File No. 2-15382
As filed on August ^ 30, 1996
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 X
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Pre-Effective Amendment No. ________
Post-Effective Amendment No. ^ 56 X
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REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 X
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Amendment No. ^ 20 X
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INVESCO INDUSTRIAL INCOME FUND, INC.
^(Exact Name of Registrant as Specified in Charter)
7800 E. Union Avenue, Denver, Colorado 80237
(Address of Principal Executive Offices)
P.O. Box 173706, Denver, Colorado 80217-3706
(Mailing Address)
Registrant's Telephone Number, including Area Code: (303) 930-6300
Glen A. Payne, Esq.
7800 E. Union Avenue
Denver, Colorado 80237
(Name and Address of Agent for Service)
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Copies to:
Ronald M. Feiman, Esq.
Gordon Altman Butowsky
Weitzen Shalov & Wein
114 W. 47th St.
New York, New York 10036
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Approximate Date of Proposed Public Offering: As soon as practicable
after this post-effective amendment becomes effective.
It is proposed that this filing will become effective (check appropriate
box)
immediately upon filing pursuant to paragraph (b)
on ________________, pursuant to paragraph (b)
60 days after filing pursuant to paragraph (a)(1)
X on ^ November 1, 1996, pursuant to paragraph (a)(1)
75 days after filing pursuant to paragraph (a)(2)
on ________________ pursuant to paragraph (a)(2) of Rule 485.
If appropriate, check the following box:
this post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
Registrant has previously elected to register an indefinite number of shares of
its common stock pursuant to Rule 24f-2 under the Investment Company Act.
Registrant's Rule 24f-2 Notice for the fiscal year ended June 30, ^ 1996, was
filed on or about August 22, ^ 1996.
Page 1 of __
Exhibit index is located at page __
<PAGE>
INVESCO INDUSTRIAL INCOME FUND, INC.
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CROSS-REFERENCE SHEET
Form N-1A
Item Caption
--------- -------
Part A Prospectus
1....................... Cover Page
2....................... Annual Fund Expenses; Essential
Information
3....................... Financial Highlights; Fund Price
and Performance
4....................... Investment Objective and
Strategy; Investment Policies and
Risks; The Fund and Its
Management
5....................... The Fund and Its Management
5a...................... Not Applicable
6....................... Fund Services; Taxes, Dividends,
and Capital Gain Distributions;
Additional Information
7....................... How to Buy Shares; Fund Price and
Performance; Fund Services; The
Fund and Its Management
8....................... Fund Services; How to Sell Shares
9....................... Not Applicable
Part B Statement of Additional
Information
10....................... Cover Page
11....................... Table of Contents
-i-
<PAGE>
Form N-1A
Item Caption
--------- -------
12....................... The Fund and Its Management
13....................... Investment Practices; Investment
Policies and Restrictions
14....................... The Fund and Its Management
15....................... The Fund and Its Management;
Additional Information
16....................... The Fund and Its Management;
Additional Information
17....................... Investment Practices; Investment
Policies and Restrictions
18....................... Additional Information
19....................... How Shares Can Be Purchased; How
Shares Are Valued; Services
Provided by the Fund;
Tax-Deferred Retirement Plans;
How to Redeem Shares
20....................... Dividends, Capital Gain
Distributions, and Taxes
21....................... How Shares Can Be Purchased
22....................... Performance Data
23....................... Additional Information
Part C Other Information
Information required to be included in Part C is set forth under the
appropriate Item, so numbered, in Part C to this Registration Statement.
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<PAGE>
PROSPECTUS
^ November 1, 1996
INVESCO INDUSTRIAL INCOME FUND, INC.
INVESCO Industrial Income Fund, Inc. (the "Fund") is actively managed to
seek the best possible current income, while following sound investment
practices^. Capital growth potential is an additional consideration in the
selection of portfolio securities. The Fund normally invests at least 65% of its
total assets in dividend-paying common stocks. Up to 10% of the Fund's total
assets may be invested in equity securities that do not pay regular dividends.
The remaining assets are invested in other income-producing securities, such as
corporate bonds. The Fund also has the flexibility to invest in other types of
securities.
This prospectus provides you with the basic information you should know
before investing in the Fund. You should read it and keep it for future
reference. A Statement of Additional Information containing further information
about the Fund, dated ^ November 1, 1996, has been filed with the Securities and
Exchange Commission, and is incorporated by reference into this prospectus. To
obtain a free copy, write to INVESCO Funds Group, Inc., P.O. Box 173706, Denver,
Colorado 80217-3706; or call 1-800-525-8085.
^ THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE. SHARES OF THE FUND ARE NOT DEPOSITS OR OBLIGATIONS OF, OR
GUARANTEED OR ENDORSED BY, ANY BANK OR OTHER FINANCIAL INSTITUTION. THE SHARES
OF THE FUND ARE NOT FEDERALLY INSURED BY THE FEDERAL DEPOSIT INSURANCE
CORPORATION, THE FEDERAL RESERVE BOARD OR ANY OTHER AGENCY.
<PAGE>
TABLE OF CONTENTS
Page
----
ESSENTIAL INFORMATION..................................................... ^ 6
ANNUAL FUND EXPENSES...................................................... ^ 7
FINANCIAL HIGHLIGHTS...................................................... 9
INVESTMENT OBJECTIVE AND STRATEGY......................................... ^ 11
INVESTMENT POLICIES AND RISKS............................................. ^ 11
THE FUND AND ITS MANAGEMENT............................................... ^ 14
FUND PRICE AND PERFORMANCE................................................ ^ 17
HOW TO BUY SHARES......................................................... ^ 17
FUND SERVICES............................................................. ^ 21
HOW TO SELL SHARES........................................................ ^ 22
TAXES, DIVIDENDS^ AND CAPITAL GAIN DISTRIBUTIONS.......................... ^ 23
ADDITIONAL INFORMATION.................................................... 23
<PAGE>
ESSENTIAL INFORMATION
Investment Goal And Strategy. INVESCO Industrial Income Fund, Inc. is a
diversified mutual fund that seeks the best possible current income, while
following sound investment practices, with the added potential for capital
appreciation. ^ It invests primarily in dividend-paying common stocks of U.S.
companies traded on national securities exchanges or over-the-counter. The Fund
also may invest in ^ equity securities that do not pay regular dividends and
other income producing securities, such as corporate bonds. There is no
guarantee that the Fund will meet its objective. See "Investment Objective And
Strategy."
Designed For: Investors primarily seeking current income, but who do not
wish to sacrifice the potential for capital growth over the long term. While not
a complete investment program, the Fund may be a valuable element of your
investment portfolio. You also may wish to consider the Fund as part of a
Uniform Gift/Trust To Minors Account or systematic investing strategy. The Fund
may be a suitable investment for many types of retirement programs, including
the IRA, SEP-IRA, SARSEP, 401(k), Profit Sharing, Money Purchase Pension, and
403(b) plans.
Time Horizon. Stock and bond prices fluctuate on a daily basis, and the
Fund's price per share therefore varies daily. Potential shareholders should
consider this a ^ long-term investment.
Risks. The Fund generally uses a moderate investment strategy, but may hold
securities rated below investment grade and foreign debt securities, and may
experience relatively rapid portfolio turnover. The Fund's investments in debt
securities are subject to credit risk and market risk, both of which are
increased by investing in lower rated securities. The returns on foreign
investments may be influenced by the risks of investing overseas. Rapid
portfolio turnover may result in higher brokerage commissions and the
acceleration of taxable capital gains. These policies make the Fund unsuitable
for that portion of your savings dedicated to preservation of capital over the
short-term. See "Investment Objective and Strategy" and "Investment Policies and
Risks."
Organization and Management. The Fund is owned by its shareholders. It
employs INVESCO Funds Group, Inc. ("IFG") (founded in 1932) to serve as
investment adviser, administrator, distributor, and transfer agent; and INVESCO
Trust Company ("INVESCO Trust") (founded in 1969) as sub-adviser.
The Fund's investments are selected by two experienced INVESCO portfolio
managers: INVESCO senior vice presidents Charles Mayer, who has ^ 26 years of
investment experience, and Donovan J. (Jerry) Paul, with ^ 20 years of
experience. A Chartered Financial Analyst, Mr. Mayer earned his MBA from St.
John's University and a BA from St. Peter's College. Mr. Paul holds an MBA from
the University of Northern Iowa and a BBA from the University of Iowa; he is
both a Chartered Financial Analyst and Certified Public Accountant. See "The
Fund And Its Management."
IFG and INVESCO Trust are part of a global firm that managed approximately
^ $90 billion as of June 30, ^ 1996. The parent company, INVESCO PLC, is based
in London, with money managers located in Europe, North America, and the Far
East.
<PAGE>
This Fund offers all of the following services at no charge:
Telephone purchases
Telephone exchanges
Telephone redemptions
Automatic reinvestment of distributions
Regular investment plans^, such as EasiVest (the Fund's automatic monthly
investment program), Direct Payroll Purchase, and Automatic Monthly Exchange)
Periodic withdrawal plans
See "How To Buy Shares" and "How To Sell Shares."
Minimum Initial Investment: $1,000, which is waived for regular investment
plans, including EasiVest and Direct Payroll Purchase, and certain retirement
plans.
Minimum Subsequent Investment: $50 (Minimums are lower for certain
retirement plans.)
ANNUAL FUND EXPENSES
The Fund is no-load; there are no fees to purchase, exchange or redeem
shares. The Fund, however, is authorized to pay a Rule 12b-1 distribution fee of
one quarter of one percent of the Fund's average net assets each year. (See "How
To Buy Shares --Distribution Expenses.")
Like any company, the Fund has operating expenses -- such as portfolio
management, accounting, shareholder servicing, maintenance of shareholder
accounts, and other expenses. These expenses are paid from the Fund's assets.
Lower expenses therefore benefit investors by increasing the Fund's total
return.
We calculate annual operating expenses as a percentage of the Fund's
average annual net assets. To share economies of scale and to keep expenses
competitive, the Fund's Manager has voluntarily reduced the management fees on
the Fund's daily net assets over $2 billion.
<PAGE>
Annual Fund Operating Expenses
(as a percentage of average net assets)
Management Fee (after expense ^ limitation)(1) 0.48%
12b-1 Fees 0.25%
Other Expenses ^(2) 0.20%
Total Fund Operating Expenses
(after expense ^ limitation)(1)(2) 0.93%
^(1) Under a voluntary expense limitation agreed to by IFG, the management fee
paid by the Fund has been reduced to an annual rate of 0.45% on daily net assets
over $2 billion, and to an annual rate of 0.40% on daily net assets over $4
billion. In the absence of the voluntary expense limitation, the Fund's
"Management Fee" and "Total Fund Operating Expenses" would have been ^ 0.51% and
^ 0.96%, respectively, based on the Fund's actual expenses for the fiscal year
ended June 30, ^ 1996.
(2) It should be noted that the Fund's actual total operating expenses were
lower than the figures shown, because the Fund's custodian fees and pricing
expenses were reduced under an expense offset arrangment. However, as a result
of an SEC requirement for mutual funds to state their total operating expenses
without crediting any such expense offset arrangement, the figures shown above
do not reflect these reductions. In comparing expenses for different years,
please note that the ratios of Expenses to Average Net Assets shown under
"Financial Highlights" do reflect any reductions for periods prior to the fiscal
year ended June 30, 1995.
Example
A shareholder would pay the following expenses on a $1,000 investment for
the periods shown, assuming a hypothetical 5% annual return and redemption at
the end of each time period. (Of course, actual operating expenses are paid from
the Fund's assets, and are deducted from the amount of income available for
distribution to shareholders; they are not charged directly to shareholder
accounts.)
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
$10 $30 $52 ^ $115
The purpose of this table is to assist you in understanding the various
costs and expenses that you will bear directly or indirectly. The example should
not be considered a representation of past or future performance or expenses,
and actual annual returns and expenses may be greater or less than those shown.
For more information on the Fund's expenses, see "The Fund and Its Management"
and "How to Buy Shares -- Distribution Expenses."
Since the Fund pays a distribution fee, investors who own Fund shares for
a long period of time may pay more than the economic equivalent of the maximum
front-end sales charge permitted for mutual funds by the National Association of
Securities Dealers, Inc.
<PAGE>
FINANCIAL HIGHLIGHTS
(For a Fund Share Outstanding Throughout ^ Each Period)
The following information has been audited by Price Waterhouse LLP,
independent accountants. This information should be read in conjunction with the
audited financial statements and the independent accountant's report appearing
in the Fund's ^ 1996 Annual Report to Shareholders, which is incorporated by
reference into the Statement of Additional Information. Both are available
without charge by contacting IFG at the address or telephone number on the cover
of this prospectus. The Annual Report also contains more information about the
Fund's performance.
INVESCO Industrial Income Fund, Inc
Financial Highlights
(For a Fund Share Outstanding throughout Each Period)
<TABLE>
<CAPTION>
Year Ended June 30,
-------- -------- -------- -------- ------- ------- ------- ------- ------- -------
^ 1996 1995 1994 1993 1992 1991 1990 1989 1988 1987 ^
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PER SHARE DATA
Net Asset Value --
Beginning of
Period $11.92 $11.32 $11.53 $10.67 $9.74 $9.39 $8.88 $7.98 $8.85 $9.10 ^
-------- -------- -------- -------- ------- ------- ------- ------- ------- -------^
INCOME FROM
INVESTMENT
OPERATIONS
Net Investment
Income 0.41 0.42 0.36 0.31 0.28 0.36 0.38 0.42 0.35 0.34 ^
Net Gains or
(Losses)
on Securities
(Both Realized
and Unrealized) 1.53 1.14 0.02 1.33 1.38 0.81 1.43 1.01 (0.51) 0.83 ^
-------- -------- -------- -------- ------- ------- ------- ------- ------- -------
Total from
Investment
Operations 1.94 1.56 0.38 1.64 1.66 1.17 1.81 1.43 (0.16) 1.17 ^
-------- -------- -------- -------- ------- ------- ------- ------- ------- -------^
<PAGE>
LESS DISTRIBUTIONS
Dividends from
Net ^ Investment
Income 0.41 0.42 0.36 0.32 0.29 0.34 0.40 0.39 0.36 0.36
^ In Excess of Net
^ Investment
^ Income 0.00 0.11 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
^ Distributions
from Capital
Gains 0.24 0.54 0.12 0.46 0.44 0.48 0.90 0.14 0.35 1.06 ^
-------- -------- -------- -------- ------- ------- ------- ------- ------- -------
^ Total
^ Distributions 0.65 0.96 0.59 0.78 0.73 0.82 1.30 0.53 0.71 1.42 ^
-------- -------- -------- -------- ------- ------- ------- ------- ------- -------^
Net Asset Value --
End of Period $13.21 $11.92 $11.32 $11.53 $10.67 $ 9.74 $ 9.39 $ 8.88 $ 7.98 $ 8.85 ^
======== ======== ======== ========= ======= ======= ======= ======= ======= =======
TOTAL RETURN 16.54% 14.79% 3.24% 15.66% 17.04% 13.06% 21.08% 18.45% (1.21%) 14.29% ^
-------- -------- -------- -------- ------- ------- ------- ------- ------- -------^
RATIOS
Net Assets --
End of Period
($000 Omitted) $4,170,536 $4,009,609 $3,913,322 $3,412,527 $2,092,955 $881,226 $572,373 $399,538 $380,978 $451,332 ^
---------- ---------- ---------- ---------- ---------- -------- -------- -------- -------- ---------
Ratio of
Expenses to
Average Net
Assets# 0.93%@ 0.94% 0.92% 0.96% 0.98% 0.94% 0.76% 0.78% 0.78% 0.74% ^
Ratio of Net
Investment
Income to
Average Net
Assets# 3.17% 3.61% 3.11% 2.94% 2.75% 3.92% 4.14% 5.08% 4.29% 3.96%
^ Portfolio
^ Turnover Rate 63% 54% 56% 121% 119% 104% 132% 124% 148% 195% ^
<FN>
# Various expenses of the Fund were voluntarily absorbed by IFG for the years
ended June 30, 1996, 1995, 1994 and 1993. If such expenses had not been
voluntarily absorbed, ratio of expenses to average net assets would have been
0.96%, 0.97%, 0.95% and 0.98%, respectively, and ratio of net investment income
to average net assets would have been 3.14%, 3.58%, 3.08% and 2.92%,
respectively.
@ Ratio is based on Total Expenses of the Fund, less expenses absorbed by
Investment Adviser, which is before any expense offset arrangements.
</FN>
</TABLE>
<PAGE>
INVESTMENT OBJECTIVE AND STRATEGY
The Fund seeks the best possible current income while following sound
investment practices. This investment objective is fundamental and cannot be
changed without the approval of the Fund's shareholders. Capital growth
potential is an additional^ consideration in the selection of portfolio
securities. ^ The Fund normally invests ^ at least 65% of its total assets in
dividend-paying common stocks. Up to 10% of the Fund's total assets may be
invested in equity securities that do not pay regular dividends. The remaining
assets are invested in other income-producing securities, ^ such as corporate
bonds. The Fund also has the flexibility to invest in preferred stocks and
convertible bonds. There is no maximum limit on the amount of equity or debt
securities in which the Fund may invest. There is no assurance that the Fund's
investment objective will be met.
The Fund's investments in ^ equity securities are limited to ^ those that
are readily marketable in the United States. These securities include American
Depository Receipts ("ADRs"), which represent shares of a foreign corporation
held by a U.S. bank that entitle the holder to all dividends and capital gains.
ADRs are denominated in U.S. dollars and trade in the U.S. securities markets.
The ^ Fund's investment portfolio is actively traded. Economic conditions
and market circumstances vary from day to day; securities may be bought and sold
relatively frequently as their suitability for the Fund's portfolio changes. ^
This policy may result in increased brokerage commissions and acceleration of
capital gains which are taxable when distributed to shareholders. The Statement
of Additional Information includes an expanded discussion of the Fund's
portfolio turnover rate, its brokerage practices and certain federal income tax
matters.
When we believe market or economic conditions are ^ adverse, the Fund may
^ assume a defensive position -- that is, temporarily invest up to 100% of its
assets in high quality corporate bonds, notes or U.S. government obligations, or
money market instruments such as commercial paper or repurchase agreements,
seeking to protect its assets until conditions stabilize.
INVESTMENT POLICIES AND RISKS
Investors generally should expect to see their price per share vary with
movements in the stock market, changes in economic conditions and other factors.
The Fund invests in many different companies in a variety of industries; this
diversification reduces the Fund's overall exposure to investment and market
risks, but cannot eliminate these risks.
Debt Securities. When we assess an issuer's ability to meet its interest
rate obligations and repay its debt when due, we are referring to "credit risk."
Debt obligations are rated based on their estimated credit risk by independent
services such as Standard & Poor's ^("S&P") or Moody's Investors Service, Inc.
(Moody's). "Market risk" refers to sensitivity to changes in interest rates: For
instance, when interest rates go up, the market value of a ^ previously issued
bond generally declines; on the other hand, when interest rates go down, bonds
generally see their prices increase.
<PAGE>
The lower a bond's quality, the more it is subject to credit risk and
market risk ^, and the more speculative it becomes. This is also true of most
unrated debt securities. Therefore, the Fund does not invest in obligations it
believes to be highly speculative. Corporate bonds rated AAA, AA, A or BBB by
S&P or Aaa, Aa, A or Baa by Moody's enjoy strong to adequate capacity to pay
principal and interest. No more than 15% of total assets may be invested in
issues rated below investment grade quality (commonly called "junk bonds," and
rated BB or below by S&P or Ba or below by Moody's); these include issues which
are of poorer quality and may have some speculative characteristics, according
to the ratings services. Never, under any circumstances, does the Fund invest in
bonds rated below CCC or Caa by S&P and Moody's, respectively. Bonds rated CCC
or Caa may be in default or there may be present elements of danger with respect
to payment of principal or interest. While Fund Management continuously monitors
all of the debt securities in the Fund's portfolio for the issuer's ability to
make required principal and interest payments and other quality factors, it may
retain a bond whose rating is changed to one below the minimum rating required
for purchase of the security. For more information on debt securities and the
foregoing corporate bond rating categories, see the Statement of Additional
Information.
For the fiscal year ended June 30, ^ 1996, the following percentages of
the Fund's total assets were invested in corporate bonds rated investment grade
(BBB by S&P or Baa by Moody's and above) at the time they were purchased: AAA--^
0.00%; AA--^ 0.23% ; A--^ 0.53%; and BBB--^ 1.58%, and the following percentages
were invested in corporate bonds rated below investment grade at the time of
purchase: BB--^ 4.85%; B--^ 4.23%; CCC--^ 0.10%; and D--^ 0.00%. Finally, ^
0.09% of total assets were invested in unrated corporate bonds. All of these
percentages were determined on a dollar-weighted basis, calculated by averaging
the Fund's month-end portfolio holdings during the fiscal year. Keep in mind
that the Fund's holdings are actively traded, and bond ratings are occasionally
adjusted by ratings services, so these figures do not represent the Fund's
actual holdings or quality ratings as of June 30, ^ 1996.
The Fund's investments in debt securities may include investments in zero
coupon bonds, step-up bonds and asset-backed securities. Zero coupon bonds
("zeros") make no periodic interest payments. Instead, they are sold at a
discount from their face value. The buyer of the zero receives the rate of
return by the gradual appreciation in the price of the security, which is
redeemed at face value at maturity. Step-up bonds initially make no (or low)
cash interest payments, but begin paying interest (or a higher rate of interest)
at a fixed time after issuance of the bond. Being extremely responsive to
changes in interest rates, the market prices of zeros and step-up bonds may be
more volatile than other bonds. The Fund may be required to distribute income
recognized on these bonds, even though no cash interest payments may be
received, which could reduce the amount of cash available for investment by the
Fund. Asset-backed securities generally represent interests in pools of consumer
loans and most often are structured as pass-through securities. Interest and
principal payments ultimately depend on payment of the underlying loans by
<PAGE>
individuals, although the securities may be supported, at least in part, by
letters of credit or other credit enhancements. The underlying loans are subject
to prepayments that may shorten the securities' weighted average life and may
lower their returns.
Foreign Securities. The Fund's investments in debt obligations may include
securities issued by foreign governments and foreign corporations. Up to 25% of
the Fund's total assets, measured at the time of purchase, may be invested
directly in foreign debt securities, provided that all such securities are
denominated and pay interest in U.S. dollars (such as Eurobonds and Yankee
bonds). Securities of Canadian issuers and ADRs are not subject to this 25%
limitation. Investments in foreign debt securities involve certain risks.
For U.S. investors, the returns on foreign debt securities are influenced
not only by the returns on the foreign investments themselves, but also by
currency fluctuations. That is, when the U.S. dollar generally rises against
foreign currencies, returns on foreign securities for a U.S. investor may
decrease. By contrast, in a period when the U.S. dollar generally declines,
those returns may increase. The Fund attempts to minimize these risks by
limiting its investments in foreign debt securities to those which are
denominated and pay interest in U.S. dollars.
Other aspects of international investing to consider include:
-less publicly available information than is generally available about U.S.
issuers;
-differences in accounting, auditing and financial reporting standards;
-generally higher commission rates on foreign portfolio transactions and
longer settlement periods;
-smaller trading volumes and generally lower liquidity of foreign stock
markets, which may cause greater price volatility; and
-investments in certain countries may be subject to foreign withholding
taxes, which may reduce dividend income or capital gains payable to
shareholders.
There is also the possibility of expropriation or confiscatory taxation;
adverse changes in investment or exchange control regulations; political
instability; potential restrictions on the flow of international capital; and
the possibility of the Fund experiencing difficulties in pursuing legal remedies
and collecting judgments.
ADRs are subject to some of the same risks as direct investments in
foreign securities, including the risk that material information about the
issuer may not be disclosed in the United States and the risk that currency
fluctuations may adversely affect the value of the ADR.
Rule 144A Securities. The Fund may not purchase securities
that are not readily marketable. However, the Fund may purchase
certain securities that are not registered for sale to the general
<PAGE>
public, but that can be resold to institutional investors ("Rule 144A
Securities") if a liquid trading market exists. The Fund's board of directors
has delegated to Fund Management the authority to determine the liquidity of
Rule 144A Securities pursuant to guidelines approved by the board. In the event
that a Rule 144A Security held by the Fund is subsequently determined to be
illiquid, the security will be sold as soon as that can be done in an orderly
fashion consistent with the best interests of the Fund's shareholders. For more
information concerning Rule 144A Securities, see "Investment Policies and
Restrictions" in the Statement of Additional Information.
Securities Lending. The Fund may seek to earn additional income by lending
securities to qualified brokers, dealers, banks, or other financial
institutions, on a fully collateralized basis. For further information on this
policy, see "Investment Policies and Restrictions" in the Statement of
Additional Information.
Repurchase Agreements. The Fund may invest money, for as short a time as
overnight, using repurchase agreements ("repos"). With a repo, the Fund buys a
debt instrument, agreeing simultaneously to sell it back to the prior owner at
an agreed-upon price. The Fund could incur costs or delays in seeking to sell
the instrument, if the prior owner defaults on its repurchase obligation. To
reduce that risk, the securities ^ that are the subject of the repurchase
agreement will be maintained with the Fund's custodian in an amount at least
equal to the repurchase price under the agreement (including accrued interest).
These agreements are entered into only with member banks of the Federal Reserve
System, registered broker-dealers, and registered U.S. government securities
dealers that are deemed creditworthy under standards established by the Fund's
board of directors.
For a further discussion of risks associated with an investment in the
Fund, see "Investment Policies and Restrictions" and "Investment Practices" in
the Statement of Additional Information.
Investment Restrictions. Certain restrictions, which are set forth in the
Statement of Additional Information, may not be altered without the approval of
the Fund's shareholders. For example, the Fund limits to 5% the portion of its
total assets which may be invested in a single company, and to 25% the portion
that may be invested in any one industry.
THE FUND AND ITS MANAGEMENT
The Fund is a no-load mutual fund, registered with the Securities and
Exchange Commission as a diversified, open-end management investment company. It
was incorporated on March 20, 1959, under the laws of Maryland, and first
publicly offered shares on February 1, 1960.
The Fund's board of directors has responsibility for overall supervision
of the Fund, and reviews the services provided by the adviser and sub-adviser.
Under an agreement with the Fund, INVESCO Funds Group, Inc. ("IFG"), 7800 E.
Union Avenue, Denver, Colorado 80237, serves as the Fund's investment manager;
it is primarily responsible for providing the Fund with various administrative
services. IFG's wholly-owned subsidiary, INVESCO Trust Company ("INVESCO
<PAGE>
Trust"), is the Fund's sub-adviser and is primarily responsible for
managing the Fund's investments. Together, IFG and INVESCO Trust constitute
"Fund Management."
The following managers share responsibility for the day-to-day management
of the Fund's holdings:
Charles P. Mayer has served as co-portfolio manager for the Fund since
1993, focusing on equity investments. He is also co- portfolio manager of
INVESCO Balanced Fund and INVESCO-VIF Industrial Income Portfolio. Mr. Mayer
began his investment career in 1969 and is now a senior vice president of
INVESCO Trust; from 1993 to 1994, he was a vice president of INVESCO Trust. From
1984 to 1993, he was a portfolio manager with Westinghouse Pension. B.A., St.
Peter's College; M.B.A., St. John's University; Chartered Financial Analyst.
Donovan J. (Jerry) Paul has served as co-portfolio manager for the Fund
since 1994, focusing on fixed-income investments. He also is the portfolio
manager of INVESCO High Yield Fund, INVESCO Select Income Fund, and INVESCO
VIF-High Yield Portfolio, as well as co- portfolio manager of INVESCO Short-Term
Bond Fund, INVESCO VIF- Industrial Income Portfolio and INVESCO Balanced Fund. A
senior vice president of INVESCO Trust since 1994, he entered the investment
management industry in 1976. Mr. Paul's recent career includes these highlights:
From 1989 to 1992, he served as senior vice president and director of
fixed-income research, and from 1987 to 1992, as portfolio manager, with Stein,
Roe & Farnham Inc. From 1993 to 1994, he was president of Quixote Investment
Management, Inc. B.B.A., University of Iowa; M.B.A., University of Northern
Iowa; Chartered Financial Analyst; Certified Public Accountant.
Fund ^ Management permits investment and other personnel to purchase and
sell securities for their own accounts, subject to a compliance policy governing
personal investing. This policy requires Fund Management's personnel to conduct
their personal investment activities in a manner that Fund Management believes
is not detrimental to the Fund or Fund Management's other advisory clients. See
the Statement of Additional Information for more detailed information.
The Fund pays IFG a monthly management fee which is based upon a
percentage of the Fund's average net assets determined daily^. The management
fee is computed at the annual rate of 0.60% on the first $350 million of the
Fund's average net assets; 0.55% on the next $350 million of the Fund's average
net assets; and 0.50% on the Fund's average net assets over $700 million. Since
October 15, 1992, IFG has been voluntarily waiving that portion of its fee which
exceeds 0.45% of the average net assets of the Fund in excess of $2 billion
pursuant to a commitment to the Fund. In addition, since October 21, 1993, IFG
has been voluntarily waiving that portion of its fee which exceeds 0.40% of the
average net assets of the Fund in excess of $4 billion pursuant to a commitment
to the Fund. For the fiscal year ended June 30, ^ 1996, investment advisory fees
paid by the Fund amounted to ^ 0.48% of the Fund's average net assets. In the
absence of such voluntary expense limitation, the investment advisory fees paid
by the Fund for the fiscal year ended June 30, ^ 1996, would have been ^ 0.51%
of the Fund's average net assets. Out of this fee, IFG paid an amount equal to
0.20% of the Fund's average net assets to INVESCO Trust as a sub-advisory fee
<PAGE>
^(0.01% after INVESCO Trust's voluntary waiver of a portion of its fee
^ pursuant to a commitment to the Fund). No fee is paid by the Fund to
INVESCO Trust.
Under a Transfer Agency Agreement, IFG acts as registrar, transfer agent,
and dividend disbursing agent for the Fund. The Fund pays an annual fee of ^
$20.00 per shareholder account or omnibus account participant for these
services. Registered broker-dealers, third party administrators of tax-qualified
retirement plans and other entities, including affiliates of IFG, may provide
equivalent services to the Fund. In these cases, IFG may pay, out of the fee it
receives from the Fund, an annual sub-transfer agency or record-keeping fee to
the third party.
In addition, under an Administrative Services Agreement, IFG handles
additional administrative, record-keeping, and internal sub-accounting services
for the Fund. For the fiscal year ended June 30, ^ 1996, the Fund paid IFG a fee
for these services equal to ^ 0.05% of the Fund's average net assets.
The Fund's expenses, which are accrued daily, are deducted from total
income before dividends are paid. Total expenses of the Fund for the fiscal year
ended June 30, ^ 1996, including investment management fees (but excluding
brokerage commissions, which are a cost of acquiring securities), amounted to ^
0.93% (after voluntary absorption of advisory fees by IFG) of the Fund's average
net assets. However, in the absence of the voluntary expense limitation
discussed above, the total expenses of the Fund for the year ended June 30, ^
1996, would have been ^ 0.96% of the Fund's average net assets.
Fund Management places orders for the purchase and sale of portfolio
securities with brokers and dealers based upon Fund Management's evaluation of
their financial responsibility coupled with their ability to effect transactions
at the best available prices. As discussed under "How to Buy Shares --
Distribution Expenses," the Fund may market its shares through intermediary
brokers or dealers that have entered into Dealer Agreements with IFG, as the
Fund's Distributor. The Fund may place orders for portfolio transactions with
qualified broker/dealers which recommend the Fund, or sell shares of the Fund,
to clients, or act as agent in the purchase of Fund shares for clients, if Fund
Management believes that the quality of the execution of the transaction and
level of commission are comparable to those available from other qualified
brokerage firms. For further information, see "Investment Practices -- Placement
of Portfolio Brokerage" in the Statement of Additional Information.
The parent company for IFG and INVESCO Trust is INVESCO PLC, a publicly
traded holding company whose subsidiaries provide investment services around the
world. IFG was established in 1932 and, as of June 30, ^ 1996, managed 14 mutual
funds, consisting of ^ 39 separate portfolios, with combined assets of
approximately ^ $12.9 billion on behalf of over ^ 826,000 shareholders. INVESCO
Trust (founded in 1969) served as adviser or sub-adviser to ^ 45 investment
portfolios as of June 30, ^ 1996, including 27 portfolios in the INVESCO group.
These ^ 45 portfolios had aggregate assets of approximately ^ $12.0 billion as
of June 30, ^ 1996. In addition, INVESCO Trust provides investment management
services to private clients, including employee benefit plans that may be
invested in a collective trust sponsored by INVESCO Trust.
<PAGE>
FUND PRICE AND PERFORMANCE
Determining Price. The value of your investment in the Fund will vary
daily. The price per share is also known as the Net Asset Value ^("NAV"). IFG
prices the Fund every day that the New York Stock Exchange is open, as of the
close of regular trading (normally, 4:00 p.m., New York time). NAV is calculated
by adding together the current market value of all of the Fund's assets,
including accrued interest and dividends; then subtracting liabilities,
including accrued expenses; and finally dividing that dollar amount by the total
number of shares outstanding.
Performance Data. To keep shareholders and potential investors informed,
we will occasionally advertise the Fund's total return and yield. Total return
figures show the rate of return on a $1,000 investment in the Fund, assuming
reinvestment of all dividends and capital gain distributions for one-, five-,
and ten-year periods. Cumulative total return shows the actual rate of return on
an investment for the period cited; average annual total return represents the
average annual percentage change in the value of an investment. Both cumulative
and average annual total returns tend to "smooth out" fluctuations in the Fund's
investment results, not showing the interim variations in performance over the
periods cited. The yield of the Fund refers to the income generated by an
investment in the Fund over a 30-day or one month period, and is computed by
dividing the net investment income per share earned during the period by the net
asset value per share at the end of the period, then adjusting the result to
provide for semi-annual compounding. More information about the Fund's recent
and historical performance is contained in the Fund's Annual Report to ^
Shareholders. You can get a free copy by calling or writing to IFG using the
phone number or address on the cover of this prospectus.
When we quote mutual fund rankings published by Lipper Analytical
Services, Inc., we may compare the fund to others in its category of Equity
Income Funds, as well as the broad-based Lipper general fund groupings. These
rankings allow you to compare the Fund to its peers. Other independent financial
media also produce performance- or service-related comparisons, which you may
see in our promotional materials. For more information see "Fund Performance" in
the Statement of Additional Information.
Performance figures are based on historical investment results and are not
intended to suggest future performance.
HOW TO BUY SHARES
The following chart shows several convenient ways to invest in the Fund.
Your new Fund shares will be priced at the NAV next determined after your order
is received in proper form ^. There is no charge to invest, exchange, or redeem
shares when you make transactions directly through IFG. However, if you invest
in the Fund through a securities broker, you may be charged a commission or
transaction fee. For all new accounts, please send a completed application form.
Please specify which Fund you wish to purchase.
Fund Management reserves the right to increase, reduce or waive the
minimum investment requirements in its sole discretion, where it determines this
action is in the best interests of the
<PAGE>
Fund. Further, Fund Management reserves the right in its sole discretion to
reject any order for the purchase of Fund shares (including purchases by
exchange) when, in its judgment, such rejection is in the Fund's best interests.
================================================================================
Method Investment Minimum Please Remember
- --------------------------------------------------------------------------------
By Check $1,000 for regular If your check does
Mail to: account; not clear, you will
INVESCO Funds $250 for an be responsible for
Group, Inc. Individual any related loss
P.O. Box 173706 Retirement Account; the Fund or IFG
Denver, CO 80217- $50 minimum for incurs. If you are
3706. each subsequent already a
Or you may send investment. shareholder in the
your check by INVESCO funds, the
overnight courier Fund may seek
to: 7800 E. Union reimbursement from
Ave., your existing
Denver, CO 80237. account(s) for any
loss incurred.
- --------------------------------------------------------------------------------
By Telephone or $1,000. Payment must be
Wire received within 3
Call 1-800-525-8085 business days, or
to request your the transaction may
purchase. Then send be cancelled. If a
your check by telephone purchase
overnight courier is cancelled due to
to our street nonpayment, you
address: will be responsible
7800 E. Union Ave., for any related
Denver, CO 80237. loss the Fund or
Or you may transmit IFG incurs. If you
your payment by are already a
bank wire (call IFG shareholder in the
for instructions). INVESCO funds, the
Fund may seek
reimbursement from
your existing
account(s) for any
loss incurred.
<PAGE>
- --------------------------------------------------------------------------------
With EasiVest or $50 per month for Like all regular
Direct Payroll EasiVest; $50 per investment plans,
Purchase pay period for neither EasiVest
You may enroll on Direct Payroll nor Direct Payroll
the fund Purchase. You may Purchase ensures a
application, or start or stop your profit or protects
call us for the regular investment against loss in a
correct form and plan at any time, falling market.
more details. with two weeks' Because you'll
Investing the same notice to IFG. invest continually,
amount on a monthly regardless of
basis allows you to varying price
buy more shares levels, consider
when prices are low your financial
and fewer shares ability to keep
when prices are buying through low
high. This "dollar- price levels. And
cost averaging" may remember that you
help offset market will lose money if
fluctuations. Over you redeem your
a period of time, shares when the
your average cost market value of all
per share may be your shares is less
less than the than their cost.
actual average
price per share.
- --------------------------------------------------------------------------------
By PAL $1,000. Be sure to write
Your "Personal down the
Account Line" is confirmation number
available for provided by PAL.
subsequent Payment must be
purchases and received within 3
exchanges 24-hours business days, or
a day. Simply call the transaction may
1-800-424-8085. be cancelled. If a
telephone purchase
is cancelled due to
nonpayment, you
will be responsible
for any related
loss the Fund or
IFG incurs. If you
are already a
shareholder in the
INVESCO funds, the
Fund may seek
reimbursement from
your existing
account(s) for any
loss incurred.
<PAGE>
- --------------------------------------------------------------------------------
By Exchange $1,000 to open a See "Exchange
Between this and new account; $50 Privilege" below.
another of the for written
INVESCO funds. Call requests to
1-800-525-8085 for purchase additional
prospectuses of shares for an
other INVESCO existing account.
funds. You may also (The exchange
establish an minimum is $250 for
Automatic Monthly purchases requested
Exchange service by telephone.)
between two INVESCO
funds; call IFG for
further details and
the correct form.
================================================================================
Exchange Privilege. You may exchange your shares in this Fund for those in
another INVESCO fund, on the basis of their respective net asset values at the
time of the exchange. Before making any exchange, be sure to review the
prospectuses of the funds involved and consider their differences.
Please note these policies regarding exchanges of fund shares:
1) The fund accounts must be identically registered.
2) You may make four exchanges out of each fund during each
calendar year.
3) An exchange is the redemption of shares from one fund followed by
the purchase of shares in another. Therefore, any gain or loss
realized on the exchange is recognizable for federal income tax
purposes (unless, of course, your account is tax-deferred).
4) The Fund reserves the right to reject any exchange
request, or to modify or terminate exchange privileges,
in the best interests of the Fund and its shareholders.
Notice of all such modifications or termination will be
given at least 60 days prior to the effective date of the
change in privilege, except for unusual instances (such
as when redemptions of the exchanged shares are suspended
under Section 22(e) of the Investment Company Act of
1940, or when sales of the fund into which you are
exchanging are temporarily stopped).
Distribution Expenses. The Fund is authorized under a Plan and Agreement
of Distribution pursuant to Rule 12b-1 under the Investment Company Act of 1940
(the "Plan") to use its assets to finance certain activities relating to the
distribution of shares. These expenditures may include compensation (including
incentive compensation and/or continuing compensation based on the amount of
customer assets maintained in the Fund) to securities dealers and other
financial institutions and organizations, which may include IFG-affiliated
companies, to obtain various distribution-related and/or administrative services
for the Fund. Such services may include, among other things, processing new
shareholder account applications, preparing and transmitting to the Fund's
<PAGE>
transfer agent computer-processable tapes of all transactions by customers, and
serving as the primary source of information to customers in answering questions
concerning the Fund and their transactions.
In addition, other reimbursable expenditures include advertising,
preparation and distribution of sales literature, printing and distribution of
prospectuses to prospective investors, public relations efforts, marketing
programs and such other services and promotional activities agreed upon from
time to time by the Fund and its board of directors. These services and
activities may be conducted by the staff of IFG or its affiliates or by third
parties.
IFG is not entitled to reimbursement for overhead expenses under the Plan,
but may be reimbursed for all or a portion of the compensation paid for salaries
and other employee benefits for IFG personnel whose primary responsibilities
involve marketing shares of the INVESCO funds, including the Fund. Also, any
payments made by the Fund may not be used to finance the distribution of shares
of any other mutual fund advised by IFG. Payments made by the Fund under the
Plan for compensation of marketing personnel, as noted above, are based on an
allocation formula designed to ensure that all such payments are appropriate.
Under the Plan, the Fund's reimbursement to IFG is limited to an amount
computed at a maximum annual rate of 0.25 ^% of the Fund's ^ average net assets.
Payments by the Fund under the Plan, for any month, may only be made to
reimburse expenditures incurred during the rolling 12-month period in which that
month falls. Therefore, any reimbursable expenses incurred by IFG in excess of
the limitation described above are not reimbursable and will be borne by IFG. In
addition, IFG may from time to time make additional payments from its revenues
to securities dealers and other financial institutions that provide
distribution-related and/or administrative services for the Fund. No further
payments will be made by the Fund under the Plan in the event of its
termination.
FUND SERVICES
Shareholder Accounts. IFG will maintain a share account that reflects your
current holdings. Share certificates will be issued only upon specific request.
You will have greater flexibility to conduct transactions if you do not request
certificates.
Transaction Confirmations. You will receive detailed confirmations of
individual purchases, exchanges, and redemptions. If you choose certain
recurring transaction plans (for instance, EasiVest), your transactions will be
confirmed on your quarterly Investment Summary.
Investment Summaries. Each calendar quarter, shareholders receive a
written statement which consolidates and summarizes account activity and value
at the beginning and end of the period for each of their INVESCO funds.
Reinvestment of Distributions. Dividends and capital gain distributions are
automatically invested in additional fund shares at the NAV on the ex-dividend
date, unless you choose to have dividends and/or capital gain distributions
<PAGE>
automatically reinvested in another INVESCO fund or paid by check (minimum of
$10.00).
Telephone Transactions. All shareholders may exchange and redeem Fund
shares by telephone, unless they expressly decline these privileges. By signing
the new account Application, a Telephone Transaction Authorization Form, or
otherwise using these privileges, the investor has agreed that, if the Fund has
followed reasonable procedures, such as recording telephone instructions and
sending written transaction confirmations, it will not be liable for following
telephoned instructions that it believes to be genuine. As a result of this
policy, the investor may bear the risk of any loss due to unauthorized or
fraudulent instructions.
Retirement Plans And IRAs. Fund shares may be purchased for Individual
Retirement Accounts ^("IRAs") and many types of tax-deferred retirement plans.
IFG can supply you with information and forms to establish or transfer your
existing plan or account.
HOW TO SELL SHARES
The following chart shows several convenient ways to redeem your Fund
shares. Shares of the Fund may be redeemed at any time at their current NAV next
determined after a request in proper form is received at the Fund's office. The
NAV at the time of the redemption may be more or less than the price you paid to
purchase your shares, depending primarily upon the Fund's investment
performance.
Please be specific from which fund you wish to redeem shares. Shareholders
have a separate account for each fund in which they invest.
<PAGE>
================================================================================
Method Minimum Redemption Please Remember
================================================================================
By Telephone $250 (or, if less, This option is not
Call us toll-free full liquidation of available for
at 1-800-525-8085. the account) for a shares held in
redemption check; Individual
$1,000 for a wire Retirement Accounts
to bank of record. (IRAs).
The maximum amount
which may be
redeemed by
telephone is
generally $25,000.
These telephone
redemption
privileges may be
modified or
terminated in the
future at the
discretion of IFG.
- --------------------------------------------------------------------------------
In Writing Any amount. The If the shares to be
Mail your request redemption request redeemed are
to INVESCO Funds must be signed by represented by
Group, Inc., P.O. all registered stock certificates,
Box 173706 shareholders(s). the certificates
Denver, CO 80217- Payment will be must be sent to
3706. You may also mailed to your IFG.
send your request address of record,
by overnight or to a pre-
courier to 7800 E. designated bank.
Union Ave., Denver,
CO 80237.
- --------------------------------------------------------------------------------
By Exchange $1,000 to open a See "Exchange
Between this and new account; $50 Privilege," above.
another of the for written
INVESCO funds. Call requests to
1-800-525-8085 for purchase additional
prospectuses of shares for an
other INVESCO existing account.
funds. You may also (The exchange
establish an minimum is $250 for
automatic monthly exchanges requested
exchange service by telephone.)
between two INVESCO
funds; call IFG for
further details and
the correct form.
- --------------------------------------------------------------------------------
Periodic Withdrawal $100 per payment, You must have at
Plan on a monthly or least $10,000 total
You may call us to quarterly basis. invested with the
request the The redemption INVESCO funds, with
appropriate form check may be made at least $5,000 of
and more payable to any that total invested
information at 1- party you in the fund from
800-525-8085. designate. which withdrawals
will be made.
<PAGE>
- --------------------------------------------------------------------------------
Payment To Third Any amount. All registered
Party owners of the
Mail your request account must sign
to INVESCO Funds the request, with a
Group, Inc., P.O. signature guarantee
Box 173706 from an eligible
Denver, CO 80217- guarantor financial
3706. institution, such
as a commercial
bank or recognized
national or
regional securities
firm.
================================================================================
While the Fund will attempt to process telephone redemptions promptly,
there may be times -- particularly in periods of severe economic or market
disruption -- when you may experience delays in redeeming shares by phone.
Payments of redemption proceeds will be mailed within seven days following
receipt of the redemption request in proper form. However, payment may be
postponed under unusual circumstances -- for instance, if normal trading is not
taking place on the New York Stock Exchange^ or during an emergency as defined
by the Securities and Exchange Commission. If your shares were purchased by a
check which has not yet cleared, payment will be made promptly upon clearance of
the purchase check (which may take up to 15 days).
If you participate in Easivest, the Fund's automatic monthly investment
program, and redeem all of the shares in your account, we will terminate any
further Easivest purchases unless you instruct us otherwise.
Because of the high relative costs of handling small accounts, should the
value of any shareholder's account fall below $250 as a result of shareholder
action, the Fund reserves the right to involuntarily redeem all shares in such
account, in which case the account would be liquidated and the proceeds
forwarded to the shareholder. Prior to any such redemption, a shareholder will
be notified and given 60 days to increase the value of the account to $250 or
more.
TAXES, DIVIDENDS^ AND CAPITAL GAIN DISTRIBUTIONS
Taxes. The Fund intends to distribute to shareholders substantially all of
its net investment income, net capital gains and net gains from foreign currency
transactions, if any, in order to continue to qualify for tax treatment as a
regulated investment company. Thus, the Fund does not expect to pay any federal
income or excise taxes.
Unless shareholders are exempt from income taxes, they must include all
dividends and capital gain distributions in taxable income for federal, state,
and local income tax purposes. Dividends and other distributions are taxable
whether they are received in cash or automatically distributed in shares of the
Fund or another fund in the INVESCO group.
<PAGE>
The Fund may be subject to withholding of foreign taxes on dividends or
interest it receives on foreign securities. Foreign taxes withheld will be
treated as an expense of the Fund unless the Fund meets the qualifications to
enable it to pass these taxes through to shareholders for use by them as a
foreign tax credit or deduction.
Shareholders may be subject to backup withholding of 31% on dividends,
capital gain distributions and redemption proceeds. Unless you are subject to
backup withholding for other reasons, you can avoid backup withholding on your
Fund account by ensuring that we have a correct, certified tax identification
number.
Dividends and Capital Gain Distributions. The Fund earns ordinary or net
investment income^ in the form of dividends and interest on its investments. The
Fund's policy is to distribute substantially all of this income, less Fund
expenses, to shareholders on a quarterly basis, at the discretion of the Fund's
board of directors.
In addition, the Fund realizes capital gains and losses when it sells
securities for more or less than it paid. If total gains on sales exceed total
losses (including losses carried forward from previous years), the Fund has a
net realized capital gain. Net realized capital gains, if any, are distributed
to shareholders at least annually, usually in December.
Dividends and capital gain distributions are paid to shareholders who hold
shares on the record date of distribution regardless of how long the shares have
been held. The Fund's share price will then drop by the amount of the
distribution on the day the distribution is made. If a shareholder purchases
shares immediately prior to the distribution, the shareholder will, in effect,
have "bought" the distribution by paying the full purchase price, a portion of
which is then returned in the form of a taxable distribution.
At the end of each year, information regarding the tax status of dividends
and capital gain distributions is provided to shareholders. Net realized capital
gains are divided into short-term and long-term gains depending upon how long
the Fund held the security which gave rise to the gains. The capital gains
distribution consists of long-term capital gains which are taxed at the capital
gains rate. Short-term capital gains are included with income from dividends and
interest as income and are paid to shareholders as dividends.
Shareholders also may realize capital gains or losses when they sell their
Fund shares at more or less than the price originally paid.
We encourage you to consult a tax adviser with respect to these matters.
For further information see "Dividends, Capital Gain Distributions and Taxes" in
the Statement of Additional Information.
ADDITIONAL INFORMATION
Voting Rights. All shares of the Fund have equal voting rights based on one
vote for each share owned. The Fund is not generally required and does not
<PAGE>
expect to hold regular annual meetings of shareholders. However, when
requested to do so in writing by the holders of 10% or more of the outstanding
shares of the Fund or as may be required by applicable law or the Fund's
Articles of Incorporation, the board of directors will call special meetings of
shareholders. Directors may be removed by action of the holders of a majority of
the outstanding shares of the Fund. The Fund will assist shareholders in
communicating with other shareholders as required by the Investment Company Act
of 1940.
<PAGE>
INVESCO INDUSTRIAL INCOME FUND, INC.
A no-load mutual fund seeking
current income, with capital growth
as an additional factor.
PROSPECTUS
^ November 1, 1996
To receive general information and prospectuses on any of the INVESCO funds or
retirement plans, or to obtain current account or price information or responses
to other questions, call toll-free:
1-800-525-8085
To reach PAL, your 24-hour Personal Account Line (PAL) call:
1-800-424-8085
Or write to:
INVESCO Funds Group, Inc., Distributor
^ Post Office Box 173706
Denver, Colorado 80217-3706
If you're in Denver, please visit one of our convenient Investor Centers:
Cherry Creek
155-B Fillmore Street
Denver Tech Center
7800 East Union Avenue, Lobby Level
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
^ November 1, 1996
INVESCO INDUSTRIAL INCOME FUND, INC.
A no-load mutual fund seeking current
income with capital growth as an additional factor
Address: Mailing Address:
7800 E. Union Avenue Post Office Box 173706
Denver, Colorado 80237 Denver, Colorado 80217-3706
Telephone:
In continental U.S., 1-800-525-8085
- --------------------------------------------------------------------------------
INVESCO INDUSTRIAL INCOME FUND, INC.'s ("the Fund") investment objective
is to seek the best possible current income while following sound investment
practices. The Fund will pursue this objective by investing its assets in
securities ^ with the potential to provide a relatively high yield and stable
return and which, over a period of years, may also provide capital appreciation.
Capital growth potential is a secondary factor in the selection of portfolio
securities of the Fund.
A Prospectus for the Fund dated ^ November 1, 1996, which provides the
basic information you should know before investing in the Fund, may be obtained
without charge from INVESCO Funds Group, Inc., Post Office Box 173706, Denver,
Colorado 80217-3706. This Statement of Additional Information is not a
Prospectus, but contains information in addition to and more detailed than that
set forth in the Prospectus. It is intended to provide additional information
regarding the activities and operations of the Fund, and should be read in
conjunction with the Prospectus.
Investment Adviser and Distributor: INVESCO FUNDS GROUP, INC.
- --------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS Page
----
INVESTMENT POLICIES AND RESTRICTIONS ^ 30
THE FUND AND ITS MANAGEMENT ^ 34
HOW SHARES CAN BE PURCHASED ^ 44
HOW SHARES ARE VALUED ^ 47
FUND PERFORMANCE ^ 48
SERVICES PROVIDED BY THE FUND ^ 50
TAX-DEFERRED RETIREMENT PLANS ^ 51
HOW TO REDEEM SHARES ^ 51
DIVIDENDS, CAPITAL GAIN DISTRIBUTIONS AND TAXES ^ 51
INVESTMENT PRACTICES ^ 53
ADDITIONAL INFORMATION ^ 56
<PAGE>
INVESTMENT POLICIES AND RESTRICTIONS
In pursuing its investment objective, the Fund endeavors to select and
purchase securities providing reasonably secure dividend or interest income.
Sometimes warrants are acquired when offered with income-producing securities,
but the warrants are disposed of as soon as that can be done in an orderly
fashion consistent with the best interests of the Fund's shareholders. Acquiring
warrants involves a risk that the Fund will lose the premium it pays to acquire
warrants if the Fund does not exercise a warrant before it expires. The major
portion of the investment portfolio normally consists of common stocks,
convertible bonds and debentures, and preferred stocks; however, there may also
be substantial holdings of straight debt securities, including non-investment
grade and unrated debt securities.
Debt Securities. As discussed in the section of the Fund's Prospectus
entitled "Investment Policies and Risks," the straight debt securities in which
the Fund invests are generally subject to two kinds of risk, credit risk and
market risk. The ratings given a straight debt security by Moody's and Standard
& Poor's ("S&P") provide a generally useful guide as to such credit risk. The
lower the rating given a debt security by such rating service, the greater the
credit risk such rating service perceives to exist with respect to such
security. Increasing the amount of Fund assets invested in unrated or lower
grade (Ba or less by Moody's, BB or less by S&P) straight debt securities, while
intended to increase the yield produced by the Fund's straight debt securities,
will also increase the credit risk to which those straight debt securities are
subject.
Lower rated straight debt securities and non-rated securities of
comparable quality tend to be subject to wider fluctuations in yields and market
values than higher rated straight debt securities and may have speculative
characteristics. Although the Fund may invest in straight debt securities
assigned lower grade ratings by S&P or Moody's, the Fund's investments have
generally been limited to straight debt securities rated B or higher by either
S&P or Moody's. Straight debt securities rated lower than B by either S&P or
Moody's may be highly speculative. The Fund's investment adviser intends to
limit such Fund investments to straight debt securities which are not believed
by the adviser to be highly speculative and which are rated at least CCC or Caa,
respectively, by S&P or Moody's. In addition, a significant economic downturn or
major increase in interest rates may well result in issuers of lower rated
straight debt securities experiencing increased financial stress which would
adversely affect their ability to service their principal and interest
obligations, to meet projected business goals, and to obtain additional
financing. While the Fund's investment adviser attempts to limit purchases of
lower rated straight debt securities to securities having an established retail
secondary market, the market for such securities may not be as liquid as the
market for higher rated straight debt securities. Bonds rated Caa by Moody's may
be in default or there may be present elements of danger with respect to
principal or interest. Lower rated bonds by Standard & Poor's (categories BB, B,
CCC) include those which are regarded, on balance, as predominantly speculative
with respect to the issuer's capacity to pay interest and repay principal in
accordance with their terms; BB indicates the lowest degree of speculation and
<PAGE>
CCC a high degre of speculation. While such bonds will likely have some
quality and protective characteristics, these are outweighed by large
uncertainties or major risk exposures to adverse conditions. For a specific
description of each corporate bond rating category, please refer to Appendix A.
Repurchase Agreements. As discussed in the Prospectus, the Fund may enter
into repurchase agreements with respect to debt instruments eligible for
investment by the Fund, with member banks of the Federal Reserve System,
registered broker-dealers, and registered government securities dealers, which
are deemed creditworthy under standards established by the Fund's board of
directors. A repurchase agreement may be considered a loan collateralized by
securities. The resale price reflects an agreed upon interest rate effective for
the period the instrument is held by the Fund and is unrelated to the interest
rate on the underlying instrument. In these transactions, the securities
acquired by the Fund (including accrued interest earned thereon) must have a
total value in excess of the value of the repurchase agreement, and are held as
collateral by the Fund's Custodian Bank until the repurchase agreement is
completed.
Restricted/144A Securities. In recent years, a large institutional market
has developed for certain securities that are not registered under the
Securities Act of 1933 (the "1933 Act"). Institutional investors will not
generally seek to sell these instruments to the general public, but instead will
often depend on an efficient institutional market in which such unregistered
securities can be readily resold or on an issuer's ability to honor a demand for
repayment. Therefore, the fact that there are contractual or legal restrictions
on resale to the general public or certain institutions is not dispositive of
the liquidity of such investments.
Rule 144A under the 1933 Act establishes a "safe harbor" from the
registration requirements of the 1933 Act for resales of certain securities to
qualified institutional buyers. Institutional markets for restricted securities
that might develop as a result of Rule 144A could provide both readily
ascertainable values for restricted securities and the ability to liquidate an
investment in order to satisfy share redemption orders. An insufficient number
of qualified institutional buyers interested in purchasing Rule 144A-eligible
securities held by the Fund, however, could affect adversely the marketability
of such portfolio securities and the Fund might be unable to dispose of such
securities promptly or at reasonable prices.
Loans of Portfolio Securities. The Fund also may lend its portfolio
securities to qualified brokers, dealers, banks, or other financial
institutions. This practice permits the Fund to earn income, which, in turn, can
be invested in additional securities to pursue the Fund's investment objective.
Loans of securities by the Fund will be collateralized by cash, letters of
credit, or securities issued or guaranteed by the U.S. government or its
agencies equal to at least 100% of the current market value of the loaned
securities, determined on a daily basis. Lending securities involves certain
risks, the most significant of which is the risk that a borrower may fail to
return a portfolio security. The Fund monitors the creditworthiness of borrowers
in order to minimize such risks. The Fund will not lend any security if, as a
<PAGE>
result of such loan, the aggregate value of securities then on loan would
exceed 33-1/3% of the Fund's net assets (taken at market value). While voting
rights may pass with the loaned securities, if a material event (e.g., proposed
merger, sale of assets, or liquidation) is to occur affecting an investment on
loan, the loan must be called and the securities voted. Loans of securities made
by the Fund will comply with all other applicable regulatory requirements,
including the rules of the New York Stock Exchange and the requirements of the
Investment Company Act of 1940, as amended (the "1940 Act"), and the rules of
the Securities and Exchange Commission (the "SEC") thereunder.
Investment Restrictions. As described in the section of the Fund's
Prospectus entitled "Investment ^ Policies and Risks," the Fund has adopted
certain fundamental investment restrictions. The first three restrictions set
forth below are contained in the Fund's charter and may not be changed without
prior approval by the holders of two-thirds of the outstanding shares of the
Fund. The Fund's other investment restrictions may not be changed without the
prior approval of the holders of a majority of the outstanding voting securities
of the Fund as defined in the 1940 Act. For purposes of the following
limitation, all percentage limitations apply immediately after a purchase or
initial investment. Any subsequent change in a particular percentage resulting
from fluctuations in value does not require elimination of any security from the
Fund. Under these restrictions, the Fund may not:
(1) issue preference shares or create any funded debt;
(2) sell short or buy on margin;
(3) borrow money except from banks in excess of 5% of the value of its
total net assets, and when borrowing, it is a temporary measure for
emergency purposes;
(4) buy or sell real estate, commodities, commodity contracts (however,
the Fund may purchase securities of companies investing in real
estate);
(5) invest in securities of any other investment company except for a
purchase or acquisition in accordance with a plan of reorganization,
merger or consolidation;
(6) invest in any company for the purpose of exercising
control or management;
(7) buy other than readily marketable securities;
(8) purchase securities if the purchase would cause the Fund, at the
time, to have more than 5% of its total assets invested in the
securities of any one company or to own more than 10% of the voting
securities of any one company (except obligations issued or
guaranteed by the U.S.
Government);
(9) engage in the underwriting of any securities;
(10) make loans to any person, except through the purchase of debt
securities in accordance with the Fund's investment policies, or the
lending of portfolio securities to broker-dealers or other
<PAGE>
institutional investors, or the entering into repurchase agreements
with member banks of the Federal Reserve System, registered broker-
dealers and registered government securities dealers. The aggregate
value of all portfolio securities loaned may not exceed 33-1/3% of
the Fund's total net assets (taken at current value). No more than
10% of the Fund's total net assets may be invested in repurchase
agreements maturing in more than seven days;
(11) purchase securities of any company in which any officer or director
of the Fund or its investment adviser owns more than 1/2 of 1% of
the outstanding securities, or in which all of the officers and
directors of the Fund and its investment supervisor, as a group, own
more than 5% of such securities; or
(12) invest more than 25% of the value of the Fund's assets in one
particular industry.
The Fund has no written policy regarding the writing of put and call
options but has not engaged in such practices and does not anticipate doing so.
^
With respect to investment restriction (7) above, since the board of
directors has delegated to the Fund's investment adviser the authority to
determine that a liquid market exists for securities eligible for resale
pursuant to Rule 144A under the Securities Act of 1933, or any successor to such
rule, such securities are not subject to restriction (7) above. Under guidelines
established by the board of directors, the adviser will consider the following
factors, among others, in making this determination: (1) the unregistered nature
of a Rule 144A security, (2) the frequency of trades and quotes for the
security; (3) the number of dealers willing to purchase or sell the security and
the number of other potential purchasers; (4) dealer undertakings to make a
market in the security; and (5) the nature of the security and the nature of
marketplace trades (e.g., the time needed to dispose of the security, the method
of soliciting offers and the mechanics of transfer).
In applying restriction (12) above, the Fund uses an industry
classification system based on the O'Neil Database published by William O'Neil &
Co., Inc.
In addition to the foregoing investment restrictions, the Fund has given
undertakings to the State of Texas that the Fund may not invest in any oil, gas,
or mineral leases; and may not invest in real estate limited partnership
interests.
Under the 1940 Act, Fund directors and officers cannot be protected
against liability to the Fund or its shareholders to which they would be subject
because of willful misfeasance, bad faith, gross negligence or reckless
disregard of duties of their office.
<PAGE>
THE FUND AND ITS MANAGEMENT
The Fund. The Fund was incorporated under the laws of
Maryland on March 20, 1959.
The Investment Adviser. INVESCO Funds Group, Inc., a Delaware corporation
("INVESCO"), is employed as the Fund's investment adviser. INVESCO was
established in 1932 and also serves as an investment adviser to INVESCO
Diversified Funds, Inc., INVESCO Dynamics Fund, Inc., INVESCO Emerging
Opportunity Funds, Inc., INVESCO Growth Fund, Inc., INVESCO Income Funds, 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, and
INVESCO Variable Investment Funds, Inc.
The Sub-Adviser. INVESCO Trust Company ("INVESCO Trust") serves as the
sub-adviser to the Fund, pursuant to an agreement between INVESCO and INVESCO
Trust. INVESCO Trust, a trust company founded in 1969, is a wholly-owned
subsidiary of INVESCO.
INVESCO is an indirect, wholly-owned subsidiary of INVESCO PLC, a
publicly-traded holding company organized in 1935. Through subsidiaries located
in London, Denver, Atlanta, Boston, Louisville, Dallas, Tokyo, Hong Kong, and
the Channel Islands, INVESCO PLC provides investment services around the world.
INVESCO was acquired by INVESCO PLC in 1982 and, as of June 30, ^ 1996, managed
14 mutual funds, consisting of ^ 39 separate portfolios, on behalf of over ^
826,000 shareholders. INVESCO PLC's other North American subsidiaries include
the following:
--INVESCO Asset Management Limited of the United Kingdom manages pension
funds, investment trusts, unit trusts, and various investment portfolios on
behalf of private clients, charities, corporations, and foreign financial
institutions.
--INVESCO Capital Management, Inc. of Atlanta, Georgia manages
institutional investment portfolios, consisting primarily of discretionary
employee benefit plans for corporations and state and local governments, and
endowment funds. INVESCO Capital Management, Inc. is the sole shareholder of
INVESCO Services, Inc., a registered broker/dealer whose primary business is the
distribution of shares of two registered investment companies.
--INVESCO Management & Research, Inc. (formerly Gardner and Preston Moss,
Inc.) of Boston, Massachusetts, primarily manages pension and endowment
accounts.
--PRIMCO Capital Management, Inc. of Louisville, Kentucky, specializes in
managing stable return investments, principally on behalf of Section 401(k)
retirement plans.
--INVESCO Realty Advisors, Inc. of Dallas, Texas is responsible for
providing advisory services in the U.S. real estate markets for INVESCO PLC's
clients worldwide. Clients include corporate plans, public pension funds, and
endowment and foundation accounts.
The corporate headquarters of INVESCO PLC are located at 11 Devonshire
Square, London, EC2M 4YR, England.
<PAGE>
As indicated in the Prospectus, INVESCO and INVESCO Trust permit
investment and other personnel to purchase and sell securities for their own
accounts in accordance with a compliance policy governing personal investing by
directors, officers and employees of INVESCO, INVESCO Trust and their North
American affiliates. The policy requires officers, inside directors, investment
and other personnel of INVESCO, INVESCO Trust and their North American
affiliates to pre-clear all transactions in securities not otherwise exempt
under the policy. Requests for trading authority will be denied when, among
other reasons, the proposed personal transaction would be contrary to the
provisions of the policy or would be deemed to adversely affect any transaction
then known to be under consideration for or to have been effected on behalf of
any client account, including the Fund.
In addition to the pre-clearance requirement described above, the policy
subjects officers, inside directors, investment and other personnel of INVESCO,
INVESCO Trust and their North American affiliates to various trading
restrictions and reporting obligations. All reportable transactions are reviewed
for compliance with the policy. The provisions of this policy are administered
by and subject to exceptions authorized by INVESCO or INVESCO Trust.
Investment Advisory Agreement. INVESCO serves as investment adviser
pursuant to an investment advisory agreement (the "Agreement") with the Fund
which was approved on April 24, 1991, by vote cast in person by a majority of
the directors of the Fund, including a majority of the directors who are not
"interested persons" of the Fund or INVESCO at a meeting called for such
purpose. The Agreement was approved by Fund shareholders on September 30, 1991,
for an initial term expiring April 30, 1993, and has been continued by action of
the board of directors until April, 30, ^ 1997. Thereafter, the Agreement may be
continued from year to year as long as such continuance is specifically approved
at least annually by the board of directors of the Fund, or by a vote of the
holders of a majority, as defined in the 1940 Act, of the outstanding shares of
the Fund. Any such continuance also must be approved by a majority of the Fund's
directors who are not parties to the Agreement or interested persons (as defined
in the 1940 Act) of any such party, cast in person at a meeting called for the
purpose of voting on such continuance. The Agreement may be terminated at any
time without penalty by either party upon sixty (60) days' written notice and
terminates automatically in the event of an assignment to the extent required by
the 1940 Act and the Rules thereunder.
The Agreement provides that INVESCO shall manage the investment portfolio
of the Fund in conformity with the Fund's investment policies (either directly
or by delegation to a sub-adviser which may be a company affiliated with
INVESCO). Further, INVESCO shall perform all administrative, internal accounting
(including computation of net asset value), clerical, statistical, secretarial
and all other services necessary or incidental to the administration of the
affairs of the Fund excluding, however, those services that are the subject of
separate agreement between the Fund and INVESCO or any affiliate thereof,
including the distribution and sale of Fund shares and provision of transfer
agency, dividend disbursing agency, and registrar services, and services
furnished under an Administrative Services Agreement with INVESCO discussed
<PAGE>
below. Services provided under the Agreement include, but are not limited
to: supplying the Fund with officers, clerical staff and other employees, if
any, who are necessary in connection with the Fund's operations; furnishing
office space, facilities, equipment, and supplies; providing personnel and
facilities required to respond to inquiries related to shareholder accounts;
conducting periodic compliance reviews of the Fund's operations; preparation and
review of required documents, reports and filings by the Adviser's in-house
legal and accounting staff (including the prospectus, statement of additional
information, proxy statements, shareholder reports, tax returns, reports to the
SEC, and other corporate documents of the Fund), except insofar as the
assistance of independent accountants or attorneys is necessary or desirable;
supplying basic telephone service and other utilities; and preparing and
maintaining certain of the books and records required to be prepared and
maintained by the Fund under the ^ 1940 Act. Expenses not assumed by INVESCO are
borne by the Fund.
As full compensation for its advisory services to the Fund, INVESCO
receives a monthly fee. The fee is computed at the annual rate of: 0.60% on the
first $350 million of the Fund's average net assets; 0.55% on the next $350
million of the Fund's average net assets; and 0.50% of the Fund's average net
assets in excess of $700 million. Effective October 15, 1992, INVESCO has
voluntarily agreed to waive that portion of its fee which exceeds 0.45% of the
average net assets of the Fund in excess of $2 billion. In addition, effective
October 21, 1993, INVESCO has voluntarily agreed to waive that portion of its
fee which exceeds 0.40% of the average net assets of the Fund in excess of $4
billion. For the fiscal years ended June 30, 1996, 1995^ and 1994, ^ the Fund
paid INVESCO (prior to the voluntary absorption of certain Fund expenses by
INVESCO) advisory fees of $21,541,300, $19,946,443^ and $19,598,151, ^
respectively.
Certain states in which the shares of the Fund are qualified for sale
currently impose limitations on the expenses of the Fund. At the date of this
Statement of Additional Information, the most restrictive state-imposed annual
expense limitation requires that INVESCO absorb any amount necessary to prevent
the Fund's aggregate ordinary operating expenses (excluding interest, taxes,
brokerage fees and commissions, and extraordinary charges such as litigation
costs) from exceeding in any fiscal year 2.5% on the Fund's first $30,000,000 of
average net assets, 2.0% on the next $70,000,000 of average net assets and 1.5%
on the remaining average net assets. No payment of the investment advisory fee
will be made to INVESCO which would result in Fund expenses exceeding on a
cumulative annualized basis this state limitation. During the past year, INVESCO
did not absorb any amounts under this provision.
Sub-Advisory Agreement. INVESCO Trust serves as sub-adviser to the Fund
pursuant to a sub-advisory agreement (the "Sub-Agreement") with INVESCO which
was approved on April 24, 1991, by a vote cast in person by a majority of the
directors of the Fund, including a majority of the directors who are not
"interested persons" of the Fund, INVESCO, or INVESCO Trust at a meeting called
for such purpose. The Sub-Agreement was approved on September 30, 1991, by Fund
shareholders for an initial term expiring April 30, 1993, and has been continued
by action of the board of directors until April 30, ^ 1997. Thereafter, the
Sub-Agreement may be continued from year to year as long as each such
<PAGE>
continuance is specifically approved by the board of directors of the Fund,
or by a vote of the holders of a majority, as defined in the ^ 1940 Act, of the
outstanding shares of the Fund. Each such continuance also must be approved by a
majority of the directors who are not parties to the Sub-Agreement or interested
persons, as defined in the 1940 Act of any such party, cast in person at a
meeting called for the purpose of voting on such continuance. The Sub-Agreement
may be terminated at any time without penalty by either party or the Fund upon
sixty (60) days' written notice, and terminates automatically in the event of an
assignment to the extent required by the 1940 Act and the rules thereunder.
The Sub-Agreement provides that INVESCO Trust, subject to the supervision
of INVESCO, shall manage the investment portfolio of the Fund in conformity with
the Fund's investment policies. These management services would include: (a)
managing the investment and reinvestment of all the assets, now or hereafter
acquired, of the Fund, and executing all purchases and sales of portfolio
securities; (b) maintaining a continuous investment program for the Fund,
consistent with (i) the Fund's investment policies as set forth in the Fund's
Articles of Incorporation, Bylaws, and Registration Statement, as from time to
time amended, under the 1940 Act and in any prospectus and/or statement of
additional information of the Fund, as from time to time amended and in use
under the 1933 Act and (ii) the Fund's status as a regulated investment company
under the Internal Revenue Code of 1986, as amended; (c) determining what
securities are to be purchased or sold for the Fund, unless otherwise directed
by the directors of the Fund or INVESCO, and executing transactions accordingly;
(d) providing the Fund the benefit of all of the investment analysis 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) determining
what portion of the Fund should be invested in the various types of securities
authorized for purchase by the Fund; and (f) making recommendations as to the
manner in which voting rights, rights to consent to Fund action and any other
rights pertaining to the Fund's portfolio securities shall be exercised.
The Sub-Agreement provides that as compensation for its services, INVESCO
Trust shall receive from INVESCO, at the end of each month, a fee based upon the
average net assets of the Fund at the following annual rates: 0.25% on the
Fund's average net assets up to $200 million, and 0.20% on the Fund's average
net assets in excess of $200 million. Effective October 15, 1992, INVESCO Trust
has voluntarily agreed to waive that portion of its sub-advisory fee which
exceeds 0.18% of the average net assets of the Fund in excess of $2 billion. In
addition, effective October 21, 1993, INVESCO Trust has voluntarily agreed to
waive that portion of its sub-advisory fee which exceeds 0.16% of the average
net assets of the Fund in excess of $4 billion. The Sub-Advisory fee is paid by
INVESCO, NOT the Fund.
Administrative Services Agreement. INVESCO, either directly or through
affiliated companies, also provides certain administrative, sub-accounting, and
recordkeeping services to the Fund pursuant to an Administrative Services
Agreement dated April 30, 1991 (the "Administrative Agreement"). The
Administrative Agreement was approved on April 24, 1991, by a vote cast in
<PAGE>
person by all of the directors of the Fund, including all of the directors
who are not "interested persons" of the Fund or INVESCO at a meeting called for
such purpose. The Administrative Agreement was for an initial term of one year
expiring April 30, 1992, and has been continued by action of the board of
directors until April 30, ^ 1997. The Administrative Agreement may be continued
from year to year as long as each such continuance is specifically approved by
the board of directors of the Fund, including a majority of the directors who
are not parties to the Administrative Agreement or interested persons (as
defined in the ^ 1940 Act) of any such party, cast in person at a meeting called
for the purpose of voting on such continuance. The Administrative Agreement may
be terminated at any time without penalty by INVESCO on sixty (60) days' written
notice, or by the Fund upon thirty (30) days' written notice, and terminates
automatically in the event of an assignment unless the Fund's board of directors
approves such assignment.
The Administrative Agreement provides that INVESCO shall provide the
following services to the Fund: (A) such sub-accounting and recordkeeping
services and functions as are reasonably necessary for the operation of the
Fund; and (B) such sub-accounting, recordkeeping, and administrative services
and functions, which may be provided by affiliates of INVESCO, as are reasonably
necessary for the operation of Fund shareholder accounts maintained by certain
retirement plans and employee benefit plans for the benefit of participants in
such plans.
As full compensation for services provided under the Administrative
Agreement, the Fund pays a fee to INVESCO consisting of a base fee of $10,000
per year, plus an additional incremental fee computed daily and paid monthly at
an annual rate of 0.015% per year of the average net assets of the Fund. ^
During the fiscal years ended June 30, 1996, 1995^ and 1994, ^ the Fund paid
INVESCO administrative services fees in the amount of $640,468, $592,643^ and
$582,063, ^ respectively.
Transfer Agency Agreement. INVESCO also performs transfer agent, dividend
disbursing agent, and registrar services for the Fund pursuant to a Transfer
Agency Agreement which was approved by the board of directors of the Fund,
including a majority of the Fund's directors who are not parties to the Transfer
Agency Agreement or "interested persons" of any such party, in April 1992, for a
term of one year. The Transfer Agency Agreement has been continued by action of
the board of directors until April 30, ^ 1997, and thereafter may be continued
from year to year as long as such continuance is specifically approved at least
annually by the board of directors of the Fund, or by a vote of the holders of a
majority of the outstanding shares of the Fund. Any such continuance also must
be approved by a majority of the Fund's directors who are not parties to the
Transfer Agency Agreement or interested persons (as defined by the 1940 Act) of
any such party, cast in person at a meeting called for the purpose of voting on
such continuance. The Transfer Agency Agreement may be terminated at any time
without penalty by either party upon sixty (60) days' written notice and
terminates automatically in the event of assignment.
The Transfer Agency Agreement provides that the Fund shall pay to INVESCO
a fee of ^ $20.00 per shareholder account and omnibus account participant per
<PAGE>
year. This fee is paid monthly at 1/12 of the annual fee and is based upon
the actual number of shareholder accounts or omnibus account participants in
existence at any time during each month. For the fiscal years ended June 30,
1996, 1995^ and 1994, ^ the Fund paid INVESCO transfer agency fees of
$5,698,274, $5,386,968^ and $4,168,479, ^ respectively.
Officers and Directors of the Fund. The overall direction and supervision
of the Fund is the responsibility of the board of directors, which has the
primary duty of seeing that the Fund's general investment policies and programs
of the Fund are carried out and that the Fund's portfolio is properly
administered. The officers of the Fund, all of whom are officers and employees
of and paid by INVESCO, are responsible for the day-to-day administration of the
Fund. The investment adviser for the Fund has the primary responsibility for
making investment decisions on behalf of the Fund. These investment decisions
are reviewed by the investment committee of INVESCO.
All of the officers and directors of the Fund hold comparable positions
with INVESCO Diversified Funds, Inc., INVESCO Dynamics Fund, Inc., INVESCO
Emerging Opportunity Funds, Inc., INVESCO Growth Fund, Inc., INVESCO Income ^
Funds, 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., and INVESCO
Variable Investment Funds, Inc. ^ All of the directors of the Fund ^ also serve
as trustees of INVESCO Value Trust. In addition, all of the directors of the
Fund also are 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 ^. All of the officers of the Fund also hold
comparable positions with INVESCO Value Trust. Set forth below is information
with respect to each of the Fund's officers and directors. Unless otherwise
indicated, the address of the directors and officers is Post Office Box 173706,
Denver, Colorado 80217-3706. Their affiliations represent their principal
occupations during the past five years.
CHARLES W. BRADY,*+ Chairman of the Board. Chief Executive Officer and
Director of INVESCO PLC, London, England, and of various subsidiaries thereof;
various subsidiaries thereof; Chairman of the Board of ^ INVESCO
Advisor Funds, Inc., INVESCO Treasurer's Series Trust, and The
Global Health Sciences Fund. Address: 1315 Peachtree Street,
NE, Atlanta, Georgia. Born: May 11, 1935.
FRED A. DEERING,+# Vice Chairman of the Board. Vice Chairman of ^ INVESCO
Advisor Funds, Inc. and INVESCO Treasurer's Series Trust. Trustee of The Global
Health Sciences Fund. Formerly, Chairman of the Executive Committee and^
Chairman of the Board of Security Life of Denver Insurance Company, Denver,
Colorado; Chairman of ^ ING America Life Insurance Co., Urbaine Life Insurance
Company and Midwestern United Life Insurance Company^. Address: Security Life
Center, 1290 Broadway, Denver, Colorado. Born: January 12, 1928.
DAN J. HESSER,+* President and Director. Chairman of the Board, President,
and Chief Executive Officer of INVESCO Funds Group, Inc.^; Director of INVESCO
Trust Company. Trustee of The Global Health Sciences Fund. Born: December 27,
1939.
<PAGE>
VICTOR L. ANDREWS,** Director. ^ Professor Emeritus, Chairman Emeritus and
Chairman of the CFO Roundtable of the Department of Finance at Georgia State
University, Atlanta, Georgia^; President, Andrews Financial Associates, Inc.
(consulting firm); formerly, member 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. and The Sheffield Funds,
Inc. Address: ^ 4625 Jettridge Drive, Atlanta, Georgia. Born: June 23, 1930.
BOB R. BAKER,+** Director. President and Chief Executive Officer of AMC
Cancer Research Center, Denver, Colorado, since January 1989; until mid-December
1988, Vice Chairman of the Board of First Columbia Financial Corporation (a
financial institution), Englewood, Colorado. Formerly, Chairman of the Board and
Chief Executive Officer of First Columbia Financial Corporation. Address: 1775
Sherman Street, #1000, Denver, Colorado. Born: August 7, 1936.
^
LAWRENCE H. BUDNER,# Director. Trust Consultant; prior to June 30, 1987,
Senior Vice President and Senior Trust Officer of InterFirst Bank, Dallas,
Texas. Address: 7608 Glen Albens Circle, Dallas, Texas. Born: July 25, 1930.
DANIEL D. CHABRIS,+# Director. Financial Consultant; Assistant Treasurer of
Colt Industries Inc., New York, New York, from 1966 to 1988. Address: 15
Sterling Road, Armonk, New York. Born: August 1, 1923.
A. D. FRAZIER, JR.,*,** Director. Chief Operating Officer of the Atlanta
Committee for the Olympic Games. From 1982 to 1991, Mr. Frazier was employed in
various capacities by First Chicago Bank, most recently as Executive Vice
President of the North American Banking Group. Trustee of The Global Health
Sciences Fund. Director of Magellan Health Services, Inc. and of Charter Medical
Corp. Address: 250 Williams Street, Suite 6000, Atlanta, Georgia 30301. Born:
June ^ 23, 1944.
HUBERT L. HARRIS, JR.,* Director, Chairman (since May 1996) and President
(January 1990 to April 1996) of INVESCO Services, Inc. Director of INVESCO PLC
and Chief Financial Officer of INVESCO Individual Services Group. Member of the
Executive Committee of the Alumni Board of Trustees of Georgia Institute of
Technology. Address: 1315 Peachtree Street, N.E., Atlanta, Georgia. Born: July
15, 1943.
KENNETH T. KING,** Director. Formerly, Chairman of the Board of The Capitol
Life Insurance Company, Providence Washington Insurance Company, and Director of
numerous subsidiaries thereof in the U.S. Formerly, Chairman of the Board of The
Providence Capitol Companies in the United Kingdom and Guernsey. Chairman of the
Board of the Symbion Corporation (a high technology company) until 1987.
Address: 4080 North Circulo Manzanillo, Tucson, Arizona. Born: November 16,
1925.
JOHN W. MCINTYRE,# Director. Retired. Formerly, Vice
Chairman of the Board of Directors of the Citizens and Southern
Corporation and Chairman of the Board and Chief Executive Officer
<PAGE>
of the Citizens and Southern Georgia Corporation and Citizens and
Southern National Bank. Director of Golden Poultry Co., Inc.
Trustee of The Global Health Sciences Fund and Gables Residential
Trust. Address: Seven Piedmont Center, Suite 100, Atlanta, Georgia
30305. Born: September 14, 1930.
^
GLEN A. PAYNE, Secretary. Senior Vice President, General Counsel and
Secretary of INVESCO Funds Group, Inc. and INVESCO Trust Company; formerly,
employee of a U.S. regulatory agency, Washington, D.C., (June 1973 through May
1989). Born: September 25, 1947.
RONALD L. GROOMS, Treasurer. Senior Vice President and Treasurer of INVESCO
Funds Group, Inc. and INVESCO Trust Company since January 1988. Born: October 1,
1946.
WILLIAM J. GALVIN, JR., Assistant Secretary. Senior Vice President of
INVESCO Funds Group, Inc. and Trust Officer of INVESCO Trust Company^. Formerly,
Vice President of 440 Financial Group from June 1990 to August 1992; Assistant
Vice President of Putnam Companies from November 1986 to June 1990. Born: August
21, 1956.
ALAN I. WATSON, Assistant Secretary. Vice President of INVESCO Funds Group,
Inc. and Trust Officer of INVESCO Trust Company. Born: September 14, 1941.
JUDY P. WIESE, Assistant Treasurer. Vice President of INVESCO Funds Group,
Inc. and Trust Officer of INVESCO Trust Company. Born: February 3, 1948.
#Member of the audit committee of the Fund.
+Member of the executive committee of the Fund. On occasion, the executive
committee acts upon the current and ordinary business of the Fund between
meetings of the board of directors. Except for certain powers which, under
applicable law, may only be exercised by the full board of directors, the
executive committee may exercise all powers and authority of the board of
directors in the management of the business of the Fund. All decisions are
subsequently submitted for ratification by the board of directors.
*These directors are "interested persons" of the Fund as defined in the
Investment Company Act of 1940.
**Member of the management liaison committee of the Fund.
As of August 27, ^ 1996, officers and directors of the Fund, as a group,
beneficially owned less than 1% of the Fund's outstanding shares.
Director Compensation
The following table sets forth, for the fiscal year ended June 30, ^ 1996:
the compensation paid by the Fund to its eight independent directors for
services rendered in their capacities as directors of the Fund; the benefits
accrued as Fund expenses with respect to the Defined Benefit Deferred
Compensation Plan discussed below; and the estimated annual benefits to be
received by these directors upon retirement as a result of their service to the
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Fund. In addition, the table sets forth the total compensation paid by all
of the mutual funds distributed by INVESCO Funds Group, Inc. (including the
Fund), ^ INVESCO Advisor Funds, Inc., INVESCO Treasurer's Series Trust and The
Global Health Sciences Fund (collectively, the "INVESCO 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 Complex.
Total
Compensa-
Benefits Estimated tion From
Aggregate Accrued As Annual INVESCO
Compensa- Part of Benefits Complex
tion From Fund Upon Paid To
Fund1 Expenses2 Retirement3 Directors1
Fred A.Deering, ^ $12,032 $ 7,484 $ 6,228 $87,350
Vice Chairman of
the Board
Victor L. Andrews ^ 10,193 6,591 6,867 68,000
Bob R. Baker ^ 10,915 6,797 9,202 73,000
Lawrence H. Budner ^ 9,667 7,072 6,867 68,350
Daniel D. Chabris ^ 11,037 8,071 4,880 73,350
A. D. Frazier, ^ Jr.4,5 8,106 0 0 ^ 63,500
Kenneth T. King ^ 10,199 7,772 5,649 70,000
John W. McIntyre4 ^ 9,331 0 0 67,850
^ Total $81,480 $43,787 $39,693 $571,400
% of Net Assets ^ 0.0020%6 0.0010%6 0.0043%7
1The vice chairman of the board, the chairmen of the audit, management
liaison and compensation committees, and the members of the executive and
valuation committees each receive compensation for serving in such capacities in
addition to the compensation paid to all independent directors.
2Represents benefits accrued with respect to the Defined Benefit Deferred
Compensation Plan discussed below, and not compensation deferred at the election
of the directors.
3These figures represent the Fund's share of the estimated annual benefits
payable by the INVESCO Complex (excluding the Global Health Sciences Fund 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 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
Complex, and for other reasons during the period in which retirement benefits
are
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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 Complex for the
minimum five-year period required to be eligible to participate in the Defined
Benefit Deferred Compensation Plan.
4Messrs. Frazier and McIntyre began serving as directors of the Fund on
April 19, 1995.
5Because of the possibility that A. D. Frazier, Jr. may become employed by
a company affiliated with INVESCO at some point in the future, he was deemed to
be an "interested person" of the Fund and of the other funds in the INVESCO
Complex effective May 1, 1996. Until such time as Mr. Frazier actually becomes
employed by an INVESCO-affiliated company, however, he will continue to receive
the same director's fees and other compensation as the Fund's independent
directors.
6Total ^ as a percentage of the Fund's net assets as of June 30, ^ 1996.
^ 7Total as a percentage of the net assets of the INVESCO Complex as of
December 31, ^ 1995.
Messrs. ^ Brady, Harris and Hesser, ^ as "interested persons" of the Fund
and of the other funds in the INVESCO Complex, receive compensation as officers
or employees of INVESCO or its affiliated companies, and do not receive any
director's fees or other compensation from the Fund or other funds in the
INVESCO Complex for their services as directors.
The boards of directors/trustees of the mutual funds managed by INVESCO, ^
INVESCO Advisor Funds, Inc. and INVESCO Treasurer's Series Trust have adopted a
Defined Benefit Deferred Compensation Plan for the non-interested directors and
trustees of the funds. Under this plan, each director or trustee who is not an
interested person of the funds (as defined in the 1940 Act) and who has served
for at least five years (a "qualified director") is entitled to receive, upon
retiring from the boards at the retirement age of 72 (or the retirement age of
73 to 74, if the retirement date is extended by the boards for one or two years,
but less than three years) continuation of payment for one year (the "first year
retirement benefit") of the annual basic retainer payable by the funds to the
qualified director at the time of his retirement (the "basic retainer").
Commencing with any such director's second year of retirement, and commencing
with the first year of retirement of a director whose retirement has been
extended by the board for three years, a qualified director shall receive
quarterly payments at an annual rate equal to 25% of the basic retainer. These
payments will continue for the remainder of the qualified director's life or ten
years, whichever is longer (the "reduced retainer payments"). If a qualified
director dies or becomes disabled after age 72 and before age 74 while still a
director of the funds, the first year retirement benefit and the reduced
retainer payments will be made to him or to his beneficiary or estate. If a
qualified director becomes disabled or dies either prior to age 72 or during
his/her 74th year while still a director of the funds, the director will not be
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entitled to receive the first year retirement benefit; however, the reduced
retainer payments will be made to his beneficiary or estate. The plan is
administered by a committee of three directors who are also participants in the
plan and one director who is not a plan participant. The cost of the plan will
be allocated among the INVESCO, ^ INVESCO Advisor and Treasurer's Series funds
in a manner determined to be fair and equitable by the committee. The Fund is
not making any payments to directors under the plan as of the date of this
Statement of Additional Information. The Fund has no stock options or other
pension or retirement plans for management or other personnel and pays no salary
or compensation to any of its officers.
The Fund has an audit committee comprised of four of the directors who are
not interested persons of the Fund. The committee meets periodically with the
Fund's independent accountants and officers to review accounting principles used
by the Fund, the adequacy of internal controls, the responsibilities and fees of
the independent accountants, and other matters.
The Fund also has a management liaison committee which meets quarterly
with various management personnel of INVESCO in order (a) to facilitate better
understanding of management and operations of the Fund, and (b) to review legal
and operational matters which have been assigned to the committee by the board
of directors, in furtherance of the board of directors' overall duty of
supervision.
HOW SHARES CAN BE PURCHASED
The Fund's shares are sold on a continuous basis at the net asset value
per share next calculated after receipt of a purchase order in good form. The
net asset value per share is computed once each day that the New York Stock
Exchange is open as of the close of regular trading on that Exchange, but may
also be computed at other times. See "How Shares Are Valued." INVESCO acts as
the Fund's Distributor under a distribution agreement with the Fund under which
it receives no compensation and bears all expenses, including the cost of
printing and distributing prospectuses, incident to marketing of the Fund's
shares, except for such distribution expenses which are paid out of Fund assets
under the Fund's Plan of Distribution which has been adopted by the Fund
pursuant to Rule 12b-1 under the 1940 Act.
Distribution Plan. As discussed under "How to Buy Shares-- Distribution
Expenses" in the Prospectus, the Fund has adopted a Plan and Agreement of
Distribution (the "Plan") pursuant to Rule 12b-1 under the 1940 Act, which was
implemented on November 1, 1990. The Plan provides that the Fund may make
monthly payments to INVESCO of amounts computed at an annual rate no greater
than 0.25% of the Fund's average net assets during any 12-month period to
reimburse INVESCO for expenses incurred in connection with the distribution of
the Fund's shares to investors. For the fiscal year ended June 30, ^ 1996, the
Fund made payments to INVESCO under the Plan in the amount of ^ $7,068,200. In
addition, as of June 30, ^ 1996, $607,497 of additional distribution expenses
had been incurred for the Fund, subject to payment upon approval of the Fund's
directors, which approval was obtained on August 14, 1996. As noted in the
section of the Fund's Prospectus entitled "How to Buy Shares--Distribution
Expenses," one type of reimbursable expenditure is the payment of compensation
<PAGE>
to securities companies, and other financial institutions and
organizations, which may include INVESCO-affiliated companies, in order to
obtain various distribution-related and/or administrative services for the Fund.
The Fund is authorized by the Plan to use its assets to finance the payments
made to obtain those services. Payments will be made by INVESCO to
broker-dealers who sell shares of a Fund and may be made to banks, savings and
loan associations and other depository institutions. Although the Glass-Steagall
Act limits the ability of certain banks to act as underwriters of mutual fund
shares, the Fund does not believe that these limitations would affect the
ability of such banks to enter into arrangements with INVESCO, but can give no
assurance in this regard. However, to the extent it is determined otherwise in
the future, arrangements with banks might have to be modified or terminated,
and, in that case, the size of the Fund possibly could decrease to the extent
that the banks would no longer invest customer assets in the Fund. Neither the
Fund nor its investment adviser will give any preference to banks or other
depository institutions which enter into such arrangements when selecting
investments to be made by the Fund.
For the fiscal year ended June 30, ^ 1996, allocation of 12b-1 amounts
paid by the Fund for the following categories of expenses were: advertising--^
$1,549,444; sales literature, printing, and postage--^ $632,760; direct mail--^
$216,460; public relations/promotion--^ $363,565; compensation to securities
dealers and other organizations--^ $3,048,296; marketing personnel--^
$1,257,675.
The nature and scope of services which are provided by securities dealers
and other organizations may vary by dealer but include, among other things,
processing new stockholder account applications, preparing and transmitting to
the Fund's Transfer Agent computer-processable tapes of all Fund transactions by
customers, serving as the primary source of information to customers in
answering questions concerning the Fund, and assisting in other customer
transactions with the Fund.
The Plan was approved on April 17, 1990, at a meeting called for such
purpose by a majority of the directors of the Fund, including a majority of the
directors who neither are "interested persons" of the Fund nor have any
financial interest in the operation of the Plan ("12b-1 directors"), and was
also approved by holders of a majority of the outstanding shares of the Fund on
June 29, 1990. ^ The Plan has been continued by action of the board of directors
of the Fund, including a majority of the 12b-1 directors, ^ until April 19, ^
1997.
The Plan provides that it shall continue in effect with respect to the
Fund for so long as such continuance is approved at least annually by the vote
of the board of directors of the Fund cast in person at a meeting called for the
purpose of voting on such continuance. The Plan can also be terminated at any
time with respect to the Fund, without penalty, if a majority of the 12b-1
directors, or shareholders of the Fund, vote to terminate the Plan. The Fund
may, in its absolute discretion, suspend, discontinue or limit the offering of
its shares at any time. In determining whether any such action should be taken,
the board of directors intends to consider all relevant factors including,
without limitation, the size of the Fund, the investment climate for the Fund,
<PAGE>
general market conditions, and the volume of sales and redemptions of Fund
shares. The Plan may continue in effect and payments may be made under the Plan
following any such temporary suspension or limitation of the offering of Fund
shares; however, the Fund is not contractually obligated to continue the Plan
for any particular period of time. Suspension of the offering of Fund shares
would not, of course, affect a shareholder's ability to redeem his shares. So
long as the Plan is in effect, the selection and nomination of persons to serve
as independent directors of the Fund shall be committed to the independent
directors then in office at the time of such selection or nomination. The Plan
may not be amended to increase materially the amount of the Fund's payments
thereunder without approval of the shareholders of the Fund, and all material
amendments to the Plan must be approved by the board of directors of the Fund,
including a majority of the 12b-1 directors. Under the agreement implementing
the Plan, INVESCO or the Fund, the latter by vote of a majority of the 12b-1
directors, or of the holders of a majority of the Fund's outstanding voting
securities, may terminate such agreement without penalty upon thirty days'
written notice to the other party. No further payments will be made by the Fund
under the Plan in the event of its termination.
To the extent that the Plan constitutes a plan of distribution adopted
pursuant to Rule 12b-1 under the 1940 Act, it shall remain in effect as such, so
as to authorize the use of Fund assets in the amounts and for the purposes set
forth therein, notwithstanding the occurrence of an assignment, as defined by
the 1940 Act, and rules thereunder. To the extent it constitutes an agreement
pursuant to a plan, the Fund's obligation to make payments to INVESCO shall
terminate automatically, in the event of such "assignment," in which event the
Fund may continue to make payments pursuant to the Plan to INVESCO or another
organization only upon the approval of new arrangements, which may or may not be
with INVESCO, regarding the use of the amounts authorized to be paid by it under
the Plan, by the directors, including a majority of the 12b-1 directors, by a
vote cast in person at a meeting called for such purpose.
Information regarding the services rendered under the Plan and the amounts
paid therefor by the Fund are provided to, and reviewed by, the directors on a
quarterly basis. In the quarterly review, the directors shall determine whether,
and to what extent, INVESCO will be reimbursed for expenditures which it has
made that are reimbursable under the Fund's Rule 12b-1 Plan. On an annual basis,
the directors shall consider the continued appropriateness of the Plan and the
level of compensation provided therein.
The only directors or interested persons, as that term is defined in
Section 2(a)(19) of the 1940 Act, of the Fund who have a direct or indirect
financial interest in the operation of the Plan are the officers and directors
of the Fund listed herein under the section entitled "The Fund and Its
Management-Officers and Directors of the Fund" who are also officers either of
INVESCO or companies affiliated with INVESCO. The benefits which the Fund
believes will be reasonably likely to flow to it and its shareholders under the
Plan include the following:
(1) Enhanced marketing efforts, if successful, should result
in an increase in net assets through the sale of
<PAGE>
additional shares and afford greater resources with which
to pursue the investment objectives of the Fund;
(2) The sale of additional shares reduces the likelihood that
redemption of shares will require the liquidation of Fund
securities in amounts and at times that are
disadvantageous for investment purposes;
(3) The positive effect which increased Fund assets will have on its
revenues could allow INVESCO:
(a) To have greater resources to make the financial commitments
necessary to improve the quality and level of Fund and
shareholder services (in both systems and personnel),
(b) To increase the number and type of mutual funds available to
investors from INVESCO (and support them in their infancy),
and thereby expand the investment choices available to all
shareholders, and
(c) To acquire and retain talented employees who desire
to be associated with a growing organization; and
(4) Increased Fund assets may result in reducing each investor's share
of certain expenses through economies of scale (e.g. exceeding
established breakpoints in the advisory fee schedule and allocating
fixed expenses over a larger asset base), thereby partially
offsetting the costs of the Plan.
HOW SHARES ARE VALUED
As described in the section of the Fund's Prospectus entitled "Fund Price
and Performance" the net asset value of shares of the Fund is computed once each
day that the New York Stock Exchange is open as of the close of regular trading
on that Exchange (generally 4:00 p.m., New York time) and applies to purchase
and redemption orders received prior to that time. Net asset value per share is
also computed on any other day on which there is a sufficient degree of trading
in the securities held by the Fund that the current net asset value per share
might be materially affected by changes in the value of the securities held, but
only if on such day the Fund receives a request to purchase or redeem shares.
Net asset value per share is not calculated on days the New York Stock Exchange
is closed, such as federal holidays, including New Year's Day, Presidents' Day,
Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving, and
Christmas.
The net asset value per share of the Fund is calculated by dividing the
value of all securities held by the Fund and its other assets (including
dividends and interest accrued but not collected), less the Fund's liabilities
(including accrued expenses), by the number of outstanding shares of the Fund.
Securities traded on national securities exchanges, the NASDAQ National Market
System, the NASDAQ Small Cap market and foreign markets are valued at their last
sale prices on the exchanges or markets where such securities are primarily
traded. Securities traded in the over-the-counter markets for which last sale
<PAGE>
prices are not available, and listed securities for which no sales were
reported on a particular date, are valued at their highest closing bid prices
(or, for debt securities, yield equivalents thereof) obtained from one or more
dealers making markets for such securities. If market quotations are not readily
available, securities or other assets will be valued at their fair value as
determined in good faith by the Fund's board of directors or pursuant to
procedures adopted by the board of directors. The above procedures may include
the use of valuations furnished by a pricing service which employs a matrix to
determine valuations for normal institutional-size trading units of debt
securities. Prior to a pricing service, the Fund's board of directors reviews
the methods used by such service to assure itself that securities will be valued
at their fair values. The Fund's board of directors also periodically monitors
the methods used by such pricing services. Debt securities with remaining
maturities of 60 days or less at the time of purchase normally are valued at
amortized cost.
The values of securities held by the Fund and other assets used in
computing net asset value generally are determined as of the time regular
trading in such securities or assets is completed each day. Since regular
trading in most foreign securities markets is completed simultaneously with, or
prior to, the close of regular trading on the New York Stock Exchange, closing
prices for foreign securities usually are available for purposes of computing
the Fund's net asset value. However, in the event that the closing price of a
foreign security is not available in time to calculate ^ the Fund's net asset
value on a particular day, the Fund's board of directors has authorized the use
of the market price for the security obtained from an approved pricing service
at an established time during the day which may be prior to the close of regular
trading in the security.
FUND PERFORMANCE
As discussed in the section of the Fund's Prospectus entitled "Fund Price
and Performance," the Fund advertises its yield and total return performance. In
calculating yield quotations for the Fund, interest earned is determined by
computing yield to maturity (or yield to call, if applicable) of each obligation
held by the Fund, based upon the market value of each obligation (including
actual accrued interest) at the close of business on the last business day of
each month, or, with respect to an obligation purchased during the month, the
purchase price plus accrued interest. The resultant yield to maturity is divided
by 360 and multiplied by the market value of the obligation (including actual
accrued interest), and the result is multiplied by the number of days in the
subsequent month that the obligation is in the Fund (assuming that each month
has 30 days). Dividends received held by the Fund are recognized, for purposes
of yield calculations, on a daily accrual basis. The Fund's yield for the 30
days ended June 30, ^ 1996, was ^ 3.19%.
Average annual total return performance for the one-, five- and ten-year
periods ended June 30, ^ 1996, was ^ 16.54%, 13.33% and ^ 13.09%, respectively.
Average annual total return performance for each of the periods indicated was
computed by finding the average annual compounded rates of return that would
equate the initial amount invested to the ending redeemable value, according to
the following formula:
<PAGE>
P(1 + T)n = ERV
where: P = initial payment of $1000
T = average annual total return
n = number of years
ERV = ending redeemable value of initial payment
The average annual total return performance figures shown above were
determined by solving the above formula for "T" for each time period.
In conjunction with performance reports, comparative data between the
Fund's performance for a given period and other types of investment vehicles,
including certificates of deposit, may be provided to prospective investors and
shareholders.
In conjunction with performance reports and/or analyses of shareholder
service for the Fund, comparative data between the Fund's performance for a
given period and recognized indices of investment results for the same period,
and/or assessments of the quality of shareholder service, may be provided to
shareholders. Such indices include indices provided by Dow Jones & Company,
Standard & Poor's, Lipper Analytical Services, Inc., Lehman Brothers, National
Association of Securities Dealers Automated Quotations, Frank Russell Company,
Value Line Investment Survey, the American Stock Exchange, Morgan Stanley
Capital International, Wilshire Associates, the Financial Times Stock Exchange,
the New York Stock Exchange, the Nikkei Stock Average and Deutcher Aktienindex,
all of which are unmanaged market indicators. In addition, rankings, ratings,
and comparisons of investment performance and/or assessments of the quality of
shareholder service made by independent sources may be used in advertisements,
sales literature or shareholder reports, including reprints of, or selections
from, editorials or articles about the Fund. These sources utilize information
compiled (i) internally; (ii) by Lipper Analytical Services, Inc.; or (iii) by
other recognized analytical services. The Lipper Analytical Services, Inc.
mutual fund rankings and comparisons which may be used by the Fund in
performance reports will be drawn from the "Equity Income Funds" mutual fund
grouping, in addition to the broad-based Lipper general fund groupings. Sources
for Fund performance information and articles about the Fund include, but are
not limited to, the following:
American Association of Individual Investors' Journal
Banxquote
Barron's
Business Week
CDA Investment Technologies
CNBC
CNN
Consumer Digest
Financial Times
Financial World
Forbes
Fortune
Ibbotson Associates, Inc.
Institutional Investor
Investment Company Data, Inc.
Investor's Business Daily
<PAGE>
Kiplinger's Personal Finance
Lipper Analytical Services, Inc.'s Mutual Fund Performance
Analysis
Money
Morningstar
Mutual Fund Forecaster
No-Load Analyst
No-Load Fund X
Performance Analysis
Personal Investor
Smart Money
The New York Times
The No-Load Fund Investor
U.S. News and World Report
United Mutual Fund Selector
USA Today
Wall Street Journal
Wiesenberger Investment Companies Services
Working Woman
Worth
SERVICES PROVIDED BY THE FUND
Periodic Withdrawal Plan. As described in the section of the Fund's
Prospectus entitled "How to Sell Shares," the Fund offers a Periodic Withdrawal
Plan. All dividends and distributions on shares owned by shareholders
participating in this Plan are reinvested in additional shares. Since withdrawal
payments represent the proceeds from sales of shares, the amount of
shareholders' investments in the Fund will be reduced to the extent that
withdrawal payments exceed dividends and other distributions paid and
reinvested. Any gain or loss on such redemptions must be reported for tax
purposes. In each case, shares will be redeemed at the close of business on or
about the 20th day of each month preceding payment, and payments will be mailed
within five business days thereafter.
The Periodic Withdrawal Plan involves the use of principal and is not a
guaranteed annuity. Payments under such Plan do not represent income or a return
on investment.
A Periodic Withdrawal Plan may be terminated at any time by sending a
written request to INVESCO. Upon termination, all future dividends and capital
gain distributions will be reinvested in additional shares unless a shareholder
requests otherwise.
Exchange Privilege. As discussed in the section of the Prospectus entitled
"How to Buy Shares--Exchange Privilege," the Fund offers shareholders the
privilege of exchanging shares of the Fund for shares of certain other mutual
funds advised by INVESCO. Exchange requests may be made either by telephone or
by written request to INVESCO Funds Group, Inc. using the telephone number or
address on the cover of this Statement of Additional Information. Exchanges made
by telephone must be in an amount of at least $250, if the exchange is being
made into an existing account of one of the INVESCO funds. All exchanges that
establish a new account must meet the fund's applicable minimum initial
investment requirements. Written exchange requests into an existing account have
no minimum requirements other than the fund's applicable minimum subsequent
investment requirements. Any gain or loss realized on an exchange is recognized
<PAGE>
for federal income tax purposes. This privilege is not an option or right
to purchase securities, but is a revocable privilege permitted under the present
policies of each of the funds and is not available in any state or other
jurisdiction where the shares of the mutual fund into which transfer is to be
made are not qualified for sale, or when the net asset value of the shares
presented for exchange is less than the minimum dollar purchase required by the
appropriate prospectus.
TAX-DEFERRED RETIREMENT PLANS
As described in the section of the Prospectus entitled "Fund Services,"
shares of the Fund may be purchased as the investment medium for various
tax-deferred retirement plans. Persons who request information regarding these
plans from INVESCO will be provided with prototype documents and other
supporting information regarding the type of plan requested. Each of these plans
involves a long-term commitment of assets and is subject to possible regulatory
penalties for excess contributions, premature distributions or for insufficient
distributions after age 70-1/2. The legal and tax implications may vary
according to the circumstances of the individual investor. Therefore, the
investor is urged to consult with an attorney or tax adviser prior to the
establishment of such a plan.
HOW TO REDEEM SHARES
Normally, payments for shares redeemed will be mailed within seven (7)
days following receipt of the required documents as described in the section of
the Prospectus entitled "How to Sell Shares." The right of redemption may be
suspended and payment postponed when: (a) the New York Stock Exchange is closed
for other than customary weekends and holidays; (b) trading on that exchange is
restricted; (c) an emergency exists as a result of which disposal by the Fund of
securities owned by it is not reasonably practicable or it is not reasonably
practicable for the Fund fairly to determine the value of its net assets; or (d)
the SEC by order so permits.
It is possible that in the future conditions may exist which would, in the
opinion of the Fund's investment adviser, make it undesirable for the Fund to
pay for redeemed shares in cash. In such cases, the investment adviser may
authorize payment to be made in portfolio securities or other property of the
Fund. However, the Fund is obligated under the 1940 Act to redeem for cash all
shares of the Fund presented for redemption by any one shareholder having a
value up to $250,000 (or 1% of the Fund's net assets if that is less) in any
90-day period. Securities delivered in payment of redemptions are selected
entirely by the investment adviser based on what is in the best interests of the
Fund and its shareholders, and are valued at the value assigned to them in
computing the Fund's net asset value per share. Shareholders receiving such
securities are likely to incur brokerage costs on their subsequent sales of the
securities.
DIVIDENDS, CAPITAL GAIN DISTRIBUTIONS AND TAXES
The Fund intends to continue to conduct its business and satisfy the
applicable diversification of assets and source of income requirements to
qualify as a regulated investment company under Subchapter M of the Internal
<PAGE>
Revenue Code of 1986, as amended. The Fund so qualified in the fiscal year
ended June 30, ^ 1996 and intends to continue to qualify during its current
fiscal year. As a result, it is anticipated that the Fund will pay no federal
income or excise taxes and will be accorded conduit or "pass through" treatment
for federal income tax purposes.
Dividends paid by the Fund from net investment income as well as
distributions of net realized short-term capital gains are, for federal income
tax purposes, taxable as ordinary income to shareholders. After the end of each
calendar year, the Fund sends shareholders information regarding the amount and
character of dividends paid in the year, including the dividends eligible for
the dividends-received deduction for corporations. Such amounts will be limited
to the aggregate amount of qualifying dividends which the Fund derives from its
portfolio investments.
Distributions by the Fund of net capital gains (the excess of long-term
capital gain over net short-term capital loss) are, for federal income tax
purposes, taxable to the shareholder as long-term capital gains regardless of
how long a shareholder has held shares of the Fund. Such distributions are
identified as such and are not eligible for the dividends-received deduction.
All dividends and other distributions are regarded as taxable to the
investor, whether or not such dividends and distributions are reinvested in
additional shares. If the net asset value of Fund shares should be reduced below
a shareholder's cost as a result of a distribution, such distribution would be
taxable to the shareholder although a portion would be, in effect, a return of
invested capital. The net asset value of shares of the Fund reflects accrued net
investment income and undistributed realized capital gains; therefore, when a
distribution is made, the net asset value is reduced by the amount of the
distribution. If shares are purchased shortly before a distribution, the full
price for the shares will be paid and some portion of the price may then be
returned to the shareholder as a taxable dividend or capital gain. However, the
net asset value per share will be reduced by the amount of the distribution,
which would reduce any gain (or increase any loss) for tax purposes on any
subsequent redemption of shares.
INVESCO may provide Fund shareholders with information concerning the
average cost basis of their shares in order to help them prepare their tax
returns. This information is intended as a convenience to shareholders, and will
not be reported to the Internal Revenue Service (the "IRS"). The IRS permits the
use of several methods to determine the cost basis of mutual fund shares. The
cost basis information provided by INVESCO will be computed using the
single-category average cost method, although neither INVESCO nor the Fund
recommends any particular method of determining cost basis. Other methods may
result in different tax consequences. If a shareholder has reported gains or
losses for a Fund in past years, the shareholder must continue to use the method
previously used, unless the shareholder applies to the IRS for permission to
change methods.
If the Fund's shares are sold at a loss after being held for six months or
less, the loss will be treated as long-term, instead of short-ter, capital loss
to the extent of any capital gain distributions received on those shares.
<PAGE>
The Fund will be subject to a nondeductible 4% excise tax to the extent it
fails to distribute by the end of any calendar year substantially all of its
ordinary income for that year and capital gain net income for the one-year
period ending on October 31 of that year, plus certain other amounts.
Dividends and interest received by the Fund may be subject to income,
withholding or other taxes imposed by foreign countries and U.S. possessions
that would reduce the yield on its securities. Tax conventions between certain
countries and the United States may reduce or eliminate these foreign taxes,
however, and many foreign countries do not impose taxes on capital gains in
respect of investments by foreign investors. If more than 50% of the value of
the Fund's total assets at the close of any taxable year consists of securities
of foreign corporations, the Fund will be eligible to, and may, file an election
with the Internal Revenue Service that will enable its shareholders, in effect,
to receive the benefit of the foreign tax credit with respect to any foreign and
U.S. possessions income taxes paid by it. The Fund will report to its
shareholders shortly after each taxable year their respective shares of the
Fund's income from sources within, and taxes paid to, foreign countries and U.S.
possessions if it makes this election.
The Fund may invest in the stock of "passive foreign investment companies"
^("PFICs"). A PFIC is a foreign corporation that, in general, meets either of
the following tests: (1) at least 75% of its gross income is passive or (2) an
average of at least 50% of its assets produce, or are held for the production
of, passive income. Under certain circumstances, the Fund will be subject to
federal income tax on a portion of any "excess distribution" received on the
stock of a PFIC or of any gain on disposition of the stock (collectively "PFIC
income"), plus interest thereon, even if the Fund distributes the PFIC income as
a taxable dividend to its shareholders. The balance of the PFIC income will be
included in the Fund's investment company taxable income and, accordingly, will
not be taxable to it to the extent that income is distributed to its
shareholders.
Shareholders should consult their own tax advisers regarding specific
questions as to federal, state and local taxes. Dividends and capital gain
distributions will generally be subject to applicable state and local taxes.
Qualification as a regulated investment company under the Internal Revenue Code
of 1986, as amended for income tax purposes does not entail government
supervision of management or investment policies.
INVESTMENT PRACTICES
Portfolio Turnover. There are no fixed limitations regarding
the Fund's portfolio turnover. Since the Fund started business,
the rate of portfolio turnover has fluctuated under constantly
changing economic conditions and market circumstances. Portfolio
turnover rates for the fiscal years ended June 30, 1996, 1995^ and
1994^ were 63%, 54%^ and 56%, ^ respectively. Securities initially
satisfying the basic policies and objectives of the Fund may be
disposed of when they are no longer suitable. Brokerage costs to
the Fund are commensurate with the rate of portfolio activity. In
<PAGE>
computing the portfolio turnover rate, all investments with maturities or
expiration dates at the time of acquisition of one year or less were excluded.
Subject to this exclusion, the turnover rate is calculated by dividing (A) the
lesser of purchases or sales of portfolio securities for the fiscal year by (B)
the monthly average of the value of portfolio securities owned by the Fund
during the fiscal year.
Placement of Portfolio Brokerage. Either INVESCO, as the Fund's investment
adviser, or INVESCO Trust, as the Fund's sub-adviser, places orders for the
purchase and sale of securities with brokers and dealers based upon INVESCO's or
INVESCO Trust's evaluation of their financial responsibility subject to their
ability to effect transactions at the best available prices. INVESCO or INVESCO
Trust evaluates the overall reasonableness of brokerage commissions paid by
reviewing the quality of executions obtained on the Fund's portfolio
transactions, viewed in terms of the size of transactions, prevailing market
conditions in the security purchased or sold, and general economic and market
conditions. In seeking to ensure that the commissions charged the Fund are
consistent with prevailing and reasonable commissions or discounts, INVESCO or
INVESCO Trust also endeavor to monitor brokerage industry practices with regard
to the commissions or discounts charged by brokers and dealers on transactions
effected for other comparable institutional investors. While INVESCO or INVESCO
Trust seek reasonably competitive rates, the Fund does not necessarily pay the
lowest commission, spread, or discount available.
Consistent with the standard of seeking to obtain the best execution on
portfolio transactions, INVESCO or INVESCO Trust may select brokers that provide
research services to effect such transactions. Research services consist of
statistical and analytical reports relating to issuers, industries, securities
and economic factors and trends, which may be of assistance or value to INVESCO
or INVESCO Trust in making informed investment decisions. Research services
prepared and furnished by brokers through which the Fund effects securities
transactions may be used by INVESCO or INVESCO Trust in servicing all of its
accounts and not all such services may be used by INVESCO or INVESCO Trust in
connection with the Fund.
In recognition of the value of the above-described brokerage and research
services provided by certain brokers, INVESCO or INVESCO Trust, consistent with
the standard of seeking to obtain the best execution on portfolio transactions,
may place orders with such brokers for the execution of Fund transactions on
which the commissions or discounts are in excess of those which other brokers
might have charged for effecting the same transactions.
Portfolio transactions may be effected through qualified broker/dealers
who recommend the Fund to their clients, or who act as agent in the purchase of
the Fund's shares for their clients. When a number of brokers and dealers can
provide comparable best price and execution on a particular transaction, the
Fund's adviser or sub-adviser may consider the sale of Fund shares by a broker
or dealer in selecting among qualified broker/dealers.
Certain financial institutions (including brokers who may sell shares of
the Fund, or affiliates of such brokers) are paid a fee (the "Services Fee") for
<PAGE>
recordkeeping, shareholder communications and other services provided by
the brokers to investors purchasing shares of the Funds through no transaction
fee programs ("NTF Programs") offered by the financial institution or its
affiliated broker (an "NTF Program Sponsor"). The Services Fee is based on the
average daily value of the investments in each Fund made in the name of such NTF
Program Sponsor and held in omnibus accounts maintained on behalf of investors
participating in the NTF Program. With respect to certain NTF Programs, the
directors of the Fund have authorized the Fund to apply dollars generated from
the Fund's Plan and Agreement of Distribution pursuant to Rule 12b-1 under the
1940 Act (the "Plan") to pay the entire Services Fee, subject to the maximum
Rule 12b-1 fee permitted by the Plan. With respect to other NTF Programs, the
Fund's directors have authorized the Fund to pay transfer agency fees to INVESCO
based on the number of investors who have beneficial interests in the NTF
Program Sponsor's omnibus accounts in the Fund. INVESCO, in turn, pays these
transfer agency fees to the NTF Program Sponsor as a sub- transfer agency or
recordkeeping fee in payment of all or a portion of the Services Fee. In the
event that the sub-transfer agency or recordkeeping fee is insufficient to pay
all of the Services Fee with respect to these NTF Programs, the directors of the
Fund have authorized the Fund to apply dollars generated from the Plan to pay
the remainder of the Services Fee, subject to the maximum Rule 12b- 1 fee
permitted by the Plan. INVESCO itself pays the portion of the Fund's Services
Fee, if any, that exceeds the sum of the sub- transfer agency or recordkeeping
fee and Rule 12b-1 fee. The Fund's directors have further authorized INVESCO to
place a portion of the Fund's brokerage transactions with certain NTF Program
Sponsors or their affiliated brokers, if INVESCO reasonably believes that, in
effecting the Fund's transactions in portfolio securities, the broker is able to
provide the best execution of orders at the most favorable prices. A portion of
the commissions earned by such a broker from executing portfolio transactions on
behalf of the Fund may be credited by the NTF Program Sponsor against its
Services Fee. Such credit shall be applied first against any sub-transfer agency
or recordkeeping fee payable with respect to the Fund, and second against any
Rule 12b-1 fees used to pay a portion of the Services Fee, on a basis which has
resulted from negotiations between INVESCO and the NTF Program Sponsor.* Thus,
the Fund pays sub-transfer agency or recordkeeping fees to the NTF Program
Sponsor in payment of the Services Fee only to the extent that such fees are not
offset by the Fund's credits. In the event that the transfer agency fee paid by
the Fund to INVESCO with respect to investors who have beneficial interests in a
particular NTF Program Sponsor's omnibus accounts in the Fund exceeds the
Services Fee applicable to the Fund, after application of credits, INVESCO may
carry forward the excess and apply it to future Services Fees payable to that
NTF Program Sponsor with respect to the Fund. The amount of excess transfer
agency fees carried forward will be reviewed for possible adjustment by INVESCO
prior to each fiscal year-end of the Fund. The Fund's board of directors has
also authorized the Fund to pay to INVESCO the full Rule 12b-1 fees contemplated
by the Plan in reimbursement of expenses incurred by INVESCO in engaging in the
activities and providing the services on behalf of the Fund contemplated by the
Plan, subject to the maximum Rule 12b-1 fee permitted by the Plan,
notwithstanding that credits have been applied to reduce the portion of the
12b-1 fee that would have been used to reimburse INVESCO for payments to such
NTF Program Sponsor absent such credits.
<PAGE>
The aggregate dollar amounts of brokerage commissions paid by the Fund for
the fiscal years ended June 30, 1996, 1995^ and 1994^ were $4,668,404,
$5,098,664^ and $8,141,611, ^ respectively. For the fiscal year ended June 30, ^
1996, brokers providing research services received ^ $2,335,990 in commissions
on portfolio transactions effected for the Fund. The aggregate dollar amount of
such portfolio transactions was ^ $1,851,476,986 . As a result of selling shares
of the Fund, brokers received ^ $6,500 in commissions on portfolio transactions
effected for the Fund during the fiscal year ended June 30, ^ 1996.
^ At June 30, 1996, the Fund held securities of its regular brokers or
dealers, or their parents, as follows:
Value of Securities
Broker or Dealer at ^ 6/30/96
- ---------------- -------------------
Ford Motor Company $25,900,000
General Electric Company $69,200,000
American Express Company $22,312,500
Donaldson, Lufkin & Jenrette, Inc. $5,647,236
American Express Credit Corporation ^ $39,372,000
Chevron Oil Finance Company $57,526,000
Ford Motor Credit Company ^ $14,937,000
^ General Motors Acceptance Corporation $28,652,000 ^
Neither INVESCO nor INVESCO Trust receive any brokerage commissions on
portfolio transactions effected on behalf of the Fund, and there is no
affiliation between INVESCO, INVESCO Trust, or any person affiliated with
INVESCO, INVESCO Trust, or the Fund and any broker or dealer that executes
transactions for the Fund.
ADDITIONAL INFORMATION
Common Stock. The Fund has one billion authorized shares of common stock
with a par value of $1.00 per share. As of June 30, ^ 1996, 315,632,152 of the
Fund's shares of common stock were outstanding. All shares are of one class with
equal rights as to voting, dividends and liquidation. All shares issued and
outstanding are, and all shares offered hereby, when issued, will be, fully paid
and nonassessable.
Shares have no preemptive rights and are freely transferable on the books
of the Fund. Fund shares have noncumulative voting rights, which means that the
holders of a majority of the shares voting for the election of directors of the
Fund can elect 100% of the directors if they choose to do so, and, in such
event, the holders of the remaining shares voting for the election of directors
will not be able to elect any person or persons to the board of directors. After
they have been elected by shareholders, the directors will continue to serve
until their successors are elected and have qualified or they are removed from
office, in either case by a shareholder vote, or until death, resignation, or
retirement. ^ Directors may appoint their own successors, provided that always
at least a majority of the directors have been elected by the Fund's
shareholders. It is the intention of the Fund not to hold annual meetings of
shareholders. The directors may call annual or special meetings of shareholders
for action by shareholder vote as may be required by the Investment Company Act
<PAGE>
of 1940 or the Fund's Articles of Incorporation, or at their
discretion.
Principal Shareholders. As of August 1, ^ 1996, the following
entities held more than 5% of the Fund's outstanding equity
securities.
Amount and Nature Class and Percent
Name and Address of Ownership of Class
- ---------------- ----------------- -----------------
Charles Schwab & Co. ^, Inc. 42,634,652.669 13.8%
^ Special Custody Acct. for Record
the Exclusive Benefit
of Customers
101 Montgomery St.
San Francisco, CA 94104
Independent Accountants. Price Waterhouse LLP, 950
Seventeenth Street, Denver, Colorado, has been selected as the
independent accountants of the Fund. The independent accountants
are responsible for auditing the financial statements of the Fund.
Custodian. State Street Bank and Trust Company, P.O. Box 351, Boston,
Massachusetts, has been designated as custodian of the cash and investment
securities of the Fund. The bank is also responsible for, among other things,
receipt and delivery of the Fund's investment securities in accordance with
procedures and conditions specified in the custody agreement.
Transfer Agent. The Fund is provided with transfer agent services by
INVESCO Funds Group, Inc., 7800 E. Union Avenue, Denver, Colorado 80237,
pursuant to the Transfer Agency Agreement described in "The Fund and Its
Management." Such services include the issuance, cancellation and transfer of
shares of the Fund, and the maintenance of records regarding the ownership of
such shares.
Reports to Shareholders. The Fund's fiscal year ends on June 30. The Fund
distributes reports at least semiannually to its shareholders. Financial
statements regarding the Fund, audited by the independent accountants, are sent
to shareholders annually.
Legal Counsel. The firm of Kirkpatrick & Lockhart LLP, Washington, D.C., is
legal counsel for the Fund. The firm of Moye, Giles, O'Keefe, Vermeire &
Gorrell, Denver, Colorado, acts as special counsel to the Fund.
Financial Statements. The ^ following audited financial statements of the
Fund and the notes thereto for the fiscal year ended June 30, ^ 1996 and the
report of Price Waterhouse LLP with respect to such financial statements, are
incorporated herein by reference from the Fund's Annual Report to Shareholders
for the fiscal year ended June 30, ^ 1996: Statement of Investment Securities as
of June 30, 1996; Statement of Assets and Liabilities as of June 30, 1996;
Statement of Operations for the year ended June 30, 1996; Statement of Changes
in Net Assets for each of the two years in the period ended June 30, 1996; and
Financial Highlights for each of the five years ended June 30, 1996.
Prospectus. The Fund will furnish, without charge, a copy of
the Prospectus upon request. Such requests should be made to the
<PAGE>
Fund at the mailing address or telephone number set forth on the first page of
this Statement of Additional Information.
Registration Statement. This Statement of Additional
Information and the related Prospectus do not contain all of the
information set forth in the Registration Statement the Fund has
filed with the ^ SEC. The complete Registration Statement may be
obtained from the ^ SEC upon payment of the fee prescribed by the
rules and regulations of the ^ SEC.
<PAGE>
APPENDIX A
BOND RATINGS
The following is a description of Standard & Poor's ^ and Moody's
Investors Service, Inc. ("Moody's") bond rating categories:
Moody's Investors Service, Inc. Corporate Bond Ratings
Aaa - Bonds rated Aaa are judged to be of the best quality. They carry the
smallest degree of investment risk and are generally referred to as
"gilt-edged." Interest payments are protected by a large or by an exceptionally
stable margin, and principal is secure. While the various protective elements
are likely to change, such changes as can be visualized are most unlikely to
impair the fundamentally strong position of such issues.
Aa - Bonds rated Aa are judged to be of high quality by all standards.
Together with the Aaa group, they comprise what are generally known as high
grade bonds. They are rated lower than the best bonds because margins of
protection may not be as large as in Aaa securities or fluctuation of protective
elements may be of greater amplitude or there may be other elements present
which make the long term risk appear somewhat larger than in Aaa securities.
A - Bonds rated A possess many favorable investment attributes, and are to
be considered as upper medium grade obligations. Factors giving security to
principal and interest are considered adequate but elements may be present which
suggest a susceptibility to impairment sometime in the future.
Baa - Bonds rated Baa are considered as medium grade obligations, i.e.,
they are neither highly protected nor poorly secured. Interest payments and
principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and in
fact have speculative characteristics as well.
Ba - Bonds rated Ba are judged to have speculative elements. Their future
cannot be considered as well assured. Often the protection of interest and
principal payments may be very moderate and thereby not well safeguarded during
both good and bad times over the future. Uncertainty of position characterizes
bonds in this class.
B - Bonds rated B generally lack characteristics of the desirable
investment. Assurance of interest and principal payments or maintenance of other
terms of the contract over any longer period of time may be small.
Caa - Bonds rated Caa are of poor standing. Such issues may be in default
or there may be present elements of danger with respect to principal or
interest.
Standard & Poor's ^ Corporate Bond Ratings
AAA - This is the highest rating assigned by Standard & Poor's to a debt
obligation and indicates an extremely strong capacity to pay principal and
interest.
<PAGE>
AA - Bonds rated AA also qualify as high-quality debt obligations.
Capacity to pay principal and interest is very strong, and in the majority of
instances they differ from AAA issues only in small degree.
A - Bonds rated A have a strong capacity to pay principal and interest,
although they are somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions than bonds in higher rated categories.
BBB - Bonds rated BBB are regarded as having an adequate capability to pay
principal and interest. Whereas they normally exhibit adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay principal and interest for bonds in
this category than for bonds in higher rated categories.
BB - Bonds rated BB have less near-term vulnerability to default than
other speculative issues. However, they face major ongoing uncertainties or
exposure to adverse business, financial, or economic conditions which could lead
to inadequate capacity to meet timely interest and principal payments.
B - Bonds rated B have a greater vulnerability to default but currently
have the capacity to meet interest payments and principal repayments. Adverse
business, financial, or economic conditions will likely impair capacity or
willingness to pay interest and repay principal.
CCC - Bonds rated CCC have a currently identifiable vulnerability to
default and are dependent upon favorable business, financial, and economic
conditions to meet timely payment of interest and repayment of principal. In the
event of adverse business, financial, or economic conditions, they are not
likely to have the capacity to pay interest and repay principal.
<PAGE>
PART C. OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) Financial Statements:
Page in
Prospectus
----------
(1) Financial statements and schedules
included in Prospectus (Part A):
Financial Highlights for each of 9
the ten years in the
period ended June 30, ^ 1996.
Page in
Statement
of Addi-
tional In-
formation
----------
(2) The following audited financial
statements of the Industrial Income
Fund and the notes thereto for the
fiscal year ended June 30, ^ 1996,
and the report of Price Waterhouse
LLP with respect to such financial
statements, are incorporated in the
Statement of Additional Information
by reference from the Fund's
Annual Report to Shareholders for
the fiscal year ended June 30, ^
1996: Statement of Investment
Securities as of June 30, ^ 1996;
Statement of Assets and Liabilities
as of June 30, ^ 1996; Statement of
Operations for the year ended June
30, ^ 1996; Statement of Changes in
Net Assets for each of the two
years in the period ended June 30,
^ 1996; and Financial Highlights
for each of the five years ended
June 30, ^ 1996.
(3) Financial statements and schedules
included in Part C:
None: Schedules have been omitted
as all information has been
presented in the financial
statements.
<PAGE>
(b) Exhibits:
(1) (a) Restatement of the Articles of 72
Incorporation ^ of Financial
Industrial Income Fund dated
November 3, 1989.
(i) Articles Supplementary to the 80
Articles of Incorporation
dated July ^ 17, 1992.
(ii) Articles of Amendment of
Articles of Restatement of the
Articles of Incorporation of
Financial Industrial Income
Fund, Inc. dated November 17,
^ 1994.1
(2) Bylaws--(amended) as of July ^ 21, 81
1993.
(3) Not applicable.
(4) Specimen stock ^ certificate. Not
required to be filed on EDGAR.
(5) (a) Investment Advisory ^ Agreement 100
between INVESCO Funds Group, Inc.
and the Fund dated April 30, 1991.
(b) Sub-Advisory Agreement between 109
^ INVESCO Funds Group, Inc. and
INVESCO Trust Company dated April
30, ^ 1991.
(6) General Distribution ^ Agreement. 116
(7) Defined Benefit Deferred
Compensation Plan for Non-
Interested Directors and ^
Trustees.6
^(8) Custody Agreement between 119
Registrant and State Street Bank
and Trust Company.
(9) (a) Transfer Agency ^ Agreement. 134
(i) Fee Schedule Amendment No. 4 148
to Transfer Agency Agreement
dated ^ May 1, 1996.
(b) Administrative Services Agreement 149
between the Fund and INVESCO Funds
Group, Inc., dated April 30, ^ 1991.
(10) Opinion and consent of counsel as
to the legality of the securities
being registered, indicating
<PAGE>
whether they will, when sold, be
legally issued, fully paid and
non-assessable was filed with the
Securities and Exchange Commission
on or about August 22, ^ 1996,
pursuant to Rule 24f-2 and herein
incorporated by reference.
(11) Consent of Independent Accountants. 153
(12) Not applicable.
(13) Not applicable.
(14) Copies of model plans used in the
establishment of retirement plans
as follows: Non-standardized
Profit Sharing Plan; Non-
standardized Money Purchase Pension
Plan; Standardized Profit Sharing
Plan Adoption Agreement;
Standardized Money Purchase Pension
Plan; Non-standardized 401(k) Plan
Adoption Agreement; Standardized
401(k) Paired Profit Sharing Plan;
Standardized Simplified Profit
Sharing Plan; Standardized
Simplified Money Purchase Plan;
Defined Contribution Master Plan &
Trust Agreement; and Financial
403(b) Retirement ^ Plan.3
(15) Plan and Agreement of Distribution
dated April 16, 1990, adopted
pursuant to Rule 12b-1 under the
Investment Company Act of ^ 1940.2
Amendment of Plan and Agreement of
Distribution, dated July 19, ^
1995.1
(16) (a) Schedule for computation of
performance ^ data.4
(b) Schedule for Computation of ^
Yield.5
(17) Financial Data Schedule. 154
(18) Not Applicable.
1Previously filed on EDGAR with Post-Effective Amendment No. ^ 55 to ^ the
Registration Statement on August ^ 29, 1995 and incorporated herein by
reference.
^ 2Previously filed with Post-Effective Amendment No. ^ 48 to this
Registration Statement on ^ August 21, 1990 and incorporated by reference
herein.
<PAGE>
^ 3Previously fled with Registration Statement of INVESCO International
Funds, Inc. (File No. 33-63498) on May 27, 1993 and incorporated by reference
herein.
^ 4Previously filed with Post Effective Amendment No. 46 to this
Registration Statement on September 1, 1988 and incorporated by reference
herein.
5Previously filed with Post-Effective Amendment No. 54 to this Registration
Statement on October 31, 1994 and incorporated by reference herein.
6Previously ^ filed with Post-Effective Amendment No. ^ 53 to this
Registration Statement on October ^ 25, 1993 and incorporated by reference
herein.
Item 25. Persons Controlled by or Under Common Control with
Registrant
No person is presently controlled by or under common control with
Registrant.
Item 26. Number of Holders of Securities
Number of Record
Holders as of
Title of Class July 31, ^ 1996
-------------- ---------------
Common Stock ^ 220,870
Item 27. Indemnification
Indemnification provisions for officers, directors and employees of
Registrant are set forth in Article XI of the amended bylaws. See Item 24(b)2
above. Under this Article, such persons will not be indemnified for any acts for
which the Investment Company Act of 1940 would not permit indemnification.
<PAGE>
Item 28. Business and Other Connections of Investment Adviser
See "The Fund and Its Management" in the Prospectus and Statement of
Additional Information for information regarding the business of the investment
adviser. For information as to the business, profession, vocation or employment
of a substantial nature of each of the officers and directors of INVESCO Funds
Group, Inc., reference is made to Schedule Ds to the Form ADV filed under the
Investment Advisers Act of 1940 by INVESCO Funds Group, Inc., which schedules
are herein incorporated by reference.
Item 29. Principal Underwriters
(a) INVESCO Diversified Funds, Inc.
INVESCO Dynamics Fund, Inc.
INVESCO Emerging Opportunity Funds, Inc.
INVESCO Growth Fund, Inc.
INVESCO Income Funds, 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.
<PAGE>
(b)
Positions and Positions and
Name and Principal Offices with Offices with
Business Address Underwriter Registrant
- ------------------ ------------- -------------
^
Charles W. Brady Chairman of
1315 Peachtree St. NE the Board
Atlanta, GA 30309
^
M. Anthony Cox Senior Vice
1315 Peachtree St., N.E. President
Atlanta, GA 30309
Steven T. Cox, Jr. Regional Vice
7800 E. Union Avenue President
Denver, CO 80237
Robert D. Cromwell ^ Regional Vice
7800 E. Union Avenue President
Denver, CO 80237
Samuel T. DeKinder Director
1315 Peachtree Street NE
Atlanta, GA 30309
Douglas P. Dhom Regional Vice
1355 Peachtree Street NE President
Atlanta, GA 30309
William J. Galvin, Jr. Sr. Vice President Assistant
7800 E. Union Avenue Secretary
Denver, CO 80237
^
Linda J. Gieger Vice President
7800 E. Union Avenue
Denver, CO 80237
Ronald L. Grooms Sr. Vice President Treasurer,
7800 E. Union Avenue & Treasurer Chief Fin'l
Denver, CO 80237 Officer, and
Chief Acctg.
Off.
<PAGE>
Positions and Positions and
Name and Principal Offices with Offices with
Business Address Underwriter Registrant
- ------------------ ------------- -------------
Wylie G. Hairgrove Vice President
7800 E. Union Avenue
Denver, CO 80237
^ Hubert L. Harris ^, Jr. Director
1315 Peachtree Street NE
^ Atlanta, GA 30309
^ Leon K. Haydon, Jr. Vice President-
7800 E. Union Avenue Marketing,
Denver, CO 80237 Planning & Research
Dan J. Hesser Chairman of the President
7800 E. Union Avenue Board, President, & Dir.
Denver, CO 80237 Chief Executive
Officer, & Director
Mark A. Jones Regional Vice
7800 E. Union Avenue President
Denver, CO 80237
Jeraldine E. Kraus Assistant Secretary
7800 E. Union Avenue
Denver, CO 80237
Michael D. Legoski Assistant Vice
7800 E. Union Avenue President
Denver, CO 80237
^ James F. Lummanick Vice President;
7800 E. Union Avenue ^ Assistant
^ Denver, CO 80237 General Counsel
^ Brian N. Minturn Executive
7800 E. Union Avenue Vice President
Denver, CO 80237
Robert J. O'Connor Director
1315 Peachtree Street NE
Atlanta, GA 30309
<PAGE>
Positions and Positions and
Name and Principal Offices with Offices with
Business Address Underwriter Registrant
- ------------------ ------------- -------------
Donald R. Paddack Assistant
7800 E. Union Avenue Vice President
Denver, CO 80237
Laura M. Parsons Vice President
7800 E. Union Avenue
Denver, CO 80237
Glen A. Payne Sr. Vice President, Secretary
7800 E. Union Avenue Secretary &
Denver, CO 80237 General Counsel
^ Pamela J. Piro Assistant Vice
7800 E. Union Avenue President
Denver, CO 80237
Gary S. Ruhl Vice President
7800 E. Union Avenue
Denver, CO 80237
R. Dalton Sim Director ^
7800 E. Union Avenue
Denver, CO 80237
James S. Skesavage Regional Vice
1315 Peachtree Street NE President
Atlanta, GA 30309
Terri Berg Smith Vice President
7800 E. Union Avenue
Denver, CO 80237
Tane T. Tyler Asst. Vice
7800 E. Union Avenue President
Denver, CO 80237
<PAGE>
Positions and Positions and
Name and Principal Offices with Offices with
Business Address Underwriter Registrant
- ------------------ ------------- -------------
^
Alan I. Watson Vice President Asst. Sec.
7800 E. Union Avenue
Denver, CO 80237
Judy P. Wiese Vice President Asst. Treas.
^ 7800 E. Union Avenue
Denver, CO 80237
Allyson B. Zoellner Vice President
7800 E. Union Avenue
Denver, CO 80239
(c) Not applicable.
Item 30. Location of Accounts and Records
Dan J. Hesser
7800 E. Union Avenue
Denver, CO 80237
Item 31. Management Services
Not applicable.
Item 32. Undertakings
(a) The Registrant shall furnish each person to whom a prospectus
is delivered with a copy of the Registrant's latest annual
report to shareholders, upon request and without charge.
<PAGE>
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the registrant has duly caused this
post-effective amendment to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Denver, County of Denver, and State of
Colorado, on the ^ 30th day of August, ^ 1996.
Attest: INVESCO Industrial Income Fund,
Inc.
/s/ Glen A. Payne /s/ Dan J. Hesser
- ------------------------------------ ------------------------------------
Glen A. Payne, Secretary Dan J. Hesser, President
Pursuant to the requirements of the Securities Act of 1933, this
post-effective amendment to Registrant's Registration Statement has been signed
by the following persons in the capacities indicated on this ^ 30th day of
August, ^ 1996.
/s/ Dan J. Hesser /s/ Lawrence H. Budner
- ------------------------------------ ------------------------------------
Dan J. Hesser, President & Lawrence H. Budner, Director
Director (Chief Executive Officer)
/s/ Ronald L. Grooms /s/ Daniel D. Chabris
- ------------------------------------ ------------------------------------
Ronald L. Grooms, Treasurer Daniel D. Chabris, Director
(Chief Financial and Accounting Officer)
/s/ Victor L. Andrews /s/ Fred A. Deering
- ------------------------------------ ------------------------------------
Victor L. Andrews, Director Fred A. Deering, Director
/s/ Bob R. Baker /s/ A. D. Frazier, Jr.
- ------------------------------------ ------------------------------------
Bob R. Baker, Director A. D. Frazier, Jr., Director
/s/ ^ Hubert L. Harris, Jr. /s/ Kenneth T. King
- ------------------------------------ ------------------------------------
^ Hubert L. Harris, Jr., Director Kenneth T. King, Director
/s/ Charles W. Brady /s/ John W. McIntyre
- ------------------------------------ ------------------------------------
Charles W. Brady, Director John W. McIntyre, Director
^
By* By* /s/ Glen A. Payne
--------------------------------- ---------------------------------
Edward F. O'Keefe Glen A. Payne
Attorney in Fact Attorney in Fact
* Original Powers of Attorney authorizing Edward F. O'Keefe and Glen A. Payne,
and each of them, to execute this post-effective amendment to the Registration
Statement of the Registrant on behalf of the above-named directors and officers
of the Registrant have been filed with the Securities and Exchange Commission on
July 20, 1989, January 9, 1990, May 22, 1992, and October 25, 1993 ^.
<PAGE>
Exhibit Index
Page in
Exhibit Number Registration Statement
- -------------- ----------------------
(1) 72
^(1)(a)(i) 80
^(2) 81
^(5)(a) 100
(5)(b) 109
(6) 116
(8) 119
(9)(a) 134
(9)(a)(i) 148
(9)(b) 149
11 153
17 154
ARTICLES OF RESTATEMENT
OF THE
ARTICLES OF INCORPORATION
OF
FINANCIAL INDUSTRIAL INCOME FUND, INC.
Secretary of Financial Industrial Income Fund, Inc., a Maryland
corporation with its principal office in Baltimore, Maryland hereby certifies to
the State Department of Assessments and Taxation that:
FIRST: The Financial Industrial Income Fund, Inc., desires at this time to
restate its Articles of Incorporation as now in effect. Such restatement of the
Articles of Incorporation has been duly and regularly authorized by a vote of
the majority of the entire Board of Directors of Financial Industrial Income
Fund, Inc. No amendment of the Articles of Incorporation of the Corporation is
being effected by these Articles of Restatement. These Articles of Restatement
contain all of the provisions of the Corporation's charter currently in effect.
All provisions of the Articles of Incorporation which have been duly and
regularly eliminated therefrom by amendments filed with the State Department of
Assessments and Taxation of the State of Maryland have been omitted from this
restatement. The following is a complete restatement of all provisions of the
Articles of Incorporation of Financial Industrial Income Fund, Inc. currently in
effect, excluding only such provisions as have been eliminated pursuant to the
requirements of Maryland General Corporation Law by amendments thereto duly
filed under the Maryland General Corporation Law:
FIRST: NAME AND TERM. The name of the corporation is
"FINANCIAL INDUSTRIAL INCOME FUND, INC."
and it shall have perpetual existence.
SECOND: POWERS AND PURPOSES. The nature of the business and the
objects and purposes to be transacted, promoted and carried on by the
corporation are as follows:
1. To engage in the business of an incorporated investment company
of open-end management type and to engage in business usually customary or
necessary in connection therewith.
2. To hold cash and to subscribe for, purchase or otherwise acquire,
own and hold, deposit, exchange, sell, assign and transfer or otherwise dispose
of, alone or in conjunction with others, but in conformity with the investment
policy herein defined, stocks, bonds and other evidences of indebtedness and
obligations of any corporation, association, partnership, syndicate, entity,
person or governmental, municipal or public authority, domestic or foreign, and
evidences of any interest in respect of any such stocks, bonds and other
evidences of indebtedness and obligations.
<PAGE>
3. To hold, in a fiduciary capacity, or otherwise, its own shares
for the accounts of the holders from time to time of any withdrawal or variable
payment plans, contracts or certificates issued by the corporation, to enter
into custody agreements with one or more banks or trust companies to provide for
the custody and safekeeping of shares which the corporation may hold from time
to time (in such fiduciary capacity, or otherwise) for the accounts of the
holders of such plans, contracts or certificates, and to effect redemption of
such shares and make payments therefor, all in accordance with the terms and
conditions of such plans, contracts or certificates.
4. In general, to have and exercise all of the powers conferred by
the laws of the State of Maryland in furtherance of the objects and purposes
herein stated.
THIRD: INVESTMENT POLICY AND OBJECTIVES. The investment policy of
the corporation shall be the selection of securities affording as generous an
income as possible consistent with investment quality, and the possible
enhancement of capital values. In conformity with this basic policy, investments
may consist of common stocks and convertible or straight issues of preferred
stocks, bonds, and debentures; also, corporate notes or warrants. The relative
amount of each type of security may be adjusted from time to time as deemed
necessary to attain the correlative objectives of income and possible
appreciation of capital values under prevailing economic and monetary
conditions. Without limiting the generality of the foregoing, the corporation
may select equity securities or debt securities convertible into equity
securities with a lower current income yield than the current income yield
afforded by straight debt securities of comparable quality. The corporation
reserves the right to dispose of any security without regard to the period of
time it has been held; also in periods of uncertainty to depart from its basic
policies, and assume a defensive position through investment in government
issues, short term corporate notes, or quality corporate bonds.
FOURTH: CAPITALIZATION. Section 1. The total amount of authorized
capital stock of the corporation is two hundred million dollars ($200,000,000),
consisting of two hundred million (200,000,000) shares of the par value of one
dollar (51.00) per share, all of one class. Such stock may be issued as full
shares or as fractional shares, and each fractional share shall have all the
same rights with respect to dividends, liquidation, voting or otherwise as a
full share, but in the proportion that such fractional share bears to a full
share.
<PAGE>
Section 2. No holder of stock of the corporation shall be entitled
as a matter of right to purchase or subscribe for any shares of the capital
stock of the corporation which it may issue or sell, whether out of the number
of shares authorized by this certificate of incorporation, or out of any shares
of the capital stock of the corporation acquired by it after the issue thereof.
Section 3. All shares of the capital stock of the corporation now or
hereafter authorized shall be subject to redemption and redeemable in the sense
contemplated by the laws of Maryland, at the redemption price for any such
shares determined as provided in the by-laws of the corporation and on the terms
and conditions set forth or provided for in this certificate of incorporation
and the by-laws. Except as otherwise determined by the board of directors at any
time or from time to time, any shares of capital stock of the corporation
repurchased or redeemed by it shall be deemed to be purchased for retirement in
the sense contemplated by the laws of Maryland and shares retired by repurchase
or redemption shall thereafter have the status of authorized but unissued
capital stock of the corporation.
FIFTH: PRINCIPAL OFFICE. The post office address of the principal
office of the corporation in the State of Maryland is 32 South Street,
Baltimore, Maryland 21202. The resident agent of the corporation is The
Corporation Trust Incorporated, whose post office address is 32 South Street,
Baltimore, Maryland 21202. Said resident agent is a corporation of the State of
Maryland.
SIXTH: DIRECTORS. Section 1. The board of directors shall consist
of fifteen members who need not be residents of the State of Maryland or
stockholders of the corporation.
Section 2. The names of the current directors, who shall serve until
their successors shall have been elected and qualified, are as follows:
Charles W. Brady
Fred A. Deering
Victor L. Andrews
Bob R. Baker
William H. Baughn
Joseph S. Bowman
Lawrence H. Budner
John M. Butler
Otto P. Butterly
<PAGE>
Daniel D. Chabris
Ernest B. Davis
Dan J. Hesser
Willard A. Johnson
Renneth T. King
Lord Stevens of Ludgate
Section 3. The number of directors may be increased or decreased in
accordance with the by-laws, provided that the number shall not be reduced to
less than seven.
Section 4. A majority of the directors shall constitute a quorum for
the transaction of business, unless the by-laws shall provide that a different
number shall constitute a quorum.
Section 5. No person shall serve as a director, unless elected by
the stockholders at an annual meeting or a special meeting called for such
purpose; except that vacancies occurring between such meetings may be filled by
the directors in accordance with the by-laws, if immediately after filling any
such vacancy at least two-thirds of the directors then holding office shall have
been elected by the stockholders at such annual meeting or special meeting.
SEVENTH: LIMITATION AND REGULATION OF POWERS. The
following provisions are inserted for the management of the
business and for the conduct of the affairs of the corporation, and
for creating, defining, limiting and regulating the powers of the
corporation, the directors and the stockholders.
Section 1. All cash and securities owned by the corporation from
time to time shall be deposited with and held by a custodian which shall be a
bank, savings bank, or trust company, organized under and subject to the laws of
the United States of America or the laws of any state thereof, which has a
reported capital, surplus and undivided profits aggregating not less than five
million dollars ($5,000,000), but upon direction of the corporation cash may be
redeposited by the custodian in its name as such custodian in another bank or
trust company, provided that not more than twenty-five thousand dollars
($25,000) cash may be deposited in a bank or trust company having such capital,
surplus and undivided profits less than one million dollars ($1,000,000).
Section 2. The corporation shall not borrow amounts in excess of
five per cent (5%) of the gross assets (as defined in the by-laws) of the
corporation, and no borrowing shall be undertaken except from banks and as a
temporary measure for extraordinary or emergency purposes. In no event may any
of the assets of the corporation be mortgaged, pledged or hypothecated.
<PAGE>
Section 3. The corporation shall not purchase any securities on
margin.
Section 4. The corporation shall not participate on a joint or a
joint and several basis in any trading account in securities, nor shall it
effect a short sale of any security.
Section 5. Subject to the provisions of the Investment Company Act
of 1940, any contract or contracts entered into for investment management
service and investment advice, and for any services in connection with the
distribution, sale, exchange, purchase and resale of securities, issued or to be
issued by the corporation, shall be valid in the absence of fraud, even though
the corporation and the person, corporation or entity with whom such contract or
contracts are executed is affiliated or has common directors, officers, agents
or stockholders, and the vote or action of one or more of such common directors,
officers, agents or stockholders may have been necessary to obligate the
corporation upon such contract or transaction: provided, however, that at the
meeting of the board of directors or of a committee thereof having authority to
authorize or confirm said contract or transaction, the affiliated or
interlocking interests of each such person, corporation or entity shall have
been disclosed.
Section 6. The board of directors, subject to the laws of Maryland,
shall have power to determine from time to time whether and to what extent and
at what times and places and under what conditions and regulations the books,
accounts and records of the corporation, or any of them, shall be open to the
inspection of the shareholders, and no shareholder shall have any right to
inspect any book, account or record of the corporation, except as conferred by
the laws of Maryland, unless and until authorized so to do by resolution of the
board of directors or of the stockholders.
Section 7. The board of directors of the corporation shall have
power to hold its meetings, and, subject to the laws of Maryland, to authorize
the books of the corporation to be kept, within or outside of said state, at
such places as from time to time may be designated by it.
Section 8. The board of directors, subject to all applicable
limitations and provisions of the Investment Company Act of 1940, shall have the
power to authorize the issuance of shares of stock of the corporation and to fix
the price or consideration for which such shares are to be issued and, with
respect to any consideration other than money, shall have the duty of
determining the actual value thereof.
<PAGE>
Section 9. The board of directors shall have power and authority
from time to time to appoint transfer agents and registrars for the shares of
the corporation, and to make such rules and regulations as it may deem expedient
concerning the issue, transfer and registration of certificates for shares,
including, but without limiting the generality of the foregoing, rules and
regulations requiring the payment of charges for transfer of such certificates
(or of certificates representing a smaller number of shares of the corporation
than such number as may be specified in such regulations) to cover fees and
charges of transfer agents and registrars and the cost of new certificates
issued upon such transfer.
Section 10. Any determination made in good faith by or pursuant to
the direction of the board of directors in the manner set forth in the by-laws
as to the amount of the assets, debts, obligations or liabilities of the
corporation, as to the price or closing bid and asked prices, as to the value of
any security or asset of the corporation, or as to any other matters relating to
the issue, sale, redemption, liquidation, purchase and/or acquisition or
disposition of securities of the corporation, shall be final and conclusive, and
shall be binding upon the corporation and all holders of securities issued by
it, past present and future, and securities of the corporation shall be issued
and sold on the condition and understanding that any and all such determinations
shall be binding as aforesaid; provided, however, that nothing contained in this
section shall be interpreted to, nor shall it be a provision in contravention of
Section 17(h) of the Investment Company Act of 1940.
Section 11. The board of directors shall have the power to make,
amend and repeal the by-laws of the corporation, which may contain any provision
not inconsistent with the laws of Maryland or this certificate of incorporation
for the regulation and management of the affairs of the corporation.
SECOND: At a meeting of the Board of Directors of Financial Industrial Income
Fund, Inc., duly called and held at the offices of INVESCO Capital Management,
Inc. at 1315 Peachtree Street, N.E., Atlanta, Georgia, on October 10, 1989, at 2
p.m., a majority of the entire Board of Directors of said Corporation voting in
favor, there was adopted a resolution authorizing a restatement of the Articles
of Incorporation of said Corporation in accordance and conformity with Section
2-608 of the Maryland General Corporation Law, and it was further resolved that
said restatement of the Articles of Incorporation be filed for record with the
State Department of Assessments and Taxation of Maryland.
<PAGE>
IN WITNESS WHEREOF, Financial Industrial Income Fund, Inc., a
Maryland Corporation, through its President and attested to by its Secretary,
duly executes the above and foregoing Articles of Restatement of the Certificate
of Incorporation this 3rd day of November, 1989.
FINANCIAL INDUSTRIAL INCOME
FUND, INC.
/s/ John M. Butler
----------------------------------
John M. Butler, President
Attest:
/s/ Glen A. Payne
- -----------------------------
Glen A. Payne, Secretary
<PAGE>
I, John M. Butler, being the duly elected, qualified and acting President
of Financial Industrial Income Fund, Inc., and being first duly sworn upon my
oath, depose and say that a meeting of the Board of Directors of Financial
Industrial Income Fund, Inc., was held at the Ritz-Carlton Buckhead, Atlanta,
Georgia on October 10, 1989 at 2 p.m., and that at said meeting of the Board of
Directors by an affirmative vote of the majority of said Board, the said Board
of Directors by proper resolution duly authorized the above and foregoing
Articles of Restatement of the Certificate of Incorporation and that the matters
and facts as set forth in said Articles of Restatement of the Certificate of
Incorporation are true and were duly authorized by said Board of Directors.
John M. Butler
---------------------------------
John M. Butler, President
STATE OF COLORADO )
)ss.
CITY AND COUNTY OF DENVER)
Subscribed, sworn to and acknowledged before me this 3rd, day of November
by John M. Butler as the duly elected, qualified and acting President of
Financial Industrial Income Fund, Inc.
My commission expires February 18, 1991.
(SEAL) /s/ Cheryl K. Howlett
---------------------------------
ARTICLES SUPPLEMENTARY TO
ARTICLES OF INCORPORATION OF
FINANCIAL INDUSTRIAL INCOME FUND, INC.
Financial Industrial Income Fund, Inc., a Maryland corporation (the
"Corporation"), having its principal office in Baltimore, Maryland, hereby
certifies to the State Department of Assessments and Taxation of Maryland, that:
FIRST: The aggregate number of shares of stock of all classes which the
Corporation shall have authority to issue is hereby increased to 1 billion
(1,000,000,000) shares of Common Stock. Prior to this increase in the
corporation's authorized aggregate number of shares of Common stock, the
Corporation was authorized aggregate number of shares of Common Stock, the
Corporation was authorized to issue 200,000,000 shares of Common Stock of all
classes. Both before and after this increase in the Corporation's authorized
aggregate number of shares of Common Stock, the Corporation's shares of Common
Stock have a par value of one dollar ($1.00) per share, with the aggregate par
value of the Corporation's 1 billion authorized shares of Common Stock being one
billion dollars ($1,000,000,000).
SECOND: The Corporation is registered as an open-end company under the
Investment Company Act of 1940.
THIRD: The total number of shares of capital stock that the Corporation
has authority to issue has been increased by the board of directors in
accordance with Section 2-105(c) of the Maryland General Corporation Law.
IN WITNESS WHEREOF, the undersigned, under penalties of perjury, have
executed these Articles Supplementary this 17th day of July, 1992.
FINANCIAL INDUSTRIAL INCOME FUND, INC.
By: /s/ John M. Butler
-------------------------
John M. Butler, President
ATTEST:
/s/ Glen A. Payne
- ------------------------
Glen A. Payne, Secretary
AMENDED BYLAWS
OF
FINANCIAL INDUSTRIAL INCOME FUND, INC.
AS OF JULY 21, 1993
ARTICLE I.
Section 1. Annual Meeting. Unless otherwise determined by the board
of directors or required by applicable law, no annual meeting of shareholders
shall be held unless one or more of the following is required to be acted on by
the shareholders under the Investment Company Act of 1940: (1) election of
directors; (2) approval of the Investment Advisory Agreement; (3) ratification
of the selection of independent public accountants; and (4) approval of a
distribution agreement. The annual meeting of the Corporation, if held, shall be
held in Denver, Colorado, at such time as the board of directors shall direct,
on the final business day in September.
Section 2. Special Meetings. Special meetings of the shareholders
entitled to vote shall be called upon the request in writing of the president
or, in his absence, a vice president, or by a vote of a majority of the board of
directors, or upon the request in writing of shareholders of the Company
representing not less than ten percent (10%) of the outstanding voting stock.
Section 3. Place of Meetings. Each annual and any special meeting
of the shareholders shall be held at the principal office of the corporation in
Denver, Colorado.
Section 4. Notices. Notices of every meeting, annual or special,
shall specify the place, day and hour of the meeting and shall be mailed not
less than ten (10) days nor more than sixty (60) days before such meeting.
Notice of every special meeting shall indicate briefly its purpose, and no
business other than that stated in said notice shall be transacted.
Section 5. Quorum. At every meeting of the shareholders, the holders
of a majority of all of the shares entitled to vote thereat, present in person
or represented by proxy, shall constitute a quorum for all purposes, unless the
representation of a larger number shall be required by statute or by the
certificate of incorporation.
Section 6. Voting. At every meeting of the shareholders, each
shareholder entitled to vote shall be entitled to vote in person, or by proxy
appointed by instrument in writing subscribed by such shareholder, or his duly
authorized attorney, and he shall have one (1) vote for each share of stock
standing registered in his name on each matter submitted at the meeting and for
each director to be elected. Every proxy shall be dated and no proxy shall be
valid after eleven (11) months from its date unless otherwise provided in the
the proxy. There shall be no cumulative voting in the election of directors.
<PAGE>
Section 7. Qualification of Voters. At every meeting of
shareholders, unless the voting is conducted by inspectors, the proxies and
ballots shall be received, and all questions with respect to the qualification
of voters and the validity of proxies and the acceptance or rejection of votes
shall be decided by the chairman of the meeting. If demanded by shareholders
present in person or by proxy entitled to cast twenty-five per cent (25%) in
number of votes, or if ordered by the chairman, the vote upon any election or
question shall be taken by ballot and, upon such demand or order, the voting
shall be conducted by two (2) inspectors appointed by the chairman, in which
event the proxies and ballots shall be received and all questions with respect
to the qualification of votes and the validity of proxies and the acceptance or
rejection of votes shall be decided by such inspectors. Unless so demanded or
ordered, no vote need be by ballot and the voting need not be conducted by
inspectors.
Section 8. Waiver of Notice. A waiver of notice of any meeting of
shareholders signed by any shareholder entitled to such notice filed with the
records of the meeting, whether before or after the holding thereof or actual
attendance at the meeting in person or by proxy, shall be deemed equivalent to
the giving of notice to such shareholder.
ARTICLE II.
BOARD OF DIRECTORS
Section 1. Powers. The business and property of the corporation
shall be conducted and managed by its board of directors, which may exercise all
of the powers of the corporation, except such as are by statute, by the charter
or by the by-laws, conferred upon or reserved to the shareholders. The board of
directors shall keep full and complete records of its transactions.
Section 2. Number. By vote of a majority of the entire board of
directors, the number of directors may be increased or decreased from time to
time; provided that, in no event, may the number be decreased to less than the
minimum number fixed by the charter.
Section 3. Election. The members of the board of directors shall be
elected by the shareholders by plurality vote at the annual meeting, or at any
special meeting called for such purpose. Each director shall hold office until
his successor shall have been duly chosen and qualified, or until he shall have
resigned or shall have been removed in the manner provided by law. Any vacancy,
including one created by an increase in the number of the board of directors
(except where such vacancy is created by removal by the shareholders) may be
<PAGE>
filled by the vote of a majority of the remaining directors, although such
majority is less than a quorum; provided, however, that immediately after
filling any vacancy by such action of the board of directors, at least two-
thirds (2/3) of the directors then holding office shall have been elected by the
shareholders at an annual or special meeting.
Section 4. Regular Meetings. The board of directors shall meet in
the month of January at such place as they may designate for the purpose of
organization, the election of officers, and the transaction of other business.
Other regular meetings may be held as scheduled by a majority of the directors.
Section 5. Special Meetings. Special meetings of the
board of directors may be called at any time by the president or by
a majority of the directors or by a majority of the executive
committee.
Section 6. Notice of Meetings. Notice of the place, day and hour of
every regular and special meeting shall be given to each director two (2) days
(or more) before the meeting, by telephone, telegraph and/or mail addressed to
him at his post office address, according to the records of the corporation.
Unless required by resolution of the board of directors, no notice of any
meeting of the board of directors need state the business to be transacted
thereat. No notice of any meeting of the board of directors need be given to any
director who attends, or to any director who, in writing executed and filed with
the records of the meeting either before or after the holding thereof, waives
such notice. Any meeting of the board of directors may adjourn from time to time
to reconvene at the same or some other place, and no notice need be given of any
such adjourned meeting other than by announcement.
Section 7. Quorum. At all meetings of the board of directors, a
majority of the directors shall constitute a quorum for the transaction of
business. Notwithstanding the presence of a quorum, a majority of the entire
board shall be required to authorize and pass any measure. In the absence of a
quorum, the directors present by a majority vote and without notice other than
by announcement may adjourn the meeting from time to time until a quorum shall
be present. At any such adjourned meeting, any business may be transacted which
might have been transacted at the meeting as originally notified.
Section 8. Compensation of Directors. Directors shall be entitled to
receive such compensation from the corporation for their services as may from
time to time be voted by the board of directors. All directors shall be
reimbursed for their reasonable expenses of attendance, if any, at board and
committee meetings. Any director of the corporation may also serve the
corporation in any other capacity and receive compensation therefor.
<PAGE>
Section 9. Resignation and Removal of Directors. Any director or
member of any committee may resign at any time. Such resignation shall be made
in writing and shall take effect at the time specified therein. If no time is
specified, it shall take effect from the time of its receipt by the Secretary,
who shall record such resignation, noting the day and hour of its reception. The
acceptance of a resignation shall not be necessary to make it effective. At any
meeting of shareholders, duly called and at which a quorum is present, the
shareholders may, by affirmative vote of the holders of a majority of the votes
entitled to be cast thereon, remove any director or directors from office and
may elect a successor or successors to fill any resulting vacancies for the
unexpired terms of removed directors.
ARTICLE III.
COMMITTEES
Section 1. Executive Committee. The board of directors, by
resolution adopted by a majority of the whole board of directors, may provide
for an executive committee of three (3) or more directors. If provision be made
for an executive committee, the members thereof shall be elected by the board of
directors to serve during the pleasure of the board of directors. Unless
otherwise provided by resolution of the board of directors, the president shall
preside at all meetings of the executive committee. During the intervals between
the meetings of the board of directors, the executive committee shall possess
and may exercise all of the powers of the board of directors in the management
of the business and affairs of the corporation conferred by the by-laws or
otherwise, to the extent authorized by the resolution providing for such
executive committee or by subsequent resolution adopted by a majority of the
whole board of directors, in all cases in which specific directions shall not
have been given by the board of directors. The executive committee shall
maintain written records of its transactions. All action by the executive
committee shall be reported to the board of directors at its meeting next
succeeding such action, and shall be subject to ratification, with or without
revision or alteration, by such vote of the board of directors as would have
been required under Article II, Section 7, hereof, had such action been taken by
the board of directors. Vacancies in the executive committee shall be filled by
the board of directors.
Section 2. Meetings of Executive Committee. The executive committee
shall fix its own rules of procedure and shall meet as provided by such rules or
by resolution of the board of directors, and it shall also meet at the call of
the chairman or of any two (2) members of the committee. A majority of the
executive committee shall constitute a quorum. Except in cases in which it is
otherwise provided by resolution of the board of directors, the vote of a
majority of such quorum at a duly constituted meeting shall be sufficient to
elect and to pass any measure, subject to ratification by the board of directors
as provided in Section 1 of this Article III.
<PAGE>
Section 3. Other Committees. The board of directors may by
resolution provide for such other standing or special committees as it deems
desirable, and discontinue the same at pleasure. Each such committee shall have
such powers and perform such duties as may be assigned to it by the board of
directors.
ARTICLE IV.
OFFICERS
Section 1. Numbers; Qualifications; Term of Office; Vacancies. The
board of directors may select one of their number as chairman of the board and
may select one of their number as vice chairman of the board (neither of which
positions shall be considered to be the designation of a position as an officer
of the corporation), and shall choose as officers a president from among the
directors and a treasurer and a secretary who need not be directors. The board
of directors may also choose one or more vice presidents, one or more assistant
secretaries and one or more assistant treasurers, none of whom need be a
director. Any two or more of such offices, except those of president and vice
president, may be held by the same person, but no officer shall execute,
acknowledge or verify any instrument in more than one capacity if such
instrument is required by law or by the certificate of incorporation or by these
by-laws or by resolution of the board of directors to be executed, acknowledged
or verified by any two or more officers. Each such officer shall hold office
until the first meeting of the board of directors after the annual meeting of
the shareholders next following his election and until his successor is chosen
and qualified or until he shall have resigned or died, or until he shall have
been removed as hereinafter in Section 3 of this Article IV provided. Any
vacancy in any of the above offices may be filled by the board of directors at
any regular or special meeting.
Section 2. Subordinate Officers. The board of directors, or any
officer thereunto authorized by it may appoint from time to time such other
officers and agents for such terms of office and with such powers and duties as
may be prescribed by the board of directors or the officer making such
appointment.
Section 3. Removal. Any officer or agent may be removed by the board
of directors whenever, in its judgment, the best interests of the corporation
will be served thereby, but such removal shall be without prejudice to the
contractual rights, if any, of the person so removed.
Section 4. Chairman of the Board. The chairman of the
board, if one shall be elected, shall preside at all meetings of the
board of directors, and shall appoint all committees except such as
<PAGE>
are required by statute, these by-laws or a resolution of the board of directors
or of the executive committee to be otherwise appointed, and shall have such
other duties as may be assigned to him from time to time by the board of
directors. In recognition of notable and distinguished services to the
corporation, the board of directors may designate one of its members as honorary
chairman, who shall have such duties as the board may, from time to time, assign
to him by appropriate resolution, excluding, however, any authority or duty
vested by law or these by-laws in any other officer.
Section 5. President. The president shall preside at all meetings of
the shareholders and, in the absence of the chairman of the board or if a
chairman of the board is not elected, at all meetings of the board of directors.
Unless otherwise provided by the board of directors, he shall have direct
control of and any authority over the business and affairs and over the officers
of the corporation, and shall preside at all meetings of the executive
committee. The president shall also perform all such other duties as are
incident to his office and as may be assigned to him from time to time by the
board of directors.
Section 6. Vice Presidents. The vice president or vice presidents,
at the request of the president or in his absence or inability to act, shall
perform the duties and exercise the functions of the president in such manner as
may be directed by the president, the board of directors or the executive
committee. The vice president or vice presidents shall have such other powers
and perform all such other duties as may be assigned to them by the board of
directors, the executive committee, or the president.
Section 7. Secretary. The secretary shall see that all notices are
duly given in accordance with these by-laws; he shall keep the minutes of all
meetings of the shareholders, of the board of directors, and of the executive
committee at which he shall be present; he shall have charge of the books and
records and the corporate seal or seals of the corporation; he shall see that
the corporate seal is affixed to all documents, the execution of which under the
seal of the corporation is duly authorized; and he shall make such reports and
perform all such other duties as are incident to his office and as may be
assigned to him from time to time by the board of directors, or by the
president.
Section 8. Treasurer. The treasurer shall be the chief financial
officer of the corporation, and as such shall have supervision of the custody of
all funds, securities and valuable documents of the corporation, subject to such
arrangements as may be authorized or approved by the board of directors with
respect to the custody of assets of the corporation; shall receive, or cause to
be received, and give, or cause to be given, receipts for all funds, securities
or valuable documents paid or delivered to, or for the account of, the
corporation, and cause such funds, securities or valuable documents to be
deposited for the account of the corporation with such banks or trust companies
<PAGE>
as shall be designated by the board of directors; shall pay or cause to be paid
out of the funds of the corporation all just debts of the corporation upon their
maturity; shall maintain, or cause to be maintained, accurate records of all
receipts, disbursements, assets, liabilities, and transactions of the
corporation; shall see that adequate audits thereof are regularly made; shall,
when required by the board of directors, render accurate statements of the
condition of the corporation; and shall perform all such other duties as are
incident to his office and as may be assigned to him by the board of directors
or by the president.
Section 9. Assistant Secretaries, Assistant Treasurers. The
assistant secretaries and assistant treasurers shall have such duties as from
time to time may be assigned to them by the board of directors, or by the
president.
Section 10. Compensation. The board of directors shall have power to
fix the compensation of all officers and agents of the corporation, but may
delegate to any officer or committee the power of determining the amount of
salary to be paid to any officer or agent of the corporation other than the
chairman of the board, the president, the vice presidents, the secretary and the
treasurer.
ARTICLE V.
CAPITAL STOCK
Section 1. Certificates. Certificates for stock shall be issued in
such form as may be approved by the board of directors and shall be signed by,
or bear a facsimile of the signatures of, the president or a vice president, and
shall also be signed by, or bear a facsimile of the signature of some other
person who is one of the following: the treasurer, an assistant treasurer, the
secretary, or an assistant secretary; and shall be sealed with, or bear a
facsimile of, the seal of the corporation. In case any officer of the
corporation whose signature or facsimile signature appears on such certificates
shall cease to be such officer, whether because of death, resignation or
otherwise, certificates may nevertheless be issued and delivered as though such
person had not ceased to be an officer.
Section 2. Transfers. Subject to the Maryland Corporation Law (1951
Code, Article 23, Sections 96-118 inclusive, constituting the Uniform Stock
Transfer Act), the board of directors shall have power and authority to make all
such rules and regulations as it may deem expedient concerning the issue,
transfer and registration of certificates of stock; and may appoint transfer
agents and registrars thereof. The duties of transfer agent and registrar may be
combined.
<PAGE>
Section 3. Stock Ledgers. Original or duplicate stock ledgers,
containing the names and addresses of the shareholders of the corporation and
the number of shares of each class held by them respectively, shall be kept at
an office or agency of the corporation in such city or town as may be designated
by the board of directors.
Section 4. Record Dates. The board of directors is hereby authorized
to fix the period of time, not exceeding twenty (20) days preceding the date of
any meeting of shareholders, any dividend payment date or any date for the
allotment of rights, during which the books or the corporation shall be closed
against transfer of stock. In lieu of providing for the closing of the books
against transfers of stock as aforesaid, the board of directors is hereby
authorized to fix a date, as a record date for the determination of the
shareholders, entitled to notice of and to vote at such meeting, or entitled to
receive such dividends or rights, as the case may be. Such record date shall be
not more than forty (40) days, and in case of a meeting of shareholders, not
less than ten (10) days, prior to the date on which the particular action is to
be taken. Only shareholders of record on such dates, when fixed as herein
provided, shall be entitled to notice of and to vote at such meetings, or to
receive such dividends or rights, as the case may be.
Section 5. New Certificates. In case any certificate of stock is
lost, stolen, mutilated or destroyed, the board of directors may authorize the
issue of a new certificate in place thereof upon such terms and conditions as it
may deem advisable; or the board of directors may delegate such power to any
officer or officers of the corporation; but the board of directors or such
officer or officers, in their discretion, may refuse to issue such new
certificate, save upon the order of some court having jurisdiction in the
premises.
ARTICLE VI.
FINANCES
Section 1. Checks, drafts, etc. All drafts, checks and orders for
the payment of money, notes and other evidence of indebtedness issued in the
name of the corporation shall, unless otherwise provided by resolution of the
board of directors, be signed by the president or vice president and
countersigned by the secretary or treasurer.
Section 2. Annual Resorts. A statement of the affairs of
the corporation shall be submitted at the annual meeting of the
shareholders and filed within twenty (20) days thereafter at the
office of the corporation in Baltimore. Such statement shall be
prepared by such executive officer of the corporation as may be
designated by resolution of the board of directors. If no other
<PAGE>
executive officer is so designated, it shall be the duty of the
president to prepare such statement.
Section 3. Fiscal Year. The fiscal year of the
corporation shall begin on the 1st day of July in each year and end
on the 30th day of June following.
ARTICLE VII.
REDEMPTION OF STOCK
The registered owner of the outstanding stock of the corporation
shall have the right to require the corporation to redeem his shares at the
asset value thereof, as hereinafter defined in Article VIII of these By-Laws,
upon delivery to the corporation of the certificate, or certificates, properly
endorsed, and a written request for redemption in a form satisfactory to the
Corporation.
Determination of the asset value for the redemption of stock shall
be made as of the close of business on the first business day next following the
business day on which certificates properly surrendered for redemption are
received at the designated principal place of business of the corporation. Any
certificates delivered at the designated principal place of business of the
corporation on a day which is not a business day as herein defined, shall be
deemed to have been received on the business day next succeeding the day of such
delivery. Subject to the limitations of the Investment Company Act of 1940, the
board of directors shall have authority to fix a reasonable service charge for
redemption of its stock, including redemption pursuant to any periodic
withdrawal or variable payment plan or contract.
ARTICLE VIII.
DETERMINATION OF ASSET VALUE
Section 1. The "asset value" of any share of stock of this
corporation outstanding on any day shall be the proportionate interest in the
corporation at the time of determination on such day and shall be determined by
or pursuant to the direction of the board of directors, in the following manner:
(a) The value of the gross assets at the time of determination
on such day (securities being taken at their market value determined
as hereinafter provided) less the amount determined by or pursuant
to the direction of the board of directors of all debts, obligations
and liabilities of the corporation (which debts, obligations and
liabilities shall include, without limitation of the generality of
any of the foregoing, any or all debts, obligations, liabilities or
claims, of any and every kind and nature, fixed accured, unmatured
<PAGE>
or contingent, whether for taxes, expenses, contingencies or
otherwise) but excluding the corporation's liability upon its
capital stock and surplus.
Shall be divided by:
(b) The total number of shares of capital stock of the
corporation outstanding (exclusive of any shares of treasury stock)
as of the time of determination.
Section 2. For the purposes of this Article, the value of the "gross
assets" of the corporation at the time of determination shall be established by
the following rules:
(a) The market value of each security which shall be listed or
traded in upon the New York Stock Exchange, or the American Stock
Exchange, shall be determined by the last sale price thereon, except
that if there was no sale or such security on the day of such
determination and prior to the time of such determination or on the
date next preceding such determination, thereby the mean between the
closing bid and asked prices for such security on the last preceding
date upon which such exchange on which such security is listed or
traded in shall have been open and upon which such closing bid and
asked prices shall have been quoted.
(b) The market value of such security which shall not be
listed or traded in upon the New York Stock Exchange or the American
Stock Exchange, or with respect to which trading upon such exchanges
has been suspended, shall be determined by the closing sale price of
such security on the day next preceding the time of determination
upon any national securities exchange (as defined by the federal
Securities Exchange Act of 1934, as amended) upon which such
security is listed or traded in.
(c) The market value of any security, no provision for the
valuation of which is contained in either (a) or (b) above, shall be
determined by the best readily available market quotation or, if
there be none, then by a method determined by or pursuant to the
direction of the board of directors.
(d) Dividends declared but not yet received, or rights, in
respect of securities which are quoted ex-dividend or ex-rights,
shall be included at the value thereof as determined by or pursuant
to the direction of the board of directors.
<PAGE>
(e) The value of any of the assets of the corporation during a
period of emergency as defined in Article IX of the By-Laws shall be
determined by or pursuant to the direction of the board of
directors.
ARTICLE IX.
PERIOD OF EMERGENCY
During any period of emergency, the board of directors, at its
option, may suspend the computation of asset value for the purpose of issuing or
redeeming its stock, and may suspend any obligation to accept payments for the
acquisition of additional stock of the corporation, or may suspend the
obligation of the corporation to redeem stock. A period of emergency is defined
to be:
(a) A period during which the New York Stock Exchange is
closed other than customary weekend and holiday closings, or during
which trading on the New York Stock Exchange is restricted;
(b) A period during which disposal by the corporation of
securities owned by it is not reasonably practicable, or during
which it is not reasonably practicable for the corporation fairly to
determine the value of its net assets; or
(c) Such other periods as the Securities and Exchange
Commission pursuant to the provisions of the Investment Company Act
of 1940 may by order declare as an emergency period or periods.
ARTICLE X.
RESTRICTIONS ON INVESTMENTS AND PROHIBITED TRANSACTIONS
The following restrictions and provisions with respect to the
investments which may be made by the corporation and the transactions which may
be entered into by the corporation are in amplification and not in limitation of
the provisions set forth in Article VII of the certificate of incorporation.
Section 1. The corporation may not purchase securities of any one
issuer if immediately after such purchase more than five per cent (5%) of the
assets, taken at market value, would be invested in securities of such issuer,
but this limitation shall not apply to investments in obligations of the United
States or in obligations of any corporation organized under general act of
Congress if such corporation be an instrumentality of the United States.
<PAGE>
Section 2. The corporation shall not purchase securities of any
issuer if immediately after and as a result of such purchase the corporation
would own more than ten per cent (10%) of the outstanding voting securities of
such issuer.
Section 3. The corporation shall not purchase or acquire securities
of any other investment company as defined in Section 3 of the federal
Investment Company Act of 1940, except for a purchase or acquisition pursuant to
a plan of reorganization, merger or consolidation.
Section 4. The corporation shall not lend any of its funds or assets
to any officer or director of the corporation, any investment manager or
principal underwriter, or any officer or director of such investment manager or
principal underwriter.
Section 5. The officers and directors of the corporation shall not
deal for or on behalf of the corporation with themselves as principal or agent
or with any corporation or partnership in which they have a financial interest,
except that, subject to the provisions of the certificate of incorporation, this
shall not prohibit:
(a) officers or directors of the corporation from having a
financial interest in the corporation or in its investment manager;
or in any corporation, firm or association rendering services in
connection with the distribution and sale of securities issued by
the corporation.
(b) the purchase of securities for the corporation or the sale
of securities owned by the corporation through a security broker or
dealer, one or more of whose partners, officers or directors is an
officer or director of the corporation, provided such transactions
are handled in the capacity of broker only and provided commissions
charged do not exceed customary brokerage charges for such service.
(c) the employment of legal counsel, registrar, transfer
agent, dividend disbursing agent or custodian, having a partner,
officer or director who is an officer or director of the
corporation, provided that only customary fees are charged for
services rendered to or for the benefit of the corporation.
(d) the purchase for the investment portfolio of the
corporation of securities issued by an issuer having an officer,
director or security holder who is an officer or director of the
corporation or of the investment manager of the corporation;
provided, however, that no such officer or director of the
corporation or of its investment manager may own benefically more
<PAGE>
than one-half (1/2) of one per cent (1%) of any class of outstanding
securities of such issuer, nor may such officers and directors of
the corporation or its investment manager, as a group, own
beneficially more than five per cent (5%) of any class of
outstanding securities of such issuer.
ARTICLE XI.
INDEMNIFICATION OF DIRECTORS OFFICERS AND EMPLOYEES
Section 1. Definitions. The following definitions shall apply to
the terms as used in this Article:
(a) "Corporation" includes this corporation and any domestic
or foreign predecessor entity of the corporation in a merger,
consolidation, or other transaction in which the predecessor's
existence ceased upon consummation of the transaction.
(b) "Director" means an individual who is or was a director of
the corporation and an individual who, while a director of the
corporation, is or was serving at the corporation's request as a
director, officer, partner, trustee, employee, or agent of any other
foreign or domestic corporation or of any partnership, joint
venture, trust, other enterprise, or employee benefit plan. A
director shall be considered to be serving an employee benefit plan
at the corporation's request if his or her duties to the corporation
also impose duties on or otherwise involve services by him or her to
the plan or to participants in or beneficiaries of the plan.
(c) "Expenses" includes attorney fees.
(d) "Liability" means the obligation to pay a judgment,
settlement, penalty, fine (including an excise tax assessed with
respect to an employee benefit plan), or reasonable expense incurred
with respect to a proceeding.
(e) "Official capacity," when used with respect to a director,
means the office of director in the corporation, and, when used with
respect to an individual other than a director, means the office in
the corporation held by the officer or the employment or agency
relationship undertaken by the employee or agent on behalf of the
corporation. "Official capacity" does not include service for any
other foreign or domestic corporation or for any partnership, joint
venture, trust, other enterprise, or employee benefit plan.
<PAGE>
(f) "Party" includes an individual who was, is, or is
threatened to be made a named defendant or respondent in a
proceeding.
(g) "Proceeding" means any threatened, pending, or completed
action, suit, or proceeding, whether civil, criminal,
administrative, or investigative and whether formal or informal.
Section 2. Indemnification for Liability.
(a) Except as provided in paragraph (d) of this Section (2),
the corporation shall indemnify against liability incurred in any
proceeding any individual made a party to the proceeding because he
or she is or was a director or officer if:
(I) He or she conducted himself or herself in
good faith;
(II) He or she reasonably believed:
(A) In the case of conduct in his or her official
capacity with the corporation, that his or her conduct
was in the corporation's best interests; or
(B) In all other cases, that his or her
conduct was at least not opposed to the
corporation's best interests; and
(III) In the case of any criminal proceeding, he or she
had no reasonable cause to believe his or her conduct was
unlawful.
(b) A director's or officer's conduct with respect to an
employee benefit plan for a purpose he or she reasonably believed to
be in the interests of the participants in or beneficiaries of the
plan is conduct that satisfies the requirements of this Section (2).
A director's or officer's conduct with respect to an employee
benefit plan for a purpose that he or she did not reasonably believe
to be in the interests of the participants in or beneficiaries of
the plan shall be deemed not to satisfy the requirements of this
Section (2).
(c) The termination of any proceeding by judgment, order,
settlement, or conviction, or upon a plea of nolo contendere or its
equivalent, creates a rebuttable presumption that the individual did
not meet the standard of conduct set forth in paragraph (a) of this
Section (2).
<PAGE>
(d) The corporation may not indemnify a director or officer
under this Section (2) either:
(I) In connection with a proceeding by or in the right
of the corporation in which the director or officer was
adjudged liable to the corporation; or
(II) In connection with any proceeding charging improper
personal benefit to the director or officer, whether or not
involving action in his or her official capacity, in which he
or she was adjudged liable on the basis that personal benefit
was improperly received by him or her.
(e) Indemnification permitted under this Section (2) in
connection with a proceeding by or in the right of the corporation
is limited to reasonable expenses incurred in connection with the
proceeding.
Section 3. Indemnification for Expenses.
(a) Except as limited by these Bylaws or the Articles of
Incorporation, the corporation shall be required to indemnify a
person who is or was a director or officer of the corporation and
who was wholly successful, on the merits or otherwise, in defense of
any proceeding to which he or she was a party against reasonable
expenses incurred by him or her in connection with the proceeding.
Section 4. Court-Ordered Indemnification. Except as otherwise
limited by these Bylaws or the Articles of Incorporation, a director or officer
who is or was a party to a proceeding may apply for indemnification to the court
conducting the proceeding or to another court of competent jurisdiction. On
receipt of an application, the court, after giving any notice the court
considers necessary, may order indemnification in the following manner:
(I) If it determines the director or officer is entitled
to mandatory indemnification, the court shall order
indemnification, in which case the court shall also order the
corporation to pay the director's or officer's reasonable
expenses incurred to obtain court-ordered indemnification.
(II) If it determines that the director or officer is
fairly and reasonably entitled to indemnification in view of
all the relevant circumstances, whether or not he or she met
the standard of conduct set forth in paragraph (a) of Section
(2) of this Article or was adjudged liable in the
circumstances described in paragraph (d) of Section (2) of
<PAGE>
this Article, the court may order such indemnification as the
court deems proper; except that the indemnification with
respect to any proceeding in which liability shall have been
adjudged in the circumstances described in paragraph (d) of
Section (2) of this Article is limited to reasonable expenses
incurred.
Section 5. Limitation on Indemnification.
(a) The corporation may not indemnify a director or officer
under Section (2) of this Article unless authorized in the specific
case after a determination has been made that indemnification of the
director or officer is mandatory in the circumstances because he or
she has met the standard of conduct set forth in paragraph (a) of
Section (2) of this Article.
(b) The determination required to be made by paragraph (a) of
this Section (5) shall be made:
(I) By the board of directors by a majority vote of a
quorum, which quorum shall consist of directors not parties to
the proceeding; or
(II) If a quorum cannot be obtained, by a majority vote
of a committee of the board designated by the board, which
committee shall consist of two or more directors not parties
to the proceeding; except that directors who are parties to
the proceeding may participate in the designation of directors
for the committee.
(c) If the quorum cannot be obtained or the committee cannot
be established under paragraph (b) of this Section (5), or even if a
quorum is obtained or a committee designated if such quorum or
committee so directs, the determination required to be made by
paragraph (a) of this Section (5) shall be made:
(I) By independent legal counsel selected by a vote of
the board of directors or the committee in the manner
specified in subparagraph (I) or (II) of paragraph (b) of this
Section (5) or, if a quorum of the full board cannot be
obtained and a committee cannot be established, by independent
legal counsel selected by a majority vote of the full board;
or
(II) By the shareholders.
(d) Authorization of indemnification and evaluation
as to reasonableness of expenses shall be made in the same
<PAGE>
manner as the determination that indemnification is mandatory;
except that, if the determination that indemnification is mandatory
is made by independent legal counsel, authorization of
indemnification and evaluation as to reasonableness of expenses
shall be made by the body that selected said counsel.
Section 6. Advance Payment of Expenses.
(a) The corporation shall pay for or reimburse the reasonable
expenses incurred by a director, officer, employee or agent who is a
party to a proceeding in advance of the final disposition of the
proceeding if:
(I) The director, officer, employee or agent furnishes
the corporation a written affirmation of his or her good-faith
belief that he or she has met the standard of conduct
described in subparagraph (I) of paragraph (a) of Section (2)
of this Article;
(II) The director, officer, employee or agent furnishes
the corporation a written undertaking, executed personally or
on his or her behalf, to repay the advance if it is determined
that he or she did not meet such standard of conduct; and
(III) A determination is made that the facts then known
to those making the determination would not preclude
indemnification under this Section (6).
(b) The undertaking required by subparagraph (II) of paragraph
(a) of this Section (6) shall be an unlimited general obligation of
the director, officer, employee or agent, but need not be secured
and may be accepted without reference to financial ability to make
repayment.
Section 7. Reimbursement of Witness Expenses. The corporation shall
pay or reimburse expenses incurred by a director or officer in connection with
his or her appearance as a witness in a proceeding at a time when he or she has
not been made a named defendant or respondent in the proceeding.
Section 8. Insurance for Indemnification. The corporation may
purchase and maintain insurance on behalf of an individual who is or was a
director, officer, employee, fiduciary, or agent of the corporation and who,
while a director, officer, employee, fiduciary, or agent of the corporation, is
or was serving at the request of the corporation as a director, officer,
partner, trustee, employee, fiduciary, or agent of any other foreign or domestic
corporation or of any partnership, joint venture, trust, other enterprise, or
employee benefit plan against any liability asserted against or incurred by him
or her in any such capacity or arising out of his or her status as such, whether
<PAGE>
or not the corporation would have the power to indemnify him or her against
such liability under the provisions of this Article.
Section 9. Notice of Indemnification. Any indemnification of or
advance of expenses to a director or officer in accordance with this Article, if
arising out of a proceeding by or on behalf of the corporation, shall be
reported in writing to the shareholders with or before the notice of the next
shareholders meeting.
Section 10. Indemnification of officers, Employees and Agents of the
Corporation. The Board of Directors may indemnify and advance expenses to an
officer, employee or agent of the corporation who is not a director of the
corporation to the same or greater extent as to a director if such
indemnification and advance expense payment is provided for in these Bylaws, the
Articles of Incorporation, by resolution of the shareholders or directors or by
contract, in a manner consistent with the Maryland Corporation Code.
ARTICLE XII.
MISCELLANEOUS PROVISIONS
Section 1. Seal. The board of directors shall provide a suitable
seal, bearing the name of the corporation, which shall be in charge of the
secretary. The board of directors may authorize one or more duplicate seals and
provide for the custody thereof.
Section 2. Bonds. The board of directors may require any officer,
agent or employee of the corporation to give a bond to the corporation,
conditioned upon the faithful discharge of his duties, with one or more sureties
and in such amount as may be satisfactory to the board of directors.
Section 3. Voting upon Stock in Other Corporations. Any stock in
other corporations or associations, which may from time to time be held by the
corporation, may be voted at any meeting of the shareholders thereof by the
president or a vice president of the corporation or by proxy or proxies
appointed by the president or one of the vice presidents of the corporation. The
board of directors, however, may by resolution appoint some other person or
persons to vote such stock, in which case, such person or persons shall be
entitled to vote such stock upon the production of a certified copy of such
resolution.
Section 4. By-Laws. The board of directors shall have the power to
make, amend and repeal the by-laws of the corporation which may contain any
provision for the regulation and management of the affairs of the corporation
not inconsistent with law or the certificate of incorporation; provided,
however, that Articles VII, VIII and X may not be altered or repealed except by
the affirmative vote of the holders of a majority of the outstanding stock of
<PAGE>
the corporation; and provided further, that any and all other provisions of the
by-laws, notwithstanding the power of the directors to act with respect thereto,
may be altered or repealed, and new provisions may be adopted by the
shareholders or at any annual meeting or any special meeting called for that
purpose.
Section 5. Definitions. For all purposes of the
certificate of incorporation and these by-laws, the terms:
(a) "business day" shall be defined as a day with respect to
which the New York Stock Exchange is open for business, and with
respect to which the actual time of closing of such exchange is that
time which shall have been scheduled for such closing in advance of
the opening of such exchange;
(b) "the close of business" shall be defined as the time of
closing of the New York Stock Exchange.
- ------------------------------------------
The Amended Bylaws adopted and approved as amended by the board of
directors on December 15, 1976, have been revised to reflect amendments through
July 21, 1993, as set forth below:
Minutes dated December 15, 1976 - Article XI Minutes dated April 29,
1986 - Article XI Minutes dated January 13, 1988 - Article I,
Section 1 Minutes dated August 22, 1988 - Article I, Section 1
Minutes dated October 10, 1989 - Article IV, Section 1
Minutes dated January 22, 1992 - Article II, Section 4; Article II,
Section 8; and Article IV, Section 1
Minutes dated July 21, 1993 - Article I, Section 2
INVESTMENT ADVISORY AGREEMENT
THIS AGREEMENT is made this 30th day of April 1991, in Denver, Colorado,
by and between INVESCO Funds Group, Inc. (the "Adviser"), a Delaware
Corporation, and Financial Industrial Income Fund, Inc., a Maryland Corporation
(the "Fund").
W I T N E S S E T H :
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 currently has one class of shares (the "Shares"); and
WHEREAS, the Fund desires that the Adviser manage its investment
operations and to provide certain other services, and the Adviser desires to
manage said operations and to provide such other services;
NOW, THEREFORE, in consideration of these premises and of the mutual
covenants and agreements hereinafter contained, the parties hereto agree as
follows:
1. Investment Management Services. The Adviser hereby agrees to manage
the investment operations of the Fund, subject to the terms of this
Agreement and to the supervision of the Fund's directors (the
"Directors"). 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, and to execute all
purchases and sales of portfolio securities;
(b) to maintain a continuous investment program for the Fund,
consistent with (i) the Fund's 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 statement of additional
information 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;
<PAGE>
(c) to determine what securities are to be purchased or sold for
the Fund, unless otherwise directed by the Directors of the
Fund, and to execute transactions accordingly;
(d) to provide to the Fund the benefit of all of the investment
analyses and research, the reviews of current economic
conditions and of 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 should be invested in
the various types of securities authorized for purchase by the
Fund; and
(f) to make recommendations as to the manner in which voting
rights, rights to consent to Fund action and any other rights
pertaining to the Fund's securities shall be exercised.
With respect to execution of transactions for the Fund, the Adviser
is authorized to employ such brokers or dealers as may, in the
Adviser's best judgment, implement the policy of the Fund to obtain
prompt and reliable execution at the most favorable price
obtainable. In assigning an execution or negotiating the commission
to be paid therefor, the Adviser is authorized to consider the full
range and quality of a broker's services which benefit the Fund,
including but not limited to research and analytical capabilities,
reliability of performance, and financial soundness and
responsibility. Research services prepared and furnished by brokers
through which the Adviser effects securities transactions on behalf
of the Fund may be used by the Adviser in servicing all of its
accounts, and not all such services may be used by the Adviser in
connection with the Fund. In the selection of a broker or dealer for
execution of any negotiated transaction, the Adviser shall have no
duty or obligation to seek advance competitive bidding for the most
favorable negotiated commission rate for such transaction, or to
select any broker solely on the basis of its purported or "posted"
commission rate for such transaction, provided, however, that the
Adviser shall consider such "posted" commission rates, if any,
together with any other information 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 contemporaneous
market in such securities, the importance to the Fund of speed,
efficiency, and confidentiality of execution, the execution
<PAGE>
capabilities required by the circumstances of the particular
transactions, and the apparent knowledge or familiarity with sources
from or to whom such securities may be purchased or sold. Where the
commission rate reflects services, reliability and other relevant
factors in addition to the cost of execution, the Adviser shall have
the burden of demonstrating that such expenditures were bona fide
and for the benefit of the Fund.
2. Other Services and Facilities. The Adviser shall, in addition,
supply at its own expense all supervisory and administrative
services and facilities necessary in connection with the day-to-day
operations of the Fund (except those associated with the preparation
and maintenance of certain required books and records, and record-
keeping and administrative functions relating to employee benefit
and retirement plans, which services and facilities are provided
under a separate Administrative Services Agreement between the Fund
and the Adviser). These services shall include, but not be limited
to: supplying the Fund with officers, clerical staff and other
employees, if any, who are necessary in connection with the Fund's
operations; furnishing office space, facilities, equipment, and
supplies; providing personnel and facilities required to respond to
inquiries related to shareholder accounts; conducting periodic
compliance reviews of the Fund's operations; preparation and review
of required documents, reports and filings by the Adviser's in-house
legal and accounting staff (including the prospectus, statement of
additional information, proxy statements, shareholder reports, tax
returns, reports to the SEC, and other corporate documents of the
Fund), except insofar as the assistance of independent accountants
or attorneys is necessary or desirable; supplying basic telephone
service and other utilities; and preparing and maintaining the books
and records required to be prepared and maintained by the Fund
pursuant to Rule 31a-1(b) (4), (5), (9), and (10) under the
Investment Company Act of 1940. All books and records prepared and
maintained by the Adviser for the Fund under this Agreement shall be
the property of the Fund and, upon request therefor, the Adviser
shall surrender to the Fund such of the books and records so
requested.
3. Payment of Costs and Expenses. The Adviser shall bear the costs and
expenses of all personnel, facilities, equipment and supplies
reasonably necessary to provide the services required to be provided
by the Adviser under this Agreement. The Fund shall pay all of the
costs and expenses associated with its operations and activities,
<PAGE>
except those expressly assumed by the Adviser under this Agreement,
including but not limited to:
(a) all brokers' commissions, issue and transfer taxes, and other
costs chargeable to the Fund in connection with securities
transactions to which the Fund is a party or in connection
with securities owned by the Fund;
(b) the fees, charges and expenses of any independent public
accountants, custodian, depository, dividend disbursing agent,
dividend reinvestment agent, transfer agent, registrar,
independent pricing services and legal counsel for the Fund;
(c) the interest on indebtedness, if any, incurred by the Fund;
(d) the taxes, including franchise, income, issue, transfer,
business license, and other corporate fees payable by the Fund
to federal, state, county, city, or other governmental agents;
(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 independent Directors,
and the compensation of any employees and officers of the Fund
who are not employees of the Adviser or one of its affiliated
companies and compensated as such;
(g) the costs of printing and distributing reports, notices of
shareholders' 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 organization 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
registration 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;
<PAGE>
(i) the expenses of repurchasing and redeeming shares of the Fund;
(j) insurance premiums;
(k) the costs of designing, printing, and issuing certificates
representing shares of beneficial interest of the Fund;
(l) extraordinary expenses, including fees and disbursements of
Fund counsel, in connection with litigation by or against the
Fund;
(m) premiums for the fidelity bond maintained by the Fund pursuant
to Section 17(9) of the 1940 Act and rules promulgated
thereunder (except for such premiums as may be allocated to
third parties, as insureds thereunder);
(n) association and institute dues;
(o) the expenses of distributing shares of the Fund but only if
and to the extent permissible under a plan of distribution
adopted by the Fund pursuant to Rule 12b-1 of the Investment
Company Act of 1940; and
(p) all fees paid by the Fund for administrative, recordkeeping,
and sub-accounting services under the Administrative Services
Agreement between the Fund and the Adviser dated April 30,
1991;
4. Use of Affiliated Companies. In connection with the rendering of the
services required to be provided by the Adviser under this
Agreement, the Adviser may, to the extent it deems appropriate and
subject to compliance with the requirements of applicable laws and
regulations, and upon receipt of written approval of the Fund, make
use of its affiliated companies and their employees; provided that
the Adviser shall supervise and remain fully responsible 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.
<PAGE>
5. 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
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 Fund, as determined by valuations 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 Additional Information.
The advisory fee to the Adviser shall be computed at the following
annual rates: 0.60; of the Fund's daily net assets up to $350
million; 0.55; of the Fund's daily net assets in excess of $350
million but not more than $700 million; and 0.50; of the Fund's
daily net assets in excess of $700 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
purpose of this Paragraph 5, 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 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 the Fund's expenses exceeds the
state-imposed annual expense limitation to which the Fund is
subject, the Adviser will be required to reimburse the Fund for such
excess expenses promptly. Interest, taxes and extraordinary items
such as litigation costs are not deemed expenses for purposes of
this paragraph and shall be borne by the Fund in any event.
Expenditures, including costs incurred in connection with the
purchase or sale of portfolio securities, which are capitalized in
accordance 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.
6. Avoidance of Inconsistent Positions and Compliance with Laws. In
connection with purchases or sales of securities for the investment
portfolio of the Fund, neither the Adviser nor its officers or
employees will act as a principal or agent for any party other than
the Fund or receive any commissions. The Adviser will comply with
all applicable laws in acting hereunder including, without
<PAGE>
limitation, the 1940 Act; the Investment Advisers Act of 1940, as
amended; and all rules and regulations duly promulgated under the
foregoing.
7. 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 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, but
only as long as such continuance is specifically approved at least
annually (i) by a vote of a majority of the outstanding voting
securities 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, as the case may be, or by the Adviser. This Agreement
shall immediately terminate in the event of its assignment, unless
an order is issued by the Securities 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 7, the definitions contained in Section 2(a) of the 1940
Act and the applicable rules under the 1940 Act (particularly the
definitions of "interested 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.
Termination of this Agreement shall not affect the right of the
Adviser to receive payments on any unpaid balance of the
compensation described in paragraph 5 earned prior to such
termination.
8. Non-Exclusive Services. The Adviser shall, during the term of this
Agreement, be entitled to render investment advisory services to
others, including, without limitation, other investment companies
with similar objectives to those of the Fund, the Adviser may, when
<PAGE>
it deems such to be advisable, aggregate orders for its other
customers together with any securities of the same type to be
sold or purchased for the Fund 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 and the Adviser's other customers.
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 orally
changed or discharged, but may only be modified by an instrument in
writing signed by the Fund and the Adviser. In addition, no
amendment to 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 majority of the outstanding voting securities of the Fund
(other than an amendment which can be effective without shareholder
approval under applicable law).
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. 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.
<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, on the date first above written.
FINANCIAL INDUSTRIAL INCOME FUND, INC.
ATTEST:
By: /s/ John M. Butler
------------------
John M. Butler
/s/ Glen A. Payne President
- -----------------
Glen A. Payne
Secretary
INVESCO FUNDS GROUP, INC.
ATTEST:
By: /s/ Dan J. Hesser
-----------------
Dan J. Hesser
/s/ Glen A. Payne President
- -----------------
Glen A. Payne
Secretary
SUB-ADVISORY AGREEMENT
AGREEMENT made this 30th day of April, 1991, by and between INVESCO Funds
Group, Inc. ("INVESCO"), a Delaware corporation, and INVESCO Trust Company, a
Colorado corporation ("the Sub-Adviser").
W I T N E S S E T H:
WHEREAS, FINANCIAL INDUSTRIAL INCOME FUND, INC. (the "Fund") 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 currently has one class of shares (the
"Shares"); and
WHEREAS, INVESCO and the Sub-Adviser are engaged principally in rendering
investment advisory 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 Fund (the "INVESCO Investment Advisory Agreement"), pursuant to which
INVESCO is required to provide investment and advisory services to the Fund,
and, upon receipt of written approval of the Fund, 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 Fund on the terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and the covenants
hereinafter 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
Fund and to furnish the investment advisory services described below, subject to
the broad supervision of INVESCO and Board of Directors of the Fund, for the
period and on the terms and conditions set forth in this Agreement. The
Sub-Adviser hereby accepts such assignment and agrees during such period, at its
own expense, to render such services and to assume the obligations herein set
forth for the compensation provided for herein. The Sub-Adviser shall for all
purposes herein be deemed to be independent contractors and shall, unless
otherwise expressly provided or authorized herein, shall have no authority to
act for or represent the Fund in any way or otherwise be deemed an agent of the
Fund.
<PAGE>
The Sub-Adviser hereby agrees to manage the investment operations of the
Fund, subject to the supervision of the Fund'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 Fund, and to execute all purchases and
sales of portfolios securities;
(b) to maintain a continuous investment program for the Fund, consistent
with (i) the Fund's 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 statement
of additional information 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, unless otherwise directed by the Directors of the Fund or
INVESC0, and to execute transactions accordingly;
(d) to provide to the Fund, the benefit of all of the investment
analysis and research, the reviews of current economic conditions
and of 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 Fund should be invested in the
various types of securities authorized for purchase by the Fund; and
(f) to make recommendations as to the manner in which voting rights,
rights to consent to Fund action and any other rights pertaining to
the Fund's securities shall be exercised.
With respect to execution of transactions for the Fund, 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 Fund to obtain prompt and reliable
execution 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
Fund, including but not limited to research and analytical capabilities,
reliability of performance, and financial soundness and responsibility. Research
<PAGE>
services prepared and furnished by brokers through which the Sub-Adviser effects
securities transactions on behalf of the Fund 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 Fund. In the selection of a broker or dealer
for execution of any negotiated transaction, the Sub-Adviser shall have no duty
or obligation to seek advance competitive bidding for the most favorable
negotiated commission rate for such transaction, or to select any broker solely
on the basis of its purported or "posted" commission rate for such transaction,
provided, however, that the Sub-Adviser shall consider such "posted" commission
rates, if any, together with any other information 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 contemporaneous market in such
securities, the importance to the Fund of speed, efficiency, and confidentiality
of execution, the execution capabilities required by the circumstances of the
particular transactions, and the apparent knowledge or familiarity with sources
from or to whom such securities may be purchased 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
Fund.
ARTICLE II
ALLOCATION OF CHARGES AND EXPENSES
The Sub-Adviser assumes and shall pay for maintaining the staff and
personnel 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 expressly
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 Fund shall pay all costs and
expenses in connection with the operations of the Fund.
ARTICLE III
COMPENSATION OF THE SUB-ADVISER
For the services rendered, the 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 Fund, as determined by a
valuation 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 Additional
Information. The advisory fee to the Sub-Adviser shall be computed at the
following annual rates: 0.25% of the Fund's daily net assets up to $200 million,
<PAGE>
and 0.20% of the Fund's daily net assets in excess of $200 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 purpose of this Article
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 Fund which may be invested in
any other investment company for which the Sub-Adviser serves as investment
adviser or sub-adviser. The fee provided for hereunder shall be prorated 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 Fund are not to be deemed to be
exclusive, 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
"affiliates") being free to render services to others. It is understood that
directors, officers, employees and shareholders of the Fund are or may become
interested in the Sub-Adviser and its affiliates, as directors, officers,
employees 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 Fund as directors, officers and employees.
ARTICLE V
AVOIDANCE OF INCONSISTENT POSITIONS AND COMPLIANCE WITH
APPLICABLE LAWS
In connection with purchases or sales of securities for the investment
portfolio of the Fund, neither the Sub-Adviser nor any of its directors,
officers or employees will act as a principal or agent for any party other than
the Fund or receive any commissions. The Sub-Adviser will comply with all
applicable 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
majority of the outstanding voting securities of the Fund, and shall remain in
<PAGE>
force for an initial term of 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 Fund, or by the vote of a majority of the
outstanding voting securities of the Fund, 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 Fund by vote of the Directors of the Fund, or by vote
of a majority of the outstanding voting securities of the Fund, 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 Fund, and a termination by
the Fund 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 thereunder.
The Sub-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.
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 Article 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 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 majority of the outstanding
voting securities of the Fund (other than an amendment which can be effective
without shareholder approval under applicable law).
ARTICLE VIII
DEFINITIONS OF CERTAIN TERMS
In interpreting the provisions of this Agreement, the terms "vote of a
majority of the outstanding voting securities," "assignments," "affiliated
<PAGE>
person" and "interested person," when used in this Agreement, shall have the
respective 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.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the date first above written.
INVESCO TRUST COMPANY
ATTEST: By: /s/ R. Dalton Sim
-----------------
R. Dalton Sim
President
/s/ Glen A. Payne
- -----------------
Glen A. Payne
Secretary
INVESCO FUNDS GROUP, INC.
ATTEST:
By: /s/ Dan J. Hesser
-----------------
Dan J. Hesser
President
/s/ Glen A. Payne
- -----------------
Glen A. Payne
Secretary
GENERAL DISTRIBUTION CONTRACT
THIS CONTRACT is made and entered into this 14th day of December,
1984, by and between Financial Industrial Income Fund, Inc., a Maryland
Corporation, (hereinafter called the Company) and FINANCIAL PROGRAMS, INC., a
Delaware corporation (hereinafter called Programs):
WITNESSETH:
1. Distribution of Fund Shares
Company hereby grants Programs the exclusive right to distribute and
promote the sale of the capital stock of the Company (shares) in all
jurisdictions and localities where the offering thereof is legally qualified,
and Programs hereby agrees to act as such exclusive selling agent, subject to
the terms and conditions herein contained.
2. Terms and Conditions of Sales
A. Shares shall lie offered at the net asset value thereof, as
defined in the bylaws of the Company, and no sales charge or commission shall be
imposed on the sale of shares to any person.
B. No shares shall be offered for sale until and unless there shall
have been delivered to the purchaser a currently effective prospectus covering
the same filed under the Securities Act of 1933 and qualified for use in each
state, territorial, or foreign jurisdiction in which the offering is made.
3. Duties of Distributor and Assumption of Expenses by Distributor
A. Programs shall use its best efforts to promote maximum
distribution of shares by direct selling methods, which may include use of the
mails, telephone, and such other means, including personal solicitation, as
Programs in its sole discretion may deem advisable. Programs shall train and
supervise all personnel engaged in this direct selling effort, provided,
however, that nothing herein shall be construed to impose upon Programs any duty
to maintain sales representatives in the field, or to engage any subdistributor
or agent, or to employ any person or incur any expense not reasonably required
by or attributable to direct selling activities administered by Programs.
B. Programs shall prepare and provide necessary copies of all sales
literature, including prospectuses covering said securities, subject to the
Company's approval thereof, and shall bear all costs incident to the
distribution and sale of shares by the direct selling methods herein provided.
C. Company agrees to make available to Programs such information,
books and records relating to the business of the Company as Programs may from
time to time reasonably request in connection with the services rendered by
Programs hereunder.
<PAGE>
4. Duration and Termination of Contract
A. This contract, having been approved by vote of a majority of the
directors of the Company (including a majority of the directors of the Company
who are not interested persons of any party to the agreement within the purview
of Section 15(c) of the Investment Company Act of 1940, as amended), shall
continue in effect unless sooner terminated as hereinafter provided for an
initial term of two years and from year to year thereafter as long as such
continuance is specifically approved at least annually by the board of directors
of the Company or by vote of a majority of the outstanding voting securities of
the Company, and, in addition, the terms of the contract and any renewal thereof
shall have been approved by a vote of a majority of the directors who are not
parties to the contract or interested persons of any such party cast in person
at a meeting called for the purpose of voting on such approval.
B. If this contract is assigned (as defined in Section 2(a) (4) of
the Investment Company Act of 1940), it shall automatically terminate forthwith.
C. Either Programs or the Company shall have the right to terminate
this contract without the payment of any penalty, upon sixty (60) days notice to
the other.
5. Miscellaneous
A. Nothing herein shall be construed to prohibit Programs from
engaging in other related or unrelated businesses.
B. Nothing herein shall be construed to impose upon Programs any
duty or expense in connection with the services of any registrar, transfer agent
or custodian appointed by the Company, the computation of the asset value or
offering price of shares, the preparation and distribution of notices of
meetings, proxy soliciting material, annual and periodic reports, dividends and
dividend notices, or any other corporate responsibility of the Company.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed the foregoing
contract on the date first above written.
FINANCIAL INDUSTRIAL INCOME
FUND, INC.
By: /s/ John M. Butler
-------------------------
ATTEST: John M. Butler, President
/s/ Karen C. Gehlhausen
- ------------------------------
Karen C. Gehlhausen, Secretary
FINANCIAL PROGRAMS, INC.
By: /s/ Dan J. Hesser
-----------------
Dan J. Hesser,
Exec. Vice Pres.
ATTEST:
/s/ Karen C. Gehlhausen
- ------------------------------
Karen C. Gehlhausen, Secretary
CUSTODIAN CONTRACT
THIS CONTRACT between FINANCIAL INDUSTRIAL INCOME FUND, INC. a corporation
organized and existing under the laws of the State of Maryland, having its
principal office and place of business at 7503 Marin Drive, Englewood, Colorado
80111, hereinafter called the "Fund," and STATE STREET BANK AND TRUST COMPANY,
hereinafter called the "Custodian,"
W I T N E S S E T H:
That in consideration of the mutual covenants and agreements hereinafter
contained, the parties hereto agree as follows:
I. Employment of Custodian and Property to be Held by It
The Fund hereby employs the Custodian as the Custodian of its assets
pursuant to the provisions of its governing documents. The Fund agrees to
deliver to the Custodian all securities: and cash owned by it, and all payments
of income, payments of principal or capital distributions received by it with
respect to all securities owned by the Fund from time to time, and the cash
consideration received by it for such new or treasury shares ("Shares") of the
Fund as may be issued or sold from time to time The Custodian shall not be
responsible for any property of the Fund held or received by the Fund and not
delivered to the Custodian.
The Custodian may from time to time employ one or more subcustodians, but
only after having received approval of such employment by specific written
instructions from the Fund.
II. Duties of the Custodian with Respect to Property of the Fund Held by the
Custodian
A. Holding Securities. The Custodian shall hold and physically segregate for
the account of the Fund all non-cash property, including all securities
owned by the Fund, other than securities which are maintained pursuant to
Section K of Article II in a clearing agency which acts as a securities
depository or in a book-entry system authorized by the U.S. Department of
the Treasury, collectively referred to herein as "Securities Systems."
B. Delivery of Securities. The Custodian shall release and deliver securities
owned by the Fund held by the Custodian or in a Securities System account
of the Custodian only upon receipt of proper instructions which may be
continuing instructions when deemed appropriate by the parties, and only
in the following cases:
(1) Upon sale of such securities for the account of the Fund and receipt
of payment in full therefor in cash, certified or cashier's check,
other official bank check, or the equivalent.
<PAGE>
(2) Upon the receipt of payment in connection with any repurchase
agreement related to such securities entered into by the Fund.
(3) In the case of a sale effected through a Securities System, in
accordance with the provisions of Section K hereof.
(4) To the depository agent in connection with tender or other similar
offers for portfolio securities of the Fund.
(5) To the Issuer thereof or its agent when such securities are called,
redeemed, retired, or otherwise become payable; provided that, in
any such case, the cash or other consideration is to be delivered to
the Custodian.
(6) To the Issuer thereof, or its agent, for transfer into the name of
the Fund or into the name of any nominee or nominees of the
Custodian or into the name or nominee name of any agent appointed
pursuant to Section J of Article II or into the name or nominee name
of any sub-custodian appointed pursuant to Article I; or for
exchange for a different number of bonds, certificates or other
evidence representing the same aggregate face amount or number of
units; provided that, in any such case, the new securities are to be
delivered to the Custodian.
(7) To the broker selling the same for examination in accordance with
the "street delivery" custom; provided that the Custodian shall
adopt such procedures as the Fund from time to time shall approve to
ensure their prompt return to the Custodian by the broker in the
event the broker elects not to accept them.
(8) For exchange or conversion pursuant to any plan of merger,
consolidation, recapitalization, reorganization or readjustment of
the securities of the Issuer of such securities, or pursuant to
provisions for conversion contained in such securities, or pursuant
to any deposit agreement; provided that, in any such case, the new
securities and cash, if any, are to be delivered to the Custodian.
(9) In the case of warrants, rights or similar securities, the surrender
thereof in the exercise of such warrant, rights or similar
securities or the surrender of interim receipts or temporary
<PAGE>
securities for definitive securities; provided that, in any such
case, the new securities and cash, if any, are to be delivered to
the Custodian;
(10) For delivery as security in connection with any borrowings by the
Fund requiring a pledge of assets by the Fund, but only against
receipt of amounts borrowed;
(11) Upon receipt of instructions from the transfer agent for the Fund,
for delivery to such transfer agent or to holders of shares in
connection with distributions in kind, as may be described from time
to time in the Fund's currently effective prospectus, in
satisfaction of requests by holders of Shares for repurchase or
redemption; and
(12) For any other proper corporate purposes, but only upon receipt of,
in addition to proper instructions, a certified copy of a resolution
of the Board of Directors of the Fund or of the Fund's Executive
Committee signed by an officer of the Fund and certified by the
Secretary or an Assistant Secretary, setting forth the purpose for
which such delivery is to be made, declaring such purposes to be
proper corporate purposes, and naming the person or persons to whom
delivery of such securities shall be made.
C. Registration of Securities. Securities held by the Custodian (other than
bearer securities) shall be registered in the name of the Fund or in the
name of any nominee of the Fund or of any nominee of the Custodian which
nominee shall be assigned exclusively to the Fund, unless the Fund has
authorized in writing the appointment of a nominee to be used in common
with other registered investment companies having the same investment
adviser as the Fund, or in the name or nominee name of any agent appointed
pursuant to Section J of Article II or in the name or nominee name of any
sub-custodian appointed pursuant to Article I. All securities accepted by
the Custodian on behalf of the Fund under the terms of this Contract shall
be in "street" or other good delivery form.
D. Bank Accounts. The Custodian shall open and maintain a separate bank
account or accounts in the name of the Fund, subject only to draft or
order by the Custodian acting pursuant to the terms of this Contract, and
shall hold in such account or accounts, subject to the provisions hereof,
all cash received by it from or for the account of the Fund, other than
cash maintained by the Fund in a bank account established and used in
accordance with Rule 17f-3 under the Investment Company Act of 1940. Funds
held by the Custodian for the Fund may be deposited by it to its credit as
Custodian in the Banking Department of the Custodian or in such other
banks or trust companies as it may in its discretion deem necessary or
<PAGE>
desirable; provided, however, that every such bank or trust company
shall be qualified to act as a custodian under the Investment Company Act
of 1940 and that each such bank or trust company and the funds to be
deposited with each such bank or trust company shall be approved by
vote of a majority of the Board of Directors of the Fund. Such funds
shall be deposited by the Custodian in its capacity as Custodian and
shall be withdrawable by the Custodian only in that capacity.
E. Payments for Shares. The Custodian shall receive from the distributor of
the Fund's Shares or from the transfer agent of the Fund ("the Transfer
Agent") and deposit into the Fund's account such payments as are received
for Shares of the Fund issued or sold from time to time by the Fund. The
Custodian will provide timely notification to the Fund and the Transfer
Agent of any receipt by it of payments for Shares of the Fund.
F. Collection of Income. The Custodian shall collect on a timely basis all
income and other payments with respect to registered securities held
hereunder to which the Fund shall be entitled either by law or pursuant to
custom in the securities business, and shall collect on a timely basis all
income and other payments with respect to bearer securities if, on the
date of payment by the Issuer, such securities are held by the Custodian
or agent thereof and shall credit such income, as collected, to the Fund's
custodian account. Without limiting the generality of the foregoing, the
Custodian shall detach and present for payment all coupons and other
income items requiring presentation as and when they become due and shall
collect interest when due on securities held hereunder.
G. Payment of Fund Moneys. Upon receipt of proper instructions, which may be
continuing instructions when deemed appropriate by the parties, the
Custodian shall pay out moneys of the Fund in the following cases only:
(1) Upon the purchase of securities for the account of the Fund but only
(a) against the delivery of such securities to the Custodian (or any
bank, banking firm or trust company doing business in the United
States or abroad which is qualified under the Investment Company Act
of 1940, as amended, to act as a custodian and has been designated
by the Custodian as its agent for this purpose) registered in the
name of the Fund or in the name of a nominee of the Custodian
referred to in Section C of Article II hereof or in proper form for
transfer; (b) in the case of a purchase effected through a
Securities System, in accordance with the conditions set forth in
Section K of Article II hereof or (c) in the case of repurchase
agreements entered into between the Fund and the Custodian, or
another bank, (i) against delivery of the securities either in
<PAGE>
certificate form or through an entry crediting the Custodian's
account at the Federal Reserve Bank with such securities or (ii)
against delivery of the receipt evidencing purchase by the Fund
of securities owned by the Custodian or other bank along with
written evidence of the agreement by the Custodian or other bank to
repurchase such securities from the Fund;
(2) In connection with conversion, exchange or surrender of securities
owned by the Fund as set forth in Section B of Article II hereof;
(3) For the redemption or repurchase of Shares issued by the Fund as set
forth in Section I of Article II hereof;
(4) For the payment of any expense or liability incurred by the Fund,
including but not limited to the following payments for the account
of the Fund: interest, taxes, investment supervisory fees,
administrative services charges, directors fees and expenses, fees
and expenses of the Custodian, registrar, transfer agent, and
dividend disbursing agent of the Fund, any fiscal agent retained by
the Fund, accounting and legal fees and disbursements, and other
operating expenses of the Fund whether or not such expenses are to
be in whole or part capitalized or treated as deferred expenses;
(5) For the payment of any dividends declared pursuant to the governing
documents of the Fund;
(6) For any other proper purposes, but only upon receipt of, in addition
to proper instructions, a certified copy of a resolution of the
Board of Directors or of the Executive Committee of the Fund signed
by an officer of the Fund and certified by its Secretary or an
Assistant Secretary, specifying the amount of such payment, setting
forth the purpose for which such payment is to be made, declaring
such purpose to be a proper purpose, and naming the person or
persons to whom such payment is to be made.
H. Liability for Payment in Advance of Receipt of Securities Purchased. In
any and every case where payment for purchase of securities for the
account of the Fund is made by the Custodian in advance of receipt of the
securities purchased in the absence of specific written instructions from
the Fund to so pay in advance, the Custodian shall be absolutely liable to
the Fund for such securities to the same extent as if the securities had
been received by the Custodian, except that in the case of repurchase
agreements entered into by the Fund with a bank which is a member of the
Federal Reserve System, the Custodian may transfer funds to the account of
such bank prior to the receipt of written evidence that the securities
<PAGE>
subject to such repurchase agreement have been transferred by book-entry
into a segregated non-proprietary account of the Custodian maintained
with the Federal Reserve Bank of Boston or of the safekeeping receipt,
provided that such securities have in fact been so transferred by book-
entry.
I. Payments for Repurchases or Redemptions of Shares of the Fund. From such
funds as may be available for the purpose but subject to the limitations
of the governing documents of the Fund, the Custodian shall, upon receipt
of instructions from the Transfer Agent, make funds available for payment
to holders of shares who have delivered to the Transfer Agent a request
for redemption or repurchase of their Shares. In connection with the
redemption or repurchase of Shares of the Fund, the Custodian is
authorized upon receipt of instructions from the Transfer Agent to wire
funds to or through a commercial bank designated by the redeeming
shareholders. In connection with the redemption or repurchase of Shares
of the Fund, the Custodian shall honor checks drawn on the custodian
by a holder of Shares, which checks have been furnished by the Fund to the
holder of Shares, when presented to the Custodian in accordance with such
procedures and controls as are mutually agreed upon from time to time
between the Fund and the Custodian.
J. Appointment of Agents. The Custodian may at any time or times in its
discretion appoint (and may at any time remove) any other bank or trust
company which is itself qualified under the Investment Company Act of
1940, as amended, to act as a custodian, as its agent to carry out such of
the provisions of this Article II as the Custodian may from time to time
direct; provided, however, that the appointment of any agent shall not
relieve the Custodian of any of its responsibilities or liabilities
hereunder.
K. Deposit of Fund Assets in Securities Systems. The Custodian may deposit
and/or maintain securities owned by the Fund in a clearing agency
registered with the Securities and Exchange Commission under Section 17A
of the Securities Exchange Act of 1934, which acts as a securities
depository, or in the book-entry system authorized by the U.S. Department
of the Treasury and certain federal agencies, collectively referred to
herein as "Securities Systems" in accordance with all applicable Federal
Reserve Board and Securities and Exchange Commission rules and
regulations, if any, and subject to the following provisions:
(1) The Custodian may keep securities of the Fund in a Securities System
provided that such securities are represented in an account
("Account") of the Custodian in the Securities System which shall
not include any assets of the Custodian other than assets held as a
fiduciary, custodian, or otherwise for customers.
<PAGE>
(2) The records of the Custodian with respect to securities of the Fund
which are maintained in a Securities System shall identify by
book-entry those securities belonging to the Fund.
(3) The Custodian shall pay for securities purchased for the account of
the Fund upon (i) receipt of advice from the Securities System that
such securities have been transferred to the Account, and (ii) the
making of an entry on the records of the Custodian to reflect such
payment and transfer for the account of the Fund. The Custodian
shall transfer securities sold for the account of the Fund upon (i)
receipt of advice from the Securities System that payment for such
securities has been transferred to the Account, and (ii) the making
of an entry on the records of the Custodian to reflect such transfer
and payment for the account of the Fund. Copies of all advices from
the Securities System of transfers of securities for the account of
the Fund shall identify the Fund, be maintained for the Fund by the
Custodian and be provided to the Fund at its request. The Custodian
shall furnish the Fund confirmation of each transfer to or from the
account of the Fund in the form of a written advice or notice and
shall furnish to the Fund copies of daily transaction sheets
reflecting each day's transactions in the Securities System for the
account of the Fund on the next business day.
(4) The Custodian shall provide the Fund with any report obtained by the
Custodian on the Securities System's accounting system, internal
accounting control and procedures for safeguarding securities
deposited in the Securities System.
(5) The Custodian shall have received the initial or annual certificate,
as the case may be, required by Article IX hereof.
(6) Anything to the contrary in this Contract notwithstanding, the
Custodian shall be liable to the Fund for any loss or damage to the
Fund resulting from use of the Securities System by reason of any
negligence, misfeasance or misconduct of the Custodian or any of its
agents or of any of its or their employees or from any failure of
the Custodian or any such agent to enforce effectively such rights
as it may have against the Securities System; at the election of the
Fund, it shall be entitled to be subrogated to the rights of the
Custodian with respect to any claim against the Securities System or
<PAGE>
any other person which the Custodian may have as a consequence of
any such loss or damage if and to the extent that the Fund has not
been made whole for any such loss or damage.
L. Ownership Certificates for Tax Purposes. The Custodian shall execute
ownership and other certificates and affidavits for all federal and state
tax purposes in connection with receipt of income or other payments with
respect to securities of the Fund held by it and in connection with
transfers of securities.
M. Proxies. The Custodian shall, with respect to the securities held
hereunder, cause to be promptly executed by the registered holder of such
securities, if the securities are registered otherwise than in the name of
the Fund or a nominee of the Fund, all proxies, without indication of the
manner in which such proxies are to be voted, and shall promptly deliver
to the Fund such proxies, all proxy soliciting materials and all notices
relating to such securities, in accordance with proper instructions from
the Fund.
N. Communications Relating to Fund Portfolio Securities. The Custodian shall
transmit promptly to the Fund all written information (including, without
limitation, pendency of calls and maturities of securities and expirations
of rights in connection therewith) received by the Custodian from or
concerning issuers of the securities being held for the Fund. With respect
to tender or exchange offers, the Custodian shall transmit promptly to the
Fund all written information received by the Custodian from issuers of the
securities whose tender or exchange is sought and from the party (or his
agents) making the tender or exchange offer. If the Fund desires to take
action with respect to any tender offer, exchange offer, or any other
similar transaction, the Fund shall notify the Custodian at least three
business days prior to the date on which the Custodian is to take such
action.
O. Proper Instructions. "Proper instructions" as used throughout this
Contract shall mean an instruction or certification in writing, signed in
the name of the Fund by any two of the officers of the Fund who are duly
authorized to give such instruction and sign such a document by the Board
of Directors or Executive Committee of the Fund and whose names and
signatures have been certified to the Custodian in the following manner:
(1) An officer of the Funds shall certify to the Custodian the names and
signatures of the officers authorized to sign proper instructions,
and the names of the members of the Board of Directors and of the
Executive Committee of the Fund, and shall certify to the Custodian
any changes which may occur from time to time.
<PAGE>
(2) Annexed hereto as Exhibit A is an instruction signed by two of the
present officers of the Fund under its corporate seal, setting forth
the names and the signatures of the present officers of the Fund,
and the names of the members of the Board of Directors and Executive
Committee of the Fund. The Fund agrees to furnish to the Custodian a
new instruction in similar form in the event any such present
officer or director ceases to be an officer or director of the Fund,
or in the event that other or additional officers or directors are
elected or appointed. Until such new instructions in acting under
the provisions of this Contract upon the signatures of the present
officers as set forth in said annexed instructions or upon the
signatures of the present officers as set forth in a subsequently
issued instruction.
Each such instruction shall set forth the specific transaction or
type of transaction involved, including a specific statement of the
purpose for which such action is requested. Oral instructions will
be considered proper instructions only if the Custodian reasonably
believes them to have been given by a person authorized to give such
instructions with respect to the transaction involved. The Fund
shall cause all oral instructions to be confirmed in writing. Upon
receipt of a certificate of the Secretary or an Assistant Secretary
as to the authorization by the Board of Directors of the Fund
accompanied by a detailed description of procedures approved by the
Board of Directors, "proper instructions" may include communications
effected directly between electro-mechanical or electronic devices
provided that the Board of Directors and the Custodian are satisfied
that such procedures afford adequate safeguards for the Fund's
assets.
P. Clearance of Security Transactions and Collection of Income. In connection
with clearance of security transactions and collection of income (such as
dividends and interest) and capital adjustments (such as stock splits,
stock dividends, rights, warrants, etc.) on the securities held in custody
for the Fund, the Custodian shall exercise diligence and take all
appropriate action, including the following:
(1) On security purchases for the Fund portfolio, the Custodian shall
not accept delivery and make payment unless the securities are in
proper form (including receipt of a due bill, if appropriate); and
if delivery is refused, the Custodian shall inform the delivering
broker or agent and the Fund of such refusal and the reasons
therefor;
<PAGE>
(2) On security sales from the Fund portfolio, the Custodian shall
deliver to the broker or agent in proper form and on a timely basis,
and if delivery and payment is refused by the broker or agent, the
Custodian shall notify the Fund of such refusal and the reason
therefor, and make reasonable efforts to rectify any error in the
delivery form caused by the Custodian, and continue to seek to make
delivery until the transaction is cleared; provided, however, that
the Fund shall be responsible for rectifying errors caused by the
Fund, brokers or others, and shall cooperate fully with the
Custodian to assist it in making delivery and clearing such
transactions;
(3) The Custodian shall maintain, with reasonable care, a schedule of
income and capital adjustments receivable on the securities held in
custody for the Fund, based upon published information received by
the Custodian, concerning such income and capital adjustments, and
shall make reasonable efforts, including follow-up with paying
agents, to assure timely collection of such scheduled income and
capital adjustments, as further provided in Section F of Article II
hereof; provided that the Fund as part of its regulatory
record-keeping responsibilities shall also maintain schedules of
such income and capital adjustments and provide to the Custodian on
a timely basis all information that the Custodian may reasonably
request to assist the Custodian in providing such service.
Q. Actions Permitted Without Express Authority. The Custodian may in its
discretion, without express authority from the Fund:
(1) make payments to itself or others for minor expenses of handling
securities or other similar items relating to its duties under this
contract, provided that all such payments shall be accounted for to
the Fund;
(2) surrender securities in temporary form for securities in definitive
form;
(3) endorse for collection, in the name of the Fund, checks, drafts, and
other negotiable instruments; and
(4) in general, attend to all non-discretionary details in connection
with the sale, exchange, substitution, purchase, transfer, and other
dealings with the securities and property of the Fund except as
otherwise directed by the Board of Directors of the Fund.
<PAGE>
R. Evidence of Authority. The Custodian shall be protected in acting upon
any instructions, notice request, consent, certificate or other instrument
or paper believed by it to be genuine and to have been properly executed
by or on behalf of the Fund. The Custodian may receive and accept a
certified copy of a vote of the Board of Directors of the Fund as
conclusive evidence (a) of the authority of any person to act in
accordance with such vote or (b) of any determination or of any action by
the Board of Directors as described in such vote, and such vote may be
considered as in full force and effect until receipt by the Custodian of
written notice to the contrary. The protection and authority granted
pursuant to this Section shall not be deemed a waiver of the necessity for
the Custodian to receive proper instructions as required by provisions of
this Contract and as defined in Section O of this Article II.
III. Duties of Custodian With Respect to Reports
The Custodian shall furnish the Fund at the close of each business
day with information concerning all transactions and entries for the account of
the Fund on that day, including the receipt and disbursement of all securities
and cash in connection with purchases and sales of securities, dividends and
interest payments, exchanges, and any other transaction. The Custodian shall
furnish the Fund at the end of every month with a statement of the Fund's
accounts, including a list of the portfolio securities held for the Fund.
Semiannually at the end of each month on which a semiannual fiscal period of the
Fund ends, such list shall be adjusted for all commitments confirmed by the Fund
as of the end of such month, and certified by a duly authorized officer of the
Custodian. The Custodian shall also furnish to the Fund such other statements
and reports as it may reasonably require.
IV. Records
The Custodian shall create and maintain all records relating to its
activities and obligations under this Contract in such manner as will meet the
obligations of the Fund under the Investment Company Act of 1940, with
particular attention to Section 31 thereof and Rules 31a-1 and 31a-2 thereunder,
applicable federal and state tax laws and any other law or administrative rules
or procedures which may be applicable to the Fund. All such records shall be the
property of the Fund and shall at all times during the regular business hours of
the Custodian be open for inspection by duly authorized officers, employees or
agents of the Fund and employees and agents of the Securities and Exchange
Commission. The Custodian shall, at the Fund's request, supply the Fund with a
tabulation of securities owned by the Fund and held by the Custodian and shall,
when requested to do so by the Fund and for such compensation as shall be agreed
upon between the Fund and the Custodian, include certificate numbers in such
tabulations.
<PAGE>
V. Opinion of Fund's Independent Accountant
The Custodian shall take all reasonable action, as the Fund may from
time to time request, to obtain from year to year favorable opinions from the
Fund's independent accountants with respect to its activities hereunder in
connection with the preparation of the Fund's Form N-1 and Form N-1R or other
annual reports to the Securities and Exchange Commission and with respect to any
other requirements of such Commission.
VI. Reports to Fund by Independent Accountants
The Custodian shall provide the Fund, at such times as the Fund may
reasonably require, with reports by independent accountants on the accounting
system, internal accounting control and procedures for safeguarding securities,
including securities deposited and/or maintained in a Securities System,
relating to the services provided by the Custodian under this Contract; such
reports, which shall be of sufficient scope and in sufficient detail as may
reasonably be required by the Fund to provide reasonable assurance that any
material inadequacies would be disclosed, shall state in detail material
inadequacies disclosed by such examination, and, if there are no such
inadequacies, shall so state.
VII. Compensation of Custodian
The Custodian shall be entitled to reasonable compensation for its
services and expenses as Custodian, as agreed upon from time to time between the
Fund and the Custodian.
VIII. Responsibility of Custodian
So long as and to the extent that it is in the exercise of
reasonable care, the Custodian shall not be responsible for the title, validity
or genuineness of any property or evidence of title thereto received by it or
delivered by it pursuant to this Contract and shall be held harmless in acting
upon any notice, request, consent, certificate or other instrument reasonably
believed by it to be genuine and to be signed by the proper party or parties.
The Custodian shall be held to the exercise of reasonable care in carrying out
the provisions of this Contract but shall be kept indemnified by and shall be
without liability to the Fund for any action taken or omitted by it in good
faith without negligence. It shall be entitled to rely on and may act upon
written advice of counsel (who may be counsel for the Fund) on all matters and
shall be without liability for any action reasonably taken or omitted pursuant
to such advice. Notwithstanding the foregoing, the responsibility of the
Custodian with respect to redemptions effected by check shall be in accordance
with a separate agreement entered into between the Custodian and the Fund.
<PAGE>
If the Fund requires the Custodian to take any action with respect
to securities, which action involves the payment of money or which action may,
in the opinion of the Custodian, result in the Custodian or its nominee assigned
to the Fund being liable for the payment of money or incurring liability of some
other form, the Fund, as a prerequisite to requiring the Custodian to take such
action, shall provide indemnity to the Custodian in an amount and form
satisfactory to it.
IX. Effective Period, Termination and Amendment
This Contract shall become effective as of its execution, shall
continue in full force and effect until terminated as hereinafter provided, may
be amended at any time by mutual written agreement of the parties hereto and may
be terminated by either party by an instrument in writing delivered or mailed,
postage prepaid to the other party, such termination to take effect not sooner
than thirty (30) days after the date of such delivery or mailing; provided,
however, that the Custodian shall not act under Section K of Article II hereof
in the absence of receipt of an initial certificate of the Secretary or an
Assistant Secretary that the Board of Directors of the Fund has approved the
initial use of a particular Securities System and the receipt of an annual
certificate of the Secretary or an Assistant Secretary that the Board of
Directors has reviewed the use by the Fund of such Securities System, as
required in each case by Rule 17f-4 under the Investment Company Act of 1940, as
amended; provide further, however, that the Fund shall not amend or terminate
this Contract in contravention of any applicable federal or state regulations,
or any provision of the Fund's governing documents, and provided further that
the Fund may at any time by action of its Board of Directors (i) substitute
another bank or trust company for the Custodian by giving notice as described
above to the Custodian, or (ii) immediately terminate this Contract in the event
of the appointment of a conservator or receiver for the Custodian by the
Comptroller of the Currency or upon the happening of a like event at the
direction of an appropriate regulatory agency or court of competent
jurisdiction.
Upon termination of the Contract, the Fund shall pay to the
Custodian such compensation as may be due as of the date of such termination and
shall likewise reimburse the Custodian for its costs, expenses, and
disbursements.
X. Successor Custodian
If a successor custodian shall be appointed by the Board of
Directors of the Fund, the Custodian shall, upon termination, deliver to such
successor custodian at the office of the Custodian, fully endorsed and in the
<PAGE>
form for transfer, all securities then held by it hereunder, and all funds
and other properties of the Fund.
If no such successor custodian shall be appointed, the Custodian
shall, in like manner, upon receipt of a certified copy of a vote of the Board
of Directors of the Fund, deliver at the office of the Custodian such
securities, funds, and other properties in accordance with such vote.
In the event that no written order designating a successor custodian
or certified copy of a vote of the Board of Directors shall have been delivered
to the Custodian on or before the date when such termination shall become
effective, then the Custodian shall have the right to deliver to a bank or trust
company, which is a "bank" as defined in the Investment Company Act of 1940,
doing business in Boston, Massachusetts, of its own selection, having an
aggregate capital, surplus, and undivided profits, as shown by its last
published report, of not less than $25,000,000, all securities, funds and other
properties held by the Custodian and all instruments held by the Custodian
relative thereto and all other property held by it under this contract.
Thereafter, such bank or trust company shall be the successor of the Custodian
under this Contract.
In the event that securities, funds, and other properties remain in
the possession of the Custodian after the date of termination hereof owing to
failure of the Fund to procure the certified copy of vote referred to or of the
Board of Directors to appoint a successor custodian, the Custodian shall be
entitled to fair compensation for its services during such period as the
Custodian retains possession of such securities, funds, and other properties and
the provisions of this Contract relating to the duties and obligations of the
Custodian shall remain in full force and effect.
XI. Interpretive and Additional Provisions
In connection with the operation of this Contract, the Custodian and
the Fund may from time to time agree on such provisions interpretive of or in
addition to the provisions of this Contract as may in their joint opinion be
consistent with the general tenor of this Contract. Any such interpretive or
additional provisions shall be in a writing signed by both parties and shall be
annexed hereto, provided that no such interpretive or additional provisions
shall contravene any applicable federal or state regulations or any provision of
the governing documents of the Fund. No interpretive or additional provisions
made as provided in the preceding sentence shall be deemed to be an amendment of
this Contract.
<PAGE>
XII. Massachusetts Law to Apply
This Contract shall be construed and the provisions thereof
interpreted under and in accordance with the laws of the Commonwealth of
Massachusetts.
XIII. Miscellaneous
A. Assignment. This Contract may not be assigned by either party without the
written consent of the other party first being obtained. Any assignment or
consent to assignment by the Fund must be approved by resolution of its
Board of Directors or of its Executive Committee.
B. Conflict with Rules and Regulations. If any provision of this Contract,
either in its present form or as amended from time to time, limits,
qualifies, or conflicts with the Investment Company Act of 1940 and the
rules and regulations thereunder, or with any other statute, rules, and
regulations which may govern the activities of the Custodian or of the
Fund, such statutes, rules, and regulations shall be deemed to control
and supersede such provision, without nullifying or terminating the
remainder of this Contract.
IN WITNESS WHEREOF, each of the parties has caused this instrument
to be executed in its name and behalf by its fully authorized representative and
its seal to be hereunder affixed as of the 1st day of February 1980.
FINANCIAL INDUSTRIAL INCOME FUND, INC.
By: _________________________________
STATE STREET BANK AND TRUST COMPANY
By: _________________________________
TRANSFER AGENCY AGREEMENT
AGREEMENT made as of this 21st day of January, 1991, between Financial
Industrial Income Fund, Inc., a Maryland corporation, having its principal
office and place of business at 7800 East Union Avenue, Denver, Colorado, 80237
(hereinafter referred to as the "Fund") and INVESCO Funds Group, Inc., a
Delaware corporation, having its principal place of business at 7800 E. Union
Avenue, Denver, CO 80237 (hereinafter referred to as the "Transfer Agent").
WITNESSETH:
That for and in consideration of mutual promises hereinafter set forth,
the Fund and the Transfer Agent agree as follows:
1. Definitions. Whenever used in this Agreement, the following words an
phrases, unless the context otherwise requires, shall have the
following meanings:
(a) "Authorized Person" shall be deemed to include the President,
any Vice President, the Secretary, Treasurer, or any other
person, whether or not any such person is an officer or
employee of the Fund, duly authorized to give Oral
Instructions and Written Instructions on behalf of the Fund as
indicated in a certification as may be received by the
Transfer Agent from time to time;
(b) "Certificate" shall mean any notice, instruction or other
instrument in writing, authorized or required by this
Agreement to be given to the Transfer Agent, which is actually
received by the Transfer Agent and signed on behalf of the
Fund by any two office thereof;
(c) "Commission" shall have the meaning given it in the 1940 Act;
(d) "Custodian" refers to the custodian of all of the securities
and other moneys owned by the Fund;
(e) "Oral Instructions" shall mean verbal instructions actually
received by the Transfer Agent from a person reasonably
believed the Transfer Agent to be an Authorized Person;
(f) "Prospectus" shall mean the most current effective prospectus
relating to the Fund's Shares registered under the Securities
Act of 1933;
(g) "Shares" refers to the shares of common stock, $1.00 par
value, of the Fund;
<PAGE>
(h) "Shareholder" means a record owner of Shares;
(i) "Written Instructions" shall mean a written communication
actually received by the Transfer Agent where the receiver is
able to veri with a reasonable degree of certainty the
authenticity of the sender of such communication; and
(j) The "1940 Act" refers to the Investment Company Act of 1940
and the Rules and Regulations thereunder, all as amended from
time to time.
2. Representation of Transfer Agent. The Transfer Agent does hereby
represent and warrant to the Fund that it has filed a registration
statement on SEC Form TA-1 in order to become duly registered as a
transfer agent as provided in Section 17A(c) of the Securities
Exchange Act of 1934.
3. Appointment of the Transfer Agent. Upon the effectiveness of the
Transfer Agent's registration statement on SEC Form TA-1, the Fund
hereby appoints and constitutes the Transfer Agent as transfer agent
for all of the Shares of the Fund authorized as of the date hereof,
and the Transfer Agent accepts such appointment and agrees to
perform the duties herein set forth. If the board of directors of
the Fund hereafter reclassifies the Shares, by the creation of one
or more additional series or otherwise, the Transfer Agent agrees
that it will act as transfer agent for the Shares so reclassified on
the terms set forth herein.
4. Compensation.
(a) The Fund will initially compensate the Transfer Agent for its
services rendered under this Agreement in accordance with the
fees set forth in the Fee Schedule annexed hereto and
incorporated herein.
(b) The parties hereto will agree upon the compensation for acting
as transfer agent for any series of Shares hereafter
designated and established at the time that the Transfer Agent
commences serving as such for said series, and such agreement
shall be reflected in a Fee Schedule for that series, dated
and signed by an authorized officer of each party hereto, to
be attached to this Agreement.
(c) Any compensation agreed to hereunder may be adjusted from time
to time by attaching to this Agreement a revised Fee Schedule,
dated and signed by an authorized officer of each party
hereto, and a certified copy of the resolution of the board of
directors of the Fund authorizing such revised Fee Schedule.
<PAGE>
(d) The Transfer Agent will bill the Fund as soon as practicable
after the end of each calendar month, and said billings will
be detailed in accordance with the Fee Schedule for the Fund.
The Fund will promptly pay to the Transfer Agent the amount of
such billing.
5. Documents. In connection with the appointment of the Transfer Agent,
the fund shall, on or before the date this Agreement goes into
effect, file with the Transfer Agent the following documents:
(a) A certified copy of the Articles of Incorporation of the Fund,
including all amendments thereto, as then in effect;
(b) A certified copy of the Bylaws of the Fund, as then in effect;
(c) Certified copies of the resolutions of the board of directors
authorizing this Agreement and designating Authorized Persons
to give instructions to the Transfer Agent;
(d) A specimen of the certificate for Shares of the Fund in the
form approved by the board of directors, with a certificate of
the Secretary of the Fund as to such approval;
(e) All account application forms and other documents relating to
Shareholder accounts;
(f) A certified list of Shareholders of the Fund with the name,
address and tax identification number of each Shareholder, and
the number of Shares held by each, certificate numbers and
denominations (if any certificates have been issued), lists of
any accounts against which stops have been placed, together
with the reasons for said stops, and the number of Shares
redeemed by the Fund;
(g) Copies of all agreements then in effect between the Fund and
any agent with respect to the issuance, sale, or cancellation
of Shares; and
(h) An opinion of counsel for the Fund with respect to the
validity of the Shares.
<PAGE>
6. Further Documentation. The Fund will also furnish from time to time
the following documents:
(a) Each resolution of the board of directors authorizing the
original issue of Shares;
(b) Each Registration Statement filed with the Commission, and
amendments and orders with respect thereto, in effect with
respect to the sale of Shares of the Fund;
(c) A certified copy of each amendment to the Articles of
Incorporation and the Bylaws of the Fund;
(d) Certified copies of each resolution of the board of directors
designating Authorized Persons to give instructions to the
Transfer Agent;
(e) Certificates as to any change in any officer, director, or
Authorized Person of the Fund;
(f) Specimens of all new certificates for Shares accompanied by
the Fund's resolutions of the board of directors approving
such forms; and
(g) Such other certificates, documents or opinions as may mutually
be deemed necessary or appropriate for the Transfer Agent in
the proper performance of its duties.
7. Certificates for Shares and Records Pertaining Thereto.
(a) At the expense of the Fund, the Transfer Agent shall maintain
an adequate supply of blank share certificates to meet the
Transfer Agent's requirements therefor. Such share
certificates shall be properly signed by facsimile. The Fund
agrees that, notwithstanding the death, resignation, or
removal of any officer of the Fund whose signature appears on
such certificates, the Transfer Agent may continue to
countersign certificates which bear such signatures until
otherwise directed by the Fund.
(b) The Transfer Agent agrees to prepare, issue and mail
certificates as requested by the Shareholders for Shares of
the Fund in accordance with the instructions of the Fund and
to confirm such issuance to the Shareholder and the Fund or
its designee.
<PAGE>
(c) The Fund hereby authorizes the Transfer Agent to issue
replacement share certificates in lieu of certificates which
have been lost, stolen or destroyed, without any further
action by the board of directors or any officer of the Fund,
upon receipt by the Transfer Agent of properly executed
affidavits or lost certificate bonds, in form satisfactory to
the Transfer Agent, with the Fund and the Transfer Agent as
obligees under any such bond.
(d) The Transfer Agent shall also maintain a record of each
certificate issued, the number of Shares represented thereby
and the holder of record. The Transfer Agent shall further
maintain a stop transfer record on lost and/or replaced
certificates.
(e) The Transfer Agent may establish such additional rules and
regulations governing the transfer or registration of
certificates for Shares as it may deem advisable and
consistent with such-rules and regulations generally adopted
by transfer agents.
8. Sale of Fund Shares.
(a) Whenever the Fund or its authorized agent shall sell or cause
to be sold any Shares, the Fund or its authorized agent shall
provide or cause to be provided to the Transfer Agent
information including: (i) the number of Shares sold, trade
date, and price; (ii) the amount of money to be delivered to
the Custodian for the sale of such Shares; (iii) in the case
of a new account, a new account application or sufficient
information to establish an account.
(b) The Transfer Agent will, upon receipt by it of a check or
other payment identified by it as an investment in Shares of
the Fund and drawn or endorsed to the Transfer Agent as agent
for, or identified as being for the account of, the Fund,
promptly deposit such check or other payment to the
appropriate account postings necessary to reflect the
investment. The Transfer Agent will notify the Fund, or its
designee, and the Custodian of all purchases and related
account adjustments.
(c) Upon receipt of the notification required under paragraph (a)
hereof and the notification from the Custodian that such money
has been received by it, the Transfer Agent shall issue to the
purchaser or his authorized agent such Shares as he is
<PAGE>
entitled to receive, based on the appropriate net asset value
of the Fund's Shares, determined in accordance with applicable
federal law or regulation, as described in the Prospectus for
the Fund. In issuing Shares to a purchaser or his authorized
agent, the Transfer Agent shall be entitled to rely upon the
latest written directions, if any, previously received by the
Transfer Agent from the purchaser or his authorized agent
concerning the delivery of such Shares.
(d) The Transfer Agent shall not be required to issue any Shares
of the Fund where it has received Written Instructions from
the Fund or written notification from any appropriate federal
or state authority that the sale of the Shares of the Fund
has been suspended or discontinued, and the Transfer Agent
shall be entitled to rely upon such Written Instructions or
written notification.
(e) Upon the issuance of any Shares of the Fund in accordance with
the foregoing provision of this Article, the Transfer Agent
shall not be responsible for the payment of any original issue
or other taxes required to be paid by the Fund in connection
with such issuance.
9. Returned Checks. In the event that any check or other order for the
payment of money is returned unpaid for any reason, the Transfer
Agent will: (i) give prompt notice of such return to the Fund or its
designee; (ii) place a stop transfer order against all Shares issued
or held on deposit as a result of such check or order; (iii) in the
case of any Shareholder who has obtained redemption checks, place a
stop payment order on the checking account on which such checks are
issued; and (iv) take such other steps as the Transfer Agent may, in
its discretion, deem appropriate or as the Fund or its designee may
instruct.
10. Redemptions.
(a) Redemptions By Mail or In Person. Shares of the Fund will be
redeemed upon receipt by the Transfer Agent of: (i) a written
request for redemption, signed by each registered owner
exactly as the Shares are registered; (ii) certificates
properly endorsed for any Shares for which certificates have
been issued; (iii) signature guarantees to the extent required
by the Transfer Agent as described in the Prospectus for the
Fund; and (iv) any additional documents required by the
<PAGE>
Transfer Agent for redemption by corporations, executors,
administrators, trustees and guardians.
(b) Wire Orders or Telephone Redemptions. The Transfer Agent will,
consistent with procedures which may be established by the
Fund from time to time for redemption by wire or telephone,
upon receipt of such a wire order or telephone redemption
request, redeem Shares and transmit the proceeds of such
redemption to the redeeming Shareholder as directed. All wire
or telephone redemptions will be subject to such additional
requirements as may be described in the Prospectus for the
Fund. Both the Fund and the Transfer Agent reserve the right
to modify or terminate the procedures for wire order or
telephone redemptions at any time.
(c) Processing Redemptions. Upon receipt of all necessary
information and documentation relating to a redemption, the
Transfer Agent will issue to the Custodian an advice setting
forth the number of Shares of the Fund received by the
Transfer Agent for redemption and that such shares are valid
and in good form for redemption. The Transfer Agent shall,
upon receipt of the moneys paid to it by the Custodian for the
redemption of Shares, pay such moneys to the Shareholder, his
authorized agent or legal representative.
11. Transfers and Exchanges. The Transfer Agent is authorized to review
and process transfers of Shares of the Fund and to the extent, if
any, permitted in the Prospectus for the Fund, exchanges between the
Fund and other mutual funds advised by INVESCO Funds Group, Inc., on
the records of the Fund maintained by the Transfer Agent. If Shares
to be transferred are represented by outstanding certificates, the
Transfer Agent will, upon surrender to it of the certificates in
proper form for transfer, and upon cancellation thereof, countersign
and issue new certificates for a like number of Shares and deliver
the same. If the Shares to be transferred are not represented by
outstanding certificates, the Transfer Agent will, upon an order
therefor by or on behalf of the registered holder thereof in proper
form, credit the same to the transferee on its books. If Shares are
to be exchanged for Shares of another mutual fund, the Transfer
Agent will process such exchange in the same manner as a redemption
and sale of Shares, except that it may in its discretion waive
requirements for information and documentation.
<PAGE>
12. Right to Seek Assurances. The Transfer Agent reserves the right to
refuse to transfer or redeem Shares until it is satisfied that the
requested transfer or redemption is legally authorized, and it shall
incur no liability for the refusal, in good faith, to make transfers
or redemptions which the Transfer Agent, in its judgment, deems
improper or unauthorized, or until it is satisfied that there is no
basis for any claims adverse to such transfer or redemption. The
Transfer Agent may, in effecting transfers, rely upon the provisions
of the Uniform Act for the Simplification of Fiduciary Security
Transfers or the Uniform Commercial Code, as the same may be amended
from time to time, which in the opinion of legal counsel for the
Fund or of its own legal counsel protect it in not requiring certain
documents in connection with the transfer or redemption of Shares of
the Fund, and the Fund shall indemnify the Transfer Agent for any
act done or omitted by it in reliance upon such laws or opinions of
counsel to the Fund or of its own counsel.
13. Distributions.
(a) The Fund will promptly notify the Transfer Agent of the
declaration of any dividend or distribution. The Fund shall
furnish to the Transfer Agent a resolution of the board of
directors of the Fund certified by the Secretary authorizing
the declaration of dividends and authorizing the Transfer
Agent to rely on Oral Instructions or a Certificate specifying
the date of the declaration of such dividend or distribution,
the date of payment thereof, the record date as of which
Shareholders entitled to payment shall be determined, the
amount payable per share to Shareholders of record as of that
date, and the total amount payable to the Transfer Agent on
the payment date.
(b) The Transfer Agent will, on or before the payable date of any
dividend or distribution, notify the Custodian of the
estimated amount of cash required to pay said dividend or
distribution, and the Fund agrees that, on or before the
mailing date of such dividend or distribution, it shall
instruct the Custodian to place in a dividend disbursing
account funds equal to the cash amount to be paid out. The
Transfer Agent, in accordance with Shareholder instructions,
will calculate, prepare and mail checks to, or (where
appropriate) credit such dividend or distribution to the
account of, Fund Shareholders, and maintain and safequard all
underlying records.
<PAGE>
(c) The Transfer Agent will replace lost checks upon receipt of
properly executed affidavits and maintain stop payment orders
against replaced checks.
(d) The Transfer Agent will maintain all records necessary to
reflect the crediting of dividends which are reinvested in
Shares of the Fund.
(e) The Transfer Agent shall not be liable for any improper
payments made in accordance with the resolution of the board
of directors of the Fund.
(f) If the Transfer Agent shall not receive from the Custodian
sufficient cash to make payment to all Shareholders of the
Fund as of the record date, the Transfer Agent shall, upon
notifying the Fund, withhold payment to all Shareholders of
record as of the record date until such sufficient cash is
provided to the Transfer Agent.
14. Other Duties. In addition to the duties expressly provided for
herein, the Transfer Agent shall perform such other duties and
functions as are set forth in the Fee Schedules(s) hereto from time
to time.
15. Taxes. It is understood that the Transfer Agent shall file such
appropriate information returns concerning the payment of dividends
and capital gain distributions with the proper federal, state and
local authorities as are required by law to be filed by the Fund and
shall withhold such sums as are required to be withheld by
applicable law.
16. Books and Records.
(a) The Transfer Agent shall maintain records showing for each
investor's account the following: (i) names, addresses, tax
identifying numbers and assigned account numbers; (ii) numbers
of Shares held; (iii) historical information regarding the
account of each Shareholder, including dividends paid and date
and price of all transactions on a Shareholder's account; (iv)
any stop or restraining order placed against a Shareholder's
account; (v) information with respect to withholdings in the
case of a foreign account; (vi) any capital gain or dividend
reinvestment order, plan application, dividend address and
correspondence relating to the current maintenance of a
<PAGE>
Shareholder's account; (vii) certificate numbers and
denominations for any Shareholders holding certificates; and
(viii) any information required in order for the Transfer
Agent to perform the calculations contemplated or required by
this Agreement.
(b) Any records required to be maintained by Rule 31a-1 under the
1940 Act will be preserved for the periods prescribed in Rule
31a-2 under the 1940 Act. Such records may be inspected by the
Fund at reasonable times. The Transfer Agent may, at its
option at any time, and shall forthwith upon the Fund's
demand, turn over to the Fund and cease to retain in the
Transfer Agent's files, records and documents created and
maintained by the Transfer Agent in performance of its
services or for its protection. At the end of the six-year
retention period, such records and documents will either be
turned over to the Fund, or destroyed in accordance with the
Fund's authorization.
17. Shareholder Relations.
(a) The Transfer Agent will investigate all Shareholder inquiries
related to Shareholder accounts and respond promptly to
correspondence from Shareholders.
(b) The Transfer Agent will address and mail all communications to
Shareholders or their nominees, including proxy material and
periodic reports to Shareholders.
(c) In connection with special and annual meetings of
Shareholders, the Transfer Agent will prepare Shareholder
lists, mail and certify as to the mailing of proxy materials,
process and tabulate returned proxy cards, report on proxies
voted prior to meetings, and certify to the Secretary of the
Fund Shares to be voted at meetings.
18. Reliance by Transfer Agent; Instructions.
(a) The Transfer Agent shall be protected in acting upon any paper
or document believed by it to be genuine and to have been
signed by an Authorized Person and shall not be held to have
any notice of any change of authority of any person until
receipt of written certification thereof from the Fund. It
shall also be protected in processing Share certificates which
it reasonably believes to bear the proper manual or facsimile
<PAGE>
signatures of the officers of the Fund and the proper
countersignature of the Transfer Agent.
(b) At any time the Transfer Agent may apply to any Authorized
Person of the Fund for Written Instructions, and, at the
expense of the Fund, may seek advice from legal counsel for
the Fund, with respect to any matter arising in connection
with this Agreement, and it shall not be liable for any
action taken or not taken or suffered by it in good faith in
accordance with such Written Instructions or with the opinion
of such counsel. In addition, the Transfer Agent, its
officers, agents or employees, shall accept instructions or
requests given to them by any person representing or acting
on behalf of the Fund only if said representative is known by
the Transfer Agent, its officers, agents or employees, to be
an Authorized Person. The Transfer Agent shall have no duty or
obligation to inquire into, nor shall the Transfer Agent be
responsible for, the legality of any act done by it upon the
request or direction of Authorized Persons of the Fund.
(c) Notwithstanding any of the foregoing provisions of this
Agreement, the Transfer Agent shall be under no duty or
obligation to inquire into, and shall not be liable for: (i)
the legality of the issue or sale of any Shares of the Fund,
or the sufficiency of the amount to be received therefor; (ii)
the legality of the redemption of any Shares of the Fund, or
the propriety of the amount to be paid therefor; (iii) the
legality of the declaration of any dividend by the Fund, or
the legality of the issue of any Shares of the Fund in payment
of any stock dividend; or (iv) the legality of any
recapitalization or readjustment of the Shares of the Fund.
19. Standard of Care and Indemnification.
(a) The Transfer Agent may, in connection with this Agreement,
employ agents or attorneys in fact, and shall not be liable
for any loss arising out of or in connection with its actions
under this Agreement so long as it acts in good faith and with
due diligence, and is not negligent or guilty of any willful
misconduct.
(b) The Fund hereby agrees to indemnify and hold harmless the
Transfer Agent from and against any and all claims, demands,
<PAGE>
expenses and liabilities (whether with or without basis in
fact or law) of any and every nature which the Transfer Agent
may sustain or incur or which may be asserted against the
Transfer Agent by any person by reason of, or as a result of:
(i) any action taken or omitted to be taken by the Transfer
Agent in good faith in reliance upon any Certificate,
instrument, order or stock certificate believed by it to be
genuine and to be signed, countersigned or executed by any
duly Authorized Person, upon the Oral Instructions or Written
Instructions of an Authorized Person of the Fund or upon the
opinion of legal counsel for the Fund or its own counsel; or
(ii) any action taken or omitted to be taken by the Transfer
Agent in connection with its appointment in good faith in
reliance upon any law, act, regulation or interpretation of
the same even though the same may thereafter have been
altered, changed, amended or repealed. However,
indemnification hereunder shall not apply to actions or
omissions of the Transfer Agent or its directors, officers,
employees or agents in cases of its own gross negligence,
willful misconduct, bad faith, or reckless disregard of its or
their own duties hereunder.
20. Affiliation Between Fund and Transfer Agent. It is understood that
the directors, officers, employees, agents and Shareholders of the
Fund, and the officers, directors, employees, agents and
shareholders of the Fund's investment adviser, INVESC0 Funds Group,
Inc. (the "Adviser"), are or may be interested in the Transfer
Agent as directors, officers, employees, agents, shareholders, or
otherwise, and that the directors, officers, employees, agents or
shareholders of the Transfer Agent may be interested in the Fund as
directors, officers, employees, agents, shareholders, or otherwise,
or in the Adviser as officers, directors, employees, agents,
shareholders or otherwise.
21. Term.
(a) This Agreement shall become effective on the date on which it
is approved by vote of a majority (as defined in the 1940 Act)
of the Fund's board of directors, including a majority of the
directors who are not interested persons of the Fund (as
defined in the 1940 Act), or the date on which the Transfer
Agent's registration statement on SEC Form TA-1 becomes
effective (whichever occurs later), and shall continue in
effect for an initial term of one year, and from year to year
thereafter, so long as such continuance is specifically
<PAGE>
approved at least annually both: (i) by either the board of
directors or the vote of a majority of the outstanding voting
securities of the Fund; and (ii) by a vote of the majority of
the directors who are not interested persons of the Fund (as
defined in the 1940 Act) cast in person at a meeting called
for the purpose of voting upon such approval.
(b) Either of the parties hereto may terminate this Agreement by
giving to the other party a notice in writing specifying the
date of such termination, which shall not be less than 60 days
after the date of receipt of such notice. In the event such
notice is given by the Fund, it shall be accompanied by a
resolution of the board of directors, certified by the
Secretary, electing to terminate this Agreement and
designating a successor transfer agent.
22. Amendment. This Agreement may not be amended or modified in any
manner except by a written agreement executed by both parties with
the formality of this Agreement, and (i) authorized or approved by
the resolution of the board of directors, including a majority of
the directors of the Fund who are not interested persons of the Fund
as defined in the 1940 Act, or (ii) authorized and approved by such
other procedures as may be permitted or required by the 1940 Act.
23. Subcontracting. The Fund agrees that the Transfer Agent may, in its
discretion, subcontract for certain of the services to be provided
hereunder.
24. Miscellaneous.
(a) Any notice and other instrument in writing, authorized or
required by this Agreement to be given to the Fund or the
Transfer Agent, shall be sufficiently given if addressed to
that party and mailed or delivered to it at its office set
forth below or at such other place as it may from time to time
designate in writing.
To the Fund:
Financial Industrial Income Fund, Inc.
Post Office Box 2040
Denver, Colorado 80201
Attention: John M. Butler, President
<PAGE>
To the Transfer Agent:
INVESCO Funds Group, Inc.
Post Office Box 2040
Denver, Colorado 80201
Attention: Dan J. Hesser, Executive Vice President
(b) This Agreement shall not be assignable and in the event of its
assignment (in the sense contemplated by the 1940 Act), it
shall automatically terminate.
(c) This Agreement shall be construed in accordance with the laws
of the State of Colorado.
(d) This Agreement may be executed in any number of counterparts,
each of which shall be deemed to be an original; but such
counterparts shall, together, constitute only one instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective corporate officers thereunder duly authorized and
their respective corporate seals to be hereunto affixed, as of the day and year
first above written.
FINANCIAL INDUSTRIAL INCOME
FUND, INC.
By: /s/ John Butler
----------------------
John Butler, President
ATTEST:
/s/ Glen A. Payne
- ------------------------
Glen A. Payne, Secretary
INVESCO FUNDS GROUP INC.
By: /s/ Dan J. Hesser
-----------------------------
Dan J. Hesser, Executive Vice
ATTEST: President
/s/ Glen A. Payne
- ------------------------
Glen A. Payne, Secretary
AMENDMENT NO. 4
to
FEE SCHEDULE
for
Services Pursuant to Transfer Agency Agreement, dated January 21, 1991,
between Financial Industrial Income Fund, Inc. (the "Fund") and INVESCO Funds
Group, Inc. as Transfer Agent (the "Agreement").
Account Maintenance Charges. Fees are based on an annual charge set forth
below per shareholder account or omnibus account participant for account
maintenance, as described in the Agreement. This charge, in the amount of $20.00
per shareholder account per year, or in the case of omnibus accounts that are
invested in the Fund $20.00 per participant in such accounts per year, is
billable monthly at the rate of one-twelfth (1/12) of the annual fee. A charge
is made for an account in the month that it opens or closes, as well as in each
month which the account remains open, regardless of the account balance.
Expenses. The Fund shall not be liable for reimbursement to the Transfer
Agent of expenses incurred by it in the performance of services pursuant to the
Agreement, provided, however, that nothing herein or in the Agreement shall be
construed as affecting in any manner any obligations assumed by the Fund with
respect to expense payment or reimbursement pursuant to a separate written
agreement between the Fund and the Transfer Agent or any affiliate thereof.
Effective this 1st day of May, 1996.
Financial Industrial Income Fund, Inc.
By: /s/ Dan J. Hesser
------------------------
Dan J. Hesser, President
ATTEST:
/s/ Glen A. Payne
- ------------------------
Glen A. Payne, Secretary
INVESCO FUNDS GROUP, INC.
By: /s/ Ronald L. Grooms
--------------------
Ronald L. Grooms,
Senior Vice President
ATTEST:
/s/ Glen A. Payne
- ------------------------
Glen A. Payne, Secretary
ADMINISTRATIVE SERVICES AGREEMENT
AGREEMENT made as of the 30th day of April 1991, in Denver, Colorado, by
and between Financial Industrial Income Fund, Inc., a Maryland corporation (the
"fund"), and INVESCO Funds Group, Inc., a Delaware corporation (hereinafter
referred to as "INVESCO").
WHEREAS, the Fund is engaged in business as an open-end management
investment company, is registered as such under the Investment Company Act of
1940, as amended (the "Act"), and is authorized to issue one class of shares;
and
WHEREAS, INVESCO is registered as an investment adviser under the
Investment Advisers Act of 1940, and engages in the business of acting as
investment adviser and providing certain other administrative, sub-accounting,
and recordkeeping services to certain investment companies, including the Fund;
and
WHEREAS, the Fund desires to retain INVESCO to render certain
administrative, sub-accounting, and recordkeeping services (the "Services") in
the manner and on the terms and conditions hereinafter set forth; and
WHEREAS, INVESCO desires to be retained to perform such services on said
terms and conditions;
NOW, THEREFORE, in consideration of the premises and the mutual covenants
hereinafter contained, the Fund and INVESCO agree as follows:
1. The Fund hereby retains INVESCO to provide, or, upon receipt of written
approval of the Fund arrange for other companies, including affiliates of
INVESCO, to provide to the Fund: A) such sub-accounting and recordkeeping
services and functions as are reasonably necessary for the operation of the
Fund. Such services shall include, but shall not be limited to, preparation and
maintenance of the following required books, records and other documents: (1)
journals containing daily itemized records of all purchases and sales, and
receipts and deliveries of securities and all receipts and disbursements of cash
and all other debits and credits, in the form required by Rule 31a1(b)(1) under
the Act; (2) general and auxiliary ledgers reflecting all asset, liability,
reserve, capital, income and expense accounts, in the form required by Rules
31a-1(b)(2)(i) - (iii) under the Act; (3) a securities record or ledger
reflecting separately for each portfolio security as of trade date all "long"
and "short" positions carried by the Fund for the account of the Fund, if any,
and showing the location of all securities long and the off-setting position to
all securities short, in the form required by Rule 31a-l(b)(3) under the Act;
(4) a record of all portfolio purchases or sales, in the form required by Rule
31a-1(b)(6) under the Act; (5) a record of all puts, calls, spreads, straddles
and all other options, if any, in which the Fund has any direct or indirect
<PAGE>
interest or which the Fund has granted or guaranteed, in the form required by
Rule 31a-1(b)(7) under the Act; (6) a record of the proof of money balances in
all ledger accounts maintained pursuant to this Agreement, in the form required
by Rule 31a-1(b)(8) under the Act; and (7) price make-up sheets and such records
as are necessary to reflect the determination of the Fund's net asset value. The
foregoing books and records shall be maintained and preserved by INVESCO in
accordance with and for the time periods specified by applicable rules and
regulations, including Rule 31a-2 under the Act. All such books and records
shall be the property of the Fund and, upon request therefor, INVESCO shall
surrender to the Fund such of the books and records so requested; and B) such
sub-accounting, recordkeeping, and administrative services and functions, which
shall be furnished by INVESCO's wholly-owned subsidiary, INVESCO Solutions,
Inc., as are reasonably necessary for the operation of Fund shareholder accounts
maintained by certain retirement plans and employe benefit plans for the benefit
of participants in such plans. Such services and functions shall include, but
shall not be limited to: (1) establishing new retirement plan participant
accounts; (2) receipt and posting of weekly, bi-weekly and monthly retirement
plan contributions; (3) allocation of contributions to each participant's
individual Fund account; (4) maintenance of separate account balances for each
source of retirement plan money (i.e., Company, Employee, Voluntary, Rollover)
invested in the Fund; (5) purchase, sale, exchange or transfer of monies in the
retirement plan as directed by the relevant party; (6) distribution of monies
for participant loans, hardships, terminations, death or disability payments;
(7) distribution of periodic payments for retired participants; (8) posting of
distributions of interest, dividends and long-term capital gains to participants
by the Fund; (9) production of monthly, quarterly and/or annual statements of
all Fund activity for the relevant parties; (10) processing of participant
maintenance information for investment election changes, address changes,
beneficiary changes and Qualified Domestic Relations Orders; (11) responding
to telephone and written inquiries concerning Fund investments, retirement plan
provisions and compliance issues; (12) performing discrimination testing and
counseling employers on cure options on failed tests; (13) preparation of 1099R
and W2P participant IRS tax forms; (14) preparation of, or assisting in the
preparation of, 5500 Series tax forms, Summary Plan Descriptions and
Determination Letters; and (15) reviewing legislative and IRS changes to keep
the retirement plan in compliance with applicable law.
2. INVESCO shall, at its own expense, maintain such staff and employ or
retain such personnel and consult with such other persons as it shall from time
to time determine to be necessary or useful to the performance of its
obligations under this Agreement. Without limiting the generality of the
foregoing, such staff and personnel shall be deemed to include officers of
INVESCO and persons employed or otherwise retained by INVESCO to provide or
assist in providing of the Services to the Fund.
<PAGE>
3. INVESCO shall, at its own expense, provide such office space,
facilities and equipment (including, but not limited to, computer equipment,
communication lines and supplies) and such clerical help and other services as
shall be necessary to provide the Services to the Fund. In addition, INVESCO may
arrange on behalf of the Fund to obtain pricing information regarding the Fund's
investment securities from such company or companies as are approved by a
majority of the Fund's board of directors; and, if necessary, the Fund shall be
financially responsible to such company or companies for the reasonable cost of
providing such pricing information.
4. The Fund will, from time to time, furnish or otherwise make available
to INVESCO such information relating to the business and affairs of the Fund as
INVESCO may reasonably require in order to discharge its duties and obligations
hereunder.
5. For the services rendered, facilities furnished, and expenses assumed
by the Investment Adviser under this Agreement, the Fund shall pay to INVESC0 a
$10,000 per year base fee, plus an additional fee, computed on a daily basis and
paid on a monthly basis. For purposes of each daily calculation of this
additional fee, the most recently determined net asset value of the Fund, as
determined by a valuation made in accordance with the Fund's procedure for
calculating Fund net asset value as described in the Fund's Prospectus and/or
Statement of Additional Information, shall be used. The additional fee to
INVESC0 under this Agreement shall be computed at the annual rate of 0.015; of
the Fund's daily net assets as so determined. 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 purpose of this Paragraph 5, be deemed
to be the net asset value at the close of each succeeding business day until it
is again determined.
6. INVESC0 will permit representatives of the Fund including the Fund's
independent auditors to have reasonable access to the personnel and records of
INVESC0 in order to enable such representatives to monitor the quality of
services being provided and the level of fees due INVESC0 pursuant to this
Agreement. In addition, INVESC0 shall promptly deliver to the board of directors
of the Fund such information as may reasonably be requested from time to time to
permit the board of directors to make an informed determination regarding
continuation of this Agreement and the payments contemplated to be made
hereunder.
7. This Agreement shall remain in effect until no later than April 30,
1992 and from year to year thereafter provided such continuance is approved at
least annually by the vote of a majority of the directors of the Fund who are
<PAGE>
not parties to this Agreement or "interested persons" (as defined in the Act)
of any such party, which vote must be cast in person at a meeting called
for the purpose of voting on such approval; and further provided, however,
that (a) the Fund may, at any time and without the payment of any penalty,
terminate this Agreement upon thirty days written notice to the Investment
Adviser; (b) the Agreement shall immediately terminate in the event of its
assignment (within the meaning of the Act and the Rules thereunder) unless the
Board of Directors of the Fund approved such amendment; and (c) the Investment
Adviser may terminate this Agreement without payment of penalty on sixty days
written notice to the Fund. Any notice under this Agreement shall be given in
writing, addressed and delivered, or mailed post-paid, to the other party at the
principal office of such party.
8. This Agreement shall be construed in accordance with the laws of the
State of Colorado and the applicable provisions of the Act. To the extent the
applicable law of the State of Colorado or any of the provisions herein conflict
with the applicable provisions of the Act, the latter shall control.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement on the day and year first above written.
FINANCIAL INDUSTRIAL INCOME FUND, INC.
By: /s/ John M. Butler
-------------------------
John M. Butler, President
INVESCO FUNDS GROUP, INC.
By: /s/ Dan J. Hesser
------------------------
Dan J. Hesser, President
Consent of Independent Accountants
We hereby consent to the incorporation by reference in the Prospectus and
Statement of Additional Information constituting parts of this Post-Effective
Amendment No. 56 to the registration statement on Form N-1A (the "Registration
Statement") of our report dated August 1, 1996, relating to the financial
statements and financial highlights appearing in the June 30, 1996 Annual Report
to Shareholders of INVESCO Industrial Income Fund, Inc., which is also
incorporated by reference into the Registration Statement. We also consent to
the references to us under the heading "Financial Highlights" in the Prospectus
and under the headings "Independent Accountants" and "Financial Statements" in
the Statement of Additional Information.
/s/ Price Waterhouse LLP
- ------------------------
Price Waterhouse LLP
Denver, Colorado
August 27, 1996
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000035732
<NAME> INVESCO INDUSTRIAL INCOME FUND, INC.
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-END> JUN-30-1996
<INVESTMENTS-AT-COST> 3541914355
<INVESTMENTS-AT-VALUE> 4183584782
<RECEIVABLES> 38420852
<ASSETS-OTHER> 178011
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 4222183645
<PAYABLE-FOR-SECURITIES> 29510815
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 22137027
<TOTAL-LIABILITIES> 51647842
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 3299297632
<SHARES-COMMON-STOCK> 315632152
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<ACCUMULATED-NII-CURRENT> 91634
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<OTHER-INCOME> (489569)
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<REALIZED-GAINS-CURRENT> 291155395
<APPREC-INCREASE-CURRENT> 217662186
<NET-CHANGE-FROM-OPS> 508817581
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 133792249
<DISTRIBUTIONS-OF-GAINS> 77502041
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 55792000
<NUMBER-OF-SHARES-REDEEMED> 92077091
<SHARES-REINVESTED> 15483292
<NET-CHANGE-IN-ASSETS> 160926894
<ACCUMULATED-NII-PRIOR> 1916689
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 16277609
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 21541300
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 40470049
<AVERAGE-NET-ASSETS> 4181082071
<PER-SHARE-NAV-BEGIN> 11.92
<PER-SHARE-NII> 0.41
<PER-SHARE-GAIN-APPREC> 1.53
<PER-SHARE-DIVIDEND> 0.41
<PER-SHARE-DISTRIBUTIONS> 0.24
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<PER-SHARE-NAV-END> 13.21
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<AVG-DEBT-PER-SHARE> 0
</TABLE>
