SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
[Amendment No. ___]
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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 FUNDS ICON] INVESCO FUNDS 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 the following 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;
2 Reorganization of the Fund as a newly created series of an existing INVESCO
Funds open-end investment company
a. Approval of the proposed Agreement and Plan of Reorganization whereby
all the assets and liabilities of Global Health Sciences Fund would be
transferred to a newly created series of an existing INVESCO Funds
open-end investment company, in exchange for shares of the New Fund
resulting from the Reorganization;
b. Approval of a New Investment Advisory Agreement Between INVESCO and
the New Fund Resulting from the Reorganization; and
c. Approval of the following New Fundamental Investment Policies of the
New Fund Resulting from the Reorganization:
i. Fundamental Investment Restriction Relating to Borrowing;
ii. Fundamental Investment Restriction relating to Issuer
Diversification;
iii. Fundamental Investment Restriction relating to Lending;
iv. Conforming Language of Fundamental Investment Policies
v. Fundamental Investment Restriction Relating to Master-Feeder
Structure.
The principal matter to be acted upon at the meeting is Proposal 2. SHAREHOLDERS
SHOULD NOTE THAT IN ORDER FOR THE PROPOSED GLOBAL HEALTH SCIENCES FUND
REORGANIZATION TO GO INTO EFFECT ALL OF THE INDIVIDUAL PROPOSALS TO BE VOTED ON
WHICH ENCOMPASS PROPOSAL 2 MUST BE APPROVED. IF ALL OF PROPOSALS 2(a), 2(b), AND
2(c) DO NOT PASS THEN THE PROPOSED GLOBAL HEALTH SCIENCES FUND REORGANIZATION
WILL BE ABANDONED AND GLOBAL HEALTH SCIENCES FUND WILL CONTINUE TO OPERATE AS A
CLOSED-END INVESTMENT COMPANY. The intent of Proposal 2 is to 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. The fund has
enlisted the services of Shareholder Communications Corporation ("SCC"), a
professional proxy solicitation firm, to assist shareholders with the proxy
process. As the meeting date approaches, you may receive a call from SCC
encouraging you to exercise your right to vote.
Again, we urge you to review the enclosed proxy material and vote your shares
utilizing one of the convenient methods found on the voting insert. By voting
your shares, you will help us eliminate the possibility of additional expenses
incurred from further solicitation efforts.
If you have any questions regarding the enclosed material or the execution of
your vote, please call Shareholder Communications Corporation at 1-800-634-9899.
Thank you.
Sincerely,
/s/ Mark H. Williamson
--------------------------------
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
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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;
2) Reorganization of the Fund as a newly created series of an existing INVESCO
Funds open-end investment company
a. Approval of the proposed Agreement and Plan of Reorganization whereby
all the assets and liabilities of Global Health Sciences Fund would be
transferred to a newly created series of an existing INVESCO Funds
open-end investment company, in exchange for shares of the New Fund
resulting from the Reorganization;
b. Approval of a New Investment Advisory Agreement Between INVESCO and
the New Fund Resulting from the Reorganization; and
c. Approval of the following New Fundamental Investment Policies of the
New Fund Resulting from the Reorganization:
i. Fundamental Investment Restriction Relating to Borrowing;
ii. Fundamental Investment Restriction Relating to Issuer
Diversification;
iii. Fundamental Investment Restriction Relating to Lending;
iv. Conforming Language of Fundamental Investment Policies; and
v. Fundamental Investment Restriction Relating to Master-Feeder
Structure.
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 Proposals 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,
/s/ Glen A. Payne
------------------
Glen A. Payne
Secretary
Denver, Colorado
Dated: March 19, 2001
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS OF:
INVESCO GLOBAL HEALTH SCIENCES FUND
TABLE OF CONTENTS
Voting Information......................................................4
Synopsis................................................................6
PROPOSAL 1: ELECTION OF TRUSTEES OF THE FUND...........................7
PROPOSAL 2(a): TO APPROVE THE REORGANIZATION..........................11
I. Summary........................................................11
II. Reorganization As A Maryland Corporation.......................12
III. Information Regarding Counselor Series Funds...................13
IV. Reasons For The Reorganization.................................17
V. Master Distribution Plan And Agreement.........................20
VI. Comparison Of Open-End And Closed-End Investment Companies.....21
VII. Comparison Of A Maryland Corporation And A
Massachusetts Business Trust...................................22
VIII. Conclusion.....................................................24
PROPOSAL 2(b) - APPROVAL OF A NEW INVESTMENT ADVISORY AGREEMENT........25
I. Current Investment Advisory Agreement..........................25
II. Proposed Investment Advisory Agreement.........................25
III. Annual Fund Operating Expenses.................................28
PROPOSAL 2(c) - APPROVAL OF THE FOLLOWING NEW FUNDAMENTAL
INVESTMENT POLICIES...........................................30
(i) - Fundamental Investment Restriction Relating to Borrowing......30
(ii) - Fundamental Investment Restriction Relating to
Issuer Diversification........................................31
(iii) - Fundamental Investment Restriction Relating to Lending....31
(iv) - Conforming Language of Fundamental Investment Policies.....31
(v) - Fundamental Investment Restriction Relating to
Master-Feeder Structure........................................32
Additional Information Concerning - Non-Fundamental Investment
Restrictions of New Fund...............................................33
APPENDIX A FORM OF AGREEMENT AND PLAN OF REORGANIZATION................35
APPENDIX B INVESTMENT ADVISORY AGREEMENT...............................45
APPENDIX C MASTER AGREEMENT AND PLAN OF DISTRIBUTION..................52
APPENDIX D CHARTER OF THE AUDIT COMMITTEE..............................59
INVESCO GLOBAL HEALTH SCIENCES FUND
7800 East Union Avenue
Denver, Colorado 80237
(Toll Free) 1(800)528-8765
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PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS OF:
INVESCO GLOBAL HEALTH SCIENCES FUND
(A MASSACHUSETTS BUSINESS TRUST)
TO BE HELD ON MAY 8, 2001
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 $12,500 (or such other fee
as determined necessary and appropriate by the Fund) plus out-of-pocket
expenses. If you have any questions regarding this Proxy Statement or the
execution of your vote, please call Shareholder Communications Corporation at 1
(800) 634-9899. 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
42,278,872 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.
There were no persons known to own beneficially 5% or more of the
outstanding shares of the Fund on the Record Date. On the record date, the
trustees and officers of the Fund, as a group, beneficially owned less than one
percent of the outstanding shares of the Fund.
VOTES REQUIRED: ALTHOUGH SEPARATE VOTES ARE BEING TAKEN ON EACH ELEMENT OF THE
REORGANIZATION, THE REORGANIZATION WILL TAKE EFFECT ONLY IF EACH AND EVERY
INDIVIDUAL PROPOSAL ENCOMPASSING PROPOSAL 2 IS APPROVED BY SHAREHOLDERS.
PROPOSAL 1
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.
INTERDEPENDENCY OF PROPOSALS 2(a), 2(b) AND 2(c)
PROPOSALS 2(a), 2(b) AND 2(c), AND EACH ELEMENT THEREOF ARE BEING
PRESENTED TO SHAREHOLDERS BY THE TRUSTEES AS A COMPREHENSIVE PLAN TO REORGANIZE
GLOBAL HEALTH SCIENCES FUND AS A SERIES OF AN OPEN-END INVESTMENT COMPANY.
ACCORDINGLY, THE PROPOSED GLOBAL HEALTH SCIENCES FUND REORGANIZATION WILL BE
IMPLEMENTED ONLY IF SHAREHOLDERS APPROVE ALL THREE OF PROPOSALS 2(a), 2(b) AND
2(c) AND EACH ELEMENT THEREOF.
PROPOSALS 2(a), 2(b) AND 2(c)
THE DECLARATION OF TRUST OF GLOBAL HEALTH SCIENCES FUND PROVIDES THAT
APPROVAL OF PROPOSAL 2(a), CONCERNING REORGANIZATION OF THE FUND AS AN OPEN-END
FUND, REQUIRES A MAJORITY SHAREHOLDER VOTE, WHICH IS DEFINED IN THE DECLARATION
OF TRUST AS THE VOTE OF THE HOLDERS OF A MAJORITY OF SHARES, WHICH SHALL CONSIST
OF A MAJORITY OF SHARES PRESENTED IN PERSON OF BY PROXY AND ENTITLED TO VOTE AT
A MEETING OF SHAREHOLDERS AT WHICH A QUORUM, AS DETERMINED IN ACCORDANCE WITH
THE BY-LAWS, IS PRESENT. THE DECLARATION OF TRUST OF GLOBAL HEALTH SCIENCES FUND
FURTHER PROVIDES THAT SHOULD A GREATER VOTE BE REQUIRED BY THE INVESTMENT
COMPANY ACT OF 1940 (THE "1940 ACT"), THEN THAT GREATER VOTE REQUIREMENT SHALL
APPLY. BECAUSE PROPOSAL 2(b) CONTAINS APPROVAL OF THE PROPOSED INVESTMENT
ADVISORY AGREEMENT, AND PROPOSAL 2(c) CONTAINS CHANGES TO FUNDAMENTAL INVESTMENT
RESTRICTIONS, THE 1940 ACT REQUIRES AN AFFIRMATIVE VOTE OF A "MAJORITY OF THE
OUTSTANDING VOTING SECURITIES" OF THE FUND. THE 1940 ACT DEFINES "MAJORITY OF
THE OUTSTANDING VOTING SECURITIES" AS THE LESSER OF (I) 67% OF THE SHARES OF THE
FUND PRESENT AT THE MEETING IF THE OWNERS OF MORE THAN 50% OF THOSE SHARES THEN
OUTSTANDING ARE PRESENT IN PERSON OR BY PROXY OR (II) MORE THAN 50% OF THE
FUND'S OUTSTANDING SHARES. THEREFORE, THE APPROVAL OF PROPOSALS 2(a), 2(b), AND
2(c) AND EACH ELEMENT THEREOF, REQUIRE THE AFFIRMATIVE VOTE OF A "MAJORITY OF
THE OUTSTANDING VOTING SECURITIES" OF THE FUND'S SHAREHOLDERS ENTITLED TO VOTE.
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; (2) to vote upon and approve the reorganization of Global
Health Sciences Fund ("Reorganization") as an open-end fund, as more fully
described below; (3) if Proposal 2(a) is approved, to approve an Investment
Advisory Agreement between INVESCO and the new fund resulting from the
Reorganization; and (4) if Proposal 2(a) is approved, to approve the Fundamental
Investment Policies of the new fund resulting from the Reorganization.
THE PROPOSED REORGANIZATION
Shareholders of Global Health Sciences Fund are being asked to approve the
Reorganization, the principal purpose of which is to reorganize 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"). Reorganizing Global Health Sciences Fund into an open-end fund will
eliminate the discount and give shareholders of New Fund the ability IMMEDIATELY
to realize the value of their shares by redeeming them from 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(a)).
The Reorganization will be accomplished pursuant to an Agreement and Plan
of Reorganization ("Agreement") which is attached hereto as Appendix A. The
Agreement provides for the acquisition by New Fund of all of the assets of
Global Health Sciences Fund in exchange, share for share, for Class A shares of
stock of New Fund and the assumption by New Fund of the liabilities of Global
Health Sciences Fund. The net asset value per share of New Fund will equal the
net asset value per share of Global Health Sciences Fund on the date of
Reorganization. As provided in the Agreement, Global Health Sciences Fund will
then constructively distribute the Class A shares of 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 New Fund. It is expected that the Reorganization will be
completed on or before May 31, 2001, but may be delayed if an adjournment of the
Meeting is required.
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(c), Global
Health Sciences Fund's investment restrictions and policies are, in specific and
material respects, different from those associated with New Fund and 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. 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 a higher limit on New Fund's ability to engage in short selling. In
addition, shareholders will be asked to approve a fundamental investment policy
permitting 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 their requested approval of the Reorganization
described in Proposal 2(a) shareholders, will also be asked to approve a
proposed Investment Advisory Agreement described in Proposal 2(b), and attached
hereto as Appendix B. Under the Proposed Investment Advisory Agreement, INVESCO
will manage 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 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. The anticipated total operating expenses of New
Fund are projected to be 2.00%, which is higher than the current total operating
expenses of Global Health Sciences Fund.
Each shareholder of Global Health Sciences Fund will receive a number of
full and fractional Class A shares of 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 New Fund.
However, the Class A shares will be subject to a 12b-1 fee calculated as a
percentage of 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
New Fund available to non-institutional investors. New Fund will enter into the
Master Plan and Agreement for Distribution - Class A shares (the "Plan"),
attached hereto as Appendix C, if shareholders approve Proposals 2, 3, and 4.
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 New Fund which occur after the Plan is
implemented. The distribution fees would be absorbed pro rata by all New Fund
shareholders. The Plan would limit the amount of 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 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 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, New Fund, shareholders of Global Health
Sciences Fund or shareholders of 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. It is expected that if the
Reorganization is approved at the Meeting, the Reorganization will be completed
on or before May 31, 2001. 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(a) -- 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 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 9, 2001+
- ----------------------------------------------------------------------------------------------------------------------------
Class A Vice Chairman of the Board of the INVESCO Funds; 1992 144.070
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 0
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 34,882
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 19,107.783
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 0
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 54,133.853
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 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 Global Health Sciences Fund is the Audit
Committee. The Global Health Sciences Fund's Audit Committee is composed
entirely of Trustees who are not "interested persons" of the Fund or of INVESCO
or its affiliates within the meaning of the 1940 Act, and who are "independent"
as defined in the New York Stock Exchange listing standards. Currently, Messrs.
Deering and McIntyre, and Dr. Soll are members of the Audit Committee. The Audit
Committee convened three times during the fiscal year ended October 31, 2000.
The principal functions of the Audit Committee are to recommend to the Board the
appointment of the Fund's independent accountants, to review with the
independent accountants the scope, performance and anticipated cost of their
audit and to receive and consider a report from the independent accountants
concerning their conduct of the audit, including the form of the opinion
proposed to be rendered and any comments or recommendations the independent
accountants might want to make in that connection. The Fund adopted an Audit
Committee Charter on May 8, 2000. A copy of the Audit Committee Charter is
attached to this Proxy Statement as Appendix D.
The Audit Committee has received written disclosures and the letter
required by Independence Standards Board Standard No. 1 from
PricewaterhouseCoopers LLP ("PwC"), the Fund's independent accountants, and has
discussed with PwC its independence. The Audit Committee has also reviewed and
discussed the audited financial statements with Fund management and PwC, and
discussed certain matters with PwC required to be discussed by Statements on
Auditing Standards No. 61.
Based on the foregoing, the Audit Committee recommended to the Board of
Trustees that the Fund's audited financial statements be included in the Fund's
Annual Report for the fiscal year ended October 31, 2000.
TRUSTEE COMPENSATION
The following table shows the compensation paid by 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 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
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 EXPENSES(2) RETIREMENT(3) 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 0.0064%(4) 0.0056%(4) 0.0008%(5)
OF NET ASSETS
(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 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 the Reorganization 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 the Reorganization 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 BOARD OF TRUSTEES UNANIMOUSLY RECOMMENDS THAT
SHAREHOLDERS VOTE TO RE-ELECT THE NOMINEES AS
TRUSTEES OF THE FUND.
PROPOSAL 2(a): TO APPROVE THE REORGANIZATION
I. SUMMARY
Shareholders of Global Health Sciences Fund are being asked to vote on and
approve the Reorganization, the principal purpose of which is to reorganize
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.
Reorganizing 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 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, New Fund will
acquire all of the assets of Global Health Sciences Fund in exchange for Class A
shares of common stock of New Fund and the assumption by 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 New Fund to its
shareholders. Each shareholder will be credited with a number of full and
fractional Class A shares of 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 New Fund. The net asset value per
share of New Fund will equal the net asset value per share of Global Health
Sciences Fund on the date of the Reorganization.
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 New Fund and 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 described in this Proposal
2(a), shareholders of Global Health Sciences Fund are also being asked to
approve a new Investment Advisory Agreement, between Counselor Series Funds, on
behalf of New Fund, and INVESCO, as described in Proposal 2(b), and approve the
Fundamental Investment Policies for New Fund, described in Proposal 2(c).
PROPOSALS 2(a), 2(b), AND 2(c) ARE BEING PRESENTED TO SHAREHOLDERS BY THE
TRUSTEES AS A COMPREHENSIVE PLAN TO REORGANIZE GLOBAL HEALTH SCIENCES FUND AS A
SERIES OF COUNSELOR SERIES FUNDS. ACCORDINGLY, THE PROPOSED GLOBAL HEALTH
SCIENCES FUND REORGANIZATION WILL BE IMPLEMENTED ONLY IF SHAREHOLDERS APPROVE
ALL ELEMENTS OF PROPOSALS 2(a), 2(b), AND 2(c).
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 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. It is expected
that the Reorganization will be completed on or before May 31, 2001. 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.
II. 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 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.
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 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
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 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 New Fund is lower than
the 12b-1 fee applicable to the shares of other classes of New Fund available to
non-institutional investors. New purchases of Class A shares of 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 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 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 New Fund during the first twelve months following the Reorganization. No
CDSC will be imposed on new sales of 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 the section entitled "Master
Distribution Plan and Agreement." The CDSC is designed to reduce the possibility
that New Fund will experience significant out flows of assets resulting from
shareholder redemptions occurring after the conversion of Fund to an open-end
fund, thereby 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.
New Fund may also incur transaction costs to the extent that New Fund must
sell portfolio securities to finance redemptions, and 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.
III. INFORMATION REGARDING COUNSELOR SERIES FUNDS
If the Reorganization is approved by shareholders New Fund's Board of
Directors will consist of the five Trustees of Global Health Sciences Fund plus
four other Directors of Counselor Series who are not currently Trustees of
Global Health Sciences Fund. Each of the nine individual Directors of Counselor
Series, identified in the table below, is currently Directors of all the INVESCO
mutual funds. 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 Counselor Series 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;
1290 Broadway 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 Counselor Series 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 Counselor Series 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 Counselor Series 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.
IV. REASONS FOR THE REORGANIZATION
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. Reorganizing Global Health Sciences Fund into an
open-end fund would address this problem by giving shareholders the opportunity
IMMEDIATELY to redeem their shares from 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. 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. On the Record Date (March
9, 2001), shares Global Health Sciences Fund closed on the NYSE at a price of
$14.17, and its net asset value per share was $14.94, representing a discount to
net asset value per share of 5.154%.
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 1999, the Trustees approved a
proposal to retain Paine Webber, 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 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, if the Reorganization is approved by shareholders, 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 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 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 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 New Fund if the Reorganization is approved. An
enhanced marketing effort by IDI on behalf of New Fund, and sales of additional
New Fund shares through third-party intermediaries would benefit 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 the Reorganization,
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 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 New Fund.
The Board also considered that 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 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 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 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 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 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 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 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 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 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. 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 the Reorganization is approved. Consequently, the Trustees
have deferred consideration of distributions pursuant to the Managed
Distribution Policy pending the outcome of voting on 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, 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 Global Health Sciences Fund's
Dividend Reinvestment Plan could potentially interfere with an orderly
implementation of the Reorganization, if the Reorganization is approved.
Therefore, the Trustees have suspended the Dividend Reinvestment Plan, effective
immediately, pending the outcome of voting and completion of the Reorganization.
If the Reorganization 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 the Reorganization 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 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. If the Reorganization is approved, all
holders of Global Health Sciences Fund share certificates are strongly
encouraged to send their certificates to INVESCO for conversion of those
shares to book-entry shares.
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 annually. THE CDSC WILL NOT BE APPLICABLE TO REDEMPTIONS
OCCURRING 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 Sciences
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 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 Series Fund series of
Counselor Series Funds and affecting the Reorganization were 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 Counselor Series Funds because 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, as described in Proposal 2(c). In
particular, the Directors considered 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 Counselor
Series Funds investment personnel who would assist Mr. Wald in implementing New
Fund's aggressive global growth, leveraging, and short-selling strategies if the
Reorganization is approved. These strategies are generally consistent with
Global Health Sciences Fund's investment goals and risks but differ materially
in certain specific risks, as described in Proposal 2(c), from the investment
strategies currently employed by Global Health Sciences Fund.
V. MASTER DISTRIBUTION PLAN AND AGREEMENT
If the Reorganization is approved, shareholders will also approve 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 New Fund and INVESCO
Distributors, Inc. ("IDI"), New Fund's distributor, to incur certain expenses
that might be considered to constitute direct or indirect payment by New Fund of
distribution expenses.
Under the Class A Plan, Class A shares of 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 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 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 New Fund. During any period in which New Fund is closed due to
high asset levels, the Class A shares of 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 New Fund.
However, to remain competitive in distribution Class A shares of 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 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 New Fund and that provide continuing personal services to
their customers who own Class A shares of New Fund and that provide continuing
personal services to their customers who own Class A shares of 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
New Fund, in amounts up to 0.25% of the average daily net assets of the Class A
shares of 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 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 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
New Fund by attracting more assets which may in turn lower the ongoing expenses
per share of New Fund. The Board believes that these marketing efforts will also
assist in selling shares of New Fund to offset redemptions that are anticipated
to occur after the Reorganization. To the extent that New Fund is successful in
offsetting redemptions with new sales of shares, INVESCO believes it will be
able to manage New Fund more effectively.
VI. 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 reorganized
as 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 New Fund at the next determined current net asset value,
less the CDSC fee (as described above). 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 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 New Fund on a daily basis, however based on the size of the fund and the
policies of such publication, New Fund may not be listed
(b) ELIMINATION OF DISCOUNT AND IMPLEMENTATION OF CONTINGENT DEFERRED
SALES CHARGE. The implementation of the 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 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 usually maintain a portion of their assets in cash to meet redemption
requests and 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 New Fund after the
Reorganization may be higher than Global Health Sciences Fund's current expense
ratio. 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. New Fund may also be required to sell portfolio securities
or incur borrowing costs in order to meet redemptions. During its first twelve
months, 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).
VII. 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 New
Fund, a series of a Maryland corporation. As such, 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 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 New Fund, 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 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
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.
VIII. 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 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 New Fund solely
in exchange for Class A shares of Common Stock of New Fund and the assumption by
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 New Fund enter into a new Advisory Agreement with INVESCO, as described
above, and (vi) having 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 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(a) TO REORGANIZE THE FUND.
PROPOSALS 2(a), 2(b), AND 2(c) ARE BEING PRESENTED TO SHAREHOLDERS BY THE
TRUSTEES AS A COMPREHENSIVE PLAN TO REORGANIZE GLOBAL HEALTH SCIENCES FUND AS A
SERIES OF COUNSELOR SERIES FUNDS. ACCORDINGLY, THE PROPOSED REORGANIZATION OF
GLOBAL HEALTH SCIENCES FUND WILL BE IMPLEMENTED ONLY IF SHAREHOLDERS APPROVE ALL
ELEMENTS OF PROPOSALS 2(a), 2(b), AND 2(c).
PROPOSAL 2(b) - APPROVAL OF A NEW INVESTMENT ADVISORY AGREEMENT
I. CURRENT INVESTMENT 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 $7,683,110. If the proposed Investment Advisory Agreement had been in
place during the fiscal year ending October 31, 2000, the investment management
fee that would have been paid to INVESCO would have been $11,971,851.
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 $798,123. 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.
II. PROPOSED INVESTMENT ADVISORY AGREEMENT
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 New Fund will employ
INVESCO to supervise New Fund's investment program and to furnish other services
to 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 New Fund
in accordance with New Fund's investment objective, policies, and limitations.
INVESCO will also provide New Fund with all necessary office facilities and
personnel for servicing the New Fund's investments and compensate all officers
of New Fund and all Directors who are "interested persons" of Counselor Series
Funds or of INVESCO, and all personnel of 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 New Fund. These services include
providing facilities for maintaining New Fund's organization; supervising
relations with custodians, transfer and pricing agents, accountants,
underwriters, and other persons dealing with New Fund; preparing all general
shareholder communications and conducting shareholder relations; maintaining New
Fund's records and registration of New Fund's shares under federal securities
laws and making necessary filings under state securities laws; developing
management and shareholder services for 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 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 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 New Fund exceeds the sum of
2.00% and the investment record of the Morgan Stanley Heath Care Product Index,
or any successor thereto (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 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 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 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 Counselor Series Funds.
This fact makes meaningful comparison of management fees between New
Fund and other registered mutual funds problematic. However, 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 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 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 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 Counselor Series Funds should determine at some future
date that another securities index is a better representative of the composition
of 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.
III. 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 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 0.96% 1.50%
12b-1 Fees None 0.35%
Other Expenses 0.20% 0.15%
Total Operating Expenses 1.16% 2.00%
In addition to the fund operating expenses, Class A shares of 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 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 New Fund that
will be paid by INVESCO, on behalf of New Fund, as more fully described in the
section entitled "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 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 $10,000
investment in Global Health Sciences Fund, and the estimated expenses on a
hypothetical $10,000 investment in 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) $118 $368 $638 $1,409
New Fund Class A Shares (open-end) $742 $1,143 $1,568 $2,749
including maximum sales charge
New Fund Class A Shares (open-end $203 $627 $1,078 $2,327
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 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 New Fund must dispose of portfolio securities to pay
redemption proceeds, 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.
THE BOARD OF TRUSTEES UNANIMOUSLY RECOMMENDS A VOTE FOR PROPOSAL 2(b)
TO APPROVE THE PROPOSED INVESTMENT ADVISORY AGREEMENT
PROPOSALS 2(a), 2(b), AND 2(c) ARE BEING PRESENTED TO SHAREHOLDERS BY THE
TRUSTEES AS A COMPREHENSIVE PLAN TO REORGANIZE GLOBAL HEALTH SCIENCES FUND AS A
SERIES OF COUNSELOR SERIES FUNDS. ACCORDINGLY, THE PROPOSED REORGANIZATION OF
GLOBAL HEALTH SCIENCES FUND WILL BE IMPLEMENTED ONLY IF SHAREHOLDERS APPROVE ALL
ELEMENTS OF PROPOSALS 2(c), 2(b), AND 2(c).
PROPOSAL 2(c) - APPROVAL OF NEW FUNDAMENTAL INVESTMENT POLICIES AND RESTRICTIONS
I. FUNDAMENTAL INVESTMENT RESTRICTIONS
Global Health Sciences Fund has certain investment restrictions that are
fundamental. If the proposed Reorganization is approved, as described in
Proposal 2, 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 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, shareholders will approve a new fundamental
investment policy permitting 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 the New 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.
Finally, New Fund will have certain non-fundamental investment policies that
differ from the investment policies of Global Health Sciences Fund. Adoption or
modification of New Fund's non-fundamental investment policies and restrictions
does not require shareholder approval. However, the Trustees ask that
shareholders considered these differences when considering Proposal 2(c).
PROPOSAL 2(c)(i) - FUNDAMENTAL INVESTMENT RESTRICTION RELATING TO BORROWING
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 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 policies, 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,
New Fund would also, be permitted to borrow for the purpose of purchasing
securities - i.e., New Fund will have the ability to leverage its assets. To the
extent 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.
THE BOARD OF TRUSTEES UNANIMOUSLY RECOMMEND A VOTE FOR PROPOSAL 2(c)(i)
PROPOSAL 2(c)(ii) - FUNDAMENTAL INVESTMENT RESTRICTION RELATING TO ISSUER
DIVERSIFICATION
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.
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
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.
THE BOARD OF TRUSTEES UNANIMOUSLY RECOMMEND A VOTE FOR PROPOSAL 2(c)(ii)
PROPOSAL 2(c)(iii) - FUNDAMENTAL INVESTMENT RESTRICTION RELATING TO LENDING.
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.
THE BOARD OF TRUSTEES UNANIMOUSLY RECOMMENDS A VOTE FOR PROPOSAL 2(c)(iii)
PROPOSAL 2(c)(iv) - APPROVAL OF CONFORMING LANGUAGE OF FUNDAMENTAL INVESTMENT
POLICIES
If the Reorganization is approved, certain 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,
except insofar as the Fund may be deemed an underwriter under the
Securities Act of 1933 in the sale of its Shares or in disposing of a
portfolio security.
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 BOARD OF TRUSTEES UNANIMOUSLY RECOMMENDS A VOTE FOR PROPOSAL 2(c)(iv)
PROPOSAL 2(c)(v) - MASTER FEEDER STRUCTURE
New Fund will have 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 New Fund to
participate in a so-called "master/feeder fund" organizational format.
Shareholders are asked to approve 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.
THE BOARD OF TRUSTEES UNANIMOUSLY RECOMMENDS A VOTE FOR PROPOSAL 2(c)(v)
PROPOSALS 2(a), 2(b), AND 2(c) ARE BEING PRESENTED TO SHAREHOLDERS BY THE
TRUSTEES AS A COMPREHENSIVE PLAN TO REORGANIZE GLOBAL HEALTH SCIENCES FUND AS A
SERIES OF COUNSELOR SERIES FUNDS. ACCORDINGLY, THE PROPOSED REORGANIZATION OF
GLOBAL HEALTH SCIENCES FUND WILL BE IMPLEMENTED ONLY IF SHAREHOLDERS APPROVE ALL
ELEMENTS OF PROPOSALS 2(a), 2(b), AND 2(c).
ADDITIONAL INFORMATION CONCERNING NON-FUNDAMENTAL INVESTMENT RESTRICTIONS OF
THE NEW FUND
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.
The Directors of New Fund have adopted certain 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 12.18% of its total net
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. If the Reorganization is approved, New Fund will have the
ability to engage in short selling the maximum extent permitted by the 1940 Act.
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.
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.\
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 Global Health Sciences Fund, 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 Fund's 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 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 $ 7,200 $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 150 Royall
Street, Canton, Massachusetts 02021. 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., 17 State
Street, New York, New York, 10004, 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, New Fund does not intend to hold annual meetings of shareholders
in the future. In the event that New Fund should hold a Special Meeting of
Shareholders, a shareholder proposal intended to be presented at any such
meeting of shareholders of New Fund must be received by the New Fund within a
reasonable time before the solicitation by the Board of Directors of New Fund
relating to such meeting is to be made in order to be considered in 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 November 30,
2001 to the Fund's Secretary, 7800 E. Union Avenue, Denver CO 80237.
APPENDIX A
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 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.
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.
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.
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.
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.
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.
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.
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).
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.
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.
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.
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).
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.
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.
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.
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' obligations hereunder shall be subject to satisfaction of the
following conditions, at or before the Closing:
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;
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;
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;
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.
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;
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;
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;
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
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:
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;
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
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' and Global Health Sciences Fund's obligations hereunder shall
be subject to satisfaction of the following conditions, at or before the
Closing:
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;
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;
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;
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;
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, Kirkpatrick & Lockhart LLP;
That there shall not be any material litigation pending with respect to the
matters contemplated by this Agreement; and
That Counselor Series and Global Health Sciences Fund shall have received an
opinion of Kirkpatrick & Lockhart LLP, satisfactory to each of them, that for
federal income tax purposes:
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.
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 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.
No gain or loss will be recognized by 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.
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.
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.
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.
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.
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.
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.
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.
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;
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;
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;
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
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:
(i) 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
(ii) 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.
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.
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.
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.
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 B
FORM OF 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 therefore,
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: /s/ Mark H. Williamson
----------------------
Mark H. Williamson
/s/ Glen A. Payne President & Chairman of the Board
- ----------------- of Directors
Glen A. Payne
Secretary
INVESCO FUNDS GROUP, INC.
ATTEST:
By: /s/ Mark H. Williamson
----------------------
Mark H. Williamson
/s/ Glen A. Payne 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) May __, 2001
Advantage Technology/
Telecommunications Fund(3) May __, 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 May __, 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 "Portfolio"), as determined by valuations made in accordance with each
Portfolio's procedures for calculating its 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 INVESCO Advantage Fund, the Morgan Stanley Health Care Product Index
for 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) Amended November 29, 2000.
(2) Amended May __, 2001.
APPENDIX C
FORM OF 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: /s/ Mark H. Williamson
-----------------------
Mark H. Williamson
President
Attest:
/s/ Glen A. Payne
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Glen A. Payne
Secretary
DISTRIBUTOR
By: /s/ Ronald L. Grooms
---------------------
Name: Ronald L. Grooms
Title: Treasurer
Attest:
/s/ Glen A. Payne
- ------------------------
Glen A. Payne
Secretary
SCHEDULE A
TO MASTER DISTRIBUTION PLAN AND AGREEMENT
(CLASS A SHARES)
REGISTERED
INVESTMENT
COMPANY FUNDS EFFECTIVE DATE
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INVESCO ADVANTAGE SERIES FUNDS, INC.(1) AUGUST 23, 2000
Advantage Fund
Global Growth Fund(2) November 29, 2000
Advantage Global Health
Sciences Fund(3) May __, 2001
Advantage Technology/
Telecommunications Fund(3) May __, 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 May 7, 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
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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% May 7, 2001
INVESCO Advantage
Technology/
Telecommunications Fund(3) 0.10% 0.25% 0.35% May 7, 2001
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(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 May 7, 2001.
APPENDIX D
INVESCO GLOBAL HEALTH SCIENCES FUND
AUDIT COMMITTEE CHARTER
I. COMPOSITION OF THE AUDIT COMMITTEE. The Audit Committee of Global Health
Sciences Fund ("Fund") shall be comprised of at least three Trustees, each
of whom shall have no relationship to the Fund, that may interfere with
the exercise of their independence from management and the Fund, and shall
otherwise satisfy the applicable membership requirements under the rules
of the New York Stock Exchange, Inc.
II. PURPOSES OF THE AUDIT COMMITTEE. The purposes of the Audit Committee
are to assist the Board of Trustees:
1. in its oversight of the Fund's accounting and financial reporting
policies and practices, its internal audit controls and
procedures, and, as appropriate, the internal controls of certain
service providers;
2. in its oversight of the quality and objectivity of the Fund's
financial statements and the independent audit thereof;
3. in selecting (or nominating, subject to shareholder approval)
evaluating and, where deemed appropriate, replacing the outside
auditors; and
4. in evaluating the independence of the outside auditors.
The function of the Audit Committee is oversight. Management for the Fund
is responsible for the preparation, presentation and integrity of the
Fund's financial statements. Management and its internal accounting
department are responsible for maintaining appropriate accounting and
financial reporting principles and policies and internal controls and
procedures designed to assure compliance with accounting standards and
applicable laws and regulations. The outside auditors are responsible for
planning and carrying out a proper audit and reviews. The outside auditor
for the Fund is ultimately accountable to the Board of Trustees and Audit
Committee of the Fund. The Board of Trustees and the Audit Committee have
the ultimate authority and responsibility to select, evaluate and, where
appropriate, replace the outside accountant (or to nominate the outside
accountant to be proposed for shareholder approval in any proxy
statement).
III. MEETINGS OF THE AUDIT COMMITTEE. The Audit Committee shall meet at least
once annually, or more frequently if circumstances dictate. The Audit
Committee shall set its agenda and the places and times of its meetings.
The Audit Committee may meet alone and outside the presence of management
personnel with any certified public accountant and auditor firm rendering
reports to the Audit Committee or the Board of Trustees and with outside
legal counsel.
IV. DUTIES AND POWERS OF THE AUDIT COMMITTEE. To carry out its purposes,
the Audit Committee shall have the following duties and powers:
1. The Audit Committee shall review and discuss the audited financial
statements and other financial information with management and the
independent auditors for the Fund.
2. The Audit Committee shall review and discuss with the independent
auditors:
a. the scope of audits and audit reports;
b. the personnel, staffing, qualifications and experience of
the auditor;
c. the compensation of the auditor; and
d. the independence of the auditor, regarding which the Audit
Committee shall secure from the auditor the information
required by Independence Standards Board Standard No. 1.
The Audit Committee shall actively engage in a dialogue
with the outside auditor with respect to any disclosed
relationships or services that may impact the objectivity
and independence of the outside auditor. The Audit
Committee also shall be responsible for recommending that
the Board of Trustees take appropriate action in response
to the outside auditor's report to satisfy itself of the
outside auditor's independence.
3. The Audit Committee also shall review and discuss with the
independent auditors the matters required to be discussed pursuant
to SAS 61, including the following:
a. the quality, not just the acceptability under generally
accepted accounting principles, of the accounting
principles applied by the Fund in its financial reporting;
b. the level of responsibility assumed by the auditors in the
preparation of the audit;
c. the initial selection of and changes in significant
accounting policies or their application, and the effect of
significant accounting policies in controversial or
emerging areas for which there is a lack of authoritative
consensus or guidance;
d. the process used by management for the Fund in formulating
particularly sensitive accounting estimates and the basis
for the auditor's conclusions regarding the reasonableness
of those estimates;
e. the auditor's responsibility for other information in
documents containing audited financial statements, any
procedures performed, and the results;
f. any disagreements with management, whether or not
satisfactorily resolved, about matters that individually or
in the aggregate could be significant to the entity's
financial statements or the auditor's report;
g. any consultations with other accountants and significant
matters that were the subject of such consultations;
h. any major issues discussed with management in connection
with the initial or recurring retention of the auditor,
including the application of accounting principles and
auditing standards; and
i. any serious difficulties relating to the performance of the
audit that the auditor encountered with management.
4. The Audit Committee shall provide a recommendation to the Board of
Trustees regarding whether the audited financial statements of the
Fund should be included in the annual report to shareholders of the
Fund.
5. The Audit Committee shall prepare the report, including any
recommendation of the Audit Committee, required by the rules of the
Securities and Exchange Commission to be included in the Fund's
annual proxy statement.
6. The Audit Committee shall review this charter at least annually
and recommend any changes to the full Board of Trustees; and
7. The Audit Committee shall report its activities to the full Board of
Trustees on a regular basis and make such recommendations with
respect to the above and other matters as the Audit Committee may
deem necessary or appropriate.
V. RESOURCES AND AUTHORITY OF THE AUDIT COMMITTEE. The Audit Committee shall
have the resources and authority appropriate to discharge its
responsibilities, including the authority to engage outside auditors for
special audits, reviews and other procedures and to retain special counsel
and other experts or consultants at the expense of the Fund.
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:
Please be sure to sign and date this Proxy. Date:
--------------------------
- ------------------------------------ --------------------------------------
Shareholder sign here Co-owner sign here
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.
PROPOSAL 2
2(a) Approval of the proposed Agreement and For Against Abstain
Plan of Reorganization. [ ] [ ] [ ]
2(b) Approval of the proposed New Investment For Against Abstain
Advisory Agreement [ ] [ ] [ ]
2(c) APPROVAL OF THE FOLLOWING NEW FUNDAMENTAL INVESTMENT POLICIES OF NEW FUND
RESULTING FROM REORGANIZATION.
2(c)(i) Fundamental Investment Restriction For Against Abstain
Relating to Borrowing [ ] [ ] [ ]
2(c)(ii) Fundamental Investment Restriction For Against Abstain
Relating to Issuer Diversification [ ] [ ] [ ]
2(c)(iii) Fundamental Investment Restriction For Against Abstain
Relating to Lending [ ] [ ] [ ]
2(c)(iv) Conforming Language of For Against Abstain
Fundamental Investment Policies [ ] [ ] [ ]
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. [ ]
RECORD DATE SHARES: