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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:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to (S) 240.14a-11(c) or (S) 240.14a-12
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 LOGO APPEARS HERE] INVESCO INDUSTRIAL INCOME FUND
(a series of INVESCO Industrial Income Fund, Inc.)
March 23, 1999
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Dear Shareholder:
The attached proxy materials seek your approval to convert INVESCO Indus-
trial Income Fund ("Industrial Income Fund"), the only series of INVESCO In-
dustrial Income Fund, Inc. ("Company"), to a separate series of INVESCO Combi-
nation Stock & Bond Funds, Inc. ("Combination Stock & Bond Funds"), to make
certain changes in the fundamental investment restrictions of Industrial In-
come Fund, to amend the Articles of Restatement to the Articles of Incorpora-
tion 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 in-
vest 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 or-
der 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 con-
version, as well as the proposed changes in fundamental investment restric-
tions 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 com-
plete, sign and date your proxy card and mail it in the enclosed return enve-
lope 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,
/s/ Mark H. Williamson
Mark H. Williamson
President
INVESCO Industrial Income Fund, Inc.
9957
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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
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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 pro-
viding 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 restric-
tions of Industrial Income Fund;
(3) To amend the Articles of Restatement of the Articles of Incorpora-
tion 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 inde-
pendent 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,
/s/ Glen A. Payne
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 1-800-690-6903. 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 1-800-733-1885. If we do
not receive your completed proxy card after several weeks, you may be con-
tacted 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.)
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7800 East Union Avenue
Denver, Colorado 80237
(Toll Free) 1-800-646-8372
PROXY STATEMENT
Special Meeting of Shareholders
MAY 20, 1999
VOTING INFORMATION
This Proxy Statement is being furnished to shareholders of INVESCO Indus-
trial Income Fund ("Industrial Income Fund"), the only series of INVESCO In-
dustrial Income Fund, Inc. (the "Company"), in connection with the solicita-
tion of proxies from Industrial Income Fund shareholders by the board of di-
rectors of the Company (the "Board") for use at a special meeting of share-
holders 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 quo-
rum 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 State-
ment 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 pro-
posal 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 indi-
cates that instructions have not been received from the beneficial owners or
other persons entitled to vote and for which the broker does not have discre-
tionary 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, ab-
stentions 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 ac-
cordance with your directions as indicated on that proxy card, if it is re-
ceived 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 in-
structions, your shares will be voted in favor of approval of each of the pro-
posals and the duly appointed proxies may, in their discretion, vote upon such
other matters as may come before the Meeting. The proxy card may be revoked by
giving another proxy or by letter or
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telegram revoking the initial proxy. To be effective, revocation must be re-
ceived by the Company prior to the Meeting and must indicate your name and ac-
count 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 314,852,860.340 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 activ-
ities from Industrial Income Fund, or from Shareholder Communications Corpora-
tion, 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 con-
firm 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, includ-
ing 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. Direc-
tors 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 ma-
jority of the shares of Industrial Income Fund present at the Meeting, pro-
vided 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 out-
standing fractional share thereof is entitled to a proportionate fractional
share of one vote. If any Proposal is not approved by the requisite vote of
shareholders, the persons named as proxies may propose one or more adjourn-
ments of the Meeting to permit further solicitation of proxies.
2
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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 Com-
pany. 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 Com-
pany, 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 es-
tablished for the purpose of effecting the Conversion, will carry on the busi-
ness of Industrial Income Fund following the Conversion and will have invest-
ment objectives, policies, and restrictions identical to those of Industrial
Income Fund. The investment objectives, policies and restrictions of Indus-
trial 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 secu-
rity holders of Industrial Income Fund under state law and its governing docu-
ments are expected to remain unchanged after the Conversion. Shareholder vot-
ing rights under both the Company and Combination Stock & Bond Funds are cur-
rently based on the number of shares owned. The same individuals serve as di-
rectors 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 super-
vising 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). This
proposed conversion is part of an overall plan that involves the conversion of
other INVESCO Funds as well. The goal of the conversions is to combine similar
types of funds into a single corporate entity. Ultimately, if all of the con-
versions are approved, the INVESCO Funds will be organized into a group of
core companies, with one core company for each major fund type-- for example,
all INVESCO Funds that invest internationally will be series of one core com-
pany, all INVESCO Funds that invest solely in debt securities will be series
of one core company, and all INVESCO Funds that invest in equity securities of
domestic issuers will be series of one core company. Moving Industrial Income
Fund from the Company to Combination Stock & Bond Funds will also consolidate
and streamline the production and mailing of certain financial reports and le-
gal 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 ap-
proval 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 limita-
tions of Industrial Income Fund to permit the Conversion (see "Temporary
Waiver of Investment Restrictions" below). If shareholders of Industrial In-
come Fund do not approve the Conversion Plan set forth herein, Industrial In-
come 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 In-
dustrial Income Fund shareholder one New Series Share for each Industrial In-
come 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 dis-
tribution 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 re-
spect to the New Series (the "New Management Contract") and (ii) a Distribu-
tion 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 Se-
ries. Each New Agreement will be virtually identical to the corresponding con-
tract 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 con-
tinue in effect until May 15, 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 termina-
ble 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 a vote of a majority of Combination Stock & Bond Funds' Independent Direc-
tors 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 meet-
ing 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
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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 share-
holders, the directors then in office will promptly call a shareholders' meet-
ing 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 Conver-
sion may become effective at such other date as to which the Company and Com-
bination 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. Notwith-
standing the approval of the Conversion Plan by Industrial Income Fund share-
holders, 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 Combina-
tion Stock & Bond Funds may at any time waive compliance with any of the cove-
nants and conditions contained in, or may amend, the Conversion Plan, provided
that the waiver or amendment does not materially adversely affect the inter-
ests 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 denomi-
nations of New Series Shares to be received by each holder of Industrial In-
come 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 $369,000 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 an-
other company, might be construed as restricting its ability to carry out the
Conversion. By approving the Conversion Plan, Industrial Income Fund share-
holders will be agreeing to waive, only for the purpose of the Conversion,
those fundamental investment restrictions that could prohibit or otherwise im-
pede the transaction.
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 con-
stitute 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 opin-
ion will further provide, among other
5
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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 ex-
change for those New Series Shares; and (2) an Industrial Income Fund share-
holder'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 in-
terests of Industrial Income Fund's shareholders. A vote in favor of the Con-
version Plan encompasses (i) approval of the conversion of Industrial Income
Fund to the New Series (ii) approval of the temporary waiver of certain in-
vestment 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 identi-
cal 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
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 fun-
damental investment restrictions ("fundamental restrictions"), which are set
forth in Industrial Income Fund's Statement of Additional Information. Certain
of these fundamental restrictions are also set forth in the Articles of Re-
statement of the Articles of Incorporation ("Articles") or in the Amended By-
laws ("Bylaws") dated as of July 21, 1993, of the Company. Fundamental re-
strictions may be changed only with shareholder approval. Restrictions and
policies that Industrial Income Fund has not specifically designated as funda-
mental 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 regu-
latory, 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
6
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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 invest-
ment environments and permit the Board to review and monitor investment poli-
cies 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 In-
come Fund's fundamental restrictions are set forth below, together with a sum-
mary 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 funda-
mental restrictions will be adopted by Industrial Income Fund. Industrial In-
come 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 restric-
tion:
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.
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 re-
quired 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 con-
tracts (however, the Fund may purchase securities of companies invest-
ing in real estate).
7
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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 fi-
nancial contracts and derivative products when doing so is permitted by oper-
ating 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 estab-
lished 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 in-
vestment 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 in-
vestments is as follows:
The Fund may not buy or sell real estate, commodities, commodity con-
tracts (however, the Fund may purchase securities of companies invest-
ing in real estate).
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 re-
sult 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 Indus-
trial Income Fund to purchase or sell real estate acquired as a result of own-
ership of securities or other instruments (e.g., through foreclosure on a
mortgage in which Industrial Income Fund directly or indirectly holds an in-
terest). 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.
8
<PAGE>
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 com-
pany 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 re-
striction with the following fundamental investment restriction:
The Fund may, notwithstanding any other fundamental investment pol-
icy 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 sub-
stantially the same fundamental investment objective, policies and
limitations as the Fund.
The proposed revision to Industrial Income Fund's current fundamental re-
striction 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 poten-
tial, under certain circumstances, to minimize administrative costs and maxi-
mize 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 rec-
ommend 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 affili-
ate thereof.
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 compa-
nies 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 in-
vestment 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 pur-
chase the securities of other investment companies to the extent permitted un-
der the 1940 Act or pursuant to an exemption granted by the SEC. If a Fund did
purchase the securities of another investment company, shareholders might incur
additional expenses because the Fund would have to pay its ratable share of the
expenses of the other investment company.
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 con-
trol 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 invest-
ment 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 manage-
ment. By eliminating this restriction, the Board may, however, be
9
<PAGE>
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-fundamen-
tal 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 securi-
ties 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 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 re-
striction will make the restriction more accurately reflect market conditions
and will maximize Industrial Income Fund's flexibility for future contingen-
cies. The Board may delegate to INVESCO, Industrial Income Fund's investment
adviser, the authority to determine whether a security is liquid for the pur-
poses of this investment limitation.
g. Modification of fundamental restriction on issuer diversification
Industrial Income Fund's current fundamental restriction on issuer diversi-
fication 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, pur-
chase the securities of any issuer (other than securities issued or
guaranteed by the U.S. Government or any of its agencies or instrumen-
talities, or securities of other investment companies) if, as a re-
sult, (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 limi-
tation imposed by the 1940 Act for diversified investment companies. The
amended fundamental restriction would allow Industrial Income Fund, with re-
spect 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 se-
curities 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 in-
vested in any one issuer, and so that the Industrial Income Fund will not own
more than 10% of the voting securities of an issuer.
10
<PAGE>
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 se-
curities.
The amended fundamental restriction also would permit Industrial Income Fund
to invest without limit in the securities of other investment companies. In-
dustrial Income Fund has no current intention of doing so, and, as noted be-
low, the 1940 Act imposes restrictions on the extent to which a fund may in-
vest in the securities of other investment companies. The revision would, how-
ever, give Industrial Income Fund flexibility to invest in other investment
companies in the event legal and other regulatory requirements change.
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 inso-
far 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 unifor-
mity 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 fol-
lows:
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 in-
stitutional 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 33 1/3% 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 rela-
tively minor and would have no substantive effect on Industrial Income Fund's
lending activities or other invest-
11
<PAGE>
ments. The proposed changes would eliminate the current restriction that pro-
hibits 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 In-
come Fund or its investment adviser is as follows:
The Fund may not purchase securities of any company in which any of-
ficer 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.
The Board recommends that the shareholders vote to eliminate this restric-
tion. Funds are not legally required to have a fundamental restriction limit-
ing 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 be-
cause Industrial Income Fund is subject to the extensive affiliated transac-
tion provisions of the 1940 Act. Because this restriction provides no addi-
tional protections to shareholders and may hinder the Board in pursuing in-
vestment 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 concen-
tration 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 re-
sult, 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 restric-
tion with respect to industry concentration as follows:
With respect to fundamental limitation ( ), 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 al-
tering the restriction. The proposed changes to Industrial Income Fund's fun-
damental concentration policy exclude municipal securities and securities is-
sued or guaranteed by the U.S. government, its agencies or instrumentalities
from
12
<PAGE>
the concentration limitation. There is no such exclusion from the current con-
centration limitation. A failure to exclude all such securities from the con-
centration 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 repre-
sented by proxy if more than 50% of the outstanding shares of Industrial In-
come Fund are so present or represented, or (ii) more than 50% of the out-
standing shares of Industrial Income Fund. Shareholders who vote "for" Pro-
posal 2 will vote "for" each proposed change described above. Those sharehold-
ers 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 ap-
prove 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. Al-
so, the Board believes that approval of the Articles Amendments will save In-
dustrial Income Fund the expense of amending the Articles in the future if the
Board should deem that further modifications to Industrial Income Fund's fun-
damental restrictions are advisable. The Board recommends that Industrial In-
come 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 Addi-
tional Information as follows:
The Fund may not sell short or buy on margin.
13
<PAGE>
The Board recommends that shareholders vote to amend the Articles to remove
this fundamental restriction from the Articles and from the Statement of Addi-
tional Information. If the proposal is approved by shareholders, the Board
will adopt the following non-fundamental restriction for Industrial Income
Fund:
The Fund may not sell securities short (unless it owns or has the
right to obtain securities equivalent in kind and amount to the se-
curities 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 instru-
ments, (ii) the Fund may obtain such short-term credits as are nec-
essary 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 pur-
chases 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 equiva-
lent 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 pay-
ments in a variety of financial instruments. The Board believes that elimina-
tion of the fundamental restriction and adoption of the non-fundamental re-
striction will provide Industrial Income Fund with greater investment flexi-
bility.
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 extraor-
dinary 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 Addi-
tional 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 fun-
damental 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).
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 elimi-
nates 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 33 1/3% of Industrial Income Fund's total as-
sets.
14
<PAGE>
If the proposal is approved, the Board will adopt a non-fundamental restric-
tion 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
( )).
The non-fundamental restriction reflects Industrial Income Fund's current
policy that borrowing by Industrial Income Fund may only be done for tempo-
rary, emergency purposes. In addition to borrowing from banks, as permitted by
Industrial Income Fund's current policy, the non-fundamental restriction per-
mits 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 fundamen-
tal restriction on joint trading activities:
The [Fund] . . . shall not participate on a joint or joint and sev-
eral 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, ex-
cept 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 rec-
ommends 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 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 funda-
mental restrictions. In order to change these fundamental restrictions in ac-
cordance 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 revi-
sions to Industrial Income Fund's fundamental restrictions contained in Pro-
posal 2 and to make
15
<PAGE>
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 restric-
tions 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 ap-
prove the corresponding Bylaws Amendments in Proposal 4, the changes in Pro-
posals 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 In-
come 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 pro-
vides 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 In-
vestment 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 re-
striction on such investments, as discussed in Proposal 2d above.
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 corpora-
tion 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 im-
mediately after and as a result of such purchase the [Fund] . . .
would own more than ten percent (10%) of the outstanding voting se-
curities 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.
16
<PAGE>
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 ma-
jority 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 correspond-
ing 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 restric-
tions set forth in the Bylaws will continue to govern Industrial Income Fund's
investment decisions with respect to those fundamental restrictions. If Pro-
posal 4 is approved in whole or in part, and Proposal 1 is approved, the By-
laws 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 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. How-
ever, the 1940 Act provides that vacancies may not be filled by directors un-
less thereafter at least two-thirds of the directors shall have been elected
by shareholders. To ensure continued compliance with this rule without incur-
ring 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 antic-
ipate 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 nomi-
nated and selected by Independent Directors. Eight of the ten current direc-
tors 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 val-
idly executed proxies for the election of the nominees named below.
The nominees for director, their ages, a description of their principal oc-
cupations, the number of Industrial Income Fund shares owned by each, and
their respective memberships on Board committees are listed in the table be-
low.
<TABLE>
<CAPTION>
Director or Number of Company
Principal Occupation and Executive Shares Beneficially
Business Officer of Owned Directly or
Name, Position with the Experience (during the past the Indirectly on Dec. 31, Member of
Company, and Age five years) Company Since 1998(1) Committee
- -------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
Charles W. Brady, Chief Executive Officer 1993 0 (3),(5),(6)
Chairman of the Board, and Director of AMVESCAP
Age 63* PLC, London, England,
and of various
subsidiaries thereof.
Chairman of the Board of
INVESCO Global Health
Sciences Fund.
</TABLE>
17
<PAGE>
<TABLE>
<CAPTION>
Director or Number of Company
Principal Occupation and Executive Shares Beneficially
Business Officer of Owned Directly or
Name, Position with the Experience (during the past the Indirectly on Dec. 31, Member of
Company, and Age five years) Company Since 1998(1) Committee
- -------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
Fred A. Deering, Trustee of INVESCO 1993 25,181.9330 (2), (3), (5)
Vice Chairman of the Board, Global Health Sciences
Age 71 Fund. 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.
Mark H. Williamson, President, Chief 1998 0 (3), (5)
President, Chief Executive Executive Officer, and
Officer, and Director, Director, INVESCO
Age 47* Distributors Inc.;
President, Chief
Executive Officer, and
Director, 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. Andrews, Professor Emeritus, 1993 61.5280 (4), (6), (8)
Director, Chairman Emeritus and
Age 68 Chairman of the CFO
Roundtable of the
Department of Finance of
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.
</TABLE>
18
<PAGE>
<TABLE>
<CAPTION>
Director or Number of Company
Principal Occupation and Executive Shares Beneficially
Business Officer of Owned Directly or
Name, Position with the Experience (during the past the Indirectly on Dec. 31, Member of
Company, and Age five years) Company Since 1998(1) Committee
- ---------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
Bob R. Baker, President and Chief 1993 61.5280 (3), (4), (5)
Director, Executive Officer of AMC
Age 62 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. Budner, Trust Consultant. Prior 1993 4,389.9170 (2), (6), (7)
Director, to June 1987, Senior
Age 68 Vice President and
Senior Trust Officer,
InterFirst Bank, Dallas,
Texas.
Dr. Wendy Lee Gramm, Self-employed (since 1997 2,921.1730 (4), (8)
Director, 1993). Professor of
Age 54 Economics and 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's 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.
</TABLE>
19
<PAGE>
<TABLE>
<CAPTION>
Director or Number of Company
Principal Occupation and Executive Shares Beneficially
Business Officer of Owned Directly or
Name, Position with the Experience (during the past the Indirectly on Dec. 31, Member of
Company, and Age five years) Company Since 1998(1) Committee
- ----------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C>
Kenneth T. King, Presently retired. For- 1993 13555.2560 (2), (3), (5),
Director, merly, Chairman of the (6), (7)
Age 73 Board, The Capitol Life
Insurance Company, Prov-
idence Washington Insur-
ance Company, and Direc-
tor of numerous U.S.
subsidiaries thereof.
Formerly, Chairman of
the Board, The Provi-
dence Capitol Companies
in the United Kingdom
and Guernsey. Until
1987, Chairman of the
Board, Symbion Corpora-
tion.
John W. McIntyre, Presently retired. For- 1995 61.52880 (2), (3), (5),
Director, merly, Vice Chairman of (7)
Age 68 the Board, The Citizens
and Southern Corpora-
tion; Chairman of the
Board and Chief Execu-
tive Officer, The Citi-
zens and Southern Geor-
gia Corporation; Chair-
man of the Board and
Chief Executive Officer,
The Citizens and South-
ern National Bank.
Trustee of INVESCO
Global Health Sciences
Fund, and Gables
Residential Trust, Em-
ployee's Retirement Sys-
tem of Georgia, Emory
University, and J. M.
Tull Charitable Founda-
tion; directors of Kai-
ser Foundation Health
Plans of Georgia, Inc.
Dr. Larry Soll, Presently retired. For- 1997 61.5280 (4), (8)
Director, merly, Chairman of the
Age 56 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 Pharma-
ceuticals, Inc. Trustee
of INVESCO Global Health
Sciences Fund.
</TABLE>
* Because of his affiliation with INVESCO, with the Fund's investment ad-
viser, 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 re-
spect to that security. The persons listed have partial or complete vot-
ing and investment power with respect to their respective Fund shares.
(2) Member of the Audit Committee
20
<PAGE>
(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 deriva-
tives committees consisting of Independent Directors and compensation, execu-
tive 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 respon-
sibilities 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 commit-
tee 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 per-
sonnel of INVESCO in order to facilitate better understanding of the manage-
ment and operations of the Company, and to review legal and operational mat-
ters 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 Compa-
ny, and to review policies and procedures of the Company's adviser with re-
spect 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 de-
rivatives 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.
Each Independent Director receives an annual retainer of $56,000 for their
service to the INVESCO Funds. Additionally, each Independent Director receives
$3,000 for in-person attendance at each board meeting and $1,000 for in-person
attendance at each committee meeting. The chairmen of the audit and management
liaison committees receive an annual fee of $4,000 for serving in such capaci-
ty.
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 Di-
rectors, 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 ap-
proved the nomination of the foregoing persons to serve as directors and di-
rected that the election of these nominees be submitted to the Company's
shareholders.
21
<PAGE>
The following table sets forth information relating to the compensation paid
to directors during the last fiscal year:
COMPENSATION TABLE
<TABLE>
<CAPTION>
Amounts Paid During the Most Recent
Fiscal Year by the Company to Directors
-----------------------------------------------------------------------------
Pension or
Retirement Total Compensation from
Aggregate Benefits Accrued Industrial Income Fund
Compensation from as Part of Estimated Annual and the other 14
Name of Person, Industrial Income Industrial Income Benefits Upon INVESCO Funds Paid to
Position Fund(1) Fund's Expenses(2) Retirement(3) 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. Andrews, $ 12,283 $11,040 $ 8,678 $ 80,350
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,
Director $ 10,967 $ 0 $ 0 $ 96,000
-------- ------- ------- --------
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 re-
ceive 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 ben-
efits 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 allo-
cating 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 in-
creases 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
22
<PAGE>
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 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 partici-
pate in the Defined Benefit Deferred Compensation Plan. Although Mr. McIn-
tyre became eligible to participate in the Defined Benefit Deferred Com-
pensation Plan as of November 1, 1998, he will not be included in the cal-
culation of retirement benefits until November 1, 1999.
(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 net assets of the 15 INVESCO Funds in the
INVESCO Complex 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 re-
imburses 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 reim-
bursed for travel expenses incurred in attending meetings as officers or em-
ployees of INVESCO or its affiliated companies, but do not receive any direc-
tor'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 gen-
eral 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 ad-
ministration 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 Interna-
tional 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 Com-
pany 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 De-
ferred 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 re-
tirement 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) con-
tinuation 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 re-
ceive 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 Re-
duced 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
23
<PAGE>
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 par-
ticipants 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 op-
tions 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 INVESCO
Funds. The deferred amounts have been invested in shares of certain INVESCO
Funds. Each Independent Director may, therefore, be deemed to have an indirect
interest in shares of each such INVESCO Fund, in addition to any Industrial
Income Fund shares that they may own directly or beneficially.
Required Vote. Election of each nominee as a director of the Company re-
quires 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. Representa-
tives 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 Indus-
trial Income Fund and provide other audit and tax-related services. In recom-
mending 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' in-
dependence.
Required Vote. Approval of Proposal 6 requires the affirmative vote of a ma-
jority of the votes present at the Meeting, provided that a quorum is present.
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 invest-
ment 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/
24
<PAGE>
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., At-
lanta, 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 as-
sets 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 Pres-
ident of IDI; Ronald L. Grooms, Director, Senior Vice-President and Treasurer,
also, Director, Senior Vice-President and Treasurer of IDI; Richard W. Healey,
Director and Senior Vice President, also, Director and Senior Vice President of
IDI; Timothy J. Miller, Director and Senior Vice President, also, Director and
Senior Vice President of IDI; and Glen A. Payne, Senior Vice-President, Secre-
tary 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, In-
dustrial 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, in-
cluding 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.
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 inten-
tion 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.
- ---------------
/1/The intermediary companies between INAH and AMVESCAP PLC are as follows:
INVESCO, Inc., AMVESCAP Group Services, Inc., AVZ, Inc. and INVESCO North
American Group, Ltd., each of which is wholly owned by its immediate parent.
SHAREHOLDER PROPOSALS
The Company does not hold annual meetings of shareholders. Shareholders wish-
ing 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
/s/ Glen A. Payne
Glen A. Payne
Secretary
March 23, 1999
25
<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:
<TABLE>
<CAPTION>
Amount and
Nature of
Name and Address Ownership Percentage
- ---------------- --------------- ----------
<S> <C> <C>
Charles Schwab & Co. Inc. 42,441,578.1390 13.49%
Special Custody Account for the Exclusive Benefit
of Customers
Attn: Mutual Funds
101 Montgomery Street
San Francisco, CA 94104-4122
</TABLE>
A-1
<PAGE>
APPENDIX B
AGREEMENT AND PLAN OF CONVERSION AND TERMINATION
This AGREEMENT AND PLAN OF CONVERSION AND TERMINATION ("Agreement") is made
as of March 21, 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 Mary-
land 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 under-
taken 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 con-
tinuing 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 reorga-
nization" 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 equiva-
lents, securities, receivables (including interest and dividends receivable),
claims and rights of action, rights to register shares under applicable secu-
rities 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, ob-
ligations, and duties of whatever kind or nature, whether absolute, accrued,
contingent, or otherwise, whether or not arising in the ordinary course of
business, whether or not determinable at the Effective Time, and whether or
not specifically referred to in this Agreement.
B-1
<PAGE>
1.4. At the Effective Time (or as soon thereafter as is reasonably practica-
ble), (a) the New Fund Share issued pursuant to paragraph 4.4 shall be re-
deemed 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 dis-
tribution shall be accomplished by Stock & Bond Funds' transfer agent's open-
ing 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 out-
standing 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 June 1,
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 Clos-
ing a certificate of an authorized officer verifying that the information (in-
cluding adjusted basis and holding period, by lot) concerning the Assets, in-
cluding all portfolio securities, transferred by Old Fund to New Fund, as re-
flected on New Fund's books immediately following the Closing, does or will
conform to such information on Old Fund's books immediately before the Clos-
ing. Old Fund's custodian shall deliver at the Closing a certificate of an au-
thorized 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 pay-
ment has been made.
2.3. Stock & Bond Funds' transfer agent shall deliver at the Closing a cer-
tificate 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 confir-
mation 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 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, as-
signments, 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
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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 mar-
ketable 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 com-
pany under Subchapter M of the Code ("RIC") for each past taxable year
since it commenced operations and will continue to meet all the require-
ments for such qualification for its current taxable year; and it has no
earnings and profits accumulated in any taxable year in which the provi-
sions 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 mean-
ing 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 (ex-
cluding 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;
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 sharehold-
ers; 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 thereaf-
ter.
3.2. New Fund represents and warrants as follows:
3.2.1. Stock & Bond Funds is a corporation duly organized, validly ex-
isting, 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;
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<PAGE>
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 out-
standing 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 as-
sumption 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 here-
under will, at the Effective Time, have been duly authorized and, when is-
sued and delivered as provided herein, will be duly and validly issued and
outstanding shares of New Fund, fully paid and nonassessable;
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 ordi-
nary 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 reac-
quire any New Fund Shares issued to the Shareholders pursuant to the Reor-
ganization, 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 ordi-
nary 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 in-
tention to sell or otherwise dispose of any of the Assets, except for dis-
positions made in the ordinary course of that business and dispositions
necessary to maintain its status as a RIC, and (d) expects to retain sub-
stantially all the Assets in the same form as it receives them in the Re-
organization, unless and until subsequent investment circumstances 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 Reor-
ganization; 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 re-
ceived by the Shareholders, will be approximately equal to the aggregate
fair market value of their Old Fund Shares constructively surrendered in
exchange therefor;
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<PAGE>
3.3.2. Its management (a) is unaware of any plan or intention of Share-
holders 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 de-
fined) 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 inter-
ests, 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 share-
holders in the course of its business as a RIC and assets used to pay ex-
penses 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 par-
ties 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 Re-
organization, 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 ex-
penses are solely and directly related to the Reorganization (determined
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 con-
tained 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 be-
fore 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 appli-
cable law;
4.2. All necessary filings shall have been made with the Securities and Ex-
change Commission ("SEC") and state securities authorities, and no order or
directive shall have been received that any other or further action is re-
quired to permit the parties to carry out the transactions contemplated here-
by. All consents, orders, and permits of federal, state, and local regulatory
authorities (including the SEC and state securities authorities) deemed neces-
sary by either
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<PAGE>
Investment Company to permit consummation, in all material respects, of the
transactions contemplated hereby shall have been obtained, except where fail-
ure 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 Com-
pany 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 ren-
dering the Tax Opinion, such counsel may rely as to factual matters, exclu-
sively and without independent verification, on the representations made in
this Agreement (or in separate letters addressed to such counsel) and the cer-
tificates delivered pursuant to paragraph 2.4. The Tax Opinion shall be sub-
stantially 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 construc-
tively 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 As-
sets in exchange solely for New Fund Shares and its assumption of the Lia-
bilities;
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 pe-
riod 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 re-
ceived 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 autho-
rized 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 re-
ferred to in paragraph 4.5; and
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<PAGE>
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 pur-
suant to Rule 12b-1 under the 1940 Act, and such other agreements as are nec-
essary 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 di-
rectors 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 ad-
verse 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 Ex-
penses 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.
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 offi-
cers of either Investment Company, to the other Fund.
8. AMENDMENT
This Agreement may be amended, modified, or supplemented at any time, not-
withstanding 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.
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<PAGE>
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 un-
der 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 effec-
tive when one or more counterparts have been executed by each Investment Com-
pany 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.
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.
INVESCO INDUSTRIAL INCOME FUNDS, INC.
By: ___________________________________
President
ATTEST:
____________________________________
Secretary
INVESCO COMBINATION STOCK & BOND
FUNDS, INC.,
on behalf of its series,
INVESCO Industrial Income Fund
By: ___________________________________
President
ATTEST:
____________________________________
Secretary
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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. (the "Company") and relates to the
proposals with respect to the Company and to INVESCO Industrial Income Fund, the
only series of the Company ("Fund"). The undersigned hereby appoints as proxies
Fred A. Deering and Mark H. Williamson, 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 HTTP://WWW.PROXYVOTE.COM. TO VOTE BY FACSIMILE TRANSMISSION,
PLEASE FAX YOUR COMPLETED PROXY CARD TO 1-800-733-1885.
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.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Vote on Directors FOR WITHHOLD FOR ALL
ALL ALL EXCEPT
5. Election of the Company's Board of [ ] [ ] [ ] To withhold authority to
Directors: (1) Charles W. Brady; (2) Fred A. vote, mark "For All
Deering; (3) Mark H. Williamson; (4) Dr. Victor Except" and write the
L. Andrews; (5) Bob R. Baker; (6) Lawrence H. nominee's number on the
Budner; (7) Dr. Wendy Lee Gramm; (8) Kenneth T. line below.
King; (9) John W. McIntyre; and (10) Dr. Larry
Soll;
Vote On Proposals FOR AGAINST ABSTAIN
[ ] [ ] [ ]
1. Approval of an Agreement and Plan of Conversion and Termination providing
for the conversion of INVESCO Industrial Income Fund as the only series of
the Company, to a separate series of INVESCO Combination Stock & Bond Funds,
Inc., all as described in the accompanying Proxy Statement;
FOR AGAINST ABSTAIN
ALL ALL ALL
[ ] [ ] [ ]
2. Approval of changes to the fundamental investment restrictions;
To vote against the proposed changes to one or more of the specific
fundamental investment restrictions, but to approve others, PLACE
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C>
AN "X" IN THE BOX AT LEFT and indicate the letter(s) (as set forth
in the proxy statement) of the investment restriction or
restrictions you do not want to change on the line on the reverse side.
If you choose to vote differently on individual
restrictions, you must mail in your proxy card. If you choose to vote
the same on all restrictions pertaining to your fund,
telephone and Internet voting are available.
FOR AGAINST ABSTAIN
ALL ALL ALL
[ ] [ ] [ ]
3. To amend the Articles of Restatement of the Articles of Incorporation
of the Company;
[ ] To vote against the proposed changes to one or more of the specific
fundamental investment restrictions, but to approve others, PLACE AN "X" IN
THE BOX AT LEFT and indicate the letter(s) (as set forth in the proxy
statement) of the investment restriction or restrictions you do not want to
change on the line on the reverse side. If you choose to vote differently
on individual restrictions, you must mail in your proxy card. If you
choose to vote the same on all restrictions pertaining to your fund,
telephone and Internet voting are available.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
FOR AGAINST ABSTAIN
ALL ALL ALL
4. To amend the Bylaws of the Company;
[ ] [ ] [ ]
<S> <C> <C> <C>
[ ] To vote against the proposed changes to one or more of the
specific fundamental investment restrictions, but to
approve others, PLACE AN "X" IN THE BOX AT LEFT and
indicate the letter(s) (as set forth in the proxy
statement) of the investment restriction or restrictions
you do not want to change on the line on the reverse
side. If you choose to vote differently on individual
restrictions, you must mail in your proxy card. If you
choose to vote the same on all restrictions pertaining to
your fund, telephone and Internet voting are available.
FOR AGAINST ABSTAIN
6. Ratification of the selection of PricewaterhouseCoopers [ ] [ ] [ ]
LLP as the Fund's Independent Public Accountants.
</TABLE>
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 HTTP://WWW.PROXYVOTE.COM. TO VOTE BY FACSIMILE TRANSMISSION,
PLEASE FAX YOUR COMPLETED PROXY CARD TO 1-800-733-1885.
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
[Back]
To vote against the proposed changes to one or more of the specific fundamental
investment restrictions, indicate the letter(s) (as set forth in the proxy
statement) of the investment restriction or restrictions you do not want to
change on the line at the right. If you choose to vote differently on
individual restrictions, you must mail in your proxy card. If you choose to
vote the same on all restrictions pertaining to your fund, telephone and
Internet voting are available.
To vote against the proposed changes to one or more of the specific fundamental
investment restrictions, indicate the letter(s) (as set forth in the proxy
statement) of the investment restriction or restrictions you do not want to
change on the line at the right. If you choose to vote differently on
individual restrictions, you must mail in your proxy card. If you choose to
vote the same on all restrictions pertaining to your fund, telephone and
Internet voting are available.
To vote against the proposed changes to one or more of the specific fundamental
investment restrictions, indicate the letter(s) (as set forth in the proxy
statement) of the investment restriction or restrictions you do not want to
change on the line at the right. If you choose to vote differently on individual
restrictions, you must mail in your proxy card. If you choose to vote the same
on all restrictions pertaining to your fund, telephone and Internet voting are
available.
2. _________________________________
3. ___________________________________
4. ___________________________________
