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:
/ x/ Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/ / Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
INVESCO Value Trust
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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 VALUE EQUITY FUND
INVESCO TOTAL RETURN FUND
(EACH A SERIES OF INVESCO VALUE TRUST)
March 23, 1999
Dear Shareholder:
The attached proxy materials seek your approval to convert the INVESCO
Value Equity Fund and the INVESCO Total Return Fund from two separate series of
INVESCO Value Trust into two separate series of two different INVESCO entities,
each of which is organized as a Maryland corporation, to make certain changes in
the fundamental policies of those Funds, to elect trustees of INVESCO Value
Trust and to ratify the appointment of PricewaterhouseCoopers LLP as independent
accountants of each Fund.
YOUR BOARD OF TRUSTEES RECOMMENDS A VOTE FOR ALL PROPOSALS. The conversion
of the Funds, which is part of a proposed conversion of other INVESCO Funds that
invest in the equity or equity and debt securities of domestic issuers, will
streamline and render more efficient the administration of the Funds. The
changes to the fundamental investment restrictions of the Funds have been
approved by the board of trustees in order to simplify and modernize the Funds'
fundamental investment restrictions and make them more uniform with those of the
other INVESCO Funds. The attached proxy materials provide more information about
the proposed conversion, as well as the proposed changes in fundamental
investment restrictions and the other matters you are being asked to vote upon.
YOUR VOTE IS IMPORTANT NO MATTER HOW MANY SHARES YOU OWN. Voting your
shares early will permit the Funds to avoid costly follow-up mail and telephone
solicitation. After reviewing the attached materials, please complete, date and
sign your proxy card and mail it in the enclosed return envelope promptly. As an
alternative to using the paper proxy card to vote, you may vote by telephone, by
facsimile, through the Internet, or in person.
Very truly yours,
Mark H. Williamson
President
INVESCO Value Trust
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INVESCO VALUE EQUITY FUND
INVESCO TOTAL RETURN FUND
(EACH A SERIES OF INVESCO VALUE TRUST)
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NOTICE OF
SPECIAL MEETING OF SHAREHOLDERS
MAY 20, 1999
--------------------
To The Shareholders:
NOTICE IS HEREBY GIVEN that a special meeting of the shareholders of
INVESCO Value Equity Fund ("Value Equity Fund") and INVESCO Total Return Fund
("Total Return Fund" and, together with Value Equity Fund, "Funds"), each a
series of INVESCO Value Trust ("Value Trust"), will be held on May 20, 1999, at
10:00 a.m., Mountain Time, at the offices of INVESCO Funds Group, Inc., 7800
East Union Avenue, Denver, Colorado, for the following purposes:
(1) To approve an Agreement and Plan of Conversion and Termination
providing for the conversion of Value Equity Fund from a series of
Value Trust into a separate series of INVESCO Stock Funds, Inc. and
an Agreement and Plan of Conversion and Termination providing for
the conversion of Total Return Fund from a series of Value Trust
into a separate series of INVESCO Combination Stock & Bond Funds,
Inc.;
(2) To approve certain changes to the fundamental investment
restrictions of each Fund;
(3) To elect trustees of Value Trust;
(4) To ratify the selection of PricewaterhouseCoopers LLP as independent
accountants of each Fund; and
(5) To transact such other business as may properly come before the
meeting or any adjournment thereof.
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You are entitled to vote at the meeting and any adjournment thereof if you
owned shares of either 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, DATE, SIGN AND RETURN THE ENCLOSED PROXY
CARD IN THE ENCLOSED POSTAGE-PAID ENVELOPE.
By order of the Board of Trustees,
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, date
and sign the card, and return it in the envelope provided. IF YOU SIGN, DATE AND
RETURN THE PROXY CARD BUT GIVE NO VOTING INSTRUCTIONS, YOUR SHARES WILL BE VOTED
"FOR" THE PROPOSALS NOTICED ABOVE. In order to avoid the additional expense of
further solicitation, we ask your cooperation in mailing in your proxy card
promptly. As an alternative to using the paper proxy card to vote, you may vote
by telephone, through the Internet, by facsimile machine or in person. To vote
by telephone, please call the toll-free number listed on the enclosed proxy
card. Shares that are registered in your name, as well as shares held in "street
name" through a broker, may be voted via the Internet or by telephone. To vote
in this manner, you will need the 12-digit "control" number that appears on your
proxy card. To vote via the Internet, please access http://www.proxyvote.com on
the World Wide Web. In addition, shares that are registered in your name may be
voted by faxing your completed proxy card to 1-516-254-7564. If we do not
receive your completed proxy card after several weeks, you may be contacted by
our proxy solicitor, Shareholder Communications Corporation. Our proxy solicitor
will remind you to vote your shares or will record your vote over the phone if
you choose to vote in that manner.
Unless proxy cards submitted by corporations and partnerships are signed by
the appropriate persons as indicated in the voting instructions on the proxy
card, they will not be voted.
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INVESCO VALUE EQUITY FUND
INVESCO TOTAL RETURN FUND
(each a series of INVESCO Value Trust)
-----------
PROXY STATEMENT
SPECIAL MEETING OF SHAREHOLDERS
MAY 20, 1999
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VOTING INFORMATION
This Proxy Statement is being furnished to shareholders of INVESCO Value
Equity Fund ("Value Equity Fund") and INVESCO Total Return Fund ("Total Return
Fund" and, together with Value Equity Fund, "Funds"), each a series of INVESCO
Value Trust ("Value Trust"), in connection with the solicitation of proxies from
shareholders of the Funds by the Board of Trustees of Value Trust ("Board") for
use at a special meeting of shareholders to be held on May 20, 1999 ("Meeting"),
and at any adjournment of the Meeting. This Proxy Statement is first being
mailed to shareholders on or about March 23, 1999.
For each Fund, a majority of the Fund's shares outstanding on March 12,
1999 (the "Record Date"), represented in person or by proxy, shall constitute a
quorum and must be present for the transaction of business at the Meeting. If a
quorum is not present at the Meeting or a quorum is present but sufficient votes
to approve one or more of the proposals set forth in this Proxy Statement are
not received, the persons named as proxies may propose one or more adjournments
of the Meeting to permit further solicitation of proxies. Any such adjournment
will require the affirmative vote of a majority of those shares represented at
the Meeting in person or by proxy. The persons named as proxies will vote those
proxies that they are entitled to vote FOR any proposal in favor of such an
adjournment and will vote those proxies required to be voted AGAINST a proposal
against such adjournment. A shareholder vote may be taken on one or more of the
proposals in this Proxy Statement prior to any such adjournment if sufficient
votes have been received with respect to such proposal and it is otherwise
appropriate.
Broker non-votes are shares held in street name for which the broker
indicates that instructions have not been received from the beneficial owners or
other persons entitled to vote and for which the broker does not have
discretionary voting authority. Abstentions and broker non-votes will be counted
as shares present for purposes of determining whether a quorum is present but
will not be voted for or against any adjournment or proposal. Accordingly,
abstentions and broker non-votes effectively will be a vote against adjournment
or against any proposal where the required vote is a percentage of the shares
present or outstanding. Abstentions and broker non-votes will not be counted,
however, as votes cast for purposes of determining whether sufficient votes have
been received to approve a proposal.
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The individuals named as proxies on the enclosed proxy card will vote in
accordance with your directions as indicated on that proxy card, if it is
received properly executed by you or by your duly appointed agent or
attorney-in-fact. If you sign, date and return the proxy card, but give no
voting instructions, your shares will be voted in favor of approval of each of
the proposals and the duly appointed proxies may, in their discretion, vote upon
such other matters as may come before the Meeting. The proxy card may be revoked
by giving another proxy or by letter or telegram revoking the initial proxy. To
be effective, revocation must be received by Value Trust prior to the Meeting
and must indicate your name and account number. If you attend the Meeting in
person you may, if you wish, vote by ballot at the Meeting, thereby canceling
any proxy previously given.
In order to reduce costs, the notices to a shareholder having more than
one account in either 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, Value Equity Fund had _____ shares of common stock
outstanding and Total Return Fund had _______ shares of common stock
outstanding. The solicitation of proxies, the cost of which will be borne half
by INVESCO Funds Group, Inc. ("INVESCO"), the investment adviser and transfer
agent of the Funds, and half by the Funds, will be made primarily by mail but
also may be made by telephone or oral communications by representatives of
INVESCO and INVESCO Distributors, Inc. ("IDI"), the distributor of the INVESCO
group of investment companies ("INVESCO Funds"), none of whom will receive any
compensation for these activities from the Funds or from Shareholder
Communications Corporation, professional proxy solicitors, which will be paid
fees and expenses of up to approximately $28,100 for soliciting services. If
votes are recorded by telephone, Shareholder Communications Corporation will use
procedures designed to authenticate shareholders' identities, to allow
shareholders to authorize the voting of their shares in accordance with their
instructions, and to confirm that a shareholder's instructions have been
properly recorded. You may also vote by mail, by facsimile or through a secure
Internet site. Proxies voted by telephone, facsimile or Internet may be revoked
at any time before they are voted at the Meeting in the same manner that proxies
voted by mail may be revoked.
COPIES OF THE MOST RECENT ANNUAL AND SEMI-ANNUAL REPORTS, INCLUDING
FINANCIAL STATEMENTS, OF VALUE EQUITY FUND AND TOTAL RETURN FUND 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 Value Equity Fund or Total Return
Fund. Trustees and officers of Value Trust own in the aggregate less than 1% of
the shares of either Fund.
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VOTE REQUIRED
Approval of Proposal 1 with respect to each Fund requires the affirmative
vote of a majority of the outstanding shares of that Fund. Approval of Proposal
2 with respect to each Fund requires the affirmative vote of a "majority of the
outstanding voting securities" of that Fund, as defined in the Investment
Company Act of 1940, as amended ("1940 Act"). This means that for each Fund
Proposal 2 must be approved by the lesser of (i) 67% of that Fund's shares
present at a meeting of shareholders if the owners of more than 50% of that
Fund's shares then outstanding are present in person or by proxy or (ii) more
than 50% of that Fund's outstanding shares. The affirmative vote of a majority
of the outstanding voting securities of each Fund present at the Meeting, in
person or by proxy, and of a majority of the outstanding voting securities of
the other series of Value Trust taken at a concurrent meeting of that series, in
the aggregate, is sufficient to approve Proposal 3. Approval of Proposal 4
requires the affirmative vote of a majority of the votes of each Fund present at
the Meeting, provided a quorum is present. Each outstanding full share of each
Fund is entitled to one vote, and each outstanding 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 adjournments of the Meeting to permit further solicitation
of proxies.
PROPOSAL 1. TO APPROVE (A) AN AGREEMENT AND PLAN OF CONVERSION AND
- ---------- TERMINATION ("VALUE EQUITY FUND CONVERSION PLAN") PROVIDING
FOR THE CONVERSION OF VALUE EQUITY FUND FROM A SEPARATE
SERIES OF VALUE TRUST TO A SEPARATE SERIES OF A MARYLAND
CORPORATION (INVESCO STOCK FUNDS, INC.) AND (B) AN
AGREEMENT AND PLAN OF CONVERSION AND TERMINATION ("TOTAL
RETURN FUND CONVERSION PLAN") PROVIDING FOR THE CONVERSION
OF TOTAL RETURN FUND FROM A SEPARATE SERIES OF VALUE TRUST
TO A SEPARATE SERIES OF ANOTHER MARYLAND CORPORATION
(INVESCO COMBINATION STOCK & BOND FUNDS, INC.).
Each Fund is presently organized as a series of Value Trust. The Board,
including a majority of its trustees who are not "interested persons," as that
term is defined in the 1940 Act, of either Value Trust or INVESCO ("Independent
Trustees"), has approved the Value Equity Fund Conversion Plan and the Total
Return Fund Conversion Plan (together, "Conversion Plans") in the forms attached
to this Proxy Statement as Appendix B and Appendix C, respectively. The Value
Equity Fund Conversion Plan provides for the conversion of Value Equity Fund
from a separate series of Value Trust, a Massachusetts business trust, to a
newly established separate series ("Value Equity New Series") of INVESCO Stock
Funds, Inc. ("Stock Funds"), a Maryland corporation ("Value Equity Fund
Conversion"). The Total Return Fund Conversion Plan provides for the conversion
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of Total Return Fund from a separate series of Value Trust to a newly
established separate series ("Total Return New Series" and, together with Value
Equity New Series, "New Series") of INVESCO Combination Stock & Bond Funds, Inc.
("Combination Stock & Bond Funds"), a Maryland corporation ("Total Return Fund
Conversion" and, together with Value Equity Fund Conversion, "Conversions").
Stock Funds and Combination Stock & Bond Funds are collectively the "Companies."
THE PROPOSED CONVERSIONS WILL HAVE NO MATERIAL EFFECT ON SHAREHOLDERS, OFFICERS,
OPERATIONS OR THE MANAGEMENT OF EITHER FUND.
Value Equity New Series and Total Return New Series, neither of which has
yet commenced business operations and each of which was established for the
purpose of effecting the Value Equity Fund Conversion and the Total Return Fund
Conversion, respectively, will carry on the business of Value Equity Fund and
Total Return Fund, respectively, following the Conversions and will have
investment objectives, policies and restrictions identical to those of Value
Equity Fund and Total Return Fund, respectively. The investment objectives,
policies and restrictions of each Fund will not change except as approved by the
shareholders of each Fund as described in Proposal 2 of this Proxy Statement.
Except as described in Appendix D, the rights of the shareholders of each Fund
under state law and its governing documents are expected to remain unchanged
after the Conversions. Shareholder voting rights with respect to Value Trust and
the Companies are currently based on the number of shares owned. The same
individuals serve as trustees of Value Trust and directors of the Companies.
INVESCO, the investment adviser to the Funds, will be responsible for
providing the New Series with various administrative services and supervising
the daily business affairs of the New Series, subject to the supervision of the
board of directors of the applicable Company, under management contracts
substantially identical to the contracts in effect between INVESCO and each Fund
immediately prior to the consummation of the Conversions. INVESCO Capital
Management, Inc. ("ICM") will serve as sub-adviser to the New Series and will be
primarily responsible for managing each New Series' assets under contracts
substantially identical to the contracts in effect between INVESCO and ICM with
respect to the Funds immediately prior to the consummation of the Conversions.
The distribution agent for the Funds, IDI, will distribute shares of each New
Series under General Distribution Agreements substantially identical to the
contracts in effect between IDI and each Fund immediately prior to the
consummation of the Conversions.
REASONS FOR THE PROPOSED CONVERSIONS
The Board unanimously recommends conversion of each Fund to a separate
series of the applicable Company (i.e., to the applicable New Series). Moving
each Fund from Value Trust to the applicable Company will consolidate and
streamline the production and mailing of certain financial reports and legal
documents, reducing the expenses of each Fund. THE PROPOSED CONVERSIONS WILL
HAVE NO MATERIAL EFFECT ON SHAREHOLDERS, OFFICERS, OPERATIONS OR THE MANAGEMENT
OF EITHER FUND.
The proposal to present the Conversion Plans to shareholders was approved
by the Board, including all of its Independent Trustees, on August 5, 1998. The
Board recommends that shareholders of Value Equity Fund vote FOR approval of the
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Value Equity Fund Conversion Plan and that shareholders of Total Return Fund
vote FOR approval of the Total Return Fund Conversion Plan, each as described
below. With respect to Value Equity Fund, such a vote encompasses approval of
both: (i) the conversion of Value Equity Fund to a separate series of Stock
Funds; and (ii) a temporary waiver of certain investment limitations of Value
Equity Fund to permit the Value Equity Fund Conversion (see "Temporary Waiver of
Investment Restrictions" below). With respect to Total Return Fund, such a vote
encompasses approval of both: (i) the conversion of Total Return Fund to a
separate series of Combination Stock & Bond Funds; and (ii) a temporary waiver
of certain investment limitations of Total Return Fund to permit the Total
Return Fund Conversion (see "Temporary Waiver of Investment Restrictions"
below). If the shareholders of either Value Equity Fund or Total Return Fund do
not approve the Value Equity Fund Conversion or the Total Return Fund
Conversion, respectively, each as set forth herein, that Fund will continue to
operate as a series of Value Trust.
SUMMARY OF THE CONVERSION PLANS
The Conversion Plans are substantially identical for both Funds.
Accordingly, unless otherwise indicated, the following discussion is applicable
to the Value Equity Fund Conversion and the Total Return Fund Conversion. The
following summary of the important terms of the Conversion Plans is qualified in
its entirety by reference to the Value Equity Fund Conversion Plan and the Total
Return Fund Conversion Plan, which are attached as Appendix B and Appendix C,
respectively, to this Proxy Statement.
If the Value Equity Fund Conversion is approved by shareholders of Value
Equity Fund, on June 1, 1999 or such later date to which Value Trust and Stock
Funds agree (the "Closing Date"), Value Equity Fund will transfer all of its
assets to Value Equity New Series in exchange solely for shares of Value Equity
New Series ("Value Equity New Series Shares") equal to the number of Value
Equity Fund shares ("Value Equity Shares") outstanding on the Closing Date and
the assumption by Value Equity New Series of all of the liabilities of Value
Equity Fund. Immediately thereafter, Value Equity Fund will constructively
distribute to each Value Equity Fund shareholder one Value Equity New Series
Share for each Value Equity Share held by the shareholder on the Closing Date,
in liquidation of the Value Equity Shares. As soon as is practicable after this
distribution of Value Equity New Series Shares, Value Equity Fund will be
terminated as a series of Value Trust and will be wound up and liquidated. UPON
COMPLETION OF THE VALUE EQUITY FUND CONVERSION, EACH VALUE EQUITY FUND
SHAREHOLDER WILL BE THE OWNER OF FULL AND FRACTIONAL VALUE EQUITY NEW SERIES
SHARES EQUAL IN NUMBER, DENOMINATION, AND AGGREGATE NET ASSET VALUE TO HIS OR
HER VALUE EQUITY SHARES.
If the Total Return Fund Conversion is approved by shareholders of Total
Return Fund, on the Closing Date, Total Return Fund will transfer all of its
assets to Total Return New Series in exchange solely for shares of Total Return
New Series ("Total Return New Series Shares" and, together with Value Equity New
Series Shares, "New Series Shares") equal to the number of Total Return Fund
shares ("Total Return Shares" and, together with Value Equity Shares, "Fund
Shares") outstanding on the Closing Date and the assumption by Total Return New
Series of all of the liabilities of Total Return Fund. Immediately thereafter,
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Total Return Fund will constructively distribute to each Total Return Fund
shareholder one Total Return New Series Share for each Total Return Share held
by the shareholder on the Closing Date, in liquidation of the Total Return
Shares. As soon as is practicable after this distribution of Total Return New
Series Shares, Total Return Fund will be terminated as a series of Value Trust
and will be wound up and liquidated. UPON COMPLETION OF THE TOTAL RETURN FUND
CONVERSION, EACH TOTAL RETURN FUND SHAREHOLDER WILL BE THE OWNER OF FULL AND
FRACTIONAL TOTAL RETURN NEW SERIES SHARES EQUAL IN NUMBER, DENOMINATION, AND
AGGREGATE NET ASSET VALUE TO HIS OR HER TOTAL RETURN SHARES.
Each Conversion Plan obligates the applicable Company to enter into: (i) a
Management Contract with INVESCO for the applicable New Series ("New Management
Contract"); and (ii) a Distribution and Service Plan under Rule 12b-1
promulgated under the 1940 Act ("New 12b-1 Plan") with respect to the applicable
New Series (collectively, "New Agreements"). Approval of the applicable
Conversion Plan by shareholders of a Fund will authorize Value Trust (which will
be issued a single share of each New Series on a temporary basis) to approve the
New Agreements with respect to that Fund as sole initial shareholder of the
applicable New Series. Each New Agreement will be substantially identical to the
corresponding contract or plan in effect with respect to a Fund immediately
prior to the Closing Date.
The New Agreements will take effect on the Closing Date and each will
continue in effect through May 15, 2000. Thereafter, each New Management
Contract will continue in effect only if its continuance is approved at least
annually: (i) by the vote of a majority of the directors of the applicable
Company who are not "interested persons," as that term is defined in the 1940
Act, of that Company or INVESCO ("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 the directors of the applicable Company or a majority of the
outstanding voting shares of the applicable New Series. The New 12b-1 Plan will
continue in effect only if approved annually by a vote of the Independent
Directors of the applicable Company, cast in person at a meeting called for that
purpose. Each New Management Contract will be terminable without penalty on
sixty days' written notice either by the applicable Company or INVESCO, and will
terminate automatically in the event of its assignment. Each New 12b-1 Plan will
be terminable at any time without penalty by a vote of a majority of the
Independent Directors of the applicable Company or a majority of the outstanding
voting shares of the applicable New Series.
The board of directors of each Company will hold office without limit in
time except that (i) any director may resign and (ii) a director may be removed
at any special meeting of the shareholders at which a quorum is present by the
affirmative vote of a majority of the outstanding voting shares of such Company.
In case a vacancy shall for any reason exist, a majority of the remaining
directors, though less than a quorum, will vote to fill such vacancy by
appointing another director, so long as, immediately after such appointment, at
least two-thirds of the directors have been elected by shareholders. If, at any
time, less than a majority of the directors holding office have been elected by
shareholders, the directors then in office will promptly call a shareholders'
meeting for the purpose of electing a board of directors. Otherwise, there need
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normally be no meetings of shareholders for the purpose of electing directors.
Each Company's Board of Directors will call meetings of shareholders as required
by the 1940 Act, Maryland law or that Company's Articles of Incorporation or
bylaws and at their discretion.
Assuming each Conversion Plan is approved, it is currently contemplated
that the Conversions will become effective on the Closing Date. However, either
Conversion may become effective on such other date as Value Trust and the
applicable Company may agree in writing. Neither Conversion is conditioned on
the occurrence of the other Conversion.
The obligations of Value Trust and the applicable Company under the
applicable Conversion Plan are subject to various conditions as stated therein.
Notwithstanding the approval of a Conversion Plan by the applicable Fund's
shareholders, that Conversion Plan may be terminated or amended at any time
prior to the Closing Date by action of the trustees of Value Trust or the
directors of the applicable Company to provide against unforeseen events, if (i)
there is a material breach by the other party of any representation, warranty,
or agreement contained in that 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 that Conversion Plan. Either Value Trust or the
applicable Company may at any time waive compliance with any of the covenants
and conditions contained in, or may amend, the applicable Conversion Plan,
provided that the waiver or amendment does not materially adversely affect the
interests of the applicable Fund's shareholders.
CONTINUATION OF FUND SHAREHOLDER ACCOUNTS
The transfer agents of Stock Funds and Combination Stock & Bond Funds will
establish accounts for the Value Equity New Series shareholders and the Total
Return New Series shareholders, respectively, containing the appropriate number
and denominations of Value Equity New Series Shares and Total Return New Series
Shares, respectively, to be received by each shareholder under the applicable
Conversion Plan. Such accounts will be identical in all material respects to the
accounts currently maintained by the Funds' transfer agent for the Funds'
shareholders.
EXPENSES
Each Fund and the applicable New Series will be responsible for one-half
of expenses of their Conversion, estimated at approximately $________ for each
Conversion.
TEMPORARY WAIVER OF INVESTMENT RESTRICTIONS
Certain fundamental investment restrictions of each Fund, which prohibit
that Fund from acquiring more than a stated percentage of ownership of another
company, might be construed as restricting that Fund's ability to carry out its
Conversion. By approving the Value Equity Fund Conversion Plan or the Total
Return Fund Conversion Plan, shareholders of Value Equity Fund or Total Return
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Fund, respectively, will be agreeing to waive, only for the purpose of the Value
Equity Fund Conversion Plan or the Total Return Fund Conversion Plan,
respectively, those fundamental investment restrictions that could prohibit or
otherwise impede the transaction.
FORMS OF ORGANIZATION
Value Equity Fund and Total Return Fund are two series of Value Trust, an
open-end, diversified investment management company. Value Trust was organized
on July 15, 1987 under the laws of the Commonwealth of Massachusetts as "INVESCO
Institutional Series Trust." On April 5, 1991, the Trust changed its name to
Financial Series Trust. On July 1, 1993, Financial Series Trust changed its name
to "INVESCO Value Trust." Value Trust does not issue share certificates and is
not required to (nor does it) hold annual shareholder meetings.
Value Equity New Series will be one series of Stock Funds, an open-end,
diversified investment management company. Stock Funds was incorporated as
"INVESCO Dynamics Fund, Inc." on February 17, 1967 under the laws of the State
of Colorado and was reorganized as a Maryland corporation on July 1, 1993. The
name of Stock Funds was changed to "INVESCO Capital Appreciation Funds, Inc." on
June 26, 1997, to "INVESCO Equity Funds, Inc." on August 28, 1998 and to
"INVESCO Stock Funds, Inc." on October 29, 1998. Stock Funds has authorized
capital of one billion shares of common stock, par value $0.01 per share, of
which one hundred million authorized and unissued shares of common stock have
been allocated to Value Equity New Series. Stock Funds does not issue share
certificates and is not required to (nor does it) hold annual shareholder
meetings.
Total Return New Series will be one series of Combination Stock & Bond
Funds, an open-end, diversified investment management company. Combination Stock
& Bond Funds was incorporated as "INVESCO Multiple Asset Funds, Inc." on August
19, 1993 under the laws of the State of Maryland. The name of Combination Stock
& Bond Funds was changed to "INVESCO Flexible Funds, Inc." on September 10, 1998
and to "INVESCO Combination Stock & Bond Funds, Inc." on October 29, 1998.
Combination Stock & Bond Funds has authorized capital of one billion six hundred
million shares of common stock, par value $0.01 per share, of which one hundred
million authorized and unissued shares of common stock have been allocated to
Total Return New Series. Combination Stock & Bond Funds does not issue share
certificates and is not required to (nor does it) hold annual shareholder
meetings.
RIGHTS AND OBLIGATIONS OF SHAREHOLDERS
As noted above, each New Series will be a series of an investment company
organized as a Maryland corporation, while each Fund is organized as a series of
a Massachusetts business trust. The rights of the shareholders of each Fund,
including rights with respect to shareholder meetings, inspection of shareholder
lists, and distributions on liquidation of that Fund, are substantially similar
to the rights of shareholders of a Maryland corporation. Although shareholders
of a Massachusetts business trust may, under certain circumstances, be held
personally liable for its obligations, Value Trust's Declaration of Trust, as
amended, provides that, generally, no trustee, shareholder, officer, employee or
agent of Value Trust will have personal liability for Value Trust's obligations.
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In addition, Value Trust's Declaration of Trust states that only the property of
Value Trust, and not the private property of any trustee, shareholder, officer,
employee or agent of Value Trust, shall be used to satisfy any obligation of or
claim against Value Trust.
COMPARISON OF LEGAL STRUCTURES
Comparisons of the material provisions of the Massachusetts statute
governing business trusts ("Massachusetts Statute") with the material provisions
of the Maryland statute governing corporations ("Maryland Statute") and of the
material provisions of Value Trust's Declaration of Trust and bylaws with the
material provisions of the Articles of Incorporation and bylaws of each Company
are included in Appendix D, which is entitled "Differences in Legal Structures."
TAX CONSEQUENCES OF THE CONVERSIONS
Value Trust, Stock Funds and Combination Stock & Bond Funds will receive
an opinion from their counsel, Kirkpatrick & Lockhart LLP, that the Conversions
will constitute tax-free reorganizations within the meaning of Section
368(a)(1)(F) of the Internal Revenue Code of 1986, as amended. Accordingly, no
gain or loss will be recognized for federal income tax purposes by Value Equity
Fund, Total Return Fund, Value Equity New Series, Total Return New Series or the
shareholders of either Fund upon: (i) the transfer of the assets of Value Equity
Fund or Total Return Fund in exchange solely for Value Equity New Series Shares
or Total Return New Series Shares, respectively, and the corresponding
assumption by Stock Funds and Combination Stock & Bond Funds on behalf of Value
Equity New Series and Total Return New Series, respectively, of the liabilities
of Value Equity Fund and Total Return Fund, respectively; or (ii) the
distribution of Value Equity New Series Shares or Total Return New Series
Shares, as the case may be, to the shareholders of Value Equity Fund or Total
Return Fund in liquidation of their Value Equity Shares or Total Return Shares,
respectively. The opinion will further provide, among other things, that: (i) a
Fund shareholder's aggregate basis for federal income tax purposes in the Value
Equity New Series Shares or the Total Return New Series Shares to be received by
that shareholder in conjunction with the applicable Conversion will be the same
as the aggregate basis of his or her Fund Shares to be constructively
surrendered in exchange for those New Series Shares; and (ii) a Fund
shareholder's holding period for his or her New Series Shares will include that
shareholder's holding period for his or her Fund Shares, provided that those
Fund Shares were held as capital assets at the time of the applicable
Conversion.
CONCLUSION
The Board has concluded that the proposed Value Equity Fund Conversion
Plan and Total Return Fund Conversion Plan are in the best interests of the
shareholders of the respective Funds. A vote in favor of either the Value Equity
Fund Conversion Plan or Total Return Fund Conversion Plan encompasses: (i)
approval of the conversion of that Fund to the applicable New Series; (ii)
approval of the temporary waiver of certain investment limitations of that Fund
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to permit the applicable Conversion (see "Temporary Waiver of Investment
Restrictions," above); and (iii) authorization of Value Trust, as sole initial
shareholder of both New Series, to approve: (a) a Management Contract with
respect to each New Series between the applicable Company and INVESCO; and (b) a
Distribution and Service Plan under Rule 12b-1 with respect to each New Series.
Each of the New Agreements is substantially identical to the corresponding
contract or plan in effect with the applicable Fund immediately prior to the
Closing Date. If approved, the Conversion Plans will take effect on the Closing
Date. If the Value Equity Fund Conversion Plan or the Total Return Fund
Conversion Plan is not approved, the applicable Fund will continue to operate as
a series of Value Trust.
REQUIRED VOTE
Approval of the Value Equity Fund Conversion Plan requires the affirmative
vote of a majority of the outstanding shares of Value Equity Fund. Approval of
the Total Return Fund Conversion Plan requires the affirmative vote of a
majority of the outstanding shares of Total Return Fund.
THE BOARD UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS
VOTE "FOR" PROPOSAL 1
------------------------------------------------------------
PROPOSAL 2. TO APPROVE AMENDMENTS TO THE FUNDAMENTAL INVESTMENT
- ---------- RESTRICTIONS OF EACH FUND
As required by the 1940 Act, each Fund has adopted certain fundamental
investment restrictions ("fundamental restrictions"), which are set forth in the
Fund's Statement of Additional Information. These fundamental restrictions may
be changed only with shareholder approval. Restrictions that a Fund has not
specifically designated as fundamental are considered to be "non-fundamental"
and may be changed by the Board without shareholder approval.
Some of the Funds' fundamental restrictions reflect past regulatory,
business or industry conditions, practices or requirements that are no longer in
effect. Also, as other INVESCO Funds have been created over the years, these
funds have adopted substantially similar fundamental restrictions that often
have been phrased in slightly different ways, resulting in minor but unintended
differences in effect or potentially giving rise to unintended differences in
interpretation. Accordingly, the Board has approved revisions to each Fund's
fundamental restrictions in order to simplify and modernize the Funds'
fundamental restrictions and make them more uniform with those of the other
INVESCO Funds.
The Board believes that eliminating the disparities among the INVESCO
Funds' fundamental restrictions will enhance management's ability to manage the
funds' assets efficiently and effectively in changing regulatory and investment
environments and permit trustees and directors to review and monitor investment
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policies more easily. In addition, standardizing the fundamental restrictions of
the INVESCO Funds will assist the INVESCO Funds in making required regulatory
filings in a more efficient and cost-effective way. Although the proposed
changes in fundamental restrictions will allow each 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 either Fund.
The text and a summary description of each proposed change to each Fund's
fundamental restrictions are set forth below, together with 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 further shareholder approval.
If approved by the shareholders of Value Equity Fund or Total Return Fund
at the Meeting, the proposed changes in that Fund's fundamental restrictions
will be adopted by that Fund. The applicable Fund's Statement of Additional
Information will be revised to reflect those changes as soon as practicable
following the Meeting.
A. MODIFICATION OF FUNDAMENTAL RESTRICTION ON INDUSTRY CONCENTRATION AND
ADOPTION OF CERTAIN NON-FUNDAMENTAL RESTRICTIONS FOR VALUE EQUITY FUND AND
TOTAL RETURN FUND.
Each Fund's current fundamental restriction on industry concentration is
as follows:
Each Fund may not, other than investments by the Fund in obligations
issued or guaranteed by the U.S. Government, its agencies or
instrumentalities, invest in the securities of issuers conducting their
principal business activities in the same industry (investments in
obligations issued by a foreign government, including the agencies or
instrumentalities of a foreign government, are considered to be
investments in a single industry), if immediately after such investment
the value of a Fund's investments in such industry would exceed 25% of the
value of such Fund's total assets.
The Board recommends that the shareholders of each Fund vote to replace
this restriction with the following fundamental restriction:
The Fund may not purchase the securities of any issuer (other than
securities issued or guaranteed by the U.S. Government or any of its
agencies or instrumentalities or municipal securities) if, as a result,
more than 25% of the Fund's total assets would be invested in the
securities of companies whose principal business activities are in the
same industry.
The primary purpose of the modification is to eliminate minor differences
in the wording of the INVESCO Funds' current restrictions on concentration for
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greater uniformity and to avoid unintended limitations without materially
altering the restriction. The proposed changes to each Fund's fundamental
concentration policy exclude municipal securities from the concentration
limitation. There is no such exclusion from the current concentration
limitation. A failure to exclude such securities from the concentration policy
could hinder a Fund's ability to purchase such securities in conjunction with
taking temporary defensive positions.
If the proposal is approved, the Board will adopt a non-fundamental
restriction as follows:
With respect to fundamental restriction (2), domestic and foreign banking
will be considered to be different industries.
If the proposal is approved, the Board will also adopt a non-fundamental
restriction as follows:
Each state (including the District of Columbia and Puerto Rico), territory
and possession of the United States, each political subdivision, agency,
instrumentality, and authority thereof, and each multistate agency of
which a state is a member is a separate "issuer." When the assets and
revenues of an agency, authority, instrumentality or other political
subdivision are separate from the government creating the subdivision and
the security is backed only by assets and revenues of the subdivision,
such subdivision would be deemed to be the sole issuer. Similarly, in the
case of an Industrial Development Bond or Private Activity Bond, if that
bond is backed only by the assets and revenues of the non-governmental
user, then that non-governmental user would be deemed to be the sole
issuer. However, if the creating government or another entity guarantees a
security, then to the extent that the value of all securities issued or
guaranteed by that government or entity and owned by the Fund exceeds 10%
of the Fund's total assets, the guarantee would be considered a separate
security and would be treated as issued by that government or entity.
B. MODIFICATION OF FUNDAMENTAL RESTRICTION ON ISSUER DIVERSIFICATION.
Each Fund's current fundamental restriction on issuer diversification is
as follows:
Each Fund may not, with respect to the total assets of the Value Equity
Fund and 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 issuers" 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.
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The Board recommends that the shareholders of each Fund vote to replace
this restriction with the following fundamental restriction:
The Fund may not, with respect to 75% of the Fund's total assets, purchase
the securities of any issuer (other than securities issued or guaranteed
by the U.S. Government or any of its agencies or instrumentalities, or
securities of other investment companies) if, as a result, (i) more than
5% of the Fund's total assets would be invested in the securities of that
issuer, or (ii) the Fund would hold more than 10% of the outstanding
voting securities of that issuer.
The proposed fundamental restriction concerning diversification is the
limitation imposed by the 1940 Act for diversified investment companies. The
amended fundamental restriction would allow Value Equity Fund, with respect to
25% of its total assets, to invest more than 5% of its assets in the securities
of one or more issuers and to hold more than 10% of the voting securities of an
issuer. (Total Return Fund already has this authority.) Value Equity Fund will
continue to be required to invest 75% of its total assets so that no more than
5% of total assets are invested in any one issuer, and so that the Fund will not
own more than 10% of the voting securities of an issuer.
The amended restriction would give Value Equity 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 the Fund's
performance. Investing a larger percentage of Value Equity Fund's assets in a
single issuer's securities, however, increases the Fund's exposure to credit and
other risks associated with that issuer's financial condition and operations,
including the risk of default on debt securities.
The amended fundamental restriction would also permit each Fund to invest
without limit in the securities of other investment companies. No Fund has a
current intention of doing so, and, as noted below, the 1940 Act imposes
restrictions on the extent to which a Fund may invest in the securities of other
investment companies. The revision would, however, give each Fund flexibility to
invest in other investment companies in the event legal and other regulatory
requirements change. The ability of mutual funds to invest in other investment
companies is currently restricted by rules under the 1940 Act, including a rule
limiting all such investments to 10% of a mutual fund's total assets and
investment in any one investment company to an aggregate of 5% of the value of
the investing fund's total assets and 3% of the total outstanding voting stock
of the acquired investment company.
C. MODIFICATION OF FUNDAMENTAL RESTRICTION ON UNDERWRITING SECURITIES.
Each Fund's current fundamental restriction on underwriting securities is
as follows:
Each Fund may not underwrite securities of other issuers, except insofar
as it may technically be deemed an "underwriter" under the Securities Act
of 1933, as amended, in connection with the disposition of a Fund's
portfolio securities.
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The Board recommends that the shareholders of each Fund vote to replace
this restriction with the following fundamental restriction:
The Fund may not underwrite securities of other issuers, except insofar as
it may be deemed to be an underwriter under the Securities Act of 1933, as
amended, in connection with the disposition of the Fund's portfolio
securities.
The purpose of the proposal is to eliminate minor differences in the
wording of each Fund's current fundamental restriction on underwriting for
greater uniformity with the fundamental restrictions of other INVESCO Funds.
D. ELIMINATION OF FUNDAMENTAL RESTRICTION ON INVESTING IN COMPANIES FOR THE
PURPOSE OF EXERCISING CONTROL OR MANAGEMENT.
Each Fund's current fundamental restriction regarding investing in
companies for the purpose of exercising control or management is as follows:
Each Fund may not invest in companies for the purpose of exercising
control or management.
The Board recommends that the shareholders of each Fund vote to eliminate
this restriction. There is no legal requirement that a fund have an affirmative
policy on investment for the purpose of exercising control or management if it
does NOT intend to make investments for that purpose. The Funds have no
intention of investing in any company for the purpose of exercising control or
management. By eliminating this restriction, the Board may, however, be able to
authorize such a strategy in the future if it concludes that doing so would be
in the best interest of a Fund and its shareholders.
E. MODIFICATION OF FUNDAMENTAL RESTRICTION ON BORROWING AND ADOPTION OF
NON-FUNDAMENTAL POLICY ON BORROWING.
Each Fund's current fundamental restriction on borrowing is as follows:
Each Fund may not issue any class of senior securities or borrow money,
except borrowings from banks for temporary or emergency purposes (not for
leveraging or investment) in an amount not exceeding 331/3% of the value
of a Fund's total assets at the time the borrowing is made.
The Board recommends that the shareholders of each Fund vote to replace
this restriction with the following fundamental restriction:
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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).
The primary purpose of the proposal is to eliminate differences between
the INVESCO Funds' current restrictions on borrowing and those imposed by the
1940 Act. Currently, each Fund's fundamental restriction is more limiting than
the restrictions imposed by the 1940 Act in that it limits the purposes for
which each Fund may borrow money for "temporary or emergency purposes." The
proposed revision would eliminate the restrictions on the purposes for which
each Fund may borrow money. The proposed revision would also separate each
Fund's fundamental restriction on borrowing and issuing senior securities into
two fundamental restrictions, a revision that is expected to be standard for all
of the INVESCO Funds. The Board believes that this approach, making each Fund's
fundamental restriction on borrowing no more limiting than is required under the
1940 Act, will maximize each Fund's flexibility for future contingencies.
If the proposal is approved, the Board will adopt a non-fundamental
restriction with respect to borrowing for each Fund 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 (5)).
The non-fundamental restriction reflects each Fund's current policy that
borrowing may only be done for temporary or emergency purposes. In addition to
borrowing from banks, as permitted by each Fund's current restriction, the
non-fundamental restriction would permit each Fund to borrow from open-end funds
managed by INVESCO or an affiliate or successor thereof. A 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 each Fund's fundamental
restriction on borrowing no more limiting than is required under the 1940 Act,
while incorporating more strict limits on borrowing in a non-fundamental
restriction, will maximize each Fund's flexibility for future contingencies.
F. MODIFICATION OF FUNDAMENTAL RESTRICTION ON ISSUANCE OF SENIOR SECURITIES.
Currently, each Fund's fundamental restriction on the issuance of senior
securities is combined with its restriction on borrowing (see above). To conform
each Fund's restriction on the issuance of senior securities (i.e., obligations
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that have a priority over the Fund's shares with respect to the distribution of
Fund assets or the payment of dividends) with those of the other INVESCO Funds,
the Board recommends that the shareholders of each Fund vote to adopt the
following separate fundamental restriction:
The Fund may not issue senior securities, except as permitted under the
Investment Company Act of 1940.
The Board believes that the adoption of the proposed fundamental
restriction, which does not specify the manner in which senior securities may be
issued and is no more limiting than is required under the 1940 Act, would
maximize each Fund's borrowing flexibility for future contingencies and would
conform to the fundamental restrictions of the other INVESCO Funds on the
issuance of senior securities.
G. ELIMINATION OF FUNDAMENTAL RESTRICTION ON MORTGAGING, PLEDGING OR
HYPOTHECATING SECURITIES.
Each Fund currently has the following fundamental restriction on
mortgaging, pledging or hypothecating securities:
Each Fund may not mortgage, pledge, hypothecate or in any manner transfer
as security for indebtedness any securities owned or held except to an
extent not greater than 5% of the value of a Fund's total assets.
This restriction is derived from a state "blue sky" requirement, which has
been preempted by recent amendments of the federal securities laws. Accordingly,
the Board recommends that shareholders vote to eliminate this restriction.
H. ELIMINATION OF FUNDAMENTAL RESTRICTION ON SHORT SALES AND MARGIN PURCHASES
AND ADOPTION OF NON-FUNDAMENTAL RESTRICTION ON SHORT SALES AND MARGIN
PURCHASES.
The Funds' current fundamental restrictions on selling short and buying on
margin is as follows:
Each Fund may not sell short, except the Value Equity and Total Return
Funds may purchase or sell options or futures contracts, or write,
purchase or sell put and call options.
Each Fund may not buy on margin, except the Value Equity and Total Return
Funds may purchase or sell options or futures contracts, or write,
purchase or sell put and call options.
The Board recommends that the shareholders of each Fund vote to eliminate
this fundamental restriction. If the proposal is approved, the Board will adopt
the following non-fundamental restriction for each Fund:
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The Fund may not sell securities short (unless it owns or has the right to
obtain securities equivalent in kind and amount to the securities sold
short) or purchase securities on margin, except that (i) this policy does
not prevent the Fund from entering into short positions in foreign
currency, futures contracts, options, forward contracts, swaps, caps,
floors, collars and other financial instruments, (ii) the Fund may obtain
such short-term credits as are necessary for the clearance of
transactions, and (iii) the Fund may make margin payments in connection
with futures contracts, options, forward contracts, swaps, caps, floors,
collars and other financial instruments.
The proposed changes clarify the wording of the restriction and expand the
exceptions to the restriction, which generally prohibits a Fund from selling
securities short or buying securities on margin. Margin purchases involve the
purchase of securities with money borrowed from a broker. "Margin" is the cash
or eligible securities that a 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. In a
"short sale against the box" transaction, a Fund would engage in a short sale of
a security that it already owns or has the right to own. Each Fund's current
fundamental restriction prohibits that Fund from purchasing securities on margin
or selling short, but does not clearly provide for an exception for transactions
requiring margin payments and short positions such as the sale and purchase of
futures contracts and options on futures contracts. Even with these exceptions,
mutual funds are prohibited from entering into most types of margin purchases
and short sales by applicable SEC policies.
The Board believes that elimination of the fundamental restriction and
adoption of the non-fundamental restriction will provide each Fund with greater
investment flexibility.
I. MODIFICATION OF FUNDAMENTAL RESTRICTION ON REAL ESTATE INVESTMENTS.
Each Fund's current fundamental restriction on real estate investment is
as follows:
Each Fund may not purchase or sell real estate or interests in real
estate. Each Fund may invest in securities secured by real estate or
interests therein or issued by companies, including real estate investment
trusts, which invest in real estate or interests therein.
The Board recommends that the shareholders of each Fund vote to replace
this restriction with the following fundamental restriction:
The Fund will not purchase or sell real estate unless acquired as a result
of ownership of securities or other instruments (but this shall not
prevent the Fund from investing in securities or other instruments backed
by real estate or securities of companies engaged in the real estate
business).
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In addition to conforming each Fund's fundamental restriction to that of
the other INVESCO Funds, the proposed amendment of the Funds' fundamental
restrictions on investment in real estate more completely describes the types of
real estate-related securities investments that would be permissible for each
Fund and would permit each Fund to purchase or sell real estate acquired as a
result of ownership of securities or other instruments (e.g., through
foreclosure on a mortgage in which that Fund directly or indirectly holds an
interest). The Board believes that this clarification will make it easier for
decisions to be made concerning each 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.
J. MODIFICATION OF FUNDAMENTAL RESTRICTION ON INVESTING IN COMMODITIES.
Each Fund's current fundamental restriction on the purchase of commodities
is as follows:
Each Fund may not buy or sell commodities contracts (however each Fund may
purchase securities of companies which invest in the foregoing). This
restriction shall not prevent the Funds from purchasing or selling options
on individual securities, security indexes, and currencies or financial
futures or options on financial futures, or undertaking forward currency
contracts.
The Board recommends that the shareholders of each Fund 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 to this fundamental restriction for each Fund are
intended to conform the restriction to those of the other INVESCO Funds and to
ensure that each Fund will have the maximum flexibility to enter into hedging or
other transactions utilizing financial contracts and derivative products when
doing so is permitted by operating policies established for the 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 each Fund's policy to be flexible enough to allow it to
enter into hedging and other transactions using these products when doing so is
deemed appropriate by INVESCO and is within the investment parameters
established by the Board.
K. MODIFICATION OF FUNDAMENTAL RESTRICTION ON LOANS.
Each Fund's current fundamental restriction on loans is as follows:
Each Fund may not make loans to other persons, provided that a Fund may
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purchase debt obligations consistent with its investment objectives and
policies and each Fund may lend limited amounts (not to exceed 10% of
their total assets) of their portfolio securities to broker-dealers or
other institutional investors.
The Board recommends that the shareholders of each Fund 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 conform to the 1940 Act
requirements regarding the lending of securities. The Board believes that the
adoption of the proposed fundamental restriction is no more limiting than is
required under the 1940 Act. In addition, the Board believes the proposal will
provide greater flexibility, maximize each Fund's lending capabilities and
conform to the fundamental restrictions of other INVESCO Funds on the lending of
fund securities.
L. MODIFICATION OF FUNDAMENTAL POLICY ON INVESTING IN ANOTHER INVESTMENT
COMPANY AND ADOPTION OF NON-FUNDAMENTAL INVESTMENT POLICY REGARDING
INVESTMENT IN SECURITIES ISSUED BY OTHER INVESTMENT COMPANIES.
Each Fund's current fundamental policy regarding investment in another
investment company is as follows:
Each Fund may not purchase securities of other investment companies except
(i) in connection with a merger, consolidation, acquisition or
reorganization, or (ii) by purchase in the open market of securities of
other investment companies involving only customary brokers' commissions
and only if immediately thereafter (i) no more than 3% of the voting
securities of any one investment company are owned by such a Fund, (ii) no
more than 5% of the value of the total assets of such a Fund would be
invested in any one investment company, and (iii) no more than 10% of the
value of the total assets of such a Fund would be invested in the
securities of such investment companies. The Trust may invest from time to
time a portion of the Funds' cash in investment companies to which the
Adviser serves as investment adviser; provided that no management or
distribution fee will be charged by the Adviser with respect to any such
assets so invested and provided further that at no time will more than 3%
of such a Fund's assets be so invested. Should such a Fund purchase
securities of other investment companies, shareholders may incur
additional management and distribution fees.
The Board recommends that the shareholders of each Fund vote to replace
this restriction with the following fundamental restriction:
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The Fund may, notwithstanding any other fundamental investment policy or
limitation, invest all of its assets in the securities of a single
open-end management investment company managed by INVESCO Funds Group,
Inc. or an affiliate or a successor thereof, with substantially the same
fundamental investment objective, policies and limitations as the Fund.
The proposed revision to each Fund's current fundamental restriction would
ensure that the INVESCO Funds have uniform restrictions permitting each INVESCO
Fund to adopt a "master/feeder" structure whereby one or more INVESCO Funds
invests all of its assets in another INVESCO Fund. The master/feeder structure
has the potential, under certain circumstances, to minimize administrative costs
and maximize the possibility of gaining a broader investor base. Currently, none
of the INVESCO Funds intends to establish a master/feeder structure; however,
the Board recommends that each Fund's shareholders adopt a restriction that
would permit this structure in the event that the Board determines to recommend
the adoption of a master/feeder structure by a Fund. The proposed revision would
require that any fund in which a Fund may invest under a master/feeder structure
be advised by INVESCO or an affiliate thereof.
If the proposal is approved, the Board will adopt a non-fundamental
restriction for each Fund as follows:
The Fund may invest in securities issued by other investment companies to
the extent that such investments are consistent with the Fund's investment
objective and policies and permissible under the 1940 Act.
The primary purpose of this non-fundamental restriction is to conform to
the other INVESCO Funds and to the 1940 Act requirements for investing in other
investment companies. Adoption of this non-fundamental policy will enable each
Fund to purchase the securities of other investment companies to the extent
permitted under the 1940 Act or pursuant to an exemption granted by the SEC.
M. ELIMINATION OF FUNDAMENTAL RESTRICTION ON INVESTING IN ILLIQUID SECURITIES
AND ADOPTION OF NON-FUNDAMENTAL RESTRICTION ON INVESTING IN ILLIQUID
SECURITIES.
Each Fund's current fundamental restriction on investment in illiquid
securities is as follows:
Each Fund may not invest in securities for which there are legal or
contractual restrictions on resale, except that each of the Funds may
invest no more than 2% of the value of its total assets in such
securities; or invest in securities for which there is no readily
available market, except that each of the Funds may invest no more than 5%
of the value of its total assets in such securities.
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The Board recommends that the shareholders of each Fund vote to eliminate
this restriction. If the proposal is approved, the Board will adopt the
following non-fundamental restriction for each Fund as follows:
The Fund does not currently intend to purchase any security if, as a
result, more than 15% of its net assets would be invested in securities
that are deemed to be illiquid because they are subject to legal or
contractual restrictions on resale or because they cannot be sold or
disposed of in the ordinary course of business at approximately the prices
at which they are valued.
The primary purpose of the proposal is to conform to the federal
securities law requirements regarding investment in illiquid securities and to
conform the investment restrictions of the Funds to those of the other INVESCO
Funds. Each Fund is currently limited in its ability to invest in illiquid
securities. The Board believes that the proposed elimination of the fundamental
restriction and subsequent adoption of the non-fundamental restriction will make
the restriction more accurately reflect market conditions and will maximize each
Fund's flexibility for future contingencies. The Board may delegate to INVESCO,
the Funds' investment adviser, the authority to determine whether a security is
liquid for the purposes of this investment limitation.
REQUIRED VOTE
Approval of Proposal 2 with respect to Value Equity Fund or Total Return
Fund requires the affirmative vote of a "majority of the outstanding voting
securities" of that Fund, which for this purpose means the affirmative vote of
the lesser of (i) 67% or more of the shares of that Fund present at the Meeting
or represented by proxy if more than 50% of the outstanding shares of that Fund
are so present or represented, or (ii) more than 50% of the outstanding shares
of that Fund. SHAREHOLDERS WHO VOTE "FOR" PROPOSAL 2 WILL VOTE "FOR" EACH
PROPOSED CHANGE DESCRIBED ABOVE. THOSE SHAREHOLDERS WHO WISH TO VOTE AGAINST ANY
OF THE SPECIFIC PROPOSED CHANGES DESCRIBED ABOVE MAY DO SO ON THE PROXY
PROVIDED. ONLY THOSE SPECIFIC PROPOSED CHANGES APPROVED BY THE REQUIRED VOTE
WILL BECOME EFFECTIVE. WITH RESPECT TO EACH FUND, IF PROPOSAL 1 IN THIS PROXY
STATEMENT IS APPROVED, THE CHANGES APPROVED UNDER PROPOSAL 2 FOR THAT FUND WILL
APPLY TO THE APPLICABLE NEW SERIES.
THE BOARD UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS
VOTE "FOR" PROPOSAL 2.
-----------------------------------------------------------
PROPOSAL 3. TO ELECT THE TRUSTEES OF VALUE TRUST
- ----------
The Board has nominated the individuals identified below for election to
the Board at the Meeting. Value Trust currently has ten trustees. Vacancies on
21
<PAGE>
the Board are generally filled by appointment by the remaining trustees.
However, the 1940 Act provides that vacancies may not be filled by trustees
unless thereafter at least two-thirds of the trustees shall have been elected by
shareholders. To ensure continued compliance with this rule without incurring
the expense of calling additional shareholder meetings, shareholders are being
asked at this Meeting to elect the current ten trustees to hold office until the
next meeting of shareholders. Consistent with the provisions of Value Trust's
bylaws, and as permitted by Massachusetts law, Value Trust does not anticipate
holding annual shareholder meetings. Thus, the trustees 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 Trustees now being proposed for election were
nominated and selected by Independent Trustees. Eight of the ten current
trustees are Independent Trustees.
The persons named as attorneys-in-fact in the enclosed proxy have advised
Value Trust that unless a proxy instructs them to withhold authority to vote for
all listed nominees or for any individual nominee, they will vote all validly
executed proxies for the election of the nominees named below.
22
<PAGE>
The nominees for trustee, their ages, a description of their principal
occupations, the number of the Funds' shares owned by each, and their respective
memberships on Board committees are listed in the table below.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
NUMBER OF
TRUSTEE THE FUNDS'
OR SHARES
EXECUTIVE BENEFICIALLY
NAME, POSITION PRINCIPAL OCCUPATION AND OFFICER OWNED MEMBER
WITH VALUE BUSINESS EXPERIENCE (DURING OF VALUE DIRECTLY OR OF
TRUST, AND AGE THE PAST FIVE YEARS) TRUST INDIRECTLY COMMITTEE
- -------------- -------------------- SINCE ON DEC. 31, ---------
----- 1998 (1)
--------
CHARLES W. Chief Executive Officer and 1993 0 (3),
BRADY, CHAIRMAN Director of AMVESCAP PLC, (5), (6)
OF THE BOARD, London, England, and of
AGE 63* various subsidiaries
thereof. Chairman of the
Board of INVESCO Global
Health Sciences Fund.
FRED A. Trustee of INVESCO Global 1993 6997.448 (2),
DEERING, VICE Health Sciences Fund. (3), (5)
CHAIRMAN OF THE Formerly, Chairman of the
BOARD, AGE 71 Executive Committee and
Chairman of the Board of
Security Life of Denver
Insurance Company, Denver,
Colorado; Director of ING
America Holdings Company
and First ING American Life
Insurance Company of New
York.
MARK H. President, Chief Executive 1998 0 (3), (5)
WILLIAMSON, Officer, and Director,
PRESIDENT, INVESCO Distributors Inc.;
CHIEF EXECUTIVE President, Chief Executive
OFFICER, AND Officer, and Director,
TRUSTEE, AGE 47* Chief Operating Officer,
and Trustee, 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).
</TABLE>
23
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
NUMBER OF
TRUSTEE THE FUNDS'
OR SHARES
EXECUTIVE BENEFICIALLY
NAME, POSITION PRINCIPAL OCCUPATION AND OFFICER OWNED MEMBER
WITH VALUE BUSINESS EXPERIENCE (DURING OF VALUE DIRECTLY OR OF
TRUST, AND AGE THE PAST FIVE YEARS) TRUST INDIRECTLY COMMITTEE
- -------------- -------------------- SINCE ON DEC. 31, ---------
----- 1998 (1)
--------
DR. VICTOR L. Professor Emeritus, 1993 44.099 (4),
ANDREWS, Chairman Emeritus and (6), (8)
TRUSTEE, AGE 68 Chairman of the CFO
Roundtable of the
Department of Finance at
Georgia State University,
Atlanta, Georgia;
President, Andrews
Financial Associates, Inc.
(consulting firm).
Formerly, member of the
faculties of the Harvard
Business School and the
Sloan School of Management
of MIT. Dr. Andrews is
also a director of the
Sheffield Funds, Inc.
BOB R. BAKER, President and Chief 1993 44.099 (3),
TRUSTEE, AGE 62 Executive Officer of AMC (4), (5)
Cancer Research Center,
Denver, Colorado, since
January 1989; until
December 1988, Vice
Chairman of the Board,
First Columbia
Financial Corporation,
Englewood, Colorado.
Formerly, Chairman
of the Board and Chief
Executive Officer of
First Columbia
Financial Corporation.
LAWRENCE H. Trust Consultant; Prior to 1993 44.099 (2),
BUDNER, June 1987, Senior Vice (6),
TRUSTEE, AGE 68 President and Senior Trust (7)
Officer, InterFirst Bank,
Dallas, Texas.
</TABLE>
24
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
NUMBER OF
TRUSTEE THE FUNDS'
OR SHARES
EXECUTIVE BENEFICIALLY
NAME, POSITION PRINCIPAL OCCUPATION AND OFFICER OWNED MEMBER
WITH VALUE BUSINESS EXPERIENCE (DURING OF VALUE DIRECTLY OR OF
TRUST, AND AGE THE PAST FIVE YEARS) TRUST INDIRECTLY COMMITTEE
- -------------- -------------------- SINCE ON DEC. 31, ---------
----- 1998 (1)
--------
DR. WENDY LEE Self-employed (since 1997 705.139 (4), (8)
GRAMM, TRUSTEE, 1993). Professor of
AGE 53 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 Bureau of
Economics. Director of the
Chicago Mercantile
Exchange; Enron
Corporation; IBP, Inc.;
State Farm Insurance
Company; Independent
Women's Forum;
International Republic
Institute; and the
Republican Women's Federal
Forum.
KENNETH T. Presently retired. 1993 44.099 (2),
KING, TRUSTEE, Formerly, Chairman of the (3),
AGE 73 Board of the Capitol Life (5),
Insurance Company, (6), (7)
Providence Washington
Insurance Company, and
Director of numerous U.S.
subsidiaries thereof.
Formerly, Chairman of the
Board of the Providence
Capitol Companies in the
United Kingdom and
Guernsey. Until 1987,
Chairman of the Board,
Symbion Corporation.
</TABLE>
25
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
NUMBER OF
TRUSTEE THE FUNDS'
OR SHARES
EXECUTIVE BENEFICIALLY
NAME, POSITION PRINCIPAL OCCUPATION AND OFFICER OWNED MEMBER
WITH VALUE BUSINESS EXPERIENCE (DURING OF VALUE DIRECTLY OR OF
TRUST, AND AGE THE PAST FIVE YEARS) TRUST INDIRECTLY COMMITTEE
- -------------- -------------------- SINCE ON DEC. 31, ---------
----- 1998 (1)
--------
JOHN W. Presently retired. 1995 44.099 (2),
MCINTYRE, Formerly, Vice Chairman of (3),
TRUSTEE, AGE 68 the Board of The Citizens (5), (7)
and Southern Corporation;
Chairman of the Board and
Chief Executive Officer of
The Citizens and Southern
Georgia Corporation;
Chairman of the Board and
Chief Executive Officer
of The Citizens and
Southern National Bank.
Trustee of INVESCO
Global Health Sciences
Fund, Gables Residential
Trust, Employee's
Retirement System
of Georgia, Emory
University, and
J.M. Tull Charitable
Foundation; Director
of Kaiser Foundation
Health Plans of Georgia,
Inc.
DR. LARRY SOLL, Presently retired. 1997 44.099 (4), (8)
TRUSTEE, AGE 56 Formerly, Chairman of the
Board (1987-1994), Chief
Executive Officer
(1982-1989 and 1993-1994)
and President (1982-1989)
of Synergen Inc. Director
of Synergen Inc. since
incorporation in 1982.
Director of ISIS
Pharmaceuticals, Inc.
Trustee of INVESCO Global
Health Sciences Fund.
</TABLE>
*Because of his affiliation with INVESCO, the Funds' investment adviser, or with
companies affiliated with INVESCO, this individual is deemed to be an
"interested person" of Value Trust, as that term is defined in the 1940 Act.
(1) = As interpreted by the SEC, a security is beneficially owned by a person if
that person has or shares voting power or investment power with respect to
that security. The persons listed have partial or complete voting and
investment power with respect to their respective Fund shares.
(2) = Member of the Audit Committee
(3) = Member of the Executive Committee
(4) = Member of the Managemen 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 Derivative Committee
26
<PAGE>
The Board has audit, management liaison, soft dollar brokerage and
derivatives committees consisting of Independent Trustees, and compensation,
executive, and valuation committees consisting of Independent Trustees and
non-independent trustees. The Board does not have a nominating committee. The
audit committee, consisting of four Independent Trustees, meets quarterly with
Value Trust's independent accountants and executive officers of Value Trust.
This committee reviews the accounting principles being applied by Value Trust in
financial reporting, the scope and adequacy of internal controls, the
responsibilities and fees of the independent accountants, and other matters. All
of the recommendations of the audit committee are reported to the full Board.
During the intervals between the meetings of the Board, the executive committee
may exercise all powers and authority of the Board in the management of Value
Trust's business, except for certain powers which, under applicable law and/or
Value Trust's bylaws, may only be exercised by the full Board. All decisions are
subsequently submitted for ratification by the Board. The management liaison
committee meets quarterly with various management personnel of INVESCO in order
to facilitate better understanding of management and operations of Value Trust,
and to review legal and operational matters that have been assigned to the
committee by the Board, in furtherance of the Board's overall duty of
supervision. The soft dollar brokerage committee meets periodically to review
soft dollar transactions by the Funds, and to review policies and procedures of
Value Trust's adviser with respect to soft dollar brokerage transactions. The
committee then reports on these matters to the Board. The derivatives committee
meets periodically to review derivatives investments made by the Funds. The
committee monitors derivatives usage by the Funds and the procedures utilized by
Value Trust's adviser to ensure that the use of such instruments follows the
policies on such instruments adopted by the Board. The committee then reports on
these matters to the Board.
During the past fiscal year, the Board met five times, the audit committee
met four times, the executive committee did not meet, the compensation committee
met once, the management liaison committee met four times, the soft dollar
brokerage committee met twice, and the derivatives committee met twice. During
Value Trust's last fiscal year, each trustee 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 Trustees nominate individuals to serve as Independent
Trustees, without any specific nominating committee. The Board ordinarily will
not consider unsolicited trustee nominations recommended by the Funds'
shareholders. The Board, including its Independent Trustees, unanimously
approved the nomination of the foregoing persons to serve as trustees and
directed that the election of these nominees be submitted to each Fund's
shareholders.
27
<PAGE>
The following table sets forth information relating to the compensation
paid to trustees during the last fiscal year:
COMPENSATION TABLE
AMOUNTS PAID DURING THE MOST RECENT
FISCAL YEAR BY VALUE TRUST TO TRUSTEES
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
PENSION OR TOTAL
AGGREGATE RETIREMENT ESTIMATED COMPENSATION
COMPENSATION BENEFITS ANNUAL FROM VALUE
NAME OF PERSON, FROM VALUE ACCRUED AS BENEFITS UPON TRUST AND
POSITION TRUST(1) PART OF VALUE RETIREMENT(3) INVESCO FUNDS
- -------- -------- TRUST'S ------------- PAID TO
EXPENSES(2) TRUSTEES(1)
----------- -----------
FRED A. DEERING, $9,418 $5,735 $3,680 $103,700
VICE CHAIRMAN OF
THE BOARD AND
TRUSTEE
DR. VICTOR L. $9,004 $5,420 $4,260 $80,350
ANDREWS, TRUSTEE
BOB R. BAKER, $9,568 $4,840 $5,709 $84,000
TRUSTEE
LAWRENCE H. $8,697 $5,420 $4,260 $79,350
BUDNER, TRUSTEE
DANIEL D. $9,106 $5,858 $3,179 $70,000
CHABRIS(4), TRUSTEE
KENNETH T. KING, $8,085 $5,956 $3,338 $77,050
TRUSTEE
JOHN W. MCINTYRE, $8,486 $0 $0 $98,500
TRUSTEE
DR. WENDY L. $8,368 $0 $0 $79,000
GRAMM, TRUSTEE
DR. LARRY SOLL, $8,486 $0 $0 $96,000
TRUSTEE
-----------------------------------------------------------------
TOTAL $79,218 $33,229 $24,426 $767,950
AS A PERCENTAGE 0.0027%(5) 0.0011%(5) 0.0035%(6)
OF NET ASSETS
</TABLE>
- -------------
(1) The Vice Chairman of the Board, the chairmen of the audit, management
liaison, derivatives, soft dollar brokerage and compensation committees, and
Independent Trustee members of the committees of Value Trust receive
compensation for serving in such capacities in addition to the compensation
paid to all Independent Trustees.
(2) Represents benefits accrued with respect to the Defined Benefit Deferred
Compensation Plan discussed below, and not compensation deferred at the
election of the trustees.
(3) These figures represent Value Trust's share of the estimated annual benefits
payable by the INVESCO Complex (excluding INVESCO Global Health Sciences
Fund which does not participate in this retirement plan) upon the trustees'
retirement, calculated using the current method of allocating trustee
compensation among the INVESCO Funds. These estimated benefits assume
retirement at age 72 and that the basic retainer payable to the trustees
will be adjusted periodically for inflation, for increases in the number of
funds in the INVESCO Complex, and for other reasons during the period in
which retirement benefits are accrued on behalf of the respective trustees.
This results in lower estimated benefits for trustees who are closer to
retirement and higher estimated benefits for trustees who are farther from
retirement. With the exception of Mr. McIntyre and Drs. Soll and Gramm, each
of these trustees has served as trustee or director of one or more of the
INVESCO Funds for the minimum five-year period required to be eligible to
participate in the Defined Benefit Deferred Compensation Plan.
(4) Mr. Chabris retired as a trustee effective September 30, 1998.
28
<PAGE>
(5) Total as a percentage of Value Trust's net assets as of August 31, 1998.
(6) Total as a percentage of the net assets of INVESCO Complex as of
December 31, 1998.
Value Trust pays its Independent Trustees, Board vice chairman, committee
chairmen and committee members the fees described above. Value Trust also
reimburses its Independent Trustees for travel expenses incurred in attending
meetings. Charles W. Brady, Chairman of the Board, and Mark H. Williamson,
President, Chief Executive Officer, and Trustee, as "interested persons" of
28a
<PAGE>
Value Trust and of other INVESCO Funds, receive compensation and are reimbursed
for travel expenses incurred in attending meetings as officers or employees of
INVESCO or its affiliated companies, but do not receive any trustee's fees or
other compensation from Value Trust or other INVESCO Funds for their services as
directors or trustees.
The overall direction and supervision of Value Trust is the responsibility
of the Board, which has the primary duty of ensuring that Value Trust's general
investment policies and programs are adhered to and that Value Trust is properly
administered. The officers of Value Trust, all of whom are officers and
employees of and paid by INVESCO, are responsible for the day-to-day
administration of Value Trust. INVESCO, as investment adviser of Value Trust,
and INVESCO Capital Management ("ICM"), as sub-adviser, have the primary
responsibility for making investment decisions on behalf of Value Trust. These
investment decisions are reviewed by the investment committee of INVESCO.
All of the officers and trustees of Value Trust 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 Industrial
Income Fund, Inc., INVESCO International Funds, Inc., INVESCO Money Market
Funds, Inc., INVESCO Sector Funds, Inc. (formerly, INVESCO Strategic Portfolios,
Inc.), INVESCO Specialty Funds, Inc., INVESCO Stock Funds, Inc. (formerly,
INVESCO Equity Funds, Inc. and INVESCO Capital Appreciation Funds, Inc.),
INVESCO Tax-Free Income Funds, Inc., INVESCO Variable Investment Funds, Inc.,
and INVESCO Treasurer's Series Trust.
The Boards of the Funds managed by INVESCO have adopted a Defined Benefit
Deferred Compensation Plan (the "Plan") for the non-interested directors and
trustees of the Funds. Under the Plan, each director or trustee who is not an
interested person of the Funds (as defined in Section 2(a)(19) of the 1940 Act)
and who has served for at least five years (a "Qualified Trustee") is entitled
to receive, upon termination of service as trustee (normally at retirement age
72 or the retirement age of 73 or 74, if the retirement date is extended by the
Boards for one or two years, but less than three years) continuation of payment
for one year (the "First Year Retirement Benefit") of the annual basic retainer
and annualized board meeting fees payable by the Funds to the Qualified Trustee
at the time of his or her retirement (the "Basic Benefit"). Commencing with any
such trustee's second year of retirement, and commencing with the first year of
retirement of any trustee whose retirement has been extended by the Board for
three years, a Qualified Trustee shall receive quarterly payments at an annual
rate equal to 50% of the Basic Benefit. These payments will continue for the
remainder of the Qualified Trustee's life or ten years, whichever is longer (the
"Reduced Benefit Payments"). If a Qualified Trustee dies or becomes disabled
after age 72 and before age 74 while still a trustee of the Funds, the First
Year Retirement Benefit and Reduced Benefit Payments will be made to him or her
or to his or her beneficiary or estate. If a Qualified Trustee becomes disabled
29
<PAGE>
or dies either prior to age 72 or during his or her 74th year while still a
trustee of the Funds, the trustee 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
trustees who are also participants in the Plan and one trustee 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. Value Trust began
making payments to Mr. Chabris as of October 1, 1998 under the Plan. Value Trust
has no stock options or other pension or retirement plans for management or
other personnel and pays no salary or compensation to any of its officers.
The Independent Trustees 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 trustees/directors of certain
INVESCO Funds. The deferred amounts have been invested in shares of all of the
INVESCO Funds. Each Independent Trustee is, therefore, an indirect owner of
shares of each INVESCO Fund, in addition to any Fund shares that may be owned
directly.
REQUIRED VOTE
Election of each nominee as a trustee of Value Trust requires the vote of
a majority of the outstanding shares of each Fund present at the Meeting, in
person or by proxy, and a majority of the outstanding shares of the other series
of Value Trust present at a concurrent meeting of that series, in person or by
proxy, taken in the aggregate.
THE BOARD, INCLUDING THE INDEPENDENT TRUSTEES, UNANIMOUSLY
RECOMMENDS THAT SHAREHOLDERS VOTE "FOR"
EACH OF THE NOMINEES IN PROPOSAL 3.
-----------------------------------------------------------
PROPOSAL 4. RATIFICATION OR REJECTION OF SELECTION OF INDEPENDENT
- ---------- ACCOUNTANTS.
The Board, including all of its Independent Trustees, has selected
PricewaterhouseCoopers LLP to continue to serve as independent accountants of
the Funds, subject to ratification by each Fund's shareholders.
PricewaterhouseCoopers LLP has no direct financial interest or material indirect
financial interest in any Fund. Representatives of PricewaterhouseCoopers LLP
are not expected to attend the Meeting, but have been given the opportunity to
make a statement if they so desire, and will be available should any matter
arise requiring their presence.
30
<PAGE>
The independent accountants examine annual financial statements for the
Funds and provide other audit and tax-related services. In recommending the
selection of PricewaterhouseCoopers LLP, the trustees reviewed the nature and
scope of the services to be provided (including non-audit services) and whether
the performance of such services would affect the accountants' independence.
REQUIRED VOTE
Approval of Proposal 4 requires the affirmative vote of a majority of the
votes of a Fund present at the Meeting, in person or by proxy, provided a quorum
is present.
THE BOARD UNANIMOUSLY RECOMMENDS THAT THE
SHAREHOLDERS VOTE "FOR" PROPOSAL 4.
-----------------------------------------------------------
INFORMATION CONCERNING ADVISER, SUB-ADVISER, DISTRIBUTOR, AND AFFILIATED
COMPANIES
INVESCO, a Delaware corporation, serves as each Fund's investment adviser,
and provides other services to each Fund and Value Trust. IDI, a Delaware
corporation that serves as each Fund's distributor, is a wholly owned subsidiary
of INVESCO. ICM serves as each Fund's sub-adviser. INVESCO 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.(1) The corporate headquarters of AMVESCAP PLC are
located at 11 Devonshire Square, London, EC2M 4YR, England. INVESCO'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.
INVESCO currently serves as investment adviser to 14 open-end investment
companies having aggregate net assets in excess 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, Senior Vice President and Director, also, Senior Vice
President and Director of IDI; Ronald L. Grooms, Senior Vice-President and
Treasurer, also, Senior Vice-President and Treasurer of IDI; and Glen A. Payne,
Senior Vice-President, Secretary and General Counsel, also Senior
Vice-President, Secretary and General Counsel of IDI.
The address of each of the foregoing officers and directors is 7800 East
Union Avenue, Denver, Colorado 80237.
(1) The intermediary companies between INAH and AMVESCAP PLC are as follows:
INVESCO, Inc., INVESCO Group Services, Inc. and INVESCO North American
Group, Ltd., each of which is wholly owned by its immediate parent.
31
<PAGE>
ICM serves as the sub-adviser to both Funds. ICM is an indirect wholly
owned subsidiary of AMVESCAP PLC. INVESCO, as investment adviser, has contracted
with ICM for providing portfolio investment advisory services to both Funds. The
principal executive officers and directors of ICM and their principal
occupations are:
Frank M. Bishop, President, Chief Executive Officer and Director; Edward
C. Mitchell, Jr., Chairman of the Board; Terrence J. Miller, Deputy President
and Director; Timothy J. Culler, Chief Investment Officer, Vice President and
Director; David Hartley, Chief Financial Officer and Treasurer; Julie A. Skagge,
Vice President and Secretary; Luis A. Aguilar, Vice President and Assistant
Secretary; Stephen A. Dana, Vice President and Director; Thomas W. Norwood, Vice
President and Director; Donald B. Saltee, Vice President and Director; Thomas L.
Shields, Vice President and Director; Wendell M. Starke, Vice President and
Director; A. D. Frazier, Director; and Deborah Lamb, Assistant Secretary.
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 Value Trust and
INVESCO, INVESCO provides administrative services to Value Trust, including
sub-accounting and recordkeeping services and functions. During the fiscal year
ended August 31, 1998, Value Trust paid INVESCO total compensation of $455,075
for such services.
During the fiscal year ended August 31, 1998, Value Trust paid INVESCO,
which also serves as Value Trust's transfer agent and dividend disbursing agent,
total compensation of $4,890,325 for such services.
OTHER BUSINESS
The Board knows of no other business to be brought before the shareholders
at the Meeting. If, however, any other matters properly come before the
shareholders at the Meeting, it is the intention that proxies that do not
contain specific instructions to the contrary will be voted on such matters in
accordance with the judgment of the persons designated in the proxies.
SHAREHOLDER PROPOSALS
Value 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
32
<PAGE>
the Secretary of Value Trust, 7800 East Union Avenue, Denver, Colorado 80237.
Value Trust has not received any shareholder proposals to be presented at this
Meeting.
By Order of the Board of Trustees
Glen A. Payne
Secretary
March 23, 1999
33
<PAGE>
APPENDIX A
PRINCIPAL SHAREHOLDERS AT MARCH 12, 1999
NAME AND ADDRESS OF BENEFICIAL OWNER NUMBER OF SHARES PERCENT OF CLASS
- ------------------------------------ ---------------- ----------------
VALUE EQUITY FUND
- -----------------
Charles Schwab & Co. Inc. [864,976.7110] [6.40%]
Special Custody Acct. For the
Exclusive Benefit of Customers
Attn: Mutual Funds
101 Montgomery Street
San Francisco, CA 94104
INVESCO Trust Co. Trustee [835,018.3840] [6.18%]
HNTB Corporation Retirement &
Savings Plan
c/o Joan Watanabie
1201 Walnut, Suite 700
Kansas City, MO 64106
INVESCO Trust Co. Trustee [731,705.8790] [5.42%]
Morris Communications Corp.
Employees' Profit Sharing Ret. Plan
725 Broad Street
Augusta, GA 30901-1336
TOTAL RETURN FUND
- -----------------
Charles Schwab & Co. Inc. [15,686,779.0540] [17.21%]
Special Custody Acct. For the
Exclusive Benefit of Customers
Attn: Mutual Funds
101 Montgomery Street
San Francisco, CA 94104
Connecticut General Life Ins. [13,246,467.4570] [14.53%]
c/o Liz Pezda M-110
P. O. Box 2975
Hartford, CT 06104
A-1
<PAGE>
NAME AND ADDRESS OF BENEFICIAL OWNER NUMBER OF SHARES PERCENT OF CLASS
- ------------------------------------ ---------------- ----------------
Bankers Trust Company [7,338,602.5630] [8.05%]
Siemens Savings Plan
100 Plaza One Suite M53048
Jersey City, NJ 07311-3999
A-2
<PAGE>
APPENDIX B
AGREEMENT AND PLAN OF CONVERSION AND TERMINATION
------------------------------------------------
This AGREEMENT AND PLAN OF CONVERSION AND TERMINATION ("Agreement") is
made as of _____ __, 1999, between INVESCO Value Trust, a Massachusetts business
trust ("Trust"), on behalf of INVESCO Value Equity Fund, a segregated portfolio
of assets ("series") thereof ("Old Fund"), and INVESCO Stock Funds, Inc., a
Maryland corporation ("Stock Funds"), on behalf of its INVESCO Value Equity
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"; Trust and Stock Funds are sometimes referred to
herein individually as an "Investment Company" and collectively as the
"Investment Companies.") All agreements, representations, actions, and
obligations described herein made or to be taken or undertaken by either Fund
are made and shall be taken or undertaken by Trust on behalf of Old Fund and
Stock Funds on behalf of New Fund.
Old Fund intends to change its identity -- by converting from a series of
Trust to a series of Stock Funds -- through a reorganization within the meaning
of section 368(a)(1)(F) of the Internal Revenue Code of 1986, as amended
("Code"). Old Fund desires to accomplish such conversion by transferring all its
assets to New Fund (which is being established solely for the purpose of
acquiring such assets and continuing Old Fund's business) in exchange solely for
voting shares of common stock in New Fund ("New Fund Shares") and New Fund's
assumption of Old Fund's liabilities, followed by the constructive distribution
of the New Fund Shares PRO RATA to the holders of shares of common stock in Old
Fund ("Old Fund Shares") in exchange therefor, all on the terms and conditions
set forth in this Agreement (which is intended to be, and is adopted as, a "plan
of reorganization" for federal income tax purposes). All such transactions are
referred to herein as the "Reorganization."
In consideration of the mutual promises herein contained, the parties
agree as follows:
1. PLAN OF CONVERSION AND TERMINATION
----------------------------------
1.1. Old Fund agrees to assign, sell, convey, transfer, and deliver
all of its assets described in paragraph 1.2 ("Assets") to New Fund. New
Fund agrees in exchange therefor --
(a) to issue and deliver to Old Fund the number of full and
fractional (rounded to the third decimal place) New Fund Shares equal to
the number of full and fractional Old Fund Shares then outstanding, and
(b) to assume all of Old Fund's liabilities described in paragraph
1.3 ("Liabilities").
Such transactions shall take place at the Closing (as defined in paragraph 2.1).
1.2. The Assets shall include, without limitation, all cash, cash
equivalents, securities, receivables (including interest and dividends
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receivable), claims and rights of action, rights to register shares under
applicable securities laws, books and records, deferred and prepaid expenses
shown as assets on Old Fund's books, and other property owned by Old Fund at the
Effective Time (as defined in paragraph 2.1).
1.3. The Liabilities shall include all of Old Fund's liabilities, debts,
obligations, and duties of whatever kind or nature, whether absolute, accrued,
contingent, or otherwise, whether or not arising in the ordinary course of
business, whether or not determinable at the Effective Time, and whether or not
specifically referred to in this Agreement.
1.4. At the Effective Time (or as soon thereafter as is reasonably
practicable), (a) the New Fund Share issued pursuant to paragraph 4.4 shall be
redeemed by New Fund for $1.00 and (b) Old Fund shall distribute the New Fund
Shares it received pursuant to paragraph 1.1 to its shareholders of record,
determined as of the Effective Time (each a "Shareholder" and collectively
"Shareholders"), in constructive exchange for their Old Fund Shares. Such
distribution shall be accomplished by Stock Funds' transfer agent's opening
accounts on New Fund's share transfer books in the Shareholders' names and
transferring such New Fund Shares thereto. Each Shareholder's account shall be
credited with the respective PRO RATA number of full and fractional (rounded to
the third decimal place) New Fund Shares due that Shareholder. All outstanding
Old Fund Shares, including those represented by certificates, shall
simultaneously be canceled on Old Fund's share transfer books. New Fund shall
not issue certificates representing the New Fund Shares in connection with the
Reorganization.
1.5. As soon as reasonably practicable after distribution of the New Fund
Shares pursuant to paragraph 1.4, but in all events within twelve months after
the Effective Time, Old Fund shall be terminated as a series of Trust and any
further actions shall be taken in connection therewith as required by applicable
law.
1.6. Any reporting responsibility of Old Fund to a public authority is and
shall remain its responsibility up to and including the date on which it is
terminated.
1.7. Any transfer taxes payable on issuance of New Fund Shares in a name
other than that of the registered holder on Old Fund's books of the Old Fund
Shares constructively exchanged therefor shall be paid by the person to whom
such New Fund Shares are to be issued, as a condition of such transfer.
2. CLOSING AND EFFECTIVE TIME
--------------------------
2.1. The Reorganization, together with related acts necessary to
consummate the same ("Closing"), shall occur at the Funds' principal office on
______ ___, 1999, or at such other place and/or on such other date as to which
the parties may agree. All acts taking place at the Closing shall be deemed to
take place simultaneously as of the close of business on the date thereof or at
such other time as to which the parties may agree ("Effective Time").
2.2. Trust's fund accounting and pricing agent shall deliver at the
Closing a certificate of an authorized officer verifying that the information
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(including adjusted basis and holding period, by lot) concerning the Assets,
including all portfolio securities, transferred by Old Fund to New Fund, as
reflected on New Fund's books immediately following the Closing, does or will
conform to such information on Trust's books immediately before the Closing. Old
Fund's custodian shall deliver at the Closing a certificate of an authorized
officer stating that (a) the Assets held by the custodian will be transferred to
New Fund at the Effective Time and (b) all necessary taxes in conjunction with
the delivery of the Assets, including all applicable federal and state stock
transfer stamps, if any, have been paid or provision for payment has been made.
2.3. Stock Funds' transfer agent shall deliver at the Closing a
certificate as to the opening on New Fund's share transfer books of accounts in
the Shareholders' names. Stock Funds shall issue and deliver a confirmation to
Trust evidencing the New Fund Shares to be credited to Old Fund at the Effective
Time or provide evidence satisfactory to Trust 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, assignments, stock
certificates, receipts, or other documents as the other party or its counsel may
reasonably request.
2.4. Each Investment Company shall deliver to the other at the Closing a
certificate executed in its name by its President or a Vice President in form
and substance satisfactory to the recipient and dated the Effective Time, to the
effect that the representations and warranties it made in this Agreement are
true and correct at the Effective Time except as they may be affected by the
transactions contemplated by this Agreement.
3. REPRESENTATIONS AND WARRANTIES
------------------------------
3.1. Old Fund represents and warrants as follows:
3.1.1. Trust is a trust operating under a written declaration of
trust, the beneficial interest in which is divided into transferable
shares ("Business Trust"), that is duly organized and validly existing
under the laws of the Commonwealth of Massachusetts; and a copy of its'
Declaration of Trust is on file with the Secretary of the Commonwealth of
Massachusetts;
3.1.2. Trust 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. Old Fund is a duly established and designated series of
Trust;
3.1.4. At the Closing, Old Fund will have good and marketable title
to the Assets and full right, power, and authority to sell, assign,
transfer, and deliver the Assets free of any liens or other encumbrances;
and upon delivery and payment for the Assets, New Fund will acquire good
and marketable title thereto;
3.1.5. New Fund Shares are not being acquired for the purpose of
making any distribution thereof, other than in accordance with the terms
hereof;
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3.1.6. Old Fund is a "fund" as defined in section 851(g)(2) of the
Code; it qualified for treatment as a regulated investment company under
Subchapter M of the Code ("RIC") for each past taxable year since it
commenced operations and will continue to meet all the requirements for
such qualification for its current taxable year; and it has no earnings
and profits accumulated in any taxable year in which the provisions of
Subchapter M did not apply to it. The Assets shall be invested at all
times through the Effective Time in a manner that ensures compliance with
the foregoing;
3.1.7. The Liabilities were incurred by Old Fund in the ordinary
course of its business and are associated with the Assets;
3.1.8. Old Fund is not under the jurisdiction of a court in a
proceeding under Title 11 of the United States Code or similar case within
the meaning of section 368(a)(3)(A) of the Code;
3.1.9. Not more than 25% of the value of Old Fund's total assets
(excluding cash, cash items, and U.S. government securities) is invested
in the stock and securities of any one issuer, and not more than 50% of
the value of such assets is invested in the stock and securities of five
or fewer issuers;
3.1.10. 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;
3.1.11. At the Effective Time, the performance of this Agreement
shall have been duly authorized by all necessary action by Old Fund's
shareholders; and
3.1.12. Old Fund will be terminated as soon as reasonably
practicable after the Effective Time, but in all events within twelve
months thereafter.
3.2. New Fund represents and warrants as follows:
3.2.1. Stock Funds is a corporation duly organized, validly
existing, and in good standing under the laws of the State of Maryland;
and a copy of its Articles of Incorporation is on file with the Secretary
of State of Maryland;
3.2.2. Stock 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 Funds;
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3.2.4. New Fund has not commenced operations and will not do so
until after the Closing;
3.2.5. Prior to the Effective Time, there will be no issued and
outstanding shares in New Fund or any other securities issued by New Fund,
except as provided in paragraph 4.4;
3.2.6. No consideration other than New Fund Shares (and New Fund's
assumption of the Liabilities) will be issued in exchange for the Assets
in the Reorganization;
3.2.7. The New Fund Shares to be issued and delivered to Old Fund
hereunder will, at the Effective Time, have been duly authorized and, when
issued and delivered as provided herein, will be duly and validly issued
and outstanding shares of New Fund, fully paid and non-assessable;
3.2.8. New Fund will be a "fund" as defined in section 851(g)(2) of
the Code and will meet all the requirements to qualify for treatment as a
RIC for its taxable year in which the Reorganization occurs;
3.2.9. New Fund has no plan or intention to issue additional New
Fund Shares following the Reorganization except for shares issued in the
ordinary course of its business as a series of an open-end investment
company; nor does New Fund have any plan or intention to redeem or
otherwise reacquire any New Fund Shares issued to the Shareholders
pursuant to the Reorganization, except to the extent it is required by the
1940 Act to redeem any of its shares presented for redemption at net asset
value in the ordinary course of that business;
3.2.10. Following the Reorganization, New Fund (a) will continue Old
Fund's "historic business" (within the meaning of section 1.368-1(d)(2) of
the Income Tax Regulations under the Code), (b) use a significant portion
of Old Fund's historic business assets (within the meaning of section
1.368-1(d)(3) of the Income Tax Regulations under the Code) in a business,
(c) has no plan or intention to sell or otherwise dispose of any of the
Assets, except for dispositions made in the ordinary course of that
business and dispositions necessary to maintain its status as a RIC, and
(d) expects to retain substantially all the Assets in the same form as it
receives them in the Reorganization, unless and until subsequent
investment circumstances suggest the desirability of change or it becomes
necessary to make dispositions thereof to maintain such status;
3.2.11. There is no plan or intention for New Fund to be dissolved
or merged into another corporation or a business trust or any "fund"
thereof (within the meaning of section 851(g)(2) of the Code) following
the Reorganization; and
3.2.12. Immediately after the Reorganization, (a) not more than 25%
of the value of New Fund's total assets (excluding cash, cash items, and
U.S. government securities) will be invested in the stock and securities
of any one issuer and (b) not more than 50% of the value of such assets
will be invested in the stock and securities of five or fewer issuers.
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3.3. Each Fund represents and warrants as follows:
3.3.1. The aggregate fair market value of the New Fund Shares, when
received by the Shareholders, will be approximately equal to the aggregate
fair market value of their Old Fund Shares constructively surrendered in
exchange therefor;
3.3.2. Its management (a) is unaware of any plan or intention of
Shareholders to redeem, sell, or otherwise dispose of (i) any portion of
their Old Fund Shares before the Reorganization to any person related
(within the meaning of section 1.368-1(e)(3) of the Income Tax Regulations
under the Code) to either Fund or (ii) any portion of the New Fund Shares
to be received by them in the Reorganization to any person related (as so
defined) to New Fund, (b) does not anticipate dispositions of those New
Fund Shares at the time of or soon after the Reorganization to exceed the
usual rate and frequency of dispositions of shares of Old Fund as a series
of an open-end investment company, (c) expects that the percentage of
Shareholder interests, if any, that will be disposed of as a result of or
at the time of the Reorganization will be DE MINIMIS, and (d) does not
anticipate that there will be extraordinary redemptions of New Fund Shares
immediately following the Reorganization;
3.3.3. The Shareholders will pay their own expenses, if any,
incurred in connection with the Reorganization;
3.3.4. Immediately following consummation of the Reorganization, the
Shareholders will own all the New Fund Shares and will own such shares
solely by reason of their ownership of Old Fund Shares immediately before
the Reorganization;
3.3.5. Immediately following consummation of the Reorganization, New
Fund will hold the same assets -- except for assets distributed to
shareholders in the course of its business as a RIC and assets used to pay
expenses incurred in connection with the Reorganization -- and be subject
to the same liabilities that Old Fund held or was subject to immediately
prior to the Reorganization, plus any liabilities for expenses of the
parties incurred in connection with the Reorganization. Such excepted
assets, together with the amount of all redemptions and distributions
(other than regular, normal dividends) made by Old Fund immediately
preceding the Reorganization, will, in the aggregate, constitute less than
1% of its net assets;
3.3.6. There is no intercompany indebtedness between the Funds that
was issued or acquired, or will be settled, at a discount; and
3.3.7. Neither Fund will be reimbursed for any expenses incurred by
it or on its behalf in connection with the Reorganization unless those
expenses are solely and directly related to the Reorganization (determined
in accordance with the guidelines set forth in Rev. Rul. 73-54, 1973-1
C.B. 187) ("Reorganization Expenses").
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4. CONDITIONS PRECEDENT
--------------------
Each Fund's obligations hereunder shall be subject to (a) performance by
the other Fund of all its obligations to be performed hereunder at or before the
Effective Time, (b) all representations and warranties of the other Fund
contained herein being true and correct in all material respects as of the date
hereof and, except as they may be affected by the transactions contemplated
hereby, as of the Effective Time, with the same force and effect as if made on
and as of the Effective Time, and (c) the further conditions that, at or before
the Effective Time:
4.1. This Agreement and the transactions contemplated hereby shall have
been duly adopted and approved by Old Fund and Stock Funds' board of directors
and shall have been approved by Old Fund's shareholders in accordance with
applicable law;
4.2. All necessary filings shall have been made with the Securities and
Exchange Commission ("SEC") and state securities authorities, and no order or
directive shall have been received that any other or further action is required
to permit the parties to carry out the transactions contemplated hereby. All
consents, orders, and permits of federal, state, and local regulatory
authorities (including the SEC and state securities authorities) deemed
necessary by either Investment Company to permit consummation, in all material
respects, of the transactions contemplated hereby shall have been obtained,
except where failure to obtain same would not involve a risk of a material
adverse effect on the assets or properties of either Fund, provided that either
Investment Company may for itself waive any of such conditions;
4.3. Each Investment Company shall have received an opinion of Kirkpatrick
& Lockhart LLP, addressed to and in form and substance satisfactory to it, as to
the federal income tax consequences mentioned below ("Tax Opinion"). In
rendering the Tax Opinion, such counsel may rely as to factual matters,
exclusively and without independent verification, on the representations made in
this Agreement (or in separate letters addressed to such counsel) and the
certificates delivered pursuant to paragraph 2.4. The Tax Opinion shall be
substantially to the effect that, based on the facts and assumptions stated
therein and conditioned on consummation of the Reorganization in accordance with
this Agreement, for federal income tax purposes:
4.3.1. New Fund's acquisition of the Assets in exchange solely for
New Fund Shares and New Fund's assumption of the Liabilities, followed by
Old Fund's distribution of those shares PRO RATA to the Shareholders
constructively in exchange for the Shareholders' Old Fund Shares, will
constitute a reorganization within the meaning of section 368(a)(1)(F) of
the Code, and each Fund will be "a party to a reorganization" within the
meaning of section 368(b) of the Code;
4.3.2. Old Fund will recognize no gain or loss on the transfer to
New Fund of the Assets in exchange solely for New Fund Shares and New
Fund's assumption of the Liabilities or on the subsequent distribution of
those shares to the Shareholders in constructive exchange for their Old
Fund Shares;
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4.3.3. New Fund will recognize no gain or loss on its receipt of
the Assets in exchange solely for New Fund Shares and its assumption of
the Liabilities;
4.3.4. New Fund's basis for the Assets will be the same as the
basis thereof in Old Fund's hands immediately before the Reorganization,
and New Fund's holding period for the Assets will include Old Fund's
holding period therefor;
4.3.5. A Shareholder will recognize no gain or loss on the
constructive exchange of all its Old Fund Shares solely for New Fund
Shares pursuant to the Reorganization;
4.3.6. A Shareholder's aggregate basis for the New Fund Shares to be
received by it in the Reorganization will be the same as the aggregate
basis for its Old Fund Shares to be constructively surrendered in exchange
for those New Fund Shares, and its holding period for those New Fund
Shares will include its holding period for those Old Fund Shares, provided
they are held as capital assets by the Shareholder at the Effective Time;
and
4.3.7. For purposes of section 381 of the Code, New Fund will be
treated as if there had been no Reorganization. Accordingly, the
Reorganization will not result in the termination of Old Fund's taxable
year, Old Fund's tax attributes enumerated in section 381(c) of the Code
will be taken into account by New Fund as if there had been no
Reorganization, and the part of Old Fund's taxable year before the
Reorganization will be included in New Fund's taxable year after the
Reorganization;
4.4. Prior to the Closing, Stock Funds' directors shall have authorized
the issuance of, and New Fund shall have issued, one New Fund Share to Trust in
consideration of the payment of $1.00 to vote on the matters referred to in
paragraph 4.5; and
4.5. Stock Funds (on behalf of and with respect to New Fund) shall have
entered into a management contract, a distribution and service plan pursuant to
Rule 12b-1 under the 1940 Act, and such other agreements as are necessary for
New Fund's operation as a series of an open-end investment company. Each such
contract, plan, and agreement shall have been approved by Stock Funds' directors
and, to the extent required by law, by such of those directors who are not
"interested persons" thereof (as defined in the 1940 Act) and by Trust as the
sole shareholder of New Fund.
At any time before the Closing, Old Fund or Stock Funds may waive any of the
foregoing conditions (except that set forth in paragraph 4.1) if, in the
judgment of its board of directors, such waiver will not have a material adverse
effect on its Fund's shareholders' interests.
5. BROKERAGE FEES AND EXPENSES
---------------------------
5.1 Old Fund and Stock Funds 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.
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5.2 Except as otherwise provided herein, 50% of the total Reorganization
Expenses will be borne by INVESCO and the remaining 50% will be borne partly 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 officers
of either Investment Company, to the other Fund.
8. AMENDMENT
---------
This Agreement may be amended, modified, or supplemented at any time,
notwithstanding approval thereof by Old Fund's shareholders, in such manner as
may be mutually agreed upon in writing by the parties; provided that following
such approval no such amendment shall have a material adverse effect on the
Shareholders' interests.
9. MISCELLANEOUS
-------------
9.1. This Agreement shall be governed by and construed in accordance with
the internal laws of the State of Maryland; provided that, in the case of any
conflict between such laws and the federal securities laws, the latter shall
govern.
9.2. Nothing expressed or implied herein is intended or shall be construed
to confer upon or give any person, firm, trust, or corporation other than the
parties and their respective successors and assigns any rights or remedies under
or by reason of this Agreement.
9.3. This Agreement may be executed in one or more counterparts, all of
which shall be considered one and the same agreement, and shall become effective
when one or more counterparts have been executed by Old Fund and Stock Funds and
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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.
ATTEST: INVESCO VALUE TRUST,
on behalf of its series,
INVESCO Value Equity Fund
- ------------------- By: --------------------
Assistant Secretary Vice President
ATTEST: INVESCO STOCK FUNDS, INC.,
on behalf of its series,
INVESCO Value Equity Fund
- ------------------- By: --------------------
Assistant Secretary Vice President
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APPENDIX C
AGREEMENT AND PLAN OF CONVERSION AND TERMINATION
------------------------------------------------
This AGREEMENT AND PLAN OF CONVERSION AND TERMINATION ("Agreement") is
made as of _____ __, 1999, between INVESCO Value Trust, a Massachusetts business
trust ("Trust"), on behalf of INVESCO Total Return Fund, a segregated portfolio
of assets ("series") thereof ("Old Fund"), and INVESCO Combination Stock & Bond
Funds, Inc., a Maryland corporation ("Stock & Bond Funds"), on behalf of its
INVESCO Total Return 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"; Trust and Stock Funds
are sometimes referred to herein individually as an "Investment Company" and
collectively as the "Investment Companies.") All agreements, representations,
actions, and obligations described herein made or to be taken or undertaken by
either Fund are made and shall be taken or undertaken by Trust on behalf of Old
Fund and Stock Funds on behalf of New Fund.
Old Fund intends to change its identity -- by converting from a series of
Trust to a series of Stock Funds -- through a reorganization within the meaning
of section 368(a)(1)(F) of the Internal Revenue Code of 1986, as amended
("Code"). Old Fund desires to accomplish such conversion by transferring all its
assets to New Fund (which is being established solely for the purpose of
acquiring such assets and continuing Old Fund's business) in exchange solely for
voting shares of common stock in New Fund ("New Fund Shares") and New Fund's
assumption of Old Fund's liabilities, followed by the constructive distribution
of the New Fund Shares PRO RATA to the holders of shares of common stock in Old
Fund ("Old Fund Shares") in exchange therefor, all on the terms and conditions
set forth in this Agreement (which is intended to be, and is adopted as, a "plan
of reorganization" for federal income tax purposes). All such transactions are
referred to herein as the "Reorganization."
In consideration of the mutual promises herein contained, the parties
agree as follows:
1. PLAN OF CONVERSION AND TERMINATION
----------------------------------
1.1. Old Fund agrees to assign, sell, convey, transfer, and deliver all
of its assets described in paragraph 1.2 ("Assets") to New Fund. New Fund agrees
in exchange therefor --
(a) to issue and deliver to Old Fund the number of full and
fractional (rounded to the third decimal place) New Fund Shares equal to
the number of full and fractional Old Fund Shares then outstanding, and
(b) to assume all of Old Fund's liabilities described in paragraph
1.3 ("Liabilities").
Such transactions shall take place at the Closing (as defined in paragraph 2.1).
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1.2. The Assets shall include, without limitation, all cash, cash
equivalents, securities, receivables (including interest and dividends
receivable), claims and rights of action, rights to register shares under
applicable securities laws, books and records, deferred and prepaid expenses
shown as assets on Old Fund's books, and other property owned by Old Fund at the
Effective Time (as defined in paragraph 2.1).
1.3. The Liabilities shall include all of Old Fund's liabilities, debts,
obligations, and duties of whatever kind or nature, whether absolute, accrued,
contingent, or otherwise, whether or not arising in the ordinary course of
business, whether or not determinable at the Effective Time, and whether or not
specifically referred to in this Agreement.
1.4. At the Effective Time (or as soon thereafter as is reasonably
practicable), (a) the New Fund Share issued pursuant to paragraph 4.4 shall be
redeemed by New Fund for $1.00 and (b) Old Fund shall distribute the New Fund
Shares it received pursuant to paragraph 1.1 to its shareholders of record,
determined as of the Effective Time (each a "Shareholder" and collectively
"Shareholders"), in constructive exchange for their Old Fund Shares. Such
distribution shall be accomplished by Stock & Bond Funds' transfer agent's
opening accounts on New Fund's share transfer books in the Shareholders' names
and transferring such New Fund Shares thereto. Each Shareholder's account shall
be credited with the respective PRO RATA number of full and fractional (rounded
to the third decimal place) New Fund Shares due that Shareholder. All
outstanding Old Fund Shares, including those represented by certificates, shall
simultaneously be canceled on Old Fund's share transfer books. New Fund shall
not issue certificates representing the New Fund Shares in connection with the
Reorganization.
1.5. As soon as reasonably practicable after distribution of the New Fund
Shares pursuant to paragraph 1.4, but in all events within twelve months after
the Effective Time, Old Fund shall be terminated as a series of Trust and any
further actions shall be taken in connection therewith as required by applicable
law.
1.6. Any reporting responsibility of Old Fund to a public authority is and
shall remain its responsibility up to and including the date on which it is
terminated.
1.7. Any transfer taxes payable on issuance of New Fund Shares in a name
other than that of the registered holder on Old Fund's books of the Old Fund
Shares constructively exchanged therefor shall be paid by the person to whom
such New Fund Shares are to be issued, as a condition of such transfer.
2. CLOSING AND EFFECTIVE TIME
--------------------------
2.1. The Reorganization, together with related acts necessary to
consummate the same ("Closing"), shall occur at the Funds' principal office on
______ ___, 1999, or at such other place and/or on such other date as to which
the parties may agree. All acts taking place at the Closing shall be deemed to
take place simultaneously as of the close of business on the date thereof or at
such other time as to which the parties may agree ("Effective Time").
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2.2. Trust's fund accounting and pricing agent shall deliver at the
Closing a certificate of an authorized officer verifying that the information
(including adjusted basis and holding period, by lot) concerning the Assets,
including all portfolio securities, transferred by Old Fund to New Fund, as
reflected on New Fund's books immediately following the Closing, does or will
conform to such information on Trust's books immediately before the Closing. Old
Fund's custodian shall deliver at the Closing a certificate of an authorized
officer stating that (a) the Assets held by the custodian will be transferred to
New Fund at the Effective Time and (b) all necessary taxes in conjunction with
the delivery of the Assets, including all applicable federal and state stock
transfer stamps, if any, have been paid or provision for payment has been made.
2.3. Stock & Bond Funds' transfer agent shall deliver at the Closing a
certificate as to the opening on New Fund's share transfer books of accounts in
the Shareholders' names. Stock & Bond Funds shall issue and deliver a
confirmation to Trust evidencing the New Fund Shares to be credited to Old Fund
at the Effective Time or provide evidence satisfactory to Trust 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,
assignments, stock certificates, receipts, or other documents as the other party
or its counsel may reasonably request.
2.4. Each Investment Company shall deliver to the other at the Closing a
certificate executed in its name by its President or a Vice President in form
and substance satisfactory to the recipient and dated the Effective Time, to the
effect that the representations and warranties it made in this Agreement are
true and correct at the Effective Time except as they may be affected by the
transactions contemplated by this Agreement.
3. REPRESENTATIONS AND WARRANTIES
------------------------------
3.1. Old Fund represents and warrants as follows:
3.1.1. Trust is a trust operating under a written declaration of
trust, the beneficial interest in which is divided into transferable
shares ("Business Trust"), that is duly organized and validly existing
under the laws of the Commonwealth of Massachusetts; and a copy of its'
Declaration of Trust is on file with the Secretary of the Commonwealth of
Massachusetts;
3.1.2.Trust 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. Old Fund is a duly established and designated series of
Trust;
3.1.4. At the Closing, Old Fund will have good and marketable title
to the Assets and full right, power, and authority to sell, assign,
transfer, and deliver the Assets free of any liens or other encumbrances;
and upon delivery and payment for the Assets, New Fund will acquire good
and marketable title thereto;
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3.1.5. New Fund Shares are not being acquired for the purpose of
making any distribution thereof, other than in accordance with the terms
hereof;
3.1.6. Old Fund is a "fund" as defined in section 851(g)(2) of the
Code; it qualified for treatment as a regulated investment company under
Subchapter M of the Code ("RIC") for each past taxable year since it
commenced operations and will continue to meet all the requirements for
such qualification for its current taxable year; and it has no earnings
and profits accumulated in any taxable year in which the provisions of
Subchapter M did not apply to it. The Assets shall be invested at all
times through the Effective Time in a manner that ensures compliance with
the foregoing;
3.1.7. The Liabilities were incurred by Old Fund in the ordinary
course of its business and are associated with the Assets;
3.1.8. Old Fund is not under the jurisdiction of a court in a
proceeding under Title 11 of the United States Code or similar case within
the meaning of section 368(a)(3)(A) of the Code;
3.1.9. Not more than 25% of the value of Old Fund's total assets
(excluding cash, cash items, and U.S. government securities) is invested
in the stock and securities of any one issuer, and not more than 50% of
the value of such assets is invested in the stock and securities of five
or fewer issuers;
3.1.10. 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;
3.1.11. At the Effective Time, the performance of this Agreement
shall have been duly authorized by all necessary action by Old Fund's
shareholders; and
3.1.12. Old Fund will be terminated as soon as reasonably
practicable after the Effective Time, but in all events within twelve
months thereafter.
3.2. New Fund represents and warrants as follows:
3.2.1. Stock & Bond Funds is a corporation duly organized, validly
existing, and in good standing under the laws of the State of Maryland;
and a copy of its Articles of Incorporation is on file with the Secretary
of State of Maryland;
3.2.2. Stock & Bond Funds is duly registered as an open-end
management investment company under the 1940 Act, and such registration
will be in full force and effect at the Effective Time;
3.2.3. Before the Effective Time, New Fund will be a duly
established and designated series of Stock & Bond Funds;
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3.2.4. New Fund has not commenced operations and will not do so
until after the Closing;
3.2.5. Prior to the Effective Time, there will be no issued and
outstanding shares in New Fund or any other securities issued by New Fund,
except as provided in paragraph 4.4;
3.2.6. No consideration other than New Fund Shares (and New Fund's
assumption of the Liabilities) will be issued in exchange for the Assets
in the Reorganization;
3.2.7. The New Fund Shares to be issued and delivered to Old Fund
hereunder will, at the Effective Time, have been duly authorized and, when
issued and delivered as provided herein, will be duly and validly issued
and outstanding shares of New Fund, fully paid and non-assessable;
3.2.8. New Fund will be a "fund" as defined in section 851(g)(2) of
the Code and will meet all the requirements to qualify for treatment as a
RIC for its taxable year in which the Reorganization occurs;
3.2.9. New Fund has no plan or intention to issue additional New
Fund Shares following the Reorganization except for shares issued in the
ordinary course of its business as a series of an open-end investment
company; nor does New Fund have any plan or intention to redeem or
otherwise reacquire any New Fund Shares issued to the Shareholders
pursuant to the Reorganization, except to the extent it is required by the
1940 Act to redeem any of its shares presented for redemption at net asset
value in the ordinary course of that business;
3.2.10. Following the Reorganization, New Fund (a) will continue Old
Fund's "historic business" (within the meaning of section 1.368-1(d)(2) of
the Income Tax Regulations under the Code), (b) use a significant portion
of Old Fund's historic business assets (within the meaning of section
1.368-1(d)(3) of the Income Tax Regulations under the Code) in a business,
(c) has no plan or intention to sell or otherwise dispose of any of the
Assets, except for dispositions made in the ordinary course of that
business and dispositions necessary to maintain its status as a RIC, and
(d) expects to retain substantially all the Assets in the same form as it
receives them in the Reorganization, unless and until subsequent
investment circumstances suggest the desirability of change or it becomes
necessary to make dispositions thereof to maintain such status;
3.2.11. There is no plan or intention for New Fund to be dissolved
or merged into another corporation or a business trust or any "fund"
thereof (within the meaning of section 851(g)(2) of the Code) following
the Reorganization; and
3.2.12. Immediately after the Reorganization, (a) not more than 25%
of the value of New Fund's total assets (excluding cash, cash items, and
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U.S. government securities) will be invested in the stock and securities
of any one issuer and (b) not more than 50% of the value of such assets
will be invested in the stock and securities of five or fewer issuers.
3.3. Each Fund represents and warrants as follows:
3.3.1. The aggregate fair market value of the New Fund Shares, when
received by the Shareholders, will be approximately equal to the aggregate
fair market value of their Old Fund Shares constructively surrendered in
exchange therefor;
3.3.2. Its management (a) is unaware of any plan or intention of
Shareholders to redeem, sell, or otherwise dispose of (i) any portion of
their Old Fund Shares before the Reorganization to any person related
(within the meaning of section 1.368-1(e)(3) of the Income Tax Regulations
under the Code) to either Fund or (ii) any portion of the New Fund Shares
to be received by them in the Reorganization to any person related (as so
defined) to New Fund, (b) does not anticipate dispositions of those New
Fund Shares at the time of or soon after the Reorganization to exceed the
usual rate and frequency of dispositions of shares of Old Fund as a series
of an open-end investment company, (c) expects that the percentage of
Shareholder interests, if any, that will be disposed of as a result of or
at the time of the Reorganization will be DE MINIMIS, and (d) does not
anticipate that there will be extraordinary redemptions of New Fund Shares
immediately following the Reorganization;
3.3.3. The Shareholders will pay their own expenses, if any,
incurred in connection with the Reorganization;
3.3.4. Immediately following consummation of the Reorganization, the
Shareholders will own all the New Fund Shares and will own such shares
solely by reason of their ownership of Old Fund Shares immediately before
the Reorganization;
3.3.5. Immediately following consummation of the Reorganization, New
Fund will hold the same assets -- except for assets distributed to
shareholders in the course of its business as a RIC and assets used to pay
expenses incurred in connection with the Reorganization -- and be subject
to the same liabilities that Old Fund held or was subject to immediately
prior to the Reorganization, plus any liabilities for expenses of the
parties incurred in connection with the Reorganization. Such excepted
assets, together with the amount of all redemptions and distributions
(other than regular, normal dividends) made by Old Fund immediately
preceding the Reorganization, will, in the aggregate, constitute less than
1% of its net assets;
3.3.6. There is no intercompany indebtedness between the Funds
that was issued or acquired, or will be settled, at a discount; and
3.3.7. Neither Fund will be reimbursed for any expenses incurred by
it or on its behalf in connection with the Reorganization unless those
expenses are solely and directly related to the Reorganization (determined
in accordance with the guidelines set forth in Rev. Rul. 73-54, 1973-1
C.B. 187) ("Reorganization Expenses").
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4. CONDITIONS PRECEDENT
--------------------
Each Fund's obligations hereunder shall be subject to (a) performance by
the other Fund of all its obligations to be performed hereunder at or before the
Effective Time, (b) all representations and warranties of the other Fund
contained herein being true and correct in all material respects as of the date
hereof and, except as they may be affected by the transactions contemplated
hereby, as of the Effective Time, with the same force and effect as if made on
and as of the Effective Time, and (c) the further conditions that, at or before
the Effective Time:
4.1. This Agreement and the transactions contemplated hereby shall have
been duly adopted and approved by Old Fund and Stock Funds' board of directors
and shall have been approved by Old Fund's shareholders in accordance with
applicable law;
4.2. All necessary filings shall have been made with the Securities and
Exchange Commission ("SEC") and state securities authorities, and no order or
directive shall have been received that any other or further action is required
to permit the parties to carry out the transactions contemplated hereby. All
consents, orders, and permits of federal, state, and local regulatory
authorities (including the SEC and state securities authorities) deemed
necessary by either Investment Company to permit consummation, in all material
respects, of the transactions contemplated hereby shall have been obtained,
except where failure to obtain same would not involve a risk of a material
adverse effect on the assets or properties of either Fund, provided that either
Investment Company may for itself waive any of such conditions;
4.3. Each Investment Company shall have received an opinion of Kirkpatrick
& Lockhart LLP, addressed to and in form and substance satisfactory to it, as to
the federal income tax consequences mentioned below ("Tax Opinion"). In
rendering the Tax Opinion, such counsel may rely as to factual matters,
exclusively and without independent verification, on the representations made in
this Agreement (or in separate letters addressed to such counsel) and the
certificates delivered pursuant to paragraph 2.4. The Tax Opinion shall be
substantially to the effect that, based on the facts and assumptions stated
therein and conditioned on consummation of the Reorganization in accordance with
this Agreement, for federal income tax purposes:
4.3.1. New Fund's acquisition of the Assets in exchange solely for
New Fund Shares and New Fund's assumption of the Liabilities, followed by
Old Fund's distribution of those shares PRO RATA to the Shareholders
constructively in exchange for the Shareholders' Old Fund Shares, will
constitute a reorganization within the meaning of section 368(a)(1)(F) of
the Code, and each Fund will be "a party to a reorganization" within the
meaning of section 368(b) of the Code;
4.3.2. Old Fund will recognize no gain or loss on the transfer to
New Fund of the Assets in exchange solely for New Fund Shares and New
Fund's assumption of the Liabilities or on the subsequent distribution of
those shares to the Shareholders in constructive exchange for their Old
Fund Shares;
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4.3.3. New Fund will recognize no gain or loss on its receipt
of the Assets in exchange solely for New Fund Shares and its
assumption of the Liabilities;
4.3.4. New Fund's basis for the Assets will be the same as the basis
thereof in Old Fund's hands immediately before the Reorganization, and New
Fund's holding period for the Assets will include Old Fund's holding
period therefor;
4.3.5. A Shareholder will recognize no gain or loss on the
constructive exchange of all its Old Fund Shares solely for New Fund
Shares pursuant to the Reorganization;
4.3.6. A Shareholder's aggregate basis for the New Fund Shares to be
received by it in the Reorganization will be the same as the aggregate
basis for its Old Fund Shares to be constructively surrendered in exchange
for those New Fund Shares, and its holding period for those New Fund
Shares will include its holding period for those Old Fund Shares, provided
they are held as capital assets by the Shareholder at the Effective Time;
and
4.3.7. For purposes of section 381 of the Code, New Fund will be
treated as if there had been no Reorganization. Accordingly, the
Reorganization will not result in the termination of Old Fund's taxable
year, Old Fund's tax attributes enumerated in section 381(c) of the Code
will be taken into account by New Fund as if there had been no
Reorganization, and the part of Old Fund's taxable year before the
Reorganization will be included in New Fund's taxable year after the
Reorganization;
4.4. Prior to the Closing, Stock & Bond Funds' directors shall have
authorized the issuance of, and New Fund shall have issued, one New Fund Share
to Trust in consideration of the payment of $1.00 to vote on the matters
referred to in paragraph 4.5; and
4.5. Stock & Bond Funds (on behalf of and with respect to New Fund) shall
have entered into a management contract, a distribution and service plan
pursuant to Rule 12b-1 under the 1940 Act, and such other agreements as are
necessary for New Fund's operation as a series of an open-end investment
company. Each such contract, plan, and agreement shall have been approved by
Stock & Bond Funds' directors and, to the extent required by law, by such of
those directors who are not "interested persons" thereof (as defined in the 1940
Act) and by Trust as the sole shareholder of New Fund.
At any time before the Closing, Old Fund or Stock Funds may waive any of the
foregoing conditions (except that set forth in paragraph 4.1) if, in the
judgment of its board of directors, such waiver will not have a material adverse
effect on its Fund's shareholders' interests.
5. BROKERAGE FEES AND EXPENSES
---------------------------
5.1 Old Fund and Stock Funds 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.
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5.2 Except as otherwise provided herein, 50% of the total Reorganization
Expenses will be borne by INVESCO and the remaining 50% will be borne partly 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 officers
of either Investment Company, to the other Fund.
8. AMENDMENT
---------
This Agreement may be amended, modified, or supplemented at any time,
notwithstanding approval thereof by Old Fund's shareholders, in such manner as
may be mutually agreed upon in writing by the parties; provided that following
such approval no such amendment shall have a material adverse effect on the
Shareholders' interests.
9. MISCELLANEOUS
-------------
9.1. This Agreement shall be governed by and construed in accordance with
the internal laws of the State of Maryland; provided that, in the case of any
conflict between such laws and the federal securities laws, the latter shall
govern.
9.2. Nothing expressed or implied herein is intended or shall be construed
to confer upon or give any person, firm, trust, or corporation other than the
parties and their respective successors and assigns any rights or remedies under
or by reason of this Agreement.
9.3. This Agreement may be executed in one or more counterparts, all of
which shall be considered one and the same agreement, and shall become effective
when one or more counterparts have been executed by Old Fund and Stock Funds and
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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.
ATTEST: INVESCO VALUE TRUST,
on behalf of its series,
INVESCO Total Return Fund
- ------------------- By: --------------------
Assistant Secretary Vice President
ATTEST: INVESCO COMBINATION STOCK
& BOND FUNDS, INC.,
on behalf of its series,
INVESCO Total Return Fund
- ------------------- --------------------
Assistant Secretary Vice President
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APPENDIX D
----------
DIFFERENCES IN LEGAL STRUCTURES
Unless otherwise defined in this Appendix, capitalized terms have the
meanings set forth in the Proxy Statement.
DIFFERENCES BETWEEN THE LEGAL STRUCTURES OF A
MARYLAND CORPORATION AND A MASSACHUSETTS BUSINESS TRUST
Value Trust is organized as a Massachusetts business trust and two series
of Value Trust are to be converted into series of two different Maryland
corporations. This discussion provides a summary of the material differences
between the legal structure of an investment company organized as a Maryland
corporation and subject to the Maryland Statute and an investment company
organized as a Massachusetts business trust under the Massachusetts Statute. The
different legal structures are considered by contrasting the provisions of the
Agreement and Declaration of Trust and bylaws of Value Trust (the "Trust") with
the corporate charters and bylaws of Stock Funds and Combination Stock & Bond
Funds, as well as the respective laws applicable to such entities.
The following is not a complete list of differences. Shareholders should
refer to the provisions of such charters and bylaws ("Governing Documents") of
Stock Funds and Combination Stock & Bond Funds, the Maryland Statute, the
declarations and bylaws of Value Trust and the Massachusetts Statute directly
for a more thorough comparison. The Governing Documents of Stock Funds and
Combination Stock & Bond Funds are substantially identical. Accordingly, unless
otherwise indicated, the following discussion is applicable to shareholders of
Stock Funds and Combination Stock & Bond Funds.
GOVERNING DOCUMENTS. In order to form a Maryland corporation, one or more
individuals over the age of 18 must sign and acknowledge articles of
incorporation which contain statutorily required provisions and file them for
record with the State Department of Assessments and Taxation of Maryland. The
shareholders of a Maryland corporation are subject to the Maryland Statute and
the Governing Documents of the corporation. The business and affairs of a
Maryland corporation are managed under the direction of its Board of Directors.
In order to be considered a Massachusetts business trust, an entity must
file its trust document with the Secretary of the Commonwealth of Massachusetts
and with the clerk of every city or town in Massachusetts where the trust has a
usual place of business. The business and affairs of a Massachusetts business
trust are governed by its trust instrument, called an Agreement and Declaration
of Trust, as well as its bylaws. The Agreement and Declaration of Trust of the
Trust is referred to herein as the "Massachusetts Declaration."
SHAREHOLDER VOTING RIGHTS AND MEETINGS. Shareholders of both a Maryland
corporation and a Massachusetts business trust are subject to the voting
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requirements contained in the 1940 Act for electing and removing
trustees/directors, selecting auditors and approving investment advisory
agreements and plans of distribution.
The Governing Documents, consistent with the Maryland Statute, provide
that the holder of each share of stock of a New Series is entitled to one vote
for each full share, and a fractional vote for each fractional share of stock,
irrespective of the series or class. The Governing Documents of each New Series
state that, on any matter submitted to a vote of shareholders, all shares of the
corporation then issued and outstanding and entitled to vote, irrespective of
series or class, shall be voted in the aggregate and not by series or class
except when (1) otherwise expressly required by the Maryland Statute; (2)
required by the 1940 Act; and (3) the matter does not affect any interest of the
particular series or class, in which circumstance only shareholders of the
affected series or class shall be entitled to vote thereon, unless otherwise
expressly provided in the corporation's charter.
There is no provision in the Massachusetts Statute addressing voting by
beneficial owners. With respect to voting by series or class, the Massachusetts
Declaration is similar to the Governing Documents for each corresponding New
Series. Specifically, such Massachusetts Declaration provides that each whole
share shall be entitled to one vote as to any matter on which it is entitled to
vote and fractional shares shall be entitled to a proportionate fractional vote.
Except with respect to matters as to which the trustees have determined that
only the interests of one or more particular series or classes are affected or
as required by law, all of the shares of each series or class shall, on matters
as to which such series or class is entitled to vote, vote with the other series
or classes so entitled as a single class. The Massachusetts Declaration
specifically provides that the shareholders of each series must act separately
to act upon matters concerning advisory or management arrangements or investment
policies or restrictions affecting such series.
MATTERS REQUIRING SHAREHOLDER APPROVAL. Under the Maryland Statute,
shareholder approval by a majority of all votes entitled to be cast on the
matter is required to approve: (1) amendments of the charter except as described
below; (2) a consolidation, merger, share exchange or transfer of assets,
including a sale of all or substantially all of the assets of the corporation;
(3) a distribution in partial liquidation; or (4) a voluntary dissolution.
Under the Governing Documents of each New Series, the corporation may take
action upon the concurrence of a majority of the aggregate number of votes
entitled to be cast where any provision of Maryland law requires the vote of a
greater proportion of votes entitled to be cast thereon.
The Massachusetts Declaration provides the trustees with a great deal of
latitude as to which matters are to be submitted to a vote of shareholders.
Specifically, shareholders have the power to vote only: (i) for the removal of
trustees by vote of 2/3 of the outstanding shares of the Trust; (ii) to fill a
vacancy on the Board of trustees by affirmative vote of a majority of shares
represented at a special meeting of the shareholders, provided that a quorum is
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present and to the extent that a vacancy is not filled by the trustees as
otherwise permitted by the 1940 Act; (iii) for amendments to the Massachusetts
Declaration by vote of not less than a majority of the shares of the Trust; (iv)
on termination of the Trust or any series by vote of not less than 2/3 of the
shares of any such series of the Trust; (v) on any management or advisory
contract to the extent provided by the 1940 Act; (vi) on certain other matters
as may be required by applicable law, the bylaws, or by the Declaration; or
(vii) for the merger, consolidation, sale, lease or exchange of all or
substantially all of the Trust Property by vote of not less than 2/3 of the
shares of each Series. In addition, the Trustees may form an organization to
take over all Trust Property in exchange for the securities of such organization
with approval of the holders of a majority of the shares.
Unlike the Maryland Statute, there is no specific provision under the
Massachusetts Statute with respect to amendments of the Massachusetts
Declaration. Under the Massachusetts Declaration, however, shareholders are
entitled to vote on such amendments as described in the preceding paragraph.
The Massachusetts Declaration may be amended without obtaining shareholder
approval in order to (i) change the name of the Trust or any series thereof;
(ii) establish and designate any series of shares upon the execution by a
majority of Trustees of an instrument setting forth such designation; and (iii)
abolish any series of shares at any time that there are no shares outstanding of
such series by act of a majority of trustees. The trustees may also amend the
Massachusetts Declaration without the vote or consent of shareholders at any
time if the trustees deem it necessary to conform the Massachusetts Declaration
to applicable laws or regulations. The Governing Documents include a provision
for amendment of the bylaws of the corporation by the board of directors, except
for any provision which is specified not to be subject to alteration or repeal
by the board. Under the Maryland Statute, the board of directors of an open-end
investment company may amend the charter of such company to change the name of
the Fund or the name or other designation of any classes or series without
approval of the shareholders. The Massachusetts Declaration does not require
shareholder approval to change the name of a Massachusetts Trust or the name or
other designation of any classes or series.
REMOVAL OF DIRECTORS/TRUSTEES. Unless the charter provides otherwise, the
Maryland Statute requires the affirmative vote of a majority of all votes
entitled to be cast for the election of directors, or to remove a director with
or without cause. The Governing Documents specify that the shareholders may
remove any director or directors by the affirmative vote of the holders of a
majority of the votes entitled to be cast thereon, at any meeting of
shareholders duly called and at which a quorum is present.
The Massachusetts Statute is silent with respect to the removal of
trustees from office. The Massachusetts Declaration provides for the removal of
trustees with cause by action of 2/3 of the remaining trustees, or with or
without cause by vote of 2/3 of the outstanding shares of the Trust at any
special meeting of shareholders.
QUORUM REQUIREMENTS. The Maryland Statute provides that the presence in
person or by proxy of the holders of record of a majority of the outstanding
shares of stock entitled to vote shall constitute a quorum, except as provided
otherwise by the charter or the 1940 Act. The Governing Documents require the
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presence of 1/3 of the shares of stock of the corporation entitled to vote, in
person or by proxy, to constitute a quorum, except that in instances where
applicable law requires approval by one or more classes of stock, the presence
of the holders of 1/3 of the shares of each such class shall constitute a
quorum. The bylaws of each New Series require a greater proportion of
shareholders to constitute a quorum if necessitated by applicable law or the
charter. When a quorum is present, a majority of the shares entitled to vote in
person or by proxy shall decide any matter, unless a different vote is required
under applicable law or the Governing Documents. The bylaws of each New Series
also provide that a plurality of all votes cast at a meeting where a quorum is
present shall be sufficient for the election of a director.
The Massachusetts Statute does not contain a provision which defines a
quorum. However, the Massachusetts Declaration of Trust and bylaws require the
presence, in person or by proxy, of the holders of a majority of the outstanding
shares of each series in order to constitute a quorum, except as otherwise
provided by applicable laws or otherwise provided in the Declaration or bylaws
of the Trust.
SHAREHOLDERS' MEETINGS. Under the Maryland Statute, annual shareholders'
meetings of a registered investment company are not required if the charter or
bylaws of the company so provide; however, an annual meeting is required to be
held when the 1940 Act requires the election of directors by shareholders. The
Governing Documents of each New Series are consistent with the Maryland Statute.
There is no provision in the Massachusetts Statute relating to annual
shareholders' meetings, and neither the Massachusetts Declaration nor the bylaws
of the Trust require an annual shareholders' meeting.
With respect to special meetings of shareholders, the bylaws of each New
Series, pursuant to the Maryland Statute, provide that a special meeting may be
called by the president, or, in his absence, a vice president or a majority of
the members of the board of directors or upon the written request of the holders
of at least 10% of all shares issued and outstanding and entitled to vote at the
meeting. There is no comparable provision in the Massachusetts Statute relating
to special meetings of shareholders. The special meeting requirement under the
Declaration of Trust is similar to that described above for each New Series, in
that a special meeting of a series may be called by a majority of the trustees
or upon written request of shareholders holding in the aggregate at least 10% of
all outstanding shares of such Series.
ACTION WITHOUT A SHAREHOLDERS' MEETING. Under the Maryland Statute, any
action required to be approved at a meeting of the shareholders may also be
approved by the unanimous written consent of the shareholders entitled to vote
at such meeting.
There is no specific provision in the Massachusetts Statute relating to
shareholder action absent a meeting. Under the Massachusetts Declaration,
however, any action by shareholders that may be taken at a meeting also may be
taken by written action if a majority of the shareholders of each series
entitled to vote on the matter consent in writing and the consents are filed
with the records of shareholders' meetings.
RECORD DATE. The Maryland Statute requires that the record date for
determining which shareholders are entitled to notice of a meeting, to vote at a
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meeting, or to certain other rights, such as the record date for the payment of
dividends, may be not more than 90 days and not less than 10 days before the
date on which the meeting or other action requiring determination will be taken.
Each Corporation's bylaws provide that for the purpose of determining
shareholders entitled to notice of or to vote at any meeting of shareholders or
any adjournment thereof, or shareholders entitled to receive payment of any
dividend, or in order to make a determination of shareholders for any other
purpose, the board of directors of the Corporation may provide that the share
transfer books shall be closed for a stated period not to exceed, in any case,
twenty days. If the share transfer books shall be closed for the purpose of
determining shareholders entitled to notice of or to vote at a meeting of
shareholders, such books shall be closed for at least ten days immediately
preceding such meeting. In lieu of closing the share transfer books, the board
of directors may fix in advance a date as the record date for any such
determination of shareholders, such date in any case to be not more than ninety
days and, in case of a meeting of shareholders, not less than ten days prior to
the date on which the particular action requiring such determination of
shareholders is to be taken. If the share transfer books are not closed and no
record date is fixed for the determination of shareholders entitled to notice of
or to vote at a meeting of shareholders, the later of the close of business on
the date on which notice of the meeting is mailed or the thirtieth day before
the meeting shall be the record date for determining shareholders entitled to
notice of or to vote at a meeting of shareholders. The record date for
determining shareholders entitled to receive payment of a dividend or an
allotment of any rights shall be the close of business on the day on which the
resolution of the board of directors declaring such dividend or allotment of
rights is adopted. But the payment or allotment may not be made more than 60
days after the date on which the resolution is adopted. When a determination of
shareholders entitled to vote at any meeting of shareholders has been made as
provided in this section, such determination shall apply to any adjournment
thereof.
There is no provision in the Massachusetts Statute regarding record dates
for shareholders entitled to notice of a meeting or to vote at a meeting. The
Massachusetts Declaration permits the trustees from time to time to close the
transfer books for a period not to exceed 30 days or to fix a record date for
making shareholder determinations, which shall not be more than 60 days from the
date of the meeting or other action requiring determination.
NOTICE OF MEETINGS. The Maryland Statute requires that notice of each
shareholders' meeting be given to each shareholder entitled to vote at the
meeting no more than 90 days and not less than 10 days before a meeting. The
bylaws of each New Series are consistent with this provision.
There is no shareholder meeting notice provision in the Massachusetts
Statute. Under the Massachusetts Declaration, notice of a shareholders' meeting
must be given to shareholders at least 10 days and not more than 60 days before
a meeting.
SHAREHOLDER RIGHTS TO INSPECTION. The Maryland Statute provides that
during usual business hours a shareholder may inspect and copy the following
corporate documents: bylaws; minutes of shareholders' meetings; annual
statements of affairs; and voting trust agreements. Moreover, one or more
persons who together are, and for at least six months have been, shareholders of
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<PAGE>
record of at least five percent of the outstanding stock of any class are
entitled to inspect and copy the corporation's books of account and stock ledger
and to review a statement of affairs and a list of shareholders.
There is no provision in the Massachusetts Statute relating to the
inspection of trust records by shareholders. The Massachusetts Declaration
permits inspection by shareholders to the extent permitted by shareholders of a
Massachusetts business corporation.
DIVIDENDS AND OTHER DISTRIBUTIONS. The Maryland Statute allows the payment
of a dividend or other distribution unless, after giving effect to the dividend
or other distribution, (1) the corporation would not be able to pay its debts as
they become due in the usual course of business or (2) the corporation's total
assets would be less than the corporation's total liabilities plus the amount
that would be needed, if the corporation were to be dissolved at the time of the
distribution, to satisfy the preferential rights upon dissolution of
shareholders whose preferential rights upon dissolution are superior to those
receiving the distribution.
The Massachusetts Statute does not contain any statutory limitations on
the payment of dividends and other distributions. The Massachusetts Declaration
allows the trustees to declare and pay dividends within the board's discretion.
SHAREHOLDER/BENEFICIAL OWNER LIABILITY. As a general matter, the
shareholders of a Maryland corporation are not liable for the obligations of the
corporation. Under the Maryland Statute, a shareholder of a Maryland corporation
may, however, be liable in the amount of any distribution he or she accepts
knowing that the distribution was made in violation of the corporation's charter
or the Maryland Statute.
The Massachusetts Statute does not include an express provision relating
to the limitation of liability of the beneficial owners of a business trust. The
beneficial owners of a Massachusetts business trust potentially could be held
personally liable for obligations of the trust. The Massachusetts Declaration
provides, however, that no shareholder shall be subject to any personal
liability to any person in connection with Trust Property or the acts,
obligations or affairs of the Trust or any series thereof.
Therefore, the terms of the Massachusetts Declaration prohibit third
parties from holding a shareholder personally liable for any claim.
DIRECTOR/TRUSTEE LIABILITY. The standard of conduct for directors of a
Maryland corporation is governed by the Maryland Statute. A director of a
Maryland corporation is required to perform his or her duties in good faith, in
a manner that he or she reasonably believes to be in the best interests of the
corporation, and with the care that an ordinarily prudent person in a like
position would use under similar circumstances. To the extent that a director
performs his or her duties as required, he or she will be protected from
liability by reason of having been a director. Under the Maryland Statute, if it
is established that a director did not perform his or her duties as required by
the Maryland Statute, the director who votes or assents to a distribution made
in violation of the Maryland Statute or the corporation's charter may be
personally liable to the corporation for the amount of the distribution that
exceeds what could have been made pursuant to the Maryland Statute or the
charter.
D-6
<PAGE>
The Massachusetts Statute does not include an express provision limiting
the liability of the trustees of a Massachusetts business trust. The trustees of
a Massachusetts business trust can potentially be held liable for obligations of
the trust. Under the Massachusetts Declaration, no trustee is subject to any
personal liability to any person, except where such liability of the trustee is
to the Trust, any shareholder, trustee, officer, employee or agent and such
liability arises from the bad faith, willful misfeasance, gross negligence or
reckless disregard of the trustee's duties.
The Governing Documents limit the liability of directors to the fullest
extent permitted by Maryland corporate law and the 1940 Act for acts or
omissions which occur while such individual serves as director.
INDEMNIFICATION. There is no provision in the Maryland Statute relating to
indemnification of shareholders. The Governing Documents do not contain
provisions relating to indemnification of shareholders. Generally shareholders
of a Maryland corporation are not liable for the obligations of the corporation.
The Maryland Statute permits indemnification of directors and officers.
Under the Maryland Statute, this right may be limited by the charter or bylaws.
The Governing Documents require indemnification of officers and directors to the
fullest extent permitted by Maryland law and the 1940 Act.
Under the Maryland Statute, indemnification is not permitted if it is
established that: (i) the act or omission of the director was material to the
matter giving rise to the proceeding and was committed in bad faith or was the
result of active and deliberate dishonesty; or (ii) the director received an
improper personal benefit in money, property, or services; or (iii) in the case
of a criminal proceeding, the director had reasonable cause to believe that the
act or omission was unlawful. Under the Maryland Statute, unless the charter
provides otherwise, indemnification against reasonable expenses incurred by a
director is required for a director who is successful, on the merits or
otherwise, in the defense of a proceeding to which he is made a party by reason
of his service in such capacity.
The Massachusetts Statute does not contain a specific provision addressing
the indemnification of shareholders. The Massachusetts Declaration does,
however, provide that if a shareholder is held personally liable by reason of a
claim or liability incurred by the Trust, the shareholder shall be held harmless
from and indemnified against all claims and liabilities incurred by the Trust
which the shareholder has become subject to and legal and other expenses
reasonably incurred in connection with any such claim or liability. The
shareholders are to be indemnified out of the assets of the particular series of
shares of which the shareholder is or was a shareholder.
The Massachusetts Statute does not contain a specific provision addressing
the indemnification of trustees and officers. Under the Massachusetts
Declaration, however, indemnification of trustees and officers is provided to
the fullest extent permitted by law against liability and against all expenses
reasonably incurred or paid by such trustee in connection with any claim,
action, suit or proceeding. Consistent with the provisions of the 1940 Act,
D-7
<PAGE>
indemnification is specifically excluded under the Massachusetts Declaration by
reason of a final adjudication of willful misfeasance, bad faith, gross
negligence or reckless disregard of the trustees' duties.
D-8
<PAGE>
[Name and Address]
INVESCO TOTAL RETURN FUND
INVESCO VALUE TRUST
PROXY FOR THE SPECIAL MEETING OF SHAREHOLDERS
May 20, 1999
This proxy is being solicited on behalf of the Board of Trustees of INVESCO
Value Trust ("Company") and relates to the proposals with respect to the Company
and to INVESCO Total Return Fund, a series of the Company ("Fund"). The
undersigned hereby appoints as proxies [ ] and [ ], and each of them
(with power of substitution), to vote all shares of common stock of the
undersigned in the Fund at the Special Meeting of Shareholders to be held at
10:00 a.m., Mountain Standard Time, on May 20, 1999, at the offices of the
Company, 7800 E. 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 DATE AND SIGN THIS PROXY BELOW AND RETURN IT PROMPTLY IN THE ENCLOSED
ENVELOPE.
TO VOTE BY TOUCH-TONE PHONE OR THE INTERNET, PLEASE CALL 1-800-[ ] TOLL FREE OR
VISIT WWW.PROXYVOTE.COM. TO VOTE BY FACSIMILE TRANSMISSION, PLEASE FAX YOUR
COMPLETED PROXY CARD TO 1-516-254-7564.
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
[X] KEEP THIS PORTION FOR YOUR RECORDS
<PAGE>
DETACH AND RETURN THIS PORTION ONLY
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
INVESCO TOTAL RETURN FUND
INVESCO VALUE TRUST
Vote on Trustees FOR WITHHOLD FOR
- ---------------- ALL ALL ALL
EXCEPT
3. Election of the Company's Board / / / / / / To withhold
of Trustees: (1) Charles W. authority to
Brady; (2) Fred A. Deering; (3) vote for any
Mark H. Williamson; individual
(4) Dr. Victor L. Andrews; nominee(s), mark
(5) Bob R. Baker; (6) Lawrence "For All Except"
H. Budner; (7) Dr. Wendy Lee and write the
Gramm; (8) Kenneth T. King; nominee's number
(9) John W. McIntyre; and on the line
(10) Dr. Larry Soll. below.
_________________
Vote On Proposals FOR AGAINST ABSTAIN
- -----------------
1. To approve an Agreement and Plan of Conversion / / / / / /
and Termination ("Total Return Fund Conversion
Plan") providing for the conversion of Total
Return Fund from a separate series of Value Trust
to a separate series of a Maryland Corporation
(INVESCO Combination Stock & Bond Funds, Inc.).
2. Approval of changes to the fundamental / / / / / /
investment policies.
/ / To vote against the proposed changes to one or
more of the specific fundamental investment
policies, but to approve others, PLACE AN "X" IN
THE BOX AT left and indicate the letter(s) (as
set forth in the proxy statement) of the
investment policy or policies you do not want to
change on the line below.
________________________________________________
4. Ratification of the selection of / / / / / /
PricewaterhouseCoopers LLP as the Company's
Independent Public Accountants.
YOUR VOTE IS IMPORTANT. IF YOU ARE NOT VOTING BY PHONE, FACSIMILE, OR
INTERNET, PLEASE DATE AND SIGN THIS PROXY BELOW AND RETURN IT PROMPTLY IN THE
ENCLOSED ENVELOPE.
TO VOTE BY TOUCH-TONE PHONE OR THE INTERNET, PLEASE CALL 1-800-[ ]
TOLL FREE OR VISIT WWW.PROXYVOTE.COM. TO VOTE BY FACSIMILE TRANSMISSION, PLEASE
FAX YOUR COMPLETED PROXY CARD TO 1-516-254-7564.
Please sign exactly as name appears hereon. If stock is held in the name of
joint owners, each should sign. Attorneys-in-fact, executors, administrators,
etc. should so indicate. If shareholder is a corporation or partnership, please
sign in full corporate or partnership name by authorized person.
<PAGE>
- ------------------------------- -----------------------------------
Signature Date
- ------------------------------- -----------------------------------
Signature (Joint Owners) Date
<PAGE>
[Name and Address]
INVESCO VALUE EQUITY FUND
INVESCO VALUE TRUST
PROXY FOR THE SPECIAL MEETING OF SHAREHOLDERS
May 20, 1999
This proxy is being solicited on behalf of the Board of Trustees of INVESCO
Value Trust ("Company") and relates to the proposals with respect to the Company
and to INVESCO Value Equity Fund, a series of the Company ("Fund"). The
undersigned hereby appoints as proxies [ ] and [ ], and each of them (with power
of substitution), to vote all shares of common stock of the undersigned in the
Fund at the Special Meeting of Shareholders to be held at 10:00 a.m., Mountain
Standard Time, on May 20, 1999, at the offices of the Company, 7800 E. 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 DATE AND SIGN THIS PROXY BELOW AND RETURN IT PROMPTLY IN THE ENCLOSED
ENVELOPE.
TO VOTE BY TOUCH-TONE PHONE OR THE INTERNET, PLEASE CALL 1-800-[ ] TOLL FREE OR
VISIT WWW.PROXYVOTE.COM. TO VOTE BY FACSIMILE TRANSMISSION, PLEASE FAX YOUR
COMPLETED PROXY CARD TO 1-516-254-7564.
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
[X] KEEP THIS PORTION FOR YOUR RECORDS
<PAGE>
DETACH AND RETURN THIS PORTION ONLY
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
INVESCO VALUE EQUITY FUND
INVESCO VALUE TRUST
Vote on Trustees FOR WITHHOLD FOR
- ---------------- ALL ALL ALL
EXCEPT
3. Election of the Company's Board / / / / / / To withhold
of Trustees: (1) Charles W. authority to
Brady; (2) Fred A. Deering; (3) vote for any
Mark H. Williamson; individual
(4) Dr. Victor L. Andrews; nominee(s), mark
(5) Bob R. Baker; (6) Lawrence "For All Except"
H. Budner; (7) Dr. Wendy Lee and write the
Gramm; (8) Kenneth T. King; nominee's number
(9) John W. McIntyre; and on the line
(10) Dr. Larry Soll. below.
_________________
Vote On Proposals FOR AGAINST ABSTAIN
- -----------------
1. To approve an Agreement and Plan of Conversion / / / / / /
and Termination ("Value Equity Fund Conversion
Plan") providing for the conversion of Value
Equity Fund from a separate series of Value Trust
to a separate series of a Maryland Corporation
(INVESCO Stock Funds, Inc.).
2. Approval of changes to the fundamental investment / / / / / /
policies.
/ / To vote against the proposed changes to one or
more of the specific fundamental investment
policies, but to approve others, PLACE AN "X" IN
THE BOX AT left and indicate the letter(s) (as
set forth in the proxy statement) of the
investment policy or policies you do not want to
change on the line below.
________________________________________________
4. Ratification of the selection of / / / / / /
PricewaterhouseCoopers LLP as the Company's
Independent Public Accountants.
YOUR VOTE IS IMPORTANT. IF YOU ARE NOT VOTING BY PHONE, FACSIMILE, OR
INTERNET, PLEASE DATE AND SIGN THIS PROXY BELOW AND RETURN IT PROMPTLY IN THE
ENCLOSED ENVELOPE.
TO VOTE BY TOUCH-TONE PHONE OR THE INTERNET, PLEASE CALL 1-800-[ ]
TOLL FREE OR VISIT WWW.PROXYVOTE.COM. TO VOTE BY FACSIMILE TRANSMISSION, PLEASE
FAX YOUR COMPLETED PROXY CARD TO 1-516-254-7564.
Please sign exactly as name appears hereon. If stock is held in the name of
joint owners, each should sign. Attorneys-in-fact, executors, administrators,
etc. should so indicate. If shareholder is a corporation or partnership, please
sign in full corporate or partnership name by authorized person.
<PAGE>
- ------------------------------- -----------------------------------
Signature Date
- ------------------------------- -----------------------------------
Signature (Joint Owners) Date
