SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
[Amendment No. ___]
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Section 240.14a-12
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INVESCO GLOBAL HEALTH SCIENCES FUND
(Name of Registrant as Specified in its Charter)
N/A
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
- --------------------------------------------------------------------------------
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INVESCO GLOBAL HEALTH SCIENCES FUND
March 19, 2001
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Dear INVESCO Global Health Sciences Fund Shareholder:
We are pleased to enclose the Proxy Statement for the May 8, 2001 annual
shareholders' meeting of your Fund. Please take the time to read the
accompanying Proxy Statement and cast your vote, since the matters we are
submitting for your consideration are important to the Fund and to you as a
shareholder. Your vote is important.
We are requesting action on two proposals:
1. Election of two trustees: INVESCO and the Board of Trustees propose that
Mark H. Williamson and Larry Soll, PhD. be re-elected as Class B Trustees;
and
2. Reorganization of the Fund as a newly created series of an existing INVESCO
Funds open-end investment company effectively converting the Fund to an
open-end mutual fund.
The principal matter to be acted upon at the meeting is Proposal 2. If
approved, Proposal 2 will allow shareholders to immediately buy and sell shares
of the Fund at net asset value, subject to a contingent deferred sales charge
explained in the Proxy Statement. The Board of Trustees has unanimously approved
this proposal because it believes it is in the best interests of shareholders.
Among other things, the board of trustees determined that open-ending the Fund
was the most effective action that could be taken to eliminate the persistent
discount from net asset value at which the Fund's shares, and the shares of most
other equity closed-end funds have historically traded.
We appreciate your thoughtful consideration of these issues and ask that you
vote promptly. If we do not receive sufficient votes to approve these proposals,
it may necessitate a further mailing or a telephone canvass. Thank you.
Sincerely,
----------------------
MARK H. WILLIAMSON
President
INVESCO Global Health Sciences Fund
INVESCO GLOBAL HEALTH SCIENCES FUND
7800 East Union Avenue
Denver, Colorado 80237
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON MAY 8, 2001
================================================================================
Notice is hereby given that the annual meeting of shareholders (the "Meeting")
of INVESCO Global Health Sciences Fund (the "Fund") will be held at 7800 E.
Union Avenue, Denver, Colorado 80237 on Tuesday May 8, 2001, at 1:00 p.m.,
Mountain Time, for the following purposes:
1. Election of two trustees: INVESCO and the Board of Trustees propose that
Mark H. Williamson and Larry Soll, PhD. be re-elected as Class B Trustees;
and
2. Reorganization of the Fund as a newly created series of an existing INVESCO
Funds open-end investment company effectively converting the Fund to an
open-end mutual fund.
The Trustees of the Fund have fixed the close of business on March 9, 2001 as
the record date for the determination of shareholders entitled to notice of and
to vote at the Meeting or any adjournment(s) thereof.
A complete list of shareholders of the Fund entitled to vote at the Meeting will
be available and open to the examination of any shareholder of the Fund for any
purpose germane to the Meeting during ordinary business hours at the offices of
the Fund, 7800 East Union Avenue, Denver, Colorado 80237. A copy of this list
also will be available at the Meeting.
You are cordially invited to attend the Meeting. Shareholders who do not expect
to attend the Meeting in person are requested to complete, sign and date the
enclosed form of proxy and return it promptly in the envelope provided for that
purpose. The enclosed proxy is being solicited on behalf of the Trustees of the
Fund.
IMPORTANT
Please mark, sign, date and return the enclosed proxy in the accompanying
envelope as soon as possible in order to ensure a full representation at the
Meeting. The Meeting will have to be adjourned without conducting any business
if less than a majority of the eligible shares is represented, and the Fund, at
shareholders' expense, will have to continue to solicit votes until a quorum is
obtained. The Meeting also may be adjourned, if necessary, to continue to
solicit votes if less than the required shareholder vote has been obtained to
re-elect the Trustees or approve the other Proposal to be voted on at the
meeting. Your vote, then, could be critical in allowing the Fund to hold the
Meeting as scheduled. By marking, signing and promptly returning the enclosed
proxy, you may eliminate the need for additional solicitation. Your cooperation
will be appreciated.
By Order of the Trustees,
-----------------
Glen A. Payne
Secretary
Denver, Colorado
Dated: March 19, 2001
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS OF:
INVESCO GLOBAL HEALTH SCIENCES FUND
(A MASSACHUSETTS BUSINESS TRUST)
7800 EAST UNION AVENUE
DENVER, COLORADO 80237
(TOLL FREE) 1(800)528-8765.
TO BE HELD ON MAY 8, 2001
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VOTING INFORMATION
------------------------
This Proxy Statement ("Proxy Statement") is furnished in connection with a
solicitation of proxies made by, and on behalf of, the Board of Trustees of
INVESCO Global Health Sciences Fund ("Global Health Sciences Fund" or "Fund") to
be used at the Annual Meeting of Shareholders of INVESCO Global Health Sciences
Fund and at any adjournments thereof ("Meeting"), to be held on May 8, 2001 at
1:00 p.m. at 7800 East Union Avenue, Denver, Colorado 80237, the principal
executive office of Global Health Sciences Fund and INVESCO Funds Group, Inc.
("INVESCO"), the Fund's investment adviser.
The purpose of the Meeting is set forth in the accompanying Notice. The
solicitation is made primarily by the mailing of this Proxy Statement and the
accompanying proxy card on or about March 19, 2001. Supplementary solicitations
may be made by mail, telephone, facsimile, electronic means or by personal
interview by representatives of Global Health Sciences Fund and also may be made
by telephone or oral communications by representatives of INVESCO and INVESCO
Distributors, Inc. ("IDI"), the distributor of the INVESCO group of investment
companies ("INVESCO Funds"), who will not receive any compensation for these
activities from Global Health Sciences Fund. In addition, Shareholder
Communications Corporation, Inc. will assist the Fund in soliciting proxies for
the Meeting and will be paid a fee of approximately $_____ (or such other fee as
determined necessary and appropriate by the Fund) plus out-of-pocket expenses.
The expenses in connection with preparing this Proxy Statement and its
enclosures will be paid by Global Health Sciences Fund. The Fund will reimburse
brokerage firms and others for their reasonable expenses in forwarding
solicitation material to the beneficial owners of shares.
If the enclosed proxy card is executed and returned, it may nevertheless
be revoked at any time prior to its use by written notification received by
Global Health Sciences Fund, by the execution of a later-dated proxy card, or by
attending the Meeting and voting in person.
All proxy cards solicited by the Board of Trustees that are properly
executed and received by the Secretary prior to the Meeting, and which are not
revoked, will be voted at the Meeting. Shares represented by such proxies will
be voted in accordance with the instructions thereon. If no specification is
made on a proxy card, it will be voted FOR the matters specified on the proxy
card. Only proxies that are voted will be counted toward establishing a quorum.
Broker non-votes are not considered voted for this purpose. Shareholders should
note that while votes to ABSTAIN will count toward establishing a quorum,
passage of any proposal being considered at the Meeting will occur only if a
sufficient number of votes are cast FOR the proposal. Accordingly, votes to
ABSTAIN and votes AGAINST will have the same effect in determining whether a
proposal is approved.
If a quorum is not present at the Meeting, or if a quorum is present at
the Meeting but sufficient votes to approve one or more of the proposed items
are not received, or if other matters arise requiring shareholder attention, the
persons named as proxy agents may propose one or more adjournments of the
Meeting to permit further solicitation of proxies. Any such adjournment will
require the affirmative vote of a majority of those shares present at the
Meeting or represented by proxy. When voting on a proposed adjournment, the
persons named as proxy agents will vote FOR the proposed adjournment all shares
that they are entitled to vote with respect to each item, unless directed to
vote AGAINST the item, in which case such shares will be voted against the
proposed adjournment with respect to that item. A shareholder vote may be taken
on one or more of the items in this Proxy Statement or on any other business
properly presented at the meeting prior to such adjournment if sufficient votes
have been received and it is otherwise appropriate.
GLOBAL HEALTH SCIENCES FUND WILL FURNISH, WITHOUT CHARGE, A COPY OF ITS
ANNUAL REPORT FOR THE FISCAL YEAR ENDED OCTOBER 31, 2000, AND ITS SEMI-ANNUAL
REPORT FOR THE PERIOD ENDED APRIL 30, 2000, TO ANY SHAREHOLDER REQUESTING EITHER
REPORT. REQUESTS FOR THE ANNUAL REPORT AND THE SEMI-ANNUAL REPORT SHOULD BE MADE
IN WRITING TO INVESCO GLOBAL HEALTH SCIENCES FUND, 7800 EAST UNION AVENUE,
DENVER, COLORADO 80237, OR BY CALLING 1 (800) 528-8765.
INVESCO, with main offices located at 7800 East Union Avenue, Denver,
Colorado 80237, is Global Health Sciences Fund's Investment Adviser.
As of March 9, 2001, ("Record Date"), Global Health Sciences Fund had
42,278,823 shares of beneficial interest, $0.01 par value per, share
outstanding. Shareholders of record of Global Health Sciences Fund at the close
of business on March 9, 2001 will be entitled to vote at the Meeting with
respect to the proposals set forth in the accompanying notice. Each such
shareholder will be entitled to one vote for each share (and proportionate
fractional votes for each fraction of a share) held on that date.
Except as set forth in Appendix A, INVESCO does not know of any person who
owns beneficially 5% or more of the shares of Global Health Sciences Fund.
Trustees and officers of Global Health Sciences Fund own in the aggregate less
than 1% of the shares of Global Health Sciences Fund.
VOTES REQUIRED:
A MAJORITY OF THE SHARES OF THE FUND ENTITLED TO VOTE, REPRESENTED IN
PERSON OR BY PROXY WILL CONSTITUTE A QUORUM AT THE MEETING. IF A QUORUM IS
PRESENT, THE AFFIRMATIVE VOTE OF A PLURALITY (I.E., THE LARGEST NUMBER OF SHARES
VOTED AT THE MEETING FOR A TRUSTEE NOMINEE) OF THE SHARES REPRESENTED AT THE
MEETING AND ENTITLED TO VOTE SHALL DETERMINE PROPOSAL 1. THE AFFIRMATIVE VOTE OF
A MAJORITY OF SHARES REPRESENTED AT THE MEETING AND ENTITLED TO VOTE SHALL
DETERMINE PROPOSAL 2.
SYNOPSIS
Shareholders of Global Health Sciences Fund will be asked at the upcoming
Meeting (1) to elect two Class B Trustees of Global Health Sciences Fund to
serve for a term expiring on the date on which the annual meeting of
shareholders is held in 2004, or until their respective successors are duly
elected and qualified; and (2) to vote upon and approve the reorganization of
Global Health Sciences Fund ("Reorganization") as an open-end fund, as more
fully described below.
THE PROPOSED REORGANIZATION
Shareholders of Global Health Sciences Fund are being asked to approve the
Reorganization, the principal purpose of which is to convert Global Health
Sciences Fund into an open-end fund by reorganizing the Fund as a newly created
series ("New Fund") of INVESCO Counselor Series Funds, Inc., a Maryland
corporation ("Counselor Series Funds"). As a closed-end fund, Global Health
Sciences Fund's shares have often traded at a discount to net asset value (NAV).
Converting Global Health Sciences Fund into an open-end fund will eliminate the
discount and give shareholders of the New Fund the ability IMMEDIATELY to
realize the value of their shares by redeeming them from the New Fund at NAV
(subject to a Contingent Deferred Sales Charge ("CDSC") of 2% for the first
twelve months following the Reorganization, as described in Proposal 2).
The Reorganization will be accomplished pursuant to an Agreement and Plan
of Reorganization ("Agreement"), which is attached hereto as Appendix B. The
Agreement provides for the acquisition by the New Fund of all of the assets of
Global Health Sciences Fund in exchange, share for share, for Class A shares of
stock of the New Fund and the assumption by the New Fund of the liabilities of
Global Health Sciences Fund. As provided in the Agreement, Global Health
Sciences Fund will then constructively distribute the Class A shares of the New
Fund to its shareholders in liquidation of Global Health Sciences Fund. The
Reorganization will occur as soon as practical after the Annual Meeting, or on
such other date as the Board of Trustees of Global Health Sciences Fund and the
Board of Directors of Counselor Series Funds may determine (Closing Date).
Accordingly, as a result of the Reorganization, Global Health Sciences Fund will
dissolve and the former shareholders of Global Health Sciences Fund will become
Class A shareholders of the New Fund.
The New Fund will have the same investment objective, and, except as
described below, generally similar investment policies and restrictions as
currently apply to Global Health Sciences Fund. However, as described in
Proposal 2, Global Health Sciences Fund's investment restrictions and policies
are, in specific and material respects, different from those associated with New
Fund and the Counselor Series open-end equity funds. These differences in
fundamental investment restrictions relate to the Funds' ability to borrow, to
lend assets, and their issuer diversification requirements. The New Fund will
have non-fundamental investment policies that differ from those of Global Health
Sciences Fund, including a lower limit on New Fund's ability to invest in
illiquid securities, and New Fund's higher limit to engage in short selling. In
addition, if the Reorganization is approved by shareholders, the New Fund will
adopt a fundamental investment policy permitting the New Fund to invest all of
its assets in another open-end investment company managed by INVESCO or an
affiliate with substantially the same investment objective and policies as New
Fund.
In connection with the Reorganization, the New Fund will adopt a proposed
Investment Advisory Agreement, attached hereto as Appendix C, and a new Master
Plan and Agreement for Distribution - Class A shares, attached hereto as
Appendix D, for the New Fund Class A Shares. Under the Proposed Investment
Advisory Agreement, INVESCO will manage the New Fund, but will change its
management fee from an annual rate of 1.00% on ending daily net assets up to and
including $500 million, and 0.90% on ending daily net assets in excess of $500
million, to a base management fee calculated at the annual rate of 1.50% of the
Fund's daily net assets (the "Base Fee"). This Base Fee will be adjusted, on a
monthly basis (i) upward at the rate of 0.20%, on a pro rata basis, for each
percentage point the investment performance of the Class A shares of the Fund
exceeds the sum of 2.00% plus the investment record of the Morgan Stanley Health
Care Product Index (the "Index"), or (ii) downward at the rate of 0.20%, on a
pro rata basis, for each percentage point the investment record of the Index
less 2.00% exceeds the investment performance of the Class A shares of the New
Fund (the "Fee Adjustment"). The maximum or minimum adjustment will be 1.00%
annually. During the first twelve months of operation, the management fee will
be charged at the base fee of 1.50% with no performance adjustment.
Each shareholder of Global Health Sciences Fund will receive a number of
full and fractional Class A shares of the New Fund equal in number and value to
the aggregate net asset value of Global Health Sciences Fund held by such
shareholder on the Closing Date. The net asset value of each fund shall be
determined according to valuation procedures that are the same for both funds.
Global Health Sciences Fund shareholders will not pay any sales load in
connection with the Reorganization and the exchange of Global Health Sciences
Fund shares for Class A
shares of the New Fund, but the Class A shares will be subject to a 12b-1 fee
calculated as a percentage of the New Fund's average net assets that are
acquired by New Fund after the Reorganization attributable to Class A shares at
an annual rate of 0.35%. This 12b-1 structure initially reduces the 12b-1 fee
paid by New Fund below 0.35% of average net assets because the 0.35% 12b-1 fee
is based only on assets acquired by New Fund after the Closing Date, and is
therefore based on less than 100% of New Fund's total Class A assets. The 12b-1
fee applicable to the Class A shares will be lower than the 12b-1 fee applicable
to any other share class of the New Fund available to non-institutional
investors.
The proposed Plan is PROSPECTIVE in nature. Thus, the fee will only be
assessed based on new sales of New Fund Class A shares, exchanges into the Class
A shares and reinvestments of dividends and capital gains distributions
(collectively "New Class A Assets") of the New Fund which occur after the Plan
is implemented. The distribution fees would be absorbed pro rata by all the New
Fund shareholders. The Plan would limit the amount of the New Fund's assets
which could be used for distribution and promotion of Class A shares during any
12-month period to a maximum of 0.35 of 1% (35 basis points) of New Class A
Assets added after the Plan is implemented. Any increase in this rate would
require approval of the Board and shareholders of the New Fund. At no time will
the fees under the Plan be applied to a level of New Class A Assets higher than
the net Class A assets of the New Fund.
The Global Health Sciences Fund and Counselor Series Funds have received
an opinion of their fund counsel, Kirkpatrick & Lockhart LLP, that the
Reorganization will not result in any gain or loss for Federal income tax
purposes to Global Health Sciences Fund, the New Fund, shareholders of Global
Health Sciences Fund or shareholders of the New Fund.
If approved at the meeting, it is anticipated that the Reorganization will
occur as soon as practical after the meeting, but the Reorganization could be
delayed or cancelled as provided in the Agreement. The Agreement provides that,
if either the Board of Trustees of Global Health Sciences Fund, or Board of
Directors of Counselor Series Funds determines that consummation of the
Reorganization is impracticable or inadvisable due to adverse market
developments, or otherwise, the parties may determine to delay the
Reorganization or terminate the Agreement in its entirety. See "Proposal 2 -- To
Approve the Reorganization."
THE PROPOSALS
PROPOSAL 1: ELECTION OF TRUSTEES OF THE FUND
The Fund currently has five Trustees, divided into three classes, with one
Trustee in Class A, two Trustees in Class B and two Trustees in Class C. The
Class B Trustees' terms will expire at the Meeting to be held on May 8, 2001;
the Class A Trustee's term will expire at the annual meeting of shareholders to
be held in 2002; and the Class C Trustees' terms will expire at the annual
meeting of shareholders to be held in 2003.
At the Meeting, two Class B Trustees are to be elected to hold office
until the 2004 annual meeting of shareholders and until their successors are
elected and qualified. The nominees, Larry Soll, Ph.D., who is presently a
Trustee of the Global Health Sciences Fund, and Mark H. Williamson, who is
presently Chairman of the Board, have consented to serve if re-elected, and no
circumstances now known will prevent the nominees from serving. If either of the
nominees should be unable to serve, the proxy will be voted for substitute
nominees proposed by the present trustees.
Information concerning the Trustees of the Fund is set forth below.
No. of Fund
Shares
Beneficially
Owned Directly
Principal Occupation During Past Five Years and or Indirectly on
Name and Address Other Affiliations* Trustees Since March __, 2001+
- ---------------- ----------------------------------------------- -------------- ----------------
Class A Vice Chairman of the Board of the INVESCO Funds; 1992
Fred A. Deering# formerly Chairman of the Executive Committee and
Security Life Center Chairman of the Board of Security Life of Denver
1290 Broadway Insurance Company, Denver, Colorado; Director of
Denver, CO 80203 ING American Holding Company and First ING Life
Insurance Company of New York. Age 73.
Class B President, Chief Executive Officer, and Chairman 2000
Mark H. Williamson* of the Board of the INVESCO Funds; President,
7800 E. Union Avenue Chief Executive Officer and Chairman of the Board
Denver, Colorado 80237 of INVESCO Funds Group, Inc.; President, Chief
Chairman of the Board Executive Officer and Chairman of the Board of
INVESCO Distributors, Inc.; President, Chief
Operating Officer and Chairman of the Board of
INVESCO Global Health Sciences Funds; formerly,
Chairman and Chief Executive Officer of NationsBanc
Advisors, Inc.; formerly Chairman of NationsBanc
Investments, Inc. Age 49
Class B Retired. Formerly, Chairman of the Board (1987 to 1991
Larry Soll, Ph.D.# 1994), Chief Executive Officer (1982 to 1989; 1993
4291 Westside Road to 1994) and President (1982 to 1989) of Synergen Inc.
Friday Harbor, WA 98250 (a biotechnology company), Boulder, Colorado. Director
of Synergen since its incorporation in 1982. Formerly,
Director of ISIS Pharmaceuticals, Inc. (1991 to 2000).
Director of INVESCO Funds. Age 58
Class C Retired. Formerly, Vice Chairman of the Board of The 1991
John W. McIntyre# Citizens and Southern Corporation and Chairman of
7 Piedmont Center, the Board and Chief Executive Officer of The Citizens
Suite 100 and Southern Georgia Corp. and The Citizens and
Atlanta, GA 30305 Southern National Bank. Director of the INVESCO
Funds and Kaiser Foundation Health Plans of Georgia,
Inc. Trustee of Gables Residential Trust, Employee's
Retirement System of GA, Emory University, and J.M.
Tull Charitable Foundation. Age 70
Class C Chairman and Chief Executive Officer of AMVESCAP 1991 (Mr. Brady did
Charles W. Brady++ PLC, London, England, and of various subsidiaries not serve as a
1315 Peachtree Street, NE thereof. Chairman of the Board of the Fund from trustee between
Atlanta, GA 30309 1991-1997, and 1998-2000. Director of INVESCO 2/28/1997 and
Funds. Age 65. 8/3/1998)
All trustees and executive officers as a group
* As used in this Proxy Statement, the term "INVESCO Funds" refers to the 9
investment companies, consisting of 45 separate portfolios, managed by
INVESCO Funds Group and distributed by IDI, excluding the Global Health
Sciences Fund.
# Member of the audit committee.
+ As interpreted by the Securities and Exchange Commission, a security is
beneficially owned by a person if that person has or shares voting power or
investment power with respect to the security. The persons listed have sole
voting and investment power with respect to their respective Fund shares.
++ Because of his affiliation with INVESCO Funds Group, the Fund's
investment adviser, or companies affiliated with INVESCO Funds Group, this
individual is deemed to be an "interested person" of the Fund as that term
is defined in the Investment Company Act of 1940, as amended (the "1940
Act").
The only standing committee of the Global Health Sciences Fund is the
Audit Committee. The Audit Committee, consisting of the three independent
Trustees, meets periodically with the Fund's independent accountants and the
executive officers of the Fund. This committee reviews the accounting principles
being applied by the Fund in financial reporting, the scope and adequacy of
internal controls, the scope of the audit and non-audit assignments of the
independent accountants and the related fees. All of the recommendations of the
audit committee are reported to the Trustees. During the year ended October 31,
2000, Trustees met four times and the audit committee met two times. Each
Trustee attended seventy-five percent or more of the total meetings of the Board
and of the committee of Trustees on which he served that were held during the
year.
TRUSTEE COMPENSATION
The following table shows the compensation paid by the Global Health
Sciences Fund to its three independent Trustees for their services as trustees
of the Fund in the fiscal year ended October 31, 2000. The following table also
shows the total compensation paid by the Global Health Sciences Fund and the
INVESCO Funds to these Trustees for their services as Directors or Trustees
during the year ended December 31, 2000.
COMPENSATION TABLE
AMOUNTS PAID DURING THE MOST RECENT
FISCAL YEAR BY THE FUND TO TRUSTEES
TOTAL
AGGREGATE BENEFITS ESTIMATED COMPENSATION FROM
COMPENSATION ACCRUED AS ANNUAL THE FUND AND
NAME OF PERSON, FROM THE PART OF FUND BENEFITS UPON INVESCO FUNDS
POSITION FUND EXPENSES2 RETIREMENT3 PAID TO TRUSTEES
- --------------------------------------------------------------------------------
FRED A. DEERING 19,000 20,276 8,000 112,250
JOHN W. MCINTYRE(1) 22,000 19,035 9,261 116,000
DR. LARRY SOLL 19,000 13,202 15,839 110,100
------ ------ ------ -------
Total 60,000 52,513 33,100 338,350
As a Percentage
of Net Assets 0.0064% 0.0056% 0.0008%
(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 Trustees. This plan was adopted by the Board of Trustees on October 12, 1998.
(3) These figures represent the Global Health Sciences 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 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 a
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 Global Health Sciences Fund's net assets as of
October 31, 2000.
(5) Total as a percentage of the INVESCO Funds' net assets as of December 31,
2000.
Trustees who are not "interested persons" of Global Health Sciences Fund
(as defined under Federal Law) and of the INVESCO Funds (the "Independent
Trustees"), establish their own compensation from the Fund and the INVESCO Funds
and are not paid by INVESCO or any affiliated company. Messrs. Brady and
Williamson, as "interested persons" of the Fund and of the INVESCO Funds,
receive compensation as officers of companies affiliated with INVESCO, but do
not receive any Trustee fees or other compensation from the Fund or from other
funds in the INVESCO Funds for their service as a Trustee or Director.
On October 12, 1998, the Board of Trustees of the Fund adopted a Defined
Benefit Deferred Compensation Plan (the "Plan") for the Independent Trustees of
the Fund. Under the 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 retirement, with each payment
up to 25 percent of a basic benefit (the "First Year Retirement Benefit").
Trustees normally retire between the ages of 72 and 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 life, a benefit (the "Benefit"), payable
quarterly, with each quarterly payment to be equal to 50% of the First Year
Retirement Benefit.
If an Independent Trustee's service as a Trustee is terminated because of
his 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
Benefit and will, beginning with the quarter following the quarter in which the
last First Year Retirement Benefit is paid, 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 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 Independent Trustee's death.
If an Independent Trustee's service as a Trustee is terminated because of
his 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 Benefit and will,
beginning with the quarter following the quarter in which the last First Year
Retirement Benefit payment is made, receive the Benefit for the remainder of his
life, with quarterly payments to be made to the disabled Independent Trustee. If
the disabled Independent Trustee should die before the First Year Retirement
Benefit 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 Benefit
payments and forty quarterly Benefit payments have been made to the disabled
Independent Trustee and his designated beneficiary.
If an Independent Trustee's service as a Trustee is terminated because of
his 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 life, with quarterly
payments to be made to the disabled Independent Trustee beginning in the first
quarter following the Independent 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 his designated beneficiary.
Any question involving entitlement to payments under or the administration
of the Plan will be referred to a four-person committee (the "Committee")
composed of three Independent Trustees designated by all of the Independent
Trustees of the Fund and one trustee of the Fund who is not an Independent
Trustee, designated by the non-Independent Trustees. Except as otherwise
provided, the Committee will make all interpretations and determinations
necessary or desirable for the 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 Fund in respect of
the Plan and, subject to the other provisions of the Plan, the Committee may
adopt, amend or repeal bylaws or other regulations relating to the
administration of the 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 of Trustees from time to time on its
activities in respect of the Plan. The Committee or persons designated by it
will cause such records to be kept as may be necessary for the administration of
the Plan. The cost of the Plan is paid by the Fund.
If Proposal 2 is approved, the Plan will terminate and no additional
benefits will accrue to Qualified Trustees after the completion of the
Reorganization.
A Deferred Fee Agreement for Independent Trustees became effective on
January 1, 1999. Pursuant to the Deferred Fee Agreement, 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 of the Fund. Each Independent Trustee who has elected to
defer payment of fees pursuant to the Deferred Fee Agreement may be deemed to
have an indirect interest in shares of the Fund, in addition to any Fund shares
he may own directly or beneficially.
If Proposal 2 is approved, Trustees will no longer receive fees for their
services as Trustees and therefore no additional deferral of fees will accrue
pursuant to the Deferred Fee Agreement.
The Fund's Officers and Trustees, persons who are beneficial owners of
more than 10% of the Fund's shares, and certain persons affiliated with INVESCO
are required to file reports of their holdings and transactions in the Fund's
shares with the Securities and Exchange Commission and the New York Stock
Exchange, and to furnish the Fund with copies of those reports. Based solely
upon its review of the copies it has received and upon written representations
it has obtained from these persons, the Fund believes that during the fiscal
year ended October 31, 2000, these persons have complied with all such filing
requirements.
THE TRUSTEES UNANIMOUSLY RECOMMEND THAT
THE FUND'S SHAREHOLDERS VOTE TO RE-ELECT THE NOMINEES
AS TRUSTEES OF THE FUND.
PROPOSAL 2: TO APPROVE THE REORGANIZATION
SUMMARY
Shareholders of Global Health Sciences Fund are being asked to vote on and
approve the Reorganization, the principal purpose of which is to convert Global
Health Sciences Fund into an open-end fund. As a closed-end fund, Global Health
Sciences Fund does not continuously redeem outstanding shares or sell new
shares. Instead, Global Health Sciences Fund's shares, which are listed on the
New York Stock Exchange ("NYSE"), trade on the secondary market. Since it
commenced operations January 24, 1992, Global Health Sciences Fund's shares have
generally traded at a discount to net asset value ("NAV"), with infrequent
instances in which Fund shares have traded at or above net asses value.
Converting Global Health Sciences Fund into an open-end fund will IMMEDIATELY
eliminate the discount and give shareholders the ability to realize the full
value of their shares by redeeming them from the New Fund at NAV (subject to a
CDSC of 2% for the first twelve months following the Reorganization, as
described below).
The Reorganization will be accomplished pursuant to an Agreement and Plan
of Reorganization between Global Health Sciences Fund and INVESCO Counselor
Series Funds, Inc., a Maryland corporation, which provides for the
reorganization of Global Health Sciences Fund as a newly created series ("New
Fund") of Counselor Series Funds. Pursuant to the Agreement, the New Fund will
acquire all of the assets of Global Health Sciences Fund in exchange for Class A
shares of common stock of the New Fund and the assumption by the New Fund of the
liabilities of Global Health Sciences Fund. As provided in the Agreement, Global
Health Sciences Fund will then distribute the Class A shares of the New Fund to
its shareholders. Each shareholder will be credited with a number of full and
fractional Class A shares of the New Fund equal in value to the aggregate net
asset value of the shares of Global Health Sciences Fund held by such
shareholder on the date of the Reorganization. Accordingly, as a result of the
Reorganization, Global Health Sciences Fund will dissolve and the shareholders
of Global Health Sciences Fund will become shareholders of the New Fund.
The New Fund will have the same investment objective, and, except as
described below, generally similar investment policies and restrictions as
currently exist for Global Health Sciences Fund. However, as described below,
Global Health Sciences Fund's investment restrictions and policies are, in
specific and material respects, different from those associated with the New
Fund and the Counselor Series Funds. As a result of the Reorganization, Global
Health Sciences Fund's shares will be delisted from the NYSE.
In connection with voting on the Reorganization, shareholders of Global
Health Sciences Fund are also being asked to approve (i) a new Investment
Advisory Agreement, between Counselor Series Funds, on behalf of New Fund, and
INVESCO; and (ii) a Master Plan and Agreement of Distribution with respect to
the Class A shares of the New Fund.
The Board of Trustees of Global Health Sciences Fund, including all of the
Trustees who are not "interested persons" of Global Health Sciences Fund within
the meaning of the 1940 Act (the Independent Trustees), has unanimously approved
the Reorganization and has determined that the Reorganization is in the best
interest of Global Health Sciences Fund and that the interests of the existing
shareholders of Global Health Sciences Fund will not be diluted as a result of
the Reorganization. As part of the Reorganization, the Board has also approved
the issuance of Class A shares of the New Fund to existing shareholders of
Global Health Sciences Fund.
If approved at the Meeting, it is anticipated that the Reorganization will
be implemented as soon as practical after the Annual Meeting. However, the
Agreement provides that if either the Board of Trustees of Global Health
Sciences Fund or the Board of Directors of Counselor Series Funds determines
that consummation of the Reorganization is impracticable or inadvisable due to
adverse market developments or otherwise, the parties may determine to delay the
Reorganization or terminate the Agreement in its entirety.
A. REORGANIZATION AS A MARYLAND CORPORATION
Shareholders are being asked to approve the Agreement pursuant to which
Global Health Sciences Fund would effectively reorganize from a Massachusetts
business trust to an open-end, multiple-class fund organized as a newly created
series of Counselor Series Funds. Counselor Series Funds is an open-end
investment company organized as a Maryland corporation by Articles of
Incorporation dated April 24, 2000, as amended November 6, 2000 and
supplemented, November 9, 2000. The Articles of Incorporation authorize the
issuance of shares in different series and authorize the Board of Directors,
without shareholder action, to establish and create additional series and to
designate the rights and preferences thereof. Currently, there are two series of
Counselor Series Funds: INVESCO Advantage Fund, and INVESCO Global Growth Fund.
The Directors of Counselor Series Funds have authorized the designation of the
New Fund as an additional series of Counselor Series Funds. The interests of
investors in the various series of Counselor Series Funds will be separate and
distinct. All assets and liabilities of a particular series are allocated and
belong entirely to that series.
The New Fund will have three classes of shares with differing sales load
and distribution fee structures: Class A, Class B, and Class C. The shareholders
of Global Health Sciences Fund will receive Class A shares of the New Fund in
the Reorganization in exchange for their shares of Global Health Sciences Fund.
No sales load will be payable on the Class A shares received in this exchange,
but the Class A shares will be subject to a 12b-1 fee calculated as a percentage
of the New Fund's average net assets acquired by New Fund after the
Reorganization attributable to Class A shares at an annual rate of 0.35%. This
12b-1 structure initially reduces the 12b-1 fee paid by New Fund below 0.35%
because the 0.35% 12b-1 fee is based only on assets going into the New Fund
after the Closing Date, and is therefore based on less than 100% of New Fund's
total Class A assets.
The 12b-1 fee applicable to the Class A shares of the New Fund is lower
than the 12b-1 fee applicable to the shares of other classes of the New Fund
available to non-institutional investors. New purchases of Class A shares of the
New Fund will be subject to a maximum front-end sales load of 5.50% and will
also be subject to the 12b-1 fee. Shareholders of the New Fund will have the
ability to purchase or otherwise acquire additional Class A shares and shares of
other classes of the New Fund for which they are eligible at a price based on
the NAV of the shares (subject to each Class' maximum sales charge).
The Class A shares of the New Fund acquired in exchange for shares of Global
Health Sciences Fund will be subject to a Contingent Deferred Sales Charge
("CDSC") of 2% of the net asset value of such shares if such shares are redeemed
out of the New Fund during the first twelve months following the Reorganization.
[No CDSC will be imposed on new sales of the New Fund's shares; however a sales
load will be charged.] The proceeds of the CDSC will be retained by INVESCO in
order to partially offset increased distribution costs that will be incurred by
INVESCO as more fully described herein at Section G - Master Distribution Plan
and Agreement. The CDSC is designed to reduce the possibility that the New Fund
will experience significant out flows of assets resulting from shareholder
redemptions occurring after the conversion of the Fund to an open-end fund,
thereby protecting the interests of shareholders who exchange their shares of
Global Health Sciences Fund for shares of the New Fund by maintaining a stable
asset base.
The New Fund may also incur transaction costs to the extent that the New
Fund must sell portfolio securities to finance redemptions, and the New Fund may
realize taxable gains as a result of these sales that must be distributed as
taxable distributions to shareholders.
For a discussion of the differences between open-end and closed-end funds,
see "Comparison of Open-End and Closed-End Investment Companies" below.
B. INFORMATION REGARDING COUNSELOR SERIES FUNDS
As a result of the Reorganization, the Trustees of Global Health Sciences
Fund will be joined by the Directors of Counselor Series Funds, each of whom is
currently a director of all of the INVESCO open-end funds. The Directors of
Counselor Series Funds are listed below. Except as indicated, each individual
has held the office shown or other offices in the same company for the last five
years. All Directors holding positions with Counselor Series Funds also hold the
same positions for all of the other open-end funds advised by INVESCO.
POSITION(S) HELD WITH PRINCIPAL OCCUPATION(S)
NAME, ADDRESS, AND AGE COMPANY DURING PAST FIVE YEARS
- ---------------------- --------------------- -----------------------
Mark H. Williamson (2)(3) President, Chief Exec- President, Chief Executive
7800 E. Union Avenue utive Officer and Officer and Chairman of
Denver, Colorado Chairman of the Board the Board of INVESCO
Age: 49 Funds Group, Inc.; Presi-
dent, Chief Executive
Officer and Chairman of
the Board of INVESCO
Distributors, Inc.; Presi-
dent, Chief Operating
Officer and Chairman of
the Board of INVESCO
Global Health Sciences
Fund; formerly, Chairman
and Chief Executive
Officer of NationsBanc
Advisors, Inc.; formerly,
Chairman of NationsBanc
Investments, Inc.
Fred A. Deering (1)(2)(7)(8) Vice Chairman of the Trustee of INVESCO Global
Security Life Center Board Health Sciences Fund;
1551 Larimer Street, #1701 formerly, Chairman of the
Denver, Colorado Executive Committee and
Age: 73 Chairman of the Board of
Security Life of Denver
Insurance Company;
Director of ING American
Holdings Company and First
ING Life Insurance
Company of New York.
POSITION(S) HELD WITH PRINCIPAL OCCUPATION(S)
NAME, ADDRESS, AND AGE COMPANY DURING PAST FIVE YEARS
- ---------------------- --------------------- -----------------------
Victor L. Andrews, Director Professor Emeritus, Chair-
Ph.D.(4)(6)(10) man Emeritus and Chairman
34 Seawatch Drive of the CFO Roundtable of
Savannah, Georgia the Department of Finance
Age: 70 of Georgia State
University; President,
Andrews Financial
Associates, Inc.
(consulting firm);
Director of The Sheffield
Funds, Inc.; formerly,
member of the faculties of
the Harvard Business
School and the Sloan
School of Management of
MIT.
Bob R. Baker(2)(4)(5)(9)(10) Director Consultant (since 2000);
37 Castle Pines Dr., N. formerly, President and
Castle Rock, Colorado Chief Executive Officer
Age: 64 (1989 to 2000) of AMC
Cancer Research Center,
Denver, Colorado; until
mid-December 1988, Vice
Chairman of the Board of
First Columbia Financial
Corporation, Englewood,
Colorado; formerly,
Chairman of the Board and
Chief Executive Officer of
First Columbia Financial
Corporation.
Charles W. Brady(3)(10) Director Chief Executive Officer
1315 Peachtree St., N.E. and Chairman of
Atlanta, Georgia AMVESCAP PLC, London,
Age: 65 England and various
subsidiaries of AMVESCAP
PLC; Trustee of INVESCO
Global Health Sciences
Fund.
Lawrence H. Budner Director Trust Consultant; prior to
(1)(5)(10) June 30, 1987, Senior Vice
7608 Glen Albens Circle President and Senior Trust
Dallas, Texas Officer of InterFirst
Age: 70 Bank, Dallas, Texas.
Position(s) Held With Principal Occupation(s)
Name, Address, and Age Company During Past Five Years
- ---------------------- --------------------- -----------------------
James T. Bunch(4)(5)(9) Principal and Founder of
3600 Republic Plaza Director Green Manning & Bunch
370 Seventeenth Street Ltd., Denver, Colorado,
Denver, Colorado since August 1988; Direc-
Age: 58 tor and Secretary of
Green Manning & Bunch
Securities, Inc., Denver,
Colorado, since September
1993; Vice President and
Director of Western Golf
Association and Evans
Scholars Foundation;
formerly, General Counsel
and Director of Boettcher
& Co., Denver, Colorado;
formerly, Chairman and
Managing Partner of Davis
Graham & Stubbs, Denver,
Colorado.
Wendy L. Gramm, Director Self-employed (since
Ph.D.(4)(6)(9) 1993); Distinguished
3401 N. Fairfax Senior Fellow and Direc-
Arlington, VA tor, Regulatory Studies
Age: 56 Program, Mercatus Center,
George Mason University,
VA; formerly, Chairman,
Commodity Futures Trading
Commission; Administrator
for Information and
Regulatory Affairs at the
Office of Management and
Budget; Also, Director of
Enron Corporation, IBP
Inc., State Farm Insurance
Company, International
Republic Institute, and
the Texas Public Policy
Foundation; formerly,
Director of the Chicago
Mercentile Exchange
(1994-1999), Kinetic
Concepts, Inc. (1996-1997)
and the Independent
Women's Forum (1994-1999).
Richard W. Healey(3) Director Director and Senior Vice
7800 E. Union Avenue President of INVESCO
Denver, Colorado Funds Group, Inc.; Direc-
Age: 46 tor and Senior Vice Presi-
dent of INVESCO
Distributors, Inc.; for-
merly, Senior Vice Presi-
dent of GT Global-North
America (1996 to 1998)
and The Boston Company
(1993 to 1996).
Position(s) Held With Principal Occupation(s)
Name, Address, and Age Company During Past Five Years
- ---------------------- --------------------- -----------------------
Gerald J. Lewis(1)(6)(7) Chairman of Lawsuit Res-
701 "B" Street Director olution Services, San
Suite 2100 Diego, California since
San Diego, California 1987; Director of General
Age: 67 Chemical Group, Inc.,
Hampdon, New Hampshire,
since 1996; formerly,
Associate Justice of the
California Court of
Appeals; Director of
Wheelabrator Technologies,
Inc., Fisher Scientific,
Inc., Henley
Manufacturing, Inc., and
California Coastal
Properties, Inc.; Of
Counsel, Latham &
Watkins, San Diego,
California (1987 to
1997).
John W. McIntyre (1)(2)(5)(7) Director Retired. Formerly, Vice
7 Piedmont Center Chairman of the Board
Suite 100 of Directors of The
Atlanta, Georgia Citizens and Southern
Age: 70 Corporation and Chairman
of the Board and Chief
Executive Officer of The
Citizens and Southern
Georgia Corp. and The
Citizens and Southern
National Bank; Trustee of
INVESCO Global Health
Sciences Fund, Gables
Residential Trust,
Employee's Retirement
System of GA, Emory
University, and J.M. Tull
Charitable Foundation;
Director of Kaiser Foun
dation Health Plans of
Georgia, Inc.
Larry Soll, Ph.D. Director Retired. Formerly, Chair-
(4)(6)(9)(10) man of the Board (1987 to
4291 Westside Road 1994), Chief Executive
Friday Harbor, WA 98250 Officer (1982 to 1989 and
Age: 58 1993 to 1994) and Presi-
dent (1982 to 1989) of
Synergen Inc.; Director
of Synergen since
incorporation in 1982;
formerly, Director of Isis
Pharmaceuticals, Inc.
(1991 to 2000); Trustee
of INVESCO Global
Health Sciences Fund.
(1) Member of the audit committee of the Counselor Series Funds.
(2) Member of the executive committee of the Counselor Series Funds. On
occasion, the executive committee acts upon the current and ordinary business of
the Company between meetings of the board of directors. Except for certain
powers, which, under applicable law, may only be exercised by the full board of
directors, the executive committee may exercise all powers and authority of the
board of directors in the management of the business of the Company. All
decisions are subsequently submitted for ratification by the board of directors.
(3) These directors are "interested persons" of the Counselor Series Funds
defined in the 1940 Act.
(4) Member of the management liaison committee of the Counselor Series Funds.
(5) Member of the brokerage committee of the Counselor Series Funds.
(6) Member of the derivatives committee of the Counselor Series Funds.
(7) Member of the legal committee of the Counselor Series Funds.
(8) Member of the insurance committee of the Counselor Series Funds
(9) Member of the nominating committee of the Counselor Series Funds.
(10) Member of the compensation committee of the Counselor Series Funds.
C. REASONS FOR THE REORGANIZATION
The Global Health Sciences Fund was organized on November 18, 1991, as a
closed-end fund because it was believed such a structure, among other things,
would permit management of the Fund's portfolio consistent with its investment
objectives and policies without the pressures and constraints to which open-end
investment companies ("mutual funds") are subject as a result of cash inflows
and redemptions. However, the shares of most equity closed-end funds
historically sell at a discount to net asset value, and Global Health Sciences
Fund has been no exception. Converting Global Health Sciences Fund into an
open-end fund would address this problem by giving shareholders the opportunity
IMMEDIATELY to redeem their shares from the New Fund at NAV, subject to the CDSC
described above. During the time that Global Health Sciences Fund has been in
existence, its discount has been as high as 27.52%, which occurred on July 16,
1996. The Global Health Sciences Fund has infrequently traded at a premium, and
most instances of Fund shares trading at a premium occurred early in the life of
the Fund. The greatest premium of price to net asset value at which Fund shares
have traded was 8.42%, which occurred on January 24, 1992. Since the Fund's
organization, INVESCO and the Board of Trustees (the "Board") have taken a
number of steps to attempt to narrow the discount.
In 1997, INVESCO hired a full-time person to handle investor relations for
the Fund, and supported that effort with both budget and additional staff. The
investor relations' initiative was designed to increase the interest of
investors and broker-dealers in the Fund. INVESCO and the Board envisioned that
increased publicity would create greater market interest and trading volumes,
which would tend to decrease the discount. Also in 1997, the Board approved a
proposal to change the Fund's name from Global Health Sciences Fund to INVESCO
Global Health Sciences Fund, in order to more closely align the Fund with the
INVESCO brand and capitalize indirectly on marketing initiatives then underway
with respect to the INVESCO mutual funds. In 1998, the Trustees approved a
proposal to retain PaineWebber, Inc. (now known as UBS Warburg, Inc.) to assist
in promoting the Fund and to advise the Board on market conditions that impact
closed-end funds. These efforts produced some narrowing of the discount, but the
effect has not been sustained over time.
In 1998, the Board of Trustees approved another change aimed at reducing
the discount by adopting a managed distribution policy. This policy provides
shareholders a 10% yearly return by paying a fixed yearly dividend of at least
10%, in equal quarterly installments. The anticipated benefit of a managed
distribution policy was that a consistent dividend would be viewed favorably by
investors, making the Fund more attractive to investors, thereby increasing
market volume and thus mitigating the discount. The managed distribution policy
kept the discount at comparatively low single-digit levels until mid-1999. At
that time, the health sciences sector generally went out of favor. For most of
calendar 2000, the discount was at or near the levels it was prior to adoption
of the managed distribution policy. Thus, after considering again the issue of
how best to address the Fund's discount, the Board on February 6, 2001 approved
submitting the proposed Reorganization to Global Health Sciences Fund's
shareholders for their approval.
After detailed consideration, the Board determined that participation in
the Reorganization would be in the best interests of Global Health Sciences Fund
and that the interests of existing shareholders would not be diluted as a result
of the Reorganization. In reaching this determination, the Board approved the
recommendation that the New Fund should be organized as a series of Counselor
Series Funds and should offer three share classes -- Class A, Class B, and Class
C. The Board was advised that the load and distribution structure for each share
class would be the same as for other similar series of Counselor Series Funds.
The Board also noted the fact that existing shareholders of Global Health
Sciences Fund would become holders of Class A shares in the New Fund issued
pursuant to the Reorganization. The Board was advised that no sales load would
be charged on these shares in the Reorganization, but that all of the holders of
the Class A shares would become subject to the Master Plan and Agreement of
Distributors applicable to Class A shares of the New Fund. In addition, the
Board was advised that new purchases of Class A shares would be subject to the
standard sales loads and fees associated with the Class A shares of similar
series of Counselor Series Funds. The Board also noted that the 0.35% 12b-1 fee
applicable to Class A shares was the lowest 12b-1 fee available to
non-institutional investors in the Counselor Series Funds.
In considering the Master Plan and Agreement of Distribution - Class A
Shares, the Trustees, including all of the Independent Trustees, determined that
it was important that IDI, on behalf of New Fund, be in a position to reasonably
compensate the efforts of third parties such as full-service brokerage firms,
discount brokers, banks, investment advisers, consultants and others who will
distribute additional shares of the New Fund if Proposal 2 is approved. An
enhanced marketing effort by IDI on behalf of the New Fund, and sales of
additional New Fund shares through third-party intermediaries would benefit the
New Fund and its shareholders by maintaining asset levels of the open-end fund
and should, if successful, mitigate against the potential adverse impact of high
levels of redemptions that quite possibly could follow the approval of Proposal
2, and potentially follow again after the expiration of the CDSC on exchanged
shares. While there can be no assurance that such distribution efforts will be
successful in offsetting substantial redemptions, INVESCO and IDI have
substantial experience managing and distributing open-end investment company
shares and have advised the Trustees that approval of the Plan by current Global
Health Sciences Fund shareholders is advisable because distribution of
additional New Fund shares by third party intermediaries will be an important
element in a successful Reorganization of the Global Health Sciences Fund as an
open-end mutual fund.
The Board was advised that Thomas Wald, who is currently the portfolio
manager of Global Health Sciences Fund would be the manager of the New Fund.
The Board also considered that the New Fund would have the same investment
objective and, except as necessary to conform the existing investment policies
of Global Health Sciences Fund to the analogous policies of Counselor Series
Funds, the same investment policies and restrictions. In this connection the
Board considered that there are some material and substantive differences
between the New Fund's fundamental investment restriction on borrowing, lending
securities and issuer diversification and those of Global Health Sciences Fund.
Global
Health Sciences Fund does not borrow in order to purchase securities, while New
Fund will be able to do so, and intends to do so as an investment strategy.
Global Health Sciences Fund is only permitted to lend up to 25% of its assets,
while New Fund will be able to lend up to 33 1/3% of its assets. Global Health
Sciences Fund is a diversified fund, while the New Fund will be non-diversified.
Certain other fundamental investment restrictions of Global Health Sciences Fund
are worded somewhat differently from the analogous fundamental investment
restrictions of the New Fund. The Board also considered that the non-fundamental
investment policy of Global Health Sciences Fund concerning investments in
illiquid securities is different from that of the New Fund. New Fund may invest
no more than 15% of its assets in illiquid securities while Global Health
Sciences Fund has authority to invest up to 25% of its net assets in illiquid
securities. It was pointed out to the Board that Global Health Sciences Fund
investments in illiquid securities averaged 11.75% of net assets for calendar
year 2000, calculated weekly; and 13.02% of net assets net assets for calendar
year 2000, calculated monthly. The highest level in that period was 18.62% and
the lowest level was 5.92%. It was further pointed out that Global Health
Sciences Fund generally did not invest outside that range with great regularity
in preceding periods and therefore the differing investment policies would not
significantly reduce the New Fund's investments in illiquid securities as
compared to Global Health Sciences Fund. The Board was also advised that, while
Global Health Sciences Fund has actively engaged in short sales, the New Fund
will have a greater ability to engage in short sales.
The Board also considered the fact that it was advisable for the New Fund
to impose a 2% Contingent Deferred Sales Charge on existing Global Health
Sciences Fund shareholders who redeem their New Fund shares within twelve months
after Reorganization thereby reducing the possibility that the New Fund will
experience significant outflows of assets resulting from shareholder redemptions
occurring after the conversion of the Fund to an open-end fund and thus
protecting the interests of shareholders who exchange their shares of Global
Health Sciences Fund for shares of New Fund by maintaining a stable asset base.
Substantial shareholder redemptions may require Global Health Sciences Fund to
liquidate portfolio securities, thereby increasing realized capital gains, and
give rise to increased taxable distributions to shareholders.
The Board also considered the fact that Global Health Sciences Fund
currently pays an investment advisory fee equal to an annual rate of 1.00% on
ending daily net assets up to and including $500 million, and 0.90% on ending
daily net assets in excess of $500 million; and there is no performance
adjustment to this fee. The Board specifically considered INVESCO's proposal
that the New Fund's management fee be a base management fee calculated at the
annual rate of 1.50% of the Fund's daily net assets (the "Base Fee"). This Base
Fee under INVESCO's proposal will be adjusted, on a monthly basis (i) upward at
the rate of 0.20%, on a pro rata basis, for each percentage point the investment
performance of the Class A shares of the Fund exceeds the sum of 2.00% and the
investment record of the Morgan Stanley Health Care Product Index (the "Index"),
or (ii) downward at the rate of 0.20%, on a pro rata basis, for each percentage
point the investment record of the Index less 2.00% exceeds the investment
performance of the Class A shares of the Fund (the "Fee Adjustment"). The
maximum or minimum adjustment will be 1.00% annually. During the first twelve
months of operation, the management fee will be charged at the base fee of 1.50%
with no performance adjustment.
The Board was advised by INVESCO that it anticipates that Class A shares
of the New Fund will have higher gross expenses than Global Health Sciences
Fund, as a result of the potential decrease in the Fund's assets and the
increased registration fees, distribution expenses, custody and transfer
agency expenses associated with operating as an open-end fund.
The Board was advised by INVESCO that the dividend and capital gains
distribution policies of New Fund would differ from the dividend distribution
policies of Global Health Sciences Fund in the following manner. The Global
Health Sciences Fund, pursuant to an order issued by the SEC, currently
distributes 10% of its net assets annually, in the form of 2.5% quarterly
distributions (the "Managed Distribution Policy"). Any capital gains in excess
of the 10% Managed Distribution Policy are normally distributed to shareholders
at year's end. The Managed Distribution Policy provides that distributions
pursuant to that policy in excess of capital gains available for distribution
are treated as a return of shareholder capital. As previously described herein,
the Managed Distribution Policy was approved by the Board of Trustees in an
effort to permanently decrease or eliminate the Fund's discount to net asset
value, which will certainly occur if Proposal 2 is approved. Consequently, the
Trustees have deferred consideration of distributions pursuant to the Managed
Distribution Policy pending the outcome of voting on Proposal 2 and completion
of the Reorganization.
New Fund shares necessarily will be purchased and redeemed at net asset
value, and therefore will not have a policy analogous to the Managed
Distribution Policy. Rather, the New Fund will normally only make annual
distributions of its capital gains. Shareholders should note that the fiscal
year end of Counselor Series Funds is August 31st and the fiscal year end of
Global Health Sciences Fund is October 31st.
The Board was advised that continuation of the Global Health Sciences
Fund's Dividend Reinvestment Plan could potentially interfere with an orderly
implementation of the Reorganization, if Proposal 2 is approved. Therefore, the
Trustees have suspended the Dividend Reinvestment Plan, effective immediately,
pending the outcome of voting on Proposal 2 and completion of the
Reorganization. If Proposal 2 is approved, dividends paid by New Fund will
automatically be reinvested in additional shares of New Fund unless INVESCO is
otherwise instructed by shareholders.
The Board was advised that an orderly implementation of the Reorganization,
if approved, would be facilitated by issuing shares of New Fund in book-entry
form only. Therefore, if Proposal 2 is approved, all outstanding Global Health
Sciences Fund shares represented by a certificate in Global Health Sciences Fund
will be represented as certificated shares in the New Fund. However, there will
not be a new certificate issued. If a shareholder wants to redeem shares in New
Fund, represented by existing certificates in Global Health Sciences Fund, the
shareholder will have to return the closed-end fund share certificate to
INVESCO.
INVESCO advised the Board that shareholders of New Fund will be able to
receive scheduled quarterly or monthly payments from their accounts by
participating in INVESCO's Periodic Withdrawal Plan, which provides for
quarterly or monthly payments ($100 minimum) by check payable to whomever a
shareholder designates. The shareholder must have at least $10,000 invested in
the INVESCO Funds, and at least $5000 in the fund from which the withdrawals
will be made. SUCH PERIODIC WITHDRAWAL MAY NOT REPRESENT MORE THAN 10% OF THE
VALUE OF THE ACCOUNT. THE CDSC WILL NOT BE APPLICABLE TO REDEMPTIONS OCCURING
PURSUANT TO THE PERIODIC WITHDRAWAL PLAN.
The Board also considered the fact that INVESCO would obtain an opinion of
counsel that the Reorganization will qualify as a tax-free reorganization for
federal income tax purposes.
Finally, the Board considered the fact that INVESCO's Counselor Series
Funds product line currently has no health science equity fund. The Board was
advised that Global Health Sciences Fund has had relatively strong performance,
and that, while it is probable that the New Fund's assets will decrease
immediately following the Reorganization being implemented, despite the CDSC,
INVESCO believes that Global Health Sciences Fund's performance record will
position the New Fund strategically to benefit from a turnaround in the health
sciences sector.
The desirability of creating a new Global Health Sciences series of
Counselor Series Funds was also considered and approved by the Board of
Directors of INVESCO Counselor Series Funds, Inc. at a meeting of that Board
held on February 5, 2001.
The Board of Directors of Counselor Series Funds specifically considered
the potential benefits and risks associated with the Reorganization and
determined that the addition of New Fund to Counselor Series Funds would provide
convenience and flexibility to shareholders of both Global Health Sciences Fund
and the Counselor Series Funds because the New Fund represents an investment
alternative consistent with investment goals of Global Health Sciences Fund,
while also positioning New Fund to capitalize on both existing strong
shareholder relationships and current mutual fund distribution opportunities for
health sciences funds. The Directors also considered the impact of the differing
investment policies of the two Funds, in particular New Fund's increased ability
to both leverage its assets and sell securities short, and its decreased ability
to purchase illiquid securities in comparison to Global Health Sciences Fund.
The Directors considered that quantifying such a comparison is difficult but
concluded that the reduction in investment potential and risk from New Fund's
decreased ability to invest in illiquid securities may to some extent be offset
by the leverage and short-selling strategies currently employed by the Counselor
Series Funds investment personnel who would assist Mr. Wald in implementing New
Fund's aggressive global growth, leveraging, and short-selling strategies, if
Proposal 2 is approved. These strategies are generally consistent with Global
Health Sciences Fund's investment goals and risks but differ in certain specific
risks, as described herein, from the investment strategies currently employed by
Global Health Sciences Fund.
D. FUNDAMENTAL INVESTMENT RESTRICTIONS
Global Health Sciences Fund has certain investment restrictions that are
fundamental. If the proposed Reorganization is approved, the New Fund will have
fundamental investment restrictions that are different, in material respects,
from certain fundamental investment policies of Global Health Sciences Fund. The
fundamental investment restrictions of the New Fund with respect to borrowing,
lending and issuer diversification will differ substantively from the
fundamental investment restrictions of Global Health Sciences Fund. In addition,
the New Fund will adopt a new fundamental investment policy permitting the New
Fund to invest all of its assets in another open-end fund. Three other
fundamental restrictions of Global Health Sciences Fund would differ from the
analogous policies to be adopted by new Fund; the differences in these three
investment restrictions could have a material positive or negative impact on how
Global Health Sciences Fund - if it is reorganized as New Fund - is operated.
BORROWING. Global Health Sciences Fund's current fundamental investment
restriction relating to borrowing and the issuance of senior securities is as
follows:
The Fund may not 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 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).
New Fund will have the following fundamental investment restrictions
relating to borrowing and the issuance of senior securities:
The Fund may not borrow money, except that the Fund may borrow money
in an amount not exceeding 33 1/3% of its total assets (including the
amount borrowed) less liabilities (other than borrowings). The Fund may not
issue senior securities, except as permitted under the 1940 Act.
In addition, the following non-fundamental investment restriction will be
applicable to the New Fund:
The Fund may borrow money only from a bank or from an open-end
management investment company managed by INVESCO or an affiliate or a
successor thereof for temporary or emergency purposes, for leveraging or
investing, or by engaging in reverse repurchase agreements with any party
(reverse repurchase agreements will be treated as borrowing for purposes of
[the] fundamental limitation [on borrowing].
As a result of these changes, the New Fund will have the ability to borrow
up to 33 1/3% of its assets, compared to the maximum 15% of its assets that
Global Health Sciences Fund is permitted to borrow. Unlike Global Health
Sciences Fund, the New Fund would also be permitted to borrow for the purpose of
purchasing securities - i.e., the New Fund will have the ability to leverage its
assets. To the extent the New Fund uses borrowing to buy securities, the risk of
loss is magnified if the value of the security purchased decreases, and gains
will be magnified if the value of the security purchased increases. To repay
such borrowing, New Fund might have to sell portfolio securities at a time and
at a price that is unfavorable to New Fund. In addition, New Fund would incur
the expense of interest on such borrowing.
ISSUER DIVERSIFICATION. Global Health Sciences Fund is a diversified fund;
it has the following fundamental investment restriction on issuer
diversification.
The Fund may not, 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.
The New Fund, by contrast, will be a non-diversified fund, with the
following fundamental investment restriction on issuer diversification:
[New Fund] may not, with respect to 50% of its total assets, purchase
the securities of any issuer (other than securities issued or guaranteed by
the U.S. Government or any of its agencies or instrumentalities, or
securities of other investment companies) if, as a result, (i) more than 5%
of the Fund's total assets would be invested in the securities of that
issue, or (ii) the Fund would hold more than 10% of the outstanding voting
securities of that issuer.
Because a smaller portion of its portfolio will be subject to the issuer
diversification requirements, New Fund will have greater investment flexibility
than Global Health Sciences Fund, in that it will be permitted to acquire larger
positions in the securities of a particular issuer. Investing a larger
percentage of its assets in a single issuer's securities, however, will
increase the New Fund's exposure to the risks associated with such issuer's
financial condition and operations, and the risk that the value of that issuer's
securities will decrease.
LENDING. Global Health Sciences Fund's fundamental investment restriction
with respect to lending is as follows:
The Fund may not 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 assets.
New Fund's fundamental investment restriction on lending would increase the
foregoing limit from 25% to 33 1/3%, by providing as follows:
[New Fund] may not lend any security or make any loan if, as a result,
more than 33 1/3% of its total assets would be lent to other parties, but
this limitation does not apply to the purchase of debt securities or to
repurchase agreements.
Global Health Sciences Fund's fundamental investment restriction on lending is
more limiting than the provisions in the 1940 Act governing lending. The
advantage of lending portfolio securities is that a fund continues to have the
benefits (and risks) of ownership of the securities lent, while at the same time
receiving interest payments from the borrower of the securities. The primary
risk in lending portfolio securities is that a borrower might fail to return the
securities at the agreed-upon time.
If the Reorganization is approved and the Global Health Sciences Fund is
reorganized as New Fund, the fundamental investment policies of the New Fund
will differ in minor respects from those of Global Health Sciences Fund with
respect to investment in commodities, investment in real estate, and
underwriting securities in order to conform their wording to the wording of the
analogous fundamental investment restrictions of the Counselor Series Funds.
Global Health Sciences Fund's fundamental investment restrictions in these
three areas are as follows:
The Fund may not 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).
The Fund may not buy or sell real estate or interests there in
(however, securities issued by companies which invest in real estate or
interests therein may be purchased and sold).
The Fund may not engage in the underwriting of any securities,
expect 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.
The analogous fundamental investment restrictions for New Fund will be as
follows:
[New Fund] may not purchase or sell physical commodities; however this
policy shall not prevent the Fund from purchasing and selling foreign
securities, futures contracts, options, forward contracts, swaps, caps,
floors, collars and other financial instruments.
[New Fund] may not purchase or sell real estate unless acquired as a
result of ownership of securities or other instruments (but this shall not
prevent the Fund from investing in securities or other instruments backed
by real estate or securities of companies engaged in the real estate
business).
[New Fund] may not underwrite the securities of other issuers, except
insofar as it may be deemed to be an underwriter under the 1933 Act in
connection with the disposition of the Fund's portfolio securities.
The New Fund will also adopt a fundamental investment policy that permits
it to invest all of its assets in another open-end investment company managed by
INVESCO or an affiliate with substantially the same investment objective and
policies as the New Fund. Adoption of the policy will allow the New Fund to
participate in a so-called "master/feeder fund" organizational format. If
Proposal 2 is approved, the New Fund will adopt the following fundamental
investment policy:
[New Fund] may, notwithstanding any other fundamental investment
policy or limitation, invest all of its asset in the securities of a single
open-end management investment company managed by INVESCO or an affiliate
or a successor thereof, with substantially the same fundamental investment
objective, policies, and limitations as the Fund
The master/feeder structure has the potential, under certain circumstances,
to minimize administrative costs and maximize the possibility of gaining a
broader investor base. Currently, neither Counselor Series Funds nor any of the
other INVESCO Funds intends to establish a master/feeder structure; however, the
Board of Directors of Counselor Series Funds has recommended that each series'
shareholders adopt a policy that would permit this structure in the event that
the Board determines to recommend the adoption of a master/feeder structure.
E. NON-FUNDAMENTAL INVESTMENT RESTRICTIONS
Non-fundamental investment restrictions may be changed or adopted by
either the Trustees of Global Health Sciences Fund or the Directors of New Fund;
a change to, or adoption of, a non-fundamental investment restriction does not
require shareholder approval.
If the Reorganization is approved, the New Fund will also adopt
non-fundamental investment restrictions that conform to the standard
non-fundamental investment restrictions applicable to the other Counselor Series
Funds. As a result of the adoption of these non-fundamental investment policies,
New Fund's ability to invest in illiquid securities would be less than Global
Health Sciences Fund's ability to invest in such securities - 15% of net assets
for New Fund, as opposed to 25% of net assets for Global Health Sciences Fund.
Global Health Sciences Fund has never invested the maximum permitted 25% of its
net assets in illiquid securities, and very rarely invested more than 15% of its
net assets in illiquid securities. Global Health Sciences Fund had _______% of
its assets invested in illiquid securities as of March 9, 2001.
Furthermore, the current limit on Global Health Sciences Fund's ability to
engage in short sales (it may do so only to the extent that the current market
value of securities sold short does not exceed 25% of the Fund's total assets)
would be removed.
In addition to the non-fundamental restrictions on borrowing discussed
above, New Fund's non-fundamental investment restriction on investing in
illiquid securities will be as follows:
[New Fund] does not currently intend to purchase any security if, as a
result, more than 15% of its net assets would be invested in securities
that are deemed to be illiquid because they are subject to legal or
contractual restrictions on resale or because they cannot be sold or
disposed of in the ordinary course of business at approximately the prices
at which they are valued.
The New Fund's non-fundamental investment restriction on investing in securities
issued by other investment companies will be as follows:
[New Fund] may invest in securities issued by other investment
companies to the extent that such investments are consistent with the
Fund's investment objective and policies and permissible under the 1940
Act.
F. THE CURRENT ADVISORY AGREEMENT AND THE PROPOSED NEW ADVISORY AGREEMENT
Under the current Advisory Agreement, INVESCO is responsible for providing
investment advice to Global Health Sciences Fund and, in general, for conducting
the management and investment program of the Fund under the supervision and
control of the Board of Trustees. In addition, INVESCO 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 INVESCO.
Global Health Sciences Fund pays INVESCO a fee based on an annual rate of
1.00% on the Fund's ending daily net assets up to and including $500,000, and
0.90% on the Fund's ending daily net assets in excess of $500,000. For the
fiscal year ended October 31, 2000, the Fund paid INVESCO investment management
fees of $______. Additionally, in accordance with an Administrative Agreement,
the Fund pays INVESCO 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, 2000, the Fund paid INVESCO administrative fees of $________.
Out of this administrative services fee, INVESCO pays UBS Warburg (formerly
Paine Webber, Inc.) $250,000 per year for the promotional services it is
providing the Fund.
Under the current Advisory Agreement, the Fund pays certain of its other
costs not paid by INVESCO, including (i) interest and taxes, including issue and
transfer taxes incurred by or levied by the Fund; (ii) insurance premiums for
fidelity and other coverage requisite to its operations; (iii) compensation and
expenses of its Trustees other than Trustees that are associated or affiliated
with INVESCO; (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 Dividend Reinvestment Plan) and brokerage commissions, if
any; (vi) certain expenses incidental to registration, under Federal Law, of the
Fund's shares for public sale; (vii) certain expenses incidental to holding
meetings of the Fund's shareholders; (viii) payments under the Fund's
Administrative Agreement with INVESCO; (ix) fees and expenses of listing and
maintaining the listing of the Fund's shares on the NYSE; (x) the costs of
certificates representing the Fund's 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 current Advisory Agreement provides that INVESCO 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 Advisory Agreement relates,
except for a loss resulting from willful misfeasance, bad faith or gross
negligence on the part of INVESCO in the performance of its obligations and
duties or by reason of its reckless disregard of its obligations and duties
under the Advisory Agreement.
The Advisory Agreement may be terminated without penalty upon sixty (60)
days' written notice by either party, or by a vote of the majority of the Fund's
shares, and automatically terminates in the event of its assignment.
In connection with the Reorganization, shareholders are being asked to
approve the proposed new Investment Advisory Agreement (the "Proposed Investment
Advisory Agreement"), as discussed below. Pursuant to the Proposed Investment
Advisory Agreement, Counselor Series Funds on behalf of the New Fund will employ
INVESCO to supervise the New Fund's investment program and to furnish other
services to the New Fund. Under the terms of the Proposed Investment Advisory
Agreement, INVESCO will act as investment adviser and, subject to the
supervision of the Board of Directors of Counselor Series Funds, direct the
investments of the New Fund in accordance with the New Fund's investment
objective, policies, and limitations. INVESCO will also provide the New Fund
with all necessary office facilities and personnel for servicing the New Fund's
investments and compensate all officers of the New Fund and all Directors who
are "interested persons" of Counselor Series Funds or of INVESCO, and all
personnel of the New Fund or INVESCO performing services relating to research,
statistical, and investment activities.
In addition, INVESCO or its affiliates, subject to the supervision of the
Board of Directors, will continue to provide the management and administrative
services necessary for the operation of the New Fund. These services include
providing facilities for maintaining the New Fund's organization; supervising
relations with custodians, transfer and pricing agents, accountants,
underwriters, and other persons dealing with the New Fund; preparing all general
shareholder communications and conducting shareholder relations; maintaining the
New Fund's records and registration of the New Fund's shares under federal
securities laws and making necessary filings under state securities laws;
developing management and shareholder services for the New Fund; and furnishing
reports, evaluations, and analyses on a variety of subjects to the Directors.
Other than the fee for providing investment advisory services proposed to be
charged the New Fund by INVESCO described below, the terms of the Proposed
Investment Advisory Agreement are substantially the same as those contained in
the Fund's current Advisory Agreement.
For the advisory services it provides to the Fund, INVESCO will receive a
base management fee calculated at the annual rate of 1.50% of the New Fund's
daily net assets (the "Base Fee"). This Base Fee will be adjusted, on a monthly
basis (i) upward at the rate of 0.20%, on a pro rata basis, for each percentage
point the investment performance of the Class A shares of the New Fund exceeds
the sum of 2.00% and the investment record of the Morgan Stanley Health Care
Product Index (the "Index"), or (ii) downward at the rate of 0.20%, on a pro
rata basis, for each percentage point the investment record of the Index less
2.00% exceeds the investment performance of the Class A shares of the New Fund
(the "Fee Adjustment"). The maximum or minimum adjustment, if any, will be 1.00%
annually. Therefore, the maximum annual fee payable to INVESCO will be 2.50% of
average daily net assets and the minimum annual fee will be 0.50% of average
daily net assets. During the first twelve months of operation, the management
fee will be charged at the base fee of 1.50% with no performance adjustment.
In determining the Fee Adjustment, if any, applicable during any month,
INVESCO will compare the investment performance of the Class A shares of the New
Fund for the twelve-month period ending on the last day of the prior month (the
"Performance Period") to the investment record of the Index during the
Performance Period. The investment performance of the New Fund will be
determined by adding together (i) the change in the net asset value of the Class
A shares during the Performance Period, (ii) the value of cash distributions
made by the New Fund to holders of Class A shares to the end of the Performance
Period, and (iii) the value of capital gains per share, if any, paid or payable
on undistributed realized long-term capital gains accumulated to the end of the
Performance Period, and will be expressed as a percentage of its net asset value
per share at the beginning of the Performance Period. The investment record of
the Index will be determined by adding together (i) the change in the level of
the Index during the Performance Period and (ii) the value, computed
consistently with the Index, of cash distributions made by companies whose
securities comprise the Index accumulated to the end of the Performance Period,
and will be expressed as a percentage of the Index at the beginning of such
Period.
After it determines any Fee Adjustment, INVESCO will determine the dollar
amount of additional fees or fee reductions to be accrued for each day of a
month by multiplying the Fee Adjustment by the average daily net assets of the
Class A shares of the New Fund during the Performance Period and dividing that
number by the number of days in the Performance Period. The management fee, as
adjusted, is accrued daily and paid monthly.
At the request of INVESCO, the Board of Trustees discussed the Proposal
Investment Advisory Agreement for New Fund at a meeting held on February 6,
2001. In addition, the Independent Trustees also discussed approval of the
Proposal Investment Advisory Agreement for New Fund with their independent
counsel. In evaluating the Proposed Investment Advisory Agreement for New Fund,
the Board of Trustees received information from INVESCO to assist in its
deliberations. The Trustees considered various matters, discussed below, in
determining the reasonableness and fairness of the proposed changes in the
investment advisory fee payable by New Fund and reached the following
conclusions:
o First, New Fund will use investment leverage through bank borrowings,
and make extensive use of short sales and various types of derivative
instruments. These practices require a significant devotion of
management, investment, trading and administrative resources;
o Second, investment management fees are calculated based upon net
assets. As a consequence, INVESCO is effectively not compensated for
managing assets derived from the bank borrowings, which may equal up
to 33 1/3% of New Fund's net assets, notwithstanding that these assets
are managed as part of New Fund's overall portfolio;
o Third, the mechanics of the Securities and Exchange Commission's
mandated calculation of the performance fee adjustment creates
distortions in the amount of compensation paid to INVESCO of a rapidly
growing or shrinking fund. This distortion is a function of basing the
monthly performance adjustment calculation on average asset levels
over rolling 12 month periods. The Base Fee is permitted to be
calculated each month based on the average daily net assets that
month. As a result, in a rapidly growing fund the amount of the Fund's
assets upon which a performance fee adjustment is calculated will lag
the average assets of the Fund calculated on a more frequent basis;
the opposite is true in the case of a rapidly shrinking fund;
o Fourth, to the knowledge of the Trustees, there are a small but
growing number of other registered mutual funds which have the broad
investment mandate and investment practices of the Counselor Series
Funds. This fact makes meaningful comparison of management fees
between the New Fund and other registered mutual funds problematic.
However, the New Fund is, in many respects, similar to an unregistered
hedge fund. The Trustees understand that the management fee for these
unregistered funds is generally a Base Fee of 3/4 of 1% to 11/2% of
net assets per annum, plus a performance fee of 20% of returns which
exceed a so-called "hurdle rate." The hurdle rate is typically set at
6% to 10% of returns based on invested capital. While federal
securities laws prohibit this type of fee from being used in
connection with registered mutual funds like the New Fund, this fee
would generally far exceed the Proposed Fee;
o Fifth, in today's highly complex investment world, the Trustees and
INVESCO both believe the increased fee, particularly when fixed at
1.5% of net assets during the first twelve months following the
Reorganization, will help INVESCO remain competitive in attracting,
retaining and motivating the top quality investment personnel and
other key personnel necessary to manage New Fund and provide new and
innovative services to shareholders of the open-end fund; and
o Sixth, the Trustees considered today's ever-expanding securities
markets, which operate continuously around the globe. The Trustees
believe that additional resources will help INVESCO maintain
state-of-the-art computer systems, access information and analyze
strategies using sophisticated tools and methodologies, a hallmark of
INVESCO's philosophy in creating the Counselor Series Funds.
The Trustees reached these conclusions after careful discussion and
analysis and believe that they have carefully and thoroughly examined the
questions and alternatives. In recommending that the shareholders of Global
Health Sciences Fund approve the Reorganization, including the Proposed
Investment Advisory Agreement, the Independent Trustees have considered
what they believe to be the best interests of the shareholders of Global
Health Sciences Fund, who will become shareholders of New Fund should
Proposal 2 be approved. In so doing the Independent Trustees were advised
by independent counsel, retained by the Independent Trustees, and paid by
the Fund, as to the nature of the matters to be considered and the
standards to be used in reaching their decision.
If the Fund outperforms the Morgan Stanley Health Care Product Index by more
than 2%, the Base Fee will be adjusted as follows:
- --------------------------------------------------------------------------------
% PERFORMANCE OVER ADVISORY FEE
MORGAN STANLEY HEALTH CARE PRODUCT INDEX
- --------------------------------------------------------------------------------
2% 1.50% (no increase in
Base Fee)
3% 1.70%
4% 1.90%
5% 2.10%
6% 2.30%
7% 2.50%
- --------------------------------------------------------------------------------
If the Fund underperforms the Index by more than 2%, the Base Fee will be
adjusted as follows:
- --------------------------------------------------------------------------------
% PERFORMANCE UNDER ADVISORY FEE
MORGAN STANLEY HEALTH CARE PRODUCT INDEX
- --------------------------------------------------------------------------------
2% 1.50% (no decrease in
Base Fee)
3% 1.30%
4% 1.10%
5% 0.90%
6% 0.70%
7% 0.50%
- --------------------------------------------------------------------------------
The Index is an equal-dollar weighted index of 26 companies involved in
the business of pharmaceuticals, including biotechnology and medical technology.
The performance of Global Health Sciences Fund has historically been
compared to the S&P Health Care Composite Index ("S & P Health Care Index"), a
capitalization weighted index of all the stocks in the Standard & Poor's 500
Index ("S&P" 500") that are involved in the business of health care related
products or services. Use of the S&P Health Care Index tends to emphasize the
performance of large capitalization pharmaceutical companies for two reasons.
First, the S&P 500 itself is representative of the performance of larger
capitalization companies so use of a subset index thereof necessarily includes
only the larger participants in the health sciences sector, which tend primarily
to be pharmaceutical companies. Second the capitalization weighting further
amplifies the effect of the index price changes resulting from price changes of
larger capitalization companies over price changes of smaller capitalization
companies within the index. At the request of INVESCO, in considering the
adoption of the New Fund as a series of Counselor Series Funds, the Directors of
Counselor Series Funds, permitted INVESCO to consider use of an index more
representative of the assets historically held by Global Health Sciences Fund,
which assets will comprise the asset base of New Fund if Proposal 2 is approved.
INVESCO believes that the comparison of New Fund's performance to
the Morgan Stanley Health Care Product Index is appropriate because its
equal-dollar weighting, and its inclusion of biotechnology and other medical
technology products, is more representative of the types of investments INVESCO
will make on behalf of New Fund. It is important to note that, after the first
twelve months of operation of New Fund, the investment advisory fee INVESCO will
receive from New Fund will be determined by comparison of New Fund's performance
to the Index. During the first twelve months of operation, the investment
advisory fee INVESCO will receive from New Fund will be fixed at 1.5%, an
investment advisory fee that is materially higher than the 0.90% currently
charged Global Health Sciences Fund at its current asset levels.
If the Directors of the Counselor Series Funds should determine at some
future date that another securities index is a better representative of the
composition of the New Fund than is the Morgan Stanley Health Care Product
Index, the Directors may change the securities index used to compute the Fee
Adjustment. If the Directors do so, the new securities index (the "New Index")
will be applied prospectively to determine the amount of the Fee Adjustment. The
Index will continue to be used to determine the amount of the Fee Adjustment for
that part of the Performance Period prior to the effective date of the New
Index. A change in the Index would be submitted to shareholders for their
approval unless the SEC determines that shareholder approval is not required.
INVESCO may also receive fees for acting as securities lending agent for
New Fund, in connection with New Fund's securities lending activities.
G. MASTER DISTRIBUTION PLAN AND AGREEMENT
If the Reorganization is approved, the New Fund will adopt a Master
Distribution Plan and Agreement - Class A (the "Class A Plan") pursuant to Rule
12b-1 under the 1940 Act. Rule 12b-1 provides in substance that a mutual fund
may not engage directly or indirectly in financing any activity that is
primarily intended to result in the sale of shares of a fund except pursuant to
a plan approved on behalf of the fund under Rule 12b-1. The Class A Plan, as
approved by the Directors of Counselor Series Funds, allows the New Fund and
INVESCO Distributors, Inc. ("IDI"), the New Fund's distributor, to incur certain
expenses that might be considered to constitute direct or indirect payment by
the New Fund of distribution expenses.
Under the Class A Plan, Class A shares of the New Fund will pay
compensation to IDI at an annual rate of 0.35% per annum of the average daily
net assets attributable to Class A shares for the purpose of financing any
activity which is primarily intended to result in the sale of Class A shares.
With regard to the Class A Plan for the New Fund, the Plan provides that the
Class A shares of the Fund shall pay compensation to IDI at an annual rate of
0.35% per annum of new sales of shares, exchanges into the New Fund and
reinvestments of dividends and capital gain distributions made after the closing
date, for the purpose of financing any activity which is primarily intended to
result in the sale of Class A shares of the New Fund. During any period in which
the New Fund is closed due to high asset levels, the Class A shares of the New
Fund will reduce this payment of 0.35% to 0.25% per annum.
The proposed Plan is PROSPECTIVE in nature. Thus, the fee will only be
assessed based on new sales of New Fund Class A shares, exchanges into the Class
A shares and reinvestments of dividends and capital gains distributions
(collectively "New Class A Assets") of the Fund which occur after the Plan is
implemented. The distribution fees would be absorbed pro rata by all Fund
shareholders. The Plan would limit the amount of the Fund's assets which could
be used for distribution and promotion of Class A shares during any 12-month
period to a maximum of 0.35 of 1% (35 basis points) of New Assets of the Fund
added after the Plan is implemented. Any increase in this rate would require
approval of the Board and shareholders of the Fund. At no time will the fees
under the Plan be applied to a level of New Class A Assets higher than the net
Class A assets of the New Fund.
However, to remain competitive in distribution Class A shares of the New
Fund, IDI will likely need to compensate third parties for distribution of the
shares at levels that exceed the amounts IDI receives from New Fund. To the
extent this is so, INVESCO will pay these periodic payments on behalf of New
Fund. To partially offset this expense, INVESCO will retain the 2% CDSC that
will be in effect if Proposal 2 is approved.
The Class A Plan is designed to compensate IDI, on a monthly basis, for
certain promotional and other sales-related costs, and to implement a dealer
incentive program which provides for periodic payments to selected dealers who
furnish continuing personal shareholder services to their customers who purchase
and own Class A shares of the New Fund. Payments can also be directed by IDI to
selected institutions that have entered into service agreements with respect to
Class A shares of the New Fund and that provide continuing personal services to
their customers who own Class A shares of the New Fund. The service fees payable
to selected institutions are calculated at the annual rate of 0.25% of the
average daily net asset value of those Class A New Fund shares that are held in
such institutions' customers' accounts.
Of the aggregate amount payable under the Class A Plan, payments to
dealers and other financial institutions that provide continuing personal
shareholder services to their customers who purchase and own Class A shares of
the New Fund, in amounts up to 0.25% of the average daily net assets of the
Class A shares of the New Fund attributable to the customers of such dealers or
financial institutions, are characterized as service fees. Payments to dealers
and other financial institutions in excess of such amount and payments to IDI
would be characterized as an asset-based sales charge pursuant to the Class A
Plan. The Class A Plan also imposes a cap on the total amount of sales charges,
including asset-based sales charges, that may be paid by the Company with
respect to the Class A shares of the New Fund.
IDI may pay investment dealers or other financial service firms for share
purchases (measured on an annual basis) of Class A shares of the New Fund sold
at net asset value to an employee benefit plan as follows: 1.00% of the first $2
million of such purchases, plus 0.80% of the next $1 million of such purchases,
plus 0.50% of the next $17 million of such purchases, plus 0.25% of amounts in
excess of $20 million of such purchases.
To the extent they are successful in attracting new investments, marketing
efforts conducted pursuant to the Class A Plan may benefit the shareholders of
the New Fund by attracting more assets which may in turn lower the ongoing
expenses per share of the New Fund. The Board believes that these marketing
efforts will also assist in selling shares of the New Fund to offset redemptions
that are anticipated to occur after the Reorganization. To the extent that the
new Fund is successful in offsetting redemptions with new sales of shares,
INVESCO believes it will be able to manage the New Fund more effectively
H. ANNUAL FUND OPERATING EXPENSES
Annual fund operating expenses are paid out of Global Health Sciences
Fund's assets. Expenses are factored into the Fund's share price or dividends
and are not charged directly to shareholder accounts.
The following table shows the fees and expenses of Global Health Sciences
Fund for the fiscal year ended October 31, 2000, and the pro forma fees and
expenses of the New Fund adjusted to reflect the proposed fees as expenses had
it been operating in the fiscal year ended October 31, 2000.
FEES PAID TO INVESCO GHS NEW FUND - CLASS A
- -------------------- --- ------------------
MANAGEMENT FEES 1.00% _____%
12B-1 FEES NONE _____%
OTHER EXPENSES ____% _____%
TOTAL OPERATING EXPENSES ____% _____%
In addition to the fund operating expenses, Class A shares of the New Fund
acquired in exchange for shares of Global Health Sciences Fund will be subject
to a CDSC of 2% of the net asset value of such shares, if such shares are
redeemed out of the New Fund during the first twelve months following the
Reorganization. The proceeds of the CDSC will be retained by INVESCO to
partially offset additional distribution expenses associated with the New Fund
that will be paid by INVESCO, on behalf of the New Fund, as more fully described
in the preceding Section G - Master Distribution Plan and Agreement.
Furthermore, no sales load will be payable on the Class A shares received in the
Reorganization, but new purchases of Class A shares of the New Fund will be
subject to a maximum front-end sales load of 5.50%. Since the shares of Global
Health Sciences Fund cannot be redeemed and, other than reinvestments of
dividends and capital gain distributions, can only be purchased on the New York
Stock Exchange, they are not subject to any redemption fees or sales loads.
EXAMPLES OF EFFECT OF FUND EXPENSES
The following table illustrates the expenses on a hypothetical $1,000 investment
in Global Health Sciences Fund, and the estimated expenses on a hypothetical
$1,000 investment in the New Fund calculated at the rates stated above, assuming
a 5% annual return.
1 year 3 years 5 years 10 years
Global Health Sciences Fund $____ $____ $____ $_____
(closed-end)
New Fund Class A Shares $____ $____ $____ $_____
New Fund Class A Shares (open-end $____ $____ $____ $_____
excluding sales charge)
Based upon an opinion of counsel, neither Global Health Sciences Fund nor
its shareholders will realize any gain or loss for federal income tax purposes
as a result of the Reorganization. However, shareholders will recognize a gain
or loss if they later redeem their shares of the New Fund or if they sell their
shares of Global Health Sciences Fund prior to the Reorganization to the extent
that the redemption or sale proceeds are greater or less than the respective
adjusted tax basis of their shares. Payment for any such redemptions generally
will be made within seven days after receipt of a proper request for redemption.
Such payments may be postponed or the right of redemption suspended under
unusual circumstances that affect the ability to value the securities in New
Fund's portfolio or when an emergency makes it not reasonably practicable for
New Fund to dispose of portfolio securities or to fairly determine the value of
its net assets.
To the extent that the New Fund must dispose of portfolio securities to pay
redemption proceeds, the New Fund may have capital gains or losses that must be
distributed to shareholders. As a result, remaining shareholders may be subject
to higher capital gain tax or dividend liabilities in fiscal year 2001 than they
might have been subject to had Global Health Sciences Fund remained a closed-end
fund.
I. COMPARISON OF OPEN-END AND CLOSED-END INVESTMENT COMPANIES
Open-end investment companies, commonly referred to as mutual funds, issue
redeemable securities. The holders of redeemable securities have the right to
surrender those securities to the mutual fund and obtain in return, an amount
based on their proportionate share of the value of the mutual fund's net assets.
Most mutual funds also continuously issue new shares to investors at a
price based on the fund's net asset value at the time of issuance. Such fund's
net asset value per share is determined by deducting the amount of its
liabilities from the value of its assets, and dividing the difference by the
number of shares outstanding.
In contrast, closed-end investment companies such as Global Health Sciences Fund
do not redeem their outstanding shares or engage in the continuous sale of new
securities, and thus operate with a relatively fixed capitalization. The shares
of closed-end investment companies are normally bought and sold in securities
markets. Global Health Sciences Fund's shares are currently listed and traded on
the New York Stock Exchange ("NYSE"). If the Fund is converted to an open-end
investment company, its shares will be delisted from the NYSE.
Some of the legal and practical differences between operations of Global Health
Sciences Fund as a closed-end versus an open-end investment company are as
follows:
(a) ACQUISITION AND DISPOSITION OF SHARES. Once Global Health Sciences Fund
is reorganized into an open-end investment company the Fund's shares will no
longer be listed on the NYSE. Shareholders desiring to realize the value of
their shares will be able to do so IMMEDIATELY by exercising their right to have
such shares redeemed by the New Fund at the next determined current net asset
value, less the CDSC fee (as described above). The New Fund's net asset value
per share will be calculated by dividing (i) the value of its portfolio
securities plus all cash and other assets (including accrued interest and
dividends received but not collected) less all liabilities (including accrued
expenses) by (ii) the number of outstanding shares of the New Fund. The 1940 Act
generally requires open-end investment companies to value their assets on each
business day in order to determine the current net asset value on the basis of
which their shares may be redeemed by shareholders or purchased by investors. It
is anticipated that leading financial publications will publish the net asset
value of the New Fund on a daily basis.
(b) ELIMINATION OF DISCOUNT AND IMPLEMENTATION OF CONTINGENT DEFERRED
SALES CHARGE. The implementation of Reorganization will have the effect of
IMMEDIATELY eliminating any market discount from net asset value. If the
Reorganization is approved by the shareholders, the market discount may be
reduced or the Fund's shares may trade at a premium prior to the Closing Date to
the extent investors are induced to purchase shares in the open market in
anticipation of such a Reorganization. However, there can be no assurance that
this will be the case. After the Reorganization, shareholders of the New Fund
will be permitted to redeem their shares, subject to a CDSC that will be set at
2% for the first twelve months following the Reorganization.
(c) PORTFOLIO MANAGEMENT. Because a closed-end investment company does not
have to redeem its shares, it may keep all of its assets fully invested and make
investment decisions without having to adjust for cash inflows and outflows from
continuing sales and redemptions of its shares. In contrast, open-end investment
companies may be subject to pressure to sell portfolio securities at
disadvantageous times or prices in order to satisfy such redemption requests. In
addition, sales of portfolio securities may generate taxable gains or losses,
which must be distributed to shareholders.
(d) EXPENSES; COSTS OF POTENTIAL NET REDEMPTIONS. Open-end investment
companies are generally more expensive to operate and administer than closed-end
investment companies, and thus the expense ratio of the New Fund after the
Reorganization may be higher than Global Health Sciences Fund's current expense
ratio. The New Fund's expense ratio could be adversely affected by significant
redemptions. Additional costs may be incurred by the sale of portfolio
securities if a substantial number of redemption requests are received following
the Reorganization. The New Fund may also be required to sell portfolio
securities or incur borrowing costs in order to meet redemptions. During its
first twelve months, the New Fund will have a higher management fee than Global
Health Sciences Fund (and may well have a higher management fee thereafter) and
will be subject to a 12b-1 fee on its classes of shares.
(e) SENIOR SECURITIES AND BORROWINGS. The Investment Company Act of 1940
prohibits mutual funds from issuing "senior securities" representing
indebtedness (i.e., bonds, debentures, notes and other similar securities),
other than indebtedness to banks where there is an asset coverage of at least
300% for all borrowings. Open-end investment companies generally may not issue
preferred stock. While Global Health Sciences Fund has not done so, closed-end
investment companies are generally permitted to issue "senior securities"
representing indebtedness to any lender if the 300% asset coverage test is met
and may issue preferred stock (subject to various limitations).
J. COMPARISON OF A MARYLAND CORPORATION AND A MASSACHUSETTS BUSINESS TRUST
Global Health Sciences Fund is a Massachusetts business trust and is governed by
its Declaration of Trust, By-laws and Massachusetts trust law. As part of the
Reorganization, Global Health Sciences Fund will reorganize as the New Fund, a
series of a Maryland corporation. As such, the New Fund will be governed with
Articles of Incorporation, By-laws, and under applicable Maryland corporation
law. Certain differences between a Maryland corporation and a Massachusetts
business trust are summarized below.
(a) SHARES OF CAPITAL STOCK. The Articles of Incorporation of Counselor
Series Funds permit the Directors to issue an unlimited number of shares of
stock and to divide such shares into an unlimited number of series or classes,
all without shareholder approval. Counselor Series Funds currently has two
series. The authorized capital stock of New Fund consists of 100,000,000 shares
of Common Stock. The Directors of Counselor Series Funds may, without
shareholder approval, increase the number of shares authorized and may classify
and reclassify the shares of Counselor Series Funds into additional series or
classes at a future date.
(b) VOTING REQUIREMENTS. The By-laws of Global Health Sciences Fund
require that special meetings of shareholders must be called upon the written
request of shareholders entitled to vote not less than 25% of all votes entitled
to be cast at the special meeting. The By-laws of Counselor Series Funds, and
Maryland General Corporation Law, require that special meetings of shareholders
must be called upon the written request of shareholders holding to not less
than 10% of all votes entitled to be cast at the special meeting.
The Articles of Incorporation of Counselor Series Funds provide that on
each matter submitted for a vote of the shareholders, each holder of a share
will be permitted one vote per share owned. All shares of all classes or series
will vote as a single class or series ("single class voting"), unless a separate
vote of any class or series is required by the Investment Company Act of 1940,
or by the Maryland General Corporation Law, or the matter does not affect any
other class or series other than those classes or series voting on the issue.
Holders of the shares of stock of the Company shall not be entitled to exercise
cumulative voting in the election of directors or any other matter.
The establishment and designation of any series or class of share, in
addition to those originally set forth in the Articles of Incorporation, will be
effective upon the adoption by a majority of the current directors of a
resolution setting forth such establishment. Such additions will also be
effective upon designation and the relative right and preference of such series
or class, and the filing with the proper authority of the State of Maryland of
Articles Supplementary establishing and designating relative rights and
preferences.
(c) SHAREHOLDER MEETINGS. Counselor Series Funds is not required to hold
annual meetings of its shareholders, thus subsequent to the Reorganization of
Global Health Sciences Fund into the New Fund, the New Fund will not be required
to hold annual meetings of its shareholders. Global Health Sciences Fund is
required to hold annual shareholders meetings pursuant to the rules of the NYSE.
The Directors of Counselor Series Funds may be removed for cause by a written
instrument signed by at least two-thirds of the remaining Directors or by vote
of shareholders of Counselor Series Funds holding not less than two-thirds of
the votes then outstanding, cast in person or by proxy at any meeting called for
that purpose. The By-laws of Global Health Sciences Fund permit removal of a
Trustee by the holders of a majority of the outstanding shares of Global Health
Sciences Fund.
(d) SHAREHOLDER LIABILITY. Under Massachusetts law, shareholders of Global
Health Sciences Fund may, under certain circumstances, be held personally liable
as partners for Global Health Sciences Fund's obligations. However, the risk of
a shareholder incurring financial loss on account of shareholder liability is
limited to circumstances in which both inadequate insurance exists and Global
Health Sciences Fund itself is unable to meet its obligations. As a Maryland
corporation, the shareholders of New Fund have no personal liability to New Fund
or its creditors with respect to their stock, except that a shareholder may be
liable to the extent that (1) the subscription price or other agreed
consideration for the stock has not been paid, or (2) liability is imposed under
any other provision of Maryland law.
(e) LIABILITY OF DIRECTORS AND TRUSTEES. Under the Global Health Science's
Fund's Declaration of Trust, Trustees are personally liable only for willful
misfeasance, bad faith, gross negligence or reckless disregard of their duties.
Under the Declaration of Trust, Trustees, officers, agents and employees will be
indemnified against all liabilities and expenses (including amounts paid in
satisfaction of judgments, in compromise, as fines and penalties, and as counsel
fees) reasonably incurred by them in connection with the defense or disposition
of any action, suit or other proceeding, whether civil or criminal, in which
they may be involved or with which they may be threatened, while in office or
thereafter, by reason of their being or having been such a Trustee, officer,
employee or agent, except with respect to any matter as to which they have been
adjudicated to have acted in bad faith or with willful misfeasance, gross
negligence or reckless disregard of their duties, provided, however, that as to
any matter disposed of by a compromise payment, pursuant to a consent decree or
otherwise, no indemnification either for that payment or for any other expenses
may be provided unless Global Health Sciences Fund has received a written
opinion from independent legal counsel approved by the Trustees to the effect
that if either the matter of willful misfeasance, gross negligence or reckless
disregard of duty, or the matter of good faith and reasonable belief as to the
best interests of Global Health Sciences Fund, had been adjudicated, it would
have been adjudicated in favor of the person seeking indemnification. The
Trustees may receive advance payments in connection with indemnification;
provided the indemnified person has given a written undertaking to reimburse the
Global Health Sciences Fund in the event it is subsequently determined that he
or she is not entitled to such indemnification.
Maryland law provides that in addition to any other liabilities imposed by
law, a Director of New Fund may be liable to the Fund for voting for or
assenting to the declaration of any dividend or other distribution of assets to
New Fund shareholders that is contrary to Maryland law if it is established that
the Director did not act in good faith, in a manner he or she reasonably
believed to be in the best interest of New Fund and with the care that an
ordinarily prudent person in a like position would use under similar
circumstances. In the event of any litigation against the Directors or Officers
of New Fund, Maryland law permits, and New Fund's By-laws will require, New Fund
to indemnify a Director or Officer for certain expenses and to advance money for
such expenses only if he or she demonstrates that he or she acted in good faith
and reasonably believed that his or her conduct was in, or not opposed to, the
best interest of New Fund and, with respect to a criminal proceeding, he or she
had no reasonable cause to believe such conduct was unlawful.
The foregoing is only a summary of certain of the differences between Counselor
Series Funds' Articles of Incorporation and By-laws and Maryland law and Global
Health Sciences Fund's Declaration of Trust and By-laws and Massachusetts law.
It is not a complete list of differences. Shareholders should refer to the
provisions of such Articles of Incorporation, By-laws and Maryland law, and such
Declaration of Trust, By-laws and Massachusetts law directly for a more thorough
comparison.
CONCLUSION
If the Reorganization is approved, the Board will take such other actions
as are necessary to implement the Reorganization. The Reorganization of Global
Health Sciences Fund from a Massachusetts business trust to an open-end,
multiple-class fund organized as a series of a Maryland corporation will be
accomplished by: (i) filing a Certificate of Designation designating the New
Fund as a series of shares of Counselor Series Funds with the State of Maryland
(ii) transferring all of the assets of Global Health Sciences Fund to the New
Fund solely in exchange for Class A shares of Common Stock of the New Fund and
the assumption by the New Fund of the liabilities of Global Health Sciences
Fund, (iii) filing a Certificate of Dissolution for Global Health Sciences Fund
with the Secretary of State of the Commonwealth of Massachusetts, (iv) filing
with the SEC of an application for an Order under Section 8(f) of the 1940 Act
terminating the registration of the Global Health Sciences Fund as an investment
company, (v) having the New Fund enter into a new Advisory Agreement with
INVESCO, as described above, and (vi) having the New Fund enter into the Master
Plan and Agreement of Distribution, as described above. All of the above actions
will be deemed to have received the necessary approval of the Global Health
Sciences Fund's shareholders if the shareholders approve the reorganization
In the event that the Reorganization is not approved, Global Health
Sciences Fund will continue to engage in business as a registered closed-end
investment company under the Fund's current fundamental and non-fundamental
investment policies. In that event, the Board of Trustees of Global Health
Sciences Fund may consider other options, including possibly liquidating Global
Health Sciences Fund upon the approval of Fund shareholders.
THE BOARD OF TRUSTEES UNANIMOUSLY RECOMMENDS A VOTE FOR PROPOSAL 2.
INDEPENDENT ACCOUNTANTS
PricewaterhouseCoopers LLP, 1670 Broadway, Suite 1000, Denver, Colorado,
are the independent accountants of both Global Health Sciences Fund and
Counselor Series Funds. The independent accountants are responsible for auditing
the financial statements of the Funds.
This firm has no direct financial interest or material indirect financial
interest in the Global Health Sciences Fund, the Counselor Series Funds or
INVESCO. Representatives of PricewaterhouseCoopers LLP are not expected to
attend the Meeting.
PricewaterhouseCoopers LLP provided the following audit services to Global
Health Sciences Fund for the fiscal year ended October 31, 2000.
o audit of annual financial statements
o preparation of the Fund's federal and state income tax returns
o preparation of the Funds federal excise tax return
o consultation with the Fund's audit committee
o routine consultation on financial accounting and reporting matters.
The trustees authorized all services performed by PricewaterhouseCoopers
LLP. In addition, the trustees annually review the scope of the services to be
provided by PricewaterhouseCoopers LLP and consider the effect, if any, that
performance of any non-audit services might have on audit independence.
The audit committee of the fund, consisting of three independent Trustees,
meets periodically with PricewaterhouseCoopers LLP to review accounting and
reporting requirements.
In the fiscal year ending October 31, 2000, Global Health Sciences Fund and
INVESCO paid PWC for audit and other services as follows.
- ------------------------------------------------------------------
GLOBAL HEALTH SCIENCES INVESCO
- ------------------------------------------------------------------
Audit Fees $33,500 None
Financial Systems Design None None
and Implementation
Other Fees
Press Releases $ 3,000
Tax Work $ 4,200
Various $130,500
Total $40,700 $130,500
- ------------------------------------------------------------------
CUSTODIAN
State Street Bank and Trust Company, P.O. Box 351, Boston MA is the custodian of
the cash and investments of both Global Health Sciences Fund and Counselor
Series Funds, and will act as custodian of New Fund if Proposal 2 is approved. .
TRANSFER AGENTS
The transfer agent of Global Health Sciences Fund is Equiserve [ADDRESS]. The
Transfer Agent of Counselor Series Funds is INVESCO, 7800 E. Union Avenue,
Denver CO 80237. INVESCO will act as transfer agent of New Fund if Proposal 2 is
approved.
MISCELLANEOUS
NOTICE TO BANKS, BROKER-DEALERS AND VOTING TRUSTEES AND THEIR NOMINEES. Please
advise Shareholder Communications Corporation, Inc., 77 Water St., 20th Floor,
New York, New York, 10005, if you know that other persons are beneficial owners
of shares for which proxies are being solicited and, if so, the number of copies
of the Proxy Statement you wish to receive in order to supply copies to the
beneficial owners of the respective shares.
OTHER BUSINESS. The Board knows of no other business to be brought before the
Meeting. However, if any other matters properly come before the Meeting, it is
the intention that proxies which do not contain specific instructions to the
contrary will be voted on such matters in accordance with the judgment of the
persons therein designated.
SHAREHOLDER PROPOSALS. If the Reorganization is approved by the shareholders of
Global Health Sciences Fund, the New Fund does not intend to hold annual
meetings of shareholders in the future. In the event that the New Fund should
hold a Special Meeting of Shareholders, a shareholder proposal intended to be
presented at any such meeting of shareholders of the New Fund must be received
by the New Fund within a reasonable time before the solicitation by the Board of
Directors of the New Fund relating to such meeting is to be made in order to be
considered in the New Fund's proxy statement and form of proxy relating to that
meeting. If the Reorganization is not approved, shareholders of Global Health
Sciences Fund wishing to submit proposals for inclusion in a proxy statement for
a subsequent annual shareholders meeting should send their written proposals by
_________, 2001 to the Fund's Secretary, 7800 E. Union Avenue, Denver CO 80237.
APPENDIX A
PRINCIPAL SHAREHOLDERS
The following table sets forth the beneficial ownership of INVESCO Global Health
Sciences Fund's outstanding equity securities as of March 9, 2001 by each
beneficial owner of 5% or more of INVESCO Global Health Sciences Fund's
outstanding equity securities:
Amount and
Nature of
Name and Address Ownership Percentage
APPENDIX B
FORM OF AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (Agreement) is made as of May 8, 2001,
by and between (i) INVESCO Global Health Sciences Fund, a Massachusetts business
trust duly registered as a closed-end management investment company under the
Investment Company Act of 1940, as amended (1940 Act), with a principal place of
business at 7800 E. Union Avenue, Denver, Colorado 80237 (Global Health Sciences
Fund), and (ii) INVESCO Counselor Series Funds, Inc., a Maryland corporation
(Counselor Series), on behalf of a new segregated portfolio of assets (series)
of Counselor Series named "Global Health Sciences Fund" (Series). Counselor
Series is a duly organized corporation under the laws of the State of Maryland
duly registered as an open-end management company under the 1940 Act with a
principal place of business at 7800 E. Union Avenue, Denver, Colorado 80237. The
Series and Global Health Sciences Fund may be referred to herein collectively as
the "Funds" or each individually as a "Fund."
This Agreement is intended to be, and is adopted as, a "plan of reorganization"
within the meaning of the regulations under Section 368 of the Internal Revenue
Code of 1986, as amended (Code), regarding a reorganization under Section
368(a)(1)(F) of the Code. The reorganization will comprise: (a) the transfer of
all of the assets of Global Health Sciences Fund to the Series solely in
exchange for Class A shares of common stock of the Series (Series Shares) and
the assumption by the Series of Global Health Sciences Fund's liabilities; and
(b) the constructive distribution of such Series shares by Global Health
Sciences Fund pro rata to its shareholders in complete liquidation, dissolution
and termination of Global Health Sciences Fund in exchange for all of Global
Health Sciences Fund's outstanding shares. On the Closing Date (as defined in
Section 6), Global Health Sciences Fund shall receive a number of full and
fractional Series Shares having an aggregate net asset value equal to the value
of the assets of Global Health Sciences Fund, less the liabilities of Global
Health Sciences Fund, at the Valuation Time (as defined in Section 4), which
Global Health Sciences Fund shall then distribute pro rata to its shareholders.
The foregoing transactions are referred to herein as the "Reorganization." In
consideration of the mutual promises and subject to the terms and conditions
herein, the parties covenant and agree as follows:
1. REPRESENTATIONS AND WARRANTIES OF GLOBAL HEALTH SCIENCES FUND.
Global Health Sciences Fund represents and warrants to and agrees with the
Series that:
(a) Global Health Sciences Fund is a trust duly organized and validly existing
under the laws of the Commonwealth of Massachusetts, and has the power to own
all of its properties and assets and to carry out its obligations under this
Agreement. It has all necessary federal, state, and local authorizations to
carry on its business as now being conducted and to carry out this Agreement;
(b) Global Health Sciences Fund is a closed-end management investment company
duly registered under the 1940 Act, and such registration is in full force and
effect;
(c) The Prospectus of Global Health Sciences Fund, dated January 16, 1992, and
any information provided in the annual report of Global Health Sciences Fund for
the year ended October 31, 2000 pursuant to Rule 8b-16(b) of the 1940 Act and
previously furnished to the Series, did not and do not contain any 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;
(d) There are no material legal, administrative, or other proceedings pending
or, to the knowledge of Global Health Sciences Fund, threatened against Global
Health Sciences Fund which assert liability on the part of Global Health
Sciences Fund. Global Health Sciences Fund knows of no facts which might form
the basis for the institution of such proceedings;
(e) Global Health Sciences Fund is not in, and the execution, delivery, and
performance of this Agreement in accordance with its terms will not result in,
violation of any provision of its Declaration of Trust or By-laws, or, to the
knowledge of Global Health Sciences Fund, of any agreement, indenture,
instrument, contract, lease, or other undertaking to which Global Health
Sciences Fund is a party or by which Global Health Sciences Fund is bound or
result in the acceleration of any obligation or the imposition of any penalty
under any agreement, judgment or decree to which Global Health Sciences Fund is
a party or is bound;
(f) The Statement of Assets and Liabilities, the Statement of Operations, the
Statement of Changes in Net Assets, Financial Highlights, and the Schedule of
Investments (including market values) of Global Health Sciences Fund at or for
the year ended October 31, 2000, have been audited by PricewaterhouseCoopers
LLP, independent accountants, and have been furnished to the Series together
with such unaudited financial statements and a Schedule of Investments
(including market values) at and for the six month period ended April 30, 2001.
Said Statements of Assets and Liabilities and Schedules of Investments fairly
present the Fund's financial position as of their respective dates and said
Statements of Operations, Statements of Changes in Net Assets, and Financial
Highlights fairly reflect its results of operations, changes in financial
position, and financial highlights for the periods covered thereby in conformity
with generally accepted accounting principles consistently applied;
(g) Global Health Sciences Fund has no known liabilities of a material nature,
contingent or otherwise, other than those shown as owed by it on its Statement
of Assets and Liabilities as of April 30, 2001, and those incurred in the
ordinary course of Global Health Sciences Fund's business as an investment
company since April 30, 2001, except as otherwise disclosed in writing to and
accepted by Counselor Series;
(h) The proxy statement filed with the Securities and Exchange Commission by
Global Health Sciences Fund relating to the Reorganization (Proxy Statement) on
the date such Proxy Statement is first sent to shareholders of Global Health
Sciences Fund insofar as it relates to Global Health Sciences Fund, (i) complies
in all material respects with the provisions of the Securities Act of 1933, as
amended (1933 Act), the Securities Exchange Act of 1934, as amended (1934 Act),
the 1940 Act, and the rules and regulations thereunder, and (ii) does not
contain any 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; and at the time of the shareholders' meeting referred to in Section
7 and on the Closing Date, the Proxy Statement insofar as it relates to Global
Health Sciences Fund will not contain any 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;
(i) All material contracts and commitments of Global Health Sciences Fund (other
than this Agreement and investment contracts, including options, futures, and
forward contracts) will be terminated without liability to Global Health
Sciences Fund on or prior to the Closing Date (other than those made in
connection with redemptions of shares and the purchase and sale of portfolio
securities made in the ordinary course of business);
(j) No consent, approval, authorization, or order of any court or governmental
authority is required for the consummation by Global Health Sciences Fund of the
transactions contemplated by this Agreement, except such as have been obtained
under the 1933 Act, the 1934 Act, the 1940 Act, and state securities or blue sky
laws (which term as used herein shall include the District of Columbia and
Puerto Rico);
(k) Global Health Sciences Fund has filed or will file all federal and state tax
returns which, to the knowledge of Global Health Sciences Fund's officers, are
required to be filed by Global Health Sciences Fund and has paid or will pay all
federal and state taxes shown to be due on said returns or provision shall have
been made for the payment thereof, and, to the best of Global Health Sciences
Fund's knowledge, no such return is currently under audit and no assessment has
been asserted with respect to such returns;
(l) Global Health Sciences Fund has met the requirements of Subchapter M of the
Code for qualification and treatment as a regulated investment company ("RIC")
for all of its prior taxable years and intends to meet such requirements for its
current taxable year; its assets will be invested at all times through the
Closing Date in a manner that ensures compliance with the foregoing; and it has
no earnings and profits accumulated in any taxable year in which the provisions
of Subchapter M did not apply to it;
(m) All of the issued and outstanding shares of Global Health Sciences Fund are,
and at the Closing Date will be, duly and validly issued and outstanding and
fully paid and nonassessable as a matter of Massachusetts law, and have been
offered for sale and in conformity with all applicable federal securities laws.
All of the issued and outstanding shares of Global Health Sciences Fund will, at
the Closing Date, be held by the persons and in the amounts set forth in the
list of shareholders submitted to Counselor Series in accordance with this
Agreement;
(n) As of both the Valuation Time (as defined in Section 4) and the Closing
Date, Global Health Sciences Fund will have the full right, power, and authority
to sell, assign, transfer, and deliver its portfolio securities and any other
assets of Global Health Sciences Fund to be transferred to the Series pursuant
to this Agreement. As of the Closing Date, subject only to the delivery of
Global Health Sciences Fund's portfolio securities and any such other assets as
contemplated by this Agreement, the Series will acquire Global Health Sciences
Fund's portfolio securities and any such other assets subject to no
encumbrances, liens, or security interests (except for those that may arise in
the ordinary course or that are disclosed to the Series) and without any
restrictions upon the transfer thereof; and
(o) The execution, performance, and delivery of this Agreement will have been
duly authorized prior to the Closing Date by all necessary action on the part of
Global Health Sciences Fund, and this Agreement constitutes a valid and binding
obligation of Global Health Sciences Fund enforceable in accordance with its
terms (except as the same may be limited by bankruptcy, insolvency, fraudulent
transfer, reorganization, moratorium, and similar laws relating to or affecting
creditors' rights and by general principles of equity), subject to approval of
the shareholders of the Fund.
2. REPRESENTATIONS AND WARRANTIES OF COUNSELOR SERIES.
Counselor Series, on behalf of the Series, represents and warrants to and agrees
with Global Health Sciences Fund that:
(a) The Series will be a series of Counselor Series, a corporation duly
organized, validly existing and in good standing under the laws of the State of
Maryland that has the power to own all of its properties and assets and to carry
out its obligations under this Agreement. It has [or will have prior to the
Closing Date] [not in Section 1(a)] all necessary federal, state, and local
authorizations to carry on its business as now being conducted and to carry out
this Agreement;
(b) Counselor Series is an open-end, management investment company duly
registered under the 1940 Act, and such registration is in full force and
effect, and the Series is a newly organized series of Counselor Series, and,
prior to the Closing Date, the Series has not and shall not have engaged in any
business activities other than such activities as are directly related to
organization of the Series in anticipation of the Reorganization and any other
transactions contemplated hereby;
(c) Prior to the Closing Date, Counselor Series shall have on file with the
Securities and Exchange Commission an effective Prospectus and Statement of
Additional Information for the Series (Series Disclosure Documents)
contemplating that the Series shall be managed as an open-end fund having the
same investment objective as the Global Health Sciences Fund, as described in
the Proxy Statement, and the Series Disclosure Documents shall not contain any
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;
(d) There are no material legal, administrative, or other proceedings pending
or, to the knowledge of Counselor Series, threatened against the Series which
assert liability on the part of the Series. Counselor Series knows of no facts
which might form the basis for the institution of such proceedings;
(e) Counselor Series is not in, and the execution, delivery, and performance of
this Agreement in accordance with its terms will not result in, violation of any
provision of its Articles of Incorporation or any Supplement thereto or any
amendment thereof or Bylaws, or, to the knowledge of Counselor Series, of any
agreement, indenture, instrument, contract, lease, or other undertaking to which
Counselor Series is a party or by which Counselor Series is bound or result in
the acceleration of any obligation or the imposition of any penalty under any
agreement, judgment, or decree to which Counselor Series is a party or is bound;
(f) The Series has no liabilities of any nature, contingent or otherwise;
(g) No consent, approval, authorization, or order of any court or governmental
authority is required for the consummation by the Series of the transactions
contemplated by this Agreement, except such as have been obtained, or as may be
contemplated hereby, under the 1933 Act, the 1934 Act, the 1940 Act, and state
securities or blue sky laws (which term as used herein shall include the
District of Columbia and Puerto Rico);
(h) Counselor Series has filed or will file all federal and state tax returns
which, to the knowledge of Counselor Series's officers, are required to be
filed by Counselor Series and has paid or will pay all federal and state taxes
shown to be due on said returns or provision shall have been made for the
payment thereof, and, to the best of Counselor Series's knowledge, no such
return is currently under audit and no assessment has been asserted with respect
to such returns;
(i) The Series will be a "fund" as defined in section 851(g)(2) of the Code and
will meet all the requirements of Subchapter M of the Code for qualification and
treatment as a RIC for its taxable year in which the Reorganization occurs; and
it intends to continue to meet all such requirements for the next taxable year;
(j) As of the Closing Date, the shares of beneficial interest of the Series to
be issued to Global Health Sciences Fund will have been duly authorized and,
when issued and delivered pursuant to this Agreement, will be legally and
validly issued and will be fully paid and nonassessable by the Series, and no
shareholder of the Series will have any preemptive right of subscription or
purchase in respect thereof;
(k) The execution, performance, and delivery of this Agreement will have been
duly authorized prior to the Closing Date by all necessary action on the part of
Counselor Series, and this Agreement constitutes a valid and binding obligation
of Counselor Series enforceable in accordance with its terms (except as the same
may be limited by bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium, and similar laws relating to or affecting creditors' rights and by
general principles of equity);
(l) The Proxy Statement on the date such Proxy Statement is first sent to
shareholders of Global Health Sciences Fund insofar as it relates to Counselor
Series, (i) complies in all material respects with the provisions of the 1933
Act, the 1934 Act, and the 1940 Act, and the rules and regulations thereunder,
and (ii) does not contain any 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; and at the time of the shareholders' meeting
referred to in Section 7 and on the Closing Date, the Proxy Statement insofar as
it relates to Counselor Series will not contain any 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; and
(m) The issuance of the Series Shares pursuant to this Agreement will be in
compliance with all applicable federal securities laws.
3. REORGANIZATION.
(a)Subject to the requisite approval of the shareholders of Global Health
Sciences Fund and to the other terms and conditions contained herein, Global
Health Sciences Fund agrees to assign, sell, convey, transfer, and deliver to
the Series as of the Closing Date all of the assets of Global Health Sciences
Fund of every kind and nature existing on the Closing Date. The Series agrees
in exchange therefor: (i) to assume all of Global Health Sciences Fund's
liabilities existing on or after the Closing Date, whether or not
determinable on the Closing Date, and (ii) to issue and deliver to Global
Health Sciences Fund a number of full and fractional Class A shares of the
Series having an aggregate net asset value equal to the value of the assets
of Global Health Sciences Fund less the liabilities of Global Health Sciences
Fund, determined as provided for under Section 4.
(b)The assets of Global Health Sciences Fund to be acquired by the Series shall
include, without limitation, all cash, cash equivalents, securities,
receivables (including interest or dividends receivables), claims, chooses in
action, and other property owned by Global Health Sciences Fund, and any
deferred or prepaid expenses (other than deferred organizational expenses)
shown as an asset on the books of Global Health Sciences Fund on the Closing
Date. Global Health Sciences Fund will pay or cause to be paid to the Series
any dividend or interest payments received by it on or after the Closing Date
with respect to the assets transferred to the Series hereunder, and the
Series will retain any dividend or interest payments received by it after the
Valuation Time with respect to the assets transferred hereunder without
regard to the payment date thereof.
(c)The liabilities of Global Health Sciences Fund to be assumed by the Series
shall include all of Global Health Sciences Fund's liabilities, debts,
obligations, and duties, of whatever kind or nature, whether absolute,
accrued, contingent, or otherwise, whether or not arising in the ordinary
course of business, whether or not determinable on the Closing Date, and
whether or not specifically referred to in this Agreement. Notwithstanding
the foregoing, Global Health Sciences Fund agrees to use its best efforts to
discharge all of its known liabilities prior to the Closing Date, other than
liabilities incurred in the ordinary course of business.
(d)Pursuant to this Agreement, as soon after the Closing Date as is
conveniently practicable, Global Health Sciences Fund will constructively
distribute pro rata to its shareholders of record, determined as of the
Valuation Time, the Series Shares in exchange for such shareholders' shares
of beneficial interest in Global Health Sciences Fund and Global Health
Sciences Fund will be liquidated and dissolved in accordance with the trust
law of the Commonwealth of Massachusetts and Global Health Sciences Fund's
Declaration of Trust. Such distribution shall be accomplished by the Series'
transfer agent opening accounts on the Series' share transfer books in the
names of the Global Health Sciences Fund shareholders and transferring the
Series Shares thereto. Each Global Health Sciences Fund shareholder's account
shall be credited with the respective pro rata number of full and fractional
(rounded to the third decimal place) Series Shares due that shareholder. All
outstanding Global Health Sciences Fund shares, including any represented by
certificates, shall simultaneously be canceled on Global Health Sciences
Fund's share transfer records. The Series shall not issue certificates
representing the Series Shares in connection with the Reorganization.
(e)Any reporting responsibility of Global Health Sciences Fund is and shall
remain its responsibility up to and including the date on which it is
terminated.
(f)Any transfer taxes payable upon issuance of the Series Shares in a name
other than that of the registered holder on Global Health Sciences Fund's
books of the Global Health Sciences Fund shares constructively exchanged for
the Series Shares shall be paid by the person to whom such Series Shares are
to be issued, as a condition of such transfer.
4. VALUATION.
(a)The Valuation Time shall be as of the close of regular trading on the New
York Stock Exchange on the Closing Date, or such other date as may be
mutually agreed upon in writing by the parties hereto (Valuation Time).
(b)As of the Closing Date, the Series will deliver to Global Health Sciences
Fund the number of Series Shares having an aggregate net asset value equal to
the value of the assets of Global Health Sciences Fund transferred hereunder
less the liabilities of Global Health Sciences Fund, determined as provided
in this Section 4.
(c)The net asset value per share of the Series to be delivered to Global Health
Sciences Fund, the value of the assets of Global Health Sciences Fund
transferred hereunder, and the liabilities of Global Health Sciences Fund to
be assumed hereunder, shall, in each case, be determined as of the Valuation
Time.
(d)All computations pursuant to this Section shall be made by or under the
direction of INVESCO Funds Group, Inc., in accordance with its regular
practice as pricing agent for the Funds.
5. FEES; EXPENSES.
(a) Global Health Sciences Fund shall be responsible for all expenses, fees and
other charges in connection with the transactions contemplated by this
Agreement. Any portfolio transaction expenses incurred in the purchase and sale
of securities in connection with the transactions contemplated by this Agreement
which may be attributable to the Series will be borne by the Series.
(b) Each of the Series and Global Health Sciences Fund represents that there is
no person who has dealt with it who by reason of such dealings is entitled to
any broker's or finder's or other similar fee or commission arising out of the
transactions contemplated by this Agreement.
6. CLOSING DATE.
(a)The Reorganization, together with related acts necessary to consummate the
same (Closing), unless otherwise provided herein, shall occur at the
principal office of the Funds, 7800 E. Union Avenue, Denver, Colorado, as of
the Valuation Time on a date determined by both the Board of Trustees of
Global Health Sciences Fund and the Board of Directors of Counselor Series,
or at some other time and place agreed to by Global Health Sciences Fund and
Counselor Series (Closing Date).
(b)If on the Closing Date: (i) any of the markets for securities held by Global
Health Sciences Fund is closed to trading, or (ii) trading thereon is
restricted, or (iii) trading or the reporting of trading on said market or
elsewhere is disrupted, all so that accurate appraisal of the total net asset
value of Global Health Sciences Fund, the Valuation Time and the Closing Date
shall be postponed until the first business day after the day when such
trading shall have been fully resumed and such reporting shall have been
restored, or such other date as the parties may agree.
(c)If, prior to the Closing Date, either the Board of Trustees of Global Health
Sciences Fund or the Board of Directors of Counselor Series determines in its
sole discretion that it is either impracticable or inadvisable to consummate
the Reorganization on the Closing Date due to adverse market developments or
otherwise, the parties may determine to delay the Closing Date to such time
as shall be mutually agreed by the parties hereto or to terminate this
Agreement in its entirety in accordance with the provisions of Section 12
hereof.
7. SHAREHOLDER MEETING AND TERMINATION OF GLOBAL HEALTH SCIENCES FUND.
(a)Global Health Sciences Fund agrees to call a meeting of its shareholders to
consider transferring its assets to the Series as herein provided,
approving this Agreement, and authorizing the liquidation of Global Health
Sciences Fund.
(b)Global Health Sciences Fund agrees that as soon as reasonably practicable
after distribution of the Series Shares, Global Health Sciences Fund shall be
terminated and dissolved pursuant to the trust laws of the Commonwealth of
Massachusetts and its Declaration of Trust, any further actions shall be
taken in connection therewith as required by applicable law, and on and after
the Closing Date Global Health Sciences Fund shall not conduct any business
except in connection with its liquidation, dissolution and termination.
8. CONDITIONS TO OBLIGATIONS OF COUNSELOR SERIES.
Counselor Series's obligations hereunder shall be subject to satisfaction of the
following conditions, at or before the Closing:
(a)That Global Health Sciences Fund furnishes to Counselor Series a statement,
dated as of the Closing Date, signed by an officer of Global Health
Sciences Fund, certifying that as of the Valuation Time and the Closing
Date all representations and warranties of Global Health Sciences Fund made
in this Agreement are true and correct in all material respects and that
Global Health Sciences Fund has complied with all the agreements and
satisfied all the conditions on its part to be performed or satisfied at or
prior to such dates;
(b)That Global Health Sciences Fund furnishes the Counselor Series with copies
of the resolutions, certified by an officer of Global Health Sciences Fund,
evidencing the approval of this Agreement and the approval of the
transactions contemplated herein by the requisite vote of the holders of the
outstanding shares of beneficial interest in Global Health Sciences Fund;
(c)That, on or prior to the Closing Date, Global Health Sciences Fund declares
one or more dividends or other distributions which, together with all
previous such dividends or other distributions attributable to its current
taxable year, shall have the effect of distributing to the shareholders of
Global Health Sciences Fund substantially all of Global Health Sciences
Fund's investment company taxable income and all of its net realized capital
gain (each determined without regard to the deduction for dividends paid), if
any, as of the Closing Date; [not necessary for an F reorganization; usually
not done]
(d)Global Health Sciences Fund's fund accounting and pricing agent shall
deliver at the Closing a certificate of an authorized officer verifying that
the information (including adjusted basis and holding period, by lot)
concerning the assets, including all portfolio securities, transferred by
Global Health Sciences Fund to the Series, as reflected on the Series's books
immediately after the Closing, does or will conform to that information on
Global Health Sciences Fund's books immediately before the Closing.
(e)That Global Health Sciences Fund's custodian delivers to the Series a
certificate identifying the assets of Global Health Sciences Fund held by
such custodian as of the Valuation Time and stating that as of the Valuation
Time: (i) the assets held by the custodian will be transferred to the Series;
(ii) Global Health Sciences Fund's assets have been duly endorsed in proper
form for transfer in such condition as to constitute good delivery thereof;
and (iii) to the best of the custodian's knowledge, all necessary taxes in
conjunction with the delivery of the assets, including all applicable federal
and state stock transfer stamps, if any, have been paid or provision for
payment has been made;
(f)That Global Health Sciences Fund's transfer agent delivers to Counselor
Series at the Closing a certificate setting forth the number of shares of
Global Health Sciences Fund outstanding as of the Valuation Time and the name
and address of each holder of record of any such shares and the number of
shares held of record by each such shareholder;
(g)That Global Health Sciences Fund calls a meeting of its shareholders to
consider transferring its assets to the Series and authorizing the
liquidation and termination of Global Health Sciences Fund, all as herein
provided;
(h)That Global Health Sciences Fund delivers to Counselor Series a certificate
of an officer of Global Health Sciences Fund, dated as of the Closing Date,
that there has been no material adverse change in Global Health Sciences
Fund's financial position since April 30, 2001, other than changes in the
market value of its portfolio securities, or changes due to dividends paid,
or losses from operations; and
(i)That all of the issued and outstanding shares of beneficial interest in
Global Health Sciences Fund shall have been offered for sale and sold by
Global Health Sciences Fund in conformity with all applicable state
securities laws and, to the extent that any audit of the records of Global
Health Sciences Fund or its transfer agent by Counselor Series or its agents
shall have revealed otherwise, Global Health Sciences Fund shall have taken
all actions that in the opinion of Counselor Series are necessary to remedy
any prior failure on the part of Global Health Sciences Fund to have offered
for sale and sold such shares in conformity with such laws.
9. CONDITIONS TO OBLIGATIONS OF GLOBAL HEALTH SCIENCES FUND.
Global Health Sciences Fund's obligations hereunder shall be subject to
satisfaction of the following conditions, at or before the Closing:
(a)That Counselor Series shall have executed and delivered to Global Health
Sciences Fund an Assumption of Liabilities, certified by an officer of
Counselor Series, dated as of the Closing Date, pursuant to which the
Series assumes all of the liabilities of Global Health Sciences Fund
existing at the Valuation Time;
(b)That Counselor Series furnishes to Global Health Sciences Fund a statement,
dated as of the Closing Date, signed by an officer of Counselor Series,
certifying that as of the Valuation Time and the Closing Date all
representations and warranties of Counselor Series made in this Agreement are
true and correct in all material respects, and Counselor Series has complied
with all the agreements and satisfied all the conditions on its part to be
performed or satisfied at or prior to such dates; and
(c)That Global Health Sciences Fund shall have received an opinion of
Kirkpatrick & Lockhart LLP, counsel to Counselor Series, to the effect that
the Series Shares are duly authorized and upon delivery to Global Health
Sciences Fund as provided in this Agreement will be validly issued and will
be fully paid and nonassessable by the Series and no shareholder of the
Series has any preemptive right of subscription or purchase in respect
thereof.
10. CONDITIONS TO OBLIGATIONS OF COUNSELOR SERIES AND GLOBAL HEALTH SCIENCES
FUND.
Counselor Series's and Global Health Sciences Fund's obligations hereunder shall
be subject to satisfaction of the following conditions, at or before the
Closing:
(a)That the transactions contemplated by this Agreement shall have been
approved by the requisite vote of the holders of the outstanding shares
of beneficial interest in Global Health Sciences Fund;
(b)That on or before the Closing Date, the Securities and Exchange Commission
(SEC) shall have declared effective the Series Disclosure Documents meeting
the requirements of Section 2(c) hereof;
(c)That neither the Trustees of Global Health Sciences Fund nor the Directors
of Counselor Series shall have made and not withdrawn a determination that
the Reorganization is either impracticable or inadvisable due to adverse
market developments or otherwise, as described in Section 6(c) hereof;
(d)That all consents of other parties and all other consents, orders, and
permits of federal, state, and local regulatory authorities (including those
of the SEC and of state Blue Sky and securities authorities, which term as
used herein shall include the District of Columbia and Puerto Rico, and
including "no action" positions of such federal or state authorities) deemed
necessary by Counselor Series or Global Health Sciences Fund to permit
consummation, in all material respects, of the transactions contemplated
hereby shall have been obtained, except where failure to obtain any such
consent, order, or permit would not involve a risk of a material adverse
effect on the assets or properties of Counselor Series or Global Health
Sciences Fund, provided that either party hereto may for itself waive any of
such conditions;
(e)That all proceedings taken by Counselor Series or Global Health Sciences
Fund in connection with the transactions contemplated by this Agreement and
all documents incidental thereto shall be satisfactory in form and substance
to Counselor Series and its counsel, Kirkpatrick & Lockhart LLP, and Global
Health Sciences Fund and its counsel, ____________ LLP;
(f)That there shall not be any material litigation pending with respect to the
matters contemplated by this Agreement; and
(g)That Counselor Series and Global Health Sciences Fund shall have received an
opinion of ______________, satisfactory to each of them, that for federal
income tax purposes:
I. The acquisition by the Series of all the assets of Global Health Sciences
Fund in exchange solely for the Series Shares and the assumption by the
Series of Global Health Sciences Fund's liabilities, followed by the
distribution by Global Health Sciences Fund of the Series Shares to the
shareholders of Global Health Sciences Fund pursuant to the complete
liquidation of Global Health Sciences Fund and in exchange for their Global
Health Sciences Fund shares, will constitute a reorganization within the
meaning of Section 368(a)(1)(F) of the Code, and Global Health Sciences
Fund and the Series will each be a "party to a reorganization" within the
meaning of Section 368(b) of the Code.
II. No gain or loss will be recognized by Global Health Sciences Fund upon the
transfer of all of its assets to the Series, in exchange solely for [shares
of beneficial interest of the Series] [suggested substitute - the Series
Shares] and the assumption by the Series of Global Health Sciences Fund's
liabilities, followed by Global Health Sciences Fund's subsequent
distribution of those shares to shareholders in liquidation of Global
Health Sciences Fund.
III. No gain or loss will be recognized by ["to" in II, above] the Series upon
receipt of the assets of Global Health Sciences Fund in exchange solely for
the Series Shares and its assumption of Global Health Sciences Fund's
liabilities.
IV. The shareholders of Global Health Sciences Fund will recognize no gain or
loss upon the exchange of their Global Health Sciences Fund shares solely
for Series Shares.
V. The basis of Global Health Sciences Fund's assets in the hands of the
Series will be the same as the basis of those assets in the hands of Global
Health Sciences Fund immediately prior to the Reorganization.
VI. The basis of Series Shares in the hands of Global Health Sciences Fund
shareholders will be the same as their basis in Global Health Sciences Fund
shares to be exchanged therefor.
VII. The Series' holding period with respect to the assets received from Global
Health Sciences Fund will include the period for which such assets were
held by Global Health Sciences Fund.
VIII.The holding period of Series Shares to be received by each Global Health
Sciences Fund shareholder will include the period during which Global
Health Sciences Fund shares to be surrendered in exchange therefor were
held, provided such Global Health Sciences Fund shares were held as capital
assets by that shareholder on the date of the Reorganization.
IX. The Reorganization will not result in the termination of Global Health
Sciences Fund's taxable year and Global Health Sciences Fund's tax
attributes enumerated in Section 381(c) of the Code will be taken into
account by the Series as if there had been no Reorganization.
X. The qualification of each of Fund as a RIC under Sections 851 through 855
of the Code will not be affected as a result of the Reorganization, except
that, upon the liquidation and dissolution of Global Health Sciences Fund,
it will no longer qualify as a RIC.
Notwithstanding anything herein to the contrary, neither Fund may waive the
conditions set forth in this subsection 10(g).
11. COVENANTS OF THE SERIES AND GLOBAL HEALTH SCIENCES FUND.
(a)Global Health Sciences Fund covenants to operate its business in the
ordinary course between the date hereof and the Closing Date, it being
understood that such ordinary course of business will include the payment of
customary dividends and other distributions;
(b)The Series covenants that, between the date hereof and the Closing Date, it
shall not engage in any business activities other than such activities as are
directly related to organization of the Series in anticipation of the
Reorganization and any other transactions contemplated hereby;
(c)Global Health Sciences Fund covenants that it is not acquiring the Series
Shares for the purpose of making any distribution other than in accordance
with the terms of this Agreement;
(d)Global Health Sciences Fund covenants that it will assist Counselor Series
in obtaining such information as Counselor Series reasonably requests
concerning the beneficial ownership of Global Health Sciences Fund's shares;
and
(e)Global Health Sciences Fund covenants that its liquidation and termination
will be effected in the manner provided in the General Corporation Law of the
State of Maryland and its Articles of Incorporation in accordance with
applicable law and after the Closing Date, Global Health Sciences Fund will
not conduct any business except in connection with its liquidation and
termination.
12. TERMINATION.
Counselor Series and Global Health Sciences Fund may terminate this Agreement by
mutual agreement. In addition, either Counselor Series or Global Health Sciences
Fund may at its option terminate this Agreement at or prior to the Closing Date
because:
(a) of a material breach by the other of any representation, warranty, or
agreement contained herein to be performed at or prior to the Closing Date; or
(b) a condition herein expressed to be precedent to the obligations of the
terminating party has not been met and it reasonably appears that it will not or
cannot be met. In the event of any such termination, there shall be no liability
for damages on the part of Global Health Sciences Fund or Counselor Series, or
their respective Trustees/Directors or officers.
13. SOLE AGREEMENT; AMENDMENTS; WAIVERS; SURVIVAL OF WARRANTIES.
(a)This Agreement supersedes all previous correspondence and oral
communications between the parties regarding the subject matter hereof,
constitutes the only understanding with respect to such subject matter, may
not be changed except by a letter of agreement signed by each party hereto
and shall be construed in accordance with and governed by the laws of the
State of Maryland.
(b)This Agreement may be amended, modified, or supplemented in such manner as
may be mutually agreed upon in writing by the respective President, any Vice
President, or Treasurer of Counselor Series or Global Health Sciences Fund;
provided, however, that following the shareholders' meeting called by Global
Health Sciences Fund pursuant to Section 7 of this Agreement, no such
amendment may have the effect of changing the provisions for determining the
number of the Series Shares to be paid to Global Health Sciences Fund
shareholders under this Agreement to the detriment of such shareholders
without their further approval.
(c)Except as expressly provided otherwise herein, either Counselor Series or
Global Health Sciences Fund may waive any condition to its obligations
hereunder, provided that such waiver does not have any material adverse
effect on the interests of its shareholders.
(d)The representations, warranties, and covenants contained in the Agreement,
or in any document delivered pursuant hereto or in connection herewith, shall
survive the consummation of the transactions contemplated hereunder.
14. DECLARATION OF TRUST.
A copy of Global Health Sciences Fund's Declaration of Trust, as restated and
amended, is on file with the Secretary of State of the Commonwealth of
Massachusetts, and notice is hereby given that this instrument is executed on
behalf of the Trustees of Global Health Sciences Fund as trustees, and not
individually and that the obligations of Global Health Sciences Fund under this
instrument are not binding upon any of Global Health Sciences Fund's Trustees,
officers, or shareholders, as the case may be, individually but are binding only
upon the assets and property of Global Health Sciences Fund. Each of Counselor
Series and Global Health Sciences Fund agrees that its obligations hereunder
apply only to it and not to its shareholders individually or to the Trustees or
Directors thereof.
15. ASSIGNMENT.
This Agreement shall bind and inure to the benefit of the parties hereto and
their respective successors and assigns, but no assignment or transfer of any
rights or obligations hereunder shall be made by any party without the written
consent of the other party. Nothing herein expressed or implied is intended or
shall be construed to confer upon or give any person, firm, or corporation other
than the parties hereto and their respective successors and assigns any rights
or remedies under or by reason of this Agreement. This Agreement may be executed
in any number of counterparts, each of which, when executed and delivered, shall
be deemed to be an original.
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to be
executed by an appropriate officer. SIGNATURE LINES OMITTED
APPENDIX C
INVESTMENT ADVISORY AGREEMENT
THIS AGREEMENT is made this 23rd day of August, 2000, in Denver, Colorado,
by and between INVESCO Funds Group, Inc. (the "Adviser"), a Delaware
corporation, and INVESCO Advantage Series Funds, Inc., a Maryland Corporation
(the "Company").
W I T N E S S E T H :
- - - - - - - - - -
WHEREAS, the Company is a corporation organized under the laws of the State
of Maryland; and
WHEREAS, the Company is registered under the Investment Company Act of
1940, as amended (the "Investment Company Act"), as a non-diversified, open-end
management investment company and currently has one class of shares which is
divided into series (the "Shares"), which may be divided into additional series,
each representing an interest in a separate portfolio of investments specific in
Schedule A (each a "Fund" and, collectively, the "Funds"); and
WHEREAS, the Company desires that the Adviser manage its investment
operations and provide certain other services, and the Adviser desires to manage
said operations and to provide such other services;
NOW, THEREFORE, in consideration of these premises and of the mutual
covenants and agreements hereinafter contained, the parties hereto agree as
follows:
1. INVESTMENT MANAGEMENT SERVICES. The Adviser hereby agrees to manage
the investment operations of the Company's Funds, subject to the terms
of this Agreement and to the supervision of the Company's directors
(the "Directors"). The Adviser agrees to perform, or arrange for the
performance of, the following specific services for the Company:
(a) to manage the investment and reinvestment of all the assets, now
or hereafter acquired, of the Company's Funds, and to execute all
purchases and sales of portfolio securities;
(b) to maintain a continuous investment program for the Company's
Funds, consistent with (i) the Funds' investment policies as set
forth in the Company's Articles of Incorporation, Bylaws, and
Registration Statement, as from time to time amended, under the
Investment Company Act of 1940, as amended (the "1940 Act"), and
in any prospectus and/or statement of additional information of
the Company, as from time to time amended and in use under the
Securities Act of 1933, as amended, and (ii) the Company's status
as a regulated investment company under the Internal Revenue Code
of 1986, as amended;
(c) to determine what securities are to be purchased or sold for the
Company's Funds, unless otherwise directed by the Directors of
the Company, and to execute transactions accordingly;
(d) to provide to the Company's Funds the benefit of all of the
investment analyses and research, the reviews of current economic
conditions and of trends, and the consideration of long-range
investment policy now or hereafter generally available to
investment advisory customers of the Adviser;
(e) to determine what portion of the Company's Funds should be
invested in the various types of securities authorized for
purchase by the Funds; and
(f) to make recommendations as to the manner in which voting rights,
rights to consent to Company action and any other rights
pertaining to the Funds' securities shall be exercised.
With respect to execution of transactions for the Company's Funds,
the Adviser is authorized to employ such brokers or dealers as may,
in the Adviser's best judgment, implement the policy of the Company
to obtain prompt and reliable execution at the most favorable price
obtainable. In assigning an execution or negotiating the commission
to be paid therefor, the Adviser is authorized to consider the full
range and quality of a broker's services which benefit the Company,
including but not limited to research and analytical capabilities,
reliability of performance, and financial soundness and
responsibility. Research services prepared and furnished by brokers
through which the Adviser effects securities transactions on behalf
of the Company may be used by the Adviser in servicing all of its
accounts, and not all such services may be used by the Adviser in
connection with the Company. In the selection of a broker or dealer
for execution of any negotiated transaction, the Adviser shall have
no duty or obligation to seek advance competitive bidding for the
most favorable negotiated commission rate for such transaction, or
to select any broker solely on the basis of its purported or
"posted" commission rate for such transaction, provided, however,
that the Adviser shall consider such "posted" commission rates, if
any, together with any other information available at the time as to
the level of commissions known to be charged on comparable
transactions by other qualified brokerage firms, as well as all
other relevant factors and circumstances, including the size of any
contemporaneous market in such securities, the importance to the
Company of speed, efficiency, and confidentiality of execution, the
execution capabilities required by the circumstances of the
particular transactions, and the apparent knowledge or familiarity
with sources from or to whom such securities may be purchased or
sold. Where the commission rate reflects services, reliability and
other relevant factors in addition to the cost of execution, the
Adviser shall have the burden of demonstrating that such
expenditures were bona fide and for the benefit of the Company.
2. OTHER SERVICES AND FACILITIES. The Adviser shall, in addition, supply
at its own expense all supervisory and administrative services and
facilities necessary in connection with the day-to-day operations of
the Company (except those associated with the preparation and
maintenance of certain required books and records, and recordkeeping
and administrative functions relating to employee benefit and
retirement plans, which services and facilities are provided under a
separate Administrative Services Agreement between the Company and the
Adviser). These services shall include, but not be limited to:
supplying the Company with officers, clerical staff and other
employees, if any, who are necessary in connection with the Company's
operations; furnishing office space, facilities, equipment, and
supplies; providing personnel and facilities required to respond to
inquiries related to shareholder accounts; conducting periodic
compliance reviews of the Company's operations; preparation and review
of required documents, reports and filings by the Adviser's in-house
legal and accounting staff (including the prospectus, statement of
additional information, proxy statements, shareholder reports, tax
returns, reports to the SEC, and other corporate documents of the
Company), except insofar as the assistance of independent accountants
or attorneys is necessary or desirable; supplying basic telephone
service and other utilities; and preparing and maintaining the books
and records required to be prepared and maintained by the Company
pursuant to Rule 31a-1(b)(4), (5), (9), and (10) under the Investment
Company Act of 1940. All books and records prepared and maintained by
the Adviser for the Company under this Agreement shall be the property
of the Company and, upon request therefor, the Adviser shall surrender
to the Company such of the books and records so requested.
3. PAYMENT OF COSTS AND EXPENSES. The Adviser shall bear the costs and
expenses of all personnel, facilities, equipment and supplies
reasonably necessary to provide the services required to be provided
by the Adviser under this Agreement. The Company shall pay all of the
costs and expenses associated with its operations and activities,
except those expressly assumed by the Adviser under this Agreement,
including but not limited to:
(a) all brokers' commissions, issue and transfer taxes, and other
costs chargeable to the Company in connection with securities
transactions to which the Company is a party or in connection
with securities owned by the Company's Funds;
(b) the fees, charges and expenses of any independent public
accountants, custodian, depository, dividend disbursing agent,
dividend reinvestment agent, transfer agent, registrar,
independent pricing services and legal counsel for the Company;
(c) the interest on indebtedness, if any, incurred by the Company;
(d) the taxes, including franchise, income, issue, transfer, business
license, and other corporate fees payable by the Company to
federal, state, county, city, or other governmental agents;
(e) the fees and expenses involved in maintaining the registration
and qualification of the Company and of its shares under laws
administered by the Securities and Exchange Commission or under
other applicable regulatory requirements;
(f) the compensation and expenses of its independent Directors, and
the compensation of any employees and officers of the Company who
are not employees of the Adviser or one of its affiliated
companies and compensated as such;
(g) the costs of printing and distributing reports, notices of
shareholders' meetings, proxy statements, dividend notices,
prospectuses, statements of additional information and other
communications to the Company's shareholders, as well as all
expenses of shareholders' meetings and Directors' meetings;
(h) all costs, fees or other expenses arising in connection with the
organization and filing of the Company's Articles of
Incorporation, including its initial registration and
qualification under the 1940 Act and under the Securities Act of
1933, as amended, the initial determination of its tax status and
any rulings obtained for this purpose, the initial registration
and qualification of its securities under the laws of any state
and the approval of the Company's operations by any other
federal, state, or foreign authority;
(i) the expenses of repurchasing and redeeming shares of the
Company's Funds;
(j) insurance premiums;
(k) the costs of designing, printing, and issuing certificates
representing shares of beneficial interest of the Company's
Funds;
(l) extraordinary expenses, including fees and disbursements of
Company counsel, in connection with litigation by or against the
Company;
(m) premiums for the fidelity bond maintained by the Company pursuant
to Section 17(g) of the 1940 Act and rules promulgated thereunder
(except for such premiums as may be allocated to third parties,
as insured thereunder);
(n) association and institute dues;
(o) the expenses of distributing shares of the Company but only if
and to the extent permissible under a plan of distribution
adopted by the Company pursuant to Rule 12b-1 of the Investment
Company Act of 1940; and
(p) all fees paid by the Company for administrative, recordkeeping,
and sub-accounting services under the Administrative Services
Agreement between the Company and the Adviser dated August 1,
2000.
4. USE OF AFFILIATED COMPANIES. In connection with the rendering of the
services required to be provided by the Adviser under this Agreement,
the Adviser may, to the extent it deems appropriate and subject to
compliance with the requirements of applicable laws and regulations,
and upon receipt of written approval of the Company, make use of its
affiliated companies and their employees; provided that the Adviser
shall supervise and remain fully responsible for all such services in
accordance with and to the extent provided by this Agreement and that
all costs and expenses associated with the providing of services by
any such companies or employees and required by this Agreement to be
borne by the Adviser shall be borne by the Adviser or its affiliated
companies.
5. COMPENSATION OF THE ADVISER. For the advisory services assumed by the
Adviser under this Agreement, the Company shall pay to the Adviser the
fees set forth on Schedule B.
6. AVOIDANCE OF INCONSISTENT POSITIONS AND COMPLIANCE WITH LAWS. In
connection with purchases or sales of securities for the Company's
Funds, neither the Adviser nor its officers or employees will act as a
principal or agent for any party other than the Company's Funds or
receive any commissions. The Adviser will comply with all applicable
laws in acting hereunder including, without limitation, the 1940 Act;
the Investment Advisers Act of 1940, as amended; and all rules and
regulations duly promulgated under the foregoing.
7. DURATION AND TERMINATION. This Agreement shall become effective as of
the date it is approved by a majority of the outstanding voting
securities of the Company's Funds, and unless sooner terminated as
hereinafter provided, shall remain in force for an initial term ending
two years from the date of execution, and from year to year
thereafter, but only as long as such continuance is specifically
approved at least annually (i) by a vote of a majority of the
outstanding voting securities of the Company's Funds or by the
Directors of the Company, and (ii) by a majority of the Directors of
the Company who are not interested persons of the Adviser or the
Company by votes cast in person at a meeting called for the purpose of
voting on such approval.
This Agreement may, on 60 days' prior written notice, be terminated
without the payment of any penalty, by the Directors of the Company,
or by the vote of a majority of the outstanding voting securities of
the Company's Funds, as the case may be, or by the Adviser. This
Agreement shall immediately terminate in the event of its assignment,
unless an order is issued by the Securities and Exchange Commission
conditionally or unconditionally exempting such assignment from the
provisions of Section 15(a) of the 1940 Act, in which event this
Agreement shall remain in full force and effect subject to the terms
and provisions of said order. In interpreting the provisions of this
paragraph 7, the definitions contained in Section 2(a) of the 1940 Act
and the applicable rules under the 1940 Act (particularly the
definitions of "interested person," "assignment" and "vote of a
majority of the outstanding voting securities") shall be applied.
The Adviser agrees to furnish to the Directors of the Company such
information on an annual basis as may reasonably be necessary to
evaluate the terms of this Agreement.
Termination of this Agreement shall not affect the right of the
Adviser to receive payments on any unpaid balance of the compensation
described in paragraph 5 earned prior to such termination.
8. NON-EXCLUSIVE SERVICES. The Adviser shall, during the term of this
Agreement, be entitled to render investment advisory services to
others, including, without limitation, other investment companies with
similar objectives to those of the Company's Funds. The Adviser may,
when it deems such to be advisable, aggregate orders for its other
customers together with any securities of the same type to be sold or
purchased for the Company's Funds in order to obtain best execution
and lower brokerage commissions. In such event, the Adviser shall
allocate the shares so purchased or sold, as well as the expenses
incurred in the transaction, in the manner it considers to be most
equitable and consistent with its fiduciary obligations to the
Company's Funds and the Adviser's other customers.
9. MISCELLANEOUS PROVISIONS.
NOTICE. Any notice under this Agreement shall be in writing, addressed
and delivered or mailed, postage prepaid, to the other party at such
address as such other party may designate for the receipt of such
notice.
AMENDMENTS HEREOF. No provision of this Agreement may be orally
changed or discharged, but may only be modified by an instrument in
writing signed by the Company and the Adviser. In addition, no
amendment to this Agreement shall be effective unless approved by (1)
the vote of a majority of the Directors of the Company, including a
majority of the Directors who are not parties to this Agreement or
interested persons of any such party cast in person at a meeting
called for the purpose of voting on such amendment, and (2) the vote
of a majority of the outstanding voting securities of any of the
Company's Funds as to which such amendment is applicable (other than
an amendment which can be effective without shareholder approval under
applicable law).
SEVERABILITY. Each provision of this Agreement is intended to be
severable. If any provision of this Agreement shall be held illegal or
made invalid by a court decision, statute, rule or otherwise, such
illegality or invalidity shall not affect the validity or
enforceability of the remainder of this Agreement.
HEADINGS. The headings in this Agreement are inserted for convenience
and identification only and are in no way intended to describe,
interpret, define or limit the size, extent or intent of this
Agreement or any provision hereof.
APPLICABLE LAW. This Agreement shall be construed in accordance with
the laws of the State of Maryland. To the extent that the applicable
laws of the State of Maryland, or any of the provisions herein,
conflict with applicable provisions of the 1940 Act, the latter shall
control.
IN WITNESS WHEREOF, the Adviser and the Company each has caused this
Agreement to be duly executed on its behalf by an officer thereunto duly
authorized, on the date first above written.
INVESCO ADVANTAGE SERIES FUNDS, INC.
ATTEST:
By:
----------------------
Mark H. Williamson
President & Chairman of the Board
- ------------------ of Directors
Glen A. Payne
Secretary
INVESCO FUNDS GROUP, INC.
ATTEST:
By:
---------------------
Mark H. Williamson
- ----------------- President & Chief Executive Officer
Glen A. Payne
Secretary
INVESTMENT ADVISORY
SCHEDULE A
REGISTERED
INVESTMENT
COMPANY FUNDS EFFECTIVE DATE
- --------------------------------------------------------------------------------
INVESCO ADVANTAGE SERIES FUNDS, INC.(1) AUGUST 23, 2000
Advantage Fund
Global Growth Fund(2) November 29, 2000
Advantage Global Health
Sciences Fund(3) ___________, 2001
Advantage Technology/
Telecommunications Fund(3) ___________, 2001
(1) Amended November 8, 2000 - On November 8, 2000, the name of the INVESCO
Advantage Series Funds, Inc. was changed to INVESCO Counselor Series Funds,
Inc. Therefore, all references to INVESCO Advantage Series Funds, Inc.
should be changed to INVESCO Counselor Series Funds, Inc.
(2) Amended November 29, 2000.
(3) Amended _______, 2001.
INVESTMENT ADVISORY
SCHEDULE B
INVESCO ADVANTAGE FUND
INVESCO ADVANTAGE GLOBAL HEALTH SCIENCES FUND(2)
INVESCO ADVANTAGE TECHNOLOGY/TELECOMMUNIATIONS FUND(2)
For the services to be rendered and the charges and expenses to be assumed by
the Adviser hereunder, the Company shall pay to the Adviser an advisory fee
which will be computed daily and paid as of the last day of each month, using
for each daily calculation the most recently determined net asset value of the
INVESCO Advantage Fund, the INVESCO Advantage Global Health Sciences Fund, and
the INVESCO Advantage Technology/Telecommunications Fund (individually referred
to as a "Portfolio"), as determined by valuations made in accordance with each
Portfolio's procedures for calculating to net asset value as described in each
Portfolio's current Prospectus and/or Statement of Additional Information. The
advisory fee to the Adviser shall be computed at an annual rate of 1.50% of each
Portfolio's daily average net assets (the "Base Fee"). This Base Fee will be
adjusted, on a monthly basis (i) upward at the rate of 0.20%, on a pro rata
basis, for each percentage point by which the investment performance of each
Portfolio exceeds the sum of 2.00% and the investment record of the Russell 3000
Index for the INVESCO Advantage Fund, the Morgan Stanley Health Care Product
Index for the INVESCO Advantage Global Health Sciences Fund, and the Merrill
Lynch 100 Technology Index for the INVESCO Advantage
Technology/Telecommunications Fund (the "Index" or "Indexes"), or (ii) downward
at the rate of 0.20%, on a pro rata basis, for each percentage point by which
the investment record of the applicable Index less 2.00% exceeds the investment
performance of each Portfolio. The maximum or minimum adjustment, if any, will
be 1.00% annually. Therefore, the maximum annual fee payable to the Adviser will
be 2.50% of average daily net assets and the minimum annual fee will be 0.50% of
average daily net assets. During the first twelve months of operation, the
management fee will be charged at the base fee of 1.50% with no performance
adjustment. During any period when the determination of each Portfolio's net
asset value is suspended by the Directors of the Company, the net asset value of
a share of that Portfolio as of the last business day prior to such suspension
shall be deemed to be the net asset value at the close of each succeeding
business day until it is again determined.
In determining the fee adjustment, if any, applicable during any month, INVESCO
will compare the investment performance of the Class A Shares of each Portfolio
for the twelve-month period ending on the last day of the prior month (the
"Performance Period") to the investment record of the applicable Index during
the Performance Period. The investment performance of each Portfolio will be
determined by adding together (i) the change in the net asset value of the Class
A Shares during the Performance Period, (ii) the value of cash distributions
made by the applicable Portfolio to holders of Class A Shares to the end of
the Performance Period, and (iii) the value of capital gains per share, if any,
paid on undistributed realized long-term capital gains accumulated to the end of
the Performance Period, and will be expressed as a percentage of the net asset
value per share of the Class A Shares at the beginning of the Performance
Period. The investment record of the applicable Index will be determined by
adding together (i) the change in the level of the Index during the Performance
Period and (ii) the value, computed consistently with the Index, of cash
distributions made by companies whose securities comprise the Index accumulated
to the end of the Performance Period, and will be expressed as a percentage of
the Index at the beginning of such Period.
After it determines any fee adjustment, INVESCO will determine the dollar amount
of additional fees or fee reductions to be accrued for each day of a month by
multiplying the fee adjustment by the average daily net assets of the Class A
Shares of each Portfolio during the Performance Period and dividing that
number by the number of days in the Performance Period. The management fee, as
adjusted, is accrued daily and paid monthly.
If the Directors determine at some future date that another securities index is
more representative of the composition of the INVESCO Advantage Fund than is the
Russell 3000 Index, or the Morgan Stanley Health Care Product Index for INVESCO
Advantage Global Health Sciences Fund, or the Merrill Lynch 100 Technology Index
for INVESCO Advantage Technology/Telecommunications Fund, the Directors may
change the securities index used to compute the fee adjustment. If the Directors
do so, the new securities index (the "New Index") will be applied prospectively
to determine the amount of the fee adjustment. The Index will continue to be
used to determine the amount of the fee adjustment for that part of the
Performance Period prior to the effective date of the New Index. A change in the
Index will be submitted to shareholders for their approval unless the SEC
determines that shareholder approval is not required.
However, no such fee shall be paid to the Adviser with respect to any assets of
each Portfolio which may be invested in any other investment company for
which the Adviser serves as investment adviser. The fee provided for hereunder
shall be prorated in any month in which this Agreement is not in effect for the
entire month.
Interest, taxes and extraordinary items such as litigation costs are not deemed
expenses for purposes of this section and shall be borne by each Portfolio in
any event. Expenditures, including costs incurred in connection with the
purchase or sale of portfolio securities, which are capitalized in accordance
with generally accepted accounting principles applicable to investment
companies, are accounted for as capital items and shall not be deemed to be
expenses for purposes of this section.
INVESCO GLOBAL GROWTH FUND(1)
For the services to be rendered and the charges and expenses to be assumed by
the Adviser hereunder, the Company shall pay to the Adviser an advisory fee
which will be computed on a daily basis and paid as of the last day of each
month, using for each daily calculation the most recently determined net asset
value of the INVESCO Global Growth Fund, as determined by valuations made in
accordance with the INVESCO Global Growth Fund's procedure for calculating its
net asset value as described in the INVESCO Global Growth Fund's Prospectus
and/or Statement of Additional Information. As full compensation for its
advisory services to the INVESCO Global Growth Fund, the Adviser receives a
monthly fee from the Fund. The fee is calculated at the annual rate of 1.00% of
the INVESCO Global Growth Fund's average net assets.
During any period when the determination of the net asset value is suspended by
the Directors of the Company, the net asset value of a share of the INVESCO
Global Growth Fund as of the last business day prior to such suspension shall be
deemed to be the net asset value at the close of each succeeding business day
until it is again determined. However, no such fee shall be paid to the Adviser
with respect to any assets of the INVESCO Global Growth Fund which may be
invested in any other investment company for which the Adviser serves as
investment adviser. The fee provided for hereunder shall be prorated in any
month in which this Agreement is not in effect for the entire month.
Interest, taxes and extraordinary items such as litigation costs are not deemed
expenses for the purposes of calculating the fee and shall be borne by the
Company in any event. Expenditures, including costs incurred in connection with
the purchase or sale of the INVESCO Global Growth Fund securities, which are
capitalized in accordance with generally accepted accounting principles
applicable to investment companies, are accounted for as capital items and shall
not be deemed to be expenses for purposes of calculating the fee. 1.00% of the
Fund's average net assets.
(1) Amended November 29, 2000.
(2) Amended _______, 2001.
APPENDIX D
MASTER DISTRIBUTION PLAN AND AGREEMENT
(CLASS A SHARES)
THIS AGREEMENT made as of the 1st day of June, 2000, by and between each
registered investment company referenced in Schedule A, each a Maryland
Corporation (each individually referred to as "Company"), with respect to the
shares of the Class A shares ("Class A Shares") of the common stock of the
Company allocated to each series set forth on Schedule A to this Agreement as
amended from time to time (the "Funds") and INVESCO DISTRIBUTORS, INC., a
Delaware corporation (the "Distributor").
WHEREAS, the Company engages in business as one or more open-end management
investment companies, and is registered as such under the Investment Company Act
of 1940, as amended (the "Act"); and
WHEREAS, the Company desires to finance the distribution of the Class A
Shares of the Funds in accordance with this Master Distribution Plan and
Agreement of Distribution pursuant to Rule 12b-1 under the Act (the "Plan and
Agreement"); and
WHEREAS, Distributor desires to be retained to perform services in
accordance with such Plan and Agreement and on said terms and conditions; and
WHEREAS, this Plan and Agreement has been approved by a vote of the board
of directors of the Company, including a majority of the directors who are not
interested persons of the Company, as defined in the Act, and who have no direct
or indirect financial interest in the operation of this Plan and Agreement (the
"Independent Directors"), cast in person at a meeting called for the purpose of
voting on this Plan and Agreement;
NOW, THEREFORE, the Company hereby adopts the Plan set forth herein and the
Company and Distributor hereby enter into this Agreement pursuant to the Plan in
accordance with the requirements of Rule 12b-1 under the Act, and provide and
agree as follows:
FIRST: The Plan is defined as those provisions of this document by which
the Company adopts a Plan pursuant to Rule 12b-1 under the Act and authorizes
payments as described herein. The Agreement is defined as those provisions of
this document by which the Company retains Distributor to provide distribution
services beyond those required by the Underwriting Agreement between the
parties, as are described herein. The Company may retain the Plan
notwithstanding termination of the Agreement. Termination of the Plan will
automatically terminate the Agreement. Each Fund is hereby authorized to utilize
the assets of the Company to finance certain activities in connection with
distribution of the Company's Class A Shares.
SECOND: Each Fund shall incur expenses per annum allocable solely to Class
A Shares of the average daily net assets of such Fund attributable to the Class
A Shares, at the rates set forth in Schedule B opposite the name of such Fund,
subject to any limitations imposed from time to time by applicable rules of the
National Association of Securities Dealers, Inc.
THIRD: To the extent obligations incurred by the Distributor out of its own
resources to finance any activity primarily intended to result in the sale of
Class A Shares, pursuant to this Plan and Agreement or otherwise, may be deemed
to constitute the indirect use of Class A Shares Fund assets, such indirect use
of Class A Shares Fund assets is hereby authorized in addition to, and not in
lieu of, any other payments authorized under this Plan and Agreement.
FOURTH: Distributor shall provide to the Company's Board of Directors and
the Board of Directors shall review, at least quarterly, a written report of the
amounts expended pursuant to the Plan and Agreement and the purposes for which
such expenditures were made.
FIFTH: Amounts payable pursuant to paragraph SECOND above shall
compensate/reimburse the Distributor for financing any activity which is
primarily intended to result in the sale of the Class A Shares, including, but
not limited to, expenses of organizing and conducting sales seminars,
advertising programs, finders fees, printing of prospectuses and statements of
additional information (and supplements thereto) and reports for other than
existing shareholders, preparation and distribution of advertising material and
sales literature, supplemental payments to dealers and other institutions as
asset-based sales charges and providing such other services and activities as
may from time to time be agreed upon by the Company. Such reports, prospectuses
and statements of additional information (and supplements thereto), sales
literature, advertising and other services and activities may be prepared and/or
conducted either by Distributor's own staff, the staff of affiliated companies
of the Distributor, or third parties.
SIXTH: Amounts set forth in Schedule B may also be used to
compensate/reimburse the Distributor for making payments of service fees under a
shareholder service arrangement to be established by Distributor in accordance
with paragraph SEVENTH below. To the extent that amounts paid hereunder are not
used specifically to compensate Distributor for any such expense, such amounts
may be treated as compensation for Distributor's distribution-related services.
All amounts expended pursuant to the Plan and Agreement shall be paid to
Distributor and are the legal obligation of the Company and not of Distributor.
That portion of the amounts paid under the Plan and Agreement that is not paid
or advanced by Distributor to dealers or other institutions that provide
personal continuing shareholder service as a service fee pursuant to paragraph
SEVENTH below shall be deemed an asset-based sales charge. No provision of this
Plan and Agreement shall be interpreted to prohibit any payments by the Company
during periods when the Company has suspended or otherwise limited sales.
SEVENTH: Distributor may make payments to selected banks, financial
planners, retirement plan service providers and other appropriate third parties
acting in an agency capacity for their customers who provide shareholder
services to their customers from time to time. The maximum service fee paid to
any service provider shall be twenty-five one-hundredths of one percent (0.25%),
per annum of the average daily net assets of the Company attributable to the
Class A Shares owned by the customers of such service provider, or such lower
rate for the Fund as is specified on Schedule B.
(A) Pursuant to this program, Distributor may enter into agreements
("Service Agreements") with such broker-dealers ("Dealers") as may be
selected from time to time by Distributor for the provision of
distribution-related personal shareholder services in connection with
the sale of Shares to the Dealers' clients and customers ("Customers")
who may from time to time directly or beneficially own Shares. The
distribution-related personal continuing shareholder services to be
rendered by Dealers under the Service Agreements may include, but
shall not be limited to, the following: (i) distributing sales
literature; (ii) answering routine Customer inquiries concerning the
Company and the Class A Shares; (iii) assisting Customers in changing
dividend options, account designations and addresses, and in enrolling
into any of several retirement plans offered in connection with the
purchase of Class A Shares; (iv) assisting in the establishment and
maintenance of customer accounts and records, and in the processing of
purchase and redemption transactions; (v) investing dividends and
capital gains distributions automatically in Class A Shares; and (vi)
providing such other information and services as the Company or the
Customer may reasonably request.
(B) Distributor may also enter into agreements ("Third Party Agreements")
with selected banks, financial planners, retirement plan service
providers and other appropriate third parties acting in an agency
capacity for their customers ("Third Parties"). Third Parties acting
in such capacity will provide some or all of the shareholder services
to their customers as set forth in the Third Party Agreements from
time to time.
(C) Distributor may also enter into variable group annuity contractholder
service agreements ("Variable Contract Agreements") with selected
insurance companies ("Insurance Companies") offering variable annuity
contracts to employers as funding vehicles for retirement plans
qualified under Section 401(a) of the Internal Revenue Code, where
amounts contributed under such plans are invested pursuant to such
variable annuity contracts in Class A Shares of the Company. The
Insurance Companies receiving payments under such Variable Contract
Agreements will provide specialized services to contractholders and
plan participants, as set forth in the Variable Contract Agreements
from time to time.
(D) Distributor may also enter into shareholder service agreements ("Bank
Trust Department Agreements and Brokers for Bank Trust Department
Agreements") with selected bank trust departments and brokers for bank
trust departments. Such bank trust departments and brokers for bank
trust departments will provide some or all of the shareholder services
to their customers as set forth in the Bank Trust Department
Agreements and Brokers for Bank Trust Department Agreements.
EIGHTH: No provision of this Plan and Agreement shall be deemed to prohibit
any payments by a Fund to the Distributor or by a Fund or the Distributor to
investment dealers, financial institutions and 401(k) plan service providers
where such payments are made under the Plan and Agreement.
NINTH: The Company, on behalf of the Funds, and the Distributor shall each
comply with all applicable provisions of the Act, the Securities Act of 1933,
rules and regulations of the National Association of Securities Dealers, Inc.
and its affiliates, and of all other federal and state laws, rules and
regulations governing the issuance and sale of Class A Shares.
TENTH: Nothing herein contained shall require the Company to take any
action contrary to any provision of its Articles of Incorporation, or to any
applicable statute or regulation.
ELEVENTH: This Plan and Agreement shall become effective as of the date
hereof, shall continue in force and effect until May 31, 2001, and shall
continue in force and effect from year to year thereafter, provided that such
continuance is specifically approved at least annually by a majority of the
Board of Directors of the Company and a majority of the Company's Independent
Directors cast in person at a meeting called for such purpose, as contemplated
by paragraphs (d) and (e) of Rule 12b-1 under the 1940 Act.
Any amendment to this Plan and Agreement that requires the approval of the
shareholders of Class A Shares pursuant to Rule 12b-1 under the 1940 Act shall
become effective as to such Class A Shares upon the approval of such amendment
by a "majority of the outstanding voting securities" (as defined in the 1940
Act) of such Class A Shares, PROVIDED that the Board of Directors of the Company
has approved such amendment.
TWELFTH: This Plan and Agreement, any amendment to this Plan and Agreement
and any agreements related to this Plan and Agreement shall become effective
immediately upon the receipt by the Company of both (a) the affirmative vote of
a majority of the Board of Directors of the Company, and (b) the affirmative
vote of a majority of the Independent Directors of the Company, cast in person
at a meeting called for the purpose of voting on this Plan and Agreement or such
agreements. Notwithstanding the foregoing, no such amendment that requires the
approval of the shareholders of Class A Shares of a Company shall become
effective as to such Class A Shares until such amendment has been approved by
the shareholders of such Class A Shares in accordance with the provisions of the
ELEVENTH paragraph of this Plan and Agreement.
This Plan and Agreement may not be amended to increase materially the
amount of distribution expenses provided for in paragraph SECOND hereof unless
such amendment is approved in the manner provided herein, and no material
amendment to the Plan and Agreement shall be made unless approved in the manner
provided for in the ELEVENTH paragraph hereof.
So long as the Plan and Agreement remains in effect, the selection and
nomination of persons to serve as Independent Directors of the Company shall be
committed to the discretion of the Independent Directors then in office.
However, nothing contained herein shall prevent the participation of other
persons in the selection and nomination process, provided that a final decision
on any such selection or nomination is within the discretion of, and approved
by, a majority of the Independent Directors of the Company then in office.
THIRTEENTH:
(A) This Plan and Agreement may be terminated as to any Fund at any time,
without the payment of any penalty, by vote of a majority of the
Independent Directors or by vote of a majority of the outstanding
voting securities of Class A Shares of such Fund, or by the
Distributor, on sixty (60) days' written notice to the other party.
(B) In the event that neither Distributor nor any affiliate of Distributor
serves the Company as investment adviser, the agreement with
Distributor pursuant to this Plan shall terminate at such time. The
board of directors may determine to approve a continuance of the Plan
and/or a continuance of the Agreement, hereunder.
(C) To the extent that this Plan and Agreement constitutes a Plan of
Distribution adopted pursuant to Rule 12b-1 under the Act it shall
remain in effect as such, so as to authorize the use by the Class A
Shares of each Fund of its assets in the amounts and for the purposes
set forth herein, notwithstanding the occurrence of an "assignment,"
as defined by the Act and the rules thereunder. To the extent it
constitutes an agreement pursuant to a plan, it shall terminate
automatically in the event of such "assignment." Upon a termination of
the agreement with Distributor, the Funds may continue to make
payments pursuant to the Plan only upon the approval of a new
agreement under this Plan and Agreement, which may or may not be with
Distributor, or the adoption of other arrangements regarding the use
of the amounts authorized to be paid by the Funds hereunder, by the
Company's board of directors in accordance with the procedures set
forth above.
FOURTEENTH: Any notice under this Plan and Agreement shall be in writing,
addressed and delivered, or mailed postage prepaid, to the other party at such
address as the other party may designate for the receipt of notices. Until
further notice to the other party, it is agreed that the addresses of both the
Company and the Distributor shall be 7800 East Union Avenue, Mail Stop 201,
Denver, Colorado 80237.
FIFTEENTH: This Plan and Agreement shall be governed by and construed in
accordance with the laws (without reference to conflicts of law provisions) of
the State of Maryland.
IN WITNESS WHEREOF, the parties have caused this Plan and Agreement to be
executed in duplicate on the day and year first above written.
COMPANY (Listed in Schedule A)
By:
---------------------
Name: Mark H. Williamson
Title: President
Attest:
- --------------------
Name: Glen A. Payne
Title: Secretary
DISTRIBUTOR
By:
--------------------
Name: Ronald L. Grooms
Title: Treasurer
Attest:
- --------------------
Name: Glen A. Payne
Title: Secretary
SCHEDULE A
TO
MASTER DISTRIBUTION PLAN AND AGREEMENT
(CLASS A SHARES)
REGISTERED
INVESTMENT
COMPANY FUNDS EFFECTIVE DATE
- --------------------------------------------------------------------------------
INVESCO ADVANTAGE SERIES FUNDS, INC.(1) AUGUST 23, 2000
Advantage Fund
Global Growth Fund(2) November 29, 2000
Advantage Global Health
Sciences Fund(3) ________, 2001
Advantage Technology/
Telecommunications Fund(3) ________, 2001
INVESCO MONEY MARKET FUNDS, INC. AUGUST 23, 2000
Cash Reserves Fund
(1) Amended on November 8, 2000 - On November 8, 2000, the name of the INVESCO
Advantage Series Funds, Inc. was changed to INVESCO Counselor Series Funds,
Inc. Therefore, all references to INVESCO Advantage Series Funds, Inc.
should be changed to INVESCO Counselor Series Funds, Inc.
(2) Amended on November 29, 2000.
(3) Amended on _______, 2001.
SCHEDULE B
TO
MASTER DISTRIBUTION PLAN and AGREEMENT
(CLASS A SHARES)
DISTRIBUTION FEE
The Company shall pay the Distributor as full compensation for all services
rendered and all facilities furnished under the Distribution Plan and Agreement
for each Fund (or Class thereof) designated below, a Distribution Fee1
determined by applying the annual rate set forth below as to each Fund (or Class
thereof) to the average daily net assets of the Fund (or Class thereof) for the
plan year, computed in a manner used for the determination of the offering price
of shares of the Fund.
MAXIMUM
ASSET MAXIMUM MAXIMUM
FUND CLASS A SHARES BASED SALES SERVICE AGGREGATE EFFECTIVE
CHARGE FEE FEE DATE
INVESCO Advantage Fund 0.10% 0.25% 0.35% August 23, 2000
INVESCO Cash Reserves Fund 0.10% 0.25% 0.35% August 23, 2000
INVESCO Global Growth Fund(2) 0.10% 0.25% 0.35% November 29, 2000
INVESCO Advantage Global
Health Sciences Fund(3) 0.10% 0.25% 0.35% _______, 2001
INVESCO Advantage
Technology/
Telecommunications Fund(3) 0.10% 0.25% 0.35% _______, 2001
- ----------------
(1) The Distribution Fee is payable apart from the sales charge, if any, as
stated in the current prospectus for the applicable Fund (or Class
thereof).
(2) Amended on November 29, 2000.
(3) Amended on _______, 2001.
TO BE SURE YOU ARE REPRESENTED, PLEASE SIGN, DATE AND RETURN PROMPTLY.
INVESCO GLOBAL HEALTH SCIENCES FUND
PROXY FOR THE ANNUAL MEETING OF SHAREHOLDERS
MAY 8, 2001
The undersigned hereby appoints Mark H. Williamson and Glen A. Payne, and each
of them, proxy for the undersigned, with the power of substitution to vote with
the same force and effect as the undersigned at the Annual Meeting of
Shareholders of INVESCO Global Health Sciences Fund (the "Fund"), to be held at
the offices of the Fund, 7800 East Union Avenue, Denver, Colorado, on Tuesday,
May 8, 2001 at 1:00 p.m. (Mountain Time) and at any adjournment thereof, upon
the matters set forth on the reverse side, all in accordance with and as more
fully described in the Notice of Annual Meeting and Proxy Statement, dated March
19, 2001, receipt of which is hereby acknowledged.
This proxy, when properly executed, will be voted in the manner directed herein
by the undersigned shareholder. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED FOR THE ELECTION OF THE TRUSTEES AND FOR ITEM 2.
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY IN THE ACCOMPANYING ENVELOPE AS
SOON AS POSSIBLE, THANK YOU.
Please sign exactly as name appears hereon. If stock is held in the name of
joint owners, each should sign. Attorneys-in-fact, executors, administrators,
etc., should so indicate. If shareholder is a corporation or partnership, please
sign in full corporate or partnership name by authorized person.
HAS YOUR ADDRESS CHANGED? DO YOU HAVE COMMENTS?
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
[X] PLEASE MARK VOTES AS IN THIS EXAMPLE
- --------------------------------------------
INVESCO GLOBAL HEALTH SCIENCES FUND
- --------------------------------------------
THIS PROXY IS SOLICITED BY THE BOARD OF TRUSTEES
CONTROL NUMBER:
THE BOARD OF TRUSTEES RECOMMENDS A VOTE "FOR":
1.Proposal to elect (01) Mark H. Williamson For With- For All
and (02) Larry Soll, PhD as Class B trustees Nominees hold Except
of the Fund until the annual meeting of [ ] [ ] [ ]
shareholders in 2003 and until the annual
meeting of shareholders in 2003 and until
their successors are elected and qualified.
Instruction: To withhold authority to vote for any nominee, mark the "For
All Except" box and strike a line through the nominee's name in the list
above. Your shares will be voted "For" the remaining nominee.
2.Proposal to approve In their discretion, the For Against Abstain
Proxies are authorized to vote upon such other [ ] [ ] [ ]
business as may properly come before the
meeting or any adjournment thereof.
In their discretion, the Proxies are authorized to vote upon such other business
as may properly come before the meeting or any adjournment thereof.
Mark box at right if an address change or comment has been noted on the reverse
side of this card. Please be sure to sign and date this Proxy. [ ]
Please be sure to sign and date this Proxy. Date:
--------------------------
- ------------------------------------ --------------------------------------
Shareholder sign here Co-owner sign here
RECORD DATE SHARES: