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SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant |X|
Filed by a Party other than the Registrant |_|
Check the appropriate box:
<S> <C> <C>
|X| Preliminary Proxy Statement
|_| Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
|_| Definitive Proxy Statement
|_| Definitive Additional Materials
|_| Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
INVESCO Industrial Income Fund, Inc.
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
|X| No fee required.
|_| Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
|_| Fee paid previously with preliminary materials.
|_| Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or the
Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
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INVESCO INDUSTRIAL INCOME FUND
(A SERIES OF INVESCO INDUSTRIAL INCOME FUND, INC.)
March 23, 1999
Dear Shareholder:
The attached proxy materials seek your approval to convert INVESCO
Industrial Income Fund ("Industrial Income Fund"), the only series of INVESCO
Industrial Income Fund, Inc. ("Company"), to a separate series of INVESCO
Combination Stock & Bond Funds, Inc. ("Combination Stock & Bond Funds"), to make
certain changes in the fundamental investment restrictions of Industrial Income
Fund, to amend the Articles of Restatement to the Articles of Incorporation of
the Company, to amend the Bylaws of the Company, to elect directors of the
Company, and to ratify the appointment of PricewaterhouseCoopers LLP as
independent accountants of Industrial Income Fund.
YOUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR ALL PROPOSALS.
The conversion of Industrial Income Fund to a series of Combination Stock & Bond
Funds which is part of a proposed conversion of other INVESCO funds that invest
in equity and debt securities of domestic issuers to Combination Stock & Bond
Funds, will streamline and render more efficient the administration of
Industrial Income Fund. The changes to the fundamental investment restrictions
of Industrial Income Fund have been approved by the board of directors in order
to simplify and modernize Industrial Income Fund's fundamental investment
restrictions and make them more uniform with those of the other INVESCO funds.
The attached proxy materials provide more information about the proposed
conversion, as well as the proposed changes in fundamental investment
restrictions and the other matters you are being asked to vote upon.
YOUR VOTE IS IMPORTANT NO MATTER HOW MANY SHARES YOU OWN. Voting your
shares early will permit Industrial Income Fund to avoid costly follow-up mail
and telephone solicitation. After reviewing the attached materials, please
complete, sign and date your proxy card and mail it in the enclosed return
envelope promptly. As an alternative to using the paper proxy card to vote, you
may vote by telephone, by facsimile, through the Internet, or in person.
Very truly yours,
Mark H. Williamson
President
INVESCO Industrial Income Fund, Inc.
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INVESCO INDUSTRIAL INCOME FUND (A SERIES
OF INVESCO INDUSTRIAL INCOME FUND, INC.)
-----------------------
NOTICE OF
SPECIAL MEETING OF SHAREHOLDERS
MAY 20, 1999
-----------------------
To The Shareholders:
A special meeting of the shareholders of INVESCO Industrial Income Fund
("Industrial Income Fund"), the only series of INVESCO Industrial Income Fund,
Inc. (the "Company"), will be held on May 20, 1999, at 10:00 a.m., Mountain
Time, at offices of INVESCO Funds Group, Inc., 7800 East Union Avenue, Denver,
Colorado, for the following purposes:
(1) To approve an Agreement and Plan of Conversion and Termination
providing for the conversion of Industrial Income Fund from the
only series of the Company to a separate series of INVESCO
Combination Stock & Bond Funds, Inc.;
(2) To approve certain changes to the fundamental investment
restrictions of Industrial Income Fund;
(3) To amend the Articles of Restatement of the Articles of
Incorporation of the Company;
(4) To amend the Bylaws of the Company;
(5) To elect directors of the Company;
(6) To ratify the selection of PricewaterhouseCoopers LLP as the
independent accountants of Industrial Income Fund; and
(7) To transact such other business as may properly come before the
meeting or any adjournment thereof.
You are entitled to vote at the meeting and any adjournment thereof if
you owned shares of Industrial Income Fund at the close of business on March 12,
1999. IF YOU ATTEND THE MEETING, YOU MAY VOTE YOUR SHARES IN PERSON. IF YOU DO
NOT EXPECT TO ATTEND THE MEETING, PLEASE COMPLETE, SIGN, DATE AND RETURN THE
ENCLOSED PROXY CARD IN THE ENCLOSED POSTAGE-PAID ENVELOPE.
By order of the Board of Directors,
Glen A. Payne
Secretary
March 23, 1999
Denver, Colorado
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YOUR VOTE IS IMPORTANT
NO MATTER HOW MANY SHARES YOU OWN
Please indicate your voting instructions on the enclosed proxy card, sign
and date the card, and return it in the envelope provided. IF YOU SIGN, DATE AND
RETURN THE PROXY CARD BUT GIVE NO VOTING INSTRUCTIONS, YOUR SHARES WILL BE VOTED
"FOR" THE PROPOSALS NOTICED ABOVE. In order to avoid the additional expense of
further solicitation, we ask your cooperation in mailing in your proxy card
promptly. As an alternative to using the paper proxy card to vote, you may vote
by telephone, through the Internet, by facsimile machine or in person. To vote
by telephone, please call the toll-free number listed on the enclosed proxy
card. Shares that are registered in your name, as well as shares held in "street
name" through a broker, may be voted via the Internet or by telephone. To vote
in this manner, you will need the 12-digit "control" number that appears on your
proxy card. To vote via the Internet, please access http://www.proxyvote.com on
the World Wide Web. In addition, shares that are registered in your name may be
voted by faxing your completed proxy card to 1-516-254-7564. If we do not
receive your completed proxy card after several weeks, you may be contacted by
our proxy solicitor, Shareholder Communications Corporation. Our proxy solicitor
will remind you to vote your shares or will record your vote over the phone if
you choose to vote in that manner.
Unless proxy cards submitted by corporations and partnerships are signed by the
appropriate persons as indicated in the voting instructions on the proxy card,
they will not be voted.
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INVESCO INDUSTRIAL INCOME FUND
(a series of INVESCO Industrial Income Fund, Inc.)
7800 EAST UNION AVENUE
DENVER, COLORADO 80237
(TOLL FREE) 1-800-646-8372
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PROXY STATEMENT
SPECIAL MEETING OF SHAREHOLDERS
MAY 20, 1999
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VOTING INFORMATION
This Proxy Statement is being furnished to shareholders of INVESCO
Industrial Income Fund ("Industrial Income Fund"), the only series of INVESCO
Industrial Income Fund, Inc. (the "Company"), in connection with the
solicitation of proxies from Industrial Income Fund shareholders by the board of
directors of the Company (the "Board") for use at a special meeting of
shareholders to be held on May 20, 1999 (the "Meeting"), and at any adjournment
of the Meeting. This Proxy Statement is first being mailed to shareholders on or
about March 23, 1999.
A majority of Industrial Income Fund's shares outstanding on March 12,
1999 (the "Record Date"), represented in person or by proxy shall constitute a
quorum and must be present for the transaction of business at the Meeting. If a
quorum is not present at the Meeting or a quorum is present but sufficient votes
to approve one or more of the proposals set forth in this Proxy Statement are
not received, the persons named as proxies may propose one or more adjournments
of the Meeting to permit further solicitation of proxies. Any such adjournment
will require the affirmative vote of a majority of those shares represented at
the Meeting in person or by proxy. The persons named as proxies will vote those
proxies that they are entitled to vote FOR any proposal in favor of such an
adjournment and will vote those proxies required to be voted AGAINST a proposal
against such adjournment. A shareholder vote may be taken on one or more of the
proposals in this Proxy Statement prior to any such adjournment if sufficient
votes have been received with respect to such proposal and it is otherwise
appropriate.
Broker non-votes are shares held in street name for which the broker
indicates that instructions have not been received from the beneficial owners or
other persons entitled to vote and for which the broker does not have
discretionary voting authority. Abstentions and broker non-votes will be counted
as shares present for purposes of determining whether a quorum is present but
will not be voted for or against any adjournment or proposal. Accordingly,
abstentions and broker non-votes effectively will be a vote against adjournment
or against any proposal where the required vote is a percentage of the shares
present or outstanding. Abstentions and broker non-votes will not be counted,
however, as votes cast for purposes of determining whether sufficient votes have
been received to approve a proposal.
The individuals named as proxies on the enclosed proxy card will vote in
accordance with your directions as indicated on that proxy card, if it is
received properly executed by you or by your duly appointed agent or
attorney-in-fact. If you sign, date and return the proxy card, but give no
voting instructions, your shares will be voted in favor of approval of each of
the proposals and the duly appointed proxies may, in their discretion, vote upon
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such other matters as may come before the Meeting. The proxy card may be revoked
by giving another proxy or by letter or telegram revoking the initial proxy. To
be effective, revocation must be received by the Company prior to the Meeting
and must indicate your name and account number. If you attend the Meeting in
person you may, if you wish, vote by ballot at the Meeting, thereby canceling
any proxy previously given.
In order to reduce costs, the notices to shareholders having more than
one account in Industrial Income Fund listed under the same Social Security
number at a single address have been combined. The proxy cards have been coded
so that a shareholder's votes will be counted for each such account.
As of the Record Date, Industrial Income Fund had _______ shares of
common stock outstanding. The solicitation of proxies, the cost of which will be
borne half by INVESCO Funds Group, Inc. ("INVESCO"), the investment adviser and
transfer agent of Industrial Income Fund, and half by Industrial Income Fund,
will be made primarily by mail but also may be made by telephone or oral
communications by representatives of INVESCO and INVESCO Distributors, Inc.
("IDI"), the distributor of the INVESCO group of investment companies ("INVESCO
Funds"), none of whom will receive any compensation for these activities from
Industrial Income Fund, or from Shareholder Communications Corporation,
professional proxy solicitors, which will be paid fees and expenses of up to
approximately $306,000 for soliciting services. If votes are recorded by
telephone, Shareholder Communications Corporation will use procedures designed
to authenticate shareholders' identities, to allow shareholders to authorize the
voting of their shares in accordance with their instructions, and to confirm
that a shareholder's instructions have been properly recorded. You may also vote
by mail, by facsimile or through a secure Internet site. Proxies voted by
telephone, facsimile or Internet may be revoked at any time before they are
voted at the meeting in the same manner that proxies voted by mail may be
revoked.
COPIES OF THE COMPANY'S MOST RECENT ANNUAL AND SEMI-ANNUAL REPORTS,
INCLUDING FINANCIAL STATEMENTS, HAVE PREVIOUSLY BEEN DELIVERED TO SHAREHOLDERS.
SHAREHOLDERS MAY REQUEST COPIES OF THESE REPORTS, WITHOUT CHARGE, BY WRITING TO
INVESCO DISTRIBUTORS, INC., P.O. BOX 173706, DENVER, COLORADO 80217-3706, OR BY
CALLING TOLL-FREE 1-800-646-8372.
Except as set forth in Appendix A, INVESCO does not know of any person
who owns beneficially 5% or more of the shares of Industrial Income Fund.
Directors and officers of the Company own in the aggregate less than 1% of the
shares of Industrial Income Fund.
VOTE REQUIRED. Approval of Proposal 1 requires the affirmative vote of a
majority of the shares of Industrial Income Fund present at the Meeting,
provided a quorum is present. Approval of Proposal 2 requires the affirmative
vote of a "majority of the outstanding voting securities" of Industrial Income
Fund, as defined in the Investment Company Act of 1940, as amended (the "1940
Act"). This means that Proposal 2 must be approved by the lesser of (i) 67% of
Industrial Income Fund's shares present at a meeting of shareholders if the
owners of more than 50% of Industrial Income Fund's shares then outstanding are
present in person or by proxy or (ii) more than 50% of Industrial Income Fund's
outstanding shares. Approval of Proposal 3 requires the affirmative vote of
two-thirds of the outstanding voting securities of Industrial Income Fund.
Approval of Proposal 4 requires the affirmative vote of the holders of a
majority of the outstanding voting securities of Industrial Income Fund. A
plurality of the votes cast at the Meeting is sufficient to approve Proposal 5.
Approval of Proposal 6 requires the affirmative vote of a majority of the votes
present at the Meeting, provided a quorum is present. Each outstanding full
share of Industrial Income Fund is entitled to one vote, and each outstanding
fractional share thereof is entitled to a proportionate fractional share of one
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vote. If any Proposal is not approved by the requisite vote of shareholders, the
persons named as proxies may propose one or more adjournments of the Meeting to
permit further solicitation of proxies.
PROPOSAL 1. TO APPROVE AN AGREEMENT AND PLAN OF CONVERSION AND
TERMINATION ("CONVERSION PLAN") PROVIDING FOR THE CONVERSION OF
INDUSTRIAL INCOME FUND FROM THE ONLY SERIES OF THE COMPANY TO A
SEPARATE SERIES OF INVESCO COMBINATION STOCK & BOND FUNDS, INC.
Industrial Income Fund is presently organized as the only series of the
Company. The Board, including a majority of its directors who are not
"interested persons," as that term is defined in the 1940 Act ("Independent
Directors"), of either the Company or INVESCO, has approved the Conversion Plan
in the form attached to this Proxy Statement as Appendix B. The Conversion Plan
provides for the conversion of Industrial Income Fund from the only series of
the Company, a Maryland corporation, into a newly established separate series
("New Series") of INVESCO Combination Stock & Bond Funds, Inc. ("Combination
Stock & Bond Funds"), also a Maryland corporation (the "Conversion"). THE
PROPOSED CHANGE WILL HAVE NO MATERIAL EFFECT ON THE SHAREHOLDERS, OFFICERS,
OPERATIONS, OR MANAGEMENT OF INDUSTRIAL INCOME FUND.
The New Series, which has not yet commenced business operations and was
established for the purpose of effecting the Conversion, will carry on the
business of Industrial Income Fund following the Conversion and will have
investment objectives, policies, and restrictions identical to those of
Industrial Income Fund. The investment objectives, policies and restrictions of
Industrial Income Fund will not change except as approved by shareholders and as
described in Proposal 2 and Proposal 3 of this Proxy Statement. Since both the
Company and Combination Stock & Bond Funds are Maryland corporations organized
under substantially similar Articles of Incorporation, the rights of the
security holders of Industrial Income Fund under state law and its governing
documents are expected to remain unchanged after the Conversion. Shareholder
voting rights under both the Company and Combination Stock & Bond Funds are
currently based on the number of shares owned. The same individuals serve as
directors of both the Company and Combination Stock & Bond Funds.
INVESCO, Industrial Income Fund's investment adviser, will be
responsible for providing the New Series with various administrative services
and supervising the New Series' daily business affairs, subject to the
supervision of the board of directors of Combination Stock & Bond Funds (the
"New Board"), under a management contract substantially identical to the
contract in effect between INVESCO and the Company immediately prior to the
Closing Date (defined below). Industrial Income Fund's distribution agent, IDI,
will distribute shares of the New Series under a General Distribution Agreement
substantially identical to the contract in effect between IDI and the Company
immediately prior to the Closing Date.
REASONS FOR THE PROPOSED CONVERSION
The Board unanimously recommends conversion of Industrial Income Fund to
a separate series of Combination Stock & Bond Funds (i.e., the New Series).
Moving Industrial Income Fund from the Company to Combination Stock & Bond Funds
will consolidate and streamline the production and mailing of certain financial
reports and legal documents, reducing expense to Industrial Income Fund. THE
PROPOSED CHANGE WILL HAVE NO MATERIAL EFFECT ON THE SHAREHOLDERS, OFFICERS,
OPERATIONS, OR MANAGEMENT OF INDUSTRIAL INCOME FUND.
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The proposal to present the Conversion Plan to shareholders was approved
by the Board, including all of its Independent Directors, on August 5, 1998. The
Board recommends that Industrial Income Fund shareholders vote FOR the approval
of the Conversion Plan. Such a vote encompasses approval of both (i) the
conversion of Industrial Income Fund to a separate series of Combination Stock &
Bond Funds and (ii) a temporary waiver of certain investment limitations of
Industrial Income Fund to permit the Conversion (see "Temporary Waiver of
Investment Restrictions" below). If shareholders of Industrial Income Fund do
not approve the Conversion Plan set forth herein, Industrial Income Fund will
continue to operate as a series of the Company.
SUMMARY OF THE CONVERSION PLAN
The following discussion summarizes the important terms of the
Conversion Plan. This summary is qualified in its entirety by reference to the
Conversion Plan itself, which is attached as Appendix B to this Proxy Statement.
If this Proposal is approved by shareholders, then on June 1, 1999, or
such later date on which the Company and Combination Stock & Bond Funds agree
(the "Closing Date"), Industrial Income Fund will transfer all of its assets to
the New Series in exchange solely for shares of the New Series ("New Series
Shares") equal to the number of Industrial Income Fund shares outstanding on the
Closing Date ("Industrial Income Fund Shares") and the assumption by the New
Series of all of the liabilities of Industrial Income Fund. Immediately
thereafter, Industrial Income Fund will constructively distribute to each
Industrial Income Fund shareholder one New Series Share for each Industrial
Income Fund Share held by the shareholder on the Closing Date, in liquidation of
the Industrial Income Fund Shares. As soon as is practicable after this
distribution of New Series Shares, Industrial Income Fund will be terminated as
a series of the Company, which will be wound up and liquidated. UPON COMPLETION
OF THE CONVERSION, EACH INDUSTRIAL INCOME FUND SHAREHOLDER WILL OWN FULL AND
FRACTIONAL NEW SERIES SHARES EQUAL IN NUMBER, DENOMINATION, AND AGGREGATE NET
ASSET VALUE TO HIS OR HER INDUSTRIAL INCOME FUND SHARES.
The Conversion Plan obligates Combination Stock & Bond Funds, on behalf
of the New Series, to enter into (i) a Management Contract with INVESCO with
respect to the New Series (the "New Management Contract") and (ii) a
Distribution and Service Plan under Rule 12b-1 promulgated under the 1940 Act
(the "New 12b-1 Plan") with respect to the New Series (collectively, the "New
Agreements"). Approval of the Conversion Plan will authorize the Company (which
will be issued a single share of the New Series on a temporary basis) to approve
the New Agreements as the sole initial shareholder of the New Series. Each New
Agreement will be virtually identical to the corresponding contract or plan in
effect with respect to the Company immediately prior to the Closing Date.
The New Agreements will take effect on the Closing Date, and each will
continue in effect until June 1, 2000. Thereafter, the New Management Contract
will continue in effect only if its continuance is approved at least annually
(i) by the vote of a majority of Combination Stock & Bond Funds' Independent
Directors cast in person at a meeting called for the purpose of voting on such
approval and (ii) by the vote of a majority of Combination Stock & Bond Funds'
directors or a majority of the outstanding voting shares of the New Series. The
New 12b-1 Plan will continue in effect only if approved annually by a vote of
Combination Stock & Bond Funds' Independent Directors, cast in person at a
meeting called for that purpose. The New Management Contract will be terminable
without penalty on sixty days' written notice by either Combination Stock & Bond
Funds or INVESCO and will terminate automatically in the event of its
assignment. The New 12b-1 Plan will be terminable at any time without penalty by
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a vote of a majority of Combination Stock & Bond Funds' Independent Directors or
a majority of the outstanding voting shares of the New Series.
The New Board will hold office without limit in time except that: (i)
any director may resign; and (ii) any director may be removed at any special
meeting of the Combination Stock & Bond Funds' shareholders by the affirmative
vote of a majority of the outstanding voting shares of Combination Stock & Bond
Funds. In case a vacancy shall for any reason exist, a majority of the remaining
directors, though less than a quorum, will vote to fill such vacancy by
appointing another director, so long as, immediately after such appointment, at
least two-thirds of the directors then holding office have been elected by
shareholders. If, at any time, less than a majority of the directors holding
office have been elected by shareholders, the directors then in office will
promptly call a shareholders' meeting for the purpose of electing directors.
Otherwise, there need normally be no meetings of shareholders for the purpose of
electing directors.
Assuming the Conversion Plan is approved, it is currently contemplated
that the Conversion will become effective on the Closing Date. However, the
Conversion may become effective at such other date as to which the Company and
Combination Stock & Bond Funds may agree in writing.
The obligations of the Company and Combination Stock & Bond Funds under
the Conversion Plan are subject to various conditions as stated therein.
Notwithstanding the approval of the Conversion Plan by Industrial Income Fund
shareholders, it may be terminated or amended at any time prior to the
Conversion by action of the directors to provide against unforeseen events, if
(i) there is a material breach by the other party of any representation,
warranty, or agreement contained in the Conversion Plan to be performed at or
prior to the Closing Date or (ii) it reasonably appears that the other party
will not or cannot meet a condition of the Conversion Plan. Either the Company
or Combination Stock & Bond Funds may at any time waive compliance with any of
the covenants and conditions contained in, or may amend, the Conversion Plan,
provided that the waiver or amendment does not materially adversely affect the
interests of Industrial Income Fund shareholders.
CONTINUATION OF FUND SHAREHOLDER ACCOUNTS
The transfer agent of Combination Stock & Bond Funds will establish
accounts for the New Series shareholders containing the appropriate number and
denominations of New Series Shares to be received by each holder of Industrial
Income Fund Shares under the Conversion Plan. Such accounts will be identical in
all material respects to the accounts currently maintained by the Company's
transfer agent for Industrial Income Fund's shareholders.
EXPENSES
The expenses of the Conversion, estimated at approximately $________ in
the aggregate, will be borne half by INVESCO and half by Industrial Income Fund
and the New Series.
TEMPORARY WAIVER OF INVESTMENT RESTRICTIONS
Certain fundamental investment restrictions of Industrial Income Fund,
which prohibit it from acquiring more than a stated percentage of ownership of
another company, might be construed as restricting its ability to carry out the
Conversion. By approving the Conversion Plan, Industrial Income Fund
shareholders will be agreeing to waive, only for the purpose of the Conversion,
those fundamental investment restrictions that could prohibit or otherwise
impede the transaction.
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TAX CONSEQUENCES OF THE CONVERSION
Both the Company and Combination Stock & Bond Funds will receive an
opinion from their counsel, Kirkpatrick & Lockhart LLP, that the Conversion will
constitute a tax-free conversion within the meaning of section 368(a)(1)(F) of
the Internal Revenue Code of 1986, as amended. Accordingly, neither Industrial
Income Fund, the New Series nor Industrial Income Fund's shareholders will
recognize gain or loss for federal income tax purposes upon (i) the transfer of
Industrial Income Fund's assets in exchange solely for New Series Shares and the
assumption by the New Series of Industrial Income Fund's liabilities or (ii) the
distribution of the New Series Shares to Industrial Income Fund's shareholders
in liquidation of their Industrial Income Fund Shares. The opinion will further
provide, among other things, that (1) an Industrial Income Fund shareholder's
aggregate basis for federal income tax purposes of the New Series Shares to be
received by the shareholder in the Conversion will be the same as the aggregate
basis of his or her Industrial Income Fund Shares to be constructively
surrendered in exchange for those New Series Shares; and (2) an Industrial
Income Fund shareholder's holding period for his or her New Series Shares will
include the shareholder's holding period for his or her Industrial Income Fund
Shares, provided that those Industrial Income Fund Shares were held as capital
assets at the time of Conversion.
CONCLUSION
The Board has concluded that the proposed Conversion Plan is in the best
interests of Industrial Income Fund's shareholders. A vote in favor of the
Conversion Plan encompasses (i) approval of the conversion of Industrial Income
Fund to the New Series (ii) approval of the temporary waiver of certain
investment limitations of Industrial Income Fund to permit the Conversion (see
"Temporary Waiver of Investment Restrictions" above) and (iii) authorization of
the Company, as sole initial shareholder of the New Series, to approve (a) a
Management Contract with respect to the New Series between Combination Stock &
Bond Funds and INVESCO and (b) a Distribution and Service Plan under Rule 12b-1
with respect to the New Series. Each of these New Agreements is identical to the
corresponding contract or plan in effect with Industrial Income Fund immediately
prior to the Closing Date. If approved, the Conversion Plan will take effect on
the Closing Date. If the Conversion Plan is not approved, Industrial Income Fund
will continue to operate as a series of the Company.
REQUIRED VOTE
Approval of the Conversion Plan requires the affirmative vote of a
majority of the votes present at the Meeting, provided a quorum is present.
THE BOARD UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS
VOTE "FOR" PROPOSAL 1
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PROPOSAL 2. TO APPROVE AMENDMENTS TO THE FUNDAMENTAL
INVESTMENT RESTRICTIONS OF INDUSTRIAL INCOME FUND
As required by the 1940 Act, Industrial Income Fund has adopted certain
fundamental investment restrictions ("fundamental restrictions"), which are set
forth in Industrial Income Funds' Statement of Additional Information. Certain
of these fundamental restrictions are also set forth in the Articles of
Restatement of the Articles of Incorporation ("Articles") or in the Amended
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Bylaws ("Bylaws") dated as of July 21, 1993, of the Company. Fundamental
restrictions may be changed only with shareholder approval. Restrictions and
policies that Industrial Income Fund has not specifically designated as
fundamental are considered to be "non-fundamental" and may be changed by the
Board without shareholder approval. The Board may also amend or repeal any Bylaw
without approval of Industrial Income Fund shareholders. As more fully set forth
in Proposals 3 and 4, fundamental restrictions contained in the Articles or
Bylaws require a separate vote of Industrial Income Fund shareholders to remove
them from the Articles or Bylaws.
Some of Industrial Income Fund's fundamental restrictions reflect past
regulatory, business or industry conditions, practices or requirements that are
no longer in effect. Also, as other INVESCO Funds have been created over the
years, these funds have adopted substantially similar fundamental restrictions
that often have been phrased in slightly different ways, resulting in minor but
unintended differences in effect or potentially giving rise to unintended
differences in interpretation. Accordingly, the Board has approved revisions to
Industrial Income Fund's fundamental restrictions in order to simplify and
modernize Industrial Income Fund's fundamental restrictions and make them more
uniform with those of the other INVESCO Funds.
The Board believes that eliminating the disparities among the INVESCO
Funds' fundamental restrictions will enhance management's ability to manage the
funds' assets efficiently and effectively in changing regulatory and investment
environments and permit the Board to review and monitor investment policies more
easily. In addition, standardizing the fundamental restrictions of the INVESCO
Funds will assist the INVESCO Funds in making required regulatory filings in a
more efficient and cost-effective way. Although the proposed changes in
fundamental restrictions will allow Industrial Income Fund greater investment
flexibility to respond to future investment opportunities, the Board does not
anticipate that the changes, individually or in the aggregate, will result at
this time in a material change in the level of investment risk associated with
an investment in Industrial Income Fund.
The text and a summary description of each proposed change to Industrial
Income Fund's fundamental restrictions are set forth below, together with a
summary of the text of the corresponding current fundamental restriction. The
text below also describes any non-fundamental restrictions that would be adopted
by the Board in conjunction with the revision of certain fundamental
restrictions. Any non-fundamental restriction may be modified or eliminated by
the Board at any future date without shareholder approval.
If Industrial Income Fund shareholders approve Proposals 2a, b, c, d, e,
f, g, h, i, j, k and l, those proposed changes in Industrial Income Fund's
fundamental restrictions will be adopted by Industrial Income Fund. Industrial
Income Fund's Statement of Additional Information will be revised to reflect any
changes as soon as practicable following the Meeting.
A. MODIFICATION OF FUNDAMENTAL RESTRICTION ON THE ISSUANCE OF SENIOR
SECURITIES
Industrial Income Fund's currently has the following fundamental
restriction:
The Fund may not issue preference shares or create any funded debt.
The Board recommends that shareholders vote to replace the fundamental
restriction set forth above with the following fundamental restriction on the
issuance of senior securities:
The Fund may not issue senior securities, except as permitted under
the Investment Company Act of 1940.
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The primary purposes of the proposal are to eliminate differences in the
wording of the INVESCO Funds' current restrictions on the issuance of senior
securities for greater uniformity, to eliminate any unnecessary limitations and
to conform the restriction to 1940 Act requirements regarding the issuance of
senior securities. The Board believes that the replacement of the current
fundamental restriction on issuing preference shares and creating funded debt
with the proposed fundamental restriction, which does not specify the manner in
which senior securities may be issued and is no more limiting than is required
under the 1940 Act, would maximize Industrial Income Fund's flexibility for
future contingencies and would conform to the fundamental restrictions of the
other INVESCO Funds on the issuance of senior securities.
B. MODIFICATION OF FUNDAMENTAL RESTRICTION ON INVESTING IN COMMODITIES
Industrial Income Fund's current fundamental restriction on investing in
commodities is as follows:
The Fund may not buy or sell real estate, commodities, commodity
contracts (however, the Fund may purchase securities of companies
investing in real estate).
The Board recommends that shareholders vote to replace this restriction
with the following fundamental restriction:
The Fund may not purchase or sell physical commodities; however,
this policy shall not prevent the Fund from purchasing and selling
foreign currency, futures contracts, options, forward contracts,
swaps, caps, floors, collars and other financial instruments.
The proposed changes are intended to conform the restriction to those of
the other INVESCO Funds and to ensure that Industrial Income Fund will have the
maximum flexibility to enter into hedging or other transactions utilizing
financial contracts and derivative products when doing so is permitted by
operating policies established for Industrial Income Fund by the Board. Due to
the rapid and continuing development of derivative products and the possibility
of changes in the definition of "commodities," particularly in the context of
the jurisdiction of the Commodities Futures Trading Commission, it is important
for Industrial Income Fund's policy to be flexible enough to allow it to enter
into hedging and other transactions using these products when doing so is deemed
appropriate by INVESCO and is within the investment parameters established by
the Board. To maximize that flexibility, the Board recommends that Industrial
Income Fund's fundamental restriction on commodities investments be clear in
permitting the use of derivative products, even if the current non-fundamental
investment policies of Industrial Income Fund would not permit investment in one
or more of the permitted transactions. The proposed revision also separates
Industrial Income Fund's restriction on commodity investments from its
restriction on real estate related investments (see below).
C. MODIFICATION OF FUNDAMENTAL RESTRICTION ON REAL ESTATE INVESTMENT
Industrial Income Fund's current fundamental restriction on real estate
investments is as follows:
The Fund may not buy or sell real estate, commodities, commodity
contracts (however, the Fund may purchase securities of companies
investing in real estate).
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Currently, Industrial Income Fund's fundamental restriction on real
estate is combined with its restriction on investing in commodities (see above).
To conform Industrial Income Fund's restriction on real estate investment with
those of other INVESCO Funds, the Board recommends that shareholders vote to
replace this restriction with the following separate fundamental restriction:
The Fund may not purchase or sell real estate unless acquired as a
result of ownership of securities or other instruments (but this
shall not prevent the Fund from investing in securities or other
instruments backed by real estate or securities of companies
engaged in the real estate business).
In addition to conforming Industrial Income Fund's fundamental
restriction on real estate to that of other INVESCO funds, the proposed
amendment more completely describes the types of real estate-related securities
investments that would be permissible for Industrial Income Fund and would
permit Industrial Income Fund to purchase or sell real estate acquired as a
result of ownership of securities or other instruments (e.g., through
foreclosure on a mortgage in which Industrial Income Fund directly or indirectly
holds an interest). The Board believes that this clarification will make it
easier for decisions to be made concerning Industrial Income Fund's investments
in real estate-related securities without materially altering the general
restriction on direct investments in real estate or interests in real estate.
The proposed change would also give Industrial Income Fund the ability to invest
in assets secured by real estate.
D. MODIFICATION OF FUNDAMENTAL RESTRICTION AND ADOPTION OF NON-FUNDAMENTAL
RESTRICTION ON INVESTING IN ANOTHER INVESTMENT COMPANY
Industrial Income Fund's current fundamental restriction on investing in
other investment companies is as follows:
The Fund may not invest in securities of any other investment
company except for a purchase or acquisition in accordance with a
plan of reorganization, merger or consolidation.
The Board recommends that shareholders vote to replace this fundamental
restriction with the following fundamental investment restriction:
The Fund may, notwithstanding any other fundamental investment
policy or limitation, invest all of its assets in the securities of
a single open-end management investment company managed by INVESCO
Funds Group, Inc. or an affiliate or a successor thereof, with
substantially the same fundamental investment objective, policies
and limitations as the Fund.
The proposed revision to Industrial Income Fund's current fundamental
restriction would ensure that the INVESCO Funds have uniform policies permitting
each Fund to adopt a "master/feeder" structure whereby one or more Funds invest
all of their assets in another Fund. The master/feeder structure has the
potential, under certain circumstances, to minimize administrative costs and
maximize the possibility of gaining a broader investor base. Currently, none of
the INVESCO Funds intends to establish a master/feeder structure; however, the
Board recommends that Industrial Income Fund shareholders adopt a restriction
that would permit this structure in the event that the Board determines to
recommend the adoption of a master/feeder structure by Industrial Income Fund.
The proposed revision would require that any fund in which Industrial Income
Fund may invest under a master/feeder structure be advised by INVESCO or an
affiliate thereof.
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If the proposed revision is approved, the Board will adopt a
non-fundamental restriction as follows:
The Fund may invest in securities issued by other investment
companies to the extent that such investments are consistent with
the Fund's investment objective and policies and permissible under
the 1940 Act.
The primary purpose of this non-fundamental restriction is to conform to
the other INVESCO Funds and to the 1940 Act requirements for investing in other
investment companies. Currently, Industrial Income Fund's fundamental
restriction is much more limiting than the restrictions imposed by the 1940 Act.
Adoption of this non-fundamental restriction will enable Industrial Income Fund
to purchase the securities of other investment companies to the extent permitted
under the 1940 Act or pursuant to an exemption granted by the SEC.
E. ELIMINATION OF FUNDAMENTAL RESTRICTION ON INVESTING IN COMPANIES FOR THE
PURPOSE OF EXERCISING CONTROL OR MANAGEMENT
Industrial Income Fund's current fundamental restriction regarding
investing in companies for the purpose of exercising control or management is as
follows:
The Fund may not invest in any company for the purpose of
exercising control or management.
The Board recommends that shareholders vote to eliminate this
restriction. There is no legal requirement that a fund have an affirmative
policy on investment for the purpose of exercising control or management if it
does NOT intend to make investments for that purpose. Industrial Income Fund has
no intention of investing in any company for the purpose of exercising control
or management. By eliminating this restriction, the Board may, however, be able
to authorize such a strategy in the future if it concludes that doing so would
be in the best interests of Industrial Income Fund and its shareholders.
F. ELIMINATION OF FUNDAMENTAL RESTRICTION ON INVESTING IN ILLIQUID
SECURITIES AND ADOPTION OF NON-FUNDAMENTAL RESTRICTION ON INVESTING IN
ILLIQUID SECURITIES
Industrial Income Fund currently has the following fundamental
restriction on investing in illiquid securities:
The Fund may not buy other than readily marketable securities.
The Board recommends that shareholders vote to eliminate this
restriction. If the proposal is approved, the Board will adopt the following
non-fundamental restriction:
The Fund does not currently intend to purchase any security if, as
a result, more than 15% of its net assets would be invested in
securities that are deemed to be illiquid because they are subject
to legal or contractual restrictions on resale or because they
cannot be sold or disposed of in the ordinary course of business at
approximately the prices at which they are valued.
The primary purpose of the proposal is to conform to the federal
securities law requirements regarding investment in illiquid securities and to
conform the investment restrictions of Industrial Income Fund to those of the
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other INVESCO Funds. Industrial Income Fund is currently prohibited from
investing in illiquid securities. The Board believes that the proposed
elimination of the fundamental restriction and subsequent adoption of the
non-fundamental restriction will make the restriction more accurately reflect
market conditions and will maximize Industrial Income Fund's flexibility for
future contingencies. The Board may delegate to INVESCO, Industrial Income
Fund's investment adviser, the authority to determine whether a security is
liquid for the purposes of this investment limitation.
G. MODIFICATION OF FUNDAMENTAL RESTRICTION ON ISSUER DIVERSIFICATION
Industrial Income Fund's current fundamental restriction on issuer
diversification is as follows:
The Fund may not 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).
The Board recommends that shareholders vote to replace this restriction
with the following fundamental restriction:
The Fund may not, with respect to 75% of the Fund's total assets,
purchase the securities of any issuer (other than securities issued
or guaranteed by the U.S. Government or any of its agencies or
instrumentalities, or securities of other investment companies) if,
as a result, (i) more than 5% of the Fund's total assets would be
invested in the securities of that issuer, or (ii) the Fund would
hold more than 10% of the outstanding voting securities of that
issuer.
The proposed fundamental restriction concerning diversification is the
limitation imposed by the 1940 Act for diversified investment companies. The
amended fundamental restriction would allow Industrial Income Fund, with respect
to 25% of its total assets, to invest more than 5% of its assets in the
securities of one or more issuers and to hold more than 10% of the voting
securities of an issuer. Industrial Income Fund will continue to be required to
invest 75% of its total assets so that no more than 5% of total assets are
invested in any one issuer, and so that the Industrial Income Fund will not own
more than 10% of the voting securities of an issuer.
The amended restriction would give Industrial Income Fund greater
investment flexibility by permitting it to acquire larger positions in the
securities of a particular issuer, consistent with its investment objective and
strategies. This increased flexibility could provide opportunities to enhance
Industrial Income Fund's performance. Investing a larger percentage of
Industrial Income Fund's assets in a single issuer's securities, however,
increases Industrial Income Fund's exposure to credit and other risks associated
with that issuer's financial condition and operations, including the risk of
default on debt securities.
The amended fundamental restriction also would permit Industrial Income
Fund to invest without limit in the securities of other investment companies.
Industrial Income Fund has no current intention of doing so, and, as noted
below, the 1940 Act imposes restrictions on the extent to which a fund may
invest in the securities of other investment companies. The revision would,
however, give Industrial Income Fund flexibility to invest in other investment
companies in the event legal and other regulatory requirements change.
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H. MODIFICATION OF FUNDAMENTAL RESTRICTION ON UNDERWRITING
Industrial Income Fund's current fundamental restriction on underwriting
is as follows:
The Fund may not engage in the underwriting of any securities.
The Board recommends that shareholders vote to replace this restriction
with the following fundamental restriction:
The Fund may not underwrite securities of other issuers, except
insofar as it may be deemed to be an underwriter under the
Securities Act of 1933, as amended, in connection with the
disposition of the Fund's portfolio securities.
The purpose of the proposal is to eliminate minor differences in the
wording of the INVESCO Funds' current restrictions on underwriting for greater
uniformity with the fundamental restrictions of other INVESCO Funds.
I. MODIFICATION OF FUNDAMENTAL RESTRICTION ON LOANS
Industrial Income Fund's current fundamental restriction on loans is as
follows:
The Fund may not 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 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).
The Board recommends that shareholders vote to replace this restriction
with the following fundamental restriction:
The Fund may not lend any security or make any loan if, as a result,
more than 331/3 % of its total assets would be lent to other parties,
but this limitation does not apply to the purchase of debt securities or
to repurchase agreements.
The primary purpose of the proposal is to eliminate minor differences in
the wording of the INVESCO Funds' current restrictions on loans to achieve
greater uniformity. The proposed changes to this fundamental restriction are
relatively minor and would have no substantive effect on Industrial Income
Fund's lending activities or other investments. The proposed changes would
eliminate the current restriction that prohibits Industrial Income Fund from
investing more than 10% of its total assets in repurchase agreements maturing in
more than seven days.
J. ELIMINATION OF FUNDAMENTAL RESTRICTION ON FUND OWNERSHIP OF SECURITIES
ALSO OWNED BY DIRECTORS AND OFFICERS OF INDUSTRIAL INCOME FUND OR ITS
INVESTMENT ADVISER
Industrial Income Fund's current fundamental restriction concerning Fund
ownership of securities also owned by directors and officers of Industrial
Income Fund or its investment adviser is as follows:
The Fund may not 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.
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The Board recommends that the shareholders vote to eliminate this
restriction. Funds are not legally required to have a fundamental restriction
limiting or prohibiting the purchase of securities of companies that are also
owned by affiliated parties of the fund. This limitation was derived from state
laws that are no longer applicable. The concerns that this restriction was
designed to address are sufficiently safeguarded against by provisions of the
1940 Act applicable to Industrial Income Fund, as well as by Industrial Income
Fund's other investment policies. Specifically, to the extent that this
restriction seeks to limit possible conflicts of interest arising out of
transactions with affiliated parties, the restriction is unnecessary and unduly
burdensome because Industrial Income Fund is subject to the extensive affiliated
transaction provisions of the 1940 Act. Because this restriction provides no
additional protections to shareholders and may hinder the Board in pursuing
investment strategies that may be advantageous to Industrial Income Fund, the
Board recommends that this investment restriction be eliminated.
K. MODIFICATION OF FUNDAMENTAL RESTRICTION ON INDUSTRY CONCENTRATION AND
ADOPTION OF NON-FUNDAMENTAL RESTRICTION ON INDUSTRY CONCENTRATION
Industrial Income Fund's current fundamental restriction on industry
concentration is as follows:
The Fund may not invest more than 25% of the value of its assets in
one particular industry.
The Board recommends that shareholders vote to replace this restriction
with the following fundamental restriction:
The Fund may not purchase the securities of any issuer (other than
securities issued or guaranteed by the U.S. Government or any of
its agencies or instrumentalities or municipal securities) if, as a
result, more than 25% of the Fund's total assets would be invested
in the securities of companies whose principal business activities
are in the same industry.
If the proposal is approved, the Board will adopt a non-fundamental
restriction with respect to industry concentration as follows:
With respect to fundamental limitation (1), domestic and foreign
banking will be considered to be different industries.
The primary purpose of the modification is to eliminate minor
differences in the wording of the INVESCO Funds' current restrictions on
concentration for greater uniformity and to avoid unintended limitations without
materially altering the restriction. The proposed changes to Industrial Income
Fund's fundamental concentration policy exclude municipal securities and
securities issued or guaranteed by the U.S. government, its agencies or
instrumentalities from the concentration limitation. There is no such exclusion
from the current concentration limitation. A failure to exclude all such
securities from the concentration policy could hinder Industrial Income Fund's
ability to purchase such securities in conjunction with taking temporary
defensive positions.
REQUIRED VOTE. Approval of Proposal 2 requires the affirmative vote
of a "majority of the outstanding voting securities" of Industrial Income
Fund, which for this purpose means the affirmative vote of the lesser of
(i) 67% or more of the shares of Industrial Income Fund present at the
Meeting or represented by proxy if more than 50% of the outstanding shares
of Industrial Income Fund are
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so present or represented, or (ii) more than 50% of the outstanding shares of
Industrial Income Fund. Shareholders who vote "for" Proposal 2 will vote "for"
each proposed change described above. THOSE SHAREHOLDERS WHO WISH TO VOTE
AGAINST ANY OF THE SPECIFIC PROPOSED CHANGES DESCRIBED ABOVE MAY DO SO ON THE
PROXY PROVIDED.
THE BOARD UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS
VOTE "FOR" PROPOSAL 2.
-----------------------------------------------------------
PROPOSAL 3. TO AMEND THE ARTICLES OF RESTATEMENT OF THE
ARTICLES OF INCORPORATION OF THE COMPANY
The Restated Articles of Incorporation ("Articles") of the Company set
forth some of Industrial Income Fund's fundamental restrictions. In order to
change these fundamental restrictions, Industrial Income Fund shareholders must
approve certain amendments (the "Articles Amendments") to the Articles removing
such fundamental restrictions from the Articles. The Board has approved the
Articles Amendments in order to carry out the proposed revisions to Industrial
Income Fund's fundamental restrictions and to make Industrial Income Fund's
Articles of Incorporation uniform with those of other INVESCO Funds in their
exclusion of fundamental restrictions from such Articles of Incorporation. Also,
the Board believes that approval of the Articles Amendments will save Industrial
Income Fund the expense of amending the Articles in the future if the Board
should deem that further modifications to Industrial Income Fund's fundamental
restrictions are advisable. The Board recommends that Industrial Income Fund
shareholders vote FOR Proposal 3 in order to carry out the proposed changes in
Industrial Income Fund's fundamental restrictions.
The text of the fundamental restrictions contained in the Articles that
the Board is proposing to eliminate is set forth below.
A. ELIMINATION FROM ARTICLES OF FUNDAMENTAL RESTRICTION ON SHORT SALES AND
MARGIN PURCHASES AND ADOPTION OF NON-FUNDAMENTAL RESTRICTION ON SHORT
SALES AND MARGIN PURCHASES
Industrial Income Fund's current fundamental restriction on short sales
and margin purchases as set forth in the Articles is as follows:
The [Fund] ... shall not purchase any securities on margin ... nor
shall [the Fund] effect a short sale of any security.
This restriction is reflected in Industrial Income Fund's Statement of
Additional Information as follows:
The Fund may not sell short or buy on margin.
The Board recommends that shareholders vote to amend the Articles to
remove this fundamental restriction from the Articles and from the Statement of
Additional Information. If the proposal is approved by shareholders, the Board
will adopt the following non-fundamental restriction for Industrial Income Fund:
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The Fund may not sell securities short (unless it owns or has the
right to obtain securities equivalent in kind and amount to the
securities sold short) or purchase securities on margin, except
that (i) this policy does not prevent the Fund from entering into
short positions in foreign currency, futures contracts, options,
forward contracts, swaps, caps, floors, collars and other financial
instruments, (ii) the Fund may obtain such short-term credits as
are necessary for the clearance of transactions, and (iii) the Fund
may make margin payments in connection with futures contracts,
options, forward contracts, swaps, caps, floors, collars and other
financial instruments.
The proposed changes clarify the wording of the restriction and expand
the exceptions to the restriction, which generally prohibits Industrial Income
Fund from selling securities short or buying securities on margin. Margin
purchases involve the purchase of securities with money borrowed from a broker.
"Margin" is the cash or eligible securities that the borrower places with a
broker as collateral against the loan. In a short sale, an investor sells a
borrowed security and has a corresponding obligation to the lender to return the
identical security. The proposed non-fundamental restriction permits short sales
against the box, when an investor sells securities short while owning the same
securities in the same amount or having the right to obtain equivalent
securities. It also permits Industrial Income Fund to borrow a security on a
short-term basis and to enter into short positions and make margin payments in a
variety of financial instruments. The Board believes that elimination of the
fundamental restriction and adoption of the non-fundamental restriction will
provide Industrial Income Fund with greater investment flexibility.
B. ELIMINATION FROM ARTICLES OF FUNDAMENTAL RESTRICTION ON BORROWING,
MODIFICATION OF FUNDAMENTAL RESTRICTION ON BORROWING, AND ADOPTION OF
NON-FUNDAMENTAL RESTRICTION ON BORROWING
Industrial Income Fund's current fundamental restriction on borrowing as
set forth in the Articles is as follows:
The [Fund] ... shall not borrow amounts in excess of five percent
(5%) of the value of its gross assets ... and no borrowing shall be
undertaken except from banks as a temporary measure for
extraordinary or emergency purposes. In no event may any of the
assets of the [Fund] ... be mortgaged, pledged or hypothecated.
This restriction is reflected in Industrial Income Fund's Statement of
Additional Information as follows:
The Fund may not borrow money in excess of 5% of the value of its total
net assets and then only from banks, and when borrowing, it is a
temporary measure for emergency purposes.
The Board recommends that shareholders vote to amend the Articles to
remove this fundamental restriction from the Articles and to replace the
fundamental restriction in the Statement of Additional Information with the
following fundamental restriction:
The Fund may not borrow money, except that the Fund may borrow
money in an amount not exceeding 33 1/3% of its total assets
(including the amount borrowed) less liabilities (other than
borrowings).
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Currently, Industrial Income Fund's fundamental restriction is
significantly more limiting than the restrictions imposed by the 1940 Act in
that it limits the purposes for which Industrial Income Fund may borrow money
and it limits all borrowings to 5% of Industrial Income Fund's assets. The
proposal eliminates the fundamental nature of the restrictions on the purposes
for which the Industrial Income Fund may borrow money and increases Industrial
Income Fund's borrowing authority from 5% to 331/3% of Industrial Income Fund's
total assets.
If the proposal is approved, the Board will adopt a non-fundamental
restriction as follows:
The Fund may borrow money only from a bank or from an open-end
management investment company managed by INVESCO Funds Group, Inc.
or an affiliate or a successor thereof for temporary or emergency
purposes (not for leveraging or investing) or by engaging in
reverse repurchase agreements with any party (reverse repurchase
agreements will be treated as borrowings for purposes of
fundamental limitation (4)).
The non-fundamental restriction reflects Industrial Income Fund's
current policy that borrowing by Industrial Income Fund may only be done for
temporary, emergency purposes. In addition to borrowing from banks, as permitted
by Industrial Income Fund's current policy, the non-fundamental restriction
permits Industrial Income Fund to borrow from open-end funds managed by INVESCO
or an affiliate or successor thereof. Industrial Income Fund would not be able
to do so, however, unless it obtains permission for such borrowings from the
Securities and Exchange Commission ("SEC"). The non-fundamental restriction also
clarifies that reverse repurchase agreements will be treated as borrowings. The
Board believes that this approach, making Industrial Income Fund's fundamental
restriction on borrowing no more limiting than is required under the 1940 Act,
while incorporating more strict limits on borrowing in the Industrial Income
Fund's non-fundamental restriction, will maximize Industrial Income Fund's
flexibility for future contingencies.
C. ELIMINATION FROM ARTICLES OF FUNDAMENTAL RESTRICTION ON JOINT TRADING
ACTIVITIES
Industrial Income Fund's Articles currently include the following
fundamental restriction on joint trading activities:
The [Fund] ... shall not participate on a joint or joint and
several basis in any trading account in securities....
The Board recommends that shareholders vote to eliminate this
fundamental restriction. This restriction is derived from a 1940 Act
requirement, which makes it unlawful for a registered investment company to
participate on a joint or a joint and several basis in any trading account in
securities, except in connection with an underwriting in which such registered
investment company is a participant. The 1940 Act does not, however, require
that this limitation be stated as a fundamental restriction. Accordingly, the
Board recommends that this restriction be eliminated.
REQUIRED VOTE. Approval of Proposal 3 requires the affirmative
vote of two-thirds of the outstanding voting securities of Industrial Income
Fund. THOSE SHAREHOLDERS WHO WISH TO VOTE AGAINST ANY OF THE SPECIFIC ARTICLES
AMENDMENTS DESCRIBED ABOVE MAY DO SO ON THE PROXY PROVIDED. ONLY THOSE SPECIFIC
ARTICLES AMENDMENTS APPROVED BY THE REQUIRED VOTE WILL BECOME EFFECTIVE. If
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Proposal 3 is approved in whole or in part, and Proposal 1 is approved, the
Articles as amended will remain in effect only until the Conversion described in
Proposal 1 is consummated.
THE BOARD UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS
VOTE "FOR" PROPOSAL 3.
-----------------------------------------
PROPOSAL 4. TO AMEND THE BYLAWS OF THE COMPANY
The Bylaws of the Company set forth some of Industrial Income Fund's
fundamental restrictions. In order to change these fundamental restrictions in
accordance with the changes recommended in Proposal 2, Industrial Income Fund
shareholders must approve certain amendments (the "Bylaws Amendments") to the
Bylaws removing such fundamental restrictions from the Bylaws. The Board has
approved the Bylaws Amendments in order to carry out certain proposed revisions
to Industrial Income Fund's fundamental restrictions contained in Proposal 2 and
to make Industrial Income Fund's Bylaws uniform with those of other INVESCO
Funds in their exclusion of fundamental restrictions from such Bylaws. Also, the
Board believes that approval of the Bylaws Amendments will save Industrial
Income Fund the expense of amending the Bylaws in the future if the Board should
deem that further modifications to Industrial Income Fund's fundamental
restrictions are advisable. In order for the changes in Proposal 2 to be
effected, Industrial Income Fund shareholders must approve both Proposal 2 and
Proposal 4. IF INDUSTRIAL INCOME FUND SHAREHOLDERS APPROVE PROPOSAL 2 BUT DO NOT
APPROVE THE CORRESPONDING BYLAWS AMENDMENTS IN PROPOSAL 4, THE CHANGES IN
PROPOSALS 2D, 2G, AND/OR 2I, AS THE CASE MAY BE, WILL NOT BE GIVEN EFFECT AND
THE CORRESPONDING FUNDAMENTAL RESTRICTIONS SET FORTH IN THE BYLAWS WILL CONTINUE
TO GOVERN INDUSTRIAL INCOME FUND'S INVESTMENT DECISIONS WITH RESPECT TO THOSE
FUNDAMENTAL RESTRICTIONS. Therefore, the Board recommends that Industrial Income
Fund shareholders vote for Proposal 4 in order to carry out the proposed changes
in Industrial Income Fund's fundamental restrictions as set forth in Proposal 2.
The text of the fundamental restrictions contained in the Bylaws that
the Board is proposing to eliminate is set forth below. The text below also
provides a cross-reference to the fundamental restrictions in Proposal 2
proposed to replace the corresponding fundamental restrictions contained in the
Bylaws.
A. ELIMINATION OF BYLAW RESTRICTION ON INVESTING IN ANOTHER INVESTMENT
COMPANY
The Company's Bylaws have the following fundamental restriction on
investing in other investment companies:
The [Fund] ... 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.
Elimination of this Bylaw provision would give effect to Proposal 2d,
which, if approved, would eliminate Industrial Income Fund's fundamental
restriction on investing in other investment companies and adopt a
non-fundamental restriction on such investments, as discussed in Proposal 2d
above.
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B. ELIMINATION OF BYLAW RESTRICTIONS ON ISSUER DIVERSIFICATION
The Company's Bylaws have the following fundamental restrictions on
issuer diversification:
The [Fund] ... may not purchase securities of any one issuer if
immediately after such purchase more than five percent (5%) of the
assets, taken at market value, would be invested in securities of
such issuer, but this limitation shall not apply to investments and
obligations of the United States or on obligations of any
corporation organized under general act of Congress if such
corporation be an instrumentality of the United States.
The [Fund] ... shall not purchase securities of any issuer if
immediately after and as a result of such purchase the [Fund] ...
would own more than ten percent (10%) of the outstanding voting
securities of such issuer.
Elimination of this Bylaw provision would give effect to Proposal 2g,
which, if approved, would modify Industrial Income Fund's fundamental
restriction on issuer diversification, as discussed in Proposal 2g above.
C. ELIMINATION OF BYLAW RESTRICTION ON LOANS
The Company's Bylaws have the following fundamental restriction on
loans:
The [Fund] ... shall not lend any of its funds or assets to any
officer or director of Company, any investment advisor or principal
underwriter, or any officer or director of any investment advisor
or principal underwriter.
Elimination of this Bylaw provision would give effect to Proposal 2i,
which, if approved, would modify Industrial Income Fund's fundamental
restriction on loans, as discussed in Proposal 2i above.
REQUIRED VOTE. Approval of Proposal 4 requires the affirmative vote
of a majority of the outstanding voting securities of Industrial Income
Fund. THOSE SHAREHOLDERS WHO WISH TO VOTE AGAINST ANY OF THE SPECIFIC
BYLAWS AMENDMENTS DESCRIBED ABOVE MAY DO SO ON THE PROXY PROVIDED. ONLY
THOSE SPECIFIC BYLAWS AMENDMENTS APPROVED BY THE REQUIRED VOTE WILL BECOME
EFFECTIVE. IF INDUSTRIAL INCOME FUND SHAREHOLDERS APPROVE PROPOSAL 2 BUT DO
NOT APPROVE THE CORRESPONDING BYLAWS AMENDMENTS IN PROPOSAL 4, PROPOSALS
2D, 2G, AND/OR 2I, AS THE CASE MAY BE, WILL NOT BE GIVEN EFFECT AND THE
CORRESPONDING FUNDAMENTAL RESTRICTIONS SET FORTH IN THE BYLAWS WILL
CONTINUE TO GOVERN INDUSTRIAL INCOME FUND'S INVESTMENT DECISIONS WITH
RESPECT TO THOSE FUNDAMENTAL RESTRICTIONS. If Proposal 4 is approved in
whole or in part, and Proposal 1 is approved, the Bylaws as amended will
remain in effect only until the Conversion described in Proposal 1 is
consummated.
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THE BOARD UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS
VOTE "FOR" PROPOSAL 4.
-------------------------------------------
PROPOSAL 5. TO ELECT THE DIRECTORS OF THE COMPANY
The Board has nominated the individuals identified below for election to
the Board at the Meeting. The Company currently has ten directors. Vacancies on
the Board are generally filled by appointment by the remaining directors.
However, the 1940 Act provides that vacancies may not be filled by directors
unless thereafter at least two-thirds of the directors shall have been elected
by shareholders. To ensure continued compliance with this rule without incurring
the expense of calling additional shareholder meetings, shareholders are being
asked at this Meeting to elect the current ten directors. Consistent with the
Bylaws, and as permitted by Maryland law, the Company does not anticipate
holding annual shareholder meetings. Thus, the directors will be elected for
indefinite terms, subject to termination or resignation. Each nominee has
indicated a willingness to serve if elected. If any of the nominees should not
be available for election, the persons named as proxies (or their substitutes)
may vote for other persons in their discretion. Management has no reason to
believe that any nominee will be unavailable for election.
All of the Independent Directors now being proposed for election were
nominated and selected by Independent Directors. Eight of the ten current
directors are Independent Directors.
The persons named as attorneys-in-fact in the enclosed proxy have
advised the Company that unless a proxy instructs them to withhold authority to
vote for all listed nominees or for any individual nominee, they will vote all
validly executed proxies for the election of the nominees named below.
The nominees for director, their ages, a description of their principal
occupations, the number of Industrial Income Fund shares owned by each, and
their respective memberships on Board committees are listed in the table below.
<TABLE>
<CAPTION>
NAME, POSITION WITH THE PRINCIPAL OCCUPATION AND BUSINESS DIRECTOR OR NUMBER OF COMPANY MEMBER OF
COMPANY, AND AGE EXPERIENCE (DURING THE PAST FIVE YEARS) EXECUTIVE SHARES BENEFICIALLY COMMITTEE
- ---------------- -------------------------------------- OFFICER OF THE OWNED DIRECTLY OR ---------
COMPANY SINCE INDIRECTLY ON DEC. 31,
------------- 1998 (1)
----
<S> <C> <C> <C> <C>
CHARLES W. BRADY, Chief Executive Officer and 1993 0 (3), (5), (6)
CHAIRMAN OF THE Director of AMVESCAP PLC,
BOARD, AGE 63* London, England, and of
various subsidiaries
thereof. Chairman of the
Board of INVESCO Global
Health Sciences Fund.
FRED A. DEERING, Trustee of INVESCO Global 1993 23481.1110 (2), (3), (5)
VICE CHAIRMAN OF Health Sciences Fund.
THE BOARD, AGE 71 Formerly, Chairman of the
Executive Committee and
Chairman of the Board of
Security Life of Denver
Insurance Company, Denver,
Colorado; Director of ING
American Holding Company, and
First ING Life Insurance
Company of New York.
19
<PAGE>
NAME, POSITION WITH THE PRINCIPAL OCCUPATION AND BUSINESS DIRECTOR OR NUMBER OF COMPANY MEMBER OF
COMPANY, AND AGE EXPERIENCE (DURING THE PAST FIVE YEARS) EXECUTIVE SHARES BENEFICIALLY COMMITTEE
- ---------------- -------------------------------------- OFFICER OF THE OWNED DIRECTLY OR ---------
COMPANY SINCE INDIRECTLY ON DEC. 31,
------------- 1998 (1)
----
MARK H. President, Chief Executive 1998 0 (3), (5)
WILLIAMSON, Officer, and Director,
PRESIDENT, CHIEF INVESCO Distributors Inc.;
EXECUTIVE OFFICER, President, Chief Executive
AND DIRECTOR, AGE Officer, and Director,
47* INVESCO; President, Chief
Operating Officer, and
Trustee, INVESCO Global
Health Sciences Fund.
Formerly, Chairman of the
Board and Chief Executive
Officer, NationsBanc
Advisors, Inc. (1995-1997);
Chairman of the Board,
NationsBanc Investments, Inc.
(1997-1998).
DR. VICTOR L. Professor Emeritus, Chairman 1993 61.5280 (4), (6), (8)
ANDREWS, DIRECTOR, Emeritus and Chairman of the
AGE 68 CFO Roundtable of the
Department of Finance at
Georgia State University,
Atlanta, Georgia and
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 Sheffield
Funds, Inc.
BOB R. BAKER, President and Chief Executive 1993 61.5280 (3), (4), (5)
DIRECTOR, AGE 62 Officer of AMC Cancer
Research Center, Denver,
Colorado, since January 1989;
until December 1988, Vice
Chairman of the Board, First
Columbia Financial
Corporation, Englewood,
Colorado. Formerly, Chairman
of the Board and Chief
Executive Officer of First
Columbia Financial
Corporation.
LAWRENCE H. Trust Consultant. Prior to 1993 4389.9170 (2), (6), (7)
BUDNER, DIRECTOR, June 1987, Senior Vice
AGE 68 President and Senior Trust
Officer, InterFirst Bank,
Dallas, Texas.
DR. WENDY LEE Self-employed (since 1993). 1997 2921.1730 (4), (8)
GRAMM, DIRECTOR, Professor of Economics and
AGE 53 Public Administration,
University of Texas at
Arlington. Formerly,
Chairman, Commodities Futures
Trading Commission
(1988-1993); Administrator
for Information and
Regulatory Affairs, Office of
Management and Budget
(1985-1988); Executive
Director, Presidential Task
Force on Regulatory Relief;
Director, Federal Trade
Commission Bureau of
Economics. Director of the
Chicago Mercantile Exchange;
Enron Corporation; IBP, Inc.;
State Farm Insurance Company;
Independent Women's Forum;
International Republic
Institute; and the Republican
Women's Federal Forum.
KENNETH T. KING, Presently retired. Formerly, 1993 13555.2560 (2), (3), (5), (6),
DIRECTOR, AGE 73 Chairman of the Board, The (7)
Capitol Life Insurance
Company, Providence
Washington Insurance Company,
and Director of numerous U.S.
subsidiaries thereof.
Formerly, Chairman of the
Board, The Providence Capitol
Companies in the United
Kingdom and Guernsey. Until
1987, Chairman of the Board,
Symbion Corporation.
20
<PAGE>
NAME, POSITION WITH THE PRINCIPAL OCCUPATION AND BUSINESS DIRECTOR OR NUMBER OF COMPANY MEMBER OF
COMPANY, AND AGE EXPERIENCE (DURING THE PAST FIVE YEARS) EXECUTIVE SHARES BENEFICIALLY COMMITTEE
- ---------------- -------------------------------------- OFFICER OF THE OWNED DIRECTLY OR ---------
COMPANY SINCE INDIRECTLY ON DEC. 31,
------------- 1998 (1)
----
JOHN W. MCINTYRE, Presently retired. Formerly, 1995 61.52880 (2), (3), (5), (7)
DIRECTOR, AGE 68 Vice Chairman of the Board,
The Citizens and Southern
Corporation; Chairman of the
Board and Chief Executive
Officer, The Citizens and
Southern Georgia Corporation;
Chairman of the Board and
Chief Executive Officer, The
Citizens and Southern
National Bank. Trustee of
INVESCO Global Health
Sciences Fund, and Gables
Residential Trust, Employee's
Retirement System of Georgia,
Emory University, and J. M.
Tull Charitable Foundation;
directors of Kaiser
Foundation Health Plans of
Georgia, Inc.
DR. LARRY SOLL, Presently retired. Formerly, 1997 61.5280 (4), (8)
DIRECTOR, AGE 56 Chairman of the Board
(1987-1994), Chief Executive
Officer (1982-1989 and
1993-1994) and President
(1982-1989) of Synergen Inc.
Director of Synergen Inc.
since incorporation in 1982.
Director of ISIS
Pharmaceuticals, Inc. Trustee
of INVESCO Global Health
Sciences Fund.
</TABLE>
*Because of his affiliation with INVESCO, with the Fund's investment adviser, or
with companies affiliated with INVESCO, this individual is deemed to be an
"interested person" of Company as that term is defined in the 1940 Act.
(1) = As interpreted by the SEC, a security is beneficially owned by a person if
that person has or shares voting power or investment power with respect to
that security. The persons listed have partial or complete voting and
investment power with respect to their respective Fund shares.
(2) = Member of the Audit Committee
(3) = Member of the Executive Committee
(4) = Member of the Management Liaison Committee
(5) = Member of the Valuation Committee
(6) = Member of the Compensation Committee
(7) = Member of the Soft Dollar Brokerage Committee
(8) = Member of the Derivatives Committee
The Board has audit, management liaison, soft dollar brokerage, and
derivatives committees consisting of Independent Directors and compensation,
executive and valuation committees consisting of both Independent Directors and
non-independent directors. The Board does not have a nominating committee. The
audit committee, consisting of four Independent Directors, meets quarterly with
the independent accountants and executive officers of the Company. This
committee reviews the accounting principles being applied by the Company in
financial reporting, the scope and adequacy of internal controls, the
responsibilities and fees of the independent accountants, and other matters. All
of the recommendations of the audit committee are reported to the full Board.
During the intervals between the meetings of the Board, the executive committee
may exercise all powers and authority of the Board in the management of the
business of the Company, except for certain powers which, under applicable law
and/or the by-laws of the Company, may only be exercised by the full Board. All
decisions are subsequently submitted for ratification by the Board. The
management liaison committee meets quarterly with various management personnel
of INVESCO in order to facilitate better understanding of the management and
operations of the Company, and to review legal and operational matters that have
been assigned to the committee by the Board, in furtherance of the Board's
overall duty of supervision. The soft dollar brokerage committee meets
periodically to review soft dollar brokerage transactions by the Company, and to
21
<PAGE>
review policies and procedures of the Company's adviser with respect to soft
dollar brokerage transactions. The committee then reports on these matters to
the Board. The derivatives committee meets periodically to review derivatives
investments made by the Company. The committee monitors derivatives usage by the
Company and the procedures utilized by the Company's adviser to ensure that the
use of such instruments follows the policies on such instruments adopted by the
Board. The committee then reports on these matters to the Board.
During the past fiscal year, the Board met five times, the audit
committee met four times, the compensation committee met twice, the management
liaison committee met four times, the soft dollar brokerage committee met twice,
and the derivatives committee met three times. The executive committee did not
meet. During the Company's last fiscal year, each director nominee attended 75%
or more of the Board meetings and meetings of the committees of the Board on
which he or she served.
The Independent Directors nominate individuals to serve as Independent
Directors, without any specific nominating committees. The Board ordinarily will
not consider unsolicited director nominations recommended by the Company's
shareholders. The Board, including its Independent Directors, unanimously
approved the nomination of the foregoing persons to serve as directors and
directed that the election of these nominees be submitted to the Company's
shareholders.
22
<PAGE>
The following table sets forth information relating to the compensation
paid to directors during the last fiscal year:
<TABLE>
<CAPTION>
COMPENSATION TABLE
AMOUNTS PAID DURING THE MOST RECENT
FISCAL YEAR BY THE COMPANY TO DIRECTORS
NAME OF PERSON, POSITION AGGREGATE PENSION OR RETIREMENT ESTIMATED ANNUAL TOTAL COMPENSATION
- ------------------------ COMPENSATION FROM BENEFITS ACCRUED AS BENEFITS UPON FROM THE COMPANY AND
THE COMPANY(1) PART THE COMPANY'S RETIREMENT(3) INVESCO FUNDS PAID TO
-------------- EXPENSES(2) ------------- DIRECTORS(1)
----------- ------------
<S> <C> <C> <C> <C>
FRED A. DEERING, $12,933 $11,683 $7,497 $103,700
VICE CHAIRMAN OF THE
BOARD AND DIRECTOR
DR. VICTOR L. $12,283 $11,040 $8,678 $80,350
ANDREWS, DIRECTOR
BOB R. BAKER, $13,314 $9,859 $11,630 $84,000
DIRECTOR
LAWRENCE H. BUDNER, $11,623 $11,040 $8,678 $79,350
DIRECTOR
DANIEL D. CHABRIS, (4) $12,371 $11,934 $6,476 $70,000
DIRECTOR
DR. WENDY L. GRAMM, $10,388 $0 $0 $79,000
DIRECTOR
KENNETH T. KING, $10,728 $12,133 $6,800 $77,050
DIRECTOR
JOHN W. MCINTYRE, $10,967 0 $0 $98,500
DIRECTOR
DR. LARRY SOLL, $10,967 $0 $0 $96,000
DIRECTOR
----------------- --------------- --------------- -------------
TOTAL $105,574 $67,689 $49,759 $767,950
- -----
AS A PERCENTAGE OF NET 0.0021%(5) 0.0013%(5) 0.0035%(6)
- ---------------------
ASSETS
- ------
</TABLE>
(1) The Vice Chairman of the board, the chairmen of the audit, management
liaison, derivatives, soft dollar brokerage and compensation committee, and
Independent Director members of the committees of the Company receive
compensation for serving in such capacities in addition to the compensation paid
to all Independent Directors.
(2) Represents benefits accrued with respect to the Defined Benefit Deferred
Compensation Plan discussed below, and not compensation deferred at the election
of the directors.
(3) These figures represent the Company's share of the estimated annual benefits
payable by the INVESCO Complex (excluding INVESCO Global Health Sciences Fund
which does not participate in this retirement plan) upon the directors'
retirement, calculated using the current method of allocating director
compensation among the INVESCO Funds. 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 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 farther from retirement. With the
exception of Mr. McIntyre and Drs. Soll and Gramm, each of these directors has
served as director of one or more of the INVESCO Funds for the minimum five-year
period required to be eligible to participate in the Defined Benefit Deferred
Compensation Plan.
(4) Mr. Chabris retired as a director effective September 30, 1998.
(5) Total as a percentage of the Company's net assets as of June 30, 1998.
(6) Total as a percentage of the INVESCO Complex's net assets as of December 31,
1998.
The Company pays its Independent Directors, Board vice chairman,
committee chairmen, and committee members the fees described above. The Company
also reimburses its Independent Directors for travel expenses incurred in
attending meetings. Charles W. Brady, Chairman of the Board, and Mark H.
Williamson, President, Chief Executive Officer, and Director, as "interested
persons" of the Company and of other INVESCO Funds, receive compensation and are
reimbursed for travel expenses incurred in attending meetings as officers or
23
<PAGE>
employees of INVESCO or its affiliated companies, but do not receive any
director's fees or other compensation from the Company or other INVESCO Funds
for their services as directors.
The overall direction and supervision of the Company is the
responsibility of the Board, which has the primary duty of ensuring that the
Company's general investment policies and programs are adhered to and that the
Company is properly administered. The officers of the Company, all of whom are
officers and employees of and paid by INVESCO, are responsible for the
day-to-day administration of the Company. INVESCO, as investment adviser for the
Company, has the primary responsibility for making investment decisions on
behalf of the Company. These decisions are reviewed by the investment committee
of INVESCO.
All of the officers and directors of the Company hold comparable
positions with the following INVESCO Funds: INVESCO Bond Funds, Inc. (formerly,
INVESCO Income Funds, Inc.), INVESCO Combination Stock & Bond Funds, Inc.
(formerly, INVESCO Flexible Funds, Inc. and INVESCO Multiple Asset Funds, Inc.),
INVESCO Diversified Funds, Inc., INVESCO Emerging Opportunity Funds, Inc.,
INVESCO Growth Funds, Inc. (formerly, INVESCO Growth Fund, Inc.), INVESCO
International Funds, Inc., INVESCO Money Market Funds, Inc., INVESCO Sector
Funds, Inc. (formerly, INVESCO Strategic Portfolios, Inc.), INVESCO Specialty
Funds, Inc., INVESCO Stock Funds, Inc. (formerly, INVESCO Equity Funds, Inc. and
INVESCO Capital Appreciation Funds, Inc.), INVESCO Tax-Free Income Funds, Inc.,
INVESCO Variable Investment Funds, Inc. All of the directors of the Company also
serve as trustees of INVESCO Value Trust, and INVESCO Treasurer's Series Trust
(the "INVESCO Funds").
The Board of Funds managed by INVESCO have adopted a Defined Benefit
Deferred Compensation Plan (the "Plan") for the non-interested directors and
trustees of the Funds. Under the Plan, each director or trustee who is not an
interested person of the Funds (as defined in Section 2(a)(19) of the 1940 Act)
and who has served for at least five years (a "Qualified Director") is entitled
to receive, upon termination of service as director (normally at retirement age
of 72 or the retirement age of 73 or 74, if the retirement date is extended by
the Board 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 and annualized board meeting fees payable by the Funds to the Qualified
Director at the time of his or her retirement (the "Basic Benefit"). Commencing
with any such director's second year of retirement, and commencing with the
first year of retirement of any 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 50% of the Basic Benefit. These payments will
continue for the remainder of the Qualified Director's life or ten years,
whichever is longer (the "Reduced Benefit 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 Reduced Benefit Payments
will be made to him or her or to his or her beneficiary or estate. If a
Qualified Director becomes disabled or dies either prior to age 72 or during his
or her 74th year while still a director of the Funds, the director will not be
entitled to receive the First Year Retirement Benefit; however, the Reduced
Benefit Payments will be made to his or her 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 Funds in a manner determined to be fair and
equitable by the committee. The Funds began making payments to Mr. Chabris as of
October 1, 1998 under the Plan. The Company 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 Independent Directors have contributed to a deferred compensation
plan, pursuant to which they have deferred receipt of a portion of the
compensation which they would otherwise have been paid as directors of certain
24
<PAGE>
INVESCO Funds. The deferred amounts have been invested in shares of certain
INVESCO Funds. Each Independent Director is, therefore, an indirect owner of
shares of each INVESCO Fund, in addition to any Industrial Income Fund shares
that they may own directly.
REQUIRED VOTE. Election of each nominee as a director of the Company
requires the affirmative vote of a plurality of the votes cast at the Meeting in
person or by proxy.
THE BOARD, INCLUDING THE INDEPENDENT DIRECTORS, UNANIMOUSLY
RECOMMENDS THAT SHAREHOLDERS VOTE "FOR"
EACH OF THE NOMINEES IN PROPOSAL 5.
-----------------------------------------------------------
PROPOSAL 6. RATIFICATION OR REJECTION OF SELECTION OF INDEPENDENT
ACCOUNTANTS.
The Board, including all of its Independent Directors, has selected
PricewaterhouseCoopers LLP to continue to serve as independent accountants of
Industrial Income Fund, subject to ratification by Industrial Income Fund's
shareholders. PricewaterhouseCoopers LLP has no direct financial interest or
material indirect financial interest in Industrial Income Fund. Representatives
of PricewaterhouseCoopers LLP are not expected to attend the Meeting, but have
been given the opportunity to make a statement if they so desire, and will be
available should any matter arise requiring their presence.
The independent accountants examine annual financial statements for
Industrial Income Fund and provide other audit and tax-related services. In
recommending the selection of PricewaterhouseCoopers LLP, the Board reviewed the
nature and scope of the services to be provided (including non-audit services)
and whether the performance of such services would affect the accountants'
independence.
REQUIRED VOTE. Approval of Proposal 6 requires the affirmative vote of a
majority of the votes present at the Meeting, provided that a quorum is present.
25
<PAGE>
THE BOARD UNANIMOUSLY RECOMMENDS THAT THE
SHAREHOLDERS VOTE "FOR" PROPOSAL 6.
INFORMATION CONCERNING ADVISER,
DISTRIBUTOR AND AFFILIATED COMPANIES
INVESCO, a Delaware corporation, serves as Industrial Income Fund's
investment adviser, and provides other services to Industrial Income Fund and
the Company. INVESCO Distributors, Inc. ("IDI"), a Delaware corporation that
serves as Industrial Income Fund's distributor, is a wholly owned subsidiary of
INVESCO. INVESCO is a wholly owned subsidiary of INVESCO North American
Holdings, Inc. ("INAH"). INAH is an indirect, wholly owned subsidiary of
AMVESCAP PLC.(1)
INVESCO's and IDI's offices are located at 7800 East Union Avenue,
Denver, Colorado 80237. INAH's offices are located at 1315 Peachtree Street,
N.E., Atlanta, Georgia 30309. The corporate headquarters of AMVESCAP PLC are
located at 11 Devonshire Square, London, EC2M 4YR, England. INVESCO currently
serves as investment adviser of 14 open-end investment companies having
aggregate net assets of $21.1 billion as of December 31, 1998.
The principal executive officers and directors of INVESCO and their
principal occupations are:
Mark H. Williamson, Chairman of the Board, President, Chief Executive
Officer and Director, also, President and Chief Executive Officer of IDI;
Charles P. Mayer, Director and Senior Vice President, also, Director and Senior
Vice President of IDI; Ronald L. Grooms, Senior Vice-President and Treasurer,
also, Senior Vice-President and Treasurer of IDI; and Glen A. Payne, Senior
Vice-President, Secretary and General Counsel, also Senior Vice-President,
Secretary and General Counsel of IDI.
The address of each of the foregoing officers and directors is 7800 East
Union Avenue, Denver, Colorado 80237.
Pursuant to an Administrative Services Agreement between the Company and
INVESCO, INVESCO provides administrative services to the Company, including
sub-accounting and recordkeeping services and functions. For such services,
Industrial Income Fund pays INVESCO a fee consisting of a base fee of $10,000
per year, plus an additional incremental fee computed at the annual rate of
0.015% per year of the average net assets of Industrial Income Fund. INVESCO is
also paid a fee by Industrial Income Fund for providing transfer agent services,
including acting as registrar, transfer agent and dividend disbursing agent for
the Company During the fiscal year ended June 30, 1998, the Company paid INVESCO
total compensation of $6,870,347 for such services.
- -------------------
(1) The intermediary companies between INAH and AMVESCAP PLC are as follows:
INVESCO, Inc., INVESCO Group Services, Inc. and INVESCO North American Group,
Ltd., each of which is wholly owned by its immediate parent.
26
<PAGE>
OTHER BUSINESS
The Board knows of no other business to be brought before the Meeting.
If, however, any other matters properly come before the Meeting, it is the
intention that proxies that do not contain specific instructions to the contrary
will be voted on such matters in accordance with the judgment of the persons
designated in the proxies.
SHAREHOLDER PROPOSALS
The Company does not hold annual meetings of shareholders. Shareholders
wishing to submit proposals for inclusion in a proxy statement and form of proxy
for a subsequent shareholders' meeting should send their written proposals to
the Secretary of the Company, 7800 East Union Avenue, Denver, Colorado 80237.
The Company has not received any shareholder proposals to be presented at this
Meeting.
By Order of the Board of Directors
Glen A. Payne
Secretary
March 23, 1999
27
<PAGE>
APPENDIX A
----------
PRINCIPAL SHAREHOLDERS
----------------------
The following table sets forth the beneficial ownership of Industrial
Income Fund's outstanding equity securities as of March 12, 1999 by each
beneficial owner of 5% or more of Industrial Income Fund's outstanding equity
securities:
SHARES OF EQUITY
SECURITIES
BENEFICIALLY OWNED
--------------------------
NAME AND ADDRESS (1) AMOUNT PERCENT
---------------------------- --------------- ----------
<PAGE>
APPENDIX B
AGREEMENT AND PLAN OF CONVERSION AND TERMINATION
------------------------------------------------
This AGREEMENT AND PLAN OF CONVERSION AND TERMINATION ("Agreement") is
made as of _____ __, 1999, between INVESCO Industrial Income Fund, Inc., a
Maryland corporation (operating through a single series, INVESCO Industrial
Income Fund) ("Old Fund"), and INVESCO Combination Stock & Bond Funds, Inc., a
Maryland corporation ("Stock & Bond Funds"), on behalf of its INVESCO Industrial
Income Fund, a segregated portfolio of assets ("series") thereof ("New Fund").
(Old Fund and New Fund are sometimes referred to herein individually as a "Fund"
and collectively as the "Funds"; and Old Fund and Stock & Bond Funds are
sometimes referred to herein individually as an "Investment Company.") All
agreements, representations, actions, and obligations described herein made or
to be taken or undertaken by New Fund are made and shall be taken or undertaken
by Stock & Bond Funds on its behalf.
Old Fund intends to change its identity -- by converting to a series of
Stock & Bond Funds -- through a reorganization within the meaning of section
368(a)(1)(F) of the Internal Revenue Code of 1986, as amended ("Code"). Old Fund
desires to accomplish such conversion by transferring all its assets to New Fund
(which is being established solely for the purpose of acquiring such assets and
continuing Old Fund's business) in exchange solely for voting shares of common
stock in New Fund ("New Fund Shares") and New Fund's assumption of Old Fund's
liabilities, followed by the constructive distribution of the New Fund Shares
pro rata to the holders of shares of common stock in Old Fund ("Old Fund
Shares") in exchange therefor, all on the terms and conditions set forth in this
Agreement (which is intended to be, and is adopted as, a "plan of
reorganization" for federal income tax purposes). All such transactions are
referred to herein as the "Reorganization."
In consideration of the mutual promises herein contained, the parties
agree as follows:
1. PLAN OF CONVERSION AND TERMINATION
----------------------------------
1.1. Old Fund agrees to assign, sell, convey, transfer, and deliver all of
its assets described in paragraph 1.2 ("Assets") to New Fund. New Fund agrees in
exchange therefor --
(a) to issue and deliver to Old Fund the number of full and
fractional (rounded to the third decimal place) New Fund Shares equal to
the number of full and fractional Old Fund Shares then outstanding, and
(b) to assume all of Old Fund's liabilities described in paragraph
1.3 ("Liabilities").
Such transactions shall take place at the Closing (as defined in paragraph 2.1).
1.2. The Assets shall include, without limitation, all cash, cash
equivalents, securities, receivables (including interest and dividends
receivable), claims and rights of action, rights to register shares under
applicable securities laws, books and records, deferred and prepaid expenses
shown as assets on Old Fund's books, and other property owned by Old Fund at the
Effective Time (as defined in paragraph 2.1).
1.3. The Liabilities shall include all of Old Fund's liabilities, debts,
obligations, and duties of whatever kind or nature, whether absolute, accrued,
contingent, or otherwise, whether or not arising in the ordinary course of
<PAGE>
business, whether or not determinable at the Effective Time, and whether or not
specifically referred to in this Agreement.
1.4. At the Effective Time (or as soon thereafter as is reasonably
practicable), (a) the New Fund Share issued pursuant to paragraph 4.4 shall be
redeemed by New Fund for $1.00 and (b) Old Fund shall distribute the New Fund
Shares it received pursuant to paragraph 1.1 to its shareholders of record,
determined as of the Effective Time (each a "Shareholder" and collectively
"Shareholders"), in constructive exchange for their Old Fund Shares. Such
distribution shall be accomplished by Stock & Bond Funds' transfer agent's
opening accounts on New Fund's share transfer books in the Shareholders' names
and transferring such New Fund Shares thereto. Each Shareholder's account shall
be credited with the respective pro rata number of full and fractional (rounded
to the third decimal place) New Fund Shares due that Shareholder. All
outstanding Old Fund Shares, including those represented by certificates, shall
simultaneously be canceled on Old Fund's share transfer books. New Fund shall
not issue certificates representing the New Fund Shares in connection with the
Reorganization.
1.5. As soon as reasonably practicable after distribution of the New Fund
Shares pursuant to paragraph 1.4, but in all events within twelve months after
the Effective Time, Old Fund shall be terminated and any further actions shall
be taken in connection therewith as required by applicable law.
1.6. Any reporting responsibility of Old Fund to a public authority is and
shall remain its responsibility up to and including the date on which it is
terminated.
1.7. Any transfer taxes payable on issuance of New Fund Shares in a name
other than that of the registered holder on Old Fund's books of the Old Fund
Shares constructively exchanged therefor shall be paid by the person to whom
such New Fund Shares are to be issued, as a condition of such transfer.
2. CLOSING AND EFFECTIVE TIME
--------------------------
2.1. The Reorganization, together with related acts necessary to
consummate the same ("Closing"), shall occur at the Funds' principal office on
______ ___, 1999, or at such other place and/or on such other date as to which
the parties may agree. All acts taking place at the Closing shall be deemed to
take place simultaneously as of the close of business on the date thereof or at
such other time as to which the parties may agree ("Effective Time").
2.2. Old Fund's fund accounting and pricing agent shall deliver at the
Closing a certificate of an authorized officer verifying that the information
(including adjusted basis and holding period, by lot) concerning the Assets,
including all portfolio securities, transferred by Old Fund to New Fund, as
reflected on New Fund's books immediately following the Closing, does or will
conform to such information on Old Fund's books immediately before the Closing.
Old Fund's custodian shall deliver at the Closing a certificate of an authorized
officer stating that (a) the Assets held by the custodian will be transferred to
New Fund at the Effective Time and (b) all necessary taxes in conjunction with
the delivery of the Assets, including all applicable federal and state stock
transfer stamps, if any, have been paid or provision for payment has been made.
2.3. Stock & Bond Funds' transfer agent shall deliver at the Closing a
certificate as to the opening on New Fund's share transfer books of accounts in
the Shareholders' names. Stock & Bond Funds shall issue and deliver a
confirmation to Old Fund evidencing the New Fund Shares to be credited to Old
Fund at the Effective Time or provide evidence satisfactory to Old Fund that
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such New Fund Shares have been credited to Old Fund's account on such books. At
the Closing, each party shall deliver to the other such bills of sale, checks,
assignments, stock certificates, receipts, or other documents as the other party
or its counsel may reasonably request.
2.4. Each Investment Company shall deliver to the other at the Closing a
certificate executed in its name by its President or a Vice President in form
and substance satisfactory to the recipient and dated the Effective Time, to the
effect that the representations and warranties it made in this Agreement are
true and correct at the Effective Time except as they may be affected by the
transactions contemplated by this Agreement.
3. REPRESENTATIONS AND WARRANTIES
------------------------------
3.1. Old Fund represents and warrants as follows:
3.1.1. Old Fund is a corporation duly organized, validly existing,
and in good standing under the laws of the State of Maryland; and a copy
of its Articles of Incorporation is on file with the Secretary of State of
Maryland;
3.1.2. Old Fund is duly registered as an open-end management
investment company under the Investment Company Act of 1940, as amended
("1940 Act"), and such registration will be in full force and effect at
the Effective Time;
3.1.3. At the Closing, Old Fund will have good and marketable title
to the Assets and full right, power, and authority to sell, assign,
transfer, and deliver the Assets free of any liens or other encumbrances;
and upon delivery and payment for the Assets, New Fund will acquire good
and marketable title thereto;
3.1.4. New Fund Shares are not being acquired for the purpose of
making any distribution thereof, other than in accordance with the terms
hereof;
3.1.5. Old Fund qualified for treatment as a regulated investment
company under Subchapter M of the Code ("RIC") for each past taxable year
since it commenced operations and will continue to meet all the
requirements for such qualification for its current taxable year; and it
has no earnings and profits accumulated in any taxable year in which the
provisions of Subchapter M did not apply to it. The Assets shall be
invested at all times through the Effective Time in a manner that ensures
compliance with the foregoing;
3.1.6. The Liabilities were incurred by Old Fund in the ordinary
course of its business and are associated with the Assets;
3.1.7. Old Fund is not under the jurisdiction of a court in a
proceeding under Title 11 of the United States Code or similar case within
the meaning of section 368(a)(3)(A) of the Code;
3.1.8. Not more than 25% of the value of Old Fund's total assets
(excluding cash, cash items, and U.S. government securities) is invested
in the stock and securities of any one issuer, and not more than 50% of
the value of such assets is invested in the stock and securities of five
or fewer issuers;
3.1.9. As of the Effective Time, Old Fund will not have outstanding
any warrants, options, convertible securities, or any other type of rights
pursuant to which any person could acquire Old Fund Shares;
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3.1.10. At the Effective Time, the performance of this Agreement
shall have been duly authorized by all necessary action by Old Fund's
shareholders; and
3.1.11. Old Fund will be terminated as soon as reasonably
practicable after the Effective Time, but in all events within twelve
months thereafter.
3.2. New Fund represents and warrants as follows:
3.2.1. Stock & Bond Funds is a corporation duly organized, validly
existing, and in good standing under the laws of the State of Maryland;
and a copy of its Articles of Incorporation is on file with the Secretary
of State of Maryland;
3.2.2. Stock & Bond Funds is duly registered as an open-end
management investment company under the 1940 Act, and such registration
will be in full force and effect at the Effective Time;
3.2.3. Before the Effective Time, New Fund will be a duly
established and designated series of Stock & Bond Funds;
3.2.4. New Fund has not commenced operations and will not do so
until after the Closing;
3.2.5. Prior to the Effective Time, there will be no issued and
outstanding shares in New Fund or any other securities issued by New Fund,
except as provided in paragraph 4.4;
3.2.6. No consideration other than New Fund Shares (and New Fund's
assumption of the Liabilities) will be issued in exchange for the Assets
in the Reorganization;
3.2.7. The New Fund Shares to be issued and delivered to Old Fund
hereunder will, at the Effective Time, have been duly authorized and, when
issued and delivered as provided herein, will be duly and validly issued
and outstanding shares of New Fund, fully paid and non-assessable;
3.2.8. New Fund will be a "fund" as defined in section 851(g)(2) of
the Code and will meet all the requirements to qualify for treatment as a
RIC for its taxable year in which the Reorganization occurs;
3.2.9. New Fund has no plan or intention to issue additional New
Fund Shares following the Reorganization except for shares issued in the
ordinary course of its business as a series of an open-end investment
company; nor does New Fund have any plan or intention to redeem or
otherwise reacquire any New Fund Shares issued to the Shareholders
pursuant to the Reorganization, except to the extent it is required by the
1940 Act to redeem any of its shares presented for redemption at net asset
value in the ordinary course of that business;
3.2.10. Following the Reorganization, New Fund (a) will continue Old
Fund's "historic business" (within the meaning of section 1.368-1(d)(2) of
the Income Tax Regulations under the Code), (b) use a significant portion
of Old Fund's historic business assets (within the meaning of section
1.368-1(d)(3) of those regulations) in a business, (c) has no plan or
intention to sell or otherwise dispose of any of the Assets, except for
dispositions made in the ordinary course of that business and dispositions
necessary to maintain its status as a RIC, and (d) expects to retain
substantially all the Assets in the same form as it receives them in the
Reorganization, unless and until subsequent investment circumstances
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suggest the desirability of change or it becomes necessary to make
dispositions thereof to maintain such status;
3.2.11. There is no plan or intention for New Fund to be dissolved
or merged into another corporation or a business trust or any "fund"
thereof (within the meaning of section 851(g)(2) of the Code) following
the Reorganization; and
3.2.12. Immediately after the Reorganization, (a) not more than 25%
of the value of New Fund's total assets (excluding cash, cash items, and
U.S. government securities) will be invested in the stock and securities
of any one issuer and (b) not more than 50% of the value of such assets
will be invested in the stock and securities of five or fewer issuers.
3.3. Each Fund represents and warrants as follows:
3.3.1. The aggregate fair market value of the New Fund Shares, when
received by the Shareholders, will be approximately equal to the aggregate
fair market value of their Old Fund Shares constructively surrendered in
exchange therefor;
3.3.2. Its management (a) is unaware of any plan or intention of
Shareholders to redeem, sell, or otherwise dispose of (i) any portion of
their Old Fund Shares before the Reorganization to any person related
(within the meaning of section 1.368-1(e)(3) of the Income Tax Regulations
under the Code) to either Fund or (ii) any portion of the New Fund Shares
to be received by them in the Reorganization to any person related (as so
defined) to New Fund, (b) does not anticipate dispositions of those New
Fund Shares at the time of or soon after the Reorganization to exceed the
usual rate and frequency of dispositions of shares of Old Fund as an
open-end investment company, (c) expects that the percentage of
Shareholder interests, if any, that will be disposed of as a result of or
at the time of the Reorganization will be de minimis, and (d) does not
anticipate that there will be extraordinary redemptions of New Fund Shares
immediately following the Reorganization;
3.3.3. The Shareholders will pay their own expenses, if any,
incurred in connection with the Reorganization;
3.3.4. Immediately following consummation of the Reorganization, the
Shareholders will own all the New Fund Shares and will own such shares
solely by reason of their ownership of Old Fund Shares immediately before
the Reorganization;
3.3.5. Immediately following consummation of the Reorganization, New
Fund will hold the same assets -- except for assets distributed to
shareholders in the course of its business as a RIC and assets used to pay
expenses incurred in connection with the Reorganization -- and be subject
to the same liabilities that Old Fund held or was subject to immediately
prior to the Reorganization, plus any liabilities for expenses of the
parties incurred in connection with the Reorganization. Such excepted
assets, together with the amount of all redemptions and distributions
(other than regular, normal dividends) made by Old Fund immediately
preceding the Reorganization, will, in the aggregate, constitute less than
1% of its net assets;
3.3.6. There is no intercompany indebtedness between the Funds that
was issued or acquired, or will be settled, at a discount; and
3.3.7. Neither Fund will be reimbursed for any expenses incurred by
it or on its behalf in connection with the Reorganization unless those
expenses are solely and directly related to the Reorganization (determined
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in accordance with the guidelines set forth in Rev. Rul. 73-54, 1973-1
C.B. 187) ("Reorganization Expenses").
4. CONDITIONS PRECEDENT
--------------------
Each Fund's obligations hereunder shall be subject to (a) performance by
the other Fund of all its obligations to be performed hereunder at or before the
Effective Time, (b) all representations and warranties of the other Fund
contained herein being true and correct in all material respects as of the date
hereof and, except as they may be affected by the transactions contemplated
hereby, as of the Effective Time, with the same force and effect as if made on
and as of the Effective Time, and (c) the further conditions that, at or before
the Effective Time:
4.1. This Agreement and the transactions contemplated hereby shall have
been duly adopted and approved by each Investment Company's board of directors
and shall have been approved by Old Fund's shareholders in accordance with
applicable law;
4.2. All necessary filings shall have been made with the Securities and
Exchange Commission ("SEC") and state securities authorities, and no order or
directive shall have been received that any other or further action is required
to permit the parties to carry out the transactions contemplated hereby. All
consents, orders, and permits of federal, state, and local regulatory
authorities (including the SEC and state securities authorities) deemed
necessary by either Investment Company to permit consummation, in all material
respects, of the transactions contemplated hereby shall have been obtained,
except where failure to obtain same would not involve a risk of a material
adverse effect on the assets or properties of either Fund, provided that either
Investment Company may for itself waive any of such conditions;
4.3. Each Investment Company shall have received an opinion of Kirkpatrick
& Lockhart LLP, addressed to and in form and substance satisfactory to it, as to
the federal income tax consequences mentioned below ("Tax Opinion"). In
rendering the Tax Opinion, such counsel may rely as to factual matters,
exclusively and without independent verification, on the representations made in
this Agreement (or in separate letters addressed to such counsel) and the
certificates delivered pursuant to paragraph 2.4. The Tax Opinion shall be
substantially to the effect that, based on the facts and assumptions stated
therein and conditioned on consummation of the Reorganization in accordance with
this Agreement, for federal income tax purposes:
4.3.1. New Fund's acquisition of the Assets in exchange solely for
New Fund Shares and New Fund's assumption of the Liabilities, followed by
Old Fund's distribution of those shares pro rata to the Shareholders
constructively in exchange for the Shareholders' Old Fund Shares, will
constitute a reorganization within the meaning of section 368(a)(1)(F) of
the Code, and each Fund will be "a party to a reorganization" within the
meaning of section 368(b) of the Code;
4.3.2. Old Fund will recognize no gain or loss on the transfer to
New Fund of the Assets in exchange solely for New Fund Shares and New
Fund's assumption of the Liabilities or on the subsequent distribution of
those shares to the Shareholders in constructive exchange for their Old
Fund Shares;
4.3.3. New Fund will recognize no gain or loss on its receipt of the
Assets in exchange solely for New Fund Shares and its assumption of the
Liabilities;
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4.3.4. New Fund's basis for the Assets will be the same as the basis
thereof in Old Fund's hands immediately before the Reorganization, and New
Fund's holding period for the Assets will include Old Fund's holding
period therefor;
4.3.5. A Shareholder will recognize no gain or loss on the
constructive exchange of all its Old Fund Shares solely for New Fund
Shares pursuant to the Reorganization;
4.3.6. A Shareholder's aggregate basis for the New Fund Shares to be
received by it in the Reorganization will be the same as the aggregate
basis for its Old Fund Shares to be constructively surrendered in exchange
for those New Fund Shares, and its holding period for those New Fund
Shares will include its holding period for those Old Fund Shares, provided
they are held as capital assets by the Shareholder at the Effective Time;
and
4.3.7. For purposes of section 381 of the Code, New Fund will be
treated as if there had been no Reorganization. Accordingly, the
Reorganization will not result in the termination of Old Fund's taxable
year, Old Fund's tax attributes enumerated in section 381(c) of the Code
will be taken into account by New Fund as if there had been no
Reorganization, and the part of Old Fund's taxable year before the
Reorganization will be included in New Fund's taxable year after the
Reorganization;
4.4. Prior to the Closing, Stock & Bond Funds' directors shall have
authorized the issuance of, and New Fund shall have issued, one New Fund Share
to Old Fund in consideration of the payment of $1.00 to vote on the matters
referred to in paragraph 4.5; and
4.5. Stock & Bond Funds (on behalf of and with respect to New Fund) shall
have entered into a management contract, a distribution and service plan
pursuant to Rule 12b-1 under the 1940 Act, and such other agreements as are
necessary for New Fund's operation as a series of an open-end investment
company. Each such contract, plan, and agreement shall have been approved by
Stock & Bond Funds' directors and, to the extent required by law, by such of
those directors who are not "interested persons" thereof (as defined in the 1940
Act) and by Old Fund as the sole shareholder of New Fund.
At any time before the Closing, either Investment Company may waive any of the
foregoing conditions (except that set forth in paragraph 4.1) if, in the
judgment of its board of directors, such waiver will not have a material adverse
effect on its Fund's shareholders' interests.
5. BROKERAGE FEES AND EXPENSES
---------------------------
5.1 Each Investment Company represents and warrants to the other that
there are no brokers or finders entitled to receive any payments in connection
with the transactions provided for herein.
5.2 Except as otherwise provided herein, 50% of the total Reorganization
Expenses will be borne by INVESCO Funds Group, Inc. and the remaining 50% will
be borne one-half by each Fund.
6. ENTIRE AGREEMENT; NO SURVIVAL
-----------------------------
Neither party has made any representation, warranty, or covenant not set
forth herein, and this Agreement constitutes the entire agreement between the
parties. The representations, warranties, and covenants contained herein or in
any document delivered pursuant hereto or in connection herewith shall not
survive the Closing.
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7. TERMINATION
-----------
This Agreement may be terminated at any time at or prior to the Effective
Time, whether before or after approval by Old Fund's shareholders:
7.1. By either Fund (a) in the event of the other Fund's material breach
of any representation, warranty, or covenant contained herein to be performed at
or prior to the Effective Time, (b) if a condition to its obligations has not
been met and it reasonably appears that such condition will not or cannot be
met, or (c) if the Closing has not occurred on or before August 31, 1999; or
7.2. By the parties' mutual agreement.
In the event of termination under paragraphs 7.1(c) or 7.2, there shall be no
liability for damages on the part of either Fund, or the directors or officers
of either Investment Company, to the other Fund.
8. AMENDMENT
---------
This Agreement may be amended, modified, or supplemented at any time,
notwithstanding approval thereof by Old Fund's shareholders, in such manner as
may be mutually agreed upon in writing by the parties; provided that following
such approval no such amendment shall have a material adverse effect on the
Shareholders' interests.
9. MISCELLANEOUS
-------------
9.1. This Agreement shall be governed by and construed in accordance with
the internal laws of the State of Maryland; provided that, in the case of any
conflict between such laws and the federal securities laws, the latter shall
govern.
9.2. Nothing expressed or implied herein is intended or shall be construed
to confer upon or give any person, firm, trust, or corporation other than the
parties and their respective successors and assigns any rights or remedies under
or by reason of this Agreement.
9.3. This Agreement may be executed in one or more counterparts, all of
which shall be considered one and the same agreement, and shall become effective
when one or more counterparts have been executed by each Investment Company and
delivered to the other party hereto. The headings contained in this Agreement
are for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
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<PAGE>
IN WITNESS WHEREOF, each party has caused this Agreement to be executed
and delivered by its duly authorized officers as of the day and year first
written above.
ATTEST: INVESCO INDUSTRIAL INCOME
FUNDS, INC.
______________________ By: _____________________
Assistant Secretary Vice President
ATTEST: INVESCO COMBINATION STOCK & BOND
FUNDS, INC.,
on behalf of its series,
INVESCO Industrial Income Fund
______________________ By: _____________________
Assistant Secretary Vice President
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<PAGE>
[Name and Address]
INVESCO INDUSTRIAL INCOME FUND
INVESCO INDUSTRIAL INCOME FUND, INC.
PROXY FOR THE SPECIAL MEETING OF SHAREHOLDERS
MAY 20, 1999
This proxy is being solicited on behalf of the Board of Directors of
INVESCO Industrial Income Fund, Inc. ("Company") and relates to the proposals
with respect to the Company and to INVESCO Industrial Income Fund, a series of
the Company ("Fund"). The undersigned hereby appoints as proxies [ ] and [ ],
and each of them (with power of substitution), to vote all shares of common
stock of the undersigned in the Fund at the Special Meeting of Shareholders to
be held at 10:00 a.m., Mountain Standard Time, on May 20, 1999, at the offices
of the Company, 7800 East Union Avenue, Denver, Colorado 80237, and any
adjournment thereof ("Meeting"), with all the power the undersigned would have
if personally present.
The shares represented by this proxy will be voted as instructed. Unless
indicated to the contrary, this proxy shall be deemed to grant authority to vote
"FOR" all proposals relating to the Company and the Fund with discretionary
power to vote upon such other business as may properly come before the Meeting.
YOUR VOTE IS IMPORTANT. IF YOU ARE NOT VOTING BY PHONE, FACSIMILE, OR INTERNET,
PLEASE SIGN AND DATE THIS PROXY BELOW AND RETURN IT PROMPTLY IN THE ENCLOSED
ENVELOPE.
TO VOTE BY TOUCH-TONE PHONE OR THE INTERNET, PLEASE CALL 1-800-690-6903 TOLL
FREE OR VISIT WWW.PROXYVOTE.COM. TO VOTE BY FACSIMILE TRANSMISSION, PLEASE FAX
YOUR COMPLETED PROXY CARD TO 1-516-254-7564.
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
[X] KEEP THIS PORTION FOR YOUR RECORDS
<PAGE>
DETACH AND RETURN THIS PORTION ONLY
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
INVESCO INDUSTRIAL INCOME FUND
INVESCO INDUSTRIAL INCOME FUND, INC.
VOTE ON DIRECTORS FOR WITHHOLD FOR
ALL ALL ALL
5. Election of the Company's EXCEPT
Board of Directors; (1) / / / / / / To withhold
Charles W. Brady; (2) Fred A. authority to vote
Deering; (3) Mark H. for any individual
Williamson; (4) Dr. Victor L. nominee(s), mark
Andrews; (5) Bob R. Baker; (6) "For All Except"
Lawrence H. Budner; (7) Dr. and write the
Wendy Lee Gramm; (8) Kenneth nominee's number
T. King; (9) John W. McIntyre; on the line below.
and (10) Dr. Larry Soll
------------------
VOTE ON PROPOSALS FOR AGAINST ABSTAIN
1. Approval of an Agreement and / / / / / /
Plan of Conversion and
and Termination providing
for the conversion of INVESCO
Industrial Income Fund from
a separate series of INVESCO
Industrial Income Fund, Inc.,
to a separate series of INVESCO
Combination Stock & Bond Funds, Inc.,
all as described in the accompanying
Prospectus/Proxy Statement;
2. Approval of changes to the fundamental / / / / / /
investment restrictions;
/ /To vote against the proposed changes
to one or more of the specific fundamental
investment policies, but to approve others,
PLACE AN "X" IN THE BOX AT left and indicate
the number(s) (as set forth in the proxy
statement) of the investment policy or
policies you do not want to change on the
line below.
--------------------------------------------
3. To amend the Articles of Restatement of the / / / / / /
Articles of Incorporation of INVESCO Industrial
Income Fund;
4. To amend the Bylaws of INVESCO Industrial / / / / / /
Income Fund;
6. Ratification of the selection of / / / / / /
PricewaterhouseCoopers LLP as the Industrial
Income Fund's Independent Public Accountants;
YOUR VOTE IS IMPORTANT. IF YOU ARE NOT VOTING BY PHONE, FACSIMILE, OR INTERNET,
PLEASE SIGN AND DATE THIS PROXY BELOW AND RETURN IT PROMPTLY IN THE ENCLOSED
ENVELOPE.
TO VOTE BY TOUCH-TONE PHONE OR THE INTERNET, PLEASE CALL 1-800-690-6903 TOLL
FREE OR VISIT WWW.PROXYVOTE.COM. TO VOTE BY FACSIMILE TRANSMISSION, PLEASE FAX
YOUR COMPLETED PROXY CARD TO 1-516-254-7564.
Please sign exactly as name appears hereon. If stock is held in the name of
joint owners, each should sign. Attorneys-in-fact, executors, administrators,
etc. should so indicate. If shareholder is a corporation or partnership, please
sign in full corporate or partnership name by authorized person
<PAGE>
- ------------------------------------------------- ------------------------------
Signature Date
- ------------------------------------------------- ------------------------------
Signature (Joint Owners) Date
