<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
(Amendment No. )
Filed by the Registrant [X]
Filed by a party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule 14a-
6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to (S)240.14a-11(c) or (S)240.14a-12
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INVESCO INCOME FUNDS, INC.
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Payment of Filing Fee (Check the appropriate box):
[x] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
-----------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-----------------------------------------------------------------------
(5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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<PAGE>
INVESCO INCOME FUNDS, INC.
[LOGO OF INVESCO APPEARS HERE]
DECEMBER 26, 1996
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Dear INVESCO Income Funds Shareholder:
Enclosed is a Proxy Statement for the January 31, 1997 special meeting of
shareholders of INVESCO High Yield Fund, INVESCO Select Income Fund, INVESCO
Short-Term Bond Fund and INVESCO U.S. Government Securities Fund (collective-
ly, the "Funds"), the four series of INVESCO Income Funds, Inc. (the "Compa-
ny").
As you may have heard, INVESCO PLC ("INVESCO") has entered into an agreement
to merge with A I M Management Group Inc. ("AIM"), under which AIM will become
part of INVESCO. INVESCO is the ultimate parent company of INVESCO Funds
Group, Inc., the investment adviser to the Company and INVESCO Trust Company,
the sub-adviser to the Funds.
As explained more fully in the attached Proxy Statement, at the time the
INVESCO/AIM merger takes effect, the Company's present investment advisory and
sub-advisory contracts will terminate automatically, as a matter of law. Al-
though Company shareholders are not being asked to approve the merger, they
must vote on the necessary new investment advisory and sub-advisory contracts.
Accordingly, to provide continuity of investment advisory services to the Com-
pany, the Board of Directors is asking shareholders to approve the following
proposals:
. All shareholders of the Company will be asked to approve a new investment
advisory agreement for the Company, with the same parties and on terms
substantially identical to the existing investment advisory agreement.
. Shareholders of each of the Funds will be asked to approve a new invest-
ment sub-advisory agreement, with the same parties and on terms substan-
tially identical to the existing investment sub-advisory agreement.
In addition, all shareholders are being asked to elect directors of the Com-
pany and to ratify the selection of Price Waterhouse LLP as the Company's in-
dependent accountants. The accompanying Proxy Statement provides additional
detailed information on these proposals, the INVESCO/AIM merger and the Compa-
ny.
WE ARE REQUIRED BY LAW TO INFORM YOU AS TO CERTAIN DETAILS OF THE TRANSAC-
TION, EVEN THOUGH YOU ARE NOT VOTING TO APPROVE THE MERGER. WHAT IS MOST IM-
PORTANT FOR YOU AS A SHAREHOLDER OF THE FUNDS IS THAT APPROVAL OF THE PROPOS-
ALS LISTED ABOVE WILL IN NO WAY INCREASE THE ADVISORY FEES, SUB-ADVISORY FEES
OR EXPENSES OF THE COMPANY OR THE FUNDS OR CHANGE THE LEVEL, NATURE OR QUALITY
OF SERVICES YOU RECEIVE. EACH OF THESE PROPOSALS HAS BEEN APPROVED BY THE
BOARD OF DIRECTORS OF THE COMPANY, WHICH RECOMMENDS THAT SHAREHOLDERS APPROVE
THEM AS WELL.
The Board of Directors believes that these proposals are in the best inter-
ests of the shareholders. Therefore, we ask that you read the enclosed materi-
als and vote promptly. Should you have any questions, please feel free to call
our client services representatives at 1-800-646-8372. They will be happy to
answer any questions that you might have.
YOUR VOTE IS IMPORTANT. THE MATTERS WE ARE SUBMITTING FOR YOUR CONSIDERATION
ARE SIGNIFICANT TO THE COMPANY, THE FUNDS AND TO YOU AS A SHAREHOLDER. IF WE
DO NOT RECEIVE SUFFICIENT VOTES TO APPROVE THESE
9704
<PAGE>
PROPOSALS, WE MAY HAVE TO SEND ADDITIONAL MAILINGS OR CONDUCT TELEPHONE CAN-
VASSING. THEREFORE, PLEASE TAKE THE TIME TO READ THE PROXY STATEMENT AND CAST
YOUR VOTE ON THE ENCLOSED PROXY CARD, AND RETURN IT IN THE ENCLOSED PRE-AD-
DRESSED, POSTAGE-PAID ENVELOPE.
Sincerely,
/s/ Dan J. Hesser
Dan J. Hesser
President
INVESCO Income Funds, Inc. --
INVESCO High Yield Fund
INVESCO Select Income Fund
INVESCO Short-Term Bond Fund
INVESCO U.S. Government Securities Fund
2
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INVESCO INCOME FUNDS, INC.
7800 EAST UNION AVENUE
DENVER, COLORADO 80237
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NOTICE OF SPECIAL MEETING OF SHAREHOLDERS TO BE HELD ON JANUARY 31, 1997
Notice is hereby given that a special meeting of shareholders (the "Meet-
ing") of INVESCO High Yield Fund, INVESCO Select Income Fund, INVESCO Short-
Term Bond Fund and INVESCO U.S. Government Securities Fund (collectively, the
"Funds") of INVESCO Income Funds, Inc. (the "Company") will be held at the
Denver Marriott Southeast, 6363 East Hampden Avenue, Denver, Colorado 80222 on
Friday, January 31, 1997, at 10:00 a.m., Mountain Standard Time, for the fol-
lowing purposes.
1.A. To approve or disapprove a new investment advisory agreement between
the Company and INVESCO Funds Group, Inc. ("IFG"), such agreement to
take effect only if the proposed merger of A I M Management Group
Inc. into a wholly-owned U.S. subsidiary of INVESCO PLC is consum-
mated (the "Merger"). INVESCO PLC is the ultimate parent of IFG.
1.B. To approve or disapprove a new sub-advisory agreement between IFG and
INVESCO Trust Company, with respect to each of the Funds, to take ef-
fect only if the Merger is consummated.
2. To elect eleven directors of the Company.
3. To ratify or reject the selection of Price Waterhouse LLP as indepen-
dent accountants for the Company for the fiscal year ending August 31,
1997.
4. To transact such other business as may properly come before the Meeting
or any adjournment(s) thereof.
None of these proposals is expected to result in any change in the way the
Funds are managed, in the advisory or sub-advisory fees or in the services you
receive as a shareholder.
The board of directors of the Company has fixed the close of business on De-
cember 9, 1996, as the record date for the determination of shareholders enti-
tled to notice of and to vote at the Meeting or any adjournment(s) thereof.
A complete list of shareholders of the Funds entitled to vote at the Meeting
will be available and open to the examination of any shareholder of the Funds
for any purpose germane to the Meeting during ordinary business hours after
December 15, 1996, at the offices of the Company, 7800 East Union Avenue, Den-
ver, Colorado 80237.
You are cordially invited to attend the Meeting. Shareholders who do not ex-
pect to attend the Meeting in person are requested to complete, date and sign
the enclosed form of proxy and return it promptly in the enclosed envelope
that requires NO postage if mailed in the United States. The enclosed proxy is
being solicited on behalf of the board of directors of the Company.
<PAGE>
IMPORTANT
Please mark, sign, date and return the enclosed proxy in the accompanying
envelope as soon as possible in order to ensure a full representation at the
Meeting.
The Meeting will have to be adjourned without conducting any business if
less than one-third of the eligible shares is represented, and the Company
will have to continue to solicit votes until a quorum is obtained. The Meeting
also may be adjourned, if necessary, to continue to solicit votes if less than
the required shareholder vote has been obtained to elect the specified number
of directors and to approve Proposals 1.A., 1.B. and 3.
Your vote, then, could be critical in allowing the Company to hold the Meet-
ing as scheduled. By marking, signing, and promptly returning the enclosed
proxy, you may eliminate the need for additional solicitation. Your coopera-
tion is appreciated.
By Order of the Board of Directors,
/s/ Glen A. Payne
Glen A. Payne
Secretary
Denver, Colorado
Dated: December 26, 1996
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INVESCO INCOME FUNDS, INC.
DECEMBER 26, 1996
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INVESCO INCOME FUNDS, INC.
7800 EAST UNION AVENUE
DENVER, COLORADO 80237
PROXY STATEMENT
FOR SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD JANUARY 31, 1997
INTRODUCTION
The enclosed proxy is being solicited by the board of directors (the "Board"
or the "Directors") of INVESCO Income Funds, Inc. (the "Company") on behalf of
INVESCO High Yield Fund (the "High Yield Fund"), INVESCO Select Income Fund
(the "Select Income Fund"), INVESCO Short-Term Bond Fund (the "Short-Term Bond
Fund") and INVESCO U.S. Government Securities Fund (the "U.S. Government Secu-
rities Fund") (collectively, the "Funds"), the four series of the Company, for
use in connection with the special meeting of shareholders of the Company (the
"Meeting") to be held at 10:00 a.m., Mountain Standard Time, on Friday, Janu-
ary 31, 1997, at the Denver Marriott Southeast, 6363 East Hampden Avenue, Den-
ver, Colorado 80222, and at any adjournment(s) thereof for the purposes set
forth in the foregoing notice. THE COMPANY'S ANNUAL REPORT, INCLUDING FINAN-
CIAL STATEMENTS OF THE COMPANY FOR THE FISCAL YEAR ENDED AUGUST 31, 1996, IS
AVAILABLE WITHOUT CHARGE UPON REQUEST FROM GLEN A. PAYNE, SECRETARY OF THE
COMPANY, AT P.O. BOX 173706, DENVER, COLORADO 80217-3706 (TELEPHONE NUMBER 1-
800-646-8372). The approximate mailing date of proxies and this Proxy State-
ment is December 26, 1996.
The primary purpose of the Meeting is to allow shareholders to consider new
investment advisory and sub-advisory agreements for the Funds. As explained in
more detail below, the existing advisory and sub-advisory agreements for the
Funds will terminate automatically, by operation of law, upon the consummation
of the proposed merger (the "Merger") of A I M Management Group Inc. ("AIM")
and a direct wholly-owned subsidiary of INVESCO PLC ("INVESCO"). Shareholders
are not being asked to approve the Merger; rather, they are being asked to
continue the existing investment advisory relationships for the Funds under
new contracts which would take effect at the time of the Merger. Consummation
of the Merger is conditioned on, among other things, shareholder approval of
the new investment advisory and sub-advisory contracts. The transactions con-
templated by the Merger and the terms of the new investment advisory and sub-
advisory agreements are discussed below.
OTHER THAN THEIR COMMENCEMENT AND EXPIRATION DATES, THE PROPOSED NEW ADVI-
SORY AND SUB-ADVISORY AGREEMENTS ARE IDENTICAL IN FORM AND TERMS TO THE PRES-
ENT AGREEMENTS.
Therefore:
(1) All shareholders of the Company are being asked to approve a new in-
vestment advisory agreement (the "Proposed Advisory Agreement") be-
tween the Company and its investment adviser, INVESCO Funds Group,
Inc. (the "Adviser" or "IFG"), to replace the existing agreement be-
tween the Company and the Adviser (the "Current Advisory Agreement");
and
<PAGE>
(2) Shareholders of each of the Funds are being asked to approve a new in-
vestment sub-advisory agreement (the "Proposed Sub-Advisory Agree-
ment") between IFG and that Fund's sub-adviser, INVESCO Trust Company
(the "Sub-Adviser" or "ITC"), to replace the existing sub-advisory
agreement between IFG and ITC (the "Current Sub-Advisory Agreement").
Elsewhere in this Proxy Statement the Current Advisory Agreement and the
Current Sub-Advisory Agreement are together referred to as the "Current Agree-
ments." Similarly, the Proposed Advisory Agreement and the Proposed Sub-Advi-
sory Agreement are together referred to as the "Proposed Agreements."
The following factors should be considered by shareholders in determining
whether to approve the Proposed Agreements:
. The Proposed Advisory Agreement and the Proposed Sub-Advisory Agreement
were approved by the Directors, including the Independent Directors (as
defined below).
. There will be no change in the investment objectives or policies of the
Funds.
. There will be no increase in the fees payable to the Adviser or to the
Sub-Adviser as a result of the approval and implementation of the Pro-
posed Agreements.
. No significant changes are contemplated in the personnel of the Adviser
who are responsible for the overall supervision of the Company or of the
Sub-Adviser who are responsible for managing the investments of the
Funds.
If the enclosed form of proxy is duly executed and returned in time to be
voted at the Meeting, and not subsequently revoked, all shares represented by
the proxy will be voted in accordance with the instructions marked thereon. If
no instructions are given, such shares will be voted FOR the nominees for di-
rector hereinafter listed and FOR Proposals 1.A., 1.B. and 3. One-third of the
outstanding shares of the Company entitled to vote, represented in person or
by proxy, will constitute a quorum at the Meeting.
Shares held by shareholders present in person or represented by proxy at the
Meeting will be counted both for the purpose of determining the presence of a
quorum and for calculating the votes cast on the issues before the Meeting. An
abstention by a shareholder, either by proxy or by vote in person at the Meet-
ing, has the same effect as a negative vote. Shares held by a broker or other
fiduciary as record owner for the account of the beneficial owner are counted
toward the required quorum if the beneficial owner has executed and timely de-
livered the necessary instructions for the broker to vote the shares or if the
broker has and exercises discretionary voting power. Where the broker or fidu-
ciary does not receive instructions from the beneficial owner and does not
have discretionary voting power as to one or more issues before the Meeting,
but grants a proxy for or votes such shares, they will be counted toward the
required quorum but will have the effect of a negative vote on any proposals
on which it does not vote.
Because the proposals being submitted for a vote of the shareholders of each
Fund are identical, the Board determined to combine the proxy materials for
the Funds in order to reduce the cost of preparing, printing and mailing the
proxy materials.
In order to further reduce costs, the notices to shareholders having more
than one account in a Fund listed under the same social security number at a
single address have been combined. The proxy cards have been coded so that
each shareholder's votes will be counted for all such accounts.
Execution of the enclosed proxy card will not affect a shareholder's right
to attend the Meeting and vote in person, and a shareholder giving a proxy has
the power to revoke it (by written notice to the Company at
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<PAGE>
P.O. Box 173706, Denver, Colorado 80217-3706, execution of a subsequent proxy
card, or oral revocation at the Meeting) at any time before it is exercised.
Shareholders of the Funds of record at the close of business on December 9,
1996 (the "Record Date"), are entitled to vote at the Meeting, including any
adjournment(s) thereof, and are entitled to one vote for each share, and cor-
responding fractional votes for fractional shares, on each matter to be acted
upon at the Meeting. On the Record Date, 109,341,319 shares of the Company's
common stock, $.01 par value per share were outstanding, including 59,075,533
shares of the High Yield Fund, 40,819,753 shares of the Select Income Fund,
1,144,225 shares of the Short-Term Bond Fund and 8,301,808 shares of the U.S.
Government Securities Fund.
The following table sets forth, as of the Record Date, the beneficial owner-
ship of each Fund's issued and outstanding common stock by each 5% or greater
shareholder. The Directors and executive officers of the Company did not own
1% or more of the outstanding Fund shares as of the Record Date.
<TABLE>
<CAPTION>
Name and Address Amount of Percent of
of Beneficial Owner Beneficial Ownership(1) Common Stock
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<S> <C> <C>
HIGH YIELD FUND
Charles Schwab & Co., Inc. 23,529,373.7190 39.860%
Special Custody Account for the
Exclusive Benefit of Customers
Attn: Mutual Funds
101 Montgomery Street
San Francisco, CA 94104
SELECT INCOME FUND
Charles Schwab & Co., Inc. 8,426,905.7660 20.652%
Special Custody Account for the
Exclusive Benefit of Customers
Attn: Mutual Funds
101 Montgomery Street
San Francisco, CA 94104
Resources Trust Co., Custodian 2,725,455.7680 6.679%
Customers of Meridian Investment Manage-
ment Corp.
P.O. Box 3865
Englewood, CO 80155
SHORT-TERM BOND FUND
Amalgamated Bank of New York, Custodian 145,946.2360 12.807%
TWU Private Busline Pension Trust
Amivest Discretionary Investment Manager
P.O. Box 370, Cooper Station
New York, NY 10276
Charles Schwab & Co., Inc. 141,740.7320 12.438%
Special Custody Account for the
Exclusive Benefit of Customers
Attn: Mutual Funds
101 Montgomery Street
San Francisco, CA 94104
</TABLE>
3
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<TABLE>
<CAPTION>
Name and Address Amount of Percent of
of Beneficial Owner Beneficial Ownership(1) Common Stock
- ------------------- ----------------------- ------------
<S> <C> <C>
Amalgamated Bank of New York, Custodian 81,592.1920 7.160%
Local 917 Pension
Annuity & Heath Funds
Amivest Corp.
Discretionary Investment Manager
P.O. Box 370, Cooper Station
New York, NY 10003
Amalgamated Bank of New York, Custodian 62,741.1680 5.506%
Elevator Division
Retirement Benefit Plan
Amivest Corp.
Discretionary Investment Manager
P.O. Box 370, Cooper Station
New York, NY 10003
U.S. GOVERNMENT SECURITIES FUND
Resources Trust Company, Custodian 3,464,400.5360 45.058%
Exclusive Benefit of the Customers of
Meridian Investment Management Corp.
P.O. Box 3865
Englewood, CO 80155
Charles Schwab & Co., Inc. 537,329.8280 6.989%
Special Custody Account for the
Exclusive Benefit of Customers
Attn: Mutual Funds
101 Montgomery Street
San Francisco, CA 94104
</TABLE>
(1) Each beneficial owner named above shares investment power with respect
to the shares listed next to its respective row, but its customers re-
tain sole voting power.
In addition to the solicitations of proxies by use of the mail, proxies may
be solicited by officers of the Company, and by officers and employees of IFG,
personally or by telephone or telegraph, without special compensation. In addi-
tion, Shareholder Communications Corporation ("SCC") will be retained to assist
in the solicitation of proxies.
As the meeting date approaches, certain shareholders whose votes the Company
has not yet received may receive telephone calls from representatives of SCC
requesting that they authorize, by telephonic or electronically transmitted in-
structions, SCC to execute proxy cards on their behalf. Telephone authoriza-
tions will be recorded in accordance with the procedures set forth below. The
Adviser believes that these procedures are reasonably designed to ensure that
the identity of the shareholder casting the vote is accurately determined and
that the voting instructions of the shareholder are accurately determined.
SCC has received an opinion of Maryland counsel that addresses the validity,
under the applicable laws of the State of Maryland, of authorization given
orally to execute a proxy. The opinion given by Maryland counsel
4
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concludes that a Maryland court would find that there is no Maryland law or
public policy against the acceptance of proxies signed by an orally-authorized
agent, provided it adheres to the procedures set forth below.
In all cases where a telephonic proxy is solicited, the SCC representative
is required to ask the shareholder for such shareholder's full name, address,
social security or employer identification number, title (if the person giving
the proxy is authorized to act on behalf of an entity, such as a corporation),
and the number of shares owned, and to confirm that the shareholder has re-
ceived the Proxy Statement in the mail. If the information solicited agrees
with the information provided to SCC by the Company, the SCC representative
has the responsibility to explain the process, read the proposals listed on
the proxy card, and ask for the shareholder's instructions on each proposal.
Although he or she is permitted to answer questions about the process, the SCC
representative is not permitted to recommend to the shareholder how to vote,
other than to read any recommendation set forth in the Proxy Statement. SCC
will record the shareholder's instructions on the card. Within 72 hours, SCC
will send the shareholder a letter or mailgram confirming the shareholder's
vote and asking the shareholder to call SCC immediately if the shareholder's
instructions are not correctly reflected in the confirmation.
If a shareholder wishes to participate in the Meeting, but does not wish to
give a proxy by telephone, such shareholder may still submit the proxy card
originally sent with the Proxy Statement or attend in person. Any proxy given
by a shareholder, whether in writing or by telephone, is revocable. A share-
holder may revoke the accompanying proxy or a proxy given telephonically at
any time prior to its use by filing with the Company a written revocation or
duly executed proxy bearing a later date. In addition, any shareholder who at-
tends the Meeting in person may vote by ballot at the Meeting, thereby cancel-
ing any proxy previously given.
All costs of printing and mailing proxy materials and the costs and expenses
of holding the Meeting and soliciting proxies, including any amount paid to
SCC, will be paid by INVESCO and not by the Company, the Funds or their share-
holders.
The Board may seek one or more adjournments of the Meeting to solicit addi-
tional shareholders, if necessary, to obtain a quorum for the Meeting, or to
obtain the required shareholder vote to elect the number of specified direc-
tors and approve Proposals 1.A., 1.B. and 3. An adjournment would require the
affirmative vote of the holders of a majority of the shares present at the
Meeting (or an adjournment thereof) in person or by proxy and entitled to
vote. If adjournment is proposed in order to obtain the required shareholder
vote on a particular proposal, the persons named as proxies will vote in favor
of adjournment those shares which they are entitled to vote in favor of such
proposal and will vote against adjournment those shares which they are re-
quired to vote against such proposal. A shareholder vote may be taken on one
or more of the proposals discussed herein prior to any such adjournment if
sufficient votes have been received and it is otherwise appropriate.
PROPOSAL 1: A. APPROVAL OF THE PROPOSED ADVISORY AGREEMENT BETWEEN THE COM-
PANY AND INVESCO FUNDS GROUP, INC.
B. APPROVAL OF THE PROPOSED SUB-ADVISORY AGREEMENT BETWEEN
INVESCO FUNDS GROUP, INC. AND INVESCO TRUST COMPANY
BACKGROUND
IFG serves as investment adviser to the Company pursuant to the Current Ad-
visory Agreement. The Current Advisory Agreement provides that the Adviser,
upon receipt of written approval of the Company, is authorized to retain com-
panies to provide investment advisory services to the Company. Accordingly,
IFG has entered into a sub-advisory agreement with ITC, pursuant to which ITC
serves as sub-adviser to, and is primarily responsible
5
<PAGE>
for, managing the investments of all of the Funds. Both the Adviser and the
Sub-Adviser are indirect, wholly-owned subsidiaries of INVESCO. INVESCO is a
publicly traded holding company organized under the laws of England in 1935.
The ordinary shares of INVESCO, 25 pence nominal value per share (the "Ordi-
nary Shares"), are traded on the London Stock Exchange. INVESCO's subsidiaries
provide investment advisory services throughout the world. As of September 30,
1996, the total assets advised by INVESCO and its subsidiaries were approxi-
mately $91.1 billion.
AIM is a holding company that has been engaged in the financial services
business since 1976 and, together with its affiliates, advises or manages 38
investment company portfolios comprising the A I M Family of Funds(R). As of
October 31, 1996, the total assets of the registered investment company port-
folios advised or managed by AIM and its affiliates were approximately $57
billion.
On November 4, 1996, INVESCO and INVESCO Group Services, Inc. ("IGS")
entered into an agreement of merger (the "Merger Agreement") with AIM pursuant
to which IGS or another wholly-owned U.S. subsidiary of INVESCO ("INVESCO
Sub") will acquire all the issued and outstanding shares of AIM capital stock
for consideration valued on November 4, 1996 at approximately $1.6 billion,
plus the amount of AIM net income from September 1, 1996 through the date on
which the Merger is consummated (the "Closing Date"), minus dividends paid
during such period and subject to adjustments for certain balance sheet items
and transaction expenses. The consideration will include 290 million new
Ordinary Shares (including Ordinary Shares issuable in respect of vested and
unvested AIM options) of INVESCO valued on November 4, 1996 at approximately
$1.1 billion. The balance of the consideration will be paid in cash. Upon
consummation of the Merger, the AIM shareholders will own approximately 45% of
INVESCO's total outstanding capital stock on a fully-diluted basis.
Thereafter, INVESCO will change its name to "AMVESCO PLC" (the names of the
Adviser and the Sub-Adviser will not change).
The Closing Date is presently expected to occur on or about February 28,
1997, subject to the satisfaction of conditions to closing that include, among
other things: (a) INVESCO having consummated one or more financings and having
received net proceeds of not less than $500 million; (b) the respective aggre-
gate annualized asset management fees of INVESCO and AIM (based on assets un-
der management, excluding the effects of market movements), in respect of
which consents to the Merger have been obtained being equal to or greater than
87.5% of all such fees; (c) INVESCO and AIM having received certain consents
from regulators, lenders and/or other third parties; (d) AIM not having re-
ceived from the holder or holders of more than 2% of the outstanding AIM
shares notices that they intend to exercise dissenters' rights; (e) a Voting
Agreement, Standstill Agreement, Transfer Restriction Agreements, Transfer Ad-
ministration Agreement, Registration Rights Agreement, Indemnification Agree-
ment and employment agreements with approximately thirty AIM employees having
been executed and delivered; (f) AIM having received an opinion from its U.S.
counsel that the Merger will be treated as a tax-free reorganization; and (g)
shareholder resolutions to appoint to INVESCO's board of directors (the
"INVESCO Board") six AIM designees and a resolution of the INVESCO Board to
appoint the seventh AIM designee having been passed and not revoked.
The Merger Agreement may be terminated at any time prior to the Closing Date
by written notice by AIM or INVESCO to the other after June 1, 1997 or under
other circumstances set forth in the Merger Agreement. In certain circum-
stances occurring on or before September 30, 1997, a termination fee will be
payable by the party in respect of which such circumstances have occurred.
In connection with the Merger, the following agreements, each to be effec-
tive upon the closing of the Merger, have been or will be executed:
6
<PAGE>
Voting Agreement. Certain AIM shareholders and their spouses, the cur-
rent directors of INVESCO and proposed directors of INVESCO (expected to
hold in the aggregate approximately 25% of the Ordinary Shares of INVESCO
outstanding immediately following consummation of the Merger) have agreed
to vote as directors and as shareholders to ensure that: (a) the INVESCO
Board will have fifteen members, consisting of four executive directors
and three non-executive directors designated by INVESCO's current senior
management, four executive directors and three non-executive directors
designated by AIM's current senior management and a Chairman; (b) the ini-
tial Chairman will be Charles W. Brady (INVESCO's current Chairman) and
the initial Vice Chairman will be Charles T. Bauer (AIM's current Chair-
man); and (c) the parties will vote at any INVESCO shareholder meetings on
resolutions (other than those in respect of the election of directors)
supported by two-thirds of the INVESCO Board in the same proportion as
votes are cast by unaffiliated shareholders. The Voting Agreement will
terminate on the earlier of the fourth anniversary of the Closing Date or
the date on which a resolution proposed by an INVESCO-designated board
member is approved by the INVESCO Board despite being voted against by
each AIM-designated board member present at such INVESCO Board meeting.
Standstill Agreement and Transfer Restriction Agreements. Certain AIM
shareholders and their spouses and certain significant shareholders of
INVESCO have agreed, under certain circumstances for a maximum period of
five years, not to engage in a number of specified activities that might
result in a change of the ownership or control positions of INVESCO exist-
ing as of the Closing Date. AIM shareholders and INVESCO's current Chair-
man will be restricted in their ability to transfer their shares of
INVESCO for a period of up to five years.
If the conditions to the Merger are not met or waived, or if the Merger
Agreement is terminated, the Merger will not be consummated and the Current
Agreements will remain in effect. If the Proposed Agreements are approved and
the Merger is thereafter consummated, the Proposed Agreements will be executed
and become effective on the Closing Date. In the event that the Merger is con-
summated and the Proposed Advisory Agreement or the Proposed Sub-Advisory
Agreement is not approved by each of the Funds, such Proposed Agreement(s)
will be approved as to any Fund(s) that voted in favor of such Proposed Agree-
ment(s) and the Board will determine what action to take as to any Fund(s)
that voted against such Proposed Agreement(s). Any such action taken by the
Board will be subject to the approval of the appropriate shareholders.
Under the Merger Agreement, INVESCO and INVESCO Sub have agreed that they
will comply, and use all reasonable efforts to cause compliance on behalf of
their affiliates, with the provisions of Section 15(f) of the Investment Com-
pany Act of 1940, as amended (the "1940 Act"). Section 15(f) provides, in per-
tinent part, that an investment adviser of an investment company and its af-
filiates may receive any amount or benefit in connection with a sale of secu-
rities of, or a sale of any other interest in, such investment adviser that
results in an "assignment" of an investment advisory contract as long as two
conditions are met. First, no "unfair burden" may be imposed on the investment
company as a result of the Merger. The term "unfair burden," as defined in the
1940 Act, includes any arrangement during the two-year period after the trans-
action whereby the investment adviser (or predecessor or successor investment
adviser) or any interested person of any such adviser receives or is entitled
to receive any compensation directly or indirectly from the investment company
or its security holders (other than fees for bona fide investment advisory or
other services) or from any person in connection with the purchase or sale of
securities or other property to, from, or on behalf of the investment company
(other than fees for bona fide principal underwriting services). No such com-
pensation arrangements are contemplated in connection with the Merger.
The second condition is that, for a period of three years after the transac-
tion occurs, at least 75% of the members of the board of directors of the in-
vestment company advised by such adviser are not "interested
7
<PAGE>
persons" (as defined in the 1940 Act) of the new or the old investment advis-
er. The Board you are being asked to elect in Proposal No. 2 below does not
meet this 75% requirement. Nevertheless, as more fully described below under
Proposal No. 2, the composition of the Board, on or prior to the date the
Merger is effected, will comply with the 75% requirement.
INVESCO has advised the Company that the Merger is not expected to have a
material effect on the operations of the Company, on the Funds or on their
shareholders. No material change in investment philosophy, policies or strate-
gies is currently envisioned. The Adviser and the Sub-Adviser will, following
the Merger, continue to be indirect wholly-owned subsidiaries of INVESCO. The
Merger Agreement does not, by its terms, contemplate any changes, other than
changes in the ordinary course of business, in the management or operation of
the Adviser or the Sub-Adviser relating to the Company and its Funds, the per-
sonnel managing the Funds, or other services provided to or other business ac-
tivities of the Company. The Merger also is not expected to result in material
changes in the business, corporate structure or composition of the senior man-
agement or personnel of the Adviser or the Sub-Adviser. Based on the forego-
ing, the Adviser does not anticipate that the Merger will cause a reduction in
the quality of services now being provided to the Company, or have any adverse
effect on the Adviser's or the Sub-Adviser's ability to fulfill its respective
obligations under the Proposed Agreements or to operate its business in a man-
ner consistent with its current practices.
Each of the Current Agreements, as required by Section 15 of the 1940 Act,
provides for its automatic termination in the event of its assignment. Any
change of control of the Adviser and/or the Sub-Adviser is deemed to be an as-
signment. Because INVESCO Ordinary Shares constituting more than 25% of the
outstanding voting securities of INVESCO will be issued to the shareholders of
AIM, as a result of the Merger there may be deemed to be a change in control
of INVESCO. Such a change in control would cause an automatic termination of
the Current Advisory Agreement and the Current Sub-Advisory Agreement under
the 1940 Act.
Accordingly, in anticipation of the consummation of the Merger and in order
to ensure continuity of investment advisory services to the Company by the Ad-
viser and to each of the Funds by ITC, a new investment advisory agreement be-
tween the Company and IFG is proposed to be approved by shareholders of each
of the Funds. In addition, it is proposed that shareholders of each of the
Funds approve a new sub-advisory agreement between IFG and ITC.
The Board, including a majority of those Directors who are not "interested
persons" of the Company as such term is defined under the 1940 Act (the "Inde-
pendent Directors"), has approved the Proposed Advisory Agreement and the Pro-
posed Sub-Advisory Agreement.
EVALUATION OF THE BOARD OF DIRECTORS
At regular or special meetings of the Independent Directors and of the Board
held on October 14, 15, 28, and 30 and on November 6, 1996, at each of which a
majority of the Independent Directors were in attendance, the Directors evalu-
ated the Proposed Advisory Agreement and the Proposed Sub-Advisory Agreement.
The Independent Directors had available to them the assistance of outside
counsel throughout the process of determining whether to approve the Proposed
Agreements. Prior to and during the meetings, the Independent Directors re-
quested and received all information they deemed necessary to enable them to
determine whether each of the Proposed Agreements is in the best interests of
the Company, the Funds and their shareholders. At the meetings, the Indepen-
dent Directors reviewed materials furnished by management and met with repre-
sentatives of INVESCO and with representatives of AIM. They noted that senior
members of the management team of the Adviser will continue to be responsible
for managing the day-to-day affairs of the Adviser and senior management mem-
bers of the Sub-Adviser will continue to be responsible for managing the af-
fairs of that company. In
8
<PAGE>
evaluating the effects of the Merger, the Independent Directors viewed as sig-
nificant the fact that the Adviser and the Sub-Adviser are expected to con-
tinue to provide to the Company, the Funds and their shareholders, after the
Merger, investment advisory services of the same nature and quality as before
the Merger. Also, the Independent Directors considered the possible effects of
the Merger on the Company and its Funds.
The Board considered the nature, quality and extent of services provided and
expected to be provided by the Adviser to the Company and by ITC to each of
the Funds as well as the benefits derived by the Adviser and ITC. In addition,
the Board discussed and reviewed the terms and provisions of the Proposed Ad-
visory Agreement and the Proposed Sub-Advisory Agreement. The Board specifi-
cally noted that, other than the dates of execution, effectiveness and termi-
nation, the terms of each of the Proposed Agreements are the same, in all ma-
terial respects, as the terms of the corresponding Current Agreements. Specif-
ically, the Board noted that the fees and expenses payable under each of the
Proposed Agreements are identical to the fees and expenses presently in effect
under the corresponding Current Agreements.
The Board also took note of the terms of the Merger Agreement and the effect
of the addition of the substantial resources of AIM and its affiliated compa-
nies to the INVESCO group, including the reputation, experience, personnel,
resources, financial condition and performance of A I M Advisors, Inc. The
Board considered the statements made by representatives of INVESCO and AIM
that the capabilities of the Adviser and the Sub-Adviser would not be ad-
versely affected by the Merger and could be enhanced by the resources of AIM,
although there was no assurance of the Adviser or Sub-Adviser obtaining any
particular benefits.
Based upon the Directors' review and the evaluations of the materials they
received, and in consideration of all factors deemed relevant to them, the Di-
rectors determined that each of the Proposed Agreements is fair, reasonable
and in the best interests of the Company, the Funds and their shareholders.
ACCORDINGLY, THE BOARD, INCLUDING ALL OF THE INDEPENDENT DIRECTORS PRESENT AT
THE APPLICABLE MEETING, APPROVED EACH OF THE PROPOSED AGREEMENTS AND VOTED TO
RECOMMEND THAT ALL OF THE COMPANY'S SHAREHOLDERS VOTE TO APPROVE THE PROPOSED
ADVISORY AGREEMENT AND THAT SHAREHOLDERS OF EACH OF THE FUNDS VOTE TO APPROVE
THE PROPOSED SUB-ADVISORY AGREEMENT.
THE PROPOSED ADVISORY AND SUB-ADVISORY AGREEMENT
If shareholders of each of the Funds approve the Proposed Advisory Agreement
and the Proposed Sub- Advisory Agreement, the Proposed Agreements will become
effective immediately after the closing of the Merger. This summary of the
Proposed Agreements is qualified in its entirety by reference to the form of
such agreements attached to this Proxy Statement as Exhibits A.1. and A.2.
Each of the Proposed Agreements will remain in effect, unless earlier termi-
nated, for an initial term expiring two years from the Closing Date. As previ-
ously discussed, the sole purpose of entering into the Proposed Advisory
Agreement and the Proposed Sub-Advisory Agreement is to enable IFG to continue
to serve as the investment adviser to the Company and to enable ITC to con-
tinue to serve as sub-adviser to the Funds, after termination of each of the
Current Agreements by virtue of the "assignment" of such agreements that could
result from the Merger. THE MATERIAL TERMS AND PROVISIONS OF EACH OF THE PRO-
POSED AGREEMENTS, OTHER THAN THEIR RESPECTIVE EFFECTIVE AND TERMINATION DATES,
ARE THE SAME, IN ALL SUBSTANTIVE RESPECTS, AS THOSE OF THE CORRESPONDING CUR-
RENT AGREEMENTS, EACH OF WHICH IS SUMMARIZED BELOW.
THE CURRENT ADVISORY AGREEMENT
The Current Advisory Agreement, dated April 30, 1993, was unanimously ap-
proved on April 21, 1993, by a vote cast in person by a majority of the Direc-
tors, including a majority of the Independent Directors. Pursuant to
9
<PAGE>
authorizations granted at meetings held on May 24, 1993 and June 21, 1993 by
the public shareholders of certain investment companies, whose assets were ac-
quired by the Company (the "Predecessor Funds"), the Predecessor Funds, as the
initial shareholders of the Company, approved the Current Advisory Agreement
on June 24, 1993, for an initial term expiring on April 30, 1995. In addition,
on September 29, 1993, IFG, as the then sole shareholder of the Short-Term
Bond Fund, approved the Current Advisory Agreement. The continuation of the
Current Advisory Agreement until April 30, 1997, was approved by the Direc-
tors, including a majority of the Independent Directors, at a meeting of the
Directors held on April 30, 1996, called for the purpose of approving the Cur-
rent Advisory Agreement.
The Current Advisory Agreement may be continued from year to year as to each
Fund as long as each such continuance is approved at least annually by the
Board, or by a vote of the holders of a majority of the then-outstanding vot-
ing securities (as defined below under "Vote Required") of the Funds. Any such
continuance also must be approved by a majority of the Independent Directors
of the Company at a meeting called for the purpose of voting on such continu-
ance. Upon sixty (60) days' written notice, the Current Advisory Agreement may
be terminated at any time without penalty by a majority of the then-outstand-
ing voting securities of the Company, or with respect to a particular Fund, by
a majority of the then-outstanding voting securities of that Fund, or by IFG.
As discussed earlier, the Current Advisory Agreement terminates automatically
in the event of its "assignment" under the 1940 Act.
The Current Advisory Agreement provides that the Adviser shall (either di-
rectly or by delegation to a sub-adviser) maintain a continuous investment
program for the Company and each of the Funds that is consistent with the
Company's and the Funds' respective investment objectives and policies as set
forth in the Company's registration statement (the "Registration Statement")
and prospectuses and statements of additional information of each of the Funds
(the "Prospectus" and the "SAI") as in effect from time to time under the 1940
Act and the Securities Act of 1933, as amended. In the performance of such du-
ties, the Adviser shall, among other things: (i) manage the investment and re-
investment of the assets of the Company and the Funds; (ii) determine what se-
curities are to be purchased or sold for the Company and the Funds and place,
or arrange for the placement of, all orders for such transactions; (iii) fur-
nish the Company and the Funds with investment analysis and research, reviews
of current economic conditions and trends and considerations respecting long-
range investment policies; (iv) make recommendations as to the manner in which
rights pertaining to the Funds' portfolio securities should be exercised; (v)
calculate the net asset value of each Fund as required by the 1940 Act; (vi)
furnish requisite office space, equipment and facilities as may reasonably be
requested by the Company from time to time; and (vii) maintain the Company's
accounts and records and prepare all requisite corporate documents such as tax
returns and reports to the Securities and Exchange Commission and Company
shareholders. Except to the extent assumed by IFG under the Current Advisory
Agreement or required by law, expenses incurred in connection with the opera-
tions and organization of the Funds are borne by the Funds.
As full compensation for its advisory services to the Company, IFG receives
a monthly fee. The fee is based upon a percentage of each Fund's average net
assets, determined daily. With respect to each of the High Yield Fund and the
Short-Term Bond Fund, the fee is calculated at the annual rate of: 0.50% of
the first $300 million of the Fund's average net assets; 0.40% of the next
$200 million of the Fund's average net assets; and 0.30% of the Fund's average
net assets over $500 million. With respect to each of the Select Income Fund
and the U.S. Government Securities Fund, the fee is calculated at the annual
rate of: 0.55% of the first $300 million of the Fund's average net assets;
0.45% of the next $200 million of the Fund's average net assets; and 0.35% of
the Fund's average net assets over $500 million.
For the fiscal year ended August 31, 1996, the High Yield Fund, the Select
Income Fund, the Short-Term Bond Fund and the U.S. Government Securities Fund
each paid to IFG total advisory fees of $1,671,610,
10
<PAGE>
$1,410,937, $44,394 and $233,025, respectively. The net assets, at August 31,
1996, of each Fund totaled $375,313,382, $258,208,036, $10,738,081 and
$54,653,504, respectively.
The Current Advisory Agreement provides that IFG shall not be liable for any
error of judgment, mistake of law, any loss arising out of any investment, or
for any other act or omission in the performance of its obligations under the
Current Advisory Agreement not involving willful misfeasance, bad faith, gross
negligence or reckless disregard of its obligations under such Agreement.
THE CURRENT SUB-ADVISORY AGREEMENT
The Current Sub-Advisory Agreement, dated April 30, 1993, was unanimously
approved on April 21, 1993 by a majority of the Directors, including a major-
ity of the Independent Directors. Pursuant to authorizations granted at meet-
ings held on May 24, 1993 and June 21, 1993 by the public shareholders of the
Predecessor Funds, the Predecessor Funds, as the initial shareholders of the
Company, approved the Current Sub-Advisory Agreement for an initial term ex-
piring on April 30, 1995. In addition, on September 29, 1993, IFG, as the then
sole shareholder of the Short-Term Bond Fund, approved the Current Sub-Advi-
sory Agreement. The continuation of the Current Sub-Advisory Agreement until
April 30, 1997, was approved by the Directors, including a majority of the In-
dependent Directors, at a meeting of the Directors held on April 30, 1996,
called for the purpose of approving the Current Sub-Advisory Agreement.
The Current Sub-Advisory Agreement may be terminated at any time without
penalty by IFG, the Board, a vote of a majority of the then-outstanding voting
securities of the respective Fund or by ITC. Termination by IFG or ITC re-
quires sixty (60) days' written notice to the other party and to the Company.
The Current Sub-Advisory Agreement provides that ITC, as sub-adviser to the
Funds, subject to the supervision of IFG and the Board, shall maintain a con-
tinuous investment program for the Funds that is consistent with each Fund's
respective investment objectives and policies as set forth in the Company's
Registration Statement and in the Fund's Prospectus and SAI. In the perfor-
mance of such duties, the Sub-Adviser is obligated to provide each Fund with
the same services as those set forth above in clauses (i) through (iv) with
respect to the services provided to the Company and the Funds by the Adviser.
The Current Sub-Advisory Agreement provides that as compensation for its
services, ITC shall receive from IFG, at the end of each month, a fee based
upon each Fund's average net assets, determined daily. With respect to each of
the Funds other than the Short-Term Bond Fund, the fee is calculated at the
annual rate of: 0.25% of the first $200 million of the Fund's average net as-
sets; and 0.20% of the Fund's average net assets over $200 million. With re-
spect to the Short-Term Bond Fund, the fee is calculated at the annual rate
of: 0.25% of the first $300 million of the Fund's average net assets; 0.20% of
the next $200 million of the Fund's average net assets; and 0.15% of the
Fund's average net assets over $500 million. The sub-advisory fees are paid by
IFG, and not by the Funds or their shareholders.
INFORMATION CONCERNING ADVISER AND AFFILIATED COMPANIES
IFG, a Delaware corporation, serves as the Company's investment adviser. IFG
is a wholly-owned subsidiary of INVESCO North American Holdings, Inc.
("INAH"), 1315 Peachtree Street, N.E., Atlanta, Georgia 30309. INAH is an in-
direct wholly-owned subsidiary of INVESCO./1/ The corporate headquarters of
INVESCO are located at 11 Devonshire Square, London EC2M 4YR, England. IFG's
offices are located at 7800 East Union
- ----------------
/1/The intermediary companies between INAH and INVESCO are as follows: INVESCO,
Inc., INVESCO Group Services, Inc. and INVESCO North American Group, Ltd.,
each of which is wholly-owned by its immediate parent.
11
<PAGE>
Avenue, Denver, Colorado 80237. IFG currently serves as investment adviser of
14 open-end investment companies having aggregate net assets of $13.4 billion.
Exhibit B to this Proxy Statement includes a list of investment companies, in-
cluding the Company, for which the Adviser or the Sub-Adviser provides advi-
sory services and which have similar investment objectives to those of the
Funds, and sets forth the net assets of and advisory fees payable by such com-
panies.
The principal executive officer and directors of IFG and their principal oc-
cupations are:
Dan J. Hesser, Chairman of the Board, President, Chief Executive Officer;
Brian N. Minturn, Executive Vice President and Director; Frank M. Bishop, Di-
rector, also, President and Chief Operating Officer of INVESCO, Inc.; Samuel
T. DeKinder, Director, also, Institutional Marketing Manager of INVESCO North
America; Hubert L. Harris, Jr., Director, also, President of INVESCO Services,
Inc., Director of INVESCO, Chief Executive Officer of INVESCO Individual Serv-
ices Group; Robert J. O'Connor, Director, also, Chief Executive Officer and
President of INVESCO Retirement Plan Services, a division of IFG; and R. Dal-
ton Sim, Director, also, President and Director of ITC.
The address of each of the foregoing officers and directors is 7800 East
Union Avenue, Denver,Colorado 80237, with the exception of the address of
Messrs. Bishop, DeKinder and Harris, which is 1315 Peachtree Street, N.E., At-
lanta, Georgia 30309 and Mr. O'Connor, whose address is 1355 Peachtree Street,
N.E., Atlanta, Georgia 30309.
IFG also acts as the Company's Distributor. Pursuant to an Administrative
Services Agreement between the Company and IFG, IFG also provides administra-
tive services to the Company, including sub-accounting and recordkeeping serv-
ices and functions. During the fiscal year ended August 31, 1996, the Company
paid IFG total compensation of $137,610 in payment of such services ($61,443,
$48,480, $11,332 and $16,355 of such compensation was paid IFG by the High
Yield Fund, the Select Income Fund, the Short-Term Bond Fund and the U.S. Gov-
ernment Securities Fund, respectively).
During the fiscal year ended August 31, 1996, the Company paid IFG, which
also serves as the Company's registrar, transfer agent and dividend disbursing
agent, total compensation of $1,375,422 for such services ($532,180, $614,471,
$51,685 and $177,086 of such compensation was paid IFG by the High Yield Fund,
the Select Income Fund, the Short-Term Bond Fund and the U.S. Government Secu-
rities Fund, respectively).
Pursuant to each of the Funds' Plan and Agreement of Distribution pursuant
to Rule 12b-1 under the 1940 Act, the Company paid IFG during the fiscal year
ended August 31, 1996, total reimbursements of $1,597,748 ($842,755, $630,553,
$21,829 and $102,611 of such reimbursements was paid IFG by the High Yield
Fund, the Select Income Fund, the Short-Term Bond Fund and the U.S. Government
Securities Fund, respectively).
Once the Merger is consummated and the Proposed Agreements are approved, IFG
fully intends to continue to provide the same level, quality and nature of the
foregoing services to the Company and its Funds as are currently being provid-
ed.
INFORMATION CONCERNING SUB-ADVISER
INVESCO Trust Company ("ITC"), 7800 East Union Avenue, Denver, Colorado
80237, a Colorado trust company incorporated in 1969, is a wholly-owned sub-
sidiary of IFG. IFG, as investment adviser, has contracted with ITC for in-
vestment advisory and research services on behalf of the High Yield Fund, the
Select Income Fund, the Short-Term Bond Fund and the U.S. Government Securi-
ties Fund. ITC has the primary responsibility for providing portfolio invest-
ment management services to the Funds. ITC also served as adviser or sub-ad-
viser to 47 investment portfolios as of October 31, 1996, including 27 portfo-
lios in the INVESCO group. These 47
12
<PAGE>
portfolios had aggregate assets of approximately $12.5 billion as of October
31, 1996. In addition, ITC provides investment management services to private
clients, including employee benefit plans that may be invested in a collective
trust sponsored by ITC.
The principal executive officer and directors of ITC and their principal oc-
cupations are:
R. Dalton Sim, President, Chief Executive Officer and Director; Frank M.
Bishop, Director, also, President and Chief Operating Officer of INVESCO,
Inc.; Samuel T. DeKinder, Director, also, Institutional Marketing Manager of
INVESCO North America; and Dan J. Hesser, Director, also, President, Chief Ex-
ecutive Officer and Director of IFG.
The address of each of the foregoing officers and directors is set forth
above.
VOTE REQUIRED
As provided under the 1940 Act, approval of the Proposed Advisory Agreement
and the Proposed Sub-Advisory Agreement will require the affirmative vote of a
majority of the outstanding shares of each Fund voting separately as a class.
Such a majority is defined in the 1940 Act as the lesser of: (a) 67% or more
of the shares present at such meeting, if the holders of more than 50% of the
outstanding shares of each Fund are present or represented by proxy, or (b)
more than 50% of the total outstanding shares of each Fund.
THE DIRECTORS, INCLUDING A MAJORITY OF THE INDEPENDENT DIRECTORS, RECOMMEND
THAT ALL OF THE COMPANY'S SHAREHOLDERS VOTE TO APPROVE THE PROPOSED ADVISORY
AGREEMENT BETWEEN THE COMPANY AND IFG AND THAT SHAREHOLDERS OF EACH OF THE
FUNDS VOTE TO APPROVE THE PROPOSED SUB-ADVISORY AGREEMENT BETWEEN IFG AND ITC.
PROPOSAL 2: ELECTION OF DIRECTORS OF THE COMPANY
The Company currently has eleven Directors. Vacancies on the Board are gen-
erally filled by appointment by the remaining Directors. However, the 1940 Act
provides that vacancies may not be filled by Directors unless thereafter at
least two-thirds of the Directors shall have been elected by shareholders. To
enable the requirement to be met in the future without the necessity of call-
ing additional shareholder meetings, shareholders are being asked at this
Meeting to elect the current eleven Directors to hold office until the next
meeting of shareholders or until their successors are elected and qualified.
Under the provisions of the Company's by-laws, as permitted by Maryland law,
the Company does not anticipate holding annual shareholder meetings. Thus, the
Directors will be elected for indefinite terms.
Seven of the current Directors are "Independent Directors," i.e., Directors
who are not "interested persons" of the Company, as that term is defined in
the 1940 Act. The nominees for election as Directors have been proposed by the
Directors now serving or, in the case of nominees for positions as Independent
Directors, by the Independent Directors now serving. It is possible that the
Board will consider the election of one additional Independent Director at its
February 1997 meeting.
The persons named as attorneys-in-fact in the enclosed proxy have advised
the Company that unless a proxy instructs them to withhold authority to vote
for all listed nominees or for any individual nominee, they will vote all val-
idly executed proxies for the election of the nominees named below. All of the
nominees have consented to being named in this Proxy Statement and to serve,
if elected, and no circumstances now known will prevent any of the nominees
from serving. If any nominee should be unable or unwilling to serve, the proxy
will be
13
<PAGE>
voted for a substitute nominee proposed by the present Directors or in the
case of an Independent Director nominee, by the Independent Directors.
Set forth below is information concerning the nominees for Directors to be
elected at this Meeting:
<TABLE>
<CAPTION>
NUMBER OF
COMPANY SHARES
POSITION, IF ANY, WITH THE COMPANY, DIRECTOR OR BENEFICIALLY
PRINCIPAL OCCUPATION AND EXECUTIVE OFFICER OWNED DIRECTLY OR
BUSINESS EXPERIENCE OF THE INDIRECTLY ON
NAME AND AGE (DURING PAST FIVE YEARS) COMPANY SINCE DEC. 9, 1996(1)
------------ ----------------------------------- ----------------- -----------------
<S> <C> <C> <C>
Charles W. Brady*(3),(5),(6) Chairman of the Board of the Company. 1993 None
Age 61 Chief Executive Officer and Director
of INVESCO and of various subsidiaries
thereof; Chairman of the Board of
INVESCO Advisor Funds, Inc. ("Advisor
Funds"), INVESCO Treasurer's Series
Trust ("Treasurer's Series Trust") and
The Global Health Sciences Fund
("GHSF").
Dan J. Hesser*(3),(5) President, Chief Executive Officer and 1993 None
Age 56 Director of the Company. Chairman of
the Board, President and Chief Execu-
tive Officer of IFG; Director of ITC;
Trustee of GHSF; Chairman and Director
of Britannia North American Holdings,
Inc.
Fred A. Deering(2),(3),(5) Vice Chairman of the Board of the Com- 1993 34.5180
Age 68 pany. Vice Chairman of Advisor Funds
and Treasurer's Series Trust; Trustee
of GHSF; formerly, Chairman of the Ex-
ecutive Committee and Chairman of the
Board of Security Life of Denver In-
surance Company, Denver, Colorado; Di-
rector of ING American Holding Company
and ING Life Insurance Company of New
York.
Dr. Victor L. Andrews(4),(6) Director of the Company. Professor 1993 None
Age 66 Emeritus, Chairman Emeritus and Chair-
man of the CFO Roundtable of the De-
partment of Finance of Georgia State
University, Atlanta, Georgia; Presi-
dent, Andrews Financial Associates,
Inc. (consulting firm); formerly, mem-
ber of the faculties of the Harvard
Business School and the Sloan School
of Management of MIT. Dr. Andrews is
also a Director of The Southeastern
Thrift and Bank Fund, Inc., Sheffield
Total Return Fund and Sheffield Inter-
mediate-Term Bond Fund.
Bob R. Baker(3),(4),(5) Director of the Company. President and 1993 None
Age 60 Chief Executive Officer of AMC Cancer
Research Center, Denver, Colorado,
since January 1989.
Lawrence H. Budner(2),(6) Director of the Company. Trust Consul- 1993 None
Age 66 tant; prior to June 30, 1987, Senior
Vice President and Senior Trust Offi-
cer of InterFirst Bank.
</TABLE>
14
<PAGE>
<TABLE>
<CAPTION>
NUMBER OF
COMPANY SHARES
POSITION, IF ANY, WITH THE COMPANY, DIRECTOR OR BENEFICIALLY
PRINCIPAL OCCUPATION AND EXECUTIVE OFFICER OWNED DIRECTLY OR
BUSINESS EXPERIENCE OF THE INDIRECTLY ON
NAME AND AGE (DURING PAST FIVE YEARS) COMPANY SINCE DEC. 9, 1996(1)
------------ ----------------------------------- ----------------- -----------------
<S> <C> <C> <C>
Daniel D. Director of the Company. Financial 1993 None
Chabris(2),(3),(5) Consultant; Assistant Treasurer of
Age 73 Colt Industries, Inc., New York, New
York, from 1966 to 1988.
A. D. Frazier, Jr.*(4) Director of the Company. Executive 1995 None
Age 52 Vice President of INVESCO; from 1991
to 1996, Senior Executive Vice Presi-
dent and Chief Operating Officer of
the Atlanta Committee for the Olympic
Games; Trustee of GHSF; Director of
Charter Medical Corp.
Hubert L. Harris, Jr.* Director of the Company. Chairman of 1996 1,550.432
Age 53 the Board and Chief Executive Officer
of INVESCO Services, Inc., Chief Exec-
utive Officer of INVESCO Individual
Services Group; Director of INVESCO;
President, Chief Executive Officer and
Chief Financial Officer of Advisor
Funds; President and Trustee of GHSF;
President of the Georgia Institute of
Technology Alumni Association and mem-
ber of the Alumni Board of Trustees
thereof.
Kenneth T. King(3),(4),(5),(6) Director of the Company. Formerly, 1993 None
Age 71 Chairman of the Board of The Capitol
Life Insurance Company, Providence
Washington Insurance Company, and Di-
rector of numerous subsidiaries
thereof in the U.S.; formerly, Chair-
man of the Board of The Providence
Capitol Companies in the United King-
dom and in Guernsey; Chairman of the
Board of the Symbion Corporation (a
high technology company) until 1987.
John W. McIntyre(2) Director of the Company. Retired; for- 1995 None
Age 66 merly, Vice Chairman of the Board of
Directors of The Citizens and Southern
Corporation and Chairman of the Board
and Chief Executive Officer of The
Citizens and Southern Georgia Corp.
and Citizens and Southern National
Bank; Director of Golden Poultry Co.,
Inc.; Trustee of GHSF and of Gables
Residential Trust.
</TABLE>
(1) As interpreted by the Securities and Exchange Commission, a security is
beneficially owned by a person if that person has or shares voting power
or investment power with respect to the security. The persons listed
have partial or complete voting and investment power with respect to
their respective Fund shares.
(2) Member of Audit Committee.
(3) Member of Executive Committee.
(4) Member of Management Liaison Committee.
15
<PAGE>
(5) Member of Valuation Committee.
(6) Member of Compensation Committee.
* Because of his affiliation with INVESCO, with the Company's investment
adviser or with companies affiliated with INVESCO, this individual is
deemed to be an "interested person" of the Company as that term is de-
fined in the 1940 Act.
As discussed above under Proposal No. 1, the terms of the Merger Agreement
require that immediately after the Merger is effected, 75% of the members of
the Board not be "interested persons" of the Company, as that term is defined
in the 1940 Act. As noted above, seven of the current Directors (63%) are In-
dependent Directors. Thus, the composition of the Board you are being asked to
elect would not meet the 75% requirement. Therefore, prior to the closing of
the Merger, it is the current intention that a sufficient number of "interest-
ed" Directors would resign from the Board so that the Board would be in com-
pliance with the 75% requirement at the time the Merger is effected.
The committees of the Board are the compensation committee, executive com-
mittee, audit committee, management liaison committee and valuation committee.
The Company does not have a nominating committee. During the intervals between
the meetings of the Board, and except for certain powers which, under applica-
ble law and/or the Company's by-laws, may only be exercised by the full Board,
the executive committee may exercise all powers and authority of the Board in
the management of Company business. All decisions are subsequently submitted
for ratification by the full Board. The audit committee, consisting of four
Independent Directors, meets periodically with the Company's independent ac-
countants and the executive officers of the Company. This committee reviews
the accounting principles being applied by the Company in financial reporting,
the scope and adequacy of internal controls, the responsibilities and fees of
the independent accountants and other matters. All of the recommendations of
the audit committee are reported to the full Board. During the past fiscal
year, the Board met four times, the audit committee met five times, the man-
agement liaison committee met four times and the compensation committee met
once. During the Company's last fiscal year, each director nominee attended
75% or more of the aggregate of the Board meetings and meetings of the commit-
tees of the Board on which he served.
The Company pays its Independent Directors the directors' fees and board
vice chairman and committee chairmen fees described below and reimburses Inde-
pendent Directors for travel expenses incurred in attending meetings. Messrs.
Brady, Harris, Hesser and, as of November 1, 1996, Frazier, as "interested
persons" of the Company and of other funds in the INVESCO Fund Complex,/2/ re-
ceive compensation and are reimbursed for travel expenses incurred in attend-
ing meetings as officers or employees of IFG or of its affiliated companies,
but do not receive any directors' fees or other compensation from the Company
or from other companies in the INVESCO Fund Complex for their services as Di-
rectors.
- ----------------
/2/ The following investment companies comprise the INVESCO Fund Complex:
INVESCO Diversified Funds, Inc., INVESCO Dynamics Fund, Inc., INVESCO Emerg-
ing 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 Strategic Portfolios,
Inc., INVESCO Tax-Free Income Funds, Inc., INVESCO Value Trust, INVESCO
Variable Investment Funds, Inc. (collectively, the "IFG-Distributed
Funds"); INVESCO Advisor Funds, Inc.; The Global Health Sciences Fund; and
INVESCO Treasur-er's Series Trust.
16
<PAGE>
The following table sets forth, for the fiscal year ended August 31, 1996:
the compensation paid by the Company to its seven current Independent Direc-
tors (and to Mr. Frazier, for the period before he became an employee of
INVESCO on November 1, 1996) for services rendered in their capacities as Di-
rectors of the Company; the benefits accrued as Company expenses with respect
to the Defined Benefit Deferred Compensation Plan discussed below; and the es-
timated annual benefits to be received by these Directors upon retirement as a
result of their service to the Company. In addition, the table sets forth the
total compensation paid by all of the mutual funds in the INVESCO Fund Complex
to these Directors for services rendered in their capacities as directors or
trustees during the year ended December 31, 1995. As of December 31, 1995,
there were 48 funds in the INVESCO Fund Complex.
<TABLE>
<CAPTION>
PENSION / TOTAL COMPENSATION
AGGREGATE RETIREMENT BENEFITS ESTIMATED ANNUAL FROM INVESCO
COMPENSATION FROM ACCRUED AS PART OF BENEFITS UPON FUND COMPLEX PAID
NAME AND POSITION THE COMPANY(1) COMPANY EXPENSES(2) RETIREMENT(3) TO DIRECTORS(1)
----------------- ----------------- ------------------- ---------------- ------------------
<S> <C> <C> <C> <C>
Fred A. Deering, Vice 5,642 1,076 896 87,350
Chairman of the Board
Victor L. Andrews, 5,372 948 987 68,000
Director
Bob R. Baker, Director 5,431 977 1,323 73,000
Lawrence H. Budner, 5,289 1,017 987 68,350
Director
Daniel D. Chabris, 5,448 1,160 702 73,350
Director
A. D. Frazier, Jr., 5,219 0 0 63,500
Director(4)
Kenneth T. King, 5,392 1,118 812 70,000
Director
John W. McIntyre, 5,237 0 0 67,850
Director(4)
------ ------ ----- -------
TOTAL 43,030 6,296 5,707 571,400
====== ====== ===== =======
% OF NET ASSETS 0.0062%(5) 0.0009%(5) 0.0043%(6)
</TABLE>
(1) The vice chairman of the Board, the chairmen of the audit, management
liaison and compensation committees, and the members of the audit, man-
agement liaison, executive and valuation committees receive compensation
for serving in such capacities in addition to the compensation paid to
all Independent Directors.
(2) Represents benefits accrued with respect to the Defined Benefit Deferred
Compensation Plan discussed below, and not compensation deferred at the
election of the Directors.
17
<PAGE>
(3) These amounts represent the Company's share of the estimated annual ben-
efits payable by the INVESCO Fund Complex (excluding GHSF, which does
not participate in any retirement plan) upon the Directors' retirement,
calculated using the current method of allocating director compensation
among the funds in the INVESCO Fund Complex. These estimated benefits
assume retirement at age 72 and that the basic retainer payable to the
Directors will be adjusted periodically for inflation, for increases in
the number of funds in the INVESCO Fund Complex, and for other reasons
during the period in which retirement benefits are accrued on behalf of
the respective Directors. This results in lower estimated benefits for
Directors who are closer to retirement and higher estimated benefits for
Directors who are further from retirement. With the exception of Messrs.
Frazier and McIntyre, each of these Directors has served as a
director/trustee of one or more of the funds in the INVESCO Fund Complex
for the minimum five-year period required to be eligible to participate
in the Defined Benefit Deferred Compensation Plan.
(4) Messrs. Frazier and McIntyre began serving as Directors of the Company
on April 19, 1995.
(5) Total as a percentage of the Company's net assets as of August 31, 1996.
(6) Total as a percentage of the net assets of the INVESCO Fund Complex as
of December 31, 1995.
The officers of the Company, all of whom are officers and employees of, and
paid by, IFG, are responsible for the day-to-day administration of the Company
and of each of the Funds. The investment adviser for each Fund has the primary
responsibility for making investment decisions on behalf of that Fund. These
investment decisions are reviewed by the IFG investment committee.
All of the officers and Directors of the Company hold comparable positions
with each of the IFG-Distributed Funds. In addition, all of the Directors of
the Company are also directors of INVESCO Advisor Funds, Inc. (formerly known
as The EBI Funds, Inc.); and, with the exception of Mr. Hesser, trustees of
INVESCO Treasurer's Series Trust.
VOTE REQUIRED
The Directors must be elected by a plurality of the votes present at the
Meeting in person or by proxy and entitled to vote, provided a quorum is pres-
ent.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE COMPANY'S SHAREHOLDERS VOTE TO
ELECT ALL OF THE NOMINEES LISTED ABOVE.
PROPOSAL 3: RATIFICATION OR REJECTION OF SELECTION OF INDEPENDENT ACCOUNTANTS
The Directors of the Company, including a majority of its Independent Direc-
tors, have selected Price Waterhouse LLP to continue to serve as independent
accountants of the Company for the fiscal year ending August 31, 1997, subject
to ratification by the Company's shareholders. This firm has no direct finan-
cial interest or material indirect financial interest in the Company. Repre-
sentatives of this firm are not expected to attend the Meeting, but have been
given the opportunity to make a statement if they so desire, and will be
available should any matter arise requiring their presence.
The following summarizes Price Waterhouse LLP's audit services for the fis-
cal year ended August 31, 1996: audit of annual financial statements; prepara-
tion of the Company's federal and state income tax returns; preparation of the
Company's federal excise tax return; consultation with the Company's audit
committee; and routine consultation on financial accounting and reporting mat-
ters.
18
<PAGE>
The Board authorized all services performed by Price Waterhouse LLP on be-
half of the Company. In addition, the Board annually reviews the scope of
services to be provided by Price Waterhouse LLP and considers the effect, if
any, that performance of any non-audit services might have on audit indepen-
dence.
An audit committee, consisting of four Independent Directors, meets periodi-
cally with the Company's independent accountants to review accounting and re-
porting requirements.
VOTE REQUIRED
The ratification of the selection of the independent accountants must be ap-
proved by a majority of the shares present at the Meeting in person or by
proxy and entitled to vote, provided a quorum is present.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE COMPANY'S SHAREHOLDERS VOTE IN
FAVOR OF PROPOSAL 3.
OTHER BUSINESS
The management of the Company has no business to bring before the Meeting
other than the matters described above. Should any other business be presented
at the Meeting, it is the intention of the persons named in the accompanying
proxy to vote on such matters in accordance with their best judgment.
SHAREHOLDER PROPOSALS
The Company does not hold annual meetings of shareholders. Shareholders
wishing to submit proposals for inclusion in a proxy statement and form of
proxy for a subsequent shareholders' meeting should send their written propos-
als to the Secretary of the Company, 7800 East Union Avenue, Denver, Colorado
80237. The Company has not received any shareholder proposals to be presented
at this Meeting.
By Order of the Board of
Directors,
/s/ Glen A. Payne
Glen A. Payne
Secretary
December 26, 1996
19
<PAGE>
EXHIBIT A.1.
INVESTMENT ADVISORY AGREEMENT
THIS AGREEMENT is made this 28th day of February, 1997, in Denver, Colorado,
by and between INVESCO FUNDS GROUP, INC. (the "Adviser"), a Delaware corpora-
tion, and INVESCO Income Funds, Inc., a Maryland corporation (the "Fund").
WITNESSETH:
WHEREAS, the Fund is a corporation organized under the laws of the State of
Maryland; and
WHEREAS, the Fund is registered under the Investment Company Act of 1940, as
amended (the "Investment Company Act"), as a diversified, open-end management
investment company and has one class of shares which is divided into four se-
ries (the "Shares"), each representing an interest in a separate portfolio of
investments (such series initially being the INVESCO Select Income Fund;
INVESCO High Yield Fund; INVESCO U.S. Government Securities Fund; and INVESCO
Short-Term Bond Fund (the "Portfolios")); and
WHEREAS, the Fund desires that the Adviser manage its investment operations
and the Adviser desires to manage said operations;
NOW, THEREFORE, in consideration of these premises and of the mutual cove-
nants and agreements hereinafter contained, the parties hereto agree as fol-
lows:
1. Investment Management Services. The Adviser hereby agrees to manage the
investment operations of the Fund's four Portfolios, subject to the terms of
this Agreement and to the supervision of the Fund's directors (the "Direc-
tors"). The Adviser agrees to perform, or arrange for the performance of, the
following specific services for the Fund:
(a) to manage the investment and reinvestment of all the assets, now or
hereafter acquired, of the Fund's four Portfolios;
(b) to maintain a continuous investment program for the Fund's four
Portfolios, consistent with (i) the Portfolios' investment policies as set
forth in the Fund's Articles of Incorporation, Bylaws, and Registration
Statement, as from time to time amended, under the Investment Company Act
of 1940, as amended (the "1940 Act"), and in any prospectus and/or state-
ment of additional information of the Fund or any Portfolio of the Fund,
as from time to time amended and in use under the Securities Act of 1933,
as amended, and (ii) the Fund's status as a regulated investment company
under the Internal Revenue Code of 1986, as amended;
(c) to determine what securities are to be purchased or sold for the
Fund's four Portfolios, unless otherwise directed by the Directors of the
Fund, and to execute transactions accordingly;
(d) to provide to the Fund's four Portfolios the benefit of all of the
investment analyses and research, the reviews of current economic condi-
tions and trends, and the consideration of long-range investment policy
now or hereafter generally available to investment advisory customers of
the Adviser;
(e) to determine what portion of the Fund's four Portfolios should be
invested in the various types of securities authorized for purchase by the
Fund;
(f) to make recommendations as to the manner in which voting rights,
rights to consent to Fund and/or Portfolio action and any other rights
pertaining to the Portfolios' securities shall be exercised; and
A.1.-1
<PAGE>
(g) to calculate the net asset value of the Fund and each Portfolio, as
applicable, as required by the 1940 Act, subject to such procedures as may
be established from time to time by the Fund's Directors, based upon the
information provided to the Adviser by the Fund or by the custodian, co-
custodian or sub-custodian of the Fund's or any of the Portfolios' assets
(the "Custodian") or such other source as designated by the Directors from
time to time.
With respect to execution of transactions for the Fund's four Portfolios,
the Adviser shall place, or arrange for the placement of, all orders for the
purchase or sale of portfolio securities with brokers or dealers selected by
the Adviser. In connection with the selection of such brokers or dealers and
the placing of such orders, the Adviser is directed at all times to obtain for
the Fund's four Portfolios the most favorable execution and price; after ful-
filling this primary requirement of obtaining the most favorable execution and
price, the Adviser is hereby expressly authorized to consider as a secondary
factor in selecting brokers or dealers with which such orders may be placed
whether such firms furnish statistical, research and other information or
services to the Adviser. Receipt by the Adviser of any such statistical or
other information and services should not be deemed to give rise to any re-
quirement for adjustment of the advisory fee payable pursuant to paragraph 4
hereof. The Adviser may follow a policy of considering sales of shares of the
Fund as a factor in the selection of broker/dealers to execute portfolio
transactions, subject to the requirements of best execution discussed above.
The Adviser shall for all purposes herein provided be deemed to be an inde-
pendent contractor.
2. Allocation of Costs and Expenses. The Adviser shall reimburse the Fund
monthly for any salaries paid by the Fund to officers, Directors, and full-
time employees of the Fund who also are officers, general partners or employ-
ees of the Adviser or its affiliates. Except for such sub-accounting, record-
keeping, and administrative services which are to be provided by the Adviser
to the Fund under the Administrative Services Agreement between the Fund and
the Adviser dated April 30, 1993, which was approved on April 21, 1993, by the
Fund's board of directors, including all of the independent directors, at the
Fund's request the Adviser shall also furnish to the Fund, at the expense of
the Adviser, such competent executive, statistical, administrative, internal
accounting and clerical services as may be required in the judgment of the Di-
rectors of the Fund. These services will include, among other things, the
maintenance (but not preparation) of the Fund's accounts and records, and the
preparation (apart from legal and accounting costs) of all requisite corporate
documents such as tax returns and reports to the Securities and Exchange Com-
mission and Fund shareholders. The Adviser also will furnish, at the Adviser's
expense, such office space, equipment and facilities as may be reasonably re-
quested by the Fund from time to time.
Except to the extent expressly assumed by the Adviser herein and except to
the extent required by law to be paid by the Adviser, the Fund shall pay all
costs and expenses in connection with the operations and organization of the
Fund. Without limiting the generality of the foregoing, such costs and ex-
penses payable by the Fund include the following:
(a) all brokers' commissions, issue and transfer taxes, and other costs
chargeable to the Fund and any Portfolio in connection with securities
transactions to which the Fund or any Portfolio is a party or in connec-
tion with securities owned by the Fund's four Portfolios;
(b) the fees, charges and expenses of any independent public accoun-
tants, custodian, depository, dividend disbursing agent, dividend rein-
vestment agent, transfer agent, registrar, independent pricing services
and legal counsel for the Fund;
(c) the interest on indebtedness, if any, incurred by the Fund or any of
the Fund's four Portfolios;
(d) the taxes, including franchise, income, issue, transfer, business
license, and other corporate fees payable by the Fund or any Portfolio to
federal, state, county, city, or other governmental agents;
A.1.-2
<PAGE>
(e) the fees and expenses involved in maintaining the registration and
qualification of the Fund and of its shares under laws administered by the
Securities and Exchange Commission or under other applicable regulatory
requirements;
(f) the compensation and expenses of its Directors;
(g) the costs of printing and distributing reports, notices of share-
holders' meetings, proxy statements, dividend notices, prospectuses,
statements of additional information and other communications to the
Fund's shareholders, as well as all expenses of shareholders' meetings and
Directors' meetings;
(h) all costs, fees or other expenses arising in connection with the or-
ganization and filing of the Fund's Articles of Incorporation, including
its initial registration and qualification under the 1940 Act and under
the Securities Act of 1933, as amended, the initial determination of its
tax status and any rulings obtained for this purpose, the initial regis-
tration and qualification of its securities under the laws of any state
and the approval of the Fund's operations by any other federal or state
authority;
(i) the expenses of repurchasing and redeeming shares of the Fund;
(j) insurance premiums;
(k) the costs of designing, printing, and issuing certificates repre-
senting shares of beneficial interest of the Fund's four Portfolios;
(l) extraordinary expenses, including fees and disbursements of Fund
counsel, in connection with litigation by or against the Fund or any Port-
folio;
(m) premiums for the fidelity bond maintained by the Fund pursuant to
Section 17(g) of the 1940 Act and rules promulgated thereunder (except for
such premiums as may be allocated to the Adviser as an insured thereun-
der);
(n) association and institute dues; and
(o) the expenses, if any, of distributing shares of the Fund paid by the
Fund pursuant to a Plan and Agreement of Distribution adopted under Rule
12b-1 of the Investment Company Act of 1940.
3. Use of Affiliated Companies. In connection with the rendering of the
services required to be provided by the Adviser under this Agreement, the Ad-
viser may, to the extent it deems appropriate and subject to compliance with
the requirements of applicable laws and regulations, and upon receipt of writ-
ten approval of the Fund, make use of its affiliated companies and their em-
ployees; provided that the Adviser shall supervise and remain fully responsi-
ble for all such services in accordance with and to the extent provided by
this Agreement and that all costs and expenses associated with the providing
of services by any such companies or employees and required by this Agreement
to be borne by the Adviser shall be borne by the Adviser or its affiliated
companies.
4. Compensation of the Adviser. For the services to be rendered and the
charges and expenses to be assumed by the Adviser hereunder, the Fund shall
pay to the Adviser an advisory fee which will be computed on a daily basis and
paid as of the last day of each month, using for each daily calculation the
most recently determined net asset value of each of the four Portfolios of the
Fund, as determined by valuations made in accordance with the Fund's procedure
for calculating its net asset value as described in the Fund's Prospectus
and/or Statement of Additional Information. The advisory fee to the Adviser
with respect to each of the Portfolios designated as INVESCO Select Income
Fund and INVESCO U.S. Government Securities Fund shall be computed at the fol-
lowing annual rates: 0.55% of such Portfolio's average net assets up to $300
million; 0.45% of such Portfolio's average net assets in excess of $300 mil-
lion but not more than $500 million; and 0.35% of such Portfolio's
A.1.-3
<PAGE>
average net assets in excess of $500 million. The advisory fee to the Adviser
with respect to the Portfolios designated as INVESCO High Yield Fund and
INVESCO Short-Term Bond Fund shall be computed at the following annual rates:
0.50% of such Portfolio's average net assets up to $300 million; 0.40% of such
Portfolio's average net assets in excess of $300 million but not more than
$500 million; and 0.30% of such Portfolio's average net assets in excess of
$500 million.
During any period when the determination of the Fund's net asset value is
suspended by the Directors of the Fund, the net asset value of a share of the
Fund as of the last business day prior to such suspension shall, for the pur-
pose of this Paragraph 4, be deemed to be the net asset value at the close of
each succeeding business day until it is again determined. However, no such
fee shall be paid to the Adviser with respect to any assets of the Fund or any
Portfolio thereof which may be invested in any other investment company for
which the Adviser serves as investment adviser. The fee provided for hereunder
shall be prorated in any month in which this Agreement is not in effect for
the entire month.
If, in any given year, the sum of a Portfolio's expenses exceeds the most
restrictive state imposed annual expense limitation, the Adviser will be re-
quired to reimburse that Portfolio for such excess expenses promptly. Inter-
est, taxes and extraordinary items such as litigation costs are not deemed ex-
penses for purposes of this paragraph and shall be borne by the Fund or Port-
folio in any event. Expenditures, including costs incurred in connection with
the purchase or sale of portfolio securities, which are capitalized in accor-
dance with generally accepted accounting principles applicable to investment
companies, are accounted for as capital items and shall not be deemed to be
expenses for purposes of this paragraph.
5. Avoidance of Inconsistent Positions and Compliance with Laws. In connec-
tion with purchases or sales of securities for the investment portfolio of the
Fund's four Portfolios, neither the Adviser nor its officers or employees,
will act as a principal or agent for any party other than the Fund's four
Portfolios or receive any commissions. The Adviser will comply with all appli-
cable laws in acting hereunder including, without limitation, the 1940 Act;
the Investment Advisers Act of 1940, as amended; and all rules and regulations
duly promulgated under the foregoing.
6. The Duration and Termination. This Agreement shall become effective as of
the date it is approved by a majority of the outstanding voting securities of
the Portfolios of the Fund, and unless sooner terminated as hereinafter pro-
vided, shall remain in force for an initial term ending two years from the
date of execution, and from year to year thereafter, but only as long as such
continuance is specifically approved at least annually (i) by a vote of a ma-
jority of the outstanding voting securities of the four Portfolios of the Fund
or by the Directors of the Fund, and (ii) by a majority of the Directors of
the Fund who are not interested persons of the Adviser or the Fund by votes
cast in person at a meeting called for the purpose of voting on such approval.
This Agreement may, on 60 days' prior written notice, be terminated without
the payment of any penalty, by the Directors of the Fund, or by the vote of a
majority of the outstanding voting securities of the Fund's four Portfolios,
as the case may be, or by the Adviser. This Agreement shall immediately termi-
nate in the event of its assignment, unless an order is issued by the Securi-
ties and Exchange Commission conditionally or unconditionally exempting such
assignment from the provisions of Section 15(a) of the 1940 Act, in which
event this Agreement shall remain in full force and effect subject to the
terms and provisions of said order. In interpreting the provisions of this
paragraph 6, the definitions contained in Section 2(a) of the 1940 Act and the
applicable rules under the 1940 Act (particularly the definitions of "inter-
ested person," "assignment" and "vote of a majority of the outstanding voting
securities") shall be applied.
The Adviser agrees to furnish to the Directors of the Fund such information
on an annual basis as may reasonably be necessary to evaluate the terms of
this Agreement.
A.1.-4
<PAGE>
Termination of this Agreement shall not affect the right of the Adviser to
receive payments on any unpaid balance of the compensation described in para-
graph 4 earned prior to such termination.
7. Non-Exclusive Services. The Adviser shall, during the term of this Agree-
ment, be entitled to render investment advisory services to others, including,
without limitation, other investment companies with similar objectives to
those of the Fund's four Portfolios. The Adviser may, when it deems such to be
advisable, aggregate orders for its other customers together with any securi-
ties of the same type to be sold or purchased for the Fund's four Portfolios
in order to obtain best execution and lower brokerage commissions. In such
event, the Adviser shall allocate the shares so purchased or sold, as well as
the expenses incurred in the transaction, in the manner it considers to be
most equitable and consistent with its fiduciary obligations to the Fund's
four Portfolios and the Adviser's other customers.
8. Liability. The Adviser shall have no liability to the Fund or any Portfo-
lio or to the Fund's shareholders or creditors, for any error of judgment,
mistake of law, or for any loss arising out of any investment, nor for any
other act or omission, in the performance of its obligations to the Fund or
any Portfolio not involving willful misfeasance, bad faith, gross negligence
or reckless disregard of its obligations and duties hereunder.
9. Miscellaneous Provisions.
Notice. Any notice under this Agreement shall be in writing, addressed and
delivered or mailed, postage prepaid, to the other party at such address as
such other party may designate for the receipt of such notice.
Amendments Hereof. No provision of this Agreement may be changed, waived,
discharged or terminated orally, but only by an instrument in writing signed
by the Fund and the Adviser, and no material amendment of this Agreement shall
be effective unless approved by (1) the vote of a majority of the Directors of
the Fund, including a majority of the Directors who are not parties to this
Agreement or interested persons of any such party cast in person at a meeting
called for the purpose of voting on such amendment, and (2) the vote of a ma-
jority of the outstanding voting securities of any of the Fund's four Portfo-
lios as to which such amendment is applicable; provided, however, that this
paragraph shall not prevent any immaterial amendment(s) to this Agreement,
which amendment(s) may be made without shareholder approval, if such amend-
ment(s) are made with the approval of (1) the Directors and (2) a majority of
the Directors of the Fund who are not interested persons of the Adviser or the
Fund.
Severability. Each provision of this Agreement is intended to be severable.
If any provision of this Agreement shall be held illegal or made invalid by a
court decision, statute, rule or otherwise, such illegality or invalidity
shall not affect the validity or enforceability of the remainder of this
Agreement.
Headings. The headings in this Agreement are inserted for convenience and
identification only and are in no way intended to describe, interpret, define
or limit the size, extent or intent of this Agreement or any provision hereof.
Applicable Law. This Agreement shall be construed in accordance with the
laws of the State of Colorado and the applicable provisions of the 1940 Act.
To the extent that the applicable laws of the State of Colorado, or any of the
provisions herein, conflict with applicable provisions of the 1940 Act, the
latter shall control.
A.1.-5
<PAGE>
IN WITNESS WHEREOF, the Adviser and the Fund each has caused this Agreement
to be duly executed on its behalf by an officer thereunto duly authorized, the
day and year first above written.
INVESCO INCOME FUNDS, INC.
By:
-------------------------------
President
ATTEST:
- -------------------------------------
Secretary
INVESCO FUNDS GROUP, INC.
By:
-------------------------------
President
ATTEST:
- -------------------------------------
Secretary
A.1.-6
<PAGE>
EXHIBIT A.2.
SUB-ADVISORY AGREEMENT
AGREEMENT made this 28th day of February, 1997, by and between INVESCO Funds
Group, Inc. ("INVESCO"), a Delaware corporation, and INVESCO TRUST COMPANY, a
Colorado corporation ("the Sub-Adviser").
WITNESSETH:
WHEREAS, INVESCO INCOME FUNDS, INC. (the "Company") is engaged in business
as a diversified, open-end management investment company registered under the
Investment Company Act of 1940, as amended (hereinafter referred to as the
"Investment Company Act") and has one class of shares (the "Shares"), which is
divided into series, each representing an interest in a separate portfolio of
investments, with such series being designated the INVESCO Select Income Fund;
the INVESCO High Yield Fund; the INVESCO U.S. Government Securities Fund; and
the INVESCO Short-Term Bond Fund (collectively, the "Funds"); and
WHEREAS, INVESCO and the Sub-Adviser are engaged in rendering investment ad-
visory services and are registered as investment advisers under the Investment
Advisers Act of 1940; and
WHEREAS, INVESCO has entered into an Investment Advisory Agreement with the
Company (the "INVESCO Investment Advisory Agreement"), pursuant to which
INVESCO is required to provide investment advisory services to the Company,
and, upon receipt of written approval of the Company, is authorized to retain
companies which are affiliated with INVESCO to provide such services; and
WHEREAS, the Sub-Adviser is willing to provide investment advisory services
to the Company on the terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and the covenants hereinaf-
ter contained, INVESCO and the Sub-Adviser hereby agree as follows:
ARTICLE I
DUTIES OF THE SUB-ADVISER
INVESCO hereby employs the Sub-Adviser to act as investment adviser to the
Company and to furnish the investment advisory services described below, sub-
ject to the broad supervision of INVESCO and Board of Directors of the Compa-
ny, for the period and on the terms and conditions set forth in this Agree-
ment. The Sub-Adviser hereby accepts such assignment and agrees during such
period, at its own expense, to render such services and to assume the obliga-
tions herein set forth for the compensation provided for herein. The Sub-
Adviser shall for all purposes herein be deemed to be an independent contrac-
tor and, unless otherwise expressly provided or authorized herein, shall have
no authority to act for or represent the Company in any way or otherwise be
deemed an agent of the Company.
The Sub-Adviser hereby agrees to manage the investment operations of the
Funds, subject to the supervision of the Company's directors (the "Directors")
and INVESCO. Specifically, the Sub-Adviser agrees to perform the following
services:
(a) to manage the investment and reinvestment of all the assets, now or
hereafter acquired, of the Funds, and to execute all purchases and sales
of portfolio securities;
A.2.-1
<PAGE>
(b) to maintain a continuous investment program for the Funds, consis-
tent with (i) the Funds' investment policies as set forth in the Company's
Articles of Incorporation, Bylaws, and Registration Statement, as from
time to time amended, under the Investment Company Act of 1940, as amended
(the "1940 Act"), and in any prospectus and/or statement of additional in-
formation of the Funds, as from time to time amended and in use under the
Securities Act of 1933, as amended, and (ii) the Company's status as a
regulated investment company under the Internal Revenue Code of 1986, as
amended;
(c) to determine what securities are to be purchased or sold for the
Funds, unless otherwise directed by the Directors of the Company or
INVESCO, and to execute transactions accordingly;
(d) to provide to the Funds the benefit of all of the investment analy-
sis and research, the reviews of current economic conditions and trends,
and the consideration of long-range investment policy now or hereafter
generally available to investment advisory customers of the Sub-Adviser;
(e) to determine what portion of the Funds should be invested in the
various types of securities authorized for purchase by the Funds; and
(f) to make recommendations as to the manner in which voting rights,
rights to consent to Funds action and any other rights pertaining to the
Funds' portfolio securities shall be exercised.
With respect to execution of transactions for the Funds, the Sub-Adviser is
authorized to employ such brokers or dealers as may, in the Sub-Adviser's best
judgment, implement the policy of the Funds to obtain prompt and reliable exe-
cution at the most favorable price obtainable. In assigning an execution or
negotiating the commission to be paid therefor, the Sub-Adviser is authorized
to consider the full range and quality of a broker's services which benefit
the Funds, including but not limited to research and analytical capabilities,
reliability of performance, and financial soundness and responsibility. Re-
search services prepared and furnished by brokers through which the Sub-Ad-
viser effects securities transactions on behalf of the Funds may be used by
the Sub-Adviser in servicing all of its accounts, and not all such services
may be used by the Sub-Adviser in connection with the Funds. In the selection
of a broker or dealer for execution of any negotiated transaction, the Sub-Ad-
viser shall have no duty or obligation to seek advance competitive bidding for
the most favorable negotiated commission rate for such transaction, or to se-
lect any broker solely on the basis of its purported or "posted" commission
rate for such transaction, provided, however, that the Sub-Adviser shall con-
sider such "posted" commission rates, if any, together with any other informa-
tion available at the time as to the level of commissions known to be charged
on comparable transactions by other qualified brokerage firms, as well as all
other relevant factors and circumstances, including the size of any contempo-
raneous market in such securities, the importance to the Funds of speed, effi-
ciency, and confidentiality of execution, the execution capabilities required
by the circumstances of the particular transactions, and the apparent knowl-
edge or familiarity with sources from or to whom such securities may be pur-
chased or sold. Where the commission rate reflects services, reliability and
other relevant factors in addition to the cost of execution, the Sub-Adviser
shall have the burden of demonstrating that such expenditures were bona fide
and for the benefit of the Funds.
A.2.-2
<PAGE>
ARTICLE II
ALLOCATION OF CHARGES AND EXPENSES
The Sub-Adviser assumes and shall pay for maintaining the staff and person-
nel necessary to perform its obligations under this Agreement, and shall, at
its own expense, provide the office space, equipment and facilities necessary
to perform its obligations under this Agreement. Except to the extent ex-
pressly assumed by the Sub-Adviser herein and except to the extent required by
law to be paid by the Sub-Adviser, INVESCO and/or the Company shall pay all
costs and expenses in connection with the operations of the Funds.
ARTICLE III
COMPENSATION OF THE SUB-ADVISER
For the services rendered, facilities furnished, and expenses assumed by the
Sub-Adviser, INVESCO shall pay to the Sub-Adviser a fee, computed daily and
paid as of the last day of each month, using for each daily calculation the
most recently determined net asset value of the Funds, as determined by a val-
uation made in accordance with the Fund's procedures for calculating its net
asset value as described in the Fund's Prospectus and/or Statement of Addi-
tional Information. With respect to the INVESCO Select Income Fund, the
INVESCO High Yield Fund, and the INVESCO U.S. Government Money Fund, the advi-
sory fee to the Sub-Adviser shall be computed at the annual rate of 0.25% of
each Fund's daily net assets up to $200 million and 0.20% of each Fund's daily
net assets in excess of $200 million. With respect to the INVESCO Short-Term
Bond Fund, the advisory fee to the Sub-Adviser shall be computed at the annual
rate of 0.25% of the first $300 million of such Fund's average net assets;
0.20% of the next $200 million of such Fund's average net assets; and 0.15% of
such Fund's average net assets in excess of $500 million. During any period
when the determination of the Funds' net asset value is suspended by the Di-
rectors of the Funds, the net asset value of a share of the Funds as of the
last business day prior to such suspension shall, for the purpose of this Ar-
ticle III, be deemed to be the net asset value at the close of each succeeding
business day until it is again determined. However, no such fee shall be paid
to the Sub-Adviser with respect to any assets of the Funds which may be in-
vested in any other investment company for which the Sub-Adviser serves as in-
vestment adviser or sub-adviser. The fee provided for hereunder shall be pro-
rated in any month in which this Agreement is not in effect for the entire
month. The Sub-Adviser shall be entitled to receive fees hereunder only for
such periods as the INVESCO Investment Advisory Agreement remains in effect.
ARTICLE IV
ACTIVITIES OF THE SUB-ADVISER
The services of the Sub-Adviser to the Funds are not to be deemed to be ex-
clusive, the Sub-Adviser and any person controlled by or under common control
with the Sub-Adviser (for purposes of this Article IV referred to as "affili-
ates") being free to render services to others. It is understood that direc-
tors, officers, employees and shareholders of the Funds are or may become in-
terested in the Sub-Adviser and its affiliates, as directors, officers, em-
ployees and shareholders or otherwise and that directors, officers, employees
and shareholders of the Sub-Adviser, INVESCO and their affiliates are or may
become interested in the Funds as directors, officers and employees.
A.2.-3
<PAGE>
ARTICLE V
AVOIDANCE OF INCONSISTENT POSITIONS AND COMPLIANCE WITH APPLICABLE LAWS
In connection with purchases or sales of securities for the investment port-
folios of the Funds, neither the Sub-Adviser nor any of its directors, offi-
cers or employees will act as a principal or agent for any party other than
the Funds or receive any commissions. The Sub-Adviser will comply with all ap-
plicable laws in acting hereunder including, without limitation, the 1940 Act;
the Investment Advisers Act of 1940, as amended; and all rules and regulations
duly promulgated under the foregoing.
ARTICLE VI
DURATION AND TERMINATION OF THIS AGREEMENT
This Agreement shall become effective as of the date it is approved by a ma-
jority of the outstanding voting securities of the Portfolios of the Fund, and
unless sooner terminated as hereinafter provided, shall remain in force for an
initial term ending two years from the date of execution, and from year to
year thereafter until its termination in accordance with this Article VI, but
only so long as such continuance is specifically approved at least annually by
(i) the Directors of the Funds, or by the vote of a majority of the outstand-
ing voting securities of the Funds, and (ii) a majority of those Directors who
are not parties to this Agreement or interested persons of any such party cast
in person at a meeting called for the purpose of voting on such approval.
This Agreement may be terminated at any time, without the payment of any
penalty, by INVESCO, the Funds by vote of the Directors of the Company, or by
vote of a majority of the outstanding voting securities of the Funds, or by
the Sub-Adviser. A termination by INVESCO or the Sub-Adviser shall require
sixty days' written notice to the other party and to the Company, and a termi-
nation by the Company shall require such notice to each of the parties. This
Agreement shall automatically terminate in the event of its assignment to the
extent required by the Investment Company Act of 1940 and the Rules thereun-
der.
The Sub-Adviser agrees to furnish to the Directors of the Company such in-
formation on an annual basis as may reasonably be necessary to evaluate the
terms of this Agreement.
Termination of this Agreement shall not affect the right of the Sub-Adviser
to receive payments on any unpaid balance of the compensation described in Ar-
ticle III hereof earned prior to such termination.
ARTICLE VII
AMENDMENTS OF THIS AGREEMENT
No provision of this Agreement may be orally changed or discharged, but may
only be modified by an instrument in writing signed by the Sub-Adviser and
INVESCO. In addition, no amendment to this Agreement shall be effective unless
approved by (1) the vote of a majority of the Directors of the Company, in-
cluding a majority of the Directors who are not parties to this Agreement or
interested persons of any such party cast in person at a meeting called for
the purpose of voting on such amendment and (2) the vote of a majority of the
outstanding voting securities of the Funds (other than an amendment which can
be effective without shareholder approval under applicable law).
A.2.-4
<PAGE>
ARTICLE VIII
DEFINITIONS OF CERTAIN TERMS
In interpreting the provisions of this Agreement, the terms "vote of a ma-
jority of the outstanding voting securities," "assignments," "affiliated per-
son" and "interested person," when used in this Agreement, shall have the re-
spective meanings specified in the Investment Company Act and the Rules and
Regulations thereunder, subject, however, to such exemptions as may be granted
by the Securities and Exchange Commission under said Act.
ARTICLE IX
GOVERNING LAW
This Agreement shall be construed in accordance with the laws of the State
of Colorado and the applicable provisions of the Investment Company Act. To
the extent that the applicable laws of the State of Colorado, or any of the
provisions herein, conflict with the applicable provisions of the Investment
Company Act, the latter shall control.
ARTICLE X
MISCELLANEOUS
Notice. Any notice under this Agreement shall be in writing, addressed and
delivered or mailed, postage prepaid, to the other party at such address as
such other party may designate for the receipt of such notice.
Severability. Each provision of this Agreement is intended to be severable.
If any provision of this Agreement shall be held illegal or made invalid by a
court decision, statute, rule or otherwise, such illegality or invalidity
shall not affect the validity or enforceability of the remainder of this
Agreement.
Headings. The headings in this Agreement are inserted for convenience and
identification only and are in no way intended to describe, interpret, define
or limit the size, extent or intent of this Agreement or any provision hereof.
A.2.-5
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the date first above written.
INVESCO FUNDS GROUP, INC.
By:
---------------------------------
President
ATTEST:
- -------------------------------------
Secretary
INVESCO TRUST COMPANY
By:
---------------------------------
President
ATTEST:
- -------------------------------------
Secretary
A.2.-6
<PAGE>
EXHIBIT B
FUNDS ADVISED BY THE ADVISER OR THE SUB-ADVISERS WITH SIMILAR INVESTMENT
OBJECTIVES AND STRATEGIES TO THOSE OF THE COMPANY; EQUITY INCOME FUNDS
<TABLE>
<CAPTION>
EQUITY 1940 ACT ADVISER SUB- ADVISORY FEE SUB-ADVISORY NET ASSETS (AT
INCOME FUNDS OBJECTIVE ADVISER RATE (BASED ON FEE RATE OCTOBER 31,
AVERAGE NET (BASED ON 1996)
ASSETS) AVERAGE NET
ASSETS)
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
INDUSTRIAL Current INVESCO INVESCO .60% of the first .25% of the first $4,206,106,717
INCOME FUND Income Funds Trust $350 million; $200 million;
Group, Company .55% of the next .20% over
Inc. $350 million; $200 million
.50% over
$700 million
- --------------------------------------------------------------------------------------------------------
UTILITIES PORTFOLIO* Capital INVESCO INVESCO .75% of the first .25% of the first $152,742,377
Appreciation Funds Trust $350 million; $200 million;
and Income Group, Company .65% of the next .20% over
Inc. $350 million; $200 million
.55% over
$700 million
- --------------------------------------------------------------------------------------------------------
VIF-INDUSTRIAL Current INVESCO INVESCO .75% of the first .375% of the first $19,167,082
INCOME PORTFOLIO* Income Funds Trust $500 million; $500 million;
Group, Company .65% of the next .325% of the next
Inc. $500 million; $500 million;
.55% over .275% over
$1 billion $1 billion
- --------------------------------------------------------------------------------------------------------
VIF-UTILITIES Capital INVESCO INVESCO .60% of the first .30% of the first $1,295,949
PORTFOLIO* Appreciation Funds Trust $500 million; $500 million;
and Income Group, Company .55% of the next .275% of the next
Inc. $500 million; $500 million;
.45% over .225% over
$1 billion $1 billion
</TABLE>
B-1
<PAGE>
EXHIBIT B
FUNDS ADVISED BY THE ADVISER OR THE SUB-ADVISERS WITH SIMILAR INVESTMENT
OBJECTIVES AND STRATEGIES TO THOSE OF THE COMPANY; EQUITY INCOME FUNDS
<TABLE>
<CAPTION>
EQUITY 1940 ACT ADVISER SUB- ADVISORY FEE SUB-ADVISORY NET ASSETS (AT
INCOME FUNDS OBJECTIVE ADVISER RATE (BASED ON FEE RATE OCTOBER 31,
AVERAGE NET (BASED ON 1996)
ASSETS) AVERAGE NET
ASSETS)
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
AMERICAN High American INVESCO .75% .50% of the first $320,023,507
SKANDIA TRUST -- Current Skandia Trust $25 million;
EQUITY INCOME Income; Investment Company .45% of the next
PORTFOLIO Capital Services, Inc. $50 million;
Growth .40% of the next
Secondary $25 million;
.35% over
$100 million
</TABLE>
* Indicates whether fee has been waived or absorbed during the Fund's past
fiscal year.
B-2
<PAGE>
EXHIBIT B
FUNDS ADVISED BY THE ADVISER OR THE SUB-ADVISERS WITH SIMILAR INVESTMENT
OBJECTIVES AND STRATEGIES TO THOSE OF THE COMPANY; INCOME FUNDS
<TABLE>
<CAPTION>
INCOME FUNDS 1940 ACT ADVISER SUB- ADVISORY FEE SUB-ADVISORY NET ASSETS (AT
OBJECTIVE ADVISER RATE (BASED ON FEE RATE OCTOBER 31,
AVERAGE NET (BASED ON 1996)
ASSETS) AVERAGE NET
ASSETS)
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
SHORT-TERM Current INVESCO INVESCO .50% of the first .25% of the first $10,884,689
BOND FUND* Income; Funds Trust $300 million; $300 million;
Liquidity Group, Company .40% of the next .20% of the next
Inc. $200 million; $200 million;
.30% over .15% over
$500 million $500 million
- -----------------------------------------------------------------------------------------------------------
INTERMEDIATE Capital INVESCO INVESCO .60% of the first .16% of the first $44,684,053
GOVERNMENT Appreciation Funds Capital $500 million; $500 million;
BOND FUND* and Income Group, Management, Inc. .50% of the next .13% of the next
Inc. $500 million; $500 million;
.40% over .11% over
$1 billion $1 billion
- -----------------------------------------------------------------------------------------------------------
U.S. GOVERNMENT Current INVESCO INVESCO .55% of the first .25% of the first $58,176,601
SECURITIES Income Funds Trust $300 million; $200 million;
FUND* Group, Company .45% of the next .20% over
Inc. $200 million; $200 million
.35% over
$500 million
- -----------------------------------------------------------------------------------------------------------
SELECT INCOME Current INVESCO INVESCO .55% of the first .25% of the first $265,380,728
FUND* Income Funds Trust $300 million; $200 million;
Group, Company .45% of the next .20% over
Inc. $200 million; $200 million
.35% over
$500 million
- -----------------------------------------------------------------------------------------------------------
HIGH YIELD Current INVESCO INVESCO .50% of the first .25% of the first $398,615,748
FUND* Income Funds Trust $300 million; $200 million;
Group, Company .40% of the next .20% over
Inc. $200 million; $200 million
.30% over
$500 million
</TABLE>
B-3
<PAGE>
EXHIBIT B
FUNDS ADVISED BY THE ADVISER OR THE SUB-ADVISERS WITH SIMILAR INVESTMENT
OBJECTIVES AND STRATEGIES TO THOSE OF THE COMPANY; INCOME FUNDS
<TABLE>
<CAPTION>
INCOME FUNDS 1940 ACT ADVISER SUB-ADVISER ADVISORY FEE SUB-ADVISORY NET ASSETS (AT
OBJECTIVE RATE (BASED ON FEE RATE OCTOBER 31,
AVERAGE NET (BASED ON 1996)
ASSETS) AVERAGE NET
ASSETS)
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
VIF-HIGH YIELD Current INVESCO INVESCO .60% of the first .30% of the first $11,404,398
FUND* Income Funds Trust $500 million; $500 million;
Group, Company .55% of the next .275% of the next
Inc. $500 million; $500 million;
.45% over .225% over
$1 billion $1 billion
- ------------------------------------------------------------------------------------------------------------
INCOME Capital INVESCO INVESCO .65% * .10% $27,752,586
PORTFOLIO Appreciation Services, Capital
and Income Inc. Management, Inc.
</TABLE>
* Indicates whether fee has been waived or absorbed during the Fund's past
fiscal year.
B-4
<PAGE>
TO BE SURE YOU ARE REPRESENTED, PLEASE SIGN, DATE AND RETURN
PROMPTLY.
INVESCO INCOME FUNDS, INC.
INVESCO SELECT INCOME FUND
PROXY FOR THE SPECIAL MEETING OF SHAREHOLDERS
JANUARY 31, 1997
The undersigned hereby appoints Fred A. Deering, Dan J. Hesser and Glen A.
Payne, and each of them, proxy for the undersigned, with the power of
substitution, to vote with the same force and effect as the undersigned at the
Special Meeting of the Shareholders of the INVESCO Select Income Fund of the
INVESCO Income Funds, Inc. (the "Company"), to be held at the Denver Marriott
Southeast, 6363 East Hampden Avenue, Denver, Colorado 80222, on Friday, January
31, 1997, at 10:00 a.m. (Mountain Standard Time) and at any adjournment thereof,
upon the matters set forth below, all in accordance with and as more fully
described in the Notice of Special Meeting and Proxy Statement, dated December
26, 1996, receipt of which is hereby acknowledged.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS, WHICH RECOMMENDS A VOTE
"FOR":
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS [X]
1.A. Proposal to approve a new investment advisory agreement between the Company
and INVESCO Funds Group, Inc. ("IFG"), such agreement to take effect only
if the proposed merger of A I M Management Group, Inc. into a wholly-owned
U.S. subsidiary of INVESCO PLC is consummated.
Vote on Proposal
For [ ] Against [ ] Abstain [ ]
1.B. Proposal to approve a new sub-advisory agreement between IFG and INVESCO
Trust Company, such agreement to take effect only if the proposed merger of
A I M Management Group, Inc. into a wholly-owned U.S. subsidiary of INVESCO
PLC is consummated.
Vote on Proposal
For [ ] Against [ ] Abstain [ ]
<PAGE>
2. Proposal to elect eleven directors of the Company: Charles W. Brady, Dan J.
Hesser, Fred A. Deering, Victor L. Andrews, Bob R. Baker, Lawrence H.
Budner, Daniel D. Chabris, A.D. Frazier, Jr., Hubert L. Harris, Jr.,
Kenneth T. King and John W. McIntyre.
Vote on Directors
For All [ ] Withhold All [ ] For All Except [ ]
To withhold authority to vote, mark "For All Except" and write the
nominee's name on the line below.
--------------------------------------------------------------------
3. Proposal to ratify the selection of Price Waterhouse LLP as independent
accountants for the Company for the fiscal year ending August 31, 1997.
Vote on Proposal
For [ ] Against [ ] Abstain [ ]
In their discretion, the Proxies are authorized to vote upon such other business
as may properly come before the meeting or any adjournment thereof.
This proxy, when properly executed, will be voted in the manner directed herein
by the undersigned shareholder. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED "FOR" PROPOSALS 1.A., 1.B., 2 and 3.
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY IN THE ACCOMPANYING ENVELOPE AS
SOON AS POSSIBLE. THANK YOU.
- --------------------------------------------------------------------------------
Signature Signature Date
(Joint Owners)
Please sign exactly as name appears hereon. If stock is held in the name of
joint owners, each should sign. Attorneys-in-fact, executors, administrators,
etc., should so indicate. If shareholder is a corporation or partnership, please
sign in full corporate or partnership name by authorized person.
<PAGE>
TO BE SURE YOU ARE REPRESENTED, PLEASE SIGN, DATE AND RETURN
PROMPTLY.
INVESCO INCOME FUNDS, INC.
INVESCO HIGH YIELD FUND
PROXY FOR THE SPECIAL MEETING OF SHAREHOLDERS
JANUARY 31, 1997
The undersigned hereby appoints Fred A. Deering, Dan J. Hesser and Glen A.
Payne, and each of them, proxy for the undersigned, with the power of
substitution, to vote with the same force and effect as the undersigned at the
Special Meeting of the Shareholders of the INVESCO High Yield Fund of the
INVESCO Income Funds, Inc. (the "Company"), to be held at the Denver Marriott
Southeast, 6363 East Hampden Avenue, Denver, Colorado 80222, on Friday, January
31, 1997, at 10:00 a.m. (Mountain Standard Time) and at any adjournment thereof,
upon the matters set forth below, all in accordance with and as more fully
described in the Notice of Special Meeting and Proxy Statement, dated December
26, 1996, receipt of which is hereby acknowledged.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS, WHICH RECOMMENDS A VOTE
"FOR":
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS [X]
1.A. Proposal to approve a new investment advisory agreement between the Company
and INVESCO Funds Group, Inc. ("IFG"), such agreement to take effect only
if the proposed merger of A I M Management Group, Inc. into a wholly-owned
U.S. subsidiary of INVESCO PLC is consummated.
Vote on Proposal
For [ ] Against [ ] Abstain [ ]
1.B. Proposal to approve a new sub-advisory agreement between IFG and INVESCO
Trust Company, such agreement to take effect only if the proposed merger of
A I M Management Group, Inc. into a wholly-owned U.S. subsidiary of INVESCO
PLC is consummated.
Vote on Proposal
For [ ] Against [ ] Abstain [ ]
<PAGE>
2. Proposal to elect eleven directors of the Company: Charles W. Brady, Dan J.
Hesser, Fred A. Deering, Victor L. Andrews, Bob R. Baker, Lawrence H.
Budner, Daniel D. Chabris, A.D. Frazier, Jr., Hubert L. Harris, Jr.,
Kenneth T. King and John W. McIntyre.
Vote on Directors
For All [ ] Withhold All [ ] For All Except [ ]
To withhold authority to vote, mark "For All Except" and write the
nominee's name on the line below.
--------------------------------------------------------------------
3. Proposal to ratify the selection of Price Waterhouse LLP as independent
accountants for the Company for the fiscal year ending August 31, 1997.
Vote on Proposal
For [ ] Against [ ] Abstain [ ]
In their discretion, the Proxies are authorized to vote upon such other business
as may properly come before the meeting or any adjournment thereof.
This proxy, when properly executed, will be voted in the manner directed herein
by the undersigned shareholder. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED "FOR" PROPOSALS 1.A., 1.B., 2 and 3.
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY IN THE ACCOMPANYING ENVELOPE AS
SOON AS POSSIBLE. THANK YOU.
- --------------------------------------------------------------------------------
Signature Signature Date
(Joint Owners)
Please sign exactly as name appears hereon. If stock is held in the name of
joint owners, each should sign. Attorneys-in-fact, executors, administrators,
etc., should so indicate. If shareholder is a corporation or partnership, please
sign in full corporate or partnership name by authorized person.
<PAGE>
TO BE SURE YOU ARE REPRESENTED, PLEASE SIGN, DATE AND RETURN PROMPTLY.
INVESCO INCOME FUNDS, INC.
INVESCO U.S. GOVERNMENT SECURITIES FUND
PROXY FOR THE SPECIAL MEETING OF SHAREHOLDERS
JANUARY 31, 1997
The undersigned hereby appoints Fred A. Deering, Dan J. Hesser and Glen A.
Payne, and each of them, proxy for the undersigned, with the power of
substitution, to vote with the same force and effect as the undersigned at the
Special Meeting of the Shareholders of the INVESCO U.S. Government Securities
Fund of the INVESCO Income Funds, Inc. (the "Company"), to be held at the Denver
Marriott Southeast, 6363 East Hampden Avenue, Denver, Colorado 80222, on Friday,
January 31, 1997, at 10:00 a.m. (Mountain Standard Time) and at any adjournment
thereof, upon the matters set forth below, all in accordance with and as more
fully described in the Notice of Special Meeting and Proxy Statement, dated
December 26, 1996, receipt of which is hereby acknowledged.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS, WHICH RECOMMENDS A VOTE
"FOR":
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS [X]
1.A. Proposal to approve a new investment advisory agreement between the Company
and INVESCO Funds Group, Inc. ("IFG"), such agreement to take effect only
if the proposed merger of A I M Management Group, Inc. into a wholly-
owned U.S. subsidiary of INVESCO PLC is consummated.
Vote on Proposal
For [ ] Against [ ] Abstain [ ]
1.B. Proposal to approve a new sub-advisory agreement between IFG and INVESCO
Trust Company, such agreement to take effect only if the proposed merger of
A I M Management Group, Inc. into a wholly-owned U.S. subsidiary of INVESCO
PLC is consummated.
Vote on Proposal
For [ ] Against [ ] Abstain [ ]
<PAGE>
2. Proposal to elect eleven directors of the Company: Charles W. Brady, Dan J.
Hesser, Fred A. Deering, Victor L. Andrews, Bob R. Baker, Lawrence H.
Budner, Daniel D. Chabris, A.D. Frazier, Jr., Hubert L. Harris, Jr.,
Kenneth T. King and John W. McIntyre.
Vote on Directors
For All [ ] Withhold All [ ] For All Except [ ]
To withhold authority to vote, mark "For All Except" and write the
nominee's name on the line below.
--------------------------------------------------------------------
3. Proposal to ratify the selection of Price Waterhouse LLP as independent
accountants for the Company for the fiscal year ending August 31, 1997.
Vote on Proposal
For [ ] Against [ ] Abstain [ ]
In their discretion, the Proxies are authorized to vote upon such other business
as may properly come before the meeting or any adjournment thereof.
This proxy, when properly executed, will be voted in the manner directed herein
by the undersigned shareholder. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED "FOR" PROPOSALS 1.A., 1.B., 2 and 3.
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY IN THE ACCOMPANYING ENVELOPE AS
SOON AS POSSIBLE. THANK YOU.
- --------------------------------------------------------------------------------
Signature Signature Date
(Joint Owners)
Please sign exactly as name appears hereon. If stock is held in the name of
joint owners, each should sign. Attorneys-in-fact, executors, administrators,
etc., should so indicate. If shareholder is a corporation or partnership, please
sign in full corporate or partnership name by authorized person.
<PAGE>
TO BE SURE YOU ARE REPRESENTED, PLEASE SIGN, DATE AND RETURN PROMPTLY.
INVESCO INCOME FUNDS, INC.
INVESCO SHORT-TERM BOND FUND
PROXY FOR THE SPECIAL MEETING OF SHAREHOLDERS
JANUARY 31, 1997
The undersigned hereby appoints Fred A. Deering, Dan J. Hesser and Glen A.
Payne, and each of them, proxy for the undersigned, with the power of
substitution, to vote with the same force and effect as the undersigned at the
Special Meeting of the Shareholders of the INVESCO Short-Term Bond Fund of the
INVESCO Income Funds, Inc. (the "Company"), to be held at the Denver Marriott
Southeast, 6363 East Hampden Avenue, Denver, Colorado 80222, on Friday, January
31, 1997, at 10:00 a.m. (Mountain Standard Time) and at any adjournment thereof,
upon the matters set forth below, all in accordance with and as more fully
described in the Notice of Special Meeting and Proxy Statement, dated December
26, 1996, receipt of which is hereby acknowledged.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS, WHICH RECOMMENDS A VOTE
"FOR":
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS [X]
1.A. Proposal to approve a new investment advisory agreement between the
Company and INVESCO Funds Group, Inc. ("IFG"), such agreement to take
effect only if the proposed merger of A I M Management Group, Inc. into
a wholly-owned U.S. subsidiary of INVESCO PLC is consummated.
Vote on Proposal
For [ ] Against [ ] Abstain [ ]
1.B. Proposal to approve a new sub-advisory agreement between IFG and INVESCO
Trust Company, such agreement to take effect only if the proposed merger
of A I M Management Group, Inc. into a wholly-owned U.S. subsidiary
of INVESCO PLC is consummated.
Vote on Proposal
For [ ] Against [ ] Abstain [ ]
<PAGE>
2. Proposal to elect eleven directors of the Company: Charles W. Brady, Dan
J. Hesser, Fred A. Deering, Victor L. Andrews, Bob R. Baker, Lawrence H.
Budner, Daniel D. Chabris, A.D. Frazier, Jr., Hubert L. Harris, Jr.,
Kenneth T. King and John W. McIntyre.
Vote on Directors
For All [ ] Withhold All [ ] For All Except [ ]
To withhold authority to vote, mark "For All Except" and write the
nominee's name on the line below.
-------------------------------------------------------------------
3. Proposal to ratify the selection of Price Waterhouse LLP as independent
accountants for the Company for the fiscal year ending August 31, 1997.
Vote on Proposal
For [ ] Against [ ] Abstain [ ]
In their discretion, the Proxies are authorized to vote upon such other business
as may properly come before the meeting or any adjournment thereof.
This proxy, when properly executed, will be voted in the manner directed herein
by the undersigned shareholder. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED "FOR" PROPOSALS 1.A., 1.B., 2 and 3.
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY IN THE ACCOMPANYING ENVELOPE AS
SOON AS POSSIBLE. THANK YOU.
- --------------------------------------------------------------------------------
Signature Signature Date
(Joint Owners)
Please sign exactly as name appears hereon. If stock is held in the name of
joint owners, each should sign. Attorneys-in-fact, executors, administrators,
etc., should so indicate. If shareholder is a corporation or partnership, please
sign in full corporate or partnership name by authorized person.
