PRELIMINARY COPY-TO BE FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
(Amendment No. __ )
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INVESCO VARIABLE INVESTMENT FUNDS, INC.
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or the Form or Schedule and the date of its filing.
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<PAGE>
INVESCO Tax-Free Bond Fund
March 6, 2000
Dear INVESCO Tax-Free Bond Fund Shareholder:
We are pleased to enclose the Proxy Statement for the May 10, 2000 special
shareholders' meeting (the "Meeting") of INVESCO Tax-Free Bond Fund (the
"Fund"). Please take the time to read the accompanying Proxy Statement and cast
your vote, since the matters we are submitting for your consideration are
important to the Fund and to you as a shareholder. Your vote is important.
We are requesting action on the following two proposals:
1. To approve or disapprove a new sub-advisory agreement between INVESCO Funds
Group, Inc. ("INVESCO") and A I M Capital Management, Inc. ("A I M"), with
respect to INVESCO Tax-Free Bond Fund;
2. To elect directors of INVESCO Bond Funds, Inc. (the "Company"); and
We appreciate your thoughtful consideration of these issues and ask that you
vote promptly. If we do not receive sufficient votes to approve these proposals,
it may necessitate a further mailing or a telephone canvass. Thank you.
Sincerely,
--------------------------------
Mark H. Williamson
President
INVESCO Tax-Free Bond Fund
<PAGE>
INVESCO TAX-FREE BOND FUND
7800 East Union Avenue
Denver, Colorado 80237
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON MAY 10, 2000
To The Shareholders:
NOTICE IS HEREBY GIVEN that a special meeting of shareholders (the "Meeting") of
INVESCO Tax-Free Bond Fund (the "Fund") will be held at the offices of the Fund,
7800 East Union Avenue, Denver, Colorado 80237, on May 10, 2000, at __________
for the following purposes:
1. To approve or disapprove a new sub-advisory agreement between INVESCO Funds
Group, Inc. ("INVESCO") and A I M Capital Management, Inc. ("A I M"), with
respect to INVESCO Tax-Free Bond Fund;
2. To elect directors of INVESCO Bond Funds, Inc. (the "Company"); and
3. To transact such other business as may properly come before the Meeting or
any adjournment(s) thereof.
None of these proposals is expected to result in any material change in the way
the Fund is managed, in the advisory fees it now pays, or in the services you
receive as a shareholder.
You are entitled to vote at the meeting and any adjournment thereof if you
owned shares of the Fund at the close of business on February 18, 2000. You are
cordially invited to attend the Meeting. IF YOU ATTEND THE MEETING, YOU MAY VOTE
YOUR SHARES IN PERSON. IF YOU DO NOT EXPECT TO ATTEND THE MEETING, PLEASE
COMPLETE, DATE, SIGN AND RETURN THE ENCLOSED PROXY CARD IN THE ENCLOSED POSTAGE
PAID ENVELOPE. The enclosed proxy is being solicited on behalf of the directors
of the Fund.
A complete list of shareholders of the Fund entitled to vote at the Meeting
will be available and open to the examination of any shareholder of the Fund for
any purpose germane to the Meeting during ordinary business hours at the offices
of the Fund, 7800 East Union Avenue, Denver, Colorado 80237. A copy of this list
also will be available at the Meeting.
By Order of the Board of Directors,
Glen A. Payne
Secretary
Denver, Colorado
Dated: March 6, 2000
<PAGE>
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YOUR VOTE IS IMPORTANT
NO MATTER HOW MANY SHARES YOU OWN
Please indicate your voting instructions on the enclosed proxy card, date
and sign the card, and return it in the envelope provided. IF YOU DATE, SIGN AND
RETURN THE PROXY CARD BUT GIVE NO VOTING INSTRUCTIONS, YOUR SHARES WILL BE VOTED
"FOR" THE PROPOSALS DESCRIBED ABOVE. In order to avoid the additional expense of
further solicitation, we ask your cooperation in mailing your proxy card
promptly. As an alternative to using the paper proxy card to vote, you may vote
by telephone, through the Internet, by facsimile machine or in person. To vote
by telephone, please call 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. To vote via the Internet,
please access http://www.proxyvote.com on the World Wide Web. In addition,
shares that are registered in your name may be voted by faxing your completed
proxy card to 1-800-733-1885. If we do not receive your completed proxy card
after several weeks, you may be contacted by our proxy solicitor, Shareholder
Communications Corporation. Our proxy solicitor will remind you to vote your
shares or will record your vote over the phone if you choose to vote in that
manner.
Unless proxy cards 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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<PAGE>
INVESCO TAX-FREE BOND FUND
7800 East Union Avenue
Denver, Colorado 80237
PROXY STATEMENT
FOR SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 10, 2000
VOTING INFORMATION
The enclosed proxy is being solicited by the board of directors (the
"Board" or the "Directors") of INVESCO Bond Funds, Inc. (the "Company") on
behalf of INVESCO Tax-Free Bond Fund (the "Fund"). The Meeting will be held on
May 10, 2000, at the offices of the Fund, 7800 East Union Avenue, Denver,
Colorado 80237. The enclosed proxy will be used for the purposes described in
the preceding notice (the "Proposals") and may also be used at any adjournment
of the Meeting, if required. AN ANNUAL REPORT, INCLUDING FINANCIAL STATEMENTS
FOR THE FUND FOR THE FISCAL YEAR ENDED AUGUST 31, 1999 , IS AVAILABLE WITHOUT
CHARGE UPON REQUEST BY CALLING 1-800-525-8085 OR WRITING THE FUND AT P.O. BOX
173706, DENVER, CO 80217-3706. The approximate mailing date of proxies and this
Proxy Statement is March 6, 2000.
The primary purpose of the Meeting is to allow shareholders to consider a
sub-advisory agreement (the "Proposed Sub-Advisory Agreement") for the Fund. If
approved, the Proposal provides that the Fund's current investment adviser,
INVESCO Funds Group, Inc. ("INVESCO"), will enter into the Proposed Sub-Advisory
Agreement with A I M Capital Management, Inc. (hereinafter "A I M" or the
"Sub-Adviser"), under which A I M will provide day-to-day investment management
services ("sub-advisory services") to the Fund under the supervision of INVESCO.
The Proposal is explained in more detail below. IF APPROVED, THE PROPOSED
SUB-ADVISORY AGREEMENT WILL NOT RESULT IN ANY INCREASED INVESTMENT ADVISORY FEES
FOR THE FUND OR ITS SHAREHOLDERS.
If the enclosed proxy is properly executed and returned in time to be voted
at the Meeting, your shares will be voted according to the instructions you have
marked on the proxy. If you sign the proxy but give no instructions, your shares
will be voted FOR all three Proposals. A majority of the shares of the Fund
entitled to vote, represented in person or by proxy, will constitute a quorum at
the Meeting. The affirmative vote of either two-thirds of the shares represented
in person or by proxy, provided a quorum is present, or a majority of the Fund's
outstanding shares is required to approve Proposal 1. The affirmative vote of a
plurality (i.e., the largest number of shares voted at the meeting for each
director nominee or for the board of directors as a whole) of the shares
represented at the Meeting and entitled to vote shall determine Proposal 2.
Proposal 2 will only become effective after being presented to, and approved by,
the shareholders of the three other series Funds within INVESCO Bond Funds, Inc.
(INVESCO High Yield Fund, INVESCO Select Income Fund, and INVESCO Government
Securities Fund) at the next scheduled meeting of these three series Funds'
shareholders. No dates have been set for these three series Funds' shareholders
meetings.
<PAGE>
Shares held by shareholders present in person or represented by proxy at the
Meeting will be counted both for the purpose of determining the presence of a
quorum and for calculating the votes cast on the issues before the Meeting.
Shares held by a broker or other fiduciary as record owner for the account of
the beneficial owner are counted toward the required quorum if the beneficial
owner has executed and timely delivered the necessary proxy, or if the broker or
other fiduciary votes the shares pursuant to applicable stock exchange rules
granting the broker or fiduciary the discretion to vote the beneficial owner's
shares on one or more of the issues before the Meeting. Where the broker or
fiduciary does not have the discretion to vote the shares on one or more issues
before the Meeting, and does not receive a proxy from the beneficial owner, the
shares will not be voted on such issues, and will not count for or against such
issues.
If you sign and return the enclosed proxy, that will not affect your right
to attend the Meeting and vote in person, and you also have the power to revoke
it (by written notice to INVESCO Tax-Free Bond Fund at Post Office Box 173706,
Denver, Colorado 80217-3706, execution of a subsequent proxy, or oral revocation
at the Meeting) at any time before it is exercised.
Shareholders of record of the Fund at the close of business on February 18,
2000 (the "Record Date"), are entitled to vote at the Meeting, including any
adjournment thereof, and are entitled to one vote for each share, and
corresponding fractional votes for fractional shares, on each matter to be acted
upon at the Meeting. On the Record Date, ______________ of the Fund's shares
were outstanding.
INVESCO does not know of any person that owns beneficially 5% or more of the
outstanding shares of the Fund on the Record Date. On the Record Date, the
directors and officers of the Fund, as a group, beneficially owned less than one
percent of the outstanding shares of the Fund.
In addition to the solicitation of proxies by mail, proxies may be solicited
by officers of the Fund, by officers and employees of INVESCO and by officers
and employees of INVESCO Distributors, Inc. ("IDI"), a broker-dealer subsidiary
of INVESCO which serves as distributor of the Fund. These proxies may be
solicited personally or by telephone, without special compensation.
Shareholder Communications Corporation ("SCC") has been retained to assist
in the solicitation of proxies. As the meeting date approaches, certain
shareholders who have not yet voted may receive telephone calls from
representatives of SCC requesting that they authorize SCC, by telephonic or
electronically transmitted instructions, to execute proxy cards on their behalf.
Telephone authorizations will be recorded in accordance with procedures that are
reasonably designed to ensure that the identity of the shareholder casting the
vote and the voting instructions of the shareholder are accurately determined.
<PAGE>
If a shareholder wishes to participate in the Meeting, but does not wish to
give a proxy by telephone, such shareholder may still submit the proxy card
originally sent with the Proxy Statement or attend in person. Any proxy given by
a shareholder, whether in writing or by telephone, is revocable. A shareholder
may revoke the accompanying proxy or a proxy given telephonically at any time
prior to its use by filing with the Fund a written revocation or duly executed
proxy bearing a later date. In addition, any shareholder who attends the Meeting
in person may vote by ballot at the Meeting, thereby canceling any proxy
previously given.
THE COSTS OF PRINTING AND MAILING PROXY MATERIALS AND THE COSTS AND EXPENSES
OF HOLDING THE MEETING AND SOLICITING PROXIES, INCLUDING ANY AMOUNT PAID TO SCC,
WILL BE SHARED EQUALLY BY THE FUND AND INVESCO.
The Directors may seek one or more adjournments of the Meeting to solicit
additional shareholders, if necessary, to obtain a quorum for the Meeting or to
obtain the required shareholder vote to approve the Proposed Sub-Advisory
Agreement and/or to elect the Directors. An adjournment would require the YES
vote of the holders of a majority of the shares present at the Meeting (or an
adjournment thereof), in person or by proxy, and entitled to vote. If an
adjournment is proposed in order to obtain the required shareholder vote on a
particular Proposal, the persons named as proxies will vote in favor of
adjournment those shares which they are entitled to vote in favor of the
Proposal, and will vote against adjournment those shares required to be voted
against the Proposal. A shareholder vote may be taken on one or more of the
Proposals discussed herein prior to any such adjournment if sufficient votes
have been received and it is otherwise appropriate.
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<PAGE>
PROPOSAL 1: APPROVAL OF THE PROPOSED SUB-ADVISORY
AGREEMENT BETWEEN INVESCO FUNDS GROUP, INC. AND A I M
CAPITAL MANAGEMENT, INC.
BACKGROUND
INVESCO serves as investment adviser to the Fund pursuant to an advisory
agreement which was approved by shareholders on January 31, 1997 (the "Current
Advisory Agreement"). The Current Advisory Agreement allows INVESCO to retain
other companies to provide investment sub-advisory services to the Fund. INVESCO
has been responsible for the day-to-day investment operations of the Fund since
the Fund's inception on August 14, 1981. INVESCO and the Directors have agreed
that it is in the best interests of the Fund's shareholders to retain A I M
Capital Management, Inc. ("A I M") to provide sub-advisory services to the Fund.
INFORMATION CONCERNING INVESCO AND A I M
INVESCO, a Delaware corporation incorporated in 1932, serves as investment
adviser to 45 open-end investment company portfolios, including the Fund, and
one closed-end investment company. These funds had aggregate assets of
approximately $31.9 billion as of December 31, 1999. In addition, INVESCO
provides investment management services to private clients.
A I M is a holding company that has been engaged in the financial services
business since 1976 and, together with its affiliates, advises or manages 38
registered investment company portfolios comprising the A I M Family of
Funds(R). As of October 31, 1996, the total assets of the investment company
portfolios advised or managed by A I M and its affiliates were approximately $57
billion.
A I M has managed tax-free bond funds similar to the Fund since
___________. It currently manages ____________ funds with investment objectives
similar to the Fund. A I M currently manages approximately $54 billion of
municipal debt and other tax-free securities in these funds.
Both INVESCO and A I M are indirect subsidiaries of AMVESCAP PLC,
("AMVESCAP"), an international investment management company that, as of
December 31, 1999, managed approximately $357.4 billion in assets (including
assets managed by INVESCO and A I M). AMVESCAP is based in London with money
managers located in Europe, North America, South America and Asia. AMVESCAP is a
publicly traded holding company organized under the laws of England. Its shares
are traded on the London Stock Exchange under the symbol AVZ.
EVALUATION OF THE BOARD OF DIRECTORS
At a regular meeting of the Independent Directors and of the Board held on
January 26, 2000, at which all of the Independent Directors were in attendance,
the Directors evaluated the Proposed Sub-Advisory Agreement with A I M. The
<PAGE>
Independent Directors had available to them the assistance of outside
counsel throughout the process of determining whether to approve the Proposed
Sub-Advisory Agreement. Prior to and during the meeting, the Independent
Directors requested and received all information they deemed necessary to enable
them to determine whether the Proposed Sub-Advisory Agreement is in the best
interests of the Fund and its shareholders. At the meeting, the Independent
Directors reviewed materials furnished by INVESCO and met with representatives
of INVESCO and A I M. With respect to the qualifications of A I M, the directors
noted the following:
o A I M advises more than $54 billion in assets in the bond and money market
funds which it currently manages;
o A I M employs a fixed-income investment discipline which is designed to
reduce volatility and help meet income needs over time;
o A I M focuses on investment quality and pursues low-to-moderate volatility
to meet its income funds' goals, such as total return, high current income
and price stability; and
o A I M has a large research group, including nine investment professionals,
which analyzes fixed-income securities that may help reveal investment
potential overlooked by other analysts.
The Board also considered the nature, quality and extent of services
currently provided by A I M to similar Funds within the A I M Family of
Funds(R), and the benefit to the Fund of the services expected to be provided by
A I M to the Fund pursuant to the Proposed Sub-Advisory Agreement. The Board
discussed and reviewed the terms and provisions of the Proposed Sub-Advisory
Agreement. THE BOARD SPECIFICALLY NOTED THAT THE FEES AND EXPENSES PAYABLE BY
THE FUND, IF THE PROPOSED SUB-ADVISORY AGREEMENT IS APPROVED BY THE
SHAREHOLDERS, ARE IDENTICAL TO THE FEES AND EXPENSES PRESENTLY IN EFFECT AND
PAYABLE BY THE FUND UNDER THE CURRENT ADVISORY AGREEMENT. Finally, the Board
noted that the Current Advisory Agreement would remain in effect without change.
The Board, in considering various courses of action proposed by INVESCO
senior management for the ongoing management of the Fund, also considered the
following factors important in recommending that A I M be engaged to perform the
day-to-day investment responsibilities for the Fund pursuant to the Proposed
Sub-Advisory Agreement. The following factors should also be considered by
shareholders in determining whether to approve the Proposed Sub-Advisory
Agreement:
o The Proposed Sub-Advisory Agreement was specifically approved by the
Directors, including all of the Independent Directors;
o There will be no change in the investment objectives or policies of the
Fund;
<PAGE>
o A I M possesses substantial municipal bond fund expertise, evidenced by
___________ years of experience, and current management of $54 billion in
municipal and other tax-free securities;
o A I M will manage the Fund with an investment management style similar to
the style currently employed by INVESCO;
o There will be no increase in the fees payable by the Fund to INVESCO as
a result of the approval and implementation of the Proposed
Sub-Advisory Agreement; and
o All fees payable to A I M for sub-advisory services will be paid by
INVESCO from the advisory fee paid to INVESCO by the Fund, resulting
in an identical cost to the Fund for advisory services, when stated as a
percentage of Fund assets.
A I M currently manages a substantially larger amount of municipal
securities than does INVESCO. This creates the potential for increased economies
of scale with respect to the purchase of large blocks of municipal investment
securities. INVESCO believes that reassignment of the day-to-day management of
the Fund to A I M may result in decreased overall operating expenses for the
Fund, resulting from these economies of scale. However, reduced Fund operating
expenses are not guaranteed to result from approval of the Proposed Sub-Advisory
Agreement. Absent the achievement of these economies of scale, INVESCO believes
the overall operating expenses of the Fund will remain substantially the same,
in percentage terms, if the Proposed Sub-Advisory Agreement is approved.
Based upon the Directors' review and the evaluation of the materials they
received, and in consideration of all factors deemed relevant to them, the
Directors determined that the Proposed Sub-Advisory Agreement is fair,
reasonable and in the best interests of the Fund and its shareholders.
ACCORDINGLY, THE BOARD, INCLUDING ALL OF THE INDEPENDENT DIRECTORS, APPROVED THE
PROPOSED SUB-ADVISORY AGREEMENT AND VOTED TO RECOMMEND THAT ALL SHAREHOLDERS
VOTE TO APPROVE THE PROPOSED SUB-ADVISORY AGREEMENT.
THE PROPOSED SUB-ADVISORY AGREEMENT
If shareholders of the Fund approve the Proposed Sub-Advisory Agreement, it
will become effective on May 10, 2000. The Proposed Sub-Advisory Agreement will
remain in effect for an initial term of two years ending May 10, 2002, unless
terminated earlier. If the Proposed Sub-Advisory Agreement is not terminated
prior to May 10, 2002, it will continue automatically for successive periods not
to exceed twelve months each, provided that each continuance is specifically
approved at least annually (i) by a vote of a majority of the Independent
Directors cast in person at a meeting called for the purpose of voting on such
approval, and (ii) by the Board or by vote of a majority of the outstanding
voting securities of the Fund. The following summary of the Proposed
Sub-Advisory Agreement is provided to assist shareholders in considering the
Proposal. The complete text of the Proposed Sub-Advisory Agreement is attached
to this Proxy Statement as Appendix A, and should be reviewed by shareholders in
consideration of Proposal 1.
<PAGE>
If the Proposed Sub-Advisory Agreement is approved, A I M will provide the
investment advisory services described below, subject to the broad supervision
of INVESCO and the board of directors of the Company.
A I M will generally manage the investment operations of the Fund.
Specifically, A I M will perform the following services:
o Manage the investment and reinvestment of all the assets of the Fund,
and execute all purchases and sales of portfolio securities;
o Maintain a continuous investment program for the Fund consistent with
the Fund's investment policies;
o Maintain the Company's status as a regulated investment company under
the Internal Revenue Code of 1986;
o Determine what securities are to be purchased or sold for the Fund,
unless otherwise directed by the Directors of the Company or INVESCO,
and execute transactions accordingly;
o Provide to the Fund the benefit of all of the investment analysis and
research, the reviews of current economic conditions and trends, and the
consideration of long range investment policy now or hereafter generally
available to investment advisory customers of A I M;
o Determine what portion of the Fund should be invested in the various
types of securities authorized for purchase by the Fund; and
o Make recommendations as to the manner in which voting rights, rights to
consent to Fund action and any other rights pertaining to each Fund's
portfolio securities will be exercised.
A I M is authorized to choose, in its best judgment, the brokers or dealers
used to execute securities transactions for the Fund, consistent with prompt and
reliable execution of those transactions at favorable prices. In selecting
brokers or dealers to execute securities transactions for the Fund, A I M is
authorized to consider the full range and quality of a broker's services which
benefit the Fund, including the broker or dealer's research and analytical
capabilities, its reliability of performance, and its financial soundness and
responsibility.
Research services furnished by selected brokers may be used by A I M in
servicing all of its accounts, and not all such services may be used by A I M in
connection with the sub-advisory services provided to the Fund.
A I M will pay for maintaining the staff and personnel necessary to perform
its obligations under the Proposed Sub-Advisory Agreement. A I M will provide
<PAGE>
the office space, equipment and facilities necessary to perform its
obligations under the Proposed Sub-Advisory Agreement. Otherwise, INVESCO and/or
the Company will pay all costs and expenses in connection with the operations of
the Fund.
INVESCO will pay to A I M an annual sub-advisory fee, computed daily and
paid the last day of each month, at the annual rate of 0.22% of the first $300
million of the Fund's average net assets, 0.18% of the Fund's average net assets
in excess of $300 million but not more than $500 million, and .014% of the
Fund's average net assets in excess of $500 million. THE SUB-ADVISORY FEE IS
PAID TO A I M BY INVESCO FROM THE ADVISORY FEE INVESCO RECEIVES FROM THE FUND.
APPROVAL OF THE PROPOSED SUB-ADVISORY AGREEMENT WILL NOT INCREASE THE INVESTMENT
ADVISORY FEE PAID BY THE FUND TO INVESCO.
A I M will not be liable for any error of judgment, mistake of law or for
any loss arising out of any investment or for any act or omission in the
performance of sub-advisory services rendered with respect to the Company or the
Fund, except for willful misfeasance, bad faith or gross negligence in the
performance of its duties or by reason of reckless disregard of its obligations
and duties under the Proposed Sub-Advisory Agreement.
The sub-advisory services provided by A I M to the Fund will not be
exclusive. If the Proposed Sub-Advisory Agreement is approved, A I M will
continue to render services to other clients.
If the Proposed Sub-Advisory Agreement is approved, it may be subsequently
terminated at any time, without the payment of any penalty, by INVESCO; the Fund
by vote of a majority of the Directors of the Company; by vote of a majority of
the outstanding voting securities of the Fund; or by A I M. A termination by
INVESCO or A I M will require sixty days' written notice to the other party and
to the Company. A termination by the Company will require written notice to
INVESCO and A I M. The terms of the Proposed Sub-Advisory Agreement provide that
it will automatically terminate in the event of its assignment.
A I M uses a team approach to investment management. The individual member
of the team who will be primarily responsible for the day-to-day management of
the Fund's portfolio is Richard A. Berry. Mr. Berry is vice president of A I M
Capital Management, Inc. and senior portfolio manager for A I M High Income
Municipal Fund, A I M Municipal Bond Fund, A I M Tax-Free Intermediate Fund, A I
M Tax-Exempt Bond Fund of Connecticut, and tax-free private accounts. Mr. Berry
joined A I M in 1987 and has been in the investment industry since 1968. Prior
to joining A I M, Mr. Berry served at various times as senior vice president for
InterFirst Investment Management Company, manager of investor relations at Texas
Industries, Inc., vice president of Banc Texas, and investment officer at
Southwestern Life Insurance Company. Mr. Berry has been president and director
of the Dallas Association of Investment Analysts and chairman of the board of
regents of the Financial Analysts Seminar. Mr. Berry received both a bachelor of
business
<PAGE>
administration degree in 1968 and a masters of business administration
degree in finance in 1973 from Texas Christian University. He is a Chartered
Financial Analyst.
THE CURRENT ADVISORY AGREEMENT
The Current Advisory Agreement, dated February 28, 1997, was approved by a
majority of the shareholders of the Fund at a special meeting held on January
31, 1997 for that purpose. The continuation of the Current Advisory Agreement
through May 15, 2000 was last approved by the Directors, including a majority of
the Independent Directors, at a meeting of the Directors held on May 12, 1999.
The Current Advisory Agreement provides that INVESCO will (either directly
or by delegation to a sub-adviser) maintain a continuous investment program for
the Fund that is consistent with the Fund's investment objectives and policies
as set forth in the registration statement of INVESCO Bond Funds, Inc. (the
"Company"), and the prospectus and statement of additional information for the
Fund currently in effect under the Investment Company Act of 1940 (the "1940
Act") and the Securities Act of 1933, as amended. In the performance of such
duties, INVESCO will, among other things:
o manage the investment and reinvestment of the assets of the Fund;
o determine what securities are to be purchased or sold for the Fund and place,
or arrange for the placement of, all orders for such transactions;
o furnish the Fund with investment analysis and research, reviews of current
economic conditions and trends and considerations respecting long-range
investment policies;
o make recommendations as to the manner in which rights pertaining to the
Fund's portfolio securities should be exercised;
o calculate the net asset value of the Fund as required by the 1940 Act;
o furnish requisite office space, equipment and facilities as may reasonably
be requested by the Fund from time to time; and
o maintain the Fund's accounts and records and prepare all requisite corporate
documents such as tax returns and reports to the U.S. Securities and Exchange
Commission and Company shareholders. Except to the extent assumed by INVESCO
under the Current Advisory Agreement or required by law, expenses incurred in
connection with the operations and organization of the Fund as borne by the
Fund.
As compensation for its advisory services to the Fund, INVESCO receives a
monthly fee. The fee is based upon a percentage of the Fund's average net
assets, determined daily. The fee is calculated at the annual rate of. 0.55% of
the first $300 million of the Fund's average net assets; 0.45% of the next $200
million of the Fund's average net assets; and 0.35% of the Fund's average net
assets over $500 million. For the fiscal year ended August 31, 1999, the Fund
paid to INVESCO total advisory fees of $_______________(1).
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(1) On August 16, 1999, the Fund's fiscal year end was changed from June 30 to
August 31. This figure represents the total advisory fees paid by the Fund
during the 12 month period ended August 31, 1999.
<PAGE>
The Current Advisory Agreement provides that INVESCO shall not be liable
for any error of judgment, mistake of law, any loss arising out of any
investment, or for any other act or omission in the performance of its
obligations under the Current Advisory Agreement not involving willful
misfeasance, bad faith, gross negligence or reckless disregard of its
obligations under such Agreement.
The Current Advisory Agreement may be continued from year to year as long as
each such continuance is approved at least annually by the Board, or by a vote
of the holders of a majority of the then-outstanding voting securities (as
defined below under "Vote Required") of the Funds. Any such continuance also
must be approved by a majority of the Independent Directors of the Company at a
meeting called for the purpose of voting on such continuance. Upon sixty (60)
days' written notice, the Current Advisory Agreement may be terminated at any
time without penalty by a majority of the then outstanding voting securities of
the Fund, or by INVESCO.
VOTE REQUIRED
Approval of the Proposed Sub-Advisory Agreement requires the affirmative vote
of the lesser of. (a) 67% or more of the shares present at the meeting, if the
holders of more than 50% of the outstanding shares of the Fund are present or
represented by proxy; or (b) more than 50% of the total outstanding shares of
the Fund.
THE FUND'S BOARD, INCLUDING ALL OF THE INDEPENDENT
DIRECTORS, UNANIMOUSLY RECOMMENDS THAT
SHAREHOLDERS VOTE "FOR" PROPOSAL 1
PROPOSAL 2: TO ELECT THE DIRECTORS OF INVESCO BOND FUNDS,
INC.
The Board has nominated the individuals identified below for election to
the Board at the Meeting. The Company currently has twelve 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 requirement without
incurring the expense of calling additional shareholder meetings, shareholders
are being asked at this Meeting to elect the twelve directors to hold office
until the next meeting of shareholders. Consistent with the provisions of the
Company's by-laws, and as permitted by Maryland law, the Company 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.
<PAGE>
All of the Independent Directors (i.e., directors who are not "interested
persons" of the Company, as such term is defined in the 1940 Act) now being
proposed for election were nominated and selected by the Independent Directors
as a group. Nine of the twelve current directors are Independent Directors.
The persons named as attorneys-in-fact in the enclosed proxy have advised the
Company 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
occupation, the number of Company shares owned by each, and their respective
memberships on Board committees are listed in the table below.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------
Name and Address Principal Occupation During Director of No. of Fund Member of
Past Five Years and Other Executive Shares Committee
Affiliations Officer of the Beneficially
Company Owned Directly
Since or Indirectly on
---------(1)
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Mark H. Williamson* President, Chief Executive 1998 (3)(5)(6)
President, Chief Officer, and Chairman of the
Executive Officer, and Board, INVESCO Distributors,
Chairman of the Board, Inc.; President, Chief Executive
Age 48 Officer, and Chairman of the
7800 E. Union Avenue Board, INVESCO; President,
Denver Colorado 80237 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).
Fred A. Deering Trustee of INVESCO Global 1993 (2)(3)(5)
Vice Chairman of the Health Sciences Fund. (11)(12)
Board, Age 72 Formerly, Chairman of the
1290 Broadway Executive Committee and
Denver, Colorado Chairman of the Board of
80203 Security Life of Denver
Insurance Company, Denver,
Colorado; Director of ING
American Holdings Company
and First ING Life Insurance
Company of New York.
<PAGE>
- --------------------------------------------------------------------------------------------------
Name and Address Principal Occupation During Director of No. of Fund Member of
Past Five Years and Other Executive Shares Committee
Affiliations Officer of the Beneficially
Company Owned Directly
Since or Indirectly on
---------(1)
- --------------------------------------------------------------------------------------------------
Dr. Victor L. Andrews Professor Emeritus, Chairman 1993 (4)(6)(8)
Director, Age 69 Emeritus and Chairman of the
34 Seawatch Drive CFO Roundtable of the
Savannah, Georgia Department of Finance of
31411-2600 Georgia State University,
Atlanta, Georgia; President
Andrews Financial Associates,
Inc. (consulting firm).
Dr. Andrews is also a director
of the Sheffield Funds, Inc.
Formerly, member of the
faculties of the Harvard
Business School and the Sloan
School of Management of MIT.
Bob R. Baker Consultant (since 2000); form- 1993 (3)(4)(5)(10)
Director, Age 63 erly, President and Chief Executive
37 Castle Pines Drive Officer (1989 to 2000) of AMC
North Cancer Research Center,
Castle Rock, Colorado Denver, Colorado; until mid-
80104 December 1988, Vice Chairman
of the Board, First Columbia
Financial Corporation,
Englewood, Colorado;
Chairman of the Board
and Chief Executive Officer of
First Columbia Financial
Corporation (1988 - ).
Charles W. Brady* Chairman and Chief Executive 1993
Director, Age 64. Officer of AMVESCAP PLC,
1315 Peachtree Street, London, England, and of various
N.E. subsidiaries thereof; Chairman
Atlanta, Georgia 30309 of the Board of INVESCO
Global Health Sciences Fund.
- --------------------------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------------------------
Name and Address Principal Occupation During Director of No. of Fund Member of
Past Five Years and Other Executive Shares Committee
Affiliations Officer of the Beneficially
Company Owned Directly
Since or Indirectly on
---------(1)
- --------------------------------------------------------------------------------------------------
Lawrence H. Budner Trust 1993 (2)(6)(7)
Director, Age 69 Consultant;
7608 Glen Albens prior to June
Dallas, Texas 1987, Senior
75225 Vice President
and Senior Trust
Officer,
InterFirst Bank,
Dallas Texas
James T. Bunch, Principal and 2000 (4)(7)(10)
Director, Age 57 Founder of Green
Green Manning & Manning & Bunch
Bunch, Ltd. Ltd., Denver,
3600 Republic Colorado, since
Plaza August 1988;
370 17th Street Director and
Denver, Colorado Secretary of
80202-5636 Green Manning &
Bunch Securities,
Inc., Denver,
Colorado since
September 1993.
Vice President
and Director of
Western Golf
Association and
Evans Scholars
Foundation. Formerly,
General Counsel
and Director of
Boettcher & Co.,
Denver, Colorado;
Chairman and Managing
Partner of Davis Graham
& Stubbs, Denver, Colorado.
- ---------------------------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------------------------
Name and Address Principal Occupation During Director of No. of Fund Member of
Past Five Years and Other Executive Shares Committee
Affiliations Officer of the Beneficially
Company Owned Directly
Since or Indirectly on
---------(1)
- --------------------------------------------------------------------------------------------------
Dr. Wendy Lee Gramm Self-employed (since 1993); 1997 (4)(8)(10)
Director, Age 55 Professor of Economics and
4201 Yuma Street, N.W. Public Administration,
Washington, D.C. University of Texas at
20016 Arlington. Formerly, Chairman,
Commodities Futures Trading
Commission (1988-1993);
Administrator for Information
and Regulatory Affairs, Office
of Management and Budget
(1985-1988); Executive
Director, Presidential Task Force
on Regulatory Relief; Director,
Federal Trade Commission
Bureau of Economics. Director
of the Chicago Mercantile
Exchange; Enron Corporation;
IBP, Inc.; State Farm Insurance
Company; Independent
Women's Forum; International
Republic Institute; and the
Republican Women's Federal Forum
Richard W. Healey* Since 1998, Director and Senior 2000
Director, Age 45 Vice President, INVESCO
7800 E. Union Avenue Distributors, Inc. Formerly,
Denver, Colorado Senior Vice President GT
80237 Global-North America (1996-
1998), The Boston Company
(1993-1996).
Gerald J. Lewis Chairman of Lawsuit Resolution 2000 (2)(8)(10)(11)
Director, Age 66 Services San Diego, California
Justice of the Court of since 1987; Director of General
Appeals Chemical Group, Inc., Hampdon,
701 "B" Street, Suite New Hampshire, since 1996.
2100 Formerly, Associate Justice of
San Diego, California the California Court of Appeals;
92101 Director of Wheelabrator
Technologies, Inc., Fisher
Scientific, Inc., Henley
Manufacturing, Inc., and
California Coastal Properties,
Inc.; Of Counsel, Latham &
Watkins, San Diego,
California (1987 to 1997).
- --------------------------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------------------------
Name and Address Principal Occupation During Director of No. of Fund Member of
Past Five Years and Other Executive Shares Committee
Affiliations Officer of the Beneficially
Company Owned Directly
Since or Indirectly on
---------(1)
- --------------------------------------------------------------------------------------------------
John W. McIntyre Retired. Formerly, 1995 (2)(3)(5)(7)
Director, Age 69 Vice Chairman of the Board, (11)
7 Piedmont Center, The Citizens and Southern
Suite 100 Corporation; Chairman of the
Atlanta, Georgia 30305 Board and Chief Executive
Officer, The Citizens and
Southern Georgia Corporation;
Chairman of the Board and
Chief Executive Officer, The
Citizens and Southern National
Bank. Trustee of INVESCO
Global Health Sciences Fund,
Gables Residential Trust,
Employee's Retirement System
of Georgia, Emory University,
and the J.M. Tull Charitable
Foundation; Director of Kaiser
Foundation Health Plans of
Georgia, Inc.
Dr. Larry Soll Retired. Formerly, 1997 (4)(8)(10)
Director, Chairman of the Board (1987 to
Age 57 1994), Chief Executive Officer
345 Poorman Road (1982 to 1989; 1993 to 1994)
Boulder, Colorado and President (1982 to 1989) of
80302 Synergen Inc. (a biotechnology
company), Boulder, Colorado.
Director of Synergen since its
incorporation in 1982. Director
of Isis Pharmaceuticals, Inc.
Trustee of INVESCO Global
Health Sciences Fund.
- --------------------------------------------------------------------------------------------------
</TABLE>
* Because of his affiliation with INVESCO or with companies affiliated with
INVESCO, this individual is deemed to be an "interested person" of the Fund, 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 partialor 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 Brokerage Committee
(8) Member of the Derivatives Committee
(10)Member of the Nominating Committee
(11)Member of the Legal Committee
(12)Member of the Insurance Committee
<PAGE>
The Board has audit, management liaison, brokerage, nominating,
derivatives, legal and insurance committees consisting of Independent Directors,
and compensation, executive and valuation committees consisting of Independent
Directors and Directors affiliated with INVESCO. During the intervals between
the meetings of the Board, the executive committee may exercise all powers and
authority of the Board in the management of the Company's business, except for
certain powers which, under applicable law and/or the Company's 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 audit committee,
consisting of four Independent Directors, meets quarterly with the Company's
independent accountants and executive officers of the Company. This committee
reviews the accounting principles being applied by the Company 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.
The management liaison committee meets quarterly with various management
personnel of INVESCO in order to facilitate better understanding of management
and operations of the Company, 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 brokerage committee meets periodically to
review transactions by the Fund, and to review policies and procedures of the
Fund's adviser with respect to brokerage transactions. The committee then
reports on these matters to the Board. The nominating committee meets
periodically to review and nominate candidates for Independent Director
positions on the Board of Directors. The committee then submits selected
candidates to the Independent Directors for nomination and selection. If
required by the 1940 Act or applicable Maryland law, the nominated candidates
are then submitted to shareholders for approval. The derivatives committee meets
periodically to review derivatives investments made by the Fund. The committee
monitors derivatives usage by the Fund and the procedures utilized by the Fund's
adviser to ensure that the use of such instruments follows the policies on such
instruments adopted by the Board. The committee then reports on these matters to
the Board. The legal and insurance committees meet when necessary to review
legal and insurance matters of importance to the Board. Each committee then
reports on such matters to the Board.
Each Independent Director receives an annual retainer of $56,000 for his or
her 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, the Vice Chairman
of the Board receives an annual fee of $6,000, the chairmen of the Brokerage and
Derivatives Committees receive an annual fee of $2,000, the chairpersons of the
Compensation and Nominating Committees receive an annual fee of $1,000, and the
members of the Executive and Valuation Committees receive an annual fee of
$2,000 for serving in these capacities.
During the past fiscal year, the Board met four times, the audit committee
met four times, the management liaison committee met five times, the brokerage
committee met two times, the derivatives committee met four times, the
compensation committee met __ times and the legal committee met __ times. The
executive, nominating, insurance and valuation committees did not meet. During
the Company'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.
<PAGE>
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 the Fund's shareholders.
The following table sets forth information relating to the compensation paid to
directors during the last fiscal year.
<TABLE>
<CAPTION>
COMPENSATION TABLE
AMOUNTS PAID DURING THE MOST RECENT
FISCAL YEAR BY THE COMPANY TO DIRECTORS
- ----------------------------------------------------------------------------------------------------------------------------------
Name of Person, Position Aggregate Compensation Pension or Retirement Estimated Annual Benefits Total Compensation from
from the Company(1) Benefits Accrued as Part of Upon Retirement(3) the Company and the 44
the Company's Expenses(2) other INVESCO Funds
Paid to Directors(1)
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
FRED A. DEERING, 6,717 4,641 3,135 107,050
Vice Chairman of the Board
and Director
DR. VICTOR L. ANDREWS, 6,254 4,440 3,456 84,700
Director
BOB R. BAKER, 6,343 3,965 4,631 82,850
Director
LAWRENCE H. BUDNER, 6,162 4,440 3,456 82,850
Director
DANIEL D. CHABRIS(4) 2,049 4,537 2,843 34,000
DR. WENDY L. GRAMM, 6,133 0 0 81,350
Director
KENNETH T. KING(4) 6,509 4,737 2,843 85,850
JOHN W. MCINTYRE, 6,595 0 0 108,700
Director
DR. LARRY SOLL, 6,133 0 0 100,900
Director
- ------------------------------------------------------------------------------------------------------------------------------------
Total 52,895 26,760 20,364 768,250
====================================================================================================================================
As a Percentage of Net 0.0033%(5) 0.0017% 0.0024%(6)
Assets
====================================================================================================================================
</TABLE>
<PAGE>
(1) The Vice Chairman of the Board, the chairmen of the audit, management
liaison, nominating, derivatives, brokerage and compensation committees,
and Independent Director members of the committees of the Company 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 Company's share of the estimated annual
benefits payable by the INVESCO Complex (including INVESCO Global Health
Sciences Fund, which participates in a separate but substantially
identical retirement plan) upon a director's 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 directors. This results
in lower estimated benefits for directors who are closer to retirement and
higher estimated benefits for directors who are farther from retirement.
With the exception of Drs. Soll and Gramm and Messrs. Bunch and Lewis,
each of these directors has served as a director of one or more of the
INVESCO Funds for the minimum five-year period required to be eligible to
participate in the Defined Benefit Deferred Compensation Plan.
(4) Mr. Chabris retired as a director on September 30, 1998. Mr. King retired
as a director on December 31, 1999.
(5) Total as a percentage of the Company's net assets as of August 31, 1999.
(6) Total as a percentage of the net assets of the INVESCO Complex as of
December 31, 1999.
The Company pays its Independent Directors, Board Vice Chairman, committee
chairmen and committee members the fees described above. The Company also
reimburses its Independent Directors for travel expenses incurred in attending
meetings. Charles W. Brady, Mark H. Williamson and Richard W. Healey, as
"interested persons" of the Company and of the 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 the Company or the
other INVESCO Funds for their services as officers and/or directors.
The overall direction and supervision of the Company is the responsibility of
the Board, which has the primary duty of ensuring that the Company's general
investment policies and programs are adhered to and that the Company is properly
administered. The officers of the Company, all of whom are officers and
employees of and paid by INVESCO, are responsible for the day-to-day
administration of the Company and the Fund. INVESCO has the primary
responsibility for making investment decisions on behalf of the Company. These
investment decisions are reviewed by the investment committee of INVESCO.
All of the officers and directors of the Company hold comparable positions
with the following INVESCO Funds, each of which contains a number of separate
series Funds: INVESCO Combination Stock & Bond Funds, Inc.; INVESCO
International Funds, Inc.; INVESCO Money Market Funds, Inc.; INVESCO Sector
Funds, Inc.; INVESCO Stock Funds, Inc.; INVESCO Treasurer's Series Funds, Inc.;
and INVESCO Variable Investment Funds, Inc.
The Boards of the INVESCO Funds have adopted a Defined Benefit Deferred
Compensation Plan (the "Plan") for the Independent Directors of the Funds.
<PAGE>
Under the Plan, each director 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, if the Qualified
Director retires upon reaching age 72 (or the retirement age of 73 or 74, if the
retirement date is extended by the Boards for one or two years, but less than
three years), continuation of payment for one year (the "First Year Retirement
Benefit") of the annual basic retainer and annualized board meeting fees payable
by the Funds to the Qualified Director at the time of his or her retirement (the
"Basic Benefit"). Commencing with any such director's second year of retirement,
commencing with the first year of retirement of any Qualified Director whose
retirement has been extended by the Board for three years, and commencing with
attainment of age 72 by a Qualified Director who voluntarily retires prior to
reaching age 72, 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 him or her or 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 Company has no stock options or other pension or
retirement plans for management or other personnel and pays no salary or
compensation to any of its officers.
The Independent Directors have contributed to a deferred compensation plan,
pursuant to which they have deferred receipt of a portion of the compensation
which they would otherwise have been paid as directors of certain of the INVESCO
Funds. Certain of the deferred amounts have been invested in shares of all
INVESCO Funds, except Funds offered by INVESCO Variable Investment Funds, Inc.,
in which the directors are legally precluded from investing. 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 the director may own
directly or beneficially.
VOTE REQUIRED
Election of each nominee as a director of the Company requires a plurality
of the votes cast at the Meeting in person or by proxy for the director
individually or for the slate of directors. Please note that this election of
Fund Directors will not become effective until the three other series Funds of
the Company approve the election of these Directors.
<PAGE>
THE BOARD UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE "FOR"
EACH OF THE NOMINEES IN PROPOSAL 2
INFORMATION CONCERNING ADVISER,
DISTRIBUTOR AND AFFILIATED COMPANIES
INVESCO, a Delaware corporation, serves as the Fund's investment adviser
and provides other services to the Fund. INVESCO is a wholly owned subsidiary of
INVESCO North American Holdings, Inc. ("INAH"), 1315 Peachtree Street, N.E.,
Atlanta, Georgia 30309. INAH is an indirect wholly owned subsidiary of AMVESCAP
PLC. (2) 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 9 open-end investment companies having aggregate net
assets of approximately $31.9 billion as of December 31, 1999.
The principal executive officers and directors of INVESCO and their
principal occupations are:
Mark H. Williamson, Chairman of the Board, President, and Chief Executive
Officer; also, Chairman of the Board, President and Chief Executive Officer of
IDI; Charles P. Mayer, Director and Senior Vice President; Timothy J. Miller,
Director and Senior Vice President; Ronald L. Grooms, Director, Senior Vice
President and Treasurer, also, Director, Senior Vice President and Treasurer of
IDI; Raymond R. Cunningham, Director and Senior Vice President, also Senior Vice
President of IDI; Richard W. Healey, Director, and Senior Vice President, also
Director and Senior Vice President of IDI; and Glen A.Payne, Senior
Vice-President, Secretary and General Counsel, also Senior Vice President,
Secretary and General Counsel of IDI.
The address of each of the foregoing officers and directors is 7800 East
Union Avenue, Denver, Colorado 80237.
Pursuant to an Administrative Services Agreement between the Company and
INVESCO, INVESCO provides administrative services to the Company and the Fund,
including sub-accounting and recordkeeping services and functions. During the
fiscal year ended August 31, 1999, the Fund paid INVESCO total compensation of
$53,344 for such services. (3) The Administrative Services Agreement will remain
in effect if the Proposed Sub-Advisory Agreement is approved by shareholders.
INVESCO serves as the Fund's transfer agent and dividend disbursing
agent. During the fiscal year ended August 31, 1999, the Fund paid INVESCO total
- --------------------
(2) The intermediary companies between INAH and AMVESCAP PLC are as
follows: AMVESCAP, Inc. and AMVESCAP Group Services, Inc., each of which is
wholly owned by its immediate parent.
(3) On August 16, 1999, the Fund's fiscal year end was changed from June 30
to August 31. This figure represents the total administrative service fees paid
by the fund during the 12 month period ended August 31, 1999.
<PAGE>
compensation of $279,732 for such services(4). INVESCO will continue to act
as the Fund's transfer agent and dividend disbursing agent if the Proposed
Sub-Advisory Agreement is approved by shareholders.
OTHER BUSINESS
The Board knows of no other business to be brought before the Meeting.
If, however, any other matters properly come before the Meeting, it is the
intention that proxies that do not contain specific instructions to the contrary
will be voted on such matters in accordance with the judgment of the persons
designated in the proxies.
SHAREHOLDER PROPOSALS
The Fund and the Company do 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 INVESCO Bond Funds, Inc., 7800 East Union Avenue,
Denver, Colorado 80237. The Fund has not received any shareholder proposals to
be presented at this meeting.
By Order of the Board of Directors
Glen A. Payne
-----------------
(4) On August 16, 1999, the Fund's fiscal year end was changed from June 30
to August 31. This figure represents the total transfer agent and dividend
disbursing fees paid by the Fund during the 12 month period ended August 31,
1999.
<PAGE>
APPENDIX A
PROPOSED SUB-ADVISORY AGREEMENT
AGREEMENT made this 10th day of May, 2000, by and between INVESCO Funds
Group, Inc. ("INVESCO"), a Delaware corporation, and A I M Capital Management,
Inc., a Delaware corporation ("the Sub-Adviser").
WITNESSETH:
WHEREAS, INVESCO BOND FUNDS, INC. (the "Company") is engaged in business as a
diversified, open-end management investment company registered under the
Investment Company Act of 1940, as amended (hereinafter referred to as the
"Investment Company Act") and has one class of shares (the "Shares"), which is
divided into series, each series representing an interest in a separate
portfolio of investments, one such series being designated the INVESCO Tax-Free
Bond Fund (the "Fund"); and
WHEREAS, INVESCO and the Sub-Adviser are affiliated entities, are engaged
in rendering investment advisory services, and are registered as investment
advisers under the Investment Advisers Act of 1940; and
WHEREAS, INVESCO has entered into an Investment Advisory Agreement with the
Company (the "INVESCO Investment Advisory Agreement"), pursuant to which INVESCO
is required to provide investment advisory services to the Company, and, upon
receipt of written approval of the Company, is authorized to retain companies
which are affiliated with INVESCO to provide such services; and
WHEREAS, the Sub-Adviser is willing to provide investment advisory services
to the Company on the terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and the covenants
hereinafter contained, INVESCO and the Sub-Adviser hereby agree as follows:
ARTICLE I
DUTIES OF THE SUB-ADVISER
INVESCO employs the Sub-Adviser to act as investment adviser to the Company
and to furnish the investment advisory services described below, subject to the
broad supervision of INVESCO and the Board of Directors of the Company, for the
period and on the terms and conditions set forth in this Agreement. The
Sub-Adviser accepts such assignment and agrees during such period, at its own
expense, to render such services and to assume the obligations herein set
<PAGE>
forth for the compensation provided for herein. The Sub-Adviser shall for all
purposes herein be deemed to be an independent contractor and, unless otherwise
expressly provided or authorized herein, shall have no authority to act for or
represent the Company in any way or otherwise be deemed an agent of the Company.
The Sub-Adviser agrees to manage the investment operations of the Fund,
subject to the supervision of the Company's directors (the "Directors") and
INVESCO. Specifically, the Sub-Adviser agrees to perform the following services:
(a) to manage the investment and reinvestment of all the assets, now or
hereafter acquired, of the Fund, and to execute all purchases and sales of
portfolio securities;
(b) to maintain a continuous investment program for the Fund, consistent
with (i) the Fund's investment policies as set forth in the Company's
Registration Statement, as from time to time amended, under the Investment
Company Act of 1940, as amended (the "1940 Act"), and in any prospectus
and/or statement of additional information of the Fund, as from time to time
amended and in use under the Securities Act of 1933, as amended, and (ii) the
Company's status as a regulated investment company under the Internal Revenue
Code of 1986, as amended;
(c) to determine what securities are to be purchased or sold for the Fund,
unless otherwise directed by the Directors of the Company or INVESCO, and to
execute transactions accordingly;
(d) to provide to the Fund the benefit of all of the investment analysis
and research, the reviews of current economic conditions and trends, and the
consideration of long range investment policy now or hereafter generally
available to investment advisory customers of the Sub-Adviser;
(e) to determine what portion of the Fund should be invested in the various
types of securities authorized for purchase by the Fund; and
(f) to make recommendations as to the manner in which voting rights, rights
to consent to Fund action and any other rights pertaining to each Fund's
portfolio securities shall be exercised.
With respect to execution of transactions for the Fund, the Sub-Adviser is
authorized to employ such brokers or dealers as may, in the Sub-Adviser's best
judgment, implement the policy of the Fund to obtain prompt and reliable
execution at the most favorable price obtainable. In assigning an execution or
negotiating the commission to be paid therefor, the Sub-Adviser is authorized to
consider the full range and quality of a broker's services which benefit the
Fund, including but not limited to research and analytical capabilities,
reliability of performance, and financial soundness and responsibility. Research
services prepared and furnished by brokers through which the Sub-Adviser effects
securities transactions on behalf of the Fund may be used by the Sub-Adviser in
servicing all of its accounts, and not all such services may be used by the
<PAGE>
Sub-Adviser in connection with the Fund. The Sub-Adviser may follow a policy of
considering sales of shares of the Fund as a factor in the selection of
broker/dealers to execute portfolio transactions, subject to the requirements of
best execution discussed above. In the selection of a broker or dealer for
execution of any negotiated transaction, the Sub-Adviser shall have no duty or
obligation to seek advance competitive bidding for the most favorable negotiated
commission rate for such transaction, or to select any broker solely on the
basis of its purported or "posted" commission rate for such transaction,
provided, however, that the Sub-Adviser shall consider such "posted" commission
rates, if any, together with any other information available at the time as to
the level of commissions known to be charged on comparable transactions by other
qualified brokerage firms, as well as all other relevant factors and
circumstances, including the size of any contemporaneous market in such
securities, the importance to the Fund of speed, efficiency, and confidentiality
of execution, the execution capabilities required by the circumstances of the
particular transactions, and the apparent knowledge or familiarity with sources
from or to whom such securities may be purchased or sold. Where the commission
rate reflects services, reliability and other relevant factors in addition to
the cost of execution, the Sub-Adviser shall have the burden of demonstrating
that such expenditures were bona fide and for the benefit of the Fund.
ARTICLE II
ALLOCATION OF CHARGES AND EXPENSES
The Sub-Adviser assumes and shall pay for maintaining the staff and personnel
necessary to perform its obligations under this Agreement, and shall, at its own
expense, provide the office space, equipment and facilities necessary to perform
its obligations under this Agreement. Except to the extent expressly assumed by
the Sub-Adviser herein and except to the extent required by law to be paid by
the Sub-Adviser, INVESCO and/or the Company shall pay all costs and expenses in
connection with the operations of the Fund.
ARTICLE III
COMPENSATION OF THE SUB-ADVISER
For the services rendered, facilities furnished, and expenses assumed by the
Sub-Adviser, INVESCO shall pay to the Sub-Adviser an annual fee, computed daily
and paid as of the last day of each month, using for each daily calculation the
most recently determined net asset value of the Fund, as determined by a
valuation made in accordance with the Fund's procedures for calculating their
net asset value as described in the Fund's Prospectus and/or Statement of
Additional Information. The advisory fee to the Sub-Adviser shall be computed at
the annual rate of 0.22% of the first $300 million of the Fund's average net
assets, 0.18% of the Fund's average net assets in excess of $300 million but not
more than $500 million, and .014% of the Fund's average net assets in excess of
<PAGE>
$500 million. During any period when the determination of the Fund's net asset
value is suspended by the Directors of the Company, the net asset value of a
share of the Fund as of the last business day prior to such suspension shall,
for the purpose of this Article III, be deemed to be the net asset value at the
close of each succeeding business day until it is again determined. However, no
such fee shall be paid to the Sub-Adviser with respect to any assets of the Fund
which may be invested in any other investment company for which the Sub-Adviser
serves as investment adviser or sub-adviser. The fee provided for hereunder
shall be prorated in any month in which this Agreement is not in effect for the
entire month. The Sub-Adviser shall be entitled to receive fees hereunder only
for such periods as the INVESCO Investment Advisory Agreement remains in effect.
ARTICLE IV
LIMITATION OF LIABILITY OF SUB-ADVISER
The Sub-Adviser shall not be liable for any error of judgment, mistake of law
or for any loss arising out of any investment or for any act or omission in the
performance of sub-advisory services rendered with respect to the Company or the
Fund, except for willful misfeasance, bad faith or gross negligence in the
performance of its duties or by reason of reckless disregard of its obligations
and duties hereunder. As used in this Article IV, "Sub-Adviser" shall include
any affiliates of the Sub-Adviser performing services contemplated hereby and
directors, officers and employees of the Sub-Adviser and such affiliates.
ARTICLE V
ACTIVITIES OF THE SUB-ADVISER
The services of the Sub-Adviser to the Fund are not to be deemed to be
exclusive, the Sub-Adviser and any person controlled by or under common control
with the Sub-Adviser (for purposes of this Article V referred to as
"affiliates") being free to render services to others. It is understood that
directors, officers, employees and shareholders of the Company are or may become
interested in the Sub-Adviser and its affiliates, as directors, officers,
employees and shareholders or otherwise and that directors, officers, employees
and shareholders of the Sub-Adviser, INVESCO and their affiliates are or may
become interested in the Company as directors, officers and employees.
ARTICLE VI
AVOIDANCE OF INCONSISTENT POSITIONS AND
COMPLIANCE WITH APPLICABLE LAWS
In connection with purchases or sales of securities for the investment
portfolios of the Fund, neither the Sub-Adviser nor any of its directors,
officers or employees will act as a principal or agent for any party other than
<PAGE>
the Fund or receive any commissions. The Sub-Adviser will comply with all
applicable laws in acting hereunder including, without limitation, the 1940 Act;
the Investment Advisers Act of 1940, as amended; and all rules and regulations
duly promulgated under the foregoing.
ARTICLE VII
DURATION AND TERMINATION OF THIS AGREEMENT
This Agreement shall become effective as of the date it is approved by a
majority of the outstanding voting securities of the Fund, and shall remain in
force for an initial term of two years from the date of execution, and from year
to year thereafter until its termination in accordance with this Article VII,
but only so long as such continuance is specifically approved at least annually
by (i) the Directors of the Company, or by the vote of a majority of the
outstanding voting securities of the Fund, and (ii) a majority of those
Directors who are not parties to this Agreement or interested persons of any
such party cast in person at a meeting called for the purpose of voting on such
approval.
This Agreement may be terminated at any time, without the payment of any
penalty, by INVESCO; the Fund by vote of a majority of the Directors of the
Company; by vote of a majority of the outstanding voting securities of the Fund;
or by a majority of the outstanding voting securities of the Fund; or by the
Sub-Adviser. A termination by INVESCO or the Sub-Adviser shall require sixty
days' written notice to the other party and to the Company, and a termination by
the Company shall require such notice to each of the parties. This Agreement
shall automatically terminate in the event of its assignment to the extent
required by the Investment Company Act of 1940 and the Rules thereunder.
The Sub-Adviser agrees to furnish to the Directors of the Company such
information on an annual basis as may reasonably be necessary to evaluate the
terms of this Agreement.
Termination of this Agreement shall not affect the right of the Sub-Adviser
to receive payments on any unpaid balance of the compensation described in
Article III hereof earned prior to such termination.
<PAGE>
ARTICLE VIII
AMENDMENTS OF THIS AGREEMENT
No provision of this Agreement may be orally changed or discharged, but may
only be modified by an instrument in writing signed by the Sub-Adviser and
INVESCO. In addition, no amendment to this Agreement shall be effective unless
approved by (1) the vote of a majority of the Directors of the Company,
including a majority of the Directors who are not parties to this Agreement or
interested persons of any such party cast in person at a meeting called for the
purpose of voting on such amendment and (2) the vote of a majority of the
outstanding voting securities of the Fund (other than an amendment which can be
effective without shareholder approval under applicable law).
ARTICLE IX
DEFINITIONS OF CERTAIN TERMS
In interpreting the provisions of this Agreement, the terms "vote of a
majority of the outstanding voting securities," "assignments," "affiliated
person" and "interested person," when used in this Agreement, shall have the
respective meanings specified in the Investment Company Act and the Rules and
Regulations thereunder, subject, however, to such exemptions as may be granted
by the Securities and Exchange Commission under said Act.
ARTICLE X
GOVERNING LAW
This Agreement shall be construed in accordance with the laws of the State of
Colorado and the applicable provisions of the Investment Company Act. To the
extent that the applicable laws of the State of Delaware, or any of the
provisions herein, conflict with the applicable provisions of the Investment
Company Act, the latter shall control.
<PAGE>
ARTICLE XI
MISCELLANEOUS
Notice. Any notice under this Agreement shall be in writing, addressed and
delivered or mailed, postage prepaid, to the other party at such address as such
other party may designate for the receipt of such notice.
Severability. Each provision of this Agreement is intended to be severable.
If any provision of this Agreement shall be held illegal or made invalid by a
court decision, statute, rule or otherwise, such illegality or invalidity shall
not affect the validity or enforceability of the remainder of this Agreement.
Headings. The headings in this Agreement are inserted for convenience and
identification only and are in no way intended to describe, interpret, define or
limit the size, extent or intent of this Agreement or any provision hereof.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the date first above written.
INVESCO FUNDS GROUP, INC.
By: ---------------------------
Mark H. Williamson
President
ATTEST:
- --------------------------
Glen A. Payne
Secretary
A I M Capital Management, Inc.
By: ---------------------------
President
ATTEST:
- ---------------------------
<PAGE>
[Name and Address]
INVESCO TAX-FREE BOND FUND
INVESCO BOND FUNDS, INC.
PROXY FOR THE SPECIAL MEETING OF SHAREHOLDERS
MAY 10, 2000
This proxy is being solicited on behalf of the Board of Directors of
INVESCO Bond Funds, Inc. (the "Company") and relates to the proposals with
respect to INVESCO Tax-Free Bond 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 ____________ a.m., Mountain Standard Time, on May 10, 2000, at the
offices of the Fund, 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 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
<PAGE>
DETACH AND RETURN THIS PORTION ONLY THIS PROXY CARD IS
VALID ONLY WHEN SIGNED AND DATED.
INVESCO TAX-FREE BOND FUND
INVESCO BOND FUNDS, INC.
VOTE ON DIRECTORS FOR WITHHOLD FOR ALL
ALL ALL EXCEPT
2. Election of the Company's Board To withhold
of Directors: (1) Charles W. authority to
Brady; (2) Fred A. Deering; (3) vote, mark "For
Mark H. Williamson; All Except" and
(4) Dr. Victor L. Andrews; write the
(5) Bob R. Baker; (6) Lawrence nominee's
H. Budner; (7) James T. Bunch number on the
(8) Dr. Wendy Lee Gramm; (9) line below.
Richard W. Healey; (10) Gerald
J. Lewis; (11) John W. -----------------
McIntyre; and (12)Dr. Larry
Soll;
FOR AGAINST ABSTAIN
VOTE ON PROPOSALS
1. To approve or disapprove a new
sub-advisory agreement between INVESCO
Funds Group, Inc.("INVESCO") and A I M
Capital Management, Inc. ("A I M"), with
respect to the INVESCO Tax-Free Bond Fund;
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
