File No. 33-38336
As filed on ^ September 26, 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. ^ 8 X
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REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 X
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Amendment No. ^ 10 X
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INVESCO EMERGING OPPORTUNITY FUNDS, 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)
^X on October 1, 1997, pursuant to paragraph (b)
- --- 60 days after filing pursuant to paragraph (a)(1)
- --- ^ on -------------, 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.
Registrant's Rule 24f-2 Notice for the fiscal year ended May 31, ^ 1997, was
filed on or about July 22, ^ 1997.
Page 1 of 174
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Exhibit index is located at page 90
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^
INVESCO EMERGING OPPORTUNITY FUNDS, INC.
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CROSS-REFERENCE SHEET
Form N-1A
Item Caption
- --------- -------
Part A Prospectus
1....................... Cover Page
2....................... Annual Fund Expenses;
Essential Information
3....................... Financial Highlights; Fund
Price and Performance
4....................... Investment Objective and
Strategy; Investment Policies
and ^ Risks; The Fund and Its
Management
5....................... The Fund and Its Management
5A...................... Not Applicable
6....................... Fund Services; Taxes,
Dividends and Capital Gain
Distributions; Additional
Information
7....................... How to Buy Shares; Fund Price
and Performance; Fund
Services; The Fund and Its
Management
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 Practices;
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 Practices;
Investment Policies and
Restrictions
18....................... Additional Information
19....................... How Shares Can Be Purchased;
How Shares Are Valued;
Services Provided by the Fund;
Tax-Deferred Retirement Plans;
How to Redeem Shares
20....................... Dividends, Capital Gain
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
October 1, ^ 1997
INVESCO ^ SMALL COMPANY GROWTH FUND
INVESCO Small Company Growth Fund (formerly, INVESCO Emerging Growth Fund)
(the ^"Fund") seeks long-term capital growth. Most of its investments are in
equity securities of emerging growth companies with market capitalizations of $1
billion or less at the time of initial purchase ("small-cap companies"), but the
Fund has the flexibility to invest in other types of securities.
The Fund is a series of INVESCO Emerging Opportunity Funds, Inc. (the
"Company"), a diversified, managed, no-load mutual fund.
^ This Prospectus provides you with the basic information you should know
before investing in the Fund. You should read it and keep it for future
reference. A Statement of Additional Information containing further information
about the Fund, dated October 1, ^ 1997, 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 FUND ARE NOT DEPOSITS OR OBLIGATIONS OF, OR
GUARANTEED OR ENDORSED BY, ANY BANK OR OTHER FINANCIAL INSTITUTION. THE SHARES
OF THE FUND ARE NOT FEDERALLY INSURED BY THE FEDERAL DEPOSIT INSURANCE
CORPORATION, THE FEDERAL RESERVE BOARD OR ANY OTHER AGENCY.
<PAGE>
TABLE OF CONTENTS Page
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ESSENTIAL INFORMATION........................................................6
ANNUAL FUND EXPENSES.........................................................7
FINANCIAL HIGHLIGHTS.........................................................9
INVESTMENT OBJECTIVE AND STRATEGY...........................................12
INVESTMENT POLICIES AND RISKS...............................................13
THE FUND AND ITS MANAGEMENT.................................................16
FUND PRICE AND PERFORMANCE..................................................19
HOW TO BUY SHARES...........................................................19
FUND SERVICES...............................................................25
HOW TO SELL SHARES..........................................................25
TAXES, DIVIDENDS AND CAPITAL GAIN DISTRIBUTIONS.............................28
ADDITIONAL INFORMATION......................................................30
<PAGE>
ESSENTIAL INFORMATION
Investment Goal And Strategy. INVESCO ^ Small Company Growth Fund is a
diversified mutual fund that seeks long-term capital growth. It invests
primarily in small-capitalization equity securities of U.S. companies traded
"over-the-counter." There is no guarantee that the Fund will meet its objective.
See "Investment Objective And Strategy."
^ Designed For: Investors seeking capital growth over the long-term. While
not intended as a complete investment program, the Fund may be a valuable
element of your investment portfolio. You also may wish to consider the Fund as
part of a Uniform Gift/Transfer To Minors Account or systematic investing
strategy. The Fund may be a suitable investment for many types of retirement
programs, including IRA, SEP-IRA, ^ SIMPLE IRA, 401(k), Profit Sharing, Money
Purchase Pension, and 403(b) plans.
Time Horizon. Potential shareholders should consider this a long-term
investment due to the volatility of the securities held by the Fund.
Risks. The Fund uses an investment strategy, which at times may include
holdings in foreign securities and rapid portfolio turnover. The returns on
foreign investments may be influenced by currency fluctuations and other risks
of investing overseas. Rapid portfolio turnover may result in higher brokerage
commissions and the acceleration of taxable capital gains. Investors should
consider whether these policies make the Fund unsuitable for that portion of
your savings dedicated to current income or preservation of capital over the
short-term. See "Investment Objective and Strategy" and "Investment Policies and
Risks."
Organization and Management. The Fund is owned by its shareholders. It
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 sub-adviser. Together, IFG and
INVESCO Trust constitute "Fund Management." Prior to September 29, 1997, INVESCO
Funds Group, Inc. served as the Fund's distributor. Effective September 29,
1997, INVESCO Distributors, Inc. ("IDI"), founded in 1997 as a wholly-owned
subsidiary of IFG, became the Fund's distributor.
INVESCO Trust senior ^ vice president John Schroer, a chartered financial
analyst, has managed ^ the Fund since 1995.
See "The Fund And Its Management."
IFG ^, INVESCO Trust and IDI are subsidiaries of AMVESCAP PLC, an
international investment management company that manages
<PAGE>
approximately $165 billion in assets. AMVESCAP PLC is based in London with
money managers located in Europe, North America and the Far East.
This 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, which is waived for regular investment
plans, including EasiVest and Direct Payroll Purchase, and certain retirement
plans.
Minimum Subsequent Investment: $50 (Minimums are lower for certain
retirement plans.)
ANNUAL FUND EXPENSES
The Fund is no-load; there are no fees to purchase, exchange or redeem
shares. The Fund is authorized to pay a Rule 12b-1 distribution fee of one
quarter of one percent of the Fund's average net assets each year. (See "How To
Buy Shares --Distribution Expenses.")
Like any company, the Fund has operating expenses^ -- such as portfolio
management, accounting, shareholder servicing, maintenance of shareholder
accounts, and other expenses. These expenses are paid from the Fund's assets.
Lower expenses therefore benefit investors by increasing the Fund's total
return.
We calculate annual operating expenses as a percentage of the Fund's
average annual net assets. To keep expenses competitive, the Fund's ^ adviser
voluntarily reimburses the Fund for amounts in excess of 1.50% of average net
assets.
Annual Fund Operating Expenses
(as a percentage of average net assets)
Management Fee 0.75%
12b-1 Fees 0.25%
Other ^ Expenses (1)(2) 0.52%
Total Fund Operating ^ Expenses (1)(2) 1.52%
<PAGE>
^ (1) It should be noted that the Fund's actual total operating expenses
were lower than the figures shown, because the Fund's custodian fees, transfer
agency and distribution expenses were reduced under an expense offset
arrangement. 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 including and prior to the fiscal year ended May 31,
1995. See "The Fund and Its Management."
(2) Certain expenses of the Fund are being absorbed voluntarily by IFG. In
the absence of such absorbed expenses, the Fund's "Other Expenses" and "Total
Fund Operating Expenses" would have been 0.54% and 1.54%, respectively, based on
the Fund's actual expenses for the fiscal year ended May 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
the Fund's assets, and are deducted from the amount of income available for
distribution to shareholders; they are not charged directly to shareholder
accounts.)
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
^ $16 $48 $83 $182
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, AND ACTUAL
ANNUAL RETURNS AND EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN. For more
information on the Fund's expenses, see "The Fund and Its Management" and "How ^
To Buy Shares -- Distribution Expenses."
^ Because the Fund pays a distribution fee, investors who own Fund shares
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>
FINANCIAL HIGHLIGHTS
(For a Fund Share Outstanding Throughout Each Period)
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 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 IFG at the address or telephone number on the cover
of this prospectus. The Annual Report also contains more information about the
Fund's performance.
<TABLE>
<CAPTION>
Period
^ Ended
Year Ended May 31 May 31
------------------------------------------------------- --------
1997 1996 1995 1994 1993 1992^
<S> <C> <C> <C> <C> <C> <C>
PER SHARE DATA
Net Asset Value - ^
Beginning of Period $14.38 $9.37 $11.40 $9.89 $7.55 $7.50
------------------------------------------------------- --------
INCOME FROM INVESTMENT
OPERATIONS
Net Investment Income
(Loss) (0.07) (0.06) 0.04 (0.01) (0.04) (0.02)
Net Gains or (Losses)
on Securities ^(Both
Realized and Unrealized) (0.96) 5.25 0.46 1.53 2.38 0.07
------------------------------------------------------- --------
Total from Investment
Operations (1.03) 5.19 0.50 1.52 2.34 0.05
------------------------------------------------------- --------
<PAGE>
LESS DISTRIBUTIONS
Dividends from Net
Investment Income 0.00 0.00 0.04 0.00 0.00 0.00
Distributions from
Capital Gains 0.53 0.18 2.49 0.01 0.00 0.00
------------------------------------------------------- --------
Total Distributions 0.53 0.18 2.53 0.01 0.00 0.00
------------------------------------------------------- --------
Net Asset Value -
^ End of Period $12.82 $14.38 $9.37 $11.40 $9.89 $7.55
======================================================= ========
TOTAL RETURN (7.08%) 55.78% 4.98% 15.34% 30.95% 0.68%*
RATIOS
Net Assets - ^ End of Period
($000 Omitted) $294,259 $370,029 $153,727 $176,510 $103,029 $25,579
Ratio of Expenses to
Average Net Assets# 1.52%@ 1.48%@ 1.49% 1.37% 1.54% 1.93%~
Ratio of Net Investment
Income ^(Loss) to
Average Net Assets# (0.55%) (0.78%) 0.41% (0.26%) (0.70%) (0.95%)~
Portfolio Turnover Rate 216% 221% 228% 196% 153% 50%*
Average Commission Rate
Paid^^ $0.0935 - - - - -
</TABLE>
^ From December 27, 1991, commencement of operations, to May 31, 1992.
* Based on operations for the period shown and, accordingly, are not
representative of a full year.
# Various expenses of the Fund were voluntarily absorbed by IFG for the ^ years
ended May 31, 1997 and 1995. If such expenses had not been voluntarily absorbed,
ratio of expenses to average net assets would have been 1.54% and 1.52%,
respectively, and ratio of net investment income to average net assets would
have been (0.57%) and 0.38%, respectively.
<PAGE>
@ Ratio is based on Total Expenses of the Fund, 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>
INVESTMENT OBJECTIVE AND STRATEGY
The Fund seeks long-term capital growth. This investment objective is
fundamental and may not be changed without the approval of the Fund's
shareholders. ^ Normally, the Fund seeks to achieve this objective through the
investment of 65% or more of its assets in equity securities of companies with
market capitalizations of $1 billion or less at the time we purchase them
("small-cap companies"). The balance of the Fund's assets may be invested in the
equity securities of companies with market capitalizations in excess of $1
billion, debt securities and short-term investments. With respect to small-cap
companies, we are primarily looking for companies in the developing stages of
their life cycle, which are currently undervalued in the marketplace, have
earnings which may be expected to grow faster than the U.S. economy in general,
and/or offer the potential for accelerated earnings growth due to rapid growth
of sales, new products, management changes, or structural changes in the
economy. There is no assurance that the Fund's investment objective will be met.
The majority of the Fund's holdings consists of common stocks traded
"over-the-counter." The Fund also has the flexibility to invest in other U.S.
and foreign securities.
The Fund's investments in debt securities include U.S. government and
corporate debt securities. Investments in U.S. government securities may consist
of securities issued or guaranteed by the U.S. government and any agency or
instrumentality of the U.S. government. In some cases, these securities are
direct obligations of the U.S. government, such as U.S. Treasury bills, notes
and bonds. In other cases, these securities are obligations guaranteed by the
U.S. government, consisting of Government National Mortgage Association
obligations, or obligations of U.S. government authorities, agencies or
instrumentalities, consisting of the Federal National Mortgage Association,
Federal Home Loan Bank, Federal Financing Bank and Federal Farm Credit Bank,
which are supported only by the assets of the issuer. The Fund may invest in
both investment grade and lower-rated corporate debt securities. However, the
Fund will not invest more than 5% of its total assets (measured at the time of
purchase) in corporate debt securities that are rated below BBB by Standard &
Poor's Ratings Group^, Inc., a division of The McGraw-Hill Companies, Inc.
("S&P") or Baa by Moody's Investors Service, Inc. ("Moody's") or, if unrated,
are judged by Fund Management to be equivalent in quality to debt securities
having such ratings. In no event will the Fund invest in a debt security rated
below CCC by ^ S&P or Caa by Moody's. The risks of investing in debt securities
are discussed below under "Risk Factors." For a description of each corporate
bond rating category, please refer to Appendix A to the Statement of Additional
Information.
<PAGE>
The short-term investments of the Fund may consist of U.S. government and
agency securities, domestic bank certificates of deposit and bankers'
acceptances, and commercial paper rated A-1 by ^ S&P or P-1 by Moody's, as well
as repurchase agreements with banks, ^ registered broker-dealers and registered
government securities dealers with respect to the foregoing securities. The
Fund's assets invested in U.S. government securities and short-term investments
will be used to meet current cash requirements, such as to satisfy requests to
redeem shares of the Fund and to preserve investment flexibility. A commercial
paper rating of A-1 by ^ S&P or P-1 by Moody's is the highest rating category
assigned by such rating organizations and indicates that the issuer has a very
strong capacity to make timely payments of principal and interest on its
commercial paper obligations. All bank certificates of deposit and bankers'
acceptances at the time of purchase by the Fund must be issued by domestic banks
(i) which are members of the Federal Reserve System having total assets in
excess of $5 billion, (ii) which have received at least a B ranking from Thomson
Bank Watch Credit Rating Service or International Bank Credit Analysis, and
(iii) which either directly or through parent holding companies have securities
outstanding which have been rated Aaa, Aa or P-1 by Moody's or AAA, AA or A-1 by
^ S&P.
The Fund's investment portfolio is actively traded. Since our strategy
highlights many short-term factors -- current information about a company,
investor interest, price movements of the company's securities and general
market and monetary conditions -- securities may be bought and sold relatively
frequently. The Fund's portfolio turnover rate may be higher than many other
mutual funds, sometimes exceeding 200%; this turnover 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 Fund's portfolio turnover rate, its brokerage
practices and certain federal income tax matters.
When we believe market or economic conditions are unfavorable, the Fund
may assume a defensive position by temporarily investing up to 100% of its
assets in high quality money market instruments, such as short-term U.S.
government obligations, commercial paper or repurchase agreements, seeking to
protect its assets until conditions stabilize.
^
INVESTMENT POLICIES AND RISKS
Investors generally should expect to see their price per share vary with
movements in the stock market, changes in economic conditions and other factors.
The Fund invests in many different companies in a variety of industries; this
<PAGE>
diversification reduces the Fund's overall exposure to investment and
market risks, but cannot eliminate these risks.
Small-Cap Stocks. The small-cap companies represented in the Fund's
investment portfolio (particularly those trading "over-the-counter") may be in
the early stages of development; have limited product lines, markets or
financial resources; and/or lack management depth. These factors may lead to
more intense competitive pressures on, greater volatility in earnings of, and
relative illiquidity or erratic price movements for the securities of these
companies, compared to larger-cap companies.
Debt Securities. The Fund's investments in debt securities generally are
subject to both credit risk and market risk. Credit risk relates to the ability
of the issuer to meet interest or principal payments, or both, as they come due.
Market risk relates to the fact that the market values of the debt securities
generally will be affected by changes in the level of interest rates. An
increase in interest rates will tend to reduce the market values of outstanding
debt securities, whereas a decline in interest rates will tend to increase their
values. Although Fund Management limits the Fund's investments in debt
securities to securities it believes are not highly speculative, both kinds of
risk are increased by investing in debt securities rated BBB or lower by S&P,
Baa or lower by Moody's or, if unrated, securities determined by Fund Management
to be of equivalent quality.
Foreign Securities. Up to 25% of the Fund's total assets, measured at the
time of purchase, may be invested directly in foreign securities. Securities of
Canadian issuers and American Depository Receipts ("ADRs") are not subject to
this 25% limitation. 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. ADRs are denominated in U.S. dollars and trade in the U.S.
securities markets.
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;
<PAGE>
-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 the Fund experiencing difficulties in pursuing legal remedies
and collecting judgments.
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.
^ Illiquid and Rule 144A Securities. The Fund may invest in illiquid
securities, including securities that are subject to restrictions on resale and
securities that are not readily marketable. The Fund may also invest in
restricted securities that may be resold to institutional investors, known as
"Rule 144A Securities." For more information concerning illiquid and Rule 144A
Securities, see "Investment Policies and Restrictions" in the Statement of
Additional Information.
^ Delayed Delivery or When-Issued Securities. Up to 10% of the value of
the Fund's total assets may be committed to the purchase or sale of securities
on a when-issued or delayed-delivery basis -- that is, with settlement taking
place in the future. The payment obligation and the interest rate received on
the securities generally are fixed at the time the Fund enters into the
commitment. Between the date of purchase and the settlement date, the market
value of the securities may vary, and no interest is payable to the Fund prior
to settlement.
Put and Call Options. The Fund may purchase and write options on
securities and indices. These practices and their risks are discussed under
"Investment Policies and Restrictions" in the Statement of Additional
Information.
Repurchase Agreements. The Fund may invest money, for as short a time as
overnight, using repurchase agreements ("repos"). With a repo, the Fund buys a
<PAGE>
debt instrument, agreeing simultaneously to sell it back to the prior owner
at an agreed-upon price. The Fund could incur costs or delays in seeking to sell
the security if the prior owner defaults on its repurchase obligation. To reduce
that risk, the securities ^ that are the subject of each 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 ^
Company's board of directors.
Securities Lending. The Fund 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.
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.
Investment Restrictions. Certain restrictions, which are set forth in the
Statement of Additional Information, may not be altered without the approval of
the Fund's shareholders. For example, the Fund limits to 5% the portion of its
total assets that may be invested in any one issuer, and to 25% the portion of
its total assets that may be invested in any one industry.
THE FUND AND ITS MANAGEMENT
The ^ Company 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 December 6, 1990, under the laws of Maryland.
The ^ Company'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 ^ Company, IFG, 7800 E. Union Avenue,
Denver, Colorado 80237, serves as the Fund's investment ^ adviser; it is
primarily responsible for providing the Fund with various administrative
services. IFG's wholly-owned subsidiary, INVESCO Trust ^, is the Fund's
sub-adviser and is primarily responsible for managing the Fund's investments.
^
John Schroer has served as portfolio manager for the Fund since 1995 and
is primarily responsible for the day-to-day management of the Fund's holdings.
His recent career includes these highlights: Portfolio manager of the Health
Sciences Portfolio of INVESCO Strategic Portfolios, Inc.; senior vice
<PAGE>
president (since 1996), vice president (since 1995) and portfolio manager (1993
to present) of INVESCO Trust. Formerly (1990 to 1993), assistant vice president
with Trust Company of the West. He earned BS and MBA degrees from the University
of Wisconsin-Madison. He is a Chartered Financial Analyst.
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.
The Fund pays IFG a monthly management fee which is based upon a percentage
of the Fund's average net assets determined daily. The management fee is
computed at the annual rate of 0.75% on the first $350 million of the Fund's
average net assets; 0.65% on the next $350 million of the Fund's average net
assets; and 0.55% on the Fund's average net assets over $700 million. For the
fiscal year ended May 31, ^ 1997, investment management fees paid by the Fund
amounted to 0.75% of the Fund's average net assets. Out of this ^ advisory fee,
IFG paid to INVESCO Trust, as a sub-advisory fee, an amount equal to 0.24% of
the Fund's average net assets. No fee is paid by the Fund to INVESCO Trust.
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 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 recordkeeping 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 such services, IFG was paid, for the fiscal year ended May 31,
^ 1997, a fee equal to $10,000 plus an additional amount computed at an annual
rate of 0.015% of the Fund's average net assets.
The Fund's expenses, which are accrued daily, are deducted from
total income before dividends are paid. Total expenses of the
<PAGE>
Fund (prior to any expense offset) for the fiscal year ended May 31, ^ 1997,
including investment management fees (but excluding brokerage commissions, which
are a cost of acquiring securities), amounted to ^ 1.52% of the Fund's average
net assets. ^ Certain Fund expenses ^ were absorbed voluntarily by IFG ^
pursuant to a commitment to the Fund to ensure that the Fund's total operating
expenses ^ did not exceed 1.50% of the Fund's average net assets. This
commitment may be changed following consultation with the Company's board of
directors.
Fund Management places orders for the purchase and sale of portfolio
securities with brokers and dealers based upon Fund Management's evaluation of
their financial responsibility coupled with their ability to effect transactions
at the best available prices. As discussed under "How to Buy Shares -
Distribution Expenses," the Fund may market its shares through intermediary
brokers or dealers that have entered into Dealer Agreements with ^ IDI, as the
Fund's distributor. The Fund may place orders for portfolio transactions with
qualified ^ broker-dealers that recommend the Fund, or sell shares of the Fund,
to clients, or act as agent in the purchase of Fund 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 $165 billion in assets under management. IFG was established in
1932 and, as of May 31, ^ 1997, managed 14 mutual funds, consisting of ^ 45
separate portfolios, with combined assets of approximately ^ $14.8 billion on
behalf of over ^ 859,000 shareholders. INVESCO Trust (founded in 1969) served as
adviser or sub-adviser to ^ 59 investment portfolios as of May 31, ^ 1997,
including ^ 31 portfolios in the INVESCO group. These ^ 59 portfolios had
aggregate assets of approximately ^ $13.5 billion as of May 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. IDI was established in 1997 and is the
distributor for 14 mutual funds consisting of 45 separate portfolios.
<PAGE>
FUND PRICE AND PERFORMANCE
Determining Price. The value of your investment in the Fund will vary
daily. The price per share is also known as the Net Asset Value ("NAV"). IFG
prices the Fund every day that the New York Stock Exchange is open, as of the
close of regular trading (normally, 4:00 p.m., New York time). NAV is calculated
by adding together the current market value of all of the Fund's assets,
including accrued interest and dividends; then subtracting liabilities,
including accrued expenses; and finally dividing that dollar amount by the total
number of Fund shares outstanding.
Performance Data. To keep shareholders and potential investors informed,
we will occasionally advertise the Fund's total return ^. Total return figures
show the average annual rate of return on ^ a $1,000 investment in the Fund,
assuming reinvestment of all dividends and capital gain distributions for ^
one-, five- and ten-year periods (or since inception). Cumulative total return
shows the actual rate of return on an investment over a stated period; average
annual total return represents the average annual percentage change in the value
of an investment. Both cumulative and average annual total returns tend to
"smooth out" fluctuations in the Fund's investment results, ^ because they show
the interim variations in performance over the periods cited. More information
about the Fund's recent and historical performance is contained in the ^
Company'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 ^ back of this
prospectus.
When we quote mutual fund rankings published by Lipper Analytical
Services, Inc., we may compare the Fund to others in its category of Small
Company Growth Funds, as well as the broad-based Lipper general fund groupings.
These rankings allow you to compare the Fund to its 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 earnings and are not intended
to suggest future performance.
HOW TO BUY SHARES
The following chart ^ shows several convenient ways to invest in the Fund.
Your new Fund 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 ^ IDI. However, if you invest
in the Fund through a securities broker, you may be charged a commission or
transaction fee. For all new accounts, please send a completed application form.
Please specify which ^ Fund's shares you wish to purchase.
<PAGE>
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 Fund. Further, Fund Management reserves
the right in its sole discretion to reject any order for the purchase of Fund
shares (including purchases by exchange) when, in its judgment, such rejection
is in the Fund's best interests.
Exchange ^ Policy. You may exchange your shares in this Fund for those in
another INVESCO fund 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 up to 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 Fund reserves the right to reject any exchange request, or to
modify or terminate the exchange ^ policy, 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 for 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>
HOW TO BUY SHARES
- --------------------------------------------------------------------------------
Method Investment Minimum Please Remember
- --------------------------------------------------------------------------------
By Check
Mail to: $1,000 for regular If your check does
INVESCO Funds account; not clear, you will
Group, Inc. $250 for an be responsible for
P.O. Box 173706 Individual any related loss
Denver, CO 80217- Retirement Account; the Fund or IFG
3706. $50 minimum for incurs. If you are
Or you may send each subsequent already a
your check by investment. shareholder in the
overnight courier INVESCO funds, the
to: 7800 E. Union Fund may seek
Ave., Denver, CO reimbursement from
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 cancelled. If a
to our street purchase is
address: cancelled due to
7800 E. Union Ave., nonpayment, you
Denver, CO 80237. will be responsible
Or you may transmit for any related
your payment by loss the Fund or
bank wire (call IFG IFG incurs. If you
for instructions). are already a
shareholder in the
INVESCO funds, the
Fund 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 your financial
"dollar-cost ability to keep
averaging" may help buying through low
offset market price levels. And
fluctuations. Over remember that you
a period of time, will lose money if
your average cost you redeem your
per share may be shares when the
less than the market value of all
actual average your shares is less
price per share. than their cost.
- --------------------------------------------------------------------------------
<PAGE>
By ^ PAL(R)
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 cancelled. If a
purchase is cancelled due
to nonpayment, you will
be responsible for any
related loss the Fund or
IFG incurs. If you are
already a shareholder in
the INVESCO funds, the
Fund may seek
reimbursement from your
existing account(s) for
any loss incurred.
- --------------------------------------------------------------------------------
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 exchanges requested
between two INVESCO by telephone.)
funds; call IFG for
further details and
the correct form.
================================================================================
Distribution Expenses. The Fund is authorized under a Plan and Agreement
of Distribution pursuant to Rule 12b^-1 under the Investment Company Act of 1940
(the ^"Plan") to use its assets to finance certain activities relating to the
distribution of ^ its shares to investors. Under the Plan, monthly payments may
be made by the Fund to IDI to permit IDI, at its discretion, to engage in
certain activities, and provide certain services approved by the board of
directors in connection with the distribution of each Fund's shares to investors
and the maintenance of their accounts.
<PAGE>
These activities and services may include the payment of compensation
(including incentive compensation and/or continuing compensation based on the
amount of customer assets maintained in the Fund) to securities dealers and
other financial institutions and organizations, which may include ^
IDI-affiliated companies, to obtain various distribution^-related and/or
administrative services for the Fund. Such services may include, among other
things, processing new shareholder account applications, preparing and
transmitting electronically to the ^ Fund's Transfer Agent computer ^
processable tapes of all transactions by customers, and serving as the primary
source of information to customers in answering questions concerning the Fund
and their transactions with the Fund.
In addition, other ^ permissible activities and services include
advertising, the preparation, printing and distribution of sales literature^ and
prospectuses to prospective investors^ and such other services and promotional
activities ^ for the Fund as may from time to time be agreed upon by the ^
Company and its board of directors, including public relations efforts and
marketing programs to communicate with investors and prospective investors.
These services and activities may be conducted by the staff of IDI or its
affiliates or by third parties.^
^ Under the Plan, the Company's payments to IDI on behalf of the Fund are
limited to an amount computed at an annual rate of 0.25% of the Fund's average
net assets during the month. IDI is not entitled to payment for overhead
expenses under the Plan, but may be ^ paid for all or a portion of the
compensation paid for salaries and other employee benefits for ^ the personnel
of IDI whose primary responsibilities involve marketing shares of the INVESCO
funds, including the Fund. Payment amounts by the Fund under the Plan, for any
month, may be made to compensate IDI for permissible activities engaged in and
services provided by IDI during the rolling 12-month period in which that month
falls. Therefore, any obligations incurred by IDI in excess of the limitations
described above will not be paid by the Fund under the Plan, and will be borne
by IDI. In addition, IDI and its affiliates may from time to time make
additional payments from its revenues to securities dealers and other financial
institutions that provide distribution-related and/or administrative services
for the Fund. No further payments will be made by the Fund under the Plan in the
event of its termination. Also, any payments made by the Fund may not be used to
finance directly the distribution of shares of any other fund of the Company or
other mutual fund advised by IFG. Payments made by the Fund under the Plan for
compensation of marketing personnel, as noted above, 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. ^
<PAGE>
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 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 Fund
shares by telephone, unless they expressly decline these privileges. By signing
the new account Application, a Telephone Transaction Authorization Form, or
otherwise using these privileges, the investor has agreed that, if the Fund 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. Fund shares may be purchased for Individual
Retirement Accounts ("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 Fund
shares. Shares of the Fund may be redeemed at any time at their current 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 the Fund's investment
performance.
<PAGE>
Please specify from which fund you wish to redeem shares. Shareholders
have a separate account for each fund in which they invest.
While the Fund 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 redeemding shares by phone.
HOW TO SELL SHARES
- --------------------------------------------------------------------------------
Method Minimum Redemption Please Remember
- --------------------------------------------------------------------------------
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; Individual
$1,000 for a wire Retirement Accounts
to bank of record. ("IRAs").
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 IFG's
discretion.
In Writing
Mail your request Any amount. The If the share 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- shareholder (s). the certificates
3706. You may also Payment will be must be sent to
send your request mailed to your IFG.
by overnight address of record,
courier to 7800 E. or to a designated
Union Ave., Denver, bank.
CO 80237.
- --------------------------------------------------------------------------------
<PAGE>
By Exchange
Between this and $1,000 to open a See "Exchange ^
another of the new account; $50 Policy" above.
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 on You must have at
request the 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 a
recognized national or
regional securities firm.
================================================================================
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
<PAGE>
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 Fund's 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 fall below $250 as a result of shareholder
action, the Fund 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 CAPITAL GAIN DISTRIBUTIONS
Taxes. The Fund intends to distribute to shareholders substantially all of
its net investment income, net capital gains and net gains from foreign currency
transactions, if any, in order to continue to qualify for tax treatment as a
regulated investment company. Thus, the Fund does not expect to pay any federal
income or excise taxes.
Unless shareholders are exempt from income taxes, they must include all
dividends and distributions of net capital gain distributions in taxable income
for federal, state, and local income tax purposes. Dividends and other
distributions are taxable whether they are received in cash or automatically
invested in shares of the Fund or another fund in the INVESCO group.
The taxpayer Relief Act of 1997 (the "Tax" Act"), enacted in August 1997,
changed the taxation of capital gains by applying different capital gains rates
depending on the taxpayer's holding period and marginal rate of federal income
tax. Net realized capital gains of the Fund are classified as short term, mid-
term and long-term gains depending on how long the Fund held the security which
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.
<PAGE>
Shareholders also may realize capital gains or losses when they sell their
Fund shares at more or less than the price originally paid.
At the end of each year, information regarding the tax status of dividends
and capital gain distributions is provided to shareholders.
The Fund may be subject to the withholding of foreign taxes on dividends
or interest it receives on foreign securities. Foreign taxes withheld will be
treated as an expense of the Fund unless the Fund meets the qualifications to
enable it to pass these taxes through to shareholders for use by them as a
foreign tax credit or deduction.
^ Individuals and certain other non-corporate shareholders may be subject
to backup withholding of 31% on dividends, capital gain distributions and
redemption proceeds. Unless you are subject to backup withholding for other
reasons, you can avoid backup withholding on your Fund account by ensuring that
we have a correct, certified tax identification number.
We encourage you to consult a tax adviser with respect to these matters.
For further information, see "Dividends, Capital Gain Distributions and Taxes"
in the Statement of Additional Information.
Dividends and Capital Gain Distributions. The Fund earns ordinary or net
investment income, in the form of dividends and interest on its investments. The
Fund's policy is to distribute substantially all of this income, less Fund
expenses, to shareholders on an annual or semiannual basis, at the discretion of
the ^ Company's board of directors.
In addition, the Fund realizes capital gains and losses when it sells
securities for more or less than it paid. If total gains on sales exceed total
losses (including losses carried forward from previous years), the Fund has a
net realized capital gain. Net realized capital gains, if any, are distributed
to shareholders at least annually, usually in December.
Dividends and capital gain distributions are paid to shareholders who hold
shares on the record date of the distribution regardless of how long the shares
have been held. The Fund's share price will then drop by the amount of the
distribution on the ^ ex- dividend date. If a shareholder purchases shares
immediately prior to ^ such date, the shareholder will, in effect, have "bought"
the distribution by paying 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^ and a corresponding fractional vote for each
fractional share owned. The Company 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 ^ Company'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>
INVESCO ^ Small Company Growth Fund
A no-load mutual fund seeking capital growth ^
from small-capitalization stocks.
PROSPECTUS
October 1, ^ 1997
To receive general information and prospectuses on any of ^ the INVESCO funds or
retirement plans, or to obtain current account or price information or responses
to other questions, call toll-free:
1-800-525-8085
To reach ^ PAL(R), your 24-hour Personal Account Line, call:
1-800-424-8085
You can find us on the World Wide Web:
http://www.invesco.com
Or write to:
INVESCO ^ Distributors. Inc., Distributor
Post Office Box 173706
Denver, Colorado 80217-3706
If you're in Denver, please 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 Company 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
October 1, ^ 1997
INVESCO EMERGING OPPORTUNITY FUNDS, INC.
INVESCO Small Company Growth Fund
Address: Mailing Address:
7800 East Union Avenue Post Office Box 173706
Denver, Colorado 80237 Denver, Colorado 80217-3706
Telephone:
In Continental U.S., 1-800-525-8085
- --------------------------------------------------------------------------------
INVESCO EMERGING OPPORTUNITY FUNDS, Inc. (the "Company") is an open-end,
diversified ^ investment management company currently consisting of one
portfolio of investments, INVESCO ^ Small Company Growth Fund (formerly, INVESCO
Emerging Growth Fund) (the "Fund"). Additional funds may be offered in the
future.
The Fund seeks long-term capital growth. It pursues this objective by
investing its assets principally in a diversified group of equity securities of
emerging growth companies with market capitalizations of $1 billion or less at
the time of initial purchase ("small cap companies"). In managing the Fund's
investments the Fund's investment adviser or sub-adviser seeks to identify
securities that are undervalued in the marketplace, and/or have earnings that
may be expected to grow faster than the U.S. economy in general. Under normal
circumstances, the Fund invests at least 65% of its total assets in the equity
securities of small cap companies (consisting of common and preferred stocks,
convertible debt securities, and other securities having equity features). The
balance of the Fund's assets may be invested in the equity securities of
companies with market capitalizations in excess of $1 billion, debt securities
and short-term investments. The Fund is designed for investors seeking long-term
capital appreciation with little or no current income.
<PAGE>
A Prospectus for the Fund, dated October 1, ^ 1997, which provides the
basic information you should know before investing in the Fund, may be obtained
without charge from INVESCO Funds Group, 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 with additional
information regarding the activities and operations of the Fund, 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 35
THE FUND AND ITS MANAGEMENT 46
HOW SHARES CAN BE PURCHASED 59
HOW SHARES ARE VALUED 63
FUND PERFORMANCE 64
SERVICES PROVIDED BY THE FUND 65
TAX-DEFERRED RETIREMENT PLANS 66
HOW TO REDEEM SHARES 66
DIVIDENDS, CAPITAL GAIN DISTRIBUTIONS, AND TAXES 67
INVESTMENT PRACTICES 69
ADDITIONAL INFORMATION 72
APPENDIX A 76
<PAGE>
INVESTMENT POLICIES AND RESTRICTIONS
As discussed in the Fund's Prospectus in the section entitled "Investment
Objective and Policies," the Fund may invest in a variety of securities, and
employ a broad range of investment techniques, in seeking to achieve its
investment objective. Such securities and techniques include the following:
Types of Equity Securities
As described in the Prospectus, equity securities which may be purchased
by the Fund consist of common, preferred and convertible preferred stocks, and
securities having equity characteristics such as rights, warrants and
convertible debt securities. Common stocks and preferred stocks represent equity
ownership interests in a corporation and participate in the corporation's
earnings through dividends which may be declared by the corporation. Unlike
common stocks, preferred stocks are entitled to stated dividends payable from
the corporation's earnings, which in some cases may be "cumulative" if prior
stated dividends have not been paid. Dividends payable on preferred stock have
priority over distributions to holders of common stock, and preferred stocks
generally have preferences on the distribution of assets in the event of the
corporation's liquidation. Preferred stocks may be "participating" which means
that they may be entitled to dividends in excess of the stated dividend in
certain cases. The rights of common and preferred stocks are generally
subordinate to rights associated with a corporation's debt securities. Rights
and warrants are securities which entitle the holder to purchase the securities
of a company (generally, its common stock) at a specified price during a
specified time period. Because of this feature, the values of rights and
warrants are affected by factors similar to those which determine the prices of
common stocks and exhibit similar behavior. Rights and warrants may be purchased
directly or acquired in connection with a corporate reorganization or exchange
offer.
Convertible securities which may be purchased by the Fund include
convertible debt obligations and convertible preferred stock. A convertible
security entitles the holder to exchange it for a fixed number of shares of
common stock (or other equity security), usually at a fixed price within a
specified period of time. Until conversion, the holder receives the interest
paid on a convertible bond or the dividend preference of a preferred stock.
Convertible securities have an "investment value" which is the theoretical
value determined by the yield they provide in comparison with similar securities
without the conversion feature. Investment value changes are based upon
prevailing interest rates and other factors. They also have a "conversion value"
which is the worth in market value if the security were exchanged for the
underlying equity security. Conversion value fluctuates directly
<PAGE>
with the price of the underlying security. If conversion value is substantially
below investment value, the price of the convertible security is governed
principally by its investment value. If the conversion value is near or above
investment value, the price of the convertible security generally will rise
above investment value and may represent a premium over conversion value due to
the combination of the convertible security's right to interest (or dividend
preference) and the possibility of capital appreciation from the conversion
feature. A convertible security's price, when price is influenced primarily by
its conversion value, generally will yield less than a senior non-convertible
security of comparable investment value. Convertible securities may be purchased
at varying price levels above their investment values or conversion values.
However, there is no assurance that any premium above investment value or
conversion value will be recovered because prices change and, as a result, the
ability to achieve capital appreciation through conversion may be eliminated.
Foreign Securities
As discussed in the section of the Fund's Prospectus entitled "Investment
Objective and Policies--Foreign Securities," the Fund may invest up to 25% of
its total assets, measured at the time of purchase, in foreign securities.
Securities of Canadian issuers and securities purchased by means of sponsored
American Depository Receipts ("ADRs") are not subject to this 25% limitation.
There is generally less publicly available information, reports and ratings
about foreign companies and other foreign issuers than that which is available
about companies and issuers in the United States. Foreign issuers are also
generally subject to fewer uniform accounting and auditing and financial
reporting standards, practices, and requirements as compared to those applicable
to United States issuers.
The Fund's investment adviser normally will purchase foreign securities in
over-the-counter ("OTC") markets or on exchanges located in the countries in
which the respective principal offices of the issuers of the various securities
are located, as such markets or exchanges are generally the best available
market for foreign securities. Foreign securities markets are generally not as
developed or efficient as those in the United States. While growing in volume,
they usually have substantially less volume than the New York Stock Exchange,
and securities of some foreign issuers are less liquid and more volatile than
securities of comparable United States issuers. Fixed commissions on foreign
exchanges are generally higher than negotiated commissions on United States
exchanges, although the Fund will endeavor to achieve the most favorable net
results on its portfolio transactions. There is generally less government
supervision and regulation of securities exchanges, brokers and listed issuers
than in the United States.
<PAGE>
With respect to certain foreign countries, there is the possibility of
adverse changes in investment or exchange control regulations, expropriation or
confiscatory taxation, limitations on the removal of funds or other assets of
the Fund, political or social instability, or diplomatic developments which
could affect United States investments in those countries. Moreover, the
economies of foreign countries may differ favorably or unfavorably from the
United States' economy in such respects as growth of gross national product,
rate of inflation, capital reinvestment, resource self-sufficiency and balance
of payment position.
The dividends and interest payable on certain of the Fund's foreign
portfolio securities may be subject to foreign withholding taxes, thus reducing
the net amount of income available for distribution to the Fund's shareholders.
Illiquid and 144A Securities
As discussed in the section of the Fund's Prospectus entitled "Investment
Objective and Policies," the Fund may invest in illiquid securities, including
restricted securities and other investments which are not readily marketable.
Restricted securities are securities which are subject to restrictions on resale
because they have not been registered under the Securities Act of 1933 (the
"1933 Act"). These limitations on resale and marketability may have the effect
of preventing the Fund from disposing of such a security at the time desired or
at a reasonable price. In addition, in order to resell a restricted security,
the Fund might have to bear the expense and incur the delays associated with
effecting registration. In purchasing restricted securities, the Fund does not
intend to engage in underwriting activities, except to the extent the Fund may
be deemed to be a statutory underwriter under the Securities Act in disposing of
such securities. Restricted securities will be purchased for investment purposes
only and not for the purpose of exercising control or management of other
companies.
The Fund also may invest in restricted securities that can be resold to
institutional investors pursuant to Rule 144A under the 1933 Act ("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. Institutional markets for Rule 144A Securities may provide both
readily ascertainable values for Rule 144A Securities and the ability to
<PAGE>
liquidate an investment in order to satisfy share redemption orders. An
insufficient number of qualified institutional buyers interested in purchasing a
Rule 144A Security held by the Fund, however, could adversely affect the
marketability of such security, and the Fund might be unable to dispose of such
security promptly or at reasonable prices.
The board of directors has delegated to Fund Management the authority to
determine whether a liquid market exists for securities eligible for resale
pursuant to Rule 144A under the 1933 Act, or any successor to such rule, and
whether such securities are subject to the Fund's restriction against investing
more than 10% of its total assets in illiquid securities. Under guidelines
established by the board of directors, Fund Management 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).
When-Issued and Delayed Delivery Securities
As discussed in the section of the Fund's Prospectus entitled "Investment
Objective and Policies," the Fund may purchase and sell securities on a
when-issued or delayed delivery basis. When-issued or delayed delivery
transactions arise when securities (normally, equity obligations of issuers
eligible for investment by the Fund) are purchased or sold by the Fund with
payment and delivery taking place in the future in order to secure what is
considered to be an advantageous price and yield. However, the yield on a
comparable security available when delivery takes place may vary from the yield
on the security at the time that the when-issued or delayed delivery transaction
was entered into. When the Fund engages in when-issued and delayed delivery
transactions, it relies on the seller or buyer, as the case may be, to
consummate the sale. Failure to do so may result in the Fund missing the
opportunity of obtaining a price or yield considered to be advantageous.
When-issued and delayed delivery transactions generally may be expected to
settle within one month from the date the transactions are entered into, but in
no event later than 90 days. However, no payment or delivery is made by the Fund
until it receives delivery or payment from the other party to the transaction.
To the extent that the Fund remains substantially fully invested at the
same time that it has purchased when-issued securities, as it would normally
expect to do, there may be greater fluctuations in its net assets than if the
Fund set aside cash to satisfy its purchase commitments.
<PAGE>
When the Fund purchases securities on a when-issued basis, it will
maintain in a segregated account cash, U.S. government securities or other
high-grade debt obligations readily convertible into cash having an aggregate
value equal to the amount of such purchase commitments, until payment is made.
If necessary, additional assets will be placed in the account daily so that the
value of the account will equal or exceed the amount of the Fund's purchase
commitments.
Repurchase Agreements
As discussed in the section of the Fund's Prospectus entitled "Investment
Objective and Policies," the Fund may invest in repurchase agreements with
commercial banks, registered brokers or registered government securities
dealers, which are believed to be creditworthy under standards established by
the Company's board of directors. A repurchase agreement is an agreement under
which the Fund acquires a debt instrument (generally a security issued by the
U.S. government or an agency thereof, a banker's acceptance or a certificate of
deposit) from a commercial bank, broker or dealer, subject to resale to the
seller at an agreed upon price and date (normally, the next business day). 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 the Fund and is unrelated to the interest rate on the
underlying instrument. In these transactions, the securities acquired by the
Fund (including accrued interest earned thereon) must have a total value ^ at
least 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. In
addition, the Company's board of directors monitors the Fund's repurchase
agreement transactions and has established guidelines and standards for review
by the investment adviser of the creditworthiness of any bank, broker or dealer
party to a repurchase agreement with the Fund. The Fund will not enter into
repurchase agreements maturing in more than seven days if as a result more than
10% of its total assets would be invested in such repurchase agreements and
other illiquid securities.
The use of repurchase agreements involves certain risks. For example, if
the other party to the agreement defaults on its obligation to repurchase the
underlying security at a time when the value of the security has declined, the
Fund may incur a loss upon disposition of the security. If the other party to
the agreement becomes insolvent and subject to liquidation or reorganization
under the Bankruptcy Code or other laws, a court may determine that the
underlying security is collateral for a loan by the Fund not within the control
of the Fund and therefore the realization by the Fund on such collateral may
automatically be stayed. Finally, it is possible that the Fund may not be able
to substantiate its interest in the underlying security and may be deemed an
<PAGE>
creditor of the other party to the agreement. While the Fund's management
acknowledges these risks, it is expected that they can be controlled through
careful monitoring procedures.
Lending of Securities
The Fund may lend its securities to qualified institutional investors who
need to borrow securities in order to complete certain transactions, such as
covering short sales, avoiding failures to deliver securities, or completing
arbitrage operations. By lending its securities, the Fund will be attempting to
generate income through the receipt of interest on the loan which, in turn, can
be invested in additional securities to pursue the Fund's investment objective.
Any gain or loss in the market price of the securities loaned that might occur
during the term of the loan would be for the account of the Fund. The Fund may
lend its portfolio securities to qualified brokers, dealers, banks or other
financial institutions, so long as the terms, structure and the aggregate amount
of such loans are not inconsistent with the Investment Company Act of 1940, as
amended (the "1940 Act") or the rules and regulations or interpretations of the
Securities and Exchange Commission (the "Commission") thereunder. Loans of
securities by the Fund 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, determined
on a daily basis. Cash collateral will be invested only in high quality
short-term investments offering maximum liquidity. Lending securities involves
certain risks, the most significant of which is the risk that a borrower may
fail to return a portfolio security. The Fund monitors the creditworthiness of
borrowers in order to minimize such risks. The Fund 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 Fund's total assets (taken at market value).
At the present time, the Fund may pay reasonable negotiated finder's fees
in connection with loaned securities, so long as such fees are set forth in a
written contract and approved by the Company's board of directors. In addition,
voting rights may pass with the loaned securities, but if a material event
(e.g., proposed merger, sale of assets, or liquidation) will occur affecting an
investment on loan, the loan must be called and the securities voted.
U.S. Government Obligations
These securities consist of treasury bills, treasury notes, and treasury
bonds, which differ only in their interest rates, maturities, and dates of
issuance. Treasury bills have a maturity of one year or less. Treasury notes
generally have a maturity of one to ten years, and treasury bonds generally have
maturities of more than ten years. As discussed in the Fund's Prospectus, U.S.
<PAGE>
government obligations also include securities issued or guaranteed by
agencies or instrumentalities of the U.S. government.
Some obligations of United States government agencies, which are
established under the authority of an act of Congress, such as Government
National Mortgage Association ("GNMA") participation certificates, are supported
by the full faith and credit of the United States Treasury. GNMA Certificates
are mortgage-backed securities representing part ownership of a pool of mortgage
loans. These loans -- issued by lenders such as mortgage bankers, commercial
banks and savings and loan associations -- are either insured by the Federal
Housing Administration or guaranteed by the Veterans Administration. A "pool" or
group of such mortgages is assembled and, after being approved by GNMA, is
offered to investors through securities dealers. Once approved by GNMA, the
timely payment of interest and principal on each mortgage is guaranteed by GNMA
and backed by the full faith and credit of the U.S. government. The market value
of GNMA Certificates is not guaranteed. GNMA Certificates differ from bonds in
that principal is paid back monthly by the borrower over the term of the loan
rather than returned in a lump sum at maturity. GNMA Certificates are called
"pass-through" securities because both interest and principal payments
(including prepayments) are passed through to the holder of the Certificate.
Upon receipt, principal payments will be used by the Fund to purchase additional
securities under its investment objective and investment policies.
Other United States government obligations, such as securities of the
Federal Home Loan Banks, are supported by the right of the issuer to borrow from
the Treasury to repay its obligations. Still others, such as bonds issued by the
Federal National Mortgage Association, a federally chartered private
corporation, are supported only by the credit of the instrumentality.
Obligations of Domestic Banks
These obligations consist of certificates of deposit ("CDs") and bankers'
acceptances issued by domestic banks (including their foreign branches) having
total assets in excess of $5 billion, which meet the Fund's minimum rating
requirements. CDs are issued against deposits in a commercial bank for a
specified period and rate and are normally negotiable. Eurodollar CDs are
certificates issued by a foreign branch (usually London) of a U.S. domestic
bank, and, as such, the credit is deemed to be that of the domestic bank.
Bankers' acceptances are short-term credit instruments evidencing the
promise of the bank (by virtue of the bank's "acceptance") to pay at maturity a
draft which has been drawn on it by a customer (the "drawer"). These instruments
are used to finance the import, export, transfer, or storage of goods and
<PAGE>
reflect the obligation of both the bank and the drawer to pay the face
amount.
Commercial Paper
These obligations are short-term promissory notes issued by domestic
corporations to meet current working capital requirements. Such paper may be
unsecured or backed by a bank letter of credit. Commercial paper issued with a
letter of credit is, in effect, "two party paper," with the issuer directly
responsible for payment, plus a bank's guarantee that if the note is not paid at
maturity by the issuer, the bank will pay the principal and interest to the
buyer. Commercial paper is sold either as interest-bearing or on a discounted
basis, with maturities not exceeding 270 days.
Options on Securities and Indices
As discussed in the section of the Fund's Prospectus entitled "Investment
Policies and Risks," the Fund may purchase and write options on securities and
indices. 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. The Fund will only
write options if they are covered.
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.
<PAGE>
In addition to purchasing and writing options on securities, the Fund may
purchase and write put and call options on stock indices. A stock index measures
the movement of a certain group of stocks by assigning relative values to the
common stocks included in the index. Options on stock indices are similar to
options on securities. However, because options on stock indices do not involve
the delivery of an underlying security, the option represents the holder's right
to obtain from the writer in cash a fixed multiple of the amount by which the
exercise price exceeds (in the case of a put) or is less than (in the case of a
call) the closing value of the underlying index on the exercise date.
Options on securities and indices 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 ("OCC") 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 Fund 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 Fund would have to
exercise the option in order to realize any profit. This would result in the
Fund 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 Fund as a
covered call option writer is unable to effect a closing purchase transaction in
a secondary market, unless the Fund 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
<PAGE>
or other reasons, decide or be compelled at some future date to discontinue
the trading of options (or a 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 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 such clearing corporation that they believe their
facilities will also be adequate to handle reasonably anticipated volume.
In addition, options on securities and indices may be traded
over-the-counter ("OTC") through financial institutions dealing in such options
as well as the underlying instruments. OTC options are purchased from or sold
(written) to dealers or financial institutions which have entered into direct
agreements with the Fund. With OTC options, such variables as expiration date,
exercise price and premium will be agreed upon between the Fund 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 Fund would lose the premium paid for the option as well as any
anticipated benefit of the transaction. The Fund will engage in OTC option
transactions only with primary U.S. Government securities dealers recognized by
the Federal Reserve Bank of New York.
Investment Restrictions. As described in the section of the Fund's
Prospectus entitled "Investment Policies and Risks," the Fund ^ operates under
certain ^ investment restrictions. ^ These restrictions^ are fundamental and may
not be changed without prior approval by the holders of a majority, as defined
in the 1940 Act, of the outstanding voting securities of the Fund. For purposes
of the following limitations, 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 Fund.
Under the Fund's fundamental investment restrictions, the Fund may not:
(1) sell short or buy on margin, except for the Fund's writing of put or
call options and except for such short-term credits as are necessary
for the clearance of purchases of securities;
<PAGE>
(2) issue senior securities as defined in the Investment Company Act of
1940 or borrow money, except that the Fund may borrow from banks in
an amount not in excess of 10% of the value of its total assets
(including the amount borrowed) less liabilities (not including the
amount borrowed) at the time the borrowing is made, as a temporary
measure for emergency purposes (the Fund will not purchase
securities while any such borrowings exist);
(3) 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;
(4) purchase the securities of any one issuer (other than U.S.
government securities) if as a result more than 5% of the value of
its total assets would be invested in the securities of any one
issuer or the Fund would own more than 10% of the voting securities
of such issuer;
(5) lend money or securities to any person, provided, however, that
this shall not be deemed to prohibit the purchase of debt
securities or entering into repurchase agreements in accordance
with the Fund's investment policies, or to prohibit the Fund from
lending portfolio securities in an amount up to 33-1/3% of the
Fund's total assets (taken at current value);
(6) buy or sell commodities, commodity contracts or real estate
(however, the Fund may purchase securities of companies investing in
real estate);
(7) invest in any company for the purpose of exercising control or
management;
(8) engage in the underwriting of any securities (except to the extent
the Fund may be deemed an underwriter under the Securities Act of
1933 in disposing of a security);
(9) 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, or in which all of the officers and
directors of the Fund and its investment adviser, as a group, own
more than 5% of such securities;
(10) invest more than 25% of the value of the Fund's assets in one
particular industry.
<PAGE>
(11) pledge, hypothecate, mortgage or otherwise encumber its
assets, except as necessary to secure permitted
borrowings;
(12) purchase oil, gas or other mineral leases, rights or royalty
contracts or development programs (except that the Fund may invest
in the securities of issuers engaged in the foregoing activities);
(13) purchase the securities (other than United States government
securities) of an issuer having a record, together with
predecessors, of less than three years' continuous operations, if as
a result of such purchase more than 5% of the value of the Fund's
total assets would be invested in such securities.
In applying restriction (10) above, the Fund uses an industry
classification system based on the O'Neil Database published by William O'Neil &
Co., Inc.
^
THE FUND AND ITS MANAGEMENT
The Company. The Company was incorporated under the laws of Maryland on
December 6, 1990. On December 2, 1994, the Company's name was changed from
"INVESCO Emerging Growth Fund, Inc." to "INVESCO Emerging Opportunity Funds,
Inc."
The Investment Adviser. INVESCO Funds Group, Inc.^, a Delaware Corporation
("IFG") is employed as the ^ Company'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 Multiple Asset Funds, Inc., INVESCO
Specialty Funds, Inc., INVESCO Strategic Portfolios, Inc., INVESCO Tax^-Free
Income Funds, Inc., INVESCO Value Trust and INVESCO Variable Investment Funds,
Inc.
^ IFG is an indirect wholly owned subsidiary 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 independent management businesses in
the world with approximately $165 billion in assets under management. IFG was
established in 1932 and as of May 31, 1997, managed 14 mutual funds, consisting
<PAGE>
of ^ 45 separate portfolios, on behalf of ^ over 859,000 shareholders. ^
AMVESCAP PLC's North American subsidiaries include the following:
--INVESCO Distributors, Inc. of Denver, Colorado is a registered
broker-dealer that acts as the principal underwriter for retail mutual funds.
--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 whose primary business is the
distribution of shares of two registered investment companies.
--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.
The Sub-Adviser. IFG, as investment adviser, has contracted with INVESCO
Trust Company ("INVESCO Trust") to provide investment advisory and research
services to the Fund. 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.
<PAGE>
As indicated in the 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 the Fund.
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 or INVESCO Trust.
Investment Advisory Agreement. ^ IFG serves as investment adviser to the
Fund pursuant to an investment advisory agreement dated February 28, 1997 (the
"Agreement") with the Company which was approved ^ by the board of directors on
November 6, 1996, by a vote cast in person by ^ a majority of the directors of
the Company, including ^ a majority of the directors who are not "interested
persons" of the Company or ^ IFG at a meeting called for such purpose. ^
Shareholders of the Fund approved the Agreement on January 31, 1997 for an
initial term ^ expiring February 28, 1999. Thereafter, the Agreement may be
continued from year to year ^ with respect to the Fund as long as each such
continuance is specifically approved at least annually by the board of directors
of the Company, or by a vote of the holders of a majority, as defined in the
1940 Act, of the outstanding shares of the Fund. ^ Any such continuance also
must be approved by a majority of the Company'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 or by 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.
<PAGE>
The Agreement provides that ^ IFG shall manage the investment portfolio of
the Fund in conformity with the Fund's 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 Company 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 Company 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 provided to the Company
under the Agreement, ^ IFG receives a monthly fee. The fee is ^ calculated daily
at an annual rate of 0.75% on the first $350 million of the Fund's average net
assets, 0.65% on the next $350 million of the Fund's average net assets, and
0.55% on the Fund's average net assets over $700 million. For the fiscal years
ended May 31, 1997, 1996^ and 1995 ^, the Fund paid ^ IFG advisory fees ^(prior
to the voluntary absorption of certain Fund expenses by IFG) of $2,029,312,
$1,572,230 and $1,370,549, respectively. ^
Sub-Advisory Agreement. INVESCO Trust serves as sub-adviser to the Fund
pursuant to a sub-advisory agreement dated February 28, 1997 (the
"Sub-Agreement") with ^ IFG which was approved ^ by the board of directors on
November 6, 1996, by a vote cast in person by ^ a majority of the directors of
the Company, including ^ a majority of the directors who are not "interested
persons" of the Company, ^ IFG, or INVESCO Trust at a meeting called for such
purpose. ^ Shareholders of the Fund approved the Sub-Advisory Agreement on
January 31, 1997, for an initial term ^ expiring February 28, 1999. Thereafter,
the Sub-Agreement may be continued from year to year as long as each such
continuance is specifically approved by the board of directors of the Company,
<PAGE>
or by a vote of the holders of a majority, as defined in the 1940 Act, of
the outstanding shares of the Fund. ^ Any 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 and the Company's board of directors, shall manage the investment
portfolio of the Fund in conformity with the Fund's investment policies. These
management services include: (a) managing the investment and reinvestment of all
the assets, now or hereafter acquired, of the Fund, and executing all purchases
and sales of portfolio securities; (b) maintaining a continuous investment
program for the Fund, consistent with (i) the Fund's investment policies as set
forth in the Company's Articles of Incorporation, Bylaws, and Registration
Statement, as from time to time amended, under the 1940 Act, and in any
prospectus and/or statement of additional information of the Company, as from
time to time amended and in use under the 1933 Act, and (ii) the Company'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 the Fund, unless otherwise directed by the directors of the Company or ^
IFG, and executing transactions accordingly; (d) providing the Fund the benefit
of all of the investment analysis and research, the reviews of current economic
conditions and trends, and the consideration of long-range investment policy now
or hereafter generally available to investment advisory customers of INVESCO
Trust; (e) determining what portion of the Fund should be invested in the
various types of securities authorized for purchase by the Fund; and (f) making
recommendations as to the manner in which voting rights, rights to consent to
Company action and any other rights pertaining to the portfolio securities of
the Fund shall be exercised.
The Sub-Agreement 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 Fund's net assets at the following annual rate: 0.25%
on the first ^ $200 million of the average net assets of the Fund and 0.20% on
the Fund's average net assets in excess of $200 million. The Sub-Advisory fees
are paid by ^ IFG, NOT the Fund.
Administrative Services Agreement. ^ IFG, either directly or through
affiliated companies, provides certain administrative, sub-accounting, and
recordkeeping services to the Fund pursuant to an Administrative Services
<PAGE>
Agreement dated ^ February 28, 1997 (the "Administrative Agreement"). The
Administrative Agreement was approved ^ by the board of directors on November 6,
1996, by a vote cast in person by ^ a majority of the directors of the Company,
including ^ a majority of the directors who are not "interested persons" of the
Company or ^ IFG at a meeting called for such purpose. The Administrative
Agreement was for an initial term of one year expiring ^ February 28, 1998, and
has been continued by action of the board of directors until ^ May 15, 1998. The
Administrative Agreement may be continued from year to year thereafter as long
as each such continuance is specifically approved by the board of directors of
the Company, 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 Company
upon thirty (30) days' written notice, and terminates automatically in the event
of an assignment unless the Company'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, which may be provided by affiliates of ^ IFG, 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 monthly fee to ^ IFG consisting of a base fee of
$10,000 per year, plus an additional incremental fee computed daily and paid
monthly at an annual rate of 0.015% per year of the average net assets of the
Fund.
^ During the fiscal years ended May 31, 1997, 1996^ and 1995 ^, the Fund
paid ^ IFG administrative services fees ^(prior to the voluntary absorption of
certain Fund expenses by ^ IFG) in the amount of $50,600, $41,467 and $37,411,
respectively.
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 the Company, including a majority of the Company's directors who
are not parties to the Transfer Agency Agreement or "interested persons" of any
such party, ^ on November 6, 1996, for an initial term expiring February 28,
1998 and has been extended by action of the board of directors until ^ May 15,
1998. Thereafter, the Transfer Agency Agreement may be continued from year to
year as long as such continuance is specifically approved at least annually by
<PAGE>
the board of directors of the Company or by a vote of the holders of a
majority of the outstanding shares of the Fund. Any such continuance also must
be approved by a majority of the Company'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.
The Transfer Agency Agreement provides that the Fund shall pay to ^ IFG an
annual fee of $20.00 per shareholder account or, where applicable, per
participant in an omnibus account ^ per year. This fee is paid monthly at 1/12
of the annual fee and is based upon the actual number of shareholder accounts ^
or omnibus account participants in existence at any time during each month.
^ During the fiscal years ended May 31, 1997, 1996^ and 1995 ^, the Fund
paid ^ IFG transfer agency fees of ^ $1,043,895, $668,624 and $635,770,
respectively.
Officers and Directors of the Company. The overall direction and
supervision of the Company is the responsibility of the board of directors,
which has the primary duty of seeing that the general investment policies and
programs of the Fund are carried out and that the ^ Fund's portfolio is properly
administered. The officers of the Company, all of whom are officers and
employees of, and are paid by, ^ IFG, are responsible for the day-to-day
administration of the Company and the Fund. The investment adviser for the Fund
has the primary responsibility for making investment decisions on behalf of the
Fund. These investment decisions are reviewed by the investment committee of ^
IFG.
All of the officers and directors of the Company hold comparable positions
with INVESCO Capital Appreciation Funds, Inc. (formerly INVESCO Dynamics Fund,
Inc.), INVESCO Diversified 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., and INVESCO Variable Investment Funds, Inc. All of
the directors of the Company also serve as trustees of INVESCO Value Trust. In
addition, all of the directors of the Company ^, with the exception of ^ Dan
Hesser, serve as trustees of INVESCO Treasurer's Series Trust. All of the
officers of the Company also hold comparable positions with INVESCO Value Trust.
Set forth below is information with respect to each of the Company's officers
and directors. Unless otherwise indicated, the address of the directors and
officers is Post Office Box 173706, Denver, Colorado 80217-3706.
<PAGE>
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 of 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 Univeristy;formerly, member of the 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.
<PAGE>
DANIEL D. CHABRIS,+# Director. Financial Consultant; Assistant Treasurer of
Colt Industries Inc., New York, New York, from 1966 to 1988. Address: 15
Sterling Road, Armonk, New York. 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, Kinetic Concepts, Inc., Independant 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 May 1996) and President
(January 1990 to April 1996) of INVESCO Services, Inc. ^; Chief ^ Executive
Officer of INVESCO Individual Services Group. 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.
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
<PAGE>
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 of 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 of INVESCO Distributors, Inc. (since 1997) 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 Company.
+Member of the executive committee of the Company. On occasion, the
executive committee acts upon the current and ordinary business of the Company
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 Company. All decisions are
subsequently submitted for ratification by the board of directors.
*These directors are "interested persons" of the Company as defined in the
1940 Act.
**Member of the management liaison committee of the Company.
<PAGE>
As of ^ September 22, 1997, the officers and directors of the Company, as a
group, beneficially owned less than 1% of the Company's outstanding shares and
less than 1% of the Fund's outstanding shares.
Director Compensation
The following table sets forth, for the fiscal year ended May 31, ^ 1997:
the compensation paid by the Company to its eight independent directors for
services rendered in their capacities as directors of the Company; the benefits
accrued as Company 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
Company. In addition, the table sets forth the total compensation paid by all of
the mutual funds distributed by INVESCO ^ Distributors, Inc. (including the
Company), 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 Company effective May 15, 1997. Dr. Gramm became an independent
director of the Company effective July 29, 1997 and is not included in the table
below.
Total
Retirement Compensa-
Benefits Estimated tion From
Aggregate Accrued As Annual INVESCO
Compensa- Part of Benefits Complex
tion From Company Upon Paid To
Company(1) Expenses(2) Retirement(3) Directors(1)
Fred A.Deering, ^ $1,819 $582 $567 $98,850
Vice Chairman of
the Board
Victor L. Andrews ^ 1,767 550 656 84,350
Bob R. Baker ^ 1,815 491 880 84,850
Lawrence H. Budner ^ 1,721 550 656 80,350
Daniel D. Chabris 1,782 628 467 84,850
A. D. Frazier (4) 795 0 0 81,500
Kenneth T. King 1,519 605 514 71,350
<PAGE>
John W. McIntyre 1,699 0 0 90,350
Larry Soll 318 0 0 17,500
------- ------ ------ --------
Total $13,235 $3,406 $3,740 $693,950
% of Net Assets 0.0046%(5) 0.0012%(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 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 Company'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
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, 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
Company. 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 Company or other
funds in the INVESCO Complex ^ for his service as a director.
^ (5)Totals as a percentage of the Company's net assets as of May 31, ^
1997.
^ (6)Total as a percentage of the net assets of the INVESCO Complex as of
December 31, ^ 1996.
<PAGE>
Messrs. Brady, Harris and Hesser, as "interested persons" of the Company
and other funds in the INVESCO Complex, receive compensation as officers or
employees of ^ IFG or its affiliated companies, and do not receive any
director's fees or other compensation from the Company or other funds in the
INVESCO Complex for their services 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 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 payment 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 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 to his beneficiary or estate. If a qualified director becomes disabled or
dies either prior to age 72 or during his/her 74th year while still a director
of the funds, the director will not be entitled to receive the first year
retirement benefit; however, the reduced retainer payments will be made to his
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 ^ IFG and
Treasurer's Series Trust funds in a manner determined to be fair and equitable
by the committee. The Company is not making any payments to directors under the
plan as of the date of this Statement of Additional Information. The Company 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 Company has an audit committee which is comprised of ^ five of the
directors who are not interested persons of the Company. The committee meets
periodically with the Company's independent accountants and officers to review
accounting principles used by the Company, the adequacy of internal controls,
<PAGE>
the responsibilities and fees of the independent accountants, and other
matters.
The Company 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 Company, 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
Shares of the Fund are sold on a continuous basis at the net asset value
per share of the Fund next calculated after receipt of a purchase order in good
form. The net asset value per share is computed 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 Company under
which it receives no compensation and bears all expenses, including the costs of
printing and distributing prospectuses, incident to marketing of the Fund's
shares, except for such distribution expenses which are paid out of Fund assets
under the Company's Plan of Distribution which has been adopted by the Company
in accordance with Rule 12b-1 under the 1940 Act.
Distribution Plan. As ^ described in the section of the Fund's Prospectus
entitled "How To Buy Shares - Distribution Expenses," the Company 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, 1990. The Plan provides that the
Fund may make monthly payments to ^ IDI of amounts computed at an annual rate no
greater than 0.25% ^ of the Fund's average net assets to ^ permit IDI, at its
discretion, to engage in certain activities and provide services in connection
with the distribution of the ^ Fund's shares to investors. Payment amounts by
the Fund under the Plan, for any month, may ^ be made to compensate IDI for
permissible activities engaged in and services provided by IDI during the
rolling 12-month period in which that month falls^. For the fiscal year ended
May 31, ^ 1997 the Fund made payments to ^ IFG (the predecessor of IDI,
distributor of shares of the Fund) under the 12b-1 Plan (prior to the voluntary
absorption of certain Fund expenses by IFG) in the amount of $694,164. In
addition, as of May 31, ^ 1997, $57,316 of additional distribution ^ accruals
had been incurred under the Plan for the Fund and will be paid to IDI during the
fiscal year ended May 31, 1998. As noted in the Prospectus, one type of payable
expenditure 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
<PAGE>
services for the ^ Funds. Each Fund 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 the Fund 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 Company does 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 the Fund possibly could
decrease to the extent that the banks would no longer invest customer assets in
the Fund. Neither the Company 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 the Fund.
For the ^ fiscal year ended May 31, ^ 1997, allocations of 12b-1 amounts
paid by the Fund for the following categories of expenses were: advertising -- ^
$219,007; sales literature, printing^ and postage -- ^ $116,212; direct mail --
^ $34,056; public relations/promotion -- ^ $15,383; compensation to securities
dealers and other organizations -- ^ $189,178; marketing personnel --^ $120,328.
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 Company's Transfer Agent computer-processable tapes of the Fund's
transactions by customers, serving as the primary source of information to
customers in answering questions concerning the Fund, and assisting in other
customer transactions with the Fund.
The initial Plan was approved on April 24, 1991, at a meeting called for
such purpose by a majority of the directors of the Company, including a majority
of the directors who neither are "interested persons" of the Company nor have
any financial interest in the operation of the Plan ("12b-1 directors"). ^ This
Plan was approved by ^ IFG on December 31, 1991^ and by the public shareholders
^ on May 24, 1993. ^ The Plan was continued by action of the board of directors
^ until May 15, 1998. The board of directors, on February 4, 1997, approved
amending the Plan to a compensation type 12b-1 plan. This amendment of the Plan
will not result in increasing the amount of the Fund's payments thereunder.
Pursuant to authorization granted by the Company's board of directors on
September 2, 1997, a new Plan became effective on September 29, 1997, under
which IDI assumes all obligations related to distribution from IFG.
<PAGE>
The Plan provides that it shall continue in effect with respect to the Fund
for so long as such continuance is approved at least annually by the vote of the
board of directors^ of the Company 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 the Fund, without penalty, if a majority of the 12b-1
directors, or shareholders of the Fund, vote to terminate the Plan. The Company
may, in its absolute discretion, suspend, discontinue or limit the offering of ^
its shares of the Fund 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 the Fund, the investment climate for
the Fund, general market conditions, and the volume of sales and redemptions of
^ the Fund'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 the Fund's shares; however, the ^ Fund is not contractually
obligated to continue the Plan for any particular period of time. Suspension of
the offering of the Fund's shares would not, of course, affect a shareholder's
ability to redeem his or her shares. So long as the Plan is in effect, the
selection and nomination of persons to serve as independent directors of the
Company 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 the Fund's payments thereunder without approval of the
shareholders of the Fund, and all material amendments to the Plan must be
approved by the board of directors of the Company, including a majority of the
12b-1 directors. Under the agreement implementing the Plan, ^ IDI or the Fund,
the latter by vote of a majority of the 12b-1 directors, or of the holders of a
majority of the Fund's outstanding voting securities, may terminate such
agreement as to the Fund without penalty upon 30 days' written notice to the
other party. No further payments will be made by the Fund under the Plan in the
event of its termination as to the Fund.
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 the Fund'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 a plan, the Fund's obligation to make payments to ^ IDI shall
terminate automatically, in the event of ^ such "assignment," in which ^ case
the Fund 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.
<PAGE>
Information regarding the services rendered under the Plan and the amounts
paid therefor by the Fund 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 directors or interested persons, as that term is defined in
Section 2(a)(19) of the 1940 Act, of the Company who have a direct or indirect
financial interest in the operation of the Plan are the officers and directors
of the Company listed ^ herein under the section entitled "The Fund And Its
Management-- Officers and Directors of the Company" who are also officers either
of ^ IFG or companies affiliated with ^ IFG. The benefits which the Company
believes will be reasonably likely to flow to ^ it and its 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 ^
objective of the Fund;
(2) The sale of additional shares reduces the likelihood that redemption
of shares will require the liquidation of securities of the Fund in
amounts and at times that are disadvantageous for investment
purposes;
(3) The positive effect which increased Fund assets will have on its
revenues could allow ^ IDI and its affiliated companies:
(a) To have greater resources to make the financial commitments
necessary to improve the quality and level of the Fund's
shareholder services (in both systems and personnel),
(b) To increase the number and type of mutual funds available to
investors from ^ IDI 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 Fund 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.
<PAGE>
HOW SHARES ARE VALUED
As described in the section of the Fund's Prospectus entitled "How To Buy
Shares ^," the net asset value of shares 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 the Fund that the current net asset value per share of
the Fund 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. 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
the Fund is calculated by dividing the value of all securities held by the Fund
^ plus its other assets (including dividends and interest accrued but not
collected), less the Fund's liabilities (including accrued expenses), by the
number of outstanding shares of the Fund.
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 sale prices are not available, and listed securities for which no sales
were reported on a particular date, are valued at their highest closing bid
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 board of directors or pursuant to procedures adopted by 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 Company's board of directors reviews the
methods used by such service to assure itself that securities will be valued at
their fair values. The Company'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 Fund, 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. Since 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
<PAGE>
the Fund's net asset value. However, in the event that the closing price of
a foreign security is not available in time to calculate the Fund's net asset
value on a particular day, the Company'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
initially 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 Fund's Prospectus^ entitled "Fund Price and
Performance," the Company advertises the total return performance of the Fund.
Average annual total return performance for the Fund for the one- and five-year
^ periods ended May 31, ^ 1997 and the period December 27, 1991 (commencement of
operations of the Fund) to May 31, ^ 1997 (life of the Fund), was ^(7.08%),
18.08% and ^ 16.45%, respectively. ^ Average annual total return performance is
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)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 are determined
by solving the above formula for "T" for ^ each time period indicated.
In conjunction with performance reports, comparative data between the
Fund's performance for a given period and other types of investment vehicles,
including certificates of deposit, may be provided to prospective investors and
shareholders.
From time to time, evaluations of performance made by independent sources
may also be used in advertisements, sales literature or shareholder reports,
including reprints of, or selections from, editorials or articles about the
Fund. Sources for Fund performance information and articles about the Fund
include, but are not limited to, the following:
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
<PAGE>
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
The Wall Street Journal
Wiesenberger Investment Companies Services
Working Woman
Worth
SERVICES PROVIDED BY THE FUND
Periodic Withdrawal Plan. As described in the section of the Fund'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.
^ 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 the Fund's Prospectus
entitled ^"How To Buy Shares -- Exchange Policy," the Fund offers shareholders
the ^ ability to exchange 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
<PAGE>
written request to INVESCO Funds Group, Inc. 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 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 Fund's Prospectus entitled ^"How To Buy
Shares -- Retirement Plans and IRAs," shares of a Fund 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
the Fund'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 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 by order so permits.
It is possible that in the future conditions may exist which would, in the
opinion of the Company's investment adviser, make it undesirable for the Fund to
<PAGE>
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 Company is obligated under the 1940 Act to redeem for cash
all shares of the Fund presented for redemption by any one shareholder having a
value up to $250,000 (or 1% of the Fund'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
Fund and its shareholders, and are valued at the value assigned to them in
computing the Fund's net asset value per share. Shareholders receiving such
securities are likely to incur brokerage costs on their subsequent sales of the
securities.
DIVIDENDS, CAPITAL GAIN DISTRIBUTIONS, AND TAXES
The Fund intends 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 Fund so qualified in the fiscal year ended May 31, 1996,
and intends to qualify during the current fiscal 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, including the dividends eligible for the
dividends-received deduction for corporations. Such amounts will be limited to
the aggregate amount of qualifying dividends which the Fund derives from its
portfolio investments.
Distributions by the Fund of net capital gain (the excess of 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. Such distributions are
identified as such and are not eligible for the dividends-received deduction.
All dividends and other distributions are regarded as taxable to the
investor, whether or not such dividends and distributions are reinvested in
additional shares. If the net asset value of the shares of the Fund should be
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. The net asset value of shares of the Fund
reflects accrued net investment income and undistributed realized capital and
<PAGE>
foreign currency gain; therefore, when a distribution is made, the net
asset value is reduced by the amount of the distribution. 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.
Dividends and interest received by the Fund may give rise to withholding
and other taxes imposed by foreign countries. Tax treaties between certain
countries and the United States may reduce or eliminate such taxes.
^ 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 INVESCO nor the Company
recommends any particular method of determining cost basis. Other methods may
result in different tax consequences. If a shareholder has reported gains or
losses ^ with respect to shares of a Fund 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 the Fund's 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 gain distributions received on those shares.
The Fund will be subject to a nondeductible 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 capital gain net income for the one-year
period ending on October 31 of that year, plus certain other amounts.
Dividends and interest received by the Fund 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. If more than 50% of the value of
the Fund'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 Internal Revenue Service that will enable its shareholders, in effect,
to receive the benefit of the foreign tax credit with respect to any foreign and
<PAGE>
U.S. possessions income taxes paid by it. The Fund will report to its
shareholders shortly after each taxable year their respective shares of the
Fund's income from sources within, and taxes paid to, foreign countries and U.S.
possessions if it makes this election.
The Fund may invest in the stock of "passive foreign investment companies"
(PFICs"). A PFIC is a 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, the Fund 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 Fund distributes the PFIC income as
a taxable dividend to its shareholders. The balance of the PFIC income will be
included in the Fund's investment company taxable income and, accordingly, will
not be taxable to it to the extent that income is distributed to its
shareholders.
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
the Fund accrues interest, dividends or other receivables or accrues expenses or
other liabilities denominated in a foreign currency and the time the Fund
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 Fund'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 the portfolio
turnover of the Fund. The rate of portfolio turnover can fluctuate under
constantly changing economic conditions and market circumstances. Securities
initially satisfying the basic policies and objectives of the Fund may be
disposed of when they are no longer suitable. Brokerage costs to the Fund are
commensurate with the rate of portfolio activity. The portfolio turnover rates
<PAGE>
for the Fund for the fiscal years ended May 31, 1997, 1996 and 1995, were
216%, 221% and 228%, respectively. 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 Fund during the fiscal year.
Placement of Portfolio Brokerage. Either ^ IFG, as the Company's
investment adviser, or INVESCO Trust, as the Company'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 their financial responsibility,
subject to their ability to effect transactions at the best available prices. ^
IFG or INVESCO Trust evaluates the overall reasonableness of brokerage
commissions or underwriting discounts (the difference between the full
acquisition price to acquire the new offering and the discount offered to
members of the underwriting syndicate) paid by reviewing the quality of
executions obtained on portfolio transactions of the Fund, 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
the commissions or discounts charged the Fund are consistent with prevailing and
reasonable commissions^ or discounts, IFG and INVESCO Trust also endeavor to
monitor brokerage industry practices with regard to the commissions or discounts
charged by brokers and dealers on transactions effected for other comparable
institutional investors. While ^ IFG and INVESCO Trust seek reasonably
competitive rates, the Fund does not necessarily pay the lowest commission,
discount or spread 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 Fund effects securities
transactions may be used by ^ IFG or INVESCO Trust in servicing all of their
accounts and not all such services may be used by ^ IFG or INVESCO Trust in
connection with the Fund.
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 on which the commissions are in excess of those which other brokers might
have charged for effecting the same transactions.
<PAGE>
Portfolio transactions may be effected through qualified ^ broker-dealers
who recommend the Fund to their clients, or who act as agent in the purchase of
the Fund's shares for their clients. When a number of brokers and dealers can
provide comparable best price and execution on a particular transaction, the
Company's adviser or sub-adviser may consider the sale of Fund shares by a
broker or dealer in selecting among qualified ^ broker-dealers.
Certain financial institutions (including brokers who may sell shares of
the Funds, or affiliates of such brokers) are paid a fee (the "Services Fee")
for recordkeeping, shareholder communications and other services provided by the
brokers to investors purchasing shares of the Funds 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 Fund made in the name of such NTF Program
Sponsor and held in omnibus accounts maintained on behalf of investors
participating in the NTF Program. With respect to certain NTF Programs, the
Company's directors ^ have authorized the Funds to apply dollars generated from
the Company's Plan and Agreement of Distribution pursuant to Rule 12b-1 under
the 1940 Act (the "Plan") to pay the entire Services Fee, subject to the maximum
Rule 12b-1 fee permitted by the Plan. With respect to other NTF Programs, the
Company's directors have authorized each Fund to pay transfer agency fees to ^
IDI based on the number of investors who have beneficial interests in the NTF
Program Sponsor's omnibus accounts in that Fund. ^ IDI, 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, the directors of the
Company have authorized the Funds to apply dollars generated from the Plan to
pay the remainder of the Services Fee, subject to the maximum Rule 12b-1 fee
permitted by the Plan. ^ IDI itself pays the portion of a Fund's Services Fee,
if any, that exceeds the sum of the sub-transfer agency or recordkeeping fee and
Rule 12b-1 fee. The Company's directors have further authorized ^ IDI to place a
portion of each Fund's brokerage transactions with certain NTF Program Sponsors
or their affiliated brokers, if ^ IDI 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 a specific Fund may be credited by the NTF Program Sponsor against its
Services Fee. Such credit shall be applied first against any sub-transfer agency
or recordkeeping fee payable with respect to that Fund, and second against any
Rule 12b-1 fees used to pay a portion of the Services Fee, on a basis which has
<PAGE>
resulted from negotiations between ^ 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
a Fund to INVESCO with respect to investors who have beneficial interests in a
particular NTF Program Sponsor's omnibus accounts in that Fund exceeds the
Services Fee applicable to that Fund, after application of credits, ^ IDI 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 Company. The Company's board of directors
has also authorized the Company to pay to ^ IFG the full Rule 12b-1 fees
contemplated by the Plan ^ to compensate IDI for expenses incurred by ^ IDI in
engaging in the activities and providing the services on behalf of the
respective Funds contemplated by the Plan, subject to the maximum Rule 12b-1 fee
permitted by the Plan, notwithstanding that credits have been applied to reduce
the portion of the 12b-1 fee that would have been used to ^ compensate IFG for
payments to such NTF Program Sponsor absent such credits.
The aggregate dollar amounts of brokerage commissions paid by the Fund for
the fiscal years ended May 31, 1997, 1996^ and 1995 ^ were $2,518,857,
$3,987,784^ and $1,223,859, ^ respectively. ^ During the fiscal year ended May
31, ^ 1997, brokers providing research services received ^ $314,447 in
commissions on portfolio transactions effected for the Fund. The aggregate
dollar amount of such portfolio transactions was ^ $134,573,729. Commissions of
^ $6,900 were allocated to certain brokers in recognition of their sales of
shares of the Fund on portfolio transactions of the Fund effected during the
fiscal year ended May 31, ^ 1997.
At May 31, ^ 1997, the Fund held securities of its regular brokers or
dealers, or their parents, as follows:
Value of Securities
Broker or Dealer at ^ 5/31/97
- ---------------- -------------------
^ State Street Capital Markets 6,639,000.00
^ 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 or INVESCO Trust, or any person affiliated with ^ IFG
or INVESCO Trust, or the Fund and any broker or dealer that executes
transactions for the Fund.
ADDITIONAL INFORMATION
Common Stock. The Company was incorporated with 600,000,000 authorized
shares of common stock, with a par value of $0.01 per share. Of the Company's
authorized shares, 200,000,000 shares have
<PAGE>
been allocated to the Fund. As of May 31, ^ 1997, 22,950,475 shares of the Fund
were outstanding. The board of directors has the authority to designate
additional series of common stock without seeking the approval of shareholders,
and may classify and reclassify any authorized but unissued shares.
Shares of each series represent the interests of the shareholders of such
series in a particular portfolio of investments of the Company. Each series of
the Company's shares is preferred over all other series ^ with respect ^ to the
assets specifically allocated to that series, and all income, earnings, profits
and proceeds from such assets, subject only to the rights of creditors, are
allocated to shares of that series. The assets of each series are segregated on
the books of account and are charged with the liabilities of that series and
with a share of the Company's general liabilities. The board of directors
determines those assets and liabilities deemed to be general assets or
liabilities of the Company, and these items are allocated among series in a
manner deemed by the board of directors to be fair and equitable. Generally,
such allocation will be made based upon the relative total net assets of each
series. In the unlikely event that a liability allocable to one series exceeds
the assets belonging to the series, all or a portion of such liability may have
to be borne by the holders of shares of the Company's other series.
All dividends on shares of a particular series shall be paid only out of
the income belonging to that series, pro rata to the holders of that series. In
the event of the liquidation or dissolution of the Company or of a particular
series, the shareholders of each series that is being liquidated shall be
entitled to receive, as a series, when and as declared by the board of
directors, the excess of the assets belonging to that series over the
liabilities belonging to that series. The holders of shares of any series shall
not be entitled to any distribution upon liquidation of any other series. The
assets so distributable to the shareholders of any particular series shall be
distributed among such shareholders in proportion to the number of shares of
that series held by them and recorded on the books of the Company.
All shares, regardless of series, have equal voting rights. Voting with
respect to certain matters, such as ratification of independent accountants or
election of directors, will be by all series of the Company. 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 fund's investment policies, only shareholders
of the series affected by the matter may be entitled to vote. Company 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
<PAGE>
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. They may appoint
their own successors, provided that always at least a majority of the directors
have been elected the Company's shareholders. It is the intention of the Company
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 Company's Articles of Incorporation, or at their
discretion.
Principal Shareholders. As of ^ August 31, 1997, the following entities
held more than 5% of the Fund's outstanding equity securities.
Class and
Amount and Nature Percent
Name and Address of Ownership of Class
- ---------------- ----------------- ---------
Connecticut General Life Ins. 4,417,474.9430 20.598%
c/o Liz Pezda M-110
P.O. Box 2975
Hartford, CT 06104
Charles Schwab & Co. Inc. ^ 687,276.1550 12.781%
^ 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
Company. The independent accountants are responsible for auditing the financial
statements of the Company.
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 Company. 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.
Transfer Agent. The Company is provided with transfer agent, registrar, and
dividend disbursing agent services by INVESCO Funds Group, Inc., 7800 E. Union
Avenue, Denver, Colorado 80237, pursuant to the Transfer Agency Agreement
described in "The Fund and Its Management." Such services include the issuance,
<PAGE>
cancellation, and transfer of shares of the Fund, and the maintenance of
records regarding the ownership of such shares.
Reports to Shareholders. The Company's fiscal year ends on May 31. The
Company distributes reports at least semiannually to its shareholders. Financial
statements regarding the Company, 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 Company. The firm of Moye, Giles, O'Keefe, Vermeire &
Gorrell, Denver, Colorado, acts as special counsel to the Company.
Financial Statements. The Company's following audited financial statements
^ and the notes thereto for the fiscal year ended May 31, ^ 1997, and the report
of Price Waterhouse LLP with respect to such financial statements, are
incorporated herein by reference from the Company's Annual Report to
Shareholders for the fiscal year ended May 31, ^ 1997.
Prospectus. The Company will furnish, without charge, a copy of the Fund's
Prospectus upon request. Such requests should be made to the Company 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
related Prospectus do not contain all of the information set forth in the
Registration Statement the Company 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
BOND RATINGS
The following is a description of ^ the Moody's and S&P bond rating
categories:
Moody's ^ Corporate Bond Ratings
Aaa - Bonds rated Aaa are judged to be of the best quality. They carry the
smallest degree of investment risk and are generally referred to as
"gilt-edged." Interest payments are protected by a large or by an exceptionally
stable margin, and principal is secure. While the various protective elements
are likely to change, such changes as can be visualized are most unlikely to
impair the fundamentally strong position of such issues.
Aa - Bonds rated Aa are judged to be of high quality by all standards.
Together with the Aaa group, they comprise what are generally known as high
grade bonds. They are rated lower than the best bonds because margins of
protection may not be as large as in Aaa securities or fluctuation of protective
elements may be of greater amplitude or there may be other elements present
which make the long term risk appear somewhat larger than in Aaa securities.
A - Bonds rated A possess many favorable investment attributes, and are to
be considered as upper medium grade obligations. Factors giving security to
principal and interest are considered adequate but elements may be present which
suggest a susceptibility to impairment sometime in the future.
Baa - Bonds rated Baa are considered as medium grade obligations, i.e.,
they are neither highly protected nor poorly secured. Interest payments and
principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and in
fact have speculative characteristics as well.
Ba - Bonds rated Ba are judged to have speculative elements. Their future
cannot be considered as well assured. Often the protection of interest and
principal payments may be very moderate and thereby not well safeguarded during
both good and bad times over the future. Uncertainty of position characterizes
bonds in this class.
B - Bonds rated B generally lack characteristics of the desirable
investment. Assurance of interest and principal payments or maintenance of other
terms of the contract over any longer period of time may be small.
<PAGE>
Caa - Bonds rated Caa are of poor standing. Such issues may be in default
or there may be present elements of danger with respect to principal or
interest.
^ S&P Corporate Bond Ratings
AAA - This is the highest rating assigned by ^ S&P to a debt obligation
and indicates an extremely strong capacity to pay principal and interest.
AA - Bonds rated AA also qualify as high-quality debt obligations.
Capacity to pay principal and interest is very strong, and in the majority of
instances they differ from AAA issues only in small degree.
A - Bonds rated A have a strong capacity to pay principal and interest,
although they are somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions than bonds in higher rated categories.
BBB - Bonds rated BBB are regarded as having an adequate capability to pay
principal and interest. Whereas they normally exhibit adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay principal and interest for bonds in
this category than for bonds in higher rated categories.
BB - Bonds rated BB have less near-term vulnerability to default than
other speculative issues. However, they face major ongoing uncertainties or
exposure to adverse business, financial, or economic conditions which could lead
to inadequate capacity to meet timely interest and principal payments.
B - Bonds rated B have a greater vulnerability to default but currently
have the capacity to meet interest payments and principal repayments. Adverse
business, financial, or economic conditions will likely impair capacity or
willingness to pay interest and repay principal.
CCC - Bonds rated CCC have a currently identifiable vulnerability to
default and are dependent upon favorable business, financial, and economic
conditions to meet timely payment of interest and repayment of principal. In the
event of adverse business, financial, or economic conditions, they are not
likely to have the capacity to pay interest and repay principal.
<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 9
^ five years ended May 31, ^ 1997 and the
period from commencement of the Fund's
operations (December 27, 1991) until
May 31, 1992.
(2) The following audited financial
statements of the ^ Company and the
notes thereto for the fiscal year
ended May 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 Company's
Annual Report to Shareholders for
the fiscal year ended May 31, ^
1997: Statement of Investment
Securities as of May 31, ^ 1997;
Statement of Assets and Liabilities
as of May 31, ^ 1997; Statement of
Operations for the year ended May
31, ^ 1997; Statement of Changes in
Net Assets for each of the two
years in the period ended May 31, ^
1997; Financial Highlights for each
of the ^ five years in the period
ended May 31, 1997.
(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 Incorporation
(Charter)(2)
<PAGE>
(a) Amendment to Articles of
Incorporation, filed December
6, ^ 1990.(2)
(b) Amendment to Articles of
Incorporation, filed December
23, ^ 1991.(2)
(c) Amendment to Articles of
Incorporation, filed June 28,
^ 1993.(2)
(d) Articles of Amendment of
Articles of Incorporation,
filed December 2, ^ 1994.(2)
(e) Articles of Amendment of
Articles of Incorporation,
filed January 20, ^ 1995.(2)
(f) Articles Supplementary to
Articles of Incorporation,
filed July 7, ^ 1995.(2)
(2) Bylaws, as amended July 21, ^
1993.(2)
(3) Not applicable.
(4) ^ Not required to be filed on
EDGAR.
(5) (a) Investment Advisory Agreement
Between Registrant and INVESCO
Funds Group, Inc. dated ^
February 28, 1997.
^
(b) Sub-Advisory Agreement Between
INVESCO Funds Group, Inc. and
INVESCO Trust Company dated ^
February 28, 1997.
^(6) (a) General Distribution Agreement
Between Registrant and INVESCO
Funds Group, Inc. dated ^
February 28, 1997.
(b) Form of General Distribution
Agreement between Registrant and
INVESCO Distributors, Inc.
<PAGE>
(7) Defined Benefit Deferred
Compensation Plan for Non-
Interested Directors and Trustees.
(8) Amended and Restated Custodian
Contract Between Registrant and
State Street Bank and Trust Company
dated August 31, 1995.(2)
(a) Amendment to Custody Agreement
dated October 25, 1995.
(b) Data Access Service Addendum
dated May 19, 1997.
(9) (a) Transfer Agency Agreement
Between Registrant and INVESCO
Funds Group, Inc. dated
February 28, 1997. ^
(b) Administrative Services
Agreement Between Registrant
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 was
filed with the Securities and Exchange
Commission on or about July 22, 1997,
pursuant to Rule 24f-2 and herein
incorporated by reference.
(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
<PAGE>
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. (File No.
33-63498), filed May 27, 1993, and herein
incorporated by reference.
(15) Plan and Agreement of Distribution
^ pursuant to Rule 12b-1
under the Investment Company Act
of ^ 1940 dated April 30,
1991.(1)
(a) Amendment of Plan and
Agreement of Distribution
Pursuant to Rule 12b-1 dated
July 19, ^ 1995.(1)
(b) Amended Plan and Agreement of
Distribution between Applicant
and INVESCO Funds Group, Inc.
adopted pursuant to Rule 12b-1
under the Investment Company
Act of 1940 dated January 1,
1997.
(c) Form of Amended Plan and
Agreement of Distribution
between Applicant and INVESCO
Distributors, Inc. adopted
pursuant to Rule 12b-1 under
the Investment Company Act of
1940 dated -------------, 1997.
(16) Schedule for computation of
performance ^ data.
(17) ^ Financial Data Schedule for the
fiscal year ended May 31, 1997 for
the Small Company Growth Fund. ^
(18) Not Applicable.
(1)Previously filed on EDGAR with ^ Post-Effective Amendment No. ^ 6 to the
Registrant's Registration Statement on ^ September 5, 1995, and incorporated
herein by reference.
(2)Previously filed on EDGAR with Post-Effective Amendment No. ^ 7 to the ^
Registrant's Registration Statement on ^ Form N-1A on July 23, 1996, and
incorporated herein by reference.
<PAGE>
Item 25. Persons Controlled by or Under Common Control With
Registrant
No person is presently controlled by or under common control with
Registrant.
Item 26. Number of Holders of Securities
Number of Record
Holders as of
Title of Class August 30, ^ 1997
-------------- -----------------
^ Small Company Growth Fund 25,560
Item 27. Indemnification
Indemnification provisions for officers, directors and employees of
Registrant are set forth in Article VII, Section 2 of the Articles of
Incorporation and are hereby incorporated by reference. See Item 24(b)(1) above.
Under this Article, officers and directors 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 1940 Act and the rules
thereunder. Under the 1940 Act, directors and officers of the Company cannot be
protected against liability to the Company 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 Company 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 Prospectus and in
the 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 Schedule Ds to 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
(a) INVESCO Capital Appreciation Funds, Inc.
INVESCO Diversified 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.
<PAGE>
(b)
Positions and Positions and
Name and Principal Offices with Offices with
Business Address Underwriter Registrant
- ------------------ ------------- --------------
^
Charles W. Brady Chairman of
1315 Peachtree St. NE the Board
Atlanta, GA 30309
^ Frederick W. Braley Chief Financial
^ 400 Colony Square, Suite 2200 Officer and
^ 1201 Peachtree St., N.E. Treasurer
^ Atlanta, GA 30361
Scott P. Brogan Senior Vice
400 Colony Square, Suite 2200 President
1201 Peachtree St., N.E.
Atlanta, GA 30361
Darryl Celkupa Vice President
7800 E. Union Avenue
^ Denver, CO 80237
Rayane S. Clark Vice President -
400 Colony Square, Suite 2200 Defined Contribu-
1201 Peachtree St., N.E. tions, Operations
Atlanta, GA 30361
M. Anthony Cox Senior Vice
1315 Peachtree St., N.E. President
Atlanta, GA 30309
^ Robert D. Cromwell Regional Vice
7800 E. Union Avenue President
Denver, CO 80237
^ Mary Ann Dallenbach Senior Vice
^ 400 Colony Square, Suite 2200 President
^ 1201 Peachtree St., N.E.
^ Atlanta, GA 30361
<PAGE>
Positions and Positions and
Name and Principal Offices with Offices with
Business Address Underwriter Registrant
- ------------------ ------------- -------------
Douglas P. Dohm Regional Vice
400 Colony Square, Suite 2200 President
1201 Peachtree St., N.E.
Atlanta, GA 30361
William J. Galvin, Jr. Sr. Vice Assistant ^
7800 E. Union Avenue President Secretary
Denver, CO 80237
Ronald L. Grooms Sr. Vice Treasurer,
7800 E. Union Avenue President & Chief Fin'l
Denver, CO 80237 Treasurer Officer, and
Chief Acctg.
Off. ^
Hubert L. Harris, Jr. Director Director
1315 Peachtree Street^ NE
Atlanta, GA 30309
Dan J. Hesser Chairman of the President ^,
7800 E. Union Avenue Board, President, ^ CEO & Dir.
Denver, CO 80237 Chief Executive
Officer, & Director
^ Thomas M. Hurley Vice President
7800 E. Union Avenue
^ Denver, CO 80237
^ Gregory E. Hyde Vice President
7800 E. Union Avenue
Denver, CO 80237
Joseph B. Jennings Senior Vice
400 Colony Square, Suite 2200 President
1201 Peachtree St., N.E.
Atlanta, GA 30361
<PAGE>
Positions and Positions and
Name and Principal Offices with Offices with
Business Address Underwriter Registrant
- ------------------ -------------- --------------
Mark A. Jones Senior Vice
400 Colony Square, Suite 2200 President
1201 Peachtree St., N.E.
Atlanta, GA 30361
Jeraldine E. Kraus Assistant Secretary
7800 E. Union Avenue
Denver, CO 80237
Michael D. Legoski Assistant Vice
7800 E. Union Avenue President
Denver, CO 80237
^ James F. Lummanick Vice President;
7800 E. Union Avenue ^ Assistant
Denver, CO 80237 General Counsel
Barbara L. March Senior Vice
400 Colony Square, Suite 2200 President
1201 Peachtree St., N.E.
Atlanta, GA 30361
Charles P. Mayer Director
7800 E. Union Avenue
Denver, CO 80237
Robert J. O'Connor Director
^ 1201 Peachtree Street NE
Atlanta, GA ^ 30361
^
Laura M. Parsons Vice President
7800 E. Union Avenue
Denver, CO 80237
Glen A. Payne Sr. Vice Secretary
7800 E. Union Avenue President,
Denver, CO 80237 Secretary &
General Counsel
<PAGE>
Positions and Positions and
Name and Principal Offices with Offices with
Business Address Underwriter Registrant
- ------------------ -------------- --------------
^ Kent Schmeckpepper Assistant Vice
7800 E. Union Avenue President
Denver, CO 80237
^ Terri Berg Smith Vice President
7800 E. Union Avenue
Denver, CO 80237
^ Tane T. Tyler Asst. Vice
7800 E. Union Avenue President^
Denver, CO 80237
Alan I. Watson Vice President Asst. Sec.
7800 E. Union Avenue
Denver, CO 80237
Judy P. Wiese Vice President Asst. Treas.
7800 E. Union Avenue
Denver, CO 80237
Allyson B. Zoellner Vice President
7800 E. Union Avenue
Denver, CO ^ 80239
(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 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 Company
or as may be required by applicable law or the
Company's Articles of Incorporation, and to assist
shareholders in communicating with other
<PAGE>
shareholders as required by the Investment Company
Act of 1940.
(b) 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.
(c)^ Insofar as indemnification for liability arising
under the Securities Act of 1933 may be permitted
to directors, officers and controlling persons of
the Registrant pursuant to the foregoing
provisions, or otherwise, the Registrant has been
advised that in the opinion of the Securities and
Exchange Commission such indemnification is against
public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a
claim for indemnification against such liabilities
(other than the payment by the Registrant of
expenses incurred or paid by a director, officer or
controlling person of the Registrant in the
successful defense of any action, suit or
proceeding) is asserted by such director, officer
or controlling person in connection with the
securities being registered, the Registrant will,
unless in the opinion of its counsel the matter has
been settled by controlling precedent, submit to a
court of appropriate jurisdiction the question
whether such indemnification by it is against
public policy as expressed in the Act and will be
governed by the final adjudication of such issue.
<PAGE>
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the registrant certifies that it meets all of
the requirements for effectiveness of this Registration Statement pursuant to
Rule 485(b) under the Securities Act of 1933 and 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 ^ 26th day of ^ September, 1997.
Attest: INVESCO EMERGING OPPORTUNITY
FUNDS, INC.
/s/ Glen A. Payne /s/ Dan J. Hesser
-----------------------------------
/s/ Glen A. Payne Dan J. Hesser, President
- -------------------------------
Glen A. Payne, Secretary
Pursuant to the requirements of the Securities Act of 1933, this
post-effective amendment to Registrant's Registration Statement has been signed
by the following persons in the capacities indicated on this ^ 26th day of ^
September, 1997.
/s/ Dan J. Hesser /s/ Lawrence H. Budner
- ------------------------------------ -----------------------------------
Dan J. Hesser, President & Director Lawrence H. Budner, 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
- ------------------------------------ ------------------------------------
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
/s/ Glen A. Payne
By*--------------------------------- By*---------------------------------
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 (with the exception of Wendy L. Gramm and Larry Soll) have
been filed with the Securities and Exchange Commission on May 22, 1992, June 9,
1992, October 13, 1992, July 26, 1994, June 27, 1995, July 12, 1995 ^, September
5, 1995 and July 23, 1996.
<PAGE>
Exhibit Index
-------------
Page in
Exhibit Number Registration Statement
- -------------- ----------------------
^ 5(a) 91
5(b) 97
6(a) 102
6(b) 110
7 119
8(a) 125
8(b) 126
9(a) 142
9(b) 156
11 160
15(b) 161
15(c) 166
16 171
17 172
99.POAGRAMM 173
99.POASOLL 174
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 Emerging Opportunity Funds, 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
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 (the "Shares"), which is divided
into separate series, each representing an interest in a separate portfolio of
investments (such series initially being the INVESCO Emerging Growth Fund); 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, 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;
(b) to maintain a continuous investment program for the Fund, consistent
with (i) the Fund's 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, 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,
unless otherwise directed by the Directors of the Fund, and to execute
transactions accordingly;
(d) to provide to the Fund 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;
(e) to determine what portion of the Fund should be invested in common
stocks, preferred stocks, Government obligations, commercial paper,
certificates of deposit, bankers' acceptances, variable amount notes,
corporate debt obligations, and any other authorized securities;
<PAGE>
(f) to make recommendations as to the manner in which voting rights,
rights to consent to Fund action and any other rights pertaining to the
Fund's portfolio securities shall be exercised; and
(g) to calculate the net asset value of the Fund, as applicable, as
required by the 1940 Act, subject to such procedures as may be established
from time to time by the Fund's Directors, based upon the information
provided to the Adviser of the Fund or by the custodian, co-custodian or
sub-custodian of the Fund's assets (the "Custodian") or such other source as
designated by the Directors from time to time.
With respect to execution of transactions for the Fund, the Adviser shall
place, or arrange for the placement of, all orders for the purchase or sale of
portfolio securities with brokers or dealers selected by the Adviser. In
connection with the selection of such brokers or dealers and the placing of such
orders, the Adviser is directed at all times to obtain for the Fund the most
favorable execution and price; after fulfilling this primary requirement of
obtaining the most favorable execution and price, the Adviser is hereby
expressly authorized to consider as secondary factor in selecting brokers or
dealers with which such orders may be placed whether such firms furnish
statistical, research and other information or services to the Adviser. Receipt
by the Adviser of any such statistical or other information and services should
not be deemed to give rise to any requirement for adjustment of the advisory fee
payable pursuant to paragraph 4 hereof. The Adviser may follow a policy of
considering sales of shares of the Fund as a factor in the selection of
broker/dealers to execute portfolio transactions, subject to the requirements of
best execution discussed above.
The Adviser shall for all purposes herein provided be deemed to be an
independent contractor.
2. Allocation of Costs and Expenses. The Adviser shall reimburse the Fund
monthly for any salaries paid by the Fund to officers, Directors, and full-time
employees of the Fund who also are officers, general partners or employees of
the Adviser or its affiliates. Except for such subaccounting, recordkeeping, and
administrative services which are to be provided by the Adviser to the Fund
under the Administrative Services Agreement between the Fund and the Adviser
dated April 30, 1991, which was approved on April 24, 1991, by the Fund's board
of directors, including all of the independent directors, at the Fund's request
the Adviser shall also furnish to the Fund, at the expense of the Adviser, such
competent executive, statistical, administrative, internal accounting and
clerical services as may be required in the judgment of the Directors of the
Fund. These services will include, among other things, the maintenance (but not
preparation) of the Fund's accounts and records, and the preparation (apart from
legal and accounting costs) of all requisite corporate documents such as tax
returns and reports to the Securities and Exchange Commission and Fund
shareholders. The Adviser also will furnish, at the Adviser's expense, such
office space, equipment and facilities as may be reasonably requested by the
Fund from time to time.
Except to the extent expressly assumed by the Adviser herein and except to
the extent required by law to be paid by the Adviser, the Fund shall pay all
costs and expenses in connection with the operations and organization of the
Fund. Without limiting the generality of the foregoing, such costs and expenses
payable by the Fund include the following:
<PAGE>
(a) all brokers' commissions, issue and transfer taxes, 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;
(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 its shares under laws administered by the
Securities and Exchange Commission or under other applicable regulatory
requirements, including the preparation and printing of prospectuses and
statements of additional information;
(f) the compensation and expenses of its Directors;
(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;
(i) the expenses of repurchasing and redeeming shares of the Fund;
(j) insurance premiums;
(k) the costs of designing, printing, and issuing certificates
representing shares of beneficial interest of the Fund;
(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; and
(o) the expenses, if any, of distributing shares of the Fund paid by the
Fund pursuant to a Plan and Agreement of Distribution adopted under Rule
12b-1 of the Investment Company Act of 1940.
<PAGE>
3. 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.
4. 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 on a daily basis and paid
as of the last day of each month, using for each daily calculation the most
recently determined net asset value of the Fund, as determined by 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 annual
rate of 0.75% on the first $350 million of the Fund's average daily net assets
as so determined, 0.65% of the next $350 million of the Fund's average daily net
assets, and 0.55% of the Fund's average daily net assets over $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 4, 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 Adviser with respect to any assets
of the Fund 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 the Fund's expenses exceeds the most
restrictive state imposed annual expense limitation, the Adviser will be
required to reimburse the Fund 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 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.
5. Avoidance of Inconsistent Positions and Compliance with Laws. In
connection with purchase or sales of securities for the investment portfolio of
the Fund, neither the Adviser not its officers or employees will act as a
principal or agent for any party other than the Fund 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.
6. 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
<PAGE>
Fund, 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 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, 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.
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 4 earned prior to such termination.
7. 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. 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 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 obligation to the Fund and the Adviser's other customers.
8. Liability. The Adviser shall have no liability to the Fund or to the
Fund's shareholders or creditors, for any error of judgment, mistake of law, or
for any loss arising out of any investment, nor for any other act or omission,
in the performance of its obligations to the Fund not involving willful
misfeasance, bad faith, gross negligence or reckless disregard of its
obligations and duties hereunder.
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.
<PAGE>
Amendments Hereof. 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 Adviser, and no material amendment of 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 the Fund; provided, however,
that this paragraph shall not prevent any immaterial amendment(s) to this
Agreement, which amendment(s) may be made without shareholder approval, if such
amendment(s) are made with the approval of (1) the Directors and (2) a majority
of the Directors of the Fund who are not interested persons of the Adviser or
the Fund.
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.
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 EMERGING OPPORTUNITY FUNDS, INC.
By:/s/ Dan J. Hesser
-------------------------------
President
ATTEST:
/s/ Glen A. Payne
- --------------------------------
Secretary
INVESCO FUNDS GROUP, INC.
By: /s/ Ron L. Grooms
-----------------------------
Senior Vice President
ATTEST:
/s/ Glen A. Payne
- ---------------------------------
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").
WITNESSETH:
WHEREAS, INVESCO EMERGING OPPORTUNITY FUNDS, 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 (the "Shares"), which
is divided into separate series, each representing an interest in a separate
portfolio of investments; 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
Fund (the "INVESCO Investment Advisory Agreement"), pursuant to which INVESCO is
required to provide investment advisory services to the Fund, and, upon receipt
of written approval of the Fund, 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 Fund 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
Fund 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, subject to the supervision of the Fund's directors (the "Directors") and
INVESCO. Specifically, the Sub-Adviser agrees to perform the following services:
(a) to manage the investment and reinvestment of all the assets, now or
hereafter acquired, of the Fund, and to execute all purchases and sales of
portfolio securities;
<PAGE>
(b) to maintain a continuous investment program for the Fund, consistent
with (i) the Fund's 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, 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,
unless otherwise directed by the Directors of the Fund or INVESCO, and to
execute transactions accordingly;
(d) to provide to the Fund the benefit of all of the investment analysis
and research, the reviews of current economic conditions and trends, and the
consideration of long-range investment policy now or hereafter generally
available to investment advisory customers of the Sub-Adviser;
(e) to determine what portion of the Fund should be invested in the
various types of securities authorized for purchase by the Fund; and
(f) to make recommendations as to the manner in which voting rights,
rights to consent to Fund action and any other rights pertaining to the
Fund's portfolio securities shall be exercised.
With respect to execution of transactions for the Fund, the Sub-Adviser is
authorized to employ such brokers or dealers as may, in the Sub-Adviser's best
judgment, implement the policy of the Fund to obtain prompt and reliable
execution at the most favorable price obtainable. In assigning an execution or
negotiating the commission to be paid therefor, the Sub-Adviser is authorized to
consider the full range and quality of a broker's services which benefit the
Fund, including but not limited to research and analytical capabilities,
reliability of performance, and financial soundness and responsibility. Research
services prepared and furnished by brokers through which the Sub-Adviser effects
securities transactions on behalf of the Fund may be used by the Sub-Adviser in
servicing all of its accounts, and not all such services may be used by the Sub-
Adviser in connection with the Fund. In the selection of a broker or dealer for
execution of any negotiated transaction, the Sub-Adviser shall have no duty or
obligation to seek advance competitive bidding for the most favorable negotiated
commission rate for such transaction, or to select any broker solely on the
basis of its purported or "posted" commission rate for such transaction,
provided, however, that the Sub-Adviser shall consider such "posted" commission
rates, if any, together with any other information available at the time as to
the level of commissions known to be charged on comparable transactions by other
qualified brokerage firms, as well as all other relevant factors and
circumstances, including the size of any contemporaneous market in such
securities, the importance to the Fund of speed, efficiency, and confidentiality
of execution, the execution capabilities required by the circumstances of the
particular transactions, and the apparent knowledge or familiarity with sources
from or to whom such securities may be purchased or sold. Where the commission
rate reflects services, reliability and other relevant factors in addition to
the cost of execution, the Sub-Adviser shall have the burden of demonstrating
that such expenditures were bona fide and for the benefit of the Fund.
<PAGE>
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.
ARTICLE III
COMPENSATION OF THE SUB-ADVISER
For the services rendered, facilities furnished, and expenses assumed by the
Sub-Adviser, INVESCO shall pay to the Sub-Adviser a fee, computed daily and paid
as of the last day of each month, using for each daily calculation the most
recently determined net asset value of the Fund, as determined by a valuation
made in accordance with the Fund's procedures for calculating its net asset
value as described in the Fund's Prospectus and/or Statement of Additional
Information. The advisory fee to the Sub-Adviser shall be computed at the annual
rate of 0.25% of the Fund's daily net assets up to $200 million, and 0.20% of
the Fund's daily net assets in excess of $200 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 Article III, be deemed
to be the net asset value at the close of each succeeding business day until it
is again determined. However, no such fee shall be paid to the Sub-Adviser with
respect to any assets of the Fund which may be invested in any other investment
company for which the Sub-Adviser serves as investment adviser or sub-adviser.
The fee provided for hereunder shall be prorated in any month in which this
Agreement is not in effect for the entire month. The Sub-Adviser shall be
entitled to receive fees hereunder only for such periods as the INVESCO
Investment Advisory Agreement remains in effect.
ARTICLE IV
ACTIVITIES OF THE SUB-ADVISER
The services of the Sub-Adviser to the Fund are not to be deemed to be
exclusive, the Sub-Adviser and any person controlled by or under common control
with the Sub-Adviser (for purposes of this Article V referred to as
"affiliates") being free to render services to others. It is understood that
directors, officers, employees and shareholders of the Fund are or may become
interested in the Sub-Adviser and its affiliates, as directors, officers,
employees and shareholders or otherwise and that directors, officers, employees
and shareholders of the Sub-Adviser, INVESCO and their affiliates are or may
become interested in the Fund as directors, officers and employees.
<PAGE>
ARTICLE V
AVOIDANCE OF INCONSISTENT POSITIONS AND
COMPLIANCE WITH APPLICABLE LAWS
In connection with purchases or sales of securities for the investment
portfolio of the Fund, neither the Sub-Adviser nor any of its directors,
officers or employees will act as a principal or agent for any party other than
the Fund or receive any commissions. The Sub-Adviser will comply with all
applicable laws in acting hereunder including, without limitation, the 1940 Act;
the Investment Advisers Act of 1940, as amended; and all rules and regulations
duly promulgated under the foregoing.
ARTICLE VI
DURATION AND TERMINATION OF THIS AGREEMENT
This Agreement shall become effective as of the date it is approved by a
majority of the outstanding voting securities of the Fund, 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 Fund, or by the vote of a majority of the outstanding
voting securities of the Fund, and (ii) a majority of those Directors who are
not parties to this Agreement or interested persons of any such party cast in
person at a meeting called for the purpose of voting on such approval.
This Agreement may be terminated at any time, without the payment of any
penalty, by INVESCO, the Fund by vote of the Directors of the Fund, or by vote
of a majority of the outstanding voting securities of the Fund, or by the Sub-
Adviser. A termination by INVESCO or the Sub-Adviser shall require sixty days'
written notice to the other party and to the Fund, 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 an annual basis as may reasonably be necessary to evaluate the terms
of this Agreement.
Termination of this Agreement shall not affect the right of the Sub-Adviser
to receive payments on any unpaid balance of the compensation described in
Article III hereof earned prior to such termination.
ARTICLE VII
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 his 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 the Fund (other than an amendment which can be effective
without shareholder approval under applicable law).
<PAGE>
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.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the date first above written.
INVESCO FUNDS GROUP, INC.
By:/s/ Ronald L. Grooms
-----------------------------
Senior Vice President
ATTEST:
/s/ Glen A. Payne
--------------------------
Secretary
INVESCO TRUST COMPANY
By: /s/ Dan J. Hesser
---------------------------
President
ATTEST:
/s/ Glen A. Payne
-------------------------------
Secretary
DISTRIBUTION AGREEMENT
THIS AGREEMENT is made this 28th day of February, 1997 between INVESCO
EMERGING OPPORTUNITY FUNDS, 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 two 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.
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,
<PAGE>
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
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
<PAGE>
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 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
<PAGE>
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 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
<PAGE>
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
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
<PAGE>
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 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
<PAGE>
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.
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 EMERGING OPPORTUNITY
FUNDS, 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
DISTRIBUTION AGREEMENT
THIS AGREEMENT is made this ----- day of --------, 1997 between INVESCO
EMERGING OPPORTUNITY FUNDS, INC., a Maryland corporation (the "Fund"), and
INVESCO DISTRIBUTORS, 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 two 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
<PAGE>
utilize theservices of other persons or entities believed by it to
be competent 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 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
<PAGE>
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 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
<PAGE>
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
<PAGE>
will reimburse the Fund, its 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 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
<PAGE>
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.
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 EMERGING OPPORTUNITY
FUNDS, INC.
ATTEST:
By:
------------------------------
Dan J. Hesser
President
- ---------------------------
Glen A. Payne
Secretary
INVESCO DISTRIBUTORS, INC.
ATTEST:
By:
------------------------------
Ronald L. Grooms
Senior Vice President
- ---------------------------
Glen A. Payne
Secretary
DEFINED BENEFIT DEFERRED COMPENSATION PLAN
FOR NON-INTERESTED DIRECTORS AND TRUSTEES
The registered, open-end management investment companies referred to on
Schedule A as the Schedule may hereafter be revised by the addition and deletion
of investment companies (the "Funds") have adopted this Defined Benefit Deferred
Compensation Plan ("Plan") for the benefit of those directors and trustees of
the Funds who are not interested directors or trustees thereof as defined in
Section 2(a)(19) of the Investment Company Act of 1940, as amended ("Independent
Directors").
1. Eligibility
Each Independent Director who has served as such ("Eligible Service") on
the boards of any of the Funds and their predecessor and successor entities, if
any, or as an Independent Director of the now-defunct investment management
company known as FG Series for an aggregate of at least five years at the time
of his Service Termination Date (as defined in paragraph 2) will be entitled to
receive benefits under the Plan. An Independent Director's period of Eligible
Service commences on the date of election to the board of directors or trustees
of any one or more of the Funds ("Board"). Hereafter, references in this Plan to
Independent Directors shall be deemed to include only those Directors who have
met the Eligible Service requirement for Plan participation.
2. Service Termination and Service Termination Date
a. Service Termination. Service Termination means termination of service
(other than by disability or death) of an Independent Director which results
from the Director's having reached his Service Termination Date.
b. Service Termination Date. An Independent Director's Service Termination
Date is normally the last day of the calendar quarter in which such Director's
seventy-second birthday occurs. A majority of the Board of a Fund may annually
extend a Director's Service Termination Date for a maximum period of three
years, through the date not later than the last day of the calendar quarter in
which such Director's seventy-fifth birthday occurs.
As used in this Plan unless otherwise stipulated, Service Termination Date
shall mean an Independent Director's normal Service Termination Date, or the
Director's extended Service Termination Date, whichever may be applicable to the
Independent Director.
3. Defined Payments and Benefit
a. Payments. If an Independent Director's Service Termination Date occurs
on a date not later than the last day of the calendar quarter in which such
Director's seventy-fourth birthday occurs, the Independent Director will receive
four quarterly payments during the first twelve months subsequent to his Service
Termination Date (the "First Year Retirement Payments"), with each payment to be
equal to 25 percent of the annual basic retainer payable by each Fund to the
Independent Director on his Service Termination Date (excluding any fees
relating to attending meetings or chairing committees).
<PAGE>
b. Benefit. Commencing with the first anniversary of the Service
Termination Date of any Independent Director who has received the First Year
Retirement Payments, and commencing as of the Service Termination Date of an
Independent Director whose Service Termination Date is subsequent to the date of
the last day of the calendar quarter in which such Director's seventy-fourth
birthday occurred, the Independent Director will receive, for the remainder of
his life, a benefit (the "Benefit"), payable quarterly, with each quarterly
payment to be equal to 10 percent of the annual basic retainer payable by each
Fund to the Independent Director on his Service Termination Date (excluding any
fees relating to attending meetings or chairing committees).
c. Death Provisions. If an Independent Director's service as a Director is
terminated because of his death subsequent to the last day of the calendar
quarter in which such Director's seventy-second birthday occurred and prior to
the last day of the calendar quarter in which such Director's seventy-fourth
birthday occurs, the designated beneficiary of the Independent Director shall
receive the First Year Retirement Payments and shall, commencing with the
quarter following the quarter in which the last First Year Retirement Payment is
made, receive the Benefit for a period of ten years, with quarterly payments to
be made to the designated beneficiary.
If an Independent Director's service as a Director is terminated because
of his death prior to the last day of the calendar quarter in which such
Director's seventy-second birthday occurs or subsequent to the last day of the
calendar quarter in which such Director's seventy-fourth birthday occurred, the
designated beneficiary of the Independent Director shall receive the Benefit for
a period of ten years, with quarterly payments to be made to the designated
beneficiary commencing in the first quarter following the Director's death.
d. Disability Provisions. If an Independent Director's service as a
Director is terminated because of his disability subsequent to the last day of
the calendar quarter in which such Director's seventy-second birthday occurred
and prior to the last day of the calendar quarter in which such Director's
seventy-fourth birthday occurs, the Independent Director shall receive the First
Year Retirement Payments and shall, commencing with the quarter following the
quarter in which the last First Year Retirement Payment is made, receive the
Benefit for the remainder of his life, with quarterly payments to be made to the
disabled Independent Director. If the disabled Independent Director should die
before the First Year Retirement Payments are completed and before forty
quarterly Benefit payments are made, such payments will continue to be made to
the Independent Director's designated beneficiary until the aggregate of the
First Year Retirement Payments and forty quarterly Benefit payments have been
made to the disabled Independent Director and the Director's designated
beneficiary.
If an Independent Director's service as a Director is terminated because
of his disability prior to the last day of the calendar quarter in which such
Director's seventy-second birthday occurs or subsequent to the last day of the
calendar quarter in which such Director's seventy-fourth birthday occurred, the
Independent Director shall receive the Benefit for the remainder of his life,
with quarterly payments to be made to the disabled Independent Director
commencing in the first quarter following the Director's termination for
<PAGE>
disability. If the disabled Independent Director should die before forty
quarterly payments are made, payments will continue to be made to the
Independent Director's designated beneficiary until the aggregate of forty
quarterly payments has been made to the disabled Independent Director and the
Director's designated beneficiary.
e. Death of Independent Director and Beneficiary. If the Independent
Director and his designated beneficiary should die before the First Year
Retirement Payments and/or a total of forty quarterly Benefit payments are made,
the remaining value of the Independent Director's First Year Retirement Payments
and/or Benefit shall be determined as of the date of the death of the
Independent Director's designated beneficiary and shall be paid to the estate of
the designated beneficiary in one lump sum or in periodic payments, with the
determinations with respect to the value of the First Year Retirement Payments
and/or Benefit and the method and frequency of payment to be made by the
Committee (as defined in paragraph 8.a.) in its sole discretion.
4. Designated Beneficiary
The beneficiary referred to in paragraph 3 may be designated or changed by
the Independent Director without the consent of any prior beneficiary on a form
provided by the Committee (as defined in paragraph 8.a.) and delivered to the
Committee before the Independent Director's death. If no such beneficiary shall
have been designated, or if no designated beneficiary shall survive the
Independent Director, the value or remaining value of the Independent Director's
First Year Retirement Payments and/or Benefit shall be determined as of the date
of the death of the Independent Director by the Committee and shall be paid as
promptly as possible in one lump sum to the Independent Director's estate.
5. Disability
An Independent Director shall be deemed to have become disabled for the
purposes of paragraph 3 if the Committee shall find on the basis of medical
evidence satisfactory to it that the Independent Director is disabled, mentally
or physically, as a result of an accident or illness, so as to be prevented from
performing each of the duties which are incumbent upon an Independent Director
in fulfilling his responsibilities as such.
6. Time of Payment
The First Year Retirement Payments and/or the Benefit for each year will
be paid in quarterly installments that are as nearly equal as possible.
7. Payment of First Year Retirement Payments and/or Benefit: Allocation of
Costs
Each Fund is responsible for the payment of the amount of the First Year
Retirement Payments and/or Benefit applicable to the Fund, as well as its
proportionate share of all expenses of administration of the Plan, including
without limitation all accounting and legal fees and expenses and fees and
expenses of any Actuary. The obligations of each Fund to pay such First Year
Retirement Payments and/or Benefit and expenses will not be secured or funded in
any manner, and such obligations will not have any preference over the lawful
<PAGE>
claims of each Fund's creditors and shareholders. To the extent that the First
Year Retirement Payments and/or Benefit is paid by more than one Fund, such
costs and expenses will be allocated among such Funds in a manner that is
determined by the Committee to be fair and equitable under the circumstances. To
the extent that one or more of such Funds consist of one or more separate
portfolios, such costs and expenses allocated to any such Fund will thereafter
be allocated among such portfolios by the Board of the Fund in a manner that is
determined by such Board to be fair and equitable under the circumstances.
8. Administration
a. The Committee. Any question involving entitlement to payments under or
the administration of the Plan will be referred to a four-person committee (the
"Committee") composed of three Independent Directors designated by all of the
Independent Directors of the Funds and one director of the Funds who is not an
Independent Director, designated by the non-Independent Directors. Except as
otherwise provided herein, the Committee will make all interpretations and
determinations necessary or desirable for the Plan's administration, and such
interpretations and determinations will be final and conclusive. Committee
members will be elected annually.
b. Powers of the Committee. The Committee will represent and act on behalf
of the Funds in respect of the Plan and, subject to the other provisions of the
Plan, the Committee may adopt, amend or repeal bylaws or other regulations
relating to the administration of the Plan, the conduct of the Committee's
affairs, its rights or powers, or the rights or powers of its members. The
Committee will report to the Independent Directors and to the Boards of the
Funds from time to time on its activities in respect of the Plan. The Committee
or persons designated by it will cause such records to be kept as may be
necessary for the administration of the Plan.
9. Miscellaneous Provisions
a. Rights Not Assignable. Other than as is specifically provided in
paragraph 3, the right to receive any payment under the Plan is not transferable
or assignable, and nothing in the Plan shall create any benefit, cause of
action, right of sale, transfer, assignment, pledge, encumbrance, or other such
right in any heirs or the estate of any Independent Director.
b. Amendment, etc. The Committee, with the concurrence of the Board of any
Fund, may as to the specific Fund at any time amend or terminate the Plan or
waive any provision of the Plan; provided, however, that subject to the
limitations imposed by paragraph 7, no amendment, termination or waiver will
impair the rights of an Independent Director to receive the payments which would
have been made to such Independent Director had there been no such amendment,
termination, or waiver.
c. No Right to Reelection. Nothing in the Plan will create any obligation
on the part of the Board of any Fund to nominate any Independent Director for
reelection.
d. Consulting. Subsequent to his Service Termination Date, an Independent
Director may render such services for any Fund, for such compensation, as may be
agreed upon from time to time by such Independent Director and the Board of the
Fund which desires to procure such services.
<PAGE>
e. Effectiveness. The Plan will be effective for all Independent Directors
who have Service Termination Dates occurring on and after October 20, 1993.
Periods of Eligible Service shall include periods commencing prior and
subsequent to such date. Upon its adoption by the Board of a Fund, the Plan will
become effective as to that Fund on the date when the Committee determines that
any regulatory approval or advice that may be necessary or appropriate in
connection with the Plan have been obtained.
Adopted October 20, 1993. Amended October 19, 1994.
Amended May 1, 1996, effective July 1, 1996.
<PAGE>
SCHEDULE A
TO
DEFINED BENEFIT DEFERRED COMPENSATION PLAN
FOR NON-INTERESTED DIRECTORS AND TRUSTEES
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.
The INVESCO Advisor Funds, Inc.
INVESCO Treasurer's Series Trust
AMENDMENT TO CUSTODIAN CONTRACT
Agreement made by and between State Street Bank and Trust Company (the
"Custodian") and INVESCO Emerging Opportunity Funds (the "Fund").
WHEREAS, the Custodian and the Fund are parties to a custodian contract
dated August 31, 1995 (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 bookentry
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 in its name and behalf by its duly authorized
representative this 25th day of October, 1995.
INVESCO EMERGING OPPORTUNITY FUNDS, INC.
By: /s/ Glen A. Payne
------------------------------
Title: Secretary
STATE STREET BANK AND TRUST COMPANY
By: /s/ Charles R. 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 HORIZONR
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 HORIZONR 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
<PAGE>
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.
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
<PAGE>
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
(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
<PAGE>
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.
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.
<PAGE>
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
Agreement shall be limited to the amount paid by the Customer for the 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.
<PAGE>
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.
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 the 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.
<PAGE>
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
until terminated as herein provided.
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 successor 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.
<PAGE>
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.
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.
<PAGE>
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: Executive 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
<PAGE>
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
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 HORIZONR Accounting System
System Product Description
I. The Multicurrency HORIZONR 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. GlobalQuestR GlobalQuestR is designed to provide customer access to the
following information maintained on The Multicurrency HORIZONR 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. HORIZONR Gateway. HORIZONR Gateway provides customers with the ability
to (i) generate reports using information maintained on the Multicurrency
HORIZONR Accounting System which may be viewed or printed at the customer's
location; (ii) extract and download data from the Multicurrency HORIZONR
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 C-1
Undertaking
The undersigned understands that in the course of its employment as
Independent Auditor 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.
[Independent Auditor]
By:
Title:
Date:
<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 HORIZONR 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
EMERGING OPPORTUNITY FUNDS, 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 East Union
Avenue, Denver, Colorado 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;
<PAGE>
(f) Specimens of all new certificates for Shares accompanied by
the Fund's resolutions of the board of directors approving
such forms; and
(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 including: (i) the number of Shares sold, trade
date, and price; (ii) the amount of money to be delivered to
<PAGE>
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 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.
<PAGE>
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 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.
<PAGE>
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 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.
<PAGE>
(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.
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.
<PAGE>
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.
(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
<PAGE>
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.
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.
<PAGE>
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.
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 Emerging Opportunity Funds, 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 EMERGING OPPORTUNITY FUNDS, 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: President
/s/ Glen A. Payne
- ---------------------------
Glen A. Payne, Secretary
<PAGE>
FEE SCHEDULE
for
Services Pursuant to Transfer Agency Agreement, dated February 28, 1997,
between INVESCO Emerging Opportunity Funds, 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 EMERGING OPPORTUNITY FUNDS, 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 EMERGING OPPORTUNITY FUNDS, 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) INVESCO Small
Company Growth Fund, and (2) INVESCO Worldwide Emerging Markets Fund (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 Portfolios 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
have 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
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
<PAGE>
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 Portfolio 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.
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.
<PAGE>
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 each Portfolio'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 Portfolio'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 EMERGING
OPPORTUNITY FUNDS, 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
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. 8 to the registration statement on Form N-1A (the "Registration
Statement") of our report dated July 2, 1997, relating to the financial
statements and financial highlights appearing in the May 31, 1997 Annual Report
to Shareholders of INVESCO Emerging Opportunity Funds, 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
- -------------------------------------
Denver, Colorado
September 25, 1997.
AMENDED PLAN AND AGREEMENT OF DISTRIBUTION PURSUANT TO RULE 12b-1
PLAN AND AGREEMENT made as of 1st day of January, 1997, by and between
INVESCO Emerging Opportunity Funds, Inc., a Maryland corporation (hereinafter
called the "Company"), and INVESCO FUNDS GROUP, 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 the shares of
each of its two classes or series of common stock, each of which represents an
interest in a separate portfolio of investments, together with any additional
such classes or series that may hereafter be offered to the public
(individually, a "Fund" and collectively, the "Funds"), 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. Each Fund 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 each
of the Funds 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
<PAGE>
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
with the distribution of the shares of each of the Funds; (b) the
printing and distribution of reports and prospectuses for the use of
potential investors in each Fund; (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 each of the Funds 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. Each Fund 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 Fund 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 a Fund 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 a Fund'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. No Fund
shall 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, and no Fund shall be authorized to expend, for
any month, a greater percentage of its assets to pay INVESCO for
<PAGE>
activities engaged in and services provided by INVESCO pursuant to
the Plan and Agreement than it would otherwise have been authorized
to expend out of its assets to reimburse INVESCO for expenditures
incurred by INVESCO pursuant to the Plan and Agreement as it existed
prior to February 5, 1997. 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 a Fund, pursuant to this Plan and Agreement or
otherwise, may be deemed to constitute the indirect use of Fund
assets, such indirect use of Fund assets is hereby authorized in
addition to, and not in lieu of, any other payments authorized under
this 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 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 each become effective immediately upon
approval by a vote of a majority of the outstanding voting
securities of the Company as defined in the Act, and shall continue
in effect until February 5, 1998 unless terminated as provided
below. 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 as to any Fund,
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 that Fund. 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 Fund, may
terminate the Agreement under this Plan as to such Fund, 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
<PAGE>
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 a
Fund hereunder without approval of a majority of the outstanding
voting securities of that Fund. 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 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 each Fund 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 Funds 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 5th day of February, 1997.
INVESCO EMERGING OPPORTUNITY
FUNDS, 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
AMENDED PLAN AND AGREEMENT OF DISTRIBUTION PURSUANT TO RULE 12b-1
PLAN AND AGREEMENT made as of ----- day of -------, 1997, by and between
INVESCO Emerging Opportunity Funds, 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 the shares of
each of its two classes or series of common stock, each of which represents an
interest in a separate portfolio of investments, together with any additional
such classes or series that may hereafter be offered to the public
(individually, a "Fund" and collectively, the "Funds"), 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. Each Fund 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 each
of the Funds 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
<PAGE>
other organizations, which may include INVESCO-affiliated companies,
that render distribution and administrative services in connection
with the distribution of the shares of each of the Funds; (b) the
printing and distribution of reports and prospectuses for the use of
potential investors in each Fund; (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 each of the Funds 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. Each Fund 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 Fund 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 a Fund 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 a Fund'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. No Fund
shall 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, and no Fund shall 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 pursuant to
the Plan and Agreement than it would otherwise have been authorized
to expend out of its assets to reimburse INVESCO for expenditures
incurred by INVESCO pursuant to the Plan and Agreement as it existed
prior to February 5, 1997. No payments will be made by the Company
hereunder after the date of termination of the Plan and Agreement.
<PAGE>
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 a Fund, pursuant to this Plan and Agreement or
otherwise, may be deemed to constitute the indirect use of Fund
assets, such indirect use of Fund assets is hereby authorized in
addition to, and not in lieu of, any other payments authorized under
this 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 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 each become effective immediately upon
approval by a vote of a majority of the outstanding voting
securities of the Company as defined in the Act, and shall continue
in effect until February 5, 1998 unless terminated as provided
below. 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 as to any Fund,
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 that Fund. 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 Fund, may
terminate the Agreement under this Plan as to such Fund, 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 a
Fund hereunder without approval of a majority of the outstanding
voting securities of that Fund. 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 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 each Fund 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 Funds 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 5th day of February, 1997.
INVESCO EMERGING OPPORTUNITY
FUNDS, 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 performance for the Fund will be computed by determining 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 $1,000
T = average annual total return
n = number of years
ERV = ending redeemable value of initial payment
The total return performance figures are determined by solving the above formula
for "T", applying the SEC Total Return Formula in the Investment Company Act
Rel. No. 16245 (May 1, 1988):
P = $1,000 initial payment
T = average annual total return
n = number of years
ERV = ending redeemable value
P(1 + T) exponent n = ERV
The formula given on pages 64 and 65 of the Investment Company Act Rel. No.
16245 (May 1, 1988) 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 will solve for T as follows:
T = (n/(ERV/P)) - 1
and will report those amounts as the total return.
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000870781
<NAME> INVESCO EMERGING OPPORTUNITY FUNDS, INC.
<SERIES>
<NUMBER> 1
<NAME> INVESCO SMALL COMPANY GROWTH FUND
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> MAY-31-1997
<PERIOD-END> MAY-31-1997
<INVESTMENTS-AT-COST> 277310949
<INVESTMENTS-AT-VALUE> 301078314
<RECEIVABLES> 15682468
<ASSETS-OTHER> 59538
<OTHER-ITEMS-ASSETS> 50965
<TOTAL-ASSETS> 316871285
<PAYABLE-FOR-SECURITIES> 22022228
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 578282
<TOTAL-LIABILITIES> 22600510
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 246542328
<SHARES-COMMON-STOCK> 22950475
<SHARES-COMMON-PRIOR> 25724952
<ACCUMULATED-NII-CURRENT> (9857)
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 23970939
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 23767365
<NET-ASSETS> 294270775
<DIVIDEND-INCOME> 301494
<INTEREST-INCOME> 2285518
<OTHER-INCOME> 0
<EXPENSES-NET> 4065769
<NET-INVESTMENT-INCOME> (1478757)
<REALIZED-GAINS-CURRENT> 29515644
<APPREC-INCREASE-CURRENT> (56216632)
<NET-CHANGE-FROM-OPS> (26700988)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 10787315
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 46136498
<NUMBER-OF-SHARES-REDEEMED> 49747852
<SHARES-REINVESTED> 836877
<NET-CHANGE-IN-ASSETS> (75758337)
<ACCUMULATED-NII-PRIOR> (6379)
<ACCUMULATED-GAINS-PRIOR> 6717889
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 2029312
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 4164392
<AVERAGE-NET-ASSETS> 275676250
<PER-SHARE-NAV-BEGIN> 14.38
<PER-SHARE-NII> (0.07)
<PER-SHARE-GAIN-APPREC> (0.96)
<PER-SHARE-DIVIDEND> 0.00
<PER-SHARE-DISTRIBUTIONS> 0.53
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 12.82
<EXPENSE-RATIO> 2
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</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: February 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.
/s/ Mary Paulette Weaver
------------------------------------------
Notary Public
My Commission Expires: 1-27-99
