pre14a
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
Filed by the Registrant þ
Filed by a Party other than the Registrant o
Check the appropriate box:
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Preliminary Proxy Statement |
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Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) |
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Definitive Proxy Statement |
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Definitive Additional Materials |
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Soliciting Material Pursuant to § 240.14a-11(c) or § 240.14a-12 |
AIM SECTOR FUNDS (INVESCO SECTOR FUNDS)
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
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No fee required. |
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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:
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Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it
was determined):
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Fee paid previously with preliminary materials. |
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Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify
the previous filing by registration statement number, or the Form or Schedule and the date of
its filing. |
1) Amount Previously Paid:
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3) Filing Party:
AIM SECTOR FUNDS (INVESCO SECTOR FUNDS)
INVESCO UTILITIES FUND
11 Greenway Plaza, Suite 1000
Houston, Texas 77046-1173
[December __, 2012]
Dear Shareholder:
AIM Sector Funds (Invesco Sector Funds) (the Trust) will hold a special meeting of
Shareholders (the Special Meeting) on February 1, 2013, at 11 Greenway Plaza, Suite 1000,
Houston, Texas 77046-1173. The purpose of the Special Meeting is to vote on an important proposal
affecting the Invesco Utilities Fund (the Fund). This package contains important information
about the proposal, a proxy statement, simple instructions on how to vote by phone or via the
Internet, and a business reply envelope for you to vote by mail.
The Board of Trustees of the Trust (the Board) has carefully considered the proposal below,
and unanimously recommends that you vote FOR the proposal. The enclosed proxy statement provides
you with detailed information on the proposal, including how it will benefit shareholders.
The Board is requesting that you:
Approve the elimination of the Funds fundamental investment restriction that requires the
Fund to concentrate its investments in the securities of issuers engaged primarily in
utilities-related industries.
The Fund may also transact any other business, not currently contemplated, that may properly
come before the Meeting, in the discretion of the proxies or their substitutes.
The Board is recommending this change to allow the Fund to implement desired changes to its
name, investment objective and strategies, which will permit the Fund to transition from a
utilities-focused fund to a diversified high income-seeking equity fund, as described in this Proxy
Statement.
Your vote is important. Please take a moment after reviewing the enclosed materials to sign
and return your proxy card in the enclosed postage paid return envelope. If you attend the Special
Meeting, you may vote your shares in person. If you expect to attend the Special Meeting in person,
or have questions, please notify us by calling [(800) 952-3502]. You may also vote by telephone or
through a website established for that purpose by following the instructions that appear on the
enclosed proxy card. If we do not hear from you after a reasonable amount of time, you may receive
a telephone call from our proxy solicitor, Computershare Fund Services, reminding you to vote your
shares.
Sincerely,
Philip A. Taylor
President and Principal Executive Officer
AIM SECTOR FUNDS (INVESCO SECTOR FUNDS)
INVESCO UTILITIES FUND
11 Greenway Plaza, Suite 1000
Houston, Texas 77046-1173
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON FEBRUARY 1, 2013
Notice is hereby given to the shareholders of Invesco Utilities Fund (the Fund), a series
portfolio of AIM Sector Funds (Invesco Sector Funds) (the Trust), that the Fund will hold a
special meeting of shareholders (the Special Meeting) on February 1, 2013 at 11 Greenway Plaza,
Suite 1000, Houston, Texas 77046-1173. The Special Meeting will begin at 10:00 a.m. Central Time.
The Board of Trustees of the Trust (the Board) has carefully considered the proposal below,
and unanimously recommends that you vote FOR the proposal. The enclosed proxy statement provides
you with detailed information on the proposal, including how it will benefit shareholders.
We cordially invite you to attend our Special Meeting of Shareholders, at which the Board is
requesting that you vote to:
Approve the elimination of the Funds fundamental investment restriction that requires the
Fund to concentrate its investments in the securities of issuers engaged primarily in
utilities-related industries.
The Fund may also transact any other business, not currently contemplated, that may properly
come before the Special Meeting, in the discretion of the proxies or their substitutes.
Shareholders of record of the Fund as of the close of business on November 27, 2012 are
entitled to notice of, and to vote at, the Special Meeting or any adjournment or postponement of
the Special Meeting.
We request that you execute and return promptly in the enclosed envelope the accompanying
proxy card. The Board is soliciting your vote on the proposal set forth above. You may also vote by
telephone or through a website established for that purpose by following the instructions on the
enclosed proxy material. Your vote is important for the purpose of ensuring a quorum at the Special
Meeting. You may revoke your proxy at any time before it is exercised by executing and submitting a
revised proxy card, by giving written notice of revocation to the Trusts secretary or by voting in
person at the Special Meeting.
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John M. Zerr |
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Secretary |
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[December __, 2012]
AIM SECTOR FUNDS (INVESCO SECTOR FUNDS)
INVESCO UTILITIES FUND
11 Greenway Plaza, Suite 1000
Houston, Texas 77046-1173
SPECIAL MEETING OF SHAREHOLDERS
To Be Held On February 1, 2013
INFORMATION ABOUT THE SPECIAL MEETING AND VOTING
Why Did We Send You This Proxy Statement?
We are sending you this Proxy Statement and the enclosed proxy card on behalf of Invesco
Utilities Fund (the Fund), a series portfolio of AIM Sector Funds (Invesco Sector Funds) (the
Trust) because the Board of Trustees of the Trust (the Board) is soliciting your proxy to vote
at a special meeting of shareholders (the Special Meeting) and at any adjournments or
postponements of the Special Meeting. This Proxy Statement provides you with information about the
business to be conducted at the Special Meeting. You do not need to attend the Special Meeting to
vote your shares. Instead, you may simply complete, sign and return the enclosed proxy card or vote
by telephone or through a website established for that purpose.
The Trust intends to mail this Proxy Statement, the enclosed Notice of Special Meeting of
Shareholders and the enclosed proxy card on or about [December 10, 2012], to all shareholders
entitled to vote. The proxy material will also be available on or about [December 10, 2012] at
[www.invesco.com/us.] Shareholders of record of any class of the Fund as of the close of business
on November 27, 2012 (the Record Date), are entitled to vote their respective shares at the
Special Meeting. The number of shares outstanding of each class of the Fund on the Record Date can
be found in Exhibit A. Each share of the Fund that you own entitles you to one vote on the proposal
(a fractional share has a fractional vote).
We have previously sent to shareholders the most recent annual report for the Fund, including
financial statements. If you have not received such report or would like to receive an additional
copy, please contact Invesco Investment Services, Inc., 11 Greenway Plaza, Suite 1000, Houston,
Texas 77046-1173, or call (800) 959-4246. We will furnish such report free of charge.
When and Where Will the Special Meeting Be Held?
We are holding the Special Meeting at 11 Greenway Plaza, Suite 1000, Houston, Texas 77046 on
February 1, 2013, at 10:00 a.m., Central Time.
What is the Proposal to Be Voted on at the Special Meeting?
Shareholders of the Fund are being asked to approve the elimination of one of the Funds
fundamental investment restrictions (the Proposal). The fundamental restriction states: Invesco
Utilities Fund will concentrate (as that term may be defined or interpreted by the 1940 Act Laws,
Interpretations and Exemptions) its investments in the securities of issuers engaged primarily in
utilities-related industries. The proposed elimination of this fundamental restriction will permit
the Fund to transition from a utilities securities-based fund to a diversified high income-seeking
equity fund. As part of this transition, the Fund will also implement changes to its name,
investment objective and principal investment strategies, which were approved by the Board at a
meeting held on October 24-26, 2012. While the changes to the Funds name, investment objective and
principal investment strategies do not, in and of themselves, require shareholder approval,
elimination of the fundamental restriction does require shareholder approval.
Shareholders may also transact any other business currently contemplated that may properly
come before the Special Meeting in the discretion of the proxies or their substitutes.
What Other Changes Will Be Made to the Fund If Shareholders Approve Eliminating the Fundamental
Restriction?
The Board has approved certain other changes that will take effect only if shareholders
approve the Proposal. These include the following:
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Renaming the Fund as Invesco Dividend Income Fund; |
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Adopting a new investment objective and principal investment strategy consistent with
the new name; |
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Removing the Funds non-fundamental investment restriction that defines
utilities-related issuers; |
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Changing the Funds distribution frequency from quarterly to monthly; |
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Changing certain of the Funds benchmarks; and |
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Making an additional distribution to Fund shareholders of any capital gains realized
from the repositioning of the Funds portfolio. |
Each of these changes is described in greater detail in this Proxy Statement. Management will
reevaluate whether to make the above changes if the Proposal is not approved. Please refer to
ProposalApproval of Elimination of a Fundamental Investment Restriction for more information
about these changes.
Why is the Board Proposing This Change to the Funds Investment Strategy?
Invesco Advisers, Inc., the Funds investment adviser (the Adviser), believes, and the Board
considered, that the proposed new investment strategy would greatly expand the pool of potential
investments for the Fund by permitting the Fund to focus on investments outside of the utilities
sector. Under the new investment strategy, the Adviser will seek to deliver high current income
with less volatility and greater downside protection versus the broad market. The changes to the
Fund are expected to decrease sector-specific volatility over a full market cycle while maintaining
an income bias by investing in a broader range of sectors and holding a greater number of issuers.
The new investment objective and strategy will allow investors to diversify their sources of income
through the Funds broader investment mandate, while still providing an opportunity for modest
growth in capital. The Adviser noted, and the Board considered, that like most high income-seeking
equity funds, the Funds new investment strategy is likely to underperform the broader equity
market during equity market rallies but has the potential to outperform the broader equity market
during periods of market stress. The Adviser believes, and the Board considered, that this change
will broaden the distribution appeal of the Fund to investors seeking high current equity income
versus the Funds current, single sector investment strategy.
Will the Proposal Result in any Tax Impact to the Fund?
The repositioning of the Fund as a diversified high income-seeking equity fund will result in
the sale of a portion of the Funds portfolio securities as the Funds portfolio managers align the
portfolio with the new investment strategy. These sales may result in the realization of
capital gains, reduced by any available capital loss carryovers, which would be distributed to
shareholders. The amount of any capital gains that may be realized and distributed to the
shareholders of the Fund will depend upon a variety of factors, including the Funds net unrealized
appreciation in the value of its portfolio assets at that time. Based on net unrealized
appreciation in portfolio investments at [ _________,] the Fund would realize approximately
[$_________] of long-term capital gains ($___ per share; __% of NAV), assuming that 65% of its
portfolio investments are sold on a pro-rata basis. The Funds capital loss carryover of
[$_______] was utilized in this estimate which is subject to limitations from a previous
reorganization. Depending upon the particular securities sold in the repositioning and the amount
of gains realized, the utilization of the capital loss carryover could be limited in which case the
amount of distributable gains would increase.
The Fund will also incur transaction costs, such as commissions, due to the repositioning of
the portfolio, as the percentage of investments expected to be sold is more than double the Funds
typical annual portfolio turnover rate. Invesco believes that these portfolio turnover costs would
total approximately [$____ ($___ per share)].
How Do I Vote in Person?
If you do attend the Special Meeting, were the record owner of your shares on the Record Date,
and wish to vote in person, we will provide you with a ballot prior to the vote. However, if your
shares were held in the name of your broker, bank or other nominee, you are required to bring a
letter from the nominee indicating that you are the beneficial owner of the shares on the Record
Date and authorizing you to vote. The letter must also state whether before the Special Meeting you
authorized a proxy to vote for you and if so, how you instructed such proxy to vote. Please call
the Trust at (800) 952-3502 if you plan to attend the Special Meeting.
How Do I Vote by Proxy?
Whether you plan to attend the Special Meeting or not, we urge you to complete, sign and date
the enclosed proxy card and to return it promptly in the envelope provided. Returning the proxy
card will not affect your right to attend the Special Meeting or to vote at the Special Meeting if
you choose to do so.
If you properly complete and sign your proxy card and send it to us in time to vote at the
Special Meeting, your proxy (the individual(s) named on your proxy card) will vote your shares as
you have directed. If you sign your proxy card but do not make specific choices, your proxy will
vote your shares as recommended by the Board as follows and in accordance with managements
recommendation on other matters:
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FOR eliminating the Funds fundamental investment restriction that requires the Fund
to concentrate its investments in the securities of issuers engaged primarily in
utilities-related industries. |
Your proxy will have the authority to vote and act on your behalf at any adjournment or
postponement of the Special Meeting.
Shareholders may also transact any other business not currently contemplated that may properly
come before the Special Meeting in the discretion of the proxies or their substitutes.
How Do I Vote by Telephone or the Internet?
You may vote your shares by telephone or through a website established for that purpose by
following the instructions that appear on the proxy card accompanying this Proxy Statement.
May I Revoke My Vote?
If you authorize a proxy to vote for you, you may revoke the authorization at any time before
it is exercised. You can do this in one of four ways:
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You may send in another proxy card at a later date, prior to the Shareholder Meeting. |
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If you submitted a proxy by telephone, via the Internet or via an alternative method
of voting permitted by your broker, you may submit another proxy by telephone, via the
Internet, or via such alternative method of voting, or send in another proxy with a later
date. |
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You may notify the Trusts secretary in writing before the Special Meeting that you
have revoked your proxy. |
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You may vote in person at the Special Meeting, as set forth above under the heading,
How Do I Vote in Person? |
What Is the Quorum Requirement?
A quorum of shareholders is necessary to hold a valid meeting. A quorum will exist for the
Fund if shareholders entitled to vote one-third of the issued and outstanding shares of the Fund on
the Record Date are present at the Special Meeting in person or by proxy.
Under rules applicable to broker-dealers, your broker will not be entitled to vote on the
proposal unless it has received instructions from you. A broker non-vote occurs when a broker has
not received voting instructions from a shareholder and is barred from voting the shares without
shareholder instructions because the proposal is considered to be non-routine. The proposal
described in this proxy statement is considered non-routine and,
therefore, your broker will not be permitted to vote your shares if it has not received
instructions from you, and the shares will be considered broker non-votes. As a result, we urge
you to complete and send in your proxy or voting instructions so your vote can be counted.
Abstentions and broker non-votes will count as shares present at the Special Meeting for
purposes of establishing a quorum.
Could There Be an Adjournment of the Special Meeting?
If a quorum is not present at the Special Meeting or a quorum is present but sufficient votes
to approve the Proposal are not received, then the person(s) presiding over the Special Meeting or
the persons named as proxies may propose one or more adjournments of the Special Meeting of the
Fund to allow for further solicitation of proxies. The persons named as proxies will vote those
proxies that they are entitled to vote in favor of such an adjournment, provided that they
determine that such an adjournment and additional solicitation is reasonable and in the interest of
shareholders based on a consideration of all relevant factors, including, among other things, the
percentage of votes then cast, the percentage of negative votes then cast, the nature of the
proposed solicitation activities, and the nature of the reasons for such further solicitation.
What Is the Vote Necessary to Approve the Proposal?
Approval of the Proposal requires the lesser of (a) the affirmative vote of 67% or more of the
shares of the Fund present or represented by proxy at the Special Meeting, if the holders of more
than 50% of the outstanding shares of the Fund on the Record Date are present or represented by
proxy, or (b) the affirmative vote of more than 50% of the outstanding shares of the Fund on the
Record Date. Abstentions and broker non-votes are counted as present for purposes of establishing
quorum but are not considered votes cast at the Special Meeting. As a result, they have the same
effect as a vote against the Proposal because approval of the Proposal requires the affirmative
vote of a percentage of the shares present or represented by proxy at the Special Meeting or a
percentage of the outstanding shares of the Fund.
How Will Proxies Be Solicited and Who Will Pay?
The Trust has engaged the services of Computershare Fund Services (the Solicitor) to assist
in the solicitation of proxies for the Special Meeting. The Solicitors costs for the Fund are
currently estimated to be in the aggregate approximately $55,000. The Trust expects to solicit
proxies principally by mail, but the Trust or the Solicitor may also solicit proxies by telephone,
facsimile or personal interview. The Trusts officers will not receive any additional or special
compensation for any such solicitation. The Adviser will pay the cost of soliciting proxies.
Will Any Other Matters Be Voted on at the Special Meeting?
Management is not aware of any matters to be presented at the Special Meeting other than those
discussed in this Proxy Statement. If any other matters properly come before the Special Meeting,
the shares represented by proxies will be voted on those matters in the discretion of the proxies
or their substitutes and generally in accordance with managements recommendation.
How May a Shareholder Proposal Be Submitted?
As a general matter, the Fund does not hold regular meetings of shareholders. Shareholder
proposals for consideration at a meeting of shareholders of the Fund should be submitted to the
Trust at the address set forth on the first page of this Proxy Statement. To be considered for
presentation at a meeting of shareholders, the Trust must receive proposals within a reasonable
time, as determined by the Trusts management, before proxy materials are prepared for the meeting.
Such proposals also must comply with applicable law.
PROPOSAL
APPROVAL OF ELIMINATION OF A FUNDAMENTAL INVESTMENT RESTRICTION
What Am I Being Asked to Approve?
At a meeting held on October 24-26, 2012, the Board, upon recommendation of the Adviser,
unanimously approved a proposal to eliminate the following fundamental restriction of the Fund (the
Fundamental Restriction):
Invesco Utilities Fund will concentrate (as that term may be defined or interpreted by the
1940 Act Laws, Interpretations and Exemptions) its investments in the securities of issuers
engaged primarily in utilities-related industries.
If the removal of the Fundamental Restriction is approved, the Adviser will transition the
Fund to a diversified high income-seeking equity fund. In connection with this transition, the
Board approved several additional changes to the Fund, including changes to its name, investment
objective, principal investment strategies and dividend distribution frequency. The Board also
approved the removal of the following non-fundamental investment restriction of the Fund, which
will no longer be necessary as it defines utilities related industries as used in the Fundamental
Restriction:
For purposes of Invesco Utilities Funds fundamental investment restriction regarding
industry concentration an issuer will be considered to be engaged in a utilities-related
industry if (1) at least 50% of its gross income or its net sales are derived from activities
in utilities-related industries; (2) at least 50% of its total assets are devoted to producing
revenues in utilities-related industries; or (3) based on other available information, the
Funds portfolio manager(s) determines that its primary business is within utilities-related
industries.
The chart set for the below summarizes the differences between the Fund as it is currently
positioned and the Fund as it would be positioned if the Proposal is approved.
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Current |
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Proposed |
Name
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Invesco Utilities Fund
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Invesco Dividend Income Fund |
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Investment Objective
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Long-term growth of capital
and, secondarily, current
income
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Current Income and long-term growth of capital |
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Portfolio Managers
(no change)
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Meggan Walsh and Robert Botard
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Meggan Walsh and Robert Botard |
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Principal
Investment
Strategies
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The Fund invests, under
normal circumstances, at
least 80% of its net assets
(plus any borrowings for
investment purposes) in
securities of issuers engaged
in utilities-related
industries. The Fund invests
predominantly in equity
securities. In complying
with the 80% investment
requirement, the Fund may
include synthetic securities
that have economic
characteristics similar to
the Funds direct investments
that are counted toward the
80% investment requirement.
The Fund may invest up to 25%
of its net assets in foreign
securities, including U.S.
dollar-denominated
securities, of issuers doing
business in utilities-related
industries.
In selecting investments, the
portfolio managers seek to
identify issuers
predominantly within the
electric utility, natural
gas, water and
telecommunications
industries. The investment
team generally emphasizes
issuers with solid balance
sheets and operational cash
flow that support sustained
or increasing dividends.
Through fundamental research,
financial statement analysis
and multiple valuation
metrics, the management team
estimates a target price for
each security over a two- to
three-year investment
horizon. The portfolio
managers then construct a
portfolio which they believe
provides the best
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The Fund seeks to achieve its investment
objective by investing predominately in
dividend-paying equity securities. The Fund
may invest up to 25% of its net assets in
foreign securities.
In selecting investments, the portfolio
managers seek to deliver the value of
dividend investing by identifying primarily
above-market yielding stocks with consistent
and defensible dividends. The portfolio
managers process also emphasizes long-term
capital appreciation. Through fundamental
research, the management team measures the
strength and sustainability of a companys
dividend by analyzing the free cash flow
potential over various economic environments.
The portfolio managers construct a portfolio
they believe provides above-average dividend
income and the potential to grow capital over
the long-term. Portfolio risk is managed
utilizing careful stock selection,
maintaining exposure to multiple sectors and
employing a rigorous buy-and-sell discipline.
The portfolio managers consider selling or
trimming a stock when it no longer materially
meets their |
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Current |
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Proposed |
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total
return potential based on a
combination of price
appreciation, dividend income
and a favorable risk profile.
The portfolio managers
consider whether to sell a
particular security when any
of these factors materially
change.
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investment criteria, including when (1) a
stock reaches its fair valuation (target
price); (2) there is deterioration in the
capital structure; or (3) a more attractive
investment opportunity presents itself. |
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Principal Risks
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Foreign Securities Risk. The
dollar value of the Funds
foreign investments may be
affected by changes in the
exchange rates between the
dollar and the currencies in
which those investments are
traded. The value of the
Funds foreign investments
may be adversely affected by
political and social
instability in their home
countries, by changes in
economic or taxation policies
in those countries, or by the
difficulty in enforcing
obligations in those
countries. Foreign companies
generally may be subject to
less stringent regulations
than U.S. companies,
including financial reporting
requirements and auditing and
accounting controls. As a
result, there generally is
less publicly available
information about foreign
companies than about U.S.
companies. Trading in many
foreign securities may be
less liquid and more volatile
than U.S. securities due to
the size of the market or
other factors.
Management Risk. The
investment techniques and
risk analysis used by the
Funds portfolio managers may
not produce the desired
results.
Market Risk. The prices of
and the income generated by
the Funds securities may
decline in response to, among
other things, investor
sentiment, general economic
and market conditions,
regional or global
instability, and currency and
interest rate fluctuations.
Sector Fund Risk. The Funds
investments are concentrated
in a comparatively narrow
segment of the economy. This
means that the Funds
investment concentration in
the sector is higher than
most mutual funds and the
broad securities market.
Consequently, the Fund may be
more volatile than other
mutual funds, and
consequently the value of an
investment in the Fund may
tend to rise and fall more
rapidly.
Synthetic Securities Risk.
Fluctuations in the values of
synthetic securities may not
correlate perfectly with the
instruments they are designed
to replicate. Synthetic
securities may be subject to
interest rate changes, market
price fluctuations,
counterparty risk and
liquidity risk.
Utilities Sector Risk.
Governmental regulation,
difficulties in obtaining
adequate financing and
investment return,
environmental issues, prices
of fuel for generation of
electricity, availability of
natural gas, risks associated
with power marketing and
trading, and risks associated
with nuclear power facilities
may adversely affect the
market value of the Funds
holdings. Deregulation in
the utilities industry
presents special risks. Some
companies may be faced with
increased competition and may
become less profitable.
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Foreign Securities Risk. The dollar value of
the Funds foreign investments may be
affected by changes in the exchange rates
between the dollar and the currencies in
which those investments are traded. The
value of the Funds foreign investments may
be adversely affected by political and social
instability in their home countries, by
changes in economic or taxation policies in
those countries, or by the difficulty in
enforcing obligations in those countries.
Foreign companies generally may be subject to
less stringent regulations than U.S.
companies, including financial reporting
requirements and auditing and accounting
controls. As a result, there generally is
less publicly available information about
foreign companies than about U.S. companies.
Trading in many foreign securities may be
less liquid and more volatile than U.S.
securities due to the size of the market or
other factors.
Management Risk. The investment techniques
and risk analysis used by the Funds
portfolio managers may not produce the
desired results.
Market Risk. The prices of and the income
generated by the Funds securities may
decline in response to, among other things,
investor sentiment, general economic and
market conditions, regional or global
instability, and currency and interest rate
fluctuations. |
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Net Assets |
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Annual Rate |
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Net Assets |
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Annual Rate |
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Advisory Fee |
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First $350 million |
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0.75 |
% |
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First $350 million |
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0.75 |
% |
(no change) |
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Next $350 million |
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0.65 |
% |
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Next $350 million |
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0.65 |
% |
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Next $1.3 billion |
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0.55 |
% |
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Next $1.3 billion |
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0.55 |
% |
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Next $2 billion |
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0.45 |
% |
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Next $2 billion |
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0.45 |
% |
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Next $2 billion |
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0.40 |
% |
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Next $2 billion |
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0.40 |
% |
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Next $2 billion |
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0.375 |
% |
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Next $2 billion |
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0.375 |
% |
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Over $8 billion |
|
|
0.35 |
% |
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Over $8 billion |
|
|
0.35 |
% |
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|
|
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|
|
|
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|
|
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Expense Ratios1 |
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Class A Shares |
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1.32 |
% |
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Class A Shares |
|
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1.10 |
% |
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Class B Shares |
|
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2.07 |
% |
|
Class B Shares |
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|
1.85 |
% |
|
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Class C Shares |
|
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2.07 |
% |
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Class C Shares |
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1.85 |
% |
|
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Class R5 Shares |
|
|
1.07 |
% |
|
Class R5 Shares |
|
|
0.85 |
% |
|
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Class R6 Shares |
|
|
1.07 |
% |
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Class R6 Shares |
|
|
0.85 |
% |
|
|
Class Y Shares |
|
|
1.07 |
% |
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Class Y Shares |
|
|
0.85 |
% |
|
|
Investor Class Shares |
|
|
1.32 |
% |
|
Investor Class Shares |
|
|
1.10 |
% |
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|
|
|
|
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|
|
Distribution Frequency |
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Quarterly |
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Monthly |
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Benchmarks |
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S&P 500® Index
S&P 500® Utilities Index
Lipper Utility Funds Index |
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S&P 500® Index
Russell 1000 Value Index
Dow Jones Select Dividend Index
Lipper Equity Income Funds Index |
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|
1 |
|
Represents expense ratios after fee waivers/expense
reimbursements that
would be effective for one year following the effective date of the Fund changes described herein.
See the section below titled How Will the Proposed Elimination of the Fundamental Restriction
Benefit the Fund for additional information about the fee waiver/expense reimbursement. |
If shareholders approve the Proposal, the Fund will be renamed Invesco Dividend
Income Fund and its investment objective and investment strategies, consistent with its new name,
will change as discussed in detail above. The Board may change the Funds name, investment
objective and investment strategies without shareholder approval. If shareholders do not approve
the Proposal, the Board will consider other appropriate actions for the Fund.
How Will the Proposed Elimination of the Fundamental Restriction Benefit the Fund?
The Adviser believes, and the Board considered, that the proposed new investment strategy
would greatly expand the pool of potential investments for the Fund by permitting the Fund to focus
on investments outside of the utilities sector. Under the new investment strategy, the Adviser
will seek to deliver high current income with less volatility and greater downside protection
versus the broad market. The changes to the Fund are expected to decrease sector-specific
volatility over a full market cycle while maintaining an income bias by investing in a broader
range of sectors and holding a greater number of issuers. The new investment objective and
strategy will allow investors to diversify their sources of income through the Funds broader
investment mandate, while still providing an opportunity for modest growth in capital. The Adviser
noted, and the Board considered, that like most high income-seeking equity funds, the Funds new
investment strategy is likely to underperform the broader equity market during equity market
rallies but has the potential to outperform the broader equity market during periods of market
stress. The Adviser believes, and the Board considered, that this change will broaden the
distribution appeal of the Fund to investors seeking high current equity income versus the Funds
current, single sector investment strategy.
In addition, the Adviser has contractually agreed with the Fund, through June 30, 2013, to
waive advisory fees and/or reimburse expenses to the extent necessary to limit the total expense
ratio (TER) for all share classes of the Fund. The Funds current TER cap for Class A Shares is
1.32%. If the changes to the Funds name and strategies are approved, the TER caps will be further
reduced for all share classes of the Fund as follows: Class A and Investor Class1.10%; Classes B
and C1.85%; and Classes R5, Y and R60.85%. The reduced caps will be effective for one year
following the effective date of the Fund changes described herein. The savings to the Funds
shareholders amounts to approximately $1.1 million, representing Fund expenses that will be paid by
the Adviser as a result of the reduced caps. The Funds gross expenses are currently not expected
to increase following the implementation of the changes to the Fund described herein.
What is the Tax Impact of the Portfolio Repositioning Resulting from the Proposed Changes?
The repositioning of the Fund as a diversified high income-seeking equity fund will result in
the sale of a portion of the Funds portfolio securities as the Funds portfolio managers align the
portfolio with the new investment strategy. These sales may result in the realization of
capital gains, reduced by any available capital loss carryovers, which would be distributed to
shareholders. The amount of any capital gains that may be realized and distributed to the
shareholders of the Fund will depend upon a variety of factors, including the Funds net unrealized
appreciation in the value of its portfolio assets at that time. Based on net unrealized
appreciation in portfolio investments at [_________,] the Fund would realize approximately
[$_________] of long-term capital gains ($___ per share; __% of NAV), assuming that 65% of its
portfolio investments are sold on a pro-rata basis.
The Funds capital loss carryover of
[$_______] was utilized in this estimate which is subject to limitations from a previous
reorganization. Depending upon the particular securities sold in the repositioning and the amount
of gains realized, the utilization of the capital loss carryover could be limited in which case the
amount of distributable gains would increase.
The Fund will also incur transaction costs, such as commissions, due to the repositioning of
the portfolio, as the percentage of investments expected to be sold is more than double the Funds
typical annual portfolio turnover rate. Invesco believes that these portfolio turnover costs would
total approximately [$____ ($___ per share)].
In [February 2013], the Fund may declare and pay a distribution to its shareholders of the
capital gains realized by the Fund (net of available capital loss carryovers) as a result of such
repositioning. If the Fund decides to make this additional distribution, it plans to apply to the
SEC for an exemption from Section 19(b) to make an additional capital gains distribution due to
unforeseen circumstances given the nonrecurring nature of this potential distribution. The Fund
would file for this exemption as a precautionary measure in early 2013. Such distribution could
also result in a taxable return of capital to the Funds shareholders in the event the Fund later
realizes capital losses that reduce the amount of capital gains otherwise distributable for such
year.
This additional dividend should not impact the timing of the recognition in income by
individual shareholders of these capital gains. All net capital gains recognized due to the
repositioning, if not earlier distributed in
[February 2013], would likely be distributed by December 31, 2013 in order for the Fund to satisfy its annual distribution requirements and avoid
excise tax. Additionally, short-term and long-term capital gains are currently taxed at reduced
rates. These reduced rates are presently scheduled to sunset December 31, 2012, unless Congress
extends the rates presently in effect (possibly retroactively to January 1, 2013) or makes them
permanent. If these rates sunset without legislative action, the highest marginal rate for
short-term capital gains would increase from 35% to 39.6%, and the highest rate for long-term
capital gains would increase from 15% to 20%. Effective
January 1, 2013, a 3.8% Medicare tax will be imposed on income dividends
and capital gain distributions received by U.S. individuals, estates and trusts subject to
certain threshold amounts.
Shareholder-initiated redemptions resulting from the proposed changes could subject the
capital loss carryovers of the Fund to an annual limitation if they result in a more than 50%
change in ownership of the Fund. An ownership change could result in capital loss carryovers
being used at a slower rate, thereby reducing the Funds ability to offset capital gains with those
losses and possibly causing the Fund to pay out more capital gains in [February 2013].
The above considerations are general in nature and individual shareholders should consult
their own tax advisors as to the federal, state, local, and foreign tax considerations applicable
to them and their individual circumstances. These same considerations generally do not apply to
shareholders who hold their shares in a tax-deferred account except that such shareholders will
bear their proportionate share of any transaction costs, such as commissions, resulting from the
repositioning of the portfolio.
When Will the Proposal Be Implemented?
The Board anticipates that if the Proposal is approved by shareholders, the changes to the
Fund described in this Proxy Statement will be implemented promptly after the Special Meeting, upon
appropriate disclosure being made in the Funds Prospectus and Statement of Additional Information.
What is the Boards Recommendation on the Proposal?
At in-person meetings held on October 24-26, 2012, the Board considered the recommendation of
the Adviser to eliminate the Fundamental Restriction. The Board considered all relevant factors,
including the potential impact of the Proposal and the related changes on the Fund. Following its
consideration of these matters, the Board unanimously approved the Proposal.
The Board, including the independent trustees of the Board, unanimously recommends that you
vote FOR the Proposal.
PENDING LITIGATION
Investigations Related to Market Timing
On August 30, 2005, the West Virginia Securities Commissioner (WVSC) issued a Summary Order to
Cease and Desist and Notice of Right to Hearing to AIM Advisors, Inc. and AIM Distributors, Inc.
(predecessors to Invesco Advisers, Inc. and Invesco Distributors, Inc., respectively)
(collectively, Invesco) (Order No. 05-1318). The WVSC alleged that Invesco entered into certain
arrangements permitting market timing and failed to disclose these arrangements in violation of the
West Virginia securities laws. The WVSC ordered Invesco to cease any further violations and sought
to impose monetary sanctions, including restitution to affected investors, disgorgement of fees,
reimbursement of investigatory, administrative and legal costs and an administrative assessment
to be determined by the Commissioner. On October 27, 2011, a hearing examiner was appointed to this
matter. This matter continues to be indefinitely suspended.
You can find more detailed information concerning the above matters, including the parties to
the civil lawsuits and summaries of the various allegations and remedies sought in such lawsuits,
in the Funds public filings with the Securities and Exchange Commission and on Invescos internet
website at www.invesco.com/us.
ADDITIONAL INFORMATION
Who is the Funds Investment Adviser and Administrator?
Invesco Advisers, Inc., 1555 Peachtree Street, N.E., Atlanta, Georgia 30309, is the
investment adviser and administrator for the Fund.
Who Are the Funds Current Sub-Advisers?
The following affiliates of the Adviser (collectively, the affiliated sub-advisers) serve as
sub-advisers to the Fund and may be appointed by the Adviser from time to time to provide
discretionary investment management services, investment advice, and/or order execution services to
the Fund:
Invesco Asset Management Deutschland GmbH, located at An der Welle 5, 1st Floor, Frankfurt,
Germany 60322.
Invesco Asset Management Limited, located at 30 Finsbury Square, London, EC2A 1AG, United
Kingdom.
Invesco Asset Management (Japan) Limited, located at Roppongi Hills Mori Tower 14F, P.O. Box
115, 6-10-1, Roppongi, Minato-ku, Tokyo 106-6114, Japan.
Invesco Australia Limited, located at 333 Collins Street, Level 26, Melbourne Victoria 3000,
Australia.
Invesco Hong Kong Limited, located at 41/F Citibank Tower, 3 Garden Road, Central, Hong Kong.
Invesco Senior Secured Management, Inc., located at 1166 Avenue of the Americas, New York, New
York 10036.
Invesco Canada Ltd., located at 5140 Yonge Street, Suite 800, Toronto, Ontario, Canada M2N
6X7.
Who Is the Funds Principal Underwriter?
Invesco Distributors, Inc., 11 Greenway Plaza, Suite 1000, Houston, Texas 77046-1173, is the
principal underwriter for the Fund.
How Many Shares of the Fund Does Management Own?
As
of November 27, 2012, the trustees and officers as a group owned less than 1% of the shares outstanding of each class of the Fund.
Does Anyone Own More Than 5% of the Fund?
A list of the name, address and percent ownership of each person who, as of November 27, 2012,
to the knowledge of the Trust owned 5% or more of any class of the outstanding shares of the Fund
can be found in Exhibit B.
How Many Copies of the Proxy Statement Will I Receive If I Share My Mailing Address with Another
Security Holder?
Unless we have been instructed otherwise, we are delivering only one proxy statement to
multiple shareholders sharing the same address. We will however, upon written or oral request,
promptly deliver a separate copy of this proxy statement to a shareholder at a shared address to
which a single copy of this proxy statement was delivered. You may direct this request to Invesco
Investment Services, Inc., 11 Greenway Plaza, Suite 1000, Houston, Texas 77046-1173, or call (800)
959-4246.
EXHIBIT A
SHARES OF THE FUNDS OUTSTANDING ON NOVEMBER 27, 2012
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Number of Shares |
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Outstanding on |
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Share Class |
|
November 27, 2012 |
|
Class A |
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Class B |
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Class C |
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Class R5 |
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Class R6 |
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Class Y |
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Investor Class |
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|
EXHIBIT B
OWNERSHIP OF SHARES OF THE FUND
Significant Holders
Listed below is the name, address and percent ownership of each person who, as of November 27,
2012, to the best knowledge of the Trust owned 5% or more of any class of the outstanding shares of
the Fund. A shareholder who owns beneficially 25% or more of the outstanding securities of a fund
is presumed to control the fund as defined in the Investment Company Act of 1940, as amended.
Such control may affect the voting rights of other shareholders.
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Number |
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Number |
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of |
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Percent |
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of |
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Percent |
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Shares |
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of Class |
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Shares |
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of Class |
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Name and |
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Owned of |
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Owned of |
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Name and |
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Owned of |
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Owned of |
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Address of Record Owner |
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Class |
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Record |
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Record(1) |
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Address of Record Owner |
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Class |
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Record |
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Record(1) |
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(1) |
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The Trust has no knowledge of whether all or any portion of the shares owned of record are
also owned beneficially. |
EVERY SHAREHOLDERS VOTE IS IMPORTANT
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EASY VOTING OPTIONS: |
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VOTE ON THE INTERNET
Log on to:
XXXXXXXX
Follow the on-screen instructions
available 24 hours |
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VOTE BY TELEPHONE
Call X-XXX-XXX-XXXX
Follow the recorded instructions
available 24 hours |
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VOTE BY MAIL
Vote, sign and date your
Proxy Card and return it in the
postage-paid envelope |
Please detach at perforation before mailing.
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INVESCO UTILITIES FUND (the Fund)
AN INVESTMENT PORTFOLIO OF AIM SECTOR FUNDS (INVESCO SECTOR FUNDS) (the Trust)
PROXY SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES (the Board)
PROXY FOR THE SPECIAL MEETING OF SHAREHOLDERS TO BE HELD ON FEBRUARY 1, 2013
|
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The undersigned hereby appoints XXXXXXXXX and XXXXXX, and any one of them separately, proxies
with full power of substitution in each, and hereby authorizes them to represent and to vote, as
designated on the reverse of this proxy card, at the Special Meeting of Shareholders on February 1,
2013, at 10:00 a.m., Central time, and at any adjournment or postponement thereof, all of the
shares of the Target Fund which the undersigned would be entitled to vote if personally present. IF
THIS PROXY IS SIGNED AND RETURNED WITH NO CHOICE INDICATED, THE SHARES WILL BE VOTED FOR THE
APPROVAL OF THE PROPOSAL.
NOTE: If you vote by telephone or on the Internet, please do NOT return your proxy card.
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VOTE VIA THE INTERNET: XXXXXXXXX
VOTE VIA THE TELEPHONE:
X-XXX-XXX-XXXX
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NOTE: PLEASE SIGN EXACTLY AS YOUR NAME APPEARS ON THIS PROXY CARD. When signing as executor,
administrator, attorney, trustee or guardian or as custodian for a minor, please give full title as
such. If a corporation, limited liability company, or partnership, please sign in full entity name
and indicate the signers position with the entity. |
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Signature |
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Signature |
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Date
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INV-USM_23180_122311 |
PLEASE VOTE, SIGN AND DATE THIS PROXY CARD AND RETURN IT IN THE ENCLOSED ENVELOPE.
EVERY SHAREHOLDERS VOTE IS IMPORTANT!
Important Notice Regarding the Availability of Proxy Materials
for the Special Meeting of Shareholders to Be Held on February 1, 2013.
The Proxy Statement is available at: xxxxxxxxxx
Please detach at perforation before mailing.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD. THE BOARD RECOMMENDS VOTING FOR THE PROPOSAL.
TO VOTE, MARK A BLOCK BELOW IN BLUE OR BLACK INK. Example: █
o To vote in accordance with the Boards recommendation mark this box. No other vote is necessary.
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FOR
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AGAINST
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ABSTAIN |
1.
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To approve the elimination of the Funds fundamental investment restriction that requires
the Fund to concentrate its investments in the securities of issuers engaged primarily in
utilities-related industries.
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o
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o
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o |
PROXIES ARE AUTHORIZED TO VOTE, IN THEIR DISCRETION, UPON SUCH OTHER BUSINESS AS MAY PROPERLY COME
BEFORE THE MEETING OR ANY ADJOURNMENT OR POSTPONEMENT THEREOF.
PLEASE VOTE, SIGN AND DATE THIS PROXY CARD AND RETURN IT IN THE ENCLOSED ENVELOPE.
INV-USM_23180_122311