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:
/x/ Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/ / Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Rule 14a-11(c) or Rule 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:
(2) Aggregate number of securities to which transaction applies:
(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):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
/ / 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:______________________________________________
(2) Form, Schedule or Registration Statement No.:_______________________
(3) Filing Party:________________________________________________________
(4) Date Filed:__________________________________________________________
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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.)
March 23, 1999
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,
Mark H. Williamson
President
INVESCO Specialty Funds, Inc.
<PAGE>
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.
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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.
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 5- 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,
<PAGE>
including performance figures and updates from the portfolio managers:
WWW.INVESCO.COM.
If you are still an investor in the 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.
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,
Mark H. Williamson
Chairman & CEO, INVESCO Funds
<PAGE>
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.
*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.
9989 3/99
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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
__________________________
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. ("Stock 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);
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(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
(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,
Glen A. Payne
Secretary
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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 the toll-free number listed on the
enclosed proxy card. 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
516-254-7564. 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. You may
also call Shareholder Communications Corporation directly at 1-800-690-6903 and
vote by phone.
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.)
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.
<PAGE>
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 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 - _________ shares; Realty Fund - _________
shares; S&P 500 Index Fund (Class I) - _________ and (Class II) - _________
shares; WCG Fund - _________ shares; and Worldwide Communications Fund -
_________ 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.
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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.
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 and 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.
3
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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.
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). Moving LAG Fund from
Specialty Funds to International Funds will 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.
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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 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 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 June 1, 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 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 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.
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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 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 $________ in the aggregate,
will be borne half by INVESCO and half by the LAG Fund and the LAG New Series.
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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.
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 International
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 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.
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REQUIRED VOTE. Approval of the LAG Fund Conversion Plan requires the
affirmative vote of the lesser of (1) 67% of LAG 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 LAG Fund's
outstanding shares.
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, has 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 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
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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). Moving each Fund from
Specialty Funds to Sector Funds will 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.
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
9
<PAGE>
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. ("IARI") 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.
The New Agreements will take effect on the Closing Date, and each will
continue in effect until June 1, 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
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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 Stock
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 and the 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 $________ 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 $________ 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 World; 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
12
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to the Closing Date. If approved, the Conversion Plans will take effect on the
Closing Date. If a 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 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.
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.
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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.
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). Moving S&P 500
Index Fund from Specialty Funds to Stock Funds will 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
14
<PAGE>
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.
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 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 June 1, 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.
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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 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 $________ 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
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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; (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 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 the lesser of (1) 67% of S&P 500 Index 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 S&P
500 Index Fund's outstanding shares.
THE BOARD UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS OF S&P 500
INDEX FUND VOTE "FOR" PROPOSAL 3.
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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.
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.
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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.
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.
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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.
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THE BOARD UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS
VOTE "FOR" PROPOSAL 4.
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.
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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.
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.
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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.
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 Fund may not issue
senior securities, except as permitted under the 1940 Act.
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.
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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 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:
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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).
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
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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.
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.
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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 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
restriction, 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, restrictions and limitations as the
Fund.
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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.
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.
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
28
<PAGE>
(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.
29
<PAGE>
<TABLE>
<CAPTION>
NUMBER OF MONEY
EXECUTIVE SPECIALTY FUNDS
OFFICER OF SHARES BENEFICIALLY
NAME, POSITION WITH PRINCIPAL OCCUPATION AND SPECIALTY OWNED DIRECTLY
SPECIALTY FUNDS, BUSINESS EXPERIENCE FUNDS OR INDIRECTLY MEMBER OF
AND AGE (DURING THE PAST FIVE YEARS) SINCE ON DEC. 31, 1998(1) COMMITTEE
- ------- ---------------------------- ----- ------------------- ---------
<S> <C> <C> <C> <C>
CHARLES W. BRADY, Chief Executive Officer and 1993 0 (3), (5), (6)
CHAIRMAN OF THE Director of AMVESCAP PLC,
BOARD, 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 Health Sciences Fund.
THE 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 88.0530 (3), (5)
PRESIDENT, CHIEF Officer, and Director,
EXECUTIVE OFFICER, INVESCO Distributors Inc.;
AND DIRECTOR, AGE President, Chief Executive
47* 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)
ANDREWS, DIRECTOR, Emeritus and Chairman of the
AGE 68 CFO Roundtable of the
Department of Finance at
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 Executive 1993 88.0530 (3), (4), (5)
DIRECTOR, AGE 62 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, June 1987, Senior Vice
AGE 68 President and Senior Trust
Officer, InterFirst Bank,
Dallas, Texas.
30
<PAGE>
NUMBER OF MONEY
EXECUTIVE SPECIALTY FUNDS
OFFICER OF SHARES BENEFICIALLY
NAME, POSITION WITH PRINCIPAL OCCUPATION AND SPECIALTY OWNED DIRECTLY
SPECIALTY FUNDS, BUSINESS EXPERIENCE FUNDS OR INDIRECTLY MEMBER OF
AND AGE (DURING THE PAST FIVE YEARS) SINCE ON DEC. 31, 1998(1) COMMITTEE
- ------- ---------------------------- ----- ------------------- ---------
DR. WENDY LEE Self-employed (since 1993). 1997 1164.7220 (4), (8)
GRAMM, DIRECTOR, Professor of Economics and
AGE 54 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
(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.
KENNETH T. KING, Presently retired. 1993 88.0530 (2), (3), (5), (6), (7)
DIRECTOR, AGE 73 Formerly, Chairman of the (5), (6),
Board of the Capitol Life (7)
Insurance Company,
Providence Washington
Insurance Company, and
Director of numerous
subsidiaries thereof in the
U.S. Formerly, Chairman of
the Board of 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), (7)
DIRECTOR, AGE 68 Vice Chairman of the Board
of The Citizens and Southern
Corporation; Chairman of the
Board and Chief Executive
Officer of The Citizens and
Southern Georgia Corporation;
Chairman of the Board and
Chief Executive Officer of
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, Presently retired. 1997 88.0530 (4), (8)
DIRECTOR, AGE 56 Formerly, 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.
</TABLE>
*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 Money Market 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
31
<PAGE>
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 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.
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 twice 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.
The following table sets forth information relating to the compensation
paid to directors during the last fiscal year:
32
<PAGE>
COMPENSATION TABLE
AMOUNTS PAID DURING THE MOST RECENT
FISCAL YEAR BY VIF FUNDS TO DIRECTORS
PENSION OR TOTAL
RETIREMENT COMPENSATION
BENEFITS FROM
AGGREGATE ACCRUED AS ESTIMATED SPECIALTY
COMPENSATION PART OF ANNUAL FUNDS AND
NAME OF FROM THE SPECIALTY BENEFITS INVESCO FUNDS
PERSON, SPECIALTY FUNDS' UPON PAID TO
POSITION FUNDS EXPEMSES(2) RETIREMENT(3) 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
____________ ____________ ____________ ____________
$61,243 $4,994 $3,671 $767,950
0.0131%(5) 0.0011(5) 0.0035%(6)
TOTAL
AS A
PERCENTAGE
OF NET ASSETS
-------------
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 higher estimated benefits for
directors who are farther from retirement. With the exception of Mr.
McIntyre and 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.
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 INVESCO Complex's net assets as of December
31, 1998
33
<PAGE>
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, INVESCO Treasurer's Series Trust, and INVESCO Value Trust
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 or other pension or retirement plans for management or
other personnel and pays no salary or compensation to any of its officers.
34
<PAGE>
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 is, therefore, an indirect
owner of shares of each such INVESCO fund, in addition to any fund shares that
may be owned directly.
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.
35
<PAGE>
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, 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, Senior Vice-President and
Treasurer, also, Senior Vice-President and Treasurer 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:
- --------
1 The intermediary companies between INAH and AMVESCAP PLC are as follows:
INVESCO, Inc., INVESCO Group Services, Inc. and INVESCO North American Group,
Ltd., each of which is wholly owned by its immediate parent.
36
<PAGE>
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.
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.
37
<PAGE>
By Order of the Board of Directors
Glen A. Payne
Secretary
March 23, 1999
38
<PAGE>
APPENDIX A
----------
PRINCIPAL SHAREHOLDERS
----------------------
[As of March 12, 1999, no person held 5% or more of the outstanding
voting securities of the each Fund.]
INVESCO Latin American Growth Fund [insert information]
INVESCO Realty Fund [insert information]
INVESCO S&P 500 Index Fund [insert information]
INVESCO Worldwide Capital Goods Fund [insert information]
INVESCO Worldwide Communications Fund [insert information]
39
<PAGE>
APPENDIX B
AGREEMENT AND PLAN OF CONVERSION AND TERMINATION
This AGREEMENT AND PLAN OF CONVERSION AND TERMINATION ("Agreement") is
made as of _____ __, 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).
<PAGE>
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
______ ___, 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
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
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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;
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
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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 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
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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 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
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<PAGE>
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 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 and the remaining 50% will be borne one-half
by each Funds Group, Inc.
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<PAGE>
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.
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.
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<PAGE>
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:
- ---------------------- --------------------
Assistant Secretary Vice President
ATTEST: INVESCO INTERNATIONAL FUNDS, INC.,
on behalf of its series,
INVESCO Latin American Growth Fund
By:
- ---------------------- ---------------------
Assistant Secretary Vice President
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<PAGE>
APPENDIX C
AGREEMENT AND PLAN OF CONVERSION AND TERMINATION
This AGREEMENT AND PLAN OF CONVERSION AND TERMINATION ("Agreement") is
made as of _____ __, 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).
<PAGE>
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
______ ___, 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
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
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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;
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
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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 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 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
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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 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
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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 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 and the remaining 50% will be borne one-half
by each Funds Group, Inc.
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<PAGE>
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.
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.
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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:
- ---------------------- ---------------------
Assistant Secretary Vice President
ATTEST: INVESCO SECTOR FUNDS, INC.,
on behalf of its series,
INVESCO Realty Fund
By:
- ---------------------- ---------------------
Assistant Secretary Vice 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 _____ __, 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).
1.3. The Liabilities shall include all of Old Fund's liabilities, debts,
obligations, and duties of whatever kind or nature, whether absolute, accrued,
<PAGE>
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
______ ___, 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
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
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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;
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;
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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 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
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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 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;
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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 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;
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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 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 and the remaining 50% will be borne one-half
by each Funds Group, Inc.
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
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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.
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.
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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:
- ---------------------- ---------------------
Assistant Secretary Vice President
ATTEST: INVESCO SECTOR FUNDS, INC.,
on behalf of its series,
INVESCO Worldwide Communications Fund
By:
- ---------------------- ---------------------
Assistant Secretary Vice 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 _____ __, 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
______ ___, 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
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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 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;
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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;
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;
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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 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 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
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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, 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.
E-7
<PAGE>
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 and the remaining 50% will be borne one-half
by each Funds Group, Inc.
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.
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
E-8
<PAGE>
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:
- ---------------------- ---------------------
Assistant Secretary Vice President
ATTEST: INVESCO STOCK FUNDS, INC.,
on behalf of its series,
INVESCO S&P 500 Index Fund
By:
- ---------------------- ---------------------
Assistant Secretary Vice President
E-9
<PAGE>
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.
<PAGE>
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.
<PAGE>
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.
<PAGE>
[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. ("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 [ ] and [ ],
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 WWW.PROXYVOTE.COM. TO VOTE BY FACSIMILE TRANSMISSION, PLEASE FAX
YOUR COMPLETED PROXY CARD TO 1-516-254-7564.
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 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 / / / / / / To withhold
of Directors; (1) Charles W. authority to
Brady; (2) Fred A. Deering; (3) vote for any
Mark H. Williamson; individual
(4) Dr. Victor L. Andrews; nominee(s), mark
(5) Bob R. Baker; (6) Lawrence "For All Except"
H. Budner; (7) Dr. Wendy Lee and write the
Gramm; (8) Kenneth T. King; nominee's number
(9) John W. McIntyre; and on the line
(10) Dr. Larry Soll below.
________________
Vote On Proposals FOR AGAINST ABSTAIN
- -----------------
1. 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
policies, but to approve others, PLACE AN "X" IN
THE BOX AT left and indicate the number(s) (as
set forth in the proxy statement) of the
investment policy or policies you do not want to
change on the line below.
________________________________________________
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 WWW.PROXYVOTE.COM. TO VOTE BY FACSIMILE TRANSMISSION, PLEASE FAX
YOUR COMPLETED PROXY CARD TO 1-516-254-7564.
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.
<PAGE>
- ------------------------------------------------- ------------------------------
Signature Date
- ------------------------------------------------- ------------------------------
Signature (Joint Owners) Date
<PAGE>
[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. ("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 [ ] and [ ], 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 WWW.PROXYVOTE.COM. TO VOTE BY FACSIMILE TRANSMISSION, PLEASE FAX
YOUR COMPLETED PROXY CARD TO 1-516-254-7564.
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 REALTY FUND
INVESCO SPECIALTY FUNDS, INC.
Vote on Directors FOR WITHHOLD FOR
- ----------------- ALL ALL ALL
EXCEPT
6. Election of the Company's Board / / / / / / To withhold
of Directors; (1) Charles W. authority to
Brady; (2) Fred A. Deering; (3) vote for any
Mark H. Williamson; individual
(4) Dr. Victor L. Andrews; nominee(s), mark
(5) Bob R. Baker; (6) Lawrence "For All Except"
H. Budner; (7) Dr. Wendy Lee and write the
Gramm; (8) Kenneth T. King; nominee's number
(9) John W. McIntyre; and on the line
(10) Dr. Larry Soll below.
_________________
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 policies, but to approve others, PLACE AN
"X" IN THE BOX AT left and indicate the number(s)
(as set forth in the proxy statement) of the
investment policy or policies you do not want to
change on the line below.
__________________________________________________
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 WWW.PROXYVOTE.COM. TO VOTE BY FACSIMILE TRANSMISSION, PLEASE FAX
YOUR COMPLETED PROXY CARD TO 1-516-254-7564.
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
<PAGE>
- ------------------------------------------------- ------------------------------
Signature Date
- ------------------------------------------------- ------------------------------
Signature (Joint Owners) Date
<PAGE>
[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. ("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 [ ]
and [ ], 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 WWW.PROXYVOTE.COM. TO VOTE BY FACSIMILE TRANSMISSION, PLEASE FAX
YOUR COMPLETED PROXY CARD TO 1-516-254-7564.
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 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 / / / / / / To withhold
of Directors; (1) Charles W. authority to
Brady; (2) Fred A. Deering; (3) vote for any
Mark H. Williamson; individual
(4) Dr. Victor L. Andrews; nominee(s), mark
(5) Bob R. Baker; (6) Lawrence "For All Except"
H. Budner; (7) Dr. Wendy Lee and write the
Gramm; (8) Kenneth T. King; nominee's number
(9) John W. McIntyre; and on the line
(10) Dr. Larry Soll below.
_________________
Vote On Proposals FOR AGAINST ABSTAIN
- -----------------
3. Approval of an Agreement and Plan of / / / / / /
Conversion and Termination providing for the
Conversion of the Fund (classes I & II)
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
policies, but to approve others, PLACE AN "X" IN
THE BOX AT left and indicate the number(s) (as
set forth in the proxy statement) of the
investment policy or policies you do not want to
change on the line below.
________________________________________________
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 WWW.PROXYVOTE.COM. TO VOTE BY FACSIMILE TRANSMISSION, PLEASE FAX
YOUR COMPLETED PROXY CARD TO 1-516-254-7564.
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
<PAGE>
- ------------------------------------------------- ------------------------------
Signature Date
- ------------------------------------------------- ------------------------------
Signature (Joint Owners) Date
<PAGE>
[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. ("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 [ ] and [ ],
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 WWW.PROXYVOTE.COM. TO VOTE BY FACSIMILE TRANSMISSION, PLEASE FAX
YOUR COMPLETED PROXY CARD TO 1-516-254-7564.
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 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 / / / / / / To withhold
of Directors; (1) Charles W. authority to
Brady; (2) Fred A. Deering; (3) vote for any
Mark H. Williamson; individual
(4) Dr. Victor L. Andrews; nominee(s), mark
(5) Bob R. Baker; (6) Lawrence "For All Except"
H. Budner; (7) Dr. Wendy Lee and write the
Gramm; (8) Kenneth T. King; nominee's number
(9) John W. McIntyre; and on the line
(10) Dr. Larry Soll below.
----------------
VOTE ON PROPOSALS FOR AGAINST ABSTAIN
4. Approval of a Plan of Liquidation and / / / / / /
Termination providing for the liquidation
of 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
policies, but to approve others, PLACE AN "X" IN
THE BOX AT left and indicate the number(s) (as set
forth in the proxy statement) of the investment
policy or policies you do not want to change on the
line below.
--------------------------------------------------------
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 WWW.PROXYVOTE.COM. TO VOTE BY FACSIMILE TRANSMISSION, PLEASE FAX
YOUR COMPLETED PROXY CARD TO 1-516-254-7564.
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
<PAGE>
- ------------------------------------------------- ------------------------------
Signature Date
- ------------------------------------------------- ------------------------------
Signature (Joint Owners) Date
<PAGE>
[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. ("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 [ ] and [ ],
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 WWW.PROXYVOTE.COM. TO VOTE BY FACSIMILE TRANSMISSION, PLEASE FAX
YOUR COMPLETED PROXY CARD TO 1-516-254-7564.
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 WORLDWIDE COMMUNICATIONS FUND
INVESCO SPECIALTY FUNDS, INC.
Vote on Directors FOR WITHHOLD FOR
- ----------------- ALL ALL ALL
EXCEPT
6. Election of the Company's Board / / / / / / To withhold
of Directors; (1) Charles W. authority to
Brady; (2) Fred A. Deering; (3) vote for any
Mark H. Williamson; individual
(4) Dr. Victor L. Andrews; nominee(s), mark
(5) Bob R. Baker; (6) Lawrence "For All Except"
H. Budner; (7) Dr. Wendy Lee and write the
Gramm; (8) Kenneth T. King; nominee's number
(9) John W. McIntyre; and on the line
(10) Dr. Larry Soll below.
_________________
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 policies,
but to approve others, PLACE AN "X" IN THE BOX AT
left and indicate the number(s) (as set forth in
the proxy statement) of the investment policy or
policies you do not want to change on the line
below.
_________________________________________________
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 WWW.PROXYVOTE.COM. TO VOTE BY FACSIMILE TRANSMISSION, PLEASE FAX
YOUR COMPLETED PROXY CARD TO 1-516-254-7564.
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
<PAGE>
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Signature Date
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Signature (Joint Owners) Date
