INVESCO Specialty Funds, Inc.
(February 15, 1995)
INVESCO International Funds, Inc.
(February 28, 1995)
Supplement to Statements of Additional Information of Above Funds
Date of Which is Indicated in Parentheses
The second and third paragraphs in the section of the above Funds'
Statements of Additional Information entitled "How Shares are Valued" are
amended to read as follows:
The net asset value per share of each Fund is calculated by dividing the
value of all securities held by the Fund and 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 that 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 Company's 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 Fund's board of
directors reviews the methods used by such service to assure itself that
securities will be valued at their fair values. The Fund's board of
directors also periodically monitors the methods used by such pricing
services. Debt securities with remaining maturities of 60 days or less at
the time of purchase are normally valued at amortized cost.
The values of securities held by the Funds, 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
1
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computing the Funds' net asset value. However, in the event that the
closing price of a foreign security is not available in time to calculate
a 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.
The date of this Supplement is April 24, 1995.
2
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STATEMENT OF ADDITIONAL INFORMATION
February 28, 1995
INVESCO INTERNATIONAL FUNDS, INC.
A no-load mutual fund seeking capital appreciation through
investment in designated geographical sectors.
Address: Mailing Address:
7800 E. Union Avenue Post Office Box 173706
Denver, Colorado 80237 Denver, Colorado 80217-3706
Telephone:
In continental U.S., 1-800-525-8085
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INVESCO INTERNATIONAL FUNDS, INC. (the "Company") is an open-end
management investment company organized in series form in which all three of its
funds, the INVESCO European Fund, the INVESCO Pacific Basin Fund and the INVESCO
International Growth Fund (the "Funds"), seek to provide investors with capital
appreciation through the investment of assets of its professionally managed
portfolios primarily in equity securities. Investors may purchase shares of any
or all Funds. The following are available:
The INVESCO EUROPEAN FUND seeks to achieve its investment objective by
investing principally in equity securities of companies domiciled in specific
European countries.
The INVESCO PACIFIC BASIN FUND seeks to achieve its investment objective
by investing primarily in equity securities of companies domiciled in specific
Far Eastern or Western Pacific countries
The INVESCO INTERNATIONAL GROWTH FUND seeks to achieve its investment
objective by investing substantially all of its assets in foreign securities.
This Fund invests principally in equity securities. The term "foreign
securities" refers to securities of issuers, wherever organized, which in the
judgment of management have their principal business activities outside of the
United States. In determining whether an issuer's principal activities are
outside of the United States, consideration is given to such factors as the
location of the issuer's assets, personnel, sales and earnings.
Additional funds may be offered in the future.
Separate Prospectuses for the Funds dated February 28, 1995, which provide
the basic information you should know before investing in the Funds, 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 each Prospectus. It is intended to provide you additional
information regarding the activities and operations of the Funds and should be
read in conjunction with the Prospectus. Investment Adviser and Distributor:
INVESCO Funds Group, Inc.
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TABLE OF CONTENTS
Page
INVESTMENT POLICIES AND RESTRICTIONS 4
THE FUNDS AND THEIR MANAGEMENT 12
HOW SHARES CAN BE PURCHASED 26
HOW SHARES ARE VALUED 26
FUND PERFORMANCE 27
SERVICES PROVIDED BY THE FUND 29
TAX-SHELTERED RETIREMENT PLANS 30
HOW TO REDEEM SHARES 30
DIVIDENDS, CAPITAL GAIN DISTRIBUTIONS, AND TAXES 31
INVESTMENT PRACTICES 32
ADDITIONAL INFORMATION 35
REPORT OF INDEPENDENT ACCOUNTANTS 39
FINANCIAL STATEMENTS 54
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INVESTMENT POLICIES AND RESTRICTIONS
The investment objectives and policies of the Funds are discussed in their
respective Prospectuses under the heading "Investment Objectives and Policies."
Further information about the Funds' respective investment policies and
restrictions is set forth below.
Foreign Securities. The Funds invest primarily in foreign securities.
Investments in non-U.S. securities involve certain risks not associated with
investment in U.S. companies. Non-U.S. companies generally are not subject to
uniform accounting, auditing and financial reporting standards comparable to
those applicable to domestic companies, and there may be less publicly available
information about a foreign company. Although the volume of trading in foreign
securities markets is growing, securities of many non-U.S. companies may be less
liquid and more volatile than securities of comparable U.S. companies.
Transaction costs on foreign securities exchanges are generally higher than in
the United States and there is generally less government supervision and
regulation of exchanges, brokers and issuers in foreign countries than there is
in the United States. Investment in non-U.S. securities may also be subject to
other risks different from those affecting U.S. investments, including local
political or economic developments, expropriation or nationalization of assets,
confiscatory taxation, and imposition of withholding taxes on dividends or
interest payments. Securities denominated in non-U.S. currencies, whether issued
by a non-U.S. or a U.S. issuer, may be affected favorably or unfavorably by
changes in currency rates and exchange control regulations, and costs will be
incurred in connection with conversions from one currency to another. Foreign
currency exchange rates are determined by forces of supply and demand on the
foreign exchange markets. These forces are, in turn, affected by the
international balance of payments and other economic and financial conditions,
government intervention, speculation and other factors. Generally, the foreign
currency exchange transactions of the Funds will be conducted on a spot basis
(i.e., cash basis) at the spot rate for purchasing or selling currency
prevailing in the foreign currency exchange market.
Forward Foreign Currency Contracts. The Funds may enter into forward
currency contracts to purchase or sell foreign currencies (i.e., non-U.S.
currencies) as a hedge against possible variations in foreign exchange rates. A
forward foreign currency exchange contract is an agreement between the
contracting parties to exchange an amount of currency at some future time at an
agreed upon rate. The rate can be higher or lower than the spot rate between the
currencies that are the subject of the contract. A forward contract generally
has no deposit requirement, and such transactions do not involve commissions. By
entering into a forward contract for the purchase or sale of the amount of
foreign currency invested in a foreign security transaction, a Fund can hedge
against possible variations in the value of the dollar versus the subject
currency either between the date the foreign security is purchased or sold and
the date on which payment is made or received or during the time the Fund holds
the foreign security. Hedging against a decline in the value of a currency in
the foregoing manner does not eliminate fluctuations in the prices of portfolio
securities or prevent losses if the prices of such securities decline.
Furthermore, such hedging transactions preclude the opportunity for gain if the
value of the hedged currency should rise. The Funds will not speculate in
forward currency contracts. If a Fund enters into a "position hedging
transaction," which is the sale of forward non-U.S. currency with respect to a
portfolio security denominated in such foreign currency, its custodian bank will
place cash or liquid equity or debt securities, which may be denominated either
in U.S. dollars or in a foreign currency, in a separate account of the Fund in
an amount at least equal to the value of the Fund's total assets committed to
the
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consummation of such forward contract. If the value of the securities placed in
the account declines, additional cash or securities will be placed in the
account so that the value of the account will at least equal the amount of the
Fund's commitments with respect to such contracts. The Funds will not attempt to
hedge all of their non-U.S. portfolio positions and will enter into such
transactions only to the extent, if any, deemed appropriate by their investment
adviser. The Funds will not enter into forward contracts for a term of more than
one year. Forward contracts and the securities placed in a segregated account
may, from time to time, be considered illiquid, in which case they would be
subject to the Funds' limitations on investing in illiquid securities, discussed
in the Prospectuses.
Restricted/144A Securities. In recent years, a large institutional market
has developed for certain securities that are not registered under the
Securities Act of 1933 (the "1933 Act"). 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 such unregistered
securities can readily be resold or on an issuer's ability to honor a demand for
repayment. Therefore, the fact that there are contractual or legal restrictions
on resale to the general public or certain institutions is not dispositive of
the liquidity of such investments.
Rule 144A under the 1933 Act establishes a "safe harbor" from the
registration requirements of the 1933 Act for resales of certain securities to
qualified institutional buyers. Institutional markets for restricted securities
that might develop as a result of Rule 144A could provide both readily
ascertainable values for restricted securities and the ability to liquidate an
investment in order to satisfy share redemption orders. An insufficient number
of qualified institutional buyers interested in purchasing Rule 144A-eligible
securities held by a Fund, however, could affect adversely the marketability of
such portfolio securities and the Fund might be unable to dispose of such
securities promptly or at reasonable prices.
Loans of Portfolio Securities. All of the Funds may lend their portfolio
securities to brokers, dealers, and other financial institutions, provided that
such loans are callable at any time by the Funds and are at all times secured by
collateral consisting of cash, letters of credit or securities issued or
guaranteed by the United States Government or its agencies, or any combination
thereof, equal to at least the market value, determined daily, of the loaned
securities. The advantage of such loans is that the Fund continues to earn
income on the loaned securities, while at the same time receiving interest from
the borrower of the securities. Loans will be made only to firms deemed by the
Adviser or Sub-Adviser (under procedures established by the board of directors)
to be creditworthy and when the amount of interest to be received justifies the
inherent risks. A loan may be terminated by the borrower on one business day's
notice, or by the Fund at any time. If at any time the borrower fails to
maintain the required amount of collateral (at least 100% of the market value of
the borrowed securities), the Fund will require the deposit of additional
collateral not later than the business day following the day on which a
collateral deficiency occurs or the collateral appears inadequate. If the
deficiency is not remedied by the end of that period, the Fund will use the
collateral to replace the securities while holding the borrower liable for any
excess of replacement cost over collateral. Upon termination of the loan, the
borrower is required to return the securities to the Fund. Any gain or loss
during the loan period would inure to the Fund.
Repurchase Agreements. All of the Funds may enter into repurchase
agreements with respect to debt instruments eligible for investment by the
Funds with member banks of the Federal Reserve System, registered broker-
<PAGE>
dealers, and registered government securities dealers, which are deemed
creditworthy. A repurchase agreement is a means of investing monies for a short
period. The resale price reflects an agreed upon interest rate effective for the
period the instrument is held by a Fund and is unrelated to the interest rate on
the underlying instrument. In these transactions, the collateral securities
acquired by a Fund (including accrued interest earned thereon) must have a total
value in excess of the value of the repurchase agreement, and are held as
collateral by the Company's custodian bank until the repurchase agreement is
completed.
Investment Restrictions. As described in the section of each Fund's
Prospectus entitled "Investment Objectives and Policies," the Funds operate
under certain investment restrictions. These policies are fundamental and may
not be changed with respect to a particular Fund without the prior approval of
the holders of a majority of the outstanding voting securities of that Fund, as
defined in the Investment Company Act of 1940, as amended (the "1940 Act"). 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.
INVESCO Pacific Basin and European Funds
Under these restrictions, neither the INVESCO Pacific Basin or European
Funds, nor the Company on behalf of such Funds, will:
(1) issue senior securities as defined in the 1940 Act (except insofar
as the Company may be deemed to have issued a senior security by
reason of entering into a repurchase agreement, or borrowing money,
in accordance with the restrictions described below, and in
accordance with the position of the staff of the Securities and
Exchange Commission set forth in Investment Company Act Release No.
10666);
(2) mortgage, pledge or hypothecate portfolio securities or borrow
money, except borrowings from banks for temporary or emergency
purposes (but not for investment) are permitted in an amount not
exceeding 10% of total net assets. A Fund will not purchase
additional securities while any borrowings on behalf of that Fund
exist;
(3) buy or sell commodities, commodity contracts, oil, gas or other
mineral interests or exploration programs (however, the Fund may
purchase securities of companies which invest in the foregoing and
may enter into forward contracts for the purchase or sale of foreign
currencies);
(4) purchase the securities of any company if as a result of such
purchase more than 10% of total assets would be invested in
securities which are subject to legal or contractual restrictions
on resale ("restricted securities") and in securities for which
there are no readily available market quotations; or enter into a
repurchase agreement maturing in more than seven days, if as a
result, such repurchase agreements, together with restricted
securities and securities for which there are not readily available
market quotations, would constitute more than 10% of total assets;
(5) sell short or buy on margin, or write, purchase or sell puts or
calls or combinations thereof;
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(6) buy or sell real estate or interests therein (however, securities
issued by companies which invest in real estate or interests therein
may be purchased and sold);
(7) invest in the securities of any other investment company except for
a purchase or acquisition in accordance with a plan of
reorganization, merger or consolidation, and except that not more
than 10% of the INVESCO Pacific Basin Fund's and the INVESCO
European Fund's total assets may be invested in shares of closed-end
investment companies within the limits of Section 12(d)(1) of the
Investment Company Act of 1940;
(8) invest in any company for the purpose of exercising control or
management;
(9) engage in the underwriting of any securities, except insofar as the
Company may be deemed an underwriter under the 1933 Act in disposing
of a portfolio security;
(10) make loans to any person, except through the purchase of debt
securities in accordance with the investment policies of the Funds,
or the lending of portfolio securities to broker-dealers or other
institutional investors, or the entering into of repurchase
agreements with member banks of the Federal Reserve System,
registered broker-dealers and registered government securities
dealers. The aggregate value of all portfolio securities loaned may
not exceed 33-1/3% of a Fund's total net assets (taken at current
value). No more than 10% of a Fund's total net assets may be
invested in repurchase agreements maturing in more than seven days;
(11) purchase securities of any company in which any officer or director
of the Company or its investment adviser owns more than 1/2 of 1% of
the outstanding securities of such company and in which the officers
and directors of the Company and its investment adviser, as a group,
own more than 5% of such securities;
(12) purchase securities (except obligations issued or guaranteed by the
U.S. Government, its agencies or instrumentalities) if the purchase
would cause a Fund at the time to have more than 5% of the value of
its total assets invested in the securities of any one issuer or to
own more than 10% of the outstanding voting securities of any one
issuer;
(13) invest more than 5% of its total assets in an issuer having a
record, together with predecessors, of less than three years'
continuous operation.
In addition to the above restrictions, a fundamental policy of the INVESCO
Pacific Basin Fund and the INVESCO European Fund is not to invest more than 25%
of their respective total assets (taken at market value at the time of each
investment) in the securities of issuers in any one industry.
In applying restriction (1) above, the INVESCO Pacific Basin and European
Funds will enter into repurchase agreements only if such agreements are in
accordance with all applicable positions of the staff of the Securities and
Exchange Commission, including Investment Company Act Release No. 10666.
INVESCO International Growth Fund
Under these restrictions, neither INVESCO International Growth Fund, nor
<PAGE>
the Company on behalf of such Fund, will:
(1) other than investments by the Fund in obligations issued or
guaranteed by the U.S. Government, its agencies or
instrumentalities, invest in the securities of issuers conducting
their principal business activities in the same industry
(investments in obligations issued by a foreign government,
including the agencies or instrumentalities of a foreign government,
are considered to be investments in a single industry), if
immediately after such investment the value of the Fund's
investments in such industry would exceed 25% of the value of the
Fund's total assets;
(2) invest in the securities of any one issuer, other than the United
States Government, if immediately after such investment more than 5%
of the value of the Fund's total assets, taken at market value,
would be invested in such issuer or more than 10% of such issuer's
outstanding voting securities would be owned by the Fund;
(3) underwrite securities of other issuers, except insofar as it may
technically be deemed an "underwriter" under the Securities Act of
1933, as amended, in connection with the disposition of the Fund's
portfolio securities;
(4) invest in companies for the purpose of exercising control or
management;
(5) issue any class of senior securities or borrow money, except
borrowings from banks for temporary or emergency purposes not in
excess of 5% of the value of the Fund's total assets at the time the
borrowing is made;
(6) mortgage, pledge, hypothecate or in any manner transfer as security
for indebtedness any securities owned or held except to an extent
not greater than 5% of the value of the Fund's total assets;
(7) make short sales of securities or maintain a short position;
(8) purchase securities on margin, except that the Fund may obtain such
short-term credit as may be necessary for the clearance of purchases
and sales of portfolio securities;
(9) purchase or sell real estate or interests in real estate. The Fund
may invest in securities secured by real estate or interests therein
or issued by companies, including real estate investment trusts,
which invest in real estate or interests therein;
(10) purchase or sell commodities or commodity contracts;
(11) make loans to other persons, provided that the Fund may purchase
debt obligations consistent with its investment objectives and
policies and may lend limited amounts (not to exceed 10% of its
total assets) of its portfolio securities to broker-dealers or other
institutional investors;
(12) purchase securities of other investment companies except (i) in
connection with a merger, consolidation, acquisition or
reorganization, or (ii) by purchase in the open market of securities
of other investment companies involving only customary brokers'
commissions and only if immediately thereafter (i) no more than 3%
<PAGE>
of the voting securities of any one investment company are owned by
the Fund, (ii) no more than 5% of the value of the total assets of
the Fund would be invested in any one investment company, and (iii)
no more than 10% of the value of the total assets of the Fund would
be invested in the securities of such investment companies. The
Company may invest from time to time a portion of the Fund's cash in
investment companies to which the Adviser serves as investment
adviser; provided that no management or distribution fee will be
charged by the Adviser with respect to any such assets so invested
and provided further that at no time will more than 3% of the Fund's
assets be so invested. Should the Fund purchase securities of other
investment companies, shareholders may incur additional management
and distribution fees;
(13) invest in securities for which there are legal or contractual
restrictions on resale, except that the Fund may invest no more than
2% of the value of the Fund's total assets in such securities, or
invest in securities for which there is no readily available market,
except that the Fund may invest no more than 5% of the value of the
Fund's total assets in such securities.
In applying restriction (13) above, the INVESCO International Growth Fund
also includes illiquid securities (those which cannot be sold in the ordinary
course of business within seven days at approximately the valuation given to
them by the Fund) among the securities subject to the 5% of total assets limit.
With respect to investment restriction (4) applicable to the INVESCO
Pacific Basin and European Funds, and restriction (13) applicable to the INVESCO
International Growth Fund, the board of directors has delegated to the Funds'
investment adviser the authority to determine that a liquid market exists for
securities eligible for resale pursuant to Rule 144A under the Securities Act of
1933, or any successor to such rule, and that such securities are not subject to
the Funds' limitations on investing in illiquid securities, securities that are
not readily marketable or securities which do not have readily available market
quotations. Under guidelines established by the board of directors, the adviser
will consider the following factors, among others, in making this determination:
(1) the unregistered nature of a Rule 144A security, (2) the frequency of trades
and quotes for the security; (3) the number of dealers willing to purchase or
sell the security and the number of other potential purchasers; (4) dealer
undertakings to make a market in the security; and (5) the nature of the
security and the nature of marketplace trades (e.g., the time needed to dispose
of the security, the method of soliciting offers and the mechanics of transfer).
However, Rule 144A Securities are still subject to the Funds' respective
limitations on investments in restricted securities (securities for which there
are legal or contractual restrictions on resale).
In applying the industry concentration investment restrictions applicable
to the Funds, the Company uses an industry classification system for
international securities based on information obtained from Bridge Information
Systems, Incorporated, Bloomberg L.P. and other sources.
In addition, the Company has adopted the following additional investment
restrictions for the Funds in order to qualify the Funds' shares for sale in
certain states. These restrictions are not fundamental and may be changed by the
Company's board of directors without shareholder approval.
The Company has given an undertaking to the State of Arizona regarding
the Funds' investments in warrants. A Fund's investment in warrants, valued
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at the lower of cost or market, will not exceed 5% of the value of the Fund's
net assets and will be limited to warrants listed on the principal securities
exchange of the country in which the issuer is domiciled.
The Company also has given the following undertakings to the State of
Texas. A Fund's investment in warrants, valued at the lower of cost or market,
will not exceed 5% of the value of such Fund's net assets, of which amount not
more than 2% of the value of the Fund's net assets may be warrants which are not
listed on the New York or American Stock Exchange. No Fund will buy or sell any
oil, gas, or other mineral interests (including mineral leases) or exploration
programs. No Fund will buy or sell real property (including limited partnership
interests therein), but may buy or sell readily marketable interests in real
estate investment trusts or readily marketable securities of companies which
invest in real estate.
The Company also has given undertakings to the State of Arkansas that (1)
a Fund may purchase or write put and call options on securities, or straddles,
spreads, or combinations thereof, only if by reason thereof the value of the
Fund's aggregate investment in such classes of securities will be 5% or less of
its total assets; and (2) no Fund will purchase any interests in oil, gas or
other mineral exploration or development programs.
The Company has given an undertaking to the State of Missouri that the
Funds will limit investments in securities which are secured by real estate or
real estate interests only to those securities which are readily marketable.
The Company also has given the following undertaking to the State of
California: The Funds will not engage in the purchase or sale of shares of any
open-end investment companies, as long as such purchases are not permitted by
California regulations.
THE FUNDS AND THEIR MANAGEMENT
The Company. The Company was incorporated on April 2, 1993, under the laws
of Maryland. On July 1, 1993, the Company, through the INVESCO European Fund and
INVESCO Pacific Basin Fund, assumed all of the assets and liabilities of the
European Portfolio and Pacific Basin Portfolio, respectively, of Financial
Strategic Portfolios, Inc., which was incorporated under the laws of Maryland on
August 10, 1983. In addition, on July 1, 1993, the Company, through the INVESCO
International Growth Fund, assumed all of the assets and liabilities of the
Financial International Growth Fund, a series of Financial Series Trust, a
Massachusetts business trust organized on July 15, 1987. All financial and other
information about the Funds for periods prior to July 1, 1993, relates to such
former portfolios and series (collectively, the "Predecessor Funds").
The Investment Adviser. INVESCO Funds Group, Inc., a Delaware corporation
("INVESCO"), is employed as the Company's investment adviser. INVESCO was
established in 1932 and also serves as an investment adviser to 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 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, and
INVESCO Variable Investment Funds, Inc.
The Sub-Adviser. INVESCO, as investment adviser, has contracted with MIM
International Limited ("MIL") for investment advisory and research services
on behalf of INVESCO European Fund and INVESCO Pacific Basin Fund. MIL has the
<PAGE>
primary responsibility for providing portfolio investment management services to
those Funds. MIL, an indirect wholly-owned subsidiary of INVESCO PLC, previously
served as investment adviser to the INVESCO European and INVESCO Pacific Basin
Funds from their inception in 1983 until September 30, 1991, and has served as
sub-adviser to those Funds since September 30, 1991.
On December 31, 1993, INVESCO MIM International, Inc., which had been
acting as sub-adviser to the INVESCO International Growth Fund, ceased doing
business as a result of an internal corporate reorganization. Fund management
intends to propose to the board of directors a new firm to act as sub-adviser to
the INVESCO International Growth Fund. Upon director approval of a new sub-
adviser, the proposed new sub-adviser will be submitted to the INVESCO
International Growth Fund's shareholders for their approval, if necessary. Until
such time as a new sub-adviser receives the necessary director and, if
necessary, shareholder approval, INVESCO, as the Fund's investment adviser, will
provide all portfolio management services to the Fund. The portfolio management
services which will be provided to the Fund by INVESCO are identical to the
portfolio management services provided to the INVESCO European and Pacific Basin
Funds by MIL, and are described below under "Sub- Advisory Agreement. This
internal reorganization does not affect in any way the portfolio management
services being provided to INVESCO International Growth Fund.
INVESCO is a wholly-owned subsidiary of INVESCO North American Holdings,
Inc. ("INAH") a Delaware corporation, which is an indirect wholly-owned
subsidiary of INVESCO PLC. INVESCO PLC was organized in 1935. Its ordinary
shares are held by approximately 16,500 shareholders and are traded on the
London Stock Exchange, with a market valuation of over $660 million as of June
30, 1994. INVESCO PLC is the holding company for a group of companies engaged in
financial services. Through subsidiaries in London, Denver, Atlanta, Boston,
Louisville, Dallas, Tokyo, Hong Kong, and the Channel Islands, INVESCO PLC
managed over $64 billion on behalf of mutual funds, pension and insurance funds
and private individuals as June 30, 1994. INVESCO Fund Managers Ltd., one of the
largest unit trust management companies in the United Kingdom, managed the
assets of over 34 authorized unit trusts having approximately 168,000
unitholders and assets exceeding $2.0 billion as of June 30, 1994. INVESCO
International Ltd (incorporated in Jersey, Channel Islands) offers a broad range
of offshore trusts (designed for international investors other than residents of
the United States). As of June 30, 1994, funds under management in Jersey
amounted to some $1.3 billion on behalf of some 27,600 unitholders. INVESCO was
acquired by INAH in 1982 and as of October 31, 1994, managed 14 mutual funds,
consisting of 36 separate portfolios, on behalf of over 850,000 shareholders.
INVESCO Management & Research, Inc. formerly known as Gardner and Preston Moss,
Inc. of Boston, Massachusetts, was acquired by INAH in 1983, and managed funds
in excess of $2.8 billion, predominantly in pension and endowment accounts as of
June 30, 1994.
In May 1986, INVESCO PLC acquired INVESCO Asset Management Limited
("Management Limited"), an investment management company located in the United
Kingdom. The principal business of Management Limited is the management of
pension funds, investment trusts, unit trusts, and various investment portfolios
on behalf of private clients, charities, corporations, and foreign financial
institutions.
In December 1988, INVESCO PLC, through one of its wholly-owned
subsidiaries, purchased INVESCO Capital Management, Inc.'s general partnership
interest in INVESCO Capital Management, L.P. The limited partnership interest in
INVESCO Capital Management, L.P. had been acquired by INVESCO PLC in December
1986. The business of INVESCO Capital Management, Inc. is the management of
institutional investment portfolios, consisting primarily of
<PAGE>
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.
In December 1990, INVESCO PLC purchased the business and assets of PRIMCO
Capital Management, Inc. ("PRIMCO"). PRIMCO, which was established in 1985 and
is based in Louisville, Kentucky, specializes in managing stable return
investments, principally on behalf of Section 401(k) retirement plans. As of
June 30, 1994, PRIMCO managed assets of over $16.4 billion on behalf of
approximately 50 clients.
Based in Dallas, Texas, INVESCO Realty Advisors, Inc. ("IRA") is
responsible for providing advisory services in the U.S. real estate markets for
INVESCO PLC's clients worldwide. Established in 1983 as a registered investment
adviser and qualified professional asset manager, funds under management have
grown, as of June 30, 1994, to $971 million. As of June 30, 1994, its portfolio
contained 73 properties totalling over 18.4 million square feet of commercial
real estate and 3,329 apartment units. Clients include corporate plans, public
pension funds as well as endowment and foundation accounts.
The corporate headquarters of INVESCO PLC are located at 11 Devonshire
Square, London, EC2M 4YR, England. The dollar figures set forth in the above
paragraphs were obtained by converting British pounds sterling into U.S. dollars
as of June 30, 1994, at $1.54. All of the information contained in the above
five paragraphs was furnished by INVESCO PLC.
Investment Advisory Agreement. INVESCO serves as investment adviser
pursuant to an investment advisory agreement (the "Agreement") with the Company
which was approved on April 21, 1993, 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 INVESCO at a meeting called for such
purpose. Pursuant to authorizations granted by the public shareholders of the
Predecessor Funds at meetings held on May 24, 1993, the Predecessor Funds, as
the initial shareholders of the Company, approved the Agreement on June 24, 1993
for an initial term expiring April 30, 1995. Thereafter, the Agreement may be
continued from year to year as to each 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 must also 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 upon sixty (60) days' written notice and terminates automatically
in the event of an assignment to the extent required by the Investment Company
Act of 1940 and the rules thereunder.
The Agreement provides that INVESCO shall manage the investment portfolios
of the Funds in conformity with each Fund's investment policies (either directly
or by delegation to a sub-adviser which may be a company affiliated with
INVESCO). Further, INVESCO 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 Funds excluding, however, those services that are the subject of
separate agreement between the Company and INVESCO or any affiliate thereof,
including the distribution and sale of Fund shares and
<PAGE>
provision of transfer agency, dividend disbursing agency, and registrar
services, and services furnished under an Administrative Services Agreement with
INVESCO dated as of April 30, 1993. 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
Funds' 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 Funds'
operations; preparation and review of required documents, reports and filings by
INVESCO's in-house legal and accounting staff (including the prospectuses,
statement of additional information, proxy statements, shareholder reports, tax
returns, reports to the SEC, and other corporate documents of the Funds), 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 Funds under the 1940 Act. Expenses not assumed by
INVESCO are borne by the Funds.
As full compensation for its advisory services to the Company, INVESCO
receives a monthly fee. The fee is calculated daily at an annual rate of:
(a) INVESCO Pacific Basin and European Funds: 0.75% on the first $350
million of each Fund's average net assets; 0.65% on the next $350
million of each Fund's average net assets; and 0.55% of each Fund's
average net assets in excess of $700 million;
(b) INVESCO International Growth Fund: 1.00% on the first $500 million
of the Fund's average net assets; 0.75% on the next $500 million of
the Fund's average net assets; and 0.65% of the Fund's average net
assets in excess of $1 billion.
The advisory fee is calculated daily at the applicable annual rate and
paid monthly. While the portions of INVESCO's fees which are equal to or greater
than 0.75% of the net assets are higher than those generally charged by
investment advisers to mutual funds, they are not higher than those charged by
most other investment advisers to funds comparable to the Funds, whose assets
are invested primarily in equity securities of companies located outside the
United States.
Certain states in which the shares of each of the Funds are qualified for
sale currently impose limitations on the expenses of each of the Funds. At the
date of this Statement of Additional Information, the most restrictive state-
imposed annual expense limitation requires that INVESCO absorb any amount
necessary to prevent any Fund's aggregate ordinary operating expenses (excluding
interest, taxes, brokerage fees and commissions, and extraordinary charges such
as litigation costs) from exceeding in any fiscal year 2.5% of that Fund's first
$30,000,000 of average net assets, 2.0% of the next $70,000,000 of average net
assets and 1.5% of the remaining average net assets. No payment of the
investment advisory fee will be made to the investment adviser which would
result in any of the Funds' expenses exceeding, on a cumulative annualized
basis, this state limitation. During the past year, INVESCO did not absorb any
amounts under this provision.
Sub-Advisory Agreement. MIM International Limited ("MIL") serves as sub-
adviser to the INVESCO European and Pacific Basin Funds, pursuant to a sub-
advisory agreement (the "Sub-Agreement") with INVESCO which was approved on
April 21, 1993, 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, INVESCO, or MIL at a meeting called for such purpose.
<PAGE>
Pursuant to authorizations granted by the public shareholders of the respective
Predecessor Funds at meetings held on May 24, 1993, the respective Predecessor
Funds, as the initial shareholders of the INVESCO European and Pacific Basin
Funds, approved the Sub-Agreement on June 24, 1993 for an initial term expiring
April 30, 1995. Thereafter, the Sub-Agreement may be continued from year to year
as to each Fund as long as each such continuance is specifically approved by the
board of directors of the Company, or by a vote of the holders of a majority of
the outstanding shares of that Fund, as defined in the 1940 Act. Each such
continuance also must be approved by a majority of the directors who are not
parties to the Sub-Agreement or interested persons (as defined in the 1940 Act)
of any such party, cast in person at a meeting called for the purpose of voting
on such continuance. The Sub-Agreement may be terminated at any time without
penalty by either party or the Company upon sixty (60) days' written notice, and
terminate automatically in the event of an assignment to the extent required by
the 1940 Act and the rules thereunder.
The Sub-Agreement provides that MIL, subject to the supervision of
INVESCO, shall manage the investment portfolios of the INVESCO European and
Pacific Basin Funds in conformity with each such Fund's investment policies.
These management services would include: (a) managing the investment and
reinvestment of all the assets, now or hereafter acquired, of each Fund, and
executing all purchases and sales of portfolio securities; (b) maintaining a
continuous investment program for the Funds, consistent with (i) each 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, as amended, 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 each Fund, unless otherwise directed by the
directors of the Company or INVESCO, and executing transactions accordingly; (d)
providing the Funds 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-Advisers; (e) determining what portion of each
applicable Fund should be invested in the various types of securities authorized
for purchase by such 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 each applicable Fund shall be
exercised.
The Sub-Agreement provides that as compensation for its services, MIL
shall receive from INVESCO, at the end of each month, a fee based upon the
average daily value of the INVESCO European and Pacific Basin Funds' average net
assets computed at the following annual rates: 0.45% on the first $350 million
of each Fund's average net assets; 0.40% on the next $350 million of each Fund's
average net assets; and 0.35% of each Fund's average net assets in excess of
$700 million. The sub-advisory fee is paid by INVESCO, NOT the Funds.
Administrative Services Agreement. INVESCO, either directly or through
affiliated companies, also provides certain administrative, sub-accounting, and
recordkeeping services to the Company pursuant to an Administrative Services
Agreement dated April 30, 1993 (the "Administrative Agreement"). The
Administrative Agreement was approved on April 21, 1993, by a vote cast in
person by all of the directors of the Company, including all of the directors
who are not "interested persons" of the Company or INVESCO at a meeting called
for such purpose. The Administrative Agreement was for an initial term expiring
April 30, 1994, and has been renewed through April 30, 1995. The
<PAGE>
Administrative Agreement may be continued from year to year as long as each such
continuance is specifically approved by the board of directors of the 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 INVESCO 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 INVESCO shall provide the
following services to the Funds: (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 INVESCO, 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 of
such plans. As full compensation for services provided under the Administrative
Agreement, the Company pays a monthly fee to INVESCO consisting of a base fee of
$10,000 per year per Fund, 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
each Fund of the Company.
Transfer Agency Agreement. INVESCO also performs transfer agent, dividend
disbursing agent, and registrar services for the Company pursuant to a Transfer
Agency Agreement, 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 April
21, 1993, for an initial term expiring April 30, 1994. The Transfer Agency
Agreement has been continued by action of the board of directors until April 30,
1995, and thereafter may be continued from year to year as to each Fund as long
as 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 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 Company shall pay to
INVESCO a fee of $14.00 per shareholder account or omnibus account participant
per year. This fee is paid monthly at 1/12 of the annual fee and is based upon
the actual number of shareholder accounts and omnibus account participants in
existence during each month.
For the fiscal years ended October 31, 1994, 1993 and 1992, the INVESCO
European and Pacific Basin Funds paid the following advisory fees,
administrative services fees and transfer agency fees:
INVESCO European Fund
Fiscal Year Administrative Transfer
Ended Advisory Services Agency
October 31, Fee Fee Fee
1994 $2,503,180 $60,180 $698,202
1993 1,235,975 34,720 324,579
1992 745,851 24,917 266,003
<PAGE>
INVESCO Pacific Basin Fund
Fiscal Year Administrative Transfer
Ended Advisory Services Agency
October 31, Fee Fee Fee
1994 $2,255,967 $55,169 $615,420
1993 945,962 28,919 193,283
1992 174,505 13,490 108,290
INVESCO International Growth Fund
For the fiscal year ended October 31, 1994, the period January 1, 1993 to
October 31, 1993 and the fiscal year ended December 31, 1992, the INVESCO
International Growth Fund paid the following advisory fees, administrative
services fees and transfer agency fees:
Fiscal Year Administrative Transfer
Ended Advisory Services Agency
October 31, Fee Fee Fee
October 31, 1994 $1,307,707 $29,616 $242,814
October 31, 1993 614,331 17,548 52,761
December 31, 1992 380,391 15,706 18,061
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 each of the Funds are carried out and that the Funds' portfolios are
properly administered. The officers of the Company, all of whom are officers and
employees of, and paid by, INVESCO, are responsible for the day-to-day
administration of the Company and each of the Funds. The investment adviser for
the Company has the primary responsibility for making investment decisions on
behalf of the Company. These investment decisions are reviewed by the investment
committee of INVESCO.
All of the officers and directors of the Company hold comparable positions
with INVESCO Diversified Funds, Inc., INVESCO Dynamics Funds, Inc., INVESCO
Emerging Opportunity Funds, Inc., INVESCO Growth Fund, Inc., INVESCO Income
Funds, Inc., INVESCO Industrial Income Fund, 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
Fund also are: with the exception of Mr. Sim, trustees of INVESCO Treasurer's
Series Trust; and, with the exception of Messrs. Hesser and Sim, directors of
The EBI Funds, Inc. 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. Their affiliations represent their principal occupations
during the past five years.
CHARLES W. BRADY,*+ Chairman of the Board. Chief Executive Officer and
Director of INVESCO PLC, London, England, and of subsidiaries thereof;
Chairman of the Board of The EBI Funds, Inc., INVESCO Treasurer's Series
Trust, and The Global Heath Sciences Fund. Address: 1315 Peachtree Street,
NE, Atlanta, Georgia. Born: May 11, 1935.
FRED A. DEERING,+# Vice Chairman of the Board. Vice Chairman of The EBI
Funds, Inc., and INVESCO Treasurer's Series Trust. Trustee of The Global
<PAGE>
Health Sciences Fund. Chairman of the Executive Committee and, formerly,
Chairman of the Board of Security Life of Denver Insurance Company, Denver,
Colorado; Chairman of the Board of Midwestern United Life Insurance Company,
Inc., Denver, Colorado; Director of NN Financial, Toronto, Ontario, Canada;
Chairman of First Columbia Financial Corporation, Englewood, Colorado.
Address: Security Life Center, 1290 Broadway, Denver, Colorado. Born:
January 12, 1928.
DAN J. HESSER,+* President and Director. Chairman of the Board,
President, and Chief Executive Officer of INVESCO Funds Group, Inc., and
Director of INVESCO Trust Company. Trustee of The Global Health Sciences
Fund. Born: December 27, 1939.
VICTOR L. ANDREWS,** Director. Mills Bee Lane Professor of Banking and
Finance and Chairman of the Department of Finance at Georgia State University,
Atlanta, Georgia, since 1968; since October 1984, Director of the Center for
the Study of Regulated Industry at Georgia State University; 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: Department of
Finance, Georgia State University, University Plaza, 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.
FRANK M. BISHOP*, Director. President and Chief Operating Officer of
INVESCO Inc. since February, 1993; Director of INVESCO Funds Group, Inc. since
March 1993; Director (since February 1993), Vice President (since December
1991), and Portfolio Manager (since February 1987), of INVESCO Capital
Management, Inc. (and predecessor firms), Atlanta, Georgia. Address: 1315
Peachtree Street, N.E., Atlanta, Georgia. Born: December 7, 1943.
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, Dallas, Texas. Born: July 25,
1930.
DANIEL D. CHABRIS,+# Director. Financial Consultant; Assistant
Treasurer of Colt Industries Inc., New York, New York, from 1966 to 1988.
Address: 15 Sterling Road, Armonk, New York. Born: August 1, 1923.
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.
R. DALTON SIM*, Director. Chairman of the Board (since March 1993) and
President (since January 1991) of INVESCO Trust Company; Director since June
1987 and, formerly, Executive Vice President and Chief Investment Officer
(June 1987 to January 1991) of INVESCO Funds Group, Inc.; President (since
1994) and Trustee (since 1991) of The Global Health Sciences Fund. Born: July
18, 1939.
<PAGE>
JONATHAN F. ZESCHIN, Vice President. Executive Vice President of INVESCO
Funds Group, Inc. since October 1993; formerly (January 1992 to October 1993)
Senior Vice President of INVESCO Funds Group, Inc.; Trust Officer of INVESCO
Trust Company since January 1993; Senior Vice President and director of
marketing of SteinRoe & Farnham, Inc., Chicago, Illinois, from January 1987
to December 1991. Born: September 4, 1953.
GLEN A. PAYNE, Secretary. Vice President, General Counsel and Secretary
of INVESCO Funds Group, Inc. and INVESCO Trust Company since May 1989.
Employee of a U.S. regulatory agency, Washington, D.C., from 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. Born: October 1, 1946.
WILLIAM J. GALVIN, JR., Assistant Secretary. Vice President of INVESCO
Funds Group, Inc. and Trust Officer of INVESCO Trust Company since August
1992; 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. and Trust Officer of INVESCO Trust Company. Born: September 14,
1941.
JUDY P. WIESE, Assistant Treasurer. Vice President of INVESCO Funds
Group, Inc. 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
Investment Company Act of 1940.
**Member of the management liaison committee of the Company.
As of February 14, 1995, officers and directors of the Company, as a
group, beneficially owned less than 1% of each Fund's outstanding shares.
Director Compensation
The following table sets forth, for the fiscal year ended October 31,
1994: the compensation paid by the Company to its six 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 Funds Group, Inc. (including the
Company), The EBI Funds, Inc., INVESCO Treasurer's Series Trust and The Global
Health Sciences Fund (collectively, the "INVESCO Complex") (45 funds
<PAGE>
in total) to these directors for services rendered in their capacities as
directors or trustees during the year ended December 31, 1994.
<PAGE>
Benefits Total
Aggregate Accrued As Estimated Compensation
Name of Compensa- Part of Annual From INVESCO
Person, tion From Company Benefits Upon Complex Paid
Position Company1 Expenses2 Retirement3 To Directors1
Fred A.Deering, $6,236 $1,725 $1,518 $89,350
Vice Chairman of
the Board
Victor L. Andrews 5,670 1,630 1,757 68,000
Bob R. Baker 6,074 1,456 2,355 75,350
Lawrence H. Budner 5,670 1,630 1,757 68,000
Daniel D. Chabris 6,074 1,860 1,249 73,350
Kenneth T. King 5,751 1,792 1,377 71,000
----- ----- ----- ------
Total $35,475 $10,093 $10,013 $445,050
% of Net Assets .0041%4 .0012%4 .0045%5
1The 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.
2Represents benefits accrued with respect to the Defined Benefit Deferred
Compensation Plan discussed below, and not compensation deferred at the election
of the directors.
3These figures represent the Company's share of the estimated annual
benefits payable by the INVESCO Complex (excluding the 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.
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.
4Totals as a percentage of the Company's net assets as of October 31,
1994.
5Total as a percentage of the net assets of the INVESCO Complex as of
December 31, 1994.
Messrs. Bishop, Brady, Hesser, and Sim, as "interested persons" of the
Company and other funds in the INVESCO Complex, receive compensation as officers
or employees of INVESCO or its affiliated companies, and do not receive any
director's fees or other compensation from the Company or other funds in the
INVESCO Complex for their services as directors.
<PAGE>
The boards of directors/trustees of the mutual funds managed by INVESCO,
The EBI Funds, Inc. 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 25% 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 INVESCO, EBI and Treasurer's Series 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 three 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 Funds, the adequacy of internal controls, 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 INVESCO 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
The shares of each Fund are sold on a continuous basis at the net asset
value per share next calculated after receipt of a purchase order in good form.
The net asset value for each Fund 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." INVESCO acts
as the Funds' Distributor under a distribution agreement with the Company under
which it receives no compensation and bears all expenses, including the costs of
printing and distribution of prospectuses incident to direct sales and
distribution of each of the Fund's shares on a no-load basis.
<PAGE>
HOW SHARES ARE VALUED
As described in the section of each Fund's Prospectus entitled "How Shares
Can Be Purchased," the net asset value of shares of each Fund is computed once
each day that the New York Stock Exchange is open as of the close of regular
trading on that Exchange (generally 4:00 p.m., New York time) and applies to
purchase and redemption orders received prior to that time. Net asset value per
share is also computed on any other day on which there is a sufficient degree of
trading in the securities held by a Fund that the current net asset value per
share might be materially affected by changes in the value of the securities
held, but only if on such day the Fund receives a request to purchase or redeem
shares of that Fund. 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, Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving, and Christmas.
The net asset value per share of each Fund is calculated by dividing the
value of all securities held by that Fund and 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 that 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 Company's 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 board of directors of the Company will review
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 will be valued
at amortized cost, absent unusual circumstances.
The values of securities held by each Fund and other assets used in
computing net asset value are determined as of the time regular trading in such
securities is completed each day, which, in the case of foreign securities,
generally occurs at various times each day but after the close of regular
trading on the New York Stock Exchange on the previous day. 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 section of each Fund's Prospectus entitled
"Performance Data," the Company advertises the total return performance of its
Funds. Average annual total return performance for each Fund for the indicated
periods ended October 31, 1994, was as follows:
<PAGE>
10 Years/
Life of
Fund 1 Year 5 Years Fund
- --------- ------ ------- ----
European 7.43% 7.38% 7.51%(1)
Pacific Basin 15.63% 5.15% 14.87%(2)
International Growth 10.21% 3.69% 6.02%(3)
- -----------------
(1) 101 months (8.42 yrs.)
(2) 10 years
(3) 85 months (7.08 yrs.)
Average annual total return performance for each of the periods indicated was
computed by finding the average annual compounded rates of return that would
equate the initial amount invested to the ending redeemable value, according to
the following formula:
P(1 + T)n = ERV
where: P = initial payment of $1000
T = average annual total return
n = number of years
ERV = ending redeemable value of initial payment
The average annual total return performance figures shown above were
determined by solving the above formula for "T" for each time period and Fund
indicated.
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
Funds. Sources for Fund performance information and articles about the Funds
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
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
<PAGE>
USA Today
Wall Street Journal
Wiesenberger Investment Companies Services
Working Woman
Worth
SERVICES PROVIDED BY THE FUND
Periodic Withdrawal Plan. As described in the section of each Fund's
Prospectus entitled "Services Provided By the Funds" each Fund offers a Periodic
Withdrawal Plan. All dividends and distributions on shares owned by shareholders
participating in this Plan are reinvested in additional shares. Since withdrawal
payments represent the proceeds from sales of shares, the amount of
shareholders' investments in that 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.
A Periodic Withdrawal Plan may be terminated at any time by sending a
written request to INVESCO. Upon termination, all future dividends and capital
gain distributions will be reinvested in additional shares unless a shareholder
requests otherwise.
Exchange Privilege. As discussed in the section of each Fund's Prospectus
entitled "Services Provided by the Funds," the Funds offer shareholders the
privilege of exchanging shares of the Funds for shares of certain other no-load
mutual funds advised by INVESCO. Exchange requests may be made either by
telephone or by 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 such an exchange is recognized for federal income tax purposes. This
privilege is not an option or right to purchase securities, but is a revocable
privilege permitted under the present policies of each of the funds and is not
available in any state or other jurisdiction where the shares of the mutual fund
into which transfer is to be made are not qualified for sale, or when the net
asset value of the shares presented for exchange is less than the minimum dollar
purchase required by the appropriate prospectus.
TAX-SHELTERED RETIREMENT PLANS
As described in the section of each Fund's Prospectus entitled "Services
Provided by the Funds," shares of the Funds may be purchased as the investment
medium for various tax-sheltered retirement plans. Persons who request
information regarding these plans from INVESCO 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
<PAGE>
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 days
following receipt of the required documents as described in the section of each
Fund's Prospectus entitled "How to Redeem 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
a particular Fund of securities owned by it is not reasonably practicable, or it
is not reasonably practicable for a particular 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 a Fund to
pay for redeemed shares in cash. In such cases, the investment adviser may
authorize payment to be made in portfolio securities or other property of the
Fund. However, the Company has obligated itself under the 1940 Act to redeem for
cash all shares of a Fund presented for redemption by any one shareholder 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
Each Fund intends to continue to conduct its business and maintain the
necessary diversification of assets and source of income requirements to qualify
as a regulated investment company under Subchapter M of the Internal Revenue
Code. The Company so qualified in the fiscal year ended October 31, 1994, and
intends to qualify during its next fiscal year. As a result, it is anticipated
that the Funds will pay no federal income taxes and will be accorded conduit or
"pass through" treatment for federal income tax purposes.
Dividends paid by each Fund from net investment income and distributions
of net realized short-term capital gains are, for federal income tax purposes,
taxable as ordinary income to shareholders. After the end of each calendar year,
each Fund sends shareholders information regarding the amount and character of
dividends paid in the year, information on foreign source income and foreign
taxes, and the dividends eligible for the dividends-received deduction for
corporations. Such amounts will be limited to the aggregate amount of qualifying
dividends which each Fund derives from its portfolio investments.
Distributions by each Fund of net realized long-term capital gains are,
for federal income tax purposes, taxable 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 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 Fund shares should be reduced below a
shareholder's cost as a result of a distribution of such realized capital gains,
such distribution would be taxable to the shareholder although a portion would
be, in effect, a return of invested capital. The net asset
<PAGE>
value of each Fund's shares reflects accrued net investment income and
undistributed realized capital gains; 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 each Fund may give rise to withholding
and other taxes imposed by foreign countries. Tax conventions between certain
countries and the United States may reduce or eliminate such taxes.
INVESCO 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 INVESCO 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 for 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 methods.
Shareholders should consult their own tax advisers regarding specific
questions as to federal, state and local taxes. Dividends and capital gains
distributions will generally be subject to applicable state and local taxes.
Qualification as a regulated investment company under the Internal Revenue Code
for income tax purposes does not entail government supervision of management or
investment policies.
INVESTMENT PRACTICES
Portfolio Turnover. There are no fixed limitations regarding portfolio
turnover for any of the Funds. Brokerage costs to each Fund are commensurate
with the rate of portfolio activity. During the fiscal years ended October 31,
1994, 1993 and 1992, the INVESCO European Fund's portfolio turnover rates were
70%, 44% and 87%, respectively, and the INVESCO Pacific Basin Fund's portfolio
turnover rates were 70%, 30% and 123%, respectively. During the fiscal year
ended October 31, 1994, the period January 1, 1993 to October 31, 1993 and the
fiscal year ended December 31, 1992, the INVESCO International Growth Fund's
portfolio turnover rates were 87%, 46% and 50%, respectively. The increased
level of portfolio turnover in all three Funds in fiscal 1994 versus fiscal 1993
was primarily due to the increased volume of purchases and sales of Fund shares
by investors, which resulted in higher levels of purchases and sales of
portfolio securities.
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 INVESCO or MIL, as the
Company's investment adviser or sub-adviser, places orders for the purchase
and sale of securities with brokers and dealers based upon INVESCO's or the
<PAGE>
sub-adviser's evaluation of their financial responsibility, subject to their
ability to effect transactions at the best available prices. INVESCO or the
sub-adviser evaluates the overall reasonableness of brokerage commissions paid
by reviewing the quality of executions obtained on portfolio transactions of
each 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 charged the Fund are
consistent with prevailing and reasonable commissions, INVESCO or the sub-
adviser also endeavors to monitor brokerage industry practices with regard to
the commissions charged by brokers/dealers on transactions effected for other
comparable institutional investors. While INVESCO or the sub-adviser seeks
reasonably competitive rates, the Funds do not necessarily pay the lowest
commission or spread available.
Consistent with the standard of seeking to obtain the best execution on
portfolio transactions, INVESCO or the sub-adviser 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 INVESCO or the sub-adviser in making informed investment decisions. Research
services prepared and furnished by brokers through which the Funds effect
securities transactions may be used by INVESCO or the sub-adviser in servicing
all of their respective accounts and not all such services may be used by
INVESCO or the sub-adviser in connection with the Funds.
In recognition of the value of the above-described brokerage and research
services provided by certain brokers, INVESCO or the sub-adviser, 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 Funds on which the commissions are in excess of those which
other brokers might have charged for effecting the same transactions.
Portfolio transactions may be effected through qualified broker/dealers
who recommend the Funds to their clients, or who act as agent in the purchase
any of the Funds' 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 may consider the sale of Fund shares by a broker or dealer in
selecting among qualified broker/dealers.
Charles Schwab & Co., Inc. ("Schwab") is paid a fee (the "OneSource Fee")
for recordkeeping, shareholder communications and other services provided by
Schwab to investors purchasing shares of the Funds through the OneSource(R)
program offered by Schwab as part of its Mutual Fund Marketplace(R). The
OneSource Fee is based on the average daily value of the investments in each
Fund made by Schwab through omnibus accounts it maintains on behalf of investors
participating in the Schwab program. The Fund directors have authorized each
Fund to pay INVESCO transfer agency fees based on the number of investors who
have beneficial interests in the Schwab omnibus accounts in that Fund. INVESCO,
in turn, is authorized to pay these transfer agency fees to Schwab as a
Sub-Transfer Agency Fee in payment of all or a portion of the OneSource Fee. The
Fund's directors have further authorized INVESCO to place a portion of each
Fund's brokerage transactions with Schwab, if INVESCO reasonably believes that,
in effecting the Fund's transactions in portfolio securities, Schwab is able to
provide the best execution of orders at the most favorable prices. Commissions
earned by Schwab from executing portfolio transactions on behalf of a specific
Fund may be credited by Schwab against the Sub-Transfer Agency Fee payable with
respect to that Fund, on a basis which has resulted from negotiations between
INVESCO and Schwab. INVESCO, in turn, applies any such credits to the transfer
agency fee it charges to the Fund. Thus, the Fund pays transfer agency fees to
INVESCO, and INVESCO pays
<PAGE>
Sub-Transfer Agency Fees to Schwab in payment of the OneSource Fee, only to the
extent that such fees are not offset by the Fund's credits. INVESCO itself pays
the portion of a Fund's OneSource Fee, if any, that exceeds the Sub- Transfer
Agency Fee. In the event that the transfer agency fee paid by a Fund to INVESCO
with respect to investors who have beneficial interests in the Schwab omnibus
accounts in that Fund exceeds the OneSource Fee applicable to that Fund, INVESCO
may carry forward the excess and apply it to future OneSource Fees applicable to
that Fund.
The aggregate dollar amounts of brokerage commissions paid by the INVESCO
European and Pacific Basin Funds for the fiscal years ended October 31, 1994,
1993, and 1992, were, $486,571, $103,126, and $32,425, respectively, for the
European Fund and $24,970, $311, and $3,792 respectively, for the INVESCO
Pacific Basin Fund. For the fiscal year ended October 31, 1994, brokers
providing research services received $31,687 and $0 in commissions on portfolio
transactions effected for the INVESCO European Fund and INVESCO Pacific Basin
Fund, respectively, on aggregate portfolio transactions of $12,429,310 and $0,
respectively. The INVESCO Pacific Basin and European Funds paid $3,885 and $0,
respectively, in compensation to brokers for the sale of shares of these Funds
during the fiscal year ended October 31, 1994.
The aggregate dollar amount of brokerage commissions paid by the INVESCO
International Growth Fund for the fiscal year ended October 31, 1994 was
$561,639, the period January 1, 1993 to October 31, 1993 was $355,739 and for
the fiscal year ended December 31, 1992 was $110,927. During the year ended
October 31, 1994, no commissions were paid to brokers in connection with their
provision of research services to the Fund.
The increased brokerage commissions paid by the Funds in fiscal 1994
versus the prior fiscal years were primarily the result of the increased volume
of purchases and sales of Fund shares by investors, which resulted in higher
levels of purchases and sales of portfolio securities and corresponding
increases in the amounts of brokerage commissions.
At October 31, 1994, each of the Funds held securities of its regular
brokers or dealers, or their parents, as follows:
Value of Securities
Fund Broker or Dealer at 10/31/94
Pacific Basin Associates Corporation
of North America $11,600,000
European Chevron Oil Finance Company $14,360,000
International State Street Bank and Trust Company $7,812,000
Growth Fund Nomura Securities $942,732
Neither INVESCO nor MIL receives any brokerage commissions on portfolio
transactions effected on behalf of any of the Funds, and there is no affiliation
between INVESCO, MIL or any person affiliated with INVESCO, MIL or the Funds and
any broker or dealer that executes transactions for the Funds.
ADDITIONAL INFORMATION
Common Stock. The Company has 500,000,000 authorized shares of common
stock with a par value of $0.01 per share. As of October 31, 1994, 57,056,136 of
such shares were outstanding. Of the Company's authorized shares, 100,000,000
shares have been allocated to each of the Company's three Funds. The board of
directors has the authority to designate additional classes of Common Stock
without seeking the approval of shareholders and may classify and
<PAGE>
reclassify any authorized but unissued shares.
Shares of each class represent the interests of the shareholders of such
class in a particular portfolio of investments of the Company. Each class of the
Company's shares is preferred over all other classes in respect of the assets
specifically allocated to that class, and all income, earnings, profits and
proceeds from such assets, subject only to the rights of creditors, are
allocated to shares of that class. The assets of each class are segregated on
the books of account and are charged with the liabilities of that class 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 classes 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 class. In the unlikely
event that a liability allocable to one class exceeds the assets belonging to
the class, all or a portion of such liability may have to be borne by the
holders of shares of the Company's other classes.
All shares, regardless of class, have equal voting rights. Voting with
respect to certain matters, such as ratification of independent accountants or
election of directors, will be by all classes of the Company. When not all
classes 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 class 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 voting for the election of directors will not be able to elect
any person or persons to the board of directors. After they have been elected by
shareholders, the directors will continue to serve until their successors are
elected and have qualified or they are removed from office, in either case by a
shareholder vote, or until death, resignation, or retirement. Directors may
appoint their own successors, provided that always at least a majority of the
directors have been elected 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 Investment Company Act of 1940 or the Company's Articles of
Incorporation, or at their discretion.
Principal Shareholders. As of February 1, 1995, the following entities
held more than 5% of the Funds' outstanding equity securities.
Amount and Nature Percent
Name and Address of Ownership of Class
INVESCO Pacific Basin Fund
Charles Schwab & Co., Inc. 6,147,590.33 sh. 38.20%
Reinvestment Account Record
101 Montgomery St.
San Francisco, CA 94104
<PAGE>
INVESCO European Fund
Charles Schwab & Co., Inc. 6,408,539.62 sh. 35.73%
Reinvestment Account Record
101 Montgomery St.
San Francisco, CA 94104
INVESCO International Growth Fund
Commerce Bank of Kansas 1,922,569.59 sh. 29.13%
City Trustee for Record and
Farmland Industries Beneficial
Coop Retirement Plan
P.O. Box 419248
Kansas City, MO 64141
Charles Schwab & Co., Inc. 1,134,355.22 sh. 17.19%
Reinvestment Account Record
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 each Fund's investment securities in accordance with
procedures and conditions specified in the custody agreement. Under its contract
with the Company, the custodian is authorized to establish separate accounts in
foreign currencies and to cause foreign securities owned by the Company to be
held outside the United States in branches of U.S. banks and, to the extent
permitted by applicable regulations, in certain foreign banks and securities
depositories.
Transfer Agent. 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 herein. Such services include the issuance, cancellation and transfer
of shares of each of the Funds, and the maintenance of records
regarding the ownership of such shares.
Reports to Shareholders. The Company's fiscal year ends on October 31. The
Fund 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, 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 Funds.
Financial Statements. The financial statements and schedules for the
fiscal year ended October 31, 1994 are attached hereto.
Prospectuses. The Company will furnish, without charge, a copy of the
Prospectus for each of its Funds, 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.
<PAGE>
Registration Statement. This Statement of Additional Information and the
Prospectuses 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>
Report of Independent Accountants
To the Board of Directors and Shareholders of
INVESCO International Funds, Inc.
In our opinion, the accompanying statement of assets and liabilities, including
the statement of investment securities, and the related statements of operations
and of changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of INVESCO European Fund, INVESCO
International Growth Fund and INVESCO Pacific Basin Fund, constituting the
INVESCO International Funds, Inc., (hereafter referred to as the "Fund") at
October 31, 1994, the results of each of their operations for the year then
ended, the changes in each of their net assets for each of the two years in the
period then ended (for the INVESCO International Growth Fund for the year-ended
October 31, 1994 and for the period January 1, 1993 through October 31, 1993),
and the financial highlights for each of the periods indicated, in conformity
with generally accepted accounting principles. These financial statements and
the financial highlights (hereafter referred to as "financial statements") are
the responsibility of the Fund's management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these financial statements in accordance with generally accepted
auditing standards which require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits, which included confirmation of securities at October 31, 1994 by
correspondence with the custodian and the application of alternative auditing
procedures for unsettled security transactions, provide a reasonable basis for
the opinion expressed above.
PRICE WATERHOUSE LLP
Denver, Colorado
December 2, 1994
<PAGE>
<TABLE>
<CAPTION>
INVESCO International Funds, Inc.
Financial Highlights
(For a Fund Share Outstanding throughout Each Period)
Year Ended October 31
--------------------------------------------------
1994 1993 1992 1991 1990
<S> <C> <C> <C> <C> <C>
European Fund
PER SHARE DATA
Net Asset Value - Beginning of Period $12.20 $10.14 $11.14 $11.04 $10.03
--------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income 0.16 0.14 0.20 0.22 0.26
Net Gains or (Losses) on Securities
(Both Realized and Unrealized) 0.75 2.06 (1.00) 0.26 1.01
--------------------------------------------------
Total from Investment Operations 0.91 2.20 (0.80) 0.48 1.27
--------------------------------------------------
LESS DISTRIBUTIONS
Dividends from Net Investment Income 0.16 0.14 0.20 0.21 0.26
Distributions from Capital Gains 0.00 0.00 0.00 0.17 0.00
--------------------------------------------------
Total Distributions 0.16 0.14 0.20 0.38 0.26
--------------------------------------------------
Net Asset Value - End of Period $12.95 $12.20 $10.14 $11.14 $11.04
==================================================
TOTAL RETURN 7.43% 21.78% (7.22%) 4.34% 12.70%
RATIOS
Net Assets - End of Period ($000 Omitted) $349,842 $270,544 $117,276 $74,497 $83,521
Ratio of Expenses to Average Net Assets 1.20% 1.28% 1.29% 1.43% 1.29%
Ratio of Net Investment Income to Average Net Assets 1.28% 1.76% 2.23% 1.83% 3.38%
Portfolio Turnover Rate 70% 44% 87% 61% 20%
<PAGE>
INVESCO International Funds, Inc.
Financial Highlights (Continued)
(For a Fund Share Outstanding throughout Each Period)
Pacific Basin Fund~
PER SHARE DATA
Net Asset Value - Beginning of Period $15.11 $11.02 $13.19 11.95 $14.24
--------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income 0.04 0.04 0.07 0.11 0.05
Net Gains or (Losses) on Securities
(Both Realized and Unrealized) 2.28 4.09 (2.18) 1.23 (1.97)
--------------------------------------------------
Total from Investment Operations 2.32 4.13 (2.11) 1.34 (1.92)
--------------------------------------------------
LESS DISTRIBUTIONS
Dividends from Net Investment Income 0.04 0.04 0.06 0.10 0.09
Distributions from Capital Gains 0.32 0.00 0.00 0.00 0.28
--------------------------------------------------
Total Distributions 0.36 0.04 0.06 0.10 0.37
--------------------------------------------------
Net Asset Value - End of Period $17.07 $15.11 $11.02 $13.19 $11.95
==================================================
TOTAL RETURN 15.63% 37.51% (16.03%) 11.27% (13.47%)
RATIOS
Net Assets - End of Period ($000 Omitted) $352,888 $299,192 $26,488 $27,683 $16,871
Ratio of Expenses to Average Net Assets 1.24% 1.22% 1.78% 1.87% 1.79%
Ratio of Net Investment Income to Average Net Assets 0.28% 0.63% 0.66% 0.99% 0.36%
Portfolio Turnover Rate 70% 30% 123% 89% 93%
<FN>
~ The per share information for Pacific Basin Fund for 1993 was computed based
on weighted average shares.
</FN>
<PAGE>
INVESCO International Funds, Inc.
Financial Highlights (Continued)
(For a Fund Share Outstanding throughout Each Period)
Year Period
Ended Ended
October 31 October 31 Year Ended December 31
---------- ---------- ----------------------
1994~ 1993~ 1992 1991 1990
(Note 1)
International Growth Fund
PER SHARE DATA
Net Asset Value - Beginning of Period $15.75 $12.57 $14.51 $13.69 $16.16
---------- ---------- ---------------------
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income 0.04 0.08 0.12 0.17 0.26
Net Gains or (Losses) on Securities
(Both Realized and Unrealized) 1.57 3.16 (1.94) 0.82 (2.65)
---------- ---------- ---------------------
Total from Investment Operations 1.61 3.24 (1.82) 0.99 (2.39)
---------- ---------- ---------------------
LESS DISTRIBUTIONS
Dividends from Net Investment Income 0.07 0.06 0.11 0.17 0.02
Distributions from Capital Gains 0.00 0.00 0.01 0.00 0.06
---------- ---------- ---------------------
Total Distributions 0.07 0.06 0.12 0.17 0.08
---------- ---------- ---------------------
Net Asset Value - End of Period $17.29 $15.75 $12.57 $14.51 $13.69
========== ========== =====================
TOTAL RETURN 10.21% 29.08%+ (12.52%) 7.19% (14.62%)
RATIOS
Net Assets - End of Period ($000 Omitted) $161,884 $108,677 $35,192 $42,039 $39,237
Ratio of Expenses to Average Net Assets# 1.50% 1.43%* 1.36% 1.48% 1.48%
Ratio of Net Investment Income to Average Net Assets# 0.46% 0.94%* 0.83% 1.17% 1.85%
Portfolio Turnover Rate 87% 46%+ 50% 71% 78%
<FN>
~ The per share information was computed based on weighted average shares.
+ These amounts are 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
year ended December 31, 1990. If such expenses had not been voluntarily
absorbed, ratio of expenses to average net assets would have been 1.49% and
ratio of net investment income to average net assets would have been 1.84%.
* Annualized
<FN>
<PAGE>
</TABLE>
<TABLE>
<CAPTION>
INVESCO International Funds, Inc.
Ten Largest Common Stock Holdings
October 31, 1994
Description Value
- -------------------------------------------------------------------------------
<S> <C>
EUROPEAN Fund
Repsol SA Sponsored ADR $5,850,000
Fiat SpA 5,381,431
AKZO NV 5,254,609
British Gas PLC ADR 4,974,375
Total Cie Francaise des Petroles B Shrs 4,883,008
British Telecommunications PLC 4,882,960
Glaxo Holdings PLC Sponsored ADR 4,812,500
Bayerische Motoren Werke AG 4,777,795
Banco Popular Espanol SA Registered Shrs 4,256,027
Volvo AB ADR Representing Class B Shrs 4,246,250
INTERNATIONAL GROWTH Fund
Total Cie Francaise des Petroles B Shrs $2,453,501
Societe Nationale Elf Aquitaine 1,958,288
Philips Electronics NV 1,810,894
Volvo AB Class B Free Shrs 1,753,447
Fiat SpA 1,714,440
Broken Hill Proprietary 1,531,488
Assicurazioni Generali SpA 1,469,969
Bayerische Motoren Werke AG 1,408,295
Lloyds Bank PLC 1,407,735
British Telecommunications PLC 1,352,799
PACIFIC BASIN Fund
Hitachi Metals $6,789,528
Toray Industries 6,315,840
Nippon Express 6,176,520
Mitsui OSK Lines 6,140,400
Asahi Diamond Industrial 6,061,968
Asatsu Inc 5,910,264
Sumitomo Rubber Industries 5,784,876
Sanyo Electric 5,715,732
Nippon Telegraph & Telephone 5,603,760
Sumitomo Metal Mining 5,548,032
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
INVESCO International Funds, Inc.
Statement of Investment Securities
October 31, 1994
Shares or
Industry Principal
Description Code Amount Value
-----------------------------------------------------------------------------
<S> <C> <C> <C>
EUROPEAN Fund
COMMON STOCKS & WARRANTS 94.00%
BELGIUM 0.89%
Petrofina SA OG 10,000 $3,070,757
------------
Petrofina SA Warrants (Exp 1997)* OG 600 13,185
------------
3,083,942
------------
FINLAND 1.39%
Metsa-Serla Oy Series B Shrs FP 67,000 3,109,525
Tampella Ltd* PP 533,333 1,734,983
------------
4,844,508
------------
FRANCE 16.06%
Accor SA+ HM 25,000 2,966,588
AXA SA*+ FR 60,000 2,781,504
Banque Nationale de Paris+ BK 60,000 2,970,278
BIC SA+ DV 10,000 1,233,246
Carrefour SA+ RT 4,000 1,763,445
Cie Generale des Establissement
Michelin Warrants (Exp 1995)*+ TI 900,000 900,173
Club Mediterranee SA*+ HM 25,000 2,138,760
Compagnie Financiere de Paribas+ BK 35,388 2,353,925
Compagnie Plastic Omnium+ CH 17,500 2,158,181
Docks de France+ RT 24,000 3,328,017
Dollfus-Mieg & Cie+ TA 8,400 526,936
Lagardere Groupe+ FR 50,000 1,179,838
Lagardere Groupe Warrants (Exp 1997)* FR 110,000 133,521
L'Air Liquide SA+ CH 20,130 2,838,288
Lyonnaise des Eaux-Dumez+ PC 36,000 3,272,084
Moet Hennessy Louis Vuitton+ FD 13,750 2,216,444
Moulinex SA* HA 67,400 1,540,680
Rhone-Poulenc SA+ CH 110,000 2,713,142
Roussel & Uclaf+ MD 27,000 3,015,141
Schneider SA+ DV 40,000 3,006,402
Societe Centrale du Groupe des Assurances
Nationales SA+ FR 16,000 887,160
Societe Nationale Elf Aquitaine+ OG 48,000 3,547,088
Thomson-CSF SA*+ EL 70,000 1,899,199
Total Cie Francaise des Petroles B Shrs+ OG 75,300 4,883,008
Vallourec-Usines a de Tubes*+ MM 14,900 808,806
Worms & Cie+ FR 20,000 932,218
------------
55,994,072
------------
GERMANY 10.82%
Allianz AG Holding Registered Shrs IN 1,920 $2,945,108
BASF AG Warrants (Exp 2001)* CH 16,500 959,941
Barmag AG MY 6,500 1,447,807
Bayer AG CH 16,000 3,743,619
Bayerische Motoren Werke AG+ AM 9,272 4,777,795
<PAGE>
Bilfinger & Berger AG CR 3,000 1,693,485
Bremer Vulkan Verbund AG* + SH 25,000 1,710,440
Commerzbank AG Warrants (Exp 1997)* BK 20,000 511,968
Deutsche Babcock AG*+ EG 14,250 2,114,762
Deutsche Bank AG+ BK 6,081 2,996,026
Deutsche Bank AG Warrants (Exp 1996)* BK 9,000 550,532
FAG Kugelfischer Georg Schaefer
Kommanditgesellschaft auf Aktien*+ MY 19,300 3,022,043
Kampa Haus AG+ CR 2,900 1,889,629
Mannesmann AG MY 12,000 3,207,449
Philipp Holzmann AG EG 3,506 1,918,647
Veba AG+ DV 12,000 4,021,279
Weru AG CR 390 220,412
------------
37,730,942
------------
ITALY 7.19%
Ansaldo Trasporti EE 632,500 2,775,094
Europa Metalli* MM 3,250,000 1,620,288
Fiat SpA* AM 1,318,332 5,381,431
Istituto Mobiliare Italiano SpA
Sponsored ADR FR 110,000 2,200,000
Italcementi SpA Savings Shrs CR 777,000 2,588,381
Montedison SpA Warrants (Exp 1997)* CH 4,500,000 712,237
Sasib SpA MY 240,000 1,237,860
Sogefi SpA* AM 960,000 2,340,000
Stet-Societa Financiaria Telefonica TC 1,100,000 3,324,750
Telecom Italia UT 1,050,000 2,880,150
------------
25,060,191
------------
NETHERLANDS 8.66%
AKZO NV DV 41,600 5,254,609
Fortis Amev NV IN 100,000 4,159,005
Hagemeyer NV DV 13,000 1,037,378
Hollandsche Beton Groep NV CR 14,000 2,363,098
Hunter Douglas NV FM 43,000 1,900,624
KLM Royal Dutch Airlines* TR 100,000 2,782,558
Koninklijke Borsumij Wehry WH 100,000 1,655,296
Philips Electronics NV EE 120,000 3,972,710
Verenigde Nederlendse Uitgevsbedri
Verigd Bezit PR 30,000 3,203,798
Wereldhave NV* RE 30,000 1,699,793
Wolters Kluwer PR 30,000 2,169,684
------------
30,198,553
------------
NORWAY 0.75%
Norske Skogindustrier Frie A PP 94,600 $2,627,586
------------
SPAIN 5.07%
Banco de Santander SA BK 13,333 521,094
Banco de Santander SA Registered Shrs BK 53,000 2,149,527
Banco Popular Espanol SA Registered Shrs BK 34,000 4,256,027
Cortefiel SA* RT 34,000 1,213,686
Espanola de Carburos Metalicos SA CH 76,600 2,563,465
Europistas Concesionaria Espanola SA EG 17,500 149,201
Repsol SA Sponsored ADR OG 180,000 5,850,000
Viscofan Industria Navarra de Envolturas
Celulosicas SA CN 56,000 988,351
<PAGE>
------------
17,691,351
------------
SWEDEN 6.05%
Atlas Copco AB B Free Shrs MY 240,000 3,263,259
Marieberg Tidnings AB Series A Shrs PR 110,000 2,701,346
Munksjo AB PP 240,000 2,031,212
NCC AB B Free Shrs* CR 230,000 2,169,956
Skanska AB B Free Shrs CR 58,000 1,311,686
Svenskt Stal Series A Shrs MM 20,950 982,460
Series B Shrs MM 44,000 2,063,401
Trelleborg AB Series B Shrs* TI 150,000 2,310,087
Volvo AB ADR Representing Class B Shrs AM 215,000 4,246,250
------------
21,079,657
------------
SWITZERLAND 7.14%
Baloise-Holding Registered Shrs IN 1,650 3,109,364
Baloise-Holding Warrants (Exp 1995)* IN 1,250 16,434
CS Holding AG Bearer Shrs* BK 5,600 2,449,722
CS Holding AG Warrants (Exp 1994)* BK 5,600 46,853
Danzas AG Participation Certificates TR 11,500 2,703,188
Registered Shrs TR 340 426,693
Edipresse SA Bearer Shrs PR 2,970 1,254,263
Georg Fischer AG Bearer Shrs* MY 1,200 1,386,455
Merkur Holding AG Registered Shrs RT 12,500 3,276,893
Publicitas Holding SA Registered Shrs* AD 4,000 3,474,105
Saurer-Group Holdings Registered Shrs MY 3,900 1,274,104
SBSI Holding SA FR 700 858,964
SBSI Participation Certificates Series B FR 3,800 914,423
Schindler Holding AG Participation
Certificates~ MY 2,200 2,454,184
Schweizerische Rueckversicherungs
Gesellschaft Registered Shrs IN 2,100 $1,246,614
------------
24,892,259
------------
UNITED KINGDOM 29.98%
Abbey National PLC FR 268,000 1,822,829
Argyll Group PLC RT 347,000 1,486,444
BAT Industries PLC Sponsored ADR DV 251,500 3,568,156
BTR PLC DV 747,929 3,754,192
BTR PLC Warrants (Exp 1998)* DV 2,121 1,509
Beazer Homes PLC CR 825,000 1,847,959
Boots PLC MD 120,000 1,040,841
Bowater PLC PP 302,666 2,221,917
Bowthorpe Holdings PLC EL 240,000 1,216,440
Britannic Assurance PLC IN 325,000 2,199,892
British Gas PLC ADR UT 105,000 4,974,375
British Petroleum OG 230,000 1,635,817
British Telecommunications PLC TC 758,000 4,882,960
Burford Holdings PLC RE 290,000 426,735
Cable & Wireless PLC TC 220,000 1,514,337
Cadbury Schweppes PLC FD 150,000 1,071,743
Coats Viyella PLC TA 340,000 1,089,564
Commercial Union PLC IN 427,500 3,823,325
Cookson Group PLC MM 510,000 1,976,224
Davis Service Group PLC SV 75,000 277,132
General Accident PLC IN 105,000 1,002,582
General Electric PLC EL 588,000 2,663,023
<PAGE>
Glaxo Holdings PLC Sponsored ADR MD 250,000 4,812,500
Glynwed International PLC MM 370,000 1,996,335
Granada Group PLC AV 200,000 1,706,940
Grand Metropolitan PLC DV 275,000 1,870,440
Great Universal Stores PLC RT 128,000 1,174,061
Guinness PLC FD 135,000 1,032,993
HSBC Holdings PLC BK 143,225 1,700,095
Hanson PLC DV 717,000 2,708,001
Harrisons & Crosfield PLC DV 180,000 482,652
Hepworth PLC CR 200,000 961,380
Kingfisher PLC RT 225,714 1,741,880
Land Securities PLC RE 158,000 1,593,896
Legal & General Group PLC IN 330,000 2,395,602
Lloyds Bank PLC BK 200,000 1,876,980
MFI Furniture Group PLC FM 350,000 755,370
Marks & Spencer PLC RT 300,000 2,035,575
Meyer International PLC CR 100,000 609,855
NFC PLC TR 1,000,000 2,910,300
National Power PLC UT 120,000 975,114
National Westminster Bank PLC BK 170,000 1,400,868
Northern Foods FD 200,000 670,350
P&P PLC RT 500,000 564,075
Peninsular & Oriental Steam Navigation TR 150,000 1,559,790
Prudential Corp PLC IN 500,000 2,599,650
Rank Organization PLC RR 190,000 1,255,026
Redland PLC CR 125,000 950,344
Scottish Power PLC UT 218,270 $1,281,169
Sedgwick Group PLC IN 400,000 1,007,160
Severn Trent PLC UT 295,000 2,763,722
Shell Transport & Trading PLC OG 200,000 2,400,180
Siebe PLC CI 249,500 2,194,677
SmithKline Beecham PLC ADR
Representing Ord A Shrs* MD 25,000 828,125
Tarmac PLC CR 420,000 844,641
Tesco PLC RT 400,000 1,533,630
Tomkins PLC CR 530,000 1,828,420
Unilever NV DV 50,000 930,315
Wellcome PLC Sponsored ADR MD 89,000 923,375
Yorkshire Water PLC UT 130,000 1,175,402
------------
104,548,884
------------
TOTAL COMMON STOCKS & WARRANTS
(Cost $300,416,122) 327,751,945
------------
PREFERRED STOCKS 1.88%
BELGIUM 0.59%
Cockerill Sambre SA, Pfd Shrs* MM 330,000 2,062,852
------------
GERMANY 1.29%
Fielmann AG, Non-Voting Pfd Shrs* RT 7,494 263,764
Jungheinrich AG, Non-Voting Pfd Shrs+ MY 9,350 2,225,600
SAP AG, Non-Voting Pfd Shrs CS 3,500 2,022,275
------------
4,511,639
------------
TOTAL PREFERRED STOCKS
(Cost $4,383,541) 6,574,491
------------
SHORT-TERM INVESTMENTS -
<PAGE>
COMMERCIAL PAPER 4.12%
UNITED STATES 4.12%
Chevron Oil Finance
4.625%, 11/1/1994
(Cost $14,360,000) FR $14,360,000 14,360,000
------------
TOTAL INVESTMENT SECURITIES AT VALUE 100.00% (Cost $319,159,663) (Cost for
Income Tax Purposes
$319,359,485) $348,686,436
============
INTERNATIONAL GROWTH Fund
COMMON STOCKS & WARRANTS 93.18%
ARGENTINA 1.12%
Banco Frances del Rio de la Plata
SA Sponsored ADR BK 18,000 $461,250
CIA Naviera Perez Companc
SA Series B Shrs* DV 80,000 438,400
Telefonica de Argentina SA Sponsored ADR
Representing Ord B Shrs UT 7,000 434,875
Yacimientos Petroliferos Fiscales
SA Sponsored ADR OG 18,000 $434,250
------------
1,768,775
------------
AUSTRALIA 3.75%
Amcor Ltd PP 34,000 226,043
Australian National Industries Ltd MM 324,000 348,592
Brambles Industries Ltd TR 27,000 270,058
Broken Hill Proprietary MM 100,000 1,531,488
CRA Ltd MM 27,000 383,851
Lend Lease DV 25,000 307,930
National Australia Bank BK 85,000 671,065
News Corp MM 122,000 751,349
North Broken Hill Peko Ltd MM 290,000 811,229
Pasminco Ltd* MM 234,000 392,399
Savage Resources Ltd MM 215,000 221,747
------------
5,915,751
------------
CHILE 0.84%
Chilgener SA ADR UT 20,000 565,000
Compania de Telefonos de Chile
SA Sponsored ADR* UT 8,000 753,000
------------
1,318,000
------------
FRANCE 9.59%
Accor SA HM 7,000 830,645
Banque Nationale de Paris+ BK 3,600 178,217
Carrefour SA+ RT 2,180 961,078
Cie de Saint Gobain+ GC 8,225 1,043,098
Club Mediterranee SA* HM 5,500 470,527
Compagnie Financiere de Paribas+ BK 13,065 869,053
Docks de France+ RT 5,675 786,937
Dollfus-Mieg & Cie TA 9,000 564,574
Lyonnaise des Eaux-Dumez+ PC 8,415 764,850
Moet Hennessy Louis Vuitton FD 4,141 667,512
<PAGE>
Moulinex SA* HA 27,250 622,901
Rhone-Poulenc SA+ CH 26,000 641,288
Schneider SA DV 14,710 1,105,604
Societe Nationale Elf Aquitaine OG 26,500 1,958,288
Thomson-CSF SA* EL 27,000 732,548
Total Cie Francaise des Petroles B Shrs+ OG 37,835 2,453,501
VALEO* AM 9,125 495,326
------------
15,145,947
------------
GERMANY 5.59%
Allianz AG Holding Registered Shrs+ IN 570 874,329
BASF Lacke & Farben AG+ CH 3,170 670,885
Bayer AG+ CH 3,090 722,986
Bayerische Motoren Werke AG+ AM 2,733 1,408,295
Bilfinger & Berger AG CR 1,300 733,843
Commerzbank AG+ BK 4,222 888,473
Deutsche Babcock AG*+ EG 5,050 $749,442
Deutsche Bank AG+ BK 848 417,798
FAG Kugelfischer Georg Schaefer
Kommanditgesellschaft auf Aktien*+ MY 2,360 369,535
Philipp Holzmann AG EG 756 413,826
Preussag AG+ DV 2,430 711,712
Veba AG DV 2,570 861,224
------------
8,822,348
------------
GREECE 0.33%
ErgoBank SA Registered Shrs* BK 6,600 246,266
Hellenic Bottling FD 8,800 275,994
------------
522,260
------------
HONG KONG 4.68%
Amoy Properties RE 911,000 1,131,969
Cheung Kong Holdings RE 224,000 1,078,539
Dairy Farm International Holdings FD 498,000 647,799
Hang Seng Bank BK 99,250 719,389
Hong Kong & China Gas UT 345,000 654,187
Hongkong Land Holdings Ltd RE 290,000 743,204
Hongkong Electric Holdings UT 165,000 518,962
Hutchison Whampoa DV 58,000 268,004
Jardine Strategic Holdings DV 172,000 661,196
Sun Hung Kai Properties RE 89,700 684,998
Swire Pacific Class A Shrs Ltd TR 37,000 282,552
------------
7,390,799
------------
ITALY 3.43%
Alleanza Assicurazioni SpA
Non Conv Savings Shrs IN 200 1,842
Ansaldo Trasporti EE 100,000 438,750
Assicurazioni Generali SpA IN 58,740 1,469,968
Banca Commerciale Italiana SpA BK 34,000 78,676
Fiat SpA* AM 420,000 1,714,440
Italcementi SpA Savings Shrs CR 51,300 170,893
Stet-Societa Financiaria Telefonica TC 240,950 728,271
Telecom Italia UT 296,800 814,122
------------
5,416,962
<PAGE>
------------
JAPAN 23.96%
Amway Japan Ltd RT 9,000 291,643
DDI Corp+ TC 100 906,096
Dowa Mining MM 170,000 1,017,552
East Japan Railway+ TR 130 647,993
Fanuc Ltd EL 18,500 897,324
Fujitsu Ltd CO 92,000 1,053,878
Hino Motors Ltd AM 90,000 887,004
Honda Motor+ AM 47,000 $819,718
Itochu Corp+ DV 120,000 933,754
Japan Associated Finance FR 6,000 885,456
Jusco Co+ RT 23,000 517,445
Kawasaki Steel*+ MM 200,000 937,056
Komatsu Ltd + MY 87,000 826,013
Kyocera Corp+ EL 12,000 913,939
Mitsubishi Chemical CH 182,000 1,074,353
Mitsubishi Heavy Industries+ MY 120,000 977,098
Mitsui & Co+ DV 123,000 1,104,343
Murata Manufacturing+ EE 22,000 883,186
Nikko Securities+ IB 85,000 1,000,008
Nippon Express TR 70,000 758,520
Nippon Koei EG 65,000 731,172
Nippon Light Metal MM 120,000 879,264
Nippon Sanso CH 160,000 939,533
Nippon Telegraph & Telephone UT 15 140,094
Nisshinbo Industries TA 64,000 746,342
Nomura Securities IB 45,000 942,732
Oji Paper PP 72,000 802,483
SNT Corp MY 62,000 787,003
Sanwa Bank BK 51,000 1,068,430
Sharp Corp EL 50,000 933,960
Shimamura Co RT 14,000 660,274
Shizuoka Bank BK 72,000 980,813
Sony Music Entertainment RR 12,800 725,207
Sumitomo Bank BK 59,000 1,108,162
Sumitomo Chemical CH 160,000 944,486
Sumitomo Warehouse SF 115,000 872,298
TDK Corp EE 20,000 982,464
Teikoku Oil OG 120,000 960,998
Tokai Bank SL 79,000 978,336
Tokio Marine & Fire Insurance IN 68,000 807,024
Tokyo Steel Manufacturing MM 33,000 827,561
Toppan Printing PR 61,000 900,214
Toray Industries TA 90,000 710,532
Toshiba Corp DV 137,000 1,080,174
------------
37,841,935
------------
KOREA 0.08%
Hyundai Motor GDR Ltd AM 6,000 132,000
------------
MALAYSIA 2.50%
Commerce Asset-Holding Berhad BK 57,000 254,076
Genting Berhad RE 24,000 220,528
Magnum Corp Berhad RR 182,000 409,189
Malayan Banking Berhad BK 33,000 224,516
Perusahaan Otomobil Nasional
Berhad-Proton AM 151,000 563,852
Public Bank Berhad BK 105,000 238,123
<PAGE>
Resorts World Berhad RR 80,000 506,745
Sime Darby Berhad DV 40,000 110,264
Tanjong PLC RR 97,000 379,277
Telekom Malaysia Berhad TC 40,000 323,754
Tenaga Nasional Berhad UT 82,000 $436,051
United Engineers Malaysia Berhad EG 52,000 280,587
------------
3,946,962
------------
MEXICO 2.96%
CEMEX SA CPO CR 100,000 896,653
Cifra SA de CV Series B ADR RT 300,000 848,670
Desc Sociedad de Fomento
Industrial SA de CV ADR* DV 20,000 562,500
Empresas ICA Sociedad Controladora
SA de CV ADR CR 25,000 740,625
Grupo Sidek SA de CV ADR* DV 30,000 528,750
Telefonos de Mexico SA de CV Sponsored
ADR Representing Ord Series L Shrs UT 20,000 1,102,500
------------
4,679,698
------------
NETHERLANDS 4.72%
AKZO NV CH 7,565 955,556
Heineken NV FD 3,100 453,367
IS Himalayan Fund NV* IC 36,696 645,850
IS Himalayan Fund NV Warrants
(Exp 1996)* IC 5,839 18,393
Internationale Nederlanden Groep NV IN 18,400 861,323
KLM Royal Dutch Airlines* TR 33,740 938,835
Philips Electronics NV EE 54,700 1,810,894
Unilever NV DV 6,880 819,233
Verenigde Nederlandse
Uitgevbedri Verigd Bezit PR 5,200 555,325
Wolters Kluwer PR 5,500 397,775
------------
7,456,551
------------
NEW ZEALAND 0.56%
Brierley Investments Ltd DV 241,000 180,969
Carter Holt Harvey FP 76,000 184,305
Fisher & Paykel Industries Ltd HA 43,000 113,806
Fletcher Challenge Industries Ltd PP 66,000 177,768
Telecom Corp of New Zealand Ltd TC 67,000 233,410
------------
890,258
------------
PORTUGAL 0.36%
Cimentos de Portugal SA CR 30,000 560,080
------------
SINGAPORE 4.35%
City Developments RE 102,400 602,149
Courts (Singapore) Ltd FM 190,000 267,369
Development Bank of Singapore BK 47,000 498,437
First Capital Ltd DV 62,000 244,460
Fraser & Neave Ltd FD 52,200 617,458
Hotel Properties Ltd HM 116,000 236,574
Keppel Corp Ltd SH 95,000 $871,856
Malayan Banking Berhad BK 67,500 458,872
Neptune Orient Lines TR 210,000 312,645
<PAGE>
Robinson & Co Ltd RT 62,800 290,306
Sembawang Corp Ltd SH 70,000 542,488
Sime Darby Berhad DV 125,000 345,004
Singapore Airlines Foreign Shrs TR 50,000 479,266
Singapore Press Holdings PR 30,000 548,607
United Overseas Bank BK 49,825 545,332
------------
6,860,823
------------
SPAIN 2.94%
Argentaria-Corp Bancaria de Espana SA BK 27,950 1,079,009
Banco Popular Espanol SA Registered Shares BK 10,000 1,251,773
Repsol SA OG 36,450 1,163,187
Telefonica de Espana SA UT 85,000 1,147,990
------------
4,641,959
------------
SWEDEN 2.31%
Astra AB Series A Free Shrs MD 26,280 709,184
Pharmacia AB Series B Free Shrs MD 29,050 538,074
Skandinaviska Enskilda Banken A Free Shrs* BK 99,500 648,836
Volvo AB Class B Free Shrs AM 89,000 1,753,447
------------
3,649,541
------------
SWITZERLAND 2.79%
Ciba-Geigy Ltd Registered Shrs MD 2,000 1,166,534
CS Holding AG Bearer Shrs BK 2,305 1,008,323<%0>
Nestle SA Registered Shrs FD 1,152 1,077,648
Sandoz AG Ltd Registered Shrs MD 900 448,924
Schindler Holding AG
Participation Certificates MY 235 262,151
Winterthur Schweiz Versicherungs-
Gesellschaft Registered Shrs IN 940 448,654
------------
4,412,234
------------
THAILAND 0.26%
Siam Commercial Bank BK 40,000 413,956
------------
TURKEY 0.22%
Migros Turk FD 150,000 340,200
------------
UNITED KINGDOM 15.84%
BAT Industries PLC DV 180,000 1,291,977
BTR PLC DV 130,000 652,528
BTR PLC Warrants (Exp 1998)* DV 210,000 149,357
Beazer Homes PLC CR 250,000 559,987
Bowater PLC PP 100,000 734,115
Bowthorpe Holdings PLC EL 130,000 658,905
Britannic Assurance PLC IN 70,000 473,823
British Gas PLC UT 235,000 1,121,937
British Telecommunications PLC TC 210,000 $1,352,799
Cadbury Schweppes PLC FD 80,000 571,596
Coats Viyella PLC TA 210,000 672,966
Commercial Union PLC IN 61,875 553,376
Foreign and Colonial Smaller PLC IC 181,000 488,293
Formosa Fund IDR Representing
Registered Shrs* IC 120 1,116,000
Glaxo Holdings PLC MD 95,000 930,397
<PAGE>
Granada Group PLC AV 45,000 384,061
HSBC Holdings PLC BK 64,618 765,279
Hambro Countrywide PLC RE 216,000 158,922
Hanson PLC DV 145,000 547,643
Hanson PLC Warrants (Exp 1997)* DV 100,000 37,605
Hickson International PLC CH 110,000 266,178
Kingfisher PLC RT 135,000 1,041,822
Legal & General Group PLC IN 122,000 885,647
Lloyds Bank PLC BK 150,000 1,407,735
MFI Furniture Group PLC FM 245,000 528,759
Meyer International PLC CR 96,000 585,461
NFC PLC TR 250,000 727,575
National Westminster Bank PLC BK 49,000 403,780<%0>
Peninsular & Oriental Steam Navigation TR 60,000 623,916
Redland PLC CR 55,000 418,151
Scottish Power PLC UT 79,754 468,128
Sedgwick Group PLC IN 175,000 440,632
Severn Trent PLC UT 70,000 655,799
Shell Transport & Trading PLC OG 50,000 600,045
Siebe PLC CI 56,000 492,593
SmithKline Beecham PLC Ord A Shrs MD 40,400 268,840
Tomkins PLC CR 130,000 448,481
United Biscuits Holdings PLC FD 105,000 525,325
United Newspapers PLC PR 29,532 246,735
Williams Holdings PLC CR 135,000 761,501
------------
25,018,669
------------
TOTAL COMMON STOCKS & WARRANTS
(Cost $133,688,817) 147,145,708
------------
PREFERRED STOCKS 1.72%
ARGENTINA 0.11%
Alpargatas Sociedad Anonima Industrial y
Comerical Pfd Shrs* TA 230,000 176,640
------------
BRAZIL 1.13%
Aracruz Celulose SA ADR PP 29,000 369,750
Companhia Energetica de Sao Paulo
Sponsored ADR* UT 30,000 486,693
Companhia Energetica de Sao Paulo
Sponsored ADR* UT 10,000 $162,231
Telecomunicacoes Brasileiras SA-Telebras UT 16,000 771,130
------------
1,789,804
------------
GERMANY 0.45%
MAN AG, Non-Voting Pfd Shrs* MY 3,410 705,127
------------
HONG KONG 0.03%
Jardine Strategic IDR 7.50%, Conv Pfd DV 40,000 49,600
------------
TOTAL PREFERRED STOCKS
(Cost $2,179,262) 2,721,171
------------
FIXED INCOME SECURITIES 0.15%
KOREA 0.15%
Daewoo Electronics, Conv Unsub
Deb, 2.250%, 12/31/2008
(Cost $230,000) EL $230,000 $235,175
<PAGE>
------------
SHORT-TERM OBLIGATIONS UNDER REPURCHASE
AGREEMENTS 4.95%
UNITED STATES 4.95%
Repurchase Agreement with State Street Bank
& Trust Co dated 10/31/1994 due 11/1/1994
at 4.400%, repurchased at $7,812,955
(Collateralized by US Treasury Bonds due
2/15/2000 at 8.500%, value $7,978,731)
(Cost $7,812,000) RA $7,812,000 7,812,000
------------
TOTAL INVESTMENT SECURITIES AT VALUE 100.00%
(Cost $143,910,079)
(Cost for Income Tax Purposes
$144,207,928) $157,914,054
============
PACIFIC BASIN Fund
COMMON STOCKS & WARRANTS 96.71%
AUSTRALIA 9.67%
ANZ Banking Group BK 900,000 $2,604,420
Amcor Ltd PP 400,000 2,659,328
Boral Ltd CR 1,000,000 2,515,380
Broken Hill Proprietary MM 170,000 2,603,530
Burns Philp DV 1,000,000 2,552,480
CRA Ltd MM 175,000 2,487,926
Coles Myer RT 1,000,000 3,101,560
National Australia Bank BK 500,000 3,947,440
News Corp PR 600,000 3,695,160
Pacific Dunlop Ltd DV 1,000,000 3,034,780
Southcorp Holdings Ltd DV 1,000,000 $2,099,860
Western Mining Holdings MM 450,000 2,801,421
------------
34,103,285
------------
HONG KONG 11.08%
Amoy Properties RE 2,500,000 3,106,392
Cheung Kong Holdings RE 600,000 2,888,945
China Light & Power UT 850,000 4,422,726
Dairy Farm International Holdings FD 2,500,000 3,252,005
Great Eagle Holdings RE 5,625,000 3,203,466
Hang Seng Bank BK 600,000 4,348,949
Hongkong Land Holdings RE 1,600,000 4,100,437
Jardine Matheson Holdings DV 324,800 2,701,059
Jardine Strategic Holdings DV 800,000 3,075,328
Mandarin Oriental Hotel Group HM 1,044,000 1,378,306
Shun Tak Holdings TR 4,000,000 3,520,576
Sun Hung Kai Properties RE 400,000 3,054,619
------------
39,052,808
------------
JAPAN 52.30%
77 Bank BK 400,000 4,103,232
Alpine Electronics EL 260,000 5,312,736
Asahi Bank BK 349,000 3,853,798
Asahi Diamond Industrial+ TL 330,000 6,061,968
Asatsu Inc AD 115,000 5,910,264
<PAGE>
Best Denki RT 315,000 4,973,724
Calsonic Corp AM 198,000 1,604,038
Fanuc Ltd+ EL 80,000 3,880,320
Fujitsu Ltd+ CO 450,000 5,154,840
Hankyu Department Stores+ RT 305,000 3,682,692
Hitachi Metals+ MM 510,000 6,789,528
Hitachi Zosen MY 910,000 5,324,810
Industrial Bank of Japan+ BK 69,000 2,136,240
Kamigumi Co TR 500,000 5,469,600
Kaneka Corp CH 511,000 4,155,534
Matsushita Communication Industrial EL 130,000 3,622,320
Mitsubishi Bank BK 220,000 5,517,072
Mitsubishi Heavy Industries MY 500,000 4,071,240
Mitsubishi Materials MM 850,000 4,833,372
Mitsui Marine & Fire Insurance IN 600,000 4,551,120
Mitsui OSK Lines TR 1,400,000 6,140,400
NGK Insulators DV 340,000 3,578,976
Nintendo Co RR 65,000 3,629,028
Nippon Express TR 570,000 6,176,520
Nippon Telegraph & Telephone UT 600 5,603,760
Nippon Yusen Kabushiki Kaisha TR 500,000 3,395,280
Nishimatsu Construction EG 420,000 4,464,432
Nissan Motor AM 600,000 5,120,784
Nomura Securities IB 250,000 5,237,400
Oji Paper PP 400,000 4,458,240
Onward Kashiyama Ltd RT 270,000 3,873,096
Pioneer Electronic EL 190,000 4,960,824
Rohm Co EL 115,000 5,043,900
Sanyo Electric EL 950,000 $5,715,732
Shin-etsu Chemical Ltd CH 190,000 4,039,248
Sumitomo Chemical CH 720,000 4,250,189
Sumitomo Metal Mining DV 560,000 5,548,032
Sumitomo Rubber Industries TI 555,000 5,784,876
Toray Industries TA 800,000 6,315,840
------------
184,345,005
------------
MALAYSIA 5.98%
Berjaya Singer Berhad RT 600,000 863,344
Commerce Asset-Holding Berhad BK 400,000 1,782,992
Genting Berhad RE 202,500 1,860,705
Hong Leong Industries CR 400,000 2,142,718
Magnum Corp Berhad RR 330,000 741,936
Malayan Banking Berhad BK 55,000 374,194
Malayan Cement Berhad DV 1,000,000 1,696,970
Perusahaan Otomobil Nasional Berhad AM 700,000 2,613,882
Resorts World Berhad RR 300,000 1,900,294
Rothmans of Pall Mall Berhad TO 400,000 2,627,567
Sime Darby Berhad DV 471,000 1,298,358
Tenaga Nasional Berhad UT 600,000 3,190,617
------------
21,093,577
------------
NEW ZEALAND 2.25%
Carter Holt Harvey FP 1,045,000 2,534,198
Lion Nathan FD 1,000,000 1,895,740
Telecom Corp of New Zealand Ltd TC 1,000,000 3,483,730
------------
7,913,668
------------
<PAGE>
PHILIPPINES 0.46%
Manila Electric Sponsored GDS# UT 14,640 1,029,773
Philippine Long Distance Telephone
Sponsored ADR UT 10,120 576,840
------------
1,606,613
------------
SINGAPORE 9.32%
City Developments RE 550,000 3,234,196
Development Bank of Singapore BK 250,000 2,651,259
Genting Berhad RE 97,500 868,287
Hotel Properties Ltd HM 1,600,000 3,263,088
Inchcape Berhad DV 507,000 1,947,350
Keppel Corp Ltd SH 324,500 2,978,078
Malayan Banking Berhad BK 195,000 1,325,629
NatSteel Ltd MM 1,000,000 2,216,181
Sembawang Corp Ltd SH 350,000 2,712,442
Sime Darby Berhad DV 229,000 632,047
Singapore Land RE 76 488
Singapore Press Holdings PR 200,000 3,657,378
United Overseas Bank BK 344,437 3,769,843
Venture Manufacturing Ltd BS 1,425,000 3,448,677
Venture Manufacturing Ltd Detachable
Warrants (Exp 1999)* BS 150,000 140,721
------------
32,845,664
------------
SOUTH KOREA 4.37%
Daedong Industrial TL 73,607 $1,792,110
Daewoo Corp WH 109,568 2,048,867
Daewoo Corp New* WH 2,022 37,810
Goldstar Co EL 48,793 2,192,221
Haitai Stores RT 55,330 1,020,755
Keangnam Enterprises CR 76,194 1,902,907
Keangnam Enterprises New CR 18,853 470,844
Korea Electric Power UT 80,000 3,042,120
Shinhan Bank BK 38,750 1,176,876
Shinyoung Securities IB 54,200 1,734,535
------------
15,419,045
------------
THAILAND 0.27%
Siam City Cement PLC CR 45,000 967,501
------------
UNITED KINGDOM 1.01%
HSBC Holdings PLC BK 299,716 3,549,572
------------
TOTAL COMMON STOCKS & WARRANTS
(Cost $301,004,745) 340,896,738
------------
SHORT-TERM INVESTMENTS -
COMMERCIAL PAPER 3.29%
UNITED STATES 3.29%
Associates Corp of North America
4.820%, 11/1/1994
(Cost $11,600,000) FR $11,600,000 11,600,000
------------
TOTAL INVESTMENT
SECURITIES AT VALUE 100.00%
(Cost $312,604,745)
<PAGE>
(Cost for Income Tax Purposes
$312,777,876) $352,496,738
============
<FN>
* Security is non-income producing.
+ A portion of this security has been designated as collateral for forward
foreign currency contracts.
~ Security is an affiliated company (see Note 5).
# The following are restricted securities at October 31, 1994.
</FN>
</TABLE>
<TABLE>
<CAPTION>
Value as
Acquisition Acquisition % of
Description Date Cost Net Assets
- ---------------------------------------------------------------------------
<S> <C> <C> <C>
International Growth Fund
Companhia Energetica de Sao Paulo
Sponsored ADR 6/01/94 $150,000 0.10%
======
Pacific Basin Fund
Manila Electric Sponsored GDS 9/24/92 $298,900 0.29%
======
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Forward Foreign Currency Contracts
Open at October 31,1994:
Currency Currency
Units Value Unrealized
Currency/Value Date Sold (US$) Loss
- ---------------------------------------------------------------------------
<S> <C> <C> <C>
European Fund
Deutsche Marks
11/10/1994 23,832,000 $15,000,000 $(841,130)
French Francs
11/10/1994 217,982,000 40,000,000 (2,325,565)
-------------------------------
$55,000,000 $(3,166,695)
===============================
International Growth Fund
Deutsche Marks
11/25/1994 6,900,000 $4,500,465 $(86,034)
French Francs
11/25/1994 29,500,000 5,602,613 (124,517)
Japanese Yen
11/25/1994 725,000,000 7,413,088 (83,412)
-------------------------------
$17,516,166 $(293,963)
===============================
Pacific Basin Fund
Japanese Yen
1/3/1995 1,668,000,000 $17,310,087 $(3,753)
===============================
<PAGE>
Summary of Investments by Industry
% of
Industry Investment
Industry Code Securities Value
- ---------------------------------------------------------------------------
European Fund
Advertising AD 1.00% $3,474,105
Audio/Video AV 0.49 1,706,940
Automobile Related AM 4.80 16,745,476
Banking BK 6.82 23,783,895
Chemicals CH 4.50 15,688,873
Computer Related CS 0.58 2,022,275
Construction Related CR 5.53 19,279,246
Containers CN 0.28 988,351
Control Instruments CI 0.63 2,194,677
Diversified DV 7.99 27,868,179
Electrical Equipment EE 1.93 6,747,804
Electronics EL 1.66 5,778,662
Engineering EG 1.20 4,182,610
Finance Related FR 7.48 26,070,457
Food Products & Beverages FD 1.43 4,991,530
Forest Products FP 0.89 3,109,525
Furniture Manufacturing FM 0.76 2,655,994
Hotels & Motels HM 1.46 5,105,348
Household Appliances HA 0.44 1,540,680
Insurance IN 7.03 24,504,736
Machinery MY 5.60 19,518,761
Medical Related - Drugs MD 3.05 10,619,982
Metals & Mining MM 3.30 11,510,366
Oil & Gas Related OG 6.14% 21,400,035
Paper & Paper Products PP 2.47 8,615,698
Pollution Control Related PC 0.94 3,272,084
Printing & Publishing PR 2.68 9,329,091
Real Estate Related RE 1.07 3,720,424
Recreation Related RR 0.36 1,255,026
Retail RT 5.27 18,381,470
Services SV 0.08 277,132
Ship Building SH 0.49 1,710,440
Telecommunications TC 2.79 9,722,047
Textiles & Apparel Manufacturers TA 0.46 1,616,500
Tire & Rubber Companies TI 0.92 3,210,260
Transportation TR 2.98 10,382,529
Utilities UT 4.03 14,049,932
Wholesale WH 0.47 1,655,296
--------------------------
100.00% $348,686,436
==========================
International Growth Fund
Audio/Video AV 0.24% $384,061
Automobile Related AM 4.92 7,774,082
Banking BK 10.69 16,885,639
Chemicals CH 3.94 6,215,265
Computer Related CO 0.67 1,053,878
Construction Related CR 3.72 5,875,675
Control Instruments CI 0.31 492,593
Diversified DV 8.23 12,992,231
Electrical Equipment EE 2.61 4,115,294
Electronics EL 2.77 4,371,851
Engineering EG 1.38 2,175,027
<PAGE>
Financial Related FR 0.56 885,456
Food Products & Beverages FD 3.28 5,176,899
Forest Products FP 0.12 184,305
Furniture Manufacturing FM 0.50 796,128
Glass & Ceramic Products GC 0.66 1,043,098
Hotels & Motels HM 0.97 1,537,746
Household Appliances HA 0.47 736,707
Insurance IN 4.32 6,816,618
Investment Brokers IB 1.23 1,942,740
Investment Companies IC 1.44 2,268,536
Machinery MY 2.49 3,926,927
Medical Related - Drugs MD 2.57 4,061,953
Metals & Mining MM 5.13 8,102,088
Oil & Gas Related OG 4.79 7,570,269
Paper & Paper Products PP 1.46 2,310,159
Pollution Control Related PC 0.48 764,850
Printing & Publishing PR 1.68 2,648,656
Real Estate Related RE 2.93 4,620,309
Repurchase Agreement RA 4.95 7,812,000
Recreation Related RR 1.28 2,020,418
Retail RT 3.42 5,398,175
Savings & Loan SL 0.62 978,336
Ship Building SH 0.89 1,414,344
Storage Facilities SF 0.55% 872,298
Telecommunications TC 2.24 3,544,330
Textiles & Apparel Manufacturers TA 1.82 2,871,054
Transportation TR 3.19 5,041,360
Utilities UT 6.48 10,232,699
--------------------------
100.00% $157,914,054
==========================
Pacific Basin Fund
Advertising AD .68% $,910,264
Automobile Related AM .65 ,338,704
Banking BK 11.67 41,141,516
Business Services BS 1.02 3,589,398
Chemicals CH 3.53 12,444,971
Computer Related CO 1.46 5,154,840
Construction Related CR 2.27 7,999,350
Diversified DV 7.99 28,165,240
Electronics EL 8.71 30,728,053
Engineering EG 1.27 4,464,432
Finance Related FR 3.29 11,600,000
Food Products & Beverages FD 1.46 5,147,745
Forest Products FP 0.72 2,534,198
Hotels & Motels HM 1.32 4,641,394
Insurance IN 1.29 4,551,120
Investment Brokers IB 1.98 6,971,935
Machinery MY 2.67 9,396,050
Metals & Mining MM 6.16 21,731,958
Paper & Paper Products PP 2.02 7,117,568
Printing & Publishing PR 2.09 7,352,538
Real Estate Related RE 6.33 22,317,535
Recreation Related RR 1.78 6,271,258
Retail RT 4.97 17,515,171
Ship Building SH 1.61 5,690,520
Telecommunications TC 0.99 3,483,730
Textiles & Apparel Manufacturers TA 1.79 6,315,840
Tire & Rubber Companies TI 1.64 5,784,876
<PAGE>
Tobacco TO 0.74 2,627,567
Tools TL 2.23 7,854,078
Transportation TR 7.01 24,702,376
Utilities UT 5.07 17,865,836
Wholesale WH 0.59 2,086,677
--------------------------
100.00% $352,496,738
==========================
See Notes to Financial Statements
<PAGE>
INVESCO International Funds, Inc.
Statement of Assets and Liabilities
October 31, 1994
International Pacific
European Growth Basin
Fund Fund Fund
------------------------------------------
ASSETS
Investment Securities:
At Cost $319,159,663 $143,910,079 $312,604,745
==========================================
At Value $348,686,436 $157,914,054 $352,496,738
Cash 121,513 472,395 67,590
Receivables:
Investment Securities Sold 7,628,926 13,805 1,133,482
Fund Shares Sold 596,248 3,883,060 1,507,523
Dividends and Interest 2,340,603 955,933 1,463,719
Prepaid Expenses and Other Assets 184,173 84,954 89,277
------------------------------------------
TOTAL ASSETS 359,557,899 163,324,201 356,758,329
------------------------------------------
LIABILITIES
Payables:
Distributions to Shareholders 216,874 7,603 30,417
Investment Securities Purchased 5,122,498 602,003 524,819
Fund Shares Repurchased 1,138,443 502,943 3,239,070
Depreciation on Forward Foreign
Currency Contracts 3,166,695 293,963 3,753
Accrued Expenses and Other Payables 71,279 33,476 71,938
------------------------------------------
TOTAL LIABILITIES 9,715,789 1,439,988 3,869,997
------------------------------------------
Net Assets at Value $349,842,110 $161,884,213 $352,888,332
==========================================
NET ASSETS
Paid-in Capital* $325,037,198 $142,494,494 $284,532,801
Accumulated Undistributed Net
Investment Income (Loss) 1,367,931 48,143 10,180
Accumulated Undistributed Net
Realized Gain (Loss) on
Investment Securities (3,034,790) 5,596,072 28,447,453
Net Appreciation of Investment
Securities 26,471,771 13,745,504 39,897,898
------------------------------------------
Net Assets at Value $349,842,110 $161,884,213 $352,888,332
==========================================
Shares Outstanding 27,019,237 9,365,055 20,671,844
Net Asset Value, Offering and
Redemption
Price per Share $12.95 $17.29 $17.07
==========================================
<FN>
* The Fund has 500 million authorized shares of common stock, par value of $0.01
per share. Of such shares, 100 million have been allocated to each individual
Fund.
See Notes to Financial Statements
</FN>
<PAGE>
INVESCO International Funds, Inc.
Statement of Operations
Year Ended October 31, 1994
International Pacific
European Growth Basin
Fund Fund Fund
------------------------------------------
INVESTMENT INCOME
INCOME
Dividends $8,939,903 $2,584,200 $4,511,082
Interest 593,579 316,037 581,526
Foreign Taxes Withheld (1,247,559) (336,279) (506,353)
------------------------------------------
TOTAL INCOME 8,285,923 2,563,958 4,586,255
------------------------------------------
EXPENSES
Investment Advisory Fees 2,503,180 1,307,707 2,255,967
Transfer Agent Fees 698,202 242,814 615,420
Administrative Fees 60,180 29,616 55,169
Custodian Fees and Expenses 461,356 219,874 511,819
Directors' Fees and Expenses 24,696 13,507 22,941
Professional Fees and Expenses 37,793 30,566 35,410
Registration Fees and Expenses 87,065 55,225 124,281
Reports to Shareholders 126,481 49,740 108,777
Other Expenses 13,369 12,124 12,219
------------------------------------------
TOTAL EXPENSES 4,012,322 1,961,173 3,742,003
------------------------------------------
NET INVESTMENT INCOME 4,273,601 602,785 844,252
------------------------------------------
REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENT SECURITIES
Net Realized Gain (Loss) on:
Investment Securities 23,853,757 10,666,282 32,919,708
Forward Foreign Currency
Contracts (8,506,212) (2,032,743) (4,364,144)
Foreign Exchange 0 (1,614) 0
Total Net Realized Gain 15,347,545 8,631,925 28,555,564
Change in Net Appreciation
(Depreciation) of Investment
Securities (2,825,637) 1,119,574 9,665,563
------------------------------------------
NET GAIN ON INVESTMENT SECURITIES 12,521,908 9,751,499 38,221,127
------------------------------------------
Net Increase in Net Assets
from Operations $16,795,509 $10,354,284 $39,065,379
==========================================
<FN>
See Notes to Financial Statements
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
INVESCO International Funds, Inc.
Statement of Changes in Net Assets
International
European Fund Growth Fund Pacific Basin Fund
Year Year Year Period Year Year
Ended Ended Ended Ended Ended Ended
October 31 October 31 October 31 October 31 October 31 October 31
1994 1993 1994 1993 1994 1993
------------ ------------ ------------ ------------ ------------ ------------
(Note 1)
<S> <C> <C> <C> <C> <C> <C>
OPERATIONS
Net Investment Income $4,273,601 $2,902,346 $602,785 $576,970 $844,252 $799,369
Net Realized Gain (Loss)
on Investment
Securities 15,347,545 (2,116,532) 8,631,925 2,705,151 28,555,564 7,014,836
Change in Net Appreciation
(Depreciation) of
Investment Securities (2,825,637) 34,445,085 1,119,574 11,847,005 9,665,563 29,924,404
------------ ------------ ------------ ------------ ------------ ------------
NET INCREASE IN NET
ASSETS FROM OPERATIONS 16,795,509 35,230,899 10,354,284 15,129,126 39,065,379 37,738,609
------------ ------------ ------------ ------------ ------------ ------------
DISTRIBUTIONS
TO SHAREHOLDERS
Net Investment Income (4,202,346) (3,019,815) (621,420) (468,807) (850,319) (812,527)
Net Realized Gain on
Investment Securities 0 0 0 0 (5,656,152) 0
------------ ------------ ------------ ------------ ------------ ------------
TOTAL DISTRIBUTIONS (4,202,346) (3,019,815) (621,420) (468,807) (6,506,471) (812,527)
------------ ------------ ------------ ------------ ------------ ------------
FUND SHARE TRANSACTIONS
Proceeds from Sales
of Shares 563,799,753 322,233,470 324,620,425 170,644,679 671,765,229 499,223,081
Reinvestment of
Distributions 3,982,993 2,898,454 613,588 457,396 6,152,449 783,256
------------ ------------ ------------ ------------ ------------ ------------
567,782,746 325,131,924 325,234,013 171,102,075 677,917,678 500,006,337
Amounts Paid for
Repurchases
of Shares (501,077,753) (204,074,667) (281,759,776) (112,277,296) (656,780,301) (264,228,366)
------------ ------------ ------------ ------------ ------------ ------------
<PAGE>
NET INCREASE IN NET
ASSETS FROM FUND
SHARE TRANSACTIONS 66,704,993 121,057,257 43,474,237 58,824,779 21,137,377 235,777,971
------------ ------------ ------------ ------------ ------------ ------------
Total Increase in Net
Assets 79,298,156 153,268,341 53,207,101 73,485,098 53,696,285 272,704,053
NET ASSETS
Beginning of Period 270,543,954 117,275,613 108,677,112 35,192,014 299,192,047 26,487,994
------------ ------------ ------------ ------------ ------------ ------------
End of Period $349,842,110 $270,543,954 $161,884,213 $108,677,112 $352,888,332 $299,192,047
============ ============ ============ ============ ============ ============
Accumulated Undistributed
Net Investment Income
(Loss) Included in
Net Assets at End
of Period $1,367,931 $(107,598) $48,143 $801,152 $10,180 $(86,158)
FUND SHARE TRANSACTIONS
Shares Sold 43,524,229 28,814,634 19,445,127 11,658,095 41,934,196 36,966,450
Shares Issued from
Reinvestment of
Distributions 307,572 238,884 35,489 29,038 397,248 51,836
------------ ------------ ------------ ------------ ------------ ------------
43,831,801 29,053,518 19,480,616 11,687,133 42,331,444 37,018,286
Shares Repurchased (38,992,404) (18,445,384) (17,014,660) (7,587,306) (41,460,858) (19,621,014)
------------ ------------ ------------ ------------ ------------ ------------
Net Increase in Fund
Shares 4,839,397 10,608,134 2,465,956 4,099,827 870,586 17,397,272
============ ============ ============ ============ ============ ============
<FN>
See Notes to Financial Statements
</FN>
</TABLE>
<PAGE>
INVESCO International Funds, Inc.
Notes to Financial Statements
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES. INVESCO International Funds, Inc. (the
"Fund"), a Maryland Corporation, consists of three separate funds: European
Fund, International Growth Fund and Pacific Basin Fund. The Fund is registered
under the Investment Company Act of 1940, (the "Act") as a diversified, open-end
management investment company. The International Growth Fund's fiscal year-end
was changed from December 31 to October 31 at January 1, 1993.
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. A. SECURITY
VALUATION - Equity securities traded on national securities exchanges or in the
over-the-counter market are valued at the last sale price in the market where
such securities are primarily traded. If last sale prices are not available,
securities are valued at the highest closing bid price obtained from one or more
dealers making a market for such securities or by a pricing service approved by
the Fund's board of directors.
Values of foreign securities are determined as of the time that trading of
such securities is completed each day on the principal stock exchange on which
it is listed, generally at various times prior to the close of the New York
Stock Exchange. Foreign currency exchange rates are determined daily prior to
the close of the New York Stock Exchange.
Debt securities are valued at evaluated bid prices as determined by a pricing
service approved by the Fund's board of directors. If evaluated bid prices are
not available, debt securities are valued by averaging the bid prices obtained
from two dealers making a market for such securities.
If market quotations or pricing service valuations are not readily available,
securities are valued at fair value as determined in good faith by the Fund's
board of directors. Restricted securities are valued in accordance with
procedures established by the Fund's board of directors.
Short-term securities are stated at amortized cost (which approximates market
value) if maturity is 60 days or less, or at market value if maturity is greater
than 60 days. B. REPURCHASE AGREEMENTS - Repurchase agreements held by the Fund
are fully collateralized by U.S. Government securities and such collateral is in
the possession of the Fund's custodian. The collateral is evaluated daily to
ensure its market value exceeds the current market value of the repurchase
agreements including accrued interest. C. SECURITY TRANSACTIONS AND RELATED
INVESTMENT INCOME - Security transactions are accounted for on the trade date
and dividend income is recorded on the ex dividend date. Certain dividends from
foreign securities will be recorded as soon as the Fund is informed of the ex
dividend date. Interest income, which may be comprised of stated coupon rate,
market discount and original issue discount is recorded on the accrual basis.
Cost is determined on the specific identification basis. Discounts on debt
securities purchased are amortized over the life of the respective security as
adjustments to interest income.
The Fund may have elements of risk due to concentrated investments in foreign
issuers located in a specific country. Such concentrations may subject the Fund
to additional risks resulting from future political or economic conditions and
possible imposition of adverse foreign governmental laws or currency exchange
restrictions.
The Fund's use of forward foreign currency contracts may subject it to
certain risks as a result of unanticipated movements in foreign exchange rates.
The Fund may enter into offsetting forward contracts to reduce the risk of such
movements. The net position of such forward contracts is presented in the
Statement of Assets and Liabilities and may have additional elements of risk
which
<PAGE>
may not necessarily be reflected.
Restricted securities held by the Pacific Basin Fund may not be sold except
in exempt transactions or in a public offering registered under the Securities
Act of 1933. The risk of investing in such securities is generally greater than
the risk of investing in the securities of widely held, publicly traded
companies. Lack of a secondary market and resale restrictions may result in the
inability of the Fund to sell a security at a fair price and may substantially
delay the sale of the security which the Fund seeks to sell. In addition, these
securities may exhibit greater price volatility than securities for which
secondary markets exist. D. ADOPTION OF STATEMENT OF POSITION - During the
current fiscal year, the Fund adopted AICPA Statement of Position 93-2
Determination, Disclosure, and Financial Statement Presentation of Income,
Capital Gain and Return of Capital Distributions by Investment Companies. As a
result, any permanent book and tax basis differences are reclassified among the
components of net assets. These differences are primarily due to differing
treatments of income and gains on various investment securities held by the Fund
and differing characterization of distributions made by the Fund.
As of November 1, 1993, the cumulative effect of such differences on
accumulated undistributed net investment income, accumulated undistributed net
realized gain on investment securities and paid-in capital were as follows:
Accumulated
Accumulated Undistributed
Undistributed Net Realized
Net Gain on
Investment Investment Paid-in
Fund Income Securities Capital
- ----------------------------------------------------------------------------
European Fund $1,187,666 $(1,075,528) (112,138)
International Growth Fund (943,142) 975,447 (32,305)
Pacific Basin Fund 96,792 76,756 (173,548)
During the year ended October 31, 1994, the effect of such differences were as
follows:
Accumulated
Accumulated Undistributed
Undistributed Net Realized
Net Gain on
Investment Investment Paid-in
Fund Income Securities Capital
- ----------------------------------------------------------------------------
European Fund $216,608 $(216,608) $0
International Growth Fund 208,768 (208,768) 0
Pacific Basin Fund 5,613 (5,613) 0
Net investment income and net assets were not affected by this adoption.
<PAGE>
E. FEDERAL AND STATE TAXES - The Fund has complied with the provisions of the
Internal Revenue Code applicable to regulated investment companies and,
accordingly, has made or intends to make sufficient distributions of net
investment income and net realized capital gains, if any, to relieve it from all
federal and state income taxes and federal excise taxes. At October 31, 1994,
the European Fund had net realized capital loss carryovers of $3,649,786 and
$1,058,439, which will expire October 31, 2000 and 2001, respectively.
Net capital loss carryovers utilized in 1994 by European and International
Growth Funds amounted to $11,099,271 and $2,759,032, respectively.
To the extent future capital gains are offset by capital loss carryovers,
such gains will generally not be distributed to shareholders.
Dividends paid by the Fund from net investment income and distributions of
net realized short-term capital gains are, for federal income tax purposes,
taxable as ordinary income to shareholders. Each Fund has elected to treat a
portion of distributions of both realized and unrealized gains on forward
foreign currency contracts as capital gain distributions.
Investment income received by each Fund from foreign sources may be
subject to foreign withholding taxes. Dividend income is shown gross of foreign
withholding taxes in the accompanying financial statements. F. DIVIDENDS AND
DISTRIBUTIONS TO SHAREHOLDERS 3/4 Dividends and distributions to shareholders
are recorded by the Fund on the ex dividend/distribution date. The Fund
distributes net realized capital gains, if any, to its shareholders at least
annually, if not offset by capital loss carryovers. G. FORWARD FOREIGN CURRENCY
CONTRACTS - At October 31, 1994, each Fund had outstanding forward foreign
currency contracts. Unrealized gain or loss on forward foreign currency
contracts is calculated daily as the difference between the contract exchange
rate and the closing forward rate applied to the face amount of the contract.
Forward foreign currency contracts held by the Funds are fully
collateralized by other securities which are notated in the accompanying
Statement of Investment Securities. Such collateral is in the possession of the
Fund's custodian. The collateral is evaluated daily to ensure its market value
equals or exceeds the current market value of the forward foreign currency
contract. H. EXPENSES - Each of the Funds bears expenses incurred specifically
on its behalf and, in addition, each Fund bears a portion of general expenses,
based on the relative net assets of each Fund. NOTE 2 - INVESTMENT ADVISORY AND
OTHER AGREEMENTS. INVESCO Funds Group, Inc. ("IFG") serves as the Fund's
investment adviser. As compensation for its services to the Fund, IFG receives
an investment advisory fee which is accrued daily at the applicable rate and
paid monthly. The fee for European and Pacific Basin Funds is based on the
annual rate of 0.75% on the first $350 million of average net assets; reduced to
0.65% on the next $350 million of average net assets; and 0.55% of average net
assets in excess of $700 million. International Growth Fund's fees are based on
the annual rate of 1.00% on the first $500 million of average net assets;
reduced to 0.75% on the next $500 million of average net assets; and 0.65% of
average net assets in excess of $1 billion.
In accordance with a Sub-Advisory Agreement between IFG and MIM
International, Limited ("MIL"), an affiliate of IFG, investment decisions of the
European and Pacific Basin Funds are made by MIL. A separate Sub-Advisory
Agreement between IFG and INVESCO International, Limited ("IIL"), an affiliate
of IFG, provides that investment decisions of the International Growth Fund are
made by IIL. Fees for such sub-advisory services are paid by IFG.
<PAGE>
In accordance with an Administrative Agreement, each Fund pays IFG an
annual fee of $10,000, plus an additional amount computed at an annual rate of
0.015% of average net assets to provide administrative, accounting and clerical
services. The fee is accrued daily and paid monthly.
IFG receives a transfer agent fee of $14.00 per shareholder account or per
participant in an omnibus account per year. IFG may pay such fee for
participants in omnibus accounts to affiliates or third parties. The fee is paid
monthly at one-twelfth of the annual fee and is based upon the actual number of
accounts in existence during each month. NOTE 3 - PURCHASES AND SALES OF
INVESTMENT SECURITIES. For the year ended October 31, 1994, the aggregate cost
of purchases and proceeds from sales of investment securities (excluding all
U.S. Government securities and short-term securities) were as follows:
Fund Purchases Sales
- ----------------------------------------------------------------------------
European Fund $279,969,274 $223,255,482
International Growth Fund 132,983,147 108,090,775
Pacific Basin Fund 217,846,775 202,788,393
There were no purchases or sales of U.S. Government securities.
NOTE 4 - APPRECIATION AND DEPRECIATION. At October 31, 1994, the gross
appreciation of securities in which there was an excess of value over tax cost,
the gross depreciation of securities in which there was an excess of tax cost
over value and the resulting net appreciation by Fund were as follows:
Gross Gross Net
Fund Appreciation Depreciation Appreciation
- ------------------------------------------------------------------------------
European Fund $39,125,583 $9,798,632 $29,326,951
International Growth Fund 16,745,512 3,039,386 13,706,126
Pacific Basin Fund 46,408,932 6,690,070 39,718,862
NOTE 5 - TRANSACTIONS WITH AFFILIATES AND AFFILIATED COMPANIES. Certain of the
Fund's officers and directors are also officers and directors of IFG, MIL or
IIL.
The Fund has adopted an unfunded noncontributory defined benefit pension
plan covering all independent directors of the Fund who will have served as an
independent director for at least five years at the time of retirement. Benefits
under this plan are based on an annual rate equal to 25% of the retainer fee at
the time of retirement. Pension expenses for the year ended October 31, 1994,
included in Directors' Fees and Expenses in the Statement of Operations, prepaid
pension costs and accrued pension liability included in prepaid expenses and
accrued expenses, respectively, in the Statement of Assets and Liabilities were
as follows:
Prepaid Accrued
Pension Pension Pension
Fund Expenses Costs Liability
- ----------------------------------------------------------------------------
<PAGE>
European Fund $4,054 $11,924 $15,978
International Growth Fund 1,861 5,476 7,337
Pacific Basin Fund 4,178 12,292 16,470
<PAGE>
An affiliated company represents ownership by the Fund of at least 5% of the
voting securities of the issuer during the period, as defined in the Act. A
summary of the transactions during the year ended October 31, 1994, in which the
issuer was an affiliate of the Fund, is as follows:
<TABLE>
<CAPTION>
Realized
Purchases Sales Dividend Gain on Value at
-------------------- ------------------
Affiliate Shares Cost Shares Cost Income Investments 10/31/94
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
European Fund
Schindler Holding AG
Participation
Certificates - - 500 $272,087 $42,596 $272,750 $2,454,184
Skandinaviska Eskilda
Banken A Shrs 100,000 $747,121 560,000 2,336,256 - 1,116,108 0
</TABLE>
