SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
Filed by the registrant X
Filed by a party other than the registrant
Check the appropriate box:
X Preliminary proxy statement
Definitive proxy statement
Definitive additional materials
Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
Invesco Specialty Funds, Inc.
(Name of Registrant as Specified in Its Charter)
Invesco Specialty Funds, Inc. - Invesco S&P 500 Index Fund
(Name of Person(s) Filing Proxy Statement)
Payment of filing fee (Check the appropriate box):
X No fee required
Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
__ Fee paid previously with preliminary materials
__ Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identifying the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the form or schedule and the date of its filing.
(1) Amount previously paid:
(2) Form, schedule or registration statement no.:
(3) Filing party:
(4) Date filed:
<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 Funds 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
________________, 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.
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
Glen A. Payne, Secretary
Denver, Colorado
October 15, 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 Meetin of Shareholdlers
with accompanying form of proxy are being mailed to shareholders of the INVESCO
S&P 500 Index Fund (the "Fund") on or about October 15, 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 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 Funds 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 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:
Class I:
Class II:
INTRODUCTION
The Company is a Maryland corporation and is not required to hold
annual meetings of shareholders. The Board of Directors has 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 of the Fund pursuant to a sub-advisory agreement between World
and INVESCO Funds 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
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 Board of 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 Board of 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 Board of 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.
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 Board of 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 Board of 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 Board of
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).
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
Board of 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.
Fees on Assets Fees on Assets Between Fees on Assets
up to $10 Million $10 and $40 Million Exceeding $40 Million
----------------- ---------------------- ---------------------
0.07% 0.05% 0.03%
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 Board of 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 Board of Directors would
either negotiate a new investment advisory agreement with an advisory
organization selected by the Board 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 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 Board of Directors would select another qualified firm.
Any new sub-advisory agreement would be subject to shareholder approval.
The Evaluation By the Board of Directors
The Board of Directors has 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 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 and Mr. Munder and employees in MCM and the Sub-Adviser.
Based upon its review, the Board of 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 Board of
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 Board of Directors unanimously recommends 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.
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 Board 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 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:
[INSERT]
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 (i) 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 (ii) more than 50% of the outstanding Fund
shares ("1940 Act Majority").
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: [INSERT]
YOU ARE URGED TO FILL IN, DATE, SIGN AND RETURN
THE ENCLOSED PROXY PROMPTLY
By Order of the Board of Directors
Glen A. Payne, Secretary
October 15, 1998
<PAGE>
Appendix A
SUB-ADVISORY AGREEMENT
AGREEMENT made as of the 2nd day of July, 1998, by and between INVESCO
Funds 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 FUNDS, INC. (the "Company") is engaged in
business as a diversified, open end management investment company registered
under the Investment Company Act of 1940, as amended (hereinafter referred to as
the "Investment Company Act") and has one class of shares (the "Shares"), which
is divided into series, each 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 Board of Directors of the Company, 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 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 Company's directors (the "Directors")
and INVESCO. Specifically, the Sub-Adviser agrees to perform the following
services:
(a) to manage the investment and reinvestment of all the assets, now or
hereafter acquired, of the Fund, 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 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.
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 Funds 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
directors, 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 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
funds 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 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.
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.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the date first above written.
INVESCO FUNDS GROUP, INC.
ATTEST:
By:
Mark H. Williamson, President
Glen A. Payne, Secretary
WORLD ASSET MANAGEMENT
ATTEST:
By:
<PAGE>
Appendix B
Executive Officers of World Asset Management
Name Position
---- --------
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
<PAGE>
Appendix C
Other Similar Investment Companies For Which
World Serves as Adviser or Sub-Adviser
Investment Company Net Assets (as of) Advisory Fee Rate
SEI Index Funds --
S&P 500
Index
Portfolio
<PAGE>
LOGO
INVESCO SPECIALTY FUNDS, INC.-
INVESCO S&P 500 INDEX FUND
October 15, 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, on July 2, 1998, increased its ownership interest from 44% to 85% in
Munder Capital Management, the parent of the Fund's Sub-Adviser, Word 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.
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,
LOGO
Mark H. Williamson
President
Invesco Specialty Funds, Inc.
Invesco S&P 500 Index Fund
<PAGE>
TO BE SURE YOU ARE REPRESENTED, PLEASE SIGN, DATE AND RETURN PROMPTLY.
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 the Shareholders of 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 below, all in accordance with and as more fully described in
the Notice of Annual Meeting and Proxy Statement, dated October [15], 1998,
receipt of which is hereby acknowledged.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS, WHICH RECOMMENDS A VOTE
"FOR":
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS [X]
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.
For [__] Against [__] Abstain [__]
In their discretion, the Proxies are authorized to vote upon such other business
as may properly come before the meeting or any adjournment thereof.
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 MARK, SIGN, DATE AND RETURN THIS PROXY IN THE ACCOMPANYING ENVELOPE AS
SOON AS POSSIBLE. THANK YOU.
- ------------------------------------------------------------------------------
Signature Signature Date
(Joint Owners)
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.
