LOGO
INVESCO SPECIALTY FUNDS, INC.-
INVESCO S&P 500 INDEX FUND
October 19, 1998
Dear INVESCO S&P 500 Index Fund Shareholder:
Enclosed is a Proxy Statement for the November 20, 1998 special
meeting of shareholders of INVESCO Specialty Funds, Inc. - INVESCO S&P 500
Index Fund (the "Fund").
On July 2, 1998, Comerica Incorporated, a publicly-held bank holding
company, increased its ownership interest from 44% to 85% in Munder Capital
Management, the parent of the Fund's Sub-Adviser, World Asset Management (the
"Transaction").
As explained more fully in the attached Proxy Statement, at the time
of the Transaction, the Fund's prior sub-advisory agreement terminated
automatically, as a matter of law. Fund shareholders must vote on a new
sub-advisory agreement. Accordingly, to provide continuity of advisory
services to the Fund, the Board of Directors of INVESCO Specialty Funds, Inc.
is asking shareholders of the Fund to approve the following Proposal:
Shareholders of the Fund will be asked to approve a new sub-advisory
agreement for the Fund, with the same parties on terms substantially
identical to the prior sub-advisory agreement.
What is most important to you as a shareholder of the Fund is that
approval of the proposal listed above will in no way increase the
sub-advisory fees or expenses of the Fund or change the level, nature or
quality of services you receive. The proposal has been approved by the Board
of Directors of the Company, which recommends that shareholders approve it as
well.
The Board of Directors believes that the proposal is in the best
interests of the shareholders. Therefore, we ask that you read the enclosed
materials and vote promptly. Should you have any questions, please feel free
to call our client services representatives at 1-800-525-8085. They will be
happy to answer any questions that you might have.
Your vote is important. The matter we are submitting for your
consideration is significant to the Fund and to you as a shareholder. If we
do not receive sufficient votes to approve the proposal, we may have to send
additional mailings or conduct telephone canvassing.
<PAGE>
Therefore, please take the time to read the Proxy Statement and cast your
vote on the enclosed proxy card, and return it in the enclosed pre-addressed,
postage-paid envelope.
Sincerely,
/s/ Mark H. Williamson
Mark H. Williamson
President
INVESCO Specialty Funds, Inc.
INVESCO S&P 500 Index Fund
<PAGE>
LOGO
INVESCO SPECIALTY FUNDS, INC. -
INVESCO S&P 500 INDEX FUND
7800 E. Union Avenue
Denver, Colorado 80237
Telephone: (800) 525-8085
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
November 20, 1998
To the Shareholders of the INVESCO S&P 500 Index Fund:
NOTICE IS HEREBY GIVEN that a Special Meeting of shareholders
of the INVESCO S&P 500 Index Fund (the "Fund"), a series of INVESCO Specialty
Funds, Inc. (the "Company") will be held at the offices of the Company at
7800 E. Union Avenue, Denver, Colorado 80237, on November 20, 1998 at 10:00
a.m. (Mountain Time) for the following purposes:
1. To approve or disapprove a new sub-advisory agreement between
INVESCO Fund Group, Inc. ("IFG"), on behalf of the Fund, and
World Asset Management ("World") on substantially the same
terms as the prior sub-advisory agreement for the Fund.
2. To transact such other business as may properly come before
the Special Meeting.
The proposal is not expected to result in any change in the
way the Fund is managed, or in the sub-advisory fees or services you receive
as a shareholder.
A complete list of shareholders of the Fund entitled to vote
at the Meeting will be available and open to the examination of any
shareholder of the Fund for any purpose germane to the Meeting during
ordinary business hours after October 1, 1998, at the offices of the Fund,
7800 East Union Avenue, Denver, Colorado 80237.
You are cordially invited to attend the Meeting. Shareholders
who do not expect to attend the Meeting in person are requested to complete,
date and sign the enclosed form of proxy and return it promptly in the
enclosed envelope that requires no postage if mailed in the United States.
The enclosed proxy is being solicited on behalf of the Board of Directors of
the Company.
IMPORTANT
Please mark, sign, date and return the enclosed proxy in the
accompanying envelope as soon as possible in order to ensure a full
representation at the Meeting.
<PAGE>
The Meeting will have to be adjourned without conducting any
business if less than a majority of the eligible shares is represented, and
the Fund will have to continue to solicit votes until a quorum is obtained.
The Meeting also may be adjourned, if necessary, to continue to solicit votes
if less than the required shareholder vote has been obtained to approve the
proposal.
Your vote, then, could be critical in allowing the Fund to
hold the Meeting as scheduled. By marking, signing, and promptly returning
the enclosed proxy, you may eliminate the need for additional solicitation.
Your cooperation is appreciated.
The Board of Directors has fixed the close of business on
September 30, 1998 as the Record Date for determination of shareholders
entitled to notice of, and to vote at, the meeting.
EACH SHAREHOLDER WHO DOES NOT EXPECT TO ATTEND THE MEETING IN
PERSON IS REQUESTED TO DATE, FILL IN, SIGN AND RETURN PROMPTLY THE ENCLOSED
FORM OF PROXY IN THE ENCLOSED ENVELOPE, WHICH NEEDS NO POSTAGE IF MAILED IN
THE UNITED STATES.
By Order of the Board of Directors
/s/ Glen A. Payne
Glen A. Payne, Secretary
Denver, Colorado
October 19, 1998
<PAGE>
INVESCO SPECIALTY FUNDS, INC. -
INVESCO S&P 500 INDEX FUND
7800 E. Union Avenue
Denver, Colorado 80237
Telephone: (800) 525-8085
PROXY STATEMENT
FOR SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD NOVEMBER 20, 1998
This Proxy Statement and Notice of Special Meeting of
Shareholders with accompanying form of proxy are being mailed to shareholders
of the INVESCO S&P 500 Index Fund (the "Fund") on or about October 19, 1998.
They are being furnished in connection with the solicitation of proxies by
the Directors of INVESCO Specialty Funds, Inc. (the "Company") for use at the
Special Meeting of Shareholders of the Fund on November 20, 1998, or any
adjournment thereof (the "Meeting"), for the purposes set forth in the
accompanying notice of meeting.
The Board of Directors (the "Directors") is recommending that
shareholders consider the following proposals:
Proposal
1. To consider and vote on approval or disapproval of a new sub-advisory
agreement between INVESCO Fund Group, Inc. ("IFG"), on behalf of the
Fund, and World Asset Management ("World") on substantially the same
terms as the prior Sub-Advisory Agreement.
2. To transact such other business as may properly come before the
Meeting
The annual report for the Company for the year ended July 31,
1998, including audited financial statements, has previously been sent to
shareholders and is available upon request without charge by calling the
toll-free number referenced above.
If the accompanying form of proxy is executed properly and
returned, shares represented by it will be voted at the Meeting in accordance
with the instructions on the proxy. However, if no instructions are
specified, shares will be voted FOR the proposal.
Shares held by shareholders present in person or represented
by proxy at the Meeting will be counted both for the purpose of determining
the presence of a quorum and for calculating the votes cast on the issues
before the Meeting. An abstention by a shareholder, either by proxy or by
vote in person at the Meeting, has the same effect as a negative vote. Shares
held by a broker or other fiduciary as record owner for the account of the
beneficial owner are counted toward the required quorum if the beneficial
owner has executed and timely
<PAGE>
delivered the necessary instructions for the broker to vote the shares or if
the broker has and exercises discretionary voting power. When the broker or
fiduciary does not receive instructions from the beneficial owner and does
not have discretionary voting power as to one or more issues before the
Meeting, but grants a proxy for or votes such shares, they will be counted
toward the required quorum but will have the effect of a negative vote on any
proposals on which it does not vote.
In order to reduce the costs of preparing, printing and
mailing the proxy materials, the notices to shareholders having more than one
account in the Fund listed under the same social security number at a single
address have been combined. The proxy cards have been coded so that each
shareholder's votes will be counted for all such accounts.
Execution of the enclosed proxy card will not affect a
shareholder's right to attend the Meeting and vote in person, and a
shareholder giving a proxy has the power to revoke it (by written notice to
the Fund at P.O. Box 173706, Denver, Colorado 80217-3706, execution of a
subsequent proxy card, or oral revocation at the Meeting) at any time before
it is executed.
The close of business on September 30, 1998 has been fixed as
the Record Date for the determination of shareholders entitled to notice of
and to vote at the Meeting. The following shares of each class of the Fund,
$.01 par value, were outstanding as of the close of business on the Record
Date:
<TABLE>
<S> <C>
Class I: 261,783.74
Class II: 1,595,641.08
</TABLE>
INTRODUCTION
The Company is a Maryland corporation and is not required to
hold annual meetings of shareholders. The Directors have called this Meeting
to permit shareholders of the Fund to vote on a new sub-advisory agreement,
which will continue in effect upon the approval by shareholders of the
agreement. The prior sub-advisory agreement terminated upon the completion of
the transaction between Comerica, Inc. ("Comerica") and Mr. Lee P. Munder,
Chairman of World's general partner, Munder Capital Management ("MCM"), as
more fully described below.
I. APPROVAL OR DISAPPROVAL OF A NEW SUB-ADVISORY AGREEMENT
World Asset Management ("World" or the "Sub-Adviser")
currently serves as sub-adviser to the Fund pursuant to a sub-advisory
agreement between World and INVESCO Fund Group, Inc. ("IFG"), the Fund's
investment adviser, on behalf of the Fund, dated July 2, 1998. World is a
general partnership wholly owned by MCM, a Delaware general partnership
organized in December 1994 which engages in investment management and
advisory services. Prior to July 2, 1998, the general partnership interest in
MCM was owned by Old MCM, Inc. (44%), WAM Holdings, Inc. (44%) and Munder
Group L.L.C. (12%). WAM Holdings, Inc. is wholly-owned by Comerica
Incorporated. Mr. Lee P. Munder, Chairman of MCM, owned 83% of Old MCM, Inc.
(representing a 36% indirect interest in MCM) and 68% of Munder Group
-2-
<PAGE>
L.L.C. (representing an 8% indirect interest in MCM). Mr. Munder, through his
ownership interest in Old MCM, Inc. and Munder Group L.L.C., owned or
controlled approximately 44% of MCM. Employees of MCM owned the remaining 12%
of MCM.
On July 2, 1998, WAM Holdings II, Inc., a wholly-owned
subsidiary of Comerica Incorporated, purchased 85% of Old MCM, Inc.'s
interest in MCM (representing a 37.4% interest in MCM) and 85% of Mr.
Munder's interest in Munder Group L.L.C. (representing a 6.9% interest in
MCM) (the "Transaction"). As a result, Comerica Incorporated owns or controls
approximately 88% of the partnership interests in MCM, World's general
partner. As required by the Investment Company Act of 1940 (the "1940 Act"),
the prior sub-advisory agreement for the Fund provided for its automatic
termination in the event of an "assignment," as defined in the 1940 Act, and
consummation of the Transaction may have constituted an assignment (as
defined in the 1940 Act) of the prior sub-advisory agreement between World
and IFG (the "Prior Sub-Advisory Agreement"). IFG proposed to the Directors
that IFG enter into a new sub-advisory agreement on behalf of the Fund with
the Sub-Adviser to take effect upon the closing of the Transaction.
At a meeting held on May 13, 1998, the Directors met to
consider the Transaction and its anticipated effect on World and sub-advisory
arrangements for the Fund. The Directors, including the Directors who are not
parties to the Prior Sub-Advisory Agreement or the New Sub-Advisory Agreement
(as defined below) or interested persons (as defined in the 1940 Act) of any
such party (the "Independent Directors"), unanimously approved, subject to
the required shareholder approval described herein, a proposed new
sub-advisory agreement (the "New Sub-Advisory Agreement") with World, on
behalf of the Fund, and recommended approval of the New Sub-Advisory
Agreement by the Fund's shareholders. A form of the New Sub-Advisory
Agreement is attached as Exhibit A.
World and IFG have represented to the Directors that the
Transaction would not result in any material change to advisory services
provided to the Fund; that, subject to approval of the New Sub-Advisory
Agreement by shareholders, the Transaction was not expected materially to
affect the level or quality of advisory services provided to the Fund; and,
that the same personnel who currently render such services to the Fund will
continue to do so after the Transaction.
1940 Act Considerations
Section 15(a) of the 1940 Act prohibits any person from
serving as an investment adviser to a registered investment company except
pursuant to a written contract that has been approved by the shareholders of
the company. Section 15(a) also provides, as did the Prior Sub-Advisory
Agreement pursuant to Section 15(a), for the automatic termination of such
agreements upon their assignment. An assignment is deemed to include any
change of control of the investment adviser or sub-adviser. In order for
World to continue to provide investment advisory services to the Fund,
therefore, the shareholders of the Fund must approve the Fund's New
Sub-Advisory Agreement.
-3-
<PAGE>
Due to insufficient time to obtain consent of the Fund's
shareholders prior to the closing of the Transaction, the Company, the
Investment Adviser and the Sub-Adviser have obtained an order from the
Securities and Exchange Commission exempting them from compliance with
Section 15(a) of the 1940 Act pending approval of the New Sub-Advisory
Agreement by the Fund's shareholders. The order permitted the New
Sub-Advisory Agreement to go into effect without shareholder approval and
allows the Sub-Adviser to collect fees from the Investment Adviser with
respect to the Fund at the rates specified in the New Sub-Advisory Agreement
commencing on July 2, 1998. Fees paid by the Investment Adviser under the New
Sub-Advisory Agreement will be held in an interest-bearing escrow account
pending shareholder approval, which, pursuant to the terms of the order, must
be obtained no later than November 30, 1998.
If the shareholders of the Fund do not approve the Fund's New
Sub-Advisory Agreement, the amount held in escrow under the New Sub-Advisory
Agreement of the Fund will be returned to the Fund.
In addition, the Company intends to conform with the
provisions of Section 15(f) of the 1940 Act, which provides, in pertinent
part, that an investment adviser may receive any amount or benefit in
connection with a sale of such investment adviser which results in an
assignment of an investment advisory contract if (1) for a period of three
years after the time of such event, 75% of the members of the board of
directors of the investment company which it advises are not "interested
persons" (as defined in the 1940 Act) of the new or old investment adviser;
and (2) there is no "unfair burden" imposed on the investment company as a
result of the transaction.
The New and the Prior Sub-Advisory Agreements
The Prior Sub-Advisory Agreement for the Fund was last
approved by the Directors on October 1, 1997.
If the New Sub-Advisory Agreement is approved by shareholders,
World will continue to serve as sub-adviser to the Fund. The terms and
conditions of the New Sub-Advisory Agreement are identical in all material
respects to those of the Prior Sub-Advisory Agreement, with the exception of
their effective dates and termination dates and the escrow arrangements
described above. The New Sub-Advisory Agreement, if approved by the vote of
the holders of a majority of the outstanding shares of the Fund (as defined
in the 1940 Act), will continue in effect for a two-year period from July 2,
1998, and thereafter from year to year, subject to approval annually by the
Directors of the Company or by the vote of a 1940 Act Majority of the
outstanding shares of the Fund, and also, in either event, approval by a
majority of the Directors who are not parties to the New Sub-Advisory
Agreement or interested persons (as defined in the 1940 Act) of any such
party. The New Sub-Advisory Agreement may be terminated, without penalty, on
60 days' written notice by the Directors or by vote of holders of a 1940 Act
Majority of the Fund's shares or upon 90 days' written notice by the
Investment Adviser or Sub-Adviser. The New Sub-Advisory Agreement will also
terminate automatically in the event of its "assignment" (as defined in the
1940 Act).
-4-
<PAGE>
Under the New Sub-Advisory Agreement, as under the Prior
Sub-Advisory Agreement, the Sub-Adviser will furnish continuing investment
supervision to the Fund and will be responsible for the management of the
Fund's portfolio. The responsibility for making decisions to buy, sell or
hold a particular security will rest with the Sub-Adviser, subject to review
by the Directors. The Sub-Adviser will furnish office space, equipment and
personnel in connection with the performance of its investment management
responsibilities.
Like the Prior Sub-Advisory Agreement, the New Sub-Advisory
Agreement provides that the Sub-Adviser shall have no liability to the Fund
or any shareholder of the Fund for any error of judgment, mistake of law, or
any loss arising out of any investment or other act or omission in the
performance by the Sub-Adviser of its duties under the agreement, except for
any liability, loss or damage resulting from willful misfeasance, bad faith
or gross negligence on the Sub-Adviser's part or reckless disregard of its
duties under the agreement.
Advisory Fee
The fees under the New Sub-Advisory Agreement are the same as
the fees under the Prior Sub-Advisory Agreement for the Fund. Under the New
Sub-Advisory Agreement, as under the Prior Sub-Advisory Agreement, the
Investment Adviser will pay the Sub-Adviser the monthly fees set forth below.
<TABLE>
<CAPTION>
Fees on Assets Fees on Assets Between $10 Fees on Assets Exceeding
up to $10 Million and $40 Million $40 Million
----------------- --------------- -----------
<S> <C> <C>
0.07% 0.05% 0.03%
</TABLE>
Shareholders should refer to Exhibit A for the complete terms
of the New Sub-Advisory Agreement.
In the event that shareholders of the Fund do not approve the
New Sub-Advisory Agreement for the Fund, the Directors of the Company could
seek to obtain for the Fund interim advisory services from the Sub-Adviser or
from another advisory organization. Thereafter, the Directors would either
negotiate a new investment advisory agreement with an advisory organization
selected by the Directors or make other appropriate arrangements, in either
event subject to approval by the shareholders of the Fund.
Information Regarding the Sub-Adviser
The Sub-Adviser is a general partnership with principal
offices at 255 E. Brown Street, Birmingham, Michigan 48009. The general
partner of the Sub-Adviser is MCM, a Delaware general partnership with
principal offices at 480 Pierce Street, Birmingham, Michigan 48009. The
general partners of MCM are WAM Holdings, Inc., WAM Holdings II, Inc. Old
MCM, Inc. and Munder Group, L.L.C. Old MCM, Inc. and Munder Group, L.L.C.
have offices at the same address as MCM. WAM Holdings, Inc. and WAM Holdings
II, Inc. have offices at 500 Woodward Avenue, 33rd Floor, Detroit, Michigan
48275-3391 and are wholly-owned
-5-
<PAGE>
subsidiaries of Comerica Bank, a Michigan banking corporation, which, in
turn, is a wholly-owned subsidiary of Comerica Incorporated, a publicly-held
bank holding company. Employees of MCM may acquire partnership interests in
MCM from time to time through Munder Group, L.L.C., which was organized for
that purpose. Appendix B to this Proxy Statement sets forth the name,
business address and principal occupation of each of the Sub-Adviser's
executive officers. In addition to serving as the Fund's sub-adviser, World
serves as the investment adviser or sub-adviser to each of the similar
investment companies listed in Appendix C to this Proxy Statement. Appendix C
also sets forth the size of such investment companies and the rate of the
Sub-Adviser's advisory fees charged to such investment companies.
Banking laws and regulations, including the Glass-Steagall Act
as presently interpreted by the Board of Governors of the Federal Reserve
System, prohibit a bank holding company registered under the Federal Bank
Holding Company Act of 1956 or any bank or non-bank affiliate thereof from
sponsoring, organizing, controlling or distributing the shares of a
registered open-end investment company continuously engaged in the issuance
of its shares, and prohibit banks generally from underwriting securities.
However, a holding company or affiliate, and banks generally, can act as
adviser to an investment company and can purchase shares of an investment
company as agent for and upon the order of customers. The Sub-Adviser
believes that it may perform the services contemplated by the New
Sub-Advisory Agreement without violating these banking laws or regulations.
However, future changes in legal requirements relating to the permissible
activities of banks and their affiliates, as well as future interpretations
of current requirements, could prevent the Sub-Adviser from continuing to
perform sub-advisory services for the Fund. If the Sub-Adviser were
prohibited from performing sub-advisory services for the Fund, it is expected
that the Directors would select another qualified firm. Any new sub-advisory
agreement would be subject to shareholder approval.
The Evaluation By the Directors
The Directors have determined that, by approving the New
Sub-Advisory Agreement on behalf of the Fund, the Fund can best assure itself
that services currently provided by the Sub-Adviser will continue to be
provided without interruption.
At a meeting held on May 13, 1998, the Directors considered
information with respect to whether the New Sub-Advisory Agreement with the
Sub-Adviser was in the best interests of the Fund and its shareholders. The
Directors considered, among other factors, representations by the Sub-Adviser
that the Transaction would not materially affect the sub-advisory operations
of the Sub-Adviser or the level or quality of advisory services provided to
the Fund; that, subject to Board and shareholder approval, the same personnel
at the Sub-Adviser who provide services to the Fund would continue to do so
after the Transaction; that the Fund's advisory fees would not change as a
result of the Transaction; and that the Fund would not be subjected to any
unfair burden as a result of the Transaction. The Directors also considered
the terms of the Transaction, and the resulting differences in the ownership
and control of the Sub-Adviser. The Directors also considered, as they have
in the past, the nature and quality of services expected to be provided by
the Sub-Adviser and information regarding fees, expense rates, performance
and profitability. In evaluating the Sub-Adviser's ability to provide
services
-6-
<PAGE>
to the Fund, the Directors considered information as to the Sub-Adviser's
business organization, financial resources and personnel and other matters,
including the continuing interests of Comerica Incorporated and Mr. Munder
and employees of MCM and the Sub-Adviser.
Based upon its review, the Directors concluded that the terms
of the New Sub-Advisory Agreement with the Sub-Adviser are reasonable, fair
and in the best interests of the Fund and its shareholders, and that the fees
provided in the New Sub-Advisory Agreement are fair and reasonable in light
of the usual and customary charges made by others for services of the same
nature and quality. Accordingly, after consideration of the above factors,
and such other factors and information as it deemed relevant, the Directors,
including all of the Independent Directors, unanimously approved the New
Sub-Advisory Agreement and voted to recommend its approval by the Fund's
shareholders.
The Directors unanimously recommend that the shareholders of
the Fund vote FOR approval of the New Sub-Advisory Agreement with respect to
the Fund.
II. OTHER BUSINESS
Management knows of no other business to be presented at the
meeting. If any additional matters should be properly presented, it is
intended that the enclosed proxy will be voted in accordance with the
judgment of the persons named in the proxy.
Investment Adviser and Administrator
IFG serves as the investment adviser of the Fund pursuant to
an investment advisory agreement between IFG and the Company, on behalf of
the Fund, dated February 28, 1997. IFG also serves as the Fund's
administrator pursuant to an Administrative Services Agreement dated February
28, 1997. The principal business address of IFG is 7800 E. Union Avenue,
Denver, Colorado 80237.
Principal Underwriter
Pursuant to an underwriting agreement dated September 30,
1997, INVESCO Distributors, Inc. ("IDI"), a wholly-owned subsidiary of IFG,
serves as the Fund's distributor. IDI's principal business address is 7800 E.
Union Avenue, Denver, Colorado 80237.
Solicitation of Proxies
The cost of soliciting proxies in the accompanying form,
including the fees of a proxy soliciting agent, will be borne by MCM and
World, and not the Fund. In addition to solicitation by mail, proxies may be
solicited by telephone or telegraph by Directors, Officers, and regular
employees and agents of the Company without compensation therefor. In
addition, First Data Investor Services Group ("First Data") will be retained
to assist in the solicitation of proxies. MCM and World will reimburse
brokerage firms and others for their expenses in forwarding proxy materials
to the beneficial owners and soliciting them to execute the proxies.
-7-
<PAGE>
As the meeting date approaches, certain shareholders whose
votes the Fund has not yet received may receive telephone calls from
representatives of First Data requesting that they authorize, by telephonic
or electronically transmitted instructions, First Data to execute proxy cards
on their behalf. Telephone authorizations will be recorded in accordance with
the procedures set forth below. The Adviser believes that these procedures
are reasonably designed to ensure that the identity of the shareholder
casting the vote is accurately determined and that the voting instructions of
the shareholder are accurately determined.
First Data has received an opinion of Maryland counsel that
addresses the validity, under the applicable laws of the State of Maryland,
of authorization given orally to execute a proxy. The opinion given by
Maryland counsel concludes that a Maryland court would find that there is no
Maryland law or public policy against the acceptance of proxies signed by an
orally-authorized agent, provided it adheres to the procedures set forth
below.
In all cases where a telephonic proxy is solicited, the First
Data representative is required to ask the shareholder for such shareholder's
full name, address, social security or employer identification number, title
(if the person giving the proxy is authorized to act on behalf of an entity,
such as a corporation), and the number of shares owned, and to confirm that
the shareholder has received the Proxy Statement in the mail. If the
information solicited agrees with the information provided to First Data by
the Fund, the First Data representative has the responsibility to explain the
process, read the proposals listed on the proxy card, and ask for the
shareholder's instructions on the proposal. Although he or she is permitted
to answer questions about the process, the First Data representative is not
permitted to recommend to the shareholder how to vote, other than to read any
recommendation set forth in the Proxy Statement. First Data will record the
shareholder's instructions on the card. Within 72 hours, First Data will send
the shareholder a letter or mailgram confirming the shareholder's vote and
asking the shareholder to call First Data immediately if the shareholder's
instructions are not correctly reflected in the confirmation.
If a shareholder wishes to participate in the Meeting, but
does not wish to give a proxy by telephone, such shareholder may still submit
the proxy card originally sent with the Proxy Statement or attend in person.
Any proxy given by a shareholder, whether in writing or by telephone, is
revocable. A shareholder may revoke the accompanying proxy or a proxy given
telephonically at any time prior to its use by filing with the Fund a written
revocation or duly executed proxy bearing a later date. In addition, any
shareholder who attends the Meeting in person may vote by ballot at the
Meeting, thereby canceling any proxy previously given.
Adjournments
The Directors may seek one or more adjournments of the Meeting
to solicit additional shareholders, if necessary, to obtain a quorum for the
Meeting, or to obtain the required shareholder vote to approve the Proposal.
An adjournment would require the affirmative vote of the holders of a
majority of the shares present at the Meeting (or an adjournment thereof) in
person or by proxy and entitled to vote. If adjournment is proposed in order
to obtain the required shareholder vote on a particular proposal, the persons
named as
-8-
<PAGE>
proxies will vote in favor of adjournment those shares which they are
entitled to vote in favor of such proposal and will vote against adjournment
those shares which they are required to vote against such proposal.
5% Shareholders
As of the Record Date, the following persons owned
beneficially or had the right to vote 5% or more of the outstanding shares of
the Fund:
<TABLE>
<CAPTION>
S&P Index Fund - Class I
----------------------------
<S> <C> <C>
INVESCO Trust Co. Cust. 119,931.96 45.81%
Right Choice Mgd. Care Inc.
Supp. Exec. Retirement Plan
1831 Chestnut Street
St. Louis, MO 63103-2231
Ronald L. Grooms 52,684.65 20.13%
7800 E. Union Avenue #800
Denver, CO 80237-2715
David Bockstrom 32,943.33 12.58%
12030 Gift Rd.
Bridgeton, MO 63044-1413
James V. Johnson 20,414.52 7.80%
Evelyn L. Johnson CO-TRS
Johnson Living Trust
UA 10/23/96
4700 Aberfeldy Rd.
Reno, NV 89509-0943
S&P Index Fund - Class II
----------------------------
None
</TABLE>
Required Vote
Approval of a new sub-advisory agreement with respect to the
Fund, as set forth in Proposal I will require the affirmative vote of the
holders of the lesser of either (1) 67% or more of the Fund's shares present
at the meeting if the holders of more than 50% of the outstanding shares of
the Fund are present or represented by proxy or (2) more than 50% of the
outstanding Fund shares ("1940 Act Majority").
-9-
<PAGE>
Shareholder Proposals
The Company is not required to hold annual shareholder
meetings, although special meetings may be called from time to time.
Shareholder proposals to be presented at any subsequent meeting of
shareholders must be received at the office of the Company within a
reasonable time before the proxy solicitation is made.
Other Matters
As of the Record Date, the aggregate ownership of Fund shares
held by all the Directors and Officers of the Company, as a group, and the
percentage of outstanding shares represented by such amounts, were as
follows:
Class I
Total Outstanding Shares: 261,783.74
<TABLE>
<CAPTION>
Director/Officer Outstanding Shares Percentage
---------------- ------------------ ----------
<S> <C> <C>
Ronald L. Grooms 52,684.65 20.13%
</TABLE>
Class II
Total Outstanding: 1,595,641.08
Director/Officer Outstanding Shares Percentage
---------------- ------------------ ----------
None
YOU ARE URGED TO FILL IN, DATE, SIGN AND RETURN
THE ENCLOSED PROXY PROMPTLY
By Order of the Board of Directors
/s/ Glen A. Payne
Glen A. Payne, Secretary
October 19, 1998
-10-
<PAGE>
Appendix A
FORM OF SUB-ADVISORY AGREEMENT
AGREEMENT made as of the 2nd day of July, 1998, by and between
INVESCO Fund Group, Inc. ("INVESCO"), a Delaware corporation, and World Asset
Management, a general partnership organized under the laws of the State of
Delaware ("the Sub-Adviser").
W I T N E S S E T H:
WHEREAS, INVESCO SPECIALTY FUND, INC. (the "Company") is engaged in
business as a diversified, open end management investment company registered
under the Investment Company Act of 1940, as amended (hereinafter referred to
as the "Investment Company Act") and has one class of shares (the "Shares"),
which is divided into series, each representing an interest in a separate
portfolio of investments, with one such series being designated the INVESCO
S&P 500 Index Fund (the "Fund"); and
WHEREAS, INVESCO and the Sub-Adviser are engaged in rendering
investment advisory services and are registered as investment advisers under
the Investment Advisers Act of 1940; and
WHEREAS, INVESCO has entered into an Investment Advisory Agreement
with the Company (the "INVESCO Investment Advisory Agreement"), pursuant to
which INVESCO is required to provide investment advisory services to the
Company, and, upon receipt of written approval of the Company, is authorized
to retain other parties to provide such services; and
WHEREAS, the Sub-Adviser is willing to provide investment advisory
services to the Company on the terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and the covenants
hereinafter contained, INVESCO and the Sub-Adviser hereby agree as follows:
ARTICLE I
DUTIES OF THE SUB-ADVISER
INVESCO hereby employs the Sub-Adviser to act as investment adviser
to the Company and to furnish the investment advisory services described
below, subject to the broad supervision of INVESCO and the Board of Directors
of the Company (the "Directors"), for the period and on the terms and
conditions set forth in this Agreement. The Sub-Adviser hereby accepts such
assignment and agrees during such period, at its own expense, to render such
services and to assume the obligations herein set forth for the compensation
provided for herein. The Sub-Adviser shall for all purposes herein be deemed
to be an independent contractor and, unless
<PAGE>
otherwise expressly provided or authorized herein, shall have no authority to
act for or represent the Company in any way or otherwise be deemed an agent
of the Company.
The Sub-Adviser hereby agrees to manage the investment operations of
the Fund, subject to the supervision of the Directors of the Company and
INVESCO. Specifically, the Sub-Adviser agrees to perform the following
services:
(a) to manage the investment and reinvestment of all the assets, now
or hereafter acquired, of the Fund, to execute all purchases and sales of
portfolio securities and to vote all proxies of portfolio securities;
(b) to maintain a continuous investment program for the Fund,
consistent with (i) the Fund's investment policies as set forth in the
Company's Articles of Incorporation, Bylaws, and Registration Statement, as
from time to time amended, under the Investment Company Act of 1940, as
amended (the "1940 Act"), and in any prospectus and/or statement of
additional information of the Fund, as from time to time amended and in use
under the Securities Act of 1933, as amended, and (ii) the Company's status
as a regulated investment company under the Internal Revenue Code of 1986, as
amended;
(c) to determine what securities are to be purchased or sold for the
Fund, unless otherwise directed by the Directors of the Company or INVESCO,
and to execute transactions accordingly;
(d) to provide to the Fund the benefit of all of the investment
analysis and research, the reviews of current economic conditions and trends,
and the consideration of long range investment policy now or hereafter
generally available to investment advisory customers of the Sub-Adviser;
(e) to determine what portion of the Fund should be invested in the
various types of securities authorized for purchase by the Fund; and
(f) to make recommendations as to the manner in which voting rights,
rights to consent to Fund action and any other rights pertaining to the
Fund's portfolio securities shall be exercised.
With respect to execution of transactions for the Fund, the
Sub-Adviser is authorized to employ such brokers or dealers as may, in the
Sub-Adviser's best judgment, implement the policy of the Fund to obtain
prompt and reliable execution at the most favorable price obtainable. In
assigning an execution or negotiating the commission to be paid therefor, the
Sub-Adviser is authorized to consider the full range and quality of a
broker's services which benefit the Fund, including but not limited to
research and analytical capabilities, reliability of performance, and
financial soundness and responsibility. Research services prepared and
furnished by brokers through which the Sub-Adviser effects securities
transactions on behalf of the Fund may be used by the Sub-Adviser in
servicing all of its accounts, and not all such services may be used by the
Sub-Adviser in connection with the Fund. In the selection of a broker or
dealer for execution of
-2-
<PAGE>
any negotiated transaction, the Sub-Adviser shall have no duty or obligation
to seek advance competitive bidding for the most favorable negotiated
commission rate for such transaction, or to select any broker solely on the
basis of its purported or "posted" commission rate for such transaction,
provided, however, that the Sub-Adviser shall consider such "posted"
commission rates, if any, together with any other information available at
the time as to the level of commissions known to be charged on comparable
transactions by other qualified brokerage firms, as well as all other
relevant factors and circumstances, including the size of any contemporaneous
market in such securities, the importance to the Fund of speed, efficiency,
and confidentiality of execution, the execution capabilities required by the
circumstances of the particular transactions, and the apparent knowledge or
familiarity with sources from or to whom such securities may be purchased or
sold. Where the commission rate reflects services, reliability and other
relevant factors in addition to the cost of execution, the Sub-Adviser shall
have the burden of demonstrating that such expenditures were bona fide and
for the benefit of the Fund.
The Sub-Adviser may recommend transactions in which it has directly
or indirectly a material interest, in unregulated collective investment
schemes including any operated or advised by the Sub-Adviser or in margined
transactions. Advice on investments may extend to investments not traded or
exchanges recognized or designated by the Securities and Investments Board.
Both parties acknowledge that the advice given under this Agreement
may involve liabilities in one currency matched by assets in another currency
and that accordingly movements in rates of exchange may have a separate
effect, unfavorable as well as favorable on the gain or loss experienced on
an investment.
In carrying out its duties hereunder, the Sub-Adviser shall comply
with all instructions of INVESCO in connection therewith such instructions
may be given by letter, telex, telephone or facsimile by any Director or
Officer of INVESCO or by any other person authorized by INVESCO.
Any instructions which appear to conflict with the terms of this
Agreement may be confirmed by the Sub-Adviser with INVESCO prior to
execution.
ARTICLE II
ALLOCATION OF CHARGES AND EXPENSES
The Sub-Adviser assumes and shall pay for maintaining the staff and
personnel necessary to perform its obligations under this Agreement, and
shall, at its own expense, provide the office space, equipment and facilities
necessary to perform its obligations under this Agreement. Except to the
extent expressly assumed by the Sub-Adviser herein and except to the extent
required by law to be paid by the Sub-Adviser, INVESCO and/or the Company
shall pay all costs and expenses in connection with the operations of the
Fund.
-3-
<PAGE>
ARTICLE III
COMPENSATION OF THE SUB-ADVISER
For the services rendered, facilities furnished, and expenses assumed
by the Sub-Adviser, INVESCO shall pay to the Sub-Adviser a fee, computed
daily and paid as of the last day of each month, using for each daily
calculation the most recently determined net asset value of the Fund, as
determined by a valuation made in accordance with the Fund's procedures for
calculating its net asset value as described in the Fund's Prospectus and/or
Statement of Additional Information. The advisory fee to the Sub-Adviser with
respect to the Fund shall be computed at the annual rate of 0.07% of the
Fund's daily net assets up to $10 million; 0.05% of the Fund's daily net
assets in excess of $10 million but not more than $50 million; and 0.03% of
the Fund's daily net assets in excess of $$50 million. During any period when
the determination of the Fund's net asset value is suspended by the Directors
of the Company, the net asset value of a share of the Fund as of the last
business day prior to such suspension shall, for the purpose of this Article
III, be deemed to be the net asset value at the close of each succeeding
business day until it is again determined. However, no such fee shall be paid
to the Sub-Adviser with respect to any assets of the Fund which may be
invested in any other investment company for which the Sub-Adviser serves as
investment adviser or sub-adviser. The fee provided for hereunder shall be
prorated in any month in which this Agreement is not in effect for the entire
month. The Sub-Adviser shall be entitled to receive fees hereunder only for
such periods as the INVESCO Investment Advisory Agreement remains in effect.
ARTICLE IV
ACTIVITIES OF THE SUB-ADVISER
The services of the Sub-Adviser to the Fund are not to be deemed to
be exclusive, the Sub-Adviser and any person controlled by or under common
control with the Sub-Adviser (for purposes of this Article IV referred to as
"affiliates") being free to render services to others. It is understood that
DirectorsO officers, employees and shareholders of the Fund are or may become
interested in the Sub-Adviser and its affiliates, as Directors, Officers,
employees and shareholders or otherwise and that Directors, Officers,
employees and shareholders of the Sub-Adviser, INVESCO and their affiliates
are or may become interested in the Company as Directors, Officers and
employees.
ARTICLE V
AVOIDANCE OF INCONSISTENT POSITIONS AND COMPLIANCE WITH APPLICABLE
LAWS
In connection with purchases or sales of securities for the
investment portfolios of the Fund, neither the Sub-Adviser nor any of its
Directors, Officers or employees will act as a
-4-
<PAGE>
principal or agent for any party other than the Fund or receive any
commissions. The Sub-Adviser will comply with all applicable laws in acting
hereunder including, without limitation, the 1940 Act; the Investment
Advisers Act of 1940, as amended; and all rules and regulations duly
promulgated under the foregoing.
ARTICLE VI
DURATION AND TERMINATION OF THIS AGREEMENT
This Agreement shall become effective as of the date it is approved
by a majority of the outstanding voting securities of the Fund. Thereafter,
this Agreement shall remain in force for an initial term of two years from
the date of execution, and from year to year thereafter until its termination
in accordance with this Article VI, but only so long as such continuance is
specifically approved at least annually by (i) the Directors of the Company,
or by the vote of a majority of the outstanding voting securities of the
Fund, and (ii) a majority of those Directors who are not parties to this
Agreement or interested persons of any such party cast in person at a meeting
called for the purpose of voting on such approval.
This Agreement may be terminated at any time, without the payment of
any penalty, by INVESCO, the Fund by vote of the Directors of the Company, or
by vote of a majority of the outstanding voting securities of the Fund, or by
the Sub-Adviser. A termination by INVESCO or the Sub-Adviser shall require
sixty days' written notice to the other party and to the Company, and a
termination by the Company shall require such notice to each of the parties.
This Agreement shall automatically terminate in the event of its assignment
to the extent required by the Investment Company Act of 1940 and the Rules
thereunder.
The Sub-Adviser agrees to furnish to the Directors of the Company
such information on an annual basis as may reasonably be necessary to
evaluate the terms of this Agreement.
Termination of this Agreement shall not affect the right of the
Sub-Adviser to receive payments on any unpaid balance of the compensation
described in Article III hereof earned prior to such termination.
ARTICLE VII
LIABILITY
The Sub-Adviser agrees to use its best efforts and judgement and due
care in carrying out its duties under this Agreement provided however that
the Sub-Adviser shall not be liable to INVESCO for any loss suffered by
INVESCO or the Fund advised in connection with the subject matter of this
Agreement unless such loss arises from the willful misfeasance, bad faith or
negligence in the performance of the Sub-Adviser's duties and subject and
without prejudice to the foregoing. INVESCO hereby undertakes to indemnify
and to keep indemnified the Sub-Adviser from and against any and all
liabilities, obligations, losses, damages, suits and expenses which may be
incurred by or asserted against the Sub-Adviser for which it is responsible
-5-
<PAGE>
pursuant to Article I hereof provided always that the Sub-Adviser shall send
to INVESCO as soon as possible all claims, letters, summonses, writs or
documents which it receives from third parties and provide whatever
information and assistance INVESCO may require and no liability of any sort
shall be admitted and no undertaking shall be given nor shall any offer,
promise or payment be made or legal expenses incurred by the Sub-Adviser
without written consent of INVESCO who shall be entitled if it so desires to
take over and conduct in the name of the Sub-Adviser the defense of any
action or to prosecute any claim for indemnity or damages or otherwise
against any third party.
ARTICLE VIII
AMENDMENTS OF THIS AGREEMENT
No provision of this Agreement may be orally changed or discharged,
but may only be modified by an instrument in writing signed by the
Sub-Adviser and INVESCO. In addition, no amendment to this Agreement shall be
effective unless approved by (1) the vote of a majority of the Directors of
the Company, including a majority of the Directors who are not parties to
this Agreement or interested persons of any such party cast in person at a
meeting called for the purpose of voting on such amendment and (2) the vote
of a majority of the outstanding voting securities of the Fund (other than an
amendment which can be effective without shareholder approval under
applicable law).
ARTICLE IX
DEFINITIONS OF CERTAIN TERMS
In interpreting the provisions of this Agreement, the terms "vote of
a majority of the outstanding voting securities," "assignments," "affiliated
person" and "interested person," when used in this Agreement, shall have the
respective meanings specified in the Investment Company Act and the Rules and
Regulations thereunder, subject, however, to such exemptions as may be
granted by the Securities and Exchange Commission under said Act.
ARTICLE X
GOVERNING LAW
This Agreement shall be construed in accordance with the laws of the
State of Colorado and the applicable provisions of the Investment Company
Act. To the extent that the applicable laws of the State of Colorado, or any
of the provisions herein, conflict with the applicable provisions of the
Investment Company Act, the latter shall control.
-6-
<PAGE>
ARTICLE XI
MISCELLANEOUS
Advice. Any recommendation or advice given by the Sub-Adviser to
INVESCO hereunder shall be given in writing or by mail, telex, telefacsimile
or by telephone, such telephone advice to be confirmed by mail, telex,
telefacsimile or in writing to such place as INVESCO shall from time to time
require; further the Sub-Adviser shall be free to telephone INVESCO as it
sees fit in the performance of its duties.
Notice. Any notice under this Agreement shall be in writing,
addressed and delivered or mailed, postage prepaid, to the other party at
such address as such other party may designate for the receipt of such
notice.
Severability. Each provision of this Agreement is intended to be
severable. If any provision of this Agreement shall be held illegal or made
invalid by a court decision, statute, rule or otherwise, such illegality or
invalidity shall not affect the validity or enforceability of the remainder
of this Agreement.
Headings. The headings in this Agreement are inserted for convenience
and identification only and are in no way intended to describe, interpret,
define or limit the size, extent or intent of this Agreement or any provision
hereof.
-7-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed and delivered
this Agreement as of the date first above written.
INVESCO FUND GROUP, INC.
ATTEST:
By:
---------------------
WORLD ASSET MANAGEMENT
ATTEST:
By:
---------------------
-8-
<PAGE>
<TABLE>
<CAPTION>
Appendix B
Executive Officers of World Asset Management
Name Position
---- --------
<S> <C>
Paul Tobias Chief Executive Officer
Gerald Seizert Chief Executive Officer
Steven Albrecht Chief Operating Officer
Terry Gardner Chief Financial Officer
Todd Johnson Chief Investment Officer
Lisa Rosen General Counsel
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Appendix C
Other Similar Investment Companies For Which
World Serves As Adviser or Sub-Adviser
Investment Company Net Assets as of September 30, 1998 Advisory Fee Rate
- ------------------ ------------------------------------ -----------------
<S> <C> <C>
SEI Index Fund - S&P $1,660,000,000 0.03%
500 Index Portfolio
Munder Institutional 56,952,023 0.07%
S&P 500 Index Equity
Fund
Munder Index 500 770,212,741 0.07%
Fund
</TABLE>
<PAGE>
[ PROXY CARD, FRONT ]
INVESCO S&P 500 INDEX FUND
Please fold and detach card at perforation before mailing
INVESCO S & P 500 INDEX FUND
PROXY FOR THE SPECIAL MEETING OF SHAREHOLDERS
The undersigned hereby appoints Fred A. Deering, Mark H. Williamson and Glen
A. Payne, and each of them, proxy for the undersigned, with the power of
substitution, to vote with the same force and effect as the undersigned at the
Special Meeting of Shareholders of the INVESCO S&P 500 Index Fund (the
"Fund"), to be held at 7800 East Union Avenue, Denver, Colorado 80237 on
November 20, 1998 at 10:00 a.m. (Mountain Time) and at any adjournment
thereof, upon the matters set forth on the reverse side, all in accordance
with and as more fully described in the Notice of Annual Meeting and Proxy
Statement, dated October 19, 1998, receipt of which is hereby acknowledged.
TO BE SURE YOU ARE REPRESENTED, PLEASE
SIGN, DATE AND RETURN PROMPTLY.
Dated: ______________ , 1998
_______________________________________
Signature(s)
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.
INVESCO
<PAGE>
[ PROXY CARD, BACK ]
Please fold and detach card at perforation before mailing
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS,
WHICH RECOMMENDS A VOTE "FOR":
This proxy, when properly executed, will be voted in the manner directed
herein by the undersigned shareholder. IF NO DIRECTION IS MADE, THIS PROXY
WILL BE VOTED FOR ITEM 1.
Please vote by filling in the appropriate box below.
FOR AGAINST ABSTAIN
1. Proposal to approve or disapprove a new / / / / / /
sub-advisory agreement between INVESCO Funds
Group, Inc. on behalf of the Fund, and World
Asset Management on substantially the same
terms as the prior sub-advisory agreement for
the Fund.
In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting or any adjournment thereof.
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY IN THE ACCOMPANYING
ENVELOPE AS SOON AS POSSIBLE.
THANK YOU.
INVESCO
