotiation of new or amended credit agreements. An underlying PowerShares ETF that holds government debt securities may be asked to participate in the restructuring of such obligations and to extend further loans to their issuers. There can be no assurance that the securities in which such underlying PowerShares ETF will invest will not be subject to restructuring arrangements or to requests for additional credit. In addition, certain participants in the secondary market for such debt may be directly involved in negotiating the terms of these arrangements and may therefore have access to information not available to other market participants, including the underlying PowerShares ETF.
The fund's portfolio holdings are disclosed on a regular basis in its semi- annual and annual reports to shareholders, and on Form N-Q, which is filed with the Securities and Exchange Commission (SEC) within 60 days of the fund's first and third quarter-ends. Due to the fact that you cannot purchase shares of the fund directly, these documents have not been made available on our website. However, these documents are available on
the SEC's website at http://www.sec.gov. In addition, the fund's portfolio holdings as of each calendar quarter-end are made available to insurance companies issuing variable products that invest in the fund.
A description of the fund's policies and procedures with respect to the disclosure of the fund's portfolio holdings is available in the fund's Statement of Additional Information.
THE ADVISORS
Invesco Aim Advisors, Inc. (the advisor or Invesco Aim) serves as the fund's
investment advisor and manages the investment operations of the fund and has
agreed to perform or arrange for the performance of the fund's day-to-day
management. The advisor is located at 11 Greenway Plaza, Suite 100, Houston,
Texas 77046-1173. The advisor has acted as an investment advisor since its
organization in 1976. Today, the advisor, together with its subsidiaries,
advises or manages over 225 investment portfolios, including the fund,
encompassing a broad range of investment objectives.
The following affiliates of the advisor (collectively, the affiliated sub- advisors) serve as sub-advisors to the fund and may be appointed by the advisor from time to time to provide discretionary investment management services, investment advice, and/or order execution services to the fund:
Invesco Asset Management Deutschland GmbH (Invesco Deutschland), located at Bleichstrasse 60-62, Frankfurt, Germany 60313, which has acted as an investment advisor since 1998.
Invesco Asset Management Limited (Invesco Asset Management), located at 30 Finsbury Square, London, EC2A 1AG, United Kingdom, which has acted as an investment advisor since 2001.
Invesco Asset Management (Japan) Limited (Invesco Japan), located at 25th Floor, Shiroyama Trust Tower, 3-1, Toranomon 4-chome, Minato-ku, Tokyo 105-6025, Japan, which has acted as an investment advisor since 1996.
Invesco Australia Limited (Invesco Australia), located at 333 Collins Street, Level 26, Melbourne Vic 3000, Australia, which has acted as an investment advisor since 1983.
Invesco Global Asset Management (N.A.), Inc. (Invesco Global), located at 1555 Peachtree Street, N.E., Atlanta, Georgia 30309, which has acted as an investment advisor since 1997.
Invesco Hong Kong Limited (Invesco Hong Kong), located at 32nd Floor, Three Pacific Place, 1 Queen's Road East, Hong Kong, which has acted as an investment advisor since 1994.
Invesco Institutional (N.A.), Inc. (Invesco Institutional), located at 1555 Peachtree Street, N.E., Atlanta, Georgia 30309, which has acted as an investment advisor since 1988.
Invesco Senior Secured Management, Inc. (Invesco Senior Secured), located at 1166 Avenue of the Americas, New York, New York 10036, which has acted as an investment advisor since 1992.
AIM Funds Management Inc. (AFMI), located at 5140 Yonge Street, Suite 900, Toronto, Ontario, Canada M2N 6X7, which has acted as an investment advisor since 1994. AFMI anticipates changing its name to Invesco Trimark Ltd. on or prior to December 31, 2008.
Civil lawsuits, including a regulatory proceeding and purported class action and shareholder derivative suits, have been filed against certain of the AIM funds, INVESCO Funds Group, Inc. (IFG) (the former investment advisor to certain AIM funds), Invesco Aim, Invesco Aim Distributors, Inc. (Invesco Aim Distributors) (the distributor of AIM funds) and/or related entities and individuals, depending on the lawsuit, alleging among other things: (i) that the defendants permitted improper market timing and related activity in the funds; and (ii) that certain funds inadequately employed fair value pricing.
Additional civil lawsuits related to the above or other matters may be filed by regulators or private litigants against the AIM funds, IFG, Invesco Aim, Invesco Aim Distributors and/or related entities and individuals in the future. You can find more detailed information concerning all of the above matters, including the parties to the civil lawsuits and summaries of the various allegations and remedies sought in such lawsuits, in the fund's Statement of Additional Information.
As a result of the matters discussed above, investors in the AIM 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.
ADVISOR COMPENSATION
The advisor is to receive a fee from the fund calculated at the annual rate of ____.
Invesco Aim, not the fund, pays sub-advisory fees, if any.
When issued, a discussion regarding the basis for the Board's approval of the investment advisory and investment sub-advisory agreements of the fund will be available in the fund's annual report to shareholders.
PORTFOLIO MANAGERS
Investment decisions for the fund are made by the investment management team at
Invesco Institutional. The following individuals are jointly and primarily
responsible for the day-to-day management of the fund's portfolio:
- Scott Wolle, Portfolio Manager, who has been responsible for the fund since its inception and has been associated with Invesco Institutional and/or its affiliates since 1999.
- Scott Hixon, Portfolio Manager, who has been responsible for the fund since its inception and has been associated with Invesco Institutional and/or its affiliates since 1994.
- Mark Ahnrud, Portfolio Manager, who has been responsible for the fund since its inception and has been associated with Invesco Institutional and/or its affiliates since 2000.
- Chris Devine, Portfolio Manager, who has been responsible for the fund since its inception and has been associated with Invesco Institutional and/or its affiliates since 1998.
The portfolio managers are assisted by research analysts on Invesco's Multiple Asset Strategies Team. Team members provide research support and make securities recommendations with respect to the fund's portfolio, but do not have day-to-day management responsibilities with respect to the fund's portfolio. More information on the portfolio managers may be found on the advisor's website http://www.invescoaim.com. The website is not part of this prospectus.
The fund's Statement of Additional Information provides additional information about the portfolio managers' investments in the fund, a description of their compensation structure, and information regarding other accounts they manage.
PURCHASE AND REDEMPTION OF SHARES
The fund ordinarily effects orders to purchase and redeem shares at the fund's next computed net asset value after it receives an order. Insurance companies participating in the fund serve as the fund's designee for receiving orders of separate accounts that invest in the fund. The fund may postpone the right of redemption only under unusual circumstances, as allowed by the SEC, such as when the New York Stock Exchange (NYSE) restricts or suspends trading.
Although the fund generally intends to pay redemption proceeds solely in cash, the fund reserves the right to determine, in its sole discretion, whether to satisfy redemption requests by making payment in securities or other property (known as a redemption in kind).
Shares of the fund are offered in connection with mixed and shared funding,
i.e., to separate accounts of affiliated and unaffiliated insurance companies
funding variable products. The fund currently offers shares only to insurance
company separate accounts. In the future, the fund may offer them to pension and
retirement plans that qualify for special federal income tax treatment. Due to
differences in tax treatment and other considerations, the interests of fund
shareholders, including variable product owners and plan participants investing
in the fund (whether directly or indirectly through fund of funds), may
conflict.
Mixed and shared funding may present certain conflicts of interest. For example, violation of the federal tax laws by one insurance company separate account investing directly or indirectly in the fund could cause variable products funded through another insurance company separate account to lose their tax-deferred status, unless remedial actions were taken. The Board will monitor for the existence of any material conflicts and determine what action, if any, should be taken. The fund's net asset value could decrease if it had to sell investment securities to pay redemption proceeds to a separate account (or plan) withdrawing because of a conflict.
EXCESSIVE SHORT-TERM TRADING ACTIVITY DISCLOSURES
The fund's investment programs are designed to serve long-term investors and are not designed to accommodate excessive short-term trading activity in violation of our policies described below. Excessive short-term trading activity in the fund's shares (i.e., purchases of fund shares followed shortly thereafter by redemptions of such shares, or vice versa) may hurt the long-term performance of the fund by requiring it to maintain an excessive amount of cash or to liquidate portfolio holdings at a disadvantageous time, thus interfering with the efficient management of the fund by causing it to incur increased brokerage and administrative costs. Where excessive short-term trading activity seeks to take advantage of arbitrage opportunities from stale prices for portfolio securities, the value of fund shares held by long-term investors may be diluted.
The Board has adopted policies and procedures designed to discourage excessive short-term trading of fund shares. The fund may alter its policies and procedures at any time without giving prior notice to fund shareholders, if the advisor believes the change would be in the best interests of long-term investors.
Pursuant to the fund's policies and procedures, Invesco Aim and its affiliates (collectively the Invesco Aim Affiliates) currently use the following tools designed to discourage excessive short-term trading in the fund:
(1) trade activity monitoring; and
(2) the use of fair value pricing consistent with procedures approved by the Board.
Each of these tools is described in more detail below.
In addition, restrictions designed to discourage or curtail excessive short- term trading activity may be imposed by the insurance companies and/or their separate accounts that invest in the fund on behalf of variable product owners. Variable product owners should refer to the applicable contract and related prospectus for more details.
TRADE ACTIVITY MONITORING
To detect excessive short-term trading activities, the Invesco Aim Affiliates will monitor, on a daily basis, selected aggregate purchase, or redemption trade orders placed by insurance companies and/or their separate accounts. The Invesco Aim Affiliates will seek to work with insurance companies to discourage variable product owners from engaging in abusive trading practices. However, the ability of the Invesco Aim Affiliates to monitor trades that are placed by variable product owners is severely if not completely limited due to the fact that the insurance companies trade with the funds through omnibus accounts, and maintain the exclusive relationship with, and are responsible for maintaining the account records of, their variable product owners. There may also be legal and technological limitations on the ability of insurance companies to impose restrictions on the trading practices of their variable product owners. As a result, there can be no guarantee that the Invesco Aim Affiliates will be able to detect or deter market timing by variable product owners.
If, as a result of this monitoring, the Invesco Aim Affiliates believe that a variable product owner has engaged in excessive short-term trading (regardless of whether or not the insurance company's own trading restrictions are exceeded), the Invesco Aim Affiliates will seek to act in a manner that they believe is consistent with the best interests of long-term investors, which may include taking steps such as (i) asking the insurance company to take action to stop such activities, or (ii) refusing to process future purchases related to such activities in the insurance company's account with the funds. Invesco Aim Affiliates will use reasonable efforts to apply the fund's policies uniformly given the potential limitations described above.
FAIR VALUE PRICING
Securities owned by the fund are to be valued at current market value if market quotations are readily available. All other securities and assets of the fund for which market quotations are not readily available are to be valued at fair value determined in good faith using procedures approved by the Board of the fund. Fair value pricing may reduce the ability of frequent traders to take advantage of arbitrage opportunities resulting from potentially "stale" prices of portfolio holdings. However, it cannot eliminate the possibility of frequent trading.
See "Pricing of Shares--Determination of Net Asset Value" for more information.
RISKS
There is the risk that the fund's policies and procedures will prove ineffective in whole or in part to detect or prevent excessive short-term trading. Although these policies and procedures, including the tools described above, are designed to discourage excessive short-term trading, they do not eliminate the possibility that excessive short-term trading activity in the fund will occur. Moreover, each of these tools involves judgments that are inherently subjective. The Invesco Aim Affiliates seek to make these judgments to the best of their abilities in a manner that they believe is consistent with the best interests of long-term investors. However, there can be no assurance that the Invesco Aim Affiliates will be able to gain access to any or all of the information necessary to detect or prevent excessive short-term trading by a variable product owner. While the Invesco Aim Affiliates and the funds may seek to take actions with the assistance of the insurance companies that invest in the fund, there is the risk that neither the Invesco Aim Affiliates nor the fund will be successful in their efforts to minimize or eliminate such activity.
PRICING OF SHARES
DETERMINATION OF NET ASSET VALUE
The price of the fund's shares is the fund's net asset value per share. The fund values portfolio securities for which market quotations are readily available at market value. The fund values all other securities and assets for which market quotations are not readily available at their fair value in good faith using procedures approved by the Board of the fund. The Board has delegated the daily determination of good faith fair value methodologies to Invesco Aim's Valuation Committee, which acts in accordance with Board approved policies. On a quarterly basis, Invesco Aim provides the Board various reports indicating the quality and effectiveness of its fair value decisions on portfolio holdings. Securities and other assets quoted in foreign currencies are valued in U.S. dollars based on the prevailing exchange rates on that day.
Even when market quotations are available, they may be stale or they may be unreliable because the security is not traded frequently, trading on the security ceased before the close of the trading market or issuer specific events occurred after the security ceased trading or because of the passage of time between the close of the market on which the security trades and the close of the NYSE and when the fund calculates its net asset value. Issuer specific events may cause the last market quotation to be unreliable. Such events may include a merger or insolvency, events which affect a geographical area or an industry segment, such as political events or natural disasters, or market events, such as a significant movement in the U.S. market. Where market quotations are not readily available, including where the advisor determines that the closing price of
the security is unreliable, the advisor will value the security at fair value in good faith using procedures approved by the Board. Fair value pricing may reduce the ability of frequent traders to take advantage of arbitrage opportunities resulting from potentially "stale" prices of portfolio holdings. However, it cannot eliminate the possibility of frequent trading.
Fair value is that amount that the owner might reasonably expect to receive for the security upon its current sale. Fair value requires consideration of all appropriate factors, including indications of fair value available from pricing services. A fair value price is an estimated price and may vary from the prices used by other mutual funds to calculate their net asset values.
The advisor may use indications of fair value from pricing services approved by the Board. In other circumstances, the advisor valuation committee may fair value securities in good faith using procedures approved by the Board. As a means of evaluating its fair value process, the advisor routinely compares closing market prices, the next day's opening prices for the security in its primary market if available, and indications of fair value from other sources. Fair value pricing methods and pricing services can change from time to time as approved by the Board.
Specific types of securities are valued as follows:
Domestic Exchange Traded Equity Securities: Market quotations are generally available and reliable for domestic exchange traded equity securities. If market quotations are not available or are unreliable, the advisor will value the security at fair value in good faith using procedures approved by the Board.
Foreign Securities: If market quotations are available and reliable for foreign exchange traded equity securities, the securities will be valued at the market quotations. Because trading hours for certain foreign securities end before the close of the NYSE, closing market quotations may become unreliable. If between the time trading ends on a particular security and the close of the customary trading session on the NYSE events occur that are significant and may make the closing price unreliable, the fund may fair value the security. If an issuer specific event has occurred that the advisor determines, in its judgment, is likely to have affected the closing price of a foreign security, it will price the security at fair value. The advisor also relies on a screening process from a pricing vendor to indicate the degree of certainty, based on historical data, that the closing price in the principal market where a foreign security trades is not the current market value as of the close of the NYSE. For foreign securities where the advisor believes, at the approved degree of certainty, that the price is not reflective of current market value, the advisor will use the indication of fair value from the pricing service to determine the fair value of the security. The pricing vendor, pricing methodology or degree of certainty may change from time to time.
Fund securities primarily traded on foreign markets may trade on days that are not business days of the fund. Because the net asset value of fund shares is determined only on business days of the fund, the value of the portfolio securities of a fund that invests in foreign securities may change on days when you will not be able to purchase or redeem shares of the fund.
Fixed Income Securities: Government, corporate, asset-backed and municipal bonds and convertible securities, including high yield or junk bonds, are valued on the basis of prices provided by independent pricing services. Prices provided by the pricing services may be determined without exclusive reliance on quoted prices, and may reflect appropriate factors such as institution-size trading in similar groups of securities, developments related to special securities, dividend rate, maturity and other market data. Prices received from pricing services are fair value prices. In addition, if the price provided by the pricing service is unreliable, the advisor valuation committee may fair value the security using procedures approved by the Board.
Short-term Securities: The fund's short-term investments are valued at amortized cost when the security has 60 days or less to maturity.
Futures and Options: Futures and options are valued on the basis of market quotations, if available.
Swap Agreements: Swap Agreements are fair valued using an evaluated quote provided by an independent pricing service. Evaluated quotes provided by the pricing service are based on a model that may include end of day net present values, spreads, ratings, industry and company performance.
Open-end Funds: To the extent the fund invests in other open-end funds, other than open-end funds that are exchange traded, the investing fund will calculate its net asset value using the net asset value of the underlying fund in which it invests.
The fund discloses portfolio holdings at different times to insurance companies issuing variable products that invest in the fund, and in annual and semi-annual shareholder reports. Refer to such reports to determine the types of securities in which the fund has invested. You may also refer to the Statement of Additional Information to determine what types of securities in which the fund may invest. You may obtain copies of these reports or of the Statement of Additional Information from the insurance company that issued your variable product, or from the advisor as described on the back cover of this prospectus.
The fund determines the net asset value of its shares on each day the NYSE is open for business, as of the close of the customary trading session, or earlier NYSE closing time that day.
TAXES
Variable product owners should refer to the prospectus for their variable products for information regarding the tax consequences of owning such variable products contracts and should consult their tax advisors before investing.
DIVIDENDS AND DISTRIBUTIONS
The fund expects that its distributions will consist of both capital gains and
ordinary income.
DIVIDENDS
The fund generally declares and pays dividends, if any, annually to separate accounts of insurance companies issuing the variable products.
CAPITAL GAINS DISTRIBUTIONS
The fund generally distributes long-term and short-term capital gains, if any, annually to separate accounts of insurance companies issuing the variable products, but may declare and pay capital gains distributions more than once per year as permitted by law.
At the election of insurance companies issuing the variable products, dividends and distributions are automatically reinvested at net asset value in shares of the fund.
SHARE CLASSES
The fund has two classes of shares, Series I shares and Series II shares. Each class is identical except that Series II shares has a distribution or "Rule 12b- 1 Plan" that is described in the prospectus relating to the Series II shares.
PAYMENTS TO INSURANCE COMPANIES
Invesco Aim Distributors, the distributor of the fund, or one or more of its corporate affiliates (Invesco Aim Distributors Affiliates), may make cash payments to the insurance company that issued your variable product or its affiliates in connection with promotion of the fund and certain other marketing support services. Invesco Aim Distributors Affiliates make these payments from their own resources.
Invesco Aim Distributors Affiliates make these payments as incentives to certain insurance companies to promote the sale and retention of shares of the fund. The benefits Invesco Aim Distributors Affiliates receive when they make these payments may include, among other things, adding the fund to the list of underlying investment options in the insurance company's variable products, and access (in some cases on a preferential basis over other competitors) to individual members of an insurance company's sales force or to an insurance company's management. These payments are sometimes referred to as "shelf space" payments because the payments compensate the insurance company for including the fund in its variable products (on its "sales shelf"). Invesco Aim Distributors Affiliates compensate insurance companies differently depending typically on the level and/or type of considerations provided by the insurance companies. The payments Invesco Aim Distributors Affiliates make may be calculated on sales of shares of the fund (Sales-Based Payments), in which case the total amount of such payments shall not exceed 0.25% of the offering price of all shares sold through variable products during the particular period. Such payments also may be calculated on the average daily net assets of the fund attributable to that particular insurance company (Asset-Based Payments), in which case the total amount of such cash payments shall not exceed 0.25% per annum of those assets during a defined period. Sales-Based Payments primarily create incentives to make sales of shares of the fund and Asset-Based Payments primarily create incentives to retain assets of the fund in insurance company separate accounts.
Invesco Aim Distributors Affiliates are motivated to make the payments described above in order to promote the sale of fund shares and the retention of those investments by clients of insurance companies. To the extent insurance companies sell more shares of the fund or retain shares of the fund in their variable product owners' accounts, Invesco Aim Distributors Affiliates may directly or indirectly benefit from the incremental management and other fees paid to Invesco Aim Distributors Affiliates by the fund with respect to those assets.
In addition to the payments listed above, the advisor may also reimburse insurance companies for certain administrative services provided to variable product owners. Under a Master Administrative Services Agreement, between the fund and the advisor, the advisor is entitled to receive from the fund reimbursement of its costs or such reasonable compensation as may be approved by the Board. Under this arrangement, the advisor provides, or assures that insurance companies issuing variable products will provide, certain variable product owner-related services. These services, include, but are not limited to, facilitation of variable product owners' purchase and redemption requests; distribution to existing variable product owners of copies of fund prospectuses, proxy materials, periodic fund reports, and other materials; maintenance of variable product owners' records; and fund services and communications. Currently, these administrative service payments made by the fund to the advisor are subject to an annual limit of 0.25% of the average net assets invested in the fund by each insurance company. Any amounts paid by the advisor to an insurance company in excess of 0.25% of the average net assets invested in the fund are paid by the advisor out of its own financial resources, and not out of the fund's assets. Insurance companies may earn profits on these payments for these services, since the amount of the payments may exceed the cost of providing the service.
You can find further details in the Statement of Additional Information about these payments and the services provided by insurance companies. In certain cases these payments could be significant to the insurance company. Your insurance company may charge you additional fees or commissions, on your variable product other than those disclosed in this prospectus. You can ask your insurance company about any payments it receives from the advisor, Invesco Aim Distributors, or the fund, as well as about fees and/or commissions it charges.
More information may be obtained free of charge upon request. The Statement of Additional Information (SAI), a current version of which is on file with the Securities and Exchange Commission (SEC), contains more details about the fund and is incorporated by reference into the prospectus (is legally a part of the prospectus). Annual and semiannual reports to shareholders contain additional information about the fund's investments. The fund's annual report also discusses the market conditions and investment strategies that significantly affected the fund's performance during its last fiscal year. The fund also files its complete schedule of portfolio holdings with the SEC for the 1st and 3rd quarters of each fiscal year on Form N-Q. The fund's most recent portfolio holdings, as filed on Form N-Q, have also been made available to insurance companies issuing variable products that invest in the fund.
If you wish to obtain free copies of the fund's current SAI or annual or semiannual reports, please contact the insurance company that issued your variable product, or you may contact us at
BY MAIL: Invesco Aim Distributors, Inc.
11 Greenway Plaza, Suite 100
Houston, TX 77046-1173
BY TELEPHONE: (800) 410-4246
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Because you cannot purchase shares of the fund directly, these documents have not been made available on our website.
You can also review and obtain copies of the fund's SAI, financial reports, the fund's Form N-Q and other information at the SEC's Public Reference Room in Washington, DC; on the EDGAR database on the SEC's Internet website (http://www.sec.gov); or, after paying a duplicating fee, by sending a letter to the SEC's Public Reference Section, Washington, DC 20549-0102 or by sending an electronic mail request to publicinfo@sec.gov. Please call the SEC at 1-202-942- 8090 for information about the Public Reference Room.
invescoaim.com P-VIAL-PRO-1
[INVESCO AIM LOGO APPEARS HERE]
--Service Mark--
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This information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.
SUBJECT TO COMPLETION--DATED AUGUST 8, 2008
AIM V.I. POWERSHARES ETF ALLOCATION FUND
Series II shares
Shares of the fund are currently offered only to insurance company separate accounts funding variable annuity contracts and variable life insurance policies. AIM V.I. PowerShares ETF Allocation Fund's investment objective is to provide total return consistent with a moderate level of risk relative to the broad stock market.
This prospectus contains important information about the Series II class shares (Series II Shares) of the fund. Please read it before investing and keep it for future reference.
As with all other mutual fund securities, the Securities and Exchange Commission has not approved or disapproved these securities or determined whether the information in this prospectus is adequate or accurate. Anyone who tells you otherwise is committing a crime.
An investment in the fund:
- is not FDIC insured;
- may lose value; and
- is not guaranteed by a bank.
RISK/RETURN SUMMARY 1 - - - - - - - - - - - - - - - - - - - - - - - - - PERFORMANCE INFORMATION 1 - - - - - - - - - - - - - - - - - - - - - - - - - FEE TABLE AND EXPENSE EXAMPLE 2 - - - - - - - - - - - - - - - - - - - - - - - - - Fees and Expenses of the Fund 2 Expense Example 2 HYPOTHETICAL INVESTMENT AND EXPENSE INFORMATION 2 - - - - - - - - - - - - - - - - - - - - - - - - - INVESTMENT OBJECTIVE, STRATEGIES AND RISK 3 - - - - - - - - - - - - - - - - - - - - - - - - - Objective and Strategies 3 Risk 4 DISCLOSURE OF PORTFOLIO HOLDINGS 7 - - - - - - - - - - - - - - - - - - - - - - - - - FUND MANAGEMENT 7 - - - - - - - - - - - - - - - - - - - - - - - - - The Advisors 7 Advisor Compensation 7 Portfolio Managers 8 OTHER INFORMATION 8 - - - - - - - - - - - - - - - - - - - - - - - - - Purchase and Redemption of Shares 8 Excessive Short-Term Trading Activity Disclosures 8 Trade Activity Monitoring 9 Fair Value Pricing 9 Risks 9 Pricing of Shares 9 Taxes 10 Dividends and Distributions 11 Share Classes 11 Distribution Plan 11 Payments to Insurance Companies 11 - - - - - - - - - - - - - - - - - - - - - - - - - OBTAINING ADDITIONAL INFORMATION Back Cover - - - - - - - - - - - - - - - - - - - - - - - - - |
The AIM Family of Funds, AIM and Design, AIM, AIM Funds, AIM Funds and Design, AIM Investments, AIM Investor, AIM Lifetime America, AIM LINK, AIM Institutional Funds, aimfunds.com, La Familia AIM de Fondos, La Familia AIM de Fondos and Design, Invierta con DISCIPLINA, Invest with DISCIPLINE, The AIM College Savings Plan, AIM Solo 401(k), AIM Investments and Design and Your goals. Our solutions. 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 and myaim.com are service marks of Invesco Aim Management Group, Inc. AIM Trimark is a registered service mark of Invesco Aim Management Group, Inc. and AIM Funds Management Inc.
No dealer, salesperson or any other person has been authorized to give any information or to make any representations other than those contained in this prospectus, and you should not rely on such other information or representations.
Shares of the fund are used as investment vehicles for variable annuity contracts and variable life insurance policies (variable products) issued by certain insurance companies. You cannot purchase shares of the fund directly. As an owner of a variable product (variable product owner) that offers the fund as an investment option, however, you may allocate your variable product values to a separate account of the insurance company that invests in shares of the fund.
Your variable product is offered through its own prospectus, which contains information about your variable product, including how to purchase the variable product and how to allocate variable product values to the fund.
INVESTMENT OBJECTIVE
The fund's investment objective is to provide total return consistent with a
moderate level of risk relative to the broad stock market.
PRIMARY INVESTMENT STRATEGIES
The fund is a "fund of funds" that invests its assets primarily in underlying
funds rather than directly in individual securities. The underlying funds in
which the fund principally invests are exchange-traded funds (underlying
PowerShares ETFs) advised by Invesco PowerShares Capital Management LLC
(PowerShares). The underlying PowerShares ETFs will invest primarily in equity
and fixed income securities of both domestic and foreign issuers. The fund and
the underlying PowerShares ETFs in which the fund invests are part of the same
group of investment companies. Invesco Aim Advisors, Inc. (the advisor or
Invesco Aim), advisor to the fund, and PowerShares are affiliates of each other
as they are both indirect wholly-owned subsidiaries of Invesco Ltd.
In looking to balance risk across a broad mix of markets and tactically allocate among the markets, the portfolio managers use a proprietary quantitative research model based on fundamental investment principles to select portfolio securities in which to invest.
PRINCIPAL RISKS
The fund's investment performance depends on the investment performance of the
underlying PowerShares ETFs in which the fund invests. Therefore, the risks
associated with an investment in a fund of funds, such as the fund, are also the
risks associated with an investment in the underlying PowerShares ETFs. Among
the principal risks of investing in the fund and the underlying PowerShares
ETFs, which could adversely affect the fund's net asset value, yield and total
return are:
Fund of Funds Risk Foreign Securities Risk U.S. Government Obligations Risk Developing Markets Securities Risk Exchange-Traded Funds Risk Derivatives Risk High-Coupon U.S. Government Agency Liquidity Risk Non-Diversified Risk Equity Securities Risk Mortgage-Backed Securities Risk Prepayment Risk Market Risk Interest Rate Risk Reinvestment Risk Sovereign Debt Risk Market Capitalization Risk Leverage Risk Management Risk Emerging Markets Credit Risk Active Trading Risk High Yield Risk Sovereign Debt Risk |
Please see "Investment Objectives, Strategies and Risks" for a description of these risks.
There is a risk that you could lose all or a portion of your investment in the fund and the income that you may receive from the fund may vary. The value of your investment in the fund will rise and fall with the prices of the securities held by the underlying PowerShares ETFs in which the fund invests.
An investment in the fund is not a deposit in a bank and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other governmental agency.
No performance information is available for the fund because it has not completed a full calendar year of operations. In the future, the fund will disclose performance information in a bar chart and performance table. Such disclosure will give some indication of the risks of an investment in the fund by comparing the fund's performance with a broad measure of market performance and by showing changes in the fund's performance from year to year.
FEES AND EXPENSES OF THE FUND
The following table describes the fees and expenses that are incurred, directly
or indirectly, when a variable product owner buys, holds, or redeems interest in
an insurance company separate account that invests in the Series II shares of
the fund but does not represent the effect of any fees or other expenses
assessed in connection with your variable product and if it did, expenses would
be higher.
SHAREHOLDER FEES - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - (fees paid directly from your investment) SERIES II SHARES ------------------------------------------------------------------------------------------------- Maximum Sales Charge (Load) N/A Maximum Deferred Sales Charge (Load) N/A ------------------------------------------------------------------------------------------------- |
"N/A" in the above table means "not applicable."
ANNUAL FUND OPERATING EXPENSES (SERIES II SHARES) - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - (expenses that are deducted from Series II share assets) SERIES II SHARES ------------------------------------------------------------------------------------------------- Management Fees [ ]% Distribution and/or Service (12b-1) Fees [ ] Other Expenses [ ] Acquired Fund Fees and Expenses [ ] Total Annual Fund Operating Expenses [ ] ------------------------------------------------------------------------------------------------- |
EXPENSE EXAMPLE
This example is intended to help you compare the costs of investing in the
Series II shares of the fund with the cost of investing in other mutual funds.
This example does not represent the effect of any fees or other expenses assessed in connection with your variable product, and if it did, expenses would be higher.
The expense example assumes you:
(i) invest $10,000 in the fund's Series II shares for the time periods
indicated;
(ii) earn a 5% return on your investment before operating expenses each year;
and
(iii) incur the same amount in operating expenses each year (after giving
effect to any applicable contractual fee waivers and/or expense
reimbursements).
To the extent fees are waived and/or expenses are reimbursed voluntarily, your expenses will be lower. Although your actual returns and costs may be higher or lower, based on these assumptions your costs would be:
SERIES II SHARES 1 YEAR 3 YEARS ------------------------------------------------------------------------------ AIM V.I. PowerShares ETF Allocation Fund $[ ] $[ ] ------------------------------------------------------------------------------ |
The settlement agreement between Invesco Aim Advisors, Inc. and certain of its
affiliates and the New York Attorney General requires Invesco Aim Advisors, Inc.
and certain of its affiliates to provide certain hypothetical information
regarding investment and expense information. The chart below is intended to
reflect the annual and cumulative impact of the fund's expenses, including
investment advisory fees and other fund costs, on the fund's return over a 10-
year period. The example reflects the following:
- You invest $10,000 in the fund and hold it for the entire 10-year period;
- Your investment has a 5% return before expenses each year; and
- The fund's current annual expense ratio includes any applicable contractual
fee waiver or expense reimbursement for the period committed.
There is no assurance that the annual expense ratio will be the expense ratio for the fund for any of the years shown. To the extent that Invesco Aim Advisors, Inc. and certain of its affiliates make any fee waivers and/or expense reimbursements pursuant to a voluntary arrangement, your actual expenses may be less. The chart does not take into account any fees or other expenses assessed in connection with your variable product; if it did, the expenses shown would be higher, while the ending balance shown would be lower. This is only a hypothetical presentation made to illustrate what expenses and returns would be under the above scenarios; your actual returns and expenses are likely to differ (higher or lower) from those shown below.
SERIES II YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5 YEAR 6 YEAR 7 YEAR 8 YEAR 9 YEAR 10 ----------------------------------------------------------------------------------------------------------------------------------- Annual Expense Ratio(1) Cumulative Return Before Expenses Cumulative Return After Expenses End of Year Balance Estimated Annual Expenses ----------------------------------------------------------------------------------------------------------------------------------- |
(1) Your actual expenses may be higher or lower than those shown.
OBJECTIVE AND STRATEGIES
The fund's investment objective is to provide total return consistent with a
moderate level of risk relative to the broad stock market. The investment
objective may be changed by the Board of Trustees without shareholder approval.
The fund seeks to meet its objective by employing a tactical asset allocation strategy which includes making active allocations across a global array of asset classes. As a fund of funds, the fund expects to invest, normally, at least 80% of its assets in a portfolio of underlying PowerShares ETFs. The fund's target allocation is to invest approximately 40% to 70% of its total assets primarily in underlying PowerShares ETFs that invest primarily in equity securities (equity ETFs) and 30% to 60% of its total assets primarily in underlying PowerShares ETFs that invest primarily in fixed-income securities (fixed-income ETFs). Additional allocations will be made within each group of equity ETFs and fixed-income ETFs. For instance, with respect to the fund's investment in fixed income ETFs, the weighting between emerging market and high yield debt will vary over time. With respect to the fund's investment in equity ETFs, the weighting between emerging equity and developing markets, between U.S. and the world, between Asia-ex Japan and the world, between Europe and the world will all vary over time based on the fund's tactical asset allocation strategy described below.
A list of the underlying PowerShares ETFs and their range of weightings as of , [ ] 2008 is set forth below.
------------------------------------------------------------------------------------------------------------------------- UNDERLYING POWERSHARES ETFS RANGE OF WEIGHTING ------------------------------------------------------------------------------------------------------------------------- PowerShares FTSE RAFI US 1000 Portfolio 0% - 20% ------------------------------------------------------------------------------------------------------------------------- PowerShares FTSE RAFI US 1500 Small-Mid Portfolio 0% - 14% ------------------------------------------------------------------------------------------------------------------------- PowerShares FTSE RAFI Europe Portfolio 0% - 16% ------------------------------------------------------------------------------------------------------------------------- PowerShares FTSE RAFI Japan Portfolio 0% - 16% ------------------------------------------------------------------------------------------------------------------------- PowerShares FTSE RAFI Asia Pacific ex-Japan Portfolio 0% - 14% ------------------------------------------------------------------------------------------------------------------------- PowerShares FTSE RAFI Developed Markets ex-US Small-Mid Portfolio 0% - 16% ------------------------------------------------------------------------------------------------------------------------- PowerShares FTSE RAFI Emerging Markets Portfolio 0% -12% ------------------------------------------------------------------------------------------------------------------------- PowerShares High Yield Corporate Bond Portfolio 0% - 12% ------------------------------------------------------------------------------------------------------------------------- PowerShares 1-30 Laddered Treasury Portfolio 15% - 45% ------------------------------------------------------------------------------------------------------------------------- PowerShares Emerging Markets Sovereign Debt Portfolio 0% - 20% ------------------------------------------------------------------------------------------------------------------------- TOTAL ------------------------------------------------------------------------------------------------------------------------- |
AS THE FUND'S PORTFOLIO SECURITIES ARE CONSISTENTLY REVIEWED BY THE PORTFOLIO MANAGERS, THE WEIGHTINGS OF UNDERLYING POWERSHARES ETFS SHOWN IN THE ABOVE TABLE MAY BE CHANGED AT ANY TIME WITHOUT SHAREHOLDER NOTICE. BOTH ADDITIONAL UNDERLYING POWERSHARES ETFS, AND ADDITIONAL UNDERLYING PORTFOLIO SECURITIES, MAY ALSO BE ADDED OR REMOVED AT ANY TIME WITHOUT SHAREHOLDER NOTICE.
In seeking to outperform its benchmark index--a style-specific index made up as follows: the Index ( %), the Index ( %) and the Index ( %)--the portfolio managers rely on both strategic and tactical asset allocation.
The portfolio managers set the strategic allocation for the portfolio based on a proprietary allocation approach that focuses on balancing the risk contributed by each asset to the portfolio. After setting the strategic allocation, the portfolio managers create allocation ranges around each strategic weighting that allows them to implement tactical asset allocation decisions. The portfolio managers make the tactical asset allocation decisions by applying a three-step process.
The first step is fundamental research used to understand distinctive characteristics of various markets generally in which the underlying portfolio securities invest, generate hypotheses about how the distinctive characteristics of each asset will respond to various economic and market conditions, and then test the hypotheses using historical data and statistical techniques.
The second step involves translating the research generated in step one into quantitative models. Inputs to the quantitative models include market valuations, which provide information about the longer-term return prospects for each market, and dynamic factors which provide information about nearer-term return prospects. The portfolio managers combine these valuations and factors to determine the probability that one market will outperform another.
The final step is portfolio strategy. The portfolio managers directly map their model within the fund's underlying PowerShares ETF allocation and other assets. Allocation ranges around target allocations for each decision are determined through the portfolios managers' proprietary risk budgeting process which is based on the number of available allocation decisions in which to implement the model, the amount of expected aggregate portfolio outperformance and the risk characteristics of each available decision. The resulting allocation is then invested primarily in underlying PowerShares.
The fund may invest up to 80% of its assets in underlying PowerShares ETFs that invest in foreign securities.
The fund's investments in the type of securities described in this prospectus vary from time to time and, at any time, the fund may not be invested in all types of securities described in this prospectus. Any percentage limitations with respect to assets of the fund are applied at the time of purchase.
The fund typically maintains a portion of its assets in cash, which is generally invested in money market funds advised by the fund's advisor. The fund holds cash to handle its daily cash needs, which include payment of fund expenses, redemption requests and securities transactions. The amount of cash held by the fund may increase if the fund takes a temporary defensive position. The fund may take a temporary defensive position when it receives unusually large redemption requests, or if there are inadequate investment opportunities due to adverse market, economic, political or other conditions. A larger amount of cash could negatively affect the fund's investment results in a period of rising market prices; conversely it could reduce the magnitude of the fund's loss in the event of falling market prices and provide liquidity to make additional investments or to meet redemptions. As a result, the fund may not achieve its investment objective.
RISKS
The principal risks of investing in the fund are:
Fund of Funds Risk--The fund pursues its investment objective by investing its assets in underlying PowerShares ETFs rather than investing directly in stocks, bonds, cash or other investments. The fund's investment performance depends on the investment performance of the underlying PowerShares ETFs in which it invests. An investment in the fund, because it is a fund of funds, is subject to the risks associated with investments in the underlying PowerShares ETFs in which the fund invests. The fund will indirectly pay a proportional share of the asset-based fees of the underlying PowerShares ETFs in which it invests.
There is a risk that the advisor's evaluations and assumptions regarding the fund's broad asset classes or the underlying PowerShares ETFs in which the fund invests may be incorrect based on actual market conditions. In addition, at times the segment of the market represented by an underlying PowerShares ETF may be out of favor and under perform other segments (e.g. growth stocks). There is a risk that the fund will vary from the target weightings in the underlying PowerShares ETFs due to factors such as market fluctuations. There can be no assurance that the underlying PowerShares ETFs will achieve their investment objectives, and the performance of the underlying PowerShares ETFs may be lower than the asset class which they were selected to represent. The underlying PowerShares ETFs may change their investment objectives or policies without the approval of the fund. If that were to occur, the fund might be forced to withdraw its investment from an underlying PowerShares ETF at a time that is unfavorable to the fund.
The advisor has the ability to select and substitute the underlying PowerShares ETFs in which the fund invests, and may be subject to potential conflicts of interest in selecting underlying PowerShares ETFs because the advisor and/or PowerShares, the advisor for the underlying PowerShares ETFs and an affiliate of the advisor, may receive higher fees from certain underlying PowerShares ETFs than others. However, as a fiduciary to the fund, the advisor is required to act in the fund's best interest when selecting underlying PowerShares ETFs.
Exchange-Traded Funds Risk--An investment by the fund in underlying PowerShares ETFs generally presents the same primary risks as an investment in an AIM mutual fund. In addition, underlying PowerShares ETFs may be subject to the following risks that do not apply to AIM mutual funds: (i) the market price of an underlying PowerShares ETF's shares may trade above or below its net asset value; (ii) an active trading market for an underlying PowerShares ETF's shares may not develop or be maintained; (iii) trading of an underlying PowerShares ETF's shares may be halted if the listing exchange's officials deem such action appropriate; (iv) underlying PowerShares ETFs are not actively managed and may not fulfill their objective of tracking the performance of the index they seek to track; (v) underlying PowerShares ETFs would not necessarily sell a security because the issuer of the security was in financial trouble unless the security is removed from the index that the underlying PowerShares ETF seeks to track, and (vi) the value of an investment in underlying PowerShares ETFs will decline, more or less, in correlation with any decline in the value of the index they seek to track.
In addition, a significant percentage of certain underlying PowerShares ETFs may be comprised of issuers in a single industry or sector of the economy. If the underlying PowerShares ETF is focused on an industry or sector, it may present more risks than if it were broadly diversified over numerous industries or sectors of the economy.
Non-Diversification Risk--The fund is "non-diversified", meaning it can invest a great portion of its assets in the obligations of securities of any single issuer than a diversified fund. In addition, certain of the underlying PowerShares ETFs in which the fund invest are non-diversified. To the extent that a large percentage of the fund's assets, or the assets of the underlying PowerShares ETFs, may be invested in a limited number of issuers, a change in the value of the issuers' securities could affect the value of the fund or the underlying PowerShares ETFs more than would occur in a diversified fund.
Because the fund is a fund of funds, the fund is subject to the risks associated with the underlying PowerShares ETFs in which it invests. The risks of an investment in the fund and the underlying PowerShares ETFs are set forth below:
Market Risk--The prices of securities held by the fund and the underlying PowerShares ETFs may decline in response to certain events, including those directly involving the companies whose securities are owned by the underlying PowerShares ETFs; general economic and market conditions; regional or global economic instability; and currency and interest rate fluctuations.
Market Capitalization Risk--Stocks fall into three broad market capitalization categories--large, medium and small. Investing primarily in one category carries the risk that, due to current market conditions, that category may be out of favor with investors. Small and mid-sized companies tend to be more vulnerable to adverse developments and more volatile than larger companies. Investments in small and mid-sized companies may involve special risks, including those associated with dependence on a small management group, little or no operating history, little or no track record of success, and limited product lines, markets and financial resources. Also, there may be less publicly available information about the issuers of the securities or less market interest in such securities than in the case of larger companies, each of which can cause significant price volatility. The securities of small and mid-sized companies may be illiquid, restricted as to resale, or may trade less frequently and in smaller volume than more widely held securities, which may make it difficult for the fund or an underling PowerShares ETF to establish or close out a position in these securities at prevailing market prices.
Credit Risk--Credit risk is the risk of loss on an investment due to the deterioration of an issuer's financial health resulting in an inability to make interest payments and/or repay the principal or its debt. Such a deterioration of financial health may result in a reduction of the credit rating of the issuer's securities, which may further affect the issuer's inability to honor its contractual commitments.
Foreign Securities Risk--The dollar value of the fund's or an underlying PowerShares ETF's foreign investments will be affected by changes in the exchange rates between the dollar and the currencies in which those investments are traded. The value of an foreign investments may be adversely affected by political and social instability in their home countries, by changes in economic or taxation policies in those countries, or by the difficulty in enforcing obligations in those countries. Foreign companies generally may be subject to less stringent regulations than U.S. companies, including financial reporting requirements and auditing and accounting controls. As a result, there generally is less publicly available information about foreign companies than about U.S. companies. Trading in many foreign securities may be less liquid and more volatile than U.S. securities due to the size of the market or other factors.
Derivatives Risk--The value of "derivatives"--so-called because their value "derives" from the value of an underlying asset (including an underlying security), reference rate or index--may rise or fall more rapidly than other investments. For some derivatives, it is possible to lose more than the amount invested in the derivative. If the fund uses derivatives to "hedge" a portfolio risk, it is possible that the hedge may not succeed. This may happen for various reasons, including unexpected changes in the value of the rest of the fund's portfolio. Over the counter derivatives are also subject to counterparty risk, which is the risk that the other party to the contract will not fulfill its contractual obligation to complete the transaction with the fund.
Equity Securities Risk--The prices of equity securities change in response to many factors including the historical and prospective earnings of the issuer, the value of its assets, general economic conditions, interest rates, investor perceptions and market liquidity.
Interest Rate Risk--Interest rate risk refers to the risk that bond prices generally fall as interest rates rise; conversely, bond prices generally rise as interest rates fall. Specific bonds differ in their sensitivity to changes in interest rates depending on specific characteristics of each bond. A measure investors commonly use to determine this sensitivity is called duration. The longer the duration of a particular bond, the greater is its price sensitivity to interest rates. Similarly, a longer duration portfolio of securities has greater price sensitivity. Duration is determined by a number of factors including coupon rate, whether the coupon is fixed or floating, time to maturity, call or put features, and various repayment features.
Leverage Risk--The use of derivatives may give rise to a form of leverage. Leverage may cause the fund's portfolio to be more volatile than if the portfolio had not been leveraged because leverage can exaggerate the effect of any increase or decrease in the value of securities held by the fund.
Active Trading Risk--Certain of the underlying PowerShares ETFs may engage in active and frequent trading of portfolio securities to achieve their investment objective. If an underlying PowerShares ETF does trade in this way, it may incur increased costs, which can lower the actual return of the underlying PowerShares ETF and the fund. Active trading may also increase short term gains and losses, which may affect the taxes that must be paid.
U.S. Government Obligations Risk--The fund and certain of the underlying
PowerShares ETFs invest in obligations issued by agencies and instrumentalities
of the U.S. Government. These obligations vary in the level of support they
receive from the U.S. Government. They may be: (i) supported by the full faith
and credit of the U.S. Treasury, such as those of the Government National
Mortgage Association; (ii) supported by the right of the issue to borrow from
the U.S. Treasury, such as those of the Federal National Mortgage Association;
(iii) supported by the discretionary authority for the U.S. Government to
purchase the issuer's obligation, such as those of the former Student Loan
Marketing Association; or (iv) supported only by the credit of the issuer, such
as those of the Federal Farm Credit Bureau. The U.S. Government may choose not
to provide financial support to the U.S. Government sponsored agencies or
instrumentalities if it is not legally obligated to do so, in which case, if the
issuer defaulted, the fund holding securities of such issuer might not be able
to recover its investment from the U.S. Government.
High-Coupon U.S. Government Agency Mortgage-Backed Securities Risk--These provide a higher coupon at the time of purchase than current prevailing market interest rates. The fund and certain of the underlying PowerShares ETFs may purchase such securities at a premium. If these securities experience a faster principal prepayment rate than expected, both the market value of and income from such securities will decrease. The prices of high-coupon U.S. Government agency mortgage-backed securities fall more slowly when interest rates rise than do prices of traditional fixed-rate securities. Some of the securities purchased by the fund and the underlying PowerShares ETF are not guaranteed by the U.S. Government. The issuer of a security may default or otherwise by unable to honor a financial obligation.
Reinvestment Risk--Reinvestment risk is the risk that a bond's cash flows (coupon income and principal repayment) will be reinvested at an interest rate below that on the original bond. If interest rates decline, the underlying bond may rise in value, but the cash flows received from that bond may have to be invested at a lower interest rate.
Management Risk--There is no guarantee that the investment techniques and risk analyses used by the fund's or the underlying PowerShares ETFs' portfolio managers will produce the desired results.
High Yield Risk--High yield risk is a form of credit risk. High yield bonds or "junk bonds" are bonds rated below investment grade or deemed to be of comparable quality. They are considered to be speculative investments with greater risk of failure to make timely payment of interest and principal (to default on their contractual obligations) than their investment grade counterparts. High yield bonds may exhibit increased price sensitivity and reduced liquidity generally and particularly during times of economic downturn or volatility in the capital markets.
Developing Markets Securities Risk--The risk associated with investments in foreign securities may affect the value of securities issued by foreign companies located in developing countries more than those in countries with more mature economies. For example, many developing countries, in the past, have experienced high rates of inflation or sharply devalued their currencies against the U.S. dollar, causing the value of investments in companies located in those countries to decline. Transaction costs are often higher in developing countries and there may be delays in settlement procedures.
Liquidity Risk--Certain of the underlying PowerShares ETFs' assets are likely to be invested in loans and securities that are less liquid than those traded on national exchanges. Loans and securities with reduced liquidity involve greater risk than securities with more liquid markets. Market quotations for such loans and securities may vary over time, and if the credit quality of a loan unexpectedly declines, secondary trading of that loan may decline for a period of time. In the event that the underlying PowerShares ETF voluntarily or involuntarily liquidates portfolio assets during periods of infrequent trading, it may not receive full value for those assets.
Prepayment Risk--The ability of an issuer of a floating rate loan or debt security to repay principal prior to maturity can limit the potential for gains by an underlying PowerShares ETF. Such prepayments may require the fund to replace the loan or debt security with a lower yielding security. This may adversely affect an underlying PowerShares ETF's yield.
Sovereign Debt Risk - Investments in sovereign debt securities involve special risks. The governmental authority that controls the repayment of the debt may be unwilling or unable to repay the principal and/or interest when due in accordance with the terms of such securities due to: the extent of its foreign reserves; the availability of sufficient foreign exchange on the date a payment is due; the relative size of the debt service burden to the economy as a whole; or the government debtor's policy towards the International Monetary Fund and the political constraints to which a government debtor may be subject. If an issuer of sovereign debt defaults on payments of principal and/or interest, the underlying PowerShares ETF may have limited legal recourse against the issuer and/or guarantor. In certain cases, remedies must be pursued in the courts of the defaulting party itself, and the underlying PowerShares ETF's ability to obtain recourse may be limited. Certain issuers of sovereign debt may be dependent on disbursements from foreign governments, multilateral agencies and others abroad to reduce principal and interest arrearages on their debt. Such disbursements may be conditioned upon a debtor's implementation of economic reforms and/or economic performance and the timely service of such debtor's obligations. A failure on the part of the debtor to implement such reforms, achieve such levels of economic performance or repay principal or interest when due may result in the cancellation of such third parties' commitments to lend funds to the government debtor, which may impair the debtor's ability to service its debts on a timely basis. As a holder of government debt, the fund may be requested to participate in the rescheduling of such debt and to extend further loans to government debtors.
Emerging Markets Sovereign Debt Risk - Government obligors in emerging market countries are among the world's largest debtors to commercial banks, other governments, international financial organizations and other financial institutions. Historically, certain issuers of the government debt securities in which certain of the underlying PowerShares ETF may invest have experienced substantial difficulties in meeting their external debt obligations, resulting in defaults on certain obligations and the restructuring of certain indebtedness. Such restructuring arrangements have included obtaining additional credit to finance outstanding obligation and the reduction and rescheduling of payments of interest and principal through the negotiation of new or amended credit agreements. An underlying PowerShares ETF that holds government debt securities may be asked to participate in the restructuring of such obligations and to extend further loans to their issuers. There can be no assurance that the securities in which such underlying PowerShares ETF will invest will not be subject to restructuring arrangements or to requests for additional credit. In addition, certain participants in the secondary market for such debt may be directly involved in negotiating the terms of these arrangements and may therefore have access to information not available to other market participants, including the underlying PowerShares ETF.
The fund's portfolio holdings are disclosed on a regular basis in its semi- annual and annual reports to shareholders, and on Form N-Q, which is filed with the Securities and Exchange Commission (SEC) within 60 days of the fund's first and third quarter-ends. Due to the fact that you cannot purchase shares of the fund directly, these documents have not been made available on our website. However, these documents are available on the SEC's website at http://www.sec.gov. In addition, the fund's portfolio holdings as of each calendar quarter-end are made available to insurance companies issuing variable products that invest in the fund.
A description of the fund's policies and procedures with respect to the disclosure of the fund's portfolio holdings is available in the fund's Statement of Additional Information.
THE ADVISORS
Invesco Aim Advisors, Inc. (the advisor or Invesco Aim) serves as the fund's
investment advisor and manages the investment operations of the fund and has
agreed to perform or arrange for the performance of the fund's day-to-day
management. The advisor is located at 11 Greenway Plaza, Suite 100, Houston,
Texas 77046-1173. The advisor has acted as an investment advisor since its
organization in 1976. Today, the advisor, together with its subsidiaries,
advises or manages over 225 investment portfolios, including the fund,
encompassing a broad range of investment objectives.
The following affiliates of the advisor (collectively, the affiliated sub- advisors) serve as sub-advisors to the fund and may be appointed by the advisor from time to time to provide discretionary investment management services, investment advice, and/or order execution services to the fund:
Invesco Asset Management Deutschland GmbH (Invesco Deutschland), located at Bleichstrasse 60-62, Frankfurt, Germany 60313, which has acted as an investment advisor since 1998.
Invesco Asset Management Limited (Invesco Asset Management), located at 30 Finsbury Square, London, EC2A 1AG, United Kingdom, which has acted as an investment advisor since 2001.
Invesco Asset Management (Japan) Limited (Invesco Japan), located at 25th Floor, Shiroyama Trust Tower, 3-1, Toranomon 4-chome, Minato-ku, Tokyo 105-6025, Japan, which has acted as an investment advisor since 1996.
Invesco Australia Limited (Invesco Australia), located at 333 Collins Street, Level 26, Melbourne Vic 3000, Australia, which has acted as an investment advisor since 1983.
Invesco Global Asset Management (N.A.), Inc. (Invesco Global), located at 1555 Peachtree Street, N.E., Atlanta, Georgia 30309, which has acted as an investment advisor since 1997.
Invesco Hong Kong Limited (Invesco Hong Kong), located at 32nd Floor, Three Pacific Place, 1 Queen's Road East, Hong Kong, which has acted as an investment advisor since 1994.
Invesco Institutional (N.A.), Inc. (Invesco Institutional), located at 1555 Peachtree Street, N.E., Atlanta, Georgia 30309, which has acted as an investment advisor since 1988.
Invesco Senior Secured Management, Inc. (Invesco Senior Secured), located at 1166 Avenue of the Americas, New York, New York 10036, which has acted as an investment advisor since 1992.
AIM Funds Management Inc. (AFMI), located at 5140 Yonge Street, Suite 900, Toronto, Ontario, Canada M2N 6X7, which has acted as an investment advisor since 1994. AFMI anticipates changing its name to Invesco Trimark Ltd. on or prior to December 31, 2008.
Civil lawsuits, including a regulatory proceeding and purported class action and shareholder derivative suits, have been filed against certain of the AIM funds, INVESCO Funds Group, Inc. (IFG) (the former investment advisor to certain AIM funds, Invesco Aim, Invesco Aim Distributors, Inc. (Invesco Aim Distributors) (the distributor of the AIM funds) and/or related entities and individuals, depending on the lawsuit, alleging among other things: (i) that the defendants permitted improper market timing and related activity in the funds; and (ii) that certain funds inadequately employed fair value pricing.
Additional civil lawsuits related to the above or other matters may be filed by regulators or private litigants against the AIM funds, IFG, Invesco Aim, Invesco Aim Distributors and/or related entities and individuals in the future. You can find more detailed information concerning all of the above matters, including the parties to the civil lawsuits and summaries of the various allegations and remedies sought in such lawsuits, in the fund's Statement of Additional Information.
As a result of the matters discussed above, investors in the AIM 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.
ADVISOR COMPENSATION
The advisor is to receive a fee from the fund calculated at the annual rate
of %.
Invesco Aim, not the fund, pays sub-advisory fees, if any.
When available, a discussion regarding the basis for the Board's approval of the investment advisory and investment sub-advisory agreements of the fund will be available in the fund's annual report to shareholders.
PORTFOLIO MANAGERS
Investment decisions for the fund are made by the investment management team at
Invesco Institutional. The following individuals are jointly and primarily
responsible for the day-to-day management of the fund's portfolio:
- Scott Wolle, Portfolio Manager, who has been responsible for the fund since its inception and has been associated with Invesco Institutional and/or its affiliates since 1999.
- Scott Hixon, Portfolio Manager, who has been responsible for the fund since its inception and has been associated with Invesco Institutional and/or its affiliates since 1994.
- Mark Ahnrud, Portfolio Manager, who has been responsible for the fund since its inception and has been associated with Invesco Institutional and/or its affiliates since 2000.
- Chris Devine, Portfolio Manager, who has been responsible for the fund since its inception and has been associated with Invesco Institutional and/or its affiliates since 1998.
The portfolio managers are assisted by research analysts on Invesco's Multiple Asset Strategies Team. Team members provide research support and make securities recommendations with respect to the fund's portfolio, but do not have day-to-day management responsibilities with respect to the fund's portfolio. More information on the portfolio managers may be found on the advisor's website http://www.invescoaim.com. The website is not part of this prospectus.
The fund's Statement of Additional Information provides additional information about the portfolio managers' investments in the fund, a description of their compensation structure, and information regarding other accounts they manage.
PURCHASE AND REDEMPTION OF SHARES
The fund ordinarily effects orders to purchase and redeem shares at the fund's
next computed net asset value after it receives an order. Insurance companies
participating in the fund serve as the fund's designee for receiving orders of
separate accounts that invest in the fund. The fund may postpone the right of
redemption only under unusual circumstances, as allowed by the SEC, such as when
the New York Stock Exchange (NYSE) restricts or suspends trading.
Although the fund generally intends to pay redemption proceeds solely in cash, the fund reserves the right to determine, in its sole discretion, whether to satisfy redemption requests by making payment in securities or other property (known as a redemption in kind).
Shares of the fund are offered in connection with mixed and shared funding,
i.e., to separate accounts of affiliated and unaffiliated insurance companies
funding variable products. The fund currently offers shares only to insurance
company separate accounts. In the future, the fund may offer them to pension and
retirement plans that qualify for special federal income tax treatment. Due to
differences in tax treatment and other considerations, the interests of fund
shareholders, including variable product owners and plan participants investing
in the fund (whether directly or indirectly through fund of funds), may
conflict.
Mixed and shared funding may present certain conflicts of interest. For example, violation of the federal tax laws by one insurance company separate account investing directly or indirectly in the fund could cause variable products funded through another insurance company separate account to lose their tax-deferred status, unless remedial actions were taken. The Board will monitor for the existence of any material conflicts and determine what action, if any, should be taken. The fund's net asset value could decrease if it had to sell investment securities to pay redemption proceeds to a separate account (or plan) withdrawing because of a conflict.
EXCESSIVE SHORT-TERM TRADING ACTIVITY DISCLOSURES
The fund's investment programs are designed to serve long-term investors and are
not designed to accommodate excessive short-term trading activity in violation
of our policies described below. Excessive short-term trading activity in the
fund's shares (i.e., purchases of fund shares followed shortly thereafter by
redemptions of such shares, or vice versa) may hurt the long-term performance of
the fund by requiring it to maintain an excessive amount of cash or to liquidate
portfolio holdings at a disadvantageous time, thus interfering with the
efficient management of the fund by causing it to incur increased brokerage and
administrative costs. Where excessive short-term trading activity seeks to take
advantage of arbitrage opportunities from stale prices for portfolio securities,
the value of fund shares held by long-term investors may be diluted.
The Board has adopted policies and procedures designed to discourage excessive short-term trading of fund shares. The fund may alter its policies and procedures at any time without giving prior notice to fund shareholders, if the advisor believes the change would be in the best interests of long-term investors.
Pursuant to the fund's policies and procedures, Invesco Aim and its affiliates (collectively the Invesco Aim Affiliates) currently use the following tools designed to discourage excessive short-term trading in the fund:
(1) trade activity monitoring; and
(2) the use of fair value pricing consistent with procedures approved by the Board.
Each of these tools is described in more detail below.
In addition, restrictions designed to discourage or curtail excessive short- term trading activity may be imposed by the insurance companies and/or their separate accounts that invest in the fund on behalf of variable product owners. Variable product owners should refer to the applicable contract and related prospectus for more details.
TRADE ACTIVITY MONITORING
To detect excessive short-term trading activities, the Invesco Aim Affiliates
will monitor, on a daily basis, selected aggregate purchase, or redemption trade
orders placed by insurance companies and/or their separate accounts. The Invesco
Aim Affiliates will seek to work with insurance companies to discourage variable
product owners from engaging in abusive trading practices. However, the ability
of the Invesco Aim Affiliates to monitor trades that are placed by variable
product owners is severely if not completely limited due to the fact that the
insurance companies trade with the funds through omnibus accounts, and maintain
the exclusive relationship with, and are responsible for maintaining the account
records of, their variable product owners. There may also be legal and
technological limitations on the ability of insurance companies to impose
restrictions on the trading practices of their variable product owners. As a
result, there can be no guarantee that the Invesco Aim Affiliates will be able
to detect or deter market timing by variable product owners.
If, as a result of this monitoring, the Invesco Aim Affiliates believe that a variable product owner has engaged in excessive short-term trading (regardless of whether or not the insurance company's own trading restrictions are exceeded), the Invesco Aim Affiliates will seek to act in a manner that they believe is consistent with the best interests of long-term investors, which may include taking steps such as (i) asking the insurance company to take action to stop such activities, or (ii) refusing to process future purchases related to such activities in the insurance company's account with the funds. Invesco Aim Affiliates will use reasonable efforts to apply the fund's policies uniformly given the potential limitations described above.
FAIR VALUE PRICING
Securities owned by the fund are to be valued at current market value if market
quotations are readily available. All other securities and assets of the fund
for which market quotations are not readily available are to be valued at fair
value determined in good faith using procedures approved by the Board of the
fund. Fair value pricing may reduce the ability of frequent traders to take
advantage of arbitrage opportunities resulting from potentially "stale" prices
of portfolio holdings. However, it cannot eliminate the possibility of frequent
trading.
See "Pricing of Shares--Determination of Net Asset Value" for more information.
RISKS
There is the risk that the fund's policies and procedures will prove ineffective
in whole or in part to detect or prevent excessive short-term trading. Although
these policies and procedures, including the tools described above, are designed
to discourage excessive short-term trading, they do not eliminate the
possibility that excessive short-term trading activity in the fund will occur.
Moreover, each of these tools involves judgments that are inherently subjective.
The Invesco Aim Affiliates seek to make these judgments to the best of their
abilities in a manner that they believe is consistent with the best interests of
long-term investors. However, there can be no assurance that the Invesco Aim
Affiliates will be able to gain access to any or all of the information
necessary to detect or prevent excessive short-term trading by a variable
product owner. While the Invesco Aim Affiliates and the funds may seek to take
actions with the assistance of the insurance companies that invest in the fund,
there is the risk that neither the Invesco Aim Affiliates nor the fund will be
successful in their efforts to minimize or eliminate such activity.
PRICING OF SHARES
DETERMINATION OF NET ASSET VALUE
The price of the fund's shares is the fund's net asset value per share. The fund values portfolio securities for which market quotations are readily available at market value. The fund values all other securities and assets for which market quotations are not readily available at their fair value in good faith using procedures approved by the Board of the fund. The Board has delegated the daily determination of good faith fair value methodologies to Invesco Aim's Valuation Committee, which acts in accordance with Board approved policies. On a quarterly basis, Invesco Aim provides the Board various reports indicating the quality and effectiveness of its fair value decisions on portfolio holdings. Securities and other assets quoted in foreign currencies are valued in U.S. dollars based on the prevailing exchange rates on that day.
Even when market quotations are available, they may be stale or they may be unreliable because the security is not traded frequently, trading on the security ceased before the close of the trading market or issuer specific events occurred after the security ceased trading or because of the passage of time between the close of the market on which the security trades and the close of the NYSE and when the fund calculates its net asset value. Issuer specific events may cause the last market quotation to be unreliable. Such events may include a merger or insolvency, events which affect a geographical area or an industry segment, such as political events or natural disasters, or market events, such as a significant movement in the U.S. market. Where market quotations are not readily available, including where the advisor determines that the closing price of
the security is unreliable, the advisor will value the security at fair value in good faith using procedures approved by the Board. Fair value pricing may reduce the ability of frequent traders to take advantage of arbitrage opportunities resulting from potentially "stale" prices of portfolio holdings. However, it cannot eliminate the possibility of frequent trading.
Fair value is that amount that the owner might reasonably expect to receive for the security upon its current sale. Fair value requires consideration of all appropriate factors, including indications of fair value available from pricing services. A fair value price is an estimated price and may vary from the prices used by other mutual funds to calculate their net asset values.
The advisor may use indications of fair value from pricing services approved by the Board. In other circumstances, the advisor valuation committee may fair value securities in good faith using procedures approved by the Board. As a means of evaluating its fair value process, the advisor routinely compares closing market prices, the next day's opening prices for the security in its primary market if available, and indications of fair value from other sources. Fair value pricing methods and pricing services can change from time to time as approved by the Board.
Specific types of securities are valued as follows:
Domestic Exchange Traded Equity Securities: Market quotations are generally available and reliable for domestic exchange traded equity securities. If market quotations are not available or are unreliable, the advisor will value the security at fair value in good faith using procedures approved by the Board.
Foreign Securities: If market quotations are available and reliable for foreign exchange traded equity securities, the securities will be valued at the market quotations. Because trading hours for certain foreign securities end before the close of the NYSE, closing market quotations may become unreliable. If between the time trading ends on a particular security and the close of the customary trading session on the NYSE events occur that are significant and may make the closing price unreliable, the fund may fair value the security. If an issuer specific event has occurred that the advisor determines, in its judgment, is likely to have affected the closing price of a foreign security, it will price the security at fair value. The advisor also relies on a screening process from a pricing vendor to indicate the degree of certainty, based on historical data, that the closing price in the principal market where a foreign security trades is not the current market value as of the close of the NYSE. For foreign securities where the advisor believes, at the approved degree of certainty, that the price is not reflective of current market value, the advisor will use the indication of fair value from the pricing service to determine the fair value of the security. The pricing vendor, pricing methodology or degree of certainty may change from time to time.
Fund securities primarily traded on foreign markets may trade on days that are not business days of the fund. Because the net asset value of fund shares is determined only on business days of the fund, the value of the portfolio securities of a fund that invests in foreign securities may change on days when you will not be able to purchase or redeem shares of the fund.
Fixed Income Securities: Government, corporate, asset-backed and municipal bonds and convertible securities, including high yield or junk bonds, are valued on the basis of prices provided by independent pricing services. Prices provided by the pricing services may be determined without exclusive reliance on quoted prices, and may reflect appropriate factors such as institution-size trading in similar groups of securities, developments related to special securities, dividend rate, maturity and other market data. Prices received from pricing services are fair value prices. In addition, if the price provided by the pricing service is unreliable, the advisor valuation committee may fair value the security using procedures approved by the Board.
Short-term Securities: The fund's short-term investments are valued at amortized cost when the security has 60 days or less to maturity.
Futures and Options: Futures and options are valued on the basis of market quotations, if available.
Swap Agreements: Swap agreements are fair valued using an evaluated quote provided by an independent pricing service. Evaluated quotes provided by the pricing service are based on a model that may include end of day net present values, spreads, ratings, industry and company performance.
Open-end Funds: To the extent the fund invests in other open-end funds, other than open-end funds that are exchange traded, the investing fund will calculate its net asset value using the net asset value of the underlying fund in which it invests.
The fund discloses portfolio holdings at different times to insurance companies issuing variable products that invest in the fund, and in annual and semi-annual shareholder reports. Refer to such reports to determine the types of securities in which the fund has invested. You may also refer to the Statement of Additional Information to determine what types of securities in which the fund may invest. You may obtain copies of these reports or of the Statement of Additional Information from the insurance company that issued your variable product, or from the advisor as described on the back cover of this prospectus.
The fund determines the net asset value of its shares on each day the NYSE is open for business, as of the close of the customary trading session, or earlier NYSE closing time that day.
TAXES
Variable product owners should refer to the prospectus for their variable products for information regarding the tax consequences of owning such variable products and should consult their tax advisors before investing.
DIVIDENDS AND DISTRIBUTIONS
The fund expects that its distributions will consist of both capital gains and ordinary income.
DIVIDENDS
The fund generally declares and pays dividends, if any, annually to separate accounts of insurance companies issuing the variable products.
CAPITAL GAINS DISTRIBUTIONS
The fund generally distributes long-term and short-term capital gains, if any, annually to separate accounts of insurance companies issuing the variable products, but may declare and pay capital gains distributions more than once per year as permitted by law.
At the election of insurance companies issuing the variable products, dividends and distributions are automatically reinvested at net asset value in shares of the fund.
SHARE CLASSES
The fund has two classes of shares, Series I shares and Series II shares. Each class is identical except that Series II shares has a distribution or "Rule 12b- 1 Plan" which is described in this prospectus.
DISTRIBUTION PLAN
The fund has adopted a distribution or "Rule 12b-1" plan for its Series II shares. The plan allows the fund to pay distribution fees to life insurance companies and others to promote the sale and distribution of Series II shares. The plan provides for a maximum fee equal to an annual rate of 0.25% (expressed as a percentage of average daily net assets of the fund). Because the fund pays this fee out of its assets on an ongoing basis, over time this fee will increase the cost of your investment and may cost you more than paying other types of charges.
PAYMENTS TO INSURANCE COMPANIES
The insurance company that issued your variable product, or one of its affiliates may receive all the Rule 12b-1 distribution fees discussed above. In addition to those payments, Invesco Aim Distributors, the distributor of the fund, or one or more of its corporate affiliates (Invesco Aim Distributors Affiliates), may make additional cash payments to the insurance company or an affiliate in connection with promotion of the fund and certain other marketing support services. Invesco Aim Distributors Affiliates make these payments from their own resources.
Invesco Aim Distributors Affiliates make these payments as incentives to certain insurance companies to promote the sale and retention of shares of the fund. The benefits Invesco Aim Distributors Affiliates receive when they make these payments may include, among other things, adding the fund to the list of underlying investment options in the insurance company's variable products, and access (in some cases on a preferential basis over other competitors) to individual members of an insurance company's sales force or to an insurance company's management. These payments are sometimes referred to as "shelf space" payments because the payments compensate the insurance company for including the fund in its variable products (on its "sales shelf"). Invesco Aim Distributors Affiliates compensate insurance companies differently depending typically on the level and/or type of considerations provided by the insurance companies. The payments Invesco Aim Distributors Affiliates make may be calculated on sales of shares of the fund (Sales-Based Payments), in which case the total amount of such payments shall not exceed 0.25% of the offering price of all shares sold through variable products during the particular period. Such payments also may be calculated on the average daily net assets of the fund attributable to that particular insurance company (Asset-Based Payments), in which case the total amount of such cash payments shall not exceed 0.25% per annum of those assets during a defined period. Sales-Based Payments primarily create incentives to make sales of shares of the fund and Asset-Based Payments primarily create incentives to retain assets of the fund in insurance company separate accounts.
Invesco Aim Distributors Affiliates is motivated to make the payments described above in order to promote the sale of fund shares and the retention of those investments by clients of insurance companies. To the extent insurance companies sell more shares of the fund or retain shares of the fund in their variable product owners' accounts, Invesco Aim Distributors Affiliates may directly or indirectly benefit from the incremental management and other fees paid to Invesco Aim Distributors Affiliates by the fund with respect to those assets.
In addition to the payments listed above, the advisor may also reimburse insurance companies for certain administrative services provided to variable product owners. Under a Master Administrative Services Agreement, between the fund and the advisor, the advisor is entitled to receive from the fund reimbursement of its costs or such reasonable compensation as may be approved by the Board. Under this arrangement, the advisor provides, or assures that insurance companies issuing variable products will provide, certain variable product owner-related services. These services, include, but are not limited to, facilitation of variable product owners' purchase and redemption requests; distribution to existing variable product owners of copies of fund prospectuses, proxy materials, periodic fund reports, and other materials; maintenance of variable product owners' records; and fund services and communications. Currently, these administrative service payments made by the fund to the advisor are subject to an annual limit of 0.25% of the average net assets invested in the fund by each insurance company. Any amounts paid by the advisor to an insurance company in excess of 0.25% of the average net assets invested in the fund are paid by the advisor out of its own financial resources, and not out of the fund's assets. Insurance companies may earn profits on these payments for these services, since the amount of the payments may exceed the cost of providing the service.
You can find further details in the Statement of Additional Information about these payments and the services provided by insurance companies. In certain cases these payments could be significant to the insurance company. Your insurance company may charge you additional fees or commissions, on your variable product other than those disclosed in this prospectus. You can ask your insurance company about any payments it receives from the advisor, Invesco Aim Distributors, or the fund, as well as about fees and/or commissions it charges.
More information may be obtained free of charge upon request. The Statement of Additional Information (SAI), a current version of which is on file with the Securities and Exchange Commission (SEC), contains more details about the fund and is incorporated by reference into the prospectus (is legally a part of the prospectus). Annual and semiannual reports to shareholders contain additional information about the fund's investments. The fund's annual report also discusses the market conditions and investment strategies that significantly affected the fund's performance during its last fiscal year. The fund also files its complete schedule of portfolio holdings with the SEC for the 1st and 3rd quarters of each fiscal year on Form N-Q. The fund's most recent portfolio holdings, as filed on Form N-Q, have also been made available to insurance companies issuing variable products that invest in the fund.
If you wish to obtain free copies of the fund's current SAI or annual or semiannual reports, please contact the insurance company that issued your variable product, or you may contact us at
BY MAIL: Invesco Aim Distributors, Inc.
11 Greenway Plaza, Suite 100
Houston, TX 77046-1173
BY TELEPHONE: (800) 410-4246
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Because you cannot purchase shares of the fund directly, these documents have not been made available on our website.
You can also review and obtain copies of the fund's SAI, financial reports, the fund's Forms N-Q and other information at the SEC's Public Reference Room in Washington, DC; on the EDGAR database on the SEC's Internet website (http://www.sec.gov); or, after paying a duplicating fee, by sending a letter to the SEC's Public Reference Section, Washington, DC 20549-0102 or by sending an electronic mail request to publicinfo@sec.gov. Please call the SEC at 1-202-942- 8090 for information about the Public Reference Room.
invescoaim.com P-VIAL-PRO-2
[INVESCO AIM LOGO APPEARS HERE]
--Service Mark--
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The information in this Statement of Additional Information is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This Statement of Additional Information is not an offer to sell these securities and is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.
Subject to Completion - Dated August 8, 2008
STATEMENT OF
ADDITIONAL INFORMATION
AIM VARIABLE INSURANCE FUNDS
11 GREENWAY PLAZA
SUITE 100
HOUSTON, TEXAS 77046-1173
(713) 626-1919
THIS STATEMENT OF ADDITIONAL INFORMATION RELATES TO THE PORTFOLIO OF AIM
VARIABLE INSURANCE FUNDS LISTED BELOW. THIS STATEMENT OF ADDITIONAL INFORMATION IS NOT A PROSPECTUS, AND IT SHOULD BE READ IN CONJUNCTION WITH THE PROSPECTUSES FOR THE FUND LISTED BELOW. WHEN ISSUED, THE FUND'S FINANCIAL STATEMENTS WILL BE INCORPORATED INTO THIS STATEMENT OF ADDITIONAL INFORMATION BY REFERENCE TO THE FUND'S MOST RECENT ANNUAL REPORT TO SHAREHOLDERS. YOU MAY OBTAIN, WITHOUT
CHARGE, A COPY OF ANY PROSPECTUS AND/OR ANNUAL REPORT FOR THE FUND LISTED BELOW FROM AN AUTHORIZED DEALER OR BY WRITING TO:
INVESCO AIM DISTRIBUTORS, INC.
11 GREENWAY PLAZA, SUITE 100
HOUSTON, TEXAS 77046-1173
OR BY CALLING (800) 410-4246
THIS STATEMENT OF ADDITIONAL INFORMATION, DATED OCTOBER 22, 2008, RELATES TO THE FOLLOWING PROSPECTUSES FOR THE SERIES I AND SERIES II SHARES OF THE FUND LISTED BELOW:
FUND DATED
--------------------------------------------------- --------
AIM V.I. POWERSHARES ETF ALLOCATION FUND - SERIES I 10/22/08
- SERIES II 10/22/08
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AIM VARIABLE INSURANCE FUNDS
STATEMENT OF ADDITIONAL INFORMATION
TABLE OF CONTENTS
PAGE
----
GENERAL INFORMATION ABOUT THE TRUST............................................ 1
Fund History............................................................. 1
Shares of Beneficial Interest............................................ 1
DESCRIPTION OF THE FUNDS AND THEIR INVESTMENTS AND RISKS....................... 3
Classification........................................................... 3
Investment Strategies and Risks.......................................... 3
Equity Investments................................................. 4
Foreign Investments................................................ 5
Debt Investments................................................... 8
Other Investments.................................................. 15
Investment Techniques.............................................. 19
Derivatives........................................................ 24
Fund Policies for the Fund............................................... 32
Temporary Defensive Position....................................... 34
Policies and Procedures for Disclosure of Fund Holdings.................. 34
General Disclosures................................................ 34
Selective Disclosures.............................................. 35
MANAGEMENT OF THE TRUST........................................................ 37
Board of Trustees........................................................ 37
Management Information................................................... 37
Trustee Ownership of Fund Shares................................... 40
Compensation............................................................. 40
Retirement Plan For Trustees....................................... 41
Deferred Compensation Agreements................................... 41
Code of Ethics........................................................... 42
Proxy Voting Policies.................................................... 42
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES............................ 42
INVESTMENT ADVISORY AND OTHER SERVICES......................................... 42
Investment Advisor....................................................... 42
Investment Sub-Advisor................................................... 44
Portfolio Managers................................................. 44
Securities Lending Arrangements.................................... 45
Services Agreements...................................................... 45
Other Service Providers.................................................. 46
BROKERAGE ALLOCATION AND OTHER PRACTICES....................................... 46
Brokerage Transactions................................................... 47
Commissions.............................................................. 47
Broker Selection......................................................... 47
Directed Brokerage (Research Services)................................... 50
Allocation of Portfolio Transactions..................................... 51
[Allocation of Initial Public Offering ("IPO") Transactions.............. 51
PURCHASE AND REDEMPTION OF SHARES.............................................. 51
Calculation of Net Asset Value........................................... 52
Redemptions In Kind...................................................... 54
Payments to Participating Insurance Companies and/or their Affiliates.... 54
DIVIDENDS, DISTRIBUTIONS AND TAX MATTERS....................................... 55
Dividends and Distributions.............................................. 55
Tax Matters.............................................................. 55
Qualifications as a Regulated Investment Company......................... 55
Special Rules Applicable to Variable Contracts........................... 56
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Excise Tax on Regulated Investment Companies............................. 57
Investment by Underlying Funds in Foreign Securities..................... 57
Determination of Taxable Income of a Regulated Investment Company........ 57
DISTRIBUTION OF SECURITIES..................................................... 57
Distribution Plan........................................................ 57
Distributor.............................................................. 58
FINANCIAL STATEMENTS........................................................... 59
PENDING LITIGATION............................................................. 59
APPENDICES:
RATINGS OF DEBT SECURITIES..................................................... A-1
PERSONS TO WHOM INVESCO AIM PROVIDES NON-PUBLIC PORTFOLIO HOLDINGS ON AN
ONGOING BASIS ................................................................. B-1
TRUSTEES AND OFFICERS.......................................................... C-1
TRUSTEE AND OFFICER COMPENSATION TABLE......................................... D-1
PROXY POLICIES AND PROCEDURES.................................................. E-1
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES............................ F-1
PORTFOLIO MANAGERS............................................................. G-1
DIRECTED BROKERAGE (RESEARCH SERVICES) AND PURCHASES OF SECURITIES OF REGULAR
BROKERS OR DEALERS H-1
CERTAIN FINANCIAL ADVISORS THAT RECEIVE ONE OR MORE TYPES OF PAYMENTS.......... I-1
PENDING LITIGATION............................................................. J-1
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GENERAL INFORMATION ABOUT THE TRUST
FUND HISTORY
AIM Variable Insurance Funds (the "Trust") is a Delaware statutory trust
which is registered under the Investment Company Act of 1940, as amended (the
"1940 Act"), as an open-end series management investment company. The Trust
currently consists of twenty-one separate portfolios: AIM V.I. Basic Balanced
Fund (formerly known as AIM V.I. Balanced Fund), AIM V.I. Basic Value Fund, AIM
V.I. Capital Appreciation Fund, AIM V.I. Capital Development Fund, AIM V.I. Core
Equity Fund, AIM V.I. Dynamics Fund (formerly known as INVESCO VIF - Dynamics
Fund), AIM V.I. Diversified Income Fund, AIM V.I. Financial Services Fund
(formerly known as INVESCO VIF - Financial Services Fund), AIM V.I. Global
Health Care Fund (formerly known as AIM V.I. Health Sciences Fund and INVESCO
VIF - Health Sciences Fund), AIM V.I. Global Real Estate Fund (formerly known as
AIM V.I. Real Estate Fund and INVESCO VIF - Real Estate Opportunity Fund), AIM
V.I. Government Securities Fund, AIM V.I. High Yield Fund, AIM V.I.
International Growth Fund, AIM V.I. Large Cap Growth Fund, AIM V.I. Leisure Fund
(formerly known as INVESCO VIF - Leisure Fund), AIM V.I. Mid Cap Core Equity
Fund, AIM V.I. Money Market Fund, AIM V.I. PowerShares ETF Allocation Fund, AIM
V.I. Small Cap Equity Fund, AIM V.I. Technology Fund (formerly known as INVESCO
VIF - Technology Fund), and AIM V.I. Utilities Fund (formerly known as INVESCO
VIF - Utilities Fund) (collectively, the "Funds"). This Statement of Additional
Information relates to AIM V.I. PowerShares ETF Allocation Fund (the "Fund").
Under the Amended and Restated Agreement and Declaration of Trust, dated
September 14, 2005, as amended (the "Trust Agreement"), the Board of Trustees of
the Trust (the "Board") is authorized to create new series of shares without the
necessity of a vote of shareholders of the Trust.
The Trust was originally organized on January 22, 1993 as a Maryland corporation. On October 15, 1999, the following Funds acquired all the assets and assumed all the liabilities of the series portfolios of G.T. Global Variable Investment Trust and G.T. Global Variable Investment Series: AIM V.I. Global Growth and Income Fund, AIM V.I. Capital Appreciation Fund, AIM V.I. International Equity Fund, AIM V.I. Diversified Income Fund, AIM V.I. Government Securities Fund and AIM V.I. Money Market Fund. The Trust reorganized as a Delaware business trust on May 1, 2000. All of the V.I. Funds, except AIM V.I. Basic Value Fund, AIM V.I. Global Real Estate Fund and AIM V.I. Large Cap Growth Fund, AIM V.I. Mid Cap Core Equity Fund, and AIM V.I. Small Cap Equity Fund, were included in the reorganization. All historical financial and other information contained in this Statement of Additional Information for periods prior to May 1, 2000 relating to these Funds (or a class thereof) is that of the predecessor funds (or the corresponding class thereof). AIM V.I. Basic Value Fund and AIM V.I. Mid Cap Core Equity Fund commenced operations as a series of the Trust on September 10, 2001. AIM V.I. Large Cap Growth Fund and AIM V.I. Small Cap Equity Fund commenced operations as series of the Trust on September 1, 2003. AIM V.I. Core Equity Fund was known as AIM V.I. Growth and Income Fund, AIM V.I. International Growth Fund was known as AIM V.I. International Equity Fund, AIM V.I. Mid Cap Core Equity Fund was known as AIM V.I. Mid Cap Equity Fund. Prior to April 30, 2004, AIM V.I. Global Real Estate Fund and the VIF Funds were portfolios of INVESCO Variable Investment Funds, Inc., a Maryland corporation. Pursuant to an agreement and plan of reorganization, AIM V.I. Dynamics Fund, AIM V.I. Financial Services Fund, AIM V.I. Global Health Care Fund, AIM V.I. Global Real Estate Fund, AIM V.I. Leisure Fund, AIM V.I. Technology Fund and AIM V.I. Utilities Fund became portfolios of the Trust.
SHARES OF BENEFICIAL INTEREST
Shares of beneficial interest of the Trust are redeemable at their net asset value at the option of the shareholder or at the option of the Trust in certain circumstances.
The Trust allocates moneys and other property it receives from the issue or sale of shares of each of its series of shares, and all income, earnings and profits from such issuance and sales, subject only to the rights of creditors, to the appropriate Fund. These assets constitute the underlying assets of
the Funds, are segregated on the Trust's books of account, and are charged with the expenses of such Fund and its respective classes. The Trust allocates any general expenses of the Trust not readily identifiable as belonging to a particular fund by or under the direction of the Board, primarily on the basis of relative net assets, or other relevant factors.
The Fund offers Series I and Series II shares. Each share of the Fund represents an equal proportionate interest in the Fund with each other share and is entitled to such dividends and distributions out of the income belonging to the Fund as are declared by the Board. The Fund offers two separate classes of shares: Series I shares and Series II shares. Each such class represents interests in the same portfolio of investments. Differing expenses will result in differing net asset values and dividends and distributions. Upon any liquidation of the Trust, shareholders of each class are entitled to share pro rata in the net assets belonging to the Fund allocable to such class available for distribution after satisfaction of outstanding liabilities of the Fund allocable to such class.
The Trust is not required to hold annual or regular meetings of shareholders. Meetings of shareholders of the Fund or Series will be held from time to time to consider matters requiring a vote of such shareholders in accordance with the requirements of the 1940 Act, state law or the provisions of the Trust Agreement. It is not expected that shareholder meetings will be held annually.
The Trust understands that insurance company separate accounts owning shares of the Fund will vote their shares in accordance with the instructions received from owners of variable annuity contracts and variable life insurance policies ("Contract Owners"), annuitants and beneficiaries. Fund shares held by a separate account as to which no instructions have been received will be voted for or against any proposition, or in abstention, in the same proportion as the shares of that separate account as to which instructions have been received. Fund shares held by a separate account that are not attributable to Contracts will also be voted for or against any proposition in the same proportion as the shares for which voting instructions are received by that separate account. If an insurance company determines, however, that it is permitted to vote any such shares of the Fund in its own right, it may elect to do so, subject to the then current interpretation of the 1940 Act and the rules thereunder.
Each share of the Fund has generally the same voting, dividend, liquidation and other rights, however, each class of shares of the Fund is subject to different class-specific expenses. Only shareholders of a specific class may vote on matters relating to that class' distribution plan.
Except as specifically noted above, shareholders of the Fund are entitled to one vote per share (with proportionate voting for fractional shares), irrespective of the relative net asset value of the shares of the Fund. However, on matters affecting a class of shares of the Fund, a separate vote of shareholders of that class is required. Shareholders of the Fund or class are not entitled to vote on any matter which does not affect the Fund or class but that requires a separate vote of another fund or class. An example of a matter that would be voted on separately by shareholders of the Fund is the approval of the advisory agreement with Invesco Aim Advisors, Inc. ("Invesco Aim"), and an example of a matter that would be voted on separately by shareholders of each class of shares is approval of the distribution plans. When issued, shares of the Fund are fully paid and nonassessable, have no preemptive or subscription rights, and are freely transferable. There are no conversion rights. Shares do not have cumulative voting rights, which means that in situations in which shareholders elect trustees, holders of more than 50% of the shares voting for the election of trustees can elect all of the trustees of the Trust, and the holders of less than 50% of the shares voting for the election of trustees will not be able to elect any trustees.
Under Delaware law, shareholders of a Delaware statutory trust shall be entitled to the same limitations of liability extended to shareholders of private for-profit corporations. There is a remote possibility, however, that shareholders could, under certain circumstances, be held liable for the obligations of the Trust to the extent the courts of another state which does not recognize such limited liability were to apply the laws of such state to a controversy involving such obligations. The Trust Agreement disclaims shareholder liability for acts or obligations of the Trust and requires that notice of
such disclaimer be given in each agreement, obligation or instrument entered into or executed by the Trust or the trustees to all parties, and each party thereto must expressly waive all rights of action directly against shareholders of the Trust. The Trust Agreement provides for indemnification out of the property of the Fund for all losses and expenses of any shareholder of such Fund held liable on account of being or having been a shareholder. Thus, the risk of a shareholder incurring financial loss due to shareholder liability is limited to circumstances in which the Fund is unable to meet its obligations and the complaining party is not held to be bound by the disclaimer.
The trustees and officers of the Trust will not be liable for any act, omission or obligation of the Trust or any Trustee or officer; however, a trustee or officer is not protected against any liability to the Trust or to the shareholders to which a trustee or officer would otherwise be subject by reason of willful misfeasance, bad faith, gross negligence, or reckless disregard of the duties involved in the conduct of his or her office with the Trust ("Disabling Conduct"). The Trust's Bylaws generally provide for indemnification by the Trust of the trustees, the officers and employees or agents of the Trust, provided that such persons have not engaged in Disabling Conduct. Indemnification does not extend to judgments or amounts paid in settlement in any actions by or in the right of the Trust. The Trust's Bylaws provide for the advancement of payments to current and former trustees, officers and employees or agents of the Trust, or anyone serving at their request, in connection with the preparation and presentation of a defense to any claim, action, suit or proceeding, expenses for which such person would be entitled to indemnification; provided that any advancement of payments would be reimbursed unless it is ultimately determined that such person is entitled to indemnification for such expenses.
SHARE CERTIFICATES. Shareholders of the Fund do not have the right to demand or require the Trust to issue share certificates and share certificates are not issued.
DESCRIPTION OF THE FUNDS AND THEIR INVESTMENTS AND RISKS
CLASSIFICATION
The Trust is an open-end management investment company. The Fund is "non-diversified" for purposes of the 1940 Act, which means the Fund can invest a greater percentage of its assets in any one issuer than a diversified fund can.
INVESTMENT STRATEGIES AND RISKS
The underlying funds in which the Fund primarily invests are exchange-traded funds advised by Invesco PowerShares Capital Management LLC ("PowerShares Capital"), an affiliate of Invesco Aim (such funds are referred to as the "PowerShares ETFs" or the "Underlying Funds"). Invesco Aim and PowerShares Capital are affiliates of each other as they are both indirect wholly-owned subsidiaries of Invesco Ltd. ("Invesco").
Set forth below are detailed descriptions of the various types of securities and investment techniques that Invesco Aim and/or PowerShares Capital and/or the Sub-Advisors (defined herein) may use in managing the Underlying Funds, as well as the risks associated with those types of securities and investment techniques. The descriptions of the types of securities and investment techniques below supplement the discussion of principal investment strategies and risks contained in the Fund's Prospectus; where a particular type of security or investment technique is not discussed in the Fund's Prospectus, that security or investment technique is not a principal investment strategy.
Not all of the Underlying Funds invest in all of the types of securities or use all of the investment techniques described below, and an Underlying Fund may not invest in all of these types of securities or use all of these techniques at any one time. An Underlying Fund's transactions in a particular type of security or use of a particular technique is subject to limitations imposed by an Underlying Fund's investment objective, policies and restrictions described in that Underlying Fund's Prospectus and/or this
Statement of Additional Information, as well as the federal securities laws. Invesco Aim and/or PowerShares Capital and/or the Sub-Advisors may invest in other types of securities and may use other investment techniques in managing the Underlying Funds, including those described below for Underlying Funds not specifically mentioned as investing in the security or using the investment technique, as well as securities and techniques not described, subject to limitations imposed by an Underlying Fund's investment objective, policies and restrictions described in that Underlying Fund's Prospectus and/or this Statement of Additional Information, as well as the federal securities laws.
The Underlying Funds' investment objectives, policies, strategies and practices described below are non-fundamental unless otherwise indicated.
The Fund is a "funds of funds" which invests in Underlying Funds and generally does not directly invest in the securities or use the investment techniques discussed below. The types of securities and investment techniques discussed below generally are those of the Underlying Funds.
Equity Investments
Certain of the Underlying Funds may invest in the following types of equity investments.
COMMON STOCK. Common stock is issued by companies principally to raise cash for business purposes and represents a residual interest in the issuing company. An Underlying Fund participates in the success or failure of any company in which it holds stock. The prices of equity securities change in response to many factors including the historical and prospective earnings of the issuer, the value of its assets, general economic conditions, interest rates, investor perceptions and market liquidity.
PREFERRED STOCK. Preferred stock, unlike common stock, often offers a stated dividend rate payable from a corporation's earnings. If interest rates rise, the fixed dividend on preferred stocks may be less attractive, causing the price of preferred stocks to decline. Preferred stock may have mandatory sinking fund provisions, as well as call/redemption provisions prior to maturity, which is a negative feature when interest rates decline. Dividends on some preferred stock may be "cumulative," requiring all or a portion of prior unpaid dividends to be paid before dividends are paid on the issuer's common stock. Preferred stock also generally has a preference over common stock on the distribution of a corporation's assets in the event of liquidation of the corporation, and may be "participating," which means that it may be entitled to a dividend exceeding the stated dividend in certain cases. In some cases an issuer may offer auction rate preferred stock, which means that the interest to be paid is set by auction and will often be reset at stated intervals. The rights of preferred stocks on the distribution of a corporation's assets in the event of a liquidation are generally subordinate to the rights associated with a corporation's debt securities.
Certain of the Underlying Funds will not acquire equity securities, other than preferred stocks, except when (a) attached to or included in a unit with income-generating securities that otherwise would be attractive to the Underlying Funds; (b) acquired through the exercise of equity features accompanying convertible securities held by the Underlying Funds, such as conversion or exchange privileges or warrants for the acquisition of stock or equity interests of the same or a different issuer; or (c) in the case of an exchange offer whereby the equity security would be acquired with the intention of exchanging it for a debt security issued on a "when-issued" basis.
CONVERTIBLE SECURITIES. Convertible securities include bonds, debentures, notes, preferred stocks and other securities that may be converted into a prescribed amount of common stock or other equity securities at a specified price and time. The holder of convertible securities is entitled to receive interest paid or accrued on debt, or dividends paid or accrued on preferred stock, until the security matures or is converted.
The value of a convertible security depends on interest rates, the yield of similar nonconvertible securities, the financial strength of the issuer and the seniority of the security in the issuer's capital
structure. Convertible securities may be illiquid, and may be required to convert at a time and at a price that is unfavorable to an Underlying Fund.
The Underlying Funds that invest in convertible debt securities may invest in these securities based primarily on the characteristics of the equity security into which it converts, and without regard to the credit rating of the convertible security (even if the credit rating is below investment grade). To the extent that an Underlying Fund invests in convertible debt securities with credit ratings below investment grade, such securities may have a higher likelihood of default, although this may be somewhat offset by the convertibility feature. See also "Debt Investments - Junk Bonds" below.
ALTERNATIVE ENTITY SECURITIES. Companies that are formed as limited partnerships, limited liability companies, business trusts or other non-corporate entities may issue equity securities that are similar to common or preferred stock of corporations.
Foreign Investments
FOREIGN SECURITIES. Certain of the Underlying Funds may invest in foreign securities. Foreign securities are equity or debt securities issued by entities outside the United States. The term "foreign securities" includes securities in the form of American Depositary Receipts ("ADRs"), European Depositary Receipts ("EDRs"), or other securities representing underlying securities of foreign issuers when determining foreign securities limits. Depositary Receipts are typically issued by a bank or trust company and evidence ownership of underlying securities issued by foreign corporations. For a discussion of ADRs and EDRs, please refer to subsection "Foreign Exchange Transaction - ADRs and EDRs" below.
Investments by an Underlying Fund in foreign securities, whether denominated in U.S. dollars or foreign currencies, may entail some or all of the risks set forth below. Investments by an Underlying Fund in ADRs, EDRs or similar securities also may entail some or all of the risks described below.
Currency Risk. The value of the Underlying Funds' foreign investments will be affected by changes in currency exchange rates. The U.S. dollar value of a foreign security decreases when the value of the U.S. dollar rises against the foreign currency in which the security is denominated, and increases when the value of the U.S. dollar falls against such currency.
Political and Economic Risk. The economies of many of the countries in which the Underlying Funds may invest may not be as developed as the United States' economy and may be subject to significantly different forces. Political or social instability, and developments, expropriation or confiscatory taxation, and limitations on the removal of funds or other assets could also adversely affect the value of the Underlying Funds' investments.
Regulatory Risk. Foreign companies are not registered with the Securities and Exchange Commission ("SEC") and are generally not subject to the regulatory controls imposed on United States issuers and, as a consequence, there is generally less publicly available information about foreign securities than is available about domestic securities. Foreign companies may not be subject to uniform accounting, auditing and financial reporting standards, corporate governance practices and requirements comparable to those applicable to domestic companies. Therefore, financial information about foreign companies may be incomplete, or may not be comparable to the information available on U.S. companies. Income from foreign securities owned by the Underlying Funds may be reduced by a withholding tax at the source, which tax would reduce dividend income payable to the Underlying Funds' shareholders.
Market Risk. The securities markets in many of the countries in which the Underlying Funds invest often have substantially less trading volume than the major United States markets. As a result, the securities of some foreign companies may be less liquid and experience more price volatility than comparable domestic securities. Increased custodian costs as well as administrative costs (such as the
need to use foreign custodians) may be associated with the maintenance of assets in foreign jurisdictions. There is generally less government regulation and supervision of foreign stock exchanges, brokers and issuers which may make it difficult to enforce contractual obligations. In addition, transaction costs in foreign securities markets are likely to be higher, since brokerage commission rates in foreign countries are likely to be higher than in the United States.
Risks of Developing Countries. The Fund may invest up to 50% of its respective total assets in securities of companies located in developing countries. Developing countries are those countries which are not included in the MSCI World Index. The Underlying Funds consider various factors when determining whether a company is in a developing country, including whether (1) it is organized under the laws of a developing country; (2) it has a principal office in a developing country; (3) it derives 50% or more of its total revenues from businesses in developing countries; or (4) its securities are traded principally on a stock exchange, or in an over-the-counter market, in a developing country. Investments in developing countries present risks greater than, and in addition to, those presented by investments in foreign issuers in general. A number of developing countries restrict, to varying degrees, foreign investment in stocks. Repatriation of investment income, capital, and the proceeds of sales by foreign investors may require governmental registration and/or approval in some developing countries. A number of the currencies of developing countries have experienced significant declines against the U.S. dollar in recent years, and devaluation may occur subsequent to investments in these currencies by an Underlying Fund. Inflation and rapid fluctuations in inflation rates have had and may continue to have negative effects on the economies and securities markets of certain developing countries. Many of the developing countries' securities markets are relatively small or less diverse, have low trading volumes, suffer periods of relative illiquidity, and are characterized by significant price volatility. There is a risk in developing countries that a future economic or political crisis could lead to price controls, forced mergers of companies, expropriation or confiscatory taxation, seizure, nationalization, or creation of government monopolies, any of which may have a detrimental effect on the Underlying Funds'investments.
FOREIGN GOVERNMENT OBLIGATIONS. Certain of the Underlying Funds may invest in debt securities of foreign governments. Debt securities issued by foreign governments are often, but not always, supported by the full faith and credit of the foreign governments, or their subdivisions, agencies or instrumentalities, that issue them. These securities involve the risks discussed above with respect to foreign securities. Additionally, the issuer of the debt or the governmental authorities that control repayment of the debt may be unwilling or unable to pay interest or repay principal when due. Political or economic changes or the balance of trade may affect a country's willingness or ability to service its debt obligations. Periods of economic uncertainty may result in the volatility of market prices of sovereign debt obligations, especially debt obligations issued by the governments of developing countries. Foreign government obligations of developing countries, and some structures of emerging market debt securities, both of which are generally below investment grade, are sometimes referred to as "Brady Bonds."
FOREIGN EXCHANGE TRANSACTIONS. Certain of the Underlying Funds have authority to deal in foreign exchange transactions between currencies of the different countries in which it will invest as a hedge against possible variations in the foreign exchange rates between those currencies.
An Underlying Fund may commit the same percentage of its assets to foreign exchange hedges as it can invest in foreign securities. Foreign exchange transactions include direct purchases of futures contracts with respect to foreign currency, and contractual agreements to purchase or sell a specified currency at a specified future date (up to one year) at a price set at the time of the contract. Such contractual commitments may be forward contracts entered into directly with another party or exchange traded futures contracts. Foreign exchange transactions also include transactions conducted on a cash or "spot" basis at the spot rate for purchasing or selling currency in the relevant foreign currency exchange markets.
Certain of the Underlying Funds may utilize either specific transactions ("transaction hedging") or portfolio positions ("position hedging") to hedge foreign currency exposure through foreign exchange
transactions. Transaction hedging is the purchase or sale of foreign currency with respect to specific receivables or payables of an Underlying Fund accruing in connection with the purchase or sale of its portfolio securities, the sale and redemption of shares of the Underlying Funds, or the payment of dividends and distributions by the Underlying Funds. Position hedging is the purchase or sale of foreign currency with respect to portfolio security positions (or underlying portfolio security positions, such as in an ADR) denominated or quoted in a foreign currency. There can be no guarantee that these investments will be successful. Additionally, foreign exchange transactions may involve some of the risks of investments in foreign securities.
ADRS AND EDRS. Certain Underlying Funds may invest in ADRs and EDRs. ADRs are receipts typically issued by U.S. banks. ADRs are receipts for the shares of foreign corporations that are held by the bank issuing the receipt. An ADR entitles its holder to all dividends and capital gains on the underlying foreign securities, less any fees paid to the bank. Purchasing ADRs gives the Underlying Funds the ability to purchase the functional equivalent of foreign securities without going to the foreign securities markets to do so. ADRs are bought and sold in U.S. dollars, not foreign currencies. An ADR that is "sponsored" means that the foreign corporation whose shares are represented by the ADR is actively involved in the issuance of the ADR, and generally provides material information about the corporation to the U.S. market. An "unsponsored" ADR program means that the foreign corporation whose shares are held by the bank is not obligated to disclose material information in the United States, and, therefore, the market value of the ADR may not reflect important facts known only to the foreign company. Since they mirror their underlying foreign securities, ADRs generally have the same risks as investing directly in the underlying foreign securities. EDRs are similar to ADRs, except they are typically issued by European banks or trust companies.
Exchange Traded Funds
EXCHANGE TRADED FUNDS. The Fund and each Underlying Fund may purchase shares of exchange-traded funds ("ETFs"). Most ETFs are registered under the 1940 Act as investment companies. Therefore, the Fund's and an Underlying Fund's purchase of shares of an ETF may be subject to the restrictions on investments in other investment companies discussed under "Other Investment Companies."
ETFs hold portfolios of securities, commodities and/or currencies that are designed to replicate, as closely as possible before expenses, the price and/or yield of (i) a specified market or other index, (ii) a basket of securities, commodities or currencies, or (iii) a particular commodity or currency. The performance results of ETFs will not replicate exactly the performance of the pertinent index, basket, commodity or currency due to transaction and other expenses, including fees to service providers, borne by ETFs. ETF shares are sold and redeemed at net asset value only in large blocks called creation units and redemption units, respectively. ETF shares also may be purchased and sold in secondary market trading on national securities exchanges, which allows investors to purchase and sell ETF shares at their market price throughout the day.
Investments in ETFs generally present the same primary risks as an investment in a conventional mutual fund that has the same investment objective, strategy and policies. Investments in ETFs further involve the same risks associated with a direct investment in the commodity or currency, or in the types of securities, commodities and/or currencies included in the indices or baskets the ETFs are designed to replicate. In addition, shares of an ETF may trade at a market price that is higher or lower than their net asset value and an active trading market in such shares may not develop or continue. Moreover, trading of an ETF's shares may be halted if the listing exchange's officials deem such action to be appropriate, the shares are de-listed from the exchange, or the activation of market-wide "circuit breakers" (which are tied to large decreases in stock prices) halts stock trading generally. Finally, there can be no assurance that the portfolio of securities, commodities and/or currencies purchased by an ETF will replicate a particular index or basket or price of a commodity or currency.
Debt Investments
INVESTMENT GRADE CORPORATE DEBT OBLIGATIONS. Certain of the Underlying
Funds may invest in U.S. dollar-denominated debt obligations issued or
guaranteed by U.S. corporations or U.S. commercial banks, U.S.
dollar-denominated obligations of foreign issuers and debt obligations of
foreign issuers denominated in foreign currencies. Such debt obligations
include, among others, bonds, notes, debentures and variable rate demand notes.
In choosing corporate debt securities on behalf of an Underlying Fund, its
portfolio managers may consider (i) general economic and financial conditions;
(ii) the specific issuer's (a) business and management, (b) cash flow, (c)
earnings coverage of interest and dividends, (d) ability to operate under
adverse economic conditions, (e) fair market value of assets, and (f) in the
case of foreign issuers, unique political, economic or social conditions
applicable to such issuer's country; and, (iii) other considerations deemed
appropriate.
Descriptions of debt securities ratings are found in Appendix A.
LIQUID ASSETS. Certain of the Underlying Funds may investment in liquid assets. Cash equivalents include money market instruments (such as certificates of deposit, time deposits, banker's acceptances from U.S. or foreign banks, and repurchase agreements), shares of affiliated money market funds or high-quality debt obligations (such as U.S. Government obligations, commercial paper, master notes and other short-term corporate instruments and municipal obligations).
JUNK BONDS. Certain of the Underlying Funds may invest in junk bonds.
Junk bonds are considered speculative with respect to their capacity to pay interest and repay principal. While they may provide greater income and opportunity for gain, junk bonds are subject to greater risks than higher-rated debt securities. The prices of and yields on junk bonds may fluctuate to a greater extent than those of higher-rated debt securities.
Issuers of junk bonds are often highly leveraged, and may lack more traditional methods of financing. The risk of issuer default on junk bonds is generally higher because such issues are often unsecured or otherwise subordinated to claims of the issuer's other creditors. If a junk bond issuer defaults, an Underlying Fund may incur additional expenses to seek recovery.
Junk bonds have been found to be less sensitive to fluctuations in interest rates, and more sensitive to real or perceived adverse economic conditions and individual corporate developments (including industry competition and adverse publicity), than those of higher-rated debt securities, which can decrease the liquidity and values of junk bonds. During such periods of recession and economic downturns, highly leveraged junk bond issuers may experience financial stress and may lack sufficient revenues to meet interest payment obligations, increasing the risk of default. In addition, new laws and proposed new laws may adversely impact the market for junk bonds.
An Underlying Fund may have difficulty selling certain junk bonds at the desired time and price. The secondary markets in which junk bonds are traded may be thin and less liquid than the market for higher-rated debt securities. Less liquidity in secondary trading markets could adversely affect the price at which a Fund could sell a particular junk bond, and could adversely affect and cause large fluctuations in the net asset value of that Fund's shares. The lack of a liquid secondary market may also make it more difficult for an Underlying Fund to obtain accurate market quotations in valuing junk bond assets.
U.S. GOVERNMENT OBLIGATIONS. Certain of the Underlying Funds may invest in U.S. Government obligations. Obligations issued or guaranteed by the U.S. Government, its agencies and instrumentalities include bills, notes and bonds issued by the U.S. Treasury, as well as "stripped" or "zero coupon" U.S. Treasury obligations representing future interest or principal payments on U.S. Treasury notes or bonds. Stripped securities are sold at a discount to their "face value," and may exhibit greater price volatility than interest-bearing securities since investors receive no payment until maturity. Obligations of certain agencies and instrumentalities of the U.S. Government, such as the Government
National Mortgage Association ("GNMA"), are supported by the full faith and credit of the U.S. Treasury; others, such as those of the Federal National Mortgage Association ("FNMA"), are supported by the right of the issuer to borrow from the Treasury; others, such as those of the former Student Loan Marketing Association ("SLMA"), are supported by the discretionary authority of the U.S. Government to purchase the agency's obligations; still others, though issued by an instrumentality chartered by the U.S. Government, like the Federal Farm Credit Bureau ("FFCB"), are supported only by the credit of the instrumentality. The U.S. Government may choose not to provide financial support to U.S. Government-sponsored agencies or instrumentalities if it is not legally obligated to do so, in which case, if the issuer were to default and an Underlying Fund held securities of such issuer, it might not be able to recover their investments from the U.S. Government.
RULE 2A-7 REQUIREMENTS. Money market instruments in which the Fund will invest will be "Eligible Securities" as defined in Rule 2a-7 under the 1940 Act, as such Rule may be amended from time to time. An Eligible Security is generally a rated security with a remaining maturity of 397 calendar days or less that has been rated by the Requisite NRSROs (as defined below) in one of the two highest short-term rating categories, or a security issued by an issuer that has received a rating by the Requisite NRSROs in one of the two highest short-term rating categories with respect to a class of debt obligations (or any debt obligation within that class). Eligible Securities may also include unrated securities determined by Invesco Aim (under the supervision of and pursuant to guidelines established by the Board) to be of comparable quality to such rated securities. If an unrated security is subject to a guarantee, to be an Eligible Security, the guarantee generally must have received a rating from an NRSRO in one of the two highest short-term rating categories or be issued by a guarantor that has received a rating from an NRSRO in one of the two highest short-term rating categories with respect to a class of debt obligations (or any debt obligation within that class). [Since AIM V.I. Money Market Fund may invest in securities backed by banks and other financial institutions, changes in the credit quality of these institutions could cause losses to the Fund and affect their share price. The term "Requisite NRSRO" means (a) any two nationally recognized statistical rating organizations (NRSROs) that have issued a rating with respect to a security or class of debt obligations of an issuer, or (b) if only one NRSRO has issued a rating with respect to such security or issuer at the time the Fund acquires the security, that NRSRO.]
MORTGAGE-BACKED AND ASSET-BACKED SECURITIES. Certain of the Underlying Funds may invest in mortgage-backed and asset-backed securities. Mortgage-backed securities are mortgage-related securities issued or guaranteed by the U.S. Government, its agencies and instrumentalities, or issued by nongovernment entities. Mortgage-related securities represent pools of mortgage loans assembled for sale to investors by various government agencies such as GNMA and government-related organizations such as FNMA and the Federal Home Loan Mortgage Corporation ("FHLMC"), as well as by nongovernment issuers such as commercial banks, savings and loan institutions, mortgage bankers and private mortgage insurance companies. Although certain mortgage-related securities are guaranteed by a third party or otherwise similarly secured, the market value of the security, which may fluctuate, is not so secured.
There are a number of important differences among the agencies and instrumentalities of the U.S. Government that issue mortgage-related securities and among the securities they issue. Mortgage-related securities issued by GNMA include GNMA Mortgage Pass-Through Certificates (also known as "Ginnie Maes") which are guaranteed as to the timely payment of principal and interest. That guarantee is backed by the full faith and credit of the U.S. Treasury. GNMA is a corporation wholly owned by the U.S. Government within the Department of Housing and Urban Development. Mortgage-related securities issued by FNMA include FNMA Guaranteed Mortgage Pass-Through Certificates (also known as "Fannie Maes") and are guaranteed as to payment of principal and interest by FNMA itself and backed by a line of credit with the U.S. Treasury. FNMA is a government-sponsored entity wholly owned by public stockholders. Mortgage-related securities issued by FHLMC include FHLMC Mortgage Participation Certificates (also known as "Freddie Macs") guaranteed as to payment of principal and interest by FHLMC itself and backed by a line of credit with the U.S. Treasury. FHLMC is a government-sponsored entity wholly owned by public stockholders.
Other asset-backed securities are structured like mortgage-backed securities, but instead of mortgage loans or interests in mortgage loans, the underlying assets may include such items as motor vehicle installment sales or installment loan contracts, leases of various types of real and personal property, and receivables from credit card agreements. Regular payments received in respect of such securities include both interest and principal. Asset-backed securities typically have no U.S. Government backing. Additionally, the ability of an issuer of asset-backed securities to enforce its security interest in the underlying assets may be limited.
If an Underlying Fund purchases a mortgage-backed or other asset-backed security at a premium, that portion may be lost if there is a decline in the market value of the security whether resulting from changes in interest rates or prepayments in the underlying collateral. As with other interest-bearing securities, the prices of such securities are inversely affected by changes in interest rates. However, though the value of a mortgage-backed or other asset-backed security may decline when interest rates rise, the converse is not necessarily true, since in periods of declining interest rates the mortgages and loans underlying the securities are prone to prepayment, thereby shortening the average life of the security and shortening the period of time over which income at the higher rate is received. When interest rates are rising, though, the rate of prepayment tends to decrease, thereby lengthening the period of time over which income at the lower rate is received. For these and other reasons, a mortgage-backed or other asset-backed security's average maturity may be shortened or lengthened as a result of interest rate fluctuations and, therefore, it is not possible to predict accurately the security's return.
COLLATERALIZED MORTGAGE OBLIGATIONS ("CMOS"). Certain of the Underlying Funds may invest in CMOs. A CMO is a hybrid between a mortgage-backed bond and a mortgage pass-through security. A CMO is a type of mortgage-backed security that creates separate classes with varying maturities and interest rates, called tranches. Similar to a bond, interest and prepaid principal is paid, in most cases, semiannually. CMOs may be collateralized by whole mortgage loans, but are more typically collateralized by portfolios of mortgage pass-through securities guaranteed by GNMA, FHLMC, or FNMA, and their income streams.
CMOs are structured into multiple classes, each bearing a different stated maturity. Actual maturity and average life will depend upon the prepayment experience of the collateral. CMOs provide for a modified form of call protection through a de facto breakdown of the underlying pool of mortgages according to how quickly the loans are repaid. Monthly payment of principal received from the pool of underlying mortgages, including prepayments, is first returned to investors holding the shortest maturity class. Investors holding the longer maturity classes receive principal only after the first class has been retired. An investor is partially guarded against a sooner than desired return of principal because of the sequential payments.
In a typical CMO transaction, a corporation ("issuer") issues multiple series (e.g., Series A, B, C and Z) of CMO bonds ("Bonds"). Proceeds of the Bond offering are used to purchase mortgages or mortgage pass-through certificates ("Collateral"). The Collateral is pledged to a third party trustee as security for the Bonds. Principal and interest payments from the Collateral are used to pay principal on the Bonds in the following order: Series A, B, C and Z. The Series A, B, and C Bonds all bear current interest. Interest on a Series Z Bond is accrued and added to principal and a like amount is paid as principal on the Series A, B, or C Bond currently being paid off. Only after the Series A, B, and C Bonds are paid in full does the Series Z Bond begin to receive payment. With some CMOs, the issuer serves as a conduit to allow loan originators (primarily builders or savings and loan associations) to borrow against their loan portfolios.
FHLMC CMOs are debt obligations of FHLMC issued in multiple classes having different maturity dates which are secured by the pledge of a pool of conventional mortgage loans purchased by FHLMC. Payments of principal and interest on the FHLMC CMOs are made semiannually. The amount of principal payable on each semiannual payment date is determined in accordance with FHLMC's mandatory sinking fund schedule, which, in turn, is equal to approximately 100% of FHA prepayment
experience applied to the mortgage collateral pool. All sinking fund payments in the FHLMC CMOs are allocated to the retirement of the individual classes of bonds in the order of their stated maturities. Payment of principal on the mortgage loans in the collateral pool in excess of the amount of FHLMC's minimum sinking fund obligation for any payment date are paid to the holders of the FHLMC CMOs as additional sinking fund payments. Because of the "pass-through" nature of all principal payments received on the collateral pool in excess of FHLMC's minimum sinking fund requirement, the rate at which principal of the FHLMC CMOs is actually repaid is likely to be such that each class of bonds will be retired in advance of its scheduled maturity date. If collection of principal (including prepayments) on the mortgage loans during any semiannual payment period is not sufficient to meet FHLMC CMO's minimum sinking fund obligation on the next sinking fund payment date, FHLMC agrees to make up the deficiency from its general funds.
Common risks associated with mortgage related securities include:
Prepayment Risk: Prepayment risk reflects the risk that borrowers may prepay their mortgages faster than expected, thereby affecting the investment's average life and perhaps its yield. Whether or not a mortgage loan is prepaid is almost entirely controlled by the borrower. Borrowers are most likely to exercise prepayment options at the time when it is least advantageous to investors, generally prepaying mortgages as interest rates fall, and slowing payments as interest rates rise. Besides the effect of prevailing interest rates, the rate of prepayment and refinancing of mortgages may also be affected by home value appreciation, ease of the refinancing process and local economic conditions.
Market Risk: Market risk reflects the risk that the price of the security may fluctuate over time. The price of mortgage-backed securities may be particularly sensitive to prevailing interest rates, the length of time the security is expected to be outstanding, and the liquidity of the issue. In a period of unstable interest rates, there may be decreased demand for certain types of mortgage-backed securities, and an Underlying Fund invested in such securities wishing to sell them may find it difficult to find a buyer, which may in turn decrease the price at which they may be sold.
Credit Risk: Credit risk reflects the risk that the Fund may not receive all or part of its principal because the issuer or credit enhancer has defaulted on its obligations. Obligations issued by U.S. Government-related entities are guaranteed as to the payment of principal and interest, but are not backed by the full faith and credit of the U.S. Government. The performance of private label mortgage-backed securities, issued by private institutions, is based on the financial health of those institutions. Although GNMA guarantees timely payment of GNMA certificates even if homeowners delay or default, tracking the "pass-through" payments may, at times, be difficult.
COLLATERALIZED DEBT OBLIGATIONS ("CDOS"). Certain of the Underlying Funds may invest in CDOs. A CDO is an asset backed security backed by a pool of bonds, loans and other debt obligations. CDOs do not specialize in one type of debt but often include non-mortgage loans or bonds.
Similar in structure to a collateralized mortgage obligation (described above) CDOs are unique in that they represent different types of debt and credit risk. In the case of CDOs, these are often referred to as 'tranches' or 'slices'. Each slice has a different maturity and risk associated with it.
CREDIT LINKED NOTES ("CLNS"). Certain of the Underlying Funds may invest in CLNs. A CLN is a security with an embedded credit default swap allowing the issuer to transfer a specific credit risk to credit investors.
CLNs are created through a Special Purpose Company (SPC), or trust, which is collateralized with AAA-rated securities. Investors buy securities from a trust that pays a fixed or floating coupon during the life of the note. At maturity, the investors receive par unless the referenced credit defaults or declares bankruptcy, in which case they receive an amount equal to the recovery rate. The trust enters into a default swap with a deal arranger. In case of default, the trust pays the dealer par minus the recovery rate
in exchange for an annual fee which is passed on to the investors in the form of a higher yield on the notes.
BANK INSTRUMENTS. Certain of the Underlying Funds may invest in certificates of deposits, time deposits, and bankers' acceptances from U.S. or foreign banks. A bankers' acceptance is a bill of exchange or time draft drawn on and accepted by a commercial bank. A certificate of deposit is a negotiable interest-bearing instrument with a specific maturity. Certificates of deposit are issued by banks and savings and loan institutions in exchange for the deposit of funds, and normally can be traded in the secondary market prior to maturity. A time deposit is a non-negotiable receipt issued by a bank in exchange for the deposit of funds. Like a certificate of deposit, it earns a specified rate of interest over a definite period of time; however, it cannot be traded in the secondary market.
Certain of the Underlying Funds may invest in certificates of deposit ("Eurodollar CDs") and time deposits ("Eurodollar time deposits") of foreign branches of domestic banks. Accordingly, an investment in the Fund may involve risks that are different in some respects from those incurred by an investment company which invests only in debt obligations of U.S. domestic issuers. Such risks include future political and economic developments, the possible seizure or nationalization of foreign deposits and the possible imposition of foreign country withholding taxes on interest income.
LOANS, LOAN PARTICIPATIONS AND ASSIGNMENTS. Certain of the Underlying Funds may invest, subject to an overall 15% limit on loans, in loan participations or assignments. Loan participations are loans or other direct debt instruments that are interests in amounts owned by a corporate, governmental or other borrower to another party. They may represent amounts owed to lenders or lending syndicates, suppliers of goods or services, or to other parties. The Underlying Fund will have the right to receive payments of principal, interest and any fees to which it is entitled only from the lender selling the participation and only upon receipt by the lender of the payments from the borrower. In connection with purchasing participations, the Underlying Fund generally will have no right to enforce compliance by the borrower with the terms of the loan agreement relating to the loan, nor any rights of set-off against the borrower, and the Underlying Fund may not directly benefit from any collateral supporting the loan in which it has purchased the participation. As a result, the Underlying Fund will be subject to the credit risk of both the borrower and the lender that is selling the participation. In the event of the insolvency of the lender selling a participation, the Underlying Fund may be treated as a general creditor of the lender and may not benefit from any set-off between the lender and the borrower.
When an Underlying Fund purchases assignments from lenders, it acquires direct rights against the borrower on the loan. However, because assignments are arranged through private negotiations between potential assignees and potential assignors, the rights and obligations acquired by the Underlying Fund as the purchaser of an assignment may differ from, and be more limited than, those held by the assigning lender. Investments in loan participations and assignments present the possibility that the Underlying Fund could be held liable as a co-lender under emerging legal theories of lender liability. In addition, if the loan is foreclosed, the Underlying Fund could be part owner of any collateral and could bear the costs and liabilities of owning and disposing of the collateral. The Underlying Fund anticipates that loan participations could be sold only to a limited number of institutional investors. In addition, some loan participations and assignments may not be rated by major rating agencies and may not be protected by the securities laws.
COMMERCIAL INSTRUMENTS. Certain of the Underlying Funds may invest in commercial instruments, including commercial paper, master notes and other short-term corporate instruments, that are denominated in U.S. dollars. Commercial paper consists of short-term promissory notes issued by corporations. Commercial paper may be traded in the secondary market after its issuance. Master notes are demand notes that permit the investment of fluctuating amounts of money at varying rates of interest pursuant to arrangements with issuers who meet the quality criteria of the Fund. The interest rate on a master note may fluctuate based upon changes in specified interest rates or be reset periodically according to a prescribed formula or may be a set rate. Although there is no secondary market in master demand notes, if such notes have a demand feature, the payee may demand payment of the principal
amount of the note upon relatively short notice. Variable rate master demand notes are unsecured demand notes that permit investment of fluctuating amounts of money at variable rates of interest pursuant to arrangements with issuers who meet the applicable quality criteria. The interest rate on a variable rate master demand note is periodically redetermined according to a prescribed formula.
MUNICIPAL SECURITIES. Certain of the Underlying Funds may invest in "Municipal Securities," which include debt obligations of states, territories or possessions of the United States and the District of Columbia and their political subdivisions, agencies and instrumentalities. Municipal Securities are issued to obtain funds for various public purposes, including the construction of a wide range of public facilities such as airports, bridges, highways, housing, hospitals, mass transportation, schools, streets and water and sewer works.
Other public purposes for which Municipal Securities may be issued include the refunding of outstanding obligations, obtaining funds for general operating expenses and lending such funds to other public institutions and facilities. In addition, certain types of industrial development bonds are issued by or on behalf of public authorities to obtain funds to provide for the construction, equipment, repair or improvement of privately operated housing facilities, airport, mass transit, industrial, port or parking facilities, air or water pollution control facilities and certain local facilities for water supply, gas, electricity or sewage or solid waste disposal. The principal and interest payments for industrial development bonds or pollution control bonds are often the sole responsibility of the industrial user and therefore may not be backed by the taxing power of the issuing municipality. The interest paid on such bonds may be exempt from federal income tax, although current federal tax laws place substantial limitations on the purposes and size of such issues. Such obligations are considered to be Municipal Securities provided that the interest paid thereon, in the opinion of bond counsel, qualifies as exempt from federal income tax. However, interest on Municipal Securities may give rise to a federal alternative minimum tax liability and may have other collateral federal income tax consequences. See "Dividends, Distributions and Tax Matters."
The two major classifications of Municipal Securities are bonds and notes. Bonds may be further classified as "general obligation" or "revenue" issues. General obligation bonds are secured by the issuer's pledge of its full faith, credit and taxing power for the payment of principal and interest. Revenue bonds are payable from the revenues derived from a particular facility or class of facilities, and in some cases, from the proceeds of a special excise or other specific revenue source, but not from the general taxing power. Tax exempt industrial development bonds are in most cases revenue bonds and do not generally carry the pledge of the credit of the issuing municipality. Notes are short term instruments which usually mature in less than two years. Most notes are general obligations of the issuing municipalities or agencies and are sold in anticipation of a bond sale, collection of taxes or receipt of other revenues. There are, of course, variations in the risks associated with Municipal Securities, both within a particular classification and between classifications. The Underlying Funds' assets may consist of any combination of general obligation bonds, revenue bonds, industrial revenue bonds and notes. The percentage of such Municipal Securities held by an Underlying Fund will vary from time to time.
Municipal Securities also include the following securities:
- Bond Anticipation Notes usually are general obligations of state and local governmental issuers which are sold to obtain interim financing for projects that will eventually be funded through the sale of long term debt obligations or bonds.
- Tax Anticipation Notes are issued by state and local governments to finance the current operations of such governments. Repayment is generally to be derived from specific future tax revenues. Tax anticipation notes are usually general obligations of the issuer.
- Revenue Anticipation Notes are issued by governments or governmental bodies with the expectation that future revenues from a designated source will be used to repay the notes. In general, they also constitute general obligations of the issuer.
- Tax-Exempt Commercial Paper (Municipal Paper) is similar to taxable commercial paper, except that tax-exempt commercial paper is issued by states, municipalities and their agencies.
Certain of the Underlying Funds also may purchase participation interests or custodial receipts from financial institutions. These participation interests give the purchaser an undivided interest in one or more underlying Municipal Securities.
Subsequent to its purchase by an Underlying Fund, an issue of Municipal Securities may cease to be rated by Moody's Investors Service, Inc. ("Moody's") or Standard and Poor's Ratings Services ("S&P"), or another nationally recognized statistical rating organization ("NRSRO"), or the rating of such a security may be reduced below the minimum rating required for purchase by an Underlying Fund. Neither event would require an Underlying Fund to dispose of the security, but Invesco Aim and/or PowerShares Capital will consider such events to be relevant in determining whether the Underlying Funds should continue to hold the security. To the extent that the ratings applied by Moody's, S&P or another NRSRO to Municipal Securities may change as a result of changes in these rating systems, an Underlying Fund will attempt to use comparable ratings as standards for its investments in Municipal Securities in accordance with the investment policies described herein.
Quality Standards. The following quality standards apply at the time a security is purchased. Information concerning the ratings criteria of Moody's, S&P, and Fitch Investors Service, Inc. ("Fitch") appears herein under "Appendix A - Ratings of Debt Securities."
Since the Underlying Funds may invest in Municipal Securities backed by insurance companies and other financial institutions, changes in the financial condition of these institutions could cause losses to the Underlying Funds and affect its share price.
Certain of the Underlying Funds may invest in Municipal Securities which are insured by financial insurance companies. Because a limited number of entities provide such insurance, an Underlying Fund may invest more than 25% of its assets in securities insured by the same insurance company.
Other Considerations. The ability of certain Underlying Funds to achieve their investment objective may depend upon the continuing ability of the issuers or guarantors of Municipal Securities held by the Underlying Funds to meet their obligations for the payment of interest and principal when due. The securities in which certain Underlying Fund invests may not yield as high a level of current income as longer term or lower grade securities, which generally have less liquidity and greater fluctuation in value.
There is a risk that some or all of the interest received by an Underlying Fund from Municipal Securities might become taxable as a result of tax law changes or determinations of the Internal Revenue Service ("IRS").
The yields on Municipal Securities are dependent on a variety of factors, including general economic and monetary conditions, money market factors, conditions of the Municipal Securities market, size of a particular offering, and maturity and rating of the obligation. Generally, the yield realized by an Underlying Fund's shareholders will be the yield realized by the Underlying Funds on its investments, reduced by the general expenses of the Underlying Funds and the Trust. The market values of the Municipal Securities held by an Underlying Fund will be affected by changes in the yields available on similar securities. If yields increase following the purchase of a Municipal Security, the market value of such Municipal Security will generally decrease. Conversely, if yields decrease, the market value of a Municipal Security will generally increase.
MUNICIPAL LEASE OBLIGATIONS. Certain of the Underlying Funds may purchase municipal lease obligations. Municipal lease obligations may take the form of a lease, an installment purchase or a
conditional sales contract. Municipal lease obligations are issued by state and local governments and authorities to acquire land, equipment and facilities such as state and municipal vehicles, telecommunications and computer equipment, and other capital assets. Interest payments on qualifying municipal leases for exempt from federal income taxes. Consistent with its investment objective, an Underlying Fund may purchase these obligations directly, or they may purchase participation interests in such obligations. Municipal leases are generally subject to greater risks than general obligation or revenue bonds. State laws set forth requirements that states or municipalities must meet in order to issue municipal obligations, and such obligations may contain a covenant by the issuer to budget for, appropriate, and make payments due under the obligation. However, certain municipal lease obligations may contain "non-appropriation" clauses which provide that the issuer is not obligated to make payments on the obligation in future years unless funds have been appropriated for this purpose each year. Accordingly, such obligations are subject to "non-appropriation" risk. While municipal leases are secured by the underlying capital asset, it may be difficult to dispose of such assets in the event of non-appropriation or other default. All direct investments by the Underlying Funds in municipal lease obligations shall be deemed illiquid and shall be valued according to the Underlying Funds' Procedures for Valuing Securities current at the time of such valuation.
An Underlying Fund will not enter into a transaction with any single counterparty if the net amount owed or to be received under existing transactions with that counterparty would exceed 5% of the Underlying Funds' net assets determined on the date the Participation not is entered into.
STRUCTURED NOTES. Certain of the Underlying Funds may invest in structured notes. Structured notes are derivative debt securities, the interest rate or principal of which is determined by reference to changes in the value of a specific asset, reference rate, or index (the "reference") or the relative change in two or more references. The interest rate or the principal amount payable upon maturity or redemption may increase or decrease, depending upon changes in the reference. The terms of a structured note may provide that, in certain circumstances, no principal is due at maturity and, therefore may result in a loss of invested capital. Structured notes may be indexed positively or negatively, so that appreciation of the reference may produce an increase or decrease in the interest rate or value of the principal at maturity. In addition, changes in the interest rate or the value of the principal at maturity may be fixed at a specified multiple of the change in the value of the reference, making the value of the note particularly volatile.
Structured notes may entail a greater degree of market risk than other types of debt securities because the investor bears the risk of the reference. Structured notes also may be more volatile, less liquid, and more difficult to price accurately than less complex securities or more traditional debt securities.
Other Investments
REAL ESTATE INVESTMENT TRUSTS ("REITS"). Certain of the Underlying Funds may invest up to 15% of its total assets in equity and/or debt securities issued by REITs.
REITs are trusts that sell equity or debt securities to investors and use the proceeds to invest in real estate or interests therein. A REIT may focus on particular projects, such as apartment complexes, or geographic regions, such as the southeastern United States, or both.
To the extent that an Underlying Fund has the ability to invest in REITs, the Underlying Funds could conceivably own real estate directly as a result of a default on the securities it owns. An Underlying Fund, therefore, may be subject to certain risks associated with the direct ownership of real estate including difficulties in valuing and trading real estate, declines in the value of real estate, risks related to general and local economic conditions, adverse changes in the climate for real estate, environmental liability risks, increases in property taxes and operating expenses, changes in zoning laws, casualty or condemnation losses, limitations on rents, changes in neighborhood values, the appeal of properties to tenants, and increases in interest rates.
REITs can generally be classified as equity REITs, mortgage REITs and hybrid REITs. Equity REITs generally invest a majority of their assets in income-producing real estate properties in order to generate cash flow from rental income and a gradual asset appreciation. The income-producing real estate properties in which equity REITs invest typically include properties such as office, retail, industrial, hotel and apartment buildings, self storage, specialty and diversified and healthcare facilities. Equity REITs can realize capital gains by selling properties that have appreciated in value. Mortgage REITs invest the majority of their assets in real estate mortgages and derive their income primarily from interest payments on the mortgages. Hybrid REITs combine the characteristics of both equity REITs and mortgage REITs. The Fund will invest primarily in equity REITs, but may invest up to 10% of its total assets in any combination of mortgage REITs and hybrid REITs.
REITs can be listed and traded on national securities exchanges or can be traded privately between individual owners. Certain Underlying Funds may invest in both publicly and privately traded REITs.
Certain Underlying Funds could conceivably own real estate directly as a result of a default on the securities it owns. These Underlying Funds, therefore, may be subject to certain risks associated with the direct ownership of real estate including difficulties in valuing and trading real estate, declines in the value of real estate, risks related to general and local economic conditions, adverse changes in the climate for real estate, environmental liability risks, increases in property taxes and operating expenses, changes in zoning laws, casualty or condemnation losses, limitations on rents, changes in neighborhood values, the appeal of properties to tenants, and increases in interest rates.
In addition to the risks described above, equity REITs may be affected by any changes in the value of the underlying property owned by the trusts, while mortgage REITs may be affected by the quality of any credit extended. Equity and mortgage REITs are dependent upon management skill, are not diversified, and are therefore subject to the risk of financing single or a limited number of projects. Such trusts are also subject to heavy cash flow dependency, defaults by borrowers, self-liquidation, and the possibility of failing to maintain an exemption from the 1940 Act. Changes in interest rates may also affect the value of debt securities held by REITs. By investing in REITs indirectly through an Underlying Fund, the Fund (and its shareholders) will bear not only proportionate share of the expenses of the Underlying Funds, but also, indirectly, similar expenses of the REITs.
OTHER INVESTMENT COMPANIES. Each Underlying Fund may purchase shares of other investment companies. As discussed previously, the Fund is structured as a "fund of funds" under the 1940 Act and invests in other investment companies, namely PowerShares ETFs.
For each Underlying Fund, the 1940 Act imposes the following restrictions on investments in other investment companies: (i) an Underlying Fund may not purchase more than 3% of the total outstanding voting stock of another investment company; (ii) an Underlying Fund may not invest more than 5% of its total assets in securities issued by another investment company; and (iii) an Underlying Fund may not invest more than 10% of its total assets in securities issued by other investment companies. These restrictions do not apply to investments by the Funds in investment companies that are money market funds, including money market funds that have Invesco Aim or an affiliate of Invesco Aim as an investment advisor (the "Affiliated Money Market Funds"). As a "fund of funds" under the 1940 Act, the Fund is not subject to these restrictions.
With respect to an Underlying Fund's purchase of shares of another investment company, including an Affiliated Money Market Fund, the Underlying Funds will indirectly bear its proportionate share of the advisory fees and other operating expenses of such investment company.
DEFAULTED SECURITIES. Certain of the Underlying Funds may invest in defaulted securities. In order to enforce its rights in defaulted securities, the Underlying Funds may be required to participate in various legal proceedings or take possession of and manage assets securing the issuer's obligations on
the defaulted securities. This could increase the Underlying Funds'operating expenses and adversely affect its net asset value. Any investments by an Underlying Fund in defaulted securities will also be considered illiquid securities subject to the limitations described herein, unless Invesco Aim and/or PowerShares Capital determines that such defaulted securities are liquid under guidelines adopted by the Board.
VARIABLE OR FLOATING RATE INSTRUMENTS. Certain of the Underlying Funds may invest in Municipal Securities which have variable or floating interest rates which are readjusted on set dates (such as the last day of the month or calendar quarter) in the case of variable rates or whenever a specified interest rate change occurs in the case of a floating rate instrument. Variable or floating interest rates generally reduce changes in the market price of Municipal Securities from their original purchase price because, upon readjustment, such rates approximate market rates. Accordingly, as interest rates decrease or increase, the potential for capital appreciation or depreciation is less for variable or floating rate Municipal Securities than for fixed rate obligations. Many Municipal Securities with variable or floating interest rates purchased by an Underlying Fund are subject to payment of principal and accrued interest (usually within seven days) on the Underlying Funds'demand. The terms of such demand instruments require payment of principal and accrued interest by the issuer, a guarantor, and/or a liquidity provider. All variable or floating rate instruments will meet the applicable quality standards of an Underlying Fund. Invesco Aim and/or PowerShares Capital will monitor the pricing, quality and liquidity of the variable or floating rate Municipal Securities held by the Underlying Funds.
INDEXED SECURITIES. Certain of the Underlying Funds may invest in indexed securities the value of which is linked to interest rates, commodities, indices or other financial indicators. Most indexed securities are short to intermediate term fixed income securities whose values at maturity (principal value) or interest rates rise or fall according to changes in the value of one or more specified underlying instruments. Indexed securities may be positively or negatively indexed (i.e., their principal value or interest rates may increase or decrease if the underlying instrument appreciates), and may have return characteristics similar to direct investments in the underlying instrument or to one or more options on the underlying instrument. Indexed securities may be more volatile than the underlying instrument itself and could involve the loss of all or a portion of the principal amount of the indexed security.
ZERO-COUPON AND PAY-IN-KIND SECURITIES. To the extent consistent with its investment objective, certain of the Underlying Funds may invest in zero-coupon or pay-in-kind securities. These securities are debt securities that do not make regular cash interest payments. Zero-coupon securities are sold at a deep discount to their face value. Pay-in-kind securities pay interest through the issuance of additional securities. Because zero-coupon and pay-in-kind securities do not pay current cash income, the price of these securities can be volatile when interest rates fluctuate. While these securities do not pay current cash income, federal tax law requires the holders of zero-coupon and pay-in-kind securities to include in income each year the portion of the original issue discount (or deemed discount) and other non-cash income on such securities accrued during that year. In order to qualify as a "regulated investment company" ("RIC") under the Internal Revenue Code of 1986, as amended (the "Code") and to avoid certain excise taxes, the Underlying Fund may be required to distribute a portion of such discount and income, and may be required to dispose of other portfolio securities, which could occur during periods of adverse market prices, in order to generate sufficient cash to meet these distribution requirements.
SYNTHETIC MUNICIPAL INSTRUMENTS. Certain of the Underlying Funds may invest in synthetic municipal instruments the value and return on which are derived from underlying securities. Invesco Aim and/or PowerShares Capital believes that certain synthetic municipal instruments provide opportunities for mutual funds to invest in high credit quality securities providing attractive returns, even in market conditions where the supply of short-term tax-exempt instruments may be limited. Synthetic municipal instruments comprise a large percentage of tax-exempt securities eligible for purchase by tax-exempt money market funds. The types of synthetic municipal instruments in which the Underlying Funds may invest include tender option bonds and variable rate trust certificates. Both types of instruments involve the deposit into a trust or custodial account of one or more long-term tax-exempt bonds or notes
("Underlying Bonds"), and the sale of certificates evidencing interests in the trust or custodial account to investors such as the Underlying Funds. The trustee or custodian receives the long-term fixed rate interest payments on the Underlying Bonds, and pays certificate holders short-term floating or variable interest rates which are reset periodically. A "tender option bond" provides a certificate holder with the conditional right to sell its certificate to the sponsor or some designated third party at specified intervals and receive the par value of the certificate plus accrued interest (a demand feature). A "variable rate trust certificate" evidences an interest in a trust entitling the certificate holder to receive variable rate interest based on prevailing short-term interest rates and also typically providing the certificate holder with the conditional demand feature the right to tender its certificate at par value plus accrued interest.
All synthetic municipal instruments must meet the minimum quality standards for the Underlying Funds'investments and must present minimal credit risks. In selecting synthetic municipal instruments for the Underlying Funds, Invesco Aim and/or PowerShares Capital considers the creditworthiness of the issuer of the Underlying Bond, the sponsor and the party providing certificate holders with a conditional right to sell their certificates at stated times and prices (a demand feature). Typically, a certificate holder cannot exercise the demand feature upon the occurrence of certain conditions, such as where the issuer of the Underlying Bond defaults on interest payments. Moreover, because synthetic municipal instruments involve a trust or custodial account and a third party conditional demand feature, they involve complexities and potential risks that may not be present where a municipal security is owned directly.
The tax-exempt character of the interest paid to certificate holders is based on the assumption that the holders have an ownership interest in the Underlying Bonds; however, the IRS has not issued a ruling addressing this issue. In the event the IRS issues an adverse ruling or successfully litigates this issue, it is possible that the interest paid to the Funds on certain synthetic municipal instruments would be deemed to be taxable. Each Underlying Fund relies on opinions of special tax counsel on this ownership question and opinions of bond counsel regarding the tax-exempt character of interest paid on the Underlying Bonds.
PARTICIPATION INTERESTS. Certain of the Underlying Funds may invest in participation interests. Participation interests generally will be acquired from a commercial bank or other financial institution (a "Lender") or from other holders of a participation interest (a "Participant"). The purchase of a participation interest either from a Lender or a Participant will not result in any direct contractual relationship with the borrowing company (the "Borrower"). The Underlying Funds generally will have no right directly to enforce compliance by the Borrower with the terms of the credit agreement. Instead, the Underlying Funds will be required to rely on the Lender or the Participant that sold the participation interest both for the enforcement of the Underlying Funds' rights against the Borrower and for the receipt and processing of payments due to the Underlying Funds under the loans. Under the terms of a participation interest, an Underlying Fund may be regarded as a creditor of the Participant and thus is subject to the credit risk of both the Borrower and Lender or a Participant. Participation interests are generally subject to restrictions on resale. The Underlying Funds consider participation interests to be illiquid and therefore subject to the Funds' percentage limitation for investments in illiquid securities.
PARTICIPATION NOTES. Certain of the Underlying Funds may invest in participation notes. Participation notes are generally traded over-the-counter and are subject to counterparty risk. Counterparty risk is the risk that the broker-dealer or bank that issues them will not fulfill its contractual obligation to complete the transaction with the Underlying Funds. Participation notes constitute general unsecured contractual obligations of the banks or broker-dealers that issue them, and an Underlying Fund is relying on the creditworthiness of such banks or broker-dealers and has no rights under a participation note against the issuer of the underlying assets.
TAXABLE MUNICIPAL SECURITIES. Certain of the Underlying Funds may invest in taxable municipal securities. Taxable municipal securities are debt securities issued by or on behalf of states and their political subdivisions, the District of Columbia, and possessions of the United States, the interest on which is not exempt from federal income tax.
INVESTMENTS IN ENTITIES WITH RELATIONSHIPS WITH THE FUNDS/ADVISORS. The Underlying Funds may invest in securities issued, sponsored or guaranteed by the following types of entities or their affiliates: (i) entities that sell shares of the AIM Funds; (ii) entities that rate or rank the AIM Funds; (iii) exchanges on which the AIM Funds buy or sell securities; and (iv) entities that provide services to the AIM Funds (e.g., custodian banks). The Underlying Funds will decide whether to invest in or sell securities issued by these entities based on the merits of the specific investment opportunity.
Investment Techniques
DELAYED DELIVERY TRANSACTIONS. Delayed delivery transactions, also referred to as forward commitments, involve commitments by an Underlying Fund to dealers or issuers to acquire or sell securities at a specified future date beyond the customary settlement for such securities. These commitments may fix the payment price and interest rate to be received or paid on the investment. An Underlying Fund may purchase securities on a delayed delivery basis to the extent it can anticipate having available cash on settlement date. Delayed delivery transactions will not be used as a speculative or leverage technique.
Investment in securities on a delayed delivery basis may increase an Underlying Fund's exposure to market fluctuation and may increase the possibility that the Underlying Funds will incur short-term gains subject to federal taxation or short-term losses if the Underlying Funds must engage in portfolio transactions in order to honor a delayed delivery commitment. Until the settlement date, an Underlying Fund will segregate liquid assets of a dollar value sufficient at all times to make payment for the delayed delivery transactions. Such segregated liquid assets will be marked-to-market daily, and the amount segregated will be increased if necessary to maintain adequate coverage of the delayed delivery commitments. No additional delayed delivery agreements or when-issued commitments (as described below) will be made by an Underlying Fund if, as a result, more than 25% of the Underlying Funds' total assets would become so committed.
The delayed delivery securities, which will not begin to accrue interest or dividends until the settlement date, will be recorded as an asset of an Underlying Fund and will be subject to the risk of market fluctuation. The purchase price of the delayed delivery securities is a liability of an Underlying Fund until settlement. Absent extraordinary circumstances, an Underlying Fund will not sell or otherwise transfer the delayed delivery basis securities prior to settlement.
An Underlying Fund may enter into buy/sell back transactions (a form of delayed delivery agreement). In a buy/sell back transaction, the Underlying Funds enters a trade to sell securities at one price and simultaneously enters a trade to buy the same securities at another price for settlement at a future date.
WHEN-ISSUED SECURITIES. Certain of the Underlying Funds may purchase when-issued securities. Purchasing securities on a "when-issued" basis means that the date for delivery of and payment for the securities is not fixed at the date of purchase, but is set after the securities are issued. The payment obligation and, if applicable, the interest rate that will be received on the securities are fixed at the time the buyer enters into the commitment. An Underlying Fund will only make commitments to purchase such securities with the intention of actually acquiring such securities, but the Underlying Funds may sell these securities before the settlement date if it is deemed advisable.
Securities purchased on a when-issued basis and the securities held in an Underlying Fund's portfolio are subject to changes in market value based upon the public's perception of the creditworthiness of the issuer and, if applicable, changes in the level of interest rates. Therefore, if an Underlying Fund is to remain substantially fully invested at the same time that it has purchased securities on a when-issued basis, there will be a possibility that the market value of the Underlying Funds' assets will fluctuate to a greater degree. Furthermore, when the time comes for the Underlying Funds to meet its obligations under when-issued commitments, the Underlying Funds will do so by using then available
cash flow, by sale of the segregated liquid assets, by sale of other securities or, although it would not normally expect to do so, by directing the sale of the when-issued securities themselves (which may have a market value greater or less than the Underlying Funds' payment obligation).
Investment in securities on a when-issued basis may increase an Underlying Fund's exposure to market fluctuation and may increase the possibility that the Underlying Funds will incur short-term gains subject to federal taxation or short-term losses if the Underlying Funds must engage in portfolio transactions in order to honor a when-issued commitment. An Underlying Fund will employ techniques designed to reduce such risks. If an Underlying Fund purchases a when-issued security, the Underlying Funds will segregate liquid assets in an amount equal to the when-issued commitment. If the market value of such segregated assets declines, additional liquid assets will be segregated on a daily basis so that the market value of the segregated assets will equal the amount of the Underlying Funds'when-issued commitments. No additional delayed delivery agreements (as described above) or when-issued commitments will be made by an Underlying Fund if, as a result, more than 25% of the Underlying Funds' total assets would become so committed.
SHORT SALES. Certain of the Underlying Funds may engage in short sales. A short sale is effected when it is believed that the price of a particular security will decline, and involves the sale of a security which an Underlying Fund does not own in the hope of purchasing the same security at a later date at a lower price. To make delivery to the buyer, an Underlying Fund must borrow the security from a broker-dealer through which the short sale is executed, and the broker-dealer delivers the securities, on behalf of the Underlying Funds, to the buyer. The broker-dealer is entitled to retain the proceeds from the short sale until an Underlying Fund delivers the securities sold short to the broker-dealer. In addition, an Underlying Fund is required to pay to the broker-dealer the amount of any dividends paid on shares sold short and may have to pay a premium to borrow the securities.
To secure its obligation to deliver the securities sold short to the broker-dealer, an Underlying Fund may be required to deposit cash or liquid securities with the broker in addition to the proceeds from the short sale to meet necessary margin requirements. In addition, an Underlying Fund will place in a segregated account with the Underlying Funds' custodian an amount of cash or liquid securities equal to the difference, if any, between the current market value of the securities sold short and any cash or liquid securities deposited as collateral with the broker-dealer in connection with the short sale. The amounts deposited with the broker-dealer or segregated with the custodian do not have the effect of limiting the amount of money that the Underlying Funds may lose on a short sale.
An Underlying Fund is said to have a short position in the securities sold short until it delivers to the broker-dealer the securities sold short, at which time such Underlying Funds receivethe proceeds of the sale. An Underlying Fund will normally close out a short position by purchasing on the open market and delivering to the broker-dealer an equal amount of the securities sold short.
An Underlying Fund will realize a gain if the price of a security declines between the date of the short sale and the date on which such Underlying Fund purchases a security to replace the borrowed security. On the other hand, an Underlying Fund will incur a loss if the price of the security increases between those dates. The amount of any gain will be decreased and the amount of any loss increased by any premium or interest that an Underlying Fund may be required to pay in connection with a short sale. It should be noted that possible losses from short sales differ from those that could arise from a cash investment in a security in that losses from a short sale may be limitless, while the losses from a cash investment in a security cannot exceed the total amount of an Underlying Fund's investment in the security. For example, if an Underlying Fund purchases a $10 security, potential loss is limited to $10; however, if an Underlying Fund sells a $10 security short, it may have to purchase the security for return to the broker-dealer when the market value of that security is $50, thereby incurring a loss of $40.
Certain of the Underlying Funds may also make short sales "against the box," meaning that at all times when a short position is open an Underlying Fund owns an equal amount of such securities or securities convertible into or exchangeable for, without payment of any further consideration, securities of
the same issue as, and in an amount equal to, the securities sold short. To secure its obligation to deliver the securities sold short "against the box", an Underlying Fund will segregate with its custodian an equal amount of the securities sold short or securities convertible into or exchangeable for an equal amount of such securities.
In addition to enabling the Underlying Funds to hedge against market risk, short sales may afford the Underlying Funds an opportunity to earn additional current income to the extent the Underlying Funds are able to enter into arrangements with broker-dealers through which the short sales are executed to receive income with respect to the proceeds of the short sales during the period the Underlying Funds' short positions remain open. There is no assurance that the Underlying Funds will be able to enter into such arrangements.
See "Dividends, Distributions and Tax Matters - Tax Matters - Determination of Taxable Income of a Regulated Investment Company."
MARGIN TRANSACTIONS. Neither the Fund nor any of the Underlying Funds will purchase any security on margin, except that each Underlying Fund may obtain such short-term credits as may be necessary for the clearance of purchases and sales of portfolio securities. The payment by an Underlying Fund of initial or variation margin in connection with futures or related options transactions and short sales will not be considered the purchase of a security on margin.
INTERFUND LOANS. The Fund and each Underlying Fund may lend uninvested cash up to 15% of its net assets to other AIM Funds and the Fund and each Underlying Fund may borrow from other AIM Funds to the extent permitted under the Fund's and each Underlying Fund's respective investment restrictions. During temporary or emergency periods, the percentage of the Fund and each Underlying Fund's net assets that may be loaned to other AIM Funds may be increased as permitted by the SEC. If any interfund borrowings are outstanding, the Fund and each Underlying Fund may not make any additional investments. If the Fund or an Underlying Fund has borrowed from other AIM Funds and has aggregate borrowings from all sources that exceed 10% of the Fund's or the Underlying Fund's total assets, the Fund or the Underlying Fund will secure all of its loans from other AIM Funds. The ability of the Fund and each Underlying Fund to lend its securities to other AIM Funds is subject to certain other terms and conditions.
BORROWING. The Fund and each Underlying Fund may borrow money from a bank up to a limit of 10% of the value of its assets, but only for temporary or emergency purposes. If there are unusually heavy redemptions because of changes in interest rates or Underlying Fund performance, or for any other reason, an Underlying Fund may have to sell a portion of its investment portfolio at a time when it may be disadvantageous to do so. Selling fund securities under these circumstances may result in a lower net asset value and/or market price per share or decreased dividend income, or both. The Trust believes that, in the event of abnormally heavy redemption requests, the Fund's and an Underlying Fund's borrowing ability would help to mitigate any such effects and could make the forced sale of their portfolio securities less likely.
LENDING PORTFOLIO SECURITIES. Each Underlying Fund may lend its portfolio securities (principally to broker-dealers) where such loans are callable at any time and are continuously secured by segregated collateral equal to no less than the market value, determined daily, of the loaned securities. Such collateral will be cash, letters of credit, or debt securities issued or guaranteed by the U.S. Government or any of its agencies. Each Underlying Fund may lend portfolio securities to the extent of one-third of its total assets.
An Underlying Fund will not have the right to vote securities while they are being lent, but it can call a loan in anticipation of an important vote. The Underlying Funds would receive income in lieu of dividends on loaned securities and would, at the same time, earn interest on the loan collateral or on the investment of any cash collateral. Lending securities entails a risk of loss to the Underlying Funds if and to the extent that the market value of the loaned securities increases and the collateral is not increased
accordingly, or in the event of a default by the borrower. The Underlying Funds could also experience delays and costs in gaining access to the collateral.
Any cash received as collateral for loaned securities will be invested, in accordance with an Underlying Fund's investment guidelines, in short-term money market instruments or Affiliated Money Market Funds. For purposes of determining whether an Underlying Fund is complying with its investment policies, strategies and restrictions, the Underlying Funds will consider the loaned securities as assets of the Underlying Funds, but will not consider any collateral received as an Underlying Fund asset.
From time to time, Underlying Funds that are PowerShares ETFs may return a part of the interest earned from the investment of collateral received from securities loaned to the borrower and/or a third party that is unaffiliated with such Underlying Fund and that is acting as a finder.
REPURCHASE AGREEMENTS. Each Underlying Fund may enter into repurchase agreements with (i) member banks of the Federal Reserve System having total assets in excess of $500 million and (ii) securities dealers ("Qualified Institutions"). PowerShares Capital will monitor the continued creditworthiness of Qualified Institutions. Repurchase agreements are agreements under which an Underlying Fund acquires ownership of a security from a broker-dealer or bank that agrees to repurchase the security at a mutually agreed upon time and price (which is higher than the purchase price), thereby determining the yield during an Underlying Fund's holding period. An Underlying Fund may, however, enter into a "continuing contract" or "open" repurchase agreement under which the seller is under a continuing obligation to repurchase the underlying obligation from the Underlying Funds on demand and the effective interest rate is negotiated on a daily basis.
If the seller of a repurchase agreement fails to repurchase the security in accordance with the terms of the agreement, an Underlying Fund might incur expenses in enforcing its rights, and could experience losses, including a decline in the value of the underlying security and loss of income. In addition, although the Bankruptcy Code and other insolvency laws may provide certain protections for some types of repurchase agreements, if the seller of a repurchase agreement should be involved in bankruptcy or insolvency proceedings, an Underlying Fund may incur delay and costs in selling the underlying security or may suffer a loss of principal and interest if the value of the underlying security declines. The securities underlying a repurchase agreement will be marked-to-market every business day so that the value of such securities is at least equal to the investment value of the repurchase agreement, including any accrued interest thereon.
REVERSE REPURCHASE AGREEMENTS. Certain of the Underlying Funds may engage in reverse repurchase agreements. Reverse repurchase agreements are agreements that involve the sale of securities held by an Underlying Fund to financial institutions such as banks and broker-dealers, with an agreement that the Underlying Funds will repurchase the securities at an agreed upon price and date. An Underlying Fund may employ reverse repurchase agreements (i) for temporary emergency purposes, such as to meet unanticipated net redemptions so as to avoid liquidating other portfolio securities during unfavorable market conditions; (ii) to cover short-term cash requirements resulting from the timing of trade settlements; or (iii) to take advantage of market situations where the interest income to be earned from the investment of the proceeds of the transaction is greater than the interest expense of the transaction. At the time it enters into a reverse repurchase agreement, an Underlying Fund will segregate liquid assets having a dollar value equal to the repurchase price, and will subsequently continually monitor the account to ensure that such equivalent value is maintained at all times. Reverse repurchase agreements involve the risk that the market value of securities to be purchased by the Underlying Funds may decline below the price at which it is obligated to repurchase the securities, or that the other party may default on its obligation, so that the Underlying Funds are delayed or prevented from completing the transaction. Reverse repurchase agreements are considered borrowings by an Underlying Fund under the 1940 Act.
DOLLAR ROLLS. Certain of the Underlying Funds may engage in dollar rolls. A dollar roll is a type of repurchase transaction that involves the sale by an Underlying Fund of a mortgage-backed security to a financial institution such as a bank or broker-dealer, with an agreement that the Underlying Fund will
repurchase a substantially similar (i.e., same type, coupon and maturity) security at an agreed upon price and date. The mortgage securities that are purchased will bear the same interest rate as those sold, but will generally be collateralized by different pools of mortgages with different prepayment histories. During the period between the sale and repurchase, an Underlying Fund will not be entitled to receive interest and principal payments on the securities sold but is compensated for the difference between the current sales price and the forward price for the future purchase. In addition, cash proceeds of the sale may be invested in short-term instruments and the income from these investments, together with any additional fee income received on the sale, would generate income for an Underlying Fund. An Underlying Fund typically enters into a dollar roll transaction to enhance the Underlying Funds' return either on an income or total return basis or to manage pre-payment risk.
Dollar roll transactions involve the risk that the market value of the securities retained by an Underlying Fund may decline below the price of the securities that the Underlying Funds have sold but are obligated to repurchase under the agreement. In the event the buyer of securities under a dollar roll transaction files for bankruptcy or becomes insolvent, an Underlying Fund's use of the proceeds from the sale of the securities may be restricted pending a determination by the other party, or its trustee or receiver, whether to enforce the Underlying Funds' obligation to repurchase the securities. Dollar rolls are considered borrowings by an Underlying Fund under the 1940 Act.
ILLIQUID SECURITIES. Each Fund and each Underlying Fund may invest up to 15% of its net assets in securities that are illiquid. Illiquid securities are securities that cannot be disposed of within seven days in the normal course of business at the price at which they are valued. Illiquid securities may include securities that are subject to restrictions on resale because they have not been registered under the Securities Act of 1933 (the "1933 Act"). Restricted securities may, in certain circumstances, be resold pursuant to Rule 144A under the 1933 Act, and thus may or may not constitute illiquid securities.
Limitations on the resale of restricted securities may have an adverse effect on their marketability, which may prevent the Fund or an Underlying Fund from disposing of them promptly at reasonable prices. An Underlying Fund may have to bear the expense of registering such securities for resale, and the risk of substantial delays in effecting such registrations.
RULE 144A SECURITIES. Certain of the Underlying Funds may invest in Rule
144A securities. Rule 144A securities are securities which, while privately
placed, are eligible for purchase and resale pursuant to Rule 144A under the
1933 Act. This Rule permits certain qualified institutional buyers, such as the
Underlying Funds, to trade in privately placed securities even though such
securities are not registered under the 1933 Act. Invesco Aim and/or
Sub-Advisors, under the supervision of the Board, will consider whether
securities purchased under Rule 144A are illiquid and thus subject to the
Underlying Funds' restriction on investment in illiquid securities.
Determination of whether a Rule 144A security is liquid or not is a question of
fact. In making this determination Invesco Aim, PowerShares Capital and/or
Sub-Advisors will consider the trading markets for the specific security taking
into account the unregistered nature of a Rule 144A security. In addition,
Invesco Aim, PowerShares Capital and/or Sub-Advisors could consider the (i)
frequency of trades and quotes; (ii) number of dealers and potential purchasers;
(iii) dealer undertakings to make a market; and (iv) nature of the security and
of market place trades (for example, the time needed to dispose of the security,
the method of soliciting offers and the mechanics of transfer). Invesco Aim,
PowerShares Capital and/or Sub-Advisors will also monitor the liquidity of Rule
144A securities and, if as a result of changed conditions, Invesco Aim,
PowerShares Capital and/or Sub-Advisors determines that a Rule 144A security is
no longer liquid, Invesco Aim and/or Sub-Advisors will review an Underlying
Fund's holdings of illiquid securities to determine what, if any, action is
required to assure that such Underlying Fund complies with its restriction on
investment in illiquid securities. Investing in Rule 144A securities could
increase the amount of each Underlying Fund's investments in illiquid securities
if qualified institutional buyers are unwilling to purchase such securities.
UNSEASONED ISSUERS. Certain of the Underlying Funds may invest in the securities of unseasoned issuers. Investments in the equity securities of companies having less than three years' continuous operations (including operations of any predecessor) involve more risk than investments in the
securities of more established companies because unseasoned issuers have only a brief operating history and may have more limited markets and financial resources. As a result, securities of unseasoned issuers tend to be more volatile than securities of more established companies.
Derivatives
SWAP AGREEMENTS. Certain of the Underlying Funds may enter into a swap agreement. Swap agreements are two-party contracts wherein the two parties agree to make an exchange as described below.
Commonly used swap agreements include:
Credit Default Swaps ("CDS"): An agreement between two parties where one party agrees to make one or more payments to the other, while the other party assumes the risk of certain defaults on a referenced debt obligation, generally a failure to pay or bankruptcy of the issuer. CDS may be direct ("unfunded swaps") or indirect in the form of a structured note ("funded swaps").
An Underlying Fund may buy a CDS ("buy credit protection"); in this transaction the Underlying Funds pays a stream of payments based on a fixed interest rate (the "premium") over the life of the swap in exchange for a counterparty (the "seller") taking on the risk of default of a referenced debt obligation (the "Reference Obligation"). If a credit event occurs for the Reference Obligation the Underlying Funds would cease to make premium payments and it would deliver defaulted bonds to the seller; in return, the seller would pay the full par value, of the Reference Obligation to the Underlying Funds. Alternatively, the two counterparties may agree to cash settlement in which the seller delivers to the Underlying Funds (buyer) the difference between the market value and the notional value of the Reference Obligation. If no event of default occurs, the Underlying Funds pay the fixed premium to the seller, and no other exchange occurs.
Alternatively, an Underlying Fund may sell a CDS ("sell protection"); in this transaction the Underlying Funds will receive premium payments from the buyer in exchange for taking the credit risk of the Reference Obligation. If an event of default occurs the buyer would cease to make premium payments to the Underlying Funds and the Underlying Funds would pay the buyer the par value of the Reference Obligation; in return, the buyer would deliver the Reference Obligation to the Underlying Funds. Alternatively, if cash settlement is elected, the Underlying Funds would pay the buyer the notional value less the market value of the Reference Obligation. If no event of default occurs, the Underlying Funds receive the premium payments over the life of the agreement.
CDS transactions are typically individually negotiated and structured. CDS transactions may be entered into for investment or hedging purposes. An Underlying Fund may enter into CDS to create direct or synthetic long or short exposure to domestic or foreign corporate debt securities or sovereign debt securities.
Interest Rate Swap: An agreement between two parties pursuant to which the parties exchange a floating rate payment for a fixed rate payment based on a specified principal or notional amount. In other words, Party A agrees to pay Party B a fixed interest rate and in return Party B will pay Party A a variable interest rate. The amount that each party pays is calculated by multiplying the fixed or variable rate by the par amount.
Currency Swap: An agreement between two parties pursuant to which the parties exchange a U.S. dollar-denominated payment for a payment denominated in a different currency.
Credit Default Index Swap ("CDX"). A CDX is a credit derivative used to hedge credit risk or to take a position on a basket of credit entities. A CDX is a completely standardized credit security and is therefore highly liquid and typically trades at a very small bid-offer spread. This means that it may be cheaper to hedge a portfolio of credit default swaps or bonds with a CDX than it is to buy many CDS to
achieve a similar effect. A new series of CDX is issued every six months by Markit and IIC. Prior to the announcement of each series, a group of investment banks is polled to determine the credit entities that will form the constituents of the new issue. On the day of issue, a fixed coupon is decided for the CDX based on the credit spread of the entities within the CDX. Once this has been determined, the CDX constituents and the fixed coupon are published, and the CDX can be actively traded.
Total Return Swap: A swap agreement in which one party makes payments based on a set rate, either fixed or variable, while the other party makes payments based on the return of an underlying asset, which includes both the income it generates and any capital gains. The underlying asset that is used is usually an equities index, loan or a basket of assets.
Common risks associated with swap agreements:
Liquidity Risk: The risk that a particular swap is difficult to sell or liquidate. If a swap transaction is particularly large or if the relevant market is illiquid, it may not be possible to initiate a transaction or liquidate a position at an advantageous time or price, which may result in significant losses.
Pricing Risk: The risk that a particular swap becomes extraordinarily expensive (or cheap) relative to historical prices or the prices of corresponding underlying instruments.
Interest Rate and Currency Swap Risk: Interest rate and currency swaps could result in losses if interest rate or currency changes are not correctly anticipated by the Underlying Funds.
Basis Risk: The risk that offsetting investments in a hedging strategy will not experience price changes in entirely opposite directions from each other. This imperfect correlation between the two investments causes the potential for excess gains or losses in a hedging strategy.
Tax Risks: For a discussion of the tax considerations relating to swap agreements, see "Dividends, Distributions and Tax Matters - Swap Agreements."
Counterparty Risk: Swaps are generally governed by a single master agreement for each counterparty. Counterparty Risk refers to the risk that the counterparty under the swap agreement will not live up to its obligations. A swap agreement may not contemplate delivery of collateral to support a counterparty's contractual obligation; therefore, an Underlying Fund might need to rely on contractual remedies to satisfy the counterparty's obligation. As with any contractual remedy, there is no guarantee that an Underlying Fund would be successful in pursuing such remedies, particularly in the event of the counterparty's bankruptcy. The swap agreement may allow for netting of the counterparties' obligations on specific transactions in which case an Underlying Fund's obligation or right will be the net amount owed to or by the counterparty. Although this will not guarantee that the counterparty does not default, the Underlying Funds will not enter into a swap transaction with any counterparty that Invesco Aim, PowerShares Capital and/or the Sub-Advisors believe does not have the financial resources to honor its obligations under the transaction. Further, Invesco Aim and/or PowerShares Capital monitors the financial stability of swap counterparties in an effort to protect the Underlying Funds' investments. Where the obligations of the counterparty are guaranteed, Invesco Aim and/or PowerShares Capital monitors the financial stability of the guarantor instead of the counterparty. An Underlying Fund's current obligations under a swap agreement are to be accrued daily (on a net basis), and the Underlying Funds maintain cash or liquid assets in an amount equal to amounts owed to a swap counterparty (some of these assets may be segregated to secure the swap counterparty).
An Underlying Fund will not enter into a transaction with any single counterparty if the net amount owed or to be received under existing transactions under the swap agreements with that counterparty would exceed 5% of the Underlying Funds' net assets determined on the date the transaction is entered into.
BUNDLED SECURITIES. In lieu of investing directly in securities, certain of the Underlying Funds may from time to time invest in Targeted Return Index Securities Trusts ("TRAINS") or similar instruments representing a fractional undivided interest in an underlying pool of securities often referred to as "Bundled Securities". Bundled Securities are typically represented by certificates and the Underlying Funds will be permitted at any time to exchange such certificates for the underlying securities evidenced by such certificates and thus the certificates are generally subject to the same risks as the underlying securities held in the trust. The Underlying Funds will examine the characteristics of the underlying securities for compliance with investment criteria but will determine liquidity with reference to the certificates themselves. TRAINs and other trust certificates are generally not registered under the 1933 Act or the 1940 Act and therefore must be held by qualified purchasers and resold to qualified institutional buyers pursuant to Rule 144A under the 1933 Act. Investments in certain TRAINs or other trust certificates may have the effect of increasing the level of Fund illiquidity to the extent an Underlying Fund, at a particular point in time, may be unable to find qualified institutional buyers interested in purchasing such securities.
PUT AND CALL OPTIONS. Certain of the Underlying Funds may engage in certain strategies involving options to attempt to manage the risk of their investments or, in certain circumstances, for investment (e.g., as a substitute for investing in securities). Option transactions present the possibility of large amounts of exposure, which may result in an Underlying Fund's net asset value being more sensitive to changes in the value of the related investment.
Call Options: A call option gives the purchaser the right to buy the underlying security, contract or foreign currency at the stated exercise price at any time prior to the expiration of the option (or on a specified date if the option is a European style option), regardless of the market price or exchange rate of the security, contract or foreign currency, as the case may be, at the time of exercise. If the purchaser exercises the call option, the writer of a call option is obligated to sell to and deliver the underlying security, contract or foreign currency to the purchaser of the call option.
Put Options: A put option gives the purchaser the right to sell the underlying security, contract or foreign currency at the stated exercise price at any time prior to the expiration date of the option (or on a specified date if the option is a European style option), regardless of the market price or exchange rate of the security, contract or foreign currency, as the case may be, at the time of exercise. If the purchaser exercises the put option, the writer of a put option is obligated to buy the underlying security, contract or foreign currency. The premium paid to the writer is consideration for undertaking the obligations under the option contract. Until an option expires or is offset, the option is said to be "open." When an option expires or is offset, the option is said to be "closed."
Listed Options and Over-The-Counter Options. Options may be either listed on an exchange or traded in over-the-counter ("OTC") markets. Listed options are third-party contracts (i.e., performance of the obligations of the purchaser and seller are guaranteed by the exchange or clearing corporation) and have standardized strike prices and expiration dates. OTC options are two-party contracts with negotiated strike prices and expiration dates. An Underlying Fund will not purchase an OTC option unless it believes that daily valuations for such options are readily obtainable. OTC options differ from exchange-traded options in that OTC options are transacted with dealers directly and not through a clearing corporation (which guarantees performance). Consequently, there is a risk of non-performance by the dealer. Since no exchange is involved, OTC options are valued on the basis of an average of the last bid prices obtained from dealers, unless a quotation from only one dealer is available, in which case only that dealer's price will be used. In the case of OTC options, there can be no assurance that a liquid secondary market will exist for any particular option at any specific time. Because purchased OTC options in certain cases may be difficult to dispose of in a timely manner, the Underlying Fund may be required to treat some or all of these options (i.e., the market value) as illiquid securities. Although an Underlying Fund will enter into OTC options only with dealers that are expected to be capable of entering into closing transactions with it, there is no assurance that the Underlying Fund will in fact be able to close out an OTC option position at a favorable price prior to expiration. In the event of insolvency of the
dealer, an Underlying Fund might be unable to close out an OTC option position at any time prior to its expiration.
Index Options. Index options (or options on securities indices) are similar in many respects to options on securities, except that an index option gives the holder the right to receive, upon exercise, cash instead of securities, if the closing level of the securities index upon which the option is based is greater than, in the case of a call, or less than, in the case of a put, the exercise price of the option. The amount of cash is equal to the difference between the closing price of the index and the exercise price of the call or put times a specified multiple (the "multiplier"), which determines the total dollar value for each point of such difference.
The risks of investment in index options may be greater than options on securities. Because index options are settled in cash, when an Underlying Fund writes a call on an index it cannot provide in advance for its potential settlement obligations by acquiring and holding the underlying securities. An Underlying Fund can offset some of the risk of writing a call index option by holding a diversified portfolio of securities similar to those on which the underlying index is based. However, the Underlying Funds cannot, as a practical matter, acquire and hold a portfolio containing exactly the same securities as underlie the index and, as a result, bears a risk that the value of the securities held will not be perfectly correlated with the value of the index.
CDS Option. An Underlying Fund may additionally enter into CDS option transactions which grant the holder the right, but not the obligation, to enter into a CDS at a specified future date and under specified terms in exchange for a purchase price or premium. The writer of the option bears the risk of any unfavorable move in the value of the CDS relative to the market value on the exercise date, while the purchaser may allow the option to expire unexercised.
Writing Options. An Underlying Fund may write put and call options in an attempt to realize, through the receipt of premiums, a greater current return than would be realized on the underlying security, contract, or foreign currency alone. An Underlying Fund may only write a call option on a security if it owns an equal amount of such securities or securities convertible into, or exchangeable, without payment of any further consideration, for securities of the same issue as, and equal in amount to, the securities subject to the call option. In return for the premium received for writing a call option, the Underlying Funds foregothe opportunity for profit from a price increase in the underlying security, contract, or foreign currency above the exercise price so long as the option remains open, but retains the risk of loss should the price of the security, contract, or foreign currency decline.
An Underlying Fund may write a put option without owning the underlying security if it covers the option as described in the section "Cover." An Underlying Fund may only write a put option on a security as part of an investment strategy and not for speculative purposes. In return for the premium received for writing a put option, the Underlying Funds assumethe risk that the price of the underlying security, contract, or foreign currency will decline below the exercise price, in which case the put would be exercised and the Underlying Funds would suffer a loss.
If an option that an Underlying Fund has written expires, it will realize a gain in the amount of the premium; however, such gain may be offset by a decline in the market value of the underlying security, contract or currency during the option period. If a call option is exercised, an Underlying Fund will realize a gain or loss from the sale of the underlying security, contract or currency, which will be increased or offset by the premium received. An Underlying Fund would write a put option at an exercise price that, reduced by the premium received on the option, reflects the price it is willing to pay for the underlying security, contract or currency. The obligation imposed upon the writer of an option is terminated upon the expiration of the option, or such earlier time at which an Underlying Fund effects a closing purchase transaction by purchasing an option (put or call as the case may be) identical to that previously sold.
Writing call options can serve as a limited hedge because declines in the value of the hedged investment would be offset to the extent of the premium received for writing the option. Closing
transactions may be effected in order to realize a profit on an outstanding call option, to prevent an underlying security, contract or currency from being called or to permit the sale of the underlying security, contract or currency. Furthermore, effecting a closing transaction will permit an Underlying Fund to write another call option on the underlying security, contract or currency with either a different exercise price or expiration date, or both.
Pursuant to federal securities rules and regulations, if an Underlying Fund writes options it may be required to set aside assets to reduce the risks associated with writing those options. This process is described in more detail below in the section "Cover."
An Underlying Fund will not write (sell) options if, immediately after such sale, the aggregate value of securities or obligations underlying the outstanding options exceeds 20% of the Fund's total assets. An Underlying Fund will not purchase options if, at the time of the investment, the aggregate premiums paid for the options will exceed 5% of the Underlying Funds'total assets.
Purchasing Options. An Underlying Fund may purchase a call option for the purpose of acquiring the underlying security, contract or currency for its portfolio. The Underlying Funds are not required to own the underlying security in order to purchase a call option, and may only cover the transaction with cash, liquid assets and/or short-term debt securities. Utilized in this fashion, the purchase of call options would enable an Underlying Fund to acquire the security, contract or currency at the exercise price of the call option plus the premium paid. So long as it holds such a call option, rather than the underlying security or currency itself, the Underlying Funds are partially protected from any unexpected increase in the market price of the underlying security, contract or currency. If the market price does not exceed the exercise price, the Underlying Funds could purchase the security on the open market and could allow the call option to expire, incurring a loss only to the extent of the premium paid for the option. Each of the Underlying Funds may also purchase call options on underlying securities, contracts or currencies against which it has written other call options. For example, where an Underlying Fund has written a call option on an underlying security, rather than entering a closing transaction of the written option, it may purchase a call option with a different exercise strike and/or expiration date that would eliminate some or all of the risk associated with the written call. Used in combinations, these strategies are commonly referred to as "call spreads."
An Underlying Fund may only purchase a put option on an underlying security, contract or currency ("protective put") owned by the Underlying Funds in order to protect against an anticipated decline in the value of the security, contract or currency. Such hedge protection is provided only during the life of the put option. The premium paid for the put option and any transaction costs would reduce any profit realized when the security, contract or currency is delivered upon the exercise of the put option. Conversely, if the underlying security, contract or currency does not decline in value, the option may expire worthless and the premium paid for the protective put would be lost. An Underlying Fund may also purchase put options on underlying securities, contracts or currencies against which it has written other put options. For example, where an Underlying Fund has written a put option on an underlying security, rather than entering a closing transaction of the written option, it may purchase a put option with a different exercise price and/or expiration date that would eliminate some or all of the risk associated with the written put. Used in combinations, these strategies are commonly referred to as "put spreads." Likewise, an Underlying Fund may write call options on underlying securities, contracts or currencies against which it has purchased protective put options. This strategy is commonly referred to as a "collar."
Straddles. Each Underlying Fund, for hedging purposes, may write straddles (combinations of put and call options on the same underlying security) to adjust the risk and return characteristics of the Underlying Funds' overall position. A possible combined position would involve writing a covered call option at one strike price and buying a call option at a lower price, in order to reduce the risk of the written covered call option in the event of a substantial price increase. Because combined options positions involve multiple trades, they result in higher transaction costs and may be more difficult to open and close out.
General Information Regarding Options: The value of an option position will reflect, among other things, the current market value of the underlying investment, the time remaining until expiration, the relationship of the exercise price to the market price of the underlying investment, the price volatility of the underlying investment and general market and interest rate conditions. Options that expire unexercised have no value.
An Underlying Fund may effectively terminate its right or obligation under an option by entering into a closing transaction. For example, an Underlying Fund may terminate its obligation under a call or put option that it had written by purchasing an identical call or put option, which is known as a closing purchase transaction. Conversely, an Underlying Fund may terminate a position in a put or call option it had purchased by writing an identical put or call option, which is known as a closing sale transaction. Closing transactions permit an Underlying Fund to realize profits or limit losses on an option position prior to its exercise or expiration.
WARRANTS. Certain of the Underlying Funds may purchase warrants. A warrant is a security that gives the holder the right to purchase securities from the issuer at a specific price within a certain time frame and are similar to call options. The main difference between warrants and call options is that warrants are issued by the company that will issue the underlying security, whereas options are not issued by the company. The purchaser of a warrant expects that the market price of the security will exceed the purchase price of the warrant plus the exercise price of the warrant, thus giving him a profit. Since the market price may never exceed the exercise price before the expiration date of the warrant, the purchaser of the warrant risks the loss of the purchase price of the warrant. Warrants generally trade in the open market and may be sold rather than exercised. Warrants are sometimes sold in unit form with other securities of an issuer. Units of warrants and common stock are often employed to finance young, unseasoned companies. The purchase price of a warrant varies with the exercise price of the warrant, the current market value of the underlying security, the life of the warrant and various other investment factors.
FUTURES CONTRACTS. A Futures Contract is a two-party agreement to buy or sell a specified amount of a specified security or currency (or delivery of a cash settlement price, in the case of an index future) for a specified price at a designated date, time and place (collectively, "Futures Contracts").
Common examples of Futures Contracts that an Underlying Fund may engage in include, but are not limited to:
Index Futures: A stock index Futures Contract is an exchange-traded contract that provides for the delivery, at a designated date, time and place, of an amount of cash equal to a specified dollar amount times the difference between the stock index value at the close of trading on the contracts and the price agreed upon in the Futures Contract; no physical delivery of stocks comprising the index is made.
Interest Rate Futures: An interest-rate futures contract is an exchange-traded contact in which the specified underlying security is either an interest-bearing fixed income security or an inter-bank deposit. Two examples of common interest rate futures contracts are U.S. Treasury futures and Eurodollar futures contracts. The specified security for U.S. Treasury futures is a U.S. Treasury security. The specified security for Eurodollar futures is the London Interbank Offered Rate ("Libor") which is a daily reference rate based on the interest rates at which banks offer to lend unsecured funds to other banks in the London wholesale money market.
Security Futures: A security futures contract is an exchange-traded contract to purchase or sell in the future a specified quantity of a security, other than a Treasury security, or a narrow-based securities index at a certain price. Presently, the only available security futures contracts use shares of a single equity security as the specified security.
Currency Futures: A currency futures contract is an exchange-traded contract to buy or sell a particular currency at a specified price at some time in the future (commonly three months or more). Currency futures contracts are highly volatile, with a relatively small price movement potentially resulting in substantial gains or losses to the Underlying Funds. Additionally, the Underlying Funds may lose money on currency futures if changes in the currency rates do not occur as anticipated.
The Underlying Funds will only enter into Futures Contracts that are traded (either domestically or internationally) on futures exchanges and are standardized as to maturity date and underlying financial instrument. Futures exchanges and trading thereon in the United States are regulated under the Commodity Exchange Act and by the Commodity Futures Trading Commission ("CFTC"). Foreign futures exchanges and trading thereon are not regulated by the CFTC and are not subject to the same regulatory controls. For a further discussion of the risks associated with investments in foreign securities, see "Foreign Investments" above. It should be noted that the Trust, on behalf of the Fund, has claimed an exclusion from the definition of the term "commodity pool operator" under the Commodity Exchange Act and, therefore, is not subject to registration or regulation as a pool operator under the act with respect to the Fund.
Brokerage fees are incurred when a Futures Contract is bought or sold, and margin deposits must be maintained at all times when a Futures Contract is outstanding. "Margin" with respect to Futures Contracts is the amount of funds that must be deposited by an Underlying Fund in order to initiate Futures Contracts trading and maintain its open positions in Futures Contracts. A margin deposit made when the Futures Contract is entered ("initial margin") is intended to ensure the Underlying Funds'performance under the Futures Contract. The margin required for a particular Futures Contract is set by the exchange on which the Futures Contract is traded and may be significantly modified from time to time by the exchange during the term of the Futures Contract.
Subsequent payments, called "variation margin," received from or paid to the futures commission merchant through which an Underlying Fund entered into the Futures Contract will be made on a daily basis as the price of the underlying security, currency, index or futures price fluctuates making the Futures Contract more or less valuable, a process known as marking-to-market.
Closing out an open Futures Contract is effected by entering into an offsetting Futures Contract for the same aggregate amount of the identical financial instrument or currency and the same delivery date. There can be no assurance, however, that an Underlying Fund will be able to enter into an offsetting transaction with respect to a particular Futures Contract at a particular time. If an Underlying Fund is not able to enter into an offsetting transaction, it will continue to be required to maintain the margin deposits on the Futures Contract.
In addition, if an Underlying Fund were unable to liquidate a Futures Contract or an option on a Futures Contract position due to the absence of a liquid secondary market or the imposition of price limits, it could incur substantial losses. The Underlying Funds would continue to be subject to market risk with respect to the position. In addition, except in the case of purchased options, the Underlying Funds would continue to be required to make daily variation margin payments and might be required to maintain the position being hedged by the Futures Contract or option or to maintain cash or securities in a segregated account.
OPTIONS ON FUTURES CONTRACTS. Options on Futures Contracts are similar to options on securities or currencies except that options on Futures Contracts give the purchaser the right, in return for the premium paid, to assume a position in a Futures Contract (a long position if the option is a call and a short position if the option is a put) at a specified exercise price at any time during the period of the option. Upon exercise of the option, the delivery of the Futures Contract position by the writer of the option to the holder of the option will be accompanied by delivery of the accumulated balance in the writer's Futures Contract margin account. The Underlying Funds currently may not invest in any security (including futures contracts or options thereon) that is secured by physical commodities.
Pursuant to federal securities laws and regulations, the Underlying Funds' use of Futures Contracts and options on Futures Contracts may require the Underlying Funds to set aside assets to reduce the risks associated with using Futures Contracts and options on Futures Contracts. This process is described in more detail below in the section "Cover."
LIMITATIONS ON FUTURES CONTRACTS AND OPTIONS ON FUTURES CONTRACTS AND ON
CERTAIN OPTIONS ON CURRENCIES.
An Underlying Fund will enter into Futures Contracts for hedging purposes only; that is, Futures Contracts will be sold to protect against a decline in the price of securities or currencies that the Underlying Funds own, or Futures Contracts will be purchased to protect the Underlying Funds against an increase in the price of securities or currencies it has committed to purchase or expects to purchase.
FORWARD CURRENCY CONTRACTS. Certain of the Underlying Funds may engage in forward currency transactions in anticipation of, or to protect itself against, fluctuations in exchange rates. A forward currency contract is an obligation, usually arranged with a commercial bank or other currency dealer, to purchase or sell a currency for payment in another currency at a future date, which may be any fixed number of days (term) from the date of the forward currency contract and at a price as agreed upon by the parties at the time the contract is entered. An Underlying Fund will either accept or make delivery of the currency at the maturity of the forward currency contract. An Underlying Fund may also, if its counterparty agrees prior to maturity, enter into a closing transaction involving the purchase or sale of an offsetting contract. Forward currency contracts are traded over-the-counter, and not on organized commodities or securities exchanges. As a result, it may be more difficult to value such contracts, and it may be difficult to enter into closing transactions.
An Underlying Fund may enter into forward currency contracts with respect to a specific purchase or sale of a security, or with respect to its portfolio positions generally. When an Underlying Fund purchases a security denominated in a foreign currency for settlement in the near future, it may immediately purchase in the forward market the currency needed to pay for and settle the purchase. An Underlying Fund may enter into a forward currency contract with respect to the specific purchase or sale of a security denominated in a foreign currency thereby "locking in" an exchange rate between the trade and settlement dates for that purchase or sale transaction. This practice is sometimes referred to as "transaction hedging." Position hedging is the purchase or sale of foreign currency with respect to portfolio security positions denominated or quoted in a foreign currency.
The cost to an Underlying Fund of engaging in forward currency contracts varies with factors such as the currencies involved, the length of the contract period and the market conditions then prevailing. Because forward currency contracts are usually entered into on a principal basis, no fees or commissions are involved. The use of forward currency contracts does not eliminate fluctuations in the prices of the underlying securities an Underlying Fund owns or intends to acquire, but it does establish a rate of exchange in advance. In addition, while forward currency contract sales limit the risk of loss due to a decline in the value of the hedged currencies, they also limit any potential gain that might result should the value of the currencies increase.
Pursuant to federal securities rules and regulations, an Underlying Fund's use of forward currency contracts may require that Underlying Fund to set aside assets to reduce the risks associated with using forward currency contracts. This process is described in more detail below in the section "Cover."
COVER. Certain transactions including, but not limited to, credit default swaps, forward currency contracts, futures contracts and options (other than options purchased by an Underlying Fund) expose an Underlying Fund to an obligation to another party. An Underlying Fund will not enter into any such transactions unless, in addition to complying with all the restrictions noted in the disclosure above, it owns either (1) an offsetting position in securities, currencies, or other options, forward currency contracts, or futures contracts or (2) cash, liquid assets and/or short-term debt securities with a value sufficient at all
times to cover its potential obligations not covered as provided in (1) above. Each Underlying Fund will comply with SEC guidelines regarding cover for these instruments and, if the guidelines so require, set aside cash or liquid assets. To the extent that a credit default swap, futures contract, forward currency contract or option is deemed to be illiquid, the assets used to cover an Underlying Fund's obligation will also be treated as illiquid for purposes of determining the Underlying Funds'maximum allowable investment in illiquid securities.
To the extent that a purchased option is deemed illiquid, an Underlying Fund will treat the market value of the purchased option (i.e., the amount at risk to the Underlying Funds) as illiquid, but will not treat the assets used as cover on such transactions as illiquid.
Assets used as cover cannot be sold while the position in the corresponding position is open unless they are replaced with other appropriate assets. If a large portion of an Underlying Fund's assets are used for cover or otherwise set aside, it could affect portfolio management or the Underlying Funds'ability to meet redemption requests or other current obligations.
GENERAL RISKS OF HEDGING STRATEGIES. The use by the Underlying Funds of hedging strategies involves special considerations and risks, as described below.
(1) Successful use of hedging transactions depends upon Invesco Aim's and the Sub-Advisors' ability to correctly predict the direction of changes in the value of the applicable markets and securities, contracts and/or currencies. While Invesco Aim and the Sub-Advisors and/or PowerShares Capital are experienced in the use of these instruments, there can be no assurance that any particular hedging strategy will succeed.
(2) In a hedging transaction, there might be imperfect correlation, or even no correlation, between the price movements of an instrument (such as an option contract) and the price movements of the investments being hedged. For example, if a "protective put" is used to hedge a potential decline in a security and the security does decline in price, the put option's increased value may not completely offset the loss in the underlying security. Such a lack of correlation might occur due to factors unrelated to the value of the investments being hedged, such as changing interest rates, market liquidity, and speculative or other pressures on the markets in which the hedging instrument is traded.
(3) Hedging strategies, if successful, can reduce risk of loss by wholly or partially offsetting the negative effect of unfavorable price movements in the investments being hedged. However, hedging strategies can also reduce opportunity for gain by offsetting the positive effect of favorable price movements in the hedged investments.
(4) There is no assurance that an Underlying Fund will use hedging transactions. For example, if an Underlying Fund determines that the cost of hedging will exceed the potential benefit to the Underlying Funds, the Underlying Funds will not enter into such transaction.
FUND POLICIES FOR THE FUND
FUNDAMENTAL RESTRICTIONS. The Fund is subject to the following fundamental investment restrictions. Fundamental restrictions may be changed only by a vote of the lesser of (i) 67% or more of the Fund's shares present at a meeting if the holders of more than 50% of the outstanding shares are present in person or represented by proxy, or (ii) more than 50% of the Fund's outstanding shares. Consistent with applicable law and unless otherwise provided, all percentage limitations apply at the time of purchase.
(1) The Fund may not borrow money or issue senior securities, except as permitted by the 1940 Act Laws, Interpretations and Exemptions;
(2) The Fund may not underwrite the securities of other issuers. This restriction does not prevent the Fund from engaging in transactions involving the acquisition, disposition or resale of its portfolio securities, regardless of whether the Fund may be considered to be an underwriter under the Securities Act of 1933;
(3) The Fund will make investments that will result in the concentration
(as that term may be defined or interpreted by the 1940 Act Laws,
Interpretations and Exemptions) of its investments in the securities of
investment companies. This restriction does not limit the Fund's investments in
(i) obligations issued or guaranteed by the U.S. Government, its agencies or
instrumentalities, or (ii) tax-exempt obligations issued by governments or
political subdivisions of governments. In complying with this restriction, the
Fund will not consider a bank-issued guaranty or financial guaranty insurance as
a separate security;
(4) The Fund may not purchase real estate or sell real estate unless acquired as a result of ownership of securities or other instruments. This restriction does not prevent the Fund from investing in issuers that invest, deal, or otherwise engage in transactions in real estate or interests therein, or in investing in securities that are secured by real estate or interests therein;
(5) The Fund may not purchase physical commodities or sell physical commodities unless acquired as a result of ownership of securities or other instruments. This restriction does not prevent the Fund from engaging in transactions involving futures contracts and options thereon or investing in securities that are secured by physical commodities;
(6) The Fund may not make personal loans or loans of its assets to persons who control or are under common control with the Fund, except to the extent permitted by 1940 Act Laws, Interpretations and Exemptions. This restriction does not prevent the Fund from, among other things, purchasing debt obligations, entering into repurchase agreements, loaning its assets to broker-dealers or institutional investors, or investing in loans, including assignments and participation interests; and
(7) The Fund may, notwithstanding any other fundamental investment policy or limitation, invest all of its assets in the securities of a single open-end management investment company with substantially the same fundamental investment objectives, policies and limitations as that Fund.
The investment restrictions set forth above provide the Fund with the ability to operate under new interpretations of the 1940 Act or pursuant to exemptive relief from the SEC without receiving prior shareholder approval of the change. Even though the Fund has this flexibility, the Board has adopted non-fundamental restrictions for the Fund relating to certain of these restrictions which Invesco Aim and, when applicable, the Sub-advisors must follow in managing the Fund. Any changes to these non-fundamental restrictions, which are set forth below, require the approval of the Board.
NON-FUNDAMENTAL RESTRICTIONS. The following non-fundamental investment restrictions apply to the Fund. They may be changed for the Fund without approval of the Fund's voting securities.
(1) In complying with the fundamental restriction regarding borrowing money and issuing senior securities, the Fund may borrow money in an amount not exceeding 33a% of its total assets (including the amount borrowed) less liabilities (other than borrowings). The Fund may borrow from banks, broker-dealers or an AIM Fund. The Fund may borrow for temporary or emergency purposes, in anticipation of or in response to adverse market conditions, or for cash management purposes. The Fund may not purchase additional securities when any borrowings from banks exceed 5% of the Fund's total assets or when any borrowings from an AIM Fund are outstanding.
(2) In complying with the fundamental restriction regarding industry concentration, the Fund may invest up to 25% of its total assets in the securities of issuers whose principal business activities are in the same industry.
(3) In complying with the fundamental restriction with regard to making loans, the Fund may lend up to 331/3% of its total assets and may lend money to an AIM Fund, on such terms and conditions as the SEC may require in an exemptive order.
(4) Notwithstanding the fundamental restriction with regard to investing all assets in an open-end fund, the Fund may currently not invest all of its assets in the securities of a single open-end management investment company with the same fundamental investment objectives, policies and restrictions as the Fund.
(5) Notwithstanding the fundamental restriction with regard to engaging in transactions involving futures contracts and options thereon or investing in securities that are secured by physical commodities, the Fund currently may not invest in any security (including futures contracts or options thereon) that is secured by physical commodities.
The Fund does not consider currencies or other financial commodities or contracts and financial instruments to be physical commodities (which include, for example, oil, precious metals and grains). Accordingly, the Fund will interpret the restriction and the related non-fundamental restriction to permit the Funds, subject to the Fund's investment objectives and general investment policies (as stated in the Funds' prospectuses and herein), to invest directly in foreign currencies and other financial commodities and to purchase, sell or enter into commodity futures contracts and options thereon, foreign currency forward contracts, foreign currency options, currency-, commodity- and financial instrument-related swap agreements, hybrid instruments, interest rate or securities-related or foreign currency-related hedging instruments or other currency-, commodity- or financial instrument-related derivatives, subject to compliance with any applicable provisions of the federal securities or commodities laws. The Fund also will interpret its fundamental restriction regarding purchasing and selling physical commodities and its related non-fundamental restriction to permit the Fund to invest in exchange-traded funds that invest in physical and/or financial commodities, subject to the limits described in the Fund's prospectuses and herein.
Temporary Defensive Position
In anticipation of or in response to adverse market or other conditions, or atypical circumstances such as unusually large cash inflows or redemptions, the Fund may temporarily hold all or a portion of their assets in cash, cash equivalents or high-quality debt instruments (including shares of Affiliated Money Market Funds).
POLICIES AND PROCEDURES FOR DISCLOSURE OF FUND HOLDINGS
The Board has adopted policies and procedures with respect to the disclosure of the Fund's portfolio holdings (the "Holdings Disclosure Policy"). Non-public holdings information may not be disclosed except in compliance with the Holdings Disclosure Policy.
General Disclosures
The Holdings Disclosure Policy permits Invesco Aim to publicly release certain portfolio holdings information of the Fund from time to time. The Fund sells its shares to life insurance companies and their separate accounts to fund interests in variable annuity and variable life insurance policies issued by such companies, but not directly to the public. Accordingly, the Policy authorizes Invesco Aim to disclose, pursuant to the following table, the Fund's portfolio holdings information on a non-selective basis to all insurance companies whose variable annuity and variable life insurance separate accounts invest in the Fund and with which the Fund has entered into participation agreements ("Insurance Companies") and Invesco Aim has entered into a nondisclosure agreement:
DISCLOSURE DATE AVAILABLE/LAG
-------------------------------------- -------------------------------------------------------------------------------------------
Month-end top ten holdings Available 10 days after month-end (Holdings as of June 30 available July 10)
Calendar quarter-end complete holdings Available 25 days after calendar quarter-end (Holdings as of June 30 available July 25)
Fiscal quarter-end complete holdings Available 55 days after fiscal quarter-end (Holdings as of June 30 available August 24)
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Selective Disclosures
SELECTIVE DISCLOSURE - TO INSURANCE COMPANIES. The Policy permits Invesco Aim to disclose Fund Portfolio Holdings Information to Insurance Companies, upon request/on a selective basis, up to five days prior to the scheduled release dates of such information to allow the Insurance Companies to post the information on their websites at approximately the same time that Invesco Aim posts the same information. The Policy incorporates the Board's determination that selectively disclosing portfolio holdings information to facilitate an Insurance Company's dissemination of the information on its website is a legitimate business purpose of the Fund. Insurance Companies that wish to receive such portfolio holdings information in advance must sign a non-disclosure agreement requiring them to maintain the confidentiality of the information until the later of five business days or the scheduled release dates and to refrain from using that information to execute transactions in securities. Invesco Aim does not post the portfolio holdings of the Fund to its website. Not all insurance companies that receive Fund portfolio holdings information provide such information on their websites. To obtain information about Fund portfolio holdings, please contact the life insurance company that issued your variable annuity or variable life insurance policy.
SELECTIVE DISCLOSURE OF PORTFOLIO HOLDINGS PURSUANT TO NON-DISCLOSURE AGREEMENT. Employees of Invesco Aim and its affiliates may disclose non-public full portfolio holdings on a selective basis only if the Internal Compliance Controls Committee (the "ICCC") of Invesco Aim Management Group Inc. ("Invesco Aim Management") approves the parties to whom disclosure of non-public full portfolio holdings will be made. The ICCC must determine that the proposed selective disclosure will be made for legitimate business purposes of the applicable Fund and address any perceived conflicts of interest between shareholders of such Fund and Invesco Aim or its affiliates as part of granting its approval.
The Board exercises continuing oversight of the disclosure of Fund portfolio holdings by (1) overseeing the implementation and enforcement of the Holdings Disclosure Policy and the AIM Funds Code of Ethics by the Chief Compliance Officer (or his designee) of Invesco Aim and the AIM Funds and (2) considering reports and recommendations by the Chief Compliance Officer concerning any material compliance matters (as defined in Rule 38a-1 under the 1940 Act and Rule 206(4)-7 under the Investment Advisers Act of 1940, as amended) that may arise in connection with the Holdings Disclosure Policy. Pursuant to the Holdings Disclosure Policy, the Board reviews the types of situations in which Invesco Aim provides selective disclosure and approves situations involving perceived conflicts of interest between shareholders of the applicable Fund and Invesco Aim or its affiliates brought to the Board's attention by Invesco Aim.
Invesco Aim discloses non-public full portfolio holdings information to the following persons in connection with the day-to-day operations and management of the AIM Funds:
- Attorneys and accountants;
- Securities lending agents;
- Lenders to the AIM Funds;
- Rating and rankings agencies;
- Persons assisting in the voting of proxies;
- AIM Funds' custodians;
- The AIM Funds' transfer agent(s) (in the event of a redemption in kind);
- Pricing services, market makers, or other persons who provide systems or software support in connection with AIM Funds' operations (to determine the price of securities held by an AIM Fund);
- Financial printers;
- Brokers identified by the AIM Funds' portfolio management team who provide execution and research services to the team; and
- Analysts hired to perform research and analysis to the AIM Funds' portfolio management team.
In many cases, Invesco Aim will disclose current portfolio holdings on a daily basis to these persons. In these situations, Invesco Aim has entered into non-disclosure agreements which provide that the recipient of the portfolio holdings will maintain the confidentiality of such portfolio holdings and will not trade on such information ("Non-Disclosure Agreements"). Please refer to Appendix B for a list of examples of persons to whom Invesco Aim provides non-public portfolio holdings on an ongoing basis.
Invesco Aim will also disclose non-public portfolio holdings information if such disclosure is required by applicable laws, rules or regulations, or by regulatory authorities having jurisdiction over Invesco Aim and its affiliates or the Fund.
The Holdings Disclosure Policy provides that Invesco Aim will not request, receive or accept any compensation (including compensation in the form of the maintenance of assets in any Fund or other mutual fund or account managed by Invesco Aim or one of its affiliates) for the selective disclosure of portfolio holdings information.
DISCLOSURE OF CERTAIN PORTFOLIO HOLDINGS AND RELATED INFORMATION WITHOUT NON-DISCLOSURE AGREEMENT. Invesco Aim and its affiliates that provide services to the Fund, the Sub-Advisors and each of their employees may receive or have access to portfolio holdings as part of the day-to-day operations of the Fund.
From time to time, employees of Invesco Aim and its affiliates may express their views orally or in writing on one or more of the Fund's portfolio securities or may state that the Fund has recently purchased or sold, or continues to own, one or more securities. The securities subject to these views and statements may be ones that were purchased or sold since the Fund's most recent quarter-end and therefore may not be reflected on the list of the Fund's most recent quarter-end portfolio holdings. Such views and statements may be made to various persons, including members of the press, brokers and other financial intermediaries that sell shares of the Fund. The nature and content of the views and statements provided to each of these persons may differ.
From time to time, employees of Invesco Aim and its affiliates also may provide oral or written information ("portfolio commentary") about the Fund, including, but not limited to, how the Fund's investments are divided among various sectors, industries, countries, investment styles and capitalization sizes, and among stocks, bonds, currencies and cash, security types, bond maturities, bond coupons and bond credit quality ratings. This portfolio commentary may also include information on how these various weightings and factors contributed to Fund performance. Invesco Aim may also provide oral or written information ("statistical information") about various financial characteristics of the Fund or its underlying portfolio securities including, but not limited to, alpha, beta, R-squared, coefficient of determination, duration, maturity, information ratio, sharpe ratio, earnings growth, payout ratio, price/book value, projected earnings growth, return on equity, standard deviation, tracking error, weighted average quality, market capitalization, percent debt to equity, price to cash flow, dividend yield or growth, default rate, portfolio turnover, and risk and style characteristics. This portfolio commentary and statistical information about the Fund may be based on the Fund's portfolio as of the most recent quarter-end or the end of some other interim period, such as month-end. The portfolio commentary and statistical information may be provided to various persons, including those described in the preceding paragraph. The nature and content of the information provided to each of these persons may differ.
DISCLOSURE OF PORTFOLIO HOLDINGS BY TRADERS. Additionally, employees of Invesco Aim and its affiliates may disclose one or more of the portfolio securities of the Fund when purchasing and selling securities through broker-dealers, requesting bids on securities, obtaining price quotations on securities, or in connection with litigation involving the Fund's portfolio securities. Invesco Aim does not enter into formal Non-Disclosure Agreements in connection with these situations; however, the Fund would not continue to conduct business with a person who Invesco Aim believed was misusing the disclosed information.
MANAGEMENT OF THE TRUST
BOARD OF TRUSTEES
The Trustees have the authority to take all actions necessary in connection with the business affairs of the Trust. The Trustees, among other things, approve the investment objectives, policies and procedures for the Fund. The Trust enters into agreements with various entities to manage the day-to-day operations of the Fund, including the Fund's investment advisers, administrator, transfer agent, distributor and custodians. The Trustees are responsible for selecting these service providers, and approving the terms of their contracts with the Fund. On an ongoing basis, the Trustees exercise general oversight of these service providers.
Certain trustees and officers of the Trust are affiliated with Invesco Aim and Invesco Aim Management, the parent corporation of Invesco Aim. All of the Trust's executive officers hold similar offices with some or all of the other AIM Funds.
MANAGEMENT INFORMATION
The trustees and officers of the Trust, their principal occupations during the last five years and certain other information concerning them are set forth in Appendix C.
The standing committees of the Board are the Audit Committee, the Compliance Committee, the Governance Committee, the Investments Committee, the Valuation, Distribution and Proxy Oversight Committee and the Special Market Timing Litigation Committee (the "Committees").
The members of the Audit Committee are Messrs. James T. Bunch (Vice Chair),
Bruce L. Crockett, Lewis F. Pennock, Raymond Stickel, Jr. (Chair)and Dr. Larry
Soll (Vice Chair). The Audit Committee's primary purposes are to: (i) oversee
qualifications and performance of the independent registered public accountant;
(ii) appoint independent registered public accountants for the Fund; (iii)
pre-approve all permissible audit and non-audit services that are provided to
the Fund by its independent registered public accountants to the extent required
by Section 10A(h) and (i) of the Exchange Act, (iv) pre-approve, in accordance
with Rule 2-01(c)(7)(ii) of Regulation S-X, certain non-audit services provided
by the Fund's independent registered public accountants to the Fund's investment
adviser and certain other affiliated entities; (v) review the audit and tax
plans prepared by the independent registered public accountants; (vi) review the
Fund's audited financial statements; (vii) review the process that management
uses to evaluate and certify disclosure controls and procedures in Form N-CSR;
(viii) review the process for preparation and review of the Fund's shareholder
reports; (ix) review certain tax procedures maintained by the Fund; (x) review
modified or omitted officer certifications and disclosures; (xi) review any
internal audits of the Fund; (xii) establish procedures regarding questionable
accounting or auditing matters and other alleged violations; (xiii) set hiring
policies for employees and proposed employees of the Fund who are employees or
former employees of the independent registered public accountants; and (xiv)
remain informed of (a) the Fund accounting systems and controls, (b) regulatory
changes and new accounting pronouncements that affect the Fund's net asset value
calculations and financial statement reporting requirements, and
(c) communications with regulators regarding accounting and financial reporting matters that pertain to the Fund. During the fiscal year ended December 31, 2007, the Audit Committee held six meetings.
The members of the Compliance Committee are Messrs. Frank S. Bayley, Mr.
Crockett (Chair), Albert R. Dowden (Vice Chair) and Mr. Stickel. The Compliance
Committee is responsible for: (i) recommending to the Board and the independent
trustees the appointment, compensation and removal of the Funds' Chief
Compliance Officer; (ii) recommending to the independent trustees the
appointment, compensation and removal of the Fund's Senior Officer appointed
pursuant to the terms of the Assurances of Discontinuance entered into by the
New York Attorney General, Invesco Aim and INVESCO Funds Group, Inc. ("IFG");
(iii) recommending to the independent trustees the appointment and removal of
Invesco Aim's independent Compliance Consultant (the "Compliance Consultant")
and reviewing the report prepared by the Compliance Consultant upon its
compliance review of Invesco Aim (the "Report") and any objections made by
Invesco Aim with respect to the Report; (iv) reviewing any report prepared by a
third party who is not an interested person of Invesco Aim, upon the conclusion
by such third party of a compliance review of Invesco Aim; (v) reviewing all
reports on compliance matters from the Fund's Chief Compliance Officer, (vi)
reviewing all recommendations made by the Senior Officer regarding Invesco Aim's
compliance procedures, (vii) reviewing all reports from the Senior Officer of
any violations of state and federal securities laws, the Colorado Consumer
Protection Act, or breaches of Invesco Aim's fiduciary duties to Fund
shareholders and of Invesco Aim's Code of Ethics; (viii) overseeing all of the
compliance policies and procedures of the Funds and their service providers
adopted pursuant to Rule 38a-1 of the 1940 Act; (ix) from time to time,
reviewing certain matters related to redemption fee waivers and recommending to
the Board whether or not to approve such matters; (x) receiving and reviewing
quarterly reports on the activities of Invesco Aim's Internal Compliance
Controls Committee; (xi) reviewing all reports made by Invesco Aim's Chief
Compliance Officer; (xii) reviewing and recommending to the independent trustees
whether to approve procedures to investigate matters brought to the attention of
Invesco Aim's ombudsman; (xiii) risk management oversight with respect to the
Fund and, in connection therewith, receiving and overseeing risk management
reports from Invesco Ltd. ("Invesco") that are applicable to the Fund or its
service providers; and (xiv) overseeing potential conflicts of interest that are
reported to the Compliance Committee by Invesco Aim, the Chief Compliance
Officer, the Senior Officer and/or the Compliance Consultant. During the fiscal
year ended December 31, 2007, the Compliance Committee held seven meetings.
The members of the Governance Committee are Messrs. Bob R. Baker, Bayley, Dowden (Chair), Jack M. Fields (Vice Chair), Carl Frischling and Dr. Prema Mathai-Davis. The Governance Committee is responsible for: (i) nominating persons who will qualify as independent trustees for (a) election as trustees in connection with meetings of shareholders of the Fund that are called to vote on the election of trustees, (b) appointment by the Board as trustees in connection with filling vacancies that arise in between meetings of shareholders; (ii) reviewing the size of the Board, and recommending to the Board whether the size of the Board shall be increased or decreased; (iii) nominating the Chair of the Board; (iv) monitoring the composition of the Board and each committee of the Board, and monitoring the qualifications of all trustees; (v) recommending persons to serve as members of each committee of the Board (other than the Compliance Committee), as well as persons who shall serve as the chair and vice chair of each such committee; (vi) reviewing and recommending the amount of compensation payable to the independent trustees; (vii) overseeing the selection of independent legal counsel to the independent trustees; (viii) reviewing and approving the compensation paid to independent legal counsel and to the independent trustees; (ix) reviewing and approving the compensation paid to counsel and other advisers, if any, to the Committees of the Board; and (x) reviewing as they deem appropriate administrative and/or logistical matters pertaining to the operations of the Board.
The Governance Committee will consider nominees recommended by a
shareholder to serve as trustees, provided: (i) that such person is a
shareholder of record at the time he or she submits such names and is entitled
to vote at the meeting of shareholders at which trustees will be elected; and
(ii) that the Governance Committee or the Board, as applicable, shall make the
final determination of persons to
be nominated. During the fiscal year ended December 31, 2007, the Governance Committee held eight meetings.
Notice procedures set forth in the Trust's bylaws require that any shareholder of the Fund desiring to nominate a trustee for election at a shareholder meeting must submit to the Trust's Secretary the nomination in writing not later than the close of business on the later of the 90th day prior to such shareholder meeting or the tenth day following the day on which public announcement is made of the shareholder meeting and not earlier than the close of business on the 120th day prior to the shareholder meeting.
The members of the Investments Committee are Messrs. Baker (Vice Chair), Bayley (Chair), Bunch, Crockett, Dowden, Fields, Martin L. Flanagan, Frischling, Pennock, Stickel, Philip A. Taylor and Drs. Mathai-Davis (Vice Chair) and Soll (Vice Chair). The Investments Committee's primary purposes are to: (i) assist the Board in its oversight of the investment management services provided by Invesco Aim and the Sub-Advisors; and (ii) review all proposed advisory, sub-advisory and distribution arrangements for the Fund, and to recommend what action the full Boards and the independent trustees take regarding the approval of all such proposed arrangements and the continuance of all such existing arrangements. During the fiscal year ended December 31, 2007, the Investments Committee held six meetings.
The Investments Committee has established three Sub-Committees. The
Sub-Committees are responsible for: (i) reviewing the performance, fees and
expenses of the Fund that has been assigned to a particular Sub-Committee (for
each Sub-Committee, the "Designated Funds"), unless the Investments Committee
takes such action directly; (ii) reviewing with the applicable portfolio
managers from time to time the investment objective(s), policies, strategies and
limitations of the Designated Funds; (iii) evaluating the investment advisory,
sub-advisory and distribution arrangements in effect or proposed for the
Designated Funds, unless the Investments Committee takes such action directly;
(iv) being familiar with the registration statements and periodic shareholder
reports applicable to their Designated Funds; and (v) such other
investment-related matters as the Investments Committee may delegate to the
Sub-Committee from time to time.
The members of the Valuation, Distribution and Proxy Oversight Committee are Messrs. Baker, Bunch, Fields, Frischling (Chair), Pennock (Vice Chair), Taylor and Drs. Mathai-Davis and Soll. The primary purposes of the Valuation, Distribution and Proxy Oversight Committee are: (a) to address issues requiring action or oversight by the Board of the AIM Funds (i) in the valuation of the AIM Funds' portfolio securities consistent with the Pricing Procedures, (ii) in oversight of the creation and maintenance by the principal underwriters of the AIM Funds of an effective distribution and marketing system to build and maintain an adequate asset base and to create and maintain economies of scale for the AIM Funds, (iii) in the review of existing distribution arrangements for the AIM Funds under Rule 12b-1 and Section 15 of the 1940 Act, and (iv) in the oversight of proxy voting on portfolio securities of the funds; and (b) to make regular reports to the full Boards of the AIM Funds.
The Valuation, Distribution and Proxy Oversight Committee is responsible
for: (a) with regard to valuation, (i) developing an understanding of the
valuation process and the Pricing Procedures, (ii) reviewing the Pricing
Procedures and making recommendations to the full Board with respect thereto,
(iii) reviewing the reports described in the Pricing Procedures and other
information from Invesco Aim regarding fair value determinations made pursuant
to the Pricing Procedures by Invesco Aim's internal valuation committee and
making reports and recommendations to the full Board with respect thereto, (iv)
receiving the reports of Invesco Aim's internal valuation committee requesting
approval of any changes to pricing vendors or pricing methodologies as required
by the Pricing Procedures and the annual report of Invesco Aim evaluating the
pricing vendors, approving changes to pricing vendors and pricing methodologies
as provided in the Pricing Procedures, and recommending annually the pricing
vendors for approval by the full Board, (v) upon request of Invesco Aim,
assisting Invesco Aim's internal valuation committee or the full Board in
resolving particular fair valuation issues, (vi) reviewing the reports described
in the Procedures for Determining the Liquidity of Securities (the "Liquidity
Procedures") and
other information from Invesco Aim regarding liquidity determinations made
pursuant to the Liquidity Procedures by Invesco Aim and making reports and
recommendations to the full Board with respect thereto, and (vii) overseeing
actual or potential conflicts of interest by investment personnel or others that
could affect their input or recommendations regarding pricing or liquidity
issues; (b) with regard to distribution, (i) developing and understanding of
mutual fund distribution and marketing channels and legal, regulatory and market
developments regarding distribution, (ii) reviewing periodic distribution and
marketing determinations and annual approval of distribution arrangements and
making reports and recommendations to the full Board with respect thereto, and
(iii) reviewing other information from the principal underwriters to the AIM
Funds regarding distribution and marketing of the AIM Funds and making
recommendations to the full Board with respect thereto; and (c) with regard to
proxy voting, (i) overseeing the implementation of the Proxy Voting Guidelines
(the "Guidelines") and the Proxy Policies and Procedures (the "Proxy
Procedures") by Invesco Aim and the Sub-Advisors, reviewing the Quarterly Proxy
Voting Report and making recommendations to the full Board with respect thereto,
(ii) reviewing the Guidelines and the Proxy Procedures and information provided
by Invesco Aim and the Sub-Advisors regarding industry developments and best
practices in connection with proxy voting and making recommendations to the full
Board with respect thereto, and (iii) in implementing its responsibilities in
this area, assisting Invesco Aim in resolving particular proxy voting issues.
During the fiscal year ended December 31, 2007, the Valuation, Distribution and
Proxy Oversight Committee held four meetings.
The members of the Special Market Timing Litigation Committee are Messrs.
Bayley, Bunch (Chair), Crockett and Dowden (Vice Chair). The Special Market
Timing Litigation Committee is responsible: (i) for receiving reports from time
to time from management, counsel for management, counsel for the AIM Funds and
special counsel for the independent trustees, as applicable, related to (a) the
civil lawsuits, including purported class action and shareholder derivative
suits, that have been filed against the AIM Funds concerning alleged excessive
short term trading in shares of the AIM Funds ("market timing") and (b) the
civil enforcement actions and investigations related to market timing activity
in the AIM Funds that were settled with certain regulators, including without
limitation the SEC, the New York Attorney General and the Colorado Attorney
General, and for recommending to the independent trustees what actions, if any,
should be taken by the AIM Funds in light of all such reports; (ii) for
overseeing the investigation(s) on behalf of the independent trustees by special
counsel for the independent trustees and the independent trustees' financial
expert of market timing activity in the AIM Funds, and for recommending to the
independent trustees what actions, if any, should be taken by the AIM Funds in
light of the results of such investigation(s); (iii) for (a) reviewing the
methodology developed by Invesco Aim's Independent Distribution Consultant (the
"Distribution Consultation") for the monies ordered to be paid under the
settlement order with the SEC, and making recommendations to the independent
trustees as to the acceptability of such methodology and (b) recommending to the
independent trustees whether to consent to any firm with which the Distribution
Consultant is affiliated entering into any employment, consultant,
attorney-client, auditing or other professional relationship with Invesco Aim,
or any of its present or former affiliates, directors, officers, employees or
agents acting in their capacity as such for the period of the Distribution
Consultant's engagement and for a period of two years after the engagement; and
(iv) for taking reasonable steps to ensure that any AIM Fund which the Special
Market Timing Litigation Committee determines was harmed by improper market
timing activity receives what the Special Market Timing Litigation Committee
deems to be full restitution. During the fiscal year ended December 31, 2007,
the Special Market Timing Litigation Committee did not meet.
Trustee Ownership of Fund Shares
The dollar range of equity securities beneficially owned by each trustee
(i) in the Fund and (ii) on an aggregate basis, in all registered investment
companies overseen by the trustees in the AIM Funds Complex is set forth in
Appendix C.
COMPENSATION
Each trustee who is not affiliated with Invesco 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. 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. The Chair of the Board and Chairs and Vice Chairs of certain committees receive additional compensation for their services.
Information regarding compensation paid or accrued for each trustee of the Trust who was not affiliated with Invesco Aim during the year ended December 31, 2007 is found in Appendix D. Appendix D also provides information regarding compensation paid to Russell Burk, the Funds' Senior Vice President and Senior Officer, during the year ended December 31, 2007.
Retirement Plan For Trustees
The trustees have adopted a retirement plan for the trustees of the Trust who are not affiliated with Invesco Aim.
The trustees have also adopted a retirement policy that permits each non-Invesco Aim-affiliated trustee to serve until December 31 of the year in which the trustee turns 75. 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-Invesco Aim-affiliated trustee of the 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. Effective January 1, 2006, for retirement after December 31, 2005, the retirement benefits will equal 75% of the trustee's annual retainer paid to or accrued by any Covered Fund with respect 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 amount of the annual retirement benefit does not include additional compensation paid for Board meeting fees or compensation paid to the Chair of the Board and the Chairs and Vice Chairs of certain Board committees, whether such amounts are paid directly to the Trustee or deferred. The annual retirement benefit is payable in quarterly installments for a number of years equal to the lesser of (i) sixteen years or (ii) the number of such trustee's credited years of service. If a trustee dies prior to receiving the full amount of retirement benefits, the remaining payments will be made to the deceased trustee's designated beneficiary for the same length of time that the trustee would have received the payments based on his or her service. A trustee must have attained the age of 65 (60 in the event of death or disability) to receive any retirement benefit. A trustee may make an irrevocable election to commence payment of retirement benefits is upon retirement from the Board before age 72; in such a case, the annual retirement benefit is subject to a reduction for early payment.
Deferred Compensation Agreements
Messrs. Crockett, Edward K. Dunn, Jr. (a former trustee), Fields, Frischling and Drs. Mathai-Davis and Soll (for purposes of this paragraph only, the "Deferring Trustees") have each executed a Deferred Compensation Agreement (collectively, the "Compensation Agreements"). Pursuant to the Compensation Agreements, the Deferring Trustees have the option to elect to defer receipt of up to 100% of their compensation payable by the Trust, and such amounts are placed into a deferral account and deemed to be invested in one or more AIM Funds selected by the Deferring Trustees. Distributions from the Deferring Trustees' deferral accounts will be paid in cash, generally in equal quarterly installments over a period of up to ten (10) years (depending on the Compensation Agreement) beginning on the date selected under the Compensation Agreement. If a Deferring Trustee dies prior to the distribution of amounts in his or her deferral account, the balance of the deferral account will be distributed to his or her designated beneficiary. The Compensation Agreements are not funded and, with respect to the payments of amounts held in the deferral accounts, the Deferring Trustees have the status of unsecured creditors of the Trust and of each other AIM Fund from which they are deferring compensation.
CODE OF ETHICS
Invesco Aim, the Trust, Invesco Aim Distributors and the Sub-Advisors have adopted Codes of Ethics which apply to all AIM Fund trustees and officers, employees of Invesco Aim, the Sub-Advisors and their affiliates and govern, among other things, personal trading activities of all such persons. The Codes of Ethics are intended to address conflicts of interest with the Trust that may arise from personal trading, including personal trading in most of the funds within The AIM Family of Funds(R). Personal trading, including personal trading involving securities that may be purchased or held by a fund within The AIM Family of Funds(R), is permitted under the Codes subject to certain restrictions; however employees are required to pre-clear security transactions with the applicable Compliance Officer or a designee and to report transactions on a regular basis.
PROXY VOTING POLICIES
The Board has delegated responsibility for decisions regarding proxy voting for securities held by the Fund to the following Advisor/Sub-Advisor (as defined herein):
FUND NAME ADVISOR/SUB-ADVISOR
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AIM V.I. PowerShares ETF Allocation Fund Invesco Aim
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Invesco Aim or the Sub-Advisor, as applicable, will vote such proxies in accordance with its proxy policies and procedures, which have been reviewed by the Board, and which are found in Appendix E.
Any material changes to the proxy policies and procedures will be submitted to the Board for approval. The Board will be supplied with a summary quarterly report of the Fund's proxy voting record.
Once the Fund commences operations, information regarding how the Fund voted proxies related to their portfolio securities during the 12 months ended June 30, 2008 will be available, without charge, at our website, http://www.invescoaim.com. This information is also available at the SEC website, http://www.sec.gov.
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES
Information about the ownership of each class of each Fund's shares in the Trust by certain beneficial or record owners of such Fund and by trustees and officers as a group is found in Appendix F. A shareholder who owns beneficially 25% or more of the outstanding shares of a fund is presumed to "control" that fund.
INVESTMENT ADVISORY AND OTHER SERVICES
INVESTMENT ADVISOR
Invesco Aim, the Fund's investment advisor, was organized in 1976, and along with its subsidiaries, manages or advises over 225 investment portfolios encompassing a broad range of investment objectives. Invesco Aim is a direct, wholly owned subsidiary of Invesco Aim Management, a holding company that has been engaged in the financial services business since 1976. Invesco Aim Management is an indirect, wholly owned subsidiary of Invesco. Invesco and its subsidiaries are an independent global investment management group. Certain of the directors and officers of Invesco Aim are also executive officers of the Trust and their affiliations are shown under "Management Information" herein.
As investment advisor, Invesco Aim supervises all aspects of the Fund's operations and provides investment advisory services to the Fund. Invesco Aim obtains and evaluates economic,
statistical and financial information to formulate and implement investment programs for the Fund. The Investment Advisory Agreement provides that, in fulfilling its responsibilities, Invesco Aim may engage the services of other investment managers with respect to the Fund. The investment advisory services of Invesco Aim are not exclusive and Invesco Aim is free to render investment advisory services to others, including other investment companies.
Invesco Aim is also responsible for furnishing to the Fund, at Invesco Aim's expense, the services of persons believed to be competent to perform all supervisory and administrative services required by the Fund, in the judgment of the trustees, to conduct their respective businesses effectively, as well as the offices, equipment and other facilities necessary for their operations. Such functions include the maintenance of the Fund's accounts and records, and the preparation of all requisite corporate documents such as tax returns and reports to the SEC and shareholders.
The Advisory Agreement provides that the Fund will pay or cause to be paid all expenses of the Fund not assumed by Invesco Aim, including, without limitation: brokerage commissions, taxes, legal, auditing or governmental fees, the cost of preparing share certificates, custodian, transfer and shareholder service agent costs, expenses of issue, sale, redemption, and repurchase of shares, expenses of registering and qualifying shares for sale, expenses relating to trustees and shareholder meetings, the cost of preparing and distributing reports and notices to shareholders, the fees and other expenses incurred by the Trust on behalf of the Fund in connection with membership in investment company organizations, and the cost of printing copies of prospectuses and statements of additional information distributed to the Fund's shareholders.
Invesco Aim, at its own expense, furnishes to the Trust office space and facilities. Invesco Aim furnishes to the Trust all personnel for managing the affairs of the Trust and each of its series of shares.
Pursuant to the Advisory Agreement with the Trust, Invesco Aim receives a monthly fee from the Fund calculated at the annual rates indicated in the second column below, based on the average daily net assets of the Fund during the year. The Fund allocates advisory fees to a class based on the relative net assets of each class.
ANNUAL RATE/NET ASSETS
FUND NAME PER ADVISORY AGREEMENT
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AIM V.I. PowerShares ETF Allocation Fund
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Invesco Aim may from time to time waive or reduce its fee. Voluntary fee waivers or reductions may be rescinded at any time without further notice to investors. During periods of voluntary fee waivers or reductions, Invesco Aim will retain its ability to be reimbursed for such fee prior to the end of each fiscal year. Contractual fee waivers or reductions set forth in the Fee Table in a Prospectus may not be terminated or amended to the Fund's detriment during the period stated in the agreement between Invesco Aim and the Fund.
Invesco Aim has contractually agreed through at least April 30, 2009 to waive advisory fees payable by the Fund in an amount equal to 100% of the advisory fee Invesco Aim receives from the Affiliated Money Market Funds as a result of the Fund's investment of uninvested cash in the Affiliated Money Market Funds. See "Description of the Funds and Their Investments and Risks - Investment Strategies and Risks - Other Investments - Other Investment Companies."
Invesco Aim has contractually agreed to waive advisory fees and/or
reimburse expenses through April 30, 2009, to the extent necessary to limit
Total Annual Fund Operating Expenses (excluding: (i) interest; (ii) taxes; (iii)
dividend expense on short sales; (iv) extraordinary items; (v) expenses related
to a merger or reorganizations as approved by the Fund's Board of Trustees; and
(vi) expenses that the Fund has incurred but did not actually pay because of an
expense offset arrangement) for the following Fund's shares as follows:
FUND EXPENSE LIMITATION
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AIM V.I. PowerShares ETF Allocation Fund - Series I [____%]
Series II [____%]
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Contractual fee waivers or reductions may not be terminated or amended to the Fund's detriment during the period stated in the agreement between Invesco Aim and the Fund.
INVESTMENT SUB-ADVISOR
Invesco Aim has entered into a Sub-Advisory Agreement with certain affiliates to serve as sub-advisors to the Fund, pursuant to which these affiliated sub-advisors may be appointed by Invesco Aim from time to time to provide discretionary investment management services, investment advice, and/or order execution services to the Fund. These affiliated sub-advisors, each of which is a registered investment advisor under the Advisors Act, are:
Invesco Asset Management Deutschland GmbH ("Invesco Deutschland");
Invesco Asset Management Ltd. ("Invesco Asset Management");
Invesco Asset Management (Japan) Limited ("Invesco Japan");
Invesco Australia Limited ("Invesco Australia");
Invesco Global Asset Management (N.A.), Inc. ("Invesco Global");
Invesco Hong Kong Limited ("Invesco Hong Kong");
Invesco Institutional (N.A.), Inc. ("Invesco Institutional"); and
Invesco Senior Secured Management, Inc. ("Invesco Senior Secured"); and
AIM Funds Management Inc. ("AFMI") (AFMI anticipates changing its name to Invesco Trimark Ltd. on or prior to December 31, 2008) (each a "Sub-Advisor" and collectively, the "Sub-Advisors").
Invesco Aim and each Sub-Advisor are indirect wholly owned subsidiaries of Invesco.
The only fees payable to the Sub-Advisors under the Sub-Advisory Agreement are for providing discretionary investment management services. For such services, Invesco Aim will pay each Sub-Advisor a fee, computed daily and paid monthly, equal to (i) 40% of the monthly compensation that Invesco Aim receives from the Trust, multiplied by (ii) the fraction equal to the net assets of such Fund as to which such Sub-Advisor shall have provided discretionary investment management services for that month divided by the net assets of such Fund for that month. Pursuant to the Sub-Advisory Agreement, this fee is reduced to reflect contractual or voluntary fee waivers or expense limitations by Invesco Aim, if any, in effect from time to time. In no event shall the aggregate monthly fees paid to the Sub-Advisors under the Sub-Advisory Agreement exceed 40% of the monthly compensation that Invesco Aim receives from the Trust pursuant to its advisory agreement with the Trust, as reduced to reflect contractual or voluntary fees waivers or expense limitations by Invesco Aim, if any.
Portfolio Managers
Appendix G contains the following information regarding the portfolio managers identified in the Fund's prospectus:
- The dollar range of the managers' investments in the Fund.
- A description of the managers' compensation structure.
- Information regarding other accounts managed by the manager and potential conflicts of interest that might arise from the management of multiple accounts.
Securities Lending Arrangements
If the Fund engages in securities lending, Invesco Aim will provide the Fund investment advisory services and related administrative services. The Advisory Agreement describes the administrative services to be rendered by Invesco Aim if the Fund engages in securities lending activities, as well as the compensation Invesco Aim may receive for such administrative services. Services to be provided include: (a) overseeing participation in the securities lending program to ensure compliance with all applicable regulatory and investment guidelines; (b) assisting the securities lending agent or principal (the agent) in determining which specific securities are available for loan; (c) monitoring the agent to ensure that securities loans are effected in accordance with Invesco Aim's instructions and with procedures adopted by the Board; (d) preparing appropriate periodic reports for, and seeking appropriate approvals from, the Board with respect to securities lending activities; (e) responding to agent inquiries; and (f) performing such other duties as may be necessary.
Invesco Aim's compensation for advisory services rendered in connection with securities lending is included in the advisory fee schedule. As compensation for the related administrative services Invesco Aim will provide, a lending Fund will pay Invesco Aim a fee equal to 25% of the net monthly interest or fee income retained or paid to the Fund from such activities. Invesco Aim currently intends to waive such fee, and has agreed to seek Board approval prior to its receipt of all or a portion of such fee.
SERVICES AGREEMENTS
ADMINISTRATIVE SERVICES AGREEMENT. Invesco Aim and the Trust have entered into a Master Administrative Services Agreement ("Administrative Services Agreement") pursuant to which Invesco Aim may perform or arrange for the provision of certain accounting and other administrative services to the Fund which are not required to be performed by Invesco Aim under the Advisory Agreement. The Administrative Services Agreement provides that it will remain in effect and continue from year to year only if such continuance is specifically approved at least annually by the Board, including the independent trustees, by votes cast in person at a meeting called for such purpose. Under the Administrative Services Agreement, Invesco Aim is entitled to receive from the Funds reimbursement of its costs or such reasonable compensation as may be approved by the Board. Currently, Invesco Aim is reimbursed for the services of the Trust's principal financial officer and her staff, and any expenses related to fund accounting services. In addition, Invesco Aim contracts with Participating Insurance Companies to provide certain services related to operations of the Trust. These services may include, among other things: the printing of prospectuses, financial reports and proxy statements and the delivery of the same to existing Contract owners; the maintenance of master accounts; the facilitation of purchases and redemptions requested by Contract owners; and the servicing of Contract owner accounts.
Each Participating Insurance Company negotiates the fees to be paid for the provision of these services. The cost of providing the services and the overall package of services provided may vary from one Participating Insurance Company to another. Invesco Aim does not make an independent assessment of the cost of providing such services.
The Fund agreed to reimburse Invesco Aim for its costs in paying the Participating Insurance Companies that provide these services, currently subject to an annual limit of 0.25% of the average net assets invested in the Fund by each Participating Insurance Company. Any amounts paid by Invesco Aim to a Participating Insurance Company in excess of 0.25% of the average net assets invested in the Fund are paid by Invesco Aim out of its own financial resources.
OTHER SERVICE PROVIDERS
TRANSFER AGENT. Invesco Aim Investment Services, Inc. ("Invesco Aim Investment Services"), 11 Greenway Plaza, Suite 100, Houston, Texas 77046, a wholly owned subsidiary of Invesco Aim, is the Trust's transfer agent.
The Transfer Agency and Service Agreement (the "TA Agreement") between the Trust and Invesco Aim Investment Services provides that Invesco Aim Investment Services will perform certain shareholder services for the Funds. The TA Agreement provides that Invesco Aim Investment Services will receive a per trade fee plus out-of-pocket expenses to process orders for purchases, and redemptions of shares; prepare and transmit payments for dividends and distributions declared by the Funds; and maintain shareholder accounts.
SUB-TRANSFER AGENT. AFMI, 5140 Yonge Street, Suite 900, Toronto, Ontario M2N6X7, a wholly owned, indirect subsidiary of Invesco, provides services to the Trust as a sub-transfer agent, pursuant to an agreement between AFMI and Invesco Aim Investment Services. The Trust does not pay a fee to AFMI for these services. Rather AFMI is compensated by Invesco Aim Investment Services, as a sub-contractor.
CUSTODIANS. State Street Bank and Trust Company (the "Custodian"), 225 Franklin Street, Boston, Massachusetts 02110, is custodian of all securities and cash of the Fund. JPMorgan Chase Bank, N.A., 712 Main, Houston, Texas 77002, serves as sub-custodian for purchases of shares of the Fund. The Bank of New York, 2 Hanson Place, Brooklyn, New York 11217-1431, also serves as sub-custodian to facilitate cash management.
The Custodian is authorized to establish separate accounts in foreign countries and to cause foreign securities owned by the Fund to be held outside the United States in branches of U.S. banks and, to the extent permitted by applicable regulations, in certain foreign banks and securities depositories. Invesco Aim is responsible for selecting eligible foreign securities depositories and for assessing the risks associated with investing in foreign countries, including the risk of using eligible foreign securities depositories in a country. The Custodian is responsible for monitoring eligible foreign securities depositories.
Under their contract with the Trust, the Custodian maintains the portfolio securities of the Funds, administers the purchases and sales of portfolio securities, collects interest and dividends and other distributions made on the securities held in the portfolios of the Funds and performs other ministerial duties. These services do not include any supervisory function over management or provide any protection against any possible depreciation of assets.
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM. The Funds' independent registered public accounting firm is responsible for auditing the financial statements of the Funds. The Audit Committee of the Board has appointed ___________________, as the independent registered public accounting firm to audit the financial statements of the Funds. Such appointment was ratified and approved by the Board.
COUNSEL TO THE TRUST. Legal matters for the Trust have been passed upon by Stradley Ronon Stevens & Young LLP, 2600 One Commerce Square, Philadelphia, Pennsylvania 19103.
BROKERAGE ALLOCATION AND OTHER PRACTICES
The Sub-Advisors have adopted compliance procedures that cover, among other items, brokerage allocation and other trading practices. Unless specifically noted, the Sub-Advisors' procedures do not materially differ from Invesco Aim's procedures discussed below.
BROKERAGE TRANSACTIONS
Invesco Aim or the Sub-Advisor makes decisions to buy and sell securities for the Fund, selects broker-dealers (each, a "Broker"), effects the Fund's investment portfolio transactions, allocates brokerage fees in such transactions and, where applicable, negotiates commissions and spreads on transactions. Invesco Aim and the Sub-Advisor's primary consideration in effecting a security transaction is to obtain best execution, which is defined as prompt and efficient execution of the transaction at the best obtainable price with payment of commissions, mark-ups or mark-downs which are reasonable in relation to the value of the brokerage services provided by the Broker. While Invesco Aim and the Sub-Advisors seek reasonably competitive commission rates, the Fund may not pay the lowest commission or spread available. See "Broker Selection" below.
Some of the securities in which the Fund invests are traded in over-the-counter markets. Portfolio transactions placed in such markets may be effected on a principal basis at net prices without commissions, but which include compensation to the Broker in the form of a mark up or mark down, or on an agency basis, which involves the payment of negotiated brokerage commissions to the Broker, including electronic communication networks. Purchases of underwritten issues include a commission or concession paid by the issuer (not the Fund) to the underwriter. Purchases of money market instruments may be made directly from issuers without the payment of commissions.
Traditionally, commission rates have not been negotiated on stock markets outside the United States. Although in recent years many overseas stock markets have adopted a system of negotiated rates, a number of markets maintain an established schedule of minimum commission rates.
This Fund is a Fund of Funds, and therefore does not allow transactions for brokerage commissions. However, for such data for each of the Underlying Funds which comprise the subject Fund of Funds, please see the SAI of each Underlying Fund.
COMMISSIONS
The Fund may engage in certain principal and agency transactions with banks and their affiliates that own 5% or more of the outstanding voting securities of an AIM Fund, provided the conditions of an exemptive order received by the AIM Funds from the SEC are met. In addition, the Fund may purchase or sell a security from or to certain other AIM Funds or other accounts (and may invest in the Affiliated Money Market Funds) provided the Funds follow procedures adopted by the Boards of the various AIM Funds, including the Trust. These inter-fund transactions do not generate brokerage commissions but may result in custodial fees or taxes or other related expenses.
BROKER SELECTION
Invesco Aim's primary consideration in selecting Brokers to execute portfolio transactions for the Fund is to obtain best execution. In selecting a Broker to execute a portfolio transaction in equity securities for the Fund, Invesco Aim considers the full range and quality of a Broker's services, including the value of research and/or brokerage services provided, execution capability, commission rate, willingness to commit capital, anonymity and responsiveness. Invesco Aim's primary consideration when selecting a Broker to execute a portfolio transaction in fixed income securities for the Fund is the Broker's ability to deliver or sell the relevant fixed income securities; however, Invesco Aim will also consider the various factors listed above. In each case, the determinative factor is not the lowest commission or spread available but whether the transaction represents the best qualitative execution for the Fund. Invesco Aim will not select Brokers based upon their promotion or sale of Fund shares.
In choosing Brokers to execute portfolio transactions for the Fund, Invesco Aim may select Brokers that provide brokerage and/or research services ("Soft Dollar Products") to the Fund and/or the other accounts over which Invesco Aim and its affiliates have investment discretion. Section 28(e) of the Securities Exchange Act of 1934, as amended, provides that Invesco Aim, under certain circumstances,
lawfully may cause an account to pay a higher commission than the lowest available. Under Section 28(e)(1), Invesco Aim must make a good faith determination that the commissions paid are "reasonable in relation to the value of the brokerage and research services provided ... viewed in terms of either that particular transaction or Invesco Aim's overall responsibilities with respect to the accounts as to which [it] exercises investment discretion." The services provided by the Broker also must lawfully and appropriately assist Invesco Aim in the performance of its investment decision-making responsibilities. Accordingly, the Fund may pay a Broker higher commissions than those available from another Broker in recognition of such Broker's provision of Soft Dollar Products to Invesco Aim.
Invesco Aim faces a potential conflict of interest when it uses client trades to obtain Soft Dollar Products. This conflict exists because Invesco Aim is able to use the Soft Dollar Products to manage client accounts without paying cash for the Soft Dollar Products, which reduces Invesco Aim's expenses to the extent that Invesco Aim would have purchased such products had they not been provided by Brokers. Section 28(e) permits Invesco Aim to use Soft Dollar Products for the benefit of any account it manages. Certain Invesco Aim-managed accounts may generate soft dollars used to purchase Soft Dollar Products that ultimately benefit other Invesco Aim-managed accounts, effectively cross subsidizing the other Invesco Aim-managed accounts that benefit directly from the product. Invesco Aim may not use all of the Soft Dollar Products provided by Brokers through which the Fund effects securities transactions in connection with managing such Fund.
Invesco Aim and certain of its affiliates presently engage in the following instances of cross-subsidization:
1. Fixed income funds normally do not generate soft dollar commissions to pay for Soft Dollar Products. Therefore, soft dollar commissions used to pay for Soft Dollar Products which are used to manage certain fixed income AIM Funds are generated entirely by equity AIM Funds and other equity client accounts managed by Invesco Aim or Invesco Aim Capital Management, Inc. ("Invesco Aim Capital"), a subsidiary of Invesco Aim. In other words, certain fixed income AIM Funds are cross-subsidized by the equity AIM Funds, in that the fixed income AIM Funds receive the benefit of Soft Dollar Products services for which they do not pay.
2. The investment models used to manage many of the AIM Funds are also used to manage other accounts of Invesco Aim and/or Invesco Aim Capital. The Soft Dollar Products obtained through the use of soft dollar commissions generated by the transactions of the AIM Funds and/or other accounts managed by Invesco Aim and/or Invesco Aim Capital are used to maintain the investment models relied upon by both of these advisory affiliates.
This type of cross-subsidization occurs in both directions. For example, soft dollar commissions generated by transactions of the AIM Funds and/or other accounts managed by Invesco Aim are used for Soft Dollar Products which may benefit those AIM Funds and/or accounts as well as accounts managed by Invesco Aim Capital. Additionally, soft dollar commissions generated by transactions of accounts managed by Invesco Aim Capital are used for Soft Dollar Products which may benefit those accounts as well as accounts managed by Invesco Aim. In certain circumstances, Invesco Aim Capital accounts may indicate that their transactions should not be used to generate soft dollar commissions but may still receive the benefits of Soft Dollar Products received by Invesco Aim or Invesco Aim Capital.
3. Some of the common investment models used to manage various AIM Funds and other accounts of Invesco Aim and/or Invesco Aim Capital are also used to manage accounts of Invesco Aim Private Asset Management, Inc. ("IAPAM"), another Invesco Aim subsidiary. The Soft Dollar Products obtained through the use of soft dollar commissions generated by the transactions of the Funds and/or other accounts managed by Invesco Aim and/or Invesco Aim Capital are used to maintain the investment models relied upon by Invesco Aim, Invesco
Aim Capital and IAPAM. This cross-subsidization occurs in only one direction. Most of IAPAM's accounts do not generate soft dollar commissions which can be used to purchase Soft Dollar Products. The soft dollar commissions generated by transactions of the Funds and/or other accounts managed by Invesco Aim and/or Invesco Aim Capital are used for Soft Dollar Products which may benefit the accounts managed by Invesco Aim, Invesco Aim Capital and IAPAM; however, IAPAM does not provide any soft dollar research benefit to the Funds and/or other accounts managed by Invesco Aim or Invesco Aim Capital.
Invesco Aim and Invesco Aim Capital attempt to reduce or eliminate the potential conflicts of interest concerning the use of Soft Dollar Products by directing client trades for Soft Dollar Products only if Invesco Aim and Invesco Aim Capital conclude that the Broker supplying the product is capable of providing best execution.
Certain Soft Dollar Products may be available directly from a vendor on a hard dollar basis; other Soft Dollar Products are available only through Brokers in exchange for soft dollars. Invesco Aim uses soft dollars to purchase two types of Soft Dollar Products:
- proprietary research created by the Broker executing the trade, and
- other products created by third parties that are supplied to Invesco Aim through the Broker executing the trade.
Proprietary research consists primarily of traditional research reports, recommendations and similar materials produced by the in house research staffs of broker-dealer firms. This research includes evaluations and recommendations of specific companies or industry groups, as well as analyses of general economic and market conditions and trends, market data, contacts and other related information and assistance. Invesco Aim periodically rates the quality of proprietary research produced by various Brokers. Based on the evaluation of the quality of information that Invesco Aim receives from each Broker, Invesco Aim develops an estimate of each Broker's share of Invesco Aim clients' commission dollars. Invesco Aim attempts to direct trades to the firms to meet these estimates.
Invesco Aim also uses soft dollars to acquire products from third parties that are supplied to Invesco Aim through Brokers executing the trades or other Brokers who "step in" to a transaction and receive a portion of the brokerage commission for the trade. Invesco Aim may from time to time instruct the executing Broker to allocate or "step out" a portion of a transaction to another Broker. The Broker to which Invesco Aim has "stepped out" would then settle and complete the designated portion of the transaction, and the executing Broker would settle and complete the remaining portion of the transaction that has not been "stepped out." Each Broker may receive a commission or brokerage fee with respect to that portion of the transaction that it settles and completes.
Soft Dollar Products received from Brokers supplement Invesco Aim's own research (and the research of certain of its affiliates), and may include the following types of products and services:
- Database Services - comprehensive databases containing current and/or historical information on companies and industries and indices. Examples include historical securities prices, earnings estimates and financial data. These services may include software tools that allow the user to search the database or to prepare value-added analyses related to the investment process (such as forecasts and models used in the portfolio management process).
- Quotation/Trading/News Systems - products that provide real time market data information, such as pricing of individual securities and information on current trading, as well as a variety of news services.
- Economic Data/Forecasting Tools - various macro economic forecasting tools, such as economic data or currency and political forecasts for various countries or regions.
- Quantitative/Technical Analysis - software tools that assist in quantitative and technical analysis of investment data.
- Fundamental/Industry Analysis - industry specific fundamental investment research.
- Fixed Income Security Analysis - data and analytical tools that pertain specifically to fixed income securities. These tools assist in creating financial models, such as cash flow projections and interest rate sensitivity analyses, which are relevant to fixed income securities.
- Other Specialized Tools - other specialized products, such as consulting analyses, access to industry experts, and distinct investment expertise such as forensic accounting or custom built investment-analysis software.
If Invesco Aim determines that any service or product has a mixed use (i.e., it also serves functions that do not assist the investment decision-making or trading process), Invesco Aim will allocate the costs of such service or product accordingly in its reasonable discretion. Invesco Aim will allocate brokerage commissions to Brokers only for the portion of the service or product that Invesco Aim determines assists it in the investment decision-making or trading process and will pay for the remaining value of the product or service in cash.
Outside research assistance is useful to Invesco Aim since the Brokers used by Invesco Aim tend to provide more in-depth analysis of a broader universe of securities and other matters than Invesco Aim's staff follows. In addition, such services provide Invesco Aim with a diverse perspective on financial markets. Some Brokers may indicate that the provision of research services is dependent upon the generation of certain specified levels of commissions and underwriting concessions by Invesco Aim's clients, including the Funds. However, the Funds are not under any obligation to deal with any Broker in the execution of transactions in portfolio securities. In some cases, Soft Dollar Products are available only from the Broker providing them. In other cases, Soft Dollar Products may be obtainable from alternative sources in return for cash payments. Invesco Aim believes that because Broker research supplements rather than replaces Invesco Aim's research, the receipt of such research tends to improve the quality of Invesco Aim's investment advice. The advisory fee paid by the Funds is not reduced because Invesco Aim receives such services. To the extent the Funds' portfolio transactions are used to obtain Soft Dollar Products, the brokerage commissions obtained by the Funds might exceed those that might otherwise have been paid.
Invesco Aim may determine target levels of brokerage business with various Brokers on behalf of its clients (including the Funds) over a certain time period. The target levels will be based upon the following factors, among others: (1) the execution services provided by the Broker; and (2) the research services provided by the Broker. Portfolio transactions may be effected through Brokers that recommend the Funds to their clients, or that act as agent in the purchase of a Fund's shares for their clients, provided that Invesco Aim believes such Brokers provide best execution and such transactions are executed in compliance with Invesco Aim's policy against using directed brokerage to compensate Brokers for promoting or selling AIM Fund shares. Invesco Aim will not enter into a binding commitment with Brokers to place trades with such Brokers involving brokerage commissions in precise amounts.
DIRECTED BROKERAGE (RESEARCH SERVICES)
When available, directed brokerage (research services) paid by the Fund during the fiscal year ended December 31 will be found in Appendix H.
REGULAR BROKERS
When available, information concerning the Fund's acquisition of securities of its regular Brokers during the fiscal year ended December 31 will be found in Appendix H.
ALLOCATION OF PORTFOLIO TRANSACTIONS
Invesco Aim and its affiliates manage numerous AIM Funds and other accounts. Some of these accounts may have investment objectives similar to the Funds. Occasionally, identical securities will be appropriate for investment by one of the Funds and by another Fund or one or more other accounts. However, the position of each account in the same security and the length of time that each account may hold its investment in the same security may vary. The timing and amount of purchase by each account will also be determined by its cash position. If the purchase or sale of securities is consistent with the investment policies of the Fund(s) and one or more other accounts, and is considered at or about the same time, Invesco Aim will allocate transactions in such securities among the Fund(s) and these accounts on a pro rata basis based on order size or in such other manner believed by Invesco Aim to be fair and equitable. Invesco Aim may combine such transactions, in accordance with applicable laws and regulations, to obtain the most favorable execution. Simultaneous transactions could, however, adversely affect the Fund's ability to obtain or dispose of the full amount of a security which it seeks to purchase or sell.
ALLOCATION OF INITIAL PUBLIC OFFERING ("IPO") TRANSACTIONS
The Fund or other accounts managed by Invesco Aim may become interested in participating in IPOs. Purchases of IPOs by one AIM Fund or other account may also be considered for purchase by one or more other AIM Funds or accounts. Invesco Aim shall combine indications of interest for IPOs for all AIM Funds and accounts participating in purchase transactions for that IPO. When the full amount of all IPO orders for such AIM Funds and accounts cannot be filled completely, Invesco Aim shall allocate such transactions in accordance with the following procedures:
Invesco Aim or the Sub-Advisor will determine the eligibility of each AIM Fund and account that seeks to participate in a particular IPO by reviewing a number of factors, including market capitalization/liquidity suitability and sector/style suitability of the investment with the AIM Fund's or account's investment objective, policies, strategies and current holdings. Invesco Aim will allocate securities issued in IPOs to eligible AIM Funds and accounts on a pro rata basis based on order size.
AFMI, Invesco Australia, Invesco Global, Invesco Hong Kong and Invesco Japan allocate IPOs on a pro rata basis based on size of order or in such other manner believed by AFMI, Invesco Australia, Invesco Global, Invesco Hong Kong and Invesco Japan to be fair and equitable.
Invesco Asset Management and Invesco Institutional allocate IPOs on a pro rata basis based on account size or in such other manner believed by Invesco Asset Management, Invesco Global and Invesco Institutional to be fair and equitable.
Invesco Deutschland and Invesco Senior Secured do not subscribe to IPOs.
PURCHASE AND REDEMPTION OF SHARES
The Trust offers the shares of the Fund, on a continuous basis, to both registered and unregistered separate accounts of affiliated and unaffiliated Participating Insurance Companies to fund variable annuity contracts (the "Contracts") and variable life insurance policies ("Policies"). Each separate account contains divisions, each of which corresponds to a fund in the Trust. Net purchase payments under the Contracts are placed in one or more of the divisions of the relevant separate account and the assets of each division are invested in the shares of the fund which corresponds to that division. Each separate account purchases and redeems shares of the fund for its divisions at net asset value without sales or redemption charges. Currently several insurance company separate accounts invest in the Fund.
The Trust, in the future, may offer the shares of the fund to certain pension and retirement plans ("Plans") qualified under the Code. The relationships of Plans and Plan participants to the Fund would be subject, in part, to the provisions of the individual plans and applicable law. Accordingly, such relationships could be different from those described in this Prospectus for separate accounts and owners of Contracts and Policies, in such areas, for example, as tax matters and voting privileges.
The Board monitors for possible conflicts among separate accounts (and will do so for plans) buying shares of the Fund. Conflicts could develop for a variety of reasons. For example, violation of the federal tax laws by one separate account investing in a fund could cause the contracts or policies funded through another separate account to lose their tax-deferred status, unless remedial actions were taken. For example, differences in treatment under tax and other laws or the failure by a separate account to comply with such laws could cause a conflict. To eliminate a conflict, the Board may require a separate account or Plan to withdraw its participation in the Fund. The Fund's net asset value could decrease if it had to sell investment securities to pay redemptions proceeds to a separate account (or plan) withdrawing because of a conflict.
CALCULATION OF NET ASSET VALUE
The Fund determines its net asset value per share once daily as of the close of the customary trading session of the NYSE (generally 4:00 p.m. Eastern time) on each business day of the Fund. In the event the NYSE closes early (i.e., before 4:00 p.m. Eastern time) on a particular day, the Fund determines its net asset value per share as of the close of the NYSE on such day. For purposes of determining net asset value per share, futures and option contracts generally will be valued 15 minutes after the close of the customary trading session of the NYSE. Futures contracts are valued at the final settlement price set by an exchange on which they are principally traded. Listed options are valued at the mean between the last bid and the ask prices from the exchange on which they are principally traded. Options not listed on an exchange are valued by an independent source at the mean between the last bid and ask prices. The Fund determines net asset value per share by dividing the value of the Fund's securities, cash and other assets (including interest accrued but not collected) attributable to a particular class, less all its liabilities (including accrued expenses and dividends payable) attributable to that class, by the total number of shares outstanding of that class. Determination of the Fund's net asset value per share is made in accordance with generally accepted accounting principles. The net asset value for shareholder transactions may be different than the net asset value reported in the Fund's financial statements due to adjustments required by generally accepted accounting principles made to the net assets of the Fund at period end.
Investments in open-end and closed-end registered investment companies that do not trade on an exchange are valued at the end of day net asset value per share. Investments in open-end and closed-end registered investment companies that trade on an exchange are valued at the last sales price or official closing price as of the close of the customary trading session on the exchange where the security is principally traded.
A security listed or traded on an exchange (excluding convertible bonds) held by the Fund is valued at its last sales price or official closing price on the exchange where the security is principally traded or, lacking any sales on a particular day, the security may be valued at the closing bid price on that day. Each equity security traded in the over-the-counter market is valued on the basis of prices furnished by independent pricing vendors or market makers. Debt securities (including convertible bonds) and unlisted equities are fair valued using an evaluated quote on the basis of prices provided by an independent pricing vendor. Evaluated quotes provided by the pricing vendor may be determined without exclusive reliance on quoted prices, and may reflect appropriate factors such as institution-size trading in similar groups of securities, developments related to special securities, dividend rate, yield, quality, coupon rate, maturity, type of issue, individual trading characteristics and other market data.
Securities for which market prices are not provided by any of the above methods may be valued based upon quotes furnished by independent sources and are valued at the last bid price in the case of
equity securities and in the case of debt obligations, the mean between the last bid and ask prices. Short-term obligations having 60 days or less to maturity and commercial paper are priced at amortized cost, which approximates value.
Generally, trading in corporate bonds, U.S. Government securities and money market instruments is substantially completed each day at various times prior to the close of the customary trading session of the NYSE. The values of such securities used in computing the net asset value of the Fund's shares are determined at such times. Occasionally, events affecting the values of such securities may occur between the times at which such values are determined and the close of the customary trading session of the NYSE. If Invesco Aim believes a development/event has actually caused a closing price to no longer reflect current market value, the closing price may be adjusted to reflect the fair value of the affected security as of the close of the NYSE as determined in good faith using procedures approved by the Board.
Foreign securities are converted into U.S. dollar amounts using exchange rates as of the close of the NYSE. If market quotations are available and reliable for foreign exchange traded equity securities, the securities will be valued at the market quotations. Because trading hours for certain foreign securities end before the close of the NYSE, closing market quotations may become unreliable. If between the time trading ends on a particular security and the close of the customary trading session on the NYSE, events occur that are significant and may make the closing price unreliable, the Fund may fair value the security. If the event is likely to have affected the closing price of the security, the security will be valued at fair value in good faith using procedures approved by the Board of Trustees. Adjustments to closing prices to reflect fair value may also be based on a screening process from a pricing vendor to indicate the degree of certainty, based on historical data, that the closing price in the principal market where a foreign security trades is not the current market value as of the close of the NYSE. For foreign securities where Invesco Aim believes, at the approved degree of certainty, that the price is not reflective of current market value, Invesco Aim will use the indication of fair value from the pricing vendor to determine the fair value of the security. The pricing vendor, pricing methodology or degree of certainty may change from time to time. Multiple factors may be considered by the pricing vendor in determining adjustments to reflect fair value and may include information relating to sector indices, ADRs, domestic and foreign index futures, and exchange-traded funds.
Fund securities primarily traded in foreign markets may be traded in such markets on days that are not business days of the Fund.
Swap agreements are fair valued using an evaluated quote provided by an independent pricing service. Evaluated quotes provided by the pricing service are based on a model that may include end of day net present values, spreads, ratings, industry, and company performance.
Securities for which market prices are not provided by any of the above methods may be valued based upon quotes furnished by independent sources and are valued at the last bid price in the case of equity securities and in the case of debt obligations, the mean between the last bid and ask prices.
Securities for which market quotations are not readily available or are unreliable are valued at fair value as determined in good faith by or under the supervision of the Trust's officers following procedures approved by the Board of Trustees. Issuer specific events, market trends, bid/ask quotes of brokers and information providers and other market data may be reviewed in the course of making a good faith determination of a security's fair value.
For financial reporting purposes and shareholder transactions on the last day of the fiscal quarter, transactions are normally accounted for on a trade date basis. For purposes of executing shareholder transactions in the normal course of business (other than shareholder transactions at a fiscal period-end), each non-money market fund's portfolio securities transactions are recorded no later than the first business day following the trade date. Transactions in money market fund portfolio securities
transactions are recorded no later than the first business day following the trade date. Transactions in money market fund portfolio securities are normally accounted for on a trade date basis.
REDEMPTIONS IN KIND
Although the Fund generally intends to pay redemption proceeds solely in cash, the Fund reserves the right to determine, in their sole discretion, whether to satisfy redemption requests by making payment in securities or other property (known as a redemption in kind). For instance, the Fund may make a redemption in kind if a cash redemption would disrupt its operations or performance. Securities that will be delivered as payment in redemptions in kind will be valued using the same methodologies that the Fund typically utilizes in valuing such securities. Shareholders receiving such securities are likely to incur transaction and brokerage costs on their subsequent sales of such securities, and the securities may increase or decrease in value until the shareholder sells them. The Trust, on behalf of the Fund, has made an election under Rule 18f-1 under the 1940 Act (a "Rule 18f-1 Election"), and therefore, the Trust, on behalf of the Fund, is obligated to redeem for cash all shares presented to such Fund for redemption by any one shareholder in an amount up to the lesser of $250,000 or 1% of that Fund's net assets in any 90-day period. The Rule 18f-1 Election is irrevocable while Rule 18f-1 under the 1940 Act is in effect unless the SEC by order permits withdrawal of such Rule 18f-1 Election.
PAYMENTS TO PARTICIPATING INSURANCE COMPANIES AND/OR THEIR AFFILIATES
Invesco Aim or Invesco Aim Distributors may, from time to time, at their expense out of their own financial resources, make cash payments to Participating Insurance Companies and/or their affiliates, as an incentive to promote the Funds and/or to retain Participating Insurance Companies' assets in the Fund. Such cash payments may be calculated on the average daily net assets of the applicable Fund(s) attributable to that particular Participating Insurance Company ("Asset-Based Payments"), in which case the total amount of such cash payments shall not exceed 0.25% per annum of those assets during a defined period. Invesco Aim or Invesco Aim Distributors may also make other cash payments to Participating Insurance Companies and/or their affiliates in addition to or in lieu of Asset-Based Payments, in the form of: payment for travel expenses, including lodging, incurred in connection with trips taken by qualifying registered representatives of those dealer firms and their families to places within or outside the United States; meeting fees; entertainment; transaction processing and transmission charges; advertising or other promotional expenses; or other expenses as determined in Invesco Aim's or Invesco Aim Distributors' discretion. In certain cases these other payments could be significant to the Participating Insurance Companies and/or their affiliates. Generally, commitments to make such payments are terminable upon notice to the Participating Insurance Company and/or their affiliates. However, Invesco Aim and Invesco Aim Distributors have entered into unique agreements with RiverSource Life Insurance Company and its affiliates ("RiverSource"), where the payment obligation of Invesco Aim or Invesco Aim Distributors can only be terminated on the occurrence of certain specified events. For example, in the event that RiverSource obtains an SEC order to substitute out such RiverSource assets in the Fund or such RiverSource assets in the Fund fall below a pre-determined level, payments by Invesco Aim or Invesco Aim Distributors to RiverSource can then be terminated. Any payments described above will not change the price paid by RiverSource for the purchase of the applicable Fund's shares or the amount that any particular Fund will receive as proceeds from such sales. Invesco Aim or Invesco Aim Distributors determines the cash payments described above in its discretion in response to requests from RiverSource, based on factors it deems relevant. RiverSource may not use sales of the Funds' shares to qualify for any incentives to the extent that such incentives may be prohibited by the laws of any state.
A list of certain entities that received payments as described in this Statement of Additional Information during the 2007 calendar year is attached as Appendix I. The list is not necessarily current and will change over time. Certain arrangements are still being negotiated, and there is a possibility that payments will be made retroactively to entities not listed below. Accordingly, please contact your Participating Insurance Company to determine whether they currently may be receiving such payments and to obtain further information regarding any such payments.
DIVIDENDS, DISTRIBUTIONS AND TAX MATTERS
DIVIDENDS AND DISTRIBUTIONS
It is the present policy of the Fund to declare and distribute dividends representing substantially all net investment income as follows:
DIVIDENDS DIVIDENDS
DECLARED PAID
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AIM V.I. PowerShares ETF Allocation Fund ...... annually annually
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The Fund intends to distribute annually substantially all of its capital gains net income (excess of capital gains over capital losses); however, the Fund may declare and pay such income dividends and capital gains distributions more than once per year, if necessary, in order to reduce or eliminate federal income taxes on the Fund. In determining the amount of capital gains, if any, available for distribution, capital gains will be offset against available net capital losses, if any, carried forward from previous fiscal periods.
All such distributions will be automatically reinvested, at the election of Participating Insurance Companies, in shares of the Fund issuing the distribution at the net asset value determined on the reinvestment date.
It is the Fund's intention to distribute substantially all of its net investment income and realized net capital gain to separate accounts of participating life insurance companies. At the election of participating life insurance companies, dividends and distributions will be reinvested at the net asset value per share determined on the ex-dividend date.
TAX MATTERS
The following is only a summary of certain additional tax considerations generally affecting the Fund and its shareholders that are not described in the Prospectus. No attempt is made to present a detailed explanation of the tax treatment of the Fund or its shareholders, and the discussion here and in the Prospectus is not intended as a substitute for careful tax planning.
Holders of Contracts under which assets are invested in the Fund should refer to the prospectus for the Contracts for information regarding the tax aspects of ownership of such Contracts.
QUALIFICATIONS AS A REGULATED INVESTMENT COMPANY
Each portfolio of the Trust is treated as a separate association taxable as a corporation. The Fund intends to qualify under the "Code", as a RIC for each taxable year.
As a RIC, the Fund will not be subject to federal income tax on its income and gains distributed to shareholders if it distributes at least (i) 90% of its investment company taxable income for the taxable year; and (ii) 90% of the excess of its tax-exempt interest income under Code Section 103(a) over its deductions disallowed under Code Sections 265 and 171(a)(2) (the "Distribution Requirement"). Distributions by the Fund made during the taxable year or, under specified circumstances, within twelve months after the close of the taxable year, will be considered distributions of income and gain of the taxable year and can therefore satisfy the Distribution Requirement. Notwithstanding the foregoing, the Board of Trustees reserves the right not to maintain the qualification of the Fund as a regulated investment company if it determines such a course of action to be beneficial to shareholders.
In addition to satisfying the Distribution Requirement, a RIC must, among other things, meet the following requirements: (A) The Fund must generally derive at least 90% of its gross income from
dividends, interest, payments with respect to securities loans, and gains from the sale or other disposition of stock, securities, foreign currencies, or other income derived with respect to its business of investing in such stock, securities or currencies and net income derived from certain publicly traded partnerships; and (B) The Fund must satisfy an asset diversification test (the "Asset Diversification Test").
The Asset Diversification Test requires that at the close of each quarter of the Fund's taxable year, at least 50% of the value of the Fund's assets must consist of cash and cash items, U.S. Government securities, securities of other RICs, and securities of other issuers, as to which the Fund has not invested more than 5% of the value of the Fund's total assets in securities of such issuer and as to which the Fund does not hold more than 10% of the outstanding voting securities of such issuer, and no more than 25% of the value of its total assets may be invested in the securities of any one issuer (other than U.S. Government securities and securities of other regulated investment companies), or of two or more issuers which the Fund controls and which are engaged in the same or similar trades or businesses, or, collectively, in the securities of certain publicly traded partnerships.
SPECIAL RULES APPLICABLE TO VARIABLE CONTRACTS
In addition to the Asset Diversification Test, and the diversification requirements imposed on the Fund by the 1940 Act, the Fund intends to comply with the diversification requirements imposed by Section 817(h) of the Code applicable to variable contracts.
Section 817(h) of the Code and the regulations thereunder, place certain
limitations on (i) the assets of the insurance company separate accounts that
may be invested in securities of a single issuer and (ii) eligible investors.
Because Section 817(h) and those regulations treat the assets of the Fund as
assets of the corresponding division of the insurance company separate accounts,
the Fund intends to comply with these diversification requirements.
Specifically, the regulations provide that, except as permitted by a "safe
harbor" described below, as of the end of each calendar quarter or within 30
days thereafter no more than 55% of the Fund's total assets may be represented
by any one investment, no more than 70% by any two investments, no more than 80%
by any three investments and no more than 90% by any four investments. For this
purpose, all securities of the same issuer are considered a single investment,
and while each U.S. Government agency and instrumentality is considered a
separate issuer, a particular foreign government and its agencies,
instrumentalities and political subdivisions all will be considered the same
issuer. Section 817(h) provides, as a safe harbor, that a separate account will
be treated as being adequately diversified if the Asset Diversification is
satisfied and no more than 55% of the value of the account's total assets are
cash and cash items (including receivables), government securities and
securities of other RICs. Although the Fund is expected to meet this
diversification requirement, it is not expected to satisfy this safe harbor due
to its investment in the Underlying Funds. The regulations also provide that the
Fund's shareholders are limited, generally, to life insurance company separate
accounts, general accounts of the same life insurance company, an investment
adviser or affiliate in connection with the creation or management of the Fund
or the trustee of a qualified pension plan. Failure of the Fund to satisfy the
Section 817(h) requirements would result in taxation of and treatment of the
Contract holders investing in a corresponding insurance company division other
than as described in the applicable prospectuses of the various insurance
company separate accounts.
Also, a contract holder should not be able to direct the Fund's investment in any particular asset so as to avoid the prohibition on investor control. The Treasury Department may issue future pronouncements addressing the circumstances in which a variable contract owner's control of the investments of a separate account may cause the contract owner, rather than the insurance company, to be treated as the owner of the assets held by the separate account. If the contract owner is considered the owner of the separate account, income and gains produced by those securities would be included currently in the contract owner's gross income. It is not known what standards will be set forth in any such pronouncements or when, if at all, these pronouncements may be issued.
EXCISE TAX ON REGULATED INVESTMENT COMPANIES
The Code imposes a nondeductible 4% excise tax on a RIC that fails to distribute during each calendar year the sum of 98% of its ordinary income for the calendar year, plus 98% of its capital gain net income for the 12-month period ending on October 31 of the calendar year. The amount which must be distributed is increased by undistributed income and gains from prior years and decreased by certain distributions in prior years. In any calendar year in which the investment made by Invesco Aim and its affiliates in the Fund does not exceed $250,000, the Fund will qualify for an exemption from the excise tax regardless of whether it has satisfied the foregoing distribution requirements. If the Fund does not qualify for this exemption, the Fund intends to make sufficient distributions to avoid imposition of the excise tax.
INVESTMENT BY UNDERLYING FUNDS IN FOREIGN SECURITIES
Certain Underlying Funds may invest in foreign securities and may be subject to foreign withholding taxes on income from those securities that may reduce distributions to the Fund.
DETERMINATION OF TAXABLE INCOME OF A REGULATED INVESTMENT COMPANY
The Fund will invest its assets in shares of the Underlying Funds, cash and money market instruments. Accordingly, the Fund's income will consist of distributions from the Underlying Funds, net gains realized from the disposition of Underlying Fund shares and interest earned on cash and money market instruments. If an Underlying Fund qualifies for treatment as a regulated investment company under the Code - each has done so for its past taxable years and intends to continue to do so for its current and future taxable years - (1) dividends paid to the Fund from the Underlying Fund's investment company taxable income (which may include net gains from certain foreign currency transactions and net short-term capital gains) will be taxable to the Fund as ordinary income and (2) dividends paid to the Fund that an Underlying Fund designates as capital gain dividends will be taxable to the Fund as long-term capital gain. If shares of an Underlying Fund are purchased within 30 days before or after redeeming at a loss other shares of that Underlying Fund (whether pursuant to a rebalancing of the Fund's portfolio or otherwise), all or a part of the loss will not be deductible by the Fund and instead will increase its basis for the newly purchased shares.
DISTRIBUTION OF SECURITIES
DISTRIBUTION PLAN
The Trust has adopted a distribution plan pursuant to Rule 12b-1 under the 1940 Act with respect to the Fund's Series II shares (the "Plan"). The Fund, pursuant to the Plan, pays Invesco Aim Distributors compensation at the annual rate of 0.25% of average daily net assets of Series II shares.
The Plan compensates Invesco Aim Distributors for the purpose of financing any activity which is primarily intended to result in the sale of Series II shares of the Fund. Distribution activities appropriate for financing under the Plan include, but are not limited to, the following: expenses relating to the development, preparation, printing and distribution of advertisements and sales literature and other promotional materials describing and/or relating to the Fund; expenses of training sales personnel regarding the Fund; expenses of organizing and conducting seminars and sales meetings designed to promote the distribution of the Series II shares; compensation to financial intermediaries and broker-dealers to pay or reimburse them for their services or expenses in connection with the distribution of the Series II shares to fund variable annuity and variable insurance contracts investing directly in the Series II shares; compensation to sales personnel in connection with the allocation of cash values and premium of variable annuity and variable insurance contracts to investments in the Series II shares; compensation to and expenses of employees of Invesco Aim Distributors, including overhead and telephone expenses, who engage in the distribution of the Series II shares; and the costs of administering the Plan.
Amounts payable by the Fund under the Plan need not be directly related to the expenses actually incurred by Invesco Aim Distributors on behalf of the Fund. The Plan does not obligate the Fund to reimburse Invesco Aim Distributors for the actual expenses Invesco Aim Distributors may incur in fulfilling its obligations under the Plan. Thus, even if Invesco Aim Distributors' actual expenses exceed the fee payable to Invesco Aim Distributors at any given time, the Fund will not be obligated to pay more than that fee. If Invesco Aim Distributors' expenses are less than the fee it receives, Invesco Aim Distributors will retain the full amount of the fee. No provision of this Distribution Plan shall be interpreted to prohibit any payments by the Trust during periods when the Trust has suspended or otherwise limited sales. Payments pursuant to the Plan are subject to any applicable limitations imposed by rules of the Financial Industry Regulatory Authority ("FINRA") (formerly, NASD, Inc.).
Invesco Aim Distributors may from time to time waive or reduce any portion of its 12b-1 fee for Series II shares. Voluntary fee waivers or reductions may be rescinded at any time without further notice to investors. During periods of voluntary fee waivers or reductions, Invesco Aim Distributors will retain its ability to be reimbursed for such fee prior to the end of each fiscal year. Contractual fee waivers or reductions set forth in the Fee Table in a Prospectus may not be terminated or amended to the Fund's detriment during the period stated in the agreement between Invesco Aim Distributors and the Fund.
Invesco Aim Distributors has entered into agreements with Participating Insurance Companies and other financial intermediaries to provide the distribution services in furtherance of the Plan. Currently, Invesco Aim Distributors pays Participating Insurance Companies and others at the annual rate of 0.25% of average daily net assets of Series II shares attributable to the Contracts issued by the Participating Insurance Company as compensation for providing such distribution services. Invesco Aim Distributors does not act as principal, but rather as agent for the Fund, in making distribution service payments. These payments are an obligation of the Fund and not of Invesco Aim Distributors.
As required by Rule 12b-1, the Plan approved by the Board, including a majority of the trustees who are not "interested persons" (as defined in the 1940 Act) of the Trust and who have no direct or indirect financial interest in the operation of the Plan or in any agreements related to the Plan (the "Rule 12b-1 Trustees"). In approving the Plans in accordance with the requirements of Rule 12b-1, the Trustees considered various factors and determined that there is a reasonable likelihood that the Plan would benefit Series II class of the Fund and its respective shareholders by, among other things, providing broker-dealers with an incentive to sell additional shares of the Trust, thereby helping to satisfy the Trust's liquidity needs and helping to increase the Trust's investment flexibility.
Unless terminated earlier in accordance with its terms, the Plan continues from year to year as long as such continuance is specifically approved, in person, at least annually by the Board, including a majority of the Rule 12b-1 Trustees. The Plan requires Invesco Aim Distributors to provide the Board at least quarterly with a written report of the amounts expended pursuant to the Distribution Plan and the purposes for which such expenditures were made. The Board reviews these reports in connection with their decisions with respect to the Plan. A Plan may be terminated as to the Fund or Series II shares by the vote of a majority of the Rule 12b-1 Trustees or, with respect to the Series II shares, by the vote of a majority of the outstanding voting securities of the Series II shares.
Any change in the Plan that would increase materially the distribution expenses paid by the Series II shares requires shareholder approval. No material amendment to the Plan may be made unless approved by the affirmative vote of a majority of the Rule 12b-1 Trustees cast in person at a meeting called for the purpose of voting upon such amendment.
DISTRIBUTOR
The Trust has entered into a master distribution agreement relating to the Fund (the "Distribution Agreement") with Invesco Aim Distributors, a registered broker-dealer and a wholly owned subsidiary of Invesco Aim, pursuant to which Invesco Aim Distributors acts as the distributor of shares of
the Fund. The address of Invesco Aim Distributors is P.O. Box 4739, Houston, Texas 77210-4739. Certain trustees and officers of the Trust are affiliated with Invesco Aim Distributors. See "Management of the Trust."
The Distribution Agreement provides Invesco Aim Distributors with the exclusive right to distribute shares of the Fund on a continuous basis.
The Trust (on behalf of any class of the Fund) or Invesco Aim Distributors may terminate the Distribution Agreement on sixty (60) days' written notice without penalty. The Distribution Agreement will terminate automatically in the event of its assignment.
FINANCIAL STATEMENTS
When issued, the Fund's Financial Statements including the Financial Highlights and the report of the independent registered public accounting firm pertaining thereto, will be incorporated by reference into this Statement of Additional Information ("SAI") from such Fund's Annual Report to shareholders.
The portions of such Annual Reports that are not specifically listed above are not incorporated by reference into this SAI and are not a part of this Registration Statement.
PENDING LITIGATION
Settled Enforcement Actions Related to Market Timing
On October 8, 2004, INVESCO Funds Group, Inc. ("IFG") (the former investment advisor to certain AIM Funds), Invesco Aim and Invesco Aim Distributors reached final settlements with certain regulators, including the SEC, the New York Attorney General and the Colorado Attorney General, to resolve civil enforcement actions and/or investigations related to market timing and related activity in the AIM Funds, including those formerly advised by IFG. As part of the settlements, a $325 million fair fund ($110 million of which is civil penalties) has been created to compensate shareholders harmed by market timing and related activity in funds formerly advised by IFG. Additionally, Invesco Aim and Invesco Aim Distributors created a $50 million fair fund ($30 million of which is civil penalties) to compensate shareholders harmed by market timing and related activity in funds advised by Invesco Aim, which was done pursuant to the terms of the settlements. These two fair funds will be distributed in accordance with a methodology determined by Invesco Aim's independent distribution consultant ("IDC Plan"), in consultation with Invesco Aim and the independent trustees of the AIM Funds and approved by the staff of the SEC. Further details regarding the IDC Plan and planned distributions thereunder are available under the "About Us - SEC Settlement" section of Invesco Aim's website, available at http://www.invescoaim.com. Invesco Aim's website is not a part of this Statement of Additional Information or the prospectus of any AIM Fund.
Regulatory Action Alleging Market Timing
On August 30, 2005, the West Virginia Office of the State Auditor - Securities Commission ("WVASC") issued a Summary Order to Cease and Desist and Notice of Right to Hearing to Invesco Aim and Invesco Aim Distributors (Order No. 05-1318). The WVASC makes findings of fact that Invesco Aim and Invesco Aim Distributors entered into certain arrangements permitting market timing of the AIM Funds and failed to disclose these arrangements in the prospectuses for such Funds, and conclusions of law to the effect that Invesco Aim and Invesco Aim Distributors violated the West Virginia securities laws. The WVASC orders Invesco Aim and Invesco Aim Distributors to cease any further violations and seeks to impose monetary sanctions, including restitution to affected investors, disgorgement of fees, reimbursement of investigatory, administrative and legal costs and an "administrative assessment," to be determined by the Commissioner. Initial research indicates that these damages could be limited or
capped by statute. By agreement with the Commissioner of Securities, Invesco Aim's time to respond to that Order has been indefinitely suspended.
Private Civil Actions Alleging Market Timing
Multiple civil lawsuits, including purported class action and shareholder derivative suits, have been filed against various parties (including, depending on the lawsuit, certain AIM Funds, IFG, Invesco Aim, Invesco Aim Management and certain related entities, certain of their current and former officers and/or certain unrelated third parties) based on allegations of improper market timing and related activity in the AIM Funds. These 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; (ii) violation of various provisions of the Employee Retirement Income Security Act of 1974, as amended ("ERISA"); (iii) breach of fiduciary duty; and/or (iv) breach of contract. These lawsuits were initiated in both Federal and state courts and seek such remedies as compensatory damages; restitution; injunctive relief; disgorgement of management fees; imposition of a constructive trust; removal of certain directors and/or employees; various corrective measures under ERISA; rescission of certain Funds' advisory agreements; interest; and attorneys' and experts' fees. A list identifying such lawsuits (excluding those lawsuits that have been recently transferred as mentioned herein) that have been served on IFG, Invesco Aim, the AIM Funds or related entities, or for which service of process has been waived is set forth in Appendix J-1.
All lawsuits based on allegations of market timing, late trading, and related issues have been transferred to the United States District Court for the District of Maryland (the "MDL Court") for consolidated or coordinated pre-trial proceedings. Pursuant to an Order of the MDL Court, plaintiffs in these lawsuits consolidated their claims for pre-trial purposes into three amended complaints against various Invesco Aim- and IFG-related parties. A list identifying the amended complaints in the MDL Court is included in Appendix J-1. Plaintiffs in two of the underlying lawsuits transferred to the MDL Court continue to seek remand of their action to state court. These lawsuits are identified in Appendix J-1.
Private Civil Actions Alleging Improper Use of Fair Value Pricing
Multiple civil class action lawsuits have been filed against various parties (including, depending on the lawsuit, certain AIM Funds, IFG and/or Invesco Aim) alleging that certain AIM Funds inadequately employed fair value pricing. These lawsuits allege a variety of theories of recovery, including but not limited to: (i) violations of various provisions of the Federal securities laws; (ii) common law breach of duty; and (iii) common law negligence and gross negligence. These lawsuits have been filed in both Federal and state courts and seek such remedies as compensatory and punitive damages; interest; and attorneys' fees and costs. A list identifying such lawsuits that have been served on IFG, Invesco Aim, the AIM Funds or related entities, or for which service of process has been waived is set forth in Appendix J-2.
APPENDIX A
RATINGS OF DEBT SECURITIES
The following is a description of the factors underlying the debt ratings of Moody's, S&P and Fitch.
MOODY'S LONG-TERM DEBT RATINGS
AAA: Obligations rated Aaa are judged to be of the highest quality, with minimal credit risk.
AA: Obligations rated Aa are judged to be of high quality and are subject to very low credit risk.
A: Obligations rated A are considered upper-medium grade and are subject to low credit risk.
BAA; Obligations rated Baa are subject to moderate credit risk. They are considered medium-grade and as such may possess certain speculative characteristics.
BA: Obligations rated Ba are judged to have speculative elements and are subject to substantial credit risk.
B: Obligations rated B are considered speculative and are subject to high credit risk.
CAA: Obligations rated Caa are judged to be of poor standing and are subject to very high credit risk.
CA: Obligations rated Ca are highly speculative and are likely in, or very near, default, with some prospect of recovery of principal and interest.
C: Obligations rated C are the lowest rated class of bonds and are typically in default, with little prospect for recovery of principal or interest.
Note: Moody's applies numerical modifiers 1, 2, and 3 in each generic rating classification from Aa through Caa. The modifier 1 indicates that the obligation ranks in the higher end of its generic rating category; the modifier 2 indicates a mid-range ranking; and the modifier 3 indicates a ranking in the lower end of that generic rating category.
MOODY'S SHORT-TERM PRIME RATING SYSTEM
Issuers (or supporting institutions) rated Prime-1 have a superior ability to repay short-term debt obligations.
Issuers (or supporting institutions) rated Prime-2 have a strong ability to repay short-term debt obligations.
Issuers (or supporting institutions) rated Prime-3 have an acceptable ability to repay short-term obligations.
Not Prime
Issuers (or supporting institutions) rated Not Prime do not fall within any of the Prime rating categories.
Note: In addition, in certain countries the prime rating may be modified by the issuer's or guarantor's senior unsecured long-term debt rating.
Moody's municipal ratings are as follows:
MOODY'S U.S. LONG-TERM MUNICIPAL BOND RATING DEFINITIONS
Municipal Ratings are opinions of the investment quality of issuers and issues in the US municipal and tax-exempt markets. As such, these ratings incorporate Moody's assessment of the default probability and loss severity of these issuers and issues.
Municipal Ratings are based upon the analysis of four primary factors relating to municipal finance: economy, debt, finances, and administration/management strategies. Each of the factors is evaluated individually and for its effect on the other factors in the context of the municipality's ability to repay its debt.
AAA: Issuers or issues rated Aaa demonstrate the strongest creditworthiness relative to other US municipal or tax-exempt issuers or issues.
AA: Issuers or issues rated Aa demonstrate very strong creditworthiness relative to other US municipal or tax-exempt issuers or issues.
A: Issuers or issues rated A present above-average creditworthiness relative to other US municipal or tax-exempt issuers or issues.
BAA: Issuers or issues rated Baa represent average creditworthiness relative to other US municipal or tax-exempt issuers or issues.
BA: Issuers or issues rated Ba demonstrate below-average creditworthiness relative to other US municipal or tax-exempt issuers or issues.
B: Issuers or issues rated B demonstrate weak creditworthiness relative to other US municipal or tax-exempt issuers or issues.
CAA: Issuers or issues rated Caa demonstrate very weak creditworthiness relative to other US municipal or tax-exempt issuers or issues.
CA: Issuers or issues rated Ca demonstrate extremely weak creditworthiness relative to other US municipal or tax-exempt issuers or issues.
C: Issuers or issues rated C demonstrate the weakest creditworthiness relative to other US municipal or tax-exempt issuers or issues.
Note: Also, Moody's applied numerical modifiers 1, 2, and 3 in each generic rating classification from Aa to Caa. The modifier 1 indicates that the issue ranks in the higher end of its generic rating category; the modifier 2 indicates a mid-range ranking; and the modifier 3 indicates that the issue ranks in the lower end of its generic category.
MOODY'S MIG/VMIG US SHORT-TERM RATINGS
In municipal debt issuance, there are three rating categories for short-term obligations that are considered investment grade. These ratings are designated as Moody's Investment Grade (MIG) and are divided into three levels - MIG 1 through MIG 3.
In addition, those short-term obligations that are of speculative quality are designated SG, or speculative grade.
In the case of variable rate demand obligations (VRDOs), a two-component rating is assigned. The first element represents Moody's evaluation of the degree of risk associated with scheduled principal and interest payments. The second element represents Moody's evaluation of the degree of risk associated with the demand feature, using the MIG rating scale.
The short-term rating assigned to the demand feature of VRDOs is designated as VMIG. When either the long- or short-term aspect of a VRDO is not rated, that piece is designated NR, e.g., Aaa/NR or NR/VMIG 1.
MIG ratings expire at note maturity. By contrast, VMIG rating expirations will be a function of each issue's specific structural or credit features.
Gradations of investment quality are indicated by rating symbols, with each symbol representing a group in which the quality characteristics are broadly the same.
MIG 1/VMIG 1: This designation denotes superior credit quality. Excellent protection is afforded by established cash flows, highly reliable liquidity support or demonstrated broad-based access to the market for refinancing.
MIG 2/VMIG 2: This designation denotes strong credit quality. Margins of protection are ample although not as large as in the preceding group.
MIG 3/VMIG 3: This designation denotes acceptable credit quality. Liquidity and cash flow protection may be narrow and market access for refinancing is likely to be less well established.
SG: This designation denotes speculative-grade credit quality. Debt instruments in this category may lack sufficient margins of protection.
STANDARD & POOR'S LONG-TERM CORPORATE AND MUNICIPAL RATINGS
Issue credit ratings are based in varying degrees, on the following considerations: likelihood of payment - capacity and willingness of the obligor to meet its financial commitment on an obligation in accordance with the terms of the obligation; nature of and provisions of the obligation; and protection afforded by, and relative position of, the obligation in the event of bankruptcy, reorganization, or other arrangement under the laws of bankruptcy and other laws affecting creditors' rights.
The issue ratings definitions are expressed in terms of default risk. As such, they pertain to senior obligations of an entity. Junior obligations are typically rated lower than senior obligations, to reflect the lower priority in bankruptcy, as noted above.
S&P describes its ratings for corporate and municipal bonds as follows:
AAA: Debt rated AAA has the highest rating assigned by S&P. Capacity to pay interest and repay principal is extremely strong.
AA: Debt rated AA has a very strong capacity to pay interest and repay principal and differs from the highest rated issues only in a small degree.
A: Debt rated A has a strong capacity to meet its financial commitments although it is somewhat more susceptible to the adverse effects of changes in circumstances and economic conditions than debt in higher rated categories.
BBB: Debt rated BBB exhibits adequate protection parameters. However, adverse economic conditions or changing circumstances are more likely to lead to a weakened capacity to meet its financial commitment on the obligation.
BB-B-CCC-CC-C: Debt rated BB, B, CCC, CC and C is regarded as having significant speculative characteristics with respect to capacity to pay interest and repay principal. BB indicates the least degree of speculation and C the highest. While such debt will likely have some quality and protective characteristics, these may be outweighed by large uncertainties or major exposures to adverse conditions.
NR: Not Rated.
S&P DUAL RATINGS
S&P assigns "dual" ratings to all debt issues that have a put option or demand feature as part of their structure.
The first rating addresses the likelihood of repayment of principal and interest as due, and the second rating addresses only the demand feature. The long-term debt rating symbols are used for bonds to denote the long-term maturity and the commercial paper rating symbols for the put option (for example, AAA/A-1+). With short-term demand debt, the not rating symbols are used with the commercial paper rating symbols (for example, SP-1+/A-1+).
S&P COMMERCIAL PAPER RATINGS
An S&P commercial paper rating is a current assessment of the likelihood of timely payment of debt having an original maturity of no more than 365 days.
These categories are as follows:
A-1: This highest category indicates that the degree of safety regarding timely payment is strong. Those issues determined to possess extremely strong safety characteristics are denoted with a plus sign (+) designation.
A-2: Capacity for timely payment on issues with this designation is satisfactory. However, the relative degree of safety is not as high as for issues designated A-1.
A-3: Issues carrying this designation have adequate capacity for timely payment. They are, however, more vulnerable to the adverse effects of changes in circumstances than obligations carrying the higher designations.
B: Issues rated "B" are regarded as having only speculative capacity for timely payment.
C: This rating is assigned to short-term debt obligations with a doubtful capacity for payment.
D: Debt rated "D" is in payment default. The "D" rating category is used when interest payments or principal payments are not made on the date due, even if the applicable grace period has not expired, unless Standard & Poor's believes such payments will be made during such grace period.
S&P SHORT-TERM MUNICIPAL RATINGS
An S&P note rating reflect the liquidity factors and market-access risks unique to notes. Notes due in three years or less will likely receive a note rating. Notes maturing beyond three years will most likely receive a long-term debt rating. The following criteria will be used in making that assessment:
amortization schedule (the larger the final maturity relative to other maturities, the more likely it will be treated as a note); and source of payment (the more dependent the issue is on the market for its refinancing, the more likely it will be treated as a note).
Note rating symbols are as follows:
SP-1: Strong capacity to pay principal and interest. An issue determined to possess a very strong capacity to pay debt service is given a plus (+) designation.
SP-2: Satisfactory capacity to pay principal and interest, with some vulnerability to adverse financial and economic changes over the term of the notes.
SP-3: Speculative capacity to pay principal and interest.
FITCH LONG-TERM CREDIT RATINGS
Fitch Ratings provides an opinion on the ability of an entity or of a securities issue to meet financial commitments, such as interest, preferred dividends, or repayment of principal, on a timely basis. These credit ratings apply to a variety of entities and issues, including but not limited to sovereigns, governments, structured financings, and corporations; debt, preferred/preference stock, bank loans, and counterparties; as well as the financial strength of insurance companies and financial guarantors.
Credit ratings are used by investors as indications of the likelihood of
getting their money back in accordance with the terms on which they invested.
Thus, the use of credit ratings defines their function: "investment grade"
ratings (international Long-term "AAA" - "BBB" categories; Short-term "F1" -
"F3") indicate a relatively low probability of default, while those in the
"speculative" or "non-investment grade" categories (international Long-term "BB"
- "D"; Short-term "B" - "D") either signal a higher probability of default or
that a default has already occurred. Ratings imply no specific prediction of
default probability. However, for example, it is relevant to note that over the
long term, defaults on "AAA" rated U.S. corporate bonds have averaged less than
0.10% per annum, while the equivalent rate for "BBB" rated bonds was 0.35%, and
for "B" rated bonds, 3.0%.
Fitch ratings do not reflect any credit enhancement that may be provided by insurance policies or financial guaranties unless otherwise indicated.
Entities or issues carrying the same rating are of similar but not necessarily identical credit quality since the rating categories do not fully reflect small differences in the degrees of credit risk.
Fitch credit and research are not recommendations to buy, sell or hold any security. Ratings do not comment on the adequacy of market price, the suitability of any security for a particular investor, or the tax-exempt nature of taxability of payments of any security.
The ratings are based on information obtained from issuers, other obligors, underwriters, their experts, and other sources Fitch Ratings believes to be reliable. Fitch Ratings does not audit or verify the truth or accuracy of such information. Ratings may be changed or withdrawn as a result of changes in, or the unavailability of, information or for other reasons.
Our program ratings relate only to standard issues made under the program concerned; it should not be assumed that these ratings apply to every issue made under the program. In particular, in the case of non-standard issues, i.e., those that are linked to the credit of a third party or linked to the performance of an index, ratings of these issues may deviate from the applicable program rating.
Credit ratings do not directly address any risk other than credit risk. In particular, these ratings do not deal with the risk of loss due to changes in market interest rates and other market considerations.
AAA: Bonds considered to be investment grade and of the highest credit quality. The obligor has an exceptionally strong capacity for timely payment of financial commitments, which is unlikely to be affected by foreseeable events.
AA: Bonds considered to be investment grade and of very high credit quality. The obligor has a very strong capacity for timely payment of financial commitments which is not significantly vulnerable to foreseeable events.
A: Bonds considered to be investment grade and of high credit quality. The obligor's ability to pay interest and repay principal is considered to be strong, but may be more vulnerable to adverse changes in economic conditions and circumstances than bonds with higher ratings.
BBB: Bonds considered to be investment grade and of good credit quality. The obligor's ability to pay interest and repay principal is considered to be adequate. Adverse changes in economic conditions and circumstances are more likely to impair this capacity.
PLUS (+) MINUS (-): Plus and minus signs are used with a rating symbol to indicate the relative position of a credit within the rating category. Plus and minus signs, however, are not used in the "AAA" category.
NR: Indicates that Fitch does not rate the specific issue.
WITHDRAWN: A rating will be withdrawn when an issue matures or is called or refinanced and at Fitch's discretion, when Fitch Ratings deems the amount of information available to be inadequate for ratings purposes.
RATINGWATCH: Ratings are placed on RatingWatch to notify investors that there is a reasonable possibility of a rating change and the likely direction of such change. These are designated as "Positive," indicating a potential upgrade, "Negative," for potential downgrade, or "Evolving," if ratings may be raised, lowered or maintained. RatingWatch is typically resolved over a relatively short period.
FITCH SPECULATIVE GRADE BOND RATINGS
BB: Bonds are considered speculative. There is a possibility of credit risk developing, particularly as the result of adverse economic changes over time. However, business and financial alternatives may be available to allow financial commitments to be met.
B: Bonds are considered highly speculative. Significant credit risk is present but a limited margin of safety remains. While bonds in this class are currently meeting financial commitments, the capacity for continued payment is contingent upon a sustained, favorable business and economic environment.
CCC: Default is a real possibility. Capacity for meeting financial commitments is solely reliant upon sustained, favorable business or economic developments.
CC: Default of some kind appears probable.
C: Bonds are in imminent default in payment of interest or principal.
DDD, DD, AND D: Bonds are in default on interest and/or principal payments. Such bonds are extremely speculative and are valued on the basis of their prospects for achieving partial or full recovery value in liquidation or reorganization of the obligor. "DDD" represents the highest potential for recovery on these bonds, and "D" represents the lowest potential for recovery.
PLUS (+) MINUS (-): Plus and minus signs are used with a rating symbol to indicate the relative position of a credit within the rating category. Plus and minus signs, however, are not used in categories below CCC.
FITCH SHORT-TERM CREDIT RATINGS
The following ratings scale applies to foreign currency and local currency ratings. A Short-term rating has a time horizon of less than 12 months for most obligations, or up to three years for U.S. public finance securities, and thus places greater emphasis on the liquidity necessary to meet financial commitments in a timely manner.
F-1+: Exceptionally Strong Credit Quality. Issues assigned this rating are regarded as having the strongest degree of assurance for timely payment.
F-1-: Very Strong Credit Quality. Issues assigned this rating reflect an assurance of timely payment only slightly less in degree than issues rated "F-1+;"
F-2: Good Credit Quality. Issues assigned this rating have a satisfactory degree of assurance for timely payment, but the margin of safety is not as great as in the case of the higher ratings.
F-3: Fair Credit Quality. Issues assigned this rating have characteristics suggesting that the degree of assurance for timely payment is adequate, however, near-term adverse changes could result in a reduction to non-investment grade.
B: Speculative. Minimal capacity for timely payment of financial commitments, plus vulnerability to near-term adverse changes in financial and economic conditions.
C: High default risk. Default is a real possibility. Capacity for meeting financial commitments is solely reliant upon a sustained, favorable business and economic environment.
D: Default. Issues assigned this rating are in actual or imminent payment default.
APPENDIX B
PERSONS TO WHOM INVESCO AIM PROVIDES
NON-PUBLIC PORTFOLIO HOLDINGS ON AN ONGOING BASIS
(AS OF JUNE 30, 2008)
SERVICE PROVIDER DISCLOSURE CATEGORY
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ABN AMRO Financial Services, Inc. Broker (for certain AIM Funds)
Anglemyer & Co. Analyst (for certain AIM Funds)
BB&T Capital Markets Broker (for certain AIM Funds)
Bear, Stearns Pricing Direct, Inc. Pricing Vendor (for certain AIM Funds)
BOSC, Inc. Broker (for certain AIM Funds)
BOWNE & Co. Financial Printer
Brown Brothers Harriman & Co. Securities Lender (for certain AIM Funds)
Cabrera Capital Markets Broker (for certain AIM Funds)
CENVEO Financial Printer
Charles River Systems, Inc. System Provider
Citigroup Global Markets, Inc. Broker (for certain AIM Funds)
Classic Printers Inc. Financial Printer
Color Dynamics Financial Printer
Commerce Capital Markets Broker (for certain AIM Funds)
D.A. Davidson & Co. Broker (for certain AIM Funds)
Dechert LLP Legal Counsel
Earth Color Houston Financial Printer
EMCO Press Financial Printer
Empirical Research Partners Analyst (for certain AIM Funds)
Finacorp Securities Broker (for certain AIM Funds)
First Albany Capital Broker (for certain AIM Funds)
First Tryon Securities Broker (for certain AIM Funds)
F T Interactive Data Corporation Pricing Vendor
GainsKeeper Software Provider (for certain AIM Funds)
GCom2 Solutions Software Provider (for certain AIM Funds)
George K. Baum & Company Broker (for certain AIM Funds)
Glass, Lewis & Co. System Provider (for certain AIM Funds)
Global Trend Alert Analyst (for certain AIM Funds)
Greater Houston Publishers, Inc. Financial Printer
Grover Printing Financial Printer
Gulfstream Graphics Corp. Financial Printer
Hattier, Sanford & Reynoir Broker (for certain AIM Funds)
Hutchinson, Shockey, Erley & Co. Broker (for certain AIM Funds)
Imageset Financial Printer
iMoneyNet, Inc. Rating & Ranking Agency (for certain AIM Funds)
Infinity Web, Inc. Financial Printer
Initram Data, Inc. Pricing Vendor
Institutional Shareholder Services, Inc. Proxy Voting Service (for certain AIM Funds)
Invesco Aim Investment Services, Inc. Transfer Agent
Invesco Senior Secured Management, Inc. System Provider (for certain AIM Funds)
Investortools, Inc. Broker (for certain AIM Funds)
ITG, Inc. Pricing Vendor (for certain AIM Funds)
J.P. Morgan Securities, Inc. Analyst (for certain AIM Funds)
JPMorgan Securities Inc.\Citigroup Global Markets
Inc.\JPMorgan Chase Bank, N.A. Lender (for certain AIM Funds)
Janney Montgomery Scott LLC Broker (for certain AIM Funds)
John Hancock Investment Management Services, LLC Sub-advisor (for certain sub-advised accounts)
Jorden Burt LLP Special Insurance Counsel
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SERVICE PROVIDER DISCLOSURE CATEGORY
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Kramer, Levin Naftalis & Frankel LLP Legal Counsel
Lipper, Inc. Rating & Ranking Agency (for certain AIM Funds)
Loan Pricing Corporation Pricing Service (for certain AIM Funds)
Loop Capital Markets Broker (for certain AIM Funds)
MarkIt Group Limited Pricing Vendor (for certain AIM Funds)
Merrill Communications, LLC Financial Printer
Mesirow Financial, Inc. Broker (for certain AIM Funds)
Moody's Investors Service Rating & Ranking Agency (for certain AIM Funds)
Morgan Keegan & Company, Inc. Broker (for certain AIM Funds)
Morrison Foerster LLP Legal Counsel
M.R. Beal Broker (for certain AIM Funds)
MS Securities Services, Inc. and Morgan Stanley &
Co. Incorporated Securities Lender (for certain AIM Funds)
Muzea Insider Consulting Services, LLC Analyst (for certain AIM Funds)
Ness USA System provider
Noah Financial, LLC Analyst (for certain AIM Funds)
OMGEO Oasys Trading System
Page International Financial Printer
PCP Publishing Financial Printer
Piper Jaffray Analyst (for certain AIM Funds)
Prager, Sealy & Co. Broker (for certain AIM Funds)
PricewaterhouseCoopers LLP Independent Registered Public Accounting Firm (for all AIM Funds)
Protective Securities Broker (for certain AIM Funds)
Ramirez & Co., Inc. Broker (for certain AIM Funds)
Raymond James & Associates, Inc. Broker (for certain AIM Funds)
RBC Capital Markets Analyst (for certain AIM Funds)
RBC Dain Rauscher Incorporated Broker (for certain AIM Funds)
Reuters America, LLC Pricing Service (for certain AIM Funds)
Rice Financial Products Broker (for certain AIM Funds)
Robert W. Baird & Co. Incorporated Broker (for certain AIM Funds)
RR Donnelley Financial Financial Printer
Ryan Beck & Co. Broker (for certain AIM Funds)
Seattle-Northwest Securities Corporation Broker (for certain AIM Funds)
Siebert Brandford Shank & Co., L.L.C. Broker (for certain AIM Funds)
Signature Financial Printer
Simon Printing Company Financial Printer
Southwest Precision Printers, Inc. Financial Printer
Standard and Poor's/Standard and Poor's Securities Pricing Service and Rating and Ranking Agency (each, respectively,
Evaluations, Inc. for certain AIM Funds)
StarCompliance, Inc. System Provider
State Street Bank and Trust Company Custodian, Lender, Securities Lender, and System Provider (each,
respectively, for certain AIM Funds)
Sterne, Agee & Leach, Inc. Broker (for certain AIM Funds)
Stifel, Nicolaus & Company, Incorporated Broker (for certain AIM Funds)
Stradley Ronon Stevens & Young, LLP Legal Counsel
The Bank of New York Custodian and Securities Lender (each, respectively, for certain
AIM Funds)
The MacGregor Group, Inc. Software Provider
The Savader Group Broker (for certain AIM Funds)
Thomson Information Services Incorporated Software Provider
UBS Financial Services, Inc. Broker (for certain AIM Funds)
VCI Group Inc. Financial Printer
Wachovia National Bank, N.A. Broker (for certain AIM Funds)
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SERVICE PROVIDER DISCLOSURE CATEGORY
-------------------------------------------------- ------------------------------------------------------------------
Western Lithograph Financial Printer
Wiley Bros. Aintree Capital L.L.C. Broker (for certain AIM Funds)
William Blair & Co. Broker (for certain AIM Funds)
XSP, LLC\Solutions PLUS, Inc. Software Provider
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APPENDIX C
TRUSTEES AND OFFICERS
As of July 31, 2008
The address of each trustee and officer is 11 Greenway Plaza, Suite 100, Houston, Texas 77046-1173. Each trustee oversees 103 portfolios in the AIM Funds complex. The trustees serve for the life of the Trust, subject to their earlier death, incapacitation, resignation, retirement or removal as more specifically provided in the Trust's organizational documents. Each officer serves for a one year term or until their successors are elected and qualified. Column two below includes length of time served with predecessor entities, if any.
OTHER
TRUSTEE TRUSTEESHIP(S)/
NAME, YEAR OF BIRTH AND AND/OR DIRECTORSHIPS(S)
POSITION(S) HELD WITH THE OFFICER HELD BY
TRUST SINCE PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS TRUSTEE/DIRECTOR
---------------------------- ------- ------------------------------------------------------------------------- ------------------
INTERESTED PERSONS
Martin L. Flanagan(1) - 1960 2007 Executive Director, Chief Executive Officer and President, Invesco Ltd. None
Trustee (ultimate parent of Invesco Aim and a global investment management firm);
Chairman, Invesco Aim Advisors, Inc. (registered investment advisor);
Director, Chairman, Chief Executive Officer and President, IVZ Inc.
(holding company), INVESCO North American Holdings, Inc. (holding
company) and INVESCO Group Services, Inc. (service provider); Trustee,
The AIM Family of Funds(R); Vice Chairman, Investment Company Institute;
and Member of Executive Board, SMU Cox School of Business
Formerly: Director, Chief Executive Officer and President, Invesco
Holding Company Limited (parent of Invesco Aim and a global investment
management firm); Director, Invesco Ltd.; Chairman, Investment Company
Institute; and President, Co-Chief Executive Officer, Co-President, Chief
Operating Officer and Chief Financial Officer, Franklin Resources, Inc.
(global investment management organization)
Philip A. Taylor(2) - 1954 2006 Director, Chief Executive Officer and President, AIM Mutual Fund Dealer None
Trustee, President and Inc. (registered broker dealer), Invesco Aim Advisors, Inc., AIM Funds
Principal Executive Officer Management Inc. d/b/a INVESCO Enterprise Services (registered investment
advisor and registered transfer agent), 1371 Preferred Inc. (holding
company), AIM Trimark Corporate Class Inc. (formerly AIM Trimark Global
Fund Inc.) (corporate mutual fund company) and AIM Trimark Canada Fund
Inc. (corporate mutual fund company); Director, Chairman, Chief Executive
Officer and President, Invesco Aim Management Group, Inc. (financial
services holding company) and Invesco Aim Capital Management, Inc.
(registered investment advisor); Director and President, INVESCO Funds
Group, Inc. (registered investment advisor and registered transfer agent)
and AIM GP Canada Inc. (general partner for limited partnership);
Director, Invesco Aim Distributors, Inc. (registered broker dealer);
Director and Chairman, Invesco Aim Investment Services, Inc. (registered
transfer agent) and INVESCO Distributors, Inc. (registered broker
|
(2) Mr. Taylor is considered an interested person of the Trust because he is an officer and a director of the advisor to, and a director of the principal underwriter of, the Trust.
OTHER
TRUSTEE TRUSTEESHIP(S)/
NAME, YEAR OF BIRTH AND AND/OR DIRECTORSHIPS(S)
POSITION(S) HELD WITH THE OFFICER HELD BY
TRUST SINCE PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS TRUSTEE/DIRECTOR
---------------------------- ------- ------------------------------------------------------------------------- ------------------
dealer); Director, President and Chairman, IVZ Callco Inc. (holding
company), INVESCO Inc. (holding company) and AIM Canada Holdings, Inc.
(holding company); Trustee, President and Principal Executive Officer,
The AIM Family of Funds(R) (other than AIM Treasurer's Series Trust and
Short-Term Investments Trust); Trustee and Executive Vice President, The
AIM Family of Funds(R) (AIM Treasurer's Series Trust and Short-Term
Investments Trust only); and Manager, Invesco PowerShares Capital
Management LLC
Formerly: Trustee and Executive Vice President, Tax-Free Investments
Trust; Director and Chairman, Fund Management Company (former registered
broker dealer); President and Principal Executive Officer, The AIM Family
of Funds(R) (AIM Treasurer's Series Trust, Short-Term Investments Trust
and Tax-Free Investments Trust only); Chairman, AIM Canada Holdings,
Inc.; President, AIM Trimark Global Fund Inc. and AIM Trimark Canada Fund
Inc.; and Director, Trimark Trust (federally regulated Canadian trust
company)
INDEPENDENT TRUSTEES
Bruce L. Crockett - 1944 1993 Chairman, Crockett Technology Associates (technology consulting company) ACE Limited
Trustee and Chair (insurance
company); and
Captaris, Inc.
(unified messaging
provider)
Bob R. Baker - 1936 2004 Retired None
Trustee
Frank S. Bayley - 1939 2001 Retired None
Trustee Formerly: Partner, law firm of Baker & McKenzie and Director, Badgley
Funds, Inc. (registered investment company) (2 portfolios)
James T. Bunch - 1942 2004 Founder, Green, Manning & Bunch Ltd. (investment banking firm); and None
Trustee Director, Policy Studies, Inc. and Van Gilder Insurance Corporation
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OTHER
TRUSTEE TRUSTEESHIP(S)/
NAME, YEAR OF BIRTH AND AND/OR DIRECTORSHIPS(S)
POSITION(S) HELD WITH THE OFFICER HELD BY
TRUST SINCE PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS TRUSTEE/DIRECTOR
---------------------------- ------- ------------------------------------------------------------------------- ------------------
Albert R. Dowden - 1941 2000 Director of a number of public and private business corporations, None
Trustee including the Boss Group, Ltd. (private investment and management), Reich
& Tang Funds (Chairman) (registered investment company) (7 portfolios),
Daily Income Fund (4 portfolios), California Daily Tax Free Income Fund,
Inc., Connecticut Daily Tax Free Income Fund, Inc. and New Jersey Daily
Municipal Income Fund, Inc., Annuity and Life Re (Holdings), Ltd.
(insurance company), and Homeowners of America Holding Corporation
(property casualty company)
Formerly: Director, CompuDyne Corporation (provider of product and
services to the public security market); Director, President and Chief
Executive Officer, Volvo Group North America, Inc.; Senior Vice
President, AB Volvo; Director of various affiliated Volvo companies; and
Director, Magellan Insurance Company
Jack M. Fields - 1952 1997 Chief Executive Officer, Twenty First Century Group, Inc. (government Administaff
Trustee affairs company); and Owner and Chief Executive Officer, Dos Angelos
Ranch, L.P. (cattle, hunting, corporate entertainment)
Formerly: Chief Executive Officer, Texana Timber LP (sustainable forestry
company) and Discovery Global Education Fund (non-profit)
Carl Frischling - 1937 1993 Partner, law firm of Kramer Levin Naftalis and Frankel LLP Director, Reich &
Trustee Tang Funds
(15 portfolios)
Prema Mathai-Davis - 1950 1998 Formerly: Chief Executive Officer, YWCA of the USA None
Trustee
Lewis F. Pennock - 1942 1993 Partner, law firm of Pennock & Cooper None
Trustee
Larry Soll - 1942 2004 Retired None
Trustee
Raymond Stickel, Jr. - 1944 2005 Retired None
Trustee Formerly: Partner, Deloitte & Touche; and Director, Mainstay VP
Series Funds, Inc. (25 portfolios)
OTHER OFFICERS
Russell C. Burk - 1958 2005 Senior Vice President and Senior Officer, The AIM Family of Funds(R) N/A
Senior Vice President and Formerly: Director of Compliance and Assistant General Counsel, ICON
Senior Officer Advisers, Inc.; Financial Consultant, Merrill Lynch; and General Counsel
and Director of Compliance, ALPS Mutual Funds, Inc.
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OTHER
TRUSTEE TRUSTEESHIP(S)/
NAME, YEAR OF BIRTH AND AND/OR DIRECTORSHIPS(S)
POSITION(S) HELD WITH THE OFFICER HELD BY
TRUST SINCE PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS TRUSTEE/DIRECTOR
---------------------------- ------- ------------------------------------------------------------------------- ------------------
John M. Zerr - 1962 2006 Director, Senior Vice President, Secretary and General Counsel, Invesco N/A
Senior Vice President, Chief Aim Management Group, Inc., Invesco Aim Advisors, Inc. and Invesco Aim
Legal Officer and Secretary Capital Management, Inc.; Director, Senior Vice President and Secretary,
Invesco Aim Distributors, Inc.; Director, Vice President and Secretary,
Invesco Aim Investment Services, Inc. and INVESCO Distributors, Inc.;
Director and Vice President, INVESCO Funds Group, Inc.; Senior Vice
President, Chief Legal Officer and Secretary, The AIM Family of Funds(R);
and Manager, Invesco PowerShares Capital Management LLC
Formerly: Director, Vice President and Secretary, Fund Management
Company; Vice President, Invesco Aim Capital Management, Inc.; Chief
Operating Officer, Senior Vice President, General Counsel and Secretary,
Liberty Ridge Capital, Inc. (an investment adviser); Vice President and
Secretary, PBHG Funds (an investment company); Vice President and
Secretary, PBHG Insurance Series Fund (an investment company); Chief
Operating Officer, General Counsel and Secretary, Old Mutual Investment
Partners (a broker-dealer); General Counsel and Secretary, Old Mutual
Fund Services (an administrator); General Counsel and Secretary, Old
Mutual Shareholder Services (a shareholder servicing center); Executive
Vice President, General Counsel and Secretary, Old Mutual Capital, Inc.
(an investment adviser); and Vice President and Secretary, Old Mutual
Advisors Funds (an investment company)
Lisa O. Brinkley - 1959 2004 Global Compliance Director, Invesco Ltd.; and Vice President, The AIM N/A
Vice President Family of Funds(R)
Formerly: Senior Vice President, Invesco Aim
Management Group, Inc.; Senior Vice President and Chief Compliance
Officer, Invesco Aim Advisors, Inc. and The AIM Family of Funds(R); Vice
President and Chief Compliance Officer, Invesco Aim Capital Management,
Inc. and Invesco Aim Distributors, Inc.; Vice President, Invesco Aim
Investment Services, Inc. and Fund Management Company; and Senior Vice
President and Compliance Director, Delaware Investments Family of Funds
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OTHER
TRUSTEE TRUSTEESHIP(S)/
NAME, YEAR OF BIRTH AND AND/OR DIRECTORSHIPS(S)
POSITION(S) HELD WITH THE OFFICER HELD BY
TRUST SINCE PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS TRUSTEE/DIRECTOR
---------------------------- ------- ------------------------------------------------------------------------- ------------------
Kevin M. Carome - 1956 2003 General Counsel, Secretary and Senior Managing Director, Invesco Ltd.; N/A
Vice President Director and Secretary, Invesco Holding Company Limited, IVZ, Inc. and
INVESCO Group Services, Inc; Director, INVESCO Funds Group, Inc.;
Secretary, INVESCO North American Holdings, Inc.; and Vice President, The
AIM Family of Funds(R)
Formerly: Director, Senior Vice President,
Secretary and General Counsel, Invesco Aim Management Group, Inc. and
Invesco Aim Advisors, Inc.; Senior Vice President, Invesco Aim
Distributors, Inc.; Director, General Counsel and Vice President, Fund
Management Company; Vice President, Invesco Aim Capital Management, Inc.
and Invesco Aim Investment Services, Inc.; Senior Vice President, Chief
Legal Officer and Secretary, The AIM Family of Funds(R); Director and
Vice President, INVESCO Distributors, Inc.; and Chief Executive Officer
and President, INVESCO Funds Group
Sidney M. Dilgren - 1961 2004 Vice President , Invesco Aim Advisors, Inc. and Invesco Aim Capital N/A
Vice President, Treasurer Management, Inc.; and Vice President, Treasurer and Principal Financial
and Principal Financial Officer, The AIM Family of Funds(R)
Officer
Formerly: Fund Treasurer, Invesco Aim Advisors, Inc.; Senior Vice
President, Invesco Aim Investment Services, Inc. and Vice President,
Invesco Aim Distributors, Inc.
Karen Dunn Kelley - 1960 1993 Head of Invesco's World Wide Fixed Income and Cash Management Group; N/A
Vice President Director of Cash Management and Senior Vice President, Invesco Aim
Advisors, Inc. and Invesco Aim Capital Management, Inc.; Executive Vice
President, Invesco Aim Distributors, Inc.; Senior Vice President, Invesco
Aim Management Group, Inc.; Vice President, The AIM Family of Funds(R)
(other than AIM Treasurer's Series Trust and Short-Term Investments
Trust); and President and Principal Executive Officer, The AIM Family of
Funds(R) (AIM Treasurer's Series Trust and Short-Term Investments Trust
only)
Formerly: President and Principal Executive Officer, Tax-Free Investments
Trust; Director and President, Fund Management Company; Chief Cash
Management Officer and Managing Director, Invesco Aim Capital Management,
Inc.; and Vice President, Invesco Aim Advisors, Inc. and The AIM Family
of Funds(R) (AIM Treasurer's Series Trust, Short-Term Investments Trust
and Tax-Free Investments Trust only)
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OTHER
TRUSTEE TRUSTEESHIP(S)/
NAME, YEAR OF BIRTH AND AND/OR DIRECTORSHIPS(S)
POSITION(S) HELD WITH THE OFFICER HELD BY
TRUST SINCE PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS TRUSTEE/DIRECTOR
---------------------------- ------- ------------------------------------------------------------------------- ------------------
Lance A. Rejsek - 1967 2005 Anti-Money Laundering Compliance Officer, Invesco Aim Advisors, Inc., N/A
Anti-Money Laundering Invesco Aim Capital Management, Inc., Invesco Aim Distributors, Inc.,
Compliance Officer Invesco Aim Investment Services, Inc., Invesco Aim Private Asset
Management, Inc. and The AIM Family of Funds(R)
Formerly: Anti-Money Laundering Compliance Officer, Fund Management
Company; and Manager of the Fraud Prevention Department, Invesco Aim
Investment Services, Inc.
Todd L. Spillane - 1958 2006 Senior Vice President, Invesco Aim Management Group, Inc.; Senior Vice N/A
Chief Compliance Officer President and Chief Compliance Officer, Invesco Aim Advisors, Inc. and
Invesco Aim Capital Management, Inc.; Chief Compliance Officer, The AIM
Family of Funds(R), Invesco Global Asset Management (N.A.), Inc.
(registered investment advisor), Invesco Institutional (N.A.), Inc.
(registered investment advisor), INVESCO Private Capital Investments,
Inc. (holding company), Invesco Private Capital, Inc. (registered
investment advisor) and Invesco Senior Secured Management, Inc.
(registered investment advisor); and Vice President, Invesco Aim
Distributors, Inc. and Invesco Aim Investment Services, Inc.
Formerly: Vice President, Invesco Aim Capital Management, Inc. and Fund
Management Company; and Global Head of Product Development, AIG-Global
Investment Group, Inc.
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TRUSTEE OWNERSHIP OF FUND SHARES AS OF DECEMBER 31, 2007
Aggregate Dollar Range of Equity
Dollar Range of Securities in All Registered
Equity Securities Investment Companies Overseen by
Name of Trustee Per Fund Trustee in The AIM Family of Funds(R)
-------------------- ----------------- -------------------------------------
Martin L. Flanagan -0- Over $100,000
Philip A. Taylor -0- -0-
Bob R. Baker -0- Over $100,000
Frank S. Bayley -0- Over $100,000
James T. Bunch -0- Over $100,000(3)
Bruce L. Crockett -0- Over $100,000(3)
Albert R. Dowden -0- Over $100,000
Jack M. Fields -0- Over $100,000(3)
Carl Frischling -0- Over $100,000(3)
Prema Mathai-Davis -0- Over $100,000(3)
Lewis F. Pennock -0- Over $100,000
Larry Soll -0- Over $100,000(3)
Raymond Stickel, Jr. -0- Over $100,000
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APPENDIX D
TRUSTEE AND OFFICER COMPENSATION TABLE
Set forth below is information regarding compensation paid or accrued for each trustee of the Trust who was not affiliated with Invesco Aim during the year ended December 31, 2007:
AGGREGATE RETIREMENT
COMPENSATION FROM BENEFITS ACCRUED ESTIMATED ANNUAL TOTAL
THE BY ALL BENEFITS UPON COMPENSATION FROM
TRUSTEE TRUST(1) AIM FUNDS(2) RETIREMENT(3) ALL AIM FUNDS(4)
-------------------- ----------------- ---------------- ---------------- -----------------
Bob R. Baker $31,279 $234,974 $188,144 $232,400
Frank S. Bayley 33,551 164,614 126,750 249,300
James T. Bunch 29,007 159,121 126,750 215,500
Bruce L. Crockett 60,821 85,879 126,750 452,100
Albert R. Dowden 33,551 115,299 126,750 249,300
Jack M. Fields 29,007 110,194 126,750 215,500
Carl Frischling(5) 29,007 96,575 126,750 215,500
Prema Mathai-Davis 31,279 109,077 126,750 232,400
Lewis F. Pennock 29,007 88,793 126,750 215,500
Ruth H. Quigley(6) 33,551 192,521 126,750 249,300
Larry Soll 29,007 203,535 147,748 215,500
Raymond Stickel, Jr. 33,551 85,977 126,750 249,300
OFFICER
Russell Burk 64,730 N/A N/A 456,019
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(1) Amounts shown are based on the fiscal year ended December 31, 2007. The total amount of compensation deferred by all trustees of the Trust during the fiscal year ended December 31, 2007, including earnings, was $145,709.
(2) During the fiscal year ended December 31, 2007, the total amount of expenses allocated to the Trust in respect of such retirement benefits was $79,426.
(3) These amounts represent the estimated annual benefits payable by the AIM Funds upon the trustee's retirement and assumes each trustee serves until his or her normal retirement date.
(4) All trustees currently serve as trustees of 16 registered investment companies advised by Invesco Aim.
(5) During the fiscal year ended December 31, 2007, the Trust paid $99,287 in legal fees to Kramer Levin Naftalis & Frankel LLP for services rendered by such firm as counsel to the independent trustees of the Trust. Mr. Frischling is a partner of such firm.
(6) Miss Quigley retired effective January 1, 2008.
APPENDIX E
PROXY POLICY APPLIES TO THE FOLLOWING:
INVESCO AIM ADVISORS, INC.
INVESCO AIM PROXY VOTING GUIDELINES
(Effective as of March 31, 2008)
The following Invesco Aim Proxy Voting Guidelines are applicable to all funds and other accounts managed by Invesco Aim Advisors, Inc., Invesco Aim Capital Management, Inc and Invesco Aim Private Asset Management, Inc. (collectively, "Invesco Aim").(1)
INTRODUCTION
OUR BELIEF
The AIM Funds Boards of Trustees and Invesco Aim's investment professionals expect a high standard of corporate governance from the companies in our portfolios so that Invesco Aim may fulfill its fiduciary obligation to our fund shareholders and other account holders. Well governed companies are characterized by a primary focus on the interests of shareholders, accountable boards of directors, ample transparency in financial disclosure, performance-driven cultures and appropriate consideration of all stakeholders. Invesco Aim believes well governed companies create greater shareholder wealth over the long term than poorly governed companies, so we endeavor to vote in a manner that increases the value of our investments and fosters good governance within our portfolio companies.
In determining how to vote proxy issues, Invesco Aim considers the probable business consequences of each issue and votes in a manner designed to protect and enhance fund shareholders' and other account holders' interests. Our voting decisions are intended to enhance each company's total shareholder value over Invesco Aim's typical investment horizon.
Proxy voting is an integral part of Invesco Aim's investment process. We believe that the right to vote proxies should be managed with the same care as all other elements of the investment process. The objective of Invesco Aim's proxy-voting activity is to promote good governance and advance the economic interests of our clients. At no time will Invesco Aim exercise its voting power to advance its own commercial interests, to pursue a social or political cause that is unrelated to our clients' economic interests, or to favor a particular client or business relationship to the detriment of others.
PROXY ADMINISTRATION
The Invesco Aim Proxy Committee (the "Proxy Committee") consists of members representing Invesco Aim's Investments, Legal and Compliance departments. Invesco Aim's Proxy Voting Guidelines (the "Guidelines") are revised annually by the Proxy Committee, and are approved by the AIM Funds Boards of Trustees. The Proxy Committee implements the Guidelines and oversees proxy voting.
The Proxy Committee has retained outside experts to assist with the analysis and voting of proxy issues. In addition to the advice offered by these experts, Invesco Aim uses information gathered from our own research,
company managements, Invesco Aim's portfolio managers and outside shareholder groups to reach our voting decisions.
Generally speaking, Invesco Aim's investment-research process leads us to invest in companies led by management teams we believe have the ability to conceive and execute strategies to outperform their competitors. We select companies for investment based in large part on our assessment of their management teams' ability to create shareholder wealth. Therefore, in formulating our proxy-voting decisions, Invesco Aim gives proper consideration to the recommendations of a company's Board of Directors.
IMPORTANT PRINCIPLES UNDERLYING THE INVESCO AIM PROXY VOTING GUIDELINES
I. ACCOUNTABILITY
Management teams of companies are accountable to their boards of directors, and directors of publicly held companies are accountable to their shareholders. Invesco Aim endeavors to vote the proxies of its portfolio companies in a manner that will reinforce the notion of a board's accountability to its shareholders. Consequently, Invesco Aim votes against any actions that would impair the rights of shareholders or would reduce shareholders' influence over the board or over management.
The following are specific voting issues that illustrate how Invesco Aim applies this principle of accountability.
- Elections of directors. In uncontested director elections for companies that do not have a controlling shareholder, Invesco Aim votes in favor of slates if they are comprised of at least a majority of independent directors and if the boards' key committees are fully independent. Key committees include the Audit, Compensation and Governance or Nominating Committees. Invesco Aim's standard of independence excludes directors who, in addition to the directorship, have any material business or family relationships with the companies they serve.
Contested director elections are evaluated on a case-by-case basis and are decided within the context of Invesco Aim's investment thesis on a company.
- Director performance. Invesco Aim withholds votes from directors who exhibit a lack of accountability to shareholders, either through their level of attendance at meetings or by enacting egregious corporate-governance or other policies. In cases of material financial restatements, accounting fraud, habitually late filings, adopting shareholder rights plan ("poison pills") without shareholder approval, or other areas of poor performance, Invesco Aim may withhold votes from some or all of a company's directors. In situations where directors' performance is a concern, Invesco Aim may also support shareholder proposals to take corrective actions such as so-called "clawback" provisions.
- Auditors and Audit Committee members. Invesco Aim believes a company's Audit Committee has a high degree of responsibility to shareholders in matters of financial disclosure, integrity of the financial statements and effectiveness of a company's internal controls. Independence, experience and financial expertise are critical elements of a well-functioning Audit Committee. When electing directors who are members of a company's Audit Committee, or when ratifying a company's auditors, Invesco Aim considers the past performance of the Committee and holds its members accountable for the quality of the company's financial statements and reports.
- Majority standard in director elections. The right to elect directors is the single most important mechanism shareholders have to promote accountability. Invesco Aim supports the nascent effort to reform the U.S. convention of electing directors, and votes in favor of proposals to elect directors by a majority vote.
- Classified boards. Invesco Aim supports proposals to elect directors annually instead of electing them to staggered multi-year terms because annual elections increase a board's level of accountability to its shareholders.
- Supermajority voting requirements. Unless proscribed by law in the state of incorporation, Invesco Aim votes against actions that would impose any supermajority voting requirement, and supports actions to dismantle existing supermajority requirements.
- Responsiveness. Invesco Aim withholds votes from directors who do not adequately respond to shareholder proposals that were approved by a majority of votes cast the prior year.
- Cumulative voting. The practice of cumulative voting can enable minority shareholders to have representation on a company's board. Invesco Aim supports proposals to institute the practice of cumulative voting at companies whose overall corporate-governance standards indicate a particular need to protect the interests of minority shareholders.
- Shareholder access. On business matters with potential financial consequences, Invesco Aim votes in favor of proposals that would increase shareholders' opportunities to express their views to boards of directors, proposals that would lower barriers to shareholder action and proposals to promote the adoption of generally accepted best practices in corporate governance.
II. INCENTIVES
Invesco Aim believes properly constructed compensation plans that include equity ownership are effective in creating incentives that induce managements and employees of our portfolio companies to create greater shareholder wealth. Invesco Aim supports equity compensation plans that promote the proper alignment of incentives, and votes against plans that are overly dilutive to existing shareholders, plans that contain objectionable structural features, and plans that appear likely to reduce the value of an account's investment.
Following are specific voting issues that illustrate how Invesco Aim evaluates incentive plans.
- Executive compensation. Invesco Aim evaluates compensation plans for executives within the context of the company's performance under the executives' tenure. Invesco Aim believes independent compensation committees are best positioned to craft executive-compensation plans that are suitable for their company-specific circumstances. We view the election of those independent compensation committee members as the appropriate mechanism for shareholders to express their approval or disapproval of a company's compensation practices. Therefore, Invesco Aim generally does not support shareholder proposals to limit or eliminate certain forms of executive compensation. In the interest of reinforcing the notion of a compensation committee's accountability to shareholders, Invesco Aim supports proposals requesting that companies subject each year's compensation record to an advisory shareholder vote, or so-called "say on pay" proposals.
- Equity-based compensation plans. When voting to approve or reject equity-based compensation plans, Invesco Aim compares the total estimated cost of the plans, including stock options and restricted stock, against a carefully selected peer group and uses multiple performance metrics that help us determine whether the incentive structures in place are creating genuine shareholder wealth. Regardless of a plan's estimated cost relative to its peer group, Invesco Aim votes against plans that contain structural features that would impair the alignment of incentives between shareholders and management. Such features include the ability to reprice or reload options without shareholder approval, the ability to issue options below the stock's current market price, or the ability to automatically replenish shares without shareholder approval.
- Employee stock-purchase plans. Invesco Aim supports employee stock-purchase plans that are reasonably designed to provide proper incentives to a broad base of employees, provided that the price at which employees may acquire stock is at most a 15 percent discount from the market price.
- Severance agreements. Invesco Aim generally votes in favor of proposals requiring advisory shareholder ratification of executives' severance agreements. However, we oppose proposals requiring such agreements to be ratified by shareholders in advance of their adoption.
III. CAPITALIZATION
Examples of management proposals related to a company's capital structure include authorizing or issuing additional equity capital, repurchasing outstanding stock, or enacting a stock split or reverse stock split. On requests for additional capital stock, Invesco Aim analyzes the company's stated reasons for the request. Except where the request could adversely affect the fund's ownership stake or voting rights, AIM generally supports a board's decisions on its needs for additional capital stock. Some capitalization proposals require a case-by-case analysis within the context of Invesco Aim's investment thesis on a company. Examples of such proposals include authorizing common or preferred stock with special voting rights, or issuing additional stock in connection with an acquisition.
IV. MERGERS, ACQUISITIONS AND OTHER CORPORATE ACTIONS
Issuers occasionally require shareholder approval to engage in certain corporate actions such as mergers, acquisitions, name changes, dissolutions, reorganizations, divestitures and reincorporations. Invesco Aim analyzes these proposals within the context of our investment thesis on the company, and determines its vote on a case-by-case basis.
V. ANTI-TAKEOVER MEASURES
Practices designed to protect a company from unsolicited bids can adversely affect shareholder value and voting rights, and they create conflicts of interests among directors, management and shareholders. Except under special issuer-specific circumstances, Invesco Aim votes to reduce or eliminate such measures. These measures include adopting or renewing "poison pills", requiring supermajority voting on certain corporate actions, classifying the election of directors instead of electing each director to an annual term, or creating separate classes of common or preferred stock with special voting rights. Invesco Aim generally votes against management proposals to impose these types of measures, and generally votes for shareholder proposals designed to reduce such measures. Invesco Aim supports shareholder proposals directing companies to subject their anti-takeover provisions to a shareholder vote.
VI. SHAREHOLDER PROPOSALS ON CORPORATE GOVERNANCE
Invesco Aim generally votes for shareholder proposals that are designed to protect shareholder rights if a company's corporate-governance standards indicate that such additional protections are warranted.
VII. SHAREHOLDER PROPOSALS ON SOCIAL RESPONSIBILITY
The potential costs and economic benefits of shareholder proposals seeking to amend a company's practices for social reasons are difficult to assess. Analyzing the costs and economic benefits of these proposals is highly subjective and does not fit readily within our framework of voting to create greater shareholder wealth over Invesco Aim's typical investment horizon. Therefore, Invesco Aim abstains from voting on shareholder proposals deemed to be of a purely social, political or moral nature.
VIII. ROUTINE BUSINESS MATTERS
Routine business matters rarely have a potentially material effect on the economic prospects of fund holdings, so we generally support the board's discretion on these items. However, Invesco Aim votes against proposals where there is insufficient information to make a decision about the nature of the proposal. Similarly, Invesco Aim votes against proposals to conduct other unidentified business at shareholder meetings.
SUMMARY
These Guidelines provide an important framework for making proxy-voting decisions, and should give fund shareholders and other account holders insight into the factors driving Invesco Aim's decisions. The Guidelines cannot address all potential proxy issues, however. Decisions on specific issues must be made within the context of these Guidelines and within the context of the investment thesis of the funds and other accounts that own the company's stock. Where a different investment thesis is held by portfolio managers who may hold stocks in common, Invesco Aim may vote the shares held on a fund-by-fund or account-by-account basis.
EXCEPTIONS
In certain circumstances, Invesco Aim may refrain from voting where the economic cost of voting a company's proxy exceeds any anticipated benefits of that proxy proposal.
SHARE-LENDING PROGRAMS
One reason that some portion of Invesco Aim's position in a particular security might not be voted is the securities lending program. When securities are out on loan and earning fees for the lending fund, they are transferred into the borrower's name. Any proxies during the period of the loan are voted by the borrower. The lending fund would have to terminate the loan to vote the company's proxy, an action that is not generally in the best economic interest of fund shareholders. However, whenever Invesco Aim determines that the benefit to shareholders or other account holders of voting a particular proxy outweighs the revenue lost by terminating the loan, we recall the securities for the purpose of voting the fund's full position.
"SHARE-BLOCKING"
Another example of a situation where Invesco Aim may be unable to vote is in countries where the exercise of voting rights requires the fund to submit to short-term trading restrictions, a practice known as "share-blocking." Invesco Aim generally refrains from voting proxies in share-blocking countries unless the portfolio manager determines that the benefit to fund shareholders and other account holders of voting a specific proxy outweighs the fund's or other account's temporary inability to sell the security.
INTERNATIONAL CONSTRAINTS
An additional concern that sometimes precludes our voting non-U.S. proxies is our inability to receive proxy materials with enough time and enough information to make a voting decision. In the great majority of instances, however, we are able to vote non-U.S. proxies successfully. It is important to note that Invesco Aim makes voting decisions for non-U.S. issuers using these Guidelines as our framework, but also takes into account the corporate-governance standards, regulatory environment and generally accepted best practices of the local market.
EXCEPTIONS TO THESE GUIDELINES
Invesco Aim retains the flexibility to accommodate company-specific situations where strictly adhering to the Guidelines would lead to a vote that the Proxy Committee deems not to be in the best interest of the funds' shareholders and other account holders. In these situations, the Proxy Committee will vote the proxy in the manner deemed to be in the best interest of the funds' shareholders and other account holders, and will promptly inform the funds' Boards of Trustees of such vote and the circumstances surrounding it.
RESOLVING POTENTIAL CONFLICTS OF INTEREST
A potential conflict of interest arises when Invesco Aim votes a proxy for an issuer with which it also maintains a material business relationship. Examples could include issuers that are distributors of Invesco Aim's products, or issuers that employ Invesco Aim to manage portions of their retirement plans or treasury accounts. Invesco Aim reviews each proxy proposal to assess the extent, if any, to which there may be a material conflict between the interests of the fund shareholders or other account holders and Invesco Aim.
Invesco Aim takes reasonable measures to determine whether a potential conflict may exist. A potential conflict is deemed to exist only if one or more of the Proxy Committee members actually knew or should have known of the potential conflict.
If a material potential conflict is deemed to exist, Invesco Aim may resolve the
potential conflict in one of the following ways: (1) if the proposal that gives
rise to the potential conflict is specifically addressed by the Guidelines,
Invesco Aim may vote the proxy in accordance with the predetermined Guidelines;
(2) Invesco Aim may engage an independent third party to determine how the proxy
should be voted; or (3) Invesco Aim may establish an ethical wall or other
informational barrier between the persons involved in the potential conflict and
the persons making the proxy-voting decision in order to insulate the potential
conflict from the decision makers.
Because the Guidelines are pre-determined and crafted to be in the best economic interest of shareholders and other account holders, applying the Guidelines to vote client proxies should, in most instances, adequately resolve any potential conflict of interest. As an additional safeguard against potential conflicts, persons from Invesco Aim's marketing, distribution and other customer-facing functions are precluded from becoming members of the Proxy Committee.
On a quarterly basis, the AIM Funds Boards of Trustees review a report from Invesco Aim's Internal Compliance Controls Committee. The report contains a list of all known material business relationships that Invesco Aim maintains with publicly traded issuers. That list is cross-referenced with the list of proxies voted over the period. If there are any instances where Invesco Aim's voting pattern on the proxies of its material business partners is inconsistent with its voting pattern on all other issuers, they are brought before the Trustees and explained by the Chairman of the Proxy Committee.
Personal conflicts of interest. If any member of the Proxy Committee has a personal conflict of interest with respect to a company or an issue presented for voting, that Proxy Committee member will inform the Proxy Committee of such conflict and will abstain from voting on that company or issue.
Funds of funds. Some AIM Funds offering diversified asset allocation within one investment vehicle own shares in other AIM Funds. A potential conflict of interest could arise if an underlying AIM Fund has a shareholder
meeting with any proxy issues to be voted on, because Invesco Aim's asset-allocation funds or target-maturity funds may be large shareholders of the underlying fund. In order to avoid any potential for a conflict, the asset-allocation funds and target maturity funds vote their shares in the same proportion as the votes of the external shareholders of the underlying fund.
POLICIES AND VOTE DISCLOSURE
A copy of these Guidelines and the voting record of each AIM Fund are available on our web site, www.invescoaim.com. In accordance with Securities and Exchange Commission regulations, all funds file a record of all proxy-voting activity for the prior 12 months ending June 30th. That filing is made on or before August 31st of each year.
FOOTNOTES
(1) AIM Funds not managed by Invesco Aim Advisors, Inc., are governed by the proxy voting policies of their respective sub-advisors. Proxy Voting Guidelines applicable to AIM CHINA FUND, AIM FLOATING RATE FUND, AIM GLOBAL REAL ESTATE FUND, AIM INTERNATIONAL CORE EQUITY FUND, AIM INTERNATIONAL TOTAL RETURN FUND, AIM JAPAN FUND, AIM LIBOR ALPHA FUND, AIM REAL ESTATE FUND, AIM S&P 500 INDEX FUND, AIM SELECT REAL ESTATE INCOME FUND, AIM STRUCTURED CORE FUND, AIM STRUCTURED GROWTH FUND, AIM STRUCTURED VALUE FUND, AIM TRIMARK ENDEAVOR FUND, AIM TRIMARK FUND, AIM TRIMARK SMALL COMPANIES FUND, SERIES C and SERIES M are available at our website, http://www.invescoaim.com.
Proxy policy applies to the following:
INVESCO ASSET MANAGEMENT DEUTSCHLAND, GMBH
(INVESCO LOGO)
PROXY VOTING POLICY
INVESCO ASSET MANAGEMENT DEUTSCHLAND GMBH
December 2007
GENERAL POLICY
INVESCO has responsibility for making investment decisions that are in the best interests of its clients. As part of the investment management services it provides to clients, INVESCO may be authorized by clients to vote proxies appurtenant to the shares for which the clients are beneficial owners.
INVESCO believes that it has a duty to manage clients' assets in the best economic interests of the clients and that the ability to vote proxies is a client asset.
INVESCO reserves the right to amend its proxy policies and procedures from time to time without prior notice to its clients.
PROXY VOTING POLICIES
VOTING OF PROXIES
INVESCO will on a fund by fund basis, decide whether it will vote proxies and if so, for which parts of the portfolio it will voted for. If INVESCO decides to vote proxies, it will do so in accordance with the procedures set forth below. If the client retains in writing the right to vote or if INVESCO determines that any benefit the client might gain from voting a proxy would be outweighed by the costs associated therewith, it will refrain from voting.
BEST ECONOMIC INTERESTS OF CLIENTS
In voting proxies, INVESCO will take into consideration those factors that may affect the value of the security and will vote proxies in a manner in which, in its opinion, is in the best economic interests of clients. INVESCO endeavors to resolve any conflicts of interest exclusively in the best economic interests of clients.
CERTAIN PROXY VOTES MAY NOT BE CAST
In some cases, INVESCO may determine that it is not in the best economic interests of clients to vote proxies. For example, proxy voting in certain countries outside the United States requires share blocking. Shareholders who wish to vote their proxies must deposit their shares 7 to 21 days before the date of the meeting with a designated depositary. During the blocked period, shares to be voted at the meeting cannot be sold until the meeting has taken place and the shares have been returned to the Custodian/Sub-Custodian bank. In addition, voting certain international securities may involve unusual costs to clients. In other cases, it may not be possible to vote certain proxies despite good faith efforts to do so, for instance when inadequate notice of the matter is provided. In the instance of loan securities, voting of proxies typically requires termination of the loan, so it is not usually in the best economic interests of clients to vote proxies on loaned securities. INVESCO typically will not, but reserves the right to, vote where share blocking restrictions, unusual costs or other barriers to efficient voting apply. If INVESCO does not vote, it would have made the determination that the cost of voting exceeds the expected benefit to the client.
ISS SERVICES
INVESCO has contracted with Institutional Shareholder Services ("ISS"), an
independent third party service provider, to vote INVESCO's clients' proxies
according to ISS's proxy voting recommendations. In addition, ISS will provide
proxy analyses, vote recommendations, vote execution and record-keeping services
for clients for which INVESCO has proxy voting responsibility. On an annual
basis, INVESCO will review information obtained from ISS to ascertain whether
ISS (i) has the capacity and competency to adequately analyze proxy issues, and
(ii) can make such recommendations in an impartial manner and in
the best economic interest of INVESCO's clients. This may include a review of ISS' Policies, Procedures and Practices Regarding Potential Conflicts of Interests and obtaining information about the work ISS does for corporate issuers and the payments ISS receives from such issuers.
Custodians forward proxy materials for clients who rely on INVESCO to vote proxies to ISS. ISS is responsible for exercising the voting rights in accordance with the ISS proxy voting guidelines. If INVESCO receives proxy materials in connection with a client's account where the client has, in writing, communicated to INVESCO that the client, plan fiduciary or other third party has reserved the right to vote proxies, INVESCO will forward to the party appointed by client any proxy materials it receives with respect to the account. In order to avoid voting proxies in circumstances where INVESCO, or any of its affiliates have or may have any conflict of interest, real or perceived, INVESCO has engaged ISS to provide the proxy analyses, vote recommendations and voting of proxies.
In the event that (i) ISS recuses itself on a proxy voting matter and makes no recommendation or (ii) INVESCO decides to override the ISS vote recommendation, the Proxy Voting Committee (PVC) of the International Structured Products Group and the Compliance Officer will review the issue and direct ISS how to vote the proxies as described below.
ISS RECUSAL
When ISS makes no recommendation on a proxy voting issue or is recused due to a conflict of interest, the Proxy Voting Committee (PVC) of the International Structured Products Group and the Compliance Officer will review the issue and, if INVESCO does not have a conflict of interest, direct ISS how to vote the proxies. In such cases where INVESCO has a conflict of interest, INVESCO, in its sole discretion, shall either (a) vote the proxies pursuant to ISS's general proxy voting guidelines, (b) engage an independent third party to provide a vote recommendation, or (c) contact its client(s) for direction as to how to vote the proxies.
OVERRIDE OF ISS RECOMMENDATION
There may be occasions where the INVESCO investment personnel or senior officers seek to override ISS's recommendations if they believe that ISS's recommendations are not in accordance with the best economic interests of clients. In the event that an individual listed above in this section disagrees with an ISS recommendation on a particular voting issue, the individual shall document in writing the reasons that he/she believes that the ISS recommendation is not in accordance with clients' best economic interests and submit such written documentation to the Proxy Voting Committee (PVC) of the International Structured Products Group. Upon review of the documentation and consultation with the individual and others as the PVC deems appropriate, the PVC together with the Compliance Officer may make a determination to override the ISS voting recommendation if they determine that it is in the best economic interests of clients.
PROXY VOTING RECORDS
Clients may obtain information about how INVESCO voted proxies on their behalf by contacting their client services representative. Alternatively, clients may make a written request for proxy voting information.
CONFLICTS OF INTEREST
PROCEDURES TO ADDRESS CONFLICTS OF INTEREST AND IMPROPER INFLUENCE
In order to avoid voting proxies in circumstances where INVESCO or any of its affiliates have or may have any conflict of interest, real or perceived, INVESCO has contracted with ISS to provide proxy analyses, vote recommendations and voting of proxies. Unless noted otherwise by ISS, each vote recommendation provided by ISS to INVESCO includes a representation from ISS that ISS faces no conflict of interest with
respect to the vote. In instances where ISS has recused itself and makes no recommendation on a particular matter or if an override submission is requested, the Proxy Voting Committee (PVC) of the International Structured Products Group together with the Compliance Officer shall determine how the proxy is to be voted and instruct accordingly in which case the conflict of interest provisions discussed below shall apply.
In effecting the policy of voting proxies in the best economic interests of clients, there may be occasions where the voting of such proxies may present a real or perceived conflict of interest between INVESCO, as the investment manager, and clients.
For each director, officer and employee of INVESCO ("INVESCO person"), the interests of INVESCO's clients must come first, ahead of the interest of INVESCO and any person within the INVESCO organization, which includes INVESCO's affiliates.
Accordingly, each INVESCO person must not put "personal benefit," whether tangible or intangible, before the interests of clients of INVESCO or otherwise take advantage of the relationship to INVESCO's clients. "Personal benefit" includes any intended benefit for oneself or any other individual, company, group or organization of any kind whatsoever, except a benefit for a client of INVESCO, as appropriate. It is imperative that each of INVESCO's directors, officers and employees avoid any situation that might compromise, or call into question, the exercise of fully independent judgment in the interests of INVESCO's clients.
Occasions may arise where a person or organization involved in the proxy voting process may have a conflict of interest. A conflict of interest may also exist if INVESCO has a business relationship with (or is actively soliciting business from) either the company soliciting the proxy or a third party that has a material interest in the outcome of a proxy vote or that is actively lobbying for a particular outcome of a proxy vote. An INVESCO person shall not be considered to have a conflict of interest if the INVESCO person did not know of the conflict of interest and did not attempt to influence the outcome of a proxy vote. Any individual with actual knowledge of a conflict of interest relating to a particular referral item shall disclose that conflict to the Compliance Officer.
The following are examples of situations where a conflict may exist:
- Business Relationships - where INVESCO manages money for a company or an employee group, manages pension assets or is actively soliciting any such business, or leases office space from a company;
- Personal Relationships - where a INVESCO person has a personal relationship with other proponents of proxy proposals, participants in proxy contests, corporate directors, or candidates for directorships; and
- Familial Relationships - where an INVESCO person has a known familial relationship relating to a company (e.g. a spouse or other relative who serves as a director of a public company or is employed by the company).
In the event that INVESCO (or an affiliate) manages assets for a company, its pension plan, or related entity and where clients' funds are invested in that company's shares, it will not take into consideration this relationship and will vote proxies in that company solely in the best economic interest of its clients.
It is the responsibility of the INVESCO person to report any real or potential conflict of interest of which such individual has actual knowledge to the Compliance Officer, who shall present any such information to the Head of Continental Europe Compliance. However, once a particular conflict has been reported to the Compliance Officer, this requirement shall be deemed satisfied with respect to all individuals with knowledge of such conflict.
In addition, any INVESCO person who submits an ISS override recommendation to the Proxy Voting Committee (PVC) of the International Structured Products Group shall certify as to their compliance with this policy concurrently with the submission of their override recommendation. A form of such certification is attached as Appendix A hereto.
In addition, the Proxy Voting Committee (PVC) of the International Structured Products Group must notify INVESCO's Compliance Officer with impunity and without fear of retribution or retaliation, of any direct, indirect or perceived improper influence made by anyone within INVESCO or by an affiliated company's representatives with regard to how INVESCO should vote proxies. The Compliance Officer will investigate the allegations and will report his or her findings to the INVESCO Risk Management Committee and to the Head of Continental Europe Compliance. In the event that it is determined that improper influence was made, the Risk Management Committee will determine the appropriate action to take which may include, but is not limited to, (1) notifying the affiliated company's Chief Executive Officer, its Management Committee or Board of Directors, (2) taking remedial action, if necessary, to correct the result of any improper influence where clients have been harmed, or (3) notifying the appropriate regulatory agencies of the improper influence and to fully cooperate with these regulatory agencies as required. In all cases, the Proxy Voting Committee (PVC) of the International Structured Products Group together with the Compliance Officer shall not take into consideration the improper influence in determining how to vote proxies and will vote proxies solely in the best economic interest of clients.
ISS PROXY VOTING GUIDELINES
A copy of the most recent ISS Proxy Voting Guidelines Summary can be found on ISS's website at www.issproxy.com. From this website, click on ISS Governance Services tab, next click on "Policy Gateway", next click on "2008 Policy Information", and then click on "Download 2008 U.S. Proxy Voting Guidelines Summary."
APPENDIX A
ACKNOWLEDGEMENT AND CERTIFICATION
I acknowledge that I have read the INVESCO Proxy Voting Policy (a copy of which has been supplied to me, which I will retain for future reference) and agree to comply in all respects with the terms and provisions thereof. I have disclosed or reported all real or potential conflicts of interest to the INVESCO Compliance Officer and will continue to do so as matters arise. I have complied with all provisions of this Policy.
PROXY POLICY APPLIES TO THE FOLLOWING:
INVESCO ASSET MANAGEMENT LIMITED
INVESCO PERPETUAL
POLICY ON CORPORATE GOVERNANCE
(Updated February 2008)
1. INTRODUCTION
Invesco Perpetual (IP), the trading name of Invesco Asset Management Limited, has adopted a clear and considered policy towards its responsibility as a shareholder. As part of this policy, IP will take steps to satisfy itself about the extent to which the companies in which it invests comply with local recommendations and practices, such as the UK Combined Code issued by the Committee on Corporate Governance and/or the U.S. Department of Labor Interpretive Bulletins.
2. RESPONSIBLE VOTING
IP has a responsibility to optimise returns to its clients. As a core part of the investment process, Fund Managers will endeavour to establish a dialogue with management to promote company decision making that is in the best interests of shareholders, and is in accordance with good Corporate Governance principles.
IP considers that shareholder activism is fundamental to good Corporate Governance. Whilst this does not entail intervening in daily management decisions, it does involve supporting general standards for corporate activity and, where necessary, taking the initiative to ensure those standards are met.
One important means of putting shareholder responsibility into practice is via the exercising of voting rights. In deciding whether to vote shares, IP will take into account such factors as the likely impact of voting on management activity, and where expressed, the preference of clients. As a result of these two factors, IP will tend to vote on all UK and European shares, but to vote on a more selective basis on other shares. (See Appendix I - Voting on non-UK/European shares)
IP considers that the voting rights attached to its clients' investments should be actively managed with the same duty of care as that applied to all other aspects of asset administration. As such, voting rights will be exercised on an informed and independent basis, and will not simply be passed back to the company concerned for discretionary voting by the Chairman. In doing this, IP will have in mind three objectives:
i) To protect the rights of its clients
ii) To minimise the risk of financial or business impropriety within the
companies in which its clients are invested, and
iii) To protect the long-term value of its clients' investments.
It is important to note that, when exercising voting rights, a third option of abstention can also be used as a means of expressing dissatisfaction, or lack of support, to a Board on a particular issue. Additionally, in the event of a conflict of interest arising between IP and its clients over a specific issue, IP will either abstain or seek instruction from each client.
IP will exercise actively the voting rights represented by the shares it manages on behalf of its investors.
Note: Share Blocking
Generally, IP will not vote where this results in shares being blocked from trading for a period of more than a few hours. IP considers that it is not in the interest of clients that their shares are blocked at a potentially sensitive time, such as that around a shareholder meeting.
3. VOTING PROCEDURES
IP will endeavour to keep under regular review with trustees, depositaries and custodians the practical arrangements for circulating company resolutions and notices of meetings and for exercising votes in accordance with standing or special instructions.
IP will endeavour to review regularly any standing or special instructions on voting and where possible, discuss with company representatives any significant issues.
IP will take into account the implications of stock lending arrangements where this is relevant (that is, when stock is lent to the extent permitted by local regulations, the voting rights attaching to that stock pass to the borrower). If a stock is on loan and therefore cannot be voted, it will not necessarily be recalled in instances where we would vote with management. Individual IP Fund Managers enter securities lending arrangements at their own discretion and where they believe it is for the potential benefit of their investors.
4. DIALOGUE WITH COMPANIES
IP will endeavour, where practicable in accordance with its investment processes, to enter into a dialogue with companies based on the mutual understanding of objectives. This dialogue is likely to include regular meetings with company representatives to explore any concerns about corporate governance where these may impact on the best interests of clients. In discussion with Company Boards and senior non-Executive Directors, IP will endeavour to cover any matters with particular relevance to shareholder value.
Specifically when considering resolutions put to shareholders, IP will pay attention to the companies' compliance with the relevant local requirements. In addition, when analysing the company's prospects for future profitability and hence returns to shareholders, IP will take many variables into account, including but not limited to, the following:
- Nomination and audit committees
- Remuneration committee and directors' remuneration
- Board balance and structure
- Financial reporting principles
- Internal control system and annual review of its effectiveness
- Dividend and Capital Management policies
5. NON-ROUTINE RESOLUTIONS AND OTHER TOPICS
These will be considered on a case-by-case basis and where proposals are put to the vote will require proper explanation and justification by (in most instances) the Board. Examples of such would be all SRI issues (i.e. those with social, environmental or ethical connotations), political donations, and any proposal raised by a shareholder or body of shareholders (typically a pressure group).
Apart from the three fundamental voting objectives set out under 'Responsible Voting' above, considerations that IP might apply to non-routine proposals will include:
i) The degree to which the company's stated position on the issue could affect its reputation and/or sales, or leave it vulnerable to boycott or selective purchasing
ii) What other companies have done in response to the issue
iii) Whether implementation would achieve the objectives sought in the
proposal
iv) Whether the matter is best left to the Board's discretion.
6. EVALUATION OF COMPANIES' CORPORATE GOVERNANCE ARRANGEMENTS
IP will, when evaluating companies' governance arrangements, particularly those relating to board structure and composition, give due weight to all relevant factors drawn to their attention.
7. DISCLOSURE
On request from clients, IP will in good faith provide records of voting instructions given to third parties such as trustees, depositaries and custodians provided that
(i) in IP's discretion, to do so does not conflict with the best interests of other clients and
(ii) it is understood that IP will not be held accountable for the expression of views within such voting instructions and
(iii) IP are not giving any assurance nor undertaking any obligation to ensure that such instructions resulted in any votes actually being cast. Records of voting instructions within the immediate preceding 3 months will not normally be provided.
Note: The record of votes will reflect the voting instruction of the relevant Fund Manager. This may not be the same as votes actually cast as IP is entirely reliant on third parties complying promptly with such instructions to ensure that such votes are cast correctly. Accordingly, the provision of information relating to an instruction does not mean that a vote was actually cast, just that an instruction was given in accordance with a particular view taken.
APPENDIX I
VOTING ON NON-UK/EUROPEAN SHARES
When deciding whether to exercise the voting rights attached to its clients' non-UK/European shares, IP will take into consideration a number of factors. These will include:
- the likely impact of voting on management activity, versus the cost to the client
- the portfolio management restrictions (e.g. share blocking) that may result from voting
- the preferences, where expressed, of clients
Generally, IP will vote on non-UK/European shares by exception only, except where the client or local regulator expressly requires voting on all shares.
SHARE BLOCKING
Generally, IP will not vote where this results in shares being blocked from trading for a period of more than a few hours. IP considers that it is not in the interest of clients that their shares are blocked at a potentially sensitive time, such as that around a shareholder meeting.
PROXY POLICY APPLIES TO THE FOLLOWING:
Invesco Asset Management (Japan) Limited
(Quick Translation)
INTERNAL RULES ON PROXY VOTING EXECUTION
(PURPOSE)
ARTICLE 1
INVESCO Asset Management (Japan) Limited (referred to as "INVESCO" thereafter)] assumes a fiduciary responsibility to vote proxies in the best interest of its trustors and beneficiaries. In addition, INVESCO acknowledges its responsibility as a fiduciary to vote proxies prudently and solely for the purpose of maximizing the economic values of trustors (investors) and beneficiaries. So that it may fulfill these fiduciary responsibilities to trustors (investors) and beneficiaries , INVESCO has adopted and implemented these internal rules reasonably designed to ensure that the business operations of the company to invest are appropriately conducted in the best interest of shareholders and are always monitored by the shareholders.
(PROXY VOTING POLICY)
ARTICLE 2
INVESCO exercises the voting right in the best interest of its trustors and beneficiaries not in the interests of the third parties. The interests of trustors and beneficiaries are defined as the increase of the value of the enterprise or the expansion of the economic value of the shareholders or to protect these values from the impairment.
(VOTING EXERCISE STRUCTURE)
ARTICLE 3
Please refer to the Article 2 of Proxy Voting basic Policy as per attached.
(PROXY VOTING GUIDELINES)
ARTICLE 4
Please refer to Proxy Voting Guidelines (Attachment 2).
(PROXY VOTING PROCESS)
ARTICLE 5
1. DOMESTIC EQUITIES
(1) Notification on the shareholder meeting will be delivered to Operations from trustee banks which will be in turn forwarded to the person in charge of equities investment. The instruction shall be handled by Operations.
(2) The person in charge of equities investment scrutinizes the subjects according to the "Screening Standard" and forward them to the proxy voting committee ("Committee").
(3) In case of asking for the outside counsel, to forward our proxy voting guidelines("Guidelines") to them beforehand and obtain their advice
(4) In either case of b. or c., the person in charge shall make proposal to the committee to ask for their "For", "Against", "Abstention", etc.
(5) The committee scrutinizes the respective subjects and approves/disapproves with the quorum of two thirds according to the Guidelines.
(6) In case where as to the subject which the Committee judges as inappropriate according to the Guidelines and/or the subject which cannot obtain the quorum, the Committee will be held again to discuss the subject.
2. FOREIGN EQUITIES
(1) As to the voting exercise of the foreign equities, we shall consider the manners and customs of the foreign countries as well as the costs.
(2) As to the voting process, the above process of the domestic equities shall be accordingly adjusted and applied.
(DISCLOSURE OF INFORMATION)
ARTICLE 6
In case of the request from the customers, we can disclose the content.
(VOTING RECORD)
ARTICLE 7
The Committee preserves the record of Attachment 1 for one year.
The administration office is the Investment Division which shall preserve all the related documents of this voting process.
Operations which handle the instruction shall preserve the instruction documents for 10 years after the termination of the ITM funds or the termination of the investment advisory contracts.
Article 8 and addendum are omitted.
PROXY VOTING BASIC POLICY
1. Basic Thought on Proxy Voting
- INVESCO makes efforts to maximize the entrusted assets in terms of fiduciary duties in investing the funds entrusted by the trustors (investors) and the beneficiaries.
- For the purpose of maximizing the invested assets and the value of the equities, INVESCO always monitors the invested companies to operate appropriately as a shareholder in the best interests of the shareholders.
- From the above point of view, INVESCO has adopted and implemented this Proxy Voting Basic Policy and Proxy Voting Policy and Procedure to fulfill the proxy voting rights properly.
- In exercising the proxy voting rights, INVESCO fulfills the voting rights in the benefits of the trustors (investors) and the beneficiaries not in the benefits of the third parties.
2. Voting Process and Structure
- INVESCO establishes the Proxy Voting Committee (referred to as "Committee" thereafter) which executes the proxy voting rights.
- The Committee is composed of the chairman who is designated by Japanese Management Committee (referred to as "J-Mac" thereafter) and the members appointed by the chairman. Persons in charge of Investment Division and Legal & Compliance Division shall be mandatory members. - The Committee has been delegated the judgment power to execute the voting right from the J-Mac.
- The Committee has worked out the subjects according to the pre-determined "Screening Standard" in terms of benefits of the shareholders and executes the voting rights based on the "Proxy Voting Guidelines".
- The Committee is occasionally taken the advice from the outside parties according to the "Proxy Voting Guidelines". The Committee is held on a monthly basis and the result of the voting execution is to be reported to J-Mac on a monthly basis at least.
3. Screening Standard
For the purpose of efficient voting execution, INVESCO implements the following screening criteria. The companies fallen under this screening criteria shall be scrutinized according to "Voting Guidelines".
(1) Quantitative Standard
1) Low profit margin of operational income and recurrent income for
certain periods
2) Negative Net Assets/Insolvency
3) Extremely High Dividend Ratios or Low Dividend Ratios
(2) Qualitative Standard
1) In breach of the substantial laws or anti-social activities for
the past one year
2) Impairment of the interests of the shareholders for the past one
year
(3) Others
1) External Auditor's Audit Report with the limited auditor's
opinion
2) Shareholders' proposals
4. Proxy Voting Guidelines
(1) General Subjects
1) Any violation of laws and anti-social activities ?
2) Inappropriate disclosure which impairs the interests of
shareholders ?
3) Enough Business Improvement Efforts ?
(2) Subjects on Financial Statements Any reasonable reasons for Interest Appropriation/Loss Disposal ?
(3) Amendments to Articles of Incorporations, etc Any possibility of the limitation to the shareholder's rights ?
(4) Directors/Statutory Auditors Appointment of the unqualified person, or inappropriate amount of payment/gifts to the unqualified person ?
(5) Capital Policy/Business Policy
Unreasonable policy in terms of maximization of the shareholders' interests ?
(6) Others
1) Shareholder's Proposals Contribution to the increase of the shareholders' economic interests ?
2) Appointment of Auditor Any problem of independency ?
(ATTACHMENT 1)
Voting Screening Criteria & Decision Making Documents
Company Name Year Month
Screening Criteria Quantitative Criteria consolidated or single
Yes No
Consecutive unprofitable settlements for the past 3 years Consecutive Non dividend payments for the past 3 years Operational loss for the most recent fiscal year Negative net assets for the most recent fiscal year Less than 10% or more than 100% of the dividend ratios for the most recent fiscal year
Screening Criteria/Qualitative Criteria
Yes No
Substantial breach of the laws/anti-social activities for the past one year
If Yes, describe the content of the breach of the law/anti-social activities
Others, especially, any impairment of the value of the shareholders for the past one year
If Yes, describe the content of the impairment of the value of shareholders:
Others
Yes No
External Auditor's report with the limited auditor's
opinion
Shareholder's proposal
Person in charge of equities investment Initial Signature
- If all Nos No objection to the agenda of the shareholders' meeting
- If one or more Yes (Person in charge of equities investment shall fill out the blanks below and forward to the Committee)
Proposal on Voting Execution
Reason for judgment
Chairman For Against Initial Signature Member For Against Initial Signature Member For Against Initial Signature Member For Against Initial Signature Member For Against Initial Signature Member For Against Initial Signature |
(ATTACHMENT 2)
PROXY VOTING GUIDELINES
1. PURPORT OF GUIDELINES
Pursuant to Article 2 of Proxy Voting Policy and Procedure, INVESCO has adopted and implemented the following guidelines and hereby scrutinizes and decides the subjects one by one in light of the guidelines.
2. GUIDELINES
(1) General Subjects
1) Any violation of laws and anti-social activities?
- To scrutinize and judge respectively the substantial impact over the company's business operations by the above subjects or the impairment of the shareholders' economic value.
2) Inappropriate disclosure which impairs the interests of shareholders ?
- To scrutinize and judge respectively the potential impairment of the shareholder's economic value.
3) Enough Business Improvement Efforts?
- Although the continuous extremely unprofitable and the extremely bad performance, the management is in short of business improvement efforts. To scrutinize and judge respectively the cases.
(2) Subjects on Financial Statements
1) Interest Appropriation Plan
- Interest Appropriate Plan (Dividends)
- To basically approve unless the extremely overpayment or minimum payment of the dividends
- Interest Appropriation Plan (Bonus payment to corporate officers)
- To basically agree but in case where the extremely unprofitable, for example, the consecutive unprofitable and no dividend payments or it is apparent of the impairment of the shareholder's value, to request to decrease the amount or no bonus payment.
- To basically disagree to the interest appropriation plan if no dividend payments but to pay the bonus to the corporate officers without prior assessment.
2) Loss Disposal Plan
- To scrutinize and judge respectively
(3) Amendments to Articles of Incorporation, etc.
1) Company Name Change/Address Change, etc.
2) Change of Purpose/Method of Public Announcement
3) Change of Business Operations, etc.
4) Change of Stipulations on Shareholders/Shareholders Meeting
5) Change of Stipulations on Directors/Board of Directors/Statutory Auditors
- To basically approve however, in case of the possibility of the limitation to the shareholders' rights, to judge respectively
(4) Subjects on Corporate Organization
1) Composition of Board of Directors Meeting, etc
- To basically approve the introduction of "Committee Installation Company "or "Substantial Asset Control Institution"
- To basically approve the introduction of the corporate officer institution. Provided, however, that in case where all directors are concurrent with those committee members and the institutions, to basically disagree. In case of the above introduction, to basically disapprove to the decrease of the board members or adjustment of the remuneration.
2) Appointment of Directors
- To basically disagree in case where the increase of the board members which
is deemed to be overstaffed and no explanatory comments on the increase. In case of 21 or more board members, to respectively judge.
- To basically disagree the re-appointment of the existing directors in case where the consecutive unprofitable settlements for the past 3 years and the consecutive 3 year no dividend payments, or the consecutive decrease in the net profits for the past 5 years.
- To basically disagree the re-appointment of the existing directors in case where the scandal of the breach of the laws and the anti-social activities occurred and caused the substantial impact over the business operations during his/her assignment.
3) Appointment of Outside Directors
- To basically agree after the confirmation of its independency based on the information obtained from the possible data sources.
- To basically disagree the decrease in number.
- To basically disagree the job concurrence of the competitors' CEO, COO,CFO or concurrence of the outside directors of 4 or more companies.
- To basically disagree in case of no-independence of the company
- To basically disagree the extension of the board of directors' term.
4) Appointment of Statutory Auditors
- To basically disagree the appointment of the candidate who is appointed as a director and a statutory auditor by turns.
- To basically disagree the re-appointment of the existing directors in case where the scandal of the breach of the laws and the anti-social activities occurred and caused the substantial impact over the business operations during his/her assignment.
5) Appointment of Outside Statutory Auditors
- To basically disagree in case where the outside statutory auditor is not actually the outside auditor (the officer or employee of the parent company, etc.)
- To basically disagree in case where the reason of the decrease in the number is not clearly described.
- To basically agree in case where the introduction of the "Statutory Auditor Appointment Committee" which includes plural outside statutory auditors.
(5) Officer Remuneration/officer Retirement Allowances
1) Officer Remuneration
- To basically disagree the amendment of the officer remuneration (unless the decrease in amount or no payment) in case where the consecutive unprofitable settlements for the past 3 years and the consecutive 3 year no dividend payments, or the consecutive decrease in the net profits for the past 5 years.
- To basically disagree and scrutinize respectively in case where no sufficient explanation of the substantial increase (10% or more per head), or no decrease of the remuneration amount if the number of the officers decrease.
2) Officer Retirement Allowance
- To basically approve
- To basically disapprove in case where the payment of the allowance to the outside statutory auditors and the outside directors.
- To basically disapprove in case where the officer resigned or retired during his/her assignment due to the scandal of the breach of the laws and the anti-social activities.
- To basically disagree in case where the consecutive unprofitable settlements for the past 3 years and the consecutive 3 year no dividend payments, or the consecutive decrease in the net profits for the past 5 years.
(6) Capital Policy/Business Policy
1) Acquisition of Own shares
- To basically approve
- To basically approve the disposition of the own sharers if the disposition ratio of less than 10% of the total issued shares and the shareholders' equities. In case of 10% or more, to respectively scrutinize.
2) Capital Reduction
- To basically disagree in case where the future growth of the business might be substantially decreased.
3) Increase of the authorized capital
- To basically disagree in case of the substantial increase of the authorized capital taking into consideration the dilution of the voting right (10% or more) and incentive.
4) Granting of the stock options to Directors, Statutory Auditors and Employees
- To basically approve
- To basically disagree in case where the substantial dilution of the value of the stocks (the potential dilution ration is to increase 5% of the total issued stock number) will occur and accordingly decrease of the shareholders' interests.
- To basically disagree in case where the exercise price is deviated by 10% or more from the market value as of the fiscal year-end
- To basically disagree the decrease of the exercise price
(re-pricing)
- To basically disagree in case where the exercise term remains less than 1 year.
- To basically disagree in case the scope of the option granted objectives (transaction countereparties)is not so closely connected with the better performance.
5) Mergers and Acquisitions
- To basically disagree in case where the terms and conditions are not advantageous and there is no assessment base by the thirdparty.
- To basically disagree in case where the content of the mergers and acquisitions can not be deemed to be reasonable in comparison with the business strategy.
6) Business Transfer/Acceptance
- To basically disagree in case where the content of the mergers and acquisitions can not be deemed to be reasonable and extremely unprofitable in comparison with the business strategy.
7) Capital Increase by the allocation to the thirdparties - To basically analyze on a case by case basis
- Provided, however, that to basically approve in case where the companies under the financial difficulties executes as the restructuring of the business.
(7) Others
1) Appointment of Accountant
- To basically approve
- To basically disapprove on suspicion of its independency.
- To scrutinize the subjects in case where the decline of the re-appointment due to the conflict of the audit policy.
2) Shareholders' proposal
- To basically analyze on a case by case basis
- The basic judgment criterion is the contribution to the increase of the shareholders' value. However, to basically disapprove in case where to maneuver as a method to resolve the specific social and political problems.
PROXY POLICY APPLIES TO THE FOLLOWING:
INVESCO AUSTRALIA LIMITED
PROXY VOTING POLICY
1. Purpose of this Policy
INVESCO recognises its fiduciary obligation to act in the best interests of all clients, be they superannuation trustees, institutional clients, unit-holders in managed investment schemes or personal investors. One way INVESCO represents its clients in matters of corporate governance is through the proxy voting process.
This document sets out INVESCO's policy in relation to proxy voting. It has been approved by the INVESCO Australia Limited Board.
2. Scope
This policy applies to all INVESCO portfolios with the following exceptions:
- "index" or "index like" funds where, due to the nature of the funds, INVESCO will generally abstain from voting;
- private client or discrete wholesale mandates, where the voting policy has been agreed within the mandate;
- where investment management of an international fund has been delegated to an overseas AMVESCAP or INVESCO company, proxy voting will rest with that delegated manager.
3. Policy
In accordance with industry practices and the IFSA standard on proxy voting, our policy is as follows:
- INVESCO's overriding principle is that votes will be cast in the best economic interests of investors.
- INVESCO's intention is to vote on all Australian Company shareholder resolutions however it recognises that in some circumstances it would be inappropriate to vote, or its vote may be immaterial. INVESCO will generally abstain from voting on "routine" company resolutions (eg approval of financial accounts or housekeeping amendments to Articles of Association or Constitution) unless its clients' portfolios in aggregate represent a significant proportion of the shareholdings of the company in question (a significant proportion in this context means 5% or more of the market capitalisation of the company).
- INVESCO will always vote on the following issues arising in company Annual General Meetings where it has the authority to do so on behalf of clients.
- contentious issues (eg. issues of perceived national interest, or where there has been extensive press coverage or public comment);
- employee and executive share and option schemes;
- approval of changes of substantial shareholdings;
- mergers or schemes of arrangement; and
- approval of major asset sales or purchases.
- Management agreements or mandates for individually-managed clients will provide direction as to who has responsibility for voting.
- In the case of existing management agreements which do not contain a provision concerning voting authority or are ambiguous on the subject, INVESCO will not vote until clear instructions have been received from the client.
- In the case of clients who wish to place special conditions on the delegation of proxy voting powers, INVESCO will endeavour to accommodate those clients' requirements as far as practicable, subject to any administrative obstacles or additional costs that might arise in implementing the conditions.
- In considering proxy voting issues arising in respect of unit-holders in managed investment schemes, INVESCO will act solely in accordance with its fiduciary responsibility to take account of the collective interests of unit-holders in the scheme as a whole. INVESCO cannot accept instructions from individual unit-holders as to the exercise of proxy voting authority in a particular instance.
- In order to facilitate its proxy voting process, INVESCO may retain a professional proxy voting service to assist with in-depth proxy research, vote execution, and the necessary record keeping.
4. Reporting and Disclosure
A written record will be kept of the voting decision in each case, and of the reasons for each decision (including abstentions).
INVESCO will disclose on an annual basis, a summary of its proxy voting statistics on its website as required by IFSA standard No. 13 - Proxy Voting.
5. Conflicts of Interest
All INVESCO employees are under an obligation to be aware of the potential for conflicts of interest with respect to voting proxies on behalf of clients.
INVESCO acknowledges that conflicts of interest do arise and where a conflict of interest is considered material, INVESCO will not vote until a resolution has been agreed upon and implemented.
PROXY POLICY APPLIES
TO THE FOLLOWING:
INVESCO HONG KONG LIMITED
INVESCO HONG KONG LIMITED
PROXY VOTING POLICY
8 APRIL 2004
TABLE OF CONTENTS
Introduction ............................................................. 2 1. Guiding Principles .................................................... 3 2. Proxy Voting Authority ................................................ 4 3. Key Proxy Voting Issues ............................................... 7 4. Internal Admistration and Decision-Making Process ..................... 10 5. Client Reporting ...................................................... 12 |
INTRODUCTION
This policy sets out Invesco's approach to proxy voting in the context of our broader portfolio management and client service responsibilities. It applies to Asia related equity portfolios managed by Invesco on behalf of individually-managed clients and pooled fund clients
Invesco's proxy voting policy is expected to evolve over time to cater for changing circumstances or unforeseen events.
1. GUIDING PRINCIPLES
1.1 Invesco recognises its fiduciary obligation to act in the best interests of all clients, be they retirement scheme trustees, institutional clients, unitholders in pooled investment vehicles or personal investors. The application of due care and skill in exercising shareholder responsibilities is a key aspect of this fiduciary obligation.
1.2 The sole objective of Invesco's proxy voting policy is to promote the economic interests of its clients. At no time will Invesco use the shareholding powers exercised in respect of its clients' investments to advance its own commercial interests, to pursue a social or political cause that is unrelated to clients' economic interests, or to favour a particular client or other relationship to the detriment of others.
1.3 Invesco also recognises the broader chain of accountability that exists in the proper governance of corporations, and the extent and limitations of the shareholder's role in that process. In particular, it is recognised that company management should ordinarily be presumed to be best placed to conduct the commercial affairs of the enterprise concerned, with prime accountability to the enterprise's Board of Directors which is in turn accountable to shareholders and to external regulators and exchanges. The involvement of Invesco as an institutional shareholder will not extend to interference in the proper exercise of Board or management responsibilities, or impede the ability of companies to take the calculated commercial risks which are essential means of adding value for shareholders.
1.4 The primary aim of the policy is to encourage a culture of performance among investee companies, rather than one of mere conformance with a prescriptive set of rules and constraints. Rigid adherence to a checklist approach to corporate governance issues is of itself unlikely to promote the maximum economic performance of companies, or to cater for circumstances in which non-compliance with a checklist is appropriate or unavoidable.
1.5 Invesco considers that proxy voting rights are an asset which should be managed with the same care as any other asset managed on behalf of its clients.
2. PROXY VOTING AUTHORITY
2.1 An important dimension of Invesco's approach to corporate governance is the exercise of proxy voting authority at the Annual General Meetings or other decision-making forums of companies in which we manage investments on behalf of clients.
2.2 An initial issue to consider in framing a proxy voting policy is the question of where discretion to exercise voting power should rest - with Invesco as the investment manager, or with each individual client? Under the first alternative, Invesco's role would be both to make voting decisions on clients' behalf and to implement those decisions. Under the second alternative, Invesco would either have no role to play, or its role would be limited solely to implementing voting decisions under instructions from our clients.
2.3 In addressing this issue, it is necessary to distinguish the different legal structures and fiduciary relationships which exist as between individually-managed clients, who hold investments directly on their own accounts, and pooled fund clients, whose investments are held indirectly under a trust structure.
2.4 Individually-Managed Clients
2.4.1 As a matter of general policy, Invesco believes that unless a client's mandate gives specific instructions to the contrary, discretion to exercise votes should normally rest with the investment manager, provided that the discretion is always exercised in the client's interests alone.
2.4.2 The reason for this position is that Invesco believes that, with its dedicated research resources and ongoing monitoring of companies, an investment manager is usually better placed to identify issues upon which a vote is necessary or desirable. We believe it is also more practical that voting discretion rests with the party that has the authority to buy and sell shares, which is essentially what investment managers have been engaged to do on behalf of their clients.
2.4.3 In cases where voting authority is delegated by an individually-managed client, Invesco recognises its responsibility to be accountable for the decisions it makes. If a client requires, an appropriate reporting mechanism will be put in place.
2.4.4 While it is envisaged that the above arrangements will be acceptable in the majority of cases, it is recognised that some individually-managed clients will wish to retain voting authority for themselves, or to place conditions on the circumstances in which it can be exercised by investment managers. In practice, it is believed that this option is generally only likely to arise with relatively large clients such as trustees of major superannuation funds or statutory corporations which have the resources to develop their own policies and to supervise their implementation by investment managers and custodians. In particular, clients who have multiple equity managers and utilise a master custody arrangement may be more likely to consider retaining voting authority in order to ensure consistency of approach across their total portfolio.
2.4.5 In any event, whatever decision is taken as to where voting authority should lie, Invesco believes that the matter should be explicitly covered by the terms of the investment management agreement and clearly understood by the respective parties.
2.4.6 Accordingly, Invesco will pursue the following policies with respect to the exercise of proxy voting authority for individually-managed clients:
PROXY VOTING AUTHORITY
Individually-Managed Clients
Unless an individually-managed client wishes to retain proxy voting authority, Invesco will assume proxy voting authority by way of delegation from the client, provided that the allocation of proxy voting responsibility is clearly set out in the investment management agreement.
In the case of clients who wish to place special conditions on the delegation of proxy voting powers, Invesco will endeavour to accommodate those clients' requirements as far as practicable, subject to any administrative obstacles or additional costs that might arise in implementing the conditions.
2.5 POOLED FUND CLIENTS
2.5.1 The legal relationship between an investment manager and its pooled fund clients is different in a number of important respects from that applying to individually-managed clients. These differences have a bearing on how proxy voting authority is exercised on behalf of pooled fund clients.
2.5.2 These legal relationships essentially mean that the manager is required to act solely in the collective interests of unitholders at large rather than as a direct agent or delegate of each unitholder. On the issue of proxy voting, as with all other aspects of our client relationships, Invesco will naturally continue to be receptive to any views and concerns raised by its pooled fund clients. However, the legal relationship that exists means it is not possible for the manager to accept instructions from a particular pooled fund client as to how to exercise proxy voting authority in a particular instance.
2.5.3 As in the case of individually-managed clients who delegate their proxy voting authority, Invesco's accountability to pooled fund clients in exercising its fiduciary responsibilities is best addressed as part of the manager's broader client relationship and reporting responsibilities.
2.5.4 Accordingly, Invesco will pursue the following policies with respect to the exercise of proxy voting authority for pooled fund clients:
PROXY VOTING AUTHORITY
Pooled Fund Clients
In considering proxy voting issues arising in respect of pooled fund shareholdings, Invesco will act solely in accordance with its fiduciary responsibility to take account of the collective interests of unitholders in the pooled fund as a whole.
Invesco cannot accept instructions from individual unitholders as to the exercise of proxy voting authority in a particular instance.
3. KEY PROXY VOTING ISSUES
3.1 This section outlines Invesco's intended approach in cases where proxy voting authority is being exercised on clients' behalf.
3.2 Invesco will vote on all material issues at all company meetings where it has the voting authority and responsibility to do so. We will not announce our voting intentions and the reasons behind them.
3.3 Invesco applies two underlying principles. First, our interpretation of 'material voting issues' is confined to those issues which affect the value of shares we hold on behalf of clients and the rights of shareholders to an equal voice in influencing the affairs of companies in proportion to their shareholdings. We do not consider it appropriate to use shareholder powers for reasons other than the pursuit of these economic interests. Second, we believe that a critical factor in the development of an optimal corporate governance policy is the need to avoid unduly diverting resources from our primary responsibilities to add value to our clients' portfolios through investment performance and client service.
3.4 In order to expand upon these principles, Invesco believes it is necessary to consider the role of proxy voting policy in the context of broader portfolio management and administrative issues which apply to our investment management business as a whole. These are discussed as follows.
3.5 PORTFOLIO MANAGEMENT ISSUES - ACTIVE EQUITY PORTFOLIOS
3.5.1 While recognising in general terms that issues concerning corporate governance practices can have a significant bearing on the financial performance of companies, the primary criterion for the selection and retention of a particular stock in active equity portfolios remains our judgment that the stock will deliver superior investment performance for our clients, based on our investment themes and market analysis.
3.5.2 In view of these dynamics, Invesco does not consider it feasible or desirable to prescribe in advance comprehensive guidelines as to how it will exercise proxy voting authority in all circumstances. The primary aim of Invesco's approach to corporate governance is to encourage a culture of performance among the companies in which we manage investments in order to add value to our clients' portfolios, rather than one of mere conformance with a prescriptive set of rules and constraints.
3.5.3 Nevertheless, Invesco has identified a limited range of issues upon which it will always exercise proxy voting authority - either to register disapproval of management proposals or to demonstrate support for company initiatives through positive use of voting powers. These issues are outlined as follows:
KEY VOTING ISSUES
Major Corporate Proposals
Invesco will always vote on the following issues arising in company General Meetings where it has the authority to do so on behalf of clients.
- contentious issues (eg. issues of perceived national interest, or where there has been extensive press coverage or public comment);
- approval of changes of substantial shareholdings;
- mergers or schemes of arrangement; and
- approval of major asset sales or purchases.
As a general rule, Invesco will vote against any actions that will reduce the rights or options of shareholders, reduce shareholder influence over the board of directors and management, reduce the alignment of interests between management and shareholders, or reduce the value of shareholders' investments, unless balanced by reasonable increase in net worth of the shareholding.
Where appropriate, Invesco will also use voting powers to influence companies to adopt generally accepted best corporate governance practices in areas such as board composition, disclosure policies and the other areas of recommended corporate governance practice.
Invesco's approach to significant proxy voting issues which fall outside these areas will be addressed on their merits.
3.6 ADMINISTRATIVE ISSUES
3.6.1 In addition to the portfolio management issues outlined above, Invesco's proxy voting policy also takes account of administrative and cost implications, together with the size of our holdings as compared to the issue size, involved in the exercise of proxy voting authority on our clients' behalf.
3.6.2 There are practical constraints to the implementation of proxy voting decisions. Proxy voting is a highly seasonal activity, with most company Annual General Meetings being collapsed into a few months, with short deadlines for the distribution and return of notice papers, multiple resolutions from multiple companies being considered simultaneously, and under a legal system which is essentially dependent upon paper-based communication and record-keeping.
3.6.3 In addition, for investment managers such as Invesco who do not invest as principals and who consequently do not appear directly on the share registers of companies, all of these communications are channelled through external custodians, among whom there is in turn a considerable variation in the nature and quality of systems to deal with the flow of information.
3.6.4 While Invesco has the systems in place to efficiently implement proxy voting decisions when required, it can be seen that administrative and cost considerations by necessity play an important role in the application of a responsible proxy voting policy. This is particularly so bearing in mind the extremely limited time period within which voting decisions must often be made and implemented (which can in practice be as little as a few days). This factor also explains why Invesco resists any suggestion that there should be compulsory proxy voting on all issues, as in our view this would only increase the costs to be borne by our clients with very little practical improvement in corporate performance in most cases.
3.6.5 These administrative constraints are further highlighted by the fact that many issues on which shareholders are in practice asked to vote are routine matters relating to the ongoing administration of the company - eg. approval of financial accounts or housekeeping amendments to Articles of Association. Generally in such cases, we will be in favour of the motion as most companies take seriously their duties and are acting in the best interests of shareholders. However, the actual casting of a "yes" vote on all such resolutions in our view would entail an unreasonable administrative workload and cost.
3.6.6 Accordingly, Invesco believes that an important consideration in the framing of a proxy voting policy is the need to avoid unduly diverting resources from our primary responsibilities to add value to our clients' investments through portfolio management and client service. The policies outlined below have been prepared on this basis.
KEY PROXY VOTING ISSUES
Administrative Constraints
In view of the administrative constraints and costs involved in the exercise of proxy voting powers, Invesco may (depending on circumstances) not exercise its voting right unless its clients' portfolios in aggregate represent a significant proportion of the shareholdings of the company in question.
A significant proportion in this context means 5% or more of the market capitalisation of the company.
4. INTERNAL ADMINISTRATION & DECISION-MAKING PROCESS
4.1 The following diagram illustrates the procedures adopted by Invesco for the administration of proxy voting:
-----------------------
| |
| COMPANY |
| |
-----------------------
|
|
\|/ Notice Paper
|
-------------------------------------------------------------------------------------
| Custodian | Custodian | Custodian | Custodian | Custodian | Custodian | Custodian |
| No. 1 | No. 2 | No. 3 | No. 4 | No. 5 | No. 6 | No. 7 | (etc)
-------------------------------------------------------------------------------------
| |
Courier/Fax advice | /|\ INSTRUCTION OF VOTING
\|/ |
| |
--------------------------
| |
| IAL Settlement Team |(-----
| | |
-------------------------- /|\
| |
| |
\|/ Memo |
| |
-------------------------- |
| Primary Equity | | ADVISE DECISION
| Investment Manager for | | (RETURN EMAIL)
| relevant market | |
-------------------------- |
| |
| |
\|/ Decision |
| |
-------------------------- |
| | |
| Vote |------
| |
--------------------------
|
4.2 As shown by the diagram, a central administrative role is performed by our Settlement Team, located within the Client Administration section. The initial role of the Settlement Team is to receive company notice papers via the range of custodians who hold shares on behalf of our clients, to ascertain which client portfolios hold the stock, and to initiate the decision-making process by distributing the company notice papers to the Primary Investment Manager responsible for the company in question.
4.3 A voting decision on each company resolution (whether a yes or no vote, or a recommended abstention) is made by the Primary Investment Manager responsible for the company in question. Invesco believes that this approach is preferable to the appointment of a committee with responsibility for handling voting issues across all companies, as it takes advantage of the expertise of individuals whose professional lives are occupied by analysing particular companies and sectors, and who are familiar with the issues facing particular companies through their regular company visits.
4.4 Moreover, the Primary Equity Manager has overall responsibility for the relevant market and this ensures that similar issues which arise in different companies are handled in a consistent way across the relevant market.
4.5 The voting decision is then documented and passed back to the Settlement Team, who issue the voting instructions to each custodian in advance of the closing date for receipt of proxies by the company. At the same time, the Settlement Team logs all proxy voting activities for record keeping or client reporting purposes.
4.6 A key task in administering the overall process is the capture and dissemination of data from companies and custodians within a time frame that makes exercising votes feasible in practice. This applies particularly during the company Annual General Meeting "season", when there are
typically a large number of proxy voting issues under consideration simultaneously. Invesco has no control over the former dependency and Invesco's ability to influence a custodian's service levels are limited in the case of individually-managed clients, where the custodian is answerable to the client.
4.7 The following policy commitments are implicit in these administrative and decision-making processes:
INTERNAL ADMINISTRATION AND DECISION-MAKING PROCESS
Invesco will consider all resolutions put forward in the Annual General Meetings or other decision-making forums of all companies in which investments are held on behalf of clients, where it has the authority to exercise voting powers. This consideration will occur in the context of our policy on Key Voting Issues outlined in Section 3.
The voting decision will be made by the Primary Investment Manager responsible for the market in question.
A written record will be kept of the voting decision in each case, and in case of an opposing vote, the reason/comment for the decision.
Voting instructions will be issued to custodians as far as practicable in advance of the deadline for receipt of proxies by the company. Invesco will monitor the efficiency with which custodians implement voting instructions on clients' behalf.
Invesco's ability to exercise proxy voting authority is dependent on timely receipt of notification from the relevant custodians.
5. CLIENT REPORTING
5.1 Invesco will keep records of its proxy voting activities.
5.2 Upon client request, Invesco will regularly report back to the client on proxy voting activities for investments owned by the client.
5.2 The following points summarise Invesco's policy commitments on the reporting of proxy voting activities to clients (other than in cases where specific forms of client reporting are specified in the client's mandate):
CLIENT REPORTING
Where proxy voting authority is being exercised on a client's behalf, a statistical summary of voting activity will be provided on request as part of the client's regular quarterly report.
Invesco will provide more detailed information on particular proxy voting issues in response to requests from clients wherever possible.
PROXY POLICY APPLIES TO THE FOLLOWING:
INVESCO INSTITUTIONAL (N.A.), INC.
INVESCO GLOBAL ASSET MANAGEMENT (N.A.), INC.
INVESCO SENIOR SECURED MANAGEMENT, INC.
(INVESCO LOGO)
PROXY VOTING POLICIES
AND
PROCEDURES
April 1, 2006
GENERAL POLICY
INVESCO Institutional (N.A.), Inc. and its wholly-owned subsidiaries, and INVESCO Global Asset Management (N.A.), Inc. (collectively, "INVESCO"), each has responsibility for making investment decisions that are in the best interests of its clients. As part of the investment management services it provides to clients, INVESCO may be authorized by clients to vote proxies appurtenant to the shares for which the clients are beneficial owners.
INVESCO believes that it has a duty to manage clients' assets in the best economic interests of the clients and that the ability to vote proxies is a client asset.
INVESCO reserves the right to amend its proxy policies and procedures from time to time without prior notice to its clients.
PROXY VOTING POLICIES
VOTING OF PROXIES
INVESCO will vote client proxies in accordance with the procedures set forth below unless the client for non-ERISA clients retains in writing the right to vote, the named fiduciary (e.g., the plan sponsor) for ERISA clients retains in writing the right to direct the plan trustee or a third party to vote proxies or INVESCO determines that any benefit the client might gain from voting a proxy would be outweighed by the costs associated therewith.
BEST ECONOMIC INTERESTS OF CLIENTS
In voting proxies, INVESCO will take into consideration those factors that may affect the value of the security and will vote proxies in a manner in which, in its opinion, is in the best economic interests of clients. INVESCO endeavors to resolve any conflicts of interest exclusively in the best economic interests of clients.
ISS SERVICES
INVESCO has contracted with Institutional Shareholder Services ("ISS"), an
independent third party service provider, to vote INVESCO's clients' proxies
according to ISS's proxy voting recommendations. In addition, ISS will provide
proxy analyses, vote recommendations, vote execution and record-keeping services
for clients for which INVESCO has proxy voting responsibility. On an annual
basis, INVESCO will review information obtained from ISS to ascertain whether
ISS (i) has the capacity and competency to adequately analyze proxy issues, and
(ii) can make such recommendations in an impartial manner and in the best
economic interest of INVESCO's clients. This may include a review of ISS'
Policies, Procedures and Practices Regarding Potential Conflicts of Interests
and obtaining information about the work ISS does for corporate issuers and the
payments ISS receives from such issuers.
Custodians forward proxy materials for clients who rely on INVESCO to vote proxies to ISS. ISS is responsible for exercising the voting rights in accordance with the ISS proxy voting guidelines. If INVESCO receives proxy materials in connection with a client's account where the client has, in writing, communicated to INVESCO that the client, plan fiduciary or other third party has reserved the right to vote proxies, INVESCO will forward to the party appointed by client any proxy materials it receives with respect to the account. In order to avoid voting proxies in circumstances where INVESCO, or any of its affiliates have or may have any conflict of interest, real or perceived, INVESCO has engaged ISS to provide the proxy analyses, vote recommendations and voting of proxies.
In the event that (i) ISS recuses itself on a proxy voting matter and makes no recommendation or (ii) INVESCO decides to override the ISS vote recommendation, the Proxy Committee will review the issue and direct ISS how to vote the proxies as described below.
PROXY COMMITTEE
The Proxy Committee shall have seven (7) members, which shall include representatives from portfolio management, operations, and legal/compliance or other functional departments as deemed appropriate who are knowledgeable regarding the proxy process. A majority of the members of the Proxy Committee shall constitute a quorum and the Proxy Committee shall act by a majority vote. The chair of the Proxy Committee shall be chosen by the Chief Compliance Officer of INVESCO. The Proxy Committee shall keep minutes of its meetings that shall be kept with the proxy voting records of INVESCO. The Proxy Committee will appoint a Proxy Manager to manage the proxy voting process, which includes the voting of proxies and the maintenance of appropriate records.
Proxy Committee meetings shall be called by the Proxy Manager when override submissions are made and in instances when ISS has recused itself from a vote recommendation. In these situations, the Proxy Committee shall meet and determine how proxies are to be voted in the best interests of clients.
The Proxy Committee periodically reviews new types of corporate governance issues, evaluates proposals not addressed by the ISS proxy voting guidelines in instances when ISS has recused itself, and determines how INVESCO should vote. The Committee monitors adherence to these Procedures, industry trends and reviews the ISS proxy voting guidelines.
ISS RECUSAL
When ISS makes no recommendation on a proxy voting issue or is recused due to a conflict of interest, the Proxy Committee will review the issue and, if INVESCO does not have a conflict of interest, direct ISS how to vote the proxies. In such cases where INVESCO has a conflict of interest, INVESCO, in its sole discretion, shall either (a) vote the proxies pursuant to ISS's general proxy voting guidelines, (b) engage an independent third party to provide a vote recommendation, or (c) contact its client(s) for direction as to how to vote the proxies.
OVERRIDE OF ISS RECOMMENDATION
There may be occasions where the INVESCO investment personnel, senior officers or a member of the Proxy Committee seek to override ISS's recommendations if they believe that ISS's recommendations are not in accordance with the best economic interests of clients. In the event that an individual listed above in this section disagrees with an ISS recommendation on a particular voting issue, the individual shall document in writing the reasons that he/she believes that the ISS recommendation is not in accordance with clients' best economic interests and submit such written documentation to the Proxy Manager for consideration by the Proxy Committee. Upon review of the documentation and consultation with the individual and others as the Proxy Committee deems appropriate, the Proxy Committee may make a determination to override the ISS voting recommendation if the Committee determines that it is in the best economic interests of clients and the Committee has addressed conflict of interest issues as discussed below.
PROXY COMMITTEE MEETINGS
When a Proxy Committee Meeting is called, whether because of an ISS recusal or request for override of an ISS recommendation, the Proxy Committee shall review the report of the Chief Compliance Officer as to whether any INVESCO person has reported a conflict of interest.
The Proxy Committee shall review the information provided to it to determine if a real or perceived conflict of interest exists and the minutes of the Proxy Committee shall:
(1) describe any real or perceived conflict of interest,
(2) discuss any procedure used to address such conflict of interest,
(3) report any contacts from outside parties (other than routine communications from proxy solicitors), and
(4) include confirmation that the recommendation as to how the proxies are to be voted is in the best economic interests of clients and was made without regard to any conflict of interest.
Based on the above review and determinations, the Proxy Committee will direct ISS how to vote the proxies.
CERTAIN PROXY VOTES MAY NOT BE CAST
In some cases, INVESCO may determine that it is not in the best economic interests of clients to vote proxies. For example, proxy voting in certain countries outside the United States requires share blocking. Shareholders who wish to vote their proxies must deposit their shares 7 to 21 days before the date of the meeting with a designated depositary. During the blocked period, shares to be voted at the meeting cannot be sold until the meeting has taken place and the shares have been returned to the Custodian/Sub-Custodian bank. In addition, voting certain international securities may involve unusual costs to clients. In other cases, it may not be possible to vote certain proxies despite good faith efforts to do so, for instance when inadequate notice of the matter is provided. In the instance of loan securities, voting of proxies typically requires termination of the loan, so it is not usually in the best economic interests of clients to vote proxies on loaned securities. INVESCO typically will not, but reserves the right to, vote where share blocking restrictions, unusual costs or other barriers to efficient voting apply. If INVESCO does not vote, it would have made the determination that the cost of voting exceeds the expected benefit to the client. The Proxy Manager shall record the reason for any proxy not being voted, which record shall be kept with the proxy voting records of INVESCO.
PROXY VOTING RECORDS
Clients may obtain information about how INVESCO voted proxies on their behalf by contacting their client services representative. Alternatively, clients may make a written request for proxy voting information to: Proxy Manager, 1360 Peachtree Street, N.E., Atlanta, Georgia 30309.
CONFLICTS OF INTEREST
PROCEDURES TO ADDRESS CONFLICTS OF INTEREST AND IMPROPER INFLUENCE
In order to avoid voting proxies in circumstances where INVESCO or any of its affiliates have or may have any conflict of interest, real or perceived, INVESCO has contracted with ISS to provide proxy analyses, vote recommendations and voting of proxies. Unless noted otherwise by ISS, each vote recommendation provided by ISS to INVESCO includes a representation from ISS that ISS faces no conflict of interest with respect to the vote. In instances where ISS has recused itself and makes no recommendation on a particular matter or if an override submission is requested, the Proxy Committee shall determine how the proxy is to be voted and instruct the Proxy Manager accordingly in which case the conflict of interest provisions discussed below shall apply.
In effecting the policy of voting proxies in the best economic interests of clients, there may be occasions where the voting of such proxies may present a real or perceived conflict of interest between INVESCO, as the investment manager, and clients.
For each director, officer and employee of INVESCO ("INVESCO person"), the interests of INVESCO's clients must come first, ahead of the interest of INVESCO and any person within the INVESCO organization, which includes INVESCO's affiliates.
Accordingly, each INVESCO person must not put "personal benefit," whether tangible or intangible, before the interests of clients of INVESCO or otherwise take advantage of the relationship to INVESCO's clients. "Personal benefit" includes any intended benefit for oneself or any other individual, company, group or organization of any kind whatsoever, except a benefit for a client of INVESCO, as appropriate. It is imperative that each of INVESCO's directors, officers and employees avoid any situation that might compromise, or call into question, the exercise of fully independent judgment in the interests of INVESCO's clients.
Occasions may arise where a person or organization involved in the proxy voting process may have a conflict of interest. A conflict of interest may also exist if INVESCO has a business relationship with (or is actively soliciting business from) either the company soliciting the proxy or a third party that has a material interest in the outcome of a proxy vote or that is actively lobbying for a particular outcome of a proxy vote. An INVESCO person (excluding members of the Proxy Committee) shall not be considered to have a conflict of interest if the INVESCO person did not know of the conflict of interest and did not attempt to influence the outcome of a proxy vote. Any individual with actual knowledge of a conflict of interest relating to a particular referral item shall disclose that conflict to the Chief Compliance Officer.
The following are examples of situations where a conflict may exist:
- Business Relationships - where INVESCO manages money for a company or an employee group, manages pension assets or is actively soliciting any such business, or leases office space from a company;
- Personal Relationships - where a INVESCO person has a personal relationship with other proponents of proxy proposals, participants in proxy contests, corporate directors, or candidates for directorships; and
- Familial Relationships - where an INVESCO person has a known familial relationship relating to a company (e.g. a spouse or other relative who serves as a director of a public company or is employed by the company).
In the event that INVESCO (or an affiliate) manages assets for a company, its pension plan, or related entity or where any member of the Proxy Committee has a personal conflict of interest, and where clients' funds are invested in that company's shares, the Proxy Committee will not take into consideration this relationship and will vote proxies in that company solely in the best economic interest of its clients.
It is the responsibility of the Proxy Manager and each member of the Proxy Committee to report any real or potential conflict of interest of which such individual has actual knowledge to the Chief Compliance Officer, who shall present any such information to the Proxy Committee. However, once a particular conflict has been reported to the Chief Compliance Officer, this requirement shall be deemed satisfied with respect to all individuals with knowledge of such conflict.
In addition, the Proxy Manager and each member of the Proxy Committee shall certify annually as to their compliance with this policy. In addition, any INVESCO person who submits an ISS override recommendation to the Proxy Committee shall certify as to their compliance with this policy concurrently with the submission of their override recommendation. A form of such certification is attached as Appendix A hereto.
In addition, members of the Proxy Committee must notify INVESCO's Chief Compliance Officer, with impunity and without fear of retribution or retaliation, of any direct, indirect or perceived improper influence made by anyone within INVESCO or by an affiliated company's representatives with regard to how INVESCO should vote proxies. The Chief Compliance Officer will investigate the allegations and will report his or her findings to the INVESCO Risk Management Committee. In the event that it is determined that improper influence was made, the Risk Management Committee will determine the appropriate action to take which may include, but is not limited to, (1) notifying the affiliated company's Chief Executive Officer, its Management Committee or Board of Directors, (2) taking remedial action, if necessary, to correct the result of any improper influence where clients have been harmed, or (3) notifying the appropriate regulatory agencies of the improper influence and to fully
cooperate with these regulatory agencies as required. In all cases, the Proxy Committee shall not take into consideration the improper influence in determining how to vote proxies and will vote proxies solely in the best economic interest of clients.
Furthermore, members of the Proxy Committee must advise INVESCO's Chief Compliance Officer and fellow Committee members of any real or perceived conflicts of interest he or she may have with regard to how proxies are to be voted regarding certain companies (e.g., personal security ownership in a company, or personal or business relationships with participants in proxy contests, corporate directors or candidates for corporate directorships). After reviewing such conflict, upon advice from the Chief Compliance Officer, the Committee may require such Committee member to recuse himself or herself from participating in the discussions regarding the proxy vote item and from casting a vote regarding how INVESCO should vote such proxy.
ISS PROXY VOTING GUIDELINES
A copy of the most recent ISS US Proxy Voting Guidelines Summary can be found on ISS's website at www.issproxy.com. From this website, click on ISS Governance Services tab, next click on "Policy Gateway", next click on "2008 Policy Information", and then click on "Download 2008 U.S. Proxy Voting Guidelines Summary."
APPENDIX A
ACKNOWLEDGEMENT AND CERTIFICATION
I acknowledge that I have read the INVESCO Proxy Voting Policy (a copy of which has been supplied to me, which I will retain for future reference) and agree to comply in all respects with the terms and provisions thereof. I have disclosed or reported all real or potential conflicts of interest to the INVESCO Compliance Officer and will continue to do so as matters arise. I have complied with all provisions of this Policy.
PROXY POLICY APPLIES TO THE FOLLOWING:
INVESCO TRIMARK INVESTMENT MANAGEMENT INC.
PROXY VOTING
Policy Number: B-6 Effective Date: May 1, 2001 Revision Date: November 6, 2006
PURPOSE AND BACKGROUND
In its trusteeship and management of mutual funds, AIM Trimark acts as fiduciary to the unitholders and must act in their best interests.
APPLICATION
AIM Trimark will make every effort to exercise all voting rights with respect to securities held in the mutual funds that it manages in Canada or to which it provides sub-advisory services, including a Fund registered under and governed by the US Investment Company Act of 1940, as amended (the "US Funds") (collectively, the "Funds"). Proxies for the funds distributed by AIM Trimark Investments and managed by an affiliate or a third party (a "Sub-Advisor") will be voted in accordance with the Sub-Advisor's policy, unless the sub-advisory agreement provides otherwise.
The portfolio managers have responsibility for exercising all proxy votes and in doing so, for acting in the best interest of the Fund. Portfolio managers must vote proxies in accordance with the Guidelines, as amended from time to time, a copy of which is attached to this policy.
When a proxy is voted against management's recommendation, the portfolio manager will provide to the CIO the reasons in writing for any vote in opposition to management's recommendation.
AIM Trimark may delegate to a third party the responsibility to vote proxies on behalf of all or certain Funds, in accordance with the Guidelines.
RECORDS MANAGEMENT
The Investment Department will endeavour to ensure that all proxies and notices are received from all issuers on a timely basis, and will maintain for all Funds
- A record of all proxies received;
- a record of votes cast;
- a copy of the reasons for voting against management; and for the US Funds
- the documents mentioned above; and
- a copy of any document created by AIM Trimark that was material to making a decision how to vote proxies on behalf of a US Fund and that memorializes the basis of that decision.
AIM Trimark has a dedicated Central Proxy Administrator who manages all proxy voting materials. Proxy voting circulars for all companies are received electronically through an external service provider. Circulars for North American companies and ADRs are generally also received in paper format.
Once a circular is received, the Administrator verifies that all shares and Funds affected are correctly listed. The Administrator then gives a copy of the proxy summary to each affected portfolio manager and maintains a tracking list to ensure that all proxies are voted within the prescribed deadlines.
Once voting information has been received from the portfolio managers, voting instructions are sent electronically to the service provider who then forwards the instructions to the appropriate proxy voting agent or transfer agent. The external service provider retains on behalf of AIM Trimark a record of the votes cast and agrees to provide AIM Trimark with a copy of proxy records promptly upon request. The service provider must make all documents available to AIM Trimark for a period of 6 years.
In the event that AIM Trimark ceases to use an external service provider, all documents would be maintained and preserved in an easily accessible place i) for a period of 2 years where AIM Trimark carries on business in Canada and ii) for a period of 3 years thereafter at the same location or at any other location.
REPORTING
The CIO will report on proxy voting to the Fund Boards on an annual basis with respect to all funds managed in Canada or distributed by AIM Trimark Investments and managed by a Sub-Advisor. The CIO will report on proxy voting to the Board of Directors of the US Funds as required from time to time.
In accordance with NI 81-106, proxy voting records for all Canadian mutual funds for years ending June 30th are posted on AIM Trimark's websites. The AIM Trimark Compliance department will review the proxy voting records held by AIM Trimark on an annual basis.
AIM TRIMARK INVESTMENTS
PROXY VOTING GUIDELINES (APRIL 17, 2006)
PURPOSE
The purpose of this document is to describe AIM Trimark's general guidelines for voting proxies received from companies held in AIM Trimark's Toronto-based funds. Proxy voting for the funds managed on behalf of AIM Trimark on a sub-advised basis (i.e. by other AMVESCAP business units or on a third party basis) are subject to the proxy voting policies & procedures of those other entities. As part of its regular due diligence, AIM Trimark will review the proxy voting policies & procedures of any new sub-advisors to ensure that they are appropriate in the circumstances.
INTRODUCTION
AIM Trimark has the fiduciary obligation to ensure that the long-term economic best interest of unitholders is the key consideration when voting proxies of portfolio companies.
As a general rule, AIM Trimark shall vote against any actions that would:
- reduce the rights or options of shareholders,
- reduce shareholder influence over the board of directors and management,
- reduce the alignment of interests between management and shareholders, or
- reduce the value of shareholders' investments.
At the same time, since AIM Trimark's Toronto-based portfolio managers follow an investment discipline that includes investing in companies that are believed to have strong management teams, the portfolio managers will generally support the management of companies in which they invest, and will accord proper weight to the positions of a company's board of directors. Therefore, in most circumstances, votes will be cast in accordance with the recommendations of the company's board of directors.
While AIM Trimark's proxy voting guidelines are stated below, the portfolio managers will take into consideration all relevant facts and circumstances (including country specific considerations), and retain the right to vote proxies as deemed appropriate.
These guidelines may be amended from time to time.
CONFLICTS OF INTEREST
When voting proxies, AIM Trimark's portfolio managers assess whether there are material conflicts of interest between AIM Trimark's interests and those of unitholders. A potential conflict of interest situation may include where AIM Trimark or an affiliate manages assets for, provides other financial services to, or otherwise has a material business relationship with, a company whose management is soliciting proxies, and failure to vote in favour of management of the company may harm AIM Trimark's relationship with the company. In all situations, the portfolio managers will not take AIM Trimark's relationship with the company into account, and will vote the proxies in the best interest of the unitholders. To the extent that a portfolio manager has any conflict of interest with respect to a company or an issue presented, that portfolio manager should abstain from voting on that company or issue. Portfolio managers are required to report to the Chief Investment Officer any such conflicts of interest and/or attempts by outside parties to improperly influence the voting process.
BOARDS OF DIRECTORS
We believe that a board that has at least a majority of independent directors is integral to good corporate governance. Unless there are restrictions specific to a company's home jurisdiction, key board committees, including audit and compensation committees, should be completely independent.
VOTING ON DIRECTOR NOMINEES IN UNCONTESTED ELECTIONS
Votes in an uncontested election of directors are evaluated on a case-by-case basis, considering factors that may include:
- Long-term company performance relative to a market index,
- Composition of the board and key board committees,
- Nominee's attendance at board meetings,
- Nominee's time commitments as a result of serving on other company boards,
- Nominee's investments in the company,
- Whether the chairman is also serving as CEO, and
- Whether a retired CEO sits on the board.
VOTING ON DIRECTOR NOMINEES IN CONTESTED ELECTIONS
Votes in a contested election of directors are evaluated on a case-by-case basis, considering factors that may include:
- Long-term financial performance of the target company relative to its industry,
- Management's track record,
- Background to the proxy contest,
- Qualifications of director nominees (both slates),
- Evaluation of what each side is offering shareholders as well as the likelihood that the proposed objectives and goals can be met, and
- Stock ownership positions.
MAJORITY THRESHOLD VOTING FOR DIRECTOR ELECTIONS
We will generally vote for proposals that require directors to be elected with an affirmative majority of votes cast unless the relevant portfolio manager believes that the company has adopted formal corporate governance principles that present a meaningful alternative to the majority voting standard and provide an adequate and timely response to both new nominees as well as incumbent nominees who fail to receive a majority of votes cast.
REIMBURSEMENT OF PROXY SOLICITATION EXPENSES
Decisions to provide reimbursement for dissidents waging a proxy contest are made on a case-by-case basis.
SEPARATING CHAIRMAN AND CEO
Shareholder proposals to separate the chairman and CEO positions should be evaluated on a case-by-case basis.
While we generally support these proposals, some companies have governance structures in place that can satisfactorily counterbalance a combined position. Voting decisions will take into account factors such as:
- Designated lead director, appointed from the ranks of the independent board members with clearly delineated duties;
- Majority of independent directors;
- All-independent key committees;
- Committee chairpersons nominated by the independent directors;
- CEO performance is reviewed annually by a committee of outside directors; and
- Established governance guidelines.
MAJORITY OF INDEPENDENT DIRECTORS
While we generally support shareholder proposals asking that a majority of directors be independent, each proposal should be evaluated on a case-by-case basis.
We generally vote for shareholder proposals that request that the board's audit, compensation, and/or nominating committees be composed exclusively of independent directors.
STOCK OWNERSHIP REQUIREMENTS
We believe that individual directors should be appropriately compensated and motivated to act in the best interests of shareholders. Share ownership by directors better aligns their interests with those of other shareholders. Therefore, we believe that meaningful share ownership by directors is in the best interest of the company.
We generally vote for proposals that require a certain percentage of a director's compensation to be in the form of common stock.
SIZE OF BOARDS OF DIRECTORS
We believe that the number of directors is important to ensuring the board's effectiveness in maximizing long-term shareholder value. The board must be large enough to allow it to adequately discharge its responsibilities, without being so large that it becomes cumbersome.
While we will prefer a board of no fewer than 5 and no more than16 members, each situation will be considered on a case-by-case basis taking into consideration the specific company circumstances.
CLASSIFIED OR STAGGERED BOARDS
In a classified or staggered board, directors are typically elected in two or more "classes", serving terms greater than one year.
We prefer the annual election of all directors and will generally not support proposals that provide for staggered terms for board members. We recognize that there may be jurisdictions where staggered terms for board members is common practice and, in such situations, we will review the proposals on a case-by-case basis.
DIRECTOR INDEMNIFICATION AND LIABILITY PROTECTION
We recognize that many individuals may be reluctant to serve as corporate directors if they were to be personally liable for all lawsuits and legal costs. As a result, limitations on directors' liability can benefit the corporation and its shareholders by helping to attract and retain qualified directors while providing recourse to shareholders on areas of misconduct by directors.
We generally vote for proposals that limit directors' liability and provide indemnification as long as the arrangements are limited to the director acting honestly and in good faith with a view to the best interests of the corporation and, in criminal matters, are limited to the director having reasonable grounds for believing the conduct was lawful.
AUDITORS
A strong audit process is a requirement for good corporate governance. A significant aspect of the audit process is a strong relationship with a knowledgeable and independent set of auditors.
RATIFICATION OF AUDITORS
We believe a company should limit its relationship with its auditors to the audit engagement, and certain closely related activities that do not, in the aggregate, raise an appearance of impaired independence.
We generally vote for the reappointment of the company's auditors unless:
- It is not clear that the auditors will be able to fulfill their function;
- There is reason to believe the auditors have rendered an opinion that is neither accurate nor indicative of the company's financial position; or
- The auditors have a significant professional or personal relationship with the issuer that compromises their independence.
DISCLOSURE OF AUDIT VS. NON-AUDIT FEES
Understanding the fees earned by the auditors is important for assessing auditor independence. Our support for the re-appointment of the auditors will take into consideration whether the management information circular contains adequate disclosure about the amount and nature of audit vs. non-audit fees.
There may be certain jurisdictions that do not currently require disclosure of audit vs. non-audit fees. In these circumstances, we will generally support proposals that call for this disclosure.
COMPENSATION PROGRAMS
Appropriately designed equity-based compensation plans, approved by shareholders, can be an effective way to align the interests of long-term shareholders and the interests of management, employees and directors. Plans should not substantially dilute shareholders' ownership interests in the company, provide participants with excessive awards or have objectionable structural features. We will consider each compensation plan in its entirety (including all incentives, awards and other compensation) to determine if the plan provides the right incentives to managers and directors and is reasonable on the whole.
While we generally encourage companies to provide more transparent disclosure related to their compensation programs, the following are specific guidelines dealing with some of the more common features of these programs (features not specifically itemized below will be considered on a case-by-case basis taking into consideration the general principles described above):
CASH COMPENSATION AND SEVERANCE PACKAGES
We will generally support the board's discretion to determine and grant appropriate cash compensation and severance packages.
EQUITY BASED PLANS - DILUTION
We will generally vote against equity-based plans where the total dilution (including all equity-based plans) is excessive.
EMPLOYEE STOCK PURCHASE PLANS
We will generally vote for the use of employee stock purchase plans to increase company stock ownership by employees, provided that shares purchased under the plan are acquired for no less than 85% of their market value. It is recognized that country specific circumstances may exist (e.g. tax issues) that require proposals to be reviewed on a case-by-case basis.
LOANS TO EMPLOYEES
We will vote against the corporation making loans to employees to allow employees to pay for stock or stock options. It is recognized that country specific circumstances may exist that require proposals to be reviewed on a case-by-case basis.
STOCK OPTION PLANS - BOARD DISCRETION
We will vote against stock option plans that give the board broad discretion in setting the terms and conditions of the programs. Such programs should be submitted with detail and be reasonable in the circumstances regarding their cost, scope, frequency and schedule for exercising the options.
STOCK OPTION PLANS - INAPPROPRIATE FEATURES
We will generally vote against plans that have any of the following structural features:
- ability to re-price "underwater" options without shareholder approval,
- ability to issue options with an exercise price below the stock's current market price,
- ability to issue "reload" options, or
- automatic share replenishment ("evergreen") features.
STOCK OPTION PLANS - DIRECTOR ELIGIBILITY
While we prefer stock ownership by directors, we will support stock option plans for directors as long as the terms and conditions of director options are clearly defined and are reasonable.
STOCK OPTION PLANS - REPRICING
We will vote for proposals to re-price options if there is a value-for-value (rather than a share-for-share) exchange.
STOCK OPTION PLANS - VESTING
We will vote against stock option plans that are 100% vested when granted.
STOCK OPTION PLANS - AUTHORIZED ALLOCATIONS
We will generally vote against stock option plans that authorize allocation of 25% or more of the available options to any one individual.
STOCK OPTION PLANS - CHANGE IN CONTROL PROVISIONS
We will vote against stock option plans with change in control provisions that allow option holders to receive more for their options than shareholders would receive for their shares.
CORPORATE MATTERS
We will review management proposals relating to changes to capital structure, reincorporation, restructuring and mergers & acquisitions on a case-by-case basis, taking into consideration the impact of the changes on corporate governance and shareholder rights, anticipated financial and operating benefits, portfolio manager views, level of dilution, and a company's industry and performance in terms of shareholder returns.
COMMON STOCK AUTHORIZATION
We will review proposals to increase the number of shares of common stock authorized for issue on a case-by-case basis.
DUAL CLASS SHARE STRUCTURES
Dual class share structures involve a second class of common stock with either superior or inferior voting rights to those of another class of stock.
We will generally vote against proposals to create or extend dual class share structures where certain stockholders have superior or inferior voting rights to another class of stock.
STOCK SPLITS
We will vote for proposals to increase common share authorization for a stock split, provided that the increase in authorized shares would not result in excessive dilution given a company's industry and performance in terms of shareholder returns.
REVERSE STOCK SPLITS
We will vote for management proposals to implement a reverse stock split, provided that the reverse split does not result in an increase of authorized but unissued shares of more than 100% after giving effect to the shares needed for the reverse split.
SHARE REPURCHASE PROGRAMS
We will vote against proposals to institute open-market share repurchase plans if all shareholders do not participate on an equal basis.
REINCORPORATION
Reincorporation involves re-establishing the company in a different legal jurisdiction.
We will generally vote for proposals to reincorporate the company provided that the board and management have demonstrated sound financial or business reasons for the move. Proposals to reincorporate will not be supported if solely as part of an anti-takeover defense or as a way to limit directors' liability.
MERGERS & ACQUISITIONS
We will vote for merger & acquisition proposals that the relevant portfolio managers believe, based on their review of the materials:
- will result in financial and operating benefits,
- have a fair offer price,
- have favourable prospects for the combined companies, and
- will not have a negative impact on corporate governance or shareholder rights.
SOCIAL RESPONSIBILITY
We recognize that to effectively manage a corporation, directors and management must consider not only the interests of shareholders, but the interests of employees, customers, suppliers, and creditors, among others.
We believe that companies and their boards must give careful consideration to social responsibility issues in order to enhance long-term shareholder value.
We support efforts by companies to develop policies and practices that consider social responsibility issues related to their businesses.
SHAREHOLDER PROPOSALS
Shareholder proposals can be extremely complex, and the impact on the interests of all stakeholders can rarely be anticipated with a high degree of confidence. As a result, shareholder proposals will be reviewed on a case-by-case basis with consideration of factors such as:
- the proposal's impact on the company's short-term and long-term share value,
- its effect on the company's reputation,
- the economic effect of the proposal,
- industry and regional norms applicable to the company,
- the company's overall corporate governance provisions, and
- the reasonableness of the request.
We will generally support shareholder proposals that require additional disclosure regarding corporate responsibility issues where the relevant portfolio manager believes:
- the company has failed to adequately address these issues with shareholders,
- there is information to suggest that a company follows procedures that are not in compliance with applicable regulations, or
- the company fails to provide a level of disclosure that is comparable to industry peers or generally accepted standards.
We will generally not support shareholder proposals that place arbitrary or artificial constraints on the board, management or the company.
ORDINARY BUSINESS PRACTICES
We will generally support the board's discretion regarding shareholder proposals that involve ordinary business practices.
PROTECTION OF SHAREHOLDER RIGHTS
We will generally vote for shareholder proposals that are designed to protect shareholder rights if the company's corporate governance standards indicate that such additional protections are warranted.
BARRIERS TO SHAREHOLDER ACTION
We will generally vote for proposals to lower barriers to shareholder action.
SHAREHOLDER RIGHTS PLANS
We will generally vote for proposals to subject shareholder rights plans to a shareholder vote.
OTHER
We will vote against any proposal where the proxy materials lack sufficient information upon which to base an informed decision.
We will vote against any proposals to authorize the company to conduct any other business that is not described in the proxy statement (including the authority to approve any further amendments to an otherwise approved resolution).
APPENDIX F
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES
To the best knowledge of the Trust, the names and addresses of the record and beneficial holders of 5% or more of the outstanding shares of each class of the Trust's equity securities and the percentage of the outstanding shares held by such holders are set forth below. Unless otherwise indicated below, the Trust has no knowledge as to whether all or any portion of the shares owned of record are also owned beneficially.
A shareholder who owns beneficially 25% or more of the outstanding securities of a Fund is presumed to "control" that Fund as defined in the 1940 Act. Such control may affect the voting rights of other shareholders.
All information listed below is as of August 1, 2008.
AIM V.I. BASIC BALANCED FUND
SERIES I SERIES II
SHARES SHARES
PERCENTAGE OWNED PERCENTAGE OWNED
NAME AND ADDRESS OF OF OF
PRINCIPAL HOLDER RECORD RECORD
------------------- ---------------- ----------------
ALLSTATE LIFE INSURANCE COMPANY
GLAC PROPRIETARY
FINANCIAL CONTROL UNIT 57.21% --
P.O. BOX 94210
PALATINE, IL 60094-4210
ALLSTATE LIFE INSURANCE CO.
GLAC AIM VA1 AND SPVL-VL
FINANCIAL CONTROL UNIT 13.24% --
P.O. BOX 94210
PALATINE, IL 60094-4210
ALLSTATE LIFE INSURANCE CO. OF NEW YORK
NY PROPRIETARY
FINANCIAL CONTROL UNIT 7.03% --
P.O. BOX 94210
PALATINE, IL 60094-4210
ALLSTATE LIFE INSURANCE CO.
ATTN: FINANCIAL CONTROL UNIT 5.53% --
P.O. BOX 94200
PALATINE, IL 60094-4200
ALLSTATE LIFE INSURANCE CO.
GLAC VA3
FINANCIAL CONTROL UNIT -- 31.83%
P.O. BOX 94210
PALATINE, IL 60094-4210
|
AIM V.I. BASIC BALANCED FUND
SERIES I SERIES II
SHARES SHARES
PERCENTAGE OWNED PERCENTAGE OWNED
NAME AND ADDRESS OF OF OF
PRINCIPAL HOLDER RECORD RECORD
------------------- ---------------- ----------------
MINNESOTA LIFE INSURANCE CO.
Attn: A6-5216
400 ROBERT ST. N -- 60.94%
ST PAUL, MN 55101-2037
|
AIM V.I. BASIC VALUE FUND
SERIES I SERIES II
SHARES SHARES
PERCENTAGE OWNED PERCENTAGE OWNED
NAME AND ADDRESS OF OF OF
PRINCIPAL HOLDER RECORD RECORD
------------------- ---------------- ----------------
ALLSTATE LIFE INSURANCE CO.
AIM VI-AIM VA3
FINANCIAL CONTROL UNIT -- 5.57%
P.O. BOX 94210
PALATINE, IL 60094-4210
ALLSTATE LIFE INSURANCE COMPANY
GLAC PROPRIETARY
FINANCIAL CONTROL UNIT 5.02% --
P.O. BOX 94210
PALATINE, IL 60094-4210
AMERICAN ENTERPRISE LIFE INS CO.
1497 AXP FINANCIAL CTR. -- 14.67%
MINNEAPOLIS, MN 55474-0014
COMMONWEALTH ANNUITY AND LIFE INSURANCE COMPANY
SEPARATE ACCOUNTING
MAIL STATION S310 -- 7.02%
440 LINCOLN ST.
WORCESTER, MA 01653-0002
GE LIFE AND ANNUITY ASSURANCE CO.
VARIABLE EXTRA CREDIT
ATTN: VARIABLE ACCOUNTING -- 9.07%
6610 W. BROAD ST.
RICHMOND, VA 23230-1702
HARTFORD LIFE AND ANNUITY
SEPARATE ACCOUNT
ATTN: DAVE TEN BROECK 57.65% --
P.O. BOX 2999
HARTFORD, CT 06104-2999
|
AIM V.I. BASIC VALUE FUND
SERIES I SERIES II
SHARES SHARES
PERCENTAGE OWNED PERCENTAGE OWNED
NAME AND ADDRESS OF OF OF
PRINCIPAL HOLDER RECORD RECORD
------------------- ---------------- ----------------
HARTFORD LIFE SEPARATE ACCOUNT
ATTN: DAVE TEN BROECK 20.92% --
P.O. BOX 2999
HARTFORD, CT 06104-2999
LINCOLN BENEFIT LIFE
2940 S 84TH ST. 5.80% --
LINCOLN, NE 68506-4142
NATIONWIDE INSURANCE COMPANY NWVAII
c/o IPO PORTFOLIO ACCOUNTING -- 17.21%
P.O. BOX 182029
COLUMBUS, OH 43218-2029
TRANSAMERICA LIFE INSURANCE CO.
LANDMARK
ATTN: FMD OPERATIONAL ACCOUNTING -- 12.54%
4333 EDGEWOOD RD. NE
CEDAR RAPIDS, IA 52499-0001
|
AIM V.I. CAPITAL APPRECIATION FUND
SERIES I SERIES II
SHARES SHARES
PERCENTAGE OWNED PERCENTAGE OWNED
NAME AND ADDRESS OF OF OF
PRINCIPAL HOLDER RECORD RECORD
------------------- ---------------- ----------------
ALLSTATE LIFE INSURANCE CO.
ATTN: FINANCIAL CONTROL- CIGNA 7.12% --
P.O. BOX 94200
PALATINE, IL 60094-4200
ALLSTATE LIFE INSURANCE COMPANY
GLAC PROPRIETARY
FINANCIAL CONTROL UNIT 7.88% --
P.O. BOX 94210
PALATINE, IL 60094-4210
10.92% --
HARTFORD LIFE AND ANNUITY
SEPARATE ACCOUNT
ATTN: DAVE TEN BROECK
P.O. BOX 2999
HARTFORD, CT 06104-2999
|
AIM V.I. CAPITAL APPRECIATION FUND
SERIES I SERIES II
SHARES SHARES
PERCENTAGE OWNED PERCENTAGE OWNED
NAME AND ADDRESS OF OF OF
PRINCIPAL HOLDER RECORD RECORD
------------------- ---------------- ----------------
IDS LIFE INSURANCE CO.
222 AXP FINANCIAL CENTER 8.42% --
MINNEAPOLIS, MN 55474-0002
IDS LIFE INSURANCE CO.
222 AXP FINANCIAL CENTER -- 62.19%
MINNEAPOLIS, MN 55474-0002
ING LIFE INSURANCE AND ANNUITY CO. CONVEYOR
ONE ORANGE WAY B3N 6.66% --
WINDSOR, CT 06095
NATIONWIDE INSURANCE CO. NWVAII
c/o IPO PORTFOLIO ACCOUNTING -- 5.12%
P.O. BOX 182029
COLUMBUS, OH 43218-2029
PHOENIX HOME LIFE
ATTN: BRIAN COOPER 6.78% --
P.O. BOX 22012
ALBANY, NY 12201-2012
THE SOLE BENEFIT OF CUSTOMERS
MERRILL LYNCH PIERCE FENNER & SMITH 6.80%
4800 DEER LAKE DR. E
JACKSONVILLE, FL 32246-6486
|
AIM V.I. CAPITAL DEVELOPMENT FUND
SERIES I SERIES II
SHARES SHARES
PERCENTAGE OWNED PERCENTAGE OWNED
NAME AND ADDRESS OF OF OF
PRINCIPAL HOLDER RECORD RECORD
------------------- ---------------- ----------------
ALLSTATE LIFE INSURANCE COMPANY
GLAC PROPRIETARY
FINANCIAL CONTROL UNIT 11.97% --
P.O. BOX 94210
PALATINE, IL 60094-4210
ANNUITY INVESTORS LIFE INSURANCE CO.
ATTN: TODD GAYHART 16.37% --
580 WALNUT ST.
CINCINNATI, OH 45202-3110
|
AIM V.I. CAPITAL DEVELOPMENT FUND
SERIES I SERIES II
SHARES SHARES
PERCENTAGE OWNED PERCENTAGE OWNED
NAME AND ADDRESS OF OF OF
PRINCIPAL HOLDER RECORD RECORD
------------------- ---------------- ----------------
IDS LIFE INSURANCE CO.
222 AXP FINANCIAL CENTER 42.37% --
MINNEAPOLIS, MN 55474-0002
IDS LIFE INSURANCE CO.
222 AXP FINANCIAL CTR. -- 40.83%
MINNEAPOLIS, MN 55474-0002
NATIONWIDE INSURANCE CO. NWLVI4
c/o IPO PORTFOLIO ACCOUNTING 10.17% --
P.O. BOX 182029
COLUMBUS, OH 43218-2029
NATIONWIDE INSURANCE CO. NWVAII
c/o IPO PORTFOLIO ACCOUNTING -- 14.47%
P.O. BOX 182029
COLUMBUS, OH 43218-2029
SECURITY BENEFIT LIFE
VARIFLEX Q NAVISYS -- 11.83%
1 SW SECURITY BENEFIT PL.
TOPEKA, KS 66636-0001
SECURITY BENEFIT LIFE
FBO UNBUNDLED
c/o VARIABLE ANNUITY DEPT -- 6.54%
1 SW SECURITY BENEFIT PL.
TOPEKA, KS 66606-2444
SBL VARIABLE FLEX NQ NAVISYS
1 SW SECURITY BENEFIT PL. -- 5.90%
TOPEKA, KS 66606-2444
|
AIM V.I. CORE EQUITY FUND
SERIES I SERIES II
SHARES SHARES
PERCENTAGE OWNED PERCENTAGE OWNED
NAME AND ADDRESS OF OF OF
PRINCIPAL HOLDER RECORD RECORD
------------------- ---------------- ----------------
-- 9.08%
ALLSTATE LIFE INSURANCE CO.
AIM VI-AIM VA3
FINANCIAL CONTROL UNIT
P.O. BOX 94210
PALATINE, IL 60094-4210
|
AIM V.I. CORE EQUITY FUND
SERIES I SERIES II
SHARES SHARES
PERCENTAGE OWNED PERCENTAGE OWNED
NAME AND ADDRESS OF OF OF
PRINCIPAL HOLDER RECORD RECORD
------------------- ---------------- ----------------
HARTFORD LIFE SEPARATE ACCOUNT
ATTN: DAVE TEN BROECK 5.81% --
P.O. BOX 2999
HARTFORD, CT 06104-2999
HARTFORD LIFE AND ANNUITY SEPARATE ACCOUNT
ATTN: DAVE TEN BROECK 14.81% --
P.O. BOX 2999
HARTFORD, CT 06104-2999
IDS LIFE INSURANCE COMPANY
222 AXP FINANCIAL CTR. 22.45% --
MINNEAPOLIS, MN 55474-0002
ING LIFE INSURANCE AND ANNUITY CO. CONVEYOR
ONE ORANGE WAY B3N 5.56% --
WINDSOR, CT 06095
LINCOLN BENEFIT LIFE
2940 S 84TH ST. -- 22.59%
LINCOLN, NE 68506-4142
LINCOLN NATIONAL LIFE INS. COMPANY
ATTN: SHIRLEY SMITH -- 18.98%
1300 S CLINTON ST.
FORT WAYNE, IN 46802-3506
MERRILL LYNCH PIERCE FENNER & SMITH
THE SOLE BENEFIT OF CUSTOMERS 5.88% --
4800 DEER LAKE DR. E.
JACKSONVILLE, FL 32246-6484
PRINCIPAL LIFE INSURANCE CO CUST
FBO PRINCIPAL INDIVIDUAL - VARIABLE
UNIVERSAL LIFE ACCUMULATOR II -- 9.07%
711 HIGH ST.
DES MOINES, IA 50392-9992
PRINCIPAL LIFE INSURANCE CO VUL III
711 HIGH STREET LIFE HEALTH -- 6.01%
DES MOINES, IA 50392-0001
PRUDENTIAL INSURANCE CO. OF AMERICA
ATTN:IGG FINL REP SEP. ACCTS. 7.31% --
213 WASHINGTON ST. 7TH FL.
NEWARK, NJ 07102-2992
|
AIM V.I. DIVERSIFIED INCOME FUND
SERIES I SERIES II
SHARES SHARES
PERCENTAGE OWNED PERCENTAGE OWNED
NAME AND ADDRESS OF OF OF
PRINCIPAL HOLDER RECORD RECORD
------------------- ---------------- ----------------
ALLSTATE LIFE INSURANCE CO. 18.73% --
ATTN:FINANCIAL CONTROL- CIGNA
P.O. BOX 94200
PALATINE, IL 60094-4200
ALLSTATE LIFE INSURANCE COMPANY
GLAC PROPRIETARY
FINANCIAL CONTROL UNIT 32.37% --
P.O. BOX 94210
PALATINE, IL 60094-4210
ALLSTATE LIFE INSURANCE COMPANY
GLAC VA1
FINANCIAL CONTROL UNIT 10.92% --
P.O. BOX 94210
PALATINE, IL 60094-4210
ALLSTATE LIFE INSURANCE CO.
GLAC VA3
FINANCIAL CONTROL UNIT -- 85.46%
P.O. BOX 94210
PALATINE, IL 60094-4210
ALLSTATE LIFE OF NEW YORK
3100 SANDERS ROAD -- 14.54%
NORTHBROOK, IL 60062-7155
ALLSTATE LIFE INSURANCE CO.
GLAC AIM VA1 AND SPVL -VL
FINANCIAL CONTROL UNIT 7.69% --
P.O. BOX 94210
PALATINE, IL 60094-4210
GENERAL AMERICAN LIFE INSURANCE
SEPARATE ACCOUNTS B1-08 6.15% --
13045 TESSON FERRY RD.
ST LOUIS, MO 63128-3499
|
AIM V.I. DYNAMICS FUND
SERIES I SERIES II
SHARES SHARES
PERCENTAGE OWNED PERCENTAGE OWNED
NAME AND ADDRESS OF OF OF
PRINCIPAL HOLDER RECORD RECORD
------------------- ---------------- ----------------
AIM ADVISORS INC(1) -- 100.00%
ATTN:CORPORATE CONTROLLER
1360 PEACHTREE ST NE
ATLANTA, GA 30309-3283
AMERICAN SKANDIA LIFE ASSURANCE CO.
VARIABLE ACCOUNT / SAQ
ATTN: INVESTMENT ACCOUNTING 48.31% --
P.O. BOX 883
1 CORPORATE DR.
SHELTON, CT 06484-6208
AMERITAS LIFE INSURANCE CORP.
SEPARATE ACCOUNT VA 5.06% --
5900 O ST
LINCOLN, NE 68510-2234
AUL AMERICAN INDIVIDUAL
VARIABLE ANNUITY UNIT TRUST B
AMERICAN UNITED LIFE INS CO. 5.88% --
ONE AMERICAN SQUARE
P.O. BOX 368
INDIANAPOLIS, IN 46206-0368
IDS LIFE INSURANCE COMPANY
222 AXP FINANCIAL CTR 14.19% --
MINNEAPOLIS, MN 55474-0002
|
(1) Owned of record and beneficially
AIM V.I. FINANCIAL SERVICES FUND
SERIES I SERIES II
SHARES SHARES
PERCENTAGE OWNED PERCENTAGE OWNED
NAME AND ADDRESS OF OF OF
PRINCIPAL HOLDER RECORD RECORD
------------------- ---------------- ----------------
AMERICAN SKANDIA LIFE ASSURANCE CO.
VARIABLE ACCOUNT / SAQ 38.71% --
ATTN: INVESTMENT ACCOUNTING
P.O. BOX 883
1 CORPORATE DR.
SHELTON, CT 06484-6208
CM LIFE INSURANCE CO.
FUND OPERATIONS 5.79% --
1295 STATE ST.
SPRINGFIELD, MA 01111-0001
|
AIM V.I. FINANCIAL SERVICES FUND
SERIES I SERIES II
SHARES SHARES
PERCENTAGE OWNED PERCENTAGE OWNED
NAME AND ADDRESS OF OF OF
PRINCIPAL HOLDER RECORD RECORD
------------------- ---------------- ----------------
IDS LIFE INSURANCE COMPANY
222 AXP FINANCIAL CTR. 28.16% --
MINNEAPOLIS, MN 55474-0002
IDS LIFE INSURANCE COMPANY
222 AXP FINANCIAL CTR. -- 86.73%
MINNEAPOLIS, MN 55474-0002
IDS LIFE INSURANCE COMPANY
222 AXP FINANCIAL CTR -- 13.27%
MINNEAPOLIS, MN 55474-0002
MASS MUTUAL LIFE INS. CO.
FUND OPERATIONS/N255 6.19% --
1295 STATE ST
SPRINGFIELD, MA 01111-0001
|
AIM V.I. GLOBAL HEALTH CARE FUND
SERIES I SERIES II
SHARES SHARES
PERCENTAGE OWNED PERCENTAGE OWNED
NAME AND ADDRESS OF OF OF
PRINCIPAL HOLDER RECORD RECORD
------------------- ---------------- ----------------
AMERICAN SKANDIA LIFE ASSURANCE CO. 37.88% --
VARIABLE ACCOUNT / SAQ
ATTN: INVESTMENT ACCOUNTING
P.O. BOX 883
1 CORPORATE DR.
SHELTON, CT 06484-6208
CM LIFE INSURANCE CO.
FUND OPERATIONS/N255 7.64% --
1295 STATE ST.
SPRINGFIELD, MA 01111-0001
COMMONWEALTH ANNUITY AND LIFE INSURANCE COMPANY
SEPARATE ACCOUNTING
440 LINCOLN ST 6.97% --
MAIL STATION S310
WORCESTER, PA 01653-0002
IDS LIFE INSURANCE COMPANY
222 AXP FINANCIAL CTR. -- 89.52%
MINNEAPOLIS, MN 55474-0002
|
AIM V.I. GLOBAL HEALTH CARE FUND
SERIES I SERIES II
SHARES SHARES
PERCENTAGE OWNED PERCENTAGE OWNED
NAME AND ADDRESS OF OF OF
PRINCIPAL HOLDER RECORD RECORD
------------------- ---------------- ----------------
IDS LIFE INSURANCE COMPANY OF NY
222 AXP FINANCIAL CENTER -- 9.99%
MINNEAPOLIS, MN 55474-0014
MASS MUTUAL LIFE INS CO.
1295 STATE ST. MIP C105 8.52% --
SPRINGFIELD, MA 01111-0001
PRINCIPAL LIFE INSURANCE CO
FVA-PRINCIPAL VARIABLE ANNUITY
ATTN: LISA DAGUE - IND ACG G-008-N10 6.61% --
711 HIGH ST.
DES MOINES, IA 50392-0001
|
AIM V.I. GLOBAL REAL ESTATE FUND
SERIES I SERIES II
SHARES SHARES
PERCENTAGE OWNED PERCENTAGE OWNED
NAME AND ADDRESS OF OF OF
PRINCIPAL HOLDER RECORD RECORD
------------------- ---------------- ----------------
AUL AMERICAN INDIVIDUAL VARIABLE ANNUITY UNIT
TRUST B
AMERICAN UNITED LIFE INS CO. 15.29% --
ONE AMERICAN SQUARE
PO BOX 368
INDIANAPOLIS, IN 46206-0368
CUNA MUTUAL VARIABLE ACCOUNTING
2000 HERITAGE WAY -- 12.32%
WAVERLY, IA 23230-1702
GE CAPITAL LIFE ASSURANCE CO. OF NY
NY CHOICE 160BP
6610 W BROAD ST. -- 12.43%
BLDG 3, 5TH FLOOR
ATTN: VARIABLE ACCOUNTING
RICHMOND, VA 23230-1702
GE LIFE AND ANNUITY ASSURANCE CO.
VARIABLE EXTRA CREDIT
ATTN: VARIABLE ACCOUNTING -- 6.41%
6610 W BROAD ST.
RICHMOND, VA 23230-1702
JEFFERSON NATIONAL LIFE INSURANCE
9920 CORPORATE CAMPUS DR. STE. 1000 5.69% --
LOUISVILLE, KY 40223-4051
|
AIM V.I. GLOBAL REAL ESTATE FUND
SERIES I SERIES II
SHARES SHARES
PERCENTAGE OWNED PERCENTAGE OWNED
NAME AND ADDRESS OF OF OF
PRINCIPAL HOLDER RECORD RECORD
------------------- ---------------- ----------------
KEMPER INVESTORS LIFE INSURANCE CO.
VARIABLE SEPARATE ACCOUNT 7.85% --
2500 WESTFIELD DR
ELGIN, IL 60124-7836
MET LIFE ANNUITY OPERATIONS
SECURITY FIRST LIFE SEPARATE AC
ATTN: SHAR NEVENHOVEN CPA -- 63.78%
4700 WESTOWN PLSY., STE. 200
WEST DES MOINES, IA 50266
SECURITY BENEFIT LIFE
FBO UNBUNDLED
c/o VARIABLE ANNUITY DEPARTMENT 19.43% --
1 SW SECURITY BENEFIT PL.
TOPEKA, KS 66636-1000
SECURITY BENEFIT LIFE
VARIFLEX Q NAVISYS 5.40% --
1 SW SECURITY BENEFIT PL.
TOPEKA, KS 66606-2444
SYMETRA LIFE INSURANCE CO.
ATTN: MICHEAL ZHANG
SEP. ACCTS. SC-15 15.80% --
777 108TH AVE. NE , STE. 1200
BELLEVUE, WA 98004-5135
|
AIM V.I. GOVERNMENT SECURITIES FUND
SERIES I SERIES II
SHARES SHARES
PERCENTAGE OWNED PERCENTAGE OWNED
NAME AND ADDRESS OF OF OF
PRINCIPAL HOLDER RECORD RECORD
------------------- ---------------- ----------------
ALLSTATE LIFE INSURANCE CO.
GLAC VA3
FINANCIAL CONTROL UNIT -- 12.83%
P.O. BOX 94210
PALATINE, IL 60094-4210
ANNUITY INVESTORS LIFE INSURANCE
580 WALNUT ST -- 8.05%
CINCINNATI, OH 45202-3110
|
AIM V.I. GOVERNMENT SECURITIES FUND
SERIES I SERIES II
SHARES SHARES
PERCENTAGE OWNED PERCENTAGE OWNED
NAME AND ADDRESS OF OF OF
PRINCIPAL HOLDER RECORD RECORD
------------------- ---------------- ----------------
GUARDIAN INSURANCE & ANNUITY
ATTN: PAUL IANNELLI
EQUITY ACCOUNTING 3-S -- 31.00%
3900 BURGESS PL.
BETHLEHEM, PA 18017-9097
GUARDIAN INSURANCE & ANNUITY
ATTN: PAUL IANNELLI
EQUITY ACCOUNTING 3-S -- 17.27%
3900 BURGESS PL.
BETHLEHEM, PA 18017-9097
HARTFORD LIFE AND ANNUITY
SEPARATE ACCOUNT
ATTN:DAVE TEN BROECK 67.52% --
P.O. BOX 2999
HARTFORD, CT 06104-2999
HARTFORD LIFE
SEPARATE ACCOUNT
ATTN: DAVE TEN BROECK 26.99% --
P.O. BOX 2999
HARTFORD, CT 06104-2999
LINCOLN NATIONAL LIFE INS COMPANY
ATTN:SHIRLEY SMITH -- 6.10%
1300 SOUTH CLINTON STREET
FORT WAYNE, IN 46802-3506
SAGE LIFE ASSURANCE OF AMERICA
175 KING ST. -- 8.47%
ARMONK, NY 10504-1606
TRANSAMERICA LIFE INSURANCE CO.
PREFERRED ADVANTAGE
ATTN: FMD OPERATIONAL ACCOUNTING -- 13.76%
4333 EDGEWOOD RD. NE
CEDAR RAPIDS, IA 52499-0001
|
AIM V.I. HIGH YIELD FUND
SERIES I SERIES II
SHARES SHARES
PERCENTAGE OWNED PERCENTAGE OWNED
NAME AND ADDRESS OF OF OF
PRINCIPAL HOLDER RECORD RECORD
------------------- ---------------- ----------------
ALLSTATE LIFE INSURANCE COMPANY
GLAC PROPRIETARY
FINANCIAL CONTROL UNIT 15.10% --
P.O. BOX 94210
PALATINE, IL 60094-4210
ALLSTATE LIFE INSURANCE CO.
GLAC VA3
FINANCIAL CONTROL UNIT -- 97.69%
P.O. BOX 94210
PALATINE, IL 60094-4210
ANNUITY INVESTORS LIFE INS CO.
ATTN: TODD GAYHART
580 WALNUT ST. 5.13% --
CINCINNATI, OH 45202-3110
AUL AMERICAN INDIVIDUAL VARIABLE ANNUITY UNIT
TRUST B
AMERICAN UNITED LIFE INS CO.
ONE AMERICAN SQUARE 30.35% --
P.O. BOX 368
INDIANAPOLIS, IN 46206-0368
GREAT-WEST LIFE & ANNUITY
UNIT VALUATIONS 2T2
ATTN: MUTUAL FUND TRADING 2T2 8.56% --
8515 E ORCHARD RD.
ENGLEWOOD, CO 80111-5002
HARTFORD LIFE INSURANCE CO.
SEPARATE ACCOUNT 2
ATTN:DAVID TEN BROECK 7.91% --
P.O. BOX 2999
HARTFORD, CT 06104-2999
JEFFERSON NATIONAL LIFE INSURANCE
9920 CORPORATE CAMPUS DR. ,STE. 1000 12.94% --
LOUISVILLE, KY 40223-4051
|
AIM V.I. INTERNATIONAL GROWTH FUND
SERIES I SERIES II
SHARES SHARES
PERCENTAGE OWNED PERCENTAGE OWNED
NAME AND ADDRESS OF OF OF
PRINCIPAL HOLDER RECORD RECORD
------------------- ---------------- ----------------
GE LIFE AND ANNUITY ASSURANCE CO.
VARIABLE EXTRA CREDIT -- 10.94%
ATTN: VARIABLE ACCOUNTING
6610 WEST BROAD ST.
RICHMOND, VA 23230-1702
HARTFORD LIFE AND ANNUITY
SEPARATE ACCOUNT
ATTN: DAVE TEN BROECK 30.83% --
P.O. BOX 2999
HARTFORD, CT 06104-2999
HARTFORD LIFE SEPARATE ACCOUNT
ATTN: DAVE TEN BROECK 11.14% --
P.O. BOX 2999
HARTFORD, CT 06104-2999
IDS LIFE INSURANCE COMPANY
222 AXP FINANCIAL CTR. -- 55.63%
MINNEAPOLIS, MN 55474-0002
METLIFE INSURANCE COMPANY OF CONNECTICUT
ATTN: SHAREHOLDER ACCOUNTS 7.10% --
ONE TOWER SQUARE 6MS
HARTFORD, CT 06183-0003
NATIONWIDE INSURANCE CO NWLV14
C/O IPO PORTFOLIO ACCOUNTING 5.30% --
PO BOX 182029
COLUMBUS, OH 43218-2029
RIVERSOURCE LIFE INSURANCE COMPANY
222 AXP FINANCIAL CTR. -- 8.22%
MINNEAPOLIS, MN 55474-0002
SECURITY BENEFIT LIFE FBO UNBUNDLED
c/o VARIABLE ANNUITY DEPT. -- 5.38%
1 SW SECURITY BENEFIT PL.
TOPEKA, KS 66606-2444
|
AIM V.I. LARGE CAP GROWTH FUND
SERIES I SERIES II
SHARES SHARES
PERCENTAGE OWNED PERCENTAGE OWNED
NAME AND ADDRESS OF OF OF
PRINCIPAL HOLDER RECORD RECORD
------------------- ---------------- ----------------
ALLSTATE LIFE OF NEW YORK
3100 SANDERS RD. -- 11.21%
NORTHBROOK, IL 60062-7155
ALLSTATE LIFE INSURANCE COMPANY
GLAC PROPRIETARY
FINANCIAL CONTROL UNIT 12.73% --
P.O. BOX 94210
PALATINE, IL 60094-4210
ALLSTATE LIFE INSURANCE CO. GLAC VA3
FINANCIAL CONTROL UNIT -- 87.65%
P.O. BOX 94210
PALATINE, IL 60094-4210
COMMONWEALTH ANNUITY AND LIFE INSURANCE COMPANY
1 SW SECURITY BENEFIT PL. 10.87% --
TOPEKA, KS 66636-0001
HARTFORD LIFE AND ANNUITY SEPARATE ACCOUNT
ATTN: DAVE TEN BROECK 46.96% --
P.O. BOX 2999
HARTFORD, CT 06104-2999
HARTFORD LIFE SEPARATE ACCOUNT
ATTN: DAVE TEN BROECK 19.27% --
P.O. BOX 2999
HARTFORD, CT 06104-2999
|
AIM V.I. LEISURE FUND
SERIES I SERIES II
SHARES SHARES
PERCENTAGE OWNED PERCENTAGE OWNED
NAME AND ADDRESS OF OF OF
PRINCIPAL HOLDER RECORD RECORD
------------------- ---------------- ----------------
AIM ADVISORS, INC.(1)
ATTN: CORPORATE CONTROLLER -- 96.98%
1360 PEACHTREE ST. NE
ATLANTA, GA 30309-3283
ING USA ANNUITY AND LIFE INSURANCE CO.
ONE ORANGE WAY B3N 99.28% --
WINDSOR, CT 06095
|
(1) Owned of record and beneficially
AIM V.I. MID CAP CORE EQUITY FUND
SERIES I SERIES II
SHARES SHARES
PERCENTAGE OWNED PERCENTAGE OWNED
NAME AND ADDRESS OF OF OF
PRINCIPAL HOLDER RECORD RECORD
------------------- ---------------- ----------------
ALLSTATE LIFE INSURANCE CO.
AIM VI-AIM VA3
FINANCIAL CONTROL UNIT -- 5.91%
P.O. BOX 94210
PALATINE, IL 60094-4210
AMERICAN ENTERPRISE LIFE INS CO.
1497 AXP FINANCIAL CTR. -- 9.13%
MINNEAPOLIS, MN 55474-0014
HARTFORD LIFE AND ANNUITY SEPARATE ACCOUNT
ATTN: DAVE TEN BROECK 67.03% --
P.O. BOX 2999
HARTFORD, CT 06104-2999
HARTFORD LIFE SEPARATE ACCOUNT
ATTN: DAVE TEN BROECK 19.85% --
P.O. BOX 2999
HARTFORD, CT 06104-2999
LINCOLN BENEFIT LIFE -- 22.01%
2940 S 84TH ST.
LINCOLN, NE 68506-4142
SECURITY BENEFIT LIFE INSURANCE CO.
FBO SBL ADVISOR DESIGNS - NAVISYS
UNBUNDLED VARIABLE -- 16.41%
1 SW SECURITY BENEFIT PL.
TOPEKA, KS 66636-0001
SECURITY BENEFIT LIFE FBO UNBUNDLED
c/o VARIABLE ANNUITY DEPARTMENT -- 18.90%
1 SW SECURITY BENEFIT PL.
TOPEKA, KS 66636-1000
SECURITY BENEFIT LIFE
VARIFLEX Q NAVISYS -- 6.16%
1 SW SECURITY BENEFIT PL.
TOPEKA, KS 66606-2444
|
AIM V.I. MONEY MARKET FUND
SERIES I SERIES II
SHARES SHARES
PERCENTAGE OWNED PERCENTAGE OWNED
NAME AND ADDRESS OF OF OF
PRINCIPAL HOLDER RECORD RECORD
------------------- ---------------- ----------------
ALLSTATE LIFE INSURANCE CO.
ATTN: FINANCIAL CONTROL- CIGNA
P.O. BOX 94200 21.32% --
PALATINE, IL 60094-4200
ALLSTATE LIFE INSURANCE CO.
GLAC AIM VA1 AND SPVL-VL
FINANCIAL CONTROL UNIT 7.49% --
P.O. BOX 94210
PALATINE, IL 60094-4210
ALLSTATE LIFE OF NEW YORK
3100 SANDERS ROAD -- 9.87%
NORTHBROOK, IL 60062-7155
ALLSTATE LIFE INSURANCE COMPANY
GLAC PROPRIETARY
FINANCIAL CONTROL UNIT 37.29% --
P.O. BOX 94210
PALATINE, IL 60094-4210
ALLSTATE LIFE INSURANCE COMPANY
GLAC VA1
FINANCIAL CONTROL UNIT 10.30% --
P.O. BOX 94210
PALATINE, IL 60094-4210
ALLSTATE LIFE INSURANCE CO.
GLAC VA3
FINANCIAL CONTROL UNIT -- 90.13%
P.O. BOX 94210
PALATINE, IL 60094-4210
SAGE LIFE ASSURANCE OF AMERICA
175 KING ST. 13.13% --
ARMONK, NY 10504-1606
|
AIM V.I. SMALL CAP EQUITY FUND
SERIES I SERIES II
SHARES SHARES
PERCENTAGE OWNED PERCENTAGE OWNED
NAME AND ADDRESS OF OF OF
PRINCIPAL HOLDER RECORD RECORD
------------------- ---------------- ----------------
HARTFORD LIFE & ANNUITY
SEPARATE ACCOUNT
ATTN: DAVE TEN BROECK 66.38% --
P.O. BOX 2999
HARTFORD, CT 06104-2999
HARTFORD LIFE INSURANCE COMPANY
SEPARATE ACCOUNT
ATTN: DAVE TEN BROECK 21.12% --
P.O. BOX 2999
HARTFORD, CT 06104-2999
MINNESOTA LIFE INSURANCE CO.
ATTN: A6-5216 -- 54.86%
400 ROBERT ST. N
ST PAUL, MN 55101-2037
HARTFORD LIFE AND ANNUITY SEPARATE ACCOUNT
ATTN: UIT OPERATIONS -- 36.54%
PO BOX 2999
HARTFORD, CT 06104-2999
HARTFORD LIFE SEPARATE ACCOUNT
ATTN: UIT OPERATIONS -- 6.98%
PO BOX 2999
HARTFORD, CT 06104-2999
|
AIM V.I. TECHNOLOGY FUND
SERIES I SERIES II
SHARES SHARES
PERCENTAGE OWNED PERCENTAGE OWNED
NAME AND ADDRESS OF OF OF
PRINCIPAL HOLDER RECORD RECORD
------------------- ---------------- ----------------
ALLSTATE LIFE INSURANCE CO.
GLAC VA3
FINANCIAL CONTROL UNIT -- 89.57%
P.O. BOX 94210
PALATINE, IL 60094-4210
ALLSTATE LIFE OF NEW YORK
3100 SANDERS RD. -- 10.43%
NORTHBROOK, IL 60062-7155
|
AIM V.I. TECHNOLOGY FUND
SERIES I SERIES II
SHARES SHARES
PERCENTAGE OWNED PERCENTAGE OWNED
NAME AND ADDRESS OF OF OF
PRINCIPAL HOLDER RECORD RECORD
------------------- ---------------- ----------------
AMERICAN SKANDIA LIFE ASSURANCE CO.
VARIABLE ACCOUNT / SAQ
ATTN: INVESTMENT ACCOUNTING 31.11% --
P.O. BOX 883
1 CORPORATE DR.
SHELTON, CT 06484-0883
CM LIFE INSURANCE CO.
FUND OPERATIONS/N255 6.07% --
1295 STATE ST.
SPRINGFIELD, MA 01111-0001
IDS LIFE INSURANCE COMPANY
222 AXP FINANCIAL CTR. 21.88% --
MINNEAPOLIS, MN 55474-0002
MASS MUTUAL LIFE INS CO.
FUND OPERATIONS/N255 7.13% --
1295 STATE ST.
SPRINGFIELD, MA 01111-0001
|
AIM V.I. UTILITIES FUND
SERIES I SERIES II
SHARES SHARES
PERCENTAGE OWNED PERCENTAGE OWNED
NAME AND ADDRESS OF OF OF
PRINCIPAL HOLDER RECORD RECORD
------------------- ---------------- ----------------
ALLSTATE LIFE INSURANCE CO.
GLAC VA3
FINANCIAL CONTROL UNIT -- 31.47%
P.O. BOX 94210
PALATINE, IL 60094-4210
ALLSTATE LIFE INSURANCE COMPANY
GLAC PROPRIETARY
FINANCIAL CONTROL UNIT 6.73% --
P.O. BOX 94210
PALATINE, IL 60094-4210
ANNUITY INVESTORS LIFE INSURANCE
580 WALNUT
CINCINNATI, OH 45202-3110 -- 66.23%
|
SERIES I SERIES II
SHARES SHARES
PERCENTAGE OWNED PERCENTAGE OWNED
NAME AND ADDRESS OF OF OF
PRINCIPAL HOLDER RECORD RECORD
------------------- ---------------- ----------------
COMMONWEALTH ANNUITY AND LIFE INSURANCE COMPANY
SEPARATE ACCOUNTING
MAIL STATION S310 10.68% --
440 LINCOLN ST.
WORCESTER, MA 01653-0002
GUARDIAN INSURANCE & ANNUITY CO.
ATTN: EQUITY ACCOUNTING DEPT 3-S-18
3900 BURGESS PL. 5.82% --
BETHLEHEM, PA 18017-9097
KEMPER INVESTORS LIFE INSURANCE CO.
ATTN: INVESTMENT ACCOUNTING LL-2W
P.O. BOX 19097 35.61% --
GREENVILLE, SC 29602-9097
|
AIM V.I. POWERSHARES ETF ALLOCATION FUND
Invesco Aim provided the initial capitalization of AIM V.I. PowerShares ETF Allocation Fund and, accordingly, as of the date of this Statement of Additional Information, owned more than 25% of the issued and outstanding shares of AIM V.I. PowerShares ETF Allocation Fund and therefore could be deemed to "control" AIM V.I. PowerShares ETF Allocation Fund as that term is defined in the 1940 Act. It is anticipated that after the commencement of the public offering of AIM V.I. PowerShares ETF Allocation Fund's shares, Invesco Aim will cease to control AIM V.I. PowerShares ETF AllocationFund for the purposes of the 1940 Act.
MANAGEMENT OWNERSHIP
As of August 1, 2008, the trustees and officers as a group owned less than 1% of the shares outstanding of each class of any Fund.
APPENDIX G
PORTFOLIO MANAGERS
PORTFOLIO MANAGER FUND HOLDINGS AND INFORMATION ON OTHER MANAGED ACCOUNTS
Invesco Aim's portfolio managers develop investment models which are used in connection with the management of certain AIM Funds as well as other mutual funds for which Invesco Aim or an affiliate acts as sub-advisor, other pooled investment vehicles that are not registered mutual funds, and other accounts managed for organizations and individuals. The following chart reflects the portfolio managers' investments in the Funds that they manage. The chart also reflects information regarding accounts other than the Funds for which each portfolio manager has day-to-day management responsibilities. Accounts are grouped into three categories: (i) mutual funds, (ii) other pooled investment vehicles, and (iii) other accounts. To the extent that any of these accounts pay advisory fees that are based on account performance ("performance-based fees"), information on those accounts is specifically broken out. In addition, any assets denominated in foreign currencies have been converted into U.S. Dollars using the exchange rates as of the applicable date.
The following information is as of September 30, 2008:
OTHER REGISTERED MUTUAL OTHER POOLED INVESTMENT OTHER ACCOUNTS
FUNDS MANAGED VEHICLES MANAGED MANAGED
(ASSETS IN MILLIONS) (ASSETS IN MILLIONS) (ASSETS IN MILLIONS)
DOLLAR RANGE OF ----------------------- ----------------------- --------------------
PORTFOLIO INVESTMENTS IN EACH NUMBER OF NUMBER OF NUMBER OF
MANAGER FUND(1) ACCOUNTS ASSETS ACCOUNTS ASSETS ACCOUNTS ASSETS
------------ ------------------- ------------- -------- ------------ --------- ----------- -------
AIM V.I. POWERSHARES ETF ALLOCATION FUND
Mark Ahnrud
Chris Devine
Scott Hixon
Scott Wolle
|
POTENTIAL CONFLICTS OF INTEREST
Actual or apparent conflicts of interest may arise when a portfolio manager has day-to-day management responsibilities with respect to more than one Fund or other account. More specifically, portfolio managers who manage multiple Funds and/or other accounts may be presented with one or more of the following potential conflicts:
- The management of multiple Funds and/or other accounts may result in a portfolio manager devoting unequal time and attention to the management of each Fund and/or other account. The Advisor and each Sub-Advisor seek to manage such competing interests for the time and attention of portfolio
managers by having portfolio managers focus on a particular investment discipline. Most other accounts managed by a portfolio manager are managed using the same investment models that are used in connection with the management of the Funds.
- If a portfolio manager identifies a limited investment opportunity which may be suitable for more than one Fund or other account, a Fund may not be able to take full advantage of that opportunity due to an allocation of filled purchase or sale orders across all eligible Funds and other accounts. To deal with these situations, the Advisor, each Sub-Advisor and the Funds have adopted procedures for allocating portfolio transactions across multiple accounts.
- The Advisor and each Sub-Advisor determine which broker to use to execute each order for securities transactions for the Funds, consistent with its duty to seek best execution of the transaction. However, for certain other account (such as mutual funds for which Invesco Aim or an affiliate acts as sub-advisor, other pooled investment vehicles that are not registered mutual funds, and other accounts managed for organizations and individuals), the Advisor and each Sub-Advisor may be limited by the client with respect to the selection of brokers or may be instructed to direct trades through a particular broker. In these cases, trades for a Fund in a particular security may be placed separately from, rather than aggregated with, such other accounts. Having separate transactions with respect to a security may temporarily affect the market price of the security or the execution of the transaction, or both, to the possible detriment of the Fund or other account(s) involved.
- Finally, the appearance of a conflict of interest may arise where the Advisor or Sub-Advisor has an incentive, such as a performance-based management fee, which relates to the management of one Fund or account but not all Funds and accounts for which a portfolio manager has day-to-day management responsibilities.
The Advisor, each Sub-Advisor, and the Funds have adopted certain compliance procedures which are designed to address these types of conflicts. However, there is no guarantee that such procedures will detect each and every situation in which a conflict arises.
DESCRIPTION OF COMPENSATION STRUCTURE
For the Advisor and each affiliated Sub-Advisor
The Advisor and each Sub-Advisor seek to maintain a compensation program that is competitively positioned to attract and retain high-caliber investment professionals. Portfolio managers receive a base salary, an incentive bonus opportunity, and an equity compensation opportunity. Portfolio manager compensation is reviewed and may be modified each year as appropriate to reflect changes in the market, as well as to adjust the factors used to determine bonuses to promote competitive fund performance. The Advisor and each Sub-Advisor evaluate competitive market compensation by reviewing compensation survey results conducted by an independent third party of investment industry compensation. Each portfolio manager's compensation consists of the following three elements:
Base Salary. Each portfolio manager is paid a base salary. In setting the base salary, the Advisor and each Sub-Advisor's intention is to be competitive in light of the particular portfolio manager's experience and responsibilities.
Annual Bonus. The portfolio managers are eligible, along with other employees of the Advisor and each Sub-Advisor, to participate in a discretionary year-end bonus pool. The Compensation Committee of Invesco reviews and approves the amount of the bonus pool available for the Advisor and each of the Sub-Advisor's investment centers. The Compensation Committee considers investment performance and financial results in its review. In addition, while having no direct impact on individual bonuses, assets under management are considered when determining the starting bonus funding levels. Each portfolio manager is eligible to receive an annual cash bonus which is based on quantitative (i.e.
investment performance) and non-quantitative factors (which may include, but are not limited to, individual performance, risk management and teamwork).
Each portfolio manager's compensation is linked to the pre-tax investment performance of the funds/accounts managed by the portfolio manager as described in Table 1 below.
Table 1
SUB-ADVISOR PERFORMANCE TIME PERIOD(2)
------------------------------------------------------- -----------------------------------------------------------------------
Invesco Aim Four-year average performance against Fund peer group
Invesco Institutional (Except Invesco Real Estate U.S.) One-, Three- and Five-year performance against Fund peer group.
Invesco Global
Invesco Australia
Invesco Deutschland
Invesco Institutional - Invesco Real Estate U.S. N/A
Invesco Senior Secured N/A
AFMI One-year performance against Fund peer group.
Three- and Five-year performance against entire universe of Canadian
funds.
Invesco Hong Kong One- and Three-year performance against Fund peer group.
Invesco Asset Management
Invesco Japan One-, Three- and Five-year performance against the appropriate Micropol
benchmark.
|
Invesco Institutional - Invesco Real Estate U.S.'s bonus is based on net operating profits of Invesco Institutional - Invesco Real Estate U.S.
Invesco Senior Secured's bonus is based on annual measures of equity return and standard tests of collateralization performance.
High investment performance (against applicable peer group) would deliver compensation generally associated with top pay in the industry (determined by reference to the third-party provided compensation survey information) and poor investment performance (versus applicable peer group) would result in low bonus compared to the applicable peer group or no bonus at all. These decisions are reviewed and approved collectively by senior leadership which has responsibility for executing the compensation approach across the organization.
Equity-Based Compensation. Portfolio managers may be awarded options to purchase common shares and/or granted restricted shares of Invesco stock from pools determined from time to time by the
Compensation Committee of Invesco's Board of Directors. Awards of equity-based compensation typically vest over time, so as to create incentives to retain key talent.
Portfolio managers also participate in benefit plans and programs available generally to all employees.
APPENDIX H
DIRECTED BROKERAGE (RESEARCH SERVICES) AND PURCHASES OF
SECURITIES OF REGULAR BROKERS OR DEALERS
When available, the Fund will allocate the following amount of transactions to broker-dealers that provide Invesco Aim with certain research, statistics and other information:
Related
Fund Transactions* Brokerage Commissions*
---- ------------- ----------------------
AIM V.I. Power Shares ETF Allocation Fund $ N/A $ N/A
|
* Amounts reported are inclusive of commissions paid to, and brokerage transactions placed with, certain brokers that provide execution, research and other services.
APPENDIX I
CERTAIN FINANCIAL ADVISORS THAT RECEIVE ONE OR MORE TYPES OF PAYMENTS
1st Global Capital Corporation
A G Edwards & Sons, Inc.
ADP Broker Dealer, Inc.
Advantage Capital Corporation
American General Securities, Inc.
American Skandia Life Assurance Corporation
American United Life Insurance Company
Ameriprise Financial Services, Inc.
APS Financial
Associated Securities Corporation
AXA Advisors, LLC
Bank of New York
Bank of Oklahoma N.A.
BBVA Investments
Bear Stearns Securities Co
Brown Brothers Harriman
Cadaret Grant & Company, Inc.
Cambridge Investment Research, Inc.
Cantella
Cantor Fitzgerald
Centennial Bank
Charles Schwab & Company, Inc.
Chase Investment Services Corporation
Chicago Mercantile Exchange
Citigroup
CitiCorp Investment Services
Citigroup Global Markets, Inc.
Citistreet Equities LLC
Comerica Bank
Commonwealth Financial Network
Compass Brokerage, Inc.
Contemporary Financial Solutions, Inc.
Credit Suisse
CUNA Brokerage Services, Inc.
CUSO Financial Services, Inc.
Equity Services, Inc.
Fidelity Brokerage Services, LLC
Fidelity Institutional Operations Company, Inc.
Fifth Third Bank
Financial Network Investment Corporation
Fiserv
Frost Brokerage Services, Inc.
Frost National Bank
FSC Securities Corporation
Fund Services Advisors
Goldman Sachs
Great West Life & Annuity Company
Guaranty Bank & Trust
Guardian Insurance & Annuity Company, Inc.
GunnAllen Finanical
Harris Nesbitt Burns
H. D. Vest Investment Securities, Inc.
Hilliard Lyons, Inc.
Hornor Townsend & Kent, Inc.
Huntington
ING Financial Partners, Inc.
ING USA Annuity and Life Insurance Company
Intersecurities, Inc.
INVEST Financial Corporation, Inc.
Investment Centers of America, Inc.
Jefferson Pilot Securities Corporation
JM Lummis Securities
JP Morgan Chase
LaSalle
Lincoln Financial Advisors Corporation
Lincoln Investment Planning, Inc.
Linsco/Private Ledger Corporation
M & I Trust
M & T Securities, Inc.
M M L Investors Services, Inc.
Matrix
McDonald Investments, Inc.
Mellon Financial
Merrill Lynch & Company, Inc.
Merrill Lynch Life Insurance Company
Metlife Securities, Inc.
Meyer Financial Group
Money Concepts Capital Corporation
Morgan Keegan & Company, Inc.
Morgan Stanley
Morgan Stanley DW Inc.
Multi-Financial Securities Corporation
Mutual Service Corporation
N F P Securities, Inc.
NatCity Investments, Inc.
National Planning Corporation
Nationwide Investment Services Corporation
New England Securities Corporation
Next Financial Group, Inc.
Northwestern Mutual Investment Services
NYLIFE Distributors, LLC
Oppenheimer & Company, Inc.
Pershing LLC
PFS Investments, Inc.
Piper Jaffray & Company
PNC Capital Markets
Primevest Financial Services, Inc.
Proequities, Inc.
R B C Centura Securities, Inc.
R B C Dain Rauscher, Inc.
Raymond James & Associates, Inc.
Raymond James Financial Services, Inc.
Ross Sinclair and Associates
Royal Alliance Associates, Inc.
SCF Securities
S I I Investments, Inc.
Securities America, Inc.
Sentra Securities Corporation
Signator Investors, Inc.
Simmons 1st Investment Group
Spelman & Company, Inc.
State Farm VP Management Corp
State Street Bank & Trust Company
SunAmerica Securities, Inc.
SunGard Institutional Brokerage, Inc.
Sungard Investment Products, Inc.
SunTrust Bank, Central Florida, N.A.
SunTrust Robinson Humphrey
SWS Financial Services
The (Wilson) William Financial
Tower Square Securities, Inc.
Transamerica Financial Advisors, Inc.
Transamerica Life Insurance & Annuity Company
Trust Management Network
U.S. Bancorp Investments, Inc.
UBS Financial Services Inc.
Union Bank of California
United Planner Financial Service
USAllianz Securities, Inc.
US Bank
UVEST Financial Services, Inc.
V S R Financial Services, Inc.
VALIC Financial Advisors, Inc.
vFinance Investments
Wachovia Capital Markets LLC
Wachovia Securities, LLC
Walnut Street Securities, Inc.
Waterstone Financial Group, Inc.
Wells Fargo Investments, LLC
Woodbury Financial Services, Inc.
X C U Capital Corporation, Inc.
Zions Bank
APPENDIX J-1
PENDING LITIGATION ALLEGING MARKET TIMING
The following civil lawsuits, including purported class action and shareholder derivative suits, involve, depending on the lawsuit, one or more AIM Funds, IFG, Invesco Aim, Invesco Aim Management and Invesco, certain related entities, certain of their current and former officers and/or certain unrelated third parties and are based on allegations of improper market timing and related activity in the AIM Funds. These lawsuits either have been served or have had service of process waived (with the exception of the Sayegh lawsuit discussed below).
RICHARD LEPERA, ON BEHALF OF HIMSELF AND ALL OTHERS SIMILARLY SITUATED, V.
INVESCO FUNDS GROUP, INC., INVESCO STOCK FUNDS, INC., INVESCO BOND FUNDS,
INC., INVESCO SECTOR FUNDS, INC. AND DOE DEFENDANTS 1-100, in the District
Court, City and County of Denver, Colorado, (Civil Action No. 03-CV-7600),
filed on October 2, 2003. This claim alleges: common law breach of
fiduciary duty; common law breach of contract; and common law tortious
interference with contract. The plaintiff in this case is seeking:
compensatory and punitive damages; injunctive relief; disgorgement of
revenues and profits; and costs and expenses, including counsel fees and
expert fees.
MIKE SAYEGH, ON BEHALF OF THE GENERAL PUBLIC, V. JANUS CAPITAL CORPORATION,
JANUS CAPITAL MANAGEMENT LLC, JANUS INVESTMENT FUND, EDWARD J. STERN,
CANARY CAPITAL PARTNERS LLC, CANARY INVESTMENT MANAGEMENT LLC, CANARY
CAPITAL PARTNERS LTD., KAPLAN & CO. SECURITIES INC., BANK ONE CORPORATION,
BANC ONE INVESTMENT ADVISORS, THE ONE GROUP MUTUAL FUNDS, BANK OF AMERICA
CORPORATION, BANC OF AMERICA CAPITAL MANAGEMENT LLC, BANC OF AMERICA
ADVISORS LLC, NATIONS FUND INC., ROBERT H. GORDON, THEODORE H. SIHPOL III,
CHARLES D. BRYCELAND, SECURITY TRUST COMPANY, STRONG CAPITAL MANAGEMENT
INC., JB OXFORD & COMPANY, ALLIANCE CAPITAL MANAGEMENT HOLDING L.P.,
ALLIANCE CAPITAL MANAGEMENT L.P., ALLIANCE CAPITAL MANAGEMENT CORPORATION,
AXA FINANCIAL INC., ALLIANCEBERNSTEIN REGISTRANTS, GERALD MALONE, CHARLES
SCHAFFRAN, MARSH & MCLENNAN COMPANIES, INC., PUTNAM INVESTMENTS TRUST,
PUTNAM INVESTMENT MANAGEMENT LLC, PUTNAM INVESTMENT FUNDS, AND DOES 1-500,
in the Superior Court of the State of California, County of Los Angeles
(Case No. BC304655), filed on October 22, 2003 and amended on December 17,
2003 to substitute INVESCO Funds Group, Inc. and Raymond R. Cunningham for
unnamed Doe defendants. This claim alleges unfair business practices and
violations of Sections 17200 and 17203 of the California Business and
Professions Code. The plaintiff in this case is seeking: injunctive relief;
restitution, including pre-judgment interest; an accounting to determine
the amount to be returned by the defendants and the amount to be refunded
to the public; the creation of an administrative process whereby injured
customers of the defendants receive their losses; and counsel fees.
RAJ SANYAL, DERIVATIVELY ON BEHALF OF NATIONS INTERNATIONAL EQUITY FUND, V. WILLIAM P. CARMICHAEL, WILLIAM H. GRIGG, THOMAS F. KELLER, CARL E. MUNDY, JR., CORNELIUS J. PINGS, A. MAX WALKER, CHARLES B. WALKER, EDMUND L. BENSON, III, ROBERT H. GORDON, JAMES B. SOMMERS, THOMAS S. WORD, JR., EDWARD D. BEDARD, GERALD MURPHY, ROBERT B. CARROLL, INVESCO GLOBAL ASSET
MANAGEMENT, PUTNAM INVESTMENT MANAGEMENT, BANK OF AMERICA CORPORATION,
MARSICO CAPITAL MANAGEMENT, LLC, BANC OF AMERICA ADVISORS, LLC, BANC OF
AMERICA CAPITAL MANAGEMENT, LLC, AND NATIONS FUNDS TRUST, in the Superior
Court Division,
State of North Carolina (Civil Action No. 03-CVS-19622), filed on November 14, 2003. This claim alleges common law breach of fiduciary duty; abuse of control; gross mismanagement; waste of fund assets; and unjust enrichment. The plaintiff in this case is seeking: injunctive relief, including imposition of a constructive trust; damages; restitution and disgorgement; and costs and expenses, including counsel fees and expert fees.
L. SCOTT KARLIN, DERIVATIVELY ON BEHALF OF INVESCO FUNDS GROUP, INC. V.
AMVESCAP, PLC, INVESCO, INC., CANARY CAPITAL PARTNERS, LLC, CANARY
INVESTMENT MANAGEMENT, LLC, AND CANARY CAPITAL PARTNERS, LTD., in the
United States District Court, District of Colorado (Civil Action No.
03-MK-2406), filed on November 28, 2003. This claim alleges violations of
Section 36(b) of the Investment Company Act of 1940 ("Investment Company
Act"), and common law breach of fiduciary duty. The plaintiff in this case
is seeking damages and costs and expenses, including counsel fees and
expert fees.
RICHARD RAVER, INDIVIDUALLY AND ON BEHALF OF ALL OTHERS SIMILARLY SITUATED,
V. INVESCO FUNDS GROUP, INC., INVESCO STOCK FUNDS, INC, AIM MANAGEMENT
GROUP, INC., AIM STOCK FUNDS, AIM STOCK FUNDS, INC., AMVESCAP PLC, INVESCO
ADVANTAGE HEALTH SCIENCES FUND, INVESCO CORE EQUITY FUND, INVESCO DYNAMICS
FUND, INVESCO ENERGY FUND, INVESCO FINANCIAL SERVICES FUND, INVESCO GOLD &
PRECIOUS METALS FUND, INVESCO HEALTH SCIENCES FUND, INVESCO INTERNATIONAL
CORE EQUITY FUND, INVESCO LEISURE FUND, INVESCO MID-CAP GROWTH FUND,
INVESCO MULTI-SECTOR FUND, INVESCO S&P 500 INDEX FUND, INVESCO SMALL
COMPANY GROWTH FUND, INVESCO TECHNOLOGY FUND, INVESCO TOTAL RETURN FUND,
INVESCO UTILITIES FUND, INVESCO ADVANTAGE FUND, INVESCO BALANCED FUND,
INVESCO EUROPEAN FUND, INVESCO GROWTH FUND, INVESCO HIGH YIELD FUND,
INVESCO GROWTH & INCOME FUND, INVESCO INTERNATIONAL BLUE CHIP VALUE FUND,
INVESCO REAL ESTATE OPPORTUNITY FUND, INVESCO SELECT FUND, INVESCO TAX-FREE
BOND FUND, INVESCO TELECOMMUNICATIONS FUND, INVESCO U.S. GOVERNMENT
SECURITIES FUND, INVESCO VALUE FUND, EDWARD J. STERN, CANARY INVESTMENT
MANAGEMENT, LLC, CANARY CAPITAL PARTNERS, LTD., CANARY CAPITAL PARTNERS,
LLC, AND DOES 1-100, in the United States District Court, District of
Colorado (Civil Action No. 03-F-2441), filed on December 2, 2003. This
claim alleges violations of: Sections 11 and 15 of the Securities Act of
1933 (the "Securities Act"); Sections 10(b) and 20(a) of the Securities
Exchange Act of 1934 (the "Exchange Act"); Rule 10b-5 under the Exchange
Act; and Sections 34(b), 36(a) and 36(b) of the Investment Company Act. The
claim also alleges common law breach of fiduciary duty. The plaintiffs in
this case are seeking: damages; pre-judgment and post-judgment interest;
counsel fees and expert fees; and other relief.
JERRY FATTAH, CUSTODIAN FOR BASIM FATTAH, INDIVIDUALLY AND ON BEHALF OF ALL OTHERS SIMILARLY SITUATED, V. INVESCO ADVANTAGE HEALTH SCIENCES FUND, INVESCO CORE EQUITY FUND, INVESCO DYNAMICS FUND, INVESCO ENERGY FUND, INVESCO FINANCIAL SERVICES FUND, INVESCO GOLD & PRECIOUS METALS FUND, INVESCO HEALTH SCIENCES FUND, INVESCO INTERNATIONAL CORE EQUITY FUND (FORMERLY KNOWN AS INTERNATIONAL BLUE CHIP VALUE FUND), INVESCO LEISURE FUND, INVESCO MID-CAP GROWTH FUND, INVESCO MULTI-SECTOR FUND, AIM INVESCO S&P 500 INDEX FUND, INVESCO SMALL COMPANY GROWTH FUND, INVESCO TECHNOLOGY FUND, INVESCO TOTAL RETURN FUND, INVESCO UTILITIES FUND, AIM MONEY MARKET FUND, AIM INVESCO TAX-FREE MONEY FUND, AIM INVESCO TREASURER'S MONEY MARKET RESERVE FUND, AIM INVESCO TREASURER'S TAX-EXEMPT RESERVE FUND, AIM INVESCO U.S. GOVERNMENT MONEY FUND, INVESCO ADVANTAGE
FUND, INVESCO BALANCED FUND, INVESCO EUROPEAN FUND, INVESCO GROWTH FUND,
INVESCO HIGH YIELD FUND, INVESCO GROWTH & INCOME FUND, INVESCO REAL ESTATE
OPPORTUNITY FUND, INVESCO SELECT INCOME FUND, INVESCO TAX-FREE BOND FUND,
INVESCO TELECOMMUNICATIONS FUND, INVESCO U.S. GOVERNMENT SECURITIES FUND,
INVESCO VALUE FUND, INVESCO, INVESCO LATIN AMERICAN GROWTH FUND
(COLLECTIVELY KNOWN AS THE "INVESCO FUNDS"), AIM STOCK FUNDS, AIM COUNSELOR
SERIES TRUST, AIM SECTOR FUNDS INC., AIM BOND FUNDS INC., AIM COMBINATION
STOCK AND BOND FUNDS INC., AIM MONEY MARKET FUNDS INC., AIM INTERNATIONAL
FUNDS INC. (COLLECTIVELY KNOWN AS THE "INVESCO FUNDS REGISTRANTS"),
AMVESCAP PLC, INVESCO FUNDS GROUP INC., TIMOTHY MILLER, RAYMOND CUNNINGHAM,
THOMAS KOLBE, EDWARD STERN, AMERICAN SKANDIA INC., BREAN MURRAY & CO.,
INC., CANARY CAPITAL PARTNERS, LLC, CANARY INVESTMENT MANAGEMENT, LLC,
CANARY CAPITAL PARTNERS, LTD., AND JOHN DOES 1-100, in the United States
District Court, District of Colorado (Civil Action No. 03-F-2456), filed on
December 4, 2003. This claim alleges violations of: Sections 11 and 15 of
Securities Act; Sections 10(b) and 20(a) of the Exchange Act; Rule 10b-5
under the Exchange Act; and Section 206 of the Investment Advisers Act of
1940, as amended (the "Advisers Act"). The plaintiffs in this case are
seeking: compensatory damages; rescission; return of fees paid; accounting
for wrongfully gotten gains, profits and compensation; restitution and
disgorgement; and other costs and expenses, including counsel fees and
expert fees.
EDWARD LOWINGER AND SHARON LOWINGER, INDIVIDUALLY AND ON BEHALF OF ALL
OTHERS SIMILARLY SITUATED, V. INVESCO ADVANTAGE HEALTH SCIENCES FUND,
INVESCO CORE EQUITY FUND, INVESCO DYNAMICS FUND, INVESCO ENERGY FUND,
INVESCO FINANCIAL SERVICES FUND, INVESCO GOLD & PRECIOUS METALS FUND,
INVESCO HEALTH SCIENCES FUND, INVESCO INTERNATIONAL CORE EQUITY FUND
(FORMERLY KNOWN AS INTERNATIONAL BLUE CHIP VALUE FUND), INVESCO LEISURE
FUND, INVESCO MID-CAP GROWTH FUND, INVESCO MULTI-SECTOR FUND, AIM INVESCO
S&P 500 INDEX FUND, INVESCO SMALL COMPANY GROWTH FUND, INVESCO TECHNOLOGY
FUND, INVESCO TOTAL RETURN FUND, INVESCO UTILITIES FUND, AIM MONEY MARKET
FUND, AIM INVESCO TAX-FREE MONEY FUND, AIM INVESCO TREASURER'S MONEY MARKET
RESERVE FUND, AIM INVESCO TREASURER'S TAX-EXEMPT RESERVE FUND, AIM INVESCO
U.S. GOVERNMENT MONEY FUND, INVESCO ADVANTAGE FUND, INVESCO BALANCED FUND,
INVESCO EUROPEAN FUND, INVESCO GROWTH FUND, INVESCO HIGH-YIELD FUND,
INVESCO GROWTH & INCOME FUND, INVESCO REAL ESTATE OPPORTUNITY FUND, INVESCO
SELECT INCOME FUND, INVESCO TAX-FREE BOND FUND, INVESCO TELECOMMUNICATIONS
FUND, INVESCO U.S. GOVERNMENT SECURITIES FUND, INVESCO VALUE FUND, INVESCO;
INVESCO LATIN AMERICAN GROWTH FUND (COLLECTIVELY KNOWN AS THE "INVESCO
FUNDS"), AIM STOCK FUNDS, AIM COUNSELOR SERIES TRUST, AIM SECTOR FUNDS
INC., AIM BOND FUNDS INC., AIM COMBINATION STOCK AND BOND FUNDS INC., AIM
MONEY MARKET FUNDS INC., AIM INTERNATIONAL FUNDS INC. (COLLECTIVELY KNOWN
AS THE "INVESCO FUNDS REGISTRANTS"), AMVESCAP PLC, INVESCO FUNDS GROUP,
INC., TIMOTHY MILLER, RAYMOND CUNNINGHAM, THOMAS KOLBE, EDWARD J. STERN,
AMERICAN SKANDIA INC., BREAN MURRAY & CO., INC., CANARY CAPITAL PARTNERS,
LLC, CANARY INVESTMENT MANAGEMENT, LLC, CANARY CAPITAL PARTNERS, LTD., AND
JOHN DOES 1-100, in the United States District Court, Southern District of
New York (Civil Action No. 03-CV-9634), filed on December 4, 2003. This
claim alleges violations of: Sections 11 and 15 of the Securities Act;
Sections 10(b) and 20(a) of the Exchange Act; Rule 10b-5 under the Exchange
Act; and Section 206 of the Advisers Act. The plaintiffs in this case are
seeking: compensatory damages; rescission; return of fees
paid; accounting for wrongfully gotten gains, profits and compensation; restitution and disgorgement; and other costs and expenses, including counsel fees and expert fees.
JOEL GOODMAN, INDIVIDUALLY AND ON BEHALF OF ALL OTHERS SIMILARLY SITUATED,
V. INVESCO FUNDS GROUP, INC. AND RAYMOND R. CUNNINGHAM, in the District
Court, City and County of Denver, Colorado (Case Number 03CV9268), filed on
December 5, 2003. This claim alleges common law breach of fiduciary duty
and aiding and abetting breach of fiduciary duty. The plaintiffs in this
case are seeking: injunctive relief; accounting for all damages and for all
profits and any special benefits obtained; disgorgement; restitution and
damages; costs and disbursements, including counsel fees and expert fees;
and equitable relief.
STEVEN B. EHRLICH, CUSTODIAN FOR ALEXA P. EHRLICH, UGTMA/FLORIDA, AND DENNY
P. JACOBSON, INDIVIDUALLY AND ON BEHALF OF ALL OTHERS SIMILARLY SITUATED,
V. INVESCO ADVANTAGE HEALTH SCIENCES FUND, INVESCO CORE EQUITY FUND,
INVESCO DYNAMICS FUND, INVESCO ENERGY FUND, INVESCO FINANCIAL SERVICES
FUND, INVESCO GOLD & PRECIOUS METALS FUND, INVESCO HEALTH SCIENCES FUND,
INVESCO INTERNATIONAL CORE EQUITY FUND (FORMERLY KNOWN AS INTERNATIONAL
BLUE CHIP VALUE FUND), INVESCO LEISURE FUND, INVESCO MID-CAP GROWTH FUND,
INVESCO MULTI-SECTOR FUND, AIM INVESCO S&P 500 INDEX FUND, INVESCO SMALL
COMPANY GROWTH FUND, INVESCO TECHNOLOGY FUND, INVESCO TOTAL RETURN FUND,
INVESCO UTILITIES FUND, AIM MONEY MARKET FUND, AIM INVESCO TAX-FREE MONEY
FUND, AIM INVESCO TREASURERS MONEY MARKET RESERVE FUND, AIM INVESCO
TREASURERS TAX-EXEMPT RESERVE FUND, AIM INVESCO US GOVERNMENT MONEY FUND,
INVESCO ADVANTAGE FUND, INVESCO BALANCED FUND, INVESCO EUROPEAN FUND,
INVESCO GROWTH FUND, INVESCO HIGH-YIELD FUND, INVESCO GROWTH & INCOME FUND,
INVESCO REAL ESTATE OPPORTUNITY FUND, INVESCO SELECT INCOME FUND, INVESCO
TAX-FREE BOND FUND, INVESCO TELECOMMUNICATIONS FUND, INVESCO U.S.
GOVERNMENT SECURITIES FUND, INVESCO VALUE FUND, INVESCO LATIN AMERICAN
GROWTH FUND (COLLECTIVELY KNOWN AS THE "INVESCO FUNDS"), AIM STOCK FUNDS,
AIM COUNSELOR SERIES TRUST, AIM SECTOR FUNDS INC., AIM BOND FUNDS INC., AIM
COMBINATION STOCK AND BOND FUNDS INC., AIM MONEY MARKET FUNDS INC., AIM
INTERNATIONAL FUNDS INC. (COLLECTIVELY KNOWN AS THE "INVESCO FUNDS
REGISTRANTS"), AMVESCAP PLC, INVESCO FUNDS GROUP, INC., TIMOTHY MILLER,
RAYMOND CUNNINGHAM, THOMAS KOLBE, EDWARD J. STERN, AMERICAN SKANDIA INC.,
BREAN MURRAY & CO., INC., CANARY CAPITAL PARTNERS, LLC, CANARY INVESTMENT
MANAGEMENT, LLC, CANARY CAPITAL PARTNERS, LTD., AND JOHN DOES 1-100, in the
United States District Court, District of Colorado (Civil Action No.
03-N-2559), filed on December 17, 2003. This claim alleges violations of:
Sections 11 and 15 of the Securities Act; Sections 10(b) and 20(a) of the
Exchange Act; Rule 10b-5 under the Exchange Act; and Section 206 of the
Advisers Act. The plaintiffs in this case are seeking: compensatory
damages; rescission; return of fees paid; accounting for wrongfully gotten
gains, profits and compensation; restitution and disgorgement; and other
costs and expenses, including counsel fees and expert fees.
JOSEPH R. RUSSO, INDIVIDUALLY AND ON BEHALF OF ALL OTHERS SIMILARLY SITUATED, V. INVESCO ADVANTAGE HEALTH SCIENCES FUND, INVESCO CORE EQUITY FUND, INVESCO DYNAMICS FUND, INVESCO ENERGY FUND, INVESCO FINANCIAL SERVICES FUND, INVESCO GOLD & PRECIOUS METALS FUND, INVESCO HEALTH SCIENCES FUND, INVESCO INTERNATIONAL CORE EQUITY FUND (FORMERLY KNOWN AS INTERNATIONAL BLUE CHIP VALUE FUND), INVESCO LEISURE FUND, INVESCO MID-CAP GROWTH FUND, INVESCO MULTI-SECTOR FUND, AIM INVESCO S&P 500 INDEX FUND, INVESCO SMALL COMPANY
GROWTH FUND, INVESCO TECHNOLOGY FUND, INVESCO TOTAL RETURN FUND, INVESCO
UTILITIES FUND, AIM MONEY MARKET FUND, AIM INVESCO TAX-FREE MONEY FUND, AIM
INVESCO TREASURERS MONEY MARKET RESERVE FUND, AIM INVESCO TREASURERS
TAX-EXEMPT RESERVE FUND, AIM INVESCO US GOVERNMENT MONEY FUND, INVESCO
ADVANTAGE FUND, INVESCO BALANCED FUND, INVESCO EUROPEAN FUND, INVESCO
GROWTH FUND, INVESCO HIGH-YIELD FUND, INVESCO GROWTH & INCOME FUND, INVESCO
REAL ESTATE OPPORTUNITY FUND, INVESCO SELECT INCOME FUND, INVESCO TAX-FREE
BOND FUND, INVESCO TELECOMMUNICATIONS FUND, INVESCO U.S. GOVERNMENT
SECURITIES FUND, INVESCO VALUE FUND, INVESCO LATIN AMERICAN GROWTH FUND
(COLLECTIVELY KNOWN AS THE "INVESCO FUNDS"), AIM STOCK FUNDS, AIM COUNSELOR
SERIES TRUST, AIM SECTOR FUNDS INC., AIM BOND FUNDS INC., AIM COMBINATION
STOCK AND BOND FUNDS INC., AIM MONEY MARKET FUNDS INC., AIM INTERNATIONAL
FUNDS INC. (COLLECTIVELY KNOWN AS THE "INVESCO FUNDS REGISTRANTS"),
AMVESCAP PLC, INVESCO FUNDS GROUP, INC., TIMOTHY MILLER, RAYMOND
CUNNINGHAM, THOMAS KOLBE, EDWARD J. STERN, AMERICAN SKANDIA INC., BREAN
MURRAY & CO., INC., CANARY CAPITAL PARTNERS, LLC, CANARY INVESTMENT
MANAGEMENT, LLC, CANARY CAPITAL PARTNERS, LTD., AND JOHN DOES 1-100, in the
United States District Court, Southern District of New York (Civil Action
No. 03-CV-10045), filed on December 18, 2003. This claim alleges violations
of: Sections 11 and 15 of the Securities Act; Sections 10(b) and 20(a) of
the Exchange Act; Rule 10b-5 under the Exchange Act; and Section 206 of the
Advisers Act. The plaintiffs in this case are seeking: compensatory
damages; rescission; return of fees paid; accounting for wrongfully gotten
gains, profits and compensation; restitution and disgorgement; and other
costs and expenses, including counsel fees and expert fees.
MIRIAM CALDERON, INDIVIDUALLY AND ON BEHALF OF ALL OTHERS SIMILARLY
SITUATED, V. AMVESCAP PLC, AVZ, INC., AMVESCAP RETIREMENT, INC., AMVESCAP
NATIONAL TRUST COMPANY, ROBERT F. MCCULLOUGH, GORDON NEBEKER, JEFFREY G.
CALLAHAN, INVESCO FUNDS GROUP, INC., RAYMOND R. CUNNINGHAM, AND DOES 1-100,
in the United States District Court, District of Colorado (Civil Action No.
03-M-2604), filed on December 24, 2003. This claim alleges violations of
Sections 404, 405 and 406B of the Employee Retirement Income Security Act
("ERISA"). The plaintiffs in this case are seeking: declarations that the
defendants breached their ERISA fiduciary duties and that they are not
entitled to the protection of Section 404(c)(1)(B) of ERISA; an order
compelling the defendants to make good all losses to a particular
retirement plan described in this case (the "Retirement Plan") resulting
from the defendants' breaches of their fiduciary duties, including losses
to the Retirement Plan resulting from imprudent investment of the
Retirement Plan's assets, and to restore to the Retirement Plan all profits
the defendants made through use of the Retirement Plan's assets, and to
restore to the Retirement Plan all profits which the participants would
have made if the defendants had fulfilled their fiduciary obligations;
damages on behalf of the Retirement Plan; imposition of a constructive
trust, injunctive relief, damages suffered by the Retirement Plan, to be
allocated proportionately to the participants in the Retirement Plan;
restitution and other costs and expenses, including counsel fees and expert
fees.
PAT B. GORSUCH AND GEORGE L. GORSUCH V. INVESCO FUNDS GROUP, INC. AND AIM
ADVISER, INC., in the United States District Court, District of Colorado
(Civil Action No. 03-MK-2612), filed on December 24, 2003. This claim
alleges violations of Sections 15(a), 20(a) and 36(b) of the Investment
Company Act. The plaintiffs in this case are seeking: rescission and/or
voiding of the investment advisory agreements; return of fees paid;
damages; and other costs and expenses, including counsel fees and expert
fees.
LORI WEINRIB, INDIVIDUALLY AND ON BEHALF OF ALL OTHERS SIMILARLY SITUATED,
V. INVESCO FUNDS GROUP, INC., AIM STOCK FUNDS, AIM COUNSELOR SERIES TRUST,
AIM SECTOR FUNDS INC., AIM BOND FUNDS INC., AIM COMBINATION STOCK AND BOND
FUNDS INC., AIM MONEY MARKET FUNDS INC., AIM INTERNATIONAL FUNDS INC.,
AMVESCAP PLC, TIMOTHY MILLER, RAYMOND CUNNINGHAM, THOMAS KOLBE, EDWARD J.
STERN, AMERICAN SKANDIA INC., BREAN MURRAY & CO., INC., CANARY CAPITAL
PARTNERS, LLC, CANARY INVESTMENT MANAGEMENT, LLC, CANARY CAPITAL PARTNERS,
LTD., AND JOHN DOES 1-100, in the United States District Court, Southern
District of New York (Civil Action No. 04-CV-00492), filed on January 21,
2004. This claim alleges violations of: Sections 11 and 15 of the 1933 Act;
Sections 10(b) and 20(a) of the Exchange Act; Rule 10b-5 under the Exchange
Act; and Section 206 of the Advisers Act. The plaintiffs in this case are
seeking: compensatory damages; rescission; return of fees paid; accounting
for wrongfully gotten gains, profits and compensation; restitution and
disgorgement; and other costs and expenses, including counsel fees and
expert fees.
ROBERT S. BALLAGH, JR., INDIVIDUALLY AND ON BEHALF OF ALL OTHERS SIMILARLY
SITUATED, V. INVESCO FUNDS GROUP, INC., INVESCO STOCK FUNDS, INC., AIM
MANAGEMENT GROUP, INC., AIM STOCK FUNDS, AIM STOCK FUNDS, INC., AMVESCAP
PLC, INVESCO ADVANTAGE HEALTH SCIENCES FUND, INVESCO CORE EQUITY FUND,
INVESCO DYNAMICS FUND, INVESCO ENERGY FUND, INVESCO FINANCIAL SERVICES
FUND, INVESCO GOLD & PRECIOUS METALS FUND, INVESCO HEALTH SCIENCES FUND,
INVESCO INTERNATIONAL CORE EQUITY FUND, INVESCO LEISURE FUND, INVESCO
MID-CAP GROWTH FUND, INVESCO MULTI-SECTOR FUND, INVESCO S&P 500 INDEX FUND,
INVESCO SMALL COMPANY GROWTH FUND, INVESCO TECHNOLOGY FUND, INVESCO TOTAL
RETURN FUND, INVESCO UTILITIES FUND, INVESCO ADVANTAGE FUND, INVESCO
BALANCED FUND, INVESCO EUROPEAN FUND, INVESCO GROWTH FUND, INVESCO HIGH
YIELD FUND, INVESCO GROWTH & INCOME FUND, INVESCO INTERNATIONAL BLUE CHIP
VALUE FUND, INVESCO REAL ESTATE OPPORTUNITY FUND, INVESCO SELECT FUND,
INVESCO TAX-FREE BOND FUND, INVESCO TELECOMMUNICATIONS FUND, INVESCO U.S.
GOVERNMENT SECURITIES FUND, INVESCO VALUE FUND, EDWARD J. STERN, CANARY
INVESTMENT MANAGEMENT, LLC, CANARY CAPITAL PARTNERS, LTD., CANARY CAPITAL
PARTNERS, LLC, AND DOES 1-100, in the United States District Court,
District of Colorado (Civil Action No. 04-MK-0152), filed on January 28,
2004. This claim alleges violations of: Sections 11 and 15 of the
Securities Act; Sections 10(b) and 20(a) of the Exchange Act; Rule 10b-5
under the Exchange Act; and Sections 34(b), 36(a) and 36(b) of the
Investment Company Act. The claim also alleges common law breach of
fiduciary duty. The plaintiffs in this case are seeking: damages;
pre-judgment and post-judgment interest; counsel fees and expert fees; and
other relief.
JONATHAN GALLO, INDIVIDUALLY AND ON BEHALF OF ALL OTHERS SIMILARLY SITUATED, V. INVESCO FUNDS GROUP, INC., INVESCO STOCK FUNDS, INC., AIM MANAGEMENT GROUP, INC., AIM STOCK FUNDS, AIM STOCK FUNDS, INC., AMVESCAP PLC, INVESCO ADVANTAGE HEALTH SCIENCES FUND, INVESCO CORE EQUITY FUND, INVESCO DYNAMICS FUND, INVESCO ENERGY FUND, INVESCO FINANCIAL SERVICES FUND, INVESCO GOLD & PRECIOUS METALS FUND, INVESCO HEALTH SCIENCES FUND, INVESCO INTERNATIONAL CORE EQUITY FUND, INVESCO LEISURE FUND, INVESCO MID-CAP GROWTH FUND, INVESCO MULTI-SECTOR FUND, INVESCO S&P 500 INDEX FUND, INVESCO SMALL COMPANY GROWTH FUND, INVESCO TECHNOLOGY FUND, INVESCO TOTAL RETURN FUND, INVESCO UTILITIES FUND, INVESCO ADVANTAGE FUND, INVESCO BALANCED FUND, INVESCO EUROPEAN FUND, INVESCO GROWTH FUND, INVESCO HIGH YIELD FUND, INVESCO GROWTH & INCOME FUND, INVESCO INTERNATIONAL BLUE CHIP VALUE FUND, INVESCO REAL ESTATE
OPPORTUNITY FUND, INVESCO SELECT FUND, INVESCO TAX-FREE BOND FUND, INVESCO
TELECOMMUNICATIONS FUND, INVESCO U.S. GOVERNMENT SECURITIES FUND, INVESCO
VALUE FUND, EDWARD J. STERN, CANARY INVESTMENT MANAGEMENT, LLC, CANARY
CAPITAL PARTNERS, LTD., CANARY CAPITAL PARTNERS, LLC, AND DOES 1-100, in
the United States District Court, District of Colorado (Civil Action No.
04-MK-0151), filed on January 28, 2004. This claim alleges violations of:
Sections 11 and 15 of the Securities Act; Sections 10(b) and 20(a) of the
Exchange Act; Rule 10b-5 under the Exchange Act; and Sections 34(b), 36(a)
and 36(b) of the Investment Company Act. The claim also alleges common law
breach of fiduciary duty. The plaintiffs in this case are seeking: damages;
pre-judgment and post-judgment interest; counsel fees and expert fees; and
other relief.
EILEEN CLANCY, INDIVIDUALLY AND ON BEHALF OF ALL OTHERS SIMILARLY SITUATED,
V. INVESCO ADVANTAGE HEALTH SCIENCES FUND, INVESCO CORE EQUITY FUND,
INVESCO DYNAMICS FUND, INVESCO ENERGY FUND, INVESCO FINANCIAL SERVICES
FUND, INVESCO GOLD & PRECIOUS METALS FUND, INVESCO HEALTH SCIENCES FUND,
INVESCO INTERNATIONAL CORE EQUITY FUND (FORMERLY KNOWN AS INTERNATIONAL
BLUE CHIP VALUE FUND), INVESCO LEISURE FUND, INVESCO MID-CAP GROWTH FUND,
INVESCO MULTI-SECTOR FUND, AIM INVESCO S&P 500 INDEX FUND, INVESCO SMALL
COMPANY GROWTH FUND, INVESCO TECHNOLOGY FUND, INVESCO TOTAL RETURN FUND,
INVESCO UTILITIES FUND, AIM MONEY MARKET FUND, AIM INVESCO TAX-FREE MONEY
FUND, AIM INVESCO TREASURER'S MONEY MARKET RESERVE FUND, AIM INVESCO
TREASURER'S TAX-EXEMPT RESERVE FUND, AIM INVESCO US GOVERNMENT MONEY FUND,
INVESCO ADVANTAGE FUND, INVESCO BALANCED FUND, INVESCO EUROPEAN FUND,
INVESCO GROWTH FUND, INVESCO HIGH-YIELD FUND, INVESCO GROWTH & INCOME FUND,
INVESCO REAL ESTATE OPPORTUNITY FUND, INVESCO SELECT INCOME FUND, INVESCO
TAX-FREE BOND FUND, INVESCO TELECOMMUNICATIONS FUND, INVESCO U.S.
GOVERNMENT SECURITIES FUND, INVESCO VALUE FUND, INVESCO, INVESCO LATIN
AMERICAN GROWTH FUND (COLLECTIVELY KNOWN AS THE "INVESCO FUNDS"), AIM STOCK
FUNDS, AIM COUNSELOR SERIES TRUST, AIM SECTOR FUNDS INC., AIM BOND FUNDS
INC., AIM COMBINATION STOCK AND BOND FUNDS INC., AIM MONEY MARKET FUNDS
INC., AIM INTERNATIONAL FUNDS INC. (COLLECTIVELY KNOWN AS THE "INVESCO
FUNDS REGISTRANTS"), AMVESCAP PLC, INVESCO FUNDS GROUP, INC., TIMOTHY
MILLER, RAYMOND CUNNINGHAM AND THOMAS KOLBE, in the United States District
Court, Southern District of New York (Civil Action No. 04-CV-0713), filed
on January 30, 2004. This claim alleges violations of Sections 11 and 15 of
the Securities Act. The plaintiffs in this case are seeking: compensatory
damages, rescission; return of fees paid; and other costs and expenses,
including counsel fees and expert fees.
SCOTT WALDMAN, ON BEHALF OF HIMSELF AND ALL OTHERS SIMILARLY SITUATED, V.
INVESCO FUNDS GROUP, INC., INVESCO DYNAMICS FUND, INVESCO EUROPEAN FUND,
INVESCO SMALL COMPANY GROWTH FUND, INVESCO TECHNOLOGY FUND, AIM STOCK
FUNDS, AIM COUNSELOR SERIES TRUST, AIM SECTOR FUNDS INC., AIM BOND FUNDS
INC., AIM COMBINATION STOCK AND BOND FUNDS INC., AIM MONEY MARKET FUNDS
INC., AIM INTERNATIONAL FUNDS INC., AMVESCAP PLC, AND RAYMOND CUNNINGHAM,
in the United States District Court, Southern District of New York (Civil
Action No. 04-CV-00915), filed on February 3, 2004. This claim alleges
violations of Sections 11 and 15 of the Securities Act and common law
breach of fiduciary duty. The plaintiffs in this case are seeking
compensatory damages; injunctive relief; and costs and expenses, including
counsel fees and expert fees.
CARL E. VONDER HAAR AND MARILYN P. MARTIN, ON BEHALF OF THEMSELVES AND ALL
OTHERS SIMILARLY SITUATED, V. INVESCO FUNDS GROUP, INC., INVESCO STOCK
FUNDS, INC. AND DOE DEFENDANTS 1-100, in the United States District Court,
District of Colorado (Civil Action No. 04-CV-812), filed on February 5,
2004. This claim alleges: common law breach of fiduciary duty; breach of
contract; and tortious interference with contract. The plaintiffs in this
case are seeking: injunctive relief; damages; disgorgement; and costs and
expenses, including counsel fees and expert fees.
HENRY KRAMER, DERIVATIVELY ON BEHALF OF INVESCO ENERGY FUND, INVESCO STOCK
FUNDS, INC., AND INVESCO MUTUAL FUNDS V. AMVESCAP, PLC, INVESCO FUNDS
GROUP, INC., CANARY CAPITAL PARTNERS, LLC, CANARY INVESTMENT MANAGEMENT,
LLC, AND CANARY CAPITAL PARTNERS, LTD., DEFENDANTS, AND INVESCO ENERGY
FUND, INVESCO STOCK FUNDS, INC., AND INVESCO MUTUAL FUNDS, NOMINAL
DEFENDANTS, in the United States District Court, District of Colorado
(Civil Action No. 04-MK-0397), filed on March 4, 2004. This claim alleges
violations of Section 36(b) of the Investment Company Act and common law
breach of fiduciary duty. The plaintiff in this case is seeking damages and
costs and expenses, including counsel fees and expert fees.
CYNTHIA L. ESSENMACHER, DERIVATIVELY ON BEHALF OF THE INVESCO DYNAMICS FUND
AND THE REMAINING "INVESCO FUNDS" V. INVESCO FUNDS GROUPS, INC., AMVESCAP
PLC, AIM MANAGEMENT GROUP, INC., RAYMOND CUNNINGHAM, TIMOTHY MILLER, THOMAS
KOLBE AND MICHAEL LEGOSKI, DEFENDANTS, AND INVESCO DYNAMICS FUND AND THE
"INVESCO FUNDS", NOMINAL DEFENDANTS, in the United States District Court,
District of Delaware (Civil Action No. 04-CV-188), filed on March 29, 2004.
This claim alleges: violations of Section 36(b) of the Investment Company
Act; violations of Section 206 of the Advisers Act; common law breach of
fiduciary duty; and civil conspiracy. The plaintiff in this case is
seeking: damages; injunctive relief; and costs and expenses, including
counsel fees and expert fees.
ANNE G. PERENTESIS (WIDOW) V. AIM INVESTMENTS, ET AL (INVESCO FUNDS GROUP,
INC.), in the District Court of Maryland for Baltimore County (Case No.
080400228152005), filed on July 21, 2005. This claim alleges financial
losses, mental anguish and emotional distress as a result of unlawful
market timing and related activity by the defendants. The plaintiff in this
case is seeking damages and costs and expenses.
Pursuant to an Order of the MDL Court, plaintiffs in the above lawsuits (with the exception of Carl E. Vonder Haar, et al. v. INVESCO Funds Group, Inc. et al. and Mike Sayegh v. Janus Capital Corporation, et al.) consolidated their claims for pre-trial purposes into three amended complaints against various Invesco Aim-- and IFG-related parties: (i) a Consolidated Amended Class Action Complaint purportedly brought on behalf of shareholders of the AIM Funds (the Lepera lawsuit discussed below); (ii) a Consolidated Amended Fund Derivative Complaint purportedly brought on behalf of the AIM Funds and fund registrants (the Essenmacher lawsuit discussed below); and (iii) an Amended Class Action Complaint for Violations of the Employee Retirement Income Securities Act ("ERISA") purportedly brought on behalf of participants in Invesco's 401(k) plan (the Calderon lawsuit discussed below). The plaintiffs in the Vonder Haar and Sayegh lawsuits continue to seek remand of their lawsuits to state court. Set forth below is detailed information about these three amended complaints.
RICHARD LEPERA, INDIVIDUALLY AND ON BEHALF OF ALL OTHERS SIMILARLY SITUATED (LEAD PLAINTIFF: CITY OF CHICAGO DEFERRED COMPENSATION PLAN), V. INVESCO FUNDS GROUP, INC., AMVESCAP, PLC, AIM INVESTMENTS, AIM ADVISORS, INC., INVESCO INSTITUTIONAL (N.A.), INC., INVESCO ASSETS MANAGEMENT LIMITED, INVESCO GLOBAL ASSETS MANAGEMENT (N.A.), AIM
STOCK FUNDS, AIM MUTUAL FUNDS, AIM COMBINATION STOCK & BOND FUNDS, AIM
SECTOR FUNDS, AIM TREASURER'S SERIES TRUST, INVESCO DISTRIBUTORS, INC., AIM
DISTRIBUTORS, INC., RAYMOND R. CUNNINGHAM, TIMOTHY J. MILLER, THOMAS A.
KOLBE, MICHAEL D. LEGOSKI, MICHAEL K. BRUGMAN, MARK WILLIAMSON, EDWARD J.
STERN, CANARY CAPITAL PARTNERS, LLC, CANARY INVESTMENT MANAGEMENT, LLC,
CANARY CAPITAL PARTNERS, LTD., RYAN GOLDBERG, MICHAEL GRADY, CITIGROUP,
INC., CITIGROUP GLOBAL MARKETS HOLDINGS, INC., SALOMON SMITH BARNEY, INC.,
MORGAN STANLEY DW, ANNA BRUGMAN, ANB CONSULTING, LLC, KAPLAN & CO.
SECURITIES INC., SECURITY TRUST COMPANY, N.A., GRANT D. SEEGER, JB OXFORD
HOLDINGS, INC., NATIONAL CLEARING CORPORATION, JAMES G. LEWIS, KRAIG L.
KIBBLE, JAMES Y. LIN, BANK OF AMERICA CORPORATION, BANC OF AMERICA
SECURITIES LLC, THEODORE C. SIHPOL, III, BEAR STEARNS & CO., INC., BEAR
STEARNS SECURITIES CORP., CHARLES SCHWAB & CO., CREDIT SUISSE FIRST BOSTON
(USA) INC., PRUDENTIAL FINANCIAL, INC., PRUDENTIAL SECURITIES, INC.,
CANADIAN IMPERIAL BANK OF COMMERCE, JP MORGAN CHASE AND CO., AND JOHN DOE
DEFENDANTS 1-100, in the MDL Court (Case No. 04-MD-15864; No.
04-CV-00814-JFM) (originally in the United States District Court for the
District of Colorado), filed on September 29, 2004. This lawsuit alleges
violations of Sections 11, 12(a) (2), and 15 of the Securities Act; Section
10(b) of the Exchange Act and Rule 10b-5 promulgated thereunder; Section
20(a) of the Exchange Act; Sections 34(b), 36(a), 36(b) and 48(a) of the
Investment Company Act; breach of fiduciary duty/constructive fraud; aiding
and abetting breach of fiduciary duty; and unjust enrichment. The
plaintiffs in this lawsuit are seeking: compensatory damages, including
interest; and other costs and expenses, including counsel and expert fees.
CYNTHIA ESSENMACHER, SILVANA G. DELLA CAMERA, FELICIA BERNSTEIN AS CUSTODIAN FOR DANIELLE BROOKE BERNSTEIN, EDWARD CASEY, TINA CASEY, SIMON DENENBERG, GEORGE L. GORSUCH, PAT B. GORSUCH, L. SCOTT KARLIN, HENRY KRAMER, JOHN E. MORRISEY, HARRY SCHIPPER, BERTY KREISLER, GERSON SMITH, CYNTHIA PULEO, ZACHARY ALAN STARR, JOSHUA GUTTMAN, AND AMY SUGIN, DERIVATIVELY ON BEHALF OF THE MUTUAL FUNDS, TRUSTS AND CORPORATIONS COMPRISING THE INVESCO AND AIM FAMILY OF MUTUAL FUNDS V. AMVESCAP, PLC, INVESCO FUNDS GROUP, INC., INVESCO DISTRIBUTORS, INC., INVESCO INSTITUTIONAL (N.A.), INC., INVESCO ASSETS MANAGEMENT LIMITED, INVESCO GLOBAL ASSETS MANAGEMENT (N.A.), AIM MANAGEMENT GROUP, INC., AIM ADVISERS, INC., AIM INVESTMENT SERVICES, INC., AIM DISTRIBUTORS, INC., FUND
MANAGEMENT COMPANY, MARK H. WILLIAMSON, RAYMOND R. CUNNINGHAM, TIMOTHY MILLER, THOMAS KOLBE, MICHAEL LEGOSKI, MICHAEL BRUGMAN, FRED A. DEERING, VICTOR L. ANDREWS, BOB R. BAKER, LAWRENCE H. BUDNER, JAMES T. BUNCH, GERALD J. LEWIS, JOHN W. MCINTYRE, LARRY SOLL, RONALD L. GROOMS, WILLIAM J. GALVIN, JR., ROBERT H. GRAHAM, FRANK S. BAYLEY, BRUCE L. CROCKETT, ALBERT R. DOWDEN, EDWARD K. DUNN, JACK M. FIELDS, CARL FRISCHILING, PREMA MATHAI-DAVIS, LEWIS F. PENNOCK, RUTH H. QUIGLEY, LOUIS S. SKLAR, OWEN DALY II, AURUM SECURITIES CORP., AURUM CAPITAL MANAGEMENT CORP., GOLDEN GATE FINANCIAL GROUP, LLC, BANK OF AMERICA CORP., BANC OF AMERICA SECURITIES LLC, BANK OF AMERICA, N.A., BEAR STEARNS & CO., INC., CANARY CAPITAL PARTNERS, LLC, CANARY CAPITAL PARTNERS, LTD., CANARY INVESTMENT MANAGEMENT, LLC, EDWARD J. STERN, CANADIAN IMPERIAL BANK OF COMMERCE, CIRCLE TRUST COMPANY, RYAN GOLDBERG, MICHAEL GRADY, KAPLAN & CO. SECURITIES, INC., JP MORGAN CHASE & CO., OPPENHEIMER & CO., INC., PRITCHARD CAPITAL PARTNERS LLC, TIJA MANAGEMENT, TRAUTMAN WASSERMAN & COMPANY, INC., DEFENDANTS, AND THE INVESCO FUNDS AND THE AIM FUNDS AND ALL TRUSTS AND
CORPORATIONS THAT COMPRISE THE INVESCO FUNDS AND AIM FUNDS THAT WERE MANAGED BY INVESCO AND AIM, NOMINAL DEFENDANTS, in the MDL Court (Case No. 04-MD-15864-FPS; No. 04-819), filed on September 29, 2004. This lawsuit alleges violations of Sections 206 and 215 of the Investment Advisers Act; Sections 36(a), 36(b) and 47 of the Investment Company Act; control person liability under Section 48 of the Investment Company Act; breach of fiduciary duty; aiding and abetting breach of fiduciary duty; breach of contract; unjust enrichment; interference with contract; and civil conspiracy. The plaintiffs in this lawsuit are seeking: removal of director defendants; removal of adviser, sub-adviser and distributor defendants; rescission of management and other contracts between the Funds and defendants; rescission of 12b-1 plans; disgorgement of management fees and other compensation/profits paid to adviser defendants; compensatory and punitive damages; and fees and expenses, including attorney and expert fees.
MIRIAM CALDERON, INDIVIDUALLY AND ON BEHALF OF ALL OTHERS SIMILARLY SITUATED, V. AVZ, INC., AMVESCAP RETIREMENT, INC., AMVESCAP NATIONAL TRUST COMPANY, INVESCO FUNDS GROUP, INC., AMVESCAP, ROBERT F. MCCULLOUGH, GORDON NEBEKER, JEFFREY G. CALLAHAN, AND RAYMOND R. CUNNINGHAM, in the MDL Court (Case No. 1:04-MD-15864-FPS), filed on September 29, 2004. This lawsuit alleges violations of ERISA Sections 404, 405 and 406. The plaintiffs in this lawsuit are seeking: declaratory judgment; restoration of losses suffered by the plan; disgorgement of profits; imposition of a constructive trust; injunctive relief; compensatory damages; costs and attorneys' fees; and equitable restitution.
On March 1, 2006, the MDL Court entered orders on Defendants' Motions to dismiss in the derivative (Essenmacher) and class action (Lepera) lawsuits. The MDL Court dismissed all derivative causes of action in the Essenmacher lawsuit but two: (i) the excessive fee claim under Section 36(b) of the Investment Company Act of 1940 (the "1940 Act"); and (ii) the "control person liability" claim under Section 48 of the 1940 Act. The MDL Court dismissed all claims asserted in the Lepera class action lawsuit but three: (i) the securities fraud claims under Section 10(b) of the Securities Exchange Act of 1934; (ii) the excessive fee claim under Section 36(b) of the 1940 Act (which survived only insofar as plaintiffs seek recovery of fees associated with the assets involved in market timing); and (iii) the "control person liability" claim under Section 48 of the 1940 Act. On June 14, 2006, the MDL Court entered an order dismissing the Section 48 claim in the derivative (Essenmacher) lawsuit. Based on the MDL Court's March 1, 2006 and June 14, 2006 orders, all claims asserted against the Funds that have been transferred to the MDL Court have been dismissed, although certain Funds remain nominal defendants in the derivative (Essenmacher) lawsuit. Defendants filed their Original Answer in the class action (Lepera) lawsuit on March 31, 2006. The MDL Court has indefinitely deferred Defendants' obligation to answer the derivative (Essenmacher) lawsuit. The Plaintiffs in the class action (Lepera) lawsuit stipulated that their claims against Invesco Aim, Invesco Aim Distributors and Invesco Aim Investment Services, Inc. Invesco Aim Investment Services are based solely on successor liability for alleged timing in the AIM Funds formerly advised by IFG and that they are not making any claims based on alleged timing in the other AIM Funds. Based upon this stipulation, Invesco Aim withdrew its pending Motion to Dismiss the claims against Invesco Aim, Invesco Aim Distributors and Invesco Aim Investment Services. On July 3, 2007, the Defendants filed an Omnibus Motion to Dismiss in both the class action (Lepera) and derivative (Essenmacher) lawsuits based on Plaintiffs' lack of standing to sue for injuries to funds the Plaintiffs do not own. On October 19, 2007, Judge Motz for the MDL Court denied the Defendants' Motion to Dismiss.
On September 15, 2006, Judge Motz for the MDL Court granted the INVESCO Defendants' motion to dismiss the ERISA (Calderon) lawsuit and dismissed such lawsuit. The Plaintiff appealed this decision. On June 16, 2008, the Fourth Court of Appeals reversed the dismissal and remanded this lawsuit back to the MDL Court for further proceedings.
APPENDIX J-2
PENDING LITIGATION ALLEGING INADEQUATELY EMPLOYED FAIR VALUE PRICING
The following civil class action lawsuits involve, depending on the lawsuit, one or more AIM Funds, IFG and/or Invesco Aim and allege that the defendants inadequately employed fair value pricing. These lawsuits either have been served or have had service of process waived.
T.K. PARTHASARATHY, EDMUND WOODBURY, STUART ALLEN SMITH AND SHARON SMITH,
INDIVIDUALLY AND ON BEHALF OF ALL OTHERS SIMILARLY SITUATED, V. T. ROWE
PRICE INTERNATIONAL FUNDS, INC., T. ROWE PRICE INTERNATIONAL, INC., ARTISAN
FUNDS, INC., ARTISAN PARTNERS LIMITED PARTNERSHIP, AIM INTERNATIONAL FUNDS,
INC. AND AIM ADVISORS, INC., in the Third Judicial Circuit Court for
Madison County, Illinois (Case No. 2003-L-001253), filed on September 23,
2003. This claim alleges: common law breach of duty and common law
negligence and gross negligence. The plaintiffs in these cases are seeking:
compensatory and punitive damages; interest; and attorneys' fees and costs.
The Third Judicial Circuit Court for Madison County, Illinois has issued an
order severing the claims of plaintiff Parthasarathy from the claims of the
other plaintiffs against Invesco Aim and other defendants. As a result, AIM
is a defendant in the following severed action: EDMUND WOODBURY, STUART
ALLEN SMITH and SHARON SMITH, Individually and On Behalf of All Others
Similarly Situated, v. AIM INTERNATIONAL FUNDS, INC., ET AL., in the Third
Judicial Circuit Court for Madison County, Illinois (Case No. 03-L-1253A).
The claims made by Plaintiffs and the relief sought in the Woodbury lawsuit
are identical to those in the Parthasarathy lawsuit. This case has been
through various procedural steps, including complete dismissal and appeals.
The parties were contesting whether the proper venue for this action is the
Federal District Court or the Illinois State Court. On July 17, 2007, the
Federal District Court ordered this case remanded back to Illinois State
Court. On January 1, 2008, the Illinois State Court denied defendants'
Motion to Dismiss. Pursuant to a settlement agreement, Plaintiffs filed a
Motion to Dismiss with prejudice, which was granted on May 6, 2008.
JOHN BILSKI, INDIVIDUALLY AND ON BEHALF OF ALL OTHERS SIMILARLY SITUATED,
V. AIM INTERNATIONAL FUNDS, INC., AIM ADVISORS, INC., INVESCO INTERNATIONAL
FUNDS, INC., INVESCO FUNDS GROUP, INC., T. ROWE PRICE INTERNATIONAL FUNDS,
INC. AND T. ROWE PRICE INTERNATIONAL, INC., in the United States District
Court, Southern District of Illinois (East St. Louis) (Case No. 03-772),
filed on November 19, 2003. This claim alleges: violations of Sections
36(a) and 36(b) of the Investment Company Act of 1940; common law breach of
duty; and common law negligence and gross negligence. The plaintiff in this
case is seeking: compensatory and punitive damages; interest; and
attorneys' fees and costs. This lawsuit has been transferred to the MDL
Court by order of the United States District Court, Southern District of
Illinois (East St. Louis).
PART C
OTHER INFORMATION
Item 23. Exhibits
a (1) - (a) Amended and Restated Agreement and Declaration of Trust of
Registrant, dated September 14, 2005.(26)
- (b) Amendment No. 1, dated December 21, 2005, effective as of
December 21, 2005, to Amended and Restated Agreement and
Declaration of Trust of Registrant.(26)
- (c) Amendment No. 2, dated December 7, 2005, effective as of July
3, 2006, to Amended and Restated Agreement and Declaration of
Trust of Registrant.(27)
- (d) Amendment No. 3, dated January 9, 2006, effective as of
January 9, 2006, to Amended and Restated Agreement and
Declaration of Trust of Registrant.(27)
- (e) Amendment No. 4, dated February 2, 2006, effective as of July
3, 2006, to Amended and Restated Agreement and Declaration of
Trust of Registrant.(27)
- (f) Amendment No. 5, dated May 1, 2006, effective as of May 1,
2006, to Amended and Restated Agreement and Declaration of Trust
of Registrant.(28)
- (g) Amendment No. 6, dated May 24, 2006, effective as of May 24,
2006, to Amended and Restated Agreement and Declaration of Trust
of Registrant.(28)
- (h) Amendment No. 7, dated June 12, 2006, effective as of June
12, 2006, to Amended and Restated Agreement and Declaration of
Trust of Registrant.(28)
- (i) Amendment No. 8, dated July 5, 2006, effective as of July 5,
2006, to Amended and Restated Agreement and Declaration of Trust
of Registrant.(28)
- (j) Amendment No. 9, dated November 6, 2006, effective as of
November 6, 2006, to Amended and Restated Agreement and
Declaration of Trust of Registrant.(28)
- (k) Amendment No. 10, dated December 21, 2006, effective as of
December 21, 2006, to Amended and Restated Agreement and
Declaration of Trust of Registrant.(28)
- (l) Amendment No. 11, dated May 1, 2007, effective as of May 1,
2007, to Amended and Restated Agreement and Declaration of Trust
of Registrant.(29)
- (m) Amendment No. 12, dated May 1, 2008, effective as of May 1,
2008, to Amended and Restated Agreement and Declaration of Trust
of Registrant.(31)
|
- (n) Form of Amendment No. 13, dated __________, 2008, effective as of ______, 2008, to Amended and Restated Agreement and Declaration of Trust of Registrant.(31)
b (1) - (a) Amended and Restated By-Laws of Registrant, dated effective September 14, 2005.(26)
- (b) Amendment, adopted effective August 1, 2006, to Amended and
Restated By-Laws of Registrant, dated effective September 14,
2005.(28)
- (c) Amendment No. 2, adopted effective March 23, 2007, to Amended
and Restated By-Laws of Registrant, dated effective September 14,
2005.(28)
- (d) Amendment No. 3, adopted effective January 1, 2008, to
Amended and Restated By-Laws of Registrant, dated effective
September 14, 2005.(29)
c - Instruments Defining Rights of Security Holders - All rights of
security holders are contained in the Registrant's Amended and
Restated Agreement and Declaration of Trust.
d (1) - (a) Master Investment Advisory Agreement, dated May 1, 2000,
between Registrant and A I M Advisors, Inc.(14)
- (b) Amendment No. 1, dated, May 1, 2001 to Master Investment
Advisory Agreement between Registrant and A I M Advisors,
Inc.(15)
- (c) Amendment No. 2, dated September 7, 2001, to Master
Investment Advisory Agreement of Registrant, between Registrant
and A I M Advisors, Inc.(18)
- (d) Amendment No. 3, dated May 1, 2002, to Master Investment
Advisory Agreement of Registrant, between Registrant and A I M
Advisors, Inc.(20)
- (e) Amendment No. 4, dated August 29, 2003, to Master Investment
Advisory Agreement between Registrant and A I M Advisors,
Inc.(22)
- (f) Amendment No. 5, dated April 30, 2004 to Master Investment
Advisory Agreement between Registrant and A I M Advisors,
Inc.(24)
- (g) Amendment No. 6, dated July 1, 2004, to Master Investment
Advisory Agreement between Registrant and A I M Advisors,
Inc.(24)
- (h) Amendment No. 7, dated October 15, 2004, to Master Investment
Advisory Agreement between Registrant and A I M Advisors,
Inc.(24)
- (i) Amendment No. 8, dated July 1, 2005, to Master Investment
Advisory Agreement between Registrant and A I M Advisors,
Inc.(26)
- (j) Amendment No. 9, dated December 21, 2005, to Master
Investment Advisory Agreement between Registrant and A I M
Advisors, Inc.(26)
- (k) Amendment No. 10, dated May 1, 2006, to Master Investment
Advisory Agreement between Registrant and A I M Advisors,
Inc.(28)
- (l) Amendment No. 11, dated June 12, 2006, to Master Investment
Advisory Agreement between Registrant and A I M Advisors,
Inc.(28)
- (m) Amendment No. 12, dated July 3, 2006, to Master Investment
Advisory Agreement between Registrant and A I M Advisors,
Inc.(28)
- (n) Amendment No. 13, dated November 6, 2006, to Master
Investment Advisory Agreement between Registrant and A I M
Advisors, Inc.(28)
|
- (o) Amendment No. 14, dated December 21, 2006, to Master Investment Advisory Agreement between Registrant and A I M Advisors, Inc.(28)
- (p) Amendment No. 15, dated May 1, 2007, to Master Investment Advisory Agreement between Registrant and A I M Advisors, Inc.(29)
- (q) Amendment No. 16, dated July 1, 2007, to Master Investment Advisory Agreement between Registrant and A I M Advisors, Inc.(29)
- (r) Form of Amendment No. 17, dated ___________, 2008, to Master Investment Advisory Agreement between Registrant and Invesco Aim Advisors, Inc.(31)
(2) - (a) Master Intergroup Sub-Advisory Contract for Mutual Funds,
dated April 30, 2004, between A I M Advisors, Inc. and INVESCO
Institutional (N.A.), Inc.(24)
- (b) Amendment No. 1, dated July 16, 2004, to Master Intergroup
Sub-Advisory Contract for Mutual Funds between A I M Advisors,
Inc. and INVESCO Institutional (N.A.), Inc.(24)
- (c) Amendment No. 2, dated September 30, 2004, to Master
Intergroup Sub-Advisory Contract for Mutual Funds between A I M
Advisors, Inc. and INVESCO Institutional (N.A.), Inc.(24)
- (d) Amendment No. 3, dated October 15, 2004, to Master Intergroup
Sub-Advisory Contract for Mutual Funds between A I M Advisors,
Inc. and INVESCO Institutional (N.A.), Inc.(24)
- (e) Amendment No. 4, dated June 1, 2005, to Master Intergroup
Sub-Advisory Contract for Mutual Funds between A I M Advisors,
Inc. and INVESCO Institutional (N.A.), Inc.(26)
- (f) Amendment No. 5, dated July 3, 2006, to Master Intergroup
Sub-Advisory Contract for Mutual Funds between A I M Advisors,
Inc. and INVESCO Institutional (N.A.), Inc.(28)
(3) - (a) Master Intergroup Sub-Advisory Contract for Mutual Funds,
dated May 1, 2008 between Invesco Aim Advisors, Inc., on behalf
of Registrant, and each of Invesco Asset Management Deutschland
GmbH, Invesco Asset Management Ltd., Invesco Asset Management
(Japan) Limited, Invesco Australia Limited, Invesco Global Asset
Management (N.A.), Inc., Invesco Hong Kong Limited, Invesco
Institutional (N.A.), Inc., Invesco Senior Secured Management,
Inc. and A I M Funds Management Inc.(30)
|
- (b) Form of Amendment No. 1, dated __________, 2008, to Master Intergroup Sub-Advisory Contract for Mutual Funds, dated May 1, 2008 between Invesco Aim Advisors, Inc., on behalf of Registrant, and each of Invesco Asset Management Deutschland GmbH, Invesco Asset Management Ltd., Invesco Asset Management (Japan) Limited, Invesco Australia Limited, Invesco Global Asset Management (N.A.), Inc., Invesco Hong Kong Limited, Invesco Institutional (N.A.), Inc., Invesco Senior Secured Management, Inc. and A I M Funds Management Inc.(31)
(4) - (a) Foreign Country Selection and Mandatory Securities Depository
Responsibilities Delegation Agreement, dated September 9, 1998,
between Registrant and A I M Advisors, Inc.(7)
- (b) Amendment No. 1, dated September 28, 1998, to Foreign Country
Selection and Mandatory Securities Depository Responsibilities
Delegation Agreement between Registrant and A I M Advisors,
Inc.(8)
- (c) Amendment No. 2, dated December 14, 1998, to Foreign Country
Selection and Mandatory Securities Depository Responsibilities
Delegation Agreement between Registrant and A I M Advisors,
Inc.(8)
e (1) - (a) First Amended and Restated Master Distribution Agreement,
dated July 16, 2001, between Registrant and A I M Distributors,
Inc.(17)
- (b) Amendment No. 1, dated September 7, 2001, to First Amended
and Restated Master Distribution Agreement, between Registrant
and A I M Distributors, Inc., dated July 16, 2001.(18)
- (c) Amendment No. 2, dated May 1, 2002, to First Amended and
Restated Master Distribution Agreement between Registrant and A I
M Distributors Inc., dated July 16, 2001.(20)
- (d) Amendment No. 3, dated August 29, 2003, to First Amended and
Restated Master Distribution Agreement, between Registrant and A
I M Distributors, Inc., dated July 16, 2001.(22)
- (e) Amendment No. 4, dated April 30, 2004, to First Amended and
Restated Master Distribution Agreement between Registrant and A I
M Distributors, Inc.(24)
- (f) Amendment No. 5, dated October 15, 2004, to First Amended and
Restated Master Distribution Agreement between Registrant and A I
M Distributors, Inc.(24)
- (g) Amendment No. 6, dated July 1, 2005, to First Amended and
Restated Master Distribution Agreement between Registrant and A I
M Distributors, Inc.(26)
- (h) Amendment No. 7, dated December 21, 2005, to First Amended
and Restated Master Distribution Agreement between Registrant and
A I M Distributors, Inc.(26)
- (i) Amendment No. 8, dated May 1, 2006, to First Amended and
Restated Master Distribution Agreement between Registrant and A I
M Distributors, Inc.(28)
- (j) Amendment No. 9, dated June 12, 2006, to First Amended and
Restated Master Distribution Agreement between Registrant and A I
M Distributors, Inc.(28)
- (k) Amendment No. 10, dated July 3, 2006, to First Amended and
Restated Master Distribution Agreement between Registrant and A I
M Distributors, Inc.(28)
- (l) Amendment No. 11, dated November 6, 2006, to First Amended
and Restated Master Distribution Agreement between Registrant and
A I M Distributors, Inc.(28)
- (m) Amendment No. 12, dated December 21, 2006, to First Amended
and Restated Master Distribution Agreement between Registrant and
A I M Distributors, Inc.(28)
|
- (n) Amendment No. 13, dated May 1, 2007, to First Amended and Restated Master Distribution Agreement between Registrant and A I M Distributors, Inc.(29)
- (o) Form of Amendment No. 14, dated __________, 2008, to First Amended and Restated Master Distribution Agreement between Registrant and Invesco Aim Distributors, Inc.(31)
f (1) - Retirement Plan of Registrant's Non-Affiliated Directors,
effective March 8, 1994, as restated September 18, 1995.(4)
(2) - Retirement Plan for Eligible Directors/Trustees effective as of
March 8, 1994, as Restated January 1, 2005.(28)
(3) - Form of Director Deferred Compensation Agreement effective as
Amended March 7, 2000, September 28, 2001 and September 26,
2002.(22)
g (1) - (a) Master Custodian Contract, dated May 1, 2000, between
Registrant and State Street Bank and Trust Company.(15)
- (b) Amendment, dated May 1, 2000, to Master Custodian Contract,
dated May 1, 2000, between Registrant and State Street Bank and
Trust Company.(15)
- (c) Amendment, dated June 29, 2001, to Master Custodian Contract
dated May 1, 2000, between Registrant and State Street Bank and
Trust Company.(20)
- (d) Amendment, dated April 2, 2002, to Master Custodian Contract
dated May 1, 2000, between Registrant and State Street Bank and
Trust Company.(20)
- (e) Amendment, dated September 8, 2004, to Master Custodian
Contract dated May 1, 2000, between Registrant and State Street
Bank and Trust Company.(24)
- (f) Amendment, dated February 6, 2006, to Master Custodian
Contract dated May 1, 2000, between Registrant and State Street
Bank and Trust Company.(28)
- (g) Amendment, dated January 31, 2007, to Master Custodian
Contract dated May 1, 2000, between Registrant and State Street
Bank and Trust Company.(28)
(2) - (a) Custody Agreement, dated September 19, 2000, between
Registrant and The Bank of New York.(15)
- (b) Amendment No. 1, dated May 31, 2005, to Custody Agreement
dated September 19, 2000, between Registrant and The Bank of New
York.(28)
(3) - Foreign Assets Delegation Agreement, dated November 6, 2006,
between Registrant and A I M Advisors, Inc.(29)
h (1) - (a) Third Amended and Restated Master Administrative Services
Agreement, dated July 1, 2006, between Registrant and A I M
Advisors, Inc.(28)
- (b) Amendment No. 1, dated July 3, 2006, to Third Amended and
Restated Master Administrative Services Agreement, dated July 1,
2006, between Registrant and A I M Advisors, Inc.(28)
|
- (c) Amendment No. 2, dated November 6, 2006, to Third Amended and Restated Master Administrative Services Agreement, dated July 1, 2006, between Registrant and A I M Advisors, Inc.(28)
- (d) Amendment No. 3, dated December 21, 2006, to Third Amended and Restated Master Administrative Services Agreement, dated July 1, 2006, between Registrant and A I M Advisors, Inc.(28)
- (e) Amendment No. 4, dated May 1, 2007, to Third Amended and Restated Master Administrative Services Agreement, dated July 1, 2006, between Registrant and A I M Advisors, Inc.(29)
- (f) Form of Amendment No. 5, dated __________, 2008, to Third Amended and Restated Master Administrative Services Agreement, dated July 1, 2006, between Registrant and Invesco Aim Advisors, Inc.(31)
(2) - (a) Amended and Restated Transfer Agency and Service Agreement,
dated July 1, 2006, between Registrant and AIM Investment
Services, Inc.(28)
- (b) Amendment No. 1, dated July 1, 2007, to the Amended and
Restated Transfer Agency and Service Agreement, dated July 1,
2006, between Registrant and AIM Investment Services, Inc.(29)
(3) - Participation Agreement, dated February 25, 1993, between
Registrant, Connecticut General Life Insurance Company and A I M
Distributors, Inc.(4)
(4) - (a) Participation Agreement, dated February 10, 1995, between
Registrant and Citicorp Life Insurance Company.(4)
- (b) Amendment No. 1, dated February 3, 1997, to the Participation
Agreement dated February 10, 1995, between Registrant and
Citicorp Life Insurance Company.(6)
(5) - (a) Participation Agreement, dated February 10, 1995, between
Registrant and First Citicorp Life Insurance Company.(4)
- (b) Amendment No. 1, dated February 3, 1997, to the Participation
Agreement, dated February 10, 1995, between Registrant and First
Citicorp Life Insurance Company.(6)
(6) - (a) Participation Agreement, dated December 19, 1995, between
Registrant and Glenbrook Life and Annuity Company.(4)
- (a)(i) Side Letter Agreement, dated December 1, 1995, among
Registrant and Glenbrook Life and Annuity Company.(5)
- (b) Amendment No. 1, dated November 7, 1997, to the Participation
Agreement, dated December 19, 1995, between Registrant and
Glenbrook Life and Annuity Company.(7)
- (c) Amendment No. 2, dated September 2, 1997, to the
Participation Agreement, dated December 19, 1995, between
Registrant and Glenbrook Life and Annuity Company.(6)
- (d) Amendment No. 3, dated January 26, 1998, to the Participation
Agreement, dated December 19, 1995, between Registrant and
Glenbrook Life and Annuity
|
Company.(7)
- (e) Amendment No. 4, dated May 1, 1998, to the Participation
Agreement, dated December 19, 1995, between Registrant and
Glenbrook Life and Annuity Company.(7)
- (f) Amendment No. 5, dated January 12, 1999, to the Participation
Agreement, dated December 19, 1995, between Registrant and
Glenbrook Life and Annuity Insurance Company.(8)
- (g) Amendment No. 6, dated September 26, 2001, to the
Participation Agreement, dated December 19, 1995, between
Registrant and Glenbrook Life and Annuity Company.(20)
- (h) Amendment No. 7, dated May 1, 2004, to the Participation
Agreement, dated December 19, 1995, between Registrant and
Glenbrook Life and Annuity Insurance Company.(27)
(7) - Participation Agreement, dated March 4, 1996, between Registrant
and IDS Life Insurance Company.(4)
(8) - (a) Participation Agreement, dated October 7, 1996, between
Registrant and IDS Life Insurance Company (supersedes and
replaces Participation Agreement dated March 4, 1996).(5)
- (a)(i) Side Letter Agreement, dated September 27, 1996, between
Registrant, IDS Life Insurance Company and IDS Life Insurance
Company of New York.(6)
- (b) Amendment 1, dated November 11, 1997, to the Participation
Agreement, dated October 7, 1996, between Registrant and IDS Life
Insurance Company.(8)
- (c) Amendment No. 2, dated August 13, 2001, to the Participation
Agreement, dated October 7, 1996, between Registrant and IDS Life
Insurance Company.(27)
- (d) Amendment No. 3, dated May 1, 2002, to the Participation
Agreement, dated October 7, 1996, between Registrant and IDS Life
Insurance Company.(27)
- (e) Amendment, dated January 1, 2003, to the Participation
Agreement, dated October 7, 1996, between Registrant and IDS Life
Insurance Company.(27)
- (f) Amendment, dated September 30, 2003, to the Participation
Agreement, dated October 7, 1996, between Registrant and IDS Life
Insurance Company.(27)
- (g) Amendment, dated April 30, 2004, to the Participation
Agreement, dated October 7, 1996, between Registrant and IDS Life
Insurance Company.(27)
(9) - (a) Participation Agreement, dated October 7, 1996, between
Registrant and IDS Life Insurance Company of New York.(5)
- (b) Amendment No. 1, dated November 11, 1997, to the
Participation Agreement, dated October 7, 1996 between Registrant
and IDS Life Insurance Company of New York.(8)
- (c) Amendment No. 2, dated August 13, 2001, to the Participation
Agreement, dated October 7, 1996, between Registrant and IDS Life
Insurance Company of New York.(27)
|
- (d) Amendment No. 3, dated May 1, 2002, to the Participation
Agreement, dated October 7, 1996, between Registrant and IDS Life
Insurance Company of New York.(27)
- (e) Amendment, dated January 1, 2003, to the Participation
Agreement, dated October 7, 1996, between Registrant and IDS Life
Insurance Company of New York.(27)
- (f) Amendment, dated August 18, 2003, to the Participation
Agreement, dated October 7, 1996, between Registrant and IDS Life
Insurance Company of New York.(27)
- (g) Amendment, dated April 30, 2004, to the Participation
Agreement, dated October 7, 1996, between Registrant and IDS Life
Insurance Company of New York.(27)
(10) - (a) Participation Agreement, dated April 8, 1996, between
Registrant and Connecticut General Life Insurance Company.(4)
- (b) Amendment No. 1, dated April 30, 2004, to the Participation
Agreement, dated April 8, 1996, between Registrant and
Connecticut General Life Insurance Company.(27)
(11) - (a) Participation Agreement, dated September 21, 1996, between
Registrant and Pruco Life Insurance Company.(5)
- (b) Amendment No. 1, dated July 1, 1997, to the Participation
Agreement, dated September 21, 1996, between Registrant and Pruco
Life Insurance Company.(6)
- (c) Amendment No. 2, dated August 1, 1998, to the Participation
Agreement, dated September 21, 1996, between Registrant and Pruco
Life Insurance Company.(7)
- (d) Amendment No. 3, dated November 8, 1999, to the Participation
Agreement dated September 21, 1996, between Registrant and Pruco
Life Insurance Company.(14)
- (e) Amendment No. 4, dated April 10, 2000, to the Participation
Agreement dated September 21, 1996, between Registrant and Pruco
Life Insurance Company.(14)
(f) Amendment, dated November 1, 2007, to the Participation
Agreement dated September 21, 1996, between Registrant and Pruco
Life Insurance Company.(29)
(12) - (a) Participation Agreement, dated October 1, 1996, between
Registrant and Allstate Life Insurance Company of New York.(5)
- (a)(i) Side Letter Agreement, dated October 1, 1996, between
Registrant and Allstate Life Insurance Company of New York.(7)
- (b) Amendment No. 1, dated November 7, 1997, to the Participation
Agreement, dated October 1, 1996, between Registrant and Allstate
Life Insurance Company of New York.(9)
|
- (c) Amendment No. 2, dated December 18, 2002, to the
Participation Agreement, dated October 1, 1996, between
Registrant and Allstate Life Insurance Company of New York.(27)
- (d) Amendment No. 3, dated May 1, 2003, to the Participation
Agreement, dated October 1, 1996, between Registrant and Allstate
Life Insurance Company of New York.(27)
(13) - (a) Participation Agreement, dated December 18, 1996, between
Registrant and Merrill Lynch Life Insurance Company.(5)
- (a)(i) Side Letter Agreement, dated December 18, 1996, between
Registrant and Merrill, Lynch, Pierce, Fenner & Smith,
Incorporated.(5)
- (b) Amendment No. 1, dated May 1, 1997, to the Participation
Agreement, dated December 18, 1996, between Registrant and
Merrill Lynch Life Insurance Company.(6)
- (c) Amendment No. 2, dated April 13, 2000, to the Participation
Agreement, dated December 18, 1996, between Registrant and
Merrill Lynch Life Insurance Company.(14)
- (d) Amendment No. 3, dated February 16, 2001, to the
Participation Agreement, dated December 18, 1996, between
Registrant and Merrill Lynch Life Insurance Company.(18)
- (e) Amendment No. 4, dated May 1, 2001, to the Participation
Agreement, dated December 18, 1996, between Registrant and
Merrill Lynch Life Insurance Company.(18)
- (f) Amendment No. 5, dated October 5, 2001, to the Participation
Agreement, dated December 18, 1996, between Registrant and
Merrill Lynch Life Insurance Company.(18)
- (g) Agreement No. 6, dated September 10, 2002, to the
Participation Agreement, dated December 18, 1996, between
Registrant and Merrill Lynch Life Insurance Company.(20)
- (h) Amendment No. 7, dated March 1, 2005, to the Participation
Agreement, dated December 18, 1996, between Registrant and
Merrill Lynch Life Insurance Company.(27)
- (i) Amendment No. 8, dated May 1, 2006, to the Participation
Agreement, dated December 18, 1996, between Registrant and
Merrill Lynch Life Insurance Company.(27)
(14) - (a) Participation Agreement, dated December 18, 1996, between
Registrant and ML Life Insurance Company of New York.(5)
- (b) Amendment No. 1, dated May 1, 1997, to the Participation
Agreement, dated December 18, 1996, between Registrant and ML
Life Insurance Company of New York.(6)
- (c) Amendment No. 2, dated April 3, 2000, to the Participation
Agreement, dated December 18, 1996, by and between Registrant and
ML Life Insurance Company of New York.(14)
|
- (d) Amendment No. 3, dated February 16, 2001, to the
Participation Agreement, dated December 18, 1996, between
Registrant and ML Life Insurance Company of New York.(18)
- (e) Amendment No. 4, dated May 1, 2001, to the Participation
Agreement, dated December 18, 1996, between Registrant and ML
Life Insurance Company of New York.(18)
- (f) Amendment No. 5, dated October 5, 2001, to the Participation
Agreement, dated, December 18, 1996, between Registrant and ML
Life Insurance Company of New York.(18)
- (g) Amendment No. 6, dated September 10, 2002, to the
Participation Agreement, dated December 18, 1996, between
Registrant and ML Life Insurance Company of New York.(20)
- (h) Amendment No. 7, dated March 1, 2005, to the Participation
Agreement, dated December 18, 1996, between Registrant and ML
Life Insurance Company of New York.(27)
- (i) Amendment No. 8, dated May 1, 2006, to the Participation
Agreement, dated December 18, 1996, between Registrant and ML
Life Insurance Company of New York.(27)
(15) - (a) Participation Agreement, dated February 14, 1997, between
Registrant and Pruco Life Insurance Company of New Jersey.(5)
- (b) Amendment No. 1, dated November 8, 1999, to the Participation
Agreement, dated February 14, 1997, between Registrant and Pruco
Life Insurance Company of New Jersey.(14)
- (c) Amendment No. 2, dated April 10, 2000, to the Participation
Agreement, dated February 14, 1997, between Registrant and Pruco
Life Insurance Company of New Jersey.(14)
- (d) Amendment, dated April 30, 2004, to the Participation
Agreement, dated February 14, 1997, between Registrant and Pruco
Life Insurance Company of New Jersey.(27)
(e) Amendment, dated November 1, 2007, to the Participation
Agreement, dated February 14, 1997, between Registrant and Pruco
Life Insurance Company of New Jersey.(29)
(16) - Participation Agreement, dated April 30, 1997, between Registrant
and Prudential Insurance Company of America.(6)
(17) - Amended and Restated Participation Agreement, dated April 17,
2006, between Registrant and American Centurion Life Assurance
Company.(28)
(18) - Amended and Restated Participation Agreement, dated April 17,
2006, between Registrant and American Enterprise Life Insurance
Company.(28)
(19) - (a) Participation Agreement, dated November 20, 1997, between
Registrant and AIG Life Insurance Company.(6)
|
- (b) Amendment No. 1, dated October 11, 1999, to the Participation
Agreement, dated November 20, 1997, between Registrant and AIG
Life Insurance Company.(27)
(20) - Participation Agreement, dated November 20, 1997, between
Registrant and American International Life Assurance Company of
New York.(6)
(21) - (a) Participation Agreement, dated November 4, 1997, between
Registrant and Nationwide Life Insurance Company.(6)
- (b) Amendment No. 1, dated June 15, 1998, to the Participation
Agreement, dated November 4, 1997, between Registrant and
Nationwide Life Insurance Company.(7)
(22) - (a) Participation Agreement, dated December 3, 1997, between
Registrant and Security Life of Denver.(6)
- (b) Amendment No. 1, dated June 23, 1998, to the Participation
Agreement, dated December 3, 1997, between Registrant and
Security Life of Denver.(7)
- (c) Amendment No. 2, dated May 20, 1999, to the Participation
Agreement, dated December 3, 1997, between Registrant and
Security Life of Denver Insurance Company.(10)
- (d) Amendment No. 3, dated November 1, 1999, to the Participation
Agreement, dated December 3, 1997, between Registrant and
Security Life of Denver Insurance Company.(12)
- (e) Amendment No. 4, dated March 2, 2000, to the Participation
Agreement, dated December 3, 1997, between Registrant and
Security Life of Denver Insurance Company.(14)
- (f) Amendment No. 5, dated December 28, 2000, to the
Participation Agreement, dated December 3, 1997, between
Registrant and Security Life of Denver Insurance Company.(14)
- (g) Amendment No. 6, dated September 5, 2001, to the
Participation Agreement, dated December 3, 1997, between
Registrant and Security Life of Denver Insurance Company.(18)
(23) - (a) Participation Agreement, dated December 31, 1997, between
Registrant and Cova Financial Services Life Insurance Company.(6)
- (b) Amendment No. 1, dated April 23, 1999, to the Participation
Agreement, dated December 31, 1997, between Registrant and Cova
Financial Services Life Insurance Company.(12)
- (c) Amendment No. 2, dated September 1, 2000, to the
Participation Agreement, dated December 31, 1997, between
Registrant and Cova Financial Services Life Insurance
Company.(14)
- (d) Amendment No. 3, dated February 12, 2001, to the
Participation Agreement, dated December 31, 1997, between
Registrant and Met Life Investors Insurance Company (formerly,
Cova Financial Services Life Insurance Company).(18)
|
(24) - (a) Participation Agreement, dated December 31, 1997, between
Registrant and Cova Financial Life Insurance Company.(6)
- (b) Amendment No. 1, dated April 23, 1999, to the Participation
Agreement, dated December 31, 1997, between Registrant and Cova
Financial Life Insurance Company.(10)
- (c) Amendment No. 2, dated February 12, 2001, to the
Participation Agreement, dated April 23, 1999, between Registrant
and Met Life Investors Insurance Company (formerly, Cova
Financial Life Insurance Company).(18)
(25) - (a) Participation Agreement, dated February 2, 1998, between
Registrant and The Guardian Insurance & Annuity Company, Inc.(7)
- (b) Amendment No. 1, dated July 1, 1999, to the Participation
Agreement, dated February 2, 1998, between Registrant and The
Guardian Life Insurance & Annuity Company, Inc.(11)
- (c) Amendment No. 2, dated May 1, 2000, to the Participation
Agreement, dated February 2, 1998, between Registrant and The
Guardian Life Insurance & Annuity Company, Inc.(14)
- (d) Amendment No. 3, dated August 1, 2000, to the Participation
Agreement, dated February 2, 1998, between Registrant and The
Guardian Life Insurance & Annuity Company.(14)
- (e) Amendment No. 4, dated December 1, 2000, to the Participation
Agreement, dated February 2, 1998, between Registrant and The
Guardian Life Insurance and Annuity Company, Inc.(18)
- (f) Amendment, dated January 1, 2003, to the Participation
Agreement, dated February 2, 1998, between Registrant and The
Guardian Insurance and Annuity Company, Inc.(27)
- (g) Amendment No. 5, dated May 1, 2004, to the Participation
Agreement, dated February 2, 1998, between Registrant and The
Guardian Insurance and Annuity Company, Inc.(27)
- (h) Form of Amendment No. 6, dated ________, to the Participation
Agreement, dated February 2, 1998 between Registrant and The
Guardian Insurance and Annuity Company, Inc.(30)
(26) - (a) Participation Agreement, dated February 17, 1998, between
Registrant and Sun Life Assurance Company of Canada (U.S.).(7)
- (b) Amendment No. 1, dated December 11, 1998, to the
Participation Agreement, dated February 17, 1998, between
Registrant and Sun Life Assurance Company of Canada (U.S.).(8)
- (c) Amendment No. 2, dated March 15, 1999, to the Participation
Agreement, dated February 17, 1998, between Registrant and Sun
Life Assurance Company of Canada (U.S.).(14)
- (d) Amendment No. 3, dated April 17, 2000, to the Participation
Agreement, dated February 17, 1998, between Registrant and Sun
Life Assurance Company of Canada (U.S.).(14)
|
- (e) Amendment No. 4, dated May 1, 2000, to the Participation
Agreement, dated February 17, 1998, between Registrant and Sun
Life Assurance Company of Canada (U.S).(18)
- (f) Amendment No. 5, dated May 1, 2001, to the Participation
Agreement, dated February 17, 1998, between Registrant and Sun
Life Assurance Company of Canada (U.S.).(18)
- (g) Amendment No. 6, dated September 1, 2001, to the
Participation Agreement dated February 17, 1998, between
Registrant and Sun Life Assurance Company of Canada (U.S.).(18)
- (h) Amendment No. 7, dated April 1, 2002 to the Participation
Agreement dated February 17, 1998, between Registrant and Sun
Life Assurance Company of Canada (U.S.).(20)
- (i) Amendment No. 8, dated August 5, 2002, to the Participation
Agreement dated February 17, 1998, between Registrant and Sun
Life Assurance Company of Canada (U.S.).(20)
- (j) Amendment No. 9, dated August 20, 2003, to the Participation
Agreement, dated February 17, 1998, between Registrant and Sun
Life Assurance Company of Canada.(27)
- (k) Amendment No. 10, dated December 31, 2003, to the
Participation Agreement, dated February 17, 1998, between
Registrant and Sun Life Assurance Company of Canada (U.S.).(27)
- (l) Amendment No. 11, dated April 30, 2004, to the Participation
Agreement, dated February 17, 1998, between Registrant and Sun
Life Assurance Company of Canada (U.S.).(27)
- (m) Amendment No. 12, dated January 29, 2007, to the
Participation Agreement, dated February 17, 1998, between
Registrant and Sun Life Assurance Company of Canada (U.S.).(28)
- (n) Amendment No. 13, dated May 1, 2007, to the Participation
Agreement, dated February 17, 1998, between Registrant and Sun
Life Assurance Company of Canada (U.S.).(29)
- (o) Amendment No. 14, dated August 1, 2007, to the Participation
Agreement, dated February 17, 1998, between Registrant and Sun
Life Assurance Company of Canada (U.S.).(29)
(27) - Participation Agreement, dated April 1, 1998, between Registrant
and United Life & Annuity Insurance Company.(7)
(28) - (a) Participation Agreement, dated April 21, 1998, between
Registrant and Keyport Life Insurance Company.(7)
- (b) Amendment No. 1, dated December 28, 1998, to the
Participation Agreement, dated April 21, 1998, between Registrant
and Keyport Life Insurance Company.(8)
|
- (c) Amendment No. 2, dated March 12, 2001, to the Participation
Agreement, dated April 21, 1998, between Registrant and Keyport
Life Insurance Company.(18)
(29) - (a) Participation Agreement, dated May 1, 1998, between
Registrant and PFL Life Insurance Company.(7)
- (b) Amendment No. 1, dated June 30, 1998, to the Participation
Agreement, dated May 1, 1998, between Registrant and PFL Life
Insurance Company.(7)
- (c) Amendment No. 2, dated November 27, 1998, to the
Participation Agreement, dated May 1, 1998, between Registrant
and PFL Life Insurance Company.(8)
- (d) Amendment No. 3, dated August 1, 1999, to the Participation
Agreement, dated May 1, 1998, between Registrant and PFL Life
Insurance Company.(18)
- (e) Amendment No. 4, dated February 28, 2001, to the
Participation Agreement, dated May 1, 1998, between Registrant
and PFL Life Insurance Company.(18)
- (f) Amendment No. 5, dated July 1, 2001, to the Participation
Agreement, dated May 1, 1998, between Registrant and Transamerica
Life Insurance Company (formerly, PFL Life Insurance
Company).(18)
- (g) Amendment No. 6, dated August 15, 2001, to the Participation
Agreement dated May 1, 1998, between Transamerica Life Insurance
Company (formerly, PFL Life Insurance Company).(18)
- (h) Amendment No. 7, dated May 1, 2002, to the Participation
Agreement, dated May 1, 1998, between Registrant and Transamerica
Life Insurance Company (formerly, PFL Life Insurance
Company).(20)
- (i) Amendment No. 8, dated July 15, 2002, to the Participation
Agreement, dated May 1, 1998, between Registrant and Transamerica
Life Insurance Company (formerly, PFL Life Insurance
Company).(20)
- (j) Amendment No. 9, dated December 1, 2002, to the Participation
Agreement, dated May 1, 1998, between Registrant and Transamerica
Life Insurance Company (formerly, PFL Life Insurance
Company).(20)
- (k) Amendment No. 10, dated May 1, 2003, to the Participation
Agreement, dated May 1, 1998, between Registrant and Transamerica
Life Insurance Company (formerly, PFL Life Insurance
Company).(27)
- (l) Amendment No. 11, dated December 1, 2003, to the
Participation Agreement, dated May 1, 1998, between Registrant
and Transamerica Life Insurance Company (formerly, PFL Life
Insurance Company).(27)
- (m) Amendment No. 12, dated May 1, 2004, to the Participation
Agreement, dated May 1, 1998, between Registrant and Transamerica
Life Insurance Company (formerly, PFL Life Insurance
Company).(27)
- (n) Amendment No. 13, dated September 1, 2005, to the
Participation Agreement, dated May 1, 1998, between Registrant
and Transamerica Life Insurance Company (formerly, PFL Life
Insurance Company).(27)
|
- (o) Amendment No. 14, dated May 1, 2006, to the Participation
Agreement, dated May 1, 1998, between Registrant and Transamerica
Life Insurance Company (formerly, PFL Life Insurance
Company).(27)
- (p) Amendment and Novation, dated May 1, 2007, to the
Participation Agreement, dated May 1, 1998, between Registrant
and Transamerica Life Insurance Company (formerly, PFL Life
Insurance Company).(29)
- (q) Amendment, dated July 30, 2007, to the Participation
Agreement, dated May 1, 1998, between Registrant and Transamerica
Life Insurance Company (formerly, PFL Life Insurance
Company).(29)
- (r) Amendment, dated January 10, 2008, to the Participation
Agreement, dated May 1, 1998, between Registrant and Transamerica
Life Insurance Company (formerly, PFL Life Insurance
Company).(30)
(30) - (a) Participation Agreement, dated May 1, 1998, between
Registrant and Fortis Benefits Insurance Company.(7)
- (b) Amendment No. 1, dated April 30, 2004, to the Participation
Agreement, dated May 1, 1998, between Registrant and Fortis
Benefits Insurance Company (n/k/a Union Security Insurance
Company).(28)
(31) - (a) Participation Agreement, dated June 1, 1998, between
Registrant and American General Life Insurance Company.(7)
- (b) Amendment No. 1, dated January 1, 1999, to the Participation
Agreement, dated June 1, 1998, between Registrant and American
General Life Insurance Company.(9)
- (c) Amendment No. 2, dated September 29, 1999, to the
Participation Agreement, dated June 1, 1998, between Registrant
and American General Life Insurance Company.(14)
- (d) Amendment No. 3, dated February 1, 2000, to the Participation
Agreement, dated June 1, 1998, between Registrant and American
General Life Insurance Company.(14)
- (e) Amendment No. 4, dated November 1, 2000, to the Participation
Agreement, dated June 1, 1998, between Registrant and American
General Life Insurance Company.(18)
- (f) Amendment No. 5, dated May 14, 2002, to the Participation
Agreement, dated June 1, 1998, between Registrant and American
General Life Insurance Company.(20)
- (g) Amendment No. 6, dated October 1, 2002, to the Participation
Agreement, dated June 1, 1998, between Registrant and American
General Life Insurance Company.(27)
- (h) Amendment No. 7, dated January 15, 2004, to the Participation
Agreement, dated June 1, 1998, between Registrant and American
General Life Insurance Company.(27)
|
- (i) Amendment No. 8, dated January 1, 2005, to the Participation
Agreement, dated June 1, 1998, between Registrant and American
General Life Insurance Company.(27)
- (j) Amendment No. 9, dated May 1, 2006, to the Participation
Agreement, dated June 1, 1998, between Registrant and American
General Life Insurance Company.(28)
- (k) Amendment No. 10, dated August 31, 2007, to the Participation
Agreement, dated June 1, 1998, between Registrant and American
General Life Insurance Company.(29)
- (l) Amendment No. 11, dated February 1, 2008, to the
Participation Agreement, dated June 1, 1998, between Registrant
and American General Life Insurance Company.(30)
(32) - (a) Participation Agreement, dated June 16, 1998, between
Registrant and Lincoln National Life Insurance Company.(7)
- (b) Amendment No. 1, dated November 20, 1998, to the
Participation Agreement, dated June 16, 1998, between Registrant
and Lincoln National Life Insurance Company.(8)
- (c) Amendment No. 2, dated May 1, 1999, to the Participation
Agreement, dated June 16, 1998, between Registrant and Lincoln
National Life Insurance Company.(14)
- (d) Amendment No. 3, dated October 14, 1999, to the Participation
Agreement, dated June 16, 1998, between Registrant and Lincoln
National Life Insurance Company.(14)
- (e) Amendment No. 4, dated May 1, 2000, to the Participation
Agreement, dated June 16, 1998, between Registrant and Lincoln
National Life Insurance Company.(14)
- (f) Amendment No. 5, dated July 15, 2000, to the Participation
Agreement, dated June 16, 1998, between Registrant and Lincoln
National Life Insurance Company.(18)
- (g) Amendment No. 6, dated July 15, 2001, to the Participation
Agreement dated June 16, 1998, between Registrant and Lincoln
National Life Insurance Company.(18)
- (h) Amendment No. 7, dated May 1, 2003, to the Participation
Agreement, dated June 16, 1998, between Registrant and Lincoln
National Life Insurance Company.(27)
- (i) Amendment No. 8, dated April 30, 2004, to the Participation
Agreement, dated June 16, 1998, between Registrant and Lincoln
National Life Insurance Company.(27)
- (j) Amendment No. 9, dated May 1, 2006, to the Participation
Agreement, dated June 16, 1998, between Registrant and Lincoln
National Life Insurance Company.(28)
|
(33) - (a) Participation Agreement, dated June 30, 1998, between
Registrant and Aetna Life Insurance and Annuity Company.(7)
- (b) Amendment No. 1, dated October 1, 2000, to the Participation
Agreement, dated June 30, 1998, between Registrant and AETNA Life
Insurance and Annuity Company.(18)
- (c) Amendment, dated July 12, 2002, to the Participation
Agreement, dated June 30, 1998, between Registrant and AETNA Life
Insurance and Annuity Company (n/k/a ING Life Insurance and
Annuity Company).(27)
(34) - (a) Participation Agreement, dated July 1, 1998, between
Registrant and The Union Central Life Insurance Company.(8)
- (b) Amendment 2, dated July 1, 2001, to the Participation
Agreement, dated July 1, 1998, between Registrant and The Union
Central Life Insurance Company.(28)
- (c) Amendment, dated January 1, 2003, to the Participation
Agreement, dated July 1, 1998, between Registrant and The Union
Central Life Insurance Company.(20)
- (d) Amendment, dated April 30, 2004, to the Participation
Agreement, dated July 1, 1998, between Registrant and The Union
Central Life Insurance Company (ING Life Insurance and Annuity
Company).(27)
- (e) Amendment 4, dated June 30, 2006, to the Participation
Agreement, dated July 1, 1998, between Registrant and The Union
Central Life Insurance Company.(28)
- (f) Amendment, dated November 5, 2007, to the Participation
Agreement, dated July 1, 1998, between Registrant and The Union
Central Life Insurance Company.(29)
(35) - (a) Participation Agreement, dated July 1, 1998, between
Registrant and United Investors Life Insurance Company.(8)
- (b) Amendment No. 1, dated July 1, 2002, to the Participation
Agreement, dated July 1, 1998, between Registrant and United
Investors Life Insurance Company.(27)
(36) - (a) Participation Agreement, dated July 2, 1998, between
Registrant and Hartford Life Insurance Company.(7)
- (b) Amendment No. 1, dated April 29, 2002, to be effective as of
November 1, 2000, to the Participation Agreement, dated July 2,
1998, between Registration and Hartford Life Insurance
Company.(20)
- (c) Amendment No. 2, dated September 20, 2001, to the
Participation Agreement, dated July 2, 1998, between Registrant
and Hartford Life Insurance Company.(20)
- (d) Amendment No. 3, dated June 1, 2003, to the Participation
Agreement, dated July 2, 1998, between Registrant and Hartford
Life Insurance Company.(27)
|
- (e) Amendment No. 4, dated November 1, 2003, to the Participation
Agreement, dated July 2, 1998, between Registrant and Hartford
Life Insurance Company.(27)
- (f) Amendment No. 5, dated May 1, 2004, to the Participation
Agreement, dated July 2, 1998, between Registrant and Hartford
Life Insurance Company.(27)
- (g) Form of Amendment No. 6, dated ___________, to the
Participation Agreement, dated July 2, 1998, between Registrant
and Hartford Life Insurance Company.(30)
(37) - (a) Participation Agreement, dated July 13, 1998, between
Registrant and Keyport Benefit Life Insurance Company.(7)
- (b) Amendment No. 1, dated December 28, 1998 to the Participation
Agreement, dated July 13, 1998, between Registrant and Keyport
Benefit Life Insurance Company.(8)
- (c) Amendment No. 2, dated March 12, 2001, to the Participation
Agreement, dated July 13, 1998, between Registrant and Keyport
Benefit Life Insurance Company.(27)
(38) - (a) Amended and Restated Participation Agreement, dated July 31,
2007, to the Participation Agreement, dated July 27, 1998,
between Registrant, A I M Distributors, Inc., and Commonwealth
Annuity and Life Insurance Company (formerly, Allmerica Financial
Life Insurance and Annuity Company).(29)
- (b) Amendment No. 1, dated March 1, 2008, to the Participation
Agreement, dated July 31, 2007, between Registrant AIM
Distributors, Inc., and Commonwealth Annuity and Life Insurance
Company (formerly, Allmerica Financial Life Insurance and Annuity
Company).(30)
(39) - (a) Participation Agreement, dated July 27, 1998, between
Registrant and First Allmerica Financial Life Insurance
Company.(7)
- (b) Amendment No. 1, dated February 11, 2000, to the
Participation Agreement, dated July 27, 1998, between Registrant
and First Allmerica Financial Life Insurance Company.(13)
- (c) Amendment No. 2, dated April 10, 2000, to the Participation
Agreement, dated July 27, 1998, between Registrant and First
Allmerica Financial Life Insurance Company.(14)
- (d) Amendment No. 3, dated May 1, 2000, to the Participation
Agreement, dated July 27, 1998, between Registrant and First
Allmerica Financial Life Insurance Company.(14)
- (e) Amendment No. 4, dated October 4, 2000, to the Participation
Agreement, dated July 27, 1998, between Registrant and First
Allmerica Financial Life Insurance Company.(14)
- (f) Amendment No. 5, dated December 1, 2000, to the Participation
Agreement, dated July 27, 1998, between Registrant and First
Allmerica Financial Life Insurance Company.(18)
|
- (g) Amendment No. 6, dated May 1, 2001, to the Participation
Agreement, dated July 27, 1998, between Registrant and First
Allmerica Financial Life Insurance Company.(18)
- (h) Amendment No. 7, dated May 1, 2002, to the Participation
Agreement, dated July 27, 1998, between Registrant and First
Allmerica Financial Life Insurance Company.(20)
- (i) Amendment dated January 1, 2003 to the Participation
Agreement, dated July 27, 1998, between Registrant and First
Allmerica Financial Life Insurance Company.(27)
(40) - (a) Participation Agreement, dated October 15, 1998, between
Registrant and Lincoln Life & Annuity Insurance Company of New
York.(9)
- (b) Amendment No. 1, dated February 15, 2000, to the
Participation Agreement, dated October 15, 1998, between
Registrant and Lincoln Life & Annuity Insurance Company of New
York.(27)
- (c) Amendment No. 2, dated May 1, 2000, to the Participation
Agreement, dated October 15, 1998, between Registrant and Lincoln
Life & Annuity Insurance Company of New York.(27)
- (d) Amendment No. 3, dated July 15, 2000, to the Participation
Agreement, dated October 15, 1998, between Registrant and Lincoln
Life & Annuity Insurance Company of New York.(27)
- (e) Amendment, dated January 1, 2003, to the Participation
Agreement, dated October 15, 1998, between Registrant and Lincoln
Life & Annuity Insurance Company of New York.(27)
- (f) Amendment No. 5, dated April 30, 2004, to the Participation
Agreement, dated October 15, 1998, between Registrant and Lincoln
Life & Annuity Insurance Company of New York.(27)
- (g) Amendment No. 6, dated October 1, 2006, to the Participation
Agreement, dated October 15, 1998, between Registrant and Lincoln
Life & Annuity Insurance Company of New York.(28)
- (h) Amendment No. 7, dated April 2, 2007, to the Participation
Agreement, dated October 15, 1998, between Registrant and Lincoln
Life & Annuity Insurance Company of New York.(29)
(41) - (a) Participation Agreement, dated November 23, 1998, between
Registrant and American General Annuity Insurance Company.(8)
- (b) Amendment No. 1, dated July 1, 1999, to the Participation
Agreement dated November 23, 1998, between Registrant and
American General Annuity Insurance Company.(11)
- (c) Amendment No. 2, dated August 1, 2000, to the Participation
Agreement, dated November 23, 1998, between Registrant and
American General Annuity Insurance Company.(14)
(42) - (a) Participation Agreement, dated December 1, 1998, between
Registrant and the Prudential Insurance Company of America.(8)
|
- (b) Amendment No. 1, dated March 8, 2000, to the Participation
Agreement, dated April 30, 1997, between Registrant and
Prudential Insurance Company of America.(27)
- (c) Amendment, dated April 30, 2004, to the Participation
Agreement, dated April 30, 1997, between Registrant and
Prudential Insurance Company of America.(27)
- (d) Amendment, dated May 1, 2006, to the Participation Agreement,
dated April 30, 1997, between Registrant and Prudential Insurance
Company of America.(29)
(43) - (a) Participation Agreement, dated February 1, 1999, between
Registrant and Sage Life Assurance of America, Inc.(9)
- (b) Amendment No. 1, dated October 1, 2001, to the Participation
Agreement, dated February 1, 1999, between Registrant and Sage
Life Assurance of America, Inc.(18)
- (c) Amendment No. 2, dated February 1, 2002, to the Participation
Agreement, dated February 1, 1999, between Registrant and Sage
Life Assurance of America, Inc.(27)
- (d) Amendment No. 3, dated May 1, 2003, to the Participation
Agreement, dated February 1, 1999, between Registrant and Sage
Life Assurance of America, Inc.(27)
(44) - (a) Participation Agreement, dated April 1, 1999, between
Registrant and Liberty Life Assurance Company of Boston.(9)
- (b) Amendment No. 1, dated May 1, 2001, to the Participation
Agreement, dated April 1, 1999, between Registrant and Liberty
Life Assurance Company of Boston.(18)
- (c) Amendment No. 2, dated April 30, 2004, to the Participation
Agreement, dated April 1, 1999, between Registrant and Liberty
Life Assurance Company of Boston.(27)
(d) Amendment No. 2, dated April 30, 2004, to the Participation
Agreement, dated April 1, 1999, between Registrant and Liberty
Life Assurance Company of Boston.(29)
(45) - Participation Agreement, dated April 13, 1999, between Registrant
and Western-Southern Life Insurance Company.(10)
(46) - (a) Participation Agreement, dated May 1, 1999, between
Registrant and Columbus Life Insurance Company.(10)
- (b) Amendment, dated April 25, 2003, to the Participation
Agreement, dated May 1, 1999, between Registrant and Columbus
Life Insurance Company.(27)
- (c) Amendment No. 2, dated April 30, 2004, to the Participation
Agreement, dated May 1, 1999, between Registrant and Columbus
Life Insurance Company.(27)
|
(47) - (a) Participation Agreement, dated April 26, 1999, between
Registrant and First Variable Life Insurance Company.(10)
- (b) Amendment, dated April 30, 2004, to the Participation
Agreement, dated April 26, 1999, between Registrant and
Protective Life Insurance Company (formerly, First Variable Life
Insurance Company).(27)
(48) - (a) Participation Agreement, dated August 21, 1999, between
Registrant and Life Investors Insurance Company of America.(11)
- (b) Amendment, dated July 12, 2006, to the Participation
Agreement, dated August 21, 1999, between Registrant and Life
Investors Insurance Company of America.(28)
- (c) Amendment and Novation, dated May 1, 2007, to the
Participation Agreement, dated August 21, 1999, between
Registrant and Life Investors Insurance Company of America.(29)
(49) - Participation Agreement, dated June 8, 1999, between Registrant
and The Principal Life Insurance Company.(10)
(50) - (a) Participation Agreement, dated June 8, 1999, between
Registrant and Principal Life Insurance Company.(11)
- (b) Amendment, dated April 1, 2001, to the Participation
Agreement, dated June 8, 1999, between Registrant and Principal
Life Insurance Company.(27)
- (c) Amendment, dated May 1, 2002, to the Participation Agreement,
dated June 8, 1999, between Registrant and Principal Life
Insurance Company.(20)
- (d) Amendment, dated August 15, 2002, to the Participation
Agreement, dated June 8, 1999, between Registrant and Principal
Life Insurance Company.(20)
- (e) Amendment. dated January 8, 2003, to the Participation
Agreement, dated June 8, 1999, between Registrant and Principal
Life Insurance Company.(27)
- (f) Amendment, dated February 14, 2003, to the Participation
Agreement, dated June 8, 1999, between Registrant and Principal
Life Insurance Company.(27)
- (g) Amendment, dated April 30, 2004, to the Participation
Agreement, dated June 8, 1999, between Registrant and Principal
Life Insurance Company.(27)
- (h) Amendment, dated April 29, 2005, to the Participation
Agreement, dated June 8, 1999, between Registrant and Principal
Life Insurance Company.(27)
- (i) Amendment No. 8, dated May 1, 2006, to the Participation
Agreement, dated June 8, 1999, between Registrant and Principal
Life Insurance Company.(29)
(51) - (a) Participation Agreement, dated June 14, 1999, between
Registrant and Security First Life Insurance Company.(11)
- (b) Amendment No. 1, dated April 30, 2007, to the Participation
Agreement, dated June 14 1999, between Registrant and Security
First Life Insurance Company.(29)
|
(52) - (a) Participation Agreement, dated July 1, 1999, between
Registrant and Allstate Life Insurance Company.(11)
- (b) Amendment No. 1, dated December 20, 2001, to the
Participation Agreement, dated July 1, 1999, between Registrant
and Allstate Life Insurance Company.(18)
- (c) Amendment No. 2, dated May 1, 2003, to the Participation
Agreement, dated July 1, 1999, between Registrant and Allstate
Life Insurance Company.(27)
(53) - (a) Participation Agreement, dated July 27, 1999, between
Registrant and Allianz Life Insurance Company of North
America.(11)
- (b) Amendment No. 1, dated May 1, 2005, to the Participation
Agreement, dated July 27, 1999, between Registrant and Allianz
Life Insurance Company of North America.(28)
- (c) Amendment No. 2, dated May 1, 2006, to the Participation
Agreement, dated July 27, 1999, between Registrant and Allianz
Life Insurance Company of North America.(28)
(54) - (a) Participation Agreement, dated July 27, 1999, between
Registrant and Preferred Life Insurance Company of New York.(11)
- (b) Amendment No. 1, dated May 1, 2006, to the Participation
Agreement, dated July 27, 1999, between Registrant and Allianz
Life Insurance Company of New York (formerly, preferred Life
Insurance Company of New York).(28)
(55) - Participation Agreement, dated August 31, 1999, between
Registrant and John Hancock Mutual Life Insurance Company.(11)
(56) - (a) Participation Agreement, dated August 31, 1999, between
Registrant and The United States Life Insurance Company in the
City of New York.(11)
- (b) Amendment No. 1, dated October 1, 2001, to the Participation
Agreement, dated August 31, 1999, between Registrant and The
United States Life Insurance Company in the City of New York.(27)
- (c) Amendment No. 2, dated December 31, 2002, to the
Participation Agreement, dated August 31, 1999, between
Registrant and The United States Life Insurance Company in the
City of New York.(27)
- (d) Amendment No. 3, dated September 5, 2003, to the
Participation Agreement, dated August 31, 1999, between
Registrant and The United States Life Insurance Company in the
City of New York.(27)
(57) - (a) Participation Agreement, dated November 1, 1999, between
Registrant and AETNA Insurance Company of America.(12)
- (b) Amendment No. 1, dated November 17, 2000, to the
Participation Agreement dated November 1, 1999, between
Registrant and AETNA Insurance Company of America.(18)
|
- (c) Amendment, dated July 12, 2002, to the Participation
Agreement, dated November 1, 1999, between Registrant and AETNA
Insurance Company of America.(27)
(58) - Participation Agreement, dated January 28, 2000, between
Registrant and Northbrook Life Insurance Company.(13)
(59) - (a) Participation Agreement, dated March 2, 2000, between
Registrant and GE Life and Annuity Assurance Company.(14)
- (b) Amendment No. 1, dated January 12, 2005, to the Participation
Agreement, dated March 2, 2000, between Registrant and GE Life
and Annuity Assurance Company.(27)
- (c) Amendment No. 2, dated April 29, 2005, to the Participation
Agreement, dated March 2, 2000, between Registrant and GE Life
and Annuity Assurance Company.(27)
- (d) Amendment No. 3, dated February 27, 2007, to the
Participation Agreement, dated March 2, 2000, between Registrant
and Genworth Life and Annuity Insurance Company (formerly, GE
Life and Annuity Assurance Company).(29)
- (e) Amendment No. 4, dated March 18, 2008, to the Participation
Agreement, dated March 2, 2000, between Registrant and Genworth
Life and Annuity Insurance Company (formerly, GE Life and Annuity
Assurance Company).(30)
(60) - Participation Agreement, dated March 27, 2000, between Registrant
and Reliastar Life Insurance Company of New York.(14)
(61) - Participation Agreement, dated March 27, 2000, between Registrant
and Northern Life Insurance Company.(14)
(62) - Participation Agreement, dated March 27, 2000, between Registrant
and Reliastar Life Insurance Company.(14)
(63) - (a) Participation Agreement, dated April 10, 2000, between
Registrant and Allmerica Financial Life Insurance and Annuity
Company.(14)
- (b) Amendment No. 1, dated December 1, 2000, to the Participation
Agreement, dated April 10, 2000, between Registrant and Allmerica
Financial Life Insurance and Annuity Company.(18)
(64) - (a) Participation Agreement, dated April 14, 2000, between
Registrant and United Investors Life Insurance Company.(14)
- (b) Amendment, dated April 30, 2004, to the Participation
Agreement, dated April 14, 2000, between Registrant and United
Investors Life Insurance Company.(27)
(65) - (a) Participation Agreement, dated April 17, 2000, between
Registrant and Sun Life Insurance and Annuity Company of New
York.(14)
- (b) Amendment No. 1, dated April 27, 2000, to the Participation
Agreement, dated April 17, 2000, between Registrant and Sun Life
Insurance and Annuity Company of New York.(20)
|
- (c) Amendment No. 2, dated September 1, 2001, to the
Participation Agreement, dated April 17, 2000, between Registrant
and Sun Life Insurance and Annuity Company of New York.(20)
- (d) Amendment No. 3, dated April 1, 2002, to the Participation
Agreement, dated April 17, 2000, between Registrant and Sun Life
Insurance and Annuity Company of New York.(20)
- (e) Amendment No. 4, dated December 31, 2002, to the
Participation Agreement, dated April 17, 2000, between Registrant
and Sun Life Insurance and Annuity Company of New York.(20)
- (f) Amendment No. 5, dated August 20, 2003, to the Participation
Agreement, dated April 17, 2000, between Registrant and Sun Life
Insurance and Annuity Company of New York.(27)
- (g) Amendment No. 6, dated April 30, 2004, to the Participation
Agreement, dated April 17, 2000, between Registrant and Sun Life
Insurance and Annuity Company of New York.(27)
- (h) Amendment No. 7, dated October 1, 2006, to the Participation
Agreement, dated April 17, 2000, between Registrant and Sun Life
Insurance and Annuity Company of New York.(28)
- (i) Amendment No. 8, dated January 29, 2007, to the Participation
Agreement, dated April 17, 2000, between Registrant and Sun Life
Insurance and Annuity Company of New York.(29)
- (j) Amendment No. 9, dated May 1, 2007, to the Participation
Agreement, dated April 17, 2000, between Registrant and Sun Life
Insurance and Annuity Company of New York.(29)
- (k) Amendment No. 10, dated August 1, 2007, to the Participation
Agreement, dated April 17, 2000, between Registrant and Sun Life
Insurance and Annuity Company of New York.(29)
(66) - (a) Participation Agreement, dated August 1, 2000, between
Registrant and Kansas City Life Insurance Company.(14)
- (b) Amendment, dated October 31, 2002, to the Participation
Agreement, dated August 1, 2000, between Registrant and Kansas
City Life Insurance Company.(27)
(67) - (a) Participation Agreement, dated September 25, 2000, between
Registrant and Security Life of Denver Insurance Company.(14)
- (b) Amendment No. 1, dated September 5, 2001, to the Private
Placement Participation Agreement, dated September 25, 2000,
between Registrant and Security Life of Denver Insurance
Company.(18)
(68) - (a) Participation Agreement, dated February 26, 1999, between
Registrant and American General Life Insurance Company.(18)
|
- (b) Amendment No. 1, dated November 1, 2000, to the Participation
Agreement, dated February 26, 1999, between Registrant and
American General Life Insurance Company.(18)
- (c) Amendment No. 2, dated October 1, 2002, to the Participation
Agreement, dated February 26, 1999, between Registrant and
American General Life Insurance Company.(27)
(69) - (a) Participation Agreement, dated April 3, 2000, between
Registrant and First Cova Life Insurance Company.(18)
- (b) Amendment No. 1, dated February 12, 2001, to the
Participation Agreement dated December 31, 1997, between
Registrant and First MetLife Investors Insurance Company
(formerly, First Cova Life Insurance Company).(18)
- (c) Amendment No. 2, dated April 30, 2007, to the Participation
Agreement dated December 31, 1997, between Registrant and First
MetLife Investors Insurance Company (formerly, First Cova Life
Insurance Company).(29)
(70) - (a) Participation Agreement, dated February 1, 2001, between
Registrant and Peoples Benefit Life Insurance Company.(18)
- (b) Amendment, dated April 6, 2004, to the Participation
Agreement between Registrant and Peoples Benefit Life Insurance
Company.(27)
- (c) Amendment and Novation, dated May 1, 2007, to the
Participation Agreement, dated February 1, 2001, between
Registrant and People's Benefit Life Insurance Company.(29)
(71) - (a) Participation Agreement, dated March 28, 2001, between
Registrant and Security Benefit Life Insurance Company.(18)
- (b) Amendment No. 1, dated May 1, 2003, to the Participation
Agreement, dated March 28, 2001, between Registrant and Security
Benefit Life Insurance Company.(27)
- (c) Amendment No. 2, dated September 29, 2005, to the
Participation Agreement, dated March 28, 2001, between Registrant
and Security Benefit Life Insurance Company.(27)
- (d) Amendment No. 3, dated November 15, 2006, to the
Participation Agreement, dated March 28, 2001, between Registrant
and Security Benefit Life Insurance Company.(28)
(72) - Participation Agreement, dated March 29, 2001, between Registrant
and Phoenix Home Life Mutual Insurance Company.(18)
(73) - Participation Agreement, dated March 29, 2001, between Registrant
and Phoenix Life and Annuity Company.(18)
(74) - (a) Participation Agreement, dated March 29, 2001, between
Registrant and PHL Variable Insurance Company.(18)
- (b) Amendment No. 1, dated February 1, 2008, to the Participation
Agreement, dated March 29, 2001, between Registrant and PHL
Variable Insurance Company.(30)
|
(75) - (a) Participation Agreement, dated April 4, 2001, between
Registrant and Annuity Investors Life Insurance Company.(18)
- (b) Amendment No. 1, dated July 1, 2002, to the Participation
Agreement, dated April 4, 2001, between Registrant and Annuity
Investors Life Insurance Company.(27)
- (c) Amended, dated April 30, 2004, to the Participation
Agreement, dated April 4, 2001, between Registrant and Annuity
Investors Life Insurance Company.(27)
- (d) Amended, dated May 1, 2008, to the Participation Agreement,
dated April 4, 2001, between Registrant and Annuity Investors
life Insurance Company.(30)
(76) - Participation Agreement, dated April 17, 2001, between Registrant
and Sun Life Insurance and Annuity Company of New York.(18)
(77) - (a) Participation Agreement, dated April 30, 2001, between
Registrant and Western Reserve Life Assurance Co. of Ohio.(18)
- (b) Amendment, dated April 30, 2001, to the Participation
Agreement, dated April 30, 2001, between Registrant and Western
Reserve Life Assurance Co. of Ohio.(27)
- (c) Amendment, dated July 12, 2006, to the Participation
Agreement, dated April 30, 2001, between Registrant and Western
Reserve Life Assurance Co. of Ohio.(28)
- (d) Amendment and Novation dated May 1, 2007, to the
Participation Agreement, dated April 30, 2001, between Registrant
and Western Reserve Life Assurance Co. of Ohio.(29)
(78) - (a) Participation Agreement, dated July 13, 2001, between
Registrant and Golden American Life Insurance Company.(18)
- (b) Amendment, dated April 30, 2004, to the Participation
Agreement, dated July 13, 2001, between Registrant and Golden
American Life Insurance Company.(27)
(79) - (a) Participation Agreement, dated July 24, 2001, between
Registrant and Lincoln Benefit Life Company.(18)
- (b) Amendment No. 1, dated December 18, 2002, to the
Participation Agreement, dated July 24, 2001, between Registrant
and Lincoln Benefit Life Company.(20)
(80) - (a) Participation Agreement, dated October 1, 2000, between
Registrant and The Travelers Life and Annuity Company.(18)
- (b) Amendment, dated May 1, 2003, to the Participation Agreement,
dated October 1, 2000, between Registrant and The Travelers Life
and Annuity Company.(27)
|
- (c) Amendment, dated March 31, 2005, to the Participation
Agreement, dated October 1, 2000, between Registrant and The
Travelers Life and Annuity Company.(27)
- (d) Form of Amendment, dated April 28, 2008, to the Participation
Agreement, dated October 1, 2000, between Registrant and MetLife
Insurance Company of Connecticut (formerly, The Travelers Life
and Annuity Company).(30)
(81) - Participation Agreement, dated November 1, 2001, between
Registrant and The American Life Insurance Company of New
York.(18)
(82) - (a) Participation Agreement, dated May 1, 2002, between the
Registrant and Hartford Life and Annuity Insurance Company.(27)
- (b) Amendment No. 1, dated April 30, 2004, to the Participation
Agreement, dated May 1, 2002, to the Participation Agreement
dated May 1, 2002, between the Registrant and Hartford Life and
Annuity Insurance Company.(27)
(83) - (a) Participation Agreement, dated March 4, 2002, between
Registrant and Minnesota Life Insurance Company.(19)
- (b) Amendment No. 1, dated April 30, 2004, to the Participation
Agreement, dated March 4, 2002, between Registrant and Minnesota
Life Insurance Company, Inc.(27)
- (c) Amendment No. 2, dated April 1, 2005, to the Participation
Agreement, dated March 4, 2002, between Registrant and Minnesota
Life Insurance Company, Inc.(27)
- (d) Amendment No. 3, dated October 1, 2006, to the Participation
Agreement, dated March 4, 2002, between Registrant and Minnesota
Life Insurance Company, Inc.(28)
(84) - (a) Participation Agreement, dated May 1, 2002, between
Registrant and AUSA Life Insurance Company, Inc.(20)
- (b) Amendment No. 1, dated May 1, 2004, to the Participation
Agreement, dated May 1, 2002, between Registrant and AUSA Life
Insurance Company, Inc.(27)
- (c) Amendment, dated July 12, 2006, to the Participation
Agreement, dated May 1, 2002, between Registrant and Transamerica
Financial Life Insurance Company (formerly, AUSA Life Insurance
Company, Inc.).(28)
- (d) Amendment and Novation, dated May 1, 2007, to the
Participation Agreement, dated May 1, 2002, between Registrant
and Transamerica Financial Life Insurance Company (formerly, AUSA
Life Insurance Company, Inc.).(29)
- (e) Amendment, dated July 30, 2007, to the Participation
Agreement, dated May 1, 2002, between Registrant and Transamerica
Financial Life Insurance Company (formerly, AUSA Life Insurance
Company, Inc.).(29)
- (f) Amendment, dated January 10, 2008, to the Participation
Agreement, dated May 1, 2002, between Registrant and Transamerica
Financial Life Insurance Company (formerly, AUSA Life Insurance
Company, Inc.). (30)
|
(85) - (a) Participation Agreement, dated October 1, 2002, between
Registrant and CUNA Mutual Life Insurance Company.(20)
- (b) Amendment No. 1, dated May 1, 2004, to the Participation
Agreement, dated October 1, 2002, between Registrant and CUNA
Brokerage Services, Inc.(30)
- (c) Amendment No. 2, dated March 19, 2008, to the Participation
Agreement, dated October 1, 2002, between Registrant and CUNA
Brokerage Services, Inc.(30)
(86) - (a) Participation Agreement, dated May 1, 2000, between
Registrant and SAFECO Life Insurance Company.(27)
- (b) Amendment, dated May 1, 2003, to the Participation Agreement,
dated May 1, 2000, between Registrant and SAFECO Life Insurance
Company.(27)
- (c) Amendment, dated April 30, 2004, to the Participation
Agreement, dated May 1, 2000, between Registrant and SAFECO Life
Insurance Company.(27)
- (d) Amendment, dated July 15, 2005, to the Participation
Agreement, dated May 1, 2000, between Registrant and SAFECO Life
Insurance Company (n/k/a Symetra Life Insurance Company.(27)
(87) - (a) Participation Agreement, dated May 22, 2002, between
Registrant and The Penn Mutual Life Insurance Company.(27)
- (b) Amendment No. 1, dated May 1, 2004, to the Participation
Agreement, dated May 22, 2002, between Registrant and the Penn
Mutual Life Insurance Company.(27)
(88) - (a) Participation Agreement, dated June 21, 2002, between
Registrant and First Security Benefit Life Insurance and Annuity
Company.(27)
- (b) Amendment No. 1, dated May 1, 2003, to the Participation
Agreement, dated June 21, 2002, between Registrant and First
Security Benefit Life Insurance and Annuity Company.(27)
- (c) Amendment No. 2, dated September 29, 2005, to the
Participation Agreement, dated June 21, 2002, between Registrant
and First Security Benefit Life Insurance and Annuity
Company.(27)
- (d) Amendment No. 3, dated November 15, 2006, to the
Participation Agreement, dated June 21, 2002, between Registrant
and First Security Benefit Life Insurance and Annuity
Company.(28)
(89) - Participation Agreement, dated April 30, 2003, between Registrant
and MONY Life Insurance Company.(27)
(90) - Participation Agreement, dated April 30, 2003, between Registrant
and MONY Life Insurance Company of America.(27)
(91) - (a) Participation Agreement, dated September 1, 2005, between
Registrant and American National Insurance Company.(27)
|
- (b) Amendment, dated March 2, 2007, to the Participation
Agreement, dated September 1, 2005, between Registrant and
American National Insurance Company.(29)
(92) - (a) Participation Agreement, dated October 12, 1999, between
Registrant and Security Equity Life Insurance Company.(27)
- (b) Amendment No. 1, dated October 31, 2003, to the Participation
Agreement, dated October 12, 1999, between Registrant and
Security Equity Life Insurance Company.(27)
(93) - (a) Participation Agreement, dated October 12, 1999, between
Registrant and General American Life Insurance Company.(27)
- (b) Amendment, dated September 2, 2002, to the Participation
Agreement, dated October 12, 1999, between Registrant and General
American Life Insurance Company.(27)
(94) - (a) Participation Agreement, dated May 1, 2003, between
Registrant and Jefferson National Life Insurance Company.(27)
- (b) Amendment, dated April 30, 2004, to the Participation
Agreement, dated May 1, 2003, between Registrant and Jefferson
National Life Insurance Company.(27)
- (c) Amendment, dated May 1, 2006, to the Participation Agreement,
dated May 1, 2003, between Registrant and Jefferson National Life
Insurance Company.(27)
- (d) Amendment, dated May 1, 2008, to the Participation Agreement,
dated May 1, 2003, between Registrant and Jefferson National Life
Insurance Company.(30)
(95) - Participation Agreement, dated April 30, 2004, between Registrant
and Midland National Life Insurance Company.(27)
(96) - Participation Agreement, dated April 30, 2004, between Registrant
and National Life Insurance Company.(27)
(97) - (a) Participation Agreement, dated April 30, 2004, between
Registrant and Metropolitan Life Insurance Company.(27)
- (b) Form of Amendment No. 1, dated April 28, 2008, to the
Participation Agreement, dated April 30, 2004, between Registrant
and Metropolitan Life Insurance Company.(30)
(98) - (a) Participation Agreement, dated April 30, 2004, between
Registrant and Ameritas Life Insurance Corporation (formerly,
Ameritas Variable Life Insurance Company).(27)
- (b) Amendment No. 1, dated July 31, 2006, to the Participation
Agreement, dated April 30, 2004, between Registrant and Ameritas
Life Insurance Corporation (formerly, Ameritas Variable Life
Insurance Company).(28)
|
- (c) Amendment No. 2, dated November 5, 2007, to the Participation
Agreement, dated April 30, 2004, between Registrant and Ameritas
Life Insurance Corporation (formerly, Ameritas Variable Life
Insurance Company).(29)
(99) - (a) Participation Agreement, dated April 30, 2004, between
Registrant and Ameritas Life Insurance Company.(27)
- (b) Novation to Participation Agreement, dated February 26, 2007,
to the Participation Agreement, dated April 30, 2004, between
Registrant and Ameritas Life Insurance Company.(28)
- (c) Amendment No. 1, effective November 5, 2007, to the
Participation Agreement, dated April 30, 2004, between Registrant
and Ameritas Life Insurance Corp.(29)
(100) - Participation Agreement, dated April 30, 2004, between Registrant
and Business Men's Assurance Company of America.(27)
(101) - Participation Agreement, dated April 30, 2004, between Registrant
and American Skandia Life Assurance Corp.(27)
(102) - Participation Agreement, dated April 30, 2004, between Registrant
and Great- West Life Annuity Insurance Company.(27)
(103) - Participation Agreement, dated April 30, 2004, between Registrant
and American United Life Insurance Company.(27)
(104) - (a) Participation Agreement, dated March 2, 2003, between
Registrant and GE Capital Life Assurance Company of New York.(27)
- (b) Amendment No. 1, dated April 29, 2005, to the Participation
Agreement, dated March 2, 2003, between Registrant and GE Capital
Life Assurance Company of New York.(27)
- (c) Amendment No. 2, dated February 27, 2007, to the
Participation Agreement, dated March 2, 2003, between Registrant
and Genworth Life Insurance Company of New York (formerly, GE
Capital Life Assurance Company of New York).(29)
- (d) Amendment No. 3, dated March 18, 2008, to the Participation
Agreement, dated March 2, 2003, between Registrant and Genworth
Life Insurance Company of New York (formerly, GE Capital life
Assurance Company of New York).(30)
(105) - Participation Agreement, dated April 30, 2004, between Registrant
and American Partners Life Insurance Company.(27)
(106) - Participation Agreement, dated April 30, 2004, between Registrant
and Massachusetts Mutual Life Insurance Company.(27)
(107) - Participation Agreement, dated April 30, 2004, between Registrant
and C.M. Life Insurance Company.(27)
(108) - Participation Agreement, dated July 1, 2005, between Registrant
and AXA Equitable Life Insurance Company.(27)
|
(109) - (a) Participation Agreement, dated September 14, 2005, between
Registrant and New York Life Insurance and Annuity Corp.(27)
- (b) Addendum, dated March 17, 2006, to the Participation
Agreement, dated September 14, 2005, between Registrant and New
York Life Insurance and Annuity Corp.(27)
(110) - Participation Agreement, dated April 30, 2004, between Registrant
and Chase Insurance Life and Annuity Company.(27)
(111) - (a) Participation Agreement, dated April 30, 2004, between
Registrant and Kemper Investors Life Insurance Company.(27)
- (b) Form of Amendment No. 1, dated ________________, to the
Participation Agreement, dated April 30, 2004, between Registrant
and Kemper Investors Life Insurance Company.(30)
(112) - (a) Participation Agreement, dated January 6, 2003, between
Registrant and Nationwide Life Insurance Company.(27)
- (b) Amendment No. 1, dated April 30, 2004, to the Participation
Agreement, dated January 6, 2003, between Registrant and
Nationwide Life Insurance Company.(27)
- (c) Amendment No. 2, dated July 1, 2005, to the Participation
Agreement, dated January 6, 2003, between Registrant and
Nationwide Life Insurance Company.(27)
(113) - (a) Participation Agreement, dated April 30, 2004, between
Registrant, A I M Distributors, Inc. and First Great-West Life &
Annuity Insurance Company.(28)
- (b) Amendment No. 1, dated November 15, 2007, to the
Participation Agreement dated April 30, 2004, between Registrant,
A I M Distributors, Inc., and First Great-West Life & Annuity
Insurance Company.(29)
- (c) Amendment No. 2, dated February 20, 2008, to the
Participation Agreement dated April 30, 2004, between Registrant,
A I M Distributors, Inc., and First Great-West Life & Annuity
Insurance Company.(30)
(114) - (a) Participation Agreement, dated April 30, 2004, between
Registrant, A I M Distributors, Inc., and Great-West Life &
Annuity Insurance Company.(29)
- (b) Amendment No. 1, dated April 30, 2004, to the Participation
Agreement, dated April 30, 2004, between Registrant, A I M
Distributors, Inc. and Great-West Life & Annuity Insurance
Company.(28)
- (c) Amendment No. 2, dated August 1, 2006, to the Participation
Agreement, dated April 30, 2004, between Registrant, A I M
Distributors, Inc. and Great-West Life & Annuity Insurance
Company.(28)
- (d) Amendment No. 3, dated November 15, 2007, to the
Participation Agreement, dated April 30, 2004, between
Registrant, A I M Distributors, Inc. and Great-West Life &
Annuity Insurance Company.(29)
|
(115) - Participation Agreement, dated April 30, 2004, between Registrant
and The Manufacturers Life Insurance Company of New York
(effective January 1, 2005, John Hancock Life Insurance Company
of New York).(28)
(116) - Participation Agreement, dated April 30, 2004, between Registrant
and The Manufacturers Life Insurance Company (U.S.A.) (effective
January 1, 2005, John Hancock Life Insurance Company
(U.S.A.).(28)
(117) - Accounting Services Agreement, dated March 31, 1993, between the
Registrant and State Street Bank and Trust Company.(4)
(118) - Agreement and Plan of Reorganization, dated December 7, 1999,
between Registrant and AIM Variable Insurance Funds.(12)
(119) - Third Amended and Restated Interfund Loan Agreement, dated
December 30, 2005, between Registrant and A I M Advisors, Inc.(
28)
(120) - Fourth Amended and Restated Memorandum of Agreement, dated as of
July 1, 2008, between Registrant, on behalf of all funds, and
Invesco Aim Advisors, Inc., regarding securities lending.(31)
(121) - Memorandum of Agreement, dated as of July 1, 2008, between
Registrant, on behalf of certain funds, and Invesco Aim Advisors,
Inc., regarding advisory fee waivers.(31)
(122) - Memorandum of Agreement, dated as of July 1, 2008, between
Registrant, on behalf of all funds, and Invesco Aim Advisors,
Inc., regarding expense limitations.(31)
(123) - Memorandum of Agreement, dated as of July 1, 2008, between
Registrant, on behalf of all funds, and Invesco Aim Advisors,
Inc., regarding Affiliated Money Market Fund Waiver.(31)
|
i - Opinion and Consent of Stradley Ronon Stevens and Young, LLP.(31)
j - Other Opinions - None
k - Financial Statements for the period ended December 31, 2007 are
incorporated by reference to the Funds' annual reports to
shareholders contained in the Registrant's Form N-CSR filed on
March 3, 2008.
l (1) - (a) Agreements Concerning Initial Capitalization of the AIM V.I.
Capital Appreciation Fund, the AIM V.I. Diversified Income Fund,
the AIM V.I. Government Securities Fund, the AIM V.I. Growth
Fund, the AIM V.I. International Equity Fund, the AIM V.I. Money
Market Fund, and the AIM V.I. Value Fund.(4)
- (b) Agreements Concerning Initial Capitalization of the AIM V.I.
Growth and Income Fund and the AIM V.I. Utilities Fund.(4)
- (c) Agreement Concerning Initial Capitalization of the AIM V.I.
Aggressive Growth Fund, the AIM V.I. Balanced Fund, the AIM V.I.
Capital Development Fund and the AIM V.I. High Yield Fund.(7)
|
- (d) Agreement Concerning Initial Capitalization of the AIM V.I.
Blue Chip Fund.(11)
- (e) Agreement Concerning Initial Capitalization of the AIM V.I.
Dent Demographic Trends Fund.(11)
- (f) Agreement Concerning Initial Capitalization of the AIM V.I.
Basic Value Fund and the AIM V.I. Mid Cap Equity Fund, dated
September 7, 2001.(18)
- (g) Form of Agreement Concerning Initial Capitalization of AIM V.I. PowerShares ETF Allocation Fund, dated ___________, 2008.(31)
m (1) - (a) Registrant's Master Distribution Plan pursuant to Rule 12b-1
for Series II shares.(17)
- (b) Amendment No. 1 to the Registrant's Master Distribution Plan,
dated September 7, 2001.(18)
- (c) Amendment No. 2 to the Registrant's Master Distribution Plan,
dated May 1, 2002.(20)
- (d) Amendment No. 3 to the Registrant's Master Distribution Plan,
dated August 29, 2003.(22)
- (e) Amendment No. 4 to the Registrant's Master Distribution Plan,
dated April 30, 2004.(24)
- (f) Amendment No. 5 to the Registrant's Master Distribution Plan,
dated October 15, 2004.(24)
- (g) Amendment No. 6 to the Registrant's Master Distribution Plan,
dated July 1, 2005.(26)
- (h) Amendment No. 7 to the Registrant's Master Distribution Plan,
dated December 21, 2005.(26)
- (i) Amendment No. 8 to the Registrant's Master Distribution Plan,
dated May 1, 2006.(28)
- (j) Amendment No. 9, to the Registrant's Master Distribution
Plan, dated June 12, 2006.(28)
- (k) Amendment No. 10, to the Registrant's Master Distribution
Plan, July 3, 2006.(28)
- (l) Amendment No. 11, to the Registrant's Master Distribution
Plan, dated November 6, 2006.(28)
- (m) Amendment No. 12, to the Registrant's Master Distribution
Plan, dated December 21, 2006.(28)
- (n) Amendment No. 13, to the Registrant's Master Distribution
Plan, dated May 1, 2007.(29)
- (o) Form of Amendment No. 14, to the Registrant's Master
Distribution Plan,
|
dated December 21, 2006.(31)
n - Registrant's Amended and Restated Multiple Class Plan, effective
July 16, 2001, as amended and restated August 18, 2003.(22)
o - Reserved
p (1) - AIM Funds and A I M Management Group, Inc. Code of Ethics,
originally adopted May 1, 1981, amended effective as of February
16, 2006.(28)
(2) - Invesco Institutional (N.A.), Inc., Code of Ethics adopted May
19, 2006.(28)
(3) - Code of Ethics relating to INVESCO Asset Management (Japan)
Limited.(29)
(4) - INVESCO Code of Ethics, dated February 2008, relating to Invesco
Global Asset Management (N.A.), Inc., Invesco Institutional
(N.A.), Inc. and Invesco Senior Secured Management, Inc.(30)
(5) - Invesco Staff Ethics and Personal Share Dealing, dated April
2007, relating to Invesco Hong Kong Limited.(29)
(6) - INVESCO PLC Code of Conduct, revised October 2007, AIM Trimark
Investments Addendum to the AMVESCAP Code of Conduct, revised
April 2, 2007, Policy No. D-6 Gifts and Entertainment, revised
April 2007, and Policy No. D-7 AIM Trimark Personal Trading
Policy, revised March 2007, together the Code of Ethics relating
to Invesco Trimark Investment Management Inc.(31)
(7) - Code of Ethics relating to Invesco Asset Management Deutschland
GmbH.(29)
(8) - Code of Ethics relating to Invesco Asset Management Limited.(29)
(9) - INVESCO PLC Code of Conduct, revised October 2007, relating to
Invesco Australia Limited.(31)
q - Powers of Attorney for Baker, Bayley, Bunch, Crockett, Dowden,
Fields, Flanagan, Frischling, Mathai-Davis, Pennock, Soll,
Stickel and Taylor.(30)
|
(1) Incorporated herein by reference to Pre-Effective Amendment No.
1, filed on April 19, 1993.
(2) Incorporated herein by reference to Post-Effective Amendment No.
4, filed on November 3, 1994.
(3) Incorporated herein by reference to Post-Effective Amendment No.
6, filed on April 26, 1995.
(4) Incorporated herein by reference to Post-Effective Amendment No.
7, filed electronically on April 29, 1996.
(5) Incorporated herein by reference to Post-Effective Amendment No.
8, filed electronically on April 23, 1997.
(6) Incorporated herein by reference to Post-Effective Amendment No.
9, filed electronically on February 13, 1998.
(7) Incorporated herein by reference to Post-Effective Amendment No.
10, filed electronically on October 2, 1998.
(8) Incorporated herein by reference to Post-Effective Amendment No.
11, filed electronically on February 18, 1999.
(9) Incorporated herein by reference to Post-Effective Amendment No.
12, filed electronically on April 29, 1999.
(10) Incorporated herein by reference to Post-Effective Amendment No.
13, filed electronically on July 13, 1999.
(11) Incorporated herein by reference to Post-Effective Amendment No.
14, filed electronically on September 28, 1999.
(12) Incorporated herein by reference to Post-Effective Amendment No.
15, filed electronically on February 16, 2000.
(13) Incorporated herein by reference to Post-Effective Amendment No.
16, filed electronically on February 17, 2000.
(14) Incorporated herein by reference to Post-Effective Amendment No.
18, filed electronically on February 16, 2001.
(15) Incorporated herein by reference to Post-Effective Amendment No.
19, filed electronically on April 12, 2001.
(16) Incorporated herein by reference to Post Effective Amendment No.
20, filed electronically on May 29, 2001.
(17) Incorporated herein by reference to Post Effective Amendment No.
21, filed electronically on July 18, 2001.
(18) Incorporated herein by reference to Post Effective Amendment No.
22, filed electronically on February 12, 2002.
(19) Incorporated herein by reference to Post Effective Amendment No.
24, filed electronically on April 30, 2002.
(20) Incorporated herein by reference to Post Effective Amendment No.
25, filed electronically on April 29, 2003.
(21) Incorporated herein by reference to Post Effective Amendment No.
26, filed electronically on June 18, 2003.
(22) Incorporated herein by reference to Post Effective Amendment No.
27, filed electronically on February 13, 2004.
(23) Incorporated herein by reference to Post Effective Amendment No.
28, filed electronically on April 13, 2004.
(24) Incorporated herein by reference to Post Effective Amendment No.
29, filed electronically on February 28, 2005.
(25) Incorporated herein by reference to Post Effective Amendment No.
30, filed electronically on April 29, 2005.
(26) Incorporated herein by reference to Post Effective Amendment No.
31, filed electronically on February 14, 2006.
(27) Incorporated herein by reference to Post Effective Amendment No.
32, filed electronically on April 27, 2006.
(28) Incorporated herein by reference to Post Effective Amendment No.
33, filed electronically on April 27, 2007.
(29) Incorporated herein by reference to Post Effective Amendment No.
34, filed electronically on February 11, 2008.
(30) Incorporated herein by reference to Post Effective Amendment No.
35, filed electronically on April 28, 2008.
|
(31) Filed herewith electronically.
Item 24. Persons Controlled by or Under Common Control with Registrant
None.
Item 25. Indemnification
Indemnification provisions for officers, trustees, and employees of the Registrant are set forth in Article VIII of the Registrant's Amended and Restated Agreement and Declaration of Trust and Article VIII of its Amended and Restated Bylaws, and are hereby incorporated by reference. See Items 23(a) and (b) above. Under the Amended and Restated Agreement and Declaration of Trust, effective as of September 14, 2005, as amended (i) Trustees or officers, when acting in such capacity, shall not be personally liable for any act, omission or obligation of the Registrant or any Trustee or officer except by reason of willful misfeasance, bad faith, gross negligence or reckless disregard of the duties involved in the conduct of his office with the Trust; (ii) every Trustee, officer, employee or agent of the Registrant shall be indemnified to the fullest extent permitted under the Delaware Statutory Trust act, the Registrant's Bylaws and other applicable law; (iii) in case any shareholder or former shareholder of the Registrant shall be held to be personally liable solely by reason of his being or having been a shareholder of the Registrant or any portfolio or class and not because of his acts or omissions or for some other reason, the shareholder or former shareholder (or his heirs, executors, administrators or other legal representatives, or, in the case of a corporation or other entity, its corporate or general successor) shall be entitled, out of the assets belonging to the applicable portfolio (or allocable to the applicable class), to be held harmless from and indemnified against all loss and expense arising from such liability in accordance with the Bylaws and applicable law. The Registrant, on behalf of the affected portfolio (or class), shall upon request by the shareholder, assume the defense of any such claim made against the shareholder for any act or obligation of that portfolio (or class).
The Registrant and other investment companies and their respective officers and trustees are insured under a joint Mutual Fund Directors & Officers Liability Policy, issued by ICI Mutual Insurance Company and certain other domestic insurers, with limits up to a $60,000,000 (plus an additional $20,000,000 limit that applies to independent directors/trustees only).
Section 16 of the Master Investment Advisory Agreement between the Registrant and Invesco Aim provides that in the absence of willful misfeasance, bad faith, gross negligence or reckless disregard of obligations or duties hereunder on the part of Invesco Aim or any of its officers, directors or employees, that Invesco Aim shall not be subject to liability to the Registrant or to any series of the Registrant, or to any shareholder of any series of the Registrant for any act or omission in the course of, or connected with, rendering services hereunder or for any losses that may be sustained in the purchase, holding or sale of any security. Any liability of Invesco Aim to any series of the Registrant shall not automatically impart liability on the part of Invesco Aim to any other series of the Registrant. No series of the Registrant shall be liable for the obligations of any other series of the Registrant.
Section 7 of the Master Intergroup Sub-Advisory Contract for Mutual Funds between Invesco Aim and Invesco Institutional (N.A.), Inc. (the "Sub-Advisory Contract") provides that the sub-advisor shall not be liable for any costs or liabilities arising from any error of judgment or mistake of law or any loss suffered by any series of the Registrant or the Registrant in connection with the matters to which the Sub-Advisory Contract relates except a loss resulting from willful misfeasance, bad faith or gross negligence on the part of the sub-advisor in the performance by the sub-advisor of its duties or from reckless disregard by the sub-advisor of its obligations and duties under the Sub-Advisory Contract.
Effective May 1, 2008, Section 9 of the Master Intergroup Sub-Advisory Contract for Mutual Funds (the "Sub-Advisory Contract") between Invesco Aim Advisors, Inc., on behalf of Registrant, and each of Invesco Asset Management Deutschland GmbH, Invesco Asset Management Ltd., Invesco Asset Management (Japan) Limited, Invesco Australia Limited, Invesco Global Asset Management (N.A.), Inc., Invesco Hong Kong Limited, Invesco Institutional (N.A.), Inc., Invesco Senior Secured Management, Inc. and AIM Funds Management Inc. (each a "Sub-Advisor", collectively the "Sub-Advisors") provides that the Sub-Advisor shall not be liable for any costs or liabilities arising from any error of judgment or mistake of law or any loss suffered by any series of the Registrant or the Registrant in connection with the matters to which the Sub-Advisory Contract relates except a loss resulting from willful misfeasance, bad faith or gross negligence on the part of the Sub-Advisor in the performance by the Sub-advisor of its duties or from reckless disregard by the Sub-Advisor of its obligations and duties under the Sub-Advisory Contract.
Insofar as indemnification for liability arising under the Securities Act of 1933 may be permitted to trustees, officers and controlling persons of the Registrant pursuant to the foregoing provisions, or otherwise, the Registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in such Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a trustee, officer or controlling person of the Registrant in the successful defense of any action, suit or proceeding) is asserted by such trustee, officer or controlling person in connection with the securities being registered hereby, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in such Act and will be governed by the final adjudication of such issue.
Item 26. Business and Other Connections of Investment Advisor
The only employment of a substantial nature of AIM's directors and officers is with AIM and its affiliated companies. For information as to the business, profession, vocation or employment of a substantial nature of each of the officers and directors of Invesco Asset Management Deutschland GmbH, Invesco Asset Management Ltd., Invesco Asset Management (Japan) Limited, Invesco Australia Limited, Invesco Global Asset Management (N.A.), Inc., Invesco Hong Kong Limited, Invesco Institutional (N.A.), Inc., Invesco Senior Secured Management, Inc. and AIM Funds Management Inc. (each a "Sub-Advisor", collectively the "Sub-Advisors") reference is made to Form ADV filed under the Investment Advisers Act of 1940 by each Sub-Advisor herein incorporated by reference. Reference is also made to the caption "Fund Management--The Advisor" of the Prospectuses which comprises Part A of this Registration Statement, and to the discussion under the caption "Management of the Trust" of the Statement of Additional Information which comprises Part B of this Registration Statement, and to Item 27(b) of this
Part C.
Item 27. Principal Underwriters
(a) Invesco Aim Distributors, Inc. the Registrant's principal underwriter, also acts as a principal underwriter to the following investment companies:
AIM Core Allocation Portfolio Series
AIM Counselor Series Trust
AIM Equity Funds
AIM Funds Group
AIM Growth Series
AIM International Mutual Funds
AIM Investment Funds
AIM Investment Securities Funds
AIM Sector Funds
AIM Tax-Exempt Funds
AIM Treasurer's Series Trust
PowerShares Exchange-Traded Fund Trust
PowerShares Exchange-Traded Fund Trust II
PowerShares India Exchange-Traded Fund Trust
PowerShares Actively Managed Exchange-Traded Fund Trust
Short-Term Investments Trust
(b) The following table sets forth information with respect to each director, officer or partner of Invesco Aim Distributors, Inc.
Name and Principal Position and Offices with Positions and Offices
------------------ ------------------------- ---------------------
Business Address* Underwriter with Registrant
---------------- ----------- ---------------
Philip A. Taylor Director Trustee, President & Principal Executive
Officer
John S. Cooper President None
William Hoppe, Jr. Executive Vice President None
Karen Dunn Kelley Executive Vice President Vice President
Brian Lee Executive Vice President None
Ben Utt Executive Vice President None
Patrick R. Bray Senior Vice President None
LuAnn S. Katz Senior Vice President None
Ivy B. McLemore Senior Vice President None
|
Name and Principal Position and Offices with Positions and Offices
------------------ ------------------------- ---------------------
Business Address* Underwriter with Registrant
---------------- ----------- ---------------
Lyman Missimer III Senior Vice President Assistant Vice President
David J. Nardecchia Senior Vice President None
Margaret A. Vinson Senior Vice President None
Gary K. Wendler Director & Senior Vice President None
Scott B. Widder Senior Vice President None
John M. Zerr Director, Senior Vice President & Senior Vice President, Secretary & Chief
Secretary Legal Officer
David A. Hartley Treasurer & Chief Financial Officer None
Rebecca Starling-Klatt Chief Compliance Officer & Assistant None
Vice President
Lance A. Rejsek Anti-Money Laundering Compliance Anti-Money Laundering Compliance Officer
Officer
|
* 11 Greenway Plaza, Suite 100, Houston, Texas 77046-1173
(c) Not applicable
Item 28. Location of Accounts and Records
Invesco Aim Advisors, Inc., 11 Greenway Plaza, Suite 100, Houston, Texas 77046-1173, will maintain physical possession of each such account, book or other document of the Registrant at its principal executive offices, except for those maintained at the offices of Invesco Institutional (N.A.), Inc., 400 West Market Street, Suite 300, Louisville, Kentucky 40202, and except for those relating to certain transactions in portfolio securities that are maintained by the Registrant's Custodian, State Street Bank and Trust Company, 225 Franklin Street, Boston, Massachusetts 02110, and the Registrant's Transfer Agent and Dividend Paying Agent, Invesco Aim Investment Services, Inc., P.O. Box 4739, Houston, Texas 77210-4739.
Effective May 1, 2008, records may also be maintained at the offices of:
Invesco Asset Management Deutschland GmbH
Bleichstrasse 60-62
Frankfurt, Germany 60313
Invesco Asset Management Limited
30 Finsbury Square
London, United Kingdom
EC2A 1AG
Invesco Asset Management (Japan) Limited
25th Floor, Shiroyama Trust Tower
3-1, Toranoman 4-chome, Minato-Ku
Tokyo, Japan 105-6025
Invesco Australia Limited
333 Collins Street, Level 26
Melbourne Vic 3000, Australia
Invesco Global Asset Management (N.A.), Inc.
One Midtown Plaza
1360 Peachtree Street, N.E.
Atlanta, Georgia 30309
Invesco Hong Kong Limited
32nd Floor
Three Pacific Place
1 Queen's Road East
Hong Kong
Invesco Institutional (N.A.), Inc.
One Midtown Plaza
1360 Peachtree Street, N.E.
Atlanta, Georgia 30309
Invesco Senior Secured Management, Inc.
1166 Avenue of the Americas
New York, NY 10036
AIM Funds Management Inc.
5140 Yonge Street
Suite 900
Toronto, Ontario
Canada M2N 6X7
Item 29. Management Services
None.
Item 30. Undertakings
Not applicable.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the Investment Company Act of 1940, the Registrant has duly caused this Amendment to its Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the city of Houston, Texas on the 8th of August, 2008.
REGISTRANT: AIM VARIABLE INSURANCE FUNDS
By: /s/ Philip A. Taylor
------------------------------------
Philip A. Taylor, President
|
Pursuant to the requirements of the Securities Act of 1933, this Amendment to the Registration Statement has been signed below by the following persons in the capacities and on the dates indicated:
SIGNATURES TITLE DATE
---------- ----- ----
/s/ Philip A. Taylor Trustee & President August 8, 2008
------------------------- (Principal Executive Officer)
(Philip A. Taylor)
/s/ Bob R. Baker* Trustee August 8, 2008
-------------------------
(Bob R. Baker)
/s/ Frank S. Bayley* Trustee August 8, 2008
-------------------------
(Frank S. Bayley)
/s/ James T. Bunch* Trustee August 8, 2008
-------------------------
(James T. Bunch)
/s/ Bruce L. Crockett* Chair & Trustee August 8, 2008
-------------------------
(Bruce L. Crockett)
/s/ Albert R. Dowden* Trustee August 8, 2008
-------------------------
(Albert R. Dowden)
/s/ Martin L. Flanagan* Trustee August 8, 2008
-------------------------
(Martin L. Flanagan)
/s/ Jack M. Fields* Trustee August 8, 2008
-------------------------
(Jack M. Fields)
/s/ Carl Frischling* Trustee August 8, 2008
-------------------------
(Carl Frischling)
/s/ Prema Mathai-Davis* Trustee August 8, 2008
-------------------------
(Prema Mathai-Davis)
|
/s/ Lewis F. Pennock* Trustee August 8, 2008
-------------------------
(Lewis F. Pennock)
/s/ Larry Soll* Trustee August 8, 2008
-------------------------
(Larry Soll)
/s/ Raymond Stickel, Jr.* Trustee August 8, 2008
-------------------------
(Raymond Stickel, Jr.)
Vice President & Treasurer August 8, 2008
/s/ Sidney M. Dilgren (Principal Financial and
------------------------- Accounting Officer)
(Sidney M. Dilgren)
|
*By /s/ Philip A. Taylor
---------------------------------
Philip A. Taylor
Attorney-in-Fact
|
* Philip A. Taylor, pursuant to powers of attorney filed in Registrant's Post-Effective Amendment No. 35 on April 28, 2008.
INDEX
Exhibit
Number Description
a(1)(m) Amendment No. 12, dated May 1, 2008, effective as of May 1, 2008, to
Amended and Restated Agreement and Declaration of Trust of Registrant.
a(1)(n) Amendment No. 13, dated __________, 2008, effective as of __________,
2008, to Amended and Restated Agreement and Declaration of Trust of
Registrant
d(1)(r) Form of Amendment No. 17, dated __________, 2008, to Master Investment
Advisory Agreement between Registrant and Invesco Aim Advisors, Inc.
d(3)(b) Form of Amendment No. 1, dated __________, 2008, to Master Intergroup
Sub-Advisory Contract for Mutual Funds, dated May 1, 2008 between
Invesco Aim Advisors, Inc., on behalf of Registrant and each of
Invesco Asset Management Deutschland GmbH, Invesco Asset Management
Ltd., Invesco Asset Management (Japan) Limited, Invesco Australia
Limited, Invesco Global Asset Management (N.A.), Inc., Invesco Hong
Kong Limited, Invesco Institutional (N.A.), Inc., Invesco Senior
Secured Management, Inc. and A I M Funds Management Inc.
e(1)(o) Form of Amendment No. 14, dated __________, 2008, to First Amended and
Restated Master Distribution Agreement between Registrant and Invesco
Aim Distributors, Inc.
h(1)(f) Form of Amendment No. 5, dated _______________, 2008, to the Third
Amended and Restated Master Administrative Services Agreement, dated
July 1, 2006, between the Registrant and Invesco Aim Advisors, Inc.
h(120) Fourth Amended and Restated Memorandum of Agreement, dated as of July
1, 2008, between Registrant, on behalf of all funds, and Invesco Aim
Advisors, Inc., regarding securities lending
h(121) Memorandum of Agreement, dated as of July 1, 2008, between Registrant,
on behalf of certain funds, and Invesco Aim Advisors, Inc., regarding
advisory fee waivers
h(122) Memorandum of Agreement, dated as of July 1, 2008, between Registrant,
on behalf of all funds, and Invesco Aim Advisors, Inc., regarding
expense limitations
h(123) Memorandum of Agreement, dated as of July 1, 2008, between Registrant,
on behalf of all funds, and Invesco Aim Advisors, Inc., regarding
Affiliated Money Market Fund Waiver
i Opinion and Consent of Stradley Ronon Stevens & Young, LLP
l(1)(g) Form of Agreement Concerning Initial Capitalization of AIM V.I.
PowerShares ETF Allocation Fund, dated ___________, 2008
m(1)(o) Form of Amendment No. 14, to the Registrant's Master Distribution
Plan, dated _________, 2008
p(6) INVESCO PLC Code of Conduct, revised October 2007, AIM Trimark
Investments Addendum to the AMVESAP Code of Conduct, revised April 2,
2007, Policy No. D-6 Gifts and Entertainment, revised April 2007, and
Policy No. D-7 AIM Trimark Personal Trading Policy, revised March
2007, together the Code of Ethics relating to Invesco Trimark
Investment Management Inc.
p(9) INVESCO PLC Code of Conduct, revised October 2007, relating to Invesco
Australia Limited
|
AMENDMENT NO. 12 TO
AMENDED AND RESTATED AGREEMENT AND DECLARATION OF TRUST OF
AIM VARIABLE INSURANCE FUNDS
This Amendment No. 12 (the "Amendment") to the Amended and Restated Agreement and Declaration of Trust of AIM Variable Insurance Funds (the "Trust") amends, effective as of May 1, 2008, the Amended and Restated Agreement and Declaration of Trust of the Trust dated as of September 14, 2005, as amended (the "Agreement").
Under Section 9.7 of the Agreement, this Amendment may be executed by a duly authorized officer of the Trust.
WHEREAS, the Shareholders of the Trust approved this amendment to eliminate the requirement that shareholders approve the termination of the Trust, a Fund or share class if there are 100 or more holders of record of the Trust, Fund or share class;
NOW, THEREFORE, the Agreement is hereby amended as follows:
1. The first paragraph of Section 6.1 of the Agreement is amended and restated to read as follows:
"Section 6.1 Voting Powers. The Shareholders shall have power to vote only to: (i) elect Trustees, provided that a meeting of Shareholders has been called for that purpose; (ii) remove Trustees, provided that a meeting of Shareholders has been called for that purpose; (iii) approve the sale of all or substantially all the assets of the Trust or any Portfolio or Class, unless the primary purpose of such sale is to change the Trust's domicile or form of organization or form of statutory trust; (iv) approve the merger or consolidation of the Trust or any Portfolio or Class with and into another Company or with and into any Portfolio or Class of the Trust, unless (A) the primary purpose of such merger or consolidation is to change the Trust's domicile or form of organization or form of statutory trust, or (B) after giving effect to such merger or consolidation, based on the number of Outstanding Shares as of a date selected by the Trustees, the Shareholders of the Trust or such Portfolio or Class will have a majority of the outstanding shares of the surviving Company or Portfolio or Class thereof, as the case may be; (v) approve any amendment to this Article VI, Section 6.1; and (vi) approve such additional matters as may be required by law or as the Trustees, in their sole discretion, shall determine."
2. All references in the Agreement to "this Agreement" shall mean the Agreement as amended by this Amendment.
3. Except as specifically amended by this Amendment, the Agreement is hereby confirmed and remains in full force and effect.
IN WITNESS WHEREOF, the undersigned, a duly authorized officer of the Trust, has executed this Amendment as of May 1, 2008.
By: /s/ John M. Zerr
------------------------------------
Name: John M. Zerr
Title: Senior Vice President
|
AMENDMENT NO. 13
TO
AMENDED AND RESTATED AGREEMENT AND DECLARATION OF TRUST
OF
AIM VARIABLE INSURANCE FUNDS
This Amendment No. 13 to the Amended and Restated Agreement and Declaration of Trust of AIM Variable Insurance Funds (this "Amendment") amends, effective as of July 31, 2008, the Amended and Restated Agreement and Declaration of Trust of AIM Variable Insurance Funds dated as of September 14, 2005, as amended (the "Agreement").
Under Section 9.7 of the Agreement, this Amendment may be executed by a duly authorized officer of the Trust.
WHEREAS, the parties desire to amend the Agreement to add AIM V.I. PowerShares ETF Allocation Fund; and
NOW, THEREFORE, the Agreement is hereby amended as follows:
1. Schedule A of the Agreement is hereby deleted in its entirety and replaced with the following:
"SCHEDULE A
AIM VARIABLE INSURANCE FUNDS
PORTFOLIOS AND CLASSES THEREOF
PORTFOLIO CLASSES OF EACH PORTFOLIO
--------- -------------------------
AIM V.I. Basic Balanced Fund Series I shares
Series II shares
AIM V.I. Basic Value Fund Series I shares
Series II shares
AIM V.I. Capital Appreciation Fund Series I shares
Series II shares
AIM V.I. Capital Development Fund Series I shares
Series II shares
AIM V.I. Core Equity Fund Series I shares
Series II shares
AIM V.I. Diversified Income Fund Series I shares
Series II shares
AIM V.I. Dynamics Fund Series I shares
Series II shares
AIM V.I. Financial Services Fund Series I shares
Series II shares
AIM V.I. Global Health Care Fund Series I shares
Series II shares
|
AIM V.I. Global Real Estate Fund Series I shares
Series II shares
AIM V.I. Government Securities Fund Series I shares
Series II shares
AIM V.I. High Yield Fund Series I shares
Series II shares
AIM V.I. International Growth Fund Series I shares
Series II shares
AIM V.I. Large Cap Growth Fund Series I shares
Series II shares
AIM V.I. Leisure Fund Series I shares
Series II shares
AIM V.I. Mid Cap Core Equity Fund Series I shares
Series II shares
AIM V.I. Money Market Fund Series I shares
Series II shares
AIM V.I. PowerShares ETF Allocation Fund Series I shares
Series II shares
AIM V.I. Small Cap Equity Fund Series I shares
Series II shares
AIM V.I. Technology Fund Series I shares
Series II shares
AIM V.I. Utilities Fund Series I shares
Series II shares"
|
2. All references in the Agreement to "this Agreement" shall mean the Agreement as amended by this Amendment.
3. Except as specifically amended by this Amendment, the Agreement is hereby confirmed and remains in full force and effect.
IN WITNESS WHEREOF, the undersigned, a duly authorized officer of the Trust, has executed this Amendment as of July 31, 2008.
By: /s/ John M. Zerr
---------------------------------
Name: John M. Zerr
Title: Senior Vice President
|
AMENDMENT NO. 17
TO
MASTER INVESTMENT ADVISORY AGREEMENT
This amendment dated as of October __, 2008, amends the Master Investment Advisory Agreement (the "Agreement"), dated May 1, 2000, between AIM Variable Insurance Funds, a Delaware statutory trust, and Invesco Aim Advisors, Inc., formerly A I M Advisors, Inc., a Delaware corporation.
WITNESSETH:
WHEREAS, the parties desire to amend the Agreement to add AIM V.I. PowerShares ETF Allocation Fund;
NOW, THEREFORE, the parties agree as follows:
1. Appendix A and Appendix B to the Agreement are hereby deleted in their entirety and replaced with the following:
"APPENDIX A
FUNDS AND EFFECTIVE DATES
EFFECTIVE DATE OF
NAME OF FUND ADVISORY AGREEMENT
---------------------------------------- ------------------
AIM V.I. Basic Balanced Fund May 1, 2000
AIM V.I. Basic Value Fund September 10, 2001
AIM V.I. Capital Appreciation Fund May 1, 2000
AIM V.I. Capital Development Fund May 1, 2000
AIM V.I. Core Equity Fund May 1, 2000
AIM V.I. Diversified Income Fund May 1, 2000
AIM V.I. Dynamics Fund April 30, 2004
AIM V.I. Financial Services Fund April 30, 2004
AIM V.I. Global Health Care Fund April 30, 2004
AIM V.I. Global Real Estate Fund April 30, 2004
AIM V.I. Government Securities Fund May 1, 2000
AIM V.I. High Yield Fund May 1, 2000
AIM V.I. International Growth Fund May 1, 2000
AIM V.I. Large Cap Growth Fund September 1, 2003
AIM V.I. Leisure Fund April 30, 2004
AIM V.I. Mid Cap Core Equity Fund September 10, 2001
AIM V.I. Money Market Fund May 1, 2000
AIM V.I. PowerShares ETF Allocation Fund October __, 2008
AIM V.I. Small Cap Equity Fund September 1, 2003
AIM V.I. Technology Fund April 30, 2004
AIM V.I. Utilities Fund April 30, 2004
|
APPENDIX B
COMPENSATION TO THE ADVISOR
The Trust shall pay the Advisor, out of the assets of a Fund, as full compensation for all services rendered, an advisory fee for such Fund set forth below. Such fee shall be calculated by applying the following annual rates to the average daily net assets of such Fund for the calendar year computed in the manner used for the determination of the net asset value of shares of such Fund.
AIM V.I. BASIC BALANCED FUND
NET ASSETS ANNUAL RATE ------------------------------------------------------------------ ----------- First $150 million................................................ 0.75% Over $150 million................................................. 0.50% |
AIM V.I. BASIC VALUE FUND
AIM V.I. LARGE CAP GROWTH FUND
NET ASSETS ANNUAL RATE ------------------------------------------------------------------ ----------- First $250 million................................................ 0.695% Next $250 million................................................. 0.67% Next $500 million................................................. 0.645% Next $1.5 billion................................................. 0.62% Next $2.5 billion................................................. 0.595% Next $2.5 billion................................................. 0.57% Next $2.5 billion................................................. 0.545% Over $10 billion.................................................. 0.52% |
AIM V.I. CAPITAL APPRECIATION FUND
AIM V.I. CORE EQUITY FUND
NET ASSETS ANNUAL RATE ------------------------------------------------------------------ ----------- First $250 million................................................ 0.65% Over $250 million................................................. 0.60% |
AIM V.I. CAPITAL DEVELOPMENT FUND
NET ASSETS ANNUAL RATE ------------------------------------------------------------------ ----------- First $350 million................................................ 0.75% Over $350 million................................................. 0.625% |
AIM V.I. DIVERSIFIED INCOME FUND
NET ASSETS ANNUAL RATE ------------------------------------------------------------------ ----------- First $250 million................................................ 0.60% Over $250 million................................................. 0.55% |
AIM V.I. DYNAMICS FUND
AIM V.I. SMALL CAP EQUITY FUND
First $250 million................................................ 0.745% Next $250 million................................................. 0.73% Next $500 million................................................. 0.715% Next $1.5 billion................................................. 0.70% Next $2.5 billion................................................. 0.685% Next $2.5 billion................................................. 0.67% Next $2.5 billion................................................. 0.655% Over $10 billion.................................................. 0.64% |
AIM V.I. FINANCIAL SERVICES FUND
AIM V.I. GLOBAL HEALTH CARE FUND
AIM V.I. GLOBAL REAL ESTATE FUND
AIM V.I. LEISURE FUND
AIM V.I. TECHNOLOGY FUND
ANNUAL RATE
-----------
First $250 million................................................ 0.75%
Next $250 million................................................. 0.74%
Next $500 million................................................. 0.73%
Next $1.5 billion................................................. 0.72%
Next $2.5 billion................................................. 0.71%
Next $2.5 billion................................................. 0.70%
Next $2.5 billion................................................. 0.69%
Over $10 billion.................................................. 0.68%
|
AIM V.I. GOVERNMENT SECURITIES FUND
NET ASSETS ANNUAL RATE ------------------------------------------------------------------ ----------- First $250 million................................................ 0.50% Over $250 million................................................. 0.45% |
AIM V.I. HIGH YIELD FUND
NET ASSETS ANNUAL RATE ------------------------------------------------------------------ ----------- First $200 million................................................ 0.625% Next $300 million................................................. 0.55% Next $500 million................................................. 0.50% Over $1 billion................................................... 0.45% |
AIM V.I. INTERNATIONAL GROWTH FUND
NET ASSETS ANNUAL RATE ------------------------------------------------------------------ ----------- First $250 million................................................ 0.75% Over $250 million................................................. 0.70% |
AIM V.I. MID CAP CORE EQUITY FUND
NET ASSETS ANNUAL RATE ------------------------------------------------------------------ ----------- First $500 million................................................ 0.725% Next $500 million................................................. 0.700% Next $500 million................................................. 0.675% Over $1.5 billion................................................. 0.65% |
AIM V.I. MONEY MARKET FUND
NET ASSETS ANNUAL RATE ------------------------------------------------------------------ ----------- First $250 million................................................ 0.40% Over $250 million................................................. 0.35% |
AIM V.I. UTILITIES FUND
ANNUAL RATE
-----------
All Assets........................................................ 0.60%
|
AIM V.I. POWERSHARES ETF ALLOCATION FUND
NET ASSETS ANNUAL RATE ------------------------------------------------------------------ ----------- [ ]............................................................. [ ]" |
2. In all other respects, the Agreement is hereby confirmed and remains in full force and effect.
IN WITNESS WHEREOF, the parties have caused this Amendment to be executed by their respective officers on the date first written above.
AIM VARIABLE INSURANCE FUNDS
Attest: By:
-------------------------------- ---------------------------------
Assistant Secretary John M. Zerr
Senior Vice President
|
(SEAL)
INVESCO AIM ADVISORS, INC.
Attest: By:
-------------------------------- ---------------------------------
Assistant Secretary John M. Zerr
Senior Vice President
|
(SEAL)
AMENDMENT NO. 1
TO
MASTER INTERGROUP SUB-ADVISORY CONTRACT FOR MUTUAL FUNDS
This Amendment dated as of October __, 2008, amends the Master Intergroup Sub-Advisory Contract for Mutual Funds (the "Contract"), dated May 1, 2008, between Invesco Aim Advisors, Inc. (the "Advisor") and each of AIM Funds Management Inc., Invesco Asset Management Deutschland GmbH, Invesco Asset Management Limited, Invesco Asset Management (Japan) Ltd., Invesco Australia Limited, Invesco Global Asset Management (N.A.), Inc., Invesco Hong Kong Limited, Invesco Institutional (N.A.), Inc., and Invesco Senior Secured Management, Inc. (each a "Sub-Advisor" and, collectively, the "Sub-Advisors").
WITNESSETH:
WHEREAS, the parties desire to amend the Contract to add AIM V.I. PowerShares ETF Allocation Fund;
NOW, THEREFORE, the parties agree as follows;
1. Exhibit A to the Contract is hereby deleted in its entirety and replaced with the following:
2. All other terms and provisions of the Contract not amended shall remain in full force and effect.
"EXHIBIT A
AIM V.I. Basic Balanced Fund
AIM V.I. Basic Value Fund
AIM V.I. Capital Appreciation Fund
AIM V.I. Capital Development Fund
AIM V.I. Core Equity Fund
AIM V.I. Diversified Income Fund
AIM V.I. Dynamics Fund
AIM V.I. Financial Services Fund
AIM V.I. Global Health Care Fund
AIM V.I. Global Real Estate Fund
AIM V.I. Government Securities Fund
AIM V.I. High Yield Fund
AIM V.I. International Growth Fund
AIM V.I. Large Cap Growth Fund
AIM V.I. Leisure Fund
AIM V.I. Mid Cap Core Equity Fund
AIM V.I. Money Market Fund
AIM V.I. PowerShares ETF Allocation Fund
AIM V.I. Small Cap Equity Fund
AIM V.I. Technology Fund
AIM V.I. Utilities Fund
IN WITNESS WHEREOF, the parties hereto have caused this Contract to be executed by their officers designated as of the day and year first above written.
INVESCO AIM ADVISORS, INC.
ADVISOR
AIM FUNDS MANAGEMENT INC.
SUB-ADVISOR
INVESCO ASSET MANAGEMENT
DEUTSCHLAND GMBH
Sub-Advisor
INVESCO ASSET MANAGEMENT LIMITED
Sub-Advisor
INVESCO ASSET MANAGEMENT (JAPAN) LTD.
Sub-Advisor
INVESCO AUSTRALIA LIMITED
Sub-Advisor
INVESCO GLOBAL ASSET MANAGEMENT
(N.A.), INC.
Sub-Advisor
INVESCO HONG KONG LIMITED
Sub-Advisor
INVESCO INSTITUTIONAL (N.A.), INC.
Sub-Advisor
INVESCO SENIOR SECURED MANAGEMENT, INC.
Sub-Advisor
AMENDMENT NO. 14
TO
FIRST AMENDED AND RESTATED
MASTER DISTRIBUTION AGREEMENT
The First Amended and Restated Master Distribution Agreement (the "Agreement"), dated as of July 16, 2001, by and between AIM Variable Insurance Funds, a Delaware statutory trust and Invesco Aim Distributors, Inc., formerly A I M Distributors, Inc., a Delaware corporation, is hereby amended to add AIM V.I. PowerShares ETF Allocation Fund;
Appendix A of the Agreement is hereby deleted in its entirety and replaced with the following:
"APPENDIX A
TO
FIRST AMENDED AND RESTATED
MASTER DISTRIBUTION AGREEMENT
OF
AIM VARIABLE INSURANCE FUNDS
SERIES I SHARES SERIES II SHARES --------------- ---------------- AIM V.I. Basic Balanced Fund AIM V.I. Basic Balanced Fund AIM V.I. Basic Value Fund AIM V.I. Basic Value Fund AIM V.I. Capital Appreciation Fund AIM V.I. Capital Appreciation Fund AIM V.I. Capital Development Fund AIM V.I. Capital Development Fund AIM V.I. Core Equity Fund AIM V.I. Core Equity Fund AIM V.I. Diversified Income Fund AIM V.I. Diversified Income Fund AIM V.I. Dynamics Fund AIM V.I. Dynamics Fund AIM V.I. Financial Services Fund AIM V.I. Financial Services Fund AIM V.I. Global Health Care Fund AIM V.I. Global Health Care Fund AIM V.I. Global Real Estate Fund AIM V.I. Global Real Estate Fund AIM V.I. Government Securities Fund AIM V.I. Government Securities Fund AIM V.I. High Yield Fund AIM V.I. High Yield Fund AIM V.I. International Growth Fund AIM V.I. International Growth Fund AIM V.I. Large Cap Growth Fund AIM V.I. Large Cap Growth Fund AIM V.I. Leisure Fund AIM V.I. Leisure Fund AIM V.I. Mid Cap Core Equity Fund AIM V.I. Mid Cap Core Equity Fund AIM V.I. Money Market Fund AIM V.I. Money Market Fund AIM V.I. PowerShares ETF Allocation Fund AIM V.I. PowerShares ETF Allocation Fund AIM V.I. Small Cap Equity Fund AIM V.I. Small Cap Equity Fund AIM V.I. Technology Fund AIM V.I. Technology Fund AIM V.I. Utilities Fund AIM V.I. Utilities Fund" |
All other terms and provisions of the Agreement not amended herein shall remain in full force and effect.
Dated: October __, 2008
AIM VARIABLE INSURANCE FUNDS
Attest: By:
----------------------------- ------------------------------------
Assistant Secretary John M. Zerr
Senior Vice President
|
INVESCO AIM DISTRIBUTORS, INC.
Attest: By:
----------------------------- ------------------------------------
Assistant Secretary John S. Cooper
President
|
AMENDMENT NO. 5
THIRD AMENDED AND RESTATED MASTER ADMINISTRATIVE SERVICES AGREEMENT
The Third Amended and Restated Master Administrative Services Agreement (the "Agreement"), dated July 1, 2006, by and between Invesco Aim Advisors, Inc., formerly A I M Advisors, Inc., a Delaware corporation, and AIM Variable Insurance Funds, a Delaware statutory trust, is hereby amended as follows:
WHEREAS, the parties desire to amend the Agreement to add AIM V.I. PowerShares ETF Allocation Fund;
Appendix A of the Agreement is hereby deleted in its entirety and replaced with the following:
"APPENDIX A
TO
THIRD AMENDED AND RESTATED
MASTER ADMINISTRATIVE SERVICES AGREEMENT
OF
AIM VARIABLE INSURANCE FUNDS
PORTFOLIOS EFFECTIVE DATE OF AGREEMENT ---------- --------------------------- AIM V.I. Basic Balanced Fund July 1, 2006 AIM V.I. Basic Value Fund July 1, 2006 AIM V.I. Capital Appreciation Fund July 1, 2006 AIM V.I. Capital Development Fund July 1, 2006 AIM V.I. Core Equity Fund July 1, 2006 AIM V.I. Diversified Income Fund July 1, 2006 AIM V.I. Dynamics Fund July 1, 2006 AIM V.I. Financial Services Fund July 1, 2006 AIM V.I. Global Health Care Fund July 1, 2006 AIM V.I. Global Real Estate Fund July 1, 2006 AIM V.I. Government Securities Fund July 1, 2006 AIM V.I. High Yield Fund July 1, 2006 AIM V.I. International Growth Fund July 1, 2006 AIM V.I. Large Cap Growth Fund July 1, 2006 AIM V.I. Leisure Fund July 1, 2006 AIM V.I. Mid Cap Core Equity Fund July 1, 2006 AIM V.I. Money Market Fund July 1, 2006 AIM V.I. PowerShares ETF Allocation Fund October __, 2008 AIM V.I. Small Cap Equity Fund July 1, 2006 AIM V.I. Technology Fund July 1, 2006 AIM V.I. Utilities Fund July 1, 2006 |
The Administrator may receive from each Portfolio reimbursement for costs or reasonable compensation for such services as follows:
Rate* Net Assets ----- ------------------ 0.023% First $1.5 billion 0.013% Next $1.5 billion 0.003% Over $3 billion |
* Annual minimum fee is $50,000. An additional $10,000 per class of shares is charged for each class other than the initial class. The $10,000 class fee is waived for any of the above Portfolios with insufficient assets to result in the payment of more than the minimum fee of $50,000."
All other terms and provisions of the Agreement not amended herein shall remain in full force and effect.
Dated: October __, 2008
INVESCO AIM ADVISORS, INC.
Attest: By:
----------------------------- ------------------------------------
Assistant Secretary John M. Zerr
Senior Vice President
|
(SEAL)
AIM VARIABLE INSURANCE FUNDS
Attest: By:
----------------------------- ------------------------------------
Assistant Secretary John M. Zerr
Senior Vice President
|
(SEAL)
FOURTH AMENDED AND RESTATED
MEMORANDUM OF AGREEMENT
(SECURITIES LENDING ADMINISTRATIVE FEE WAIVER)
This Third Amended and Restated Memorandum of Agreement is entered into as of the dates indicated on Exhibit "A" between AIM Counselor Series Trust, AIM Equity Funds, AIM Funds Group, AIM Growth Series, AIM International Mutual Funds, AIM Investment Funds, AIM Investment Securities Funds, AIM Sector Funds, AIM Tax-Exempt Funds, AIM Treasurer's Series Trust, AIM Variable Insurance Funds and Short-Term Investments Trust (each a "Fund" and collectively, the "Funds"), on behalf of the portfolios listed on Exhibit "A" to this Memorandum of Agreement (the "Portfolios"), and Invesco Aim Advisors, Inc. ("Invesco Aim"). This Memorandum of Agreement restates the Memorandum of Agreement previously in effect prior to July 1, 2007 and entered into as of the effective dates indicated on Exhibit "A" between AIM Counselor Series Trust, AIM Equity Funds, AIM Funds Group, AIM Growth Series, AIM International Mutual Funds, AIM Investment Funds, AIM Investment Securities Funds, AIM Sector Funds, AIM Stock Funds, AIM Summit Fund, AIM Tax-Exempt Funds, AIM Variable Insurance Funds, AIM Treasurer's Series Trust, Short-Term Investments Trust and Tax-Free Investments Trust, on behalf of the portfolios and Invesco Aim.
For and in consideration of the mutual terms and agreements set forth herein and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Funds and Invesco Aim agree as follows:
1. Each Fund, for itself and its Portfolios, and Invesco Aim agree that until the expiration date, if any, of the commitment set forth on the attached Exhibit "A" occurs, as such Exhibit "A" is amended from time to time, Invesco Aim has agreed that it will not charge any administrative fee under each Portfolio's advisory agreement in connection with securities lending activities without prior approval from the Portfolio's Board (such agreement is referred to as the "Waiver").
2. Neither a Fund nor Invesco Aim may remove or amend the Waiver to a Fund's detriment prior to requesting and receiving the approval of the Portfolio's Board to remove or amend the Waiver. Invesco Aim will not have any right to reimbursement of any amount so waived.
Unless a Fund, by vote of its Board of Trustees terminates the Waiver, or a Fund and Invesco Aim are unable to reach an agreement on the amount of the Waiver to which the Fund and Invesco Aim desire to be bound, the Waiver will continue indefinitely with respect to such Fund. Exhibit "A" will be amended to reflect the new date through which a Fund and Invesco Aim agree to be bound.
Nothing in this Memorandum of Agreement is intended to affect any other memorandum of agreement executed by any Fund or Invesco Aim with respect to any other fee waivers, expense reimbursements and/or expense limitations.
IN WITNESS WHEREOF, each Fund, on behalf of itself and its Portfolios listed in Exhibit "A" to this Memorandum of Agreement, and Invesco Aim have entered into this Memorandum of Agreement as of the dates indicated on Exhibit "A".
AIM COUNSELOR SERIES TRUST
AIM EQUITY FUNDS
AIM FUNDS GROUP
AIM GROWTH SERIES
AIM INTERNATIONAL MUTUAL FUNDS
AIM INVESTMENT FUNDS
AIM INVESTMENT SECURITIES FUNDS
AIM SECTOR FUNDS
AIM TAX-EXEMPT FUNDS
AIM VARIABLE INSURANCE FUNDS
By: /s/ John M. Zerr
------------------------------------
Title: Senior Vice President
|
AIM TREASURER'S SERIES TRUST
SHORT-TERM INVESTMENTS TRUST
By: /s/ John M. Zerr
------------------------------------
Title: Senior Vice President
|
INVESCO AIM ADVISORS, INC.
By: /s/ John M. Zerr
------------------------------------
Title: Senior Vice President
|
EXHIBIT "A"
AIM COUNSELOR SERIES TRUST
PORTFOLIO EFFECTIVE DATE COMMITTED UNTIL* --------- ------------------ ---------------- AIM Floating Rate Fund April 14, 2006 AIM Multi-Sector Fund November 25, 2003 AIM Select Real Estate Income Fund March 9, 2007 AIM Structured Core Fund March 31, 2006 AIM Structured Growth Fund March 31, 2006 AIM Structured Value Fund March 31, 2006 |
AIM EQUITY FUNDS
PORTFOLIO EFFECTIVE DATE COMMITTED UNTIL* --------- ------------------ ---------------- AIM Capital Development Fund June 21, 2000 AIM Charter Fund June 21, 2000 AIM Constellation Fund June 21, 2000 AIM Diversified Dividend Fund December 28, 2001 AIM Large Cap Basic Value Fund June 21, 2000 AIM Large Cap Growth Fund June 21, 2000 AIM Summit Fund July 24, 2000 |
AIM FUNDS GROUP
FUND EFFECTIVE DATE COMMITTED UNTIL* ---- ------------------ ---------------- AIM Basic Balanced Fund September 28, 2001 AIM European Small Company Fund August 30, 2000 AIM Global Value Fund December 27, 2000 AIM International Small Company Fund August 30, 2000 AIM Mid Cap Basic Value Fund December 27, 2001 AIM Select Equity Fund June 1, 2000 AIM Small Cap Equity Fund August 30, 2000 |
AIM GROWTH SERIES
FUND EFFECTIVE DATE COMMITTED UNTIL* ---- ------------------ ---------------- AIM Basic Value Fund June 5, 2000 AIM Global Equity Fund September 1, 2001 AIM Mid Cap Core Equity Fund September 1, 2001 AIM Small Cap Growth Fund September 11, 2000 |
* Committed until the Fund or AIM requests and receives the approval of the Fund's Board to remove or amend such fee waiver. Such commitments are evergreen until amended and apply to each Portfolio of a Fund.
AIM INTERNATIONAL MUTUAL FUNDS
FUND EFFECTIVE DATE COMMITTED UNTIL* ---- ------------------ ---------------- AIM Asia Pacific Growth Fund June 21, 2000 AIM European Growth Fund June 21, 2000 AIM Global Growth Fund June 21, 2000 AIM Global Small & Mid Cap Growth Fund June 21, 2000 AIM International Growth Fund June 21, 2000 AIM International Core Equity Fund November 25, 2003 |
AIM INVESTMENT FUNDS
FUND EFFECTIVE DATE COMMITTED UNTIL* ---- ------------------ ---------------- AIM China Fund March 31, 2006 AIM Developing Markets Fund September 1, 2001 AIM Global Health Care Fund September 1, 2001 AIM International Total Return Fund March 31, 2006 AIM Japan Fund March 31, 2006 AIM LIBOR Alpha Fund March 31, 2006 AIM Trimark Endeavor Fund November 4, 2003 AIM Trimark Fund November 4, 2003 AIM Trimark Small Companies Fund November 4, 2003 |
AIM INVESTMENT SECURITIES FUNDS
FUND EFFECTIVE DATE COMMITTED UNTIL* ---- ------------------ ---------------- AIM Core Bond Fund December 28, 2001 AIM Dynamics Fund November 25, 2003 AIM Global Real Estate Fund April 29, 2005 AIM High Yield Fund June 1, 2000 AIM Income Fund June 1, 2000 AIM Limited Maturity Treasury Fund June 1, 2000 AIM Money Market Fund June 1, 2000 AIM Municipal Bond Fund June 1, 2000 AIM Real Estate Fund September 11, 2000 AIM Short Term Bond Fund August 29, 2002 AIM U.S. Government Fund June 1, 2000 |
* Committed until the Fund or AIM requests and receives the approval of the Fund's Board to remove or amend such fee waiver. Such commitments are evergreen until amended and apply to each Portfolio of a Fund.
AIM SECTOR FUNDS
FUND EFFECTIVE DATE COMMITTED UNTIL* ---- ------------------ ---------------- AIM Energy Fund November 25, 2003 AIM Financial Services Fund November 25, 2003 AIM Gold & Precious Metals Fund November 25, 2003 AIM Leisure Fund November 25, 2003 AIM Technology Fund November 25, 2003 AIM Utilities Fund November 25, 2003 |
AIM TAX-EXEMPT FUNDS
FUND EFFECTIVE DATE COMMITTED UNTIL* ---- ------------------ ---------------- AIM High Income Municipal Fund June 1, 2000 AIM Tax-Exempt Cash Fund June 1, 2000 AIM Tax-Free Intermediate Fund June 1, 2000 |
AIM TREASURER'S SERIES TRUST
FUND EFFECTIVE DATE COMMITTED UNTIL* ---- ------------------ ---------------- Premier Portfolio November 25, 2003 Premier Tax-Exempt Portfolio November 25, 2003 Premier U.S. Government Money November 25, 2003 Portfolio |
* Committed until the Fund or AIM requests and receives the approval of the Fund's Board to remove or amend such fee waiver. Such commitments are evergreen until amended and apply to each Portfolio of a Fund.
AIM VARIABLE INSURANCE FUNDS
FUND EFFECTIVE DATE COMMITTED UNTIL* ---- ------------------ ---------------- AIM V.I. Basic Balanced Fund May 1, 2000 AIM V.I. Basic Value Fund September 10, 2001 AIM V.I. Capital Appreciation Fund May 1, 2000 AIM V.I. Capital Development Fund May 1, 2000 AIM V.I. Core Equity Fund May 1, 2000 AIM V.I. Diversified Income Fund May 1, 2000 AIM V.I. Dynamics Fund April 30, 2004 AIM V.I. Financial Services Fund April 30, 2004 AIM V.I. Global Health Care Fund April 30, 2004 AIM V.I. Global Real Estate Fund April 30, 2004 AIM V.I. Government Securities Fund May 1, 2000 AIM V.I. High Yield Fund May 1, 2000 AIM V.I. International Growth Fund May 1, 2000 AIM V.I. Large Cap Growth Fund September 1, 2003 AIM V.I. Leisure Fund April 30, 2004 AIM V.I. Mid Cap Core Equity Fund September 10, 2001 AIM V.I. Money Market Fund May 1, 2000 AIM V.I. Small Cap Equity Fund September 1, 2003 AIM V.I. Technology Fund April 30, 2004 AIM V.I. Utilities Fund April 30, 2004 |
SHORT-TERM INVESTMENTS TRUST
FUND EFFECTIVE DATE COMMITTED UNTIL* ---- ------------------ ---------------- Government & Agency Portfolio June 1, 2000 Government TaxAdvantage Portfolio June 1, 2000 Liquid Assets Portfolio June 1, 2000 STIC Prime Portfolio June 1, 2000 Tax-Free Cash Reserve Portfolio June 1, 2000 Treasury Portfolio June 1, 2000 |
* Committed until the Fund or AIM requests and receives the approval of the Fund's Board to remove or amend such fee waiver. Such commitments are evergreen until amended and apply to each Portfolio of a Fund.
MEMORANDUM OF AGREEMENT
(ADVISORY FEE WAIVERS)
This Memorandum of Agreement is entered into as of the effective date on the attached Exhibit (the "Exhibit"), between AIM Equity Funds, AIM Funds Group, AIM Investment Funds, AIM Sector Funds, AIM Treasurer's Series Trust and AIM Variable Insurance Funds (each a "Trust" or, collectively, the "Trusts"), on behalf of the funds listed on the Exhibit to this Memorandum of Agreement (the "Funds"), and Invesco Aim Advisors, Inc. ("Invesco Aim"). Invesco Aim shall and hereby agrees to waive fees of the Funds, on behalf of their respective classes as applicable, severally and not jointly, as indicated in the Exhibit.
For and in consideration of the mutual terms and agreements set forth herein and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Trusts and AIM agree that until at least the expiration date set forth on the Exhibit (the "Expiration Date") and with respect to those Funds listed on the Exhibit. Invesco Aim will waive its advisory fees at the rate set forth on the Exhibit.
The Boards of Trustees and Invesco Aim may terminate or modify this Memorandum of Agreement prior to the Expiration Date only by mutual written consent. Invesco Aim will not have any right to reimbursement of any amount so waived or reimbursed.
Subject to the foregoing paragraphs, each of the Trusts and Invesco Aim agree to review the then-current waivers for each class of the Funds listed on the Exhibit on a date prior to the Expiration Date to determine whether such waivers should be amended, continued or terminated. The waivers will expire upon the Expiration Date unless the Trusts and Invesco Aim have agreed to continue them. The Exhibit will be amended to reflect any such agreement.
It is expressly agreed that the obligations of the Trusts hereunder shall not be binding upon any of the Trustees, shareholders, nominees, officers, agents or employees of the Trusts personally, but shall only bind the assets and property of the Funds, as provided in each Trust's Agreement and Declaration of Trust. The execution and delivery of this Memorandum of Agreement have been authorized by the Trustees of each Trust, and this Memorandum of Agreement has been executed and delivered by an authorized officer of each Trust acting as such; neither such authorization by such Trustees nor such execution and delivery by such officer shall be deemed to have been made by any of them individually or to impose any liability on any of them personally, but shall bind only the assets and property of the Funds, as provided in each Trust's Agreement and Declaration of Trust.
IN WITNESS WHEREOF, each of the Trusts and Invesco Aim have entered into this Memorandum of Agreement as of the Effective Date on the attached Exhibit.
AIM EQUITY FUNDS
AIM FUNDS GROUP
AIM INVESTMENT FUNDS
AIM SECTOR FUNDS
AIM TREASURER'S SERIES TRUST
AIM VARIABLE INSURANCE FUNDS
on behalf of the Funds listed in the
Exhibit to this Memorandum of Agreement
By: /s/ John M. Zerr
------------------------------------
Title: Senior Vice President
|
INVESCO AIM ADVISORS, INC.
By: /s/ John M. Zerr
------------------------------------
Title: Senior Vice President
|
EXHIBIT TO ADVISORY FEE MOA
AIM EQUITY FUNDS WAIVER DESCRIPTION EFFECTIVE DATE EXPIRATION DATE
---------------- ----------------------------------------------- -------------- ---------------
AIM Charter Fund Invesco Aim will waive advisory fees to the 1/1/2005 12/31/2012
extent necessary so that advisory fees Invesco
Aim receives do not exceed the annualized rates
listed below.
0.75% of the first $150M
0.615% of the next $4.85B
0.57% of the next $2.5B
0.545% of the next $2.5B
0.52% of the excess over $10B
AIM Constellation Fund Invesco Aim will waive advisory fees to the 3/27/2006 12/31/2012
extent necessary so that advisory fees Invesco
Aim receives do not exceed the annualized rates
listed below.
0.695% of the first $250M
0.615% of the next $4B
0.595% of the next $750M
0.57% of the next $2.5B
0.545% of the next $2.5B
0.52% of the excess over $10B
|
AIM FUNDS GROUP WAIVER DESCRIPTION EFFECTIVE DATE EXPIRATION DATE
---------------- ----------------------------------------------- -------------- ---------------
AIM Basic Balanced Fund Invesco Aim will waive advisory fees to the 1/1/2005 12/31/2012
extent necessary so that advisory fees Invesco
Aim receives do not exceed the annualized rates
listed below.
0.62% of the first $250M
0.605% of the next $250M
0.59% of the next $500M
0.575% of the next $1.5B
0.56% of the next $2.5B
0.545% of the next $2.5B
0.53% of the next $2.5B
0.515% of the excess over $10B
|
AIM INVESTMENT FUNDS WAIVER DESCRIPTION EFFECTIVE DATE EXPIRATION DATE
-------------------- ----------------------------------------------- -------------- ---------------
AIM Global Health Care Fund Invesco Aim will waive advisory fees to the 1/1/2005 12/31/2009
extent necessary so that advisory fees Invesco
Aim receives do not exceed the annualized rates
listed below.
0.75% of the first $250M
0.74% of the next $250M
0.73% of the next $500M
0.72% of the next $1.5B
0.71% of the next $2.5B
0.70% of the next $2.5B
0.69% of the next $2.5B
0.68% of the excess over $10B
|
AIM SECTOR FUNDS WAIVER DESCRIPTION EFFECTIVE DATE EXPIRATION DATE
---------------- ----------------------------------------------- -------------- ---------------
AIM Gold & Precious Metals Invesco Aim will waive advisory fees to the 1/1/2005 6/30/2009
Fund extent necessary so that advisory fees Invesco
Aim receives do not exceed the annualized rates
listed below.
0.75% of the first $250M
0.74% of the next $250M
0.73% of the next $500M
0.72% of the next $1.5B
0.71% of the next $2.5B
0.70% of the next $2.5B
0.69% of the next $2.5B
0.68% of the excess over $10B
|
AIM TREASURER'S SERIES TRUST WAIVER DESCRIPTION EFFECTIVE DATE EXPIRATION DATE
---------------------------- ----------------------------------------------- -------------- ---------------
Premier Portfolio Invesco Aim will waive advisory fees in the 2/25/2005 6/30/2009
amount of 0.08% of the Fund's average daily net
assets
Premier U.S. Government Money Invesco Aim will waive advisory fees in the 2/25/2005 6/30/2009
Portfolio amount of 0.08% of the Fund's average daily net
assets
|
AIM VARIABLE INSURANCE FUNDS WAIVER DESCRIPTION EFFECTIVE DATE EXPIRATION DATE
---------------------------- ----------------------------------------------- -------------- ---------------
AIM V. I. Basic Balanced Fund Invesco Aim will waive advisory fees to the 1/1/2005 12/31/2009
extent necessary so that advisory fees Invesco
Aim receives do not exceed the annualized rates
listed below.
0.62% of the first $150M
0.50% of the next $4.85B
0.475% of the next $5B
0.45% of the excess over $10B
AIM V. I. Capital Appreciation Invesco Aim will waive advisory fees to the 5/1/2006 12/31/2009
Fund extent necessary so that advisory fees Invesco
Aim receives do not exceed the annualized rates
listed below.
0.695% of the first $250M
0.625% of the next $750M
0.62% of the next $1.5B
0.595% of the next $2.5B
0.57% of the next $2.5B
0.545% of the next $2.5B
0.52% of the excess over $10B
|
AIM VARIABLE INSURANCE
FUNDS - CONTINUED WAIVER DESCRIPTION EFFECTIVE DATE EXPIRATION DATE
---------------------- ----------------------------------------------- -------------- ---------------
AIM V. I. Capital Development Invesco Aim will waive advisory fees to the 1/1/2005 4/30/2010
Fund extent necessary so that advisory fees Invesco
Aim receives do not exceed the annualized rates
listed below.
0.745% of the first $250M
0.73% of the next $250M
0.715% of the next $500M
0.70% of the next $1.5B
0.685% of the next $2.5B
0.67% of the next $2.5B
0.655% of the next $2.5B
0.64% of the excess over $10B
AIM V. I. Core Equity Fund Invesco Aim will waive advisory fees to the 1/1/2005 12/31/2009
extent necessary so that advisory fees Invesco
Aim receives do not exceed the annualized rates
listed below.
0.695% of the first $250M
0.67% of the next $250M
0.645% of the next $500M
0.62% of the next $1.5B
0.595% of the next $2.5B
0.57% of the next $2.5B
0.545% of the next $2.5B
0.52% of the excess over $10B
|
MEMORANDUM OF AGREEMENT
(EXPENSE LIMITATIONS)
This Memorandum of Agreement is entered into as of the Effective Date on the attached exhibits (the "Exhibits"), between AIM Counselor Series Trust, AIM Equity Funds, AIM Growth Series, AIM Investment Funds, AIM Investment Securities Funds, AIM Sector Funds, AIM Tax-Exempt Funds, AIM Variable Insurance Funds and Short-Term Investments Trust (each a "Trust" or, collectively, the "Trusts"), on behalf of the funds listed on the Exhibits to this Memorandum of Agreement (the "Funds"), and Invesco Aim Advisors, Inc. ("Invesco Aim"). Invesco Aim shall and hereby agrees to waive fees or reimburse expenses of each Fund, on behalf of its respective classes as applicable, severally and not jointly, as indicated in the attached Exhibits.
For and in consideration of the mutual terms and agreements set forth herein and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Trusts and Invesco Aim agree as follows:
For the Contractual Limits (listed in Exhibits A - D), the Trusts and
Invesco Aim agree until at least the expiration date set forth on the attached
Exhibits A - D (the "Expiration Date") that Invesco Aim will waive its fees or
reimburse expenses to the extent that expenses of a class of a Fund (excluding
(i) interest; (ii) taxes; (iii) dividend expense on short sales; (iv)
extraordinary items; (v) expenses related to a merger or reorganization, as
approved by the Funds' Boards of Trustees; (vi) expenses of the underlying funds
that are paid indirectly as a result of share ownership of the underlying funds;
and (vii) expenses that each Fund has incurred but did not actually pay because
of an expense offset arrangement, if applicable) exceed the rate, on an
annualized basis, set forth on the Exhibits of the average daily net assets
allocable to such class. Acquired fund fees and expenses are not fees or
expenses incurred by a fund directly but are expenses of the investment
companies in which a fund invests. These fees and expenses are incurred
indirectly through the valuation of a fund's investment in these investment
companies. Acquired fund fees and expenses are required to be disclosed and
included in the total annual fund operating expenses in the prospectus fee
table. As a result, the net total annual fund operating expenses shown in the
prospectus fee table may exceed the expense limits reflected in Exhibits A-D.
With regard to the Contractual Limits, the Board of Trustees of the Trust and
Invesco Aim may terminate or modify this Memorandum of Agreement prior to the
Expiration Date only by mutual written consent. Invesco Aim will not have any
right to reimbursement of any amount so waived or reimbursed.
For the Contractual Limits, each of the Trusts and Invesco Aim agree to review the then-current expense limitations for each class of each Fund listed on the Exhibits on a date prior to the Expiration Date to determine whether such limitations should be amended, continued or terminated. The expense limitations will expire upon the Expiration Date unless the Trusts and Invesco Aim have agreed to continue them. The Exhibits will be amended to reflect any such agreement.
For the Voluntary Limits (listed in Exhibits A - D), the Trusts and Invesco Aim agree that these are not contractual in nature and that Invesco Aim may establish, amend and/or terminate such expense limitations at any time in its sole discretion after consultation with the Funds' Boards of Trustees. Any delay or failure by Invesco Aim to update this Memorandum of Agreement with regards to the terminations, extensions, or expirations of the Voluntary Limits shall have no effect on the term of such Voluntary Limitations; the Voluntary Limitations are listed herein for informational purposes only.
It is expressly agreed that the obligations of each Trust hereunder shall not be binding upon any of the Trustees, shareholders, nominees, officers, agents or employees of the Trusts personally, but shall only bind the assets and property of each Fund, as provided in each Trust's Agreement and Declaration of Trust. The execution and delivery of this Memorandum of Agreement have been authorized by the Trustees of the Trusts, and this Memorandum of Agreement has been executed and delivered by an authorized officer of the Trusts acting as such; neither such authorization by such Trustees nor such execution and delivery by such officer shall be deemed to have been made by any of them individually or to impose any liability on any of them personally, but shall bind only the assets and property of the Funds, as provided in each Trust's Agreement and Declaration of Trust.
IN WITNESS WHEREOF, each of the Trusts and Invesco Aim have entered into this Memorandum of Agreement as of the Effective Dates on the attached Exhibits.
AIM COUNSELOR SERIES TRUST
AIM EQUITY FUNDS
AIM GROWTH SERIES
AIM INVESTMENT FUNDS
AIM INVESTMENT SECURITIES FUNDS
AIM SECTOR FUNDS
AIM TAX-EXEMPT FUNDS
AIM VARIABLE INSURANCE FUNDS
on behalf of the Funds listed in the Exhibits
to this Memorandum of Agreement
By: /s/ John M. Zerr
-----------------------------------------
Title: Senior Vice President
|
SHORT-TERM INVESTMENTS TRUST
on behalf of the Funds listed in the Exhibits
to this Memorandum of Agreement
By: /s/ John M. Zerr
-----------------------------------------
Title: Senior Vice President
|
Invesco Aim Advisors, Inc.
By: /s/ John M. Zerr
-----------------------------------------
Title: Senior Vice President
|
as of July 1, 2008
EXHIBIT "A" - RETAIL FUNDS(1)
FUNDS WITH FISCAL YEAR END OF MARCH 31
AIM SECTOR FUNDS
CONTRACTUAL/ EXPENSE EFFECTIVE DATE OF EXPIRATION
FUND VOLUNTARY LIMITATION CURRENT LIMIT DATE
---- ------------ ---------- ------------------ --------------
AIM Technology Fund
Class A Shares Contractual 1.55% July 1, 2005 June 30, 2009
Class B Shares Contractual 2.30% July 1, 2005 June 30, 2009
Class C Shares Contractual 2.30% July 1, 2005 June 30, 2009
Investor Class Shares Contractual 1.55% July 1, 2005 June 30, 2009
Institutional Class Shares Contractual 1.30% July 1, 2005 June 30, 2009
|
AIM TAX-EXEMPT FUNDS
CONTRACTUAL/ EXPENSE EFFECTIVE DATE OF EXPIRATION
FUND VOLUNTARY LIMITATION CURRENT LIMIT DATE
---- ------------ ---------- ------------------ --------------
AIM High Income Municipal Fund
Class A Shares Voluntary 0.75% May 1, 2008 N/A(2)
Class B Shares Voluntary 1.50% May 1, 2008 N/A(2)
Class C Shares Voluntary 1.50% May 1, 2008 N/A(2)
Institutional Class Shares Voluntary 0.50% May 1, 2008 N/A(2)
|
FUNDS WITH FISCAL YEAR END OF JULY 31
AIM INVESTMENT SECURITIES FUNDS
CONTRACTUAL/ EXPENSE EFFECTIVE DATE OF EXPIRATION
FUND VOLUNTARY LIMITATION CURRENT LIMIT DATE
---- ------------ ---------- ------------------ --------------
AIM Core Bond Fund
Class A Shares Contractual 1.00% July 1, 2005 June 30, 2009
Class B Shares Contractual 1.75% July 1, 2002 June 30, 2009
Class C Shares Contractual 1.75% July 1, 2002 June 30, 2009
Class R Shares Contractual 1.25% April 30, 2004 June 30, 2009
Institutional Class Shares Contractual 0.75% April 30, 2004 June 30, 2009
AIM Short Term Bond Fund
Class A Shares Contractual 0.85% July 1, 2005 June 30, 2009
Class C Shares Contractual 1.10%(3) February 1, 2006 June 30, 2009
Class R Shares Contractual 1.10% August 30, 2002 June 30, 2009
Institutional Class Shares Contractual 0.60% August 30, 2002 June 30, 2009
|
See page 5 for footnotes to Exhibit A.
as of July 1, 2008
FUNDS WITH FISCAL YEAR END OF AUGUST 31
AIM COUNSELOR SERIES TRUST
CONTRACTUAL/ EXPENSE EFFECTIVE DATE OF EXPIRATION
FUND VOLUNTARY LIMITATION CURRENT LIMIT DATE
---- ------------ ---------- ------------------ --------------
AIM Floating Rate Fund
Class A Shares Contractual 1.50% April 14, 2006 June 30, 2009
Class C Shares Contractual 2.00% April 14, 2006 June 30, 2009
Class R Shares Contractual 1.75% April 14, 2006 June 30, 2009
Institutional Class Shares Contractual 1.25% April 14, 2006 June 30, 2009
AIM Structured Core Fund
Class A Contractual 0.60% April 28, 2008 June 30, 2009
Class B Contractual 1.35% April 28, 2008 June 30, 2009
Class C Contractual 1.35% April 28, 2008 June 30, 2009
Class R Contractual 0.85% April 28, 2008 June 30, 2009
Investor Class Contractual 0.60% April 28, 2008 June 30, 2009
Institutional Class Contractual 0.35% April 28, 2008 June 30, 2009
AIM Structured Growth Fund
Class A Contractual 1.00% March 31, 2006 June 30, 2009
Class B Contractual 1.75% March 31, 2006 June 30, 2009
Class C Contractual 1.75% March 31, 2006 June 30, 2009
Class R Contractual 1.25% March 31, 2006 June 30, 2009
Institutional Class Contractual 0.75% March 31, 2006 June 30, 2009
AIM Structured Value Fund
Class A Contractual 1.00% March 31, 2006 June 30, 2009
Class B Contractual 1.75% March 31, 2006 June 30, 2009
Class C Contractual 1.75% March 31, 2006 June 30, 2009
Class R Contractual 1.25% March 31, 2006 June 30, 2009
Institutional Class Contractual 0.75% March 31, 2006 June 30, 2009
|
FUNDS WITH FISCAL YEAR END OF OCTOBER 31
AIM EQUITY FUNDS
CONTRACTUAL/ EXPENSE EFFECTIVE DATE OF EXPIRATION
FUND VOLUNTARY LIMITATION CURRENT LIMIT DATE
---- ------------ ---------- ------------------ --------------
AIM Large Cap Basic Value Fund
Class A Shares Contractual 1.22% July 1, 2005 June 30, 2009
Class B Shares Contractual 1.97% July 1, 2005 June 30, 2009
Class C Shares Contractual 1.97% July 1, 2005 June 30, 2009
Class R Shares Contractual 1.47% July 1, 2005 June 30, 2009
Investor Class Shares Contractual 1.22% July 1, 2005 June 30, 2009
Institutional Class Shares Contractual 0.97% July 1, 2005 June 30, 2009
AIM Large Cap Growth Fund
Class A Shares Contractual 1.32% July 1, 2005 June 30, 2009
Class B Shares Contractual 2.07% July 1, 2005 June 30, 2009
Class C Shares Contractual 2.07% July 1, 2005 June 30, 2009
Class R Shares Contractual 1.57% July 1, 2005 June 30, 2009
Investor Class Shares Contractual 1.32% July 1, 2005 June 30, 2009
Institutional Class Shares Contractual 1.07% July 1, 2005 June 30, 2009
|
See page 5 for footnotes to Exhibit A.
as of July 1, 2008
AIM INVESTMENT FUNDS
CONTRACTUAL/ EXPENSE EFFECTIVE DATE OF EXPIRATION
FUND VOLUNTARY LIMITATION CURRENT LIMIT DATE
---- ------------ ---------- ------------------ --------------
AIM China Fund
Class A Shares Contractual 2.05% March 31, 2006 June 30, 2009
Class B Shares Contractual 2.80% March 31, 2006 June 30, 2009
Class C Shares Contractual 2.80% March 31, 2006 June 30, 2009
Institutional Class Shares Contractual 1.80% March 31, 2006 June 30, 2009
AIM Developing Markets Fund
Class A Shares Contractual 1.75% July 1, 2005 June 30, 2009
Class B Shares Contractual 2.50% July 1, 2002 June 30, 2009
Class C Shares Contractual 2.50% July 1, 2002 June 30, 2009
Institutional Class Shares Contractual 1.50% October 25, 2005 June 30, 2009
AIM International Total Return Fund
Class A Shares Contractual 1.10% March 31, 2006 June 30, 2009
Class B Shares Contractual 1.85% March 31, 2006 June 30, 2009
Class C Shares Contractual 1.85% March 31, 2006 June 30, 2009
Institutional Class Shares Contractual 0.85% March 31, 2006 June 30, 2009
AIM Japan Fund
Class A Shares Contractual 1.70% March 31, 2006 June 30, 2009
Class B Shares Contractual 2.45% March 31, 2006 June 30, 2009
Class C Shares Contractual 2.45% March 31, 2006 June 30, 2009
Institutional Class Shares Contractual 1.45% March 31, 2006 June 30, 2009
AIM LIBOR Alpha Fund
Class A Shares Contractual 0.85% March 31, 2006 June 30, 2009
Class C Shares Contractual 1.10%(3) March 31, 2006 June 30, 2009
Class R Shares Contractual 1.10% March 31, 2006 June 30, 2009
Institutional Class Shares Contractual 0.60% March 31, 2006 June 30, 2009
AIM Trimark Fund
Class A Shares Contractual 2.15% July 1, 2005 June 30, 2009
Class B Shares Contractual 2.90% November 1, 2004 June 30, 2009
Class C Shares Contractual 2.90% November 1, 2004 June 30, 2009
Class R Shares Contractual 2.40% November 1, 2004 June 30, 2009
Institutional Class Shares Contractual 1.90% November 1, 2004 June 30, 2009
|
(1) The total operating expenses of any class of shares established after the date of this Memorandum of Agreement will be limited to the amount established for Class A Shares plus the difference between the new class 12b-1 rate and the Class A 12b-1 rate.
(2) AIM may establish, amend or terminate voluntary waivers at any time in its sole discretion after consultation with the Trust.
(3) The expense limit shown is the expense limit after Rule 12b-1 fee waivers by Invesco Aim Distributors, Inc.
as of July 1, 2008
EXHIBIT "B" - ASSET ALLOCATION FUNDS(1)
AIM GROWTH SERIES
CONTRACTUAL/ EXPENSE EFFECTIVE DATE OF EXPIRATION
FUND VOLUNTARY LIMITATION(2) CURRENT LIMIT DATE
---- ------------ -------------------------------- ----------------- -------------
AIM Conservative Allocation Fund
Class A Shares Contractual Limit Other Expenses to 0.23% of January 1, 2006 June 30, 2009
average daily net assets
Class B Shares Contractual Limit Other Expenses to 0.23% of January 1, 2006 June 30, 2009
average daily net assets
Class C Shares Contractual Limit Other Expenses to 0.23% of January 1, 2006 June 30, 2009
average daily net assets
Class R Shares Contractual Limit Other Expenses to 0.23% of January 1, 2006 June 30, 2009
average daily net assets
Institutional Class Shares Contractual Limit Other Expenses to 0.23% of January 1, 2006 June 30, 2009
average daily net assets
AIM Growth Allocation Fund
Class A Shares Contractual Limit Other Expenses to 0.21% of January 1, 2006 June 30, 2009
average daily net assets
Class B Shares Contractual Limit Other Expenses to 0.21% of January 1, 2006 June 30, 2009
average daily net assets
Class C Shares Contractual Limit Other Expenses to 0.21% of January 1, 2006 June 30, 2009
average daily net assets
Class R Shares Contractual Limit Other Expenses to 0.21% of January 1, 2006 June 30, 2009
average daily net assets
Institutional Class Shares Contractual Limit Other Expenses to 0.21% of January 1, 2006 June 30, 2009
average daily net assets
AIM Income Allocation Fund
Class A Contractual Limit Other Expenses to 0.03% of January 1, 2006 June 30, 2009
average daily net assets
Class B Contractual Limit Other Expenses to 0.03% of January 1, 2006 June 30, 2009
average daily net assets
Class C Contractual Limit Other Expenses to 0.03% of January 1, 2006 June 30, 2009
average daily net assets
Class R Contractual Limit Other Expenses to 0.03% of January 1, 2006 June 30, 2009
average daily net assets
Institutional Class Contractual Limit Other Expenses to 0.03% of January 1, 2006 June 30, 2009
average daily net assets
|
See page 10 for footnotes to Exhibit B.
as of July 1, 2008
CONTRACTUAL/ EXPENSE EFFECTIVE DATE OF EXPIRATION
FUND VOLUNTARY LIMITATION(2) CURRENT LIMIT DATE
---- ------------ -------------------------------- ----------------- -------------
AIM Independence Now Fund
Class A Contractual Limit Other Expenses to 0.02% of May 1, 2008 June 30, 2009
average daily net assets
Class B Contractual Limit Other Expenses to 0.02% of May 1, 2008 June 30, 2009
average daily net assets
Class C Contractual Limit Other Expenses to 0.02% of May 1, 2008 June 30, 2009
average daily net assets
Class R Contractual Limit Other Expenses to 0.02% of May 1, 2008 June 30, 2009
average daily net assets
Institutional Class Contractual Limit Other Expenses to 0.02% of May 1, 2008 June 30, 2009
average daily net assets
AIM Independence 2010 Fund
Class A Contractual Limit Other Expenses to 0.04% of May 1, 2008 June 30, 2009
average daily net assets
Class B Contractual Limit Other Expenses to 0.04% of May 1, 2008 June 30, 2009
average daily net assets
Class C Contractual Limit Other Expenses to 0.04% of May 1, 2008 June 30, 2009
average daily net assets
Class R Contractual Limit Other Expenses to 0.04% of May 1, 2008 June 30, 2009
average daily net assets
Institutional Class Contractual Limit Other Expenses to 0.04% of May 1, 2008 June 30, 2009
average daily net assets
AIM Independence 2020 Fund
Class A Contractual Limit Other Expenses to 0.07% of May 1, 2008 June 30, 2009
average daily net assets
Class B Contractual Limit Other Expenses to 0.07% of May 1, 2008 June 30, 2009
average daily net assets
Class C Contractual Limit Other Expenses to 0.07% of May 1, 2008 June 30, 2009
average daily net assets
Class R Contractual Limit Other Expenses to 0.07% of May 1, 2008 June 30, 2009
average daily net assets
Institutional Class Contractual Limit Other Expenses to 0.07% of May 1, 2008 June 30, 2009
average daily net assets
|
See page 10 for footnotes to Exhibit B.
as of July 1, 2008
CONTRACTUAL/ EXPENSE EFFECTIVE DATE OF EXPIRATION
FUND VOLUNTARY LIMITATION(2) CURRENT LIMIT DATE
---- ------------ -------------------------------- ----------------- -------------
AIM Independence 2030 Fund
Class A Contractual Limit Other Expenses to 0.10% of May 1, 2008 June 30, 2009
average daily net assets
Class B Contractual Limit Other Expenses to 0.10% of May 1, 2008 June 30, 2009
average daily net assets
Class C Contractual Limit Other Expenses to 0.10% of May 1, 2008 June 30, 2009
average daily net assets
Class R Contractual Limit Other Expenses to 0.10% of May 1, 2008 June 30, 2009
average daily net assets
Institutional Class Contractual Limit Other Expenses to 0.10% of May 1, 2008 June 30, 2009
average daily net assets
AIM Independence 2040 Fund
Class A Contractual Limit Other Expenses to 0.09% of May 1, 2008 June 30, 2009
average daily net assets
Class B Contractual Limit Other Expenses to 0.09% of May 1, 2008 June 30, 2009
average daily net assets
Class C Contractual Limit Other Expenses to 0.09% of May 1, 2008 June 30, 2009
average daily net assets
Class R Contractual Limit Other Expenses to 0.09% of May 1, 2008 June 30, 2009
average daily net assets
Institutional Class Contractual Limit Other Expenses to 0.09% of May 1, 2008 June 30, 2009
average daily net assets
AIM Independence 2050 Fund
Class A Contractual Limit Other Expenses to 0.08% of May 1, 2008 June 30, 2009
average daily net assets
Class B Contractual Limit Other Expenses to 0.08% of May 1, 2008 June 30, 2009
average daily net assets
Class C Contractual Limit Other Expenses to 0.08% of May 1, 2008 June 30, 2009
average daily net assets
Class R Contractual Limit Other Expenses to 0.08% of May 1, 2008 June 30, 2009
average daily net assets
Institutional Class Contractual Limit Other Expenses to 0.08% of May 1, 2008 June 30, 2009
average daily net assets
|
See page 10 for footnotes to Exhibit B.
as of July 1, 2008
CONTRACTUAL/ EXPENSE EFFECTIVE DATE OF EXPIRATION
FUND VOLUNTARY LIMITATION(2) CURRENT LIMIT DATE
---- ------------ -------------------------------- ----------------- -------------
AIM International Allocation Fund
Class A Contractual Limit Other Expenses to 0.18% of October 31, 2005 June 30, 2009
average daily net assets
Class B Contractual Limit Other Expenses to 0.18% of October 31, 2005 June 30, 2009
average daily net assets
Class C Contractual Limit Other Expenses to 0.18% of October 31, 2005 June 30, 2009
average daily net assets
Class R Contractual Limit Other Expenses to 0.18% of October 31, 2005 June 30, 2009
average daily net assets
Institutional Class Contractual Limit Other Expenses to 0.18% of October 31, 2005 June 30, 2009
average daily net assets
AIM Moderate Allocation Fund
Class A Shares Contractual Limit Other Expenses to 0.12% of January 1, 2006 June 30, 2009
average daily net assets
Class B Shares Contractual Limit Other Expenses to 0.12% of January 1, 2006 June 30, 2009
average daily net assets
Class C Shares Contractual Limit Other Expenses to 0.12% of January 1, 2006 June 30, 2009
average daily net assets
Class R Shares Contractual Limit Other Expenses to 0.12% of January 1, 2006 June 30, 2009
average daily net assets
Institutional Class Shares Contractual Limit Other Expenses to 0.12% of January 1, 2006 June 30, 2009
average daily net assets
AIM Moderate Growth Allocation Fund
Class A Shares Contractual Limit Other Expenses to 0.12% of April 29, 2005 June 30, 2009
average daiy net assets
Class B Shares Contractual Limit Other Expenses to 0.12% of April 29, 2005 June 30, 2009
average daily net assets
Class C Shares Contractual Limit Other Expenses to 0.12% of April 29, 2005 June 30, 2009
average daily net assets
Class R Shares Contractual Limit Other Expenses to 0.12% of April 29, 2005 June 30, 2009
average daily net assets
Institutional Class Shares Contractual Limit Other Expenses to 0.12% of April 29, 2005 June 30, 2009
average daily net assets
|
See page 10 for footnotes to Exhibit B.
as of July 1, 2008
CONTRACTUAL/ EXPENSE EFFECTIVE DATE OF EXPIRATION
FUND VOLUNTARY LIMITATION(2) CURRENT LIMIT DATE
---- ------------ -------------------------------- ----------------- -------------
AIM Moderately Conservative
Allocation Fund
Class A Shares Contractual Limit Other Expenses to 0.14% of April 29, 2005 June 30, 2009
average daily net assets
Class B Shares Contractual Limit Other Expenses to 0.14% of April 29, 2005 June 30, 2009
average daily net assets
Class C Shares Contractual Limit Other Expenses to 0.14% of April 29, 2005 June 30, 2009
average daily net assets
Class R Shares Contractual Limit Other Expenses to 0.14% of April 29, 2005 June 30, 2009
average daily net assets
Institutional Class Shares Contractual Limit Other Expenses to 0.14% of April 29, 2005 June 30, 2009
average daily net assets
|
(1) Other Expenses of any class of shares established after the date of this Memorandum of Agreement will be limited to the same amount established for Class A shares.
(2) Other Expenses are defined as all normal operating expenses of the fund, excluding management fees and 12b-1 expenses, if any. The expense limitation is subject to the exclusions as listed in the Memorandum of Agreement.
as of July 1, 2008
EXHIBIT "C" - INSTITUTIONAL MONEY MARKET FUNDS(1,2)
FUNDS WITH FISCAL YEAR END OF AUGUST 31
SHORT-TERM INVESTMENTS TRUST
CONTRACTUAL/ EXPENSE EFFECTIVE DATE OF EXPIRATION
FUND VOLUNTARY LIMITATION CURRENT LIMIT DATE
---- ------------ ---------- ------------------ --------------
Government & Agency Portfolio
Cash Management Class Contractual 0.12% June 30, 2005 June 30, 2009
Corporate Class Contractual 0.12% June 30, 2005 June 30, 2009
Institutional Class Contractual 0.12% June 30, 2005 June 30, 2009
Personal Investment Class Contractual 0.12% June 30, 2005 June 30, 2009
Private Investment Class Contractual 0.12% June 30, 2005 June 30, 2009
Reserve Class Contractual 0.12% June 30, 2005 June 30, 2009
Resource Class Contractual 0.12% June 30, 2005 June 30, 2009
Government TaxAdvantage Portfolio
Cash Management Class
Corporate Class Contractual 0.12% June 30, 2005 June 30, 2009
Institutional Class Contractual 0.12% June 30, 2005 June 30, 2009
Personal Investment Class Contractual 0.12% June 30, 2005 June 30, 2009
Private Investment Class Contractual 0.12% June 30, 2005 June 30, 2009
Reserve Class Contractual 0.12% June 30, 2005 June 30, 2009
Resource Class Contractual 0.12% June 30, 2005 June 30, 2009
Contractual 0.12% June 30, 2005 June 30, 2009
Liquid Assets Portfolio
Cash Management Class Contractual 0.12% June 30, 2005 June 30, 2009
Corporate Class Contractual 0.12% June 30, 2005 June 30, 2009
Institutional Class Contractual 0.12% June 30, 2005 June 30, 2009
Personal Investment Class Contractual 0.12% June 30, 2005 June 30, 2009
Private Investment Class Contractual 0.12% June 30, 2005 June 30, 2009
Reserve Class Contractual 0.12% June 30, 2005 June 30, 2009
Resource Class Contractual 0.12% June 30, 2005 June 30, 2009
STIC Prime Portfolio
Cash Management Class Contractual 0.12% June 30, 2005 June 30, 2009
Corporate Class Contractual 0.12% June 30, 2005 June 30, 2009
Institutional Class Contractual 0.12% June 30, 2005 June 30, 2009
Personal Investment Class Contractual 0.12% June 30, 2005 June 30, 2009
Private Investment Class Contractual 0.12% June 30, 2005 June 30, 2009
Reserve Class Contractual 0.12% June 30, 2005 June 30, 2009
Resource Class Contractual 0.12% June 30, 2005 June 30, 2009
Tax-Free Cash Reserve Portfolio(3)
Cash Management Class Contractual 0.22% April 30, 2008 June 30, 2009
Corporate Class Contractual 0.22% April 30, 2008 June 30, 2009
Institutional Class Contractual 0.22% April 30, 2008 June 30, 2009
Personal Investment Class Contractual 0.22% April 30, 2008 June 30, 2009
Private Investment Class Contractual 0.22% April 30, 2008 June 30, 2009
Reserve Class Contractual 0.22% April 30, 2008 June 30, 2009
Resource Class Contractual 0.22% April 30, 2008 June 30, 2009
|
See page 12 for footnotes to Exhibit C.
as of July 1, 2008
CONTRACTUAL/ EXPENSE EFFECTIVE DATE OF EXPIRATION
FUND VOLUNTARY LIMITATION CURRENT LIMIT DATE
---- ------------ ---------- ------------------ --------------
Treasury Portfolio Contractual 0.12% June 30, 2005 June 30, 2009
Cash Management Class Contractual 0.12% June 30, 2005 June 30, 2009
Corporate Class Contractual 0.12% June 30, 2005 June 30, 2009
Institutional Class Contractual 0.12% June 30, 2005 June 30, 2009
Personal Investment Class Contractual 0.12% June 30, 2005 June 30, 2009
Private Investment Class Contractual 0.12% June 30, 2005 June 30, 2009
Reserve Class Contractual 0.12% June 30, 2005 June 30, 2009
Resource Class
|
(1) The expense limit shown excludes Rule 12b-1 fees.
(2) The expense rate excluding 12b-1 fees of any class of shares established after the date of this Memorandum of Agreement will be the same as existing classes.
(3) The expense limitation also excludes Trustees' fees and federal registration expenses. As of the date of this agreement, the fiscal year end of Tax-Free Cash Reserve Portfolio is 3/31. Effective April 30, 2008, Tax-Free Cash Reserve Portfolio was reorganized as a portfolio of Tax-Free Investments Trust ("TFIT") to Short-Term Investments Trust following shareholder approval at a meeting held on February 29, 2008. The Board of Trustees of TFIT previously approved this expense limitation at a meeting on June 26-27, 2007 to be effective until at least June 30, 2008. As a portfolio of TFIT, this limitation has been in effect since June 30, 2005.
as of July 1, 2008
EXHIBIT "D" - VARIABLE INSURANCE FUNDS
AIM VARIABLE INSURANCE FUNDS
CONTRACTUAL/ EXPENSE EFFECTIVE DATE OF EXPIRATION
FUND VOLUNTARY LIMITATION CURRENT LIMIT DATE
---- ------------ ---------- ------------------ --------------
AIM V.I. Basic Balanced Fund
Series I Shares Contractual 0.91% July 1, 2005 April 30, 2010
Series II Shares Contractual 1.16% July 1, 2005 April 30, 2010
AIM V.I. Basic Value Fund
Series I Shares Contractual 1.30% January 1, 2005 April 30, 2010
Series II Shares Contractual 1.45% January 1, 2005 April 30, 2010
AIM V.I. Capital Appreciation Fund
Series I Shares Contractual 1.30% January 1, 2005 April 30, 2010
Series II Shares Contractual 1.45% January 1, 2005 April 30, 2010
AIM V.I. Capital Development Fund
Series I Shares Contractual 1.30% January 1, 2005 April 30, 2010
Series II Shares Contractual 1.45% January 1, 2005 April 30, 2010
AIM V.I. Core Equity Fund
Series I Shares Contractual 1.30% January 1, 2005 April 30, 2010
Series II Shares Contractual 1.45% January 1, 2005 April 30, 2010
AIM V.I. Diversified Income Fund
Series I Shares Contractual 0.75% July 1, 2005 April 30, 2010
Series II Shares Contractual 1.00% July 1, 2005 April 30, 2010
AIM V.I. Dynamics Fund
Series I Shares Contractual 1.30% April 30, 2004 April 30, 2010
Series II Shares Contractual 1.45% April 30, 2004 April 30, 2010
AIM V.I. Financial Services Fund
Series I Shares Contractual 1.30% April 30, 2004 April 30, 2010
Series II Shares Contractual 1.45% April 30, 2004 April 30, 2010
AIM V.I. Global Health Care Fund
Series I Shares Contractual 1.30% April 30, 2004 April 30, 2010
Series II Shares Contractual 1.45% April 30, 2004 April 30, 2010
AIM V.I. Global Real Estate Fund
Series I Shares Contractual 1.30% April 30, 2004 April 30, 2010
Series II Shares Contractual 1.45% April 30, 2004 April 30, 2010
AIM V.I. Government Securities Fund
Series I Shares Contractual 0.73% July 1, 2005 April 30, 2010
Series II Shares Contractual 0.98% July 1, 2005 April 30, 2010
|
as of July 1, 2008
CONTRACTUAL/ EXPENSE EFFECTIVE DATE OF EXPIRATION
FUND VOLUNTARY LIMITATION CURRENT LIMIT DATE
---- ------------ ---------- ------------------ --------------
AIM V.I. High Yield Fund
Series II Shares Contractual 0.95% July 1, 2005 April 30, 2010
Series II Shares Contractual 1.20% April 30, 2004 April 30, 2010
AIM V.I. International Growth Fund
Series I Shares Contractual 1.30% January 1, 2005 April 30, 2010
Series II Shares Contractual 1.45% January 1, 2005 April 30, 2010
AIM V.I. Large Cap Growth Fund
Series I Shares Contractual 1.01% July 1, 2005 April 30, 2010
Series II Shares Contractual 1.26% July 1, 2005 April 30, 2010
AIM V.I. Leisure Fund
Series I Shares Contractual 1.01% April 30, 2004 April 30, 2010
Series II Shares Contractual 1.26% April 30, 2004 April 30, 2010
AIM V.I. Mid Cap Core Equity Fund
Series I Shares Contractual 1.30% September 10, 2001 April 30, 2010
Series II Shares Contractual 1.45% September 10, 2001 April 30, 2010
AIM V.I. Money Market Fund
Series I Shares Contractual 1.30% January 1, 2005 April 30, 2010
Series II Shares Contractual 1.45% January 1, 2005 April 30, 2010
AIM V.I. Small Cap Equity Fund
Series I Shares Contractual 1.15% July 1, 2005 April 30, 2010
Series II Shares Contractual 1.40% July 1, 2005 April 30, 2010
AIM V.I. Technology Fund
Series I Shares Contractual 1.30% April 30, 2004 April 30, 2010
Series II Shares Contractual 1.45% April 30, 2004 April 30, 2010
AIM V.I. Utilities Fund
Series I Shares Contractual 0.93% September 23, 2005 April 30, 2010
Series II Shares Contractual 1.18% September 23, 2005 April 30, 2010
|
MEMORANDUM OF AGREEMENT
(AFFILIATED MONEY MARKET FUND ADVISORY FEE WAIVER)
This Memorandum of Agreement is entered into as of the dates indicated on Exhibit "A" between AIM Counselor Series Trust, AIM Equity Funds, AIM Funds Group, AIM Growth Series, AIM International Mutual Funds, AIM Investment Funds, AIM Investment Securities Funds, AIM Sector Funds, AIM Tax-Exempt Funds, AIM Variable Insurance Funds and Short-Term Investments Trust (each a "Fund" and collectively, the "Funds"), on behalf of the portfolios listed on Exhibit "A" to this Memorandum of Agreement (the "Portfolios"), and Invesco Aim Advisors, Inc. ("Invesco Aim").
For and in consideration of the mutual terms and agreements set forth herein and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Funds and Invesco Aim agree as follows:
1. Each Fund, for itself and its Portfolios, and Invesco Aim agree that until the expiration date, if any, of the commitment set forth on the attached Exhibit "A" occurs, as such Exhibit "A" is amended from time to time, Invesco Aim will waive advisory fees payable by an Investing Fund in an amount equal to 100% of the net advisory fee Invesco Aim receives on the Uninvested Cash (defined below) from the Affiliated Money Market Fund (defined below) in which the Investing Fund invests (the "Waiver").
i. Invesco Aim's Fund Accounting Group will calculate, and apply, the Waiver monthly, based upon the average investment of Uninvested Cash made by the Investing Fund during the previous month in an Affiliated Money Market Fund.
ii. The Waiver will not apply to those investing Funds that do not charge an advisory fee, either due to the terms of their advisory agreement, or as a result of contractual or voluntary fee waivers.
iii. The Waiver will not apply to cash collateral for securities lending.
For purposes of the paragraph above, the following terms shall have the following meanings:
(a) "Affiliated Money Market Fund" - any existing or future Fund that holds itself out as a money market fund and complies with Rule 2a-7 under the Investment Company Act of 1940, as amended; and
(b) "Uninvested Cash" - cash available and uninvested by a Fund that may result from a variety of sources, including dividends or interest received on portfolio securities, unsettled securities transactions, strategic reserves, matured investments, proceeds from liquidation of investment securities, dividend payments, or new investor capital.
2. Neither a Fund nor Invesco Aim may remove or amend the Waiver to a Fund's detriment prior to requesting and receiving the approval of the Portfolio's Board of Trustee to remove or amend such Waiver. Invesco Aim will not have any right to reimbursement of any amount so waived.
Subject to the foregoing paragraphs, each of the Funds and Invesco Aim agree to review the then-current waivers for each class of the Funds listed on the Exhibit on a date prior to the Expiration Date to determine whether such waivers should be amended, continued or terminated. The waivers will expire upon the Expiration Date unless the Funds and Invesco Aim have agreed to continue them. The Exhibit will be amended to reflect any such agreement.
Nothing in this Memorandum of Agreement is intended to affect any other memorandum of agreement executed by any Fund or Invesco Aim with respect to any other fee waivers, expense reimbursements and/or expense limitations.
IN WITNESS WHEREOF, each Fund, on behalf of itself and its Portfolios listed in Exhibit "A" to this Memorandum of Agreement, and Invesco Aim have entered into this Memorandum of Agreement as of the dates indicated on Exhibit "A".
AIM COUNSELOR SERIES TRUST
AIM EQUITY FUNDS
AIM FUNDS GROUP
AIM GROWTH SERIES
AIM INTERNATIONAL MUTUAL FUNDS
AIM INVESTMENT FUNDS
AIM INVESTMENT SECURITIES FUNDS
AIM SECTOR FUNDS
AIM TAX-EXEMPT FUNDS
AIM VARIABLE INSURANCE FUNDS
By: /s/ John M. Zerr
------------------------------------
Title: Senior Vice President
|
SHORT-TERM INVESTMENTS TRUST
By: /s/ John M. Zerr
------------------------------------
Title: Senior Vice President
|
INVESCO AIM ADVISORS, INC.
By: /s/ John M. Zerr
------------------------------------
Title: Senior Vice President
|
EXHIBIT "A"
AIM COUNSELOR SERIES TRUST
PORTFOLIO EFFECTIVE DATE COMMITTED UNTIL --------- -------------- --------------- AIM Floating Rate Fund July 1, 2007 June 30, 2009 AIM Multi-Sector Fund July 1, 2007 June 30, 2009 AIM Select Real Estate Income Fund July 1, 2007 June 30, 2009 AIM Structured Core Fund July 1, 2007 June 30, 2009 AIM Structured Growth Fund July 1, 2007 June 30, 2009 AIM Structured Value Fund July 1, 2007 June 30, 2009 |
AIM EQUITY FUNDS
PORTFOLIO EFFECTIVE DATE COMMITTED UNTIL --------- -------------- --------------- AIM Capital Development Fund July 1, 2007 June 30, 2009 AIM Charter Fund July 1, 2007 June 30, 2009 AIM Constellation Fund July 1, 2007 June 30, 2009 AIM Diversified Dividend Fund July 1, 2007 June 30, 2009 AIM Large Cap Basic Value Fund July 1, 2007 June 30, 2009 AIM Large Cap Growth Fund July 1, 2007 June 30, 2009 AIM Summit Fund July 1, 2007 June 30, 2009 |
AIM FUNDS GROUP
FUND EFFECTIVE DATE COMMITTED UNTIL ---- -------------- --------------- AIM Basic Balanced Fund July 1, 2007 June 30, 2009 AIM European Small Company Fund July 1, 2007 June 30, 2009 AIM Global Value Fund July 1, 2007 June 30, 2009 AIM International Small Company Fund July 1, 2007 June 30, 2009 AIM Mid Cap Basic Value Fund July 1, 2007 June 30, 2009 AIM Select Equity Fund July 1, 2007 June 30, 2009 AIM Small Cap Equity Fund July 1, 2007 June 30, 2009 |
AIM GROWTH SERIES
FUND EFFECTIVE DATE COMMITTED UNTIL ---- -------------- --------------- AIM Basic Value Fund July 1, 2007 June 30, 2009 AIM Global Equity Fund July 1, 2007 June 30, 2009 AIM Mid Cap Core Equity Fund July 1, 2007 June 30, 2009 AIM Small Cap Growth Fund July 1, 2007 June 30, 2009 |
AIM INTERNATIONAL MUTUAL FUNDS
FUND EFFECTIVE DATE COMMITTED UNTIL ---- -------------- --------------- AIM Asia Pacific Growth Fund July 1, 2007 June 30, 2009 AIM European Growth Fund July 1, 2007 June 30, 2009 AIM Global Growth Fund July 1, 2007 June 30, 2009 AIM Global Small & Mid Cap Growth Fund July 1, 2007 June 30, 2009 AIM International Core Equity Fund July 1, 2007 June 30, 2009 AIM International Growth Fund July 1, 2007 June 30, 2009 |
AIM INVESTMENT FUNDS
FUND EFFECTIVE DATE COMMITTED UNTIL ---- -------------- --------------- AIM China Fund July 1, 2007 June 30, 2009 AIM Developing Markets Fund July 1, 2007 June 30, 2009 AIM Global Health Care Fund July 1, 2007 June 30, 2009 AIM International Total Return Fund July 1, 2007 June 30, 2009 AIM Japan Fund July 1, 2007 June 30, 2009 AIM LIBOR Alpha Fund July 1, 2007 June 30, 2009 AIM Trimark Endeavor Fund July 1, 2007 June 30, 2009 AIM Trimark Fund July 1, 2007 June 30, 2009 AIM Trimark Small Companies Fund July 1, 2007 June 30, 2009 |
AIM INVESTMENT SECURITIES FUNDS
FUND EFFECTIVE DATE COMMITTED UNTIL ---- -------------- --------------- AIM Core Bond Fund July 1, 2007 June 30, 2009 AIM Dynamics Fund July 1, 2007 June 30, 2009 AIM Global Real Estate Fund July 1, 2007 June 30, 2009 AIM High Yield Fund July 1, 2007 June 30, 2009 AIM Income Fund July 1, 2007 June 30, 2009 AIM Limited Maturity Treasury Fund July 1, 2007 June 30, 2009 AIM Money Market Fund July 1, 2007 June 30, 2009 AIM Municipal Bond Fund July 1, 2007 June 30, 2009 AIM Real Estate Fund July 1, 2007 June 30, 2009 AIM Short Term Bond Fund July 1, 2007 June 30, 2009 AIM U.S. Government Fund July 1, 2007 June 30, 2009 |
AIM SECTOR FUNDS
FUND EFFECTIVE DATE COMMITTED UNTIL ---- -------------- --------------- AIM Energy Fund July 1, 2007 June 30, 2009 AIM Financial Services Fund July 1, 2007 June 30, 2009 AIM Gold & Precious Metals Fund July 1, 2007 June 30, 2009 AIM Leisure Fund July 1, 2007 June 30, 2009 AIM Technology Fund July 1, 2007 June 30, 2009 AIM Utilities Fund July 1, 2007 June 30, 2009 |
AIM TAX-EXEMPT FUNDS
FUND EFFECTIVE DATE COMMITTED UNTIL ---- -------------- --------------- AIM High Income Municipal Fund July 1, 2007 June 30, 2009 AIM Tax-Exempt Cash Fund July 1, 2007 June 30, 2009 AIM Tax-Free Intermediate Fund July 1, 2007 June 30, 2009 |
AIM VARIABLE INSURANCE FUNDS
FUND EFFECTIVE DATE COMMITTED UNTIL ---- -------------- --------------- AIM V.I. Basic Balanced Fund July 1, 2007 April 30, 2010 AIM V.I. Basic Value Fund July 1, 2007 April 30, 2010 AIM V.I. Capital Appreciation Fund July 1, 2007 April 30, 2010 AIM V.I. Capital Development Fund July 1, 2007 April 30, 2010 AIM V.I. Core Equity Fund July 1, 2007 April 30, 2010 AIM V.I. Diversified Income Fund July 1, 2007 April 30, 2010 AIM V.I. Dynamics Fund July 1, 2007 April 30, 2010 AIM V.I. Financial Services Fund July 1, 2007 April 30, 2010 AIM V.I. Global Health Care Fund July 1, 2007 April 30, 2010 AIM V.I. Global Real Estate Fund July 1, 2007 April 30, 2010 AIM V.I. Government Securities Fund July 1, 2007 April 30, 2010 AIM V.I. High Yield Fund July 1, 2007 April 30, 2010 AIM V.I. International Growth Fund July 1, 2007 April 30, 2010 AIM V.I. Large Cap Growth Fund July 1, 2007 April 30, 2010 AIM V.I. Leisure Fund July 1, 2007 April 30, 2010 AIM V.I. Mid Cap Core Equity Fund July 1, 2007 April 30, 2010 AIM V.I. Money Market Fund July 1, 2007 April 30, 2010 AIM V.I. Small Cap Equity Fund July 1, 2007 April 30, 2010 AIM V.I. Technology Fund July 1, 2007 April 30, 2010 AIM V.I. Utilities Fund July 1, 2007 April 30, 2010 |
SHORT-TERM INVESTMENTS TRUST
FUND EFFECTIVE DATE COMMITTED UNTIL ---- -------------- --------------- Government TaxAdvantage Portfolio July 1, 2007 June 30, 2009 STIC Prime Portfolio July 1, 2007 June 30, 2009 Treasury Portfolio July 1, 2007 June 30, 2009 |
[STRADLEY RONON LOGO] STRADLEY RONON STEVENS & YOUNG, LLP
2600 One Commerce Square
Philadelphia, PA 19103-7098
Telephone 215.564.8000
Fax 215.564.8120
www.stradley.com
August 8, 2008
AIM Variable Insurance Funds
11 Greenway Plaza, Suite 100
Houston, TX 77046-1173
Re: AIM Variable Insurance Funds Registration Statement on Form N-1A
Ladies and Gentlemen:
We have acted as counsel to AIM Variable Insurance Funds, a statutory trust organized under the laws of the State of Delaware (the "Trust") and registered under the Investment Company Act of 1940, as amended (the "1940 Act"), as an open-end, series management investment company.
This opinion is given in connection with the filing by the Trust with the Securities and Exchange Commission of Post-Effective Amendment No. 36 to the Registration Statement on Form N-1A under the Securities Act of 1933, as amended (the "1933 Act"), and Amendment No. 35 to such Registration Statement under the 1940 Act (collectively, the "Registration Statement") relating to the registration of an indefinite number of Series I shares and Series II shares of beneficial interest, par value $0.001 per share (together, the "Shares"), of AIM V.I. PowerShares ETF Allocation Fund (the "Fund").
In connection with giving this opinion, we have examined copies of the Trust's Amended and Restated Certificate of Trust, Amended and Restated Agreement and Declaration of Trust, as amended (the "Trust Agreement"), Amended and Restated Bylaws of the Trust, as amended, and resolutions of the Board of Trustees of the Trust adopted by written consent dated July 31, 2008, and originals or copies, certified or otherwise identified to our satisfaction, of such other documents, records and other instruments as we have deemed necessary or advisable for purposes of this opinion. We have also examined the prospectuses for the Fund, which are included in the Registration Statement, substantially in the form in which they are to be filed under the 1940 Act and the 1933 Act (the "Prospectuses"). As to various questions of fact material to our opinion, we have relied upon information provided by officers of the Trust.
The Prospectuses provide for issuance of the Shares from time to time at the net asset value thereof. In connection with our giving this opinion, we assume that the Shares have been, and will continue to be, sold in accordance with the Trust's usual method of distributing its registered Shares, under which prospectuses are made available
for delivery to offerees and purchasers of such Shares in accordance with the 1933 Act and that upon sale of the Shares the Trust will receive the net asset value thereof.
Both the Delaware Statutory Trust Act, as amended, and the Trust Agreement provide that shareholders of the Trust shall be entitled to the same limitation on personal liability as is extended under the Delaware General Corporation Law, as amended, to stockholders of private corporations for profit. There is a remote possibility, however, that, under certain circumstances, shareholders of a Delaware statutory trust may be held personally liable for that trust's obligations to the extent that the courts of another state that does not recognize such limited liability were to apply the laws of such state to a controversy involving such obligations. The Trust Agreement also provides for indemnification out of property of a Fund for all loss and expense of any shareholder held personally liable for the obligations of such Fund. Therefore, the risk of any shareholder incurring financial loss beyond his investment due to shareholder liability is limited to circumstances in which a Fund is unable to meet its obligations and the express limitation of shareholder liabilities is determined by a court of competent jurisdiction not to be effective.
Based on and subject to the foregoing, we are of the opinion that the Shares to be offered for sale pursuant to the Prospectuses are duly authorized and, when sold, issued and paid for as described in the Prospectuses, will be validly issued, fully paid and nonassessable.
We express no opinion concerning the laws of any jurisdiction other than the federal law of the United States of America and the laws of the State of Delaware applicable to trusts formed under the Delaware Statutory Trust Act, as amended.
We consent to the filing of this opinion as an exhibit to the Registration Statement and to the use of our name and to the reference to our firm under the caption "Investment Advisory and Other Services - Other Service Providers - Counsel to the Trust" in the Statement of Additional Information for the Fund, which is included in the Registration Statement.
Very truly yours,
STRADLEY RONON STEVENS & YOUNG, LLP
By: /s/ E. Carolan Berkley
------------------------------------
E. Carolan Berkley, a Partner
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[INVESCO AIM LOGO APPEARS HERE]
--Servicemark--
11 Greenway Plaza, Suite 100
Houston, TX 77046-1173
713-626-1919
Invesco Aim Advisors, Inc.
October __, 2008
Board of Trustees
AIM Variable Insurance Funds
11 Greenway Plaza, Suite 100
Houston, Texas 77046-1173
Re: Initial Capital Investment In A New Portfolio Of AIM Variable Insurance Funds
Ladies and Gentlemen:
We are purchasing shares of the AIM V.I. PowerShares ETF Allocation Fund (the "Fund"), a new portfolio of AIM Variable Insurance Funds, for the purpose of providing initial investment for the Fund. The purpose of this letter is to set out our understanding of the conditions of and our promises and representations concerning this investment.
We hereby agree to purchase shares equal to the following dollar amount for the Fund:
PURCHASE
FUND AMOUNT DATE
---- ------ ----------------
INITIAL INVESTMENT AS SOLE SHAREHOLDER
AIM V.I. PowerShares ETF Allocation Fund - Series I Shares $10.00 October __, 2008
AIM V.I. PowerShares ETF Allocation Fund - Series II Shares $10.00 October __, 2008
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FUND AMOUNT DATE
---- -------- ----------------
INITIAL INVESTMENT FOR THE PURPOSES OF COMMENCING OPERATIONS
AIM V.I. PowerShares ETF Allocation Fund - Series I Shares $125,000 October __, 2008
AIM V.I. PowerShares ETF Allocation Fund - Series II Shares $125,000 October __, 2008
|
We understand that the initial net asset value per share for the portfolio named above will be $10.00.
October __, 2008
We hereby represent that we are purchasing these shares solely for our own account and solely for investment purposes without any intent of distributing or reselling said shares. We further represent that disposition of said shares will only be by direct redemption to or repurchase by the Fund.
We further agree to provide the Fund with at least three days' advance written notice of any intended redemption and agree that we will work with the Fund with respect to the amount of such redemption so as not to place a burden on the Fund and to facilitate normal portfolio management of the Fund.
Sincerely yours,
INVESCO AIM ADVISORS, INC.
AMENDMENT NO. 14
TO
MASTER DISTRIBUTION PLAN
The Master Distribution Plan (the "Plan"), dated as of July 16, 2001, pursuant to Rule 12b-1, of AIM Variable Insurance Funds, a Delaware statutory trust, is hereby amended as follows:
WHEREAS, the parties desire to amend the Agreement to add AIM V.I. PowerShares ETF Allocation Fund;
NOW THEREFORE, Schedule A of the Plan is hereby deleted in its entirety and replaced with the following:
"SCHEDULE A
TO
MASTER DISTRIBUTION PLAN
OF
AIM VARIABLE INSURANCE FUNDS
(SERIES II SHARES)
(DISTRIBUTION FEE)
The Fund shall pay the Distributor as full compensation for all services rendered and all facilities furnished under the Distribution Plan for each Portfolio (or Class thereof) designated below, a Distribution Fee determined by applying the annual rate set forth below as to each Portfolio (or Class thereof) to the average daily net assets of the Portfolio (or Class thereof) for the plan year, computed in a manner used for the determination of the offering price of shares of the Portfolio.
DISTRIBUTION
PORTFOLIO: FEE:
---------- ------------
AIM V.I. Basic Balanced Fund 0.25%
AIM V.I. Basic Value Fund 0.25%
AIM V.I. Capital Appreciation Fund 0.25%
AIM V.I. Capital Development Fund 0.25%
AIM V.I. Core Equity Fund 0.25%
AIM V.I. Diversified Income Fund 0.25%
AIM V.I. Dynamics Fund 0.25%
AIM V.I. Financial Services Fund 0.25%
AIM V.I. Global Health Care Fund 0.25%
AIM V.I. Global Real Estate Fund 0.25%
AIM V.I. Government Securities Fund 0.25%
AIM V.I. High Yield Fund 0.25%
AIM V.I. International Growth Fund 0.25%
AIM V.I. Large Cap Growth Fund 0.25%
AIM V.I. Leisure Fund 0.25%
AIM V.I. Mid Cap Core Equity Fund 0.25%
AIM V.I. Money Market Fund 0.25%
AIM V.I. PowerShares ETF Allocation Fund [0.25%]
AIM V.I. Small Cap Equity Fund 0.25%
AIM V.I. Technology Fund 0.25%
AIM V.I. Utilities Fund 0.25%"
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All other terms and provisions of the Plan not amended herein shall remain in full force and effect.
Dated: October __, 2008
AIM VARIABLE INSURANCE FUNDS
(on behalf of its Series II Shares)
Attest: By:
----------------------------- ------------------------------------
Assistant Secretary John M. Zerr
Senior Vice President
|
(INVESCO LOGO)
INVESCO LTD.
CODE OF CONDUCT
INTRODUCTION
Our company's Core Purpose and Mission are a logical beginning point for our Code of Conduct:
Invesco is committed to "Helping People Worldwide Build Their Financial Security". That Core Purpose underlies our Mission, which is to deliver superior investment performance worldwide. Over the years, Invesco has developed a set of values that will continue to help us achieve our Core Purpose and Mission. Our values include:
- Working with integrity
- Respecting our employees and clients
- Empowering people
This Code of Conduct ("Code of Conduct" or "Code") has been created to assist us in accomplishing our Core Purpose and Mission. It contains a number of policies and standards which, when taken together, are designed to help define the essence of the conduct of an Invesco representative. These policies and standards are also intended to provide guidance to Invesco personnel in fulfilling their obligations to comply with applicable laws, rules and regulations. This Code of Conduct applies to all officers and other employees of Invesco and its subsidiaries (collectively, "Covered Persons"). These standards are neither exclusive nor complete. Additional company policies and rules can be found in the company's Intranet site, and others may be published to company personnel from time to time. Covered Persons are required to comply with all applicable laws, rules and regulations, whether or not specifically addressed in these policies. For additional guidance, or if you have questions regarding the existence, interpretation or application of any law, rule or regulation, please contact your supervisor, the General Counsel of your business unit or division, or the Invesco General Counsel.
Our culture is based upon a set of shared values and principles. These include
working with integrity and commitment to our clients, colleagues and
communities. In practice, this means that our clients' interests must always
come first, that Covered Persons should treat each other with respect and
consideration, and that Invesco should participate as a responsible corporate
citizen in every community in which it operates. This commitment is a vital part
of our achieving our principal responsibility as a publicly-held company:
producing a fair return on our shareholders' capital.
This Code of Conduct contains broad and general principles that supplement the specific policies, procedures and training within each business unit of Invesco.
YOUR RESPONSIBLITIES
One person's misconduct can damage our entire company's hard-earned reputation and compromise the public's trust in the company. Every Covered Person should therefore become familiar with this Code and abide strictly by its provisions. In brief:
- It is your responsibility at all times to comply with the law and behave in an ethical manner.
- This Code cannot anticipate every possible situation or cover every topic in detail. The company has established special policies to address specific subjects and will update this Code and those specific policies from time-to-time. If you are unclear about a situation, stop and ask for guidance before taking action.
- Failure to obey laws and regulations violates this Code and may expose both you and the company to criminal or civil sanctions. Any violation of this Code or other company policies may result in disciplinary action, up to and including termination of employment. The company may also seek civil remedies from you and even refer criminal misconduct to law enforcement agencies.
- You are responsible for reporting possible violations of this Code to the company (see below).
- If you have a question about a topic covered in this Code or a concern regarding any conduct, please speak with your supervisor or with an appropriate member of the Legal & Compliance Department.
- If you are aware of a violation and are uncomfortable speaking with any of these people or wish to remain anonymous, you may call the toll-free Invesco Compliance Reporting Line (the "Compliance Reporting Line"). If you are calling from a U.S. or Canadian location dial 1-866-297-3627. For calls from all other locations, dial an international operator and request a collect call to 1-704-943-1136. When asked for your name use "Invesco." (See further details below.)
- If you are an attorney or an executive officer of the company, you may have additional reporting or other obligations under specific rules applicable to you, such as the POLICY FOR REPORTING BY ATTORNEYS EMPLOYED BY INVESCO LTD. AND ITS SUBSIDIARIES, and you should also comply with such rules.
STATEMENT OF GENERAL PRINCIPLES
Invesco with its subsidiaries and various divisions operates in a highly-regulated and complex environment. There are numerous layers of overlapping, and occasionally conflicting, laws, customs and local practices. This Code of Conduct was designed to provide all of us who are part of the Invesco group with a clear statement of our firm's ethical and cultural standards.
We operate in major countries and securities markets throughout the world. Generally, we serve our clients as fiduciaries.
Fiduciary businesses are generally held to a higher standard of conduct than other businesses, and as such there are special obligations that apply. The following key duties and principles govern our conduct as fiduciaries:
- Best interests of clients - As fiduciaries, we have a duty to act with reasonable care, skill and caution in the best interests of our clients, and to avoid conflicts of interest.
- Global fiduciary standards - Invesco seeks to maintain the same high fiduciary standards throughout the world, even though those standards may not be legally required, or even recognized, in some countries.
- Compliance with applicable laws, rules and regulations - We have a duty to comply with the laws, rules and regulations of the jurisdictions in which we operate, and to comply with the terms of our agreements with our clients.
- Client confidentiality - We must maintain the confidentiality of information relating to the client, and comply with the data protection requirements imposed by many jurisdictions.
- Information - Clients must be provided with timely and accurate information regarding their accounts.
- Segregation and protection of assets - Processes must be established for the proper maintenance, control and protection of client assets. Fiduciary assets must be segregated from Invesco assets and property.
- Delegation of duties - Fiduciary duties should be delegated only when the client consents and where permitted by applicable law. Reasonable care, skill and caution must be exercised in the selection of agents and review of their performance.
- Client guidelines - Invesco is responsible for making investment decisions on behalf of clients that are consistent with the prospectus, contract, or other controlling document relating to the client's account.
- Relations with regulators - We seek relationships with regulators that are open and responsive in nature.
1. Compliance with Laws, Rules and Regulations
Invesco strives to ensure that all activity by or on behalf of Invesco is in compliance with applicable laws, rules and regulations ("applicable laws"). Many of these applicable laws are specifically described in this Code of Conduct and in other Invesco and business unit policies and procedures. In the conduct of our business, all Covered Persons are required to comply with all applicable laws.
2. Fair and Honest Dealing
Covered Persons shall deal fairly and honestly with Invesco's shareholders, customers, suppliers, competitors and employees. Covered Persons shall behave in an ethical manner and shall not take unfair advantage of anyone through manipulation, concealment, abuse of privileged information, misrepresentation of material facts, or any other unfair dealing practice.
3. Conflicts of Interest
Invesco and its Covered Persons must adhere to the highest standards of honest and ethical conduct. These include, but are not limited to, sensitivity to the existence of a conflict of interest or the appearance of a conflict of interest. Conflicts of interest can arise in many ways, and we must all be sensitive to those situations in which they are most likely to be present. A conflict of interest exists when a Covered Person's personal interest interferes, or appears to interfere, in any way with the interests of Invesco or its clients, or when a Covered Person otherwise takes actions or has interests that may make it difficult to perform his or her company work objectively and effectively. For example, a conflict of interest would arise if a Covered Person, or a member of his or her family, receives improper personal benefits as a result of his or her position with Invesco.
All Covered Persons owe a duty of undivided and unqualified loyalty to Invesco and may not use their positions improperly to profit personally or to assist others in profiting at the expense of the company. All Covered Persons are therefore expected and
required to regulate their activities so as to avoid conflicts of interest. In addition, Covered Persons shall promptly communicate to the applicable member of the Legal & Compliance Department any material transaction or relationship that reasonably could be expected to give rise to a conflict of interest so that the company and the Covered Person may take steps to minimize the conflict.
Covered Persons shall not take for personal use (or for use by a family member) any business opportunity learned of during the course of serving Invesco, using Invesco property or as a result of such individual's position with Invesco. To the extent that an employee or officer learns of a business opportunity that is within Invesco's existing or proposed lines of business, the employee or officer should inform his or her supervisor, the divisional or business unit General Counsel, or the Board of Directors, as appropriate, of the business opportunity and refrain from personally pursuing the matter until such time as Invesco decides to forego the business opportunity. At no time may any employee or officer utilize any Invesco property, information or position to generate personal gain or engage or participate in any business that directly competes with Invesco.
While not all-inclusive, the following examples of outside financial interests will serve to illustrate some of the types of activities that might cause conflicts of interest:
- Ownership or other interest in or employment by any outside concern which does business with Invesco. This does not apply to stock or other investments in a publicly-held company, provided that the stock and other investments do not, in the aggregate, exceed 5% of the outstanding ownership interests of such company. Invesco may, following a review of the relevant facts, permit ownership interests which exceed these amounts if management or the Board of Directors, as appropriate, concludes that such ownership interests will not adversely affect Invesco's business interests or the judgment of the affected Covered Person.
- Conducting business, not on behalf of Invesco, with any Invesco vendor, supplier, contractor, agency, or any of their directors, officers or employees.
- Representation of Invesco by a Covered Person in any transaction in which he or she, or a family member, has a substantial personal interest.
- Disclosure or use of confidential, special or inside information of or about Invesco, particularly for personal profit or advantage of the Covered Person or a family member of such person.
- Competition with Invesco by a Covered Person, directly or indirectly, in the purchase, sale or ownership of property or services or business investment opportunities.
As described in more detail in Sections 4, 5 and 6 below, acting as an officer or director of an outside organization, personal share dealing, and the use of material non-public information represent additional areas where conflicts can arise and are of particular sensitivity.
In addition to conflicts of interest between the company and its Covered Persons, conflicts of interest may arise between the company and its clients, including investment funds. Where a Covered Person is trading in securities owned by client accounts, or where a portfolio management team for a hedge fund also manages mutual funds that invest in the same securities, are each examples of situations that may give rise to real or apparent conflicts of interest. All Covered Persons must follow the procedures in place within their respective divisions and business units and must also be sensitive to the types of situations that can give rise to such conflicts or apparent conflicts.
4. Outside Activities and Compensation
No Covered Person shall perform work or render services for any competitor of Invesco or for any organization with which Invesco does business or which seeks to do business with Invesco, outside of the normal course of his or her employment with Invesco, without the prior written approval of the company. Nor shall any such person be a director, officer, or consultant of such an organization, or permit his or her name to be used in any fashion that would tend to indicate a business connection with such organization, without such approval. Outside organizations can include public or private corporations, partnerships, charitable foundations and other not-for-profit institutions. With the above approval, Covered Persons may receive compensation for such activities.
Service with organizations outside of Invesco can, however, raise serious regulatory issues, including conflicts of interest and access to material non-public information.
As an outside board member or officer, a Covered Person may come into possession of material non-public information about the outside company or other public companies. It is critical that a proper information barrier be in place between Invesco and the outside organization, and that the Covered Person does not communicate such information to other Covered Persons in violation of the information barrier.
Similarly, Invesco may have a business relationship with the outside organization or may seek a relationship in the future. In those circumstances, the Covered Person must not be involved in any way in the business relationship between Invesco and the outside organization.
Invesco retains the right to prohibit membership by Covered Persons on any board of directors/trustees or as an officer of an outside organization where such membership might conflict with the best interests of the company. Approval will be granted on a
case-by-case basis, subject to proper resolution of potential conflicts of interest. Outside activities will be approved only if these issues can be satisfactorily resolved.
5. Personal Share Dealing
Purchasing and selling securities in a Covered Person's own account, or accounts over which the Covered Person has access or control, can give rise to potential conflicts of interest. As fiduciaries, we are held to the highest standards of conduct. Improperly gaining advance knowledge of portfolio transactions, or conducting securities transactions based upon information obtained at Invesco, can be a violation of those standards.
All personal securities transactions must be pre-cleared unless an exemption is obtained. Generally, an exemption will be granted only for Covered Persons whose duties do not give them access to information regarding the sale or purchase of, or the recommendation to sell or purchase, securities in any portfolio. Transactions in certain retirement benefit plans, such as 401(k)s and Money Purchase Plans, and in specified categories of securities, are exempt from pre-clearance. Every Covered Person must also comply with the specific rules in effect in this area for the Covered Person's division or business unit.
Invesco also has policies that specifically cover personal transactions in the shares and American Depositary Shares of the company. All Covered Persons are obligated to follow those procedures whenever they conduct such transactions.
6. Information Barriers and Material Non-Public Information
In the conduct of our business, Covered Persons may come into possession of material non-public information. This information could concern an issuer, a client, a portfolio, the market for a particular security, or Invesco itself. The purchase or sale of Invesco's securities or the securities of other publicly-traded companies while aware of material nonpublic information about such company, or the disclosure of material nonpublic information to others who then trade in such company's securities, is prohibited by this Code of Conduct and by United States and other jurisdictions' securities laws. Invesco and its subsidiaries have adopted insider trading policies that apply to all Covered Persons. All Covered Persons should review the insider trading policies carefully and follow the policies and procedures described therein. The failure of a Covered Person to comply with the company's insider trading policy may subject him or her to company-imposed sanctions, up to and including termination for cause, whether or not the failure to comply results in a violation of law. You should seek the advice of the applicable divisional or business unit General Counsel on any questions regarding this subject and the company's insider trading policy. All Covered Persons are prohibited from using such information in ways that violate the law, including for personal gain. Non-public information must be kept confidential, which may include keeping it confidential from other Covered Persons.
7. Anti-Bribery and Dealings with Governmental Officials
Special care must be taken when dealing with government customers. Activities that might be appropriate when working with private sector customers may be improper and even illegal when dealing with government employees, or when providing goods and services to another customer who, in turn, will deliver the company's product to a government end user. Many of the countries in which Invesco conducts its business prohibit the improper influencing of governmental officials or other persons by the payment of bribes, gifts, political contributions, lavish hospitality or by other means. Our policy requires adherence to those restrictions.
Do not directly or indirectly promise, offer or make payment in money or anything of value to anyone, including a government official, agent or employee of a government, political party, labor organization or business entity or a candidate of a political party, or their families, with the intent to induce favorable business treatment or to improperly affect business or government decisions. This policy prohibits actions intended either to influence a specific decision or merely to enhance future relationships. In general, all travel and entertainment that Covered Persons provide to governmental officials must be pre-approved within the appropriate business unit. If approved, a written confirmation that such expenses do not violate local law must be obtained from an appropriate third party (e.g., the business unit's legal counsel or the government official's supervisor).
Covered Persons shall comply with all laws, rules and regulations governing political campaign finance and lobbying activities and shall not engage in any conduct that is intended to avoid the application of such laws to activities undertaken on Invesco's behalf. In addition, appropriate executive officers shall monitor compliance with lobbyist registration and disclosure requirements by all individuals who act on behalf of Invesco.
These prohibitions extend to any consultants or agents we may retain on behalf of Invesco.
8. Anti-Discrimination and Harassment
Invesco is committed to providing a work environment that is free of discrimination and harassment. Such conduct, whether overt or subtle, is demeaning, may be illegal, and undermines the integrity of the employment relationship.
Sexual harassment can include unwelcome sexual advances, requests for sexual favors, pressure to engage in a sexual relationship as a condition of employment or promotion, or conduct which creates a hostile or offensive work environment.
Discrimination can take many forms including actions, words, jokes, or comments based upon an individual's race, citizenship, ethnicity, color, religion, sex, veteran status,
national origin, age, disability, sexual orientation, marital status or other legally protected characteristic. Any Covered Person who engages in harassment or discrimination will be subject to disciplinary action, up to and including termination of employment.
9. Anti-Money Laundering
In the global marketplace, the attempted use of financial institutions and instruments to launder money is a significant problem that has resulted in the passage of strict laws in many countries. Money laundering is the attempt to disguise money derived from or intended to finance illegal activity including drug trafficking, terrorism, organized crime, fraud, and many other crimes. Money launderers go to great lengths to hide the sources of their funds. Among the most common stratagems are placing cash in legitimate financial institutions, layering between numerous financial institutions, and integrating the laundered proceeds back into the economy as apparently legitimate funds.
All Covered Persons must be vigilant in the fight against money laundering, and must not allow Invesco to be used for money laundering. Each business unit has developed an anti-money laundering program that is consistent with Invesco's group-wide policy. Each Covered Person must comply with the applicable program.
10. Antitrust
The laws of many countries are designed to protect consumers from illegal competitive actions such as price fixing and dividing markets. It is Invesco's policy and practice to compete based on the merits of our products and services. In order to further that policy, Covered Persons must not fix or control prices with competitors, divide up territories or markets, limit the production or sale of products, boycott certain suppliers or customers, unfairly control or restrict trade in any way, restrict a competitor's marketing practices, or disparage a competitor. Covered Persons must never discuss products, pricing or markets with competitors with the intent to fix prices or divide markets.
11. Data Privacy
Data privacy, as it relates both to our clients and our employees, has become a major political and legal issue in many jurisdictions in which we do business. A variety of laws in each of those jurisdictions governs the collection, storage, dissemination, transfer, use, access to and confidentiality of personal information and patient health information. These laws can work to limit transfers of such data across borders and even among affiliated entities in the Invesco group of companies. Invesco and its Covered Persons will comply with all provisions of these laws that relate to its business, including the privacy, security and electronic transmission of financial, health and other personal information. The company expects its Covered Persons to keep all such data
confidential and to protect, use and disclose information in the conduct of our business only in compliance with these laws. The company will consider and may release personal information to third parties to comply with law or to protect the rights, property or safety of Invesco and its customers. . In accordance with Invesco policies, each business unit has developed required disclosures and data security procedures applicable to that business unit. All Covered Persons must comply with the applicable procedures.
With respect to Invesco Covered Persons, all salary, benefit, medical and other personal information relating to Covered Persons shall generally be treated as confidential. Personnel files, payroll information, disciplinary matters, and similar information are to be maintained in a manner designed to protect confidentiality in accordance with applicable laws. All Covered Persons shall exercise due care to prevent the release or sharing of such information beyond those persons who may need such information to fulfill their job functions. Notwithstanding the foregoing, all personnel information belongs solely to Invesco and may be reviewed or used by the company as needed to conduct its business.
12. Communications with the Media and Analysts
Invesco has a long-standing policy of co-operating with the news media and the financial community. This policy is intended to enhance respect for the company, provide accurate information, and achieve our business goals.
Invesco employs media relations professionals who are responsible for handling all contacts with the news media. Invesco's Communications and Corporate Affairs Department is responsible for formulating and directing our media relations policy worldwide. Other Invesco employees may not speak to or disseminate information to the news media unless such contact has been requested and arranged by or coordinated with an Invesco media relations professional in accordance with the company's media relations policy. Any contact from the news media should be referred promptly and without comment to an Invesco media relations professional. If you do not know the appropriate media relations professional for your unit, you can refer the contact to the Invesco Communications and Corporate Affairs Department.
Many countries have detailed rules with regard to the dissemination of information about public companies. In particular, a public company must have procedures for controlling the release of information that may have a material impact on its share price. The Chief Executive Officer and the Chief Financial Officer are responsible for Invesco's relationships with the financial community, including the release of price sensitive information. Other Invesco employees may not speak to or disseminate information regarding the company to the financial community (including analysts, investors, shareholders, Company lenders, and rating agencies) unless such contact has been requested and arranged by the Chief Executive Officer, the Chief Financial Officer or the Investor Relations Group within the Finance Department.
13. Electronic Communications
The use of electronic mail, the Internet and other technology assets is an important part of our work at Invesco. Used improperly, this technology presents legal and business risks for the company and for individual employees. There are also important privacy issues associated with the use of technology, and related regulations are evolving.
In accordance with Invesco's Electronic Communications policies, all Covered Persons are required to use information technology for proper business purposes and in a manner that does not compromise the confidentiality of sensitive or proprietary information. All communications with the public, clients, prospects and fellow employees must be conducted with dignity, integrity, and competence and in an ethical and professional manner.
We must not use information technology to: transmit or store materials which are obscene, pornographic, or otherwise offensive; engage in criminal activity; obtain unauthorized access to data or files; commit copyright violations; install personal software without permission; or make Internet statements, without permission, that suggest that the user is speaking on behalf of Invesco or its affiliates.
14. Gifts and Relationships with Customers and Suppliers
Invesco seeks to do business with clients and suppliers on a fair and equitable basis. We may not accept gifts of other than nominal value, or lavish entertainment, or other valuable benefits or special favors from customers or suppliers. We must observe any limits imposed by our business unit's policies, local laws, or regulations with respect to the acceptance of gifts or gratuities.
15. International Issues
If you conduct business for Invesco outside of the U.S., in addition to being familiar with the local laws of the other countries involved, be sure you are familiar with the following U.S. laws and regulations. Violations of these laws can result in substantial fines, imprisonment and severe restrictions on the company's ability to do business.
FOREIGN CORRUPT PRACTICES ACT
The United States Foreign Corrupt Practices Act (FCPA) and similar laws in many other countries have a variety of provisions that regulate business in other countries and with foreign citizens. In essence, these laws make it a crime to promise or give anything of value to a foreign official or political party in order to obtain or keep business or obtain any improper advantage. It is also illegal to make payments to agents, sales representatives or other third parties if you have reason to believe your gift will be used illegally. Seek advice from the appropriate member of the Legal & Compliance
Department for interpretation of the FCPA or similar laws if you are involved in any business dealings that involve foreign countries.
ANTI-BOYCOTT LAWS
From time to time, various countries may impose restrictions upon the ability of businesses in their jurisdiction to engage in commerce with designated individuals, countries or companies. These laws are commonly referred to as boycotts or trade embargoes. It may be against the law to cooperate in any boycotts between foreign countries not sanctioned by the laws of the place where your office is located. All requests for boycott support or boycott-related information must be reported to your supervisor and the member of the Legal & Compliance Department with responsibility for your office.
Similarly, many countries contribute the names of criminal or terrorist organizations or individuals to a common database and require financial institutions to screen customer lists against the database as part of their "Know Your Customer" obligations. We must be aware of, and where appropriate, adhere to any such restrictions.
EMBARGO SANCTIONS
The United States Treasury Department's Office of Foreign Assets Control prohibits U.S. companies and their foreign subsidiaries from doing business with certain countries and agencies and certain individuals. The laws of other countries may have similar types of prohibitions. The regulations vary depending on the country and the type of transaction and often change as countries' foreign policies change. If you are aware of any sensitive political issues with a country in which Invesco is doing or considering doing business, seek advice from the appropriate member of the Legal & Compliance Department.
16. Political Activities and Lobbying
Covered Persons are encouraged to vote in elections for which they are eligible, and to make contributions supporting candidates or parties of their choice. Covered Persons are also encouraged to express their views on government, legislation and other matters of local or national interest.
Many jurisdictions have imposed severe and complex restrictions on the ability of individuals and companies to make political contributions. You should assume that Invesco and its Covered Persons are generally prohibited from certain types of political activities, and you must be familiar with the rules in effect for your business unit. No Covered Person may, under any circumstances, use company funds to make political contributions without the prior written approval of a member of the Legal & Compliance Department, nor may you represent your personal political views as being those of the company.
17. Retention of Books and Records
Invesco corporate records are important assets. Corporate records include essentially everything you produce as a Covered Person, regardless of its format. A corporate record may be in the form of paper, computer tapes, microfilm, e-mail, or voice mail. It may be something as obvious as a memorandum or a contract or something not as obvious, such as a desk calendar, an appointment book, or an expense record.
Invesco is required by law to maintain certain types of corporate records, usually for a specified period of time. Failure to retain such documents for such minimum periods could subject Invesco to penalties and fines, cause the loss of rights, obstruct justice, place Invesco in contempt of court, or place Invesco at a serious disadvantage in litigation. However, storage of voluminous records over time is costly. Therefore, Invesco has established controls to assure retention for required periods and timely destruction of retrievable records, such as paper copies and records on computers, electronic systems, microfiche, and microfilm. Even if a document is retained for the legally required period, liability could still result if a document is destroyed before its scheduled destruction date.
Invesco and its affiliates are subject to the regulatory requirements of numerous countries and regulatory agencies. Virtually all of them have specific requirements concerning the creation, maintenance and storage of business records. Invesco expects all Covered Persons to become familiar with and fully comply with the records retention/destruction schedule for the departments and office locations for which they work. If you believe documents should be retained beyond the applicable retention period, consult with the Legal & Compliance Department.
18. Sales and Marketing Materials
Invesco is committed to building sustained, open, and honest relationships with our customers, and to complying with all relevant regulatory requirements. This requires that all marketing and sales-related materials be prepared under standards approved by the Legal & Compliance Department and, prior to use, reviewed and approved by the appropriate supervisor within a business unit. Covered materials include requests for proposals, client presentations, performance summaries, advertisements, and published market commentaries.
19. Substance Abuse
Invesco is committed to providing a safe and healthy work place for all employees. The use, possession, sale, transfer, purchase, or being "under the influence" of drugs at any time while on company premises or on company business is prohibited. The term "drug" includes alcoholic beverages (other than in connection with entertainment
events, or in other appropriate settings), prescriptions not authorized by your doctor, inhalants, marijuana, cocaine, heroin and other illegal substances.
20. Confidential Information
Confidential information includes all non-public information that might be of use to competitors, or harmful to the company or its customers, if disclosed. All information (in any form, including electronic information) that is created or used in support of company business activities is the property of Invesco. This company information is a valuable asset and Covered Persons are expected to protect it from unauthorized disclosure. This includes Invesco customer, supplier, business partner and employee data. United Kingdom, United States (federal and state) and other jurisdictions' laws may restrict the use of such information and impose penalties for impermissible use or disclosure.
Covered Persons must maintain the confidentiality of information entrusted to them by the company or its customers, vendors or consultants except when disclosure is properly authorized by the company or legally mandated. Covered Persons shall take all reasonable efforts to safeguard such confidential information that is in their possession against inadvertent disclosure and shall comply with any non-disclosure obligations imposed on Invesco in its agreements with third parties.
Information pertaining to Invesco's competitive position or business strategies, and information relating to negotiations with Covered Persons or third parties, should be protected and shared only with Covered Persons having a need to know such information in order to perform their job responsibilities.
21. Protection and Proper Use of Company Assets
All Covered Persons shall strive to preserve and protect the company's assets and resources and to promote their efficient use. The standards set forth below are intended to guide Covered Persons by articulating Invesco's expectations as they relate to activities or behaviors that may affect the company's assets.
Personal Use of Corporate Assets
Theft, carelessness and waste have a direct impact on Invesco's profitability. Covered Persons are not to convert assets of the company to personal use. Company property should be used for the company's legitimate business purposes and the business of the company shall be conducted in a manner designed to further Invesco's interest rather than the personal interest of an individual Covered Person. Covered Persons are prohibited from the unauthorized use or taking of Invesco's equipment, supplies, materials or services. Prior to engaging in any activity on company time which will result in remuneration to the Covered Person or the use of Invesco's equipment, supplies, materials or services for personal or non-work related purposes, officers and
other Covered Persons shall obtain the approval of the supervisor of the appropriate business unit.
Use of Company Software
Covered Persons use software programs for word processing, spreadsheets, data management, and many other applications. Software products purchased by the company are covered by some form of licensing agreement that describes the terms, conditions and allowed uses. It is the company's policy to respect copyright laws and observe the terms and conditions of any license agreements. Copyright laws in the United States and other countries impose civil and criminal penalties for illegal reproductions and use of licensed software. You must be aware of the restrictions on the use of software and abide by those restrictions. Invesco business equipment may not be used to reproduce commercial software. In addition, you may not use personal software on company equipment without prior written approval.
Computer Resources/E-mail
The company's computer resources, which include the electronic mail system, belong to Invesco and not to the Covered Person. They are not intended to be used for amusement, solicitation, or other non-business purposes. While it is recognized that Covered Persons will occasionally use the system for personal communications, it is expected that such uses will be kept to a minimum and that Covered Persons will be responsible and professional in their use of e-mail. The use of the computer systems to make or forward derogatory or offensive remarks about other people or groups is prohibited. E-mail messages should be treated as any other written business communication.
22. Invesco Intellectual Property
Employees and officers must carefully maintain and manage the intellectual property rights of Invesco, including patents, trademarks, copyrights and trade secrets, to preserve and protect their value. Information, ideas and intellectual property assets of Invesco are important to the company's success.
Invesco's name, logo, trademarks, inventions, processes and innovations are intellectual property assets and their protection is vital to the success of the company's business. The company's and any of its subsidiaries' names, logos and other trademarks and service marks are to be used only for authorized company business and never in connection with personal or other activities unless appropriately approved and in accordance with company policy. In addition, our Covered Persons must respect the intellectual property rights of third parties. Violation of these rights can subject both you and the company to substantial liability, including criminal penalties.
Any work product produced in the course of performing your job shall be deemed to be a "work made for hire" and shall belong to Invesco and is to be used only for the benefit of Invesco. This includes such items as marketing plans, product development plans, computer programs, software, hardware and similar materials. You must share any innovations or inventions you create with your supervisor so that the company can take steps to protect these valuable assets.
23. Integrity and Accuracy of Financial Records
The preparation and maintenance of accurate books, records and accounts is required by law and essential to the proper discharge of financial, legal and reporting obligations. All Covered Persons are prohibited from directly or indirectly falsifying or causing to be false or misleading any financial or accounting book, record or account. In addition, all financial data must be completely and accurately recorded in compliance with applicable law and Invesco's accounting policies and procedures. A Covered Person may violate this section by acting or by failing to act when he or she becomes aware of a violation or potential violation of this section.
24. Disclosure in Reports and Documents.
Filings and Public Materials. As a public company, it is important that the company's filings with UK authorities, the United States Securities and Exchange Commission (the "SEC") and other U.S. federal, state, domestic and international regulatory agencies are full, fair, accurate, timely and understandable. The company also makes many other filings with the SEC and other UK, U.S. and international regulatory agencies on behalf of the funds that its subsidiaries and affiliates manage. Further, the company prepares mutual fund account statements, client investment performance information, prospectuses and advertising materials that are sent out to its mutual fund shareholders and clients.
Disclosure and Reporting Policy. The company's policy is to comply with all applicable disclosure, financial reporting and accounting regulations applicable to the company. The company maintains the highest commitment to its disclosure and reporting requirements, and expects and requires all Covered Persons to record information accurately and truthfully in the books and records of the company.
Information for Filings. Depending on his or her position with the company, a Covered Person may be called upon to provide necessary information to assure that the company's public reports and regulatory filings are full, fair, accurate, timely and understandable. The company expects all Covered Persons to be diligent in providing accurate information to the inquiries that are made related to the company's public disclosure requirements.
Disclosure Controls and Procedures and Internal Control Over Financial Reporting. Covered Persons are required to cooperate and comply with the company's disclosure
controls and procedures and internal controls over financial reporting so that the company's reports and documents filed with the UK authorities, the SEC and other U.S. federal, state, domestic and international regulatory agencies comply in all material respects with applicable laws, and rules and regulations, and provide full, fair, accurate, timely and understandable disclosure.
25. Improper Influence on the Conduct of Audits
Every Covered Person must deal fairly and honestly with outside accountants performing audits, reviews or examinations of Invesco's and its subsidiaries' financial statements. To that end, no Covered Person of Invesco may make or cause to be made a materially false or misleading statement (or omit facts necessary to make the statements made not misleading) in connection with an audit, review or examination of financial statements by independent accountants or the preparation of any document or report required to be filed with a governmental or regulatory authority. Covered Persons of Invesco also are prohibited from coercing, manipulating, misleading or fraudulently inducing any independent public or certified public accountant engaged in the performance or review of financial statements that are required to be filed with a governmental or regulatory authority if he or she knows or should have known that his or her actions could result in making those financial statements materially misleading.
26. Standards for Invesco's Financial Officers
Invesco's Chief Executive Officer, Chief Financial Officer and Chief Accounting Officer (the "Financial Officers") are required to take all reasonable steps to provide full, fair, accurate, timely and understandable disclosures in the reports and documents that Invesco files with or submits to the SEC and other regulatory bodies and in other public communications made by Invesco. In the event that a Financial Officer learns that any such report, document or communication does not meet this standard and such deviation is material, then the Financial Officers are required to review and investigate such deviation, advise the Board of Directors or the Audit Committee of the Board of Directors regarding the deviation and, where necessary, revise the relevant report, document or communication.
Although a particular accounting treatment for one or more of Invesco's operations may be permitted under applicable accounting standards, the Financial Officers may not authorize or permit the use of such an accounting treatment if the effect is to distort or conceal Invesco's true financial condition. The accounting standards and treatments utilized by Invesco must, in all instances, be determined on an objective and uniform basis and without reference to a single transaction or series of transactions and their impact on Invesco's financial results for a particular time period. Any new or novel accounting treatment or standard that is to be utilized in the preparation of Invesco's financial statements must be discussed with Invesco's Audit Committee and its independent auditors.
27. Policy and Procedures on Reporting Potential Material Violations
Invesco's Audit Committee has adopted the following statement of policy with respect to the reporting by employees of potential material violations of this Code of Conduct, laws or regulations and our related non-retaliation policy:
"Invesco strives to ensure that all activity by or on behalf of Invesco is in compliance with applicable laws, rules and regulations. Invesco and its employees must adhere to the highest standards of honest and ethical conduct. Employees of Invesco and its subsidiaries are affirmatively required to report possible violations of the Invesco Code of Conduct, laws or regulations promptly to their manager, a Human Resources Director at the employee's site, the employee's Legal and Compliance Department representative, or via the 24-hour toll-free, anonymous Invesco Compliance Reporting Line.
Invesco will not permit retribution, harassment, or intimidation of any employee who in good faith reports a possible violation. Specifically, Invesco policy prevents any employee from being subject to disciplinary or retaliatory action by Invesco or any of its employees or agents as a result of the employee's good faith:
- Disclosing information to a government or law enforcement agency, where the employee has reasonable cause to believe that the information discloses a violation or possible violation of federal or state law or regulation; or
- Providing information, causing information to be provided, filing, causing to be filed, testifying, participating in a proceeding filed or about to be filed, or otherwise assisting in an investigation or proceeding regarding any conduct that the employee reasonably believes involves a violation of: (1) any criminal law relating to securities fraud, mail fraud, bank fraud, or wire, radio, television or internet fraud; (2) any rule or regulation of the United States Securities and Exchange Commission or any other national, state or provincial securities regulatory authority; or any provision of applicable law relating to fraud against shareholders, where, with respect to investigations, such information or assistance is provided to or the investigation is being conducted by a national, state or provincial regulatory agency, a member of any parliamentary body, or a person at Invesco with supervisory or similar authority over the employee.
However, employees who file reports or provide evidence which they know to be false or without a reasonable belief in the truth and accuracy of such information will not be protected by the above policy statement and may be subject to disciplinary action, including termination of their employment."
If you are a Covered Person with complaints or concerns regarding:
(i) violations of this Code of Conduct or the rules mentioned herein;
(ii) violations of laws or regulations generally involving Invesco; or
(iii) questionable accounting matters, internal accounting controls, auditing matters, breaches of fiduciary duty or violations of United States or foreign securities laws or rules (collectively "Accounting Matters"), including:
- fraud or deliberate error in the preparation, evaluation, review or audit of any financial statement of Invesco;
- fraud or deliberate error in the recording and maintaining of financial records of Invesco;
- deficiencies in or non-compliance with Invesco's internal accounting controls;
- misrepresentation or false statements to or by a senior officer or accountant regarding a matter contained in the financial records, financial reports or audit reports of Invesco;
- deviation from full and fair reporting of Invesco's financial condition; or
- fraudulent or criminal activities engaged in by officers, directors or employees of Invesco;
you may report your concerns in any of three ways:
YOU CAN SPEAK WITH YOUR SUPERVISOR. We encourage you to first contact your immediate supervisor, who is in turn responsible for informing Invesco's Compliance Reporting Line (described below) of any concerns raised.
YOU CAN SPEAK DIRECTLY WITH THE BUSINESS UNIT OR DIVISIONAL GENERAL COUNSEL. If you prefer not to discuss a concern with your own supervisor, you may instead contact the General Counsel of your business unit or division directly. You are also free to e-mail the business unit or divisional General Counsel at the appropriate e-mail address. Such person will then likewise be responsible for informing Invesco's Compliance Reporting Line (described below) of any concerns raised.
YOU CAN CALL OUR COMPLIANCE REPORTING LINE. You may also call the Invesco Compliance Reporting Line. If you are calling from a U.S. or Canadian location dial 1-866-297-3627. For calls from all other locations, dial an international operator and request a collect call to 1-704-943-1136. When asked for your name use "Invesco." You can use the Compliance Reporting Line to report possible violations or to check on the status of a previously filed report. You can also report to the Compliance Reporting Line if you believe that a report previously made to company management, your
supervisor, other management personnel or the applicable business unit or divisional General Counsel has not been addressed.
The Compliance Reporting Line is administered by an outside vendor. The telephone operators for the Compliance Reporting Line have been trained to receive your call. The Compliance Reporting Line is available 24 hours a day, seven days a week. All calls will be answered by a live person. Calls are not recorded and are not able to be traced. You have the option to remain anonymous. If you remain anonymous, you will be given a numeric code so that you may call back and ask for follow up. You will be guided through the call and prompted by appropriate questions from the operator. You will be given a date on which you can call back and receive a follow up report. Once the call is completed, a report will be generated and sent to the appropriate departments within Invesco based on the subject matter of your call. You are urged to call back for follow up, because in the event more information is required, this will be an opportunity for you to provide those details.
If you report a possible violation, regardless of the method that you use to make the report, it is important that you provide as much detail as possible, including names, dates, times, locations and the specific conduct in question. Only with sufficient specific information can Invesco adequately investigate the reported action.
Your submission of information will be treated in a confidential manner to the extent reasonably possible. Please note, however, that if an investigation by Invesco of the activities you have reported takes place, it may be impossible for Invesco to maintain the confidentiality of the fact of the report or the information reported.
Complaints relating to Accounting Matters will be reviewed under Audit Committee direction and oversight by such persons as the Audit Committee determines to be appropriate. All other matters will be reviewed under the direction and oversight of the appropriate departments within Invesco, usually also including the Legal & Compliance Department. Prompt and appropriate corrective action will be taken when and as warranted in the judgment of the Audit Committee or other reviewing department.
28. Disclosure; Amendments
To the extent required by law, the company shall publicly (e.g., in its Annual Report on Form 20-F and/or on its website) disclose this Code of Conduct and its application to all of the company's Covered Persons.
This Code may only be amended by Invesco's Board of Directors or a duly authorized committee thereof. To the extent required by law, amendments to the Code of Conduct shall be disclosed publicly. As set forth in Item 16B of the company's Annual Report on Form 20-F for 2005 filed with the SEC, the company has elected to disclose certain amendments to the Code that affect, and any waivers of the Code granted to, Financial Officers on the company's Web site in accordance with the requirements of Instruction 4 to Item 16B.
29. Waivers of the Code.
a. Waivers for Executive Officers. Any change in or waiver of this Code for executive officers (as defined in Rule 3b-7 under the Securities Exchange Act of 1934, "Executive Officers") of the company may be made only by the Board of Directors or a committee thereof in the manner described in Section 29(d) below, and any such waiver (including any implicit waiver) shall be promptly disclosed to shareholders as required by the corporate governance listing standards of the New York Stock Exchange and other applicable laws, rules and regulations.
b. Waivers for Other Covered Persons. Any requests for waivers of this Code for Covered Persons other than Executive Officers of the company may be made to the Legal and Compliance Department in the manner described in Section 29(e) below.
c. Definition of Waiver. For the purposes of the Code, the term "waiver" shall mean a material departure from a provision of the Code. An "implicit waiver" shall mean the failure of the company to take action within a reasonable period of time regarding a material departure from a provision of the Code that has been made known to an Executive Officer.
d. Manner for Requesting Executive Officer Waivers.
i. Request and Criteria. If an Executive Officer wishes to request a waiver of this Code, the Executive Officer may submit to the Global Compliance Director or the Legal and Compliance Department a written request for a waiver of the Code only if he/she can demonstrate that such a waiver:
A. is necessary to alleviate undue hardship or in view of unforeseen circumstances or is otherwise appropriate under all the relevant facts and circumstances;
B. will not be inconsistent with the purposes and objectives of the Code;
C. will not adversely affect the interests of clients of the company or the interests of the company; and
D. will not result in a transaction or conduct that would violate provisions of applicable laws or regulations.
ii. Discretionary Waiver and Response. The Legal and Compliance Department will forward the waiver request to the Board of Directors or a committee thereof for consideration. Any decision to grant a waiver from the Code shall be at the sole and absolute discretion of the Board of Directors or committee thereof, as appropriate. The Company Secretary will advise the Legal and Compliance Department in writing of the Board of Director's decision regarding the waiver, including the grounds for granting or denying the waiver request. The Legal and Compliance Department shall promptly advise the Executive Officer in writing of the Board of Director's decision.
e. Manner for Requesting Other Covered Person Waivers.
i. Request and Criteria. If a Covered Person who is a non-Executive Officer wishes to request a waiver of this Code, such Covered Person may submit to the Legal and Compliance Department a written request for a waiver of the Code only if he/she can demonstrate that such a waiver would satisfy the same criteria set forth in Section 29(d).
ii. Discretionary Waiver and Response. The Legal and Compliance Department shall forward the waiver request to the General Counsel of the company for consideration. The decision to grant a waiver shall be at the sole and absolute discretion of the General Counsel of the company. The General Counsel will advise the Legal and Compliance Department in writing of his/her decision regarding the waiver, including the grounds for granting or denying the waiver request. The Legal and Compliance Department shall promptly advise the Covered Person in writing of the General Counsel's decision.
30. Internal Use. This Code is intended solely for the internal use by the company and does not constitute an admission, by or on behalf of the company, as to any fact, circumstance, or legal conclusion.
CONCLUSION
As Covered Persons, each of us is obligated to read and understand this Code of Conduct and our relevant business unit's policies and procedures. No code of conduct, however, can address every situation for which guidance may be necessary. If you are unclear about a situation, stop and ask for guidance before taking action. All Covered
Persons are expected to abide by both the letter and spirit of this Code. Covered Persons are also expected to perform their work with honesty and integrity in any areas not specifically addressed by the Code. Invesco will investigate reported violations of the Code and, if violations are found, may take disciplinary action, if appropriate, against the individuals involved, and may make reports, if appropriate, to civil, criminal or regulatory authorities. Nothing in this Code restricts the company from taking any disciplinary action on any matters pertaining to the conduct of a Covered Person, whether or not expressly set forth in the Code. Any questions regarding the scope or interpretation of this Code should be referred to the appropriate Compliance or Legal officer.
Revised: October 2007
AIM TRIMARK INVESTMENTS
ADDENDUM TO THE
AMVESCAP CODE OF CONDUCT
EFFECTIVE DATE: OCTOBER 1, 2006 REVISED DATE: APRIL 2, 2007
1. INTRODUCTION
Every employee of AIM Trimark Investments ("AIM Trimark") is considered an employee of AMVESCAP PLC and is subject to the AMVESCAP Code of Conduct ("AMVESCAP Code"). All officers, directors and employees of AIM Trimark, including temporary, part-time, contract, and seasonal personnel, are expected to be familiar with the AMVESCAP Code and this Addendum and are required to provide an annual certificate accepting the AMVESCAP Code and this Addendum and acknowledging the obligation to abide by their terms.
The AMVESCAP Code has general application globally. It cannot address specific circumstances which may be required by local regulation or custom. This Addendum, together with the other Policies referred to below, is intended to provide supplementary guidance and more detailed procedures where needed to give effect to the AMVESCAP Code for AIM Trimark employees. The other AIM Trimark policies which deal directly and in a general manner with employee conduct include:
- AIM Trimark Personal Trading Policy -- Policy D-7
- Personal Conflicts and Self-Dealing- Policy B-10
- Gifts and Entertainment - Policy D-6
- Corporate Systems Policies
2. FIDUCIARY OBLIGATIONS
In AIM Trimark's capacity as a money manager, AIM Trimark stands in a fiduciary relationship to its clients. Those clients to whom the fiduciary obligations are owed are the mutual funds and investment accounts that we manage, and the holders of fund securities or the clients in the investment accounts, as applicable. (For purposes of this Addendum, the terms "clients" and "client accounts" always refers to the investment funds that we manage or sub-advise or other accounts in respect of which AIM Trimark has been engaged to provide money management services, and do not refer to business partners who distribute our products.)
In carrying out our investment management responsibilities, AIM Trimark must at all times act honestly, in good faith and in the best interests of our clients. This means that the interests of our clients must always and in every instance come ahead of the interests of AIM Trimark or AMVESCAP or of any personal interest of an employee.
The fiduciary nature of our business means that our actions and our policies are governed by the principles of:
- TRANSPARENCY: it is not enough that AIM Trimark put client interests ahead of our own interests; but rather, we must be seen to do so, and the appearance of conflicts is to be avoided where possible
- ACCOUNTABILITY: AIM Trimark must account to our clients as to how we manage their money, through appropriate and clear reporting and disclosure
- COMPETENCE: AIM Trimark must act competently and with the appropriate level of care, skill and diligence in the management of client funds.
Regard shall be had to these principles in the interpretation and application of the AMVESCAP Code, this Addendum and related policies and procedures.
3. AIM TRIMARK PERSONAL TRADING POLICY
Policy D-7, AIM Trimark Personal Trading Policy, covers the following topics in detail and should be referred to for the definitive rules in this regard.
3.1 RESTRICTION ON THE PERSONAL TRADING ACTIVITY OF AIM TRIMARK EMPLOYEES
Employees of AIM Trimark may not engage in a personal securities transaction unless it has been pre-cleared by the AIM Trimark Compliance department following a determination that the transaction does not give rise to an actual or potential conflict of interest with activity by a client account in the same security. Employees are required to report transactions and holdings to the AIM Trimark Compliance department on a regular basis. The pre-clearance and reporting requirements also apply to Covered Accounts. Covered Accounts are accounts which an Employee is financially interested in or controls, and may include (but are not limited to) accounts of a spouse, minor child, relative, friend or personal business associate.
4. PERSONAL CONFLICTS OF INTEREST
4.1 UNDERLYING PRINCIPLE
Employees must avoid taking any actions or placing themselves in circumstances that result in an actual or potential conflict between their own personal interests and the interests of AIM Trimark, AMVESCAP or client accounts. Employees must never profit personally at the expense of AIM Trimark, AMVESCAP or client accounts, and they must refrain from deliberately or knowingly doing things which may be otherwise detrimental to the interests of AIM Trimark, AMVESCAP or client accounts.
Policy D-7, AIM Trimark Personal Trading Policy, and Policy B-10, Personal Conflicts and Self-Dealing, cover certain of the following topics in detail and should be referred to for the definitive rules in that regard.
4.2 POSSESSION OF INSIDE INFORMATION
Any director, officer or employee who possesses or believes that he or she may possess material undisclosed or non-public information about any issuer of securities which could put such person in a conflict of interest with AIM Trimark or any of our client accounts must report the matter immediately to the AIM Trimark Chief Compliance Officer (or designee), who will review the matter and provide further instructions as to the appropriate handling of the information.
4.3 INSIDER TRADING & TIPPING
Trading on or communicating, other than to persons with a need to know, material non-public information, or inside information, of any sort, whether obtained in the course of research activities, through a client relationship or otherwise, is strictly prohibited. AIM Trimark forbids its directors and employees from trading, either personally or on behalf of others (including client accounts managed by AIM Trimark), on material non-public information or communicating material non-public information to others in violation of the law. The communicating or passing on of this type of information is sometimes known as "tipping" and trading on such information is "insider trading".
4.4 PERSONAL TRADING
Personal securities transactions of all Employees of AIM Trimark are subject to restrictions and pre-clearance, as discussed above. Personal securities transactions of independent directors of AIM Trimark's corporate funds and members of the AIM Trimark Fund Advisory Boards are not subject to the pre-clearance or reporting requirements, except with respect to trading in the securities of AMVESCAP or shares of any closed-end investment company or investment trust on which such independent director may serve in a director or trustee capacity.
4.5 SHORT TERM TRADING IN MUTUAL FUNDS AND SEG FUNDS
Employees are prohibited from engaging in excessive short-term trading in any investment fund or similar investment vehicle (including segregated funds and variable annuity products) for which AIM Trimark is the manager or investment advisor or in which an AIM Trimark fund is an ingredient, in the case of fund-of-fund products. Determination of behaviour constituting "excessive short-term trading" will be as set out in Policy D-4, Market Timing.
4.6 PERSONAL BORROWING AND LENDING
Except with the prior written approval of the AIM Trimark Compliance department, employees may not borrow from or lend personal funds or other personal property to any customer of AIM Trimark or third party vendor who has a business relationship or potential business relationship with AIM Trimark. This prohibition does not operate to prohibit employees borrowing from recognized financial institutions such as banks, trust companies and credit card companies with whom AIM Trimark does or may do business.
4.7 OUTSIDE ACTIVITIES
Employees may not undertake or engage in a business activity that is in competition or in conflict with AIM Trimark's business unless they have received the written consent of the employee's manager and the approval of the AIM Trimark Compliance department. For this purpose, "undertaking or engaging in a business activity" includes any direct or indirect involvement with an enterprise for which the employee
may receive financial compensation or return. A business will be deemed to be in competition or conflict with AIM Trimark if the business offers or provides products or services of a type similar to products or services offered by AIM Trimark or AMVESCAP. This prohibition does not operate to prohibit employees from making personal investments in public issuers that are in a similar business to AIM Trimark or AMVESCAP.
In addition, all Employees of AIM Trimark are prohibited from serving as directors/trustees of organizations (including charitable organizations) except with the prior written approval of AIM Trimark's President and Chief Executive Officer. All such requests must be submitted to the AIM Trimark Compliance department for consideration prior to submission to AIM Trimark's President and Chief Executive Officer.
4.8 DUAL REGISTRATION
Employees who are registered with a securities regulatory authority as a representative or officer of both AIM Funds Management Inc. and AIM Mutual Fund Dealer Inc. have duties and responsibilities equally to both registered entities. Dually registered employees must allocate sufficient time to support each entity and take into consideration the impact on both entities when making policy decisions. Dually registered employees must disclose in writing to their clients, at account opening and on an annual basis, the fact that the employee is registered with both AIM Funds Management Inc. and AIM Mutual Fund Dealer Inc. and that there are policies and procedures in place to minimize the potential for conflicts of interest resulting from the dual registration.
Employees licensed by any regulatory or professional body, are expected to adhere to any requirements imposed by those entities. Except with the prior written consent of the Chief Compliance Officer, no employee may be licensed or registered with, or as a representative of, any entity other than AIM Funds Management Inc. and AIM Mutual Fund Dealer Inc. This includes but is not limited to securities dealers, scholarship plan dealers, insurance agents, real estate agents, mortgage brokers and other similar entities.
5. POLITICAL CONTRIBUTIONS AND ACTIVITY
Employees, as private citizens, should feel free to exercise their rights and duties in any political or civic process.
AIM Trimark however, does not make political contributions nor does AIM Trimark participate in political activities, at any level of government. AIM Trimark does not make corporate donations to any political party or cause. For example:
- no purchases of seats or tables at fundraising events
- no contributions to political parties or candidate campaigns (includes local or municipal politics)
- no use of AIM Trimark resources (e.g. photocopying, printing, use of office space) in aid of political activity
No employee may make any such political contributions on behalf of AIM Trimark. Employees should be careful not to give the impression that personal political views and beliefs are those of AIM Trimark.
Any departure from the foregoing must receive the prior approval of the AIM Trimark Compliance department.
6 LOCAL ADMINISTRATION
6.1 CODE OF ETHICS COMMITTEE
Administration of the AMVESCAP Code, this Addendum, and related policies to employees of AIM Trimark is overseen by AIM Trimark's Code of Ethics Committee.
6.2 CODE OF ETHICS OFFICER
The AIM Trimark Chief Compliance Officer is the AIM Trimark designated Code of Ethics Officer.
6.3 AMENDMENTS AND MODIFICATIONS
Any amendments or modifications to this Addendum are effective upon approval of the Chief Compliance Officer and the Chief Executive Officer.
Gifts and Entertainment
Policy Number: D-6 Effective Date: March 2006 Revision Date: April 2007
OVERVIEW
AMVESCAP has in place the AMVESCAP Gifts and Entertainment Policy which is applicable to AMVESCAP and its individual business units worldwide. This AIM Trimark Gifts and Entertainment Policy ("Policy") is intended to work with the AMVESCAP Policy and supplement it with local rules.
All AIM Trimark employees, including temporary, part-time, contract, and seasonal personnel, must refrain from conduct that could give rise to the appearance of a conflict of interest. The provision or receipt of gifts or entertainment can create, or can have the appearance of creating, conflicts of interest.
Employees also need to take into consideration the firm's policy on corporate expenses, which can be found on Total Access Point ("TAP") under travel and entertainment guidelines, and the firm's policy on Sales Practices, which can be found in the AIM Trimark compliance manual under section D-2.
DEFINITIONS
For purposes of this Policy, a GIFT is anything of value given or received involving AIM Trimark personnel, and a person or entity that has a direct or indirect, existing or potential business relationship with AIM Trimark (a "Business Partner"). This Policy also applies to gifts given by AIM Trimark to family members of a Business Partner and gifts received from a Business Partner by a family member of an employee of AIM Trimark. Business Partners specifically include broker dealers and financial advisors. Gifts may include, but are not limited to, personal items, air miles, services, office accessories, electronic equipment (e.g., iPods, MP3s, etc.), tickets (e.g., theatre, concerts, sporting events, etc.) and sporting equipment (e.g., golf clubs, tennis rackets, etc.). For purposes of this Policy, gifts also include charitable contributions and sponsorship requests (e.g., sponsoring a minor hockey team) made to or at the request of a Business Partner. For purposes of this Policy, gifts do not include promotional items of nominal value (approximately $20 - e.g., golf balls, pens, etc.) that display the logo of AIM Trimark or its AMVESCAP business units, or of its Business Partners.
ENTERTAINMENT involves attendance at activities, including but not limited to meals, sporting events, the theatre, parties or receptions, and similar functions. Entertainment requires the presence of both AIM Trimark personnel and Business Partner personnel;
unless personnel from both entities attend, the activity constitutes a gift. The value of entertainment includes the cost of the activity itself (for example, the cost of tickets or a meal), as well as the cost of any related activities or services provided (such as prizes). The value of entertainment does not include the cost of overhead (such as rent or equipment rentals).
THRESHOLDS
Employees are prohibited from giving or receiving gifts with a value of more than $250.
Entertainment should not exceed $450 per business partner.
FREQUENCY
Gifts and entertainment cannot be so extensive or so frequent as to cause a reasonable person to question whether the provision of the items or activity improperly influences the employee or Business Partner.
The maximum total value of gifts received by, or given to, a business partner is $250 annually.
Entertainment is limited to three times per year per business partner.
PROHIBITED ACTIVITIES
Employees are prohibited from providing or receiving any gift or entertainment that is conditioned upon AIM Trimark doing business with the entity or person involved.
Employees are prohibited from soliciting gifts and entertainment. Employees are to immediately advise the AIM Trimark Compliance department if a Business Partner solicits the employee for gifts and entertainment other than a charitable donation or request for sponsorship.
Except with the prior approval of the AIM Trimark Compliance department, employees cannot pay for, or accept, any travel and/or accommodation to or from a Business Partner.
With respect to approved co-operative marketing practices, such as sales communications and investor seminars, where AIM Trimark pays a portion of the cost, AIM Trimark cannot provide gifts, other than nominal valued promotional items, to the dealer's clients. Nominal speaker gifts would be co-op eligible at approved dealer-sponsored events for financial advisors.
REPORTING/RECORD KEEPING
Each department or employee is responsible for keeping a record of all gifts and entertainment given or received. Minimum required information includes: date, employee name(s), business partner firm name, business partner representative name(s), description of gift or entertainment, approximate dollar value, and required approval where applicable. Promotional items of nominal value (approximately $20) and department breakfasts or lunches do not need to be recorded. Where the value of the activity or item is not readily known, the employee should record the estimated cost.
REVIEW AND MONITORING
This Policy shall be overseen and administered by AIM Trimark's Code of Ethics Committee, which has responsibility for the overall scope, application, and enforcement of this Policy. AIM Trimark's Code of Ethics Committee shall receive the reports and recommendations of the AIM Trimark Compliance department and of management from time to time and periodically update or revise this Policy as may be desirable.
Each department head is expected to review the gifts and entertainment log on a regular basis in order to identify any concerns or trends. Any concerns or issues are to be brought to the attention of the AIM Trimark Compliance department.
The AIM Trimark Compliance department will conduct a quarterly review of the gifts and entertainment log. A summary of such review, together with other relevant observations and recommendations, shall be reported to the AIM Trimark Code of Ethics Committee.
Evidence of reviews must be maintained for a minimum of seven years.
D7. AIM TRIMARK PERSONAL TRADING POLICY
Policy Number: D-7 Effective Date: October 2006 Revision Date: March 2007
1. PURPOSE AND APPLICATION
The AIM Trimark Personal Trading Policy applies to all officers, directors and employees of AIM Trimark Investments, including temporary, part-time, contract, and seasonal personnel (collectively referred to as "Employee"). For purposes of this Policy, the terms "clients" and "client accounts" always refers to the investment funds that AIM Trimark manages or sub-advises or other accounts in respect of which AIM Trimark has been engaged to provide money management services.
The purpose of this Policy is to ensure the fair treatment of client accounts through the highest standard of integrity and ethical business conduct by Employees. The Policy is designed to ensure, among other things, that the personal securities transactions of all Employees are conducted in accordance with the following general principles:
- A duty at all times to place the interests of client accounts first.
- The requirement that all personal securities transactions be conducted in a manner that avoids any actual or potential conflict of interest or the appearance of a conflict of interest.
- That Employees should not take otherwise inappropriate advantage of their positions.
Employees must not use any non-public information about client accounts for their direct or indirect personal benefit or in a manner that would not be in the best interests of client accounts. Employees also must not use their position to obtain special treatment or investment opportunities not generally available to client accounts or the public.
The personal trading requirements pertaining to pre-clearance, reporting and investment restrictions contained in this Policy apply to both Employees and their Covered Accounts.
AIM Trimark recognizes that certain relationships with non-employees may, from time to time, present particular risks that inappropriate trading could occur. Those risks may be present, for example, through certain arrangements with consultants or independent contractors who have entered into long-term services arrangements with AIM Trimark pursuant to which they are expected to have access to non-public information in connection with those arrangements (such information may relate to AIM Trimark or some outside source, and may be obtained from AIM Trimark or some outside source). Accordingly, as part of the process for engaging the services of consultants or other independent contractors, the AIM Trimark Chief Compliance Officer shall take such
steps as may be reasonably determined to be necessary or appropriate. Those steps may or may not include requiring a non-employee to agree to be bound by these procedures as if he or she were an Employee.
2. DEFINITIONS
2.1 EMPLOYEE
For the purposes of this Policy the term Employee includes all officers, directors and employees of AIM Trimark Investments including temporary, part-time, contract, and seasonal personnel
2.2 COVERED ACCOUNTS
A Covered Account is defined for purposes of this Policy as any account:
- In which an Employee has a direct or indirect financial interest;
- Over which such Employee has direct or indirect control over the purchase or sale of securities; or
- In which securities are held for an Employee's direct or indirect benefit.
Such Covered Accounts may include, but are not limited to, accounts of a spouse, minor child, relative, friend or personal business associate.
3. PRE-CLEARANCE REQUIREMENTS
3.1 SUBMITTING THE REQUEST TO TRADE
Except where noted below, an Employee must receive the prior approval using the automated review system (Star Compliance) or from the AIM Trimark Compliance department in order to engage in a personal securities transaction. The Star Compliance system will review the trade request to determine whether or not the proposed transaction gives rise to an actual or potential conflict of interest with activity in a client account in the same security. Upon completion of the review process, the Employee will receive a time stamped response indicating whether the trade is authorized or denied.
Pre-clearance will not be given if there has been a transaction by a subject client account in the same, or equivalent, security within seven (7) calendar days of the proposed personal securities transaction (the "7-Day Rule"). An equivalent security means a security that (1) is convertible into another security or (2) gives its holder the right to purchase another security of the same issuer. For example, a bond or preferred stock may be convertible into another security of the same issuer, or an option or warrant may give the holder the right to purchase stock of the same issuer. ADR and EDR shares are considered equivalent to their corresponding foreign shares.
The trade approval process involves the following steps:
- A trade must be entered into the Star Compliance system.
- The Star Compliance system will confirm that there is no activity currently on the trading desk for the security involved in the proposed personal transaction and check the portfolio accounting system to verify that there have been no transactions for the requested security within seven calendar days.
- The Star Compliance system will provide an automated response on a timely basis for all pre-approval requests indicating whether the transaction has been approved or denied.
3.2 EXECUTING APPROVED TRANSACTIONS
Except as may be authorized by the Chief Compliance Officer or designate in the case of certain securities or classes of securities, all authorized personal securities transactions must be executed by the next business day. If the trade is not executed within this time period, a new pre-clearance request must be submitted.
Employees will be requested to reverse any trades processed without the required pre-approval. Any costs or losses associated with the reversal are the responsibility of the Employee.
3.3 EXCEPTIONS TO PRE-CLEARANCE REQUIREMENTS
Employees may trade in the following types of securities without regard to the pre-clearance procedures:
- Open-end mutual funds, open-end unit investment trusts and pooled trust funds (whether or not managed or distributed by an AMVESCAP Company).
- Variable annuities, variable life products, segregated funds, and other similar unit-based insurance products issued by insurance companies and insurance company separate accounts.
- Securities issued or guaranteed by the Government of Canada, or the government of any province in Canada.
- Securities issued or guaranteed by the Governments of the United States, United Kingdom, Germany, Japan, France and Italy.
- Guaranteed Investment certificates, bank certificates of deposit other deposits with financial institutions, bankers acceptances, commercial paper and high quality short-term instruments, including repurchase agreements.
- Short-term debt securities maturing in less than 91 days from their date of issue.
- Physical commodities or securities relating to those commodities.
- Other securities or classes of securities as the Committee may from time to time designate.
Employee accounts excluded from the pre-clearance requirement are the following:
- Employee share purchase plans except for the sale of the securities.
- Employee stock option purchase plans except for the sale of the securities.
- Accounts capable of holding only deposits or GIC's issued by a financial institution and/or mutual funds.
- Fully-managed discretionary accounts subject to the conditions in 3.4 below.
3.4 MANAGED ACCOUNTS
To qualify as a fully-managed discretionary account, the account must be fully "discretionary", without any influence by the Employee over individual transactions. This means that full investment discretion has been granted to an investment manager or trustee and that neither the Employee nor Covered Account person participates in the investment decisions or is informed in advance of transactions in the account. Pre-clearance is not required for transactions in a Covered Account in which an Employee is not exercising power over investment discretion including a managed account, provided that:
- The account is the subject of a written contract providing for the delegation by the Employee of substantially all investment discretion to another party.
- The Employee has provided the AIM Trimark Compliance department with a copy of such written agreement.
- The Employee certifies in writing that he or she has not discussed, and will not discuss, potential investment decisions with the party to whom investment discretion has been delegated.
- The Employee otherwise complies with the annual reporting requirement contained herein, and also provides or makes provision for the delivery to the AIM Trimark Compliance department of periodic statements of discretionary account holdings.
- The foregoing exception from the pre-clearance requirement does not apply to transactions by a delegated discretionary account in shares of AMVESCAP. All employees are required to notify parties to whom they have delegated investment discretion that such discretion may not be exercised to purchase shares of AMVESCAP and that any sales of AMVESCAP shares by a Covered Account that is the subject of delegated investment discretion are subject to the pre-clearance and reporting requirements.
- Discretionary managed accounts for which this exemption is available would not include ones where the accountholder has given a power of attorney (POA) to another person such as a broker for occasional discretionary trading. Discretionary accounts would include blind trusts.
4. OPTIONS TRADING
In the case of personal securities transactions involving the purchase or sale of an option on an equity security, the Star Compliance system will determine whether to authorize the transaction by matching the pre-clearance request against activity in client accounts in both the option and the underlying security. This determination will not be made, and pre-clearance will not be given, if there has been a client account transaction in either the option or the underlying security within 7 calendar days of the proposed personal securities transaction. Pre-clearance is required for both the opening and closing transaction.
It is the responsibility of the employee to be aware of the additional risks that can result from engaging in certain transactions. For example, if an opening options transaction is approved, the closing options transaction may not be approved or may be delayed in certain cases due to actual or apparent conflicts of interest or competing obligations that arise after the time the employee's opening transaction was approved. An employee is prohibited from purchasing or selling options on shares of AMVESCAP.
5. SHORT SALES
Short sales of securities are permissible subject to the following conditions:
- No short sales on AMVESCAP
- No short sales on securities where there has been a trade in the same security within the last 7 days in one of the client accounts
- Employees are prohibited from short-term trading; therefore, the Employee is restricted from buying back the position within 60 days.
- Portfolio managers are prohibited from short selling a security if the client account the Portfolio Manager manages are long the security.
- If a Portfolio Manager is selling a stock there should generally be no "short selling" allowed until that position is completely sold. This provision includes the situation where the Portfolio Manager stops selling the security for a short period, for example to let the market absorb what has been sold, and then resumes selling the position. If other client accounts hold the same security, the AIM Trimark Compliance department will review the other client accounts to determine if the other client accounts are active in the security or are going to be active.
6. RESTRICTIONS ON CERTAIN ACTIVITIES
In order to avoid even the appearance of conduct that might be deemed contrary to a client's best interests, Employees are subject to the following additional restrictions and prohibitions relating to certain investment activities and related conduct as set out herein.
6.1 PROHIBITION AGAINST TRADING IN SECURITIES ON "RESTRICTED LISTS"
It is recognized that there may be occasions when AMVESCAP, an AMVESCAP Company, or an Employee who is a key executive of AMVESCAP or an AMVESCAP Company, may have a special relationship with an issuer of securities. In such occasions the Board of Directors of AMVESCAP or the Code of Ethics Committee may decide to place the securities of such issuer on a "restricted list", to be maintained by the Chief Compliance Officer. Employees are prohibited from engaging in any personal securities transactions in a security on a "restricted list".
6.2 PROHIBITION AGAINST SHORT-TERM TRADING ACTIVITIES
Employees are prohibited from profiting from a trade in an "opposite transaction" in the same, or equivalent, security within 60 days of its purchase or sale. This short-term trading prohibition may be waived by the AIM Trimark Compliance department in certain instances including where an employee wishes to limit his or her losses on a security with rapidly depreciating market value. Such circumstances must be disclosed at the time pre-clearance is requested.
6.3 PROHIBITION AGAINST PURCHASES IN INITIAL PUBLIC OFFERINGS
Employees generally are prohibited from purchasing securities in IPOs. Employees who are not investment personnel and whose proposed IPO trade is through discretionary accounts may acquire shares in an IPO. Investment personnel are prohibited from purchases in Initial Public Offerings, even if the proposed IPO trade would be through a discretionary account, unless the person has obtained pre-clearance by the Chief Compliance Officer and Chief Investment Officer.
6.4 RESTRICTED SECURITIES ISSUED BY PUBLIC COMPANIES
Generally, Employees are discouraged from investing in restricted securities of public companies including special warrant deals. Restricted securities are securities acquired in an unregistered, private sale from an issuer. An Employee may purchase such securities, however, if such purchase has been pre-cleared by the AIM Trimark Compliance
department following a determination that the proposed transaction does not present any actual or potential conflict of interest.
6.5 RESTRICTIONS ON PRIVATE PLACEMENTS (INCLUDING HEDGE FUNDS)
An Employee may not purchase or sell any security (e.g., stock, bond or limited partnership interest) obtained through a private placement (including the purchase or sale of an interest in a so-called "hedge fund") unless such transaction has been pre-cleared by the AIM Trimark Compliance department following a determination that the proposed transaction does not (i) present any actual or potential conflict of interest, (ii) that the issuer is a "private issuer" under securities legislation and (iii) the Employee has no reason to believe that the issuer or a related subsidiary company (whether or not such securities are of the same class as the securities held by such Employee) will make a public offering of its securities within the next twelve months. The AIM Trimark Compliance department will also review the request with the Chief Investment Officer before granting pre-clearance. The AIM Trimark Compliance department will maintain a record of the approval and the rationale supporting the purchase of the Private Placement. If pre-clearance is provided, the security will then be added to the restricted list. Further, Employees who have been authorized to acquire securities in a private placement must disclose such investment when he/she plays a part in any client account's subsequent consideration of an investment in the issuer. In such circumstances, the client account's decision to purchase securities of the issuer is subject to an independent review by investment personnel with no personal interest in the issuer.
6.6 INVESTMENT CLUBS
An Employee is prohibited from participating in an investment club unless such participation has been approved by the AIM Trimark Compliance department following a determination that the following conditions have been satisfied:
- The Employee's participation does not create any actual or potential conflict of interest.
- The Employee does not control investment decision-making for the investment club.
- The Employee has made satisfactory arrangements to ensure that duplicate trade confirmations of investment club activity and quarterly statements of investment club holdings are provided to the AIM Trimark Compliance department by brokers acting on behalf of the investment club.
If participation in an investment club has been approved, all future trades will be subject to pre-clearance.
6.7 TRADING IN AMVESCAP
Employees are prohibited from trading in AMVESCAP during the "Close Periods". Details of the "Close Periods" are circulated to all employees by way of the internal e-
mail system and can also be found via the attached link:
http://atlas.amvescap.com/ags/amv_groupservices/sec_closed.html
A "Close Period" is defined by the rules as the period of 60 days prior to the announcement of the year end results and the period of 30 days prior to the announcement of the interim and quarterly results. The close period may be shorter depending on when the results are announced but cannot start until the end of the relevant reporting period.
Short term trading (i.e. buying and selling within a 60 day period) in AMVESCAP, where the intention is to make a quick profit, is prohibited.
7. REPORTING REQUIREMENTS
7.1 INITIAL REPORTS
Within 10 days of becoming an Employee, each Employee, using the Star Compliance system, must submit a statement containing the following information: (i) a complete list of all of his or her Covered Accounts (including the name of the broker, dealer or bank with which the Employee maintained the Account); (ii) a list of each Reportable Security (whether held through a Covered Account, in certificate form, or otherwise) in which he or she has direct or indirect beneficial ownership (e.g., that he or she owns); and (iii) the date the Employee submits the report. The statement must be current as of a date no more than 45 days prior to the date of becoming an Employee.
7.2 REPORTS OF TRADE CONFIRMATIONS AND QUARTERLY REPORTS
Within 10 calendar days of settlement of each personal securities transaction involving a Reportable Security, whether the transactions had to be pre-cleared or not, the Employee engaging in the transaction must file or cause to be filed with the AIM Trimark Compliance department a duplicate copy of the broker/dealer confirmation, or such other confirmations as are available, for such transaction. In addition, except to the extent that such report would duplicate information contained in such confirmations, within 30 calendar days after the end of each calendar quarter, the Employee must submit a statement: (i) with respect to each personal securities transaction during the quarter in a Reportable Security in which the Employee had any direct or indirect beneficial ownership; (ii) with respect to any Covered Account established during the quarter, the name of the broker, dealer or bank with which the account was established, the date the account was established, and (iii) the date that the statement is submitted by the Employee.
Notwithstanding the reporting requirements set forth in the previous paragraph, transactions effected pursuant to an automatic investment plan need not be reported in the quarterly statement (nor in trade confirmations in lieu of the quarterly statement). An "automatic investment plan" means any program in which regular periodic purchases (or withdrawals) are made automatically in (or from) investment accounts in accordance with a predetermined schedule and allocation. An automatic investment plan includes a dividend reinvestment plan.
7.3 ANNUAL REPORTS
By January 30 of each year, each Employee must file with the AIM Trimark Compliance department an annual account statement as of December 31 of each year, (i) all Covered Accounts of such Employee (including the name of the broker, dealer or bank with which the Employee maintained the account) (ii) each Reportable Security (whether held through a Covered Account, in certificate form, or otherwise) in which he or she has direct or indirect beneficial ownership; and (iii) the date the Employee submits the account statements.
Employees are encouraged to request their broker or dealer to automatically send the AIM Trimark Compliance department copies of trade confirmations and monthly account statements. By doing so, the Employee does not have to make arrangements every time to meet the ongoing quarterly and annual reporting requirements.
The AIM Trimark Compliance department will review all reports submitted and report any irregularity to the Code of Ethics Committee.
7.4 REPORTABLE SECURITY
For purposes of this Policy, the term "Reportable Security" means any security except the following:
- Unit investment trusts (i.e., variable insurance contracts funded by insurance company separate accounts organized as unit investment trusts) invested exclusively in open-end U.S. mutual funds that are not managed or distributed by AIM Trimark or any AMVESCAP Company.
- Open-end U.S. mutual funds that are not managed or distributed by AIM Trimark or any AMVESCAP Company.
- Open-end Canadian mutual funds that are not managed or distributed by AIM Trimark.
- Securities issued or guaranteed by (i.e., securities that are the direct obligations of) the government of the United States.
- Money market funds.
- Money market instruments. a money market instrument is a debt
instrument that has a maturity at issuance of less than 366 days and
(i) is rated in one of the two highest ratings categories by a
statistical rating organization that is nationally recognized in the
United States or a rating organization not affiliated with AIM Trimark
and of comparable status in Canada or (ii) if not rated, is determined
by AIM Trimark in good faith to be of equivalent quality such that it
presents a comparable (or better) degree of safety of principal. For
example, a short-term debt instrument with a rating of AA or AAA by
Moody's Investors Service or AA or AAA
by Standard & Poor's Corporation meets this definition of money market instrument. Typical examples of money market instruments include bankers' acceptances, bank certificates of deposit, commercial paper and repurchase agreements.
8. INDEPENDENT DIRECTORS
Except as otherwise provided in the special procedures for independent directors of US Funds, personal securities transactions of independent directors of AIM Trimark or of AIM Trimark's corporate funds and members of the Fund's Advisory Boards are not subject to either the pre-clearance or reporting requirements set forth in this Policy, except with respect to personal securities transactions in the shares of AMVESCAP or shares of any closed-end investment company or investment trust served by such independent director in a director or trustee capacity.
8.1 FOR PURPOSES OF THIS EXCEPTION THE TERM "INDEPENDENT DIRECTOR" MEANS
a) any director of AIM Trimark's corporate funds or members of the AIM Trimark Fund Advisory Board
i) who is neither an officer nor employee of AMVESCAP or of any AMVESCAP Company, or
ii) who is not otherwise "connected with" AMVESCAP or any AMVESCAP Company within the meaning of the London Stock Exchange Yellow Book; and
b) any director of AIM Trimark who
i) is neither an officer nor employee of AMVESCAP or of any AMVESCAP Company,
ii) is not otherwise "connected with" AMVESCAP or any AMVESCAP Company within the meaning of the London Stock Exchange Yellow Book,
iii) is not an interested person of a US Fund under Section 2(a)(19) of the Investment Company Act (1940) and would otherwise be required to submit a pre-clearance request or make a report solely by reason of being an AIM director and
iv) does not regularly obtain information concerning the investment recommendations or decisions made by AIM Trimark on behalf of the US Funds.
8.2 SPECIAL PROCEDURES FOR INDEPENDENT DIRECTORS OF US FUNDS
While an "independent director" of AIM Trimark is not deemed to be an "Employee" and consequently is not subject to most of the procedures specified in this Policy with respect
to securities transactions, independent directors of AIM Trimark are subject to all of the following provisions. For purposes of this Policy, a "US Fund" is an investment fund whose activities are governed by the laws of the United States.
- An independent director is expected to adhere to the insider trading requirements.
- An independent director is expected to avoid engaging in any of the following actions:
- Employ any device, scheme or artifice to defraud a US Fund.
- Make any untrue statement of a material fact to directors, officers or agents of a US Fund or with respect to the securities or investment operations of a US Fund, or omit to state a material fact necessary in order to make such statements in light of the circumstances under which they were made, not misleading.
- Engage in any act, practice or course of business that operates or would operate as a fraud or deceit on a US Fund.
- Engage in any manipulative practice with respect to a US Fund.
- Prior to engaging in a personal securities transaction in a security (other than in a security excluded from pre-clearance), if an independent director knows, or in the ordinary course of fulfilling his or her official duties as an independent director to AIM Trimark, should have known, that during the 15-day period immediately before the date of his or her prospective transaction in the security, (i) a US Fund purchased or sold the security or (ii) a US Fund or its adviser or sub-adviser considered purchasing or selling the security, he or she is required to do the following: not purchase or sell such security until the day next following the completion by the Fund of its transaction, unless the director has submitted a pre-clearance request and the AIM Trimark Compliance department reasonably determines that, in view of the nature of the security and the market for the security, the director's transaction is not likely to affect the price paid for or received by the Fund. Absent such a finding, if such a transaction nonetheless is placed, the transaction is considered prohibited and any profits related thereto must be disgorged (to the Fund or an appropriate charity).
- If an independent director knows, or in the ordinary course of fulfilling his or her official duties as an independent director to AIM Trimark should have known, that during the 15-day period immediately before or after the date of the director's transaction in a security (other than those excluded from reporting), (i) a US Fund purchased or sold the security or (ii) a US Fund or its adviser or sub-adviser considered purchasing or selling the
security, he or she is required, whether or not he or she has pre-cleared the transaction, to follow the reporting requirements as if he or she were an Employee.
9. CERTIFICATION OF COMPLIANCE
By signing off on the AMVESCAP Code of Conduct and the AIM Trimark Addendum to the Code on an annual basis, Employees are also confirming adherence to this Policy.
10. OVERSIGHT
This Policy shall be overseen and administered by AIM Trimark's Code of Ethics Committee, while administration of this Policy is the responsibility of the Chief Compliance Officer.
10.1 CODE OF ETHICS COMMITTEE
This Policy shall be overseen and administered by AIM Trimark's Code of Ethics Committee, which has responsibility for the overall scope, application, and enforcement of this Policy. AIM Trimark's Code of Ethics Committee shall receive the reports and recommendations of the AIM Trimark Compliance department from time to time and periodically update or revise this Policy as may be desirable.
Members of the Code of Ethics Committee include:
- President and Chief Executive Officer
- Chief Investment Officer
- Executive Vice President, Sales
- General Counsel
- Senior Vice President, Investment Operations and Analytics
- Chief Compliance Officer
- Assistant Vice President, Operations Compliance
- Such other members as the President and CEO may designate
The Committee meets no less frequently than annually to review the Chief Compliance Officer's report and the provisions of the AMVESCAP Code of Conduct and this Policy. The Chief Compliance Officer calls other meetings of the Committee when she or he believes that a possible violation of the Code or these Procedures has occurred or that the Committee should meet for other purposes, such as to consider changes to the AIM Trimark Addendum to the AMVESCAP Code of Conduct or to this Policy. A majority of
the members of the Committee will constitute a quorum, provided that the President and Chief Executive Officer are present in order to have a quorum. A majority of the members present at a meeting constitutes the vote required for any action taken by the Committee. Special meetings of the Committee may be called by any member of the Committee to discuss matters that are deemed to warrant immediate attention.
10.2 AIM TRIMARK COMPLIANCE DEPARTMENT
The AIM Trimark Compliance department administers all aspects of the Policy including informing new Employees of the requirements, reviewing pre-approval requests, monitoring personal trading activity, monitoring client account activity in the same security of an approved trade for the following seven (7) calendar days to determine whether the appearance of a conflict is present, following up on reporting requirements, and record keeping.
The Chief Compliance Officer or designate will provide a written report, at least annually to the Committee summarizing:
- Compliance with the Policy for the period under review.
- Violations of the Policy for the period under review.
- Sanctions imposed under the Policy by AIM Trimark during the period under review.
- Whether AIM Trimark's external investment advisors have confirmed that they have complied with the basic principles set out in this Policy in providing investment advisory services to the funds during the period under review.
- Changes in procedures recommended for the Policy.
- Any other information requested by the Committee.
(INVESCO LOGO)
INVESCO LTD.
CODE OF CONDUCT
INTRODUCTION
Our company's Core Purpose and Mission are a logical beginning point for our Code of Conduct:
Invesco is committed to "Helping People Worldwide Build Their Financial Security". That Core Purpose underlies our Mission, which is to deliver superior investment performance worldwide. Over the years, Invesco has developed a set of values that will continue to help us achieve our Core Purpose and Mission. Our values include:
- Working with integrity
- Respecting our employees and clients
- Empowering people
This Code of Conduct ("Code of Conduct" or "Code") has been created to assist us in accomplishing our Core Purpose and Mission. It contains a number of policies and standards which, when taken together, are designed to help define the essence of the conduct of an Invesco representative. These policies and standards are also intended to provide guidance to Invesco personnel in fulfilling their obligations to comply with applicable laws, rules and regulations. This Code of Conduct applies to all officers and other employees of Invesco and its subsidiaries (collectively, "Covered Persons"). These standards are neither exclusive nor complete. Additional company policies and rules can be found in the company's Intranet site, and others may be published to company personnel from time to time. Covered Persons are required to comply with all applicable laws, rules and regulations, whether or not specifically addressed in these policies. For additional guidance, or if you have questions regarding the existence, interpretation or application of any law, rule or regulation, please contact your supervisor, the General Counsel of your business unit or division, or the Invesco General Counsel.
Our culture is based upon a set of shared values and principles. These include
working with integrity and commitment to our clients, colleagues and
communities. In practice, this means that our clients' interests must always
come first, that Covered Persons should treat each other with respect and
consideration, and that Invesco should participate as a responsible corporate
citizen in every community in which it operates. This commitment is a vital part
of our achieving our principal responsibility as a publicly-held company:
producing a fair return on our shareholders' capital.
This Code of Conduct contains broad and general principles that supplement the specific policies, procedures and training within each business unit of Invesco.
YOUR RESPONSIBLITIES
One person's misconduct can damage our entire company's hard-earned reputation and compromise the public's trust in the company. Every Covered Person should therefore become familiar with this Code and abide strictly by its provisions. In brief:
- It is your responsibility at all times to comply with the law and behave in an ethical manner.
- This Code cannot anticipate every possible situation or cover every topic in detail. The company has established special policies to address specific subjects and will update this Code and those specific policies from time-to-time. If you are unclear about a situation, stop and ask for guidance before taking action.
- Failure to obey laws and regulations violates this Code and may expose both you and the company to criminal or civil sanctions. Any violation of this Code or other company policies may result in disciplinary action, up to and including termination of employment. The company may also seek civil remedies from you and even refer criminal misconduct to law enforcement agencies.
- You are responsible for reporting possible violations of this Code to the company (see below).
- If you have a question about a topic covered in this Code or a concern regarding any conduct, please speak with your supervisor or with an appropriate member of the Legal & Compliance Department.
- If you are aware of a violation and are uncomfortable speaking with any of these people or wish to remain anonymous, you may call the toll-free Invesco Compliance Reporting Line (the "Compliance Reporting Line"). If you are calling from a U.S. or Canadian location dial 1-866-297-3627. For calls from all other locations, dial an international operator and request a collect call to 1-704-943-1136. When asked for your name use "Invesco." (See further details below.)
- If you are an attorney or an executive officer of the company, you may have additional reporting or other obligations under specific rules applicable to you, such as the POLICY FOR REPORTING BY ATTORNEYS EMPLOYED BY INVESCO LTD. AND ITS SUBSIDIARIES, and you should also comply with such rules.
STATEMENT OF GENERAL PRINCIPLES
Invesco with its subsidiaries and various divisions operates in a highly-regulated and complex environment. There are numerous layers of overlapping, and occasionally conflicting, laws, customs and local practices. This Code of Conduct was designed to provide all of us who are part of the Invesco group with a clear statement of our firm's ethical and cultural standards.
We operate in major countries and securities markets throughout the world. Generally, we serve our clients as fiduciaries.
Fiduciary businesses are generally held to a higher standard of conduct than other businesses, and as such there are special obligations that apply. The following key duties and principles govern our conduct as fiduciaries:
- Best interests of clients - As fiduciaries, we have a duty to act with reasonable care, skill and caution in the best interests of our clients, and to avoid conflicts of interest.
- Global fiduciary standards - Invesco seeks to maintain the same high fiduciary standards throughout the world, even though those standards may not be legally required, or even recognized, in some countries.
- Compliance with applicable laws, rules and regulations - We have a duty to comply with the laws, rules and regulations of the jurisdictions in which we operate, and to comply with the terms of our agreements with our clients.
- Client confidentiality - We must maintain the confidentiality of information relating to the client, and comply with the data protection requirements imposed by many jurisdictions.
- Information - Clients must be provided with timely and accurate information regarding their accounts.
- Segregation and protection of assets - Processes must be established for the proper maintenance, control and protection of client assets. Fiduciary assets must be segregated from Invesco assets and property.
- Delegation of duties - Fiduciary duties should be delegated only when the client consents and where permitted by applicable law. Reasonable care, skill and caution must be exercised in the selection of agents and review of their performance.
- Client guidelines - Invesco is responsible for making investment decisions on behalf of clients that are consistent with the prospectus, contract, or other controlling document relating to the client's account.
- Relations with regulators - We seek relationships with regulators that are open and responsive in nature.
1. Compliance with Laws, Rules and Regulations
Invesco strives to ensure that all activity by or on behalf of Invesco is in compliance with applicable laws, rules and regulations ("applicable laws"). Many of these applicable laws are specifically described in this Code of Conduct and in other Invesco and business unit policies and procedures. In the conduct of our business, all Covered Persons are required to comply with all applicable laws.
2. Fair and Honest Dealing
Covered Persons shall deal fairly and honestly with Invesco's shareholders, customers, suppliers, competitors and employees. Covered Persons shall behave in an ethical manner and shall not take unfair advantage of anyone through manipulation, concealment, abuse of privileged information, misrepresentation of material facts, or any other unfair dealing practice.
3. Conflicts of Interest
Invesco and its Covered Persons must adhere to the highest standards of honest and ethical conduct. These include, but are not limited to, sensitivity to the existence of a conflict of interest or the appearance of a conflict of interest. Conflicts of interest can arise in many ways, and we must all be sensitive to those situations in which they are most likely to be present. A conflict of interest exists when a Covered Person's personal interest interferes, or appears to interfere, in any way with the interests of Invesco or its clients, or when a Covered Person otherwise takes actions or has interests that may make it difficult to perform his or her company work objectively and effectively. For example, a conflict of interest would arise if a Covered Person, or a member of his or her family, receives improper personal benefits as a result of his or her position with Invesco.
All Covered Persons owe a duty of undivided and unqualified loyalty to Invesco and may not use their positions improperly to profit personally or to assist others in profiting at the expense of the company. All Covered Persons are therefore expected and
required to regulate their activities so as to avoid conflicts of interest. In addition, Covered Persons shall promptly communicate to the applicable member of the Legal & Compliance Department any material transaction or relationship that reasonably could be expected to give rise to a conflict of interest so that the company and the Covered Person may take steps to minimize the conflict.
Covered Persons shall not take for personal use (or for use by a family member) any business opportunity learned of during the course of serving Invesco, using Invesco property or as a result of such individual's position with Invesco. To the extent that an employee or officer learns of a business opportunity that is within Invesco's existing or proposed lines of business, the employee or officer should inform his or her supervisor, the divisional or business unit General Counsel, or the Board of Directors, as appropriate, of the business opportunity and refrain from personally pursuing the matter until such time as Invesco decides to forego the business opportunity. At no time may any employee or officer utilize any Invesco property, information or position to generate personal gain or engage or participate in any business that directly competes with Invesco.
While not all-inclusive, the following examples of outside financial interests will serve to illustrate some of the types of activities that might cause conflicts of interest:
- Ownership or other interest in or employment by any outside concern which does business with Invesco. This does not apply to stock or other investments in a publicly-held company, provided that the stock and other investments do not, in the aggregate, exceed 5% of the outstanding ownership interests of such company. Invesco may, following a review of the relevant facts, permit ownership interests which exceed these amounts if management or the Board of Directors, as appropriate, concludes that such ownership interests will not adversely affect Invesco's business interests or the judgment of the affected Covered Person.
- Conducting business, not on behalf of Invesco, with any Invesco vendor, supplier, contractor, agency, or any of their directors, officers or employees.
- Representation of Invesco by a Covered Person in any transaction in which he or she, or a family member, has a substantial personal interest.
- Disclosure or use of confidential, special or inside information of or about Invesco, particularly for personal profit or advantage of the Covered Person or a family member of such person.
- Competition with Invesco by a Covered Person, directly or indirectly, in the purchase, sale or ownership of property or services or business investment opportunities.
As described in more detail in Sections 4, 5 and 6 below, acting as an officer or director of an outside organization, personal share dealing, and the use of material non-public information represent additional areas where conflicts can arise and are of particular sensitivity.
In addition to conflicts of interest between the company and its Covered Persons, conflicts of interest may arise between the company and its clients, including investment funds. Where a Covered Person is trading in securities owned by client accounts, or where a portfolio management team for a hedge fund also manages mutual funds that invest in the same securities, are each examples of situations that may give rise to real or apparent conflicts of interest. All Covered Persons must follow the procedures in place within their respective divisions and business units and must also be sensitive to the types of situations that can give rise to such conflicts or apparent conflicts.
4. Outside Activities and Compensation
No Covered Person shall perform work or render services for any competitor of Invesco or for any organization with which Invesco does business or which seeks to do business with Invesco, outside of the normal course of his or her employment with Invesco, without the prior written approval of the company. Nor shall any such person be a director, officer, or consultant of such an organization, or permit his or her name to be used in any fashion that would tend to indicate a business connection with such organization, without such approval. Outside organizations can include public or private corporations, partnerships, charitable foundations and other not-for-profit institutions. With the above approval, Covered Persons may receive compensation for such activities.
Service with organizations outside of Invesco can, however, raise serious regulatory issues, including conflicts of interest and access to material non-public information.
As an outside board member or officer, a Covered Person may come into possession of material non-public information about the outside company or other public companies. It is critical that a proper information barrier be in place between Invesco and the outside organization, and that the Covered Person does not communicate such information to other Covered Persons in violation of the information barrier.
Similarly, Invesco may have a business relationship with the outside organization or may seek a relationship in the future. In those circumstances, the Covered Person must not be involved in any way in the business relationship between Invesco and the outside organization.
Invesco retains the right to prohibit membership by Covered Persons on any board of directors/trustees or as an officer of an outside organization where such membership might conflict with the best interests of the company. Approval will be granted on a
case-by-case basis, subject to proper resolution of potential conflicts of interest. Outside activities will be approved only if these issues can be satisfactorily resolved.
5. Personal Share Dealing
Purchasing and selling securities in a Covered Person's own account, or accounts over which the Covered Person has access or control, can give rise to potential conflicts of interest. As fiduciaries, we are held to the highest standards of conduct. Improperly gaining advance knowledge of portfolio transactions, or conducting securities transactions based upon information obtained at Invesco, can be a violation of those standards.
All personal securities transactions must be pre-cleared unless an exemption is obtained. Generally, an exemption will be granted only for Covered Persons whose duties do not give them access to information regarding the sale or purchase of, or the recommendation to sell or purchase, securities in any portfolio. Transactions in certain retirement benefit plans, such as 401(k)s and Money Purchase Plans, and in specified categories of securities, are exempt from pre-clearance. Every Covered Person must also comply with the specific rules in effect in this area for the Covered Person's division or business unit.
Invesco also has policies that specifically cover personal transactions in the shares and American Depositary Shares of the company. All Covered Persons are obligated to follow those procedures whenever they conduct such transactions.
6. Information Barriers and Material Non-Public Information
In the conduct of our business, Covered Persons may come into possession of material non-public information. This information could concern an issuer, a client, a portfolio, the market for a particular security, or Invesco itself. The purchase or sale of Invesco's securities or the securities of other publicly-traded companies while aware of material nonpublic information about such company, or the disclosure of material nonpublic information to others who then trade in such company's securities, is prohibited by this Code of Conduct and by United States and other jurisdictions' securities laws. Invesco and its subsidiaries have adopted insider trading policies that apply to all Covered Persons. All Covered Persons should review the insider trading policies carefully and follow the policies and procedures described therein. The failure of a Covered Person to comply with the company's insider trading policy may subject him or her to company-imposed sanctions, up to and including termination for cause, whether or not the failure to comply results in a violation of law. You should seek the advice of the applicable divisional or business unit General Counsel on any questions regarding this subject and the company's insider trading policy. All Covered Persons are prohibited from using such information in ways that violate the law, including for personal gain. Non-public information must be kept confidential, which may include keeping it confidential from other Covered Persons.
7. Anti-Bribery and Dealings with Governmental Officials
Special care must be taken when dealing with government customers. Activities that might be appropriate when working with private sector customers may be improper and even illegal when dealing with government employees, or when providing goods and services to another customer who, in turn, will deliver the company's product to a government end user. Many of the countries in which Invesco conducts its business prohibit the improper influencing of governmental officials or other persons by the payment of bribes, gifts, political contributions, lavish hospitality or by other means. Our policy requires adherence to those restrictions.
Do not directly or indirectly promise, offer or make payment in money or anything of value to anyone, including a government official, agent or employee of a government, political party, labor organization or business entity or a candidate of a political party, or their families, with the intent to induce favorable business treatment or to improperly affect business or government decisions. This policy prohibits actions intended either to influence a specific decision or merely to enhance future relationships. In general, all travel and entertainment that Covered Persons provide to governmental officials must be pre-approved within the appropriate business unit. If approved, a written confirmation that such expenses do not violate local law must be obtained from an appropriate third party (e.g., the business unit's legal counsel or the government official's supervisor).
Covered Persons shall comply with all laws, rules and regulations governing political campaign finance and lobbying activities and shall not engage in any conduct that is intended to avoid the application of such laws to activities undertaken on Invesco's behalf. In addition, appropriate executive officers shall monitor compliance with lobbyist registration and disclosure requirements by all individuals who act on behalf of Invesco.
These prohibitions extend to any consultants or agents we may retain on behalf of Invesco.
8. Anti-Discrimination and Harassment
Invesco is committed to providing a work environment that is free of discrimination and harassment. Such conduct, whether overt or subtle, is demeaning, may be illegal, and undermines the integrity of the employment relationship.
Sexual harassment can include unwelcome sexual advances, requests for sexual favors, pressure to engage in a sexual relationship as a condition of employment or promotion, or conduct which creates a hostile or offensive work environment.
Discrimination can take many forms including actions, words, jokes, or comments based upon an individual's race, citizenship, ethnicity, color, religion, sex, veteran status,
national origin, age, disability, sexual orientation, marital status or other legally protected characteristic. Any Covered Person who engages in harassment or discrimination will be subject to disciplinary action, up to and including termination of employment.
9. Anti-Money Laundering
In the global marketplace, the attempted use of financial institutions and instruments to launder money is a significant problem that has resulted in the passage of strict laws in many countries. Money laundering is the attempt to disguise money derived from or intended to finance illegal activity including drug trafficking, terrorism, organized crime, fraud, and many other crimes. Money launderers go to great lengths to hide the sources of their funds. Among the most common stratagems are placing cash in legitimate financial institutions, layering between numerous financial institutions, and integrating the laundered proceeds back into the economy as apparently legitimate funds.
All Covered Persons must be vigilant in the fight against money laundering, and must not allow Invesco to be used for money laundering. Each business unit has developed an anti-money laundering program that is consistent with Invesco's group-wide policy. Each Covered Person must comply with the applicable program.
10. Antitrust
The laws of many countries are designed to protect consumers from illegal competitive actions such as price fixing and dividing markets. It is Invesco's policy and practice to compete based on the merits of our products and services. In order to further that policy, Covered Persons must not fix or control prices with competitors, divide up territories or markets, limit the production or sale of products, boycott certain suppliers or customers, unfairly control or restrict trade in any way, restrict a competitor's marketing practices, or disparage a competitor. Covered Persons must never discuss products, pricing or markets with competitors with the intent to fix prices or divide markets.
11. Data Privacy
Data privacy, as it relates both to our clients and our employees, has become a major political and legal issue in many jurisdictions in which we do business. A variety of laws in each of those jurisdictions governs the collection, storage, dissemination, transfer, use, access to and confidentiality of personal information and patient health information. These laws can work to limit transfers of such data across borders and even among affiliated entities in the Invesco group of companies. Invesco and its Covered Persons will comply with all provisions of these laws that relate to its business, including the privacy, security and electronic transmission of financial, health and other personal information. The company expects its Covered Persons to keep all such data
confidential and to protect, use and disclose information in the conduct of our business only in compliance with these laws. The company will consider and may release personal information to third parties to comply with law or to protect the rights, property or safety of Invesco and its customers. . In accordance with Invesco policies, each business unit has developed required disclosures and data security procedures applicable to that business unit. All Covered Persons must comply with the applicable procedures.
With respect to Invesco Covered Persons, all salary, benefit, medical and other personal information relating to Covered Persons shall generally be treated as confidential. Personnel files, payroll information, disciplinary matters, and similar information are to be maintained in a manner designed to protect confidentiality in accordance with applicable laws. All Covered Persons shall exercise due care to prevent the release or sharing of such information beyond those persons who may need such information to fulfill their job functions. Notwithstanding the foregoing, all personnel information belongs solely to Invesco and may be reviewed or used by the company as needed to conduct its business.
12. Communications with the Media and Analysts
Invesco has a long-standing policy of co-operating with the news media and the financial community. This policy is intended to enhance respect for the company, provide accurate information, and achieve our business goals.
Invesco employs media relations professionals who are responsible for handling all contacts with the news media. Invesco's Communications and Corporate Affairs Department is responsible for formulating and directing our media relations policy worldwide. Other Invesco employees may not speak to or disseminate information to the news media unless such contact has been requested and arranged by or coordinated with an Invesco media relations professional in accordance with the company's media relations policy. Any contact from the news media should be referred promptly and without comment to an Invesco media relations professional. If you do not know the appropriate media relations professional for your unit, you can refer the contact to the Invesco Communications and Corporate Affairs Department.
Many countries have detailed rules with regard to the dissemination of information about public companies. In particular, a public company must have procedures for controlling the release of information that may have a material impact on its share price. The Chief Executive Officer and the Chief Financial Officer are responsible for Invesco's relationships with the financial community, including the release of price sensitive information. Other Invesco employees may not speak to or disseminate information regarding the company to the financial community (including analysts, investors, shareholders, Company lenders, and rating agencies) unless such contact has been requested and arranged by the Chief Executive Officer, the Chief Financial Officer or the Investor Relations Group within the Finance Department.
13. Electronic Communications
The use of electronic mail, the Internet and other technology assets is an important part of our work at Invesco. Used improperly, this technology presents legal and business risks for the company and for individual employees. There are also important privacy issues associated with the use of technology, and related regulations are evolving.
In accordance with Invesco's Electronic Communications policies, all Covered Persons are required to use information technology for proper business purposes and in a manner that does not compromise the confidentiality of sensitive or proprietary information. All communications with the public, clients, prospects and fellow employees must be conducted with dignity, integrity, and competence and in an ethical and professional manner.
We must not use information technology to: transmit or store materials which are obscene, pornographic, or otherwise offensive; engage in criminal activity; obtain unauthorized access to data or files; commit copyright violations; install personal software without permission; or make Internet statements, without permission, that suggest that the user is speaking on behalf of Invesco or its affiliates.
14. Gifts and Relationships with Customers and Suppliers
Invesco seeks to do business with clients and suppliers on a fair and equitable basis. We may not accept gifts of other than nominal value, or lavish entertainment, or other valuable benefits or special favors from customers or suppliers. We must observe any limits imposed by our business unit's policies, local laws, or regulations with respect to the acceptance of gifts or gratuities.
15. International Issues
If you conduct business for Invesco outside of the U.S., in addition to being familiar with the local laws of the other countries involved, be sure you are familiar with the following U.S. laws and regulations. Violations of these laws can result in substantial fines, imprisonment and severe restrictions on the company's ability to do business.
FOREIGN CORRUPT PRACTICES ACT
The United States Foreign Corrupt Practices Act (FCPA) and similar laws in many other countries have a variety of provisions that regulate business in other countries and with foreign citizens. In essence, these laws make it a crime to promise or give anything of value to a foreign official or political party in order to obtain or keep business or obtain any improper advantage. It is also illegal to make payments to agents, sales representatives or other third parties if you have reason to believe your gift will be used illegally. Seek advice from the appropriate member of the Legal & Compliance
Department for interpretation of the FCPA or similar laws if you are involved in any business dealings that involve foreign countries.
ANTI-BOYCOTT LAWS
From time to time, various countries may impose restrictions upon the ability of businesses in their jurisdiction to engage in commerce with designated individuals, countries or companies. These laws are commonly referred to as boycotts or trade embargoes. It may be against the law to cooperate in any boycotts between foreign countries not sanctioned by the laws of the place where your office is located. All requests for boycott support or boycott-related information must be reported to your supervisor and the member of the Legal & Compliance Department with responsibility for your office.
Similarly, many countries contribute the names of criminal or terrorist organizations or individuals to a common database and require financial institutions to screen customer lists against the database as part of their "Know Your Customer" obligations. We must be aware of, and where appropriate, adhere to any such restrictions.
EMBARGO SANCTIONS
The United States Treasury Department's Office of Foreign Assets Control prohibits U.S. companies and their foreign subsidiaries from doing business with certain countries and agencies and certain individuals. The laws of other countries may have similar types of prohibitions. The regulations vary depending on the country and the type of transaction and often change as countries' foreign policies change. If you are aware of any sensitive political issues with a country in which Invesco is doing or considering doing business, seek advice from the appropriate member of the Legal & Compliance Department.
16. Political Activities and Lobbying
Covered Persons are encouraged to vote in elections for which they are eligible, and to make contributions supporting candidates or parties of their choice. Covered Persons are also encouraged to express their views on government, legislation and other matters of local or national interest.
Many jurisdictions have imposed severe and complex restrictions on the ability of individuals and companies to make political contributions. You should assume that Invesco and its Covered Persons are generally prohibited from certain types of political activities, and you must be familiar with the rules in effect for your business unit. No Covered Person may, under any circumstances, use company funds to make political contributions without the prior written approval of a member of the Legal & Compliance Department, nor may you represent your personal political views as being those of the company.
17. Retention of Books and Records
Invesco corporate records are important assets. Corporate records include essentially everything you produce as a Covered Person, regardless of its format. A corporate record may be in the form of paper, computer tapes, microfilm, e-mail, or voice mail. It may be something as obvious as a memorandum or a contract or something not as obvious, such as a desk calendar, an appointment book, or an expense record.
Invesco is required by law to maintain certain types of corporate records, usually for a specified period of time. Failure to retain such documents for such minimum periods could subject Invesco to penalties and fines, cause the loss of rights, obstruct justice, place Invesco in contempt of court, or place Invesco at a serious disadvantage in litigation. However, storage of voluminous records over time is costly. Therefore, Invesco has established controls to assure retention for required periods and timely destruction of retrievable records, such as paper copies and records on computers, electronic systems, microfiche, and microfilm. Even if a document is retained for the legally required period, liability could still result if a document is destroyed before its scheduled destruction date.
Invesco and its affiliates are subject to the regulatory requirements of numerous countries and regulatory agencies. Virtually all of them have specific requirements concerning the creation, maintenance and storage of business records. Invesco expects all Covered Persons to become familiar with and fully comply with the records retention/destruction schedule for the departments and office locations for which they work. If you believe documents should be retained beyond the applicable retention period, consult with the Legal & Compliance Department.
18. Sales and Marketing Materials
Invesco is committed to building sustained, open, and honest relationships with our customers, and to complying with all relevant regulatory requirements. This requires that all marketing and sales-related materials be prepared under standards approved by the Legal & Compliance Department and, prior to use, reviewed and approved by the appropriate supervisor within a business unit. Covered materials include requests for proposals, client presentations, performance summaries, advertisements, and published market commentaries.
19. Substance Abuse
Invesco is committed to providing a safe and healthy work place for all employees. The use, possession, sale, transfer, purchase, or being "under the influence" of drugs at any time while on company premises or on company business is prohibited. The term "drug" includes alcoholic beverages (other than in connection with entertainment
events, or in other appropriate settings), prescriptions not authorized by your doctor, inhalants, marijuana, cocaine, heroin and other illegal substances.
20. Confidential Information
Confidential information includes all non-public information that might be of use to competitors, or harmful to the company or its customers, if disclosed. All information (in any form, including electronic information) that is created or used in support of company business activities is the property of Invesco. This company information is a valuable asset and Covered Persons are expected to protect it from unauthorized disclosure. This includes Invesco customer, supplier, business partner and employee data. United Kingdom, United States (federal and state) and other jurisdictions' laws may restrict the use of such information and impose penalties for impermissible use or disclosure.
Covered Persons must maintain the confidentiality of information entrusted to them by the company or its customers, vendors or consultants except when disclosure is properly authorized by the company or legally mandated. Covered Persons shall take all reasonable efforts to safeguard such confidential information that is in their possession against inadvertent disclosure and shall comply with any non-disclosure obligations imposed on Invesco in its agreements with third parties.
Information pertaining to Invesco's competitive position or business strategies, and information relating to negotiations with Covered Persons or third parties, should be protected and shared only with Covered Persons having a need to know such information in order to perform their job responsibilities.
21. Protection and Proper Use of Company Assets
All Covered Persons shall strive to preserve and protect the company's assets and resources and to promote their efficient use. The standards set forth below are intended to guide Covered Persons by articulating Invesco's expectations as they relate to activities or behaviors that may affect the company's assets.
Personal Use of Corporate Assets
Theft, carelessness and waste have a direct impact on Invesco's profitability. Covered Persons are not to convert assets of the company to personal use. Company property should be used for the company's legitimate business purposes and the business of the company shall be conducted in a manner designed to further Invesco's interest rather than the personal interest of an individual Covered Person. Covered Persons are prohibited from the unauthorized use or taking of Invesco's equipment, supplies, materials or services. Prior to engaging in any activity on company time which will result in remuneration to the Covered Person or the use of Invesco's equipment, supplies, materials or services for personal or non-work related purposes, officers and
other Covered Persons shall obtain the approval of the supervisor of the appropriate business unit.
Use of Company Software
Covered Persons use software programs for word processing, spreadsheets, data management, and many other applications. Software products purchased by the company are covered by some form of licensing agreement that describes the terms, conditions and allowed uses. It is the company's policy to respect copyright laws and observe the terms and conditions of any license agreements. Copyright laws in the United States and other countries impose civil and criminal penalties for illegal reproductions and use of licensed software. You must be aware of the restrictions on the use of software and abide by those restrictions. Invesco business equipment may not be used to reproduce commercial software. In addition, you may not use personal software on company equipment without prior written approval.
Computer Resources/E-mail
The company's computer resources, which include the electronic mail system, belong to Invesco and not to the Covered Person. They are not intended to be used for amusement, solicitation, or other non-business purposes. While it is recognized that Covered Persons will occasionally use the system for personal communications, it is expected that such uses will be kept to a minimum and that Covered Persons will be responsible and professional in their use of e-mail. The use of the computer systems to make or forward derogatory or offensive remarks about other people or groups is prohibited. E-mail messages should be treated as any other written business communication.
22. Invesco Intellectual Property
Employees and officers must carefully maintain and manage the intellectual property rights of Invesco, including patents, trademarks, copyrights and trade secrets, to preserve and protect their value. Information, ideas and intellectual property assets of Invesco are important to the company's success.
Invesco's name, logo, trademarks, inventions, processes and innovations are intellectual property assets and their protection is vital to the success of the company's business. The company's and any of its subsidiaries' names, logos and other trademarks and service marks are to be used only for authorized company business and never in connection with personal or other activities unless appropriately approved and in accordance with company policy. In addition, our Covered Persons must respect the intellectual property rights of third parties. Violation of these rights can subject both you and the company to substantial liability, including criminal penalties.
Any work product produced in the course of performing your job shall be deemed to be a "work made for hire" and shall belong to Invesco and is to be used only for the benefit of Invesco. This includes such items as marketing plans, product development plans, computer programs, software, hardware and similar materials. You must share any innovations or inventions you create with your supervisor so that the company can take steps to protect these valuable assets.
23. Integrity and Accuracy of Financial Records
The preparation and maintenance of accurate books, records and accounts is required by law and essential to the proper discharge of financial, legal and reporting obligations. All Covered Persons are prohibited from directly or indirectly falsifying or causing to be false or misleading any financial or accounting book, record or account. In addition, all financial data must be completely and accurately recorded in compliance with applicable law and Invesco's accounting policies and procedures. A Covered Person may violate this section by acting or by failing to act when he or she becomes aware of a violation or potential violation of this section.
24. Disclosure in Reports and Documents.
Filings and Public Materials. As a public company, it is important that the company's filings with UK authorities, the United States Securities and Exchange Commission (the "SEC") and other U.S. federal, state, domestic and international regulatory agencies are full, fair, accurate, timely and understandable. The company also makes many other filings with the SEC and other UK, U.S. and international regulatory agencies on behalf of the funds that its subsidiaries and affiliates manage. Further, the company prepares mutual fund account statements, client investment performance information, prospectuses and advertising materials that are sent out to its mutual fund shareholders and clients.
Disclosure and Reporting Policy. The company's policy is to comply with all applicable disclosure, financial reporting and accounting regulations applicable to the company. The company maintains the highest commitment to its disclosure and reporting requirements, and expects and requires all Covered Persons to record information accurately and truthfully in the books and records of the company.
Information for Filings. Depending on his or her position with the company, a Covered Person may be called upon to provide necessary information to assure that the company's public reports and regulatory filings are full, fair, accurate, timely and understandable. The company expects all Covered Persons to be diligent in providing accurate information to the inquiries that are made related to the company's public disclosure requirements.
Disclosure Controls and Procedures and Internal Control Over Financial Reporting. Covered Persons are required to cooperate and comply with the company's disclosure
controls and procedures and internal controls over financial reporting so that the company's reports and documents filed with the UK authorities, the SEC and other U.S. federal, state, domestic and international regulatory agencies comply in all material respects with applicable laws, and rules and regulations, and provide full, fair, accurate, timely and understandable disclosure.
25. Improper Influence on the Conduct of Audits
Every Covered Person must deal fairly and honestly with outside accountants performing audits, reviews or examinations of Invesco's and its subsidiaries' financial statements. To that end, no Covered Person of Invesco may make or cause to be made a materially false or misleading statement (or omit facts necessary to make the statements made not misleading) in connection with an audit, review or examination of financial statements by independent accountants or the preparation of any document or report required to be filed with a governmental or regulatory authority. Covered Persons of Invesco also are prohibited from coercing, manipulating, misleading or fraudulently inducing any independent public or certified public accountant engaged in the performance or review of financial statements that are required to be filed with a governmental or regulatory authority if he or she knows or should have known that his or her actions could result in making those financial statements materially misleading.
26. Standards for Invesco's Financial Officers
Invesco's Chief Executive Officer, Chief Financial Officer and Chief Accounting Officer (the "Financial Officers") are required to take all reasonable steps to provide full, fair, accurate, timely and understandable disclosures in the reports and documents that Invesco files with or submits to the SEC and other regulatory bodies and in other public communications made by Invesco. In the event that a Financial Officer learns that any such report, document or communication does not meet this standard and such deviation is material, then the Financial Officers are required to review and investigate such deviation, advise the Board of Directors or the Audit Committee of the Board of Directors regarding the deviation and, where necessary, revise the relevant report, document or communication.
Although a particular accounting treatment for one or more of Invesco's operations may be permitted under applicable accounting standards, the Financial Officers may not authorize or permit the use of such an accounting treatment if the effect is to distort or conceal Invesco's true financial condition. The accounting standards and treatments utilized by Invesco must, in all instances, be determined on an objective and uniform basis and without reference to a single transaction or series of transactions and their impact on Invesco's financial results for a particular time period. Any new or novel accounting treatment or standard that is to be utilized in the preparation of Invesco's financial statements must be discussed with Invesco's Audit Committee and its independent auditors.
27. Policy and Procedures on Reporting Potential Material Violations
Invesco's Audit Committee has adopted the following statement of policy with respect to the reporting by employees of potential material violations of this Code of Conduct, laws or regulations and our related non-retaliation policy:
"Invesco strives to ensure that all activity by or on behalf of Invesco is in compliance with applicable laws, rules and regulations. Invesco and its employees must adhere to the highest standards of honest and ethical conduct. Employees of Invesco and its subsidiaries are affirmatively required to report possible violations of the Invesco Code of Conduct, laws or regulations promptly to their manager, a Human Resources Director at the employee's site, the employee's Legal and Compliance Department representative, or via the 24-hour toll-free, anonymous Invesco Compliance Reporting Line.
Invesco will not permit retribution, harassment, or intimidation of any employee who in good faith reports a possible violation. Specifically, Invesco policy prevents any employee from being subject to disciplinary or retaliatory action by Invesco or any of its employees or agents as a result of the employee's good faith:
- Disclosing information to a government or law enforcement agency, where the employee has reasonable cause to believe that the information discloses a violation or possible violation of federal or state law or regulation; or
- Providing information, causing information to be provided, filing, causing to be filed, testifying, participating in a proceeding filed or about to be filed, or otherwise assisting in an investigation or proceeding regarding any conduct that the employee reasonably believes involves a violation of: (1) any criminal law relating to securities fraud, mail fraud, bank fraud, or wire, radio, television or internet fraud; (2) any rule or regulation of the United States Securities and Exchange Commission or any other national, state or provincial securities regulatory authority; or any provision of applicable law relating to fraud against shareholders, where, with respect to investigations, such information or assistance is provided to or the investigation is being conducted by a national, state or provincial regulatory agency, a member of any parliamentary body, or a person at Invesco with supervisory or similar authority over the employee.
However, employees who file reports or provide evidence which they know to be false or without a reasonable belief in the truth and accuracy of such information will not be protected by the above policy statement and may be subject to disciplinary action, including termination of their employment."
If you are a Covered Person with complaints or concerns regarding:
(i) violations of this Code of Conduct or the rules mentioned herein;
(ii) violations of laws or regulations generally involving Invesco; or
(iii) questionable accounting matters, internal accounting controls, auditing matters, breaches of fiduciary duty or violations of United States or foreign securities laws or rules (collectively "Accounting Matters"), including:
- fraud or deliberate error in the preparation, evaluation, review or audit of any financial statement of Invesco;
- fraud or deliberate error in the recording and maintaining of financial records of Invesco;
- deficiencies in or non-compliance with Invesco's internal accounting controls;
- misrepresentation or false statements to or by a senior officer or accountant regarding a matter contained in the financial records, financial reports or audit reports of Invesco;
- deviation from full and fair reporting of Invesco's financial condition; or
- fraudulent or criminal activities engaged in by officers, directors or employees of Invesco;
you may report your concerns in any of three ways:
YOU CAN SPEAK WITH YOUR SUPERVISOR. We encourage you to first contact your immediate supervisor, who is in turn responsible for informing Invesco's Compliance Reporting Line (described below) of any concerns raised.
YOU CAN SPEAK DIRECTLY WITH THE BUSINESS UNIT OR DIVISIONAL GENERAL COUNSEL. If you prefer not to discuss a concern with your own supervisor, you may instead contact the General Counsel of your business unit or division directly. You are also free to e-mail the business unit or divisional General Counsel at the appropriate e-mail address. Such person will then likewise be responsible for informing Invesco's Compliance Reporting Line (described below) of any concerns raised.
YOU CAN CALL OUR COMPLIANCE REPORTING LINE. You may also call the Invesco Compliance Reporting Line. If you are calling from a U.S. or Canadian location dial 1-866-297-3627. For calls from all other locations, dial an international operator and request a collect call to 1-704-943-1136. When asked for your name use "Invesco." You can use the Compliance Reporting Line to report possible violations or to check on the status of a previously filed report. You can also report to the Compliance Reporting Line if you believe that a report previously made to company management, your
supervisor, other management personnel or the applicable business unit or divisional General Counsel has not been addressed.
The Compliance Reporting Line is administered by an outside vendor. The telephone operators for the Compliance Reporting Line have been trained to receive your call. The Compliance Reporting Line is available 24 hours a day, seven days a week. All calls will be answered by a live person. Calls are not recorded and are not able to be traced. You have the option to remain anonymous. If you remain anonymous, you will be given a numeric code so that you may call back and ask for follow up. You will be guided through the call and prompted by appropriate questions from the operator. You will be given a date on which you can call back and receive a follow up report. Once the call is completed, a report will be generated and sent to the appropriate departments within Invesco based on the subject matter of your call. You are urged to call back for follow up, because in the event more information is required, this will be an opportunity for you to provide those details.
If you report a possible violation, regardless of the method that you use to make the report, it is important that you provide as much detail as possible, including names, dates, times, locations and the specific conduct in question. Only with sufficient specific information can Invesco adequately investigate the reported action.
Your submission of information will be treated in a confidential manner to the extent reasonably possible. Please note, however, that if an investigation by Invesco of the activities you have reported takes place, it may be impossible for Invesco to maintain the confidentiality of the fact of the report or the information reported.
Complaints relating to Accounting Matters will be reviewed under Audit Committee direction and oversight by such persons as the Audit Committee determines to be appropriate. All other matters will be reviewed under the direction and oversight of the appropriate departments within Invesco, usually also including the Legal & Compliance Department. Prompt and appropriate corrective action will be taken when and as warranted in the judgment of the Audit Committee or other reviewing department.
28. Disclosure; Amendments
To the extent required by law, the company shall publicly (e.g., in its Annual Report on Form 20-F and/or on its website) disclose this Code of Conduct and its application to all of the company's Covered Persons.
This Code may only be amended by Invesco's Board of Directors or a duly authorized committee thereof. To the extent required by law, amendments to the Code of Conduct shall be disclosed publicly. As set forth in Item 16B of the company's Annual Report on Form 20-F for 2005 filed with the SEC, the company has elected to disclose certain amendments to the Code that affect, and any waivers of the Code granted to, Financial Officers on the company's Web site in accordance with the requirements of Instruction 4 to Item 16B.
29. Waivers of the Code.
a. Waivers for Executive Officers. Any change in or waiver of this Code for executive officers (as defined in Rule 3b-7 under the Securities Exchange Act of 1934, "Executive Officers") of the company may be made only by the Board of Directors or a committee thereof in the manner described in Section 29(d) below, and any such waiver (including any implicit waiver) shall be promptly disclosed to shareholders as required by the corporate governance listing standards of the New York Stock Exchange and other applicable laws, rules and regulations.
b. Waivers for Other Covered Persons. Any requests for waivers of this Code for Covered Persons other than Executive Officers of the company may be made to the Legal and Compliance Department in the manner described in Section 29(e) below.
c. Definition of Waiver. For the purposes of the Code, the term "waiver" shall mean a material departure from a provision of the Code. An "implicit waiver" shall mean the failure of the company to take action within a reasonable period of time regarding a material departure from a provision of the Code that has been made known to an Executive Officer.
d. Manner for Requesting Executive Officer Waivers.
i. Request and Criteria. If an Executive Officer wishes to request a waiver of this Code, the Executive Officer may submit to the Global Compliance Director or the Legal and Compliance Department a written request for a waiver of the Code only if he/she can demonstrate that such a waiver:
A. is necessary to alleviate undue hardship or in view of unforeseen circumstances or is otherwise appropriate under all the relevant facts and circumstances;
B. will not be inconsistent with the purposes and objectives of the Code;
C. will not adversely affect the interests of clients of the company or the interests of the company; and
D. will not result in a transaction or conduct that would violate provisions of applicable laws or regulations.
ii. Discretionary Waiver and Response. The Legal and Compliance Department will forward the waiver request to the Board of Directors or a committee thereof for consideration. Any decision to grant a waiver from the Code shall be at the sole and absolute discretion of the Board of Directors or committee thereof, as appropriate. The Company Secretary will advise the Legal and Compliance Department in writing of the Board of Director's decision regarding the waiver, including the grounds for granting or denying the waiver request. The Legal and Compliance Department shall promptly advise the Executive Officer in writing of the Board of Director's decision.
e. Manner for Requesting Other Covered Person Waivers.
i. Request and Criteria. If a Covered Person who is a non-Executive Officer wishes to request a waiver of this Code, such Covered Person may submit to the Legal and Compliance Department a written request for a waiver of the Code only if he/she can demonstrate that such a waiver would satisfy the same criteria set forth in Section 29(d).
ii. Discretionary Waiver and Response. The Legal and Compliance Department shall forward the waiver request to the General Counsel of the company for consideration. The decision to grant a waiver shall be at the sole and absolute discretion of the General Counsel of the company. The General Counsel will advise the Legal and Compliance Department in writing of his/her decision regarding the waiver, including the grounds for granting or denying the waiver request. The Legal and Compliance Department shall promptly advise the Covered Person in writing of the General Counsel's decision.
30. Internal Use. This Code is intended solely for the internal use by the company and does not constitute an admission, by or on behalf of the company, as to any fact, circumstance, or legal conclusion.
CONCLUSION
As Covered Persons, each of us is obligated to read and understand this Code of Conduct and our relevant business unit's policies and procedures. No code of conduct, however, can address every situation for which guidance may be necessary. If you are unclear about a situation, stop and ask for guidance before taking action. All Covered
Persons are expected to abide by both the letter and spirit of this Code. Covered Persons are also expected to perform their work with honesty and integrity in any areas not specifically addressed by the Code. Invesco will investigate reported violations of the Code and, if violations are found, may take disciplinary action, if appropriate, against the individuals involved, and may make reports, if appropriate, to civil, criminal or regulatory authorities. Nothing in this Code restricts the company from taking any disciplinary action on any matters pertaining to the conduct of a Covered Person, whether or not expressly set forth in the Code. Any questions regarding the scope or interpretation of this Code should be referred to the appropriate Compliance or Legal officer.
Revised: October 2007