^ SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
(Amendment No. )
Filed by the Registrant [X]
Filed by a party other than the Registrant [ ]
Check the appropriate box:
[^] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to (S)240.14a-11(C)or (S)240.14a-12
INVESCO VALUE TRUST
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[ ] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(Schedule
14A2(a)(2) of
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1. Title of each class of securities to which transaction applies:
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2. Aggregate number of securities to which transaction applies:
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3. Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
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4. Proposed maximum aggregate value of transaction:
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5. Total fee paid:
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[ ] Fee paid previously by written preliminary materials.
[ ] Check box is any part of the fee is offset as provided by Exchange Act Rule
0-11(a)92) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1. Amount Previously Paid:
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2. Form Schedule or Registration Statement No.
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3. Filing Party:
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4. Date Filed:
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^ INVESCO VALUE TRUST
March 30, 1998
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Dear INVESCO Value Trust Shareholder:
Enclosed is a Proxy Statement for the May 6, 1998 special meeting of
shareholders of INVESCO Total Return Fund (the "Total Return Fund" or the
"Fund") a series of INVESCO Value Trust (the "Trust").
As explained more fully in the attached Proxy Statement, shareholders of
the Fund will be asked to approve a change in the investment policies of the
Fund to permit it to modify its diversification policy. Shareholders of the Fund
also will be asked to approve a Plan and Agreement of Distribution (the "Plan"),
with fees assessed based on new assets added to the Fund after the Plan is
implemented.
The board of trustees of the Trust believes that the change in
diversification policy and the adoption of the Plan ^ are in the best interests
of the Fund's shareholders. Therefore, we ask that you read the enclosed
materials and vote promptly. Should you have any questions, please feel free to
call our client services representatives at 1-800-646-8372. They will be happy
to answer any questions that you might have.
YOUR VOTE IS IMPORTANT. THE CHANGE IN INVESTMENT POLICY AND THE PLAN WE
ARE SUBMITTING FOR YOUR CONSIDERATION ARE SIGNIFICANT TO THE TRUST, THE FUND AND
TO YOU AS A SHAREHOLDER. IF WE DO NOT RECEIVE YOUR COMPLETED PROXY CARDS AFTER
SEVERAL WEEKS, YOU MAY BE CONTACTED BY OUR PROXY SOLICITOR, SHAREHOLDER
COMMUNICATIONS CORPORATION. OUR PROXY SOLICITOR WILL REMIND YOU TO VOTE YOUR
SHARES OR WILL RECORD YOUR VOTE OVER THE PHONE IF YOU CHOOSE TO VOTE IN THAT
MANNER. YOU MAY ALSO CALL SHAREHOLDER COMMUNICATIONS CORPORATION DIRECTLY AT
1-800-773-8481, EXTENSION 466, AND VOTE BY PHONE. IF WE DO NOT RECEIVE
SUFFICIENT VOTES TO APPROVE THESE PROPOSALS, WE MAY HAVE TO SEND ADDITIONAL
MAILINGS OR CONDUCT ADDITIONAL TELEPHONE CANVASSING WHICH WOULD INCREASE COSTS
TO SHAREHOLDERS. THEREFORE, PLEASE TAKE THE TIME TO READ THE PROXY STATEMENT AND
CAST YOUR VOTE ON THE ENCLOSED PROXY CARD, AND RETURN IT IN THE ENCLOSED
PRE-ADDRESSED, POSTAGE-PAID ENVELOPE.
Sincerely,
/s/ Dan J. Hesser
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Dan J. Hesser
President
INVESCO Value Trust
INVESCO Total Return Fund
^
<PAGE>
INVESCO VALUE TRUST
7800 East Union Avenue
Denver, Colorado 80237
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON MAY 6, 1998
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Notice is hereby given that a special meeting of shareholders (the
"Meeting") of INVESCO Total Return Fund ^(the "Total Return Fund" or the
"Fund"), a series of INVESCO Value Trust (the "Trust"), will be held at the
Hyatt Regency Tech Center, 7800 E. Tufts Avenue, Colorado 80237 on Wednesday,
May 6, 1998, at 10:00 a.m., Mountain Time, for the following purposes:
1. To approve or disapprove a change in the investment policies of the
Fund to permit more than five percent of the Fund's assets to be
invested in a single issuer, provided that such purchases do not
exceed twenty-five percent of the Fund's assets.
2. To approve or disapprove a Plan and Agreement of Distribution (the
"Plan") for the Fund.
3. To transact such other business as may properly come before the
Meeting or any adjournment(s) thereof.
The board of trustees of the Trust has fixed the close of business on
March 20, 1998, as the record date for the determination of shareholders
entitled to notice of and to vote at the Meeting or any adjournment(s) thereof.
A complete list of shareholders of the Fund entitled to vote at the
Meeting will be available and open to the examination of any shareholder of the
Fund for any purpose germane to the Meeting during ordinary business hours after
March 31, 1998, at the offices of the Trust, 7800 East Union Avenue, Denver,
Colorado 80237.
You are cordially invited to attend the Meeting. Shareholders who do not
expect to attend the Meeting in person are requested to complete, date and sign
the enclosed form of proxy and return it promptly in the enclosed envelope that
requires NO postage if mailed in the United States. The enclosed proxy is being
solicited on behalf of the board of trustees of the Trust.
<PAGE>
IMPORTANT
Please mark, sign, date and return the enclosed proxy in the accompanying
envelope as soon as possible in order to ensure a full representation at the
Meeting.
The Meeting will have to be adjourned without conducting any business if
less than a majority of the eligible shares is represented, and the Trust will
have to continue to solicit votes until a quorum is obtained. The Meeting also
may be adjourned, if necessary, to continue to solicit votes if less than the
required shareholder vote has been obtained to approve Proposal 1 and Proposal
2.
Your vote, then, could be critical in allowing the Trust to hold the
Meeting as scheduled. By marking, signing, and promptly returning the enclosed
proxy, you may eliminate the need for additional solicitation. Your cooperation
is appreciated.
By Order of the Board of Trustees,
/s/ Glen A. Payne
----------------------
Glen A. Payne
Secretary
Denver, Colorado
Dated: March 30, 1998
<PAGE>
^
INVESCO VALUE TRUST
March 30, 1998
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INVESCO VALUE TRUST
7800 East Union Avenue
Denver, Colorado 80237
PROXY STATEMENT
FOR SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON May 6, 1998
INTRODUCTION
The enclosed proxy is being solicited by the board of trustees (the
"Board" or the "Trustees") of INVESCO Value Trust (the "Trust") on behalf of
INVESCO Total Return Fund^ (the "Total Return Fund" or the "Fund"), a series of
the Trust, for use in connection with the special meeting of shareholders of the
^ Fund (the "Meeting") to be held at 10:00 a.m., Mountain Time, on Wednesday,
May 6, 1998, at the Hyatt Regency Tech Center, 7800 E. Tufts Avenue, Denver,
Colorado 80237, and at any adjournment(s) thereof for the purposes set forth in
the foregoing notice. THE TRUST'S ANNUAL REPORT, INCLUDING FINANCIAL STATEMENTS
OF THE TRUST FOR THE FISCAL YEAR ENDED AUGUST 31, 1997, IS AVAILABLE WITHOUT
CHARGE UPON REQUEST FROM GLEN A. PAYNE, SECRETARY OF THE TRUST, AT P.O. BOX
173706, DENVER, COLORADO 80217-3706 (TELEPHONE NUMBER 1-800-646-8372). The
approximate mailing date of proxies and this Proxy Statement is March 30, 1998.
The primary purposes of the Meeting are to allow shareholders to consider
(i) a change in the investment policy of the Total Return Fund to permit
investments of more than five percent of the Fund's assets in a single issuer,
provided that such purchases do not exceed twenty-five percent of the Fund's
assets and (ii) a Plan and Agreement of Distribution (the "Plan") for the Fund.
The following factors should be considered by shareholders in determining
whether to authorize the change in investment policy to permit more than five
percent of ^ the Fund's total assets to be invested in securities of a single
issuer, with a limit on all such investments of twenty-five percent of the
Fund's total assets:
o The change in investment policy, if approved, would assist the Fund in
achieving ^ its investment objectives by providing the flexibility
permitted by law.
o If approved, the change could make the Fund's portfolio somewhat less
diversified.
The following factors should be considered by shareholders in determining
whether to approve the Plan:
o The Plan has been approved by the Board, including the Trustees who are
completely independent of any INVESCO-affiliated Company ("the Independent
Trustees").
o The relationship of the Plan to the overall cost structure of the Total
Return Fund.
o The potential long-term benefits of the Plan to the Fund and its
shareholders.
<PAGE>
o The effect of the Plan on existing shareholders.
If the enclosed form of proxy is duly executed and returned in time to be
voted at the Meeting, and not subsequently revoked, all shares represented by
the proxy will be voted in accordance with the instructions marked thereon. If
no instructions are given, such shares will be voted FOR Proposals 1 and 2. A
majority of the outstanding shares of the Trust entitled to vote, represented in
person or by proxy, will constitute a quorum at the Meeting.
Shares held by shareholders present in person or represented by proxy at
the Meeting will be counted both for the purpose of determining the presence of
a quorum and for calculating the votes cast on the issues before the Meeting. An
abstention by a shareholder, either by proxy or by vote in person at the
Meeting, has the same effect as a negative vote. Shares held by a broker or
other fiduciary as record owner for the account of the beneficial owner are
counted toward the required quorum if the beneficial owner has executed and
timely delivered the necessary instructions for the broker to vote the shares or
if the broker has and exercises discretionary voting power. Where the broker or
fiduciary does not receive instructions from the beneficial owner and does not
have discretionary voting power as to one or more issues before the Meeting, but
grants a proxy for or votes such shares, the shares will be counted toward the
required quorum but will have the effect of a negative vote on any proposals on
which they are not voted.
In order to further reduce costs, the notices to shareholders having more
than one account in a Fund listed under the same Social Security number at a
single address have been combined. The proxy cards have been coded so that each
shareholder's votes will be counted for all such accounts.
Execution of the enclosed proxy card will not affect a shareholder's right
to attend the Meeting and vote in person, and a shareholder giving a proxy has
the power to revoke it (by written notice to the Trust at P.O. Box 173706,
Denver, Colorado 80217-3706, execution of a subsequent proxy card, or oral
revocation at the Meeting) at any time before it is exercised.
Shareholders of record of the Fund at the close of business on March 20,
1998 (the "Record Date"), are entitled to vote at the Meeting, including any
adjournment(s) thereof, and are entitled to one vote for each share, and
corresponding fractional votes for fractional shares, on each matter to be acted
upon at the Meeting. On the Record Date, ^ 94,808,992 shares of beneficial
interest of the Trust, $.01 par value per share, were outstanding, including ^
77,802,510 shares of the Total Return Fund.
In addition to the solicitations of proxies by use of the mail, proxies
may be solicited by officers of the Trust, by officers and employees of INVESCO
Funds Group, Inc. ("IFG"), the investment adviser and transfer agent of the
Fund, INVESCO Capital Management, Inc. ("ICM"), the sub-adviser to the ^ Fund
and by officers and employees of INVESCO Distributors, Inc. ("IDI"), the
distributor of the Fund, personally or by telephone or telegraph, without
special compensation. IFG, ICM and IDI are referred to collectively as
"INVESCO." In addition, Shareholder Communications Corporation ("SCC") has been
retained to assist in the solicitation of proxies.
As the meeting date approaches, certain shareholders whose votes the Trust
has not yet received may receive telephone calls from representatives of SCC
requesting that they authorize SCC, by telephonic or electronically transmitted
instructions, to execute proxy cards on their behalf. Telephone authorizations
will be recorded in accordance with the procedures set forth below. INVESCO
believes that these procedures are reasonably designed to ensure that the
identity of the shareholder casting the vote is accurately determined and that
the voting instructions of the shareholder are accurately determined.
<PAGE>
SCC has received an opinion of Massachusetts counsel that addresses the
validity, under the applicable laws of the Commonwealth of Massachusetts, of
authorization given orally to execute a proxy. The opinion given by
Massachusetts counsel concludes that a Massachusetts court would find that there
is no Massachusetts law or public policy against the acceptance of proxies
signed by an orally authorized agent, provided it adheres to the procedures set
forth below.
In all cases where a telephonic proxy is solicited, the SCC representative
is required to ask the shareholder for such shareholder's full name, address,
Social Security or employer identification number, title (if the person giving
the proxy is authorized to act on behalf of an entity, such as a corporation),
and the number of shares owned, and to confirm that the shareholder has received
the Proxy Statement in the mail. If the information solicited agrees with the
information provided to SCC by the Trust, the SCC representative has the
responsibility to explain the voting process, read the proposals listed on the
proxy card, and ask for the shareholder's instructions on the proposals.
Although he or she is permitted to answer questions about the process, the SCC
representative is not permitted to recommend to the shareholder how to vote,
other than to read any recommendation set forth in the Proxy Statement. SCC will
record the shareholder's instructions on a proxy card. Within 72 hours, SCC will
send the shareholder a letter or mailgram confirming the shareholder's vote and
asking the shareholder to call SCC immediately if the shareholder's instructions
are not correctly reflected in the confirmation.
If a shareholder wishes to participate in the Meeting, but does not wish
to give a proxy by telephone, such shareholder may still submit the proxy card
originally sent with the Proxy Statement or attend in person. Any proxy given by
a shareholder, whether in writing or by telephone, is revocable. A shareholder
may revoke the accompanying proxy or a proxy given telephonically at any time
prior to its use by filing with the Trust a written revocation or duly executed
proxy bearing a later date. In addition, any shareholder who attends the Meeting
in person may vote by ballot at the Meeting, thereby canceling any proxy
previously given.
ALL COSTS OF PRINTING AND MAILING PROXY MATERIALS AND THE COSTS AND
EXPENSES OF HOLDING THE MEETING AND SOLICITING PROXIES, INCLUDING ANY AMOUNT
PAID TO SCC, WILL BE SPLIT EQUALLY BETWEEN INVESCO AND THE FUND.
The Board may seek one or more adjournments of the Meeting to solicit
additional shareholders, if necessary, to obtain a quorum for the Meeting, or to
obtain the required shareholder vote to approve Proposals 1 and 2. An
adjournment would require the affirmative vote of the holders of a majority of
the shares present at the Meeting (or an adjournment thereof) in person or by
proxy and entitled to vote. If adjournment is proposed in order to obtain the
required shareholder vote on a particular proposal, the persons named as proxies
will vote in favor of adjournment those shares which they are entitled to vote
in favor of such proposal and will vote against adjournment those shares which
they are required to vote against such proposal. A shareholder vote may be taken
on one or more of the proposals discussed herein prior to any such adjournment
if sufficient votes have been received and it is otherwise appropriate.
<PAGE>
PROPOSAL 1: APPROVAL OR DISAPPROVAL OF THE CHANGE IN INVESTMENT
POLICY PERMITTING MORE THAN FIVE PERCENT OF THE FUND'S
TOTAL ASSETS TO BE INVESTED IN SECURITIES OF A SINGLE
ISSUER, WITH A LIMIT ON ALL SUCH INVESTMENTS OF ^ 25% OF
THE FUND'S TOTAL ASSETS.
Background
As stated in the Statement of Additional Information, the current
fundamental policy of the Trust, applicable to all of ^ its funds, concerning
the percentage of a fund's assets which can be invested in any one issuer is as
follows:
Each Fund, unless otherwise indicated may not:
... (2) Invest in the securities of any one issuer, other than the United
States Government, if immediately after such investment more than
5% of the value of a Fund's total assets, taken at market value,
would be invested in such issuer or more than 10% of such issuer's
outstanding voting securities would be owned by such Fund;
Under this fundamental investment policy, no Fund may purchase securities
(except obligations issued or guaranteed by the U.S. government, its agencies or
instrumentalities) if such purchase would cause a Fund immediately after such
purchase to have more than 5% of the value of its total assets invested in the
securities of any one issuer.
This restriction was put in place when the Trust was formed in 1987 to help
ensure that each ^ fund would meet the diversification requirements for a
regulated investment company under Subchapter M of the Internal Revenue Code of
1986, as amended (the "Code") and Section 5 of the Investment Company Act of
1940 (the" 1940 Act").
This investment limitation is more restrictive than the legal requirements
of either the 1940 Act or the Code. INVESCO seeks to ease this investment
limitation in order to give ^ the Fund the ability, if desired, to invest in
excess of 5% of ^ its assets in the outstanding securities of a single company
in a particular sector. Such a change would permit the fundamental investment
restriction to remain in complete compliance with Subchapter M of the Code and
Section 5 of the 1940 Act.
Although no assurances can be given, INVESCO believes that this proposal
will benefit shareholders of the Fund by potentially increasing the Fund's
investment returns. As shareholders know, the Fund invests in a broad range of
securities, and attempts to diversify its investments by market sectors, among
other factors it considers. Although INVESCO recognizes the fundamental
importance of diversification of investments, it also recognizes that it may be
advantageous to invest more than 5% of the Fund's assets in the securities of
one or more companies. For example, the passage of time has created certain
dominant firms in several economic sectors. These firms, by their very size, may
drive the performance of a sector as a whole. In turn, the performance of a
sector may impact the overall performance of the Fund. Under the present
investment limitations, the Fund may not fully participate in the upside
potential of a given sector, because ^ it is limited in the amount that ^ it may
invest in a single company.
INVESCO feels that it is beneficial to be able to construct a diversified
portfolio of investments for the Fund that more closely mirrors what INVESCO
believes from time to time are the most appropriate sector weightings. The
Fund's present inability to completely reflect the economic realities of certain
economic sectors may put the Fund at a competitive disadvantage, to the
potential detriment of ^ its shareholders, inasmuch as competitors of the Fund
generally have the ability to concentrate a certain percentage of their
investments, limited only by the legal requirements of the Code and the 1940
Act. INVESCO seeks the same flexibility for the Fund.
<PAGE>
There is, of course, a possibility that increased concentration in one or
more companies will increase ^ the Fund's portfolio risk, particularly in down
markets. However, the risk that ^ the Fund will not be able to fully participate
in upside potential is also present under the current investment limitations.
Proposed Change To Investment Policy
INVESCO and the Board have determined that the ability to invest more than
5% of the Fund's total assets in certain companies, within the limitations
imposed by the Code and the 1940 Act, would provide the ^ Fund an additional
potential means of improving Fund performance. The Trustees believe that the
Fund would benefit from having the flexibility to make such investments, and
that they would be consistent with the Fund's investment objective and policies.
There can be no assurance, however, that such investments will assist the Fund
in achieving ^ its investment objective.
Accordingly, the Board, including all of the Independent Trustees present,
approved the proposed change in a meeting on February 3, 1998, and is proposing
that shareholders approve the modification of the above-quoted fundamental
investment policy of the Trust with respect to ^ the Fund. If the proposal is
approved by shareholders, the language of this fundamental investment policy
would be revised to read, in ^ its entirety, as follows:
The Fund, unless otherwise indicated, may not:
...(2) With respect to seventy-five percent (75%) of the Total Return
Fund's total assets, purchase the securities of any one issuer
(except cash items and "government securities" as defined under the
1940 Act, if the purchase would cause a Fund to have more than 5%
of the value of its total assets invested in the securities of such
issuer or to own more than 10% of the outstanding voting
securities of such issuer.
This modified fundamental investment policy will provide the portfolio
manager with the flexibility to invest more than 5% of ^ the Total Return Fund's
assets in a single company, provided that all such investments do not exceed 25%
of the Fund's total assets.
Vote Required
As provided under the 1940 Act, approval of the investment policy change
will require the affirmative vote of a majority of the outstanding shares of ^
the Fund voting as a separate class. Such a majority is defined in the 1940 Act
as the lesser of: (a) 67% or more of the shares present at such meeting, if the
holders of more than 50% of the outstanding shares of ^ the Fund are present or
represented by proxy, or (b) more than 50% of the total outstanding shares of ^
the Fund.
If approved, this Proposal will take effect as soon as possible after any
remaining legal prerequisites to implementation of the Proposal have been
satisfied. If the shareholders of the Fund fail to approve this Proposal, the
Fund's fundamental investment policy regarding diversification will remain
unchanged.
<PAGE>
THE TRUSTEES OF THE TRUST UNANIMOUSLY RECOMMEND
THAT THE FUND'S SHAREHOLDERS
VOTE IN FAVOR OF PROPOSAL 1.
PROPOSAL 2: APPROVAL OR DISAPPROVAL OF THE PLAN AND AGREEMENT OF
DISTRIBUTION FOR INVESCO TOTAL RETURN FUND
Background
At the Meeting, shareholders of the ^ Total Return Fund ^ are to consider
a Plan and Agreement of Distribution (the "Plan") approved by the Board on
February 3, 1998. The reasons why the Trustees, including all of the Independent
Trustees present at the meeting, determined that it was reasonably likely that
the Plan would contribute to an increase in sales of shares of the Fund, with
resulting benefits to the Fund and its shareholders, are set forth in detail
below. Briefly, the Board determined that an enhanced marketing effort by IDI on
behalf of the Fund would benefit the Fund in maintaining and improving its
market share, and that such an effort would be enhanced by adoption of the Plan,
under which the Fund's assets will be available to compensate IDI for a portion
of the costs of marketing and distributing the Fund's shares.
Changing Mutual Fund Distribution Patterns
In years past, no-load mutual funds such as those offered by the Trust
were sold directly by their distributors. Today, no-load mutual funds
increasingly are sold through the efforts of third parties such as full-service
brokerage firms, discount brokers, banks, investment advisers, consultants and
others. Some of these third parties are compensated for sales efforts; others
are compensated for ongoing services that they provide to mutual fund
shareholders; still others are compensated for both. According to Strategic
Insight Mutual Fund Research and Consulting LLC ("Strategic Insight"), retail
equity mutual funds with similar capital appreciation objectives to that of the
Fund, which are primarily distributed through financial intermediaries, offer,
with very few exceptions, distribution or service fees to such third party
intermediaries. Among such funds during 1997, Strategic Insight estimated that
90% of net cash flows (new sales less redemptions plus net exchanges) were
captured by funds with stated annual fees to intermediaries of 25 basis points
or higher; only 9% of net flows were captured by such funds not offering such
fees. The INVESCO Mutual Funds are no different from the rest of the industry in
this respect. IFG has advised the Trust that nearly ^ 83% of the gross sales of
all INVESCO Mutual Funds in calendar year 1997 came through third party
intermediaries.
While the mutual fund industry has evolved increasingly toward fee-based
compensation of third party intermediaries and advisory services asset
allocation, the ^ Fund's pricing structure has remained unchanged. Historically,
IFG has compensated these third parties, and paid a wide variety of marketing
expenses, out of the revenues it derives from the Fund for portfolio management
and other services provided to the Fund. In the judgment of IFG and the Board,
continuing this approach places the Fund at a competitive marketing disadvantage
to its peers.
Although the INVESCO Mutual Funds have grown significantly in the past
five years, INVESCO and the ^ Fund compete against management companies having
far greater resources at their command. The costs of distributing the INVESCO
Mutual Funds (including the Fund) have increased substantially over the last few
years. While INVESCO cannot outspend its competitors, it believes it must spend
at least enough to provide what its competitors offer to third parties to
distribute and provide services to their mutual funds and generally to inform
investors that the Fund offers attractive alternatives to other mutual funds.
INVESCO has advised the Board that to do both requires a significant increase in
the money and personnel devoted to marketing shares of the Fund.
<PAGE>
This is a need that is not unique to the ^ Fund, or to the INVESCO Mutual
Funds as a group. In order to increase revenue available for spending in the
areas of advertising, sales promotion, and maintenance of an effective sales
effort, many competing mutual fund groups, both load and no-load, have adopted
distribution plans pursuant to Rule 12b-1 of the 1940 Act, under which fund
assets are available to pay certain expenses of distributing fund shares and
providing ongoing services to shareholders.
Several of the INVESCO Mutual Funds adopted distribution plans in 1990,
and most new INVESCO Mutual Funds started since that time have such plans. In
October and November 1997, shareholders of the INVESCO Value Equity Fund and
INVESCO Intermediate Government Bond Fund of INVESCO Value Trust, eight
portfolios of INVESCO Strategic Portfolios, Inc. and all portfolios of INVESCO
International Funds, Inc. approved such plans. Again, this is not unique. Data
on the mutual fund industry compiled by Lipper Analytical Services, Inc. shows
that at December 31, 1997, 7,233 of the 11,628 open-end mutual funds registered
with the SEC (62.2%) were using fund assets to pay for distribution expenses,
either through Rule 12b-1 plans or a direct charge against fund assets. In 1990,
only 54.6% of all such funds had such ^ plans in place. According to INVESCO,
one reason why many no-load funds have adopted Rule 12b-1 plans is to give them
a means, through payment of service fees, to compensate third party
intermediaries for helping to sell fund shares and providing ongoing services to
shareholders.
It is important to note that adoption of the Plan will not result in a
windfall of revenue for INVESCO. INVESCO has committed to the Board, and the
Board has acted in reliance on such commitment, that it will continue bearing
expenses of marketing the INVESCO Mutual Funds at least equal to the level of
expenses that it has currently committed to the Board to bear (at least $3.5
million annually). Thus, adoption of the proposed Plan will have the effect of
making additional monies available for promotion and marketing of the Fund, but
will not result in increased profits to INVESCO from INVESCO's reducing ^ its
own marketing expenditures below the commitment level.
The Board and INVESCO believe that the adoption of the Plan is reasonably
likely to improve the sales of the Fund's shares by providing third party
intermediaries with an incentive to provide ongoing services to Fund
shareholders and sell shares of the Fund, and by providing monies for INVESCO to
embark on an enhanced distribution effort on behalf of the Fund which the Board
and INVESCO believe should assist the Fund to remain competitive in the
marketplace.
Impact Of The Proposed Plan On The Cost Structure Of The Total Return Fund
The proposed Plan is PROSPECTIVE in nature. Thus, the fee will only be
assessed based on new sales of shares, exchanges into the Fund and reinvestments
of dividends and capital gains distributions (collectively "New Assets") of the
Fund which occur after the Plan is implemented. If approved by shareholders, the
Plan will become effective on the first business day of the month following the
month in which shareholder approval is received, and the first payments under
the Plan will be made in the second month following shareholder approval. To
illustrate how the Plan will work, assume that the Plan was in effect on April
1, 1997, when the Fund had $1,402.2 million in assets. During the month of April
1997, the Fund added $114.1 million in New Assets. Under this illustration, the
fees assessed under the Plan would have been applied to the $114.1 million in
New Assets added after adoption of the Plan. Under the Plan, the resulting fees
would be absorbed pro rata by all Fund shareholders. Investment performance of
the Fund's assets and redemptions will have no impact on the Plan. Redemptions
of shares acquired with New Assets will not reduce the dollar amounts to which
the Plan's fees will be applied. Any increase or decrease in the net asset value
of New Assets will not affect the dollar amounts to which the Plan's fees will
<PAGE>
be applied. Increases in the net asset value of shares of the Fund existing
prior to implementation of the Plan also will not increase the dollar amounts to
which the Plan's fees will be applied. At no time will the fees under the Plan
be applied to a level of New Assets higher than the net assets of the Fund.
The proposed Plan would authorize use of a small percentage of assets of
the Fund to compensate IDI for expenditures it undertakes to promote
distribution of the Fund's shares. The Plan would limit the amount of the Fund's
assets which could be used for this purpose during any 12-month period to a
maximum of 0.25 of 1% (25 basis points) of New Assets of the Fund added after
the Plan is implemented. Any increase in this rate would require approval of the
Board and shareholders of the Fund. The compensation allowed under the proposed
Plan is modest in comparison to Rule 12b-1 plans that have been adopted by many
other mutual funds. Some funds have adopted distribution plans authorizing up to
1% of fund assets on an annual basis to be used to compensate the distributor
for the costs of distributing fund shares.
Adoption of the proposed Plan will increase the expenses a shareholder
would pay on a $1,000 investment in the Fund (assuming a 5% annual return and
assessment of the full 0.25% fee) by approximately $2.63 for one year. Another
way of looking at the effect of this proposal is to consider the fact that, if
the Fund had a net asset value per share of $10, the deduction of the maximum
distribution and service fee charge would reduce the price per share by two and
one-half cents ($.025) for the entire year ($.00007 per share per day). Daily
changes in the market price of the Fund's securities often result in a
fluctuation in the Fund's net asset value per share by an amount greater than
the yearly amount of the reduction in the per share net asset value that will
result from the distribution and service charge. If the Plan had been effective
at January 1, 1997, based on the average daily net assets of the Fund's
portfolio and the New Assets added to the Fund after that date, as of December
31, 1997, the estimated maximum annual payments of the Fund under the Plan for
the twelve months then ended would have been $1,636,758.
Operating expenses of the Fund are paid from the Fund's assets. Lower
expenses therefore benefit investors by increasing the Fund's total return.
Annual operating expenses are calculated as a percentage of the Fund's average
annual net assets. The table below shows the expense ratios for the Fund for the
twelve months ended December 31, 1997, and the estimated pro forma expense
ratios for the Fund if the proposed Plan had been in effect from January 1, 1997
through December 31, 1997.
Pro Forma
Estimated Expenses
Expenses at Including Proposed
December 31, 1997 Plan at December 31, 1997
----------------------------------------------
Management Fee 0.62% 0.62%
12b-1 Fee None 0.10%
Other Expenses 0.19% 0.19%
Total Fund Operating Expenses 0.81% 0.91%
<PAGE>
Benefits To Existing Shareholders Of The Total Return Fund
In addition to ^ benefitting the Fund and INVESCO, adoption of the Plan
will benefit Fund shareholders.
First, as noted above, it is important to understand that the Plan is
PROSPECTIVE in nature and will ONLY be assessed based on New Assets of the Fund
^ after the Plan is implemented. Therefore, the initial increase in the expenses
of the Fund ^ is expected to be substantially less than the 0.25% maximum amount
for which approval is sought, because payments will be made only as to New
Assets added on or after the date on which the Plan is implemented. As the
proportion of the Fund's New Assets on or after that date to the total Fund
assets increases, the actual expenses caused by Plan payments also will increase
(but in no event will exceed the annual rate of 0.25% of the average daily net
assets of the Fund).
The Board and INVESCO believe that there is a reasonable likelihood that
there will be benefits to existing shareholders, including:
o Enhanced marketing efforts, if successful, should result in an
increase in net assets through the sale of additional shares and
afford greater resources with which to pursue the investment
objectives of the ^ Fund;
o The sale of additional shares reduces the likelihood that redemption
of shares will require the liquidation of the Fund's securities in
amounts and at times that are disadvantageous for investment
purposes and, therefore, disadvantageous to the remaining
shareholders;
o The positive effect which increased Fund assets will have on its
revenues could allow INVESCO:
o To have greater resources to make the financial commitments
necessary to continue to improve the quality and level of Fund
and shareholder services (in both systems and personnel) that
Fund shareholders have come to expect;
o To increase the number and type of mutual funds available to
investors from INVESCO (and support them in their infancy),
and thereby expand the investment choices available to all
shareholders;
o To acquire and retain talented employees who desire to be
associated with a growing organization.
^ Moreover, increased Fund assets may result in reducing each investor's
share of certain expenses through economies of scale (e.g., allocating fixed
expenses over a larger asset base), thereby partially offsetting the costs of
the Plan. To the extent that Fund assets are increased as the result of
increased sales, breakpoints in the investment advisory fee schedule (i.e.,
asset levels at which the investment advisory fee rate is reduced) may be
reached which would have the effect of reducing the Fund's management fee. This,
however, may not necessarily lead to a reduction in a Fund's overall expense
ratio compared to the Fund's expense ratio prior to implementation of the Plan.
^ IFG has voluntarily agreed to reduce its management fee from 0.50% to 0.45% on
assets of the Fund in excess of $2 billion, but there is no guarantee that
further such voluntary reductions will occur, whether or not the Plan is
adopted. As of February 28, 1998, the net assets of the Total Return Fund were
$2,326,282,214.
<PAGE>
Although INVESCO believes that there is a reasonable likelihood that these
benefits to shareholders will occur, INVESCO can make no guarantee that these
benefits will have any impact on investment performance of the Fund.
Protections Afforded Shareholders Under The Proposed Plan
The proposed Plan is described in detail below. However, the Board and
INVESCO believe that shareholders should be aware of certain protections that
are either in the proposed Plan itself or are embedded in the proposed Plan
under the terms of Rule 12b-1 under the 1940 Act.
No Carryover Of Expenses
The proposed Plan does NOT permit carrying over distribution expenses in
excess of the above 25 basis points to subsequent periods. As you may know, many
distribution plans of other mutual funds permit the carrying over of such excess
expenses (subject to the approval of those funds' boards), and the resultant
buildup of large expense accruals subject to compensation. Building up of large
expense accruals is a major complaint that is often raised concerning the
operation of distribution plans.
Quarterly Review By The Board Of Trustees
INVESCO will be required to submit reports to the Board on a quarterly
basis concerning the marketing expenses that have been compensated under the
Plan; and, very importantly, the Trustees will be able to terminate the Plan at
any time, which would terminate subsequent Plan payments. The Board must approve
the continuation of the Plan annually, or the Plan will terminate automatically
along with the payments under it by the Fund.
Description Of The Plan
On February 3, 1998, the Board adopted the proposed Plan, subject to
approval by shareholders of the Fund. A copy of the Plan is attached as Exhibit
A. The distribution and service expenses borne by the Fund will be in addition
to the distribution expenses that INVESCO currently bears, and that it intends
to continue bearing, pursuant to a commitment INVESCO has made to the INVESCO
Mutual Funds. The Plan will obligate INVESCO to submit quarterly reports of
expenditures under the Plan to the Board. Such quarterly reports will be
reviewed by the Board, including a majority of the Independent Trustees. In
addition, INVESCO has made a commitment to the Trustees to provide them with the
proposed annual budget for its marketing efforts on behalf of the INVESCO Mutual
Funds, including the Fund.
The Fund is authorized under the proposed Plan to use its assets to
finance certain activities relating to the distribution of its shares to
investors. Under the Plan, monthly payments may be made by the Fund to IDI to
permit it, at IDI's discretion, to engage in certain activities, and provide
certain services approved by the Board in connection with the distribution of
the Fund's shares to investors. These activities and services may include the
payment of compensation (including incentive compensation and/or continuing
compensation based on the amount of customer assets maintained in the Fund) to
securities dealers and other financial institutions and organizations, which may
include INVESCO-affiliated companies, to obtain various distribution-related
and/or administrative services (except administrative services already provided
under separate agreements with INVESCO-affiliated companies) for the Fund. Such
services may include, among other things, processing new shareholder account
applications, preparing and transmitting to the Fund's Transfer Agent computer
processable tapes of all transactions by customers, providing recordkeeping
administration for full service 401(k) plans, and serving as the primary source
of information to customers in answering questions concerning the Fund and their
transactions with the Fund.
<PAGE>
In addition, other permissible activities and services under the Plan
include advertising, the preparation, printing and distribution of sales
literature, printing and distributing prospectuses to prospective investors, and
such other services and promotional activities for the Fund as may from time to
time be agreed upon by the Trust and the Board, including public relations
efforts and marketing programs to communicate with investors and prospective
investors. These services and activities may be conducted by the staff of
INVESCO or its affiliates or by third parties.
Under the Plan, the Trust's payments to IDI on behalf of the Fund are
limited to an amount computed at an annual rate of 0.25% of the Fund's average
net assets added after the Plan is implemented. IDI is not entitled to payment
for overhead expenses under the Plan, but may be paid for all or a portion of
the compensation paid for salaries and other employee benefits to the personnel
of IDI whose primary responsibilities involve marketing shares of the INVESCO
Mutual Funds, including the Fund. Payments by the Fund under the Plan, for any
month, may be made to compensate IDI for permissible activities engaged in and
services provided by IDI during the rolling 12-month period in which that month
falls. Any obligations incurred by IDI in excess of the limitations described
above will not be paid by the Fund under the Plan, and will be borne by IDI. In
addition, IDI may from time to time make additional payments from its revenues
to securities dealers, financial advisers and financial institutions that
provide distribution-related and/or administrative services for the Fund. No
further payments will be made by the Fund under the Plan in the event of the
Plan's termination. Payments made by the Fund may not be used to finance
directly the distribution of shares of any other Fund of the Trust or other
mutual fund advised by IFG.^ However, payments received by IDI which are not
used to finance the distribution of shares of the Fund become part of IDI's
revenues and may be used by IDI for activities that promote distribution of any
of the mutual funds advised by IFG. Subject to review by the Fund's Trustees,
payments made by the Fund under the Plan for compensation of marketing
personnel, as noted above, are based on an allocation formula designed to ensure
that all such payments are appropriate.
INVESCO will bear any distribution- and service-related expenses in excess
of the amounts which are paid pursuant to the Plan. The Plan also authorizes any
financing of distribution which may result from INVESCO's use of its own
resources, including profits from investment advisory fees received from the
Fund, provided that such fees are legitimate and not excessive.
The Plan is subject to the requirements of Rule 12b-1 under the 1940 Act.
The Plan has been approved by the Trust's Board, including all of the
Independent Trustees present at the meeting at which the Plan was considered,
and is being submitted to the shareholders of the Fund for approval at this
shareholders' meeting. Under this Rule, the Board must review expenditures under
the Plan no less often than quarterly, and the Plan may continue in effect only
so long as such continuance is approved at least annually by the Board,
including a majority of the Independent Trustees. A material amendment to the
Plan requires approval by the Board, including a majority of the Independent
Trustees, and any amendment which would materially increase the amount which the
Fund may expend under the Plan also requires approval by a majority of the
outstanding shares of the Fund. The Plan and any agreements relating to its
implementation may be terminated, in the case of the Plan, at any time, and in
case of any agreements, upon sixty days' written notice to the other party, by
vote of a majority of the Independent Trustees or by the vote of a majority of
the outstanding shares of the Fund. Such agreements will also terminate
automatically if assigned. So long as the Plan continues in effect, the
selection and nomination of the disinterested Trustees of the Trust are
committed to the discretion of the Independent Trustees.
<PAGE>
Basis Of Board Of Trustees' Recommendations
The Independent Trustees had available to them the assistance of outside
legal counsel throughout the process of determining whether to approve the Plan.
Prior to and during the February 3, 1998 meeting, the Independent Trustees
requested and received all information they deemed necessary to enable them to
determine whether the Plan is in the best interests of the Trust, the Fund and
its shareholders. At the meeting, the Independent Trustees reviewed and
discussed materials furnished by Fund management and also met with
representatives of INVESCO.
In connection with their consideration of the proposed Plan, the Trustees
were furnished with a draft of the Plan and related materials, including a
memorandum from INVESCO, which outlined the uses and benefits of distribution
plans under Rule 12b-1 of the 1940 Act currently being used in the mutual fund
industry, and certain data concerning such plans prepared by IFG. In addition,
the Trust's legal counsel provided additional information, summarized the
provisions of the proposed Plan, and discussed the legal and regulatory
considerations in adopting such Plan.
In approving the Plan, the Trustees determined, in the exercise of their
business judgment and in light of their fiduciary duties under state law and the
1940 Act, that, based upon the material requested and evaluated by them, the
Plan is reasonably likely to benefit the Fund and its shareholders.
The Trustees considered various factors relevant to the Fund's situation,
including the investment and sales history of the Fund, the Fund's marketing
experience using IFG/IDI as distributor, possible ways in which sales of shares
could be increased, and the effect of the proposed Plan on the Fund and its
shareholders. The Board also noted that while shareholders of several INVESCO
Mutual Funds did not approve distribution plans similar to the Proposed Plan in
1990, shareholders of several others did approve such plans. During the last
five years that those current Rule 12b-1 Plans have been in effect, there have
been positive results. The table below, prepared by INVESCO, summarizes certain
of these results by noting the percentage increase in gross sales during
calendar years 1993, 1994, 1995, 1996 and 1997 of both the INVESCO 12b-1 and
non-12b-1 Mutual Funds which were in existence when the current 12b-1 Plans were
instituted in 1990. These figures were calculated by comparing the gross sales
of the relevant INVESCO 12b-1 and non-12b-1 Funds over these years to these
Funds' gross sales during calendar year 1990. They include exchanges and
dividend reinvestments, but do not include information with respect to INVESCO
Value Trust, which was not distributed by INVESCO in 1990.
Percent of Gross Sales Increase
Type of Funds
1993 1994 1995 1996 1997
INVESCO 538.96% 442.01% 307.33% 331.58% 384.32%
12b-1 Funds
INVESCO 225.79% 122.27% 147.45% 291.47% 319.99%
Non-12b-1 Funds
These figures show that the gross sales of the INVESCO 12b-1 Mutual Funds
compare favorably to the gross sales of the INVESCO Mutual Funds without such
plans over this entire time period. In short, the addition of 12b-1 plans for
certain of the INVESCO Mutual Funds in 1990 ^ appears to have contributed to
increased gross sales of those INVESCO Mutual Funds, compared to the INVESCO
Mutual Funds without such plans.
It was also represented to the Board that there would be no diminution in
the promotional and marketing efforts currently made by INVESCO in connection
with promoting sales of shares of the Fund. At the meeting, it was suggested
that the monies made available under the proposed Plan could be used for direct
<PAGE>
support of targeted advertising and promotional campaigns for the Fund in
specific regional areas, as well as for general promotion and advertising of the
Fund. The Trustees specifically questioned IFG as to why it believed adoption of
the proposed Plan could be expected to stimulate additional sales of shares of
the Fund, thereby assisting the Fund by increasing its asset base. After
discussion, it was agreed that it was reasonable to expect that an enhanced
marketing effort by INVESCO on behalf of the Fund, together with the ability to
compensate third party intermediaries for helping to sell the Fund's shares
and/or providing services to Fund shareholders, would have a reasonable
likelihood of producing these results. The Board also placed importance on the
fact that the Board and, in particular, the Independent Trustees, would be able
to monitor the nature, manner and amount of expenditures of the Fund under the
Plan by reviewing the quarterly reports of IDI's distribution expenditures that
IDI is obligated to provide the Board, and by being able to terminate the Plan,
and thereby end all obligations of the Fund to make payments thereunder, at any
time.
In approving the proposed Plan, the Board took into account, among other
things, the following factors: the nature and causes of the problems or
circumstances which made implementation of the Plan advisable and appropriate;
the way in which the Plan would address these problems or circumstances,
including the nature and potential amount of the expenditures; the relationship
of such expenditures to the overall cost structure of the Fund; the nature of
the anticipated benefits; the time it might take for those benefits to be
achieved; the merits of possible alternative plans; the interrelationship
between the Plan and the activities of INVESCO; and the effect of the Plan on
existing shareholders.
The Trustees concluded that there was a reasonable likelihood that the
Fund and its shareholders will benefit from the adoption of the Plan in the
following ways:
o The sale of additional shares reduces the likelihood that redemption of
shares will require the liquidation of portfolio securities in amounts and
at times that are disadvantageous for investment purposes;
o Enhanced marketing efforts, if successful, should result in an increase
in net assets and afford greater flexibility in pursuing the investment
objectives of the Fund;
o Increased ^ assets of the Fund could allow INVESCO to: have greater
resources to make the financial commitments necessary to improve the
quality and level of Fund and shareholder services (in both systems and
personnel); increase the number and type of mutual funds in the group (and
support them in their infancy) and thereby expand the investment choices
available to all shareholders; and acquire and retain talented employees
who desire to be associated with a growing organization; and
o The cost to the Fund of the Plan would be partly offset to the extent that
increased Fund assets result in economies of scale (e.g., sharing fixed
expenses over a larger asset base ^).
The Trustees concluded that the various possible benefits described above
would be of substantially equal significance to both new and existing
shareholders of the Fund, and thus no unfair burden will fall on any group of
Fund shareholders from adoption of the proposed Plan. In addition, while INVESCO
will benefit from increased management fees as a result of growth in Fund
assets, the Trustees concluded that such benefit to INVESCO will not be
disproportionate to the above-described anticipated benefits to the Fund and
shareholders of the Fund resulting from growth in Fund assets. Finally, while
adoption of the proposed Plan will increase the expense ratio of the Fund by the
amount of the distribution payments from assets of the Fund (less any economies
of scale attributable to the Plan), the Trustees were satisfied that the
increased expense ratio will not be out of line with the expense ratios of
comparable mutual funds.
<PAGE>
The Trustees recognized that there is no assurance that the expenditures
of assets of the Fund to finance distribution of shares of the Fund will result
in additional sales of shares or in an increase in the net assets of the Fund,
upon which the above benefits depend. The Trustees determined, however, that
there is a reasonable likelihood that one or more of such benefits will result
and that ^ the Trustees will be in a position to monitor the distribution
expenses of the Fund and to evaluate the benefit of such expenditures in
deciding whether to continue the Plan.
Vote Required
As provided under the 1940 Act, approval of the Plan with respect to the
Fund will require the affirmative vote of a majority of the outstanding shares
of the Fund voting separately as a class. Such a majority is defined in the 1940
Act as the lesser of: (a) 67% or more of the shares present at such meeting, if
the holders of more than 50% of the outstanding shares of the Fund are present
or represented by proxy, or (b) more than 50% of the total outstanding shares of
the Fund.
If the shareholders of the Fund fail to approve the Plan, the Plan will
not go into effect for the Fund, and the Fund will not participate in the
enhanced advertising and marketing effort by IDI on behalf of the INVESCO Mutual
Funds.
THE TRUSTEES OF THE TRUST UNANIMOUSLY RECOMMEND THAT THE TOTAL
RETURN FUND'S SHAREHOLDERS VOTE TO APPROVE THE PLAN.
INFORMATION CONCERNING ADVISER, SUB-ADVISER, DISTRIBUTOR AND AFFILIATED
COMPANIES
IFG, a Delaware corporation, serves as the Trust's investment adviser, and
provides other services to the Trust. IDI, a Delaware corporation that serves as
the Fund's distributor, is a wholly-owned subsidiary of IFG. ICM^ serves as the
Fund's sub-adviser. IFG is a wholly-owned subsidiary of INVESCO North American
Holdings, Inc. ("INAH"), 1315 Peachtree Street, N.E., Atlanta, Georgia 30309.
INAH is an indirect wholly-owned subsidiary of AMVESCAP PLC ("AMVESCAP").(1)
The corporate headquarters of AMVESCAP are located at 11 Devonshire Square,
London EC2M 4YR, England. IFG's and IDI's offices are located at 7800 East Union
Avenue, Denver, Colorado 80237. ICM's offices are located at 1315 Peachtree
Street, N.E., Atlanta, Georgia 30309. IFG currently serves as investment adviser
of 14 open-end investment companies having aggregate net assets of $16.7 billion
as of December 31, 1997.
The principal executive officers and directors of IFG and their principal
occupations are:
Dan J. Hesser, Chairman of the Board, ^ also, Director of IDI; Mark H.
Williamson, President, CEO and Director, also, President and ^ CEO of IDI; and
Charles P. Mayer, Director and Senior Vice President, also, Senior Vice
President and Director of IDI^.
The address of each of the foregoing officers and directors is 7800 East
Union Avenue, Denver, Colorado 80237^.
- --------
1
The intermediary companies between INAH and AMVESCAP are as follows:
INVESCO, Inc., INVESCO Group Services, Inc. and INVESCO North American Group,
Ltd., each of which is wholly-owned by its immediate parent.
<PAGE>
INVESCO Capital Management ("ICM") serves as the sub-adviser to the Funds.
ICM is a wholly-owned subsidiary of INAH. IFG, as investment adviser, has
contracted with ICM for investment advisory and research services on behalf of
the Intermediate Government Bond Fund, the Total Return Fund and the Value
Equity Fund. ICM has the primary responsibility for providing portfolio
investment advisory services to these Funds. ICM also acts as adviser to the
INVESCO Treasurer's Series Trust and as a sub-adviser to one of the INVESCO
Variable Investment Funds, Inc. and offers investment services to U.S.
institutions and wealthy individuals.
The principal executive officers and directors of ICM and their principal
occupations are as follows:
Edward D. Mitchell, Jr., Chairman of the Board; Wendell M. Starke,
Director; Frank M. Bishop, President, CEO and Director^; Terrence J. Miller,
Deputy President and Director; Timothy J. ^ Culler, Chief Investment Officer,
Vice President and Director; Thomas W. Norwood, Vice President and Director;
Donald B. Shallee, Vice President and Director;^ Thomas L. Shields, Vice
President and Director; Stephen A. Dana, Vice President and Director; A. D.
Frazier, Director; Luis A. Aguilar, Executive Vice President and Assistant
Secretary; Julie Skaggs, Vice President, Secretary and General Counsel; Deborah
Lamb, Assistant Secretary; David Hartley, Chief Financial Officer and Treasurer.
The address of each of the foregoing officers and directors is 1315
Peachtree Street, N.E., Atlanta, Georgia 30309.
Pursuant to an Administrative Services Agreement between the Trust and
IFG, IFG provides administrative services to the Trust, including sub-accounting
and recordkeeping services and functions. During the fiscal year ended August
31, 1997, the Trust paid IFG total compensation of $295,965 in payment for such
services; $224,249 of such compensation was paid ^ IFG by the Total Return Fund.
During the fiscal year ended August 31, 1997, the Trust paid IFG, which
also serves as the Trust's registrar, transfer agent and dividend disbursing
agent, total compensation of $3,193,607 for such services; $2,332,422 of such
compensation was paid IFG by the Total Return Fund. In calculating the amount of
the advisory fee paid by the Fund to IFG, it should be noted that IFG
voluntarily has agreed to reduce its 0.50% fee on all Fund assets in excess of
$2 billion, to an annual fee of .45% on Fund assets in excess of that amount, in
order to lower Fund expenses. As of March 2, 1998, the net assets of the Total
Return Fund were ^ $2,327,464,434.
<PAGE>
SHARE OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND FUND MANAGEMENT
The following table sets forth, as of the Record Date, the beneficial
ownership of the Fund's issued and outstanding shares of beneficial interest by
each 5% or greater shareholder.
- -----------------------------
Percent of
Name and Address Amount & Nature of Shares of
of Beneficial Owner Beneficial Ownership(2) Beneficial Interest
- ------------------- --------------------- -------------------
Charles Schwab & Co. Inc. 13,956,965.4340 17.94%
Special Custody Acct. For The
Exclusive Benefit of Customers
Attn: Mutual Funds
101 Montgomery St.
San Francisco, CA 94104-4122
Connecticut General Life Ins. 11,229,812.3600 14.43%
c/o Liz Pezda M-110
P.O. Box 2975
Hartford, CT 06104-2975
As of the Record Date, officers and ^ Trustees of the Trust, as a group,
beneficially owned less than 1% of the Trust's outstanding shares and less than
1% of ^ the Fund's outstanding shares.
OTHER BUSINESS
The management of the Trust has no business to bring before the Meeting
other than the matters described above. Should any other business be presented
at the Meeting, it is the intention of the persons named in the accompanying
proxy to vote on such matters in accordance with their best judgment.
- --------
2
Each beneficial owner named above shares investment power with respect to
the shares listed next to its respective row, but its customers retain sole
voting power.
<PAGE>
SHAREHOLDER PROPOSALS
The Trust does not hold annual meetings of shareholders. Shareholders
wishing to submit proposals for inclusion in a proxy statement and form of proxy
for a subsequent shareholders' meeting should send their written proposals to
the Secretary of the Trust, 7800 East Union Avenue, Denver, Colorado 80237. The
Trust has not received any shareholder proposals to be presented at this
Meeting.
By Order of the Board of Trustees,
/s/ Glen A. Payne
-------------------
Glen A. Payne
Secretary
March ^ 30, 1998
<PAGE>
EXHIBIT A
PLAN AND AGREEMENT OF DISTRIBUTION PURSUANT TO RULE 12b-1
PLAN AND AGREEMENT made as of the [______] day of [________], 1998, by and
between INVESCO VALUE TRUST, a Massachusetts business trust (hereinafter called
the "Trust") and INVESCO DISTRIBUTORS, Inc., a Delaware corporation ("INVESCO").
WHEREAS, the Trust engages in business as an open-end management
investment company, and is registered as such under the Investment Company Act
of 1940, as amended (the "Act"); and
WHEREAS, the Trust desires to finance the distribution of the shares of
one of its three classes or series of common stock, namely, INVESCO Total Return
Fund, which represents an interest in a separate portfolio of investments,
together with any additional such classes or series that may hereafter be
offered to the public by INVESCO Total Return Fund (the "Fund"), in accordance
with this Plan and Agreement of Distribution pursuant to Rule 12b-1 under the
Act (the "Plan and Agreement"); and
WHEREAS, INVESCO desires to be retained to perform services in accordance
with such Plan and Agreement and on said terms and conditions; and
WHEREAS, this Plan and Agreement has been approved by a vote of the board
of trustees of the Trust, including a majority of the trustees who are not
interested persons of the Trust, as defined in the Act, and who have no direct
or indirect financial interest in the operation of this Plan and Agreement (the
"Disinterested Trustees") cast in person at a meeting called for the purpose of
voting on this Plan and Agreement;
NOW, THEREFORE, the Trust hereby adopts the Plan set forth herein and the
Trust and INVESCO hereby enter into this Agreement pursuant to the Plan in
accordance with the requirements of Rule 12b-1 under the Act, and provide and
agree as follows:
1. The Plan is defined as those provisions of this document by which the
Trust adopts a Plan pursuant to Rule 12b-1 under the Act and
authorizes payments as described herein. The Agreement is defined as
those provisions of this document by which the Trust retains INVESCO
to provide distribution services beyond those required by the General
Distribution Agreement between the parties, as are described herein.
The Trust may retain the Plan notwithstanding termination of the
Agreement. Termination of the Plan will automatically terminate the
Agreement. The Trust is hereby authorized to utilize the assets of the
Trust to finance certain activities in connection with distribution of
the Trust's shares.
2. Subject to the supervision of the board of trustees, the Trust hereby
retains INVESCO to promote the distribution of shares of the Fund by
providing services and engaging in activities beyond those
specifically required by the Distribution Agreement between the Trust
and INVESCO and to provide related services. The activities and
services to be provided by INVESCO hereunder shall include one or more
of the following: (a) the payment of compensation (including trail
commissions and incentive compensation) to securities dealers,
financial institutions and other organizations, which may include
INVESCO-affiliated companies, that render distribution and
administrative services in connection with the distribution of the
shares of the Fund; (b) the printing and distribution of reports and
<PAGE>
prospectuses for the use of potential investors in the Fund; ^(c) the
preparing and distributing of sales literature; (d) the providing of
advertising and engaging in other promotional activities, including
direct mail solicitation, and television, radio, newspaper and other
media advertisements; and (e) the providing of such other services and
activities as may from time to time be agreed upon by the Trust. Such
reports and prospectuses, sales literature, advertising and
promotional activities and other services and activities may be
prepared and/or conducted either by INVESCO's own staff, the staff of
INVESCO-affiliated companies, or third parties.
3. INVESCO hereby undertakes to use its best efforts to promote sales of
shares of the Fund to investors by engaging in those activities
specified in paragraph (2) above as may be necessary and as it from
time to time believes will best further sales of such shares.
4. The Fund is hereby authorized to expend, out of its assets, on a
monthly basis, and shall pay INVESCO to such extent, to enable INVESCO
at its discretion to engage over a rolling twelve-month period (or the
rolling twenty-four month period specified below) in the activities
and provide the services specified in paragraph (2) above, an amount
computed at an annual rate of 0.25 of 1% of the average daily net
assets of the Fund during the month. The amount paid by the Fund under
the Plan and Agreement is calculated on the amount of new assets (new
sales of shares, exchanges into the Fund, and reinvestments of
dividends and capital gain distributions) of the Fund after
_________________, 1998, regardless of any redemptions or capital
appreciation or depreciation after such date. INVESCO shall not be
entitled hereunder to payment for overhead expenses (overhead expenses
defined as customary overhead not including the --- costs of INVESCO's
personnel whose primary responsibilities involve marketing of the
INVESCO Funds). Payments by the Fund hereunder, for any month, may be
used to compensate INVESCO for: (a) activities engaged in and services
provided by INVESCO during the rolling twelve-month period in which
that month falls, or (b) to the extent permitted by applicable law,
for any month during the first twenty-four months following a Fund's
commencement of operations, activities engaged in and services
provided by INVESCO during the rolling twenty-four month period in
which that month falls, and any obligations incurred by INVESCO in
excess of the limitation described above shall not be paid for out of
Fund assets. The Fund shall not be authorized to expend, for any
month, a greater percentage of its assets to pay INVESCO for
activities engaged in and services provided by INVESCO during the
rolling twenty-four month period referred to above than it would
otherwise be authorized to expend out of its assets to pay INVESCO for
activities engaged in and services provided by INVESCO during the
rolling twelve-month period referred to above. No payments will be
made by the Trust hereunder after the date of termination of the Plan
and Agreement.
5. To the extent that obligations incurred by INVESCO out of its own
resources to finance any activity primarily intended to result in the
sale of shares of the Fund, pursuant to this Plan and Agreement or
otherwise, may be deemed to constitute the indirect use of Fund
assets, such indirect use of Fund assets is hereby authorized in
addition to, and not in lieu of, any other payments authorized under
this Plan and Agreement.
<PAGE>
6. The Treasurer of INVESCO shall provide to the board of trustees of the
Trust, at least quarterly, a written report of all moneys spent by
INVESCO on the activities and services specified in paragraph (2)
above pursuant to the Plan and Agreement. Each such report shall
itemize the activities engaged in and services provided by INVESCO to
a Fund as authorized by the penultimate sentence of paragraph (4)
above. Upon request, but no less frequently than annually, INVESCO
shall provide to the board of trustees of the Trust such information
as may reasonably be required for it to review the continuing
appropriateness of the Plan and Agreement.
7. This Plan and Agreement shall each become effective immediately upon
approval by a vote of a majority of the outstanding voting securities
of the Trust as defined in the Act, and shall continue in effect until
[______________], 1998 unless terminated as provided below.
Thereafter, the Plan and Agreement shall continue in effect from year
to year, provided that the continuance of each is approved at least
annually by a vote of the board of Trustees of the Trust, including a
majority of the Disinterested Trustees, cast in person at a meeting
called for the purpose of voting on such continuance. The Plan may be
terminated at any time, without penalty, by the vote of a majority of
the Disinterested Trustees or by the vote of a majority of the
outstanding voting securities of the Fund. INVESCO, or the Trust, by
vote of a majority of the Disinterested Trustees or of the holders of
a majority of the outstanding voting securities of the Fund, may
terminate the Agreement under this Plan as to the Fund, without
penalty, upon 30 days' written notice to the other party. In the event
that neither INVESCO nor any affiliate of INVESCO serves the Trust as
investment adviser, the agreement with INVESCO pursuant to this Plan
shall terminate at such time. The board of trustees may determine to
approve a continuance of the Plan, but not a continuance of the
Agreement, hereunder.
8. So long as the Plan remains in effect, the selection and nomination of
persons to serve as trustees of the Trust who are not "interested
persons" of the Trust shall be committed to the discretion of the
trustees then in office who are not "interested persons" of the Trust.
However, nothing contained herein shall prevent the participation of
other persons in the selection and nomination process, provided that a
final decision on any such selection or nomination is within the
discretion of, and approved by, a majority of the trustees of the
Trust then in office who are not "interested persons" of the Trust.
9. This Plan may not be amended to increase the amount to be spent by the
Fund hereunder without approval of a majority of the outstanding
voting securities of the Fund. All material amendments to the Plan and
Agreement must be approved by the vote of the board of trustees of the
Trust, including a majority of the Disinterested Trustees, cast in
person at a meeting called for the purpose of voting on such
amendment.
10. To the extent that this Plan and Agreement constitutes a Plan of
Distribution adopted pursuant to Rule 12b-1 under the Act it shall
remain in effect as such, so as to authorize the use by the Fund of
its assets in the amounts and for the purposes set forth herein,
notwithstanding the occurrence of an "assignment," as defined by the
Act and the rules thereunder. To the extent it constitutes an
agreement with INVESCO pursuant to a plan, it shall terminate
automatically in the event of such "assignment." Upon a termination of
the agreement with INVESCO, the Fund may continue to make payments
pursuant to the Plan only upon the approval of a new agreement under
this Plan and Agreement, which may or may not be with INVESCO, or the
adoption of other arrangements regarding the use of the amounts
authorized to be paid by the Fund hereunder, by the Trust's board of
trustees in accordance with the procedures set forth in paragraph 7
above.
<PAGE>
11. The Trust shall preserve copies of this Plan and Agreement and all
reports made pursuant to paragraph 6 hereof, together with minutes of
all board of trustees meetings at which the adoption, amendment or
continuance of the Plan were considered (describing the factors
considered and the basis for decision), for a period of not less than
six years from the date of this Plan and Agreement, or any such
reports or minutes, as the case may be, the first two years in an
easily accessible place.
12. This Plan and Agreement shall be construed in accordance with the laws
of the State of Colorado and applicable provisions of the Act. To the
extent the applicable laws of the State of Colorado, or any provisions
herein, conflict with the applicable provisions of the Act, the latter
shall control.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Plan and Agreement on the _th day of __________, 1998.
INVESCO VALUE TRUST
By: _________________________
Dan J. Hesser, President
ATTEST: ________________________
Glen A. Payne, Secretary
INVESCO DISTRIBUTORS, INC.
By: _________________________
Ronald L. Grooms,
Senior Vice President
ATTEST: ________________________
Glen A. Payne, Secretary
<PAGE>
INVESCO VALUE TRUST
INVESCO Total Return Fund
PROXY FOR THE SPECIAL MEETING OF SHAREHOLDERS
May 6, 1998
The undersigned hereby appoints Fred A. Deering, Dan J. Hesser and Glen A.
Payne, and each of them, proxy for the undersigned, with the power of
substitution, to vote with the same force and effect as the undersigned at the
Special Meeting of the Shareholders of the INVESCO Total Return Fund (the
"Fund") of INVESCO Value Trust, to be held at the Hyatt Regency Tech Center,
7800 E. Tufts Avenue, Denver, Colorado 80237, on Wednesday, May 6, 1998 at 10:00
a.m. (Mountain Time) and at any adjournment thereof, upon the matters set forth
below, all in accordance with, and as more fully described in, the Notice of
Special Meeting and Proxy Statement, dated March 30, 1998, receipt of which is
hereby acknowledged.
In their discretion, the Proxies are authorized to vote upon such other business
as may properly come before the meeting or any adjournment thereof.
This proxy, when properly executed, will be voted in the manner directed herein
by the undersigned shareholders. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED "FOR" PROPOSALS 1 AND 2.
TO BE SURE YOU ARE REPRESENTED, PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY
IN THE ACCOMPANYING ENVELOPE AS SOON AS POSSIBLE. THANK YOU.
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: _____
INVTRF KEEP THIS PORTION FOR YOUR RECORDS
- --------------------------------------------------------------------------------
DETACH AND RETURN THIS PORTION ONLY
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED
INVESCO VALUE TRUST
INVESCO Total Return Fund
THIS PROXY IS SOLICITED BY THE BOARD OF TRUSTEES, WHICH RECOMMENDS A VOTE "FOR":
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.
Vote on Proposal For Against Abstain
1. Proposal to approve a change in the ____ ____ ____
investment policies of the Fund to
permit more than five percent of the
Fund's assets to be invested in a
single issuer, provided that such
purchases do not exceed twenty-five
percent of the Fund's assets.
2. Proposal to approval a Plan and ____ ____ ____
Agreement of Distribution (the
"Plan") for the Fund.
- --------------------------------------- ------------------------------------
Signature [PLEASE SIGN WITHIN BOX] Date Signature (Joint Owners) Date
