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SCHEDULE 14a INFORMATION
Proxy Statement Pursuant To Section 14(a) of the Securities Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
INVESCO Specialty Funds, Inc.
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(Name of Registrant as Specified in Its Charter)
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(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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INVESCO LOGO
INVESCO LATIN AMERICAN GROWTH FUND
INVESCO REALTY FUND
INVESCO S&P 500 INDEX FUND (CLASSES I & II)
INVESCO WORLDWIDE CAPITAL GOODS FUND
INVESCO WORLDWIDE COMMUNICATIONS FUND
(EACH A SERIES OF INVESCO SPECIALTY FUNDS, INC.)
MARCH 23, 1999
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Dear Shareholder:
The attached proxy materials seek your approval to convert each of the
above-named Funds from separate series of INVESCO Specialty Funds Inc.
("Specialty Funds"), to separate series of INVESCO Sector Funds, Inc., INVESCO
International Funds or INVESCO Stock Funds, Inc., as applicable, or in the case
of INVESCO Worldwide Capital Goods Fund ("Worldwide Capital Goods Fund"), to
liquidate the Fund, make certain changes in the fundamental policies of each
Fund, to elect directors of Specialty Funds and to ratify the appointment of
PricewaterhouseCoopers LLP as independent accountants of each Fund.
YOUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR ALL PROPOSALS. The
board believes that the proposed conversion of the Funds will consolidate and
streamline the production and mailing of certain financial reports and legal
documents, reducing the expenses of the Funds. Shareholders of Worldwide Capital
Goods Fund are being asked to approve the liquidation of Worldwide Capital Goods
Fund (please see the separate letter addressed to you about the proposed
liquidation). Shareholders are also being asked to approve certain changes to
the fundamental investment restrictions of the Funds that will modernize their
fundamental investment restrictions and make them more uniform with those of the
other INVESCO Funds. The attached proxy materials provide more information about
the proposed conversions, the proposed liquidation of Worldwide Capital Goods
Fund, the proposed changes in fundamental investment restrictions and the other
matters you are being asked to vote upon.
YOUR VOTE IS IMPORTANT NO MATTER HOW MANY SHARES YOU OWN. Voting your shares
early will permit Specialty Funds to avoid costly follow-up mail and telephone
solicitation. After reviewing the attached materials, please complete, sign and
date your proxy card and mail it in the enclosed return envelope promptly. As an
alternative to using the paper proxy card to vote, you may vote by telephone, by
facsimile, through the Internet, or in person.
Very truly yours,
/s/ Mark H. Williamson
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Mark H. Williamson
President
INVESCO Specialty Funds, Inc.
9964
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INVESCO LATIN AMERICAN GROWTH FUND
INVESCO REALTY FUND
INVESCO S&P 500 INDEX FUND (CLASSES I & II)
INVESCO WORLDWIDE CAPITAL GOODS FUND
INVESCO WORLDWIDE COMMUNICATIONS FUND
(EACH A SERIES OF INVESCO SPECIALTY FUNDS, INC.)
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
MAY 20, 1999
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To The Shareholders:
NOTICE IS HEREBY GIVEN that a special meeting of shareholders of INVESCO
Latin American Growth Fund, INVESCO Realty Fund, INVESCO S&P 500 Index Fund
(Classes I & II), INVESCO Worldwide Capital Goods Fund, and INVESCO Worldwide
Communications Fund (each, a "Fund" and collectively, the "Funds"), each a
series of INVESCO Specialty Funds, Inc. ("Specialty Funds"), will be held on May
20, 1999, at 10:00 a.m., Mountain Time, at the offices of INVESCO Funds Group,
Inc., 7800 East Union Avenue, Denver, Colorado, for the following purposes:
1. For INVESCO Latin American Growth Fund voting separately, to
approve an Agreement and Plan of Conversion and Termination
providing for the conversion of the Fund from a separate series of
Specialty Funds to a separate series of INVESCO International
Funds, Inc.;
2. For each of INVESCO Realty Fund and INVESCO Worldwide
Communications Fund voting separately, to approve an Agreement and
Plan of Conversion and Termination providing for the conversion of
each such Fund from a separate series of Specialty Funds to a
separate series of INVESCO Sector Funds, Inc. ("Sector Funds");
3. For INVESCO S&P 500 Index Fund voting separately, to approve an
Agreement and Plan of Conversion and Termination providing for the
conversion of the Fund from a separate series of Specialty Funds to
a separate series of INVESCO Stock Funds, Inc.;
4. For INVESCO Worldwide Capital Goods Fund voting separately, to
approve a Plan of Liquidation and Termination of the Fund (if
liquidation is not approved fee waiver and expense reimbursements
will be discontinued);
5. For each Fund voting separately, to approve certain changes to its
fundamental investment restrictions;
6. For the Funds voting together to elect directors of Specialty
Funds;
7. For the Funds voting separately, to ratify the selection of
PricewaterhouseCoopers LLP as independent accountants of each such
Fund; and
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8. To transact such other business as may properly come before the
meeting or any adjournment thereof.
You are entitled to vote at the meeting and any adjournment thereof if you
owned shares of any Fund at the close of business on March 12, 1999. IF YOU
ATTEND THE MEETING, YOU MAY VOTE YOUR SHARES IN PERSON. IF YOU DO NOT EXPECT TO
ATTEND THE MEETING, PLEASE COMPLETE, SIGN, DATE AND RETURN THE ENCLOSED PROXY
CARD IN THE ENCLOSED POSTAGE-PAID ENVELOPE.
By order of the Board of Directors,
/s/ Glen A. Payne
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Glen A. Payne
Secretary
March 23, 1999
Denver, Colorado
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YOUR VOTE IS IMPORTANT
NO MATTER HOW MANY SHARES YOU OWN
Please indicate your voting instructions on the enclosed proxy card, sign
and date the card, and return it in the envelope provided. IF YOU SIGN, DATE AND
RETURN THE PROXY CARD BUT GIVE NO VOTING INSTRUCTIONS, YOUR SHARES WILL BE VOTED
"FOR" THE PROPOSALS NOTICED ABOVE. In order to avoid the additional expense of
further solicitation, we ask your cooperation in mailing in your proxy card(s)
promptly. As an alternative to using the paper proxy card(s) to vote, you may
vote by telephone, through the Internet, by facsimile machine or in person. To
vote by telephone, please call 1-800-690-6903. Shares that are registered in
your name, as well as shares held in "street name" through a broker, may be
voted via the Internet or by telephone. To vote in this manner, you will need
the 12-digit "control" number that appears on your proxy card(s). To vote via
the Internet, please access http://www.proxyvote.com on the World Wide Web. In
addition, shares that are registered in your name may be voted by faxing your
completed proxy card(s) to 1-800-733-1885. If we do not receive your completed
proxy card(s) after several weeks, you may be contacted by our proxy solicitor,
Shareholder Communications Corporation. Our proxy solicitor will remind you to
vote your shares or will record your vote over the phone if you choose to vote
in that manner.
Unless proxy card(s) submitted by corporations and partnerships are signed
by the appropriate persons as indicated in the voting instructions on the proxy
card, they will not be voted.
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INVESCO LATIN AMERICAN GROWTH FUND
INVESCO REALTY FUND
INVESCO S&P 500 INDEX FUND (CLASSES I & II)
INVESCO WORLDWIDE CAPITAL GOODS FUND
INVESCO WORLDWIDE COMMUNICATIONS FUND
(EACH A SERIES OF INVESCO SPECIALTY FUNDS, INC.)
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7800 EAST UNION AVENUE
DENVER, COLORADO 80237
(TOLL FREE) 1-800-646-8372
PROXY STATEMENT
SPECIAL MEETING OF SHAREHOLDERS
MAY 20, 1999
VOTING INFORMATION
This Proxy Statement is being furnished to shareholders of INVESCO Latin
American Growth Fund ("LAG Fund"), INVESCO Realty Fund ("Realty Fund"), INVESCO
S&P 500 Index Fund (Classes I & II) ("S&P 500 Index Fund"), INVESCO Worldwide
Capital Goods Fund ("WCG Fund"), and INVESCO Worldwide Communications Fund
("Worldwide Communications Fund") (each, a "Fund" and collectively, the
"Funds"), each a series of INVESCO Specialty Funds, Inc. ("Specialty Funds"), in
connection with the solicitation of proxies from shareholders of the Funds by
the board of directors of Specialty Funds (the "Board") for use at a special
meeting of shareholders to be held on May 20, 1999 (the "Meeting"), and at any
adjournment of the Meeting. This Proxy Statement will first be mailed to
shareholders on or about March 23, 1999.
For each Fund, one-third of that Fund's shares outstanding on March 12,
1999 (the "Record Date"), represented in person or by proxy, shall constitute a
quorum and must be present for the transaction of business at the Meeting. If a
quorum is not present at the Meeting or a quorum is present but sufficient votes
to approve one or more of the proposals set forth in this Proxy Statement are
not received, the persons named as proxies may propose one or more adjournments
of the Meeting to permit further solicitation of proxies. Any such adjournment
will require the affirmative vote of a majority of those shares represented at
the Meeting in person or by proxy. The persons named as proxies will vote those
proxies that they are entitled to vote FOR any proposal in favor of such an
adjournment and will vote those proxies required to be voted AGAINST that
proposal against such adjournment. A shareholder vote may be taken on one or
more of the proposals in this Proxy Statement prior to any such adjournment if a
quorum is present with respect to each proposal, sufficient votes have been
received and it is otherwise appropriate.
Broker non-votes are shares held in street name for which the broker
indicates that instructions have not been received from the beneficial owners or
other persons entitled to vote and for which the broker does not have
discretionary voting authority. Abstentions and broker non-votes will be counted
as shares present for
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purposes of determining whether a quorum is present but will not be voted for or
against any adjournment or proposal. Accordingly, abstentions and broker
non-votes effectively will be a vote against adjournment or against any proposal
where the required vote is a percentage of the shares present or outstanding.
Abstentions and broker non-votes will not be counted, however, as votes cast for
purposes of determining whether sufficient votes have been received to approve a
proposal.
The individuals named as proxies on the enclosed proxy card will vote in
accordance with your directions as indicated on that proxy card, if it is
received properly executed by you or by your duly appointed agent or
attorney-in-fact. If you sign, date and return the proxy card, but give no
voting instructions, your shares will be voted in favor of approval of each of
the proposals and the duly appointed proxies may, in their discretion, vote upon
such other matters as may come before the Meeting. The proxy card may be revoked
by giving another proxy or by letter or telegram revoking the initial proxy. To
be effective, revocation must be received by Specialty Funds prior to the
Meeting and must indicate your name and account number. If you attend the
Meeting in person you may, if you wish, vote by ballot at the Meeting, thereby
canceling any proxy previously given.
In order to reduce costs, the notices to a shareholder having more than one
account in a Fund listed under the same Social Security number at a single
address have been combined. The proxy cards have been coded so that a
shareholder's votes will be counted for each such account.
As of the Record Date, each Fund had the following amount of shares of
common stock outstanding: LAG Fund -- 2,464,843.357 shares; Realty
Fund -- 2,291,264.648 shares; S&P 500 Index Fund (Class I) -- 274,332.082 and
(Class II) -- 3,558,487.309 shares; WCA Fund -- 698,842.926 shares; and
Worldwide Communications Fund -- 20,076,469.558 shares. The solicitation of
proxies, the cost of which will be borne half by INVESCO Funds Group, Inc.
("INVESCO"), the investment adviser and transfer agent of the Funds, and half by
the Funds, will be made primarily by mail but also may be made by telephone or
oral communications by representatives of INVESCO and INVESCO Distributors, Inc.
("IDI"), the distributor of the INVESCO group of investment companies ("INVESCO
Funds"), none of whom will receive any compensation for these activities from
the Funds, or by Shareholder Communications Corporation professional proxy
solicitors, which will be paid fees and expenses of up to approximately $24,000
for soliciting services. If votes are recorded by telephone, Shareholder
Communications Corporation will use procedures designed to authenticate
shareholders' identities, to allow shareholders to authorize the voting of their
shares in accordance with their instructions, and to confirm that a
shareholder's instructions have been properly recorded. You may also vote by
mail, by facsimile or through a secure Internet site. Proxies voted by
telephone, facsimile or Internet may be revoked at any time before they are
voted in the same manner that proxies voted by mail may be revoked.
COPIES OF THE SPECIALTY FUNDS' MOST RECENT ANNUAL AND SEMI-ANNUAL REPORTS,
INCLUDING FINANCIAL STATEMENTS, HAVE PREVIOUSLY BEEN DELIVERED TO SHAREHOLDERS.
SHAREHOLDERS MAY REQUEST COPIES OF THESE REPORTS, WITHOUT CHARGE, BY WRITING TO
INVESCO DISTRIBUTORS, INC., P.O. BOX 173706, DENVER, COLORADO 80217-3706, OR BY
CALLING TOLL-FREE 1-800-646-8372.
Except as set forth in Appendix A, INVESCO does not know of any person who
owns beneficially 5% or more of the shares of any Fund. Directors and officers
of Specialty Funds own in the aggregate less than 1% of the shares of each Fund.
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VOTE REQUIRED. Approval of Proposals 1, 2 and 3 with respect to LAG Fund,
Realty Fund, Worldwide Communications Fund and S&P 500 Index Fund requires the
affirmative vote of a majority of the outstanding securities of the respective
Fund. Approval of Proposal 4 with respect to WCG Fund, and approval of Proposal
5 with respect to each Fund, requires the affirmative vote of a "majority of the
outstanding voting securities" of that Fund, as defined in the Investment
Company Act of 1940, as amended (the "1940 Act"). This means that for each Fund,
Proposals 1, 2, 3, 4 and 5 must be approved by the lesser of: (i) 67% of that
Fund's shares present at a meeting of shareholders if the owners of more than
50% of that Fund's shares then outstanding are present in person or by proxy; or
(ii) more than 50% of that Fund's outstanding shares. Approval of Proposal 6
requires the affirmative vote of a plurality of all the outstanding shares of
the Fund cast at the Meeting, in person or by proxy, and at concurrent Meetings
of shareholders of INVESCO Asian Growth Fund and INVESCO European Small Company
Fund. Approval of Proposal 7 with respect to each Fund requires the affirmative
vote of a majority of the votes present at the Meeting, provided a quorum is
present. Each outstanding full share of each Fund is entitled to one vote, and
each outstanding fractional share thereof is entitled to a proportionate
fractional share of one vote. If any Proposal is not approved by the requisite
vote of shareholders of a Fund or the Funds, the persons named as proxies may
propose one or more adjournments of the Meeting to permit further solicitation
of proxies.
PROPOSAL 1: TO APPROVE AN AGREEMENT AND PLAN OF CONVERSION AND TERMINATION
PROVIDING FOR THE CONVERSION OF LAG FUND (LATIN AMERICAN GROWTH FUND) FROM A
SEPARATE SERIES OF SPECIALTY FUNDS TO A SEPARATE SERIES OF INVESCO INTERNATIONAL
FUNDS, INC. ("INTERNATIONAL FUNDS").
LAG Fund is presently organized as a series of the Specialty Funds. The
Board, including a majority of its directors who are not "interested persons,"
as that term is defined in the 1940 Act (the "Independent Directors"), has
approved an Agreement and Plan of Conversion and Termination for LAG Fund (the
"LAG Fund Conversion Plan") in the form attached to this Proxy Statement as
Appendix B. The LAG Fund Conversion Plan provides for the conversion of LAG Fund
from a separate series of the Specialty Funds, a Maryland corporation, to a
newly established separate series (the "LAG New Series") of International Funds,
also a Maryland corporation (the "LAG Fund Conversion"). THE PROPOSED LAG FUND
CONVERSION WILL HAVE NO MATERIAL EFFECT ON THE SHAREHOLDERS, OFFICERS,
OPERATIONS OR MANAGEMENT OF LAG FUND.
The LAG New Series, which has not yet commenced business operations and was
established for the purpose of effecting the LAG Fund Conversion, will carry on
the business of LAG Fund following that conversion and will have an investment
objective, policies and restrictions identical to those of LAG Fund. The
investment objective, policies and restrictions of LAG Fund will not change
except as approved by its shareholders as described in Proposal 5 of this Proxy
Statement. Since both Specialty Funds and International Funds are Maryland
corporations organized under substantially similar Articles of Incorporation,
the rights of security holders of LAG Fund under state law and its governing
documents are expected to remain unchanged after the LAG Fund Conversion.
Shareholder voting rights under both Specialty Funds and International Funds are
currently based on the number of shares owned by such shareholder. The same
individuals serve as directors of both Specialty Funds and International Funds.
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INVESCO, the investment advisor to LAG Fund, will be responsible for
providing the LAG New Series with various administrative services and
supervising the daily business affairs of the LAG Fund New Series, subject to
the supervision of the board of directors of International Funds, under
management contracts substantially similar to the contracts in effect between
INVESCO and LAG Fund immediately prior to the proposed LAG Fund Conversion. The
distribution agent for the Fund, IDI, will distribute shares of the LAG New
Series under General Distribution Agreements substantially similar to the
contracts in effect between IDI and the LAG Fund immediately prior to the
proposed Conversion.
REASONS FOR THE PROPOSED CONVERSION
The Board unanimously recommends conversion of LAG Fund to a separate
series of International Funds (i.e., to LAG New Series). This proposed
conversion is part of an overall plan that involves the conversion of other
INVESCO Funds as well. The goal of the conversions is to combine similar types
of funds into a single corporate entity. Ultimately, if all of the conversions
are approved, the INVESCO Funds will be organized into a group of core
companies, with one core company for each major fund type -- for example, all
INVESCO Funds that invest internationally will be series of one core company,
all INVESCO Funds that invest solely in debt securities will be series of one
core company, and all INVESCO Funds that invest in equity securities of domestic
issuers will be series of one core company. Moving LAG Fund from Specialty Funds
to International Funds will also consolidate and streamline the production and
mailing of certain financial reports and legal documents, reducing the expenses
of LAG Fund. Ultimately, it is expected that all INVESCO Funds that invest
primarily in equity securities of international issuers will become series of
International Funds. THE PROPOSED LAG FUND CONVERSION WILL HAVE NO MATERIAL
EFFECT ON THE SHAREHOLDERS, OFFICERS, OPERATIONS OR MANAGEMENT OF LAG FUND.
The proposal to present the Conversion Plan to shareholders was approved by
the Board, including all of its Independent Directors, on February 3, 1999. The
Board recommends that shareholders of LAG Fund vote FOR the approval of the LAG
Fund Conversion Plan. Such a vote encompasses approval of both: (i) the
conversion of LAG Fund to a separate series of International Funds; and (ii) a
temporary waiver of certain investment limitations of the LAG Fund, to permit
LAG Fund Conversion (see "Temporary Waiver of Investment Restrictions," below).
If shareholders of LAG Fund do not approve the LAG Fund Conversion Plan, set
forth herein, LAG Fund will continue to operate as a series of Specialty Funds.
SUMMARY OF THE CONVERSION PLAN
The following discussion summarizes the important terms of the LAG Fund
Conversion Plan. This summary is qualified in its entirety by reference to the
LAG Conversion Plan itself, which is attached as Appendix B to this Proxy
Statement.
If the LAG Fund Conversion Plan is approved by shareholders of LAG Fund,
then on June 1, 1999, or such later date as to which Specialty Funds and
International Funds agree (the "Closing Date"), LAG Fund will transfer all of
its assets to the LAG New Series in exchange solely for shares thereof ("LAG New
Series Shares") equal to the number of LAG Fund shares, outstanding on the
Closing Date ("LAG Fund Shares") and the assumption by the LAG New Series of all
of the liabilities of the LAG Fund. Immediately thereafter, LAG Fund will
constructively distribute to each LAG Fund shareholder one LAG New Series Share
for each LAG Fund Share held by the shareholder on the Closing Date, by class,
in liquidation of the LAG Fund Shares. As soon as is practicable after this
distribution of LAG New Series Shares, LAG Fund
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will be terminated as a series of Specialty Funds and will be wound up and
liquidated. UPON COMPLETION OF THE LAG FUND CONVERSION, EACH LAG FUND
SHAREHOLDER WILL OWN FULL AND FRACTIONAL LAG NEW SERIES SHARES EQUAL IN NUMBER,
DENOMINATION AND AGGREGATE NET ASSET VALUE TO, AND OF THE SAME CLASS AS, HIS OR
HER LAG FUND SHARES.
The Conversion Plan obligates International Funds to enter into: (i) a
Management Contract with INVESCO with respect to the LAG New Series (the "New
Management Contract"); (ii) a Sub-Advisory Agreement between INVESCO and INVESCO
Asset Management Limited ("IAML") with respect to the New Series (the "New
Sub-Advisory Agreement"); and (iii) a Distribution and Service Plan under Rule
12b-1 (the "New 12b-1 Plan") with respect to the LAG New Series (collectively,
the "New Agreements"). Approval of the LAG Fund Conversion Plan by shareholders
of LAG Fund will authorize Specialty Funds (which will be issued a single share
of LAG New Series on a temporary basis) to approve the New Agreements with
respect to LAG Fund as the sole initial shareholder of the LAG New Series. Each
New Agreement will be identical to the corresponding contract or plan in effect
with respect to LAG Fund immediately prior to the Closing Date.
The New Agreements will take effect on the Closing Date, and each will
continue in effect until May 15, 2000. Thereafter, the New Management Contract
will continue in effect only if its continuance is approved at least annually:
(i) by the vote of a majority of Independent Directors cast in person at a
meeting called for the purpose of voting on such approval; and (ii) by the vote
of a majority of International Funds' directors or a majority of the outstanding
voting shares of the LAG New Series. The New Sub-Advisory Agreement will
continue in effect only if approved annually by a vote of International Funds'
Independent Directors, cast in person at a meeting called for that purpose. The
New 12b-1 Plan will continue in effect only if approved annually by a vote of
International Funds' Independent Directors, cast in person at a meeting called
for that purpose. The New Management Contract will be terminable without penalty
on sixty days' written notice by either International Funds or INVESCO and will
terminate automatically in the event of its assignment. The New 12b-1 Plan will
be terminable at any time without penalty by a vote of a majority of
International Funds' Independent Directors or a majority of the outstanding
voting shares of the LAG New Series.
The board of directors of International Funds will hold office without
limit in time except that: (i) any director may resign; and (ii) a director may
be removed at any special meeting of the International Funds shareholders at
which a quorum is present by the affirmative vote of a majority of the
outstanding voting shares of International Funds. In case a vacancy shall for
any reason exist, a majority of the remaining directors, though less than a
quorum, will vote to fill such vacancy by appointing another director, so long
as, immediately after such appointment, at least two-thirds of the directors
have been elected by shareholders. If, at any time, less than a majority of the
directors holding office have been elected by shareholders, the directors then
in office will promptly call a shareholders' meeting for the purpose of electing
a board of directors. Otherwise, there need normally be no meetings of
shareholders for the purpose of electing directors.
Assuming the Conversion Plan is approved, it is currently contemplated that
the Conversion will become effective on the Closing Date. However, the LAG Fund
Conversion may become effective at such other date as to which Specialty Funds
and International Funds may agree in writing.
The obligations of Specialty Funds and International Funds under the LAG
Fund Conversion Plan are subject to various conditions as stated therein.
Notwithstanding the approval of the Conversion Plan by shareholders, it may be
terminated or amended at any time prior to the Closing Date by action of the
directors
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of Specialty Funds to provide against unforeseen events, if: (i) there is a
material breach by the other party of any representation, warranty, or agreement
contained in the plan to be performed at or prior to the Closing Date; or (ii)
it reasonably appears that the other party will not or cannot meet a condition
of the plan. Either Specialty Funds or International Funds may at any time waive
compliance with any of the covenants and conditions contained in, or may amend,
the LAG Fund Conversion Plan, provided that the waiver or amendment does not
materially adversely affect the interests of LAG Fund's shareholders.
CONTINUATION OF FUND SHAREHOLDER ACCOUNTS
International Funds' transfer agent will establish accounts for the LAG New
Series shareholders containing the appropriate number and denominations of LAG
New Series Shares to be received by each shareholder under the LAG Fund
Conversion Plan. Such accounts will be identical in all material respects to the
accounts currently maintained by Specialty Funds' transfer agent for
shareholders.
EXPENSES
The expenses of the Conversion, estimated at $1,500 in the aggregate, will
be borne half by INVESCO and half by the LAG Fund and the LAG New Series.
TEMPORARY WAIVER OF INVESTMENT RESTRICTIONS
Certain fundamental investment restrictions of LAG Fund, which prohibit it
from acquiring more than a stated percentage of ownership of another company,
might be construed as restricting its ability to carry out the LAG Fund
Conversion. By approving the LAG Fund Conversion Plan, shareholders will be
agreeing to waive, only for the purpose thereof, those fundamental investment
restrictions that could prohibit or otherwise impede the transaction.
TAX CONSEQUENCES OF THE CONVERSION
Both Specialty Funds and International Funds will receive an opinion from
their counsel, Kirkpatrick & Lockhart LLP, that the Conversion will constitute a
tax-free reorganization within the meaning of section 368(a)(1)(F) of the
Internal Revenue Code of 1986, as amended ("the Code"). Accordingly, neither LAG
Fund, the LAG New Series, nor the shareholders of LAG Fund will recognize gain
or loss for federal income tax purposes upon: (i) the transfer of LAG Fund's
assets in exchange solely for LAG New Series Shares and the LAG New Series'
assumption of LAG Fund's liabilities; or (ii) the distribution of those shares
to the LAG Fund's shareholders in liquidation of their LAG Fund Shares. The
opinion will further provide, among other things, that: (1) a LAG Fund
shareholder's aggregate basis for federal income tax purposes of the LAG New
Series Shares to be received by the shareholder in the LAG Fund Conversion will
be the same as the aggregate basis of his or her LAG Fund shares to be
constructively surrendered in exchange for those LAG New Series Shares; and (2)
a LAG Fund shareholder's holding period for his or her LAG New Series Shares
will include the shareholder's holding period for his or her LAG Fund Shares,
provided that those LAG Fund Shares were held as capital assets at the time of
the LAG Fund Conversion.
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CONCLUSION
The Board has concluded that the proposed LAG Fund Conversion Plan is in
the best interests of the shareholders of LAG Fund. A vote in favor of the LAG
Fund Conversion Plan encompasses: (i) approval of the conversion of LAG Fund to
LAG New Series; (ii) approval of the temporary waiver of certain investment
limitations of LAG Fund to permit the LAG Fund Conversion (see "Temporary Waiver
of Investment Restrictions," above); and (iii) authorization of Stock Funds, as
the sole initial shareholder of the LAG New Series, to approve: (a) a Management
Contract with respect to the LAG New Series between International Funds and
INVESCO; (b) a Sub-Advisory Agreement with respect to the New Series between
INVESCO and IAML; and (c) the Distribution and Service Plan under Rule 12b-1
with respect to the LAG New Series. Each of these New Agreements is virtually
identical to the corresponding contract or plan in effect with respect to LAG
Fund immediately prior to the Closing Date. If approved, the Conversion Plan
will take effect on the Closing Date. If the LAG Fund Conversion Plan is not
approved, LAG Fund will continue to operate as a series of Specialty Funds.
Otherwise, LAG Fund will be reorganized consistent with shareholder approval.
REQUIRED VOTE. Approval of the LAG Fund Conversion Plan requires the
affirmative vote of a majority of the outstanding securities of the Fund.
THE BOARD UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS OF LAG
FUND VOTE "FOR" PROPOSAL 1.
PROPOSAL 2: TO APPROVE AN AGREEMENT AND PLAN OF CONVERSION AND TERMINATION
PROVIDING FOR THE CONVERSION OF EACH OF REALTY FUND AND WORLDWIDE COMMUNICATIONS
FUND FROM SEPARATE SERIES OF SPECIALTY FUNDS TO SEPARATE SERIES OF INVESCO
SECTOR FUNDS INC. ("SECTOR FUNDS").
Realty Fund and Worldwide Communications Fund are presently organized as
separate series of Specialty Funds. The Independent Directors of either
Specialty Funds or INVESCO have approved an Agreement and Plan of Conversion and
Termination for Realty Fund (the "Realty Fund Conversion Plan") and an Agreement
and Plan of Conversion and Termination for Worldwide Communications Fund (the
"Worldwide Communications Fund Conversion Plan" and, together with the Realty
Fund Conversion Plan the "Conversion Plans") in the forms attached to this Proxy
Statement as Appendices C and D, respectively. The Realty Fund Conversion Plan
provides for the conversion of Realty Fund from a separate series of Specialty
Funds, a Maryland corporation, to a newly established separate series (the
"Realty New Series") of Sector Funds, also a Maryland corporation (the "Realty
Fund Conversion"). The Worldwide Communications Fund Conversion Plan provides
for the conversion of Worldwide Communications Fund from a separate series of
Specialty Funds to a newly established separate series (the "Worldwide
Communications New Series") of Sector Funds (the "Worldwide Communications Fund
Conversion" and, together with the Realty Fund Conversion, the "Conversions").
THE PROPOSED CONVERSIONS WILL HAVE NO MATERIAL EFFECT ON THE SHAREHOLDERS,
OFFICERS, OPERATIONS OR MANAGEMENT OF EITHER FUND.
The Realty New Series and Worldwide Communications New Series (each a "New
Series" and collectively, the "New Series"), neither of which has yet commenced
business operations and each of which was established for the purpose of
effecting the Realty Fund Conversion and Worldwide Communications
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Fund Conversion, respectively, will carry on the business of Realty Fund and
Worldwide Communications Fund, respectively, following the Conversions and will
have investment objectives, policies and restrictions identical to those of the
Realty Fund and Worldwide Communications Fund. The investment objective,
policies and restrictions of each Fund will not change except as approved by the
shareholders of each Fund as described in Proposal 5 of this Proxy Statement.
(As used in the discussion of this Proposal 2, "Fund" refers only to Realty Fund
and Worldwide Communications Fund.) Since both Specialty Funds and Sector Funds
are Maryland corporations organized under substantially similar Articles of
Incorporation, the rights of shareholders of each Fund under state law and its
governing documents are expected to remain unchanged after the Conversions.
Shareholder voting rights under both Specialty Funds and Sector Funds are
currently based on the number of shares owned by such shareholder. The same
individuals serve as directors of both Specialty Funds and Sector Funds.
INVESCO, the investment advisor to the Funds, will be responsible for
providing the New Series with various administrative services and supervising
the daily business affairs of the New Series, subject to the supervision of the
board of directors of Sector Funds, under management contracts substantially
similar to the contracts in effect between INVESCO and each Fund immediately
prior to the proposed Conversions. The distribution agent for the Funds, IDI,
will distribute shares of each New Series under General Distribution Agreements
substantially similar to the contracts in effect between IDI and each Fund
immediately prior to the proposed Conversions.
REASONS FOR THE PROPOSED CONVERSIONS
The Board unanimously recommends conversion of each Fund to a separate
series of Sector Funds (i.e., the respective New Series). These proposed
conversions are part of an overall plan that involves the conversion of other
INVESCO Funds as well. The goal of the conversions is to combine similar types
of funds into a single corporate entity. Ultimately, if all of the conversions
are approved, the INVESCO Funds will be organized into a group of core
companies, with one core company for each major fund type -- for example, all
INVESCO Funds that invest internationally will be series of one core company,
all INVESCO Funds that invest solely in debt securities will be series of one
core company, and all INVESCO Funds that invest in equity securities of domestic
issuers will be series of one core company. Moving each Fund from Specialty
Funds to Sector Funds will also consolidate and streamline the production and
mailing of certain financial reports and legal documents, reducing the expenses
of each Fund. Ultimately, it is expected that all INVESCO Funds that invest
primarily in securities of issuers in a single sector of the economy will become
series of Sector Funds. THE PROPOSED CONVERSIONS WILL HAVE NO MATERIAL EFFECT ON
THE SHAREHOLDERS, OFFICERS, OPERATIONS OR MANAGEMENT OF EITHER FUND.
The proposal to present the Conversion Plans to shareholders was approved
by the Board, including all of its Independent Directors, on August 5, 1998. The
Board recommends that shareholders of Realty Fund vote FOR the approval of
Realty Fund Conversion Plan and that shareholders of Worldwide Communications
Fund vote FOR the approval of Worldwide Communications Fund Conversion Plan.
With respect to each Fund, such a vote encompasses approval of both: (i) the
conversion of the Fund to a separate series of Sector Fund; and (ii) a temporary
waiver of certain investment limitations of the Fund, to permit the applicable
Conversion, (see "Temporary Waiver of Investment Restrictions," below). If
shareholders of Realty Fund or Worldwide Communications Fund do not approve the
applicable Conversion Plan set forth herein, that Fund will continue to operate
as a series of Specialty Funds.
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SUMMARY OF THE CONVERSION PLANS
The Conversion Plans are substantially similar for both Funds. Accordingly,
unless otherwise indicated, the following discussion is applicable to each
Conversion Plan. The following discussion summarizes the important terms of the
Conversion Plans. This summary is qualified in its entirety by reference to the
Conversion Plans themselves, which are attached as Appendices C and D, to this
Proxy Statement.
If the Realty Fund Conversion Plan is approved by shareholders of Realty
Fund, on the Closing Date, Realty Fund will transfer all of its assets to the
Realty New Series in exchange solely for shares thereof ("Realty New Series
Shares") equal to the number of Realty Fund shares outstanding on the Closing
Date ("Realty Fund Shares") and the assumption by the Realty New Series of all
of the liabilities of Realty Fund. Immediately thereafter, Realty Fund will
constructively distribute to each Realty Fund shareholder one Realty New Series
Share for each Fund Share held by the shareholder on the Closing Date, in
liquidation of the Realty Fund Shares. As soon as is practicable after this
distribution of Realty New Series Shares, Realty Fund will be terminated as a
series of Specialty Funds and will be wound up and liquidated. UPON COMPLETION
OF THE REALTY FUND CONVERSION, EACH REALTY FUND SHAREHOLDER WILL OWN FULL AND
FRACTIONAL REALTY NEW SERIES SHARES EQUAL IN NUMBER AND AGGREGATE NET ASSET
VALUE TO HIS OR HER REALTY FUND SHARES.
If the Worldwide Communications Fund Conversion Plan is approved by
shareholders of Worldwide Communications Fund, then on the Closing Date,
Worldwide Communications Fund will transfer all of its assets to Worldwide
Communications New Series in exchange solely for shares thereof ("Worldwide
Communications New Series Shares" and together with the Realty New Series
Shares, the "New Series Shares") equal to the number of Worldwide Communications
Fund shares outstanding on the Closing Date ("Worldwide Communications Fund
Shares") and the assumption by the Worldwide Communications New Series of all of
the liabilities of Worldwide Communications Fund. Immediately thereafter,
Worldwide Communications Fund will constructively distribute to each Worldwide
Communications Fund shareholder one Worldwide Communications New Series Share
for each Worldwide Communications Fund share held by the shareholder on the
Closing Date, in liquidation of the Worldwide Communications Fund Shares. As
soon as is practicable after this distribution of Worldwide Communications New
Series Shares, Worldwide Communications Fund will be terminated as a series of
Specialty Funds and will be wound up and liquidated. UPON COMPLETION OF THE
WORLDWIDE COMMUNICATIONS FUND CONVERSION, EACH WORLDWIDE COMMUNICATIONS FUND
SHAREHOLDER WILL OWN FULL AND FRACTIONAL WORLDWIDE COMMUNICATIONS NEW SERIES
SHARES EQUAL IN NUMBER AND AGGREGATE NET ASSET VALUE TO HIS OR HER WORLDWIDE
COMMUNICATIONS FUND SHARES.
The Conversion Plans obligate Sector Funds to enter into: (i) a Management
Contract with INVESCO with respect to each New Series (the "New Management
Contracts"); (ii) a Sub-Adviser Agreement between INVESCO and INVESCO Realty
Advisors Inc. ("IRAI") with respect to the Realty Fund New Series (the "New
Sub-Advisory Agreement"); and (iii) a Distribution and Service Plan under Rule
12b-1 promulgated under the 1940 Act ("Rule 12b-1") (the "New 12b-1 Plans") with
respect to each New Series (collectively, the "New Agreements"). Approval of a
Conversion Plan by shareholders of a Fund will authorize Specialty Funds (which
will be issued a single share of each New Series on a temporary basis) to
approve the New Agreements with respect to the New Series into which that Fund
is converting as the sole initial shareholder of that New Series. Each New
Agreement will be identical to the corresponding contract or plan in effect with
respect to a Fund immediately prior to the Closing Date.
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The New Agreements will take effect on the Closing Date, and each will
continue in effect until May 15, 2000. Thereafter, a New Management Contract
will continue in effect only if its continuance is approved at least annually:
(i) by the vote of a majority of Sector Funds' Independent Directors cast in
person at a meeting called for the purpose of voting on such approval; and (ii)
by the vote of a majority of Sector Funds' directors or a majority of the
outstanding voting shares of the affected New Series. The New Sub-Advisory
Agreement will continue in effect only if approved annually by a vote of Sector
Funds' Independent Directors, cast in person at a meeting called for that
purpose. A New 12b-1 Plan will continue in effect only if approved annually by a
vote of Sector Funds' Independent Directors, cast in person at a meeting called
for that purpose. A New Management Contract will be terminable without penalty
on sixty days' written notice either by Sector Funds or INVESCO and will
terminate automatically in the event of its assignment. A New 12b-1 Plan will be
terminable at any time without penalty by a vote of a majority of Sector Funds'
Independent Directors or a majority of the outstanding voting shares of the
affected New Series.
The board of directors of Sector Funds will hold office without limit in
time except that: (i) any director may resign; and (ii) a director may be
removed at any special meeting of the Sector Funds shareholders at which a
quorum is present by the affirmative vote of a majority of the outstanding
voting shares of Sector Funds. In case a vacancy shall for any reason exist, a
majority of the remaining directors, though less than a quorum, will vote to
fill such vacancy by appointing another director, so long as, immediately after
such appointment, at least two-thirds of the directors have been elected by
shareholders. If, at any time, less than a majority of the directors holding
office have been elected by shareholders, the directors then in office will
promptly call a shareholders' meeting for the purpose of electing a board of
directors. Otherwise, there need normally be no meetings of shareholders for the
purpose of electing directors.
Assuming the Conversion Plans are approved, it is currently contemplated
that the Conversions will become effective on the Closing Date. However, either
Conversion may become effective at such other date as to which Specialty Funds
and Sector Funds may agree in writing. Neither Conversion is conditioned on the
occurrence of the other Conversion.
The obligations of Specialty Funds and Sector Funds under the Conversion
Plans are subject to various conditions as stated therein. Notwithstanding the
approval of a Conversion Plan by shareholders, it may be terminated or amended
at any time prior to the Closing Date by action of the directors of Specialty
Funds to provide against unforeseen events, if: (i) there is a material breach
by the other party of any representation, warranty, or agreement contained in
the Conversion Plan to be performed at or prior to the Closing Date; or (ii) it
reasonably appears that the other party will not or cannot meet a condition of
the Conversion Plan. Either Specialty Funds or Sector Funds may at any time
waive compliance with any of the covenants and conditions contained in, or may
amend, either Conversion Plan, provided that the waiver or amendment does not
materially adversely affect the interests of Fund shareholders.
CONTINUATION OF FUND SHAREHOLDER ACCOUNTS
Sector Funds transfer agent will establish accounts for the New Series
shareholders containing the appropriate number of New Series Shares to be
received by each shareholder under the Conversion Plans. Such accounts will be
identical in all material respects to the accounts currently maintained by
Specialty Funds' transfer agent for shareholders.
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EXPENSES
For the Realty Fund Conversion, the expenses of the Conversion, estimated
at $1,400 in the aggregate, will be borne half by INVESCO and half by Realty
Fund and the Realty Fund New Series.
For the Worldwide Communications Fund Conversion, the expenses of the
Conversion, estimated at $24,200 in the aggregate, will be borne half by INVESCO
and half by Worldwide Communications Fund and the Worldwide Communications Fund
New Series.
TEMPORARY WAIVER OF INVESTMENT RESTRICTIONS
Certain fundamental investment restrictions of each Fund, which prohibit
that Fund from acquiring more than a stated percentage of ownership of another
company, might be construed as restricting that Fund's ability to carry out its
Conversion. By approving a Conversion Plan, shareholders will be agreeing to
waive, only for the purpose of that Conversion Plan, those fundamental
investment restrictions that could prohibit or otherwise impede the transaction.
TAX CONSEQUENCES OF THE CONVERSIONS
Both Specialty Funds and Sector Funds will receive an opinion from their
counsel, Kirkpatrick & Lockhart LLP, that the Conversions will constitute
tax-free reorganizations within the meaning of section 368(a)(1)(F) of the Code.
Accordingly, neither Fund New Series and neither Fund's shareholders will
recognize any gain or loss for federal income tax purposes, upon: (i) the
transfer of a Fund's assets in exchange solely for the applicable New Series
Shares and the assumption by that New Series of the Fund's liabilities; or (ii)
the distribution of those New Series to the Fund's shareholders in liquidation
of their Realty Fund Shares or Worldwide Communications Fund Shares, as
applicable. The opinion will further provide, among other things, that: (1) a
Fund shareholder's aggregate basis for federal income tax purposes of New Series
Shares to be received by the shareholder in a Conversion will be the same as the
aggregate basis of his or her Fund shares to be constructively surrendered in
exchange for those New Series Shares and; (2) a Fund shareholder's holding
period for his or her New Series Shares will include the shareholder's holding
period for his or her Fund shares provided that those Fund Shares were held as
capital assets at the time of the applicable Conversion.
CONCLUSION
The Board has concluded that the proposed Conversion Plans are in the best
interests of the shareholders of the respective Funds. A vote in favor of a
Conversion Plan, encompasses: (i) approval of the conversion of the affected
Fund to the applicable New Series; (ii) approval of the temporary waiver of
certain investment limitations of the Fund to permit the Conversion (see
"Temporary Waiver of Investment Restrictions," above); and (iii) authorization
of Sector Funds, as the sole initial shareholder of that New Series, to approve:
(a) a Management Contract with respect to the New Series between Sector Funds
and INVESCO; (b) a Sub-Advisory Agreement with respect to the New Series between
INVESCO and IRAI, and (c) a Distribution and Service Plan under Rule 12b-1 with
respect to these New Series. Each of the New Agreements is virtually identical
to the corresponding contract or plan in effect with the Funds immediately prior
to the Closing Date. If approved, the Conversion Plans will take effect on the
Closing Date. If a
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Conversion Plan is not approved, the affected Fund will continue to operate as a
series of Specialty Funds. Otherwise, that Fund will be reorganized consistent
with shareholder approval.
Required Vote. Approval of Proposal 2 with respect to each Fund requires
the affirmative vote of a majority of the outstanding securities of that Fund.
THE BOARD UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS
OF REALTY FUND AND WORLDWIDE COMMUNICATIONS FUND
VOTE "FOR" PROPOSAL 2.
PROPOSAL 3: TO APPROVE AN AGREEMENT AND PLAN OF CONVERSION AND TERMINATION
PROVIDING FOR THE CONVERSION OF S&P 500 INDEX FUND FROM A SEPARATE SERIES OF
SPECIALTY FUNDS TO A SEPARATE SERIES OF INVESCO STOCK FUNDS, INC. ("STOCK
FUNDS").
S&P 500 Index Fund is presently organized as a series of the Specialty
Funds. The Board, including a majority of its Independent Directors, has
approved an Agreement and Plan of Conversion and Termination for S&P 500 Index
Fund (the "S&P 500 Index Fund Conversion Plan") in the form attached to this
Proxy Statement as Appendix E. The S&P 500 Index Fund Conversion Plan provides
for the conversion of S&P 500 Index Fund from a separate series of Specialty
Funds, a Maryland corporation, to a newly established separate series (the "S&P
500 Index New Series") of Stock Funds, also a Maryland corporation (the "S&P 500
Index Fund Conversion"). THE PROPOSED S&P 500 INDEX FUND CONVERSION WILL HAVE NO
MATERIAL EFFECT ON THE SHAREHOLDERS, OFFICERS, OPERATIONS OR MANAGEMENT OF S&P
500 INDEX FUND.
The S&P 500 Index New Series, which has not yet commenced business
operations and was established for the purpose of effecting the S&P 500 Index
Fund Conversion, will carry on the business of S&P 500 Index Fund following that
conversion and will have an investment objective, policies and restrictions
identical to those of S&P 500 Index Fund. The investment objective, policies and
restrictions of S&P 500 Index Fund will not change except as approved by its
shareholders as described in Proposal 5 of this Proxy Statement. Since both
Specialty Funds and Stock Funds are Maryland corporations organized under
substantially similar Articles of Incorporation, the rights of security holders
of S&P 500 Index Fund under state law and its governing documents are expected
to remain unchanged after the S&P Index 500 Fund Conversion. Shareholder voting
rights under both Specialty Funds and Stock Funds are currently based on the
number of shares owned by such shareholder. The same individuals serve as
directors of both Specialty Funds and Stock Funds.
INVESCO, the investment advisor to S&P 500 Index Fund, will be responsible
for providing the S&P 500 Index New Series with various administrative services
and supervising the daily business affairs of the S&P 500 Index Fund New Series,
subject to the supervision of the board of directors of Stock Funds, under
management contracts substantially similar to the contracts in effect between
INVESCO and S&P 500 Index Fund immediately prior to the proposed S&P 500 Index
Fund Conversion. IDI, the distribution agent for the Fund, will distribute
shares of the S&P 500 Index New Series under General Distribution Agreements
substantially similar to the contracts in effect between IDI and the S&P 500
Index Fund immediately prior to the proposed Conversion.
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REASONS FOR THE PROPOSED CONVERSION
The Board unanimously recommends conversion of S&P 500 Index Fund to a
separate series of Stock Funds (i.e., S&P 500 Index New Series). This proposed
conversion is part of an overall plan that involves the conversion of other
INVESCO Funds as well. The goal of the conversions is to combine similar types
of funds into a single corporate entity. Ultimately, if all of the conversions
are approved, the INVESCO Funds will be organized into a group of core
companies, with one core company for each major fund type -- for example, all
INVESCO Funds that invest internationally will be series of one core company,
all INVESCO Funds that invest solely in debt securities will be series of one
core company, and all INVESCO Funds that invest in equity securities of domestic
issuers will be series of one core company. Moving S&P 500 Index Fund from
Specialty Funds to Stock Funds will also consolidate and streamline the
production and mailing of certain financial reports and legal documents,
reducing the expenses of S&P 500 Index Fund. Ultimately, it is expected that all
INVESCO Funds that invest primarily in equity securities of domestic issuers
will become series of Stock Funds. THE PROPOSED S&P 500 INDEX FUND CONVERSION
WILL HAVE NO MATERIAL EFFECT ON THE SHAREHOLDERS, OFFICERS, OPERATIONS OR
MANAGEMENT OF S&P 500 INDEX FUND.
The proposal to present the Conversion Plan to shareholders was approved by
the Board, including all of its Independent Directors, on August 5, 1998. The
Board recommends that shareholders of S&P 500 Index Fund vote FOR the approval
of the S&P 500 Index Fund Conversion Plan. Such a vote encompasses approval of
both: (i) the conversion of S&P 500 Index Fund to a separate series of Stock
Funds; and (ii) a temporary waiver of certain investment limitations of the S&P
500 Index Fund, to permit S&P 500 Index Fund Conversion (see "Temporary Waiver
of Investment Restrictions," below). If shareholders of S&P 500 Index Fund do
not approve the S&P 500 Index Fund Conversion Plan, set forth herein, S&P 500
Index Fund will continue to operate as a series of Specialty Funds.
SUMMARY OF THE CONVERSION PLAN
The following discussion summarizes the important terms of the S&P 500
Index Fund Conversion Plan. This summary is qualified in its entirety by
reference to the S&P 500 Index Conversion Plan itself, which is attached as
Appendix E to this Proxy Statement.
If the S&P 500 Index Fund Conversion Plan is approved by shareholders of
S&P 500 Index Fund, then on the Closing Date, S&P 500 Index Fund will transfer
all of its assets to the S&P 500 Index New Series in exchange solely for Class I
and Class II shares thereof ("S&P 500 Index New Series Shares") equal to the
number of Class I and Class II S&P 500 Index Fund shares, respectively,
outstanding on the Closing Date ("S&P 500 Index Fund Shares") and the assumption
by the S&P 500 Index New Series of all of the liabilities of the S&P 500 Index
Fund. Immediately thereafter, S&P 500 Index Fund will constructively distribute
to each S&P 500 Index Fund shareholder one S&P 500 Index New Series Share for
each S&P 500 Index Fund Share held by the shareholder on the Closing Date, by
class, in liquidation of the S&P 500 Index Fund Shares. As soon as is
practicable after this distribution of S&P 500 Index New Series Shares, S&P 500
Index Fund will be terminated as a series of Specialty Funds and will be wound
up and liquidated. UPON COMPLETION OF THE S&P 500 INDEX FUND CONVERSION, EACH
S&P 500 INDEX FUND SHAREHOLDER WILL OWN FULL AND FRACTIONAL S&P 500 INDEX NEW
SERIES SHARES EQUAL IN NUMBER, DENOMINATION AND AGGREGATE NET ASSET VALUE TO,
AND OF THE SAME CLASS AS, HIS OR HER S&P 500 INDEX FUND SHARES.
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The Conversion Plan obligates Stock Funds to enter into: (i) a Management
Contract with INVESCO with respect to the S&P 500 Index New Series (the "New
Management Contract"); (ii) a Sub-Advisory Agreement between INVESCO and World
Asset Management ("World"), with respect to the New Series Sub-Advisory
Agreement (the "New Sub-Advisory Agreement"); and (iii) a Distribution and
Service Plan under Rule 12b-1 (the "New 12b-1 Plan") with respect to the S&P 500
Index New Series (collectively, the "New Agreements"). Approval of the S&P 500
Index Fund Conversion Plan by shareholders of S&P 500 Index Fund will authorize
Specialty Funds (which will be issued a single share of S&P 500 Index New Series
on a temporary basis) to approve the New Agreements with respect to S&P 500
Index Fund as the sole initial shareholder of the S&P 500 Index New Series. Each
New Agreement will be identical to the corresponding contract or plan in effect
with respect to S&P 500 Index Fund immediately prior to the Closing Date.
The New Agreements will take effect on the Closing Date, and each will
continue in effect until May 15, 2000. Thereafter, the New Management Contract
will continue in effect only if its continuance is approved at least annually:
(i) by the vote of a majority of Independent Directors cast in person at a
meeting called for the purpose of voting on such approval; and (ii) by the vote
of a majority of Stock Funds' directors or a majority of the outstanding voting
shares of the S&P 500 Index New Series. The New Sub-Advisory Agreement will
continue in effect only if approved annually by a vote of Stock Funds'
Independent Directors, cast in person at a meeting called for that purpose. The
New 12b-1 Plan will continue in effect only if approved annually by a vote of
Stock Funds' Independent Directors, cast in person at a meeting called for that
purpose. The New Management Contract will be terminable without penalty on sixty
days' written notice by either Stock Funds or INVESCO and will terminate
automatically in the event of its assignment. The New 12b-1 Plan will be
terminable at any time without penalty by a vote of a majority of Stock Funds'
Independent Directors or a majority of the outstanding voting shares of the S&P
500 Index New Series.
The board of directors of Stock Funds will hold office without limit in
time except that: (i) any director may resign; and (ii) a director may be
removed at any special meeting of the Stock Funds shareholders at which a quorum
is present by the affirmative vote of a majority of the outstanding voting
shares of Stock Funds. In case a vacancy shall for any reason exist, a majority
of the remaining directors, though less than a quorum, will vote to fill such
vacancy by appointing another director, so long as, immediately after such
appointment, at least two-thirds of the directors have been elected by
shareholders. If, at any time, less than a majority of the directors holding
office have been elected by shareholders, the directors then in office will
promptly call a shareholders' meeting for the purpose of electing a board of
directors. Otherwise, there need normally be no meetings of shareholders for the
purpose of electing directors.
Assuming the Conversion Plan is approved, it is currently contemplated that
the Conversion will become effective on the Closing Date. However, the S&P 500
Index Fund Conversion may become effective at such other date as to which
Specialty Funds and Stock Funds may agree in writing.
The obligations of Specialty Funds and Stock Funds under the S&P 500 Index
Fund Conversion Plan are subject to various conditions as stated therein.
Notwithstanding the approval of the Conversion Plan by shareholders, it may be
terminated or amended at any time prior to the Closing Date by action of the
directors of Specialty Funds to provide against unforeseen events, if: (i) there
is a material breach by the other party of any representation, warranty, or
agreement contained in the plan to be performed at or prior to the Closing Date;
or (ii) it reasonably appears that the other party will not or cannot meet a
condition of the plan. Either Specialty Funds or Stock Funds may at any time
waive compliance with any of the covenants and conditions
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contained in, or may amend, the S&P 500 Index Fund Conversion Plan, provided
that the waiver or amendment does not materially adversely affect the interests
of S&P 500 Index Fund's shareholders.
CONTINUATION OF FUND SHAREHOLDER ACCOUNTS
Stock Funds transfer agent will establish accounts for the S&P 500 Index
New Series shareholders containing the appropriate number and denominations of
S&P 500 Index New Series Shares to be received by each shareholder under the S&P
500 Index Fund Conversion Plan. Such accounts will be identical in all material
respects to the accounts currently maintained by Specialty Funds' transfer agent
for shareholders.
EXPENSES
The expenses of the Conversion, estimated at $2,800 in the aggregate, will
be borne half by INVESCO and half by S&P 500 Index Fund and the S&P 500 Index
New Series.
TEMPORARY WAIVER OF INVESTMENT RESTRICTIONS
Certain fundamental investment restrictions of S&P 500 Index Fund, which
prohibit it from acquiring more than a stated percentage of ownership of another
company, might be construed as restricting its ability to carry out the S&P 500
Index Fund Conversion. By approving the S&P 500 Index Fund Conversion Plan,
shareholders will be agreeing to waive, only for the purpose thereof, those
fundamental investment restrictions that could prohibit or otherwise impede the
transaction.
TAX CONSEQUENCES OF THE CONVERSION
Both Specialty Funds and Stock Funds will receive an opinion from their
counsel, Kirkpatrick & Lockhart LLP, that the Conversion will constitute a
tax-free reorganization within the meaning of section 368(a)(1)(F) of the Code.
Accordingly, neither S&P 500 Index Fund, the S&P 500 Index New Series, nor the
shareholders of S&P 500 Index Fund will recognize gain or loss for federal
income tax purposes upon: (i) the transfer of S&P 500 Index Fund's assets in
exchange solely for S&P 500 Index New Series Shares and the S&P 500 Index New
Series' assumption of S&P 500 Index Fund's liabilities; or (ii) the distribution
of those shares to the S&P 500 Index Fund's shareholders in liquidation of their
S&P 500 Index Fund Shares. The opinion will further provide, among other things,
that: (1) an S&P 500 Index Fund shareholder's aggregate basis for federal income
tax purposes of the S&P 500 Index New Series Shares to be received by the
shareholder in the S&P 500 Index Fund Conversion will be the same as the
aggregate basis of his or her S&P 500 Index Fund shares to be constructively
surrendered in exchange for those S&P 500 Index New Series Shares; and (2) an
S&P 500 Index Fund shareholder's holding period for his or her S&P 500 Index New
Series Shares will include the shareholder's holding period for his or her S&P
500 Index Fund Shares provided that those S&P 500 Index Fund Shares, were held
as capital assets at the time of the S&P 500 Index Fund Conversion.
CONCLUSION
The Board has concluded that the proposed S&P 500 Index Fund Conversion
Plan is in the best interests of the shareholders of S&P 500 Index Fund. A vote
in favor of the S&P 500 Index Fund Conversion Plan encompasses: (i) approval of
the conversion of S&P 500 Index Fund to S&P 500 Index New Series;
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(ii) approval of the temporary waiver of certain investment limitations of S&P
500 Index Fund to permit the S&P 500 Index Fund Conversion (see "Temporary
Waiver of Investment Restrictions," above); and (iii) authorization of Stock
Funds, as the sole initial shareholder of the S&P 500 Index New Series, to
approve: (a) a Management Contract with respect to the S&P 500 Index New Series
between Stock Funds and INVESCO; (b) a Sub-Advisory Agreement with respect to
the New Series between INVESCO and World; and (c) the Distribution and Service
Plan under Rule 12b-1 with respect to the S&P 500 Index New Series. Each of
these New Agreements is virtually identical to the corresponding contract or
plan in effect with respect to S&P 500 Index Fund immediately prior to the
Closing Date. If approved, the Conversion Plan will take effect on the Closing
Date. If the S&P 500 Index Fund Conversion Plan is not approved, S&P 500 Index
Fund will continue to operate as a series of the Specialty Funds. Otherwise, S&P
500 Index Fund will be reorganized consistent with shareholder approval.
Required Vote. Approval of the S&P 500 Index Fund Conversion Plan requires
the affirmative vote of a majority of the outstanding securities of the S&P 500
Index Fund.
THE BOARD UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS OF S&P 500
INDEX FUND VOTE "FOR" PROPOSAL 3.
PROPOSAL 4: TO APPROVE A PLAN OF LIQUIDATION AND TERMINATION ("LIQUIDATION
PLAN") FOR WORLDWIDE CAPITAL GOODS FUND ("WCG FUND") (WORLDWIDE CAPITAL GOODS
FUND SHAREHOLDERS ONLY)
THE PROPOSED LIQUIDATION AND TERMINATION
The Board believes that liquidating the Fund's assets and terminating its
existence would be in WCG Fund's shareholders' best interests. Accordingly, the
Board, including all of its Independent Directors, adopted the proposed
Liquidation Plan, which provides for liquidating WCG Fund's assets, distributing
the proceeds thereof to its shareholders pro rata, and terminating WCG Fund's
existence. A copy of the Liquidation Plan is attached to this proxy statement as
Appendix F.
WCG Fund commenced operations on August 1, 1994. For the fiscal years ended
July 31, 1995 through ended July 31, 1997, various WCG Fund expenses were
voluntarily absorbed by its investment adviser, INVESCO. Notwithstanding the
expense reduction measures taken by INVESCO, WCG Fund has experienced limited
asset growth. In addition, WCG Fund has experienced uneven returns over the last
several years and net asset reductions over the past fiscal year. INVESCO and
IDI, WCG Fund's distributor, have come to believe that it is unlikely that WCG
Fund will experience material growth in assets in the foreseeable future. In
light of the inefficiencies and higher costs of managing WCG Fund's small asset
base, INVESCO and IDI submitted to the Board a proposal to liquidate and
terminate WCG Fund.
At a meeting held on February 3, 1999, the Board considered and unanimously
approved the Liquidation Plan, subject to shareholder approval. Under Specialty
Funds' Articles of Incorporation, the liquidation of WCG Fund may be effected
only on the affirmative vote of the lesser of (1) 67% of WCG Fund's shares
present at a meeting of its shareholders if the holders of more than 50% of its
outstanding shares are present in person or by proxy or (2) more than 50% of WCG
Fund's outstanding shares.
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CONSIDERATION BY THE BOARD
In evaluating the proposed liquidation and termination of WCG Fund, the
Board considered a number of factors, including the amount of WCG Fund's total
assets, its expense ratio (absent the absorption of expenses), and the
likelihood that additional sales of WCG Fund shares could enable it to attain an
asset level that would sustain an acceptable expense ratio. The Board also
considered INVESCO's representation that it is not prepared to continue to waive
its advisory fee and absorb the expenses associated with managing WCG Fund at
its current low level of assets indefinitely, but will do so pending WCG Fund's
liquidation and termination. Based on consideration of the foregoing, and other
factors they deemed relevant, the Board (including all of its Independent
Directors) approved the liquidation and termination of WCG Fund, subject to
shareholder approval.
If the Liquidation Plan is not approved by the shareholders, WCG Fund will
continue to operate as a series of Specialty Funds (but without INVESCO's
advisory fee waiver and absorption of expenses). The Board thus is asking WCG
Fund's shareholders to approve certain changes to WCG Fund's fundamental
investment restrictions, to elect directors of Specialty Funds, and to ratify
the selection of PricewaterhouseCoopers LLP as independent accountants of WCG
Fund, as set forth in Proposals 5, 6, and 7, respectively.
DESCRIPTION OF THE LIQUIDATION PLAN
Under the Liquidation Plan, each shareholder's interest in WCG Fund's
assets will be fixed on the date on which the shareholders approve the
Liquidation Plan. On that date, the books of WCG Fund will be closed.
Thereafter, all assets of WCG Fund not already held in cash or cash equivalents
will be liquidated. The Liquidation Plan provides that, as soon as reasonably
practicable after the that date, the distribution of WCG Fund's assets will be
made in one or two liquidating distributions. The first such distribution is
expected to consist of cash representing substantially all of WCG Fund's assets
less the amount reserved to pay its liabilities and expenses. A second
liquidating distribution, if necessary, is anticipated to be made within 90 days
after the first liquidating distribution and will consist of cash from any
assets remaining after payment of those liabilities and expenses, the proceeds
of any sale of WCG Fund assets not sold prior to the first liquidating
distribution, and any other miscellaneous WCG Fund income.
The date or dates on which WCG Fund will pay the liquidating distributions
and on which WCG Fund will be liquidated have not been determined, but it is
anticipated that, if the Fund's shareholders adopt the Liquidation Plan, the
liquidating distributions would occur as soon as reasonably practical after the
date on which the shareholders approve the Liquidation Plan. Shareholders will
receive their respective portions of the liquidating distribution(s) without any
further action on their part.
The Liquidation Plan will not affect a shareholder's right to redeem his,
her, or its WCG Fund shares. Therefore, a shareholder may redeem in accordance
with the redemption procedure set forth in WCG Fund's current prospectus without
waiting for WCG Fund to take any action respecting its liquidation. The
Liquidation Plan also authorizes the Board to make variations from or amendments
to the provisions thereof that it deems necessary or appropriate to carry out
its purposes. No shareholder will be entitled to exercise any dissenter's rights
or appraisal rights with respect to WCG Fund's liquidation and termination under
either the Liquidation Plan or relevant provisions of Maryland law.
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Under the Liquidation Plan, WCG Fund will be responsible for one-half of
the expenses incurred in connection with carrying out the Liquidation Plan,
including the cost of soliciting proxies, liquidating its assets, and
terminating its existence, and INVESCO will be responsible for the balance of
those expenses.
FEDERAL INCOME TAX CONSEQUENCES
The following summary provides general information regarding the federal
income tax consequences to WCG Fund resulting from its liquidation and
termination and to its shareholders on their receipt of liquidating
distributions from WCG Fund. The Fund has not sought a ruling from the Internal
Revenue Service with respect to these matters. This summary generally applies to
shareholders who are individual U.S. citizens (other than dealers in securities)
and does not address the particular federal income tax consequences that may
apply to shareholders that are, for example, corporations, trusts, estates,
tax-exempt organizations, or non-resident aliens; nor does this summary address
state or local tax consequences. The tax consequences discussed herein may
affect shareholders differently, depending on their particular tax situations
unrelated to the receipt of liquidating distributions, and accordingly this
summary is not a substitute for careful tax planning. Shareholders may wish to
consult their personal tax advisers concerning their particular tax situations
and the impact thereon of receiving liquidating distributions from WCG Fund.
As discussed above, if the Liquidation Plan is approved by its
shareholders, WCG Fund will sell its assets and distribute the proceeds to them.
WCG Fund anticipates that it will retain its qualification for treatment as a
regulated investment company under the Code during the liquidation period and
thus will not be taxed on any of its net gain realized from the sale of its
assets.
A shareholder who receives a liquidating distribution in cancellation and
redemption of his, her, or its WCG Fund shares will be treated as having sold
those shares for the amount of the liquidating distribution. The shareholder
will recognize gain or loss on that sale measured by the difference between his,
her, or its adjusted tax basis for the shares and the liquidating distribution.
If the shares are held as capital assets, the gain or loss will be characterized
as capital gain or loss. Capital gain or loss attributable to shares held for
more than one year will constitute long-term capital gain or loss, while capital
gain or loss attributable to shares held for one year or less will be
short-term. Shareholders also should be aware that WCG Fund is required to
withhold 31% of liquidating distributions payable to any individuals and certain
other noncorporate shareholders who do not provide WCG Fund with a correct
taxpayer identification number.
The receipt of a liquidating distribution by an individual retirement
account ("IRA") that holds Fund shares generally will not be treated as a
taxable event to the IRA beneficiary. However, some IRAs that hold WCG Fund
shares may have been established with custodians that may not reinvest the
liquidation distribution proceeds, but instead must immediately distribute those
proceeds to the IRA beneficiary. Those distributions could have adverse tax
consequences for the beneficiaries of such IRAs, who are urged to consult with
their own tax advisers regarding the tax consequences of those distributions.
Required Vote. Approval of the Liquidation Plan requires the affirmative
vote of the lesser of (1) 67% of WCG Fund's shares present at a meeting of its
shareholders if the holders of more than 50% of its outstanding shares are
present in person or by proxy or (2) more than 50% of WCG Fund's outstanding
shares.
THE BOARD UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS
VOTE "FOR" PROPOSAL 4.
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PROPOSAL 5: TO APPROVE AMENDMENTS TO THE FUNDAMENTAL INVESTMENT RESTRICTIONS OF
THE FUNDS.
As required by the 1940 Act, each Fund has adopted certain fundamental
investment restrictions ("fundamental restrictions"), which are set forth in the
Funds' Statement of Additional Information. These fundamental restrictions may
be changed only with shareholder approval. Restrictions that a Fund has not
specifically designated as fundamental are considered to be "non-fundamental"
and may be changed by the Board of Specialty Funds without shareholder approval.
Some of the Funds' fundamental restrictions reflect past regulatory,
business or industry conditions, practices or requirements that are no longer in
effect. Also, as other INVESCO Funds have been created over the years, these
funds have adopted substantially similar fundamental restrictions that often
have been phrased in slightly different ways, resulting in minor but unintended
differences in effect or potentially giving rise to unintended differences in
interpretation. Accordingly, the Board has approved revisions to the Funds'
fundamental restrictions in order to simplify, modernize and make the Funds'
fundamental restrictions more uniform with those of the other INVESCO Funds.
The Board believes that eliminating the disparities among the INVESCO
Funds' fundamental restrictions will enhance management's ability to manage the
funds' assets efficiently and effectively in changing regulatory and investment
environments and permit directors to review and monitor investment policies more
easily. In addition, standardizing the fundamental restrictions of the INVESCO
Funds will assist the INVESCO Funds in making required regulatory filings in a
more efficient and cost-effective way. Although the proposed changes in
fundamental restrictions will allow each Fund greater investment flexibility to
respond to future investment opportunities, the Board does not anticipate that
the changes, individually or in the aggregate, will result at this time in a
material change in the level of investment risk associated with an investment in
that Fund.
The text and a summary description of each proposed change to each Fund's
fundamental restrictions are set forth below, together with the text of each
current corresponding fundamental restriction. The text below also describes any
non-fundamental restrictions that would be adopted by the Board in conjunction
with the revision of certain fundamental restrictions. Any non-fundamental
restriction may be modified or eliminated by the Board at any future date
without further shareholder approval.
If approved by the shareholders of a Fund at the Meeting, the proposed
changes in a Fund's fundamental restrictions will be adopted by the Fund. The
Fund's statement of additional information will be revised to reflect those
changes as soon as practicable following the Meeting.
A. MODIFICATION OF FUNDAMENTAL INVESTMENT OBJECTIVES OF REALTY FUND
Realty Fund's current fundamental investment objective is as follows:
The Fund seeks to provide above-average current income while following
sound investment practices.
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Realty Fund's secondary fundamental investment objective is as follows:
Long-term capital growth potential is an additional, but secondary,
consideration in the selection of portfolio securities.
The Board recommends that shareholders of Realty Fund vote to modify the
current fundamental investment objectives of Realty Fund as follows:
The Fund seeks to provide long-term capital growth potential while
following sound investment practices. Above-average current income is
an additional, but secondary, consideration in the selection of
portfolio securities.
The Board believes that this modification to Realty Fund's investment
objective more accurately reflects the Fund's primary emphasis on growth with a
secondary emphasis on income.
B. MODIFICATION OF FUNDAMENTAL RESTRICTION ON ISSUER DIVERSIFICATION
Each Fund's current fundamental restriction on issuer diversification is as
follows:
The Fund may not with respect to seventy-five percent (75%) of its
Fund's total assets, purchase the securities of any one issuer (except
cash items and "government securities" as defined under the 1940 Act),
if the purchase would cause the Fund to have more than 5% of the value
of its total assets invested in the securities of such issuer or to
own more than 10% of the outstanding voting securities of such issuer.
The Board recommends that shareholders of each Fund vote to replace this
restriction with the following fundamental restriction:
The Fund may not, with respect to 75% of the Fund's total assets,
purchase the securities of any issuer (other than securities issued or
guaranteed by the U.S. Government or any of its agencies or
instrumentalities, or securities of other investment companies) if, as
a result, (i) more than 5% of the Fund's total assets would be
invested in the securities of that issuer, or (ii) the Fund would hold
more than 10% of the outstanding voting securities of that issuer.
The proposed fundamental restriction concerning diversification is the
limitation imposed by the 1940 Act for diversified investment companies. The
amended fundamental restriction would permit a Fund to invest without limit in
the securities of other investment companies. No Fund has a current intention of
doing so, and, as noted below, the 1940 Act imposes restrictions on the extent
to which a fund may invest in the securities of other investment companies. The
revision would, however, give each Fund flexibility to invest in other
investment companies in the event legal and other regulatory requirements
change.
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C. MODIFICATION OF FUNDAMENTAL RESTRICTION ON BORROWING SECURITIES AND ADOPTION
OF NON-FUNDAMENTAL RESTRICTION ON BORROWING
Each Fund's current fundamental restriction on borrowing is as follows:
The Fund may not borrow money or issue senior securities (as defined
in the 1940 Act), except that the Fund may borrow money for temporary
or emergency purposes (not for leveraging or investment) and may enter
into reverse repurchase agreements in an aggregate amount not
exceeding 33 1/3% of the value of its total assets (including the
amount borrowed) less liabilities (other than borrowings). Any
borrowings that come to exceed 33 1/3% of the value of the Fund's
total assets by reason of a decline in net assets will be reduced
within three business days to the extent necessary to comply with the
33 1/3% limitation. This restriction shall not prohibit deposits of
assets to margin or guarantee positions in futures, options, swaps or
forward contracts, or the segregation of assets in connection with
such contracts.
In applying this restriction, if the Fund has borrowed money in an
amount exceeding 5% of the value of the Fund's net assets, the Fund
will not purchase additional securities while any such borrowings
exist.
The Board recommends that shareholders of each Fund vote to replace its
restriction on borrowing securities with the following fundamental restriction:
The Fund may not borrow money, except that the Fund may borrow money
in an amount not exceeding 33 1/3% of its total assets (including the
amount borrowed) less liabilities (other than borrowings).
The primary purpose of the proposal is to eliminate differences between the
INVESCO Funds' current restrictions on borrowing and those imposed by the 1940
Act. Currently, each Fund's fundamental restriction is significantly more
limiting than the restrictions imposed by the 1940 Act in that it limits the
purposes for which each Fund may borrow money to "temporary or emergency
purposes." The proposed revision would eliminate the restrictions on the
purposes for which each Fund may borrow money. The Board believes that this
approach, making each Fund's fundamental restriction on borrowing no more
limiting than is required under the 1940 Act, will maximize each Fund's
flexibility for future contingencies.
If the proposal is approved, the Board will adopt a non-fundamental
restriction with respect to borrowing for each Fund as follows:
The Fund may borrow only from a bank or from an open-end management
investment company managed by INVESCO Funds Group, Inc. or an
affiliate or a successor thereof for temporary or emergency purposes
(not for leveraging or investing) or by engaging in reverse repurchase
agreements with any party (reverse repurchase agreements will be
treated as borrowings for purposes of fundamental restriction).
The non-fundamental restriction reflects the current policy of the Funds
that borrowing may only be done for temporary or emergency purposes. In addition
to borrowing from banks, as permitted by the Funds' current restriction, the
non-fundamental restriction would permit the Funds to borrow from open-end funds
managed by INVESCO or an affiliate or successor thereof. The Funds would not be
able to do so, however, unless they
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obtain permission for such borrowings from the SEC. The non-fundamental
restriction also clarifies that reverse repurchase agreements will be treated as
borrowings.
The Board believes that this approach, making each Fund's fundamental
restriction on borrowing no more limiting than is required under the 1940 Act,
while incorporating more strict limits on borrowing in a non-fundamental
restriction, will maximize the Fund's flexibility for future contingencies.
D. MODIFICATION OF FUNDAMENTAL RESTRICTION ON REAL ESTATE INVESTMENTS
The current fundamental restriction on real estate investment for each Fund
except Realty Fund is as follows:
The Fund may not invest directly in real estate or interests in real
estate; however, the Fund may own debt or equity securities issued by
companies engaged in those businesses.
The current fundamental restriction on real estate investment for Realty
Fund is as follows:
The Fund may not invest directly in real estate or interests in real
estate; however, the Fund may own debt or equity securities issued by
companies engaged in those businesses. This restriction shall not
prohibit the Fund from directly holding real estate if such real
estate is acquired by that Fund as a result of a default on debt
securities held by that Fund.
The Board recommends that shareholders of each Fund except Realty Fund vote
to replace that Fund's current fundamental restriction with the following
fundamental restriction:
The Fund will not purchase or sell real estate unless acquired as a
result of ownership of securities or other instruments (but this shall
not prevent the Fund from investing in securities or other instruments
backed by real estate or securities of companies engaged in the real
estate business).
In addition to conforming each Fund's fundamental restriction to that of
the other INVESCO Funds, the proposed amendment of the Fund's fundamental
restriction on investment in real estate more completely describes the types of
real estate-related securities investments that would be permissible for the
Funds and would permit the Funds to purchase or sell real estate acquired as a
result of ownership of securities or other instruments (e.g., through
foreclosure on a mortgage in which a Fund directly or indirectly holds an
interest). The Board believes that this clarification will make it easier for
decisions to be made concerning each Fund's investments in real estate-related
securities without materially altering the general restriction on direct
investments in real estate or interests in real estate.
E. MODIFICATION OF FUNDAMENTAL RESTRICTION ON INVESTING IN COMMODITIES
Each Fund's current fundamental restriction on the purchase of commodities
is as follows:
The Fund may not purchase or sell physical commodities other than
foreign currencies unless acquired as a result of ownership of
securities (but this shall not prevent the Fund from purchasing or
selling options, futures, swaps and forward contracts or from
investing in securities or other instruments backed by physical
commodities).
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The Board recommends that shareholders of each Fund vote to replace this
restriction with the following fundamental restriction:
The Fund may not purchase or sell physical commodities; however, this
policy shall not prevent the Fund from purchasing and selling foreign
currency, futures contracts, options, forward contracts, swaps, caps,
floors, collars and other financial instruments.
The proposed changes to this investment restriction for each Fund are
intended to conform the restriction to those of the other INVESCO Funds and to
ensure that each Fund will have the maximum flexibility to enter into hedging or
other transactions utilizing financial contracts and derivative products when
doing so is permitted by operating policies established for the Funds by the
Board. Due to the rapid and continuing development of derivative products and
the possibility of changes in the definition of "commodities," particularly in
the context of the jurisdiction of the Commodities Futures Trading Commission,
it is important for each Fund's policy to be flexible enough to allow it to
enter into hedging and other transactions using these products when doing so is
deemed appropriate by INVESCO and is within the investment parameters
established by the Board. To maximize that flexibility, the Board recommends
that each Fund's fundamental restriction on commodities investments be clear in
permitting the use of derivative products, even if the applicable
non-fundamental fundamental restrictions of that Fund currently would not allow
investment in one or more of the permitted transactions.
F. MODIFICATION OF FUNDAMENTAL RESTRICTION ON LOANS
Each Fund's current fundamental restriction on loans is as follows:
The Fund may not lend any security or make any other 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 purchases of commercial
paper, debt securities or to repurchase agreements).
The Board recommends that shareholders of each Fund vote to replace this
restriction with the following fundamental restriction:
The Fund may not lend any security or make any loan if, as a result,
more than 33 1/3% of its total assets would be lent to other parties,
but this limitation does not apply to the purchase of debt securities
or to repurchase agreements.
The primary purpose of the proposal is to eliminate the restriction
regarding repurchase agreements and to conform to the 1940 Act requirements
regarding the lending of securities. The Board believes that the adoption of the
proposed fundamental restriction is no more limiting than is required under the
1940 Act. In addition, the Board believes the proposal will provide greater
flexibility, maximize each Fund's lending capabilities and conform to the
fundamental restrictions of other INVESCO Funds on the lending of Fund
securities.
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G. MODIFICATION OF FUNDAMENTAL RESTRICTION ON UNDERWRITING SECURITIES
Each Fund's current fundamental restriction on underwriting securities is
as follows:
The Fund may not act as an underwriter of securities issued by others,
except to the extent that it may be deemed an underwriter in
connection with the disposition of portfolio securities of the Fund.
The Board recommends that shareholders of each Fund vote to replace this
restriction with the following fundamental restriction:
The Fund may not underwrite securities of other issuers, except
insofar as it may be deemed to be an underwriter under the Securities
Act of 1933, as amended, in connection with the disposition of the
Fund's portfolio securities.
The primary purpose of the proposal is to eliminate minor differences in
the wording of each Fund's current fundamental restriction on underwriting for
greater uniformity with the fundamental restrictions of other INVESCO Funds and
to eliminate unintended limitations.
H. MODIFICATION OF FUNDAMENTAL RESTRICTION ON INDUSTRY CONCENTRATION FOR LATIN
AMERICAN GROWTH FUND ONLY
Latin American Growth Fund's fundamental restriction regarding industry
concentration is as follows:
The Latin American Growth Fund may not invest more than 25% of the
value of its total assets in any particular industry (other than
government securities).
The Board recommends that shareholders of each Fund vote to replace this
restriction with the following fundamental restriction:
The Fund may purchase securities of any issuer (other than securities
issued or guaranteed by the U.S. Government or any of its agencies or
instrumentalities or municipal securities) if, as a result, more than
25% of the Fund's assets would be invested in the securities of
companies whose principal business activities are in the same
industry.
The primary purpose of the modification is to eliminate minor differences
in the wording of the INVESCO Funds' current restrictions on concentration for
greater uniformity and to avoid unintended limitations without materially
altering the restriction. The proposed changes to the Fund's fundamental
concentration policy exclude municipal securities and securities issued or
guaranteed by the U.S. government, its agencies or instrumentalities from the
concentration limitation. There is no such exclusion from the current
concentration limitation. A failure to exclude all such securities from the
concentration policy could hinder the Fund's ability to purchase such securities
in conjunction with taking temporary defensive positions.
I. MODIFICATION OF FUNDAMENTAL RESTRICTION ON INVESTING IN ANOTHER INVESTMENT
COMPANY
Each Fund's current fundamental restriction regarding investment in another
investment company is as follows:
The Fund may, notwithstanding any other investment policy or
restriction (whether or not fundamental), invest all of its assets in
the securities of a single open-end management investment
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company with substantially the same fundamental investment objectives,
policies and limitations as the Fund.
The Board recommends that shareholders of each Fund vote to replace this
restriction with the following fundamental restriction:
The Fund may, notwithstanding any other fundamental investment policy
or limitation, invest all of its assets in the securities of a single
open-end management investment company managed by INVESCO Funds Group,
Inc. or an affiliate or a successor thereof, with substantially the
same fundamental investment objective, policies and limitations as the
Fund.
The proposed revision to each Fund's current fundamental restriction would
ensure that the INVESCO Funds have uniform restrictions permitting each INVESCO
Fund to adopt a "master/feeder" structure whereby one or more INVESCO Funds
invest all of its assets in another INVESCO Fund. The master/feeder structure
has the potential, under certain circumstances, to minimize administration costs
and maximize the possibility of gaining a broader investor base. Currently, none
of the INVESCO Funds intends to establish a master/feeder structure; however,
the Board recommends that each Fund's shareholders adopt a restriction that
would permit this structure in the event that the Board determines to recommend
the adoption of a master/feeder structure by the Fund. The proposed revision,
unlike the current restriction, would require that any fund in which a Fund may
invest under a master/feeder structure be advised by INVESCO or an affiliate.
If the proposal is approved, the Board will adopt a non-fundamental
restriction for each Fund as follows:
The Fund may invest in securities issued by other investment companies
to the extent that such investments are consistent with the Fund's
investment objective and policies and permissible under the 1940 Act.
The primary purpose of this non-fundamental restriction is to conform to
the other INVESCO Funds and to the 1940 Act requirements for investing in other
investment companies. Currently, each Fund's fundamental restriction is much
more limiting than the restriction imposed by the 1940 Act. Adoption of this
non-fundamental restriction will enable each Fund to purchase the securities of
other investment companies to the extent permitted under the 1940 Act or
pursuant to an exemption granted by the SEC. If a Fund did purchase the
securities of another investment company, shareholders might incur additional
expenses because the Fund would have to pay its ratable share of the expenses of
the other investment company.
J. ADOPTION OF A FUNDAMENTAL RESTRICTION ON ISSUANCE OF SENIOR SECURITIES
Currently, each Fund's fundamental restriction on the issuance of senior
securities is combined with its restriction on borrowing (see above). To conform
each Fund's restriction on the issuance of senior securities (i.e., obligations
that have a priority over the Fund's shares with respect to the distribution of
Fund assets or the payment of dividends) with those of the other INVESCO Funds,
the Board recommends that shareholders of each Fund vote to adopt the following
separate fundamental restriction:
The Fund may not issue senior securities, except as permitted under
the Investment Company Act of 1940.
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The Board believes that the adoption of the proposed fundamental
restriction, which does not specify the manner in which senior securities may be
issued and is no more limiting than is required under the 1940 Act, would
maximize the Fund's borrowing flexibility for future contingencies and would
conform to the fundamental restrictions of the other INVESCO Funds on the
issuance of senior securities.
Required Vote. Approval of Proposal 5 with respect to each Fund requires
the affirmative vote of a "majority of the outstanding voting securities" of
that Fund, which for this purpose means the affirmative vote of the lesser of
(i) 67% or more of the shares of that Fund present at the Meeting or represented
by proxy if more than 50% of the outstanding shares of that Fund are so present
or represented, or (ii) more than 50% of the outstanding shares of that Fund.
SHAREHOLDERS WHO VOTE "FOR" PROPOSAL 5 WILL VOTE "FOR" EACH PROPOSED CHANGE
DESCRIBED ABOVE. THOSE SHAREHOLDERS WHO WISH TO VOTE AGAINST ANY OF THE SPECIFIC
PROPOSED CHANGES DESCRIBED ABOVE MAY DO SO ON THE PROXY PROVIDED. ONLY THOSE
SPECIFIC PROPOSED CHANGES APPROVED BY THE REQUIRED VOTE WILL BECOME EFFECTIVE.
THE BOARD UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS
VOTE "FOR" PROPOSAL 5.
PROPOSAL 6: TO ELECT THE DIRECTORS OF SPECIALTY FUNDS
The Board has nominated the individuals identified below for election to
the Board at the Meeting. Specialty Funds currently has ten directors. Vacancies
on the Board are generally filled by appointment by the remaining directors.
However, the 1940 Act provides that vacancies may not be filled by directors
unless thereafter at least two-thirds of the directors shall have been elected
by shareholders. To ensure continued compliance with this rule without incurring
the expense of calling additional shareholder meetings, shareholders are being
asked at this Meeting to elect the current ten directors. Consistent with the
provisions of Specialty Funds' by-laws, and as permitted by Maryland law,
Specialty Funds does not anticipate holding annual shareholder meetings. Thus,
the directors will be elected for indefinite terms, subject to termination or
resignation. Each nominee has indicated a willingness to serve if elected. If
any of the nominees should not be available for election, the persons named as
proxies (or their substitutes) may vote for other persons in their discretion.
Management has no reason to believe that any nominee will be unavailable for
election.
All of the Independent Directors now being proposed for election were
nominated and selected by Independent Directors. Eight of the ten current
directors are Independent Directors.
The persons named as attorneys-in-fact in the enclosed proxy have advised
Specialty Funds that unless a proxy instructs them to withhold authority to vote
for all listed nominees or for any individual nominee, they will vote all
validly executed proxies for the election of the nominees named below.
The nominees for director, their ages, a description of their principal
occupations, the number of Specialty Funds shares owned by each, and their
respective memberships on Board committees are listed in the table below.
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NUMBER OF
SPECIALTY FUNDS
DIRECTOR OR SHARES
EXECUTIVE BENEFICIALLY
PRINCIPAL OCCUPATION AND OFFICER OF OWNED DIRECTLY OR
NAME, POSITION WITH BUSINESS EXPERIENCE (DURING SPECIALTY FUNDS INDIRECTLY ON MEMBER OF
SPECIALTY FUNDS, AND AGE THE PAST FIVE YEARS) SINCE DEC. 31, 1998(1) COMMITTEE
- -------------------------------------------------------------------------------------------------------------
CHARLES W. BRADY, Chief Executive Officer and 1993 0 (3), (5), (6)
Chairman of the Board, Director of AMVESCAP PLC,
Age 63* London, England, and of
various subsidiaries
thereof. Chairman of the
Board of INVESCO Global
Health Sciences Fund.
FRED A. DEERING, Trustee of INVESCO Global 1993 88.0530 (2), (3), (5)
Vice Chairman of the Health Sciences Fund.
Board, Age 71 Formerly, Chairman of the
Executive Committee and
Chairman of the Board of
Security Life of Denver
Insurance Company, Denver,
Colorado; Director of ING
American Holdings Company,
and First ING Life Insurance
Company of New York.
MARK H. WILLIAMSON, President, Chief Executive 1998 0 (3), (5)
President, Chief Officer, and Director,
Executive Officer, and INVESCO Distributors Inc.;
Director, Age 47* President, Chief Executive
Officer, and Director,
INVESCO; President, Chief
Operating Officer, and
Trustee, INVESCO Global
Health Sciences Fund.
Formerly, Chairman of the
Board and Chief Executive
Officer, NationsBanc
Advisors, Inc. (1995-1997);
Chairman of the Board,
NationsBanc Investments,
Inc. (1997-1998).
DR. VICTOR L. ANDREWS, Professor Emeritus, Chairman 1993 88.0530 (4), (6), (8)
Director, Age 68 Emeritus and Chairman of the
CFO Roundtable of the
Department of Finance of
27
33
NUMBER OF
SPECIALTY FUNDS
DIRECTOR OR SHARES
EXECUTIVE BENEFICIALLY
PRINCIPAL OCCUPATION AND OFFICER OF OWNED DIRECTLY OR
NAME, POSITION WITH BUSINESS EXPERIENCE (DURING SPECIALTY FUNDS INDIRECTLY ON MEMBER OF
SPECIALTY FUNDS, AND AGE THE PAST FIVE YEARS) SINCE DEC. 31, 1998(1) COMMITTEE
- -------------------------------------------------------------------------------------------------------------
Georgia State University,
Atlanta, Georgia and
President, Andrews Financial
Associates, Inc. (consulting
firm). Formerly, member of
the faculties of the Harvard
Business School and the
Sloan School of Management
of MIT. Dr. Andrews is also
a director the Sheffield
Funds, Inc.
BOB R. BAKER, President and Chief 1993 88.0530 (3), (4), (5)
Director, Age 62 Executive Officer of AMC
Cancer Research Center,
Denver, Colorado, since
January 1989; until December
1988, Vice Chairman of the
Board, First Columbia
Financial Corporation,
Englewood, Colorado.
Formerly, Chairman of the
Board and Chief Executive
Officer of First Columbia
Financial Corporation.
LAWRENCE H. BUDNER, Trust Consultant. Prior to 1993 88.0530 (2), (6), (7)
Director, Age 68 June 1987, Senior Vice
President and Senior Trust
Officer, InterFirst Bank,
Dallas, Texas.
DR. WENDY LEE Self-employed (since 1993). 1997 1164.7220 (4), (8)
GRAMM,Director, Age 54 Professor of Economics and
Public Administration,
University of Texas at
Arlington. Formerly,
Chairman, Commodities
Futures Trading Commission
(1988-1993); Administrator
for Information and
Regulatory Affairs, Office
of Management and Budget
28
34
NUMBER OF
SPECIALTY FUNDS
DIRECTOR OR SHARES
EXECUTIVE BENEFICIALLY
PRINCIPAL OCCUPATION AND OFFICER OF OWNED DIRECTLY OR
NAME, POSITION WITH BUSINESS EXPERIENCE (DURING SPECIALTY FUNDS INDIRECTLY ON MEMBER OF
SPECIALTY FUNDS, AND AGE THE PAST FIVE YEARS) SINCE DEC. 31, 1998(1) COMMITTEE
- -------------------------------------------------------------------------------------------------------------
(1985-1988); Executive
Director, Presidential Task
Force on Regulatory Relief;
Director, Federal Trade
Commission's Bureau of
Economics. Director of the
Chicago Mercantile Exchange;
Enron Corporation; IBP,
Inc.; State Farm Insurance
Company; Independent Women's
Forum; International
Republic Institute; and the
Republican Women's Federal
Forum.
KENNETH T. KING, Presently retired. Formerly, 1993 88.0530 (2), (3), (5),
Director, Age 73 Chairman of the Board, The (6), (7)
Capitol Life Insurance
Company, Providence
Washington Insurance
Company, and Director of
numerous subsidiaries
thereof in the U.S.
Formerly, Chairman of the
Board, The Providence
Capitol Companies in the
United Kingdom and Guernsey.
Until 1987, Chairman of the
Board, Symbion Corporation.
JOHN W. MCINTYRE, Presently retired. Formerly, 1995 88.0530 (2), (3), (5),
Director, Age 68 Vice Chairman of the Board, (7)
The Citizens and Southern
Corporation; Chairman of the
Board and Chief Executive
Officer, The Citizens and
Southern Georgia
Corporation; Chairman of the
Board and Chief Executive
Officer, The Citizens and
Southern National Bank.
Trustee of INVESCO
29
35
NUMBER OF
SPECIALTY FUNDS
DIRECTOR OR SHARES
EXECUTIVE BENEFICIALLY
PRINCIPAL OCCUPATION AND OFFICER OF OWNED DIRECTLY OR
NAME, POSITION WITH BUSINESS EXPERIENCE (DURING SPECIALTY FUNDS INDIRECTLY ON MEMBER OF
SPECIALTY FUNDS, AND AGE THE PAST FIVE YEARS) SINCE DEC. 31, 1998(1) COMMITTEE
- -------------------------------------------------------------------------------------------------------------
Global Health Sciences Fund
and Gables Residential
Trust, Employee's Retirement
System of Georgia, Emory
University, and J.M. Tull
Charitable Foundation;
Director of Kaiser
Foundation Health Plans of
Georgia, Inc.
DR. LARRY SOLL, Presently retired. Formerly, 1997 88.0530 (4), (8)
Director, Age 56 Chairman of the Board (1987-
1994), Chief Executive
Officer (1982-1989 and
1993-1994) and President
(1982-1989) of Synergen Inc.
Director of Synergen Inc.
since incorporation in 1982.
Director of Isis
Pharmaceuticals, Inc.
Trustee of INVESCO Global
Health Sciences Fund.
- ---------------
* Because of his affiliation with INVESCO, with a Fund's investment adviser,
or with companies affiliated with INVESCO, this individual is deemed to be
an "interested person" of Specialty Funds as that term is defined in the
1940 Act.
(1) As interpreted by the SEC, a security is beneficially owned by a person if
that person has or shares voting power or investment power with respect to
that security. The persons listed have partial or complete voting and
investment power with respect to their respective Fund shares.
(2) Member of the Audit Committee
(3) Member of the Executive Committee
(4) Member of the Management Liaison Committee
(5) Member of the Valuation Committee
(6) Member of the Compensation Committee
(7) Member of the Soft Dollar Brokerage Committee
(8) Member of the Derivatives Committee
The Board has audit, management liaison, soft dollar brokerage and
derivatives committees consisting of Independent Directors, and compensation,
executive and valuation committees consisting of Independent Directors and
non-independent directors. The Board does not have a nominating committee. The
audit committee, consisting of four Independent Directors, meets quarterly with
Specialty Funds' independent
30
36
accountants and executive officers of Specialty Funds. This committee reviews
the accounting principles being applied by Specialty Funds in financial
reporting, the scope and adequacy of internal controls, the responsibilities and
fees of the independent accountants, and other matters. All of the
recommendations of the audit committee are reported to the full Board. During
the intervals between the meetings of the Board, the executive committee may
exercise all powers and authority of the Board in the management of Specialty
Funds' business, except for certain powers which, under applicable law and/or
Specialty Funds' by-laws, may only be exercised by the full Board. All decisions
by the executive committee are subsequently submitted for ratification by the
Board. The management liaison committee meets quarterly with various management
personnel of INVESCO in order to facilitate better understanding of management
and operations of Specialty Funds, and to review legal and operational matters
that have been assigned to the committee by the Board, in furtherance of the
Board's overall duty of supervision. The soft dollar brokerage committee meets
periodically to review soft dollar transactions by the Funds, and to review
policies and procedures of the Funds' adviser with respect to soft dollar
brokerage transactions. The committee then reports on these matters to the
Board. The derivatives committee meets periodically to review derivatives
investments made by the Funds. The committee monitors derivatives usage by the
Funds and the procedures utilized by the Funds' adviser to ensure that the use
of such instruments follows the policies on such instruments adopted by the
Board. The committee then reports on these matters to the Board.
Each Independent Director receives an annual retainer of $56,000 for their
service to the INVESCO Funds. Additionally, each Independent Director receives
$3,000 for in-person attendance at each board meeting and $1,000 for in-person
attendance at each committee meeting. The chairmen of the audit and management
liaison committees receive an annual fee of $4,000 for serving in such capacity.
During the past fiscal year, the Board met four times, the audit committee
met three times, the compensation committee met once, the management liaison
committee met three times, the soft dollar brokerage committee met once, and the
derivatives committee met two times. The executive committee did not meet.
During Specialty Fund's last fiscal year, each Director nominee attended 75% or
more of the Board meetings and meetings of the committees of the Board on which
he or she served.
The Independent Directors nominate individuals to serve as Independent
Directors, without any specific nominating committee. The Board ordinarily will
not consider unsolicited director nominations recommended by the Fund's
shareholders. The Board, including its Independent Directors, unanimously
approved the nomination of the foregoing persons to serve as directors and
directed that the election of these nominees be submitted to each Fund's
shareholders.
31
37
The following table sets forth information relating to the compensation
paid to directors during the last fiscal year:
COMPENSATION TABLE
AMOUNTS PAID DURING THE MOST RECENT FISCAL YEAR BY SPECIALTY FUNDS TO DIRECTORS
-----------------------------------------------------------------------------------------
AGGREGATE PENSION OR RETIREMENT TOTAL COMPENSATION FROM
COMPENSATION FROM BENEFITS ACCRUED AS PART ESTIMATED ANNUAL SPECIALTY FUNDS AND THE
THE SPECIALTY OF SPECIALTY FUNDS' BENEFITS UPON OTHER 14 INVESCO FUNDS
NAME OF PERSON, POSITION FUNDS EXPENSES(2) RETIREMENT(3) PAID TO DIRECTORS(1)
- -------------------------------------------------------------------------------------------------------------------
Fred A. Deering........ $ 6,892 $ 862 $ 553 $103,700
Vice Chairman of the
Board and Director
Dr. Victor L. Andrews... 6,845 815 640 80,350
Director
Bob R. Baker........... 6,920 727 858 84,000
Director
Lawrence H. Budner..... 6,793 815 640 79,350
Director
Daniel D. Chabris(4)... 6,852 880 478 70,000
Director
Dr. Wendy L. Gramm..... 6,700 0 0 79,000
Director
Kenneth T. King........ 6,753 895 502 77,050
Director
John W. McIntyre....... 6,744 0 0 98,500
Director
Dr. Larry Soll......... 6,744 0 0 96,000
Director
------- ------- ------ --------
TOTAL.................. $61,243 $ 4,994 $3,671 $767,950
======= ======= ====== ========
AS A PERCENTAGE OF NET
ASSETS............... 0.0131%(5) 0.0011% 0.0035%(6)
- ---------------
(1) The Vice Chairman of the Board, the chairmen of the audit, management
liaison, derivatives, soft dollar brokerage and compensation committees, and
Independent Director members of the committees of each Fund receive
compensation for serving in such capacities in addition to the compensation
paid to all Independent Directors.
(2) Represents benefits accrued with respect to the Defined Benefit Deferred
Compensation Plan discussed below, and not compensation deferred at the
election of the directors.
(3) These figures represent the Funds' share of the estimated annual benefits
payable by the INVESCO Complex (excluding INVESCO Global Health Sciences
Fund which does not participate in this retirement plan) upon the directors'
retirement, calculated using the current method of allocating director
compensation among the INVESCO Funds. These estimated benefits assume
retirement at age 72 and that the basic retainer payable to the directors
will be adjusted periodically for inflation, for increases in the number of
funds in the INVESCO Complex, and for other reasons during the period in
which retirement benefits are accrued on behalf of the respective directors.
This results in lower estimated benefits for directors who are closer to
retirement and
32
38
higher estimated benefits for directors who are farther from retirement.
With the exception of Drs. Soll and Gramm, each of these directors has
served as director of one or more of the INVESCO Funds for the minimum
five-year period required to be eligible to participate in the Defined
Benefit Deferred Compensation Plan. Although Mr. McIntyre became eligible to
participate in the Defined Benefit Deferred Compensation Plan as of November
1, 1998, he will not be included in the calculation of retirement benefits
until November 1, 1999.
(4) Mr. Chabris retired as a director effective September 30, 1998.
(5) Total as a percentage of the Specialty Funds' net assets as of July 31,
1998.
(6) Total as a percentage of the 15 INVESCO Funds in the Complex's net assets as
of December 31, 1998
Specialty Funds pays its Independent Directors, Board vice chairman,
committee chairmen and committee members the fees described above. Specialty
Funds also reimburses its Independent Directors for travel expenses incurred in
attending meetings. Charles W. Brady, Chairman of the Board, and Mark H.
Williamson, President, Chief Executive Officer, and Director, as "interested
persons" of the Funds and of other INVESCO Funds, receive compensation and are
reimbursed for travel expenses incurred in attending meetings as officers or
employees of INVESCO or its affiliated companies, but do not receive any
director's fees or other compensation from Specialty Funds or other INVESCO
Funds for their services as directors.
The overall direction and supervision of Specialty Funds is the
responsibility of the Board, which has the primary duty of ensuring that each
Fund's general investment policies and programs are adhered to and that the
Funds are properly administered. The officers of Specialty Funds, all of whom
are officers and employees of and paid by INVESCO, are responsible for the
day-to-day administration of each Fund. The investment adviser for Specialty
Funds has the primary responsibility for making investment decisions on behalf
of each Fund. These investment decisions are reviewed by the investment
committee of INVESCO.
The Boards of the Funds managed by INVESCO have adopted a Defined Benefit
Deferred Compensation Plan (the "Plan") for the non-interested directors and
trustees of the Funds. Under the Plan, each director or trustee who is not an
interested person of the Funds (as defined in Section 2(a)(19) of the 1940 Act)
and who has served for at least five years (a "Qualified Director") is entitled
to receive, upon termination of service as director (normally at retirement age
72 or the retirement age of 73 or 74, if the retirement date is extended by the
Boards for one or two years, but less than three years) continuation of payment
for one year (the "First Year Retirement Benefit") of the annual basic retainer
and annualized board meeting fees payable by the Funds to the Qualified Director
of the time of his or her retirement (the "Basic benefit"). Commencing with any
such director's second year of retirement, and commencing with the first year of
retirement of any director whose retirement has been extended by the Board for
three years, a Qualified Director shall receive quarterly payments at an annual
rate equal to 50% of the Basic Benefit. These payments will continue for the
remainder of the Qualified Director's life or ten years, whichever is longer
(the "Reduced Benefit Payments"). If a Qualified Director dies or becomes
disabled after age 72 and before age 74 while still a director of the Funds, the
First Year Retirement Benefit and Reduced Benefit Payments will be made to him
or her or to his or her beneficiary or estate. If a Qualified Director becomes
disabled or dies either prior to age 72 or during his or her 74th year while
still a director of the Funds, the director will not be entitled to receive the
First Year Retirement Benefit; however, the Reduced Benefit Payments will be
made to his or her beneficiary or estate. The Plan is administered by a
committee of three directors who are also participants in the Plan and one
director who is not a Plan participant. The cost of the Plan will be allocated
among the INVESCO Funds in a manner determined to be fair and equitable by the
committee. The Fund began making payments to Mr. Chabris as of October 1, 1998
under the Plan. The Fund has no stock options
33
39
or other pension or retirement plans for management or other personnel and pays
no salary or compensation to any of its officers.
The Independent Directors have contributed to a deferred compensation plan,
pursuant to which they have deferred receipt of a portion of the compensation
which they would otherwise have been paid as directors of certain of the INVESCO
Funds. The deferred amounts have been invested in shares of certain INVESCO
Funds. Each Independent Director may, therefore, be deemed to have an indirect
interest in shares of each such INVESCO fund, in addition to any fund shares
that they may own directly or beneficially.
Required Vote. Election of each nominee as a director of Specialty Funds
requires the vote of a plurality of the votes cast at the Meeting, in person or
by proxy, and at concurrent Meetings of the shareholders of Asian Growth Fund
and European Small Company Fund, taken in the aggregate.
THE BOARD, INCLUDING THE INDEPENDENT DIRECTORS,
UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" EACH OF THE
NOMINEES IN PROPOSAL 6.
PROPOSAL 7: RATIFICATION OR REJECTION OF SELECTION OF INDEPENDENT ACCOUNTANTS
The Board of Specialty Funds, including all of its Independent Directors,
has selected PricewaterhouseCoopers LLP to continue to serve as independent
accountants of each Fund, subject to ratification by each Fund's shareholders.
PricewaterhouseCoopers LLP has no direct financial interest or material indirect
financial interest in any Fund. Representatives of PricewaterhouseCoopers LLP
are not expected to attend the Meeting, but have been given the opportunity to
make a statement if they so desire, and will be available should any matter
arise requiring their presence.
The independent accountants examine annual financial statements for the
Funds and provide other audit and tax-related services. In recommending the
selection of PricewaterhouseCoopers LLP, the directors reviewed the nature and
scope of the services to be provided (including non-audit services) and whether
the performance of such services would affect the accountants' independence.
Required Vote. Approval of Proposal 7 requires the vote of a majority of
the votes present at the Meeting for each Fund, provided that a quorum is
present.
THE BOARD UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS
VOTE "FOR" PROPOSAL 7.
---------------------
INFORMATION CONCERNING ADVISER, SUB-ADVISERS,
DISTRIBUTOR AND AFFILIATED COMPANIES
INVESCO, a Delaware corporation, serves as each Fund's investment adviser,
and provides other services to each Fund and Specialty Funds. INVESCO
Distributors, Inc., a Delaware corporation that serves as each Fund's
distributor ("IDI"), is a wholly owned subsidiary of INVESCO. INVESCO is a
wholly owned subsidiary of INVESCO North American Holdings, Inc. ("INAH"), 1315
Peachtree Street, N.E., Atlanta,
34
40
Georgia 30309. INAH is an indirect wholly owned subsidiary of AMVESCAP PLC.(1)
The corporate headquarters of AMVESCAP PLC are located at 11 Devonshire Square,
London, EC2M 4YR, England. INVESCO's and IDI's offices are located at 7800 East
Union Avenue, Denver, Colorado 80237. INVESCO currently serves as investment
adviser of 14 open-end investment companies having approximate aggregate net
assets in excess of $21.1 billion as of December 31, 1998.
The principal executive officers and directors of INVESCO and their
principal occupations are:
Mark H. Williamson, Chairman of the Board, President, Chief Executive
Officer and Director, also, President and Chief Executive Officer of IDI;
Charles P. Mayer, Senior Vice President and Director, also, Senior Vice
President and Director of IDI; Ronald L. Grooms, Director, Senior Vice-President
and Treasurer, also, Director, Senior Vice-President and Treasurer of IDI;
Richard W. Healey, Senior Vice President and Director, also, Senior Vice
President and Director of IDI; Timothy J. Miller, Senior Vice President and
Director, also, Senior Vice President and Director of IDI; and Glen A. Payne,
Senior Vice-President, Secretary and General Counsel, also Senior
Vice-President, Secretary and General Counsel of IDI.
The address of each of the foregoing officers and directors is 7800 East
Union Avenue, Denver, Colorado 80237.
INVESCO, as investment adviser, has contracted with INVESCO Asset
Management Limited ("IAML"), to provide portfolio investment advisory services
to LAG Fund. IAML is an indirect, wholly owned subsidiary of AMVESCAP PLC. The
principal executive officers and directors of IAML and their principal
occupations are:
Tristan Hillgarth, Chief Executive Officer; Dennis Elliot, Director;
Jeremy Lambourne, Director; Dallas McGillivray, Director; Anthony
Myers, Director; Graeme Proudfoot, Director; Riccardo Ricciardi,
Director; Martin Trowell, Director; Hugh Ward, Director; Roger Yeates,
Director; Michael Perman, Secretary; and Robert Cachett, Secretary.
The address of each of the foregoing officers and directors is 11
Devonshire Square, London, EC2M 4YR, England.
INVESCO, as investment adviser, has contracted with INVESCO Realty
Advisors, Inc. ("IRAI"), to provide portfolio investment advisory services to
Realty Fund. IRAI is an indirect, wholly owned subsidiary of AMVESCAP PLC. The
principal executive officers and directors of IRAI and their principal
occupations are:
David A. Ridley, Chairman and Director; David N. Farmer, Executive
Vice President; A.D. Frazier, Director; Shellie M. Sims, Vice
President and Secretary; Deborah A. Lamb, Assistant Secretary; Ronald
L. Ragsdale, Vice President and Assistant Secretary; and Dinah L.
Monger, Treasurer and Assistant Secretary.
The address of the foregoing officers and directors is One Lincoln Center,
Suite 700; 5400 LBJ Freeway, LB-2, Dallas, Texas 75240.
- ---------------
1 The intermediary companies between INAH and AMVESCAP PLC are as follows:
INVESCO, Inc., AMVESCAP Group Services, Inc., AVZ, Inc. and INVESCO North
American Group, Ltd., each of which is wholly owned by its immediate parent.
35
41
INVESCO, as investment adviser, has contracted with World Asset Management
("World"), to provide investment sub-advisory services to S&P 500 Index Fund.
World is unaffiliated with any INVESCO entity. The principal executive officers
and directors of World and their principal occupations are:
Steven Albrecht, Chief Executive Officer; Todd B. Johnson, President
and Chief Investment Officer; Robert J. Kay, Director of Client
Services; Ken A. Schluchter, Director Domestic Investments; Theodore
D. Miller, Director International Investments.
The address of the foregoing officers and directors is 255 East Brown
Street, Birmingham, Michigan 48009.
Pursuant to an Administrative Services Agreement between Specialty Funds
and INVESCO, INVESCO provides administrative services to the Specialty Funds,
including sub-accounting and recordkeeping services and functions. For such
services, each Fund pays INVESCO a fee consisting of a base fee of $10,000 per
year, plus an additional incremental fee computed at the annual rate of 0.015%
per year of the average net assets of that Fund. INVESCO is also paid a fee by
that fund for providing transfer agent services, including acting as the
Specialty Funds registrar, transfer agent and dividend disbursing agent. During
the fiscal year ended July 31, 1998, Specialty Funds paid INVESCO total
compensation of $1,173,771 for such services.
OTHER BUSINESS
The Board knows of no other business to be brought before the Meeting. If,
however, any other matters properly come before the Meeting, it is the intention
that proxies that do not contain specific instructions to the contrary will be
voted on such matters in accordance with the judgment of the persons designated
in the proxies.
Specialty Funds does not hold annual meetings of shareholders. Shareholders
wishing to submit proposals for inclusion in a proxy statement and form of proxy
for a subsequent shareholders' meeting should send their written proposals to
the Secretary of Specialty Funds, 7800 East Union Avenue, Denver, Colorado
80237. Specialty Funds has not received any shareholder proposals to be
presented at this meeting.
By order of the Board of Directors
/s/ Glen A. Payne
--------------------------------
Glen A. Payne
Secretary
March 23, 1999
36
42
APPENDIX A
PRINCIPAL SHAREHOLDERS
The following table sets forth the beneficial ownership of each Fund's
outstanding equity securities as of March 12, 1999 by each beneficial owner of
5% or more of a Fund's outstanding equity securities.
AMOUNT AND NATURE
NAME AND ADDRESS OF OWNERSHIP PERCENTAGE
BENEFICIAL OWNERS OF 5% OR MORE OF LATIN FUND
Charles Schwab & Co., Inc. 891,686.4070 36.03%
Special Custody Account for Record
The Exclusive Benefit of Customers
Attn: Mutual Funds
101 Montgomery Street
San Francisco, CA 94104-4122
BENEFICIAL OWNERS OF 5% OR MORE OF REALTY FUND
Charles Schwab & Co., Inc. 391,233.3480 17.12%
Special Custody Account for Record
The Exclusive Benefit of Customers
Attn: Mutual Funds
101 Montgomery Street
San Francisco, CA 94104-4122
Dorothy Berg TR 121,970.0590 5.34%
Dominican Sisters Record
Congregation of Holy Cross Trust
UDT 07/21/98
P.O. Box 280
Edmonds, WA 98020-0280
BENEFICIAL OWNERS OF 5% OR MORE OF S&P 500 INDEX FUND CLASS I
INVESCO Trust Company Cust 121,147.4520 44.16%
Right Choice Managed Care, Inc. Record
Supplemental Executive Retirement Plan
1831 Chestnut Street
St. Louis, MO 63103-2231
David Backstrom 33,277.2080 12.13%
P.O. Box 970 Beneficial
Bridgeton, MO 63044-0970
Ronald L. Grooms 32,219.3180 11.74%
7800 East Union Ave., #800 Beneficial
Denver, CO 80237-2715
A-1
43
AMOUNT AND NATURE
NAME AND ADDRESS OF OWNERSHIP PERCENTAGE
INVESCO Trust Company TR 29,225.1410 10.65%
Right Choice Managed Care Inc. Record
Executive Defined Compensation Plan
1831 Chestnut Street
St. Louis, MO 63103-2231
INVESCO Trust Company TR 25,122.8110 9.16%
Compass Group USA Record
Non-Qualified Plan
IRPS, Attn: Kelly Allen
P.O. Box 1350
Winston Salem, NC 27102-1350
BENEFICIAL OWNERS OF 5% OR MORE OF WORLDWIDE CAPITAL GOODS FUND
Charles Schwab & Co., Inc. 140,175.8460 20.11%
Special Custody Account for Record
The Exclusive Benefit of Customers
Attn: Mutual Funds
101 Montgomery Street
San Francisco, CA 94104-4122
BENEFICIAL OWNERS OF 5% OR MORE OF WORLDWIDE COMMUNICATIONS FUND
Charles Schwab & Co., Inc. 4,268,091.6870 21.27%
Special Custody Account for Record
The Exclusive Benefit of Customers
Attn: Mutual Funds
101 Montgomery Street
San Francisco, CA 94104-4122
National Financial Services Corporation 1,534,731.6430 7.65%
The Exclusive Benefit of Customers Record
One World Financial Center
200 Liberty Street 5th Floor
Attn: Kate -- Recon
New York, NY 10281-5500
A-2
44
APPENDIX B
AGREEMENT AND PLAN OF CONVERSION AND TERMINATION
This AGREEMENT AND PLAN OF CONVERSION AND TERMINATION ("Agreement") is made
as of March 21, 1999, between INVESCO Specialty Funds, Inc., a Maryland
corporation ("Specialty Funds"), on behalf of INVESCO Latin American Growth
Fund, a segregated portfolio of assets ("series") thereof ("Old Fund"), and
INVESCO International Funds, Inc., a Maryland corporation ("International
Funds"), on behalf of its INVESCO Latin American Growth Fund series ("New
Fund"). (Old Fund and New Fund are sometimes referred to herein individually as
a "Fund" and collectively as the "Funds"; and Specialty Funds and International
Funds are sometimes referred to herein individually as an "Investment Company"
and collectively as the "Investment Companies.") All agreements,
representations, actions, and obligations described herein made or to be taken
or undertaken by either Fund are made and shall be taken or undertaken by
Specialty Funds on behalf of Old Fund and by International Funds on behalf of
New Fund.
Old Fund intends to change its identity -- by converting from a series of
Specialty Funds to a series of International Funds -- through a reorganization
within the meaning of section 368(a)(1)(F) of the Internal Revenue Code of 1986,
as amended ("Code"). Old Fund desires to accomplish such conversion by
transferring all its assets to New Fund (which is being established solely for
the purpose of acquiring such assets and continuing Old Fund's business) in
exchange solely for voting shares of common stock in New Fund ("New Fund
Shares") and New Fund's assumption of Old Fund's liabilities, followed by the
constructive distribution of the New Fund Shares pro rata to the holders of
shares of common stock in Old Fund ("Old Fund Shares") in exchange therefor, all
on the terms and conditions set forth in this Agreement (which is intended to
be, and is adopted as, a "plan of reorganization" for federal income tax
purposes). All such transactions are referred to herein as the "Reorganization."
In consideration of the mutual promises herein contained, the parties agree
as follows:
1. PLAN OF CONVERSION AND TERMINATION
1.1. Old Fund agrees to assign, sell, convey, transfer, and deliver all of
its assets described in paragraph 1.2 ("Assets") to New Fund. New Fund
agrees in exchange therefor --
(a) to issue and deliver to Old Fund the number of full and fractional
(rounded to the third decimal place) New Fund Shares equal to the
number of full and fractional Old Fund Shares then outstanding, and
(b) to assume all of Old Fund's liabilities described in paragraph 1.3
("Liabilities").
Such transactions shall take place at the Closing (as defined in
paragraph 2.1).
1.2. The Assets shall include, without limitation, all cash, cash
equivalents, securities, receivables (including interest and dividends
receivable), claims and rights of action, rights to register shares
under applicable securities laws, books and records, deferred and
prepaid expenses shown as assets on Old Fund's books, and other
property owned by Old Fund at the Effective Time (as defined in
paragraph 2.1).
B-1
45
1.3. The Liabilities shall include all of Old Fund's liabilities, debts,
obligations, and duties of whatever kind or nature, whether absolute,
accrued, contingent, or otherwise, whether or not arising in the
ordinary course of business, whether or not determinable at the
Effective Time, and whether or not specifically referred to in this
Agreement.
1.4. At the Effective Time (or as soon thereafter as is reasonably
practicable), (a) the New Fund Share issued pursuant to paragraph 4.4
shall be redeemed by New Fund for $1.00 and (b) Old Fund shall
distribute the New Fund Shares it received pursuant to paragraph 1.1
to its shareholders of record, determined as of the Effective Time
(each a "Shareholder" and collectively "Shareholders"), in
constructive exchange for their Old Fund Shares. Such distribution
shall be accomplished by International Funds' transfer agent's opening
accounts on New Fund's share transfer books in the Shareholders' names
and transferring such New Fund Shares thereto. Each Shareholder's
account shall be credited with the respective pro rata number of full
and fractional (rounded to the third decimal place) New Fund Shares
due that Shareholder. All outstanding Old Fund Shares, including those
represented by certificates, shall simultaneously be canceled on Old
Fund's share transfer books. New Fund shall not issue certificates
representing the New Fund Shares in connection with the
Reorganization.
1.5. As soon as reasonably practicable after distribution of the New Fund
Shares pursuant to paragraph 1.4, but in all events within twelve
months after the Effective Time, Old Fund shall be terminated as a
series of Specialty Funds and any further actions shall be taken in
connection therewith as required by applicable law.
1.6. Any reporting responsibility of Old Fund to a public authority is and
shall remain its responsibility up to and including the date on which
it is terminated.
1.7. Any transfer taxes payable on issuance of New Fund Shares in a name
other than that of the registered holder on Old Fund's books of the
Old Fund Shares constructively exchanged therefor shall be paid by the
person to whom such New Fund Shares are to be issued, as a condition
of such transfer.
2. CLOSING AND EFFECTIVE TIME
2.1. The Reorganization, together with related acts necessary to consummate
the same ("Closing"), shall occur at the Funds' principal office on
June 1, 1999, or at such other place and/or on such other date as to
which the parties may agree. All acts taking place at the Closing
shall be deemed to take place simultaneously as of the close of
business on the date thereof or at such other time as to which the
parties may agree ("Effective Time").
2.2. Specialty Funds' fund accounting and pricing agent shall deliver at
the Closing a certificate of an authorized officer verifying that the
information (including adjusted basis and holding period, by lot)
concerning the Assets, including all portfolio securities, transferred
by Old Fund to New Fund, as reflected on New Fund's books immediately
following the Closing, does or will conform to such information on Old
Fund's books immediately before the Closing. Specialty Funds'
custodian shall deliver at the Closing a certificate of an authorized
officer stating that (a) the Assets held by the custodian will be
transferred to New Fund at the Effective Time and (b) all necessary
taxes in
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conjunction with the delivery of the Assets, including all applicable
federal and state stock transfer stamps, if any, have been paid or
provision for payment has been made.
2.3. International Funds' transfer agent shall deliver at the Closing a
certificate as to the opening on New Fund's share transfer books of
accounts in the Shareholders' names. International Funds shall issue
and deliver a confirmation to Specialty Funds evidencing the New Fund
Shares to be credited to Old Fund at the Effective Time or provide
evidence satisfactory to Specialty Funds that such New Fund Shares
have been credited to Old Fund's account on such books. At the
Closing, each party shall deliver to the other such bills of sale,
checks, assignments, stock certificates, receipts, or other documents
as the other party or its counsel may reasonably request.
2.4. Each Investment Company shall deliver to the other at the Closing a
certificate executed in its name by its President or a Vice President
in form and substance satisfactory to the recipient and dated the
Effective Time, to the effect that the representations and warranties
it made in this Agreement are true and correct at the Effective Time
except as they may be affected by the transactions contemplated by
this Agreement.
3. REPRESENTATIONS AND WARRANTIES
3.1. Old Fund represents and warrants as follows:
3.1.1. Specialty Funds is a corporation duly organized, validly
existing, and in good standing under the laws of the State of
Maryland; and a copy of its Articles of Incorporation is on file
with the Secretary of State of Maryland;
3.1.2. Specialty Funds is duly registered as an open-end management
investment company under the Investment Company Act of 1940, as
amended ("1940 Act"), and such registration will be in full
force and effect at the Effective Time;
3.1.3. Old Fund is a duly established and designated series of
Specialty Funds;
3.1.4. At the Closing, Old Fund will have good and marketable title to
the Assets and full right, power, and authority to sell, assign,
transfer, and deliver the Assets free of any liens or other
encumbrances; and upon delivery and payment for the Assets, New
Fund will acquire good and marketable title thereto;
3.1.5. New Fund Shares are not being acquired for the purpose of making
any distribution thereof, other than in accordance with the
terms hereof;
3.1.6. Old Fund is a "fund" as defined in section 851(g)(2) of the
Code; it qualified for treatment as a regulated investment
company under Subchapter M of the Code ("RIC") for each past
taxable year since it commenced operations and will continue to
meet all the requirements for such qualification for its current
taxable year; and it has no earnings and profits accumulated in
any taxable year in which the provisions of Subchapter M did not
apply to it. The Assets shall be invested at all times through
the Effective Time in a manner that ensures compliance with the
foregoing;
3.1.7. The Liabilities were incurred by Old Fund in the ordinary course
of its business and are associated with the Assets;
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3.1.8. Old Fund is not under the jurisdiction of a court in a
proceeding under Title 11 of the United States Code or similar
case within the meaning of section 368(a)(3)(A) of the Code;
3.1.9. Not more than 25% of the value of Old Fund's total assets
(excluding cash, cash items, and U.S. government securities) is
invested in the stock and securities of any one issuer, and not
more than 50% of the value of such assets is invested in the
stock and securities of five or fewer issuers;
3.1.10. As of the Effective Time, Old Fund will not have outstanding any
warrants, options, convertible securities, or any other type of
rights pursuant to which any person could acquire Old Fund
Shares;
3.1.11. At the Effective Time, the performance of this Agreement shall
have been duly authorized by all necessary action by Old Fund's
shareholders; and
3.1.12. Old Fund will be terminated as soon as reasonably practicable
after the Effective Time, but in all events within twelve months
thereafter.
3.2. New Fund represents and warrants as follows:
3.2.1. International Funds is a corporation duly organized, validly
existing, and in good standing under the laws of the State of
Maryland; and a copy of its Articles of Incorporation is on file
with the Secretary of State of Maryland;
3.2.2. International Funds is duly registered as an open-end management
investment company under the 1940 Act, and such registration
will be in full force and effect at the Effective Time;
3.2.3. Before the Effective Time, New Fund will be a duly established
and designated series of International Funds;
3.2.4. New Fund has not commenced operations and will not do so until
after the Closing;
3.2.5. Prior to the Effective Time, there will be no issued and
outstanding shares in New Fund or any other securities issued by
New Fund, except as provided in paragraph 4.4;
3.2.6. No consideration other than New Fund Shares (and New Fund's
assumption of the Liabilities) will be issued in exchange for
the Assets in the Reorganization;
3.2.7. The New Fund Shares to be issued and delivered to Old Fund
hereunder will, at the Effective Time, have been duly authorized
and, when issued and delivered as provided herein, will be duly
and validly issued and outstanding shares of New Fund, fully
paid and non-assessable;
3.2.8. New Fund will be a "fund" as defined in section 851(g)(2) of the
Code and will meet all the requirements to qualify for treatment
as a RIC for its taxable year in which the Reorganization
occurs;
3.2.9. New Fund has no plan or intention to issue additional New Fund
Shares following the Reorganization except for shares issued in
the ordinary course of its business as a series of an open-end
investment company; nor does New Fund have any plan or intention
to redeem or otherwise reacquire any New Fund Shares issued to
the Shareholders pursuant to the Reorganization, except to the
extent it is required by the 1940 Act to redeem any of its
shares presented for redemption at net asset value in the
ordinary course of that business;
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3.2.10. Following the Reorganization, New Fund (a) will continue Old
Fund's "historic business" (within the meaning of section
1.368-1(d)(2) of the Income Tax Regulations under the Code), (b)
use a significant portion of Old Fund's historic business assets
(within the meaning of section 1.368-1(d)(3) of those
regulations) in a business, (c) has no plan or intention to sell
or otherwise dispose of any of the Assets, except for
dispositions made in the ordinary course of that business and
dispositions necessary to maintain its status as a RIC, and (d)
expects to retain substantially all the Assets in the same form
as it receives them in the Reorganization, unless and until
subsequent investment circumstances suggest the desirability of
change or it becomes necessary to make dispositions thereof to
maintain such status;
3.2.11. There is no plan or intention for New Fund to be dissolved or
merged into another corporation or a business trust or any
"fund" thereof (within the meaning of section 851(g)(2) of the
Code) following the Reorganization; and
3.2.12. Immediately after the Reorganization, (a) not more than 25% of
the value of New Fund's total assets (excluding cash, cash
items, and U.S. government securities) will be invested in the
stock and securities of any one issuer and (b) not more than 50%
of the value of such assets will be invested in the stock and
securities of five or fewer issuers.
3.3. Each Fund represents and warrants as follows:
3.3.1. The aggregate fair market value of the New Fund Shares, when
received by the Shareholders, will be approximately equal to the
aggregate fair market value of their Old Fund Shares
constructively surrendered in exchange therefor;
3.3.2. Its management (a) is unaware of any plan or intention of
Shareholders to redeem, sell, or otherwise dispose of (i) any
portion of their Old Fund Shares before the Reorganization to
any person related (within the meaning of section 1.368-1(e)(3)
of the Income Tax Regulations under the Code) to either Fund or
(ii) any portion of the New Fund Shares to be received by them
in the Reorganization to any person related (as so defined) to
New Fund, (b) does not anticipate dispositions of those New Fund
Shares at the time of or soon after the Reorganization to exceed
the usual rate and frequency of dispositions of shares of Old
Fund as a series of an open-end investment company, (c) expects
that the percentage of Shareholder interests, if any, that will
be disposed of as a result of or at the time of the
Reorganization will be de minimis, and (d) does not anticipate
that there will be extraordinary redemptions of New Fund Shares
immediately following the Reorganization;
3.3.3. The Shareholders will pay their own expenses, if any, incurred
in connection with the Reorganization;
3.3.4. Immediately following consummation of the Reorganization, the
Shareholders will own all the New Fund Shares and will own such
shares solely by reason of their ownership of Old Fund Shares
immediately before the Reorganization;
3.3.5. Immediately following consummation of the Reorganization, New
Fund will hold the same assets -- except for assets distributed
to shareholders in the course of its business as a RIC and
assets used to pay expenses incurred in connection with the
Reorganization -- and be
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subject to the same liabilities that Old Fund held or was
subject to immediately prior to the Reorganization, plus any
liabilities for expenses of the parties incurred in connection
with the Reorganization. Such excepted assets, together with the
amount of all redemptions and distributions (other than regular,
normal dividends) made by Old Fund immediately preceding the
Reorganization, will, in the aggregate, constitute less than 1%
of its net assets;
3.3.6. There is no intercompany indebtedness between the Funds that
was issued or acquired, or will be settled, at a discount; and
3.3.7. Neither Fund will be reimbursed for any expenses incurred by
it or on its behalf in connection with the Reorganization
unless those expenses are solely and directly related to the
Reorganization (determined in accordance with the guidelines
set forth in Rev. Rul. 73-54, 1973-1 C.B. 187)
("Reorganization Expenses").
4. CONDITIONS PRECEDENT
Each Fund's obligations hereunder shall be subject to (a) performance by
the other Fund of all its obligations to be performed hereunder at or before the
Effective Time, (b) all representations and warranties of the other Fund
contained herein being true and correct in all material respects as of the date
hereof and, except as they may be affected by the transactions contemplated
hereby, as of the Effective Time, with the same force and effect as if made on
and as of the Effective Time, and (c) the further conditions that, at or before
the Effective Time:
4.1. This Agreement and the transactions contemplated hereby shall have
been duly adopted and approved by each Investment Company's board of
directors and shall have been approved by Old Fund's shareholders in
accordance with applicable law;
4.2. All necessary filings shall have been made with the Securities and
Exchange Commission ("SEC") and state securities authorities, and no
order or directive shall have been received that any other or further
action is required to permit the parties to carry out the
transactions contemplated hereby. All consents, orders, and permits
of federal, state, and local regulatory authorities (including the
SEC and state securities authorities) deemed necessary by either
Investment Company to permit consummation, in all material respects,
of the transactions contemplated hereby shall have been obtained,
except where failure to obtain same would not involve a risk of a
material adverse effect on the assets or properties of either Fund,
provided that either Investment Company may for itself waive any of
such conditions;
4.3. Each Investment Company shall have received an opinion of Kirkpatrick
& Lockhart LLP, addressed to and in form and substance satisfactory
to it, as to the federal income tax consequences mentioned below
("Tax Opinion"). In rendering the Tax Opinion, such counsel may rely
as to factual matters, exclusively and without independent
verification, on the representations made in this Agreement (or in
separate letters addressed to such counsel) and the certificates
delivered pursuant to paragraph 2.4. The Tax Opinion shall be
substantially to the effect that, based on the
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facts and assumptions stated therein and conditioned on consummation
of the Reorganization in accordance with this Agreement, for federal
income tax purposes:
4.3.1. New Fund's acquisition of the Assets in exchange solely for New
Fund Shares and New Fund's assumption of the Liabilities,
followed by Old Fund's distribution of those shares pro rata to
the Shareholders constructively in exchange for the
Shareholders' Old Fund Shares, will constitute a reorganization
within the meaning of section 368(a)(1)(F) of the Code, and each
Fund will be "a party to a reorganization" within the meaning of
section 368(b) of the Code;
4.3.2. Old Fund will recognize no gain or loss on the transfer to New
Fund of the Assets in exchange solely for New Fund Shares and
New Fund's assumption of the Liabilities or on the subsequent
distribution of those shares to the Shareholders in constructive
exchange for their Old Fund Shares;
4.3.3. New Fund will recognize no gain or loss on its receipt of the
Assets in exchange solely for New Fund Shares and its assumption
of the Liabilities;
4.3.4. New Fund's basis for the Assets will be the same as the basis
thereof in Old Fund's hands immediately before the
Reorganization, and New Fund's holding period for the Assets
will include Old Fund's holding period therefor;
4.3.5. A Shareholder will recognize no gain or loss on the constructive
exchange of all its Old Fund Shares solely for New Fund Shares
pursuant to the Reorganization;
4.3.6. A Shareholder's aggregate basis for the New Fund Shares to be
received by it in the Reorganization will be the same as the
aggregate basis for its Old Fund Shares to be constructively
surrendered in exchange for those New Fund Shares, and its
holding period for those New Fund Shares will include its
holding period for those Old Fund Shares, provided they are held
as capital assets by the Shareholder at the Effective Time; and
4.3.7. For purposes of section 381 of the Code, New Fund will be
treated as if there had been no Reorganization. Accordingly, the
Reorganization will not result in the termination of Old Fund's
taxable year, Old Fund's tax attributes enumerated in section
381(c) of the Code will be taken into account by New Fund as if
there had been no Reorganization, and the part of Old Fund's
taxable year before the Reorganization will be included in New
Fund's taxable year after the Reorganization;
4.4.Prior to the Closing, International Funds' directors shall have
authorized the issuance of, and New Fund shall have issued, one New
Fund Share to Specialty Funds in consideration of the payment of $1.00
to vote on the matters referred to in paragraph 4.5; and
4.5.International Funds (on behalf of and with respect to New Fund) shall
have entered into a management contract, a distribution and service
plan pursuant to Rule 12b-1 under the 1940 Act, and such other
agreements as are necessary for New Fund's operation as a series of an
open-end investment company. Each such contract, plan, and agreement
shall have been approved by International Funds' directors and, to the
extent required by law, by such of those directors who are
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not "interested persons" thereof (as defined in the 1940 Act) and by Specialty
Funds as the sole shareholder of New Fund.
At any time before the Closing, either Investment Company may waive any of
the foregoing conditions (except that set forth in paragraph 4.1) if, in the
judgment of its board of directors, such waiver will not have a material adverse
effect on its Fund's shareholders' interests.
5. BROKERAGE FEES AND EXPENSES
5.1 Each Investment Company represents and warrants to the other that there
are no brokers or finders entitled to receive any payments in
connection with the transactions provided for herein.
5.2 Except as otherwise provided herein, 50% of the total Reorganization
Expenses will be borne by INVESCO Funds Group, Inc. and the remaining
50% will be borne one-half by each Fund.
6. ENTIRE AGREEMENT; NO SURVIVAL
Neither party has made any representation, warranty, or covenant not set
forth herein, and this Agreement constitutes the entire agreement between the
parties. The representations, warranties, and covenants contained herein or in
any document delivered pursuant hereto or in connection herewith shall not
survive the Closing.
7. TERMINATION
This Agreement may be terminated at any time at or prior to the Effective
Time, whether before or after approval by Old Fund's shareholders:
7.1. By either Fund (a) in the event of the other Fund's material breach of
any representation, warranty, or covenant contained herein to be
performed at or prior to the Effective Time, (b) if a condition to its
obligations has not been met and it reasonably appears that such
condition will not or cannot be met, or (c) if the Closing has not
occurred on or before August 31, 1999; or
7.2. By the parties' mutual agreement.
In the event of termination under paragraphs 7.1(c) or 7.2, there shall be
no liability for damages on the part of either Fund, or the directors or
officers of either Investment Company, to the other Fund.
8. AMENDMENT
This Agreement may be amended, modified, or supplemented at any time,
notwithstanding approval thereof by Old Fund's shareholders, in such manner as
may be mutually agreed upon in writing by the parties; provided that following
such approval no such amendment shall have a material adverse effect on the
Shareholders' interests.
9. MISCELLANEOUS
9.1. This Agreement shall be governed by and construed in accordance with
the internal laws of the State of Maryland; provided that, in the case
of any conflict between such laws and the federal securities laws, the
latter shall govern.
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9.2. Nothing expressed or implied herein is intended or shall be construed
to confer upon or give any person, firm, trust, or corporation other
than the parties and their respective successors and assigns any
rights or remedies under or by reason of this Agreement.
9.3. This Agreement may be executed in one or more counterparts, all of
which shall be considered one and the same agreement, and shall become
effective when one or more counterparts have been executed by each
Investment Company and delivered to the other party hereto. The
headings contained in this Agreement are for reference purposes only
and shall not affect in any way the meaning or interpretation of this
Agreement.
IN WITNESS WHEREOF, each party has caused this Agreement to be executed and
delivered by its duly authorized officers as of the day and year first written
above.
ATTEST: INVESCO SPECIALTY FUNDS, INC.,
on behalf of its series,
INVESCO Latin American Growth Fund
By:
- ----------------------------------------------------- ----------------------------------------------
Secretary President
ATTEST: INVESCO INTERNATIONAL FUNDS, INC.,
on behalf of its series,
INVESCO Latin American Growth Fund
By:
- ----------------------------------------------------- ----------------------------------------------
Secretary President
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APPENDIX C
AGREEMENT AND PLAN OF CONVERSION AND TERMINATION
This AGREEMENT AND PLAN OF CONVERSION AND TERMINATION ("Agreement") is made
as of March 21, 1999, between INVESCO Specialty Funds, Inc., a Maryland
corporation ("Specialty Funds"), on behalf of INVESCO Realty Fund, a segregated
portfolio of assets ("series") thereof ("Old Fund"), and INVESCO Sector Funds,
Inc., a Maryland corporation ("Sector Funds"), on behalf of its INVESCO Realty
Fund series ("New Fund"). (Old Fund and New Fund are sometimes referred to
herein individually as a "Fund" and collectively as the "Funds"; and Specialty
Funds and Sector Funds are sometimes referred to herein individually as an
"Investment Company" and collectively as the "Investment Companies.") All
agreements, representations, actions, and obligations described herein made or
to be taken or undertaken by either Fund are made and shall be taken or
undertaken by Specialty Funds on behalf of Old Fund and by Sector Funds on
behalf of New Fund.
Old Fund intends to change its identity -- by converting from a series of
Specialty Funds to a series of Sector Funds -- through a reorganization within
the meaning of section 368(a)(1)(F) of the Internal Revenue Code of 1986, as
amended ("Code"). Old Fund desires to accomplish such conversion by transferring
all its assets to New Fund (which is being established solely for the purpose of
acquiring such assets and continuing Old Fund's business) in exchange solely for
voting shares of common stock in New Fund ("New Fund Shares") and New Fund's
assumption of Old Fund's liabilities, followed by the constructive distribution
of the New Fund Shares pro rata to the holders of shares of common stock in Old
Fund ("Old Fund Shares") in exchange therefor, all on the terms and conditions
set forth in this Agreement (which is intended to be, and is adopted as, a "plan
of reorganization" for federal income tax purposes). All such transactions are
referred to herein as the "Reorganization."
In consideration of the mutual promises herein contained, the parties agree
as follows:
1. PLAN OF CONVERSION AND TERMINATION
1.1. Old Fund agrees to assign, sell, convey, transfer, and deliver all of
its assets described in paragraph 1.2 ("Assets") to New Fund. New Fund
agrees in exchange therefor --
(a) to issue and deliver to Old Fund the number of full and fractional
(rounded to the third decimal place) New Fund Shares equal to the
number of full and fractional Old Fund Shares then outstanding, and
(b) to assume all of Old Fund's liabilities described in paragraph 1.3
("Liabilities").
Such transactions shall take place at the Closing (as defined in
paragraph 2.1).
1.2. The Assets shall include, without limitation, all cash, cash
equivalents, securities, receivables (including interest and dividends
receivable), claims and rights of action, rights to register shares
under applicable securities laws, books and records, deferred and
prepaid expenses shown as assets on Old Fund's books, and other
property owned by Old Fund at the Effective Time (as defined in
paragraph 2.1).
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1.3. The Liabilities shall include all of Old Fund's liabilities, debts,
obligations, and duties of whatever kind or nature, whether absolute,
accrued, contingent, or otherwise, whether or not arising in the
ordinary course of business, whether or not determinable at the
Effective Time, and whether or not specifically referred to in this
Agreement.
1.4. At the Effective Time (or as soon thereafter as is reasonably
practicable), (a) the New Fund Share issued pursuant to paragraph 4.4
shall be redeemed by New Fund for $1.00 and (b) Old Fund shall
distribute the New Fund Shares it received pursuant to paragraph 1.1
to its shareholders of record, determined as of the Effective Time
(each a "Shareholder" and collectively "Shareholders"), in
constructive exchange for their Old Fund Shares. Such distribution
shall be accomplished by Sector Funds' transfer agent's opening
accounts on New Fund's share transfer books in the Shareholders' names
and transferring such New Fund Shares thereto. Each Shareholder's
account shall be credited with the respective pro rata number of full
and fractional (rounded to the third decimal place) New Fund Shares
due that Shareholder. All outstanding Old Fund Shares, including those
represented by certificates, shall simultaneously be canceled on Old
Fund's share transfer books. New Fund shall not issue certificates
representing the New Fund Shares in connection with the
Reorganization.
1.5. As soon as reasonably practicable after distribution of the New Fund
Shares pursuant to paragraph 1.4, but in all events within twelve
months after the Effective Time, Old Fund shall be terminated as a
series of Specialty Funds and any further actions shall be taken in
connection therewith as required by applicable law.
1.6. Any reporting responsibility of Old Fund to a public authority is and
shall remain its responsibility up to and including the date on which
it is terminated.
1.7. Any transfer taxes payable on issuance of New Fund Shares in a name
other than that of the registered holder on Old Fund's books of the
Old Fund Shares constructively exchanged therefor shall be paid by the
person to whom such New Fund Shares are to be issued, as a condition
of such transfer.
2. CLOSING AND EFFECTIVE TIME
2.1. The Reorganization, together with related acts necessary to consummate
the same ("Closing"), shall occur at the Funds' principal office on
June 1, 1999, or at such other place and/or on such other date as to
which the parties may agree. All acts taking place at the Closing
shall be deemed to take place simultaneously as of the close of
business on the date thereof or at such other time as to which the
parties may agree ("Effective Time").
2.2. Specialty Funds' fund accounting and pricing agent shall deliver at
the Closing a certificate of an authorized officer verifying that the
information (including adjusted basis and holding period, by lot)
concerning the Assets, including all portfolio securities, transferred
by Old Fund to New Fund, as reflected on New Fund's books immediately
following the Closing, does or will conform to such information on Old
Fund's books immediately before the Closing. Specialty Funds'
custodian shall deliver at the Closing a certificate of an authorized
officer stating that (a) the Assets held by the custodian will be
transferred to New Fund at the Effective Time and (b) all necessary
taxes in
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conjunction with the delivery of the Assets, including all applicable
federal and state stock transfer stamps, if any, have been paid or
provision for payment has been made.
2.3. Sector Funds' transfer agent shall deliver at the Closing a
certificate as to the opening on New Fund's share transfer books of
accounts in the Shareholders' names. Sector Funds shall issue and
deliver a confirmation to Specialty Funds evidencing the New Fund
Shares to be credited to Old Fund at the Effective Time or provide
evidence satisfactory to Specialty Funds that such New Fund Shares
have been credited to Old Fund's account on such books. At the
Closing, each party shall deliver to the other such bills of sale,
checks, assignments, stock certificates, receipts, or other documents
as the other party or its counsel may reasonably request.
2.4. Each Investment Company shall deliver to the other at the Closing a
certificate executed in its name by its President or a Vice President
in form and substance satisfactory to the recipient and dated the
Effective Time, to the effect that the representations and warranties
it made in this Agreement are true and correct at the Effective Time
except as they may be affected by the transactions contemplated by
this Agreement.
3. REPRESENTATIONS AND WARRANTIES
3.1. Old Fund represents and warrants as follows:
3.1.1. Specialty Funds is a corporation duly organized, validly
existing, and in good standing under the laws of the State of
Maryland; and a copy of its Articles of Incorporation is on file
with the Secretary of State of Maryland;
3.1.2. Specialty Funds is duly registered as an open-end management
investment company under the Investment Company Act of 1940, as
amended ("1940 Act"), and such registration will be in full
force and effect at the Effective Time;
3.1.3. Old Fund is a duly established and designated series of
Specialty Funds;
3.1.4. At the Closing, Old Fund will have good and marketable title to
the Assets and full right, power, and authority to sell, assign,
transfer, and deliver the Assets free of any liens or other
encumbrances; and upon delivery and payment for the Assets, New
Fund will acquire good and marketable title thereto;
3.1.5. New Fund Shares are not being acquired for the purpose of making
any distribution thereof, other than in accordance with the
terms hereof;
3.1.6. Old Fund is a "fund" as defined in section 851(g)(2) of the
Code; it qualified for treatment as a regulated investment
company under Subchapter M of the Code ("RIC") for each past
taxable year since it commenced operations and will continue to
meet all the requirements for such qualification for its current
taxable year; and it has no earnings and profits accumulated in
any taxable year in which the provisions of Subchapter M did not
apply to it. The Assets shall be invested at all times through
the Effective Time in a manner that ensures compliance with the
foregoing;
3.1.7. The Liabilities were incurred by Old Fund in the ordinary course
of its business and are associated with the Assets;
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3.1.8. Old Fund is not under the jurisdiction of a court in a
proceeding under Title 11 of the United States Code or similar
case within the meaning of section 368(a)(3)(A) of the Code;
3.1.9. Not more than 25% of the value of Old Fund's total assets
(excluding cash, cash items, and U.S. government securities) is
invested in the stock and securities of any one issuer, and not
more than 50% of the value of such assets is invested in the
stock and securities of five or fewer issuers;
3.1.10. As of the Effective Time, Old Fund will not have outstanding any
warrants, options, convertible securities, or any other type of
rights pursuant to which any person could acquire Old Fund
Shares;
3.1.11. At the Effective Time, the performance of this Agreement shall
have been duly authorized by all necessary action by Old Fund's
shareholders; and
3.1.12. Old Fund will be terminated as soon as reasonably practicable
after the Effective Time, but in all events within twelve months
thereafter.
3.2. New Fund represents and warrants as follows:
3.2.1. Sector Funds is a corporation duly organized, validly existing,
and in good standing under the laws of the State of Maryland;
and a copy of its Articles of Incorporation is on file with the
Secretary of State of Maryland;
3.2.2. Sector Funds is duly registered as an open-end management
investment company under the 1940 Act, and such registration
will be in full force and effect at the Effective Time;
3.2.3. Before the Effective Time, New Fund will be a duly established
and designated series of Sector Funds;
3.2.4. New Fund has not commenced operations and will not do so until
after the Closing;
3.2.5. Prior to the Effective Time, there will be no issued and
outstanding shares in New Fund or any other securities issued by
New Fund, except as provided in paragraph 4.4;
3.2.6. No consideration other than New Fund Shares (and New Fund's
assumption of the Liabilities) will be issued in exchange for
the Assets in the Reorganization;
3.2.7. The New Fund Shares to be issued and delivered to Old Fund
hereunder will, at the Effective Time, have been duly authorized
and, when issued and delivered as provided herein, will be duly
and validly issued and outstanding shares of New Fund, fully
paid and non-assessable;
3.2.8. New Fund will be a "fund" as defined in section 851(g)(2) of the
Code and will meet all the requirements to qualify for treatment
as a RIC for its taxable year in which the Reorganization
occurs;
3.2.9. New Fund has no plan or intention to issue additional New Fund
Shares following the Reorganization except for shares issued in
the ordinary course of its business as a series of an open-end
investment company; nor does New Fund have any plan or intention
to redeem or otherwise reacquire any New Fund Shares issued to
the Shareholders pursuant to the
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Reorganization, except to the extent it is required by the 1940
Act to redeem any of its shares presented for redemption at net
asset value in the ordinary course of that business;
3.2.10. Following the Reorganization, New Fund (a) will continue Old
Fund's "historic business" (within the meaning of section
1.368-1(d)(2) of the Income Tax Regulations under the Code), (b)
use a significant portion of Old Fund's historic business assets
(within the meaning of section 1.368-1(d)(3) of those
regulations) in a business, (c) has no plan or intention to sell
or otherwise dispose of any of the Assets, except for
dispositions made in the ordinary course of that business and
dispositions necessary to maintain its status as a RIC, and (d)
expects to retain substantially all the Assets in the same form
as it receives them in the Reorganization, unless and until
subsequent investment circumstances suggest the desirability of
change or it becomes necessary to make dispositions thereof to
maintain such status;
3.2.11. There is no plan or intention for New Fund to be dissolved or
merged into another corporation or a business trust or any
"fund" thereof (within the meaning of section 851(g)(2) of the
Code) following the Reorganization; and
3.2.12. Immediately after the Reorganization, (a) not more than 25% of
the value of New Fund's total assets (excluding cash, cash
items, and U.S. government securities) will be invested in the
stock and securities of any one issuer and (b) not more than 50%
of the value of such assets will be invested in the stock and
securities of five or fewer issuers.
3.3. Each Fund represents and warrants as follows:
3.3.1. The aggregate fair market value of the New Fund Shares, when
received by the Shareholders, will be approximately equal to the
aggregate fair market value of their Old Fund Shares
constructively surrendered in exchange therefor;
3.3.2. Its management (a) is unaware of any plan or intention of
Shareholders to redeem, sell, or otherwise dispose of (i) any
portion of their Old Fund Shares before the Reorganization to
any person related (within the meaning of section 1.368-1(e)(3)
of the Income Tax Regulations under the Code) to either Fund or
(ii) any portion of the New Fund Shares to be received by them
in the Reorganization to any person related (as so defined) to
New Fund, (b) does not anticipate dispositions of those New Fund
Shares at the time of or soon after the Reorganization to exceed
the usual rate and frequency of dispositions of shares of Old
Fund as a series of an open-end investment company, (c) expects
that the percentage of Shareholder interests, if any, that will
be disposed of as a result of or at the time of the
Reorganization will be de minimis, and (d) does not anticipate
that there will be extraordinary redemptions of New Fund Shares
immediately following the Reorganization;
3.3.3. The Shareholders will pay their own expenses, if any, incurred
in connection with the Reorganization;
3.3.4. Immediately following consummation of the Reorganization, the
Shareholders will own all the New Fund Shares and will own such
shares solely by reason of their ownership of Old Fund Shares
immediately before the Reorganization;
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3.3.5. Immediately following consummation of the Reorganization, New
Fund will hold the same assets -- except for assets distributed
to shareholders in the course of its business as a RIC and
assets used to pay expenses incurred in connection with the
Reorganization -- and be subject to the same liabilities that
Old Fund held or was subject to immediately prior to the
Reorganization, plus any liabilities for expenses of the parties
incurred in connection with the Reorganization. Such excepted
assets, together with the amount of all redemptions and
distributions (other than regular, normal dividends) made by Old
Fund immediately preceding the Reorganization, will, in the
aggregate, constitute less than 1% of its net assets;
3.3.6. There is no intercompany indebtedness between the Funds that was
issued or acquired, or will be settled, at a discount; and
3.3.7. Neither Fund will be reimbursed for any expenses incurred by it
or on its behalf in connection with the Reorganization unless
those expenses are solely and directly related to the
Reorganization (determined in accordance with the guidelines set
forth in Rev. Rul. 73-54, 1973-1 C.B. 187) ("Reorganization
Expenses").
4. CONDITIONS PRECEDENT
Each Fund's obligations hereunder shall be subject to (a) performance by
the other Fund of all its obligations to be performed hereunder at or before the
Effective Time, (b) all representations and warranties of the other Fund
contained herein being true and correct in all material respects as of the date
hereof and, except as they may be affected by the transactions contemplated
hereby, as of the Effective Time, with the same force and effect as if made on
and as of the Effective Time, and (c) the further conditions that, at or before
the Effective Time:
4.1. This Agreement and the transactions contemplated hereby shall have
been duly adopted and approved by each Investment Company's board of
directors and shall have been approved by Old Fund's shareholders in
accordance with applicable law;
4.2. All necessary filings shall have been made with the Securities and
Exchange Commission ("SEC") and state securities authorities, and no
order or directive shall have been received that any other or further
action is required to permit the parties to carry out the transactions
contemplated hereby. All consents, orders, and permits of federal,
state, and local regulatory authorities (including the SEC and state
securities authorities) deemed necessary by either Investment Company
to permit consummation, in all material respects, of the transactions
contemplated hereby shall have been obtained, except where failure to
obtain same would not involve a risk of a material adverse effect on
the assets or properties of either Fund, provided that either
Investment Company may for itself waive any of such conditions;
4.3. Each Investment Company shall have received an opinion of Kirkpatrick
& Lockhart LLP, addressed to and in form and substance satisfactory to
it, as to the federal income tax consequences mentioned below ("Tax
Opinion"). In rendering the Tax Opinion, such counsel may rely as to
factual matters, exclusively and without independent verification, on
the representations made in this Agreement (or in separate letters
addressed to such counsel) and the certificates delivered pursuant to
paragraph 2.4. The Tax Opinion shall be substantially to the effect
that, based on the facts and
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assumptions stated therein and conditioned on consummation of the
Reorganization in accordance with this Agreement, for federal income
tax purposes:
4.3.1. New Fund's acquisition of the Assets in exchange solely for New
Fund Shares and New Fund's assumption of the Liabilities,
followed by Old Fund's distribution of those shares pro rata to
the Shareholders constructively in exchange for the
Shareholders' Old Fund Shares, will constitute a reorganization
within the meaning of section 368(a)(1)(F) of the Code, and each
Fund will be "a party to a reorganization" within the meaning of
section 368(b) of the Code;
4.3.2. Old Fund will recognize no gain or loss on the transfer to New
Fund of the Assets in exchange solely for New Fund Shares and
New Fund's assumption of the Liabilities or on the subsequent
distribution of those shares to the Shareholders in constructive
exchange for their Old Fund Shares;
4.3.3. New Fund will recognize no gain or loss on its receipt of the
Assets in exchange solely for New Fund Shares and its assumption
of the Liabilities;
4.3.4. New Fund's basis for the Assets will be the same as the basis
thereof in Old Fund's hands immediately before the
Reorganization, and New Fund's holding period for the Assets
will include Old Fund's holding period therefor;
4.3.5. A Shareholder will recognize no gain or loss on the constructive
exchange of all its Old Fund Shares solely for New Fund Shares
pursuant to the Reorganization;
4.3.6. A Shareholder's aggregate basis for the New Fund Shares to be
received by it in the Reorganization will be the same as the
aggregate basis for its Old Fund Shares to be constructively
surrendered in exchange for those New Fund Shares, and its
holding period for those New Fund Shares will include its
holding period for those Old Fund Shares, provided they are held
as capital assets by the Shareholder at the Effective Time; and
4.3.7. For purposes of section 381 of the Code, New Fund will be
treated as if there had been no Reorganization. Accordingly, the
Reorganization will not result in the termination of Old Fund's
taxable year, Old Fund's tax attributes enumerated in section
381(c) of the Code will be taken into account by New Fund as if
there had been no Reorganization, and the part of Old Fund's
taxable year before the Reorganization will be included in New
Fund's taxable year after the Reorganization;
4.4. Prior to the Closing, Sector Funds' directors shall have authorized
the issuance of, and New Fund shall have issued, one New Fund Share to
Specialty Funds in consideration of the payment of $1.00 to vote on
the matters referred to in paragraph 4.5; and
4.5. Sector Funds (on behalf of and with respect to New Fund) shall have
entered into a management contract, a distribution and service plan
pursuant to Rule 12b-1 under the 1940 Act, and such other agreements
as are necessary for New Fund's operation as a series of an open-end
investment company. Each such contract, plan, and agreement shall have
been approved by Sector Funds' directors and, to the extent required
by law, by such of those directors who are not "interested
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persons" thereof (as defined in the 1940 Act) and by Specialty Funds
as the sole shareholder of New Fund.
At any time before the Closing, either Investment Company may waive any of
the foregoing conditions (except that set forth in paragraph 4.1) if, in the
judgment of its board of directors, such waiver will not have a material adverse
effect on its Fund's shareholders' interests.
5. BROKERAGE FEES AND EXPENSES
5.1 Each Investment Company represents and warrants to the other that
there are no brokers or finders entitled to receive any payments in
connection with the transactions provided for herein.
5.2 Except as otherwise provided herein, 50% of the total Reorganization
Expenses will be borne by INVESCO Funds Group, Inc. and the remaining
50% will be borne one-half by each Fund.
6. ENTIRE AGREEMENT; NO SURVIVAL
Neither party has made any representation, warranty, or covenant not set
forth herein, and this Agreement constitutes the entire agreement between the
parties. The representations, warranties, and covenants contained herein or in
any document delivered pursuant hereto or in connection herewith shall not
survive the Closing.
7. TERMINATION
This Agreement may be terminated at any time at or prior to the Effective
Time, whether before or after approval by Old Fund's shareholders:
7.1. By either Fund (a) in the event of the other Fund's material breach of
any representation, warranty, or covenant contained herein to be
performed at or prior to the Effective Time, (b) if a condition to its
obligations has not been met and it reasonably appears that such
condition will not or cannot be met, or (c) if the Closing has not
occurred on or before August 31, 1999; or
7.2. By the parties' mutual agreement.
In the event of termination under paragraphs 7.1(c) or 7.2, there shall be
no liability for damages on the part of either Fund, or the directors or
officers of either Investment Company, to the other Fund.
8. AMENDMENT
This Agreement may be amended, modified, or supplemented at any time,
notwithstanding approval thereof by Old Fund's shareholders, in such manner as
may be mutually agreed upon in writing by the parties; provided that following
such approval no such amendment shall have a material adverse effect on the
Shareholders' interests.
9. MISCELLANEOUS
9.1. This Agreement shall be governed by and construed in accordance with
the internal laws of the State of Maryland; provided that, in the case
of any conflict between such laws and the federal securities laws, the
latter shall govern.
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9.2. Nothing expressed or implied herein is intended or shall be construed
to confer upon or give any person, firm, trust, or corporation other
than the parties and their respective successors and assigns any
rights or remedies under or by reason of this Agreement.
9.3. This Agreement may be executed in one or more counterparts, all of
which shall be considered one and the same agreement, and shall become
effective when one or more counterparts have been executed by each
Investment Company and delivered to the other party hereto. The
headings contained in this Agreement are for reference purposes only
and shall not affect in any way the meaning or interpretation of this
Agreement.
IN WITNESS WHEREOF, each party has caused this Agreement to be executed and
delivered by its duly authorized officers as of the day and year first written
above.
ATTEST: INVESCO SPECIALTY FUNDS, INC.,
on behalf of its series,
INVESCO Realty Fund
By:
- ----------------------------------------------------- ----------------------------------------------
Secretary President
ATTEST: INVESCO SECTOR FUNDS, INC.,
on behalf of its series,
INVESCO Realty Fund
By:
- ----------------------------------------------------- ----------------------------------------------
Secretary President
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APPENDIX D
AGREEMENT AND PLAN OF CONVERSION AND TERMINATION
This AGREEMENT AND PLAN OF CONVERSION AND TERMINATION ("Agreement") is made
as of March 21, 1999, between INVESCO Specialty Funds, Inc., a Maryland
corporation ("Specialty Funds"), on behalf of INVESCO Worldwide Communications
Fund, a segregated portfolio of assets ("series") thereof ("Old Fund"), and
INVESCO Sector Funds, Inc., a Maryland corporation ("Sector Funds"), on behalf
of its INVESCO Worldwide Communications Fund series ("New Fund"). (Old Fund and
New Fund are sometimes referred to herein individually as a "Fund" and
collectively as the "Funds"; and Specialty Funds and Sector Funds are sometimes
referred to herein individually as an "Investment Company" and collectively as
the "Investment Companies.") All agreements, representations, actions, and
obligations described herein made or to be taken or undertaken by either Fund
are made and shall be taken or undertaken by Specialty Funds on behalf of Old
Fund and by Sector Funds on behalf of New Fund.
Old Fund intends to change its identity -- by converting from a series of
Specialty Funds to a series of Sector Funds -- through a reorganization within
the meaning of section 368(a)(1)(F) of the Internal Revenue Code of 1986, as
amended ("Code"). Old Fund desires to accomplish such conversion by transferring
all its assets to New Fund (which is being established solely for the purpose of
acquiring such assets and continuing Old Fund's business) in exchange solely for
voting shares of common stock in New Fund ("New Fund Shares") and New Fund's
assumption of Old Fund's liabilities, followed by the constructive distribution
of the New Fund Shares pro rata to the holders of shares of common stock in Old
Fund ("Old Fund Shares") in exchange therefor, all on the terms and conditions
set forth in this Agreement (which is intended to be, and is adopted as, a "plan
of reorganization" for federal income tax purposes). All such transactions are
referred to herein as the "Reorganization."
In consideration of the mutual promises herein contained, the parties agree
as follows:
1. PLAN OF CONVERSION AND TERMINATION
1.1. Old Fund agrees to assign, sell, convey, transfer, and deliver all of
its assets described in paragraph 1.2 ("Assets") to New Fund. New Fund
agrees in exchange therefor --
(a) to issue and deliver to Old Fund the number of full and fractional
(rounded to the third decimal place) New Fund Shares equal to the
number of full and fractional Old Fund Shares then outstanding, and
(b) to assume all of Old Fund's liabilities described in paragraph 1.3
("Liabilities").
Such transactions shall take place at the Closing (as defined in
paragraph 2.1).
1.2. The Assets shall include, without limitation, all cash, cash
equivalents, securities, receivables (including interest and dividends
receivable), claims and rights of action, rights to register shares
under applicable securities laws, books and records, deferred and
prepaid expenses shown as assets on Old Fund's books, and other
property owned by Old Fund at the Effective Time (as defined in
paragraph 2.1).
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1.3. The Liabilities shall include all of Old Fund's liabilities, debts,
obligations, and duties of whatever kind or nature, whether absolute,
accrued, contingent, or otherwise, whether or not arising in the
ordinary course of business, whether or not determinable at the
Effective Time, and whether or not specifically referred to in this
Agreement.
1.4. At the Effective Time (or as soon thereafter as is reasonably
practicable), (a) the New Fund Share issued pursuant to paragraph 4.4
shall be redeemed by New Fund for $1.00 and (b) Old Fund shall
distribute the New Fund Shares it received pursuant to paragraph 1.1
to its shareholders of record, determined as of the Effective Time
(each a "Shareholder" and collectively "Shareholders"), in
constructive exchange for their Old Fund Shares. Such distribution
shall be accomplished by Sector Funds' transfer agent's opening
accounts on New Fund's share transfer books in the Shareholders' names
and transferring such New Fund Shares thereto. Each Shareholder's
account shall be credited with the respective pro rata number of full
and fractional (rounded to the third decimal place) New Fund Shares
due that Shareholder. All outstanding Old Fund Shares, including those
represented by certificates, shall simultaneously be canceled on Old
Fund's share transfer books. New Fund shall not issue certificates
representing the New Fund Shares in connection with the
Reorganization.
1.5. As soon as reasonably practicable after distribution of the New Fund
Shares pursuant to paragraph 1.4, but in all events within twelve
months after the Effective Time, Old Fund shall be terminated as a
series of Specialty Funds and any further actions shall be taken in
connection therewith as required by applicable law.
1.6. Any reporting responsibility of Old Fund to a public authority is and
shall remain its responsibility up to and including the date on which
it is terminated.
1.7. Any transfer taxes payable on issuance of New Fund Shares in a name
other than that of the registered holder on Old Fund's books of the
Old Fund Shares constructively exchanged therefor shall be paid by the
person to whom such New Fund Shares are to be issued, as a condition
of such transfer.
2. CLOSING AND EFFECTIVE TIME
2.1. The Reorganization, together with related acts necessary to consummate
the same ("Closing"), shall occur at the Funds' principal office on
June 1, 1999, or at such other place and/or on such other date as to
which the parties may agree. All acts taking place at the Closing
shall be deemed to take place simultaneously as of the close of
business on the date thereof or at such other time as to which the
parties may agree ("Effective Time").
2.2. Specialty Funds' fund accounting and pricing agent shall deliver at
the Closing a certificate of an authorized officer verifying that the
information (including adjusted basis and holding period, by lot)
concerning the Assets, including all portfolio securities, transferred
by Old Fund to New Fund, as reflected on New Fund's books immediately
following the Closing, does or will conform to such information on Old
Fund's books immediately before the Closing. Specialty Funds'
custodian shall deliver at the Closing a certificate of an authorized
officer stating that (a) the Assets held by the custodian will be
transferred to New Fund at the Effective Time and (b) all necessary
taxes in
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conjunction with the delivery of the Assets, including all applicable
federal and state stock transfer stamps, if any, have been paid or
provision for payment has been made.
2.3. Sector Funds' transfer agent shall deliver at the Closing a
certificate as to the opening on New Fund's share transfer books of
accounts in the Shareholders' names. Sector Funds shall issue and
deliver a confirmation to Specialty Funds evidencing the New Fund
Shares to be credited to Old Fund at the Effective Time or provide
evidence satisfactory to Specialty Funds that such New Fund Shares
have been credited to Old Fund's account on such books. At the
Closing, each party shall deliver to the other such bills of sale,
checks, assignments, stock certificates, receipts, or other documents
as the other party or its counsel may reasonably request.
2.4. Each Investment Company shall deliver to the other at the Closing a
certificate executed in its name by its President or a Vice President
in form and substance satisfactory to the recipient and dated the
Effective Time, to the effect that the representations and warranties
it made in this Agreement are true and correct at the Effective Time
except as they may be affected by the transactions contemplated by
this Agreement.
3. REPRESENTATIONS AND WARRANTIES
3.1. Old Fund represents and warrants as follows:
3.1.1. Specialty Funds is a corporation duly organized, validly
existing, and in good standing under the laws of the State of
Maryland; and a copy of its Articles of Incorporation is on file
with the Secretary of State of Maryland;
3.1.2. Specialty Funds is duly registered as an open-end management
investment company under the Investment Company Act of 1940, as
amended ("1940 Act"), and such registration will be in full
force and effect at the Effective Time;
3.1.3. Old Fund is a duly established and designated series of
Specialty Funds;
3.1.4. At the Closing, Old Fund will have good and marketable title to
the Assets and full right, power, and authority to sell, assign,
transfer, and deliver the Assets free of any liens or other
encumbrances; and upon delivery and payment for the Assets, New
Fund will acquire good and marketable title thereto;
3.1.5. New Fund Shares are not being acquired for the purpose of making
any distribution thereof, other than in accordance with the
terms hereof;
3.1.6. Old Fund is a "fund" as defined in section 851(g)(2) of the
Code; it qualified for treatment as a regulated investment
company under Subchapter M of the Code ("RIC") for each past
taxable year since it commenced operations and will continue to
meet all the requirements for such qualification for its current
taxable year; and it has no earnings and profits accumulated in
any taxable year in which the provisions of Subchapter M did not
apply to it. The Assets shall be invested at all times through
the Effective Time in a manner that ensures compliance with the
foregoing;
3.1.7. The Liabilities were incurred by Old Fund in the ordinary course
of its business and are associated with the Assets;
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3.1.8. Old Fund is not under the jurisdiction of a court in a
proceeding under Title 11 of the United States Code or similar
case within the meaning of section 368(a)(3)(A) of the Code;
3.1.9. Not more than 25% of the value of Old Fund's total assets
(excluding cash, cash items, and U.S. government securities) is
invested in the stock and securities of any one issuer, and not
more than 50% of the value of such assets is invested in the
stock and securities of five or fewer issuers;
3.1.10. As of the Effective Time, Old Fund will not have outstanding any
warrants, options, convertible securities, or any other type of
rights pursuant to which any person could acquire Old Fund
Shares;
3.1.11. At the Effective Time, the performance of this Agreement shall
have been duly authorized by all necessary action by Old Fund's
shareholders; and
3.1.12. Old Fund will be terminated as soon as reasonably practicable
after the Effective Time, but in all events within twelve months
thereafter.
3.2. New Fund represents and warrants as follows:
3.2.1. Sector Funds is a corporation duly organized, validly existing,
and in good standing under the laws of the State of Maryland;
and a copy of its Articles of Incorporation is on file with the
Secretary of State of Maryland;
3.2.2. Sector Funds is duly registered as an open-end management
investment company under the 1940 Act, and such registration
will be in full force and effect at the Effective Time;
3.2.3. Before the Effective Time, New Fund will be a duly established
and designated series of Sector Funds;
3.2.4. New Fund has not commenced operations and will not do so until
after the Closing;
3.2.5. Prior to the Effective Time, there will be no issued and
outstanding shares in New Fund or any other securities issued by
New Fund, except as provided in paragraph 4.4;
3.2.6. No consideration other than New Fund Shares (and New Fund's
assumption of the Liabilities) will be issued in exchange for
the Assets in the Reorganization;
3.2.7. The New Fund Shares to be issued and delivered to Old Fund
hereunder will, at the Effective Time, have been duly authorized
and, when issued and delivered as provided herein, will be duly
and validly issued and outstanding shares of New Fund, fully
paid and non-assessable;
3.2.8. New Fund will be a "fund" as defined in section 851(g)(2) of the
Code and will meet all the requirements to qualify for treatment
as a RIC for its taxable year in which the Reorganization
occurs;
3.2.9. New Fund has no plan or intention to issue additional New Fund
Shares following the Reorganization except for shares issued in
the ordinary course of its business as a series of an open-end
investment company; nor does New Fund have any plan or intention
to redeem or otherwise reacquire any New Fund Shares issued to
the Shareholders pursuant to the
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Reorganization, except to the extent it is required by the 1940
Act to redeem any of its shares presented for redemption at net
asset value in the ordinary course of that business;
3.2.10. Following the Reorganization, New Fund (a) will continue Old
Fund's "historic business" (within the meaning of section
1.368-1(d)(2) of the Income Tax Regulations under the Code), (b)
use a significant portion of Old Fund's historic business assets
(within the meaning of section 1.368-1(d)(3) of those
regulations) in a business, (c) has no plan or intention to sell
or otherwise dispose of any of the Assets, except for
dispositions made in the ordinary course of that business and
dispositions necessary to maintain its status as a RIC, and (d)
expects to retain substantially all the Assets in the same form
as it receives them in the Reorganization, unless and until
subsequent investment circumstances suggest the desirability of
change or it becomes necessary to make dispositions thereof to
maintain such status;
3.2.11. There is no plan or intention for New Fund to be dissolved or
merged into another corporation or a business trust or any
"fund" thereof (within the meaning of section 851(g)(2) of the
Code) following the Reorganization; and
3.2.12. Immediately after the Reorganization, (a) not more than 25% of
the value of New Fund's total assets (excluding cash, cash
items, and U.S. government securities) will be invested in the
stock and securities of any one issuer and (b) not more than 50%
of the value of such assets will be invested in the stock and
securities of five or fewer issuers.
3.3. Each Fund represents and warrants as follows:
3.3.1. The aggregate fair market value of the New Fund Shares, when
received by the Shareholders, will be approximately equal to the
aggregate fair market value of their Old Fund Shares
constructively surrendered in exchange therefor;
3.3.2. Its management (a) is unaware of any plan or intention of
Shareholders to redeem, sell, or otherwise dispose of (i) any
portion of their Old Fund Shares before the Reorganization to
any person related (within the meaning of section 1.368-1(e)(3)
of the Income Tax Regulations under the Code) to either Fund or
(ii) any portion of the New Fund Shares to be received by them
in the Reorganization to any person related (as so defined) to
New Fund, (b) does not anticipate dispositions of those New Fund
Shares at the time of or soon after the Reorganization to exceed
the usual rate and frequency of dispositions of shares of Old
Fund as a series of an open-end investment company, (c) expects
that the percentage of Shareholder interests, if any, that will
be disposed of as a result of or at the time of the
Reorganization will be de minimis, and (d) does not anticipate
that there will be extraordinary redemptions of New Fund Shares
immediately following the Reorganization;
3.3.3. The Shareholders will pay their own expenses, if any, incurred
in connection with the Reorganization;
3.3.4. Immediately following consummation of the Reorganization, the
Shareholders will own all the New Fund Shares and will own such
shares solely by reason of their ownership of Old Fund Shares
immediately before the Reorganization;
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3.3.5. Immediately following consummation of the Reorganization, New
Fund will hold the same assets -- except for assets distributed
to shareholders in the course of its business as a RIC and
assets used to pay expenses incurred in connection with the
Reorganization -- and be subject to the same liabilities that
Old Fund held or was subject to immediately prior to the
Reorganization, plus any liabilities for expenses of the parties
incurred in connection with the Reorganization. Such excepted
assets, together with the amount of all redemptions and
distributions (other than regular, normal dividends) made by Old
Fund immediately preceding the Reorganization, will, in the
aggregate, constitute less than 1% of its net assets;
3.3.6. There is no intercompany indebtedness between the Funds that was
issued or acquired, or will be settled, at a discount; and
3.3.7. Neither Fund will be reimbursed for any expenses incurred by it
or on its behalf in connection with the Reorganization unless
those expenses are solely and directly related to the
Reorganization (determined in accordance with the guidelines set
forth in Rev. Rul. 73-54, 1973-1 C.B. 187) ("Reorganization
Expenses").
4. CONDITIONS PRECEDENT
Each Fund's obligations hereunder shall be subject to (a) performance by
the other Fund of all its obligations to be performed hereunder at or before the
Effective Time, (b) all representations and warranties of the other Fund
contained herein being true and correct in all material respects as of the date
hereof and, except as they may be affected by the transactions contemplated
hereby, as of the Effective Time, with the same force and effect as if made on
and as of the Effective Time, and (c) the further conditions that, at or before
the Effective Time:
4.1. This Agreement and the transactions contemplated hereby shall have
been duly adopted and approved by each Investment Company's board of
directors and shall have been approved by Old Fund's shareholders in
accordance with applicable law;
4.2. All necessary filings shall have been made with the Securities and
Exchange Commission ("SEC") and state securities authorities, and no
order or directive shall have been received that any other or further
action is required to permit the parties to carry out the transactions
contemplated hereby. All consents, orders, and permits of federal,
state, and local regulatory authorities (including the SEC and state
securities authorities) deemed necessary by either Investment Company
to permit consummation, in all material respects, of the transactions
contemplated hereby shall have been obtained, except where failure to
obtain same would not involve a risk of a material adverse effect on
the assets or properties of either Fund, provided that either
Investment Company may for itself waive any of such conditions;
4.3. Each Investment Company shall have received an opinion of Kirkpatrick
& Lockhart LLP, addressed to and in form and substance satisfactory to
it, as to the federal income tax consequences mentioned below ("Tax
Opinion"). In rendering the Tax Opinion, such counsel may rely as to
factual matters, exclusively and without independent verification, on
the representations made in this Agreement (or in separate letters
addressed to such counsel) and the certificates delivered pursuant to
paragraph 2.4. The Tax Opinion shall be substantially to the effect
that, based on the facts and
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assumptions stated therein and conditioned on consummation of the
Reorganization in accordance with this Agreement, for federal income
tax purposes:
4.3.1. New Fund's acquisition of the Assets in exchange solely for New
Fund Shares and New Fund's assumption of the Liabilities,
followed by Old Fund's distribution of those shares pro rata to
the Shareholders constructively in exchange for the
Shareholders' Old Fund Shares, will constitute a reorganization
within the meaning of section 368(a)(1)(F) of the Code, and each
Fund will be "a party to a reorganization" within the meaning of
section 368(b) of the Code;
4.3.2. Old Fund will recognize no gain or loss on the transfer to New
Fund of the Assets in exchange solely for New Fund Shares and
New Fund's assumption of the Liabilities or on the subsequent
distribution of those shares to the Shareholders in constructive
exchange for their Old Fund Shares;
4.3.3. New Fund will recognize no gain or loss on its receipt of the
Assets in exchange solely for New Fund Shares and its assumption
of the Liabilities;
4.3.4. New Fund's basis for the Assets will be the same as the basis
thereof in Old Fund's hands immediately before the
Reorganization, and New Fund's holding period for the Assets
will include Old Fund's holding period therefor;
4.3.5. A Shareholder will recognize no gain or loss on the constructive
exchange of all its Old Fund Shares solely for New Fund Shares
pursuant to the Reorganization;
4.3.6. A Shareholder's aggregate basis for the New Fund Shares to be
received by it in the Reorganization will be the same as the
aggregate basis for its Old Fund Shares to be constructively
surrendered in exchange for those New Fund Shares, and its
holding period for those New Fund Shares will include its
holding period for those Old Fund Shares, provided they are held
as capital assets by the Shareholder at the Effective Time; and
4.3.7. For purposes of section 381 of the Code, New Fund will be
treated as if there had been no Reorganization. Accordingly, the
Reorganization will not result in the termination of Old Fund's
taxable year, Old Fund's tax attributes enumerated in section
381(c) of the Code will be taken into account by New Fund as if
there had been no Reorganization, and the part of Old Fund's
taxable year before the Reorganization will be included in New
Fund's taxable year after the Reorganization;
4.4. Prior to the Closing, Sector Funds' directors shall have authorized
the issuance of, and New Fund shall have issued, one New Fund Share to
Specialty Funds in consideration of the payment of $1.00 to vote on
the matters referred to in paragraph 4.5; and
4.5. Sector Funds (on behalf of and with respect to New Fund) shall have
entered into a management contract, a distribution and service plan
pursuant to Rule 12b-1 under the 1940 Act, and such other agreements
as are necessary for New Fund's operation as a series of an open-end
investment company. Each such contract, plan, and agreement shall have
been approved by Sector Funds' directors and, to the extent required
by law, by such of those directors who are not "interested
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persons" thereof (as defined in the 1940 Act) and by Specialty Funds
as the sole shareholder of New Fund.
At any time before the Closing, either Investment Company may waive any of
the foregoing conditions (except that set forth in paragraph 4.1) if, in the
judgment of its board of directors, such waiver will not have a material adverse
effect on its Fund's shareholders' interests.
5. BROKERAGE FEES AND EXPENSES
5.1 Each Investment Company represents and warrants to the other that there
are no brokers or finders entitled to receive any payments in
connection with the transactions provided for herein.
5.2 Except as otherwise provided herein, 50% of the total Reorganization
Expenses will be borne by INVESCO Funds Group, Inc. and the remaining
50% will be borne one-half by each Fund.
6. ENTIRE AGREEMENT; NO SURVIVAL
Neither party has made any representation, warranty, or covenant not set
forth herein, and this Agreement constitutes the entire agreement between the
parties. The representations, warranties, and covenants contained herein or in
any document delivered pursuant hereto or in connection herewith shall not
survive the Closing.
7. TERMINATION
This Agreement may be terminated at any time at or prior to the Effective
Time, whether before or after approval by Old Fund's shareholders:
7.1. By either Fund (a) in the event of the other Fund's material breach of
any representation, warranty, or covenant contained herein to be
performed at or prior to the Effective Time, (b) if a condition to its
obligations has not been met and it reasonably appears that such
condition will not or cannot be met, or (c) if the Closing has not
occurred on or before August 31, 1999; or
7.2. By the parties' mutual agreement.
In the event of termination under paragraphs 7.1(c) or 7.2, there shall be
no liability for damages on the part of either Fund, or the directors or
officers of either Investment Company, to the other Fund.
8. AMENDMENT
This Agreement may be amended, modified, or supplemented at any time,
notwithstanding approval thereof by Old Fund's shareholders, in such manner as
may be mutually agreed upon in writing by the parties; provided that following
such approval no such amendment shall have a material adverse effect on the
Shareholders' interests.
9. MISCELLANEOUS
9.1. This Agreement shall be governed by and construed in accordance with
the internal laws of the State of Maryland; provided that, in the case
of any conflict between such laws and the federal securities laws, the
latter shall govern.
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9.2. Nothing expressed or implied herein is intended or shall be construed
to confer upon or give any person, firm, trust, or corporation other
than the parties and their respective successors and assigns any
rights or remedies under or by reason of this Agreement.
9.3. This Agreement may be executed in one or more counterparts, all of
which shall be considered one and the same agreement, and shall become
effective when one or more counterparts have been executed by each
Investment Company and delivered to the other party hereto. The
headings contained in this Agreement are for reference purposes only
and shall not affect in any way the meaning or interpretation of this
Agreement.
IN WITNESS WHEREOF, each party has caused this Agreement to be executed and
delivered by its duly authorized officers as of the day and year first written
above.
ATTEST: INVESCO SPECIALTY FUNDS, INC.,
on behalf of its series,
INVESCO Worldwide Communications Fund
By:
- ----------------------------------------------------- --------------------------------------------------
Secretary President
ATTEST: INVESCO SECTOR FUNDS, INC.,
on behalf of its series,
INVESCO Worldwide Communications Fund
By:
- ----------------------------------------------------- --------------------------------------------------
Secretary President
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APPENDIX E
AGREEMENT AND PLAN OF CONVERSION AND TERMINATION
This AGREEMENT AND PLAN OF CONVERSION AND TERMINATION ("Agreement") is made
as of March 21, 1999, between INVESCO Specialty Funds, Inc., a Maryland
corporation ("Specialty Funds"), on behalf of INVESCO S&P 500 Index Fund, a
segregated portfolio of assets ("series") thereof ("Old Fund"), and INVESCO
Stock Funds, Inc., a Maryland corporation ("Stock Funds"), on behalf of its
INVESCO S&P 500 Index Fund series ("New Fund"). (Old Fund and New Fund are
sometimes referred to herein individually as a "Fund" and collectively as the
"Funds"; and Specialty Funds and Stock Funds are sometimes referred to herein
individually as an "Investment Company" and collectively as the "Investment
Companies.") All agreements, representations, actions, and obligations described
herein made or to be taken or undertaken by either Fund are made and shall be
taken or undertaken by Specialty Funds on behalf of Old Fund and by Stock Funds
on behalf of New Fund.
Old Fund intends to change its identity -- by converting from a series of
Specialty Funds to a series of Stock Funds -- through a reorganization within
the meaning of section 368(a)(1)(F) of the Internal Revenue Code of 1986, as
amended ("Code"). Old Fund desires to accomplish such conversion by transferring
all its assets to New Fund (which is being established solely for the purpose of
acquiring such assets and continuing Old Fund's business) in exchange solely for
voting shares of common stock in New Fund ("New Fund Shares") and New Fund's
assumption of Old Fund's liabilities, followed by the constructive distribution
of the New Fund Shares pro rata to the holders of shares of common stock in Old
Fund ("Old Fund Shares") in exchange therefor, all on the terms and conditions
set forth in this Agreement (which is intended to be, and is adopted as, a "plan
of reorganization" for federal income tax purposes). All such transactions are
referred to herein as the "Reorganization."
The Old Fund Shares currently are divided into two classes, designated
Class I and Class II shares ("Class I Old Fund Shares" and "Class II Old Fund
Shares," respectively). The New Fund Shares will be divided into two classes,
also designated Class I and Class II shares ("Class I New Fund Shares" and
"Class II New Fund Shares," respectively.) The classes of New Fund Shares are
substantially similar to the correspondingly designated classes of Old Fund
Shares.
In consideration of the mutual promises herein contained, the parties agree
as follows:
1. PLAN OF CONVERSION AND TERMINATION
1.1. Old Fund agrees to assign, sell, convey, transfer, and deliver all of
its assets described in paragraph 1.2 ("Assets") to New Fund. New Fund
agrees in exchange therefor --
(a) to issue and deliver to Old Fund the number of full and fractional
(rounded to the third decimal place) (i) Class I New Fund Shares
equal to the number of full and fractional Class I Old Fund Shares
then outstanding and (ii) Class II New Fund Shares equal to the
number of full and fractional Class II Old Fund Shares then
outstanding; and
(b) to assume all of Old Fund's liabilities described in paragraph 1.3
("Liabilities").
Such transactions shall take place at the Closing (as defined in
paragraph 2.1).
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1.2. The Assets shall include, without limitation, all cash, cash
equivalents, securities, receivables (including interest and dividends
receivable), claims and rights of action, rights to register shares
under applicable securities laws, books and records, deferred and
prepaid expenses shown as assets on Old Fund's books, and other
property owned by Old Fund at the Effective Time (as defined in
paragraph 2.1).
1.3. The Liabilities shall include all of Old Fund's liabilities, debts,
obligations, and duties of whatever kind or nature, whether absolute,
accrued, contingent, or otherwise, whether or not arising in the
ordinary course of business, whether or not determinable at the
Effective Time, and whether or not specifically referred to in this
Agreement.
1.4. At the Effective Time (or as soon thereafter as is reasonably
practicable), (a) the New Fund Shares issued pursuant to paragraph 4.4
shall be redeemed by New Fund for $1.00 apiece and (b) Old Fund shall
distribute the New Fund Shares it received pursuant to paragraph 1.1
to its shareholders of record, determined as of the Effective Time
(each a "Shareholder" and collectively "Shareholders"), in
constructive exchange for their Old Fund Shares. Such distribution
shall be accomplished by Stock Funds' transfer agent's opening
accounts on New Fund's share transfer books in the Shareholders' names
and transferring such New Fund Shares thereto. Each Shareholder's
account shall be credited with the respective pro rata number of full
and fractional (rounded to the third decimal place) New Fund Shares
due that Shareholder, by class (i.e., the account for a Shareholder of
Class I Old Fund Shares shall be credited with the respective pro rata
number of Class I New Fund Shares due that Shareholder, and the
account for a Shareholder of Class II Old Fund Shares shall be
credited with the respective pro rata number of Class II New Fund
Shares due that Shareholder). All outstanding Old Fund Shares,
including those represented by certificates, shall simultaneously be
canceled on Old Fund's share transfer books. New Fund shall not issue
certificates representing the New Fund Shares in connection with the
Reorganization.
1.5. As soon as reasonably practicable after distribution of the New Fund
Shares pursuant to paragraph 1.4, but in all events within twelve
months after the Effective Time, Old Fund shall be terminated as a
series of Specialty Funds and any further actions shall be taken in
connection therewith as required by applicable law.
1.6. Any reporting responsibility of Old Fund to a public authority is and
shall remain its responsibility up to and including the date on which
it is terminated.
1.7. Any transfer taxes payable on issuance of New Fund Shares in a name
other than that of the registered holder on Old Fund's books of the
Old Fund Shares constructively exchanged therefor shall be paid by the
person to whom such New Fund Shares are to be issued, as a condition
of such transfer.
2. CLOSING AND EFFECTIVE TIME
2.1. The Reorganization, together with related acts necessary to consummate
the same ("Closing"), shall occur at the Funds' principal office on
June 1, 1999, or at such other place and/or on such other date as to
which the parties may agree. All acts taking place at the Closing
shall be deemed to take place simultaneously as of the close of
business on the date thereof or at such other time as to which the
parties may agree ("Effective Time").
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2.2. Specialty Funds' fund accounting and pricing agent shall deliver at
the Closing a certificate of an authorized officer verifying that the
information (including adjusted basis and holding period, by lot)
concerning the Assets, including all portfolio securities, transferred
by Old Fund to New Fund, as reflected on New Fund's books immediately
following the Closing, does or will conform to such information on Old
Fund's books immediately before the Closing. Specialty Funds'
custodian shall deliver at the Closing a certificate of an authorized
officer stating that (a) the Assets held by the custodian will be
transferred to New Fund at the Effective Time and (b) all necessary
taxes in conjunction with the delivery of the Assets, including all
applicable federal and state stock transfer stamps, if any, have been
paid or provision for payment has been made.
2.3. Stock Funds' transfer agent shall deliver at the Closing a certificate
as to the opening on New Fund's share transfer books of accounts in
the Shareholders' names. Stock Funds shall issue and deliver a
confirmation to Specialty Funds evidencing the New Fund Shares to be
credited to Old Fund at the Effective Time or provide evidence
satisfactory to Specialty Funds that such New Fund Shares have been
credited to Old Fund's account on such books. At the Closing, each
party shall deliver to the other such bills of sale, checks,
assignments, stock certificates, receipts, or other documents as the
other party or its counsel may reasonably request.
2.4. Each Investment Company shall deliver to the other at the Closing a
certificate executed in its name by its President or a Vice President
in form and substance satisfactory to the recipient and dated the
Effective Time, to the effect that the representations and warranties
it made in this Agreement are true and correct at the Effective Time
except as they may be affected by the transactions contemplated by
this Agreement.
3. REPRESENTATIONS AND WARRANTIES
3.1. Old Fund represents and warrants as follows:
3.1.1. Specialty Funds is a corporation duly organized, validly
existing, and in good standing under the laws of the State of
Maryland; and a copy of its Articles of Incorporation is on file
with the Secretary of State of Maryland;
3.1.2. Specialty Funds is duly registered as an open-end management
investment company under the Investment Company Act of 1940, as
amended ("1940 Act"), and such registration will be in full
force and effect at the Effective Time;
3.1.3. Old Fund is a duly established and designated series of
Specialty Funds;
3.1.4. At the Closing, Old Fund will have good and marketable title to
the Assets and full right, power, and authority to sell, assign,
transfer, and deliver the Assets free of any liens or other
encumbrances; and upon delivery and payment for the Assets, New
Fund will acquire good and marketable title thereto;
3.1.5. New Fund Shares are not being acquired for the purpose of making
any distribution thereof, other than in accordance with the
terms hereof;
3.1.6. Old Fund is a "fund" as defined in section 851(g)(2) of the
Code; it qualified for treatment as a regulated investment
company under Subchapter M of the Code ("RIC") for each past
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taxable year since it commenced operations and will continue to
meet all the requirements for such qualification for its current
taxable year; and it has no earnings and profits accumulated in
any taxable year in which the provisions of Subchapter M did not
apply to it. The Assets shall be invested at all times through
the Effective Time in a manner that ensures compliance with the
foregoing;
3.1.7. The Liabilities were incurred by Old Fund in the ordinary course
of its business and are associated with the Assets;
3.1.8. Old Fund is not under the jurisdiction of a court in a
proceeding under Title 11 of the United States Code or similar
case within the meaning of section 368(a)(3)(A) of the Code;
3.1.9. Not more than 25% of the value of Old Fund's total assets
(excluding cash, cash items, and U.S. government securities) is
invested in the stock and securities of any one issuer, and not
more than 50% of the value of such assets is invested in the
stock and securities of five or fewer issuers;
3.1.10. As of the Effective Time, Old Fund will not have outstanding any
warrants, options, convertible securities, or any other type of
rights pursuant to which any person could acquire Old Fund
Shares;
3.1.11. At the Effective Time, the performance of this Agreement shall
have been duly authorized by all necessary action by Old Fund's
shareholders; and
3.1.12. Old Fund will be terminated as soon as reasonably practicable
after the Effective Time, but in all events within twelve months
thereafter.
3.2. New Fund represents and warrants as follows:
3.2.1. Stock Funds is a corporation duly organized, validly existing,
and in good standing under the laws of the State of Maryland;
and a copy of its Articles of Incorporation is on file with the
Secretary of State of Maryland;
3.2.2. Stock Funds is duly registered as an open-end management
investment company under the 1940 Act, and such registration
will be in full force and effect at the Effective Time;
3.2.3. Before the Effective Time, New Fund will be a duly established
and designated series of Stock Funds;
3.2.4. New Fund has not commenced operations and will not do so until
after the Closing;
3.2.5. Prior to the Effective Time, there will be no issued and
outstanding shares in New Fund or any other securities issued by
New Fund, except as provided in paragraph 4.4;
3.2.6. No consideration other than New Fund Shares (and New Fund's
assumption of the Liabilities) will be issued in exchange for
the Assets in the Reorganization;
3.2.7. The New Fund Shares to be issued and delivered to Old Fund
hereunder will, at the Effective Time, have been duly authorized
and, when issued and delivered as provided herein, will be duly
and validly issued and outstanding shares of New Fund, fully
paid and non-assessable;
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3.2.8. New Fund will be a "fund" as defined in section 851(g)(2) of the
Code and will meet all the requirements to qualify for treatment
as a RIC for its taxable year in which the Reorganization
occurs;
3.2.9. New Fund has no plan or intention to issue additional New Fund
Shares following the Reorganization except for shares issued in
the ordinary course of its business as a series of an open-end
investment company; nor does New Fund have any plan or intention
to redeem or otherwise reacquire any New Fund Shares issued to
the Shareholders pursuant to the Reorganization, except to the
extent it is required by the 1940 Act to redeem any of its
shares presented for redemption at net asset value in the
ordinary course of that business;
3.2.10. Following the Reorganization, New Fund (a) will continue Old
Fund's "historic business" (within the meaning of section
1.368-1(d)(2) of the Income Tax Regulations under the Code), (b)
use a significant portion of Old Fund's historic business assets
(within the meaning of section 1.368-1(d)(3) of those
regulations) in a business, (c) has no plan or intention to sell
or otherwise dispose of any of the Assets, except for
dispositions made in the ordinary course of that business and
dispositions necessary to maintain its status as a RIC, and (d)
expects to retain substantially all the Assets in the same form
as it receives them in the Reorganization, unless and until
subsequent investment circumstances suggest the desirability of
change or it becomes necessary to make dispositions thereof to
maintain such status;
3.2.11. There is no plan or intention for New Fund to be dissolved or
merged into another corporation or a business trust or any
"fund" thereof (within the meaning of section 851(g)(2) of the
Code) following the Reorganization; and
3.2.12. Immediately after the Reorganization, (a) not more than 25% of
the value of New Fund's total assets (excluding cash, cash
items, and U.S. government securities) will be invested in the
stock and securities of any one issuer and (b) not more than 50%
of the value of such assets will be invested in the stock and
securities of five or fewer issuers.
3.3. Each Fund represents and warrants as follows:
3.3.1. The aggregate fair market value of the New Fund Shares, when
received by the Shareholders, will be approximately equal to the
aggregate fair market value of their Old Fund Shares
constructively surrendered in exchange therefor;
3.3.2. Its management (a) is unaware of any plan or intention of
Shareholders to redeem, sell, or otherwise dispose of (i) any
portion of their Old Fund Shares before the Reorganization to
any person related (within the meaning of section 1.368-1(e)(3)
of the Income Tax Regulations under the Code) to either Fund or
(ii) any portion of the New Fund Shares to be received by them
in the Reorganization to any person related (as so defined) to
New Fund, (b) does not anticipate dispositions of those New Fund
Shares at the time of or soon after the Reorganization to exceed
the usual rate and frequency of dispositions of shares of Old
Fund as a series of an open-end investment company, (c) expects
that the percentage of Shareholder interests, if any, that will
be disposed of as a result of or at the time of the
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Reorganization will be de minimis, and (d) does not anticipate
that there will be extraordinary redemptions of New Fund Shares
immediately following the Reorganization;
3.3.3. The Shareholders will pay their own expenses, if any, incurred
in connection with the Reorganization;
3.3.4. Immediately following consummation of the Reorganization, the
Shareholders will own all the New Fund Shares and will own such
shares solely by reason of their ownership of Old Fund Shares
immediately before the Reorganization;
3.3.5. Immediately following consummation of the Reorganization, New
Fund will hold the same assets -- except for assets distributed
to shareholders in the course of its business as a RIC and
assets used to pay expenses incurred in connection with the
Reorganization -- and be subject to the same liabilities that
Old Fund held or was subject to immediately prior to the
Reorganization, plus any liabilities for expenses of the parties
incurred in connection with the Reorganization. Such excepted
assets, together with the amount of all redemptions and
distributions (other than regular, normal dividends) made by Old
Fund immediately preceding the Reorganization, will, in the
aggregate, constitute less than 1% of its net assets;
3.3.6. There is no intercompany indebtedness between the Funds that was
issued or acquired, or will be settled, at a discount; and
3.3.7. Neither Fund will be reimbursed for any expenses incurred by it
or on its behalf in connection with the Reorganization unless
those expenses are solely and directly related to the
Reorganization (determined in accordance with the guidelines set
forth in Rev. Rul. 73-54, 1973-1 C.B. 187) ("Reorganization
Expenses").
4. CONDITIONS PRECEDENT
Each Fund's obligations hereunder shall be subject to (a) performance by
the other Fund of all its obligations to be performed hereunder at or before the
Effective Time, (b) all representations and warranties of the other Fund
contained herein being true and correct in all material respects as of the date
hereof and, except as they may be affected by the transactions contemplated
hereby, as of the Effective Time, with the same force and effect as if made on
and as of the Effective Time, and (c) the further conditions that, at or before
the Effective Time:
4.1. This Agreement and the transactions contemplated hereby shall have
been duly adopted and approved by each Investment Company's board of
directors and shall have been approved by Old Fund's shareholders in
accordance with applicable law;
4.2. All necessary filings shall have been made with the Securities and
Exchange Commission ("SEC") and state securities authorities, and no
order or directive shall have been received that any other or further
action is required to permit the parties to carry out the transactions
contemplated hereby. All consents, orders, and permits of federal,
state, and local regulatory authorities (including the SEC and state
securities authorities) deemed necessary by either Investment Company
to permit consummation, in all material respects, of the transactions
contemplated hereby shall have been obtained, except where failure to
obtain same would not involve a risk of a material adverse effect on
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the assets or properties of either Fund, provided that either
Investment Company may for itself waive any of such conditions;
4.3. Each Investment Company shall have received an opinion of Kirkpatrick
& Lockhart LLP, addressed to and in form and substance satisfactory to
it, as to the federal income tax consequences mentioned below ("Tax
Opinion"). In rendering the Tax Opinion, such counsel may rely as to
factual matters, exclusively and without independent verification, on
the representations made in this Agreement (or in separate letters
addressed to such counsel) and the certificates delivered pursuant to
paragraph 2.4. The Tax Opinion shall be substantially to the effect
that, based on the facts and assumptions stated therein and
conditioned on consummation of the Reorganization in accordance with
this Agreement, for federal income tax purposes:
4.3.1. New Fund's acquisition of the Assets in exchange solely for New
Fund Shares and New Fund's assumption of the Liabilities,
followed by Old Fund's distribution of those shares pro rata to
the Shareholders constructively in exchange for the
Shareholders' Old Fund Shares, will constitute a reorganization
within the meaning of section 368(a)(1)(F) of the Code, and each
Fund will be "a party to a reorganization" within the meaning of
section 368(b) of the Code;
4.3.2. Old Fund will recognize no gain or loss on the transfer to New
Fund of the Assets in exchange solely for New Fund Shares and
New Fund's assumption of the Liabilities or on the subsequent
distribution of those shares to the Shareholders in constructive
exchange for their Old Fund Shares;
4.3.3. New Fund will recognize no gain or loss on its receipt of the
Assets in exchange solely for New Fund Shares and its assumption
of the Liabilities;
4.3.4. New Fund's basis for the Assets will be the same as the basis
thereof in Old Fund's hands immediately before the
Reorganization, and New Fund's holding period for the Assets
will include Old Fund's holding period therefor;
4.3.5. A Shareholder will recognize no gain or loss on the constructive
exchange of all its Old Fund Shares solely for New Fund Shares
pursuant to the Reorganization;
4.3.6. A Shareholder's aggregate basis for the New Fund Shares to be
received by it in the Reorganization will be the same as the
aggregate basis for its Old Fund Shares to be constructively
surrendered in exchange for those New Fund Shares, and its
holding period for those New Fund Shares will include its
holding period for those Old Fund Shares, provided they are held
as capital assets by the Shareholder at the Effective Time; and
4.3.7. For purposes of section 381 of the Code, New Fund will be
treated as if there had been no Reorganization. Accordingly, the
Reorganization will not result in the termination of Old Fund's
taxable year, Old Fund's tax attributes enumerated in section
381(c) of the Code will be taken into account by New Fund as if
there had been no Reorganization, and the part of Old Fund's
taxable year before the Reorganization will be included in New
Fund's taxable year after the Reorganization;
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4.4. Prior to the Closing, Stock Funds' directors shall have authorized the
issuance of, and New Fund shall have issued, one share of each class
of New Fund Shares to Specialty Funds in consideration of the payment
of $1.00 apiece to vote on the matters referred to in paragraph 4.5;
and
4.5. Stock Funds (on behalf of and with respect to New Fund) shall have
entered into a management contract, distribution and service plans
pursuant to Rule 12b-1 under the 1940 Act, and such other agreements
as are necessary for New Fund's operation as a series of an open-end
investment company. Each such contract, plan, and agreement shall have
been approved by Stock Funds' directors and, to the extent required by
law, by such of those directors who are not "interested persons"
thereof (as defined in the 1940 Act) and by Specialty Funds as the
sole shareholder of New Fund.
At any time before the Closing, either Investment Company may waive any of
the foregoing conditions (except that set forth in paragraph 4.1) if, in the
judgment of its board of directors, such waiver will not have a material adverse
effect on its Fund's shareholders' interests.
5. BROKERAGE FEES AND EXPENSES
5.1 Each Investment Company represents and warrants to the other that there
are no brokers or finders entitled to receive any payments in
connection with the transactions provided for herein.
5.2 Except as otherwise provided herein, 50% of the total Reorganization
Expenses will be borne by INVESCO Funds Group, Inc. and the remaining
50% will be borne one-half by each Fund.
6. ENTIRE AGREEMENT; NO SURVIVAL
Neither party has made any representation, warranty, or covenant not set
forth herein, and this Agreement constitutes the entire agreement between the
parties. The representations, warranties, and covenants contained herein or in
any document delivered pursuant hereto or in connection herewith shall not
survive the Closing.
7. TERMINATION
This Agreement may be terminated at any time at or prior to the Effective
Time, whether before or after approval by Old Fund's shareholders:
7.1. By either Fund (a) in the event of the other Fund's material breach of
any representation, warranty, or covenant contained herein to be
performed at or prior to the Effective Time, (b) if a condition to its
obligations has not been met and it reasonably appears that such
condition will not or cannot be met, or (c) if the Closing has not
occurred on or before August 31, 1999; or
7.2. By the parties' mutual agreement.
In the event of termination under paragraphs 7.1(c) or 7.2, there shall be
no liability for damages on the part of either Fund, or the directors or
officers of either Investment Company, to the other Fund.
E-8
79
8. AMENDMENT
This Agreement may be amended, modified, or supplemented at any time,
notwithstanding approval thereof by Old Fund's shareholders, in such manner as
may be mutually agreed upon in writing by the parties; provided that following
such approval no such amendment shall have a material adverse effect on the
Shareholders' interests.
9. MISCELLANEOUS
9.1. This Agreement shall be governed by and construed in accordance with
the internal laws of the State of Maryland; provided that, in the case
of any conflict between such laws and the federal securities laws, the
latter shall govern.
9.2. Nothing expressed or implied herein is intended or shall be construed
to confer upon or give any person, firm, trust, or corporation other
than the parties and their respective successors and assigns any
rights or remedies under or by reason of this Agreement.
9.3. This Agreement may be executed in one or more counterparts, all of
which shall be considered one and the same agreement, and shall become
effective when one or more counterparts have been executed by each
Investment Company and delivered to the other party hereto. The
headings contained in this Agreement are for reference purposes only
and shall not affect in any way the meaning or interpretation of this
Agreement.
IN WITNESS WHEREOF, each party has caused this Agreement to be executed and
delivered by its duly authorized officers as of the day and year first written
above.
ATTEST: INVESCO SPECIALTY FUNDS, INC.,
on behalf of its series,
INVESCO S&P 500 INDEX Fund
By:
- ----------------------------------------------------- --------------------------------------------------
Secretary President
ATTEST: INVESCO STOCK FUNDS, INC.,
on behalf of its series,
INVESCO S&P 500 Index Fund
By:
- ----------------------------------------------------- --------------------------------------------------
Secretary Vice President
E-9
80
APPENDIX F
PLAN OF LIQUIDATION AND TERMINATION
INVESCO WORLDWIDE CAPITAL GOODS FUND
THIS PLAN OF LIQUIDATION AND TERMINATION ("Plan") is made by INVESCO
Specialty Funds, Inc., a Maryland open-end investment company ("Corporation"),
with respect to INVESCO Worldwide Capital Goods Fund, a segregated portfolio of
assets ("series") thereof ("Fund").
WHEREAS, the Corporation's board of directors ("Board") has determined that
liquidation and termination of the Fund is in the best interests of the
Corporation and the Fund and accordingly has adopted this Plan;
WHEREAS, Article III, Section 4, of the Corporation's Articles of
Incorporation provides that the Board may redeem shares of any series of stock
from its shareholders; and
WHEREAS, pursuant to Article III, Section 3(f), of the Corporation's
Articles of Incorporation, liquidation of the Fund as a series of the
Corporation requires the affirmative vote of the lesser of (1) 67% of the Fund's
shares present at a meeting of its shareholders if the holders of more than 50%
of its outstanding shares are present in person or by proxy or (2) more than 50%
of the Fund's outstanding shares ("Required Vote").
NOW THEREFORE, this Plan shall be effective upon receipt of the Required
Vote.
ARTICLE I
ACTIONS TO BE TAKEN PRIOR TO LIQUIDATION
(a) As directed by the Board, the Fund shall proceed with the business of
winding up its affairs.
(b) The Board shall authorize the appropriate parties to wind up the Fund's
affairs, and all the powers of the Corporation's directors under its Articles of
Incorporation and by-laws shall continue with respect to the Fund until its
affairs have been wound up, including the powers to (i) fulfill or discharge the
Fund's contracts, (ii) collect the Fund's assets, (iii) sell, convey, assign,
exchange, transfer, or otherwise dispose of all or any part of the remaining
property of the Fund to one or more persons at public or private sale for
consideration that may consist in whole or in part of cash, securities, or other
property of any kind, (iv) discharge or pay the Fund's liabilities, (v)
prosecute, settle, or compromise claims of the Fund or to which the Fund is
subject, (vi) file final state and federal tax returns for the Fund, (vii) mail
notice to all known creditors and employees, if any, of the Fund, at their
respective addresses shown on the Fund's records, and (viii) do all other acts
necessary or appropriate to wind up the Fund's business.
(c) As directed by the Board, the Corporation shall make one or two
liquidating distributions to the Fund's shareholders of record as of the date of
the Required Vote (individually a "Shareholder" and collectively "Shareholders")
in cancellation and redemption of their Fund shares. The amount of each
liquidating distribution to each Shareholder shall be in proportion to the
number of Fund shares held thereby.
F-1
81
ARTICLE II
FILINGS WITH THE STATE OF MARYLAND
(a) The Board shall authorize the appropriate parties to file for and
obtain (i) a tax clearance certificate from the Comptroller of the Treasury of
Maryland or the collector of taxes stating that all taxes payable by the Fund
have been paid or provided for and (ii) if the Fund has employees, a certificate
from the Secretary of Economic and Employment Development of Maryland stating
that all unemployment insurance contribution, reimbursement payments, and
interest have been paid or provided for.
(b) Upon cancellation of the Fund shares, the Board shall authorize the
appropriate parties to file Articles Supplementary with the Maryland Department
of Assessments and Taxation to eliminate the total number of shares of stock
allocated to the Fund and decrease, by an identical amount, the aggregate number
of shares of stock the Corporation has authority to issue.
ARTICLE III
LIQUIDATION PROCEDURES
(a) The Board shall authorize all actions to be taken such that the Fund
will apply its assets to the payment of all its existing debts and obligations,
including necessary expenses of redeeming and canceling the Fund shares.
(b) On the date of the Required Vote, the interest of each Shareholder
shall be fixed and the books of the Funds shall be closed.
(c) As soon as reasonably practicable after (1) the Required Vote, (2)
paying or adequately providing for the payment of all Fund liabilities, and (3)
receipt of such releases, indemnities, and refunding agreements as the Board
deems necessary for its protection, the Board shall cause the remaining assets
of the Fund to be distributed in one or two (if necessary) distributions of cash
payments, with each Shareholder receiving his, her, or its proportionate share
of each payment, in cancellation and redemption of his, her, or its Fund shares.
(d) If the Board is unable to make distributions to all the Shareholders
because of the inability to locate Shareholders to whom distributions in
cancellation and redemption of Fund shares are payable, the Board may create, in
the name and on behalf of the Fund, a trust with a financial institution and,
subject to applicable abandoned property laws, deposit any remaining assets of
the Fund in such trust for the benefit of the Shareholders that cannot be
located. The expenses of such trust shall be charged against the assets therein.
ARTICLE IV
AMENDMENT OF THIS PLAN
The Board may authorize variations from, or amendments of, the provisions
of this Plan (other than the terms of the liquidating distributions) that it
deems necessary or appropriate to effect the distributions in cancellation and
redemption of the Fund shares and the liquidation and termination of the Fund's
existence.
F-2
82
ARTICLE V
EXPENSES
The Fund shall bear 50% of all the expenses incurred in connection with
carrying out this Plan, including the cost of soliciting proxies, liquidating
its assets, and terminating its existence, and the remaining 50% will be borne
by INVESCO Funds Group, Inc.
F-3
83
[Name and Address]
INVESCO S&P INDEX 500 FUND (CLASSES I & II)
INVESCO SPECIALTY FUNDS, INC.
PROXY FOR THE SPECIAL MEETING OF SHAREHOLDERS
May 20, 1999
This proxy is being solicited on behalf of the Board of Directors of
INVESCO Specialty Funds, Inc. (the "Company") and relates to the proposals with
respect to the Company and to INVESCO S&P Index 500 Fund (classes I & II), a
series of the Company ("Fund"). The undersigned hereby appoints as proxies Fred
A. Deering and Mark H. Williamson, and each of them (with power of
substitution), to vote all shares of common stock of the undersigned in the Fund
at the Special Meeting of Shareholders to be held at 10:00 a.m., Mountain
Standard Time, on May 20, 1999, at the offices of the Company, 7800 East Union
Avenue, Denver, Colorado 80237, and any adjournment thereof ("Meeting"), with
all the power the undersigned would have if personally present.
The shares represented by this proxy will be voted as instructed.
Unless indicated to the contrary, this proxy shall be deemed to grant authority
to vote "FOR" all proposals relating to the Company and the Fund with
discretionary power to vote upon such other business as may properly come before
the Meeting.
YOUR VOTE IS IMPORTANT. IF YOU ARE NOT VOTING BY PHONE, FACSIMILE, OR INTERNET,
PLEASE SIGN AND DATE THIS PROXY BELOW AND RETURN IT PROMPTLY IN THE ENCLOSED
ENVELOPE.
TO VOTE BY TOUCH-TONE PHONE OR THE INTERNET, PLEASE CALL 1-800-690-6903 TOLL
FREE OR VISIT HTTP://WWW.PROXYVOTE.COM. TO VOTE BY FACSIMILE TRANSMISSION,
PLEASE FAX YOUR COMPLETED PROXY CARD TO 1-800-733-1885.
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
[X] KEEP THIS PORTION FOR YOUR RECORDS
84
DETACH AND RETURN THIS PORTION ONLY
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
INVESCO S&P INDEX 500 FUND (CLASSES I & II)
INVESCO SPECIALTY FUNDS, INC.
VOTE ON DIRECTORS FOR WITHHOLD FOR ALL
ALL ALL EXCEPT
6. Election of the Company's Board of Directors: [ ] [ ] [ ] To withhold authority
(1) Charles W. Brady; (2) Fred A. Deering; (3) to vote, mark "For All
Mark H. Williamson; (4) Dr. Victor L. Andrews; Except" and write the
(5) Bob R. Baker; (6) Lawrence H. Budner; nominee's number on the
(7) Dr. Wendy Lee Gramm; (8) Kenneth T. King; line below.
(9) John W. McIntyre; and (10) Dr. Larry Soll;
-----------------------
VOTE ON PROPOSALS FOR AGAINST ABSTAIN
3. Approval of an Agreement and Plan of Conversion and Termination [ ] [ ] [ ]
providing for the Conversion of the Fund from a separate series of
the Company to a separate series of INVESCO Stock Funds, Inc.;
5. Approval of changes to the fundamental investment restrictions; [ ] [ ] [ ]
[ ] To vote against the proposed changes to one or more of the specific
fundamental investment restrictions, but to approve others, PLACE AN "X" IN
THE BOX AT LEFT and indicate the letter(s) (as set forth in the proxy
statement) of the investment restriction or restrictions you do not want to
change on the line on the reverse side. IF YOU CHOOSE TO VOTE DIFFERENTLY
ON INDIVIDUAL RESTRICTIONS, YOU MUST MAIL IN YOUR PROXY CARD. IF YOU CHOOSE
TO VOTE THE SAME ON ALL RESTRICTIONS PERTAINING TO YOUR FUND, TELEPHONE AND
INTERNET VOTING ARE AVAILABLE.
7. Ratification of the selection of PricewaterhouseCoopers LLP as the Fund's [ ] [ ] [ ]
Independent Public Accountants.
YOUR VOTE IS IMPORTANT. IF YOU ARE NOT VOTING BY PHONE, FACSIMILE, OR INTERNET,
PLEASE SIGN AND DATE THIS PROXY BELOW AND RETURN IT PROMPTLY IN THE ENCLOSED
ENVELOPE.
TO VOTE BY TOUCH-TONE PHONE OR THE INTERNET, PLEASE CALL 1-800-690-6903 TOLL
FREE OR VISIT HTTP://WWW.PROXYVOTE.COM. TO VOTE BY FACSIMILE TRANSMISSION,
PLEASE FAX YOUR COMPLETED PROXY CARD TO 1-800-733-1885.
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.
- ------------------------------------------------ ------------------------------
Signature Date
- ------------------------------------------------ ------------------------------
Signature (Joint Owners) Date
85
[Back]
To vote against the proposed changes to one or more of the
specific fundamental investment restrictions, indicate the
letter(s) (as set forth in the proxy statement) of the investment
restriction or restrictions you do not want to change on the line
AT THE RIGHT. IF YOU CHOOSE TO VOTE DIFFERENTLY ON INDIVIDUAL
RESTRICTIONS, YOU MUST MAIL IN YOUR PROXY CARD. IF YOU CHOOSE TO
VOTE THE SAME ON ALL RESTRICTIONS PERTAINING TO YOUR FUND,
TELEPHONE AND INTERNET VOTING ARE AVAILABLE.
5._______________________________
86
[Name and Address]
INVESCO WORLDWIDE COMMUNICATIONS FUND
INVESCO SPECIALTY FUNDS, INC.
PROXY FOR THE SPECIAL MEETING OF SHAREHOLDERS
May 20, 1999
This proxy is being solicited on behalf of the Board of Directors of
INVESCO Specialty Funds, Inc. (the "Company") and relates to the proposals with
respect to the Company and to INVESCO Worldwide Communications Fund, a series of
the Company ("Fund"). The undersigned hereby appoints as proxies Fred A. Deering
and Mark H. Williamson, and each of them (with power of substitution), to vote
all shares of common stock of the undersigned in the Fund at the Special Meeting
of Shareholders to be held at 10:00 a.m., Mountain Standard Time, on May 20,
1999, at the offices of the Company, 7800 East Union Avenue, Denver, Colorado
80237, and any adjournment thereof ("Meeting"), with all the power the
undersigned would have if personally present.
The shares represented by this proxy will be voted as instructed.
Unless indicated to the contrary, this proxy shall be deemed to grant authority
to vote "FOR" all proposals relating to the Company and the Fund with
discretionary power to vote upon such other business as may properly come before
the Meeting.
YOUR VOTE IS IMPORTANT. IF YOU ARE NOT VOTING BY PHONE, FACSIMILE, OR INTERNET,
PLEASE SIGN AND DATE THIS PROXY BELOW AND RETURN IT PROMPTLY IN THE ENCLOSED
ENVELOPE.
TO VOTE BY TOUCH-TONE PHONE OR THE INTERNET, PLEASE CALL 1-800-690-6903 TOLL
FREE OR VISIT HTTP://WWW.PROXYVOTE.COM. TO VOTE BY FACSIMILE TRANSMISSION,
PLEASE FAX YOUR COMPLETED PROXY CARD TO 1-800-733-1885.
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
[X] KEEP THIS PORTION FOR YOUR RECORDS
87
DETACH AND RETURN THIS PORTION ONLY
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
INVESCO WORLDWIDE COMMUNICATIONS FUND
INVESCO SPECIALTY FUNDS, INC.
VOTE ON DIRECTORS FOR WITHHOLD FOR ALL
ALL ALL EXCEPT
6. Election of the Company's Board of Directors: [ ] [ ] [ ] To withhold authority
(1) Charles W. Brady; (2) Fred A. Deering; (3) to vote, mark "For All
Mark H. Williamson; (4) Dr. Victor L. Andrews; Except" and write the
(5) Bob R. Baker; (6) Lawrence H. Budner; nominee's number on the
(7) Dr. Wendy Lee Gramm; (8) Kenneth T. King; line below.
(9) John W. McIntyre; and (10) Dr. Larry Soll;
----------------------
VOTE ON PROPOSALS FOR AGAINST ABSTAIN
2. Approval of an Agreement and Plan of Conversion and Termination [ ] [ ] [ ]
providing for the Conversion of the Fund from a separate series of
the Company to a separate series of INVESCO Sector Funds, Inc.;
5. Approval of changes to the fundamental investment restrictions; [ ] [ ] [ ]
[ ] To vote against the proposed changes to one or more of the specific
fundamental investment restrictions, but to approve others, PLACE AN
"X" IN THE BOX AT LEFT and indicate the letter(s) (as set forth in
the proxy statement) of the investment restriction or restrictions
you do not want to change on the line on the reverse side. IF YOU
CHOOSE TO VOTE DIFFERENTLY ON INDIVIDUAL RESTRICTIONS, YOU MUST MAIL
IN YOUR PROXY CARD. IF YOU CHOOSE TO VOTE THE SAME ON ALL
RESTRICTIONS PERTAINING TO YOUR FUND, TELEPHONE AND INTERNET VOTING
ARE AVAILABLE.
7. Ratification of the selection of PricewaterhouseCoopers LLP as the Fund's [ ] [ ] [ ]
Independent Public Accountants.
YOUR VOTE IS IMPORTANT. IF YOU ARE NOT VOTING BY PHONE, FACSIMILE, OR INTERNET,
PLEASE SIGN AND DATE THIS PROXY BELOW AND RETURN IT PROMPTLY IN THE ENCLOSED
ENVELOPE.
TO VOTE BY TOUCH-TONE PHONE OR THE INTERNET, PLEASE CALL 1-800-690-6903 TOLL
FREE OR VISIT HTTP://WWW.PROXYVOTE.COM. TO VOTE BY FACSIMILE TRANSMISSION,
PLEASE FAX YOUR COMPLETED PROXY CARD TO 1-800-733-1885.
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.
- -------------------------------------------------- ----------------------------
Signature Date
- -------------------------------------------------- ----------------------------
Signature (Joint Owners) Date
88
[Back]
To vote against the proposed changes to one or more of the
specific fundamental investment restrictions, indicate the
letter(s) (as set forth in the proxy statement) of the
investment restriction or restrictions you do not want to
change on the line at the right. IF YOU CHOOSE TO VOTE
DIFFERENTLY ON INDIVIDUAL RESTRICTIONS, YOU MUST MAIL IN
YOUR PROXY CARD. IF YOU CHOOSE TO VOTE THE SAME ON ALL
RESTRICTIONS PERTAINING TO YOUR FUND, TELEPHONE AND INTERNET
VOTING ARE AVAILABLE.
5. ___________________________________
89
[Name and Address]
INVESCO WORLDWIDE CAPITAL GOODS FUND
INVESCO SPECIALTY FUNDS, INC.
PROXY FOR THE SPECIAL MEETING OF SHAREHOLDERS
May 20, 1999
This proxy is being solicited on behalf of the Board of Directors of
INVESCO Specialty Funds, Inc. (the "Company") and relates to the proposals with
respect to the Company and to INVESCO Worldwide Capital Goods Fund, a series of
the Company ("Fund"). The undersigned hereby appoints as proxies Fred A. Deering
and Mark H. Williamson, and each of them (with power of substitution), to vote
all shares of common stock of the undersigned in the Fund at the Special Meeting
of Shareholders to be held at 10:00 a.m., Mountain Standard Time, on May 20,
1999, at the offices of the Company, 7800 East Union Avenue, Denver, Colorado
80237, and any adjournment thereof ("Meeting"), with all the power the
undersigned would have if personally present.
The shares represented by this proxy will be voted as instructed.
Unless indicated to the contrary, this proxy shall be deemed to grant authority
to vote "FOR" all proposals relating to the Company and the Fund with
discretionary power to vote upon such other business as may properly come before
the Meeting.
YOUR VOTE IS IMPORTANT. IF YOU ARE NOT VOTING BY PHONE, FACSIMILE, OR INTERNET,
PLEASE SIGN AND DATE THIS PROXY BELOW AND RETURN IT PROMPTLY IN THE ENCLOSED
ENVELOPE.
TO VOTE BY TOUCH-TONE PHONE OR THE INTERNET, PLEASE CALL 1-800-690-6903 TOLL
FREE OR VISIT HTTP://WWW.PROXYVOTE.COM. TO VOTE BY FACSIMILE TRANSMISSION,
PLEASE FAX YOUR COMPLETED PROXY CARD TO 1-800-733-1885.
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
[X] KEEP THIS PORTION FOR YOUR RECORDS
90
DETACH AND RETURN THIS PORTION ONLY
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
INVESCO WORLDWIDE CAPITAL GOODS FUND
INVESCO SPECIALTY FUNDS, INC.
VOTE ON DIRECTORS FOR WITHHOLD FOR ALL
ALL ALL EXCEPT
6. Election of the Company's Board of Directors: [ ] [ ] [ ] To withhold authority
(1) Charles W. Brady; (2) Fred A. Deering; (3) to vote, mark "For All
Mark H. Williamson; (4) Dr. Victor L. Andrews; Except" and write the
(5) Bob R. Baker; (6) Lawrence H. Budner; nominee's number on the
(7) Dr. Wendy Lee Gramm; (8) Kenneth T. King; line below.
(9) John W. McIntyre; and (10) Dr. Larry Soll;
-----------------------
VOTE ON PROPOSALS FOR AGAINST ABSTAIN
4. Approval of a Plan of Liquidation and Termination providing for the [ ] [ ] [ ]
liquidation of the Fund;
5. Approval of changes to the fundamental investment restrictions; [ ] [ ] [ ]
[ ] To vote against the proposed changes to one or more of the specific
fundamental investment restrictions, but to approve others, PLACE AN
"X" IN THE BOX AT LEFT and indicate the letter(s) (as set forth in
the proxy statement) of the investment restriction or restrictions
you do not want to change on the line on the reverse side. IF YOU
CHOOSE TO VOTE DIFFERENTLY ON INDIVIDUAL RESTRICTIONS, YOU MUST MAIL
IN YOUR PROXY CARD. IF YOU CHOOSE TO VOTE THE SAME ON ALL
RESTRICTIONS PERTAINING TO YOUR FUND, TELEPHONE AND INTERNET VOTING
ARE AVAILABLE.
7. Ratification of the selection of PricewaterhouseCoopers LLP as the Fund's [ ] [ ] [ ]
Independent Public Accountants.
YOUR VOTE IS IMPORTANT. IF YOU ARE NOT VOTING BY PHONE, FACSIMILE, OR INTERNET,
PLEASE SIGN AND DATE THIS PROXY BELOW AND RETURN IT PROMPTLY IN THE ENCLOSED
ENVELOPE.
TO VOTE BY TOUCH-TONE PHONE OR THE INTERNET, PLEASE CALL 1-800-690-6903 TOLL
FREE OR VISIT HTTP://WWW.PROXYVOTE.COM. TO VOTE BY FACSIMILE TRANSMISSION,
PLEASE FAX YOUR COMPLETED PROXY CARD TO 1-800-733-1885.
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.
- ---------------------------------------------------- --------------------------
Signature Date
- ---------------------------------------------------- --------------------------
Signature (Joint Owners) Date
91
[Back]
5. ____________________________
92
[Name and Address]
INVESCO REALTY FUND
INVESCO SPECIALTY FUNDS, INC.
PROXY FOR THE SPECIAL MEETING OF SHAREHOLDERS
May 20, 1999
This proxy is being solicited on behalf of the Board of Directors of
INVESCO Specialty Funds, Inc. (the "Company") and relates to the proposals with
respect to the Company and to INVESCO Realty Fund, a series of the Company
("Fund"). The undersigned hereby appoints as proxies Fred A. Deering and Mark H.
Williamson, and each of them (with power of substitution), to vote all shares of
common stock of the undersigned in the Fund at the Special Meeting of
Shareholders to be held at 10:00 a.m., Mountain Standard Time, on May 20, 1999,
at the offices of the Company, 7800 East Union Avenue, Denver, Colorado 80237,
and any adjournment thereof ("Meeting"), with all the power the undersigned
would have if personally present.
The shares represented by this proxy will be voted as instructed.
Unless indicated to the contrary, this proxy shall be deemed to grant authority
to vote "FOR" all proposals relating to the Company and the Fund with
discretionary power to vote upon such other business as may properly come before
the Meeting.
YOUR VOTE IS IMPORTANT. IF YOU ARE NOT VOTING BY PHONE, FACSIMILE, OR INTERNET,
PLEASE SIGN AND DATE THIS PROXY BELOW AND RETURN IT PROMPTLY IN THE ENCLOSED
ENVELOPE.
TO VOTE BY TOUCH-TONE PHONE OR THE INTERNET, PLEASE CALL 1-800-690-6903 TOLL
FREE OR VISIT HTTP://WWW.PROXYVOTE.COM. TO VOTE BY FACSIMILE TRANSMISSION,
PLEASE FAX YOUR COMPLETED PROXY CARD TO 1-800-733-1885.
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
[X] KEEP THIS PORTION FOR YOUR RECORDS
93
DETACH AND RETURN THIS PORTION ONLY
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
INVESCO REALTY FUND
INVESCO SPECIALTY FUNDS, INC.
VOTE ON DIRECTORS FOR WITHHOLD FOR ALL
ALL ALL EXCEPT
6. Election of the Company's Board of Directors: [ ] [ ] [ ] To withhold authority
(1) Charles W. Brady; (2) Fred A. Deering; (3) to vote, mark "For All
Mark H. Williamson; (4) Dr. Victor L. Andrews; Except" and write the
(5) Bob R. Baker; (6) Lawrence H. Budner; nominee's number on the
(7) Dr. Wendy Lee Gramm; (8) Kenneth T. King; line below.
(9) John W. McIntyre; and (10) Dr. Larry Soll;
------------------------
VOTE ON PROPOSALS FOR AGAINST ABSTAIN
2. Approval of an Agreement and Plan of Conversion and Termination [ ] [ ] [ ]
providing for the conversion of the Fund from a separate series of
the Company to a separate series of INVESCO Sector Funds, Inc.;
5. Approval of changes to the fundamental investment restrictions; [ ] [ ] [ ]
[ ] To vote against the proposed changes to one or more of the specific
fundamental investment restrictions, but to approve others, PLACE AN
"X" IN THE BOX AT LEFT and indicate the letter(s) (as set forth in
the proxy statement) of the investment restriction or restrictions
you do not want to change on the line below. IF YOU CHOOSE TO VOTE
DIFFERENTLY ON INDIVIDUAL RESTRICTIONS, YOU MUST MAIL IN YOUR PROXY
CARD. IF YOU CHOOSE TO VOTE THE SAME ON ALL RESTRICTIONS PERTAINING
TO YOUR FUND, TELEPHONE AND INTERNET VOTING ARE AVAILABLE.
7. Ratification of the selection of PricewaterhouseCoopers LLP as the Fund's [ ] [ ] [ ]
Independent Public Accountants.
YOUR VOTE IS IMPORTANT. IF YOU ARE NOT VOTING BY PHONE, FACSIMILE, OR INTERNET,
PLEASE SIGN AND DATE THIS PROXY BELOW AND RETURN IT PROMPTLY IN THE ENCLOSED
ENVELOPE.
TO VOTE BY TOUCH-TONE PHONE OR THE INTERNET, PLEASE CALL 1-800-690-6903 TOLL
FREE OR VISIT HTTP://WWW.PROXYVOTE.COM. TO VOTE BY FACSIMILE TRANSMISSION,
PLEASE FAX YOUR COMPLETED PROXY CARD TO 1-800-733-1885.
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.
- ----------------------------------------------------- -------------------------
Signature Date
- ----------------------------------------------------- -------------------------
Signature (Joint Owners) Date
94
[Back]
To vote against the proposed changes to one or more of the
specific fundamental investment restrictions, indicate the
letter(s) (as set forth in the proxy statement) of the
investment restriction or restrictions you do not want to
change on the line at the right. IF YOU CHOOSE TO VOTE
DIFFERENTLY ON INDIVIDUAL RESTRICTIONS, YOU MUST MAIL IN
YOUR PROXY CARD. IF YOU CHOOSE TO VOTE THE SAME ON ALL
RESTRICTIONS PERTAINING TO YOUR FUND, TELEPHONE AND INTERNET
VOTING ARE AVAILABLE.
5. ___________________________________
95
[Name and Address]
INVESCO LATIN AMERICAN GROWTH FUND
INVESCO SPECIALTY FUNDS, INC.
PROXY FOR THE SPECIAL MEETING OF SHAREHOLDERS
May 20, 1999
This proxy is being solicited on behalf of the Board of Directors of
INVESCO Specialty Funds, Inc. (the "Company") and relates to the proposals with
respect to the Company and to INVESCO Latin American Growth Fund, a series of
the Company ("Fund"). The undersigned hereby appoints as proxies Fred A. Deering
and Mark H. Williamson each of them (with power of substitution), to vote all
shares of common stock of the undersigned in the Fund at the Special Meeting of
Shareholders to be held at 10:00 a.m., Mountain Standard Time, on May 20, 1999,
at the offices of the Company, 7800 East Union Avenue, Denver, Colorado 80237,
and any adjournment thereof ("Meeting"), with all the power the undersigned
would have if personally present.
The shares represented by this proxy will be voted as instructed.
Unless indicated to the contrary, this proxy shall be deemed to grant authority
to vote "FOR" all proposals relating to the Company and the Fund with
discretionary power to vote upon such other business as may properly come before
the Meeting.
YOUR VOTE IS IMPORTANT. IF YOU ARE NOT VOTING BY PHONE, FACSIMILE, OR INTERNET,
PLEASE SIGN AND DATE THIS PROXY BELOW AND RETURN IT PROMPTLY IN THE ENCLOSED
ENVELOPE.
TO VOTE BY TOUCH-TONE PHONE OR THE INTERNET, PLEASE CALL 1-800-690-6903 TOLL
FREE OR VISIT HTTP://WWW.PROXYVOTE.COM. TO VOTE BY FACSIMILE TRANSMISSION,
PLEASE FAX YOUR COMPLETED PROXY CARD TO 1-800-733-1885.
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
[X] KEEP THIS PORTION FOR YOUR RECORDS
96
DETACH AND RETURN THIS PORTION ONLY
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
INVESCO LATIN AMERICAN GROWTH FUND
INVESCO SPECIALTY FUNDS, INC.
VOTE ON DIRECTORS FOR WITHHOLD FOR ALL
ALL ALL EXCEPT
6. Election of the Company's Board of Directors: [ ] [ ] [ ] To withhold authority
(1) Charles W. Brady; (2) Fred A. Deering; (3) to vote, mark "For All
Mark H. Williamson; (4) Dr. Victor L. Andrews; Except" and write the
(5) Bob R. Baker; (6) Lawrence H. Budner; nominee's number on the
(7) Dr. Wendy Lee Gramm; (8) Kenneth T. King; line below.
(9) John W. McIntyre; and (10) Dr. Larry Soll;
------------------------
VOTE ON PROPOSALS FOR AGAINST ABSTAIN
2. Approval of an Agreement and Plan of Conversion and Termination [ ] [ ] [ ]
providing for the conversion of the Fund from a separate series of
the Company to a separate series of INVESCO International Funds, Inc.;
5. Approval of changes to the fundamental investment restrictions; [ ] [ ] [ ]
[ ] To vote against the proposed changes to one or more of the specific
fundamental investment restrictions, but to approve others, PLACE AN "X" IN
THE BOX AT LEFT and indicate the letter(s) (as set forth in the proxy
statement) of the investment restriction or restrictions you do not want to
change on the line on the reverse side. If you choose to vote differently
on individual restrictions, you must mail in your proxy card. If you choose
to vote the same on all restrictions pertaining to your fund, telephone and
Internet voting are available.
7. Ratification of the selection of PricewaterhouseCoopers LLP as the Fund's [ ] [ ] [ ]
Independent Public Accountants.
YOUR VOTE IS IMPORTANT. IF YOU ARE NOT VOTING BY PHONE, FACSIMILE, OR INTERNET,
PLEASE SIGN AND DATE THIS PROXY BELOW AND RETURN IT PROMPTLY IN THE ENCLOSED
ENVELOPE.
TO VOTE BY TOUCH-TONE PHONE OR THE INTERNET, PLEASE CALL 1-800-690-6903 TOLL
FREE OR VISIT HTTP://WWW.PROXYVOTE.COM. TO VOTE BY FACSIMILE TRANSMISSION,
PLEASE FAX YOUR COMPLETED PROXY CARD TO 1-800-733-1885.
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.
- ------------------------------------------------------- -----------------------
Signature Date
- ------------------------------------------------------- -----------------------
Signature (Joint Owners) Date
97
[Back]
To vote against the proposed changes to one or more of the
specific fundamental investment restrictions, indicate the
letter(s) (as set forth in the proxy statement) of the
investment restrictions or restrictions you do not want to
change on the line at the right. IF YOU CHOOSE TO VOTE
DIFFERENTLY ON INDIVIDUAL RESTRICTIONS, YOU MUST MAIL IN
YOUR PROXY CARD. IF YOU CHOOSE TO VOTE THE SAME ON ALL
RESTRICTIONS PERTAINING TO YOUR FUND, TELEPHONE AND INTERNET
VOTING ARE AVAILABLE.
5. _______________________________
98
March 23, 1999
Dear Worldwide Capital Goods Fund Shareholder:
Enclosed with this letter you will find an important proxy statement for the
upcoming shareholder meeting on May 20. The main reason for this meeting is so
that you and the other investors in INVESCO Worldwide Capital Goods Fund can
vote on a proposal by management to liquidate your Fund. It's important to us
that you understand why we are recommending this step - which we believe is in
your best interests as an investor.
Here are answers to some questions you may have about this proposal:
Why is INVESCO proposing this liquidation? We value our relationship with you --
and we won't offer an investment we don't believe provides you with the
potential you deserve. The reasons for the proposal are explained in more detail
in the enclosed proxy statement, but they can be summed up as investment outlook
and cost.
We introduced this Fund because we believed there were significant opportunities
around the globe for aggressive investors who wished to target this sector.
While there are solid values still to be found in capital goods-related stocks,
exceptional turbulence in overseas financial markets over the past two years
makes it difficult to justify a mutual fund which invests primarily in these
securities.
In addition, because of the limited potential, we have simply been unable to
attract enough shareholders and assets to run this Fund efficiently on your
behalf. Small funds tend to have higher expense ratios, shared by relatively few
investors. It does not make economic sense for either our shareholders or
INVESCO to keep managing Worldwide Capital Goods Fund.
For the foreseeable future, the investment risks and costs may simply outweigh
the potential long-term rewards. Aggressive investors may be better served by
choosing international funds which invest more broadly, or sector funds which
focus on other groups of industries with stronger potential. What happens if
shareholders decide in favor of liquidation?
If that happens, the Fund's net assets will be distributed among the remaining
shareholders on the liquidation date following the shareholder meeting. You may
decide your best investment choice is to exchange your shares into another
INVESCO fund on or before that date. You may wish to consult your financial
advisor about this important decision.
INVESCO offers numerous aggressive growth opportunities, including other sector
funds. For example, you might consider INVESCO Health Sciences Fund. Like
Worldwide Capital Goods Fund, it targets a specific market sector to seek higher
returns over time. Like any sector fund, Health Sciences Fund may be more
volatile than diversified stock funds. However, it also offers considerable
opportunity for strong long-term performance - for the 12 months ended 12/31/98,
it had a total return of 43.40%; for the five- and 10-year periods, average
annualized returns of 24.87% and 24.88%, respectively. (Of course, past
performance is not a guarantee of future results.)*
Or, if you are not ready to make a long-term investment decision, INVESCO Cash
Reserves Fund may be a good place to "park" your cash temporarily. (An
investment in this fund is not insured or guaranteed by the Federal Deposit
Insurance Corporation or any other government agency.
Although this fund seeks to preserve the value of your investment at $1.00 per
share, it is possible to lose money by investing in the fund.)
You may obtain more information about your INVESCO fund choices, including
management fees, expenses, and risks, by calling 1-800-646-8372 for a free
prospectus, or consult your financial advisor. Please read the prospectus
carefully before you invest or send money. We also encourage you to visit our
Web site for prospectuses and current information about all of our funds,
including performance figures and updates from the portfolio managers:
www.invesco.com.
If you are still an investor in Worldwide Capital Goods Fund on the liquidation
date, you will automatically receive a check for the value of the shares which
you owned on that date. If the fund liquidates, will there be tax consequences
for me?
In order to liquidate, the Fund will sell all of its holdings. This may result
in capital gain distributions to shareholders, which are usually taxable if your
investment is not in a tax-advantaged account (like an IRA or other retirement
plan). In addition, the final price per share of the Fund may be more or less
than you originally paid for your shares; if more, then you may have taxable
gains there as well. And, as always, if you exchange into another fund, that is
considered a sale and may have tax consequences.
- --------------
*Total return assumes reinvestment of dividends and capital gain distributions.
Past performance is not a guarantee of future results. Investment return and
principal value will vary so that, when redeemed, an investor's shares may be
worth more or less than when purchased.
99
You should consult your own tax advisor about how a liquidation might affect
you, given your personal circumstances.
What does the fund's Board of Directors recommend?
The Board believes you should vote in favor of the liquidation. More important,
though, the directors recommend that you study the issues involved, call us with
any questions, and vote promptly to ensure that a quorum of Worldwide Capital
Goods Fund shares will be represented at the shareholders meeting. I hope this
has helped you in better understanding why we are making this proposal.
If you have any questions, I encourage you to call us at 1-800-646-8372, and one
of our Investor Specialists will assist you.
Sincerely,
/s/ Mark H. Williamson
- --------------------------------
Mark H. Williamson
Chairman & CEO, INVESCO Funds
P.S. Remember that you have two decisions to make very soon: How to vote on the
enclosed proxy, and how to invest if the Fund does liquidate. If we can provide
you with any information to make those choices easier, please call us.