AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 24, 1999
1933 ACT FILE NO. 33-75831
1940 ACT FILE NO. 811-06476
U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-2
(CHECK APPROPRIATE BOX OR BOXES)
[X] REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
[X] Pre-Effective Amendment No. 1
[ ] Post-Effective Amendment No.
AND
[X] REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
[X] Amendment No. 1
INVESCO GLOBAL HEALTH SCIENCES FUND
7800 EAST UNION AVENUE
DENVER, COLORADO 80237
ADDRESS OF PRINCIPAL EXECUTIVE OFFICES
1-303-930-6300
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE
Glen A. Payne, Esq.
General Counsel
INVESCO Funds Group, Inc.
7800 E. Union Avenue, Suite 800
Denver, Colorado 80237
NAME AND ADDRESS (NUMBER, STREET, STATE, ZIP CODE) OF AGENT FOR SERVICE
COPIES TO:
Thomas A. Hale Clifford J. Alexander
Skadden, Arps, Slate, Kirkpatrick & Lockhart LLP
Meagher & Flom (Illinois) 1800 Massachusetts Avenue
333 West Wacker Drive, Suite 2100 Second Floor
Chicago, Illinois 60606 Washington, DC 20036
APPROXIMATE DATE OF PROPOSED PUBLIC OFFERING: As soon as practicable after
the effective date of this Registration Statement.
If any securities being registered on this form will be offered on a
delayed or continuous basis in reliance on Rule 415 under the Securities Act of
1933, other than securities offered in connection with a dividend reinvestment
plan, check the following box. [ ]
<PAGE>
CALCULATION OF REGISTRATION FEE UNDER THE SECURITIES ACT OF 1933
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
PROPOSED
PROPOSED MAXIMUM
MAXIMUM AGGREGATE AMOUNT OF
TITLE OF SECURITIES AMOUNT BEING OFFERING PRICE OFFERING REGISTRATION
BEING REGISTERED REGISTERED(1) PER UNIT(2) PRICE(2) FEE(2)
- -------------------------------------------------------------------------------------
Shares of Beneficial
Interest Issuable Upon
Exercise of Rights to
Subscribe for Such Shares 7,601,529 shares $17 19/32 $133,739,400 $37,179.55(3)
- ----------------------------------------------------------------------------------------
</TABLE>
(1) Includes 1,20,306 shares of beneficial interest to cover an increase by the
Registrant of 25% of the number of shares of beneficial interest subject to
subscriptions.
(2) Estimated solely for the purpose of calculating the registration fee in
accordance with Rule 457(c) under the Securities Act of 1933 on the basis of
the average of the high and low sales prices for the Fund's shares reported
on the New York Stock Exchange on May 19, 1999.
(3) A $5,334.13 registration fee accompanied the Fund's April 7, 1999
Registration Statement that was submitted to the Securities and Exchange
Commission.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL REGISTRANT SHALL FILE A
FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF THE
SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THE REGISTRATION STATEMENT SHALL
BECOME EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING
PURSUANT TO SECTION 8(a), MAY DETERMINE.
ii
<PAGE>
INVESCO GLOBAL HEALTH SCIENCES FUND
CROSS-REFERENCE SHEET
PART A
ITEM NO. CAPTION LOCATION IN PROSPECTUS
- -------- ------- ----------------------
1. Outside Front Cover Front Cover Page.
2. Inside Front and Outside Back Cover Front Cover Page.
Page
3. Fee Table and Synopsis Prospectus Summary; and Fee
Table.
4. Financial Highlights Financial Highlights.
5. Plan of Distribution Front Cover Page; Prospectus
Summary; The Offer; Dividends
and Other Distributions; and
Dividend Reinvestment and
Cash Purchase Plan.
6. Selling Shareholders Not Applicable.
7. Use of Proceeds Prospectus Summary; and Use
of Proceeds.
8. General Description of the Registrant Front Cover Page; Prospectus
Summary; Financial Highlights
- Portfolio Characteristics
and Composition; Trading and
Net Asset Value Information;
The Fund; The Offer;
Description of Shares of
Beneficial Interest;
Investment Objective and
Policies; Risk Factors and
Special Considerations;
Investment Restrictions; and
Special Investment Practices.
9. Management Prospectus Summary;
Management of the Fund; and
Custodian, Transfer Agent,
Dividend Disbursing Agent,
and Registrar.
10. Capital Stock, Long-Term Debt, and Front Cover Page; Description
Other Securities of Shares of Beneficial
Interest; Dividends and Other
Distributions; Dividend
Reinvestment and Cash Purchase
Plan; and Federal Taxation Of
The Fund And Its Shareholders.
11. Defaults and Arrears on Senior Not Applicable.
Securities
12. Legal Proceedings Not Applicable.
13. Table of Contents of the Statement of Table of Contents of
Additional Information Statement of Additional
Information.
PART B
ITEM NO. CAPTION LOCATION IN STATEMENT OF
- -------- ------- ADDITIONAL INFORMATION
----------------------
14. Cover Page Cover Page.
15. Table of Contents Table of Contents.
16. General Information and History General Information.
iii
<PAGE>
ITEM NO. CAPTION LOCATION IN STATEMENT OF
- -------- ------- ADDITIONAL INFORMATION
----------------------
17. Investment Objective and Policies Additional Information About
Its Investment Objective and
Policies; Investment
Restrictions.
18. Management Management.
19. Control Persons and Principal Holders Ownership of Shares; and
of Securities Prospectus: Description of
Shares of Beneficial
Interest.
20. Investment Advisory and Other Services Management; Financial
Statements; Prospectus:
Management of the Fund;
Prospectus: Custodian,
Transfer Agent, Dividend
Disbursing Agent, and
Registrar; and Prospectus:
Independent Accountants.
21. Brokerage Allocation and Other Portfolio Transactions;
Practices Prospectus: Portfolio
Trading; and Prospectus:
Special Investment Practices.
22. Tax Status Taxation.
23. Financial Statements Financial Statements.
PART C
Information required to be included in Part C is set forth under the appropriate
item, so numbered, in Part C of this Registration Statement.
iv
<PAGE>
INVESCO GLOBAL HEALTH SCIENCES FUND
6,081,223 SHARES OF BENEFICIAL INTEREST ISSUABLE UPON
EXERCISE OF RIGHTS TO SUBSCRIBE FOR SUCH SHARES
INVESCO Global Health Sciences Fund (the "Fund") is issuing non-transferable
rights ("Rights") to its shareholders of record ("Record Date Shareholders") as
of the close of business on May 25, 1999 (the "Record Date"). These Rights will
allow Record Date Shareholders to subscribe for 6,081,223 shares of beneficial
interest of the Fund ("Shares"), subject to the limitations discussed in this
prospectus (the "Prospectus"). Record Date Shareholders will receive one Right
for every five outstanding Shares they own on the Record Date. Each Right that
Record Date Shareholders receive may be exercised to buy one new Share. Record
Date Shareholders who exercise all of their Rights may request to subscribe for
the Shares not acquired by other Record Date Shareholders in this Rights
offering (the "Offer" or this "Offering"). The Fund may increase the number of
Shares that may be subscribed for in this Offering by up to 25% of the Shares
offered or up to an additional 1,520,306 Shares, for an aggregate total of
7,601,529 Shares, to honor requests for additional Shares. On MAY 21, 1999, the
last reported net asset value ("NAV") per Share was $18.63 and the last reported
sales price of a Share on the New York Stock Exchange ("NYSE") was $16.69.
Unless extended by the Fund, this Offer will expire at 5:00 p.m. Eastern time on
June 18, 1999 ("Expiration Date"). The currently outstanding Shares are listed,
and the Shares issued in this Offering will be listed, on the NYSE under the
symbol "GHS."
THE PURCHASE PRICE PER SHARE (THE "SUBSCRIPTION PRICE") WILL BE 95% OF THE LOWER
OF: (1) THE AVERAGE OF THE LAST REPORTED SALES PRICE PER SHARE ON THE NYSE ON
THE EXPIRATION DATE AND ON THE PRECEDING FOUR BUSINESS DAYS; OR (2) THE NET
ASSET VALUE ("NAV") PER SHARE ON THE EXPIRATION DATE.
-----------------------------------------
NEITHER THE SECURITIES AND EXCHANGE COMMISSION (THE "SEC" OR "COMMISSION") NOR
ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES
OR DETERMINED THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
PER SHARE TOTAL
<S> <C> <C> <C>
Estimated Subscription Price $16.53 Calculated as of May 21, 1999, using the Subscription Price
formula rounded to the $0.05.
Sales Load 3.75% 3.75%
$15.69 $95,436,172
$15.69 $119,295,219
Net Proceeds to the Fund* Purchase of all 6,081,223 Shares in the Primary Subscription
Net Proceeds to the Fund* Full Primary Subscription and 25% Over-Allotment (7,601,529 Shares)
</TABLE>
*TOTAL OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.............$ 596,200
Record Date Shareholders who do not exercise their Rights should expect that
they will, at the completion of the Offer, own a smaller proportional interest
in the Fund than they would if they exercised their Rights. In addition, the
Subscription Price per Share will be less than the NAV per Share on the
Expiration Date. Therefore, the completion of the Offer will result in an
immediate dilution of NAV per Share, that may be significant, for all
shareholders. This will disproportionately affect those shareholders who do not
exercise their Rights in full. The Fund cannot state precisely the extent of
this dilution at this time, because certain terms of the Offer, which are
specified within this Prospectus, have not been determined. See "Risk Factors
and Special Considerations--Dilution."
This Prospectus sets forth concisely the information about the Fund that a
prospective investor ought to know before investing. Investors are advised to
read and retain it for future reference. A Statement of Additional Information
(the "SAI") dated May 25, 1999 containing additional information about the Fund
has been filed with the SEC and is incorporated by reference in its entirety
into this Prospectus. A copy of the SAI, the table of contents of which appears
on page 51 of this Prospectus, may be obtained without charge by calling the
Fund at 1-800-528-8765 or by contacting the Fund at 7800 E. Union Avenue, Suite
800, Denver, Colorado 80237. In addition, a copy of the SAI, and other material
incorporated herein by reference, may be obtained from the SEC's website at
http://www.sec.gov.
--------------------
PAINEWEBBER INCORPORATED
--------------------
THE DATE OF THIS PROSPECTUS IS MAY 24, 1999.
<PAGE>
PROSPECTUS SUMMARY
THIS SUMMARY HIGHLIGHTS SOME INFORMATION THAT IS DESCRIBED MORE FULLY ELSEWHERE
IN THIS PROSPECTUS. IT MAY NOT CONTAIN ALL OF THE INFORMATION THAT IS IMPORTANT
TO YOU. TO UNDERSTAND THE OFFER FULLY, YOU SHOULD READ THE ENTIRE DOCUMENT
CAREFULLY, INCLUDING THE RISK FACTORS UNDER THE HEADING "RISK FACTORS AND
SPECIAL CONSIDERATIONS."
PURPOSE OF THE OFFER The Board of Trustees of the Fund (the "Board of
Trustees" or the "Board") has determined that it
would be in the best interests of the Fund and its
existing shareholders to increase the Fund's assets
so that it may be in a better position to take
advantage of investment opportunities and increase
the diversification of its portfolio while achieving
other net benefits to the Fund.
In reaching its decision to approve the Offer, the
Board of Trustees considered, among other things,
advice by INVESCO Funds Group, Inc. (the "Investment
Manager" or "INVESCO"), that the availability of new
assets would enable the Fund to pursue attractive
investments without selling portfolio securities. In
addition, the Board of Trustees considered that a
rights offering could result in more liquidity for
the Shares, would give shareholders the opportunity
to purchase Shares at a price below market value per
Share and/or NAV per Share, and might increase the
level of market interest in the Fund. The Board also
believes that this Offer may result in a nominal
decrease in the Fund's operating expense ratio. This
is because the Fund's fixed costs can be spread over
a larger asset base. In addition, the Fund and the
Investment Manager recently agreed to add a
breakpoint to the investment management agreement for
assets in excess of $500 million. At the Fund's
current asset size, substantially all of the Proceeds
of the Offer would be managed at this lower fee,
which would have the effect of lowering the Fund's
overall expense ratio.
In determining that the Offer was in the best
interests of the Fund and its shareholders, the Board
of Trustees retained PaineWebber Incorporated (the
"Dealer Manager") to provide the Fund with financial
advisory and marketing services relating to the
Offer, including the structure, timing and terms of
the Offer. In addition to the foregoing, the Board of
Trustees considered, among other things, the benefits
and drawbacks of conducting a non-transferable versus
a transferable rights offering, the possible impact
of the Offer on market price volatility, its dilutive
effect, its effect on non-exercising shareholders,
the effect on the Fund if the Offer is
under-subscribed, and the experience of the Dealer
Manager in conducting rights offerings.
1
<PAGE>
IMPORTANT TERMS OF THE Total number of Shares 7,539,029*
OFFER offered:
Number of non-transferable One Right for every
Rights issued to each Record five Shares owned on
Date Shareholder: the Record Date
Subscription ratio: One Share for every
one Right
Subscription Price: 95% of the lower of
(1) the average of the
last reported sales
price per Share on the
NYSE on the Expiration
Date and on the
preceding four
business days** or
(2) the NAV per Share
on the Expiration Date
Expiration Date: The Offer will expire
at 5:00 P.M. Eastern
time June 18, 1999,
unless the Offer is
extended to a date no
later than June 21,
1999
* Includes 1,520,306 Shares that the Fund may issue
to cover over-subscription requests.
** "Business Day" is any day on which the NYSE is
open for trading.
OVER-SUBSCRIPTION Record Date Shareholders who fully exercise all of
PRIVILEGE the Rights issued to them are entitled to request to
subscribe for those Shares offered hereby that were
not bought by other Record Date Shareholders. If
enough Shares are available, all such requests will
be honored in full. If such requests for Shares
exceed the Shares available, the Fund may, at the
discretion of the Board of Trustees, issue Shares up
to an additional 25% of the Shares available pursuant
to the Offer (up to an additional 1,520,306 Shares)
in order to cover such requests. Regardless of
whether the Fund issues such additional Shares, and
to the extent Shares are not available to honor all
requests, the available Shares will be allocated PRO
RATA among those who over-subscribe based on the
number of Rights originally issued to them by the
Fund.
IMPORTANT DATES TO EVENT DATE
REMEMBER
Record Date May 25, 1999
Subscription Period May 25 - June 18,
1999*
2
<PAGE>
Expiration Date and Pricing Date June 18, 1999*
Subscription Certificates and June 18, 1999*
Payment for Shares Due**
Notice of Guaranteed Delivery Due June 18, 1999*
Payment for Guarantees of June 23, 1999*
Delivery Due
Confirmation Mailed to June 30, 1999*
Participants
Final Payment for Shares*** July 12, 1999*
* Unless the Offer is extended to a date no later
than June 21, 1999.
** A Record Date Shareholder exercising Rights must
deliver by the Expiration Date either (i) a
Subscription Certificate (defined below) and
payment for Shares or (ii) a Notice of Guaranteed
Delivery (defined below).
*** Additional amount due (in the event the
Subscription Price exceeds the Estimated
Subscription Price).
NON-TRANSFERABILITY OF The Rights are non-transferable and, therefore, may
RIGHTS not be purchased or sold. The Rights will not be
listed for trading on the NYSE or any other
securities exchange. However, the Shares to be issued
pursuant to the Offer will be listed for trading on
the NYSE, subject to notice of issuance.
METHOD OF EXERCISING Except as described below, subscription certificates
RIGHTS evidencing the Rights (the "Subscription
Certificates") will be sent to Record Date
Shareholders or their broker, bank, custodian, or
other nominee. If a Record Date Shareholder wishes
to exercise Rights, the shareholder may do so in the
following ways:
(1) Record Date Shareholders or their nominees should
complete and sign the Subscription Certificate
and mail it in the envelope provided or deliver
it with payment in full to EquiServe, Inc. at
the address indicated on the Subscription
Certificate. A completed and signed Subscription
Certificate and payment must be received by the
Expiration Date; or
(2) Contact your broker, banker or trust company,
which can guarantee, on your behalf, payment and
delivery of a properly completed and executed
Subscription Certificate by the close of business
on the third Business Day after the Expiration
Date pursuant to a notice of guaranteed delivery
("Notice of Guaranteed Delivery"). A fee may be
charged for this service. The Notice of
Guaranteed Delivery, however, must be received on
or before the Expiration Date.
3
<PAGE>
OFFERING FEES AND The Fund has agreed to pay the Dealer Manager a fee
EXPENSES ("Dealer Manager Fee") for its financial advisory and
marketing services equal to 1.25% of the aggregate
Subscription Price for each Share issued pursuant to
the Offer, and the Fund has also agreed to pay
broker-dealers, including the Dealer Manager, fees
for their solicitation efforts ("Solicitation Fees")
of 2.50% of the Subscription Price per Share for each
Share issued pursuant to the Offer. Solicitation Fees
will be paid to the broker-dealer designated on the
applicable portion of the Subscription Certificate
or, in the absence of any such designation, to the
Dealer Manager. Other offering expenses incurred by
the Fund are estimated at $596,200, which includes up
to $100,000 that may be paid to the Dealer Manager as
partial reimbursement for its expenses relating to
the Offer.
FOREIGN RESTRICTIONS Record Date Shareholders whose record addresses are
outside the United States will receive written
notice of the Offer; however, Subscription
Certificates will not be mailed to such
shareholders. The Rights to which those
Subscription Certificates relate will be held by the
subscription agent for such foreign Record Date
Shareholders' accounts until instructions are
received in writing with payment to exercise the
Rights. If no such instructions are received by the
Expiration Date, such Rights will expire. See
"Subscription Agent."
USE OF PROCEEDS The Investment Manager has advised the Fund that it
anticipates that the proceeds ("Proceeds") will be
invested in accordance with its investment
objective and the policies set forth under
"Investment Objective and Policies" within three
months from the date of this Prospectus (but in no
event later than six months from the date of this
Prospectus), depending on market conditions and
the availability of appropriate securities.
Pending such investment, the Proceeds will be
invested in certain high quality short-term debt
instruments, or in certain other investments
(including, potentially, futures contracts on the
Standard & Poor's 500 Composite Stock Price Index
("S&P 500 futures") as described herein under
"Investment Objective and Policies--Special
Investment Practices--Hedging."
4
<PAGE>
INFORMATION AGENT Please direct all questions or inquiries relating to
the Offer to the Fund's information agent as follows:
SHAREHOLDER COMMUNICATIONS CORP.
17 STATE STREET
NEW YORK, NY 10004
(800) 722-4072
BROKERS AND BANKS, PLEASE CALL (212)-805-7113
Shareholders may also contact their broker or nominee
for information.
INFORMATION REGARDING THE The Fund is a diversified, closed-end management
FUND investment company registered under the Investment
Company Act of 1940, as amended ("1940 Act"). It is
managed by INVESCO. The Fund was organized as a
Massachusetts business trust on November 18, 1991 and
commenced investment operations on January 24, 1992.
The Fund is aggressively managed for growth. It seeks
to achieve its objective by investing its assets in a
broad range of health care related securities, such
as market-leading pharmaceutical companies, medical
devices manufacturers and suppliers, biotech
companies, health care delivery companies, and
various private placement investments. The Fund may
further focus its investments in certain of these
sectors. For example, at the date of this Prospectus,
approximately 60% of the Fund's portfolio is invested
in equity securities of large pharmaceutical
companies. The Fund may purchase and sell options on
equities. See "The Fund" and "Investment Objective
and Policies." For information regarding the Fund's
portfolio characteristics and composition as of April
30, 1999, see "Portfolio Characteristics and
Composition."
INFORMATION REGARDING THE INVESCO has served as the Fund's investment adviser
MANAGER since February 4, 1998. INVESCO determines the
composition of the Fund's portfolio, places all
orders for the purchase and sale of securities and
for other transactions, oversees the settlement of
the Fund's securities and other portfolio
transactions, and provides administrative services to
the Fund described below in "Management of the
Fund--Investment Manager."
As compensation for its services to the Fund, INVESCO
receives an investment management fee that accrues
daily at the applicable rate and is paid monthly. On
February 3, 1998, the Board of Trustees and INVESCO
agreed to add a breakpoint to the investment
management fee, such that the Fund pays INVESCO a fee
at the annual rate of 1.00% on the Fund's ending
daily net assets up to and including $500 million,
and 0.90% on the Fund's ending daily net assets in
excess of $500 million. Additionally, in accordance
with an administrative agreement, the Fund pays
INVESCO a monthly fee at the annual rate of 0.10% on
the Fund's ending daily net assets for administrative
services. Prior to February 4, 1998, INVESCO Trust
Company ("ITC"), then a wholly owned subsidiary of
5
<PAGE>
INVESCO, served as the Fund's investment adviser.
RISK FACTORS AND SPECIAL The following summarizes some of the matters that
CONSIDERATIONS you should consider before investing in the Fund
through this Offer. Please see "Risk Factors and
Special Considerations" of this Prospectus for a more
complete discussion of these matters.
DILUTION: NET ASSET VALUE AND OWNERSHIP. Record Date
Shareholders will experience an immediate dilution,
which may be significant, of the aggregate NAV of
their Shares as a result of the completion of the
Offer. This is because the Subscription Price per
Share will be less than the NAV per Share on the
Expiration Date, the Fund will incur expenses in
connection with the Offer, and the number of Shares
outstanding after the Offer will increase in a
greater percentage than the increase in the size of
the Fund's assets. This dilution also will affect
those shareholders to a greater extent if they do not
exercise their Rights in full. In addition, if
shareholders do not fully exercise their Rights, they
will, as a result of the completion of the Offer, own
a smaller proportional interest in the Fund than
would otherwise be the case. Although it is not
possible to state precisely the amount of any
dilution, either for NAV or in ownership interests,
because it is not known at this time what the NAV per
Share will be on the Expiration Date, what proportion
of the Rights will be exercised, or what the
Subscription Price will be, such dilution could be
significant. For a more detailed discussion, see
"Risk Factors and Special Considerations--Dilution."
HEALTH SCIENCE COMPANIES. Investment in the
securities of companies principally engaged in the
development, production or distribution of products
or services relating to the health sciences ("Health
Science Companies") entails special considerations
and risks. Among these is the risk that many Health
Science Companies may be subject to, and possibly
adversely affected by, some of the same trends
relating to the demand for health-related products
and services and the same regulatory, economic and
political factors. Certain health science industries
and Health Science Companies are characterized by a
single product focus, rapidly changing technology or
extensive government regulation. Many of these
activities are funded or subsidized by federal and
state governments; consequently, withdrawal or
curtailment of this support could have an adverse
impact on the profitability, and market prices, of
such companies. Continuing technological advances may
mean rapid obsolescence of products and services.
These regulatory and research developments may result
in abrupt fluctuations in securities values of Health
Science Companies. In addition, smaller developing
Health Science Companies may require additional
capital investments, which may dilute the interests
of existing investors, such as the Fund. For a more
detailed discussion, see "Risk Factors-Health Science
Companies."
6
<PAGE>
INVESTMENTS IN UNSEASONED COMPANIES. The Fund may
invest in the securities of smaller, less seasoned
companies. These investments may present greater
opportunities for growth but also involve greater
risks than those customarily associated with
investments in securities of more established
companies. Some of the Health Science Companies in
which the Fund may invest will be start-up companies
that may have insubstantial operational or earnings
history or may have limited products, markets,
financial resources or management depth. Some may
also be emerging companies at the research and
development stage with no products or technologies to
market or approved for marketing. Securities of
emerging Health Science Companies may lack an active
secondary market and may be subject to more abrupt or
erratic price movements than securities of larger,
more established companies or stock market averages
in general. Competitors of certain Health Science
Companies, which may or may not be Health Science
Companies, may have substantially greater financial
resources than many of the companies in which the
Fund may invest. See "Risk Factors-Investments in
Unseasoned Companies" and "Risk Factors-Illiquid
Investments."
SUBSTANTIAL COMPETITION. Intense competition exists
within and among certain health science industries,
including competition to obtain and sustain
proprietary technology protection. Health Science
Companies may be highly dependent on the strength of
a patent to maintain revenues and market share. The
complex nature of the technologies involved can lead
to patent disputes, including litigation that could
result in a company losing an exclusive right to a
patent. See "Risk Factors-Substantial Competition."
PRODUCT LIABILITY EXPOSURE. Certain Health Science
Companies and related companies in which the Fund may
invest will be exposed to potential liability risks
that are inherent in testing, manufacturing,
marketing and selling human therapeutic and
diagnostic products. See "Risk Factors-Product
Liability Exposure."
FOREIGN SECURITIES. The Fund will invest in
securities of foreign issuers and securities traded
in foreign markets ("Foreign Securities"). Investing
in Foreign Securities involves considerations and
risks not typically associated with investing in
securities of U.S. issuers in U.S. markets. Foreign
Securities of many non-U.S. companies may be less
liquid and their prices more volatile than securities
of comparable U.S. companies. The issuance of Foreign
Securities and brokers are generally subject to less
governmental the activities of supervision and
regulation than U.S. securities and brokers and
foreign accounting, auditing and financial reporting
standards differ from U.S. standards, and less
information may be available about Foreign Securities
than U.S. securities. For a more detailed discussion
about some of the other risks associated with
investments in Foreign Securities, see "Risk
Factors-Foreign Securities."
7
<PAGE>
CURRENCY RISK. The Fund may receive a portion of its
income and gains in currencies other than U.S.
dollars, although the Fund will make dividends and
other distributions in U.S. dollars. A reduction in
the value of such foreign currencies relative to the
U.S. dollar prior to conversion into U.S. dollars
would adversely affect the Fund's NAV and net
investment income and capital gains, if any, to be
distributed to shareholders of the Fund. See "Risk
Factors-Currency Risk."
ILLIQUID INVESTMENTS. The Fund may invest up to 25%
of its total assets in securities for which there is
no readily available secondary market. Therefore, the
Fund's ability to sell such securities at a fair
price may be impaired or delayed. In addition, these
securities may exhibit greater price volatility than
securities for which a secondary market exists. Since
its inception, the Fund has consistently made such
investments. See "Risk Factors-Illiquid Investments."
JUNK BONDS AND UNRATED DEBT SECURITIES. The Fund may
invest up to 10% of its total assets, in the
aggregate, in non-convertible debt securities of
Health Science Companies and related companies. These
securities and other investments in such companies
may include securities that have been rated as low as
C in the rating categories established by Standard &
Poor's, a division of The McGraw-Hill Companies, Inc.
("Standard & Poor's"), and Moody's Investors Service,
Inc. ("Moody's") or may be unrated if deemed to be of
comparable credit quality by the Investment Manager.
These securities, which are commonly referred to as
"junk bonds," are regarded, on balance, as
predominantly speculative in terms of the ability of
the issuer to pay interest or repay principal in
accordance with the terms of the obligation and
accordingly involve more credit risk than securities
rated in the higher rating categories. For a more
detailed discussion, see "Risk Factors--Junk Bonds
and Unrated Debt Securities." Such securities may be
illiquid. See "Risk Factors--Illiquid Investments."
SPECIAL INVESTMENT PRACTICES. The Fund may make short
sales, engage in certain currency and other hedging
transactions, purchase securities on a when-issued or
a delayed delivery basis, enter into repurchase
agreements, lend its portfolio securities and borrow
money to repurchase or make tender offers for its
Shares or for temporary purposes. These transactions
involve certain risks and may result in losses to the
Fund. See "Investment Objective and Policies--Special
Investment Practices," "Investment Restrictions," and
"Description of Shares of Beneficial Interest--Tender
Offer or Repurchase of Shares."
NET ASSET VALUE DISCOUNT. Shares of closed-end
investment companies frequently trade at a discount
from their NAV (that is, the market price per share
is less than the value per share of the net assets).
This characteristic is a risk separate and distinct
from the risk that the Fund's NAV will decrease as a
result of its investment activities. Moreover,
investors expecting to sell their Shares during the
course of the Offering should be aware that there is
8
<PAGE>
a greater risk that this discount, which may increase
during the Offering, will adversely affect them. This
increased risk is because, among other things, the
market price per Share may reflect the anticipated
dilution to the Shares that will result from this
Offering. See "Risk Factors--Net Asset Value
Discount" and "Special Combination--Dilution."
ANTI-TAKEOVER PROVISIONS OF THE FUND'S DECLARATION OF
TRUST AND BY-LAWS. The Fund's Declaration of Trust as
amended on December 5, 1991 ("Declaration of Trust")
and By-Laws and any amendments thereto ("By-Laws")
(together, the "Charter Documents") have certain
"anti-takeover" provisions that could have the effect
of limiting (i) the ability of other entities or
persons to acquire control of the Fund, (ii) the
Fund's freedom to engage in certain transactions, and
(iii) the ability of the Board or the Fund's
shareholders to amend the Charter Documents or to
effect changes in the Fund's management. Such
provisions also may dissuade third parties from
making offers to purchase Shares at a premium over
market price. See "Description of Shares of
Beneficial Interest-Certain Anti-Takeover Provisions
of the Declaration of Trust and By-Laws."
YEAR 2000. INVESCO has committed substantial
resources and made significant progress toward making
sure its computer systems will continue to operate
smoothly through the year 2000 and expects that its
business partners also will be prepared for the year
2000. While INVESCO does not anticipate interruptions
in its business, investors should be aware of the
possible risks. As is widely known, there is a chance
that some computer systems may not function after
December 31, 1999 because they fail to recognize
dates in the year 2000 and beyond. If a system at
INVESCO or one of its business partners should fail,
it could adversely affect the Fund. In addition, the
markets for, or values of, securities in which the
Fund invests could be affected by computer failures
on or after January 1, 2000. While INVESCO cannot
make assurances that this will not happen, it
continues to thoroughly analyze the securities it
invests in, including the possible effects of the
year 2000 computer problems on a company or the
market the security trades in. See "Risk Factors and
Special Considerations - Year 2000."
You should carefully consider your ability to assume
the foregoing risks before making an investment in
the Fund. An investment in Shares is not appropriate
for all investors.
9
<PAGE>
THE FOLLOWING FEE TABLE AND THE EXAMPLE BELOW ARE INTENDED TO ASSIST INVESTORS
IN UNDERSTANDING THE VARIOUS COSTS AND EXPENSES THAT AN INVESTOR IN THIS
OFFERING WILL BEAR, DIRECTLY OR INDIRECTLY.
FEE TABLE
SHAREHOLDER TRANSACTION EXPENSES
Sales Load (as a percentage of Subscription Price)(1)......................3.75%
Dividend Reinvestment and Cash Purchase Plan Fees(2)........................None
ANNUAL FUND OPERATING EXPENSES (AS A PERCENTAGE OF NET ASSETS ATTRIBUTABLE TO
SHARES)(3)
Management and Administrative Fees(4)..................................... 0.99%
Interest Payments on Borrowed Funds ........................................None
Other Expenses(5)..........................................................0.27%
Total Annual Fund Expenses.................................................1.31%
- -------------
(1) The Fund has agreed to pay the Dealer Manager a Dealer Manager Fee for its
financial advisory and marketing services equal to 1.25% of the aggregate
Subscription Price for each Share issued pursuant to the Offer, and the Fund has
also agreed to pay broker-dealers, including the Dealer Manager, Solicitation
Fees for their solicitation efforts of 2.50% of the Subscription Price per Share
for each Share issued pursuant to the Offer. Other offering expenses incurred by
the Fund are estimated at $596,200, which includes up to $100,000 that may be
paid to the Dealer Manager as partial reimbursement for its expenses relating to
the Offer. These fees and expenses will be borne by the Fund and indirectly by
all of the Fund's shareholders, including those shareholders who do not exercise
their Rights.
(2) Each participant in the Dividend Reinvestment and Cash Purchase Plan
("Reinvestment Plan") will pay a PRO RATA share of brokerage commissions
incurred in connection with open-market purchases of Shares under the
Reinvestment Plan.
(3) Amounts are estimated for the Fund's current fiscal year after giving effect
to anticipated Proceeds of the Offer, assuming that all of the Rights are
exercised and that the Fund incurs the estimated $596,200 of offering expenses.
(4) The Fund pays an annualized management fee in the amount of 1.00% on the
first $500 million of the Fund's daily net assets and 0.90% on amounts above
$500 million. The Fund also pays an annualized administrative fee in the amount
of 0.10% of the Fund's ending daily net assets. See "Management of the
Fund--Investment Management Agreement."
(5) This number includes the expenses of this Rights Offering. Total Annual Fund
Operating Expenses as a percentage of net assets attributable to Shares less the
expenses of this Right Offering would be ___%.
10
<PAGE>
EXAMPLE
The following Example demonstrates the projected dollar amount of total
cumulative expense that would be incurred over various periods with respect to a
hypothetical investment in the Fund through this Offering.
1 YEAR 3 YEARS 5 YEARS 10 YEARS
An investor would directly
or indirectly pay the
following expenses on a
$1,000 investment in the
Fund, assuming a 5% annual $50 $77 $107 $190
return:
The Example set forth above assumes reinvestment of all dividends and other
distributions at NAV, payment of a 3.75% sales load and an annual expense ratio
of 1.31%. However, participants in the Reinvestment Plan may receive Shares
purchased of issued at a price or value different from NAV. See "Dividends and
Other Distributions; Dividend Reinvestment and Cash Purchase Plan."
THE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF FUTURE EXPENSES, AND
THE FUND'S ACTUAL EXPENSES MAY BE MORE OR LESS THAN THOSE SHOWN.
11
<PAGE>
FINANCIAL HIGHLIGHTS
The table below sets forth certain specified information for a Share outstanding
throughout each period presented. Except for the period from November 1, 1998
through April 30, 1999, the financial highlights for each period presented have
been audited by PricewaterhouseCoopers LLP, the Fund's independent accountants,
whose unqualified report is included in the Fund's October 31, 1998 Annual
Report and is incorporated by reference in the SAI. The financial highlights
should be read in conjunction with the financial statements and notes thereto
included in the Fund's October 31, 1998 Annual Report, which is available
without charge by calling the Fund at 1-800-528-8765 or by contacting the Fund
at 7800 E. Union Avenue, Suite 800, Denver, Colorado 80237.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Six Month Period Year Ended October 31
Ended April 30, 1999 ---------------------
--------------------
(unaudited) 1998(f) 1997 1996
----------- ---- ---- ----
PER SHARE DATA
Net Asset Value - Beginning of Period $21.08 $21.250 $22.230 $18.506
- --------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT
OPERATIONS
Net Investment Income (Loss) (0.015) 0.000 (0.071) (0.097)
Net Gains or (Losses) on Securities
(Both Realized and Unrealized) 1.487 3.755 3.564 3.821
- --------------------------------------------------------------------------------------------------
TOTAL FROM INVESTMENT
OPERATIONS 1.472 3.755 3.493 3.724
- --------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS
Dividends from Net Investment Income 0.000 0.000 0.000 0.000
Distributions from Net Capital Gains 3.152 3.925 4.473 0.000
- --------------------------------------------------------------------------------------------------
TOTAL DISTRIBUTIONS 3.152 3.925 4.473 0.000
- --------------------------------------------------------------------------------------------------
Net Asset Value - End of Period $19.400 $21.080 $21.250 $22.230
- --------------------------------------------------------------------------------------------------
Share Market Price, End of Period 17.313 $19.500 $17.313 $17.000
- --------------------------------------------------------------------------------------------------
TOTAL RETURN(b) 4.73%(c) 40.29% 32.98% 15.25%
RATIOS
Net Assets - End of Period ($000 Omitted) $585,190 $586,263 $526,215 $455,842
Ratio of Expenses to Average Net Assets 0.60%(c) 1.21%(d) 1.22%(d) 1.21%
Ratio of Net Investment Income (Loss)
to Average Net Assets (0.08%)(c) (0.17%) (0.15%) (0.44%)
Portfolio Turnover Rate 32%(c) 87% 145% 91%
FOOTNOTES ON FOLLOWING PAGE
</TABLE>
12
<PAGE>
Year Ended October 31
---------------------
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Period Ended
1995 1994 1993 October 31,
---- ---- ---- ------------
1992(a)
----
PER SHARE DATA
Net Asset Value - Beginning of Period $12.378 $12.121 $12.643 $13.950
- ---------------------------------------------------------------------------------------
INCOME FROM INVESTMENT
OPERATIONS
Net Investment Income (Loss) (0.107) (0.085) 0.205 0.071
Net Gains or (Losses) on Securities
(Both Realized and Unrealized) 6.235 0.542 (0.652) (1.345)
- ---------------------------------------------------------------------------------------
TOTAL FROM INVESTMENT
OPERATIONS 6.128 0.457 (0.447) (1.274)
- ---------------------------------------------------------------------------------------
LESS DISTRIBUTIONS
Dividends from Net Investment Income 0.000 0.200 0.075 0.000
Distributions from Net Capital Gains 0.000 0.000 0.000 0.033
- ---------------------------------------------------------------------------------------
TOTAL DISTRIBUTIONS 0.000 0.200 0.075 0.033
- ---------------------------------------------------------------------------------------
Net Asset Value - End of Period $18.506 $12.378 $12.121 $12.643
- ---------------------------------------------------------------------------------------
Share Price, End of Period $14.750 $10.000 $11.500 $11.500
- ---------------------------------------------------------------------------------------
TOTAL RETURN(b) 47.50% (11.49%) 0.67% (17.56%)(c)
RATIOS
Net Assets - End of Period
($000 Omitted) $379,503 $253,834 $248,564 $259,279
Ratio of Expenses to Average
Net Assets 1.33% 1.41% 1.39% 1.35%(e)
Ratio of Net Investment Income
(Loss) to Average Net Assets (0.72%) (0.70%) 1.74% 0.72%(e)
Portfolio Turnover Rate 105% 121% 226% 215%(c)
</TABLE>
(a) From January 24, 1992, commencement of investment operations, to October 31,
1998.
(b) Total return is calculated assuming a purchase of shares at the current
market price on the first day and a sale at the current market price on the last
day of each period reported. Dividends and other distributions, if any, are
assumed, for purposes of this calculation, to be reinvested at prices obtained
under the Reinvestment Plan. Total return does not reflect sales charges or
brokerage commissions.
(c) Based on operations for the period shown and, accordingly, are not
representative of a full year.
(d) Ratio is based on total expenses of the Fund, which is before any expense
offset arrangements.
(e) Annualized
(f) INVESCO has served as the Fund's investment adviser since February 4, 1998.
Prior to February 4, 1998, ITC, then a wholly owned subsidiary of INVESCO,
served as the Fund's investment adviser.
13
<PAGE>
PORTFOLIO CHARACTERISTICS AND COMPOSITION
The following tables set forth certain information with respect to the
characteristics and the composition of the Fund's investment portfolio as of
April 30, 1999. Portfolio composition and weightings are subject to change.
PORTFOLIO COMPOSITION--TOP TEN HOLDINGS (unaudited)
DESCRIPTION VALUE % OF NET ASSETS
Medtronic Inc. $49,972,320 8.54%
Merck & Co. 35,743,200 6.11
Guidant Corp. 34,711,653 5.93
Johnson & Johnson 33,364,500 5.70
Warner-Lambert Co. 31,307,298 5.35
Bristol-Myers Squibb 30,935,869 5.29
Pharmacia & Upjohn 28,940,800 4.95
Schering-Plough Corp. 28,117,875 4.80
Pfizer Inc. 28,029,225 4.79
Lilly (Eli) & Co. 26,245,472 4.48
Total $327,368,212 55.94%
COMPOSITION OF HOLDINGS IS SUBJECT TO CHANGE.
PORTFOLIO COMPOSITION - DESCRIPTION OF HOLDINGS
COMMON STOCKS & WARRANTS 92.61%
BIOTECHNOLOGY 6.82%
HEALTH CARE DELIVERY 0.54%
MEDICAL DEVICES & SUPPLIES 22.19%
PHARMACEUTICALS 63.06%
PREFERRED STOCKS 6.55%
BIOTECHNOLOGY 3.10%
HEALTH CARE DELIVERY 0.68%
MEDICAL DEVICES & SUPPLIES 2.77%
FIXED INCOME SECURITIES 0.06%
HEALTH CARE DELIVERY 0.06%
SHORT-TERM INVESTMENTS 0.78%
CORPORATE BONDS 0.78%
BIOTECHNOLOGY 0.78%
TOTAL INVESTMENT SECURITIES AT VALUE 100.00%
COMPOSITION OF HOLDINGS IS SUBJECT TO CHANGE.
14
<PAGE>
CAPITALIZATION AT APRIL 30, 1999
SHARES OUTSTANDING
EXCLUSIVE OF AMOUNT
AMOUNT HELD BY FUND FOR ITS AMOUNT HELD BY FUND
TITLE OF CLASS AUTHORIZED OWN ACCOUNT FOR ITS OWN ACCOUNT
-------------- ---------- ----------- -------------------
Common Shares of
Beneficial
Interest, par value Unlimited 30,156,115 -0-
$0.01
INFORMATION REGARDING SENIOR SECURITIES
Subject to its investment restrictions, the Fund has the right to use financial
leverage to finance the repurchase of or tender offers for Shares or to pay
dividends and other distributions and may borrow for temporary purposes. The
Fund expects it may use financial leverage from time to time in the future.
Currently, however, the Fund has not determined the timing or amount of
financial leverage that it would utilize.
TRADING AND NET ASSET VALUE INFORMATION
In the past, the Shares have generally traded at a discount in relation to NAV.
Shares of closed-end investment companies, such as the Fund, frequently trade at
a discount from NAV. See "Risk Factors and Special Considerations."
The Shares are listed and traded on the NYSE under the ticker symbol "GHS." The
Rights will not be admitted for trading on the NYSE or any other stock exchange.
The average weekly trading volume of the Shares on the NYSE during the year
ended December 31, 1998 was 70,680 Shares. The following table shows for the
fiscal quarters for the two most recent fiscal years and the fiscal quarters
during the current fiscal year: (1) the high and low sale price of the Shares on
the NYSE during the quarter; (2) the high and low NAV per Share during the
quarter; and (3) the high and low premium or discount to NAV at which the Shares
were trading during the quarter.
DISCOUNT TO NET
For the NYSE PRICE NET ASSET VALUE ASSET VALUE
Quarter Ended High Low High Low High Low
- --------------------------------------------------------------------------------
January 31, 1997 $18.8750 $14.3750 $22.87 $18.03 (23.677%) (17.360%)
April 30, 1997 $17.3750 $14.5000 $20.36 $17.94 (19.666%) (14.330%)
July 31, 1997 $18.1875 $14.8750 $21.87 $18.48 (21.411%) (14.907%)
October 31, 1997 $18.6250 $16.2500 $22.87 $20.39 (21.053%) (16.027%)
January 31, 1998 $18.750 $15.9375 $21.99 $17.88 (18.137%) (7.771%)
April 30, 1998 $19.8750 $18.0000 $21.82 $20.09 (13.338%) (6.064%)
July 31, 1998 $21.0625 $18.5000 $22.71 $20.15 (10.755%) (5.938%)
October 31, 1998 $19.5000 $15.7500 $21.35 $18.74 (16.578%) (7.495%)
January 31, 1999 $20.0625 $17.6875 $21.68 $18.77 (9.199%) (2.927%)
April 30, 1999 $19.875 $17.25 $21.29 $18.79 (14.342%) (3.582%)
- --------------------------------------------------------------------------------
15
<PAGE>
The NAV per Share at the close of business on April 6, 1999, (the last trading
date on which the Fund publicly reported its NAV prior to the announcement of
the Offer) and on May 21, 1999, (the last trading date prior to the date of this
Prospectus on which the Fund publicly reported its NAV per Share) were $20.60
and $18.63, respectively, and the last reported sales prices of a Share on the
NYSE on those dates were $18.94 and $16.69, respectively. See "Net Asset Value"
in the SAI.
THE FUND
The Fund is a diversified closed-end investment management company registered
with the SEC. It is actively managed to seek capital appreciation. Employing an
aggressive investment philosophy, the Fund normally invests at least 80% of its
total assets in equity securities of Health Science Companies. There is no
guarantee that the Fund will meet its investment objective. See "Investment
Objective and Policies" and "Risk Factors and Special Considerations."
The Fund's objective is to seek capital appreciation by investing substantially
all of its assets in equity and related securities of U.S. and foreign Health
Science Companies. It seeks to achieve its objective by investing its assets in
a broad range of health care related equities, such as market-leading
pharmaceutical companies, medical devices manufacturers and suppliers, and
various private placement investments. The Fund may focus its investments in
these sectors. For example, at this time approximately 60% of the Fund's
portfolio is invested in stocks of pharmaceutical companies. The Fund may
purchase and sell options on equities. For information regarding the Fund's
portfolio characteristics and composition as of April 30, 1999, see "Portfolio
Characteristics and Composition."
The Investment Manager believes that there are attractive investment
opportunities available to the Fund in the health sciences industries. The
statements below relating to demographics, research and development of new
products, technological developments and economic outlook reflect the beliefs of
the Investment Manager and are based upon publicly available information.
Demographics continue to indicate growth in the health sciences industry, as
peoples' lives are extended. The larger proportion of our population over 65
years of age comprises a larger proportion of our population than ever before.
This growing population segment consumes the largest percentage of health
sciences products, such as pharmaceuticals. In the United States, as persons
born in the late 1940's to early 1950's, known in the United States as the "baby
boomers," advance in age, they are likely to consume increasing amounts of
chronic care drugs and other health science products.
The health sciences industry has increased research and development expenditures
to develop new and better products. Because the U.S. Food and Drug
Administration in the 1900's has continued to expedite approval of new products,
newly-developed health products reach the market at an accelerated pace.
Simultaneously, many Health Science Companies face relative low exposure to
patent litigation. With more new products, a shorter product-to-market period,
and reduced patent litigation risk, the health sciences industry anticipates
increased revenues and profitability.
The introduction of new technologies in the medical equipment and biotechnology
sectors has contributed significantly to growth in the hospital supply and
medical device industries. New technologies have enabled the increased
development of sophisticated devices and procedures. In addition, biotechnology
companies are offering an increasing number of new products. Trends in
demographics and potentially accelerated drug approvals could result in
significant growth in the pharmaceutical sector as well. Moreover, the favorable
outlook for the United States economy could benefit the health sciences industry
through more readily available capital for developing proprietary products and
by the increasing affluence of consumers of those products.
Closed-end funds, such as the Fund, differ from open-end management investment
companies (commonly referred to as "mutual funds") in that closed-end funds
generally list their shares for trading on a securities exchange and do not
redeem their shares at the option of the shareholder. By comparison, mutual
16
<PAGE>
funds issue securities redeemable at NAV at the option of the shareholder and
typically engage in a continuous offering of their shares. Mutual funds are
subject to continuous asset in-flows and out-flows that can complicate portfolio
management, whereas closed-end funds generally can stay more fully invested in
securities consistent with their respective investment objectives and policies.
In addition, in comparison to open-end funds, closed-end funds have greater
flexibility in the employment of financial leverage and in the ability to make
certain types of investments, such as investments in illiquid securities.
However, shares of closed-end funds frequently trade at a discount from their
NAV.
The Fund was organized as a business trust under the laws of the Commonwealth of
Massachusetts on November 18, 1991 and has registered with the SEC under the
1940 Act. The Fund commenced investment operations on January 24, 1992 under the
name Global Health Sciences Fund. On April 30, 1997, the name of the Fund was
changed to INVESCO Global Health Sciences Fund. The Fund's principal office is
located at 7800 E. Union Avenue, Suite 800, Denver, Colorado 80237. The Fund has
contracted with INVESCO to serve as its investment adviser. INVESCO is an
investment management firm registered with the SEC under the Investment Advisers
Act of 1940, as amended.
THE OFFER
PURPOSE OF THE OFFER
As discussed below, the Board of Trustees has determined that it would be in the
best interests of the Fund and its shareholders to make the Offer. The Board
considered the proposal for the Offer at several meetings, including a meeting
at which the independent Trustees (as defined under the 1940 Act) ("Independent
Trustees") met with counsel and without management present to discuss the Offer.
The Board, including all of the Independent Trustees, unanimously approved the
Offer. In its deliberations, the Board considered a number of issues and
factors, including the potential impact of the Offer on current exercising and
non-exercising shareholders; the potential impact of the Offer on the Fund's
NAV, Share price, present and potential discount to NAV, and trading activity;
the potential dilutive impact of the Offer on the Fund and its shareholders (in
particular non-exercising shareholders); the revenue impact of the Offer on the
Investment Manager and its affiliates; the value and quality of the services
expected to be provided by the Dealer Manager in light of the relationship
between the Dealer Manager and existing shareholders; the Dealer Manager's
familiarity with the Fund and with the Investment Manager; and the terms of the
Offer compared to the terms of similar offers conducted by other closed-end
funds. The Board of Trustees concluded that increasing the assets of the Fund
would be beneficial to the Fund and its shareholders. However, there can be no
assurance that any of the anticipated benefits discussed in this Prospectus will
be realized as a result of the Offer.
The Board determined that it would be in the best interests of the Fund and its
existing shareholders to increase the assets of the Fund available for
investment, thereby allowing the Fund more fully to take advantage of available
investment opportunities consistent with its investment objective. In reaching
its decision, the Board of Trustees was advised by the Investment Manager that
the availability of new assets would give the Fund additional investment
flexibility, as well as an enhanced ability to take advantage of what the
Investment Manager believes to be timely investment opportunities. It was noted
that, to take advantage of these opportunities without an infusion of new
capital, the Fund would be required to sell current portfolio positions that the
Investment Manager believes the Fund should retain, which could cause the
realization of significant capital gains by the Fund and its shareholders. The
Investment Manager provided its views to the effect that while the Fund could
seek to obtain shareholder approval to borrow money for investment purposes
under current market conditions, it would not be prudent to do so, because
raising additional money through the Offer would be less costly than borrowing
the same amount of money. With an increased asset base as a result of the Offer,
17
<PAGE>
the Investment Manager believes the Fund would be able to invest in a larger
universe of securities that it believes would have the benefits described below.
The Board of Trustees considered that the Fund potentially could achieve
additional economies of scale as a result of an increase in total assets,
resulting in a nominal decrease in the Fund's operating expense ratio. In
addition, the Fund and the Investment Manager recently agreed to add a
breakpoint to the investment management agreement for assets in excess of $500
million. At the Fund's current asset size, substantially all of the Proceeds of
the Offer would be managed at this lower fee, which could have the effect of
lowering the Fund's overall expense ratio. In addition, the Board of Trustees
considered that the Offering could ultimately result in a larger number of
shareholders and daily trading volume and therefore could result in an
improvement in the liquidity of the trading market for the Shares on the NYSE,
where the Shares are listed and traded. The Board of Trustees also believes that
a larger number of outstanding Shares and a larger number of beneficial owners
of Shares could increase the level of market interest in the Fund.
In addition, the Board of Trustees considered that the Offer affords existing
shareholders the opportunity to purchase additional Shares at a price that will
be below the lower of market value or NAV. The Board of Trustees also considered
the expenses of the Offer and its dilutive effect, including the effect on
non-exercising shareholders. The Board, however, cannot determine precisely what
the extent of the dilution might be until the completion of the Offer.
The Board of Trustees noted that the Investment Manager will benefit from the
Offer because its fees for investment management services are based on the
average daily net assets of the Fund. It is not possible to state precisely the
amount of additional compensation the Investment Manager will receive as a
result of the Offer, because it is not known how many Rights will be exercised
and because the Proceeds of the Offer will be invested in additional portfolio
securities that may fluctuate in value. However, if all the Rights are exercised
in full, including the additional 1,520,306 Shares by which the Fund may
increase the Offer, based on the Estimated Subscription Price of $ , the
Investment Manager would receive additional fees for investment management
services of approximately $ per annum and additional fees for administrative
services of approximately $___ per annum as a result of the increase in assets
under management.
In determining that the Offer is in the best interests of the Fund and its
shareholders, the Board of Trustees retained the Dealer Manager to provide the
Fund with financial advisory and marketing services relating to the Offer,
including the structure, timing and terms of the Offer. In addition to the
foregoing, the Board of Trustees considered, among other things, using a
variable pricing versus fixed pricing mechanism, the benefits and drawbacks of
conducting a non-transferable versus a transferable rights offering, the effect
on the Fund if the Offer is undersubscribed and the experience of the Dealer
Manager in conducting rights offerings. The Investment Manager advised the Board
that the non-transferability of the Rights may limit, but will not eliminate,
the activity of arbitrageurs.
The Fund and the Investment Manager have received an order and an amendment
thereto (collectively "Order") from the SEC permitting the Fund to make up to
four distributions of net long-term capital gains in any taxable year, so long
as the Fund maintains in effect a distribution policy calling for quarterly
distributions of a fixed percentage of its NAV (the "Quarterly Distribution
Policy"). The Fund and the Investment Manager agreed that, as a condition to
obtaining the Order, the relief granted by the Order shall terminate upon the
effective date of a registration statement under the Securities Act of 1933 for
any future public offering by the Fund of Shares. The Order will not be
terminated, however, for (among other specified reasons) a rights offering to
shareholders of the Fund if (a) Shares will be issued only within the six-week
period immediately following the record date of a quarterly dividend, (b) the
prospectus for such rights offering makes it clear that shareholders exercising
18
<PAGE>
the Rights will not be entitled to receive such dividend, and (c) the Fund has
not engaged in more than one rights offering during any given calendar year.
Final settlement will occur and Shares will be delivered on or about July 12,
1999.
The Fund may, in the future and at its discretion, choose to make additional
rights offerings of Shares from time to time for a number of Shares and on terms
that may or may not be similar to this Offer. Any such future offering will be
made in accordance with the 1940 Act.
TERMS OF THE OFFER
The Fund is issuing to Record Date Shareholders non-transferable Rights
entitling the holders thereof to subscribe for an aggregate of 6,081,223 Shares,
par value $0.01 per Share (7,601,529 Shares if the Fund increases the number of
Shares available by up to 25% in connection with the Over-Subscription Privilege
described below). Each Record Date Shareholder is being issued one Right for
every five Shares owned on the Record Date (1-for-5). The Rights entitle the
holders thereof to subscribe for one Share for every one Right held (the
"Primary Subscription"). Fractional Shares will not be issued on the exercise of
fractional Rights. Accordingly, Shares may be purchased in the Primary
Subscription only pursuant to the exercise of whole Rights. For example, if a
Record Date Shareholder owns 102 Shares, that shareholder will receive 20.4
Rights, but may only exercise 20 Rights for the purchase of 20 Shares, with the
unexercised fractional Rights expiring. However, Record Date Shareholders
holding fewer than five Shares will be entitled to one Right to subscribe for
one Share pursuant to the Primary Subscription. Record Date Shareholders may
request additional Shares pursuant to the Over-Subscription Privilege described
below.
Rights may be exercised at any time during the subscription period, which
commences on May 25, 1999 and ends at 5:00 P.M., Eastern time, on the Expiration
Date (the "Subscription Period"). See "Expiration Date of the Offer." The Rights
are evidenced by Subscription Certificates that will be mailed to Record Date
Shareholders, except as discussed below under "Foreign Restrictions."
Shares not subscribed for in the Primary Subscription will be offered, by means
of the Over-Subscription Privilege, to those Record Date Shareholders who have
exercised all Rights issued to them and who wish to acquire more than the number
of whole Shares they are entitled to purchase pursuant to the exercise of their
Rights in the Primary Subscription. Shares acquired pursuant to the
Over-Subscription Privilege are subject to allotment and may be subject to
increase, as more fully discussed below under "Over-Subscription Privilege." For
purposes of determining the maximum number of Shares a Record Date Shareholder
may acquire pursuant to the Offer, Record Date Shareholders whose Shares are
held of record by Cede & Co. ("Cede"), as nominee for The Depository Trust
Company ("DTC"), or by any other depository or nominee, will be deemed to be the
holders of the Rights that are issued to Cede or such other depository or
nominee on their behalf.
Because fractional Shares will not be issued, Record Date Shareholders who
receive or have remaining fractional Rights will be unable to exercise such
remaining Rights for the purchase of fractional Shares and will not be entitled
to receive any cash in lieu thereof. Such shareholders may, however, request
additional Shares pursuant to the Over-Subscription Privilege.
The Board of Trustees, in consultation with the Investment Manager, has
implemented a Quarterly Distribution Policy, which entails quarterly payments of
dividends in an amount equal to 2.5% of the Fund's NAV. The first dividend to be
paid on Shares acquired on exercise of the Rights will be the first quarterly
19
<PAGE>
dividend, the record date for which occurs after the issuance of the Shares.
Assuming the Subscription Period is not extended, it is expected that the first
dividend received by shareholders acquiring Shares in the Offer will be paid on
August 24, 1999 (payable date).
There is no minimum number of Rights that must be exercised in order for the
Offer to close.
The record date for the Fund's most recent quarterly dividend was May 11, 1999.
Record Date Shareholders will not be entitled to receive that dividend with
respect to those Shares that they receive pursuant to the Offer.
OVER-SUBSCRIPTION PRIVILEGE
If Record Date Shareholders do not exercise all the Rights issued to them, any
Shares represented by unexercised Rights will be offered by means of the
Over-Subscription Privilege to the Record Date Shareholders who have exercised
all the Rights issued to them and who wish to subscribe for additional Shares.
Only Record Date Shareholders who exercise all the Rights issued to them may
indicate on the Subscription Certificate, which they or their nominees submit
with respect to the exercise of the Rights issued to them, how many Shares they
desire to purchase pursuant to the Over-Subscription Privilege. If sufficient
Shares remain after completion of the Primary Subscription, all
over-subscription requests will be honored in full. If sufficient Shares are not
available after completion of the Primary Subscription to honor all
over-subscription requests, the Fund may, at the discretion of the Board of
Trustees, issue up to an additional 25% of the Shares available pursuant to the
Offer (up to an additional 1,520,306 Shares) in order to cover such
over-subscription requests. Regardless of whether the Fund issues such
additional Shares, and to the extent Shares are not available to honor all
over-subscription requests, the available Shares will be allocated among those
who over-subscribe so that the number of Shares issued to such shareholders will
generally be in proportion to the number of Shares owned by such shareholders on
the Record Date. The allocation process may involve a series of allocations in
order to assure that the total number of Shares available for over-subscription
is distributed on a PRO RATA basis.
Banks, brokers, trustees and other nominee holders of Rights will be required to
certify to the Subscription Agent (as defined below), before any
Over-Subscription Privilege may be exercised with respect to any particular
beneficial owner, as to the aggregate number of Rights exercised pursuant to the
Primary Subscription and the number of Shares subscribed for pursuant to the
Over-Subscription Privilege by such beneficial owner and that such beneficial
owner's Primary Subscription was exercised in full. Nominee Holder
Over-Subscription Forms will be distributed to banks, brokers, trustees and
other nominee holders of Rights with the Subscription Certificates.
The Fund will not offer or sell in connection with the Offer any Shares that are
not subscribed for pursuant to the Primary Subscription or the Over-Subscription
Privilege.
20
<PAGE>
SUBSCRIPTION PRICE
The Subscription Price for each Share to be issued pursuant to the Offer will be
95% of the lower of (1) the average of the last reported sales price per Share
on the NYSE on the Expiration Date and on the preceding four Business Days or
(2) the closing NAV per Share on the Expiration Date. For example, if the
average of the last reported sales price per Share on the NYSE on the Expiration
Date and on the four preceding Business Days is $20.00, and the closing NAV per
Share on the Expiration Date is $19.00, the Subscription Price will be $18.05
(95% of $19.00). If, however, the average of the last reported sales price per
Share on the NYSE on the Expiration Date and on the four preceding Business Days
is $18.00, and the closing NAV per Share on the Expiration Date is $19.00, the
Subscription Price will be $17.10 (95% of $18.00).
The Fund announced the Offer on April 7, 1999. The NAV per Share at the close of
business on April 6, 1999 (the last trading date on which the Fund publicly
reported its NAV per Share prior to the announcement) and on May 21, 1999 (the
last trading date on which the Fund publicly reported its NAV per Share prior to
the date of this Prospectus) was $20.60 and $18.63, respectively, and the last
reported sale price per Share on the NYSE on those dates was $18 15/16 and
$16.69, respectively.
NON-TRANSFERABILITY OF RIGHTS
The Rights are non-transferable and, therefore, may not be purchased or sold.
The Rights will not be listed for trading on the NYSE or any other securities
exchange. However, the Shares to be issued pursuant to the Offer will be listed
for trading on the NYSE, subject to notice of issuance.
EXPIRATION DATE OF THE OFFER
The Offer will expire at 5:00 P.M., Eastern time, on June 18, 1999, unless
extended by the Fund until 5:00 P.M., Eastern time, to a date not later than
June 21, 1999. The Rights will expire on the Expiration Date and thereafter may
not be exercised. Because the Offer expires and the Shares will be priced on the
same date, Record Date Shareholders who decide to acquire Shares in the Primary
Subscription or pursuant to the Over-Subscription Privilege will not know the
Subscription Price of the Shares when they make their decision. Any extension of
the Offer will be followed as promptly as practicable by announcement thereof.
Such announcement will be issued no later than 9:00 A.M., Eastern time, on the
next Business Day following the previously scheduled Expiration Date. Without
limiting the manner in which the Fund may choose to make such announcement, the
Fund will not, unless otherwise required by law, have any obligation to publish,
advertise or otherwise communicate any such announcement other than by making a
release to the Dow Jones News Service or such other means of announcement as the
Fund deems appropriate.
SUBSCRIPTION AGENT
The subscription agent is EquiServe, Inc. (the "Subscription Agent" or "EI"). EI
will receive for its administrative, processing, invoicing and other services as
Subscription Agent, a fee estimated to be approximately $70,334, which includes
reimbursement for all out-of-pocket expenses related to the Offer. The
Subscription Agent is also the Fund's transfer agent, dividend-paying agent and
registrar for the Shares. Questions regarding the Subscription Certificates
should be directed to Shareholder Communications Corporation at 1-800-722-4072
(toll free); shareholders may also consult their brokers or nominees. Banks and
broker-dealers should contact Shareholder Communications Corporation at
1-212-805-7113.
21
<PAGE>
Completed Subscription Certificates must be sent together with proper payment of
the Subscription Price for all Shares subscribed for in the Primary Subscription
and pursuant to the Over-Subscription Privilege (for Record Date Shareholders)
to EI by one of the methods described below.
Alternatively, a Notice of Guaranteed Delivery may be sent by facsimile to (781)
575-4826 to be received by the Subscription Agent prior to 5:00 P.M., Eastern
time, on the Expiration Date. Facsimiles should be confirmed by telephone at
(781) 575-4816. The Fund will accept only properly completed and executed
Subscription Certificates actually received at any of the addresses listed
below, prior to 5:00 P.M., Eastern time, on the Expiration Date or by the close
of business on the third Business Day after the Expiration Date following timely
receipt of a Notice of Guaranteed Delivery. See "Payment for Shares" below.
BY FIRST CLASS MAIL: BY OVERNIGHT COURIER: BY HAND:
EQUISERVE, INC. EQUISERVE, INC. EQUISERVE, INC.
c/o State Street Bank c/o State Street Bank Securities Transfer and
and Trust Company and Trust Company Reporting Services, Inc.
Corporate Actions Corporate Actions 100 William Street Galleria
P.O. Box 9573 40 Campanelli Drive New York, NY 10038
Boston, MA 02205-9573 Braintree, MA 02184 U.S.A.
U.S.A. U.S.A.
DELIVERY TO AN ADDRESS OTHER THAN ONE OF THE ADDRESSES
LISTED ABOVE WILL NOT CONSTITUTE VALID DELIVERY.
METHOD FOR EXERCISING RIGHTS
Rights are evidenced by Subscription Certificates that, except as described
below under "Foreign Restrictions," will be mailed to Record Date Shareholders
or, if a shareholder's Shares are held by Cede or any other depository or
nominee on their behalf, to Cede or such depository or nominee. Rights may be
exercised by completing and signing the Subscription Certificate that
accompanies this Prospectus and mailing it in the envelope provided, or
otherwise delivering the completed and signed Subscription Certificate to the
Subscription Agent, together with payment in full for the Shares at the
Estimated Subscription Price by the Expiration Date. Rights may also be
exercised by contacting your broker, banker or trust company, which can arrange,
on your behalf, to guarantee payment and delivery of a properly completed and
executed Subscription Certificate pursuant to a Notice of Guaranteed Delivery by
the close of business on the third Business Day after the Expiration Date. A fee
may be charged for this service. Because fractional Shares will not be issued,
Record Date Shareholders who receive or have remaining fractional Rights will be
unable to purchase fractional Shares on the exercise of such remaining Rights
and will not be entitled to receive any cash in lieu thereof. For example, if a
Record Date Shareholder owns 102 Shares, that shareholder will receive 20.4
Rights, but may only exercise 20 Rights for the purchase of 20 Shares, with the
unexercised fractional Rights expiring. However, Record Date Shareholders
holding fewer than five Shares will be entitled to one Right to subscribe for
one Share pursuant to the Primary Subscription. Record Date Shareholders who
exercise all their Rights pursuant to the Primary Subscription may request
additional Shares pursuant to the Over-Subscription Privilege. Completed
Subscription Certificates must be received by the Subscription Agent prior to
5:00 P.M., Eastern time, on the Expiration Date at one of the addresses set
forth above (unless the guaranteed delivery procedures are complied with as
described below under "Payment for Shares").
SHAREHOLDERS WHO ARE RECORD OWNERS. To exercise their Rights, Record Date
Shareholders may choose between either option to exercise their Rights set forth
22
<PAGE>
under "Payment for Shares" below. If time is of the essence, option (2) under
"Payment for Shares" below will permit delivery of the Subscription Certificate
and payment after the Expiration Date.
SHAREHOLDERS WHOSE SHARES ARE HELD BY A NOMINEE. Shareholders whose Shares are
held by a nominee such as a bank, broker or trustee must contact that nominee to
exercise their Rights. In that case, the nominee will complete the Subscription
Certificate on behalf of the shareholder and arrange for proper payment by one
of the methods set forth under "Payment for Shares" below.
NOMINEES. Nominees who hold Shares for the account of others should notify the
respective beneficial owners of such Shares as soon as possible to ascertain
such beneficial owners' intentions and to obtain instructions with respect to
the Rights. If the beneficial owner so instructs, the nominee should complete
the Subscription Certificate and submit it to the Subscription Agent with the
proper payment as described under "Payment for Shares" below.
Trustees of the Fund who own Shares through their deferred fee arrangement will
receive Rights and may participate in the Offering. Further information with
respect to the deferred fee arrangement may be obtained from the Fund or the
Investment Manager.
INFORMATION AGENT
Any questions or requests for assistance concerning the method of subscribing
for Shares or for additional copies of this Prospectus or Subscription
Certificates or Notices of Guaranteed Delivery may be directed to the
Information Agent at its telephone number and address listed below:
Shareholder Communications Corporation
17 State Street
New York, NY 10004
1-800-722-4072
Brokers and banks, please call 212-805-7113.
Record Date Shareholders may also contact their brokers or nominees for
information with respect to the Offer. The Information Agent will receive a fee
estimated to be $63,639, which includes reimbursement for its out-of-pocket
expenses related to the Offer.
PAYMENT FOR SHARES
Shareholders who wish to acquire Shares in the Primary Subscription and pursuant
to the Over-Subscription Privilege may choose between the following methods of
payment:
(1) A shareholder may send the Subscription Certificate together with payment
for the Shares acquired in the Primary Subscription and any additional Shares
requested to be subscribed for pursuant to the Over-Subscription Privilege to
the Subscription Agent. Payment should be calculated on the basis of the
Estimated Subscription Price of [ ] per Share for all Shares subscribed. A
subscription will be accepted when payment, together with a properly
completed and executed Subscription Certificate, is received by the
Subscription Agent's office at one of the addresses set forth above no later
than 5:00 P.M., Eastern time, on the Expiration Date. The Subscription Agent
will deposit all checks and money orders received by it for the purchase of
Shares into a segregated interest-bearing account (the interest from which
will inure to the benefit of the Fund) pending proration and distribution of
Shares. A PAYMENT PURSUANT TO THIS METHOD MUST BE IN U.S. DOLLARS BY MONEY
23
<PAGE>
ORDER OR CHECK DRAWN ON A BANK OR BRANCH LOCATED IN THE UNITED STATES, MUST
BE PAYABLE TO "INVESCO GLOBAL HEALTH SCIENCES FUND" AND MUST ACCOMPANY A
PROPERLY COMPLETED AND EXECUTED SUBSCRIPTION CERTIFICATE FOR SUCH PAYMENT TO
BE ACCEPTED. EXERCISE BY THIS METHOD IS SUBJECT TO ACTUAL COLLECTION OF
CHECKS BY 5:00 P.M., EASTERN TIME, ON THE EXPIRATION DATE. BECAUSE
UNCERTIFIED PERSONAL CHECKS MAY TAKE AT LEAST FIVE BUSINESS DAYS TO CLEAR,
SHAREHOLDERS ARE STRONGLY URGED TO PAY, OR ARRANGE FOR PAYMENT, BY MEANS OF A
CERTIFIED OR CASHIER'S CHECK OR MONEY ORDER.
(2) Alternatively, a bank, a trust company or a NYSE member subscription will
be accepted by the Subscription Agent if, prior to 5:00 P.M., Eastern time,
on the Expiration Date, the Subscription Agent has received a Notice of
Guaranteed Delivery by facsimile or otherwise from a bank, a trust company or
a NYSE member, guaranteeing delivery of (i) payment of the Estimated
Subscription Price of [$ ] per Share for the Shares subscribed for in the
Primary Subscription and any additional Shares requested pursuant to the
Over-Subscription Privilege, and (ii) a properly completed and executed
Subscription Certificate. The Subscription Agent will not honor a Notice of
Guaranteed Delivery unless a properly completed and executed Subscription
Certificate and full payment for the Shares is received by the Subscription
Agent by the close of business on the third Business Day after the Expiration
Date (June 23, 1999, unless the Offer is extended (the "Protect Period")).
Within five Business Days after the end of the Protect Period (June 30, 1999,
unless the Offer is extended) (the "Confirmation Date"), a confirmation will be
sent by the Subscription Agent to each subscribing shareholder (or, if the
shareholder's Shares are held by Cede or any other depository or nominee on such
shareholder's behalf, to Cede or such depository or nominee), showing (i) the
number of Shares acquired in the Primary Subscription, (ii) the number of
Shares, if any, acquired pursuant to the Over-Subscription Privilege, (iii) the
Subscription Price per Share and total purchase price of the Shares, and (iv)
any additional amount payable by such shareholder to the Fund or any excess to
be refunded by the Fund to such shareholder, in each case based on the
Subscription Price. If any shareholder exercises his or her Right to acquire
Shares pursuant to the Over-Subscription Privilege, any such excess payment that
would otherwise be refunded to the shareholder will be applied by the Fund
toward payment for Shares acquired pursuant to the exercise of the
Over-Subscription Privilege. Any additional payment required from a shareholder
must be received by the Subscription Agent within eighth Business Days after the
Confirmation Date (July 12, 1999, unless the Offer is extended). Any excess
payment to be refunded by the Fund to a shareholder will be mailed by the
Subscription Agent to such shareholder as promptly as possible. All payments by
a shareholder must be in U.S. dollars by money order or check drawn on a bank or
branch located in the United States and payable to "INVESCO GLOBAL HEALTH
SCIENCES FUND."
The Subscription Agent will deposit all checks received by it prior to the final
payment date into a segregated interest-bearing account (which interest will
inure to the benefit of the Fund) pending proration and distribution of the
Shares.
Whichever of the two methods described above is used, issuance and delivery of
certificates for the Shares purchased are subject to collection of checks and
actual payment pursuant to any Notice of Guaranteed Delivery.
If a shareholder who acquires Shares pursuant to the Primary Subscription or the
Over-Subscription Privilege does not make payment of any additional amounts due
by the tenth Business Day after the Confirmation Date, the Fund reserves the
right to take any or all of the following actions: (i) sell such subscribed and
24
<PAGE>
unpaid-for Shares to other Record Date Shareholders, (ii) apply any payment
actually received toward the purchase of the greatest whole number of Shares
that could be acquired by such shareholder upon the exercise of the Primary
Subscription and/or Over-Subscription Privilege, and/or (iii) exercise any and
all other rights or remedies to which the Fund may be entitled.
THE METHOD OF DELIVERY TO THE FUND OF SUBSCRIPTION CERTIFICATES AND PAYMENT OF
THE SUBSCRIPTION PRICE WILL BE AT THE ELECTION AND RISK OF THE EXERCISING RIGHTS
HOLDERS, BUT IF SENT BY MAIL IT IS RECOMMENDED THAT SUCH CERTIFICATES AND
PAYMENTS BE SENT BY REGISTERED MAIL, PROPERLY INSURED, WITH RETURN RECEIPT
REQUESTED, AND THAT A SUFFICIENT NUMBER OF DAYS BE ALLOWED TO ENSURE DELIVERY TO
THE SUBSCRIPTION AGENT AND CLEARANCE OF PAYMENT PRIOR TO 5:00 P.M., EASTERN
TIME, ON THE EXPIRATION DATE. BECAUSE UNCERTIFIED PERSONAL CHECKS MAY TAKE AT
LEAST FIVE BUSINESS DAYS TO CLEAR, YOU ARE STRONGLY URGED TO PAY, OR ARRANGE FOR
PAYMENT, BY MEANS OF CERTIFIED OR CASHIER'S CHECK OR MONEY ORDER.
All questions concerning the timeliness, validity, form and eligibility of any
exercise of Rights will be determined by the Fund, whose determinations will be
final and binding. The Fund in its sole discretion may waive any defect or
irregularity, or permit a defect or irregularity to be corrected within such
time as it may determine, or reject the purported exercise of any Right.
Subscriptions will not be deemed to have been received or accepted until all
irregularities have been waived or cured within such time as the Subscription
Agent determines in its sole discretion. The Subscription Agent will not be
under any duty to give notification of any defect or irregularity in connection
with the submission of Subscription Certificates or incur any liability for
failure to give such notification.
EXERCISING RIGHTS HOLDERS WILL HAVE NO RIGHT TO RESCIND THEIR SUBSCRIPTION AFTER
RECEIPT OF THEIR PAYMENT FOR SHARES BY THE SUBSCRIPTION AGENT, EXCEPT AS
PROVIDED BELOW UNDER "NOTICE OF NET ASSET VALUE DECLINE."
DELIVERY OF SHARE CERTIFICATES
Certificates representing Shares acquired in the Primary Subscription will be
mailed promptly after the expiration of the Offer once full payment for such
Shares has been received and cleared. Certificates representing Shares acquired
pursuant to the Over-Subscription Privilege will be mailed as soon as
practicable after full payment for such Shares has been received and cleared and
all allocations have been completed. Participants in the Reinvestment Plan will
have any Shares acquired in the Primary Subscription and pursuant to the
Over-Subscription Privilege credited to their accounts under the Reinvestment
Plan. Participants in the Reinvestment Plan wishing to exercise Rights issued
with respect to the Shares held in their accounts under the Reinvestment Plan
must exercise such Rights in accordance with the procedures set forth above.
Shareholders whose Shares are held of record by Cede or by any other depository
or nominee on their behalf or their broker-dealer's behalf will have any Shares
acquired in the Primary Subscription credited to the account of Cede or such
other depository or nominee. Shares acquired pursuant to the Over-Subscription
Privilege will be certificated, and certificates representing such Shares will
be sent directly to Cede or such other depository or nominee. Share certificates
will not be issued for Shares credited to Reinvestment Plan accounts.
FOREIGN RESTRICTIONS
Subscription Certificates will not be mailed to Record Date Shareholders whose
record addresses are outside the United States. Foreign Record Date Shareholders
or their nominees will receive written notice of the Offer. The Rights issued to
25
<PAGE>
foreign Record Date Shareholders will be held by the Subscription Agent for
their accounts until instructions are received to exercise the Rights. Rights
issued to foreign Record Date Shareholders will expire for the failure to submit
instructions to the Subscription Agent prior to or on the Expiration Date.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES OF THE OFFER
The following discussion summarizes the principal federal income tax
consequences of the Offer to Record Date Shareholders. It is based on the
Internal Revenue Code of 1986, as amended (the "Code"), U.S. Treasury
regulations, Internal Revenue Service rulings and policies and judicial
decisions in effect on the date of this Prospectus, all of which are subject to
change or differing interpretation possibl6y with retroactive effect. This
discussion does not address all federal income tax aspects of the Offer that may
be relevant to a particular shareholder in light of his or her individual
circumstances or to shareholders subject to special treatment under the Code
(such as insurance companies, financial institutions, tax-exempt entities,
dealers in securities, foreign corporations and persons who are not citizens or
residents of the United States), and it does not address any state, local or
foreign tax consequences. Accordingly, each shareholder should consult his, her
or its own tax advisor as to the specific tax consequences of the Offer to him,
her or it. Each shareholder should also review the discussion of certain tax
considerations affecting the Fund and its shareholders set forth under "Federal
Taxation of the Fund and its Shareholders" below and under "Taxation" in the
SAI.
For federal income tax purposes, neither the receipt nor the exercise of the
Rights by Record Date Shareholders will result in taxable income to them, and
they will realize no loss with respect to any Rights that expire without being
exercised.
A Record Date Shareholder's holding period for a Share acquired on exercise of a
Right will begin with the date of exercise. A Record Date Shareholder's basis
for determining gain or loss on the sale of such a Share will equal the sum of
the shareholder's basis in the Right, if any, plus the Subscription Price. A
Record Date Shareholder's basis in a Right will be zero unless either (1) the
fair market value of the Right on the date of distribution is 15% or more of the
fair market value on that date of the Shares with respect to which the Right was
distributed or (2) the shareholder elects, on his, her or its federal income tax
return for the taxable year in which the Right is received, to allocate part of
the basis of those Shares to the Right. If either clause (1) or (2) applies,
then if the Right is exercised, the Record Date Shareholder will allocate his,
her or its basis in the Shares with respect to which the Right was distributed
between those Shares and the Right in proportion to their respective fair market
values on the date of distribution. A Record Date Shareholder's gain or loss
recognized on a sale of a Share acquired on the exercise of a Right will be a
capital gain or loss (assuming the Share was held as a capital asset at the time
of sale) and will be long-term capital gain or loss if the Share was held at
that time for more than one year.
The foregoing is only a summary of certain federal income tax consequences and
does not describe any state, local or foreign tax consequences of the Offer.
Record Date Shareholders should consult their own tax advisors concerning the
tax consequences of the Offer.
NOTICE OF NET ASSET VALUE DECLINE
As required by the SEC, the Fund has undertaken to suspend the Offer until it
amends this Prospectus if, subsequent to May 24, 1999 (the effective date of the
Fund's Registration Statement of which this Prospectus is a part), the Fund's
NAV declines more than 10% from its NAV as of that date. Accordingly, the
Expiration Date would be extended and the Fund would notify Record Date
Shareholders of any such decline and permit shareholders to cancel their
exercise of Rights.
26
<PAGE>
EMPLOYEE BENEFIT PLAN CONSIDERATIONS
Shareholders that are employee benefit plans subject to the Employee Retirement
Income Security Act of 1974, as amended ("ERISA") (including corporate profit
sharing/retirement and savings plans, plans for self-employed individuals and
their employees, and individual retirement accounts ("IRAs")) (collectively,
"Retirement Plans") should be aware that additional contributions of cash to a
Retirement Plan (other than rollover contributions or trustee-to-trustee
transfers from other Retirement Plans) in order to exercise Rights may, when
taken together with contributions previously made, be treated as excess or
nondeductible contributions subject to excise taxes. In the case of Retirement
Plans qualified under section 401(a) of the Code, additional cash contributions
could cause violations of the maximum contribution limitations of section 415 of
the Code or other qualification rules. Retirement Plans in which contributions
are so limited should consider whether there is an additional source of funds
available within the Retirement Plan, including the liquidation of assets, with
which to exercise the Rights. Because the rules governing plans are extensive
and complex, Retirement Plans contemplating the exercise of Rights should
consult with their counsel prior to such exercise.
Retirement Plans and other tax exempt entities, including governmental plans,
should also be aware that if they borrow to finance their exercise of Rights,
they may become subject to the tax on unrelated business taxable income under
section 511 of the Code. If any portion of an IRA is used as security for a
loan, that portion will be treated as a distribution to the IRA owner.
ERISA contains fiduciary responsibility requirements, and ERISA and the Code
contain prohibited transactions rules, that may impact the exercise of Rights.
Due to the complexity of these rules and the penalties for noncompliance,
Retirement Plans should consult with their counsel regarding the consequences of
their exercise of Rights under ERISA and the Code.
DISTRIBUTION ARRANGEMENTS
PaineWebber Incorporated, 1285 Avenue of the Americas, New York, New York, a
broker-dealer and member of the National Association of Securities Dealers,
Inc., will act as the Dealer Manager for the Offer. Under the terms and subject
to the conditions contained in the Dealer Manager Agreement dated the date
hereof, the Dealer Manager will provide financial advisory and marketing
services in connection with the Offer and will solicit the exercise of Rights
and participation in the Over-Subscription Privilege by Record Date
Shareholders. The Offer is not contingent upon any number of Rights being
exercised. The Fund has agreed to pay the Dealer Manager a fee for financial
advisory and marketing services equal to 1.25% of the aggregate Subscription
Price for each Share issued pursuant to the Offer, and the Fund has also agreed
to pay broker-dealers, including the Dealer Manager, fees for their solicitation
efforts (the "Solicitation Fees") of 2.50% of the Subscription Price per Share
for each Share issued pursuant to the exercise of the Rights and pursuant to the
Over-Subscription Privilege as a result of their soliciting efforts.
Solicitation Fees will be paid to the broker-dealer designated on the applicable
portion of the Subscription Certificates or, in the absence of such designation,
to the Dealer Manager.
In addition, the Fund has agreed to reimburse the Dealer Manager up to an
aggregate of $100,000 for its reasonable expenses incurred in connection with
the Offer. The Fund and the Investment Manger have each agreed to indemnify the
Dealer Manager or contribute to losses arising out of certain liabilities
including liabilities under the Securities Act. The Dealer Manager Agreement
also provides that the Dealer Manager will not be subject to any liability to
the Fund in rendering the services contemplated by such agreement except for any
act of bad faith, willful misconduct or gross negligence of the Dealer Manager
or intentional failure to perform substantially by the Dealer Manager of its
obligations and duties under such agreement.
27
<PAGE>
The Fund has agreed not to offer or sell, or enter into any agreement to sell,
any equity or equity related securities of the Fund or securities convertible
into such securities for a period of 180 days after the date of the Dealer
Manager Agreement, except for the Shares issued in reinvestment of dividends or
other distributions or other limited circumstances.
IMPORTANT DATES TO EVENT DATE
REMEMBER
Record Date May 25, 1999
Subscription Period May 25, 1999 to June
18, 1999*
Expiration Date and Pricing June 18, 1999*
Date
Subscription Certificates and June 18, 1999*
Payment for Shares Due**
Notice of Guaranteed Delivery June 18, 1999*
Due
Payment for Guarantees of June 23, 1999*
Delivery Due
Confirmation Mailed to June 30, 1999*
Participants
Final Payment for Shares*** July 12, 1999*
- --------
* Unless the Offer is extended to a date no later than June 21.
** A Record Date Shareholder exercising Rights must deliver by the Expiration
Date either (i) a Subscription Certificate and payment for Shares or (ii) a
Notice of Guaranteed Delivery.
*** Additional amount due from Record Date Shareholders (in the event the Final
Subscription Price exceeds the Estimated Subscription Price).
USE OF PROCEEDS
If 6,081,223 Shares are sold at the Estimated Subscription Price of $____ per
Share, the Proceeds of the Offer are estimated to be approximately $________,
after deducting estimated expenses payable by the Fund, including the fees and
expenses of the Dealer Manager and other offering expenses that in total are
estimated to be $596,200. If the Fund increases the number of Shares subject to
subscription by up to 25%, or an additional 1,520,306 Shares, in order to
satisfy over-subscription requests, the additional Proceeds will be
approximately $________.
The Investment Manager has advised the Fund that it anticipates that the
Proceeds will be invested in accordance with its investment objective and the
policies set forth under "Investment Objective and Policies" within three months
from the date of this Prospectus (but in no event later than six months from the
date of this Prospectus), depending on market conditions and the availability of
appropriate securities. The Proceeds of the Offer may be held in U.S. Government
securities and other high-quality, short-term money market instruments until
they are invested pursuant to the Fund's investment objective. While the
Proceeds are invested in such securities, the Proceeds will not be invested in
securities consistent with the Fund's goal of seeking long-term capital
appreciation. In addition, consistent with the Fund's investment restrictions,
the Proceeds of the Offer may be held pending permanent investment in other
instruments including, without limitation, S&P 500 futures. These other
investments may present a substantial investment risk, including the potential
28
<PAGE>
that they may decrease in value prior to the time they are liquidated and the
Proceeds are ultimately invested.
INVESTMENT OBJECTIVE AND POLICIES
The investment objective of the Fund is to seek capital appreciation by
investing substantially all of its assets in equity and related securities of
U.S. and foreign Health Science Companies. The Fund's Investment Manager
believes that the securities of Health Science Companies offer the potential for
capital appreciation based upon the Investment Manager's projection of
increasing global expenditures for health science products and services
resulting from enhanced consumer demand, continuing technological advances and
demographic trends indicating an aging population. The Fund's Investment Manager
also believes that the potential for capital appreciation within the health
science industries will be driven by increased focus on cost containment and
productivity enhancement. An investment in the Fund should not itself be
considered a balanced investment program and is intended to provide
diversification for a more complete investment program. No assurance can be
given that the Fund will achieve its investment objective.
Under normal market conditions, at least 80% of the Fund's total assets will be
invested in equity and related securities of Health Science Companies. The
principal industry groups of Health Science Companies are:
o Pharmaceuticals
o Biotechnology
o Medical equipment, devices and supplies
o Health care delivery
Health Science Companies also consist of those companies principally engaged in
any other industries relating to human health or the growth or survival of
animals or plants and companies principally engaged in activities that utilize
technologies that are the same as or similar to those developed for or used by
Health Science Companies. The Fund expects to invest both in large,
well-established Health Science Companies with existing products and services as
well as in smaller, emerging Health Science Companies, including start-up
companies and venture capital opportunities, which may offer limited products or
services or which are seeking to develop products, services or technologies.
Up to 20% of the Fund's total assets may be invested, in the aggregate, in:
equity and related securities of companies engaged, but less than principally,
in the health sciences or in supplying goods or services to Health Science
Companies, or of non-Health Science Companies which benefit from the growth and
development of Health Science Companies or in real estate investment trusts that
hold at least 50% of their interests in facilities of Health Science Companies
("Related Companies"); non-convertible debt securities of Health Science
Companies and Related Companies that are not acquired as units together with
equity securities; and high grade U.S. dollar denominated money market
instruments having maturities of one year or less. Investment in non-convertible
debt securities (other than money market instruments) of Health Science
Companies and Related Companies (whether or not acquired as units with other
securities) is limited to 10% of the Fund's total assets. Current income is
generally not a consideration in the selection of investments.
29
<PAGE>
The Fund has pending before the SEC an application for an exemptive order that,
if granted, would permit the Fund to participate in an interfund lending
facility. As such, the Fund may lend cash to other registered investment
companies (including mutual funds) managed by the Investment Manager
("Affiliated Funds"). If this application is granted, the Fund may from time to
time make such loans to Affiliated Funds, and may make such loans from the
Proceeds of the Offering, if such Proceeds have not been otherwise invested
consistent with the Fund's objective.
The Fund may invest up to 25% of its total assets in securities for which there
is no readily available secondary market, including securities acquired in
private placements, venture capital opportunities, joint ventures and
partnerships. Since its inception, the Fund has consistently made such
investments.
Up to 25% of the Fund's total assets, measured at the time of purchase, may be
invested in Foreign Securities. Securities of Canadian issuers and ADRs are not
subject to this 25% limitation.
The Fund will, under normal conditions, invest at least 65% of its total assets
in issuers that are organized under the laws of, or that maintain their
principal business operations in, at least three countries, one of which is
expected to be the United States.
"Equity and related securities" consist of: common, preferred and convertible
preferred stocks, whether or not voting; partnership interests; securities
having equity characteristics such as rights, warrants and convertible debt
securities, whether or not issued by the same issuer as the security to be
issued upon exercise or conversion; non-convertible debt securities that are
acquired as units together with any of the foregoing, whether or not
transferable or separately traded; and short sale and hedge positions relating
to any of such securities.
The Fund may utilize certain investment practices, such as repurchase
agreements, when-issued and delayed delivery transactions, lending portfolio
securities, foreign currency and other hedging transactions and short sales.
These investment practices involve certain risks. See "Additional Information
About Its Investment Objective and Policies" located in the SAI.
For temporary purposes, and when, in the Investment Manager's judgment,
conditions in the securities markets generally or in the market for the
securities of Health Science Companies would make achievement of the Fund's
investment objective impracticable, the Fund may assume a defensive investment
position. During these periods, the Fund may without limit invest in U.S.
dollar-denominated, high grade money market instruments rated or, if unrated, in
the Investment Manager's opinion comparable to instruments rated, in the top
three rating categories utilized by at least one national recognized statistical
rating organization and having maturities at the time of purchase of one year or
less, including securities issued or guaranteed by the United States Government
or one of its agencies or instrumentalities ("U.S. Government Securities"),
certificates of deposit, bankers' acceptances, commercial paper, short-term
corporate securities, and repurchase agreements with respect to any of the
foregoing. While the Fund is in a defensive position, the opportunity to achieve
capital appreciation will be limited, and, to the extent that the Investment
Manager's assessment of market conditions is incorrect, the Fund will be
foregoing the opportunity to benefit from capital appreciation resulting from
increases in the value of equity investments; however, the ability to maintain a
defensive investment position provides the flexibility for the Fund to seek to
avoid capital loss during market downturns. It is impossible to predict when, or
for how long, any such investment position will be maintained.
30
<PAGE>
INVESTMENT RESTRICTIONS
The Fund has adopted the following investment restrictions, which, together with
its investment objective, are fundamental policies changeable only with the
approval of a "majority" of the Fund's outstanding voting securities. As defined
in the 1940 Act, this requires the affirmative vote of the holders of (a) more
than 50% of the outstanding Shares of the Fund, or (b) two-thirds or more of the
Shares present at a meeting if more than 50% of the Fund's outstanding Shares
are represented at the meeting in person or by proxy, whichever is less. Under
these restrictions, the Fund may not:
1. borrow money or issue senior securities, except that the Fund may
borrow in an amount not exceeding 15% of its total assets to finance
the repurchase of or tender offers for Shares or to pay dividends and
other distributions, and may borrow for temporary purposes in an amount
not exceeding 5% of its total assets (the Fund will not be deemed to
have issued a senior security by reason of effecting short sales,
lending securities, purchasing securities on a when-issued or delayed
delivery basis, or engaging in hedging transactions in accordance with
its investment policies, or entering into collateral arrangements or
maintaining margin deposits incident to any of the foregoing
practices);
2. buy or sell commodities, commodity contracts, oil, gas or other mineral
interests or exploration programs (however, the Fund may purchase
securities of companies which invest in the foregoing and may enter
into transactions in hedging instruments);
3. buy or sell real estate or interests therein (however, securities
issued by companies which invest in real estate or interests therein
may be purchased and sold);
4. invest in any company for the purpose of exercising control or
management, except to the extent that exercise by the Fund of its
rights under agreements related to portfolio securities would be deemed
to constitute such control;
5. engage in the underwriting of any securities, except insofar as the
Fund may be deemed an underwriter under the Securities Act of 1933 in
the sale of its Shares or in disposing of a portfolio security;
6. make loans of money or securities to any person, except that the Fund
may lend money through the purchase of securities (including repurchase
agreements) in accordance with its investment policies, and make loans
of portfolio securities in an amount not exceeding 25% of the Fund's
total assets;
7. with respect to 75% of its total assets, purchase the securities of any
one issuer (except U.S. Government Securities) if the purchase would
cause the Fund to have more than 5% of the value of its total assets
invested in the securities of such issuer or to own more than 10% of
the outstanding voting securities of such issuer;
8. invest in the securities of other investment companies in an amount
exceeding the limitations set forth in the 1940 Act and the rules
thereunder;
9. purchase a security if such purchase would cause more than 25% of its
total assets to be invested in securities of issuers engaged in any one
industry (as determined by standard industry classification codes),
31
<PAGE>
except that the Fund will, under normal market conditions, invest more
than 25% of its total assets in the securities of companies in the
groups of industries in which Health Science Companies are engaged; or
10. pledge, hypothecate, mortgage or otherwise encumber its assets, except
to secure permitted borrowings or for collateral and margin
arrangements associated with the Fund's investment practices.
The percentage limitations on investments set forth above, as well as those
described elsewhere in this Prospectus and SAI, apply only at the time of
investment and require no action by the Fund as a result of subsequent changes
in the value of investments or the total assets of the Fund.
SPECIAL INVESTMENT PRACTICES
The Fund may utilize the following special investment practices:
SHORT SALES. In furtherance of its objective of capital appreciation, the Fund
may effect short sales of any securities which it has authority to purchase,
subject to the limitation that the Fund will not effect a short sale if, as a
result of such sale, the current market value of securities sold short would
exceed 25% of the Fund's total assets. Short sales are transactions in which the
Fund sells a security it does not own in anticipation of an expected decline in
the price of that security. In such a transaction, the Fund must borrow the
security to make delivery to the buyer. The Fund is obligated to replace the
borrowed security and may realize a gain if it purchases the security for
replacement at a lower price. However, the price at which the Fund purchases the
security may be more or less than the price at which the security was sold. The
Fund will incur a loss as a result of a short sale if the cost of purchasing the
borrowed security, and transaction and carrying costs associated with the short
sale, are more than the amount realized from the short sale. Although the Fund's
potential for gain as a result of a short sale is limited to the price at which
it sold the security short less the cost of borrowing the security, its
potential for loss is theoretically unlimited because there is no limit to the
cost of replacing the borrowed security.
If the Fund borrows a security in order to enter into a short sale, the proceeds
of the short sale will be retained by a broker, as security for the borrowing to
the extent necessary to meet margin requirements, until the short position is
closed out. The Fund is also required to pay to the lender of the security the
amount of any dividends or interest paid on the borrowed security. To borrow the
security, the Fund also may be required to pay a premium, which would increase
the cost of the security sold short. The amount of any gain will be decreased,
and the amount of any loss increased, by the amount of any premium or dividends
or interest paid on the borrowed security that the Fund may be required to pay
in connection with the short sale.
A short sale "against the box" is a transaction in which the Fund enters into a
short sale of a security that the Fund owns or has the right to acquire at no
additional cost. The proceeds of the short sale are held by a broker until the
Fund delivers the security to close the short position, at which time the Fund
will receive the net proceeds from the sale.
When the Fund engages in short sales other than "against the box," the Fund will
"cover" its position in one of two ways. The Fund may cover by holding a call
option on the security sold short having a strike price no higher than the price
at which the security was sold. Alternatively, the Fund may maintain in an
account with its custodian a segregated amount of cash or U.S. Government
Securities equal to the excess of (1) the market value of the securities sold
short at the time they were sold short, over (2) any cash or U.S. Government
Securities required by the broker to be deposited as collateral in connection
with the short sale (not including the proceeds from the short sale). Until the
borrowed security is replaced, the Fund will maintain this account at a level so
that the amount deposited in the account, plus the collateral deposited with the
32
<PAGE>
broker, will equal the current market value of the securities sold short, but
not less than the market value of the securities at the time they were sold
short.
HEDGING. For hedging purposes, the Fund may purchase and sell stock options,
stock index futures, such as S&P 500 futures, options on stock indices, options
on stock index futures, forward foreign currency contracts and foreign currency
futures contracts and related options (collectively, "Hedging Instruments").
Hedging Instruments may be used to attempt to reduce investment risk by taking
an investment position that is expected to move in the opposite direction from
the position being hedged. The Fund may enter into hedging transactions in
connection with anticipated purchases or sales of portfolio securities or with
respect to anticipated changes in the market prices for securities which are in
its portfolio. To the extent the hedge is successful, a loss (or gain) on one
position will tend to be offset by a gain (or loss) on the other. The Investment
Manager will not engage in financial futures or related options transactions for
speculative purposes but only in an effort to hedge portfolio risks as described
above. The Fund will only invest in futures contracts and related options to the
extent that the Fund would not be required thereby to register with the United
States Commodity Futures Trading Commission as a commodity pool operator. Under
current regulations, the Fund may not purchase or sell futures contracts or
related options if, immediately thereafter, the sum of the amount of initial
margin deposits on the Fund's open regulated options and futures positions and
premiums on open option positions thereon that are not hedging transactions
would exceed 5% of the market value of the Fund's total assets.
The successful use of Hedging Instruments depends on the ability of the
Investment Manager to predict the direction of the market and is subject to
various additional risks. The investment techniques and skills required to use
Hedging Instruments successfully are different from those required to select
equity securities for investment. The correlation between movements in the price
of the Hedging Instruments and the price of the securities being hedged is
imperfect and the risk from imperfect correlation increases, with respect to
stock index related Hedging Instruments, as the composition of the Fund's
portfolio diverges from the composition of the index underlying such Hedging
Instruments. If the Fund has hedged against a decline in the value of its
portfolio securities, the Fund could suffer a loss which is only partially
offset or not offset at all by an increase in the value of the Fund's portfolio
securities. If the Fund has hedged an intended purchase of securities, the Fund
could suffer a loss which is only partially offset or not offset at all by a
reduction in the price at which the securities are purchased. If the Fund hedges
a proposed purchase of securities and determines not to purchase such
securities, any loss on the Hedging Instrument will not be offset. In addition,
the ability of the Fund to close out a position in a Hedging Instrument depends
on a liquid secondary market. There is no assurance that liquid secondary
markets will exist for any particular Hedging Instrument at any particular time.
The Fund may enter into contracts to purchase or sell foreign currencies at a
future date ("forward contracts") foreign currency futures contracts, options on
such futures contracts and options on foreign currencies as a hedge against
fluctuations in foreign exchange rates pending the settlement of transactions in
Foreign Securities or during the time the Fund holds Foreign Securities. A
forward foreign currency contract is an agreement between contracting parties to
exchange an amount of currency at some future time at an agreed upon rate. The
Fund will not attempt to hedge all of its foreign portfolio positions and will
enter into such transactions only to the extent, if any, deemed appropriate by
the Investment Manager. The Fund will not enter into a forward contract for a
term of more than one year. Investors should be aware that hedging against a
decline in a currency does not eliminate fluctuations in the market value of
portfolio securities or prevent losses if the value of such securities declines.
Furthermore, such hedging transactions preclude the opportunity for gain if the
hedged currency should rise. No predictions can be made with respect to whether
33
<PAGE>
the total of such transactions will result in a better or a worse position than
had the Fund not entered into foreign currency hedges.
The Hedging Instruments that the Fund may use are described in the SAI, which
contains further information about the characteristics, risks, possible
benefits, and applicable limitations on the use of such Hedging Instruments.
REPURCHASE AGREEMENTS. In order to make productive use of funds pending other
investments, any of the types of high grade debt securities permissible for
purchase by the Fund may be acquired subject to repurchase agreements with
commercial banks with total assets in excess of $1 billion or securities dealers
with a net worth in excess of $50 million. The Investment Manager will also
consider the creditworthiness of the parties with whom the Fund enters into
repurchase agreements. In a repurchase transaction, at the time the Fund
acquires a security, it simultaneously agrees to resell it to the bank or dealer
from which it was purchased on a specific future date. The repurchase price
exceeds the purchase price by an amount that reflects an agreed upon interest
rate effective for the period during which the repurchase agreement is in
effect. Delivery pursuant to the resale typically will occur within one to seven
days of the purchase. A repurchase transaction is similar to a loan, with the
security underlying the agreement serving as collateral. The Fund requires that
securities underlying repurchase agreements be held by its custodian in an
amount having a value at least equal to the repurchase price. The Investment
Manager will monitor the collateral daily and, if its value declines below the
repurchase price, will immediately demand that additional securities be
transferred. If such demand is not met within one day, the securities will be
sold by the Fund. If any party to a repurchase agreement fails to pay the agreed
upon resale price on the delivery date, the Fund's risks include any decline in
the value of the collateral to an amount which is less than 100% of the
repurchase price, any costs of disposing of such collateral, and any loss from a
delay in disposing of the collateral. There is no limit on the amount of the
Fund's assets that may be subject to repurchase agreements.
RISK FACTORS AND SPECIAL CONSIDERATIONS
DILUTION: NET ASSET VALUE AND OWNERSHIP. If you do not exercise all of your
Rights during the Subscription Period, when the Offering is over you will own a
relatively smaller percentage of the Fund than if you had exercised all of your
Rights. The Fund cannot tell you precisely how much smaller the percentage of
the Fund that you would own because the Fund does not know how many of the
Fund's Record Date Shareholders will exercise their Rights and how many of their
Rights they will exercise.
Shareholders will experience an immediate dilution, which may be significant, of
the aggregate NAV of the Shares as a result of the completion of the Offer
because the Subscription Price per Share will be less than the Fund's NAV per
Share on the Expiration Date, the Fund will incur expenses in connection with
the Offer, and the number of Shares outstanding after the Offer will increase in
a greater percentage than the increase in the size of the Fund's assets. This
dilution also will affect Record Date Shareholders to a greater extent if they
do not exercise their Rights in full. Although it is not possible to state
precisely the amount of any decreases in either NAV or in ownership interests,
because it is not known at this time what the NAV per share will be at the
Expiration Date or what proportion of the Shares will be subscribed, such
dilution could be significant. Finally, there may be dilution of earnings per
Share due to the increase in the number of shares outstanding, but only to the
extent that investments of the Proceeds of the Offer do not achieve the same
return as current investments held by the Fund. To the extent such investments
achieve a better return than current investments, earnings per Share will
experience appreciation.
34
<PAGE>
The following example assumes that all of the Shares are sold at the Estimated
Subscription Price and after deducting all expenses related to the issuance of
the Shares.
NAV per Share on Dilution in Dollars Percentage Dilution
May 21, 1999
Primary Subscription
or 6,081,223 Shares 18.63 $17,857,013 18.71%
Primary Subscriptions
and Over Allotment or
7,601,529 Shares 18.63 $22,321,267 15.76%
HEALTH SCIENCE COMPANIES. Because the Fund intends to invest substantially all
of its assets in equity and related securities of Health Science Companies, an
investor should be aware of certain special considerations and risk factors
relating to investment in such companies. Investors should also be aware of
considerations and risks relating to the Fund's investment practices. An
investment in the Fund should not be considered a balanced investment program
and is intended to provide diversification for a more complete investment
program. The Fund is not intended for investors seeking income.
Investment in the securities of Health Science Companies entails special
considerations and risks. In addition to the risks associated with any strategy
seeking capital appreciation through investment in equity securities, the Fund's
portfolio will bear the additional risk that many Health Science Companies may
be subject to, and possibly adversely affected by, some of the same general
trends relating to demand for health related products and services and the same
regulatory, economic, and political factors. Certain health science industries
are characterized by single product focus and rapidly changing technologies.
These changes may render existing products and technologies obsolete. There is
also extensive government regulation of certain health science industries. Many
of these activities are funded or subsidized by federal and state governments;
withdrawal or curtailment of this support could have an adverse impact on the
profitability, and market prices, of such companies. Changes in government
regulation could also have an adverse impact. Unanticipated problems may arise
in connection with the development of new products or technologies, and many
such efforts may ultimately be unsuccessful. In addition, testing or marketing
products may require obtaining government approvals, which may be a lengthy and
expensive process with an uncertain outcome. Delays in generating products may
result in the need to seek additional capital, potentially diluting the
interests of existing investors, such as the Fund. These various factors may
result in abrupt advances and declines in the securities prices of particular
companies and, in some cases, may have a broad effect on the prices of
securities of companies in particular health science industries or of Health
Science Companies generally.
INVESTMENTS IN UNSEASONED COMPANIES. The Fund may invest in the securities of
smaller, less seasoned companies. These investments may present greater
opportunities for growth but also involve greater risks than customarily are
associated with investments in securities of more established companies. Some of
the Health Science Companies in which the Fund may invest will be start-up
companies which may have insubstantial operational or earnings history or may
have limited products, markets, financial resources or management depth. Some
may also be emerging companies at the research and development stage with no
products or technologies to market or approved for marketing. Securities of
emerging Health Science Companies may lack an active secondary market and may be
subject to more abrupt or erratic price movements than securities of larger,
more established companies or stock market averages in general. Competitors of
certain Health Science Companies, which may or may not be Health Science
Companies, may have substantially greater financial resources than many of the
companies in which the Fund may invest.
35
<PAGE>
SUBSTANTIAL COMPETITION. Intense competition exists within and among certain
health science industries, including competition to obtain and sustain
proprietary technology protection. Health Science Companies may be highly
dependent on the strength of a patent to maintain revenue and market share. The
complex nature of the technologies involved can lead to patent disputes,
including litigation that could result in a company losing an exclusive right to
a patent. In addition, there are numerous Related Companies and the Fund may
invest only a limited portion of its assets in the securities of such companies.
These Related Companies, although not principally engaged in the health
sciences, may be large, well-capitalized companies that are engaged in certain
health science businesses. Some of these companies may have substantially
greater capital, research and development, manufacturing, marketing, and human
resources capabilities than certain of the Health Sciences Companies in which
the Fund may invest and may represent significant long-term competition for
Health Sciences Companies. Such large Related Companies may succeed in
developing technologies and products that are more effective or less costly than
any that may be developed by Health Science Companies and may also prove to be
more successful in production and marketing. Competition may increase further as
a result of potential advances in the health sciences and greater availability
of capital for investment in these fields.
PRODUCT LIABILITY EXPOSURE. Certain Health Science Companies and Related
Companies in which the Fund may invest will be exposed to potential product
liability risks that are inherent in testing, manufacturing, marketing, and
selling human therapeutic and diagnostic products. There can be no assurance
that a product liability claim would not have a material adverse effect on the
business, financial condition or securities prices of the companies in which the
Fund has invested.
FOREIGN SECURITIES. The Fund may invest substantially all of its assets in
Foreign Securities. Many Foreign Securities may be less liquid and their prices
more volatile than securities of comparable U.S. companies. The issuance of
Foreign Securities and the activities of brokers are generally subject to less
governmental supervision and regulation than U.S. securities and brokers, and
commissions on Foreign Securities are generally higher than negotiated
commissions in the United States. In addition, there may, in certain instances,
be delays in the settlement of transactions effected in foreign markets. Certain
countries restrict foreign investments in their securities markets. These
restrictions may limit or preclude investment in certain countries or in certain
industries or market sectors, or may increase the cost of investing in
securities of particular companies.
Foreign companies are not generally subject to uniform accounting, auditing, and
financial reporting standards or to other regulatory requirements comparable to
those applicable to U.S. companies. Thus, there may be less available
information concerning non-U.S. issuers of securities held by the Fund than is
available concerning U.S. companies. In addition, with respect to some foreign
countries there is the possibility of nationalization, expropriation or
confiscatory taxation. Income earned in a foreign nation may be subject to
taxation (including withholding taxes on interest and dividends), or other taxes
may be imposed with respect to investments in Foreign Securities. Other risks
associated with investments in Foreign Securities include limitations on the
removal of securities, property or other assets of the Fund, difficulties in
pursuing legal remedies and obtaining judgments in foreign courts, political or
social instability, and diplomatic developments that could adversely affect the
Fund's investments in companies located in foreign countries.
CURRENCY RISK. The income and capital gains received by the Fund on Foreign
Securities generally will be in non-U.S. currencies. The computation and
distribution of income and capital gains by the Fund, however, will be made in
U.S. dollars. Therefore, the Fund's reported NAV and its computation and
distribution of income and capital gains in U.S. dollars will vary with
increases and decreases in the exchange rate between the currencies in which the
Fund has invested and the U.S. dollar. A decline in any particular currency
against the U.S. dollar will cause a decline in the U.S. dollar value of the
Fund's holdings of securities denominated in such currency and, therefore, may
36
<PAGE>
cause an overall decline in the Fund's NAV and net investment income and capital
gains, if any, to be distributed in U.S. dollars to shareholders by the Fund. In
addition, the computation of income and capital gains will be made on the date
of its accrual by the Fund rather than on any later date on which the proceeds
are converted into U.S. dollars. See "Taxation" in the SAI.
The rate of exchange between the U.S. dollar and other currencies is determined
by many factors, including the supply and demand for particular currencies,
central bank efforts to support particular currencies, the movement of interest
rates, the pace of activity in the industrial countries, including the United
States, and other economic and financial conditions affecting the world economy.
As discussed above, the Fund may enter into foreign currency related Hedging
Instruments to seek to hedge against fluctuations in foreign exchange rates
pending the settlement of transactions in Foreign Securities or during the time
the Fund holds Foreign Securities. See "Investment Objective and
Policies--Special Investment Practices--Hedging."
EURO CONVERSION. The recent introduction of a new European currency, the euro,
may result in future uncertainties for European securities in the markets in
which they trade and with respect to the operation of the Fund's portfolio. The
euro was introduced on January 1, 1999 by eleven European countries that are
members of the European Economic and Monetary Union. The transition to everyday
usage of the euro will occur during the period from January 1, 1999 through
December 31, 2001. The introduction of the euro will require the redenomination
of European debt and equity securities over a period of time, which may result
in various accounting differences and/or tax treatments that otherwise would not
likely occur. Additional questions are raised by the fact that certain European
Union members, including the United Kingdom, did not implement the euro on
January 1, 1999. If the remainder of the transition to the euro does not take
place as planned, there could be negative effects, such as severe currency
fluctuations and market disruptions.
PORTFOLIO TURNOVER. There are no fixed limitations regarding portfolio turnover.
Frequency of portfolio turnover will, therefore, not be a limiting factor if the
Fund considers it advantageous to purchase or sell securities. The Fund
anticipates that its annual portfolio turnover rate will not exceed 200%. For
the year ended October 31, 1998, the Fund's portfolio turnover rate was 87%. A
higher rate of portfolio turnover involves correspondingly greater aggregate
payments for brokerage commissions than a lower rate, which expenses must be
borne by the Fund and its shareholders, while a lower rate of portfolio turnover
involves correspondingly lower aggregate payments and shareholder expenses.
ILLIQUID INVESTMENTS. The Fund is permitted to invest up to 25% of its total
assets in securities for which there is no readily available secondary market.
The risk of investing in such securities generally is greater than the risk of
investing in the securities of widely held, publicly traded companies. Certain
of these securities may be restricted securities and have legal or contractual
restrictions on resale. Restricted securities may not be sold except in exempt
transactions or in a public offering registered under the Securities Act of
1933. Adverse conditions in the securities markets at certain times may preclude
a public offering of an issuer's unregistered securities. Lack of an active
secondary market and resale restrictions may result in the inability of the Fund
to sell a security at a fair price and may substantially delay the sale of a
security that the Fund seeks to sell. In addition, these securities may exhibit
greater price volatility than securities for which secondary markets exist.
Companies whose securities are not publicly traded are not subject to the same
disclosure and other legal requirements as are applicable to companies with
publicly traded securities. Restricted securities eligible for resale to
qualified institutional buyers pursuant to Rule 144A under the Securities Act of
1933 that are determined to be liquid by the Board, or by the Investment Manager
under Board-approved guidelines, are not subject to this 25% of assets
limitation. Under guidelines to determine whether securities eligible for resale
under Rule 144A are liquid, factors such as trading activity and the
37
<PAGE>
availability of price quotations will be considered. If trading activity in a
Rule 144A security purchased by the Fund declines, the Fund's holding in that
security may become illiquid.
Securities of many Health Science Companies are traded in the over-the-counter
market, on regional stock exchanges, and on foreign securities exchanges. Such
markets and exchanges may have low trading volume, and securities traded on such
markets and exchanges may experience abrupt and erratic price movements.
Determinations as to whether a "readily available secondary market" exists for a
particular security will be made by the Board or by the Investment Manager under
Board-approved guidelines. Since its inception, the Fund has consistently made
such investments.
37
<PAGE>
JUNK BONDS AND UNRATED DEBT SECURITIES. The Fund may invest up to 10% of its
total assets in the aggregate, in non-convertible debt securities of Health
Science Companies and Related Companies. These securities and other investments
in such companies may be rated as low as C in the rating categories established
by Standard & Poor's and Moody's or may be unrated, if deemed of comparable
credit quality by the Investment Manager. These securities, which are commonly
referred to as "junk bonds," are regarded, on balance, as predominantly
speculative in terms of the capacity of the issuer to pay interest or repay
principal in accordance with the terms of the obligation and accordingly involve
more credit risk than securities rated in the higher rating categories. Such
debt securities are dependent upon favorable business, financial or economic
conditions, may be subordinated to senior debt and can be regarded as having
extremely poor prospects of ever retaining any real investment standing.
The market prices of such securities tend to reflect individual corporate
developments to a greater extent than do securities rated in the higher rating
categories, which react primarily to fluctuations in the general level of
interest rates. Junk bonds also tend to be more sensitive to economic conditions
than higher rated securities. Adverse publicity and investor perceptions,
whether or not based on fundamental analysis, regarding junk bonds may depress
the prices for such securities. These and other factors adversely affecting the
market prices of such securities will adversely affect the Fund's NAV. Although
some risk is inherent in all securities ownership, holders of debt securities
have a claim on the assets of the issuer prior to the holders of equity
securities. Therefore, an investment in debt securities generally entails less
risk than an investment in equity securities of the same issuer.
Junk bonds are frequently issued by corporations in the growth stage of their
development. They may also be issued in connection with a corporate
reorganization or a corporate takeover. Companies that issue such securities
often are highly leveraged and may not have available to them more traditional
methods of financing. Therefore, the risk associated with acquiring the
securities of such issuers generally is greater than is the case with higher
rated securities. For example, during an economic downturn such issuers may not
have sufficient revenues to meet their interest payment obligations. The
issuer's ability to service its debt obligations may also be adversely affected
by specific corporate developments, the issuer's inability to meet specific
projected business forecasts or the unavailability of additional financing. The
risk of loss from default by the issuer is significantly greater for the holders
of such securities because such securities are often unsecured and subordinated
to other creditors of the issuer.
The Fund may have difficulty disposing of junk bonds and unrated debt securities
because they may not have an active secondary market. The market for junk bonds
has been subject to periods of illiquidity. The lack of an active secondary
market may have an adverse effect on market prices and the Fund's ability to
dispose of particular issues and may also make it more difficult for the Fund to
obtain accurate market quotations for purposes of valuing these securities.
38
<PAGE>
NET ASSET VALUE DISCOUNT. Shares of closed-end funds, such as the Fund,
frequently trade at a discount from their NAV; that is, the market price per
share is less than the value per share of the net assets of the fund. This
characteristic is a risk separate and distinct from the risk that the Fund's NAV
will decrease as a result of its investment activities. Moreover, investors
expecting to sell their Shares during the course of the Offering should be aware
that there is a greater risk that this discount, which may increase during the
Offering, will adversely affect them. This increased risk is because, among
other things, the market price per Share may reflect the anticipated dilution
that will result from this Offering. The Fund cannot predict whether the Shares
will trade at a discount or premium to NAV after completion of the Offering. SEE
"Trading and Net Asset Value Information above."
If, at any time, Shares are trading at a substantial discount from NAV, the Fund
may take action to seek to reduce or eliminate the discount from NAV at which
Shares are trading. Such actions could include, among other things, purchasing
Shares in open market transactions or pursuant to a cash tender offer. There is
no assurance that any such actions would be taken or that, if undertaken, would
reduce or eliminate any such discount. In addition, the Board could recommend to
Fund shareholders that the Fund could convert to an open-end investment company.
Conversion to an open-end investment company would make the Shares redeemable
upon demand by shareholders at prices based upon the then current NAV. If
converted to an open-end fund, the Shares would no longer be listed on the NYSE
and the Fund would be required to modify certain of its investment policies. See
"Conversion to Open-End Status."
DIVIDENDS & OTHER DISTRIBUTIONS. Based on current market condition information
provided by the Investment Manager, the Board of Trustees believes that the
Offer will not result in a change in the Fund's current level of dividends per
Share for the foreseeable future. The Board of Trustees has agreed to maintain
an annual dividend of at least 10% until February 19, 2001 pursuant to its
Quarterly Distribution Policy. However, after that date, there can be no
assurance that the Fund will maintain its current level of dividends per Share,
and thereafter the Board of Trustees may, in its sole discretion, change the
Fund's current dividend policy or its current level of dividends per Share in
response to market or other conditions. Further, there can be no assurance that
the Fund's total return will exceed 10% on an annual basis and thus the Fund may
return a shareholder's capital investment in the form of a distribution.
YEAR 2000. INVESCO has committed substantial resources and made significant
progress toward making sure its computer systems will continue to operate
smoothly through the year 2000, and expects that its business partners also will
be prepared for the year 2000. While INVESCO does not anticipate interruptions
in its business, investors should be aware of the possible risks. As is widely
known, there is a chance that some computer systems may not function after
December 31, 1999 because they fail to recognize dates in the year 2000 and
beyond. If a system at INVESCO or one of its business partners should fail, it
could adversely affect the Fund. In addition, the markets for, or values of,
securities in which the Fund invests could be affected by computer failures on
or after January 1, 2000. While INVESCO cannot make assurances that this will
not happen, it continues to thoroughly analyze the securities that the Fund
invests in, including the possible effects of the year 2000 computer problems on
a company or the market the security trades in.
WHEN-ISSUED AND FORWARD DELIVERY SECURITIES. Securities may be purchased on a
"when-issued" or on a "forward delivery" basis, which means that the obligations
will be delivered at a future date beyond customary settlement time. The
commitment to purchase a security for which payment will be made on a future
date may be deemed a separate security. Although the Fund is not limited in the
amount of securities for which it may have commitments to purchase on such
basis, it is expected that in normal circumstances the Fund will not commit more
than 30% of its assets to such purchases. The Fund does not pay for the
securities until received or start earning interest on them until it is notified
of the settlement date. In order to invest its assets immediately, while
39
<PAGE>
awaiting delivery of securities purchased on such basis, the Fund will normally
invest in short-term securities that offer same-day settlement and earnings but
that may bear interest at a lower rate than longer-term securities.
These transactions are subject to market fluctuation; the value of the
securities at delivery may be more or less than their purchase price, and yields
generally available on comparable securities when delivery occurs may be higher
than yields on the securities obtained pursuant to such transactions. Because
the Fund relies on the buyer or seller, as the case may be, to consummate the
transaction, failure by the other party to complete the transaction may result
in the Fund's missing the opportunity of obtaining a price or yield considered
to be advantageous. The Fund will make commitments to purchase securities on
such basis only with the intention of actually acquiring these securities, but
it may sell such securities prior to the settlement date if such sale is
considered to be advisable. When the Fund engages in "when issued" and "forward
delivery" transactions, it will do so for the purpose of acquiring securities
for its portfolio consistent with its investment objective and policies and not
for the purpose of investment leverage.
The SEC generally requires that when investment companies, such as the Fund,
effect transactions of the foregoing nature, they must either segregate cash or
liquid portfolio securities in the amount of their obligations under the
foregoing transactions or cover such obligations by maintaining positions in
portfolio securities, futures contracts or options that would serve to satisfy
or offset the risk of such obligations. When effecting transactions of the
foregoing nature, the Fund will comply with such segregation or asset coverage
requirements. There is no limitation as to the percentage of the Fund's assets
that may be invested in such transactions.
MANAGEMENT OF THE FUND
INVESTMENT MANAGER
INVESCO has served as the Fund's investment adviser since February 4, 1998 under
an investment advisory agreement ("Investment Management Agreement"). Prior to
that time, INVESCO Trust Company ("ITC"), then a wholly owned subsidiary of the
Investment Manager, served as the Fund's investment adviser. The principal
address of the Investment Manager is 7800 E. Union Avenue, Suite 800, Denver,
Colorado 80237. INVESCO is an indirect wholly owned subsidiary of AMVESCAP PLC
("AMVESCAP"), a publicly traded holding company that, through its subsidiaries,
engages in the business of investment management on an international basis. As
part of AMVESCAP, INVESCO draws on the organization's global presence and
expertise to deliver portfolio management and investment services to its
clients. AMVESCAP maintains offices around the world, including the United
States, London, Eastern Europe, Latin America, Hong Kong and Tokyo. AMVESCAP
offers a broad array of products and services to institutions and individuals
through all major distribution channels in over 30 countries. Recent mergers
with major firms such as AIM Management Group Inc., GT Global Inc., and
Chancellor LGT Asset Management, Inc. (formerly the distributor of the GT Global
Funds and the asset management division of Liechtenstein Global Trust, AG,
respectively) have positioned AMVESCAP as one of the world's largest independent
fund management companies, adding to its already-significant presence in Europe,
Asia and North America. As of December 31, 1998, aggregate assets under the
management of AMVESCAP and its affiliates worldwide exceeded $275 billion. As of
that same date, INVESCO managed or administered assets of more than $21.2
billion, including 15 registered open-end investment companies with 53 separate
portfolios. INVESCO has built a global reputation by providing professional
investment management to some of the world's largest institutions and more than
a million individual investors. INVESCO provides investors with the perspective
gained from more than 65 years of helping clients pursue their financial goals.
40
<PAGE>
The Investment Manager determines the composition of the Fund's portfolio,
places all orders for the purchase and sale of securities and for other
transactions, and oversees the settlement of the Fund's securities and other
portfolio transactions. The Investment Manager also provides administrative
services to the Fund. These include, among other things, providing officers and
office space, preparing or assisting in preparing materials for shareholders and
regulatory bodies and overseeing the provision to the Fund of custodial and
accounting services.
John Schroer is the portfolio manager for the Fund. Mr. Schroer joined the
Investment Manager in 1992 and became a Senior Vice President of INVESCO in
1996. In addition to Mr. Schroer's responsibilities as portfolio manager of the
Fund, he also manages the INVESCO Strategic Health Sciences Fund. Mr. Schroer
has been an officer of the Fund since January 1996.
Mr. Schroer received his B.S. and M.B.A. degrees from the University of
Wisconsin-Madison. He began his investment management career in 1990 with the
Trust Company of the West as an investment analyst. He was eventually given
additional responsibilities by the Trust Company of the West in Los Angeles as
Assistant Vice President with analytical responsibilities in the health care
industry.
INVESTMENT MANAGEMENT AGREEMENT
Under the management agreement, the Investment Manager is responsible to provide
investment advice to the Fund and, in general, to conduct the management and
investment program of the Fund under the supervision and control of the Board of
Trustees. In addition, the Investment Manager is required to furnish office
facilities and equipment to the Fund and to supply certain other services,
including all facilities and personnel necessary to provide the services
required to be rendered by the Investment Manager.
On February 3, 1998, the Board of Trustees and the Investment Manager agreed to
add a breakpoint to the investment management fee, such that the Fund pays the
Investment Manager a fee based on an annual rate of 1.00% on the Fund's ending
daily net assets up to and including $500 million, and 0.90% on the Fund's
ending daily net assets in excess of $500 million. For the fiscal year ended
October 31, 1998, the Fund paid INVESCO investment management fees of
$5,556,255. Additionally, in accordance with an Administrative Agreement, the
Fund pays the Investment Manager a monthly fee based on the annual rate of 0.10%
on the Fund's ending daily net assets for administrative services. For the
fiscal year ended October 31, 1998, the Fund paid INVESCO administrative fees of
$250,000. The fee for investment management and administrative services are, in
the aggregate, higher than those paid by most U.S. investment companies,
including open-end investment companies, although they are generally comparable
to those paid by other specialized equity, closed-end funds.
The Board of Trustees noted that the Investment Manager will benefit from the
Offer because its fees for investment management services are based on the
average daily net assets of the Fund. It is not possible to state precisely the
amount of additional compensation the Investment Manager will receive as a
result of the Offer because it is not known how many Rights will be exercised
and because the Proceeds of the Offer will be invested in additional portfolio
securities that may fluctuate in value. However, in the event that all the
Rights are exercised in full, including the additional 1,520,306 Shares by which
the Board, in its discretion, may increase the Offer, based on the Estimated
Subscription Price of $___, the Investment Manager would receive additional fees
for investment management services of approximately $___ per annum as a result
of the increase in assets under management.
The Chairman of the Board of Trustees, Charles W. Brady, as an "interested
person" of the Fund and of other funds in the INVESCO complex, receives
41
<PAGE>
compensation as an officer of companies affiliated with INVESCO, but does not
receive any trustee fees or other compensation from the Fund or from other funds
in the INVESCO complex for his service as a Trustee or Director.
Under the management agreement, the Fund pays certain of its other costs not
paid by the Investment Manager, including (i) interest and taxes, including
issue and transfer taxes, incurred by or levied on the Fund; (ii) insurance
premiums for fidelity and other coverage requisite to its operations; (iii)
compensation and expenses of its Trustees other than those associated or
affiliated with the Investment Manager; (iv) legal and audit expenses; (v)
custodian, dividend paying agent, registrar and transfer agent fees and expenses
(including charges and expenses of the Fund's Reinvestment Plan) and brokerage
commissions, if any; (vi) certain fees and expenses, incident to the
registration, under Federal law, of the Shares for public sale; (vii) certain
expenses incidental to holding meetings of the Fund's shareholders; (viii)
payments under the Fund's administrative services agreement with INVESCO; (ix)
fees and expenses of listing and maintaining the listing of the Shares on any
national securities exchange; (x) the cost of certificates representing the
Shares; and (xi) such non-recurring expenses as may arise, including any
litigation affecting the Fund and the legal obligation that the Fund may have to
indemnify its officers and Trustees with respect thereto.
The management agreement provides that the Investment Manager shall not be
liable for any error of judgment or mistake of law, or for any loss suffered by
the Fund in connection with the matters to which the management agreement
relates, except a loss resulting from willful misfeasance, bad faith or gross
negligence on the part of the Investment Manager in the performance of its
obligations and duties or by reason of its reckless disregard of its obligations
and duties under the management agreement.
The management agreement may be terminated without penalty upon sixty (60) days'
written notice by either party, or by a vote of the majority of the Shares, and
automatically terminates in the event of its assignment.
PORTFOLIO TRADING
The Investment Manager places orders for the purchase and sale of securities
with brokers and dealers based upon its evaluation of their financial
responsibility subject to their ability to effect transactions at favorable
prices. The Investment Manager evaluates the overall reasonableness of brokerage
commissions and markups paid by reviewing the quality of executions obtained on
the Fund's portfolio transactions, viewed in terms of the size of transactions,
prevailing market conditions in the security purchased or sold, and general
economic and market conditions. In seeking to ensure that the commissions and
markups charged to the Fund are consistent with prevailing and reasonable
brokerage commissions or markups, the Investment Manager also endeavors to
monitor brokerage industry practices with regard to the commissions and markups
charged by broker/dealers on transactions effected for other comparable
institutional investors. While the Investment Manager seeks reasonably
competitive rates, the Fund does not necessarily pay the lowest commission,
spread or markup available.
Consistent with the standard of seeking to obtain favorable execution on
portfolio transactions, the Investment Manager may select brokers that provide
research services to effect such transactions. Research services consist of
statistical and analytical reports relating to issuers, industries, securities
and economic factors and trends, which may be of assistance or value to the
Investment Manager in making informed investment decisions. Research services
prepared and furnished by brokers through which the Fund effects securities
transactions may be used by the Investment Manager in servicing all of its
accounts and not all such services may be used by the Investment Manager in
connection with the Fund.
42
<PAGE>
In recognition of the value of the above-described brokerage and research
services provided by certain brokers, the Investment Manager, consistent with
the standard of seeking to obtain the best execution on portfolio transactions,
may place orders with such brokers for the execution of Fund transactions on
which the commissions are in excess of those which other brokers might have
charged for effecting the same transactions.
One or more of the other accounts which the Investment Manager manages may own,
from time to time, the same investments as the Fund. Investment decisions for
the Fund are made independently from those of such other accounts; however, from
time to time, the same investment decision may be made for more than one company
or account, including the Fund. When two or more companies or accounts,
including the Fund, seek to purchase or sell the same securities, the securities
actually purchased or sold will be allocated among the companies and accounts on
a good faith equitable basis by the Investment Manager in its discretion in
accordance with the accounts' various investment objectives. In some cases, this
system may adversely affect the price or size of the position obtainable for the
Fund. In other cases, however, the ability of the Fund to participate in volume
transactions may produce better execution for the Fund. It is the opinion of the
Board that this advantage, when combined with the other benefits available due
to the Investment Manager's organization, outweighs any disadvantages that may
be said to exist from exposure to simultaneous transactions.
Transactions in foreign securities markets generally involve the payment of
fixed brokerage commissions, which are usually higher than commission rates
available in the United States. In such transactions, the Fund will seek to
obtain prompt execution of orders at the most favorable net price.
NET ASSET VALUE
The Fund calculates the NAV of its Shares daily and makes that information
available for publication. Currently, the WALL STREET JOURNAL and BARRON'S
publish NAVs for closed-end funds each week. NAV per Share will be determined
each day on which the NYSE is open, as of the close of trading on the NYSE that
day, and is calculated by dividing the aggregate value of all securities held by
the Fund and its other assets (including dividends and interest accrued but not
collected) less its liabilities (including accrued expenses) by the number of
outstanding Shares. All assets and liabilities initially expressed in foreign
currencies will be converted into U.S. dollars at the mean between the bid and
offer prices of such currencies against U.S. dollars last quoted by a major bank
selected by the Fund's custodian. Securities traded on securities exchanges are
valued at their last sale prices as of 4:00 P.M., Eastern time, on the exchanges
where such securities are primarily traded. Securities traded in the
over-the-counter market and listed securities for which no sales are reported on
a particular day are valued at their bid prices (or for debt securities yield
equivalents thereof) obtained from one or more dealers making markets for such
securities. If market quotations are not readily available, a security will be
valued at fair value as determined in good faith by, or under the supervision,
of the Board of Trustees. Debt securities will be valued in accordance with the
procedures above, that may include the use of valuations furnished by a pricing
service that employs a matrix to determine valuations for normal institutional
size trading units. Prior to utilizing a pricing service, the Board of Trustees
will review the methods used by such service to assure itself that securities
will be valued at their fair values. The Board of Trustees also will
periodically monitor the methods used by any such pricing service. Debt
securities with remaining maturities of 60 days or less will, absent unusual
circumstances, be valued at amortized cost, so long as such valuation is
determined by the Board of Trustees to represent fair value. Futures contracts
and options thereon, which are traded on commodities exchanges, are valued at
their settlement value as of the close of such commodities exchanges.
43
<PAGE>
Trading in Foreign Securities generally is completed, and thus the values of
such securities are determined, prior to the close of the NYSE. Foreign currency
exchange rates are also generally determined prior to the primary close of the
NYSE. On occasion, the values of such securities and such exchange rates may be
affected by events occurring between the time as of which determinations of such
values or such exchange rates are made and the primary close of the NYSE. When
such events materially affect the values of securities held by the Fund or its
liabilities, such securities and liabilities will be valued at fair value as
determined in good faith by, or under the supervision of, the Board of Trustees.
DIVIDENDS AND OTHER DISTRIBUTIONS; DIVIDEND REINVESTMENT
AND CASH PURCHASE PLAN
Shareholders who have Shares registered directly in their own names
automatically participate in the Fund's Reinvestment Plan, unless and until an
election is made to withdraw from the Reinvestment Plan as herein provided.
EquiServe, Inc. (the "Agent") acts as agent under the Reinvestment Plan on
behalf of participating shareholders. Shareholders who do not wish to have
distributions automatically reinvested should so notify EquiServe, Inc., 150
Royall Street Mail Stop 45-02-61, Canton, MA 02021. Under the Reinvestment Plan,
all of the Fund's dividends and other distributions to shareholders are
reinvested in full and fractional Shares as described below. A shareholder who
owns Shares registered in his/her broker's or nominee name, and whose broker
does not provide facilities for a dividend reinvestment program, may be required
to have his/her Shares registered in his/her own name in order to participate in
the Reinvestment Plan. Shareholders wishing to participate in the Reinvestment
Plan whose Shares are held in the name of a broker or nominee should consult
their brokers as to how to accomplish dividend reinvestment.
The Board has implemented a Quarterly Distribution Policy, which entails
quarterly payments of dividends in an amount equal to 2.5% of the Fund's NAV.
The first dividend to be paid on Shares acquired on exercise of the Rights will
be the first quarterly dividend, the record date for which occurs after the
issuance of the Shares.
Whenever the Fund declares an income dividend or a capital gain or other
distribution (collectively, "Dividends") in cash, non-participants in the
Reinvestment Plan will receive cash and participants in the Reinvestment Plan
will receive the equivalent in Shares. Whenever the Fund declares Dividends in
additional unissued but authorized Shares ("Newly Issued Shares"), all
Shareholders (including non-participants in the Reinvestment Plan) will receive
Newly Issued Shares and participants in the Reinvestment Plan will receive
Shares. In either instance, the Shares received by Reinvestment Plan
participants will be acquired by the Agent for the participant's account,
depending upon the circumstances described below, either (i) through receipt of
Newly Issued Shares or (ii) by the purchase of outstanding Shares on the open
market ("Open-Market Purchases") on the NYSE or elsewhere. Open-Market Purchases
will be made only if the Fund declares a Dividend payable only in cash.
If, on the payment date for a Dividend, the NAV per Share is equal to or less
than the market price per Share plus estimated brokerage commissions (such
44
<PAGE>
condition being referred to herein as "Market Premium"), the Agent will purchase
Newly Issued Shares from the Fund on behalf of the Reinvestment Plan participant
at a price per Share equal to the greater of the NAV per Share or 95% of the
then current market price per Share. This discount from the current market price
reflects savings in underwriting and other costs that the Fund would otherwise
incur to raise additional capital.
If, on the payment date for a Dividend, the NAV per Share is greater than the
market price per Share (such condition being referred to herein as "Market
Discount"), the Agent will endeavor to invest the Dividend amount in Shares
acquired on behalf of the participants in Open-Market Purchases. In the event of
a Market Discount on the payment date, the Agent will have up to 30 days after
the payment date to invest the Dividend amount in Shares acquired in Open-Market
Purchases.
Registered shareholders who acquire their Shares in open-market transactions and
who do not wish to have their Dividends automatically reinvested should so
notify the Fund in writing. If a shareholder has not previously elected to
receive cash Dividends and the Agent does not receive notice of an election to
receive cash Dividends prior to the record date of any Dividend, the shareholder
will automatically receive such Dividends in additional Shares.
Participants in the Reinvestment Plan may withdraw from the Reinvestment Plan by
providing written notice to the Agent at least 30 days prior to the applicable
Dividend payment date. When a participant withdraws from the Reinvestment Plan,
or upon termination of the Reinvestment Plan as provided below, certificates for
whole Shares credited to his/her account under the Reinvestment Plan will, upon
request, be issued. Whether or not a participant requests that certificates for
whole Shares be issued, a cash payment will be made for any fraction of a Share
credited to such account.
The Agent will maintain all shareholder accounts in the Reinvestment Plan and
furnish written confirmations of all transactions in the accounts, including
information needed by shareholders for personal and tax records. Shares in the
account of each Reinvestment Plan participant will be held by the Agent in
non-certificated form in the name of the participant, and each shareholder's
proxy will include those Shares purchased pursuant to the Reinvestment Plan.
Each participant, nevertheless, has the right to receive certificates for whole
Shares owned. The Agent will distribute all proxy solicitation materials to
participating shareholders.
In the case of shareholders, such as banks, brokers or nominees, that hold
Shares for others who are the beneficial owners participating in the
Reinvestment Plan, the Agent will administer the Reinvestment Plan on the basis
of the number of Shares certified from time to time by the record shareholder as
representing the total amount of Shares registered in the shareholder's name and
held for the account of beneficial owners participating in the Reinvestment
Plan.
There will be no charge to participants for reinvesting Dividends other than
their share of brokerage commissions as discussed below. The Agent's fees for
administering the Reinvestment Plan and handling the reinvestment of Dividends
will be paid by the Fund. Each participant's account will be charged a PRO-RATA
share of brokerage commissions incurred with respect to the Agent's Open-Market
Purchases in connection with the reinvestment of Dividends. Brokerage charges
for purchasing small amounts of Shares for individual accounts through the
Reinvestment Plan are expected to be less than the usual brokerage charges for
such transactions because the Agent will be purchasing Shares for all the
participants in blocks and prorating the lower commission that may be
attainable.
The automatic reinvestment of Dividends will not relieve participants of any
income tax that may be payable on such Dividends. Participants who receive
Shares pursuant to the Reinvestment Plan as described above will recognize
taxable income in the amount of the fair market value of those Shares. In the
case of non-U.S. participants whose Dividends are subject to U.S. income tax
withholding and in the case of any participants subject to 31% federal backup
withholding, the Agent will reinvest Dividends after deduction of the amount
required to be withheld.
The Fund reserves the right to amend or terminate the Reinvestment Plan by
written notice to participants. All correspondence concerning the Reinvestment
Plan should be directed to the Agent at the address referred to in the first
paragraph of this section.
45
<PAGE>
FEDERAL TAXATION OF THE FUND AND ITS SHAREHOLDERS
The following information is a brief, general summary for U.S. taxpayers. Please
see the SAI for additional information. Shareholders should rely on their own
tax advisors for advice about the particular federal, state and local tax
consequences of investing in the Fund.
The Fund intends to operate so that it will not have to pay federal income or
excise tax. If the Fund were required to pay federal income or excise tax, its
investment performance would be adversely affected.
The Fund will distribute all or substantially all of its net investment income
and capital gains to its shareholders every year. Shareholders will be taxed on
distributions they receive, regardless of whether they are paid in cash or
reinvested in Shares. If the Fund declares a distribution in October, November
or December of one year to shareholders of record in that year, but pays it in
January of the following year, shareholders will be taxed on the distribution as
if it was received on December 31 of the year in which it was declared.
The Fund will send shareholders a tax report each year, before February 1st. The
report will designate the amount of dividends that must be treated as ordinary
income and the amount, if any, that must be treated as capital gain
distributions. If the Fund designates a distribution as a capital gain
distribution, shareholders will be required to pay tax thereon at the long-term
capital gains tax rate, no matter how long they held their Shares.
If a shareholder holds Shares in a Retirement Plan, such as an IRA, the
shareholder generally will not have to pay tax on Fund distributions until they
are distributed to the shareholder from the Retirement Plan. Retirement Plans
are subject to complex tax rules, and shareholders should consult their tax
advisors about investing in Shares through a Retirement Plan.
A shareholder generally will have a capital gain or loss on a sale of Shares.
The amount of the gain or loss and the rate of tax will depend primarily on how
much the shareholder paid for the Shares, how much the shareholder sold them for
and how long the Shares were held.
The Fund may be required to withhold federal income tax at the rate of 31% of
all distributions payable to an individual or other non-corporate shareholder
who fails to provide the Fund with a correct taxpayer identification number or
fails to make required certifications, or if the shareholder has been notified
by the IRS that he or she is subject to backup withholding. Backup withholding
is not an additional tax. Any amounts withheld may be credited against a
shareholder's federal income tax liability.
DESCRIPTION OF SHARES OF BENEFICIAL INTEREST
GENERAL
The Board of Trustees of the Fund has authority to issue an unlimited number of
Shares, $0.01 par value. The Shares outstanding are, and those offered hereby
when issued will be, fully paid and nonassessable by the Fund. The Shares have
no preemptive, conversion, exchange or redemption rights. Each Share has one
vote, with fractional Shares voting proportionately. Shares are freely
transferable, and holders thereof are entitled to dividends as declared by the
Board of Trustees. If the Fund were liquidated, shareholders would receive their
PRO-RATA portion of its net assets. Under the rules of the NYSE applicable to
listed companies, the Fund will be required to hold an annual meeting of
shareholders in each year. If the Fund were converted to an open-end investment
company or, if for any other reason the Shares are no longer listed on the NYSE
(or any other national securities exchange the rules of which require annual
46
<PAGE>
meetings of shareholders), the Fund does not intend to hold annual meetings of
shareholders.
Under Massachusetts law, shareholders could, under certain circumstances, be
held personally liable for the obligations of the Fund. However, the Declaration
of Trust disclaims shareholder liability for acts or obligations of the Fund and
requires that notice of such disclaimer be given in each agreement obligation,
or instrument entered into or executed by the Fund or the Board of Trustees. The
Declaration of Trust provides for indemnification out of Fund property for all
loss and expense of any shareholder held personally liable for the obligations
of the Fund. Thus, the risk of a shareholder incurring financial loss on account
of shareholder liability is limited to circumstances in which the Fund would be
unable to meet its obligations. The likelihood of such circumstances is remote.
The Fund has no present intention of offering additional Shares, other than
under this Offering and under the Reinvestment Plan. See "Dividends and Other
Distributions; Dividend Reinvestment and Cash Purchase Plan." Other offerings of
Shares, if made, will require approval of the Board of Trustees. Any additional
offering will be subject to the requirements of the 1940 Act that Shares may not
be sold at a price below the then current NAV, exclusive of underwriting
discounts and commissions, except in connection with an offering to existing
shareholders or with the consent of the holders of a majority of the Fund's
outstanding Shares. In addition, the Fund expects that it would commence a
continuous offering of its Shares in the event it converted to an open-end
investment company. See "Conversion to Open-End Status."
The Declaration of Trust further provides that obligations of the Fund are not
binding upon the Trustees individually but only upon the property of the Fund
and that the Trustees will not be liable for errors of judgment or mistakes of
fact or law, but nothing in the Declaration of Trust protects a Trustee against
any liability to which the Trustee would otherwise be subject by reason of
willful misfeasance, bad faith, gross negligence or reckless disregard of the
duties involved in the conduct of office.
CERTAIN ANTI-TAKEOVER PROVISIONS OF THE DECLARATION OF TRUST AND BY-LAWS
The Fund's Declaration of Trust and By-laws (together, the "Charter Documents")
could have the effect of limiting: (i) the ability of other entities or persons
to acquire control of the Fund; (ii) the Fund's freedom to engage in certain
transactions; or (iii) the ability of the Fund's Board of Trustees or
shareholders to amend the Charter Documents or effect changes in the Fund's
management. Those provisions of the Charter Documents may be regarded as
"anti-takeover" provisions. Commencing with the first meeting of shareholders,
the Board of Trustees was divided into three classes, each having a term of
three years. At the annual meeting of shareholders in each year thereafter, the
term of one class of Trustees expires. Accordingly, only those Trustees in one
class may be changed in any one year, and up to three years may be required to
replace a majority of the Board. Such system of electing Trustees may have the
effect of maintaining the continuity of management. Under the Fund's Declaration
of Trust, the affirmative vote of the holders of not less than two-thirds (66
2/3%) of the Fund's outstanding Shares entitled to vote is required to authorize
the consolidation of the Fund with another entity, a merger of the Fund with or
into another entity (except for certain mergers in which the Fund is the
successor), a sale or transfer of all or substantially all of the Fund's assets,
the termination of the Fund, the conversion of the Fund to an open-end
investment company, and any amendment to the Fund's Declaration of Trust that
would affect any of the other provisions requiring a two-thirds vote. However, a
"Majority Shareholder Vote," as defined in the Charter Documents, shall be
sufficient to approve any of the foregoing transactions that have been
recommended by two-thirds of the Trustees. Notwithstanding the foregoing, if a
corporation, person or entity is directly, or indirectly through its affiliates,
the beneficial owner of more than 5% of the outstanding Shares of the Fund,
("Principal Shareholder") the affirmative vote of 80% (which is higher than that
47
<PAGE>
required under the 1940 Act) of the outstanding Shares is required generally to
authorize any of the following transactions or to amend the provisions of the
Declaration of Trust relating to transactions involving:
(i) a merger or consolidation of the Fund with or into any such
Principal Shareholder;
(ii) the issuance of any securities of the Fund to any such
Principal Shareholder for cash;
(iii) the sale, lease or exchange of all or any substantial part of
the assets of the Fund to any such Principal Shareholder (except
assets having an aggregate market value of less than $1,000,000);
(iv) the sale, lease or exchange to the Fund, in exchange for
securities of the Fund, of any assets of any such Principal
Shareholder (except assets having an aggregate fair market value of
less than $1,000,000);
(v) the liquidation or termination of the Fund;
(vi) a change in the nature of the business of the Fund so that it
would cease to be an investment company registered under 1940 Act;
or
(vii) the conversion of the Fund to an "open-end company," or any
amendment to the Declaration of Trust of the Fund that makes the
Shares a "redeemable security," as such terms are defined in the
1940 Act.
If two-thirds of the Board has approved a memorandum of understanding with such
beneficial owner, however, a majority shareholder vote, as defined in the
Charter Documents, will be sufficient to approve the foregoing transactions.
Reference is made to the Charter Documents of the Fund, on file with the SEC,
for the full text of these provisions.
The overall effect of the provisions of the Charter Documents described above is
to render more difficult the accomplishment of a merger or the assumption of
control by a shareholder or another entity or person and to make the removal of
management more difficult than if such provisions were not in place. These
provisions may be beneficial to management in a hostile tender offer for the
Shares and may have an adverse impact on shareholders who may want to
participate in such a tender offer. In particular, they could have the effect of
depriving shareholders of the opportunity to sell their Shares at a premium over
prevailing market prices by discouraging a third party from seeking to obtain
control of the Fund in a tender offer or similar transaction. Moreover, these
provisions would apply to actions proposed by anyone, including management, and
would make changes in the Fund's structure accomplished through a transaction
covered by the provisions more difficult to achieve. The provisions may give the
holders of a minority of the Shares entitled to vote a veto power over a merger
that management and a majority of the Fund's shareholders may believe is
desirable and beneficial.
In the opinion of the Board, however, the anti-takeover provisions of the
Charter Documents provide the advantage of potentially requiring persons seeking
control of the Fund to negotiate with its management regarding price to be paid
and facilitating the continuity of the Fund's management, investment objective
48
<PAGE>
and policies. The Board has considered the foregoing anti-takeover provisions
and concluded that they are in the best interests of the Fund and its
shareholders. The above description is subject to the provisions contained in
the Charter Documents.
REPURCHASE OF SHARES
Shares of closed-end funds frequently trade at a discount from NAV but in some
cases trade at a premium. In recognition of the possibility that the Shares
might similarly trade at a discount, the Fund's Board of Trustees has determined
that it would be in the interest of shareholders for the Fund to take action to
attempt to reduce or eliminate a market value discount from NAV. To that end,
the Board of Trustees recognizes that the Fund might from time-to-time take
action either to repurchase its Shares in the open market or to tender for its
own Shares at NAV. The Board of Trustees, in consultation with the Investment
Manager, reviews on a quarterly basis the possibility of open market repurchases
and/or tender offers for Shares. There are no assurances that the Board of
Trustees will, in fact, decide to undertake either of these actions or, if
undertaken, that such actions will result in the Shares trading at a price which
is equal to or approximates their NAV. In addition, the Board of Trustees will
not necessarily announce when it has given consideration to these matters. See
"Repurchase of Shares" in the SAI for further information.
CONVERSION TO OPEN-END STATUS
The Fund's Declaration of Trust provides that the Fund may be converted at any
time from a "closed-end company" to an "open-end company" upon the approval of
the holders of not less than two-thirds (66 2/3%) of the Shares outstanding and
entitled to vote. If a corporation, person or entity is directly, or indirectly
through its affiliates, the beneficial owner of more than 5% of the outstanding
Shares, the affirmative vote of 80% (which is higher than that required under
the 1940 Act) of the outstanding Shares is required to authorize such a
conversion. Shareholders of an open-end investment company may require the
company to redeem their shares at any time (except in certain circumstances as
authorized by or under the 1940 Act) at their NAV, less redemption charge, if
any, as might be in effect at the time of redemption. The Declaration of Trust
of the Fund provides that from time to time the Board will consider recommending
to the shareholders a proposal to convert the Fund from a closed-end to an
open-end investment company. The Board may, however, determine that the Fund
should not take any action to convert the Fund to an open-end investment company
or that, due to the characteristics of the Fund's portfolio securities, it may
be inappropriate to convert the Fund to an open-end investment company.
CUSTODIAN, TRANSFER AGENT, DIVIDEND
DISBURSING AGENT, AND REGISTRAR
The Fund's securities and cash are held under a custodian agreement by State
Street Bank and Trust Company ("State Street"), whose principal place of
business is 225 Franklin Street, Boston, Massachusetts, 02110. With respect to
the Fund's investments in Foreign Securities, the custodian employs foreign
subcustodians approved by the Board of Trustees in accordance with applicable
regulations after consideration of, among other things, the qualifications of
proposed foreign subcustodians and the legal constraints under which foreign
subcustodians operate. State Street also serves as transfer agent, registrar and
dividend disbursing agent for the Shares. Pursuant to a services agreement with
EquiServe, Inc., an affiliate of State Street, serves as Shareholder Service
Agent for the Fund and, as such, performs all of State Street's duties as
transfer agent and dividend-paying agent.
49
<PAGE>
LEGAL MATTERS
Kirkpatrick & Lockhart LLP, Washington, D.C., serves as counsel to the Fund and
to the Independent Trustees and as special counsel to the Fund with respect to
the Offer and will pass on the legality of the Shares offered hereby. Certain
legal matters will be passed on for the Dealer Manager by Skadden, Arps, Slate,
Meagher & Flom (Illinois) and its affiliated entities.
REPORTS TO SHAREHOLDERS
The Fund will send unaudited semi-annual and audited annual reports to
shareholders, including a list of the portfolio investments held by the Fund.
INDEPENDENT ACCOUNTANTS
The data in the "Financial Highlights" section of this Prospectus are based upon
financial statements that have been audited by PricewaterhouseCoopers LLP,
independent accountants, as indicated in their reports with respect thereto, and
are included in reliance upon the authority of said firm as experts in auditing
and accounting.
FURTHER INFORMATION
This Prospectus does not contain all of the information set forth in the
Registration Statement that the Fund has filed with the SEC. The complete
Registration Statement may be obtained from the SEC upon payment of the fee
prescribed by its Rules and Regulations.
50
<PAGE>
TABLE OF CONTENTS OF STATEMENT OF ADDITIONAL INFORMATION
ITEM No. CAPTION LOCATION IN SAI
- -------- ------- ---------------
14. General Information Page 3
15. Additional Information About Its Investment Page 3
Objective and Policies
16. Investment Restrictions SEE PAGE 30 OF
THE PROSPECTUS
17. Management Page 11
18. Ownership of Fund Shares Page 18
19. Portfolio Transactions Page 18
20. Repurchase of Shares and Tender Offers Page 19
21. Taxation Page 21
22. Financial Statements Page 25
51
<PAGE>
=================================== ==========================================
No one has been authorized to give
any information or to make any
representations other than those
contained in this Prospectus in
connection with this Offer. If
other information is given or other
representations are made, such
information or representations must
not be relied upon since neither
was authorized by the Fund, the
Investment Manager or the Dealer 7,539,029 SHARES OF BENEFICIAL INTEREST
Manager. This Prospectus does not
constitute an offer to sell or the INVESCO GLOBAL
solicitation of any offer to buy HEALTH
any security other than the Fund's SCIENCES FUND
Shares, as described in this ISSUABLE UPON EXERCISE OF
Prospectus. This Prospectus also RIGHTS
also does not constitute an offer TO SUBSCRIBE FOR SUCH
to sell or a solicitation of any SHARES OF BENEFICIAL INTEREST
buy the Fund's Shares, as described
in this Prospectus, by anyone in
any state in which such offer
or solicitation is not authorized,
or in which the person making such
offer or solicitation is not
qualified to do so, or to any such
person to whom it is illegal to
make such offer or solicitation.
The information in this Prospectus
may no longer be correct after
after the date on the Prospectus.
However, if any material change
occurs during the period in which
this Prospectus is legally required __________________________
to be delivered, the Prospectus
will be amended or supplemented PROSPECTUS
accordingly. __________________________
_____________________
TABLE OF CONTENTS
Page DEALER MANAGER
----
Prospectus Summary ..............1
Fee Table ......................10
Financial Highlights ...........12 PAINEWEBBER INCORPORATED
The Fund .......................16
Use of Proceeds ................28
Investment Objective and
Policies ......................28
Risk Factors and Special
Considerations ................34
Management of the Fund .........40 May 24, 1999
Portfolio Trading ..............42 FILE # 811-06476
Net Asset Value ................43
Dividends and Other Distributions:
Dividend Reinvestment and
Cash Purchase Plan ...........43
Federal Taxation Of The Fund And
Its Shareholders..............45
Description of Shares of
Beneficial Interest...........46
Custodian, Transfer Agent,
Dividend Disbursing Agent,
and Registrar ................49
Legal Matters ..................49
Independent Accountants ........49
=================================== ==========================================
52
<PAGE>
May 24, 1999.
[GRAPHIC OMITTED]
INVESCO GLOBAL HEALTH SCIENCES FUND
STATEMENT OF ADDITIONAL INFORMATION
This SAI is not a prospectus but should be read in conjunction with the Fund's
Prospectus dated [EFFECTIVE DATE], 1999. This SAI does not include all
information that a prospective investor should consider before purchasing
Shares, and investors should obtain and read the Prospectus prior to purchasing
Shares. A copy of the Prospectus may be obtained without charge, by calling the
Fund at 1-800-528-8765 or by contacting the Fund at 7800 E. Union Avenue, Suite
800, Denver, Colorado 80237. This SAI incorporates by reference the entire
Prospectus.
The Prospectus and this SAI omit certain of the information contained in the
registration statement filed by the Fund with the SEC, Washington, D.C. That
registration statement may be obtained from the SEC upon payment of the fee
prescribed or inspected at the SEC's office at no charge. Capitalized terms not
defined herein have the meanings attributed to them in the Prospectus.
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE SEC.
THESE SECURITIES MAY NOT BE SOLD NOR MAY ANY OFFERS TO BUY BE ACCEPTED PRIOR TO
THE TIME THE REGISTRATION STATEMENT BECOMES EFFECTIVE. THIS STATEMENT OF
ADDITIONAL INFORMATION DOES NOT CONSTITUTE A PROSPECTUS.
<PAGE>
TABLE OF CONTENTS OF STATEMENT OF ADDITIONAL INFORMATION
ITEM No. CAPTION LOCATION IN SAI
- -------- ------- ---------------
14. General Information Page 3
15. Additional Information About Its Investment Page 3
Objective and Policies
16. Investment Restrictions SEE PAGE 30 OF
THE PROSPECTUS
17. Management Page 11
18. Ownership of Fund Shares Page 18
19. Portfolio Transactions Page 18
20. Repurchase of Shares and Tender Offers Page 19
21. Taxation Page 21
22. Financial Statements Page 25
2
<PAGE>
GENERAL INFORMATION
INVESCO Global Health Sciences Fund is a diversified, closed-end management
investment company under the Investment Company Act of 1940, as amended. The
Fund's investment manager is INVESCO Funds Group, Inc.
ADDITIONAL INFORMATION ABOUT ITS INVESTMENT
OBJECTIVE AND POLICIES
The Fund's investment objective is to seek capital appreciation by investing
substantially all of its assets in equity and related securities of U.S. and
foreign Health Science Companies. The Fund is aggressively managed for growth.
The Fund seeks to achieve its objective by investing its assets in a broad range
of health care related equity securities, such as market-leading pharmaceutical
companies, medical devices manufacturers and suppliers, and various private
placement investments.
Some of the different types of securities in which the Fund may invest, subject
to its investment objective, policies, and restrictions, are described in the
Prospectus under "Investment Objective and Policies" and "Special Investment
Practices." Additional information concerning certain of the Fund's investments
and investment techniques is set forth below.
HEDGING -FUTURES AND OPTIONS TRANSACTIONS
GENERAL. The Fund may engage in futures and options transactions in accordance
with its investment objective and policies. The Fund intends to engage in such
transactions if it appears advantageous to the Investment Manager to do so in
order to pursue its investment objective, to hedge against the effects of market
conditions and to stabilize the value of its assets. The use of futures and
options, possible benefits and attendant risks are discussed below, along with
information concerning certain other investment policies and techniques.
OPTIONS ON SECURITIES. The Fund is authorized to write covered call options and
secured put options and to purchase put and call options on the securities in
which it may invest that are listed on domestic exchanges or on the quotation
system operated by the National Association of Securities Dealers, Inc. ("listed
options"), or that are privately negotiated in over-the-counter transactions
("OTC options"). OTC options, other than those discussed in the following
sentence, are deemed to be illiquid securities and are, therefore, subject to
the Fund's limitation that a maximum of 25% of its total assets may be invested
in illiquid securities. The Fund may engage in OTC options transactions on U.S.
Government Securities with U.S. Government Securities dealers recognized by the
Federal Reserve Bank of New York subject to a forward price at which the Fund
has the absolute right to repurchase the OTC option which it has sold, in which
case the value of such OTC option purchased will not be considered illiquid. In
OTC options transactions with other dealers or without such pre-negotiated
forward repurchase prices, OTC options purchased and the Fund assets used to
"cover" OTC options sold by the Fund will be considered "illiquid securities"
and will be subject to the Fund's limitation that a maximum of 25% of its total
assets may be invested in illiquid securities. The "formula" on which the
forward price will be based may vary among contracts with different primary
dealers, although generally it will be based on a multiple of the premium
received by the Fund for writing the option plus the amount, if any, of the
option's intrinsic value, I.E., current market value of the underlying
securities minus the option's strike price. Listed options are issued by a
clearing corporation, the Options Clearing Corporation ("OCC").
By purchasing a listed call option on a security, the Fund will obtain the right
to buy the securities underlying the option from the OCC at a specified exercise
price prior to or at the expiration of the option. By selling (writing) such an
3
<PAGE>
option, the Fund will obligate itself to sell the securities underlying the
option to the OCC at the specified exercise price prior to or at the expiration
if it is assigned an exercise notice. A listed put option on a security
purchased by the Fund gives the Fund the right to sell the securities underlying
the option to the OCC at the exercise price prior to or at the expiration. By
selling (writing) such an option, the Fund obligates itself to buy the
securities underlying the option from the OCC at the exercise price prior to or
at the expiration if it is assigned an exercise notice.
OTC options operate in a similar manner but are purchased from or sold (written)
to dealers or financial institutions which enter into direct agreements with the
Fund. While listed options have "standardized" exercise prices, expiration dates
and other features, the features of OTC options can vary as agreed upon by the
Fund and by the other party to the option and there is no intermediation of the
OCC.
The Fund may purchase call options to protect against increases in the costs of
securities proposed to be acquired or to terminate ("close out") existing option
positions. Put options may be purchased to seek to protect against declines in
the value of securities which are held (or which the Fund has the right to
acquire) or to close out existing option positions. When put and call options
are sold (written) by the Fund, the Fund receives premiums as the writer of the
options, which provide a partial hedge against adverse movements in the prices
of the underlying securities. The income received from premiums will fluctuate
with varying economic market conditions. Calls may also be written to close out
existing option positions. Put options may also be sold when the Investment
Manager wishes to purchase a security at a price lower than its current market
price. Call options written by the Fund must be "covered." A call option is
covered if the Fund owns or has the right to acquire the securities underlying
the option. A call option is also covered if the Fund holds a call on the same
security as the underlying security of the written option, where the exercise
price of the call used for coverage is equal to or less than the exercise price
of the call written or, if the exercise price of the call used for coverage is
greater than the exercise price of the call written, by maintaining the mark to
market difference in cash, U.S. Government Securities or other liquid, high
quality short-term debt obligations in a segregated account with the Fund's
custodian.
In the case of listed options and certain OTC options, during or at the
termination of the option period, the Fund may be required, at any time, to
deliver the underlying security against payment of the exercise price on any
calls it has written. Exercise of certain listed options and OTC options may be
limited to specific expiration dates. This obligation terminates upon the
expiration of the option period. The obligation can be terminated at an earlier
time by effecting a closing purchase transaction. A closing purchase transaction
is accomplished by purchasing an option of the same series as the option
previously written. However, once assigned an exercise notice with respect to a
listed option, the Fund will be unable to effect a closing purchase transaction.
Closing purchases transactions are ordinarily effected to realize a profit on an
outstanding call option, to prevent an underlying security from being called, to
permit the sale of an underlying security or to enable another call option on
the underlying security (with either a different exercise price or expiration
date or both) to be written. Also, effecting a closing purchase transaction will
permit the cash or proceeds from the concurrent sale of any securities subject
to the option to be used for other investments. The Fund may realize a net gain
or loss from a closing purchase transaction depending upon whether the amount of
the premium received on the call option is more or less than the cost of
effecting the closing purchase transaction. Any loss incurred in a closing
purchasing transaction may be wholly or partially offset by unrealized
appreciation in the market value of the underlying security. Conversely, a gain
resulting from a closing purchase transaction could be offset in whole or in
part or exceeded by a decline in the market value of the underlying security.
4
<PAGE>
If a call option written by the Fund expires unexercised, the Fund realizes a
gain in the amount of the premium on the option less the commission paid. Such a
gain, however, may be offset by depreciation in the market value of the
underlying security during the option period. If a call option written by the
Fund is exercised, it realizes a gain or loss from the sale of the underlying
security equal to the difference between the purchase price of the underlying
security and the proceeds of the sale of the security plus the premium received
on the option less the commission paid.
Options written by the Fund normally have expiration dates of up to nine months
from the date written. The exercise price of a call option may be below, equal
to or above the current market value of the underlying security at the time the
option is written.
As a writer of a secured put option on securities, the Fund incurs an obligation
to buy the security underlying the option from the purchaser of the put, at the
option's exercise price at any time during, or at the expiration of, the option
period (certain listed and OTC put-options will be exercisable by the purchaser
only on a specific date). A put is "secured" if the Fund maintains with its
custodian in a segregated account cash, U.S. Government Securities or other
liquid, high quality short-term debt obligations in an amount equal to at least
the exercise price of the option. Similarly, a put position could be covered by
purchase of a put option on the same underlying security, where the exercise
price of the option purchased is equal to or more than the exercise price of the
put written or less than the exercise price of the put written if the mark to
market difference is maintained in cash. In writing puts, the Fund assumes the
risk of loss should the market value of the underlying security decline below
the exercise price of the option (any loss being decreased by the receipt of the
premium on the option written). The operation of and limitations on secured put
options in other respects are substantially identical to those of call options.
The Fund will write put options to obtain income from the premiums paid by
purchasers which provide a partial hedge. Puts may also be written when the Fund
wishes to purchase securities at prices lower than their current market prices,
in which case the Fund will write the put at an exercise price reflecting the
lower purchase price sought. The potential gain on a secured put option is
limited to the premium received on the option (less the commissions paid on the
transaction) while the potential loss equals the difference between the exercise
price of the option and the current market price of the underlying securities at
the time the put is exercised, offset by the premium received (less the
commissions paid on the transaction). Puts may also be written to close out
existing option positions.
The Fund may purchase put options on securities which it holds (or has the right
to acquire) to protect against a decline in the value of its securities. If the
value of the underlying securities were in such a case to fall below the
exercise price of the put purchased in an amount greater than the premium paid
for the option, the Fund would incur no additional loss. The Fund may also
purchase put options to close out written put positions in a manner similar to
call options closing purchase transactions. Such a sale would result in a net
gain or loss depending on whether the amount received on the sale is more or
less than the premium and other transaction costs paid on the put option which
is sold. If a put option purchased by the Fund expires without being sold or
exercised, the premium will be lost.
During the option period, a covered call writer has, in return for the premium
on the option, given up the opportunity for capital appreciation above the
exercise price should the market price of the underlying security increase, but
has retained the risk of loss should the price of the underlying security
decline. A secured put writer also retains the risk of loss should the market
value of the underlying security decline below the exercise price of the option
less the premium received on the sale of the option. In both cases, the writer
has no control over the exercise of the option and may be required to fulfill
its obligation as a writer of the option. Once an option writer has received an
exercise notice with respect to a listed option, it cannot effect a closing
5
<PAGE>
purchase transaction in order to terminate its obligation under the option and
must deliver or receive the underlying securities at the exercise price.
Prior to exercise or expiration, an option position can only be terminated by
entering into a closing purchase or sale transaction. If a covered call option
writer is unable to effect a closing transaction or enter into an offsetting OTC
option, it cannot sell the underlying security until the option expires or the
option is exercised or the Fund provides an alternative means of cover.
Accordingly, a covered call option writer may not be able to sell an underlying
security at a time when it might otherwise be advantageous to do so. A secured
put option writer who is unable to effect a closing transaction or an offsetting
OTC option would continue to bear the risk of decline in the market price of the
underlying security until the option expires or is exercised. In addition, a put
writer would be unable to utilize the amounts securing the put option until the
exercise or expiration of the option.
The Fund's ability to close out its position as a writer of an option is
dependent upon the existence of a liquid secondary market. There is no assurance
that such a market will exist, particularly in the case of OTC options, as such
options will generally only be closed out by entering into a closing transaction
with a dealer. However, the Fund may be able to purchase or write an offsetting
option which does not close out its position as a writer but constitutes an
asset offsetting the risks of the obligation under the option written. If the
Fund is not able to enter into a closing transaction or an offsetting position,
it will be required to maintain the securities subject to the call, or the
collateral underlying the put, even though it might not be advantageous to do
so, until a closing transaction can be entered into (or the option is exercised
or expires).
The possible reasons for the absence of a liquid secondary market for listed
options include: (i) insufficient trading interest in certain options; (ii)
restrictions on transactions imposed by exchanges; (iii) trading halts,
suspensions or other restrictions imposed with respect to particular classes or
series of options or underlying securities; (iv) interruption of the normal
operations on an exchange; (v) inadequacy of the facilities of an exchange or
the OCC to handle current trading volume; or (vi) a decision by one or more
exchanges to discontinue the trading of options (or a particular class or series
of options), in which event the secondary market on that exchange (or in that
class or series of options) would cease to exist, although outstanding options
on that exchange that had been issued by the OCC as a result of trades on that
exchange would generally continue to be exercisable in accordance with their
terms. The inability to close out options positions could also have an adverse
impact on the ability of the Fund to hedge its positions. In addition, in the
event of the bankruptcy of a broker through which the Fund engages in options
transactions, particularly a broker who sold an OTC option to the Fund, the Fund
could experience delays or losses in liquidating open positions purchased or
sold through such brokers or loss of all or part of the value of the options. It
should also be noted that exchanges have limitations governing the maximum
number of options of a particular type that may be written by a single investor.
Positions in excess of these limitations may be required to be liquidated. These
positions limits may operate to restrict the number of options that may be
written by the Fund.
The hours of trading for options may not conform to the hours during which the
underlying securities are traded. To the extent that the option markets close
before the markets for the underlying securities, significant price and rate
movements can take place in the underlying markets that cannot be reflected in
the option markets.
STOCK INDEX OPTIONS. The Fund may purchase and sell (write) options on stock
indices ("index options"). These options are similar to options on securities
except that, rather than taking or making delivery of securities underlying the
option at a specified price upon exercise, an index option gives the holder the
right to receive cash upon exercise of the option if the level of the stock
index upon which the option is based is greater, in the case of a call, or
6
<PAGE>
lesser, in the case of a put, than the exercise price of the option.
Transactions in index options will be effected to hedge against adverse price
movements in the stock market generally or in particular market segments.
Options on stock indices provide the Fund with a means of seeking to protect
against the risk of market wide price movements. If the Investment Manager
anticipates a market decline, the Fund could purchase a stock index put option.
If the expected market decline materialized, the resulting decrease in the value
of the Fund's securities would be offset to the extent of the increase in the
value of the put option. If the Investment Manager anticipates a market rise,
the Fund may purchase a stock index call option to enable the Fund to
participate in such rise until completion of anticipated stock purchases.
Purchases and sales of stock index options also enable the Investment Manager to
more efficiently achieve changes in equity positions.
Stock index options involve risks similar to those associated with options on
securities. However, because exercise of stock index options are settled in
cash, call writers such as the Fund cannot provide in advance for their
potential settlement obligations by acquiring and holding the underlying
securities. A call write can offset some of the risk of its writing position by
holding a diversified portfolio of stocks similar to those on which the
underlying index is based. However, most investors cannot, as a practical
matter, acquire and hold a portfolio containing exactly the same stocks as the
underlying index and, as a result, bear a risk that the value of the securities
held will vary from the value of the index. For a discussion of the risks
associated with imperfect correlation of the stock index and the securities in
the Fund's portfolio, see "Investment Objective and Policies--Special Investment
Practices--Hedging." Even if an index call writer could assemble a portfolio
that exactly replicated the composition of the underlying index, the writer
still would not be fully covered from a risk standpoint because of the "timing
risk" inherent in writing index options. When a index option is exercised, the
amount of cash that the holder is entitled to receive is determined by the
difference between the exercise price and the closing index level on the date
when the option is exercised. As with other kinds of listed options, the writer
will not learn that it has been assigned an exercise notice until the next
Business Day, at the earliest. By the time it learns that it has been assigned
an exercise notice, the index may have declined, with a corresponding decrease
in the value of its stock portfolio. This "timing risk" is an inherent
limitation on the ability of index call writers to cover their risk exposure by
holding stock positions. In addition, a holder of an index option who exercises
it before the closing index value for that day is available runs the risk that
the level of the underlying index may subsequently change. If such a change
causes the exercise price of the option to exceed the current value of the
underlying securities at the time the option is written, the exercising holder
will be required to pay the difference between the closing index value and the
exercise price of the option (times the applicable multiplier) to the assigned
writer.
If dissemination of the current level of an underlying index is interrupted, or
if trading is interrupted in stocks accounting for a substantial percentage of
the value of an index, the trading of options on that index will ordinarily be
halted. If the trading of options on an underlying index is halted, the Fund
would not be able to close out positions and an exchange may impose restrictions
prohibiting the exercise of such options. If trading in options on the index is
not halted, the prices of the options may be distorted. These results could
result in losses to the Fund. It should also be recognized that the markets for
certain stock index options may be relatively illiquid, which could impair the
ability of the Fund to close out positions on such options.
FUTURES CONTRACTS. The Fund may enter into contracts for the purchase or sale
for future delivery of baskets of securities, financial indices, financial
instruments or foreign currencies. The Fund will not purchase or sell a futures
contract or purchase an option on a futures contract if, immediately thereafter,
the sum of the amount of initial margin deposits on the Fund's existing futures
positions, and premiums paid on options on futures contracts which are still
7
<PAGE>
outstanding and which do not constitute bona fide hedging transactions, would
exceed 5% of the value of the Fund's assets. U.S. futures contracts have been
designed by exchanges which have been designated "contracts markets" by the
Commodity Futures Trading Commission and must be executed on the relevant
contract market. Futures contracts trade on a number of exchange markets, and,
through their clearing corporations, the exchanges guarantee performance of the
contracts as between the clearing members of the exchange.
At the same time a futures contract is purchased or sold, the Fund must allocate
cash or securities as a good faith deposit payment ("initial margin deposit").
It is expected that the initial deposit would be approximately 5% to 15% of a
contract's face value. Thereafter, the Fund must make additional deposits with
the applicable financial intermediary, and will be credited with an amount equal
to any net gains due to favorable price movements. These additional deposits or
credits are calculated and required daily and are known as "variation margin."
The amount of the initial margin deposit required for a particular futures
contract may be revised from time to time by the applicable exchange as the
volatility of the contract fluctuates.
Futures contracts by their terms call for delivery of the underlying financial
instruments or, in the case of index contracts, for cash settlement at the
delivery date of the contract. In most cases, however, the contractual
obligation is fulfilled before the date of delivery under the terms of the
contract through offset. The offsetting of a contractual obligation is
accomplished by buying (or selling, as the case may be) on a commodities
exchange an identical futures contract calling for delivery in the same month.
Such a transaction, which is effected through a member of an exchange, cancels
the obligation to make or take delivery under the terms of the contract. Since
all transactions in the futures market are made, offset or fulfilled through a
clearing house associated with the exchange on which the contracts are traded,
the Fund will incur brokerage fees when it purchases or sells futures contracts.
The purpose of the acquisition or sale of a futures contract is to attempt to
protect the Fund from fluctuations in the value of the securities held by the
Fund. For example, if the Fund owns equity securities which are expected to
decline in value temporarily, the Fund might enter into futures contracts for
the sale of an index of equity securities. If the Fund's portfolio and the index
tended to fluctuate in common, such a sale would have much the same effect as
selling an equivalent value of the securities owned by the Fund. If the
securities in the portfolio declined as expected, the futures contracts to the
Fund would increase at approximately the same rate, thereby keeping the next
asset value of the Fund from declining as much as it otherwise would have. The
Fund could accomplish similar results by selling its securities. However, since
the futures market is more liquid than the cash market, the use of futures
contracts as an investment technique allows the Fund to maintain a defensive
position without having to sell its portfolio securities. The Fund's portfolio
and the index will not necessarily fluctuate in common. The Fund bears the
additional risk that any divergence resulting from the Fund's portfolio
appreciating or depreciating more or less than the index operates unfavorably
toward the Fund, resulting in a correlation risk similar to that discussed under
"Investment Objective and Policies--Special Investment Practices--Hedging."
Similarly, when the Fund has a quantity of short positions in securities that
are expected to increase in value temporarily, or anticipates the purchase of
such securities, futures contracts may be purchased to attempt to hedge against
anticipated losses to the Fund. To the extent that the fluctuations in futures
contracts are similar to that of the Fund's short positions or the securities
the Fund anticipates acquiring, the Fund could take advantage of the anticipated
rise in value without actually buying the securities.
To the extent the Fund has a short position in a futures contract, the Fund may
cover by holding the instruments or currency underlying the contract or may
maintain assets in a segregated account to cover the Fund's obligations with
8
<PAGE>
respect to such futures contracts. The assets in such account will consist of
cash, cash equivalents or high quality debt securities in an amount equal to the
difference between the fluctuating market value of such futures contracts and
the aggregate value of the initial and variation margin payments made by the
Fund with respect to such futures contracts.
The ordinary spreads between prices in the cash and futures markets, due to
differences in the nature of those markets, are subject to distortions. First,
all participants in the futures market are subject to initial deposit and
variation margin requirements. Rather than meeting additional variation margin
requirements, investors may close futures contracts through offsetting
transactions which could distort the normal relationship between the cash and
futures markets. Second, the liquidity of the futures market depends on
participants entering into offsetting transactions rather than making or taking
delivery. To the extent participants decide to make or take delivery, liquidity
in the future market could be reduced, thus producing distortion. Third, from
the point of view of speculators, the margin deposit requirements in the futures
market are less onerous than margin requirements in the securities market.
Therefore, increased participation by speculators in the futures market may
cause temporary price distortions. Due to the possibility of distortion, a
correct forecast of price movements by the Investment Manager may still not
result in a successful transaction.
In addition, futures contracts entail risks. Although the Investment Manager
will only enter into futures contracts if it believes that use of such contracts
will benefit the Fund, if the Investment Manager's investment judgment about the
general direction of securities or currency prices is incorrect, the Fund's
overall performance would be poorer than if it had not entered into any such
contract. For example, if the Fund has hedged against the possibility of a
decline in securities prices and prices increase instead, the Fund will lose
part or all of the benefit of the increased value of the securities that it has
hedged because it will have offsetting losses in its futures positions. In
addition, in such situations, if the Fund has insufficient cash, it may have to
sell securities from its portfolio to meet daily variation margin requirements.
Such sales of securities may be, but will not necessarily be, at increased
prices which reflect the rising market. The Fund may have to sell securities at
a time when it may be disadvantageous to do so.
Exchanges may limit the amount by which the price of many futures contracts may
move on any day. If the price moves equal to the daily limit on successive days
then it may prove impossible to liquidate a futures position until the daily
limit moves have ceased.
OPTIONS ON FUTURES CONTRACTS. The Fund is authorized to purchase and write
options on futures contracts for hedging purposes. The purchase of a call option
on a futures contract is similar in some respects to the purchase of a call
option on an individual security. Upon the exercise of a call option, the Fund
receives a long position in the underlying futures contract. Depending on the
pricing of the option compared to either the price of the futures contract upon
which it is based or the price of the underlying financial instruments, it may
or may not be less risky than ownership of the futures contract. As with the
purchase of futures contracts, when the Fund is not fully invested it may
purchase a call option on a futures contract to hedge against a market advance
in which it would not otherwise participate. The purchase of a put option on a
futures contract is similar in some respects to the purchase of protective put
options on portfolio securities. Upon exercise of a put option, the Fund
receives a short position in the underlying futures contract. For example, the
Fund may purchase a put option on a futures contract to hedge the Fund's
portfolio against the risk of declining securities values.
The writing of a call option on a futures contract constitutes a partial hedge
against declining prices of the components of the futures contract. If the
futures price at expiration of the call option is below the exercise price, the
Fund will retain the full amount of the option premium that provides a partial
hedge against any decline that may have occurred in the Fund's portfolio
9
<PAGE>
holdings. The writing of a put option on a futures contract constitutes a
partial hedge against increasing prices of the financial instrument that is
deliverable upon termination of the futures contract. If the futures price at
expiration of the put option is higher than the exercise price, the Fund will
retain the full amount of the option premium that provides a partial hedge
against any increase in the price of securities that the Fund intends to
purchase. If a put or call option the Fund has written is exercised, the Fund
will incur a loss that will be reduced by the amount of the premium it receives.
Depending on the degree of correlation between changes in its portfolio
securities and changes in its futures positions, the Fund's losses from existing
options may to some extent be reduced or increased by changes in portfolio
securities.
The amount of risk the Fund assumes when it purchased an option on a futures
contract is the premium paid for the option plus related transaction costs. In
addition to the correlation risks discussed above, the purchase of an option
also entails the risk that changes in the underlying futures contract will not
be fully reflected in the option purchased.
The Fund's ability to engage in the options and futures strategies described
above will depend on the availability of liquid markets in such instruments. It
is impossible to predict the amount of trading interest that may exist in
various types of options or futures. Therefore no assurance can be given that
the Fund will be able to utilize these instruments effectively for the purposes
set forth above. Furthermore, the Fund's ability to engage in options and
futures transactions may be limited by tax considerations.
FOREIGN MARKET TRANSACTIONS. In addition, options on securities, options on
indices, futures contracts, and options on futures contracts may be traded on
foreign exchanges. Such transactions are subject to the risk of governmental
actions affecting trading in or the prices of such options or futures contracts.
Such positions also could be adversely affected by: (i) other complex foreign,
political, and economic factors; (ii) lesser availability than in the United
States of data on which to make trading decisions; (iii) delays in the Fund's
ability to act upon economic events occurring in foreign markets during
non-business hours in the United States; (iv) the imposition of different
exercise and settlement terms and procedures and margin requirements than in the
United States; and (v) lesser trading volume.
FORWARD CONTRACTS. The Fund may enter into forward contracts to purchase or sell
foreign currencies as a hedge against possible variations in foreign exchange
rates. A forward foreign currency contract is an agreement between the
contracting parties to exchange an amount of currency at some future time at an
agreed upon rate. The rate can be higher or lower than the spot rate between the
currencies that are the subject of the contract. A forward contract generally
has no deposit requirement, and such transactions do not involve commissions. By
entering into a forward contract for the purchase or sale of the amount of
foreign currency invested in a Foreign Securities transaction, the Fund can
hedge against possible variations in the dollar versus the subject currency
either between the date the Foreign Security is purchased or sold and the date
on which payment is made or received during the time the Fund holds the Foreign
Security. The Fund will not speculate in forward currency contracts. If the Fund
enters into a sale of forward foreign currency with respect to a portfolio
security denominated in such foreign currency, its custodian bank will place
cash or liquid equity or debt securities in a separate account of the Fund in an
amount equal to the Fund's total assets committed to the consummation of such
forward contract. If the securities placed in the account declines, additional
cash or securities will be placed in the account so that the account will equal
the amount of the Fund's commitment with respect to such contracts. The Fund
will purchase or sell currency futures or options on such futures for the same
reasons as set forth above for entering into forward foreign currency contracts.
The Fund does not anticipate attempting to hedge all of its foreign portfolio
positions and will enter into such transactions only to the extent, if any,
10
<PAGE>
deemed appropriate by the Investment Manager. The Fund will not enter into a
forward contract for a term of more than one year.
FUTURE DEVELOPMENTS. The Fund may, following written notice thereof to its
shareholders, take advantage of opportunities in the area of options, futures
contracts, options on futures contracts, and other derivative instruments that
are not currently contemplated for use by the Fund or that are not currently
available but that may be developed, to the extent such opportunities are both
consistent with the Fund's investment objective and legally permissible for the
Fund. Such opportunities, if they arise, may involve risks that exceed those
involved in the options and futures activities described above.
REGULATORY RESTRICTIONS. To the extent required to comply with SEC Release No.
10666, when purchasing a futures contract or writing a put option, the Fund will
maintain, in a segregated account, cash or liquid securities equal to the value
of such contracts.
The Fund will typically enter into a futures contract or related option only if
it constitutes a bona fide hedging position under applicable regulations.
Otherwise the Fund will limit its investments in futures contracts and related
options so that, immediately after such investment, the sum of the amount of its
initial margin deposits on open futures contracts and its premiums on open
options contracts will not exceed 5% of the Fund's total assets at current
value.
ACCOUNTING AND TAX CONSIDERATIONS. When the Fund writes an option, an amount
equal to the premium it receives is included in its Statement of Assets and
Liabilities as a liability. The amount of the liability is subsequently marked
to market to reflect the current market value of the option. When the Fund
purchases an option, the premium it pays is recorded as an asset and is
subsequently adjusted to the current market value of the option.
In the case of a regulated futures contract purchased or sold by the Fund, an
amount equal to the initial margin deposit is recorded as an asset. The amount
of the asset is subsequently adjusted to reflect changes in the amount of the
deposit as well as changes in the value of the contract.
For a discussion of the tax treatment of investments in certain options, futures
and foreign currency contracts, see "Taxation" below.
MANAGEMENT
INVESTMENT MANAGEMENT AGREEMENT
The Investment Management Agreement provides that the Investment Manager will
provide portfolio management services, place portfolio transactions in
accordance with policies expressed in the Fund's registration statement, pay the
Fund's office rent, and render significant administrative services on behalf of
the Fund (not otherwise provided by third parties) necessary for the Fund's
operation as a closed-end fund, including preparing reports to and meeting
materials for the Fund's Board of Trustees and reports and notices to Fund
shareholders; supervising, negotiating contractual arrangements with, to the
extent appropriate, and monitoring the performance of various third-party and
affiliated service providers to the Fund (such as the Fund's transfer and
pricing agents, custodian, accountants and others) and other persons in any
capacity deemed necessary or desirable to Fund operations; preparing and making
filings with the SEC and other regulatory and self-regulatory organizations,
including preliminary and definitive proxy materials, post-effective amendments
to the Registration Statement and semi-annual reports on Form N-SAR; overseeing
the tabulation of proxies by the Fund's transfer agent; assisting in the
preparation and filing of the Fund's federal, state and local tax returns;
preparing and filing the Fund's federal excise tax returns; providing assistance
11
<PAGE>
with investor and public relations matters; monitoring the valuation of
portfolio securities and the calculation of NAV; monitoring the registration of
Shares under applicable federal and state securities laws; maintaining or
causing to be maintained for the Fund all books, records and reports and any
other information required under the 1940 Act, to the extent such books, records
and reports and other information are not maintained by the Fund's custodian or
other agents of the Fund; assisting in establishing accounting policies of the
Fund; assisting in the resolution of accounting issues that may arise with
respect to the Fund's operations and consulting with the Fund's independent
accountants, legal counsel and other agents as necessary in connection
therewith; establishing and monitoring the Fund's operating expense budgets;
reviewing the Fund's bills; processing the payment of bills that have been
approved by an authorized person; assisting the Fund in determining the amount
of dividends and other distributions available to be paid by the Fund to its
shareholders, preparing and arranging for the printing of dividend notices to
shareholders, and providing the transfer and dividend paying agent, the
custodian, and the accounting agent with such information as is required for
such parties to effect the payment of dividends and other distributions; and
otherwise assisting the Fund in the conduct of its business, subject to the
direction and control of the Fund's Board of Trustees.
Under the Investment Management Agreement, the Fund is responsible for other
expenses, including organizational expenses (including out-of-pocket expenses,
but not including the Investment Manager's overhead or employee costs); brokers'
commissions or other costs of acquiring or disposing of any portfolio securities
of the Fund; legal, auditing and accounting expenses; payment for portfolio
pricing or valuation services to pricing agents, accountants, bankers and other
specialists, if any; taxes and governmental fees; the fees and expenses of the
Fund's transfer agent; expenses of preparing share certificates and any other
expenses, including clerical expenses, of issuance, offering, distribution,
sale, redemption or repurchase of Shares; the expenses of and fees for
registering or qualifying securities for sale; the fees and expenses of those
Trustees who are not "interested persons" of the Fund (as defined in the 1940
Act); the cost of printing and distributing reports, notices and dividends to
current shareholders; and the fees and expenses of the Fund's custodians,
subcustodians, dividend disbursing agents and registrars. The Fund may arrange
to have third parties assume all or part of the expenses of sale, underwriting
and distribution of Shares. The Fund is also responsible for expenses of
shareholders' and other meetings and its expenses incurred in connection with
litigation and the legal obligation it may have to indemnify officers and
Trustees of the Fund with respect thereto. The Fund is also responsible for the
maintenance of books and records which are required to be maintained by the
Fund's custodian or other agents of the Fund; telephone, telex, facsimile,
postage and other communications expenses; any fees, dues and expenses incurred
by the Fund in connection with membership in investment company trade
organizations; expenses of printing and mailing prospectuses and statements of
additional information of the Fund and supplements thereto to current
shareholders; costs of stationery; fees payable to the Investment Manager and to
any other Fund advisers or consultants; expenses relating to investor and public
relations; interest charges, bond premiums and other insurance expense; freight,
insurance and other charges in connection with the shipment of the Fund's
portfolio securities; and other expenses.
The Investment Manager is responsible for the payment of the compensation and
expenses of all Trustees, officers and executive employees of the Fund
(including the Fund's share of payroll taxes) affiliated with the Investment
Manager and making available, without expense to the Fund, the services of such
Trustees, officers and employees as may duly be elected officers of the Fund,
subject to their individual consent to serve and to any limitations imposed by
law. The Fund is responsible for the fees and expenses (specifically including
travel expenses relating to Fund business) of Trustees not affiliated with the
Investment Manager ("Non-Interested Trustees") Under the Investment Management
Agreement, the Investment Manager also pays the Fund's share of payroll taxes.
During the Fund's most recent fiscal year, no compensation, direct or otherwise
(other than through fees paid to the Investment Manager), was paid or became
12
<PAGE>
payable by the Fund to any of its officers or Trustees who were affiliated with
the Investment Manager.
On February 3, 1998, the Board of Trustees and the Investment Manager agreed to
add a breakpoint to the investment management fee, such that the Fund pays the
Investment Manager a fee based on an annual rate of 1.00% on the Fund's ending
daily net assets up to and including $500 million, and 0.90% on the Fund's
ending daily net assets in excess of $500 million. For the fiscal year ended
October 31, 1998, the Fund paid investment management fees of $5,556,255.
Additionally, in accordance with an Administrative Agreement, the Fund pays the
Investment Manager a monthly fee based on the annual rate of 0.10% on the Fund's
ending daily net assets for administrative services.
The Investment Management Agreement further provides that the Investment Manager
shall not be liable for any error of judgment or mistake of law or for any loss
suffered by any Fund in connection with matters to which such agreement relates,
except a loss resulting from willful misfeasance, bad faith or gross negligence
on the part of the Investment Manager in the performance of its duties or from
reckless disregard by the Investment Manager of its obligations and duties under
such agreement. The Investment Management Agreement also provides that purchase
and sale opportunities, which are suitable for more than one client of the
Investment Manager, will be allocated by the Investment Manager in an equitable
manner. Lastly, the Investment Management Agreement contains a provision stating
that it supersedes all prior agreements.
The Investment Management Agreement may be terminated without penalty upon sixty
days' written notice by either party. The Fund may agree to the termination of
its Investment Management Agreement either by the vote of a majority of the
outstanding voting securities of the Fund, or by a vote of the Board of
Trustees. The Investment Management Agreement may also be terminated at any time
without penalty by the vote of a majority of the outstanding voting securities
of the Fund or by a vote of the Board of Trustees if a court establishes that
the Investment Manager or any of its officers or directors has taken any action
resulting in a breach of the Investment Manager's covenants under the Investment
Management Agreement. As stated above, the Investment Management Agreement
automatically terminates in the event of its assignment.
For the fiscal years ended October 31, 1998, 1997, and 1996, the Investment
Manager or its predecessor was paid investment management fees of $5,556,255,
$4,880,120, and $4,517,293, respectively.
TRUSTEES AND OFFICERS
The Fund has a Board composed of four Trustees which supervises the Fund's
investment activities and reviews contractual arrangements with companies that
provide the Fund with services. The Trustees and officers and their positions
with the Fund and their present and principal occupations during the past five
years are listed below. Each Trustee who is an "interested person" of the Fund
(as defined in the 1940 Act) is indicated by an asterisk (*). Each Independent
Trustee serves on the Audit Committee of the Board.
All of the officers and Trustees of the Fund hold comparable positions with the
15 mutual funds, consisting of 53 separate portfolios, managed or administered
by INVESCO and distributed by INVESCO Distributors, Inc. (the "INVESCO Funds"),
excluding the Fund.
13
<PAGE>
The Trustees and Executive Officers of the Fund and their principal occupations
during the last five years are set forth below.
NAME AND AGE POSITION WITH PRINCIPAL OCCUPATIONS DURING THE PAST
THE FUND FIVE YEARS
- ----------- ------------ ------------------
CHARLES W. BRADY, CHAIRMAN OF THE Chief Executive Officer and Director of
Age 64* BOARD SINCE AMVESCAP PLC, London, England, and of
1991(MR. BRADY various subsidiaries thereof; Chairman
DID NOT SERVE of the Boards of the INVESCO Funds.
AS A TRUSTEE
BETWEEN
2/28/1997 AND
8/3/1998)
FRED A. DEERING, TRUSTEE SINCE Vice Chairman of the Boards of the
Age 71 1992 INVESCO Funds; formerly Chairman of the
Executive Committee and Chairman of the
Board of Directors of Security Life of
Denver Insurance Company, Denver,
Colorado; Director of ING American
Holdings Company and First ING Life
Insurance Company of New York.
JOHN W. McINTYRE, TRUSTEE SINCE Retired. Formerly, Vice Chairman of
Age 68 1991 the Board of Directors of the Citizens
and Southern Corporation and Chairman of
the Board and Chief Executive Officer of
the Citizens and Southern Georgia Corp.
and Citizens and Southern National Bank.
Director/Trustee of the INVESCO Funds and
Kaiser Foundation Health Plan of Georgia,
Inc., Gables Residential Trust,
Employee's Retirement System of GA, Emory
University, and J.M. Tull Charitable
Foundation.
DR. LARRY SOLL, TRUSTEE SINCE Retired. Formerly, Chairman of the
Age 56 1991 Board (1987 to 1994), Chief Executive
Officer (1982 to 1989; 1993 to 1994) and
President (1982 to 1989) of Synergen Inc.
(a biotechnology company), Boulder,
Colorado. Director/Trustee of the INVESCO
Funds. Director of Synergen since its
incorporation in 1982. Director of Isis
Pharmaceuticals, Inc.
MARK H. WILLIAMSON, PRESIDENT AND President, Chief Executive Officer, and
Age 47 CHIEF OPERATING Director, INVESCO Distributors Inc.;
OFFICER SINCE President, Chief Executive Officer and
1998 Chairman, INVESCO; Formerly, Chairman
of the Board and Chief Executive Officer,
NationsBanc Advisors, Inc. (1995-1997);
Chairman of the Board, NationsBanc
Investments, Inc. (1997-1998).
14
<PAGE>
RONALD L. GROOMS, TREASURER SINCE Senior Vice President and Treasurer of
Age 52 1991 INVESCO Funds Group, Inc. (since
1988). Senior Vice President and
Treasurer of INVESCO Distributors, Inc.
(since 1997).
GLEN A. PAYNE, SECRETARY SINCE Senior Vice President, General Counsel
Age 52 1991 and Secretary of INVESCO Funds Group,
Inc. (since 1995), and INVESCO
Distributors, Inc. (since 1997); Vice
President, Secretary and General Counsel
of INVESCO Funds Group, Inc. (May 1989 to
April 1995); formerly, employee of a U.S.
regulatory agency, Washington, D.C. (June
1973 through May 1989).
JOHN R. SCHROER, VICE PRESIDENT Senior Vice President of INVESCO Funds
Age 32 SINCE 1996 Group, Inc. and portfolio manager of
the Fund (since 1996). Portfolio manager
of the INVESCO Strategic Health Sciences
Fund.
Unless otherwise indicated, the address of each Trustee and officer of the Fund
is Post Office Box 173706, Denver, Colorado 80217-3706.
- --------
*Because of Mr. Brady's affiliation with INVESCO, or with companies affiliated
with INVESCO, he is deemed to be an "interested person" of INVESCO Global Health
Sciences Fund, as that term is defined in the 1940 Act.
The Board has an Audit Committee that is composed of Messrs. Deering, Soll and
McIntyre. The Committee makes recommendations regarding the selection of
independent auditors for the Fund, confers with the independent auditors
regarding the Fund's financial statements, the results of audits and related
matters, and performs other tasks as the Board assigns.
15
<PAGE>
COMPENSATION OF TRUSTEES
The Trustees and officers who are "interested persons" as designated above
receive no compensation from the Fund. The table below shows amounts paid or
accrued to those Trustees who are not designated "interested persons" during the
Fund's fiscal year ended October 31, 1998, except that the information regarding
the total compensation from the Fund and Fund Complex in the last column is for
the calendar year 1998.
The following table shows the compensation paid by the Fund to its three
Independent Trustees for their services as Trustees of the Fund in the fiscal
year ended October 31, 1998. The following table also shows the total
compensation paid by the Fund and the INVESCO Funds (collectively, the 54 funds
of the "INVESCO Complex", including the Fund) to these Trustees for their
services as Directors or Trustees during the year ended December 31, 1998.
COMPENSATION TABLE
AMOUNTS PAID DURING THE MOST RECENT
FISCAL YEAR BY THE FUND TO TRUSTEES
TOTAL
COMPENSATION
AGGREGATE BENEFITS ESTIMATED FROM THE FUND
COMPENSATION ACCRUED AS ANNUAL AND INVESCO
FROM THE PART OF FUND BENEFITS UPON FUNDS PAID TO
NAME OF TRUSTEE FUND EXPENSES(2) RETIREMENT(3) TRUSTEES
- --------------- ---- ----------- ------------- --------
FRED A. DEERING $19,000 $0.00 $0.00 $103,700
JOHN W. MCINTYRE(1) $20,000 $0.00 $0.00 $ 98,500
DR. LARRY SOLL $19,000 $0.00 $0.00 $ 96,000
------- ----- ----- --------
TOTAL $58,000 $0.00 $0.00 $298,200
- -----
AS A PERCENTAGE OF NET
ASSETS 0.0099%(4) 0.0014%(5)
- ------
1 The chairman of the audit committee receives compensation for serving in such
capacity in addition to the compensation paid to all Independent Trustees.
2 Represents benefits accrued with respect to the Defined Benefit Deferred
Compensation Plan discussed below, and not compensation deferred at the election
of the Trustees. This Plan was adopted by the Board of Trustees on October 12,
1998, and as of October 31, 1998, the Fund's fiscal year end, no benefits have
begun accruing to eligible Trustees.
3 These figures represent the Fund's estimated annual benefits payable upon the
trustee's retirement. These estimated benefits assume retirement at age 72 and
that the basic retainer payable to the Trustees will be adjusted periodically
for inflation. This results in lower estimated benefits for Trustees who are
closer to retirement and higher estimated benefits for Trustees who are farther
from retirement. Each of these Trustees has served as Trustee for the minimum
five-year period required to be eligible to participate in the Defined Benefit
Deferred Compensation Plan.
4 Total as a percentage of the Fund's net assets as of October 31, 1998.
5 Total as a percentage of the INVESCO Complex's net assets as of December 31,
1998.
The Fund's Independent Trustees (as defined under the 1940 Act) and of the other
funds in the INVESCO Complex establish their own compensation from the Fund and
other funds in the INVESCO Complex and are not paid by INVESCO or any affiliated
company. Mr. Brady, as an "interested person" of the Fund and of other funds in
the INVESCO Complex, receives compensation as an officer of companies affiliated
with INVESCO, but does not receive any trustee fees or other compensation from
the Fund or from other funds in the INVESCO Complex for his service as a Trustee
or Director.
The Board of Trustees of the Fund has adopted a Defined Benefit Deferred
Compensation Plan (the "Benefit Plan") for the Independent Trustees of the Fund.
Under the Benefit Plan, each Trustee who is not an interested person of the Fund
(as defined in Section 2(a)(19) of the 1940 Act), and who has served for at
least five years (a "Qualified Trustee") is entitled to receive four quarterly
payments during the first twelve months after his or her retirement, with each
payment to be equal to 25 percent of the sum of the annual basic retainer and
16
<PAGE>
annualized quarterly board meeting fees payable by the Fund to the Independent
Trustee on his or her retirement (the "First Year Retirement Payment"). Trustees
normally retire at age 72, 73, 74 or 75 if the retirement date is extended by
the Board. In no event may a Trustee retire later than the last day of the
calendar quarter in which the Trustee's seventy-fifth birthday occurs.
Beginning with the first anniversary of the Qualified Trustee's retirement, and
beginning as of the retirement of an Independent Trustee whose retirement is
after the date of the last day of the calendar quarter in which such Trustee's
seventy-fifth birthday occurred, the Independent Trustee will receive, for the
remainder of his or her life, a benefit (the "Benefit"), payable quarterly, with
each quarterly payment to be equal to 12.50% of the sum of the annual basic
retainer and annualized quarterly Board meeting fees payable by the Trust to the
Independent Trustee on his or her retirement.
If an Independent Trustee's service as a Trustee is terminated because of his or
her death after the last day of the calendar quarter in which such Trustee's
seventy-second birthday occurred and before the last day of the calendar quarter
in which such Trustee's seventy-fifth birthday occurs, the designated
beneficiary of the Independent Trustee will receive the First Year Retirement
Payments and will, beginning with the quarter following the quarter in which the
last First Year Retirement Payment is made, receive the Benefit for a period of
ten years, with quarterly payments to be made to the designated beneficiary.
If an Independent Trustee's service as a Trustee is terminated because of his or
her death before the last day of the calendar quarter in which such Trustee's
seventy-second birthday occurs or after the last day of the calendar quarter in
which such Trustee's seventy-fifth birthday occurred, the designated beneficiary
of the Independent Trustee will receive the Benefit for a period of ten years,
with quarterly payments to be made to the designated beneficiary beginning in
the first quarter following the Trustee's death.
If an Independent Trustee's service as a Trustee is terminated because of his or
her disability after the last day of the calendar quarter in which such
Trustee's seventy-second birthday occurred and before the last day of the
calendar quarter in which such Trustee's seventy-fifth birthday occurs, the
Independent Trustee will receive the First Year Retirement Payments and will,
beginning with the quarter following the quarter in which the last First Year
Retirement Payment is made, receive the Benefit for the remainder of his or her
life, with quarterly payments to be made to the disabled Independent Trustee. If
the disabled Independent Trustee should die before the First Year Retirement
Payments are completed and before forty quarterly Benefit payments are made,
such payments will continue to be made to the Independent Trustee's designated
beneficiary until the aggregate of the First Year Retirement Payments and forty
quarterly Benefit payments have been made to the disabled Independent Trustee
and the Trustee's designated beneficiary.
If an Independent Trustee's service as a Trustee is terminated because of his or
her disability before the last day of the calendar quarter in which such
Trustee's seventy-second birthday occurs or after the last day of the calendar
quarter in which such Trustee's seventy-fifth birthday occurred, the Independent
Trustee will receive the Benefit for the remainder of his or her life, with
quarterly payments to be made to the disabled Independent Trustee beginning in
the first quarter following the Trustee's termination for disability. If the
disabled Independent Trustee should die before forty quarterly payments are
made, payments will continue to be made to the Independent Trustee's designated
beneficiary until the aggregate of forty quarterly payments has been made to the
disabled Independent Trustee and the Trustee's designated beneficiary.
17
<PAGE>
Any question involving entitlement to payments under or the administration of
the Benefit Plan will be referred to a four-person committee (the "Committee")
composed of three Independent Trustees designated by all of the Independent
Trustees and one Trustee who is not an Independent Trustee, designated by the
non-Independent Trustee. Except as otherwise provided, the Committee will make
all interpretations and determinations necessary or desirable for the Benefit
Plan's administration, and such interpretations and determinations will be final
and conclusive. Committee members will be elected annually.
The Committee will represent and act on behalf of the Trust in respect of the
Benefit Plan and, subject to the other provisions of the Benefit Plan, the
Committee may adopt, amend or repeal bylaws or other regulations relating to the
administration of the Benefit Plan, the conduct of the Committee's affairs, its
rights or powers, or the rights or powers of its members. The Committee will
report to the Independent Trustees and to the Board from time to time on its
activities in respect of the Benefit Plan. The Committee or persons designated
by it will cause such records to be kept as may be necessary for the
administration of the Benefit Plan. The cost of the Benefit Plan is paid by the
Trust.
On October 12, 1998, the Board of Trustees adopted a Deferred Fee Agreement,
pursuant to which the Independent Trustees may defer receipt of a portion of the
compensation which they would otherwise have been paid as Trustees of the Fund.
The deferred amount is invested in Shares. Each Independent Trustee, therefore,
may be an indirect owner of Shares, in addition to any Shares that may be owned
directly.
OWNERSHIP OF FUND SHARES
As of March 26, 1999, no persons owned, beneficially or of record, more than 5%
of the outstanding Shares. Also on that date, the Trustees and officers of the
Fund, as a group, beneficially owned less than one percent of the outstanding
shares of the Fund.
PORTFOLIO TRANSACTIONS
The Investment Manager places orders for the purchase and sale of securities
with brokers and dealers based upon its evaluation of the financial
responsibility of the brokers and dealers, and considering the brokers' and
dealers' ability to effect transactions at the best available prices. The
Investment Manager evaluates the overall reasonableness of brokerage commissions
paid by reviewing the quality of executions obtained on portfolio transactions
of the Fund, viewed in terms of the size of transactions, prevailing market
conditions in the security purchased or sold, and general economic and market
conditions. In seeking to ensure that any commissions or discounts charged the
Fund are consistent with prevailing and reasonable commissions, the Investment
Manager also endeavors to monitor brokerage industry practices with regard to
the commissions charged by broker-dealers on transactions effected for other
comparable institutional investors. While the Investment Manager seeks
reasonably competitive rates, the Fund does not necessarily pay the lowest
commission, spread or discount available.
Consistent with the standard of seeking to obtain the best execution on
portfolio transactions, the Investment Manager may select brokers that provide
research services to effect such transactions. Research services consist of
statistical and analytical reports relating to issuers, industries, securities
and economic factors and trends, which may be of assistance or value to the
Investment Manager in making informed investment decisions. Research services
prepared and furnished by brokers through which the Funds effect securities
transactions may be used by the Investment Manager in servicing all of its
accounts and not all such services may be used by the Investment Manager in
connection with the Fund.
18
<PAGE>
In recognition of the value of the above-described brokerage and research
services provided by certain brokers, the Investment Manager, consistent with
the standard of seeking to obtain the best execution on portfolio transactions,
may place orders with such brokers for the execution of transactions for the
Fund on which the commissions are in excess of those which other brokers might
have charged for effecting the same transactions.
Portfolio transactions may be effected through qualified broker-dealers that
recommend the Fund to their clients or who act as agent in the purchase of the
Shares for their clients. When a number of brokers and dealers can provide
comparable best price and execution on a particular transaction, the Investment
Manager may consider the sale of Shares by a broker or dealer in selecting among
qualified broker-dealers.
The Fund paid $1,511,837, $1,746,140, and $1,685,692 in brokerage commissions
during the fiscal years ended October 31, 1998, 1997, and 1996. Of these
amounts, $5,812, $64,276, and $19,426 were paid to the Dealer Manager.
PORTFOLIO TURNOVER
Generally, the Fund will not purchase securities for short-term trading profits.
However, the Fund may dispose of securities without regard to the time they have
been held when such actions, for defensive or other reasons, appear advisable to
the Investment Manager. (The portfolio turnover rate is calculated by dividing
the lesser of purchases or sales of portfolio securities for the particular
fiscal year by the monthly average of the value of the portfolio securities
owned by the Fund during the particular fiscal year. For purposes of determining
this rate, all securities whose maturities at the time of acquisition are one
year or less are excluded.) The annual rate of the Fund's total portfolio
turnover for the years ended December 31, 1998, 1997, and 1996 was 87%, 145%,
and 91%, respectively.
REPURCHASE OF SHARES AND TENDER OFFERS
Shares of closed-end funds frequently trade at a discount from NAV per share but
in some cases trade at a premium. In recognition of the possibility that the
Shares might similarly trade at a discount, the Fund's Board of Trustees has
determined that it would be in the interest of shareholders for the Fund to take
action to attempt to reduce or eliminate a market value discount from NAV. To
that end, the Board contemplates that the Fund could from time to time take
action either to repurchase its Shares in the open market or to tender for its
own Shares at NAV. The Board, in consultation with the Investment Manager, will
review on a quarterly basis the possibility of open market repurchases and/or
tender offers for Shares. There are no assurances that the Board will, in fact,
decide to undertake either of these actions or, if undertaken, that such actions
will result in the Shares trading at a market price per Share that is equal to
or approximates their NAV per Share. In addition, the Board will not necessarily
announce when it has given consideration to these matters.
Subject to the Fund's investment policies and restrictions with respect to
borrowings, the Fund may incur debt to finance repurchases and/or tenders. See
"Investment Objective and Policies" in the Prospectus and "Investment
Restrictions" herein. Interest on any such borrowings will reduce the Fund's net
investment income.
The Fund anticipates that the market price of its Shares will from time to time
vary from their NAV per Share. The market price of the per Share will, among
other things, be determined by the relative demand for and supply of those
Shares in the market, the Fund's investment performance, its dividends and yield
and investor perception of its overall attractiveness as an investment as
compared with other investment alternatives. Nevertheless, the fact that the
19
<PAGE>
Shares may be repurchased or be the subject of tender offers at NAV from time to
time may reduce the spread between market price and NAV that might otherwise
exist. In the opinion of the Investment Manager, sellers may be more inclined to
accept a significant discount if they have a reasonable expectation of being
able to recover NAV in conjunction with a possible repurchase or tender offer.
Although the Board of Trustees believes that share repurchases and tender offers
generally would have a favorable effect on the market price per Share, it should
be recognized that the acquisition of Shares by the Fund will decrease its total
assets and, therefore, have the effect of increasing its expense ratio. Because
of the nature of the Fund's investment objective and policies and its portfolio,
the Investment Manager does not anticipate that repurchases and tender offers
should have a materially adverse effect on the Fund's investment performance and
does not anticipate any material difficulty in disposing of portfolio securities
in order to consummate share repurchases and tender offers.
It is the Board of Trustees' announced policy, which the Board may change, that
the Fund cannot accept tenders or effect repurchases if (1) such transactions,
if consummated, would (a) result in delisting the Shares from the NYSE (the NYSE
having advised the Fund that it would consider delisting if the aggregate market
value of the outstanding Shares is less than $5,000,000, the number of publicly
held Shares falls below 600,000 or the number of round-lot holders falls below
1,200) or (b) terminate the Fund's status as a regulated investment company
under the Code (which would cause the Fund's income to be taxed at the trust
level in addition to being taxed when the shareholders receive dividends from
the Fund), (2) the amount of securities tendered would require liquidation of
such a substantial portion of the Fund's securities that it would not be able to
liquidate portfolio securities in an orderly manner in light of the existing
market conditions and such liquidation would have an adverse effect on the NAV
of the Fund to the detriment of nontendering shareholders or (3) there is, in
the Board of Trustees' judgment, any material (a) legal action or proceeding
instituted or threatened challenging such transactions or otherwise materially
adversely affecting the Fund, (b) suspension of or limitation on prices for
trading securities generally on the NYSE or any foreign exchange on which
portfolio securities of the Fund are traded, (c) declaration of a banking
moratorium by federal, state or foreign authorities or any suspension of payment
by banks in the United States, New York State or foreign countries in which the
Fund invests, (d) limitation affecting the Fund or the issuers of its portfolio
securities imposed by federal, state or foreign authorities on the extension of
credit by lending institutions or on the exchange of foreign currency, (e)
commencement of war, armed hostilities or other international or national
calamity directly or indirectly involving the United States or other countries
in which the Fund invests or (f) other event or condition that would have a
material adverse effect on the Fund or its shareholders if Shares were
repurchased. The Board of Trustees may modify these conditions in light of
experience.
Any tender offer made by the Fund will be at a price equal to the NAV per Share
on a date subsequent to the Fund's receipt of all tenders. During the pendency
of any tender offer by the Fund, it will calculate daily the NAV of the Shares
and will establish procedures that will be specified in the tender offer
documents, to enable shareholders to ascertain readily such NAV. Each offer will
be made and shareholders will be notified in accordance with the requirements of
the Securities Exchange Act of 1934 and the 1940 Act, either by publication or
mailing or both. Each offering document will contain the information prescribed
by those laws and the rules and regulations promulgated thereunder. When a
tender offer is authorized to be made by the Fund's Trustees, a shareholder
wishing to accept the offer will be required to tender all (but not less than
all) of the Shares owned by the shareholder (or constructively owned by him or
her for federal income tax purposes under section 318 of the Code). The Fund
will not specify a record date for the tender offer that will not permit a
shareholder of record on the effective date of the tender offer to tender his or
her Shares. The Fund will purchase all Shares tendered in accordance with the
terms of the offer unless it determines to accept none of them (based upon one
of the conditions set forth above). Each person tendering Shares will pay to the
20
<PAGE>
Fund a reasonable service charge to help defray certain costs, including the
processing of tender forms, effecting payment, postage and handling. It is the
position of the staff of the SEC that such service charge may not be deducted
from the proceeds of the purchase. The Fund's transfer agent will receive the
fee as an offset to these costs. The Fund expects the costs to the Fund of
effecting a tender offer will exceed the aggregate of all service charges
received from those who tender their Shares. Costs associated with the tender
will be charged against capital.
Tendered Shares that have been accepted and purchased by the Fund will be held
in treasury and may be retired by the Trustees. Treasury Shares will be recorded
and reported as an offset to shareholders' equity and accordingly will reduce
the Fund's total assets. If treasury Shares are retired, Shares issued and
outstanding and capital in excess of par value will be reduced.
If the Fund must liquidate portfolio securities in order to purchase tendered
Shares, it may realize gains and losses. The portfolio turnover rate of the Fund
may or may not be affected by the Fund's repurchases of Shares pursuant to a
tender offer.
TAXATION
Set forth below is a discussion of certain U.S. federal income tax
considerations affecting the Fund and the purchase, ownership and disposition of
Shares. This discussion does not purport to be complete or to deal with all
aspects of federal income taxation that may be relevant to shareholders in light
of their particular circumstances. This discussion is based on current
provisions of the Code, the regulations promulgated thereunder, judicial
decisions and administrative pronouncements, all of which are subject to change
(some of which may be retroactive). Prospective investors should consult their
own tax advisors with regard to the federal income tax consequences of the
purchase, ownership and disposition of Shares, as well as the tax consequences
arising under the laws of any state, foreign or other taxing jurisdiction.
TAX TREATMENT OF THE FUND
GENERAL. The Fund has elected, qualified, and intends to continue to qualify
each year for treatment as a regulated investment company under the Code
("RIC"). For each taxable year that it so qualifies, the Fund (but not its
shareholders) will be relieved of federal income tax on the part of its
investment company taxable income (consisting generally of net investment
income, net short-term capital gain and net gains from certain foreign currency
transactions) and net capital gain (the excess of net long-term capital gain
over net short-term capital loss) that it distributes to its shareholders.
To qualify for treatment as a RIC, the Fund must distribute to its shareholders
for each taxable year at least 90% of its investment company taxable income
("Distribution Requirement") and must meet several additional requirements.
These requirements include the following: (1) the Fund must derive at least 90%
of its gross income each taxable year from dividends, interest, payments with
respect to securities loans and gains from the sale or other disposition of
securities or foreign currencies, or other income (including gains from options,
futures or forward contracts) derived with respect to its business of investing
in securities or those currencies ("Income Requirement"); (2) at the close of
each quarter of the Fund's taxable year, at least 50% of the value of its total
assets must be represented by cash and cash items, U.S. government securities,
securities of other RICs and other securities that are limited, in respect of
any one issuer, to an amount that does not exceed 5% of the value of the Fund's
total assets and that does not represent more than 10% of the issuer's
outstanding voting securities; and (3) at the close of each quarter of the
Fund's taxable year, not more than 25% of the value of its total assets may be
21
<PAGE>
invested in securities of any one issuer (other than U.S. government securities
or the securities of other RICs). If the Fund failed to qualify for treatment as
a RIC for any taxable year, it would be taxed as an ordinary corporation on the
full amount of its taxable income for that year (even if that income was
distributed to its shareholders) and all distributions out of its earnings and
profits, including distributions of net capital gain, would be taxable to its
shareholders as dividends (I.E., ordinary income). In addition, the Fund could
be required to recognize unrealized gains, pay substantial taxes and interest
and make substantial distributions before requalifying for RIC treatment.
The Fund will be subject to a non-deductible 4% excise tax ("Excise Tax") to the
extent it fails to distribute by the end of any calendar year substantially all
of its ordinary income for that year and capital gain net income for the
one-year period ending on October 31st of that year, plus certain other amounts.
For these purposes, any such income retained by the Fund, and on which it pays
federal income tax, will be treated as having been distributed.
FOREIGN SECURITIES. The Fund may invest in the stock of "passive foreign
investment companies" ("PFICs"). A PFIC is any foreign corporation (with certain
exceptions) that, in general, meets either of the following tests: (1) at least
75% of its gross income is passive income or (2) an average of at least 50% of
its assets produce, or are held for the production of, passive income. Under
certain circumstances, the Fund will be subject to federal income tax on a
portion of any "excess distribution" received on the stock of a PFIC or of any
gain on disposition of the stock (collectively "PFIC income"), plus interest
thereon, even if the Fund distributes the PFIC income as a dividend to its
shareholders. The balance of the PFIC income will be included in the Fund's
investment company taxable income and, accordingly, will not be taxable to it to
the extent it distributes that income to its shareholders.
In lieu of the foregoing tax and interest obligation, the Fund may, and intends
to, elect to "mark to market" its stock in any PFIC. "Marking-to-market," in
this context, means including in ordinary income each taxable year the excess,
if any, of the fair market value of the stock over the Fund's adjusted basis
therein as of the end of that year. Pursuant to the election, the Fund also
would be allowed to deduct (as an ordinary, not capital, loss) the excess, if
any, of its adjusted basis in PFIC stock over the fair market value thereof as
of the taxable year-end, but only to the extent of any net mark-to-market gains
with respect to that stock included in income by the Fund for prior taxable
years under the election (and under regulations proposed in 1992 that provided a
similar election with respect to the stock of certain PFICs). The Fund's
adjusted basis in each PFIC's stock subject to the election would be adjusted to
reflect the amounts of income included and deductions taken thereunder.
Gains from the disposition of foreign currencies will be treated as qualifying
income under the Income Requirement. Gains or losses (1) from the disposition of
foreign currencies, including forward contracts, (2) on the disposition of a
foreign-currency-denominated debt security that are attributable to fluctuations
in the value of the foreign currency between the dates of acquisition and
disposition of the security and (3) that are attributable to exchange rate
fluctuations between the time the Fund accrues interest, dividends or other
receivables, or accrues expenses or other liabilities, denominated in a foreign
currency and the time the Fund actually collects the receivables or pays the
liabilities, generally are treated as ordinary income or loss. These gains,
referred to under the Code as "section 988" gains or losses, increase or
decrease the amount of the Fund's investment company taxable income available to
be distributed to its shareholders as ordinary income, rather than increasing or
decreasing the amount of its net capital gain. In the case of overlap between
sections 988 and 1256 (see below under "Derivatives"), special provisions
determine the character and timing of any income, gain or loss.
Income received by the Fund from investments in Foreign Securities, and gains it
derives from the disposition thereof, may be subject to income, withholding or
other taxes imposed by foreign countries and U.S. possessions that would reduce
22
<PAGE>
the total return on its investments. Tax conventions between certain countries
and the United States may reduce or eliminate those taxes, however, and many
foreign countries do not impose taxes on capital gains in respect of investments
by foreign investors. Foreign taxes withheld from or paid by the Fund will be
treated as a Fund expense unless it meets the requirements, and makes an
election, to enable it, in effect, to pass these taxes through to its
shareholders for use by them as a foreign tax credit or deduction. Each
shareholder will be notified annually whether the foreign taxes paid by the Fund
will "pass through" for that year and, if so, the shareholder's portion of (1)
the foreign taxes paid by the Fund and (2) dividends paid by the Fund that
represent income derived from foreign sources. Individuals who have no more than
$300 ($600 for married persons filing jointly) of creditable foreign taxes
included on Forms 1099 and all of whose foreign source income is "qualified
passive income" may elect each year to be exempt from the extremely complicated
foreign tax credit limitation, in which event they would be able to claim a
foreign tax credit without having to file the detailed IRS Form 1116 that
otherwise is required.
DERIVATIVES. The use of certain derivatives, such as selling (writing) and
purchasing options and futures and entering into forward contracts, involves
complex rules that will determine for federal income tax purposes the amount,
character and timing of recognition of the gains and losses the Fund realizes in
connection therewith. These rules also may require the Fund to "mark to market"
(that is, treat as sold for their fair market value) at the end of each taxable
year certain positions in its portfolio, which may cause the Fund to recognize
income or gain without receiving cash with which to make distributions necessary
to satisfy the Distribution Requirement and avoid imposition of the Excise Tax.
Gains from options, futures and forward contracts derived by the Fund with
respect to its business of investing in securities or foreign currencies will be
treated as qualifying income under the Income Requirement.
Certain futures and foreign currency contracts in which the Fund may invest may
be subject to section 1256 of the Code ("section 1256 contracts"). Any section
1256 contracts the Fund holds at the end of each taxable year (other than such
contracts that are part of a "mixed straddle" with respect to which the Fund has
elected not to have the following rules apply) generally must be
marked-to-market for federal income tax purposes. Sixty percent of any net gain
or loss recognized on these deemed sales, and 60% of any net realized gain or
loss from any actual sales of section 1256 contracts, will be treated as
long-term capital gain or loss, and the balance will be treated as short-term
capital gain or loss. These rules may operate to increase the amount that the
Fund must distribute to satisfy the Distribution Requirement (I.E., with respect
to the portion treated as short-term capital gain), which will be taxable to the
shareholders as ordinary income, to increase the net capital gain it recognizes,
and to increase the amount it must distribute to avoid Excise Tax without any
corresponding receipt of cash by the Fund. The Fund may elect to exclude certain
transactions from the operation of section 1256, although doing so may have the
effect of increasing the relative proportion of net short-term capital gain
(taxable as ordinary income) and thus increasing the amount of dividends that
must be distributed.
Gain or loss realized by the Fund on the expiration or sale of certain OTC put
and call options it holds will be either long-term or short-term capital gain or
loss, depending on its holding period for the option. However, gain or loss
realized on the expiration or closing out of such options that are written by
the Fund will be treated as short-term capital gain or loss. In general, if the
Fund exercises an option, or an option that the Fund has written is exercised,
gain or loss on the option will not be separately recognized, but the premium
received or paid will be included in the calculation of gain or loss on
disposition of the property underlying the option.
Offsetting positions in any actively traded security, option, futures or forward
contract entered into or held by the Fund may constitute a "straddle" for
federal income tax purposes. Straddles are subject to certain rules that may
affect the amount, character and timing of the Fund's gains and losses with
respect to positions of the straddle by requiring, among other things, that (1)
23
<PAGE>
loss realized on disposition of one position of a straddle be deferred to the
extent of any unrealized gain in an offsetting position until the latter
position is disposed of, (2) the Fund's holding period in certain straddle
positions not begin until the straddle is terminated (possibly resulting in gain
being treated as short-term rather than long-term capital gain) and (3) losses
recognized with respect to certain straddle positions, that otherwise would
constitute short-term capital losses, be treated as long-term capital losses.
Applicable regulations also provide certain "wash sale" rules, which apply to
transactions where a position is sold at a loss and a new offsetting position is
acquired within a prescribed period, and "short sale" rules applicable to
straddles. Different elections are available to the Fund, which may mitigate the
effects of the straddle rules, particularly with respect to any "mixed straddle"
(I.E., a straddle of which at least one, but not all, positions are section 1256
contracts).
If the Fund has an "appreciated financial position" -- generally, an interest
(including an interest through an option, futures or forward contract or short
sale) with respect to any stock, debt instrument (other than "straight debt") or
partnership interest the fair market value of which exceeds its adjusted basis
- -- and enters into a "constructive sale" of the position, the Fund will be
treated as having made an actual sale thereof, with the result that gain will be
recognized at that time. A constructive sale generally consists of a short sale,
an offsetting notional principal contract or a futures or forward contract
entered into by the Fund or a related person with respect to the same or
substantially identical property. In addition, if the appreciated financial
position is itself a short sale or such a contract, acquisition of the
underlying property or substantially identical property will be deemed a
constructive sale. The foregoing will not apply, however, to any transaction
during any taxable year that otherwise would be treated as a constructive sale
if the transaction is closed within 30 days after the end of that year and the
Fund holds the appreciated financial position unhedged for 60 days after that
closing (I.E., at no time during that 60-day period is the Fund's risk of loss
regarding that position reduced by reason of certain specified transactions with
respect to substantially identical or related property, such as having an option
to sell, being contractually obligated to sell, making a short sale or granting
an option to buy substantially identical stock or securities).
TAX TREATMENT OF SHAREHOLDERS
Dividends from the Fund's investment company taxable income (whether received in
cash or reinvested in additional Shares) generally are taxable to its
shareholders as ordinary income to the extent of its earnings and profits.
Distributions of the Fund's net capital gain (whether received in cash or
reinvested in additional Shares), when designated as capital gain distributions,
are taxable to its shareholders as long-term capital gain, regardless of how
long they have held their Shares. A participant in the Dividend Reinvestment and
Cash Purchase Plan ("Reinvestment Plan") will be treated as having received a
distribution in the amount of the cash used to purchase Shares on his or her
behalf, including a PRO RATA portion of the brokerage fees incurred by the agent
under the Reinvestment Plan. Distributions by the Fund to its shareholders in
any year that exceed its earnings and profits generally may be applied by each
shareholder against the basis for his or her Shares and will be taxable at
capital gains rates (assuming the Shares are held as a capital asset) to a
shareholder to the extent the distributions to the shareholder exceed the
shareholder's basis for his or her Shares. Shareholders who are not liable for
tax on their income and whose Shares are not debt-financed generally are not
required to pay tax on dividends or other distributions they receive from the
Fund.
A portion of the dividends from the Fund's investment company taxable income
(whether paid in cash or reinvested in additional Shares) may be eligible for
the dividends-received deduction allowed to corporations. The eligible portion
may not exceed the aggregate dividends the Fund receives from domestic
corporations. However, dividends received by a corporate shareholder and
deducted by it pursuant to the dividends-received deduction are subject
24
<PAGE>
indirectly to the federal alternative minimum tax. The Fund will notify
shareholders of the amount of any dividends that may be taken into account for
purposes of the dividends-received deduction not later than 60 days after the
close of its taxable year.
The Fund may retain its net capital gain for investment rather than distribute
it to shareholders as capital gain distributions. If the Fund does so, however,
it will be subject to a tax of 35% on the retained amount. In that event, the
Fund expects to designate the retained amount as undistributed capital gains in
a notice to its shareholders, who (1) will be required to include in their
taxable income, as long-term capital gain, their proportionate shares of the
retained amount, (2) will be entitled to credit their proportionate shares of
the tax paid by the Fund against their federal income tax liabilities and, for
any shareholder whose share of that tax exceeds his or her tax liabilities, to
claim a refund, and (3) will increase the tax basis of their Shares by the
difference between the included income and such share of the tax paid by the
Fund.
The Fund will notify its shareholders following the end of each calendar year of
the amounts of dividends and capital gain distributions paid (or deemed paid)
that year and undistributed capital gain designated for that year.
Investors should be aware that if Shares are purchased shortly before the record
date for any dividend or other distribution, they will pay full price for the
Shares and will receive some portion of the purchase price back as a taxable
distribution.
On the sale or exchange of Shares (including a sale pursuant to a Share
repurchase or tender offer by the Fund), a shareholder generally will recognize
a taxable gain or loss equal to the difference between his or her adjusted basis
for the Shares and the amount received. Any such gain or loss will be treated as
a capital gain or loss if the Shares are held by the shareholder as capital
assets and will be long-term capital gain or loss if the Shares have been held
for more than one year. Any loss recognized on a sale or exchange of Shares that
were held for six months or less will be treated as long-term, rather than
short-term, capital loss to the extent of any capital gain distributions
previously received thereon. A loss realized on a sale or exchange of Shares
will be disallowed to the extent those Shares are replaced by other Shares
within a period of 61 days beginning 30 days before and ending 30 days after the
date of disposition of the Shares (which could occur, for example, as a result
of participation in the Reinvestment Plan). In that event, the basis of the
replacement Shares will be adjusted to reflect the disallowed loss.
Net capital gain recognized by individuals and other non-corporate taxpayers on
the sale or exchange of capital assets held for one year or less, and all net
capital gain recognized by corporations, is taxed at the same rates as ordinary
income. The maximum tax rate applicable to non-corporate taxpayers' net capital
gain for capital assets held longer than one year is 20% (10% for taxpayers in
the 15% marginal tax bracket); this rate applies to capital gain distributions
by the Fund as well as to gains from sales and exchanges of Shares.
FINANCIAL STATEMENTS
PricewaterhouseCoopers LLP are the Fund's independent accountants providing
audit and tax return preparation services and assistance and consultation in
connection with the review of various SEC filings. The address of
PricewaterhouseCoopers LLP is 950 Seventeenth Street, Denver, Colorado, 80202.
The financial statements incorporated by reference in this SAI have been so
incorporated and the financial highlights included in the Prospectus have been
so included, in reliance upon the report of PricewaterhouseCoopers LLP given on
the authority of said firm as experts in accounting and auditing.
25
<PAGE>
INCORPORATION BY REFERENCE
The Fund's Annual Report for the fiscal year ended October 31, 1998 (the
"Report"), which either accompanies this SAI or has previously been provided to
the person to whom this SAI is being sent, is incorporated herein by reference
with respect to all information other than the information set forth in the
Letter to Shareholders included therein. The Fund will furnish, without charge,
a copy of its Report upon written request to INVESCO Global Health Sciences
Fund, 7800 East Union Avenue, Denver, Colorado 80237, or call 1-800-528-8765, or
visit our website at http://ghs.invesco.com.
26
<PAGE>
PART C OTHER INFORMATION
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS
1. Financial Statements
(a) Financial Highlights - Contained in Part A
(b) Incorporated in Part B by reference to Registrant's October 31, 1998
Annual Report:
1. Statement of Investments Securities as of October 31, 1998
2. Statement of Assets and Liabilities as of October 31, 1998
3. Statement of Operations for the year ended October 31, 1998
4. Statement of Cash Flows for the year ended October 31, 1998
5. Statements of Changes in Net Assets for the years ended October
31, 1998 and October 31, 1997
6. Notes to Financial Statements
7. Report of Independent Accountants dated December 8, 1998
8. Financial Highlights for each of the five years in the period
ended October 31, 1998
2. Exhibits
(a)(1) Declaration of Trust of the Registrant (1)
(a)(2) Amendment of the Declaration of Trust of the Registrant (1)
(b) By-Laws of the Registrant (1)
(c) Not Applicable
(d)(1) Specimen Certificate for Shares of Beneficial Interest of the
Registrant - Filed herewith
(d)(2) Form of Subscription Certificate - Filed herewith
(d)(3) Form of Notice of Guaranteed Delivery - Filed herewith
(d)(4) Form of Nominee Holder Over-Subscription Exercise Form - Filed
herewith
(e) Dividend Reinvestment and Cash Purchase Plan of the Registrant (1)
(f) Not Applicable
(g)(1) Investment Management Agreement between the Registrant and INVESCO
Funds Group, Inc. (1)
27
<PAGE>
(g)(2) Amendment to Investment Management Agreement (1)
(h) Underwriter Agreement between the Registrant and PaineWebber
Incorporated - Filed herewith
(i)(1) Deferred Fee Agreement (1)
(i)(2) Defined Benefit Deferred Compensation Plan for Non-Interested
Directors and Trustees (1)
(j)(1) Custody Agreement between the Registrant and State Street Bank and
Trust Company (1)
(j)(2) Special Custody Account Agreement between the Registrant and Bear
Stearns Securities Corporation (1)
(j)(3) Special Custody Account Agreement between the Registrant and Herzog,
Heine, Geduld (1)
(k)(1) Form of Agency Agreement between the Registrant and State Street
Bank and Trust Company (1)
(k)(2) Administration Agreement between the Registrant and INVESCO Funds
Group, Inc. (1)
(k)(3) Amendment to Administration Agreement (1)
(k)(4) Subscription Agreement with INVESCO Funds Group, Inc. - Filed
herewith
(l) Opinion and Consent of Kirkpatrick & Lockhart LLP - Filed herewith
(m) Not Applicable
(n) Consent of PricewaterhouseCoopers LLP - Filed herewith
(o) Not Applicable
(p) Not Applicable
(q) Not Applicable
(r) Not Applicable
(s) Powers of Attorney - Filed herewith
___________________
(1) Incorporated by reference from Registrant's Registration Statement (File
No. 33-75831) filed on April 7, 1999.
ITEM 25. MARKETING AGREEMENTS
See Form of Dealer Manager Agreement to be filed as Exhibit (h) to this
Registration Statement.
ITEM 26. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
Registration Fees.........................................35,000
Printing and Engraving Expenses...........................38,453
Rating Agency Fees and Expenses................................0
Trustees' Fees and Expenses....................................0
Legal Fees and Expenses..................................259,674
28
<PAGE>
New York Stock Exchange Listing Fees...........................0
National Association of Securities Dealers, Inc. Fees.....11,100
Accounting Fees and Expenses..............................17,500
Dealer Manager Expense Reimbursement.....................100,000
Subscription Agent Fees and Expenses......................70,334
Information Agent's Fees and Expenses.....................63,639
Federal Taxes..................................................0
State Taxes....................................................0
State Fees.....................................................0
Miscellaneous Expenses.........................................0
Total....................................................596,200
ITEM 27. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL
Not Applicable.
ITEM 28. NUMBER OF HOLDERS OF SECURITIES
TITLE OF CLASS AS OF APRIL 30, 1999
---------------------------- ------------------------
Shares of Beneficial Interest.....1687 RECORD HOLDERS
ITEM 29. INDEMNIFICATION
Section 5.3 of the Registrant's Declaration of Trust (Exhibit (a) hereto, which
is incorporated by reference herein) provides in effect that the Registrant will
indemnify its officers and Trustees under certain circumstances. However, in
accordance with Section 17(h) and 17(i) of the Investment Company Act of 1940
and its own terms, said Article of the Agreement and Declaration of Trust does
not protect any person against any liability to the Registrant or its
shareholders to which he would otherwise be subject by reason of bad faith,
willful misfeasance, gross negligence, or reckless disregard of the duties
involved in the conduct of his office.
Insofar as indemnification for liabilities arising under the Securities Act of
1933 may be permitted to Trustees, officers and controlling persons of the
Registrant, pursuant to the foregoing provisions or otherwise, the Registrant
has been advised that in the opinion of the SEC, such indemnification is against
public policy as expressed in the Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities (other than the
payment by the Registrant of expenses incurred or paid by a Trustee, officer or
controlling person of the Registrant in the successful defense of any action,
suit or proceeding) is asserted by such Trustee, officer or controlling person
in connection with the securities being registered, the Registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question as to
whether such indemnification by it is against public policy as expressed in the
Act and will be governed by the final adjudication of such issue.
ITEM 30. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT MANAGER
The description of the business of INVESCO Funds Group, Inc. is set forth under
the caption "Management of the Fund" in the Prospectus and SAI forming part of
this Registration Statement.
29
<PAGE>
The information as to the Directors and officers of INVESCO Funds Group, Inc.
set forth in INVESCO Funds Group's Form ADV filed with the Securities and
Exchange Commission (File No. 811-6476) as amended through the date hereof, is
incorporated herein by reference.
ITEM 31. LOCATION OF ACCOUNTS AND RECORDS
INVESCO Global Health Sciences Fund, 7800 East Union Avenue, Denver, Colorado
80237, or call 1-800-528-8765. Accounts and Records of the Fund are maintained
at (i) the Fund's office at 7800 East Union, Avenue, Denver, Colorado, 80237 and
(ii) the offices of INVESCO Funds Group, Inc. at 7800 East Union, Avenue,
Denver, Colorado, 80237.
In addition, EquiServe, Inc., 150 Royall Street, Canton, MA 02021 maintains all
the required records in its capacity as transfer, dividend paying, and
shareholder service agent of the Registrant.
ITEM 32. MANAGEMENT SERVICES
Not Applicable.
ITEM 33. UNDERTAKINGS
1. The Registrant undertakes to suspend the Offer until the Prospectus is
amended if (1) subsequent to the effective date of this registration statement,
the NAV declines more than ten percent from its NAV as of the effective date of
this registration statement or (2) the NAV of the Shares exercisable pursuant to
the Rights that are the subject of this registration statement increases to an
amount greater than the Proceeds as stated in the Prospectus included in this
registration statement.
2. Not Applicable.
3. Not Applicable.
4. Not Applicable.
5. The Registrant undertakes:
a. for the purpose of determining any liability under the Securities Act
of 1933, the information omitted from the form of prospectus filed as part
of this registration statement in reliance upon Rule 430A and contained in
a form of prospectus filed by the Registrant under Rule 497(h) under the
Securities Act of 1933 shall be deemed to be part of this registration
statement as of the time it was declared effective; and
b. for the purpose of determining any liability under the Securities Act,
each post-effective amendment that contains a form of prospectus shall be
deemed to be a new registration statement relating to the securities
offered therein, and the offering of the securities at that time shall be
deemed to be the initial bona fide offering thereof.
6. The Registrant undertakes to send by first class mail or other means
designed to ensure equally prompt delivery, within two Business Days of receipt
of a written or oral request, any SAI.
30
<PAGE>
SIGNATURES Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereto duly
authorized, in the City of Denver, State of Colorado on May 24, 1999.
INVESCO GLOBAL HEALTH SCIENCES FUND
By: /s/ Mark H. Williamson May 24, 1999
------------------------------------------
Mark H. Williamson DATE
President
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed below by the following persons in the capacities
indicated on the dates indicated. The undersigned hereby constitute and appoint
Glen A. Payne, James F. Lummanick, and Ronald L. Grooms, and each of them, with
full power to act without the other, his or her true and lawful attorney-in-fact
and agent, with full power and substitution and resubstitution, for him or her,
and in his or her name, place and stead, in any and all capacities (until
revoked in writing) to sign any and all amendments to the Registration Statement
of the INVESCO Global Health Sciences Fund (including post-effective amendments
thereto), and to file the same, with all exhibits thereto, and other documents
in connection therewith, with the SEC, granting unto said attorneys-in fact and
agents, and each of them, full power and authority to do and perform each and
every act and thing ratifying and confirming all that said attorneys-in fact and
agents or any of them, or their or his or her substitute or substitutes, may
lawfully do or cause to be done by virtue hereof.
By: /s/ Mark H. Williamson May 24, 1999
------------------------------------------
Principal Executive Officer DATE
Mark H. Williamson, President
By: /s/ Ronald L. Grooms May 24, 1999
------------------------------------------
Principal Financial Officer DATE
Ronald L. Grooms Vice President and Treasurer
By: /s/ John R. Schroer May 24, 1999
------------------------------------------
Vice President DATE
John R. Schroer
By: /s/ Glen A. Payne May 24, 1999
------------------------------------------
Secretary DATE
Glen A. Payne
By: * May 24, 1999
------------------------------------------
Trustee DATE
Charles W. Brady
31
<PAGE>
By: * May 24, 1999
------------------------------------------
Trustee DATE
Fred A. Deering
By: * May 24, 1999
------------------------------------------
Trustee DATE
John W. McIntyre
By: * May 24, 1999
------------------------------------------
Trustee DATE
Dr. Larry Soll
*By: /s/ Glen A. Payne May 24, 1999
-----------------------------------
Glen A. Payne DATE
Attorney in Fact for the Trustees
32
<PAGE>
INDEX OF EXHIBITS
(2)(a)(1) Declaration of Trust of the Registrant (1)
(2)(a)(2) Amendment to the Declaration of Trust of the Registrant (1)
(2)(b) By-Laws of the Registrant (1)
(2)(d)(1) Specimen Certificate for Shares of Beneficial Interest of The
Registrant - Filed herewith
(2)(d)(2) Form of Subscription Certificate - Filed herewith
(2)(d)(3) Form of Notice of Guaranteed Delivery - Filed herewith
(2)(d)(4) Form of Nominee Holder Over-Subscription Exercise Form - Filed
herewith
(2)(e) Dividend Reinvestment and Cash Purchase Plan of the Registrant (1)
(2)(g)(1) Investment Advisory Agreement between the Registrant and INVESCO
Fund Group, Inc. (1)
(2)(g)(2) Amendment to Investment Management Agreement (1)
(2)(h) Underwriter Agreement between the Registrant and PaineWebber
Incorporated - Filed herewith
(2)(i)(1) Deferred Fee Agreement (1)
(2)(i)(2) Defined Benefit Deferred Compensation Plan for Non-Interested
Directors and Trustees (1)
(2)(j)(1) Custody Agreement between the Registrant and State Street Bank and
Trust Company (1)
(2)(j)(2) Special Custody Account Agreement between the Registrant and Bear
Stearns Securities Corporation (1)
(2)(j)(3) Special Custody Account Agreement between the Registrant and Herzog,
Heine, Geduld (1)
(2)(k)(1) Form of Agency Agreeement between the Registrant and State Street Bank
and Trust Company (1)
(2)(k)(2) Administration Agreement between the Registrant and INVESCO Funds
Group, Inc. (1)
(2)(k)(3) Amendment to Administration Agreement (1)
(2)(k)(4) Subscription Agreement with INVESCO Funds Group, Inc.
- Filed herewith
(2)(l) Opinion and Consent of Kirkpatrick & Lockhart LLP - Filed herewith
(2)(n) Consent of PricewaterhouseCoopers LLP - Filed herewith
(2)(s) Power of Attorney - Filed herewith
_______________
(1) Incorporated by reference from Registrant's Registration Statement (File
No. 33-75831) filed on April 7, 1999.
[SPECIMEN]
SHARES OF BENEFICIAL INTEREST
PAR VALUE $.01
THIS CERTIFICATE IS TRANSFERABLE IN BOSTON, MASSACHUSETTS OR IN NEW YORK, NEW
YORK.
[GRAPHIC OMITTED]
SEE REVERSE SIDE FOR CERTAIN DEFINITIONS.
CUSIP 46128N 10 9
SEE REVERSE FOR CERTAIN DEFINITIONS
THE GLOBAL HEALTH SCIENCES FUND
ORGANIZED UNDER THE LAWS OF THE COMMONWEALTH OF MASSACHUSETTS
THIS CERTIFIES THAT ________________________
IS THE OWNER OF ________________________
FULLY PAID AND NON-ASSESSABLE SHARES OF BENEFICIAL INTEREST.
OF THE GLOBAL HEALTH SCIENCES FUND (HEREINAFTER CALLED THE FUND) TRANSFERABLE ON
THE BOOKS OF THE FUND BY THE HOLDER HEREOF, IN PERSON OR BY DULY AUTHORIZED
ATTORNEY, UPON SURRENDER OF THIS CERTIFICATE PROPERLY ENDORSED. THIS CERTIFICATE
AND THE SHARES REPRESENTED THEREBY ARE ISSUED AND SHALL BE HELD SUBJECT TO ALL
OF THE PROVISIONS OF THE DECLARATION OF TRUST AND THE BY-LAWS OF THE GLOBAL
HEALTH SERVICES FUND (A COPY OF EACH OF WHICH IS ON FILE AT THE PRINCIPAL
OFFICES OF THE FUND), AND ALL AMENDMENTS THERETO, TO ALL OF WHICH THE HOLDER BY
ACCEPTANCE HEREOF ASSENTS. THIS CERTIFICATE IS NOT VALID UNTIL COUNTERSIGNED AND
REGISTERED BY THE TRANSFER AGENT AND REGISTRAR. WITNESS THE SEAL OF THE FUND AND
THE SIGNATURES OF ITS DULY AUTHORIZED OFFICERS.
[THE NAME HAS BEEN CHANGED TO INVESCO GLOBAL HEALTH SCIENCES FUND]
DATED: _____________________
/S/ GLEN A. PAYNE
SECRETARY
/S/ JOHN J. [ILLEGIBLE]
PRESIDENT
[SEAL]
COUNTERSIGNED AND REGISTERED
BY: STATE STREET BANK & TRUST COMPANY
(BOSTON, MASSACHUSETTS)
TRANSFER AGENT AND REGISTRAR
____________________________
AUTHORIZED SIGNATURE
<PAGE>
THE GLOBAL HEALTH SCIENCES FUND
THE FOLLOWING ABBREVIATIONS, WHEN USED IN THE INSCRIPTION ON THE FACE OF
THIS CERTIFICATE, SHALL BE CONSTRUED AS THOUGH THEY WERE WRITTEN OUT IN FULL
ACCORDING TO APPLICABLE LAWS OR REGULATIONS.
TEN COM - as tenants in common
TEN ENT - as tenants by the entireties
JT TEN - as joint tenants with right of survivorship and not as tenants in
common
UNIF GIFT MIN ACT - Custodian
(Cust) (Minor)
under Uniform Gifts to Minors
Additional abbreviations may also be used though not in the above list.
For value received, _________________ hereby sell, assign and transfer unto
Please insert Social Security or Other Identifying Number of Assignee
__________________________
________________________________________________________________________________
Please print or typewrite name and address including postal zip code of assignee
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________ Shares
represented by the within Certificate, and do hereby irrevocably constitute and
appoint ________________________________________________________________________
Attorney to transfer the said shares on the books of the within-named Trust with
full power of substitution in the premises.
Dated, _________________
__________________________________________________
NOTICE: The signature to this assignment must correspond with the name as
written upon the face of the Certificate, in every particular, without
alteration or enlargement or any change whatever.
THE OFFER EXPIRES AT 5:00 P.M., EASTERN TIME, ON JUNE 18, 1999*
INVESCO GLOBAL HEALTH SCIENCES FUND
TO SUBSCRIBE FOR SHARES OF BENEFICIAL INTEREST
SUBSCRIPTION CERTIFICATE
INVESCO Global Health Sciences Fund (the "Fund") issued to its shareholders of
record (the "Record Date Shareholders"), as of the close of business on May 25,
1999 (the "Record Date"), non-transferable rights ("Rights") on the basis of one
Right for every five whole Shares held on the Record Date, generally entitling
the holders thereof to subscribe for shares of beneficial interest of the Fund
("Shares") at a rate of one Share for each one Right held. The terms and
conditions of the rights offer (the "Offer") are set forth in the Fund's
Prospectus, dated May 25, 1999 (the "Prospectus"), which is incorporated herein
by reference. The owner of this Subscription Certificate is entitled to the
number of Rights shown on this Subscription Certificate and is entitled to
subscribe for the number of Shares shown on this Subscription Certificate.
Record Date Shareholders who have fully exercised their Rights pursuant to the
Primary Subscription are entitled to subscribe for additional Shares pursuant to
the Over-Subscription Privilege, subject to certain limitations and allotment,
as described in the Prospectus. Capitalized terms not defined herein have the
meanings attributed to them in the Prospectus. The Fund will not offer or sell
in connection with the Offer any Shares which are not subscribed for pursuant to
the Primary Subscription or the Over-Subscription Privilege.
<TABLE>
<CAPTION>
SAMPLE CALCULATION
FOR A RECORD DATE SHAREHOLDER WHO OWNS 500 SHARES
- -------------------------------------------------------------------------------------------------------------
PRIMARY SUBSCRIPTION ENTITLEMENT (1-FOR-5)
<S> <C> <C>
No. of Shares owned on the Record Date 500 / 5 = 100 Rights (one Right for every five Shares)
No. of Rights issued on the Record Date 100 / 1 = 100 new Shares (if the Rights are fully exercised in the
Primary Subscription)
- -------------------------------------------------------------------------------------------------------------
</TABLE>
THE RIGHTS ARE NON-TRANSFERABLE
The Rights are non-transferable, and therefore may not be transferred or sold.
The Rights will not be admitted for trading on the New York Stock Exchange (the
"NYSE") or any other stock exchange. The shares provided to Record Date
Shareholders who exercise their Rights will be listed for trading on the NYSE
under the symbol "GHS."
ESTIMATED SUBSCRIPTION PRICE
The Estimated Subscription Price is ______ per Share.
FINAL SUBSCRIPTION PRICE
The Final Subscription Price per Share will be 95% of the lower of: (1) the
average of the last reported sales price per Share on the NYSE on the Expiration
Date of the Offer and on the preceding four business days, (i.e., the average of
the closing prices on the NYSE on June 14, 15, 16, 17, and 18); or (2) the last
reported net asset value per Share on the Expiration Date.
METHOD OF EXERCISE OF RIGHTS
IN ORDER TO EXERCISE YOUR RIGHTS, YOU MUST EITHER (i) COMPLETE AND SIGN THIS
SUBSCRIPTION CERTIFICATE ON THE BACK AND RETURN IT IN THE ENVELOPE PROVIDED
TOGETHER WITH PAYMENT OF AN AMOUNT EQUAL TO THE ESTIMATED SUBSCRIPTION PRICE
MULTIPLIED BY THE TOTAL NUMBER OF SHARES FOR WHICH YOU HAVE SUBSCRIBED AND ARE
ISSUED (INCLUDING PURSUANT TO THE OVER-SUBSCRIPTION PRIVILEGE), OR (ii) PRESENT
A PROPERLY COMPLETED NOTICE OF GUARANTEED DELIVERY, IN EITHER CASE TO THE
SUBSCRIPTION AGENT, EQUISERVE, INC., BEFORE 5:00 P.M., EASTERN TIME, ON JUNE 18,
1999, OR SUCH LATER DATE AS MAY BE DETERMINED BY THE FUND ("EXPIRATION DATE").
Full payment of the Estimated Subscription Price per Share for all Shares
subscribed for pursuant to both the Primary Subscription and the
Over-Subscription Privilege must accompany this Subscription Certificate and
must be made payable in United States dollars by money order or check drawn on a
bank or branch located in the United States payable to Equiserve, Inc. No
third-party checks will be accepted. Because uncertified personal checks may
take at least five business days to clear, we recommend you pay, or arrange for
payment, by means of certified or cashier's check or money order. Alternatively,
if a Notice of Guaranteed Delivery is used, a properly completed and executed
Subscription Certificate, and full payment, as described in such Notice, must be
received by the Subscription Agent no later than 5:00 P.M., Eastern Time, on the
third business day after the Expiration Date, June 23, 1999, unless the offer is
extended by the Fund. For additional information, see the Prospectus.
<PAGE>
Certificates for the Shares acquired pursuant to both the Primary Subscription
and the Over-Subscription Privilege will be mailed promptly after the expiration
of the Offer and full payment for the Shares subscribed for has been received
and cleared. Because shareholders must only pay the Estimated Subscription Price
per Share to exercise their Rights pursuant to this Offer, and the Final
Subscription Price may be higher or lower than the Estimated Subscription Price
(and because a shareholder may not receive all the Shares for which it
subscribes pursuant to the Over-Subscription Privilege), shareholders may
receive a refund or be required to pay an additional amount equal to: the
difference between the Estimated Subscription Price and the Final Subscription
Price, multiplied by the total number of Shares for which they have subscribed
and been issued (including pursuant to the Over-Subscription Privilege). Any
excess payment to be refunded by the Fund to a shareholder will be mailed by the
Subscription Agent to such shareholder as promptly as practicable. Any
additional amounts due from shareholders (in the event the Final Subscription
Price exceeds the Estimated Subscription Price) must be received within eight
(8) business days after the Confirmation Date, July 12, 1999, unless the offer
is extended by the Fund.
*UNLESS EXTENDED BY THE FUND
Account #:
Control #:
CUSIP #: ___________
NUMBER OF RIGHTS ISSUED:
<PAGE>
- --------------------------------------------------------------------------------
PLEASE PRINT ALL INFORMATION CLEARLY AND LEGIBLY
- --------------------------------------------------------------------------------
SECTION 1: OFFERING INSTRUCTIONS (CHECK THE APPROPRIATE BOXES)
IF YOU WISH TO SUBSCRIBE FOR YOUR FULL ENTITLEMENT:
|_| I apply for ALL of my entitlement of new Shares pursuant to the Primary
Subscription
__________________________ x $____________ = $_____________________
(no. of new Shares) (per share)*
|_| In addition, I apply for new Shares pursuant to the Over-Subscription
Privilege**
__________________________ x $____________ = $_____________________
(no. of additional Shares) (per share)*
IF YOU DO NOT WISH TO APPLY FOR YOUR FULL ENTITLEMENT:
|_| I apply for _____________________ x $____________ = $____________
(no. of new Shares) (per share)*
Amount of check enclosed $_______________.___
IF YOU DO NOT WISH TO EXERCISE YOUR RIGHT TO SUBSCRIBE:
Please disregard this mailing.
- --------------------------------------------------------------------------------
SECTION 2: SUBSCRIPTION AUTHORIZATION:
I acknowledge that I have received the Prospectus for this Offer and I
hereby irrevocably subscribe for the number of Shares indicated above on the
terms and conditions specified in the Prospectus relating to the Primary
Subscription and the Over-Subscription Privilege. I understand and agree that I
will be obligated to pay an additional amount to the Fund if the Subscription
Price as determined on the Expiration Date is in excess of the $_____ Estimated
Subscription Price per Share.
I hereby agree that if I fail to pay in full for the Shares for which I
have subscribed, the Fund may exercise any of the remedies set forth for in the
Prospectus.
Signature of Subscriber(s)
________________________________________________________________________________
(and address if different than that listed on this Subscription Certificate***)
________________________________________________________________________________
________________________________________________________________________________
Telephone number (including area code)
________________________________________________________________________________
*** If you wish to have your Shares and refund check (if any) delivered to an
address other than that listed on this Subscription Certificate you must have
your signature guaranteed. Appropriate signature guarantors include: banks and
savings associations, credit unions, member firms of a national securities
exchange, municipal securities dealers and government securities dealers. Please
provide the delivery address above and note if it is a permanent change.
________________________________________________________________________________
SECTION 3: DESIGNATION OF BROKER-DEALER
The following broker-dealer is hereby designated as having been instrumental in
the exercise of the Rights hereby exercised:
FIRM:_______________________________________________________________
REPRESENTATIVE NAME:________________________________________________
REPRESENTATIVE NUMBER:______________________________________________
________________________________________________________________________________
* $____ per share is an estimated price only. The Final Subscription
Price will be determined on the Expiration Date, and could be higher or
lower depending on any changes in the net asset value and market price
of the Shares.
** You can participate in the Over-Subscription Privilege only if you have
subscribed for your full entitlement of new shares pursuant to the
Primary Subscription.
<PAGE>
Please complete all applicable information and return to:
EQUISERVE, INC.
<TABLE>
<CAPTION>
<S> <C> <C>
- --------------------------------------------------------------------------------------------------------------------
BY FIRST CLASS MAIL BY HAND BY EXPRESS MAIL OR OVERNIGHT COURIER
- ------------------- ------- ------------------------------------
STATE STREET BANK & TRUST COMPANY SECURITIES TRANSFER & REPORTING STATE STREET BANK & TRUST COMPANY
CORPORATE REORGANIZATION SERVICES, INC. CORPORATE REORGANIZATION
P.O. BOX 9573 100 WILLIAM STREET GALLERIA 40 CAMPANELLI DRIVE
BOSTON, MA 02205-9573 NEW YORK, NY 10038 BRAINTREE, MA 02184
U.S.A. U.S.A. U.S.A.
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
DELIVERY OF THIS SUBSCRIPTION CERTIFICATE TO AN ADDRESS OTHER THAN AS SET
FORTH ABOVE DOES NOT CONSTITUTE A VALID DELIVERY.
ANY QUESTIONS REGARDING THIS SUBSCRIPTION CERTIFICATE AND THE OFFER MAY BE
DIRECTED TO THE INFORMATION AGENT, SHAREHOLDER COMMUNICATIONS CORPORATION,
TOLL FREE AT (800) 722-4072.
<PAGE>
INSTRUCTIONS FOR COMPLETING THE SUBSCRIPTION CERTIFICATE
INVESCO GLOBAL HEALTH SCIENCES FUND
The enclosed Subscription Certificate contains the number of Rights
held by the registered holder of such Rights (the "Rights Holder"). The Rights
Holder has been issued one (1) Right for every five (5) shares of beneficial
interest ("Share") of the INVESCO Global Health Sciences Fund (the "Fund"). The
Rights Holder is entitled to acquire one (1) Share for every one (1) Right held
(except that a Rights Holder who holds less than one (1) Right is entitled to
acquire one (1) Share).
To subscribe for Shares, the Rights Holder must present to Equiserve,
Inc. (the "Subscription Agent"), prior to 5:00 p.m., Eastern time, on the
Expiration Date, either:
(1) a properly completed and executed Subscription Certificate and a
money order or check drawn on a bank or branch of a bank located in the
United States of America and payable to EquiServe, Inc. for an amount
equal to the number of Shares subscribed for under the Primary
Subscription (and, if such Rights Holder is electing to exercise the
Over-Subscription Privilege, under the Over-Subscription Privilege)
multiplied by the Estimated Subscription Price; or
(2) a Notice of Guaranteed Delivery guaranteeing delivery of (i) a
properly completed and executed Subscription Certificate and (ii) a
money order or check drawn on a bank or branch of a bank located in the
United States of America and payable to EquiServe, Inc. for an amount
equal to the number of Shares subscribed for under the Primary
Subscription (and, if such Rights Holder is electing to exercise the
Over-Subscription Privilege, under the Over-Subscription Privilege)
multiplied by the Estimated Subscription Price (which certificate and
money order or check must then be delivered on or before the third
business day after the Expiration Date).
If the Rights Holder desires to subscribe for additional Shares
pursuant to the Over-Subscription Privilege, Section 1 of the Subscription
Certificate must be completed to indicate the maximum number of Shares for which
such privilege is being exercised. A Rights Holder may not receive the entire
number of Shares for which it subscribes pursuant to the Over-Subscription
Privilege.
On a date within eight (8) business days following the Expiration Date
(the "Confirmation Date"), June 30, 1999, unless the offer is extended by the
Fund, subscribers will be notified as to (i) the number of Shares purchased
under the Primary Subscription and, if applicable, the Over-Subscription
Privilege, and (ii) any additional amount payable by subscribers to the Fund or
any excess to be refunded by the Fund to such subscribers, in each case, based
on the Final Subscription Price as determined on the Expiration Date. The Rights
Holder should note that the amount payable for the Shares subscribed for
pursuant to the Subscription Certificate may be more than the Estimated
Subscription Price and that additional amounts in respect of the Subscription
Price may be payable following the Expiration Date. Any additional payment
required from subscribers must be received by the Subscription Agent within
eight (8) business days after the Confirmation Date, July 12, 1999, unless the
offer is extended by the Fund.
If the Rights Holder does not make timely payment of any amounts due in
respect of Shares subscribed for pursuant to the Primary Subscription or the
Over-Subscription Privilege, the Subscription Agent and the Fund reserves the
right to (i) sell such subscribed and unpaid-for Shares to other Record Date
Shareholders, (ii) apply any payment actually received toward the purchase of
the greatest whole number of Shares that could be acquired by such shareholder
upon the exercise of the Primary Subscription and/or Over-Subscription
Privilege, and/or (iii) exercise any and all other rights or remedies to which
the Fund may be entitled.
Capitalized terms used but not defined in the Subscription Certificate
shall have the meanings assigned to them in the Prospectus, dated May 25, 1999,
relating to the Offer.
ANY QUESTIONS REGARDING THE SUBSCRIPTION CERTIFICATE AND THE OFFER MAY
BE DIRECTED TO THE FUND'S INFORMATION AGENT, SHAREHOLDER COMMUNICATIONS
CORPORATION, TOLL FREE AT (800) 722-4072.
<PAGE>
INSTRUCTIONS FOR COMPLETING THE SUBSCRIPTION CERTIFICATE
INVESCO GLOBAL HEALTH SCIENCES FUND
The enclosed Subscription Certificate contains the number of Rights held
by the registered holder of such Rights (the "Rights Holder"). The Rights Holder
has been issued one (1) Right for every five (5) shares of beneficial interest
("Share") of the INVESCO Global Health Sciences Fund (the "Fund"). The Rights
Holder is entitled to acquire one (1) Share for every one (1) Right held (except
that a Rights Holder who holds less than one (1) Right is entitled to acquire
one (1) Share).
To subscribe for Shares, the Rights Holder must present to Equiserve, Inc.
(the "Subscription Agent"), prior to 5:00 p.m., Eastern time, on the Expiration
Date, either:
(1) a properly completed and executed Subscription Certificate and a money
order or check drawn on a bank or branch of a bank located in the United
States of America and payable to EquiServe, Inc. for an amount equal to
the number of Shares subscribed for under the Primary Subscription (and,
if such Rights Holder is electing to exercise the Over-Subscription
Privilege, under the Over-Subscription Privilege) multiplied by the
Estimated Subscription Price; or
(2) a Notice of Guaranteed Delivery guaranteeing delivery of (i) a
properly completed and executed Subscription Certificate and (ii) a money
order or check drawn on a bank or branch of a bank located in the United
States of America and payable to EquiServe, Inc. for an amount equal to
the number of Shares subscribed for under the Primary Subscription (and,
if such Rights Holder is electing to exercise the Over-Subscription
Privilege, under the Over-Subscription Privilege) multiplied by the
Estimated Subscription Price (which certificate and money order or check
must then be delivered on or before the third business day after the
Expiration Date).
If the Rights Holder desires to subscribe for additional Shares pursuant
to the Over-Subscription Privilege, Section 1 of the Subscription Certificate
must be completed to indicate the maximum number of Shares for which such
privilege is being exercised. A Rights Holder may not receive the entire number
of Shares for which it subscribes pursuant to the Over-Subscription Privilege.
On a date within eight (8) business days following the Expiration Date
(the "Confirmation Date"), June 30, 1999, unless the offer is extended by the
Fund, subscribers will be notified as to (i) the number of Shares purchased
under the Primary Subscription and, if applicable, the Over-Subscription
Privilege, and (ii) any additional amount payable by subscribers to the Fund or
any excess to be refunded by the Fund to such subscribers, in each case, based
on the Final Subscription Price as determined on the Expiration Date. The Rights
Holder should note that the amount payable for the Shares subscribed for
pursuant to the Subscription Certificate may be more than the Estimated
Subscription Price and that additional amounts in respect of the Subscription
Price may be payable following the Expiration Date. Any additional payment
required from subscribers must be received by the Subscription Agent within
eight (8) business days after the Confirmation Date, July 12, 1999, unless the
offer is extended by the Fund.
If the Rights Holder does not make timely payment of any amounts due in
respect of Shares subscribed for pursuant to the Primary Subscription or the
Over-Subscription Privilege, the Subscription Agent and the Fund reserves the
right to (i) sell such subscribed and unpaid-for Shares to other Record Date
Shareholders, (ii) apply any payment actually received toward the purchase of
the greatest whole number of Shares that could be acquired by such shareholder
upon the exercise of the Primary Subscription and/or Over-Subscription
Privilege, and/or (iii) exercise any and all other rights or remedies to which
the Fund may be entitled.
Capitalized terms used but not defined in the Subscription Certificate
shall have the meanings assigned to them in the Prospectus, dated May 25, 1999,
relating to the Offer.
ANY QUESTIONS REGARDING THE SUBSCRIPTION CERTIFICATE AND THE OFFER MAY BE
DIRECTED TO THE FUND'S INFORMATION AGENT, SHAREHOLDER COMMUNICATIONS
CORPORATION, TOLL FREE AT (800) 722-4072.
FORM OF NOTICE OF GUARANTEED DELIVERY
FOR SHARES OF BENEFICIAL INTEREST OF
INVESCO GLOBAL HEALTH SCIENCES FUND
------------------
THIS FORM IS TO BE USED ONLY BY NEW YORK STOCK EXCHANGE MEMBER FIRMS, BANKS,
OR TRUST COMPANIES, AS NOMINEE HOLDERS OF RIGHTS.
-------------------
INVESCO Global Health Sciences Fund (the "Fund") issued to its shareholders of
record, as of the close of business on May 25, 1999 (the "Record Date"),
non-transferable rights ("Rights") in the ratio of one Right for every five
whole shares held on the Record Date, generally entitling the holders thereof to
subscribe for one share ("Shares") of beneficial interest of the Fund for each
Right held. The terms and conditions of the rights offer (the "Offer") are set
forth in the Fund's Prospectus, dated May 25, 1999 (the "Prospectus"), which is
incorporated herein by reference. As set forth in the Prospectus under the
heading "The Offer--Payment for Shares," this form or one substantially
equivalent hereto may be used as a means of effecting the subscription and
payment for all Shares subscribed for pursuant to the Primary Subscription and
the Over-Subscription Privilege, as such terms are defined in the Prospectus.
This form may be delivered by hand or sent by facsimile transmission, overnight
courier or mail to the Subscription Agent.
The Subscription Agent is:
EQUISERVE, INC.
<TABLE>
<CAPTION>
<S> <C> <C>
BY FIRST CLASS MAIL BY HAND BY EXPRESS MAIL OR OVERNIGHT COURIER
EQUISERVE, INC. EQUISERVE, INC. EQUISERVE, INC.
C/O STATE STREET BANK & TRUST C/O SECURITIES TRANSFER & REPORTING C/O STATE STREET BANK & TRUST
COMPANY SERVICES, INC. COMPANY
CORPORATE ACTIONS 100 WILLIAM STREET GALLERIA CORPORATE ACTIONS
P.O. BOX 9573 NEW YORK, NY 10038 40 CAMPANELLI DRIVE
BOSTON, MA 02205-9573 U.S.A. BRAINTREE, MA 02184
U.S.A. U.S.A.
</TABLE>
BY FACSIMILE
(781) 575-4826
CONFIRMED BY TELEPHONE TO:
(781) 575-4816
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN AS
SET FORTH ABOVE DOES NOT CONSTITUTE A VALID DELIVERY.
The bank, trust company or New York Stock Exchange member firm, or
other nominee holder that completes this form must communicate the guarantee and
the number of Shares subscribed for (pursuant to both the Primary Subscription
and the Over-Subscription Privilege) to the Subscription Agent and must deliver
this Notice of Guaranteed Delivery to the Subscription Agent prior to 5:00 p.m.,
Eastern time, on the Expiration Date, June 18, 1999, unless the offer is
extended. This Notice of Guaranteed Delivery guarantees delivery to the
Subscription Agent of (i) a properly completed and executed Subscription
Certificate and (ii) delivery of payment in full of the Estimated Subscription
Price for all subscribed Shares and payment in full of any additional amount
required to be paid if the Subscription Price as determined on the Expiration
Date is in excess of the Estimated Subscription Price (which payment, if any,
must then be delivered no later than the close of business on July 12, 1999, the
eighth business day after the Confirmation Date of June 30, 1999, unless the
offer is extended). Failure to deliver this Notice or to make the delivery
Guaranteed herein will result in a forfeiture of the Rights.
GUARANTEE
The Undersigned, a bank or trust company having an office or
correspondent in the United States, or a New York Stock Exchange member firm,
hereby guarantees delivery to the Subscription Agent of (a) by 5:00 p.m.,
Eastern time on the third business day after the Expiration Date (i) a properly
completed and executed Subscription Certificate and (ii) payment of the full
Estimated Subscription Price for Shares subscribed for pursuant to the Primary
Subscription and, if applicable, the Over-Subscription Privilege, as such
subscription for Shares is indicated herein and in the Subscription Certificate
and (b) by no later than 5:00 p.m., Eastern time, on July 12, 1999, the eighth
business day after the Confirmation Date of June 30, 1999, unless the offer is
extended, of any additional amount required to be paid if the Subscription Price
as determined on the Expiration Date is in excess of the Estimated Subscription
Price.
<PAGE>
Broker Assigned Control # _______
INVESCO GLOBAL HEALTH SCIENCES FUND
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Primary Subscription Number of Rights to Number of Shares subscribed Payment to be made in
be exercised for pursuant to the Primary connection with Shares
Subscription for which you subscribed for pursuant to
are guaranteeing delivery the Primary Subscription at
of Rights and Payment Estimated Subscription Price.
_________Rights = _________ Shares $___________
Over-Subscription Number of Shares subscribed Payment to be made in
for pursuant to the connection with Shares
Over-Subscription Privilege subscribed for pursuant to the
for which you are Over-Subscription Privilege at
guaranteeing payment the Estimated Subscription
Price
_________ Shares $___________
Totals Total Number of Total number of Shares Total Payment
Rights to be requested
delivered
_________Rights _________Shares $__________
</TABLE>
Method of delivery (circle one)
A. Through The Depository Trust Company ("DTC")
B. Direct to Equiserve, Inc., as Subscription Agent. Please indicate below
how the Rights to be delivered should be registered.
-----------------------
-----------------------
-----------------------
PLEASE ASSIGN A UNIQUE CONTROL NUMBER FOR EACH GUARANTEE SUBMITTED. This number
needs to be referenced on any direct delivery of Rights or any delivery through
DTC. In addition, please note that if you are guaranteeing for Shares subscribed
for pursuant to the Over-Subscription Privilege and are a DTC participant, you
must also execute and forward to Equiserve, Inc. a Nominee Holder
Over-Subscription Form.
- --------------------------------- ----------------------------------------
Name of Firm Authorized Signature
- --------------------------------- ----------------------------------------
DTC Participant Number Title
- --------------------------------- ----------------------------------------
Address Name (Please Type or Print)
- --------------------------------- ----------------------------------------
Zip Code Phone Number
- --------------------------------- ----------------------------------------
Contact Name Date
<PAGE>
NOTICE OF GUARANTEED DELIVERY INSTRUCTIONS
A Notice of Guaranteed Delivery may be submitted if the Notice is
received by the Subscription Agent by 5:00 p.m., Eastern Time, on the Expiration
Date or as directed in the Prospectus.
BROKER ASSIGNED CONTROL NUMBER:
In order to properly track incoming guarantees on the Expiration Date,
we are requiring that each guarantee submitted be assigned a unique control
number. Each person in the Reorganization Department of a securities broker
should assign his or her own unique number (e.g. the sixth item delivered by
Paul in the Reorganization Department at XYZ Securities, could have a control
number of XYZPaul6). It is the individual firm's responsibility to ensure that
the control numbers are not duplicated as the firm will be held responsible for
any losses incurred due to duplication.
ITEM 1. THE PRIMARY SUBSCRIPTION
Indicate the Rights exercised and Shares requested with the
corresponding dollar amount. Please note, by completing Item 1 you are
exercising Primary Subscription Rights. If the Rights had previously been
exercised through DTC do not complete this portion.
ITEM 2. THE OVER-SUBSCRIPTION PRIVILEGE
Indicate the Shares requested and the corresponding dollar amount.
ITEM 3. TOTALS
Total the Rights and payment which the Subscription Agent will receive
from you on the designated dates.
METHOD OF DELIVERY
Indicate how the Rights will be delivered to the Subscription Agent. If
Subscription Certificates are to be delivered directly to the Subscription
Agent, please provide the registration of such Certificates.
NOMINEE HOLDER OVER-SUBSCRIPTION FORM
INVESCO GLOBAL HEALTH SCIENCES FUND
RIGHTS OFFERING
THIS FORM IS TO BE USED ONLY BY NOMINEES TO EXERCISE THE
OVER-SUBSCRIPTION PRIVILEGE, AS ISSUED BY INVESCO GLOBAL HEALTH SCIENCES FUND
(THE "FUND"), FOR THE ACCOUNT OR ACCOUNTS OF PERSONS ON WHOSE BEHALF ALL PRIMARY
SUBSCRIPTION RIGHTS ("PRIMARY SUBSCRIPTION RIGHTS") HAVE BEEN EXERCISED AND
DELIVERED THROUGH THE FACILITIES OF THE DEPOSITORY TRUST COMPANY. ALL OTHER
EXERCISES OF OVER-SUBSCRIPTION PRIVILEGES MUST BE EFFECTED BY THE DELIVERY OF
THE SUBSCRIPTION CERTIFICATES.
--------------------
THE TERMS AND CONDITIONS OF THE RIGHTS OFFERING ARE SET FORTH IN THE
FUND'S PROSPECTUS, DATED MAY 25, 1999 (THE "PROSPECTUS"), AND ARE INCORPORATED
HEREIN BY REFERENCE. COPIES OF THE PROSPECTUS ARE AVAILABLE UPON REQUEST FROM
SHAREHOLDER COMMUNICATIONS CORPORATION, THE FUND'S INFORMATION AGENT, AT (800)
722-4072.
--------------------
THIS FORM WILL BE DEEMED TO BE VOID UNLESS RECEIVED BY EQUISERVE, INC.
(THE "SUBSCRIPTION AGENT"), BY 5:00 P.M., EASTERN TIME, ON JUNE 18, 1999, OR
SUCH LATER DATE AS MAY BE DETERMINED BY THE FUND (THE "EXPIRATION DATE").
Please complete all applicable information and return to:
<TABLE>
<CAPTION>
EQUISERVE, INC.
By First Class Mail: By Hand: By Overnight Courier:
------------------- ------- --------------------
<S> <C> <C>
State Street Bank & Trust Securities Transfer & Reporting State Street Bank & Trust
Company Services, Inc. Company
Corporate Reorganization c/o EquiServe Corporate Reorganization
P.O. Box 9573 100 William Street Galleria 40 Campanelli Drive
Boston, MA 02205-9573 New York, NY 10038 Braintree, MA 02184
</TABLE>
By Facsimile:
(781) 575-4826
Confirmed by Telephone to:
(781) 575-4816
1. The undersigned hereby certifies to the Fund and the Subscription
Agent that it is a participant in The Depository Trust Company ("DTC") and that
it has either (i) exercised the Primary Subscription Rights in full and
delivered such exercised Primary Subscription Rights to the Subscription Agent
by means of transfer to the DTC account of the Subscription Agent or (ii)
delivered to the Subscription Agent a Notice of Guaranteed Delivery in respect
of the exercise of the Primary Subscription Rights and will deliver the Rights
called for in such Notice of Guaranteed Delivery to the Subscription Agent by
means of transfer to the DTC account of the Subscription Agent.
<PAGE>
2. The undersigned hereby exercises the Over-Subscription Privilege to
purchase, to the extent available, ________ shares of beneficial ownership
("Shares") of the Fund and certifies to the Fund and the Subscription Agent that
such Over-Subscription Privilege is being exercised for the account or accounts
of persons (which may include the undersigned) on whose behalf all Primary
Subscription Rights have been exercised.*
3. The undersigned hereby agrees to make payment of the estimated
subscription price ("Estimated Subscription Price") of $_________ per share for
each Share subscribed for pursuant to the Over-Subscription Privilege to the
Subscription Agent at or before 5:00 p.m., Eastern Time, on the Expiration Date
and hereby represents that (check appropriate box)**:
[ ] payment of the final subscription price ("Final Subscription
Price") will be delivered to the Subscription Agent pursuant to
the Notice of Guaranteed Delivery (Broker Assigned Control
#____________);
[ ] payment of the Estimated Subscription Price is being delivered
to the Subscription Agent herewith, in the aggregate amount of
$_____________;
[ ] payment of the Estimated Subscription Price has been delivered
separately to the Subscription Agent, in the aggregate amount of
$_____________;
and, in the case of funds not delivered pursuant to a Notice of
Guaranteed Delivery, is or was delivered in the manner set forth below (check
appropriate box and complete information relating thereto):
|_| uncertified check
|_| certified check
|_| bank draft
----------------------------------------
Primary Subscription Confirmation Number
-----------------------------
Depository Participant Number
------------------------------
Name of Depository Participant
* PLEASE ATTACH A BENEFICIAL OWNER LISTING CONTAINING THE NUMBER OF
RIGHTS OWNED BY EACH BENEFICIAL OWNER, THE NUMBER OF RIGHTS EXERCISED IN THE
PRIMARY SUBSCRIPTION ON BEHALF OF EACH SUCH OWNER AND THE NUMBER OF ADDITIONAL
SHARES REQUESTED ON BEHALF OF EACH SUCH OWNER PURSUANT TO THE OVER-SUBSCRIPTION
PRIVILEGE.
** Because shareholders must only pay the Estimated Subscription Price
per Share to exercise their Rights pursuant to this Offer, and the Final
Subscription Price may be higher or lower than the Estimated Subscription Price
(and because a shareholder may not receive all the Shares for which it
subscribes pursuant to the Over-Subscription Privilege), shareholders may
receive a refund or be required to pay an additional amount equal to: the
difference between the Estimated Subscription Price and the Final Subscription
<PAGE>
Price, multiplied by the total number of Shares for which they have subscribed
and been issued (including pursuant to the Over-Subscription Privilege). Any
excess payment to be refunded by the Fund to a shareholder will be mailed by the
Subscription Agent to such shareholder as promptly as practicable. Any
additional amounts due from shareholders (in the event the Final Subscription
Price exceeds the Estimated Subscription Price) must be received within seven
(7) business days after the Confirmation Date.
Registration into which Shares and/or refund checks should be issued:
Name(s): ______________________________________
Address ______________________________________
______________________________________
<PAGE>
Certified TIN: ______________________________________
By: ______________________________________
Name:
Title:
Contact Name: ______________________________________
Phone Number: ______________________________________
Dated: ________________, 1999
INVESCO GLOBAL HEALTH SCIENCES FUND
6,081,223 Shares of Beneficial Interest
Issuable Upon Exercise of Non-Transferable Rights
to Subscribe for Such Shares of Beneficial Interest
DEALER MANAGER AGREEMENT
New York, New York
May 24, 1999
PaineWebber Incorporated
1285 Avenue of the Americas
New York, New York 10019
Ladies and Gentlemen:
Each of INVESCO Global Health Sciences Fund, a Massachusetts business trust
(the "Fund"), and INVESCO Funds Group, Inc., a Delaware corporation (the
"Investment Manager"), hereby confirms the agreement with and appointment of
PaineWebber Incorporated to act as dealer manager (the "Dealer Manager") in
connection with the issuance by the Fund to the holders of record (the
"Holders") of common shares of beneficial interest of the Fund (the "Common
Shares") at the close of business on the record date set forth in the Prospectus
(as defined herein) (the "Record Date") non-transferable rights entitling such
Holders to subscribe for up to 6,081,223 new shares (each a "Share" and,
collectively, the "Shares") of the Common Shares of the Fund (the "Offer").
Pursuant to the terms of the Offer, the Fund is issuing each Holder one
non-transferable right (each a "Right" and, collectively, the "Rights") for
every five Common Shares held by such Holder on the Record Date. The Fund will
issue one Right to Holders owning less than five Common Shares on the Record
Date. Such Rights entitle Holders to acquire during the subscription period set
forth in the Prospectus (the "Subscription Period"), at the price set forth in
such Prospectus (the "Subscription Price"), one Share for each Right exercised
on the terms and conditions set forth in such Prospectus. No fractional rights
or shares will be issued. Any Holder who fully exercises all Rights initially
issued to such Holder (other than those Rights that cannot be exercised because
they represent the right to acquire less than one Share) will be entitled to
subscribe for, subject to allocation, additional Shares (the "Over-Subscription
Privilege") on the terms and conditions set forth in the Prospectus. Pursuant to
<PAGE>
the Over-Subscription Privilege, the Fund may, at its discretion, increase the
number of Shares subject to subscription by up to 25%, or 1,520,306 Shares, for
an aggregate total of 7,601,529 Shares.
The Fund has filed with the Securities and Exchange Commission (the
"Commission") a registration statement on Form N-2 (Nos. 333-75831 and
811-06476) and a related preliminary prospectus and preliminary statement of
additional information under the Investment Company Act of 1940, as amended (the
"Investment Company Act"), the Securities Act of 1933, as amended (the
"Securities Act"), and the rules and regulations of the Commission under the
Investment Company Act and the Securities Act (the "Rules and Regulations"), and
has filed such amendments to such registration statement on Form N-2, if any,
and such amended preliminary prospectuses and preliminary statements of
additional information as may have been required to the date hereof. If the
registration statement has not become effective, a further amendment to such
registration statement, including forms of a final prospectus and final
statement of additional information, necessary to permit such registration
statement to become effective will promptly be filed by the Fund with the
Commission. If the registration statement has become effective and any
prospectus or statement of additional information contained therein omits
certain information at the time of effectiveness pursuant to Rule 430A of the
Rules and Regulations, a final prospectus and final statement of additional
information containing such omitted information will promptly be filed by the
Fund with the Commission in accordance with Rule 497(h) of the Rules and
Regulations. The term "Registration Statement" means the registration statement,
as amended, at the time it becomes or became effective, including financial
statements and all exhibits and all documents, if any, incorporated therein by
reference, and any information deemed to be included by Rule 430A. The term
"Prospectus" means the final prospectus and final statement of additional
information in the forms filed with the Commission pursuant to Rule 497(c), (e),
(h) or (j) of the Rules and Regulations, as the case may be, as from time to
time amended or supplemented pursuant to the Securities Act. The Prospectus and
letters to beneficial owners of Common Shares of the Fund, subscription
certificates and other forms used to exercise rights, brochures, wrappers, any
letters from the Fund to securities dealers, commercial banks and other nominees
and any newspaper announcements, press releases and other offering materials and
information that the Fund may use, approve, prepare or authorize for use in
2
<PAGE>
connection with the Offer, are collectively referred to hereinafter as the
"Offering Materials".
1. REPRESENTATIONS AND WARRANTIES.
(a) Each of the Fund and the Investment Manager represents and
warrants to, and agrees with, the Dealer Manager as of the date hereof, as of
the date of the commencement of the Offer (such later date being hereinafter
referred to as the "Representation Date") and as of the Expiration Date (as
defined below) that:
(i) the Fund meets the requirements for use of
Form N-2 under the Securities Act and the Investment
Company Act and the Rules and Regulations. At the time
the Registration Statement became or becomes effective,
the Registration Statement did or will contain all
statements required to be stated therein in accordance
with and did or will comply in all material respects
with the requirements of the Securities Act, the
Investment Company Act and the Rules and Regulations
and did not or will not contain an untrue statement of
a material fact or omit to state a material fact
required to be stated therein or necessary to make the
statements therein not misleading. From the time the
Registration Statement became or becomes effective
through the expiration date of the Offer set forth in
the Prospectus (the "Expiration Date"), the Prospectus
and the other Offering Materials will not contain an
untrue statement of a material fact or omit to state
any material fact required to be stated therein or
necessary in order to make the statements therein, in
the light of the circumstances under which they were
made, not misleading; PROVIDED, HOWEVER, that the
representations and warranties in this subsection shall
not apply to statements relating to the Dealer Manager
in, or omissions from the Registration Statement,
Prospectus or Offering Materials relating to the Dealer
Manager, made in reliance upon and in conformity with
information furnished to the Fund in writing by the
Dealer Manager expressly for use in the Registration
Statement, Prospectus or Offering Materials, such
information being as set forth in Section 7(h) hereof.
(ii) the Fund has been duly organized and is
validly existing as a business trust under the laws of
3
<PAGE>
the Commonwealth of Massachusetts, has full power and
authority (corporate and other) to own its properties
and to conduct its business as described in the
Registration Statement and the Prospectus, currently
maintains all governmental licenses, permits, consents,
orders, approvals and other authorizations
(collectively, the "Licenses and Permits") necessary to
carry on its business as contemplated in the
Prospectus, and is duly qualified to do business in
each jurisdiction wherein it owns or leases real
property or in which the conduct of its business
requires such qualification, except where the failure
to be so qualified would not result in a material
adverse change to the Fund's business, properties,
financial position or results of operations. The Fund
has no subsidiaries.
(iii) the Fund is duly registered with the
Commission under the Investment Company Act as a
closed-end, diversified management investment company,
no order of suspension or revocation of such
registration has been issued or proceedings therefor
initiated or, to the best of the Fund's knowledge,
threatened by the Commission, all required action has
been taken under the Securities Act, the Investment
Company Act to make the public offering and consummate
the issuance of the Rights and the issuance and sale of
the Shares by the Fund upon exercise of the Rights, and
the provisions of the Fund's declaration of trust and
by laws comply as to form in all material respects with
the requirements of the Investment Company Act and the
rules and regulations thereunder.
(iv) PricewaterhouseCoopers LLP, the independent
accountants who audited the financial statements of the
Fund set forth or incorporated by reference in the
Registration Statement and the Prospectus, are
independent public accountants as required by the
Securities Act, the Investment Company Act and the
Rules and Regulations.
(v) the financial statements of the Fund set forth
or incorporated by reference in the Registration
Statement and the Prospectus present fairly in all
material respects the financial condition of the Fund
as of the dates or for the periods indicated in
4
<PAGE>
conformity with generally accepted accounting
principles applied on a consistent basis; and the
information set forth in the Prospectus under the
headings "Fee Table" and "Financial Highlights"
presents fairly in all material respects the
information stated therein.
(vi) the Fund has an authorized capitalization as
set forth in the Prospectus; the outstanding Common
Shares have been duly authorized and are validly
issued, fully paid and non-assessable and conform in
all material respects to the description thereof in the
Prospectus under the heading "Description of Shares of
Beneficial Interest"; the Rights have been duly
authorized by all requisite action on the part of the
Fund for issuance pursuant to the Offer; the Shares
have been duly authorized by all requisite action on
the part of the Fund for issuance and sale pursuant to
the terms of the Offer and, when issued and delivered
by the Fund pursuant to the terms of the Offer against
payment of the consideration set forth in the
Prospectus, will be validly issued, fully paid and
non-assessable; the Shares and the Rights conform in
all material respects to all statements relating
thereto contained in the Registration Statement, the
Prospectus and the other Offering Materials; and the
issuance of each of the Rights and the Shares is not
subject to any preemptive rights.
(vii) except as set forth in the Prospectus,
subsequent to the respective dates as of which
information is given in the Registration Statement and
the Prospectus, (A) the Fund has not incurred any
liabilities or obligations, direct or contingent, or
entered into any transactions, other than in the
ordinary course of business, that are material to the
Fund, (B) there has not been any material change in the
Common Shares or long-term debt of the Fund, if any, or
any material adverse change, or any development
involving a prospective material adverse change, in the
condition (financial or other), business, prospects,
net worth or results of operations of the Fund
(excluding fluctuations in the Fund's net asset value
due to investment activities in the ordinary course of
business) and (C) there have been no dividends or
distributions paid or declared in respect of the Fund's
Common Shares.
5
<PAGE>
(viii) there is no pending or, to the best of the
Fund's knowledge, threatened action, suit or proceeding
that may materially affect the Fund or to which the
Fund is a party before or by any court or governmental
agency, authority or body or any arbitrator, whether
foreign or domestic, which might result in any material
adverse change in the Fund's condition (financial or
other), business prospects, net worth or results of
operations, or which might materially and adversely
affect the properties or assets thereof of a character
required to be disclosed in the Registration Statement
or the Prospectus.
(ix) there are no franchises, contracts or other
documents of the Fund required to be described in the
Registration Statement or the Prospectus, or to be
filed or incorporated by reference as exhibits which
are not described or filed or incorporated by reference
therein as permitted by the Securities Act, the
Investment Company Act or the Rules and Regulations.
(x) each of this agreement (the "Agreement"), the
Subscription Agency Agreement (the "Subscription Agency
Agreement") dated as of May 24, 1999 between the Fund
and EquiServe, Inc. (the "Subscription Agent"), the
Information Agent Agreement (the "Information Agent
Agreement") dated as of May 24, 1999 between the Fund
and Shareholder Communications Corp. (the "Information
Agent"), the Investment Management Agreement dated as
of February 4, 1988 between the Fund and the Investment
Manager (the "Management Agreement"), the Custodian
Agreement dated as of January 23, 1992 between the Fund
and State Street Bank and Trust Company ("State
Street") (the "Custodian Agreement"), the Transfer
Agency and Service Agreement dated as of January 16,
1992 between the Fund and State Street (the "Transfer
Agency Agreement"), and the Administration Agreement
between the Fund and the Investment Manager dated as of
February 28, 1997 and as amended November 1, 1998 (the
"Administration Agreement") (collectively, all the
foregoing are the "Fund Agreements") has been duly
authorized, executed and delivered by the Fund; each of
the Fund Agreements complies with all applicable
provisions of the Investment Company Act and the
Investment Advisers Act
6
<PAGE>
of 1940, as amended (the "Advisers Act") and the rules
and regulations under such Acts; and, assuming due
authorization, execution and delivery by the other
parties thereto, each of the Fund Agreements
constitutes a legal, valid, binding and enforceable
obligation of the Fund, subject to the qualification
that the enforceability of the Fund's obligations
thereunder may be limited by bankruptcy, insolvency,
reorganization, moratorium and other similar laws of
general applicability relating to or affecting
creditors' rights, and to general principles of equity
(regardless of whether enforceability is considered in
a proceeding in equity or at law).
(xi) neither the issuance of the Rights, nor the
issuance and sale of the Shares, nor the execution and
delivery by the Fund of the Fund Agreements, nor the
performance and consummation by the Fund of any other
of the transactions contemplated in the Fund Agreements
or any sub-custodial arrangements entered into pursuant
to the Custodian Agreement, nor the consummation of the
transactions contemplated therein or in the
Registration Statement nor the fulfillment of the terms
thereof will conflict with, result in a breach or
violation of, or constitute a default or an event of
default under, or result in the creation or imposition
of any lien, charge or encumbrance upon any properties
or assets of the Fund under the declaration of trust or
bylaws of the Fund or the terms and provisions of any
agreement, indenture, mortgage, lease or other
instrument to which the Fund is a party or by which it
may be bound or to which any of the property or assets
of the Fund is subject, nor will such action result in
any violation of any order, law, rule or regulation of
any court or governmental agency or body, whether
foreign or domestic, having jurisdiction over the Fund
or any of its properties.
(xii) no consent, approval, authorization,
notification or order of, or filing with, any court or
governmental agency or body, whether foreign or
domestic, is required for the consummation by the Fund
of the transactions contemplated by the Fund Agreements
7
<PAGE>
or the Registration Statement, except such as have been
obtained, or if the registration statement filed with
respect to the Shares is not effective under the
Securities Act as of the time of execution hereof, such
as may be required (and shall be obtained as provided
in this Agreement) under the Investment Company Act,
the Securities Act, and the Securities Exchange Act of
1934, as amended (the "Exchange Act").
(xiii) the Common Shares have been duly listed on
the New York Stock Exchange and prior to their issuance
the Shares will have been duly approved for listing,
subject to official notice of issuance, on the New York
Stock Exchange.
(xiv) the Fund (A) has not taken, directly or
indirectly, any action designed to cause or to result
in, or that has constituted or which might reasonably
be expected to constitute, the stabilization or
manipulation of the price of any security of the Fund
to facilitate the issuance of the Rights or the sale or
resale of the Shares, (B) has not since the filing of
the Registration Statement sold, bid for or purchased,
or paid anyone any compensation for soliciting
purchases of, Common Shares of the Fund (except for the
solicitation of exercises of the Rights pursuant to
this Agreement) and (C) will not, until the later of
the expiration of the Rights or the completion of the
distribution (within the meaning of the
antimanipulation rules under the Exchange Act) of the
Shares, sell, bid for or purchase, pay or agree to pay
to any person any compensation for soliciting another
to purchase any other securities of the Fund (except
for the solicitation of the exercises of Rights
pursuant to this Agreement); PROVIDED THAT any action
in connection with the Fund's dividend reinvestment and
cash purchase plan will not be deemed to be within the
terms of this Section 1(a)(xiv).
(xv) the Fund has complied in all previous tax
years, and intends to direct the investment of the
proceeds of the offering described in the Registration
Statement and the Prospectus in such a manner as to
continue to comply with the requirements of Subchapter
M of the Internal Revenue Code of 1986, as amended
("Subchapter M of the Code"), and has qualified and
8
<PAGE>
intends to continue to qualify as a regulated
investment company under Subchapter M of the Code.
(b) The Investment Manager represents and warrants to, and
agrees with, the Dealer Manager as of the date hereof, as of the Representation
Date and as of the Expiration Date that:
(i) the Investment Manager has been duly incorporated
and is validly existing as a corporation in good standing
under the laws of the State of Delaware, has full power and
authority (corporate and other) to own its properties and to
conduct its business as described in the Registration
Statement and the Prospectus, currently maintains all
governmental licenses, permits, consents, orders, approvals
and other authorizations necessary to carry on its business
and to enable the Investment Manager to continue to
supervise investments in securities as contemplated in the
Prospectus, and is duly qualified to do business as a
foreign corporation in each jurisdiction wherein it owns or
leases real property or in which the conduct of its business
requires such qualification, except where the failure to be
so qualified would not result in a material adverse change
to the Investment Manager's business, properties, financial
position or results of operations.
(ii) the Investment Manager is duly registered as an
investment adviser under the Advisers Act and is not
prohibited by the Investment Company Act or the Advisers
Act, or the rules and regulations under such Acts, from
acting as an investment adviser for the Fund as contemplated
in the Prospectus and the Management Agreement.
(iii) each of this Agreement and the Management
Agreement has been duly authorized, executed and delivered
by the Investment Manager, complies in all material respects
with all applicable provisions of the Investment Company Act
and the Advisers Act and the rules and regulations under
such Acts, and is, assuming due authorization, execution and
delivery by the other parties thereto, a legal, valid,
binding and enforceable obligation of the Investment
Manager, subject to the qualification that the
9
<PAGE>
enforceability of the Investment Manager's obligations
thereunder may be limited by bankruptcy, insolvency,
reorganization, moratorium and other similar laws of general
applicability relating to or affecting creditors' rights,
and to general principles of equity (regardless of whether
enforceability is considered in a proceeding in equity or at
law).
(iv) neither the execution or delivery by the
Investment Manager of this Agreement or the Management
Agreement, nor the performance and consummation by the
Investment Manager of its obligations under this Agreement
or the Management Agreement, nor the consummation of the
transactions contemplated therein or in the Registration
Statement nor the fulfillment of the terms thereof will
conflict with, result in a breach or violation of, or
constitute a default or an event of default under, or result
in the creation or imposition of any lien, charge or
encumbrance upon any properties or assets of the Investment
Manager under the charter or bylaws of the Investment
Manager or the terms and provisions of any agreement,
indenture, mortgage, lease or other instrument to which the
Investment Manager is a party or by which it may be bound or
to which any of the property or assets of the Investment
Manager is subject, nor will such action result in any
violation of any order, law, rule or regulation of any court
or governmental agency or body, whether foreign or domestic,
having jurisdiction over the Investment Manager or any of
its properties.
(v) there is no pending or, to the best of the
Investment Manager's knowledge, threatened action, suit or
proceeding affecting the Investment Manager or to which the
Investment Manager is a party before or by any court or
governmental agency, authority or body or any arbitrator,
whether foreign or domestic that would materially affect the
Investment Manager's ability to perform its obligations
under this Agreement or under the Management Agreement.
(vi) no consent, approval, authorization, notification
or order of, or any filing with, any court or governmental
agency or body, whether foreign or domestic, is required for
10
<PAGE>
the consummation by the Investment Manager of the
transactions contemplated by this Agreement or the
Management Agreement.
(vii) the Investment Manager (A) has not taken,
directly or indirectly, any action designed to cause or to
result in, or that has constituted or which might reasonably
be expected to constitute, the stabilization or manipulation
of the price of any security of the Fund to facilitate the
issuance of the Rights or the sale or resale of the Shares,
(B) has not since the filing of the Registration Statement
sold, bid for or purchased, or paid anyone any compensation
for soliciting purchases of, Common Shares (except for the
solicitation of exercises of Rights pursuant to this
Agreement) and (C) will not, until the later of the
expiration of the Rights or the completion of the
distribution (within the meaning of the antimanipulation
rules under the Exchange Act) of the Shares, sell, bid for
or purchase, pay or agree to pay any person any compensation
for soliciting another to purchase any other securities of
the Fund (except for the solicitation of exercises of Rights
pursuant to this Agreement); PROVIDED THAT any action in
connection with the Fund's dividend reinvestment and cash
purchase plan will not be deemed to be within the terms of
this Section 1(b)(vii).
(c) Any certificate required by this Agreement that is signed
by any officer of the Fund and the Investment Manager and delivered to the
Dealer Manager or counsel for the Dealer Manager shall be deemed a
representation and warranty by the Fund and the Investment Manager, as the case
may be, to the Dealer Manager, as to the matters covered thereby.
2. AGREEMENT TO ACT AS DEALER MANAGER.
(a) On the basis of the representations and warranties
contained herein, and subject to the terms and conditions of the Offer:
(i) The Fund hereby appoints the Dealer Manager and
other soliciting dealers entering into a Soliciting Dealer
Agreement, in the form attached hereto as Exhibit A, with
the Dealer Manager (the "Soliciting Dealers"), and the
11
<PAGE>
Dealer Manager hereby agrees to solicit the exercise of
Rights, in accordance with the Securities Act, the
Investment Company Act and the Exchange Act, and its
customary practice, the exercise of the Rights, subject to
the terms and conditions of this Agreement, the procedures
described in the Registration Statement, the Prospectus and,
where applicable, the terms and conditions of such
Soliciting Dealer Agreement; and
(ii) The Fund agrees to furnish, or cause to be
furnished, to the Dealer Manager, lists, or copies of those
lists, showing the names and addresses of, and number of
Common Shares held by, Holders as of the Record Date, and
the Dealer Manager agrees to use such information only in
connection with the Offer, and not to furnish the
information to any other person except to securities brokers
and dealers that have been requested by the Dealer Manager
to solicit exercises of Rights.
(b) The Dealer Manager agrees to provide to the Fund, in
addition to the services described in paragraph (a) of this Section 2, financial
advisory and marketing services in connection with the Offer. No advisory fee,
other than the fees provided for in Section 3 of this Agreement and the
reimbursement of the Dealer Manager's out-of-pocket expenses as described in
Section 5 of this Agreement, will be payable by the Fund, or any other party
hereto, to the Dealer Manager in connection with the financial advisory and
marketing services provided by the Dealer Manager pursuant to this Section 2(b).
(c) The Fund and the Dealer Manager agree that the Dealer
Manager is an independent contractor with respect to the solicitation of the
exercise of Rights and the performance of financial advisory and marketing
services for the Fund contemplated by this Agreement.
(d) In rendering the services contemplated by this Agreement,
the Dealer Manager will not be subject to any liability to the Fund or the
Investment Manager or any of their affiliates, for any act or omission on the
part of any soliciting broker or dealer (except with respect to the Dealer
Manager acting in such capacity) or any other person, and the Dealer Manager
will not be liable for acts or omissions in performing its obligations under
this Agreement, except for any losses, claims, damages, liabilities and expenses
that are finally judicially determined by a court of competent jurisdiction to
have resulted primarily from the bad faith, willful misconduct or gross
negligence of the Dealer Manager or by reason of the intentional failure to
12
<PAGE>
perform substantially the obligations and duties of the Dealer Manager under
this Agreement.
3. DEALER MANAGER AND SOLICITATION FEES. In full payment for the
solicitation, financial advisory and marketing services rendered and to be
rendered hereunder by the Dealer Manager, the Fund agrees to pay the Dealer
Manager a fee (the "Dealer Manager Fee") equal to 3.75% of the aggregate
Subscription Price for the Shares issued pursuant to the exercise of Rights and
the Over-Subscription Privilege. In full payment for the soliciting efforts to
be rendered, the Dealer Manager agrees to reallow solicitation fees (the
"Solicitation Fees") to Soliciting Dealers equal to 2.50% of the Subscription
Price per Share for each Share issued pursuant to the exercise of Rights and the
Over-Subscription Privilege. The Dealer Manager agrees to reallow the
Solicitation Fees to the broker-dealer designated on the applicable portion of
the form used by the Holder to exercise Rights and the Over-Subscription
Privilege, provided that such broker-dealer has entered into a Soliciting Dealer
Agreement, and if no broker-dealer is so designated or a broker-dealer is
otherwise not entitled to receive compensation pursuant to the terms of the
Soliciting Dealer Agreement, then the Dealer Manager shall retain such
Solicitation Fees for Shares issued pursuant to the exercise of Rights and the
Over-Subscription Privilege. Payment to the Dealer Manager by the Fund will be
in the form of a wire transfer of same day funds to an account or accounts
identified by the Dealer Manager. Such payment will be made on each date on
which the Fund issues Shares after the Expiration Date. Payment to a Soliciting
Dealer will be made by the Dealer Manager directly to such Soliciting Dealer by
check to an address identified by such Soliciting Dealer. Such payments shall be
made on or before the tenth business day following the day of final payment for
Shares as set forth in the Prospectus.
4. OTHER AGREEMENTS.
(a) The Fund covenants with the Dealer Manager as follows:
(i) The Fund will use its best efforts to cause the
Registration Statement to become effective and to maintain
its effectiveness under the Securities Act, and will advise
the Dealer Manager promptly as to the time at which the
Registration Statement and any amendments thereto (including
any post-effective amendment) becomes so effective.
13
<PAGE>
(ii) The Fund will notify, and confirm the notice in
writing to, the Dealer Manager immediately (A) of the
effectiveness of the Registration Statement and any
amendment thereto (including any post-effective amendment),
(B) of the receipt of any comments from the Commission, (C)
of any request by the Commission for any amendment to the
Registration Statement or any amendment or supplement to the
Prospectus or for additional information, (D) of the
issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement or the
initiation of any proceedings for that purpose, and (E) of
the suspension of the qualification of the Shares or the
Rights for offering or sale in any jurisdiction. The Fund
will make every reasonable effort to prevent the issuance of
any stop order described in subsection (D) hereunder and, if
any such stop order is issued, to obtain the lifting thereof
at the earliest possible moment.
(iii) The Fund will give the Dealer Manager notice of
its intention to file any amendment to the Registration
Statement (including any post-effective amendment) or any
amendment or supplement to the Prospectus (including any
revised prospectus which the Fund proposes for use by the
Dealer Manager in connection with the Offer, which differs
from the prospectus on file at the Commission at the time
the Registration Statement becomes effective, whether or not
such revised prospectus is required to be filed pursuant to
Rule 497(c), (e) or (h) of the Rules and Regulations),
whether pursuant to the Investment Company Act, the
Securities Act, or otherwise, and will furnish the Dealer
Manager with copies of any such amendment or supplement a
reasonable amount of time prior to such proposed filing or
use, as the case may be, and will not file any such
amendment or supplement to which the Dealer Manager or
counsel for the Dealer Manager shall reasonably object.
(iv) The Fund will, without charge, deliver to the
Dealer Manager, as soon as practicable, the number of copies
(one of which is manually executed) of the Registration
Statement as originally filed and of each amendment thereto
as it may reasonably request, in each case with the exhibits
filed therewith.
14
<PAGE>
(v) The Fund will, without charge, furnish to the
Dealer Manager, from time to time during the period when the
Prospectus is required to be delivered under the Securities
Act, such number of copies of the Prospectus (as amended or
supplemented) as the Dealer Manager may reasonably request
for the purposes contemplated by the Securities Act or the
Rules and Regulations.
(vi) If any event shall occur as a result of which it
is necessary, in the reasonable opinion of counsel for the
Dealer Manager, to amend or supplement the Registration
Statement or the Prospectus in order to make the Prospectus
not misleading in the light of the circumstances existing at
the time it is delivered to a Holder, the Fund will
forthwith amend or supplement the Prospectus by preparing
and filing with the Commission (and furnishing to the Dealer
Manager a reasonable number of copies of) an amendment or
amendments of the Registration Statement or an amendment or
amendments of or a supplement or supplements to the
Prospectus (in form and substance satisfactory to counsel
for the Dealer Manager), at the Fund's expense, which will
amend or supplement the Registration Statement or the
Prospectus so that the Prospectus will not contain an untrue
statement of a material fact or omit to state a material
fact required to be stated therein or necessary in order to
make the statements therein, in the light of the
circumstances existing at the time the Prospectus is
delivered to a Holder, not misleading.
(vii) The Fund will cooperate in connection with the
Dealer Manager's and its counsel's endeavor to qualify the
Rights and the Shares for offering and sale under the
applicable securities laws of such states and other
jurisdictions of the United States as the Dealer Manager may
designate and cooperate in the maintenance of such
qualifications in effect for the duration of the Offer;
PROVIDED, HOWEVER, that the Fund will not be obligated to
file any general consent to service of process, or to
qualify as a foreign corporation or as a dealer in
securities in any jurisdiction in which it is not now so
qualified. The Fund will file such statements and reports as
may be required by the laws of each jurisdiction in which
15
<PAGE>
the Rights and the Shares have been qualified as above
provided.
(viii) The Fund will make generally available to its
security holders as soon as practicable, but no later than
60 days after the end of the Fund's fiscal semi-annual or
fiscal year-end period covered thereby, an earnings
statement (which need not be audited) (in form complying
with the provisions of Rule 158 of the Rules and Regulations
of the Securities Act) covering a twelve-month period
beginning not later than the first day of the Fund's fiscal
semi-annual period next following the "effective" date (as
defined in said Rule 158) of the Registration Statement.
(ix) For a period of 180 days from the date of this
Agreement, the Fund will not, without the prior consent of
the Dealer Manager, which consent will not be unreasonably
withheld, offer or sell, or enter into any agreement to
sell, any equity or equity related securities of the Fund or
securities convertible into such securities, other than the
Rights and the Shares and the Common Shares issued in
reinvestment of dividends or distributions.
(x) The Fund will use the net proceeds from the Offer
as set forth under "Use of Proceeds" in the Prospectus.
(xi) The Fund will use its best efforts to cause the
Shares to be duly authorized for listing by the New York
Stock Exchange prior to the time the Shares are issued.
(xii) The Fund will use its best efforts to maintain
its qualification as a regulated investment company under
Subchapter M of the Code.
(xiii) The Fund will advise or cause the Subscription
Agent to advise the Dealer Manager and each Soliciting
Dealer from day to day during the period of, and promptly
after the termination of, the Offer, as to the names and
addresses of all Holders exercising Rights, the total number
of Rights exercised by each Holder during the immediately
preceding day, indicating the total number of Rights
16
<PAGE>
verified to be in proper form for exercise, rejected for
exercise and being processed and, for the Dealer Manager and
each Soliciting Dealer, the number of Rights exercised on
subscription certificates indicating the Dealer Manager or
such Soliciting Dealer, as the case may be, as the
broker-dealer with respect to such exercise, and as to such
other information as the Dealer Manager may reasonably
request; and will notify the Dealer Manager and each
Soliciting Dealer, not later than 5:00 P.M., New York City
time, on the first business day following the Expiration
Date, of the total number of Rights exercised and Shares
related thereto, the total number of Rights verified to be
in proper form for exercise, rejected for exercise and being
processed and, for the Dealer Manager and each Soliciting
Dealer, the number of Rights exercised on subscription
certificates indicating the Dealer Manager or such
Soliciting Dealer, as the case may be, as the broker-dealer
with respect to such exercise, and as to such other
information as the Dealer Manager may reasonably request.
(b) Neither of the Fund nor the Investment Manager will take,
directly or indirectly, any action designed to cause or to result in, or that
has constituted or which might reasonably be expected to constitute, the
stabilization or manipulation of the price of any security of the Fund to
facilitate the issuance of the Rights or the sale or resale of the Shares;
PROVIDED that any action in connection with the Fund's dividend reinvestment and
cash purchase plan will not be deemed to be within the meaning of this Section
4(b).
5. PAYMENT OF EXPENSES.
(a) The Fund will pay all expenses incident to the performance
of its obligations under this Agreement, including, but not limited to, expenses
relating to (i) the printing and filing of the Registration Statement as
originally filed and of each amendment thereto, (ii) the preparation, issuance
and delivery of the certificates for the Shares and subscription certificates
relating to the Rights, (iii) the fees and disbursements of the Fund's counsel
(including the fees and disbursements of local counsel) and accountants, (iv)
the qualification of the Rights and the Shares under securities laws in
accordance with the provisions of Section 4(a)(vii) of this Agreement, including
17
<PAGE>
filing fees, (v) the printing or other production and delivery to the Dealer
Manager of copies of the Registration Statement as originally filed and of each
amendment thereto and of the Prospectus and any amendments or supplements
thereto, (vi) the fees and expenses incurred with respect to filing with the
National Association of Securities Dealers, Inc., (vii) the fees and expenses
incurred in connection with the listing of the Shares on the New York Stock
Exchange, (viii) the printing or other production, mailing and delivery expenses
incurred in connection with Offering Materials and (ix) the fees and expenses
incurred with respect to the Subscription Agent and Information Agent.
(b) In addition to any fees that may be payable to the Dealer
Manager under this Agreement, the Fund agrees to reimburse the Dealer Manager
upon request made from time to time for its reasonable expenses incurred in
connection with its activities under this Agreement, including the reasonable
fees and disbursements of its legal counsel (excluding Blue Sky filing fees
which are paid directly by the Fund), in an amount up to $100,000.
(c) If this Agreement is terminated by the Dealer Manager in
accordance with the provisions of Section 6 or Section 9(a)(i), 9(a)(ii) or
9(a)(iii), the Fund agrees to reimburse the Dealer Manager for all of its
reasonable out-of-pocket expenses incurred in connection with its performance
hereunder, including the reasonable fees and disbursements of counsel for the
Dealer Manager. In the event the transactions contemplated hereunder are not
consummated, the Fund agrees to pay all of the costs and expenses set forth in
paragraphs (a) and (b) of this Section 5 which the Fund would have paid if such
transactions had been consummated.
6. CONDITIONS OF THE DEALER MANAGER'S OBLIGATIONS. The obligations
of the Dealer Manager hereunder are subject to the accuracy of the respective
representations and warranties of the Fund and the Investment Manager contained
herein, to the performance by the Fund and the Investment Manager of their
respective obligations hereunder, and to the following further conditions:
(a) The Registration Statement shall have become effective not
later than 5:30 P.M., New York City time, on the Record Date, or at such later
time and date as may be approved by the Dealer Manager; the Prospectus and any
amendment or supplement thereto shall have been filed with the Commission in the
manner and within the time period required by Rule 497(c), (e), (h) or (j), as
18
<PAGE>
the case may be, under the Securities Act; no stop order suspending the
effectiveness of the Registration Statement or any amendment thereto shall have
been issued, and no proceedings for that purpose shall have been instituted or
threatened or, to the knowledge of the Fund, the Investment Manager or the
Dealer Manager, shall be contemplated by the Commission; and the Fund shall have
complied with any request of the Commission for additional information (to be
included in the Registration Statement, the Prospectus or otherwise).
(b) On the Representation Date and the Expiration Date, the
Dealer Manager shall have received:
(1) The favorable opinions, dated the
Representation Date and the Expiration Date, of
Kirkpatrick & Lockhart LLP, counsel for the Fund, in
form and substance satisfactory to counsel for the
Dealer Manager to the effect that:
(i) the Fund has been duly organized and is
validly existing as a business trust under the laws of
the Commonwealth of Massachusetts, has full power and
authority (corporate and other) to own its properties
and to conduct its business as described in the
Registration Statement and the Prospectus, currently
maintains, to the best knowledge of such counsel, all
Licenses and Permits necessary to carry on its business
as contemplated in the Prospectus (except that counsel
need express no opinion as to securities or "blue sky"
laws of any state), and is duly qualified to do
business in each jurisdiction wherein it owns or leases
real property or in which the conduct of its business
requires such qualification, except where the failure
to be so qualified would not result in a material
adverse change to the Fund's business, properties,
financial position or results of operations.
(ii) the Fund is duly registered with the
Commission under the Investment Company Act as a
closed-end, diversified management investment company,
no order of suspension or revocation of such
registration has been issued or proceedings therefor
initiated or, to the best of knowledge of such counsel,
threatened by the Commission, all required action has
been taken under the Securities Act and the Investment
19
<PAGE>
Company Act to make the public offering and consummate
the issuance of the Rights and the issuance and sale of
the Shares by the Fund upon exercise of the Rights, and
the provisions of the Fund's declaration of trust and
by laws comply as to form in all material respects with
the requirements of the Investment Company Act and the
rules and regulations thereunder.
(iii) the Fund's authorized capitalization is as
set forth in the Prospectus; the outstanding Common
Shares have been duly authorized and are validly
issued, fully paid and non-assessable and conform in
all material respects to the description thereof in the
Prospectus under the heading "Description of Shares of
Beneficial Interest"; the Rights have been duly
authorized by all requisite action on the part of the
Fund for issuance pursuant to the Offer; the Shares
have been duly authorized by all requisite action on
the part of the Fund for issuance and sale pursuant to
the terms of the Offer and, when issued and delivered
by the Fund pursuant to the terms of the Offer against
payment of the consideration set forth in the
Prospectus, will be validly issued, fully paid and
non-assessable; the Shares and the Rights conform in
all material respects to all statements relating
thereto contained in the Registration Statement, the
Prospectus and the other Offering Materials; and the
issuance of each of the Rights and the Shares is not
subject to any preemptive rights.
(iv) there is no pending or, to the best knowledge
of such counsel, threatened action, suit or proceeding
affecting the Fund or to which the Fund is a party
before or by any court or governmental agency,
authority or body or any arbitrator which might result
in any material adverse change in the condition
(financial or other), business prospects, net worth or
results of operations of the Fund, or which might
materially and adversely affect the properties or
assets thereof of a character required to be disclosed
in the Registration Statement or the Prospectus.
(v) there are no franchises, contracts or other
documents of the Fund required to be described in the
20
<PAGE>
Registration Statement or the Prospectus, or to be
filed or incorporated by reference as exhibits which
are not described or filed or incorporated by reference
therein as permitted by the Securities Act, the
Investment Company Act or the Rules and Regulations.
(vi) each of the Fund Agreements has been duly
authorized, executed and delivered by the Fund;
complies with all applicable provisions of the
Investment Company Act and the Advisers Act and the
rules and regulations under such Acts; and, assuming
due authorization, execution and delivery by the other
parties thereto, each of the Fund Agreements
constitutes a legal, valid, binding and enforceable
obligation of the Fund, subject to the qualification
that the enforceability of the Fund's obligations
thereunder may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws of
general applicability relating to or affecting
creditors' rights and general principles of equity.
(vii) neither the issuance of the Rights, nor the
issuance and sale of the Shares, nor the execution and
delivery by the Fund of the Fund Agreements, nor the
performance and consummation by the Fund of any other
of the transactions contemplated in the Fund
Agreements, nor the consummation of the transactions
contemplated therein or in the Registration Statement
nor the fulfillment of the terms thereof will conflict
with, result in a material breach or material violation
of, or constitute a default or a material event of
default under, or result in the creation or imposition
of any material lien, charge or encumbrance upon any
properties or assets of the Fund under the declaration
of trust or bylaws of the Fund or the terms and
provisions of any material agreement, indenture,
mortgage, lease or other instrument to which the Fund
is a party or by which it may be bound or to which any
of the property or assets of the Fund is subject, nor
will such action result in any material violation of
any order, law, rule or regulation of any court or
governmental agency or body having jurisdiction over
the Fund or any of its properties.
(viii) no consent, approval, authorization,
notification or order of, or filing with, any court or
21
<PAGE>
governmental agency or body is required for the
consummation by the Fund of the transactions
contemplated by the Fund Agreements or the Registration
Statement, except (A) such as have been obtained and
(B) such as may be required under the blue sky laws of
any jurisdiction in connection with the transactions
contemplated hereby.
(ix) the Common Shares have been duly listed on
the New York Stock Exchange and the Shares have been
duly approved for listing, subject to official notice
of issuance, on the New York Stock Exchange.
(x) the Registration Statement is effective under
the Securities Act; any required filing of the
Prospectus or any supplement thereto pursuant to Rule
497(c), (e), (h) or (j) required to be made to the date
hereof has been made in the manner and within the time
period required by Rule 497(c), (e), (h) or (j), as the
case may be; no stop order suspending the effectiveness
of the Registration Statement has been issued, and no
proceedings for that purpose have been instituted or,
to the best knowledge of such counsel, threatened; and
the Registration Statement, the Prospectus and each
amendment thereof or supplement thereto (other than the
financial statements, schedules, the notes thereto and
the schedules and other financial, economic and
statistical data contained or incorporated by reference
therein or omitted therefrom, as to which such counsel
need express no opinion) as to their respective
effective or issue dates comply as to form in all
material respects with the applicable requirements of
the Securities Act and the Investment Company Act and
the Rules and Regulations.
(xi) the statements in the Prospectus under the
headings "THE OFFER-Certain Federal Income Tax
Consequences of the Offer" and "FEDERAL TAXATION OF THE
FUND AND ITS SHAREHOLDERS" fairly present the
information disclosed therein in all material respects.
In rendering such opinion, such counsel may rely as to matters of fact, to the
extent such counsel deems proper, on certificates of responsible officers of the
Fund, the Investment Manager and public officials.
22
<PAGE>
Such counsel shall also have stated that, while they have not
themselves checked the accuracy and completeness of or otherwise verified, and
are not passing upon and assume no responsibility for the accuracy or
completeness of, the statements contained in the Registration Statement or the
Prospectus, in the course of their review and discussion of the contents of the
Registration Statement and Prospectus with certain officers and employees of the
Fund and its independent accountants, no facts have come to their attention
which cause them to believe that the Registration Statement, on the date it
became effective, contained any untrue statement of a material fact or omitted
to state any material fact required to be stated therein or necessary to make
the statements contained therein not misleading or that the Prospectus, as of
its date and on the Representation Date or the Expiration Date, as the case may
be, contained any untrue statement of a material fact or omitted to state any
material fact required to be stated therein or necessary to make the statements
therein, in the light of the circumstances under which they were made, not
misleading (except that such counsel need not express any statement of belief
with respect to the financial statements, schedules or other financial or
statistical data included in or incorporated by reference in the Registration
Statement, Prospectus or the Offering Materials).
(2) The favorable opinions, dated the
Representation Date and the Expiration Date, of Glen A.
Payne, Esq., counsel for the Investment Manager, to the
effect that:
(i) the Investment Manager has been duly
incorporated and is validly existing as a corporation
in good standing under the laws of the State of
Delaware, has full power and authority (corporate and
other) to own its properties and to conduct its
business as described in the Registration Statement and
the Prospectus, currently maintains all governmental
licenses, permits, consents, orders, approvals and
other authorizations necessary to carry on its business
and to enable the Investment Manager to continue to
supervise investments in securities as contemplated in
the Prospectus, and is duly qualified to do business as
a foreign corporation in each jurisdiction wherein it
owns or leases real property or in which the conduct of
its business requires such qualification, except where
23
<PAGE>
the failure to be so qualified would not result in a
material adverse change to the Investment Manager's
business, properties, financial position or results of
operations.
(ii) the Investment Manager is duly registered as
an investment adviser under the Advisers Act and is not
prohibited by the Investment Company Act or the
Advisers Act, or the rules and regulations under such
Acts, from acting as an investment adviser for the Fund
as contemplated in the Prospectus and the Management
Agreement.
(iii) each of this Agreement and the Management
Agreement has been duly authorized, executed and
delivered by the Investment Manager, complies with all
applicable provisions of the Investment Company Act and
the Advisers Act and the rules and regulations under
such Acts and is, assuming due authorization, execution
and delivery by the other parties thereto, a legal,
valid, binding and enforceable obligation of the
Investment Manager, subject to the qualification that
the enforceability of the Investment Manager's
obligations thereunder may be limited by bankruptcy,
insolvency, reorganization, moratorium and other
similar laws of general applicability relating to or
affecting creditors' rights and to general principles
of equity.
(iv) neither the execution nor delivery by the
Investment Manager of this Agreement or the Management
Agreement, nor the performance and consummation by the
Investment Manager of its obligations under this
Agreement or the Management Agreement, nor the
consummation of the transactions contemplated therein
or in the Registration Statement nor the fulfillment of
the terms thereof will materially conflict with, result
in a material breach or material violation of, or
constitute a default or an event of default under, or
result in the creation or imposition of any lien,
charge or encumbrance upon any properties or assets of
the Investment Manager under the charter or bylaws of
the Investment Manager or the terms and provisions of
any material agreement, indenture, mortgage, lease or
24
<PAGE>
other instrument to which the Investment Manager is a
party or by which it may be bound or to which any of
the property or assets of the Investment Manager is
subject, nor will such action result in any violation
of any order, law, rule or regulation of any court or
governmental agency or body having jurisdiction over
the Investment Manager or any of its properties.
(v) there is no pending or, to the best knowledge
of such counsel, threatened action, suit or proceeding
affecting the Investment Manager or to which the
Investment Manager is a party before or by any court or
governmental agency, authority or body or any
arbitrator which might result in any material adverse
change in the Investment Manager's condition (financial
or other), business prospects, net worth or results of
operations or which might materially and adversely
affect the properties or assets thereof of a character
required to be disclosed in the Registration Statement
or Prospectus.
(vi) no consent, approval, authorization,
notification or order of, or any filing with, any court
or governmental agency or body is required for the
consummation by the Investment Manager of the
transactions contemplated by this Agreement or the
Management Agreement.
(vii) nothing has come to such counsel's attention
that would lead them to believe that the description of
the Investment Manager in the Registration Statement,
on the date it became effective, contained any untrue
statement of a material fact or omitted to state any
material fact required to be stated therein or
necessary to make the statements contained therein not
misleading.
(viii) nothing has come to such counsel's attention
that would lead them to believe that the description of
the Investment Manager in the Prospectus, as of its
date and on the Representation Date or the Expiration
Date, as the case may be, contained any untrue
statement of a material fact or omitted to state any
material fact required to be stated therein or
necessary to make the statements therein, in the light
of the circumstances under which they were made, not
misleading.
25
<PAGE>
In rendering such opinion, such counsel may rely as to matters of fact, to the
extent such counsel deems proper, on certificates of responsible officers of the
Investment Manager and public officials.
Such counsel shall also have stated that, while they have not
themselves checked the accuracy and completeness of or otherwise verified, and
are not passing upon and assume no responsibility for the accuracy or
completeness of, the statements contained in the Registration Statement or the
Prospectus, in the course of their review and discussion of the contents of the
Registration Statement and Prospectus with certain officers and employees of the
Fund, the Investment Manager and their affiliates, no facts have come to their
attention which cause them to believe that the Registration Statement, on the
date it became effective, contained any untrue statement of a material fact or
omitted to state any material fact required to be stated therein or necessary to
make the statements contained therein not misleading or that the Prospectus, as
of its date and on the Representation Date or the Expiration Date, as the case
may be, contained any untrue statement of a material fact or omitted to state
any material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading.
(c) The Dealer Manager shall have received from Skadden, Arps,
Slate, Meagher & Flom (Illinois), counsel for the Dealer Manager, such opinion
or opinions, dated the Representation Date and the Expiration Date, with respect
to the Offer, the Registration Statement, the Prospectus and other related
matters as the Dealer Manager may reasonably require, and the Fund and the
Investment Manager shall have furnished to such counsel such documents as they
reasonably request for the purpose of enabling them to pass upon such matters.
(d) The Fund shall have furnished to the Dealer Manager
certificates of the Fund, signed by the President, the Treasurer, the Secretary,
or a Vice President of the Fund, dated the Representation Date and the
Expiration Date, to the effect that the signer(s) of such certificate carefully
examined the Registration Statement, the Prospectus, any supplement to the
Prospectus and this Agreement and that, to the best knowledge of such signer(s):
(i) the representations and warranties of the Fund in
this Agreement are true and correct in all material respects
26
<PAGE>
on and as of the Representation Date or the Expiration Date,
as the case may be, with the same effect as if made on the
Representation Date or the Expiration Date, as the case may
be, and the Fund has complied with all the agreements and
satisfied all the conditions on its part to be performed or
satisfied at or prior to the Representation Date or the
Expiration Date, as the case may be;
(ii) no stop order suspending the effectiveness of the
Registration Statement has been issued and no proceedings
for that purpose have been instituted or, to the Fund's
knowledge, threatened; and
(iii) since the date of the most recent balance sheet
included or incorporated by reference in the Prospectus,
there has been no material adverse change in the condition
(financial or other), earnings, business, prospects, net
worth or results of operations of the Fund (excluding
fluctuations in the Fund's net asset value due to investment
activities in the ordinary course of business), except as
set forth in or contemplated in the Prospectus.
(e) The Investment Manager shall have furnished to the Dealer
Manager certificates of the Investment Manager, signed by the President, the
Treasurer, the Secretary or a Vice President of the Investment Manager, dated
the Representation Date and the Expiration Date, to the effect that the
signer(s) of such certificates has read the Registration Statement, the
Prospectus, any supplement to the Prospectus and this Agreement and, to the best
knowledge of such signer(s), the representations and warranties of the
Investment Manager in this Agreement are true and correct in all material
respects on and as of the Representation Date or the Expiration Date, as the
case may be, with the same effect as if made on the Representation Date or the
Expiration Date, as the case may be.
(f) PricewaterhouseCoopers LLP shall have furnished to the
Dealer Manager letters, dated the Representation Date and the Expiration Date,
in form and substance satisfactory to the Dealer Manager, stating in effect
that:
(i) they are independent accountants with respect to
the Fund within the meaning of the Securities Act, the
Investment Company Act and the Rules and Regulations;
27
<PAGE>
(ii) in their opinion, the audited financial statements
examined by them and included or incorporated by reference
in the Registration Statement comply as to form in all
material respects with the applicable accounting
requirements of the Securities Act and the Investment
Company Act and the respective Rules and Regulations with
respect to registration statements on Form N-2;
(iii) they have performed specified procedures, not
constituting an audit in accordance with generally accepted
auditing standards, including a reading of the latest
available unaudited financial information of the Fund, a
reading of the minute books of the Fund, and inquiries of
officials of the Fund responsible for financial and
accounting matters and on the basis of such inquiries and
procedures nothing came to their attention that caused them
to believe that at a specified date not more than five
business days prior to the Representation Date or the
Expiration Date, as the case may be, there was any change in
the Common Shares, any decrease in net assets or any
increase in long-term debt of the Fund as compared with
amounts shown in the most recent statement of assets and
liabilities included or incorporated by reference in the
Registration Statement, except as the Registration Statement
discloses has occurred or may occur, or they shall state any
specific changes, increases or decreases;
(iv) in addition to the procedures referred to in
clause (iii) above, they have compared certain dollar
amounts (or percentages as derived from such dollar amounts)
and other financial information regarding the operations of
the Fund appearing in the Registration Statement, which have
previously been specified by the Dealer Manager and which
shall be specified in such letter, and have found such items
to be in agreement with the accounting and financial records
of the Fund.
(g) Subsequent to the respective dates as of which information
is given in the Registration Statement and the Prospectus, there shall not have
been (i) any change, increase or decrease specified in the letter or letters
28
<PAGE>
referred to in paragraph (f) of this Section 6, or (ii) any change, or any
development involving a prospective change, in or affecting the business or
properties of the Fund, the effect of which, in any case referred to in clause
(i) or (ii) above, is, in the reasonable judgment of the Dealer Manager, so
material and adverse as to make it impractical or inadvisable to proceed with
the Offer as contemplated by the Registration Statement and the Prospectus.
(h) Prior to the Representation Date, the Fund and the
Investment Manager shall have furnished to the Dealer Manager such further
information, certificates and documents as the Dealer Manager may reasonably
request.
If any of the conditions specified in this Section 6 shall not have
been fulfilled in all material respects when and as provided in this Agreement
or waived by the Dealer Manager, or if any of the opinions and certificates
mentioned above or elsewhere in this Agreement shall not be in all material
respects satisfactory in form and substance to the Dealer Manager and its
counsel, this Agreement and all obligations of the Dealer Manager hereunder may
be canceled at, or at any time prior to, the Expiration Date by the Dealer
Manager. Notice of such cancellation shall be given to the Fund in writing or by
telephone confirmed in writing.
7. INDEMNIFICATION AND CONTRIBUTION.
(a) Each of the Fund and the Manager, jointly and severally,
will indemnify and hold harmless the Dealer Manager, the directors, officers,
employees and agents of the Dealer Manager and each person, if any, who controls
the Dealer Manager within the meaning of Section 15 of the Securities Act and
Section 20 of the Exchange Act from and against any and all losses, claims,
liabilities, expenses and damages (including, but not limited to, any and all
investigative, legal and other expenses reasonably incurred in connection with,
and any and all amounts paid in settlement of, any action, suit or proceeding
between any of the indemnified parties and any indemnifying parties or between
any indemnified party and any third party, or otherwise, or any claim asserted),
as and when incurred to which the Dealer Manager, or any such person, may become
subject under the Securities Act, the Exchange Act, the Investment Company Act,
the Advisers Act or other federal or state statutory law or regulation, at
common law or otherwise, insofar as such losses, claims, liabilities, expenses
or damages arise out of or are based on (i) any untrue statement or alleged
untrue statement of a material fact contained in the Registration Statement, the
29
<PAGE>
Prospectus or Offering Materials, or any amendment or supplement to the
Registration Statement, the Prospectus or Offering Materials, or in any
documents filed under the Exchange Act and deemed to be incorporated by
reference into the Registration Statement, the Prospectus, or in any application
or other document executed by or on behalf of the Fund or based on written
information furnished by or on behalf of the Fund filed with the Commission,
(ii) the omission or alleged omission to state in such document a material fact
required to be stated in it or necessary to make the statements in it not
misleading or (iii) any act or failure to act or any alleged act or failure to
act by the Dealer Manager in connection with, or relating in any manner to, the
Rights or the Shares or the offering contemplated hereby, and which is included
as part of or referred to in any loss, claim, liability, expense or damage
arising out of or based upon matters covered by clause (i) or (ii) above
(provided that neither the Fund nor the Manager shall be liable under this
clause (iii) to the extent it is finally judicially determined by a court of
competent jurisdiction that such loss, claim, liability, expense or damage
resulted directly from any such acts or failures to act undertaken or omitted to
be taken by such Dealer Manager through its bad faith, willful misconduct, gross
negligence or intentional failure to perform substantially the obligations and
duties of the Dealer Manager under this Agreement); provided that neither the
Fund nor the Manager will be liable to the extent that such loss, claim,
liability, expense or damage arises from the sale of the Shares in the public
offering to any person by the Dealer Manager and is based on an untrue statement
or omission or alleged untrue statement or omission made in reliance on and in
conformity with information relating to the Dealer Manager furnished in writing
to the Fund by the Dealer Manager expressly for inclusion in the Registration
Statement or the Prospectus. This indemnity agreement will be in addition to any
liability that the Fund or the Manager might otherwise have.
(b) The Dealer Manager will indemnify and hold harmless the
Fund and the Investment Manager, each person, if any, who controls the Fund or
the Investment Manager within the meaning of Section 15 of the Securities Act or
Section 20 of the Exchange Act, each trustee of the Fund and each officer of the
Fund who signs the Registration Statement to the same extent as the foregoing
indemnity from the Fund or the Manager to the Dealer Manager, but only insofar
as losses, claims, liabilities, expenses or damages arise out of or are based on
any untrue statement or omission or alleged untrue statement or omission made in
reliance on and in conformity with information relating to the Dealer Manager
30
<PAGE>
furnished in writing to the Fund by the Dealer Manager expressly for use in the
Registration Statement or Prospectus, such information being as set forth in
Section 7(h) hereof. This indemnity will be in addition to any liability that
the Dealer Manager might otherwise have; provided, however, that in no case
shall the Dealer Manager be liable or responsible for any amount in excess of
the fees and commissions received by the Dealer Manager.
(c) Any party that proposes to assert the right to be
indemnified under this Section 7 will, promptly after receipt of notice of
commencement of any action against such party in respect of which a claim is to
be made against an indemnifying party or parties under this Section 7, notify
each such indemnifying party of the commencement of such action, enclosing a
copy of all papers served, but the omission to so notify such indemnifying party
will not relieve it from any liability that it may have to any indemnified party
under the foregoing provision of this Section 7 unless, and only to the extent
that, such omission results in the forfeiture of substantive rights or defenses
by the indemnifying party. If any such action is brought against any indemnified
party and it notifies the indemnifying party of its commencement, the
indemnifying party will be entitled to participate in and, to the extent that it
elects by delivering written notice to the indemnified party promptly after
receiving notice of the commencement of the action from the indemnified party,
jointly with any other indemnifying party similarly notified, to assume the
defense of the action, with counsel satisfactory to the indemnified party, and
after notice from the indemnifying party to the indemnified party of its
election to assume the defense, the indemnifying party will not be liable to the
indemnified party for any legal or other expenses except as provided below and
except for the reasonable costs of investigation subsequently incurred by the
indemnified party in connection with the defense. The indemnified party will
have the right to employ its own counsel in any such action, but the fees,
disbursements and other charges of such counsel will be at the expense of such
indemnified party unless (1) the employment of counsel by the indemnified party
has been authorized in writing by the indemnifying party, (2) the indemnified
party has reasonably concluded (based on the advice of counsel) that there may
be legal defenses available to it or other indemnified parties that are
different from or in addition to those available to the indemnifying party (3) a
conflict or potential conflict exists (based on advice of counsel to the
indemnified party) between the indemnified party and the indemnifying party (in
31
<PAGE>
which case the indemnifying party will not have the right to direct the defense
of such action on behalf of the indemnified party) or (4) the indemnifying party
has not in fact employed counsel to assume the defense of such action within a
reasonable time after receiving notice of the commencement of the action, in
each of which cases the reasonable fees, disbursements and other charges of
counsel will be at the expense of the indemnifying party or parties. It is
understood that the indemnifying party or parties shall not, in connection with
any proceeding or related proceedings in the same jurisdiction, be liable for
the reasonable fees, disbursements and other charges of more than one separate
firm admitted to practice in such jurisdiction at any one time for all such
indemnified party or parties. All such fees, disbursements and other charges
will be reimbursed by the indemnifying party promptly as they are incurred. An
indemnifying party will not be liable for any settlement of any action or claim
effected without its written consent (which consent will not be unreasonably
withheld). No indemnifying party shall, without the prior written consent of
each indemnified party, settle or compromise or consent to the entry of any
judgment in any pending or threatened claim, action or proceeding relating to
the matters contemplated by this Section 7 (whether or not any indemnified party
is a party thereto), unless such settlement, compromise or consent includes an
unconditional release of each indemnified party from all liability arising or
that may arise out of such claim, action or proceeding. Notwithstanding any
other provision of this Section 7(c), if at any time an indemnified party shall
have requested an indemnifying party to reimburse the indemnified party for
fees, disbursements and other charges of counsel, such indemnifying party agrees
that it shall be liable for any settlement effected without its written consent
if (i) such settlement is entered into more than 45 days after receipt by such
indemnifying party of the aforesaid request, (ii) such indemnifying party shall
have received notice of terms of such settlement at least 30 days prior to such
settlement being entered into and (iii) such indemnifying party shall not have
reimbursed such indemnified party in accordance with such request prior to the
date of such settlement.
(d) In order to provide for just and equitable contribution in
circumstances in which the indemnification provided for in the foregoing
paragraph of this Section 7 is applicable in accordance with its terms but for
any reason is held to be unavailable from the Fund, the Investment Manager or
the Dealer Manager, the Fund, the Investment Manager and the Dealer Manager will
32
<PAGE>
contribute to the total losses, claims, liabilities, expenses and damages
(including any investigative, legal and other expenses reasonably incurred in
connection with, and any amount paid in settlement of, any action, suit or
proceeding or any claim asserted, but after deducting any contribution received
by the Fund and the Investment Manager from persons other than the Dealer
Manager, such as persons who control the Fund or the Investment Manager within
the meaning of the Securities Act or the Exchange Act, officers of the Fund who
signed the Registration Statement and trustees of the Fund, who may also be
liable for contribution) to which the Fund, the Investment Manager and the
Dealer Manager may be subject in such proportion as shall be appropriate to
reflect the relative benefits received by the Fund and the Investment Manager on
the one hand and the Dealer Manager on the other. The relative benefits received
by the Fund and the Investment Manager (treated jointly for this purpose as one
person) on the one hand and the Dealer Manager on the other hand shall be deemed
to be in the same proportion as the total net proceeds from the Offering (before
deducting expenses) received by the Fund bear to the total fees received by the
Dealer Manager, in each case as set forth on the cover page of the Prospectus.
If, but only if, the allocation provided by the foregoing sentence is not
permitted by applicable law, the allocation of contribution shall be made in
such proportion as is appropriate to reflect not only such relative benefits
referred to in the foregoing sentence but also the relative fault of the Fund
and the Investment Manager (treated jointly for this purpose as one person) on
the one hand and the Dealer Manager on the other hand with respect to the
statements or omissions which resulted in such loss, claim, liability, expense
or damage in respect thereof, as well as any other relevant equitable
considerations with respect to the Offering. Such relative fault of the parties
shall be determined by reference to whether the untrue or alleged untrue
statement of a material fact or the omission or alleged omission to state a
material fact relates to information supplied by the Fund, the Investment
Manager or the Dealer Manager, the intent of the parties and their relative
knowledge, access to information and opportunity to correct or prevent such
statement or omission. The Fund, the Investment Manager and the Dealer Manager
agree that it would not be just and equitable if contributions pursuant to this
Section 7(d) were to be determined by pro rata allocation or by any other method
of allocation which does not take into account the equitable considerations
referred to herein. The amount paid or payable by an indemnified party as a
result of the loss, claim, liability, expense or damage, or action in respect
thereof, referred to above in this Section 7(d) shall be deemed to include, for
33
<PAGE>
purposes of this Section 7(d) any legal or other expenses reasonably incurred by
such indemnified party in connection with investigating or defending any such
action or claim. Notwithstanding the provisions of this Section 7(d), the Dealer
Manager shall not be required to contribute any amount in excess of the fees
received by it and no person found guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act) will be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. For purposes of this Section 7(d), any person who controls a
party to this Agreement within the meaning of the Securities Act will have the
same rights to contribution as that party, and each trustee of the Fund and each
officer of the Fund who signed the Registration Statement will have the same
rights to contribution as the Fund, subject in each case to the provisions
hereof. Any party entitled to contribution, promptly after receipt of notice of
commencement of any action against such party in respect of which a claim for
contribution may be made under this Section 7(d), will notify such party or
parties from whom contribution may be sought, but the omission so to notify will
not relieve the party or parties from whom contribution may be sought from any
other obligation it or they may have under this Section 7(d). Except for a
settlement entered into pursuant to the last sentence of Section 7(c) hereof, no
party will be liable for contribution with respect to any action or claim
settled without its written consent (which consent shall not be unreasonably
withheld).
(e) The indemnity and contribution agreements contained in
this Section 7 and the representations and warranties of the Fund and the
Investment Manager contained in this Agreement shall remain operative and in
full force and effect regardless of (i) any investigation made by or on behalf
of the Dealer Manager, (ii) acceptance of Shares and payment therefore or (iii)
any termination of this Agreement.
(f) Notwithstanding any other provisions in this Section 7, no
party shall be entitled to indemnification or contribution under this Agreement
against any loss, claim, liability, expense or damage arising by reason of such
person's willful misfeasance, bad faith or gross negligence in the performance
of its duties hereunder, or by reason of such person's intentional failure to
perform such person's obligations and duties hereunder.
(g) The Fund and the Investment Manager agree to indemnify
each Soliciting Dealer and controlling persons to the same extent and subject to
34
<PAGE>
the same conditions and to the same agreements, including with respect to
contribution, provided for in subsections 7(a), 7(b), 7(c), 7(d), 7(e), and
7(f).
(h) The Fund and the Investment Manager acknowledge that the
statements under the caption "THE OFFER-Distribution Arrangements" in the
Prospectus constitute the only information furnished in writing to the Fund by
the Dealer Manager expressly for use in such document, and the Dealer Manager
confirms that such statements are correct in all material respects.
8. REPRESENTATIONS, WARRANTIES AND AGREEMENTS TO SURVIVE DELIVERY.
The respective agreements, representations, warranties, indemnities and other
statements of the Fund or its officers, of the Investment Manager and of the
Dealer Manager set forth in or made pursuant to this Agreement shall survive the
Expiration Date and will remain in full force and effect, regardless of any
investigation made by or on behalf of Dealer Manager or the Fund or any of the
officers, directors or controlling persons referred to in Section 7 hereof, and
will survive delivery of and payment for the Shares pursuant to the Offer. The
provisions of Sections 5 and 7 hereof shall survive the termination or
cancellation of this Agreement.
9. TERMINATION OF AGREEMENT.
(a) This Agreement shall be subject to termination in the
absolute discretion of the Dealer Manager, by notice given to the Fund prior to
the expiration of the Offer, if prior to such time (i) financial, political,
economic, currency, banking or social conditions in the United States shall have
undergone any material change the effect of which on the financial markets makes
it, in the Dealer Manager's judgment, impracticable or inadvisable to proceed
with the Offer, (ii) there has occurred any outbreak or material escalation of
hostilities or other calamity or crisis the effect of which on the financial
markets of the United States is such as to make it, in the Dealer Manager's
judgment, impracticable or inadvisable to proceed with the Offer, (iii) trading
in the Common Shares shall have been suspended by the Commission or the New York
Stock Exchange, (iv) trading in securities generally on the New York Stock
Exchange shall have been suspended or limited or (v) a banking moratorium shall
have been declared either by Federal or New York State authorities.
(b) If this Agreement is terminated pursuant to this Section,
such termination shall be without liability of any party to any other party
except as provided in Section 5.
35
<PAGE>
10. NOTICES. All communications hereunder will be in writing and
effective only on receipt, and, if sent to the Dealer Manager, will be mailed,
delivered or telegraphed and confirmed to PaineWebber Incorporated, Attn:
Corporate Finance Department, 1285 Avenue of the Americas, New York, New York
10019; or if sent to the Fund or the Investment Manager will be mailed, or
delivered or telegraphed and confirmed to them at: INVESCO Funds Group Inc.,
Attn. Glen Payne, 7800 East Union Avenue, Denver, Colorado 80237, Facsimile No.:
(303) 930-6307.
11. SUCCESSORS. This Agreement will inure to the benefit of and be
binding upon the parties hereto and their respective successors and will inure
to the benefit of the officers and directors and controlling persons referred to
in Section 7 hereof, and no other person will have any right or obligation
hereunder.
12. APPLICABLE LAW. This Agreement will be governed by and construed
in accordance with the laws of the State of New York.
13. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same instrument.
14. LIMITATION OF LIABILITY. Consistent with the Fund's Declaration
of Trust, notice is hereby given and the parties hereto acknowledge and agree
that this Agreement is executed on behalf of the Trustees of the Fund as
Trustees and not individually and that the obligations of the Fund under this
Agreement are not binding upon any of the Trustees or shareholders of the Fund
individually but are binding only against the assets and property of the Fund.
36
<PAGE>
If the foregoing is in accordance with your understanding of our
agreement, please so indicate in the space provided below for that purpose,
whereupon this letter shall constitute a binding agreement among the Fund, the
Investment Manager and the Dealer Manager.
Very truly yours,
INVESCO GLOBAL HEALTH SCIENCES FUND
By: ____________________________________
Name:
Title:
INVESCO FUNDS GROUP, INC.
By: ____________________________________
Name:
Title:
The foregoing Agreement is hereby confirmed and accepted as of the date first
above written.
PAINEWEBBER INCORPORATED
By: /s/ Oscar J. Junquera
------------------------
Name: Oscar J. Junquera
Title: Managing Director
<PAGE>
EXHIBIT A
INVESCO GLOBAL HEALTH SCIENCES FUND
Rights Offering for Shares of Beneficial Interest
SOLICITING DEALER AGREEMENT
THE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME,
June 18, 1999. UNLESS EXTENDED
To Securities Dealers and Brokers:
INVESCO Global Health Sciences Fund (the "Fund") is issuing to its
shareholders of record ("Record Date Shareholders") as of the close of business
on May 25, 1999 (the "Record Date") non-transferable rights ("Rights") to
subscribe for an aggregate of up to 6,081,223 shares (the "Shares") of
beneficial interest, par value $0.01 per share (the "Common Shares"), of the
Fund upon the terms and subject to the conditions set forth in the Fund's
Prospectus (the "Prospectus") dated May 25, 1999 (the "Offer"). Each such Record
Date Shareholder is being issued one Right for each five full Common Shares
owned on the Record Date. The Rights entitle the Record Date Shareholder, during
the Subscription Period (as hereinafter defined) to acquire at the Subscription
Price (as hereinafter defined), one Share for each Right held in the primary
subscription. No fractional Shares will be issued. The Subscription Price will
be __________________. The Subscription Period will commence on May 25, 1999 and
end on the Expiration Date. (With respect to the Offer, the term "Expiration
Date" means 5:00 p.m., New York City time, on June 18, 1999, unless and until
the Fund shall, in its sole discretion, have extended the period for which the
Offer is open, in which event the term "Expiration Date" with respect to the
Offer will mean the latest time and date on which the Offer, as so extended by
the Fund, will expire.) Any Record Date Shareholder who fully exercises all
Rights issued to such shareholder (other than those Rights that cannot be
exercised because they represent the right to acquire less than one Share) is
entitled to subscribe for Shares which were not otherwise subscribed for by
others on primary subscription (the "Over-Subscription Privilege"). Shares
acquired pursuant to the Over-Subscription Privilege are subject to allocation,
as more fully discussed in the Prospectus.
For the duration of the Offer, the Fund has authorized and the
Dealer Manager has agreed to reallow Solicitation Fee to any qualified broker or
<PAGE>
dealer executing a Soliciting Dealer Agreement who solicits the exercise of
Rights and the Over-Subscription Privilege in connection with the Offer and who
complies with the procedures described below (a "Soliciting Dealer"). Upon
timely delivery to EquiServe, Inc., the Fund's Subscription Agent for the Offer,
of payment for Shares purchased pursuant to the exercise of Rights and the
Over-Subscription Privilege and of properly completed and executed documentation
as set forth in this Soliciting Dealer Agreement, a Soliciting Dealer will be
entitled to receive the Solicitation Fee equal to 2.50% of the Subscription
Price per Share so purchased; provided, however, that no payment shall be due
with respect to the issuance of any Shares until payment therefor is actually
received. A qualified broker or dealer is a broker or dealer which is a member
of a registered national securities exchange in the United States or the
National Association of Securities Dealers, Inc. ("NASD") or any foreign broker
or dealer not eligible for membership who agrees to conform to the Rules of Fair
Practice of the NASD, including Sections 2730, 2740, 2420 and 2750 thereof, in
making solicitations in the United States to the same extent as if it were a
member thereof.
The Fund has authorized and the Dealer Manager has agreed to reallow
Solicitation Fee payable to the undersigned Soliciting Dealer and the Fund has
agreed to indemnify such Soliciting Dealer on the terms set forth in the Dealer
Manager Agreement, dated May 25, 1999, among PaineWebber Incorporated as the
dealer manager (the "Dealer Manager"), the Fund and others (the "Dealer Manager
Agreement"). Solicitation and other activities by Soliciting Dealers may be
undertaken only in accordance with the applicable rules and regulations of the
Securities and Exchange Commission and only in those states and other
jurisdictions where such solicitations and other activities may lawfully be
undertaken and in accordance with the laws thereof. Compensation will not be
paid for solicitations in any state or other jurisdiction in which the opinion
of counsel to the Fund or counsel to the Dealer Manager, such compensation may
not lawfully be paid. No Soliciting Dealer shall be paid Solicitation Fees with
respect to Shares purchased pursuant to an exercise of Rights and the
Over-Subscription Privilege for its own account or for the account of any
affiliate of the Soliciting Dealer, except that the Dealer Manager shall receive
the Solicitation Fees with respect to Shares purchased pursuant to an exercise
of Rights and the Over-Subscription Privilege for its own account provided that
such Shares are offered and sold by the Dealer Manager to its clients. No
Soliciting Dealer or any other person is authorized by the Fund or the Dealer
Manager to give any information or make any representations in connection with
the Offer other than those contained in the Prospectus and other authorized
A-2
<PAGE>
solicitation material furnished by the Fund through the Dealer Manager. No
Soliciting Dealer is authorized to act as agent of the Fund or the Dealer
Manager in any connection or transaction. In addition, nothing herein contained
shall constitute the Soliciting Dealers partners with the Dealer Manager or with
one another, or agents of the Dealer Manager or of the Fund, or create any
association between such parties, or shall render the Dealer Manager or the Fund
liable for the obligations of any Soliciting Dealer. The Dealer Manager shall be
under no liability to make any payment to any Soliciting Dealer, and shall be
subject to no other liabilities to any Soliciting Dealer, and no obligations of
any sort shall be implied.
In order for a Soliciting Dealer to receive Solicitation Fees, the
Subscription Agent must have received from such Soliciting Dealer no later than
5:00 p.m., New York City time, on the Expiration Date, either (i) a properly
completed and duly executed Subscription Certificate with respect to Shares
purchased pursuant to the exercise of Rights and the Over-Subscription Privilege
and full payment for such Shares; or (ii) a Notice of Guaranteed Delivery
guaranteeing delivery to the Subscription Agent by close of business on the
third business day after the Expiration Date, of (a) full payment for such
Shares and (b) a properly completed and duly executed Subscription Certificate
with respect to Shares purchased pursuant to the exercise of Rights.
Solicitation Fees will only be paid after receipt by the Subscription Agent of a
properly completed and duly executed Soliciting Dealer Agreement and a
Subscription Certificate designating the Soliciting Dealer in the applicable
portion hereof. In the case of a Notice of Guaranteed Delivery, Solicitation
Fees will only be paid after delivery in accordance with such Notice of
Guaranteed Delivery has been effected. Solicitation Fees will be paid by the
Dealer Manager (through the Subscription Agent) to the Soliciting Dealer by
check to an address designated by the Soliciting Dealer below on or before the
tenth business day following the day of final payment for Shares as set forth in
the Prospectus.
All questions as to the form, validity and eligibility (including
time of receipt) of this Soliciting Dealer Agreement will be determined by the
Fund, in its sole discretion, which determination shall be final and binding.
Unless waived, any irregularities in connection with a Soliciting Dealer
Agreement or delivery thereof must be cured within such time as the Fund shall
determine. None of the Fund, the Dealer Manager, the Subscription Agent, the
Information Agent for the Offer, Shareholder Communications Corp., or any other
person will be under any duty to give notification of any defects or
irregularities in any Soliciting Dealer Agreement or incur any liability for
failure to give such notification.
A-3
<PAGE>
The acceptance of Solicitation Fees from the Fund by the undersigned
Soliciting Dealer shall constitute a representation by such Soliciting Dealer to
the Fund that: (i) it has received and reviewed the Prospectus; (ii) in
soliciting purchases of Shares pursuant to the exercise of the Rights and the
Over-Subscription Privilege, it has complied with the applicable requirements of
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), the
applicable rules and regulations thereunder, any applicable securities laws of
any state or jurisdiction where such solicitations were made, and the applicable
rules and regulations of any self-regulatory organization or registered national
securities exchange; (iii) in soliciting purchases of Shares pursuant to the
exercise of the Rights and the Over-Subscription Privilege, it has not
published, circulated or used any soliciting materials other than the Prospectus
and any other authorized solicitation material furnished by the Fund through the
Dealer Manager; (iv) it has not purported to act as agent of the Fund or the
Dealer Manager in any connection or transaction relating to the Offer; (v) the
information contained in this Soliciting Dealer Agreement is, to its best
knowledge, true and complete; (vi) it is not affiliated with the Fund; (vii) it
will not accept Solicitation Fees paid by the Fund pursuant to the terms hereof
with respect to Shares purchased by the Soliciting Dealer pursuant to an
exercise of Rights and the Over-Subscription Privilege for its own account;
(viii) it will not remit, directly or indirectly, any part of Solicitation Fees
paid by the Fund pursuant to the terms hereof to any beneficial owner of Shares
purchased pursuant to the Offer; (ix) it has agreed to the amount of the
Solicitation Fees and the terms and conditions set forth herein with respect to
receiving such Solicitation Fees, and (x) it will not engage in short sales of
the Common Shares during the Offering Period. By returning a Soliciting Dealer
Agreement and accepting Solicitation Fees, a Soliciting Dealer will be deemed to
have agreed to indemnify the Fund and the Dealer Manager against losses, claims,
damages and liabilities to which the Fund may become subject as a result of the
breach of such Soliciting Dealer's representations made herein and described
above. In making the foregoing representations, Soliciting Dealers are reminded
of the possible applicability of the antimanipulation rules under the Exchange
Act if they have bought, sold, dealt in or traded in any Shares for their own
account since the commencement of the Offer.
Upon expiration of the Offer, no Solicitation Fees will be payable
to Soliciting Dealers with respect to Shares purchased thereafter.
A-4
<PAGE>
Capitalized terms not otherwise defined herein shall have the
meanings ascribed to them in the Dealer Manager Agreement or, if not defined
therein, in the Prospectus.
This Soliciting Dealer Agreement will be governed by the laws of the
State of New York.
Please execute this Soliciting Dealer Agreement below accepting the
terms and conditions hereof and confirming that you are a member firm of the
NASD or a foreign broker or dealer not eligible for membership who has conformed
to the Rules of Fair Practice of the NASD, including Sections 2730, 2740, 2420
and 2750 thereof, in making solicitations of the type being undertaken pursuant
to the Offer in the United States to the same extent as if you were a member
thereof, and certifying that you have solicited the purchase of the Shares
pursuant to exercise of the Rights, all as described above, in accordance with
the terms and conditions set forth in this Soliciting Dealer Agreement. Please
forward two executed copies of this Soliciting Dealer Agreement to PaineWebber
Incorporated, Attn: Jose Aldeanueva, 1285 Avenue of the Americas, New York, NY
10019; (Tel. No.: (212) 713-3343 Facsimile No.: (212) 713-4205). A signed copy
of this Soliciting Dealer Agreement will be promptly returned to the Soliciting
Dealer at the address set forth below.
Very truly yours,
PaineWebber Incorporated
By: _________________________________
Name:
Title:
PLEASE COMPLETE THE INFORMATION BELOW
__________________________________ ________________________________________
Printed Firm Name Address
_____________________________________________________________________________
Contact at Soliciting Dealer
__________________________________ ________________________________________
Authorized Signature Area Code and Telephone Number
A-5
<PAGE>
__________________________________ ________________________________________
Name and Title Facsimile Number
Dated: ___________________________
Payment of the Solicitation Fee
shall be mailed by check to the
following address:
__________________________________
__________________________________
__________________________________
SUBSCRIPTION AGENT AGREEMENT
This Subscription Agent Agreement (the "Agreement") is made as of May __,
1999 between INVESCO Global Health Sciences Fund (the "Fund") and State Street
Bank and Trust Fund as subscription agent (the "Agent"). All terms not defined
herein shall have the meaning given in the prospectus (the "Prospectus")
included in the (Registration Statement on Form N-2 (File No. 811-06476) filed
by the Fund with the Securities and Exchange Commission on April 7, 1999, as
amended by any amendment filed with respect thereto (the "Registration
Statement").
WHEREAS, the Fund proposes to make a subscription offer by issuing
certificates or other evidences of subscription rights, in the form designated
by the Fund (the "Subscription Certificates") to shareholders of record (the
"Shareholders") of its shares of beneficial interest, par value $0.01 per share
("Shares"), as of a record date specified by the Fund (the "Record Date"),
pursuant to which each Shareholder will have certain rights (the "Rights") to
subscribe for Shares, as described in and upon such terms as are set forth in
the Prospectus, a final copy of which has been or, upon availability will
promptly be, delivered to the Agent; and
WHEREAS, the Fund wishes the Agent to perform certain acts on behalf of
the Fund, and the Agent is willing to so act, in connection with the
distribution of the Subscription Certificates and the issuance and exercise of
the Rights to subscribe therein set forth, all upon the terms and conditions set
forth herein.
NOW, THEREFORE, in consideration of the foregoing and of the mutual
agreements set forth herein, the parties agree as follows:
1. Appointment. The Fund hereby appoints the Agent to act as subscription
agent in connection with the distribution of Subscription Certificates and the
issuance and exercise of the Rights in accordance with the terms set forth in
this Agreement and the Agent hereby accepts such appointment.
2. Form and Execution of Subscription Certificates.
(a) Each Subscription Certificate shall be irrevocable and
non-transferable. The Agent shall, in its capacity as Transfer Agent of the
Fund, maintain a register of Subscription Certificates and the holders of record
thereof (each of whom shall be deemed a "Shareholder" hereunder for purposes of
determining the rights of holders of Subscription Certificates). Each
Subscription Certificate shall, subject to the provisions thereof, entitle the
Shareholder in whose name it is recorded to the following:
(1) With respect to Record Date Shareholders only, the right to
acquire during the Subscription Period, as defined in the Prospectus, at the
Subscription Price, as defined in the Prospectus, a number of shares of Shares
equal to one share of Shares for every one Right (the "Primary Subscription
Right"); and
(2) With respect to Record Date Shareholders only, the right to
subscribe for additional Shares, subject to the availability of such Shares and
to the allotment of such Shares as may be available among Record Date
Shareholders who exercise Over-Subscription Rights on the basis specified in the
Prospectus; provided, however, that such Record Date Shareholder has exercised
all Primary Subscription Rights issued to him or her (the "Over-Subscription
Privilege").
3. Rights and Issuance of Subscription Certificates.
(a) Each Subscription Certificate shall evidence the Rights of the
Shareholder therein named to purchase Shares upon the terms and conditions
therein and herein set forth.
<PAGE>
(b) Upon the written advice of the Fund, signed by any of its duly
authorized officers, as to the Record Date, the Agent shall, from a list of the
Fund Shareholders as of the Record Date to be prepared by the Agent in its
capacity as Transfer Agent of the Fund, prepare and record Subscription
Certificates in the names of the Shareholders, setting forth the number of
Rights to subscribe for the Fund's Shares calculated on the basis of one Right
for five shares of Shares recorded on the books in the name of each such
Shareholder as of the Record Date. The number of Rights that are issued to
Record Date Shareholders will be rounded down, by the Agent, to the nearest
number of Full Rights as Fractional Rights will not be issued. Each Subscription
Certificate shall be dated as of the Record Date and shall be executed manually
or by facsimile signature of a duly authorized officer of the Subscription
Agent. Upon the written advice, signed as aforesaid, as to the effective date of
the Registration Statement, the Agent shall promptly countersign and deliver the
Subscription Certificates, together with a copy of the Prospectus, instruction
letter and any other document as the Fund deems necessary or appropriate, to all
Shareholders with record addresses in the United States (including its
territories and possessions and the District of Columbia). Delivery shall be by
first class mail (without registration or insurance), except for those
Shareholders having a registered address outside the United States (who will
only receive copies of the Prospectus, instruction letter and other documents as
the Fund deems necessary or appropriate, if any), delivery shall be by air mail
(without registration or insurance) and by first class mail (without
registration or insurance) to those Shareholders having APO or FPO addresses. No
Subscription Certificate shall be valid for any purpose unless so executed.
(c) The Agent will mail a copy of the Prospectus, instruction letter, a
special notice and other documents as the Fund deems necessary or appropriate,
if any, but not Subscription Certificates to Record Date Shareholders whose
record addresses are outside the United States (including its territories and
possessions and the District of Columbia ) ("Foreign Record Date Shareholders").
The Rights to which such Subscription Certificates relate will be held by the
Agent for such Foreign Record Date Shareholders' accounts until instructions are
received to exercise the Rights.
4. Exercise.
(a) Record Date Shareholders may acquire Shares offered in the Primary
Subscription and pursuant to the Over-Subscription Privilege by delivery to the
Agent, as specified in the Prospectus, of (i) the Subscription Certificate with
respect thereto, duly executed by such Shareholder in accordance with and as
provided by the terms and conditions of the Subscription Certificate, together
with (ii) the estimated purchase price, of as disclosed in the Prospectus, for
each Share subscribed for by exercise of such Rights, in U.S. dollars by money
order or check drawn on a bank in the United States, in each case payable to the
order of the Fund or the Agent.
(b) Rights may be exercised at any time after the date of issuance of the
Subscription Certificates with respect thereto but no later than 5:00 P.M. New
York time on such date as the Fund shall designate to the Agent in writing (the
"Expiration Date"). For the purpose of determining the time of the exercise of
any Rights, delivery of any material to the Agent shall be deemed to occur when
such materials are received at the Shareholder Services Division of the Agent
specified in the Prospectus.
(c) Notwithstanding the provisions of Section 4 (a) and 4 (b) regarding
delivery of an executed Subscription Certificate to the Agent prior to 5:00 P.M.
New York time on the Expiration Date, if prior to such time the Agent receives a
Notice of Guaranteed Delivery by facsimile (telecopy) or otherwise from a bank,
a trust Fund or a New York Stock Exchange member guaranteeing delivery of (i)
payment of the full Subscription Price for the shares of Shares subscribed for
on Primary Subscription and any additional shares of Shares subscribed for
pursuant to the Over-Subscription Privilege, and (ii) a properly completed and
executed Subscription Certificate, then such exercise of Primary Subscription
<PAGE>
Rights and Over-Subscription Rights shall be regarded as timely, subject,
however, to receipt of the duly executed Subscription Certificate and full
payment for the Shares by the Agent within three Business Days (as defined
below) after the Expiration Date (the "Protect Period") and full payment for
their Shares within ten Business Days after the Confirmation Date (as defined in
Section 4(d)). For the purposes of the Prospectus and this Agreement, "Business
Day" shall mean any day on which trading is conducted on the New York Stock
Exchange.
(d) The Fund will determine the Subscription Price by taking the lower of
95% of (i) the average of the last reported sale prices of shares of Shares on
the New York Stock Exchange on the Expiration Date (the "Pricing Date") and the
four Business Days prior thereto, or (ii) the NAV on the Pricing Date. As soon
as practicable, but no later than eight Business Days following the Pricing Date
(the "Confirm Date"), the Agent shall send to each exercising shareholder (or,
if Shares on the Record Date are held by Cede & Co. or any other depository or
nominee, to Cede & Co. or such other depository or nominee) a confirmation
showing the number of Shares acquired pursuant to the Primary Subscription, and,
if applicable, the Over-Subscription Privilege, the per Share and total purchase
price for such Shares, and any additional amount payable to the Fund by such
Shareholder or any excess to be refunded by the Fund to such Shareholder in the
form of a check and stub, along with a letter explaining the allocation of
Shares pursuant to the Over-Subscription Privilege.
(e) Any additional payment required from a Shareholder must be received by
the Agent within ten Business Days after the Confirmation Date and any excess
payment to be refunded by the Fund to a shareholder will be mailed by the Agent
within seven Business Days after the Confirmation Date. If a Shareholder does
not make timely payment of any additional amounts due in accordance with Section
4(d), the Agent will consult with the Fund in accordance with Section 5 as to
the appropriate action to be taken. The Agent will not issue or deliver
certificates for Shares subscribed for until payment in full therefore has been
received, including collection of checks and payment pursuant to notices of
guaranteed delivery.
5. Validity of Subscriptions. Irregular subscriptions not otherwise covered
by specific instructions herein shall be submitted to an appropriate officer of
the Fund and handled in accordance with his or her instructions. Such
instructions will be documented by the Agent indicating the instructing officer
and the date thereof.
6. Over-Subscription. If, after allocation of Shares to Record Date
Shareholders, there remain unexercised Rights, then the Agent shall allot the
shares issuable upon exercise of such unexercised Rights (the "Remaining
Shares") to Shareholders who have exercised all the Rights initially issued to
them and who wish to acquire more than the number of Shares for which the Rights
issued to them are exercisable. Shares subscribed for pursuant to the
Over-Subscription Privilege will be allocated in the amounts of such
over-subscriptions. If the number of shares for which the Over-Subscription
Privilege has been exercised is greater than the Remaining Shares, the Agent
shall allocate the Remaining Shares to Record Date Shareholders exercising
Over-Subscription Privilege in a PRO RATE manner based on the number of Shares
owned by them on the Record Date. The percentage of Remaining Shares each
over-subscribing Shareholder may acquire will be rounded up or down to result in
delivery of whole Shares. The Agent shall advise the Fund immediately upon the
completion of the allocation set forth above as to the total number of Shares
subscribed and distributable.
7. Delivery of Certificates. The Agent will deliver (i) certificates
representing those Shares purchased pursuant to exercise of Primary Subscription
Rights as soon as practicable after the corresponding Rights have been validly
exercised and full payment for such shares has been received and cleared based
on the Estimated Subscription Price and (ii) certificates representing those
Shares purchased pursuant to the exercise of the Over-Subscription Privilege as
<PAGE>
soon as practicable after the Expiration Date and after all allocations have
been effected.
8. Holding Proceeds of Rights Offering
(a) All proceeds received by the Agent from Shareholders in respect of the
exercise of Rights shall be held by the Agent, on behalf of the Fund, in a
segregated interest bearing account (the "Account"). All interest that accrues
in the Account pending disbursement in the manner described in Section 4(e)
above will inure to the benefit of the Fund.
(b) The Agent shall deliver all proceeds received in respect of the
exercise of Rights to the Fund as promptly as practicable, but in no event later
than ten business days after the Confirmation Date. Proceeds held in respect of
Excess Payments (including interest earned thereon) shall belong to the Fund.
9. Reports.
(a) Daily, during the period commencing not less than seven (7) business
days prior to the Expiration Date and until termination of the Subscription
Period, the Agent will report by telephone or telecopier (by 2:00 p.m., New York
time), confirmed by letter, to an Officer of the Fund and an Officer of the
PaineWebber Incorporated, data regarding Rights exercised, the total number of
Shares subscribed for, and payments received therefor, bringing forward the
figures from the previous day's report in each case so as to show the cumulative
totals and any such other information as may be mutually determined by the Fund
and the Agent.
10. Loss or Mutilation. If any Subscription Certificate is lost, stolen,
mutilated or destroyed, the Agent may, on such terms which will indemnify and
protect the Fund and the Agent may in its discretion impose (which shall, in the
case of a mutilated Subscription Certificate include the surrender and
cancellation thereof), issue a new Subscription Certificate of like denomination
in substitution for the Subscription Certificate so lost, stolen, mutilated or
destroyed.
11. Compensation for Services. The Fund agrees to pay to the Agent
compensation for its services as such in accordance with its Fee Schedule to act
as Agent, dated May 10, 1999 and set forth attached hereto as Exhibit A. The
Fund further agrees that it will reimburse the Agent for its reasonable
out-of-pocket expenses incurred in the performance of its duties as such.
12. Instructions and Indemnification. The Agent undertakes the duties and
obligations imposed by this Agreement upon the following terms and conditions:
(a) The Agent shall be entitled to rely upon any instructions or
directions furnished to it by an appropriate officer of the Fund, whether in
conformity with the provisions of this Agreement or constituting a modification
hereof or a supplement hereto. Without limiting the generality of the foregoing
or any other provision of this Agreement, the Agent, in connection with its
duties hereunder, shall not be under any duty or obligation to inquire into the
validity or invalidity or authority or lack thereof of any instruction or
direction from an officer of the Fund which conforms to the applicable
requirements of this Agreement and which the Agent reasonably believes to be
genuine and shall not be liable for any delays, errors or loss of data occurring
by reason of circumstances beyond the Agent's control.
(b) The Fund will indemnify the Agent and its nominees against, and hold
it harmless from, all liability and expense which may arise out of or in
connection with the services described in this Agreement or the instructions or
<PAGE>
directions furnished to the Agent relating to this Agreement by an appropriate
officer of the Fund, except for any liability or expense which shall arise out
of the failure to perform its duties under this Agreement or the negligence, bad
faith, willful misconduct, of the Agent or such nominees.
13. Changes in Subscription Certificate. The Agent may, without the consent or
concurrence of the Shareholders in whose names Subscription Certificates are
registered, by supplemental agreement or otherwise, concur with the Fund in
making any changes or corrections in a Subscription Certificate that it shall
have been advised by counsel (who may be counsel for the Fund) is appropriate to
cure any ambiguity or to correct any defective or inconsistent provision or
clerical omission or mistake or manifest error therein or herein contained, and
which shall not be inconsistent with the provision of the Subscription
Certificate except insofar as any such change may confer additional rights upon
the Shareholders.
14. Assignment, Delegation.
(a) Except as provided in Section 14(c) below, neither this Agreement nor
any rights or obligations hereunder may be assigned or delegated by either party
without the written consent of the other party.
(b) This Agreement shall inure to the benefit of and be binding upon the
parties and their respective permitted successors and assigns. Nothing in this
Agreement is intended or shall be construed to confer upon any other person any
right, remedy or claim or to impose upon any other person any duty, liability or
obligation.
(c) The Agent may, without further consent on the part of the Fund, (i)
subcontract for the performance hereof with Boston EquiServe Limited Partnership
or (ii) subcontract with other subcontractors for systems, processing, and
telephone and mailing services as may be required from time to time; provided,
however, that the Agent shall be as fully responsible to the Fund for the acts
and omissions of any subcontractor as it is for its own acts and omissions.
15. Governing Law. The validity, interpretation and performance of this
Agreement shall be governed by the law of the Commonwealth of Massachusetts.
16. Third Party Beneficiaries. This Agreement does not constitute an agreement
for a partnership or joint venture between the Agent and the Fund. Neither party
shall make any commitments with third parties that are binding on the other
party without the other party's prior written consent.
17. Force Majeure. In the event either party is unable to perform its
obligations under the terms of this Agreement because of acts of God, strikes,
equipment or transmission failure or damage reasonably beyond its control, or
other cause reasonably beyond its control, such party shall not be liable for
damages to the other for any damages resulting from such failure to perform or
otherwise from such causes. Performance under this Agreement shall resume when
the affected party or parties are able to perform substantially that party's
duties.
18. Consequential Damages. Neither party to this Agreement shall be liable to
the other party for any consequential, indirect, special or incidental damages
under any provisions of this Agreement or for any consequential, indirect,
special or incidental damages arising out of any act or failure to act hereunder
even if that party has been advised of or has foreseen the possibility of such
damages.
<PAGE>
19. Severability. If any provision of this Agreement shall be held invalid,
unlawful, or unenforceable, the validity, legality, and enforceability of the
remaining provisions shall not in any way be affected or impaired.
20. Counterparts. This Agreement may be executed in one or more counterparts,
each of which shall be deemed an original and all of which together shall be
considered one and the same agreement.
21. Captions. The captions and descriptive headings herein are for the
convenience of the parties only. They do not in any way modify, amplify, alter
or give full notice of the provisions hereof.
22. Facsimile Signatures. Any facsimile signature of any party hereto shall
constitute a legal, valid and binding execution hereof by such party.
23. Confidentiality. The Agent and the Fund agree that all books, records,
information and data pertaining to the business of the other party which are
exchanged or received pursuant to the negotiation or the carrying out of this
Agreement including the fees for services set forth in the attached schedule
shall remain confidential, and shall not be voluntarily disclosed to any other
person, except as may be required by law.
24. Term. This Agreement shall remain in effect until terminated on July 30,
1999 (the "Termination Date") or, prior to the Termination Date, upon 30 days'
written notice by either party to the other. Upon termination of the Agreement,
the Exchange Agent shall retain all canceled Certificates and related
documentation as required by applicable law.
25. Merger of Agreement. This Agreement constitutes the entire agreement
between the parties hereto and supersedes any prior agreement with respect to
the subject matter hereof whether oral or written.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers, hereunto duly authorized, as of the day
and year first above written.
STATE STREET BANK AND TRUST INVESCO GLOBAL HEALTH SCIENCES FUND
COMPANY
Charles Rossi Ronald L.
- ----------------------------------- -------------------------------
Signature Signature
Vice President Treasurer
- ----------------------------------- -------------------------------
Title Title
May 24, 1999 May 24, 1999
- ----------------------------------- -------------------------------
Date Date
May 24, 1999
Securities and Exchange Commission
450 Fifth Street, N.W.
Judiciary Plaza
Washington, D.C. 20549
Dear Sir or Madam:
We serve as counsel for the INVESCO Global Health Sciences Fund, a
Massachusetts business trust (the "Fund"), in connection with the issuance of up
to 7,539,029 additional shares of beneficial interest of the Fund, par value
$.01 per share ("Shares") pursuant to the Fund's rights offering (the
"Offering") as described in its Registration Statement filed with the Securities
and Exchange Commission on Form N-2, Securities Act File No. 333-75831 and
Investment Company Act File No. 811-06476 (the "Registration Statement"). All
capitalized terms not otherwise defined herein shall have the meaning set forth
in the Registration Statement.
As counsel for the Fund, we are familiar with its Declaration of Trust
and Bylaws, as amended, and we are familiar with the actions taken by the Fund's
board of trustees in connection with the Offering. We have examined its
Registration Statement, including the prospectus contained therein,
substantially in the form in which it is to become effective. We have further
examined and relied upon a certificate of the Secretary of the Commonwealth of
Massachusetts to the effect that the Fund is duly established and existing under
the laws of the Commonwealth of Massachusetts and is in good standing and duly
authorized to transact business in the Commonwealth of Massachusetts.
We have also examined and relied upon such corporate records of the
Fund and other documents and certificates with respect to factual matters as we
have deemed necessary to render the opinion expressed herein. We have assumed,
without independent verification, the genuineness of all signatures, the
authenticity of all documents submitted to us as originals, and the conformity
with originals of all documents submitted to us as copies. We also have assumed
that: at a meeting of the Fund's board of trustees that is anticipated to be
held on or about June 23rd, 1999, the Shares will be duly
authorized; and the Subscription Agent and the Fund, in issuing the Shares, will
act in compliance with the Registration Statement, the Prospectus and the
Subscription Agent Agreement.
Based on such examination, we are of the opinion that:
1. The Fund is duly organized and validly existing as a business
trust in good standing under the laws of the Commonwealth of
Massachusetts.
<PAGE>
PaineWebber Incorporated
May 24, 1999
Page 2
2. The issuance and sale of the Shares pursuant to the Offering have
been duly authorized by all necessary corporate actions on the
part of the Fund.
3. Upon the issuance and sale of the Shares pursuant to the
Offering, the Shares will be validly issued, fully paid and
nonassessable.
We hereby consent to the filing of this opinion in connection with
Pre-Effective Amendment No. 1 to the Company's Registration Statement on Form
N-2 (File No. 333-75831) being filed with the Securities and Exchange
Commission. We also consent to the reference to our firm under the caption
"Legal Matters" in the Prospectus filed as part of the Registration Statement.
Sincerely,
/s/ KIRKPATRICK & LOCKHART LLP
KIRKPATRICK & LOCKHART LLP
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Prospectus and
Statement of Additional Information constituting parts of this Pre-Effective
Amendment No. 1 to the registration statement on Form N-2 (the "Registration
Statement") of our report dated December 8, 1998, relating to the financial
statements and financial highlights appearing in the October 31, 1998 Annual
Report to Shareholders of INVESCO Global Health Sciences Fund, which is also
incorporated by reference into the Registration Statement. We also consent to
the references to us under the headings "Financial Highlights" and "Independent
Accountants" in the Prospectus and under the heading "Financial Statements" in
the Statement of Additional Information.
PricewaterhouseCoopers LLP
Denver, Colorado
May 19, 1999
POWER OF ATTORNEY
INVESCO GLOBAL HEALTH SCIENCES FUND (the "Fund"), a Massachusetts
business trust, and each of its undersigned trustees hereby nominates,
constitutes, and appoints Glenn A. Payne, Ronald L. Grooms, and James F.
Lummanick with full power to each of them to act alone as his true and lawful
attorney-in-fact and agent, for him and on his behalf and in his name, place and
stead in any and all capacities, to make, execute, and sign any and all pre- and
post-effective amendments to the Fund's Form N-2 Registration Statement filed on
April 7, 1999 under the Securities Act of 1933 and the Investment Company Act of
1940, and to file with the Securities and Exchange Commission, and any other
regulatory authority having jurisdiction over the offer and sale of shares of
beneficial interest of the Fund, any such amendment, and any and all supplements
thereto or to any prospectus or statement of additional information forming a
part thereof, and any and all exhibits, and other documents requisite in
connection therewith, granting unto said attorneys, and each of them, full power
and authority to do and perform each and every act and thing requisite and
necessary to be done in and about the premises as fully to all intents and
purposes as the Fund and the undersigned trustees themselves might or could do.
In addition, the trustees hereby reaffirm their grant of a power of
attorney unto Glenn A. Payne authorizing him to make, execute, and sign the
Registration Statement filed on April 7, 1999 with the Securities and Exchange
Commission on behalf of the undersigned trustees and hereby ratify his having
done so in accordance with that power of attorney.
IN WITNESS WHEREOF, INVESCO GLOBAL HEALTH SCIENCES FUND has caused this
power of attorney to be executed in its name by its trustees, and attested by
its Secretary, and the undersigned trustees have hereunto set their hands and
seals as of the 10th day of May, 1999.
INVESCO GLOBAL HEALTH SCIENCES FUND
By: /s/ Charles W. Brady May 10, 1999
---------------------------- ---------------
Charles W. Brady, Trustee DATE
By: /s/ Fred A. Deering May 10, 1999
---------------------------- ---------------
Fred A. Deering, Trustee DATE
By: /s/ John W. McIntyre May 10, 1999
---------------------------- ---------------
John W. McIntyre, Trustee DATE
By: /s/ Larry Soll May 10, 1999
---------------------------- ---------------
Dr. Larry Soll, Trustee DATE
ATTEST:
/s/ Glen A. Payne May 10, 1999
- -------------------------- ------------
Glen A. Payne, Secretary DATE
