File No. 33-63498
As filed on ^ November 17, 1997
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 X
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Pre-Effective Amendment No.
Post-Effective Amendment No. ^ 5 X
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REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 X
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Amendment No. ^ 6 X
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INVESCO INTERNATIONAL FUNDS, INC.
(Exact Name of Registrant as Specified in Charter)
7800 E. Union Avenue, Denver, Colorado 80237
(Address of Principal Executive Offices)
P.O. Box 173706, Denver, Colorado 80217-3706
(Mailing Address)
Registrant's Telephone Number, including Area Code: (303) 930-6300
Glen A. Payne, Esq.
7800 E. Union Avenue
Denver, Colorado 80237
(Name and Address of Agent for Service)
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Copies to:
Ronald M. Feiman, Esq.
Gordon Altman Butowsky
Weitzen Shalov & Wein
114 W. 47th St.
New York, New York 10036
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Approximate Date of Proposed Public Offering: As soon as practicable after this
post-effective amendment becomes effective.
It is proposed that this filing will become effective (check appropriate box)
___ immediately upon filing pursuant to paragraph (b)
___ ^ on March 1, 1997, pursuant to paragraph (b)
___ 60 days after filing pursuant to paragraph (a)(1)
___ on _________________, pursuant to paragraph (a)(1)
X 75 days after filing pursuant to paragraph (a)(2)
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___ on _________________, pursuant to paragraph (a)(2) of rule 485.
If appropriate, check the following:
___ this post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
Registrant has previously elected to register an indefinite number of shares of
its common stock pursuant to Rule 24f-2 under the Investment Company Act.
Registrant's Rule 24f-2 Notice for the fiscal year ended October 31, 1996, was
filed on or about December 24, 1996.
Page 1 of 196
Exhibit index is located at page 98
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NOTE
This Post-Effective Amendment (Form N-1A) is being filed to provide the
Prospectus for the INVESCO Emerging Markets Fund, a new series, and does not
affect the Prospectuses for the INVESCO European, INVESCO Pacific Basin and
INVESCO International Growth Funds.
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INVESCO INTERNATIONAL FUNDS, INC.
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CROSS-REFERENCE SHEET
Form N-1A
Item Caption
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Part A Prospectus
1....................... Cover Page
2....................... Annual Fund Expenses
3....................... Not Applicable
4....................... Investment Objective and
Policies; The Fund and Its
Management
5....................... The Fund and Its Management;
Additional Information
5A...................... Not Applicable
6....................... Services Provided by the Fund;
Taxes, Dividends and ^ Other
Distributions; Additional
Information
7....................... How Shares Can Be Purchased;
Services Provided by the Fund
8....................... Services Provided by the Fund;
How to Redeem Shares
9....................... Not Applicable
Part B Statement of Additional
Information
10....................... Cover Page
11....................... Table of Contents
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Form N-1A
Item Caption
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12....................... The Funds and Their Management
13....................... Investment Practices; Investment
Policies and Restrictions
14....................... The Funds and Their Management
15....................... The Funds and Their Management
16....................... The Funds and Their Management
17....................... Investment Practices; Investment
Policies and Restrictions
18....................... Additional Information
19....................... How Shares Can Be Purchased; How
Shares Are Valued; Services
Provided by the Funds; Tax-
Deferred Retirement Plans; How to
Redeem Shares
20....................... Dividends, ^ Other Distributions
and Taxes
21....................... How Shares Can Be Purchased
22....................... Calculation of Yield
23....................... Additional Information
Part C Other Information
Information required to be included in Part C is set forth under the
appropriate Item, so numbered, in Part C to this Registration Statement.
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Prospectus
February 1, 1998
INVESCO EMERGING MARKETS FUND
INVESCO Emerging Markets Fund (the "Fund") seeks to achieve capital
appreciation. Under normal circumstances, the Fund will invest at least 65% of
its total assets in securities of emerging country issuers. The Fund is not
intended as a complete investment program due to risks of investing in the Fund.
For a description of risks inherent in investing in the Fund see "Risk Factors"
and "Investment Objective and Policies -- Portfolio Turnover."
The Fund is a series of INVESCO International Funds, Inc. (the "Company"),
an open-end management investment company consisting of four separate portfolios
of investments. This Prospectus relates to shares of INVESCO Emerging Markets
Fund. Separate prospectuses are available upon request from INVESCO
Distributors, Inc. for the Company's other three funds, INVESCO European Fund,
INVESCO Pacific Basin Fund and INVESCO International Growth Fund. Investors may
purchase shares of any or all of the Funds. Additional funds may be offered in
the future.
This Prospectus provides you with the basic information you should know
before investing in the Fund. You should read it and keep it for future
reference. A Statement of Additional Information containing further information
about the Fund, dated February 1, 1998, has been filed with the Securities and
Exchange Commission and is incorporated by reference into this Prospectus. To
obtain a free copy, write to INVESCO Distributors, Inc., Post Office Box 173706,
Denver, Colorado 80217-3706; call 1-800-525-8085; or visit our web site at
http://www.invesco.com.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE. SHARES OF THE FUND ARE NOT DEPOSITS OR
OBLIGATIONS OF, OR GUARANTEED OR ENDORSED BY ANY BANK OR OTHER FINANCIAL
INSTITUTION. THE SHARES OF THE FUND ARE NOT FEDERALLY INSURED BY THE FEDERAL
DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD OR ANY OTHER AGENCY.
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TABLE OF CONTENTS Page
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ANNUAL FUND EXPENSES 7
PERFORMANCE DATA 8
INVESTMENT OBJECTIVE AND POLICIES 9
RISK FACTORS 16
THE FUND AND ITS MANAGEMENT 21
HOW SHARES CAN BE PURCHASED 23
SERVICES PROVIDED BY THE FUND 26
HOW TO REDEEM SHARES 29
TAXES, DIVIDENDS AND OTHER DISTRIBUTIONS 31
ADDITIONAL INFORMATION 33
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ANNUAL FUND EXPENSES
The Fund is no-load; there are no fees to purchase, exchange or redeem
shares other than a fee to redeem or exchange shares held less than 3 months
(see "Shareholder Transaction Expenses"). The Fund, however, is authorized to
pay a Rule 12b-1 distribution fee of one quarter of one percent of the Fund's
average net assets each year. Lower expenses benefit Fund shareholders by
increasing the Fund's total return.
Shareholder Transaction Expenses
Sales load "charge" on purchases None
Sales load "charge" on reinvested dividends None
Redemption fees 1.00%*
Exchange fees 1.00%*
Annual Fund Operating Expenses
(as a percentage of average net assets)
Management Fee 1.00%
12b-1 Fees 0.25%
Other Expenses 0.75%
(after voluntary expense limitation)(1)
Transfer Agency Fee(2) 0.20%
General Services, Administrative 0.55%
Services, Registration, Postage (3)
Total Fund Operating Expenses 2.00%
(after voluntary expense limitation)(1)
*There is a 1% fee retained by the Fund to offset transaction costs and other
expenses associated with short-term redemptions and exchanges, which is imposed
only on redemptions or exchanges of shares held less than 90 days.
(1) Based on estimated expenses for the current fiscal year, which may be
more or less than actual expenses. Actual expenses are not provided because the
Fund did not begin a public offering of its shares until the date of this
Prospectus. If necessary, certain Fund expenses will be absorbed voluntarily for
at least the first fiscal year of the Fund's operations in order to ensure that
expenses for the Fund will not exceed 2.00% of the Fund's average net assets
pursuant to an agreement among the Fund, INVESCO Funds Group, Inc. and INVESCO
Asset Management Limited. If such voluntary expense limit were not in effect,
the Fund's "Other Expenses" and "Total Fund Operating Expenses" for the fiscal
year ending October 31, 1998 would be estimated to be 1.09% and 2.34%,
respectively, of the Fund's average net assets.
(2) Consists of the transfer agency fee described under "Additional
Information-Transfer and Dividend Disbursing Agent."
(3) Includes, but is not limited to, fees and expenses of directors,
custodian bank, legal counsel and independent accountants, securities pricing
services, costs of administrative services under an Administrative Services
Agreement, costs of registration of Fund shares under applicable laws, and costs
of printing and distributing reports to shareholders.
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Example
A shareholder would pay the following expenses on a $1,000 investment for
the periods shown, assuming (1) a 5% annual return and (2) redemption at the end
of each time period:
1 Year 3 Years
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$21 $63
The purpose of the foregoing table is to assist investors in understanding
the various costs and expenses that an investor in the Fund will bear directly
or indirectly. Such expenses are paid from the Fund's assets. (See "The Fund and
Its Management.") The above figures are estimates, since the Fund did not
commence a public offering of securities until the date of this Prospectus. The
Fund charges no sales load. The Fund's shares are subject to an annual
distribution fee of 0.25% of its average daily net assets. THE EXAMPLE SHOULD
NOT BE CONSIDERED A REPRESENTATION OF FUTURE EXPENSES, AND ACTUAL EXPENSES MAY
BE GREATER OR LESS THAN THOSE SHOWN. The assumed 5% annual return is
hypothetical and should not be considered a representation of future annual
returns, which may be greater or less than the assumed amount.
Because the Fund pays a distribution fee on its shares, investors who own
Fund shares for a long period of time may pay more than the economic equivalent
of the maximum front-end sales charge permitted for mutual funds by the National
Association of Securities Dealers, Inc.
PERFORMANCE DATA
From time to time, the Fund may advertise its total return performance.
These figures are based upon historical earnings and are not intended to
indicate future performance. The "total return" of the Fund refers to the
average annual rate of return of an investment in the Fund. This figure is
computed by calculating the percentage change in value of an investment of
$1,000, assuming reinvestment of all income dividends and other distributions,
to the end of a specified period. Periods of one year, five years, ten years
and/or life of the Fund are generally used.
Thus, a report of total return should not be considered as representative
of future performance. The Fund charges no sales loads which would affect the
total return computation. However, the total return computation may be affected
as a result of the 1% redemption or exchange fee which is retained by the Fund
to offset transaction costs and other expenses associated with short-term
redemptions and exchanges, which is imposed on redemptions or exchanges of
shares held less than 3 months.
In conjunction with performance reports and/or analyses of shareholder
service for the Fund, comparative data between the Fund's performance for a
given period and recognized indices of investment results for the same period,
and/or assessments of the quality of shareholder service, may be provided to
shareholders. Such indices include indices provided by Dow Jones & Company,
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Standard & Poor's Ratings Services, a division of The McGraw-Hill Companies,
Inc. ("S&P"), Lipper Analytical Services, Inc., Lehman Brothers, National
Association of Securities Dealers Automated Quotations, Frank Russell Company,
Value Line Investment Survey, the American Stock Exchange, Morgan Stanley
Capital International World Index, Wilshire Associates, the Financial
Times-Stock Exchange, the New York Stock Exchange, the Nikkei Stock Average and
the Deutcher Aktienindex, all of which are unmanaged market indicators. In
addition, rankings, ratings, and comparisons of investment performance and/or
assessments of the quality of shareholder service appearing in publications such
as Money, Forbes, Kiplinger's Personal Finance, Morningstar, and similar sources
which utilize information compiled (i) internally; (ii) by Lipper Analytical
Services, Inc.; or (iii) by other recognized analytical services, may be used in
advertising. The Lipper Analytical Services, Inc. mutual fund rankings and
comparisons, which may be used by the Fund in performance reports, will be drawn
from the "Emerging Markets" Lipper mutual fund grouping, in addition to the
broad-based Lipper general fund grouping.
Further information about the performance of the Fund will be contained in
the Company's annual report to shareholders, which may be obtained without
charge by writing INVESCO Distributors, Inc., P.O. Box 173706, Denver, Colorado
80217-3706; by calling 1-800-525-8085; or by visiting our web site at
http://www.invesco.com. The annual report containing information about the
Fund's first fiscal year of operations will be available on or about December 1,
1998.
INVESTMENT OBJECTIVE AND POLICIES
The Fund seeks to achieve capital appreciation. The foregoing investment
objective is fundamental and may not be changed in any material respect without
the approval of the Fund's shareholders. Under normal circumstances, the Fund
will invest at least 65% of its total assets in equity securities of emerging
country issuers.
As used in this Prospectus, the term "emerging country" applies to any
country which, in the opinion of the Fund's investment adviser or sub-adviser
(collectively, "Fund Management"), is generally considered to be a developing or
emerging country by the international financial community. These countries
include countries with low- to middle-income economies according to the
International Bank for Reconstruction and Development (commonly known as the
World Bank), those listed in World Bank publications as developing or those
having emerging stock markets as defined by the International Finance
Corporation. Emerging countries generally include every nation in the world
except the United States, Canada, Japan, Australia, New Zealand and the nations
in Western Europe other than Greece, Portugal and Turkey. The Fund will focus
its investments in those emerging countries that Fund Management believes have
the potential for rapid growth and that have undertaken economic and securities
market reforms making international investment feasible. The Fund normally will
invest in at least three different emerging countries, although Fund Management
expects the Fund's assets to be allocated among a larger number of emerging
countries. The Fund normally will not invest more than 50% of its total assets
<PAGE>
in any one emerging country. The economies of these countries may vary widely in
their condition and may be subject to certain changes that could have a positive
or negative impact on the Fund. Investments in emerging countries involve
certain risks that are discussed below under "Risk Factors."
An "emerging country issuer" is a company that, in the opinion of Fund
Management, has one or more of the following characteristics: (i) its principal
securities trading market is in an emerging country; (ii) the company derives
50% or more of its annual revenue from either goods produced, sales made or
services performed in emerging countries; or (iii) the company is organized
under the laws of, or has its principal office in, an emerging country. Fund
Management will base its determination of whether a company is an emerging
country issuer on publicly available information or inquiries made to the
company.
Under normal conditions, the Fund will invest primarily in equity
securities (common stocks and, to a lesser degree, depository receipts, shares
of unaffiliated investment companies, preferred stocks and securities
convertible into common stocks, such as rights, warrants and convertible debt
securities) that are discussed more fully under "Risk Factors" and in the
Statement of Additional Information. In selecting the equity securities in which
the Fund invests, Fund Management attempts to identify companies that have
demonstrated or, in Fund Management's opinion, are likely to demonstrate in the
future, strong earnings growth or value that reflects the underlying economic
activity within the emerging country or countries in which they operate. Equity
securities may be issued by either established, well-capitalized companies or
newly-formed, small-cap companies, and may trade on regional or national stock
exchanges or in the over-the-counter market. The Fund's investments in small
capitalization stocks may include investments in companies that have limited
operating histories, product lines, and financial and managerial resources.
These companies may be subject to intense competition from larger companies, and
their stock may be subject to more abrupt or erratic market movements than the
stocks of larger, more established companies. Due to these and other factors,
small-cap companies may suffer significant losses as well as realize substantial
growth.
The balance of the Fund's assets may be invested in debt securities
denominated in the currency of an emerging country, or issued or guaranteed by
an emerging country issuer or the government of an emerging country, as well as
equity or debt securities of U.S. and other developed country issuers, including
non-investment grade and unrated debt securities. Equity securities of developed
country issuers in which the Fund invests may be issued by either established,
well-capitalized companies or newly-formed, small-cap companies, and may trade
on regional or national stock exchanges or in the over-the-counter market. Debt
securities in which the Fund invests must meet the quality standards described
below. In addition, the Fund may hold certain cash and cash equivalent
securities as cash reserves ("cash securities").
As discussed above, consistent with its investment objective, the Fund may
invest in debt securities, including corporate bonds, commercial paper,
securities issued by the U.S. government, its agencies and instrumentalities, or
<PAGE>
foreign governments and, to a lesser extent, municipal bonds, asset-backed
securities and zero coupon bonds. The Fund may invest in debt securities that
are rated below BBB by S&P or Baa by Moody's Investors Services, Inc.
("Moody's") or equivalent ratings of other ratings services or, if unrated, that
are judged by Fund Management to be equivalent in quality to debt securities
having such ratings (commonly referred to as "junk bonds"), provided that the
Fund's investments in junk bonds are less than 35% of its total assets at the
time of purchase. The Fund expects that most foreign debt securities in which it
invests will not be rated by U.S. rating services, as discussed more fully
below. In no event will the Fund ever invest in a debt security rated below CCC
by S&P or Caa by Moody's or equivalent ratings of other ratings services or, if
unrated, is judged by Fund Management to be equivalent in quality to debt
securities having such ratings. The risks of investing in lower rated debt
securities are discussed below under "Risk Factors."
The amounts invested in equity, debt and cash securities may be varied
from time to time, depending upon Fund Management's assessment of business,
economic and market conditions. In periods of adverse economic and market
conditions, as determined by Fund Management, the Fund may depart from its basic
investment objective and assume a temporary defensive position, with up to 100%
of its assets invested in U.S. government and agency securities, investment
grade corporate bonds, or cash securities such as domestic certificates of
deposit and bankers' acceptances, repurchase agreements and commercial paper.
The Fund reserves the right to hold equity, debt and cash securities in whatever
proportion is deemed desirable at any time for temporary defensive purposes.
While the Fund is in a temporary defensive position, the opportunity to achieve
capital appreciation will be limited; however, the ability to maintain a
temporary defensive position enables the Fund to seek to avoid capital losses
during market downturns. Under normal market conditions, the Fund does not
expect to have a substantial portion of its assets invested in cash securities.
In order to hedge its portfolio, the Fund may purchase and write options
on securities, including index options, and may invest in futures contracts for
the purchase or sale of foreign currencies, debt securities and instruments
based on financial indices (collectively, "futures contracts"), options on
futures contracts, forward contracts and interest rate swaps and swap-related
products. Interest rate swaps involve the exchange by the Fund with another
party of their respective commitments to pay or receive interest, e.g., an
exchange of floating rate payments for fixed rate payments. These practices,
some of which may involve instruments known as derivatives, and their risks are
discussed below under "Risk Factors" and in the Statement of Additional
Information.
Additional information on certain types of securities in which the Fund
may invest is set forth below:
Delayed Delivery or When-Issued Securities.
Up to 10% of the value of the Fund's total assets may be committed to the
purchase or sale of securities on a when-issued or delayed- delivery basis --
that is, with settlement taking place in the future. The payment obligation and
<PAGE>
the interest rate received on the securities generally are fixed at the time the
Fund enters into the commitment but the Fund would not pay for such securities
or start earning interest on them until they are delivered. However, the Fund
immediately assumes the risk of ownership, and between the date of purchase and
the settlement date, the market value of the securities may fluctuate.
Illiquid and Rule 144A Securities
The Fund is authorized to invest in securities that are illiquid because
they are subject to restrictions on their resale ("restricted securities") or
because, based upon their nature or the market for such securities, they are not
readily marketable. However, the Fund will not purchase any such security if the
purchase would cause the Fund to invest more than 15% of its net assets,
measured at the time of purchase, in illiquid securities. Securities the
proceeds of which are subject to limitations on repatriation of principal or
profits for more than seven days, and those for which there ceases to be a ready
market, will be deemed illiquid for this purpose. In addition, repurchase
agreements maturing in more than seven days will be considered as illiquid for
purposes of this restriction. Investments in illiquid securities involve certain
risks to the extent that the Fund may be unable to dispose of such a security at
the time desired or at a reasonable price. In addition, in order to resell a
restricted security, the Fund might have to bear the expense and incur the
delays associated with effecting registration.
The securities that may be purchased subject to the foregoing restriction
include restricted securities that are not registered for sale to the general
public, but that can be resold to institutional investors ("Rule 144A
Securities"), may be purchased without regard to the foregoing 15% limitation if
a liquid institutional trading market exists. The liquidity of the Fund's
investments in Rule 144A Securities could be impaired if dealers or
institutional investors become uninterested in purchasing these securities. The
Company's board of directors has delegated to Fund Management the authority to
determine the liquidity of Rule 144A Securities pursuant to guidelines approved
by the board. For more information concerning Rule 144A Securities, see the
Statement of Additional Information.
Forward Foreign Currency Contracts
The Fund may enter into contracts to purchase or sell foreign currencies at
a future date ("forward contracts") as a hedge against fluctuations in foreign
exchange rates pending the settlement of transactions in foreign securities or
during the time the Fund holds foreign securities. A forward contract is an
agreement between contracting parties to exchange an amount of currency at some
future time at an agreed upon rate. Although the Fund has not adopted any
limitations on its ability to use forward contracts as a hedge against
fluctuations in foreign exchange rates, it does not attempt to hedge all of its
foreign investment positions and will enter into forward contracts only to the
extent, if any, deemed appropriate by Fund Management. The Fund will not enter
into a forward contract for a term of more than one year or for purposes of
speculation. Investors should be aware that hedging against a decline in the
<PAGE>
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 may preclude the
opportunity for gain if the value of the hedged currency should rise. No
predictions can be made with respect to whether the total of such transactions
will result in a better or a worse position than had the Fund not entered into
any forward contracts. Forward contracts may, from time to time, be considered
illiquid, in which case they would be subject to the Fund's limitation on
investing in illiquid securities, discussed above. For additional information
regarding foreign securities, see the Company's Statement of Additional
Information.
Repurchase Agreements
The Fund may engage in repurchase agreements with banks, registered
broker-dealers, and registered government securities dealers which are deemed
creditworthy. A repurchase agreement is a transaction in which the Fund
purchases a security and simultaneously commits to sell the security to the
seller at an agreed upon price and date (usually not more than seven days) after
the date of purchase. The resale price reflects the purchase price plus an
agreed upon market rate of interest which is unrelated to the coupon rate or
maturity of the purchased security. The Fund's risk is limited to the ability of
the seller to pay the agreed upon amount on the delivery date. In the event the
seller should default, the underlying security constitutes collateral for the
seller's obligations to pay. This collateral will be held by the Fund's
custodian. The Fund may experience delays and incur costs in realizing on the
collateral if the other party to the agreement becomes insolvent. To the extent
that the proceeds from a sale of the collateral upon a default in the obligation
to repurchase are less than the repurchase price, the Fund would suffer a loss.
Although the Fund has not adopted any limit on the amount of its total assets
that may be invested in repurchase agreements, it is the intention of Fund
Management that the market value of its securities subject to repurchase
agreements exceed 20% of the total assets of the Fund.
Futures and Options
A futures contract is an agreement to buy or sell a specific amount of a
financial instrument or commodity at a particular price on a particular date.
The Fund will use futures contracts only to hedge against price changes in the
value of its current or intended investments in securities. In the event that an
anticipated decrease in the value of portfolio securities occurs as a result of
a general decrease in prices, the adverse effects of such changes may be offset,
at least in part, by gains on the sale of futures contracts. Conversely, the
increased cost of portfolio securities to be acquired, caused by a general
increase in prices, may be offset, at least in part, by gains on futures
contracts purchased by the Fund. Brokerage fees are paid to trade futures
contracts, and the Fund is required to maintain margin deposits.
Put and call options on futures contracts or securities may be traded by
the Fund in order to protect against declines in the value of portfolio
securities or against increases in the cost of securities to be acquired. The
<PAGE>
purchaser of an option purchases the right to effect a transaction in the
underlying future or security at a specified price (the "strike price") before a
specified date (the "expiration date"). In exchange for the right, the purchaser
pays a "premium" to the seller, which represents the price of the right to buy
or to sell the underlying instrument. In exchange for the premium, the seller of
the option becomes obligated to effect a transaction in the underlying future or
security, at the strike price, at any time prior to the expiration date, should
the buyer choose to exercise the option. A call option contract grants the
purchaser the right to buy the underlying future or security, at the strike
price, before the expiration date. A put option contract grants the purchaser
the right to sell the underlying future or security, at the strike price, before
the expiration date. Purchases of options on futures contracts may present less
dollar risk in hedging the Fund's portfolio than the purchase and sale of the
underlying futures contracts, since the potential loss is limited to the amount
of the premium plus related transaction costs. The premium paid for such a put
or call option plus any transaction costs will reduce the benefit, if any,
realized by the Fund upon exercise or liquidation of the option, and, unless the
price of the underlying futures contract or security changes sufficiently, the
option may expire without value to the Fund.
Although the Fund will enter into futures contracts and options on futures
contracts and securities solely for hedging or other nonspeculative purposes,
their use does involve certain risks. For example, a lack of correlation between
the value of an instrument underlying an option or futures contract and the
assets being hedged, or unexpected adverse price movements, could render a
Fund's hedging strategy unsuccessful and could result in losses. In addition,
there can be no assurance that a liquid secondary market will exist for any
contract purchased or sold, and the Fund may be required to maintain a position
until exercise or expiration, which could result in losses. Transactions in
futures contracts and options are subject to other risks as well, which are set
forth in greater detail in the Statement of Additional Information and Appendix
A therein.
Securities Lending
The Fund may lend its portfolio securities (not to exceed 10% of the Fund's
total assets) to broker-dealers or other institutional investors under contracts
requiring such loans to be callable at any time and to be secured continuously
by collateral in cash, cash equivalents, high quality short-term government
securities or irrevocable letters of credit maintained on a current basis at an
amount at least equal to the market value of the securities loaned, plus accrued
interest and dividends. The Fund will continue to collect the equivalent of the
interest or dividends paid by the issuer on the securities loaned and will also
receive either interest (through investment of cash collateral) or a fee (if the
collateral is government securities). The Fund may pay finder's and other fees
in connection with securities loans. Lending securities enables the Fund to earn
additional income, but could result in a loss or delay in recovering the
securities.
<PAGE>
Portfolio Turnover
There are no fixed limitations regarding portfolio turnover for the Fund.
Although the Fund does not trade for short-term profits, securities may be sold
without regard to the time they have been held in the Fund when, in the opinion
of Fund Management, investment considerations warrant such action. As a result,
while it is anticipated that the portfolio turnover rate for the Fund's
portfolio generally will not exceed 200%, under certain market conditions the
portfolio turnover rate may exceed 200%. Increased portfolio turnover would
cause the Fund to incur greater brokerage costs than would otherwise be the
case. The Fund's portfolio turnover rate, along with the Fund's brokerage
allocation policies, are discussed further in the Statement of Additional
Information.
Investment Restrictions
The Fund is subject to a variety of restrictions regarding its investments
that are set forth in this Prospectus and in the Statement of Additional
Information. Certain of the Fund's investment restrictions are fundamental, and
may not be altered without the approval of the Fund's shareholders. Such
fundamental investment restrictions include the restrictions which prohibit the
Fund from: lending more than 10% of its total assets to other parties (excluding
purchases of commercial paper, debt securities and repurchase agreements);
investing more than 25% of the value of the Fund's total assets in any one
industry (other than government securities); with respect to 75% of its total
assets, purchasing the securities of any one issuer (other than cash items and
government securities) if the purchase would cause the Fund to have more than 5%
of its total assets invested in the issuer or to own more than 10% of the
outstanding voting securities of the issuer; and borrowing money or issuing
senior securities except that the Fund may borrow money for temporary or
emergency purposes (not for leveraging or investment) and may enter into reverse
repurchase agreements in an aggregate amount not exceeding 33- 1/3% of its total
assets. However, unless otherwise noted, the Fund's investment restrictions and
its investment policies are not fundamental and may be changed by action of the
Company's board of directors. Unless otherwise noted, all percentage limitations
contained in the Fund's investment policies and restrictions apply at the time
an investment is made. Thus, subsequent changes in the value of an investment
after purchase or in the value of the Fund's total assets will not cause any
such limitation to have been violated or to require the disposition of any
investment, except as otherwise required by law. If the credit ratings of an
issuer are lowered below those specified for investment by the Fund, the Fund is
not required to dispose of the obligations of that issuer. The determination of
whether to sell such an obligation will be made by Fund Management based upon an
assessment of credit risk and the prevailing market price of the investment. If
the Fund borrows money, its share price may be subject to greater fluctuation
until the borrowing is repaid. The Fund attempts to minimize such fluctuations
by not purchasing additional securities when borrowings, including reverse
repurchase agreements, are greater than 5% of the value of the Fund's total
assets. As a fundamental policy in addition to the above, the Fund may,
notwithstanding any other investment policy or limitation (whether or not
<PAGE>
fundamental), invest all of its assets in the securities of a single open-end
management investment company with substantially the same fundamental investment
objectives, policies and limitations as the Fund. See "Additional
Information-Master/Feeder Option."
RISK FACTORS
There can be no assurance that the Fund will achieve its investment
objective. The Fund's investments in common stocks and other equity securities
may, of course, decline in value. The Fund's assets will be invested primarily
in emerging country issuers. Investors should recognize that investing in
securities of emerging country issuers involves certain risks and special
considerations, including those set forth below, which are not typically
associated with investing in securities of U.S. issuers. Further, certain
investments that the Fund may purchase, and investment techniques that the Fund
may use, involve risks, including those set forth below.
Investment in the Fund involves above-average investment risk. It is
designed as a long-term investment and not for short-term trading purposes and
should not be considered a complete investment program. A 1% fee is payable to
the Fund by redeeming or exchanging shareholders for the benefit of the Fund's
other remaining shareholders on the redemption or exchange of shares held less
than 3 months. This fee is described more fully under "Services Provided by the
Fund - Exchange Privilege" and "How to Redeem Shares."
Social, Political and Economic Risks
The emerging countries in which the Fund invests may be subject to a
substantially greater degree of social, political and economic instability than
is the case in the United States and other developed countries. Such instability
may result from, among other things, the following: (i) authoritarian
governments or military involvement in political and economic decision-making,
and changes in government through extra-constitutional means; (ii) popular
unrest associated with demands for improved political, economic and social
conditions; (iii) internal insurgencies and terrorist activities; (iv) hostile
relations with neighboring countries; and (v) drug trafficking. Social,
political and economic instability could significantly disrupt the principal
financial markets in which the Fund invests and adversely affect the value of
the Fund's assets.
The economies of individual emerging countries may differ favorably or
unfavorably and significantly from the U.S. economy in such respects as the rate
of growth of gross domestic product or gross national product, rate of
inflation, currency depreciation, capital reinvestment, resource
self-sufficiency, structural unemployment and balance of payments position.
Governments of many emerging countries have exercised and continue to exercise
substantial influence over many aspects of the private sector. In some cases,
the government owns or controls many companies, including some of the largest in
the country. Accordingly, government actions in the future could have a
significant effect on economic conditions in an emerging country, which could
affect private sector companies and the Fund, and on market conditions, prices
and yields of securities in the Fund's portfolio. There may be the possibility
<PAGE>
of nationalization, asset expropriation or future confiscatory levels of
taxation affecting the Fund. In the event of nationalization, expropriation or
other confiscation, the Fund may not be fairly compensated for its loss and
could lose its entire investment in the country involved. The economies of most
emerging countries are heavily dependent upon international trade and
accordingly are affected by protective trade barriers and the economic
conditions of their trading partners. The enactment by the United States or
other principal trading partners of protectionist trade legislation, reduction
of foreign investment in the local economies and general declines in the
international securities markets could have a significant adverse effect upon
the securities markets of these countries. The economies of emerging countries
generally are less diverse and mature than the economies of the United States
and other developed countries, and are vulnerable to weaknesses in world prices
for the emerging countries' commodity exports and natural resources.
Securities Markets
Securities exchanges and broker-dealers in most emerging countries are
subject to less regulatory scrutiny than in the United States, as are emerging
country issuers. The limited size of the markets for securities may enable
adverse publicity, investors' perceptions or traders' positions or strategies to
affect prices unduly, at times decreasing not only the value but also the
liquidity of the Fund's investments.
The market capitalizations of listed equity securities on exchanges in
emerging countries are significantly smaller than those of the United States and
other major economies. Only a few issuers may constitute a major portion of the
market capitalization and trading equity. A large segment of the ownership of
many emerging country issuers may be held by a limited number of persons and
families, which may limit the number of shares available for investment by the
Fund. As a consequence, individual emerging country securities markets are
vulnerable to the effect of large investors' trading significant blocks of
securities or by large dispositions of securities, e.g., as a result of margin
calls. The resulting limitations on the liquidity of emerging country securities
will influence the Fund's ability to acquire and dispose of such securities at
the price and time it desires to do so.
Other risks and considerations of investing in emerging country securities
markets include the following: generally higher commission rates on portfolio
transactions and longer settlement periods; the smaller trading volumes and
generally lower liquidity of emerging country stock markets, which may result in
greater price volatility; differences in accounting, auditing and financial
reporting standards which may result in less publicly available information than
is generally available with respect to U.S. issuers; foreign withholding taxes
payable on income and/or gain from the Fund's foreign securities, which may
reduce dividend income or capital gains available for distribution to
shareholders; and the possibility of the Fund experiencing difficulties in
pursuing legal remedies and collecting judgments.
In addition, in certain emerging countries there may be limitations on
investment by foreigners in the securities of companies located in those
countries, and restrictions on foreign currency transactions or repatriation of
<PAGE>
capital. The Fund's ability to invest may be restricted to the use of investment
vehicles authorized by the local government, investment in shares of other
investment companies, or investments in American Depository Receipts or American
Depository Shares (collectively, "ADRs"), Global Depository Shares, or other
similar depository securities.
ADRs are instruments, usually issued by a U.S. bank or trust company,
evidencing ownership of securities of a foreign issuer into which the ADRs may
be convertible. ADRs are designed for use in U.S. markets and may be traded on
U.S. securities exchanges or over-the- counter markets. They are denominated in
dollars rather than the currency of the country in which the underlying
securities are issued.
ADRs may be issued in sponsored or unsponsored programs. In sponsored
programs, the issuer makes arrangements to have its securities traded in the
form of ADRs; in unsponsored programs, the issuer may not be directly involved
in the creation of the program. Although the regulatory requirements with
respect to sponsored and unsponsored programs are generally similar, the issuers
of unsponsored ADRs are not obligated to disclose material information in the
United States and, therefore, such information may not be reflected in the
market value of the ADRs. ADRs are subject to certain of the same risks as
direct investments in foreign securities, including the risk that changes in the
value of the currency in which the security underlying an ADR is denominated
relative to the U.S. dollar may adversely affect the value of the ADR.
As indicated above, the Fund may deem it most practical to invest in
certain emerging countries through other investment companies or similar
vehicles, although there can be no assurance that any such vehicles will be
available or will themselves have invested in the securities found most
desirable by the Fund. The Fund will not invest through other entities unless,
in the opinion of Fund Management, the potential advantages of such investment
justify the Fund's bearing its ratable share of the expenses of such entity
(constituting duplicate levels of advisory fees to be borne by the Fund and its
shareholders) and its share of any premium encompassed in the market value of
such entity at the time of the Fund's investment over the market value of the
entity's underlying holdings. In addition, there may be tax ramifications
relating to investment in such entities. Investments by the Fund in other
investment companies are subject to the following limits imposed by the
Investment Company Act of 1940: subject to certain exceptions, no more than 5%
of the Fund's total assets may be invested in any one investment company (but no
more than 3% of the voting stock of the underlying investment company) and no
more than 10% of the Fund's total assets may be invested in other investment
companies in the aggregate. See "Additional Information -- Master/Feeder
Option."
Currency Risks
For U.S. investors, the returns on foreign securities are influenced not
only by the returns on the foreign investments themselves, but also by currency
fluctuations (i.e., changes in the value of the currencies in which the
securities are denominated relative to the U.S. dollar). In a period when the
<PAGE>
U.S. dollar generally rises against foreign currencies, the returns on foreign
securities for a U.S. investor are diminished. By contrast, in a period when the
U.S. dollar generally declines, the returns on foreign securities generally are
enhanced. Currencies of certain emerging countries have undergone sudden
devaluations relative to the U.S. dollar as a result of corresponding
inflationary trends or for other reasons. Any such devaluation may have a
deleterious effect on the Fund's investments. Inflation may have strong negative
consequences for the economy and political stability of a country that
experiences it, and may seriously affect its securities markets.
The currencies of certain emerging countries are not commonly traded in
foreign exchange markets. Certain emerging countries have managed currencies
that, for foreign exchange purposes, do not float freely against the U.S.
dollar. Other governmental restrictions on the convertibility of their currency
may be imposed.
Debt Securities
The Fund's investments in debt securities generally are subject to both
credit risk and market risk. Credit risk relates to the ability of the issuer to
meet interest or principal payments, or both, as they come due. The ratings
given a security by Moody's, S&P and other ratings services provide a generally
useful guide as to such credit risk. The lower the rating given a security by
such rating service, the greater the credit risk such rating service perceives
to exist with respect to such security. Increasing the amount of Fund assets
invested in unrated or lower grade securities, while intended to increase the
yield produced by those assets, also will increase the credit risk to which
those assets are subject.
Market risk relates to the fact that the market values of the debt
securities in which the Fund invests generally will be affected by changes in
the level of interest rates. An increase in interest rates will tend to reduce
the market values of debt securities, whereas a decline in interest rates will
tend to increase their values. Medium and lower rated securities (Baa, BBB or
the equivalent and lower) and non-rated securities of comparable quality tend to
be subject to wider fluctuations in yields and market values than higher rated
securities and may have speculative characteristics. Although Fund Management
limits the Fund's investments in debt securities to securities it believes are
not highly speculative, both kinds of risk are increased by investing in debt
securities rated below the top three grades by S&P or Moody's or equivalent
ratings of other ratings services or, if unrated, securities determined by Fund
Management to be of equivalent quality. Of course, relying in part on ratings
assigned by credit agencies in making investments will not protect the Fund from
the risk that the securities in which it invests will decline in value, since
credit ratings represent evaluations of the safety of principal, dividend and
interest payments on preferred stocks and debt securities, not the market value
of such securities, and such ratings may not be changed on a timely basis to
reflect subsequent events. The Fund is not required to sell immediately debt
securities that go into default, but may continue to hold such securities until
such time as Fund Management determines it is in the best interests of the Fund
to sell such securities. Because investment in medium and lower rated securities
involves both greater credit risk and market risk, achievement of the Fund's
investment objectives may be more dependent on Fund Management's own credit
<PAGE>
analysis than is the case for funds investing in higher quality securities.
In addition, the share price and yield of the Fund may be expected to fluctuate
more than in the case of funds investing in higher quality, shorter term
securities. Moreover, a significant economic downturn or major increase in
interest rates may result in issuers of lower rated securities experiencing
increased financial stress, which would adversely affect their ability to
service their principal, dividend and interest obligations, meet projected
business goals, and obtain additional financing. Expenses incurred to recover an
investment in a defaulted security may adversely affect the Fund's net asset
value. Finally, while Fund Management attempts to limit purchases of medium and
lower rated securities to securities having a secondary market, the secondary
market for such securities may be less liquid than the market for higher quality
securities. The reduced liquidity of the secondary market for such securities
may adversely affect the market price of, and ability of the Fund to value,
particular securities at certain times, thereby making it difficult to make
specific valuation determinations.
The Fund expects that most emerging country debt securities in which it
invests will not be rated by U.S. rating services. Although bonds in the lowest
investment grade debt category (those rated BBB by S&P, Baa by Moody's or the
equivalent) are regarded as having adequate capability to pay principal and
interest, they have speculative characteristics. Adverse economic conditions or
changing circumstances are more likely to lead to a weakened capacity to make
principal and interest payments than is the case for higher rated bonds. Lower
rated bonds by Moody's (categories Ba, B, Caa) are of poorer quality and also
have speculative characteristics. Bonds rated Caa may be in default or there may
be present elements of danger with respect to principal or interest. Lower rated
bonds by S&P (categories BB, B, CCC) include those that are regarded, on
balance, as predominantly speculative with respect to the issuer's capacity to
pay interest and repay principal in accordance with their terms; BB indicates
the lowest degree of speculation and CCC a high degree of speculation. While
such bonds likely will have some quality and protective characteristics, these
are outweighed by large uncertainties or major risk exposures to adverse
conditions. Bonds having equivalent ratings from other ratings services will
have characteristics similar to those of the corresponding S&P and Moody's
ratings. For a specific description of S&P and Moody's corporate bond rating
category, please refer to Appendix B to the Statement of Additional Information.
In certain emerging countries, the central government and its agencies are
the largest debtors to local and foreign banks and others. Sovereign debt
involves the risk that the government, as a result of political considerations
or cash flow difficulties, may fail to make scheduled payments of interest or
principal and may require holders to participate in rescheduling of payments or
even to make additional loans. If an emerging country government defaults on its
sovereign debt, there is likely to be no legal proceeding under which the debt
may be ordered repaid, in whole or in part. The ability or willingness of a
foreign sovereign debtor to make payments of principal and interest in a timely
manner may be influenced by, among other factors, its cash flow, the magnitude
of its foreign reserves, the availability of foreign exchange on the payment
date, the debt service burden to the economy as a whole, the debtor's then
current relationship with the International Monetary Fund and its then current
political constraints. Some of the emerging countries issuing such instruments
<PAGE>
have experienced high rates of inflation in recent years and have extensive
internal debt. Among other effects, high inflation and internal debt service
requirements may adversely affect the cost and availability of future domestic
sovereign borrowing to finance governmental programs, and may have other adverse
social, political and economic consequences, including effects on the
willingness of such countries to service their sovereign debt. An emerging
country government's willingness and ability to make timely payments on its
sovereign debt also are likely to be heavily affected by the country's balance
of trade and its access to trade and other international credits. If a country's
exports are concentrated in a few commodities, such country would be more
significantly exposed to a decline in the international prices of one of more of
such commodities. A rise in protectionism on the part of its trading partners,
or unwillingness by such partners to make payment for goods in hard currency,
could also adversely affect the country's ability to export its products and
repay its debts. Sovereign debtors may also be dependent on expected receipts
from such agencies and others abroad to reduce principal and interest arrearages
on their debt. However, failure by the sovereign debtor or other entity to
implement economic reforms negotiated with multilateral agencies or others, to
achieve specified levels of economic performance, or to make other debt payments
when due, may cause third parties to terminate their commitments to provide
funds to the sovereign debtor, which may further impair such debtor's
willingness or ability to service its debts.
The Fund may invest in debt securities issued under the "Brady Plan" in
connection with restructurings in emerging country debt markets or earlier
loans. These securities, often referred to as "Brady Bonds," are, in some cases,
denominated in U.S. dollars and collateralized as to principal by U.S. Treasury
zero coupon bonds having the same maturity. At least one year's interest
payments, on a rolling basis, are collateralized by cash or other investments.
Brady Bonds are actively traded on an over-the-counter basis in the secondary
market for emerging country debt securities. "Brady Bonds" are lower rated bonds
and highly volatile.
THE FUND AND ITS MANAGEMENT
The Company is a no-load mutual fund, registered with the Securities and
Exchange Commission as an open-end, diversified management investment company.
It was incorporated on April 2, 1993, under the laws of Maryland. On July 1,
1993, the Company assumed all of the assets and liabilities of the European
Portfolio and Pacific Basin Portfolio of Financial Strategic Portfolios, Inc.,
which was incorporated under the laws of Maryland on August 10, 1983. On July 1,
1993, the Company also assumed, through its INVESCO International Growth Fund,
all of the assets and liabilities of that fund's predecessor, the Financial
International Growth Fund of Financial Series Trust, a Massachusetts business
trust organized on July 15, 1987. The overall supervision of each Fund is the
responsibility of the Company's board of directors.
INVESCO Funds Group, Inc. ("IFG"), 7800 E. Union Avenue, Denver, Colorado,
serves as the Company's investment adviser pursuant to an investment advisory
agreement. Under this agreement, IFG provides the Fund with various management
services and supervises the Fund's daily business affairs. INVESCO Distributors,
Inc. ("IDI") provides services relating to the distribution and sale of the
Fund's shares pursuant to a distribution agreement.
<PAGE>
IFG has contracted with INVESCO Asset Management Limited ("IAML") for
investment sub-advisory and research services on behalf of the Fund. IAML,
subject to the supervision of IFG, is primarily responsible for selecting and
managing the Fund's investments. Although the Company is not a party to the
sub-advisory agreement, the agreement has been approved by the initial
shareholder of the Fund. Services provided by IFG and IAML are subject to review
by the Company's board of directors.
IFG, IAML and IDI are indirect wholly-owned subsidiaries of AMVESCAP PLC.
AMVESCAP PLC is a publicly-traded holding company that, through its
subsidiaries, engages in the business of investment management on an
international basis. INVESCO PLC changed its name to AMVESCO PLC on March 3,
1997 and to AMVESCAP PLC on May 8, 1997 as part of a merger between a direct
subsidiary of INVESCO PLC and A I M Management Group Inc., that created one of
the largest independent investment management businesses in the world. IFG and
IAML continued to operate under their existing names. Together, IFG and IAML
constitute "Fund Management." AMVESCAP PLC has approximately $177.5 billion in
assets under management. IFG was established in 1932 and, as of September 30,
1997, managed 14 mutual funds, consisting of 46 separate portfolios, with
combined assets of approximately $16.4 billion on behalf of more than 858,051
shareholders.
The Fund is managed by a team of portfolio managers. A senior investment
policy group determines the country-by-country allocation of the Fund's assets,
overall stock selection methodology and the ongoing implementation and risk
control policies applicable to the Fund's portfolio. Individual country
specialists are responsible for managing security selection for their assigned
country's share of the allocation within the parameters established by the
investment policy group.
The Fund pays IFG a monthly advisory fee which is based upon a percentage
of the average net assets of the Fund, determined daily. The maximum advisory
fee is computed at the annual rate of 1.00% on the first $500 million of the
Fund's average net assets, 0.85% on the next $500 million of the Fund's average
net assets and 0.75% on the Fund's average net assets over $1 billion.
Out of its advisory fee which it receives from the Fund, IFG pays IAML, as
sub-adviser to the Fund, a monthly fee, which is computed at the annual rate of
0.333% on the first $500 million of the Fund's average net assets, 0.2833% on
the next $500 million of the Fund's average net assets and 0.25% on the Fund's
average net assets in excess of $1 billion. No fee is paid by the Fund to IAML.
The Company also has entered into an Administrative Services Agreement
(the "Administrative Agreement") with IFG. Pursuant to the Administrative
Agreement, IFG performs certain administrative, recordkeeping and internal
sub-accounting services, including without limitation, maintaining general
ledger and capital stock accounts, preparing a daily trial balance, calculating
net asset value daily, providing selected general ledger reports and providing
sub-accounting and recordkeeping services for Fund shareholder accounts
maintained by certain retirement and employee benefit plans for the benefit of
participants in such plans. For such services, the Fund pays IFG a fee
consisting of a base fee of $10,000 per year, plus an additional incremental fee
<PAGE>
computed at the annual rate of 0.015% per year of the average net assets of
the Fund. IFG also is paid a fee by the Fund for providing transfer agent
services. See "Additional Information."
The Fund's expenses, which are accrued daily, are generally deducted from
the Fund's total income before dividends are paid. These expenses include the
fees of the investment adviser, distribution fees, legal, transfer agent,
custodian and auditor's fees, commissions, taxes, compensation of independent
directors, insurance premiums, printing, and other expenses relating to the
Fund's operations which are not expressly assumed by IFG under its agreements
with the Company. If necessary, certain expenses for the Fund will be absorbed
by IFG and IAML voluntarily for at least the first fiscal year of the Fund's
operations in order to ensure that the Fund's total expenses do not exceed
2.00%. This commitment may be changed following consultation with the Company's
board of directors. As of this date, IFG held all of the outstanding shares of
the Fund and should be regarded as the control person of the Fund.
Fund Management places orders for the purchase and sale of portfolio
securities with brokers and dealers based upon Fund Management's evaluation of
their financial responsibility coupled with their ability to effect transactions
at the best available prices. As discussed under "How Shares Can Be Purchased -
Distribution Expenses," the Company may market shares of the Fund through
intermediary brokers or dealers that have entered into Dealer Agreements with
IFG or IDI, as the Company's Distributor. The Fund may place orders for
portfolio transactions with qualified broker/dealers that recommend the Fund, or
sell shares of the Fund to clients, or act as agent in the purchase of Fund
shares for clients, if Fund Management believes that the quality of the
execution of the transaction and level of commission are comparable to those
available from other qualified brokerage firms.
Fund Management permits investment and other personnel to purchase and sell
securities for their own accounts, subject to policies governing personal
investing. These policies require investment and other personnel to conduct
their personal investment activities in a manner that Fund Management believes
is not detrimental to the Fund or Fund Management's other advisory clients. See
the Statement of Additional Information for more detailed information.
HOW SHARES CAN BE PURCHASED
Shares of the Fund are sold on a continuous basis by IDI, as the Fund's
distributor, at the net asset value per share next calculated after receipt of a
purchase order in good form. No sales charge is imposed upon the sale of shares
of the Fund. To purchase shares of the Fund, send a check made payable to
INVESCO Funds Group, Inc., together with a completed application form, to:
INVESCO Funds Group, Inc.
Post Office Box 173706
Denver, Colorado 80217-3706
PURCHASE ORDERS MUST SPECIFY THE FUND IN WHICH THE INVESTMENT IS TO BE MADE.
<PAGE>
The minimum initial purchase must be at least $1,000, with subsequent
investments of not less than $50, except that: (1) those shareholders
establishing an EasiVest or direct payroll purchase account, as described below
in the section entitled "Services Provided by the Fund," may open an account
without making any initial investment if they agree to make regular, minimum
purchases of at least $50; (2) Fund Management may permit a lesser amount to be
invested in the Fund under a federal income tax-deferred retirement plan (other
than an Individual Retirement Account ("IRA")), or under a group investment plan
qualifying as a sophisticated investor; (3) those shareholders investing in an
IRA, or through omnibus accounts where individual shareholder recordkeeping and
sub-accounting are not required, may make initial minimum purchases of $250; and
(4) Fund Management reserves the right to increase, reduce or waive the minimum
purchase requirements in its sole discretion where it determines such action is
in the best interests of the Fund.
The purchase of Fund shares can be expedited by placing bank wire,
overnight courier or telephone orders. Overnight courier orders must meet the
above minimum requirements. In no case can a bank wire or telephone order be in
an amount less than $1,000. For further information, the purchaser may call the
Fund's office by using the telephone number on the cover of this Prospectus.
Orders sent by overnight courier, including Express Mail, should be sent to the
street address, not Post Office Box, of INVESCO Funds Group, Inc., at 7800 E.
Union Avenue, Suite 300, Denver, CO 80237.
Orders to purchase Fund shares can be placed by telephone. Shares of the
Fund will be issued at the net asset value next determined after receipt of
telephone instructions. Generally, payments for telephone orders must be
received by the Fund within three business days or the transaction may be
canceled. In the event of such cancellation, the purchaser will be held
responsible for any loss resulting from a decline in the value of the shares. In
order to avoid such losses, purchasers should send payments for telephone
purchases by overnight courier or bank wire. IFG has agreed to indemnify the
Fund for any losses resulting from the cancellation of telephone purchases.
If your check does not clear, or if a telephone purchase must be cancelled
due to nonpayment, you will be responsible for any related loss the Fund or IFG
incurs. If you are already a shareholder in the INVESCO funds, the Fund has the
option to redeem shares from any identically registered account in the Fund or
any other INVESCO fund as reimbursement for any loss incurred. You also may be
prohibited or restricted from making future purchases in any of the INVESCO
funds.
Persons who invest in the Fund through a securities broker may be charged a
commission or transaction fee for the handling of the transaction if the broker
so elects. Any investor may deal directly with the Fund in any transaction. In
that event, there is no such charge. IFG or IDI may from time to time make
payments from its revenues to securities dealers and other financial
institutions that provide distribution-related and/or administrative services
for the Fund.
<PAGE>
The Fund reserves the right in its sole discretion to reject any order for
purchase of its shares (including purchases by exchange) when, in the judgment
of management, such rejection is in the best interest of the Fund.
Net asset value per share is computed once each day that the New York Stock
Exchange is open, as of the close of regular trading on that Exchange (generally
4:00 p.m., New York time) and also may be computed on other days under certain
circumstances. Net asset value per share for the Fund is calculated by dividing
the market value of the Fund's securities plus the value of its other assets
(including dividends and interest accrued but not collected), less all
liabilities (including accrued expenses), by the number of outstanding shares of
that Fund. If market quotations are not readily available, a security or other
asset will be valued at fair value as determined in good faith by the board of
directors. Debt securities with remaining maturities of 60 days or less at the
time of purchase will be valued at amortized cost, absent unusual circumstances,
so long as the Company's board of directors believes that such value represents
fair value.
Distribution Expenses. The Fund is authorized under a Plan and Agreement of
Distribution pursuant to Rule 12b-1 under the Investment Company Act of 1940
(the "Plan") to use its assets to finance certain activities relating to the
distribution of its shares to investors. Under the Plan, monthly payments may be
made by the Fund to IDI to permit it, at IDI's discretion, to engage in certain
activities, and provide certain services approved by the Board in connection
with the distribution of the Fund's shares to investors. These activities and
services may include the payment of compensation (including incentive
compensation and/or continuing compensation based on the amount of customer
assets maintained in the Fund) to securities dealers and other financial
institutions and organizations, which may include IFG-affiliated companies, to
obtain various distribution-related and/or administrative services for the Fund
(except administrative services already provided under separate agreements with
IFG-affiliated companies). Such services may include, among other things,
processing new shareholder account applications, preparing and transmitting to
the Fund's transfer agent computer-processable tapes of all transactions by
customers, and serving as the primary source of information to customers in
answering questions concerning the Fund and their transactions with the Fund.
In addition, other permissible activities and services include advertising,
the preparation, printing and distribution of sales literature, printing and
distribution of prospectuses to prospective investors, and such other services
and promotional activities for the Fund as may from time to time be agreed upon
by the Company and the Board, including public relations efforts and marketing
programs to communicate with investors and prospective investors. These services
and activities may be conducted by the staff of IFG or its affiliates or by
third parties.
Under the Plan, the Company's payments to IDI on behalf of the Fund are
limited to an amount computed at an annual rate of 0.25% of the Fund's average
net assets. IDI is not entitled to payment for overhead expenses under the Plan,
but may be paid for all or a portion of the compensation paid for salaries and
other employee benefits for the personnel of IFG or IDI whose primary
<PAGE>
responsibilities involve marketing shares of the INVESCO Mutual Funds,
including the Fund. Payment amounts by the Fund under the Plan, for any month,
may be made to compensate IDI for permissible activities engaged in and services
provided by IDI during the rolling 12-month period in which that month falls,
although this period is expanded to 24 months for obligations incurred during
the first 24 months of the Fund's operations. Therefore, any obligations
incurred by IDI in excess of the limitations described above will not be paid by
the Fund under the Plan, and will be borne by IDI. In addition, IDI may from
time to time make additional payments from its revenues to securities dealers,
financial advisers and financial institutions that provide distribution-related
and/or administrative services for the Fund. No further payments will be made by
the Fund under the Plan in the event of its termination. Payments made by the
Fund may not be used to finance directly the distribution of shares of any other
Fund of the Company or other mutual funds advised by IFG. However, payments
received by IDI which are not used to finance the distribution of shares of the
Fund become part of IDI's revenues and may be used by IDI for any permissible
activities for all of the mutual funds advised by IFG subject to review by the
Fund's directors. Payments made by the Fund under the Plan for compensation of
marketing personnel, as noted above, are based on an allocation formula designed
to ensure that all such payments are appropriate. IDI will bear any
distribution- and service-related expenses in excess of the amounts which are
compensated pursuant to the Plan. The Plan also authorizes any financing of
distribution which may result from IDI's use of its own resources, including
profits from investment advisory fees received from the Fund, provided that such
fees are legitimate and not excessive. For more information see "How Shares Can
Be Purchased" in the Statement of Additional information.
SERVICES PROVIDED BY THE FUND
Shareholder Accounts. IFG maintains a share account that reflects the current
holdings of each shareholder. Share certificates will be issued only upon
specific request. Since certificates must be carefully safeguarded, and must be
surrendered in order to exchange or redeem Fund shares, most shareholders do not
request share certificates in order to facilitate such transactions. Each
shareholder is sent a detailed confirmation of each transaction in shares of the
Fund. Shareholders whose only transactions are through the EasiVest, direct
payroll purchase, automatic monthly exchange or periodic withdrawal programs, or
are reinvestments of dividends or capital gains in the same or another fund,
will receive confirmations of those transactions on their quarterly statements.
These programs are discussed below. For information regarding a shareholder's
account and transactions, the shareholder may call the Fund's office by using
the telephone number on the cover of this Prospectus.
Reinvestment of Distributions. Dividends and other distributions are
automatically reinvested in additional shares of the Fund at the net asset value
per share in effect on the ex-dividend date. A shareholder may, however, elect
to reinvest dividends and other distributions in certain of the other no-load
mutual funds advised by IFG and distributed by IDI, or to receive payment of all
dividends and other distributions in excess of $10.00 by check by giving written
notice to IFG at least two weeks prior to the record date on which the change is
to take effect. Further information concerning these options can be obtained by
contacting IFG.
<PAGE>
Periodic Withdrawal Plan. A Periodic Withdrawal Plan is available to
shareholders who own or purchase shares of any mutual funds advised by IFG
having a total value of $10,000 or more; provided, however, that at the time the
Plan is established, the shareholder owns shares having a value of at least
$5,000 in the fund from which the withdrawals will be made. Under the Periodic
Withdrawal Plan, IFG, as agent, will make specified monthly or quarterly
payments of any amount selected (minimum payment of $100) to the party
designated by the shareholder. Notice of all changes concerning the Periodic
Withdrawal Plan must be received by IFG at least two weeks prior to the next
scheduled check. Further information regarding the Periodic Withdrawal Plan and
its requirements and tax consequences can be obtained by contacting IFG.
Exchange Policy. Shares of the Fund may be exchanged for shares of the
other fund of the Company, as well as for shares of any of the following other
no-load mutual funds, which are also advised by IFG, on the basis of their
respective net asset values at the time of the exchange: INVESCO Capital
Appreciation Funds, Inc. (formerly, INVESCO Dynamics Fund, Inc.), INVESCO
Diversified Funds, Inc., INVESCO Emerging Opportunity Funds, Inc., INVESCO
Growth Fund, Inc., INVESCO Income Funds, Inc., INVESCO Industrial Income Fund,
Inc., INVESCO 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 Value Trust.
Upon an exchange of shares held less than 3 months (other than shares
acquired through reinvestment of dividends or other distributions), a fee of 1%
of the current net asset value of the shares being exchanged will be assessed
and retained by the Fund for the benefit of the Fund's other shareholders. This
fee is intended to encourage long-term investment in the Fund, to avoid
transaction and other expenses caused by early redemptions, and to facilitate
portfolio management. The fee is not a deferred sales charge, is not a
commission paid to IFG, and does not benefit IFG in any way. The fee applies to
redemptions from the Fund and exchanges into any of the other no-load mutual
funds which are also advised by IFG and distributed by IDI. The Fund will use
the "first-in, first-out" method to determine the 3 month holding period. Under
this method the date of redemption or exchange will be compared with the
earliest purchase date of shares held in the account. If this holding period is
less than 3 months, the redemption/exchange fee will be assessed on the current
net asset value of those shares.
An exchange involves the redemption of shares in the Fund and investment of
the redemption proceeds in shares of another fund of the Company or in shares of
one of the INVESCO funds listed above. Exchanges will be made at the net asset
value per share next determined after receipt of an exchange request in proper
order. Any gain or loss realized on such an exchange is recognizable for federal
income tax purposes by the shareholder. Exchange requests may be made either by
telephone or by written request to IFG, using the telephone number or address on
the cover of this Prospectus. 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
<PAGE>
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.
The option to exchange Fund shares by telephone is available to
shareholders automatically unless expressly declined. By signing the New Account
Application, a Telephone Transaction Authorization Form or otherwise utilizing
the telephone exchange option, the investor has agreed that the Fund will not be
liable for following instructions communicated by telephone that it reasonably
believes to be genuine. The Fund employs procedures, which it believes are
reasonable, designed to confirm that exchange instructions are genuine. These
may include recording telephone instructions and providing written confirmations
of exchange transactions. As a result of this policy, the investor may bear the
risk of any loss due to unauthorized or fraudulent instructions; provided,
however, that if the Fund fails to follow these or other reasonable procedures,
the Fund may be liable.
In order to prevent abuse of this policy to the disadvantage of other
shareholders, the Fund reserves the right to terminate the exchange option of
any shareholder who requests more than four exchanges in a year. The Fund will
determine whether to do so based on a consideration of both the number of
exchanges any particular shareholder or group of shareholders has requested and
the time period over which those exchange requests have been made, together with
the level of expense to the Fund which will result from effecting additional
exchange requests. The exchange option also may be modified or terminated at any
time. Except for those limited instances where redemptions of the exchanged
security are suspended under Section 22(e) of the Investment Company Act of
1940, or where sales of the fund into which the shareholder is exchanging are
temporarily stopped, notice of all such modifications or termination of the
exchange policy will be given at least 60 days prior to the date of termination
or the effective date of the modification.
Before making an exchange, the shareholder should review the prospectuses
of the funds involved and consider their differences, and should be aware that
the exchange option may only be available in those states where exchanges
legally may be made, which will require that the shares being acquired are
registered for sale in the shareholder's state of residence. Shareholders
interested in exercising the exchange option may contact IFG for information
concerning their particular exchanges.
Automatic Monthly Exchange. Shareholders who have accounts in any one or
more of the mutual funds distributed by IDI may arrange for a fixed dollar
amount of their fund shares to be automatically exchanged for shares of any
other INVESCO mutual fund listed under "Exchange Policy" on a monthly basis. The
minimum monthly exchange in this program is $50.00. This automatic exchange
program can be changed by the shareholder at any time by notifying IFG at least
two weeks prior to the date the change is to be made. Further information
regarding this service can be obtained by contacting IFG.
<PAGE>
EasiVest. For shareholders who want to maintain a schedule of monthly
investments, EasiVest uses various methods to draw a preauthorized amount from
the shareholder's bank account to purchase Fund shares. This automatic
investment program can be changed by the shareholder at any time by notifying
IFG at least two weeks prior to the date the change is to be made. Further
information regarding this service can be obtained by contacting IFG.
Direct Payroll Purchase. Shareholders may elect to have their employer make
automatic purchases of Fund shares for them by deducting a specified amount from
their regular paychecks. This automatic investment program can be modified or
terminated at any time by the shareholder, by notifying the employer. Further
information regarding this service can be obtained by contacting IFG.
Tax-Deferred Retirement Plans. Shares of the Fund may be purchased for
self-employed individual retirement plans, IRAs, SIMPLE IRAs, simplified
employee pension plans and corporate retirement plans. In addition, shares can
be used to fund tax-qualified plans established under Section 403(b) of the
Internal Revenue Code of 1986 by educational institutions, including public
school systems and private schools, and certain kinds of non-profit
organizations, which provide deferred compensation arrangements for their
employees.
Prototype forms for the establishment of these various plans, including,
where applicable, disclosure statements required by the Internal Revenue
Service, are available from IFG. INVESCO Trust Company, a subsidiary of IFG, is
qualified to serve as trustee or custodian under these plans and provides the
required services at competitive rates. Retirement plans (other than IRAs)
receive monthly statements reflecting all transactions in their Fund accounts.
IRAs receive the confirmations and quarterly statements described under
"Shareholder Accounts." For complete information, including prototype forms and
service charges, call IFG at the telephone number listed on the cover of this
Prospectus or send a written request to: Retirement Services, INVESCO Funds
Group, Inc., Post Office Box 173706, Denver, Colorado 80217-3706.
HOW TO REDEEM SHARES
Shares of the Fund may be redeemed at any time at their current net asset
value per share next determined after a request in proper form is received at
the Fund's office. (See "How Shares Can Be Purchased.") Net asset value per
share at the time of redemption may be more or less than the price you paid to
purchase your shares. Upon the redemption of shares held less than 3 months
(other than shares acquired through reinvestment of dividends or other
distributions), a fee of 1% of the current net asset value of the shares will be
assessed and retained by the Fund for the benefit of the Fund's other
shareholders. This fee is intended to encourage long-term investment in the
Fund, to avoid transaction and other expenses caused by early redemptions, and
to facilitate portfolio management. The fee is not a deferred sales charge, is
not a commission paid to IFG, and does not benefit IFG in any way. The fee
applies to redemptions from the Fund and exchanges into any of the other no-load
mutual funds which are also advised by IFG and distributed by IDI. The Fund will
<PAGE>
use the "first-in, first-out" method to determine the 3 month holding period.
Under this method the date of redemption or exchange will be compared with the
earliest purchase date of shares held in the account. If this holding period is
less than 3 months, the redemption/exchange fee will be assessed on the current
net asset value of those shares.
If the shares to be redeemed are represented by stock certificates, a
written request for redemption signed by the registered shareholder(s) and the
certificates must be forwarded to INVESCO Funds Group, Inc., Post Office Box
173706, Denver, Colorado 80217-3706. Redemption requests sent by overnight
courier, including Express Mail, should be sent to the street address, not Post
Office Box, of INVESCO Funds Group, Inc. at 7800 E. Union Avenue, Denver, CO
80237. If no certificates have been issued, a written redemption request signed
by each registered owner of the account must be submitted to IFG at the address
noted above. If shares are held in the name of a corporation, additional
documentation may be necessary. Call or write for specific information. If
payment for the redeemed shares is to be made to someone other than the
registered owner(s) of the account, the signature(s) must be guaranteed by a
financial institution which qualifies as an eligible guarantor institution.
Redemption procedures with respect to accounts registered in the names of
broker-dealers may differ from those applicable to other shareholders.
Be careful to specify the account from which the redemption is to be made.
Shareholders have a separate account for each Fund in which they invest.
Payment of redemption proceeds will be mailed within seven days following
receipt of the required documents. However, payment may be postponed under
unusual circumstances, such as when normal trading is not taking place on the
New York Stock Exchange, or an emergency as defined by the Securities and
Exchange Commission exists. If the shares to be redeemed were purchased by check
and that check has not yet cleared, payment will be made after the Fund has
allowed a reasonable time for clearance of the purchase check (which will take
up to 15 days).
If a shareholder participates in EasiVest, the Fund's automatic monthly
investment program, and redeems all of the shares in his or her Fund account,
IFG will terminate any EasiVest purchases unless otherwise instructed by the
shareholder.
Because of the high relative costs of handling small accounts, should the
value of any shareholder's account fall below $250 as a result of shareholder
action, the Fund reserves the right to effect the involuntary redemption of all
shares in such account, in which case the account would be liquidated and the
proceeds forwarded to the shareholder. Prior to any such redemption, a
shareholder will be notified and given 60 days to increase the value of the
account to $250 or more.
Fund shareholders (other than shareholders holding Fund shares in accounts
of IRA plans) may request expedited redemption of shares having a minimum value
of $250 (or redemption of all shares if their value is less than $250) held in
accounts maintained in their name by telephoning redemption instructions to IFG,
using the telephone number on the cover of this Prospectus. The redemption
<PAGE>
proceeds, at the shareholder's option, either will be mailed to the address
listed for the shareholder's Fund account, or wired (minimum of $1,000) or
mailed to the bank which the shareholder has designated to receive the proceeds
of telephone redemptions. The Fund charges no fee for effecting such telephone
redemptions. Unless IFG permits a larger redemption request to be placed by
telephone, a shareholder may not place a redemption request by telephone in
excess of $25,000. These telephone redemption privileges may be modified or
terminated in the future at the discretion of Fund Management.
For INVESCO Trust Company-sponsored federal income tax-sheltered retirement
plans, the term "shareholders" is defined to mean plan trustees that file a
written request to be able to redeem Fund shares by telephone. Shareholders
should understand that, while the Fund will attempt to process all telephone
redemption requests on an expedited basis, there may be times, particularly in
periods of severe economic or market disruption, when (a) they may encounter
difficulty in placing a telephone redemption request, and (b) processing
telephone redemptions will require up to seven days following receipt of the
redemption request, or additional time because of the unusual circumstances set
forth above.
The privilege of redeeming Fund shares by telephone is available to
shareholders automatically unless expressly declined. By signing a New Account
Application, a Telephone Transaction Authorization Form or otherwise utilizing
telephone redemption privileges, the shareholder has agreed that the Fund will
not be liable for following instructions communicated by telephone that it
reasonably believe to be genuine. The Fund employs procedures, which it believes
are reasonable, designed to confirm that telephone instructions are genuine.
These may include recording telephone instructions and providing written
confirmation of transactions initiated by telephone. As a result of this policy,
the investor may bear the risk of any loss due to unauthorized or fraudulent
instructions; provided, however, that if the Fund fails to follow these or other
reasonable procedures, the Fund may be liable.
TAXES, DIVIDENDS AND OTHER DISTRIBUTIONS
Taxes. The Fund intends to distribute to shareholders all of its net
investment income, net capital gains and net gains from foreign currency
transactions, if any, in order to continue to qualify for tax treatment as a
regulated investment company. Thus, the Funds do not expect to pay any federal
income or excise taxes.
Unless shareholders are exempt from income taxes, they must include all
dividends and other distributions in taxable income for federal, state and local
income tax purposes. Dividends and other distributions are taxable whether they
are received in cash or automatically reinvested in shares of the Fund or
another fund in the INVESCO group.
Net realized capital gains of the Fund are classified as short-term and
long-term gains depending upon how long the Fund held the security that gave
rise to the gains. Short-term capital gains are included in income from
dividends and interest as ordinary income and are taxed at the taxpayer's
marginal tax rate. The Taxpayer Relief At of 1997 (the "Tax Act"), enacted in
<PAGE>
August 1997, changed the taxation of long-term capital gains by applying
different capital gains rates depending on the taxpayer's holding period and
marginal rate of federal income tax. Long-term gains realized on the sale of
securities held for more than one year but not for more than 18 months are
taxable at a rate of 28%. This category of long-term gains is often referred to
as "mid-term" gains but is technically termed "28% rate gains." Long-term gains
realized on the sale of securities held for more than 18 months are taxable at a
rate of 20%. The Tax Act, however, does not address the application of these
rules to distributions of net capital gain (excess of long-term capital gain
over short-term capital losses) by a regulated investment company, including
whether such distributions may be treated by its shareholders in accordance with
the Fund's holding period for the assets it sold that generated the gain. The
application of the new capital gain rules must be determined by further
legislation or future regulations that are not available as this Prospectus is
being prepared. At the end of each year, information regarding the tax status of
dividends and other distribuitons is provided to shareholders. Shareholders
should consult their tax advisers as to the effect of the Tax Act on
distribuitons by the Funds of net capital gain.
Shareholders also may realize capital gains or losses when they sell their
Fund shares at more or less than the price originally paid. Capital gain on
shares held for more than one year will be long-term capital gain, in which
event it will be subject to federal income tax at the rates indicated above.
The Fund may be subject to withholding of foreign taxes on dividends or
interest received on foreign securities. Foreign taxes withheld will be treated
as an expense of the Fund.
Individuals and certain other non-corporate shareholders may be subject to
backup withholding of 31% on dividends, capital gain and other distributions and
redemption proceeds. Unless you are subject to backup withholding for other
reasons, you can avoid backup withholding on your Fund account by ensuring that
we have a correct, certified tax identification number.
We encourage you to consult a tax adviser with respect to these matters.
For further information see "Dividends, Other Distributions and Taxes" in the
Statement of Additional Information.
Dividends and Other Distributions. The Fund earns ordinary or net
investment income in the form of interest and dividends on its investments.
Dividends paid by the Fund will be based solely on the income earned by it. The
Fund's policy is to distribute substantially all of this income, less Fund
expenses, to shareholders on an annual basis, at the discretion of the fund's
board of directors. Dividends are automatically reinvested in additional shares
of the Fund at the net asset value on the payable date unless otherwise
requested.
In addition, the Fund realizes capital gains and losses when it sells
securities or derivatives for more or less than it paid. If total gains on sales
exceed total losses (including losses carried forward from previous years), the
Fund has a net realized capital gain. Net realized capital gains, if any,
<PAGE>
together with gains, if any, realized on foreign currency transactions, are
distributed to shareholders at least annually, usually in December. Capital gain
distributions are automatically reinvested in additional shares of the Fund at
the net asset value on the payable date unless otherwise requested.
Dividend and other distributions are paid to shareholders who hold shares
on the record date of the distribution, regardless of how long the shares have
been held by the shareholder. The Fund's share price will then drop by the
amount of the distribution on the ex-dividend or ex-distribution date. If a
shareholder purchases shares immediately prior to the distribution, the
shareholder will, in effect, have "bought" the distribution by paying the full
purchase price, a portion of which is then returned in the form of a taxable
distribution.
ADDITIONAL INFORMATION
Voting Rights. All shares of the Fund have equal voting rights, based on
one vote for each share owned and a corresponding fractional vote for each
fractional share owned. Voting with respect to certain matters, such as
ratification of independent accountants and the election of directors, will be
by all Funds of the Company voting together. In other cases, such as voting upon
an investment advisory contract, voting is on a Fund-by-Fund basis. When all
Funds are not affected by a matter to be voted upon, only shareholders of the
Fund affected by the matter will be entitled to vote thereon. The Company is not
generally required, and does not expect, to hold regular annual meetings of
shareholders. However, the board of directors will call special meetings of
shareholders for the purpose, among other reasons, of voting upon the question
of removal of a director or directors when requested to do so in writing by the
holders of 10% or more of the outstanding shares of the Company or as may be
required by applicable law or the Company's Articles of Incorporation. The
Company will assist shareholders in communicating with other shareholders as
required by the Investment Company Act of 1940. Directors may be removed by
action of the holders of a majority or more of the outstanding shares of the
Company.
Master/Feeder Option. The Company may in the future seek to achieve the
Fund's investment objective by investing all of the Fund's assets in another
investment company or partnership having the same investment objective and
substantially the same investment policies and restrictions as those applicable
to the Fund. It is expected that any such investment company would be managed by
IFG in substantially the same manner as the existing Fund. If permitted by
applicable laws and policies then in effect, any such investment may be made in
the sole discretion of the Company's board of directors without further approval
of the shareholders of the Fund. However, Fund shareholders will be given at
least 30 days prior notice of any such investment. Such investment would be made
only if the Company's board of directors determines it to be in the best
interests of the Fund and its shareholders. In making that determination, the
board will consider, among other things, the benefits to shareholders and/or the
opportunity to reduce costs and achieve operational efficiencies. No assurance
can be given that costs will be materially reduced if this option is
implemented.
<PAGE>
Shareholder Inquiries. All inquiries regarding the Fund should be directed
to the Fund at the telephone number or mailing address set forth on the cover
page of this Prospectus.
Transfer and Dividend Disbursing Agent. INVESCO Funds Group, Inc., 7800 E.
Union Ave., Denver, Colorado 80237, acts as registrar, transfer agent, and
dividend disbursing agent for the Fund pursuant to a Transfer Agency Agreement
which provides that the Fund will pay an annual fee of $20.00 per shareholder
account or, where applicable, per participant in an omnibus account. The
transfer agency fee is not charged to each shareholder's or participant's
account, but is an expense of the Fund to be paid from the Fund's assets.
Registered broker-dealers, third party administrators of tax-qualified
retirement plans and other entities, including affiliates of IFG, may provide
sub-transfer agency services to the Fund which reduce or eliminate the need for
identical services to be provided on behalf of the Fund by IFG. In such cases,
IFG may pay the third party an annual sub-transfer agency or recordkeeping fee
out of the transfer agency fee which is paid to IFG by the Fund.
<PAGE>
INVESCO EMERGING MARKETS FUND
A no-load mutual fund seeking capital
appreciation.
PROSPECTUS
February 1, 1998
INVESCO Distributors, Inc.,
Distributor
Post Office Box 173706
Denver, Colorado 80217-3706
1-800-525-8085
PAL(R): 1-800-424-8085
http://www.invesco.com
In Denver, visit one of our
convenient Investor Centers:
Cherry Creek
155-B Fillmore Street
Denver Tech Center
7800 East Union Avenue
Lobby Level
In addition, all documents
filed by the Company with
the Securities and Exchange
Commission can be located on
a web site maintained by the
Commission at http://www.sec.gov.
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
^ February 1, ^ 1998
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
- --------------------------------------------------------------------------------
INVESCO INTERNATIONAL FUNDS, INC. (the "Company") is an open-end
management investment company organized in series form consisting of ^ four
funds: the INVESCO European Fund (the "European Fund"), the INVESCO Pacific
Basin Fund ^(the "Pacific Basin Fund"), the INVESCO International Growth Fund
(the^"International Growth Fund") and the INVESCO Emerging Markets Fund (the
"Emerging Markets Fund")(the "Funds"). The European, Pacific Basin and Emerging
Markets Funds seek to provide investors with capital appreciation. The ^
International Growth Fund seeks to achieve a high total return on investment
through capital appreciation and current income. Each of the Funds invests
primarily in equity securities. Investors may purchase shares of any or all
Funds. The following are available:
The ^ EUROPEAN FUND seeks to achieve its investment objective by investing
primarily in equity securities of companies domiciled in specific European
countries.
The ^ 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 ^ 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.
The EMERGING MARKETS FUND seeks to achieve its investment objective by
investing primarily in equity securities of emerging country issuers.
Additional funds may be offered in the future.
<PAGE>
^
Separate prospectuses for the European, Pacific Basin and International
Growth Funds dated March 1, 1997 and the Emerging Markets Fund dated February 1,
1998, which provide the basic information you should know before investing in
the Funds, may be obtained without charge from INVESCO ^ Distributors, Inc.,
Post Office Box 173706, Denver, Colorado 80217-3706. This Statement of
Additional Information is not a prospectus but contains information in addition
to and more detailed than that set forth in 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 ^: INVESCO FUNDS GROUP, INC.
Distributor: INVESCO ^ DISTRIBUTORS, INC.
TABLE OF CONTENTS
Page
----
INVESTMENT POLICIES AND RESTRICTIONS........................................38
THE FUNDS AND THEIR MANAGEMENT..............................................53
HOW SHARES CAN BE PURCHASED.................................................66
HOW SHARES ARE VALUED.......................................................69
FUND PERFORMANCE............................................................70
SERVICES PROVIDED BY THE ^ FUNDS............................................72
TAX-DEFERRED RETIREMENT PLANS...............................................73
HOW TO REDEEM SHARES........................................................73
DIVIDENDS, ^ OTHER DISTRIBUTIONS AND TAXES..................................74
INVESTMENT PRACTICES........................................................76
ADDITIONAL INFORMATION......................................................80
APPENDIX A..................................................................83
APPENDIX B..................................................................87
<PAGE>
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.
Types of Equity Securities
As described in the Prospectuses, equity securities which may be purchased
by the Funds consist of common, preferred and convertible preferred stocks, and
securities having equity characteristics such as rights, warrants and
convertible debt securities. Common stocks and preferred stocks represent equity
ownership interests in a corporation and participate in the corporation's
earnings through dividends which may be declared by the corporation. Unlike
common stocks, preferred stocks are entitled to stated dividends payable from
the corporation's earnings, which in some cases may be "cumulative" if prior
stated dividends have not been paid. Dividends payable on preferred stock have
priority over distributions to holders of common stock, and preferred stocks
generally have preferences on the distribution of assets in the event of the
corporation's liquidation. Preferred stocks may be "participating," which means
that they may be entitled to dividends in excess of the stated dividend in
certain cases. The rights of common and preferred stocks are generally
subordinate to rights associated with a corporation's debt securities. Rights
and warrants are securities which entitle the holder to purchase the securities
of a company (generally, its common stock) at a specified price during a
specified time period. Because of this feature, the values of rights and
warrants are affected by factors similar to those which determine the prices of
common stocks and exhibit similar behavior. Rights and warrants may be purchased
directly or acquired in connection with a corporate reorganization or exchange
offer.
Convertible securities which may be purchased by the Funds include
convertible debt obligations and convertible preferred stock. A convertible
security entitles the holder to exchange it for a fixed number of shares of
common stock (or other equity security), usually at a fixed price within a
specified period of time. Until conversion, the holder receives the interest
paid on a convertible bond or the dividend preference of a preferred stock.
Convertible securities have an "investment value" which is the theoretical
value determined by the yield they provide in comparison with similar securities
without the conversion feature. Investment value changes are based upon
prevailing interest rates and other factors. They also have a "conversion value"
which is the amount that would be received worth in market value if the security
were exchanged for the underlying equity security. Conversion value fluctuates
directly with the price of the underlying security. If conversion value is
substantially below investment value, the price of the convertible security is
governed principally by its investment value. If the conversion value is near or
above investment value, the price of the convertible security generally will
rise above investment value and may represent a premium over conversion value
<PAGE>
due to the combination of the convertible security's right to interest (or
dividend preference) and the possibility of capital appreciation from the
conversion feature. A convertible security's price, when price is influenced
primarily by its conversion value, generally will yield less than a senior
non-convertible security of comparable investment value. Convertible securities
may be purchased at varying price levels above their investment values or
conversion values. However, there is no assurance that any premium above
investment value or conversion value will be recovered because prices change
and, as a result, the ability to achieve capital appreciation through conversion
may be eliminated.
Foreign Securities. 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 ("forward contract") is an agreement
between the contracting parties to exchange an amount of currency at some future
time at an agreed- upon rate. The rate can be higher or lower than the spot rate
between the currencies that are the subject of the contract. A forward contract
generally has no deposit requirement, and such transactions do not involve
commissions. By entering into a forward contract for the purchase or sale of the
amount of foreign currency invested in a foreign security transaction, a Fund
can hedge against possible variations in the value of the dollar versus the
<PAGE>
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. 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 and
sub-adviser (collectively, "Fund Management"). The Funds will not enter into
forward contracts for a term of more than one year. Forward contracts may, from
time to time, be considered illiquid, in which case they would be subject to ^ a
Fund's 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.
^ Lending of ^ 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 ^ U.S. 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 own 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 Fund Management to be
creditworthy under procedures established by the board of directors 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
<PAGE>
collateral (at least 100% of the market value of the borrowed securities^,
plus accrued interest and dividends), 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^ on
the security 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-dealers and
registered government securities dealers, which are deemed creditworthy under
procedures established by the board of directors. 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.
U.S. Government Obligations
These securities consist of treasury bills, treasury notes, and treasury
bonds, which differ only in their interest rates, maturities, and dates of
issuance. Treasury bills have a maturity of one year or less. Treasury notes
generally have a maturity of one to ten years, and treasury bonds generally have
maturities of more than ten years. U.S. government obligations also include
securities issued or guaranteed by agencies or instrumentalities of the U.S.
government.
Some obligations of U.S. government agencies, which are established under
the authority of an act of Congress, such as Government National Mortgage
Association (GNMA) participation certificates, are supported by the full faith
and credit of the United States Treasury. GNMA Certificates are mortgage-backed
securities representing part ownership of a pool of mortgage loans. These loans
- -- issued by lenders such as mortgage bankers, commercial banks and savings and
loan associations -- are either insured by the Federal Housing Administration or
guaranteed by the Veterans Administration. A "pool" or group of such mortgages
is assembled and, after being approved by GNMA, is offered to investors through
securities dealers. Once approved by GNMA, the timely payment of interest and
principal on each mortgage is guaranteed by GNMA and backed by the full faith
and credit of the U.S. government. The market value of GNMA Certificates is not
guaranteed. GNMA Certificates differ from bonds in that principal is paid back
monthly by the borrower over the term of the loan rather than returned in a lump
sum at maturity. GNMA Certificates are called "pass-through" securities because
both interest and principal payments (including prepayments) are passed through
to the holder of the Certificate. Upon receipt, principal payments will be used
by the Fund to purchase additional securities under its investment objective and
investment policies.
<PAGE>
Other U.S. government obligations, such as securities of the Federal Home
Loan Banks, are supported by the right of the issuer to borrow from the Treasury
to repay its obligations. Still others, such as bonds issued by Fannie Mae, a
federally chartered private corporation, are supported only by the credit of the
instrumentality.
Obligations of Domestic Banks
These obligations consist of certificates of deposit ("CDs") and bankers'
acceptances issued by domestic banks (including their foreign branches) having
total assets in excess of $5 billion, which meet the Funds' minimum rating
requirements. CDs are issued against deposits in a commercial bank for a
specified period and rate and are normally negotiable. Eurodollar CDs are
certificates issued by a foreign branch (usually London) of a U.S. domestic
bank, and, as such, the credit is deemed to be that of the domestic bank.
Bankers' acceptances are short-term credit instruments evidencing the
promise of the bank (by virtue of the bank's "acceptance") to pay at maturity a
draft which has been drawn on it by a customer (the "drawer"). These instruments
are used to finance the import, export, transfer, or storage of goods and
reflect the obligation of both the bank and the drawer to pay the face amount.
Commercial Paper
These obligations are short-term promissory notes issued by domestic
corporations to meet current working capital requirements. Such paper may be
unsecured or backed by a bank letter of credit. Commercial paper issued with a
letter of credit is, in effect, "two party paper," with the issuer directly
responsible for payment, plus a bank's guarantee that if the note is not paid at
maturity by the issuer, the bank will pay the principal and interest to the
buyer. Commercial paper is sold either as interest-bearing or on a discounted
basis, with maturities not exceeding 270 days.
Futures and Options on Futures and Securities
As described in the Emerging Markets Fund's Prospectus, this Fund may
enter into futures contracts, and purchase and sell ("write") options to buy or
sell futures contracts and other securities, which are included among the types
of instruments sometimes known as derivatives. The Fund will comply with and
adhere to all limitations in the manner and extent to which it effects
transactions in futures and options on such futures currently imposed by the
rules and policy guidelines of the Commodity Futures Trading Commission (the
"CFTC") as conditions for exemption of a mutual fund, or investment advisers
thereto, from registration as a commodity pool operator. Under those
restrictions, the Fund will not, as to any positions, whether long, short or a
combination thereof, enter into futures and options thereon for which the
aggregate initial margins and premiums exceed 5% of the fair market value of the
Fund's total assets after taking into account unrealized profits and losses on
options it has entered into. In the case of an option that is "in-the-money," as
defined in the Commodity Exchange Act (the "CEA"), the in-the-money amount may
be excluded in computing such 5%. (In general a call option on a future is
"in-the-money" if the value of the future exceeds the exercise ("strike") price
<PAGE>
of the call; a put option on a future is "in-the-money" if the value of the
future which is the subject of the put is exceeded by the strike price of the
put.) The Fund may use futures and options thereon solely for bona fide hedging
or for other non-speculative purposes within the meaning and intent of the
applicable provisions of the CEA and the regulations thereunder. As to long
positions which are used as part of the Fund's portfolio management strategies
and are incidental to its activities in the underlying cash market, the
"underlying commodity value" of the Fund's futures and options thereon must not
exceed the sum of (i) cash set aside in an identifiable manner, or short-term
U.S. debt obligations or other dollar-denominated high-quality, short-term money
instruments so set aside, plus sums deposited on margin; (ii) cash proceeds from
existing investments due in 30 days; and (iii) accrued profits held at the
futures commission merchant. The "underlying commodity value" of a future is
computed by multiplying the size of the future by the daily settlement price of
the future. For an option on a future, that value is the underlying commodity
value of the future underlying the option.
Unlike when the Emerging Markets Fund purchases or sells a security, no
price is paid or received by the Fund upon the purchase or sale of a futures
contract. Instead, the Fund will be required to deposit in a segregated asset
account with the broker an amount of cash or qualifying securities (currently
U.S. Treasury bills), currently in a minimum amount of $15,000. This is called
"initial margin." Such initial margin is in the nature of a performance bond or
good faith deposit on the contract. However, since losses on open contracts are
required to be reflected in cash in the form of variation margin payments, the
Fund may be required to make additional payments during the term of the
contracts to its broker. Such payments would be required, for example, where,
during the term of an interest rate futures contract purchased by the Fund,
there was a general increase in interest rates, thereby making the Fund's
portfolio securities less valuable. In all instances involving the purchase of
financial futures contracts by the Fund, an amount of cash together with such
other securities as permitted by applicable regulatory authorities to be
utilized for such purpose, at least equal to the market value of the futures
contracts, will be deposited in a segregated account with the Fund's custodian
to collateralize the position. At any time prior to the expiration of a futures
contract, the Fund may elect to close its position by taking an opposite
position which will operate to terminate the Fund's position in the futures
contract. For a more complete discussion of the risks involved in futures and
options on futures and other securities, refer to Appendix A ("Description of
Futures and Options Contracts").
Where futures are purchased to hedge against a possible increase in the
price of a security before a Fund is able in an orderly fashion to invest in the
security, it is possible that the market may decline instead. If the Fund, as a
result, concluded not to make the planned investment at that time because of
concern as to possible further market decline or for other reasons, the Fund
would realize a loss on the futures contract that is not offset by a reduction
in the price of securities purchased.
<PAGE>
In addition to the possibility that there may be an imperfect correlation
or no correlation at all between movements in the futures contract and the
portion of the portfolio being hedged, the price of futures may not correlate
perfectly with movements in the portfolio prices due to certain market
distortions. All participants in the futures market are subject to margin
deposit and maintenance requirements. Rather than meeting additional margin
deposit requirements, investors may close futures contracts through offsetting
transactions which could distort the normal relationship between the underlying
securities and the value of the futures contract. Moreover, the deposit
requirements in the futures market are less onerous than margin requirements in
the securities market and may therefore cause increased participation by
speculators in the futures market. Such increased participation may also cause
temporary price distortions. Due to the possibility of price distortion in the
futures market and because of the imperfect correlation between movements in the
value of the underlying securities and movements in the prices of futures
contracts, the value of futures contracts as a hedging device may be reduced.
In addition, if the Emerging Markets Fund has insufficient available cash,
it may at times have to sell securities to meet variation margin requirements.
Such sales may have to be effected at a time when it may be disadvantageous to
do so.
Options on Futures Contracts
The Emerging Markets Fund may buy and write options on futures contracts
for hedging purposes. Options on futures contracts are included among the types
of instruments sometimes known as derivatives. The purchase of a call option on
a futures contract is similar in some respects to the purchase of a call option
on an individual security. Depending on the pricing of the option compared to
either the price of the futures contract upon which it is based or the price of
the underlying instrument, ownership of the option may or may not be less risky
than ownership of the futures contract or the underlying instrument. As with the
purchase of futures contracts, when the Fund is not fully invested it may buy a
call option on a futures contract to hedge against a market advance.
The writing of a call option on a futures contract constitutes a partial
hedge against declining prices of the security or foreign currency which is
deliverable under, or of the index comprising, the futures contract. If the
futures price at the expiration of the option is below the exercise price, the
Emerging Markets Fund will retain the full amount of the option premium which
provides a partial hedge against any decline that may have occurred in the
Fund's portfolio holdings. The writing of a put option on a futures contract
constitutes a partial hedge against increasing prices of the security or foreign
currency which is deliverable under, or of the index comprising, the futures
contract. If the futures price at expiration of the option is higher than the
exercise price, the Fund will retain the full amount of the option premium which
provides a partial hedge against any increase in the price of securities which
<PAGE>
the Fund is considering buying. If a call or put option the Fund has written is
exercised, the Fund will incur a loss which will be reduced by the amount of the
premium it received. Depending on the degree of correlation between change in
the value of its portfolio securities and changes in the value of the futures
positions, the Fund's losses from existing options on futures may to some extent
be reduced or increased by changes in the value of portfolio securities.
The purchase of a put option on a futures contract is similar in some
respects to the purchase of protective put options on portfolio securities. For
example, the Emerging Markets Fund may buy a put option on a futures contract to
hedge the Fund's portfolio against the risk of falling prices.
The amount of risk the Emerging Markets Fund assumes when it buys an
option on a futures contract is the premium paid for the option plus related
transaction costs. In addition to the correlation risks discussed above, the
purchase of an option also entails the risk that changes in the value of the
underlying futures contract will not be fully reflected in the value of the
options bought.
Swaps and Swap-Related Products
Interest rate swaps involve the exchange by the Emerging Markets Fund with
another party of their respective commitments to pay or receive interest, e.g.,
an exchange of floating rate payments for fixed rate payments. The exchange
commitments can involve payments to be made in the same currency or in different
currencies. The purchase of an interest rate cap entitles the purchaser, to the
extent that a specified index exceeds a predetermined interest rate, to receive
payments of interest on a contractually-based principal amount from the party
selling the interest rate cap. The purchase of an interest rate floor entitles
the purchaser, to the extent that a specified index falls below a predetermined
interest rate, to receive payments of interest on a contractually-based
principal amount from the party selling the interest rate floor.
The Emerging Markets Fund may enter into interest rate swaps, caps and
floors, which are included among the types of instruments sometimes known as
derivatives, on either an asset-based or liability-based basis, depending upon
whether it is hedging its assets or its liabilities, and usually will enter into
interest rate swaps on a net basis, i.e., the two payment streams are netted
out, with the Fund receiving or paying, as the case may be, only the net amount
of the two payments. The net amount of the excess, if any, of the Fund's
obligations over its entitlement with respect to each interest rate swap will be
calculated on a daily basis, and an amount of cash or high-grade liquid assets
having an aggregate net asset value at least equal to the accrued excess will be
maintained in a segregated account by the Fund's custodian. If the Fund enters
into an interest rate swap on other than a net basis, the Fund would maintain a
segregated account in the full amount accrued on a daily basis of the Fund's
obligations with respect to the swap. The Fund will not enter into any interest
rate swap, cap or floor transaction unless the unsecured senior debt or the
claims-paying ability of the other party thereto is rated in one of the three
highest rating categories of at least one nationally recognized statistical
<PAGE>
rating organization at the time of entering into such transaction. Fund
Management will monitor the creditworthiness of all counterparties on an ongoing
basis. If there is a default by the other party to such a transaction, the Fund
would have contractual remedies pursuant to the agreements related to the
transaction.
The swap market has grown substantially in recent years with a large
number of banks and investment banking firms acting both as principals and as
agents utilizing standardized swap documentation. Caps and floors are more
recent innovations for which standardized documentation has not yet been
developed and, accordingly, they are less liquid than swaps. To the extent the
Emerging Markets Fund sells (i.e., writes) caps and floors, it will maintain in
a segregated account cash or high-grade liquid assets having an aggregate net
asset value at least equal to the full amount, accrued on a daily basis, of the
Fund's obligations with respect to any caps or floors.
These transactions may in some instances involve the delivery of securities
or other underlying assets by the Fund or its counterparty to collateralize
obligations under the swap. The documentation currently used in those markets
attempts to limit the risk of loss with respect to interest rate swaps to the
net amount of the payments that a party is contractually obligated to make. If
the other party to an interest rate swap that is not collateralized defaults,
the Fund would anticipate losing the net amount of the payments that the Fund
contractually is entitled to receive over the payments that the Fund is
contractually obligated to make. The Fund may buy and sell (i.e., write) caps
and floors without limitation, subject to the segregated account requirement
described above as well as the Fund's other investment restrictions set forth
below.
Investment Restrictions. As described in the section of each Fund's
prospectus entitled "Investment ^ Objective and Policies," the Funds operate
under certain investment restrictions. ^ The following 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
^ 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
<PAGE>
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;
(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
1940 Act;
(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;
<PAGE>
(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
^ Neither INVESCO International Growth Fund, nor 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,
<PAGE>
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 ^ U.S.
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 1933 Act, 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) ^ sell short or buy on margin, exept for the Fund's purchase or sale
of options or futures, or writing, purchasing or selling puts or
calls options;
^(8) 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;
^(9) purchase or sell commodities or commodity contracts. This
restriction shall not prevent the Fund from purchasing or selling
options on individual securities, security indexes and currencies or
financial futures or options on financial futures, or undertaking
forward foreign currency contracts.^
^(10) 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;
<PAGE>
^(11) 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% 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;
^(12) 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 ^(12) 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.
The Emerging Markets Fund may not:
1. With respect to seventy-five percent (75%) of the Fund's total
assets, purchase the securities of any one issuer (except cash items
and "government securities" as defined under the 1940 Act), if the
purchase would cause the Fund to have more than 5% of the value of
its total assets invested in the securities of such issuer or to own
more than 10% of the outstanding voting securities of such issuer;
2. Borrow money or issue senior securities (as defined in the 1940
Act), except that the Fund may borrow money for temporary or
emergency purposes (not for leveraging or investment) and may enter
into reverse repurchase agreements in an aggregate amount not
exceeding 33-1/3% of the value of its total assets (including the
amount borrowed) less liabilities (other than borrowings). Any
borrowings that come to exceed 33-1/3% of the value of the Fund's
total assets by reason of a decline in total assets will be reduced
<PAGE>
within three business days to the extent necessary to comply with
the 33-1/3% limitation. This restriction shall not prohibit
deposits of assets to margin or guarantee positions in futures,
options, swaps or forward contracts, or the segregation of assets in
connection with such contracts.
3. Invest directly in real estate or interests in real estate; however,
the Fund may own debt or equity securities issued by companies
engaged in those businesses.
4. Purchase or sell physical commodities other than foreign currencies
unless acquired as a result of ownership of securities (but this
shall not prevent the Fund from purchasing or selling options,
futures, swaps and forward contracts or from investing in securities
or other instruments backed by physical commodities).
5. Lend any security or make any other loan if, as a result, more than
10% of its total assets would be lent to other parties (but this
limitation does not apply to purchases of commercial paper, debt
securities or to repurchase agreements.)
6. Act as an underwriter of securities issued by others, except to the
extent that it may be deemed an underwriter in connection with the
disposition of portfolio securities of the Fund.
7. Invest more than 25% of the value of its total assets in any
particular industry (other than government securities).
As a fundamental policy in addition to the above, the Emerging Markets
Fund may, notwithstanding any other investment policy or limitation (whether or
not fundamental), invest all of its assets in the securities of a single
open-end management investment company with substantially the same fundamental
investment objectives, policies and limitations as the Fund.
Furthermore, the Company's board of directors has adopted additional
investment restrictions for the Emerging Markets Fund. These restrictions are
operating policies of the Fund and may be changed by the board of directors
without shareholder approval. The additional investment restrictions adopted by
the board of directors to date with respect to the Emerging Markets Fund include
the following:
(a) The Fund will not (i) enter into any futures contracts or options on
futures contracts if immediately thereafter the aggregate margin
deposits on all outstanding futures contracts positions held by the
Fund and premiums paid on outstanding options on futures contracts,
after taking into account unrealized profits and losses, would
exceed 5% of the market value of the total assets of the Fund, or
(ii) enter into any futures contracts if the aggregate net amount of
the Fund's commitments under outstanding futures contracts positions
of the Fund would exceed the market value of the total assets of the
Fund.
<PAGE>
(b) The Fund does not currently intend to sell securities short, unless
it owns or has the right to obtain securities equivalent in kind and
amount to the securities sold short without the payment of any
additional consideration therefor, and provided that transactions in
options, swaps and forward futures contracts are not deemed to
constitute selling securities short.
(c) The Fund does not currently intend to purchase securities on margin,
except that the Fund may obtain such short-term credits as are
necessary for the clearance of transactions, and provided that
margin payments and other deposits in connection with transactions
in options, futures, swaps and forward contracts shall not be deemed
to constitute purchasing securities on margin.
(d) The Fund does not currently intend to (i) purchase securities of
closed-end investment companies, except in the open market where no
commission except the ordinary broker's commission is paid, or (ii)
purchase or retain securities issued by other open-end investment
companies other than money market funds or funds which are the only
practical means, or one of the few practical means, of investing in
a particular emerging country. Limitations (i) and (ii) do not
apply to securities received as dividends, through offers of
exchange, or as a result of a reorganization, consolidation, or
merger.
(e) The Fund may not mortgage or pledge any securities owned or held by
the Fund in amounts that exceed, in the aggregate, 10% of the Fund's
net assets, provided that this limitation does not apply to reverse
repurchase agreements or in the case of assets deposited to margin
or guarantee positions in futures, options, swaps or forward
contracts or placed in a segregated account in connection with such
contracts.
(f) The Fund does not currently intend to purchase any security or enter
into a repurchase agreement if, as a result, more than 15% of its
net assets would be invested in repurchase agreements not entitling
the holder to payment of principal and interest within seven days
and in securities that are illiquid by virtue of legal or
contractual restrictions on resale or the absence of a readily
available market. The board of directors, or the Fund's investment
adviser acting pursuant to authority delegated by the board of
directors, may determine that a readily available market exists for
securities eligible for resale pursuant to Rule 144A under the
Securities Act of 1933, or any successor to such rule, and
therefore that such securities are not subject to the foregoing
limitation.
With respect to investment restriction (4) applicable to the ^ Pacific
Basin and European Funds, ^ restriction ^(12) applicable to the ^ International
Growth Fund and restriction (f) applicable to the Emerging Markets Fund, the
board of directors has delegated to Fund Management the authority to determine
<PAGE>
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, Fund Management will consider the
following factors, among others, in making this determination: (1) the
unregistered nature of a Rule 144A security; (2) the frequency of trades and
quotes for the security; (3) the number of dealers willing to purchase or sell
the security and the number of other potential purchasers; (4) dealer
undertakings to make a market in the security; and (5) the nature of the
security and the nature of marketplace trades (e.g., the time needed to dispose
of the security, the method of soliciting offers and the mechanics of transfer).
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), unless they are readily
marketable outside the United States, in which case they are not deemed to be
restricted.
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 Bloomberg L.P.,
Moody's International and ^ a modified S&P industry code classification schema
which uses various sources to classify.
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 ^ European Fund and ^
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 ^ 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.
The Investment Adviser. INVESCO Funds Group, Inc., a Delaware corporation
^("IFG"), is employed as the Company's investment adviser. ^ IFG was established
in 1932 and also serves as an investment adviser to INVESCO Capital Appreciation
Funds, Inc. (formerly, INVESCO Dynamics Fund, Inc.), INVESCO Diversified Funds,
Inc.^, INVESCO Emerging Opportunity Funds, Inc., INVESCO Growth Fund, Inc.,
INVESCO Income Funds, Inc., INVESCO Industrial Income Fund, Inc., INVESCO Money
Market Funds, Inc., INVESCO Multiple Asset Funds, Inc.^, INVESCO Strategic
Portfolios, Inc., INVESCO Tax^-Free Income Funds, Inc., INVESCO Value Trust, and
INVESCO Variable Investment Funds, Inc.
<PAGE>
The Sub-Adviser. IFG, as investment adviser, has contracted with INVESCO
Asset Management Limited ("IAML") to provide investment advisory and research
services on behalf of the Funds. IAML has the primary responsibility for
providing portfolio investment management services to the Funds.
The Distributor. Effective September 30, 1997, INVESCO Distributors, Inc.
("IDI") became the Funds' distributor. IDI, established in 1997, is a registered
broker-dealer that acts as distributor for all retail funds advised by IFG.
Prior to September 30, 1997, IFG served as the Funds' distributor.
IFG, IAML and IDI are indirect, wholly-owned subsidiaries of AMVESCAP PLC,
a publicly-^ traded holding company that, through its subsidiaries, engages ^ in
the business of investment management on an international basis. INVESCO PLC
changed its name to AMVESCO PLC on ^ March 3, 1997, and to AMVESCAP PLC on May
8, 1997 as part of a merger between a direct subsidiary of INVESCO PLC and ^ A I
M Management Group^ Inc., ^ that created one of the largest independent
investment management businesses in the world with approximately ^ $177.5
billion in assets under management. ^ IFG was established in 1932 and as of ^
September 30, 1997, managed 14 mutual funds, consisting of ^ 46 separate
portfolios, on behalf of over ^ 858,051 shareholders. ^ AMVESCAP PLC's ^ North
American subsidiaries include the following:
^--INVESCO Capital Management, Inc. of Atlanta, Georgia^ manages
institutional investment portfolios, consisting primarily of discretionary
employee benefit plans for corporations and state and local governments, and
endowment funds. INVESCO Capital Management, Inc. is the sole shareholder of
INVESCO Services, Inc., a registered broker^-dealer whose primary business is
the distribution of shares of two registered investment companies.
^--INVESCO Management & Research, Inc. of Boston, Massachusetts, primarily
manages pension and endowment accounts.
^--PRIMCO Capital Management, Inc. of Louisville, Kentucky^ specializes in
managing stable return investments, principally on behalf of Section 401(k)
retirement plans.
^--INVESCO Realty Advisors, Inc. of Dallas, Texas^ is responsible for
providing advisory services in the U.S. real estate markets for ^ AMVESCAP PLC's
clients worldwide. Clients include corporate plans ^, public pension funds as
well as endowment and foundation accounts.
--A I M Advisors, Inc. of Houston, Texas provides investment advisory and
administrative services for retail and institutional mutual funds.
<PAGE>
--A I M Capital Management, Inc. of Houston, Texas provides investment
advisory services to individuals, corporations, pension plans and other private
investment advisory accounts and also serves as a sub- adviser to certain retail
and institutional mutual funds, one Canadian mutual fund and one portfolio of an
open-end registered investment company that is offered to separate accounts of
insurance companies offering variable annuities and variable life insurance
products.
--A I M Distributors, Inc. and Fund Management Company of Houston, Texas
are registered broker-dealers that act as the principal underwriters for retail
and institutional mutual funds.
The corporate headquarters of ^ AMVESCAP PLC are located at 11 Devonshire
Square, London, EC2M 4YR, England.
^
As indicated in the ^ Funds' Prospectuses, IFG and IAML permit investment
and other personnel to purchase and sell securities for their own accounts in
accordance with compliance policies governing personal investing by directors,
officers and employees of ^ IFG, IAML and their North American affiliates. These
policies require officers, inside directors, investment and other personnel of ^
IFG, IAML and their North American affiliates to pre-clear all transactions in
securities not otherwise exempt under the policies. Requests for trading
authority will be denied if, among other reasons, the proposed personal
transaction would be contrary to the provisions of the applicable policy or
would be deemed to adversely affect any transaction then known to be under
consideration for or to have been effected on behalf of any client account,
including the Funds.
In addition to the pre-clearance requirement described above, the policies
subject officers, inside directors, investment and other personnel of ^ IFG,
IAML and their North American affiliates to various trading restrictions and
reporting obligations. All reportable transactions are reviewed for compliance
with the policies. The provisions of these policies are administered by and
subject to exceptions authorized by ^ IFG or IAML.
Investment Advisory Agreement. ^ IFG serves as investment adviser pursuant
to an investment advisory agreement dated February 28, 1997 (the "Agreement")
with the Company which was approved on November 6, 1996, by a vote cast in
person by a majority of the directors of the Company, including a majority of
the directors who are not "interested persons" of the Company or ^ IFG at a
meeting called for such purpose. The Agreement was approved by shareholders of
each Fund of the Company on January 31, 1997, for an initial term expiring
February 28, 1999. The Agreement was approved by IFG as sole shareholder of the
Emerging Markets Fund with respect to that Fund on ___________, for an initial
term expiring on _______________. 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
<PAGE>
interested persons (as defined in the 1940 Act) of any such party, cast in
person at a meeting called for the purpose of voting on such continuance. The
Agreement may be terminated at any time without penalty by either party upon
sixty (60) days' written notice and terminates automatically in the event of an
assignment to the extent required by the 1940 Act and the rules thereunder.
The Agreement provides that ^ IFG shall manage the investment portfolios of
the 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 ^ IFG).
Further, ^ IFG shall perform all administrative, internal accounting (including
computation of net asset value), clerical, statistical, secretarial and all
other services necessary or incidental to the administration of the affairs of
the Funds excluding, however, those services that are the subject of separate
agreement between the Company and ^ IFG or any affiliate thereof, including the
distribution and sale of Fund shares and provision of transfer agency, dividend
disbursing agency and registrar services, and services furnished under an
Administrative Services Agreement with ^ IFG discussed below. Services provided
under the Agreement include but are not limited to: supplying the Company with
officers, clerical staff and other employees, if any, who are necessary in
connection with the 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 ^ IFG'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 ^ IFG are borne by the Funds.
As full compensation for its advisory services to the Company, ^ IFG
receives a monthly fee. The fee is calculated daily at an annual rate of:
(a) ^ 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% on each Fund's average net
assets in excess of $700 million;
(b) ^ 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% on the Fund's average net
assets in excess of $1 billion.
(c) Emerging Markets Fund: 1.00% on the first $500 million of the Fund's
average net assets; 0.85% on the next $500 million of the Fund's
average net assets; and 0.75% on 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.
<PAGE>
Sub-Advisory Agreement. With respect to the European, Pacific Basin and
International Growth Funds, IAML serves as sub-adviser to the Funds pursuant to
a sub-advisory agreement dated February 28, 1997 (the Sub-Agreement") with
INVESCO which was approved on November 6, 1996, by a vote cast in person by a
majority of the directors of the Company, including a majority of the directors
who are not "interested persons" of the Company, ^ IFG or IAML, at a meeting
called for such purpose. The Sub-Agreement was approved on January 31, 1997, by
the shareholders of each of the Funds (except Emerging Markets Fund) for an
initial term expiring February 28, 1999. The Sub-Agreement was approved by IFG
as sole shareholder of the Emerging Markets Fund with respect to that Fund on
___________, for an initial term expiring on ____________. 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
the 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 terminates automatically in
the event of an assignment to the extent required by the 1940 Act and the rules
thereunder.
The Sub-Agreement provides that IAML, subject to the supervision of ^ IFG,
shall manage the investment portfolios of the 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 ^ IFG, 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 IAML; (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, IAML
shall receive from ^ IFG, at the end of each month, a fee based upon the average
daily value of the applicable Fund's net assets. With respect to the ^ European
and Pacific Basin Funds, the fee is calculated at the ^ following annual rates:
<PAGE>
prior to January 1, 1998, 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% on each Fund's average net assets in excess of $700 million. Effective
January 1, 1998, IAML shall receive a fee based on the following annual rates:
0.25% on the first $350 million; 0.2166% on the next $350 million and 0.1833% on
each Fund's net assets in excess of $700 million. With respect to the ^
International Growth Fund, the fee is computed at the ^ following annual rates:
prior to January 1, 1998, 0.25% on the first $500 million of the Fund's average
net assets; 0.1875% on the next $500 million of the Fund's average net assets;
and 0.1625% on the Fund's average net assets in excess of $1 billion. Effective
January 1, 1998, IAML shall receive a fee based on the following annual rates:
0.333% on the first $500 million; 0.25% on the next $500 million and 0.2167% on
the Fund's average net assets in excess of $1 billion. With respect to the
Emerging Markets Fund, the fee is computed at the annual rate of 0.333% on the
first $500 million of the Fund's average net assets; 0.28% on the next $500
million of the Fund's average net assets; and 0.25% on the Fund's average net
assets in excess of $1 billion. The sub-advisory fees are paid by INVESCO, NOT
the Funds.
Administrative Services Agreement. ^ IFG, 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 February 28, 1997 (the "Administrative Agreement"). The
Administrative Agreement was approved on November 6, 1996, by a vote cast in
person by all of the directors of the Company, including all of the directors
who are not "interested persons" of the Company or ^ IFG, at a meeting called
for such purpose. The Administrative Agreement is for an initial term of one
year. Thereafter, the Administrative Agreement may be continued from year to
year as long as each such continuance is specifically approved by the board of
directors of the Company, including a majority of the directors who are not
parties to the Administrative Agreement or interested persons (as defined in the
1940 Act) of any such party, cast in person at a meeting called for the purpose
of voting on such continuance. The Administrative Agreement may be terminated at
any time without penalty by ^ IFG on sixty (60) days' written notice, or by the
Company upon thirty (30) days' written notice, and terminates automatically in
the event of an assignment unless the Company's board of directors approves such
assignment.
The Administrative Agreement provides that ^ IFG shall provide the
following services to the 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 ^ IFG, as are reasonably
necessary for the operation of Fund shareholder accounts maintained by certain
retirement plans and employee benefit plans for the benefit of participants of
such plans. As full compensation for services provided under the Administrative
Agreement, the Company pays a monthly fee to ^ IFG 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.
<PAGE>
Transfer Agency Agreement. ^ IFG also performs transfer agent, dividend
disbursing agent and registrar services for the Company pursuant to a Transfer
Agency Agreement dated February 28, 1997 which was approved by the board of
directors of the Company, including a majority of the Company's directors who
are not parties to the Transfer Agency Agreement or "interested persons" of any
such party, on November 6, 1996^. The Transfer Agency Agreement was for an
initial term expiring February 28, 1998 and has been extended by the board of
directors until May 15, 1998. Thereafter, the Transfer Agency Agreement 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 an annual fee of $20.00 per shareholder account or, where applicable,
per participant in an omnibus account. This fee is paid monthly at a rate of
1/12 of the annual fee and is based upon the actual number of shareholder
accounts ^, or, where applicable, per participant in an omnibus account.
For the fiscal years ended October 31, 1997, 1996^ and 1995 ^, the Funds
paid the following advisory fees, administrative services fees and transfer
agency fees:
^ European Fund
Fiscal Year
Ended Advisory Administrative Transfer
October 31 Fee Services Fee Agency Fee
- ---------- -------- -------------- ----------
1996 $1,793,380 $45,868 $839,761
1995 1,815,386 46,308 869,684
1994 2,503,180 60,180 698,202
^ Pacific Basin Fund
Fiscal Year
Ended Advisory Administrative Transfer
October 31 Fee Services Fee Agency Fee
- ---------- -------- -------------- ----------
1996 $1,396,490 $37,930 $870,770
1995 1,571,623 41,483 852,343
1994 2,255,967 55,169 615,420
<PAGE>
^ International Growth Fund
Fiscal Year
Ended Advisory Administrative Transfer
October 31 Fee Services Fee Agency Fee
- ---------- -------- -------------- ----------
1996 $893,966 $23,409 $383,054
1995 963,765 24,541 361,657
1994 1,307,707 29,616 242,814
Emerging Markets Fund
The Emerging Markets Fund paid IFG no advisory, administrative or transfer
agency fees as of the date of this Statement of Additional Information since it
is not anticipated that the Fund did not commence a public offering of its
shares until the date of this Statement of Additional Information.
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 are paid by, ^ IFG, 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 ^ IFG.
All of the officers and directors of the Company hold comparable positions
with INVESCO Capital Appreciation Funds, Inc. (formerly, INVESCO Dynamics Fund,
Inc.), INVESCO Diversified Funds, Inc.^, INVESCO 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 ^, with the exception of
Dan Hesser, also are directors of INVESCO Treasurer's Series Trust. All of the
officers of the Company also hold comparable positions with INVESCO Value Trust.
Set forth below is information with respect to each of the Company's officers
and directors. Unless otherwise indicated, the address of the directors and
officers is Post Office Box 173706, Denver, Colorado 80217-3706. Their
affiliations represent their principal occupations during the past five years.
CHARLES W. BRADY,*+** Chairman of the Board. Chief Executive Officer and
Director of ^ AMVESCAP PLC, London, England, and of various subsidiaries
thereof; Chairman of the Board of INVESCO ^ Treasurer's Series Trust. Address:
1315 Peachtree Street, NE, Atlanta, Georgia. Born: May 11, 1935.
<PAGE>
FRED A. DEERING,+# Vice Chairman of the Board. Vice Chairman of ^ INVESCO
Treasurer's Series Trust. Trustee of ^ INVESCO Global Health Sciences Fund.
Formerly, Chairman of the Executive Committee and Chairman of the Board of
Security Life of Denver Insurance Company, Denver, Colorado; ^ Director of ING
America Life Insurance Company, Urbaine Life Insurance Company and Midwestern
United Life Insurance Company. ^ Address: Security Life Center, 1290 Broadway,
Denver, Colorado. Born: January 12, 1928.
DAN J. HESSER,+* President, CEO and Director. Chairman of the Board,
President, and Chief Executive Officer of INVESCO Funds Group, Inc. and INVESCO
Distributors, Inc.; President and Director of INVESCO Trust Company ^. President
and Chief Operating Officer of INVESCO Global Health Sciences Fund ^. Born:
December 27, 1939.
VICTOR L. ANDREWS,** Director. Professor Emeritus, Chairman Emeritus and
Chairman of the CFO Roundtable of the Department of Finance ^ at Georgia State
University, Atlanta, Georgia; President, Andrews Financial Associates, Inc.
(consulting firm); since October 1984, Director of the Center for the Study of
Regulated Industry of 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: 4625 Jettridge Drive, Atlanta,
Georgia. Born: June 23, 1930.
BOB R. BAKER,+** Director. President and Chief Executive Officer of AMC
Cancer Research Center, Denver, Colorado, since January 1989; until mid-December
1988, Vice Chairman of the Board of First Columbia Financial Corporation (a
financial institution), Englewood, Colorado. Formerly, Chairman of the Board and
Chief Executive Officer of First Columbia Financial Corporation. Address: 1775
Sherman Street, #1000, Denver, Colorado. Born: August 7, 1936.
LAWRENCE H. BUDNER,# Director. Trust Consultant; prior to June 30, 1987,
Senior Vice President and Senior Trust Officer of InterFirst Bank, Dallas,
Texas. Address: 7608 Glen Albens Circle, Dallas, Texas. Born: July 25, 1930.
DANIEL D. CHABRIS,+# Director. Financial Consultant; Assistant Treasurer of
Colt Industries Inc., New York, New York, from 1966 to 1988. Address: ^ 19
Kingsbridge Way, Madison, Connecticut. Born: August 1, 1923.
WENDY L. GRAMM, Ph.D.,** Director. Self-employed (since 1993); Professor of
Economics and Public Administration, University of Texas at Arlington. Formerly,
Chairman, Commodity Futures Trading Commission from 1988 to 1993, administrator
for Information and Regulatory Affairs at the Office of Management and Budget
from 1985 to 1988, Executive Director of the Presidential Task Force on
Regulatory Relief and Director of the Federal Trade Commission's Bureau of
Economics. Dr. Gramm is also a director of the Chicago Mercantile Exchange,
Enron Corporation, IBP, Inc., State Farm Insurance Company, State Farm Life
<PAGE>
Insurance Company, Independent Women's Forum, International Republic Institute,
and the Republican Women's Federal Forum. Dr. Gramm is also a member of the
Board of Visitors, College of Business Administration, University of Iowa, and a
member of the Board of Visitors, Center for Study of Public Choice, George Mason
University. Address: 4201 Yuma Street, N.W., Washington, D.C. Born: January 10,
1945.
HUBERT L. HARRIS, JR.,* Director. Chairman (since 1996) and President
(January 1990 to May 1996) of INVESCO Services, Inc.; Chief Executive Officer of
INVESCO Individual Services Group. Member of the Executive Committee of the
Alumni Board of Trustees of Georgia Institute of Technology. Address: 1315
Peachtree Street, NE, Atlanta, Georgia. Born: July 15, 1943.
KENNETH T. KING,#^ Director. Formerly, Chairman of the Board of The Capitol
Life Insurance Company, Providence Washington Insurance Company, and Director of
numerous subsidiaries thereof in the U.S. Formerly, Chairman of the Board of The
Providence Capitol Companies in the United Kingdom and Guernsey. Chairman of the
Board of the Symbion Corporation (a high technology company) until 1987.
Address: 4080 North Circulo Manzanillo, Tucson, Arizona. Born: November 16,
1925.
JOHN W. MCINTYRE,# Director. Retired. Formerly, Vice Chairman of the Board
of Directors of The Citizens and Southern Corporation and Chairman of the Board
and Chief Executive Officer of The Citizens and Southern Georgia Corp. and
Citizens and Southern National Bank. Director of Golden Poultry Co., Inc.
Trustee of ^ INVESCO Global Health Sciences Fund and Gables Residential ^ Trust.
Address: 7 Piedmont Center, Suite 100, Atlanta, ^ Georgia. Born: September 14,
1930.
LARRY SOLL, Ph.D.,** Director. Retired. Formerly, Chairman of the Board
(1987 to 1994), Chief Executive Officer (1982 to 1989 and 1993 to 1994) and
President (1982 to 1989) of Synergen Corp. Director of Synergen since its
incorporation in 1982. Director of ISI Pharmaceuticals, Inc. Trustee of INVESCO
Global Health Sciences Fund. Address: 345 Poorman Road, Boulder, Colorado. Born:
April 26, 1942.
GLEN A. PAYNE, Secretary. Senior Vice President (since 1995), General
Counsel and Secretary of INVESCO Funds Group, Inc. and INVESCO Trust Company
(since 1989) and of INVESCO Distributors, Inc. (since 1997); Vice President (May
1989 to April 1995) ^. Formerly, employee of a U.S. regulatory agency,
Washington, D.C.^ (June 1973 through May 1989). Born: September 25, 1947.
RONALD L. GROOMS, Treasurer. Senior Vice President and Treasurer of INVESCO
Funds Group, Inc. and INVESCO Trust Company (since 1988) and of INVESCO
Distributors, Inc. (since 1997). Born: October 1, 1946.
WILLIAM J. GALVIN, JR., Assistant Secretary. Senior Vice President of
INVESCO Funds Group, Inc. (since 1995) and of INVESCO Distributors, Inc. (since
1997) and Trust Officer of INVESCO Trust Company since July 1995 and formerly
(August 1992 to July 1995) Vice President of INVESCO Funds Group, Inc. and ^
trust officer of INVESCO Trust Company. Formerly, Vice President of 440
Financial Group from June 1990 to August 1992 ^ and Assistant Vice President of
Putnam Companies from November 1986 to June 1990. Born: August 21, 1956.
<PAGE>
ALAN I. WATSON, Assistant Secretary. Vice President of INVESCO Funds Group,
Inc. (since 1984) and Trust Officer of INVESCO Trust Company. Born: September
14, 1941.
JUDY P. WIESE, Assistant Treasurer. Vice President of INVESCO Funds Group,
Inc. (since 1984) and of INVESCO Distributors, Inc. (since 1997) and Trust
Officer of INVESCO Trust Company. Born: February 3, 1948.
#Member of the audit committee of the 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 ^ November 7, 1997, 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,
1996: the compensation paid by the Company to its ^ independent directors for
services rendered in their capacities as directors of the Company; the benefits
accrued as Company expenses with respect to the Defined Benefit Deferred
Compensation Plan discussed below; and the estimated annual benefits to be
received by these directors upon retirement as a result of their service to the
Company. In addition, the table sets forth the total compensation paid by all of
the mutual funds distributed by INVESCO ^ Distributors, Inc. (including the
Company), INVESCO Advisor Funds, Inc. (formerly distributed by IFG), INVESCO
Treasurer's Series Trust and ^ INVESCO Global Health Sciences Fund
(collectively, the "INVESCO Complex") to these directors for services rendered
in their capacities as directors or trustees during the year ended December 31,
1996. As of December 31, ^ 1995, there were ^ 48 funds in the INVESCO Complex.
Dr. Soll became an independent director of the Company effective May 15, 1997
and is not included in this table. Dr. Gramm became an independent director of
the Company effective July 29, 1997, and is not included in this table.
<PAGE>
Total
Compensa-
Benefits Estimated tion From
Aggregate Accrued As Annual INVESCO
Compensa- Part of Benefits Complex
Name of Person, tion From Company Upon Paid To
Position Company(1) Expenses(2) Retirement(3) Directors(1)
- --------------- ----------- ----------- ------------ -----------
Fred A.Deering, $ 4,309 $ 887 $ 738 $ 98,850
Vice Chairman of
the Board
Victor L. Andrews 4,089 781 813 ^ 87,350
Bob R. Baker 4,140 805 1,090 ^ 68,000
Lawrence H. Budner 4,026 838 813 ^ 73,000
Daniel D. Chabris 4,154 956 578 ^ 68,350
A. D. Frazier, ^ Jr.(4),(5) 3,973 0 0 ^ 73,350
Kenneth T. King 4,108 921 669 ^ 63,500
John W. ^ McIntyre4 3,987 0 0 ^ 70,000
------- ------ ------ ----------
Total $32,786 $5,188 $4,701 ^ $571,400
% of Net Assets ^ 0.0060%(6) 0.0010%(6) 0.0043%(7)
(1)The vice chairman of the board, the chairmen of the audit, management
liaison and compensation committees, and the members of the executive and
valuation committees each receive compensation for serving in such capacities in
addition to the compensation paid to all independent directors.
(2)Represents benefits accrued with respect to the Defined Benefit Deferred
Compensation Plan discussed below and not compensation deferred at the election
of the directors.
(3)These figures represent the Company's share of the estimated annual
benefits payable by the INVESCO Complex (excluding ^ INVESCO Global Health
Sciences Fund which does not participate in any retirement plan) upon the
directors' retirement, calculated using the current method of allocating
director compensation among the funds in the INVESCO Complex. These estimated
benefits assume retirement at age 72 and that the basic retainer payable to the
directors will be adjusted periodically for inflation, for increases in the
number of funds in the INVESCO Complex and for other reasons during the period
in which retirement benefits are accrued on behalf of the respective directors.
<PAGE>
This results in lower estimated benefits for directors who are closer to
retirement and higher estimated benefits for directors who are further from
retirement. With the exception of Messrs. Frazier and McIntyre, each of these
directors has served as a director/trustee of one or more of the funds in the
INVESCO Complex for the minimum five-year period required to be eligible to
participate in the Defined Benefit Deferred Compensation Plan.
(4)Messrs. Frazier and McIntyre began serving as directors of the Company
on April 19, 1995.
(5)Effective ^ November 1, 1996, Mr. Frazier was employed by ^ INVESCO PLC
(the predecessor to AMVESCAP PLC), a company affiliated with ^ IF and did not
receive any director's fees or other compensation from the Company or other
funds in the INVESCO Complex ^ for his service as a director on or after May 1,
1996, at which time he was deemed to be an interested person of the Funds and of
the other funds in the INVESCO Complex ^.
^(6)Total as a percentage of the Company's net assets as of October 31,
1996. The Emerging Markets Fund did not incur directors fees as of the date of
this Statement of Additional Information.
(7)Total ^ as a percentage of the net assets of the INVESCO Complex as of
December 31, ^ 1995.
Messrs. Brady, Harris^ and Hesser, as "interested persons" of the Company
and other funds in the INVESCO Complex, receive compensation as officers or
employees of ^ IFG or its affiliated companies and do not receive any director's
fees or other compensation from the Company or other funds in the INVESCO
Complex for their services as directors.
The boards of directors/trustees of the mutual funds managed by ^ IFG and
INVESCO Treasurer's Series Trust have adopted a Defined Benefit Deferred
Compensation Plan for the non-interested directors and trustees of the funds.
Under this plan, each director or trustee who is not an interested person of the
funds (as defined in the 1940 Act) and who has served for at least five years (a
"qualified director") is entitled to receive, upon retiring from the boards at
the retirement age of 72 (or the retirement age of 73 to 74, if the retirement
date is extended by the boards for one or two years but less than three years)
continuation of payment for one year (the "first year retirement benefit") of
the annual basic retainer payable by the funds to the qualified director at the
time of his or her retirement (the "basic retainer"). Commencing with any such
director's second year of retirement, and commencing with the first year of
retirement of a director whose retirement has been extended by the board for
three years, a qualified director shall receive quarterly payments at an annual
rate equal to 40% of the basic retainer. These payments will continue for the
remainder of the qualified director's life or ten years, whichever is longer
(the "reduced retainer payments"). If a qualified director dies or becomes
disabled after age 72 and before age 74 while still a director of the funds, the
first year retirement benefit and the reduced retainer payments will be made to
^ the director or to his or her beneficiary or estate. If a qualified director
becomes disabled or dies either prior to age 72 or during his 74th year while
<PAGE>
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 or her beneficiary or estate. The plan is administered by a
committee of three directors who are also participants in the plan and one
director who is not a plan participant. The cost of the plan will be allocated
among the INVESCO^ and Treasurer's Series Trust funds in a manner determined to
be fair and equitable by the committee. The 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 ^ that is comprised of ^ five of the
directors who are not interested persons of the Company. The committee meets
periodically with the Company's independent accountants and officers to review
accounting principles used by the 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." ^ IDI 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.
Distribution Plan. As discussed in the Prospectuses, the Company has
adopted a Plan and Agreement of Distribution (the "Plan") pursuant to Rule 12b-1
under the 1940 Act which was implemented November 1, 1997. The Plan was approved
on May 16, 1997, at a meeting called for such purpose by a majority of the
directors of the Company, including a majority of the directors who neither are
"interested persons" of the Company nor have any financial interest in the
operation of the Plan ("12b-1 directors"). The Plan was approved by shareholders
of the European and International Growth Funds on October 28, 1997, shareholders
of the Pacific Basin Fund on December 1, 1997 and IFG on behalf of the Emerging
Markets Fund on _______________, for initial terms expiring October 28, 1998,
December 1, 1998, and ____________, respectively.
<PAGE>
The Plan provides that each Fund may make monthly payments to IDI of
amounts computed at the following annual rates: with respect to the European and
International Growth Funds, no greater than 0.25% of new sales of shares,
exchanges into each Fund and reinvestments of dividends and other distributions
added after November 1, 1997. With respect to the Pacific Basin Fund, no greater
than 0.25% of the Fund's new sales of shares, exchanges into the Fund and
reinvestment of dividends and other distributions added after December 1, 1997
and with respect to the Emerging Markets Fund, no greater than 0.25% of the
Fund's average net assets to permit IDI, at its discretion, to engage in certain
activities and provide certain services in connection with the distribution of
each Fund's shares to investors. Payment amounts by a Fund under the Plan, for
any month, may be made to compensate IDI for permissible activities engaged in
and services provided by IDI during the rolling 12-month period in which that
month falls, although this period is extended to 24 months for obligations
incurred during the first 24 months of a Fund's operations. As noted in the
Prospectuses, one type of expenditure permitted by the Plan is the payment of
compensation to securities companies and other financial institutions and
organizations, which may include IDI-affiliated companies, in order to obtain
various distribution-related and/or administrative services for the Funds. Each
Fund is authorized by the Plan to use its assets to finance the payments made to
obtain those services. Payments will be made by IDI to broker-dealers who sell
shares of the Funds and may be made to banks, savings and loan associations and
other depository institutions. Although the Glass-Steagall Act limits the
ability of certain banks to act as underwriters of mutual fund shares, the
Company does not believe that these limitations would affect the ability of such
banks to enter into arrangements with IDI, but can give no assurance in this
regard. However, to the extent it is determined otherwise in the future,
arrangements with banks might have to be modified or terminated, and, in that
case, the size of one or more of the Funds possibly could decrease to the extent
that the banks would no longer invest customer assets in a particular Fund.
Neither the Company nor its investment adviser will give any preference to banks
or other depository institutions which enter into such arrangements when
selecting investments to be made by each Fund.
The Plan was not implemented until November 1, 1997 with respect to the
European and International Growth Funds, December 1, 1997 with respect to the
Pacific Basin Fund and ___________ with respect to the Emerging Markets Fund.
The nature and scope of services which are provided by securities dealers
and other organizations may vary by dealer but include, among other things,
processing new stockholder account applications, preparing and transmitting to
the Company's Transfer Agent computer-processable tapes of each Fund's
transactions by customers, serving as the primary source of information to
customers in answering questions concerning each Fund, and assisting in other
customer transactions with each Fund.
The Plan provides that it shall continue in effect with respect to each
Fund for so long as such continuance is approved at least annually by the vote
of the board of directors of the Company cast in person at a meeting called for
the purpose of voting on such continuance. The Plan also can be terminated at
any time with respect to any Fund, without penalty, if a majority of the 12b-1
<PAGE>
directors, or shareholders of such Fund, vote to terminate the Plan. The
Company may, in its absolute discretion, suspend, discontinue or limit the
offering of the shares of any Fund at any time. In determining whether any such
action should be taken, the board of directors intends to consider all relevant
factors including, without limitation, the size of the Funds, the investment
climate for any particular Fund, general market conditions, and the volume of
sales and redemptions of Fund shares. The Plan may continue in effect and
payments may be made under the Plan following any such temporary suspension or
limitation of the offering of a Fund's shares; however, the Company is not
contractually obligated to continue the Plan for any particular period of time.
Suspension of the offering of a Fund's shares would not, of course, affect a
shareholder's ability to redeem his or her shares. So long as the Plan is in
effect, the selection and nomination of persons to serve as independent
directors of the Company shall be committed to the independent directors then in
office at the time of such selection or nomination. The Plan may not be amended
to increase materially the amount of any Fund's payments thereunder without
approval of the shareholders of that Fund, and all material amendments to the
Plan must be approved by the board of directors of the Company, including a
majority of the 12b-1 directors. Under the agreement implementing the Plan, IDI
or the Funds, the latter by vote of a majority of the 12b-1 directors or of the
holders of a majority of any Fund's outstanding voting securities, may terminate
such agreement without penalty upon 30 days' written notice to the other party.
No further payments will be made by any Fund under the Plan in the event of its
termination as to that Fund.
To the extent that the Plan constitutes a plan of distribution adopted
pursuant to Rule 12b-1 under the Act, it shall remain in effect as such, so as
to authorize the use of each Fund's assets in the amounts and for the purposes
set forth therein, notwithstanding the occurrence of an assignment, as defined
by the Act, and rules thereunder. To the extent it constitutes an agreement
pursuant to a plan, each Fund's obligation to make payments to IDI shall
terminate automatically, in the event of such "assignment," in which event the
Funds may continue to make payments, pursuant to the Plan, to IDI or another
organization only upon the approval of new arrangements, which may or may not be
with IDI, regarding the use of the amounts authorized to be paid by it under the
Plan, by the directors, including a majority of the 12b-1 directors, by a vote
cast in person at a meeting called for such purpose.
Information regarding the services rendered under the Plan and the amounts
paid therefor by each Fund are provided to, and reviewed by, the directors on a
quarterly basis. On an annual basis, the directors consider the continued
appropriateness of the Plan at the level of compensation provided therein.
The only directors or interested persons, as that term is defined in
Section 2(a)(19) of the Act, of the Company who have a direct or indirect
financial interest in the operation of the Plan are the officers and directors
of the Company listed under "The Funds and Their Management -- Officers and
Directors of the Company" who are also officers either of IFG or companies
affiliated with IFG. The benefits which the Company believes will be reasonably
likely to flow to the Funds and their shareholders under the Plan include the
following:
<PAGE>
(1) Enhanced marketing efforts, if successful, should result in an
increase in net assets through the sale of additional shares and
afford greater resources with which to pursue the investment
objectives of the Funds;
(2) The sale of additional shares reduces the likelihood that redemption
of shares will require the liquidation of securities of the Funds in
amounts and at times that are disadvantageous for investment
purposes;
(3) The positive effect which increased Fund assets will have on its
revenues could allow IFG and its affiliated companies:
(a) To have greater resources to make the financial commitments
necessary to improve the quality and level of each Fund's
shareholder services (in both systems and personnel),
(b) To increase the number and type of mutual funds available to
investors from IFG and its affiliated companies (and support
them in their infancy), and thereby expand the investment
choices available to all shareholders, and
(c) To acquire and retain talented employees who desire to be
associated with a growing organization; and
(4) Increased Fund assets may result in reducing each investor's share
of certain expenses through economies of scale (e.g. exceeding
established breakpoints in the advisory fee schedule and allocating
fixed expenses over a larger asset base), thereby partially
offsetting the costs of the Plan.
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, Martin Luther King, Jr. Day, Presidents' Day, Good Friday, Memorial Day,
Independence Day, Labor Day, Thanksgiving and Christmas. ^ The net asset value
per share of each 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.
<PAGE>
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 ^ value of securities held by ^ each Fund, and other assets used in
computing net asset value, generally ^ is determined as of the time regular
trading in such securities or assets is completed each day. Because regular
trading in most foreign securities markets is completed simultaneously with, or
prior to, the close of regular trading on the New York Stock Exchange, closing
prices for foreign securities usually are available for purposes of computing
the Funds' net asset values. 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.
FUND PERFORMANCE
As discussed in the section of each Fund's ^ Prospectus entitled
"Performance Data," ^ all of the Funds advertise their total return performance
^. Average annual total return performance for each Fund for the indicated
periods ended October 31, 1996, was as follows:
<PAGE>
10 Years/
Life of
Fund 1 Year 5 Years Fund
- --------- ------ ------- ---------
European 23.47% 10.60% 9.21%
Pacific Basin 3.55% 4.86% 7.22%
International Growth 12.01% 5.07% 5.65%(1)
Emerging Markets (2) N/A N/A N/A
- -----------------
(1) 109 months (9.08 yrs.)
(2) The Emerging Markets Fund did not operate during these time periods.
Average annual total return performance for each of the periods indicated was
computed by finding the average annual compounded rates of return that would
equate the initial amount invested to the ending redeemable value, according to
the following formula:
P(1 + T) exponent n = ERV
where: P = initial payment of $1000
T = average annual total return
n = number of years
ERV = ending redeemable value of initial payment
The average annual total return performance figures shown above were
determined by solving the above formula for "T" for each time period and 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
<PAGE>
Lipper Analytical Services, Inc.'s Mutual Fund Performance
Analysis
Money
Morningstar
Mutual Fund Forecaster
No-Load Analyst
No-Load Fund X
Personal Investor
Smart Money
The New York Times
The No-Load Fund Investor
U.S. News and World Report
United Mutual Fund Selector
USA Today
Wall Street Journal
Wiesenberger Investment Companies Services
Working Woman
Worth
SERVICES PROVIDED BY THE ^ FUNDS
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.
Because 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.
^ Participation in the Periodic Withdrawal Plan may be terminated at any
time by sending a written request to ^ IFG. Upon termination, all future
dividends and capital gain distributions will be reinvested in additional shares
unless a shareholder requests otherwise.
Exchange ^ Policy. As discussed in the section of each Fund's ^ Prospectus
entitled "Services Provided by the Funds," the Funds offer shareholders the ^
ability to exchange shares of the Funds for shares of certain other mutual funds
advised by ^ IFG. Exchange requests may be made either by telephone or by
written request to ^ IFG, using the telephone number or address on the cover of
this Statement of Additional Information. Exchanges made by telephone must be in
an amount of at least $250 if the exchange is being made into an existing
account of one of the INVESCO funds. All exchanges that establish a NEW account
must meet the fund's applicable minimum initial investment requirements. Written
exchange requests into an existing account have no minimum requirements other
<PAGE>
than the fund's applicable minimum subsequent investment requirements. Any
gain or loss realized on such an exchange is recognized for federal income tax
purposes. This privilege is not an option or right to purchase securities but is
a revocable privilege permitted under the present policies of each of the funds
and is not available in any state or other jurisdiction where the shares of the
mutual fund into which transfer is to be made are not qualified for sale, or
when the net asset value of the shares presented for exchange is less than the
minimum dollar purchase required by the appropriate prospectus.
TAX-DEFERRED RETIREMENT PLANS
As described in the section of each Fund's prospectus entitled "Services
Provided by the Funds," shares of the Funds may be purchased as the investment
medium for various tax-deferred retirement plans. Persons who request
information regarding these plans from ^ IFG will be provided with prototype
documents and other supporting information regarding the type of plan requested.
Each of these plans involves a long-term commitment of assets and is subject to
possible regulatory penalties for excess contributions, premature distributions
or insufficient distributions after age 70-1/2. The legal and tax implications
may vary according to the circumstances of the individual investor. Therefore,
the investor is urged to consult with an attorney or tax adviser prior to the
establishment of such a plan.
HOW TO REDEEM SHARES
Normally, payments for shares redeemed will be mailed within seven 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 ("SEC")
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 ^ is obligated ^ 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.
<PAGE>
DIVIDENDS, ^ OTHER DISTRIBUTIONS AND TAXES
The ^ Fund intends to continue to conduct its business and satisfy the
applicable diversification of assets and source of income requirements to
qualify as a regulated investment company under Subchapter M of the Internal
Revenue Code of 1986, as amended (the "Code"). The ^ Fund so qualified ^ for the
^ taxable year ended ^ October 31, ^ 1996, and intends to continue to qualify
during its current ^ taxable year. As a result, because the Fund intends to
distribute all of its income and recognized gains, it is anticipated that the ^
Fund will pay no federal income or excise taxes and will be accorded conduit or
^"pass through^" treatment for federal income tax purposes.
Dividends paid by ^ the Fund from net investment income^ as well as
distributions of net realized short-term capital gains and net realized gains
from certain foreign currency transactions^ are, for federal income tax
purposes, taxable as ordinary income to shareholders. After the end of each
calendar year, ^ the Fund sends shareholders information regarding the amount
and character of dividends paid in the year^.
^ Distributions by the Fund of net capital ^ gain (the excess of net
long-term capital gain over net short-term capital loss) are, for federal income
tax purposes, taxable to the shareholder as long-term capital gains regardless ^
how long a shareholder has held shares of the Fund. ^ The Taxpayer Relief Act of
1997 (the "Tax Act"), enacted in August 1997, changed the taxation of long-term
capital gains by applying different capital gains rates depending on the
taxpayer's holding period and marginal rate of federal income tax. Long-term
gains realized on the sale of securities held for more than one year but not for
more than 18 months are taxable at a rate of 28%. This category of long-term
gains is often referred to as "mid-term" gains but is technically termed "28%
rate gains". Long-term gains realized on the sale of securities held for more
than 18 months are taxable at a rate of 20%. The Tax Act, however, does not
address the application of these rules to distributions of net capital gain
(excess of long-term capital gain over short-term capital losses) by a regulated
investment company, including whether such distributions may be treated by its
shareholders in accordance with the Fund's holding period for the assets it sold
that generated the gain. The application of the new capital gain rules must be
determined by further legislation or future regulations that are not available
as this Prospectus is being prepared. At the end of each year, information
regarding the tax status of dividends and other distributions is provided to
shareholders. Shareholders should consult their tax advisers as to the effect of
the Tax Act on distributions by the Fund of net capital gain.
All dividends and other distributions are regarded as taxable to the
investor, regardless whether ^ such dividends and distributions are reinvested
in additional shares^ of the Fund. The net asset value of Fund shares ^ reflects
accrued net investment income and undistributed realized capital and foreign
currency gains; therefore, when a distribution is made, the net asset value is
reduced by the amount of the distribution. If the net asset value of Fund shares
were reduced below a shareholder's cost as a result of a distribution, such
<PAGE>
distribution would be taxable to the shareholder although a portion would be, in
effect, a return of invested capital. ^ 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 by
the shareholder.
IFG^ may provide Fund shareholders with information concerning the average
cost basis of their shares in order to help them prepare their tax returns. This
information is intended as a convenience to shareholders and will not be
reported to the Internal Revenue Service (the ^"IRS"). The IRS permits the use
of several methods to determine the cost basis of mutual fund shares. The cost
basis information provided by ^ IFG will be computed using the single-category
average cost method, although neither ^ IFG nor the ^ Fund recommends any
particular method of determining cost basis. Other methods may result in
different tax consequences. If a shareholder has reported gains or losses ^ with
respect to shares of the Fund in past years, the shareholder must continue to
use the cost basis method previously used^ unless the shareholder applies to the
IRS for permission to change ^ the method.
If Fund shares are sold at a loss after being held for six months or less,
the loss will be treated as a long-term, instead of short-term, capital loss to
the extent of any capital gain distributions received on those shares.
^ The Fund will be subject to a ^ non-deductible 4% excise tax to the
extent it fails to distribute by the end of any calendar year substantially all
of ^ it ordinary income for that year and net capital ^ gains for the one-year
period ending on October 31 of that year, plus certain other amounts.
Dividends and interest received by ^ the Fund may be subject to income,
withholding or other taxes imposed by foreign countries and U.S. possessions
that would reduce the yield on its securities. Tax conventions between certain
countries and the United States may reduce or eliminate these foreign taxes,
however, and many foreign countries do not ^ imposes taxes on capital gains in
respect of investments by foreign investors. ^ Foreign taxes withheld will be
treated as an expense of the Fund.
^ The Fund may invest in the stock of ^"passive foreign investment
companies^" (PFICs). A PFIC is a foreign corporation (other than a controlled
foreign corporation) that, in general, meets either of the following tests: (1)
at least 75% of its gross income is passive or (2) an average of at least 50% of
its assets produce, or are held for the production of, passive income. Under
certain circumstances, ^ the Fund will be subject to federal income tax on a
portion of any ^"excess distribution^" received on the stock of a PFIC or of any
gain on disposition of the stock (collectively ^"PFIC income"), plus interest
thereon, even if the Fund distributes the PFIC income as a taxable dividend to
its shareholders. The balance of the PFIC income will be included in the ^
Fund's investment company taxable income and, accordingly, will not be taxable
to ^ the Fund to the extent that income is distributed to its shareholders.
<PAGE>
The Fund may elect to "mark-to-market" its stock in any PFIC.
Marking-to-market, in this context, means including in ordinary income for each
taxable year the excess, if any, of the fair market value of the PFIC stock over
the Fund's adjusted tax basis therein as of the end of that year. Once the
election has been made, the Fund also will be allowed to deduct from ordinary
income the excess, if any, of its adjusted basis in PFIC stock over the fair
market value thereof as of the end of the year, but only to the extent of any
net mark-to-market gains with respect to that PFIC stock included by the Fund
for prior taxable years. The Fund's adjusted tax basis in each PFIC's stock with
respect to which it makes this election will be adjusted to reflect the amounts
of income included and deductions taken under the election.
Gains or losses (1) from the disposition of foreign currencies, (2) from
the disposition of debt securities denominated in foreign currency that are
attributable to fluctuations in the value of the foreign currency between the
date of acquisition of each security and the date of disposition, and (3) that
are attributable to fluctuations in exchange rates that occur between the time ^
the Fund accrues interest, dividends or other receivables or accrues expenses or
other liabilities denominated in a foreign currency and the time the Fund
actually collects the receivables or pays the liabilities, generally will be
treated as ordinary income or loss. These gains or losses may increase or
decrease the amount of ^ the Fund's investment company taxable income to be
distributed to its shareholders.
Shareholders should consult their own tax advisers regarding specific
questions as to federal, state and local taxes. Dividends and ^ other
distributions ^ generally will be subject to applicable state and local taxes.
Qualification as a regulated investment company under the ^ Code for federal
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,
1996, 1995 and 1994, the ^ European Fund's portfolio turnover rates were 91%,
96% and 70%, respectively; the ^ Pacific Basin Fund's portfolio turnover rates
were 70%, 56% and 70%, respectively; and the ^ International Growth Fund's
portfolio turnover rates were 64%, 62% and 87%, respectively. The Emerging
Markets Fund did not operate during these time periods.
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.
<PAGE>
Placement of Portfolio Brokerage. Either ^ IFG or IAML, as the Company's
investment adviser or sub-adviser, places orders for the purchase and sale of
securities with brokers and dealers based upon their evaluation of the financial
responsibility of the brokers and dealers, and considering the brokers' and
dealers' ability to effect transactions at the best available prices. Fund
Management 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, Fund Management also endeavors to monitor
brokerage industry practices with regard to the commissions charged by
broker-dealers on transactions effected for other comparable institutional
investors. While Fund Management 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, Fund Management 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 Fund Management in
making informed investment decisions. Research services prepared and furnished
by brokers through which the Funds effect securities transactions may be used by
Fund Management in servicing all of their respective accounts and not all such
services may be used by Fund Management in connection with the Funds.
In recognition of the value of the above-described brokerage and research
services provided by certain brokers, Fund Management, 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
that recommend the Funds to their clients or who act as agent in the purchase of
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.
Certain ^ financial institutions (including brokers who may sell shares of
the Fund, or affiliates of such brokers) are paid a fee (the ^"Services Fee")
for recordkeeping, shareholder communications and other services provided by the
brokers to investors purchasing shares of the ^ Fund through no transaction fee
programs ("NTF Programs") offered by the ^ financial institution or its
affiliated broker (an "NTF Program Sponsor"). The Services Fee is based on the
average daily value of the investments in each Fund made ^ in the name of such
NTF Program Sponsor and held in omnibus accounts maintained on behalf of
investors participating in the NTF Program. ^ With respect to certain NTF
<PAGE>
Programs, the Company's directors have authorized ^ the Funds to apply
dollars generated from the Fund's Plan and Agreement of Distribution pursuant to
Rule 12b-1 under the 1940 Act (the "Plan") to pay the entire Services Fee,
subject to the maximum Rule 12b-1 fee permitted by the Plan. With respect to
other NTF Programs, the Company's directors have authorized the Funds to pay
transfer agency fees to ^ IFG based on the number of investors who have
beneficial interests in ^ the NTF Program Sponsor's omnibus accounts in that
Fund. ^ IFG, in turn, pays these transfer agency fees to the ^ NTF Program
Sponsor as a sub^-transfer agency or recordkeeping fee in payment of all or a
portion of the ^ Services Fee. In the event that the sub-transfer agency or
recordkeeping fee is insufficient to pay all of the Services Fee with respect to
these NTF Programs, the directors of the Company have authorized the Funds to
apply dollars generated from the Plan to pay the remainder of the Services Fee,
subject to the maximum Rule 12b-1 fee permitted by the Plan. IFG itself pays the
portion of the Fund's Services Fee, if any, that exceeds the sum of the
sub-transfer agency or recordkeeping fee and Rule 12b-1 fee. The Company's
directors have further authorized ^ IFG to place a portion of ^ the Funds'
brokerage transactions with certain ^ NTF Program Sponsors or their affiliated
brokers, if IFG reasonably believes that, in effecting the Fund's transactions
in portfolio securities, the broker is able to provide the best execution of
orders at the most favorable prices. A portion of the commissions earned by such
a broker from executing portfolio transactions on behalf of ^ the Funds may be
credited by the ^ NTF Program Sponsor against its Services Fee. Such credit
shall be applied first against any sub-transfer agency or recordkeeping fee
payable with respect to ^ the Funds, and second against any Rule 12b-1 fees used
to pay a portion of the Services Fee, on a basis which has resulted from
negotiations between IFG or IDI and the NTF Program Sponsor. Thus, the Funds pay
sub-transfer agency or recordkeeping fees to the ^ NTF Program Sponsor in
payment of the ^ Services Fee only to the extent that such fees are not offset
by the ^ Funds' credits. In the event that the transfer agency fee paid by ^ the
Funds to ^ IFG with respect to investors who have beneficial interests in a
particular ^ NTF Program Sponsor's omnibus accounts in ^ the Funds exceeds the ^
Services Fee applicable to that Fund, ^ after application of credits, IFG may
carry forward the excess ^ and apply it to future ^ Services Fees payable to
that ^ NTF Program Sponsor with respect to the ^ Funds. The amount of excess
transfer agency fees carried forward will be reviewed for possible adjustment by
^ IFG prior to each fiscal year^-end of the Company. The Company's board of
directors has also authorized the Funds to pay to IDI the full Rule 12b-1 fees
contemplated by the Plan to compensate IDI for expenses incurred by IDI in
engaging in the activities and providing the services on behalf of the Funds
contemplated by the Plan, subject to the maximum Rule 12b-1 fee permitted by the
Plan, notwithstanding that credits have been applied to reduce the portion of
the 12b-1 fee that would have been used to compensate IDI for payments to such
NTF Program Sponsor absent such credits.
The aggregate dollar amounts of brokerage commissions paid by the INVESCO
European and Pacific Basin Funds for the fiscal years ended October 31, 1996,
1995 and 1994, were $1,070,781, $51,678 and $486,571, respectively, for the
European Fund and $1,284,787, $18,451 and $24,970^ respectively, for the INVESCO
<PAGE>
Pacific Basin Fund. For the fiscal year ended October 31, 1996, brokers
providing research services received $1,024 and $0 in commissions on portfolio
transactions effected for the INVESCO European Fund and INVESCO Pacific Basin
Fund, respectively, on aggregate portfolio transactions of $512,291 and $0,
respectively. The INVESCO Pacific Basin and European Funds each paid $0 in
compensation to brokers for the sale of shares of these Funds during the fiscal
year ended October 31, 1996. ^ The aggregate dollar amount of brokerage
commissions paid by the INVESCO International Growth Fund for the fiscal years
ended October 31, 1996, 1995 and 1994^ were $361,537, $35,623 and $561,639^
respectively. During the year ended October 31, 1996, no commissions were paid
to brokers in connection with their provision of research services to the Fund.
The Emerging Markets Fund did not incur any brokerage commissions during these
time periods.
The increased brokerage commissions paid by the Funds in fiscal 1996
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, 1996, 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 10/31/96
- ---- ---------------- -----------
Pacific Basin None
Fund
European Fund Associates Corp. of North ^ $9,640,000
America
International State Street Bank and Trust 3,061,000
Growth Fund North America
Emerging Markets N/A N/A
Fund(1)
(1) The Emerging Markets Fund was not operating at this time period.
Neither IFG ^ nor IAML receives any brokerage commissions on portfolio
transactions effected on behalf of any of the Funds, and there is no affiliation
between ^ IFG, IAML or any person affiliated with ^ IFG, IAML or the Funds and
any broker or dealer that executes transactions for the Funds.
<PAGE>
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, 1996, 35,184,100 of such
shares were outstanding. Of the Company's authorized shares, 100,000,000 shares
have been allocated to each of the Company's ^ four 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 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, or until death,
resignation or retirement. Directors may appoint their own successors, provided
that always at least a majority of the directors have been elected by the
Company's shareholders. It is the intention of the Company not to hold annual
meetings of shareholders. The directors will call annual or special meetings of
shareholders for action by shareholder vote as may be required by the 1940 Act
or the Company's Articles of Incorporation, or at their discretion.
Principal Shareholders. As of ^ November 1, 1997, the following entities
held more than 5% of the Funds' outstanding equity securities.
<PAGE>
Amount and Nature Percent
Name and Address of Ownership of Class
- ---------------- ----------------- --------
^ Pacific Basin Fund
Charles Schwab & Co., Inc. ^ 2,507,988.3460 38.217%
Special Custody Acct. for
the ^ Exclusive Benefit of
Customers
Attn: Mutual Funds
101 Montgomery St.
San Francisco, CA 94104
^ European Fund
Charles Schwab & Co., Inc. ^ 6,565,222.3860 35.051%
Special Custody Acct. for
the ^ Exclusive Benefit of
Customers
Attn: Mutual Funds
101 Montgomery St.
San Francisco, CA 94104
^ International Growth Fund
Commerce Bank of Kansas ^ City 2,104,959.6810 40.873%
^ Ttee for Farmland Industries ^
Coop Retirement Plan
^ PO Box 13366
Kansas City, MO 64199
Charles Schwab & Co., Inc. ^ 514,924.2010 9.998%
Special Custody Acct. for
the ^ Exclusive Benefit of
Customers
Attn: Mutual Funds
101 Montgomery St.
San Francisco, CA 94104
Emerging Markets Fund
N/A. The Emerging Markets Fund was not operating at this time period.
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.
<PAGE>
Custodian. State Street Bank and Trust Company, P.O. Box 351, Boston,
Massachusetts, has been designated as custodian of the cash and investment
securities of the 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 ^ countries 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 ^ IFG, 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 LLP, Washington, D.C.,
is legal counsel for the Company. The firm of Moye, Giles, O'Keefe, Vermeire &
Gorrell, Denver, Colorado, acts as special counsel to the Funds.
Financial Statements. The Company's audited financial statements and the
notes thereto for the fiscal year ended October 31, 1996 and the report of Price
Waterhouse LLP with respect to such financial statements are incorporated herein
by reference from the Company's Annual Report to Shareholders for the fiscal
year ended October 31, 1996.
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.
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 SEC. The complete Registration
Statement may be obtained from the SEC upon payment of the fee prescribed by the
rules and regulations of the SEC.
<PAGE>
APPENDIX A
DESCRIPTION OF FUTURES, OPTIONS AND FORWARD CONTRACTS
Options on Securities
An option on a security provides the purchaser, or "holder," with the
right, but not the obligation, to purchase, in the case of a "call" option, or
sell, in the case of a "put" option, the security or securities underlying the
option, for a fixed exercise price up to a stated expiration date. The holder
pays a non-refundable purchase price for the option, known as the "premium." The
maximum amount of risk the purchaser of the option assumes is equal to the
premium plus related transaction costs, although the entire amount may be lost.
The risk of the seller, or "writer," however, is potentially unlimited, unless
the option is "covered," which is generally accomplished through the writer's
ownership of the underlying security, in the case of a call option, or the
writer's segregation of an amount of cash or securities equal to the exercise
price, in the case of a put option. If the writer's obligation is not so
covered, it is subject to the risk of the full change in value of the underlying
security from the time the option is written until exercise.
Upon exercise of the option, the holder is required to pay the purchase
price of the underlying security, in the case of a call option, or to deliver
the security in return for the purchase price, in the case of a put option.
Conversely, the writer is required to deliver the security, in the case of a
call option, or to purchase the security, in the case of a put option. Options
on securities which have been purchased or written may be closed out prior to
exercise or expiration by entering into an offsetting transaction on the
exchange on which the initial position was established, subject to the
availability of a liquid secondary market.
Options on securities are traded on national securities exchanges, such as
the Chicago Board of Options Exchange and the New York Stock Exchange, which are
regulated by the Securities and Exchange Commission. The Options Clearing
Corporation guarantees the performance of each party to an exchange-traded
option, by in effect taking the opposite side of each such option. A holder or
writer may engage in transactions in exchange-traded options on securities and
options on indices of securities only through a registered broker/dealer which
is a member of the exchange on which the option is traded.
An option position in an exchange-traded option may be closed out only on
an exchange which provides a secondary market for an option of the same series.
Although the Fund will generally purchase or write only those options for which
there appears to be an active secondary market, there is no assurance that a
liquid secondary market on an exchange will exist for any particular option at
any particular time. In such event it might not be possible to effect closing
transactions in a particular option with the result that the Fund would have to
exercise the option in order to realize any profit. This would result in the
Fund incurring brokerage commissions upon the disposition of underlying
<PAGE>
securities acquired through the exercise of a call option or upon the purchase
of underlying securities upon the exercise of a put option. If the Fund as
covered call option writer is unable to effect a closing purchase transaction in
a secondary market, unless the Fund is required to deliver the securities
pursuant to the assignment of an exercise notice, it will not be able to sell
the underlying security until the option expires.
Reasons for the potential absence of a liquid secondary market on an
exchange include the following: (i) there may be insufficient trading interest
in certain options; (ii) restrictions may be imposed by an exchange on opening
transactions or closing transactions or both; (iii) trading halts, suspensions
or other restrictions may be imposed with respect to particular classes or
series of options or underlying securities: (iv) unusual or unforeseen
circumstances may interrupt normal operations on an exchange; (v) the facilities
of an exchange or a clearing corporation may not at all times be adequate to
handle current trading volume or (vi) one or more exchanges could, for economic
or other reasons, decide or be compelled at some future date to discontinue the
trading of options (or particular class or series of options) in which event the
secondary market on that exchange (or in the class or series of options) would
cease to exist, although outstanding options on that exchange which had been
issued by a clearing corporation as a result of trades on that exchange would
continue to be exercisable in accordance with their terms. There is no assurance
that higher than anticipated trading activity or other unforeseen events might
not, at a particular time, render certain of the facilities of any of the
clearing corporations inadequate and thereby result in the institution by an
exchange of special procedures which may interfere with the timely execution of
customers' orders. However, the Options Clearing Corporation, based on forecasts
provided by the U.S. exchanges, believes that its facilities are adequate to
handle the volume of reasonably anticipated options transactions, and such
exchanges have advised such clearing corporation that they believe their
facilities will also be adequate to handle reasonably anticipated volume.
In addition, options on securities may be traded over-the-counter through
financial institutions dealing in such options as well as the underlying
instruments. OTC options are purchased from or sold (written) to dealers or
financial institutions which have entered into direct agreements with the Fund.
With OTC options, such variables as expiration date, exercise price and premium
will be agreed upon between the Fund and the transacting dealer, without the
intermediation of a third party such as the OCC. If the transacting dealer fails
to make or take delivery of the securities underlying an option it has written,
in accordance with the terms of that option as written, the Fund would lose the
premium paid for the option as well as any anticipated benefit of the
transaction. The Fund will engage in OTC option transactions only with primary
U.S. Government securities dealers recognized by the Federal Reserve Bank of New
York.
Futures Contracts
A Futures Contract is a bilateral agreement providing for the purchase and
sale of a specified type and amount of a financial instrument or foreign
currency, or for the making and acceptance of a cash settlement, at a stated
<PAGE>
time in the future, for a fixed price. By its terms, a Futures Contract provides
for a specified settlement date on which, in the case of the majority of
interest rate and foreign currency futures contracts, the fixed income
securities or currency underlying the contract are delivered by the seller and
paid for by the purchaser, or on which, in the case of stock index futures
contracts and certain interest rate and foreign currency futures contracts, the
difference between the price at which the contract was entered into and the
contract's closing value is settled between the purchaser and seller in cash.
Futures Contracts differ from options in that they are bilateral agreements,
with both the purchaser and the seller equally obligated to complete the
transaction. In addition, Futures Contracts call for settlement only on the
expiration date, and cannot be "exercised" at any other time during their term.
The purchase or sale of a Futures Contract also differs from the purchase
or sale of a security or the purchase of an option in that no purchase price is
paid or received. Instead, an amount of cash or cash equivalent, which varies
but may be as low as 5% or less of the value of the contract, must be deposited
with the broker as "initial margin." Subsequent payments to and from the broker,
referred to as "variation margin," are made on a daily basis as the value of the
index or instrument underlying the Futures Contract fluctuates, making positions
in the Futures Contract more or less valuable, a process known as "marking to
market."
A Futures Contract may be purchased or sold only on an exchange, known as
a "contract market," designated by the Commodity Futures Trading Commission for
the trading of such contract, and only through a registered futures commission
merchant which is a member of such contract market. A commission must be paid on
each completed purchase and sale transaction. The contract market clearing house
guarantees the performance of each party to a Futures Contract, by in effect
taking the opposite side of such Contract. At any time prior to the expiration
of a Futures Contract, a trader may elect to close out its position by taking an
opposite position on the contract market on which the position was entered into,
subject to the availability of a secondary market, which will operate to
terminate the initial position. At that time, a final determination of variation
margin is made and any loss experienced by the trader is required to be paid to
the contract market clearing house while any profit due to the trader must be
delivered to it.
Interest rate futures contracts currently are traded on a variety of fixed
income securities, including long-term U.S. Treasury Bonds, Treasury Notes,
Government National Mortgage Association modified pass-through mortgage-backed
securities, U.S. Treasury Bills, bank certificates of deposit and commercial
paper. In addition, interest rate futures contracts include contracts on indices
of municipal securities. Foreign currency futures contracts currently are traded
on the British pound, Canadian dollar, Japanese yen, Swiss franc, West German
mark and on Eurodollar deposits.
Options on Futures Contracts
An Option on a Futures Contract provides the holder with the right to
enter into a "long" position in the underlying Futures Contract, in the case of
a call option, or a "short" position in the underlying Futures Contract, in the
case of a put option, at a fixed exercise price to a stated expiration date.
Upon exercise of the option by the holder, the contract market clearing house
<PAGE>
establishes a corresponding short position for the writer of the option, in the
case of a call option, or a corresponding long position, in the case of a put
option. In the event that an option is exercised, the parties will be subject to
all the risks associated with the trading of Futures Contracts, such as payment
of variation margin deposits. In addition, the writer of an Option on a Futures
contract, unlike the holder, is subject to initial and variation margin
requirements on the option position.
A position in an Option on a Futures Contract may be terminated by the
purchaser or seller prior to expiration by effecting a closing purchase or sale
transaction, subject to the availability of a liquid secondary market, which is
the purchase or sale of an option of the same series (i.e., the same exercise
price and expiration date) as the option previously purchased or sold. The
difference between the premiums paid and received represents the trader's profit
or loss on the transaction.
An option, whether based on a Futures Contract, a stock index or a
security, becomes worthless to the holder when it expires. Upon exercise of an
option, the exchange or contract market clearing house assigns exercise notices
on a random basis to those of its members which have written options of the same
series and with the same expiration date. A brokerage firm receiving such
notices then assigns them on a random basis to those of its customers which have
written options of the same series and expiration date. A writer therefore has
no control over whether an option will be exercised against it, nor over the
time of such exercise.
<PAGE>
APPENDIX B
BOND RATINGS
The following is a description of Moody's and S&P's bond ratings:
Moody's Corporate Bond Ratings
Aaa - Bonds rated Aaa are judged to be of the best quality. They carry the
smallest degree of investment risk and are generally referred to as
"gilt-edged." Interest payments are protected by a large or by an exceptionally
stable margin, and principal is secure. While the various protective elements
are likely to change, such changes as can be visualized are most unlikely to
impair the fundamentally strong position of such issues.
Aa - Bonds rated Aa are judged to be of high quality by all standards.
Together with the Aaa group, they comprise what are generally known as high
grade bonds. They are rated lower than the best bonds because margins of
protection may not be as large as in Aaa securities or fluctuation of protective
elements may be of greater amplitude or there may be other elements present
which make the long term risk appear somewhat larger than in Aaa securities.
A - Bonds rated A possess many favorable investment attributes, and are to
be considered as upper medium grade obligations. Factors giving security to
principal and interest are considered adequate but elements may be present which
suggest a susceptibility to impairment sometime in the future.
Baa - Bonds rated Baa are considered as medium grade obligations, i.e.,
they are neither highly protected nor poorly secured. Interest payments and
principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and in
fact have speculative characteristics as well.
Ba - Bonds rated Ba are judged to have speculative elements. Their future
cannot be considered as well assured. Often the protection of interest and
principal payments may be very moderate and thereby not well safeguarded during
both good and bad times over the future. Uncertainty of position characterizes
bonds in this class.
B - Bonds rated B generally lack characteristics of the desirable
investment. Assurance of interest and principal payments or maintenance of other
terms of the contract over any longer period of time may be small.
Caa - Bonds rated Caa are of poor standing. Such issues may be in default
or there may be present elements of danger with respect to principal or
interest.
S&P Corporate Bond Ratings
AAA - This is the highest rating assigned by Standard & Poor's to a debt
obligation and indicates an extremely strong capacity to pay principal and
interest.
<PAGE>
AA - Bonds rated AA also qualify as high-quality debt obligations.
Capacity to pay principal and interest is very strong, and in the majority of
instances they differ from AAA issues only in small degree.
A - Bonds rated A have a strong capacity to pay principal and interest,
although they are somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions than bonds in higher rated categories.
BBB - Bonds rated BBB are regarded as having an adequate capability to pay
principal and interest. Whereas they normally exhibit adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay principal and interest for bonds in
this category than for bonds in higher rated categories.
BB - Bonds rated BB have less near-term vulnerability to default than
other speculative issues. However, they face major ongoing uncertainties or
exposure to adverse business, financial, or economic conditions which could lead
to inadequate capacity to meet timely interest and principal payments.
B - Bonds rated B have a greater vulnerability to default but currently
have the capacity to meet interest payments and principal repayments. Adverse
business, financial, or economic conditions will likely impair capacity or
willingness to pay interest and repay principal.
CCC - Bonds rated CCC have a currently identifiable vulnerability to
default and are dependent upon favorable business, financial, and economic
conditions to meet timely payment of interest and repayment of principal. In the
event of adverse business, financial, or economic conditions, they are not
likely to have the capacity to pay interest and repay principal.
<PAGE>
PART C. OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) Financial Statements:
Page in
Prospectus
----------
(1) Financial statements and schedules included
in Prospectuses (Part A):
^ None.
Page in
Statement
of Addi-
tional In-
formation
----------
(2) The following audited financial statements of
the INVESCO European Fund, the INVESCO
Pacific Basin Fund and the INVESCO
International Growth Fund and the notes
thereto for the fiscal year ended October 31,
1996, and the report of Price Waterhouse LLP
with respect to such financial statements,
are incorporated in the Statement of
Additional Information by reference from the
Company's Annual Report to Shareholders for
the fiscal year ended October 31, 1996:
Statement of Investment Securities as of
October 31, 1996; Statement of Assets and
Liabilities as of October 31, 1996; Statement
of Operations for the year ended October 31,
1996; Statement of Changes in Net Assets for
each of the two years in the period ended
October 31, 1996; Financial Highlights for
the INVESCO European Fund and INVESCO Pacific
Basin Fund for the five years ended October
31, 1996, and for the INVESCO International
Growth Fund for the three years ended October
31, 1996, the eight-month fiscal period ended
October 31, 1993, and the year ended December
31, 1992.
(3) Financial statements and schedules included
in Part C:
<PAGE>
None: Schedules have been omitted as all
information has been presented in the
financial statements^
(b) Exhibits:
(1) Articles of Incorporation (Charter)--dated
April 2, ^ 1993.(2)
(a) Articles Supplementary dated November 11,
1997.
(2) Bylaws, as amended July 21, ^ 1993.
(3) Not applicable.
(4) Not required to be filed on EDGAR.
(5) (a) Investment Advisory Agreement--between ^
Registrant and INVESCO Funds Group, Inc.
dated February 28, 1997.(2)
(i) Form of Amendment to Advisory
Agreement dated _________, 1997.
(b) Sub-Advisory Agreement between INVESCO
Funds Group, Inc. and INVESCO Asset
Management Limited ^ with respect to
European, Pacific Basin and International
Growth Funds dated February 28, 1997.(2)
^(c) Form of Sub-Advisory Agreement dated
___________, 1997 between INVESCO Funds
Group, Inc. and INVESCO Asset Management
Limited with respect to Emerging Markets
Fund.
(6) (a) Distribution Agreement^ Between
Registrant and INVESCO Funds Group, Inc.
dated February 28, 1997.(2)
(b) Distribution Agreement Between Registrant
and INVESCO Distributors, Inc. dated
September 30, 1997.
(7) Defined Benefit Deferred Compensation Plan
for Non-Interested Directors and Trustees.
<PAGE>
(8) Custody Agreement Between Registrant and
State Street Bank and Trust Company dated
July 1, ^ 1993.
(a) Amendment to Custody Agreement dated
October 25, ^ 1995.(1)
^(b) Data Access Services Addendum.
^(c) Form of Additional Fund Letter dated
_____________, 1997.
(9) (a) Transfer Agency Agreement Between
Registrant and INVESCO Funds Group, Inc.
dated February 28, ^ 1997.(2)
(b) Administrative Services Agreement Between
Registrant and INVESCO Funds Group, Inc.
dated February 28, 1997.(2)
(10) Opinion and consent of counsel ^ as
to the legality of the securities being
registered, indicating whether they will,
when sold, be legally issued, fully paid
and non-assessable, dated May 21, ^ 1993.
(11) Consent of Independent Accountants.
(12) Not applicable.
(13) Not applicable.
(14) Copies of model plans used in the
establishment of retirement plans as
follows: Non-standardized Profit
Sharing Plan; Nonstandardized Money
Purchase Pension Plan; Standardized
Profit Sharing Plan Adoption Agreement;
Standardized Money Purchase Pension
Plan; Non-standardized 401(k) Plan
Adoption Agreement; Standardized
401(k) Paired Profit Sharing Plan;
Standardized Simplified Profit Sharing
Plan; Standardized Simplified Money
Purchase Plan; Defined Contribution
Master Plan & Trust Agreement; and
Financial 403(b) Retirement Plan,
all filed with ^ Registration
Statement No. ^ 33-63498 of INVESCO
International Funds, Inc. filed
May 27, 1993, and herein incorporated
by reference.
<PAGE>
(15) (a) Plan and Agreement of Distribution
dated November 1, 1997 adopted pursuant
to Rule 12b-1 under the Investment Company
Act of 1940.
(16) (a) Schedule for computation of performance
data for the ^ European Fund.
(b) Schedule for computation of performance
dated for the Pacific Basin Fund.
(c) Schedule for computation of performance
data for the International Growth Fund^.
(17) (a) Financial Data Schedule for the period
ended October 31, 1996 for INVESCO
European Fund.
(b) Financial Data Schedule for the period
ended October 31, 1996 for INVESCO Pacific
Basin Fund.
(c) Financial Data Schedule for the period
ended October 31, 1996 for INVESCO
International Growth Fund.
(18) Not applicable.
- ----------------
(1)Previously filed on EDGAR with Post-Effective Amendment No. 3 to ^
Registrant's Registration Statement on Form N-1A on December 22, 1995, and
herein incorporated by reference.
(2)Previously filed on EDGAR ^ with Post-Effective Amendment No. ^ 4 to ^
Registrant's Registration Statement on Form N-1A on February ^ 25, 1997, and
herein incorporated by reference.
Item 25. Persons Controlled by or Under Common Control with
Registrant
No person is presently controlled by or under common control
with Registrant.
<PAGE>
Item 26. Number of Holders of Securities
Number of
Record Holders
Title of Class as of October 31, 1997
-------------- ----------------------
INVESCO European Fund ^ 22,266
Common stock
INVESCO Pacific Basin Fund ^ 10,959
Common stock
INVESCO International Growth Fund ^ 8,239
Common Stock
Item 27. Indemnification
Indemnification provisions for officers, directors and employees of
Registrant are set forth in Article VII, Section 2 of the Articles of
Incorporation and are hereby incorporated by reference. See Item 24(b)(1) above.
Under this Article, officers and directors will be indemnified to the fullest
extent permitted to directors by the Maryland General Corporation Law, subject
only to such limitations as may be required by the Investment Company Act of
1940, as amended, and the rules thereunder. Under the Investment Company Act of
1940, Fund directors and officers cannot be protected against liability to the
Company or its shareholders to which they would be subject because of willful
misfeasance, bad faith, gross negligence or reckless disregard of the duties of
their office. The Company also intends to maintain liability insurance policies
covering its directors and officers.
Item 28. Business and Other Connections of Investment Adviser
See "The Funds and Their Management" in the Funds' respective
prospectuses and in the Statement of Additional Information for information
regarding the business of the investment adviser and sub- adviser. For
information as to the business, profession, vocation or employment of a
substantial nature of each of the officers and directors of INVESCO Funds Group,
Inc., reference is made to the Schedule Ds to the Form ADV filed under the
Investment Advisers Act of 1940 by INVESCO Funds Group, Inc., which schedules
are herein incorporated by reference.
<PAGE>
Item 29. Principal Underwriters
(a) INVESCO Capital Appreciation Funds, Inc.
INVESCO Diversified Funds, Inc.
^ INVESCO Emerging Opportunity Funds, Inc.
INVESCO Growth Fund, Inc.
INVESCO Income Funds, Inc.
INVESCO Industrial Income Fund, Inc.
INVESCO Money Market Funds, Inc.
INVESCO Multiple Asset Funds, Inc.
INVESCO Specialty Funds, Inc.
INVESCO Strategic Portfolios, Inc.
INVESCO Tax-Free Income Funds, Inc.
INVESCO Value Trust
INVESCO Variable Investment Funds, Inc.
<PAGE>
(b)
Positions and Positions and
Name and Principal Offices with Offices with
Business Address Underwriter Registrant
- ------------------ ------------- -------------
^ William J. Galvin, Jr. Senior Vice Assistant
7800 E. Union Avenue President Secretary ^
^ Denver, CO 80237
Ronald L. Grooms Senior Vice Treasurer,
7800 E. Union Avenue President & Chief Fin'l
Denver, CO 80237 Treasurer Officer, and
Chief Acctg.
Off.
Hubert L. Harris, Jr. Director
1315 Peachtree Street, N.E. ^
Atlanta, GA 30309
^ Dan J. Hesser Chairman of President,
7800 E. Union Avenue ^ the Board, CEO & Dir.
Denver, CO 80237 President ,
Chief Executive
Officer, &
Director
Gregory E. Hyde Vice President
7800 E. Union Avenue
Denver, CO 80237
Charles P. Mayer Director
7800 E. Union Avenue
Denver, CO 80237
Glen A. Payne Senior Vice Secretary
^ 7800 E. Union Avenue President ^,
^ Denver, CO 80237 Secretary &
^ General Counsel
Judy P. Wiese Vice President Asst. Treas.
^ 7800 E. Union Avenue
Denver, CO 80237
<PAGE>
(c) Not applicable.
Item 30. Location of Accounts and Records
Dan J. Hesser
7800 E. Union Avenue
Denver, CO 80237
Item 31. Management Services
Not applicable.
Item 32. Undertakings
The Registrant shall furnish each person to whom a prospectus is
delivered with a copy of the Registrant's latest annual report to shareholders,
upon request and without charge.
The Registrant hereby undertakes that the board of directors will
call a special shareholders meeting for the purpose of voting on the question of
removal of a director or directors of the Company if requested to do so in
writing by the holders of at least 10% of the outstanding shares of the Company,
and to assist the shareholders in communicating with other shareholders as
required by the Investment Company Act of 1940.
The Registrant hereby undertakes to file a post-effective amendment,
containing reasonably current financial statements for INVESCO Emerging Markets
Fund within four to six months from the effective date of Post-Effective
Amendment No. 5.
<PAGE>
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the registrant ^ has duly caused this
post-effective amendment to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Denver, County of Denver, and State of
Colorado, on the ^ 17th day of ^ November, 1997.
Attest: INVESCO International Funds, Inc.
/s/ Glen A. Payne /s/ Dan J. Hesser
- ------------------------------------ ------------------------------------
Glen A. Payne, Secretary Dan J. Hesser, President
Pursuant to the requirements of the Securities Act of 1933, this
post-effective amendment to Registrant's Registration Statement has been signed
by the following persons in the capacities indicated on this ^17th day of ^
November, 1997.
/s/ Dan J. Hesser /s/ Lawrence H. Budner
- ------------------------------------ ------------------------------------
Dan J. Hesser, President & Lawrence H. Budner, Director
Director (Chief Executive Officer)
/s/ Ronald L. Grooms /s/ Daniel D. Chabris
- ------------------------------------ ------------------------------------
Ronald L. Grooms, Treasurer Daniel D. Chabris, Director
(Chief Financial and Accounting
Officer)
/s/ Victor L. Andrews /s/ Fred A. Deering
- ------------------------------------ ------------------------------------
Victor L. Andrews, Director Fred A. Deering, Director
/s/ Bob R. Baker /s/ ^ Larry Soll
- ------------------------------------ ------------------------------------
Bob R. Baker, Director ^ Larry Soll, Director
/s/ Hubert L. Harris, Jr. /s/ Kenneth T. King
- ------------------------------------ ------------------------------------
Hubert L. Harris, Jr., Director Kenneth T. King, Director
/s/ Charles W. Brady /s/ John W. McIntyre
- ------------------------------------ ------------------------------------
Charles W. Brady, Director John W. McIntyre, Director
/s/ Wendy L. Gramm
- ------------------------------------
Wendy L. Gramm, Director
By* By* /s/ Glen A. Payne
--------------------------------- -------------------------------
Edward F. O'Keefe Glen A. Payne
Attorney in Fact Attorney in Fact
* Original Powers of Attorney authorizing Edward F. O'Keefe and Glen A. Payne,
and each of them, to execute this post-effective amendment to the Registration
Statement of the Registrant on behalf of the above-named directors and officers
of the Registrant have been filed with the Securities and Exchange Commission on
June 29, 1993, February 24, 1994, February 17, 1995, and December 22, 1995.
<PAGE>
Exhibit Index
Page in
Exhibit Number Registration Statement
- -------------- ----------------------
1(a) 99
2 101
5(a)(i) 120
5(c) 121
6(b) 128
7 137
8 143
8(b) 167
8(c) 181
10 182
11 184
15(a) 185
16(a) 189
16(b) 190
16(c)^ 191
17(a) 192
17(b) 193
17(c) 194
EX99 POA.^ GRAMM 195
EX99 POA.SOLL 196
ARTICLES SUPPLEMENTARY
TO
ARTICLES OF INCORPORATION
OF
INVESCO INTERNATIONAL FUNDS, INC.
INVESCO International Funds, Inc., a corporation organized and existing
under the General Corporation Law of the State of Maryland, registered as an
open-end investment company under the Investment Company Act of 1940, and having
its registered office in Baltimore, Maryland (hereinafter called the
"Corporation"), hereby certifies to the State Department of Assessments and
Taxation of Maryland that:
FIRST: By unanimous approval, at a meeting held on October 8, 1997, the
board of directors of the Corporation created an additional class of shares of
common stock of the Corporation designated as the INVESCO Emerging Markets Fund,
and has authorized 100,000,000 shares of the Corporation's common stock to be
allocated to the INVESCO Emerging Markets Fund. The aggregate number of shares
the Corporation shall have the authority to issue, both before and after
creation of the additional class, is five hundred million (500,000,000) shares
of Common Stock. The aggregate par value of all shares which the Corporation
shall have the authority to issue, both before and after creation of the
additional class, is five million dollars ($5,000,000).
SECOND: Shares of INVESCO Emerging Markets Fund have been duly
authorized and classified by the board of directors pursuant to authority and
power contained in the Articles of Incorporation of the Corporation.
THIRD: A description of the Common Stock so classified, including the
powers, preferences, participating, voting or other special rights and
qualifications, restrictions and limitations thereof, is as outlined in the
Articles of Incorporation of the Corporation.
FOURTH: The Corporation is registered as an open-end management
investment company under the Investment Company Act of 1940.
FIFTH: The undersigned, the President of the Corporation, who is
executing on behalf of the Corporation the foregoing Articles Supplementary, of
which this paragraph is a part, hereby acknowledges, in the name of and on
behalf of the Corporation, that the foregoing Articles Supplementary are the
corporate act of the Corporation and further verifies under oath that, to the
best of his knowledge, information and belief, the matters and facts set forth
herein are true in all material respects, under the penalties of perjury.
IN WITNESS WHEREOF, INVESCO International Funds, Inc. has caused these
Articles Supplementary to be signed in its name and on its behalf by its
President and witnessed by its Secretary on the 11th day of November 1997.
<PAGE>
These Articles Supplementary shall be effective upon acceptance by the
Maryland State Department of Assessments and Taxation.
INVESCO INTERNATIONAL FUNDS, INC.
By: /s/ Dan J. Hesser
---------------------------
Dan J. Hesser, President
WITNESSED:
By: /s/ Glen A. Payne
------------------------
Glen A. Payne, Secretary
I, Ruth Christensen, a notary public in and for the City and County of
Denver, and State of Colorado, do hereby certify that Dan J. Hesser, personally
known to me to be the person whose name is subscribed to the foregoing Articles
Supplementary, appeared before me this date in person and acknowledged that he
signed, sealed and delivered said instrument as his free and voluntary act and
deed for the uses and purposes therein set forth.
Given my hand and official seal this 11th day of November 1997.
/s/ Ruth Christensen
---------------------------
Notary Public
My Commission Expires: March 16, 1998
--------------
BYLAWS
OF
INVESCO INTERNATIONAL FUNDS, INC.
AS OF JULY 21, 1993
ARTICLE I.
SHAREHOLDERS
Section 1. Annual Meeting. Unless otherwise determined by the
board of directors or required by applicable law, no
annual meeting of shareholders shall be required to be
held in any year in which the election of directors is
not required under the Investment Company Act of 1940.
If the corporation is required to hold a meeting of
shareholders to elect directors, the meeting shall be
designated as the annual meeting of shareholders for
that year, and shall be held no later than 120 days
after occurrence of the event requiring the meeting at
a place within or without the State of Maryland.
Section 2. Special Meetings. Special meetings of the shareholders
entitled to vote shall be called upon the request in
writing of the president or, in his absence, a vice
president, or by a vote of a majority of the board of
directors, or upon the request in writing of
shareholders of the Company representing not less than
ten percent (10%) of the votes entitled to be cast at
the meeting.
Section 3. Place of Meetings. Each annual and any special meeting
of the shareholders shall be held at the principal
office of the corporation in Denver, Colorado, or at
such alternate site as may be determined by the board of
directors.
Section 4. Notices. Notices of every meeting, annual or special,
shall specify the place, day and hour of the meeting and
shall be mailed not less than ten (10) days nor more
than ninety (90) days before such meeting. Such notice
shall be given by the Secretary of the Corporation to
each shareholder entitled to notice of and entitled to
vote at the meeting. In the event that a special
meeting is called by the shareholders entitled to vote,
the Secretary of the Corporation shall inform the
shareholders who make the request of the reasonably
estimated cost of preparing and mailing a notice of the
meeting, and upon payment of these costs to the
Corporation, shall notify each shareholder entitled to
notice of the meeting. Notice of every special meeting
shall indicate briefly its purpose. Notice shall be
deemed delivered where it is personally delivered to the
<PAGE>
individual, left at the individual's usual place of
business, or mailed to the individual at the
individual's address as it appears on the records of the
Corporation.
Section 5. Quorum. At every meeting of the shareholders, the
presence in person or by proxy of the holders of
one-third of all of the shares of stock of the
corporation issued and outstanding and entitled to vote
without regard to class shall constitute a quorum,
except with respect to any matter which by law requires
the separate approval of one or more classes of stock,
in which case the presence in person or by proxy of the
holders of one-third of the shares of stock of each
class entitled to vote on the matter shall constitute a
quorum for that class; provided, however, that at every
meeting of the shareholders, the representation of a
larger number of shareholders shall constitute a quorum
if required by the Investment Company Act of 1940, as
amended, other applicable law, or by the Articles of
Incorporation.
Section 6. Voting. At every meeting of the shareholders at which a
quorum is present, each shareholder entitled to vote
shall be entitled to vote in person, or by proxy
appointed by instrument in writing subscribed by such
shareholder, or his duly authorized attorney, and he
shall have one (1) vote for each share of stock standing
registered in his name on each matter submitted at the
meeting on which such share is entitled to vote and for
each director to be elected. Fractional shares shall be
entitled to proportionate fractional votes. Every proxy
shall be dated and no proxy shall be valid after eleven
(11) months from its date unless otherwise provided in
the proxy. There shall be no cumulative voting in the
election of directors. Except as otherwise provided by
law, by the charter of the corporation, or by these
bylaws, at each meeting of stockholders at which a
quorum is present, all matters shall be decided by a
majority of the votes cast by the stockholders present
in person or represented by proxy and entitled to vote
with respect to any such matter.
Section 7. Qualification of Voters. At every meeting of
shareholders, unless the voting is conducted by
inspectors, the proxies and ballots shall be received,
and all questions with respect to the qualification of
voters and the validity of proxies and the acceptance or
rejection of votes shall be decided by the chairman of
the meeting. If demanded by shareholders present in
<PAGE>
person or by proxy entitled to cast twenty-five per cent
(25%) in number of votes, or if ordered by the chairman
of the meeting, the vote upon any election or question
shall be taken by ballot and, upon such demand or order,
the voting shall be conducted by two (2) inspectors
appointed by the chairman, in which event the proxies
and ballots shall be received and all questions with
respect to the qualification of votes and the validity
of proxies and the acceptance or rejection of votes
shall be decided by such inspectors. Unless so demanded
or ordered, no vote need be by ballot and the voting
need not be conducted by inspectors.
Section 8. Waiver of Notice. A waiver of notice of any meeting of
shareholders signed by any shareholder entitled to such
notice filed with the records of the meeting, whether
before or after the holding thereof or actual attendance
at the meeting in person or by proxy, shall be deemed
equivalent to the giving of notice to such shareholder.
Section 9. Adjournment. A meeting of shareholders convened on
the date for which it was called may be adjourned from
time to time without further notice to a date not more
than 120 days after the original record date of the
meeting.
Section 10. Action by Shareholders Without Meeting. Except as
otherwise provided by law, the provisions of these
bylaws relating to notices and meetings to the contrary
notwithstanding, any action required or permitted to be
taken at any meeting of shareholders may be taken
without a meeting if a consent in writing setting forth
the action shall be signed by all the shareholders
entitled to vote upon the action and such consent shall
be filed with the records of the corporation.
ARTICLE II.
BOARD OF DIRECTORS
Section 1. Powers. The business and property of the corporation
shall be conducted and managed by its board of
directors, which may exercise all of the powers of the
corporation, except such as are by statute, by the
charter or by the bylaws, conferred upon or reserved to
the shareholders. The board of directors shall keep
full and complete records of its transactions.
Section 2. Number. By vote of a majority of the entire board of
directors, the number of directors may be increased or
decreased from time to time; provided that, in no event,
may the number be decreased to less than three.
<PAGE>
Section 3. Election. The members of the board of directors shall
be elected by the shareholders by plurality vote at the
annual meeting, or at any special meeting called for
such purpose. Each director shall hold office until his
successor shall have been duly chosen and qualified, or
until he shall have resigned or shall have been removed
in the manner provided by law. Any vacancy, including
one created by an increase in the number of directors on
the board (except where such vacancy is created by
removal by the shareholders), may be filled by the vote
of a majority of the remaining directors, although such
majority is less than a quorum; provided, however, that
immediately after filling any vacancy by such action of
the board of directors, at least two-thirds (2/3) of the
directors then holding office shall have been elected by
the shareholders at an annual or special meeting.
Section 4. Regular Meetings. The board of directors shall schedule
an Annual Meeting at such place and time as they may
designate for the purpose of organization, the election
of officers, and the transaction of other business.
Other regular meetings may be held as scheduled by a
majority of the directors.
Section 5. Special Meetings. Special meetings of the board of
directors may be called at any time by the president or
by a majority of the directors or by a majority of the
executive committee.
Section 6. Notice of Meetings. Notice of the place, day and hour
of every special meeting shall be given to each director
at least two (2) days before the meeting, by written
announcement, telephone, telegraph and/or mail addressed
to him at his post office address, according to the
records of the corporation. Unless required by
resolution of the board of directors, no notice of any
meeting of the board of directors need state the
business to be transacted thereat. No notice of any
meeting of the board of directors need be given to any
director who attends, or to any director who, in writing
executed and filed with the records of the meeting
either before or after the holding thereof, waives such
notice. Any meeting of the board of directors may
adjourn from time to time to reconvene at the same or
some other place, and no notice need be given of any
such adjourned meeting other than by announcement.
Section 7. Quorum. At all meetings of the board of directors,
one-third of the total number of directors or not less
than two (2) directors shall constitute a quorum for
the transaction of business. In the absence of a
<PAGE>
quorum, the directors present by a majority vote and
without notice other than by announcement may adjourn
the meeting from time to time until a quorum shall be
present. At any such adjourned meeting, any business
may be transacted which might have been transacted at
the meeting as originally notified.
Section 8. Compensation of Directors. Directors shall be entitled
to receive such compensation from the corporation for
their services as may from time to time be voted by the
board of directors. All directors shall be reimbursed
for their reasonable expenses of attendance, if any, at
the board and committee meetings. Any director of the
corporation may also serve the corporation in any other
capacity and receive compensation therefor.
Section 9. Vacancies. Any vacancy occurring in the board of
directors may be filled by the affirmative vote of a
majority of the remaining directors though less than a
quorum of the board of directors. A director elected to
fill a vacancy shall be elected for the unexpired term
of his predecessor in office. Any directorship to be
filled by reason of an increase in the number of
directors may be filled by election by the board of
directors for a term of office continuing only until the
next election of directors by the shareholders.
Section 10. Resignation and Removal of Directors. Any director or
member of any committee may resign at any time. Such
resignation shall be made in writing and shall take
effect at the time specified therein. If no time is
specified, it shall take effect from the time of its
receipt by the Secretary, who shall record such
resignation, noting the day and hour of its reception.
The acceptance of a resignation shall not be necessary
to make it effective. Notwithstanding anything to the
contrary in Article I, Section 2 hereof, a meeting for
removing a director shall be called in accordance with
the procedures specified in Section 16(c) of the
Investment Company Act of 1940, and the shareholder
communications provisions of said Section 16(c) shall be
following by the corporation. At any meeting of
shareholders, duly called and at which a quorum is
present, the shareholders may, by affirmative vote of
the holders of a majority of the votes entitled to be
cast thereon, remove any director or directors from
office and may elect a successor or successors to fill
any resulting vacancies to hold office until the next
annual meeting of shareholders or until a successor or
successors are elected and qualify.
<PAGE>
Section 11. Telephone Meetings. Any member or members of the board
of directors or of any committee designated by the board
of directors, may participate in a meeting of the board,
or any such committee, as the case may be, by means of a
conference telephone or similar communications equipment
if all persons participating in the meeting can hear
each other at the same time. Participation in a meeting
by these means constitutes presence in person at the
meeting. This Section 11 shall not be applicable to
meetings held for the purpose of voting in respect of
approval of contracts or agreements whereby a person
undertakes to serve or act as investment adviser of, or
principal underwriter for, the corporation or in respect
to other matters as to which the Investment Company Act
of 1940 or the rules thereunder require that votes be
cast in person.
Section 12. Action by Directors Without Meeting. The provisions of
these bylaws covering notices and meetings to the
contrary notwithstanding, and except as required by law
(including Section 15 of the Investment Company Act of
1940), any action required or permitted to be taken at
any meeting of the board of directors may be taken
without a meeting if a consent in writing setting forth
the action shall be signed by all of the directors
entitled to vote upon the action and such written
consent is filed with the minutes of proceedings of the
board of directors.
ARTICLE III.
COMMITTEES
Section 1. Executive Committee. The board of directors, by
resolution adopted by a majority of the whole board of
directors, may provide for an executive committee of
three (3) or more directors. If provision be made for
an executive committee, the members thereof shall be
elected by the board of directors to serve during the
pleasure of the board of directors. Unless otherwise
provided by resolution of the board of directors, the
president shall be a member and the chairman of the
executive committee shall preside at all meetings
thereof. During the intervals between the meetings of
the board of directors, the executive committee shall
possess and may exercise all of the powers of the board
of directors in the management of the business and
<PAGE>
affairs of the corporation conferred by the bylaws or
otherwise, to the extent authorized by the resolution
providing for such executive committee or by subsequent
resolution adopted by a majority of the whole board of
directors, in all cases in which specific directions
shall not have been given by the board of directors.
Notwithstanding the foregoing, the executive committee
shall not have the power to: (i) declare dividends or
distributions on stock; (ii) issue stock other than as
provided by the Maryland General Corporation Law; (iii)
recommend to the shareholders any action which requires
shareholder approval; (iv) amend these bylaws; or (v)
approve any merger or share exchange which does not
require shareholder approval. The executive committee
shall maintain written records of its transactions. All
action by the executive committee shall be reported to
the board of directors at its meeting next succeeding
such action, and shall be subject to ratification, with
or without revision or alteration, by such vote of the
board of directors as would have been required under
Article II, Section 7, hereof, had such action been
taken by the board of directors. Vacancies in the
executive committee shall be filled by the board of
directors.
Section 2. Meetings of the Executive Committee. The executive
committee shall fix its own rules of procedure and shall
meet as provided by such rules or by resolution of the
board of directors, and it shall also meet at the call
of the chairman or of any two (2) members of the
committee. A majority of the executive committee shall
constitute a quorum. Except in cases in which it is
otherwise provided by resolution of the board of
directors, the vote of a majority of such quorum at a
duly constituted meeting shall be sufficient to elect
and to pass any measure, subject to ratification by the
board of directors as provided in Section 1 of this
Article III.
Section 3. Other Committees. The board of directors may by
resolution provide for such other standing or special
committees as it deems desirable, and discontinue the
same at its pleasure. Each such committee shall have
such powers and perform such duties as may be assigned
to it by the board of directors.
Section 4. Committee Action Without Meeting. The provisions of
these bylaws covering notices and meetings to the
contrary notwithstanding, and except as required by law,
any action required or permitted to be taken at any
meeting of any committee of the board of directors
<PAGE>
appointed pursuant to these bylaws may be taken without
a meeting if a consent in writing setting forth the
action shall be signed by all members of the committee
entitled to vote upon the action, and such written
consent is filed with the records of the proceedings of
the committee.
ARTICLE IV.
OFFICERS
Section 1. Numbers; Qualifications; Term of Office; Vacancies. The
board of directors may select one of their number as
chairman of the board and may select one of their number
as vice chairman of the board (neither of which
positions shall be considered to be the designation of a
position as an officer of the corporation), and shall
choose as officers a president from among the directors
and a treasurer and a secretary who need not be
directors. The board of directors may also choose one
or more vice presidents, one or more assistant
secretaries and one or more assistant treasurers, none
of whom need be a director. Any two or more of such
offices, except those of president and vice president,
may be held by the same person, but no officer shall
execute, acknowledge or verify any instrument in more
than one capacity if such instrument is required by law
or by the certificate of incorporation or by these
bylaws or by resolution of the board of directors to be
executed, acknowledged or verified by any two or more
officers. Each such officer shall hold office until the
first meeting of the board of directors after the annual
meeting of the shareholders next following his election
or, if no such annual meeting of the shareholders is
held, until the annual meeting of the board of directors
in the year following his election, and, until his
successor is chosen and qualified or until he shall have
resigned or died, or until he shall have been removed as
hereinafter provided in Section 3 of this Article IV.
Any vacancy in any of the above offices may be filled by
the board of directors at any regular or special
meeting. All officers and agents of the corporation, as
between themselves and the corporation, shall have such
authority and perform such duties in the management of
the corporation as may be provided in or pursuant to
these bylaws, or, to the extent not so provided, as may
be prescribed by the board of directors; provided, that
no rights of any third party shall be affected or
impaired by any such bylaws or resolution of the board
unless the third party has knowledge thereof.
<PAGE>
Section 2. Subordinate Officers. The board of directors, or any
officer thereunto authorized by it, may appoint from
time to time such other officers and agents for such
terms of office and with such powers and duties as may
be prescribed by the board of directors or the officer
making such appointment.
Section 3. Removal. Any officer or agent may be removed by the
board of directors whenever, in its judgment, the best
interests of the corporation will be served thereby, but
such removal shall be without prejudice to the
contractual rights, if any, of the person so removed.
Section 4. Chairman of the Board. The chairman of the board, if
one shall be elected, shall preside at all meetings of
the board of directors, and shall appoint all committees
except such as are required by statute, these bylaws or
a resolution of the board of directors or of the
executive committee to be otherwise appointed, and shall
have other such duties as may be assigned to him from
time to time by the board of directors. In recognition
of notable and distinguished services to the
corporation, the board of directors may designate one of
its members as honorary chairman, who shall have such
duties as the board may, from time to time, assign him
by appropriate resolution, excluding, however, any
authority or duty vested by law or these bylaws in any
other officer.
Section 5. Vice Chairman of the Board. The vice chairman of the
board, if one shall be elected, shall preside at all
meetings of the board of directors at which the chairman
of the board is not present, shall call at his
discretion and shall preside at meetings of those
directors of the corporation who are not affiliated with
the corporation's investment adviser, distributor, or
affiliates thereof, and shall perform such other duties
as may be assigned to the vice chairman from time to
time by the board of directors.
Section 6. President. The president shall preside at all meetings
of the shareholders and, in the absence of the chairman
and the vice chairman of the board or if a chairman and
vice chairman of the board are not elected, at all
meetings of the board of directors. Unless otherwise
provided by the board of directors, he shall have direct
control of and any authority over the business and
affairs and over the officers of the corporation, and
shall preside at all meetings of the executive
committee. The president shall also perform all such
other duties as are incident to his office and as may be
assigned to him from time to time by the board of
directors.
<PAGE>
Section 7. Vice Presidents. The vice president or vice presidents,
at the request of the president or in his absence or
inability to act, shall perform the duties and exercise
the functions of the president in such manner as may be
directed by the president, the board of directors or the
executive committee. The vice president or vice
presidents shall have such other powers and perform all
such other duties as may be assigned to them by the
board of directors, the executive committee, or the
president.
Section 8. Secretary. The secretary shall see that all notices are
duly given in accordance with these bylaws; he shall
keep the minutes of all meetings of the shareholders
and, if directed to do so by the chairman of the
meeting, of meetings of the board of directors and of
the executive committee at which he shall be present; he
shall have charge of the books and records and the
corporate seal or seals of the corporation; he shall see
that the corporate seal is affixed to all documents, the
execution of which under the seal of the corporation is
duly authorized and is necessary; and he shall make such
reports and perform all such other duties as are
incident to his office and as may be assigned to him
from time to time by the board of directors or by the
president.
Section 9. Treasurer. The treasurer shall be the chief financial
officer of the corporation, and as such shall have
supervision of the custody of all funds, securities and
valuable documents of the corporation, subject to such
arrangements as may be authorized or approved by the
board of directors with respect to the custody of assets
of the corporation; shall receive, or cause to be
received, and give, or cause to be given, receipts for
all funds, securities or valuable documents paid or
delivered to, or for the account of, the corporation,
and cause such funds, securities or valuable documents
to be deposited for the account of the corporation with
such banks or trust companies as shall be designated by
the board of directors; shall pay or cause to be paid
out of the funds of the corporation all just debts of
the corporation upon their maturity; shall maintain, or
cause to be maintained, accurate records of all
receipts, disbursements, assets, liabilities, and
transactions of the corporation; shall see that adequate
audits thereof are regularly made; shall, when required
by the board of directors, render accurate statements of
the condition of the corporation; and shall perform all
such other duties as are incident to his office and as
may be assigned to him by the board of directors or by
the president.
<PAGE>
Section 10. Assistant Secretaries, Assistant Treasurers. The
assistant secretaries and assistant treasurers shall
have such duties as from time to time may be assigned to
them by the board of directors, or by the president.
Section 11. Compensation. The board of directors shall have the
power to fix the compensation of all officers and agents
of the corporation, but may delegate to any officer or
committee the power of determining the amount of salary
to be paid to any officer or agent of the corporation
other than the chairman of the board, the president, the
vice presidents, the secretary and the treasurer.
Section 12. Contracts. Except as otherwise provided by law or by
the charter, no contract or transaction between the
corporation and any partnership or corporation, and no
act of the corporation, shall in any way be affected or
invalidated by the fact that any officer or director of
the corporation is pecuniarily or otherwise interested
therein or is a member, officer or director of such
other partnership or corporation if such interest shall
be known to the board of directors of the corporation.
Specifically, but without limitation of the foregoing,
the corporation may enter into one or more contracts
appointing INVESCO Funds Group, Inc. investment adviser
of the corporation, and may otherwise do business with
INVESCO Funds Group, Inc., notwithstanding the fact that
one or more of the directors of the corporation and some
or all of its officers are, have been or may become
directors, officers, members, employees, or shareholders
of INVESCO Funds Group, Inc. and may deal freely with
each other, and neither such contract appointing INVESCO
Funds Group, Inc. investment adviser to the corporation
nor any other contract or transaction between the
corporation and INVESCO Funds Group, Inc. shall be
invalidated or in any way affected thereby, nor shall
any director or officer of the corporation by reason
thereof be liable to the corporation or to any
shareholder or creditor of the corporation or to any
other person for any loss incurred under or by reason of
any such contract or transaction. For purposes of this
paragraph, any reference to "INVESCO Funds Group, Inc."
shall be deemed to include said company and any parent,
subsidiary or affiliate of said company and any
successor (by merger, consolidation or otherwise) to
said company or any such parent, subsidiary or
affiliate.
Section 13. Delegation of Duties. Whenever an officer is absent
or disabled, or whenever for any reason the board of
directors may deem it desirable, the board may delegate
the powers and duties of an officer to any other officer
or officers or to any director or directors.
<PAGE>
ARTICLE V.
CAPITAL STOCK
Section 1. Issuance of Stock. The corporation shall not issue its
shares of capital stock except as approved by the board
of directors. Upon the sale of each share of its common
stock, except as otherwise permitted by applicable laws
and regulations, the corporation shall receive in cash
or in securities valued as provided in Article VIII of
these bylaws, not less than the current net asset value
thereof, exclusive of any distributing commission or
discount, and in no event less than the par value
thereof.
Section 2. Certificates. Certificates for the Corporation's classes
of Common Stock shall be issued only upon the specific
request of a shareholder. If certificates are requested,
they shall be issued in such a form as may be approved
by the board of directors, they shall be respectively
numbered serially for each class of shares, or series
thereof, as they are issued, and shall be signed by, or
bear a facsimile of the signatures of, the president or
a vice president, and shall also be signed by, or bear a
facsimile of the signature of some other person who is
one of the following: the treasurer, an assistant
treasurer, the secretary, or an assistant secretary; and
shall be sealed with, or bear a facsimile of, the seal
of the corporation. In case any officer of the
corporation whose signature or facsimile signature
appears on such certificates shall cease to be such
officer, whether because of death, resignation or
otherwise, certificates may nevertheless be issued and
delivered as though such person had not ceased to be an
officer.
Section 3. Transfers. Subject to the Maryland General Corporation
Law, the board of directors shall have power and
authority to make all such rules and regulations as it
may deem expedient concerning the issue, transfer and
registration of certificates of stock; and may appoint
transfer agents and registrars thereof. The duties of
transfer agent and registrar may be combined.
Section 4. Stock Ledgers. Original or duplicate stock ledgers,
containing the names and addresses of the shareholders
of the corporation and the number of shares of each
class held by them respectively, shall be kept at an
office or agency of the corporation in such city or town
as may be designated by the board of directors.
<PAGE>
Section 5. Closing of Transfer Books or Fixing of Record Date. For
the purpose of determining shareholders entitled to
notice of or to vote at any meeting of shareholders or
any adjournment thereof, or shareholders entitled to
receive payment of any dividend, or in order to make a
determination of shareholders for any other purpose, the
board of directors of the Corporation may provide that
the share transfer books shall be closed for a stated
period but not to exceed, in any case, twenty days. If
the share transfer books shall be closed for the purpose
of determining shareholders entitled to notice of or to
vote at a meeting of shareholders, such books shall be
closed for at least ten days immediately preceding such
meeting. In lieu of closing the share transfer books,
the board of directors may fix in advance a date as the
record date for any such determination of shareholders,
such date in any case to be not more than ninety days
and, in case of a meeting of shareholders, not less than
ten days prior to the date on which the particular
action, requiring such determination of shareholders, is
to be taken. If the share transfer books are not closed
and no record date is fixed for the determination of
shareholders entitled to notice of or to vote at a
meeting of shareholders, the later of the close of
business on the date on which notice of the meeting is
mailed or the thirtieth day before the meeting shall be
the record date for determining shareholders entitled to
notice of or to vote at a meeting of shareholders. The
record date for determining shareholders entitled to
receive payment of a dividend or an allotment of any
rights shall be the close of business on the day on
which the resolution of the board of directors declaring
such dividend or allotment of rights is adopted. But
the payment or allotment may not be made more than 60
days after the date on which the resolution is adopted.
When a determination of shareholders entitled to vote at
any meeting of shareholders has been made as provided in
this section, such determination shall apply to any
adjournment thereof.
Section 6. New Certificates. In case any certificate of stock is
lost, stolen, mutilated or destroyed, the board of
directors may authorize the issue of a new certificate
in place thereof upon such terms and conditions as it
may deem advisable; or the board of directors may
delegate such power to any officer or officers of the
corporation; but the board of directors or such officer
or officers, in their discretion, may refuse to issue
such new certificate, save upon the order of some court
having jurisdiction in the premises.
Section 7. Registered Owners of Stock. The corporation shall be
entitled to recognize the exclusive right of a person
registered on its books as the owner of shares of stock
<PAGE>
to receive dividends, and to vote as such owner, and to
hold liable for calls and assessments a person
registered on its books as the owner of shares of stock,
and shall not be bound to recognize any equitable or
other claim to or interest in such share or shares on
the part of any other person, whether or not it shall
have express or other notice thereof, except as
otherwise provided by the laws of Maryland.
Section 8. Fractional Denominations. Subject to any applicable
provisions of law and the charter of the corporation,
the corporation may issue shares of its capital stock in
fractional denominations, provided that the transactions
in which and the terms and conditions upon which shares
in fractional denominations may be issued from time to
time be limited or determined by or under the authority
of the board of directors.
ARTICLE VI.
FINANCES
Section 1. Checks, drafts, etc. All instruments, documents, and
other papers shall be executed in the name and on behalf
of the corporation, and all drafts, checks, notes and
other obligations for the payment of money by the
corporation shall, unless otherwise provided by
resolution of the board of directors, be signed by the
president or vice president and countersigned by the
secretary or treasurer.
Section 2. Annual Reports. A statement of the affairs of the
corporation shall be submitted at the annual meeting of
the shareholders and, within twenty (20) days after the
meeting, shall be placed on file at the corporation's
principal office. If the corporation is not required to
hold an annual meeting of shareholders, the
corporation's statement of affairs shall be placed on
file at the corporation's principal office within one
hundred and twenty (120) days after the end of its
fiscal year. Such statement shall be prepared by such
executive officer of the corporation as may be
designated by resolution of the board of directors. If
no other executive officer is so designated, it shall be
the duty of the president to prepare such statement.
Section 3. Fiscal Year. The fiscal year of the corporation shall
begin on the 1st day of January in each year and end on
the 31st day of December following.
Section 4. Dividends and Distributions. Subject to any applicable
provisions of law and the charter of the corporation,
dividends and distributions upon the common stock of the
<PAGE>
corporation may be declared at such intervals as the
board of directors may determine, in cash, in securities
or other property, or in shares of stock of the
corporation, from any sources permitted by law, all as
the board of directors shall from time to time
determine.
Section 5. Location of Books and Records. The books and records
of the corporation may be kept outside the State of
Maryland at the principal office of the corporation or
at such place or places as the board of directors may
from time to time determine, except as otherwise
required by law.
ARTICLE VII.
REDEMPTION OF STOCK
The registered owner of the outstanding stock of the corporation shall
have the right to require the corporation to redeem his shares at the asset
value thereof, as hereinafter defined in Article VIII of these bylaws, upon
delivery to the corporation of any certificate, or certificates, properly
endorsed, which have been issued as evidence of ownership of such stock, and a
written request for redemption in a form satisfactory to the corporation.
Stock of the corporation shall be redeemed at the current net asset value
per share next determined after a request in proper form has been received from
the registered owner or owner's designee at the office of the corporation
designated to receive redemption requests. Any certificates delivered at the
designated principal place of business of the corporation on a day which is not
a business day as herein defined, shall be deemed to have been received on the
business day next succeeding the day of such delivery. Subject to the
limitations of the Investment Company Act of 1940, the board of directors shall
have authority to fix a reasonable service charge for redemption of its stock,
including redemption pursuant to any periodic withdrawal or variable payment
plan or contract.
ARTICLE VIII.
DETERMINATION OF ASSET VALUE
Section 1. Net Asset Value. The net asset value of a share of
common stock of the corporation shall be determined in
accordance with applicable laws and regulations under
the supervision of such persons and at such time or
times, including the close of business on each business
day, as shall be prescribed by the board of directors.
Each such determination shall be made by subtracting
from the value of the assets of the corporation (as
<PAGE>
determined pursuant to Section 2 of this Article of the
bylaws) the amount of its liabilities, dividing the
remainder by the number of shares of common stock issued
and outstanding, and adjusting the results to the
nearest full cent per share.
Section 2. Valuation of Portfolio Securities and Other Assets.
Except as otherwise required by any applicable law or
regulation of any regulatory agency having jurisdiction
over the activities of the corporation, the corporation
shall determine the value of its portfolio securities
and other assets as follows:
(a) securities for which market quotations are readily
available shall be valued at current market value
determined in such manner as the board of directors
may from time to time prescribe;
(b) all other securities and assets shall be valued at
amounts deemed best to reflect their fair value as
determined in good faith by or under the supervision
of such persons and at such time or times as shall
from time to time be prescribed by the board of
directors;
All quotations, sale prices, bid and asked prices and
other information shall be obtained from such sources as
the persons making such determination believe to be
reliable, and any determination of net asset value based
thereon shall be conclusive.
ARTICLE IX.
PERIOD OF EMERGENCY
During any period of emergency, the board of directors, at its option, may
suspend the computation of asset value for the purpose of issuing or redeeming
it stock, and may suspend any obligation to accept payments for the acquisition
of additional stock of the corporation and may suspend the obligation of the
corporation to redeem stock. A period of emergency is defined to be:
(a) A period during which the New York Stock Exchange is closed other
than customary weekend and holiday closings, or during which trading
on the New York Stock Exchange is restricted;
(b) A period during which disposal by the corporation of securities
owned by it is not reasonably practicable, or during which it is not
reasonably practicable for the corporation to fairly to determine
the value of its net assets; or
<PAGE>
(c) Such other periods as the Securities and Exchange Commission
pursuant to the provisions of the Investment Company Act of 1940 may
by order declare as an emergency period or periods.
ARTICLE X.
MISCELLANEOUS PROVISIONS
Section 1. Seal. The board of directors shall provide a suitable
seal, bearing the name of the corporation, which shall
be in the charge of the secretary. The board of
directors may authorize one or more duplicate seals and
provide for the custody thereof.
Section 2. Bonds. The board of directors may require any
officer, agent or employee of the corporation to give a
bond to the corporation, conditioned upon the faithful
discharge of his duties, with one or more sureties and
in such amount as may be satisfactory to the board of
directors.
Section 3. Voting upon Stock in Other Corporations. Any stock in
other corporations or associations, which may from time
to time be held by the corporation, may be voted at any
meeting of the shareholders thereof by the president or
a vice president of the corporation or by proxy or
proxies appointed by the president or one of the vice
presidents of the corporation. The board of directors,
however, may by resolution appoint some other person or
persons to vote such stock, in which case, such person
or persons shall be entitled to vote such stock upon the
production of a certified copy of such resolution.
Section 4. Bylaws. The board of directors shall have the power to
make, amend and repeal the bylaws of the corporation
which may contain any provision for regulation and
management of the affairs of the corporation not
inconsistent with law or the certificate of
incorporation; provided that any and all provisions of
the bylaws, notwithstanding the power of the directors
to act with respect thereto, may be altered or repealed,
and new provisions may be adopted by the shareholders or
at any annual meeting or any special meeting called for
that purpose.
Section 5. Appointment and Duties of Custodian. The corporation
shall at all times employ a bank or trust company having
the qualifications specified by the Investment Company
Act of 1940, as amended, as custodian with authority
as its agent, but subject to such restrictions,
limitations and other requirements, if any, as may be
contained in these bylaws and the Investment Company Act
of 1940, as amended:
<PAGE>
(1) to receive and hold the securities owned by the
the corporation and deliver the same upon written
order;
(2) to receive and receipt for any moneys due to the
corporation and deposit the same in its own banking
department or elsewhere as the board of directors
may direct;
(3) to disburse such funds upon orders or vouchers;
(4) and to provide such additional services as may be
requested by the corporation;
all upon such basis of compensation as may be agreed
upon between the board of directors and the custodian.
The board of directors may also authorize the custodian to employ one or
more sub-custodians from time to time to perform such of the acts and
services of the custodian, and upon such terms and conditions, as may be
agreed upon between the custodian and such sub-custodian and approved by
the board of directors.
Section 6. Central Certification System. Subject to such rules,
regulations and orders as the U.S. Securities and
Exchange Commission may adopt, the board of directors
may direct the custodian to deposit all or any part of
the securities owned by the corporation in a system for
the central handling of securities established by a
national securities exchange or a national securities
association registered with the SEC under the Securities
Exchange Act of 1934, or such other person as may be
permitted by the SEC or its staff in accordance with the
Investment Company Act of 1940, as amended, and any rule
or staff interpretation thereof, pursuant to which
system all securities of any particular class or series
of any issuer deposited within the system are treated as
fungible and may be transferred or pledged by
bookkeeping entry without physical delivery of such
securities, provided that all such deposits shall be
subject to withdrawal only upon the order of the
corporation.
Section 7. Compliance with Federal Regulations. The board of
directors is hereby empowered to take such action as it
may deem to be necessary, desirable or appropriate so
that the corporation is or shall be in compliance with
any federal or state statute, rule or regulation with
which compliance by the corporation is required.
<PAGE>
Section 8. Waiver of Notice. Whenever any notice of the time,
place or purpose of any meeting of shareholders,
directors, or of any committee is required to be given
under the provisions of statute or under the provisions
of the charter of the corporation or these bylaws, a
waiver thereof in writing, signed by the person or
person entitled to such notice and filed with the
records of the meeting, whether before or after the
holding thereof, or actual attendance at the meeting of
directors or committee in person, shall be deemed
equivalent to the giving of such notice to such person.
Section 9. Offices. The principal office of the corporation in the
State of Maryland shall be in the City of Baltimore. In
addition to its principal office in the State of
Maryland, the corporation may have an office or offices
in the City of Denver, State of Colorado, and at such
other places as the board of directors may from time to
time designate or the business of the corporation may
require.
Section 10. Definitions. For all purposes of the certificate of
incorporation and these bylaws, the terms:
(a) "business day" shall be defined as a day with
respect to which the New York Stock Exchange is open
for business, and with respect to which the actual
time of closing of such exchange is that time which
shall have been scheduled for such closing in
advance of the opening of such exchange;
(b) "the close of business" shall be defined as the time
of closing of the New York Stock Exchange.
Amendment to Investment Advisory Agreement
This is an Amendment to the Investment Advisory Agreement made and entered
into between INVESCO International Funds, Inc., a Maryland corporation (the
"Company") and INVESCO Funds Group, Inc., a Delaware corporation ("IFG"), as of
the _____ day of __________, 199__ (the "Agreement").
WHEREAS, the Company desires to have IFG perform investment advisory,
statistical, research, and certain administrative and clerical services with
respect to management of the assets of the
Company allocable to the INVESCO Emergin Markets Fund, and IFG is willing and
able to perform such services on the terms and conditions set forth in the
Agreement;
NOW, THEREFORE, in consideration of the premises and mutual covenants
contained in the Agreement, it is agreed that the terms and conditions of the
Agreement shall be applicable to the Company's assets allocable to the INVESCO
Emerging Markets Fund, to the same extent as if the INVESCO Emerging Markets
Fund was to be added to the definition of "Funds" as utilized in the Agreement,
and that INVESCO Emerging Markets Fund shall pay IFG a fee for services provided
to them by IFG under the Agreement as follows: 1.00% on the first $500 million
of the Fund's average net assets, 0.85% on the next $500 million of the Fund's
average net assets and 0.75% on the Fund's average net assets over $1 billion.
IN WITNESS WHEREOF, the parties have executed this Agreement on this ____
day of __________, 19___.
INVESCO INTERNATIONAL FUNDS, INC.
By:
---------------------------
Dan J. Hesser,
ATTEST: President
- ------------------------
Glen A. Payne, Secretary
INVESCO FUNDS GROUP, INC.
By:
---------------------------
Ronald L. Grooms,
ATTEST: Senior Vice President
- -------------------------
Glen A. Payne, Secretary
SUB ADVISORY AGREEMENT
AGREEMENT made this ____ day of __________, 19___, by and between INVESCO
Fund Group, Inc. ("INVESCO"), a Delaware corporation, and INVESCO Asset
Management Limited, a United Kingdom corporation ("the Sub Adviser").
W I T N E S S E T H:
WHEREAS, INVESCO INTERNATIONAL FUNDS, INC. (the "Company") is engaged in
business as a diversified, open end management investment company registered
under the Investment Company Act of 1940, as amended (hereinafter referred to as
the "Investment Company Act") and has one class of shares (the "Shares"), which
is divided into series, each representing an interest in a separate portfolio of
investments, with one such series being designated the INVESCO Emerging Markets
Fund (the "Fund"); and
WHEREAS, INVESCO and the Sub Adviser are engaged in rendering investment
advisory services and are registered as investment advisers under the Investment
Advisers Act of 1940; and
WHEREAS, the Sub-Adviser is a member of the Investment Management
Regulatory Organization ("IMRO") in the United Kingdom and as such is regulated
by IMRO in the conduct of its business; further the Sub-Adviser shall provide
services to INVESCO as a "Business Investor" as defined under the Rules of IMRO
and as such certain rules designed for the protection of private customers shall
not apply; and
WHEREAS, INVESCO has entered into an Investment Advisory Agreement with
the Company (the "INVESCO Investment Advisory Agreement"), pursuant to which
INVESCO is required to provide investment advisory services to the Company, and,
upon receipt of written approval of the Company, is authorized to retain
companies which are affiliated with INVESCO to provide such services; and
WHEREAS, the Sub Adviser is willing to provide investment advisory
services to the Company on the terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and the covenants
hereinafter contained, INVESCO and the Sub Adviser hereby agree as follows:
ARTICLE I
DUTIES OF THE SUB ADVISER
INVESCO hereby employs the Sub Adviser to act as investment adviser to the
Company and to furnish the investment advisory services described below, subject
to the broad supervision of INVESCO and Board of Directors of the Company, for
the period and on the terms and conditions set forth in this Agreement. The Sub
Adviser hereby accepts such assignment and agrees during such period, at its own
expense, to render such services and to assume the obligations herein set forth
for the compensation provided for herein. The Sub Adviser shall for all purposes
herein be deemed to be an independent contractor and, unless otherwise expressly
provided or authorized herein, shall have no authority to act for or represent
the Company in any way or otherwise be deemed an agent of the Company.
<PAGE>
The Sub Adviser hereby agrees to manage the investment operations of the
Fund, subject to the supervision of the Company's directors (the "Directors")
and INVESCO. Specifically, the Sub Adviser agrees to perform the following
services:
(a) to manage the investment and reinvestment of all the
assets, now or hereafter acquired, of the Fund, and to execute all
purchases and sales of portfolio securities;
(b) to maintain a continuous investment program for the Fund, consistent
with (i) the Fund's investment policies as set forth in the Company's Articles
of Incorporation, Bylaws, and Registration Statement, as from time to time
amended, under the Investment Company Act of 1940, as amended (the "1940 Act"),
and in any prospectus and/or statement of additional information of the Fund, as
from time to time amended and in use under the Securities Act of 1933, as
amended, and (ii) the Company's status as a regulated investment company under
the Internal Revenue Code of 1986, as amended;
(c) to determine what securities are to be purchased or sold for the Fund,
unless otherwise directed by the Directors of the Company or INVESCO, and to
execute transactions accordingly;
(d) to provide to the Fund the benefit of all of the investment analysis
and research, the reviews of current economic conditions and trends, and the
consideration of long range investment policy now or hereafter generally
available to investment advisory customers of the Sub Adviser;
(e) to determine what portion of the Fund should be
invested in the various types of securities authorized for
purchase by the Fund; and
(f) to make recommendations as to the manner in which voting rights,
rights to consent to Fund action and any other rights pertaining to the Fund's
portfolio securities shall be exercised.
With respect to execution of transactions for the Fund, the Sub Adviser is
authorized to employ such brokers or dealers as may, in the Sub Adviser's best
judgment, implement the policy of the Fund to obtain prompt and reliable
execution at the most favorable price obtainable. In assigning an execution or
negotiating the commission to be paid therefor, the Sub Adviser is authorized to
consider the full range and quality of a broker's services which benefit the
Fund, including but not limited to research and analytical capabilities,
reliability of performance, and financial soundness and responsibility. Research
services prepared and furnished by brokers through which the Sub Adviser effects
securities transactions on behalf of the Fund may be used by the Sub Adviser in
servicing all of its accounts, and not all such services may be used by the Sub
Adviser in connection with the Fund. In the selection of a broker or dealer for
execution of any negotiated transaction, the Sub Adviser shall have no duty or
obligation to seek advance competitive bidding for the most favorable negotiated
commission rate for such transaction, or to select any broker solely on the
<PAGE>
basis of its purported or "posted" commission rate for such transaction,
provided, however, that the Sub Adviser shall consider such "posted" commission
rates, if any, together with any other information available at the time as to
the level of commissions known to be charged on comparable transactions by other
qualified brokerage firms, as well as all other relevant factors and
circumstances, including the size of any contemporaneous market in such
securities, the importance to the Fund of speed, efficiency, and confidentiality
of execution, the execution capabilities required by the circumstances of the
particular transactions, and the apparent knowledge or familiarity with sources
from or to whom such securities may be purchased or sold. Where the commission
rate reflects services, reliability and other relevant factors in addition to
the cost of execution, the Sub Adviser shall have the burden of demonstrating
that such expenditures were bona fide and for the benefit of the Fund.
The Sub-Adviser may recommend transactions in which it has directly or
indirectly a material interest, in unregulated collective investment schemes
including any operated or advised by the Sub-Adviser or in margined
transactions. Advice on investments may extend to investments not traded or
exchanges recognized or designated by the Securities and Investments Board.
Both parties acknowledge that the advice given under this Agreement may
involve liabilities in one currency matched by assets in another currency and
that accordingly movements in rates of exchange may have a separate effect,
unfavorable as well as favorable on the gain or loss experienced on an
investment.
In carrying out its duties hereunder, the Sub-Adviser shall comply with
all instructions of INVESCO in connection therewith such instructions may be
given by letter, telex, telephone or facsimile by any Director or Officer of
INVESCO or by any other person authorized by INVESCO.
Any instructions which appear to conflict with the terms of this Agreement
may be confirmed by the Sub-Adviser with INVESCO prior to execution.
ARTICLE II
ALLOCATION OF CHARGES AND EXPENSES
The Sub Adviser assumes and shall pay for maintaining the staff and
personnel necessary to perform its obligations under this Agreement, and shall,
at its own expense, provide the office space, equipment and facilities necessary
to perform its obligations under this Agreement. Except to the extent expressly
assumed by the Sub Adviser herein and except to the extent required by law to be
paid by the Sub Adviser, INVESCO and/or the Company shall pay all costs and
expenses in connection with the operations of the Fund.
ARTICLE III
COMPENSATION OF THE SUB ADVISER
For the services rendered, facilities furnished, and expenses assumed by
the Sub Adviser, INVESCO shall pay to the Sub Adviser a fee, computed daily and
paid as of the last day of each month, using for each daily calculation the most
<PAGE>
recently determined net asset value of the Fund, as determined by a
valuation made in accordance with the Fund's procedures for calculating its net
asset value as described in the Fund's Prospectus and/or Statement of Additional
Information. The advisory fee to the Sub Adviser with respect to the Fund shall
be computed at the annual rate of 0.333% of the Fund's daily net assets up to
$500 million; 0.2833% of the Fund's daily net assets in excess of $500 million
but not more than $1 billion; and 0.25% of each Fund's daily net assets in
excess of $1 billion. During any period when the determination of the Fund's net
asset value is suspended by the Directors of the Company, the net asset value of
a share of the Fund as of the last business day prior to such suspension shall,
for the purpose of this Article III, be deemed to be the net asset value at the
close of each succeeding business day until it is again determined. However, no
such fee shall be paid to the Sub Adviser with respect to any assets of the Fund
which may be invested in any other investment company for which the Sub Adviser
serves as investment adviser or sub adviser. The fee provided for hereunder
shall be prorated in any month in which this Agreement is not in effect for the
entire month. The Sub Adviser shall be entitled to receive fees hereunder only
for such periods as the INVESCO Investment Advisory Agreement remains in effect.
ARTICLE IV
ACTIVITIES OF THE SUB ADVISER
The services of the Sub Adviser to the Fund are not to be
deemed to be exclusive, the Sub Adviser and any person controlled by or under
common control with the Sub Adviser (for purposes of this Article IV referred to
as "affiliates") being free to render services to others. It is understood that
directors, officers, employees and shareholders of the Fund are or may become
interested in the Sub Adviser and its affiliates, as directors, officers,
employees and shareholders or otherwise and that directors, officers, employees
and shareholders of the Sub Adviser, INVESCO and their affiliates are or may
become interested in the Fund as directors, officers and employees.
ARTICLE V
AVOIDANCE OF INCONSISTENT POSITIONS AND COMPLIANCE WITH
APPLICABLE LAWS
In connection with purchases or sales of securities for the investment
portfolios of the Fund, neither the Sub Adviser nor any of its directors,
officers or employees will act as a principal or agent for any party other than
the Fund or receive any commissions. The Sub Adviser will comply with all
applicable laws in acting hereunder including, without limitation, the 1940 Act;
the Investment Advisers Act of 1940, as amended; the Rules and Regulations of
IMRO; and all rules and regulations duly promulgated under the foregoing.
ARTICLE VI
DURATION AND TERMINATION OF THIS AGREEMENT
This Agreement shall become effective as of the date it is approved by a
majority of the outstanding voting securities of the Fund. Thereafter, this
Agreement shall remain in force for an initial term of two years from the date
<PAGE>
of execution, and from year to year thereafter until its termination in
accordance with this Article VI, but only so long as such continuance is
specifically approved at least annually by (i) the Directors of the Company, or
by the vote of a majority of the outstanding voting securities of the Fund, and
(ii) a majority of those Directors who are not parties to this Agreement or
interested persons of any such party cast in person at a meeting called for the
purpose of voting on such approval.
This Agreement may be terminated at any time, without the payment of any
penalty, by INVESCO, the Fund by vote of the Directors of the Company, or by
vote of a majority of the outstanding voting securities of the Fund, or by the
Sub Adviser. A termination by INVESCO or the Sub Adviser shall require sixty
days' written notice to the other party and to the Company, and a termination by
the Company shall require such notice to each of the parties. This Agreement
shall automatically terminate in the event of its assignment to the extent
required by the Investment Company Act of 1940 and the Rules thereunder.
The Sub Adviser agrees to furnish to the Directors of the Company such
information on an annual basis as may reasonably be necessary to evaluate the
terms of this Agreement.
Termination of this Agreement shall not affect the right of the Sub
Adviser to receive payments on any unpaid balance of the compensation described
in Article III hereof earned prior to such termination.
ARTICLE VII
LIABILITY
The Sub-Adviser agrees to use its best efforts and judgement and due care
in carrying out its duties under this Agreement provided however that the
Sub-Adviser shall not be liable to INVESCO for any loss suffered by INVESCO or
the Fund advised in connection with the subject matter of this Agreement unless
such loss arises from the willful misfeasance, bad faith or negligence in the
performance of the Sub-Adviser's duties and subject and without prejudice to the
foregoing. INVESCO hereby undertakes to indemnify and to keep indemnified the
Sub-Adviser from and against any and all liabilities, obligations, losses,
damages, suits and expenses which may be incurred by or asserted against the
Sub-Adviser for which it is responsible pursuant to Article I hereof provided
always that the Sub-Adviser shall send to INVESCO as soon as possible all
claims, letters, summonses, writs or documents which it receives from third
parties and provide whatever information and assistance INVESCO may require and
no liability of any sort shall be admitted and no undertaking shall be given nor
shall any offer, promise or payment be made or legal expenses incurred by the
Sub-Adviser without written consent of INVESCO who shall be entitled if it so
desires to take over and conduct in the name of the Sub-Adviser the defense of
any action or to prosecute any claim for indemnity or damages or otherwise
against any third party.
<PAGE>
ARTICLE VIII
AMENDMENTS OF THIS AGREEMENT
No provision of this Agreement may be orally changed or discharged, but
may only be modified by an instrument in writing signed by the Sub Adviser and
INVESCO. In addition, no amendment to this Agreement shall be effective unless
approved by (1) the vote of a majority of the Directors of the Company,
including a majority of the Directors who are not parties to this Agreement or
interested persons of any such party cast in person at a meeting called for the
purpose of voting on such amendment and (2) the vote of a majority of the
outstanding voting securities of the Fund (other than an amendment which can be
effective without shareholder approval under applicable law).
ARTICLE IX
DEFINITIONS OF CERTAIN TERMS
In interpreting the provisions of this Agreement, the terms "vote of a
majority of the outstanding voting securities," "assignments," "affiliated
person" and "interested person," when used in this Agreement, shall have the
respective meanings specified in the Investment Company Act and the Rules and
Regulations thereunder, subject, however, to such exemptions as may be granted
by the Securities and Exchange Commission under said Act.
ARTICLE X
GOVERNING LAW
This Agreement shall be construed in accordance with the laws of the State
of Colorado and the applicable provisions of the Investment Company Act. To the
extent that the applicable laws of the State of Colorado, or any of the
provisions herein, conflict with the applicable provisions of the Investment
Company Act, the latter shall control.
ARTICLE XI
MISCELLANEOUS
Advice. Any recommendation or advice given by the Sub-Adviser to INVESCO
hereunder shall be given in writing or by mail, telex, telefacsimile or by
telephone, such telephone advice to be confirmed by mail, telex, telefacsimile
or in writing to such place as INVESCO shall from time to time require; further
the Sub-Adviser shall be free to telephone INVESCO as it sees fit in the
performance of its duties.
Complaints. The Sub-Adviser has in operation a written procedure for the
proper handling of complaints from clients; if the matter of complaint cannot be
resolved to INVESCO's satisfaction, INVESCO has the right of recourse to IMRO.
Notice. Any notice under this Agreement shall be in writing, addressed and
delivered or mailed, postage prepaid, to the other party at such address as such
other party may designate for the receipt of such notice.
<PAGE>
Severability. Each provision of this Agreement is intended to be
severable. If any provision of this Agreement shall be held illegal or made
invalid by a court decision, statute, rule or otherwise, such illegality or
invalidity shall not affect the validity or enforceability of the remainder of
this Agreement.
Headings. The headings in this Agreement are inserted for convenience and
identification only and are in no way intended to describe, interpret, define or
limit the size, extent or intent of this Agreement or any provision hereof.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the date first above written.
INVESCO FUNDS GROUP, INC.
ATTEST:
By:
- ------------------------ ------------------------
Glen A. Payne, Secretary Dan J. Hesser, President
INVESCO ASSET MANAGEMENT
LIMITED
ATTEST:
By:
- ------------------------ ------------------------
Robert Cackett Tristan Hillgrath
Secretary Chief Executive Officer
DISTRIBUTION AGREEMENT
THIS AGREEMENT is made this 30th day of September, 1997 between INVESCO
INTERNATIONAL FUNDS, INC., a Maryland corporation (the "Fund"), and INVESCO
DISTRIBUTORS, INC., a Delaware corporation (the "Underwriter").
W I T N E S S E T H:
WHEREAS, the Fund is registered under the Investment Company Act of 1940,
as amended (the "Investment Company Act"), as a diversified, open-end management
investment company and currently proposes to have one class of shares (the
"Shares") which is divided into three series, and which may be divided into
additional series (the "Series"), each representing an interest in a separate
portfolio of investments, and it is in the interest of the Fund to offer the
Shares for sale continuously to life insurance companies that have entered into
participation agreements with the Fund and the Underwriter ("Participating
Insurance Companies") and separate accounts of Participating Insurance
Companies; and
WHEREAS, the Underwriter is engaged in the business of selling shares of
investment companies either directly to investors or through other securities
dealers; and
WHEREAS, the Fund and the Underwriter wish to enter into an agreement with
each other with respect to the continuous offering of the Shares of each Series
in order to promote growth of the Fund and facilitate the distribution of the
Shares;
NOW, THEREFORE, in consideration of the mutual covenants hereinafter
contained, it is hereby agreed by and between the parties hereto as follows:
1. The Fund hereby appoints the Underwriter its agent for the
distribution of Shares of each Series in jurisdictions wherein such
Shares legally may be offered for sale; provided, however, that the
Fund in its absolute discretion may (a) issue or sell Shares of each
Series directly to eligible purchasers, or (b) issue or sell Shares
of a particular Series to the shareholders of any other Series or to
the shareholders of any other investment company, for which the
Underwriter or any affiliate thereof shall act as exclusive
distributor, who wish to exchange all or a portion of their
investment in Shares of such Series or in shares of such other
investment company for the Shares of a particular Series, provided
that such shareholders are eligible to purchase shares.
Notwithstanding any other provision hereof, the Fund may terminate,
suspend or withdraw the offering of Shares whenever, in its sole
discretion, it deems such action to be desirable. The Fund reserves
the right to reject any subscription in whole or in part for any
reason.
2. The Underwriter hereby agrees to serve as agent for the distribution
of the Shares and agrees that it will use its best efforts with
reasonable promptness to sell such part of the authorized Shares
remaining unissued as from time to time shall be effectively
<PAGE>
registered under the Securities Act of 1933, as amended (the "1933
Act"), at such prices and on such terms as hereinafter set forth,
all subject to applicable federal and state securities laws and
regulations. Nothing herein shall be construed to prohibit the
Underwriter from engaging in other related or unrelated businesses.
3. In addition to serving as the Fund's agent in the distribution of
the Shares, the Underwriter shall also provide to the holders of the
Shares certain maintenance, support or similar services
("Shareholder Services"). Such services shall include, without
limitation, answering routine shareholder inquiries regarding the
Fund, arranging for bank wires, and providing such other services as
the Fund may reasonably request from time to time. It is expressly
understood that the Underwriter or the Fund may enter into one or
more agreements with third parties pursuant to which such third
parties may provide the Shareholder Services provided for in this
paragraph. Nothing herein shall be construed to impose upon the
Underwriter any duty or expense in connection with the services of
any registrar, transfer agent or custodian appointed by the Fund,
the computation of the asset value or offering price of Shares, the
preparation and distribution of notices of meetings, proxy
soliciting material, annual and periodic reports, dividends and
dividend notices, or any other responsibility of the Fund.
4. Except as otherwise specifically provided for in this Agreement, the
Underwriter shall sell the Shares directly to Participating
Insurance Companies, or separate accounts of Participating Insurance
Companies, in such manner, not inconsistent with the provisions
hereof and the then effective Registration Statement of the Fund
under the 1933 Act (the "Registration Statement") and related
Prospectus (the "Prospectus") and Statement of Additional
Information ("SAI") of the Fund as the Underwriter may determine
from time to time.
5. The Shares of each Series offered for sale or sold by the
Underwriter shall be offered or sold at the net asset value per
share determined in accordance with the then current Prospectus
and/or SAI relating to the sale of the Shares of the appropriate
Series except as departure from such prices shall be permitted by
the then current Prospectus and/or SAI of the Fund, in accordance
with applicable rules and regulations of the Securities and Exchange
Commission. The price the Fund shall receive for the Shares of each
Series purchased from the Fund shall be the net asset value per
share of such Share, determined in accordance with the Prospectus
and/or SAI applicable to the sale of the Shares of such Series.
6. Except as may be otherwise agreed to by the Fund, the Underwriter
shall be responsible for issuing and delivering such confirmations
of sales made by it pursuant to this Agreement as may be required;
provided, however, that the Underwriter or the Fund may utilize the
services of other persons or entities believed by it to be competent
to perform such functions. Shares shall be registered on the
transfer books of the Fund in such names and denominations as the
Underwriter may specify.
<PAGE>
7. The Fund will execute any and all documents and furnish any and all
information which may be reasonably necessary in connection with the
qualification of the Shares for sale (including the qualification of
the Fund as a broker-dealer where necessary or advisable) in such
states as the Underwriter may reasonably request (it being
understood that the Fund shall not be required without its consent
to comply with any requirement which in the opinion of the Directors
of the Fund is unduly burdensome). The Underwriter, at its own
expense, will effect all qualifications of itself as broker or
dealer, or otherwise, under all applicable state or Federal laws
required in order that the Shares may be sold in such states or
jurisdictions as the Fund may reasonably request.
8. The Fund shall prepare and furnish to the Underwriter from time to
time the most recent form of the Prospectus and/or SAI of the Fund
and/or of each Series of the Fund. The Fund authorizes the
Underwriter to use the Prospectus and/or SAI, in the forms furnished
to the Underwriter from time to time, in connection with the sale of
the Shares of the Fund and/or of each Series of the Fund. The Fund
will furnish to the Underwriter from time to time such information
with respect to the Fund, each Series, and the Shares as the
Underwriter may reasonably request for use in connection with the
sale of the Shares. The Underwriter agrees that it will not use or
distribute or authorize the use, distribution or dissemination by
others in connection with the sale of the Shares any statements,
other than those contained in a current Prospectus and/or SAI of the
Fund or applicable Series, except such supplemental literature or
advertising as shall be lawful under Federal and state securities
laws and regulations, and that it will promptly furnish the Fund
with copies of all such material, including any such material
provided to the Underwriter by Participating Insurance Companies
that mentions the Fund by name.
9. The Underwriter will not make, or authorize others to make, any
short sales of the Shares of the Fund or otherwise make any sales of
the Shares unless such sales are made in accordance with a then
current Prospectus and/or SAI relating to the sale of the
applicable Shares.
10. The Underwriter, as agent of and for the account of the Fund, may
cause the redemption of the Shares at such prices and upon such
terms and conditions as shall be specified in a then current
Prospectus and/or SAI. In selling or redeeming the Shares for the
account of the Fund, the Underwriter will in all respects conform to
the requirements of all state and federal laws and the Rules of Fair
Practice of the National Association of Securities Dealers, Inc.,
relating to such sale or redemption, as the case may be. The
Underwriter will observe and be bound by all the provisions of the
Articles of Incorporation or Bylaws of the Fund and of any
provisions in the Registration Statement, Prospectus and SAI, as
<PAGE>
such may be amended or supplemented from time to time, notice of
which shall have been given to the Underwriter, which at the time in
any way require, limit, restrict or prohibit or otherwise regulate
any action on the part of the Underwriter.
11. (a) The Fund shall indemnify, defend and hold harmless the
Underwriter, its officers and directors and any person who
controls the Underwriter within the meaning of the 1933 Act,
from and against any and all claims, demands, liabilities and
expenses (including the cost of investigating or defending
such claims, demands or liabilities and any attorney fees
incurred in connection therewith) which the Underwriter, its
officers and directors or any such controlling person, may
incur under the federal securities laws, the common law or
otherwise, arising out of or based upon any alleged untrue
statement of a material fact contained in the Registration
Statement or any related Prospectus and/or SAI or arising out
of or based upon any alleged omission to state a material fact
required to be stated therein or necessary to make the
statements therein not misleading.
Notwithstanding the foregoing, this indemnity agreement, to
the extent that it might require indemnity of the Underwriter
or any person who is an officer, director or controlling
person of the Underwriter, shall not inure to the benefit of
the Underwriter or officer, director or controlling person
thereof unless a court of competent jurisdiction shall
determine, or it shall have been determined by controlling
precedent, that such result would not be against public policy
as expressed in the federal securities laws and in no event
shall anything contained herein be so construed as to protect
the Underwriter against any liability to the Fund, the
Directors or the Fund's shareholders to which the Underwriter
would otherwise be subject by reason of willful misfeasance,
bad faith or gross negligence in the performance of its duties
or by reason of its reckless disregard of its obligations and
duties under this Agreement.
This indemnity agreement is expressly conditioned upon the
Fund's being notified of any action brought against the
Underwriter, its officers or directors or any such controlling
person, which notification shall be given by letter or by
telegram addressed to the Fund at its principal address in
Denver, Colorado and sent to the Fund by the person against
whom such action is brought within ten (10) days after the
summons or other first legal process shall have been served
upon the Underwriter, its officers or directors or any such
controlling person. The failure to notify the Fund of any
such action shall not relieve the Fund from any liability
which it may have to the person against whom such action is
brought by reason of any such alleged untrue statement or
<PAGE>
omission otherwise than on account of the indemnity agreement
contained in this paragraph. The Fund shall be entitled to
assume the defense of any suit brought to enforce such claim,
demand, or liability, but in such case the defense shall be
conducted by counsel chosen by the Fund and approved by the
Underwriter, which approval shall not be unreasonably
withheld. If the Fund elects to assume the defense of any such
suit and retain counsel approved by the Underwriter, the
defendant or defendants in such suit shall bear the fees and
expenses of an additional counsel obtained by any of them.
Should the Fund elect not to assume the defense of any such
suit, or should the Underwriter not approve of counsel chosen
by the Fund, the Fund will reimburse the Underwriter, its
officers and directors or the controlling person or persons
named as defendant or defendants in such suit, for the
reasonable fees and expenses of any counsel retained by the
Underwriter or them. In addition, the Underwriter shall have
the right to employ counsel to represent it, its officers and
directors and any such controlling person who may be subject
to liability arising out of any claim in respect of which
indemnity may be sought by the Underwriter against the Fund
hereunder if in the reasonable judgment of the Underwriter it
is advisable for the Underwriter, its officers and directors
or such controlling person to be represented by separate
counsel, in which event the reasonable fees and expenses of
such separate counsel shall be borne by the Fund. This
indemnity agreement and the Fund's representations and
warranties in this Agreement shall remain operative and in
full force and effect and shall survive the delivery of any of
the Shares as provided in this Agreement. This indemnity
agreement shall inure exclusively to the benefit of the
Underwriter and its successors, the Underwriter's officers and
directors and their respective estates and any such
controlling person and their successors and estates. The Fund
shall promptly notify the Underwriter of the commencement of
any litigation or proceeding against it in connection with the
issue and sale of the Shares.
(b) The Underwriter agrees to indemnify, defend and hold harmless
the Fund, its Directors and any person who controls the Fund
within the meaning of the 1933 Act, from and against any and
all claims, demands, liabilities and expenses (including the
cost of investigating or defending such claims, demands or
liabilities and any attorney fees incurred in connection
therewith) which the Fund, its Directors or any such
controlling person may incur under the Federal securities
laws, the common law or otherwise, but only to the extent that
such liability or expense incurred by the Fund, its Directors
or such controlling person resulting from such claims or
demands shall arise out of or be based upon (a) any alleged
<PAGE>
untrue statement of a material fact contained in information
furnished in writing by the Underwriter to the Fund
specifically for use in the Registration Statement or any
related Prospectus and/or SAI or shall arise out of or be
based upon any alleged omission to state a material fact in
connection with such information required to be stated in the
Registration Statement or the related Prospectus and/or SAI or
necessary to make such information not misleading and (b) any
alleged act or omission on the Underwriter's part as the
Fund's agent that has not been expressly authorized by the
Fund in writing.
Notwithstanding the foregoing, this indemnity agreement, to
the extent that it might require indemnity of the Fund or any
Director or controlling person of the Fund, shall not inure to
the benefit of the Fund or Director or controlling person
thereof unless a court of competent jurisdiction shall
determine, or it shall have been determined by controlling
precedent, that such result would not be against public policy
as expressed in the federal securities laws and in no event
shall anything contained herein be so construed as to protect
any Director of the Fund against any liability to the Fund or
the Fund's shareholders to which the Director would otherwise
be subject by reason of willful misfeasance, bad faith or
gross negligence or reckless disregard of the duties involved
in the conduct of his office.
This indemnity agreement is expressly conditioned upon the
Underwriter's being notified of any action brought against the
Fund, its Directors or any such controlling person, which
notification shall be given by letter or telegram addressed to
the Underwriter at its principal office in Denver, Colorado,
and sent to the Underwriter by the person against whom such
action is brought, within ten (10) days after the summons or
other first legal process shall have been served upon the
Fund, its Directors or any such controlling person. The
failure to notify the Underwriter of any such action shall not
relieve the Underwriter from any liability which it may have
to the person against whom such action is brought by reason of
any such alleged untrue statement or omission otherwise than
on account of the indemnity agreement contained in this
paragraph. The Underwriter shall be entitled to assume the
defense of any suit brought to enforce such claim, demand, or
liability, but in such case the defense shall be conducted by
counsel chosen by the Underwriter and approved by the Fund,
which approval shall not be unreasonably withheld. If the
Underwriter elects to assume the defense of any such suit and
retain counsel approved by the Fund, the defendant or
defendants in such suit shall bear the fees and expenses of an
additional counsel obtained by any of them. Should the
Underwriter elect not to assume the defense of any such suit,
<PAGE>
or should the Fund not approve of counsel chosen by the
Underwriter, the Underwriter will reimburse the Fund, its
Directors or the controlling person or persons named as
defendant or defendants in such suit, for the reasonable fees
and expenses of any counsel retained by the Fund or them. In
addition, the Fund shall have the right to employ counsel to
represent it, its Directors and any such controlling person
who may be subject to liability arising out of any claim in
respect of which indemnity may be sought by the Fund against
the Underwriter hereunder if in the reasonable judgment of the
Fund it is advisable for the Fund, its Directors or such
controlling person to be represented by separate counsel, in
which event the reasonable fees and expenses of such separate
counsel shall be borne by the Underwriter. This indemnity
agreement and the Underwriter's representations and warranties
in this Agreement shall remain operative and in full force and
effect and shall survive the delivery of any of the Shares as
provided in this Agreement. This indemnity agreement shall
inure exclusively to the benefit of the Fund and its
successors, the Fund's Directors and their respective estates
and any such controlling person and their successors and
estates. The Underwriter shall promptly notify the Fund of the
commencement of any litigation or proceeding against it in
connection with the issue and sale of the Shares.
12. The Fund will pay or cause to be paid (a) expenses (including the
fees and disbursements of its own counsel) of any registration of
the Shares under the 1933 Act, as amended, (b) expenses incident to
the issuance of the Shares, and (c) expenses (including the fees and
disbursements of its own counsel) incurred in connection with the
preparation, printing and distribution of the Fund's Prospectuses,
SAIs, and periodic and other reports sent to holders of the Shares
in their capacity as such. The Underwriter shall prepare and
provide necessary copies of all sales literature subject to the
Fund's approval thereof.
13. This Agreement shall become effective as of the date it is approved
by a majority vote of the Directors of the Fund, as well as a
majority vote of the Directors who are not "interested persons"
(as defined in the Investment Company Act) of the Fund, and shall
continue in effect for an initial term expiring September 30, 1998,
and from year to year thereafter, but only so long as such
continuance is specifically approved at least annually (a)(i) by a
vote of the Directors of the Fund or (ii) by a vote of a majority of
the outstanding voting securities of the Fund, and (b) by a vote of
a majority of the Directors of the Fund who are not "interested
persons," as defined in the Investment Company Act, of the Fund cast
in person at a meeting for the purpose of voting on this Agreement.
<PAGE>
Either party hereto may terminate this Agreement on any date,
without the payment of a penalty, by giving the other party at least
60 days' prior written notice of such termination specifying the
date fixed therefor. In particular, this Agreement may be
terminated at any time, without payment of any penalty, by vote of a
majority of the members of the Directors of the Fund or by a vote of
a majority of the outstanding voting securities of the Fund on not
more than 60 days' written notice to the Underwriter.
Without prejudice to any other remedies of the Fund provided for in
this Agreement or otherwise, the Fund may terminate this Agreement
at any time immediately upon the Underwriter's failure to fulfill
any of the obligations of the Underwriter hereunder.
14. The Underwriter expressly agrees that, notwithstanding anything to
the contrary herein, or in any applicable law, it will look solely
to the assets of the Fund for any obligations of the Fund hereunder
and nothing herein shall be construed to create any personal
liability on the part of any Director or any shareholder of the
Fund.
15. This Agreement shall automatically terminate in the event of its
assignment. In interpreting the provisions of this Section 15, the
definition of "assignment" contained in the Investment Company Act
shall be applied.
16. Any notice under this Agreement shall be in writing, addressed and
delivered or mailed, postage prepaid, to the other party at such
address as such other party may designate for the receipt of such
notice.
17. No provision of this Agreement may be changed, waived, discharged or
terminated orally, but only by an instrument in writing signed by
the Fund and the Underwriter and, if applicable, approved in the
manner required by the Investment Company Act.
18. Each provision of this Agreement is intended to be severable. If
any provision of this Agreement shall be held illegal or made
invalid by a court decision, statute, rule or otherwise, such
illegality or invalidity shall not affect the validity or
enforceability of the remainder of this Agreement.
19. This Agreement and the application and interpretation hereof shall
be governed exclusively by the laws of the State of Colorado.
<PAGE>
IN WITNESS WHEREOF, the Fund and the Underwriter have each caused this
Agreement to be executed on its behalf by an officer thereunto duly authorized
and the Underwriter has caused its corporate seal to be affixed as of the day
and year first above written.
INVESCO VARIABLE INVESTMENT FUNDS, INC.
ATTEST:
By: /s/ Dan J. Hesser
/s/ Glen A. Payne -----------------------
- ----------------- Dan J. Hesser
Glen A. Payne President
Secretary
INVESCO DISTRIBUTORS, INC.
ATTEST:
By: /s/ Ronald L. Grooms
/s/ Glen A. Payne -----------------------
- ----------------- Ronald L. Grooms
Glen A. Payne Senior Vice President
Secretary
DEFINED BENEFIT DEFERRED COMPENSATION PLAN
FOR NON-INTERESTED DIRECTORS AND TRUSTEES
The registered, open-end management investment companies referred to on
Schedule A as the Schedule may hereafter be revised by the addition and deletion
of investment companies (the "Funds") have adopted this Defined Benefit Deferred
Compensation Plan ("Plan") for the benefit of those directors and trustees of
the Funds who are not interested directors or trustees thereof as defined in
Section 2(a)(19) of the Investment Company Act of 1940, as amended ("Independent
Directors").
1. Eligibility
Each Independent Director who has served as such ("Eligible Service") on
the boards of any of the Funds and their predecessor and successor entities, if
any, or as an Independent Director of the now-defunct investment management
company known as FG Series for an aggregate of at least five years at the time
of his Service Termination Date (as defined in paragraph 2) will be entitled to
receive benefits under the Plan. An Independent Director's period of Eligible
Service commences on the date of election to the board of directors or trustees
of any one or more of the Funds ("Board"). Hereafter, references in this Plan to
Independent Directors shall be deemed to include only those Directors who have
met the Eligible Service requirement for Plan participation.
2. Service Termination and Service Termination Date
a. Service Termination. Service Termination means termination of service
(other than by disability or death) of an Independent Director which results
from the Director's having reached his Service Termination Date.
b. Service Termination Date. An Independent Director's Service Termination
Date is normally the last day of the calendar quarter in which such Director's
seventy-second birthday occurs. A majority of the Board of a Fund may annually
extend a Director's Service Termination Date for a maximum period of three
years, through the date not later than the last day of the calendar quarter in
which such Director's seventy-fifth birthday occurs.
As used in this Plan unless otherwise stipulated, Service Termination Date
shall mean an Independent Director's normal Service Termination Date, or the
Director's extended Service Termination Date, whichever may be applicable to the
Independent Director.
3. Defined Payments and Benefit
a. Payments. If an Independent Director's Service Termination Date occurs
on a date not later than the last day of the calendar quarter in which such
Director's seventy-fourth birthday occurs, the Independent Director will receive
four quarterly payments during the first twelve months subsequent to his Service
Termination Date (the "First Year Retirement Payments"), with each payment to be
equal to 25 percent of the annual basic retainer payable by each Fund to the
Independent Director on his Service Termination Date (excluding any fees
relating to attending meetings or chairing committees).
<PAGE>
b. Benefit. Commencing with the first anniversary of the Service
Termination Date of any Independent Director who has received the First Year
Retirement Payments, and commencing as of the Service Termination Date of an
Independent Director whose Service Termination Date is subsequent to the date of
the last day of the calendar quarter in which such Director's seventy-fourth
birthday occurred, the Independent Director will receive, for the remainder of
his life, a benefit (the "Benefit"), payable quarterly, with each quarterly
payment to be equal to 10 percent of the annual basic retainer payable by each
Fund to the Independent Director on his Service Termination Date (excluding any
fees relating to attending meetings or chairing committees).
c. Death Provisions. If an Independent Director's service as a Director is
terminated because of his death subsequent to the last day of the calendar
quarter in which such Director's seventy-second birthday occurred and prior to
the last day of the calendar quarter in which such Director's seventy-fourth
birthday occurs, the designated beneficiary of the Independent Director shall
receive the First Year Retirement Payments and shall, commencing with the
quarter following the quarter in which the last First Year Retirement Payment is
made, receive the Benefit for a period of ten years, with quarterly payments to
be made to the designated beneficiary.
If an Independent Director's service as a Director is terminated because of
his death prior to the last day of the calendar quarter in which such Director's
seventy-second birthday occurs or subsequent to the last day of the calendar
quarter in which such Director's seventy-fourth birthday occurred, the
designated beneficiary of the Independent Director shall receive the Benefit for
a period of ten years, with quarterly payments to be made to the designated
beneficiary commencing in the first quarter following the Director's death.
d. Disability Provisions. If an Independent Director's service as a
Director is terminated because of his disability subsequent to the last day of
the calendar quarter in which such Director's seventy-second birthday occurred
and prior to the last day of the calendar quarter in which such Director's
seventy-fourth birthday occurs, the Independent Director shall receive the First
Year Retirement Payments and shall, commencing with the quarter following the
quarter in which the last First Year Retirement Payment is made, receive the
Benefit for the remainder of his life, with quarterly payments to be made to the
disabled Independent Director. If the disabled Independent Director should die
before the First Year Retirement Payments are completed and before forty
quarterly Benefit payments are made, such payments will continue to be made to
the Independent Director's designated beneficiary until the aggregate of the
First Year Retirement Payments and forty quarterly Benefit payments have been
made to the disabled Independent Director and the Director's designated
beneficiary.
If an Independent Director's service as a Director is terminated because of
his disability prior to the last day of the calendar quarter in which such
Director's seventy-second birthday occurs or subsequent to the last day of the
calendar quarter in which such Director's seventy-fourth birthday occurred, the
Independent Director shall receive the Benefit for the remainder of his life,
with quarterly payments to be made to the disabled Independent Director
commencing in the first quarter following the Director's termination for
disability. If the disabled Independent Director should die before forty
quarterly payments are made, payments will continue to be made to the
<PAGE>
Independent Director's designated beneficiary until the aggregate of forty
quarterly payments has been made to the disabled Independent Director and the
Director's designated beneficiary.
e. Death of Independent Director and Beneficiary. If the Independent
Director and his designated beneficiary should die before the First Year
Retirement Payments and/or a total of forty quarterly Benefit payments are made,
the remaining value of the Independent Director's First Year Retirement Payments
and/or Benefit shall be determined as of the date of the death of the
Independent Director's designated beneficiary and shall be paid to the estate of
the designated beneficiary in one lump sum or in periodic payments, with the
determinations with respect to the value of the First Year Retirement Payments
and/or Benefit and the method and frequency of payment to be made by the
Committee (as defined in paragraph 8.a.) in its sole discretion.
4. Designated Beneficiary
The beneficiary referred to in paragraph 3 may be designated or changed by
the Independent Director without the consent of any prior beneficiary on a form
provided by the Committee (as defined in paragraph 8.a.) and delivered to the
Committee before the Independent Director's death. If no such beneficiary shall
have been designated, or if no designated beneficiary shall survive the
Independent Director, the value or remaining value of the Independent Director's
First Year Retirement Payments and/or Benefit shall be determined as of the date
of the death of the Independent Director by the Committee and shall be paid as
promptly as possible in one lump sum to the Independent Director's estate.
5. Disability
An Independent Director shall be deemed to have become disabled for the
purposes of paragraph 3 if the Committee shall find on the basis of medical
evidence satisfactory to it that the Independent Director is disabled, mentally
or physically, as a result of an accident or illness, so as to be prevented from
performing each of the duties which are incumbent upon an Independent Director
in fulfilling his responsibilities as such.
6. Time of Payment
The First Year Retirement Payments and/or the Benefit for each year will be
paid in quarterly installments that are as nearly equal as possible.
7. Payment of First Year Retirement Payments and/or Benefit: Allocation of
Costs
Each Fund is responsible for the payment of the amount of the First Year
Retirement Payments and/or Benefit applicable to the Fund, as well as its
proportionate share of all expenses of administration of the Plan, including
without limitation all accounting and legal fees and expenses and fees and
expenses of any Actuary. The obligations of each Fund to pay such First Year
Retirement Payments and/or Benefit and expenses will not be secured or funded in
any manner, and such obligations will not have any preference over the lawful
<PAGE>
claims of each Fund's creditors and shareholders. To the extent that the First
Year Retirement Payments and/or Benefit is paid by more than one Fund, such
costs and expenses will be allocated among such Funds in a manner that is
determined by the Committee to be fair and equitable under the circumstances. To
the extent that one or more of such Funds consist of one or more separate
portfolios, such costs and expenses allocated to any such Fund will thereafter
be allocated among such portfolios by the Board of the Fund in a manner that is
determined by such Board to be fair and equitable under the circumstances.
8. Administration
a. The Committee. Any question involving entitlement to payments under or
the administration of the Plan will be referred to a four-person committee (the
"Committee") composed of three Independent Directors designated by all of the
Independent Directors of the Funds and one director of the Funds who is not an
Independent Director, designated by the non-Independent Directors. Except as
otherwise provided herein, the Committee will make all interpretations and
determinations necessary or desirable for the Plan's administration, and such
interpretations and determinations will be final and conclusive. Committee
members will be elected annually.
b. Powers of the Committee. The Committee will represent and act on behalf
of the Funds in respect of the Plan and, subject to the other provisions of the
Plan, the Committee may adopt, amend or repeal bylaws or other regulations
relating to the administration of the Plan, the conduct of the Committee's
affairs, its rights or powers, or the rights or powers of its members. The
Committee will report to the Independent Directors and to the Boards of the
Funds from time to time on its activities in respect of the Plan. The Committee
or persons designated by it will cause such records to be kept as may be
necessary for the administration of the Plan.
9. Miscellaneous Provisions
a. Rights Not Assignable. Other than as is specifically provided in
paragraph 3, the right to receive any payment under the Plan is not transferable
or assignable, and nothing in the Plan shall create any benefit, cause of
action, right of sale, transfer, assignment, pledge, encumbrance, or other such
right in any heirs or the estate of any Independent Director.
b. Amendment, etc. The Committee, with the concurrence of the Board of any
Fund, may as to the specific Fund at any time amend or terminate the Plan or
waive any provision of the Plan; provided, however, that subject to the
limitations imposed by paragraph 7, no amendment, termination or waiver will
impair the rights of an Independent Director to receive the payments which would
have been made to such Independent Director had there been no such amendment,
termination, or waiver.
c. No Right to Reelection. Nothing in the Plan will create any obligation
on the part of the Board of any Fund to nominate any Independent Director for
reelection.
<PAGE>
d. Consulting. Subsequent to his Service Termination Date, an Independent
Director may render such services for any Fund, for such compensation, as may be
agreed upon from time to time by such Independent Director and the Board of the
Fund which desires to procure such services.
e. Effectiveness. The Plan will be effective for all Independent Directors
who have Service Termination Dates occurring on and after October 20, 1993.
Periods of Eligible Service shall include periods commencing prior and
subsequent to such date. Upon its adoption by the Board of a Fund, the Plan will
become effective as to that Fund on the date when the Committee determines that
any regulatory approval or advice that may be necessary or appropriate in
connection with the Plan have been obtained.
Adopted October 20, 1993. Amended October 19, 1994.
Amended May 1, 1996, effective July 1, 1996.
<PAGE>
SCHEDULE A
TO
DEFINED BENEFIT DEFERRED COMPENSATION PLAN
FOR NON-INTERESTED DIRECTORS AND TRUSTEES
INVESCO Diversified Funds, Inc.
INVESCO Dynamics Fund, Inc.
INVESCO Emerging Opportunity Funds, Inc.
INVESCO Growth Fund, Inc.
INVESCO Income Funds, Inc.
INVESCO Industrial Income Fund, Inc.
INVESCO International Funds, Inc.
INVESCO Money Market Funds, Inc.
INVESCO Multiple Asset Funds, Inc.
INVESCO Specialty Funds, Inc.
INVESCO Strategic Portfolios, Inc.
INVESCO Tax-Free Income Funds, Inc.
INVESCO Value Trust
INVESCO Variable Investment Funds, Inc.
The INVESCO Advisor Funds, Inc.
INVESCO Treasurer's Series Trust
CUSTODIAN CONTRACT
Between
INVESCO INTERNATIONAL FUNDS, INC.
and
STATE STREET BANK AND TRUST COMPANY
<PAGE>
TABLE OF CONTENTS
Page
----
1. Employment of Custodian and Property to be Held by
It..............................................................1
2. Duties of the Custodian with Respect to Property
of the Fund Held by the Custodian in the United States..........3
2.1 Holding Securities.................................3
2.2 Delivery of Securities.............................3
2.3 Registration of Securities.........................8
2.4 Bank Accounts......................................9
2.5 Availability of Federal Funds.....................10
2.6 Collection of Income..............................10
2.7 Payment of Fund Monies............................11
2.8 Liability for Payment in Advance of
Receipt of Securities Purchased...................14
2.9 Appointment of Agents.............................15
2.10 Deposit of Fund Assets in Securities System.......15
2.10A Fund Assets Held in the Custodian's Direct
Paper Sytem.......................................18
2.11 Segregated Account................................20
2.12 Ownership Certificates for Tax Purposes...........21
2.13 Proxies...........................................22
2.14 Communications Relating to Portfolio
Securities........................................22
3. Duties of the Custodian with Respect to Property of
the Fund Held Outside of the United States.....................23
3.1 Appointment of Foreign Sub-Custodians.............23
3.2 Assets to be Held.................................23
3.3 Foreign Securities Depositories...................24
3.4 Agreements with Foreign Banking Institutions......24
3.5 Access of Independent Accountants of the Fund.....25
3.6 Reports by Custodian..............................25
3.7 Transactions in Foreign Custody Account...........26
3.8 Liability of Foreign Sub-Custodians...............27
3.9 Liability of Custodian............................27
3.10 Reimbursement for Advances........................28
3.11 Monitoring Responsibilities.......................29
3.12 Branches of U.S. Banks............................29
3.13 Tax Law...........................................30
4. Payments for Sales or Repurchase or Redemptions
of Shares of the Funds.........................................31
5. Proper Instructions............................................32
6. Actions Permitted Without Express Authority....................33
7. Evidence of Authority..........................................33
<PAGE>
8. Duties of Custodian With Respect to the Books of Account
and Calculation of Net Asset Value and Net Income.............34
9. Records.......................................................34
10. Opinion of Fund's Independent Accountants.....................35
11. Reports to Fund by Independent Public Accountants.............35
12. Compensation of Custodian.....................................36
13. Responsibility of Custodian...................................36
14. Effective Period, Termination and Amendment...................38
15. Successor Custodian...........................................40
16. Interpretive and Additional Provisions........................41
17. Additional Funds..............................................42
18. Massachusetts Law to Apply....................................42
19. Prior Contracts...............................................42
20. Shareholder Communications....................................43
<PAGE>
CUSTODIAN CONTRACT
This Contract between INVESCO International Funds, Inc., a
corporation organized and existing under the laws of Maryland, having its
principal place of business at 7800 East Union Avenue, Denver, Colorado 80237,
hereinafter called the "Fund", and State Street Bank and Trust Company, a
Massachusetts trust company, having its principal place of business at 225
Franklin Street, Boston, Massachusetts, 02110, hereinafter called the
"Custodian",
WITNESSETH:
WHEREAS, the Fund is authorized to issue shares in separate
series, with each such series representing interests in a separate portfolio of
securities and other assets; and
WHEREAS, the Fund intends to initially offer shares in three
series, INVESCO European Fund, INVESCO Pacific Basin Fund, INVESCO International
Growth Fund (such series together with all other series subsequently established
by the Fund and made subject to this Contract in accordance with paragraph 17,
being herein referred to as the "Portfolio(s)");
NOW THEREFORE, in consideration of the mutual covenants
and agreements hereinafter contained, the parties hereto agree as
follows:
1. Employment of Custodian and Property to be Held by It
The Fund hereby employs the Custodian as the custodian of the
assets of the Portfolios of the Fund, including securities which the Fund, on
behalf of the applicable Portfolio desires to be held in places within the
United States ("domestic securities") and securities it desires to be
held outside the United States ("foreign securities") pursuant to the provisions
of the Articles of Incorporation. The Fund on behalf of the Portfolio(s) agrees
to deliver to the Custodian all securities and cash of the Portfolios, and all
payments of income, payments of principal or capital distributions received by
it with respect to all securities owned by the Portfolio(s) from time to time,
and the cash consideration received by it for such new or treasury shares of
capital stock of the Fund representing interests in the Portfolios, ("Shares")
as may be issued or sold from time to time. The Custodian shall not be
responsible for any property of a Portfolio held or received by the Portfolio
and not delivered to the Custodian.
Upon receipt of "Proper Instructions" (within the meaning of
Article 5), the Custodian shall on behalf of the applicable Portfolio(s) from
time to time employ one or more sub-custodians, located in the United States but
only in accordance with an applicable vote by the Board of Directors of the Fund
on behalf of the applicable Portfolio(s), and provided that the Custodian shall
have no more or less responsibility or liability to the Fund on account of any
actions or omissions of any sub-custodian so employed than any such
sub-custodian has to the Custodian. The Custodian may employ as sub-custodian
for the Fund's foreign securities on behalf of the applicable Portfolio(s) the
foreign banking institutions and foreign securities depositories
designated in Schedule A hereto but only in accordance with the provisions of
Article 3.
<PAGE>
2. Duties of the Custodian with Respect to Property of the
Fund Held By the Custodian in the United States
2.1 Holding Securities.
The Custodian shall hold and physically segregate for the
account of each Portfolio all non-cash property, to be held by it
in the United States including all domestic securities owned by
such Portfolio, other than (a) securities which are maintained
pursuant to Section 2.10 in a clearing agency which acts as a
securities depository or in a book-entry system authorized
by the U.S. Department of the Treasury, collectively
referred to herein as "Securities System" and (b) commercial
paper of an issuer for which State Street Bank and Trust
Company acts as issuing and paying agent ("Direct Paper")
which is deposited and/or maintained in the Direct Paper System
of the Custodian pursuant to Section 2.10A.
2.2 Delivery of Securities. The Custodian shall release and deliver
domestic securities owned by a Portfolio held by the Custodian or
in a Securities System account of the Custodian or in the
Custodian's Direct Paper book entry system account ("Direct Paper
System Account") only upon receipt of Proper Instructions from the
Fund on behalf of the applicable Portfolio, which may be
continuing instructions when deemed appropriate by the parties,
and only in the following cases:
1) Upon sale of such securities for the account of
the Portfolio and receipt of payment therefor;
2) Upon the receipt of payment in connection with
any repurchase agreement related to such
securities entered into by the Portfolio;
3) In the case of a sale effected through a
Securities System, in accordance with the
provisions of Section 2.10 hereof;
4) To the depository agent in connection with tender
or other similar offers for securities of the
Portfolio;
5) To the issuer thereof or its agent when such
securities are called, redeemed, retired or
otherwise become payable; provided that, in any
such case, the cash or other consideration is to
be delivered to the Custodian;
6) To the issuer thereof, or its agent, for transfer
into the name of the Portfolio or into the name
of any nominee or nominees of the Custodian or
into the name or nominee name of any agent
appointed pursuant to Section 2.9 or into the
name or nominee name of any sub-custodian
appointed pursuant to Article 1; or for exchange
for a different number of bonds,
certificates or other evidence representing the
same aggregate face amount or number of units;
provided that, in any such case, the new
securities are to be delivered to the Custodian;
<PAGE>
7) Upon the sale of such securities for the account
of the Portfolio, to the broker or its clearing
agent, against a receipt, for examination in
accordance with "street delivery" custom;
provided that in any such case, the Custodian
shall have no responsibility or liability for any
loss arising from the delivery of such securities
prior to receiving payment for such securities
except as may arise from the Custodian's own
negligence or willful misconduct;
8) For exchange or conversion pursuant to any plan
of merger, consolidation, recapitalization,
reorganization or readjustment of the securities
of the issuer of such securities, or pursuant to
provisions for conversion contained in such
securities, or pursuant to any deposit agreement;
provided that, in any such case, the new
securities and cash, if any, are to be delivered
to the Custodian;
9) In the case of warrants, rights or similar
securities, the surrender thereof in the exercise
of such warrants, rights or similar securities or
the surrender of interim receipts or temporary
securities for definitive securities; provided
that, in any such case, the new securities and
cash, if any, are to be delivered to the
Custodian;
10) For delivery in connection with any loans of
securities made by the Portfolio, but only
against receipt of adequate collateral as agreed
upon from time to time by the Custodian and the
Fund on behalf of the Portfolio, which may be in
the form of cash or obligations issued by the
United States government, its agencies or
instrumentalities, except that in connection with
any loans for which collateral is to be credited
to the Custodian's account in the book-entry
system authorized by the U.S. Department of the
Treasury, the Custodian will not be held liable
or responsible for the delivery of securities
owned by the Portfolio prior to the receipt of
such collateral;
11) For delivery as security in connection with any
borrowings by the Fund on behalf of the Portfolio
requiring a pledge of assets by the
Fund on behalf of the Portfolio, but only against
receipt of amounts borrowed;
12) For delivery in accordance with the provisions of
any agreement among the Fund on behalf of the
Portfolio, the Custodian and a broker-dealer
registered under the Securities Exchange Act of
1934 (the "Exchange Act") and a member of The
National Association of Securities Dealers, Inc.
<PAGE>
("NASD"), relating to compliance with the rules
of The Options Clearing Corporation and of any
registered national securities exchange, or of
any similar organization or organizations,
regarding escrow or other arrangements in
connection with transactions by the Portfolio of
the Fund;
13) For delivery in accordance with the provisions of
any agreement among the Fund on behalf of the
Portfolio, the Custodian, and a Futures
Commission Merchant registered under the
Commodity Exchange Act, relating to compliance
with the rules of the Commodity Futures Trading
Commission and/or any Contract Market, or any
similar organization or organizations, regarding
account deposits in connection with transactions
by the Portfolio of the Fund;
14) Upon receipt of instructions from the transfer
agent ("Transfer Agent") for the Fund, for
delivery to such Transfer Agent or to the holders
of shares in connection with distributions in
kind, as may be described from time to time in
the currently effective prospectus and statement
of additional information of the Fund, related to
the Portfolio ("Prospectus"), in satisfaction of
requests by holders of Shares for repurchase or
redemption; and
15) For any other proper corporate purpose, but only
upon receipt of, in addition to Proper
Instructions from the Fund on behalf of the
applicable Portfolio, a certified copy of a
resolution of the Board of Directors or of the
Executive Committee signed by an officer of the
Fund and certified by the Secretary or an
Assistant Secretary, specifying the securities of
the Portfolio to be delivered, setting forth the
purpose for which such delivery is to be made,
declaring such purpose to be a proper corporate
purpose, and naming the person or persons to whom
delivery of such securities shall be made.
2.3 Registration of Securities. Domestic securities held by the
Custodian (other than bearer securities) shall be registered in
the name of the Portfolio or in the name of any nominee of the
Fund on behalf of the Portfolio or of any nominee of the Custodian
which nominee shall be assigned exclusively to the Portfolio,
unless the Fund has authorized in writing the appointment of a
nominee to be used in common with other registered investment
companies having the same investment adviser as the Portfolio, or
in the name or nominee name of any agent appointed pursuant to
Section 2.9 or in the name or nominee name of any sub-custodian
appointed pursuant to Article 1. All securities accepted by the
Custodian on behalf of the Portfolio under the terms of this
Contract shall be in "street name" or other good delivery form.
<PAGE>
If, however, the Fund directs the Custodian to maintain securities
in "street name", the Custodian shall utilize its best efforts
only to timely collect income due the Fund on such securities and
to notify the Fund on a best efforts basis only of relevant
corporate actions including, without limitation, pendency of
calls, maturities, tender or exchange offers.
2.4 Bank Accounts. The Custodian shall open and maintain a separate
bank account or accounts in the United States in the name of each
Portfolio of the Fund, subject only to draft or order by the
Custodian acting pursuant to the terms of this Contract, and shall
hold in such account or accounts, subject to the provisions
hereof, all cash received by it from or for the account of the
Portfolio, other than cash maintained by the Portfolio in a bank
account established and used in accordance with Rule 17f-3 under
the Investment Company Act of 1940. Funds held by the Custodian
for a Portfolio may be deposited by it to its credit as Custodian
in the Banking Department of the Custodian or in such other banks
or trust companies as it may in its discretion deem necessary or
desirable; provided, however, that every such bank or trust
company shall be qualified to act as a custodian under the
Investment Company Act of 1940 and that each such bank or trust
company and the funds to be deposited with each such bank or trust
company shall on behalf of each applicable Portfolio be approved
by vote of a majority of the Board of Directors of the Fund. Such
funds shall be deposited by the Custodian in its capacity as
Custodian and shall be withdrawable by the Custodian only in that
capacity.
2.5 Availability of Federal Funds. Upon mutual agreement between the
Fund on behalf of each applicable Portfolio and the Custodian, the
Custodian shall, upon the receipt of Proper Instructions from the
Fund on behalf of a Portfolio, make federal funds available to
such Portfolio as of specified times agreed upon from time to time
by the Fund and the Custodian in the amount of checks received in
payment for Shares of such Portfolio which are deposited into
the Portfolio's account.
2.6 Collection of Income. Subject to the provisions of Section 2.3,
the Custodian shall collect on a timely basis all income and other
payments with respect to registered domestic securities held
hereunder to which each Portfolio shall be entitled either by law
or pursuant to custom in the securities business, and shall
collect on a timely basis all income and other payments with
respect to bearer domestic securities if, on the date of payment
by the issuer, such securities are held by the Custodian or its
agent thereof and shall credit such income, as collected, to such
Portfolio's custodian account. Without limiting the generality of
the foregoing, the Custodian shall detach and present for payment
all coupons and other income items requiring presentation as and
when they become due and shall collect interest when due on
securities held hereunder. Income due each Portfolio on securities
loaned pursuant to the provisions of Section 2.2 (10) shall be the
responsibility of the Fund. The Custodian will have no duty or
responsibility in connection therewith, other than to provide the
<PAGE>
Fund with such information or data as may be necessary to assist
the Fund in arranging for the timely delivery to the Custodian of
the income to which the Portfolio is properly entitled.
2.7 Payment of Fund Monies. Upon receipt of Proper Instructions from
the Fund on behalf of the applicable Portfolio, which may be
continuing instructions when deemed appropriate by the parties,
the Custodian shall pay out monies of a Portfolio in the following
cases only:
1) Upon the purchase of domestic securities,
options, futures contracts or options on futures
contracts for the account of the Portfolio but
only (a) against the delivery of such securities
or evidence of title to such options, futures
contracts or options on futures contracts to the
Custodian (or any bank, banking firm or trust
company doing business in the United States or
abroad which is qualified under the Investment
Company Act of 1940, as amended, to act as a
custodian and has been designated by the
Custodian as its agent for this purpose)
registered in the name of the Portfolio or in the
name of a nominee of the Custodian referred to in
Section 2.3 hereof or in proper form for
transfer; (b) in the case of a purchase effected
through a Securities System, in accordance with
the conditions set forth in Section 2.10 hereof;
(c) in the case of a purchase involving the
Direct Paper System, in accordance with the
conditions set forth in Section 2.10A; (d) in
the case of repurchase agreements entered into
between the Fund on behalf of the Portfolio and
the Custodian, or another bank, or a
broker-dealer which is a member of NASD, (i)
against delivery of the securities either in
certificate form or through an entry crediting
the Custodian's account at the Federal Reserve
Bank with such securities or (ii) against
delivery of the receipt evidencing purchase by
the Portfolio of securities owned by the
Custodian along with written evidence of the
agreement by the Custodian to repurchase such
securities from the Portfolio or (e) for transfer
to a time deposit account of the Fund in any
bank, whether domestic or foreign; such transfer
may be effected prior to receipt of a
confirmation from a broker and/or the applicable
bank pursuant to Proper Instructions from the
Fund as defined in Article 5;
2) In connection with conversion, exchange or
surrender of securities owned by the Portfolio as
set forth in Section 2.2 hereof;
3) For the redemption or repurchase of Shares
issued by the Portfolio as set forth in Article
4 hereof;
<PAGE>
4) For the payment of any expense or liability
incurred by the Portfolio, including but not
limited to the following payments for the account
of the Portfolio: interest, taxes, management,
accounting, transfer agent and legal fees, and
operating expenses of the Fund whether or not
such expenses are to be in whole or part
capitalized or treated as deferred expenses;
5) For the payment of any dividends on Shares of the
Portfolio declared pursuant to the governing
documents of the Fund;
6) For payment of the amount of dividends received
in respect of securities sold short;
7) For any other proper purpose, but only upon
receipt of, in addition to Proper Instructions
from the Fund on behalf of the Portfolio, a
certified copy of a resolution of the Board of
Directors or of the Executive Committee of the
Fund signed by an officer of the Fund and
certified by its Secretary or an Assistant
Secretary, specifying the amount of such payment,
setting forth the purpose for which such payment
is to be made, declaring such purpose to be a
proper purpose, naming the person or persons to
whom such payment is to be made.
2.8 Liability for Payment in Advance of Receipt of Securities
Purchased. Except as specifically stated otherwise in this
Contract, in any and every case where payment for purchase of
domestic securities for the account of a Portfolio is made by the
Custodian in advance of receipt of the securities purchased in the
absence of specific written instructions from the Fund on behalf
of such Portfolio to so pay in advance, the Custodian shall be
absolutely liable to the Fund for such securities to the same
extent as if the securities had been received by the Custodian.
2.9 Appointment of Agents. The Custodian may at any time or times in
its discretion appoint (and may at any time remove) any other bank
or trust company which is itself qualified under the Investment
Company Act of 1940, as amended, to act as a custodian, as its
agent to carry out such of the provisions of this Article 2 as the
Custodian may from time to time direct; provided, however, that
the appointment of any agent shall not relieve the Custodian of
its responsibilities or liabilities hereunder.
2.10 Deposit of Fund Assets in Securities Systems. The Custodian may
deposit and/or maintain securities owned by a Portfolio in a
clearing agency registered with the Securities and Exchange
Commission under Section 17A of the Securities Exchange Act of
1934, which acts as a securities depository, or in the book-entry
system authorized by the U.S. Department of the Treasury and
<PAGE>
certain federal agencies, collectively referred to herein as
"Securities System" in accordance with applicable Federal Reserve
Board and Securities and Exchange Commission rules and
regulations, if any, and subject to the following provisions:
1) The Custodian may keep securities of the
Portfolio in a Securities System provided that
such securities are represented in an account
("Account") of the Custodian in the Securities
System which shall not include any assets of the
Custodian other than assets held as a fiduciary,
custodian or otherwise for customers;
2) The records of the Custodian with respect to
securities of the Portfolio which are maintained
in a Securities System shall identify by
book-entry those securities belonging to the
Portfolio;
3) The Custodian shall pay for securities purchased
for the account of the Portfolio pon (i) receipt
of advice from the Securities System that such
securities have been transferred to the Account,
and (ii) the making of an entry on the records of
the Custodian to reflect such payment and
transfer for the account of the Portfolio. The
Custodian shall transfer securities sold for the
account of the Portfolio upon (i) receipt of
advice from the Securities System that payment
for such securities has been transferred to the
Account, and (ii) the making of an entry on the
records of the Custodian to reflect such
transfer and payment for the account of the
Portfolio. Copies of all advices from the
Securities System of transfers of securities for
the account of the Portfolio shall identify the
Portfolio, be maintained for the Portfolio by the
Custodian and be provided to the Fund at its
request. Upon request, the Custodian shall
furnish the Fund on behalf of the Portfolio
confirmation of each transfer to or from the
account of the Portfolio in the form of a written
advice or notice and shall furnish to the Fund on
behalf of the Portfolio copies of daily
transaction sheets reflecting each day's
transactions in the Securities System for the
account of the Portfolio.
4) The Custodian shall provide the Fund for the
Portfolio with any report obtained by the
Custodian on the Securities System's accounting
system, internal accounting control and
procedures for safeguarding securities deposited
in the Securities System;
<PAGE>
5) The Custodian shall have received from the Fund
on behalf of the Portfolio the initial or annual
certificate, as the case may be, required by
Article 14 hereof;
6) Anything to the contrary in this Contract
notwithstanding, the Custodian shall be liable to
the Fund for the benefit of the Portfolio for any
loss or damage to the Portfolio resulting from
use of the Securities System by reason of any
negligence, misfeasance or misconduct of the
Custodian or any of its agents or of any of its
or their employees or from failure of the
Custodian or any such agent to enforce
effectively such rights as it may have against
the Securities System; at the election of the
Fund, it shall be entitled to be subrogated to
the rights of the Custodian with respect to any
claim against the Securities System or any other
person which the Custodian may have as a
consequence of any such loss or damage if and to
the extent that the Portfolio has not been made
whole for any such loss or damage.
2.10A Fund Assets Held in the Custodian's Direct Paper System. The
Custodian may deposit and/or maintain securities owned by a
Portfolio in the Direct Paper System of the Custodian subject to
the following provisions:
1) No transaction relating to securities in the
Direct Paper System will be effected in the
absence of Proper Instructions from the Fund on
behalf of the Portfolio;
2) The Custodian may keep securities of the
Portfolio in the Direct Paper System only if such
securities are represented in an account
("Account") of the Custodian in the Direct Paper
System which shall not include any assets of the
Custodian other than assets held as a fiduciary,
custodian or otherwise for customers;
3) The records of the Custodian with respect to
securities of the Portfolio which are maintained
in the Direct Paper System shall identify by
book-entry those securities belonging to the
Portfolio;
4) The Custodian shall pay for securities purchased
for the account of the Portfolio upon the making
of an entry on the records of the Custodian to
reflect such payment and transfer of securities
to the account of the Portfolio. The Custodian
shall transfer securities sold for the account of
the Portfolio upon the making of an entry on the
records of the Custodian to reflect such transfer
and receipt of payment for the account of the
Portfolio;
<PAGE>
5) The Custodian shall furnish the Fund on behalf of
the Portfolio confirmation of each transfer to or
from the account of the Portfolio, in the form of
a written advice or notice, of Direct Paper on
the next business day following such transfer and
shall furnish to the Fund on behalf of the
Portfolio copies of daily transaction sheets
reflecting each day's transaction in the
Securities System for the account of the
Portfolio;
6) The Custodian shall provide the Fund on behalf of
the Portfolio with any report on its system of
internal accounting control as the Fund may
reasonably request from time to time.
2.11 Segregated Account. The Custodian shall upon receipt of Proper
Instructions from the Fund on behalf of each applicable Portfolio
establish and maintain a segregated account or accounts for and on
behalf of each such Portfolio, into which account or accounts may
be transferred cash and/or securities, including securities
maintained in an account by the Custodian pursuant to Section 2.10
hereof, (i) in accordance with the provisions of any agreement
among the Fund on behalf of the Portfolio, the Custodian and a
broker-dealer registered under the Exchange Act and a member of
the NASD (or any futures commission merchant registered under the
Commodity Exchange Act), relating to compliance with the rules of
The Options Clearing Corporation and of any registered national
securities exchange (or the Commodity Futures Trading Commission
or any registered contract market), or of any similar
organization or organizations, regarding escrow or other
arrangements in connection with transactions by the Portfolio,
(ii) for purposes of segregating cash or government securities in
connection with options purchased, sold or written by the
Portfolio or commodity futures contracts or options thereon
purchased or sold by the Portfolio, (iii) for the purposes of
compliance by the Portfolio with the procedures required by
Investment Company Act Release No. 10666, or any subsequent
release or releases of the Securities and Exchange Commission
relating to the maintenance of segregated accounts by registered
investment companies and (iv) for other proper corporate
purposes, but only, in the case of clause (iv), upon receipt of,
in addition to Proper Instructions from the Fund on behalf of the
applicable Portfolio, a certified copy of a resolution of the
Board of Directors or of the Executive Committee signed by an
officer of the Fund and certified by the Secretary or an
Assistant Secretary, setting forth the purpose or purposes of
such segregated account and declaring such purposes to be proper
corporate purposes.
<PAGE>
2.12 Ownership Certificates for Tax Purposes. The Custodian shall
execute ownership and other certificates and affidavits for all
federal and state tax purposes in connection with receipt of
income or other payments with respect to domestic securities of
each Portfolio held by it and in connection with transfers of
securities.
2.13 Proxies. The Custodian shall, with respect to the domestic
securities held hereunder, cause to be promptly executed by the
registered holder of such securities, if the securities are
registered otherwise than in the name of the Portfolio or a
nominee of the Portfolio, all proxies, without indication of the
manner in which such proxies are to be voted, and shall promptly
deliver to the Portfolio such proxies, all proxy soliciting
materials and all notices relating to such securities.
2.14 Communications Relating to Portfolio Securities. Subject to the
provisions of Section 2.3, the Custodian shall transmit promptly
to the Fund for each Portfolio all written information (including,
without limitation, pendency of calls and maturities of domestic
securities and expirations of rights in connection therewith and
notices of exercise of call and put options written by the Fund on
behalf of the Portfolio and the maturity of futures contracts
purchased or sold by the Portfolio) received by the Custodian from
issuers of the securities being held for the Portfolio. With
respect to tender or exchange offers, the Custodian shall
transmit promptly to the Portfolio all written information
received by the Custodian from issuers of the securities whose
tender or exchange is sought and from the party (or his agents)
making the tender or exchange offer. If the Portfolio desires to
take action with respect to any tender offer, exchange offer or
any other similar transaction, the Portfolio shall notify the
Custodian at least three business days prior to the date on which
the Custodian is to take such action.
3. Duties of the Custodian with Respect to Property of the Fund Held
Held Outside of the United States
3.1 Appointment of Foreign Sub-Custodians. The Fund hereby
authorizes and instructs the Custodian to employ as sub-custodians
for the Portfolio's securities and other assets maintained outside
the United States the foreign banking institutions and foreign
securities depositories designated on Schedule A hereto ("foreign
sub-custodians"). Upon receipt of "Proper Instructions", as
defined in Section 5 of this Contract, together with a certified
resolution of the Fund's Board of Directors, the Custodian and the
Fund may agree to amend Schedule A hereto from time to time to
designate additional foreign banking institutions and foreign
securities depositories to act as sub-custodian. Upon receipt of
Proper Instructions, the Fund may instruct the Custodian to cease
the employment of any one or more such sub-custodians for
maintaining custody of the Portfolio's assets.
3.2 Assets to be Held. The Custodian shall limit the securities and
other assets maintained in the custody of the foreign
sub-custodians to: (a) "foreign securities", as defined in
<PAGE>
paragraph (c)(1) of Rule 17f-5 under the Investment Company Act of
1940, and (b) cash and cash equivalents in such amounts as the
Custodian or the Fund may determine to be reasonably necessary to
effect the Portfolio's foreign securities transactions. The
Custodian shall identify on its books as belonging to the Fund,
the foreign securities of the Fund held by each foreign
sub-custodian.
3.3 Foreign Securities Depositories. Except as may otherwise be agreed
upon in writing by the Custodian and the Fund, assets of the
Portfolios shall be maintained in foreign securities depositories
only through arrangements implemented by the foreign banking
institutions serving as sub-custodians pursuant to the terms
hereof. Where possible, such arrangements shall include entry into
agreements containing the provisions set forth in Section 3.4
hereof.
3.4 Agreements with Foreign Banking Institutions. Each agreement with
a foreign banking institution shall be substantially in the form
set forth in Exhibit 1 hereto and shall provide that: (a) the
assets of each Portfolio will not be subject to any right, charge,
security interest, lien or claim of any kind in favor of the
foreign banking institution or its creditors or agent, except a
claim of payment for their safe custody or administration; (b)
beneficial ownership for the assets of each Portfolio will be
freely transferable without the payment of money or value other
than for custody or administration; (c) adequate records will be
maintained identifying the assets as belonging to each applicable
Portfolio; (d) officers of or auditors employed by, or other
representatives of the Custodian, including to the extent
permitted under applicable law the independent public accountants
for the Fund, will be given access to the books and records of the
foreign banking institution relating to its actions under its
agreement with the Custodian; and (e) assets of the Portfolios
held by the foreign sub-custodian will be subject only to the
instructions of the Custodian or its agents.
3.5 Access of Independent Accountants of the Fund. Upon request of the
Fund, the Custodian will use its best efforts to arrange for the
independent accountants of the Fund to be afforded access to the
books and records of any foreign banking institution employed as a
foreign sub-custodian insofar as such books and records relate to
the performance of such foreign banking institution under its
agreement with the Custodian.
3.6 Reports by Custodian. The Custodian will supply to the Fund from
time to time, as mutually agreed upon, statements in respect of
the securities and other assets of the Portfolio(s) held by
foreign sub-custodians, including but not limited to an
identification of entities having possession of the Portfolio(s)
securities and other assets and advices or notifications of any
transfers of securities to or from each custodial account
maintained by a foreign banking institution for the Custodian on
behalf of each applicable Portfolio indicating, as to securities
acquired for a Portfolio, the identity of the entity having
physical possession of such securities.
<PAGE>
3.7 Transactions in Foreign Custody Account
(a) Except as otherwise provided in paragraph (b) of this Section
3.7, the provision of Sections 2.2 and 2.7 of this Contract
shall apply, mutatis mutandis to the foreign securities of the
Fund held outside the United States by foreign sub-custodians.
(b) Notwithstanding any provision of this Contract to the
contrary, settlement and payment for securities received for the
account of each applicable Portfolio and delivery of securities
maintained for the account of each applicable Portfolio may be
effected in accordance with the customary established securities
trading or securities processing practices and procedures in the
jurisdiction or market in which the transaction occurs, including,
without limitation, delivering securities to the purchaser thereof
or to a dealer therefor (or an agent for such purchaser or dealer)
against a receipt with the expectation of receiving later payment
for such securities from such purchaser or dealer.
(c) Securities maintained in the custody of a foreign
sub-custodian may be maintained in the name of such entity's
nominee to the same extent as set forth in Section 2.3 of this
Contract, and the Fund agrees to hold any such nominee harmless
from any liability as a holder of record of such securities.
3.8 Liability of Foreign Sub-Custodians. Each agreement pursuant to
which the Custodian employs a foreign banking institution as a
foreign sub-custodian shall require the institution to exercise
reasonable care in the performance of its duties and to indemnify,
and hold harmless, the Custodian and each Fund from and against
any loss, damage, cost, expense, liability or claim arising out of
or in connection with the institution's performance of such
obligations. At the election of the Fund, it shall be entitled to
be subrogated to the rights of the Custodian with respect to any
claims against a foreign banking institution as a consequence of
any such loss, damage, cost, expense, liability or claim if and to
the extent that the Fund has not been made whole for any such
loss, damage, cost, expense, liability or claim.
3.9 Liability of Custodian. The Custodian shall be liable for the acts
or omissions of a foreign banking institution to the same extent
as set forth with respect to sub-custodians generally in this
Contract and, regardless of whether assets are maintained in the
custody of a foreign banking institution, a foreign securities
depository or a branch of a U.S. bank as contemplated by paragraph
3.12 hereof, the Custodian shall not be liable for any loss,
damage, cost, expense, liability or claim resulting from
nationalization, expropriation, currency restrictions, or acts of
war or terrorism or any loss where the sub-custodian has otherwise
exercised reasonable care. Notwithstanding the foregoing
provisions of this paragraph 3.9, in delegating custody duties to
State Street London Ltd., the Custodian shall not be relieved of
any responsibility to the Fund for any loss due to such
delegation, except such loss as may result from (a) political risk
(including, but not limited to, exchange control restrictions,
confiscation, expropriation, nationalization, insurrection, civil
<PAGE>
strife or armed hostilities) or (b) other losses (excluding a
bankruptcy or insolvency of State Street London Ltd. not caused by
political risk) due to Acts of God, nuclear incident or other
losses under circumstances where the Custodian and State Street
London Ltd. have exercised reasonable care.
3.10 Reimbursement for Advances. If the Fund requires the Custodian to
advance cash or securities for any purpose for the benefit of a
Portfolio including the purchase or sale of foreign exchange or of
contracts for foreign exchange, or in the event that the Custodian
or its nominee shall incur or be assessed any taxes, charges,
expenses, assessments, claims or liabilities in connection with
the performance of this Contract, except such as may arise from
its or its nominee's own negligent action, negligent failure to
act or willful misconduct, any property at any time held for the
account of the applicable Portfolio shall be security therefor and
should the Fund fail to repay the Custodian promptly, the
Custodian shall be entitled to utilize available cash and to
dispose of such Portfolios assets to the extent necessary to
obtain reimbursement.
3.11 Monitoring Responsibilities. The Custodian shall furnish annually
to the Fund, during the month of June, information concerning the
foreign sub-custodians employed by the Custodian. Such information
shall be similar in kind and scope to that furnished to the Fund
in connection with the initial approval of this Contract. In
addition, the Custodian will promptly inform the Fund in the event
that the Custodian learns of a material adverse change in the
financial condition of a foreign sub-custodian or any material
loss of the assets of the Fund or in the case of
any foreign sub-custodian not the subject of an exemptive order
from the Securities and Exchange Commission is notified by such
foreign sub-custodian that there appears to be a substantial
likelihood that its shareholders' equity will decline below $200
million (U.S. dollars or the equivalent thereof) or that its
shareholders' equity has declined below $200 million (in each case
computed in accordance with generally accepted U.S. accounting
principles).
3.12 Branches of U.S. Banks
(a) Except as otherwise set forth in this Contract, the provisions
hereof shall not apply where the custody of the Portfolios assets
are maintained in a foreign branch of a banking institution which
is a "bank" as defined by Section 2(a)(5) of the Investment
Company Act of 1940 meeting the qualification set forth in Section
26(a) of said Act. The appointment of any such branch as a
sub-custodian shall be governed by paragraph 1 of this Contract.
(b) Cash held for each Portfolio of the Fund in the United Kingdom
shall be maintained in an interest bearing account established for
the Fund with the Custodian's London branch, which account shall
be subject to the direction of the Custodian, State Street London
Ltd. or both.
<PAGE>
3.13 Tax Law
The Custodian shall have no responsibility or liability for any
obligations now or hereafter imposed on the Fund or the Custodian
as custodian of the Fund by the tax law of the United States of
America or any state or political subdivision thereof. It shall be
the responsibility of the Fund to notify the Custodian of the
obligations imposed on the Fund or the Custodian as custodian of
the Fund by the tax law of jurisdictions other than those
mentioned in the above sentence, including responsibility for
withholding and other taxes, assessments or other governmental
charges, certifications and governmental reporting. The sole
responsibility of the Custodian with regard to such tax law shall
be to use reasonable efforts to assist the Fund with respect to
any claim for exemption or refund under the tax law of
jurisdictions for which the Fund has provided such information.
4. Payments for Sales or Repurchases or Redemptions of Shares of the Fund
The Custodian shall receive from the distributor for the Shares or fromthe
Transfer Agent of the Fund and deposit into the account of the appropriate
Portfolio such payments as are received for Shares of that Portfolio issued or
sold from time to time by the Fund. The Custodian will provide timely
notification to the Fund on behalf of each such Portfolio and the Transfer Agent
of any receipt by it of payments for Shares of such Portfolio. From such funds
as may be available for the purpose but subject to the limitations of the the
Articles of Incorporation and any applicable votes of the Board of Directors of
the Fund pursuant thereto, the Custodian shall, upon receipt of instructions
from the Transfer Agent, make funds available for payment to holders of Shares
who have delivered to the Transfer Agent a request for redemption or repurchase
of their Shares. In connection with the redemption or repurchase of Shares of a
Portfolio, the Custodian is authorized upon receipt of instructions from the
Transfer Agent to wire funds to or through a commercial bank designated by the
redeeming shareholders. In connection with the redemption or repurchase of
Shares of the Fund, the Custodian shall honor checks drawn on the Custodian by a
holder of Shares, which checks have been furnished by the Fund to the holder of
Shares, when presented to the Custodian in accordance with such procedures and
controls as are mutually agreed upon from time to time between the Fund and the
Custodian.
5. Proper Instructions
Proper Instructions as used throughout this Contract means a writing signed
or initialled by one or more person or persons as the Board of Directors shall
have from time to time authorized. Each such writing shall set forth the
specific transaction or type of transaction involved, including a specific
statement of the purpose for which such action is requested. Oral instructions
will be considered Proper Instructions if the Custodian reasonably believes them
to have been given by a person authorized to give such instructions with respect
to the transaction involved. The Fund shall cause all oral instructions to be
confirmed in writing. Upon receipt of a certificate of the Secretary or an
Assistant Secretary as to the authorization by the Board of Directors of the
Fund accompanied by a detailed description of procedures approved by the Board
of Directors, Proper Instructions may include communications effected directly
between electro-mechanical or electronic devices provided that the Board of
Directors and the Custodian are satisfied that such procedures afford adequate
safeguards for the Portfolios' assets. For purposes of this Section, Proper
<PAGE>
Instructions shall include instructions received by the Custodian pursuant to
any three-party agreement which requires a segregated asset account in
accordance with Section 2.11.
6. Actions Permitted without Express Authority
The Custodian may in its discretion, without express authority from the
Fund on behalf of each applicable Portfolio:
1) make payments to itself or others for minor expenses of
handling securities or other similar items relating to its duties under
this Contract, provided that all such payments shall be accounted for to the
Fund on behalf of the Portfolio;
2) surrender securities in temporary form for securities in definitive
form;
3) endorse for collection, in the name of the Portfolio, checks,
drafts and other negotiable instruments; and
4) in general, attend to all non-discretionary details in
connection with the sale, exchange, substitution, purchase, transfer and
other dealings with the securities and property of the Portfolio except as
otherwise directed by the Board of Directors of the Fund.
7. Evidence of Authority
The Custodian shall be protected in acting upon any instructions, notice,
request, consent, certificate or other instrument or paper believed by it to be
genuine and to have been properly executed by or on behalf of the Fund. The
Custodian may receive and accept a certified copy of a vote of the Board of
Directors of the Fund as conclusive evidence (a) of the authority of any person
to act in accordance with such vote or (b) of any determination or of any action
by the Board of Directors pursuant to the Articles of Incorporation as described
in such vote, and such vote may be considered as in full force and effect until
receipt by the Custodian of written notice to the contrary.
8. Duties of Custodian with Respect to the Books of Account and Calculation of
Net Asset Value and Net Income
The Custodian shall cooperate with and supply necessary information to the
entity or entities appointed by the Board of Directors of the Fund to keep the
books of account of each Portfolio and/or compute the net asset value per share
of the outstanding shares of each Portfolio or, if directed in writing to do so
by the Fund on behalf of the Portfolio, shall itself keep such books of account
and/or compute such net asset value per share. If so directed, the Custodian
shall also calculate daily the net income of the Portfolio as described in the
Fund's currently effective prospectus related to such Portfolio and shall advise
the Fund and the Transfer Agent daily of the total amounts of such net income
and, if instructed in writing by an officer of the Fund to do so, shall advise
the Transfer Agent periodically of the division of such net income among its
various components. The calculations of the net asset value per share and the
daily income of each Portfolio shall be made at the time or times described from
time to time in the Fund's currently effective prospectus related to such
Portfolio.
<PAGE>
9. Records
The Custodian shall with respect to each Portfolio create and maintain all
records relating to its activities and obligations under this Contract in such
manner as will meet the obligations of the Fund under the Investment Company Act
of 1940, with particular attention to Section 31 thereof and Rules 31a-1 and
31a-2 thereunder. All such records shall be the property of the Fund and shall
at all times during the regular business hours of the Custodian be open for
inspection by duly authorized officers, employees or agents of the Fund and
employees and agents of the Securities and Exchange Commission. The Custodian
shall, at the Fund's request, supply the Fund with a tabulation of securities
owned by each Portfolio and held by the Custodian and shall, when requested to
do so by the Fund and for such compensation as shall be agreed upon between the
Fund and the Custodian, include certificate numbers in such tabulations.
10. Opinion of Fund's Independent Accountant
The Custodian shall take all reasonable action, as the Fund on behalf of
each applicable Portfolio may from time to time request, to obtain from year to
year favorable opinions from the Fund's independent accountants with respect to
its activities hereunder in connection with the preparation of the Fund's Form
N-1A, and Form N-SAR or other annual reports to the Securities and Exchange
Commission and with respect to any other requirements of such Commission.
11. Reports to Fund by Independent Public Accountants
The Custodian shall provide the Fund, on behalf of each of the Portfolios
at such times as the Fund may reasonably require, with reports by independent
public accountants on the accounting system, internal accounting control and
procedures for safeguarding securities, futures contracts and options on futures
contracts, including securities deposited and/or maintained in a Securities
System, relating to the services provided by the Custodian under this Contract;
such reports, shall be of sufficient scope and in sufficient detail, as may
reasonably be required by the Fund to provide reasonable assurance that any
material inadequacies and, if there are no such inadequacies, the reports shall
so state.
12. Compensation of Custodian
The Custodian shall be entitled to reasonable compensation for its services
and expenses as Custodian, as agreed upon from time to time between the Fund on
behalf of each applicable Portfolio and the Custodian.
13. Responsibility of Custodian
So long as and to the extent that it is in the exercise of reasonable care,
the Custodian shall not be responsible for the title, validity or genuineness of
any property or evidence of title thereto received by it or delivered by it
pursuant to this Contract and shall be held harmless in acting upon any notice,
request, consent, certificate or other instrument reasonably believed by it to
be genuine and to be signed by the proper party or parties, including any
futures commission merchant acting pursuant to the terms of a three-party
futures or options agreement. The Custodian shall be held to the exercise of
reasonable care in carrying out the provisions of this Contract, but shall be
kept indemnified by and shall be without liability to the Fund for any action
taken or omitted by it in good faith without negligence. It shall be entitled to
rely on and may act upon advice of counsel (who may be counsel for the Fund) on
all matters, and shall be without liability for any action reasonably taken or
omitted pursuant to such advice.
<PAGE>
The Custodian shall be liable for the acts or omissions of a foreign
banking institution appointed pursuant to the provisions of Article 3 to the
same extent as set forth in Article 1 hereof with respect to sub-custodians
located in the United States (except as specifically provided in Article 3.9)
and, regardless of whether assets are maintained in the custody of a foreign
banking institution, a foreign securities depository or a branch of a U.S. bank
as contemplated by paragraph 3.12 hereof, the Custodian shall not be liable for
any loss, damage, cost, expense, liability or claim resulting from, or caused
by, the direction of or authorization by the Fund to maintain custody of any
securities or cash of the Fund in a foreign country including, but not limited
to, losses resulting from nationalization, expropriation, currency restrictions,
or acts of war or terrorism. If the Fund on behalf of a Portfolio requires the
Custodian to take any action with respect to securities, which action involves
the payment of money or which action may, in the opinion of the Custodian,
result in the Custodian or its nominee assigned to the Fund or the Portfolio
being liable for the payment of money or incurring liability of some other form,
the Fund on behalf of the Portfolio, as a prerequisite to requiring the
Custodian to take such action, shall provide indemnity to the Custodian in an
amount and form satisfactory to it.
If the Fund requires the Custodian, its affiliates, subsidiaries or agents,
to advance cash or securities for any purpose (including but not limited to
securities settlements, foreign exchange contracts and assumed settlement) for
the benefit of a Portfolio including the purchase or sale of foreign exchange or
of contracts for foreign exchange or in the event that the Custodian or its
nominee shall incur or be assessed any taxes, charges, expenses, assessments,
claims or liabilities in connection with the performance of this Contract,
except such as may arise from its or its nominee's own negligent action,
negligent failure to act or willful misconduct, any property at any time held
for the account of the applicable Portfolio shall be security therefor and
should the Fund fail to repay the Custodian promptly, the Custodian shall be
entitled to utilize available cash and to dispose of such Portfolio's assets to
the extent necessary to obtain reimbursement.
14. Effective Period, Termination and Amendment
This Contract shall become effective as of its execution, shall continue in
full force and effect until terminated as hereinafter provided, may be amended
at any time by mutual agreement of the parties hereto and may be terminated by
either party by an instrument in writing delivered or mailed, postage prepaid to
the other party, such termination to take effect not sooner than thirty (30)
days after the date of such delivery or mailing; provided, however that the
Custodian shall not with respect to a Portfolio act under Section 2.10 hereof in
the absence of receipt of an initial certificate of the Secretary or an
Assistant Secretary that the Board of Directors of the Fund has approved the
initial use of a particular Securities System by such Portfolio, as required by
Rule 17f-4 under the Investment Company Act of 1940, as amended and that the
Custodian shall not with respect to a Portfolio act under Section 2.10A hereof
in the absence of receipt of an initial certificate of the Secretary or an
Assistant Secretary that the Board of Directors has approved the initial use of
the Direct Paper System by such Portfolio; provided further, however, that the
Fund shall not amend or terminate this Contract in contravention of any
applicable federal or state regulations, or any provision of the Articles of
Incorporation, and further provided, that the Fund on behalf of one or more of
<PAGE>
the Portfolios may at any time by action of its Board of Directors (i)
substitute another bank or trust company for the Custodian by giving notice as
described above to the Custodian, or (ii) immediately terminate this Contract in
the event of the appointment of a conservator or receiver for the Custodian by
the Comptroller of the Currency or upon the happening of a like event at the
direction of an appropriate regulatory agency or court of competent
jurisdiction. Upon termination of the Contract, the Fund on behalf of each
applicable Portfolio shall pay to the Custodian such compensation as may be due
as of the date of such termination and shall likewise reimburse the Custodian
for its costs, expenses and disbursements.
15. Successor Custodian
If a successor custodian for the Fund, of one or more of the Portfolios
shall be appointed by the Board of Directors of the Fund, the Custodian shall,
upon termination, deliver to such successor custodian at the office of the
Custodian, duly endorsed and in the form for transfer, all securities of each
applicable Portfolio then held by it hereunder and shall transfer to an account
of the successor custodian all of the securities of each such Portfolio held in
a Securities System.
If no such successor custodian shall be appointed, the Custodian shall, in
like manner, upon receipt of a certified copy of a vote of the Board of
Directors of the Fund, deliver at the office of the Custodian and transfer such
securities, funds and other properties in accordance with such vote.
In the event that no written order designating a successor custodian or
certified copy of a vote of the Board of Directors shall have been delivered to
the Custodian on or before the date when such termination shall become
effective, then the Custodian shall have the right to deliver to a bank or trust
company, which is a "bank" as defined in the Investment Company Act of 1940,
doing business in Boston, Massachusetts, of its own selection, having an
aggregate capital, surplus, and undivided profits, as shown by its last
published report, of not less than $25,000,000, all securities, funds and other
properties held by the Custodian on behalf of each applicable Portfolio and all
instruments held by the Custodian relative thereto and all other property held
by it under this Contract on behalf of each applicable Portfolio and to transfer
to an account of such successor custodian all of the securities of each such
Portfolio held in any Securities System. Thereafter, such bank or trust company
shall be the successor of the Custodian under this Contract.
In the event that securities, funds and other properties remain in the
possession of the Custodian after the date of termination hereof owing to
failure of the Fund to procure the certified copy of the vote referred to or of
the Board of Directors to appoint a successor custodian, the Custodian shall be
entitled to fair compensation for its services during such period as the
Custodian retains possession of such securities, funds and other properties and
the provisions of this Contract relating to the duties and obligations of the
Custodian shall remain in full force and effect.
16. Interpretive and Additional Provisions
In connection with the operation of this Contract, the Custodian and the
Fund on behalf of each of the Portfolios, may from time to time agree on such
provisions interpretive of or in addition to the provisions of this Contract as
may in their joint opinion be consistent with the general tenor of this
Contract. Any such interpretive or additional provisions shall be in a writing
signed by both parties and shall be annexed hereto, provided that no such
<PAGE>
interpretive or additional provisions shall contravene any applicable federal or
state regulations or any provision of the Articles of Incorporation of the Fund.
No interpretive or additional provisions made as provided in the preceding
sentence shall be deemed to be an amendment of this Contract.
17. Additional Funds
In the event that the Fund establishes one or more series of Shares in
addition to INVESCO European Fund, INVESCO Pacific Basin Fund, INVESCO
International Growth Fund with respect to which it desires to have the Custodian
render services as custodian under the terms hereof, it shall so notify the
Custodian in writing, and if the Custodian agrees in writing to provide such
services, such series of Shares shall become a Portfolio hereunder.
18. Massachusetts Law to Apply
This Contract shall be construed and the provisions thereof interpreted
under and in accordance with laws of The Commonwealth of Massachusetts.
19. Prior Contracts
This Contract supersedes and terminates, as of the date hereof, all prior
contracts between the Fund on behalf of each of the Portfolios and the Custodian
relating to the custody of the Fund's assets.
20. Shareholder Communications Election
Securities and Exchange Commission Rule 14b-2 requires banks which hold
securities for the account of customers to respond to requests by issuers of
securities for the names, addresses and holdings of beneficial owners of
securities of that issuer held by the bank unless the beneficial owner has
expressly objected to disclosure of this information. In order to comply with
the rule, we need you to indicate whether you authorize us to provide your name,
address, and share position to requesting companies whose stock you own. If you
tell us "no", we will not provide this information to requesting companies. If
you tell us "yes" or do not check either "yes" or "no" below, we are required by
the rule to treat you as consenting to disclosure of this information for all
securities owned by the Fund or any funds or accounts established by you. For
your protection, the Rule prohibits the requesting company from using your name
and address for any purpose other than corporate communications. Please indicate
below whether you consent or object by checking one of the alternatives below.
YES [ ] You are authorized to release our name,
address, and share positions.
NO [X] You are not authorized to release our name,
address, and share positions.
<PAGE>
IN WITNESS WHEREOF, each of the parties has caused this instrument
to be executed in its name and behalf by its duly authorized representative and
its seal to be hereunder affixed as of the 1st day of July, 1993.
ATTEST INVESCO INTERNATIONAL FUNDS, INC.
/s/ Glen A. Payne By /s/ John M. Butler
- -------------------------- ----------------------------------
ATTEST STATE STREET BANK AND TRUST COMPANY
/s/ Thomas A. Forrester /s/ Ronald E. Logue
- -------------------------- --------------------------------
Assistant Secretary Executive Vice President
DATA ACCESS SERVICES ADDENDUM TO CUSTODIAN AGREEMENT
AGREEMENT between each Fund listed on Appendix A, (individually a
"Customer" and collectively, the "Customers") and State Street Bank and Trust
Company ("State Street").
PREAMBLE
WHEREAS, State Street has been appointed as custodian of certain assets of
each Customer pursuant to a certain Custodian Agreement (the "Custodian
Agreement") for each of the respective Customers;
WHEREAS, State Street has developed and utilizes proprietary accounting and
other systems, including State Street's proprietary Multicurrency HORIZON(R)
Accounting System, in its role as custodian of each Customer, and maintains
certain Customer-related data ("Customer Data") in databases under the control
and ownership of State Street (the "Data Access Services"); and
WHEREAS, State Street makes available to each Customer certain Data Access
Services solely for the benefit of the Customer, and intends to provide
additional services, consistent with the terms and conditions of this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein contained, and for other good and valuable consideration, the parties
agree as follows:
1. SYSTEM AND DATA ACCESS SERVICES
a. System. Subject to the terms and conditions of this Agreement, State
Street hereby agrees to provide each Customer with access to State Street's
Multicurrency HORIZON(R) Accounting System and the other information systems
(collectively, the "System") as described in Attachment A, on a remote basis for
the purpose of obtaining reports, solely on computer hardware, system software
and telecommunication links, as listed in Attachment B (the "Designated
Configuration") of the Customer, or certain third parties approved by State
Street that serve as investment advisors or investment managers (the "Investment
Advisor") or independent auditors (the "Independent Auditors") of a Customer and
solely with respect to the Customer or on any designated substitute or back-up
equipment configuration with State Street's written consent, such consent not to
be unreasonably withheld.
b. Data Access Services. State Street agrees to make available to each
Customer the Data Access Services subject to the terms and conditions of this
Agreement and data access operating standards and procedures as may be issued by
State Street from time to time. The ability of each Customer to originate
electronic instructions to State Street on behalf of each Customer in order to
(i) effect the transfer or movement of cash or securities held under custody by
State Street or (ii) transmit accounting or other information (such transactions
are referred to herein as "Client Originated Electronic Financial
Instructions"), and (iii) access data for the purpose of reporting and analysis,
shall be deemed to be Data Access Services for purposes of this Agreement.
<PAGE>
c. Additional Services. State Street may from time to time agree to make
available to a Customer additional Systems that are not described in the
attachments to this Agreement. In the absence of any other written agreement
concerning such additional systems, the term "System" shall include, and this
Agreement shall govern, a Customer's access to and use of any additional System
made available by State Street and/or accessed by the Customer.
2. NO USE OF THIRD PARTY SOFTWARE
State Street and each Customer acknowledge that in connection with the Data
Access Services provided under this Agreement, each Customer will have access,
through the Data Access Services, to Customer Data and to functions of State
Street's proprietary systems; provided, however that in no event will the
Customer have direct access to any third party systems-level software that
retrieves data for, stores data from, or otherwise supports the System.
3. LIMITATION ON SCOPE OF USE
a. Designated Equipment; Designated Location. The System and the Data
Access Services shall be used and accessed solely on and through the Designated
Configuration at the offices of a Customer or the Investment Advisor or
Independent Auditor located in Denver, Colorado ("Designated Location").
b. Designated Configuration; Trained Personnel. State Street shall be
responsible for supplying, installing and maintaining the Designated
Configuration at the Designated Location. State Street and each Customer agree
that each will engage or retain the services of trained personnel to enable both
State Street and the Customer to perform their respective obligations under this
Agreement. State Street agrees to use commercially reasonable efforts to
maintain the System so that it remains serviceable, provided, however, that
State Street does not guarantee or assure uninterrupted remote access use of the
System.
c. Scope of Use. Each Customer will use the System and the Data Access
Services only for the processing of securities transactions, the keeping of
books of account for the Customer and accessing data for purposes of reporting
and analysis. Each Customer shall not, and shall cause its employees and agents
not to (i) permit any third party to use the System or the Data Access Services,
(ii) sell, rent, license or otherwise use the System or the Data Access Services
in the operation of a service bureau or for any purpose other than as expressly
authorized under this Agreement, (iii) use the System or the Data Access
Services for any fund, trust or other investment vehicle without the prior
written consent of State Street, (iv) allow access to the System or the Data
Access Services through terminals or any other computer or telecommunications
facilities located outside the Designated Locations, (v) allow or cause any
information (other than portfolio holdings, valuations of portfolio holdings,
and other information reasonably necessary for the management or distribution of
the assets of the Customer) transmitted from State Street's databases, including
data from third party sources, available through use of the System or the Data
Access Services to be redistributed or retransmitted to another computer,
terminal or other device for other than use for or on behalf of the Customer or
<PAGE>
(vi) modify the System in any way, including without limitation, developing any
software for or attaching any devices or computer programs to any equipment,
system, software or database which forms a part of or is resident on the
Designated Configuration.
d. Other Locations. Except in the event of an emergency or of a planned
System shutdown, each Customer's access to services performed by the System or
to Data Access Services at the Designated Location may be transferred to a
different location only upon the prior written consent of State Street. In the
event of an emergency or System shutdown, each Customer may use any back-up site
included in the Designated Configuration or any other back-up site agreed to by
State Street, which agreement will not be unreasonably withheld. Each Customer
may secure from State Street the right to access the System or the Data Access
Services through computer and telecommunications facilities or devices complying
with the Designated Configuration at additional locations only upon the prior
written consent of State Street and on terms to be mutually agreed upon by the
parties.
e. Title. Title and all ownership and proprietary rights to the System,
including any enhancements or modifications thereto, whether or not made by
State Street, are and shall remain with State Street.
f. No Modification. Without the prior written consent of State Street, a
Customer shall not modify, enhance or otherwise create derivative works based
upon the System, nor shall the Customer reverse engineer, decompile or otherwise
attempt to secure the source code for all or any part of the System.
g. Security Procedures. Each Customer shall comply with data access
operating standards and procedures and with user identification or other
password control requirements and other security procedures as may be issued
from time to time by State Street for use of the System on a remote basis and to
access the Data Access Services. Each Customer shall have access only to the
Customer Data and authorized transactions agreed upon from time to time by State
Street and, upon notice from State Street, the Customer shall discontinue remote
use of the System and access to Data Access Services for any security reasons
cited by State Street; provided, that, in such event, State Street shall, for a
period not less than 180 days (or such other shorter period specified by the
Customer) after such discontinuance, assume responsibility to provide accounting
services under the terms of the Custodian Agreement.
h. Inspections. State Street shall have the right to inspect the use of
the System and the Data Access Services by the Customer and the Investment
Advisor to ensure compliance with this Agreement. The on-site inspections shall
be upon prior written notice to Customer and the Investment Advisor and at
reasonably convenient times and frequencies so as not to result in an
unreasonable disruption of the Customer's or the Investment Advisor's business.
4. PROPRIETARY INFORMATION
a. Proprietary Information. Each Customer acknowledges and State Street
represents that the System and the databases, computer programs, screen formats,
report formats, interactive design techniques, documentation and other
information made available to the Customer by State Street as part of the Data
<PAGE>
Access Services and through the use of the System constitute copyrighted,
trade secret, or other proprietary information of substantial value to State
Street. Any and all such information provided by State Street to each Customer
shall be deemed proprietary and confidential information of State Street
(hereinafter "Proprietary Information"). Each Customer agrees that it will hold
such Proprietary Information in confidence and secure and protect it in a manner
consistent with its own procedures for the protection of its own confidential
information and to take appropriate action by instruction or agreement with its
employees who are permitted access to the Proprietary Information to satisfy its
obligations hereunder. Each Customer further acknowledges that State Street
shall not be required to provide the Investment Advisor or the Investment
Auditor with access to the System unless it has first received from the
Investment Advisor of the Investment Auditor an undertaking with respect to
State Street's Proprietary Information in the form of Attachment C and/or
Attachment C-1 to this Agreement. Each Customer shall use all commercially
reasonable efforts to assist State Street in identifying and preventing any
unauthorized use, copying or disclosure of the Proprietary Information or any
portions thereof or any of the logic, formats or designs contained therein.
b. Cooperation. Without limitation of the foregoing, each Customer shall
advise State Street immediately in the event the Customer learns or has reason
to believe that any person to whom the Customer has given access to the
Proprietary Information, or any portion thereof, has violated or intends to
violate the terms of this Agreement, and each Customer will, at its expense,
cooperate with State Street in seeking injunctive or other equitable relief in
the name of the Customer or State Street against any such person.
c. Injunctive Relief. Each Customer acknowledges that the disclosure of any
Proprietary Information, or of any information which at law or equity ought to
remain confidential, will immediately give rise to continuing irreparable injury
to State Street inadequately compensable in damages at law. In addition, State
Street shall be entitled to obtain immediate injunctive relief against the
breach or threatened breach of any of the foregoing undertakings, in addition to
any other legal remedies which may be available.
d. Survival. The provisions of this Section 4 shall survive the termination
of this Agreement.
5. LIMITATION ON LIABILITY
a. Limitation on Amount and Time for Bringing Action. Each Customer agrees
any liability of State Street to the Customer or any third party arising out of
State Street's provision of Data Access Services or the System under this
Agreement shall be limited to the amount paid by the Customer for he preceding
24 months for such services. In no event shall State Street be liable to the
Customer or any other party for any special, indirect, punitive or consequential
damages even if advised of the possibility of such damages. No action,
regardless of form, arising out of this Agreement may be brought by the Customer
more than two years after the Customer has knowledge that the cause of action
has arisen.
<PAGE>
b. NO OTHER WARRANTIES, WHETHER EXPRESS OR IMPLIED, INCLUDING, WITHOUT
LIMITATION, THE IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A
PARTICULAR PURPOSE, ARE MADE BY STATE STREET. IN NO EVENT WILL STATE STREET BE
LIABLE TO THE CUSTOMER OR ANY OTHER PARTY FOR ANY CONSEQUENTIAL OR INCIDENTAL
DAMAGES WHICH MAY ARISE FROM THE CUSTOMER'S ACCESS TO THE SYSTEM OR USE OF
INFORMATION OBTAINED THEREBY.
c. Third-Party Data. Organizations from which State Street may obtain
certain data included in the System or the Data Access Services are solely
responsible for the contents of such data, and State Street shall have no
liability for claims arising out of the contents of such third-party data,
including, but not limited to, the accuracy thereof.
d. Regulatory Requirements. As between State Street and each Customer, the
Customer shall be solely responsible for the accuracy of any accounting
statements or reports produced using the Data Access Services and the System and
the conformity thereof with any requirements of law.
e. Force Majeure. Neither State Street or a Customer shall be liable for
any costs or damages due to delay or nonperformance under this Agreement arising
out of any cause or event beyond such party's control, including without
limitation, cessation of services hereunder or any damages resulting therefrom
to the other party, or the Customer as a result of work stoppage, power or other
mechanical failure, computer virus, natural disaster, governmental action, or
communication disruption.
6. INDEMNIFICATION
Each Customer agrees to indemnify and hold State Street harmless from any
loss, damage or expense including reasonable attorney's fees, (a "loss")
suffered by State Street arising from (i) the negligence or willful misconduct
in the use by the Customer of the Data Access Services or the System, including
any loss incurred by State Street resulting from a security breach at the
Designated Location or committed by the Customer's employees or agents or the
Investment Advisor or the Independent Auditor of the Customer and (ii) any loss
resulting from incorrect Client Originated Electronic Financial Instructions.
State Street shall be entitled to rely on the validity and authenticity of
Client Originated Electronic Financial Instructions without undertaking any
further inquiry as long as such instruction is undertaken in conformity with
security procedures established by State Street from time to time.
7. FEES
Fees and charges for the use of the System and the Data Access Services and
related payment terms shall be as set forth in the Custody Fee Schedule in
effect from time to time between the parties (the "Fee Schedule"). Any tariffs,
duties or taxes imposed or levied by any government or governmental agency by
reason of the transactions contemplated by this Agreement, including, without
limitation, federal, state and local taxes, use, value added and personal
property taxes (other than income, franchise or similar taxes which may be
imposed or assessed against State Street) shall be borne by each Customer. Any
claimed exemption from such tariffs, duties or taxes shall be supported by
proper documentary evidence delivered to State Street.
<PAGE>
8. TRAINING, IMPLEMENTATION AND CONVERSION
a. Training. State Street agrees to provide training, at a designated
State Street training facility or at the Designated Location, to he Customer's
personnel in connection with the use of the System on the Designated
Configuration. Each Customer agrees that it will set aside, during regular
business hours or at other times agreed upon by both parties, sufficient time to
enable all operators of the System and the Data Access Services, designated by
the Customer, to receive the training offered by State Street pursuant to this
Agreement.
b. Installation and Conversion. State Street shall be responsible for the
technical installation and conversion ("Installation and Conversion") of the
Designated Configuration. Each Customer shall have the following
responsibilities in connection with Installation and Conversion of the System:
(i) The Customer shall be solely responsible for the timely acquisition
and maintenance of the hardware and software that attach to the
Designated Configuration in order to use the Data Access Services at
the Designated Location.
(ii) State Street and the Customer each agree that they will assign
qualified personnel to actively participate during the Installation
and Conversion phase of the System implementation to enable both
parties to perform their respective obligations under this Agreement.
9. SUPPORT
During the term of this Agreement, State Street agrees to provide the
support services set out in Attachment D to this Agreement.
10. TERM OF AGREEMENT
a. Term of Agreement. This Agreement shall become effective on the date of
its execution by State Street and shall remain in full force and effect u til
terminated as herein provided.
b. Termination of Agreement. Any party may terminate this Agreement (i) for
any reason by giving the other parties at least one-hundred and eighty days'
prior written notice in the case of notice of termination by State Street to the
Customer or thirty days' notice in the case of notice from the Customer to State
Street of termination; or (ii) immediately for failure of the other party to
comply with any material term and condition of the Agreement by giving the other
party written notice of termination. In the event the Customer shall cease doing
business, shall become subject to proceedings under the bankruptcy laws (other
than a petition for reorganization or similar proceeding) or shall be
adjudicated bankrupt, this Agreement and the rights granted hereunder shall, at
the option of State Street, immediately terminate with notice to the Customer.
Termination of this Agreement with respect to any given Customer shall in no way
affect the continued validity of this Agreement with respect to any other
Customer. This Agreement shall in any event terminate as to any Customer within
90 days after the termination of the Custodian Agreement applicable to such
Customer.
<PAGE>
c. Termination of the Right to Use. Upon termination of this Agreement for
any reason, any right to use the System and access to the Data Access Services
shall terminate and the Customer shall immediately cease use of the System and
the Data Access Services. Immediately upon termination of this Agreement for any
reason, the Customer shall return to State Street all copies of documentation
and other Proprietary Information in its possession; provided, however, that in
the event that either State Street or the Customer terminates this Agreement or
the Custodian Agreement for any reason other than the Customer's breach, State
Street shall provide the Data Access Services for a period of time and at a
price to be agreed upon by State Street and the Customer.
11. MISCELLANEOUS
a. Assignment; Successors. This Agreement and the rights and obligations
of each Customer and State Street hereunder shall not be assigned by any party
without the prior written consent of the other parties, except that State Street
may assign this Agreement to a success r of all or a substantial portion of its
business, or to a party controlling, controlled by, or under common control with
State Street.
b. Survival. All provisions regarding indemnification, warranty, liability
and limits thereon, and confidentiality and/or protection of proprietary rights
and trade secrets shall survive the termination of this Agreement.
c. Entire Agreement. This Agreement and the attachments hereto constitute
the entire understanding of the parties hereto with respect to the Data Access
Services and the use of the System and supersedes any and all prior or
contemporaneous representations or agreements, whether oral or written, between
the parties as such may relate to the Data Access Services or the System, and
cannot be modified or altered except in a writing duly executed by the parties.
This Agreement is not intended to supersede or modify the duties and liabilities
of the parties hereto under the Custodian Agreement or any other agreement
between the parties hereto except to the extent that any such agreement
specifically refers to the Data Access Services or the System. No single waiver
or any right hereunder shall be deemed to be a continuing waiver.
d. Severability. If any provision or provisions of this Agreement shall be
held to be invalid, unlawful, or unenforceable, the validity, legality, and
enforceability of the remaining provisions shall not in any way be affected or
impaired.
e. Governing Law. This Agreement shall be interpreted and construed in
accordance with the internal laws of The Commonwealth of Massachusetts without
regard to the conflict of laws provisions thereof.
<PAGE>
IN WITNESS WHEREOF, each of the undersigned Funds severally has
caused this Agreement to be duly executed in its name and through its duly
authorized officer as of the date hereof.
STATE STREET BANK AND TRUST COMPANY
By: /s/ Ronald E. Logue
------------------------
Title: Executive Vice President
------------------------
Date: ________________________
EACH FUND LISTED ON APPENDIX A
By: Glen A. Payne
------------------------
Title: Secretary
------------------------
Date: May 19, 1997
------------------------
<PAGE>
APPENDIX A
INVESCO FUNDS
INVESCO Diversified Funds, Inc.
INVESCO Small Company Value Fund
INVESCO Dynamics Fund, Inc.
INVESCO Dynamics Fund, Inc.
INVESCO Emerging Opportunity Funds, Inc.
INVESCO Small Company Growth Fund
INVESCO Worldwide Emerging Markets Fund
INVESCO Growth Fund, Inc.
INVESCO Growth Fund, Inc.
INVESCO Income Funds, Inc.
INVESCO High Yield Fund
INVESCO Select Income Fund
INVESCO Short-Term Bond Fund
INVESCO U.S. Government Bond Fund
INVESCO Industrial Income Fund, Inc.
INVESCO Industrial Income Fund, Inc.
INVESCO International Funds, Inc.
INVESCO European Fund
INVESCO International Growth Fund
INVESCO Pacific Basin Fund
INVESCO Money Market Funds, Inc.
INVESCO Cash Reserves Fund
INVESCO Tax-Free Money Fund
INVESCO U.S. Government Money Fund
INVESCO Multiple Asset Funds, Inc.
INVESCO Balanced Fund
INVESCO Multi-Asset Allocation Fund
INVESCO Specialty Funds, Inc.
INVESCO Asian Growth Fund
INVESCO European Small Company Fund
INVESCO Latin American Growth Fund
INVESCO Realty Fund
INVESCO Worldwide Capital Goods Fund
INVESCO Worldwide Communications Fund
<PAGE>
INVESCO Strategic Portfolios, Inc.
Energy Portfolio
Environmental Services Portfolio
Financial Services Portfolio
Gold Portfolio
Health Sciences Portfolio
Leisure Portfolio
Technology Portfolio
Utilities Portfolio
INVESCO Tax-Free Income Funds, Inc.
INVESCO Tax-Free Intermediate Bond Fund
INVESCO Tax-Free Long-Term Bond Fund
INVESCO Treasurer's Series Trust
INVESCO Treasurer's Money Market Reserve Fund
INVESCO Treasurer's Prime Reserve Fund
INVESCO Treasurer's Special Reserve Fund
INVESCO Treasurer's Tax-Exempt Reserve Fund
INVESCO Value Trust
INVESCO Intermediate Government Bond Fund
INVESCO Total Return Fund
INVESCO Value Equity Fund
INVESCO Variable Investment Funds, Inc.
INVESCO VIF-Dynamics Portfolio
INVESCO VIF-Health Sciences Portfolio
INVESCO VIF-High Yield Portfolio
INVESCO VIF-Industrial Income Portfolio
INVESCO VIF-Small Company Growth Portfolio
INVESCO VIF-Technology Portfolio
INVESCO VIF-Total Return Portfolio
INVESCO VIF-Utilities Portfolio
INVESCO VIF-Growth Portfolio*
*Effective May 1, 1997.
<PAGE>
ATTACHMENT A
Multicurrency HORIZON(R) Accounting System
System Product Description
I. The Multicurrency HORIZON(R) Accounting System is designed to
provide lot level portfolio and general ledger accounting for SEC
and ERISA type requirements and includes the following services:
1) recording of general ledger entries; 2) calculation of daily
income and expense; 3) reconciliation of daily activity with the
trial balance, and 4) appropriate automated feeding mechanisms to
(i) domestic and international settlement systems, (ii) daily,
weekly and monthly evaluation services, (iii) portfolio
performance and analytic services, (iv) customer's internal
computing systems and (v) various State Street provided
information services products.
II. GlobalQuest(R) GlobalQuest(R) is designed to provide customer
access to the following information maintained on The
Multicurrency HORIZON(R) Accounting System: 1) cash transactions and
balances; 2) purchases and sales; 3) income receivables; 4) tax
refund receivables; 5) daily priced positions; 6) open trades; 7)
settlement status; 8) foreign exchange transactions; 9) trade
history; and 10) daily, weekly and monthly evaluation services.
III. HORIZON(R) Gateway. HORIZON(R) Gateway provides customers with
the ability to (i) generate reports using information maintained
on the Multicurrency HORIZON(R) Accounting System which may be viewed
or printed at the customer's location; (ii) extract and download
data from the Multicurrency HORIZON(R) Accounting System; and (iii)
access previous day and historical data. The following
information which may be accessed for these purposes: 1) holdings;
2) holdings pricing; 3) transactions, 4) open trades; 5)
income; 6) general ledger and 7) cash.
<PAGE>
ATTACHMENT B
Designated Configuration
<PAGE>
ATTACHMENT C
Undertaking
The undersigned understands that in the course of its employment as
Investment Advisor to each of the Funds (individually a, "Customer",
collectively, the "Customers") it will have access to State Street Bank and
Trust Company's ("State Street") Multicurrency HORIZON Accounting System and
other information systems (collectively, the "System").
The undersigned acknowledges that the System and the databases, computer
programs, screen formats, report formats, interactive design techniques,
documentation, and other information made available to the Undersigned by State
Street as part of the Data Access Services provided to the Customer and through
the use of the System constitute copyrighted, trade secret, or other proprietary
information of substantial value to State Street. Any and all such information
provided by State Street to the Undersigned shall be deemed proprietary and
confidential information of State Street (hereinafter "Proprietary
Information"). The Undersigned agrees that it will hold such Proprietary
Information in confidence and secure and protect it in a manner consistent with
its own procedures for the protection of its own confidential information and to
take appropriate action by instruction or agreement with its employees who are
permitted access to the Proprietary Information to satisfy its obligations
hereunder.
The Undersigned will not attempt to intercept data, gain access to data in
transmission, or attempt entry into any system or files for which it is not
authorized. It will not intentionally adversely affect the integrity of the
System through the introduction of unauthorized code or data, or through
unauthorized deletion.
Upon notice by State Street for any reason, any right to use the System and
access to the Data Access Services shall terminate and the Undersigned shall
immediately cease use of the System and the Data Access Services. Immediately
upon notice by State Street for any reason, the Undersigned shall return to
State Street all copies of documentation and other Proprietary Information in
its possession.
By: /s/ Glen A. Payne
---------------------
Title: Secretary
---------------------
Date: May 19, 1997
---------------------
<PAGE>
ATTACHMENT D
Support
During the term of this Agreement, State Street agrees to provide the
following on-going support services:
a. Telephone Support. The Customer Designated Persons may contact State
Street's HORIZON(R) Help Desk and Customer Assistance Center between the hours
of 8 a.m. and 6 p.m. (Eastern time) on all business days for the purpose of
obtaining answers to questions about the use of the System, or to report
apparent problems with the System. From time to time, the Customer shall provide
to State Street a list of persons, not to exceed five in number, who shall be
permitted to contact State Street for assistance (such persons being referred to
as "the Customer Designated Persons").
b. Technical Support. State Street will provide technical support to assist
the Customer in using the System and the Data Access Services. The total amount
of technical support provided by State Street shall not exceed 10 resource days
per year. State Street shall provide such additional technical support as is
expressly set forth in the fee schedule in effect from time to time between the
parties (the "Fee Schedule"). Technical support, including during installation
and testing, is subject to the fees and other terms set forth in the Fee
Schedule.
c. Maintenance Support. State Street shall use commercially reasonable
efforts to correct system functions that do not work according to the System
Product Description as set forth on Attachment A in priority order in the next
scheduled delivery release or otherwise as soon as is practicable.
d. System Enhancements. State Street will provide to the Customer any
enhancements to the System developed by State Street and made a part of the
System; provided that, sixty (60) days prior to installing any such enhancement,
State Street shall notify the Customer and shall offer the Customer reasonable
training on the enhancement. Charges for system enhancements shall be as
provided in the Fee Schedule. State Street retains the right to charge for
related systems or products that may be developed and separately made available
for use other than through the System.
e. Custom Modifications. In the event the Customer desires custom
modifications in connection with its use of the System, the Customer shall make
a written request to State Street providing specifications for the desired
modification. Any custom modifications may be undertaken by State Street in its
sole discretion in accordance with the Fee Schedule.
f. Limitation on Support. State Street shall have no obligation to support
the Customer's use of the System: (1) for use on any computer equipment or
telecommunication facilities which does not conform to the Designated
Configuration or (ii) in the event the Customer has modified the System in
breach of this Agreement.
INVESCO FUNDS GROUP, INC.
7800 E. Union Avenue
Denver, Colorado 80237
Telephone: 303-930-6300
November 13, 1997
Mr. Christopher J. Meyers
Assistant Vice President
State Street Bank and Trust Company
1776 Heritage Drive
North Quincy, MA 02171
RE: INVESCO International Funds, Inc.
Dear Chris:
This is to advise you that INVESCO International Funds, Inc. (the "Company") has
established a new series of shares to be known as INVESCO Emerging Markets Fund.
In accordance with the Additional Funds provision in Paragraph 17 of the
Custodian Contract dated July 1, 1993 between the Company and State Street Bank
and Trust Company, the Company hereby requests that you act as Custodian for the
new series under the terms of the Contract.
Please indicate your acceptance of the foregoing by executing two copies of this
Letter Agreement, returning one to the Company and retaining one copy for your
records.
Sincerely,
Glen A. Payne
Secretary
Agreed to this ______ day of November 1997.
STATE STREET BANK AND TRUST COMPANY
By: _____________________________________
Vice President
MOYE, GILES, O'KEEFE, VERMEIRE & GORRELL
A LAW PARTNERSHIP
INCLUDING PROFESSIONAL CORPORATIONS
29TH FLOOR
1225 SEVENTEENTH STREET
DENVER, COLORADO 80202-5529
TELEPHONE (303) 292-2900
TELECOPIER (303) 292-4510
EDWARD F. O'KEEFE, P.C.
May 21, 1993
INVESCO International Funds, Inc.
P.O. Box 2040
Denver, Colorado 80201
Gentlemen:
This is in response to your request for our opinion as to the legality of
the registration of an indefinite number of shares of capital stock ($0.01) par
value) of INVESCO International Funds, Inc., being registered with the
Securities and Exchange Commission under the Investment Company Act of 1940 and
the Securities Act of 1933, as amended (Form N-1A). This share registration is
being requested pursuant to the provisions of Rule 24f-2 under Section 24(f) of
the Investment Company Act of 1940.
We have examined the articles of incorporation of INVESCO International
Funds, Inc., as filed for record with the State Department of Assessments and
Taxation of the State of Marylan, on April 2, 1993; the bylaws; the minute book
setting forth, among other things, the actions taken by the board of directors
authorizing the issue and sale of the corporation's capital stock and related
acts and procedures; the registration statement including all exhibits thereto;
and have made such other examination as deemed necessary in the premises.
Based upon our examination, we are of the opinion that INVESCO
International Funds, Inc. is a corporation duly organized and existing under and
by the virtue of the laws of the State of Maryland, with full power to issue its
shares of capital stock. Said shares, up to the maximum amount hereinafter
indicated, when issued and sold in the manner and on the terms set forth in the
registration statement, will be legally and validly issued, fully paid and
non-assessable shares of the corporation of the par value of $0.01 per share.
The maximum number of shares which has been authorized by the Corporation, and
thus the maximum number which may legally and validly be issued, is five hundred
million shares of such capital stock.
<PAGE>
MOYE, GILES, O'KEEFE, VERMEIRE & GORRELL
INVESCO International Funds, Inc.
May 21, 1993
Page 2
We hereby consent to the use of this opinion in the registration statement
and further consent to the reference to our name therein.
Very truly yours,
MOYE, GILES, O'KEEFE,
VERMEIRE & GORRELL
By: Edward F. O'Keefe, P.C.
By: /s/ Edward F. O'Keefe
---------------------
Edward F. O'Keefe,
President
Consent of Independent Accountants
We hereby consent to the incorporation by reference in the Statement of
Additional Information constituting parts of this Post-Effective Amendment No. 5
to the registration statement on Form N-1A (the "Registration Statement") of our
report dated December 6, 1996, relating to the financial statements and
financial highlights appearing in the October 31, 1996 Annual Report to
Shareholders of INVESCO International Funds, Inc., which is also incorporated by
reference into the Registration Statement. We also consent to the references to
us under the heading "Independent Accountants" and "Financial Statements" in the
Statement of Additional Information.
/s/ Price Waterhouse LLP
- ------------------------
Price Waterhouse LLP
Denver, Colorado
November 14, 1997
PLAN AND AGREEMENT OF DISTRIBUTION PURSUANT TO RULE 12b-1
PLAN AND AGREEMENT made as of 1st of November, 1997, by and between
INVESCO INTERNATIONAL FUNDS, INC., a Maryland corporation (hereinafter called
the "Company"), and INVESCO DISTRIBUTORS, INC., a Delaware corporation
("INVESCO").
WHEREAS, the Company engages in business as an open-end management
investment company, and is registered as such under the Investment Company Act
of 1940, as amended (the "Act"); and
WHEREAS, the Company desires to finance the distribution of its shares in
accordance with this Plan and Agreement of Distribution pursuant to Rule 12b-1
under the Act (the "Plan and Agreement"); and
WHEREAS, INVESCO desires to be retained to perform services in accordance
with such Plan and Agreement and on said terms and conditions; and
WHEREAS, this Plan and Agreement has been approved by a vote of the board
of directors of the Company, including a majority of the directors who are not
interested persons of the Company, as defined in the Act, and who have no direct
or indirect financial interest in the operation of this Plan and Agreement (the
"Disinterested Directors") cast in person at a meeting called for the purpose of
voting on this Plan and Agreement;
NOW, THEREFORE, the Company hereby adopts the Plan set forth herein and
the Company and INVESCO hereby enter into this Agreement pursuant to the Plan in
accordance with the requirements of Rule 12b-1 under the Act, and provide and
agree as follows:
1. The Plan is defined as those provisions of this document by which
the Company adopts a Plan pursuant to Rule 12b- 1 under the Act and
authorizes payments as described herein. The Agreement is defined
as those provisions of this document by which the Company retains
INVESCO to provide distribution services beyond those required by
the General Distribution Agreement between the parties, as are
described herein. The Company may retain the Plan notwithstanding
termination of the Agreement. Termination of the Plan will
automatically terminate the Agreement. The Company is hereby
authorized to utilize the assets of the Company to finance certain
activities in connection with distribution of the Company's shares.
2. Subject to the supervision of the board of directors, the Company
hereby retains INVESCO to promote the distribution of shares of the
Company by providing services and engaging in activities beyond
those specifically required by the Distribution Agreement between
the Company and INVESCO and to provide related services. The
activities and services to be provided by INVESCO hereunder shall
include one or more of the following: (a) the payment of
compensation (including trail commissions and incentive
compensation) to securities dealers, financial institutions and
other organizations, which may include INVESCO-affiliated companies,
that render distribution and administrative services in connection
<PAGE>
with the distribution of the Company's shares; (b) the printing and
distribution of reports and prospectuses for the use of potential
investors in the Company; (c) the preparing and distributing of
sales literature; (d) the providing of advertising and engaging in
other promotional activities, including direct mail solicitation,
and television, radio, newspaper and other media advertisements; and
(e) the providing of such other services and activities as may from
time to time be agreed upon by the Company. Such reports and
prospectuses, sales literature, advertising and promotional
activities and other services and activities may be prepared and/or
conducted either by INVESCO's own staff, the staff of
INVESCO-affiliated companies, or third parties.
3. INVESCO hereby undertakes to use its best efforts to promote sales
of shares of the Company to investors by engaging in those
activities specified in paragraph (2) above as may be necessary and
as it from time to time believes will best further sales of such
shares.
4. The Company is hereby authorized to expend, out of its assets, on a
monthly basis, and shall pay INVESCO to such extent, to enable
INVESCO at its discretion to engage over a rolling twelve-month
period (or the rolling twenty-four month period specified below) in
the activities and provide the services specified in paragraph (2)
above, an amount computed at an annual rate of .25 of 1% of the
average daily net assets of the Company during the month. INVESCO
shall not be entitled hereunder to payment for overhead expenses
(overhead expenses defined as customary overhead not including the
costs of INVESCO's personnel whose primary responsibilities involve
marketing of the INVESCO Funds). Payments by the Company hereunder,
for any month, may be used to compensate INVESCO for: (a) activities
engaged in and services provided by INVESCO during the rolling
twelve-month period in which that month falls, or (b) to the extent
permitted by applicable law, for any month during the first
twenty-four months following the Company's commencement of
operations, activities engaged in and services provided by INVESCO
during the rolling twenty-four month period in which that month
falls, and any obligations incurred by INVESCO in excess of the
limitation described above shall not be paid for out of Fund assets.
The Company shall not be authorized to expend, for any month, a
greater percentage of its assets to pay INVESCO for activities
engaged in and services provided by INVESCO during the rolling
twenty-four month period referred to above than it would otherwise
be authorized to expend out of its assets to pay INVESCO for
activities engaged in and services provided by INVESCO during the
rolling twelve-month period referred to above. No payments will be
made by the Company hereunder after the date of termination of the
Plan and Agreement.
5. To the extent that obligations incurred by INVESCO out of its own
resources to finance any activity primarily intended to result in
the sale of shares of the Company, pursuant to this Plan and
Agreement or otherwise, may be deemed to constitute the indirect
<PAGE>
use of Company assets, such indirect use of Company assets is hereby
authorized in addition to, and not in lieu of, any other payments
authorized under this Plan and Agreement.
6. The Treasurer of INVESCO shall provide to the board of directors of
the Company, at least quarterly, a written report of all moneys
spent by INVESCO on the activities and services specified in
paragraph (2) above pursuant to the Plan and Agreement. Each such
report shall itemize the activities engaged in and services provided
by INVESCO to a Fund as authorized by the penultimate sentence of
paragraph (4) above. Upon request, but no less frequently than
annually, INVESCO shall provide to the board of directors of the
Company such information as may reasonably be required for it to
review the continuing appropriateness of the Plan and Agreement.
7. This Plan and Agreement shall become effective with respect to the
INVESCO European and International Growth Funds on November 1, 1997
and shall continue in effect until November 1, 1998 with respect to
the INVESCO European and INVESCO International Growth Funds.
Thereafter, the Plan and Agreement shall continue in effect from
year to year, provided that the continuance of each is approved at
least annually by a vote of the board of directors of the Company,
including a majority of the Disinterested Directors, cast in person
at a meeting called for the purpose of voting on such continuance.
The Plan may be terminated at any time, without penalty, by the vote
of a majority of the Disinterested Directors or by the vote of a
majority of the outstanding voting securities of the Company.
INVESCO, or the Company, by vote of a majority of the Disinterested
Directors or of the holders of a majority of the outstanding voting
securities of the Company, may terminate the Agreement under this
Plan, without penalty, upon 30 days' written notice to the other
party. In the event that neither INVESCO nor any affiliate of
INVESCO serves the Company as investment adviser, the agreement with
INVESCO pursuant to this Plan shall terminate at such time. The
board of directors may determine to approve a continuance of the
Plan, but not a continuance of the Agreement, hereunder.
8. So long as the Plan remains in effect, the selection and nomination
of persons to serve as directors of the Company who are not
"interested persons" of the Company shall be committed to the
discretion of the directors then in office who are not "interested
persons" of the Company. However, nothing contained herein shall
prevent the participation of other persons in the selection and
nomination process, provided that a final decision on any such
selection or nomination is within the discretion of, and approved
by, a majority of the directors of the Company then in office who
are not "interested persons" of the Company.
9. This Plan may not be amended to increase the amount to be spent by
the Company hereunder without approval of a majority of the
outstanding voting securities of the Company. All material
amendments to the Plan and to the Agreement must be approved by the
vote of the board of directors of the Company, including a majority
of the Disinterested Directors, cast in person at a meeting called
for the purpose of voting on such amendment.
<PAGE>
10. To the extent that this Plan and Agreement constitutes a Plan of
Distribution adopted pursuant to Rule 12b-1 under the Act it shall
remain in effect as such, so as to authorize the use by the Company
of its assets in the amounts and for the purposes set forth herein,
notwithstanding the occurrence of an "assignment," as defined by
the Act and the rules thereunder. To the extent it constitutes an
agreement with INVESCO pursuant to a plan, it shall terminate
automatically in the event of such "assignment." Upon a termination
of the agreement with INVESCO, the Company may continue to make
payments pursuant to the Plan only upon the approval of a new
agreement under this Plan and Agreement, which may or may not be
with INVESCO, or the adoption of other arrangements regarding the
use of the amounts authorized to be paid by the Funds hereunder, by
the Company's board of directors in accordance with the procedures
set forth in paragraph 7 above.
11. The Company shall preserve copies of this Plan and Agreement and all
reports made pursuant to paragraph 6 hereof, together with minutes
of all board of directors meetings at which the adoption, amendment
or continuance of the Plan were considered (describing the factors
considered and the basis for decision), for a period of not less
than six years from the date of this Plan and Agreement, or any such
reports or minutes, as the case may be, the first two years in an
easily accessible place.
12. This Plan and Agreement shall be construed in accordance with the
laws of the State of Colorado and applicable provisions of the Act.
To the extent the applicable laws of the State of Colorado, or any
provisions herein, conflict with the applicable provisions of the
Act, the latter shall control.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this Plan and
Agreement on the 1st day of November, 1997.
INVESCO INTERNATIONAL FUNDS, INC.
By: /s/ Dan J. Hesser
-----------------------------
Dan J. Hesser, President
ATTEST: /s/ Glen A. Payne
------------------------
Glen A. Payne, Secretary
INVESCO DISTRIBUTORS, INC.
By: /s/ Ronald L. Grooms
-----------------------------
Ronald L. Grooms,
Senior Vice President
ATTEST: /s/ Glen A. Payne
------------------------
Glen A. Payne, Secretary
SCHEDULE FOR COMPUTATION OF PERFORMANCE DATA
Total return performance for the one-year, five-year, and ten-year periods ended
October 31, 1997, was 18.07%, 16.07%, and 11.41%, respectively. 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 ammount
invested to the ending redeemable value, according to the following formula:
P(1 + T)exponent n = ERV
where: P = initial payment of $1,000
T = average annual total return
n = number of years
ERV = ending redeemable value of initial payment
The total return performance figures shown above were determined by solving the
above formula for "T" for each time period and Portfolio indicated.
SEC REPORTING
TOTAL RETURN
Formula in release:
P = $1,000 initial payment
T = average annual report return
n = number of years
ERV = ending redeemable value
P(1+T)exponent n = ERV
The formula given on pages 64 and 65 of the Release is written to solve for
Ending Redeemable Value. However, the quantity to be reported is T (Average
Annual Total Return).
Because P, n, and ERV are known values, we have solved for T as follows:
T = nth root of (ERV/P) - 1
and have reported those amounts as the total return.
SCHEDULE FOR COMPUTATION OF PERFORMANCE DATA
Total return performance for the one-year, five-year, and ten-year periods ended
October 31, 1997, was -26.65%, 2.06%, and 2.80%, respectively. 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 ammount
invested to the ending redeemable value, according to the following formula:
P(1 + T)exponent n = ERV
where: P = initial payment of $1,000
T = average annual total return
n = number of years
ERV = ending redeemable value of initial payment
The total return performance figures shown above were determined by solving the
above formula for "T" for each time period and Portfolio indicated.
SEC REPORTING
TOTAL RETURN
Formula in release:
P = $1,000 initial payment
T = average annual report return
n = number of years
ERV = ending redeemable value
P(1+T)exponent n = ERV
The formula given on pages 64 and 65 of the Release is written to solve for
Ending Redeemable Value. However, the quantity to be reported is T (Average
Annual Total Return).
Because P, n, and ERV are known values, we have solved for T as follows:
T = nth root of (ERV/P) - 1
and have reported those amounts as the total return.
SCHEDULE FOR COMPUTATION OF PERFORMANCE DATA
Total return performance for the one-year, five-year, and ten-year periods ended
October 31, 1997, was 2.65%, 9.70%, and 5.38%, respectively. 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 ammount
invested to the ending redeemable value, according to the following formula:
P(1 + T)exponent n = ERV
where: P = initial payment of $1,000
T = average annual total return
n = number of years
ERV = ending redeemable value of initial payment
The total return performance figures shown above were determined by solving the
above formula for "T" for each time period and Portfolio indicated.
SEC REPORTING
TOTAL RETURN
Formula in release:
P = $1,000 initial payment
T = average annual report return
n = number of years
ERV = ending redeemable value
P(1+T)exponent n = ERV
The formula given on pages 64 and 65 of the Release is written to solve for
Ending Redeemable Value. However, the quantity to be reported is T (Average
Annual Total Return).
Because P, n, and ERV are known values, we have solved for T as follows:
T = nth root of (ERV/P) - 1
and have reported those amounts as the total return.
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000906334
<NAME> INVESCO INTERNATIONAL FUNDS, INC.
<SERIES>
<NUMBER> 1
<NAME> INVESCO EUROPEAN FUND
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<NUMBER-OF-SHARES-SOLD> 31746297
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<ACCUMULATED-NII-PRIOR> 507201
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</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000906334
<NAME> INVESCO INTERNATIONAL FUNDS, INC.
<SERIES>
<NUMBER> 2
<NAME> INVESC0 PACIFIC BASIN FUND
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> OCT-31-1996
<PERIOD-END> OCT-31-1996
<INVESTMENTS-AT-COST> 139039425
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<ASSETS-OTHER> 61796
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<DIVIDEND-INCOME> 2564897
<INTEREST-INCOME> 472651
<OTHER-INCOME> (248194)
<EXPENSES-NET> 2861720
<NET-INVESTMENT-INCOME> (72366)
<REALIZED-GAINS-CURRENT> 10089266
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<DISTRIBUTIONS-OF-INCOME> 432102
<DISTRIBUTIONS-OF-GAINS> 2389197
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 45840305
<NUMBER-OF-SHARES-REDEEMED> 46568736
<SHARES-REINVESTED> 188387
<NET-CHANGE-IN-ASSETS> (4503745)
<ACCUMULATED-NII-PRIOR> 426568
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<OVERDISTRIB-NII-PRIOR> 0
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<GROSS-EXPENSE> 2979071
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<PER-SHARE-NAV-BEGIN> 13.83
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<EXPENSE-RATIO> 2
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000906334
<NAME> INVESCO INTERNATIONAL FUNDS, INC.
<SERIES>
<NUMBER> 3
<NAME> INVESCO INTERNATIONAL GROWTH FUND
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> OCT-31-1996
<PERIOD-END> OCT-31-1996
<INVESTMENTS-AT-COST> 79803330
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<OTHER-ITEMS-ASSETS> 590335
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<PAID-IN-CAPITAL-COMMON> 80877433
<SHARES-COMMON-STOCK> 5594587
<SHARES-COMMON-PRIOR> 4778725
<ACCUMULATED-NII-CURRENT> 131783
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 3783899
<OVERDISTRIBUTION-GAINS> 0
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<DIVIDEND-INCOME> 1847954
<INTEREST-INCOME> 310411
<OTHER-INCOME> (215531)
<EXPENSES-NET> 1555755
<NET-INVESTMENT-INCOME> 387079
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<DISTRIBUTIONS-OF-GAINS> 2897940
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<NUMBER-OF-SHARES-SOLD> 21434516
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<PER-SHARE-NII> 0.07
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</TABLE>
POWER OF ATTORNEY
The person executing this Power of Attorney hereby appoints Edward F.
O'Keefe and Glen A. Payne, or either of them, as his attorney-in-fact to execute
and to file such Registration Statements under federal and state securities laws
and such Post-Effective Amendments to such Registration Statements of the
hereinafter described entities as such attorney-in-fact, or either of them, may
deem appropriate:
INVESCO Capital Appreciation Funds, Inc.
INVESCO Diversified Funds, Inc.
INVESCO Emerging Opportunity Funds, Inc.
INVESCO Growth Fund, Inc.
INVESCO Income Funds, Inc.
INVESCO Industrial Income Fund, Inc.
INVESCO International Funds, Inc.
INVESCO Money Market Funds, Inc.
INVESCO Multiple Asset Funds, Inc.
INVESCO Specialty Funds, Inc.
INVESCO Strategic Portfolios, Inc.
INVESCO Tax-Free Income Funds, Inc.
INVESCO Value Trust
INVESCO Variable Investment Funds, Inc.
This Power of Attorney, which shall not be affected by the disability of
the undersigned, is executed and effective as of the 25th day of August, 1997.
/s/ Wendy L. Gramm
------------------------------------------
Wendy L. Gramm
STATE OF District of )
Columbia )
COUNTY OF )
SUBSCRIBED, SWORN TO AND ACKNOWLEDGED before me by Wendy L.
Gramm, as a director or trustee of each of the above-described entities, this
25th day of August, 1997.
/s/ Margaret Foster
------------------------------------------
Notary Public
My Commission Expires: Feb. 14, 2000
-------------
POWER OF ATTORNEY
The person executing this Power of Attorney hereby appoints Edward F.
O'Keefe and Glen A. Payne, or either of them, as his attorney-in-fact to execute
and to file such Registration Statements under federal and state securities laws
and such Post-Effective Amendments to such Registration Statements of the
hereinafter described entities as such attorney-in-fact, or either of them, may
deem appropriate:
INVESCO Diversified Funds, Inc.
INVESCO Dynamics Fund, Inc.
INVESCO Emerging Opportunity Funds, Inc.
INVESCO Growth Fund, Inc.
INVESCO Income Funds, Inc.
INVESCO Industrial Income Fund, Inc.
INVESCO International Funds, Inc.
INVESCO Money Market Funds, Inc.
INVESCO Multiple Asset Funds, Inc.
INVESCO Specialty Funds, Inc.
INVESCO Strategic Portfolios, Inc.
INVESCO Tax-Free Income Funds, Inc.
INVESCO Value Trust
INVESCO Variable Investment Funds, Inc.
This Power of Attorney, which shall not be affected by the disability of
the undersigned, is executed and effective as of the 4th day of June, 1997.
/s/ Larry Soll
------------------------------------------
Larry Soll
STATE OF WASHINGTON )
)
COUNTY OF SAN JUAN )
SUBSCRIBED, SWORN TO AND ACKNOWLEDGED before me by Larry Soll, as a
director or trustee of each of the above-described entities, this 4th day of
June, 1997.
Mary Paulette Weaver
------------------------------------------
Notary Public
My Commission Expires: 1-27-99
