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 Emerging Opportunity Funds, Inc.
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/x/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:___________________________________________
(2) Form, Schedule or Registration Statement No.:____________________
(3) Filing Party:_____________________________________________________
(4) Date Filed:_______________________________________________________
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INVESCO SMALL COMPANY GROWTH FUND
(THE SERIES OF INVESCO EMERGING OPPORTUNITY FUNDS, INC.)
March 23, 1999
Dear Shareholder:
The attached proxy materials seek your approval to convert the INVESCO
Small Company Growth Fund ("Small Company Growth Fund"), the sole series of
INVESCO Emerging Opportunity Funds, Inc. ("Emerging Opportunity Funds"), into a
series of INVESCO Stock Funds, Inc. ("Stock Funds"), to make certain changes to
the fundamental investment restrictions of Small Company Growth Fund, to elect
directors of Emerging Opportunity Funds, and to ratify the appointment of
PricewaterhouseCoopers LLP as independent accountants of Small Company Growth
Fund.
YOUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR ALL PROPOSALS.
The conversion of the Small Company Growth Fund to a series of Stock Funds,
which is part of a proposed conversion of other INVESCO funds that invest in
equity securities of domestic issuers into Stock Funds, will streamline and
render more efficient the administration of the Small Company Growth Fund. The
changes to the fundamental policies of the Small Company Growth Fund have been
approved by the board of directors in order to simplify and modernize the Small
Company Growth Fund's fundamental investment restrictions and make them more
uniform with those of the other INVESCO Funds. The attached proxy materials
provide more information about the proposed conversion, as well as the proposed
changes in fundamental investment restrictions and the other matters you are
being asked to vote upon.
YOUR VOTE IS IMPORTANT NO MATTER HOW MANY SHARES YOU OWN. Voting your
shares early will permit Small Company Growth Fund 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 Emerging Opportunity
Funds, Inc.
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INVESCO SMALL COMPANY GROWTH FUND
(THE SERIES OF INVESCO EMERGING OPPORTUNITY FUNDS, INC.)
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NOTICE OF
SPECIAL MEETING OF SHAREHOLDERS
MAY 20, 1999
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To The Shareholders:
NOTICE IS HEREBY GIVEN that a special meeting of shareholders of INVESCO
Small Company Growth Fund ("Small Company Growth Fund" or "Fund"), the sole
series of INVESCO Emerging Opportunity Funds, Inc. ("Emerging Opportunity
Funds"), will be held on May 20, 1999, at 10:00 a.m., Mountain Time, at the
office 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 the Fund from a separate series of
Emerging Opportunity Funds to a separate series of INVESCO Stock
Funds, Inc.;
(2) To approve certain changes to the fundamental investment
restrictions of the Fund;
(3) To elect a board of directors of Emerging Opportunity Funds;
(4) To ratify the selection of PricewaterhouseCoopers LLP as independent
accountants of the Fund; and
(5) To transact such other business as may properly come before the
meeting or any adjournment thereof.
You are entitled to vote at the meeting and any adjournment thereof if you
owned shares of the 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 Directors,
Glen A. Payne
Secretary
March 23, 1999
Denver, Colorado
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YOUR VOTE IS IMPORTANT
NO MATTER HOW MANY SHARES YOU OWN
Please indicate your voting instructions on the enclosed proxy card, date
and sign the card, and return it in the envelope provided. IF YOU DATE, SIGN,
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. You may
also call Shareholder Communications Corporation directly at 1-800-___-____,
extension ____, and vote by phone.
Unless proxy card(s) 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 SMALL COMPANY GROWTH FUND
(THE SERIES OF INVESCO EMERGING OPPORTUNITY FUNDS, INC.)
7800 EAST UNION AVENUE
DENVER, COLORADO 80237
(TOLL FREE) 1-800-646-8372
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PROXY STATEMENT
SPECIAL MEETING OF SHAREHOLDERS
MAY 20, 1999
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VOTING INFORMATION
This Proxy Statement is being furnished to shareholders of INVESCO Small
Company Growth Fund ("Small Company Growth Fund"), the sole series of INVESCO
Emerging Opportunity Funds, Inc. ("Emerging Opportunity Funds"), in connection
with the solicitation of proxies from Small Company Growth Fund shareholders by
the board of directors of Emerging Opportunity Funds ("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 will first be mailed to
shareholders on or about March 23, 1999.
One-third of Small Company Growth 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 a quorum is
present and 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,
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abstentions and broker non-votes effectively will be a vote against adjournment
or against any proposal where the required vote is a percentage of the shares
present or outstanding. Abstentions and broker non-votes will not be counted,
however, as votes cast for purposes of determining whether sufficient votes have
been received to approve a proposal.
The individuals named as proxies on the enclosed proxy card will vote in
accordance with your directions as indicated on that proxy card, if it is
received properly executed by you or by your duly appointed agent or
attorney-in-fact. If you date, sign, 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 Emerging Opportunity Funds 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 Small Company Growth 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, Small Company Growth 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 Small Company Growth Fund, and half by Small Company Growth
Fund, will be made primarily by mail but also may be made by telephone or oral
communications by representatives of INVESCO and INVESCO Distributors, Inc.
("IDI"), the distributor of the INVESCO group of investment companies ("INVESCO
Funds"), none of whom will receive any compensation for these activities from
Small Company Growth Fund, or by Shareholder Communications Corporation,
professional proxy solicitors, which will be paid fees and expenses of up to
approximately $39,000 for soliciting services. If votes are recorded by
telephone, Shareholder Communications Corporation will use procedures designed
to authenticate shareholders' identities, to allow shareholders to authorize the
voting of their shares in accordance with their instructions, and to confirm
that a shareholder's instructions have been properly recorded. You may also vote
by mail, by facsimile or through a secure Internet site. Proxies voted by
telephone, facsimile or Internet may be revoked at any time before they are
voted at the Meeting in the same manner that proxies voted by mail may be
revoked.
COPIES OF EMERGING OPPORTUNITY FUNDS' MOST RECENT ANNUAL AND SEMI-ANNUAL
REPORTS, INCLUDING FINANCIAL STATEMENTS, HAVE PREVIOUSLY BEEN DELIVERED TO
SHAREHOLDERS. SHAREHOLDERS MAY REQUEST COPIES OF THESE REPORTS, WITHOUT CHARGE,
BY WRITING TO INVESCO DISTRIBUTORS, INC., P.O. BOX 173706, DENVER, COLORADO
80217-3706, OR BY CALLING TOLL-FREE 1-800-646-8372.
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Except as set forth in Appendix A, INVESCO does not know of any person who
owns beneficially 5% or more of the shares of Small Company Growth Fund.
Directors and officers of Emerging Opportunity Funds own in the aggregate less
than 1 % of the shares of Small Company Growth Fund.
VOTE REQUIRED. Approval of Proposal 1 requires the affirmative vote of a
"majority of the outstanding voting securities" of Small Company Growth Fund, as
defined in the Investment Company Act of 1940, as amended ("1940 Act"). This
means that Proposal 1 must be approved by the lesser of (i) 67% of the Small
Company Growth Fund's shares present at a Meeting of shareholders if the owners
of more than 50% of Small Company Growth Fund's shares then outstanding are
present in person or by proxy or (ii) more than 50% of Small Company Growth
Fund's outstanding shares. Approval of Proposal 2 also requires the affirmative
vote of a "majority of the outstanding voting securities" of Small Company
Growth Fund. A plurality of the votes cast at the Meeting is sufficient to
approve Proposal 3. Approval of Proposal 4 requires the affirmative vote of a
majority of the votes present at the Meeting, provided a quorum is present. Each
outstanding full share of Small Company Growth 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 AN AGREEMENT AND PLAN OF CONVERSION AND TERMINATION
("CONVERSION PLAN") PROVIDING FOR THE CONVERSION OF THE SMALL COMPANY
GROWTH FUND FROM A SEPARATE SERIES OF ONE MARYLAND CORPORATION (EMERGING
OPPORTUNITY FUNDS) TO ANOTHER (STOCK FUNDS)
The Small Company Growth Fund is presently organized as the only series of
Emerging Opportunity Funds. The Board, including a majority of its directors who
are not "interested persons," as that term is defined in the 1940 Act, of either
Emerging Opportunity Funds or INVESCO ("Independent Directors"), has approved
the Conversion Plan in the form attached to this Proxy Statement as Appendix B.
The Conversion Plan provides for the conversion of Small Company Growth Fund
from a separate series of Emerging Opportunity Funds, a Maryland corporation,
into a newly established separate series (the "New Series") of INVESCO Stock
Funds, Inc. ("Stock Funds"), also a Maryland corporation (the "Conversion"). THE
PROPOSED CHANGE WILL HAVE NO MATERIAL EFFECT ON SHAREHOLDERS, OFFICERS,
OPERATIONS, OR THE MANAGEMENT OF SMALL COMPANY GROWTH FUND.
The New Series, which has not yet commenced business operations and was
established for the purpose of effecting the Conversion, will carry on the
business of Small Company Growth Fund following the Conversion and will have
investment objectives, policies, and limitations identical to those of Small
Company Growth Fund. The investment objectives, policies and limitations of
Small Company Growth Fund will not change except as approved by shareholders and
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as described in Proposal 2 of this Proxy Statement. Since both Emerging
Opportunity Funds and Stock Funds are Maryland corporations organized under
substantially similar Articles of Incorporation, the rights of the security
holders of Small Company Growth Fund under state law and its governing documents
are expected to remain unchanged after the Conversion. Shareholder voting rights
under both Emerging Opportunity Funds and Stock Funds are currently based on the
number of shares owned. The same individuals serve as directors of both Emerging
Opportunity Funds and Stock Funds
INVESCO, Small Company Growth Fund's investment adviser, will be
responsible for providing the New Series with various administrative services
and supervising the New Series' daily business affairs, subject to the
supervision of the board of directors of Stock Funds (the "New Board"), under a
management contract substantially identical to the contract in effect between
INVESCO and Emerging Opportunity Funds immediately prior to the Closing Date.
The Small Company Growth Fund's distribution agent, IDI, will distribute shares
of the New Series under a General Distribution Agreement substantially identical
to the contract in effect between IDI and Emerging Opportunity Funds immediately
prior to the Closing Date.
REASON FOR THE PROPOSED CONVERSION
The Board unanimously recommends conversion of Small Company Growth Fund
into a separate series of Stock Funds (I.E., into the New Series). Moving Small
Company Growth Fund from Emerging Opportunity Funds to Stock Funds will
consolidate and streamline the production and mailing of certain financial
reports and legal documents, reducing expense to Small Company Growth Fund. THE
PROPOSED CHANGE WILL HAVE NO MATERIAL EFFECT ON SHAREHOLDERS, OFFICERS,
OPERATIONS, OR THE MANAGEMENT OF SMALL COMPANY GROWTH FUND.
The proposal to present the Conversion Plan to shareholders was approved
by the Board, including all of its Independent Directors, on February 3, 1999.
The Board recommends that Small Company Growth Fund shareholders vote FOR the
approval of the Conversion Plan described below. Such a vote encompasses
approval of both: (i) the conversion of Small Company Growth Fund to a separate
series of Stock Funds; and (ii) a temporary waiver of certain investment
limitations of Small Company Growth Fund to permit the Conversion (see
"Temporary Waiver of Investment Restrictions" below). If shareholders of Small
Company Growth Fund do not approve the Conversion Plan as set forth herein,
Small Company Growth Fund will continue to operate as a series of Emerging
Opportunity Funds.
SUMMARY OF THE CONVERSION PLAN
The following discussion summarizes the important terms of the Conversion
Plan. This summary is qualified in its entirety by reference to the Conversion
Plan itself, which is attached as Appendix B to this Proxy Statement.
If this Proposal is approved by shareholders, on June 1, 1999 or such
later date on which Emerging Opportunity Funds and Stock Funds agree (the
"Closing Date"), Small Company Growth Fund will transfer all of its assets to
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the New Series in exchange solely for shares of the New Series ("New Series
Shares") equal to the number of Small Company Growth Fund shares ("Small Company
Growth Fund Shares") outstanding on the Closing Date and the assumption by the
New Series of all of the liabilities of Small Company Growth Fund. Immediately
thereafter, Small Company Growth Fund will constructively distribute one New
Series Share for each Small Company Growth Fund Share held by a shareholder on
the Closing Date to each Small Company Growth Fund shareholder, in liquidation
of such Small Company Growth Fund Shares. As soon as is practicable after this
distribution of New Series Shares, Small Company Growth Fund will be terminated
as a series of Emerging Opportunity Funds and will be wound up and liquidated.
UPON COMPLETION OF THE CONVERSION, EACH SMALL COMPANY GROWTH FUND SHAREHOLDER
WILL BE THE OWNER OF FULL AND FRACTIONAL NEW SERIES SHARES EQUAL IN NUMBER,
DENOMINATION, AND AGGREGATE NET ASSET VALUE TO HIS OR HER SMALL COMPANY GROWTH
FUND SHARES.
The Conversion Plan obligates Stock Funds, on behalf of the New Series, to
enter into: (i) a Management Contract with INVESCO with respect to the New
Series (the "New Management Contract"); and (ii) a Distribution and Service Plan
under Rule 12b-1 promulgated under the 1940 Act (the "New 12b-1 Plan") with
respect to the New Series (collectively, the "New Agreements"). Approval of the
Conversion Plan will authorize Emerging Opportunity Funds (which will be issued
a single share of the New Series on a temporary basis) to approve the New
Agreements as sole initial shareholder of the New Series. Each New Agreement
will be virtually identical to the corresponding contract or plan in effect with
respect to Emerging Opportunity Funds immediately prior to the Closing Date.
The New Agreements will take effect on the Closing Date and each will
continue in effect through June 1, 2000. Thereafter, the New Management Contract
will continue in effect only if its continuance is approved at least annually:
(i) by the vote of a majority of the 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 or a majority of the outstanding voting shares of
the New Series. The New 12b-1 Plan will continue in effect only if approved
annually by a vote of the Independent Directors, cast in person at a meeting
called for that purpose. The New Management Contract will be terminable without
penalty on sixty days' written notice either by Stock Funds or INVESCO and will
terminate automatically in the event of its assignment. The New 12b-1 Plan will
be terminable at any time without penalty by a vote of a majority of the
Independent Directors or a majority of the outstanding voting shares of the New
Series.
The New Board will hold office without limit in time except that: (i) any
director may resign; and (ii) any director may be removed at a special meeting
of the shareholders at which a quorum is present by the affirmative vote of a
majority of the outstanding voting shares of Stock Funds. In case a vacancy
shall for any reason exist, a majority of the remaining directors, though less
than a quorum, will vote to fill such vacancy by appointing another director, so
long as, immediately after such appointment, at least two-thirds of the
directors then holding office have been elected by shareholders. If, at any
time, less than a majority of the directors holding office have been elected by
shareholders, the directors then in office will promptly call a shareholders'
meeting for the purpose of electing directors. Otherwise, there need normally be
no meetings of shareholders for the purpose of electing directors.
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Assuming the Conversion Plan is approved, it is currently contemplated
that the Conversion will become effective on the Closing Date. However, the
Conversion may become effective at such other date as Emerging Opportunity Funds
and Stock Funds may agree in writing.
The obligations of Emerging Opportunity Funds and Stock Funds under the
Conversion Plan are subject to various conditions as stated therein.
Notwithstanding the approval of the Conversion Plan by Small Company Growth Fund
shareholders, the Conversion Plan may be terminated or amended at any time prior
to the Conversion by action of the directors to provide against unforeseen
events, if: (i) there is a material breach by the other party of any
representation, warranty, or agreement contained in the Conversion Plan to be
performed at or prior to the Closing Date; or (ii) it reasonably appears that
the other party will not or cannot meet a condition of the Conversion Plan.
Either Emerging Opportunity Funds or Stock Funds may at any time waive
compliance with any of the covenants and conditions contained in, or may amend,
the Conversion Plan, provided that the waiver or amendment does not materially
adversely affect the interests of Small Company Growth Fund shareholders.
CONTINUATION OF SMALL COMPANY GROWTH FUND SHAREHOLDER ACCOUNTS
Stock Funds' transfer agent will establish accounts for the New Series
shareholders containing the appropriate number and denominations of New Series
Shares to be received by each holder of Small Company Growth Fund Shares under
the Conversion Plan. Such accounts will be identical in all material respects to
the accounts currently maintained by Small Company Growth Fund's transfer agent
for its shareholders.
EXPENSES
The expenses of the Conversion, estimated at approximately $________
in the aggregate, will be borne half by INVESCO and half by the Small Company
Growth Fund and the New Series.
TEMPORARY WAIVER OF INVESTMENT RESTRICTIONS
Certain fundamental investment restrictions of Small Company Growth Fund,
which prohibit it from acquiring more than a stated percentage of ownership of
another company, might be construed as restricting Small Company Growth Fund's
ability to carry out the Conversion. By approving the Conversion Plan, Small
Company Growth Fund shareholders will be agreeing to waive, only for the purpose
of the Conversion, those fundamental investment restrictions that could prohibit
or otherwise impede the transaction.
TAX CONSEQUENCES OF THE CONVERSION
Both Emerging Opportunity Funds and Stock Funds will receive an opinion
from their counsel, Kirkpatrick & Lockhart LLP, that the Conversion will
constitute a tax-free reorganization 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 Small Company Growth Fund,
the New Series or Small Company Growth Fund's shareholders upon: (i) the
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transfer of Small Company Growth Fund's assets in exchange solely for New Series
Shares and the assumption by the New Series of Small Company Growth Fund's
liabilities; or (ii) the distribution of the New Series Shares to Small Company
Growth Fund's shareholders in liquidation of their Small Company Growth Fund
Shares. The opinion will further provide, among other things, that: (1) a Small
Company Growth Fund shareholder's aggregate basis for federal income tax
purposes of the New Series Shares to be received by Small Company Growth Fund
shareholder in the Conversion will be the same as the aggregate basis of his or
her Small Company Growth Fund Shares to be constructively surrendered in
exchange for those New Series Shares; and (2) a Small Company Growth Fund
shareholder's holding period for his or her New Series Shares will include the
shareholder's holding period for his or her Small Company Growth Fund Shares,
provided that those Small Company Growth Fund Shares were held as capital assets
at the time of Conversion.
CONCLUSION
The Board has concluded that the proposed Conversion Plan is in the best
interests of Small Company Growth Fund's shareholders. A vote in favor of the
Conversion Plan encompasses: (i) approval of the conversion of Small Company
Growth Fund into the New Series; (ii) approval of the temporary waiver of
certain investment limitations of Small Company Growth Fund to permit the
Conversion (see "Temporary Waiver of Investment Restrictions" above); and (iii)
authorization of Emerging Opportunity Funds, as sole initial shareholder of the
New Series, to approve: (a) a Management Contract with respect to the New Series
between Stock Funds and INVESCO; and (b) a Distribution and Service Plan under
Rule 12b-1 with respect to the New Series. Each of the New Agreements is
identical to the corresponding contract or plan in effect with Small Company
Growth Fund immediately prior to the Closing Date. If approved, the Conversion
Plan will take effect on the Closing Date. If the Conversion Plan is not
approved, Small Company Growth Fund will continue to operate as a series of
Emerging Opportunity Funds.
REQUIRED VOTE. Approval of the Conversion Plan requires the affirmative
vote of a "majority of the outstanding voting securities" of Small Company
Growth Fund, which for this purpose means the affirmative vote of the lesser of
(i) 67% or more of the shares of Small Company Growth Fund present at the
Meeting or represented by proxy if more than 50% of the outstanding shares of
Small Company Growth Fund are so present or represented, or (ii) more than 50%
of the outstanding shares of the Fund.
THE BOARD UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS
VOTE "FOR" PROPOSAL 1.
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PROPOSAL 2. TO APPROVE AMENDMENTS TO THE FUNDAMENTAL INVESTMENT
RESTRICTIONS OF THE SMALL COMPANY GROWTH FUND
As required by the 1940 Act, Small Company Growth Fund has adopted certain
fundamental investment restrictions ("fundamental restrictions"), which are set
forth in Small Company Growth Fund's Statement of Additional Information. These
fundamental restrictions may be changed only with shareholder approval.
Restrictions and policies that Small Company Growth 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 Small Company Growth Fund's fundamental restrictions reflect past
regulatory, business or industry conditions, practices or requirements that are
no longer in effect. Also, as other INVESCO Funds have been created over the
years, they 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
Small Company Growth Fund's fundamental restrictions in order to simplify and
modernize Small Company Growth Fund's fundamental restrictions and make them
more uniform with those of the other INVESCO Funds.
The Board believes that eliminating the disparities among the INVESCO
Funds' fundamental restrictions will enhance management's ability to manage the
funds' assets efficiently and effectively in changing regulatory and investment
environments and permit the Board to review and monitor investment policies more
easily. In addition, standardizing the fundamental restrictions of the INVESCO
Funds will assist the INVESCO Funds in making required regulatory filings in a
more efficient and cost-effective way. Although the proposed changes in
fundamental restrictions will allow Small Company Growth 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 Small Company Growth Fund.
The text and a summary description of each proposed change to Small
Company Growth 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 shareholder approval.
If approved by Small Company Growth Fund shareholders at the Meeting, the
proposed changes in Small Company Growth Fund's fundamental restrictions will be
adopted by Small Company Growth Fund. The Small Company Growth Fund's Statement
of Additional Information will be revised to reflect those changes as soon as
practicable following the Meeting.
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A. ELIMINATION OF FUNDAMENTAL RESTRICTION ON SHORT SALES AND MARGIN PURCHASES
AND ADOPTION OF NON-FUNDAMENTAL RESTRICTION ON SHORT SALES AND MARGIN
PURCHASES
The Small Company Growth Fund's current fundamental restriction on selling
short and buying on margin is as follows:
The Fund may not sell short or buy on margin, except for the Fund's
writing of put or call options and except for such short-term credits as
are necessary for the clearance of purchases of securities.
The Board recommends that shareholders vote to eliminate this fundamental
restriction. If the proposal is approved by shareholders, the Board will adopt a
non-fundamental restriction for Small Company Growth Fund as follows:
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 Small Company Growth
Fund from selling securities short or buying securities on margin. Margin
purchases involve the purchase of securities with money borrowed from a broker.
"Margin" is the cash or eligible securities that the borrower places with a
broker as collateral against the loan. In a short sale, an investor sells a
borrowed security and has a corresponding obligation to the lender to return the
identical security. The proposed non-fundamental restriction permits short sales
against the box, when an investor sells securities short while owning the same
securities in the same amount or having the right to obtain equivalent
securities. It also permits Small Company Growth Fund to borrow a security on a
short-term basis and to enter into short positions and make margin payments in a
variety of financial instruments. The Board believes that elimination of the
fundamental restriction and adoption of the non-fundamental restriction will
provide Small Company Growth Fund with greater investment flexibility.
B. MODIFICATION OF FUNDAMENTAL RESTRICTION ON BORROWING AND ADOPTION OF
NON-FUNDAMENTAL RESTRICTION ON BORROWING
The Small Company Growth Fund's current fundamental restriction on
borrowing is as follows:
The Fund may not issue senior securities as defined in the 1940 Act or
borrow money, except that the Fund may borrow from banks in an amount not
9
<PAGE>
in excess of 10% of the value of its total assets (including the amount
borrowed) less liabilities (not including the amount borrowed) at the time
the borrowing is made, as a temporary measure for emergency purposes (the
Fund will not purchase securities while any such borrowings exist).
The Board recommends that shareholders vote to replace this restriction
with the following fundamental restriction:
The Fund may not borrow money, except that the Fund may borrow money in an
amount not exceeding 33 1/3% of its total assets (including the amount
borrowed) less liabilities (other than borrowings).
Currently, Small Company Growth Fund's fundamental restriction is
significantly more limiting than the restrictions imposed by the 1940 Act in
that it limits the purposes for which Small Company Growth Fund may borrow money
and it limits all borrowings to 10% of Small Company Growth Fund's assets. The
proposal eliminates the fundamental nature of the restrictions on the purposes
for which Small Company Growth Fund may borrow money and increases Small Company
Growth Fund's fundamental borrowing authority from 10% to 33 1/3% of Small
Company Growth Fund's total assets. The proposed revision also separates the
restriction on the issuance of senior securities from Small Company Growth
Fund's restriction on borrowing (see below).
If the proposal is approved, the Board will adopt a non-fundamental
restriction as follows:
The Fund may borrow money only from a bank or from an open-end management
investment company managed by INVESCO Funds Group, Inc. or an affiliate or
a successor thereof for temporary or emergency purposes (not for
leveraging or investing) or by engaging in reverse repurchase agreements
with any party (reverse repurchase agreements will be treated as
borrowings for purposes of fundamental limitation (2) above).
The non-fundamental restriction reflects Small Company Growth Fund's
current policy that borrowing by Small Company Growth Fund may only be done for
temporary or emergency purposes. In addition to borrowing from banks, as
permitted by Small Company Growth Fund's current policy, the non-fundamental
restriction permits Small Company Growth Fund to borrow from open-end funds
managed by INVESCO or an affiliate or successor thereof. The Small Company
Growth Fund would not be able to do so, however, unless it obtains permission
for such borrowings from the SEC. The non-fundamental restriction also clarifies
that reverse repurchase agreements will be treated as borrowings. The Board
believes that this approach, making Small Company Growth Fund's fundamental
restriction on borrowing no more limiting than is required under the 1940 Act,
while incorporating more strict limits on borrowing in Small Company Growth
Fund's non-fundamental restriction, will maximize Small Company Growth Fund's
flexibility for future contingencies.
10
<PAGE>
C. MODIFICATION OF FUNDAMENTAL RESTRICTION ON THE ISSUANCE OF SENIOR
SECURITIES
Currently, Small Company Growth Fund's fundamental restriction on the
issuance of senior securities is combined with its restriction on borrowing (see
above). To conform the Fund's restriction on the issuance of senior securities
(I.E., obligations that have a priority over the Fund's shares with respect to
the distribution of fund assets or the payment of dividends) with that of the
other INVESCO Funds, the Board recommends that shareholders 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 the 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.
D. MODIFICATION OF FUNDAMENTAL RESTRICTION AND ADOPTION OF NON-FUNDAMENTAL
RESTRICTION ON INVESTING IN ANOTHER INVESTMENT COMPANY
The Small Company Growth Fund's current fundamental restriction regarding
investment in another investment company is as follows:
The Fund may not invest in the securities of any other investment company
except for a purchase or acquisition in accordance with a plan of
reorganization, merger or consolidation.
The Board recommends that shareholders vote to replace this fundamental
restriction with the following fundamental restriction:
The Fund may, notwithstanding any other fundamental investment policy or
limitation, invest all of its assets in the securities of a single
open-end management investment company managed by INVESCO Funds Group,
Inc. or an affiliate or a successor thereof, with substantially the same
fundamental investment objective, policies and limitations as Small
Company Growth Fund.
The proposed revision to Small Company Growth Fund's current fundamental
restriction would ensure that the INVESCO Funds have uniform policies permitting
each Fund to adopt a "master/feeder" structure whereby one or more Funds invest
all of their assets in another Fund. The master/feeder structure has the
potential, under certain circumstances, to minimize administration costs and
maximize the possibility of gaining a broader investor base. Currently, none of
the INVESCO Funds intend to establish a master/feeder structure; however, the
Board recommends that Small Company Growth Fund shareholders adopt a policy that
would permit this structure in the event that the Board determines to recommend
the adoption of a master/feeder structure by Small Company Growth Fund. The
11
<PAGE>
proposed revision would require that any fund in which Small Company Growth Fund
may invest under a master/feeder structure be advised by INVESCO or an affiliate
thereof.
If the proposed revision is approved, the Board will adopt a
non-fundamental restriction as follows:
The Fund may invest in securities issued by other investment companies to
the extent that such investments are consistent with the Fund's investment
objective and policies and permissible under the 1940 Act.
The primary purpose of this non-fundamental restriction is to conform to
the other INVESCO Funds and to the 1940 Act requirements for investing in other
investment companies. Currently, Small Company Growth Fund's fundamental
restriction is much more limiting than the restrictions imposed by the 1940 Act.
Adoption of this non-fundamental restriction will enable Small Company Growth
Fund to purchase the securities of other investment companies to the extent
permitted under the 1940 Act or pursuant to an exemption granted by the SEC.
E. MODIFICATION OF FUNDAMENTAL RESTRICTION ON ISSUER DIVERSIFICATION
The Small Company Growth Fund's current fundamental restriction on issuer
diversification is as follows:
The Fund may not purchase the securities of any one issuer (other than
U.S. Government securities) if as a result more than 5% of the value of
its total assets would be invested in the securities of any one issuer or
Fund would own more than 10% of the voting securities of such issuer.
The Board recommends that shareholders vote to replace this restriction
with the following fundamental restriction:
The Fund may not, with respect to 75% of the Fund's total assets, purchase
the securities of any issuer (other than securities issued or guaranteed
by the U.S. Government or any of its agencies or instrumentalities, or
securities of other investment companies) if, as a result, (i) more than
5% of the Fund's total assets would be invested in the securities of that
issuer, or (ii) the Fund would hold more than 10% of the outstanding
voting securities of that issuer.
The proposed fundamental restriction concerning diversification is the
limitation imposed by the 1940 Act for diversified investment companies. The
amended fundamental restriction would allow Small Company Growth 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. Small Company Growth 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 Small Company Growth Fund will not
own more than 10% of the voting securities of an issuer.
12
<PAGE>
The amended restriction would give Small Company Growth 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
Small Company Growth Fund's performance. Investing a larger percentage of Small
Company Growth Fund's assets in a single issuer's securities, however, increases
Small Company Growth Fund's exposure to credit and other risks associated with
that issuer's financial condition and operations, including the risk of default
on debt securities.
The amended fundamental restriction also would permit Small Company Growth
Fund to invest without limit in the securities of other investment companies.
Small Company Growth Fund has no current intention of doing so, and 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 Small Company
Growth Fund flexibility to invest in other investment companies in the event
legal and other regulatory requirements change.
F. MODIFICATION OF FUNDAMENTAL RESTRICTION ON LOANS
The Small Company Growth Fund's current fundamental restriction on loans
is as follows:
The Fund may not lend money or securities to any person, provided,
however, that this shall not be deemed to prohibit the purchase of debt
securities or entering into repurchase agreements in accordance with the
Fund's investment policies, or to prohibit the Fund from lending
portfolio securities in an amount up to 33-1/3% of the Fund's total
assets (taken at current value).
The Board recommends that shareholders vote to replace this restriction
with the following fundamental restriction:
The Fund may not lend any security or make any loan if, as a result, more
than 33 1/3 % of its total assets would be lent to other parties, but this
limitation does not apply to the purchase of debt securities or to
repurchase agreements.
The primary purpose of the proposal is to eliminate minor differences in
the wording of the INVESCO Funds' current restrictions on loans to achieve
greater uniformity. The proposed changes to this fundamental restriction are
relatively minor and would have no substantive effect on Small Company Growth
Fund's lending activities or other investments.
G. MODIFICATION OF FUNDAMENTAL RESTRICTION ON INVESTING IN COMMODITIES
The Small Company Growth Fund's current fundamental restriction on
investing in commodities is as follows:
The Fund may not buy or sell commodities, commodity contracts or real
estate (however, the Fund may purchase securities of companies investing
in real estate).
13
<PAGE>
The Board recommends that shareholders vote to replace this restriction
with the following fundamental restriction:
The Fund may not purchase or sell physical commodities; however, this
policy shall not prevent the Fund from purchasing and selling foreign
currency, futures contracts, options, forward contracts, swaps, caps,
floors, collars and other financial instruments.
The proposed changes to this investment restriction are intended to
conform the restriction to those of the other INVESCO Funds and to ensure that
the 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 the Fund's policy to be flexible enough to allow it to enter into hedging
and other transactions using these products when doing so is deemed appropriate
by INVESCO and is within the investment parameters established by the Board. To
maximize that flexibility, the Board recommends that the Fund's fundamental
restriction on commodities investments be clear in permitting the use of
derivative products, even if the current non-fundamental investment policies of
the Fund would not permit investment in one or more of the permitted
transactions. The proposed revision also separates the Fund's restriction on
commodity investments from its restriction on real estate related investments
(see below).
H. MODIFICATION OF FUNDAMENTAL RESTRICTION ON REAL ESTATE INVESTMENTS
Small Company Growth Fund's current fundamental restriction on real estate
investments is combined with its restriction on investing in commodities (see
above). To conform the Small Company Growth Fund's restriction on real estate
investments with that of the other INVESCO Funds, the Board recommends that
shareholders vote to replace this restriction with the following fundamental
restriction:
The Fund may not purchase or sell real estate unless acquired as a result
of ownership of securities or other instruments (but this shall not
prevent the Fund from investing in securities or other instruments backed
by real estate or securities of companies engaged in the real estate
business).
In addition to conforming the Small Company Growth Fund's fundamental
restriction to that of the other INVESCO Funds, the proposed amendment more
completely describes the types of real estate-related securities investments
that are permissible for the Small Company Growth Fund and permits the Small
Company Growth 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 the Fund directly or indirectly holds an interest). The Board
believes that this clarification will make it easier for decisions to be made
concerning the Fund's investments in real estate-related securities without
materially altering the general restriction on direct investments in real estate
14
<PAGE>
or interests in real estate. The proposed change would also give the Fund the
ability to invest in assets secured by real estate.
I. ELIMINATION OF FUNDAMENTAL RESTRICTION ON INVESTING IN COMPANIES FOR THE
PURPOSE OF EXERCISING CONTROL OR MANAGEMENT
The Small Company Growth Fund's current fundamental restriction regarding
investing in companies for the purpose of exercising control or management is as
follows:
The Fund may not invest in any company for the purpose of exercising
control or management.
The Board recommends that shareholders vote to eliminate this restriction.
There is no legal requirement that a fund have an affirmative policy on
investment for the purpose of exercising control or management if it does NOT
intend to make investments for that purpose. The Fund has no intention of
investing in any company for the purpose of exercising control or management. By
eliminating this restriction, the Board may, however, be able to authorize such
a strategy in the future if it concludes that doing so would be in the best
interests of the Fund and its shareholders.
J. MODIFICATION OF FUNDAMENTAL RESTRICTION ON UNDERWRITING SECURITIES
The Small Company Growth Fund's current fundamental restriction on
underwriting securities is as follows:
The Fund may not engage in the underwriting of any securities (except to
the extent that the Fund may be deemed an underwriter under the Securities
Act of 1933 in disposing of a security).
The Board recommends that shareholders vote to replace this restriction
with the following fundamental restriction:
The Fund may not underwrite securities of other issuers, except insofar as
it may be deemed to be an underwriter under the Securities Act of 1933, as
amended, in connection with the disposition of the Fund's portfolio
securities.
The purpose of the proposal is to eliminate minor differences in the
wording of the Fund's current restrictions on underwriting for greater
uniformity with the fundamental restrictions of the other INVESCO Funds.
15
<PAGE>
K. ELIMINATION OF FUNDAMENTAL RESTRICTION ON FUND OWNERSHIP OF SECURITIES
ALSO OWNED BY DIRECTORS AND OFFICERS OF THE FUND OR ITS INVESTMENT ADVISER
The Small Company Growth Fund's current fundamental restriction concerning
the Fund's ownership of securities also owned by directors and officers of the
Fund or its investment adviser is as follows:
The Fund may not purchase securities of any company in which any officer
or director of the Fund or its investment adviser owns more than 1/2 of 1%
of the outstanding securities, or in which all of the officers and
directors of the Fund and its investment adviser, as a group, own more
than 5% of such securities.
The Board recommends the elimination of this fundamental restriction.
Funds are not legally required to have a fundamental restriction limiting or
prohibiting the purchase of securities of companies that are also owned by
affiliated parties of the fund. This restriction was derived from state laws
that are no longer applicable. The concerns that this restriction was designed
to address are sufficiently safeguarded against by provisions of the 1940 Act
applicable to the Fund, as well as by the Fund's other investment policies.
Specifically, to the extent that this restriction seeks to limit possible
conflicts of interest arising out of transactions with affiliated parties, the
restriction is unnecessary and unduly burdensome because Small Company Growth
Fund is subject to the extensive affiliated transaction provisions of the 1940
Act. Because this restriction provides no additional protections to shareholders
and may hinder the Board in pursuing investment strategies that may be
advantageous to the Fund, the Board recommends that this investment restriction
be eliminated.
L. MODIFICATION OF FUNDAMENTAL RESTRICTION ON INDUSTRY CONCENTRATION
The Fund's current fundamental restriction on industry concentration is as
follows:
The Fund may not invest more than 25% of the value of the Fund's assets in
one particular industry.
The Board recommends that shareholders vote to replace this restriction
with the following fundamental restriction:
The Fund may not purchase the securities of any issuer (other than
securities issued or guaranteed by the U.S. Government or any of its
agencies or instrumentalities or municipal securities) if, as a result,
more than 25% of the Fund's total assets would be invested in the
securities of companies whose principal business activities are in the
same industry.
The primary purpose of the modification is to eliminate minor differences
in the wording of the INVESCO Funds' current restrictions on concentration for
greater uniformity and to avoid unintended limitations without materially
altering the restriction. The proposed changes to the Fund's fundamental
restriction exclude municipal securities and securities issued or guaranteed by
the U.S. Government, its agencies or instrumentalities from the concentration
16
<PAGE>
limitation. There is no such exclusion from the current concentration
limitation. A failure to exclude such securities from the concentration policy
could hinder the Fund's ability to purchase such securities in conjunction with
taking temporary defensive positions.
M. ELIMINATION OF FUNDAMENTAL RESTRICTION ON MORTGAGING, PLEDGING OR
HYPOTHECATING SECURITIES
Small Company Growth Fund currently has the following fundamental
restriction on mortgaging, pledging or hypothecating securities:
The Fund may not pledge, hypothecate, mortgage, or otherwise encumber its
assets, except as necessary to secure permitted borrowings.
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.
N. ELIMINATION OF FUNDAMENTAL RESTRICTION ON INVESTMENTS IN OIL, GAS AND
OTHER MINERAL LEASES OR PROGRAMS
The Small Company Growth Fund's current fundamental restriction concerning
the Fund's investment in oil, gas and other mineral leases or programs is as
follows:
The Fund may not purchase oil, gas or other mineral leases, rights or
royalty contracts or development programs (except that the Fund may invest
in the securities of issuers engaged in the foregoing activities).
Investment in oil, gas or other mineral leases or programs is not
prohibited under Federal standards for mutual funds, but was prohibited in the
past by some state regulations. Because these state law restrictions are no
longer applicable, the Board recommends that shareholders vote to eliminate this
fundamental restriction to provide for greater investment flexibility.
O. ELIMINATION OF FUNDAMENTAL RESTRICTION ON INVESTING IN SECURITIES OF NEWLY
FORMED ISSUERS
The Small Company Growth Fund's current fundamental restriction on
investing in the securities of newly-formed issuers is as follows:
The Fund may not purchase the securities (other than United States
government securities) of an issuer having a record, together with
predecessors, of less than three years' continuous operations, if as a
result of such purchase more than 5% of the value of the Fund's total
assets would be invested in such securities.
The Board recommends the elimination of this fundamental restriction. This
restriction is derived from a state "blue sky" requirement that has been
preempted by recent amendments of the Federal securities laws. Companies with
less than three years of continuous operation are typically referred to as newly
formed issuers or "unseasoned issuers." Because newly formed companies have no
17
<PAGE>
proven track record in business, their prospects may be uncertain. Their
securities may fluctuate in price more widely than securities of established
companies. The Board believes that elimination of this fundamental restriction
will provide the Fund with greater investment flexibility. If this proposal is
approved, the Fund will be able invest in the securities of newly formed
issuers, in accordance with the Fund's investment objectives, policies and
limitations.
REQUIRED VOTE. Approval of Proposal 2 requires the affirmative vote of a
"majority of the outstanding voting securities" of Small Company Growth Fund,
which for this purpose means the affirmative vote of the lesser of (i) 67% or
more of the shares of Small Company Growth Fund present at the Meeting or
represented by proxy if more than 50% of the outstanding shares of Small Company
Growth Fund are so present or represented, or (ii) more than 50% of the
outstanding shares of the Fund. SHAREHOLDERS WHO VOTE "FOR" PROPOSAL 2 WILL VOTE
"FOR" EACH PROPOSED CHANGE DESCRIBED ABOVE. THOSE SHAREHOLDERS WHO WISH TO VOTE
AGAINST ANY OF THE SPECIFIC PROPOSED CHANGES DESCRIBED ABOVE MAY DO SO ON THE
PROXY PROVIDED.
THE BOARD UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS
VOTE "FOR" PROPOSAL 2.
-----------------------------------------------------------
PROPOSAL 3. TO ELECT THE DIRECTORS OF EMERGING
OPPORTUNITY FUNDS
The Board has nominated the individuals identified below for election to
the Board at the Meeting. Emerging Opportunity Funds currently has ten
directors. Vacancies on the Board are generally filled by appointment by the
remaining directors. However, the 1940 Act provides that vacancies may not be
filled by directors unless thereafter at least two-thirds of the directors shall
have been elected by shareholders. To ensure continued compliance with this rule
without incurring the expense of calling additional shareholder meetings,
shareholders are being asked at this Meeting to elect the current ten directors
to hold office until the next meeting of shareholders. Consistent with the
provisions of Emerging Opportunity Funds' by-laws, and as permitted by Maryland
law, Emerging Opportunity Funds does not anticipate holding annual shareholder
meetings. Thus, the directors will be elected for indefinite terms, subject to
termination or resignation. Each nominee has indicated a willingness to serve if
elected. If any of the nominees should not be available for election, the
persons named as proxies (or their substitutes) may vote for other persons in
their discretion. Management has no reason to believe that any nominee will be
unavailable for election.
All of the Independent Directors now being proposed for election were
nominated and selected by Independent Directors. Eight of the ten current
directors are Independent Directors.
The persons named as attorneys-in-fact in the enclosed proxy have advised
Emerging Opportunity Funds that unless a proxy instructs them to withhold
18
<PAGE>
authority to vote for all listed nominees or for any individual nominee, they
will vote all validly executed proxies for the election of the nominees named
below.
The nominees for director, their ages, a description of their principal
occupations, the number of Small Company Growth Fund 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 COMPANY
DIRECTOR OR SHARES BENEFICIALLY
NAME, POSITION PRINCIPAL OCCUPATION AND EXECUTIVE OWNED DIRECTLY OR
WITH COMPANY, BUSINESS EXPERIENCE OFFICER OF INDIRECTLY ON MEMBER OF
AND AGE (DURING THE PAST FIVE YEARS) COMPANY SINCE DEC. 31, 1998(1) COMMITTEE
-------------- ---------------------------- ------------- ------------------- ---------
CHARLES W.BRADY, Chief Executive Officer 1993 0 (3), (5), (6)
CHAIRMAN OF THE and Director of AMVESCAP
BOARD, AGE 63* PLC, London, England, and
of various subsidiaries
thereof. Chairman of the
Board of INVESCO Global
Health Sciences Fund.
FRED A. DEERING, Trustee of INVESCO Global 1993 15.1520 (2), (3), (5)
VICE CHAIRMAN OF Health Sciences Fund.
THE BOARD, AGE 71 Formerly, Chairman of the
Executive Committee and
Chairman of the Board of
Security Life of Denver
Insurance Company,
Denver, Colorado;
Director of ING American
Holdings Company and
First ING Life Insurance
Company of New York.
MARK H. President, Chief 1998 0 (3), (5)
WILLIAMSON, Executive Officer, and
PRESIDENT, CHIEF Director, INVESCO
EXECUTIVE Distributors Inc.;
OFFICER, AND President, Chief
DIRECTOR, Executive Officer, and
AGE 47* Director, INVESCO;
President, Chief
Operating Officer, and
Trustee, INVESCO Global
Health Sciences Fund.
Formerly, Chairman of the
Board and Chief Executive
Officer, NationsBanc
Advisors, Inc.
(1995-1997); Chairman of
the Board, NationsBanc
Investments, Inc.
(1997-1998).
DR. VICTOR L. Professor Emeritus, 1993 15.1520 (4), (6), (8)
ANDREWS, Chairman Emeritus and
DIRECTOR, Chairman of the CFO
AGE 68 Roundtable of the
Department of Finance at
Georgia State University,
Atlanta, Georgia; and
President, Andrews
Financial Associates,
Inc. (consulting firm).
Formerly, member of the
faculties of the Harvard
Business School and the
Sloan School of
Management of MIT.
Dr. Andrews is also a
Director of the Sheffield
Funds, Inc.
19
<PAGE>
NUMBER OF COMPANY
DIRECTOR OR SHARES BENEFICIALLY
NAME, POSITION PRINCIPAL OCCUPATION AND EXECUTIVE OWNED DIRECTLY OR
WITH COMPANY, BUSINESS EXPERIENCE OFFICER OF INDIRECTLY ON MEMBER OF
AND AGE (DURING THE PAST FIVE YEARS) COMPANY SINCE DEC. 31, 1998(1) COMMITTEE
-------------- ---------------------------- ------------- ------------------- ---------
BOB R. BAKER, President and Chief 1993 15.1520 (3), (4), (5)
DIRECTOR, AGE Executive Officer of AMC
62 Cancer Research Center,
Denver, Colorado, since
January 1989; until
December 1988, Vice
Chairman of the Board,
First Columbia Financial
Corporation, Englewood,
Colorado. Formerly,
Chairman of the Board and
Chief Executive Officer
of First Columbia
Financial Corporation.
LAWRENCE H. Trust Consultant. Prior 1993 4650.1810 (2), (6), (7)
BUDNER, to June 1987, Senior Vice
DIRECTOR, President and Senior
AGE 68 Trust Officer, InterFirst
Bank, Dallas, Texas.
19A
<PAGE>
NUMBER OF COMPANY
DIRECTOR OR SHARES BENEFICIALLY
NAME, POSITION PRINCIPAL OCCUPATION AND EXECUTIVE OWNED DIRECTLY OR
WITH COMPANY, BUSINESS EXPERIENCE OFFICER OF INDIRECTLY ON MEMBER OF
AND AGE (DURING THE PAST FIVE YEARS) COMPANY SINCE DEC. 31, 1998(1) COMMITTEE
-------------- ---------------------------- ------------- ------------------- ---------
DR. WENDY LEE Self-employed (since 1997 15.1520 (4), (8)
GRAMM, 1993). Professor of
DIRECTOR, Economics and Public
AGE 53 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 15.1520 (2), (3), (5), (6), (7)
KING, Formerly, Chairman of the
DIRECTOR, AGE Insurance Company,
73 Providence Washington
Insurance Company, and
Director of numerous
U.S. subsidiaries
thereof. Formerly,
Chairman of the Board,
The Providence Capitol
Companies in the United
Kingdom and Guernsey.
Until 1987, Chairman of
the Board, Symbion
Corporation.
JOHN W. Presently retired. 1995 15.1520 (2), (3), (5), (7)
MCINTYRE, Formerly, Vice Chairman
DIRECTOR, of the Board, The
AGE 68 Citizens and Southern
Corporation; Chairman of
the Board and Chief
Executive Officer, The
Citizens and Southern
Georgia Corporation;
Chairman of the Board and
Chief Executive Officer,
The Citizens and Southern
National Bank. Trustee
of INVESCO Global Health
Sciences Fund, 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.
20
<PAGE>
NUMBER OF COMPANY
DIRECTOR OR SHARES BENEFICIALLY
NAME, POSITION PRINCIPAL OCCUPATION AND EXECUTIVE OWNED DIRECTLY OR
WITH COMPANY, BUSINESS EXPERIENCE OFFICER OF INDIRECTLY ON MEMBER OF
AND AGE (DURING THE PAST FIVE YEARS) COMPANY SINCE DEC. 31, 1998(1) COMMITTEE
-------------- ---------------------------- ------------- ------------------- ---------
DR. LARRY Presently retired. 1997 15.1520 (4), (8)
SOLL, Formerly, Chairman of the
DIRECTOR, Board (1987-1994), Chief
AGE 56 Executive Officer
(1982-1989 and 1993-1994)
and President (1982-1989)
of Synergen Inc.
Director of Synergen Inc.
since incorporation in
1982. Director of ISIS
Pharmaceuticals, Inc.
Trustee of INVESCO Global
Health Sciences Fund.
</TABLE>
*Because of his affiliation with INVESCO, with the Fund's investment adviser, or
with companies affiliated with INVESCO, this individual is deemed to be an
"interested person" of Emerging Opportunity Funds as that term is defined in the
1940 Act.
(1) = As interpreted by the SEC, a security is beneficially owned by a person if
that person has or shares voting power or investment power with respect to that
security. The persons listed have partial or complete voting and investment
power with respect to their respective Fund shares.
(2) = Member of the Audit Committee
(3) = Member of the Executive Committee
(4) = Member of the Management Liaison Committee
(5) = Member of the Valuation Committee
(6) = Member of the Compensation Committee
(7) = Member of the Soft Dollar Brokerage Committee
(8) = Member of the Derivatives Committee
20A
<PAGE>
The Board has audit, management liaison, soft dollar brokerage, and
derivatives committees consisting of Independent Directors and compensation,
executive and valuation committees consisting of both Independent Directors and
non-independent directors. The Board does not have a nominating committee. The
audit committee, consisting of four Independent Directors, meets quarterly with
the independent accountants and executive officers of Emerging Opportunity
Funds. This committee reviews the accounting principles being applied by
Emerging Opportunity Funds in financial reporting, the scope and adequacy of
internal controls, the responsibilities and fees of the independent accountants,
and other matters. All of the recommendations of the audit committee are
reported to the full Board. During the intervals between the meetings of the
Board, the executive committee may exercise all powers and authority of the
Board in the management of the business of Emerging Opportunity Funds, except
for certain powers which, under applicable law and/or the by-laws of Emerging
Opportunity Funds, may only be exercised by the full Board. All decisions are
subsequently submitted for ratification by the Board. The management liaison
committee meets quarterly with various management personnel of INVESCO in order
to facilitate better understanding of the management and operations of Emerging
Opportunity Funds, and to review legal and operational matters that have been
assigned to the committee by the Board, in furtherance of the Board's overall
duty of supervision. The soft dollar brokerage committee meets periodically to
review soft dollar brokerage transactions by Small Company Growth Fund, and to
review policies and procedures of Small Company Growth Fund'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 Small Company Growth Fund. The committee
monitors derivatives usage by Small Company Growth Fund and the procedures
utilized by Small Company Growth Fund's adviser to ensure that the use of such
instruments follows the policies on such instruments adopted by the Board. The
committee then reports on these matters to the Board.
During the past fiscal year, the Board met five times, the audit committee
met four times, the compensation committee met twice, the management liaison
committee met four times, the soft dollar brokerage committee met twice, and the
derivatives committee met three times. The executive committee did not meet.
During the last fiscal year of Emerging Opportunity Funds, each director nominee
attended 75% or more of the Board meetings and meetings of the committees of the
Board on which he or she served.
The Independent Directors nominate individuals to serve as Independent
Directors, without any specific nominating committee. The Board ordinarily will
not consider unsolicited director nominations recommended by Emerging
Opportunity Funds' shareholders. The Board, including its Independent Directors,
unanimously approved the nomination of the foregoing persons to serve as
directors and directed that the election of these nominees be submitted to
Emerging Opportunity Funds' shareholders.
The following table sets forth information relating to the compensation
paid to directors during the last fiscal year:
21
<PAGE>
<TABLE>
<CAPTION>
COMPENSATION TABLE
AMOUNTS PAID DURING THE MOST RECENT
FISCAL YEAR BY EMERGING OPPORTUNITY FUNDS TO DIRECTORS
<S> <C> <C> <C> <C>
PENSION OR RETIREMENT
AGGREGATE BENEFITS ACCRUED AS TOTAL COMPENSATION
COMPENSATION FROM PART OF EMERGING ESTIMATED ANNUAL FROM EMERGING
EMERGING OPPORTUNITY FUNDS' BENEFITS UPON OPPORTUNITY FUNDS AND
NAME OF PERSON, POSITION OPPORTUNITY FUNDS(1) EXPENSES(2) RETIREMENT(3) INVESCO FUNDS PAID TO
------------------------ ----------------- --------- ----------- DIRECTORS(1)
------------
FRED A DEERING, VICE $1,779 $874 $561 $103,700
CHAIRMAN OF THE BOARD
AND DIRECTOR
DR. VICTOR L. $1,739 $826 $649 $80,350
ANDREWS, DIRECTOR
BOB R. BAKER, DIRECTOR $1,807 $738 $870 $84,000
LAWRENCE H. $1,696 $826 $649 $79,350
BUDNER, DIRECTOR
DANIEL D. CHABRIS,(4) $1,742 $893 $485 $70,000
DIRECTOR
DR. WENDY L. $1,609 $0 $0 $79,000
GRAMM, DIRECTOR
KENNETH T. KING, $1,635 $908 $509 $77,050
DIRECTOR
JOHN W. MCINTYRE, $1,654 $0 $0 $98,500
DIRECTOR
DR. LARRY SOLL, $1,654 $0 $0 $96,000
DIRECTOR
--------------- ----------- ----------- --------------
TOTAL $15,315 $5,065 $3,723 $767,950
-----
AS A PERCENTAGE OF NET 0.0055%(5) 0.0018%(5) 0.0035%(6)
----------------------
ASSETS
</TABLE>
(1) The Vice Chairman of the Board, the chairmen of the audit, management
liaison, derivatives, soft dollar brokerage and compensation committees,
and the Independent Director members of the committees of the Fund receive
compensation for serving in such capacities in addition to the compensation
paid to all Independent Directors.
(2) Represents benefits accrued with respect to the Defined Benefit Deferred
Compensation Plan discussed below, and not compensation deferred at the
election of the directors.
(3) These figures represent Emerging Opportunity Funds' share of the estimated
annual benefits payable by the INVESCO Complex (excluding INVESCO Global
Health Sciences Fund which does not participate in this retirement plan)
upon the directors' retirement, calculated using the current method of
allocating director compensation among the INVESCO Funds. These estimated
benefits assume retirement at age 72 and that the basic retainer payable to
the directors will be adjusted periodically for inflation, for increases in
the number of funds in the INVESCO Complex, and for other reasons during
the period in which retirement benefits are accrued on behalf of the
respective directors. This results in lower estimated benefits for
directors who are closer to retirement and higher estimated benefits for
directors who are farther from retirement. With the exception of Mr.
McIntyre and Drs. Soll and Gramm, each of these directors has served as
director of one or more of the INVESCO Funds for the minimum five-year
period required to be eligible to participate in the Defined Benefit
Deferred Compensation Plan.
(4) Mr. Chabris retired as a director effective September 30, 1998.
(5) Total as a percentage of Emerging Opportunity Funds' net assets as of May
31, 1998.
(6) Total as a percentage of the net assets of the INVESCO Complex as of
December 31, 1998.
22
<PAGE>
Emerging Opportunity Funds pays its Independent Directors, Board vice
chairman, committee chairmen, and committee members the fees described above.
Emerging Opportunity Funds also reimburses its Independent Directors for travel
expenses incurred in attending meetings. Charles W. Brady, Chairman of the
Board, and Mark H. Williamson, President, Chief Executive Officer, and Director,
as "interested persons" of Emerging Opportunity Funds 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 director's fees or other compensation from
Emerging Opportunity Funds or other INVESCO Funds for their services as
directors.
22A
<PAGE>
The overall direction and supervision of Small Company Growth Fund is the
responsibility of the Board, which has the primary duty of ensuring that Small
Company Growth Fund's general investment policies and programs are adhered to
and that Small Company Growth Fund is properly administered. The officers of
Small Company Growth Fund, all of whom are officers and employees of and paid by
INVESCO, are responsible for the day-to-day administration of Small Company
Growth Fund. INVESCO, as investment adviser for Small Company Growth Fund, has
the primary responsibility for making investment decisions on behalf of Small
Company Growth Fund.
All of the officers and directors of Emerging Opportunity Funds 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 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 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., INVESCO Value Trust, and INVESCO Treasurer's Series Trust (the
"INVESCO Funds").
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 Director") is entitled
to receive, upon termination of service as director (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 Director
at the time of his or her retirement (the "Basic Benefit"). Commencing with any
such director's second year of retirement, and commencing with the first year of
retirement of any director whose retirement has been extended by the Board for
three years, a Qualified Director shall receive quarterly payments at an annual
rate equal to 50% of the Basic Benefit. These payments will continue for the
remainder of the Qualified Director's life or ten years, whichever is longer
(the "Reduced Benefit Payments"). If a Qualified Director dies or becomes
disabled after age 72 and before age 74 while still a director of the Funds, the
First Year Retirement Benefit and Reduced Benefit Payments will be made to him
or her or to his or her beneficiary or estate. If a Qualified Director becomes
disabled or dies either prior to age 72 or during his or her 74th year while
still a director of the Funds, the director will not be entitled to receive the
First Year Retirement Benefit; however, the Reduced Benefit Payments will be
made to his or her beneficiary or estate. The Plan is administered by a
committee of three directors who are also participants in the Plan and one
director who is not a Plan participant. The cost of the Plan will be allocated
among the INVESCO Funds in a manner determined to be fair and equitable by the
23
<PAGE>
committee. Emerging Opportunity Funds began making payments to Mr. Chabris as of
October 1, 1998 under the Plan. Emerging Opportunity Funds has no stock options
or other pension or retirement plans for management or other personnel and pays
no salary or compensation to any of its officers.
The Independent Directors have contributed to a deferred compensation
plan, pursuant to which they have deferred receipt of a portion of the
compensation which they would otherwise have been paid as directors of certain
of the INVESCO Funds. The deferred amounts have been invested in shares of
certain INVESCO Funds. Each Independent Director is, therefore, an indirect
owner of shares of each such INVESCO Fund, in addition to any Fund shares that
they may own directly.
REQUIRED VOTE. Election of each nominee as a director of Emerging
Opportunity Funds requires the affirmative vote of a plurality of votes cast at
the Meeting in person or by proxy.
THE BOARD, INCLUDING THE INDEPENDENT DIRECTORS, UNANIMOUSLY
RECOMMENDS THAT SHAREHOLDERS VOTE "FOR"
EACH OF THE NOMINEES IN PROPOSAL 3.
-----------------------------------------------------------
PROPOSAL 4. RATIFICATION OR REJECTION OF SELECTION OF
INDEPENDENT ACCOUNTANTS
The Board, including all of its Independent Directors, has selected
PricewaterhouseCoopers LLP to continue to serve as independent accountants of
Small Company Growth Fund, subject to ratification by Small Company Growth
Fund's shareholders. PricewaterhouseCoopers LLP has no direct financial interest
or material indirect financial interest in Small Company Growth Fund.
Representatives of PricewaterhouseCoopers LLP are not expected to attend the
Meeting, but have been given the opportunity to make a statement if they so
desire, and will be available should any matter arise requiring their presence.
The independent accountants examine annual financial statements for Small
Company Growth Fund and provide other audit and tax-related services. In
recommending the selection of PricewaterhouseCoopers LLP, the Board reviewed the
nature and scope of the services to be provided (including non-audit services)
and whether the performance of such services would affect the accountants'
independence.
REQUIRED VOTE. Ratification of the selection of PricewaterhouseCoopers LLP
as independent accountants requires the affirmative vote of a majority of the
votes present at the Meeting, provided that a quorum is present.
24
<PAGE>
THE BOARD UNANIMOUSLY RECOMMENDS THAT THE
SHAREHOLDERS VOTE "FOR" PROPOSAL 4.
-----------------------------------------------------------
INFORMATION CONCERNING ADVISER,
DISTRIBUTOR AND AFFILIATED COMPANIES
INVESCO, a Delaware corporation, serves as Small Company Growth Fund's
investment adviser, and provides other services to Small Company Growth Fund and
Emerging Opportunity Funds. INVESCO Distributors, Inc. ("IDI"), a Delaware
corporation that serves as Small Company Growth Fund's distributor, is a wholly
owned subsidiary of INVESCO. 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. INVESCO currently serves as investment
adviser of 14 open-end investment companies having approximate aggregate net
assets of $21.1 billion as of December 31, 1998.
The principal executive officers and directors of INVESCO and their
principal occupations are:
Mark H. Williamson, Chairman of the Board, President, Chief Executive
Officer and Director, also, President and Chief Executive Officer of IDI;
Charles P. Mayer, 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.
Pursuant to an Administrative Services Agreement between Emerging
Opportunity Funds and INVESCO, INVESCO provides administrative services to
Emerging Opportunity Funds, including sub-accounting and recordkeeping services
and functions. For such services, Small Company Growth Fund pays INVESCO a fee
consisting of a base fee of $10,000 per year, plus an additional incremental fee
computed at the annual rate of 0.015% per year of the average net assets of
Small Company Growth Fund. INVESCO is also paid a fee by Small Company Growth
Fund for providing transfer agent services, including acting as registrar,
- --------------------------------
(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.
25
<PAGE>
transfer agent and dividend disbursing agent. During the fiscal year ended May
31, 1998, Emerging Opportunity Funds paid INVESCO total compensation of
$1,146,962 for such services.
OTHER BUSINESS
The Board knows of no other business to be brought before the Meeting. If,
however, any other matters properly come before the Meeting, it is the 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
Emerging Opportunity Funds does not hold annual meetings of shareholders.
Shareholders wishing to submit proposals for inclusion in a proxy statement and
form of proxy for a subsequent shareholders' meeting should send their written
proposals to the Secretary of Emerging Opportunity Funds, 7800 East Union
Avenue, Denver, Colorado 80237. Emerging Opportunity Funds has not received any
shareholder proposals to be presented at this Meeting.
By Order of the Board of Directors
----------------------------
Glen A. Payne
Secretary
March 23, 1999
26
<PAGE>
APPENDIX A
----------
PRINCIPAL SHAREHOLDERS
----------------------
The following table sets forth the beneficial ownership of Small Company
Growth Fund's outstanding equity securities as of March 12, 1999 by each
beneficial owner of 5% or more of Small Company Growth Fund's outstanding equity
securities:
SHARES OF EQUITY SECURITIES
BENEFICIALLY OWNED
--------------------------------
NAME AND ADDRESS (1) AMOUNT PERCENT
------------------------ ------------ ----------
Connecticut General Life Ins.
c/o Liz Pezda M-110
P.O. Box 2975
Hartford, CT 06104
Charles Schwab & Co., Inc.
Special Custody Acct. For The
Exclusive Benefit of Customers
101 Montgomery St.
San Francisco, CA 94104
27
<PAGE>
APPENDIX B
----------
CONVERSION PLAN
---------------
AGREEMENT AND PLAN OF CONVERSION AND TERMINATION
------------------------------------------------
This AGREEMENT AND PLAN OF CONVERSION AND TERMINATION ("Agreement") is
made as of _____ __, 1999, between INVESCO Emerging Opportunity Funds, Inc., a
Maryland corporation (operating through a single series, INVESCO Small Company
Growth Fund) ("Old Fund"), and INVESCO Stock Funds, Inc., a Maryland corporation
("Stock Funds"), on behalf of its INVESCO Small Company Growth Fund, a
segregated portfolio of assets ("series") thereof ("New Fund"). (Old Fund and
New Fund are sometimes referred to herein individually as a "Fund" and
collectively as the "Funds"; and Old Fund and Stock Funds are sometimes referred
to herein individually as an "Investment Company.") All agreements,
representations, actions, and obligations described herein made or to be taken
or undertaken by New Fund are made and shall be taken or undertaken by Stock
Funds on its behalf.
Old Fund intends to change its identity -- by converting 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
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,
<PAGE>
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 and any further actions shall
be taken in connection therewith as required by applicable law.
1.6. Any reporting responsibility of Old Fund to a public authority is
and shall remain its responsibility up to and including the date on which it is
terminated.
1.7. Any transfer taxes payable on issuance of New Fund Shares in a name
other than that of the registered holder on Old Fund's books of the Old Fund
Shares constructively exchanged therefor shall be paid by the person to whom
such New Fund Shares are to be issued, as a condition of such transfer.
2. CLOSING AND EFFECTIVE TIME
2.1. The Reorganization, together with related acts necessary to
consummate the same ("Closing"), shall occur at the Funds' principal office on
______ ___, 1999, or at such other place and/or on such other date as to which
the parties may agree. All acts taking place at the Closing shall be deemed to
take place simultaneously as of the close of business on the date thereof or at
such other time as to which the parties may agree ("Effective Time").
2.2. Old Fund's fund accounting and pricing agent shall deliver at the
Closing a certificate of an authorized officer verifying that the information
(including adjusted basis and holding period, by lot) concerning the Assets,
including all portfolio securities, transferred by Old Fund to New Fund, as
reflected on New Fund's books immediately following the Closing, does or will
conform to such information on Old Fund's books immediately before the Closing.
Old Fund's custodian shall deliver at the Closing a certificate of an authorized
officer stating that (a) the Assets held by the custodian will be transferred to
New Fund at the Effective Time and (b) all necessary taxes in conjunction with
the delivery of the Assets, including all applicable federal and state stock
transfer stamps, if any, have been paid or provision for payment has been made.
2.3. Stock 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
Old Fund evidencing the New Fund Shares to be credited to Old Fund at the
Effective Time or provide evidence satisfactory to Old Fund that such New Fund
Shares have been credited to Old Fund's account on such books. At the Closing,
B-2
<PAGE>
each party shall deliver to the other such bills of sale, checks, assignments,
stock certificates, receipts, or other documents as the other party or its
counsel may reasonably request.
2.4. Each Investment Company shall deliver to the other at the Closing a
certificate executed in its name by its President or a Vice President in form
and substance satisfactory to the recipient and dated the Effective Time, to the
effect that the representations and warranties it made in this Agreement are
true and correct at the Effective Time except as they may be affected by the
transactions contemplated by this Agreement.
3. REPRESENTATIONS AND WARRANTIES
3.1. Old Fund represents and warrants as follows:
3.1.1. Old Fund is a corporation duly organized, validly existing,
and in good standing under the laws of the State of Maryland; and a copy
of its Articles of Incorporation is on file with the Secretary of State of
Maryland;
3.1.2. Old Fund is duly registered as an open-end management
investment company under the Investment Company Act of 1940, as amended
("1940 Act"), and such registration will be in full force and effect at
the Effective Time;
3.1.3. At the Closing, Old Fund will have good and marketable
title to the Assets and full right, power, and authority to sell, assign,
transfer, and deliver the Assets free of any liens or other encumbrances;
and upon delivery and payment for the Assets, New Fund will acquire good
and marketable title thereto;
3.1.4. New Fund Shares are not being acquired for the purpose of
making any distribution thereof, other than in accordance with the terms
hereof;
3.1.5. Old Fund qualified for treatment as a regulated investment
company under Subchapter M of the Code ("RIC") for each past taxable year
since it commenced operations and will continue to meet all the
requirements for such qualification for its current taxable year; and it
has no earnings and profits accumulated in any taxable year in which the
provisions of Subchapter M did not apply to it. The Assets shall be
invested at all times through the Effective Time in a manner that ensures
compliance with the foregoing;
3.1.6. The Liabilities were incurred by Old Fund in the ordinary
course of its business and are associated with the Assets;
3.1.7. Old Fund is not under the jurisdiction of a court in a
proceeding under Title 11 of the United States Code or similar case within
the meaning of section 368(a)(3)(A) of the Code;
3.1.8. Not more than 25% of the value of Old Fund's total assets
(excluding cash, cash items, and U.S. government securities) is invested
in the stock and securities of any one issuer, and not more than 50% of
the value of such assets is invested in the stock and securities of five
or fewer issuers;
3.1.9. As of the Effective Time, Old Fund will not have
outstanding any warrants, options, convertible securities, or any other
type of rights pursuant to which any person could acquire Old Fund Shares;
B-3
<PAGE>
3.1.10. At the Effective Time, the performance of this Agreement
shall have been duly authorized by all necessary action by Old Fund's
shareholders; and
3.1.11. Old Fund will be terminated as soon as reasonably
practicable after the Effective Time, but in all events within twelve
months thereafter.
3.2. New Fund represents and warrants as follows:
3.2.1. Stock 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;
3.2.4. New Fund has not commenced operations and will not do
so until after the Closing;
3.2.5. Prior to the Effective Time, there will be no issued and
outstanding shares in New Fund or any other securities issued by New Fund,
except as provided in paragraph 4.4;
3.2.6. No consideration other than New Fund Shares (and New Fund's
assumption of the Liabilities) will be issued in exchange for the Assets
in the Reorganization;
3.2.7. The New Fund Shares to be issued and delivered to Old Fund
hereunder will, at the Effective Time, have been duly authorized and, when
issued and delivered as provided herein, will be duly and validly issued
and outstanding shares of New Fund, fully paid and non-assessable;
3.2.8. New Fund will be a "fund" as defined in section 851(g)(2)
of the Code and will meet all the requirements to qualify for treatment as
a RIC for its taxable year in which the Reorganization occurs;
3.2.9. New Fund has no plan or intention to issue additional New
Fund Shares following the Reorganization except for shares issued in the
ordinary course of its business as a series of an open-end investment
company; nor does New Fund have any plan or intention to redeem or
otherwise reacquire any New Fund Shares issued to the Shareholders
pursuant to the Reorganization, except to the extent it is required by the
1940 Act to redeem any of its shares presented for redemption at net asset
value in the ordinary course of that business;
3.2.10. Following the Reorganization, New Fund (a) will continue
Old Fund's "historic business" (within the meaning of section
1.368-1(d)(2) of the Income Tax Regulations under the Code), (b) use a
significant portion of Old Fund's historic business assets (within the
meaning of section 1.368-1(d)(3) of those regulations) in a business, (c)
has no plan or intention to sell or otherwise dispose of any of the
Assets, except for dispositions made in the ordinary course of that
business and dispositions necessary to maintain its status as a RIC, and
(d) expects to retain substantially all the Assets in the same form as it
B-4
<PAGE>
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.
3.3. Each Fund represents and warrants as follows:
3.3.1. The aggregate fair market value of the New Fund Shares,
when received by the Shareholders, will be approximately equal to the
aggregate fair market value of their Old Fund Shares constructively
surrendered in exchange therefor;
3.3.2. Its management (a) is unaware of any plan or intention of
Shareholders to redeem, sell, or otherwise dispose of (i) any portion of
their Old Fund Shares before the Reorganization to any person related
(within the meaning of section 1.368-1(e)(3) of the Income Tax Regulations
under the Code) to either Fund or (ii) any portion of the New Fund Shares
to be received by them in the Reorganization to any person related (as so
defined) to New Fund, (b) does not anticipate dispositions of those New
Fund Shares at the time of or soon after the Reorganization to exceed the
usual rate and frequency of dispositions of shares of Old Fund as an
open-end investment company, (c) expects that the percentage of
Shareholder interests, if any, that will be disposed of as a result of or
at the time of the Reorganization will be DE MINIMIS, and (d) does not
anticipate that there will be extraordinary redemptions of New Fund Shares
immediately following the Reorganization;
3.3.3. The Shareholders will pay their own expenses, if any,
incurred in connection with the Reorganization;
3.3.4. Immediately following consummation of the Reorganization,
the Shareholders will own all the New Fund Shares and will own such shares
solely by reason of their ownership of Old Fund Shares immediately before
the Reorganization;
3.3.5. Immediately following consummation of the Reorganization,
New Fund will hold the same assets -- except for assets distributed to
shareholders in the course of its business as a RIC and assets used to pay
expenses incurred in connection with the Reorganization -- and be subject
to the same liabilities that Old Fund held or was subject to immediately
prior to the Reorganization, plus any liabilities for expenses of the
parties incurred in connection with the Reorganization. Such excepted
assets, together with the amount of all redemptions and distributions
(other than regular, normal dividends) made by Old Fund immediately
preceding the Reorganization, will, in the aggregate, constitute less than
1% of its net assets;
3.3.6. There is no intercompany indebtedness between the Funds
that was issued or acquired, or will be settled, at a discount; and
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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").
4. CONDITIONS PRECEDENT
Each Fund's obligations hereunder shall be subject to (a) performance by
the other Fund of all its obligations to be performed hereunder at or before the
Effective Time, (b) all representations and warranties of the other Fund
contained herein being true and correct in all material respects as of the date
hereof and, except as they may be affected by the transactions contemplated
hereby, as of the Effective Time, with the same force and effect as if made on
and as of the Effective Time, and (c) the further conditions that, at or before
the Effective Time:
4.1. This Agreement and the transactions contemplated hereby shall have
been duly adopted and approved by each Investment Company's board of directors
and shall have been approved by Old Fund's shareholders in accordance with
applicable law;
4.2. All necessary filings shall have been made with the Securities and
Exchange Commission ("SEC") and state securities authorities, and no order or
directive shall have been received that any other or further action is required
to permit the parties to carry out the transactions contemplated hereby. All
consents, orders, and permits of federal, state, and local regulatory
authorities (including the SEC and state securities authorities) deemed
necessary by either Investment Company to permit consummation, in all material
respects, of the transactions contemplated hereby shall have been obtained,
except where failure to obtain same would not involve a risk of a material
adverse effect on the assets or properties of either Fund, provided that either
Investment Company may for itself waive any of such conditions;
4.3. Each Investment Company shall have received an opinion of
Kirkpatrick & Lockhart LLP, addressed to and in form and substance satisfactory
to it, as to the federal income tax consequences mentioned below ("Tax
Opinion"). In rendering the Tax Opinion, such counsel may rely as to factual
matters, exclusively and without independent verification, on the
representations made in this Agreement (or in separate letters addressed to such
counsel) and the certificates delivered pursuant to paragraph 2.4. The Tax
Opinion shall be substantially to the effect that, based on the facts and
assumptions stated therein and conditioned on consummation of the Reorganization
in accordance with this Agreement, for federal income tax purposes:
4.3.1. New Fund's acquisition of the Assets in exchange solely for
New Fund Shares and New Fund's assumption of the Liabilities, followed by
Old Fund's distribution of those shares PRO RATA to the Shareholders
constructively in exchange for the Shareholders' Old Fund Shares, will
constitute a reorganization within the meaning of section 368(a)(1)(F) of
the Code, and each Fund will be "a party to a reorganization" within the
meaning of section 368(b) of the Code;
4.3.2. Old Fund will recognize no gain or loss on the transfer to
New Fund of the Assets in exchange solely for New Fund Shares and New
Fund's assumption of the Liabilities or on the subsequent distribution of
those shares to the Shareholders in constructive exchange for their Old
Fund Shares;
4.3.3. New Fund will recognize no gain or loss on its receipt of
the Assets in exchange solely for New Fund Shares and its assumption of
the Liabilities;
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4.3.4. New Fund's basis for the Assets will be the same as the
basis thereof in Old Fund's hands immediately before the Reorganization,
and New Fund's holding period for the Assets will include Old Fund's
holding period therefor;
4.3.5. A Shareholder will recognize no gain or loss on the
constructive exchange of all its Old Fund Shares solely for New Fund
Shares pursuant to the Reorganization;
4.3.6. A Shareholder's aggregate basis for the New Fund Shares to
be received by it in the Reorganization will be the same as the aggregate
basis for its Old Fund Shares to be constructively surrendered in exchange
for those New Fund Shares, and its holding period for those New Fund
Shares will include its holding period for those Old Fund Shares, provided
they are held as capital assets by the Shareholder at the Effective Time;
and
4.3.7. For purposes of section 381 of the Code, New Fund will be
treated as if there had been no Reorganization. Accordingly, the
Reorganization will not result in the termination of Old Fund's taxable
year, Old Fund's tax attributes enumerated in section 381(c) of the Code
will be taken into account by New Fund as if there had been no
Reorganization, and the part of Old Fund's taxable year before the
Reorganization will be included in New Fund's taxable year after the
Reorganization;
4.4. Prior to the Closing, Stock Funds' directors shall have authorized
the issuance of, and New Fund shall have issued, one New Fund Share to Old Fund
in consideration of the payment of $1.00 to vote on the matters referred to in
paragraph 4.5; and
4.5. Stock 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 Old Fund as the
sole shareholder of New Fund.
At any time before the Closing, either Investment Company may waive any of the
foregoing conditions (except that set forth in paragraph 4.1) if, in the
judgment of its board of directors, such waiver will not have a material adverse
effect on its Fund's shareholders' interests.
5. BROKERAGE FEES AND EXPENSES
5.1 Each Investment Company represents and warrants to the other that
there are no brokers or finders entitled to receive any payments in connection
with the transactions provided for herein.
5.2 Except as otherwise provided herein, 50% of the total Reorganization
Expenses will be borne by INVESCO Funds Group, Inc. and the remaining 50% will
be borne one-half by each Fund.
6. ENTIRE AGREEMENT; NO SURVIVAL
Neither party has made any representation, warranty, or covenant not set
forth herein, and this Agreement constitutes the entire agreement between the
parties. The representations, warranties, and covenants contained herein or in
any document delivered pursuant hereto or in connection herewith shall not
survive the Closing.
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<PAGE>
7. TERMINATION
This Agreement may be terminated at any time at or prior to the Effective
Time, whether before or after approval by Old Fund's shareholders:
7.1. By either Fund (a) in the event of the other Fund's material breach
of any representation, warranty, or covenant contained herein to be performed at
or prior to the Effective Time, (b) if a condition to its obligations has not
been met and it reasonably appears that such condition will not or cannot be
met, or (c) if the Closing has not occurred on or before August 31, 1999; or
7.2. By the parties' mutual agreement.
In the event of termination under paragraphs 7.1(c) or 7.2, there shall be no
liability for damages on the part of either Fund, or the directors or officers
of either Investment Company, to the other Fund.
8. AMENDMENT
This Agreement may be amended, modified, or supplemented at any time,
notwithstanding approval thereof by Old Fund's shareholders, in such manner as
may be mutually agreed upon in writing by the parties; provided that following
such approval no such amendment shall have a material adverse effect on the
Shareholders' interests.
9. MISCELLANEOUS
9.1. This Agreement shall be governed by and construed in accordance with
the internal laws of the State of Maryland; provided that, in the case of any
conflict between such laws and the federal securities laws, the latter shall
govern.
9.2. Nothing expressed or implied herein is intended or shall be construed
to confer upon or give any person, firm, trust, or corporation other than the
parties and their respective successors and assigns any rights or remedies under
or by reason of this Agreement.
9.3. This Agreement may be executed in one or more counterparts, all of
which shall be considered one and the same agreement, and shall become effective
when one or more counterparts have been executed by each Investment Company and
delivered to the other party hereto. The headings contained in this Agreement
are for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
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<PAGE>
IN WITNESS WHEREOF, each party has caused this Agreement to be executed
and delivered by its duly authorized officers as of the day and year first
written above.
ATTEST: INVESCO EMERGING OPPORTUNITY
FUNDS, INC.
- ----------------------------- By:-----------------------------
Assistant Secretary Vice President
ATTEST: INVESCO STOCK FUNDS, INC.,
on behalf of its series,
INVESCO Small Company Growth Fund
- ----------------------------- By:-----------------------------
Assistant Secretary Vice President
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<PAGE>
[Name and Address]
INVESCO SMALL COMPANY GROWTH FUND
(INVESCO EMERGING INVESTMENT FUNDS, Inc.)
PROXY FOR THE SPECIAL MEETING OF SHAREHOLDERS
May 20, 1999
This proxy is being solicited on behalf of the Board of Directors of
INVESCO Emerging Opportunity Funds, Inc. (the "Company") and relates to the
proposals with respect to the Company and to INVESCO Small Company Growth Fund,
a series of the Company ("Fund"). The undersigned hereby appoints as proxies [ ]
and [ ], and each of them (with power of substitution), to vote all shares of
common stock of the undersigned in the Fund at the Special Meeting of
Shareholders to be held at 10:00 a.m., Mountain Standard Time, on May 20, 1999,
at the offices of the Company, 7800 East Union Avenue, Denver, Colorado 80237,
and any adjournment thereof ("Meeting"), with all the power the undersigned
would have if personally present.
The shares represented by this proxy will be voted as instructed. Unless
indicated to the contrary, this proxy shall be deemed to grant authority to vote
"FOR" all proposals relating to the Company and the Fund with discretionary
power to vote upon such other business as may properly come before the Meeting.
YOUR VOTE IS IMPORTANT. IF YOU ARE NOT VOTING BY PHONE, FACSIMILE, OR INTERNET,
PLEASE SIGN AND DATE THIS PROXY BELOW AND RETURN IT PROMPTLY IN THE ENCLOSED
ENVELOPE.
TO VOTE BY TOUCH-TONE PHONE OR THE INTERNET, PLEASE CALL 1-800-525-8085 TOLL
FREE OR VISIT HTTP://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:
[XXX] KEEP THIS PORTION FOR YOUR RECORDS
<PAGE>
DETACH AND RETURN THIS PORTION ONLY
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
INVESCO SMALL COMPANY GROWTH FUND
(INVESCO EMERGING OPPORTUNITY FUNDS, Inc.)
VOTE ON DIRECTORS FOR WITHHOLD FOR ALL
ALL ALL EXCEPT
3. Election of the Company's Board / / / / / / To withhold
of Directors: (1) Charles W. authority to vote
Brady; (2) Fred A. Deering; (3) for any individual
Mark H. Williamson; nominee(s), mark
(4) Dr. Victor L. Andrews; "For All Except"
(5) Bob R. Baker; (6) Lawrence and write the
H. Budner; (7) Dr. Wendy Lee nominee's number
Gramm; (8) Kenneth T. King; on the line
(9) John W. McIntyre; and below.
(10) Dr. Larry Soll.
__________________
VOTE ON PROPOSALS FOR AGAINST ABSTAIN
1. Approval of an Agreement and Plan of Conversion / / / / / /
and Termination providing for the conversion of
INVESCO Small Company Growth Fund from a separate
series of INVESCO Emerging Opportunity Funds,
Inc., to a separate series of INVESCO Stock Funds,
Inc., all as described in the accompanying
Prospectus/Proxy Statement;
2. Approval of changes to the fundamental investment / / / / / /
restrictions;
/ / To vote against the proposed changes to one or
more of the specific fundamental investment
policies, but to approve others, PLACE AN "X"
IN THE BOX AT left and indicate the number(s) (as
set forth in the proxy statement) of the
investment policy or policies you do not want to
change on the line below.
_________________________________________________
4. Ratification of the selection of / / / / / /
PricewaterhouseCoopers LLP as the Fund'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
