File No. 2-85905
As filed on December ^ 24, 1997
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 X
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Pre-Effective Amendment No.
Post-Effective Amendment No. ^ 21 X
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REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 X
--
Amendment No. ^ 21 X
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INVESCO STRATEGIC PORTFOLIOS, INC.
(Exact Name of Registrant as Specified in Charter)
7800 E. Union Avenue, Denver, Colorado 80237
(Address of Principal Executive Offices)
P.O. Box 173706, Denver, Colorado 80217-3706
(Mailing Address)
Registrant's Telephone Number, including Area Code: (303) 930-6300
Glen A. Payne, Esq.
7800 E. Union Avenue
Denver, Colorado 80237
(Name and Address of Agent for Service)
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Copies to:
Ronald M. Feiman, Esq.
Gordon Altman Butowsky
Weitzen Shalov & Wein
114 W. 47th St.
New York, New York 10036
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Approximate Date of Proposed Public Offering: As soon as practicable after this
post-effective amendment becomes effective.
It is proposed that this filing will become effective (check appropriate box)
___ immediately upon filing pursuant to paragraph (b)
___ on _________________, pursuant to paragraph (b)
___ 60 days after filing pursuant to paragraph (a)(1)
X on March 1, ^ 1998, pursuant to paragraph (a)(1)
- ---
___ 75 days after filing pursuant to paragraph (a)(2)
___ on _____________ pursuant to paragraph (a)(2) of rule 485.
If appropriate, check the following box:
___ this post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
Registrant has previously elected to register an indefinite number of shares of
its common stock pursuant to Rule 24f-2 under the Investment Company Act of
1940. Registrant's Rule 24f-2 Notice for the fiscal year ended October 31, ^
1997, was filed on or about December 18, ^ 1997.
Page 1 of 206
Exhibit index is located at page 105
<PAGE>
INVESCO STRATEGIC PORTFOLIOS, INC.
----------------------------------
CROSS-REFERENCE SHEET
Form N-A
Item Caption
- -------- -------
Part A Prospectus
1....................... Cover Page
2....................... Annual Fund Expenses
3....................... Financial Highlights;
Performance Data
4....................... Investment Objective and
Strategy; The Fund and Its
Management
5....................... The Fund and Its Management;
Additional Information
5A...................... Not Applicable
6....................... Fund Services; Taxes,
Dividends and Capital Gain
Distributions; Additional
Information
7....................... How to Buy Shares; Fund
Services
8....................... Fund Services; How to Sell
Shares
9....................... Not Applicable
Part B Statement of Additional
Information
10....................... Cover Page
11....................... Table of Contents
-i-
<PAGE>
Form N-1A
Item Caption
- --------- -------
12....................... The Fund and Its Management
13........................ Investment Policies and
Restrictions
14....................... The Fund and Its Management
15....................... The Fund and Its Management;
Additional Information
16....................... The Fund and Its Management;
Additional Information
17....................... Investment Policies and
Restrictions
18....................... Additional Information
19....................... How Shares Can Be Purchased;
How Shares Are Valued;
Services Provided by the Fund;
Tax-Sheltered Retirement
Plans; How to Redeem Shares
20....................... Dividends, ^ Other
Distributions, and Taxes
21....................... How Shares Can Be Purchased
22....................... Performance Data
23....................... Additional Information
Part C Other Information
Information required to be included in Part C is set forth under the
appropriate Item, so numbered, in Part C to this Registration Statement.
-ii-
<PAGE>
PROSPECTUS
March 1, 1997
INVESCO STRATEGIC PORTFOLIOS
Energy
Environmental Services
Financial Services
Gold
Health Sciences
Leisure
Technology
Utilities
The eight INVESCO Strategic Portfolios (the "Portfolios") described in this
^ Prospectus are actively managed to seek capital appreciation and, with respect
to the Utilities Portfolio, income. Each Portfolio, which is a separate series
of INVESCO Strategic Portfolios, Inc., normally invests 80% or more of its total
assets in companies principally engaged in a specific business sector. Most of
their holdings are in common stocks, but the Portfolios have the flexibility to
invest in other types of securities.
This Prospectus provides you with the basic information you should know
before investing in any of the Portfolios. You should read it and keep it for
future reference. A Statement of Additional Information containing further
information about the Portfolios, dated March 1, ^ 1998, has been filed with the
Securities and Exchange Commission, and is incorporated by reference into this ^
Prospectus. To obtain a free copy, write to INVESCO ^ Distributors, Inc., P.O.
Box 173706, Denver, Colorado 80217-3706; call 1-800- 525-8085; or ^ visit our
web site at: http://www.invesco.com.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE. SHARES OF THE ^ PORTFOLIOS ARE NOT DEPOSITS OR OBLIGATIONS OF,
OR GUARANTEED OR ENDORSED BY, ANY BANK OR OTHER FINANCIAL INSTITUTION. THE
SHARES OF THE ^ PORTFOLIOS ARE NOT FEDERALLY INSURED BY THE FEDERAL DEPOSIT
INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD OR ANY OTHER AGENCY.
<PAGE>
CONTENTS
ESSENTIAL INFORMATION........................................................6
ANNUAL ^ PORTFOLIO EXPENSES..................................................7
FINANCIAL HIGHLIGHTS........................................................11
INVESTMENT OBJECTIVE AND STRATEGY...........................................26
INVESTMENT POLICIES AND RISKS...............................................26
THE FUND AND ITS MANAGEMENT.................................................32
FUND PRICE AND PERFORMANCE..................................................36
HOW TO BUY SHARES...........................................................37
FUND SERVICES...............................................................42
HOW TO SELL SHARES..........................................................42
TAXES, DIVIDENDS AND ^ OTHER DISTRIBUTIONS..................................45
ADDITIONAL INFORMATION......................................................47
<PAGE>
ESSENTIAL INFORMATION
Investment Goal And Strategy^: INVESCO Strategic Portfolios, Inc. (the
"Fund") is a mutual fund made up of a series of individually managed Portfolios.
Each Portfolio described in this ^ Prospectus is actively managed to seek
capital appreciation and^ with respect to the Utilities Portfolio, income.
Employing an aggressive investment philosophy, ^ each Portfolio normally ^
invests at least 80% of ^ its total assets in equity securities of companies
principally engaged in a specific business sector. There is no guarantee that ^
a Portfolio will meet ^ its investment objective. See "Investment Objective And
Strategy" and "Investment Policies And Risks."
Designed For: Investors seeking capital appreciation. While not a complete
investment program, one or more of these Portfolios may be a valuable element of
your investment portfolio. You also may wish to consider one or more of the
Portfolios as part of a Uniform ^ Gifts/Transfers To Minors Act Account or
systematic investing strategy. The Portfolios may be a suitable investment for
many types of retirement programs, including ^ various Individual Retirement
Accounts ("IRAs"), 401(k), Profit Sharing, Money Purchase Pension, and 403(b)
plans.
Time Horizon^: Stock prices fluctuate on a daily basis, and each
Portfolio's price per share therefore varies daily. Potential shareholders
should consider this a medium- to long-term investment.
Risks^: The Portfolios generally use an aggressive investment strategy and
may experience relatively rapid portfolio turnover. Because the Portfolios focus
on narrow business segments, they may experience greater short-term volatility
than more diversified funds. Rapid portfolio turnover may result in higher
brokerage commissions and the acceleration of taxable capital gains. The returns
on foreign investments may be influenced by currency fluctuations and other
risks of investing overseas. These policies make the ^ Portfolios unsuitable for
that portion of your savings dedicated to current income or to preservation of
capital over the short-term. See "Investment Objective ^ And Strategy" and
"Investment Policies ^ And Risks."
Organization and Management^: The Portfolios are series of the Fund, a
diversified, managed, no-load mutual fund. Each Portfolio is owned by its
shareholders. The Fund employs INVESCO Funds Group, Inc. ("IFG")^, founded in
1932^, to serve as investment adviser, administrator^ and transfer agent^.
INVESCO Trust Company ("INVESCO Trust")^, founded in 1969, serves as the
Portfolios' sub-adviser. Together, IFG and INVESCO Trust constitute "Fund
Management." Prior to September 30, 1997, IFG served as the Portfolios'
distributor. Effective September 30, 1997, INVESCO Distributors, Inc. ("IDI"),
founded in 1997 as a wholly-owned subsidiary of IFG, became the Portfolios'
distributor.
Each Portfolio's investments are selected by its portfolio manager or
managers. See "The Fund And Its Management."
<PAGE>
IFG ^, INVESCO Trust and IDI are subsidiaries of AMVESCAP PLC, an
international investment management company that manages approximately ^ $177.5
billion in assets. AMVESCAP PLC is based in London^ with money managers located
in Europe, North America^ and Asia.
The Fund offers all of the following services at no charge:
Telephone purchases
Telephone exchanges
Telephone redemptions
Automatic reinvestment of distributions
Regular investment plans, such as EasiVest (the Fund's automatic monthly
investment program), Direct Payroll Purchase and Automatic
Monthly Exchange
Periodic withdrawal plans
See "How To Buy Shares" and "How To Sell Shares."
Minimum Initial Investment: $1,000 per Portfolio, which is waived for
regular investment plans, including EasiVest and Direct Payroll Purchase, and
certain retirement plans.
Minimum Subsequent Investment: $50 per Portfolio (Minimums are lower for
certain retirement plans.)
ANNUAL ^ PORTFOLIO EXPENSES
The Portfolios whose shares are offered through this Prospectus are the
Energy, Environmental Services, Financial Services, Gold, Health Sciences,
Leisure, Technology and Utilities Portfolios. These Portfolios are 100% no-load;
there are no fees to purchase, exchange or redeem shares^. Each Portfolio is
authorized to pay a Rule 12b-1 distribution fee of up to one quarter of one
percent of each Portfolio's average ^ net assets each year. (See "How To Buy
Shares -- Distribution Expenses.") Lower expenses benefit Fund shareholders by
increasing the Fund's total return.
Like any company, each Portfolio has operating expenses such as portfolio
management, accounting, shareholder servicing, maintenance of shareholder
accounts and other expenses. These expenses are paid from each Portfolio's
assets. Lower expenses therefore benefit investors by increasing a Portfolio's ^
total return.
<PAGE>
We calculate annual operating expenses as ^ a percentage of each
Portfolio's average annual net assets. To keep expenses competitive, the
Environmental Services and Utilities Portfolios' adviser voluntarily reimburses
the Environmental Services and Utilities Portfolios for certain expenses in
excess of 1.90% and 1.25%, respectively, of each Portfolio's average net assets.
Annual Portfolio Operating Expenses
(as a percentage of average net assets)
Energy Portfolio
Management Fee 0.75%
12b-1 Fees (1) ^ 0.25%
Other Expenses (2) ^ 0.46%
Total Portfolio Operating
Expenses(1)(2) 1.46%
Environmental Services Portfolio
Management Fee 0.75%
12b-1 Fees (1) ^ 0.25%
Other Expenses (after absorbed expenses)(2)(3) ^ 0.72%
Total Portfolio Operating
Expenses (after absorbed expenses)(1)(2) ^(3) 1.72%
Financial Services Portfolio
Management Fee 0.73%
12b-1 Fees (1) ^ 0.25%
Other Expenses(2) ^ 0.32%
Total Portfolio Operating
Expenses(1)(2) 1.30%
Gold Portfolio
Management Fee 0.75%
12b-1 Fees (1) ^ 0.25%
Other Expenses(2) ^ 0.72%
Total Portfolio Operating
Expenses(1) ^(2) 1.72%
Health Sciences Portfolio
Management Fee 0.65%
12b-1 Fees (1) ^ 0.25%
Other Expenses(2) ^ 0.42%
Total Portfolio Operating
Expenses(1) ^(2) 1.32%
Leisure Portfolio
Management Fee 0.75%
12b-1 Fees (1) ^ 0.25%
Other Expenses(2) ^ 0.66%
Total Portfolio Operating
Expenses(1) ^(2) 1.70%
<PAGE>
Technology Portfolio
Management Fee 0.70%
12b-1 Fees (1) ^ 0.25%
Other Expenses(2) ^ 0.39%
Total Portfolio Operating
Expenses(1) ^(2) 1.34%
Utilities Portfolio
Management Fee 0.75%
12b-1 Fees (1) ^ 0.25%
Other Expenses (after absorbed expenses)(2)(3) ^ 0.22%
Total Portfolio Operating
Expenses (after absorbed expenses)(1)(2) ^(3) 1.22%
(1) The 12b-1 fees for the period ending October 31, 1998 may be less than 0.25%
of the average net New Assets.
(2) It should be noted that the Portfolio's actual total operating expenses were
lower than the figures shown because the Portfolio's custodian fees, transfer
agency fees and distribution fees were reduced under ^ expense offset ^
arrangements. However, as a result of an SEC requirement for mutual funds to
state their total operating expenses without crediting any such expense offset
arrangement, the figures shown above do not reflect these reductions. In
comparing expenses for different years, please note that the Ratios of Expenses
to Average Net Assets shown under "Financial Highlights" do reflect any
reductions for periods prior to the fiscal year ended October 31, 1996. See "The
Fund ^ And Its Management^" and "How to Buy Shares -- Distribution Expenses."
(3) Certain expenses of the Environmental Services and Utilities Portfolios are
being absorbed voluntarily by IFG. In the absence of such absorbed expenses, the
Environmental Services Portfolio's "Other Expenses" and "Total Portfolio
Operating Expenses" would have been ^ 1.41% and ^ 2.16%, respectively; and the
Utilities Portfolio's "Other Expenses" and "Total Portfolio Operating Expenses"
would have been ^ 0.52% and ^ 1.27%, respectively, based on each Portfolio's
actual expenses for the fiscal year ended October 31, ^ 1997.
Example
A shareholder would pay the following expenses on a $1,000 investment for
the periods shown, assuming a hypothetical 5% annual return and redemption at
the end of each time period. (Of course, actual operating expenses are paid from
each Portfolio's assets and are deducted from the amount of income available for
distribution to shareholders; they are not charged directly to shareholder
accounts.)
<PAGE>
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
Energy Portfolio ^ $12 $38 $66 $147
Environmental Services 17 54 93 203
Portfolio
Financial Services 11 33 58 128
Portfolio
Gold Portfolio 15 46 80 176
Health Sciences 11 34 59 131
Portfolio
Leisure Portfolio 14 45 77 169
Technology Portfolio 11 35 60 ^ 133
Utilities Portfolio 12 ^ 39 67 148
The purpose of this table is to assist you in understanding the various
costs and expenses that you will bear directly or indirectly. THE EXAMPLE SHOULD
NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE PERFORMANCE OR EXPENSES,
AND ACTUAL ANNUAL RETURNS AND EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.
For more information on each Portfolio's expenses, see "The Fund And Its
Management" and "How To Buy Shares -- Distribution Expenses."
Because each Portfolio pays a distribution fee, investors who own shares
of the Portfolios for a long period of time may pay more than the economic
equivalent of the maximum front-end sales charge permitted for mutual funds by
the National Association of Securities Dealers, Inc.
<PAGE>
INVESCO Strategic Portfolios, Inc.
FINANCIAL HIGHLIGHTS
(For a Fund Share Outstanding Throughout Each Period)
Year Ended October 31, ^ 1997
The following information has been audited by Price Waterhouse LLP, independent
accountants. This information should be read in conjunction with the audited
financial statements and the independent accountant's report thereon appearing
in the Fund's ^ 1997 Annual Report to Shareholders, which is incorporated by
reference into the Statement of Additional Information. Both are available
without charge by contacting ^ IDI at the address or telephone number on the
cover of this prospectus.
<TABLE>
<CAPTION>
Year Ended October 31
---------------------------------------------------------------------------------------------
^ 1997 1996 1995 1994 1993 1992 1991 1990 1989 1988 ^
Energy Portfolio
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PER SHARE DATA
Net Asset Value -
Beginning of Period $15.03 $10.09 $10.77 $11.53 $9.14 $11.28 $12.06 $11.68 $9.29 $8.22
---------------------------------------------------------------------------------------------
INCOME FROM ^ INVESTMENT
OPERATIONS
Net Investment Income 0.06 0.04 0.09 0.06 0.13 0.05 0.09 0.16 0.20 0.11
^(Both Realized and Unrealized) 5.56 4.94 (0.68) (0.76) 2.36 (2.17) (0.76) 0.33 2.43 1.24
---------------------------------------------------------------------------------------------
Total from Investment
Operations 5.62 4.98 (0.59) (0.70) 2.49 (2.12) (0.67) 0.49 2.63 1.35
---------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS
Dividends from Net
Investment Income+ 0.05 0.04 0.09 0.06 0.10 0.02 0.11 0.11 0.24 0.17
Distributions from
Capital Gains 1.22 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.11
---------------------------------------------------------------------------------------------
Total Distributions 1.27 0.04 0.09 0.06 0.10 0.02 0.11 0.11 0.24 0.28
---------------------------------------------------------------------------------------------
Net Asset Value -
End of Period $19.38 $15.03 $10.09 $10.77 $11.53 $9.14 $11.28 $12.06 $11.68 $9.29
=============================================================================================
<PAGE>
TOTAL RETURN 40.65% 49.33% (5.45%) (6.04%) 27.18% (18.74%) (5.55%) 4.18% 28.32% 16.77%
RATIOS
Net Assets - End of Period
($000 Omitted) $319,651 $236,169 $48,284 $73,767 $50,272 $17,048 $12,130 $19,476 $8,617 $5,831
Ratio of Expenses to
Average Net Assets 1.21%@ 1.30%@ 1.53%@ 1.35% 1.18% 1.73% 1.69% 1.42% 1.75% 1.90%
Ratio of Net Investment
Income to Average Net
^ Assets 0.39% 0.54% 0.72% 0.65% 0.86% 0.32% 0.83% 1.04% 1.73% 0.99%
Portfolio Turnover Rate 249% 392% 300% 123% 190% 370% 337% 321% 109% 177%
Average Commission Rate
Paid^^ $0.0796 $0.0794 ^- - - - - - - -
</TABLE>
+ Distributions in excess of net investment income for the year ended October
31, 1996, aggregated less than $0.01 on a per share basis.
^< Ratio is based on Total Expenses of the Portfolio, which is before any
expense offset arrangements.
^^ The average commission rate paid is the total brokerage commissions paid on
applicable purchases and sales of securities for the period divided by the total
number of related shares purchased or sold^ which is required to be disclosed
for fiscal years beginning September 1, 1995 and thereafter.
<PAGE>
<TABLE>
<CAPTION>
^ Period
^ Ended
^ October
^ Year Ended October 31 31
----------------------------------------------------------------
1997 1996 1995 1994 ^ 1993< 1992 1991^
Environmental Services Portfolio
<S> <C> <C> <C> <C> <C> <C> <C>
PER SHARE DATA
Net Asset Value - Beginning of Period $10.14 $8.12 $6.50 $6.80 $7.54 $8.97 $8.00
----------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income (Loss) (0.04) 0.06 0.08 0.06 (0.02) (0.04) (0.07)
Net Gains or (Losses) on Securities
(Both Realized and Unrealized) 1.89 2.02 1.62 (0.30) (0.72) (1.39) 1.04
----------------------------------------------------------------
Total from Investment Operations 1.85 2.08 1.70 (0.24) (0.74) (1.43) 0.97
----------------------------------------------------------------
LESS DISTRIBUTIONS
Dividends from Net Investment Income 0.00 0.06 0.08 0.06 0.00 0.00 0.00
In Excess of Net Investment Income 0.01 0.00 0.00 0.00 0.00 0.00 0.00
Distributions from Capital Gains 0.54 0.00 0.00 0.00 0.00 0.00 0.00
----------------------------------------------------------------
Total Distributions 0.55 0.06 0.08 0.06 0.00 0.00 0.00
----------------------------------------------------------------
Net Asset Value - End of Period $11.44 $10.14 $8.12 $6.50 $6.80 $7.54 $8.97
================================================================
TOTAL RETURN 19.13% 25.58% 26.09% (3.51%) (9.85%) (15.90%) 12.11%*
RATIOS
Net Assets - End of Period ($000 Omitted) $23,151 $26,794 $22,756 $29,276 $40,589 $17,685 $8,001
Ratio of Expenses to Average Net Assets# 1.72%@ 1.61%@ 1.57%@ 1.29% 1.62% 1.85% 2.50%~
Ratio of Net Investment Income (Loss) to
Average Net Assets# (0.40%) 0.47% 0.65% 0.61% (0.40%) (1.23%) (1.81%)~
Portfolio Turnover Rate 187% 142% 195% 211% 155% 113% 69%*
Average Commission Rate Paid^^ $0.0996 $0.1639 - - - - -
</TABLE>
<PAGE>
The per share information was computed based on weighted average shares.
^ From January 2, 1991, commencement of operations, to October 31, 1991.
^
* Based on operations for the period shown and, accordingly, are not
representative of a full year.
#Various expenses of the Portfolio were voluntarily absorbed by IFG for the
years ended October 31, 1997, 1996, 1995 and 1994. If such expenses had not
been voluntarily absorbed, ratio of expenses to average net assets would have
been 2.16%, 1.85%, 1.93% and 1.43%, respectively, and ratio of net investment
income to average net assets would have been (0.84%), 0.23%, 0.29% and 0.47%,
respectively.
@ Ratio is based on Total Expenses of the Portfolio, less Expenses Absorbed by
Investment Adviser, which is before any expense offset arrangements.
~ Annualized
^^ The average commission rate paid is the total brokerage commissions paid on
applicable purchases and sales of securities for the period divided by the total
number of related shares purchased or sold, which is required to be disclosed
for fiscal years beginning September 1, 1995 and thereafter.
<PAGE>
<TABLE>
<CAPTION>
^ Year Ended October 31
-----------------------------------------------------------------------------------------
^ 1997 1996 1995 1994 1993 1992 1991 1990 1989 1988
Financial Services Portfolio
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PER SHARE DATA
Net Asset Value -
Beginning of Period $22.94 $18.95 $15.31 $20.28 $15.28 $14.67 $7.19 $9.05 $7.55 $6.37
-----------------------------------------------------------------------------------------
INCOME FROM ^ INVESTMENT
OPERATIONS
Net Investment Income (Loss) 0.28 0.50 0.29 0.29 0.24 0.20 0.10 (0.01) 0.10 0.12
Net Gains or (Losses) on
Securities (Both Realized
^ and Unrealized) 8.14 5.18 3.64 (0.66) 5.00 1.52 7.56 (1.82) 2.30 1.19
-----------------------------------------------------------------------------------------
Total from Investment
Operations 8.42 5.68 3.93 (0.37) 5.24 1.72 7.66 (1.83) 2.40 1.31
-----------------------------------------------------------------------------------------
LESS DISTRIBUTIONS
Dividends from Net
Investment Income 0.28 0.50 0.29 0.29 0.24 0.20 0.08 0.01 0.09 0.13
In Excess of Net Investment
Income 0.00 0.05 ^ 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Distributions from
Capital Gains 1.94 1.14 0.00 4.31 0.00 0.91 0.10 0.02 0.81 0.00
-----------------------------------------------------------------------------------------
Total Distributions 2.22 1.69 0.29 4.60 0.24 1.11 0.18 0.03 0.90 0.13
-----------------------------------------------------------------------------------------
Net Asset Value -
End of Period $29.14 $22.94 $18.95 $15.31 $20.28 $15.28 $14.67 $7.19 $9.05 $7.55
=========================================================================================
TOTAL RETURN 39.80% 31.48% 25.80% (2.24%) 34.33% 11.74% 106.63% (20.25%) 31.66% 20.69%
RATIOS
Net Assets - End of Period
($000 Omitted) $1,113,242 $542,688 $410,048 $266,170 $384,131 $189,708 $95,144 $1,315 $2,208 $2,322
Ratio of Expenses to
Average Net Assets 0.99%@ 1.11%@ 1.26%@ 1.18% 1.03% 1.07% 1.13% 2.50% 2.50% 1.95%
Ratio of Net Investment
Income (Loss) to ^ Average
Net Assets 1.19% 2.48% 2.10% 1.66% 1.16% 1.28% 1.76% (0.16%) 1.05% 1.71%
Portfolio Turnover Rate 96% 141% 171% 88% 236% 208% 249% 528% 217% 175%
Average Commission ^ Rate
Paid^^ ^ $0.0887 $0.0835 - - - - - - - -
</TABLE>
<PAGE>
@ Ratio is based on Total Expenses of the Portfolio, which is before any expense
offset arrangements.
^^ The average commission rate paid is the total brokerage commissions paid on
applicable purchases and sales of securities for the period divided by the total
number of related shares purchased or sold which is required to be disclosed for
fiscal years beginning September 1, 1995 and thereafter.
<PAGE>
<TABLE>
<CAPTION>
^ Year Ended October 31
---------------------------------------------------------------------------------------------
^ 1997^ 1996 1995 1994 1993 ^ 1992 1991 1990 1989 1988 ^
Gold Portfolio
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PER SHARE DATA
Net Asset Value -
Beginning of Period $8.00 $5.21 $5.68 $6.23 $3.99 $4.26 $4.29 $5.29 $5.03 $5.60
---------------------------------------------------------------------------------------------
INCOME FROM ^ INVESTMENT
OPERATIONS
Net Investment Income (Loss) (0.02) (0.01) 0.01 (0.02) (0.01) (0.01) (0.01) 0.01 0.03 0.03
^(Both Realized and
^ Unrealized) (2.62) 2.80 (0.47) (0.53) 2.25 (0.26) (0.02) (1.00) 0.28 (0.58)
---------------------------------------------------------------------------------------------
Total from Investment
Operations (2.64) 2.79 (0.46) (0.55) 2.24 (0.27) (0.03) (0.99) 0.31 (0.55)
---------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS
Dividends from Net
Investment Income 0.00 0.00 0.01 0.00 0.00 0.00 0.00 0.01 0.05 0.02
^ In Excess of Net Investment
^ Income 2.15 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
---------------------------------------------------------------------------------------------
Total Distributions 2.15 0.00 0.01 0.00 0.00 0.00 0.00 0.01 0.05 0.02
---------------------------------------------------------------------------------------------
Net Asset Value -
End of Period $3.21 $8.00 $5.21 $5.68 $6.23 $3.99 $4.26 $4.29 $5.29 $5.03
=============================================================================================
TOTAL RETURN (44.38%) 53.55% (8.12%) (8.83%) 56.27% (6.51%) (0.51%) (18.70%) 6.13% (9.84%)
RATIOS
Net Assets - End of Period
($000 Omitted) $151,085 $277,892 $151,779 $271,163 $292,940 $46,212 $46,383 $35,757 $34,255 $32,481
Ratio of Expenses to ^ Average
Net Assets 1.47%@ 1.22%@ 1.32%@ 1.07% 1.03% 1.41% 1.47% 1.32% 1.63% 1.58%
Ratio of Net Investment
Income (Loss) to ^ Average
Net Assets (0.41%) (0.08%) 0.13% (0.32%) (0.21%) (0.23%) (0.25%) 0.26% 0.69% 0.62%
Portfolio Turnover Rate 148% 155% 72% 97% 142% 101% 43% 107% 77% 47%
Average Commission Rate
Paid^^ $0.0359 $0.0415 ^- - - - - - - -
</TABLE>
<PAGE>
^ The per share information was computed based on average shares.
^ The per share information was computed based on weighted average shares.
@ Ratio is based on Total Expenses of the Portfolio, which is before any expense
offset arrangements.
^^ The average commission rate paid is the total brokerage commissions paid on
applicable purchases and sales of securities for the period divided by the total
number of related shares purchased or sold which is required to be disclosed for
fiscal years beginning September 1, 1995 and thereafter.
<PAGE>
<TABLE>
<CAPTION>
^ Year Ended October 31
------------------------------------------------------------------------------------------
^ 1997 1996 1995 1994 1993 1992 1991 1990 1989 1988 ^
Health Sciences Portfolio
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PER SHARE DATA
Net Asset Value -
Beginning of Period $55.24 $50.47 $35.09 $33.49 $35.65 $40.60 $20.61 $19.49 $14.29 $11.69
-------------------------------------------------------------------------------------------
INCOME FROM ^ INVESTMENT
OPERATIONS
Net Investment Income (Loss) 0.06 0.07 (0.03) (0.24) (0.13) 0.11 0.14 0.21 0.15 (0.09)
Net Gains or (Losses) on
Securities (Both Realized
^ and Unrealized) 10.85 8.78 15.41 1.84 (2.02) (4.52) 23.45 1.32 7.06 2.72
-------------------------------------------------------------------------------------------
Total from Investment
Operations 10.91 8.85 15.38 1.60 (2.15) (4.41) 23.59 1.53 7.21 2.63
-------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS
Dividends from Net
Investment Income 0.06 0.07 0.00 0.00 0.01 0.10 0.12 0.20 0.06 0.00
Distributions from
Capital Gains+ 8.59 4.01 0.00 0.00 0.00 0.44 3.48 0.21 1.95 0.03
-------------------------------------------------------------------------------------------
Total Distributions 8.65 4.08 0.00 0.00 0.01 0.54 3.60 0.41 2.01 0.03
-------------------------------------------------------------------------------------------
Net Asset Value -
End of Period $57.50 $55.24 $50.47 $35.09 $33.49 $35.65 $40.60 $20.61 $19.49 $14.29
===========================================================================================
TOTAL RETURN 22.96% 17.99% 43.83% 4.78% (6.01%) (10.86%) 114.54% 7.85% 50.47% 22.56%
RATIOS
Net Assets - End of Period
($000 Omitted) $944,498 $933,828 $860,926 $473,926 $560,294 $756,791 $744,927 $88,150 $26,765 $10,027
Ratio of Expenses to ^ Average
Net Assets 1.08%@ 0.98%@ 1.15%@ 1.19% 1.16% 1.00% 1.03% 1.12% 1.42% 1.65%
Ratio of Net Investment
Income (Loss) to ^ Average
Net Assets 0.11% 0.11% (0.08%) (0.57%) (0.34%) 0.26% 0.55% 1.18% 0.79% (0.48%)
Portfolio Turnover Rate 143% 90% 107% 80% 87% 91% 100% 242% 272% 280%
Average Commission Rate
Paid^^ $0.0600 $0.1204 ^- - - - - - - -
</TABLE>
<PAGE>
+ For the year ended October 31, 1993, the Portfolio declared a Capital Gains
distribution which aggregated less than $0.01 on a per share basis.
@ Ratio is based on Total Expenses of the Portfolio, which is before any expense
offset arrangements.
^^ The average commission rate paid is the total brokerage commissions paid on
applicable purchases and sales of securities for the period divided by the total
number of related shares purchased or sold which is required to be disclosed for
fiscal years beginning September 1, 1995 and thereafter.
<PAGE>
<TABLE>
<CAPTION>
^ Year Ended October 31
-----------------------------------------------------------------------------------------
^ 1997 1996 1995 1994 1993 ^ 1992 1991 1990 1989 1988 ^
Leisure Portfolio
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PER SHARE DATA
Net Asset Value -
Beginning of Period $22.89 $23.78 $22.63 $25.47 $16.29 $14.85 $10.14 $14.53 $11.99 $9.00
-----------------------------------------------------------------------------------------
INCOME FROM ^ INVESTMENT
OPERATIONS
Net Investment Income (Loss) 0.02 0.04 0.08 (0.01) (0.02) (0.01) (0.01) 0.01 0.22 0.04
^(Both ^ Realized and
Unrealized) 4.96 2.25 2.06 (0.94) 9.20 2.44 6.84 (3.69) 4.52 2.95
-----------------------------------------------------------------------------------------
Total from Investment
Operations 4.98 2.29 2.14 (0.95) 9.18 2.43 6.83 (3.68) 4.74 2.99
-----------------------------------------------------------------------------------------
LESS DISTRIBUTIONS
Dividends from Net
Investment Income+ 0.02 0.04 0.08 0.00 0.00 0.00 0.00 0.03 0.21 0.00
^ Distributions from Capital
^ Gains 0.64 2.25 0.91 1.89 0.00 0.99 2.12 0.68 1.99 0.00
In Excess of Capital Gains 0.00 0.89 ^ 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
-----------------------------------------------------------------------------------------
Total Distributions 0.66 3.18 0.99 1.89 0.00 0.99 2.12 0.71 2.20 0.00
-----------------------------------------------------------------------------------------
Net Asset Value -
End of Period $27.21 $22.89 $23.78 $22.63 $25.47 $16.29 $14.85 $10.14 $14.53 $11.99
=========================================================================================
TOTAL RETURN 22.32% 10.66% 9.98% (3.92%) 56.36% 16.34% 67.40% (25.33%) 39.58% 33.21%
RATIOS
Net Assets - End of Period
($000 Omitted) $216,616 $252,297 $265,181 $282,649 $351,685 $40,140 $14,406 $5,064 $12,569 $5,624
Ratio of Expenses to ^ Average
Net Assets 1.41%@ 1.30%@ 1.29%@ 1.17% 1.14% 1.51% 1.86% 1.84% 1.38% 1.89%
Ratio of Net Investment
Income (Loss) to ^ Average
Net Assets 0.05% 0.18% 0.31% 0.00% (0.11%) (0.33%) (0.24%) 0.10% 1.44% 0.16%
Portfolio Turnover Rate 25% 56% 119% 116% 116% 148% 122% 89% 119% 136%
Average Commission Rate
Paid^^ $0.0672 $0.1503 ^- - - - - - - -
</TABLE>
<PAGE>
< The per share information was computed based on weighted average shares.
+ Distributions in excess of net investment income for the years ended October
31, 1997, 1996 and 1995, aggregated less than $0.01 on a per share basis.
@ Ratio is based on Total Expenses of the Portfolio, which is before any expense
offset arrangements.
^^ The average commission rate paid is the total brokerage commissions paid on
applicable purchases and sales of securities for the period divided by the total
number of related shares purchased or sold which is required to be disclosed for
fiscal years beginning September 1, 1995 and thereafter.
<PAGE>
<TABLE>
<CAPTION>
^ Year Ended October 31
---------------------------------------------------------------------------------------------
^ 1997 1996 1995 1994 1993 1992 ^ 1991< 1990<< 1989 1988 ^
Technology Portfolio
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PER SHARE DATA
Net Asset Value -
Beginning of Period $34.23 $34.33 $24.94 $26.99 $20.20 $18.10 $11.61 $12.66 $10.11 $8.49
---------------------------------------------------------------------------------------------
INCOME FROM ^ INVESTMENT
OPERATIONS
Net Investment Income (Loss) 0.13 0.07 (0.02) (0.02) (0.15) (0.09) (0.09) (0.01) (0.29) (0.29)
^ Net Gains on ^ Securities
(Both ^ Realized and
Unrealized) 6.23 5.76 10.20 1.19 6.94 2.19 10.97 (1.04) 2.84 1.91
---------------------------------------------------------------------------------------------
Total from Investment
Operations 6.36 5.83 10.18 1.17 6.79 2.10 10.88 (1.05) 2.55 1.62
---------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS
Dividends from Net
Investment Income+ 0.13 0.07 ^ 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Distributions from
Capital Gains 4.49 5.86 0.79 3.22 0.00 0.00 4.39 0.00 0.00 0.00
---------------------------------------------------------------------------------------------
Total Distributions 4.62 5.93 0.79 3.22 0.00 0.00 4.39 0.00 0.00 0.00
---------------------------------------------------------------------------------------------
Net Asset Value -
End of Period $35.97 $34.23 $34.33 $24.94 $26.99 $20.20 $18.10 $11.61 $12.66 $10.11
=============================================================================================
TOTAL RETURN 20.71% 19.98% 42.19% 5.04% 33.63% 11.57% 93.73% (8.28%) 25.24% 19.02%
RATIOS
Net Assets - End of Period
($000 Omitted) $1,039,968 $789,611 $563,109 $327,260 $248,803 $165,083 $63,119 $20,190 $8,525 $9,652
Ratio of Expenses to
Average Net Assets 1.05%@ 1.08%@ 1.12%@ 1.17% 1.13% 1.12% 1.19% 1.25% 1.59% 1.72%
Ratio of Net Investment
Income (Loss) to
Average Net Assets 0.41% 0.24% (0.06%) (0.55%) (0.69%) (0.45%) (0.53%) (0.06%) (0.62%) (0.90%)
Portfolio Turnover Rate 237% 168% 191% 145% 184% 169% 307% 345% 259% 356%#
Average Commission Rate
Paid^^ $0.0633 $0.1557 ^- - - - - - - -
</TABLE>
<The per share information was computed based on weighted average shares.
+ Distributions in excess of net investment income for the year ended October
31, 1996, aggregated less than $0.01 on a per share basis.
@ Ratio is based on Total Expenses of the Portfolio, which is before any expense
offset arrangements.
# For the year ended October 31, 1988, the value of securities acquired in
connection with the acquisition of the net assets of World of Technology, Inc.
was excluded when computing the Portfolio turnover rate.
^^ The average commission rate paid is the total brokerage commissions paid on
applicable purchases and sales of securities for the period divided by the total
number of related shares purchased or sold which is required to be disclosed for
fiscal years beginning September 1, 1995 and thereafter.
<PAGE>
<TABLE>
<CAPTION>
^ Year Ended October 31
--------------------------------------------------------------------------------------------
^ 1997 1996 1995 1994 1993 1992 1991 1990 1989 1988 ^
Utilities Portfolio
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PER SHARE DATA
Net Asset Value -
Beginning of Period $12.04 $10.61 $9.76 $12.80 $10.10 $9.95 $8.35 $9.39 $8.59 $8.05
--------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT
OPERATIONS
Net Investment Income 0.32 0.37 0.44 0.33 0.29 0.27 0.39 0.32 0.39 0.40
^(Both ^ Realized and
Unrealized) 1.25 1.43 0.84 (1.12) 2.71 0.92 1.58 (1.04) 1.51 0.54
--------------------------------------------------------------------------------------------
Total from Investment
Operations 1.57 1.80 1.28 (0.79) 3.00 1.19 1.97 (0.72) 1.90 0.94
--------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS
Dividends from Net
Investment Income+ 0.32 0.37 0.43 0.25 0.30 0.26 0.37 0.32 0.38 0.40
Distributions from
Capital Gains 0.87 0.00 0.00 2.00 0.00 0.78 0.00 0.00 0.72 0.00
--------------------------------------------------------------------------------------------
Total Distributions 1.19 0.37 0.43 2.25 0.30 1.04 0.37 0.32 1.10 0.40
--------------------------------------------------------------------------------------------
Net Asset Value -
End of Period $12.42 $12.04 $10.61 $ 9.76 $12.80 $10.10 ^ $9.95 $8.35 $9.39 $8.59
============================================================================================
TOTAL RETURN 14.37% 17.18% 13.48% (7.22%) 29.88% 12.04% 23.98% (7.82%) 22.40% 12.16%
RATIOS
Net Assets - End of Period
($000 Omitted) $132,423 $153,082 $134,468 $139,579 $181,738 $107,561 $69,267 $30,730 $23,955 $18,407
Ratio of Expenses to ^ Average
Net Assets# 1.22%@ 1.17%@ 1.18%@ 1.13% 1.06% 1.13% 1.21% 1.26% 1.35% 1.39%
Ratio of Net Investment Income
to Average Net Assets# 2.74% 3.28% 4.47% 3.33% 2.66% 2.73% 4.19% 3.48% 4.07% 4.93%
Portfolio Turnover Rate 55% 141% 185% 180% 202% 226% 151% 264% 220% 164%
Average Commission Rate
Paid^^ $0.0866 $0.0895 ^- - - - - - - -
</TABLE>
<PAGE>
+ Distributions in excess of net investment income for the year ended October
31, 1996, aggregated less than $0.01 on a per share basis.
#Various expenses of the Portfolio were voluntarily absorbed by IFG for the
years ended October 31, 1997, 1996, 1995 and 1994. If such expenses had not
been voluntarily absorbed, ratio of expenses to average net assets would have
been 1.27%, 1.25%, 1.30% and 1.14%, respectively, and ratio of net investment
income to average net assets would have been 2.69%, 3.20%, 4.34% and 3.32%,
respectively.
@ Ratio is based on Total Expenses of the Portfolio, less Expenses Absorbed by
Investment Adviser, which is before any expense offset arrangements.
^^ The average commission rate paid is the total brokerage commissions paid on
applicable purchases and sales of securities for the period divided by the total
number of related shares purchased or sold which is required to be disclosed for
fiscal years beginning September 1, 1995 and thereafter.
<PAGE>
INVESTMENT OBJECTIVE AND STRATEGY
Each Portfolio, which is a separate series of the Fund, seeks capital
appreciation and, with respect to the Utilities Portfolio, income. This
investment objective is fundamental and cannot be changed without the approval
of the Portfolio's shareholders. The investment strategy is aggressive; holdings
are focused on equity securities whose price appreciation is expected to outpace
that of the overall sector in which the Portfolio invests. These stocks may not
pay regular dividends. Each Portfolio normally invests at least 80% of its total
assets in the equity securities (common and preferred stocks, and convertible
bonds) of companies principally engaged in a specific business sector. There is
no assurance that a Portfolio's investment objective will be met.
Each business sector typically consists of numerous industries. In
determining whether a company is principally engaged in a particular business
sector, Fund Management must determine that the company derives more than 50% of
its gross income or net sales from activities in that sector; or that the
company dedicates more than 50% of its assets to the production of revenues from
that sector^; or, if based on available financial information^ a question exists
whether a company meets one of these standards, Fund Management determines that
the company's primary business is within the business sector designated for
investment by that Portfolio.
The remainder of each Portfolio's assets may be invested in any securities
or other instruments deemed appropriate by Fund Management, consistent with the
Portfolio's investment policies and restrictions. These investments include debt
securities issued by companies principally engaged in the Portfolio's business
sector, debt or equity securities issued by companies outside the Portfolio's
business sector, short-term high grade debt obligations maturing no later than
one year from the date of purchase (including U.S. government and agency
securities, domestic bank certificates of deposit, commercial paper rated at
least A-2 by Standard & Poor's or P-2 by Moody's Investors Service, Inc., and
repurchase agreements), and cash.
The Portfolios are actively traded. Economic conditions and market
circumstances vary from day to day; securities may be bought and sold relatively
frequently as their suitability as a portfolio holding changes.
When Fund Management believes market or economic conditions are adverse, a
Portfolio may ^ assume a defensive position by temporarily investing up to 100%
of its total assets in ^ high-quality money market instruments as described
above or cash, ^ to seek to protect its assets until conditions stabilize.
INVESTMENT POLICIES AND RISKS
Industry Concentration. Each Portfolio's holdings normally will be
concentrated in a single, specific business sector. Compared to the broad
market, an individual sector may be more strongly affected by changes in the
economic climate; broad market shifts; moves in a particular, dominant stock; or
<PAGE>
regulatory changes. Investors should be prepared for volatile short-term
movement in net asset value. Each Portfolio attempts to reduce these risks by
diversifying its investments among many individual securities; further, a
Portfolio may not, with respect to 75% of its total assets, invest more than 5%
of its total assets in the securities of any one issuer (other than obligations
issued or guaranteed by the U.S. government, its agencies or instrumentalities).
However, of itself, an investment in one or more of the Portfolios does not
constitute a balanced investment program.
The Technology Portfolio may not invest more than 25% of its total assets
in a single industry (e.g., computer software) within the technology business
sector. The other Portfolios do not operate under this restriction.
The Portfolios are concentrated in these industry sectors:
Energy: energy companies including oil, natural gas, coal, uranium;
geothermal, solar, or nuclear power; or new energy sources. Companies may be in
the business of exploration, development, production, processing or distribution
of these energy resources. Companies may also provide supplies, services, or
transportation to energy companies, or energy conservation or pollution control
technologies. Up to 25% of the Portfolio's total assets, measured at the time of
purchase, may be invested in foreign securities. Securities of Canadian issuers
and American Depository Receipts ("ADRs") are not subject to this 25%
limitation.
Market prices of these businesses may be adversely affected by foreign
government, federal or state regulations on energy production, distribution and
sale.
Environmental Services: waste management, pollution control, and similar
companies offering products and services related to environmental concerns in
the United States and foreign countries. Environmental services include
treatment, reduction, and/or disposal of waste; decontamination, monitoring or
transportation; remedial services; landfills, recycling, incineration, pollution
reduction projects and systems; environmental insurance and surety bonding;
development of alternative energy sources; safety and protection equipment for
environmental workers; specialty environmental services; and the production of
biodegradable or otherwise environmentally safe products and technologies
related to pollution control. Up to 100% of the Portfolio's total assets may be
invested in foreign companies.
The environmental services sector has been positively influenced by
legislation that has resulted in stricter government regulations and enforcement
policies for both commercial and government generators of waste materials, as
well as specific expenditures designated for remedial clean-up efforts. These
regulations are subject to change, which could adversely affect these
businesses. Since the materials handled and processes involved include hazardous
components, there is significant liability risk. In addition, there are also
risks of intense competition within this sector.
<PAGE>
Financial Services: financial service companies including commercial and
industrial banks, savings & loan associations, consumer and industrial finance,
leasing, securities brokerage and insurance companies. Up to 25% of the
Portfolio's total assets, measured at the time of purchase, may be invested in
foreign securities. Securities of Canadian issuers and ADRs are not subject to
this 25% limitation.
Many of these industries are subject to extensive governmental regulation,
which may change frequently. The firms' profitability is largely dependent upon
the availability and cost of capital funds, and may fluctuate significantly in
response to changes in interest rates, as well as changes in general economic
conditions. From time to time, severe competition may also affect the
profitability of insurance companies in particular.
Gold: companies engaged in mining, exploring, processing, or dealing or
investing in gold. Up to 10% of the Portfolio's total assets may be invested in
gold bullion. Up to 100% of the Portfolio's total assets may be invested in
foreign companies.
Due to monetary and political policies on a national and international
level, the price of gold is subject to substantial fluctuations, which will have
an effect on the profitability and market value of these companies. Changes in
political or economic climate for the two largest producers -- South Africa and
the former Soviet Union -- may have a direct impact on the price of gold
worldwide. The Gold Portfolio's investments in gold bullion will earn no income
return; appreciation in the market price of gold is the sole manner in which the
Portfolio would be able to realize gains on such investments. Furthermore, the
Portfolio may encounter storage and transaction costs in connection with its
ownership of gold bullion that may be higher than those associated with the
purchase, holding and sale of more traditional types of investments.
Health Sciences: companies which develop, produce, or distribute products
or services related to health-care. These include medical equipment or supplies,
pharmaceuticals, health-care facilities, and applied research and development of
new products or processes. Up to 25% of the Portfolio's total assets, measured
at the time of purchase, may be invested in foreign securities. Securities of
Canadian issuers and ADRs are not subject to this 25% limitation.
Many of these activities are funded or subsidized by federal and state
governments; withdrawal or curtailment of this support could have an adverse
impact on the profitability, and market prices, of such companies. Changes in
government regulation could also have an adverse impact. Further, continuing
technological advances may mean rapid obsolescence of products and services.
Leisure: companies that design, produce or distribute leisure-time products
or services. These include recreational equipment, toys, games, photographic
equipment, and musical instruments, as well as entertainment industries such as
cable television, music, motion pictures, broadcasting, advertising and
publishing. In addition, companies engaged in air transportation, lodging,
sports arenas, gambling casinos, amusement or theme parks, and restaurants may
be included. Up to 25% of the Portfolio's total assets, measured at the time of
purchase, may be invested in foreign securities. Securities of Canadian issuers
and ADRs are not subject to this 25% limitation.
<PAGE>
Many of these industries are dependent upon consumer discretionary
spending, which may fluctuate, particularly during economic downturns.
Securities of gambling casinos may be subject to above-average price volatility
and considered speculative. Video and electronic games are subject to risks of
rapid obsolescence. These factors may adversely affect the market value of the
securities of the companies involved.
Technology: technology-related industries such as computers,
communications, video, electronics, oceanography, office and factory automation,
and robotics. Up to 25% of the Portfolio's total assets, measured at the time of
purchase, may be invested in foreign securities. Securities of Canadian issuers
and ADRs are not subject to this 25% limitation.
Many of these products and services are subject to rapid obsolescence,
which may adversely affect market value of the securities of the companies
involved.
Utilities: companies that manufacture, produce, generate, transmit or sell
gas or electricity, as well as communications firms, such as telephone,
telegraph, satellite, microwave and other media (excluding broadcasting). Up to
25% of the Portfolio's total assets, measured at the time of purchase, may be
invested in foreign securities. Securities of Canadian issuers and ADRs are not
subject to the 25% limitation.
Difficulties in obtaining adequate financing and investment return,
environmental issues, prices of fuel for electric generation, availability of
natural gas, and risks associated with nuclear power facilities may each
adversely affect the market value of the Portfolio's holdings at different
times. Compared to the broad market, the public utilities sector may be more
strongly affected by changes in the economic climate; broad market shifts; moves
in a particular, dominant stock; or regulatory changes.
Each Portfolio may invest in the following types of securities:
Equity Securities. The equity securities in which the Portfolios invest may
be issued by either established, well- capitalized companies, or newly-formed
small capitalization ("small cap") companies. These securities may be traded on
national, regional or foreign stock exchanges or in the over-the-counter market.
Small cap companies frequently have limited operating histories, product lines
and financial and managerial resources, and may face intense competitive
pressures from larger companies. The market prices of small cap stocks may be
more volatile than the stocks of larger companies both because they typically
trade in lower volumes and because small cap ^ companies may be more vulnerable
to changes in their earnings and prospects.
Foreign Securities. Each Portfolio's investments may include foreign
securities, which involve certain risks.
<PAGE>
For U.S. investors, the returns on foreign ^ securities are influenced not
only by the returns on the foreign investments themselves, but also by currency
fluctuations. That is, when the U.S. dollar generally rises against a foreign ^
currency, returns ^ for a U.S. investor on foreign securities denominated in
that foreign currency may decrease. By contrast, in a period when the U.S.
dollar generally declines, those returns may increase.
Other aspects of international investing to consider include:
-less publicly available information than is generally available about U.S.
issuers;
-differences in accounting, auditing and financial reporting standards;
-generally higher commission rates on foreign portfolio transactions and
longer settlement periods;
-smaller trading volumes and generally lower liquidity of foreign stock
markets, which may cause greater price volatility; and
-investments in certain countries may be subject to foreign withholding
taxes, which may reduce dividend income or capital gains payable to
shareholders.
There is also the possibility of expropriation or confiscatory taxation;
adverse changes in investment or exchange control regulations; political
instability; potential restrictions on the flow of international capital; and
the possibility of a Portfolio experiencing difficulties in pursuing legal
remedies and collecting judgments.
ADRs represent shares of a foreign corporation held by a U.S. bank that
entitle the holder to all dividends and capital gains, net of certain fees paid
to the bank. ADRs are denominated in U.S. dollars and trade in the U.S.
securities markets. ADRs are subject to some of the same risks as direct
investments in foreign securities, including the risk that material information
about the issuer may not be disclosed in the United States and the risk that
currency fluctuations may adversely affect the value of the ADR.
In order to hedge against fluctuations in foreign exchange rates, the
Portfolios may enter into contracts to purchase or sell foreign currencies at a
future date ("forward contracts"). Forward contracts and their risks are
discussed under "Investment Policies and Restrictions" in the Statement of
Additional Information.
Illiquid and Rule 144A Securities. Each Portfolio may invest up to 10% of
its total assets, measured at the time of purchase, in ^ securities which are
illiquid because they are subject to restrictions on ^ their resale ("restricted
securities") or because, based upon the nature of the market for such
<PAGE>
securities, they are not readily marketable. Investments in illiquid securities
are subject to the risk that a Portfolio may not be able to ^ sell such
securities at the time or price desired. In addition, in order to resell a
restricted security, a Portfolio might have to bear the expense and ^ incur the
delays associated with registration of the security. The Fund may purchase
certain securities that are not registered for sale to the general public, but
that can be resold to institutional investors ("Rule 144A Securities")^ without
regard to the foregoing 10% limitation, if a liquid trading market exists. The
Fund's board of directors has delegated to Fund Management the authority to
determine the liquidity of Rule 144A Securities ^ pursuant to guidelines
approved by the board. In the event that a Rule 144A Security held by a
Portfolio is subsequently determined to be illiquid, the security will be sold
as soon as that can be done in an orderly fashion consistent with the best
interests of the Portfolio's shareholders. For more information concerning Rule
144A Securities, see "Investment Policies and Restrictions" in the Statement of
Additional Information.
Securities Lending. The Portfolios may seek to earn additional income by
lending securities to qualified brokers, dealers, banks, or other financial
institutions, on a fully collateralized basis. For further information on this
policy, see "Investment Policies and Restrictions" in the Statement of
Additional Information.
Repurchase Agreements. The Portfolios may invest money, for as short a
time as overnight, using repurchase agreements ("repos"). With a repo, a
Portfolio buys a debt instrument, agreeing simultaneously to sell it back to the
prior owner at an agreed-upon price and on an agreed-upon date. The Portfolio
could incur costs or delays in seeking to sell the instrument if the prior owner
defaults on its repurchase obligation. To reduce that risk, securities that are
the subject of the repurchase agreement will be maintained with the Fund's
custodian in an amount at least equal to the repurchase price under the
agreement (including accrued interest). These agreements are entered into only
with member banks of the Federal Reserve System, registered broker-dealers and
registered U.S. government securities dealers that are deemed creditworthy under
standards established by the Fund's board of directors.
Portfolio Turnover. There are no fixed limitations regarding portfolio
turnover. The Portfolios do not trade for short-term profit; however, at the
discretion of Fund Management, securities may be sold regardless of how long
they have been held when investment considerations warrant such action. The
portfolio turnover rate of each Portfolio therefore may be higher than some
other mutual funds with the same investment objective. This policy also may
result in greater brokerage commissions and acceleration of capital gains which
are taxable when distributed to shareholders. The Statement of Additional
Information includes an expanded discussion of the Portfolios' portfolio
turnover rates, their brokerage practices and certain federal income tax
matters.
For a further discussion of risks associated with an investment in the
Fund, see "Investment Policies and Restrictions" and "Investment Practices" in
the Statement of Additional Information.
<PAGE>
Investment Restrictions. Certain restrictions, which are set forth in the
Statement of Additional Information, may not be altered without the approval of
the Portfolios' shareholders. For example, a Portfolio may not borrow money
except from banks for temporary or emergency purposes (but not for investment)
in an amount not to exceed 10% of its net assets, with the exception of the
Energy, Environmental and Gold Portfolios, which may borrow up to 331/3% of
their net assets. In addition, except for the Portfolios' policies regarding
investments in foreign securities and foreign currencies, the investment
objective and policies described in this prospectus under "Investment Objective
and Strategy" and "Investment Policies ^ And Risks" are fundamental and may not
be changed without a vote of the Portfolios' shareholders.
THE FUND AND ITS MANAGEMENT
The Fund is a no-load mutual fund, registered with the Securities and
Exchange Commission as a diversified, open-end management investment company. It
was incorporated on August 10, 1983, under the laws of Maryland.
The Fund's board of directors has responsibility for overall supervision
of the Fund and reviews the services provided by the adviser and sub-adviser.
Under an agreement with the Fund, ^ IFG, 7800 E. Union Avenue, Denver, Colorado
80237, serves as investment manager for each Portfolio; it is primarily
responsible for providing the Fund with various administrative services. IFG's
wholly-owned subsidiary, INVESCO Trust ^, is the ^ sub-adviser for each
Portfolio and is primarily responsible for managing the Portfolios' investments.
^ All of the Portfolios, except for Health Sciences Portfolio, are managed
by members of INVESCO's Sector Team, which is headed by Daniel B. Leonard. The
following individuals are primarily responsible for the day-to-day management of
^ the Portfolios' holdings:
^ Energy: John Segner has been the portfolio manager of the Portfolio
since February 1997. Mr. Segner is also a vice president of INVESCO Trust
Company. Mr. ^ Segner was previously the managing director and principal
with The Mitchell Group, Inc. (1990-1997), manager of marketing
development (1988-1990) and manager of financial analysis (1986-1988) with
First Tennessee National Corporation, and a financial analyst with Amerada
Hess Corporation (1985-1986). Mr. Segner received an M.B.A. in Finance
from the University of Texas-Austin and a B.S. in Civil Engineering from
the University of Alabama.
Environmental Services: ^ Gerard F. Hallaren, Jr. ^, a Chartered Financial
Analyst, has been the portfolio manager of the ^ Portfolio since 1996. Mr.
Hallaren also co-manages INVESCO Strategic Technology Portfolio and
INVESCO VIF-Technology Fund and is a vice president of INVESCO Trust
Company. Mr. Hallaren was previously a research analyst for INVESCO Trust
Company (1994 to 1995), a vice president and research analyst with Hanifen
<PAGE>
Imhoff (1992 to 1994)^, a retail broker with Merrill Lynch (1991)^,
director of business planning ^ with MiniScribe Corporation (1989 to
1990)^, and a research analyst with various firms beginning in 1978. Mr.
Hallaren ^ received a B.A. in Economics from the University of
Massachusetts^-Amherst.
Financial Services: ^ Jeffrey G. Morris, a Chartered Financial Analyst,
has been a co-portfolio manager of the ^ Portfolio since March 1997. Mr.
Morris is also a vice president of INVESCO Trust Company. Mr. Morris
joined INVESCO Trust Company in 1992 and served as a research analyst from
1994 to 1995. Mr. Morris received an M.S. in Finance from the University
of Colorado-Denver and a B.S. in Business Administration from Colorado
State University.
Daniel B. Leonard has been a co-portfolio manager of the Portfolio since
March 1997 (portfolio manager from 1996 to 1997). Mr. Leonard also manages
INVESCO Strategic Gold Portfolio and co-manages INVESCO Strategic
Technology Portfolio and INVESCO VIF - Technology Fund. Mr. Leonard is
also a senior vice president of INVESCO Trust Company. Mr. Leonard was
previously a portfolio manager (1977-1983; 1985-1991) and senior vice
president (1975-1983; 1985-1991) of INVESCO Funds Group, Inc.^ and a vice
president (1977-1983) ^ of INVESCO Trust Company. Mr. Leonard ^ received a
B.A. from Washington & Lee University.
^ Gold: Daniel B. Leonard^ has been the portfolio manager of the ^
Portfolio since 1989. Mr. Leonard also co-manages INVESCO Strategic
Technology Portfolio, INVESCO VIF - Technology Fund and INVESCO Strategic
Financial Services Portfolio and is a senior vice president of INVESCO
Trust Company. Mr. Leonard was previously a portfolio manager (1977-1983;
1985-1991) and senior vice president (1975-1983; 1985-1991) of INVESCO
Funds Group, Inc.^ and a vice president (1977-1983) ^ of INVESCO Trust
Company. Mr. Leonard ^ received a B.A. from Washington & Lee University.
^ Health Sciences Portfolio: The Portfolio is managed by John Schroer, a
Chartered Financial Analyst, who is the head of INVESCO's Health Team. Mr.
Schroer has been the portfolio manager of ^ the Portfolio since October
1997 (co-portfolio manager since 1994) and has primary responsibility for
the day-to-day management of the Portfolio's holdings. Mr. Schroer also
manages INVESCO VIF - Health Sciences Fund and INVESCO Global Health
Sciences Fund and ^ is a senior vice president of INVESCO Trust Company
and a vice president of INVESCO Global Health Sciences Fund. Mr. Schroer
was previously an assistant vice president with Trust Company of the West.
Mr. Schroer ^ received an M.B.A. and a B.S. from the University of
Wisconsin-Madison.
^ Leisure: Mark Greenberg, a Chartered Financial Analyst, has been the
portfolio manager of the Portfolio since 1996. Mr. Greenberg is also a
vice president ^ of INVESCO Trust Company. ^ Mr. Greenberg was previously
a vice president and global media and entertainment analyst ^ with
Scudder, Stevens & Clark (1990 to 1996); media, technology and
<PAGE>
telecommunications analyst ^ with Campbell Advisors (1988 to 1989); media
and technology analyst ^ with Irving Trust Company (1983 to 1988); and an
analyst ^ with Argus Research and Bernstein Macauley (1980 to 1983). ^ Mr.
Greenberg received a B.S.B.A. from Marquette University ^.
^ Technology: Daniel B. Leonard has been a co-portfolio manager of the
Portfolio since 1996 ^(portfolio manager from 1985 to 1996^). Mr. Leonard
also manages INVESCO Strategic Gold Portfolio and co-manages INVESCO
VIF - Technology Fund and INVESCO Strategic Financial Services Portfolio.
Mr. Leonard is also a senior vice president of INVESCO Trust Company. Mr.
Leonard was previously a portfolio manager (1977-1983; 1985-1991) and
senior vice president (1975-1983; 1985-1991) of INVESCO Funds Group, Inc.
^ and a vice president (1977-1983) ^ of INVESCO Trust Company. Mr. Leonard
^ received a B.A. from Washington & Lee University.
^ Gerard F. Hallaren, Jr. ^, a Chartered Financial Analyst, has been a
co-portfolio manager of the ^ Portfolio since 1996. Mr. Hallaren also
manages INVESCO Strategic Environmental Services Portfolio and co-manages
INVESCO VIF - Technology Fund. Mr. Hallaren is a vice president of INVESCO
Trust Company. Mr. Hallaren was previously a research analyst for INVESCO
Trust Company (1994 to 1995), a vice president and research analyst with
Hanifen Imhoff (1992 to 1994)^, a retail broker with Merrill Lynch
(1991)^, director of business planning ^ with MiniScribe Corporation (1989
to 1990)^, and ^ a research analyst with various firms beginning in 1978.
Mr. Hallaren ^ received a B.A. in Economics from the University of
Massachusetts^-Amherst.
Utilities: Brian B. Hayward, a Chartered Financial Analyst, has been the^
portfolio manager of ^ the Portfolio since July 1997. Mr. Hayward also
manages INVESCO VIF - Utilities Fund and INVESCO Worldwide Communications
Fund. Mr. Hayward began his investment career in 1985 and was most
recently a senior equity analyst with Mississippi Valley Advisors in St.
Louis, Missouri. Mr. Hayward received an M.A. in Economics and a B.A. in
Mathematics from the University of Missouri.
Fund Management permits investment and other personnel to purchase and
sell securities for their own accounts, subject to a compliance policy governing
personal investing. This policy requires Fund Management's personnel to conduct
their personal investment activities in a manner that Fund Management believes
is not detrimental to the Fund or Fund Management's other advisory clients. See
the Statement of Additional Information for more detailed information.
Each Portfolio pays IFG a monthly management fee which is based upon a
percentage of that Portfolio's average net assets determined daily. The
management fee is computed at the annual rate of 0.75% on the first $350 million
of a Portfolio's average net assets; 0.65% on the next $350 million of a
Portfolio's average net assets; and 0.55% on a Portfolio's average net assets
over $700 million. ^ For the fiscal year ended October 31, ^ 1997, the
Portfolios paid management fees (prior to the voluntary absorption of certain
expenses for Environmental Services and Utilities Portfolios by IFG) equal to
<PAGE>
the following percentages of their average net assets: Energy 0.75%,
Environmental Services 0.75%, Financial Services ^ 0.67%, Gold 0.75%, Health
Sciences ^ 0.70%, Leisure 0.75%, Technology ^ 0.66% and Utilities, 0.75%.
Out of these advisory fees received from the Fund, IFG paid to INVESCO
Trust as a sub-advisory fee an amount equal to the following percentages of each
Portfolio's average net assets: Energy ^ 0.24%, Environmental Services 0.25%,
Financial Services ^ 0.21%, Gold ^ 0.24%, Health Sciences 0.21%, Leisure ^
0.25%, Technology ^ 0.21% and Utilities 0.25%. No fee is paid by any Portfolio
to INVESCO Trust.
Under a Distribution Agreement effective September 30, 1997, IDI became
the Portfolios' distributor. IDI, established in 1997, is a registered
broker-dealer that acts as distributor for all retail funds advised by IFG.
Prior to September 30, 1997, IFG served as the Portfolios' distributor.
Under a Transfer Agency Agreement, IFG acts as registrar, transfer agent
and dividend disbursing agent for the Fund. The Fund pays an annual fee of
$20.00 per shareholder account or, where applicable, per participant in an
omnibus account ^. Registered broker-dealers, third party administrators of
tax-qualified retirement plans and other entities, including affiliates of IFG,
may provide equivalent services to the Fund. In these cases, IFG may pay, out of
the fee it receives from the Fund, an annual sub- transfer agency or
record-keeping fee to the third party.
In addition, under an Administrative Services Agreement, IFG handles
additional administrative, ^ recordkeeping, and internal sub-accounting services
for the Fund. For the fiscal year ended October 31, ^ 1997, the Portfolios paid
IFG fees for these services in an amount equal to the following percentages of
the respective Portfolios' average net assets: Energy 0.02%; Environmental
Services 0.05%, Financial Services 0.02%, Gold 0.02%, Health Sciences 0.02%,
Leisure 0.02%, Technology 0.02% and Utilities 0.02%.
Each Portfolio's expenses, which are accrued daily, are deducted from
total income before dividends are paid. Total expenses of each Portfolio (prior
to any expense offset) for the fiscal year ended October 31, ^ 1997, including
investment management fees (but excluding brokerage commissions, which are a
cost of acquiring securities), amounted to the following percentages of each
Portfolio's average net assets: Energy ^, 1.21%; Environmental Services ^,
1.72%; Financial Services ^, 0.99%; Gold ^, 1.47%; Health Sciences ^, 1.08%;
Leisure ^, 1.41%; Technology ^, 1.05% and Utilities, ^ 1.22%. Certain expenses
of the Environmental Services and Utilities Portfolios are absorbed voluntarily
by IFG pursuant to a commitment to the Fund. This commitment may be changed
following consultation with the Fund's board of directors. In the absence of
this voluntary expense limitation, the total operating expenses of the
Environmental Services and Utilities Portfolios for the year ended October 31, ^
1997, would have been ^ 2.16% and ^ 1.27%, respectively, of each Portfolio's
average net assets.
<PAGE>
Fund Management places orders for the purchase and sale of portfolio
securities with brokers and dealers based upon Fund Management's evaluation of ^
such brokers' and dealers' financial responsibility coupled with their ability
to effect transactions at the best available prices. Each Portfolio may place
orders for portfolio transactions with qualified broker-dealers that recommend
the Portfolio or sell shares of the Portfolio to clients, or act as agent in the
purchase of Portfolio shares for clients, if Fund Management believes that the
quality of the execution of the transaction and level of commission are
comparable to those available from other qualified brokerage firms. For further
information, see "Investment Practices - Placement of Portfolio Brokerage" in
the Statement of Additional Information.
^ IFG, INVESCO Trust and IDI are indirect wholly owned subsidiaries of
AMVESCAP PLC. AMVESCAP PLC is a publicly-traded holding company ^ that, through
its subsidiaries, engages in the business of investment management on an
international basis. INVESCO PLC changed its name to AMVESCO PLC on ^ March 3,
1997 and to AMVESCAP PLC on May 8, 1997, as part of a merger between a direct
subsidiary of INVESCO PLC and ^ A I M Management Group^ Inc. ^, that created one
of the largest independent investment management businesses in the world. IFG
and INVESCO Trust ^ continue to operate under their existing names. ^ AMVESCAP
PLC has approximately ^ $177.5 billion in assets under management. ^ IFG was
established in 1932 and, as of October 31, ^ 1997, managed 14 mutual funds,
consisting of ^ 45 separate portfolios, with combined assets of approximately ^
$16.3 billion on behalf of over ^ 851,000 shareholders. INVESCO Trust (founded
in 1969) served as adviser or sub-adviser to ^ 57 investment portfolios as of
October 31, ^ 1997, including ^ 32 portfolios in the INVESCO group. These ^ 57
portfolios had aggregate assets of approximately ^ $15.1 billion as of October
31, ^ 1997. In addition, INVESCO Trust provides investment management services
to private clients^ including employee benefit plans that may be invested in a
collective trust sponsored by INVESCO Trust.
FUND PRICE AND PERFORMANCE
Determining Price. The value of your investment in a Portfolio will vary
daily. The price per share is also known as the Net Asset Value ^("NAV"). IFG
prices the Portfolios every day that the New York Stock Exchange is open, as of
the close of regular trading ^(generally, 4:00 p.m., New York time). NAV is
calculated by adding together the current market value of each Portfolio's
assets, including accrued interest and dividends; then subtracting liabilities,
including accrued expenses; and finally dividing that dollar amount by the total
number of ^ outstanding shares of that Portfolio.
Performance Data. To keep shareholders and potential investors informed,
we will occasionally advertise a Portfolio's total return for one-, five-, and
ten-year periods (or since inception). Total return figures show the rate of
return on an investment in a Portfolio, assuming reinvestment of all dividends
and capital gain distributions for the periods cited. Cumulative total return
shows the actual rate of return on an investment; average annual total return
represents the average annual percentage change of an investment. Both
cumulative and average annual total returns tend to "smooth out" fluctuations in
<PAGE>
a Portfolio's investment results, because they do not ^ show the interim
variations in performance over the periods cited. More information about the
Portfolios' recent and historical performance is contained in the Fund's Annual
Report to Shareholders. You can get a free copy by calling or writing to ^ IDI
using the phone number or address on the cover of this prospectus.
When we quote mutual fund rankings published by Lipper Analytical Services,
Inc., we may compare the Portfolios to the broad-based Lipper general fund
groupings, or to others in their respective categories:
Portfolio Lipper Mutual Fund Category
- --------- ---------------------------
Energy Natural Resources
Environmental Services Environmental
Financial Services Financial Services
Gold Gold Oriented
Health Sciences Health/Biotechnology
Leisure Specialty/Miscellaneous
Technology Science & Technology
Utilities Utility
These rankings allow you to compare the Portfolios to their peers. Other
independent financial media also produce performance- or service-related
comparisons, which you may see in our promotional materials. For more
information, see "Fund Performance" in the Statement of Additional Information.
Performance figures are based on historical investment results and are not
intended to suggest future performance.
HOW TO BUY SHARES
The following chart shows several convenient ways to invest in one or more
Portfolios. Your new Portfolio shares will be priced at the NAV next determined
after your order is received in proper form. There is no charge to invest,
exchange or redeem shares when you make transactions directly through IFG.
However, if you invest in a Portfolio through a securities broker, you may be
charged a commission or transaction fee. IFG may from time to time make payments
from its revenues to securities dealers and other financial institutions that
provide distribution-related and/or administrative services for the Fund. For
all new accounts, please send a completed application form. Please specify ^ the
Portfolio whose shares you wish to purchase.
Fund Management reserves the right to increase, reduce or waive the
minimum investment requirements in its sole discretion, where it determines this
action is in the best interests of the Portfolios. Further, Fund Management
reserves the right in its sole discretion to reject any order for the purchase
of Portfolio shares (including purchases by exchange) when, in its judgment,
such rejection is in ^ a Portfolio's best interests.
<PAGE>
How To Buy Shares
================================================================================
Method Investment Minimum Please Remember
Per Portfolio
- --------------------------------------------------------------------------------
By Check
Mail to: $1,000 for regular ^ If your check
INVESCO Funds account; does not clear, you
Group, Inc. $250 for an ^ IRA; will be responsible
P.O. Box 173706 $50 minimum for for any related
Denver, CO 80217- each subsequent loss the Portfolio
3706. investment. or IFG incurs. If
Or you may send you are already a
your check by shareholder in the
overnight courier INVESCO funds, the
to: 7800 E. Union Portfolio may seek
Ave., reimbursement from
Denver, CO 80237. your existing
account(s) for any
loss incurred.
- --------------------------------------------------------------------------------
By Telephone or
Wire
Call 1-800-525-8085 $1,000. Payment must be
to request your received within 3
purchase. Then send business days, or
your check by the transaction may
overnight courier be ^ canceled. If a
to our street telephone purchase
address: is ^ canceled due
7800 E. Union Ave., to nonpayment, you
Denver, CO 80237. will be responsible
Or you may transmit for any related
your payment by loss the Portfolio
bank wire (call IFG or IFG incurs. If
for instructions). you are already a
shareholder in the
INVESCO funds, the
Portfolio may seek
reimbursement from
your existing
account(s) for any
loss incurred.
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
With EasiVest or
Direct Payroll
Purchase
You may enroll on $50 per month for Like all regular
the fund EasiVest; $50 per investment plans,
application, or pay period for neither EasiVest
call us for the Direct Payroll nor Direct Payroll
correct form and Purchase. You may Purchase ensures a
more details. start or stop your profit or protects
Investing the same regular investment against loss in a
amount on a monthly plan at any time, falling market.
basis allows you to with two weeks' Because you'll
buy more shares notice to IFG. invest continually,
when prices are low regardless of
and fewer shares varying price
when prices are levels, consider
high. This "dollar- your financial
cost averaging" may ability to keep
help offset market buying through low
fluctuations. Over price levels. And
a period of time, remember that you
your average cost will lose money if
per share may be you redeem your
less than the shares when the
actual average market value of all
price per share. your shares is less
than their cost.
- --------------------------------------------------------------------------------
By PAL
Your "Personal $1,000. Be sure to write
Account Line" is down the
available for confirmation number
subsequent provided by PAL.
purchases and Payment must be
exchanges 24-hours received within 3
a day. Simply call business days, or
1-800-424-8085. the transaction may
be ^ canceled. If a
telephone purchase
is ^ canceled due
to nonpayment, you
will be responsible
for any related
loss the Portfolio
or IFG incurs. If
you are already a
shareholder in the
INVESCO funds, the
Portfolio may seek
reimbursement from
your existing
account(s) for any
loss incurred.
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
By Exchange
Between this and $1,000 to open a See "Exchange ^
another of the new account; $50 Policy," below.
INVESCO funds. Call for written
1-800-525-8085 for requests to
prospectuses of purchase additional
other INVESCO shares for an
funds. You may also existing account.
establish an (The exchange
Automatic Monthly minimum is $250 for
Exchange service purchases requested
between two INVESCO by telephone.)
funds; call IFG for
further details and
the correct form.
================================================================================
Exchange ^ Policy. You may exchange your shares in ^ a Portfolio for those
in another ^ INVESCO fund or portfolio, on the basis of their respective net
asset values at the time of the exchange. Before making any exchange, be sure to
review the prospectuses of the funds involved and consider their differences.
Please note these policies regarding exchanges of fund shares:
(1) The fund accounts must be identically registered.
(2) You may make four exchanges out of each fund during each calendar
year.
(3) An exchange is the redemption of shares from one fund followed by
the purchase of shares in another. Therefore, any gain or loss
realized on the exchange is recognizable for federal income tax
purposes (unless, of course, your account is tax-deferred).
(4) The ^ Portfolios reserve the right to reject any exchange request,
or to modify or terminate the exchange ^ policy, when it is in the
best interests of the Fund and its shareholders. Notice of all such
modifications or ^ termination will be given at least 60 days prior
to the effective date of the change in privilege, except ^ in
unusual instances (such as when redemptions of the exchanged shares
are suspended under Section 22(e) of the Investment Company Act of
1940, or when sales of the ^ Fund into which you are exchanging are
temporarily stopped).
<PAGE>
Distribution Expenses. Each of the Portfolios is authorized under a Plan
and Agreement of Distribution (the "Plan") to use its assets to finance the
distribution of shares to investors. The Plan is permitted by Rule 12b-1 of the
Investment Company Act of 1940 and has been authorized by the Portfolios'
shareholders.
Monthly payments may be made by the Portfolio to IDI allowing IDI to
provide distribution and administrative services to the Portfolio. Payment for
these services has been approved by the Fund's board of directors.
These services may include the payment of compensation to securities
dealers and other financial organizations for distribution and/or administrative
services, including payment of incentive compensation and/or continuing
compensation based on the amount of customer assets maintained by the financial
organization in the Portfolio. Payments may also be made to IDI-affiliated
companies for these services.
These services may include processing new shareholder account
applications, preparing and transmitting to the Fund's Transfer Agent computer
processable tapes of transactions and serving as the primary source of
information to customers in answering questions about the Portfolio and their
transactions with a Portfolio. Other permissible services include advertising,
the preparation, printing and distribution of sales literature, printing and
distribution of prospectuses to prospective investors, public relations efforts
and marketing programs that may be agreed on by the Fund and its board of
directors. These services may be performed by IDI, its affiliates, or by third
parties.
The Fund's payments to IDI on behalf of each Portfolio may not exceed
0.25% per year of each Portfolio's average net assets added after the Plan is
implemented. IDI may not receive payment for overhead expenses under the Plan.
IDI may be paid for all or a portion of the salaries and other employee benefits
for the personnel of IDI or IFG whose primary responsibilities involve marketing
shares of the Portfolio.
Monthly payments by each Portfolio may be made to IDI for services provided
by IDI during the rolling 12-month period in which that month falls. Any
obligations incurred by IDI in excess of the limitations described above will
not be paid by the Portfolio and will be borne by IDI. IDI and its affiliates
may make additional payments from its revenues to securities dealers and other
financial institutions that provide distribution and/or administrative services
to the Portfolio.
No payments will be made by a Portfolio under the Plan in the event the
Plan is terminated with respect to that Portfolio. Payments made by a Portfolio
may not be used to finance directly the distribution of shares of any other
portfolio of the Fund or other mutual fund advised by IFG. However, payments
received by IDI which are not used to finance the distribution of shares of a
Portfolio become part of IDI's revenues and may be used by IDI for any
permissible activities for all mutual funds advised by IFG, subject to review by
the Fund's directors. Payments made by a Portfolio under the Plan for
<PAGE>
compensation of marketing personnel are based on an allocation formula designed
to ensure that all such payments are appropriate. For more information see "How
Shares Can be Purchased -- Distribution Plan" in the Statement of Additional
Information.
FUND SERVICES
Shareholder Accounts. IFG will maintain a share account that reflects your
current holdings. Share certificates will be issued only upon specific request.
You will have greater flexibility to conduct transactions if you do not request
certificates.
Transaction Confirmations. You will receive detailed confirmations of
individual purchases, exchanges and redemptions. If you choose certain recurring
transaction plans (for instance, EasiVest), your transactions will be confirmed
on your quarterly Investment Summary.
Investment Summaries. Each calendar quarter, shareholders receive a
written statement which consolidates and summarizes account activity and value
at the beginning and end of the period for each of their INVESCO funds.
Reinvestment of Distributions. Dividends and capital gain distributions
are automatically invested in additional fund shares at the NAV on the
ex-dividend or ex-distribution date, unless you choose to have dividends and/or
capital gain distributions automatically reinvested in another INVESCO fund or
paid by check (minimum of $10.00).
Telephone Transactions. All shareholders may exchange and redeem Portfolio
shares by telephone, unless they expressly decline these privileges. By signing
the new account Application or a Telephone Transaction Authorization Form, or
otherwise using these privileges, the investor has agreed that, if the Portfolio
has followed reasonable procedures, such as recording telephone instructions and
sending written transaction confirmations, it will not be liable for following ^
telephone instructions that it believes to be genuine. As a result of this
policy, the investor may bear the risk of any loss due to unauthorized or
fraudulent instructions.
Retirement Plans and IRAs. Shares of these Portfolios may be purchased for
^ IRAs and many types of tax-deferred retirement plans. IFG can supply you with
information and forms to establish or transfer your existing plan or account.
HOW TO SELL SHARES
The following chart shows several convenient ways to redeem your Portfolio
shares. Shares of any Portfolio may be redeemed at any time at ^ the NAV next
determined after a request in proper form is received at the Fund's office. The
NAV at the time of the redemption may be more or less than the price you paid to
purchase your shares, depending primarily upon that Portfolio's investment
performance.
<PAGE>
Please specify from which Portfolio you wish to redeem shares.
Shareholders have a separate account for each fund or Portfolio in which they
invest.
How To Sell Shares
================================================================================
Method Minimum Redemption Please Remember
Per Portfolio
================================================================================
By Telephone
Call us toll-free $250 (or, if less, This option is not
at 1-800-525-8085. full liquidation of available for
the account) for a shares held in ^
redemption check; IRAs.
$1,000 for a wire
to bank of record.
The maximum amount
which may be
redeemed by
telephone is
generally $25,000.
These telephone
redemption
privileges may be
modified or
terminated in the
future at the
discretion of IFG.
- --------------------------------------------------------------------------------
In Writing
Mail your request Any amount. The If the shares to be
to INVESCO Funds redemption request redeemed are
Group, Inc., P.O. must be signed by represented by
Box 173706 all registered ^ stock certificates,
Denver, CO 80217- owners of the the certificates
3706. You may also account. Payment must be sent to
send your request will be mailed to IFG.
by overnight your address of
courier to 7800 E. record, or to a
Union Ave., Denver, pre-designated
CO 80237. bank.
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
By Exchange
Between this and $1,000 to open a See "Exchange ^
another of the new account; $50 Policy," page 40.
INVESCO funds. Call for written
1-800-525-8085 for requests to
prospectuses of purchase additional
other INVESCO shares for an
funds. You may also existing account.
establish an (The exchange
automatic monthly minimum is $250 for
exchange service exchanges requested
between two INVESCO by telephone.)
funds; call IFG for
further details and
the correct form.
- --------------------------------------------------------------------------------
Periodic Withdrawal
Plan
You may call us to $100 per payment, You must have at
request the on a monthly or least $10,000 total
appropriate form quarterly basis. invested with the
and more The redemption INVESCO funds, with
information at 1- check may be made at least $5,000 of
800-525-8085. payable to any that total invested
party you in the fund from
designate. which withdrawals
will be made.
- --------------------------------------------------------------------------------
Payment To Third
Party
Mail your request Any amount. All registered
to INVESCO Funds owners of the
Group, Inc., P.O. account must sign
Box 173706 the request, with a
Denver, CO 80217- signature guarantee
3706. from an eligible
guarantor financial
institution, such
as a commercial
bank or recognized
national or
regional securities
firm.
================================================================================
^
While the Portfolios will attempt to process telephone redemptions
promptly, there may be times -- particularly in periods of severe economic or
market disruption -- when you may experience delays in redeeming shares by
phone.
<PAGE>
Payments of redemption proceeds will be mailed within seven days following
receipt of the redemption request in proper form. However, payment may be
postponed under unusual circumstances --for instance, if normal trading is not
taking place on the New York Stock Exchange or during an emergency as defined by
the Securities and Exchange Commission. If your shares were purchased by a check
which has not yet cleared, payment will be made promptly upon clearance of the
purchase check (which ^ will take up to 15 days).
If you participate in EasiVest, the Portfolios' automatic monthly
investment program, and redeem all of the shares in your account, we will
terminate any further EasiVest purchases unless you instruct us otherwise.
Because of the high relative costs of handling small accounts, should the
value of any shareholder's account in a Portfolio fall below $250 as a result of
shareholder action, ^ each Portfolio reserves the right to involuntarily redeem
all shares in such account, in which case the account would be liquidated and
the proceeds forwarded to the shareholder. Prior to any such redemption, a
shareholder will be notified and given 60 days to increase the value of the
account to $250 or more.
TAXES, DIVIDENDS AND ^ OTHER DISTRIBUTIONS
Taxes. Each ^ Portfolio intends to distribute to shareholders ^ all of its
net investment income, net capital gains and net gains from foreign currency
transactions, if any^. Distribution of all net investment income to shareholders
allows each Portfolio to maintain its tax status as a regulated investment
company. ^ The Portfolios do not expect to pay any federal income or excise
taxes because of their tax status as regulated investment companies.
Shareholders^ must include all dividends and ^ other distributions in
taxable income for federal, state^ and local income tax purposes, unless they
are exempt from income taxes. Dividends and other distributions are taxable
whether they are received in cash or automatically reinvested in shares of ^ the
Portfolio or another fund in the INVESCO group.
Net realized capital gains of a Portfolio are classified as short-term and
long-term gains depending upon how long the Portfolio held the security that
gave rise to the gains. Short-term capital gains are included in income from
dividends and interest as ordinary income and are taxed at the taxpayer's
marginal tax rate. The Taxpayer Relief Act of 1997 (the "Tax Act"), enacted in
August 1997, changed the taxation of long-term capital gains by applying
different capital gains rates depending on the taxpayer's holding period and
marginal rate of federal income tax. Long-term gains realized on the sale of
securities held for more than one year but not for more than 18 months are
taxable at a rate of 28%. This category of long-term gains is often referred to
as "mid-term" gains but is technically termed "28% rate gains." Long-term gains
realized on the sale of securities held for more than 18 months are taxable at a
rate of 20%. At the end of each year, information regarding the tax status of
dividends and other distributions is provided to shareholders. Shareholders
should consult their tax adviser as to the effect of the Tax Act on
distributions by the Portfolios of net capital gain.
<PAGE>
Shareholders may realize capital gains or losses when they sell their
shares at more or less than the price originally paid. Capital gain on shares
held for more than one year will be long-term capital gain, in which event it
will be subject to federal income tax at the rates indicated above.
Each ^ Portfolio may be subject to withholding of foreign taxes on
dividends or interest it receives on foreign securities. Foreign taxes withheld
will be treated as an expense of ^ the Portfolio.
^ Individuals and certain other non-corporate shareholders may be subject
to backup withholding of 31% on dividends, capital ^ gains and other
distributions and redemption proceeds. ^ You can avoid backup withholding on
your ^ account by ensuring that we have a correct, certified tax identification
number, unless you are subject to backup withholding for other reasons.^
^ We encourage you to consult a tax adviser with respect to these matters.
For further information see "Dividends, Other Distributions And Taxes" in the
Statement of Additional Information.
Dividends and Other Distributions. The Portfolios earn ordinary or net
investment income in the form of ^ interest and dividends on investments.
Dividends paid by a Portfolio will be based solely on the income earned by it.
The Portfolios' policy is to distribute substantially all of this income, less ^
expenses, to shareholders on an annual basis, at the discretion of the ^ Fund's
board of directors. Dividends are automatically reinvested in additional shares
of the Portfolio at the net asset value on the payable date unless otherwise
requested.
In addition, each ^ Portfolio realizes capital gains and losses when it
sells securities or derivatives for more or less than it paid. If total gains on
sales exceed total losses (including losses carried forward from previous
years), ^ the Portfolio has a net realized capital gain. Net realized capital
gains, if any, together with gains, if any, realized on foreign currency
transactions, are distributed to shareholders at least annually, usually in
December. Capital gain distributions are automatically reinvested in additional
shares of the Portfolio at the net asset value on the payable date unless
otherwise requested.
Dividend and other ^ distributions are paid to shareholders who hold
shares on the record date of the distribution, regardless of how long the shares
have been held^ by the shareholder. The Portfolio's share price will then drop
by the amount of the distribution on the ^ ex-dividend or ex-distribution ^
date. If a shareholder purchases shares immediately prior to the distribution,
the shareholder will, in effect, have ^"bought" the distribution by paying the
full purchase price, a portion of which is then returned in the form of a
taxable distribution.
^
<PAGE>
ADDITIONAL INFORMATION
Voting Rights. All shares of the Fund have equal voting rights based on
one vote for each share owned. Voting with respect to certain matters, such as
ratification of independent accountants and the election of directors, will be
by all of the Portfolios voting together. In other cases, such as voting upon an
investment advisory contract, voting is on a Portfolio-by-Portfolio basis. To
the extent permitted by law, when not all Portfolios are affected by a matter to
be voted upon, only shareholders of the Portfolio or Portfolios affected by the
matter will be entitled to vote thereon. The Fund is not generally required and
does not expect to hold regular annual meetings of shareholders. However, when
requested to do so in writing by the holders of 10% or more of the outstanding
shares of the Fund or as may be required by applicable law or the Fund's
Articles of Incorporation, the board of directors will call special meetings of
shareholders. Directors may be removed by action of the holders of a majority of
the outstanding shares of the Fund. The Fund will assist shareholders in
communicating with other shareholders as required by the Investment Company Act
of 1940.
<PAGE>
PROSPECTUS
March 1, 1997
INVESCO STRATEGIC PORTFOLIOS, INC.
A no-load mutual fund seeking appreciation
of capital and, with respect to the
Utilities Portfolio, income.
^ INVESCO FUNDS
INVESCO Distributors, Inc.
Distributor
Post Office Box 173706
Denver, Colorado 80217-3706
1-800-525-8085
PAL(R): 1-800-424-8085
http://www.invesco.com
^ In Denver, visit one of our
convenient Investor Centers:
Cherry Creek, 155-B Fillmore Street;
Denver Tech Center,
7800 East Union Avenue, Lobby Level
In addition, all documents filed
by the Fund with the Securities
and Exchange Commission can be located
on a web site maintained by the
Commission at http://www.sec.gov.
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
March 1, ^ 1998
INVESCO STRATEGIC PORTFOLIOS, INC.
A no-load mutual fund investing
in designated market sectors
Address: Mailing Address:
7800 E. Union Avenue Post Office Box 173706
Denver, Colorado 80237 Denver, Colorado 80217-3706
Telephone:
In continental U.S., 1-800-525-8085
- --------------------------------------------------------------------------------
INVESCO STRATEGIC PORTFOLIOS, INC. (the "Fund") is a diversified, managed,
no-load mutual fund consisting of eight separate Portfolios of investments. It
seeks to provide investors with capital appreciation (and, with respect to the
Utilities Portfolio, income) through the investment of assets of its
professionally managed Portfolios primarily in equity securities. Each of the
Fund's separate Portfolios concentrates its investments in securities of
companies principally engaged in the ^ business sector of that Portfolio.
Investors may purchase shares of any or all Portfolios. The following are
available:
ENERGY Portfolio HEALTH SCIENCES Portfolio
ENVIRONMENTAL SERVICES Portfolio LEISURE Portfolio
FINANCIAL SERVICES Portfolio TECHNOLOGY Portfolio
GOLD Portfolio UTILITIES Portfolio
Additional portfolios may be offered in the future.
A Prospectus dated March 1, ^ 1998 for all of the Portfolios of the Fund
which provides the basic information you should know before investing in the
respective Portfolios, may be obtained without charge from INVESCO ^
Distributors, Inc., Post Office Box 173706, Denver, Colorado 80217-3706. This
Statement of Additional Information is not a ^ prospectus, but contains
information in addition to and more detailed than that set forth in the
Prospectus. It is intended to provide you additional information regarding the
activities and operations of the ^ Portfolios and should be read in conjunction
with the Prospectus.
Investment Adviser ^: INVESCO Funds Group, Inc.
Distributor: INVESCO Distributors, Inc.
<PAGE>
TABLE OF CONTENTS
Page
----
INVESTMENT POLICIES AND RESTRICTIONS...................................... 51
THE FUND AND ITS MANAGEMENT............................................... 61
HOW SHARES CAN BE PURCHASED............................................... 74
HOW SHARES ARE VALUED..................................................... 77
FUND PERFORMANCE.......................................................... 78
SERVICES PROVIDED BY THE FUND............................................. 80
TAX-DEFERRED RETIREMENT PLANS............................................. 81
HOW TO REDEEM SHARES...................................................... 81
DIVIDENDS, ^ OTHER DISTRIBUTIONS AND TAXES................................ 82
INVESTMENT PRACTICES...................................................... 84
ADDITIONAL INFORMATION.................................................... 88
<PAGE>
INVESTMENT POLICIES AND RESTRICTIONS
In selecting securities for investment, each Portfolio's investment
adviser attempts to identify companies that have better- than-average earnings
growth potential. ^ Each Portfolio seeks to purchase the securities of companies
that are thought to be best situated in the relevant industry ^ grouping for ^
that Portfolio to benefit from the predicted economic environment.
Foreign Securities. The Gold and Environmental Services Portfolios may
invest in foreign securities without limitation on the percentage of assets
which may be so invested. Each of the other Portfolios (Energy, Financial
Services, Health Sciences, Leisure, Technology and Utilities) may invest up to
25% of its total assets, measured at the time of purchase, directly in foreign
securities. Securities of Canadian issuers and securities purchased by means of
American Depository Receipts ("ADRs") are not subject to this 25% limitation. As
described in the section of ^ the Portfolios' Prospectus entitled "Investment
Policies and Risks," foreign securities involve certain risks not associated
with investment in domestic companies. Foreign companies generally are not
subject to uniform accounting, auditing, and financial reporting standards
comparable to those applicable to domestic companies. Securities of many foreign
companies may be less liquid and more volatile than securities of comparable
domestic companies. With respect to certain foreign countries, there may be a
possibility of political developments which could affect investments in those
countries. Finally, it may be more difficult for ^ a Portfolio to obtain or ^
enforce a judgment against a foreign issuer than against a domestic issuer. In
determining individual portfolio investments, however, the investment advisers
will carefully consider all of the above.
Securities denominated in foreign currency, whether issued by a foreign or
a domestic issuer, may be affected favorably or unfavorably by changes in
currency rates and in exchange control regulations, and costs will be incurred
in connection with conversions between various currencies.
Restricted/144A Securities. As discussed in the Portfolios' Prospectus,
each Portfolio may invest in restricted securities, including restricted
securities that can be resold to institutional investors pursuant to Rule 144A
under the Securities Act of 1933 ("Rule 144A Securities").
In recent years, a large institutional market has developed for ^ Rule
144A Securities. Institutional investors generally will not seek to sell these
instruments to the general public, but instead will often depend on an efficient
institutional market in which ^ Rule 144A Securities can readily be resold or on
an issuer's ability to honor a demand for repayment. Therefore, the fact that
there are contractual or legal restrictions on resale to the general public or
certain institutions is not dispositive of the liquidity of such investments.
Rule 144A under the 1933 Act establishes a "safe harbor" from the
registration requirements of the 1933 Act for resales of certain securities to
qualified institutional buyers. Institutional markets for ^ Rule 144A Securities
may provide both readily ascertainable values for ^ Rule 144A Securities and the
ability to liquidate an investment in order to satisfy share redemption orders.
<PAGE>
An insufficient number of qualified institutional buyers interested in
purchasing a Rule 144A ^ Security held by a Portfolio, however, could adversely
affect the marketability of such portfolio security and the Portfolio might be
unable to dispose of such security promptly or at reasonable prices.
American Depository Receipts. As discussed in the Prospectus, the
Portfolios may invest in American Depository Receipts ("ADRs"). ADRs are
receipts representing shares of a foreign corporation held by a U.S. bank that
entitle the holder to all dividends and capital gains net of certain fees paid
to the bank. ADRs are denominated in U.S. dollars and trade in the U.S.
securities markets. ADRs may be issued in sponsored or unsponsored programs. In
sponsored programs, the issuer makes arrangements to have its securities traded
in the form of ADRs; in unsponsored programs, the issuer may not be directly
involved in the creation of the program. Although the regulatory requirements
with respect to sponsored and unsponsored programs are generally similar, the
issuers of unsponsored ADRs are not obligated to disclose material information
in the United States and, therefore, such information may not be reflected in
the market value of the ADRs.
Forward Foreign Currency Contracts. As discussed in the section of the
Prospectus entitled "Investment Policies and Risks," the ^ Portfolios may enter
into forward foreign currency contracts, which are included in the types of
instruments sometimes known as derivatives, to purchase or sell foreign
currencies as a hedge against possible variations in foreign exchange rates. A
forward foreign currency contract ("forward contract") is an agreement between
the contracting parties to exchange an amount of currency at some future time at
an agreed-upon rate. The rate can be higher or lower than the spot rate between
the currencies that are the subject of the contract. A forward contract
generally has no deposit requirement, and such transactions do not involve
commissions. By entering into a forward contract for the purchase or sale of the
amount of foreign currency invested in a foreign security transaction, ^ a
Portfolio can hedge against possible variations in the value of the dollar
versus the subject currency either between the date the foreign security is
purchased or sold and the date on which payment is made or received or during
the time the ^ Portfolio holds the foreign security. The ^ Portfolio will not
speculate in forward currency contracts. The ^ Portfolio will not attempt to
hedge all of ^ their foreign portfolio positions and will enter into such
transactions only to the extent, if any, deemed appropriate by Fund ^
Management. The Portfolios will not enter into ^ forward ^ contracts for a term
of more than one year. Investors should be aware that hedging against a decline
in the value of a currency in the foregoing manner does not eliminate
fluctuations in the prices of portfolio securities or prevent losses if the
prices of such securities decline. Furthermore, such hedging transactions
preclude the opportunity for gain if the value of the hedged currency should
rise. No predictions can be made with respect to whether the total of such
transactions will result in a better or a worse position than had ^ a Portfolio
not entered into any forward contracts. Forward contracts may, from time to
time, be considered illiquid, in which case they would be subject to ^ a
Portfolio's limitation on investing in illiquid securities, discussed in the
Prospectus.
<PAGE>
Repurchase Agreements. As discussed in the Prospectus, the Portfolios may
enter into repurchase agreements with respect to debt instruments eligible for
investment by the Portfolios with member banks of the Federal Reserve System,
registered broker-dealers, and registered government securities dealers. A
repurchase agreement may be considered a loan collateralized by securities. The
resale price reflects an agreed upon interest rate effective for the period the
instrument is held by a Portfolio and is unrelated to the interest rate on the
underlying instrument. In these transactions, the collateral securities acquired
by a Portfolio (including accrued interest earned thereon) must have a total
value ^ equal to the value of the repurchase agreement, and are held as
collateral by the Fund's custodian bank until the repurchase agreement is
completed.
Securities Lending. Each Portfolio also may lend its securities to
qualified brokers, dealers, banks or other financial institutions. This practice
permits ^ a Portfolio to earn income which, in turn, can be invested in
additional securities to pursue the Portfolio's investment objectives. Loans of
securities by a Portfolio will be collateralized by cash, letters of credit or
securities issued or guaranteed by the U.S. government or its agencies equal to
at least 100% of the current market value of the loaned securities, plus accrued
interest and dividends, determined on a daily basis. Lending securities involves
certain risks, the most significant of which is the risk that a borrower may
fail to return a portfolio security. ^ Fund Management monitors the
creditworthiness of borrowers in order to minimize such risks. A Portfolio will
not lend any security if, as a result of the loan, the aggregate value of
securities then on loan would exceed 33 1/3% of the Portfolio's total assets
(taken at market value).
Gold Bullion. As is also discussed in the Prospectus, the Gold Portfolio
may invest up to 10% of its total assets in gold bullion. The two largest
national producers of gold bullion are the Republic of South Africa and the
Commonwealth of Independent States (the former Soviet Union). Changes in
political and economic conditions affecting either country may have a direct
impact on that country's sales of gold bullion. The Gold Portfolio will purchase
gold bullion from, and sell gold bullion to, banks (both U.S. and foreign) and
dealers who are members of, or affiliated with members of, a regulated U.S.
commodities exchange, in accordance with applicable investment laws. Values of
gold bullion held by the Gold Portfolio are based upon daily quotes provided by
banks or brokers dealing in such commodities.
Gas and Electric Utilities. The gas and electric public utilities
industries are subject to various uncertainties, including: difficulty in
obtaining adequate returns on invested capital; frequent difficulty in obtaining
approval of rate increases by public service commissions; increased costs,
delays and restrictions as a result of environmental considerations; difficulty
and delay in securing financing of large construction projects; difficulties of
the capital markets in absorbing utility debt and equity securities;
difficulties in obtaining fuel for electric generation at reasonable prices;
difficulty in obtaining natural gas for resale; and special risks associated
with the construction and operation of nuclear power generating facilities,
<PAGE>
including technical and cost factors of such construction and operation and the
possibility of imposition of additional governmental requirements for
construction and operation. Recent and ongoing deregulation of the gas and
electric utilities industry has increased competition in the power generation
and utilities businesses, which generally exposes these companies to increased
business risk from competitors.
Futures and Options. Each of the Portfolios has adopted a policy which
permits each Portfolio to purchase or sell put and call options on individual
securities, securities indexes and currencies, or financial futures or options
on financial futures. The following sub-sections entitled "Put and Call
Options," "Futures and Options on Futures," and "Options on Futures Contracts,"
apply to each of the Portfolios, except the Environmental Services Portfolio.
Put and Call Options. An option on a security provides the purchaser, or
"holder," with the right, but not the obligation, to purchase, in the case of a
"call" option or sell, in the case of a "put" option, the security or securities
underlying the option, for a fixed exercise price up to a stated expiration
date. The holder pays a non-refundable purchase price for the option, known as
the "premium." The maximum amount of risk the purchaser of the option assumes is
equal to the premium plus related transaction costs, although the entire amount
may be lost. The risk of the seller, or "writer," however, is potentially
unlimited, unless the option is "covered," which is generally accomplished
through the writer's ownership of the underlying security, in the case of a call
option, or the writer's segregation of an amount of cash or securities equal to
the exercise price, in the case of a put option. If the writer's obligation is
not so covered, it is subject to the risk of the full change in value of the
underlying security from the time the option is written until exercise.
Upon exercise of the option, the holder is required to pay the purchase
price of the underlying security, in the case of a call option, or to deliver
the security in return for the purchase price, in the case of a put option.
Conversely, the writer is required to deliver the security, in the case of a
call option, or to purchase the security, in the case of a put option. Options
on securities which have been purchased or written may be closed out prior to
exercise or expiration by entering into an offsetting transaction on the
exchange on which the initial position was established, subject to the
availability of a liquid secondary market.
Options on securities are traded on national securities exchanges, such as
the Chicago Board of Options Exchange and the New York Stock Exchange, which are
regulated by the Securities and Exchange Commission. The Options Clearing
Corporation guarantees the performance of each party to an exchange-traded
option, by in effect taking the opposite side of each such option. A holder or
writer may engage in transactions in exchange-traded options on securities and
options on indices of securities only through a registered broker/dealer which
is a member of the exchange on which the option is traded.
<PAGE>
An option position in an exchange-traded option may be closed out only on
an exchange which provides a secondary market for an option of the same series.
Although the Portfolio will generally purchase or write only those options for
which there appears to be an active secondary market, there is no assurance that
a liquid secondary market on an exchange will exist for any particular option at
any particular time. In such event it might not be possible to effect closing
transactions in a particular option with the result that the Portfolio would
have to exercise the option in order to realize any profit. This would result in
the Portfolio's incurring brokerage commissions upon the disposition of
underlying securities acquired through the exercise of a call option or upon the
purchase of underlying securities upon the exercise of a put option. If the
Portfolio as covered call option writer is unable to effect a closing purchase
transaction in a secondary market, unless the Portfolio is required to deliver
the securities pursuant to the assignment of an exercise notice, it will not be
able to sell the underlying security until the option expires.
Reasons for the potential absence of a liquid secondary market on an
exchange include the following: (i) there may be insufficient trading interest
in certain options; (ii) restrictions may be imposed by an exchange on opening
transactions or closing transactions or both; (iii) trading halts, suspensions
or other restrictions may be imposed with respect to particular classes or
series of options or underlying securities; (iv) unusual or unforeseen
circumstances may interrupt normal operations on an exchange; (v) the facilities
of an exchange or a clearing corporation may not at all times be adequate to
handle current trading volume; or (vi) one or more exchanges could, for economic
or other reasons, decide or be compelled at some future date to discontinue the
trading of options (or particular classes or series of options) in which event
the secondary market on that exchange (or in the class or series of options)
would cease to exist, although outstanding options on that exchange which had
been issued by a clearing corporation as a result of trades on that exchange
would continue to be exercisable in accordance with their terms. There is no
assurance that higher than anticipated trading activity or other unforeseen
events might not, at a particular time, render certain of the facilities of any
of the clearing corporations inadequate and thereby result in the institution by
an exchange of special procedures which may interfere with the timely execution
of customers' orders. However, the Options Clearing Corporation ("OCC"), based
on forecasts provided by the U.S. exchanges, believes that its facilities are
adequate to handle the volume of reasonably anticipated options transactions,
and such exchanges have advised the OCC that they believe their facilities will
also be adequate to handle reasonably anticipated volume.
Futures Contracts and Options on Futures Contracts. As described in the
Portfolios' Prospectus, each Portfolio may enter into futures contracts, and
purchase and sell ("write") options to buy or sell futures contracts. The
Portfolios will comply with and adhere to all limitations in the manner and
extent to which they effect transactions in futures and options on such futures
currently imposed by the rules and policy guidelines of the Commodity Futures
Trading Commission ("CFTC") as conditions for exemption of a mutual fund, or
investment advisers thereto, from registration as a commodity pool operator. No
Portfolio will, as to any positions, whether long, short or a combination
thereof, enter into futures and options thereon for which the aggregate initial
<PAGE>
margins and premiums exceed 5% of the fair market value of its assets after
taking into account unrealized profits and losses on options it has entered
into. In the case of an option that is "in-the-money," as defined in the
Commodity Exchange Act (the "CEA"), the in-the-money amount may be excluded in
computing such 5%. (In general a call option on a future is "in-the-money" if
the value of the future exceeds the exercise ("strike") price of the call; a put
option on a future is "in-the-money" if the value of the future which is the
subject of the put is exceeded by the strike price of the put.) Each Portfolio
may use futures and options thereon for bona fide hedging or for other
non-speculative purposes within the meaning and intent of the applicable
provisions of the CEA.
Unlike when a Portfolio purchases or sells a security, no price is paid or
received by a Portfolio upon the purchase or sale of a futures contract.
Instead, the Portfolio will be required to deposit in its segregated asset
account an amount of cash or qualifying securities (currently U.S. Treasury
bills), currently in a minimum amount of $15,000. This is called "initial
margin." Such initial margin is in the nature of a performance bond or good
faith deposit on the contract. However, since losses on open contracts are
required to be reflected in cash in the form of variation margin payments, a
Portfolio may be required to make additional payments during the term of the
contracts to its broker. Such payments would be required, for example, where,
during the term of an interest rate futures contract purchased by a Portfolio,
there was a general increase in interest rates, thereby making such Portfolio's
securities less valuable. In all instances involving the purchase of futures
contracts by a Portfolio, an amount of cash together with such other securities
as permitted by applicable regulatory authorities to be utilized for such
purpose, at least equal to the market value of the futures contracts, will be
deposited in a segregated account with such Portfolio's custodian to
collateralize the position. At any time prior to the expiration of a futures
contract, a Portfolio may elect to close its position by taking an opposite
position which will operate to terminate its position in the futures contract.
Where futures are purchased to hedge against a possible increase in the
price of a security before a Portfolio is able in an orderly fashion to invest
in the security, it is possible that the market may decline instead. If the
Portfolio, as a result, concluded not to make the planned investment at that
time because of concern as to possible further market decline or for other
reasons, the Portfolio would realize a loss on the futures contract that is not
offset by a reduction in the price of securities purchased.
In addition to the possibility that there may be an imperfect correlation
or no correlation at all between movements in the futures contracts and the
portion of the portfolio being hedged, the price of a futures contract may not
correlate perfectly with movements in the prices due to certain market
distortions. All participants in the futures market are subject to margin
deposit and maintenance requirements. Rather than meeting additional margin
deposit requirements, investors may close futures contracts through offsetting
transactions which could distort the normal relationship between underlying
instruments and the value of the futures contract. Moreover, the deposit
requirements in the futures market are less onerous than margin requirements in
the securities market and may therefore cause increased participation by
speculators in the futures market. Such increased participation may also cause
temporary price distortions. Due to the possibility of price distortion in the
<PAGE>
futures market and because of the imperfect correlation between movements
in the underlying instrument and movements in the price of futures contracts,
the value of futures contracts as a hedging device may be reduced.
In addition, if a Portfolio has insufficient available cash, it may at
times have to sell securities to meet variation margin requirements. Such sales
may have to be effected at a time when it may be disadvantageous to do so.
As noted above, a Portfolio may buy and write options on futures contracts
for hedging purposes. The purchase of a call option on a futures contract is
similar in some respects to the purchase of a call option on an individual
security. Depending on the pricing of the option compared to either the price of
the futures contract upon which it is based or the price of the underlying
instrument, ownership of the option may or may not be less risky than ownership
of the futures contract or the underlying instrument. As with the purchase of
futures contracts, when a Portfolio is not fully invested it may buy a call
option on a futures contract to hedge against a market advance.
The writing of a call option on a futures contract constitutes a partial
hedge against declining prices of the security or foreign currency which is
deliverable under, or of the index comprising, the futures contract. If the
futures price at the expiration of the option is below the exercise price, a
Portfolio will retain the full amount of the option premium which provides a
partial hedge against any decline that may have occurred in such Portfolio's
holdings. The writing of a put option on a futures contract constitutes a
partial hedge against increasing prices of the security or foreign currency
which is deliverable under, or of the index comprising, the futures contract. If
the futures price at expiration of the option is higher than the exercise price,
a Portfolio will retain the full amount of the option premium which provides a
partial hedge against any increase in the price of securities which the
Portfolio is considering buying. If a call or put option which a Portfolio has
written is exercised, such Portfolio will incur a loss which will be reduced by
the amount of the premium it received. Depending on the degree of correlation
between changes in the value of its portfolio securities and changes in the
value of the futures positions, a Portfolio's losses from existing options on
futures may to some extent be reduced or increased by changes in the value of
portfolio securities.
The purchase of a put option on a futures contract is similar in some
respects to the purchase of protective put options on portfolio securities. For
example, a Portfolio may buy a put option on a futures contract to hedge its
portfolio against the risk of falling prices.
The amount of risk a Portfolio assumes when it buys an option on a futures
contract is the premium paid for the option plus related transactions costs. In
addition to the correlation risks discussed above, the purchase of an option
also entails the risk that changes in the value of the underlying futures
contract will not be reflected fully in the value of the options bought.
For a more complete discussion of the risks involved in futures and options
on futures and other securities, refer to Appendix A ("Description of Futures,
Options and Forward Contracts").
<PAGE>
Investment Restrictions. As described in the section of the Prospectus
entitled "Investment Objective And Strategy," ^ the Portfolios operate under
certain investment restrictions. ^ The following restrictions are fundamental
and may not be changed with respect to a particular Portfolio without the prior
approval of the holders of a majority, as defined in the Investment Company Act
of 1940, as amended (the "1940 Act") of the outstanding voting securities of
that Portfolio. For purposes of the following ^ restrictions, all percentage
limitations apply immediately after a purchase or initial investment. Any
subsequent change in a particular percentage resulting from fluctuations in
value does not require elimination of any security from the Portfolio.
^ Each Portfolio, unless otherwise indicated, may not:
(1) issue senior securities as defined in the 1940 Act (except insofar
as the ^ Portfolio may be deemed to have issued a senior security by
reason of entering into a repurchase agreement, or borrowing money,
in accordance with the restrictions described below, and in
accordance with the position of the staff of the Securities and
Exchange Commission set forth in Investment Company Act Release No.
10666);
(2) mortgage, pledge or hypothecate portfolio securities or borrow
money, except borrowings from banks for temporary or emergency
purposes (but not for investment) are permitted in an amount not
exceeding with respect to the Financial Services, Health Sciences,
Leisure, Technology or Utilities Portfolios 10%, or, with respect to
the Energy, Environmental Services and Gold Portfolios, 33-1/3% of
the value of the ^ Portfolio's total assets, i.e., its total assets
(including the amount borrowed) less liabilities (other than
borrowings). Any borrowings that come to exceed the relevant 10% or
33-1/3% limitation by reason of a decline in total assets will be
reduced within three business days to the extent necessary to comply
with the relevant 10% or 33-1/3% limitation. A Portfolio will not
purchase additional securities while any borrowings on behalf of
that Portfolio exist;
(3) buy or sell commodities^ or commodity contracts^ (however, the
Portfolio may purchase securities of companies which invest in the
foregoing ^). The Environmental Services Portfolio also may not buy
or sell oil, gas or other mineral interests or exploration programs
(however, the Environmental Services Portfolio may purchase
securities of companies which invest in the foregoing). This
restriction shall not prevent the Portfolios from purchasing or
selling options on individual securities, security indexes, and
currencies, or financial futures or options on financial futures, or
undertaking forward currency contracts. This restriction shall not
prevent the Gold Portfolio from investing up to 10% of its total
assets in gold bullion^;
<PAGE>
(4) purchase the securities of any company if as a result of such
purchase more than 10% of total assets would be invested in
securities which are subject to legal or contractual restrictions on
resale ^("restricted securities") and in securities for which there
are no readily available market quotations; or enter into a
repurchase agreement maturing in more than seven days, if as a
result, such repurchase agreements, together with restricted
securities and securities for which there are ^ no readily available
market quotations, would constitute more than 10% of total assets;
(5) sell short or buy on margin^. This restriction shall not prevent the
Portfolios except the Environmental Services Portfolio, from
purchasing or selling options on futures, or writing, purchasing, or
selling puts and calls;
(6) buy or sell real estate or interests therein (however, securities
issued by companies which invest in real estate or interests therein
may be purchased and sold);
(7) invest in the securities of any other investment company except for
a purchase or acquisition in accordance with a plan of
reorganization, merger or consolidation;
(8) invest in any company for the purpose of exercising control or
management;
(9) engage in the underwriting of any securities, except insofar as the
Fund may be deemed an underwriter under the Securities Act of 1933
in disposing of a portfolio security;
(10) make loans to any person, except through the purchase of debt
securities in accordance with the investment policies of the
Portfolios, or the lending of portfolio securities to broker-dealers
or other institutional investors, or the entering into repurchase
agreements with member banks of the Federal Reserve System,
registered broker-dealers and registered government securities
dealers. The aggregate value of all portfolio securities loaned may
not exceed 33-1/3% of a ^ Portfolio's total ^ assets (taken at
current value). No more than 10% of a ^ Portfolio's total ^ assets
may be invested in repurchase agreements maturing in more than
seven days;
(11) purchase securities of any company in which any officer or director
of the Fund or its investment adviser owns more than 1/2 of 1% of
the outstanding securities of such company and in which the officers
and directors of the Fund and its investment adviser, as a group,
own more than 5% of such securities;
<PAGE>
(12) ^ with respect to seventy-five percent (75%) of each Portfolio's
total assets, purchase the securities of any one issuer (except cash
items and "government securities" as defined under the 1940 Act), if
the purchase would cause a Portfolio ^ to have more than 5% of the
value of its total assets invested in the securities of ^ such
issuer or to own more than 10% of the outstanding voting securities
of ^ such issuer;
(13) invest more than 5% of its total assets in an issuer having a
record, together with predecessors, of less than three ^ years'
continuous operation.
In addition to the above restrictions, a fundamental policy of the
Technology Portfolio is not to invest more than 25% of its total assets (taken
at market value at the time of each investment) in the securities of issuers in
any one industry. In applying this restriction, the Technology Portfolio uses an
industry classification system based on ^ a modified S&P industry code
classification schema which uses various sources to classify securities.
In applying restriction (4) above, each Portfolio also includes illiquid
securities (those which cannot be sold in the ordinary course of business within
seven days at approximately the valuation given to them by the Fund) among the
securities subject to the 10% of total assets limit.
With respect to investment restriction (4) above, the board of directors
has delegated to the ^ Fund's investment adviser the authority to determine that
a liquid market exists for securities eligible for resale pursuant to Rule 144A
under the 1933 Act, or any successor to such rule, and that such securities are
not subject to ^ a Portfolio's limitations on investing in illiquid securities
and securities for which there are no readily available market quotations. Under
guidelines established by the board of directors, the adviser will consider the
following factors, among others, in making this determination: (1) the
unregistered nature of a Rule 144A security; (2) the frequency of trades and
quotes for the security; (3) the number of dealers willing to purchase or sell
the security and the number of other potential purchasers; (4) dealer
undertakings to make a market in the security; and (5) the nature of the
security and the nature of marketplace trades (e.g., the time needed to dispose
of the security, the method of soliciting offers and the mechanics of transfer).
However, Rule 144A Securities are still subject to ^ a Portfolio's limitation on
investments in restricted securities (securities for which there are legal or
contractual restrictions on resale), unless they are readily marketable outside
the United States, in which case they are not deemed to be restricted.
An additional investment restriction adopted by the Fund on behalf of each
of the Portfolios, and which may be changed by the Directors at their
discretion, provides that the Portfolio will not:
<PAGE>
(a) enter into any futures contracts, options on futures, puts and calls
if immediately thereafter the aggregate margin deposits on all outstanding
derivative positions held by the Portfolio and premiums paid on
outstanding positions, after taking into account unrealized profits and
losses, would exceed 5% of the market value of the total assets of the
Portfolio, or (b) enter into any derivative positions if the aggregate net
amount of Portfolio's commitments under outstanding derivative positions
of the Portfolio would exceed the market value of the total assets of the
Portfolio.
THE FUND AND ITS MANAGEMENT
The Fund. The Fund was incorporated under the laws of Maryland on August
10, 1983 as "Financial Strategic Portfolios, Inc." On December 2, 1994 the Fund
changed its name to INVESCO Strategic Portfolios, Inc.
The Investment Adviser. INVESCO Funds Group, Inc., a Delaware corporation
^("IFG"), is employed as the Fund's investment adviser. ^ IFG was established in
1932 and also serves as an investment adviser to INVESCO Capital Appreciation
Funds, Inc. (formerly, INVESCO Dynamics Fund, Inc.), INVESCO Diversified Funds,
Inc.^, INVESCO Emerging Opportunity Funds, Inc., INVESCO Growth Fund, Inc.,
INVESCO Income Funds, Inc., INVESCO Industrial Income Fund, Inc., INVESCO
International Funds, Inc., INVESCO Money Market Funds, Inc., INVESCO Multiple
Asset Funds, Inc., INVESCO Specialty Funds, Inc., INVESCO Tax-Free Income Funds,
Inc., INVESCO Value Trust, and INVESCO Variable Investment Funds, Inc.
The Sub-Adviser. ^ IFG, as investment adviser, has contracted with INVESCO
Trust Company ^("INVESCO Trust") to provide investment advisory and research
services ^ to the Portfolios. INVESCO Trust has the primary responsibility for
providing portfolio investment management services to the Fund. INVESCO Trust, a
trust company founded in 1969, is a ^ wholly-owned subsidiary of ^ IFG.
The Distributor. Effective September 30, 1997, INVESCO Distributors, Inc.
("IDI") became the Portfolios' distributor. IDI, established in 1997, is a
registered broker-dealer that acts as distributor for all retail mutual funds
advised by IFG. Prior to September 30, 1997, IFG served as the Portfolios'
distributor.
IFG, INVESCO Trust and IDI are indirect wholly-owned subsidiaries of
AMVESCAP PLC, a publicly-traded holding company ^ that, through its
subsidiaries, engages in the business of investment management on an
international basis. INVESCO PLC changed its name to AMVESCO PLC on ^ March 3,
1997 and to AMVESCAP PLC on May 8, 1997, as part of a merger between a direct
subsidiary of INVESCO PLC and ^ A I M Management Group, Inc. ^ that created one
of the largest ^ investment management businesses in the world^ with
approximately $177.5 billion in assets under management. ^ IFG was established
in 1932 and as of October 31, ^ 1997, managed 14 mutual funds, consisting of ^
45 separate portfolios, on behalf of over ^ 851,000 shareholders. ^ AMVESCAP
PLC's other North American subsidiaries include the following:
<PAGE>
--INVESCO Capital Management, Inc. of Atlanta, Georgia manages
institutional investment portfolios, consisting primarily of discretionary
employee benefit plans for corporations and state and local governments, and
endowment funds. INVESCO Capital Management, Inc. is the sole shareholder of
INVESCO Services, Inc., a registered broker-dealer ^.
--INVESCO Management & Research, Inc. ^ of Boston, Massachusetts^ primarily
manages pension and endowment accounts.
--PRIMCO Capital Management, Inc. of Louisville, Kentucky^ specializes in
managing stable return investments, principally on behalf of Section 401(k)
retirement plans.
--INVESCO Realty Advisors, Inc. of Dallas, Texas is responsible for
providing advisory services in the U.S. real estate markets for ^ pension plans
and public pension funds, as well as endowment and foundation accounts.
--A I M Advisors, Inc. of Houston, Texas provides investment advisory and
administrative services for retail and institutional mutual funds.
--A I M Capital Management, Inc. of Houston, Texas provides investment
advisory services to individuals, corporations, pension plans and other private
investment advisory accounts and also serves as a sub-adviser to certain retail
and institutional mutual funds, one Canadian mutual fund and one portfolio of an
open-end registered investment company that is offered to separate accounts of
variable insurance companies.
--A I M Distributors, Inc. and Fund Management Company of Houston, Texas
are registered broker-dealers that act as the principal underwriters for retail
and institutional mutual funds.
The corporate headquarters of ^ AMVESCAP PLC are located at 11 Devonshire
Square, London, ^ EC2M4YR, England.
As indicated in the Portfolios' Prospectus, IFG and INVESCO ^ Trust permit
investment and other personnel to purchase and sell securities for their own
accounts in accordance with a compliance policy governing personal investing by
directors, officers and employees of IFG, INVESCO Trust and ^ their North
American affiliates. The policy requires officers, inside directors, investment
and other personnel of IFG, INVESCO Trust and ^ their North American affiliates
to pre-clear all transactions in securities not otherwise exempt under the
policy. Requests for trading authority will be denied when, among other reasons,
the proposed personal transaction would be contrary to the provisions of the
policy or would be deemed to adversely affect any transaction then known to be
under consideration for or to have been effected on behalf of any client ^
account, including any of the Portfolios.
In addition to the pre-clearance ^ requirement described above, the policy
subjects officers, inside directors, investment and other personnel of IFG,
INVESCO Trust and ^ their North American affiliates to various trading
restrictions and reporting obligations. All reportable transactions are reviewed
for compliance with the policy. The provisions of ^ this policy are administered
by and subject to exceptions authorized by ^ IFG.
<PAGE>
Investment Advisory Agreement. ^ IFG serves as investment adviser to the
Portfolios pursuant to an investment advisory agreement dated February 28, 1997
(the "Agreement") with the Fund which was approved on November 6, 1996, by a
vote cast in person by a majority of the directors of the Fund, including a
majority of the directors who are not "interested persons" of the Fund or ^ IFG
at a meeting called for such purpose. The Agreement was approved by shareholders
of each Portfolio of the Fund on January 31, 1997, for an initial term expiring
^ February 28, 1999. Thereafter, the Agreement may be continued from year to
year as to each Portfolio as long as such continuance is specifically approved
at least annually by the board of directors of the Fund, or by a vote of the
holders of a majority, as defined in the 1940 Act, of the outstanding shares of
the Portfolio. Any such continuance also must be approved by a majority of the
Fund's directors who are not parties to the Agreement or interested persons (as
defined in the 1940 Act) of any such party, cast in person at a meeting called
for the purpose of voting on such continuance. The Agreement may be terminated
at any time without penalty by either party upon sixty (60) days' written notice
and terminates automatically in the event of an assignment to the extent
required by the 1940 Act and the rules thereunder.
The Agreement provides that ^ IFG shall manage the investment portfolios
of the Fund's Portfolios in conformity with the Portfolios' investment policies
(either directly or by delegation to a sub-adviser which may be a company
affiliated with ^ IFG). Further, ^ IFG shall perform all administrative,
internal accounting (including computation of net asset value), clerical,
statistical, secretarial and all other services necessary or incidental to the
administration of the affairs of the Fund excluding, however, those services
that are the subject of separate agreement between the Fund and ^ IFG or any
affiliate thereof, including the distribution and sale of Fund shares and
provision of transfer agency, dividend disbursing agency, and registrar
services, and services furnished under an Administrative Services Agreement with
^ IFG discussed below. Services provided under the Agreement include, but are
not limited to: supplying the Fund with officers, clerical staff and other
employees, if any, who are necessary in connection with the Fund's operations;
furnishing office space, facilities, equipment and supplies; providing personnel
and facilities required to respond to inquiries related to shareholder accounts;
conducting periodic compliance reviews of the Fund's operations; preparation and
review of required documents, reports and filings by ^ IFG's in-house legal and
accounting staff (including the prospectus, statement of additional information,
proxy statements, shareholder reports, tax returns, reports to the SEC and other
corporate documents of the Fund), except insofar as the assistance of
independent accountants or attorneys is necessary or desirable; supplying basic
telephone service and other utilities; and preparing and maintaining certain of
the books and records required to be prepared and maintained by the Fund under
the 1940 Act. Expenses not assumed by ^ IFG are borne by the Fund.
As full compensation for its advisory services to the Fund, ^ IFG receives
a monthly fee. The fee is calculated daily at an annual rate of: 0.75% on the
first $350 million of the average net assets of each Portfolio of the Fund;
0.65% on the next $350 million of the average net assets of each Portfolio of
the Fund; and 0.55% of each Portfolio's average net assets in excess of $700
million. The advisory fee is calculated daily at the applicable annual rate and
paid monthly. While the portions of INVESCO's fees which are equal to 0.75% of
<PAGE>
the net assets are higher than those generally charged by investment advisers to
mutual funds, they are not higher than those charged by most other investment
advisers to funds comparable to the Portfolios of the Fund, whose assets are
primarily invested in securities of companies principally engaged in the sector
or business activity designated for investment by each Portfolio.
Sub-Advisory Agreements. INVESCO Trust serves as sub-adviser to all of the
Portfolios pursuant to a sub-advisory agreement dated February 28, 1997 (the
"Sub-Agreement") with ^ IFG which was approved on November 6, 1996, by a vote
cast in person by a majority of the directors of the Fund, including a majority
of the directors who are not "interested persons" of the Fund, ^ IFG, or INVESCO
Trust at a meeting called for such purpose. The Sub- Agreement was approved on
January 31, 1997, by the shareholders of each of the Portfolios for an initial
term expiring ^ February 28, 1999. Thereafter, the Sub-Agreement may be
continued from year to year as to each Portfolio as long as such continuance is
specifically approved by the board of directors of the Fund, or by a vote of the
holders of a majority, as defined in the 1940 Act, of the outstanding shares of
the Portfolio. Each such continuance also must be approved by a majority of the
directors who are not parties to the Sub-Agreement or interested persons (as
defined in the 1940 Act) of any such party, cast in person at a meeting called
for the purpose of voting on such continuance. The Sub-Agreement may be
terminated at any time without penalty by either party or the Fund upon sixty
(60) days' written notice, and ^ terminates automatically in the event of an
assignment to the extent required by the 1940 Act and the rules thereunder.
The Sub-Agreement provides that INVESCO Trust, subject to the supervision
of ^ IFG, shall manage the investment portfolios of the Portfolios in conformity
with each such Portfolio's investment policies. These management services would
include: (a) managing the investment and reinvestment of all the assets, now or
hereafter acquired, of the Portfolios and executing all purchases and sales of
portfolio securities; (b) maintaining a continuous investment program for the
Fund's Portfolios, consistent with (i) the Fund's Portfolios' investment
policies as set forth in the Fund's Articles of Incorporation, Bylaws, and
Registration Statement, as from time to time amended, under the 1940 Act, as
amended, and in any prospectus and/or statement of additional information of the
Fund, as from time to time amended and in use under the 1933 Act, and (ii) the
Fund's status as a regulated investment company under the Internal Revenue Code
of 1986, as amended; (c) determining what securities are to be purchased or sold
for each Portfolio, unless otherwise directed by the directors of the Fund or
INVESCO, and executing transactions accordingly; (d) providing each Portfolio
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) determining what portion of each Portfolio
should be invested in the various types of securities authorized for purchase by
such Portfolio; and (f) making recommendations as to the manner in which voting
rights, rights to consent to Fund action and any other rights pertaining to the
portfolio securities of each Portfolio shall be exercised.
The Sub-Agreement with INVESCO Trust provides that as compensation for its
services, INVESCO Trust shall receive from ^ IFG, at the end of each month, a
fee based upon the average daily value of the Portfolios' average net assets at
the following annual rates: prior to January 1, 1998, 0.25% on the first $200
million of each Portfolio's average net assets, and 0.20% of each Portfolio's
<PAGE>
average net assets in excess of $200 million and effective January 1, 1998,
INVESCO Trust will receive a fee based on the following annual rates: 0.25% on
the first $350 million of each Portfolio's average net assets, 0.2167% of the
next $350 million of each Portfolio's average net assets and 0.1833% of each
Portfolio's average net assets in excess of $700 million. The Sub-Advisory fee
is paid by INVESCO, NOT the Fund's Portfolios.
Administrative Services Agreement. ^ IFG, either directly or through
affiliated companies, also provides certain administrative, sub-accounting and
recordkeeping services to the Fund pursuant to an Administrative Services
Agreement dated ^ February 28, 1997 (the "Administrative Agreement"). The
Administrative Agreement was approved on November 6, 1996, by a vote cast in
person by all of the directors of the Fund, including all of the directors who
are not "interested persons" of the Fund or ^ IFG at a meeting called for such
purpose. The Administrative Agreement is for an initial term of one year.
Thereafter, the Administrative Agreement may be continued from year to year as
long as each such continuance is specifically approved by the board of directors
of the Fund, including a majority of the directors who are not parties to the
Administrative Agreement or interested persons (as defined in the 1940 Act) of
any such party, cast in person at a meeting called for the purpose of voting on
such continuance. The Administrative Agreement may be terminated at any time
without penalty by ^ IFG on sixty (60) days' written notice, or by the Fund upon
thirty (30) days' written notice, and terminates automatically in the event of
an assignment unless the Fund's board of directors approves such assignment.
The Administrative Agreement provides that ^ IFG shall provide the
following services to the Fund: (A) such sub-accounting and recordkeeping
services and functions as are reasonably necessary for the operation of the
Fund; and (B) such sub-accounting, recordkeeping, and administrative services
and functions as are reasonably necessary for the operation of Fund shareholder
accounts maintained by certain retirement plans and employee benefit plans for
the benefit of participants in such plans. As full compensation for services
provided under the Administrative Agreement, the Fund pays a fee to ^ IFG
consisting of a base fee of $10,000 per year per Portfolio, plus an additional
incremental fee computed daily and paid monthly, by each Portfolio, at an annual
rate of 0.015% of the average net assets of the Portfolio.
Transfer Agency Agreement. ^ IFG also performs transfer agent, dividend
disbursing agent, and registrar services for the Fund pursuant to a Transfer
Agency Agreement dated February 28, 1997, which was approved by the board of
directors of each Portfolio of the Fund, including a majority of the Fund's
directors who are not parties to the Transfer Agency Agreement or "interested
persons" of any such party, on November 6, 1996, for a term of one year. The
Transfer Agency Agreement may be continued from year to year as to each
Portfolio as long as such continuance is specifically approved at least annually
by the board of directors of the Fund, or by a vote of the holders of a majority
of the outstanding shares of the Portfolio. Any such continuance must also be
approved by a majority of the Fund's directors who are not parties to the
Transfer Agency Agreement or interested persons (as defined by the 1940 Act) of
any such party, cast in person at a meeting called for the purpose of voting on
such continuance. The Transfer Agency Agreement may be terminated at any time
without penalty by either party upon sixty (60) days' written notice and
terminates automatically in the event of assignment.
<PAGE>
The Transfer Agency Agreement provides that the Fund shall pay to ^ IFG a
fee of $20.00 per shareholder account or ^, where applicable, per participant ^
in an omnibus account. This fee is paid monthly at a rate of 1/12 of the annual
fee and is based upon the actual number of shareholder accounts and omnibus
account participants in existence during each month.
Set forth below is a table showing the advisory fees, transfer agency fees
and administrative services fees paid by each of the Fund's Portfolios for
the fiscal years ended October 31, 1997, 1996^ and 1995 ^.
<PAGE>
<TABLE>
<CAPTION>
Year Ended October 31, 1997 Year Ended October 31, 1996 Year Ended October 31, 1995 ^
--------------------------- --------------------------- ---------------------------
Adminis- Adminis- Adminis-
Transfer trative Transfer trative Transfer trative
Advisory Agency Services Advisory Agency Services Advisory Agency Services
Fees Fees(1) Fees Fees Fees Fees Fees Fees Fees
---------------------- -------- -------- -------- -------- -------- -------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Energy $1,788,892 $710,090 $45,876 $813,779 $385,446 $26,275 $454,001 $304,482 $19,080 ^
Environmental
Services(2) 188,133 208,784 13,763 237,561 227,295 14,751 234,331 250,666 14,686 ^
Financial
Services 5,705,247 1,995,619 137,504 3,306,980 1,298,961 78,234 2,128,548 1,083,492 52,704
^ Gold 1,703,349 982,788 44,069 2,136,116 889,509 52,965 1,544,711 826,471 40,898 ^
Health
Sciences 6,276,181 2,910,149 152,539 7,016,028 2,584,098 172,697 4,221,937 1,991,219 99,730
^ Leisure 1,598,185 1,048,771 41,964 2,026,976 1,133,674 50,540 2,063,891 1,099,340 51,278
^ Technology 6,217,324 2,686,039 150,934 4,677,778 1,863,571 110,454 3,210,186 1,236,694 76,216
^
Utilities(2) 1,063,655 530,316 31,273 1,032,013 471,705 30,640 952,421 481,868 29,048
----------- ----------- -------- ----------- ---------- -------- ---------- ---------- --------
^ Totals $24,540,966 $11,072,556 $617,922 $21,247,231 $8,854,259 $536,556 $14,810,026 $7,274,232 $383,640 ^
</TABLE>
(1) Includes amounts earned as credits by the Portfolios from security brokerage
transactions under certain broker/service arrangements with third parties.
(2) These amounts do not reflect the voluntary expense limitations applicable to
the Environmental Services and Utilities Portfolios described in the Portfolios'
Prospectus.
<PAGE>
Officers and Directors of the Fund. The overall direction and supervision
of the Fund is the responsibility of the board of directors, which has the
primary duty of seeing that the Fund's general investment policies and programs
of the Fund are carried out and that the Fund's Portfolios are properly
administered. The officers of the Fund, all of whom are officers and employees
of, and are paid by, ^ IFG, are responsible for the day-to-day administration of
the Fund. The investment sub-adviser for each Portfolio has the primary
responsibility for making investment decisions on behalf of that Portfolio.
These investment decisions are reviewed by the investment committee of ^ IFG.
All of the officers and directors of the Fund hold comparable positions
with INVESCO Capital Appreciation Funds, Inc. (formerly, INVESCO Dynamics Fund,
Inc.), INVESCO Diversified Funds, Inc.^, INVESCO Emerging Opportunity Funds,
Inc., INVESCO Growth Fund, Inc., INVESCO Income Funds, Inc., INVESCO Industrial
Income Fund, Inc., INVESCO International Funds, Inc., INVESCO Money Market
Funds, Inc., INVESCO Multiple Asset Funds, Inc., INVESCO Specialty Funds, Inc.,
INVESCO Tax-Free Income Funds, Inc., and INVESCO Variable Investment Funds, Inc.
All of the directors of the Fund also serve as trustees of INVESCO Value Trust.
In addition, all of the directors of the Fund ^, with the exception of Dan
Hesser, also serve as trustees of INVESCO Treasurer's Series Trust. All of the
officers of the Fund also hold comparable positions with INVESCO Value Trust.
Set forth below is information with respect to each of the Fund's officers and
directors. Unless otherwise indicated, the address of the directors and officers
is Post Office Box 173706, Denver, Colorado 80217-3706. Their affiliations
represent their principal occupations during the past five years.
CHARLES W. BRADY,*+ Chairman of the Board. Chief Executive Officer and
Director of ^ AMVESCAP PLC, London, England, and of various subsidiaries
thereof^. Chairman of the Board of INVESCO ^ Treasurer's Series Trust ^.
Address: 1315 Peachtree Street, NE, Atlanta, Georgia. Born: May 11, 1935.
FRED A. DEERING,+# Vice Chairman of the Board. Vice Chairman of ^ INVESCO
Treasurer's Series Trust. Trustee of ^ INVESCO Global Health Sciences Fund.
Formerly, Chairman of the Executive Committee and Chairman of the Board of
Security Life of Denver Insurance Company, Denver, Colorado; Director of ING
America Life Insurance Company, Urbaine Life Insurance Company and Midwestern
United Life Insurance Company. Address: Security Life Center, 1290 Broadway,
Denver, Colorado. Born: January 12, 1928.
DAN J. HESSER,+* President, CEO and Director. Chairman of the Board,
President, and Chief Executive Officer of INVESCO Funds Group, Inc. and INVESCO
Distributors, Inc; President and Director of INVESCO Trust Company^; President
and Chief Operating Officer of INVESCO Global Health Sciences Fund ^. Born:
December 27, 1939.
VICTOR L. ANDREWS,** Director. Professor Emeritus, Chairman Emeritus and
Chairman of the CFO Roundtable of the Department of Finance at Georgia State
University, Atlanta, Georgia; President, Andrews Financial Associates, Inc.
(consulting firm); since October 1984, Director of the Center for the Study of
Regulated Industry at Georgia State University; formerly, member of the
<PAGE>
faculties of the Harvard Business School and the Sloan School of Management of
MIT. Dr. Andrews is also a ^ Director of the Southeastern Thrift and Bank Fund,
Inc. and The Sheffield Funds, Inc. Address: 4625 Jettridge Drive, Atlanta,
Georgia. Born: June 23, 1930.
BOB R. BAKER,+** Director. President and Chief Executive Officer of AMC
Cancer Research Center, Denver, Colorado, since January 1989; until
mid^-December 1988, Vice Chairman of the Board of First Columbia Financial
Corporation (a financial institution), Englewood, Colorado. Formerly, Chairman
of the Board and Chief Executive Officer of First Columbia Financial
Corporation. Address: 1775 Sherman Street, #1000, Denver, Colorado. Born: August
7, 1936.
LAWRENCE H. BUDNER,# Director. Trust Consultant; prior to June 30, 1987,
Senior Vice President and Senior Trust Officer of InterFirst Bank, Dallas,
Texas. Address: 7608 Glen Albens Circle, Dallas, Texas. Born: July 25, 1930.
DANIEL D. CHABRIS,+# Director. Financial Consultant; Assistant Treasurer of
Colt Industries Inc., New York, New York, from 1966 to 1988. Address: ^ 19
Kingsbridge Way, Madison, Connecticut. Born: August 1, 1923.
^ WENDY L. GRAMM, Ph.D.,** Director. Self-employed (since 1993); Professor
of Economics and Public Administration, University of Texas at Arlington.
Formerly, Chairman, Commodity Futures Trading Commission from 1988 to 1993,
administrator for Information and Regulatory Affairs at the Office of Management
and Budget from 1985 to 1988, Executive Director of the Presidential Task Force
on Regulatory Relief and Director of the Federal Trade Commission's Bureau of
Economics. Dr. Gramm is also a director of the Chicago Mercantile Exchange,
Enron Corporation, IBP, Inc., State Farm Insurance Company, State Farm Life
Insurance Company, Independent Women's Forum, International Republic Institute,
and the Republican Women's Federal Forum. Dr. Gramm is also a member of the
Board of Visitors, College of Business Administration, University of Iowa, and a
member of the Board of Visitors, Center for Study of Public Choice, George Mason
University. Address: 4201 Yuma Street, N.W., Washington, D.C. Born: January 10,
1945.
HUBERT L. HARRIS, JR.^,* Director. Chairman (since ^ 1996)^ and President
(January 1990 to ^ May 1996) of INVESCO Services, Inc. ^; Chief Executive
Officer of INVESCO Individual Services Group. Director of INVESCO Global Health
Sciences Fund. Member of the Executive Committee of the Alumni Board of Trustees
of Georgia Institute of Technology. Address: 1315 Peachtree Street, NE, Atlanta,
Georgia. Born: July 15, 1943.
KENNETH T. KING,^# Director. Formerly, Chairman of the Board of The Capitol
Life Insurance Company, Providence Washington Insurance Company, and Director of
numerous subsidiaries thereof in the U.S. Formerly, Chairman of the Board of The
Providence Capitol Companies in the United Kingdom and Guernsey. Chairman of the
Board of the Symbion Corporation (a high technology company) until 1987.
Address: 4080 North Circulo Manzanillo, Tucson, Arizona. Born: November 16,
1925.
<PAGE>
JOHN W. MCINTYRE,# Director. Retired. Formerly, Vice Chairman of the Board
of Directors of the Citizens and Southern Corporation and Chairman of the Board
and Chief Executive Officer of the Citizens and Southern Georgia Corporation and
Citizens and Southern National Bank. Director of Golden Poultry Co., Inc.
Trustee of ^ INVESCO Global Health Sciences Fund and Gables Residential Trust.
Address: ^ 7 Piedmont Center, Suite 100, Atlanta, Georgia ^. Born: September 14,
1930.
LARRY SOLL, Ph.D., Director.** Formerly, Chairman of the Board (1987 to
1994), Chief Executive Officer (1982 to 1989 and 1993 to 1994) and President
(1982 to 1989) of Synergen Corp. Director of Synergen since incorporation in
1982. Director of ISD Pharmaceuticals, Inc., Trustee of INVESCO Global Health
Sciences Fund. Address: 345 Poorman Road, Boulder, Colorado. Born: April 26,
1942.
GLEN A. PAYNE, Secretary. Senior Vice President (since 1995), General
Counsel and Secretary of INVESCO Funds Group, Inc. and INVESCO Trust Company and
INVESCO Distributors, Inc. (since 1997); Vice President (May 1989 to April
1995), Secretary and General Counsel of INVESCO Funds Group, Inc. ^; formerly,
employee of a U.S. regulatory agency, Washington, D.C., (June 1973 through May
1989). Born: September 25, 1947.
RONALD L. GROOMS, Treasurer. Senior Vice President and Treasurer of INVESCO
Funds Group, Inc. and INVESCO Trust Company ^(since 1988). Senior Vice President
and Treasurer of INVESCO Distributors, Inc. (since 1997). Born: October 1, 1946.
WILLIAM J. GALVIN, JR., Assistant Secretary. Senior Vice President of
INVESCO Funds Group, Inc. (since 1995) and of INVESCO Distributors, Inc. (since
1997) and Trust Officer of INVESCO Trust Company (since July 1995) and formerly
(August 1992 to July 1995), Vice President of INVESCO Funds Group, Inc. and ^
Trust Officer of INVESCO Trust Company. Formerly, Vice President of 440
Financial Group from June 1990 to August 1992; Assistant Vice President of
Putnam Companies from November 1986 to June 1990. Born: August 21, 1956.
ALAN I. WATSON, Assistant Secretary. Vice President of INVESCO Funds Group,
Inc. (since 1984) and Trust Officer of INVESCO Trust Company. Born: September
14, 1941.
JUDY P. WIESE, Assistant Treasurer. Vice President of INVESCO Funds Group,
Inc. (since 1984) and of INVESCO Distributors, Inc. (since 1997) and Trust
Officer of INVESCO Trust Company. Born: February 3, 1948.
#Member of the audit committee of the Fund.
+Member of the executive committee of the Fund. On occasion, the executive
committee acts upon the current and ordinary business of the Fund between
meetings of the board of directors. Except for certain powers which, under
applicable law, may only be exercised by the full board of directors, the
executive committee may exercise all powers and authority of the board of
directors in the management of the business of the Fund. All decisions are
subsequently submitted for ratification by the board of directors.
<PAGE>
*These directors are "interested persons" of the Fund as defined in the ^
Investment Company Act of 1940.
**Member of the management liaison committee of the Fund.
As of December ^19, 1997, officers and directors of the Fund, as a group,
beneficially owned less than 1% of the Company's outstanding shares and less
than 1% of the outstanding shares of the Fund and of each Portfolio of the Fund.
Director Compensation
The following table sets forth, for the fiscal year ended October 31, ^
1997: the compensation paid by the Fund to its ^ eligible independent directors
for services rendered in their capacities as directors of the Fund; the benefits
accrued as Fund expenses with respect to the Defined Benefit Deferred
Compensation Plan discussed below; and the estimated annual benefits to be
received by these directors upon retirement as a result of their service to the
Fund. In addition, the table sets forth the total compensation paid by all of
the mutual funds distributed by ^ IDI (including the Fund), INVESCO Advisor
Funds, Inc., INVESCO Treasurer's Series Trust, and ^ INVESCO Global Health
Sciences Fund (collectively, the "INVESCO Complex") to these directors for
services rendered in their capacities as directors or trustees during the year
ended December 31, 1996. As of December 31, ^ 1996, there were ^ 49 funds in the
INVESCO Complex. Dr. Soll became an independent director of the Fund effective
May 15, 1997. Dr. Gramm became an independent director of the Fund effective
July 29, 1997.
<PAGE>
Total
Compensa-
Benefits Estimated tion From
Aggregate Accrued As Annual INVESCO
Compensa- Part of Benefits Complex
tion From Fund Upon Paid To
Fund(1) Expenses(2) Retirement(3) Directors(1)
Fred ^ A. Deering, $17,590 $6,297 $6,131 $98,850
Vice Chairman of
the Board
Victor L. Andrews ^ 17,459 5,950 7,097 84,350
Bob R. Baker ^ 17,955 5,313 9,511 84,850
Lawrence H. Budner ^ 16,862 5,950 7,097 80,350
Daniel D. Chabris 17,382 6,790 5,044 84,850
A. D. Frazier, Jr.(4) 3,576 0 0 81,500
Wendy L. Gramm 3,459 0 0 0
Kenneth T. King 14,864 6,539 5,561 71,350
John W. McIntyre 16,277 0 0 90,350
Larry Soll 6,672 0 0 17,500
-------- ------- ------- --------
Total $132,096 $36,839 $40,441 $693,950
% of Net Assets 0.0034%(5) 0.0009%(5) 0.0045%(6)
(1)The vice chairman of the board, the chairmen of the audit, management
liaison and compensation committees, and the members of the executive and
valuation committees each receive compensation for serving in such capacities in
addition to the compensation paid to all independent directors.
(2)Represents estimated benefits accrued with respect to the Defined
Benefit Deferred Compensation Plan discussed below, and not compensation
deferred at the election of the directors.
(3)These figures represent the Fund's share of the estimated annual
benefits payable by the INVESCO Complex (excluding ^ INVESCO Global Health
Sciences Fund, which does not participate in any retirement plan) upon the
directors' retirement, calculated using the current method of allocating
director compensation among the funds in the INVESCO Complex. These estimated
<PAGE>
benefits assume retirement at age 72 and that the basic retainer payable to
the directors will be adjusted periodically for inflation, for increases in the
number of funds in the INVESCO Complex, and for other reasons during the period
in which retirement benefits are accrued on behalf of the respective directors.
This results in lower estimated benefits for directors who are closer to
retirement and higher estimated benefits for directors who are further from
retirement. With the exception of Messrs. Frazier and McIntyre and Drs. Gramm
and Soll, each of these directors has served as a director/trustee of one or
more of the funds in the INVESCO Complex for the minimum five-year period
required to be eligible to participate in the Defined Benefit Deferred
Compensation Plan.
^ (4)Effective February 28, 1997, Mr. Frazier resigned as a director of the
Fund. Effective November 1, 1996^ Mr. Frazier was employed by INVESCO PLC (the
predecessor to AMVESCAP PLC), a company affiliated with IFG and did not receive
any director's fees or other compensation from the ^ Fund or other funds in the
INVESCO Complex for his services as a director after that date.
(5)Totals^ as a percentage of the Fund's net assets as of October 31, ^
1997.
^ (6)Total as a percentage of the net assets of the INVESCO Complex as of
December 31, ^ 1996.
Messrs. Brady, Harris^ and Hesser, as "interested persons" of the Fund and
the other funds in the INVESCO Complex, receive compensation as officers or
employees of INVESCO or its affiliated companies, and do not receive any
director's fees or other compensation from the Fund or the other funds in the
INVESCO Complex for their service as directors.
The boards of directors/trustees of the mutual funds managed by ^ IFG and
INVESCO Treasurer's Series Trust have adopted a Defined Benefit Deferred
Compensation Plan for the non-interested directors and trustees of the funds.
Under this plan, each director or trustee who is not an interested person of the
funds (as defined in the 1940 Act) and who has served for at least five years (a
"qualified director") is entitled to receive, upon retiring from the boards at
the mandatory retirement age of 72 (or the retirement age of 73 to 74, if the
retirement date is extended by the boards for one or two years but less than
three years), continuation of payments for one year (the "first year retirement
benefit") of the annual basic retainer payable by the funds to the qualified
director at the time of his or her retirement (the "basic retainer"). Commencing
with any such director's second year of retirement, and commencing with the
first year of retirement of a director whose retirement has been extended by the
board for three years, a qualified director shall receive quarterly payments at
an annual rate equal to ^ 40% of the basic retainer. These payments will
continue for the remainder of the qualified director's life or ten years,
whichever is longer (the "reduced retainer payments"). If a qualified director
dies or becomes disabled after age 72 and before age 74 while still a director
of the funds, the first year retirement benefit and the reduced retainer
payments will be made to him or her or to his or her beneficiary or estate. If a
qualified director becomes disabled or dies either prior to age 72 or during his
74th year while still a director of the funds, the director will not be entitled
to receive the first year retirement benefit; however, the reduced retainer
<PAGE>
payments will be made to his or her beneficiary or estate. The plan is
administered by a committee of three directors who are also participants in the
plan and one director who is not a plan participant. The cost of the plan will
be allocated among the INVESCO^ and Treasurer's Series Trust funds in a manner
determined to be fair and equitable by the committee. The Fund is not making any
payments to directors under the plan as of the date of this Statement of
Additional Information. The Fund has no stock options or other pension or
retirement plans for management or other personnel and pays no salary or
compensation to any of its officers.
The Fund has an audit committee ^ that is comprised of ^ five of the
directors who are not interested persons of the Fund. The committee meets
periodically with the Fund's independent accountants and officers to review
accounting principles used by the Fund, the adequacy of internal controls, the
responsibilities and fees of the independent accountants, and other matters.
The Fund also has a management liaison committee which meets quarterly
with various management personnel of ^ IFG in order (a) to facilitate better
understanding of management and operations of the Fund, and (b) to review legal
and operational matters which have been assigned to the committee by the board
of directors, in furtherance of the board of directors' overall duty of
supervision.
HOW SHARES CAN BE PURCHASED
The shares of each Portfolio are sold on a continuous basis at the net
asset value per share of the Portfolio next calculated after receipt of a
purchase order in good form. The net asset value per share for each Portfolio is
computed separately for each Portfolio and is determined once each day that the
New York Stock Exchange is open as of the close of regular trading on that
Exchange, but may also be computed at other times. See "How Shares Are Valued."
^ IDI acts as the Fund's Distributor under a distribution agreement with the
Fund under which it receives no compensation and bears all expenses, including
the costs of printing and distribution of prospectuses incident to direct sales
and distribution of Fund shares on a no-load basis.
Each of the Portfolios has adopted a Plan and Agreement of Distribution
(the "Plan") pursuant to Rule 12b-1 under the 1940 Act, which was implemented on
November 1, 1997. The Plan was approved on May 16, 1997, at a meeting called for
such purpose by a majority of the directors of the Fund, including a majority of
the directors who neither are "interested persons" of the Fund nor have any
financial interest in the operation of the Plan ("12b-1 directors"). The Plan
was approved by the shareholders of the Portfolios, except the Environmental
Services Portfolio, on October 28, 1997. The Plan was approved by the
shareholders of the Environmental Services Portfolio on November 25, 1997. The
following disclosures regarding the Plan relate to all of the Portfolios.
The Plan provides that the Portfolios may make monthly payments to IDI of
amounts computed at an annual rate no greater than 0.25% of each Portfolio's new
<PAGE>
sales of shares, exchanges into the Portfolio and reinvestments of dividends and
capital gain distributions made after November 1, 1997 (December 1, 1997 for the
Environmental Services Portfolio), to compensate IDI for expenses incurred by it
in connection with the distribution of their shares to investors. Payments by a
Portfolio under the Plan, for any month, may only be made to compensate or pay
expenditures incurred during the rolling 12-month period in which that month
falls. As noted in the Prospectus, one type of expenditure permitted by the Plan
is the payment of compensation to securities companies, and other financial
institutions and organizations, which may include IDI-affiliated companies, in
order to obtain various distribution-related and/or administrative services for
the Portfolios. Each Portfolio is authorized by the Plan to use its assets to
finance the payments made to obtain those services. Payments will be made by IDI
to broker-dealers who sell shares of a Portfolio and may be made to banks,
savings and loan associations and other depository institutions. Although the
Glass-Steagall Act limits the ability of certain banks to act as underwriters of
mutual fund shares, the Portfolios do not believe that these limitations would
affect the ability of such banks to enter into arrangements with IDI, but can
give no assurance in this regard. However, to the extent it is determined
otherwise in the future, arrangements with banks might have to be modified or
terminated, and, in that case, the size of one or more of the Portfolios
possibly could decrease to the extent that the banks would no longer invest
customer assets in a particular Portfolio. Neither the Fund nor its investment
adviser will give any preference to banks or other depository institutions which
enter into such arrangements when selecting investments to be made by each
Portfolio.
The Plan was not implemented until November 1, 1997 (December 1, 1997 for
the Environmental Services Portfolio). Therefore, for the fiscal year ended
October 31, 1997, no 12b-1 amounts were paid by the Portfolios.
The nature and scope of services which are provided by securities dealers
and other organizations may vary by dealer but include, among other things,
processing new stockholder account applications, preparing and transmitting to
the Fund's Transfer Agent computer-processable tapes of each Portfolio's
transactions by customers, serving as the primary source of information to
customers in answering questions concerning each Portfolio, and assisting in
other customer transactions with each Portfolio.
The Plan provides that it shall continue in effect with respect to each
Portfolio for so long as such continuance is approved at least annually by the
vote of the board of directors cast in person at a meeting called for the
purpose of voting on such continuance. The Plan can also be terminated at any
time with respect to any Portfolio, without penalty, if a majority of the 12b-1
directors, or shareholders of such Portfolio, vote to terminate the Plan. The
Fund may, in its absolute discretion, suspend, discontinue or limit the offering
of its shares of any Portfolio at any time. In determining whether any such
action should be taken, the board of directors intends to consider all relevant
factors including, without limitation, the size of a particular Portfolio, the
investment climate for any particular Portfolio, general market conditions, and
the volume of sales and redemptions of a Portfolio's shares. The Plan may
continue in effect and payments may be made under the Plan following any such
temporary suspension or limitation of the offering of a Portfolio's shares;
however, none of the Portfolios are contractually obligated to continue the Plan
<PAGE>
for any particular period of time. Suspension of the offering of a
Portfolios shares would not, of course, affect a shareholder's ability to redeem
his shares. So long as the Plan is in effect, the selection and nomination of
persons to serve as independent directors of the Fund shall be committed to the
independent directors then in office at the time of such selection or
nomination. The Plan may not be amended to increase materially the amount of any
Portfolio's payments thereunder without approval of the shareholders of that
Portfolio, and all material amendments to the Plan must be approved by the board
of directors, including a majority of the 12b-1 directors. Under the agreement
implementing the Plan, IDI or any Portfolio, the latter by vote of a majority of
the 12b-1 directors, or of the holders of a majority of a Portfolio's
outstanding voting securities, may terminate such agreement as to that Portfolio
without penalty upon 30 days' written notice to the other party. No further
payments will be made by a Portfolio under the Plan in the event of its
termination as to that Portfolio.
To the extent that the Plan constitutes a plan of distribution adopted
pursuant to Rule 12b-1 under the 1940 Act, it shall remain in effect as such, so
as to authorize the use of each Portfolio's assets in the amounts and for the
purposes set forth therein, notwithstanding the occurrence of an assignment, as
defined by the 1940 Act, and rules thereunder. To the extent it constitutes an
agreement pursuant to the Plan, each Portfolio's obligation to make payments to
IDI shall terminate automatically, in the event of such assignment, in which
case the Portfolio may continue to make payments pursuant to the Plan to IDI or
another organization only upon the approval of new arrangements, which may or
may not be with IDI, regarding the use of the amounts authorized to be paid by
it under the Plan, by the directors, including a majority of the 12b-1
directors, by a vote cast in person at a meeting called for such purpose.
Information regarding the services rendered under the Plan and the amounts
paid therefor by the Portfolios are provided to, and reviewed by, the directors
on a quarterly basis. On an annual basis, the directors consider the continued
appropriateness of the Plan and the level of compensation provided therein.
The only members of the board of directors or officers of the Fund who are
interested persons, as that term is defined in Section 2(a)(19) of the 1940 Act,
of the Fund and who have a direct or indirect financial interest in the
operation of the Plan are the officers and directors of the Fund listed herein
under the section entitled "The Fund And Its Management -- Officers and
Directors of the Fund" who are also officers either of IDI or companies
affiliated with IDI. The benefits which the Portfolios believe will be
reasonably likely to flow to them and to their respective shareholders under the
Plan include the following:
(1) Enhanced marketing efforts, if successful, should result in an
increase in net assets through the sale of additional shares and
afford greater resources with which to pursue the investment
objectives of the Portfolios;
(2) The sale of additional shares reduces the likelihood that redemption
of shares will require the liquidation of securities of the
Portfolios in amounts and at times that are disadvantageous for
investment purposes;
<PAGE>
(3) The positive effect which increased Portfolio assets will have on
IFG's revenues could allow IFG and its affiliated companies:
(a) To have greater resources to make the financial commitments
necessary to improve the quality and level of each Portfolio's
shareholder services (in both systems and personnel),
(b) To increase the number and type of mutual funds available to
investors from IFG and its affiliated companies (and support
them in their infancy), and thereby expand the investment
choices available to all shareholders, and
(c) To acquire and retain talented employees who desire to be
associated with a growing organization; and
(4) Increased Portfolio assets may result in reducing each investor's
share of certain expenses through economies of scale (e.g. exceeding
established breakpoints in the advisory fee schedule and allocating
fixed expenses over a larger asset base), thereby partially
offsetting the costs of the Plan.
HOW SHARES ARE VALUED
As described in the section of each Portfolio's Prospectus entitled "Fund
Price And Performance," the net asset value of shares of each Portfolio of the
Fund is computed once each day that the New York Stock Exchange is open as of
the close of regular trading on that Exchange (generally 4:00 p.m., New York
time) and applies to purchase and redemption orders received prior to that time.
Net asset value per share is also computed on any other day on which there is a
sufficient degree of trading in the securities held by a Portfolio that the
current net asset value per share might be materially affected by changes in the
value of the securities held, but only if on such day the Fund receives a
request to purchase or redeem shares of that Portfolio. Net asset value per
share is not calculated on days the New York Stock Exchange is closed, such as
federal holidays including New Year's Day, Martin Luther King, Jr. Day,
Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving and Christmas. ^ The net asset value per share of each Portfolio is
calculated by dividing the value of all securities held by that Portfolio and
its other assets (including dividends and interest accrued but not collected),
less the Portfolio's liabilities (including accrued expenses) by the number of
outstanding shares of that Portfolio.
Securities traded on national securities exchanges, the NASDAQ National
Market System, the NASDAQ Small Cap Market and foreign markets are valued at
their last sale prices on the exchanges or markets where such securities are
primarily traded. Securities traded in the over-the-counter market for which
last sales prices are not available, and listed securities for which no sales
are reported on a particular date, are valued at their highest closing bid
<PAGE>
prices (or, for debt securities, yield equivalents thereof) obtained from one or
more dealers making markets for such securities. If market quotations are not
readily available, securities will be valued at their fair values as determined
in good faith by the Fund's board of directors or pursuant to procedures adopted
by authority of the board of directors. The above procedures may include the use
of valuations furnished by a pricing service which employs a matrix to determine
valuations for normal institutional-size trading units of debt securities. Prior
to utilizing a pricing service, the Fund's board of directors reviews the
methods used by such service to assure itself that securities will be valued at
their fair values. The Fund's board of directors also periodically monitors the
methods used by such pricing services. Debt securities with remaining maturities
of 60 days or less at the time of purchase are normally valued at amortized
cost.
The values of securities held by the Portfolios and other assets used in
computing net asset value generally are determined as of the time regular
trading in such securities or assets is completed each day. Because regular
trading in most foreign securities markets is completed simultaneously with, or
prior to, the close of regular trading on the New York Stock Exchange, closing
prices for foreign securities usually are available for purposes of computing
the Portfolios' net asset value. However, in the event that the closing price of
a foreign security is not available in time to calculate a Portfolio's net asset
value on a particular day, the Fund's board of directors has authorized the use
of the market price for the security obtained from an approved pricing service
at an established time during the day which may be prior to the close of regular
trading in the security. The value of all assets and liabilities expressed in
foreign currencies will be converted into U.S. dollars at the spot rate of such
currencies against U.S. dollars provided by an approved pricing service.
FUND PERFORMANCE
As discussed in the section of each Portfolio's Prospectus entitled "Fund
Price And Performance," the Fund advertises the total return performance of the
Portfolios, as well as the yield of the Utilities Portfolio. Average annual
total return performance for each Portfolio for the indicated periods ended
October 31, ^ 1997, was as follows:
10 Years/
Life of
Portfolio 1 Year 5 Years Portfolio
- --------- ------ ------- ---------
Energy ^ 40.65% 18.87% 11.01%
Environmental Services ^ 19.13% 10.41% 6.59%(1)
Financial Services 39.80% 24.88% 24.41%
Gold (44.38%) 2.26% (2.10%)
Health Sciences 22.96% 15.49% 22.83%
Leisure 22.32% 17.46% 19.72%
Technology 20.71% 23.65% 23.92%
Utilities 14.37% 12.88% 12.41%
- -----------------
<PAGE>
(1) The Environmental Services Portfolio did not commence operations until
January 2, 1991. The total return of Environmental Services for the ^ 82-month
period from January 2, 1991 (date of inception) through October 31, ^ 1997 was ^
6.59%.
Average annual total return performance for each of the periods indicated
was computed by finding the average annual compounded rates of return that would
equate the initial amount invested to the ending redeemable value, according to
the following formula:
P(1 + T) exponent n = ERV
where: P = initial payment of $1000
T = average annual total return
n = number of years
ERV = ending redeemable value of initial payment
The average annual total return performance figures shown above were
determined by solving the above formula for "T" for each time period and
Portfolio indicated.
The yield of the Utilities Portfolio for the month ended October 31, ^
1997, was ^ 2.48%. This yield was computed by dividing the net investment income
per share earned during the period as calculated according to a prescribed
formula by the net asset value per share on October 31, ^ 1997. Because
dividends received on the common stocks held by the Utilities Portfolio are
generally paid near the end of calendar quarters and are accounted for on
ex-dividend dates, such dividend income is recognized, for purposes of yield
calculations, on an annualized basis.
In conjunction with performance reports and/or analyses for the
Portfolios, comparative data between a Portfolio's performance for a given
period and recognized indices of investment results for the same period, and/or
assessments of the quality of shareholder service, may be provided to
shareholders. Such indices include indices provided by Dow Jones & Company,
Standard & Poor's, Lipper Analytical Services, Inc., Lehman Brothers, National
Association of Securities Dealers Automated Quotations, Frank Russell Company,
Value Line Investment Survey, the American Stock Exchange, Morgan Stanley
Capital International, Wilshire Associates, the Financial Times Stock Exchange,
the New York Stock Exchange, the Nikkei Stock Average and Deutcher Aktienindex,
all of which are unmanaged market indicators. In addition, rankings, ratings and
comparisons of investment performance and/or assessments of the quality of
shareholder service made by independent sources may be used in advertisements,
sales literature or shareholder reports, including reprints of, or selections
from, editorials or articles about the Funds. These sources utilize information
compiled (i) internally; (ii) by Lipper Analytical Services, Inc.; or (iii) by
other recognized analytical services. The Lipper Analytical Services, Inc.
mutual fund rankings and comparisons which may be used by the Portfolios in
performance reports will be drawn from the mutual fund groupings listed in each
Portfolio's prospectus, in addition to the broad-based Lipper general fund
groupings. Sources for Portfolio performance information and articles about the
Portfolios include, but are not limited to, the following:
<PAGE>
American Association of Individual Investors' Journal
Banxquote
Barron's
Business Week
CDA Investment Technologies
CNBC
CNN
Consumer Digest
Financial Times
Financial World
Forbes
Fortune
Ibbotson Associates, Inc.
Institutional Investor
Investment Company Data, Inc.
Investor's Business Daily
Kiplinger's Personal Finance
Lipper Analytical Services, Inc.'s Mutual Fund Performance
Analysis
Money
Morningstar
Mutual Fund Forecaster
No-Load Analyst
No-Load Fund X
Personal Investor
Smart Money
The New York Times
The No-Load Fund Investor
U.S. News and World Report
United Mutual Fund Selector
USA Today
Wall Street Journal
Wiesenberger Investment Companies Services
Working Woman
Worth
SERVICES PROVIDED BY THE FUND
Periodic Withdrawal Plan. As described in the section of each Portfolio's
Prospectus entitled "How To Sell Shares," the Fund offers a Periodic Withdrawal
Plan. All dividends and distributions on shares owned by shareholders
participating in this Plan are reinvested in additional shares. Because
withdrawal payments represent the proceeds from sales of shares, the amount of
shareholders' investments in the Fund will be reduced to the extent that
withdrawal payments exceed dividends and other distributions paid and
reinvested. Any gain or loss on such redemptions must be reported for tax
purposes. In each case, shares will be redeemed at the close of business on or
about the 20th day of each month preceding payment and payments will be mailed
within five business days thereafter.
The Periodic Withdrawal Plan involves the use of principal and is not a
guaranteed annuity. Payments under such a Plan do not represent income or a
return on investment.
<PAGE>
^ Participation in the Periodic Withdrawal Plan may be terminated at any
time by sending a written request to ^ IFG. Upon termination, all future
dividends and capital gain distributions will be reinvested in additional shares
unless a shareholder requests otherwise.
Exchange ^ Policy. As discussed in the section of each Portfolio's
Prospectus entitled "How To Buy Shares -- Exchange ^ Policy," the Fund offers
shareholders the ^ ability to exchange shares of any Portfolio of the Fund for
shares of any other Portfolio and of exchanging shares of the Fund for shares of
certain other no-load mutual funds advised by ^ IFG. Exchange requests may be
made either by telephone or by written request to ^ IFG, using the telephone
number or address on the cover of this Statement of Additional Information.
Exchanges made by telephone must be in an amount of at least $250 if the
exchange is being made into an existing account of one of the INVESCO funds. All
exchanges that establish a new account must meet the fund's applicable minimum
initial investment requirements. Written exchange requests into an existing
account have no minimum requirements other than the fund's applicable minimum
subsequent investment requirements. Any gain or loss realized on such an
exchange is recognized for federal income tax purposes. This privilege is not an
option or right to purchase securities but is a revocable privilege permitted
under the present policies of each of the funds and is not available in any
state or other jurisdiction where the shares of the mutual fund into which
transfer is to be made are not qualified for sale or when the net asset value of
the shares presented for exchange is less than the minimum dollar purchase
required by the appropriate prospectus.
TAX-DEFERRED RETIREMENT PLANS
As described in the section of ^ the Portfolios' Prospectus entitled "Fund
Services," shares of the ^ Portfolios may be purchased as the investment medium
for various tax-deferred retirement plans. Persons who request information
regarding these plans from ^ IFG will be provided with prototype documents and
other supporting information regarding the type of plan requested. Each of these
plans involves a long-term commitment of assets and is subject to possible
regulatory penalties for excess contributions, premature distributions or for
insufficient distributions after age 70-1/2. The legal and tax implications may
vary according to the circumstances of the individual investor. Therefore, the
investor is urged to consult with an attorney or tax adviser prior to the
establishment of such a plan.
HOW TO REDEEM SHARES
Normally, payments for shares redeemed will be mailed within seven (7)
days following receipt of the required documents as described in the section of
each Portfolio's Prospectus entitled "How To Sell Shares." The right of
redemption may be suspended and payment postponed when: (a) the New York Stock
Exchange is closed for other than customary weekends and holidays; (b) trading
<PAGE>
on that exchange is restricted; (c) an emergency exists as a result of which
disposal by the Fund of securities owned by it is not reasonably practicable, or
it is not reasonably practicable for the Fund fairly to determine the value of
its net assets; or (d) the Securities and Exchange Commission (the "SEC") by
order so permits.
It is possible that in the future conditions may exist which would, in the
opinion of the Fund's investment adviser, make it undesirable for a Portfolio to
pay for redeemed shares in cash. In such cases, the investment adviser may
authorize payment to be made in portfolio securities or other property of the
Fund. However, the Fund is obligated under the 1940 Act to redeem for cash all
shares of a Portfolio presented for redemption by any one shareholder having a
value up to $250,000 (or 1% of the Portfolio's net assets if that is less) in
any 90-day period. Securities delivered in payment of redemptions are selected
entirely by the investment adviser based on what is in the best interests of the
Portfolio and its shareholders, and are valued at the value assigned to them in
computing the Portfolio's net asset value per share. Shareholders receiving such
securities are likely to incur brokerage costs on their subsequent sales of the
securities.
DIVIDENDS, ^ OTHER DISTRIBUTIONS AND TAXES
The Fund intends to continue to conduct its business and satisfy the
applicable diversification of assets and source of income requirements to
qualify as a regulated investment company under Subchapter M of the Internal
Revenue Code of 1986, as amended (the "Code"). The Fund so qualified in the
fiscal year ended October 31, ^ 1997, and intends to continue to qualify during
its current ^ taxable year. As a result, it is anticipated that the Fund will
pay no federal income or excise taxes and will be accorded conduit or "pass
through" treatment for federal income tax purposes.
Dividends paid by the Fund from net investment income as well as
distributions of net realized short-term capital gains and net realized gains
from certain foreign currency transactions are, for federal income tax purposes,
taxable as ordinary income to shareholders. After the end of each calendar year,
the Fund sends shareholders information regarding the amount and character of
dividends paid in the year^.
Distributions by the Fund of net capital gains (the excess of net long-term
capital gain over net short-term capital loss) are, for federal income tax
purposes, taxable to the shareholder as long-term capital gains regardless of
how long a shareholder has held shares of the Fund. ^ The Taxpayer Relief Act of
1997 (the "Tax Act"), enacted in August 1997, changed the taxation of long-term
capital gains for individuals by applying different capital gains rates
depending on the taxpayer's holding period and marginal rate of federal income
tax. Long-term gains realized on the sale of securities held for more than one
year but not for more than 18 months are taxable at a rate of 28%. This category
of long-term gains is often referred to as "mid-term" gains but is technically
termed "28% rate gains." Long-term gains realized on the sale of securities held
for more than 18 months are taxable at a rate of 20%. At the end of each year,
information regarding the tax status of dividends and other distributions is
provided to shareholders. Shareholders should consult their tax advisers as to
the effect of the Tax Act on distributions by the Fund of net capital gains.
<PAGE>
All dividends and other distributions are regarded as taxable to the
investor, whether or not such dividends and distributions are reinvested in
additional shares^ of the Fund or another fund in the INVESCO group. The net
asset value of Fund shares ^ reflects accrued net investment income and
undistributed realized capital and foreign currency gains; therefore, when a
distribution is made, the net asset value is reduced by the amount of the
distribution. If the net asset value of Fund shares were reduced below a
shareholder's cost as a result of a distribution, such distribution would be
taxable to the shareholder although a portion would be, in effect, a return of
invested capital. ^ If shares are purchased shortly before a distribution, the
full price for the shares will be paid and some portion of the price may then be
returned to the shareholder as a taxable dividend or capital gain. However, the
net asset value per share will be reduced by the amount of the distribution,
which would reduce any gain (or increase any loss) for tax purposes on any
subsequent redemption of shares.
^ IFG may provide Fund shareholders with information concerning the
average cost basis of their shares in order to help them prepare their tax
returns. This information is intended as a convenience to shareholders and will
not be reported to the Internal Revenue Service (the "IRS"). The IRS permits the
use of several methods to determine the cost basis of mutual fund shares. The
cost basis information provided by ^ IFG will be computed using the
single-category average cost method, although neither ^ IFG nor the Fund
recommends any particular method of determining cost basis. Other methods may
result in different tax consequences. If a shareholder has reported gains or
losses for a Portfolio in past years, the shareholder must continue to use the
method previously used, unless the shareholder applies to the IRS for permission
to change ^ the method.
If Fund shares are sold at a loss after being held for six months or less,
the loss will be treated as long-term, instead of short-term, capital loss to
the extent of any capital ^ gains distributions received on those shares.
Each Portfolio will be subject to a ^ non-deductible 4% excise tax to the
extent it fails to distribute by the end of any calendar year substantially all
of its ordinary income for that year and net capital ^ gains for the one-year
period ending on October 31 of that year, plus certain other amounts.
Dividends and interest received by each Portfolio may be subject to income,
withholding or other taxes imposed by foreign countries and U.S. possessions
that would reduce the yield on its securities. Tax conventions between certain
countries and the United States may reduce or eliminate these foreign taxes,
however, and many foreign countries do not impose taxes on capital gains in
respect of investments by foreign investors. Foreign taxes withheld will be
treated as an expense of the Portfolio. If more than 50% of the value of a
Portfolio's total assets at the close of any taxable year consists of securities
of foreign corporations, the Fund will be eligible to, and may, file an election
with the IRS that will enable its shareholders, in effect, to receive the
benefit of the foreign tax credit with respect to any foreign and U.S.
possessions income taxes paid by it. Each Portfolio will report to its
shareholders shortly after each taxable year their respective shares of the
Portfolio's income from sources within, and taxes paid to, foreign countries and
U.S. possessions if it makes this election.
<PAGE>
The Portfolios may invest in the stock of "passive foreign investment
companies" ("PFICs"). A PFIC is a foreign corporation (other than a controlled
foreign corporation) that, in general, meets either of the following tests: (1)
at least 75% of its gross income is passive, or (2) an average of at least 50%
of its assets produce, or are held for the production of, passive income. Under
certain circumstances, a Portfolio will be subject to federal income tax on a
portion of any "excess distribution" received on the stock of a PFIC or of any
gain on disposition of the stock (collectively "PFIC income"), plus interest
thereon, even if the Portfolio distributes the PFIC income as a taxable dividend
to its shareholders. The balance of the PFIC income will be included in the
Portfolio's investment company taxable income and, accordingly, will not be
taxable to it to the extent that income is distributed to its shareholders.
Each Portfolio may elect to "mark-to-market" its stock in any PFIC.
Marking-to-market, in this context, means including in ordinary income for each
taxable year the excess, if any, of the fair market value of the PFIC stock over
a Portfolio's adjusted tax basis therein as of the end of that year. Once the
election has been made, a Portfolio also will be allowed to deduct from ordinary
income the excess, if any, of its adjusted basis in PFIC stock over the fair
market value thereof as of the end of the year, but only to the extent of any
net mark-to-market gains with respect to that PFIC stock included by a Portfolio
for prior taxable years. A Portfolio's adjusted tax basis in each PFIC's stock
with respect to which it makes this election will be adjusted to reflect the
amounts of income included and deductions taken under the election.
Gains or losses (1) from the disposition of foreign currencies, (2) from
the disposition of debt securities denominated in foreign currency that are
attributable to fluctuations in the value of the foreign currency between the
date of acquisition of each security and the date of disposition, and (3) that
are attributable to fluctuations in exchange rates that occur between the time a
Portfolio accrues interest, dividends or other receivables or accrues expenses
or other liabilities denominated in a foreign currency and the time the
Portfolio actually collects the receivables or pays the liabilities, generally
will be treated as ordinary income or loss. These gains or losses may increase
or decrease the amount of the Portfolio's investment company taxable income to
be distributed to its shareholders.
Shareholders should consult their own tax advisers regarding specific
questions as to federal, state and local taxes. Dividends and capital gain
distributions will generally be subject to applicable state and local taxes.
Qualification as a regulated investment company under the Internal Revenue Code
of 1986, as amended, for income tax purposes does not entail government
supervision of management or investment policies.
INVESTMENT PRACTICES
Portfolio Turnover. There are no fixed limitations regarding portfolio
turnover for any of the Fund's Portfolios. Brokerage costs to the Fund are
commensurate with the rate of portfolio activity. Portfolio turnover rates for
the fiscal years ended October 31, 1997, 1996^ and 1995 ^, were as follows:
<PAGE>
Portfolio 1997 1996 1995 ^
--------- ---- ---- ----
Energy 249% 392% 300%^
Environmental Services 187 142 195 ^
Financial Services 96 141 171 ^.
Gold 148 155 72 ^
Health Sciences 143 90 107 ^
Leisure 25 56 119 ^
Technology 237 168 191 ^
Utilities 55 141 185 ^
In computing the portfolio turnover rate, all investments with maturities
or expiration dates at the time of acquisition of one year or less are excluded.
Subject to this exclusion, the turnover rate is calculated by dividing (A) the
lesser of purchases or sales of portfolio securities for the fiscal year by (B)
the monthly average of the value of portfolio securities owned by the Portfolio
during the fiscal year.
^
Placement of Portfolio Brokerage. Either ^ IFG, as the Fund's investment
adviser, or INVESCO Trust, as the Fund's sub-adviser, places orders for the
purchase and sale of securities with brokers and dealers based upon ^ IFG's or
INVESCO Trust's evaluation of ^ the brokers' and dealers' financial
responsibility, subject to ^ such brokers' and dealers' ability to effect
transactions at the best available prices. ^ Fund Management evaluates the
overall reasonableness of brokerage commissions or underwriting discounts (the
difference between the full acquisition price to acquire a new offering and the
discount offered to members of the underwriting syndicate) paid by reviewing the
quality of executions obtained on portfolio transactions of each applicable
Portfolio, viewed in terms of the size of transactions, prevailing market
conditions in the security purchased or sold, and general economic and market
conditions. In seeking to ensure that ^ any commissions or discounts charged the
Portfolios are consistent with prevailing and reasonable commissions, ^ IFG or
INVESCO Trust also endeavor to monitor brokerage industry practices with regard
to the commissions charged by ^ broker-dealers on transactions effected for
other comparable institutional investors. While ^ IFG or INVESCO Trust seek
reasonably competitive rates, the Portfolios do not necessarily pay the lowest
commission ^, spread or discount available.
Consistent with the standard of seeking to obtain the best execution on
portfolio transactions, ^ IFG or INVESCO Trust may select brokers that provide
research services to effect such transactions. Research services consist of
statistical and analytical reports relating to issuers, industries, securities
and economic factors and trends, which may be of assistance or value to ^ IFG or
INVESCO Trust in making informed investment decisions. Research services
prepared and furnished by brokers through which the Portfolios effect securities
transactions may be used by ^ IFG or INVESCO Trust in servicing all of their
respective accounts and not all such services may be used by ^ IFG or INVESCO
Trust in connection with the Fund's Portfolios.
<PAGE>
In recognition of the value of the above-described brokerage and research
services provided by certain brokers, ^ IFG or INVESCO Trust, consistent with
the standard of seeking to obtain the best execution on portfolio transactions,
may place orders with such brokers for the execution of transactions for the
Fund's Portfolios on which the commissions are in excess of those which other
brokers might have charged for effecting the same transactions.
Portfolio transactions may be effected through qualified broker-dealers
who recommend the Portfolios to their clients or who act as agent in the
purchase of any of the Portfolios' shares for their clients. When a number of
brokers and dealers can provide comparable best price and execution on a
particular transaction, the Fund's adviser may consider the sale of Portfolio
shares by a broker or dealer in selecting among qualified broker-dealers.
Certain financial institutions (including brokers who may sell shares of
the Fund, or affiliates of such brokers) are paid a fee (the "Services Fee") for
recordkeeping, shareholder communications and other services provided by the
financial institution or such affiliates to investors purchasing shares of the ^
Portfolios through no transaction fee programs ("NTF Programs") offered by the
financial institution or its affiliated broker (an "NTF Program Sponsor"). The
Services Fee is based on the average daily value of the investments in each ^
Portfolio made in the name of such NTF Program Sponsor and held in omnibus
accounts maintained on behalf of investors participating in the NTF Program. The
Fund's directors have authorized ^ each Portfolio to pay transfer agency fees to
^ IFG based on the number of investors who have beneficial interests in the NTF
Program Sponsor's omnibus accounts in the Fund. ^ IFG, in turn, pays these
transfer agency fees to the NTF Program Sponsor as a sub-transfer agency or
recordkeeping fee in payment of all or a portion of the Services Fee. In the
event that the sub-transfer agency or recordkeeping fee is insufficient to pay
all of the Services Fee with respect to these NTF Programs, ^ IFG itself pays
the portion of the Fund's Services Fee, if any, that exceeds the sum of the
sub-transfer agency or recordkeeping fee. The Fund's directors have further
authorized ^ IFG to place a portion of the Fund's brokerage transactions with
certain NTF Program Sponsors or their affiliated brokers, if ^ IFG reasonably
believes that, in effecting the Fund's transactions in portfolio securities, the
broker is able to provide the best execution of orders at the most favorable
prices. A portion of the commissions earned by such a broker from executing
portfolio transactions on behalf of the Fund may be credited by the NTF Program
Sponsor against its Services Fee. Such credit shall be applied against any
sub-transfer agency or recordkeeping fee payable with respect to the Fund on a
basis which has resulted from negotiations between ^ IFG or IDI and the NTF
Program Sponsor. Thus, the Fund pays sub-transfer agency or recordkeeping fees
to the NTF Program Sponsor in payment of the Services Fee only to the extent
that such fees are not offset by the Fund's credits. In the event that the
transfer agency fee paid by the Fund to ^ IFG with respect to investors who have
beneficial interests in a particular NTF Program Sponsor's omnibus accounts in
the Fund exceeds the Services Fee applicable to the Fund, after application of
credits, ^ IFG may carry forward the excess and apply it to future Services Fees
payable to that NTF Program Sponsor with respect to the Fund. The amount of
excess transfer agency fees carried forward will be reviewed for possible
adjustment by ^ IFG prior to each fiscal year-end of the Fund.
<PAGE>
The aggregate dollar amounts of brokerage commissions paid by the Fund for
the fiscal years ended October 31, 1997, 1996^ and 1995 ^ were $19,588,903,
$17,056,949^ and $14,162,585 ^, respectively. On a Portfolio basis, the
aggregate amount of brokerage commissions paid in fiscal ^ 1997 breaks down as
follows: Energy, ^ $2,930,676; Environmental Services, ^ $389,416; Financial
Services, ^ $2,984,942; Gold, ^ $2,041,911; Health Sciences, ^ $3,867,011;
Leisure, ^ $678,011; Technology, ^ $6,214,757; and Utilities, ^ $481,479. For
the year ended October 31, ^ 1997, brokers providing research services received
^ $7,484,369 in commissions on portfolio transactions effected for the Fund. On
a Portfolio basis, this breaks down as follows: Energy, $1,056,892;
Environmental Services, $81,883; Financial Services, $972,552; Gold, $1,180,686;
Health Sciences, $1,843,742; Leisure, $122,417; Technology, $2,088,347 and
Utilities, $137,850. The aggregate dollar amount of such portfolio transactions
was ^ $4,404,563,694. On a Portfolio basis this figure breaks down as follows:
Energy, ^ $553,816,858; Environmental Services, ^ $32,277,206; Gold, ^
$332,821,821; Health Sciences, ^ $1,237,093,851; Financial Services, ^
$789,895,358; Leisure, ^ $48,748,634; Technology, ^ $1,342,507,339; and
Utilities ^ $67,402,627. The Fund paid ^ $2,344,896 in compensation to brokers
for the sale of shares of the Fund during the fiscal year ended October 31, ^
1997. On a Portfolio basis this breaks down as follows: Energy, $200,136;
Environmental Services, $33,506; Financial Services, $465,330; Gold, $238,380;
Health Sciences, $458,920; Leisure, $147,816; Technology, $743,112; and
Utilities, $57,696.
^ At October 31, 1997 the Fund's Portfolios held securities of their
regular brokers or dealers, or ^ the parent companies of such brokers and
dealers, as follows:
Value of
Securities
Portfolio Broker or Dealer at ^ 10/31/97
- --------- ---------------- -------------
ENERGY FUND None ^
ENVIRONMENTAL None
SERVICES FUND
FINANCIAL SERVICES Associates Corporation of ^ $28,460,000.00
FUND North America
State Street Boston ^ $828,711,500.00
Corporation
Ford Motor Credit $28,463,000.00
Household Finance $30,496,000.00
Morgan Stanley Dean Witter $12,740,000.00
<PAGE>
GOLD FUND None
HEALTH SCIENCES Household Finance $27,100,000.00
FUND
Household Finance $35,130,000.00
LEISURE FUND CIGNA $6,302,000.00
TECHNOLOGY FUND Household Finance $42,851,000.00
UTILITIES FUND Associates Corporation of ^ $4,620,000.00
^ North America
^ Neither IFG nor INVESCO Trust receives any brokerage commissions on
portfolio transactions effected on behalf of the Fund, and there is no
affiliation between ^ IFG, INVESCO Trust or any person affiliated with ^ IFG,
INVESCO Trust or the Fund and any broker or dealer that executes transactions
for the Fund.
ADDITIONAL INFORMATION
Common Stock. The Fund has one billion authorized shares of common stock
with a par value of $0.01 per share. Of the Fund's authorized shares,
100,000,000 shares have been allocated to each of the Fund's eight Portfolios.
As of ^ November 30, 1997, shares outstanding for each Portfolio were as
follows:
Portfolio Shares Outstanding
--------- ------------------
Energy ^ 14,941,799
Environmental Services ^ 1,904,144
Financial Services ^ 38,794,048
Gold ^ 44,994,993
Health Sciences ^ 16,378,410
Leisure ^ 7,868,413
Technology ^ 30,431,538
Utilities ^ 14,387,953
The board of directors has the authority to designate additional classes
of Common Stock without seeking the approval of shareholders and may classify
and reclassify any authorized but unissued shares.
Shares of each ^ Portfolio represent the interests of the shareholders of
such ^ Portfolio in a particular portfolio of investments of the Fund. Each ^
Portfolio of the Fund's shares is preferred over all other ^ Portfolio in
<PAGE>
respect of the assets specifically allocated to that ^ Portfolio, and all
income, earnings, profits and proceeds from such assets, subject only to the
rights of creditors, are allocated to shares of that ^ Portfolio. The assets of
each ^ Portfolio are segregated on the books of account and are charged with the
liabilities of that ^ Portfolio and with a share of the Fund's general
liabilities. The board of directors determines those assets and liabilities
deemed to be general assets or liabilities of the Fund, and these items are
allocated among ^ Portfolio in proportion to the relative total assets of each ^
Portfolio. In the unlikely event that a liability allocable to one ^ Portfolio
exceeds the assets belonging to the ^ Portfolio, all or a portion of such
liability may have to be borne by the holders of shares of the Fund's other ^
Portfolio.
All shares, regardless of ^ Portfolio, have equal voting rights. Voting
with respect to certain matters, such as ratification of independent accountants
or election of directors, will be by all ^ Portfolios of the Fund. When not all
^ series are affected by a matter to be voted upon, such as approval of an
investment advisory contract or changes in a Portfolio's investment policies,
only shareholders of the ^ Portfolio affected by the matter may be entitled to
vote. Fund shares have noncumulative voting rights, which means that the holders
of a majority of the shares voting for the election of directors can elect 100%
of the directors if they choose to do so. In such event, the holders of the
remaining shares voting for the election of directors will not be able to elect
any person or persons to the board of directors. After they have been elected by
shareholders, the directors will continue to serve until their successors are
elected and have qualified or they are removed from office, in either case by a
shareholder vote, or until death, resignation, or retirement. Directors may
appoint their own successors, provided that always at least a majority of the
directors have been elected by the Fund's shareholders. It is the intention of
the Fund not to hold annual meetings of shareholders. The directors will call
annual or special meetings of shareholders for action by shareholder vote as may
be required by the 1940 Act or the Fund's Articles of Incorporation, or at their
discretion.
Principal Shareholders. As of December 1, ^ 1997, the following entities
held more than 5% of the Fund's and each Portfolio's outstanding equity
securities.
Amount and Nature Class and Percent
Name and Address of Ownership of Class
- ---------------- ----------------- -----------------
Energy Portfolio
Charles Schwab & Co. Inc. ^ 5,832,849.7560 39.45%
Special Custody Acct. For
The Exclusive Benefit
of Customers
101 Montgomery St.
San Francisco, CA 94104
<PAGE>
National Financial ^ 888,472.5800 6.01%
Services Corp.
The Exclusive Benefit
of Customers
One World Financial Center
200 Liberty St., 5th Floor
New York, NY 10281
Donaldson Lufkin & 783,043.7120 5.30%
Jenrette Securities Corp.
Mutual Funds 5th Floor
P.O. Box 2052
Jersey City, NJ 07303
Gold Portfolio
Charles Schwab & Co. Inc. ^ 16,524,602.3570 36.80%
Special Custody Acct. For
The Exclusive Benefit
of Customers
101 Montgomery St.
San Francisco, CA 94104
Health Sciences Portfolio
Charles Schwab & Co. Inc. ^ 3,869,764.4860 23.62%
Special Custody Acct. For
The Exclusive Benefit
of Customers
101 Montgomery St.
San Francisco, CA 94104
Leisure Portfolio
Charles Schwab & Co. Inc. ^ 2,083,903.9250 26.47%
Special Custody Acct. For
The Exclusive Benefit
of Customers
101 Montgomery St.
San Francisco, CA 94104
<PAGE>
Technology Portfolio
Charles Schwab & Co. Inc. ^ 10,108,421.2150 33.20%
Special Custody Acct. For
The Exclusive Benefit
of Customers
101 Montgomery St.
San Francisco, CA 94104
Financial Services Portfolio
Charles Schwab & Co. Inc. ^ 12,730,098.5900 32.89%
Special Custody Acct. For
The Exclusive Benefit
of Customers
101 Montgomery St.
San Francisco, CA 94104
^
Utilities Portfolio
Charles Schwab & Co. Inc. ^ 4,378,963.0350 29.91%
Special Custody Acct. For
The Exclusive Benefit
of Customers
101 Montgomery St.
San Francisco, CA 94104
Environmental Services Portfolio
Charles Schwab & Co. Inc. ^ 488,806.9490 25.74%
Special Custody Acct. For
The Exclusive Benefit
of Customers
101 Montgomery St.
San Francisco, CA 94104
Independent Accountants. Price Waterhouse LLP, 950 Seventeenth Street,
Denver, Colorado, has been selected as the independent accountants of the Fund.
The independent accountants are responsible for auditing the financial
statements of the Fund.
<PAGE>
Custodian. State Street Bank and Trust Company, P.O. Box 351, Boston,
Massachusetts, has been designated as custodian of the cash and investment
securities of the Fund. The bank is also responsible for, among other things,
receipt and delivery of the Fund's investment securities in accordance with
procedures and conditions specified in the custody agreement. Under its contract
with the Fund, the custodian is authorized to establish separate accounts in
foreign ^ countries and to cause foreign securities owned by the Fund to be held
outside the United States in branches of U.S. banks and, to the extent permitted
by applicable regulations, in certain foreign banks and securities depositories.
Transfer Agent. ^ IFG, 7800 E. Union Avenue, Denver, Colorado 80237, acts
as registrar, dividend disbursing agent and transfer agent for the Fund pursuant
to the Transfer Agency Agreement described in "The Fund and Its Management."
Such services include the issuance, cancellation and transfer of shares of the
Fund, and the maintenance of records regarding the ownership of such shares.
Reports to Shareholders. The Fund's fiscal year ends on October 31. The
Fund distributes reports at least semiannually to its shareholders. Financial
statements regarding the Fund, audited by the independent accountants, are sent
to shareholders annually.
Legal Counsel. The firm of Kirkpatrick & Lockhart, LLP, Washington, D.C. is
legal counsel for the Fund. The firm of Moye, Giles, O'Keefe, Vermeire &
Gorrell, Denver, Colorado, acts as special counsel for the Fund.
Financial Statements. The Fund's audited financial statements and the
notes thereto for the fiscal year ended October 31, ^ 1997, and the report of
Price Waterhouse LLP with respect to such financial statements, are incorporated
herein by reference from the Fund's Annual Report to Shareholders for the fiscal
year ended October 31, ^ 1997.
Prospectus. The Fund will furnish, without charge, a copy of the
Prospectus upon request. Such requests should be made to the Fund at the mailing
address or telephone number set forth on the first page of this Statement of
Additional Information.
Registration Statement. This Statement of Additional Information and the ^
Prospectus do not contain all of the information set forth in the Registration
Statement the Fund has filed with the Securities and Exchange Commission. The
complete Registration Statement may be obtained from the Securities and Exchange
Commission upon payment of the fee prescribed by the rules and regulations of
the Commission.
<PAGE>
APPENDIX A
DESCRIPTION OF FUTURES, OPTIONS AND FORWARD CONTRACTS
Options on Securities
An option on a security provides the purchaser, or "holder," with the
right, but not the obligation, to purchase, in the case of a "call" option or
sell, in the case of a "put" option, the security or securities underlying the
option, for a fixed exercise price up to a stated expiration date. The holder
pays a non-refundable purchase price for the option, known as the "premium." The
maximum amount of risk the purchase of the option assumes is equal to the
premium plus related transaction costs, although the entire amount may be lost
The risk of the seller, or "writer," however, is potentially unlimited, unless
the option is "covered," which is generally accomplished through the writer's
segregation of an amount of cash or securities equal to the exercise price, in
the case of a put option. If the writer's obligation is not so covered, it is
subject to the risk of the full change in value of the underlying security from
the time the option is written until exercise.
Upon exercise of the option, the holder is required to pay the purchase
price of the underlying security, in the case of a call option, or to deliver
the security in return for the purchase price, in the case of a put option.
Conversely, the writer is required to deliver the security, in the case of a
call option, or to purchase the security, in the case of a put option. Options
on securities which have been purchased or written may be closed out prior to
exercise or expiration by entering into an offsetting transaction on the
exchange on which the initial position was established, subject to the
availability of a liquid secondary market.
Options on securities are traded on national securities exchanges, such as
the Chicago Board of Options Exchange and the New York Stock Exchange, which are
regulated by the Securities and Exchange Commission. The Options Clearing
Corporation guarantees the performance of each party to an exchange-traded
option, by in effect taking the opposite side of each such option. A holder or
writer may engage in transactions in exchange-traded options on securities and
options on indices of securities only through a registered broker-dealer which
is a member of the exchange on which the option is traded.
An option position in an exchange-traded option may be closed out only on
an exchange which provides a secondary market for an option of the same series.
Although the Portfolio will generally purchase or write only those options for
which there appears to be an active secondary market, there is no assurance that
a liquid secondary market on an exchange will exist for any particular option at
any particular time. In such event it might not be possible to effect closing
transactions in a particular option with the result that the Portfolio would
have to exercise the option in order to realize any profit. This would result in
the Portfolio's incurring brokerage commissions upon the disposition of
underlying securities acquired through the exercise of a call option or upon the
purchase of underlying securities upon the exercise of a put option. If the
Portfolio as covered call option writer is unable to effect a closing purchase
transaction in a secondary market, unless the Portfolio is required to deliver
the securities pursuant to the assignment of an exercise note, it will not be
able to sell the underlying security until the option expires.
<PAGE>
Reasons for the potential absence of a liquid secondary market on an
exchange include the following: (i) there may be insufficient trading interest
in certain options; (ii) restrictions may be imposed by an exchange on opening
transactions or closing transactions or both; (iii) trading halts, suspensions
or other restrictions may be imposed with respect to particular classes or
series of options or underlying securities; (iv) unusual or unforeseen
circumstances may interrupt normal operations on an exchange; (v) the facilities
of an exchange or a clearing corporation may not at all times be adequate to
handle current trading volume; or (vi) one or more exchange could, for economic
or other reasons, decide or be compelled at some future date to discontinue the
trading of options (or particular class or series of options) in which event the
secondary market on that exchange (or in the class or series of options) would
cease to exist, although outstanding options on that exchange which had been
issued by a clearing corporation as a result of trades on that exchange would
continue to be exercisable in accordance with their terms. There is no assurance
that higher than anticipated trading activity or other unforeseen events might
not, at a particular time, render certain of the facilities of any of the
clearing corporations inadequate and thereby result in the institution by an
exchange of special procedures which may interfere with the timely execution of
customers' orders. However, the Options Clearing Corporation, based on forecasts
provided by the U.S. exchanges, believe that its facilities are adequate to
handle the volume of reasonably anticipated options transactions, and such
exchanges have advised such clearing corporation that they believe their
facilities will also be adequate to handle reasonable anticipated volume.
In addition, options on securities may be traded over-the-counter through
financial institutions dealing in such options as well as the underlying
instruments. OTC options are purchased from or sole (written) to dealers or
financial institutions which have enters into direct agreements with a
Portfolio. With OTC options, such variables as expiration date, exercise price
and premium will be agreed upon between a Portfolio and the transacting dealer,
without the intermediation of a third party such as the OCC. If the transacting
dealer fails to make or take delivery of the securities underlying an option it
has written, in accordance with the terms of that option as written, the
Portfolio would lose the premium paid for the option as well as any anticipated
benefit of the transaction. A Portfolio will engage OTC option transactions only
with primary U.S. Government securities dealers recognized by the Federal
Reserve Bank of New York.
Futures Contracts
A Futures Contract is a bilateral agreement providing for the purchase and
sale of a specified type and amount of a financial instrument or foreign
currency, or for the making and acceptance of a cash settlement, at a stated
time in the future, for a fixed price. By its terms, a Futures Contract provides
for a specified settlement date on which, in the case of the majority of
interest rate and foreign currency futures contracts, the fixed income
securities or currency underlying the contract are delivered by the seller and
paid for by the purchaser, or on which, in the case of stock index futures
contracts and certain interest rate and foreign currency futures contracts, the
<PAGE>
difference between the price at which the contract was entered into and the
contract's closing value is settled between the purchaser and seller in cash.
Futures Contracts differ from options in that they are bilateral agreements,
with both the purchaser and the seller equally obligated to complete the
transaction. In addition, Futures Contracts call for settlement only on the
expiration date, and cannot be "exercised" at any other time during their term.
The purchase or sale of a Futures Contract also differs from the purchase
or sale of a security or the purchase of an option in that no purchase price is
paid or receive. Instead, an amount of cash or cash equivalent, which varies but
may be as low as 5% or less of the value of the contract, must be deposited with
the broker as "initial margin." Subsequent payments to and from the broker,
referred to as "variation margin," are made on a daily basis as the value of the
index or instrument underlying the futures Contract fluctuates, making positions
in the Futures Contract more or less valuable, a process known as "marking to
the market."
A Futures Contract may be purchased or sold only on an exchange, known as
a "contract market," designated by the Commodity Futures Trading Commission for
the trading of such contract, and only through a registered futures commission
merchant which is a member of such contract market. A commission must be paid on
each completed purchase and sale transaction. The contract market clearing house
guarantees the performance of each party to a Futures Contract, by in effect
taking the opposite side of such Contract. At any time prior to the expiration
of a Futures Contract, a trader may elect to close out its position by taking an
opposite position on the contract market on which the position was entered into,
subject to the availability of a secondary market, which will operate to
terminate the initial position. At that time, a final determination of variation
margin is made and any loss experienced by the trader is required to be paid to
the contract market clearing house while any profit due to the trader must be
delivered to it.
Interest rate futures contracts currently are traded on a variety of fixed
income securities, including long-term U.S. Treasury Bonds, Treasury Notes,
Government National Mortgage Association modified pass-through mortgage-backed
securities, U.S. Treasury Bills, bank certificates of deposit and commercial
paper. In addition, interest rate futures contracts include contracts on indices
of municipal securities. Foreign currency futures contracts currently are traded
on the British pound, Canadian dollar, Japanese yen, Swiss franc, German mark
and on Eurodollar deposits.
Options on Futures Contracts
An Option on a Futures Contract provides the holder with the right to enter
into a "long" position in the underlying Futures Contract, in the case of a call
option, or a "short" position in the underlying Futures Contract, in the case of
a put option, at a fixed exercise price to a stated expiration date. Upon
exercise of the option by the holder, the contract market clearing house
establishes a corresponding short position for the writer of the option, in the
case of a call option, or a corresponding long position, int he case of a put
option. In the event that an option is exercised, the parties will be subject to
all the risks associated with the trading of Futures Contracts, such as payment
of variation margin deposits. In addition, the writer of an Option on a Futures
Contract, unlike the holder, is subject to initial and variation margin
requirements on the option position.
<PAGE>
A position in an Option on a Futures Contract may be terminated by the
purchaser or seller prior to expiration by effecting a closing purchase or sale
transaction, subject to the availability of a liquid secondary market, which is
the purchase or sale of an option of the same series (i.e., the same exercise
price and expiration date) as the option previously purchased or sold. The
difference between the premiums paid and received represents the trader's profit
or loss on the transaction.
An option, whether based on a Futures Contract, a stock index or a
security, becomes worthless to the holder when it expires. Upon exercise of an
option, the exchange or contract market clearing house assigns exercise notices
on a random basis to those of its members which have written options of the same
series and with the same expiration date. A brokerage firm receiving such
notices then assigns them on a random basis to those of its customers which have
written options of the same series and expiration ate. A writer therefore has no
control over whether an option will be exercised against it, nor over the time
of such exercise.
<PAGE>
PART C. OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) Financial Statements:
Page in
Prospectus
----------
(1) Financial statements and schedules
included in Prospectus (Part A):
Financial Highlights for each of the 11
ten years in the period ended
October 31, ^ 1997.
Financial Highlights with respect to 13
the Environmental Services Portfolio
for each of the ^ six years in the
period ended October 31, ^ 1997 and
the period from commencement of that
Portfolio's operations (January 2,
1991) until October 31, 1991.
Page in
Statement
of Addi-
tional In-
formation
----------
(2) The following audited financial
statements of the Fund and the notes
thereto for the fiscal year ended
October 31, ^ 1997 and the report of
Price Waterhouse LLP with respect to
such financial statements are
incorporated in the Statement of
Additional Information by reference from
the Fund's Annual Report to Shareholders
for the fiscal year ended October 31, ^
1997: Statement of Investment Securities
as of October 31, ^ 1997; Statement of
Assets and Liabilities as of October 31,
^ 1997; Statement of Operations for the
year ended October 31, ^ 1997; Statement
of Changes in Net Assets for each of the
two years in the period ended October
31, ^ 1997; Financial Highlights for
each of the five years in the period
ended October 31, ^ 1997.
<PAGE>
(3) Financial statements and schedules
included in Part C:
None: Schedules have been omitted as
all information has been presented in
the financial statements.
(b) Exhibits:
(1) Articles of Restatement of the Articles
of Incorporation filed November 24, ^
1989.(1)
(a) Articles Supplementary to the Fund's
Articles of Incorporation filed December
26, ^ 1990.(1)
(b) Articles of Amendment of the
Articles of Incorporation filed December
2, ^ 1994.(1)
(2) Bylaws as of July 21, ^ 1993.(1)
(3) Not applicable.
(4) Not required to be filed on EDGAR.
(5) (a) ^ Investment Advisory Agreement
dated February 28, 1997.
(b) ^ Sub-Advisory Agreement between the
Fund and INVESCO Trust Company dated
February 28, 1997.
(6) ^ General Distribution Agreement
dated ^ February 28, 1997.
(7) Defined Benefit Deferred Compensation
Plan for Non-Interested Directors and ^
Trustees.(1)
(8) Custody Agreement between Registrant and
State Street Bank and Trust Company^
dated 1993.
(a) Amendment to Custody Agreement dated
October 25, 1995.
(b) Data Access Services Addendum.
(9) (a) ^ Transfer Agency Agreement dated
^ February 28, 1997.
<PAGE>
(b) ^ Administrative Services Agreement
between the Fund and INVESCO Funds
Group, Inc. dated ^ February 28, 1997.
(10) Opinion and consent of counsel as to the
legality of the securities being registered,
indicating whether they will, when sold,
be legally issued, fully paid and
non-assessable ^.
(11) Consent of Independent Accountants.
(12) Not applicable.
(13) Not applicable.
(14) Copies of model plans used in the
establishment of retirement plans as
follows: Non-standardized Profit
Sharing Plan; Non-standardized Money
Purchase Pension Plan; Standardized
Profit Sharing Plan Adoption Agreement;
Standardized Money Purchase Pension
Plan; Non-standardized 401(k) Plan
Adoption Agreement; Standardized 401(k)
Paired Profit Sharing Plan; Standardized
Simplified Profit Sharing Plan;
Standardized Simplified Money Purchase
Plan; Defined Contribution Master Plan &
Trust Agreement; and Financial 403(b)
Retirement Plan, all filed with
Registration Statement of INVESCO
International Funds, Inc. filed May 27,
1993, and herein incorporated by
reference.
(15) ^(a) Plan and Agreement of Distribution
dated November 1, 1997 adopted pursuant
to Rule 12b-1 under the Investment
Company Act of 1940.
(b) Amended Plan and Agreement of
Distribution dated December 1, 1997.
(16) Schedule for computation of performance
data^.
(17) (a) Financial Data Schedule for the year
ended October 31, ^ 1997 for the Energy
Portfolio.
<PAGE>
(b) Financial Data Schedule for the year
ended October 31, ^ 1997 for the
Environmental Services Portfolio.
(c) Financial Data Schedule for the year
ended October 31, ^ 1997 for the
Financial Services Portfolio.
(d) Financial Data Schedule for the year
ended October 31, ^ 1997 for the Gold
Portfolio.
(e) Financial Data Schedule for the year
ended October 31, ^ 1997 for the Health
Sciences Portfolio.
(f) Financial Data Schedule for the year
ended October 31, ^ 1997 for the Leisure
Portfolio.
(g) Financial Data Schedule for the year
ended October 31, ^ 1997 for the Technology
Portfolio.
(h) Financial Data Schedule for the year
ended October 31, ^ 1997 for the Utilities
Portfolio.
(18) Not applicable.
(1)Previously filed on EDGAR with Post-Effective Amendment No. 20 to the
Registration Statement on December 30, 1996, in incorporated by reference
herein.
Item 25. Persons Controlled by or Under Common Control with
Registrant
No person is presently controlled by or under common control
with Registrant.
<PAGE>
Item 26. Number of Holders of Securities
Number of Record
Holders as of
Title of Class November 30, ^ 1997
-------------- -------------------
Common Stock
Energy Portfolio ^ 14,948
Environmental Services Portfolio ^ 4,402
Financial Services Portfolio ^ 65,741
Gold Portfolio ^ 17,863
Health Sciences Portfolio ^ 83,089
Leisure Portfolio ^ 25,057
Technology Portfolio ^ 75,954
Utilities Portfolio ^ 12,228
Item 27. Indemnification
Indemnification provisions for officers, directors and employees of
Registrant are set forth in Article X of the Amended Bylaws and Article Seventh
(3) of the Articles of Restatement of the Articles of Incorporation, and are
hereby incorporated by reference. See Item 24(b)(1) and (2) above. Under these
Articles, directors and officers will be indemnified to the fullest extent
permitted to directors by the Maryland General Corporation Law, subject only to
such limitations as may be required by the Investment Company Act of 1940, as
amended, and the rules thereunder. Under the Investment Company Act of 1940,
Fund directors and officers cannot be protected against liability to the Fund or
its shareholders to which they would be subject because of willful misfeasance,
bad faith, gross negligence or reckless disregard of the duties of their office.
The Fund also maintains liability insurance policies covering its directors and
officers.
Item 28. Business and Other Connections of Investment Adviser
See "The Fund and Its Management" in the Fund's Portfolios'
Prospectus and Statement of Additional Information for information regarding the
business of the investment adviser. For information as to the business,
profession, vocation or employment of a substantial nature of each of the
officers and directors of INVESCO Funds Group, Inc., reference is made to the
Schedule Ds to the Form ADV filed under the Investment Advisers Act of 1940 by
INVESCO Funds Group, Inc., which schedules are herein incorporated by reference.
<PAGE>
Item 29. Principal Underwriters
----------------------
INVESCO Capital Appreciation Funds, Inc.
INVESCO Diversified Funds, Inc.
^ INVESCO Emerging Opportunity Funds, Inc.
INVESCO Growth Fund, Inc.
INVESCO Income Funds, Inc.
INVESCO Industrial Income Fund, Inc.
INVESCO International Funds, Inc.
INVESCO Money Market Funds, Inc.
INVESCO Multiple Asset Funds, Inc.
INVESCO Specialty Funds, Inc.
INVESCO Tax-Free Income Funds, Inc.
INVESCO Value Trust
INVESCO Variable Investment Funds, Inc.
(b)
Positions and Positions and
Name and Principal Offices with Offices with
Business Address Underwriter Registrant
- ------------------ ------------- -------------
^
William J. Galvin, Jr. Senior Vice Assistant
7800 E. Union Avenue President Secretary
^ Denver, CO 80237
Ronald L. Grooms Senior Vice Treasurer,
7800 E. Union Avenue President Chief Fin'l
Denver, CO 80237 & Treasurer Officer, and
Chief Acctg.
Officer
^
Dan J. Hesser Chairman of the Board, Pres. &
7800 E. Union Avenue President, CEO Dir.
Denver, CO 80237 & Director
^ Gregory E. Hyde Vice President
7800 E. Union Avenue
Denver, CO 80237
^ Charles P. Mayer Director
7800 E. Union Avenue
Denver, CO 80237
<PAGE>
Glen A. Payne Senior Vice Secretary
7800 E. Union Avenue President, Secretary
Denver, CO 80237 General Counsel
^
Judy P. Wiese Vice President Asst. Treas.
^ 7800 E. Union Avenue
Denver, CO 80237
(c) Not applicable.
Item 30. Location of Accounts and Records
Dan J. Hesser
7800 E. Union Avenue
Denver, CO 80237
Item 31. Management Services
Not applicable.
Item 32. Undertakings
(a) The Registrant shall furnish each person to whom a prospectus
is delivered with a copy of the Registrant's latest annual
report to shareholders, upon request and without charge.
(b) The registrant hereby undertakes that the board of directors
will call such meetings of shareholders for action by
shareholder vote, including acting on the question of removal
of a director or directors, as may be requested in writing by
the holders of at least 10% of the outstanding shares of the
Fund or as may be required by applicable law or the Fund's
Articles of Incorporation, and to assist the shareholders in
communicating with other shareholders as required by the
Investment Company Act of 1940.
<PAGE>
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the registrant has duly caused this
post-effective amendment to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Denver, County of Denver, and State of
Colorado, on the ^ 24th day of December, ^ 1997.
Attest: INVESCO Strategic Portfolios, Inc.
/s/ Glen A. Payne /s/ Dan J. Hesser
- ------------------------------------ ------------------------------------
Glen A. Payne, Secretary Dan J. Hesser, President
Pursuant to the requirements of the Securities Act of 1933, this
pre-effective amendment to Registrant's Registration Statement has been signed
by the following persons in the capacities indicated on this ^ 24th day of
December, ^ 1997.
/s/ Dan J. Hesser /s/ Lawrence H. Budner
- ------------------------------------ ------------------------------------
Dan J. Hesser, President & Lawrence H. Budner, Director
Director (Chief Executive Officer)
/s/ Ronald L. Grooms /s/ Daniel D. Chabris
- ------------------------------------ ------------------------------------
Ronald L. Grooms, Treasurer Daniel D. Chabris, Director
(Chief Financial and Accounting Officer)
/s/ Victor L. Andrews /s/ Fred A. Deering
- ------------------------------------ ------------------------------------
Victor L. Andrews, Director Fred A. Deering, Director
/s/ Bob R. Baker ^/s/Larry Soll
- ------------------------------------ ------------------------------------
Bob R. Baker, Director ^ Larry Soll, Director
/s/ Hubert L. Harris, Jr. /s/ Kenneth T. King, Director
- ------------------------------------ ------------------------------------
Hubert L. Harris, Jr., Director Kenneth T. King, Director
/s/ Charles W. Brady /s/ John W. McIntyre
- ------------------------------------ ------------------------------------
Charles W. Brady, Director John W. McIntyre, Director
/s/ Wendy L. Gramm
- ------------------------------------
Wendy L. Gramm, Director
By* By* /s/ Glen A. Payne
--------------------------------- ---------------------------------
Edward F. O'Keefe Glen A. Payne
Attorney in Fact Attorney in Fact
* Original Powers of Attorney authorizing Edward F. O'Keefe and Glen A.
Payne, and each of them, to execute this post-effective amendment to the
Registration Statement of the Registrant on behalf of the above-named directors
and officers of the Registrant have been filed with the Securities and Exchange
Commission on July 20, 1989, January 9, 1990, May 22, 1992, September 1, 1993,
December 1, 1993 ^, December 21, 1995 and December 30, 1996.
<PAGE>
Exhibit Index
Page in
Exhibit Number Registration Statement
- -------------- ----------------------
^
5(a) 106
5(b) 113
6 119
^ 8 128
8(a) 149
8(b) 150
9(a) 164
9(b) 179
10 183
11 185
15(a) 186
15(b) 191
16 196
17(a) 197
17(b) 198
17(c) 199
17(d) 200
17(e) 201
17(f) 202
17(g) 203
17(h) 204
99.POA GRAMM 205
99.POA SOLL ^ 206
INVESTMENT ADVISORY AGREEMENT
THIS AGREEMENT is made this 28th day of February, 1997, in Denver,
Colorado, by and between INVESCO Funds Group, Inc. (the "Adviser"), a Delaware
corporation, and INVESCO Strategic Portfolios, Inc., a Maryland Corporation (the
"Fund").
W I T N E S S E T H :
WHEREAS, the Fund is a corporation organized under the laws of the State
of the State of Maryland; and
WHEREAS, the Fund is registered under the Investment Company Act of 1940,
as amended (the "Investment Company Act"), as a diversified, open end management
investment company and has one class of shares which is divided into three
series (the "Shares"), each representing an interest in a separate portfolio of
investments (such series initially being the INVESCO European Fund, the INVESCO
Pacific Basin Fund and the INVESCO International Growth Fund (the
"Portfolios")); and
WHEREAS, the Fund desires that the Adviser manage its investment
operations and the Adviser desires to manage said operations;
NOW, THEREFORE, in consideration of these premises and of the mutual
covenants and agreements hereinafter contained, the parties hereto agree as
follows:
1. Investment Management Services. The Adviser hereby agrees to manage the
investment operations of the Fund's three Portfolios, subject to the terms of
this Agreement and to the supervision of the Fund's directors (the "Directors").
The Adviser agrees to perform, or arrange for the performance of, the following
specific services for the Fund:
(a) to manage the investment and reinvestment of all the assets,
now or hereafter acquired, of the Fund's three Portfolios;
(b) to maintain a continuous investment program for the Fund's
Portfolios, consistent with (i) the Portfolios' investment policies as set
forth in the Fund'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 or any Portfolio of the
Fund, as from time to time amended and in use under the Securities Act of
1933, as amended, and (ii) the Fund'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's Portfolios, unless otherwise directed by the Directors of the Fund,
and to execute transactions accordingly;
(d) to provide to the Fund's Portfolios the benefit of all of the
investment analyses 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 Adviser;
<PAGE>
(e) to determine what portion of the Fund's Portfolios 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 and/or Portfolio action and any other rights
pertaining to the Portfolios' securities shall be exercised.
With respect to execution of transactions for the Fund's Portfolios, the
Adviser is authorized to employ such brokers or dealers as may, in the 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 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 Adviser effects
securities transactions on behalf of the Fund may be used by the Adviser in
servicing all of its accounts, and not all such services may be used by the
Adviser in connection with the Fund. In the selection of a broker or dealer for
execution of any negotiated transaction, or to select any broker solely on the
basis of its purported or "posted" commission rate for such transaction,
provided, however, that the 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 Adviser shall have the burden of demonstrating that
such expenditures were bona fide and for the benefit of the Fund.
2. Other Services and Facilities. The Adviser shall, in addition, supply
at its own expense all supervisory and administrative services and facilities
necessary in connection with the day-to-day operations of the Fund (except those
associated with the preparation and maintenance of certain required books and
records, and recordkeeping and administrative functions relating to employee
benefit and retirement plans, which services and facilities are provided under a
separate Administrative Services Agreement between the Fund and the Adviser).
These services shall include, but not be limited to: supplying the Fund with
officers, clerical staff and other employees, if any, who are necessary in
connection with the Fund's operations; furnishing office space, facilities,
equipment, and supplies; providing personnel and facilities required to respond
to inquiries related to shareholder accounts; conducting periodic compliance
reviews of the Fund's operations; preparation and review of required documents,
reports and filings by the Adviser's in-house legal and accounting staff
(including the prospectus, statement of additional information, proxy
statements, shareholder reports, tax returns, reports to the SEC, and other
corporate documents of the Fund), except insofar as the assistance of
<PAGE>
independent accountants or attorneys is necessary or desirable; supplying basic
telephone service and other utilities; and preparing and maintaining the books
and records required to be prepared and maintained by the Fund pursuant to Rule
31a-1(b)(4), (5), (9), and (10) under the Investment Company Act of 1940. All
books and records prepared and maintained by the Adviser for the Fund under this
Agreement shall be the property of the Fund and, upon request therefor, the
Adviser shall surrender to the Fund such of the books and records so requested.
3. Payment of Costs and Expenses. The Adviser shall bear the costs and
expenses of all personnel, facilities, equipment and supplies reasonably
necessary to provide the services required to be provided by the Adviser under
this Agreement. The Fund shall pay all of the costs and expenses associated with
its operations and activities, except those expressly assumed by the Adviser
under this Agreement, including but not limited to:
(a) all brokers' commissions, issue and transfer taxex, and other costs
chargeable to the Fund in connection with securities transactions to which
the Fund is a party or in connection with securities owned by the Fund's
Portfolios;
(b) the fees, charges and expenses of any independent public
accountants, custodian, depository, dividend disbursing agent, dividend
reinvestment agent, transfer agent, registrar, independent pricing services
and legal counsel for the Fund;
(c) the interest on indebtedness, if any, incurred by the Fund;
(d) the taxes, including franchise, income, issue, transfer, business
license, and other corporate fees payable by the Fund to federal, state,
county, city, or other governmental agents;
(e) the fees and expenses involved in maintaining the registration and
qualification of the Fund and of its shares under laws administered by the
Securities and Exchange Commission or under other applicable regulatory
requirements;
(f) the compensation and expenses of its independent Directors, and the
compensation of any employees and officers of the Fund who are not
employees of the Adviser or one of its affiliated companies and compensated
as such;
(g) the costs of printing and distributing reports, notices of
shareholders' meetings, proxy statements, dividend notices, prospectuses,
statements of additional information and other communications to the Fund's
shareholders, as well as all expenses of shareholders' meetings and
Directors' meetings;
(h) all costs, fees or other expenses arising in connection with the
organization and filing of the Fund's Articles of Incorporation, including
its initial registration and qualification under the 1940 Act and under the
Securities Act of 1933, as amended, the initial determination of its tax
status and any rulings obtained for this purpose, the initial registration
and qualification of its securities under the laws of any state and the
approval of the Fund's operations by any other federal or state authority;
<PAGE>
(i) the expenses of repurchasing and redeeming shares of the Fund's
Portfolios;
(j) insurance premiums;
(k) the costs of designing, printing, and issuing certificates representing
shares of beneficial interest of the Fund's Portfolios;
(l) extraordinary expenses, including fees and disbursements of Fund
counsel, in connection with litigation by or against the Fund;
(m) premiums for the fidelity bond maintained by the Fund pursuant to
Section 17(g) of the 1940 Act and rules promulgated thereunder (except for such
premiums as may be allocated to the Adviser as an insured thereunder);
(n) association and institute dues;
(o) the expenses, if any, of distributing shares of the Fund but only if
and to the extent permissible under a plan of distribution adopted by the Fund
pursuant to Rule 12b 1 of the Investment Company Act of 1940; and
(p) all fees paid by the Fund for administrative, recordkeeping, and
sub-accounting services under the Administrative Services Agreement between the
Fund and the Adviser dated April 30, 1991.
4. Use of Affiliated Companies. In connection with the rendering of the
services required to be provided by the Adviser under this Agreement, the
Adviser may, to the extent it deems appropriate and subject to compliance with
the requirements of applicable laws and regulations, and upon receipt of written
approval of the Fund, make use of its affiliated companies and their employees;
provided that the Adviser shall supervise and remain fully responsible for all
such services in accordance with and to the extent provided by this Agreement
and that all costs and expenses associated with the providing of services by any
such companies or employees and required by this Agreement to be borne by the
Adviser shall be borne by the Adviser or its affiliated companies.
5. Compensation of the Adviser. For the services to be rendered and the
charges and expenses to be assumed by the Adviser hereunder, the Fund shall pay
to the Adviser an advisory fee which will be 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 each of the Fund's Portfolios, as determined by
valuations made in accordance with the Fund's procedure for calculating its net
asset value as described in the Fund's Prospectus and/or Statement of Additional
Information. The advisory fee to the Adviser shall be computed at the following
annual rates: 0.75% of a Portfolio's daily net assets up to $350 million; 0.65%
of a Portfolio's daily net assets in excess of $350 million but not more than
$700 million; and 0.55% of a Portfolio's daily net assets in excess of $700
million. During any period when the determination of the Fund's net asset value
is suspended by the Directors of the Fund, 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 Paragraph 5, be deemed to be the net asset value at the close of each
succeeding business day until it is again determined.
<PAGE>
However, no such fee shall be paid to the Adviser with respect to any
assets of the Fund's Portfolios which may be invested in any other investment
company for which the Adviser serves as investment adviser. The fee provided for
hereunder shall be prorated in any month in which this Agreement is not in
effect for the entire month.
If, in any given year, the sum of a Portfolio's expenses exceeds the most
restrictive state imposed annual expense limitation, the Adviser will be
required to reimburse that Portfolio for such excess expenses promptly.
Interest, taxes and extraordinary items such as litigation costs are not deemed
expenses for purposes of this paragraph and shall be borne by the Fund or
Portfolio in any event. Expenditures, including costs incurred in connection
with the purchase or sale of portfolio securities, which are capitalized in
accordance with generally accepted accounting principles applicable to
investment companies, are accounted for as capital items and shall not be deemed
to be expenses for purposes of this paragraph.
6. Avoidance of Inconsistent Positions and Compliance with Laws. In
connection with purchases or sales of securities for the investment portfolio of
the Fund's Portfolios, neither the Adviser nor its officers or employees, will
act as a principal or agent for any party other than the Fund's three Portfolios
or receive any commissions. The 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.
7. Duration and Termination. This Agreement shall become effective as of
the date it is approved by a majority of the outstanding voting securities of
the Fund's Portfolios, and unless sooner terminated as hereinafter provided,
shall remain in force for an initial term ending two years from the date of
execution, and from year to year thereafter, but only as long as such
continuance is specifically approved at least annually (i) by a vote of a
majority of the outstanding voting securities of the Fund's Portfolios or by the
Directors of the Fund, and (ii) by a majority of the Directors of the Fund who
are not interested persons of the Adviser or the Fund by votes cast in person at
a meeting called for the purpose of voting on such approval.
This Agreement may, on 60 days' prior written notice, be terminated
without the payment of any penalty, by the Directors of the Fund, or by the vote
of a majority of the outstanding voting securities of the Fund's Portfolios, as
the case may be, or by the Adviser. This Agreement shall immediately terminate
in the event of its assignment, unless an order is issued by the Securities and
Exchange Commission conditionally or unconditionally exempting such assignment
from the provisions of Section 15(a) of the 1940 Act, in which event this
Agreement shall remain in full force and effect subject to the terms and
provisions of said order. In interpreting the provisions of this paragraph 6,
the definitions contained in Section 2(a) of the 1940 Act and the applicable
rules under the 1940 Act (particularly the definitions of "interested person,"
"assignment" and "vote of a majority of the outstanding voting securities")
shall be applied.
<PAGE>
The Adviser agrees to furnish to the Directors of the Fund 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 Adviser to
receive payments on any unpaid balance of the compensation described in
paragraph 5 earned prior to such termination.
8. Non Exclusive Services. The Adviser shall, during the term of this
Agreement, be entitled to render investment advisory services to others,
including, without limitation, other investment companies with similar
objectives to those of the Fund's Portfolios. The Adviser may, when it
deems such to be advisable, aggregate orders for its other customers together
with any securities of the same type to be sold or purchased for the Fund's
Portfolios in order to obtain best execution and lower brokerage
commissions. In such event, the Adviser shall allocate the shares so purchased
or sold, as well as the expenses incurred in the transaction, in the manner it
considers to be most equitable and consistent with its fiduciary obligations to
the Fund's Portfolios and the Adviser's other customers.
9. Miscellaneous Provisions.
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.
Amendments Hereof. No provision of this Agreement may be orally changed or
discharged, but may only be modified by an instrument in writing signed by the
Fund and the Adviser. In addition, no amendment to this Agreement shall be
effective unless approved by (1) the vote of a majority of the Directors of the
Fund, 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 any of the Fund's Portfolios as
to which such amendment is applicable (other than an amendment which can be
effective without shareholder approval under applicable law).
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>
Applicable Law. This Agreement shall be construed in accordance with
the laws of the State of Colorado and the applicable provisions of the 1940 Act.
To the extent that the applicable laws of the State of Colorado, or any of the
provisions herein, conflict with applicable provisions of the 1940 Act, the
latter shall control.
IN WITNESS WHEREOF, the Adviser and the Fund each has caused this
Agreement to be duly executed on its behalf by an officer thereunto duly
authorized, the day and year first above written.
INVESCO STRATEGIC PORTFOLIOS, INC.
ATTEST:
By: /s/ Dan J. Hesser
----------------------------
/s/ Glen A. Payne President
- -----------------
Secretary
INVESCO FUNDS GROUP, INC.
ATTEST:
By: /s/ Ronald L. Grooms
--------------------------
/s/ Glen A. Payne Senior Vice President
- -----------------
Secretary
SUB-ADVISORY AGREEMENT
AGREEMENT made this 28th day of February, 1997, by and between INVESCO
Funds Group, Inc. ("INVESCO"), a Delaware corporation, and INVESCO TRUST
COMPANY, a Colorado corporation ("the Sub-Adviser").
W I T N E S S E T H:
WHEREAS, INVESCO STRATEGIC PORTFOLIOS, INC. (the "Fund") 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 which is divided into
various series (the "Shares"), which may be divided into additional series, each
representing an interest in a separate portfolio of investments (such series
shall include the Energy Portfolio, Environmental Services Portfolio, Financial
Services Portfolio, Godl Portfolio, Health Sciences Portfolio, Leisure
Portfolio, Technology Portfolio, and Utilities Portfolio); 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
companies which are affiliated with INVESCO to provide such services; and
WHEREAS, the Sub-Adviser is willing to provide investment advisory
services to the Company on the terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and the covenants
hereinafter contained, INVESCO and the Sub-Adviser hereby agree as follows:
ARTICLE I
DUTIES OF THE Sub-Adviser
INVESCO 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 Fund, 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 Fund in any way or otherwise be deemed an agent of the Fund.
The Sub-Adviser hereby agrees to manage the investment operations of the
Fund's Portfolios, subject to the supervision of the Fund's directors (the
"Directors") and INVESCO. Specifically, the Sub-Adviser agrees to perform the
following services:
<PAGE>
(a) to manage the investment and reinvestment of all the assets, now or
hereafter acquired, of the Fund's Portfolios, and to execute all purchases and
sales of portfolio securities;
(b) to maintain a continuous investment program for the Fund's Portfolios,
consistent with (i) the Portfolios' investment policies as set forth in the
Fund'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 Funds, as from time to time amended and in use under the Securities Act of
1933, as amended, and (ii) the Fund'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's
Portfolios, unless otherwise directed by the Directors of the Fund or INVESCO,
and to execute transactions accordingly;
(d) to provide to the Fund's Portfolios 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's Portfolios should be invested
in the various types of securities authorized for purchase by the Portfolios;
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
Portfolios' portfolio securities shall be exercised.
With respect to execution of transactions for the Fund's Portfolios, 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 Funds of speed,
<PAGE>
efficiency, and confidentiality of execution, the execution capabilities
required by the circumstances of the particular transactions, and the apparent
knowledge or familiarity with sources from or to whom such securities may be
purchased or sold. Where the commission rate reflects services, reliability and
other relevant factors in addition to the cost of execution, the Sub-Adviser
shall have the burden of demonstrating that such expenditures were bona fide and
for the benefit of the Fund.
ARTICLE II
ALLOCATION OF CHARGES AND EXPENSES
The Sub-Adviser assumes and shall pay for maintaining the staff and
personnel necessary to perform its obligations under this Agreement, and shall,
at its own expense, provide the office space, equipment and facilities necessary
to perform its obligations under this Agreement. Except to the extent expressly
assumed by the Sub- Adviser herein and except to the extent required by law to
be paid by the Sub-Adviser, INVESCO and/or the Fund shall pay all costs and
expenses in connection with the operations of the Fund's Portfolios.
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's Portfolios, 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 shall be computed at the
following annual rates: 0.25% of each Portfolio's daily net assets up to $200
million, an d0.20% of each Portfolio's daily net assets in excess of $200
million. During any period when the determination of the Portfolios' net asset
value is suspended by the Directors of the Fund, the net asset value of a share
of the Fund's Portfolios 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 Funds 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
<PAGE>
"affiliates") being free to render services to others. It is understood that
directors, officers, employees and shareholders of the Funds 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 Fund 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's Portfolios, 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's Portfolios 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; the
Rules and Regulations of IMRO; 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's Portfolios, and
shall remain in force for an initial term of two years from the date of
execution, and from year to year thereafter until its termination in accordance
with this Article 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's Portfolios, 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 Fund, or by vote
of a majority of the outstanding voting securities of the Fund's Portfolios, 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 Fund 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 Fund such
information on an annual basis as may reasonably be necessary to evaluate the
terms of this Agreement.
Termination of this Agreement shall not affect the right of the
Sub-Adviser to receive payments on any unpaid balance of the compensation
described in Article III hereof earned prior to such termination.
<PAGE>
ARTICLE VII
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 Fund, 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 any of the Fund's Portfolios as to which such amendment is
applicable (other than an amendment which can be effective without shareholder
approval under applicable law).
ARTICLE VIII
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 IX
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 X
MISCELLANEOUS
Notice. Any notice under this Agreement shall be in writing, addressed and
delivered or mailed, postage prepaid, to the other party at such address as such
other party may designate for the receipt of such notice.
Severability. Each provision of this Agreement is intended to be
severable. If any provision of this Agreement shall be held illegal or made
invalid by a court decision, statute, rule or otherwise, such illegality or
invalidity shall not affect the validity or enforceability of the remainder of
this Agreement.
Headings. The headings in this Agreement are inserted for convenience and
identification only and are in no way intended to describe, interpret, define or
limit the size, extent or intent of this Agreement or any provision hereof.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the date first above written.
INVESCO TRUST COMPANY
ATTEST:
By: /s/ Dan J. Hesser
--------------------------
/s/ Glen A. Payne President
- -----------------
Secretary
INVESCO FUNDS GROUP, INC.
ATTEST:
By: /s/ Ronald L.Grooms
-------------------------
Senior Vice President
/s/ Glen A. Payne
- -----------------
Secretary
DISTRIBUTION AGREEMENT
THIS AGREEMENT is made this 28th day of February, 1997 between INVESCO
STRATEGIC PORTFOLIOS, INC., a Maryland corporation (the "Fund"), and INVESCO
FUNDS GROUP, INC., a Delaware corporation (the "Underwriter").
W I T N E S S E T H:
WHEREAS, the Fund is registered under the Investment Company Act of 1940,
as amended (the "Investment Company Act"), as a diversified, open-end management
investment company and currently has one class of shares (the "Shares") which is
divided into eight series, and which may be divided into additional series (the
"Series"), each representing an interest in a separate portfolio of investments,
and it is in the interest of the Fund to offer the Shares for sale continuously;
and
WHEREAS, the Underwriter is engaged in the business of selling shares of
investment companies either directly to investors or through other securities
dealers; and
WHEREAS, the Fund and the Underwriter wish to enter into an agreement with
each other with respect to the continuous offering of the Shares of each Series
in order to promote growth of the Fund and facilitate the distribution of the
Shares;
NOW, THEREFORE, in consideration of the mutual covenants hereinafter
contained, it is hereby agreed by and between the parties hereto as follows:
1. The Fund hereby appoints the Underwriter its agent for the
distribution of Shares of each Series in jurisdictions wherein such
Shares legally may be offered for sale; provided, however, that the
Fund in its absolute discretion may (a) issue or sell Shares of each
Series directly to purchasers, or (b) issue or sell Shares of a
particular Series to the shareholders of any other Series or to the
shareholders of any other investment company, for which the
Underwriter or any affiliate thereof shall act as exclusive
distributor, who wish to exchange all or a portion of their
investment in Shares of such Series or in shares of such other
investment company for the Shares of a particular Series.
Notwithstanding any other provision hereof, the Fund may terminate,
suspend or withdraw the offering of Shares whenever, in its sole
discretion, it deems such action to be desirable. The Fund reserves
the right to reject any subscription in whole or in part for any
reason.
2. The Underwriter hereby agrees to serve as agent for the
distribution of the Shares and agrees that it will use its best
efforts with reasonable promptness to sell such part of the
authorized Shares remaining unissued as from time to time shall be
effectively registered under the Securities Act of 1933, as amended
(the "1933 Act"), at such prices and on such terms as hereinafter
set forth, all subject to applicable federal and state securities
laws and regulations. Nothing herein shall be construed to prohibit
the Underwriter from engaging in other related or unrelated
businesses.
<PAGE>
3. In addition to serving as the Fund's agent in the distribution of
the Shares, the Underwriter shall also provide to the holders of
the Shares certain maintenance, support or similar services
("Shareholder Services"). Such services shall include, without
limitation, answering routine shareholder inquiries regarding the
Fund, assisting shareholders in considering whether to change
dividend options and helping to effectuate such changes, arranging
for bank wires, and providing such other services as the Fund may
reasonably request from time to time. It is expressly understood
that the Underwriter or the Fund may enter into one or more
agreements with third parties pursuant to which such third
parties may provide the Shareholder Services provided for in this
paragraph. Nothing herein shall be construed to impose upon the
Underwriter any duty or expense in connection with the services of
any registrar, transfer agent or custodian appointed by the Fund,
the computation of the asset value or offering price of Shares, the
preparation and distribution of notices of meetings, proxy
soliciting material, annual and periodic reports, dividends and
dividend notices, or any other responsibility of the Fund.
4. Except as otherwise specifically provided for in this Agreement, the
Underwriter shall sell the Shares directly to purchasers, or through
qualified broker-dealers or others, in such manner, not inconsistent
with the provisions hereof and the then effective Registration
Statement of the Fund under the 1933 Act (the "Registration
Statement") and related Prospectus (the "Prospectus") and Statement
of Additional Information ("SAI") of the Fund as the Underwriter may
determine from time to time; provided that no broker-dealer or other
person shall be appointed or authorized to act as agent of the Fund
without the prior consent of the directors (the "Directors") of the
Fund. The Underwriter will require each broker-dealer to conform to
the provisions hereof and of the Registration Statement (and related
Prospectus and SAI) at the time in effect under the 1933 Act with
respect to the public offering price of the Shares of any Series.
The Fund will have no obligation to pay any commissions or other
remuneration to such broker-dealers.
5. The Shares of each Series offered for sale or sold by the
Underwriter shall be offered or sold at the net asset value per
share determined in accordance with the then current Prospectus
and/or SAI relating to the sale of the Shares of the appropriate
Series except as departure from such prices shall be permitted by
the then current Prospectus and/or SAI of the Fund, in accordance
with applicable rules and regulations of the Securities and Exchange
Commission. The price the Fund shall receive for the Shares of each
Series purchased from the Fund shall be the net asset value per
share of such Share, determined in accordance with the Prospectus
and/or SAI applicable to the sale of the Shares of such Series.
6. Except as may be otherwise agreed to by the Fund, the Underwriter
shall be responsible for issuing and delivering such confirmations
of sales made by it pursuant to this Agreement as may be required;
provided, however, that the Underwriter or the Fund may utilize the
services of other persons or entities believed by it to be competent
<PAGE>
to perform such functions. Shares shall be registered on the
transfer books of the Fund in such names and denominations as the
Underwriter may specify.
7. The Fund will execute any and all documents and furnish any and all
information which may be reasonably necessary in connection with the
qualification of the Shares for sale (including the qualification of
the Fund as a broker-dealer where necessary or advisable) in such
states as the Underwriter may reasonably request it being understood
that the Fund shall not be required without its consent to comply
with any requirement which in the opinion of the Directors of the
Fund is unduly burdensome). The Underwriter, at its own expense,
will effect all qualifications of itself as broker or dealer, or
otherwise, under all applicable state or Federal laws required in
order that the Shares may be sold in such states or jurisdictions as
the Fund may reasonably request.
8. The Fund shall prepare and furnish to the Underwriter from time to
time the most recent form of the Prospectus and/or SAI of the Fund
and/or of each Series of the Fund. The Fund authorizes the
Underwriter to use the Prospectus and/or SAI, in the forms furnished
to the Underwriter from time to time, in connection with the sale of
the Shares of the Fund and/or of each Series of the Fund. The Fund
will furnish to the Underwriter from time to time such information
with respect to the Fund, each Series, and the Shares as the
Underwriter may reasonably request for use in connection with the
sale of the Shares. The Underwriter agrees that it will not use or
distribute or authorize the use, distribution or dissemination by
broker-dealers or others in connection with the sale of the Shares
any statements, other than those contained in a current Prospectus
and/or SAI of the Fund or applicable Series, except such
supplemental literature or advertising as shall be lawful under
Federal and state securities laws and regulations, and that it will
promptly furnish the Fund with copies of all such material.
9. The Underwriter will not make, or authorize any broker-dealers or
others to make any short sales of the Shares of the Fund or
otherwise make any sales of the Shares unless such sales are made in
accordance with a then current Prospectus and/or SAI relating to the
sale of the applicable Shares.
10. The Underwriter, as agent of and for the account of the Fund, may
cause the redemption or repurchase of the Shares at such prices and
upon such terms and conditions as shall be specified in a then
current Prospectus and/or SAI. In selling, redeeming or repurchasing
the Shares for the account of the Fund, the Underwriter will in all
respects conform to the requirements of all state and federal laws
and the Rules of Fair Practice of the National Association of
<PAGE>
Securities Dealers, Inc., relating to such sale, redemption or
repurchase, as the case may be. The Underwriter will observe and be
bound by all the provisions of the Articles of Incorporation or
Bylaws of the Fund and of any provisions in the Registration
Statement, Prospectus and SAI, as such may be amended or
supplemented from time to time, notice of which shall have been
given to the Underwriter, which at the time in any way require,
limit, restrict or prohibit or otherwise regulate any action on the
part of the Underwriter.
11. (a) The Fund shall indemnify, defend and hold harmless the
Underwriter, its officers and directors and any person who
controls the Underwriter within the meaning of the 1933 Act,
from and against any and all claims, demands, liabilities and
expenses (including the cost of investigating or defending
such claims, demands or liabilities and any attorney fees
incurred in connection therewith) which the Underwriter, its
officers and directors or any such controlling person, may
incur under the federal securities laws, the common law or
otherwise, arising out of or based upon any alleged untrue
statement of a material fact contained in the Registration
Statement or any related Prospectus and/or SAI or arising out
of or based upon any alleged omission to state a material fact
required to be stated therein or necessary to make the
statements therein not misleading.
Notwithstanding the foregoing, this indemnity agreement, to
the extent that it might require indemnity of the Underwriter
or any person who is an officer, director or controlling
person of the Underwriter, shall not inure to the benefit of
the Underwriter or officer, director or controlling person
thereof unless a court of competent jurisdiction shall
determine, or it shall have been determined by controlling
precedent, that such result would not be against public policy
as expressed in the federal securities laws and in no event
shall anything contained herein be so construed as to protect
the Underwriter against any liability to the Fund, the
Directors or the Fund's shareholders to which the Underwriter
would otherwise be subject by reason of willful misfeasance,
bad faith or gross negligence in the performance of its duties
or by reason of its reckless disregard of its obligations and
duties under this Agreement.
This indemnity agreement is expressly conditioned upon the
Fund's being notified of any action brought against the
Underwriter, its officers or directors or any such controlling
person, which notification shall be given by letter or by
telegram addressed to the Fund at its principal address in
Denver, Colorado and sent to the Fund by the person against
whom such action is brought within ten (10) days after the
summons or other first legal process shall have been served
upon the Underwriter, its officers or directors or any such
controlling person. The failure to notify the Fund of any such
action shall not relieve the Fund from any liability which it
<PAGE>
may have to the person against whom such action is brought by
reason of any such alleged untrue statement or omission
otherwise than on account of the indemnity agreement contained
in this paragraph. The Fund shall be entitled to assume the
defense of any suit brought to enforce such claim, demand, or
liability, but in such case the defense shall be conducted by
counsel chosen by the Fund and approved by the Underwriter,
which approval shall not be unreasonably withheld. If the Fund
elects to assume the defense of any such suit and retain
counsel approved by the Underwriter, the defendant or
defendants in such suit shall bear the fees and expenses of an
additional counsel obtained by any of them. Should the Fund
elect not to assume the defense of any such suit, or should
the Underwriter not approve of counsel chosen by the Fund, the
Fund will reimburse the Underwriter, its officers and
directors or the controlling person or persons named as
defendant or defendants in such suit, for the reasonable fees
and expenses of any counsel retained by the Underwriter or
them. In addition, the Underwriter shall have the right to
employ counsel to represent it, its officers and directors and
any such controlling person who may be subject to liability
arising out of any claim in respect of which indemnity may be
sought by the Underwriter against the Fund hereunder if in the
reasonable judgment of the Underwriter it is advisable for the
Underwriter, its officers and directors or such controlling
person to be represented by separate counsel, in which event
the reasonable fees and expenses of such separate counsel
shall be borne by the Fund. This indemnity agreement and the
Fund's representations and warranties in this Agreement shall
remain operative and in full force and effect and shall
survive the delivery of any of the Shares as provided in this
Agreement. This indemnity agreement shall inure exclusively to
the benefit of the Underwriter and its successors, the
Underwriter's officers and directors and their respective
estates and any such controlling person and their successors
and estates. The Fund shall promptly notify the Underwriter of
the commencement of any litigation or proceeding against it in
connection with the issue and sale of the Shares.
(b) The Underwriter agrees to indemnify, defend and hold harmless
the Fund, its Directors and any person who controls the Fund
within the meaning of the 1933 Act, from and against any and
all claims, demands, liabilities and expenses (including the
cost of investigating or defending such claims, demands or
liabilities and any attorney fees incurred in connection
therewith) which the Fund, its Directors or any such
controlling person may incur under the Federal securities
laws, the common law or otherwise, but only to the extent that
such liability or expense incurred by the Fund, its Directors
or such controlling person resulting from such claims or
demands shall arise out of or be based upon (a) any alleged
untrue statement of a material fact contained in information
furnished in writing by the Underwriter to the Fund
<PAGE>
specifically for use in the Registration Statement or any
related Prospectus and/or SAI or shall arise out of or be
based upon any alleged omission to state a material fact in
connection with such information required to be stated in the
Registration Statement or the related Prospectus and/or SAI or
necessary to make such information not misleading and (b) any
alleged act or omission on the Underwriter's part as the
Fund's agent that has not been expressly authorized by the
Fund in writing.
Notwithstanding the foregoing, this indemnity agreement, to
the extent that it might require indemnity of the Fund or any
Director or controlling person of the Fund, shall not inure to
the benefit of the Fund or Director or controlling person
thereof unless a court of competent jurisdiction shall
determine, or it shall have been determined by controlling
precedent, that such result would not be against public policy
as expressed in the federal securities laws and in no event
shall anything contained herein be so construed as to protect
any Director of the Fund against any liability to the Fund or
the Fund's shareholders to which the Director would otherwise
be subject by reason of willful misfeasance, bad faith or
gross negligence or reckless disregard of the duties involved
in the conduct of his office.
This indemnity agreement is expressly conditioned upon the
Underwriter's being notified of any action brought against the
Fund, its Directors or any such controlling person, which
notification shall be given by letter or telegram addressed to
the Underwriter at its principal office in Denver, Colorado,
and sent to the Underwriter by the person against whom such
action is brought, within ten (10) days after the summons or
other first legal process shall have been served upon the
Fund, its Directors or any such controlling person. The
failure to notify the Underwriter of any such action shall not
relieve the Underwriter from any liability which it may have
to the person against whom such action is brought by reason of
any such alleged untrue statement or omission otherwise than
on account of the indemnity agreement contained in this
paragraph. The Underwriter shall be entitled to assume the
defense of any suit brought to enforce such claim, demand, or
liability, but in such case the defense shall be conducted by
counsel chosen by the Underwriter and approved by the Fund,
which approval shall not be unreasonably withheld. If the
Underwriter elects to assume the defense of any such suit and
retain counsel approved by the Fund, the defendant or
defendants in such suit shall bear the fees and expenses of an
additional counsel obtained by any of them. Should the
Underwriter elect not to assume the defense of any such suit,
or should the Fund not approve of counsel chosen by the
Underwriter, the Underwriter will reimburse the Fund, its
Directors or the controlling person or persons named as
<PAGE>
defendant or defendants in such suit, for the reasonable fees
and expenses of any counsel retained by the Fund or them. In
addition, the Fund shall have the right to employ counsel to
represent it, its Directors and any such controlling person
who may be subject to liability arising out of any claim in
respect of which indemnity may be sought by the Fund against
the Underwriter hereunder if in the reasonable judgment of the
Fund it is advisable for the Fund, its Directors or such
controlling person to be represented by separate counsel, in
which event the reasonable fees and expenses of such separate
counsel shall be borne by the Underwriter. This indemnity
agreement and the Underwriter's representations and warranties
in this Agreement shall remain operative and in full force and
effect and shall survive the delivery of any of the Shares as
provided in this Agreement. This indemnity agreement shall
inure exclusively to the benefit of the Fund and its
successors, the Fund's Directors and their respective estates
and any such controlling person and their successors and
estates. The Underwriter shall promptly notify the Fund of
the commencement of any litigation or proceeding against it in
connection with the issue and sale of the Shares.
12. The Fund will pay or cause to be paid (a) expenses (including the
fees and disbursements of its own counsel) of any registration of
the Shares under the 1933 Act, as amended, (b) expenses incident to
the issuance of the Shares, and (c) expenses (including the fees and
disbursements of its own counsel) incurred in connection with the
preparation, printing and distribution of the Fund's Prospectuses,
SAIs, and periodic and other reports sent to holders of the Shares
in their capacity as such. The Underwriter shall prepare and provide
necessary copies of all sales literature subject to the Fund's
approval thereof.
13. This Agreement shall become effective as of the date it is approved
by a majority vote of the Directors of the Fund, as well as a
majority vote of the Directors who are not "interested persons"
(as defined in the Investment Company Act) of the Fund, and shall
continue in effect for an initial term expiring February 28, 1998,
and from year to year thereafter, but only so long as such
continuance is specifically approved at least annually (a)(i) by a
vote of the Directors of the Fund or (ii) by a vote of a majority of
the outstanding voting securities of the Fund, and (b) by a vote of
a majority of the Directors of the Fund who are not "interested
persons," as defined in the Investment Company Act, of the Fund cast
in person at a meeting for the purpose of voting on this Agreement.
Either party hereto may terminate this Agreement on any date,
without the payment of a penalty, by giving the other party at
least 60 days' prior written notice of such termination specifying
the date fixed therefor. In particular, this Agreement may be
terminated at any time, without payment of any penalty, by vote of a
majority of the members of the Directors of the Fund or by a vote of
a majority of the outstanding voting securities of the Fund on not
more than 60 days' written notice to the Underwriter.
<PAGE>
Without prejudice to any other remedies of the Fund provided for in
this Agreement or otherwise, the Fund may terminate this Agreement
at any time immediately upon the Underwriter's failure to fulfill
any of the obligations of the Underwriter hereunder.
14. The Underwriter expressly agrees that, notwithstanding anything to
the contrary herein, or in any applicable law, it will look solely
to the assets of the Fund for any obligations of the Fund hereunder
and nothing herein shall be construed to create any personal
liability on the part of any Director or any shareholder of the
Fund.
15. This Agreement shall automatically terminate in the event of its
assignment. In interpreting the provisions of this Section 15, the
definition of "assignment" contained in the Investment Company
Act shall be applied.
16. 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.
17. No provision of this Agreement may be changed, waived, discharged or
terminated orally, but only by an instrument in writing signed by
the Fund and the Underwriter and, if applicable, approved in the
manner required by the Investment Company Act.
18. 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.
19. This Agreement and the application and interpretation hereof shall
be governed exclusively by the laws of the State of Colorado.
<PAGE>
IN WITNESS WHEREOF, the Fund and the Underwriter have each caused this
Agreement to be executed on its behalf by an officer thereunto duly authorized
and the Underwriter has caused its corporate seal to be affixed as of the day
and year first above written.
INVESCO STRATEGIC PORTFOLIOS, INC.
ATTEST:
By: /s/ Dan J. Hesser
---------------------------
Dan J. Hesser
President
/s/ Glen A. Payne
- -----------------
Glen A. Payne
Secretary
INVESCO FUNDS GROUP, INC.
ATTEST:
By: /s/ Ronald L. Grooms
---------------------------
Ronald L. Grooms
Senior Vice President
/s/ Glen A. Payne
- -----------------
Glen A. Payne
Secretary
CUSTODIAN CONTRACT
Between
INVESCO STRATEGIC PORTFOLIOS, INC.
and
STATE STREET BANK AND TRUST COMPANY
<PAGE>
TABLE OF CONTENTS
Page
----
1. Employment of Custodian and Property to be Held by
It......................................................................1
2. Duties of the Custodian with Respect to Property
of the Fund Held by the Custodian in the United States..................3
2.1 Holding Securities.............................................3
2.2 Delivery of Securities.........................................3
2.3 Registration of Securities.....................................8
2.4 Bank Accounts..................................................9
2.5 Availability of Federal Funds.................................10
2.6 Collection of Income..........................................10
2.7 Payment of Fund Monies........................................11
2.8 Liability for Payment in Advance of
Receipt of Securities Purchased...............................14
2.9 Appointment of Agents.........................................15
2.10 Deposit of Fund Assets in Securities System...................15
2.10A Fund Assets Held in the Custodian's Direct
Paper Sytem...................................................18
2.11 Segregated Account............................................20
2.12 Ownership Certificates for Tax Purposes.......................21
2.13 Proxies.......................................................22
2.14 Communications Relating to Portfolio
Securities....................................................22
3. Duties of the Custodian with Respect to Property of
the Fund Held Outside of the United States.............................23
3.1 Appointment of Foreign Sub-Custodians.........................23
3.2 Assets to be Held.............................................23
3.3 Foreign Securities Depositories...............................24
3.4 Agreements with Foreign Banking Institutions..................24
3.5 Access of Independent Accountants of the Fund.................25
3.6 Reports by Custodian..........................................25
3.7 Transactions in Foreign Custody Account.......................26
3.8 Liability of Foreign Sub-Custodians...........................27
3.9 Liability of Custodian........................................27
3.10 Reimbursement for Advances....................................28
3.11 Monitoring Responsibilities...................................29
3.12 Branches of U.S. Banks........................................29
3.13 Tax Law.......................................................30
4. Payments for Sales or Repurchase or Redemptions
of Shares of the Funds.................................................31
5. Proper Instructions....................................................32
6. Actions Permitted Without Express Authority............................33
7. Evidence of Authority..................................................33
<PAGE>
8. Duties of Custodian With Respect to the Books of Account
and Calculation of Net Asset Value and Net Income......................34
9. Records................................................................34
10. Opinion of Fund's Independent Accountants..............................35
11. Reports to Fund by Independent Public Accountants......................35
12. Compensation of Custodian..............................................36
13. Responsibility of Custodian............................................36
14. Effective Period, Termination and Amendment............................38
15. Successor Custodian....................................................40
16. Interpretive and Additional Provisions.................................41
17. Additional Funds.......................................................42
18. Massachusetts Law to Apply.............................................42
19. Prior Contracts........................................................42
20. Shareholder Communications.............................................43
<PAGE>
CUSTODIAN CONTRACT
This Contract between INVESCO Strategic Portfolios, Inc., a corporation
organized and existing under the laws of Maryland, having its principal place of
business at 7800 East Union Avenue, Denver, Colorado 80237, hereinafter called
the "Fund", and State Street Bank and Trust Company, a Massachusetts trust
company, having its principal place of business at 225 Franklin Street, Boston,
Massachusetts, 02110, hereinafter called the "Custodian",
WITNESSETH:
WHEREAS, the Fund is authorized to issue shares in separate series,
with each such series representing interests in a separate portfolio of
securities and other assets; and
WHEREAS, the Fund intends to initially offer shares in eight series,
Energy, Environmental Services, Financial Services, Gold, Health Sciences,
Leisure, Technology, Utilities (such series together with all other series
subsequently established by the Fund and made subject to this Contract in
accordance with paragraph 17, being herein referred to as the "Portfolio(s)");
NOW THEREFORE, in consideration of the mutual covenants and agreements
hereinafter contained, the parties hereto agree as follows:
1. Employment of Custodian and Property to be Held by It
The Fund hereby employs the Custodian as the custodian of the assets of
the Portfolios of the Fund, including securities which the Fund, on behalf of
the applicable Portfolio desires to be held in places within the United States
("domestic securities") and securities it desires to be held outside the United
States ("foreign securities") pursuant to the provisions of the Articles of
Incorporation. The Fund on behalf of the Portfolio(s) agrees to deliver to the
Custodian all securities and cash of the Portfolios, and all payments of income,
payments of principal or capital distributions received by it with respect to
all securities owned by the Portfolio(s) from time to time, and the cash
consideration received by it for such new or treasury shares of capital stock
of the Fund representing interests in the Portfolios, ("Shares") as may be
issued or sold from time to time. The Custodian shall not be responsible for any
property of a Portfolio held or received by the Portfolio and not delivered to
the Custodian.
Upon receipt of "Proper Instructions" (within the meaning of Article
5), the Custodian shall on behalf of the applicable Portfolio(s) from time to
time employ one or more sub-custodians, located in the United States but only in
accordance with an applicable vote by the Board of Directors of the Fund on
behalf of the applicable Portfolio(s), and provided that the Custodian shall
have no more or less responsibility or liability to the Fund on account of any
actions or omissions of any sub-custodian so employed than any such
sub-custodian has to the Custodian. The Custodian may employ as sub-custodian
for the Fund's foreign securities on behalf of the applicable Portfolio(s) the
foreign banking institutions and foreign securities depositories designated in
Schedule A hereto but only in accordance with the provisions of Article 3.
2. Duties of the Custodian with Respect to Property of the Fund Held By the
Custodian in the United States
2.1 Holding Securities. The Custodian shall hold and physically segregate for
the account of each Portfolio all non-cash property, to be held by it in the
United States including all domestic securities owned by such Portfolio,
other than (a) securities which are maintained pursuant to Section 2.10 in a
clearing agency which acts as a securities depository or in a book-entry
<PAGE>
system authorized by the U.S. Department of the Treasury, collectively
referred to herein as "Securities System" and (b) commercial paper of an
issuer for which State Street Bank and Trust Company acts as issuing and
paying agent ("Direct Paper") which is deposited and/or maintained in the
Direct Paper System of the Custodian pursuant to Section 2.10A.
2.2 Delivery of Securities. The Custodian shall release and deliver
domestic securities owned by a Portfolio held by the Custodian or in a
Securities System account of the Custodian or in the Custodian's Direct
Paper book entry system account ("Direct Paper System Account") only
upon receipt of Proper Instructions from the Fund on behalf of the
applicable Portfolio, which may be continuing instructions when deemed
appropriate by the parties, and only in the following cases:
1) Upon sale of such securities for the account of the Portfolio and
receipt of payment therefor;
2) Upon the receipt of payment in connection with any repurchase
agreement related to such securities entered into by the Portfolio;
3) In the case of a sale effected through a Securities System, in
accordance with the provisions of Section 2.10 hereof;
4) To the depository agent in connection with tender or other similar
offers for securities of the Portfolio;
5) To the issuer thereof or its agent when such securities are called,
redeemed, retired or otherwise become payable; provided that, in any
such case, the cash or other consideration is to be delivered to the
Custodian;
6) To the issuer thereof, or its agent, for transfer into the name of
the Portfolio or into the name of any nominee or nominees of the
Custodian or into the name or nominee name of any agent appointed
pursuant to Section 2.9 or into the name or nominee name of any
sub-custodian appointed pursuant to Article 1; or for exchange for a
different number of bonds, certificates or other evidence
representing the same aggregate face amount or number of units;
provided that, in any such case, the new securities are to be
delivered to the Custodian;
7) Upon the sale of such securities for the account of the Portfolio,
to the broker or its clearing agent, against a receipt, for
examination in accordance with "street delivery" custom; provided
that in any such case, the Custodian shall have no responsibility or
liability for any loss arising from the delivery of such securities
prior to receiving payment for such securities except as may arise
from the Custodian's own negligence or willful misconduct;
8) For exchange or conversion pursuant to any plan of merger,
consolidation, recapitalization, reorganization or readjustment of
the securities of the issuer of such securities, or pursuant to
provisions for conversion contained in such securities, or pursuant
to any deposit agreement; provided that, in any such case, the new
securities and cash, if any, are to be delivered to the Custodian;
9) In the case of warrants, rights or similar securities, the surrender
thereof in the exercise of such warrants, rights or similar
securities or the surrender of interim receipts or temporary
securities for definitive securities; provided that, in any such
case, the new securities and cash, if any, are to be delivered to
the Custodian;
<PAGE>
10) For delivery in connection with any loans of securities made by the
Portfolio, but only against receipt of adequate collateral as agreed
upon from time to time by the Custodian and the Fund on behalf of the
Portfolio, which may be in the form of cash or obligations issued by
the United States government, its agencies or instrumentalities,
except that in connection with any loans for which collateral is to
be credited to the Custodian's account in the book-entry system
authorized by the U.S. Department of the Treasury, the Custodian will
not be held liable or responsible for the delivery of securities
owned by the Portfolio prior to the receipt of such collateral;
11) For delivery as security in connection with any borrowings by the
Fund on behalf of the Portfolio requiring a pledge of assets by the
Fund on behalf of the Portfolio, but only against receipt of amounts
borrowed;
12) For delivery in accordance with the provisions of any agreement among
the Fund on behalf of the Portfolio, the Custodian and a
broker-dealer registered under the Securities Exchange Act of 1934
(the "Exchange Act") and a member of The National Association of
Securities Dealers, Inc. ("NASD"), relating to compliance with the
rules of The Options Clearing Corporation and of any registered
national securities exchange, or of any similar organization or
organizations, regarding escrow or other arrangements in connection
with transactions by the Portfolio of the Fund;
13) For delivery in accordance with the provisions of any agreement among
the Fund on behalf of the Portfolio, the Custodian, and a Futures
Commission Merchant registered Commodity Exchange Act, relating to
compliance with the rules of the Commodity Futures Trading Commission
and/or any Contract Market, or any similar organization or
organizations, regarding account deposits in connection with
transactions by the Portfolio of the Fund;
14) Upon receipt of instructions from the transfer agent ("Transfer
Agent") for the Fund, for delivery to such Transfer Agent or to the
holders of shares in connection with distributions in kind, as may be
described from time to time in the currently effective prospectus and
statement of additional information of the Fund, related to the
Portfolio ("Prospectus"), in satisfaction of requests by holders of
Shares for repurchase or redemption; and
15) For any other proper corporate purpose, but only upon receipt of, in
addition to Proper Instructions from the Fund on behalf of the
applicable Portfolio, a certified copy of a resolution of the Board
of Directors or of the Executive Committee signed by an officer of
the Fund and certified by the Secretary or an Assistant Secretary,
specifying the securities of the Portfolio to be delivered, setting
forth the purpose for which such delivery is to be made, declaring
such purpose to be a proper corporate purpose, and naming the person
or persons to whom delivery of such securities shall be made.
2.3 Registration of Securities. Domestic securities held by the Custodian
(other than bearer securities) shall be registered in the name of the
Portfolio or in the name of any nominee of the Fund on behalf of the
Portfolio or of any nominee of the Custodian which nominee shall be
assigned exclusively to the Portfolio, unless the Fund has authorized
in writing the appointment of a nominee to be used in common with other
<PAGE>
registered investment companies having the same investment adviser as
the Portfolio, or in the name or nominee name of any agent appointed
pursuant to Section 2.9 or in the name or nominee name of any
sub-custodian appointed pursuant to Article 1. All securities accepted
by the Custodian on behalf of the Portfolio under the terms of this
Contract shall be in "street name" or other good delivery form. If,
however, the Fund directs the Custodian to maintain securities in
"street name", the Custodian shall utilize its best efforts only to
timely collect income due the Fund on such securities and to notify the
Fund on a best efforts basis only of relevant corporate actions
including, without limitation, pendency of calls, maturities, tender
or exchange offers.
2.4 Bank Accounts. The Custodian shall open and maintain a separate bank
account or accounts in the United States in the name of each Portfolio
of the Fund, subject only to draft or order by the Custodian acting
pursuant to the terms of this Contract, and shall hold in such account
or accounts, subject to the provisions hereof, all cash received by it
from or for the account of the Portfolio, other than cash maintained by
the Portfolio in a bank account established and used in accordance with
Rule 17f-3 under the Investment Company Act of 1940. Funds held by the
Custodian for a Portfolio may be deposited by it to its credit as
Custodian in the Banking Department of the Custodian or in such other
banks or trust companies as it may in its discretion deem necessary or
desirable; provided, however, that every such bank or trust company shall
be qualified to act as a custodian under the Investment Company Act of
1940 and that each such bank or trust company and the funds to be
deposited with each such bank or trust company shall on behalf of each
applicable Portfolio be approved by vote of a majority of the Board of
Directors of the Fund. Such funds shall be deposited by the Custodian
in its capacity as Custodian and shall be withdrawable by the Custodian
only in that capacity.
2.5 Availability of Federal Funds. Upon mutual agreement between the Fund
on behalf of each applicable Portfolio and the Custodian, the Custodian
shall, upon the receipt of Proper Instructions from the Fund on behalf
of a Portfolio, make federal funds available to such Portfolio as of
specified times agreed upon from time to time by the Fund and the
Custodian in the amount of checks received in payment for Shares of
such Portfolio which are deposited into the Portfolio's account.
2.6 Collection of Income. Subject to the provisions of Section 2.3, the
Custodian shall collect on a timely basis all income and other payments
with respect to registered domestic securities held hereunder to which
each Portfolio shall be entitled either by law or pursuant to custom in
the securities business, and shall collect on a timely basis all income
and other payments with respect to bearer domestic securities if, on the
date of payment by the issuer, such securities are held by the Custodian
or its agent thereof and shall credit such income, as collected, to such
Portfolio's custodian account. Without limiting the generality of the
foregoing, the Custodian shall detach and present for payment all
coupons and other income items requiring presentation as and when they
become due and shall collect interest when due on securities held
hereunder. Income due each Portfolio on securities loaned pursuant to
the provisions of Section 2.2 (10) shall be the responsibility of the
Fund. The Custodian will have no duty or responsibility in connection
<PAGE>
therewith, other than to provide the Fund with such information or data
as may be necessary to assist the Fund in arranging for the timely
delivery to the Custodian of the income to which the Portfolio is
properly entitled.
2.7 Payment of Fund Monies. Upon receipt of Proper Instructions from the Fund
on behalf of the applicable Portfolio, which may be continuing
instructions when deemed appropriate by the parties, the Custodian shall
pay out monies of a Portfolio in the following cases only:
1) Upon the purchase of domestic securities, options, futures
contracts or options on futures contracts for the account of the
Portfolio but only (a) against the delivery of such securities or
evidence of title to such options, futures contracts or options on
futures contracts to the Custodian (or any bank, banking firm or
trust company doing business in the United States or abroad which
is qualified under the Investment Company Act of 1940, as amended,
to act as a custodian and has been designated by the Custodian as
its agent for this purpose) registered in the name of the Portfolio
or in the name of a nominee of the Custodian referred to in Section
2.3 hereof or in proper form for transfer; (b) in the case of a
purchase effected through a Securities System, in accordance with
the conditions set forth in Section 2.10 hereof; (c) in the case of
a purchase involving the Direct Paper System, in accordance with
the conditions set forth in Section 2.10A; (d) in the case of
repurchase agreements entered into between the Fund on behalf of
the Portfolio and the Custodian, or another bank, or a
broker-dealer which is a member of NASD, (i) against delivery of
the securities either in certificate form or through an entry
crediting the Custodian's account at the Federal Reserve Bank with
such securities or (ii) against delivery of the receipt evidencing
purchase by the Portfolio of securities owned by the Custodian
along with written evidence of the agreement by the Custodian to
repurchase such securities from the Portfolio or (e) for
transfer to a time deposit account of the Fund in any bank, whether
domestic or foreign; such transfer may be effected prior to receipt
of a confirmation from a broker and/or the applicable bank pursuant
to Proper Instructions from the Fund as defined in Article 5;
2) In connection with conversion, exchange or surrender of securities
owned by the Portfolio as set forth in Section 2.2 hereof;
3) For the redemption or repurchase of Shares issued by the Portfolio
as set forth in Article 4 hereof;
4) For the payment of any expense or liability incurred by the
Portfolio, including but not limited to the following payments for
the account of the Portfolio: interest, taxes, management,
accounting, transfer agent and legal fees, and operating expenses
of the Fund whether or not such expenses are to be in whole or part
capitalized or treated as deferred expenses;
5) For the payment of any dividends on Shares of the Portfolio
declared pursuant to the governing documents of the Fund;
6) For payment of the amount of dividends received in respect of
securities sold short;
<PAGE>
7) For any other proper purpose, but only upon receipt of, in addition
to Proper Instructions from the Fund on behalf of the Portfolio, a
certified copy of a resolution of the Board of Directors or of the
Executive Committee of the Fund signed by an officer of the Fund
and certified by its Secretary or an Assistant Secretary,
specifying the amount of such payment, setting forth the purpose
for which such payment is to be made, declaring such purpose to be
a proper purpose, naming the person or persons to whom such payment
is to be made.
2.8 Liability for Payment in Advance of Receipt of Securities Purchased.
Except as specifically stated otherwise in this Contract, in any and
every case where payment for purchase of domestic securities for the
account of a Portfolio is made by the Custodian in advance of receipt
of the securities purchased in the absence of specific written
instructions from the Fund on behalf of such Portfolio to so pay in
advance, the Custodian shall be absolutely liable to the Fund for such
securities to the same extent as if the securities had been received by
the Custodian.
2.9 Appointment of Agents. The Custodian may at any time or times in its
discretion appoint (and may at any time remove) any other bank or trust
company which is itself qualified under the Investment Company Act of
1940, as amended, to act as a custodian, as its agent to carry out such
of the provisions of this Article 2 as the Custodian may from time to
time direct; provided, however, that the appointment of any agent shall
not relieve the Custodian of its responsibilities or liabilities
hereunder.
2.10 Deposit of Fund Assets in Securities Systems. The Custodian may deposit
and/or maintain securities owned by a Portfolio in a clearing agency
registered with the Securities and Exchange Commission under Section
17A of the Securities Exchange Act of 1934, which acts as a securities
depository, or in the book-entry system authorized by the U.S.
Department of the Treasury and certain federal agencies, collectively
referred to herein as "Securities System" in accordance with applicable
Federal Reserve Board and Securities and Exchange Commission rules and
regulations, if any, and subject to the following provisions:
1) The Custodian may keep securities of the Portfolio in a Securities
System provided that such securities are represented in an account
("Account") of the Custodian in the Securities System which shall
not include any assets of the Custodian other than assets held as
a fiduciary, custodian or otherwise for customers;
2) The records of the Custodian with respect to securities of the
Portfolio which are maintained in a Securities System shall
identify by book-entry those securities belonging to the Portfolio;
3) The Custodian shall pay for securities purchased for the account
of the Portfolio upon (i) receipt of advice from the Securities
System that such securities havebeen transferred to the Account,
and (ii) the making of an entry on the records of the Custodian to
reflect such payment and transfer for the account of the Portfolio.
The Custodian shall transfer securities sold for the account of the
Portfolio upon (i) receipt of advice from the Securities System
that payment for such securities has been transferred to the
<PAGE>
Account, and (ii) the making of an entry on the records of the
Custodian to reflect such transfer and payment for the account of
the Portfolio. Copies of all advices from the Securities System
of transfers of securities for the account of the Portfolio shall
identify the Portfolio, be maintained for the Portfolio by the
Custodian and be provided to the Fund at its request. Upon request,
the Custodian shall furnish the Fund on behalf of the Portfolio
confirmation of each transfer to or from the account of the
Portfolio in the form of a written advice or notice and shall
furnish to the Fund on behalf of the Portfolio copies of daily
transaction sheets reflecting each day's transactions in the
Securities System for the account of the Portfolio.
4) The Custodian shall provide the Fund for the Portfolio with any
report obtained by the Custodian on the Securities System's
accounting system, internal accounting control and procedures for
safeguarding securities deposited in the Securities System;
5) The Custodian shall have received from the Fund on behalf of the
Portfolio the initial or annual certificate, as the case may be,
required by Article 14 hereof;
6) Anything to the contrary in this Contract notwithstanding, the
Custodian shall be liable to the Fund for the benefit of the
Portfolio for any loss or damage to the Portfolio resulting from
use of the Securities System by reason of any negligence,
misfeasance or misconduct of the Custodian or any of its agents
or of any of its or their employees or from failure of the
Custodian or any such agent to enforce effectively such rights as
it may have against the Securities System; at the election of the
Fund, it shall be entitled to be subrogated to the rights of the
Custodian with respect to any claim against the Securities System
or any other person which the Custodian may have as a consequence
of any such loss or damage if and to the extent that the Portfolio
has not been made whole for any such loss or damage.
2.10A Fund Assets Held in the Custodian's Direct Paper System. The Custodian
may deposit and/or maintain securities owned by a Portfolio in the
Direct Paper System of the Custodian subject to the following
provisions:
1) No transaction relating to securities in the Direct Paper
System will be effected in the absence of Proper Instructions
from the Fund on behalf of the Portfolio;
2) The Custodian may keep securities of the Portfolio in the
Direct Paper System only if such securities are represented
in an account ("Account") of the Custodian in the Direct
Paper System which shall not include any assets of the
Custodian other than assets held as a fiduciary, custodian
or otherwise for customers;
3) The records of the Custodian with respect to securities of
the Portfolio which are maintained in the Direct Paper System
shall identify by book-entry those securities belonging to
the Portfolio;
4) The Custodian shall pay for securities purchased for the
account of the Portfolio upon the making of an entry on the
records of the Custodian to reflect such payment and transfer
<PAGE>
of securities to the account of the Portfolio. The Custodian
shall transfer securities sold for the account of the
Portfolio upon the making of an entry on the records of the
Custodian to reflect such transfer and receipt of payment for
the account of the Portfolio;
5) The Custodian shall furnish the Fund on behalf of the
Portfolio confirmation of each transfer to or from the
account of the Portfolio, in the form of a written advice
or notice, of Direct Paper on the next business day
following such transfer and shall furnish to the Fund on
behalf of the Portfolio copies of daily transaction sheets
reflecting each day's transaction in the Securities System
for the account of the Portfolio;
6) The Custodian shall provide the Fund on behalf of the
Portfolio with any report on its system of internal
accounting control as the Fund may reasonably request from
time to time.
2.11 Segregated Account. The Custodian shall upon receipt of Proper
Instructions from the Fund on behalf of each applicable Portfolio
establish and maintain a segregated account or accounts for and on
behalf of each such Portfolio, into which account or accounts may be
transferred cash and/or securities, including securities maintained in
an account by the Custodian pursuant to Section 2.10 hereof, (i) in
accordance with the provisions of any agreement among the Fund on
behalf of the Portfolio, the Custodian and a broker-dealer registered
under the Exchange Act and a member of the NASD (or any futures
commission merchant registered under the Commodity Exchange Act),
relating to compliance with the rules of The Options Clearing
Corporation and of any registered national securities exchange (or the
Commodity Futures Trading Commission or any registered contract
market), or of any similar organization or organizations, regarding
escrow or other arrangements in connection with transactions by the
Portfolio, (ii) for purposes of segregating cash or government
securities in connection with options purchased, sold or written by the
Portfolio or commodity futures contracts or options thereon purchased or
sold by the Portfolio, (iii) for the purposes of compliance by
the Portfolio with the procedures required by Investment Company Act
Release No. 10666, or any subsequent release or releases of the
Securities and Exchange Commission relating to the maintenance of
segregated accounts by registered investment companies and (iv) for
other proper corporate purposes, but only, in the case of clause (iv),
upon receipt of, in addition to Proper Instructions from the Fund on
behalf of the applicable Portfolio, a certified copy of a resolution of
the Board of Directors or of the Executive Committee signed by an
officer of the Fund and certified by the Secretary or an Assistant
Secretary, setting forth the purpose or purposes of such segregated
account and declaring such purposes to be proper corporate purposes.
2.12 Ownership Certificates for Tax Purposes. The Custodian shall execute
ownership and other certificates and affidavits for all federal and
state tax purposes in connection with receipt of income or other
payments with respect to domestic securities of each Portfolio held by
it and in connection with transfers of securities.
<PAGE>
2.13 Proxies. The Custodian shall, with respect to the domestic securities
held hereunder, cause to be promptly executed by the registered holder
of such securities, if the securities are registered otherwise than in
the name of the Portfolio or a nominee of the Portfolio, all proxies,
without indication of the manner in which such proxies are to be voted,
and shall promptly deliver to the Portfolio such proxies, all proxy
soliciting materials and all notices relating to such securities.
2.14 Communications Relating to Portfolio Securities. Subject to the
provisions of Section 2.3, the Custodian shall transmit promptly to the
Fund for each Portfolio all written information (including, without
limitation, pendency of calls and maturities of domestic securities and
expirations of rights in connection therewith and notices of exercise
of call and put options written by the Fund on behalf of the Portfolio
and the maturity of futures contracts purchased or sold by the
Portfolio) received by the Custodian from issuers of the securities
being held for the Portfolio. With respect to tender or exchange
offers, the Custodian shall transmit promptly to the Portfolio all
written information received by the Custodian from issuers of the
securities whose tender or exchange is sought and from the party (or his
agents) making the tender or exchange offer. If the Portfolio desires to
take action with respect to any tender offer, exchange offer or any other
similar transaction, the Portfolio shall notify the Custodian at least
three business days prior to the date on which the Custodian is to take
such action.
3. Duties of the Custodian with Respect to Property of the Fund Held Outside
of the United States
3.1 Appointment of Foreign Sub-Custodians. The Fund hereby authorizes and
instructs the Custodian to employ as sub-custodians for the Portfolio's
securities and other assets maintained outside the United States the
foreign banking institutions and foreign securities depositories
designated on Schedule A hereto ("foreign sub-custodians"). Upon receipt
of "Proper Instructions", as defined in Section 5 of this Contract,
together with a certified resolution of the Fund's Board of Directors,
the Custodian and the Fund may agree to amend Schedule A hereto from time
to time to designate additional foreign banking institutions and foreign
securities depositories to act as sub-custodian. Upon receipt of Proper
Instructions, the Fund may instruct the Custodian to cease the employment
of any one or more such sub-custodians for maintaining custody of the
Portfolio's assets.
3.2 Assets to be Held. The Custodian shall limit the securities and other
assets maintained in the custody of the foreign sub-custodians to: (a)
"foreign securities", as defined in paragraph (c)(1) of Rule 17f-5
under the Investment Company Act of 1940, and (b) cash and cash
equivalents in such amounts as the Custodian or the Fund may determine
to be reasonably necessary to effect the Portfolio's foreign securities
transactions. The Custodian shall identify on its books as belonging to
the Fund, the foreign securities of the Fund held by each foreign
sub-custodian.
3.3 Foreign Securities Depositories. Except as may otherwise be agreed upon
in writing by the Custodian and the Fund, assets of the Portfolios
shall be maintained in foreign securities depositories only through
<PAGE>
arrangements implemented by the foreign banking institutions serving as
sub-custodians pursuant to the terms hereof. Where possible, such
arrangements shall include entry into agreements containing the
provisions set forth in Section 3.4 hereof.
3.4 Agreements with Foreign Banking Institutions. Each agreement with a
foreign banking institution shall be substantially in the form set
forth in Exhibit 1 hereto and shall provide that: (a) the assets of
each Portfolio will not be subject to any right, charge, security
interest, lien or claim of any kind in favor of the foreign banking
institution or its creditors or agent, except a claim of payment for
their safe custody or administration; (b) beneficial ownership for the
assets of each Portfolio will be freely transferable without the
payment of money or value other than for custody or administration; (c)
adequate records will be maintained identifying the assets as belonging
to each applicable Portfolio; (d) officers of or auditors employed by,
or other representatives of the Custodian, including to the extent
permitted under applicable law the independent public accountants for
the Fund, will be given access to the books and records of the foreign
banking institution relating to its actions under its agreement with
the Custodian; and (e) assets of the Portfolios held by the foreign
sub-custodian will be subject only to the instructions of the Custodian
or its agents.
3.5 Access of Independent Accountants of the Fund. Upon request of the
Fund, the Custodian will use its best efforts to arrange for the
independent accountants of the Fund to be afforded access to the books
and records of any foreign banking institution employed as a foreign
sub-custodian insofar as such books and records relate to the
performance of such foreign banking institution under its agreement
with the Custodian.
3.6 Reports by Custodian. The Custodian will supply to the Fund from time
to time, as mutually agreed upon, statements in respect of the
securities and other assets of the Portfolio(s) held by foreign
sub-custodians, including but not limited to an identification of
entities having possession of the Portfolio(s) securities and other
assets and advices or notifications of any transfers of securities to
or from each custodial account maintained by a foreign banking
institution for the Custodian on behalf of each applicable Portfolio
indicating, as to securities acquired for a Portfolio, the identity of
the entity having physical possession of such securities.
3.7 Transactions in Foreign Custody Account (a) Except as otherwise
provided in paragraph (b) of this Section 3.7, the provision of
Sections 2.2 and 2.7 of this Contract shall apply, mutatis mutandis to
the foreign securities of the Fund held outside the United States by
foreign sub-custodians. (b) Notwithstanding any provision of this
Contract to the contrary, settlement and payment for securities
received for the account of each applicable Portfolio and delivery of
securities maintained for the account of each applicable Portfolio may
be effected in accordance with the customary established securities
trading or securities processing practices and procedures in the
jurisdiction or market in which the transaction occurs, including,
<PAGE>
without limitation, delivering securities to the purchaser thereof or
to a dealer therefor (or an agent for such purchaser or dealer) against
a receipt with the expectation of receiving later payment for such
securities from such purchaser or dealer. (c) Securities maintained in
the custody of a foreign sub-custodian may be maintained in the name of
such entity's nominee to the same extent as set forth in Section 2.3 of
this Contract, and the Fund agrees to hold any such nominee harmless
from any liability as a holder of record of such securities.
3.8 Liability of Foreign Sub-Custodians. Each agreement pursuant to which
the Custodian employs a foreign banking institution as a foreign
sub-custodian shall require the institution to exercise reasonable care
in the performance of its duties and to indemnify, and hold harmless,
the Custodian and each Fund from and against any loss, damage, cost,
expense, liability or claim arising out of or in connection with the
institution's performance of such obligations. At the election of the
Fund, it shall be entitled to be subrogated to the rights of the
Custodian with respect to any claims against a foreign banking
institution as a consequence of any such loss, damage, cost, expense,
liability or claim if and to the extent that the Fund has not been made
whole for any such loss, damage, cost, expense, liability or claim.
3.9 Liability of Custodian. The Custodian shall be liable for the acts or
omissions of a foreign banking institution to the same extent as set
forth with respect to sub-custodians generally in this Contract and,
regardless of whether assets are maintained in the custody of a foreign
banking institution, a foreign securities depository or a branch of a
U.S. bank as contemplated by paragraph 3.12 hereof, the Custodian shall
not be liable for any loss, damage, cost, expense, liability or claim
resulting from nationalization, expropriation, currency restrictions,
or acts of war or terrorism or any loss where the sub-custodian has
otherwise exercised reasonable care. Notwithstanding the foregoing
provisions of this paragraph 3.9, in delegating custody duties to State
Street London Ltd., the Custodian shall not be relieved of any
responsibility to the Fund for any loss due to such delegation, except
such loss as may result from (a) political risk (including, but not
limited to, exchange control restrictions, confiscation, expropriation,
nationalization, insurrection, civil strife or armed hostilities) or
(b) other losses (excluding a bankruptcy or insolvency of State Street
London Ltd. not caused by political risk) due to Acts of God, nuclear
incident or other losses under circumstances where the Custodian and
State Street London Ltd. have exercised reasonable care.
3.10 Reimbursement for Advances. If the Fund requires the Custodian to
advance cash or securities for any purpose for the benefit of a
Portfolio including the purchase or sale of foreign exchange or of
contracts for foreign exchange, or in the event that the Custodian or
its nominee shall incur or be assessed any taxes, charges, expenses,
assessments, claims or liabilities in connection with the performance
of this Contract, except such as may arise from its or its nominee's
own negligent action, negligent failure to act or willful misconduct,
any property at any time held for the account of the applicable
Portfolio shall be security therefor and should the Fund fail to repay
the Custodian promptly, the Custodian shall be entitled to utilize
available cash and to dispose of such Portfolios assets to the extent
necessary to obtain reimbursement.
<PAGE>
3.11 Monitoring Responsibilities. The Custodian shall furnish annually to the
Fund, during the month of June, information concerning the foreign
sub-custodians employed by the Custodian. Such information shall be
similar in kind and scope to that furnished to the Fund in connection
with the initial approval of this Contract. In addition, the Custodian
will promptly inform the Fund in the event that the Custodian learns of
a material adverse change in the financial condition of a foreign
sub-custodian or any material loss of the assets of the Fund or in the
case of any foreign sub-custodian not the subject of an exemptive order
from the Securities and Exchange Commission is notified by such foreign
sub-custodian that there appears to be a substantial likelihood that
its shareholders' equity will decline below $200 million (U.S. dollars or
the equivalent thereof) or that its shareholders' equity has declined
below $200 million (in each case computed in accordance with generally
accepted U.S. accounting principles).
3.12 Branches of U.S. Banks
(a) Except as otherwise set forth in this Contract, the provisions
hereof shall not apply where the custody of the Portfolios assets are
maintained in a foreign branch of a banking institution which is a
"bank" as defined by Section 2(a)(5) of the Investment Company Act of
1940 meeting the qualification set forth in Section 26(a) of said Act.
The appointment of any such branch as a sub-custodian shall be governed
by paragraph 1 of this Contract. (b) Cash held for each Portfolio of
the Fund in the United Kingdom shall be maintained in an interest
bearing account established for the Fund with the Custodian's London
branch, which account shall be subject to the direction of the
Custodian, State Street London Ltd. or both.
3.13 Tax Law
The Custodian shall have no responsibility or liability for any
obligations now or hereafter imposed on the Fund or the Custodian as
custodian of the Fund by the tax law of the United States of America or
any state or political subdivision thereof. It shall be the
responsibility of the Fund to notify the Custodian of the obligations
imposed on the Fund or the Custodian as custodian of the Fund by the
tax law of jurisdictions other than those mentioned in the above
sentence, including responsibility for withholding and other taxes,
assessments or other governmental charges, certifications and
governmental reporting. The sole responsibility of the Custodian with
regard to such tax law shall be to use reasonable efforts to assist the
Fund with respect to any claim for exemption or refund under the tax
law of jurisdictions for which the Fund has provided such information.
4. Payments for Sales or Repurchases or Redemptions of Shares of the Fund
The Custodian shall receive from the distributor for the Shares or from
the Transfer Agent of the Fund and deposit into the account of the appropriate
Portfolio such payments as are received for Shares of that Portfolio issued or
sold from time to time by the Fund. The Custodian will provide timely
notification to the Fund on behalf of each such Portfolio and the Transfer
Agent of any receipt by it of payments for Shares of such Portfolio.
From such funds as may be available for the purpose but subject to the
limitations of the Articles of Incorporation and any applicable votes of the
Board of Directors of the Fund pursuant thereto, the Custodian shall, upon
receipt of instructions from the Transfer Agent, make funds available for
<PAGE>
payment to holders of Shares who have delivered to the Transfer Agent a request
for redemption or repurchase of their Shares. In connection with the redemption
or repurchase of Shares of a Portfolio, the Custodian is authorized upon receipt
of instructions from the Transfer Agent to wire funds to or through a commercial
bank designated by the redeeming shareholders. In connection with the redemption
or repurchase of Shares of the Fund, the Custodian shall honor checks drawn on
the Custodian by a holder of Shares, which checks have been furnished by the
Fund to the holder of Shares, when presented to the Custodian in accordance with
such procedures and controls as are mutually agreed upon from time to time
between the Fund and the Custodian.
5. Proper Instructions
Proper Instructions as used throughout this Contract means a writing
signed or initialled by one or more person or persons as the Board of Directors
shall have from time to time authorized. Each such writing shall set forth the
specific transaction or type of transaction involved, including a specific
statement of the purpose for which such action is requested. Oral instructions
will be considered Proper Instructions if the Custodian reasonably believes them
to have been given by a person authorized to give such instructions with respect
to the transaction involved. The Fund shall cause all oral instructions to be
confirmed in writing. Upon receipt of a certificate of the Secretary or an
Assistant Secretary as to the authorization by the Board of Directors of the
Fund accompanied by a detailed description of procedures approved by the Board
of Directors, Proper Instructions may include communications effected directly
between electro-mechanical or electronic devices provided that the Board of
Directors and the Custodian are satisfied that such procedures afford adequate
safeguards for the Portfolios' assets. For purposes of this Section, Proper
Instructions shall include instructions received by the Custodian pursuant to
any three-party agreement which requires a segregated asset account in
accordance with Section 2.11.
6. Actions Permitted without Express Authority
The Custodian may in its discretion, without express authority from the
Fund on behalf of each applicable Portfolio:
1) make payments to itself or others for minor expenses of handling
securities or other similar items relating to its duties under
this Contract, provided that all such payments shall be accounted
for to the Fund on behalf of the Portfolio;
2) surrender securities in temporary form for securities
in definitive form;
3) endorse for collection, in the name of the Portfolio,
checks, drafts and other negotiable instruments; and
4) in general, attend to all non-discretionary details in connection
with the sale, exchange, substitution, purchase, transfer and
other dealings with the securities and property of the Portfolio
except as otherwise directed by the Board of Directors of the
Fund.
7. Evidence of Authority
The Custodian shall be protected in acting upon any instructions,
notice, request, consent, certificate or other instrument or paper believed by
it to be genuine and to have been properly executed by or on behalf of the Fund.
The Custodian may receive and accept a certified copy of a vote of the Board of
Directors of the Fund as conclusive evidence (a) of the authority of any person
<PAGE>
to act in accordance with such vote or (b) of any determination or of any action
by the Board of Directors pursuant to the Articles of Incorporation as described
in such vote, and such vote may be considered as in full force and effect until
receipt by the Custodian of written notice to the contrary.
8. Duties of Custodian with Respect to the Books of Account and Calculation
of Net Asset Value and Net Income
The Custodian shall cooperate with and supply necessary information to
the entity or entities appointed by the Board of Directors of the Fund to keep
the books of account of each Portfolio and/or compute the net asset value per
share of the outstanding shares of each Portfolio or, if directed in writing to
do so by the Fund on behalf of the Portfolio, shall itself keep such books of
account and/or compute such net asset value per share. If so directed, the
Custodian shall also calculate daily the net income of the Portfolio as
described in the Fund's currently effective prospectus related to such Portfolio
and shall advise the Fund and the Transfer Agent daily of the total amounts of
such net income and, if instructed in writing by an officer of the Fund to do
so, shall advise the Transfer Agent periodically of the division of such net
income among its various components. The calculations of the net asset value per
share and the daily income of each Portfolio shall be made at the time or times
described from time to time in the Fund's currently effective prospectus related
to such Portfolio.
9. Records
The Custodian shall with respect to each Portfolio create and maintain
all records relating to its activities and obligations under this Contract in
such manner as will meet the obligations of the Fund under the Investment
Company Act of 1940, with particular attention to Section 31 thereof and Rules
31a-1 and 31a-2 thereunder. All such records shall be the property of the Fund
and shall at all times during the regular business hours of the Custodian be
open for inspection by duly authorized officers, employees or agents of the Fund
and employees and agents of the Securities and Exchange Commission. The
Custodian shall, at the Fund's request, supply the Fund with a tabulation of
securities owned by each Portfolio and held by the Custodian and shall, when
requested to do so by the Fund and for such compensation as shall be agreed upon
between the Fund and the Custodian, include certificate numbers in such
tabulations.
10. Opinion of Fund's Independent Accountant
The Custodian shall take all reasonable action, as the Fund on behalf of
each applicable Portfolio may from time to time request, to obtain from year to
year favorable opinions from the Fund's independent accountants with respect to
its activities hereunder in connection with the preparation of the Fund's Form
N-1A, and Form N-SAR or other annual reports to the Securities and Exchange
Commission and with respect to any other requirements of such Commission.
11. Reports to Fund by Independent Public Accountants
The Custodian shall provide the Fund, on behalf of each of the
Portfolios at such times as the Fund may reasonably require, with reports by
independent public accountants on the accounting system, internal accounting
control and procedures for safeguarding securities, futures contracts and
options on futures contracts, including securities deposited and/or maintained
in a Securities System, relating to the services provided by the Custodian under
this Contract; such reports, shall be of sufficient scope and in sufficient
detail, as may reasonably be required by the Fund to provide reasonable
assurance that any material inadequacies would be disclosed by such examination,
and, if there are no such inadequacies, the reports shall so state.
<PAGE>
12. Compensation of Custodian
The Custodian shall be entitled to reasonable compensation for its
services and expenses as Custodian, as agreed upon from time to time between the
Fund on behalf of each applicable Portfolio and the Custodian.
13. Responsibility of Custodian
So long as and to the extent that it is in the exercise of reasonable
care, the Custodian shall not be responsible for the title, validity or
genuineness of any property or evidence of title thereto received by it or
delivered by it pursuant to this Contract and shall be held harmless in acting
upon any notice, request, consent, certificate or other instrument reasonably
believed by it to be genuine and to be signed by the proper party or parties,
including any futures commission merchant acting pursuant to the terms of a
three-party futures or options agreement. The Custodian shall be held to the
exercise of reasonable care in carrying out the provisions of this Contract, but
shall be kept indemnified by and shall be without liability to the Fund for any
action taken or omitted by it in good faith without negligence. It shall
be entitled to rely on and may act upon advice of counsel (who may be counsel
for the Fund) on all matters, and shall be without liability for any action
reasonably taken or omitted pursuant to such advice.
The Custodian shall be liable for the acts or omissions of a foreign
banking institution appointed pursuant to the provisions of Article 3 to the
same extent as set forth in Article 1 hereof with respect to sub-custodians
located in the United States (except as specifically provided in Article 3.9)
and, regardless of whether assets are maintained in the custody of a foreign
banking institution, a foreign securities depository or a branch of a U.S. bank
as contemplated by paragraph 3.12 hereof, the Custodian shall not be liable for
any loss, damage, cost, expense, liability or claim resulting from, or caused
by, the direction of or authorization by the Fund to maintain custody of any
securities or cash of the Fund in a foreign country including, but not limited
to, losses resulting from nationalization, expropriation, currency restrictions,
or acts of war or terrorism.
If the Fund on behalf of a Portfolio requires the Custodian to take any
action with respect to securities, which action involves the payment of money or
which action may, in the opinion of the Custodian, result in the Custodian or
its nominee assigned to the Fund or the Portfolio being liable for the payment
of money or incurring liability of some other form, the Fund on behalf of the
Portfolio, as a prerequisite to requiring the Custodian to take such action,
shall provide indemnity to the Custodian in an amount and form satisfactory to
it.
If the Fund requires the Custodian, its affiliates, subsidiaries or
agents, to advance cash or securities for any purpose (including but not limited
to securities settlements, foreign exchange contracts and assumed settlement)
for the benefit of a Portfolio including the purchase or sale of foreign
exchange or of contracts for foreign exchange or in the event that the Custodian
or its nominee shall incur or be assessed any taxes, charges, expenses,
assessments, claims or liabilities in connection with the performance of this
Contract, except such as may arise from its or its nominee's own negligent
action, negligent failure to act or willful misconduct, any property at any time
held for the account of the applicable Portfolio shall be security therefor and
should the Fund fail to repay the Custodian promptly, the Custodian shall be
entitled to utilize available cash and to dispose of such Portfolio's assets to
the extent necessary to obtain reimbursement.
<PAGE>
14. Effective Period, Termination and Amendment
This Contract shall become effective as of its execution, shall continue
in full force and effect until terminated as hereinafter provided, may be
amended at any time by mutual agreement of the parties hereto and may be
terminated by either party by an instrument in writing delivered or mailed,
postage prepaid to the other party, such termination to take effect not sooner
than thirty (30) days after the date of such delivery or mailing; provided,
however that the Custodian shall not with respect to a Portfolio act under
Section 2.10 hereof in the absence of receipt of an initial certificate of the
Secretary or an Assistant Secretary that the Board of Directors of the Fund
has approved the initial use of a particular Securities System by such
Portfolio, as required by Rule 17f-4 under the Investment Company Act of 1940,
as amended and that the Custodian shall not with respect to a Portfolio act
under Section 2.10A hereof in the absence of receipt of an initial certificate
of the Secretary or an Assistant Secretary that the Board of Directors has
approved the initial use of the Direct Paper System by such Portfolio; provided
further, however, that the Fund shall not amend or terminate this Contract in
contravention of any applicable federal or state regulations, or any provision
of the Articles of Incorporation, and further provided, that the Fund on behalf
of one or more of the Portfolios may at any time by action of its Board of
Directors (i) substitute another bank or trust company for the Custodian by
giving notice as described above to the Custodian, or (ii) immediately terminate
this Contract in the event of the appointment of a conservator or receiver for
the Custodian by the Comptroller of the Currency or upon the happening of a
like event at the direction of an appropriate regulatory agency or court of
competent jurisdiction.
Upon termination of the Contract, the Fund on behalf of each applicable
Portfolio shall pay to the Custodian such compensation as may be due as of the
date of such termination and shall likewise reimburse the Custodian for its
costs, expenses and disbursements.
15. Successor Custodian
If a successor custodian for the Fund, of one or more of the Portfolios
shall be appointed by the Board of Directors of the Fund, the Custodian shall,
upon termination, deliver to such successor custodian at the office of the
Custodian, duly endorsed and in the form for transfer, all securities of each
applicable Portfolio then held by it hereunder and shall transfer to an account
of the successor custodian all of the securities of each such Portfolio held in
a Securities System.
If no such successor custodian shall be appointed, the Custodian shall,
in like manner, upon receipt of a certified copy of a vote of the Board of
Directors of the Fund, deliver at the office of the Custodian and transfer such
securities, funds and other properties in accordance with such vote.
In the event that no written order designating a successor custodian or
certified copy of a vote of the Board of Directors shall have been delivered to
the Custodian on or before the date when such termination shall become
effective, then the Custodian shall have the right to deliver to a bank or trust
company, which is a "bank" as defined in the Investment Company Act of 1940,
doing business in Boston, Massachusetts, of its own selection, having an
aggregate capital, surplus, and undivided profits, as shown by its last
published report, of not less than $25,000,000, all securities, funds and
other properties held by the Custodian on behalf of each applicable Portfolio
and all instruments held by the Custodian relative thereto and all other
<PAGE>
property held by it under this Contract on behalf of each applicable
Portfolio and to transfer to an account of such successor custodian all of the
securities of each such Portfolio held in any Securities System. Thereafter,
such bank or trust company shall be the successor of the Custodian under this
Contract.
In the event that securities, funds and other properties remain in the
possession of the Custodian after the date of termination hereof owing to
failure of the Fund to procure the certified copy of the vote referred to or of
the Board of Directors to appoint a successor custodian, the Custodian shall
be entitled to fair compensation for its services during such period as the
Custodian retains possession of such securities, funds and other properties and
the provisions of this Contract relating to the duties and obligations of the
Custodian shall remain in full force and effect.
16. Interpretive and Additional Provisions
In connection with the operation of this Contract, the Custodian and the
Fund on behalf of each of the Portfolios, may from time to time agree on such
provisions interpretive of or in addition to the provisions of this Contract as
may in their joint opinion be consistent with the general tenor of this
Contract. Any such interpretive or additional provisions shall be in a writing
signed by both parties and shall be annexed hereto, provided that no such
interpretive or additional provisions shall contravene any applicable federal or
state regulations or any provision of the Articles of Incorporation of the Fund.
No interpretive or additional provisions made as provided in the preceding
sentence shall be deemed to be an amendment of this Contract.
17. Additional Funds
In the event that the Fund establishes one or more series of Shares in
addition to INVESCO European Fund, INVESCO Pacific Basin Fund, INVESCO
International Growth Fund with respect to which it desires to have the Custodian
render services as custodian under the terms hereof, it shall so notify the
Custodian in writing, and if the Custodian agrees in writing to provide such
services, such series of Shares shall become a Portfolio hereunder.
18. Massachusetts Law to Apply
This Contract shall be construed and the provisions thereof interpreted
under and in accordance with laws of The Commonwealth of Massachusetts.
19. Prior Contracts
This Contract supersedes and terminates, as of the date hereof, all prior
contracts between the Fund on behalf of each of the Portfolios and the Custodian
relating to the custody of the Fund's assets.
20. Shareholder Communications Election
Securities and Exchange Commission Rule 14b-2 requires banks which hold
securities for the account of customers to respond to requests by issuers of
securities for the names, addresses and holdings of beneficial owners of
securities of that issuer held by the bank unless the beneficial owner has
expressly objected to disclosure of this information. In order to comply with
the rule, we need you to indicate whether you authorize us to provide your name,
address, and share position to requesting companies whose stock you own. If you
tell us "no", we will not provide this information to requesting companies. If
you tell us "yes" or do not check either "yes" or "no" below, we are required by
the rule to treat you as consenting to disclosure of this information for all
securities owned by the Fund or any funds or accounts established by you. For
your protection, the Rule prohibits the requesting company from using your name
and address for any purpose other than corporate communications. Please indicate
below whether you consent or object by checking one of the alternatives below.
YES [ ] You are authorized to release our name, address, and
share positions.
NO [X] You are not authorized to release our name, address,
and share positions.
<PAGE>
IN WITNESS WHEREOF, each of the parties has caused this instrument to
be executed in its name and behalf by its duly authorized representative and its
seal to be hereunder affixed as of the 1st day of July, 1993.
ATTEST INVESCO STRATEGIC PORTFOLIOS, INC.
/s/ Glen A. Payne By /s/ John M. Butler
- -------------------------- -------------------------------
ATTEST STATE STREET BANK AND TRUST COMPANY
/s/ Thomas A. Forrester /s/ Ronald E. Logue
- -------------------------- --------------------------------
Assistant Secretary Executive Vice President
AMENDMENT TO CUSTODIAN CONTRACT
Agreement made by and between State Street Bank and Trust Company (the
"Custodian") and INVESCO Strategic Portfolios, Inc. (the "Fund").
WHEREAS, the Custodian and the Fund are parties to a custodian contract
dated July 1,1993 (the "Custodian Contract") governing the terms and conditions
under which the Custodian maintains custody of the securities and other assets
of the Fund; and
WHEREAS, the Custodian and the Fund desire to amend the terms and
conditions under which the Custodian maintains the Fund's securities and other
non-cash property in the custody of certain foreign sub-custodians in conformity
with the requirements of Rule 17f-5 under the Investment Company Act of 1940, as
amended;
NOW THEREFORE, in consideration of the premises and covenants contained
herein, the Custodian and the Fund hereby amend the Custodian Contract by the
addition of the following terms and provisions;
1. Notwithstanding any provisions to the contrary set forth in the
Custodian Contract, the Custodian may hold securities and other non-cash
property for all of its customers, including the Fund, with a foreign
sub-custodian in a single account that is identified as belonging to the
Custodian for the benefit of its customers, provided however, that (i) the
records of the Custodian with respect to securities and other non-cash property
of the Fund which are maintained in such account shall identify by book-entry
those securities and other non-cash property belonging to the Fund and (ii) the
Custodian shall require that securities and other non-cash property so held by
the foreign sub-custodian be held separately from any assets of the foreign
sub-custodian or of others.
2. Except as specifically superseded or modified herein, the terms and
provisions of the Custodian Contract shall continue to apply with full force and
effect.
IN WITNESS WHEREOF, each of the parties has caused this instrument to be
executed as a sealed instrument inits name and behalf by its duly authorized
representative this 25th day of October, 1995.
INVESCO STRATEGIC PORTFOLIOS, INC.
By: /s/ Glen A. Payne
------------------------------
Title: Secretary
STATE STREET BANK AND TRUST COMPANY
By: /s/ Charles N. Whittemore, Jr.
------------------------------
Title: Vice President
DATA ACCESS SERVICES ADDENDUM TO CUSTODIAN AGREEMENT
AGREEMENT between each Fund listed on Appendix A, (individually a
"Customer" and collectively, the "Customers") and State Street Bank and Trust
Company ("State Street").
PREAMBLE
WHEREAS, State Street has been appointed as custodian of certain assets of
each Customer pursuant to a certain Custodian Agreement (the "Custodian
Agreement") for each of the respective Customers;
WHEREAS, State Street has developed and utilizes proprietary accounting and
other systems, including State Street's proprietary Multicurrency HORIZON(R)
Accounting System, in its role as custodian of each Customer, and maintains
certain Customer-related data ("Customer Data") in databases under the control
and ownership of State Street (the "Data Access Services"); and
WHEREAS, State Street makes available to each Customer certain Data Access
Services solely for the benefit of the Customer, and intends to provide
additional services, consistent with the terms and conditions of this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein contained, and for other good and valuable consideration, the parties
agree as follows:
1. SYSTEM AND DATA ACCESS SERVICES
a. System. Subject to the terms and conditions of this Agreement, State
Street hereby agrees to provide each Customer with access to State Street's
Multicurrency HORIZON(R) Accounting System and the other information systems
(collectively, the "System") as described in Attachment A, on a remote basis for
the purpose of obtaining reports, solely on computer hardware, system software
and telecommunication links, as listed in Attachment B (the "Designated
Configuration") of the Customer, or certain third parties approved by State
Street that serve as investment advisors or investment managers (the "Investment
Advisor") or independent auditors (the "Independent Auditors") of a Customer and
solely with respect to the Customer or on any designated substitute or back-up
equipment configuration with State Street's written consent, such consent not to
be unreasonably withheld.
b. Data Access Services. State Street agrees to make available to each
Customer the Data Access Services subject to the terms and conditions of this
Agreement and data access operating standards and procedures as may be issued by
State Street from time to time. The ability of each Customer to originate
electronic instructions to State Street on behalf of each Customer in order to
(i) effect the transfer or movement of cash or securities held under custody by
State Street or (ii) transmit accounting or other information (such transactions
are referred to herein as "Client Originated Electronic Financial
Instructions"), and (iii) access data for the purpose of reporting and analysis,
shall be deemed to be Data Access Services for purposes of this Agreement.
<PAGE>
c. Additional Services. State Street may from time to time agree to make
available to a Customer additional Systems that are not described in the
attachments to this Agreement. In the absence of any other written agreement
concerning such additional systems, the term "System" shall include, and this
Agreement shall govern, a Customer's access to and use of any additional System
made available by State Street and/or accessed by the Customer.
2. NO USE OF THIRD PARTY SOFTWARE
State Street and each Customer acknowledge that in connection with the Data
Access Services provided under this Agreement, each Customer will have access,
through the Data Access Services, to Customer Data and to functions of State
Street's proprietary systems; provided, however that in no event will the
Customer have direct access to any third party systems-level software that
retrieves data for, stores data from, or otherwise supports the System.
3. LIMITATION ON SCOPE OF USE
a. Designated Equipment; Designated Location. The System and the Data
Access Services shall be used and accessed solely on and through the Designated
Configuration at the offices of a Customer or the Investment Advisor or
Independent Auditor located in Denver, Colorado ("Designated Location").
b. Designated Configuration; Trained Personnel. State Street shall be
responsible for supplying, installing and maintaining the Designated
Configuration at the Designated Location. State Street and each Customer agree
that each will engage or retain the services of trained personnel to enable both
State Street and the Customer to perform their respective obligations under this
Agreement. State Street agrees to use commercially reasonable efforts to
maintain the System so that it remains serviceable, provided, however, that
State Street does not guarantee or assure uninterrupted remote access use of the
System.
c. Scope of Use. Each Customer will use the System and the Data Access
Services only for the processing of securities transactions, the keeping of
books of account for the Customer and accessing data for purposes of reporting
and analysis. Each Customer shall not, and shall cause its employees and agents
not to (i) permit any third party to use the System or the Data Access Services,
(ii) sell, rent, license or otherwise use the System or the Data Access Services
in the operation of a service bureau or for any purpose other than as expressly
authorized under this Agreement, (iii) use the System or the Data Access
Services for any fund, trust or other investment vehicle without the prior
written consent of State Street, (iv) allow access to the System or the Data
Access Services through terminals or any other computer or telecommunications
facilities located outside the Designated Locations, (v) allow or cause any
information (other than portfolio holdings, valuations of portfolio holdings,
and other information reasonably necessary for the management or distribution of
the assets of the Customer) transmitted from State Street's databases, including
data from third party sources, available through use of the System or the Data
Access Services to be redistributed or retransmitted to another computer,
terminal or other device for other than use for or on behalf of the Customer or
<PAGE>
(vi) modify the System in any way, including without limitation, developing any
software for or attaching any devices or computer programs to any equipment,
system, software or database which forms a part of or is resident on the
Designated Configuration.
d. Other Locations. Except in the event of an emergency or of a planned
System shutdown, each Customer's access to services performed by the System or
to Data Access Services at the Designated Location may be transferred to a
different location only upon the prior written consent of State Street. In the
event of an emergency or System shutdown, each Customer may use any back-up site
included in the Designated Configuration or any other back-up site agreed to by
State Street, which agreement will not be unreasonably withheld. Each Customer
may secure from State Street the right to access the System or the Data Access
Services through computer and telecommunications facilities or devices complying
with the Designated Configuration at additional locations only upon the prior
written consent of State Street and on terms to be mutually agreed upon by the
parties.
e. Title. Title and all ownership and proprietary rights to the System,
including any enhancements or modifications thereto, whether or not made by
State Street, are and shall remain with State Street.
f. No Modification. Without the prior written consent of State Street, a
Customer shall not modify, enhance or otherwise create derivative works based
upon the System, nor shall the Customer reverse engineer, decompile or otherwise
attempt to secure the source code for all or any part of the System.
g. Security Procedures. Each Customer shall comply with data access
operating standards and procedures and with user identification or other
password control requirements and other security procedures as may be issued
from time to time by State Street for use of the System on a remote basis and to
access the Data Access Services. Each Customer shall have access only to the
Customer Data and authorized transactions agreed upon from time to time by State
Street and, upon notice from State Street, the Customer shall discontinue remote
use of the System and access to Data Access Services for any security reasons
cited by State Street; provided, that, in such event, State Street shall, for a
period not less than 180 days (or such other shorter period specified by the
Customer) after such discontinuance, assume responsibility to provide accounting
services under the terms of the Custodian Agreement.
h. Inspections. State Street shall have the right to inspect the use of
the System and the Data Access Services by the Customer and the Investment
Advisor to ensure compliance with this Agreement. The on-site inspections shall
be upon prior written notice to Customer and the Investment Advisor and at
reasonably convenient times and frequencies so as not to result in an
unreasonable disruption of the Customer's or the Investment Advisor's business.
<PAGE>
4. PROPRIETARY INFORMATION
a. Proprietary Information. Each Customer acknowledges and State Street
represents that the System and the databases, computer programs, screen formats,
report formats, interactive design techniques, documentation and other
information made available to the Customer by State Street as part of the Data
Access Services and through the use of the System constitute copyrighted, trade
secret, or other proprietary information of substantial value to State Street.
Any and all such information provided by State Street to each Customer shall be
deemed proprietary and confidential information of State Street (hereinafter
"Proprietary Information"). Each Customer agrees that it will hold such
Proprietary Information in confidence and secure and protect it in a manner
consistent with its own procedures for the protection of its own confidential
information and to take appropriate action by instruction or agreement with its
employees who are permitted access to the Proprietary Information to satisfy its
obligations hereunder. Each Customer further acknowledges that State Street
shall not be required to provide the Investment Advisor or the Investment
Auditor with access to the System unless it has first received from the
Investment Advisor of the Investment Auditor an undertaking with respect to
State Street's Proprietary Information in the form of Attachment C and/or
Attachment C-1 to this Agreement. Each Customer shall use all commercially
reasonable efforts to assist State Street in identifying and preventing any
unauthorized use, copying or disclosure of the Proprietary Information or any
portions thereof or any of the logic, formats or designs contained therein.
b. Cooperation. Without limitation of the foregoing, each Customer shall
advise State Street immediately in the event the Customer learns or has reason
to believe that any person to whom the Customer has given access to the
Proprietary Information, or any portion thereof, has violated or intends to
violate the terms of this Agreement, and each Customer will, at its expense,
cooperate with State Street in seeking injunctive or other equitable relief in
the name of the Customer or State Street against any such person.
c. Injunctive Relief. Each Customer acknowledges that the disclosure of any
Proprietary Information, or of any information which at law or equity ought to
remain confidential, will immediately give rise to continuing irreparable injury
to State Street inadequately compensable in damages at law. In addition, State
Street shall be entitled to obtain immediate injunctive relief against the
breach or threatened breach of any of the foregoing undertakings, in addition to
any other legal remedies which may be available.
d. Survival. The provisions of this Section 4 shall survive the termination
of this Agreement.
5. LIMITATION ON LIABILITY
a. Limitation on Amount and Time for Bringing Action. Each Customer agrees
any liability of State Street to the Customer or any third party arising out of
State Street's provision of Data Access Services or the System under this
<PAGE>
Agreement shall be limited to the amount paid by the Customer for he preceding
24 months for such services. In no event shall State Street be liable to the
Customer or any other party for any special, indirect, punitive or consequential
damages even if advised of the possibility of such damages. No action,
regardless of form, arising out of this Agreement may be brought by the Customer
more than two years after the Customer has knowledge that the cause of action
has arisen.
b. NO OTHER WARRANTIES, WHETHER EXPRESS OR IMPLIED, INCLUDING, WITHOUT
LIMITATION, THE IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A
PARTICULAR PURPOSE, ARE MADE BY STATE STREET. IN NO EVENT WILL STATE STREET BE
LIABLE TO THE CUSTOMER OR ANY OTHER PARTY FOR ANY CONSEQUENTIAL OR INCIDENTAL
DAMAGES WHICH MAY ARISE FROM THE CUSTOMER'S ACCESS TO THE SYSTEM OR USE OF
INFORMATION OBTAINED THEREBY.
c. Third-Party Data. Organizations from which State Street may obtain
certain data included in the System or the Data Access Services are solely
responsible for the contents of such data, and State Street shall have no
liability for claims arising out of the contents of such third-party data,
including, but not limited to, the accuracy thereof.
d. Regulatory Requirements. As between State Street and each Customer, the
Customer shall be solely responsible for the accuracy of any accounting
statements or reports produced using the Data Access Services and the System and
the conformity thereof with any requirements of law.
e. Force Majeure. Neither State Street or a Customer shall be liable for
any costs or damages due to delay or nonperformance under this Agreement arising
out of any cause or event beyond such party's control, including without
limitation, cessation of services hereunder or any damages resulting therefrom
to the other party, or the Customer as a result of work stoppage, power or other
mechanical failure, computer virus, natural disaster, governmental action, or
communication disruption.
6. INDEMNIFICATION
Each Customer agrees to indemnify and hold State Street harmless from any
loss, damage or expense including reasonable attorney's fees, (a "loss")
suffered by State Street arising from (i) the negligence or willful misconduct
in the use by the Customer of the Data Access Services or the System, including
any loss incurred by State Street resulting from a security breach at the
Designated Location or committed by the Customer's employees or agents or the
Investment Advisor or the Independent Auditor of the Customer and (ii) any loss
resulting from incorrect Client Originated Electronic Financial Instructions.
State Street shall be entitled to rely on the validity and authenticity of
Client Originated Electronic Financial Instructions without undertaking any
further inquiry as long as such instruction is undertaken in conformity with
security procedures established by State Street from time to time.
<PAGE>
7. FEES
Fees and charges for the use of the System and the Data Access Services and
related payment terms shall be as set forth in the Custody Fee Schedule in
effect from time to time between the parties (the "Fee Schedule"). Any tariffs,
duties or taxes imposed or levied by any government or governmental agency by
reason of the transactions contemplated by this Agreement, including, without
limitation, federal, state and local taxes, use, value added and personal
property taxes (other than income, franchise or similar taxes which may be
imposed or assessed against State Street) shall be borne by each Customer. Any
claimed exemption from such tariffs, duties or taxes shall be supported by
proper documentary evidence delivered to State Street.
8. TRAINING, IMPLEMENTATION AND CONVERSION
a. Training. State Street agrees to provide training, at a designated
State Street training facility or at the Designated Location, to he Customer's
personnel in connection with the use of the System on the Designated
Configuration. Each Customer agrees that it will set aside, during regular
business hours or at other times agreed upon by both parties, sufficient time to
enable all operators of the System and the Data Access Services, designated by
the Customer, to receive the training offered by State Street pursuant to this
Agreement.
b. Installation and Conversion. State Street shall be responsible for the
technical installation and conversion ("Installation and Conversion") of the
Designated Configuration. Each Customer shall have the following
responsibilities in connection with Installation and Conversion of the System:
(i) The Customer shall be solely responsible for the timely acquisition
and maintenance of the hardware and software that attach to the
Designated Configuration in order to use the Data Access Services at
the Designated Location.
(ii) State Street and the Customer each agree that they will assign
qualified personnel to actively participate during the Installation
and Conversion phase of the System implementation to enable both
parties to perform their respective obligations under this Agreement.
9. SUPPORT
During the term of this Agreement, State Street agrees to provide the
support services set out in Attachment D to this Agreement.
10. TERM OF AGREEMENT
a. Term of Agreement. This Agreement shall become effective on the date of
its execution by State Street and shall remain in full force and effect u til
terminated as herein provided.
<PAGE>
b. Termination of Agreement. Any party may terminate this Agreement (i) for
any reason by giving the other parties at least one-hundred and eighty days'
prior written notice in the case of notice of termination by State Street to the
Customer or thirty days' notice in the case of notice from the Customer to State
Street of termination; or (ii) immediately for failure of the other party to
comply with any material term and condition of the Agreement by giving the other
party written notice of termination. In the event the Customer shall cease doing
business, shall become subject to proceedings under the bankruptcy laws (other
than a petition for reorganization or similar proceeding) or shall be
adjudicated bankrupt, this Agreement and the rights granted hereunder shall, at
the option of State Street, immediately terminate with notice to the Customer.
Termination of this Agreement with respect to any given Customer shall in no way
affect the continued validity of this Agreement with respect to any other
Customer. This Agreement shall in any event terminate as to any Customer within
90 days after the termination of the Custodian Agreement applicable to such
Customer.
c. Termination of the Right to Use. Upon termination of this Agreement for
any reason, any right to use the System and access to the Data Access Services
shall terminate and the Customer shall immediately cease use of the System and
the Data Access Services. Immediately upon termination of this Agreement for any
reason, the Customer shall return to State Street all copies of documentation
and other Proprietary Information in its possession; provided, however, that in
the event that either State Street or the Customer terminates this Agreement or
the Custodian Agreement for any reason other than the Customer's breach, State
Street shall provide the Data Access Services for a period of time and at a
price to be agreed upon by State Street and the Customer.
11. MISCELLANEOUS
a. Assignment; Successors. This Agreement and the rights and obligations of
each Customer and State Street hereunder shall not be assigned by any party
without the prior written consent of the other parties, except that State Street
may assign this Agreement to a success r of all or a substantial portion of its
business, or to a party controlling, controlled by, or under common control with
State Street.
b. Survival. All provisions regarding indemnification, warranty, liability
and limits thereon, and confidentiality and/or protection of proprietary rights
and trade secrets shall survive the termination of this Agreement.
c. Entire Agreement. This Agreement and the attachments hereto constitute
the entire understanding of the parties hereto with respect to the Data Access
Services and the use of the System and supersedes any and all prior or
contemporaneous representations or agreements, whether oral or written, between
the parties as such may relate to the Data Access Services or the System, and
cannot be modified or altered except in a writing duly executed by the parties.
This Agreement is not intended to supersede or modify the duties and liabilities
of the parties hereto under the Custodian Agreement or any other agreement
between the parties hereto except to the extent that any such agreement
specifically refers to the Data Access Services or the System. No single waiver
or any right hereunder shall be deemed to be a continuing waiver.
<PAGE>
d. Severability. If any provision or provisions of this Agreement shall be
held to be invalid, unlawful, or unenforceable, the validity, legality, and
enforceability of the remaining provisions shall not in any way be affected or
impaired.
e. Governing Law. This Agreement shall be interpreted and construed in
accordance with the internal laws of The Commonwealth of Massachusetts without
regard to the conflict of laws provisions thereof.
IN WITNESS WHEREOF, each of the undersigned Funds severally has
caused this Agreement to be duly executed in its name and through its duly
authorized officer as of the date hereof.
STATE STREET BANK AND TRUST COMPANY
By: /s/ Ronald E. Logue
---------------------------
Title: Exeuctive Vice President
---------------------------
Date: ___________________________
EACH FUND LISTED ON APPENDIX A
By: /s/ Glen A. Payne
---------------------------
Title: Secretary
---------------------------
Date: May 19, 1997
---------------------------
<PAGE>
APPENDIX A
INVESCO FUNDS
INVESCO Diversified Funds, Inc.
INVESCO Small Company Value Fund
INVESCO Dynamics Fund, Inc.
INVESCO Dynamics Fund, Inc.
INVESCO Emerging Opportunity Funds, Inc.
INVESCO Small Company Growth Fund
INVESCO Worldwide Emerging Markets Fund
INVESCO Growth Fund, Inc.
INVESCO Growth Fund, Inc.
INVESCO Income Funds, Inc.
INVESCO High Yield Fund
INVESCO Select Income Fund
INVESCO Short-Term Bond Fund
INVESCO U.S. Government Bond Fund
INVESCO Industrial Income Fund, Inc.
INVESCO Industrial Income Fund, Inc.
INVESCO International Funds, Inc.
INVESCO European Fund
INVESCO International Growth Fund
INVESCO Pacific Basin Fund
INVESCO Money Market Funds, Inc.
INVESCO Cash Reserves Fund
INVESCO Tax-Free Money Fund
INVESCO U.S. Government Money Fund
INVESCO Multiple Asset Funds, Inc.
INVESCO Balanced Fund
INVESCO Multi-Asset Allocation Fund
INVESCO Specialty Funds, Inc.
INVESCO Asian Growth Fund
INVESCO European Small Company Fund
INVESCO Latin American Growth Fund
INVESCO Realty Fund
INVESCO Worldwide Capital Goods Fund
INVESCO Worldwide Communications Fund
<PAGE>
INVESCO Strategic Portfolios, Inc.
Energy Portfolio
Environmental Services Portfolio
Financial Services Portfolio
Gold Portfolio
Health Sciences Portfolio
Leisure Portfolio
Technology Portfolio
Utilities Portfolio
INVESCO Tax-Free Income Funds, Inc.
INVESCO Tax-Free Intermediate Bond Fund
INVESCO Tax-Free Long-Term Bond Fund
INVESCO Treasurer's Series Trust
INVESCO Treasurer's Money Market Reserve Fund
INVESCO Treasurer's Prime Reserve Fund
INVESCO Treasurer's Special Reserve Fund
INVESCO Treasurer's Tax-Exempt Reserve Fund
INVESCO Value Trust
INVESCO Intermediate Government Bond Fund
INVESCO Total Return Fund
INVESCO Value Equity Fund
INVESCO Variable Investment Funds, Inc.
INVESCO VIF-Dynamics Portfolio
INVESCO VIF-Health Sciences Portfolio
INVESCO VIF-High Yield Portfolio
INVESCO VIF-Industrial Income Portfolio
INVESCO VIF-Small Company Growth Portfolio
INVESCO VIF-Technology Portfolio
INVESCO VIF-Total Return Portfolio
INVESCO VIF-Utilities Portfolio
INVESCO VIF-Growth Portfolio*
*Effective May 1, 1997.
<PAGE>
ATTACHMENT A
Multicurrency HORIZON(R) Accounting System
System Product Description
I. The Multicurrency HORIZON(R) Accounting System is designed to provide
lot level portfolio and general ledger accounting for SEC and ERISA type
requirements and includes the following services: 1) recording of general ledger
entries; 2) calculation of daily income and expense; 3) reconciliation of daily
activity with the trial balance, and 4) appropriate automated feeding mechanisms
to (i) domestic and international settlement systems, (ii) daily, weekly and
monthly evaluation services, (iii) portfolio performance and analytic services,
(iv) customer's internal computing systems and (v) various State Street provided
information services products.
II. GlobalQuest(R) GlobalQuest(R) is designed to provide customer access to
the following information maintained on The Multicurrency HORIZON(R) Accounting
System: 1) cash transactions and balances; 2) purchases and sales; 3) income
receivables; 4) tax refund receivables; 5) daily priced positions; 6) open
trades; 7) settlement status; 8) foreign exchange transactions; 9) trade
history; and 10) daily, weekly and monthly evaluation services.
III. HORIZON(R) Gateway. HORIZON(R) Gateway provides customers with the
ability to (i) generate reports using information maintained on the
Multicurrency HORIZON(R) Accounting System which may be viewed or printed at the
customer's location; (ii) extract and download data from the Multicurrency
HORIZON(R) Accounting System; and (iii) access previous day and historical data.
The following information which may be accessed for these purposes: 1) holdings;
2) holdings pricing; 3) transactions, 4) open trades; 5) income; 6) general
ledger and 7) cash.
<PAGE>
ATTACHMENT B
Designated Configuration
<PAGE>
ATTACHMENT C
Undertaking
The undersigned understands that in the course of its employment as
Investment Advisor to each of the Funds (individually a, "Customer" ,
collectively, the "Customers") it will have access to State Street Bank and
Trust Company's ("State Street") Multicurrency HORIZON Accounting System and
other information systems (collectively, the "System").
The undersigned acknowledges that the System and the databases, computer
programs, screen formats, report formats, interactive design techniques,
documentation, and other information made available to the Undersigned by State
Street as part of the Data Access Services provided to the Customer and through
the use of the System constitute copyrighted, trade secret, or other proprietary
information of substantial value to State Street. Any and all such information
provided by State Street to the Undersigned shall be deemed proprietary and
confidential information of State Street (hereinafter "Proprietary
Information"). The Undersigned agrees that it will hold such Proprietary
Information in confidence and secure and protect it in a manner consistent with
its own procedures for the protection of its own confidential information and to
take appropriate action by instruction or agreement with its employees who are
permitted access to the Proprietary Information to satisfy its obligations
hereunder.
The Undersigned will not attempt to intercept data, gain access to data in
transmission, or attempt entry into any system or files for which it is not
authorized. It will not intentionally adversely affect the integrity of the
System through the introduction of unauthorized code or data, or through
unauthorized deletion.
Upon notice by State Street for any reason, any right to use the System and
access to the Data Access Services shall terminate and the Undersigned shall
immediately cease use of the System and the Data Access Services. Immediately
upon notice by State Street for any reason, the Undersigned shall return to
State Street all copies of documentation and other Proprietary Information in
its possession.
By: /s/ Glen A. Payne
-----------------------
Title: Secretary
-----------------------
Date: May 19, 1997
-----------------------
<PAGE>
ATTACHMENT D
Support
During the term of this Agreement, State Street agrees to provide the
following on-going support services:
a. Telephone Support. The Customer Designated Persons may contact State
Street's HORIZON(R) Help Desk and Customer Assistance Center between the hours
of 8 a.m. and 6 p.m. (Eastern time) on all business days for the purpose of
obtaining answers to questions about the use of the System, or to report
apparent problems with the System. From time to time, the Customer shall provide
to State Street a list of persons, not to exceed five in number, who shall be
permitted to contact State Street for assistance (such persons being referred to
as "the Customer Designated Persons").
b. Technical Support. State Street will provide technical support to assist
the Customer in using the System and the Data Access Services. The total amount
of technical support provided by State Street shall not exceed 10 resource days
per year. State Street shall provide such additional technical support as is
expressly set forth in the fee schedule in effect from time to time between the
parties (the "Fee Schedule"). Technical support, including during installation
and testing, is subject to the fees and other terms set forth in the Fee
Schedule.
c. Maintenance Support. State Street shall use commercially reasonable
efforts to correct system functions that do not work according to the System
Product Description as set forth on Attachment A in priority order in the next
scheduled delivery release or otherwise as soon as is practicable.
d. System Enhancements. State Street will provide to the Customer any
enhancements to the System developed by State Street and made a part of the
System; provided that, sixty (60) days prior to installing any such enhancement,
State Street shall notify the Customer and shall offer the Customer reasonable
training on the enhancement. Charges for system enhancements shall be as
provided in the Fee Schedule. State Street retains the right to charge for
related systems or products that may be developed and separately made available
for use other than through the System.
e. Custom Modifications. In the event the Customer desires custom
modifications in connection with its use of the System, the Customer shall make
a written request to State Street providing specifications for the desired
modification. Any custom modifications may be undertaken by State Street in its
sole discretion in accordance with the Fee Schedule.
f. Limitation on Support. State Street shall have no obligation to support
the Customer's use of the System: (1) for use on any computer equipment or
telecommunication facilities which does not conform to the Designated
Configuration or (ii) in the event the Customer has modified the System in
breach of this Agreement.
TRANSFER AGENCY AGREEMENT
AGREEMENT made as of this 28th day of February, 1997, between INVESCO
STRATEGIC PORTFOLIOS, INC., a Maryland corporation, having its principal office
and place of business at 7800 East Union Avenue, Denver, Colorado, 80237
(hereinafter referred to as the "Fund") and INVESCO FUNDS GROUP, INC., a
Delaware corporation, having its principal place of business at 7800 E. Union
Avenue, Denver, CO 80237 (hereinafter referred to as the "Transfer Agent").
WITNESSETH:
That for and in consideration of mutual promises hereinafter set forth,
the Fund and the Transfer Agent agree as follows:
1. Definitions. Whenever used in this Agreement, the
following words and phrases, unless the context
otherwise requires, shall have the following meanings:
(a) "Authorized Person" shall be deemed to include the
President, any Vice President, the Secretary,
Treasurer, or any other person, whether or not any
such person is an officer or employee of the Fund,
duly authorized to give Oral Instructions and
Written Instructions on behalf of the Fund as
indicated in a certification as may be received by
the Transfer Agent from time to time;
(b) "Certificate" shall mean any notice, instruction or other
instrument in writing, authorized or required by this
Agreement to be given to the Transfer Agent, which is actually
received by the Transfer Agent and signed on behalf of the
Fund by any two officers thereof;
(c) "Commission" shall have the meaning given it in the
1940 Act;
(d) "Custodian" refers to the custodian of all of the
securities and other moneys owned by the Fund;
(e) "Oral Instructions" shall mean verbal instructions actually
received by the Transfer Agent from a person reasonably
believed by the Transfer Agent to be an Authorized Person;
(f) "Prospectus" shall mean the currently effective
prospectus relating to the Fund's Shares
registered under the Securities Act of 1933;
(g) "Shares" refers to the shares of common stock, $.01
par value, of the Fund;
(h) "Shareholder" means a record owner of Shares;
<PAGE>
(i) "Written Instructions" shall mean a written communication
actually received by the Transfer Agent where the receiver is
able to verify with a reasonable degree of certainty the
authenticity of the sender of such communication; and
(j) The "1940 Act" refers to the Investment Company Act of 1940
and the Rules and Regulations thereunder, all as amended from
time to time.
2. Representation of Transfer Agent. The Transfer Agent does hereby
represent and warrant to the Fund that it has an effective
registration statement on SEC Form TA-1 and, accordingly, has duly
registered as a transfer agent as provided in Section 17A(c) of the
Securities Exchange Act of 1934.
3. Appointment of the Transfer Agent. The Fund hereby
appoints and constitutes the Transfer Agent as transfer
agent for all of the Shares of the Fund authorized as of
the date hereof, and the Transfer Agent accepts such
appointment and agrees to perform the duties herein set
forth. If the board of directors of the Fund hereafter
reclassifies the Shares, by the creation of one or more
additional series or otherwise, the Transfer Agent agrees
that it will act as transfer agent for the Shares so
reclassified on the terms set forth herein.
4. Compensation.
(a) The Fund will initially compensate the Transfer Agent for its
services rendered under this Agreement in accordance with the
fees set forth in the Fee Schedule annexed hereto and
incorporated herein.
(b) The parties hereto will agree upon the compensation
for acting as transfer agent for any series of
Shares hereafter designated and established at the
time that the Transfer Agent commences serving as
such for said series, and such agreement shall be
reflected in a Fee Schedule for that series, dated
and signed by an authorized officer of each party
hereto, to be attached to this Agreement.
(c) Any compensation agreed to hereunder may be adjusted from time
to time by attaching to this Agreement a revised Fee Schedule,
dated and signed by an authorized officer of each party
hereto, and a certified copy of the resolution of the board of
directors of the Fund authorizing such revised Fee Schedule.
(d) The Transfer Agent will bill the Fund as soon as practicable
after the end of each calendar month, and said billings will
be detailed in accordance with the Fee Schedule for the Fund.
The Fund will promptly pay to the Transfer Agent the amount of
such billing.
<PAGE>
5. Documents. In connection with the appointment of the
Transfer Agent, the Fund shall, on or before the date
this Agreement goes into effect, file with the Transfer
Agent the following documents:
(a) A certified copy of the Articles of Incorporation
of the Fund, including all amendments thereto, as
then in effect;
(b) A certified copy of the Bylaws of the Fund, as then
in effect;
(c) Certified copies of the resolutions of the board of
directors authorizing this Agreement and
designating Authorized Persons to give instructions
to the Transfer Agent;
(d) A specimen of the certificate for Shares of the Fund in the
form approved by the board of directors, with a certificate of
the Secretary of the Fund as to such approval;
(e) All account application forms and other documents
relating to Shareholder accounts;
(f) A certified list of Shareholders of the Fund with
the name, address and tax identification number of
each Shareholder, and the number of Shares held by
each, certificate numbers and denominations (if any
certificates have been issued), lists of any
accounts against which stops have been placed,
together with the reasons for said stops, and the
number of Shares redeemed by the Fund;
(g) Copies of all agreements then in effect between the
Fund and any agent with respect to the issuance,
sale, or cancellation of Shares; and
(h) An opinion of counsel for the Fund with respect to
the validity of the Shares.
6. Further Documentation. The Fund will also furnish from
time to time the following documents:
(a) Each resolution of the board of directors
authorizing the original issue of Shares;
(b) Each Registration Statement filed with the
Commission, and amendments and orders with respect
thereto, in effect with respect to the sale of
Shares of the Fund;
(c) A certified copy of each amendment to the Articles
of Incorporation and the Bylaws of the Fund;
(d) Certified copies of each resolution of the board of
directors designating Authorized Persons to give
instructions to the Transfer Agent;
(e) Certificates as to any change in any officer,
director, or Authorized Person of the Fund;
(f) Specimens of all new certificates for Shares
accompanied by the Fund's resolutions of the board
of directors approving such forms; and
<PAGE>
(g) Such other certificates, documents or opinions as may mutually
be deemed necessary or appropriate for the Transfer Agent in
the proper performance of its duties.
7. Certificates for Shares and Records Pertaining Thereto.
(a) At the expense of the Fund, the Transfer Agent
shall maintain an adequate supply of blank share
certificates to meet the Transfer Agent's
requirements therefor. Such share certificates
shall be properly signed by facsimile. The Fund
agrees that, notwithstanding the death,
resignation, or removal of any officer of the Fund
whose signature appears on such certificates, the
Transfer Agent may continue to countersign
certificates which bear such signatures until
otherwise directed by the Fund.
(b) The Transfer Agent agrees to prepare, issue and mail
certificates as requested by the Shareholders for Shares of
the Fund in accordance with the instructions of the Fund and
to confirm such issuance to the Shareholder and the Fund or
its designee.
(c) The Fund hereby authorizes the Transfer Agent to issue
replacement share certificates in lieu of certificates which
have been lost, stolen or destroyed, without any further
action by the board of directors or any officer of the Fund,
upon receipt by the Transfer Agent of properly executed
affidavits or lost certificate bonds, in form satisfactory to
the Transfer Agent, with the Fund and the Transfer Agent as
obligees under any such bond.
(d) The Transfer Agent shall also maintain a record of each
certificate issued, the number of Shares represented thereby
and the holder of record. The Transfer Agent shall further
maintain a stop transfer record on lost and/or replaced
certificates.
(e) The Transfer Agent may establish such additional rules and
regulations governing the transfer or registration of
certificates for Shares as it may deem advisable and
consistent with such rules and regulations generally adopted
by transfer agents.
8. Sale of Fund Shares.
(a) Whenever the Fund or its authorized agent shall
sell or cause to be sold any Shares, the Fund or
its authorized agent shall provide or cause to be
provided to the Transfer Agent information
<PAGE>
including: (i) the number of Shares sold, trade
date, and price; (ii) the amount of money to be
delivered to the Custodian for the sale of such
Shares; (iii) in the case of a new account, a new
account application or sufficient information to
establish an account.
(b) The Transfer Agent will, upon receipt by it of a
check or other payment identified by it as an
investment in Shares of the Fund and drawn or
endorsed to the Transfer Agent as agent for, or
identified as being for the account of, the Fund,
promptly deposit such check or other payment to the
appropriate account postings necessary to reflect
the investment. The Transfer Agent will notify the
Fund, or its designee, and the Custodian of all
purchases and related account adjustments.
(c) Upon receipt of the notification required under
paragraph (a) hereof and the notification from the
Custodian that such money has been received by it,
the Transfer Agent shall issue to the purchaser or
his authorized agent such Shares as he is entitled
to receive, based on the appropriate net asset
value of the Fund's Shares, determined in
accordance with applicable federal law or
regulation, as described in the Prospectus for the
Fund. In issuing Shares to a purchaser or his
authorized agent, the Transfer Agent shall be
entitled to rely upon the latest written
directions, if any, previously received by the
Transfer Agent from the purchaser or his authorized
agent concerning the delivery of such Shares.
(d) The Transfer Agent shall not be required to issue
any Shares of the Fund where it has received
Written Instructions from the Fund or written
notification from any appropriate federal or state
authority that the sale of the Shares of the Fund
has been suspended or discontinued, and the
Transfer Agent shall be entitled to rely upon such
Written Instructions or written notification.
(e) Upon the issuance of any Shares of the Fund in accordance with
the foregoing provision of this Article, the Transfer Agent
shall not be responsible for the payment of any original issue
or other taxes required to be paid by the Fund in connection
with such issuance.
9. Returned Checks. In the event that any check or other
order for the payment of money is returned unpaid for any
reason, the Transfer Agent will: (i) give prompt notice
of such return to the Fund or its designee; (ii) place a
<PAGE>
stop transfer order against all Shares issued or held on
deposit as a result of such check or order; (iii) in the
case of any Shareholder who has obtained redemption
checks, place a stop payment order on the checking
account on which such checks are issued; and (iv) take
such other steps as the Transfer Agent may, in its
discretion, deem appropriate or as the Fund or its
designee may instruct.
10. Redemptions.
(a) Redemptions By Mail or In Person. Shares of the
Fund will be redeemed upon receipt by the Transfer
Agent of: (i) a written request for redemption,
signed by each registered owner exactly as the
Shares are registered; (ii) certificates properly
endorsed for any Shares for which certificates have
been issued; (iii) signature guarantees to the
extent required by the Transfer Agent as described
in the Prospectus for the Fund; and (iv) any
additional documents required by the Transfer Agent
for redemption by corporations, executors,
administrators, trustees and guardians.
(b) Wire Orders or Telephone Redemptions. The Transfer
Agent will, consistent with procedures which may be
established by the Fund from time to time for
redemption by wire or telephone, upon receipt of
such a wire order or telephone redemption request,
redeem Shares and transmit the proceeds of such
redemption to the redeeming Shareholder as
directed. All wire or telephone redemptions will
be subject to such additional requirements as may
be described in the Prospectus for the Fund. Both
the Fund and the Transfer Agent reserve the right
to modify or terminate the procedures for wire
order or telephone redemptions at any time.
(c) Processing Redemptions. Upon receipt of all
necessary information and documentation relating to
a redemption, the Transfer Agent will issue to the
Custodian an advice setting forth the number of
Shares of the Fund received by the Transfer Agent
for redemption and that such shares are valid and
in good form for redemption. The Transfer Agent
shall, upon receipt of the moneys paid to it by the
Custodian for the redemption of Shares, pay such
moneys to the Shareholder, his authorized agent or
legal representative.
11. Transfers and Exchanges. The Transfer Agent is
authorized to review and process transfers of Shares of
the Fund and to the extent, if any, permitted in the
<PAGE>
Prospectus for the Fund, exchanges between the Fund and
other mutual funds advised by INVESCO Funds Group, Inc.,
on the records of the Fund maintained by the Transfer
Agent. If Shares to be transferred are represented by
outstanding certificates, the Transfer Agent will, upon
surrender to it of the certificates in proper form for
transfer, and upon cancellation thereof, countersign and
issue new certificates for a like number of Shares and
deliver the same. If the Shares to be transferred are
not represented by outstanding certificates, the Transfer
Agent will, upon an order therefor by or on behalf of the
registered holder thereof in proper form, credit the same
to the transferee on its books. If Shares are to be
exchanged for Shares of another mutual fund, the Transfer
Agent will process such exchange in the same manner as a
redemption and sale of Shares, except that it may in its
discretion waive requirements for information and
documentation.
12. Right to Seek Assurances. The Transfer Agent reserves
the right to refuse to transfer or redeem Shares until it
is satisfied that the requested transfer or redemption is
legally authorized, and it shall incur no liability for
the refusal, in good faith, to make transfers or
redemptions which the Transfer Agent, in its judgment,
deems improper or unauthorized, or until it is satisfied
that there is no basis for any claims adverse to such
transfer or redemption. The Transfer Agent may, in
effecting transfers, rely upon the provisions of the
Uniform Act for the Simplification of Fiduciary Security
Transfers or the Uniform Commercial Code, as the same may
be amended from time to time, which in the opinion of
legal counsel for the Fund or of its own legal counsel
protect it in not requiring certain documents in
connection with the transfer or redemption of Shares of
the Fund, and the Fund shall indemnify the Transfer Agent
for any act done or omitted by it in reliance upon such
laws or opinions of counsel to the Fund or of its own
counsel.
13. Distributions.
(a) The Fund will promptly notify the Transfer Agent of
the declaration of any dividend or distribution.
The Fund shall furnish to the Transfer Agent a
resolution of the board of directors of the Fund
certified by the Secretary authorizing the
declaration of dividends and authorizing the
Transfer Agent to rely on Oral Instructions or a
Certificate specifying the date of the declaration
of such dividend or distribution, the date of
payment thereof, the record date as of which
Shareholders entitled to payment shall be
<PAGE>
determined, the amount payable per share to
Shareholders of record as of that date, and the
total amount payable to the Transfer Agent on the
payment date.
(b) The Transfer Agent will, on or before the payable
date of any dividend or distribution, notify the
Custodian of the estimated amount of cash required
to pay said dividend or distribution, and the Fund
agrees that, on or before the mailing date of such
dividend or distribution, it shall instruct the
Custodian to place in a dividend disbursing account
funds equal to the cash amount to be paid out. The
Transfer Agent, in accordance with Shareholder
instructions, will calculate, prepare and mail
checks to, or (where appropriate) credit such
dividend or distribution to the account of, Fund
Shareholders, and maintain and safeguard all
underlying records.
(c) The Transfer Agent will replace lost checks upon receipt of
properly executed affidavits and maintain stop payment orders
against replaced checks.
(d) The Transfer Agent will maintain all records necessary to
reflect the crediting of dividends which are reinvested in
Shares of the Fund.
(e) The Transfer Agent shall not be liable for any improper
payments made in accordance with the resolution of the board
of directors of the Fund.
(f) If the Transfer Agent shall not receive from the Custodian
sufficient cash to make payment to all Shareholders of the
Fund as of the record date, the Transfer Agent shall, upon
notifying the Fund, withhold payment to all Shareholders of
record as of the record date until such sufficient cash is
provided to the Transfer Agent.
14. Other Duties. In addition to the duties expressly
provided for herein, the Transfer Agent shall perform
such other duties and functions as are set forth in the
Fee Schedules(s) hereto from time to time.
15. Taxes. It is understood that the Transfer Agent shall file such
appropriate information returns concerning the payment of dividends
and capital gain distributions with the proper federal, state and
local authorities as are required by law to be filed by the Fund and
shall withhold such sums as are required to be withheld by
applicable law.
<PAGE>
16. Books and Records.
(a) The Transfer Agent shall maintain records showing
for each investor's account the following: (i)
names, addresses, tax identifying numbers and
assigned account numbers; (ii) numbers of Shares
held; (iii) historical information regarding the
account of each Shareholder, including dividends
paid and date and price of all transactions on a
Shareholder's account; (iv) any stop or restraining
order placed against a Shareholder's account; (v)
information with respect to withholdings in the
case of a foreign account; (vi) any capital gain or
dividend reinvestment order, plan application,
dividend address and correspondence relating to the
current maintenance of a Shareholder's account;
(vii) certificate numbers and denominations for any
Shareholders holding certificates; and (viii) any
information required in order for the Transfer
Agent to perform the calculations contemplated or
required by this Agreement.
(b) Any records required to be maintained by Rule 31a-1
under the 1940 Act will be preserved for the
periods prescribed in Rule 31a-2 under the 1940
Act. Such records may be inspected by the Fund at
reasonable times. The Transfer Agent may, at its
option at any time, and shall forthwith upon the
Fund's demand, turn over to the Fund and cease to
retain in the Transfer Agent's files, records and
documents created and maintained by the Transfer
Agent in performance of its services or for its
protection. At the end of the six-year retention
period, such records and documents will either be
turned over to the Fund, or destroyed in accordance
with the Fund's authorization.
17. Shareholder Relations.
(a) The Transfer Agent will investigate all Shareholder
inquiries related to Shareholder accounts and
respond promptly to correspondence from
Shareholders.
(b) The Transfer Agent will address and mail all communications to
Shareholders or their nominees, including proxy material and
periodic reports to Shareholders.
<PAGE>
(c) In connection with special and annual meetings of
Shareholders, the Transfer Agent will prepare Shareholder
lists, mail and certify as to the mailing of proxy materials,
process and tabulate returned proxy cards, report on proxies
voted prior to meetings, and certify to the Secretary of the
Fund Shares to be voted at meetings.
18. Reliance by Transfer Agent; Instructions.
(a) The Transfer Agent shall be protected in acting
upon any paper or document believed by it to be
genuine and to have been signed by an Authorized Person and
shall not be held to have any notice of any change of
authority of any person until receipt of written certification
thereof from the Fund. It shall also be protected in
processing Share certificates which it reasonably believes to
bear the proper manual or facsimile signatures of the officers
of the Fund and the proper countersignature of the Transfer
Agent.
(b) At any time the Transfer Agent may apply to any
Authorized Person of the Fund for Written
Instructions, and, at the expense of the Fund, may
seek advice from legal counsel for the Fund, with
respect to any matter arising in connection with
this Agreement, and it shall not be liable for any
action taken or not taken or suffered by it in good
faith in accordance with such Written Instructions
or with the opinion of such counsel. In addition,
the Transfer Agent, its officers, agents or
employees, shall accept instructions or requests
given to them by any person representing or acting
on behalf of the Fund only if said representative
is known by the Transfer Agent, its officers,
agents or employees, to be an Authorized Person.
The Transfer Agent shall have no duty or obligation
to inquire into, nor shall the Transfer Agent be
responsible for, the legality of any act done by it
upon the request or direction of Authorized Persons
of the Fund.
(c) Notwithstanding any of the foregoing provisions of
this Agreement, the Transfer Agent shall be under
no duty or obligation to inquire into, and shall
not be liable for: (i) the legality of the issue
or sale of any Shares of the Fund, or the
sufficiency of the amount to be received therefor;
(ii) the legality of the redemption of any Shares
of the Fund, or the propriety of the amount to be
paid therefor; (iii) the legality of the
declaration of any dividend by the Fund, or the
legality of the issue of any Shares of the Fund in
payment of any stock dividend; or (iv) the legality
of any recapitalization or readjustment of the
Shares of the Fund.
<PAGE>
19. Standard of Care and Indemnification.
(a) The Transfer Agent may, in connection with this Agreement,
employ agents or attorneys in fact, and shall not be liable
for any loss arising out of or in connection with its actions
under this Agreement so long as it acts in good faith and with
due diligence, and is not negligent or guilty of any willful
misconduct.
(b) The Fund hereby agrees to indemnify and hold
harmless the Transfer Agent from and against any
and all claims, demands, expenses and liabilities
(whether with or without basis in fact or law) of
any and every nature which the Transfer Agent may
sustain or incur or which may be asserted against
the Transfer Agent by any person by reason of, or
as a result of: (i) any action taken or omitted to
be taken by the Transfer Agent in good faith in
reliance upon any Certificate, instrument, order or
stock certificate believed by it to be genuine and
to be signed, countersigned or executed by any duly
Authorized Person, upon the Oral Instructions or
Written Instructions of an Authorized Person of the
Fund or upon the opinion of legal counsel for the
Fund or its own counsel; or (ii) any action taken
or omitted to be taken by the Transfer Agent in
connection with its appointment in good faith in
reliance upon any law, act, regulation or
interpretation of the same even though the same may
thereafter have been altered, changed, amended or
repealed. However, indemnification hereunder shall
not apply to actions or omissions of the Transfer
Agent or its directors, officers, employees or
agents in cases of its own gross negligence,
willful misconduct, bad faith, or reckless
disregard of its or their own duties hereunder.
20. Affiliation Between Fund and Transfer Agent. It is
understood that the directors, officers, employees,
agents and Shareholders of the Fund, and the officers, directors,
employees, agents and shareholders of the Fund's investment adviser,
INVESCO Funds Group, Inc. (the "Adviser"), are or may be interested
in the Transfer Agent as directors, officers, employees, agents,
shareholders, or otherwise, and that the directors, officers,
employees, agents or shareholders of the Transfer Agent may be
interested in the Fund as directors, officers, employees, agents,
shareholders, or otherwise, or in the Adviser as officers,
directors, employees, agents, shareholders or otherwise.
<PAGE>
21. Term.
(a) This Agreement shall become effective on February
28, 1997 after approval by vote of a majority (as
defined in the 1940 Act) of the Fund's board of
directors, including a majority of the directors
who are not interested persons of the Fund (as
defined in the 1940 Act), and shall continue in
effect for an initial term expiring February 28,
1998 and from year to year thereafter, so long as
such continuance is specifically approved at least
annually both: (i) by either the board of
directors or the vote of a majority of the
outstanding voting securities of the Fund; and (ii)
by a vote of the majority of the directors who are
not interested persons of the Fund (as defined in
the 1940 Act) cast in person at a meeting called
for the purpose of voting upon such approval.
(b) Either of the parties hereto may terminate this
Agreement by giving to the other party a notice in
writing specifying the date of such termination,
which shall not be less than 60 days after the date
of receipt of such notice. In the event such
notice is given by the Fund, it shall be
accompanied by a resolution of the board of
directors, certified by the Secretary, electing to
terminate this Agreement and designating a
successor transfer agent.
22. Amendment. This Agreement may not be amended or modified
in any manner except by a written agreement executed by
both parties with the formality of this Agreement, and
(i) authorized or approved by the resolution of the board
of directors, including a majority of the directors of
the Fund who are not interested persons of the Fund as
defined in the 1940 Act, or (ii) authorized and approved
by such other procedures as may be permitted or required
by the 1940 Act.
23. Subcontracting. The Fund agrees that the Transfer Agent
may, in its discretion, subcontract for certain of the
services to be provided hereunder; provided, however,
that the transfer agent will be liable to the Fund for
any loss arising out of or in connection with the actions
of any subcontractor, if the subcontractor fails to act
in good faith and with due diligence or is negligent or
guilty of any willful misconduct.
<PAGE>
24. Miscellaneous.
(a) Any notice and other instrument in writing, authorized or
required by this Agreement to be given to the Fund or the
Transfer Agent, shall be sufficiently given if addressed to
that party and mailed or delivered to it at its office set
forth below or at such other place as it may from time to time
designate in writing.
To the Fund:
INVESCO Strategic Portfolios, Inc.
Post Office Box 173706
Denver, Colorado 80217-3706
Attention: Dan J. Hesser, President
To the Transfer Agent:
INVESCO Funds Group, Inc.
Post Office Box 173706
Denver, Colorado 80217-3706
Attention: Ronald L. Grooms, Senior Vice President
(b) This Agreement shall not be assignable and in the event of its
assignment (in the sense contemplated by the 1940 Act), it
shall automatically terminate.
(c) This Agreement shall be construed in accordance
with the laws of the State of Colorado.
(d) This Agreement may be executed in any number of counterparts,
each of which shall be deemed to be an original; but such
counterparts shall, together, constitute only one instrument.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective corporate officers thereunder duly authorized and
their respective corporate seals to be hereunto affixed, as of the day and year
first above written.
INVESCO STRATEGIC PORTFOLIOS, INC.
By: /s/ Dan J. Hesser
------------------------------
Dan J. Hesser,
President
ATTEST:
/s/ Glen A. Payne
- ------------------------
Glen A. Payne, Secretary
INVESCO FUNDS GROUP, INC.
By: /s/ Ronald L. Grooms
-----------------------------
Ronald L. Grooms,
Senior Vice President
ATTEST:
/s/ Glen A. Payne
- ------------------------
Glen A. Payne, Secretary
<PAGE>
FEE SCHEDULE
for
Services Pursuant to Transfer Agency Agreement, dated January
31, 1997, between INVESCO Strategic Portfolios, Inc. (the "Fund")
and INVESCO Funds Group, Inc. as Transfer Agent (the "Agreement").
Account Maintenance Charges. Fees are based on an annual charge set forth
below per shareholder account or omnibus account participant for account
maintenance, as described in the Agreement. This charge, in the amount of $20.00
per shareholder account per year, or in the case of omnibus accounts that are
invested in the Fund, $20.00 per participant in such accounts per year, is
billable monthly at the rate of one-twelfth (1/12) of the annual fee. A charge
is made for an account in the month that it opens or closes, as well as in each
month which the account remains open, regardless of the account balance.
Expenses. The Fund shall not be liable for reimbursement to the Transfer
Agent of expenses incurred by it in the performance of services pursuant to the
Agreement, provided, however, that nothing herein or in the Agreement shall be
construed as affecting in any manner any obligations assumed by the Fund with
respect to expense payment or reimbursement pursuant to a separate written
agreement between the Fund and the Transfer Agent or any affiliate thereof.
Effective this 28th day of February, 1997.
INVESCO STRATEGIC PORTFOLIOS, INC.
By: /s/ Dan J. Hesser
------------------------------
Dan J. Hesser,
President
ATTEST:
/s/ Glen A. Payne
- ------------------------
Glen A. Payne, Secretary
INVESCO FUNDS GROUP, INC.
By: /s/ Ronald L. Grooms
-----------------------------
Ronald L. Grooms,
ATTEST: Senior Vice President
/s/ Glen A. Payne
- ------------------------
Glen A. Payne, Secretary
ADMINISTRATIVE SERVICES AGREEMENT
AGREEMENT made as of the 28th day of February, 1997, in Denver, Colorado,
by and between INVESCO STRATEGIC PORTFOLIOS, INC., a Maryland corporation (the
"Fund"), and INVESCO FUNDS GROUP, INC., a Delaware corporation (hereinafter
referred to as "INVESCO").
WHEREAS, the Fund is engaged in business as an open-end management
investment company, is registered as such under the Investment Company Act of
1940, as amended (the "Act"), and is authorized to issue shares representing
interests in the following separate portfolios of investments: (1) the Energy
Portfolio; (2) the Gold Portfolio, (3) the Health Sciences Portfolio, (4) the
Leisure Portfolio, (5) the Technology Portfolio, (6) the Financial Services
Portfolio, (7) the Utilities Portfolio, and (8) the Environmental Services
Portfolio (the "Portfolios"); and
WHEREAS, INVESCO is registered as an investment adviser under the
Investment Advisers Act of 1940, and engages in the business of acting as
investment adviser and providing certain other administrative, sub-accounting
and recordkeeping services to certain investment companies, including the Fund;
and
WHEREAS, the Fund desires to retain INVESCO to render certain
administrative, sub-accounting and recordkeeping services (the "Services") in
the manner and on the terms and conditions hereinafter set forth; and
WHEREAS, INVESCO desires to be retained to perform such services on said
terms and conditions;
NOW, THEREFORE, in consideration of the premises and the mutual covenants
hereinafter contained, the Fund and INVESCO agree as follows:
1. The Fund hereby retains INVESCO to provide, or, upon receipt of written
approval of the Fund arrange for other companies, including affiliates of
INVESCO, to provide to the Portfolios: A) such sub-accounting and recordkeeping
services and functions as are reasonably necessary for the operation of the
Portfolios. Such services shall include, but shall not be limited to,
preparation and maintenance of the following required books, records and other
documents: (1) journals containing daily itemized records of all purchases and
sales, and receipts and deliveries of securities and all receipts and
disbursements of cash and all other debits and credits, in the form required by
Rule 31a-1(b)(1) under the Act; (2) general and auxiliary ledgers reflecting all
asset, liability, reserve, capital, income and expense accounts, in the form
required by Rules 31a-1(b)(2)(i) - (iii) under the Act; (3) a securities record
or ledger reflecting separately for each portfolio security as of trade date all
"long" and "short" positions carried by the Fund for the account of the
Portfolios, if any, and showing the location of all securities long and the
off-setting position to all securities short, in the form required by Rule
31a-1(b)(3) under the Act; (4) a record of all portfolio purchases or sales, in
the form required by Rule 31a-1(b)(6) under the Act; (5) a record of all puts,
calls, spreads, straddles and all other options, if any, in which the Portfolios
has any direct or indirect interest or which the Portfolios have granted or
guaranteed, in the form required by Rule 31a-1(b)(7) under the Act; (6) a record
of the proof of money balances in all ledger accounts maintained pursuant to
<PAGE>
this Agreement, in the form required by Rule 31a- 1(b)(8) under the Act;
and (7) price make-up sheets and such records as are necessary to reflect the
determination of the Portfolios' net asset value. The foregoing books and
records shall be maintained and preserved by INVESCO in accordance with and for
the time periods specified by applicable rules and regulations, including Rule
31a-2 under the Act. All such books and records shall be the property of the
Fund and, upon request therefor, INVESCO shall surrender to the Fund such of the
books and records so requested; and B) such sub-accounting, recordkeeping and
administrative services and functions, which shall be furnished by a
wholly-owned subsidiary of INVESCO, as are reasonably necessary for the
operation of P0rtfolio shareholder accounts maintained by certain retirement
plans and employee benefit plans for the benefit of participants in such plans.
Such services and functions shall include, but shall not be limited to: (1)
establishing new retirement plan participant accounts; (2) receipt and posting
of weekly, bi-weekly and monthly retirement plan contributions; (3) allocation
of contributions to each participant's individual Portfolio account; (4)
maintenance of separate account balances for each source of retirement plan
money (i.e., Company, Employee, Voluntary, Rollover) invested in the Portfolios;
(5) purchase, sale, exchange or transfer of monies in the retirement plan as
directed by the relevant party; (6) distribution of monies for participant
loans, hardships, terminations, death or disability payments; (7) distribution
of periodic payments for retired participants; (8) posting of distributions of
interest, dividends and long-term capital gains to participants by the
Portfolios; (9) production of monthly, quarterly and/or annual statements of all
Portfolio activity for the relevant parties; (10) processing of participant
maintenance information for investment election changes, address changes,
beneficiary changes and Qualified Domestic Relations Orders; (11) responding to
telephone and written inquiries concerning Portfolio investments, retirement
plan provisions and compliance issues; (12) performing discrimination testing
and counseling employers on cure options on failed tests; (13) preparation of
1099R and W2P participant IRS tax forms; (14) preparation of, or assisting in
the preparation of, 5500 Series tax forms, Summary Plan Descriptions and
Determination Letters; and (15) reviewing legislative and IRS changes to keep
the retirement plan in compliance with applicable law.
2. INVESCO shall, at its own expense, maintain such staff and employ or
retain such personnel and consult with such other persons as it shall from time
to time determine to be necessary or useful to the performance of its
obligations under this Agreement. Without limiting the generality of the
foregoing, such staff and personnel shall be deemed to include officers of
INVESCO and persons employed or otherwise retained by INVESCO to provide or
assist in providing the Services to the Portfolios.
3. INVESCO shall, at its own expense, provide such office space,
facilities and equipment (including, but not limited to, computer equipment,
communication lines and supplies) and such clerical help and other services as
shall be necessary to provide the Services to the Portfolios. In addition,
INVESCO may arrange on behalf of the Fund to obtain pricing information
regarding the Portfolios' investment securities from such company or companies
as are approved by a majority of the Fund's board of directors; and, if
necessary, the Fund shall be financially responsible to such company or
companies for the reasonable cost of providing such pricing information.
<PAGE>
4. The Fund will, from time to time, furnish or otherwise make available
to INVESCO such information relating to the business and affairs of the
Portfolios as INVESCO may reasonably require in order to discharge its duties
and obligations hereunder.
5. For the services rendered, facilities furnished, and expenses assumed
by INVESCO under this Agreement, the Fund shall pay to INVESCO a $10,000 per
year per Portfolio base fee, plus an additional fee, computed on a daily basis
and paid on a monthly basis. For purposes of each daily calculation of this
additional fee, the most recently determined net asset value of each Portfolio,
as determined by a valuation made in accordance with the Fund's procedure for
calculating the Fund's net asset value as described in the Portfolios'
Prospectus and/or Statement of Additional Information, shall be used. The
additional fee to INVESCO under this Agreement shall be computed at the annual
rate of 0.015% of each Portfolio's daily net assets as so determined. During any
period when the determination of a the Fund's net asset value is suspended by
the directors of the Fund, the net asset value of a share of that Portfolio as
of the last business day prior to such suspension shall, for the purpose of this
Paragraph 5, be deemed to be the net asset value at the close of each succeeding
business day until it is again determined.
6. INVESCO will permit representatives of the Fund including the Fund's
independent auditors to have reasonable access to the personnel and records of
INVESCO in order to enable such representatives to monitor the quality of
services being provided and the level of fees due INVESCO pursuant to this
Agreement. In addition, INVESCO shall promptly deliver to the board of directors
of the Fund such information as may reasonably be requested from time to time to
permit the board of directors to make an informed determination regarding
continuation of this Agreement and the payments contemplated to be made
hereunder.
7. This Agreement shall remain in effect until no later than February 28,
1998 and from year to year thereafter provided such continuance is approved at
least annually by the vote of a majority of the directors of the Fund who are
not parties to this Agreement or "interested persons" (as defined in the Act) of
any such party, which vote must be cast in person at a meeting called for the
purpose of voting on such approval; and further provided, however, that (a) the
Fund may, at any time and without the payment of any penalty, terminate this
Agreement upon thirty days written notice to INVESCO; (b) the Agreement shall
immediately terminate in the event of its assignment (within the meaning of the
Act and the Rules thereunder) unless the Board of Directors of the Fund approves
such assignment; and (c) INVESCO may terminate this Agreement without payment of
penalty on sixty days written notice to the Fund. Any notice under this
Agreement shall be given in writing, addressed and delivered, or mailed postage
pre-paid, to the other party at the principal office of such party.
8. This Agreement shall be construed in accordance with the laws of the
State of Colorado and the applicable provisions of the Act. To the extent the
applicable law of the State of Colorado or any of the provisions herein conflict
with the applicable provisions of the Act, the latter shall control.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement on the day and year first above written.
INVESCO STRATEGIC PORTFOLIOS, INC.
By: /s/ Dan J. Hesser
----------------------------
ATTEST: Dan J. Hesser
President
/s/ Glen A. Payne
- -----------------
Glen A. Payne
Secretary
INVESCO FUNDS GROUP, INC.
By: /s/ Ronald L.Grooms
----------------------------
ATTEST: Ronald L. Grooms
Senior Vice President
/s/ Glen A. Payne
- ------------------
Glen A. Payne
Secretary
HEAD, MOYE, GILES & O'KEEFE
A Law Partnership
Including Professional Corporations
600 Equitable Building
730 Seventeenth Street
Denver, Colorado 80202-3582
303-623-1770
Edward F. O'Keefe, P.C.
January 20, 1984
Financial Group Portfolios, Inc.
7503 Marin Drive
Post Office Box 2040
Denver, Colorado 80201
Gentlemen:
This is in response to your request for our opinion as to the legality of
the registration of an indefinite number of shares of capital stock ($0.01 par
value) of Financial Group Portfolios, Inc. (the "Company") being registered with
the Securities and Exchange Commission under the Investment Company Act of 1940
and the Securities Act of 1933, as amended (Form N- 1). This share registration
is being requested pursuant to the provisions of Rule 24f-2 under Section 24(f)
of the Investment Company Act of 1940.
We have examined the articles of incorporation of the Company, as filed
for record with the State Department of Assessments and Taxation of the State of
Maryland on August 10, 1983; an amendment to the articles of incorporation as
filed for record on December 5, 1983; the bylaws; the minute book setting forth,
among other things; the actions taken by the board of directors and/or
shareholders authorizing the issue and sale of the corporation's capital stock
and related acts and procedures; the registration statement including exhibits
thereto; and have made such other examination as deemed necessary in the
premises.
Based upon our examination, we are of the opinion that the Company is a
corporation duly organized and existing under and by virtue of the laws of the
State of Maryland, with full power to issue its shares of capital stock, and
that said shares up to the maximum amount hereinafter indicated, when issued and
sold in the manner and on the terms set forth in the registration statement,
will be legally and validly issued, fully paid and nonassessable shares of the
corporation of the par value of $0.01 per share. The maximum number of shares
which has been authorized by the corporation, and thus the maximum number which
may legally and validly be issued, is one billion shares of such capital stock.
<PAGE>
HEAD, MOYE, GILES & O'KEEFE
Financial Group Portfolios, Inc.
January 20, 1984
Page 2
We hereby consent to the use of this opinion in the registration statement
and further consent to the reference to our name therein.
Very truly yours,
/s/ Edward F. O'Keefe
---------------------
Edward F. O'Keefe
EFO/kb
Consent of Independent Accountants
We hereby consent to the incorporation by reference in the Prospectus and
Statement of Additional Information constituting parts of this Post-Effective
Amendment No. 21 to the registration statement on Form N-1A (the "Registration
Statement") of our report dated December 8, 1997, relating to the financial
statements and financial highlights appearing in the October 31, 1997 Annual
Report to Shareholders of INVESCO Strategic Portfolios, Inc., which is also
incorporated by reference into the Registration Statement. We also consent to
the references to us under the heading "Financial Highlights" in the Prospectus
and under the headings "Independent Accountants" and "Financial Statements" in
the Statement of Additional Information.
/s/ Price Waterhouse LLP
- ------------------------------
Price Waterhouse LLP
Denver, Colorado
December 19, 1997
PLAN AND AGREEMENT OF DISTRIBUTION PURSUANT TO RULE 12b-1
PLAN AND AGREEMENT made as of 1st of November, 1997, by and between
INVESCO STRATEGIC PORTFOLIOS, INC., a Maryland corporation (hereinafter called
the "Company"), and INVESCO DISTRIBUTORS, INC., a Delaware corporation
("INVESCO").
WHEREAS, the Company engages in business as an open-end management
investment company, and is registered as such under the Investment Company Act
of 1940, as amended (the "Act"); and
WHEREAS, the Company desires to finance the distribution of its shares in
accordance with this Plan and Agreement of Distribution pursuant to Rule 12b-1
under the Act (the "Plan and Agreement"); and
WHEREAS, INVESCO desires to be retained to perform services in accordance
with such Plan and Agreement and on said terms and conditions; and
WHEREAS, this Plan and Agreement has been approved by a vote of the board
of directors of the Company, including a majority of the directors who are not
interested persons of the Company, as defined in the Act, and who have no direct
or indirect financial interest in the operation of this Plan and Agreement (the
"Disinterested Directors") cast in person at a meeting called for the purpose of
voting on this Plan and Agreement;
NOW, THEREFORE, the Company hereby adopts the Plan set forth herein and
the Company and INVESCO hereby enter into this Agreement pursuant to the Plan in
accordance with the requirements of Rule 12b-1 under the Act, and provide and
agree as follows:
1. The Plan is defined as those provisions of this document by which
the Company adopts a Plan pursuant to Rule 12b-1 under the Act and
authorizes payments as described herein. The Agreement is defined
as those provisions of this document by which the Company retains
INVESCO to provide distribution services beyond those required by
the General Distribution Agreement between the parties, as are
described herein. The Company may retain the Plan notwithstanding
termination of the Agreement. Termination of the Plan will
automatically terminate the Agreement. The Company is hereby
authorized to utilize the assets of the Company to finance certain
activities in connection with distribution of the Company's shares.
2. Subject to the supervision of the board of directors, the Company
hereby retains INVESCO to promote the distribution of shares of the
Company by providing services and engaging in activities beyond
those specifically required by the Distribution Agreement between
the Company and INVESCO and to provide related services. The
activities and services to be provided by INVESCO hereunder shall
include one or more of the following: (a) the payment of
compensation (including trail commissions and incentive
compensation) to securities dealers, financial institutions and
other organizations, which may include INVESCO-affiliated companies,
that render distribution and administrative services in connection
<PAGE>
with the distribution of the Company's shares; (b) the printing and
distribution of reports and prospectuses for the use of potential
investors in the Company; (c) the preparing and distributing of
sales literature; (d) the providing of advertising and engaging in
other promotional activities, including direct mail solicitation,
and television, radio, newspaper and other media advertisements; and
(e) the providing of such other services and activities as may from
time to time be agreed upon by the Company. Such reports and
prospectuses, sales literature, advertising and promotional
activities and other services and activities may be prepared and/or
conducted either by INVESCO's own staff, the staff of
INVESCO-affiliated companies, or third parties.
3. INVESCO hereby undertakes to use its best efforts to promote sales
of shares of the Company to investors by engaging in those
activities specified in paragraph (2) above as may be necessary and
as it from time to time believes will best further sales of such
shares.
4. The Company is hereby authorized to expend, out of its assets, on a
monthly basis, and shall pay INVESCO to such extent, to enable
INVESCO at its discretion to engage over a rolling twelve-month
period (or the rolling twenty-four month period specified below) in
the activities and provide the services specified in paragraph (2)
above, an amount computed at an annual rate of .25 of 1% of the
average daily net assets of the Company during the month. INVESCO
shall not be entitled hereunder to payment for overhead expenses
(overhead expenses defined as customary overhead not including the
costs of INVESCO's personnel whose primary responsibilities involve
marketing of the INVESCO Funds). Payments by the Company hereunder,
for any month, may be used to compensate INVESCO for: (a)
activities engaged in and services provided by INVESCO during the
rolling twelve-month period in which that month falls, or (b) to the
extent permitted by applicable law, for any month during the first
twenty-four months following the Company's commencement of
operations, activities engaged in and services provided by INVESCO
during the rolling twenty-four month period in which that month
falls, and any obligations incurred by INVESCO in excess of the
limitation described above shall not be paid for out of Fund assets.
The Company shall not be authorized to expend, for any month, a
greater percentage of its assets to pay INVESCO for activities
engaged in and services provided by INVESCO during the rolling
twenty-four month period referred to above than it would otherwise
be authorized to expend out of its assets to pay INVESCO for
activities engaged in and services provided by INVESCO during the
rolling twelve-month period referred to above. No payments will be
made by the Company hereunder after the date of termination of
the Plan and Agreement.
5. To the extent that obligations incurred by INVESCO out of its own
resources to finance any activity primarily intended to result in
the sale of shares of the Company, pursuant to this Plan and
Agreement or otherwise, may be deemed to constitute the indirect use
of Company assets, such indirect use of Company assets is hereby
authorized in addition to, and not in lieu of, any other payments
authorized under this Plan and Agreement.
<PAGE>
6. The Treasurer of INVESCO shall provide to the board of directors of
the Company, at least quarterly, a written report of all moneys
spent by INVESCO on the activities and services specified in
paragraph (2) above pursuant to the Plan and Agreement. Each such
report shall itemize the activities engaged in and services provided
by INVESCO to a Fund as authorized by the penultimate sentence of
paragraph (4) above. Upon request, but no less frequently than
annually, INVESCO shall provide to the board of directors of the
Company such information as may reasonably be required for it to
review the continuing appropriateness of the Plan and Agreement.
7. This Plan and Agreement shall become effective with respect to
the INVESCO Energy, Financial, Gold, Health Sciences, Leisure,
Technology and Utilities Portfolios on November 1, 1997 and shall
continue in effect until November 1, 1998 with respect to such
Portfolios. Thereafter, the Plan and Agreement shall continue in
effect from year to year, provided that the continuance of each is
approved at least annually by a vote of the board of directors of
the Company, including a majority of the Disinterested Directors,
cast in person at a meeting called for the purpose of voting on such
continuance. The Plan may be terminated at any time, without
penalty, by the vote of a majority of the Disinterested
Directors or by the vote of a majority of the outstanding
voting securities of the Company. INVESCO, or the Company, by vote
of a majority of the Disinterested Directors or of the holders
of a majority of the outstanding voting securities of the Company,
may terminate the Agreement under this Plan, without penalty,
upon 30 days' written notice to the other party. In the event
that neither INVESCO nor any affiliate of INVESCO serves the
Company as investment adviser, the agreement with INVESCO
pursuant to this Plan shall terminate at such time. The board
of directors may determine to approve a continuance of the
Plan, but not a continuance of the Agreement, hereunder.
8. So long as the Plan remains in effect, the selection and nomination
of persons to serve as directors of the Company who are not
"interested persons" of the Company shall be committed to the
discretion of the directors then in office who are not "interested
persons" of the Company. However, nothing contained herein shall
prevent the participation of other persons in the selection and
nomination process, provided that a final decision on any such
selection or nomination is within the discretion of, and approved
by, a majority of the directors of the Company then in office who
are not "interested persons" of the Company.
9. This Plan may not be amended to increase the amount to be spent by
the Company hereunder without approval of a majority of the
outstanding voting securities of the Company. All material
amendments to the Plan and to the Agreement must be approved by
the vote of the board of directors of the Company, including a
majority of the Disinterested Directors, cast in person at a meeting
called for the purpose of voting on such amendment.
<PAGE>
10. To the extent that this Plan and Agreement constitutes a Plan of
Distribution adopted pursuant to Rule 12b-1 under the Act it shall
remain in effect as such, so as to authorize the use by the Company
of its assets in the amounts and for the purposes set forth herein,
notwithstanding the occurrence of an "assignment," as defined by the
Act and the rules thereunder. To the extent it constitutes an
agreement with INVESCO pursuant to a plan, it shall terminate
automatically in the event of such "assignment." Upon a termination
of the agreement with INVESCO, the Company may continue to make
payments pursuant to the Plan only upon the approval of a new
agreement under this Plan and Agreement, which may or may not be
with INVESCO, or the adoption of other arrangements regarding the
use of the amounts authorized to be paid by the Funds hereunder,
by the Company's board of directors in accordance with the
procedures set forth in paragraph 7 above.
11. The Company shall preserve copies of this Plan and Agreement and all
reports made pursuant to paragraph 6 hereof, together with minutes
of all board of directors meetings at which the adoption, amendment
or continuance of the Plan were considered (describing the factors
considered and the basis for decision), for a period of not less
than six years from the date of this Plan and Agreement, or any such
reports or minutes, as the case may be, the first two years in an
easily accessible place.
12. This Plan and Agreement shall be construed in accordance with the
laws of the State of Colorado and applicable provisions of the Act.
To the extent the applicable laws of the State of Colorado, or any
provisions herein, conflict with the applicable provisions of the
Act, the latter shall control.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed and delivered this Plan and
Agreement on the 1st day of November, 1997.
INVESCO STRATEGIC PORTFOLIOS, INC.
By: /s/ Dan J. Hesser
------------------------------
Dan J. Hesser, President
ATTEST: /s/ Glen A. Payne
------------------------
Glen A. Payne, Secretary
INVESCO DISTRIBUTORS, INC.
By: /s/ Ronald L. Grooms
-----------------------------
Ronald L. Grooms,
Senior Vice President
ATTEST: /s/ Glen A. Payne
------------------------
Glen A. Payne, Secretary
AMENDED PLAN AND AGREEMENT OF DISTRIBUTION PURSUANT TO RULE 12b-1
AMENDED PLAN AND AGREEMENT made as of 1st of December, 1997, by and
between INVESCO STRATEGIC PORTFOLIOS, INC., a Maryland corporation (hereinafter
called the "Company"), and INVESCO DISTRIBUTORS, INC., a Delaware corporation
("INVESCO").
WHEREAS, the Company engages in business as an open-end management
investment company, and is registered as such under the Investment Company Act
of 1940, as amended (the "Act"); and
WHEREAS, the Company desires to finance the distribution of its shares in
accordance with this Amended Plan and Agreement of Distribution pursuant to Rule
12b-1 under the Act (the "Amended Plan and Agreement"); and
WHEREAS, INVESCO desires to be retained to perform services in accordance
with such Amended Plan and Agreement and on said terms and conditions; and
WHEREAS, this Amended Plan and Agreement has been approved by a vote of
the board of directors of the Company, including a majority of the directors who
are not interested persons of the Company, as defined in the Act, and who have
no direct or indirect financial interest in the operation of this Amended Plan
and Agreement (the "Disinterested Directors") cast in person at a meeting called
for the purpose of voting on this Amended Plan and Agreement;
NOW, THEREFORE, the Company hereby adopts the Plan set forth herein and
the Company and INVESCO hereby enter into this Agreement pursuant to the Plan in
accordance with the requirements of Rule 12b-1 under the Act, and provide and
agree as follows:
1. The Plan is defined as those provisions of this document by which
the Company adopts a Plan pursuant to Rule 12b-1 under the Act and
authorizes payments as described herein. The Agreement is defined
as those provisions of this document by which the Company retains
INVESCO to provide distribution services beyond those required by
the General Distribution Agreement between the parties, as are
described herein. The Company may retain the Plan notwithstanding
termination of the Agreement. Termination of the Plan will
automatically terminate the Agreement. The Company is hereby
authorized to utilize the assets of the Company to finance certain
activities in connection with distribution of the Company's shares.
2. Subject to the supervision of the board of directors, the Company
hereby retains INVESCO to promote the distribution of shares of the
Company by providing services and engaging in activities beyond
those specifically required by the Distribution Agreement between
the Company and INVESCO and to provide related services. The
activities and services to be provided by INVESCO hereunder shall
include one or more of the following: (a) the payment of
compensation (including trail commissions and incentive
compensation) to securities dealers, financial institutions and
other organizations, which may include INVESCO-affiliated companies,
that render distribution and administrative services in connection
<PAGE>
with the distribution of the Company's shares; (b) the printing and
distribution of reports and prospectuses for the use of potential
investors in the Company; (c) the preparing and distributing of
sales literature; (d) the providing of advertising and engaging in
other promotional activities, including direct mail solicitation,
and television, radio, newspaper and other media advertisements; and
(e) the providing of such other services and activities as may from
time to time be agreed upon by the Company. Such reports and
prospectuses, sales literature, advertising and promotional
activities and other services and activities may be prepared and/or
conducted either by INVESCO's own staff, the staff of
INVESCO-affiliated companies, or third parties.
3. INVESCO hereby undertakes to use its best efforts to promote sales
of shares of the Company to investors by engaging in those
activities specified in paragraph (2) above as may be necessary and
as it from time to time believes will best further sales of such
shares.
4. The Company is hereby authorized to expend, out of its assets, on a
monthly basis, and shall pay INVESCO to such extent, to enable
INVESCO at its discretion to engage over a rolling twelve-month
period (or the rolling twenty-four month period specified below) in
the activities and provide the services specified in paragraph (2)
above, an amount computed at an annual rate of .25 of 1% of the
average daily net assets of the Company during the month. INVESCO
shall not be entitled hereunder to payment for overhead expenses
(overhead expenses defined as customary overhead not including
the costs of INVESCO's personnel whose primary responsibilities
involve marketing of the INVESCO Funds). Payments by the Company
hereunder, for any month, may be used to compensate INVESCO for:
(a) activities engaged in and services provided by INVESCO
during the rolling twelve-month period in which that month falls,
or (b) to the extent permitted by applicable law, for any month
during the first twenty-four months following the Company's
commencement of operations, activities engaged in and services
provided by INVESCO during the rolling twenty-four month period in
which that month falls, and any obligations incurred by INVESCO in
excess of the limitation described above shall not be paid for out
of Fund assets. The Company shall not be authorized to expend, for
any month, a greater percentage of its assets to pay INVESCO for
activities engaged in and services provided by INVESCO during the
rolling twenty-four month period referred to above than it would
otherwise be authorized to expend out of its assets to pay INVESCO
for activities engaged in and services provided by INVESCO during
the rolling twelve-month period referred to above. No payments will
be made by the Company hereunder after the date of termination of
the Amended Plan and Agreement.
5. To the extent that obligations incurred by INVESCO out of its own
resources to finance any activity primarily intended to result in
the sale of shares of the Company, pursuant to this Amended Plan and
<PAGE>
Agreement or otherwise, may be deemed to constitute the indirect use
of Company assets, such indirect use of Company assets is hereby
authorized in addition to, and not in lieu of, any other payments
authorized under this Amended Plan and Agreement.
6. The Treasurer of INVESCO shall provide to the board of directors of
the Company, at least quarterly, a written report of all moneys
spent by INVESCO on the activities and services specified in
paragraph (2) above pursuant to the Amended Plan and Agreement. Each
such report shall itemize the activities engaged in and services
provided by INVESCO to a Fund as authorized by the penultimate
sentence of paragraph (4) above. Upon request, but no less
frequently than annually, INVESCO shall provide to the board of
directors of the Company such information as may reasonably be
required for it to review the continuing appropriateness of the
Amended Plan and Agreement.
7. This Amended Plan and Agreement shall become effective with
respect to the INVESCO Energy, Financial, Gold, Health Sciences,
Leisure, Technology and Utilities Portfolios on November 1, 1997
and shall continue in effect until November 1, 1998 with respect to
such Funds. This Amended Plan and Agreement shall be come effective
with respect to the INVESCO Environmental Services Portfolio on
December 1, 1997 and shall continue in effect until December 1, 1998
with respect to such Portfolio. Thereafter, the Amended Plan and
Agreement shall continue in effect from year to year, provided that
the continuance of each is approved at least annually by a vote of
the board of directors of the Company, including a majority of the
Disinterested Directors, cast in person at a meeting called for the
purpose of voting on such continuance. The Plan may be terminated
at any time, without penalty, by the vote of a majority of the
Disinterested Directors or by the vote of a majority of the
outstanding voting securities of the Company. INVESCO, or the
Company, by vote of a majority of the Disinterested Directors or of
the holders of a majority of the outstanding voting securities of
the Company, may terminate the Agreement under this Plan, without
penalty, upon 30 days' written notice to the other party. In the
event that neither INVESCO nor any affiliate of INVESCO serves the
Company as investment adviser, the agreement with INVESCO pursuant
to this Plan shall terminate at such time. The board of directors
may determine to approve a continuance of the Plan, but not a
continuance of the Agreement, hereunder.
8. So long as the Plan remains in effect, the selection and nomination
of persons to serve as directors of the Company who are not
"interested persons" of the Company shall be committed to the
discretion of the directors then in office who are not "interested
persons" of the Company. However, nothing contained herein shall
prevent the participation of other persons in the selection and
nomination process, provided that a final decision on any such
selection or nomination is within the discretion of, and approved
by, a majority of the directors of the Company then in office who
are not "interested persons" of the Company.
<PAGE>
9. This Plan may not be amended to increase the amount to be spent by
the Company hereunder without approval of a majority of the
outstanding voting securities of the Company. All material
amendments to the Plan and to the Agreement must be approved by the
vote of the board of directors of the Company, including a majority
of the Disinterested Directors, cast in person at a meeting called
for the purpose of voting on such amendment.
10. To the extent that this Amended Plan and Agreement constitutes a
Plan of Distribution adopted pursuant to Rule 12b-1 under the Act it
shall remain in effect as such, so as to authorize the use by the
Company of its assets in the amounts and for the purposes set forth
herein, notwithstanding the occurrence of an "assignment," as
defined by the Act and the rules thereunder. To the extent it
constitutes an agreement with INVESCO pursuant to a plan, it shall
terminate automatically in the event of such "assignment." Upon a
termination of the agreement with INVESCO, the Company may continue
to make payments pursuant to the Plan only upon the approval of a
new agreement under this Amended Plan and Agreement, which may or
may not be with INVESCO, or the adoption of other arrangements
regarding the use of the amounts authorized to be paid by the Funds
hereunder, by the Company's board of directors in accordance with
the procedures set forth in paragraph 7 above.
11. The Company shall preserve copies of this Amended Plan and Agreement
and all reports made pursuant to paragraph 6 hereof, together with
minutes of all board of directors meetings at which the adoption,
amendment or continuance of the Plan were considered (describing the
factors considered and the basis for decision), for a period of not
less than six years from the date of this Amended Plan and
Agreement, or any such reports or minutes, as the case may be, the
first two years in an easily accessible place.
12. This Amended Plan and Agreement shall be construed in accordance
with the laws of the State of Colorado and applicable provisions of
the Act. To the extent the applicable laws of the State of Colorado,
or any provisions herein, conflict with the applicable provisions of
the Act, the latter shall control.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed and delivered this Amended
Plan and Agreement on the 1st day of December, 1997.
INVESCO STRATEGIC PORTFOLIOS, INC.
By: /s/ Dan J. Hesser
------------------------------
Dan J. Hesser, President
ATTEST: /s/ Glen A. Payne
------------------------
Glen A. Payne, Secretary
INVESCO DISTRIBUTORS, INC.
By: /s/ Ronald L. Grooms
------------------------------
Ronald L. Grooms,
Senior Vice President
ATTEST: /s/ Glen A. Payne
------------------------
Glen A. Payne, Secretary
SCHEDULE FOR COMPUTATION OF PERFORMANCE DATA
TOTAL RETURN
Formula in release:
P = $1,000 initial payment
T = average annual total return
n = number of years (including fractional portions)
ERV = ending redeemable value
P(1+T) exponent n = ERV
The formula given on pages 64 and 65 of the release is written to solve for
Ending Redeemable Value. However, the quantity to be reported is T (Average
Annual Total Return).
Because P, n and ERV are known values, we have solved for T as
follows,
T = nth root of (ERV/P) - 1
and have reported those amounts as the total return.
YIELD
Formula in release:
a = dividends and interest earned
b = expenses accrued
c = average shares outstanding
d = price per share at end of period
YIELD = 2[((a-b)/cd + 1) exponent 6 - 1]
(Assumes all months have thirty days and year is 360 days. A one month period or
30 days was used for accruals as appropriate.)
Dividends have been accrued by dividing annual dividend income (based on most
recent dividend rate) by 360 and multiplying by the number of days the security
was held in the portfolio.
Interest earned on short-term instruments was actual per books.
(No bonds were held in Utilities Portfolio during October)
Expenses accrued were actual per books.
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<NAME> INVESCO ENERGY PORTFOLIO
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<INTEREST-INCOME> 948907
<OTHER-INCOME> (66648)
<EXPENSES-NET> 2741021
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<REALIZED-GAINS-CURRENT> 40217487
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</TABLE>
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<NAME> INVESCO STRATEGIC PORTFOLIOS INC.
<SERIES>
<NUMBER> 10
<NAME> INVESCO ENVIRONMENTAL SERVICES PORTFOLIO
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</TABLE>
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<NAME> INVESCO STRATEGIC PORTFOLIOS INC.
<SERIES>
<NUMBER> 8
<NAME> INVESCO FINANCIAL SERVICES PORTFOLIO
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</TABLE>
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<NAME> INVESCO STRATEGIC PORTFOLIOS INC.
<SERIES>
<NUMBER> 2
<NAME> INVESCO GOLD PORTFOLIO
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<NAME> INVESCO STRATEGIC PORTFOLIOS INC.
<SERIES>
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<NAME> INVESCO HEALTH SCIENCES PORTFOLIO
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<NAME> INVESCO STRATEGIC PORTFOLIOS INC.
<SERIES>
<NUMBER> 4
<NAME> INVESCO LEISURE PORTFOLIO
<S> <C>
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</TABLE>
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<ARTICLE> 6
<CIK> 0000725781
<NAME> INVESCO STRATEGIC PORTFOLIOS INC.
<SERIES>
<NUMBER> 6
<NAME> INVESCO TECHNOLOGY PORTFOLIO
<S> <C>
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<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000725781
<NAME> INVESCO STRATEGIC PORTFOLIOS INC.
<SERIES>
<NUMBER> 9
<NAME> INVESCO UTILITIES PORTFOLIO
<S> <C>
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<SHARES-COMMON-STOCK> 10664816
<SHARES-COMMON-PRIOR> 12715877
<ACCUMULATED-NII-CURRENT> (1533)
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 3933289
<OVERDISTRIBUTION-GAINS> 0
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<DISTRIBUTIONS-OF-GAINS> 10429174
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<PER-SHARE-DISTRIBUTIONS> 0.87
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</TABLE>
POWER OF ATTORNEY
The person executing this Power of Attorney hereby appoints Edward F.
O'Keefe and Glen A. Payne, or either of them, as his attorney-in-fact to execute
and to file such Registration Statements under federal and state securities laws
and such Post-Effective Amendments to such Registration Statements of the
hereinafter described entities as such attorney-in-fact, or either of them, may
deem appropriate:
INVESCO Capital Appreciation Funds, Inc.
INVESCO Diversified Funds, Inc.
INVESCO Emerging Opportunity Funds, Inc.
INVESCO Growth Fund, Inc.
INVESCO Income Funds, Inc.
INVESCO Industrial Income Fund, Inc.
INVESCO International Funds, Inc.
INVESCO Money Market Funds, Inc.
INVESCO Multiple Asset Funds, Inc.
INVESCO Specialty Funds, Inc.
INVESCO Strategic Portfolios, Inc.
INVESCO Tax-Free Income Funds, Inc.
INVESCO Value Trust
INVESCO Variable Investment Funds, Inc.
This Power of Attorney, which shall not be affected by the disability of
the undersigned, is executed and effective as of the 25th day of August, 1997.
/s/ Wendy L. Gramm
------------------------------------------
Wendy L. Gramm
STATE OF District of )
Columbia )
COUNTY OF )
SUBSCRIBED, SWORN TO AND ACKNOWLEDGED before me by Wendy L.
Gramm, as a director or trustee of each of the above-described entities, this
25th day of August, 1997.
/s/ Margaret Foster
------------------------------------------
Notary Public
My Commission Expires: Feb. 14, 2000
-------------
POWER OF ATTORNEY
The person executing this Power of Attorney hereby appoints Edward F.
O'Keefe and Glen A. Payne, or either of them, as his attorney-in-fact to execute
and to file such Registration Statements under federal and state securities laws
and such Post-Effective Amendments to such Registration Statements of the
hereinafter described entities as such attorney-in-fact, or either of them, may
deem appropriate:
INVESCO Diversified Funds, Inc.
INVESCO Dynamics Fund, Inc.
INVESCO Emerging Opportunity Funds, Inc.
INVESCO Growth Fund, Inc.
INVESCO Income Funds, Inc.
INVESCO Industrial Income Fund, Inc.
INVESCO International Funds, Inc.
INVESCO Money Market Funds, Inc.
INVESCO Multiple Asset Funds, Inc.
INVESCO Specialty Funds, Inc.
INVESCO Strategic Portfolios, Inc.
INVESCO Tax-Free Income Funds, Inc.
INVESCO Value Trust
INVESCO Variable Investment Funds, Inc.
This Power of Attorney, which shall not be affected by the disability of
the undersigned, is executed and effective as of the 4th day of June, 1997.
/s/ Larry Soll
-------------------------
Larry Soll
STATE OF WASHINGTON )
)
COUNTY OF SAN JUAN )
SUBSCRIBED, SWORN TO AND ACKNOWLEDGED before me by Larry Soll, as a
director or trustee of each of the above-described entities, this 4th day
of June, 1997.
Mary Paulette Weaver
--------------------
Notary Public
My Commission Expires: 1-27-99
-------
