Securities Act File No. ___
Investment Company Act File No.___
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM N-2
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933 [X]
PRE-EFFECTIVE AMENDMENT NO. [ ]
POST-EFFECTIVE AMENDMENT NO. [ ]
AND/OR
REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940 [X]
AMENDMENT NO. [ ]
(Check appropriate box or boxes)
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INVESCO GLOBAL FINANCIAL SERVICES FUND
(Exact Name of Registrant as Specified in Charter)
7800 E. Union Avenue, Denver, Colorado 80237
(Address of Principal Executive Offices)
Registrant's Telephone Number, Including Area Code:
1-800-528-8765
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Glen A. Payne, Esq.
General Counsel
INVESCO Funds Group, Inc.
7800 E. Union Avenue, Suite 800
Denver, Colorado 80237
(Name and address of agent for service)
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Copies to:
Thomas A. Hale
Skadden, Arps, Slate, Clifford J. Alexander
Meagher & Flom (Illinois) Kirkpatrick & Lockhart LLP
333 Wacker Drive 1800 Massachusetts Avenue
Chicago, Illinois 60606 Second Floor
Washington, DC 20036
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Approximate Date of Proposed Public Offering:
As soon as practicable after this Registration Statement becomes effective.
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CALCULATION OF REGISTRATION FEE UNDER THE SECURITIES ACT OF 1933
==============================================================================================================
Proposed Proposed
Amount Being Maximum Aggregate Amount of
Registered(1) Offering Price Maximum Offering Registration Fee
per Unit Price(1)
- ---------------------------------- ------------------ ----------------- ------------------ -------------------
<S> <C> <C> <C> <C>
Shares of Beneficial Interest 4,600,000 $15.00 $69,000,000 $20,355.00
==============================================================================================================
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(1)Includes 600,000 Shares which may be offered by the Underwriters pursuant to
an option to cover overallotments.
The registrant hereby amends this Registration Statement under the Securities
Act of 1933 on such date or dates as may be necessary to delay its effective
date until the registrant shall file a further amendment which specifically
states that this Registration Statement shall thereafter become effective in
accordance with the provisions of Section 8(a) of the Securities Act of 1933 or
until the Registration Statement shall become effective on such a date as the
Commission, acting pursuant to said Section 8(a), may determine.
<PAGE>
INVESCO Global Financial Services Fund
Cross Reference Sheet Pursuant to Rule 404(c)
Under the Securities Act of 1933
Parts A and B of the Prospectus*
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Item No. Registration Statement Caption Location in Prospectus
- -------- ------------------------------ ----------------------
<S> <C> <C>
1. Outside Front Cover Outside Front Cover
2. Inside Front and Outside back Cover Page Inside Front and Outside Back Cover Page
3. Fee Table and Synopsis Prospectus Summary; Expenses Summary
4. Financial Highlights Not Applicable
5. Plan of Distribution Cover Page; Outside Front Cover Page;
Prospectus Summary; Underwriting
6. Selling Shareholders Not Applicable
7. Use of Proceeds Outside Front Cover; Inside Front Cover;
Prospectus Summary; Use of Proceeds;
Investment Restrictions
8. General Description of Registrant Outside Front Cover; Inside Front Cover;
Prospectus Summary; The Fund; Investment
Practices; Special Considerations and Risk
Factors; Investment Restrictions; Dividends
and Distributions; Taxes; Portfolio
Transactions; Determination of Net Asset
Value
9. Management Inside Front Cover; Prospectus Summary;
Management of the Fund; Investment Adviser;
Trustees and Officers of the Fund;
Investment Management Contract; Portfolio
Transactions; Custodian; Transfer Agent,
Shareholder Servicing Agent, Custodian and
Transfer and Dividend Paying Agent;
10. Capital Stock, Long-term Debt, and Other
Securities Prospectus Summary; Dividends and
Distributions; Taxes; Automatic Dividend
Reinvestment Plan
11. Defaults and Arrears on Senior Securities Not Applicable
12. Legal Proceedings Not Applicable
<PAGE>
13. Table of Contents of Statement of
Additional Information Not Applicable
14. Cover Page Not Applicable
15. Table of Contents Not Applicable
16. General Information Not Applicable
17. Investment Objectives and Policies Outside Front Cover; Inside Front Cover;
Prospectus Summary; Restrictions;
Investment Considerations and Risks
18. Management Trustees and Officers of the Fund
19. Control Persons and Principal Holders of
Securities Not Applicable
20. Investment and Advisory and Other Services Prospectus Summary; Investment Advisor;
Trustees and Officers of the Fund;
Management Contract; Portfolio
Transactions; Shareholder Servicing Agent,
Custodian and Transfer and Dividend Paying
Agent
21. Brokerage Allocation and Other Practices Portfolio Transactions
22. Tax Status Dividends and Distributions; Taxes;
Independent Auditor's Report
23. Financial Statements Not Applicable
</TABLE>
___________
*Pursuant to General Instruction H of Form N-2, all information required to be
set forth in Part B: Statement of Additional Information has been included in
Part A: The Prospectus.
PART C
The information required to be included in Part C is set forth under the
appropriate item, so numbered, in Part C to this Registration Statement.
2
<PAGE>
SUBJECT TO COMPLETION
PRELIMINARY PROSPECTUS DATED JULY 17, 1998
__________ Shares
INVESCO GLOBAL FINANCIAL SERVICES FUND
----------------------------
INVESCO Global Financial Services Fund (the "Fund") is a newly
organized, non-diversified, closed-end management investment company. The Fund's
investment objective is long-term capital appreciation. The Fund seeks to
achieve its objective by investing substantially all of its assets in equity and
related securities of U.S. and foreign companies principally engaged in
creating, providing, developing or distributing financial services ("Financial
Services Companies"). Principal industry groups of Financial Services Companies
include banks, savings institutions, brokerage firms, investment management
companies, finance companies, leasing companies, insurance companies, holding
companies of the foregoing and companies that provide related services to such
companies.
The Fund may invest without limitation in securities denominated in
currencies other than the U.S. dollar, which may involve special risks. Up to
25% of the Fund's total assets may be invested in securities for which there is
no readily available secondary market, including those acquired in private
placements, joint ventures and partnerships. The Fund may also utilize certain
investment practices, including the use of short sales, financial leverage and
foreign currency and other hedging transactions. Under normal market conditions,
the Fund may invest up to 20% of its total assets in equity and debt securities
of U.S. and foreign issuers (whether or not such issuers are Financial Services
Companies), including debt securities rated, or deemed by the Fund's investment
manager to be, below investment grade quality. Investments in lower grade
securities are subject to special risks, including greater price volatility and
a greater risk of loss of principal and interest. As a non-diversified
investment company, the Fund may invest a greater portion of its assets in a
small number of issuers. Investors should carefully assess the risks associated
with an investment in the Fund. SEE "RISK FACTORS AND SPECIAL CONSIDERATIONS."
INVESCO Funds Group, Inc. ("INVESCO"), an indirect wholly owned
subsidiary of AMVESCAP PLC, serves as investment manager to the Fund. The Fund's
address is 7800 E. Union Avenue, Denver, Colorado 80237, and its telephone
number is 1-800-528-8765.
----------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR
ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY
OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
================================================================================
PRICE TO PROCEEDS TO
PUBLIC SALES LOAD (1) FUND (2)
- --------------------------------------------------------------------------------
Per Share............................ $15.00 None $15.00
- --------------------------------------------------------------------------------
Total................................ $ None $
- --------------------------------------------------------------------------------
Total Assuming Full Exercise of Over-
Allotment Option (3)............. $ None $
- --------------------------------------------------------------------------------
(FOOTNOTES ON THE FOLLOWING PAGE)
The Shares are offered by the Underwriters, subject to prior sale, when, as and
if delivered to and accepted by the Underwriters, and subject to their right to
reject orders in whole or in part. It is expected that delivery of the Shares
will be made in New York City on or about , 1998.
-----------------------
PAINEWEBBER INCORPORATED
A.G. EDWARDS & SONS, INC.
SALOMON SMITH BARNEY
----------------------------------
The date of this Prospectus is August __, 1998.
<PAGE>
(RED HERRING)
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITIATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
<PAGE>
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR
EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE SHARES
OF THE FUND AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN
MARKET. SUCH TRANSACTIONS MAY BE EFFECTED ON THE NEW YORK STOCK EXCHANGE, IN THE
NASDAQ MARKET OR OTHERWISE. SUCH STABILIZATION, IF COMMENCED, MAY BE
DISCONTINUED AT ANY TIME.
----------------------------
(CONTINUED FROM COVER PAGE)
At times, the Fund expects to utilize financial leverage through
borrowings, including the issuance of debt securities, or the issuance of
preferred shares or through other transactions, such as reverse repurchase
agreements, which have the effect of financial leverage. Currently, the Fund has
not determined the timing or amount of any financial leverage that it would
utilize. The Fund generally will not utilize leverage if it anticipates that the
Fund's leveraged capital structure would result in a lower return to common
shareholders than that obtainable over time with an unleveraged capital
structure. Use of financial leverage creates an opportunity for increased
capital appreciation for the common shareholders but, at the same time, creates
special risks, and there can be no assurance that a leveraging strategy will be
utilized or, if utilized, that a leveraging strategy will be successful during
any period in which it is employed. SEE "RISK FACTORS AND SPECIAL
CONSIDERATIONS-LEVERAGE."
The Fund is offering its shares of beneficial interest, par value $.001
per share (the "Shares"). Prior to this offering, there has been no market for
the Fund's Shares. The Fund intends to apply to list its Shares on the New York
Stock Exchange under the symbol "GFN." Shares of closed-end management
investment companies have in the past frequently traded at discounts from their
net asset values and the Fund's Shares may likewise trade at such a discount.
The risks associated with this characteristic of closed-end management
investment companies may be greater for investors expecting to sell shares of a
closed-end management investment company soon after completion of an initial
public offering of the company's shares. The minimum investment in this offering
is 100 Shares ($1,500). This Prospectus sets forth in concise form information
about the Fund that a prospective investor should know before investing in the
Fund. Investors are advised to read this Prospectus carefully and to retain it
for future reference.
----------------------------
(FOOTNOTES FROM COVER PAGE)
(1) INVESCO or an affiliate (not the Fund) from its own assets will pay a
commission to the Underwriters in the amount of % of the Price to Public
per Share in connection with the sale of the Shares offered hereby. The
Fund and INVESCO have agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933. See
"Underwriting."
(2) Before deducting organizational and offering expenses payable by the Fund,
including payment of $250,000 to the Underwriters in partial reimbursement
of their expenses, estimated at $ and $ , respectively. Offering expenses
will be deducted from net proceeds, and organizational expenses will be
expensed immediately.
(3) Assuming exercise in full of the 45-day option granted by the Fund to the
Underwriters to purchase up to additional Shares, on the same terms,
solely to cover overallotments. See "Underwriting."
ii
<PAGE>
PROSPECTUS SUMMARY
THE FOLLOWING SUMMARY IS QUALIFIED IN ITS ENTIRETY BY THE MORE DETAILED
INFORMATION APPEARING ELSEWHERE IN THIS PROSPECTUS. INVESTORS SHOULD CAREFULLY
CONSIDER INFORMATION SET FORTH UNDER THE HEADING "RISK FACTORS AND SPECIAL
CONSIDERATIONS."
The Fund INVESCO Global Financial Services Fund (the "Fund") is a
newly organized, non-diversified, closed-end management
investment company. The Fund is managed by INVESCO Funds
Group, Inc. ("INVESCO"). The Fund is designed for
investors seeking to participate in the potential global
growth of companies engaged in financial services. See
"The Fund."
The Offering The Fund is offering Shares of Beneficial Interest,
par value $.001 per share ("Shares"), through a group of
underwriters ("Underwriters") led by PaineWebber
Incorporated, A. G. Edwards and Sons, Inc. and Salomon
Smith Barney. The Underwriters have been granted an
option to purchase up to additional Shares solely to
cover overallotments, if any. The initial public offering
price is $15 per share. The minimum investment in the
offering is 100 Shares ($1,500). See "Underwriting."
No Sales Charge The Shares will be sold during the initial public
offering without any sales load or underwriting discounts
payable by investors or the Fund. INVESCO or an affiliate
(not the Fund) from its own assets will pay a
commission to the Underwriters in connection with
sales of the Shares in this offering. See "Underwriting."
Investment Objective The Fund's investment objective is long-term capital
and Policies appreciation. The Fund seeks to achieve its objective by
investing substantially all of its assets in equity and
related securities of U.S. and foreign companies
principally engaged in creating, providing, developing or
distributing financial services ("Financial Services
Companies"). For the reasons described under "Investment
Rationale," below, INVESCO believes that the securities
of Financial Services Companies offer the potential for
long-term capital appreciation. An investment in the Fund
should not itself be considered a balanced investment
program and is not intended to provide diversification as
would a more complete investment program. No assurance
can be given that the Fund will achieve its investment
objective. See "Investment Objective and Policies."
Under normal market conditions, at least 80% of the
Fund's total assets will be invested in equity and
related securities of Financial Services Companies. The
principal industry groups of Financial Services Companies
include banks, savings institutions, brokerage firms,
investment management companies, finance companies,
1
<PAGE>
leasing companies, insurance companies, holding companies
of the foregoing and companies that provide related
services to such companies. The Fund expects to invest in
Financial Services Companies both in large,
well-developed capital and financial markets, such as in
the United States and Western Europe, as well as in
countries with emerging capital and financial markets.
Under normal market conditions, the Fund will invest at
least 65% of its total assets in issuers that are
organized under the laws of, or that maintain their
principal business operations in, at least three
countries, one of which is expected to be the United
States.
The Fund may invest up to 25% of its total assets in
securities for which there is no readily available
secondary market, including securities acquired in
private placements, venture capital opportunities, joint
ventures and partnerships.
Up to 20% of the Fund's total assets may be invested, in
the aggregate, in: equity and related securities of
companies other than Financial Services Companies;
non-convertible debt securities of Financial Services
Companies that are not acquired as units together with
equity securities; debt securities of companies other
than Financial Services Companies; and high grade U.S.
dollar denominated money market instruments having
maturities of one year or less. The non-convertible debt
securities of Financial Services Companies and debt
securities of non-Financial Services Companies may
include debt securities that have been rated below
investment grade by a nationally recognized rating agency
such as Standard & Poor's, a division of The McGraw-Hill
Companies, Inc. ("S&P"), or Moody's Investors Service
Inc. ("Moody's") or that are unrated and are considered
by INVESCO to be of comparable quality. Such lower grade
debt securities are commonly known as "junk bonds."
The Fund may utilize the technique of short selling as a
means of furthering the Fund's investment objective of
capital appreciation. Short sales are transactions in
which the Fund sells a security it does not own in
anticipation of an expected decline in the price of that
security. The Fund may also sell short securities it owns
to seek to hedge against potential price declines in such
securities. The Fund may utilize certain other investment
practices, such as repurchase agreements, when-issued and
delayed delivery transactions, lending portfolio
securities, foreign currency and other derivative
transactions. See "Other Investment Practices."
At times, the Fund expects to utilize financial leverage
through borrowings, including the issuance of debt
securities, or the issuance of preferred shares or
through other transactions, such as reverse repurchase
agreements, which have the effect of financial leverage.
Currently, the Fund has not determined the timing or
amount of any financial leverage that it would utilize.
The Fund generally will not utilize leverage if it
anticipates that the Fund's leveraged capital structure
would result in a lower return to Shareholders than that
obtainable over time with an unleveraged capital
structure. Use of financial leverage creates an
opportunity for increased capital appreciation for
Shareholders but, at the same time, creates risks, and
there can be no assurance that a leveraging strategy will
be utilized or, if utilized, that a leveraging strategy
will be successful during any period in which it is
employed. See "Risk Factors and Special
Considerations-Leverage."
2
<PAGE>
"Equity and related securities" consist of: common,
preferred and convertible preferred stocks, whether or
not voting; partnership interests; securities having
equity characteristics such as rights, warrants, and
convertible debt securities, whether or not issued by the
same issuer as the security to be issued upon conversion
or exercise; non-convertible debt securities that are
acquired as units together with any of the foregoing,
whether or not transferable or separately traded; and
short sale and hedge positions relating to any of such
securities. See "Other Investment Practices-Short Sales"
and "-Derivatives."
For temporary or defensive purposes the Fund may, without
limit, invest in short-term securities issued or
guaranteed by the United States Government or one of its
agencies or instrumentalities, high grade debt securities
and high grade money market instruments. See "Investment
Objective and Policies."
Investment Rationale INVESCO believes that positive trends and developing
conditions in the global market for Financial Services
Companies offer attractive investment opportunities for
the Fund, consistent with its investment objective of
long-term capital appreciation. The primary forces that
INVESCO believes drive the significant growth potential
of Financial Services Companies are:
o Demographics: As the world population ages, INVESCO
believes that the need for managing and preserving
personal assets grows, increasing the demand for
financial services.
o Consolidation: Merger and acquisition activity in the
financial services industry has been increasing
significantly in recent years, which INVESCO believes
offers benefits to Financial Services Companies from
expense synergies, increased revenue opportunities
and expanded market access.
o Technological Innovation: Increased productivity has
resulted from technological developments in the
financial services industry. INVESCO believes that
trends toward more efficient ways to process
information have allowed financial Services Companies
to reduce transaction costs, enhance customer service
and increase capacity.
3
<PAGE>
o Deregulation: INVESCO believes that recent and
anticipated regulatory developments have broadened
business opportunities in the financial services
industry, allowing Financial Services Companies to
further diversity their businesses and revenues
across sectors within the industry.
o Demutualization: The most recent wave of
demutualization is the transference of ownership of
insurance companies from policyholders to public
shareholders. INVESCO believes that insurance
companies undergoing the demutualization process
potentially offer attractive valuations and that the
increase in well-capitalized, strongly positioned
companies with established brand names will foster
continued consolidation in the insurance industry.
o Globalization: INVESCO believes that the relaxation
of international trade barriers, aided by the
evolution of technology, is facilitating increased
capital flows and creating an attractive environment
for Financial Services Companies to expand business
beyond traditional borders, generate increased
revenues and enhanced earnings.
In the view of INVESCO, these trends combine to make
Financial Services Companies an attractive investment for
investors seeking long-term capital appreciation through
investment in a particular sector.
Investment Manager INVESCO is the Fund's investment manager and
and Administrator administrator. INVESCO is an indirect wholly owned
subsidiary of AMVESCAP PLC ("AMVESCAP"), a publicly
traded holding company that, through its subsidiaries,
engages in the business of investment management on an
international basis. As part of AMVESCAP, INVESCO draws
on the organization's global presence and expertise to
deliver portfolio management and investment services to
its clients, AMVESCAP maintains offices around the world
- including the U.S., London, Eastern Europe, Latin
America, Hong Kong and Tokyo. Operating under the AIM and
INVESCO names, the company offers a broad array of
products and services to institutions and individuals
through all major distribution channels in over 30
countries. Recent mergers with major firms such as AIM
Management Group Inc., and GT Global (formerly the asset
management division of Liechtenstein Global Trust) have
positioned AMVESCAP as one of the world's largest
independent fund management companies, adding to its
already-significant presence in Europe, Asia and North
America. As of June 30, 1998, aggregate assets under the
management of AMVESCAP and its affiliates worldwide
exceeded $[208] billion. As of that same date, INVESCO
managed or administered assets of more than $19.6
billion, including 14 registered open-end investment
companies
4
<PAGE>
with 49 separate portfolios. INVESCO has built a global
reputation by providing professional investment
management to some of the world's largest institutions
and more than a million individuals. INVESCO provides
investors the perspective gained from more than 65 years
of helping clients pursue their financial goals.
Since 1984, INVESCO has been a leader in offering sector
funds. One of those portfolios, the Financial Services
Portfolio of INVESCO Strategic Portfolios (the "Financial
Services Portfolio") seeks capital appreciation by
investing in Financial Services Companies, including
banks, savings and loan associations, finance companies,
leasing companies and securities brokerage and insurance
companies. As of June 30, 1998 the Financial Services
Portfolio had net assets of approximately $1.7 billion.
Its average annualized return for the ten-year period
ended June 30, 1998 was 24.98% and for such ten-year
period the performance of the Financial Services
Portfolio was ranked #3 of all of the 810 registered
open-end stock funds evaluated for that period by Lipper
Analytical Services, Inc. ("Lipper"), a recognized,
independent fund evaluation service. For further
information about the performance of the Financial
Services Portfolio for the ten-year period ended June 30,
1998 and for certain other periods, see "The Adviser."
Various policies and restrictions of the Financial
Services Portfolio differ from those of the Fund. The
investment performance of the Financial Services
Portfolio and that of the Fund are expected to differ.
Past performance of the Financial Services Portfolio is
not necessarily indicative of the Fund's future
performance. See "The Adviser."
Listing Prior to this offering, there has been no market for the
Shares. The Fund intends to apply to list its Shares on
the New York Stock Exchange, Inc. ("NYSE") under the
symbol "GFN."
Dividends and Other The Fund intends to pay dividends to Shareholders from
Distributions its net investment income (including net short-term
capital gains) and make distributions of its net realized
long-term capital gains, if any, at least annually.
Automatic Dividend The Fund has established an Automatic Dividend
Reinvestment Plan Reinvestment Plan (the "Plan"). Under the Plan, all
dividends and other distributions will be automatically
reinvested in additional Shares of the Fund either (i)
purchased in the open market, if the dividend is payable
in cash only and Shares of the Fund are trading at a
discount or (ii) issued by the Fund, if the dividend is
payable in cash or Shares. Shareholders who intend to
hold their Shares through a broker or nominee should
contact such broker or nominee to determine whether or
how they may participate in the Plan. See "Automatic
Dividend Reinvestment Plan."
Closed-End Fund The Fund has been organized as a closed-end management
Structure investment company (commonly referred to as a closed-end
fund). Closed-end funds differ from open-end management
5
<PAGE>
investment companies (commonly referred to as mutual
funds) in that closed-end funds generally list their
shares for trading on a securities exchange and do not
redeem their shares at the option of the shareholder. By
comparison, mutual funds issue securities redeemable at
net asset value at the option of the shareholder and
typically engage in a continuous offering of their
shares. Mutual funds are subject to continuous asset
in-flows and out-flows that can complicate portfolio
management, whereas closed-end funds generally can stay
more fully invested in securities consistent with the
closed-end fund's investment objective and policies. In
addition, in comparison to open-end funds, closed-end
funds have greater flexibility in the employment of
financial leverage and in the ability to make certain
types of investments, such as investments in illiquid
securities. However, shares of closed-end funds
frequently trade at a discount from their net asset
value.
In recognition of the possibility that the Shares might
trade at a discount to net asset value and that any such
discount may not be in the interest of Shareholders, the
Fund's Board of Trustees, in consultation with INVESCO,
from time to time may review possible actions to reduce
any such discount, including but not limited to, the
possibility of implementing a "managed distribution"
policy, which would entail quarterly payments of
dividends in an amount equal to a pre-established
percentage of the Fund's net asset value. The Board might
also consider open market repurchases or tender offers
for Shares at net asset value. There can be no assurance
that the Board of Trustees will decide to undertake any
of these actions or that, if undertaken, such actions
would result in the Shares trading at a price equal to or
close to net asset value per Share. The Board of Trustees
might also consider the conversion of the Fund to an
open-end mutual fund. The Board of Trustees believes,
however, that the closed-end structure is desirable,
given the Fund's investment objective and policies.
Investors should assume, therefore, that it is unlikely
that the Board of Trustees would vote to convert the Fund
to an open-end investment company. See "Description of
Shares."
Investment Management As the Fund's investment manager, INVESCO will determine
and Administration the composition of the Fund's portfolio, place all orders
Fee for the purchase and sale of securities and for other
transactions, and oversee the settlement of the Fund's
securities and other portfolio transactions. INVESCO will
also provide administrative services to the Fund. These
will include, among other things, furnishing officers and
office space, preparing or assisting in preparing
materials for Shareholders and regulatory bodies and
overseeing the provision to the Fund of custodial and
accounting services. For these investment management and
administrative services, the Fund will pay INVESCO a
monthly fee at the annual rate of 1.50% of the total
assets of the Fund minus the sum of accrued liabilities
(other than aggregate indebtedness constituting financial
leverage) ("Managed Assets"). This fee is higher than
fees paid by most U.S. investment companies. See
6
<PAGE>
"Management of the Fund."
Shareholder Servicing PaineWebber Incorporated will act as Shareholder
Agent, Custodian Servicing Agent for the Fund. INVESCO will pay a monthly
and Transfer and fee at the annual rate of 0.10% of the Fund's average
Dividend weekly Managed Assets (as defined above) for such
Disbursing Agent services. State Street Bank and Trust Company ("State
Street") will act as custodian for the Fund and may
employ sub-custodians outside the U.S. approved by the
Trustees of the Fund in accordance with regulations of
the Securities and Exchange Commission. State Street will
also act as the Fund's Transfer and Dividend Disbursing
Agent. See "Shareholder Servicing Agent, Custodian and
Transfer and Dividend Disbursing Agent."
Risk Factors and Investors are advised to consider carefully the special
Special risks involved in investing in the Fund.
Considerations
GENERAL. The Fund is a newly organized, non-diversified,
closed-end management investment company and has no
operating history. The Fund has been designed, and the
Shares are intended, primarily for long-term investors
and the Shares should not be considered a vehicle for
trading purposes. The net asset value of the Fund's
Shares will fluctuate with price changes of the Fund's
portfolio securities and these fluctuations are likely to
be greater during periods in which the Fund utilizes a
leveraged capital structure. See "Other Investment
Practices-Leverage."
FINANCIAL SERVICES INDUSTRY. The Fund will invest
substantially all of its assets in Financial Services
Companies and generally the Fund's holdings will be
concentrated in that single, specific business sector.
Compared to the broad market, an individual sector may be
more strongly affected by changes in the economic
climate, broad market shifts, moves in a particular
dominant stock, or regulatory changes. Financial Services
Companies in general are subject to extensive
governmental regulation, which may change frequently. The
profitability of Financial Services Companies is largely
dependent upon the availability and cost of capital
funds, and may fluctuate significantly in response to
changes in interest rates, as well as changes in general
economic conditions. From time to time, severe
competition may also affect the profitability of
Financial Services Companies.
FOREIGN SECURITIES. The Fund may invest in securities of
issuers domiciled outside of the United States or that
are denominated in various foreign currencies and
multinational foreign currency units. Investing in
securities of foreign entities and securities denominated
in foreign currencies involves certain risks not involved
in domestic investments, including, but not limited to,
fluctuations in foreign exchange rates, future foreign
political and economic developments, different legal
7
<PAGE>
systems and the possible imposition of exchange controls
or other foreign governmental laws or restrictions.
Securities prices in different countries are subject to
different economic, financial, political and social
factors. Since the Fund may invest in securities
denominated or quoted in currencies other than the U.S.
dollar, changes in foreign currency exchange rates may
affect the value of securities in the Fund and the
unrealized appreciation or depreciation of investments.
Currencies of certain countries may be volatile and
therefore may affect the value of securities denominated
in such currencies. The Fund may engage in certain
transactions to hedge the currency-related risks of
investing in non-U.S. dollar denominated securities. See
"Other Investment Practices." In addition, with respect
to certain foreign countries, there is the possibility of
expropriation of assets, confiscatory taxation,
difficulty in obtaining or enforcing a court judgment,
economic, political or social instability or diplomatic
developments that could affect investments in those
countries. Moreover, individual foreign economies may
differ favorably or unfavorably from the U.S. economy in
such respects as growth of gross domestic product, rates
of inflation, capital reinvestment, resources,
self-sufficiency and balance of payments position.
Certain foreign investments also may be subject to
foreign withholding taxes. These risks often are
heightened for investments in smaller, emerging capital
markets.
As a result of these potential risks, INVESCO may
determine that, notwithstanding otherwise favorable
investment criteria, it may not be practicable or
appropriate to invest in a particular country. The Fund
may invest in countries in which foreign investors,
including INVESCO, have had no or limited prior
experience.
LEVERAGE. The Fund has the right to use financial
leverage and expects it may do so from time to time in
the future. Currently, however, the Fund has not
determined the timing or amount of financial leverage
that it would utilize. The use of leverage by the Fund
creates an opportunity for increased capital appreciation
for the Shares, but, at the same time, creates special
risks. There can be no assurance that a leveraging
strategy will be utilized or, if utilized, that a
leveraging strategy will be successful during any period
in which it is employed. The Fund intends to utilize
leverage to provide the holders of Shares with a
potentially higher return. Leverage creates risks for
holders of Shares including the likelihood of greater
volatility of net asset value and market price of the
Shares and the risk that fluctuations in interest rates
on borrowings or in the dividend rates on any preferred
shares may affect the return to the holders of Shares. To
the extent the capital appreciation, if any, or any
income derived from securities purchased with funds
received from leverage exceeds the cost of leverage, the
Fund's return will be greater than if leverage had not
been used. Conversely, if the capital appreciation, if
any, or any income derived from the securities purchased
with such funds is not sufficient to cover the cost of
leverage, the return to the Fund will be less than if
leverage had not been used, and therefore the amount
available for distribution to Shareholders as dividends
8
<PAGE>
and other distributions will be reduced. In the latter
case, INVESCO in its best judgment may nevertheless
determine to maintain the Fund's leveraged position if it
deems such action to be appropriate in the circumstances.
During periods in which the Fund is utilizing financial
leverage, the investment management and administrative
fee, which is payable to INVESCO as a percentage of the
Fund's Managed Assets, will be higher than if the Fund
did not utilize a leveraged capital structure. Certain
types of borrowings by the Fund may result in the Fund
being subject to covenants in credit agreements relating
to asset coverage and portfolio composition requirements.
The Fund may be subject to certain restrictions on
investments imposed by guidelines of one or more rating
agencies, which may issue ratings for any debt securities
or preferred shares issued by the Fund. These guidelines
may impose asset coverage or portfolio composition
requirements that are more stringent than those imposed
by the Investment Company Act of 1940, as amended (the
"Investment Company Act"). It is not anticipated that
these covenants or guidelines will impede INVESCO in
managing the Fund's portfolio in accordance with the
Fund's investment objective and policies. The Fund at
times may borrow from affiliates of INVESCO, provided
that the terms of such borrowings are no less favorable
than those available from comparable sources of funds in
the marketplace. As discussed under "Management of the
Fund," the fee paid to INVESCO will be calculated on the
basis of the Fund's assets including proceeds from
borrowings for leverage and the issuance of preferred
shares. See "Risk Factors and Special
Considerations-Leverage."
LOWER GRADE SECURITIES. The Fund may invest up to 20% of
its total assets, in the aggregate, in non-convertible
debt securities of Financial Services Companies and in
debt securities of companies other than Financial
Services Companies. These securities may include
securities that have been rated as low as C in the rating
categories established by S&P and Moody's, or may be
unrated if deemed to be of comparable credit quality by
INVESCO. These securities, which are commonly referred to
as "junk bonds," are regarded, on balance, as
predominantly speculative in terms of the ability of the
issuer to pay interest or repay principal in accordance
with the terms of the obligation and accordingly involve
more credit risk than securities rated in the higher
rating categories. Such debt securities are dependent
upon favorable business, financial or economic
conditions, may be subordinated to senior debt and can be
regarded as having extremely poor prospects of ever
attaining any real investment standing. The prices of
these securities are generally more volatile than the
prices of higher rated debt securities. See "Risk Factors
and Special Considerations-Lower Grade Securities." Such
securities may be illiquid. See "Risk Factors and Special
Considerations-Illiquid Investments."
SPECIAL INVESTMENT PRACTICES. The Fund may make short
sales, which are transactions in which the Fund sells a
9
<PAGE>
security it may not own in anticipation of an expected
decline in the market value of that security. However,
the Fund will incur a loss if the price of the security
increases between the date of the short sale and the date
on which the Fund purchases the security to close its
short position. See "Other Investment Practices Short
Sales."
The Fund may also engage in certain currency and other
hedging transactions, purchase securities on a
when-issued or a delayed delivery basis, enter into
repurchase agreements and lend its portfolio securities.
These transactions involve certain risks and may result
in losses to the Fund. See "Other Investment Practices."
ILLIQUID SECURITIES. The Fund may invest up to 25% of its
total assets in securities for which no readily available
market exists or which are otherwise illiquid. The Fund
may not be able readily to dispose of such securities at
prices that approximate those at which the Fund could
sell such securities if they were more widely traded and,
as a result of such illiquidity, the Fund may have to
sell other investments or engage in borrowing
transactions if necessary to raise cash to meet its
obligations.
NON-DIVERSIFIED STATUS. The Fund is classified as a
"non-diversified" investment company under the Investment
Company Act, which means that the Fund may invest a
greater portion of its assets in a limited number of
issuers than would be the case if the Fund were
classified as a "diversified" investment company.
Accordingly, the Fund may be subject to greater risk with
respect to its portfolio securities than an investment
company that is "diversified" because changes in the
financial condition or market assessment of a single
issuer may cause greater fluctuations in the net asset
value of the Shares.
MARKET PRICE, DISCOUNT AND NET ASSET VALUE OF SHARES.
Shares of closed-end management investment companies in
the past frequently have traded at a discount to their
net asset values. The risk of loss associated with this
characteristic of closed-end management investment
companies may be greater for investors purchasing Shares
in the initial public offering and expecting to sell the
Shares soon after the completion thereof. Whether
investors will realize gains or losses upon the sale of
Shares will not depend directly upon the Fund's net asset
value, but will depend upon the market price of the
Shares at the time of sale. Since the market price of the
Shares will be determined by such factors as relative
demand for and supply of the Shares in the market,
general market and economic conditions and other factors
beyond the control of the Fund, the Fund cannot predict
whether the Shares will trade at, below or above net
asset value or at, below or above the initial offering
price. The Shares are designed primarily for long-term
investors. Investors in the Shares should not view the
Fund as a vehicle for trading purposes, and should not
invest in the Fund on the assumption that it may convert
10
<PAGE>
to an open-end investment company. See "Risk Factors and
Special Considerations" and "Description of Shares."
ANTI-TAKEOVER PROVISIONS. The Fund's Declaration of Trust
contains provisions limiting (i) the ability of other
entities or persons to acquire control of the Fund, (ii)
the Fund's freedom to engage in certain transactions, and
(iii) the ability of the Fund's Trustees or Shareholders
to amend the Declaration of Trust. These provisions of
the Declaration of Trust may be regarded as
"anti-takeover" provisions. These provisions could have
the effect of depriving the Shareholders of opportunities
to sell their Shares at a premium over prevailing market
prices by discouraging a third party from seeking to
obtain control of the Fund in a tender offer or similar
transaction. See "Risk Factors and Special
Considerations" and "Description of Shares."
11
<PAGE>
FEE TABLE
The following tables are intended to assist investors in understanding
the various costs and expenses that an investor in the Fund will bear, directly
or indirectly.
SHAREHOLDER TRANSACTION EXPENSES
Sales Load (as a percentage of offering price)..............................None
Automatic Dividend Reinvestment Plan Fees...................................None
ANNUAL FUND OPERATING EXPENSES (AS A PERCENTAGE OF NET ASSETS
ATTRIBUTABLE TO SHARES)(1)(2)
Management and Administrative Fee..........................................1.50%
Interest Payments on Borrowed Funds ........................................None
Other Expenses.............................................................0.25%
Total Annual Fund Expenses........................................1.75%
- -----------
(1) See "Management of the Fund" for additional information. The Fund has
the authority to utilize financial leverage and expects it may do so
from time to time in the future. Currently, however, the Fund has not
determined the timing or amount of financial leverage that it would
utilize. Leverage would generally increase the Fund's expenses as a
percentage of net assets attributable to the Shares. For example, in
the event the Fund utilizes leverage by borrowing an amount equal to
approximately 25% of the Fund's total assets (including the amount
obtained from leverage), it is estimated that, as a percentage of net
assets attributable to the Shares, the Management and Administration
Fee would be 2.00%, Interest Payments on Borrowed Funds (assuming an
interest rate of 6.00%) would be 2.00%, Other Expenses would be .35%
and Total Annual Fund Expenses would be 4.35%. "Other Expenses" have
been estimated. See "Special Considerations and Risk Factors -
Leverage" and "Other Investment Policies Leverage."
(2) The Fund has agreed to reimburse the Underwriters up to $250,000 for
expenses. A portion of the management and administrative fee may be
used by INVESCO as reimbursement for compensation paid to the
Underwriters.
12
<PAGE>
EXAMPLE
The following Example demonstrates the projected dollar amount of total
cumulative expense that would be incurred over various periods with respect to a
hypothetical investment in the Fund. These amounts are based upon payment by the
Fund of operating expenses at the levels set forth in the above table.
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
An investor would directly or indirectly
pay the following expenses on a $1,000
investment in the Fund, assuming a 5%
annual return throughout the relevant
period and reinvestment of all dividends
and distributions at net asset value: $18 $56 $96 $208
This Example assumes that the percentage amount listed under Total
Annual Fund Expenses remains the same in the years shown. The above tables and
the assumption in the Example of a 5% annual return and reinvestment at net
asset value are required by regulation of the Securities and Exchange Commission
applicable to all investment companies; the assumed 5% annual return is not a
prediction of, and does not represent, the projected or actual performance of
the Shares. Actual expenses and annual rates of return may be more or less than
those assumed for purposes of the Example. In addition, although the Example
assumes reinvestment of all dividends and other distributions at net asset
value, participants in the Fund's Automatic Dividend Reinvestment Plan may
receive Shares obtained by the Plan Agent at or based on the market price in
effect at that time, which may be at, above or below net asset value. The Fund
has the authority to utilize financial leverage and expects that it may do so in
the future. Currently, however, the Fund has not determined the timing or amount
of financial leverage that it would utilize. For example, in the event the Fund
utilizes leverage by borrowing an amount equal to approximately 25% of the
Fund's total assets (including the amount borrowed) and assuming an interest
rate of 6.00%, an investor in the Shares would pay the following expenses based
on the assumptions in this Example: One Year - $45; Three Years - $134; Five
Years - $225 and Ten Years - $457.
THIS EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF FUTURE
EXPENSES, AND THE FUND'S ACTUAL EXPENSES MAY BE MORE OR LESS THAN THOSE SHOWN.
13
<PAGE>
THE FUND
INVESCO Global Financial Services Fund ("Fund") is registered under the
Investment Company Act of 1940, as amended (the "Investment Company Act") as a
non-diversified, closed-end management investment company. The Fund was
organized as a business trust under the laws of The Commonwealth of
Massachusetts on July 13, 1998 and has no operating history. The Fund's
principal office is located at 7800 E. Union Avenue, Denver, Colorado 80237, and
its telephone number is 1-800-528-8765. INVESCO Funds Group, Inc. ("INVESCO") is
the Fund's investment manager.
THE ADVISER
INVESCO has been retained to provide investment advice to the Fund and
to conduct the management and investment program of the Fund. INVESCO is an
indirect, wholly-owned subsidiary of AMVESCAP PLC ("AMVESCAP"), a publicly
traded holding company that, through its subsidiaries, engages in the business
of investment management on an international basis. AMVESCAP maintains offices
around the world - including the U.S., London, Eastern Europe, Latin America,
Hong Kong and Tokyo. Operating under the AIM and INVESCO names, the company
offers a broad array of products and services to institutions and individuals
through all major distribution channels in over 30 countries. Recent mergers
with major firms such as AIM Management Group Inc., and GT Global (formerly the
asset management division of Liechtenstein Global Trust) have positioned
AMVESCAP as one of the world's largest independent fund management companies,
adding to its already-significant presence in Europe, Asia, and North America.
As of June 30, 1998, aggregate assets under the management of AMVESCAP and its
affiliates worldwide exceeded $[208] billion. With a team of approximately 330
investment professionals located in 25 offices spanning 4 continents, AMVESCAP
is committed to managing assets regionally and believes that its local
investment managers provide the company with a competitive advantage. In
addition, within each investment product category the company utilizes multiple
investment styles which allows the company to offer its worldwide clients a
diverse range of product alternatives.
As part of AMVESCAP, INVESCO draws upon the organization's
worldwide presence and expertise to deliver portfolio managment and investment
services to its clients. INVESCO has built a global reputation by providing
professional investment management to some of the world's largest institutions
and more than a million individuals. INVESCO provides investors the perspective
gained from more than 65 years of helping clients pursue their financial goals.
As of June 30, 1998, INVESCO served as investment adviser to various accounts
having assets of approximately 19.6 billion, including 14 registered open-end
investment companies with 49 separate investment portfolios.
14
<PAGE>
Since 1984, INVESCO has been a leader in offering sector funds. The
Financial Services Portfolio of INVESCO Strategic Portfolios, Inc. (the
"Financial Services Portfolio"), which is managed by INVESCO, seeks capital
appreciation by investing, under normal conditions, at least 80% of its total
assets in equity securities (common and preferred stocks, and convertible bonds)
of financial services companies, including commercial and industrial banks,
savings institutions, consumer and industrial finance companies, leasing
companies, securities brokerage firms and insurance companies. As of June 30,
1998, the Financial Services Portfolio had assets of approximately $1.7 billion.
Its investment performance for the ten-, five-, three- and one-year periods
ended June 30, 1998 was ranked by Lipper Analytical Services, Inc. ("Lipper"), a
recognized, independent fund evaluation service, as #3, #41, #12 and #147,
respectively, out of all of the 810, 1,815, 3,367 and 5,346, respectively,
registered open-end stock funds evaluated by Lipper for those periods.
Set forth below are certain performance data provided by INVESCO with
respect to the Financial Services Portfolio, the only account managed by INVESCO
with an investment objective and policies substantially similar to those of the
Fund. This information is provided solely to illustrate INVESCO's historical
performance in managing an investment portfolio that invests in securities of
companies engaged in the financial services industry, as measured against
certain broad-based market indices and against the composite performance of
other open-end investment companies having investment objectives similar to that
of the Financial Services Portfolio. Various policies and restrictions of the
Financial Services Portfolio differ from those of the Fund. The investment
performance of the Financial Services Portfolio and that of the Fund are
expected to differ. Past performance of the Financial Services Portfolio is not
necessarily indicative of the Fund's future performance. The following data
should be read in conjunction with the notes that follow.
INVESCO STRATEGIC PORTFOLIOS, INC.
FINANCIAL SERVICES PORTFOLIO
SCHEDULE OF INVESTMENT PERFORMANCE(1)
<TABLE>
<CAPTION>
Lipper Stock Lipper Financial
Financial Services S&P 500 Funds Services Funds
Portfolio (2) Index (3)(6) Average (4)(6) Average (5)(6)
(total return) (total return) (total return) (total return)
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
Average Annual
total return for
period ended June
30, 1998 and
beginning:
June 30, 1997 38.25% 30.15% 15.19% 35.16%
(one year)
June 30, 1995 37.84 30.19 18.12 34.81
(three years)
June 30, 1993 24.98 23.04 15.50 25.79
(five years)
June 30, 1988 24.98 18.53 14.02 22.74
(ten years)
</TABLE>
Notes to Schedule
- -----------------
(1) The performance data included in the schedule above reflect the total
returns of the Financial Services Portfolio (the "Portfolio"), a securities
index and two mutual fund group averages for the periods shown. Total return is
a measure of investment performance that is based upon the change in the value
15
<PAGE>
of an investment from the beginning to the end of a specified period, assuming
reinvestment of all dividends and other distributions. Other methods of
computing average annual returns and cumulative total returns may produce
different results and performance results for different periods may vary. The
performance information set forth is not performance information relating to the
Fund, which is a newly organized company and has no performance record, and is
not necessarily indicative of the Fund's future investment performance. Various
policies and restrictions of the Portfolio differ from those of the Fund. The
investment performance of the Financial Services Portfolio and that of the Fund
are expected to differ.
(2) The Portfolio is a separate series of an open-end, management investment
company registered under the Investment Company Act, and the Portfolio commenced
its investment operations on June 2, 1986. INVESCO manages the investment
operations of the Portfolio. INVESCO Trust Company ("ITC"), a subsidiary of
INVESCO, managed the investments of the Portfolio until February 3, 1998, at
which time ITC's investment advisory operations were assumed by INVESCO. ITC's
investment professionals have continued to provide advisory services to the
Portfolio in their capacities as officers of INVESCO. The foregoing event
affected no change in the personnel providing investment advisory services to
the Portfolio.
The investment objective of the Portfolio is capital appreciation. It pursues
this objective through the investment of its assets in equity securities, common
and preferred stocks and convertible debt of companies principally engaged in
financial services (including commercial and industrial banks, savings and loan
associations, consumer and industrial finance leasing companies and securities
brokerage and insurance companies). Under normal market conditions, the
Portfolio invests at least 80% of its total assets in such securities. The
Portfolio is managed using substantially the same investment strategies and
techniques as contemplated for the Fund, except that up to 25% of the
Portfolio's assets may be invested in foreign securities (securities of Canadian
issuers and American Depository Receipts not being subject to this limitation)
and the Portfolio may only invest up to 10% of its total assets in securities
that have no readily available secondary market, and except that the Fund is
authorized to engage in certain investment practices such as short sales,
financial leverage, options and futures transactions and lending portfolio
securities.
The average annual returns of the Portfolio are computed in accordance with the
standardized formula for such computations required by the Securities and
Exchange Commission for use by open-end investment companies. Average annual
return is based upon the change in value of an assumed initial investment of
$1,000 in the Portfolio from the beginning of a period through the end of a
period, and assumes reinvestment of all dividends and distributions. This result
is then annualized and expressed as a percentage of the initial investment, and
includes the effect of the Portfolio's operating expenses, including advisory
fees and brokerage commissions.
(3) Standard & Poor's 500 Composite Stock Price Index ("S&P 500 Index") is a
widely recognized, unmanaged index of market activity based upon the aggregate
performance of a selected portfolio of publicly traded common stocks, including
monthly adjustments to reflect the reinvestment of dividends and other
distributions.
(4) The Lipper Stock Funds Average ("Lipper Stock Funds Average") reflects the
composite simple average total return performance, as computed by Lipper, of the
U.S. registered open-end investment companies (including the Portfolio) that
invest primarily in stocks and equity securities generally, and assumes
reinvestment of dividends and other distributions on the ex-dividend date and
includes the effect of the operating expenses, including advisory fees and
brokerage commissions, of the funds included in the average. The total return
performance of each fund is measured by comparing a fund's net asset value at
the beginning and end of a period, with the results being expressed as a percent
change of the beginning net asset value. For the ten-year period indicated
above, there were 810 open-end funds included in the Lipper Stock Funds Average,
for the five-year period indicated above there were 1,815 open-end funds
included in Lipper Stock Funds Average, for the three-year period indicated
above there were 3,367 open-end funds included in the Lipper Stock Funds
Average, and for the one-year period indicated above there were 5,346 open-end
funds included in the Lipper Stock Funds Average, in each case including the
Portfolio.
(5) The Lipper Financial Services Funds Average ("Lipper Financial Services
Funds Average") reflects the composite simple average total return performance,
as computed by Lipper, of the U.S. registered open-end investment companies
(including the Portfolio) that invest primarily in equity securities of
companies engaged in financial services and assumes reinvestment of dividends
16
<PAGE>
and other distributions on the ex-dividend date and includes the effect of the
operating expenses, including advisory fees and brokerage commissions, of the
funds included in the average. The total return performance of each fund is
measured by comparing a fund's net asset value at the beginning and end of a
period, with the results being expressed as a percent change of the beginning
net asset value. For the ten-year period indicated above, there were 11 open-end
funds included in the Lipper Financial Services Funds Average. For the five-year
period indicated above, there were 15 open-end funds included in the Lipper
Financial Services Funds Average. For the three-year period indicated above,
there were 19 open-end funds included in the Lipper Financial Services Funds
Average. For the one-year period indicated above, there were 34 open-end funds
included in the Lipper Financial Services Funds Average. In each period, the
Portfolio was included in the Lipper Services Funds Average.
(6) The S&P 500 Index does not include the effect of brokerage commissions which
would be incurred by an investor who purchased the stocks included in that
index. The Lipper Stock Funds Average and the Lipper Financial Services Average
includes the effect of brokerage commissions incurred by the funds included in
the average, but excludes the impact of any taxes and sales charges incurred by
the shareholders.
The composition of the S&P 500 Index, which includes a broad selection of
companies in diverse industries, differs from the composition, during the
periods shown above, of the investments of the Portfolio which consisted
primarily of stocks of companies principally engaged in financial services.
During various periods, the performance of the stocks for companies engaged in
financial services may be greater than, less than or comparable to the composite
performance of a broad selection of stocks of companies engaged in diverse and
unrelated industries. For the periods shown above, the performance of stocks of
financial services companies exceeded that of the stock market generally.
However, during prior periods, financial services stocks have under performanced
the market and may also do so during future periods.
USE OF PROCEEDS
The proceeds of this initial public offering are estimated at
$_____________ ($____________ if the Underwriters' overallotment option is
exercised in full) before payment of organizational and offering expenses
(estimated at $________ and $__________, respectively). The proceeds will be
invested in accordance with the Fund's investment objective and policies during
a period not to exceed six months from the closing of the initial public
offering. Pending such investment, the proceeds may be invested in U.S.
dollar-denominated, high quality, short-term instruments. A portion of the
Fund's organizational and offering expenses has been advanced by INVESCO and
will be repaid by the Fund upon completion of the initial public offering. There
is no sales load or underwriting discount imposed on sales of Shares in the
initial public offering. INVESCO or its affiliate (not the Fund) will pay a
commission from its own assets to the Underwriters in connection with sales of
Shares in this offering. See "Underwriting."
INVESTMENT OBJECTIVE AND POLICIES
The Fund's investment objective is long-term capital appreciation. The
Fund is designed for investors seeking to participate in the potential global
growth of companies engaged in financial services. The Fund's investment
objective cannot be changed without approval by the holders of a majority (as
defined in the Investment Company Act) of the Fund's outstanding voting
securities. The investment and other policies of the Fund (other than policies
which are designated as "fundamental") may be changed by the Board of Trustees.
The Fund seeks to achieve its objective by investing substantially all
of its assets in equity and related securities of U.S. and foreign companies
principally engaged in creating, providing, developing or distributing financial
17
<PAGE>
services ("Financial Services Companies"). INVESCO believes that the securities
of Financial Services Companies offer the potential for long-term capital
appreciation based upon positive trends and developing conditions in the global
market for Financial Services Companies.
In the view of INVESCO, these trends combine to make Financial Services
Companies an attractive investment opportunity for investors seeking long-term
capital appreciation through investment in a particular sector. An investment in
the Fund should not itself be considered a balanced investment program and is
not intended to provide diversification as a more complete investment program
would. No assurance can be given that the Fund will achieve its investment
objective.
Financial Services Companies include banks, savings institutions,
brokerage firms, investment management companies, finance companies, leasing
companies, insurance companies, holding companies of the foregoing, and
companies that provide related services to such companies.
Banks and savings institutions provide services to customers such as
demand, savings and time deposit accounts and a variety of lending and related
services. Brokerage firms provide services to customers in connection with the
purchase and sale of securities. Investment management companies provide
investment advisory and related services to retail customers, high net-worth
individuals and institutions. Finance companies provide consumer or commercial
financing, such as commercial revolving credit to dealers, manufacturers or
distributors and consumer revolving credit. Leasing companies are involved in a
variety of tax-advantaged investment activities, such as advising on or
investing in leases for commercial aircraft or major industrial and power
production equipment. Insurance companies provide a wide range of commercial,
life, health, disability, personal property and casualty insurance products and
services to businesses, governmental units, associations and individuals.
Under normal market conditions, at least 80% of the Fund's total assets
will be invested in equity and related securities of Financial Services
Companies. The principal industry groups of Financial Services Companies include
banks, savings and loan associations, brokerage firms, investment management
companies, finance companies, leasing companies, insurance companies, holding
companies of the foregoing and companies that provide related services to such
companies. The Fund expects to invest in Financial Services Companies both in
large, well-developed capital and financial markets, such as in the United
States and Western Europe, as well as Financial Services Companies in countries
with emerging capital and financial markets.
The Fund will seek investment opportunities on a global basis by
investing in securities of foreign issuers and securities traded in foreign
markets ("foreign securities") as well as in securities of U.S. issuers in the
United States. Under normal market conditions, the Fund will invest at least 65%
of its total assets in issuers that are organized under the laws of, or that
maintain their principal business operations in, at least three countries, one
of which is expected to be the United States. However, there is no requirement
that any specific percentage of the Fund's assets be invested in companies
located in any specific country. Investments in foreign securities involve
certain risks not necessarily associated with investments in U.S. companies. See
"Risk Factors and Special Considerations - Foreign Securities."
A company will be considered a Financial Services Company if INVESCO
determines that the company derives more than 50% of its gross income from the
provision of financial or related services, or that the company dedicates more
than 50% of its assets to the production of revenues from the financial services
industry. If, based on available information, a question exists whether a
company meets one of these standards, INVESCO may determine that the company is
a Financial Services Company.
18
<PAGE>
Up to 20% of the Fund's total assets may be invested, in the aggregate,
in: equity and related securities of companies other than Financial Services
Companies; non-convertible debt securities of Financial Services Companies that
are not acquired as units together with equity securities; debt securities of
companies other than Financial Services Companies; and high grade U.S.
dollar-denominated money market instruments having maturities of one year or
less. The non-convertible debt securities of Financial Services Companies and
debt securities of non-Financial Services Companies may include debt securities
that have been rated below investment grade by a nationally recognized rating
agency such as Standard & Poor's, a division of The McGraw-Hill Companies, Inc.
("S&P"), or Moody's Investor Services, Inc. ("Moody's") or that are unrated and
are considered by INVESCO to be of comparable quality. Such lower grade debt
securities are commonly known as "junk bonds." See "Risk Factors and Special
Considerations - Lower Grade Securities."
The Fund may invest up to 25% of its total assets in securities for
which there is no readily available secondary market, including securities
acquired in private placements, venture capital opportunities, joint ventures
and partnerships. See "Risk Factors and Special Considerations - Illiquid
Securities."
The Fund may utilize the technique of short selling as a means of
furthering its investment objective of capital appreciation. Short sales are
transactions in which the Fund sells a security it may not own in anticipation
of an expected decline in the price of that security. The Fund may also sell
short securities it owns to seek to hedge against potential price declines in
such securities. The Fund may utilize certain other investment practices, such
as repurchase agreements, when-issued and delayed delivery transactions, lending
portfolio securities, foreign currency and other derivative transactions. See
"Other Investment Practices."
At times, the Fund expects to utilize financial leverage through
borrowings, including the issuance of debt securities, or the issuance of
preferred shares or through other transactions, such as reverse repurchase
agreements, which have the effect of financial leverage. The Fund generally will
not utilize leverage if it anticipates that the Fund's leveraged capital
structure would result in a lower return to Shareholders than that obtainable
over time with an unleveraged capital structure. Use of financial leverage
creates an opportunity for increased capital appreciation for Shareholders but,
at the same time, creates risks, and there can be no assurance that a leveraging
strategy will be utilized or, if utilized, that a leveraging strategy will be
successful during any period in which it is employed. See "Risk Factors and
Special Considerations-Leverage."
"Equity and related securities" consist of: common, preferred and
convertible preferred stocks, whether or not voting; partnership interests;
securities having equity characteristics such as rights, warrants, and
convertible debt securities, whether or not issued by the same issuer as the
security to be issued upon conversion or exercise; non-convertible debt
securities that are acquired as units together with any of the foregoing,
whether or not transferable or separately traded; and short sale and hedge
positions relating to any of such securities.
For temporary or defensive purposes the Fund may, without limit, invest
in short-term securities issued or guaranteed by the United States Government or
one of its agencies or instrumentalities, high grade debt securities and high
grade money market instruments. See "- Portfolio Securities - Temporary or
Defensive Policy."
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INVESTMENT IN FINANCIAL SERVICES COMPANIES
INVESCO believes positive trends and developing conditions in the
global market for Financial Services Companies offer attractive investment
opportunities for investors who seek long-term capital appreciation.
INVESCO believes the primary forces driving the significant growth
potential of Financial Services Companies are:
o Demographics
o Consolidation
o Technological Innovation
o Deregulation
o Demutualization
o Globalization
DEMOGRAPHICS
Global demographic trends are generating increasing demand for
financial service products. As the world population ages, INVESCO believes that
the need for managing and preserving personal assets grows, increasing the
demand for financial services such as banking, brokerage, finance, investment
management and insurance.
INVESCO believes that individuals over the age of forty use a higher
proportion of financial services as they approach their peak earning years and
plan for retirement and wealth transfer. The consumption of financial products
and services does not end when individuals have accumulated sufficient wealth to
meet retirement and other financial needs, but continues into retirement when
individuals need insurance products to protect their wealth and health.
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The following chart illustrates the evolving demographics of people
above age 40.
PERCENTAGE OF INDIVIDUALS ABOVE AGE 40
(GRAPHIC)
[Horizontal Bar Chart Comparing Percentage of Individuals Above Age 40 in
Specified Countries or Regions in 1998 compared to Projected Percentage in
2010, Source: U.S. Census Bureau, Emerging Markets Companion, with the
Following Plot Points, in percentages:
United States
1998 40
2010 46
United Kingdom
1998 45
2010 51
Japan
1998 50
2010 60
Italy
1998 50
2010 58
Germany
1998 49
2010 60
France
1998 45
2010 52
Canada
1998 42
2010 50
Asia
1998 25
2010 33
Eurasia
1998 40
2010 44
Eastern Europe
1998 38
2010 42
Latin America
1998 24
2010 30]
The more developed countries, such as the Group of Seven ("G7")
countries, have a large and growing percentage of their population reaching age
40 and above, the age segment that INVESCO believes will be the primary
consumers of financial services. By the year 2010, the lesser-developed regions'
populations are projected to be more comparable to those of more developed
countries, such as the G7. INVESCO believes these demographic trends offer the
Fund significant investment opportunities in Financial Services Companies on a
global basis.
CONSOLIDATION
Merger and acquisition activity in the financial services industry has
been increasing significantly in the last five years. As of June 29, 1998, the
value of announced transactions worldwide has surpassed the record levels set in
1997. INVESCO expects the consolidation trend to continue as companies strive to
grow businesses, enhance earnings and increase shareholder value.
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ANNOUNCED MERGERS & ACQUISITIONS ACTIVITY IN THE FINANCIAL SERVICES SECTOR
1994-1998(1)
(GRAPHIC)
[Vertical Bar Chart Showing Announced Mergers & Acquisitions Activity in the
Financial Services Sector from the year 1994 through 1998 in terms of value,
Source: Securities Data Company, with the following plot points in billions:
1994 $134.276
1995 $264.72
1996 $197.452
1997 $511.535
1998 (YTD) $549.064]
(GRAPHIC)
[Vertical Bar Chart Showing Announced Mergers & Acquisitions Activity in the
Financial Services Sector from the year 1994 through 1998 in terms of numbers of
deals, Source: Securities Data Company, with the following plot points in deals:
1994 1,371
1995 1,406
1996 1,484
1997 2,048
1998 (YTD) 1,316]
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<PAGE>
INVESCO believes the benefits of these consolidation transactions
include:
EXPENSE SYNERGIES: Back office and data processing as well as other
administrative functions can be streamlined or eliminated. Combined
with the elimination of redundant facilities and operations, these
mergers produce efficiencies of volume and scale. The reduction in
costs creates a more competitive company that is better positioned to
withstand unanticipated dramatic changes in the industry.
REVENUE OPPORTUNITIES: Through the addition of complementary product
lines and distribution channels, the combined companies can satisfy a
broader scope of client needs, providing the potential for revenue
growth.
EXPANDED MARKETS: As a means to strengthen existing market presence
within geographic areas or access new markets, financial institutions
may acquire companies with established local business infrastructure
and customer base from which to distribute their products and services.
INVESCO also believes consolidation activity will provide opportunities
to realize attractive returns from the purchase price premiums that are
typically paid to acquire Financial Services Companies.
TECHNOLOGICAL INNOVATION
Increased productivity has resulted from technological developments in
the financial services industry. Trends toward more efficient ways to process
information have allowed institutions to reduce transaction costs and enhance
customer service. Financial institutions are continually exploring and
implementing new channels to distribute their products and services, such as by
telephone, Automatic Teller Machines ("ATM") and the Internet, which are less
expensive to operate than traditional branch networks, provide greater
convenience for clients and increase the institutions' capacity to conduct
transactions.
Technology has also enabled institutions to more effectively profile
and gather client information, allowing more efficient target-marketing of their
products and services, thereby enhancing customer profitability.
Technology has been a major contributor to the emergence of financial
services-related firms responsible for maintaining customer databases, providing
administrative functions and data processing, such as credit card processing,
on-line trading and mutual fund accounting. These companies provide additional
investment opportunities for the Fund as it becomes more cost effective for
financial product creation and distribution companies to outsource these
functions.
DEREGULATION
Recent and anticipated regulatory developments have broadened business
opportunities for Financial Services Companies. For example, in the United
States regulators continue to ease restrictions imposed by the Glass-Steagall
Act, allowing Financial Services Companies to further diversify their businesses
and revenues across sectors within the industry. In Europe, the European Union
has initiated actions to remove barriers for conducting business across borders
of member countries, creating a common market with a soon-to-be-implemented
common currency, further promoting an integrated European financial services
market. In Japan, the Ministry of Finance has announced sweeping changes to its
laws relating to Financial Services Companies.
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<PAGE>
INVESCO also believes the demand for certain financial services
products will be enhanced as a result of trends in government-sponsored pension
and retirement programs throughout the world. These trends are oriented toward
mandatory contribution requirements, the liberalization of retirement fund
investment parameters and the shift from defined benefit to defined contribution
plans. For example, in Latin America, Chile pioneered changes in its
government-sponsored pension system, which are being adopted in various forms by
other countries, including Argentina, Brazil and Mexico.
DEMUTUALIZATION.
The trend toward demutualization has been in effect for over a decade.
While savings and loan depository institutions began transferring ownership from
depositors to public shareholders in the 1980s through mutual-to-stock
conversions, the most recent wave of demutualization is the transference of
ownership of insurance companies from policyholders to public shareholders. One
of the primary drivers for companies to demutualize is to increase significantly
the flexibility to grow such businesses organically and/or through acquisitions.
INVESCO believes that insurance companies undergoing the demutualization process
offer attractive valuations and that the increase in well-capitalized, strongly
positioned companies with established brand names will foster continued
consolidation in the insurance industry. Although life insurance companies in
North America currently represent approximately $160 billion in market
capitalization, INVESCO expects that $80 billion in market capitalization could
be added as a result of the demutualization process within the next two years.
GLOBALIZATION
The relaxation of international trade barriers, aided by the evolution
of technology, is facilitating increased capital flows and creating an
attractive environment for Financial Services Companies. INVESCO believes that
fragmented national markets are converging into regional blocs, creating a
single vast global market. As this global marketplace grows, Financial Services
Companies are well-positioned to expand businesses beyond traditional borders
and reach a broader more diversified client base, which helps offset the
variability of local and regional market cycles.
PORTFOLIO SECURITIES
EQUITY SECURITIES. The Fund may invest in the following types of equity
securities: common stock, preferred stock, securities convertible into common
stock, American Depository Receipts ("ADRs"), American Depository Shares
("ADSs"), European Depository Receipts ("EDRs"), rights and warrants to acquire
such securities and substantially similar forms of equity with comparable risk
characteristics. These securities may be listed on securities exchanges, traded
in various over-the-counter ("OTC") markets, have no organized market, or be
contractually or legally restricted as to transfer.
COMMON STOCK. Common stocks are shares of a corporation or other entity
that entitle the holder to a pro rata share of the profits, if any, of the
corporation, without preference over any other shareholder or class of
shareholders, after making required payments to holders of such entity's
preferred stock and other senior equity. Common stock usually carries with it
the right to vote and frequently an exclusive right to do so.
PREFERRED STOCK. Preferred stock generally has a preference as to
dividends and upon liquidation over an issuer's common stock but ranks junior to
debt securities in an issuer's capital structure. Preferred stock generally pays
dividends in cash (or additional shares of preferred stock) at a defined rate
but, unlike interest payments on debt securities, preferred stock dividends are
payable only if declared by the issuer's board of directors. Dividends on
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<PAGE>
preferred stock may be cumulative, meaning that, in the event the issuer fails
to make one or more dividend payments on the preferred stock, no dividends may
be paid on the issuer's common stock until all unpaid preferred stock dividends
have been paid. Preferred stock also may be subject to optional or mandatory
redemption provisions.
CONVERTIBLE SECURITIES. Convertible securities may be converted at
either a stated price or stated rate into underlying shares of common stock.
Convertible securities have characteristics similar to both fixed-income and
equity securities. Convertible securities generally are subordinated to other
similar but non-convertible securities of the same issuer, although convertible
bonds, as corporate debt obligations, enjoy seniority in right of payment to all
equity securities, and convertible preferred stock is senior to shares of common
stock, of the same issuer. Because of the subordination feature, however,
convertible securities typically have lower ratings than similar non-convertible
securities.
Although to a lesser extent than with fixed-income securities, the
market value of convertible securities tends to decline as interest rates
increase and, conversely, tends to increase as interest rates decline. In
addition, because of the conversion feature, the market value of convertible
securities tends to vary with fluctuations in the market value of the underlying
common stock. A unique feature of convertible securities is that as the market
price of the underlying common stock declines, convertible securities tend to
trade increasingly on a yield basis, and so may not experience market value
declines to the same extent as the underlying common stock. When the market
price of the underlying common stock increases, the prices of the convertible
securities tend to rise as a reflection of the value of the underlying common
stock. While no securities investments are without risk, investments in
convertible securities generally entail less risk than investments in common
stock of the same issuer.
Convertible securities are investments that provide for a stable stream
of income with generally higher yields than common stock. There can be no
assurance of current income because the issuers of the convertible securities
may default on their obligations. A convertible security, in addition to
providing fixed income, offers the potential for capital growth through the
conversion feature, which enables the holder to benefit from increases in the
market price of the underlying common stock. There can be no assurance of
capital growth, however, because securities prices fluctuate. Convertible
securities, however, generally offer lower interest or dividend yields than
non-convertible securities of similar quality because of the potential for
capital growth.
FOREIGN SECURITIES. The Fund may invest without limitation in
securities of issuers domiciled outside the United States or that are
denominated in various foreign currencies and multinational foreign currency
units. Foreign securities markets generally are not as developed or efficient as
those in the United States. Securities of some foreign issuers are less liquid
and more volatile than securities of comparable U.S. issuers. Similarly, volume
and liquidity in most foreign securities markets are less than in the United
States and, at times, volatility of price can be greater than in the United
States.
Because evidence of ownership of such securities usually are held
outside the United States, the Fund will be subject to additional risks that
include possible adverse political and economic developments, seizure or
nationalization of foreign deposits and adoption of governmental restrictions,
which might adversely affect or restrict the payment of principal and interest
on the foreign securities to investors located outside the country of the
issuer, whether from currency blockage or otherwise.
Developing countries have economic structures that are generally less
diverse and mature, and political systems that are less stable, than those of
developed countries. The markets of developing countries may be more volatile
than the markets of more mature economies; however, such markets may provide
higher rates of return to investors. Many developing countries providing
25
<PAGE>
investment opportunities for the Fund have experienced substantial, and in some
periods extremely high, rates of inflation for many years. Inflation and rapid
fluctuations in inflation rates have had and may continue to have adverse
effects on the economies and securities markets of certain of these countries.
Since foreign securities often are purchased with and payable in
currencies of foreign countries, the value of these assets as measured in U.S.
dollars may be affected favorably or unfavorably by changes in currency rates
and exchange control regulations. The Fund may engage in certain transactions to
seek to hedge the currency-related risks of investing in non-U.S. dollar
denominated securities. See "Other Investment Practices" and "Risk Factors and
Special Considerations - Foreign Securities."
DEPOSITORY RECEIPTS. The Fund may hold securities of foreign issuers in
the form of ADRs, ADSs and EDRs or other securities convertible into securities
of eligible foreign issuers. These securities may not necessarily be denominated
in the same currency as the securities for which they may be exchanged. ADRs and
ADSs are typically issued by an American bank or trust company and evidence
ownership of underlying securities issued by a foreign corporation. EDRs, which
are sometimes referred to as Continental Depository Receipts ("CDRs"), are
issued in Europe typically by foreign banks and trust companies and evidence
ownership of either foreign or domestic securities. Generally, ADRs and ADSs in
registered form are designed for use in U.S. markets and EDRs in bearer form are
designed for use in European securities markets. For purposes of the Fund's
investment policies, ADRs, ADSs and EDRs will be deemed to be investments in the
equity securities representing securities of foreign issuers into which they may
be converted.
ADR facilities may be established as either "unsponsored" or
"sponsored." While ADRs issued under these two types of facilities are in some
respects similar, there are distinctions between them relating to the rights and
obligations of ADR holders and the practices of market participants. A
depository may establish an unsponsored facility without participation by (or
even necessarily the acquiescence of) the issuer of the deposited securities,
although typically the depository requests a letter of non-objection from such
issuer prior to the establishment of the facility. Holders of unsponsored ADRs
generally bear all the costs of such facilities. The depository usually charges
fees upon the deposit and withdrawal of the deposited securities, the conversion
of dividends into U.S. dollars, the disposition of non-cash distributions, and
the performance of other services. The depository of an unsponsored facility
frequently is under no obligation to distribute shareholder communications
received from the issuer of deposited securities or to pass through voting
rights to ADR holders in respect of the deposited securities. Sponsored ADR
facilities are created in generally the same manner as unsponsored facilities,
except that the issuer of the deposited securities enters into a deposit
agreement with the depository. The deposit agreement sets out the rights and
responsibilities of the issuer, the depository and the ADR holders. With
sponsored facilities, the issuer of the deposited securities generally will bear
some of the costs relating to the facility (such as dividend payment fees of the
depository), although ADR holders continue to bear certain other costs (such as
deposit and withdrawal fees). Under the terms of most sponsored arrangements,
depositories agree to distribute notices of shareholder meetings and voting
instructions and to provide shareholder communications and other information to
the holders at the request of the issuer of the deposited securities. The Fund
may invest in both sponsored and unsponsored ADRs.
WARRANTS OR RIGHTS. Warrants or rights may be acquired by the Fund in
connection with other securities or separately, and provide the Fund with the
right to purchase at a later date other securities of the issuer.
LOWER GRADE SECURITIES. Under normal market conditions, the Fund may
invest up to 20% of its total assets, in the aggregate, in non-convertible debt
securities of Financial Services Companies that are not acquired as units
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<PAGE>
together with equity securities and in debt securities of companies other than
Financial Services Companies. Such debt securities may be rated below investment
grade quality (lower than Baa by Moody's or lower than BBB by S&P or comparably
rated by another rating agency) or may be unrated debt securities that INVESCO
determines to be of comparable quality. Securities rated Ba by Moody's are
judged to have speculative elements; their future cannot be considered as well
assured and often the protection of interest and principal payments may be very
moderate. Securities rated BB by S&P are regarded as having predominantly
speculative characteristics and, while such obligations have less near-term
vulnerability to default than other speculative grade debt, in the opinion of
S&P they face major ongoing uncertainties or exposure to adverse business,
financial or economic conditions which could lead to inadequate capacity to meet
timely interest and principal payments. Securities rated C by Moody's are
regarded by Moody's as having extremely poor prospects of ever attaining any
real investment standing. See "Risk Factors and Special Considerations - Lower
Grade Securities."
TEMPORARY OR DEFENSIVE POLICY. For temporary purposes, and when in
INVESCO's judgment conditions in the securities markets generally or in the
market for the securities of Financial Services Companies, would make
achievement of the Fund's investment objective impracticable, the Fund may
assume a defensive investment position. During these periods, the Fund may
without limit invest in U.S. dollar-denominated, high grade money market
instruments rated or, if unrated, in INVESCO's opinion comparable to instruments
rated, in the top three rating categories utilized by at least one nationally
recognized statistical rating organization and having maturities at the time of
purchase of one year or less, including securities issued or guaranteed by the
United States Government or one of its agencies or instrumentalities ("U.S.
Government Securities"), certificates of deposit, bankers' acceptances,
commercial paper, short-term corporate securities, and repurchase agreements
with respect to any of the foregoing. While the Fund is in a defensive position,
the opportunity to achieve capital appreciation will be limited, and, to the
extent that INVESCO's assessment of market conditions is incorrect, the Fund
will be foregoing the opportunity to benefit from capital appreciation resulting
from increases in the value of equity investments; however, the ability to
maintain a defensive investment position provides the flexibility for the Fund
to seek to avoid capital loss during market downturns. It is impossible to
predict when, or for how long, any such investment position will be maintained.
OTHER INVESTMENT PRACTICES
The Fund may utilize other investment practices and portfolio
management techniques as set forth below.
LEVERAGE. At times, the Fund expects to utilize leverage through
borrowings or issuance of debt securities or preferred shares. Currently, the
Fund has not determined the timing or amount of any financial leverage that it
would utilize. The Fund generally will not utilize leverage if it anticipates
that the Fund's leveraged capital structure would result in a lower return to
holders of the Shares than that obtainable if the Shares were unleveraged for
any significant amount of time. The Fund also may borrow money as a temporary
measure for extraordinary or emergency purposes, including the payment of
dividends and the settlement of securities transactions which otherwise may
require untimely dispositions of Fund securities.
Leverage creates risks for holders of the Shares, including the
likelihood of greater volatility of net asset value and market price of the
Shares, and the risk that fluctuations in interest rates on borrowings or in the
dividend rates on any preferred shares may affect the return to the holders of
the Shares. To the extent the capital appreciation, if any, or any income
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<PAGE>
derived from securities purchased with funds received from leverage exceeds the
cost of leverage, the Fund's return will be greater than if leverage had not
been used. Conversely, if the capital appreciation, if any, or any income from
the securities purchased with such funds is not sufficient to cover the cost of
leverage, the return on the Fund will be less than if leverage had not been
used, and therefore the amount available for distribution to Shareholders as
dividends and other distributions will be reduced. In the latter case, INVESCO
in its best judgment nevertheless may determine to maintain the Fund's leveraged
position if it deems such action to be appropriate under the circumstances. As
discussed under "Management of the Fund," the fee paid to INVESCO will be
calculated on the basis of the Fund's assets including proceeds from borrowings
for leverage and the issuance of preferred shares.
Capital raised through leverage will be subject to interest costs or
dividend payments which may exceed any capital appreciation or income earned on
the assets purchased with such capital. The Fund also may be required to
maintain minimum average balances in connection with borrowings or to pay a
commitment or other fee to maintain a line of credit; either of these
requirements will increase the cost of borrowing over the stated interest rate.
The issuance of additional classes of preferred shares involves offering
expenses and other costs and may limit the Fund's freedom to pay dividends on
Shares or to engage in other activities. Borrowings and the issuance of a class
of preferred shares having priority over the Fund's Shares create an opportunity
for greater return per Share, but at the same time such leveraging is a
speculative technique in that it will increase the Fund's exposure to capital
risk. Unless the income and appreciation, if any, on assets acquired with
borrowed funds or preferred shares offering proceeds exceed the cost of
borrowing or dividends on preferred securities, the use of leverage will
diminish the investment performance of the Fund compared with what it would have
been without leverage.
Certain types of borrowings may result in the Fund being subject to
covenants in credit agreements relating to asset coverage and portfolio
composition requirements. The Fund may be subject to certain restrictions on
investments imposed by guidelines of one or more rating agencies which may issue
ratings for the corporate debt securities or preferred shares issued by the
Fund. These guidelines may impose asset coverage or portfolio composition
requirements that are more stringent than those imposed by the Investment
Company Act. It is not anticipated that these covenants or guidelines will
impede INVESCO from managing the Fund's portfolio in accordance with the Fund's
investment objectives and policies.
Under the Investment Company Act, the Fund is not permitted to incur
indebtedness unless immediately after such incurrence the Fund has an asset
coverage of at least 300% of the aggregate outstanding principal balance of
indebtedness (I.E., such indebtedness may not exceed 33-1/3% of the Fund's total
assets, including the amount borrowed). Additionally, under the Investment
Company Act, the Fund may not declare any dividend or other distribution upon
any class of its capital shares, or purchase any such capital shares, unless the
aggregate indebtedness of the Fund has, at the time of the declaration of any
such dividend or distribution or at the time of any such purchase, an asset
coverage of at least 300% after deducting the amount of such dividend,
distribution, or purchase price, as the case may be. Under the Investment
Company Act, the Fund is not permitted to issue preferred shares unless
immediately after such issuance the net asset value of the Fund's portfolio is
at least 200% of the liquidation value of the outstanding preferred shares
(I.E., such liquidation value may not exceed 50% of the Fund's total assets,
including the amount attributable to the preferred shares). In addition, the
Fund is not permitted to declare any cash dividend or other distribution on its
Shares unless, at the time of such declaration, the net asset value of the
Fund's portfolio (determined after deducting the amount of such dividend or
other distribution) is at least 200% of such liquidation value. If preferred
shares are issued, the Fund intends, to the extent possible, to purchase or
redeem preferred shares from time to time to maintain coverage of any preferred
shares of at least 200%. In addition, during any period when preferred shares
are outstanding, the Investment Company Act would require that two of the Fund's
Trustees be elected by the holders of the preferred shares, voting separately as
a class, and that during any period in which the Fund were in arrears in an
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<PAGE>
amount equal to two full years' dividends on such preferred shares, a majority
of the Fund's Trustees be so elected.
The Fund's willingness to borrow money and issue new securities for
investment purposes, and the amount the Fund will borrow or issue, will depend
on many factors, the most important of which are investment outlook, market
conditions and costs of leverage. Successful use of a leveraging strategy
depends on INVESCO's ability to predict correctly the costs of leverage and
market movements, and there is no assurance that a leveraging strategy will be
successful during any period in which it is employed.
The Fund has the authority to utilize financial leverage and expects
that it may do so from time to time in the future. Currently, however, the Fund
has not determined the timing or amount of financial leverage that it would
utilize. Assuming the utilization of leverage by borrowings in the amount of
approximately 25% of the Fund's total assets, and an annual interest rate of
6.00% payable on such leverage based on market rates as of the date of this
Prospectus, the annual return that the Fund's portfolio must experience (net of
expenses) in order to cover such interest payments would be 2.00%.
The following table is designed to illustrate the effect on the return
to a holder of the Fund's Shares of the leverage obtained, for example, by
borrowings in the amount of approximately 25% of the Fund's total assets,
assuming hypothetical annual returns of the Fund's portfolio of minus 10% to
plus 10%. As the table shows, the leverage generally increases the return to
Shareholders when portfolio return is positive and greater than the cost of
leverage and decreases the return when the portfolio return is negative or less
than the cost of leverage. The figures appearing in the table are hypothetical
and actual returns may be greater or less than those appearing in the table.
Assumed Portfolio Return (net of expenses) (10)% (5) 0 % 5% 10%
Corresponding Share Return (15)% (9)% (2)% 5% 11%
Until the Fund borrows or issues preferred shares, the Fund's Shares
will not be leveraged, and the risks and special considerations related to
leverage described in this Prospectus will not apply. Such leveraging of the
Shares cannot be fully achieved until the proceeds resulting from the use of
leverage have been invested in longer-term instruments in accordance with the
Fund's investment objective and policies.
SHORT SALES. In furtherance of its objective of capital appreciation,
the Fund may effect short sales of any securities that it has authority to
purchase. Short sales are transactions in which the Fund sells a security it may
not own in anticipation of an expected decline in the price of that security. In
such a transaction, the Fund must borrow the security to make delivery to the
buyer. The Fund is obligated to replace the borrowed security and may realize a
gain if it purchases the security for replacement at a lower price. However, the
price at which the Fund purchases the security may be more or less than the
price at which the security was sold. The Fund will incur a loss as a result of
a short sale if the cost of purchasing the borrowed security, and transaction
and carrying costs associated with the short sale, are more than the amount
realized from the short sale. Although the Fund's potential for gain as a result
of a short sale is limited to the price at which it sold the security short less
the cost of borrowing the security, its potential for loss is theoretically
unlimited because there is no limit to the cost of replacing the borrowed
security. The fund may also sell short securities it owns to seek to hedge
against potential price declines in such securities.
If the Fund borrows a security in order to enter into a short sale, the
proceeds of the short sale will be retained by a broker, as security for the
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<PAGE>
borrowing to the extent necessary to meet margin requirements, until the short
position is closed out. The Fund is also required to pay to the lender of the
security the amount of any dividends or interest paid on the borrowed security.
To borrow the security, the Fund also may be required to pay a premium, which
would increase the cost of the security sold short. The amount of any gain will
be decreased, and the amount of any loss increased, by the amount of any premium
or dividends or interest paid on the borrowed security that the Fund may be
required to pay in connection with the short sale.
A short sale "against the box" is a transaction in which the Fund
enters into a short sale of a security that the Fund owns or has the right to
acquire at no additional cost. The proceeds of the short sale are held by a
broker until the Fund delivers the security to close the short position, at
which time the Fund will receive the net proceeds from the sale. The Fund
generally will be required to recognize any gain, but may not recognize any
loss, with respect to the security sold short at the time it enters into the
short sale "against the box" even though the Fund will not receive the net
proceeds form the sale until it delivers the security to close the short
position. See "Taxation."
When the Fund engages in short sales other than "against the box," the
Fund will "cover" its position in one of two ways. The Fund may cover by holding
a call option on the security sold short having a strike price no higher than
the price at which the security was sold. Alternatively, the Fund may maintain
in an account with its custodian a segregated amount of cash or U.S. Government
Securities equal to the excess of (1) the market value of the securities sold
short at the time they were sold short, over (2) any cash or U.S. Government
Securities required by the broker to be deposited as collateral in connection
with the short sale (not including the proceeds from the short sale). Until the
borrowed security is replaced, the Fund will maintain this account at a level so
that the amount deposited in the account, plus the collateral deposited with the
broker, will equal the current market value of the securities sold short, but
not less than the market value of the securities at the time they were sold
short.
LOANS OF PORTFOLIO SECURITIES. In an attempt to make productive use of
its assets, the Fund may lend its portfolio securities, subject to the
limitation that the Fund will not lend a security if, as a result of such loan,
all securities then subject to loans would exceed 33-1/3% of the Fund's total
assets. Under applicable regulatory requirements (which are subject to change),
the loan collateral must, on each business day, be at least equal to the value
of the loaned securities and must consist of cash, bank letters of credit or
U.S. Government Securities. To be acceptable as collateral, letters of credit
must obligate a bank to pay amounts demanded by the Fund if the demand meets the
terms of the letter. Such terms and the issuing bank must be satisfactory to the
Fund. When the Fund lends a security, it continues to be entitled to receive any
dividends or interest on the loaned security and also receives one or more of:
(i) a negotiated loan fee; (ii) interest on securities used as collateral for
the loan; or (iii) interest on short-term debt securities purchased with the
loan collateral. Either type of interest may be shared with the borrower of the
security. The Fund may also pay reasonable finder's, custodian and
administrative fees. The terms of the Fund's loans of securities must meet
certain tests under the Internal Revenue Code of 1986, as amended ("Code"), and
permit the Fund to reacquire loaned securities on five days' notice or in time
to vote on any important matter. The Fund will make such loans only to banks and
dealers deemed to be creditworthy pursuant to guidelines adopted by the Board of
Trustees. If the borrower fails to return the loaned security, the Fund's risks
include: (1) any costs in disposing of the collateral; (2) loss from a decline
in value of the collateral to an amount less than 100% of the securities loaned;
(3) being unable to exercise its voting or consent rights with respect to the
security; (4) any loss arising from the Fund being unable to settle a sale of
such securities in a timely manner; and (5) the inability of the Fund to
reacquire the loaned securities.
ILLIQUID SECURITIES. When purchasing securities that have not been
registered under the Securities Act of 1933, as amended, and are not readily
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marketable, the Fund may endeavor, to the extent practicable, to obtain the
right to registration at the expense of the issuer. Generally, there will be a
lapse of time between the Fund's decision to sell any such security and the
registration of the security permitting sale. During any such period, the price
of the securities will be subject to market fluctuations. However, where a
substantial market of qualified institutional buyers has developed for certain
unregistered securities purchased by the Fund pursuant to Rule 144A under the
Securities Act of 1933, as amended, the Fund intends to treat such securities as
liquid securities in accordance with procedures approved by the Fund's Board of
Trustees. Because it is not possible to predict with assurance how the market
for specific restricted securities sold pursuant to Rule 144A will develop, the
Fund's Board has directed INVESCO to monitor carefully the Fund's investments in
such securities with particular regard to trading activity, availability of
reliable price information and other relevant information. To the extent that,
for a period of time, qualified institutional buyers cease purchasing restricted
securities pursuant to Rule 144A, the Fund's investing in such securities may
have the effect of increasing the level of illiquidity in its investment
portfolio during such period.
With respect to liquidity determinations generally, the Fund's Board of
Trustees has the ultimate responsibility for determining whether specific
securities, including restricted securities, are liquid or illiquid. The Board
has delegated the function of making determinations of liquidity to INVESCO, in
accordance with procedures approved by the Board. INVESCO takes into account a
number of factors in making liquidity determinations, including, but not limited
to, (i) the frequency of trading in the security; (ii) the number of dealers
that make quotes for the security; (iii) the number of dealers that have
undertaken to make a market in the security; (iv) the number of other potential
purchasers; and (v) the nature of the security and how trading is effected
(E.G., the time needed to sell the security, how offers are solicited and the
mechanics of transfer.) INVESCO monitors the liquidity of securities held by the
Fund and periodically reports such determinations to the Fund's Board of
Trustees. If the Fund's percentage limitation on illiquid securities is
satisfied at the time of an investment, a later increase in the percentage of
illiquid securities held by the Fund resulting from a change in market value or
assets will not constitute a violation of the restriction. If as a result of a
change in market value or assets, the percentage of illiquid securities held by
the Fund increases above 25%, INVESCO will take appropriate steps to bring the
aggregate amount of illiquid assets back within the prescribed limitation as
soon as reasonably practicable, taking into account the effect of any
disposition on the Fund.
DERIVATIVES. The Fund may invest in, or use, derivatives
("Derivatives"). These are financial instruments that derive their performance,
at least in part, from the performance of an underlying asset, index or interest
rate. The Derivatives the Fund may use include options, futures contracts,
forward currency contracts and swaps. The Fund may invest in, or enter into,
Derivatives for a variety of reasons, including to seek to hedge certain market
risks, including currency risk, provide a substitute for purchasing or selling
particular securities, or increase potential income or gain. Derivatives may
provide a cheaper, quicker or more specifically focused way for the Fund to
invest than "traditional" securities would.
Derivatives can be volatile and involve various types and degrees of
risk, depending upon the characteristics of the particular Derivative and the
portfolio as a whole. Derivatives permit the Fund to increase or decrease the
level of risk, or change the character of the risk, to which its portfolio is
exposed in much the same way as the Fund can increase or decrease the level of
risk, or change the character of the risk, of its portfolio by purchasing or
selling specific securities.
Derivatives may entail investment exposures that are greater than their
cost would suggest, meaning that a small investment in Derivatives could have a
large potential impact on the Fund's performance.
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If the Fund invests in Derivatives at inopportune times or judges
market conditions incorrectly, such investments may lower the Fund's return or
result in a loss. The Fund also could experience losses if its Derivatives were
poorly correlated with its other investments, or if the Fund were unable to
liquidate its position because of an illiquid secondary market. The market for
many Derivatives is, or suddenly can become, illiquid. Changes in liquidity may
result in significant, rapid and unpredictable changes in the prices for
Derivatives.
Derivatives may be purchased on established exchanges or through
privately negotiated transactions referred to as over-the-counter Derivatives.
Exchange-traded Derivatives generally are guaranteed by the clearing agency that
is the issuer or counterparty to such Derivatives. This guarantee usually is
supported by a daily payment system (i.e., variation margin requirements)
operated by the clearing agency in order to reduce overall credit risk. As a
result, unless the clearing agency defaults, there is relatively little
counterparty credit risk associated with Derivatives purchased on an exchange.
By contrast, no clearing agency guarantees over-the-counter Derivatives.
Therefore, each party to an over-the-counter Derivative bears the risk that the
counterparty will default. Accordingly, INVESCO will consider the
creditworthiness of counterparties to over-the-counter Derivatives in the same
manner as it would review the credit quality of a security to be purchased by
the Fund. Over-the-counter Derivatives are less liquid than exchange-traded
Derivatives since the other party to the transaction may be the only investor
with sufficient understanding of the Derivative to be interested in bidding for
it.
FUTURES AND OPTIONS ON FUTURES TRANSACTIONS - IN GENERAL. The Fund may
enter into futures contracts and options on futures contracts in U.S. domestic
markets, such as the Chicago Board of Trade and the International Monetary
Market of the Chicago Mercantile Exchange or on exchanges located outside the
United States, such as the London International Financial Futures Exchange and
the Sydney Futures Exchange Limited. Foreign markets may offer advantages such
as trading opportunities or arbitrage possibilities not available in the United
States. Foreign markets, however, may have greater risk potential than domestic
markets. For example, some foreign exchanges are principal markets so that no
common clearing facility exists and an investor may look only to the broker for
performance of the contract. In addition, any profits that the Fund might
realize in trading could be eliminated by adverse changes in the exchange rate,
or the Fund could incur losses as a result of those changes. Transactions on
foreign exchanges may include both commodities which are traded on domestic
exchanges and those that are not. Unlike trading on domestic commodity
exchanges, trading on foreign commodity exchanges is not regulated by the
Commodity Futures Trading Commission ("CFTC").
Engaging in these transactions involves risk of loss to the Fund that
could adversely affect the value of the Fund's net assets. Although the Fund
intends to purchase or sell futures contracts and options thereon only if there
is an active market for such contracts, no assurance can be given that a liquid
market will exist for any particular contract at any particular time. Many
futures exchanges and boards of trade limit the amount of fluctuation permitted
in futures contract or option prices during a single trading day. Once the daily
limit has been reached in a particular contract, no trades may be made that day
at a price beyond that limit or trading may be suspended for specified periods
during the trading day. Futures contract or option prices could move to the
limit for several consecutive trading days with little or no trading, thereby
preventing prompt liquidation of futures or option positions and potentially
subjecting the Fund to substantial losses. Successful use of futures and options
on futures by the Fund also is subject to the ability of INVESCO to predict
correctly movements in the direction of the relevant market and, to the extent
the transaction is entered into for hedging purposes, to ascertain the
appropriate correlation between the transaction being hedged and the price
movements of the futures contract or option thereon. For example, if the Fund
uses futures to hedge against the possibility of a decline in the market value
of securities held in its portfolio and the prices of such securities instead
increase, the Fund will lose part or all of the benefit of the increased value
of securities that it has hedged because it will have offsetting losses in its
futures positions. Furthermore, if in such circumstances the Fund has
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insufficient cash, it may have to sell securities to meet daily variation margin
requirements. The Fund may have to sell such securities at a time when it may be
disadvantageous to do so.
Pursuant to regulations and/or published positions of the Securities
and Exchange Commission, the Fund may be required to segregate cash or other
liquid assets in connection with its futures and options on futures transactions
in an amount generally equal to the value of the underlying commodity. The
segregation of such assets will have the effect of limiting the Fund's ability
otherwise to invest those assets.
To the extent that the Fund enters into futures contracts, options on
futures contracts and options on foreign currencies traded on a CFTC-regulated
exchange, that are not for bona fide hedging purposes (as defined by the CFTC),
the aggregate initial margin and premiums required to establish these positions
(excluding the amount by which options are "in-the-money" at the time of
purchase) may not exceed 5% of the liquidation value of the Fund's portfolio,
after taking into account unrealized profits and unrealized losses on any
contracts the Fund has entered into. (In general, a call option on a futures
contract is "in-the-money" if the value of the underlying futures contract
exceeds the exercise ("strike") price of the call; a put option on a futures
contract is "in-the-money" if the value of the underlying futures contract is
exceeded by the strike price of the put.) This policy does not limit to 5% the
percentage of the Fund's assets that are at risk in futures contracts, options
on futures contracts and currency options.
FORWARD CURRENCY CONTRACTS. The Fund may enter into forward currency
contracts to purchase or sell foreign currencies for a fixed amount of U.S.
dollars or another foreign currency. A forward currency contract involves an
obligation to purchase or sell a specific currency at a future date, which may
be any fixed number of days (term) from the date of the forward currency
contract agreed upon by the parties, at a price set at the time the forward
currency contract is entered into. Forward currency contracts are traded
directly between currency traders (usually large commercial banks) and their
customers.
The Fund may purchase a forward currency contract to lock in the U.S.
dollar price of a security denominated in a foreign currency that the Fund
intends to acquire. The Fund may sell a forward currency contract to lock in the
U.S. dollar equivalent of the proceeds from the anticipated sale of a security
or a dividend or interest payment denominated in a foreign currency. The Fund
may also use forward currency contracts to shift the Fund's exposure to foreign
currency exchange rate changes from one currency to another. For example, if the
Fund owns securities denominated in a foreign currency and INVESCO believes that
currency will decline relative to another currency, it might enter into a
forward currency contract to sell the appropriate amount of the first foreign
currency with payment to be made in the second currency. The Fund may also
purchase forward currency contracts to enhance income when INVESCO anticipates
that the foreign currency will appreciate in value but securities denominated in
that currency do not present attractive investment opportunities.
The Fund may also use forward currency contracts to hedge against a
decline in the value of existing investments denominated in foreign currency.
Such a hedge would tend to offset both positive and negative currency
fluctuations, but would not offset changes in security values caused by other
factors. The Fund could also hedge the position by entering into a forward
currency contract to sell another currency expected to perform similarly to the
currency in which the Fund's existing investments are denominated. This type of
hedge could offer advantages in terms of cost, yield or efficiency, but may not
hedge currency exposure as effectively as a simple hedge into U.S. dollars. This
type of hedge may result in losses if the currency used to hedge does not
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perform similarly to the currency in which the hedged securities are
denominated.
The Fund may also use forward currency contracts in one currency or a
basket of currencies to attempt to hedge against fluctuations in the value of
securities denominated in a different currency if INVESCO anticipates that there
will be a correlation between the two currencies.
The cost to the Fund of engaging in forward currency contracts varies
with factors such as the currency 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. When the Fund enters into a forward currency contract, it relies on
the counterparty to make or take delivery of the underlying currency at the
maturity of the contract. Failure by the counterparty to do so would result in
the loss of some or all of any expected benefit of the transaction.
Secondary markets generally do not exist for forward currency
contracts, with the result that closing transactions generally can be made for
forward currency contracts only by negotiating directly with the counterparty.
Thus, there can be no assurance that the Fund will in fact be able to close out
a forward currency contract at a favorable price prior to maturity. In addition,
in the event of insolvency of the counterparty, the Fund might be unable to
close out a forward currency contract. In either event, the Fund would continue
to be subject to market risk with respect to the position, and would continue to
be required to maintain a position in securities denominated in the foreign
currency or to maintain cash or liquid assets in a segregated account.
The precise matching of forward currency contract amounts and the value
of the securities involved generally will not be possible because the value of
such securities, measured in the foreign currency, will change after the forward
currency contract has been established. Thus, the Fund might need to purchase or
sell foreign currencies in the spot (cash) market to the extent such foreign
currencies are not covered by forward currency contracts. The projection of
short-term currency market movements is extremely difficult, and the successful
execution of a short-term hedging strategy is highly uncertain.
OPTIONS - IN GENERAL. The Fund may purchase and write (i.e., sell) call
or put options with respect to specific securities. A call option gives the
purchaser of the option the right to buy, and obligates the writer to sell, the
underlying security or securities at the exercise price at any time during the
option period, or at a specific date. Conversely, a put option gives the
purchaser of the option the right to sell, and obligates the writer to buy, the
underlying security or securities at the exercise price at any time during the
option period, or at a specific date.
A covered call option written by the Fund is a call option with respect
to which the Fund owns the underlying security or otherwise covers the
transaction by segregating cash or other liquid assets. A put option written by
the Fund is covered when, among other things, cash or liquid assets having a
value equal to or greater than the exercise price of the option are placed in a
segregated account with the Fund's custodian to fulfill the obligation
undertaken. The principal reason for writing covered call and put options is to
realize, through the receipt of premiums, a greater return than would be
realized on the underlying securities alone. The Fund receives a premium from
writing covered call or put options which it retains whether or not the option
is exercised.
There is no assurance that sufficient trading interest to create a
liquid secondary market on a securities exchange will exist for any particular
option or at any particular time, and for some options no such secondary market
may exist. A liquid secondary market in an option may cease to exist for a
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variety of reasons. In the past, for example, higher than anticipated trading
activity or order flow, or other unforeseen events, at times have rendered
certain of the clearing facilities inadequate and resulted in the institution of
special procedures, such as trading rotations, restrictions on certain types of
orders or trading halts or suspensions in one or more options. There can be no
assurance that similar events, or events that may otherwise interfere with the
timely execution of customers' orders, will not recur. In such event, it might
not be possible to effect closing transactions in particular options. If, as a
covered call option writer, the Fund is unable to effect a closing purchase
transaction in a secondary market, it will not be able to sell the underlying
security until the option expires or it delivers the underlying security upon
exercise or it otherwise covers its position.
SPECIFIC OPTIONS TRANSACTIONS. The Fund may purchase and sell call and
put options on foreign currency. These options convey the right to buy or sell
the underlying currency at a price which is expected to be lower or higher than
the spot price of the currency at the time the option is exercised or expires.
The Fund may purchase and sell call and put options in respect of
specific securities (or groups or "baskets" of specific securities) or indices
listed on national securities exchanges or traded in the over-the-counter
market. An option on an index is similar to an option in respect of specific
securities, except that settlement does not occur by delivery of the securities
comprising the index. Instead, the option holder receives an amount of cash if
the closing level of the 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. Thus, the effectiveness of purchasing or writing index options will
depend upon price movements in the level of the index rather than the price of a
particular security.
The Fund also may purchase cash-settled options on swaps in pursuit of
its investment objective. A cash-settled option on a swap gives the purchaser
the right, but not the obligation, in return for the premium paid, to receive an
amount of cash equal to the value of the underlying swap as of the exercise
date. These options typically are purchased in privately negotiated transactions
from financial institutions, including securities brokerage firms.
Successful use by the Fund of options will be subject to the ability of
INVESCO to predict correctly movements in the prices of individual securities,
the securities markets generally, foreign currencies, or interest rates. To the
extent such predictions are incorrect, the Fund may incur losses.
FUTURE DEVELOPMENTS. The Fund may take advantage of opportunities in
the area of options and futures contracts and options on futures contracts and
any other Derivatives that are not presently contemplated for use by the Fund or
that are not currently available but that may be developed, to the extent such
opportunities are both consistent with the Fund's investment objective and
legally permissible for the Fund.
FORWARD COMMITMENTS; WHEN-ISSUED SECURITIES. The Fund may purchase
securities on a forward commitment or when-issued basis, which means that
delivery and payment take place a number of days after the date of the
commitment to purchase. The payment obligation on a forward commitment or
when-issued security are fixed when the Fund enters into the commitment, but the
Fund does not make payment until it receives delivery from the counterparty. The
Fund will commit to purchase such securities only with the intention of actually
acquiring the securities, but the Fund may sell these securities before the
settlement date if it is deemed advisable. The Fund will set aside in a
segregated account of the Fund permissible liquid assets at least equal at all
times to the amount of the commitments.
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Securities purchased on a forward commitment or when-issued basis may
expose the Fund to risks because they may experience such fluctuations prior to
their actual delivery. Purchasing securities on a when-issued basis can involve
the additional risk that the yield available in the market when the delivery
takes place actually may be higher than that obtained in the transaction itself.
Purchasing securities on a forward commitment or when-issued basis when the Fund
is fully or almost fully invested may result in greater potential fluctuation in
the value of the Fund's net assets and its net asset value per share.
RISK FACTORS AND SPECIAL CONSIDERATIONS
Investors are advised to consider carefully the special risks involved
in investing in the Fund.
GENERAL
The Fund is a newly organized, non-diversified, closed-end management
investment company and has no operating history. Accordingly, the Shares are
designed primarily for long-term investors and should not be considered a
vehicle for trading purposes. The net asset value of the Fund's Shares will
fluctuate with interest rate changes as well as with price changes of the Fund's
portfolio securities and these fluctuations are likely to be greater in the case
of a fund having a leveraged capital structure, as contemplated for the Fund.
Because the Fund's investments are concentrated in the financial services
industry, an investment in the Fund is subject to greater risk than an
investment in a fund that does not so concentrate its portfolio. The performance
of the Fund will be particularly sensitive to regulatory, economic and
competitive developments affecting Financial Services Companies.
FINANCIAL SERVICES INDUSTRY
The financial services industry in a given country may be subject to
greater governmental regulation than many other industries, and changes in
governmental policies and the need for regulatory approval may have a material
effect on the services offered by companies in the financial services industry.
Governmental regulation may limit both the financial commitments banks can make,
including the amounts and types of loans, and the interest rates and fees they
can charge. In addition, governmental regulation in certain foreign countries
may impose interest rate controls, credit controls and price controls.
Companies in the financial services sector are subject to rapid
business changes, significant competition, value fluctuations due to the
concentration of loans in particular industries significantly affected by
economic conditions (such as real estate or energy) and volatile performance
based upon the availability and cost of capital and prevailing interest rates.
In addition, general economic conditions significantly affect these companies.
Credit and other losses resulting from the financial difficulties of borrowers
or other third parties potentially may have an adverse effect on companies in
these industries. Foreign banks, particularly those in Japan and certain Asian
countries, have reported financial difficulties attributed to increased
competition, regulatory changes, and general economic conditions.
The financial services industry in the United States currently is
changing relatively rapidly as historical distinctions between various financial
service segments become less clear. For instance, recent business combinations
have included insurance, finance, investment management services and securities
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brokerage under single ownership. Some primarily retail corporations have
expanded into securities and insurance fields. Investment banking, securities
brokerage and investment management firms, like banks, are subject to government
regulation and risk due to securities trading and underwriting activities.
Under current regulations of the Securities and Exchange Commission,
the Fund may not invest more than 5% of its total assets in the equity
securities of any company that derives more than 15% of its gross revenues from
securities brokerage, underwriting or investment management activities. In
addition, the Fund generally may not acquire more than 5% of the outstanding
equity securities, or more than 10% of the outstanding principal amount of debt
securities of any such company. This may limit the Fund's ability to invest in
certain Financial Services Companies.
In addition to the risks of the Fund's investments in Financial
Services Companies generally, investments in certain types of Financial Services
Companies are subject to additional risks associated with the Financial Services
Sector.
Banks may invest and operate in an especially highly regulated
environment and are subject to extensive supervision by numerous federal and
state regulatory agencies including, but not limited to, the Federal Reserve
Board, the Federal Deposit Insurance Corporation and state banking authorities.
Such regulation is intended primarily for the protection of bank depositors and
customers rather than for the benefit of investors. Changes in regulations and
governmental policies and accounting principles could adversely affect the
business and operations of banks in which the Fund invests.
Savings institutions frequently have a large proportion of their assets
in the form of loans and securities secured by residential real estate. As a
result, the financial condition and results of operations of such savings and
loan associations would likely be affected by the conditions in the residential
real estate markets in the areas in which these savings institutions do
business.
Investment management companies in which the Fund may invest operate in
a highly competitive environment with investors generally favoring investment
advisers with a sustained successful performance record. The performance of
investment management companies may be affected by factors over which such
companies have little or no control, including general economic conditions,
other factors influencing the capital markets, the net sales of mutual fund
shares generally, and interest rate fluctuations.
Finance companies can be highly dependent upon access to capital
markets and any impediments to such access, such as general economic conditions
or a negative perception in the capital markets of a finance company's financial
condition or prospectus could adversely affect its business. Leasing companies
can be negatively impacted by changes in tax laws which affect the types of
transactions in which such companies engage.
The performance of the Fund's investments in insurance companies will
be subject to risk from several additional factors. The earnings of insurance
companies will be affected by, in addition to general economic conditions,
pricing (including severe pricing competition from time to time), claims
activity, and marketing competition. Particular insurance lines will also be
influenced by specific matters. Property and casualty insurer profits may be
affected by certain weather catastrophes and other disasters. Life and health
insurer profits may be affected by mortality and morbidity rates. Individual
companies may be exposed to material risks, including reserve inadequacy,
problems in investment portfolios (due to real estate or "junk" bond holdings,
for example), and the inability to collect from reinsurance carriers. Insurance
companies are subject to extensive governmental regulation, including the
imposition of maximum rate levels, which may not be adequate for some lines of
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business. Proposed or potential anti-trust or tax law changes also may affect
adversely insurance companies' policy sales, tax obligations and profitability.
FOREIGN SECURITIES
POLITICAL, SOCIAL AND ECONOMIC RISKS. Investing in securities of
non-U.S. companies may entail additional risks due to the potential political,
social and economic instability of certain countries and the risks of
expropriation, nationalization, confiscation or the imposition of restrictions
on foreign investment, or on the convertibility of currencies into U.S. dollars
and on repatriation of capital invested. In the event of such expropriation,
nationalization or other confiscation by any country, the Fund could lose its
entire investment in such country.
FOREIGN INVESTMENT RESTRICTIONS. Certain countries prohibit, or impose
substantial restrictions on, investment in their capital markets, particularly
their equity markets, by foreign entities such as the Fund. These restrictions
or controls may at times limit or preclude investment in certain securities and
may increase the cost and expenses of the Fund. For example, certain countries
require prior governmental approval before investments by foreign persons may be
made, or may limit the amount of investment by foreign persons in a particular
company or limit the investment by foreign persons to only a specific class of
securities of a company that may have less advantageous terms than securities of
the company available for purchase by nationals. Moreover, the national policies
of certain countries may restrict investment opportunities in issuers or
industries deemed sensitive to national interest. In addition, some countries
require governmental approval for the repatriation of investment income, capital
or the proceeds of securities sales by foreign investors. In addition, if there
is a deterioration in a country's balance of payments or for other reasons, a
country may impose restrictions on foreign capital remittances abroad. The Fund
could be adversely affected by delays in, or a refusal to grant, any required
governmental approval for repatriation, as well as by the application to it of
other restrictions on investments.
NON-UNIFORM CORPORATE DISCLOSURE STANDARDS AND GOVERNMENTAL REGULATION.
Foreign companies are subject to accounting, auditing and financial standards
and requirements that differ, in some cases significantly, from those applicable
to U.S. companies. In particular, the assets, liabilities and profits appearing
on the financial statements of such a company may not reflect its financial
position or results of operations in the way they would be reflected had such
financial statements been prepared in accordance with U.S. generally accepted
accounting principles. Most of the foreign securities held by the Fund will not
be registered with the Securities and Exchange Commission or regulators in any
foreign country, nor will the issuers thereof be subject to the reporting
requirements of the Securities and Exchange Commission. Thus, there will be less
available information concerning most foreign issuers of securities held by the
Fund than is available concerning U.S. issuers. In instances where the financial
statements of an issuer are not deemed to reflect accurately the financial
situation of the issuer, INVESCO will take appropriate steps to evaluate the
proposed investment, which may include on-site inspection of the issuer,
interviews with its management and consultations with accountants, bankers and
other specialists. There is substantially less publicly available information
about foreign companies than there are reports and ratings published about U.S.
companies and the U.S. government. In addition, where public information is
available, it may be less reliable than public information regarding U.S.
issuers. Issuers of securities in foreign jurisdictions are generally not
subject to the same degree of regulation as are U.S. issuers with respect to
such matters as restrictions on market manipulation, insider trading rules,
shareholder proxy requirements and timely disclosure of material information.
CURRENCY FLUCTUATIONS. Because the Fund, in normal circumstances, will
invest a substantial portion of its total assets in the securities of foreign
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issuers which are denominated in foreign currencies, the strength or weakness of
the U.S. dollar against such foreign currencies will account for part of the
Fund's investment performance. A decline in the value of any particular currency
against the U.S. dollar will cause a decline in the U.S. dollar value of the
Fund's holdings of securities and cash denominated in such currency and,
therefore, will cause an overall decline in the Fund's net asset value and any
net investment income and capital gains derived from such securities to be
distributed in U.S. dollars to shareholders of the Fund. Moreover, if the value
of the foreign currencies in which the Fund receives its income falls relative
to the U.S. dollar between the time the income is received and the time of the
Fund's distributions, the Fund may be required to liquidate securities in order
to make distributions if the Fund has insufficient cash in U.S. dollars to meet
distribution requirements.
The rate of exchange between the U.S. dollar and other currencies is
determined by several factors, including the supply and demand for particular
currencies, central bank efforts to support particular currencies, the relative
movement of interest rates and the pace of business activity in other countries
and the United States, and other economic and financial circumstances affecting
the world economy.
Although the Fund values its assets weekly in terms of U.S. dollars,
the Fund does not intend to convert its holdings of foreign currencies into U.S.
dollars on a weekly basis. The Fund will do so, however, from time to time, and
investors should be aware of the costs of currency conversion. Although foreign
exchange dealers do not charge a fee for conversion, they do realize a profit
based on the difference ("spread") between the prices at which they buy and sell
various currencies. Thus, a dealer may offer to sell a foreign currency to the
Fund at one rate, while offering a lower rate of exchange should the Fund desire
to sell that currency to the dealer.
ADVERSE MARKET CHARACTERISTICS. Securities of many foreign issuers may
be less liquid and their prices more volatile than securities of comparable U.S.
issuers. In addition, foreign securities markets and brokers generally are
subject to less governmental supervision and regulation than U.S. markets and
brokers, and foreign securities transactions usually are subject to fixed
commissions, which generally are higher than negotiated commissions on U.S.
transactions. Foreign securities transactions may also be subject to
difficulties associated with the settlement of such transactions. Delays in
settlement could result in temporary periods when assets of the Fund are
uninvested and no return is earned thereon. The inability of the Fund to make
intended security purchases due to settlement problems could cause the Fund to
miss attractive investment opportunities. Inability to dispose of a portfolio
security due to settlement problems could either result in losses to the Fund
due to subsequent declines in value of the portfolio security or, if the Fund
has entered into a contract to sell the security, could result in possible
liability to the purchaser. INVESCO will consider such difficulties when
determining the allocation of the Fund's assets, although INVESCO does not
believe that such difficulties will have a material adverse effect on the Fund's
portfolio trading activities.
The Fund may use foreign custodians, which may involve risks in
addition to those related to its use of U.S. custodians. Such risks include
uncertainties relating to determining and monitoring the foreign custodian's
financial strength, reputation and standing, maintaining appropriate safeguards
for the Fund's investments, and possible difficulties in obtaining and enforcing
judgments against such custodians.
WITHHOLDING TAXES. The Fund's net investment income from foreign
issuers may be subject to withholding taxes by the foreign issuer's country,
thereby reducing that income or delaying the receipt of income when those taxes
may be recaptured. See "Taxes."
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GEOGRAPHIC CONCENTRATION. To the extent the Fund invests a significant
portion of its assets in securities of issuers located in a particular country
or region of the world, the Fund may be subject to greater risks and may
experience greater volatility than a fund that is more broadly diversified
geographically.
SPECIAL CONSIDERATIONS AFFECTING EMERGING MARKETS. Investing in the
securities of companies in emerging markets may entail special risks relating to
potential political and economic instability and the risks of expropriation,
nationalization, confiscation or the imposition of restrictions on foreign
investment, convertibility of currencies into U.S. dollars, the lack of hedging
instruments, and on repatriation of capital invested. In the event of
expropriation, nationalization or other confiscation by any country, the Fund
could lose its entire investment in such country.
Emerging securities markets are substantially smaller, less developed,
less liquid and more volatile than the major securities markets. The limited
size of emerging securities markets and limited trading value in issuers
compared to the volume of trading in U.S. securities could cause prices to be
erratic for reasons apart from factors that affect the quality of the
securities. For example, limited market size may cause prices to be unduly
influenced by traders who control large positions. Adverse publicity and
investors' perceptions, whether or not based on fundamental analysis, may
decrease the value and liquidity of portfolio securities, especially in these
markets. In addition, securities traded in certain emerging markets may be
subject to risks due to the inexperience of financial intermediaries, a lack of
modern technology, the lack of a sufficient capital base to expand business
operations, and the possibility of temporary or permanent termination of
trading.
Settlement mechanisms in emerging securities markets may be less
efficient and reliable than in more developed markets. In such emerging
securities markets, there may be share registration and delivery delays or
failures.
Many emerging market countries have experienced substantial, and in
some periods extremely high, rates of inflation for many years. Inflation and
rapid fluctuations in inflation rates and corresponding currency devaluations
have had and may continue to have negative effects on the economies and
securities markets of certain emerging market countries.
LEVERAGE
The use of leverage by the Fund creates an opportunity for increased
capital appreciation for the Shares, but, at the same time, creates special
risks. The Fund has the right to use financial leverage and expects it may do so
from time to time in the future. Currently, however, the Fund has not determined
the timing or amount of financial leverage that it would utilize. The Fund would
utilize leverage to provide the holders of Shares with a potentially higher
return. Leverage creates risks for holders of Shares including the likelihood of
greater volatility of net asset value and market price of the Shares and the
risk that fluctuations in interest rates on borrowings or in the dividend rates
on any preferred shares may affect the return to the holders of Shares. To the
extent the capital appreciation, if any, or any income derived from securities
purchased with funds received from leverage exceeds the cost of leverage, the
Fund's return will be greater than if leverage had not been used. Conversely, if
the capital appreciation, if any, or any income from the securities purchased
with such funds is not sufficient to cover the cost of leverage, the return to
the Fund will be less than if leverage had not been used, and therefore the
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amount available for distribution to Shareholders as dividends and other
distributions will be reduced. In the latter case, INVESCO in its best judgment
nevertheless may determine to maintain the Fund's leveraged position if it deems
such action to be appropriate in the circumstances. During periods in which the
Fund is utilizing financial leverage, the management and administrative fee,
which is payable to INVESCO as a percentage of the Fund's Managed Assets (as
defined under "Management of the Fund"), will be higher than if the Fund did not
utilize a leveraged capital structure. Certain types of borrowings by the Fund
may result in the Fund's being subject to covenants in credit agreements
relating to asset coverage and portfolio composition requirements. The Fund may
be subject to certain restrictions on investments imposed by guidelines of one
or more rating agencies, which may issue ratings for any debt securities or
preferred shares issued by the Fund. These guidelines may impose asset coverage
or portfolio composition requirements that are more stringent than those imposed
by the Investment Company Act. It is not anticipated that these covenants or
guidelines will impede INVESCO in managing the Fund's portfolio in accordance
with the Fund's investment objective and policies. As discussed under
"Management of the Fund," the fee paid to INVESCO will be calculated on the
basis of the Fund's assets including proceeds from borrowings for leverage and
the issuance of preferred shares.
LOWER GRADE SECURITIES
Lower grade securities are regarded as being predominantly speculative
as to the issuer's ability to make payments of principal and interest.
Investment in such securities involves substantial risk. Lower grade securities
are commonly referred to as "junk bonds." Issuers of lower grade securities may
be highly leveraged and may not have available to them more traditional methods
of financing. Therefore, the risks associated with acquiring the securities of
such issuers generally are greater than is the case with higher-rated
securities. For example, during an economic downturn or a sustained period of
rising interest rates, issuers of lower grade securities may be more likely to
experience financial stress, especially if such issuers are highly leveraged.
During periods of economic downturn, such issuers may not have sufficient
revenues to meet their interest payment obligations. The issuer's ability to
service its debt obligations also may be adversely affected by specific issuer
developments, the issuer's inability to meet specific projected business
forecasts or the unavailability of additional financing. Therefore, there can be
no assurance that in the future there will not exist a higher default rate
relative to the rates currently existing in the market for lower grade
securities. The risk of loss due to default by the issuer is significantly
greater for the holders of lower grade securities because such securities may be
unsecured and may be subordinate to other creditors of the issuer. The lower
grade securities in which the Fund may invest do not include instruments which,
at the time of investment, are in default or the issuers of which are in
bankruptcy. However, there can be no assurance that such events will not occur
after the Fund purchases a particular security, in which case the Fund may
experience losses and incur costs.
DERIVATIVE TRANSACTIONS
Transactions in Derivatives involve certain risks, which include: (1)
dependence on INVESCO's ability to predict movements in the prices of individual
securities, fluctuations in the general securities markets or in the financial
services industry and movements in interest rates and currency markets; (2)
imperfect correlation, or even no correlation, between movements in the price of
options, forward contracts, futures contracts or options thereon and movements
in the price of the currency or security hedged or used for cover; (3) the fact
that skills and techniques needed to trade options, futures contracts and
options thereon or to use forward currency contracts are different from those
needed to select the securities in which the Fund invests; (4) lack of assurance
that a liquid secondary market will exist for any particular option, futures
contract or option thereon at a particular time; (5) the possible loss of
principal under certain conditions; (6) the potential lack of appropriate
hedging instruments for a particular risk; and (7) the possible inability of the
Fund to purchase or sell a portfolio security at a time when it would otherwise
be favorable for it do so, or the possible need for the Fund to sell a security
at a disadvantageous time, due to the need for the Fund to maintain "cover" or
to set aside securities in connection with hedging transactions.
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ILLIQUID SECURITIES
The Fund may invest up to 25% of its net assets in securities for which
no readily available market exists or that are otherwise considered illiquid.
The Fund may not be able readily to dispose of such securities at prices that
approximate those at which the Fund could sell such securities if they were more
widely traded and, as a result of such illiquidity, the Fund may have to sell
other investments if necessary to raise cash to meet its obligations.
NON-DIVERSIFIED STATUS
The Fund is classified as a "non-diversified" investment company under
the Investment Company Act, which means that the Fund may invest a greater
portion of its assets in a limited number of issuers than would be the case if
the Fund were classified as a "diversified" investment company. Accordingly, the
Fund may be subject to greater risk with respect to its portfolio securities
than an investment company that is "diversified" because changes in the
financial condition or market assessment of a single issuer may cause greater
fluctuations in the net asset value of the Shares.
MARKET PRICE, DISCOUNT AND NET ASSET VALUE OF SHARES
Shares of closed-end management investment companies in the past
frequently have traded at a discount to their net asset values. The risk of loss
associated with this characteristic of closed-end management investment
companies may be greater for investors purchasing Shares in the initial public
offering and expecting to sell the Shares soon after the completion thereof. The
Board of Trustees believes, however, that the closed-end fund structure is
desirable, given the investment objective of the Fund. Although the Board of
Trustees may consider various approaches to narrowing any discount, investors
should assume that it is unlikely that the Board of Trustees would vote to
convert the Fund to an open-end structure. See "Description of Shares."
Whether investors will realize gains or losses upon the sale of Shares
will not depend directly upon the Fund's net asset value, but will depend upon
the market price of the Shares at the time of sale. Since the market price of
the Shares will be determined by such factors as relative demand for and supply
of the Shares in the market, general market and economic conditions and other
factors beyond the control of the Fund, the Fund cannot predict whether the
Shares will trade at, below or above net asset value or at, below or above the
initial offering price. The Shares are designed primarily for long-term
investors, and investors in the Shares should not view the Fund as a vehicle for
trading purposes.
ANTI-TAKEOVER PROVISIONS
The Fund's Declaration of Trust contains provisions limiting (i) the
ability of other entities or persons to acquire control of the Fund, (ii) the
Fund's freedom to engage in certain transaction and (iii) the ability of the
Fund's Trustees or Shareholders to amend the Declaration of Trust. These
provisions of the Declaration of Trust may be regarded as "anti-takeover"
provisions. These provisions could have the effect of depriving the Shareholders
of opportunities to sell their Shares at a premium over prevailing market prices
by discouraging a third party from seeking to obtain control of the Fund in a
tender offer or similar transaction.
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YEAR 2000 RISKS
Like other investment companies, financial and business organizations
and individuals around the world, the Fund could be adversely affected if the
computer systems used by INVESCO and the Fund's other service providers do not
properly process and calculate date-related information and data from and after
January 1, 2000. This is commonly known as the "Year 2000 Problem." INVESCO is
taking steps to address the Year 2000 Problem with respect to the computer
systems that it uses and to obtain assurances that comparable steps are being
taken by the Fund's other major service providers. At this time, however, there
can be no assurance that these steps will be sufficient to avoid any adverse
impact on the Fund.
INVESTMENT RESTRICTIONS
The Fund has adopted investment restrictions numbered 2 through 6 as
fundamental policies, which cannot be changed without approval by the holders of
a majority (as defined in the Investment Company Act) of the Fund's outstanding
voting shares. Unless expressly designated as fundamental, any policy of the
Fund may be changed by the Board of Trustees without shareholder approval.
The Fund may not:
1. Change the Fund's classification from a non-diversified
company to diversified under the Investment Company Act.
2. Invest in commodities or commodity contracts, except that the
Fund may purchase and sell futures contracts and options thereon.
3. Issue senior securities or borrow money except as permitted
by the Investment Company Act.
4. Make loans to others, except through the purchase of debt
obligations and the entry into repurchase agreements. However, the Fund may lend
its portfolio securities in an amount not to exceed 33-1/3% of the value of its
total assets. Any loans of portfolio securities will be made according to
guidelines established by the Securities and Exchange Commission and the Fund's
Board.
5. Act as an underwriter of securities of other issuers, except
to the extent the Fund may be deemed an underwriter under the Securities Act of
1933, as amended, by virtue of disposing of portfolio securities.
6. Purchase or sell real estate unless acquired as a result of
ownership of securities or other instruments (but this shall not prevent the
Fund from investing in securities or other instruments backed by real estate or
securities of companies engaged in the real estate business).
7. Invest in the securities of a company for the purpose of
exercising management or control, but the Fund will vote the securities it owns
in its portfolio as a shareholder in accordance with its views.
8. Pledge, mortgage or hypothecate its assets, except to the
extent necessary to secure permitted borrowings and to the extent related to the
purchase of securities on a when-issued or forward commitment basis and the
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deposit of assets in escrow in connection with writing covered put and call
options and collateral and initial or variation margin arrangements with respect
to options, forward contracts, futures contracts, options on futures contracts,
swaps, caps, collars and floors.
9. Purchase securities of other investment companies, except to
the extent permitted under the Investment Company Act.
MANAGEMENT OF THE FUND
INVESTMENT MANAGER
INVESCO Funds Group, Inc., a Delaware corporation ("INVESCO"), is
employed as the Fund's investment adviser. INVESCO also serves as an investment
adviser to INVESCO Strategic Portfolios, Inc., INVESCO Global Health Sciences,
INVESCO Capital Appreciation Funds, Inc., INVESCO Diversified Funds, Inc.,
INVESCO Emerging Opportunity Funds, Inc., INVESCO Growth Fund, Inc., INVESCO
Income Funds, Inc., INVESCO Industrial Income Fund, Inc., INVESCO International
Funds, Inc., INVESCO Money Market Funds, Inc. INVESCO Multiple Asset Funds,
Inc., INVESCO Specialty Funds, Inc., INVESCO Tax-Free Income Funds, Inc.,
INVESCO Value Trust and INVESCO Variable Investment Funds, Inc.
INVESCO is an indirect wholly owned subsidiary of AMVESCAP, a publicly
traded holding company that, through its subsidiaries, engages in the business
of investment management on an international basis. AMVESCAP maintains offices
around the world -- including the U.S., London, Eastern Europe, Latin America,
Hong Kong and Tokyo. Operating under the A I M and INVESCO brand names, the
company offers a broad array of products and services to institutions and
individuals through all major distribution channels in over 30 countries. Recent
mergers with major firms such as A I M Management Group Inc., and GT Global
(formerly the asset management division of Liechtenstein Global Trust) have
positioned AMVESCAP as one of the world's largest independent fund management
companies, adding to its already significant presence in Europe, Asia and North
America. As of June 30, 1998, AMVESCAP and its affiliates had approximately
$[208] billion in assets under management. As of June 30, 1998, INVESCO managed
14 open-end mutual funds, consisting of 49 portfolios, on behalf of over 878,000
shareholders. AMVESCAP's other North American subsidiaries include the
following:
-- INVESCO Capital Management, Inc. of Atlanta, Georgia manages
institutional investment portfolios, consisting primarily of discretionary
employee benefit plans for corporations, state and local governments and
endowment funds. INVESCO Capital Management, Inc. is the sole shareholder of
INVESCO Services, Inc., a registered broker-dealer.
-- INVESCO Distributors, Inc. of Denver, Colorado is a registered
broker-dealer that acts as distributor of all retail open-end mutual funds
advised by INVESCO.
-- INVESCO Management & Research, Inc. of Boston, Massachusetts
primarily manages pension and endowment accounts.
-- PRIMCO Capital Management, Inc. of Louisville, Kentucky specializes
in managing stable return investments, principally on behalf of Section 401(k)
retirement plans.
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-- INVESCO Realty Advisors, Inc. of Dallas, Texas is responsible for
providing advisory services in the U.S. real estate markets for pension plans
and public pension funds, as well as endowment and foundation accounts.
-- Institutional Trust Company of Denver, Colorado ("Institutional
Trust") provides retirement account custodian and/or trust services for
individual retirement accounts and other retirement plan accounts. This includes
services such as recordkeeping, tax reporting and compliance. Institutional
Trust acts as trustee or custodian to these plans. Institutional Trust accepts
contributions and provides, through INVESCO, complete transfer agency functions
(correspondence, subaccounting, telephone communications and processing of
distributions).
-- A I M Advisors, Inc. of Houston, Texas provides investment advisory
and administrative services for retail and institutional mutual funds.
-- A I M Capital Management, Inc. of Houston, Texas provides investment
advisory services to individuals, corporations, pension plans and other private
investment advisory accounts and also serves as a sub-adviser to certain retail
and institutional mutual funds, one Canadian mutual fund and one portfolio of an
open-end registered investment company that is offered to separate accounts of
variable insurance companies.
-- A I M Distributors, Inc. and Fund Management Company of Houston,
Texas are registered broker-dealers that act as the principal underwriters for
retail and institutional mutual funds.
The corporate headquarters of AMVESCAP are located at 11 Devonshire
Square, London, EC2M4YR, England.
INVESCO permits investment and other personnel to purchase and sell
securities for their own accounts in accordance with a policy governing personal
investing by directors, officers and employees of INVESCO and its North American
affiliates. The policy requires officers, inside directors, investment and other
personnel of INVESCO and its North American affiliates to pre-clear all
transactions in securities that are not exempt under the policy. Requests for
trading authority will be denied when, among other reasons, the proposed
personal transaction would be contrary to the provisions of the policy or would
be deemed to affect adversely any transaction then known to be under
consideration for or to have been effected on behalf of any client account,
including the Fund.
In addition to the pre-clearance requirement described above, the
policy subjects officers, inside directors, investment and other personnel of
INVESCO and its North American affiliates to various trading restrictions and
reporting obligations. All reportable transactions are reviewed for compliance
with the policy. The provisions of the policy are administered by and subject to
exceptions authorized by INVESCO.
MANAGEMENT AND ADMINISTRATION AGREEMENT. INVESCO provides investment
management and administrative services pursuant to the Management and
Administration Agreement (the "Agreement") dated August __, 1998 with the Fund.
As compensation for INVESCO's services to the Fund, the Fund has agreed to pay
INVESCO a monthly investment management and administration fee at the annual
rate of 1.50% of the total assets of the Fund minus the sum of accrued
liabilities (other than aggregate indebtedness constituting financial leverage)
("Managed Assets"). This fee is higher than that charged by most registered
investment advisers. The initial term of the Agreement is for two years, and
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thereafter the Agreement is subject to annual approval by (i) the Fund's Board
or (ii) vote of a majority (as defined in the Investment Company Act) of the
outstanding voting securities of the Fund, provided that in either event the
continuance also is approved by a majority of the Board members who are not
"interested persons" (as defined in the Investment Company Act) of the Fund or
INVESCO, by vote cast in person at a meeting called for the purpose of voting on
such approval. The Agreement was approved by the Fund's Board, including a
majority of the Board members who are not "interested persons" of any party to
the Agreement, at a meeting held on August __, 1998. The Agreement was approved
by the Fund's initial shareholder on August __, 1998. The Agreement is
terminable without penalty, on 60 days' notice, by the Fund's Board or by vote
of the holders of a majority of the Fund's Shares. The Agreement will terminate
automatically in the event of its assignment (as defined in the Investment
Company Act).
INVESCO manages the Fund's investments in accordance with the stated
policies of the Fund, subject to the supervision of the Fund's Board. INVESCO is
responsible for investment decisions, and provides the Fund with portfolio
managers who are authorized by the Board to execute purchases and sales of
securities. INVESCO or its affiliates also maintain a research department with a
professional staff of portfolio managers and securities analysts who provide
research services for the Fund as well as for other funds advised by INVESCO and
its affiliates.
INVESCO maintains office facilities on behalf of the Fund, and
furnishes statistical and research data, clerical help, accounting, data
processing, bookkeeping and internal auditing and certain other required
services to the Fund. INVESCO also may make such advertising and promotional
expenditures, using its own resources, as it from time to time deems
appropriate.
Jeffrey G. Morris is a Co-Portfolio Manager of the Fund. He is also a
vice president of INVESCO Funds Group, Inc. Mr. Morris co-manages INVESCO
Strategic Health Sciences Portfolio. Mr. Morris joined INVESCO Trust Company in
1992 and served as a research analyst from 1994 to 1995. Mr. Morris received a
M.S. in Finance from the University of Colorado-Denver and a B.S. in Business
Administration from Colorado State University. Mr. Morris is also a certified
financial analyst.
Daniel B. Leonard is Co-Portfolio Manager of the Fund. Mr. Leonard
supervises the portfolios that comprise INVESCO Strategic Portfolios, Inc.,
including the Financial Services Portfolio, and has acted in that capacity since
March 1997. He is also a senior vice president of INVESCO Funds Group, Inc. Mr.
Leonard also manages INVESCO Strategic Gold Portfolio and co-manages INVESCO
Strategic Technology Portfolio and INVESCO VIF-Technology Fund. Mr. Leonard was
previously a portfolio manager (1977-1983; 1985-1991) and senior vice president
(1975-1983; 1985-1991) of INVESCO Funds Group, Inc. and a vice president
(1977-1983) of INVESCO Trust Company. Mr. Leonard received a B.A. from
Washington & Lee University.
Expenses. All expenses incurred in the operation of the Fund are borne
by the Fund, except to the extent specifically assumed by INVESCO. The expenses
borne by the Fund include: organizational costs, taxes, interest, interest and
distributions paid on securities sold short, brokerage fees and commissions, if
any, fees of Board members who are not officers, directors, employees, holders
of 5% or more of the outstanding voting securities of INVESCO or any of its
affiliates, Securities and Exchange Commission fees, state Blue Sky
qualification fees, advisory and administration fees, charges of custodians,
transfer and dividend disbursing agents' fees, certain insurance premiums,
industry association fees, outside auditing and legal expenses, costs of
maintaining the Fund's existence, costs of independent pricing services, costs
attributable to investor services (including, without limitation, telephone and
personnel expenses), costs of preparing and printing prospectuses, statements of
additional information and proxy statements, costs of Shareholders' reports and
meetings, and any extraordinary expenses.
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TRUSTEES AND OFFICERS OF THE FUND
The Fund has a Board composed of five Trustees which supervises the
Fund's investment activities and reviews contractual arrangements with companies
that provide the Fund with services. The Trustees and officers and their
positions with the Fund and their present and principal occupations during the
past five years are listed below. Each Trustee who is an "interested person" of
the Fund (as defined in the Investment Company Act) is indicated by an asterisk
(*). Each Trustee who is not an "interested person" serves on the Audit
Committee and the Nominating Committee of the Board.
All of the officers and trustees of the Fund hold comparable positions
with INVESCO Strategic Portfolios, Inc., INVESCO Global Health Sciences Fund,
INVESCO Capital Appreciation Funds, Inc., INVESCO Diversified Funds, Inc.,
INVESCO Emerging Opportunities Funds, Inc., INVESCO Growth Fund, Inc., INVESCO
Income Funds, Inc., INVESCO Industrial Income Fund Inc., INVESCO International
Funds, Inc. INVESCO Money Market Funds, Inc., INVESCO Multiple Asset Funds,
Inc., INVESCO Specialty Funds, Inc., INVESCO Tax-Free Income Funds, Inc. and
INVESCO Variable Investment Funds, Inc. (Collectively, with INVESCO Value Trust,
referred to as "INVESCO Funds"). All of the trustees of the Fund, also serve as
trustees of INVESCO Value Trust.
CHARLES W. BRADY, * Chairman of the Board. Chairman of INVESCO Funds
and INVESCO Treasurer's Series Trust. Chief Executive Officer and Director of
AMVESCAP, London, England, and of various subsidiaries thereof. Born: May
11, 1935.
MARK H. WILLIAMSON, * Vice Chairman of the Board and President of the
Fund. President and CEO of INVESCO Funds Group, Inc. since March, 1998.
Formerly, Chairman and CEO of NationsBanc Advisors, Inc. 1995 to 1997 and
Chairman of NationsBanc Investments, Inc. 1997-1998. Born: May 24, 1951.
FRED A. DEERING, Trustee. Vice Chairman of INVESCO Funds and INVESCO
Treasurer's Series Trust. Formerly, Chairman of the Executive Committee and
Chairman of the board of Security Life of Denver Insurance Company, Denver,
Colorado; Director of ING America Life Insurance Company. Address: Security Life
Center, 1290 Broadway, Denver, Colorado. Born: January 12, 1928.
JOHN W. MCINTYRE, Trustee. Retired. Formerly, Vice Chairman of the
board of Directors of the Citizens and Southern Georgia Corporation and Chairman
of the Board and Chief Executive Officer of the Citizens and Southern Georgia
Corporation and Citizens and Southern National Bank. Trustee of INVESCO
Treasurer's Series Trust. Trustee of Gables Residential Trust. Address: 7
Piedmont Center, Suite 100, Atlanta, Georgia. Born: September 14, 1930.
LARRY SOLL, Ph.D., Trustee. Retired. Formerly, Chairman of the Board
(1987 to 1994), Chief Executive Officer (1982 to 1989 and 1993 to 1994) and
President (1982 to 1989) of Synergen Corp., Director of Synergen Corp. since its
incorporation in 1982. Director of ISIS Pharmaceuticals, Inc. Trustee of INVESCO
Treasurer's Series Trust. Address: 345 Poorman Road, Boulder, Colorado. Born:
April 26, 1942.
JEFFREY G. MORRIS, * Vice President and Co-Portfolio Manager. Vice
President of INVESCO Funds Group, Inc. Mr. Morris joined INVESCO Trust Company
in 1992 and served as a research analyst from 1994 to 1995. Mr. Morris received
a M.S. in Finance from the University of Colorado-Denver and a B.S. in Business
Administration from Colorado State University. Born: November 17, 1967.
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GLEN A. PAYNE, Secretary. Senior Vice President (since 1995), General
Counsel and Secretary of INVESCO Funds Group, Inc., and INVESCO Distributors,
Inc. (since 1997); Vice President (May 1989 to April 1995), Secretary and
General Counsel of INVESCO Funds Group, Inc.; formerly, employee of a U.S.
regulatory agency, Washington, D.C. (June 1973 through May 1989). Born:
September 25, 1947
RONALD L. GROOMS, Treasurer. Senior Vice President and Treasurer of
INVESCO Funds Group, Inc. (since 1988). Senior Vice President and Treasurer of
INVESCO Distributors, Inc. (since 1997). Born: October 1, 1946.
Unless otherwise indicated, the address of each trustee and officer of the Fund
is Post Office Box 173706, Denver, Colorado 80217-3706.
All shares prior to the offering were held by INVESCO.
No officer or employee of the Fund receives any compensation from the
Fund for serving as an officer or Trustee of the Fund. In addition, no officer
or employee of INVESCO (or of any parent, subsidiary or affiliate thereof)
receives compensation for serving as an officer or Trustee of the Fund. The Fund
pays each non-interested Trustee $______ per annum (and an additional $_____ for
the Chairman of the Board of Trustees of the Fund). In addition, the Fund pays
each Trustee $_____ per Board meeting attended and reimburses each Trustee for
travel and out-of-pocket expenses.
Estimated Aggregate Total Compensation from the
Compensation Fund and Fund Complex
Name of Board Member from Fund Paid to Board Member*
- -------------------- ------------------- ---------------------------
Fred A. Deering $113,500
John W. McIntyre 104,000
Larry Soll, Ph.D. 78,000
Total 292,350
% of Net Assets 0.0017%
* Total as a percentage of the net assets of the INVESCO Complex as of December
31, 1997.
BROKERAGE AND PORTFOLIO TRANSACTIONS
INVESCO places orders for the purchase and sale of securities with
brokers and dealers based upon its evaluation of their financial responsibility
subject to their ability to effect transactions at the best available prices.
INVESCO evaluates the overall reasonableness of brokerage commissions paid by
reviewing the quality of executions obtained on the Fund's portfolio
transactions, viewed in terms of the size of transactions, prevailing market
conditions in the security purchased or sold, and general economic and market
conditions. In seeking to ensure that the commissions charged the Fund are
consistent with prevailing and reasonable commissions, INVESCO also endeavors to
monitor brokerage industry practices with regard to the commissions charged by
broker/dealers on transactions effected for other comparable institutional
investors. While INVESCO seeks reasonably competitive rates, the Fund does not
necessarily pay the lowest commissions available.
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Consistent with the standard of seeking to obtain the best execution on
portfolio transactions, INVESCO may select brokers that provide research
services to effect such transactions. Research services consist of statistical
and analytical reports relating to issuers, industries, securities and economic
factors and trends, which may be of assistance or value to INVESCO in making
informed investment decisions. Research services prepared and furnished by
brokers through which the Fund effects securities transactions may be used by
INVESCO in servicing all of its accounts and not all such services may be used
by INVESCO in connection with the Fund. In recognition of the above-described
brokerage and research services provided by certain brokers, INVESCO, consistent
with the standard of seeking to obtain the best execution on portfolio
transactions, may place orders with such brokers for the execution of Fund
transactions on which the commissions are in excess of those which other brokers
might have charged for effecting the same transactions.
One or more of the other accounts which INVESCO manages may own, from
time to time, the same investments as the Fund. Investment decisions for the
Fund are made independently from those of such other accounts; however, from
time to time, the same investment decision may be made for more than one company
or account, including the Fund. When two or more companies or accounts,
including the Fund, seek to purchase or sell the same securities, the securities
actually purchased or sold will be allocated among the companies and accounts on
a good faith equitable basis by the INVESCO in its discretion in accordance with
the accounts' various investment objectives and other factors. In some cases,
this system may adversely affect the price or size of the position obtainable
for the Fund. In other cases, however, the ability of the Fund to participate in
volume transactions may produce better execution for the Fund. It is the opinion
of the Board that this advantage, when combined with the other benefits
available due to INVESCO's organization, outweighs any disadvantages that may be
said to exist from exposure to simultaneous transactions.
Transactions in foreign securities markets often involve the payment of
fixed brokerage commissions, which are usually higher than commission rates
available in the United States. In such transactions, the Fund will seek to
obtain prompt execution of orders at the most favorable net price consistent
with the description above relating to best execution.
PORTFOLIO TURNOVER
Portfolio turnover may vary from year to year as well as within a year.
It is anticipated that in any fiscal year the turnover rate may exceed 100% for
the Fund. In periods in which extraordinary market conditions prevail, INVESCO
will not be deterred from changing the Fund's investment strategy as rapidly as
INVESCO determines to be necessary, in which case higher turnover rates can be
anticipated which would result in greater brokerage expenses. The overall
reasonableness of brokerage commissions paid is evaluated by INVESCO based upon
its knowledge of available information as to the general level of commissions
paid by other institutional investors for comparable services. A turnover rate
of 100% is equivalent to the Fund buying and selling all of the securities in
its portfolio once in the course of a year. Higher portfolio turnover rates
usually generate additional brokerage commissions and expenses, and the
short-term gains realized from these transactions are taxable to Shareholders as
ordinary income when distributed to them.
DETERMINATION OF NET ASSET VALUE
The Fund intends to calculate the net asset value of its Shares daily
and to make that information available for publication. Currently, THE WALL
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STREET JOURNAL and BARRON'S publish net asset values for closed-end investment
companies each week. Net asset value per Share will be determined daily on each
day the New York Stock Exchange is open, as of the close of trading on the New
York Stock Exchange that day, and is calculated by dividing the aggregate value
of all securities held by the Fund and its other assets (including dividends and
interest accrued but not collected) less the Fund's liabilities (including
accrued expenses attributable to financial leverage) by the number of
outstanding Shares. All assets and liabilities initially expressed in foreign
currencies will be converted into U.S. dollars at the mean between the bid and
offer prices of such currencies against U.S. dollars last quoted by a major bank
selected by the Fund's custodian. Securities traded on securities exchanges are
valued at their last sale prices as of 4:00 p.m. New York time on the exchanges
where such securities are primarily traded. Securities traded in the
over-the-counter market and listed securities for which no sales are reported on
a particular day are valued at their bid prices (or for debt securities yield
equivalents thereof) obtained from one or more dealers making markets for such
securities. If market quotations are not readily available, a security will be
valued at fair value as determined in good faith by, or under the supervision
of, the Board. The Board will review the method of valuation on a current basis.
In making their good faith valuation of a security, the Board members generally
will take the following factors into consideration: restricted securities which
are, or are convertible into, securities of the same class of securities for
which a public market exists usually will be valued at market value less the
same percentage discount at which purchased. This discount will be revised
periodically by the Board if it believes that the discount no longer reflects
the value of the restricted securities. Restricted securities not of the same
class as securities for which a public market exists usually will be valued
initially at cost. Any subsequent adjustment from cost will be based upon
considerations deemed relevant by the Board.
The holidays (as observed) on which the New York Stock Exchange is
closed currently are: New Year's Day, Martin Luther King Jr. Day, Presidents'
Day, Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving and
Christmas.
Debt securities will be valued in accordance with the procedures above,
which with respect to such securities may include the use of valuations
furnished by a pricing service which employs a matrix to determine valuations
for normal institutional size trading units. Prior to utilizing a pricing
service, the Board will review the methods used by such service to assure itself
that securities will be valued at their fair values. The Board also will
periodically monitor the methods used by any such pricing service. Debt
securities with remaining maturities of 60 days or less will, absent unusual
circumstances, be valued at amortized cost, so long as such valuation is
determined by the Board to represent fair value. Futures contracts and options
thereon, which are traded on commodities exchanges, are valued at their
settlement value as of the close of such commodities exchanges.
Trading in foreign securities generally is completed, and thus, the
values of such securities are determined, prior to the close of the New York
Stock Exchange. Foreign currency exchange rates are also generally determined
prior to the close of the New York Stock Exchange. On occasion, the values of
such securities and such exchange rates may be affected by events occurring
between the time as of which determinations of such values or such exchange
rates are made and the close of the New York Stock Exchange. When such events
materially affect the values of securities held by the Fund or its liabilities,
such securities and liabilities will be valued at fair value as determined in
good faith by, or under the supervision of, the Board.
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DIVIDENDS AND OTHER DISTRIBUTIONS
It is the Fund's present policy, which may be changed by the Board of
Trustees, to distribute to its Shareholders at least annually, substantially all
of its net investment income and net realized long-term capital gains, if any.
Net investment income includes dividends, interest and net short-term capital
gains earned or realized by the Fund on its portfolio holdings, net of its
expenses. The Fund also will distribute to its Shareholders at least annually,
all net realized gains from foreign currency transactions, if any. The Fund may
make additional distributions if necessary to avoid a 4% federal excise tax on
certain undistributed income and capital gain. See "Taxes."
Under the Investment Company Act, the Fund is not permitted to incur
indebtedness unless after such incurrence the Fund has an asset coverage of at
least 300% of the aggregate outstanding principal balance of indebtedness.
Additionally, under the Investment Company Act, the Fund may not declare any
dividend or other distribution upon any class of its capital shares, or purchase
any such capital shares, unless the aggregate indebtedness of the Fund has, at
the time of the declaration of any such dividend or other distribution or at the
time of any such purchase, an asset coverage of at least 300% after deducting
the amount of such dividend, other distribution, or purchase price, as the case
may be. While any preferred shares are outstanding, the Fund may not declare any
cash dividend or other distribution on the Shares, unless at the time of such
declaration, (1) all accumulated preferred share dividends have been paid and
(2) the net asset value of the Fund's portfolio (determined after deducting the
amount of such dividend or other distribution) is at least 200% of the
liquidation value of the outstanding preferred shares (expected to be equal to
the original purchase price per share plus any accumulated and unpaid dividends
thereon). In addition to the limitations imposed by the Investment Company Act
as described in this paragraph, certain lenders may impose additional
restrictions on the payment of dividends or other distributions on the Shares in
the event of a default on the Fund's borrowings. Any limitation on the Fund's
ability to make distributions on the Shares could in certain circumstances
impair the ability of the Fund to maintain its qualification for taxation as a
regulated investment company. See "Other Investment Practices-Leverage" and
"Taxes."
See "Automatic Dividend Reinvestment Plan" for information concerning
the manner in which dividends and other distributions to holders of Shares may
be automatically reinvested in Shares. Dividends and other distributions will be
taxable to Shareholders whether they are reinvested in Shares or received in
cash.
TAXES
The Fund intends to elect to be, and to qualify to be treated as, a
regulated investment company ("RIC") under the Code. For each taxable year that
the Fund so qualifies, the Fund (but not its Shareholders) will be relieved of
federal income tax on that part of its investment company taxable income
(consisting generally of net investment income, net short-term capital gain and
net gains from certain foreign currency transactions) and net capital gain (the
excess of net long-term capital gain over net short-term capital loss) that it
distributes to its Shareholders.
In order to qualify for treatment as a RIC under the Code, the Fund
must make an election to be so treated and must distribute to its Shareholders
for each taxable year at least 90% of its investment company taxable income
("Distribution Requirement") and must meet several additional requirements.
These requirements include the following: (1) the Fund must derive at least 90%
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of its gross income each taxable year from dividends, interest, payments with
respect to securities loans and gains from the sale or other disposition of
securities or foreign currencies, or other income (including gains from options,
futures or forward contracts) derived with respect to its business of investing
in securities or those currencies ("Income Requirement"); (2) at the close of
each quarter of the Fund's taxable year, at least 50% of the value of its total
assets must be represented by cash and cash items, U.S. government securities,
securities of other RICs and other securities that are limited, in respect of
any one issuer, to an amount that does not exceed 5% of the value of the Fund's
total assets and that does not represent more than 10% of the issuer's
outstanding voting securities; and (3) at the close of each quarter of the
Fund's taxable year, not more than 25% of the value of its total assets may be
invested in securities of any one issuer (other than U.S. government securities
or the securities of other RICs). If the Fund failed to qualify for treatment as
a RIC for any taxable year, it would be taxed as an ordinary corporation on its
taxable income for that year (even if that income was distributed to its
Shareholders) and all distributions out of its earnings and profits would be
taxable to its Shareholders as dividends (i.e., ordinary income).
A portion of the dividends from the Fund's investment company taxable
income (whether paid in cash or reinvested in additional Fund shares) may be
eligible for the dividends-received deduction allowed to corporations. The
eligible portion may not exceed the aggregate dividends the Fund receives from
domestic corporations. However, dividends received by a corporate Shareholder
and deducted by it pursuant to the dividend-received deduction are subject
indirectly to the federal alternative minimum tax. The Fund will notify
Shareholders of the amount of any dividends that may be taken into account for
purposes of the dividend-received deduction not later than 60 days after the
close of its taxable year.
The Fund will be subject to a non-deductible 4% excise tax ("Excise
Tax") to the extent it fails to distribute by the end of any calendar year
substantially all of its ordinary income for that year and capital gain net
income for the one-year period ending on October 31st of that year, plus certain
other amounts. For these purposes, any such income retained by the Fund, and on
which it pays federal income tax, will be treated as having been distributed.
The Fund may invest in the stock of "passive foreign investment
companies" ("PFICs"). A PFIC is a foreign corporation - other than a "controlled
foreign corporation" (i.e., a foreign corporation in which, on any day during
its taxable year, more than 50% of the total voting power of all stock therein
or the total value of all stock therein is owned, directly, indirectly or
constructively, by "U.S. shareholders," defined as U.S. persons that
individually own, directly, indirectly or constructively, at least 10% of that
voting power) as to which the Fund is a U.S. shareholder - that, in general,
meets either of the following tests: (1) at least 75% of its gross income is
passive income or (2) an average of at least 50% of its assets produce, or are
held for the production of, passive income. Under certain circumstances, the
Fund will be subject to federal income tax on a portion of any "excess
distribution" received on the stock of a PFIC or of any gain on disposition of
that stock (collectively, "PFIC Income"), plus interest thereon, even if the
Fund distributes the PFIC income as a taxable dividend to its Shareholders. The
balance of the PFIC income will be included in the Fund's investment company
taxable income and, accordingly, will not be taxable to it to the extent that
such income is distributed to its Shareholders. If the Fund invests in a PFIC
and elects to treat the PFIC as a "qualified electing fund," then, in lieu of
the foregoing tax and interest obligation, the Fund would be required to include
in income each year its pro rata share of the qualified electing fund's annual
ordinary earnings and net capital gain - which most likely would have to be
distributed by the Fund to satisfy the Distribution Requirement and avoid
imposition of the Excise Tax - even if those earnings and gain were not
distributed to the Fund. In most instances, it will be very difficult, if not
impossible, to make this election because of certain requirements for making the
election.
As an alternative to the election to treat a PFIC as a qualified
electing fund, the Fund may elect to "mark to market" its stock in any PFIC.
"Marking-to-market," in this context, means including in ordinary income each
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taxable year the excess, if any, of the fair market value of the PFIC's stock
over the Fund's adjusted basis in that stock as of the end of that year.
Pursuant to the election, the Fund may also deduct (as an ordinary, not capital,
loss) the excess, if any, of its adjusted basis in PFIC stock over the fair
market value of that stock as of the taxable year-end, but only to the extent of
any net mark-to-market gains with respect to that stock included by the Fund for
prior taxable years. The Fund's adjusted basis in each PFIC's stock with respect
to which it makes this election will be adjusted to reflect the amounts of
income included and deductions taken under the election. The use of certain
Derivatives, such as selling (writing) and purchasing options and futures and
entering into forward currency contracts, involves complex rules that will
determine for federal income tax purposes the amount, character and timing of
recognition of the gains and losses the Fund realizes in connection therewith.
These rules also may require the Fund to "mark to market" (that is, treat as
sold for their fair market value) at the end of each taxable year certain
positions in its portfolio, which may cause the Fund to recognize income or gain
without receiving cash with which to make distributions necessary to satisfy the
Distribution Requirement and to avoid imposition of the Excise Tax.
Gains from the disposition of foreign currencies, and gains from
options, futures and forward currency contracts derived by the Fund with respect
to its business of investing in securities or foreign currencies, will be
treated as qualifying income under the Income Requirement. Under section 988 of
the Code, foreign currency gains or losses from certain forward contracts not
traded in the interbank market, as well as certain other gains or losses
attributable to currency exchange rate fluctuations, are typically treated as
ordinary income or loss. Such income or loss may increase or decrease (or
possibly eliminate) the Fund's income available for distribution.
Income received by the Fund from investments in foreign securities may
be subject to income, withholding or other taxes imposed by foreign countries
and U.S. possessions. Tax conventions between certain countries and the United
States may reduce or eliminate those taxes. Shareholders may be entitled to
claim United States foreign tax credits with respect to such taxes, subject to
certain provisions and limitations contained in the Code. If more than 50% of
the Fund's total assets at the close of its taxable year consists of stocks or
securities of foreign corporations, the Fund will be eligible to file an
election with the Internal Revenue Service to pass through to Shareholders the
amount of foreign taxes paid by the Fund. Pursuant to this election,
Shareholders will, in general, be required to (i) include in gross income (in
addition to taxable dividends actually received) their respective pro rata
shares of foreign taxes paid by the Fund and (ii) treat their respective pro
rata shares of such foreign taxes as having been paid by them. Shareholders will
be entitled, subject to certain limitations, to either deduct their respective
pro rata portions of such foreign taxes in computing their taxable incomes or
use them as foreign tax credits against their United Stated federal income
taxes. No deduction for foreign taxes may be claimed by a Shareholder who does
not itemize deductions. A tax-exempt Shareholder will not ordinarily benefit
from this election by the Fund. Each Shareholder will be notified annually
whether the foreign taxes paid by the Fund will "pass through" for that year
and, if so, such notification will designate (i) the Shareholder's portion of
the foreign taxes paid to each country and (ii) the portion of dividends that
represent income derived from sources within each country. The amount of foreign
taxes for which a Shareholder may claim a credit in any year will be subject to
an overall limitation such that the credit may not exceed the Shareholder's
United Stated federal income tax attributable to the Shareholder's foreign
source taxable income. This limitation generally applies separately to certain
specific categories of foreign source income including "passive income," which
includes, among other types of income, dividends and interest. If the Fund is
not eligible or does not elect to pass through to Shareholders the foreign taxes
paid by the Fund, the Fund will be entitled to claim a deduction for such
foreign taxes. However, any such taxes will reduce the income available for
distribution to the Shareholders.
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If the Fund has an "appreciated financial position" -- generally, an
interest (including an interest through an option, futures or forward currency
contract, or short sale) with respect to any stock, debt instrument (other than
"straight debt") or partnership interest the fair market value of which exceeds
its adjusted basis -- and enters into a "constructive sale" of the same or
substantially similar property, the Fund will be treated as having made an
actual sale thereof, with the result that gain will be recognized at that time.
A constructive sale generally consists of a short sale, an offsetting notional
principal contract or futures or forward currency contract entered into by the
Fund or a related person with respect to the same or substantially similar
property. In addition, if the appreciated financial position is itself a short
sale or such a contract, acquisition of the underlying property or substantially
similar property will be deemed a constructive sale.
Dividends from the Fund's investment company taxable income (whether
received in cash or reinvested in additional Shares) generally are taxable to
its Shareholders as ordinary income to the extent of its earnings and profits.
Distributions of the Fund's net capital gain (whether received in cash or
reinvested in additional Shares), when designated as such, are taxable to its
Shareholders as long-term capital gain, regardless of how long they have held
their Shares. See below for a summary of the tax rates applicable to capital
gain distributions. A participant in the Automatic Dividend Reinvestment Plan
will be treated as having received a distribution in the amount of the cash used
to purchase Shares on his or her behalf, including a pro rata portion of the
brokerage fees incurred by the Transfer Agent. Distributions by the Fund to its
Shareholders in any year that exceed the Fund's earnings and profits generally
may be applied by each Shareholder against his or her basis for the Shares and
will be taxable at capital gains rates (assuming the Shares are held as a
capital asset) to any Shareholder only to the extent the distributions to the
Shareholder exceed the Shareholder's basis for his or her Shares. Shareholders
who are not liable for tax on their income and whose Shares are not
debt-financed generally are not required to pay tax on dividends or other
distributions they receive from the Fund.
The Fund may retain for investment its net capital gain. However, if
the Fund does so, it will be subject to a tax of 35% on the amount retained. In
that event, the Fund expects to designate the retained amount as undistributed
capital gain in a notice to its Shareholders, who (i) will be required to
include in income for tax purposes, as long-term capital gain, their
proportionate shares of such undistributed amount, (ii) will be entitled to
credit their proportionate shares of the 35% tax paid by the Fund against their
federal income tax liabilities, if any, and to claim refunds to the extent the
credit exceeds those liabilities, and (iii) will increase the tax basis of their
Fund Shares by an amount equal to the difference between (x) the respective
amounts included in income as long-term capital gain and (y) their respective
proportionate shares of the tax paid by the Fund.
The Internal Revenue Service has taken the position in a revenue ruling
that if a RIC has two classes of shares, it may designate distributions made to
each class in any year as consisting of no more than such class's proportionate
share of particular types of income based on the total distributions paid to
each class for such year, including distributions out of net capital gain.
Consequently, if both Shares and preferred stock are outstanding, the Fund
intends to designate distributions made to the classes as consisting of
particular types of income in accordance with the classes' proportionate shares
of such income. Thus, distributions of net capital gain will be allocated
between Shareholders and holders of preferred stock, if any, in proportion to
the total distributions made to each class during the taxable year, or otherwise
as required by applicable law.
The Fund will notify its Shareholders following the end of each
calendar year of the amounts of dividends and capital gain distributions paid
(or deemed paid) that year and undistributed capital gain designated for that
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year. The information regarding capital gain distributions and undistributed
capital gain will designate the portion thereof subject to the different maximum
rates of tax applicable to noncorporate taxpayers' net capital gain indicated
below.
Dividends and other distributions declared by the Fund in December of
any year and payable to Shareholders of record on a date in that month will be
deemed to have been paid by the Fund and received by the Shareholders on
December 31st if the distributions are paid by the Fund during the following
January. Accordingly, those distributions will be taxed to Shareholders for the
year in which that December 31st falls.
An investor should be aware that, if such investor purchases Shares
shortly before the record date for any dividend or other distribution, he or she
will pay full price for the Shares and will receive some portion of the purchase
price back as a taxable distribution.
Upon the sale or exchange of Shares (including a sale pursuant to a
Share repurchase or tender offer by the Fund), a Shareholder generally will
recognize a taxable gain or loss equal to the difference between his or her
adjusted basis for the Shares and the amount received. Any such gain or loss
will be treated as a capital gain or loss if the Shares are capital assets in
the Shareholder's hands and will be long-term capital gain or loss if the Shares
have been held for more than one year. See below for a discussion of the tax
rates applicable to capital gains. Any loss recognized on a sale or exchange of
Shares that were held for six months or less will be treated as long-term,
rather than short-term, capital loss to the extent of any capital gain
distributions previously received thereon. A loss realized on a sale or exchange
of Shares will be disallowed to the extent those Shares are replaced by other
Shares within a period of 61 days beginning 30 days before and ending 30 days
after the date of disposition of the Shares (which could occur, for example, as
a result of participation in the Automatic Dividend Reinvestment Plan). In that
event, the basis of the replacement Shares will be adjusted to reflect the
disallowed loss.
The maximum tax applicable to net capital gains recognized by
individuals and other non-corporate taxpayers is (i) the same as the ordinary
income tax rate for capital assets held for one year or less; (ii) 28% for
capital assets held for more than one year but not more than 18 months or (iii)
20% (10% for taxpayers in the 15% marginal tax bracket) for capital assets held
for more than 18 months. The maximum net capital gain tax rate for corporations
is 35%. The tax rates described above will apply to distributions of net capital
gain by the Fund (if, as expected, the Fund designates net capital gain
distributions as 28% rate gain distributions or 20% rate gain distributions, in
accordance with its holding periods for the securities it sold that generated
the distributed gains) as well as to sales and exchanges of Shares. With respect
to capital losses recognized on dispositions of Shares held six months or less
where such losses are treated as long-term capital losses to the extent of prior
capital gain distributions received thereon (see discussion in the preceding
paragraph), it is unclear how such capital losses offset the capital gains
referred to above. Shareholders should consult their own tax advisers as to the
application of the foregoing capital gains rates to their particular
circumstances. Proposed legislation, which has been passed by Congress, would,
if signed by the President, make capital gains recognized by individuals and
other non-corporate taxpayers on assets held for more than one year (instead of
18 months) eligible for the 20% capital gains tax rate. No assurance can be
given that such proposed legislation will be enacted in the form proposed, or at
all.
The Fund is required to withhold 31% of all dividends, capital gain
distributions and repurchase proceeds payable to any individual Shareholders and
certain other non-corporate Shareholders who do not provide the Fund with a
correct taxpayer identification number. The Fund is also required to withhold
31% of all dividends and capital gain distributions payable to such Shareholders
who otherwise are subject to backup withholding.
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The foregoing is only a brief summary of some of the important federal
income tax considerations generally affecting the Fund and its Shareholders.
There may be other federal, state, local or foreign tax considerations
applicable to a particular investor. Prospective investors are urged to consult
their tax advisers regarding the specific federal income tax consequences of
purchasing, holding and disposing of Shares, as well as the effects of state,
local and foreign tax laws and any proposed tax law changes.
AUTOMATIC DIVIDEND REINVESTMENT PLAN
Pursuant to the Fund's Automatic Dividend Reinvestment Plan (the
"Plan"), unless a Shareholder otherwise elects, all dividends and other
distributions (collectively referred to in this section as "dividends") will be
automatically reinvested by State Street Bank and Trust Company ("State
Street"), as agent for Shareholders in administering the Plan (the "Plan
Agent"), in additional Shares of the Fund. Shareholders who elect not to
participate in the Plan will receive all dividends payable in cash by check
mailed directly to the Shareholder of record (or, if the Shares are held in
street or other nominee name, then to such nominee) by State Street as dividend
disbursing agent. Such participants may elect not to participate in the Plan and
to receive in cash all dividends payable in cash by sending written instructions
to State Street, as dividend disbursing agent, at the address set forth below.
Participation in the Plan is completely voluntary and may be terminated or
resumed at any time without penalty by written notice if received by the Plan
Agent not less than thirty days prior to any dividend record date; otherwise
such termination will be effective with respect to any subsequently declared
dividend or other distribution.
Whenever the Fund declares an income dividend payable in cash,
non-participants in the Plan will receive cash and participants in the Plan will
receive the equivalent in Shares. Whenever the Fund declares dividends in
additional unissued but authorized Shares ("newly issued Shares")
non-participants in the Plan will receive newly issued Shares and participants
will receive Shares under the Plan as described as follows. The Shares will be
acquired by the Plan Agent for the participants' accounts, depending upon the
circumstances described below, either (i) through receipt of newly issued Shares
or (ii) by purchase of outstanding Shares on the open market ("open-market
purchases") on the NYSE or elsewhere. If on the payment date for a dividend
payable in either cash or Shares, the net asset value per Share is equal to or
less than the market price per Share plus estimated brokerage commissions (such
condition being referred to herein as "market premium"), the Plan Agent will
invest the dividend amount in newly issued Shares on behalf of the participants.
The number of newly issued Shares to be credited to each participant's account
will be determined by dividing the dollar amount of the dividend by the net
asset value per Share on the date the Shares are issued, provided that the
maximum discount from the then current market price per Share on the date of
issuance may not exceed 5%. If on the dividend payment date for a dividend
payable only in cash the net asset value per Share is greater than the market
value (such condition being referred to herein as "market discount"), the Plan
Agent will invest the dividend amount in Shares acquired on behalf of the
participants in open-market purchases.
In the event of a market discount on the dividend payment date for a
dividend payable only in cash, the Plan Agent will have no more than 30 days
after the dividend payment date (the "last purchase date") to invest the
dividend amount in Shares acquired in open-market purchases. If, before the Plan
Agent has completed its open-market purchases, the market price of a Share
exceeds the net asset value per Share, the average per Share purchase price paid
by the Plan Agent may exceed the net asset value of the Shares, resulting in the
acquisition of fewer Shares than if the dividend had been paid in newly issued
Shares on the dividend payment date. Because of the foregoing difficulty with
respect to open-market purchases, the Plan provides that if the Plan Agent is
unable to invest the full dividend amount in open-market purchases by the last
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purchase date or if the market discount shifts to a market premium by that date,
the Plan Agent will cease making open-market purchases and will invest the
uninvested portion of the dividend amount in newly issued Shares at the close of
business on the last purchase date.
The Plan Agent maintains all Shareholders' accounts in the Plan and
furnishes written confirmation of all transactions in the accounts, including
information needed by Shareholders for tax records. Shares in the account of
each Plan participant will be held by the Plan Agent on behalf of the Plan
participant, and each Shareholder proxy will include those Shares purchased or
received pursuant to the Plan. The Plan Agent will forward all proxy
solicitation materials to participants and vote proxies for Shares held pursuant
to the Plan in accordance with the instructions of the participants.
In the case of Shareholders such as banks, brokers or nominees that
hold Shares for others who are the beneficial owners, the Plan Agent will
administer the Plan on the basis of the number of Shares certified from time to
time by the record Shareholder's name and held for the account of beneficial
owners who participate in the Plan.
There will be no brokerage charges with respect to Shares issued
directly by the Fund as a result of dividends payable either in Shares or in
cash. However, each Plan participant will pay a pro rata share of brokerage
commissions incurred with respect to the Plan Agent's open-market purchases in
connection with the reinvestment of dividends.
The automatic reinvestment of dividends will not relieve Plan
participants of any federal, state or local income tax that may be payable (or
required to be withheld) on such dividends. See "Taxes."
Shareholders participating in the Plan may receive benefits not
available to Shareholders not participating in the Plan. If the market price
(plus commissions) of the Fund's Shares is above their net asset value,
participants in the Plan will receive Shares of the Fund at less than they could
otherwise purchase them and will have Shares with a cash value greater than the
value of any cash distribution they would have received on their Shares. If the
market price plus commissions is below the net asset value, participants will
receive distributions in Shares with a net asset value greater than the value of
any cash distribution they would have received on their Shares. However, there
may be insufficient Shares available in the market to make distributions in
Shares at prices below the net asset value. Also, since the Fund does not redeem
its Shares, the price on resale may be more or less than the net asset value.
See "Taxes" for a discussion of tax consequences of the Plan.
Experience under the Plan may indicate that changes are desirable.
Accordingly, the Fund reserves the right to amend or terminate the Plan. There
is no direct service charge to participants in the Plan; however, the Fund
reserves the right to amend the Plan to include a service charge payable by the
participants.
All correspondence concerning the Plan should be directed to the Plan
Agent at 225 Franklin Street, Boston, Massachusetts 02110.
UNDERWRITING
The underwriters named below (the "Underwriters"), acting through
PaineWebber Incorporated, 1285 Avenue of the Americas, New York, New York; A.G.
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Edwards & Sons, Inc., One North Jefferson Street, St. Louis, Missouri and Smith
Barney Inc., 338 Greenwich Street, New York, New York as their representatives
(the "Representatives") have severally agreed, subject to the terms and
conditions of the Underwriting Agreement with the Fund and INVESCO (the
"Underwriting Agreement"), to purchase from the Fund the number of Shares set
forth opposite their respective names. The Underwriters are committed to
purchase all of such Shares if any are purchased.
Underwriter Number of Shares
- ----------- ----------------
PaineWebber Incorporated ----------
A. G. Edwards & Sons, Inc. ----------
Smith Barney Inc. ----------
Total ========
The Fund has granted to the Underwriters an option, exercisable for 45
days from the date of this Prospectus to purchase up to an additional ________
Shares to cover over-allotments, if any, at the initial offering price. The
Underwriters may exercise such option solely for the purpose of covering
over-allotments incurred in the sale of the Shares offered hereby. To the extent
that the Underwriters exercise this option, each of the Underwriters will have a
firm commitment, subject to certain conditions, to purchase an additional number
of Shares proportionate to such Underwriter's initial commitment.
As set forth in the notes to the table on the cover page of this
Prospectus, INVESCO or an affiliate (not the Fund) from its own assets has
agreed to pay a commission to the Underwriters in the amount of $___ per Share
(___% of the public offering price per Share) or an aggregate amount of
$___________ ($_________ assuming full exercise of the over-allotment option)
for all Shares covered by this Prospectus. Such payment will be the legal
obligation of INVESCO (or an affiliate) and will be made out of its own assets
and will not in any way represent an obligation of the Fund or its Shareholders.
The Representatives have advised the Fund that the Underwriters may pay up to
$___ per Share from such payment received from INVESCO to certain dealers who
sell the Shares and that the Underwriters and such dealers may allow a
concession of up to $___ per Share to certain other dealers who sell Shares. In
addition, the Fund has agreed to pay the Underwriters $250,000 in partial
reimbursement of their expenses.
Prior to this offering, there has been no public market for the Shares
or any other securities of the Fund. The Fund intends to apply to list its
Shares on the New York Stock Exchange under the symbol "GFN." In order to meet
the requirements for listing the Shares on the New York Stock Exchange, the
Underwriters have undertaken to sell lots of 100 or more Shares to a minimum of
2,000 beneficial holders. The minimum investment requirement is 100 Shares
($1,500).
The Fund and INVESCO have each agreed to indemnify the several
Underwriters for or to contribute to the losses arising out of certain
liabilities, including liabilities under the Securities Act of 1933, as amended.
The Fund has agreed not to offer or sell any additional shares of
beneficial interest of the Fund, other than as contemplated by this Prospectus,
for a period of 180 days after the date of the Underwriting Agreement without
the prior written consent of the Underwriters.
Under the terms of and subject to the conditions of the Underwriting
Agreement, the Underwriters are committed to purchase and pay for all Shares
offered hereby if any are purchased. The Underwriting Agreement provides that it
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may be terminated at or prior to the closing date for the purchase of the Shares
if, in the judgment of the Representatives, payment for the delivery of the
Shares is rendered impracticable or inadvisable because (1) trading in the
equity securities of the Fund is suspended by the Securities and Exchange
Commission, by an exchange that lists the Shares, or by the National Association
of Securities Dealers Automated Quotation National Market System, (2) additional
material governmental restrictions, not in force on the date of the Underwriting
Agreement, have been imposed upon trading in securities generally or trading in
securities generally has been suspended on any U.S. securities exchange, or a
general banking moratorium has been established by Federal or New York
authorities, or (3) any outbreak or material escalation of hostilities or other
calamity or crisis occurs, the effect of which is such as to make it
impracticable to market any or all of the Shares. The Underwriting Agreement
also may be terminated if any of the conditions specified in the Underwriting
Agreement have not been fulfilled when and as required by such agreement.
The Fund anticipates that the Representatives and certain other
Underwriters may from time to time act as brokers or dealers in connection with
the execution of its portfolio transactions after they have ceased to be
Underwriters and, subject to certain restrictions, may act as such brokers while
they are Underwriters. See "Management of the Fund."
Until the distribution of Shares is completed, rules of the Securities
and Exchange Commission may limit the ability of the Underwriters and certain
selling group members to bid for and purchase the Shares. As an exception to
these rules, the Underwriters are permitted to engage in certain transactions
that stabilize the price of the Shares. Such transactions consist of bids or
purchases for the purpose of pegging, fixing or maintaining the price of the
Shares. If the Underwriters create a short position in the Shares in connection
with the offering, I.E., if they sell more Shares than are set forth on the
cover page of this Prospectus, then the Underwriters may reduce that short
position by purchasing Shares in the open market. The Underwriters may also
elect to reduce any short position by exercising all or a part of the
over-allotment option described above. In general, purchases of a security for
the purpose of stabilization or to reduce a short position could cause the price
of the security to be higher than it might be in the absence of such purchases.
In addition, PaineWebber Incorporated, on behalf of the Underwriters, may impose
"penalty bids" under contractual arrangements with the Underwriters whereby it
may reclaim from an Underwriter (or dealer participating in the offering) for
the account of the other Underwriters, the selling concession with respect to
Shares that are distributed in the offering but subsequently purchased for the
account of the Underwriters in the open market. Neither the Fund nor any of the
Underwriters make any representation or prediction as to the direction or
magnitude of any effect that the transactions described above may have on the
price of the Shares. In addition, neither the Fund nor any of the Underwriters
makes any representation that the Underwriters will engage in such transactions
or that such transactions once commenced, will not be discontinued without
notice.
SHAREHOLDER SERVICING AGENT, CUSTODIAN AND
TRANSFER AND DIVIDEND DISBURSING AGENT
PaineWebber Incorporated will provide shareholder services to the Fund
pursuant to a Shareholder Servicing Agreement with INVESCO. INVESCO will pay a
monthly fee on an annual basis equal to 0.10% of the average daily Managed
Assets of the Fund (as defined herein under "Management of the Fund") for such
services.
Pursuant to the Shareholder Servicing Agreement between PaineWebber
Incorporated (the "Shareholder Servicing Agent") and INVESCO, the Shareholder
Servicing Agent will (i) undertake to make public information pertaining to the
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Fund on an ongoing basis and to communicate to investors and prospective
investors the Fund's features and benefits (including periodic seminars or
conference calls, responses to questions from current or prospective
shareholders and specific shareholder contact where appropriate); (ii) make
available to investors and prospective investors market price, net asset value,
yield and other information regarding the Fund, if reasonably obtainable, for
the purpose of maintaining the visibility of the Fund in the investor community;
(iii) at the request of INVESCO, provide certain economic research and
statistical information and reports, if reasonably obtainable, on behalf of the
Fund, and consult with representatives and Trustees of the Fund in connection
therewith, which information and reports shall include: (a) statistical and
financial market information with respect to the Fund's market performance and
(b) comparative information regarding the Fund and other closed-end management
investment companies with respect to (1) the net asset value of their respective
shares, (2) the respective market performance of the Fund and such other
companies and (3) other relevant performance indicators; and (iv) at the request
of INVESCO, provide information to and consult with the Board of Trustees of the
Fund with respect to applicable strategies designed to address market value
discounts, which may include share repurchase, tender offers, modifications to
dividend policies or capital structure, repositioning or restructuring of the
Fund, conversion of the Fund to an open-end investment company, liquidation or
merger; provided, however, that under the terms of the Shareholder Servicing
Agreement, the Shareholder Servicing Agent is not obligated to render any
opinions, valuations or recommendations of any kind or to perform any such
similar services. For these services, INVESCO will pay the Shareholder Servicing
Agent a fee equal on an annual basis to 0.10% of the Fund's average weekly
Managed Assets (as defined above under "Management of the Fund - Management and
Administration Agreement"), payable in arrears at the end of each calendar
month. Under the terms of the Shareholder Servicing Agreement, the Shareholder
Servicing Agent is relieved from liability to INVESCO or to the Fund for any act
or omission in the course of its performance under the Shareholder Servicing
Agreement, in the absence of gross negligence or willful misconduct by the
Shareholder Servicing Agent. INVESCO has agreed to indemnify the Shareholder
Servicing Agent or contribute to losses arising out of certain liabilities under
the Shareholder Servicing Agreement. The Shareholder Servicing Agreement will
continue for an initial term of two years and thereafter for successive one-year
periods unless terminated by either party upon 60 days written notice.
State Street will act as the Fund's Custodian. The Custodian may employ
sub-custodians outside the U.S. approved by the Board of Trustees in accordance
with regulations under the Investment Company Act. State Street will also act as
the Fund's Transfer and Dividend Disbursing Agent.
DESCRIPTION OF SHARES
The Fund is a newly organized unincorporated business trust under the
laws of the Commonwealth of Massachusetts created pursuant to an Agreement and
Declaration of Trust (the "Trust Agreement") dated July 9, 1998. The Fund is
authorized to issue an unlimited number of shares of beneficial interest, par
value $.001 per share. Each Share has one vote and, when issued and paid for in
accordance with the terms of the offering, will be fully paid and
non-assessable. Fund Shares are of one class and have equal rights as to
dividends and in liquidation. The Fund may reclassify Shares as preferred
shares, with such rights and designations as the Board shall determine. Shares
have no preemptive, subscription or conversion rights and are freely
transferable. The Fund will send annual and semi-annual financial statements to
all its Shareholders.
Under Massachusetts law, Shareholders could, in certain circumstances,
be held personally liable for the obligations of a Massachusetts business trust.
However, the Trust Agreement disclaims shareholder liability for acts or
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obligations of the Fund and requires that notice of such disclaimer be given in
each agreement, obligation or instrument entered into or executed by the Fund or
a Trustee. The Trust Agreement provides for indemnification from the Fund's
property for all losses and expenses of any shareholder held personally liable
for the obligations of the Fund. Thus, the risk of a Shareholder incurring
financial loss on account of Shareholder liability is limited to circumstances
in which the Fund itself would be unable to meet its obligations, a possibility
which management believes is remote. Upon payment of any liability incurred by
the Fund, the Shareholder paying such liability will be entitled to
reimbursement from the general assets of the Fund. The Fund intends to conduct
its operations in such a way so as to avoid, as far as possible, ultimate
liability of the Shareholders for liabilities of the Fund.
The Fund has no present intention of offering additional Shares, except
as described herein and under the Automatic Dividend Reinvestment Plan, as it
may be amended from time to time. See "Automatic Dividend Reinvestment Plan."
Other offerings of its Shares, if made, will require approval of the Fund's
Board of Trustees. Any additional offering will not be sold at a price per Share
below the then current net asset value (exclusive of underwriting discounts and
commissions) except in connection with an offering to existing Shareholders or
with the consent of a majority of the Fund's outstanding Shares or otherwise as
permitted by applicable law.
The Fund intends to apply to list its Shares on the New York Stock
Exchange under the symbol "GFN."
ANTI-TAKEOVER PROVISIONS IN THE TRUST AGREEMENT
The Fund's Trust Agreement includes provisions that could have the
effect of limiting the ability of other entities or persons to acquire control
of the Fund or to change the composition of its Board of Trustees, and could
have the effect of depriving Shareholders of an opportunity to sell their Shares
at a premium over prevailing market prices by discouraging a third party from
seeking to obtain control of the Fund. These provisions may have the effect of
discouraging attempts to acquire control of the Fund, which attempts could have
the effect of increasing the expenses of the Fund and interfering with the
normal operation of the Fund. The Board of Trustees is divided into three
classes, with the terms of one class expiring at each annual meeting of
Shareholders. At each annual meeting, one class of Trustees is elected to a
three-year term. This provision could delay for up to two years the replacement
of a majority of the Board of Trustees. A Trustee may be removed from office
only for cause by a written instrument signed by at least two-thirds of the
remaining Trustees or by a vote of the holders of at least two-thirds of the
Shares.
In addition, the Declaration of Trust requires the favorable vote of
the holders of at least 80% of the outstanding Shares of each class of the Fund,
voting as a class, then entitled to vote to approve, adopt or authorize certain
transactions with 5%-or-greater holders of a class of Shares and their
associates, unless the Board of Trustees shall by resolution have approved a
memorandum of understanding with such holders, in which case normal voting
requirements would be in effect. For purposes of these provisions, a
5%-or-greater holder of a class of Shares (a "Principal Shareholder") refers to
any person who, whether directly or indirectly and whether alone or together
with its affiliates and associates, beneficially owns 5% or more of the
outstanding shares of any class of beneficial interest of the Fund. The
transactions subject to these special approval requirements are: (i) the merger
or consolidation of the Fund or any subsidiary of the Fund with or into any
Principal Shareholder; (ii) the issuance of any securities of the Fund to any
Principal Shareholder for cash (except pursuant to the Automatic Dividend
Reinvestment Plan); (iii) the sale, lease or exchange of all or any substantial
part of the assets of the Fund to any Principal Shareholder (except assets
having an aggregate fair market value of less than $1,000,000, aggregating for
the purpose of such computation all assets sold, leased or exchanged in any
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series of similar transactions within a twelve-month period); (iv) the sale,
lease or exchange to the Fund or any subsidiary thereof, in exchange for
securities of the Fund, of any assets of any Principal Shareholder (except
assets having an aggregate fair market value of less than $1,000,000,
aggregating for the purposes of such computation all assets sold, leased or
exchanged in any series of similar transactions within a twelve-month period);
(v) the liquidation or dissolution of the Fund; or (vi) a change in the nature
of the business of the Fund so that it would cease to be an investment company
registered under the Investment Company Act .
The Board of Trustees has determined that provisions with respect to
the Board of Trustees and the 80% voting requirements described above (and the
requirements relating to conversion to an open-end fund described below), which
voting requirements are greater than the minimum requirements under
Massachusetts law or the Investment Company Act, are in the best interest of
Shareholders generally. Reference should be made to the Declaration of Trust on
file with the Securities and Exchange Commission for the full text of these
provisions.
CLOSED-END FUND STRUCTURE
Closed-end funds differ from open-end management investment companies
(commonly referred to as mutual funds) in that closed-end funds generally list
their shares for trading on a securities exchange and do not redeem their shares
at the option of the shareholder. By comparison, mutual funds issue securities
redeemable at net asset value at the option of the shareholder and typically
engage in a continuous offering of their shares. Mutual funds are subject to
continuous asset in-flows and out-flows that can complicate portfolio
management, whereas closed-end funds generally can stay more fully invested in
securities consistent with the closed-end fund's investment objective and
policies. In addition, in comparison to open-end funds, closed-end funds have
greater flexibility in the employment of financial leverage and in the ability
to make certain types of investments, such as investments in illiquid
securities. However, shares of closed-end funds frequently trade at a discount
from their net asset value.
In recognition of the possibility that the Shares might trade at a
discount to net asset value and that any such discount may not be in the
interest of Shareholders, the Fund's Board of Trustees, in consultation with
INVESCO, from time to time may review the possibility of implementing a "managed
distribution" policy, which would entail quarterly payments of dividends in an
amount equal to a pre-established percentage of the Fund's net asset value. As
described below, the Board might also consider open market repurchases or tender
offers for Shares at net asset value. There can be no assurance that the Board
of Trustees will decide to undertake any of these actions or that, if
undertaken, such actions would result in the Shares trading at a price equal to
or close to net asset value per Share. As described below, the Board of Trustees
might also consider the conversion of the Fund to an open-end mutual fund. The
Board of Trustees believes, however, that the closed-end structure is desirable,
given the Fund's investment objective and policies. Investors should assume,
therefore, that it is unlikely that the Board of Trustees would vote to convert
the Fund to an open-end investment company.
Shares of closed-end management investment companies often trade at a
discount to their net asset values, and the Fund's Shares may likewise trade at
a discount to their net asset value, although it is possible that they may trade
at a premium above net asset value. The market price of the Fund's Shares will
be determined by such factors as relative demand for and supply of such Shares
in the market, the Fund's net asset value, general market and economic
conditions and other factors beyond the control of the Fund. See "Determination
of Net Asset Value." Although the Fund's Shareholders will not have the right to
redeem their Shares, the Fund may take action to repurchase Shares in the open
market or make tender offers for its Shares at their net asset value. This may
have the effect of reducing any market discount from net asset value.
There is no assurance that if action is undertaken to repurchase or
tender for Shares, such action will result in the Shares' trading at a price
which approximates their net asset value. Although Share repurchases and tenders
could have a favorable effect on the market price of the Fund's Shares, it
should be recognized that the acquisition of Shares by the Fund will decrease
the total assets of the Fund and, therefore, have the effect of increasing the
Fund's expense ratio. Any Share repurchases or tender offers will be made in
accordance with requirements of the Securities Exchange Act of 1934, as amended,
and the Investment Company Act.
The Fund may be converted to an open-end investment company at any time
by an amendment to the Trust Agreement. The Trust Agreement provides that such
an amendment would require the approval of two-thirds of the Fund's outstanding
shares (including any preferred shares) entitled to vote on the matter, voting
as a single class (or a majority of such shares if the amendment previously was
approved, adopted or authorized by at least two-thirds of the total number of
Trustees) and, assuming the Fund has issued preferred shares, by the affirmative
vote of a majority of the outstanding preferred shares, voting as a separate
class. Such a vote also would satisfy a separate requirement in the Investment
Company Act that the change be approved by the shareholders. If approved in the
foregoing manner, conversion of the Fund could not occur until at least 90 days
after the shareholders' meeting at which such conversion was approved and could
take significantly longer and would also require at least 30 days' prior notice
to all shareholders.
Conversion of the Fund to an open-end investment company would require
the redemption of any outstanding preferred shares and any indebtedness not
constituting bank loans, which could eliminate or alter the leveraged capital
structure of the Fund with respect to the Shares. Following any such conversion,
it is also possible that certain of the Fund's investment policies and
strategies would have to be modified to assure sufficient portfolio liquidity.
In particular, the Fund would be required to maintain its portfolio such that
not more than 15% of its assets would be invested in illiquid securities, or
other illiquid assets, or securities which are restricted as to resale
(excluding, for purposes of this limitation, Rule 144A and other securities
deemed liquid by INVESCO pursuant to guidelines established by the Board of
Trustees). Such requirement could cause the Fund to dispose of portfolio
securities or other assets at a time when it is not advantageous to do so, and
could adversely affect the ability of the Fund to meet its investment
objectives. In the event of conversion, the Shares would cease to be listed on
the New York Stock Exchange or other national securities exchange or market
system. Shareholders of an open-end investment company may require the company
to redeem their shares at any time (except in certain circumstances as
authorized by or under the Investment Company Act) at their net asset value,
less such redemption charge, if any, as might be in effect at the time of a
redemption. The Fund expects to pay all such redemption requests in cash, but
intends to reserve the right to pay redemption requests in a combination of cash
or securities. If a payment in securities were made, investors may incur
brokerage costs in converting such securities to cash. If the Fund were
converted to an open-end fund, it is likely that new common shares would be sold
at net asset value plus a sales load.
In its review of the Fund's investment objective and of the proposed
investment policies and practices of the Fund in its pursuit of its investment
objective, the Board of Trustees has determined that the closed-end structure of
the Fund is desirable and appropriate. Investors should assume, therefore, that
it is unlikely that the Board of Trustees would vote to amend the Trust
Agreement in order to convert the Fund to an open-end investment company.
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LEGAL OPINIONS
Certain legal matters in connection with the Shares offered hereby will
be passed upon for the Fund by Kirkpatrick & Lockhart LLP and for the
Underwriters by Skadden, Arps, Slate, Meagher & Flom (Illinois) and its
affiliated entities.
EXPERTS
The statement of assets and liabilities of the Fund included in this
Prospectus has been so included in reliance upon the report of
PricewaterhouseCoopers LLP, independent accountants, and on their authority as
experts in auditing and accounting.
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REPORT OF INDEPENDENT ACCOUNTANTS
To the Shareholder and Trustees
of the INVESCO Global Financial Services Fund
In our opinion, the accompanying statement of assets and liabilities
presents fairly, in all material respects, the financial position of the INVESCO
Global Financial Services Fund (the "Fund") at August ____, 1998, in conformity
with generally accepted accounting principles. This financial statement is the
responsibility of the Fund's management; our responsibility is to express an
opinion on this financial statement based on our audit. We conducted our audit
of this financial statement in accordance with generally accepted auditing
standards which require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statement is free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statement, assessing the accounting
principles used and significant estimates made by management, and evaluating the
overall financial statement presentation. We believe that our audit provides a
reasonable basis for the opinion expressed above.
PricewaterhouseCoopers LLP
Denver, Colorado
August _____, 1998
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES
August ____, 1998
Assets:
Cash...............................................................$_____
Deferred organization expenses (Note 3) ............................_____
Total Assets ................................................_____
Liabilities:
Organization expenses payable and total liabilities..............._____
Capital:
[Commitments and contingencies (Notes 2 and 3)............................ _____
Net Assets, equivalent to _____ shares of beneficial interest issued
and outstanding, par value $0.01, unlimited authorized shares.............._____
Net asset value per share.................................................._____
Note 1. Organization:
The INVESCO Global Financial Services Fund (the "Fund") was organized
as a Massachusetts business trust on July ____, 1998, and is registered as a
non-diversified, closed-end management investment company under the Investment
Company Act of 1940. The Fund has had no operations other than the sale to
INVESCO Funds Group, Inc. (the "Investment Adviser") of ______ shares of
beneficial interest for $_____ on August ____, 1998.
Note 2. Advisory and Administration Agreements
The Fund has entered into an Advisory and Administration Agreement with
the Investment Adviser. The Fund will pay the Investment Adviser a monthly fee
at an annual rate of 1.50 percent of the Fund's average weekly value of Managed
Assets.
Note 3. Deferred Organization Costs:
The Investment Advisor has advanced certain organization and start-up
costs of the Fund and is to be reimbursed by the Fund. On April 3, 1998,
Statement of Position 98-5 was issued. This Statement of Position requires that
unamortized organization costs on the Fund's statement of assets and liabilities
be written off, effective for fiscal years beginning after December 15, 1998. In
accordance with Statement of Position 98-5, these organization and start-up
costs will be immediately expensed.
<PAGE>
APPENDIX A
RATINGS OF CORPORATE BONDS
DESCRIPTION OF CORPORATE BOND RATINGS OF STANDARD & POOR'S RATINGS GROUP:
AAA--Bonds rated AAA have the highest rating assigned by S&P. Capacity
to pay interest and repay principal is extremely strong.
AA--Bonds rated AA have a very strong capacity to pay interest and
repay principal and differ from the highest rated issues only in small degree.
A--Bonds rated A have a strong capacity to pay interest and repay
principal although they are somewhat more susceptible to the adverse effects of
changes in circumstances and economic conditions than obligations in higher
rated categories.
BBB--Bonds rated BBB are regarded as having an adequate capacity to pay
interest and repay principal. Whereas they normally exhibit adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay interest and repay principal for
bonds in this category than for bonds in higher rated categories.
BB--Bonds rated BB have less near-term vulnerability to default than
other speculative grade debt. However, they face major ongoing uncertainties or
exposure to adverse business, financial or economic conditions which could lead
to inadequate capacity to meet timely interest and principal payments.
B--Bonds rated B have a greater vulnerability to default but presently
have the capacity to meet interest payments and principal repayments. Adverse
business, financial or economic conditions would likely impair capacity or
willingness to pay interest and repay principal.
CCC--Bonds rated CCC have a current identifiable vulnerability to
default and are dependent upon favorable business, financial and economic
conditions to meet timely payments of interest and repayment of principal. In
the event of adverse business, financial or economic conditions, they are not
likely to have the capacity to pay interest and repay principal.
CC--The rating CC is typically applied to debt subordinated to senior
debt which is assigned an actual or implied CCC rating.
C--The rating C is typically applied to debt subordinated to senior
debt which is assigned an actual or implied CCC- debt rating.
D--Bonds rated D are in default, and payment of interest and/or
repayment of principal is in arrears.
S&P's letter ratings may be modified by the addition of a plus (+) or a minus
(-) sign designation, which is used to show relative standing within the major
rating categories, except in the AAA (Prime Grade) category.
A-1
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DESCRIPTION OF BOND RATINGS OF MOODY'S INVESTORS SERVICE, INC.
Aaa--Bonds which are rated Aaa are judged to be of the best quality.
They carry the smallest degree of investment risk and generally are referred to
as "gilt edge." Interest payments are protected by a large or by an
exceptionally stable margin and principal is secure. While the various
protective elements are likely to change, such changes as can be visualized are
most unlikely to impair the fundamentally strong position of such issues.
Aa--Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what generally are known as
high grade bonds. They are rated lower than the best bonds because margins of
protection may not be as large as in Aaa securities or fluctuation of protective
elements may be of greater amplitude or there may be other elements present
which make the long-term risks appear somewhat larger than in Aaa securities.
A--Bonds which are rated A possess many favorable investment attributes
and are to be considered as upper medium grade obligations. Factors giving
security to principal and interest are considered adequate, but elements may be
present which suggest a susceptibility to impairment sometime in the future.
Baa--Bonds which are rated Baa are considered as medium grade
obligations, i.e., they are neither highly protected nor poorly secured.
Interest payments and principal security appear adequate for the present but
certain protective elements may be lacking or may be characteristically
unreliable over any great length of time. Such bonds lack outstanding investment
characteristics and in fact have speculative characteristics as well.
Ba--Bonds which are rated Ba are judged to have speculative elements;
their future cannot be considered as well assured. Often the protection of
interest and principal payments may be very moderate and, therefore, not well
safeguarded during both good and bad times over the future. Uncertainty of
position characterizes bonds in this class.
B--Bonds which are rated B generally lack characteristics of the
desirable investment. Assurance of interest and principal payments or of
maintenance of other terms of the contract over any long period of time may be
small.
Caa--Bonds which are rated Caa are of poor standing. Such issues may be
in default or there may be present elements of danger with respect to principal
or interest.
Ca-Bonds which are rated Ca present obligations which are speculative
in a high degree. Such issues are often in default or have other marked
shortcomings.
C--Bonds which are rated C are the lowest rated class of bonds, and
issues so rated can be regarded as having extremely poor prospects of ever
attaining any real investment standing.
Moody's applies the numerical modifiers 1, 2 and 3 to show relative standing
within the major rating categories, except in the Aaa category and in the
categories below B. The modifier 1 indicates a ranking for the security in the
higher end of a rating category; the modifier 2 indicates a mid-range ranking;
and the modifier 3 indicates a ranking in the lower end of a rating category.
A-2
<PAGE>
======================================== ==================================
No person has been authorized to give
any information or to make any
representations in conneciton with this
offering other than those contained in
this Prospectus and, if given or made,
such other information and repre-
sentations must not be relied upon
as having been authorized by the Fund or ________ Shares
the Underwriters. Neither the delivery
of this Prospectus nor any sale made INVESCO Global
hereunder shall, under any circumstances, Financial
create any implication that there has Services Fund
been no change in the affairs of the
Fund since the date hereof or that the
information contained herein is correct
as of any time subsequent to its date. ----------------
This Prospectus does not constitute an
offer to sell or a solicitation of an PROSPECTUS
offer to buy any securities other than ----------------
the registered securities to which it
relates. This Prospectus does not
constitute an offer to sell or a
solicitation of an offer to buy such in
any circumstances in which such offer
or solicitation is unlawful.
----------------------
TABLE OF CONTENTS
Page
Prospectus Summary.....................
Fee Table..............................
The Fund...............................
The Adviser ...........................
Use of Proceeds........................ PaineWebber Incorporated
Investment Objective and Policies...... A.G. Edwards & Sons, Inc.
Other Investment Practices............. Salomon Smith Barney
Risk Factors and Special
Considerations.......................
Investment Restrictions................
Management of the Fund.................
Trustees and Officers of the Fund......
Brokerage and Portfolio Transactions... August __, 1998
Determination of Net Asset Value.......
Dividends and Other Distributions......
Taxes..................................
Automatic Dividend Reinvestment Plan...
Underwriting...........................
Shareholder Servicing Agent,
Custodian and Transfer and
Dividend Disbursing Agent............
Description of Shares..................
Legal Opinions.........................
Experts................................
Independent Auditors Report............
Statement of Assets and Liabilities....
Appendix A.............................
Until ___, all dealers effecting
transactions in the Shares, whether or
not participating in this distribution,
may be required to deliver a Prospectus.
This is in addition to the obligation of
dealers to deliver a Prospectus when
acting as Underwriters and with respect
to their unsold allotments or
subscriptions.
======================================== ==================================
<PAGE>
Ex.(2)(d)(1)
Part C
Other Information
Item 24. Financial Statements and Exhibits
(1) Financial Statements:
The Selected Financial Information, Statement of Operations, Statement
of Changes in Net Assets, and Schedules II through VII, inclusive, are
omitted because the required information is included in the financial
statement included in Part A or Part B, or because the conditions
requiring their filing do not exist.
(2) Exhibits
(a) Declaration of Trust [Filed herewith]
(b) Bylaws [Filed herewith]
(c) Inapplicable
(d) (1) Portions of Declaration of Trust Relating to Shareholders'
Rights [Filed herewith]
(2) Portions of Bylaws Relating to Shareholders' Rights
[Filed herewith]
(e) Form of Terms and Conditions of Dividend Reinvestment Plan
[To be filed by Amendment]
(f) Inapplicable
(g) Form of Investment Management and Administration Agreement
[To be filed by Amendment]
(h) (1) Form of Master Agreement Among Underwriters
[To be filed by Amendment]
(2) Form of Underwriting Agreement
[To be filed by Amendment]
(3) Form of Master Selected Dealers Agreement
[To be filed by Amendment]
(i) Inapplicable
(j) (1) Form of Custodian Contract
[To be filed by Amendment]
(2) Form of Transfer Agency Agreement
[To be filed by Amendment]
(k) Form of Shareholder Servicing Agreement
[To be filed by Amendment]
(l) Opinion and Consent of Counsel
[To be filed by Amendment]
(m) Inapplicable
(n) Consent of Independent Auditors
[To be filed by Amendment]
(o) Inapplicable
(p) Initial Capital Agreement
[To be filed by Amendment]
(q) Inapplicable
<PAGE>
Item 25. Marketing Arrangements
Reference is made to the Form of Underwriting Agreement for
Registrant's shares of beneficial interest to be filed by amendment to this
Registration Statement.
Item 26. Other Expenses of Issuance and Distribution
Securities and Exchange Commission Fees................ $........*
NASD Fees.............................................. $........*
New York Stock Exchange Listing Fee.................... $........*
Printing............................................... $........*
Accounting Fees and Expenses........................... $........*
Legal Fees............................................. $........*
Blue Sky Fees and Expenses............................. $........*
Miscellaneous.......................................... $........*
=============
Total $ *
=============
- --------------
*To be furnished by amendment
Item 27. Persons Controlled By or Under Common Control with Registrant
No person is presently controlled by or under common control with
Registrant.
Item 28. Number of Record Holders of Securities
None
Item 29. Indemnification
Article V of the Registrant's Declaration of Trust provides as follows:
Section 5.1. No Shareholder shall be subject to any personal
liability whatsoever to any Person in connection with Fund Property or the acts,
obligations or affairs of the Fund. The Trustees shall have no power to bind any
Shareholder personally or to call upon any Shareholder for the payment of any
sum of money or assessment whatsoever other than such as the Shareholder may at
any time personally agree to pay by way of subscription to any Shares or
otherwise. Shareholder liability for the acts and obligations of the Fund is
hereby expressly disclaimed. Every note, bond, contract, or other undertaking
issued by or on behalf of the Fund or the Trustees relating to the Fund shall
include a notice and provision limiting the obligation represented thereby to
the Fund and its assets (but the omission of such notice and provision shall not
operate to impose any liability or obligation on any Shareholder). No Trustee,
officer, employee or agent of the Fund shall be subject to any personal
liability whatsoever to any Person, in connection with the Fund Property or the
affairs of the Fund, save only that arising from bad faith, willful misfeasance,
gross negligence or reckless disregard for his or her duty to such Person; and
all such Persons shall look solely to the Fund Property for satisfaction of
claims of any nature arising in connection with the affairs of the Fund. If any
Shareholder, Trustee, officer, employee or agent, as such, of the Fund is made a
party to any suit or proceeding to enforce any such liability, he or she shall
not, on account thereof, be held to any personal liability. The Fund shall
indemnify and hold each Shareholder harmless from and against all claims and
liabilities, to which such Shareholder may become subject by reason of his or
her being or having been a Shareholder, other than by reason of his or her own
wrongful act or omission, and shall reimburse such Shareholder for all legal and
2
<PAGE>
other expenses reasonably incurred by him or her in connection with any such
claim or liability. The rights accruing to a Shareholder under this Section 5.1
shall not exclude any other right to which such Shareholder may be lawfully
entitled, nor shall anything herein contained restrict the right of the Fund to
indemnify or reimburse a Shareholder in any appropriate situation even though
not specifically provided herein.
Section 5.2. No Trustee, officer, employee or agent of the
Fund shall be liable to the Fund, its Shareholders, or to any Shareholder,
Trustee, officer, employee, or agent thereof for any action or failure to act
(including without limitation the failure to compel in any way any former or
acting Trustee to redress any breach of trust) except for his or her own bad
faith, willful misfeasance, gross negligence or reckless disregard of his or her
duties.
Section 5.3. (a) The Trustee shall provide for indemnification
by the Fund of any person who is, or has been, a Trustee, officer, employee or
agent of the Fund against all liability and against all expenses reasonably
incurred or paid by him in connection with any claim, action, suit or proceeding
in which he becomes involved as a party or otherwise by virtue of his being or
having been a Trustee, officer, employee or agent and against amounts paid or
incurred by him in the settlement thereof, in such manner as the Trustees may
provide from time to time in the by-laws. (b) The words "claim," "action,"
"suit," or "proceeding" shall apply to all claims, actions, suits or proceedings
(civil, criminal or other, including appeals), actual or threatened; and the
words "liability" and "expenses" shall include, without limitation, attorneys'
fees, costs, judgments, amounts paid in settlement, fines, penalties and other
liabilities.
Item 30. Business and Other Connections of Investment Adviser
See "The Adviser" and "Management of the Fund" in the Fund's prospectus
for information regarding the business of the investment adviser. For
information as to the business, profession, vocation or employment of a
substantial nature of each of the officers and directors of the Fund, reference
is made to the Schedule Ds to the Form ADV filed under the Investment Advisers
Act of 1940 by INVESCO Funds Group, Inc., which schedules are herein
incorporated by reference.
Item 31. Location of Accounts and Records
The accounts, books and other documents of the Fund required to be
maintained by Section 31(a) of the Investment Company Act of 1940 and rules
promulgated thereunder will be maintained at the office of the Fund's custodian
and dividend disbursing agent and registrar at State Street Bank & Trust Co.,
except that the Fund's corporate records (its articles of incorporation,
by-laws, and minutes of the meetings of its Board of Directors and shareholders)
will be maintained at the offices of the Fund's investment advisor at 7800 E.
Union Avenue, Denver, Colorado 80237.
Item 32. Management Services
None
3
<PAGE>
Item 33. Undertakings
(1) The Registrant undertakes to suspend offering of its shares until it
amends its prospectus if (1) subsequent to the effective date of its
Registration Statement, the net asset value declines more than 10
percent from its net asset value as of the effective date of the
Registration Statement or (2) the net asset value increases to an
amount greater than its net proceeds as stated in the prospectus.
(2) Inapplicable
(3) Inapplicable
(4) Inapplicable
(5) The undersigned Registrant hereby undertakes that:
(a) For the purposes of determining any liability under the
Securities Act of 1933, the information omitted from the form
of prospectus filed as part of a registration statement in
reliance upon Rule 430A and contained in the form of
prospectus filed by the Registrant pursuant to Rule 42(b)(1)
or (4) or 497(h) under the Securities Act shall be deemed to
be part of the registration statement as of the time it was
declared effective.
(b) For the purposes of determining any liability under the
Securities Act of 1933, each post-effective amendment that
contains a form of prospectus shall be deemed to be a new
registration statement relating to the securities offered
therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
(6) Inapplicable
4
<PAGE>
NOTICE
A copy of the Declaration of Trust of INVESCO Global Financial Services Fund is
on file with the Secretary of State of the Commonwealth of Massachusetts and
notice is hereby given that this instrument is executed on behalf of the
Registrant by an officer of the Registrant as an officer and not individually
and that the obligations of or arising out of this instrument are not binding
upon any of the Trustees, officers or shareholders individually, but are binding
only upon the assets and property of the Registrant.
5
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereto duly
authorized, in the City of Denver, State of Colorado on the 17th day of July,
1998.
INVESCO GLOBAL FINANCIAL SERVICES
FUND
By: /s/ Mark H. Williamson
-----------------------------------
Mark H. Williamson
President
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities indicated on the dates indicated. The undersigned hereby constitute
and appoint Glen A. Payne, Clifford J. Alexander and Judith Caesar-Brown, and
each of them, with full power to act without the other, his or her true and
lawful attorney-in-fact and agent, with full power and substitution and
resubstitution, for him or her, and in his or her name, place and stead, in any
and all capacities (until revoked in writing) to sign any and all amendments to
the Registration Statement of the INVESCO Global Financial Services Fund
(including post-effective amendments thereto), and to file the same, with all
exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in fact and
agents, and each of them, full power and authority to do and perform each and
every act and thing ratifying and confirming all that said attorneys-in fact and
agents or any of them, or their or his or her substitute or substitutes, may
lawfully do or cause to be done by virtue hereof.
Signature Title Date
- --------- ----- ----
/s/ Mark H. Williamson
- ---------------------- Principal Executive Officer, July 17, 1998
Mark H. Williamson President and Trustee
/s/ Ronald L. Grooms
- ---------------------- Principal Financial Officer, July 17, 1998
Ronald L. Grooms Vice President and Treasurer
/s/ Charles W. Brady
- ---------------------- Trustee July 17, 1998
Charles W. Brady
/s/ Fred A. Deering
- ---------------------- Trustee July 17, 1998
Fred A. Deering
/s/ John W. McIntyre
- ---------------------- Trustee July 17, 1998
John W. McIntyre
/s/ Dr. Larry Soll
- ---------------------- Trustee July 17, 1998
Dr. Larry Soll
DECLARATION OF TRUST
OF
INVESCO GLOBAL FINANCIAL SERVICES FUND
DATED: JULY 9, 1998
<PAGE>
TABLE OF CONTENTS
PAGE
ARTICLE I NAME AND DEFINITIONS................................................1
Section 1.1 Name............................................................1
Section 1.2 Definitions.....................................................2
ARTICLE II TRUSTEES...........................................................3
Section 2.1 Number of Trustees..............................................3
Section 2.2 Term of Office of Trustees......................................3
Section 2.3 Resignation and Appointment of Trustees.........................4
Section 2.4 Vacancies.......................................................4
Section 2.5 Delegation of Power to Other Trustees...........................5
Section 2.6 Removal of Trustees.............................................5
ARTICLE III POWERS OF TRUSTEES................................................5
Section 3.1 General.........................................................5
Section 3.2 Investments.....................................................5
Section 3.3. Legal Title....................................................6
Section 3.4 Issuance and Repurchase of Securities...........................6
Section 3.5 Borrowing Money; Lending Fund Assets............................6
Section 3.6 Delegation; Committees..........................................7
Section 3.7 Collection and Payment..........................................7
Section 3.8 Expenses........................................................7
Section 3.9 Manner of Acting; By-Laws.......................................7
Section 3.10 Miscellaneous Powers...........................................7
Section 3.11 Principal Transactions.........................................8
Section 3.12 Litigation.....................................................8
ARTICLE IV INVESTMENT ADVISER, DISTRIBUTOR, CUSTODIAN AND
TRANSFER AGENT.................................................................8
Section 4.1 Investment Adviser..............................................8
Section 4.2 Administrative Services.........................................9
Section 4.3 Distributor.....................................................9
Section 4.4 Transfer Agent and Shareholder Servicing Agent..................9
Section 4.5 Custodian.......................................................9
Section 4.6 Parties to Contract.............................................9
ARTICLE V LIMITATIONS OF LIABILITY OF SHAREHOLDERS,
TRUSTEES AND OTHERS...........................................................10
Section 5.1 No Personal Liability of Shareholders, Trustees, etc...........10
Section 5.2 Non-Liability of Trustees, etc.................................10
Section 5.3 Indemnification................................................10
Section 5.4 No Bond Required of Trustees...................................11
<PAGE>
Section 5.5 No Duty of Investigation; Notice in Fund Instruments, etc.....11
Section 5.6 Reliance on Experts, etc.......................................11
ARTICLE VI SHARES OF BENEFICIAL INTEREST.....................................11
Section 6.1 Beneficial Interest............................................11
Section 6.2 Rights of Shareholders.........................................12
Section 6.3 Trust Only.....................................................12
Section 6.4 Issuance of Shares.............................................12
Section 6.5 Register of Shares.............................................12
Section 6.6 Transfer of Shares.............................................12
Section 6.7 Notices........................................................13
Section 6.8 Voting Powers..................................................13
Section 6.9 Series and Class Designation...................................14
ARTICLE VII DETERMINATION OF NET ASSET VALUE, NET INCOME AND DISTRIBUTIONS...14
Section 7.1 Net Asset Value.................................................14
Section 7.2 Distributions to Shareholders...................................14
Section 7.3 Determination of Net Income.....................................15
Section 7.4 Power to Modify Foregoing Procedures............................15
Section 7.5 Power to Delegate Determinations................................15
ARTICLE VIII DURATION; TERMINATION OF FUND; AMENDMENT;
MERGERS, ETC..................................................................15
Section 8.1 Duration........................................................15
Section 8.2 Termination of Fund.............................................15
Section 8.3 Amendment Procedures............................................16
Section 8.4 Merger, Consolidation and Sale of Assets........................17
Section 8.5 Incorporation and Reorganization................................17
Section 8.6 Conversion.....................................................18
Section 8.7 Certain Transactions...........................................18
ARTICLE IX REPORTS TO SHAREHOLDERS...........................................20
ARTICLE X MISCELLANEOUS......................................................20
Section 10.1 Filing.........................................................20
Section 10.2 Resident Agent.................................................20
Section 10.3 Governing Law..................................................20
Section 10.4 Organizational Expenses........................................20
Section 10.5 Counterparts...................................................21
Section 10.6 Reliance by Third Parties......................................21
Section 10.7 Provisions in Conflict with Law or Regulations.................21
<PAGE>
<PAGE>
24
DECLARATION OF TRUST
OF
INVESCO GLOBAL FINANCIAL SERVICES FUND
DATED: JULY 9, 1998
----------------------------------------
THE DECLARATION OF TRUST of INVESCO Global Financial Services Fund
is made the 9th day of July, 1998 by the parties signatory hereto, as Trustees
(such persons, so long as they shall continue in office in accordance with the
terms of this Declaration of Trust, and all other persons who at the time in
question have been duly elected or appointed as Trustees in accordance with the
provisions of this Declaration of Trust and are then in office, being
hereinafter called the "Trustees").
W I T N E S S E T H:
WHEREAS, the Trustees desire to form a Trust under the laws of
Massachusetts for the investment and reinvestment of funds contributed thereto;
and
WHEREAS, it is provided that the beneficial interest in the Trust
assets be divided into transferable shares of beneficial interest as hereinafter
provided;
NOW, THEREFORE, the Trustees hereby declare that they will hold in
trust all money and property contributed to the Trust, to manage and dispose of
the same for the benefit of the holders from time to time of the shares of
beneficial interest issued hereunder and subject to the provisions hereof, to
wit:
ARTICLE I
NAME AND DEFINITIONS
SECTION 1.1 NAME. The name of the Trust created hereby is the
"INVESCO Global Financial Services Fund," and so far as may be practicable the
Trustees shall conduct the Trust's activities, execute all documents and sue or
be sued under that name, which name (and the word "Fund" wherever herein used)
shall refer to the Trustees as trustees, and not as individuals, or personally,
and shall not refer to the officers, agents, employees or Shareholders of the
Fund. Should the Trustees determine that the use of such name is not advisable,
they may use such other name for the Fund as they deem proper and the Fund may
hold its property and conduct its activities under such other name.
<PAGE>
SECTION 1.2 DEFINITIONS. Wherever they are used herein, the
following terms have the following respective meanings:
(a) "BY-LAWS" means the By-Laws referred to in Section 3.9 hereof,
as from time to time amended.
(b) The terms "COMMISSION," "AFFILIATED PERSON" and "INTERESTED
PERSON" have the meanings given them in the 1940 Act.
(c) "DECLARATION" means this Declaration of Trust as amended from
time to time. Reference in this Declaration of Trust to
"DECLARATION," "HEREOF," "HEREIN" and "HEREUNDER" shall be
deemed to refer to this Declaration rather than the article or
section in which such words appear.
(d) "DISTRIBUTOR" means the party, other than the Fund, to a
contract described in Section 4.3 hereof.
(e) "FUND" means the INVESCO Global Financial Services Fund.
(f) "FUND PROPERTY" means any and all property, real or personal,
tangible or intangible, which is owned or held by or for the
account of the Fund or the Trustees.
(g) "FUNDAMENTAL POLICIES" shall mean the investment policies and
restrictions set forth in the Registration Statement and
designated as fundamental policies therein.
(h) "INVESTMENT ADVISER" means any party, other than the Fund, to
a contract described in Section 4.1 hereof.
(i) "MAJORITY SHAREHOLDER VOTE" means the vote of the holders of a
majority of Shares, which shall consist of (i) a majority of
Shares presented in person or by proxy and entitled to vote at
a meeting of Shareholders at which a quorum, as determined in
accordance with the By-Laws, is present or (ii) a majority of
Shares issued and outstanding and entitled to vote when action
is taken by written consent of Shareholders, unless the action
requires the approval of a "majority of the outstanding voting
securities" under the 1940 Act, in which case such vote as
specified in the 1940 Act shall be required.
(j) "1940 ACT" means the Investment Company Act of 1940 and the
rules and regulations thereunder as amended from time to time.
(k) "PERSON" means and includes individuals, corporations,
partnerships, trusts, associations, joint ventures and other
entities, whether or not legal entities, and governments and
agencies and political subdivisions thereof.
2
<PAGE>
(l) "REGISTRATION STATEMENT" means the Registration Statement of
the Fund under the Securities Act of 1933 as such Registration
Statement may be amended and filed with the Commission from
time to time.
(m) "SHAREHOLDER" means a record owner of outstanding Shares.
(n) "SHARES" means the units of interest into which the beneficial
interest in the Fund shall be divided from time to time and
includes fractions of Shares as well as whole Shares.
(o) "TRANSFER AGENT" means the party, other than the Fund, to the
contract described in Section 4.4 hereof.
(p) "TRUSTEES" means the persons who have signed the Declaration,
so long as they shall continue in office in accordance with
the terms hereof, and all other persons who may from time to
time be duly elected or appointed, qualified and serving as
Trustees in accordance with the provisions hereof, and
reference herein to a Trustee or the Trustees shall refer to
such person or persons in their capacity as Trustees
hereunder.
ARTICLE II
TRUSTEES
SECTION 2.1 NUMBER OF TRUSTEES. The number of Trustees shall be such
number as shall be fixed from time to time by a written instrument signed by a
majority of the Trustees, provided, however, that the number of Trustees shall
in no event be less than three (3) nor more than fifteen (15). No reduction in
the number of Trustees shall have the effect of removing any Trustee from office
prior to the expiration of his or her term unless the Trustee is specifically
removed pursuant to Section 2.2 of this Article II at the time of decrease.
SECTION 2.2 TERM OF OFFICE OF TRUSTEES. The Board of Trustees shall
be divided into three classes. Within the limits above specified, the number of
the Trustees in each class shall be determined by resolution of the Board of
Trustees. The term of office of all of the Trustees shall expire on the date of
the first annual or special meeting of Shareholders following the effective date
of the Registration Statement relating to the Shares under the Securities Act of
1933, as amended. The term of office of the first class shall expire on the date
of the second annual meeting of Shareholders or special meeting in lieu thereof.
The term of office of the second class shall expire on the date of the third
annual meeting of Shareholders or special meeting in lieu thereof. The term of
office of the third class shall expire on the date of the fourth annual meeting
of Shareholders or special meeting in lieu thereof. Upon expiration of the term
of office of each class as set forth above, the number of Trustees in such
class, as determined by the Board of Trustees, shall be elected for a term
expiring on the date of the third annual meeting of Shareholders or special
meeting in lieu thereof following such expiration to succeed the Trustees whose
terms of office expire. The Trustees shall be elected, by a plurality vote, at
an annual meeting of the Shareholders or special meeting in lieu thereof called
for that purpose, except as provided in Section 2.3 of this Article and each
3
<PAGE>
Trustee elected shall hold office until his or her successor shall have been
elected and shall have qualified; except (a) that any Trustee may resign his or
her trust (without need for prior or subsequent accounting) by an instrument in
writing signed by him or her and delivered to the other Trustees, which shall
take effect upon such delivery or upon such later date as is specified therein;
(b) that any Trustee may be removed (provided the aggregate number of Trustees
after such removal shall not be less than the number required by Section 2.1
hereof) for cause, at any time by written instrument, signed by at least
two-thirds of the remaining Trustees or by a vote of the holders of at least
two-thirds of the Shares, specifying the date when such removal shall become
effective; and (c) that any Trustee who requests in writing to be retired or who
has become incapacitated by illness or injury may be retired by written
instrument signed by a majority of the other Trustees, specifying the date of
his or her retirement. Upon the resignation or removal of a Trustee, or his or
her otherwise ceasing to be a Trustee, he or she shall execute and deliver such
documents as the remaining Trustees shall require for the purpose of conveying
to the Fund or the remaining Trustees any Fund property held in the name of the
resigning or removed Trustee. Upon the incapacity or death of any Trustee, his
or her legal representative shall execute and deliver on his or her behalf such
documents as the remaining Trustees shall require as provided in the preceding
sentence.
SECTION 2.3 RESIGNATION AND APPOINTMENT OF TRUSTEES. In case of the
declination, death, resignation, retirement, removal or inability of any of the
Trustees, or in case a vacancy shall, by reason of any increase in number, or
for any other reason, exist, the remaining Trustees or, prior to the public
offering of Shares of the Fund, if only one Trustee shall then remain in office,
the remaining Trustee, shall fill such vacancy by appointing such other person
as they, or any one of them, in their discretion, shall see fit. Such
appointment shall be evidenced by a written instrument signed by a majority of
the remaining Trustees or by the remaining Trustee, as the case may be. Any such
appointment shall not become effective, however, until the person named in the
written instrument or appointment shall have accepted in writing such
appointment and agreed in writing to be bound by the terms of the Declaration.
Within twelve months of such appointment, the Trustees shall cause notice of
such appointment to be mailed to each Shareholder at his or her address as
recorded on the books of the Fund. An appointment of a Trustee may be made by
the Trustees then in office and notice thereof mailed to Shareholders as
aforesaid in anticipation of a vacancy to occur by reason of retirement,
resignation or increase in number of Trustees effective at a later date,
provided that said appointment shall become effective only at or after the
effective date of said retirement, resignation or increase in number of
Trustees. The power of appointment is subject to the provisions of Section 16(a)
of the 1940 Act.
SECTION 2.4 VACANCIES. The death, declination, resignation,
retirement, removal or incapacity of the Trustees, or any one of them, shall not
operate to annul the Fund or to revoke any existing agency created pursuant to
the terms of this Declaration. Whenever a vacancy in the number of Trustees
shall occur, until such vacancy is filled as provided in Section 2.3, the
Trustees in office, regardless of their number, shall have all the duties
imposed upon the Trustees by the Declaration. A written instrument certifying
the existence of such vacancy signed by a majority of the Trustees shall be
conclusive evidence of the existence of such vacancy.
SECTION 2.5 DELEGATION OF POWER TO OTHER TRUSTEES. Subject to the
provisions of the 1940 Act, any Trustee may, by power of attorney, delegate his
or her power for a period not exceeding six (6) months at any one time to any
other Trustee or Trustees; provided that in no case shall less than two (2)
Trustees personally exercise the powers granted to the Trustees under the
Declaration except as herein otherwise expressly provided.
SECTION 2.6 REMOVAL OF TRUSTEES. The Fund shall comply with the
provisions of Section 16(c) of the 1940 Act as though applicable to the Fund,
and with interpretations thereof by the Commission staff, insofar as such
provisions and interpretations provide for the removal of trustees of common-law
trusts and the calling of Shareholder meetings for such purpose; provided,
however, that the Fund may at any time or from time to time apply to the
Commission for one or more exemptions from all or part of said Section 16(c) or
a staff interpretation thereof and, if exemptive order(s) or interpretation(s)
are issued or provided by the Commission or its staff, such order(s) or
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interpretation(s) shall be deemed part of Section 16(c) for the purpose of
applying this Section 2.6.
ARTICLE III
POWERS OF TRUSTEES
SECTION 3.1 GENERAL. The Trustees shall have exclusive and absolute
control over the Fund Property and over the business of the Fund to the same
extent as if the Trustees were the sole owners of the Fund Property and business
in their own right, but with such powers of delegation as may be permitted by
the Declaration. The Trustees shall have power to conduct the business of the
Fund and carry on its operations in any and all of its branches and maintain
offices both within and without the Commonwealth of Massachusetts, in any and
all states of the United States of America, in the District of Columbia, and in
any and all commonwealths, territories, dependencies, colonies, possessions,
agencies or instrumentalities wheresoever in the world they may be located and
to do all such other things and execute all such instruments as they deem
necessary, proper or desirable in order to promote the interests of the Fund
although such things are not herein specifically mentioned. Any determination as
to what is in the interests of the Fund made by the Trustees in good faith shall
be conclusive. In construing the provisions of the Declaration, the presumption
shall be in favor of a grant of power to the Trustees.
The enumeration of any specific power herein shall not be construed
as limiting the aforesaid power. Such powers of the Trustees may be exercised
without order of or resort to any court.
SECTION 3.2 INVESTMENTS. The Trustees shall have the power to:
(a) conduct, operate and carry on the business of an investment
company;
(b) subscribe for, invest in, reinvest in, purchase or otherwise
acquire, hold, pledge, sell, sell short, assign, transfer,
exchange, distribute, lend or otherwise deal in, all forms of
securities of every kind, nature, character, type and form,
and other financial instruments that may not be deemed to be
securities, including, but not limited to, futures contracts
and options thereon, forward foreign currency contracts, and
equity swaps. Such securities and other financial instruments
may include, but are not limited to, shares, stocks, bonds,
debentures, notes, script, participation certificates, rights
to subscribe, warrants, options, repurchase agreements,
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commercial paper, evidences of indebtedness, certificates of
indebtedness, issued or to be issued by any corporation,
company, partnership, association, trust or entity, public or
private, whether organized under the laws of the United
States, or any state, commonwealth, territory or possession
thereof, or of any foreign country, or any state, province,
territory or possession thereof; and to exercise any and all
rights, powers and privileges of ownership or interest in
respect of any and all such investments of every kind and
description, including, without limitation, the right to
consent and otherwise act with respect thereto, with power to
designate one or more persons, firms, associations or
corporations to exercise any of said rights, powers and
privileges in respect of any of said instruments; and the
Trustee shall be deemed to have the foregoing powers with
respect to any additional securities in which the Fund may
invest should the Fundamental Policies be amended.
The Trustee shall not be limited to investing in obligations maturing before the
possible termination of the Fund, nor shall the Trustees be limited by any law
limiting the investments which may be made by fiduciaries.
Section 3.3. LEGAL TITLE. Legal title to all the Fund Property shall
be vested in the Trustees as joint tenants except that the Trustees shall have
power to cause legal title to any Fund Property to be held by or in the name of
one or more of the Trustees, or in the name of the Fund, or in the name of any
other Person as nominee, on such terms as the Trustees may determine, provided
that the interest of the Fund therein is appropriately protected. The right,
title and interest of the Trustees in the Fund Property shall vest automatically
in each Person who may hereafter become a Trustee. Upon the resignation, removal
or death of a Trustee he or she shall automatically cease to have any right,
title or interest in any of the Fund Property, and the right, title and interest
of such Trustee in the Fund Property shall vest automatically in the remaining
Trustees. Such vesting and cessation of title shall be effective whether or not
conveyancing documents have been executed and delivered.
SECTION 3.4 ISSUANCE AND REPURCHASE OF SECURITIES. The Trustees
shall have the power to issue, sell, repurchase, retire, cancel, acquire, hold,
resell, reissue, dispose of, transfer, and otherwise deal in Shares and, subject
to the provisions set forth in Articles VII and VIII hereof, to apply to any
such repurchase, retirement, cancellation or acquisition of Shares any funds or
property of the Fund, whether capital or surplus or otherwise, to the full
extent now or hereafter permitted by the laws of the Commonwealth of
Massachusetts governing business corporations.
SECTION 3.5 BORROWING MONEY; LENDING FUND ASSETS. Subject to the
Fundamental Policies, the Trustees shall have power to borrow money or otherwise
obtain credit and to secure the same by mortgaging, pledging or otherwise
subjecting as security the assets of the Fund, to endorse, guarantee, or
undertake the performance of any obligation, contract or engagement of any other
Person and to lend Fund assets.
SECTION 3.6 DELEGATION; COMMITTEES. The Trustees shall have power,
consistent with their continuing exclusive authority over the management of the
Fund and the Fund Property, to delegate from time to time to such of their
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number or to officers, employees or agents of the Fund the doing of such things
and the execution of such instruments either in the name of the Fund or the
names of the Trustees or otherwise as the Trustees may deem expedient.
SECTION 3.7 COLLECTION AND PAYMENT. The Trustees shall have power to
collect all property due to the Fund; to pay all claims, including taxes,
against the Fund Property; to prosecute, defend, compromise or abandon any
claims relating to the Fund Property; to foreclose any security interest
securing any obligations, by virtue of which any property is owed to the Fund;
and to enter into releases, agreements and other instruments.
SECTION 3.8 EXPENSES. The Trustees shall have the power to incur and
pay any expenses which in the opinion of the Trustees are necessary or
incidental to carry out any of the purposes of the Declaration, and to pay
reasonable compensation from the funds of the Fund to themselves as Trustees.
The Trustees shall fix the compensation of all officers, employees and Trustees.
SECTION 3.9 MANNER OF ACTING; BY-LAWS. Except as otherwise provided
herein or in the By-Laws or by any provision of law, any action to be taken by
the Trustees may be taken by a majority of the Trustees present at a meeting of
Trustees (a quorum being present), including any meeting held by means of a
conference telephone circuit or similar communications equipment by means of
which all persons participating in the meeting can hear each other, or by
written consents of a majority of the Trustees. The Trustees may adopt By-Laws
not inconsistent with this Declaration to provide for the conduct of the
business of the Fund and may amend or repeal such By-Laws to the extent such
power is not reserved to the Shareholders.
SECTION 3.10 MISCELLANEOUS POWERS. The Trustees shall have the power
to: (a) employ or contract with such Persons as the Trustees may deem desirable
for the transaction of the business of the Fund; (b) enter into joint ventures,
partnerships and any other combinations or associations; (c) remove Trustees or
fill vacancies in or add to their number, elect and remove such officers and
appoint and terminate such agents or employees as they consider appropriate, and
appoint from their own number, and terminate, any one or more committees which
may exercise some or all of the power and authority of the Trustees as the
Trustees may determine; (d) purchase, and pay for out of Fund Property,
insurance policies insuring the Shareholders, Trustees, officers, employees,
agents, investment advisers, distributors, selected dealers or independent
contractors of the Fund against all claims arising by reason of holding any such
position or by reason of any action taken or omitted to be taken by any such
Person in such capacity, whether or not constituting negligence, or whether or
not the Fund would have the power to indemnify such Person against such
liability; (e) establish pension, profit-sharing, Share purchase, and other
retirement, incentive and benefit plans for any Trustees, officers, employees
and agents of the Fund; (f) to the extent permitted by law, indemnify any person
with whom the Fund has dealings, including any Investment Adviser, Distributor,
Transfer Agent and selected dealers, to such extent as the Trustees shall
determine; (g) guarantee indebtedness or contractual obligations of others; (h)
determine and change the fiscal year of the Fund and the method by which its
accounts shall be kept; and (i) adopt a seal for the Fund, but the absence of
such seal shall not impair the validity of any instrument executed on behalf of
the Fund.
SECTION 3.11 PRINCIPAL TRANSACTIONS. Except in transactions
permitted by the 1940 Act or any rule or regulation thereunder, or any order of
exemption issued by the Commission, or effected to implement the provisions of
any agreement to which the Fund is a party, the Trustees shall not, on behalf of
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the Fund, buy any securities (other than Shares) from or sell any securities
(other than Shares) to, or lend any assets of the Fund to, any Trustee or
officer of the Fund or any firm of which any such Trustee or officer is a member
acting as principal, or have any such dealings with any Investment Adviser,
Distributor or Transfer Agent or with any Affiliated Person of such Person; but
the Fund or any Series thereof may employ any such Person, or firm or company in
which such Person is an Interested Person, as broker, legal counsel, registrar,
transfer agent, dividend disbursing agent or custodian upon customary terms.
SECTION 3.12 LITIGATION. The Trustees shall have the power to engage
in and to prosecute, defend, compromise, abandon, or adjust, by arbitration or
otherwise, any actions, suits, proceedings, disputes, claims, and demands
relating to the Fund, and out of the assets of the Fund to pay or to satisfy any
debts, claims or expenses incurred in connection therewith, including those of
litigation, and such power shall include without limitation the power of the
Trustees or any appropriate committee thereof, in the exercise of their or its
good faith business judgment, to dismiss any action, suit, proceeding, dispute,
claim or demand, derivative or otherwise, brought by any person, including a
Shareholder in its own name or the name of the Fund, whether or not the Fund or
any of the Trustees may be named individually therein or the subject matter
arises by reason of business for or on behalf of the Fund.
ARTICLE IV
INVESTMENT ADVISER, DISTRIBUTOR,
CUSTODIAN AND TRANSFER AGENT
SECTION 4.1 INVESTMENT ADVISER. The Trustees may in their discretion
from time to time enter into one or more investment advisory or management
contracts whereby the other party or parties to any such contracts shall
undertake to furnish the Fund such management, investment advisory,
administration, accounting, legal, statistical and research facilities and
services, promotional or marketing activities, and such other facilities and
services, if any, as the Trustees shall from time to time consider desirable and
all upon such terms and conditions as the Trustees may in their discretion
determine. Notwithstanding any provisions of the Declaration, the Trustees may
authorize the Investment Advisers, or any of them, under any such contracts
(subject to such general or specific instructions as the Trustees may from time
to time adopt) to effect purchases, sales, loans or exchanges of portfolio
securities and other investments of the Fund on behalf of the Trustees or may
authorize any officer, employee or Trustee to effect such purchases, sales,
loans or exchanges pursuant to recommendations of such Investment Advisers, or
any of them (and all without further action by the Trustees). Any such
purchases, sales, loans and exchanges shall be deemed to have been authorized by
all of the Trustees.
SECTION 4.2 ADMINISTRATIVE SERVICES. The Trustees may in their
discretion from time to time contract for administrative personnel and services
whereby the other party shall agree to provide the Trustees or the Fund
administrative personnel and services to operate the Fund on a daily or other
basis, on such terms and conditions as the Trustees may in their discretion
determine. Such services may be provided by one or more persons or entities.
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SECTION 4.3 DISTRIBUTOR. The Trustees may in their discretion from
time to time enter into one or more contracts, providing for the sale of Shares
whereby the Fund may either agree to sell the Shares to the other parties to the
contracts, or any of them, or appoint any such other party its sales agent for
such Shares. In either case, any such contract shall be on such terms and
conditions as the Trustees may in their discretion determine not inconsistent
with the provisions of this Article IV or the By-Laws, including, without
limitation, the provision for the repurchase or sale of Shares of the Fund by
such other party as principal or as agent of the Fund, and for entry by the
other parties to the contracts into selected dealer agreements with registered
securities dealers to further the purpose of distribution of the Shares.
SECTION 4.4 TRANSFER AGENT AND SHAREHOLDER SERVICING AGENT. The
Trustees may in their discretion from time to time enter into a transfer agency
contract and/or shareholder servicing contract whereby the other party to such
contract shall undertake to furnish transfer agency and shareholder services to
the Fund. The contract shall have such terms and conditions as the Trustees may
in their discretion determine not inconsistent with the Declaration or the
By-Laws. Such services may be provided by one or more Persons.
SECTION 4.5 CUSTODIAN. The Trustees may appoint or otherwise engage
one or more banks or trust companies, each having an aggregate capital, surplus
and undivided profits (as shown in its last published report) of at least five
million dollars ($5,000,000) to serve as Custodian with authority as its agent,
but subject to such restrictions, limitations and other requirements, if any, as
may be contained in the By-Laws of the Fund.
SECTION 4.6 PARTIES TO CONTRACT. Any contract of the character
described in Sections 4.1, 4.2, 4.3, 4.4 or 4.5 of this Article IV and any other
contract may be entered into with any Person, although one or more of the
Trustees or officers of the Fund may be an officer, director, trustee,
shareholder, or member of such other party to the contract, and no such contract
shall be invalidated or rendered voidable by reason of the existence of any such
relationship; nor shall any Person holding such relationship be liable merely by
reason of such relationship for any loss or expense to the Fund under or by
reason of said contract or accountable for any profit realized directly or
indirectly therefrom, provided that the contract when entered into was not
inconsistent with the provisions of this Article IV. The same Person may be the
other party to any contracts entered into pursuant to Sections 4.1, 4.2, 4.3,
4.4 or 4.5 above or otherwise, and any individual may be financially interested
or otherwise affiliated with Persons who are parties to any or all of the
contracts mentioned in this Section 4.6.
ARTICLE V
LIMITATIONS OF LIABILITY OF SHAREHOLDERS,
TRUSTEES AND OTHERS
SECTION 5.1 NO PERSONAL LIABILITY OF SHAREHOLDERS, TRUSTEES, ETC. No
Shareholder shall be subject to any personal liability whatsoever to any Person
in connection with Fund Property or the acts, obligations or affairs of the
Fund. The Trustees shall have no power to bind any Shareholder personally or to
call upon any Shareholder for the payment of any sum of money or assessment
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whatsoever other than such as the Shareholder may at any time personally agree
to pay by way of subscription to any Shares or otherwise. Shareholder liability
for the acts and obligations of the Fund is hereby expressly disclaimed. Every
note, bond, contract, or other undertaking issued by or on behalf of the Fund or
the Trustees relating to the Fund shall include a notice and provision limiting
the obligation represented thereby to the Fund and its assets (but the omission
of such notice and provision shall not operate to impose any liability or
obligation on any Shareholder). No Trustee, officer, employee or agent of the
Fund shall be subject to any personal liability whatsoever to any Person, in
connection with the Fund Property or the affairs of the Fund, save only that
arising from bad faith, willful misfeasance, gross negligence or reckless
disregard for his or her duty to such Person; and all such Persons shall look
solely to the Fund Property for satisfaction of claims of any nature arising in
connection with the affairs of the Fund. If any Shareholder, Trustee, officer,
employee or agent, as such, of the Fund is made a party to any suit or
proceeding to enforce any such liability, he or she shall not, on account
thereof, be held to any personal liability. The Fund shall indemnify and hold
each Shareholder harmless from and against all claims and liabilities, to which
such Shareholder may become subject by reason of his or her being or having been
a Shareholder, other than by reason of his or her own wrongful act or omission,
and shall reimburse such Shareholder for all legal and other expenses reasonably
incurred by him or her in connection with any such claim or liability. The
rights accruing to a Shareholder under this Section 5.1 shall not exclude any
other right to which such Shareholder may be lawfully entitled, nor shall
anything herein contained restrict the right of the Fund to indemnify or
reimburse a Shareholder in any appropriate situation even though not
specifically provided herein.
SECTION 5.2 NON-LIABILITY OF TRUSTEES, ETC. No Trustee, officer,
employee or agent of the Fund shall be liable to the Fund, its Shareholders, or
to any Shareholder, Trustee, officer, employee, or agent thereof, for any action
or failure to act (including without limitation the failure to compel in any way
any former or acting Trustee to redress any breach of trust) except for his or
her own bad faith, willful misfeasance, gross negligence or reckless disregard
of his or her duties.
SECTION 5.3 INDEMNIFICATION. (a) The Trustees shall provide for
indemnification by the Fund of any person who is, or has been, a Trustee,
officer, employee or agent of the Fund against all liability and against all
expenses reasonably incurred or paid by him or her in connection with any claim,
action, suit or proceeding in which he or she becomes involved as a party or
otherwise by virtue of being or having been a Trustee, officer, employee or
agent and against amounts paid or incurred by him or her in the settlement
thereof, in such manner as the Trustees may provide from time to time in the
By-Laws.
(b) The words "claim," "action," suit," or "proceeding" shall apply
to all claims, actions, suits or proceedings (civil, criminal, or other,
including appeals), actual or threatened; and the words "liability" and
"expenses" shall include, without limitation, attorneys' fees, costs, judgments,
amounts paid in settlement, fines, penalties and other liabilities.
SECTION 5.4 NO BOND REQUIRED OF TRUSTEES. No Trustee shall be
obligated to give any bond or other security for the performance of any of his
or her duties hereunder.
SECTION 5.5 NO DUTY OF INVESTIGATION; NOTICE IN FUND INSTRUMENTS,
ETC. No purchaser, lender, transfer agent or other Person dealing with the
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Trustees or any officer, employee or agent of the Fund shall be bound to make
any inquiry concerning the validity of any transaction purporting to be made by
the Trustees or by said officer, employee or agent or be liable for the
application of money or property paid, loaned, or delivered to or on the order
of the Trustees or of said officer, employee or agent. Every obligation,
contract, instrument, certificate, Share, other security of the Fund or
undertaking, and every other act or thing whatsoever executed in connection with
the Fund shall be conclusively presumed to have been executed or done by the
executors thereof only in their capacity as officers, employees or agents of the
Fund. Every written obligation, contract, instrument, certificate, Share, other
security of the Fund or undertaking made or issued by the Trustees shall recite
that the same is executed or made by them not individually, but as Trustees
under the Declaration, and that the obligations of the Fund under any such
instrument are not binding upon any of the Trustees or Shareholders,
individually, but bind only the Fund, and may contain any further recital which
they, or any one of them, may deem appropriate, but the omission of such recital
shall not affect the validity of such obligation, contract, instrument,
certificate, share, security or undertaking and shall not operate to bind the
Trustees or Shareholders individually. The Trustees may maintain insurance for
the protection of the Fund Property, its Shareholders, Trustees, officers,
employees and agents in such amount as the Trustees shall deem adequate to cover
possible tort liability, and such other insurance as the Trustees in their sole
judgment shall deem advisable.
SECTION 5.6 RELIANCE ON EXPERTS, ETC. Each Trustee and officer or
employee of the Fund shall, in the performance of his or her duties, be fully
and completely justified and protected with regard to any act or any failure to
act resulting from reliance in good faith upon the books of account or other
records of the Fund, upon an opinion of counsel, or upon reports made to the
Fund by any of its officers or employees or by any Investment Adviser,
Distributor, Transfer Agent, selected dealers, accountants, appraisers or other
experts or consultants selected with reasonable care by the Trustees, officers
or employees of the Fund, regardless of whether such counsel or expert may also
be a Trustee.
ARTICLE VI
SHARES OF BENEFICIAL INTEREST
SECTION 6.1 BENEFICIAL INTEREST. The interest of the beneficiaries
hereunder shall be divided into transferable shares of beneficial interest of
$.001 par value. The number of such shares of beneficial interest authorized
hereunder is unlimited. All Shares issued hereunder, including Shares issued in
connection with a dividend in Shares or a split in Shares, shall be fully paid
and nonassessable.
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SECTION 6.2 RIGHTS OF SHAREHOLDERS. The ownership of the Fund
Property of every description and the right to conduct any business hereinbefore
described are vested exclusively in the Trustees, and the Shareholders shall
have no interest therein other than the beneficial interest conferred by their
Shares, and they shall have no right to call for any partition or division of
any property, profits, rights or interests of the Fund nor can they be called
upon to assume any losses of the Fund or suffer an assessment of any kind by
virtue of their ownership of Shares. The Shares shall be personal property
giving only the rights in the Declaration specifically set forth. The Shares
shall not entitle the holder to preference, preemptive, appraisal, conversion or
exchange rights.
SECTION 6.3 TRUST ONLY. It is the intention of the Trustees to
create only the relationship of Trustee and beneficiary between the Trustees and
each Shareholder from time to time. It is not the intention of the Trustees to
create a general partnership, limited partnership, joint stock association,
corporation, bailment or any other form of legal relationship other than a
trust. Nothing in the Declaration shall be construed to make the Shareholders,
either by themselves or with the Trustees, partners or members of a joint stock
association.
SECTION 6.4 ISSUANCE OF SHARES. The Trustees in their discretion
may, from time to time without vote of the Shareholders, issue Shares, in
addition to the then issued and outstanding Shares and Shares held in the
treasury, to such party or parties and for such amount and type of
consideration, including cash or property, at such time or times and on such
terms as the Trustees may deem best, and may in such manner acquire other assets
(including the acquisition of assets subject to, and in connection with, the
assumption of liabilities) and businesses. In connection with any issuance of
Shares, the Trustees may issue fractional Shares and Shares held in the
treasury. The Trustees may from time to time divide or combine the Shares into a
greater or lesser number without thereby changing the proportionate beneficial
interests in the Fund without the vote of the Shareholders. Contributions to the
Fund may be accepted for whole Shares and/or 1/1,000ths of a Share or integral
multiples thereof.
SECTION 6.5 REGISTER OF SHARES. A register shall be kept in respect
of the Fund at the principal office of the Fund or at an office of the Transfer
Agent which shall contain the names and addresses of the Shareholders and the
number of Shares held by them respectively and a record of all transfers
thereof. Such register may be in written form or any other form capable of being
converted into written form within a reasonable time for visual inspection. Such
register shall be conclusive as to who are the holders of the Shares and who
shall be entitled to receive dividends or distributions or otherwise to exercise
or enjoy the rights of Shareholders. No Shareholder shall be entitled to receive
payment of any dividend or distribution, nor to have notice given to him or her
as herein or in the By-Laws provided, until he or she has given his or her
address to the Transfer Agent or such other officer or agent of the Trustees as
shall keep the said register for entry thereon. The Trustees, in their
discretion, may authorize the issuance of Share certificates and promulgate
appropriate rules and regulations as to their use.
SECTION 6.6 TRANSFER OF SHARES. Shares shall be transferable on the
records of the Fund only by the record holder thereof or by his or her agent
thereunto duly authorized in writing, upon delivery to the Trustees or the
Transfer Agent of a duly executed instrument of transfer, together with such
evidence of the genuineness of each such execution and authorization and of
other matters as may reasonably be required. Upon such delivery the transfer
shall be recorded on the register of the Trust. Until such record is made, the
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Shareholder of record shall be deemed to be the holder of such Shares for all
purposes hereunder and neither the Trustees nor any Transfer Agent or registrar
nor any officer, employee or agent of the Fund shall be affected by any notice
of the proposed transfer.
Any person becoming entitled to any Shares in consequence of the
death, bankruptcy, or incompetence of any Shareholder, or otherwise by operation
of law, shall be recorded on the register of Shares as the holder of such Shares
upon production of the proper evidence thereof to the Trustees or the Transfer
Agent, but until such record is made, the Shareholder of record shall be deemed
to be the holder of such Shares for all purposes hereunder and neither the
Trustees nor any Transfer Agent or registrar nor any officer or agent of the
Fund shall be affected by any notice of such death, bankruptcy or incompetence,
or other operation of law, except as may otherwise be provided by the laws of
the Commonwealth of Massachusetts.
SECTION 6.7 NOTICES. Any and all notices to which any Shareholders
may be entitled and any and all communications shall be deemed duly served or
given if mailed, postage prepaid, addressed to any Shareholder of record at his
or her last known address as recorded on the register of the Fund or in such
other manner as is permitted by law. Annual reports and proxy statements need
not be sent to a Shareholder if: (i) an annual report and proxy statement for
two consecutive annual meetings, or (ii) all, and at least two, checks (if sent
by first class mail) in payment of dividends or interest and Shares during a
twelve-month period have been mailed to such Shareholder's address and have been
returned undelivered. However, delivery of such annual reports and proxy
statements shall resume once a Shareholder's current address is determined.
SECTION 6.8 VOTING POWERS. The Shareholders shall have power to vote
only (i) for the election of Trustees as provided in Section 2.2 hereof; (ii)
for the removal of Trustees as provided in Section 2.2 hereof; (iii) with
respect to termination of the Fund as provided in Section 8.2, (iv) with respect
to any amendment of the Declaration to the extent and as provided in Section
8.3, (v) with respect to any merger, consolidation, conversion or sale of assets
as provided in Sections 8.4, 8.5 and 8.6, (vi) with respect to incorporation or
reorganization of the Fund to the extent and as provided in Section 8.5, (vii)
to the same extent as the stockholders of a Massachusetts business corporation
as to whether or not a court action, proceeding or claim should or should not be
brought or maintained derivatively or as a class action on behalf of the Fund or
the Shareholders, and (viii) with respect to such additional matters relating to
the Fund as may be required by law, the Declaration, the By-Laws or any
registration of the Fund with the Commission (or any successor agency) or any
state, or as and when the Trustees may consider necessary or desirable. Each
whole Share shall be entitled to one vote as to any matter on which it is
entitled to vote and each fractional Share shall be entitled to a proportionate
fractional vote, except that Shares held in the treasury of the Fund as of the
record date, as determined in accordance with the By-Laws, shall not be voted.
There shall be no cumulative voting in the election of Trustees. Shareholders
shall have no preemptive or other right to subscribe to any additional Shares or
other securities issued by the Fund. Until Shares are issued, the Trustees may
exercise all rights of Shareholders and may take any action required by law, the
Declaration or the By-Laws to be taken by Shareholders. The By-Laws may include
further provisions for Shareholders' votes and meetings and related matters.
SECTION 6.9 SERIES AND CLASS DESIGNATION. The Trustees, in their
discretion, may authorize the division of Shares into two or more Series or
Classes thereof, and the different Series and Classes shall be established and
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designated, and the variations in the relative rights and preferences as between
the different Series and Classes shall be fixed and determined, by the Trustees;
provided that all Shares shall be identical except that there may be variations
so fixed and determined between different Series or Classes as to investment
objective, policies and restrictions, purchase price, payment obligations,
distribution expenses, right of redemption, special and relative rights as to
dividends and on liquidation, conversion rights, exchange rights and conditions
under which the several Series or Classes shall have separate voting rights, all
of which are subject to the limitations set forth below. In the event two or
more Series or Classes are authorized, issued and outstanding, on any matter
submitted to Shareholders all shares shall be voted in the aggregate and not by
individual Series or Class except (1) when required by the 1940 Act or any rule
thereunder Shares shall be voted by individual Series or Class and (2) when the
Trustees shall have determined that the matter affects only the interests of one
or more Series or Classes thereof, then only the Shareholders of such Series or
Classes thereof shall be entitled to vote thereon. The Trustees may, in
conjunction with the establishment of any Series or any Classes of Shares,
establish conditions under which the several Series or Classes of Shares shall
have separate voting rights or no voting rights. All references to Shares in
this Declaration shall be deemed to be Shares of any or all Series or Classes as
the context may require.
ARTICLE VII
DETERMINATION OF NET ASSET VALUE,
NET INCOME AND DISTRIBUTIONS
SECTION 7.1 NET ASSET VALUE. The net asset value of each outstanding
Share of the Fund shall be determined on such days and at such time or times as
the Trustees may determine. The method of determination of net asset value shall
be determined by the Trustees and shall be as set forth in the Registration
Statement. The Trustees may suspend the determination of net asset value to the
extent permitted by the 1940 Act.
SECTION 7.2 DISTRIBUTIONS TO SHAREHOLDERS. The Trustees shall from
time to time distribute ratably among the Shareholders of the Fund such
proportion of the net income, earnings, profits, gains, surplus (including paid
in surplus), capital, or assets of the Fund held by the Trustees as they may
deem proper. Such distribution may be made in cash or property (including
without limitation any type of obligations of the Fund or any assets thereof),
and the Trustees may distribute ratably among the Shareholders of the Fund
additional Shares issuable hereunder in such manner, at such times, on such
terms as the Trustees may deem proper. Such distributions may be among the
Shareholders of record (determined in accordance with the Registration
Statement) of the Fund at the time of declaring a distribution or may be among
the Shareholders of record of the Fund at such later date as the Trustees shall
determine. The Trustees may always retain from the net income, earnings, profits
or gains of the Fund such amount as they may deem necessary to pay the debts or
expenses of the Fund or to meet obligations of the Fund, or as they may deem
desirable to use in the conduct of its affairs or to retain for future
requirements or extensions of the business. The Trustees may adopt and offer to
Shareholders of the Fund such dividend reinvestment plans as the Trustees deem
appropriate.
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Inasmuch as the computation of net income and gains for federal
income tax purposes may vary from the computation thereof on the books, the
above provisions shall be interpreted to give the Trustees the power in their
discretion to distribute for any fiscal year as ordinary dividends and as
capital gains distributions, respectively, additional amounts sufficient to
enable the Fund to avoid or reduce liability for taxes.
SECTION 7.3 DETERMINATION OF NET INCOME. The Trustees shall have the
power to determine the net income of the Fund and from time to time to
distribute such net income ratably among the Shareholders as dividends in cash
or additional Shares issuable hereunder. The determination of net income and the
resultant declaration of dividends shall be as set forth in the Registration
Statement. The Trustees or their delegates shall have full discretion to
determine whether any cash or property received by the Fund shall be treated as
income or as principal and whether any item of expenses shall be charged to the
income or the principal account, and their determination made in good faith
shall be conclusive upon the Shareholders. In the case of stock dividends
received, the Trustees shall have full discretion to determine, in the light of
the particular circumstances, how much, if any, of the value thereof shall be
treated as income, the balance, if any, to be treated as principal.
SECTION 7.4 POWER TO MODIFY FOREGOING PROCEDURES. Notwithstanding
any of the foregoing provisions of this Article VII, the Trustees may prescribe,
in their absolute discretion, such other bases and times for determining the per
Share net asset value of the Shares or net income, or the declaration and
payment of dividends and distributions, as they may deem necessary or desirable
to enable the Fund to comply with any provision of the 1940 Act, or any rule or
regulation thereunder, or any order of exemption issued by the Commission, all
as in effect now or hereafter amended or modified.
SECTION 7.5 POWER TO DELEGATE DETERMINATIONS. The power and duty to
make the net asset value calculations may be delegated by the Trustees to any
Investment Adviser, the Custodian, the Transfer Agent or such other person as
the Trustees by resolution may determine. The power and duty to calculate,
declare and make net income and distributions may be delegated by the Trustees
to any officer of the Fund.
ARTICLE VIII
DURATION; TERMINATION OF
FUND; AMENDMENT; MERGERS, ETC.
SECTION 8.1 DURATION. The Fund shall continue without limitation of
time but subject to the provisions of this Article VIII.
SECTION 8.2 TERMINATION OF FUND. (a) The Fund may be terminated by
the affirmative vote of the holders of not less than two-thirds (66-2/3%) of the
Shares outstanding and entitled to vote at any meeting of Shareholders of the
Fund except that a Majority Shareholder Vote shall be sufficient if termination
of the Fund has been recommended by two-thirds of the Trustees. Upon the
termination of the Fund:
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(i) The Fund shall carry on no business except for the purpose
of winding up its affairs.
(ii) The Trustees shall proceed to wind up the affairs of the
Fund and all of the powers of the Trustees under this Declaration shall continue
until the affairs of the Fund shall have been wound up, including the power to
fulfill or discharge the contracts of the Fund, collect its assets, sell,
convey, assign, exchange, transfer or otherwise dispose of all or any part of
the remaining Fund Property to one or more persons at public or private sale for
consideration which may consist in whole or in part of cash, securities or other
property of any kind, discharge or pay its liabilities, and to do all other acts
appropriate to liquidate its business; provided that any sale, conveyance,
assignment, exchange, transfer or other disposition of all or substantially all
the Fund Property shall require Shareholder approval in accordance with Section
8.4 hereof.
(iii) After paying or adequately providing for the payment of
all liabilities, and upon receipt of such releases, indemnities and refunding
agreements, as they deem necessary for their protection, the Trustees may
distribute the remaining Fund Property, in cash or in kind or partly each, among
the Shareholders of the Fund according to their respective rights.
(b) After termination of the Fund and distribution to the
Shareholders as herein provided, a majority of the Trustees shall execute and
lodge among the records of the Fund an instrument in writing setting forth the
fact of such termination, and the Trustees shall thereupon be discharged from
all further liabilities and duties with respect to the Fund, and the rights and
interests of all Shareholders of the Fund shall thereupon cease.
SECTION 8.3 AMENDMENT PROCEDURES. (a) Except as provided in
paragraph (c) of this Section 8.3, this Declaration may be amended by a Majority
Shareholder Vote, at a meeting of Shareholders, or by written consent without a
meeting. The Trustees may also amend this Declaration without the vote or
consent of Shareholders (i) to change the name of the Fund, (ii) to supply any
omission, or cure, correct or supplement any ambiguous, defective or
inconsistent provision hereof, (iii) if they deem it necessary to conform this
Declaration to the requirements of applicable federal or state laws or
regulations or the requirements of the Internal Revenue Code, or to eliminate or
reduce any federal, state or local taxes which are or may be payable by the Fund
or the Shareholders, but the Trustees shall not be liable for failing to so, or
(iv) for any other purpose which does not adversely affect the rights of any
Shareholder with respect to which the amendment is or purports to be applicable.
(b) No amendment may be made under this Section 8.3 which would
change any rights with respect to any Shares of the Fund by reducing the amount
payable thereon upon liquidation of the Fund or by diminishing or eliminating
any voting rights pertaining thereto, except with the vote or consent of the
holders of two-thirds of the Shares of the Fund outstanding and entitled to
vote. Nothing contained in this Declaration shall permit the amendment of this
Declaration to impair the exemption from personal liability of the Shareholders,
Trustees, officers, employees and agents of the Fund or to permit assessments
upon Shareholders set forth in Section 5.1 above.
(c) No amendment may be made under this Section 8.3 which shall
amend, alter, change or repeal any of the provisions of Sections 8.3, 8.4, 8.6
and 8.7 unless the amendment affecting such amendment, alteration, change or
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repeal shall receive the affirmative vote or consent of that proportion of the
Shares outstanding and entitled to vote as would be necessary to approve the
transaction or action set forth in that respective section under circumstances
where the Board of Trustees has not recommended approval of the transaction or
action. Such affirmative vote or consent shall be in addition to the vote or
consent of the holders of Shares otherwise required by law or by the terms of
any class or series of preferred stock, whether now or hereafter authorized, or
any agreement between the Fund and any national securities exchange.
(d) A certificate signed by a majority of the Trustees or the
Secretary or any Assistant Secretary of the Fund, setting forth an amendment and
reciting that it was duly adopted by the Shareholders or by the Trustees as
aforesaid or a copy of the Declaration, as amended, and executed by a majority
of the Trustees or certified by the Secretary or any Assistant Secretary of the
Trust, shall be conclusive evidence of such amendment when lodged among the
records of the Fund. Unless such amendment or such certificate sets forth some
later time for the effectiveness of such amendment, such amendment shall be
effective when lodged among the records of the Fund.
Notwithstanding any other provision hereof, until such time as the
Registration Statement covering the first public offering of securities of the
Fund shall have become effective, this Declaration may be terminated or amended
in any respect by the affirmative vote of a majority of the Trustees or by an
instrument signed by a majority of the Trustees.
SECTION 8.4 MERGER, CONSOLIDATION AND SALE OF ASSETS. The Fund may
merge or consolidate with any other corporation, association, trust or other
organization or may sell, lease or exchange all or substantially all of the Fund
Property, including its good will, upon such terms and conditions and for such
consideration when and as authorized, at any meeting of Shareholders called for
the purpose, by the affirmative vote of the holders of not less than two-thirds
(66-2/3%) of the Shares of the Fund outstanding and entitled to vote, or by an
instrument or instruments in writing without a meeting, consented to by the
holders of not less than two-thirds (66 2/3%) of such Shares; provided, however,
that, if such merger, consolidation, sale, lease or exchange is recommended by
two-thirds of the Trustees, a Majority Shareholder Vote shall be sufficient
authorization; and any such merger, consolidation, sale, lease or exchange shall
be deemed for all purposes to have been accomplished under and pursuant to the
laws of the Commonwealth of Massachusetts. Nothing contained herein shall be
construed as requiring approval of Shareholders for any sale of assets in the
ordinary course of business of the Fund.
SECTION 8.5 INCORPORATION AND REORGANIZATION. With approval of a
Majority Shareholder Vote, the Trustees may cause to be organized or assist in
organizing a corporation or corporations under the laws of any jurisdiction or
any other trust, partnership, association or other organization to take over all
of the Fund Property or to carry on any business in which the Fund shall
directly or indirectly have any interest, and to sell, convey and transfer the
Fund Property to any such corporation, trust, partnership, association or
organization in exchange for the shares or securities thereof or otherwise, and
to lend money to, subscribe for the shares or securities of, and enter into any
contracts with any such corporation, trust, partnership, association or
organization in which the Fund holds or is about to acquire shares or any other
interest. Subject to Section 8.4 hereof, the Trustees may also cause a merger or
consolidation between the Fund or any successor thereto and any such
corporation, trust, partnership, association or other organization if and to the
extent permitted by law, as provided under the law then in effect. Nothing
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contained herein shall be construed as requiring approval of Shareholders for
the Trustees to organize or assist in organizing one or more corporations,
trusts, partnerships, associations or other organizations and selling, conveying
or transferring a portion of the Fund Property to such organization or entities.
SECTION 8.6 CONVERSION. The Fund may be converted at any time from a
"closed-end company" to an "open-end company" as those terms are defined by the
1940 Act, upon the approval of such a proposal, together with the necessary
amendments to the Declaration of Trust to permit such a conversion, by the
holders of not less than two-thirds (66-2/3%) of the Fund's outstanding Shares
entitled to vote, except that if such proposal is recommended by two-thirds of
the total number of Trustees then in office, such proposal may be adopted by a
Majority Shareholder Vote. From time to time, the Trustees will consider
recommending to the Shareholders a proposal to convert the Fund from a
"closed-end company" to an "open-end company." Upon the recommendation and
subsequent adoption of such a proposal and the necessary amendments to this
Declaration to permit such a conversion by not less than two-thirds (66 2/3%) of
the Fund's outstanding Shares entitled to vote, the Fund shall, upon complying
with any requirements of the 1940 Act and state law, become an "open-end"
investment company. Such affirmative vote or consent shall be in addition to the
vote or consent of the holders of the Shares otherwise required by law, or any
agreement between the Fund and any national securities exchange.
SECTION 8.7 CERTAIN TRANSACTIONS. (a) Notwithstanding any other
provision of this Declaration and subject to the exceptions provided in
paragraph (d) of this Section, the types of transactions described in paragraph
(c) of this Section shall require the affirmative vote or consent of the holders
of eighty percent (80%) of the Shares outstanding and entitled to vote, when a
Principal Shareholder (as defined in paragraph (b) of this Section) is a party
to the transaction. Such affirmative vote or consent shall be in addition to the
vote or consent of the holders of Shares otherwise required by law or by the
terms of any class or series of preferred stock, whether now or hereafter
authorized, or any agreement between the Fund and any national securities
exchange.
(b) The term "Principal Shareholder" shall mean any corporation,
person or other entity which is the beneficial owner, directly or indirectly, of
more than five percent (5%) of the outstanding Shares and shall include any
affiliate or associate, as such terms are defined in clause (ii) below, of a
Principal Shareholder. For the purposes of this Section, in addition to the
Shares which a corporation, person or other entity beneficially owns directly,
(a) any corporation, person or other entity shall be deemed to be the beneficial
owner of any Shares (i) which it has the right to acquire pursuant to any
agreement or upon exercise of conversion rights or warrants, or otherwise (but
excluding share options granted by the Fund) or (ii) which are beneficially
owned, directly or indirectly (including Shares deemed owned through application
of clause (i) above), by any other corporation, person or entity with which its
"affiliate" or "associate" (as defined below) has any agreement, arrangement or
understanding for the purpose of acquiring, holding, voting or disposing of
Shares, or which is its "affiliate" or "associate" as those terms are defined in
Rule 12b-2 of the General Rules and Regulations under the Securities Exchange
Act of 1934, and (b) the outstanding Shares shall include Shares deemed owned
through application of clauses (i) and (ii) above but shall not include any
other Shares which may be issuable pursuant to any agreement, or upon exercise
of conversion rights or warrants, or otherwise.
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(c) This Section shall apply to the following transactions:
(i) The merger or consolidation of the Fund or any subsidiary
of the Fund with or into any Principal Shareholder.
(ii) The issuance of any securities of the Fund to any
Principal Shareholder for cash.
(iii) The sale, lease or exchange of all or any substantial
part of the assets of the Fund to any Principal Shareholder (except assets
having an aggregate fair market value of less than $1,000,000, aggregating for
the purpose of such computation all assets sold, leased or exchanged in any
series of similar transactions within a twelve-month period).
(iv) The sale, lease or exchange to the Fund or any subsidiary
thereof, in exchange for securities of the Fund of any assets of any Principal
Shareholder (except assets having an aggregate fair market value of less than
$1,000,000, aggregating for the purposes of such computation all assets sold,
leased or exchanged in any series of similar transactions within a twelve-month
period).
(v) The liquidation or dissolution of the Fund.
(vi) A change in the nature of the business of the Fund so
that it would cease to be an investment company registered under the 1940 Act.
(vii) The conversion of the Fund to an "open-end company," or
any amendment to the Declaration of Trust of the Fund that makes the Shares a
"redeemable security," as such terms are defined in the 1940 Act.
(d) The provisions of this Section shall not be applicable to (i)
any of the transactions described in paragraph (c) of this Section if two-thirds
of the Board of Trustees of the Fund shall by resolution have approved a
memorandum of understanding with such Principal Shareholder with respect to and
substantially consistent with such transaction, or (ii) any such transaction
with any corporation of which a majority of the outstanding shares of all
classes of stock normally entitled to vote in elections of directors is owned of
record or beneficially by the Fund and its subsidiaries.
(e) The Board of Trustees shall have the power and duty to determine
for the purposes of this Section on the basis of information known to the Fund
whether (i) a corporation, person or entity beneficially owns more than five
percent (5%) of the outstanding Shares, (ii) a corporation, person or entity is
an "affiliate" or "associate" (as defined above) of another, (iii) the assets
being acquired or leased to or by the Fund or any subsidiary thereof constitute
a substantial part of the assets of the Fund and have an aggregate fair market
value of less than $1,000,000, and (iv) the memorandum of understanding referred
to in paragraph (d) hereof is substantially consistent with the transaction
covered thereby. Any such determination shall be conclusive and binding for all
purposes of this Section.
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ARTICLE IX
REPORTS TO SHAREHOLDERS
The Trustees shall at least semi-annually submit or cause the
officers of the Fund to submit to the Shareholders a written financial report of
the Fund, including financial statements which shall at least annually be
certified by independent public accountants.
ARTICLE X
MISCELLANEOUS
SECTION 10.1 FILING. This Declaration and any amendment hereto shall
be filed in the Office of the Secretary of the Commonwealth of Massachusetts and
in such other places as may be required under the laws of Massachusetts and may
also be filed or recorded in such other places as the Trustees deem appropriate.
Each amendment so filed shall be accompanied by a certificate signed and
acknowledged by a Trustee or by the Secretary or any Assistant Secretary of the
Fund stating that such action was duly taken in a manner provided herein. A
restated Declaration, integrating into a single instrument all of the provisions
of the Declaration which are then in effect and operative, may be executed from
time to time by a majority of the Trustees and shall, upon filing with the
Secretary of the Commonwealth of Massachusetts, be conclusive evidence of all
amendments contained therein and may thereafter be referred to in lieu of the
original Declaration and the various amendments thereto.
SECTION 10.2 RESIDENT AGENT. Until changed by the Trustees, the
principal office of the Fund shall be 7800 E. Union Avenue, Suite 800, Denver,
Colorado 80237. Until changed by the Trustees, Phil Fina, Esquire, at One
International Place, Boston, Massachusetts 02110 is the resident agent of the
Fund in the Commonwealth of Massachusetts.
SECTION 10.3 GOVERNING LAW. By the execution hereof, the Trustees
agree that this Declaration shall be effective when executed by all of the
Trustees and delivered for filing to the Secretary of State of the Commonwealth
of Massachusetts with reference to the laws thereof and the rights of all
parties and the validity and construction of every provision hereof shall be
subject to and construed according to the laws of said State.
SECTION 10.4 ORGANIZATIONAL EXPENSES. In the event that any person
advances the organizational expenses of the Fund, such advances shall become an
obligation of the Fund, subject to such terms and conditions as may be fixed by,
and on a date fixed by, or determined with criteria fixed by, the Board of
Trustees, to be amortized over a period or periods to be fixed by the Board.
SECTION 10.5 COUNTERPARTS. The Declaration may be simultaneously
executed in several counterparts, each of which shall be deemed to be an
original, and such counterparts, together, shall constitute one and the same
instrument, which shall be sufficiently evidenced by any such original
counterpart.
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SECTION 10.6 RELIANCE BY THIRD PARTIES. Any certificate executed by
an individual who, according to the records of the Fund, appears to be a Trustee
hereunder, or Secretary or Assistant Secretary of the Fund, certifying to: (a)
the number or identity of Trustees or Shareholders, (b) the due authorization of
the execution of any instrument or writing, (c) the form of any vote passed at a
meeting of Trustees or Shareholders, (d) the fact that the number of Trustees or
Shareholders present at any meeting or executing any written instrument
satisfies the requirements of this Declaration, (e) the form of any By-Laws
adopted by or the identity of any officers elected by the Trustees, or (f) the
existence of any fact or facts which in any manner relate to the affairs of the
Fund shall be conclusive evidence as to the matters so certified in favor of any
person dealing with the Trustees and their successors.
SECTION 10.7 PROVISIONS IN CONFLICT WITH LAW OR REGULATIONS. (a) The
provisions of the Declaration are severable, and if the Trustees shall
determine, with the advice of counsel, that any of such provisions is in
conflict with the 1940 Act, the regulated investment company provisions of the
Internal Revenue Code or with other applicable laws and regulations, the
conflicting provisions shall be deemed superseded by such law or regulation to
the extent necessary to eliminate such conflict; provided, however, that such
determination shall not affect any of the remaining provisions of the
Declaration or render invalid or improper any action taken or omitted prior to
such determination.
(b) If any provision of the Declaration shall be held invalid or
unenforceable in any jurisdiction, such invalidity or unenforceability shall
pertain only to such provision in such jurisdiction and shall not in any manner
affect such provision in any other jurisdiction or any other provision of the
Declaration in any jurisdiction.
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IN WITNESS WHEREOF, the undersigned, the Trustees of the Fund, have
executed this instrument this 9th day of July, 1998.
/S/ MARK H. WILLIAMSON
-------------------------------
Mark H. Williamson, as Trustee
and not Individually
7800 East Union Avenue
Denver, Colorado 80237
STATE OF COLORADO)
) ss.:
COUNTY OF DENVER )
On this 9th day of July, 1998, Mark H. Williamson, known to me and
known to be the individual described in and who executed the foregoing
instrument, personally appeared before me and he severally acknowledged the
foregoing instrument to be his free act and deed.
/S/ CHERYL K. HOWETT
- ---------------------
Notary Public
My Commission Expires FEBRUARY 22, 1999
--------------------
22
BY-LAWS
OF
INVESCO GLOBAL FINANCIAL SERVICES FUND
(A MASSACHUSETTS BUSINESS TRUST)
ADOPTED JULY 9, 1998
ARTICLE I
DEFINITIONS
The terms "Commission", "Declaration", "Distributor", "Fund", "Fund
Property", "Investment Adviser", "Majority Shareholder Vote", "1940 Act",
"Shareholder", "Shares", "Transfer Agent", and "Trustees" have the respective
meanings given them in the Declaration of Trust of the Fund dated July 9, 1998,
as amended from time to time.
ARTICLE II
OFFICES
SECTION 2.1 PRINCIPAL OFFICE. Until changed by the Trustees, the
principal office of the Fund shall be 7800 East Union Avenue, Denver, Colorado
80237.
SECTION 2.2 OTHER OFFICES. In addition to its principal office, the
Fund may have an office or offices at such other places within and without the
Commonwealth of Massachusetts as the Trustees may from time to time designate or
the business of the Fund may require.
ARTICLE III
SHAREHOLDERS' MEETINGS
SECTION 3.1 PLACE OF MEETINGS. Meetings of Shareholders shall be
held at such place, within or without the Commonwealth of Massachusetts, as may
be designated from time to time by the Trustees.
<PAGE>
SECTION 3.2 ANNUAL MEETINGS. Meetings of Shareholders, at which the
Shareholders shall elect Trustees and transact such other business as may
properly come before the meeting, shall be held annually so long as such annual
meetings shall be required by the New York Stock Exchange or the other exchange
or trading system on which Shares are principally traded.
SECTION 3.3 SPECIAL MEETINGS. Special meetings of Shareholders of
the Fund shall be held whenever called by the Board of Trustees or the Chairman
of the Fund. Special meetings of Shareholders shall also be called by the
Secretary upon the written request of the holders of Shares entitled to vote not
less than twenty-five percent (25%) of all the votes entitled to be cast at such
meeting. Such request shall state the purpose or purposes of such meeting and
the matters proposed to be acted on thereat. When a meeting has been requested
by Shareholders, the Secretary shall inform such Shareholders of the reasonable
estimated cost of preparing and mailing such notice of the meeting, and, upon
payment to the Fund of such costs, the Secretary shall give notice stating the
purpose or purposes of the meeting to all entitled to vote at such meeting. No
special meeting need be called upon the request of the holders of Shares
entitled to cast less than a majority of all votes entitled to be cast at such
meeting, to consider any matter which is substantially the same as a matter
voted upon at any special meeting of Shareholders held during the preceding
twelve months.
SECTION 3.4 NOTICE OF MEETINGS. Written or printed notice of every
Shareholders' meeting, stating the place, date, and purpose or purposes thereof,
shall be given by the Secretary not less than ten (10) nor more than ninety (90)
days before such meeting to each Shareholder entitled to vote at such meeting.
Such notice shall be deemed to be given when deposited in the United States
mail, postage prepaid, directed to the Shareholder at his address as it appears
on the records of the Fund.
SECTION 3.5 QUORUM AND ADJOURNMENT OF MEETINGS. Except as otherwise
provided by law, by the Declaration or by these By-Laws, at all meetings of
Shareholders the holders of a majority of the Shares issued and outstanding and
entitled to vote thereat, present in person or represented by proxy, shall be
requisite and shall constitute a quorum for the transaction of business. In the
absence of a quorum, the Shareholders present or represented by proxy and
entitled to vote thereat shall have power to adjourn the meeting from time to
time. Any adjourned meeting may be held as adjourned without further notice. At
any adjourned meeting at which a quorum shall be present, any business may be
transacted as if the meeting had been held as originally called.
SECTION 3.6 VOTING RIGHTS, PROXIES. At each meeting of Shareholders,
each holder of record of Shares entitled to vote thereat shall be entitled to
one vote in person or by proxy, executed in writing by the Shareholder or his
duly authorized attorney-in-fact, for each Share of beneficial interest of the
Fund and for the fractional portion of one vote for each fractional Share
entitled to vote so registered in his name on the records of the Fund on the
date fixed as the record date for the determination of Shareholders entitled to
vote at such meeting. No proxy shall be valid after eleven months from its date,
unless otherwise provided in the proxy. At all meetings of Shareholders, unless
the voting is conducted by inspectors, all questions relating to the
qualification of voters and the validity of proxies and the acceptance or
rejection of votes shall be decided by the chairman of the meeting. Pursuant to
a resolution of a majority of the Trustees, proxies may be solicited in the name
of one or more Trustees or officers of the Fund.
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SECTION 3.7 VOTE REQUIRED. Except as otherwise provided by law, by
the Declaration of Trust, or by these By-Laws, at each meeting of Shareholders
at which a quorum is present, all matters shall be decided by Majority
Shareholder Vote.
SECTION 3.8 INSPECTORS OF ELECTION. In advance of any meeting of
Shareholders, the Trustees may appoint Inspectors of Election to act at the
meeting or any adjournment thereof. If Inspectors of Election are not so
appointed, the chairman of any meeting of Shareholders may, and on the request
of any Shareholder or his proxy shall, appoint Inspectors of Election of the
meeting. In case any person appointed as Inspector fails to appear or fails or
refuses to act, the vacancy may be filled by appointment made by the Trustees in
advance of the convening of the meeting or at the meeting by the person acting
as chairman. The Inspectors of Election shall determine the number of Shares
outstanding, the Shares represented at the meeting, the existence of a quorum,
the authenticity, validity and effect of proxies, shall receive votes, ballots
or consents, shall hear and determine all challenges and questions in any way
arising in connection with the right to vote, shall count and tabulate all votes
or consents, determine the results, and do such other acts as may be proper to
conduct the election or vote with fairness to all Shareholders. On request of
the chairman of the meeting, or of any Shareholder or his proxy, the Inspectors
of Election shall make a report in writing of any challenge or question or
matter determined by them and shall execute a certificate of any facts found by
them.
SECTION 3.9 INSPECTION OF BOOKS AND RECORDS. Shareholders shall have
such rights and procedures of inspection of the books and records of the Fund as
are granted to Shareholders under the Corporations and Associations Law of the
Commonwealth of Massachusetts.
SECTION 3.10 ACTION BY SHAREHOLDERS WITHOUT MEETING. Except as
otherwise provided by law, the provisions of these By-Laws relating to notices
and meetings to the contrary notwithstanding, any action required or permitted
to be taken at any meeting of Shareholders may be taken without a meeting if a
majority of the Shareholders entitled to vote upon the action consent to the
action in writing and such consents are filed with the records of the Fund. Such
consent shall be treated for all purposes as a vote taken at a meeting of
Shareholders.
ARTICLE IV
TRUSTEES
SECTION 4.1 MEETINGS OF THE TRUSTEES. The Trustees may in their
discretion provide for regular or special meetings of the Trustees. Regular
meetings of the Trustees may be held at such time and place as shall be
determined from time to time by the Trustees without further notice. Special
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meetings of the Trustees may be called at any time by the Chairman and shall be
called by the Chairman or the Secretary upon the written request of any two (2)
Trustees.
SECTION 4.2 NOTICE OF SPECIAL MEETINGS. Written notice of special
meetings of the Trustees, stating the place, date and time thereof, shall be
given not less than two (2) days before such meeting to each Trustee,
personally, by telegram, by mail, or by leaving such notice at his place of
residence or usual place of business. If mailed, such notice shall be deemed to
be given when deposited in the United States mail, postage prepaid, directed to
the Trustee at his address as it appears on the records of the Fund. Subject to
the provisions of the 1940 Act, notice or waiver of notice need not specify the
purpose of any special meeting.
SECTION 4.3 TELEPHONE MEETINGS. Except as may otherwise be required
by law, any Trustee, or any member or members of any committee designated by the
Trustees, may participate in a meeting of the Trustees, or any such committee,
as the case may be, by means of a conference telephone or similar communications
equipment if all persons participating in the meeting can hear each other at the
same time. Participation in a meeting by these means constitutes presence in
person at the meeting.
SECTION 4.4 QUORUM, VOTING AND ADJOURNMENT OF MEETINGS. At all
meetings of the Trustees, a majority of the Trustees shall be requisite to and
shall constitute a quorum for the transaction of business. If a quorum is
present, the affirmative vote of a majority of the Trustees present shall be the
act of the Trustees, unless the concurrence of a greater proportion is expressly
required for such action by law, the Declaration or these By-Laws. If at any
meeting of the Trustees there be less than a quorum present, the Trustees
present thereat may adjourn the meeting from time to time, without notice other
than announcement at the meeting, until a quorum shall have been obtained.
SECTION 4.5 ACTION BY TRUSTEES WITHOUT MEETING. The provisions of
these By-Laws covering notices and meetings to the contrary notwithstanding, and
except as required by law, any action required or permitted to be taken at any
meeting of the Trustees may be taken without a meeting if a consent in writing
setting forth the action shall be signed by a majority of the Trustees entitled
to vote upon the action and such written consent is filed with the minutes of
proceedings of the Trustees.
SECTION 4.6 EXPENSES AND FEES. Each Trustee may be allowed expenses,
if any, for attendance at each regular or special meeting of the Trustees, and
each Trustee who is not an officer or employee of the Fund or of its investment
manager or underwriter or of any corporate affiliate of any of said persons
shall receive for services rendered as a Trustee of the Fund such compensation
as may be fixed by the Trustees. Nothing herein contained shall be construed to
preclude any Trustee from serving the Fund in any other capacity and receiving
compensation therefor.
SECTION 4.7 EXECUTION OF INSTRUMENTS AND DOCUMENTS AND SIGNING OF
CHECKS AND OTHER OBLIGATIONS AND TRANSFERS. All instruments, documents and other
papers shall be executed in the name and on behalf of the Fund and all checks,
notes, drafts and other obligations for the payment of money by the Fund shall
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be signed, and all transfers of securities standing in the name of the Fund
shall be executed, by the President, any Vice President or the Treasurer or by
any one or more officers or agents of the Fund as shall be designated for that
purpose by vote of the Trustees.
SECTION 4.8 INDEMNIFICATION OF TRUSTEES, OFFICERS, EMPLOYEES AND
AGENTS.
(a) As used in these By-Laws, the following terms shall have the
meanings set forth below:
(i) the term "indemnitee" shall mean any present or
former Trustee, officer or employee of the Fund, any
present or former Trustee, partner, Director or
officer of another trust, partnership, corporation or
association whose securities are or were owned by the
Fund or of which the Fund is or was a creditor and
who served or serves in such capacity at the request
of the Fund, and the heirs, executors,
administrators, successors and assigns of any of the
foregoing; however, whenever conduct by an indemnitee
is referred to, the conduct shall be that of the
original indemnitee rather than that of the heir,
executor, administrator, successor or assignee;
(ii) the term "covered proceeding" shall mean any threatened,
pending or completed action, suit or proceeding, whether
civil, criminal, administrative or investigative, to
which an indemnitee is or was a party or is threatened
to be made a party by reason of the fact or facts under
which he or it is an indemnitee as defined above;
(iii) the term "disabling conduct" shall mean willful
misfeasance, bad faith, gross negligence or reckless
disregard of the duties involved in the conduct of the
office in question;
(iv) the term "covered expenses" shall mean expenses
(including attorneys' fees), judgments, fines and
amounts paid in settlement actually and reasonably
incurred by an indemnitee in connection with a covered
proceeding; and
(v) the term "adjudication of liability" shall mean, as to
any covered proceeding and as to any indemnitee, an
adverse determination as to the indemnitee whether by
judgment, order, settlement, conviction or upon a plea
of nolo contendere or its equivalent.
(b) The Fund shall not indemnify any indemnitee for any covered
expenses in any covered proceeding if there has been an
adjudication of liability against such indemnitee expressly
based on a finding of a disabling conduct.
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(c) Except as set forth in paragraph (b) above, the Fund shall
indemnify any indemnitee for covered expenses in any
covered proceeding, whether or not there is an adjudication
of liability as to such indemnitee, such indemnification by
the Fund to be to the fullest extent now or hereafter
permitted by any applicable law unless the By-Laws limit or
restrict the indemnification to which any indemnitee may be
entitled. The Board of Trustees may adopt By-Law provisions
to implement paragraphs (a), (b) and (c) hereof.
(d) Nothing herein shall be deemed to affect the right of the
Fund and/or any indemnitee to acquire and pay for any
insurance covering any or all indemnities to the extent
permitted by applicable law or to affect any other
indemnification rights to which any indemnitee may be
entitled to the extent permitted by applicable law. Such
rights to indemnification shall not, except as otherwise
provided by law, be deemed exclusive of any other rights to
which such indemnitee may be entitled under any statute,
By-Law, contract or otherwise.
(e) In case any Shareholder or former Shareholder shall be held
to be personally liable solely by reason of his being or
having been a Shareholder 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 other general
successor) shall be entitled out of the Fund estate to be
held harmless from and indemnified against all loss and
expense arising from such liability. The Fund shall, upon
request by the Shareholder, assume the defense of any such
claim made against any Shareholder for any act or
obligation of the Fund and satisfy any judgment thereon.
ARTICLE V
COMMITTEES
SECTION 5.1 EXECUTIVE AND OTHER COMMITTEES. The Trustees, by
resolution adopted by a majority of the Trustees, may designate an Executive
Committee and/or other committees, each committee to consist of two (2) or more
of the Trustees of the Fund and may delegate to such committees, in the
intervals between meetings of the Trustees, any or all of the powers of the
Trustees in the management of the business and affairs of the Fund. In the
absence of any member of any such committee, the member(s) thereof present at
any meeting, whether or not they constitute a quorum, may appoint a Trustee to
act in place of such absent member. Each such committee shall keep a record of
its proceedings.
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The Executive Committee and any other committee shall fix its own rules or
procedures, but the presence of at least fifty percent (50%) of the members of
the whole committee shall in each case be necessary to constitute a quorum of
the committee and the affirmative vote of the majority of the members of the
committee present at the meeting shall be necessary to take action.
All actions of the Executive Committee shall be reported to the Trustees
at the meeting thereof next succeeding to the taking of such action.
SECTION 5.2 ADVISORY COMMITTEE. The Trustees may appoint an advisory
committee which shall be composed of persons who do not serve the Fund in any
other capacity and which shall have advisory functions with respect to the
investments of the Fund but which shall have no power to determine that any
security or other investment shall be purchased, sold or otherwise disposed of
by the Fund. The number of persons constituting any such advisory committee
shall be determined from time to time by the Trustees. The members of any such
advisory committee may receive compensation for their services and may be
allowed such fees and expenses for the attendance at meetings as the Trustees
may from time to time determine to be appropriate.
SECTION 5.3 COMMITTEE ACTION WITHOUT MEETING. The provisions of
these By-Laws covering notices and meetings to the contrary notwithstanding, and
except as required by law, any action required or permitted to be taken at any
meeting of any committee of the Trustees appointed pursuant to Section 5.1 of
these By-Laws may be taken without a meeting if a consent in writing setting
forth the action shall be signed by a majority of the members of the committee
entitled to vote upon the action and such written consent is filed with the
records of the proceedings of the committee.
ARTICLE VI
OFFICERS
SECTION 6.1 EXECUTIVE OFFICERS. The executive officers of the Fund
shall be a Chairman, a President, one or more Vice Presidents, a Secretary and a
Treasurer. The Chairman shall be selected from among the Trustees but none of
the other executive officers need be a Trustee. Two or more offices, except
those of President and any Vice President, may be held by the same person, but
no officer shall execute, acknowledge or verify any instrument in more than one
capacity.
The executive officers of the Fund shall be elected annually by the
Trustees and each executive officer so elected shall hold office until his or
her successor is elected and has qualified.
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SECTION 6.2 OTHER OFFICERS AND AGENTS. The Trustees may also elect
one or more Assistant Vice Presidents, Assistant Secretaries and Assistant
Treasurers and may elect, or may delegate to the President the power to appoint,
such other officers and agents as the Trustees shall at any time or from time to
time deem advisable.
SECTION 6.3 TERM, REMOVAL AND VACANCIES. Each officer of the Fund
shall hold office until his successor is elected and has qualified. Any officer
or agent of the Fund may be removed by the Trustees whenever, in their judgment,
the best interests of the Fund will be served thereby, but such removal shall be
without prejudice to the contractual rights, if any, of the person so removed.
SECTION 6.4 COMPENSATION OF OFFICERS. The compensation of officers
and agents of the Fund shall be fixed by the Trustees, or by the President to
the extent provided by the Trustees with respect to officers appointed by the
President.
SECTION 6.5 POWER AND DUTIES. All officers and agents of the Fund,
as between themselves and the Fund, shall have such authority and perform such
duties in the management of the Fund as may be provided in or pursuant to these
By-Laws, or to the extent not so provided, as may be prescribed by the Trustees;
provided, that no rights of any third party shall be affected or impaired by any
such By-Law or resolution of the Trustees unless he has knowledge thereof.
SECTION 6.6 THE CHAIRMAN. The Chairman shall preside at all meetings
of the Shareholders and of the Trustees, and he shall perform such other duties
as the Trustees may from time to time prescribe.
SECTION 6.7 THE PRESIDENT. The President shall be the chief
executive officer of the Fund; he shall have general and active management of
the business of the Fund, shall see that all orders and resolutions of the
Trustees are carried into effect, and, in connection therewith, shall be
authorized to delegate to one or more Vice Presidents such of his powers and
duties at such times and in such manner as he may deem advisable.
SECTION 6.8 THE VICE PRESIDENTS. The Vice Presidents shall be of
such number and shall have such titles as may be determined from time to time by
the Trustees. The Vice President, or, if there be more than one, the Vice
Presidents in the order of their seniority as may be determined from time to
time by the Trustees or the President, shall, in the absence or disability of
the President, exercise the powers and perform the duties of the President, and
he or they shall perform such other duties as the Trustees or the President may
from time to time prescribe.
SECTION 6.9 THE ASSISTANT VICE PRESIDENTS. The Assistant Vice
President, or, if there be more than one, the Assistant Vice Presidents, shall
perform such duties and have such powers as may be assigned them from time to
time by the Trustees or the President.
SECTION 6.10 THE SECRETARY. The Secretary shall attend all meetings
of the Trustees and all meetings of the Shareholders and record all the
proceedings of the meetings of the Shareholders and of the Trustees in a book to
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be kept for that purpose, and shall perform like duties for the standing
committees when required. He shall give, or cause to be given, notice of all
meetings of the Shareholders and special meetings of the Trustees, and shall
perform such other duties and have such powers as the Trustees, or the
President, may from time to time prescribe. He shall keep in safe custody the
seal of the Fund and affix or cause the same to be affixed to any instrument
requiring it, and, when so affixed, it shall be attested by his signature or by
the signature of an Assistant Secretary.
SECTION 6.11 THE ASSISTANT SECRETARIES. The Assistant Secretary, or,
if there be more than one, the Assistant Secretaries in the order determined by
the Trustees or the President, shall, in the absence or disability of the
Secretary, perform the duties and exercise the powers of the Secretary and shall
perform such duties and have such other powers as the Trustees or the President
may from time to time prescribe.
SECTION 6.12 THE TREASURER. The Treasurer shall be the chief
financial officer of the Fund. He shall keep or cause to be kept full and
accurate accounts of receipts and disbursements in books belonging to the Fund,
and he shall render to the Trustees and the President, whenever any of them
require it, an account of his transactions as Treasurer and of the financial
condition of the Fund; and he shall perform such other duties as the Trustees,
or the President, may from time to time prescribe.
SECTION 6.13 THE ASSISTANT TREASURERS. The Assistant Treasurer, or,
if there shall be more than one, the Assistant Treasurers in the order
determined by the Trustees or the President, shall, in the absence or disability
of the Treasurer, perform the duties and exercise the powers of the Treasurer
and shall perform such other duties and have such other powers as the Trustees,
or the President, may from time to time prescribe.
SECTION 6.14 DELEGATION OF DUTIES. Whenever an officer is absent or
disabled, or whenever for any reason the Trustees may deem it desirable, the
Trustees may delegate the powers and duties of an officer or officers to any
other officer or officers or to any Trustee or Trustees.
ARTICLE VII
DIVIDENDS AND DISTRIBUTIONS
Subject to any applicable provisions of law and the Declaration, dividends
and distributions upon the Shares may be declared at such intervals as the
Trustees may determine, in cash, in securities or other property, or in Shares,
from any sources permitted by law, all as the Trustees shall from time to time
determine.
Inasmuch as the computation of net income and net profits from the sale of
securities or other properties for federal income tax purposes may vary from the
computation thereof on the records of the Fund, the Trustees shall have power,
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in their discretion, to distribute as income dividends and as capital gain
distributions, respectively, amounts sufficient to enable the Fund to avoid or
reduce liability for federal income taxes.
ARTICLE VIII
CERTIFICATES OF SHARES
SECTION 8.1 CERTIFICATES OF SHARES. Certificates of Shares of the
Fund shall be in such form and of such design as the Trustees shall approve,
subject to the right of the Trustees to change such form and design at any time
or from time to time, and shall be entered in the records of the Fund as they
are issued. Each such certificate shall bear a distinguishing number; shall
exhibit the holder's name and certify the number of full Shares owned by such
holder; shall be signed by or in the name of the Fund by the President, or a
Vice President, and countersigned by the Secretary or an Assistant Secretary or
the Treasurer and an Assistant Treasurer of the Fund; shall be sealed with the
seal; and shall contain such recitals as may be required by law. Where any
certificate is signed by a Transfer Agent or by a Registrar, the signature of
such officers and the seal may be facsimile, printed or engraved. The Fund may,
at its option, determine not to issue a certificate or certificates to evidence
Shares owned of record by any Shareholder.
In case any officer or officers who shall have signed, or whose facsimile
signature or signatures shall appear on, any such certificate or certificates
shall cease to be such officer or officers of the Fund, whether because of
death, resignation or otherwise, before such certificate or certificates shall
have been delivered by the Fund, such certificate or certificates shall,
nevertheless, be adopted by the Fund and be issued and delivered as though the
person or persons who signed such certificate or certificates or whose facsimile
signature or signatures shall appear therein had not ceased to be such officer
or officers of the Fund.
No certificate shall be issued for any Share until such Share is fully
paid.
SECTION 8.2 TRANSFER OF SHARES. Shares shall be transferable on the
books of the Fund by the holder thereof in person or by his duly authorized
attorney or legal representative, upon surrender and cancellation of
certificates, if any, for the same number of Shares, duly endorsed or
accompanied by proper instruments of assignment and transfer, with such proof of
the authenticity of the signature as the Fund or its agent may reasonably
require; in the case of Shares not represented by certificates, the same or
similar requirements may be imposed by the Board of Trustees.
SECTION 8.3 SHARE LEDGERS. The share ledgers of the Fund, containing
the name and address of the Shareholders of the Fund and the number of Shares
held by them respectively, shall be kept at the principal offices of the Fund
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or, if the Fund employs a transfer agent, at the offices of the Transfer Agent
of the Fund.
SECTION 8.4 LOST, STOLEN, DESTROYED AND MUTILATED CERTIFICATES. The
Trustees may direct a new certificate or certificates to be issued in place of
any certificate or certificates theretofore issued by the Fund alleged to have
been lost, stolen or destroyed, upon satisfactory proof of such loss, theft, or
destruction; and the Trustees may, in their discretion, require the owner of the
lost, stolen or destroyed certificate, or his legal representative, to give to
the Fund and to such Registrar, Transfer Agent and/or Transfer Clerk as may be
authorized or required to countersign such new certificate or certificates, a
bond in such sum and of such type as they may direct, and with such surety or
sureties, as they may direct, as indemnity against any claim that may be against
them or any of them on account of or in connection with the alleged loss, theft
or destruction of any such certificate.
ARTICLE IX
WAIVER OF NOTICE
Whenever any notice of the time, place or purpose of any meeting of
Shareholders, Trustees, or of any committee is required to be given in
accordance with law or under the provisions of the Declaration or these By-Laws,
a waiver thereof in writing, signed by the person or persons entitled to such
notice and filed with the records of the meeting, whether before or after the
holding thereof, or actual attendance at the meeting of Shareholders, Trustees
or committee, as the case may be, in person, shall be deemed equivalent to the
giving of such notice to such person.
ARTICLE X
MISCELLANEOUS
SECTION 10.1 LOCATION OF BOOKS AND RECORDS. The books and records of
the Fund may be kept outside the Commonwealth of Massachusetts at such place or
places as the Trustees may from time to time determine, except as otherwise
required by law.
SECTION 10.2 RECORD DATE. The Trustees may fix in advance a date as
the record date for the purpose of determining Shareholders entitled to notice
of, or to vote at, any meeting of Shareholders, or Shareholders entitled to
receive payment of any dividend or the allotment of any rights, or in order to
make a determination of Shareholders for any other proper purpose. Such date, in
any case, shall be not more than ninety (90) days, and in case of a meeting of
Shareholders not less than ten (10) days, prior to the date on which particular
action requiring such determination of Shareholders is to be taken. In lieu of
fixing a record date, the Trustees may provide that the transfer books shall be
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closed for a stated period but not to exceed, in any case, twenty (20) days. If
the transfer books are closed for the purpose of determining Shareholders
entitled to notice of a vote at a meeting of Shareholders, such books shall be
closed for at least ten (10) days immediately preceding such meeting.
SECTION 10.3 SEAL. The Trustees shall adopt a seal, which shall be
in such form and shall have such inscription thereon as the Trustees may from
time to time provide. The seal of the Fund may be affixed to any document, and
the seal and its attestation may be lithographed, engraved or otherwise printed
on any document with the same force and effect as if it had been imprinted and
attested manually in the same manner and with the same effect as if done by a
Massachusetts business trust under Massachusetts law.
SECTION 10.4 FISCAL YEAR. The fiscal year of the Fund shall end on
such date as the Trustees may by resolution specify, and the Trustees may by
resolution change such date for future fiscal years at any time and from time to
time.
SECTION 10.5 ORDERS FOR PAYMENT OF MONEY. All orders or instructions
for the payment of money of the Fund, and all notes or other evidences of
indebtedness issued in the name of the Fund, shall be signed by such officer or
officers or such other person or persons as the Trustees may from time to time
designate, or as may be specified in or pursuant to the agreement between the
Fund and the bank or trust company appointed as Custodian of the securities and
funds of the Fund.
ARTICLE XI
COMPLIANCE WITH FEDERAL REGULATIONS
The Trustees are hereby empowered to take such action as they may deem to
be necessary, desirable or appropriate so that the Fund is or shall be in
compliance with any federal or state statute, rule or regulation with which
compliance by the Fund is required.
ARTICLE XII
AMENDMENTS
These By-Laws may be amended, altered, or repealed, or new By-Laws may be
adopted, (a) by a Majority Shareholder Vote, or (b) by the Trustees; provided,
however, that no By-Law may be amended, adopted or repealed by the Trustees if
such amendment, adoption or repeal requires, pursuant to law, the Declaration,
or these By-Laws, a vote of the Shareholders. The Trustees shall in no event
adopt By-Laws which are in conflict with the Declaration, and any apparent
inconsistency shall be construed in favor of the related provisions in the
Declaration.
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ARTICLE XIII
DECLARATION OF TRUST
The Declaration of Trust establishing the Fund, dated July 9, 1998, a copy
of which is on file in the office of the Secretary of State of the Commonwealth
of Massachusetts, provides that the name the INVESCO Global Financial Services
Fund refers to the Trustees under the Declaration collectively as Trustees, but
not as individuals or personally; and no Trustee, Shareholder, officer, employee
or agent of the Fund shall be held to any personal liability, nor shall resort
be had to their private property for the satisfaction of any obligation or claim
or otherwise, in connection with the affairs of said Fund, but the Fund Estate
only shall be liable.
13
EXHIBIT (2)(d)(1)
(PORTIONS OF DECLARATION OF TRUST
RELATING TO SHAREHOLDERS' RIGHTS)
INVESCO GLOBAL FINANCIAL SERVICES FUND
* * * * *
ARTICLE I
NAME AND DEFINITIONS
* * * * *
(m) "SHAREHOLDER" means a record owner of outstanding Shares.
(n) "SHARES" means the units of interest into which the
beneficial interest in the Fund shall be divided from
time to time and includes fractions of Shares as well
as whole Shares.
* * * * *
ARTICLE III
POWERS OF TRUSTEES
SECTION 3.1 GENERAL. The Trustees shall have exclusive and
absolute control over the Fund Property and over the business of the Fund to the
same extent as if the Trustees were the sole owners of the Fund Property and
business in their own right, but with such powers of delegation as may be
permitted by the Declaration. The Trustees shall have power to conduct the
business of the Fund and carry on its operations in any and all of its branches
and maintain offices both within and without the Commonwealth of Massachusetts,
in any and all states of the United States of America, in the District of
Columbia, and in any and all commonwealths, territories, dependencies, colonies,
possessions, agencies or instrumentalities wheresoever in the world they may be
located and to do all such other things and execute all such instruments as they
deem necessary, proper or desirable in order to promote the interests of the
Fund although such things are not herein specifically mentioned. Any
<PAGE>
determination as to what is in the interests of the Fund made by the Trustees in
good faith shall be conclusive. In construing the provisions of the Declaration,
the presumption shall be in favor of a grant of power to the Trustees.
The enumeration of any specific power herein shall not be
construed as limiting the aforesaid power. Such powers of the Trustees may be
exercised without order of or resort to any court.
SECTION 3.2 INVESTMENTS. The Trustees shall have the power to:
(a) conduct, operate and carry on the business of an
investment company;
(b) subscribe for, invest in, reinvest in, purchase or
otherwise acquire, hold, pledge, sell, sell short,
assign, transfer, exchange, distribute, lend or
otherwise deal in, all forms of securities of every
kind, nature, character, type and form, and other
financial instruments that may not be deemed to be
securities, including, but not limited to, futures
contracts and options thereon, forward foreign
currency contracts, and equity swaps. Such securities
and other financial instruments may include, but are
not limited to, shares, stocks, bonds, debentures,
notes, script, participation certificates, rights to
subscribe, warrants, options, repurchase agreements,
commercial paper, evidences of indebtedness,
certificates of indebtedness, issued or to be issued
by any corporation, company, partnership, association,
trust or entity, public or private, whether organized
under the laws of the United States, or any state,
commonwealth, territory or possession thereof, or of
any foreign country, or any state, province, territory
or possession thereof; and to exercise any and all
rights, powers and privileges of ownership or interest
in respect of any and all such investments of every
kind and description, including, without limitation,
the right to consent and otherwise act with respect
thereto, with power to designate one or more persons,
firms, associations or corporations to exercise any of
said rights, powers and privileges in respect of any
of said instruments; and the Trustee shall be deemed
to have the foregoing powers with respect to any
additional securities in which the Fund may invest
should the Fundamental Policies be amended.
The Trustee shall not be limited to investing in obligations maturing before the
possible termination of the Fund, nor shall the Trustees be limited by any law
limiting the investments which may be made by fiduciaries.
SECTION 3.3. LEGAL TITLE. Legal title to all the Fund Property
shall be vested in the Trustees as joint tenants except that the Trustees shall
have power to cause legal title to any Fund Property to be held by or in the
name of one or more of the Trustees, or in the name of the Fund, or in the name
of any other Person as nominee, on such terms as the Trustees may determine,
provided that the interest of the Fund therein is appropriately protected. The
right, title and interest of the Trustees in the Fund Property shall vest
automatically in each Person who may hereafter become a Trustee. Upon the
resignation, removal or death of a Trustee he or she shall automatically cease
to have any right, title or interest in any of the Fund Property, and the right,
title and interest of such Trustee in the Fund Property shall vest automatically
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in the remaining Trustees. Such vesting and cessation of title shall be
effective whether or not conveyancing documents have been executed and
delivered.
SECTION 3.4 ISSUANCE AND REPURCHASE OF SECURITIES. The
Trustees shall have the power to issue, sell, repurchase, retire, cancel,
acquire, hold, resell, reissue, dispose of, transfer, and otherwise deal in
Shares and, subject to the provisions set forth in Articles VII and VIII hereof,
to apply to any such repurchase, retirement, cancellation or acquisition of
Shares any funds or property of the Fund, whether capital or surplus or
otherwise, to the full extent now or hereafter permitted by the laws of the
Commonwealth of Massachusetts governing business corporations.
SECTION 3.5 BORROWING MONEY; LENDING FUND ASSETS. Subject to
the Fundamental Policies, the Trustees shall have power to borrow money or
otherwise obtain credit and to secure the same by mortgaging, pledging or
otherwise subjecting as security the assets of the Fund, to endorse, guarantee,
or undertake the performance of any obligation, contract or engagement of any
other Person and to lend Fund assets.
SECTION 3.6 DELEGATION; COMMITTEES. The Trustees shall have
power, consistent with their continuing exclusive authority over the management
of the Fund and the Fund Property, to delegate from time to time to such of
their number or to officers, employees or agents of the Fund the doing of such
things and the execution of such instruments either in the name of the Fund or
the names of the Trustees or otherwise as the Trustees may deem expedient.
SECTION 3.7 COLLECTION AND PAYMENT. The Trustees shall have
power to collect all property due to the Fund; to pay all claims, including
taxes, against the Fund Property; to prosecute, defend, compromise or abandon
any claims relating to the Fund Property; to foreclose any security interest
securing any obligations, by virtue of which any property is owed to the Fund;
and to enter into releases, agreements and other instruments.
SECTION 3.8 EXPENSES. The Trustees shall have the power to
incur and pay any expenses which in the opinion of the Trustees are necessary or
incidental to carry out any of the purposes of the Declaration, and to pay
reasonable compensation from the funds of the Fund to themselves as Trustees.
The Trustees shall fix the compensation of all officers, employees and Trustees.
SECTION 3.9 MANNER OF ACTING; BY-LAWS. Except as otherwise
provided herein or in the By-Laws or by any provision of law, any action to be
taken by the Trustees may be taken by a majority of the Trustees present at a
meeting of Trustees (a quorum being present), including any meeting held by
means of a conference telephone circuit or similar communications equipment by
means of which all persons participating in the meeting can hear each other, or
by written consents of a majority of the Trustees. The Trustees may adopt
By-Laws not inconsistent with this Declaration to provide for the conduct of the
business of the Fund and may amend or repeal such By-Laws to the extent such
power is not reserved to the Shareholders.
SECTION 3.10 MISCELLANEOUS POWERS. The Trustees shall have the
power to: (a) employ or contract with such Persons as the Trustees may deem
desirable for the transaction of the business of the Fund; (b) enter into joint
ventures, partnerships and any other combinations or associations; (c) remove
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Trustees or fill vacancies in or add to their number, elect and remove such
officers and appoint and terminate such agents or employees as they consider
appropriate, and appoint from their own number, and terminate, any one or more
committees which may exercise some or all of the power and authority of the
Trustees as the Trustees may determine; (d) purchase, and pay for out of Fund
Property, insurance policies insuring the Shareholders, Trustees, officers,
employees, agents, investment advisers, distributors, selected dealers or
independent contractors of the Fund against all claims arising by reason of
holding any such position or by reason of any action taken or omitted to be
taken by any such Person in such capacity, whether or not constituting
negligence, or whether or not the Fund would have the power to indemnify such
Person against such liability; (e) establish pension, profit-sharing, Share
purchase, and other retirement, incentive and benefit plans for any Trustees,
officers, employees and agents of the Fund; (f) to the extent permitted by law,
indemnify any person with whom the Fund has dealings, including any Investment
Adviser, Distributor, Transfer Agent and selected dealers, to such extent as the
Trustees shall determine; (g) guarantee indebtedness or contractual obligations
of others; (h) determine and change the fiscal year of the Fund and the method
by which its accounts shall be kept; and (i) adopt a seal for the Fund, but the
absence of such seal shall not impair the validity of any instrument executed on
behalf of the Fund.
SECTION 3.11 PRINCIPAL TRANSACTIONS. Except in transactions
permitted by the 1940 Act or any rule or regulation thereunder, or any order of
exemption issued by the Commission, or effected to implement the provisions of
any agreement to which the Fund is a party, the Trustees shall not, on behalf of
the Fund, buy any securities (other than Shares) from or sell any securities
(other than Shares) to, or lend any assets of the Fund to, any Trustee or
officer of the Fund or any firm of which any such Trustee or officer is a member
acting as principal, or have any such dealings with any Investment Adviser,
Distributor or Transfer Agent or with any Affiliated Person of such Person; but
the Fund or any Series thereof may employ any such Person, or firm or company in
which such Person is an Interested Person, as broker, legal counsel, registrar,
transfer agent, dividend disbursing agent or custodian upon customary terms.
SECTION 3.12 LITIGATION. The Trustees shall have the power to
engage in and to prosecute, defend, compromise, abandon, or adjust, by
arbitration or otherwise, any actions, suits, proceedings, disputes, claims, and
demands relating to the Fund, and out of the assets of the Fund to pay or to
satisfy any debts, claims or expenses incurred in connection therewith,
including those of litigation, and such power shall include without limitation
the power of the Trustees or any appropriate committee thereof, in the exercise
of their or its good faith business judgment, to dismiss any action, suit,
proceeding, dispute, claim or demand, derivative or otherwise, brought by any
person, including a Shareholder in its own name or the name of the Fund, whether
or not the Fund or any of the Trustees may be named individually therein or the
subject matter arises by reason of business for or on behalf of the Fund.
* * * * *
4
<PAGE>
ARTICLE V
LIMITATIONS OF LIABILITY OF SHAREHOLDERS,
TRUSTEES AND OTHERS
SECTION 5.1 NO PERSONAL LIABILITY OF SHAREHOLDERS, TRUSTEES,
ETC. No Shareholder shall be subject to any personal liability whatsoever to any
Person in connection with Fund Property or the acts, obligations or affairs of
the Fund. The Trustees shall have no power to bind any Shareholder personally or
to call upon any Shareholder for the payment of any sum of money or assessment
whatsoever other than such as the Shareholder may at any time personally agree
to pay by way of subscription to any Shares or otherwise. Shareholder liability
for the acts and obligations of the Fund is hereby expressly disclaimed. Every
note, bond, contract, or other undertaking issued by or on behalf of the Fund or
the Trustees relating to the Fund shall include a notice and provision limiting
the obligation represented thereby to the Fund and its assets (but the omission
of such notice and provision shall not operate to impose any liability or
obligation on any Shareholder). No Trustee, officer, employee or agent of the
Fund shall be subject to any personal liability whatsoever to any Person, in
connection with the Fund Property or the affairs of the Fund, save only that
arising from bad faith, willful misfeasance, gross negligence or reckless
disregard for his or her duty to such Person; and all such Persons shall look
solely to the Fund Property for satisfaction of claims of any nature arising in
connection with the affairs of the Fund. If any Shareholder, Trustee, officer,
employee or agent, as such, of the Fund is made a party to any suit or
proceeding to enforce any such liability, he or she shall not, on account
thereof, be held to any personal liability. The Fund shall indemnify and hold
each Shareholder harmless from and against all claims and liabilities, to which
such Shareholder may become subject by reason of his or her being or having been
a Shareholder, other than by reason of his or her own wrongful act or omission,
and shall reimburse such Shareholder for all legal and other expenses reasonably
incurred by him or her in connection with any such claim or liability. The
rights accruing to a Shareholder under this Section 5.1 shall not exclude any
other right to which such Shareholder may be lawfully entitled, nor shall
anything herein contained restrict the right of the Fund to indemnify or
reimburse a Shareholder in any appropriate situation even though not
specifically provided herein.
SECTION 5.2 NON-LIABILITY OF TRUSTEES, ETC. No Trustee,
officer, employee or agent of the Fund shall be liable to the Fund, its
Shareholders, or to any Shareholder, Trustee, officer, employee, or agent
thereof, for any action or failure to act (including without limitation the
failure to compel in any way any former or acting Trustee to redress any breach
of trust) except for his or her own bad faith, willful misfeasance, gross
negligence or reckless disregard of his or her duties.
SECTION 5.3 INDEMNIFICATION. (a) The Trustees shall provide
for indemnification by the Fund of any person who is, or has been, a Trustee,
officer, employee or agent of the Fund against all liability and against all
expenses reasonably incurred or paid by him or her in connection with any claim,
action, suit or proceeding in which he or she becomes involved as a party or
otherwise by virtue of being or having been a Trustee, officer, employee or
agent and against amounts paid or incurred by him or her in the settlement
thereof, in such manner as the Trustees may provide from time to time in the
By-Laws.
5
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(b) The words "claim," "action," suit," or "proceeding" shall
apply to all claims, actions, suits or proceedings (civil, criminal, or other,
including appeals), actual or threatened; and the words "liability" and
"expenses" shall include, without limitation, attorneys' fees, costs, judgments,
amounts paid in settlement, fines, penalties and other liabilities.
* * * * *
ARTICLE VI
SHARES OF BENEFICIAL INTEREST
SECTION 6.1 BENEFICIAL INTEREST. The interest of the
beneficiaries hereunder shall be divided into transferable shares of beneficial
interest of $.001 par value. The number of such shares of beneficial interest
authorized hereunder is unlimited. All Shares issued hereunder, including Shares
issued in connection with a dividend in Shares or a split in Shares, shall be
fully paid and nonassessable.
SECTION 6.2 RIGHTS OF SHAREHOLDERS. The ownership of the Fund
Property of every description and the right to conduct any business hereinbefore
described are vested exclusively in the Trustees, and the Shareholders shall
have no interest therein other than the beneficial interest conferred by their
Shares, and they shall have no right to call for any partition or division of
any property, profits, rights or interests of the Fund nor can they be called
upon to assume any losses of the Fund or suffer an assessment of any kind by
virtue of their ownership of Shares. The Shares shall be personal property
giving only the rights in the Declaration specifically set forth. The Shares
shall not entitle the holder to preference, preemptive, appraisal, conversion or
exchange rights.
* * * * *
SECTION 6.8 VOTING POWERS. The Shareholders shall have power
to vote only (i) for the election of Trustees as provided in Section 2.2 hereof;
(ii) for the removal of Trustees as provided in Section 2.2 hereof; (iii) with
respect to termination of the Fund as provided in Section 8.2, (iv) with respect
to any amendment of the Declaration to the extent and as provided in Section
8.3, (v) with respect to any merger, consolidation, conversion or sale of assets
as provided in Sections 8.4, 8.5 and 8.6, (vi) with respect to incorporation or
reorganization of the Fund to the extent and as provided in Section 8.5, (vii)
to the same extent as the stockholders of a Massachusetts business corporation
as to whether or not a court action, proceeding or claim should or should not be
brought or maintained derivatively or as a class action on behalf of the Fund or
the Shareholders, and (viii) with respect to such additional matters relating to
the Fund as may be required by law, the Declaration, the By-Laws or any
registration of the Fund with the Commission (or any successor agency) or any
state, or as and when the Trustees may consider necessary or desirable. Each
whole Share shall be entitled to one vote as to any matter on which it is
entitled to vote and each fractional Share shall be entitled to a proportionate
fractional vote, except that Shares held in the treasury of the Fund as of the
record date, as determined in accordance with the By-Laws, shall not be voted.
There shall be no cumulative voting in the election of Trustees. Shareholders
6
<PAGE>
shall have no preemptive or other right to subscribe to any additional Shares or
other securities issued by the Fund. Until Shares are issued, the Trustees may
exercise all rights of Shareholders and may take any action required by law, the
Declaration or the By-Laws to be taken by Shareholders. The By-Laws may include
further provisions for Shareholders' votes and meetings and related matters.
* * * * *
ARTICLE VIII
DURATION; TERMINATION OF
FUND; AMENDMENT; MERGERS, ETC.
SECTION 8.1 DURATION. The Fund shall continue without
limitation of time but subject to the provisions of this Article VIII.
SECTION 8.2 TERMINATION OF FUND. (a) The Fund may be
terminated by the affirmative vote of the holders of not less than two-thirds
(66-2/3%) of the Shares outstanding and entitled to vote at any meeting of
Shareholders of the Fund except that a Majority Shareholder Vote shall be
sufficient if termination of the Fund has been recommended by two-thirds of the
Trustees. Upon the termination of the Fund:
(i) The Fund shall carry on no business except for
the purpose of winding up its affairs.
(ii) The Trustees shall proceed to wind up the
affairs of the Fund and all of the powers
of the Trustees under this Declaration shall continue until the affairs of the
Fund shall have been wound up, including the power to fulfill or discharge the
contracts of the Fund, collect its assets, sell, convey, assign, exchange,
transfer or otherwise dispose of all or any part of the remaining Fund Property
to one or more persons at public or private sale for consideration which may
consist in whole or in part of cash, securities or other property of any kind,
discharge or pay its liabilities, and to do all other acts appropriate to
liquidate its business; provided that any sale, conveyance, assignment,
exchange, transfer or other disposition of all or substantially all the Fund
Property shall require Shareholder approval in accordance with Section 8.4
hereof.
(iii) After paying or adequately providing for the
payment of all liabilities, and upon
receipt of such releases, indemnities and refunding agreements, as they deem
necessary for their protection, the Trustees may distribute the remaining Fund
Property, in cash or in kind or partly each, among the Shareholders of the Fund
according to their respective rights.
(b) After termination of the Fund and distribution to the
Shareholders as herein provided, a majority of the Trustees shall execute and
lodge among the records of the Fund an instrument in writing setting forth the
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<PAGE>
fact of such termination, and the Trustees shall thereupon be discharged from
all further liabilities and duties with respect to the Fund, and the rights and
interests of all Shareholders of the Fund shall thereupon cease.
SECTION 8.3 AMENDMENT PROCEDURES. (a)Except as provided in
paragraph (c) of this Section 8.3, this Declaration may be amended by a Majority
Shareholder Vote, at a meeting of Shareholders, or by written consent without a
meeting. The Trustees may also amend this Declaration without the vote or
consent of Shareholders (i) to change the name of the Fund, (ii) to supply any
omission, or cure, correct or supplement any ambiguous, defective or
inconsistent provision hereof, (iii) if they deem it necessary to conform this
Declaration to the requirements of applicable federal or state laws or
regulations or the requirements of the Internal Revenue Code, or to eliminate or
reduce any federal, state or local taxes which are or may be payable by the Fund
or the Shareholders, but the Trustees shall not be liable for failing to so, or
(iv) for any other purpose which does not adversely affect the rights of any
Shareholder with respect to which the amendment is or purports to be applicable.
(b) No amendment may be made under this Section 8.3 which
would change any rights with respect to any Shares of the Fund by reducing the
amount payable thereon upon liquidation of the Fund or by diminishing or
eliminating any voting rights pertaining thereto, except with the vote or
consent of the holders of two-thirds of the Shares of the Fund outstanding and
entitled to vote. Nothing contained in this Declaration shall permit the
amendment of this Declaration to impair the exemption from personal liability of
the Shareholders, Trustees, officers, employees and agents of the Fund or to
permit assessments upon Shareholders set forth in Section 5.1 above.
(c) No amendment may be made under this Section 8.3 which
shall amend, alter, change or repeal any of the provisions of Sections 8.3, 8.4,
8.6 and 8.7 unless the amendment affecting such amendment, alteration, change or
repeal shall receive the affirmative vote or consent of that proportion of the
Shares outstanding and entitled to vote as would be necessary to approve the
transaction or action set forth in that respective section under circumstances
where the Board of Trustees has not recommended approval of the transaction or
action. Such affirmative vote or consent shall be in addition to the vote or
consent of the holders of Shares otherwise required by law or by the terms of
any class or series of preferred stock, whether now or hereafter authorized, or
any agreement between the Fund and any national securities exchange.
(d) A certificate signed by a majority of the Trustees or the
Secretary or any Assistant Secretary of the Fund, setting forth an amendment and
reciting that it was duly adopted by the Shareholders or by the Trustees as
aforesaid or a copy of the Declaration, as amended, and executed by a majority
of the Trustees or certified by the Secretary or any Assistant Secretary of the
Trust, shall be conclusive evidence of such amendment when lodged among the
records of the Fund. Unless such amendment or such certificate sets forth some
later time for the effectiveness of such amendment, such amendment shall be
effective when lodged among the records of the Fund.
Notwithstanding any other provision hereof, until such time as
the Registration Statement covering the first public offering of securities of
the Fund shall have become effective, this Declaration may be terminated or
amended in any respect by the affirmative vote of a majority of the Trustees or
by an instrument signed by a majority of the Trustees.
8
<PAGE>
SECTION 8.4 MERGER, CONSOLIDATION AND SALE OF ASSETS. The Fund
may merge or consolidate with any other corporation, association, trust or other
organization or may sell, lease or exchange all or substantially all of the Fund
Property, including its good will, upon such terms and conditions and for such
consideration when and as authorized, at any meeting of Shareholders called for
the purpose, by the affirmative vote of the holders of not less than two-thirds
(66-2/3%) of the Shares of the Fund outstanding and entitled to vote, or by an
instrument or instruments in writing without a meeting, consented to by the
holders of not less than two-thirds (66 2/3%) of such Shares; provided, however,
that, if such merger, consolidation, sale, lease or exchange is recommended by
two-thirds of the Trustees, a Majority Shareholder Vote shall be sufficient
authorization; and any such merger, consolidation, sale, lease or exchange shall
be deemed for all purposes to have been accomplished under and pursuant to the
laws of the Commonwealth of Massachusetts. Nothing contained herein shall be
construed as requiring approval of Shareholders for any sale of assets in the
ordinary course of business of the Fund.
SECTION 8.5 INCORPORATION AND REORGANIZATION. With approval of
a Majority Shareholder Vote, the Trustees may cause to be organized or assist in
organizing a corporation or corporations under the laws of any jurisdiction or
any other trust, partnership, association or other organization to take over all
of the Fund Property or to carry on any business in which the Fund shall
directly or indirectly have any interest, and to sell, convey and transfer the
Fund Property to any such corporation, trust, partnership, association or
organization in exchange for the shares or securities thereof or otherwise, and
to lend money to, subscribe for the shares or securities of, and enter into any
contracts with any such corporation, trust, partnership, association or
organization in which the Fund holds or is about to acquire shares or any other
interest. Subject to Section 8.4 hereof, the Trustees may also cause a merger or
consolidation between the Fund or any successor thereto and any such
corporation, trust, partnership, association or other organization if and to the
extent permitted by law, as provided under the law then in effect. Nothing
contained herein shall be construed as requiring approval of Shareholders for
the Trustees to organize or assist in organizing one or more corporations,
trusts, partnerships, associations or other organizations and selling, conveying
or transferring a portion of the Fund Property to such organization or entities.
SECTION 8.6 CONVERSION. The Fund may be converted at any time
from a "closed-end company" to an "open-end company" as those terms are defined
by the 1940 Act, upon the approval of such a proposal, together with the
necessary amendments to the Declaration of Trust to permit such a conversion, by
the holders of not less than two-thirds (66-2/3%) of the Fund's outstanding
Shares entitled to vote, except that if such proposal is recommended by
two-thirds of the total number of Trustees then in office, such proposal may be
adopted by a Majority Shareholder Vote. From time to time, the Trustees will
consider recommending to the Shareholders a proposal to convert the Fund from a
"closed-end company" to an "open-end company." Upon the recommendation and
subsequent adoption of such a proposal and the necessary amendments to this
Declaration to permit such a conversion by not less than two-thirds (66 2/3%) of
the Fund's outstanding Shares entitled to vote, the Fund shall, upon complying
with any requirements of the 1940 Act and state law, become an "open-end"
investment company. Such affirmative vote or consent shall be in addition to the
vote or consent of the holders of the Shares otherwise required by law, or any
agreement between the Fund and any national securities exchange.
9
<PAGE>
SECTION 8.7 CERTAIN TRANSACTIONS. (a) Notwithstanding any
other provision of this Declaration and subject to the exceptions provided in
paragraph (d) of this Section, the types of transactions described in paragraph
(c) of this Section shall require the affirmative vote or consent of the holders
of eighty percent (80%) of the Shares outstanding and entitled to vote, when a
Principal Shareholder (as defined in paragraph (b) of this Section) is a party
to the transaction. Such affirmative vote or consent shall be in addition to the
vote or consent of the holders of Shares otherwise required by law or by the
terms of any class or series of preferred stock, whether now or hereafter
authorized, or any agreement between the Fund and any national securities
exchange.
(b) The term "Principal Shareholder" shall mean any
corporation, person or other entity which is the beneficial owner, directly or
indirectly, of more than five percent (5%) of the outstanding Shares and shall
include any affiliate or associate, as such terms are defined in clause (ii)
below, of a Principal Shareholder. For the purposes of this Section, in addition
to the Shares which a corporation, person or other entity beneficially owns
directly, (a) any corporation, person or other entity shall be deemed to be the
beneficial owner of any Shares (i) which it has the right to acquire pursuant to
any agreement or upon exercise of conversion rights or warrants, or otherwise
(but excluding share options granted by the Fund) or (ii) which are beneficially
owned, directly or indirectly (including Shares deemed owned through application
of clause (i) above), by any other corporation, person or entity with which its
"affiliate" or "associate" (as defined below) has any agreement, arrangement or
understanding for the purpose of acquiring, holding, voting or disposing of
Shares, or which is its "affiliate" or "associate" as those terms are defined in
Rule 12b-2 of the General Rules and Regulations under the Securities Exchange
Act of 1934, and (b) the outstanding Shares shall include Shares deemed owned
through application of clauses (i) and (ii) above but shall not include any
other Shares which may be issuable pursuant to any agreement, or upon exercise
of conversion rights or warrants, or otherwise.
(c) This Section shall apply to the following transactions:
(i) The merger or consolidation of the Fund or any
subsidiary of the Fund with or into any Principal Shareholder.
(ii) The issuance of any securities of the Fund to
any Principal Shareholder for cash.
(iii) The sale, lease or exchange of all or any
substantial part of the assets of the Fund to any Principal Shareholder (except
assets having an aggregate fair market value of less than $1,000,000,
aggregating for the purpose of such computation all assets sold, leased or
exchanged in any series of similar transactions within a twelve-month period).
(iv) The sale, lease or exchange to the Fund or any
subsidiary thereof, in exchange for securities of the Fund of any assets of any
Principal Shareholder (except assets having an aggregate fair market value of
less than $1,000,000, aggregating for the purposes of such computation all
assets sold, leased or exchanged in any series of similar transactions within
a twelve-month period).
(v) The liquidation or dissolution of the Fund.
(vi) A change in the nature of the business of the
Fund so that it would cease to be an
investment company registered under the 1940 Act.
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<PAGE>
(vii) The conversion of the Fund to an "open-end
company," or any amendment to the Declaration of Trust of the Fund that makes
the Shares a "redeemable security," as such terms are defined in the 1940 Act.
(d) The provisions of this Section shall not be applicable to
(i) any of the transactions described in paragraph (c) of this Section if
two-thirds of the Board of Trustees of the Fund shall by resolution have
approved a memorandum of understanding with such Principal Shareholder with
respect to and substantially consistent with such transaction, or (ii) any such
transaction with any corporation of which a majority of the outstanding shares
of all classes of stock normally entitled to vote in elections of directors is
owned of record or beneficially by the Fund and its subsidiaries.
(e) The Board of Trustees shall have the power and duty to
determine for the purposes of this Section on the basis of information known to
the Fund whether (i) a corporation, person or entity beneficially owns more than
five percent (5%) of the outstanding Shares, (ii) a corporation, person or
entity is an "affiliate" or "associate" (as defined above) of another, (iii) the
assets being acquired or leased to or by the Fund or any subsidiary thereof
constitute a substantial part of the assets of the Fund and have an aggregate
fair market value of less than $1,000,000, and (iv) the memorandum of
understanding referred to in paragraph (d) hereof is substantially consistent
with the transaction covered thereby. Any such determination shall be conclusive
and binding for all purposes of this Section.
* * * * *
(PORTIONS OF BY-LAWS
OF
INVESCO GLOBAL FINANCIAL SERVICES FUND
RELATING TO SHAREHOLDERS' RIGHTS)
* * * * *
ARTICLE III
SHAREHOLDERS' MEETINGS
SECTION 3.1 PLACE OF MEETINGS. Meetings of Shareholders shall be
held at such place, within or without the Commonwealth of Massachusetts, as may
be designated from time to time by the Trustees.
SECTION 3.2 ANNUAL MEETINGS. Meetings of Shareholders, at which the
Shareholders shall elect Trustees and transact such other business as may
properly come before the meeting, shall be held annually so long as such annual
meetings shall be required by the New York Stock Exchange or the other exchange
or trading system on which Shares are principally traded.
SECTION 3.3 SPECIAL MEETINGS. Special meetings of Shareholders of
the Fund shall be held whenever called by the Board of Trustees or the Chairman
of the Fund. Special meetings of Shareholders shall also be called by the
Secretary upon the written request of the holders of Shares entitled to vote not
less than twenty-five percent (25%) of all the votes entitled to be cast at such
meeting. Such request shall state the purpose or purposes of such meeting and
the matters proposed to be acted on thereat. When a meeting has been requested
by Shareholders, the Secretary shall inform such Shareholders of the reasonable
estimated cost of preparing and mailing such notice of the meeting, and, upon
payment to the Fund of such costs, the Secretary shall give notice stating the
purpose or purposes of the meeting to all entitled to vote at such meeting. No
special meeting need be called upon the request of the holders of Shares
entitled to cast less than a majority of all votes entitled to be cast at such
meeting, to consider any matter which is substantially the same as a matter
voted upon at any special meeting of Shareholders held during the preceding
twelve months.
SECTION 3.4 NOTICE OF MEETINGS. Written or printed notice of every
Shareholders' meeting, stating the place, date, and purpose or purposes thereof,
shall be given by the Secretary not less than ten (10) nor more than ninety (90)
days before such meeting to each Shareholder entitled to vote at such meeting.
Such notice shall be deemed to be given when deposited in the United States
mail, postage prepaid, directed to the Shareholder at his address as it appears
on the records of the Fund.
<PAGE>
SECTION 3.5 QUORUM AND ADJOURNMENT OF MEETINGS. Except as otherwise
provided by law, by the Declaration or by these By-Laws, at all meetings of
Shareholders the holders of a majority of the Shares issued and outstanding and
entitled to vote thereat, present in person or represented by proxy, shall be
requisite and shall constitute a quorum for the transaction of business. In the
absence of a quorum, the Shareholders present or represented by proxy and
entitled to vote thereat shall have power to adjourn the meeting from time to
time. Any adjourned meeting may be held as adjourned without further notice. At
any adjourned meeting at which a quorum shall be present, any business may be
transacted as if the meeting had been held as originally called.
SECTION 3.6 VOTING RIGHTS, PROXIES. At each meeting of Shareholders,
each holder of record of Shares entitled to vote thereat shall be entitled to
one vote in person or by proxy, executed in writing by the Shareholder or his
duly authorized attorney-in-fact, for each Share of beneficial interest of the
Fund and for the fractional portion of one vote for each fractional Share
entitled to vote so registered in his name on the records of the Fund on the
date fixed as the record date for the determination of Shareholders entitled to
vote at such meeting. No proxy shall be valid after eleven months from its date,
unless otherwise provided in the proxy. At all meetings of Shareholders, unless
the voting is conducted by inspectors, all questions relating to the
qualification of voters and the validity of proxies and the acceptance or
rejection of votes shall be decided by the chairman of the meeting. Pursuant to
a resolution of a majority of the Trustees, proxies may be solicited in the name
of one or more Trustees or officers of the Fund.
SECTION 3.7 VOTE REQUIRED. Except as otherwise provided by law, by
the Declaration of Trust, or by these By-Laws, at each meeting of Shareholders
at which a quorum is present, all matters shall be decided by Majority
Shareholder Vote.
SECTION 3.8 INSPECTORS OF ELECTION. In advance of any meeting of
Shareholders, the Trustees may appoint Inspectors of Election to act at the
meeting or any adjournment thereof. If Inspectors of Election are not so
appointed, the chairman of any meeting of Shareholders may, and on the request
of any Shareholder or his proxy shall, appoint Inspectors of Election of the
meeting. In case any person appointed as Inspector fails to appear or fails or
refuses to act, the vacancy may be filled by appointment made by the Trustees in
advance of the convening of the meeting or at the meeting by the person acting
as chairman. The Inspectors of Election shall determine the number of Shares
outstanding, the Shares represented at the meeting, the existence of a quorum,
the authenticity, validity and effect of proxies, shall receive votes, ballots
or consents, shall hear and determine all challenges and questions in any way
arising in connection with the right to vote, shall count and tabulate all votes
or consents, determine the results, and do such other acts as may be proper to
conduct the election or vote with fairness to all Shareholders. On request of
the chairman of the meeting, or of any Shareholder or his proxy, the Inspectors
of Election shall make a report in writing of any challenge or question or
matter determined by them and shall execute a certificate of any facts found by
them.
SECTION 3.9 INSPECTION OF BOOKS AND RECORDS. Shareholders shall have
such rights and procedures of inspection of the books and records of the Fund as
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are granted to Shareholders under the Corporations and Associations Law of the
Commonwealth of Massachusetts.
SECTION 3.10 ACTION BY SHAREHOLDERS WITHOUT MEETING. Except as
otherwise provided by law, the provisions of these By-Laws relating to notices
and meetings to the contrary notwithstanding, any action required or permitted
to be taken at any meeting of Shareholders may be taken without a meeting if a
majority of the Shareholders entitled to vote upon the action consent to the
action in writing and such consents are filed with the records of the Fund. Such
consent shall be treated for all purposes as a vote taken at a meeting of
Shareholders.
* * * * *
ARTICLE VIII
CERTIFICATES OF SHARES
SECTION 8.1 CERTIFICATES OF SHARES. Certificates of Shares of the
Fund shall be in such form and of such design as the Trustees shall approve,
subject to the right of the Trustees to change such form and design at any time
or from time to time, and shall be entered in the records of the Fund as they
are issued. Each such certificate shall bear a distinguishing number; shall
exhibit the holder's name and certify the number of full Shares owned by such
holder; shall be signed by or in the name of the Fund by the President, or a
Vice President, and countersigned by the Secretary or an Assistant Secretary or
the Treasurer and an Assistant Treasurer of the Fund; shall be sealed with the
seal; and shall contain such recitals as may be required by law. Where any
certificate is signed by a Transfer Agent or by a Registrar, the signature of
such officers and the seal may be facsimile, printed or engraved. The Fund may,
at its option, determine not to issue a certificate or certificates to evidence
Shares owned of record by any Shareholder.
In case any officer or officers who shall have signed, or whose facsimile
signature or signatures shall appear on, any such certificate or certificates
shall cease to be such officer or officers of the Fund, whether because of
death, resignation or otherwise, before such certificate or certificates shall
have been delivered by the Fund, such certificate or certificates shall,
nevertheless, be adopted by the Fund and be issued and delivered as though the
person or persons who signed such certificate or certificates or whose facsimile
signature or signatures shall appear therein had not ceased to be such officer
or officers of the Fund.
No certificate shall be issued for any Share until such Share is fully
paid.
SECTION 8.2 TRANSFER OF SHARES. Shares shall be transferable on the
books of the Fund by the holder thereof in person or by his duly authorized
attorney or legal representative, upon surrender and cancellation of
certificates, if any, for the same number of Shares, duly endorsed or
accompanied by proper instruments of assignment and transfer, with such proof of
3
<PAGE>
the authenticity of the signature as the Fund or its agent may reasonably
require; in the case of Shares not represented by certificates, the same or
similar requirements may be imposed by the Board of Trustees.
SECTION 8.3 SHARE LEDGERS. The share ledgers of the Fund, containing
the name and address of the Shareholders of the Fund and the number of Shares
held by them respectively, shall be kept at the principal offices of the Fund
or, if the Fund employs a transfer agent, at the offices of the Transfer Agent
of the Fund.
SECTION 8.4 LOST, STOLEN, DESTROYED AND MUTILATED CERTIFICATES. The
Trustees may direct a new certificate or certificates to be issued in place of
any certificate or certificates theretofore issued by the Fund alleged to have
been lost, stolen or destroyed, upon satisfactory proof of such loss, theft, or
destruction; and the Trustees may, in their discretion, require the owner of the
lost, stolen or destroyed certificate, or his legal representative, to give to
the Fund and to such Registrar, Transfer Agent and/or Transfer Clerk as may be
authorized or required to countersign such new certificate or certificates, a
bond in such sum and of such type as they may direct, and with such surety or
sureties, as they may direct, as indemnity against any claim that may be against
them or any of them on account of or in connection with the alleged loss, theft
or destruction of any such certificate.
* * * * *
ARTICLE X
MISCELLANEOUS
* * * * *
SECTION 10.2 RECORD DATE. The Trustees may fix in advance a date as
the record date for the purpose of determining Shareholders entitled to notice
of, or to vote at, any meeting of Shareholders, or Shareholders entitled to
receive payment of any dividend or the allotment of any rights, or in order to
make a determination of Shareholders for any other proper purpose. Such date, in
any case, shall be not more than ninety (90) days, and in case of a meeting of
Shareholders not less than ten (10) days, prior to the date on which particular
action requiring such determination of Shareholders is to be taken. In lieu of
fixing a record date, the Trustees may provide that the transfer books shall be
closed for a stated period but not to exceed, in any case, twenty (20) days. If
the transfer books are closed for the purpose of determining Shareholders
entitled to notice of a vote at a meeting of Shareholders, such books shall be
closed for at least ten (10) days immediately preceding such meeting.
* * * * *
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ARTICLE XI
COMPLIANCE WITH FEDERAL REGULATIONS
The Trustees are hereby empowered to take such action as they may deem to
be necessary, desirable or appropriate so that the Fund is or shall be in
compliance with any federal or state statute, rule or regulation with which
compliance by the Fund is required.
ARTICLE XII
AMENDMENTS
These By-Laws may be amended, altered, or repealed, or new By-Laws may be
adopted, (a) by a Majority Shareholder Vote, or (b) by the Trustees; provided,
however, that no By-Law may be amended, adopted or repealed by the Trustees if
such amendment, adoption or repeal requires, pursuant to law, the Declaration,
or these By-Laws, a vote of the Shareholders. The Trustees shall in no event
adopt By-Laws which are in conflict with the Declaration, and any apparent
inconsistency shall be construed in favor of the related provisions in the
Declaration.
ARTICLE XIII
DECLARATION OF TRUST
The Declaration of Trust establishing the Fund, dated July 9, 1998, a copy
of which is on file in the office of the Secretary of State of the Commonwealth
of Massachusetts, provides that the name the INVESCO Global Financial Services
Fund refers to the Trustees under the Declaration collectively as Trustees, but
not as individuals or personally; and no Trustee, Shareholder, officer, employee
or agent of the Fund shall be held to any personal liability, nor shall resort
be had to their private property for the satisfaction of any obligation or claim
or otherwise, in connection with the affairs of said Fund, but the Fund Estate
only shall be liable.
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