PROSPECTUS
March 1, 1997
INVESCO EUROPEAN FUND
INVESCO PACIFIC BASIN FUND
INVESCO EUROPEAN FUND seeks to achieve capital appreciation by investing
principally in equity securities of companies domiciled in specified European
countries.
INVESCO PACIFIC BASIN FUND seeks to achieve capital appreciation by
investing principally in equity securities of companies domiciled in specified
Far Eastern or Western Pacific countries.
Each Fund is a series of INVESCO International Funds, Inc. (the "Company"),
an open-end management investment company consisting of three separate funds,
each of which represents a separate portfolio of investments. This prospectus
relates to shares of INVESCO European Fund and INVESCO Pacific Basin Fund (also
sometimes jointly referred to as the "Funds"). A separate prospectus is
available upon request from INVESCO Funds Group, Inc. for the Company's third
fund, INVESCO International Growth Fund. Additional funds may be offered in the
future.
Both Funds' investments may consist in part of securities that may be
deemed to be speculative. (See "Investment Objectives and Policies.")
This prospectus provides you with the basic information you should know
before investing in either of the Funds. You should read it and keep it for
future reference. A Statement of Additional Information containing further
information about the Funds, dated March 1, 1997, has been filed with the
Securities and Exchange Commission and is incorporated by reference into this
prospectus. To obtain a free copy, write to INVESCO Funds Group, Inc., P. O. Box
173706, Denver, Colorado 80217-3706; or call 1-800- 525-8085; or on the World
Wide Web: 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 FUNDS ARE NOT DEPOSITS OR OBLIGATIONS OF,
OR GUARANTEED OR ENDORSED BY, ANY BANK OR OTHER FINANCIAL
INSTITUTION. THE SHARES OF THE FUNDS ARE NOT FEDERALLY INSURED BY
THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE
BOARD OR ANY OTHER AGENCY.
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<PAGE>
TABLE OF CONTENTS
Page
ANNUAL FUND EXPENSES....................................................... 2
FINANCIAL HIGHLIGHTS....................................................... 3
PERFORMANCE DATA........................................................... 5
INVESTMENT OBJECTIVES AND POLICIES......................................... 5
RISK FACTORS............................................................... 8
THE FUNDS AND THEIR MANAGEMENT............................................. 9
HOW SHARES CAN BE PURCHASED................................................ 11
SERVICES PROVIDED BY THE FUNDS............................................. 12
HOW TO REDEEM SHARES....................................................... 14
TAXES, DIVIDENDS AND CAPITAL GAIN DISTRIBUTIONS............................ 16
ADDITIONAL INFORMATION..................................................... 16
<PAGE>
ANNUAL FUND EXPENSES
The Funds whose shares are offered through this prospectus are INVESCO
European Fund and INVESCO Pacific Basin Fund. These Funds are 100% no-load;
there are no fees to purchase, exchange or redeem shares, nor any ongoing
marketing ("12b-1") expenses. Lower expenses benefit Fund shareholders by
increasing the Fund's total return.
Shareholder Transaction Expenses European Pacific Basin
- -------------------------------- -------- -------------
Sales load "charge" on purchases None None
Sales load "charge" on reinvested
dividends None None
Redemption fees None None
Exchange fees None None
Annual Fund Operating Expenses
(as a percentage of average net assets)
Management Fee 0.75% 0.75%
12b-1 Fees None None
Other Expenses 0.61% 0.85%
Transfer Agency Fee(1) 0.35% 0.47%
General Services, Administrative
Services, Registration,
Postage(2) 0.26% 0.38%
Total Fund Operating Expenses(3) 1.36% 1.60%
(1) Consists of the transfer agency fee described under
"Additional Information - Transfer and Dividend Disbursing Agent."
(2) 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 furnished under an Administrative
Services Agreement, costs of registration of Fund shares under applicable laws,
and costs of printing and distributing reports to shareholders.
(3) It should be noted that the Funds' actual total operating expenses
were lower than the figures shown because the Funds' custodian fees and transfer
agency fees were reduced under an expense offset arrangement. However, as a
result of an SEC requirement for mutual funds to state their total operating
expenses without crediting any such expense offset arrangement, the figures
shown above do not reflect these reductions. In comparing expenses for different
years, please note that the Ratios of Expenses to Average Net Assets shown under
"Financial Highlights" do reflect any reductions for periods prior to the fiscal
year ended October 31, 1996. See "The Funds and Their Management."
<PAGE>
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 5 Years 10 Years
------ ------- ------- --------
INVESCO European Fund $14 $43 $75 $164
INVESCO Pacific Basin Fund $16 $51 $88 $191
The purpose of the foregoing table is to assist investors in understanding
the various costs and expenses that an investor in the Funds will bear directly
or indirectly. Such expenses are paid from the Funds' assets. (See "The Funds
and Their Management.") The Funds charge no sales load, redemption fee or
exchange fee and bear no distribution expenses. THE EXAMPLE SHOULD NOT BE
CONSIDERED A REPRESENTATION OF PAST OR 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 past or future
annual returns, which may be greater or less than the assumed amount.
<PAGE>
FINANCIAL HIGHLIGHTS
(For a Fund Share Outstanding Throughout Each Period)
The following information has been audited by Price Waterhouse LLP,
independent accountants. This information should be read in conjunction with
audited financial statements and the Report of Independent Accountants thereon
appearing in the Funds' 1996 Annual Report to Shareholders which is incorporated
by reference into the Statement of Additional Information. Both are available
without charge by contacting INVESCO Funds Group, Inc. at the address or
telephone number on the cover of this prospectus.
<TABLE>
<CAPTION>
Year Ended October 31
---------------------------------------------------------------------------------------
1996 1995 1994 1993 1992 1991 1990 1989 1988 1987
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
European Fund
PER SHARE DATA
Net Asset Value -
Beginning of Period $14.09 $12.95 $12.20 $10.14 $11.14 $11.04 $10.03 $ 9.04 $ 7.98 $ 8.31
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INCOME FROM INVESTMENT
OPERATIONS
Net Investment Income 0.05 0.23 0.16 0.14 0.20 0.22 0.26 0.11 0.09 0.05
Net Gains or (Losses) on
Securities (Both Realized
and Unrealized) 3.00 1.12 0.75 2.06 (1.00) 0.26 1.01 0.99 1.05 (0.32)
---------------------------------------------------------------------------------------
Total from Investment
Operations 3.05 1.35 0.91 2.20 (0.80) 0.48 1.27 1.10 1.14 (0.27)
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LESS DISTRIBUTIONS
Dividends from Net
Investment Income 0.08 0.21 0.16 0.14 0.20 0.21 0.26 0.11 0.08 0.05
Distributions from
Capital Gains 1.21 0.00 0.00 0.00 0.00 0.17 0.00 0.00 0.00 0.01
---------------------------------------------------------------------------------------
Total Distributions 1.29 0.21 0.16 0.14 0.20 0.38 0.26 0.11 0.08 0.06
---------------------------------------------------------------------------------------
Net Asset Value -
End of Period $15.85 $14.09 $12.95 $12.20 $10.14 $11.14 $11.04 $10.03 $9.04 $7.98
=======================================================================================
TOTAL RETURN 23.47% 10.42% 7.43% 21.78% (7.22%) 4.34% 12.70% 12.12% 14.34% (3.25%)
<PAGE>
RATIOS
Net Assets - End of Period
($000 Omitted) $300,588 $224,200 $349,842 $270,544 $117,276 $74,497 $83,521 $10,910 $6,801 $9,537
Ratio of Expenses to Average
Net Assets 1.36%@ 1.40%@ 1.20% 1.28% 1.29% 1.43% 1.29% 1.78% 1.88% 1.50%
Ratio of Net Investment
Income to Average
Net Assets 0.37% 1.26% 1.28% 1.76% 2.23% 1.83% 3.38% 1.57% 1.08% 1.44%
Portfolio Turnover Rate 91% 96% 70% 44% 87% 61% 20% 118% 75% 131%
Average Commission Rate
Paid^^ $0.0367 - - - - - - - - -
</TABLE>
@ Ratio is based on Total Expenses of the Fund, which is before any expense
offset arrangements.
^^ The average commission rate paid is the total brokerage commissions paid on
applicable purchases and sales of securities for the period divided by the total
number of related shares purchased or sold, which is required to be disclosed
for fiscal years beginning September 1, 1995 and thereafter.
<PAGE>
Financial Highlights (Continued)
(For a Fund Share Outstanding Throughout Each Period)
<TABLE>
<CAPTION>
Year Ended October 31
---------------------------------------------------------------------------------------
1996 1995 1994 1993< 1992 1991 1990 1989 1988 1987
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Pacific Basin Fund
PER SHARE DATA
Net Asset Value -
Beginning of Period $13.83 $17.07 $15.11 $11.02 $13.19 $11.95 $14.24 $12.24 $ 9.68 $11.52
---------------------------------------------------------------------------------------
INCOME FROM INVESTMENT
OPERATIONS
Net Investment Income (Loss) (0.02) 0.06 0.04 0.04 0.07 0.11 0.05 0.02 (0.02) 0.07
Net Gains or (Losses) on
Securities (Both Realized
and Unrealized) 0.51 (1.45) 2.28 4.09 (2.18) 1.23 (1.97) 2.00 2.58 1.27
---------------------------------------------------------------------------------------
Total from Investment
Operations 0.49 (1.39) 2.32 4.13 (2.11) 1.34 (1.92) 2.02 2.56 1.34
---------------------------------------------------------------------------------------
LESS DISTRIBUTIONS
Dividends from Net
Investment Income 0.03 0.06 0.04 0.04 0.06 0.10 0.09 0.02 0.00 0.07
Distributions from
Capital Gains 0.18 1.79 0.32 0.00 0.00 0.00 0.28 0.00 0.00 3.11
---------------------------------------------------------------------------------------
Total Distributions 0.21 1.85 0.36 0.04 0.06 0.10 0.37 0.02 0.00 3.18
---------------------------------------------------------------------------------------
Net Asset Value -
End of Period $14.11 $13.83 $17.07 $15.11 $11.02 $13.19 $11.95 $14.24 $12.24 $9.68
=======================================================================================
TOTAL RETURN 3.55% (8.31%) 15.63% 37.51% (16.03%) 11.27% (13.47%) 16.54% 26.36% 11.72%
RATIOS
Net Assets - End of Period
($000 Omitted) $149,870 $154,374 $352,888 $299,192 $26,488 $27,683 $16,871 $23,642 $28,364 $35,953
Ratio of Expenses to
Average Net Assets 1.60%@ 1.52%@ 1.24% 1.22% 1.78% 1.87% 1.79% 1.62% 1.62% 1.26%
Ratio of Net Investment
Income (Loss) to
Average Net Assets (0.04%) 0.37% 0.28% 0.63% 0.66% 0.99% 0.36% 0.13% (0.12%) 0.39%
Portfolio Turnover Rate 70% 56% 70% 30% 123% 89% 93% 86% 69% 155%
Average Commission Rate
Paid^^ $0.0148 - - - - - - - - -
</TABLE>
<PAGE>
< The per share information was computed based on weighted average shares.
@ Ratio is based on Total Expenses of the Fund, which is before any expense
offset arrangements.
^ The average commission rate paid is the total brokerage commissions paid on
applicable purchases and sales of securities for the period divided by the total
number of related shares purchased or sold, which is required to be disclosed
for fiscal years beginning September 1, 1995 and thereafter.
<PAGE>
PERFORMANCE DATA
From time to time, the Funds advertise their total return performance.
These figures are based upon historical investment results and are not intended
to indicate future performance. Total return is computed by calculating the
percentage change in value of an investment, assuming reinvestment of all income
dividends and capital gain distributions, to the end of a specified period.
Cumulative total return reflects actual performance over a stated period of
time. Average annual total return is a hypothetical rate of return that, if
achieved annually, would have produced the same cumulative total return if
performance had been constant over the entire period.
Thus, a given report of total return performance should not be considered
as representative of future performance. The Funds charge no sales load,
redemption fee or exchange fee which would affect the total return computation.
In conjunction with performance reports and/or analyses of shareholder
service for the Funds, comparative data between the Funds' performance for a
given period and recognized indices of investment results for the same period,
and/or assessments of the quality of shareholder service, may be provided to
shareholders. Such indices include indices provided by Dow Jones & Company,
Standard & Poor's Ratings Services, a division of The McGraw-Hill Companies,
Inc., Lipper Analytical Services, Inc., Lehman Brothers, National Association of
Securities Dealers Automated Quotations, Frank Russell Company, Value Line
Investment Survey, the American Stock Exchange, Morgan Stanley Capital
International, Wilshire Associates, the Financial Times-Stock Exchange, the New
York Stock Exchange, the Nikkei Stock Average and 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 Funds in performance reports, will be drawn from the "European
Region Funds," in the case of INVESCO European Fund, and "Pacific Region Funds,"
in the case of INVESCO Pacific Basin Fund, Lipper mutual fund groupings, in
addition to the broad-based Lipper general fund groupings.
INVESTMENT OBJECTIVES AND POLICIES
The Company consists of three separate portfolios of investments, each
represented by a different class of the Company's common stock. This prospectus
relates to the INVESCO European Fund and INVESCO Pacific Basin Fund; a separate
prospectus for INVESCO International Growth Fund is available.
The investment objective of the INVESCO European and Pacific Basin Funds
is to seek capital appreciation. Each Fund invests primarily in the equity
securities (common stocks and securities convertible into common stocks,
including convertible debt obligations and convertible preferred stock) of
companies domiciled in a particular geographic region, which may be either
established, well-capitalized companies or newly-formed, small-cap companies.
The Funds have not established any minimum investment standards, such as an
issuer's asset level, earnings history, type of industry, dividend payment
history, etc., with respect to the Funds' investments in foreign equity
<PAGE>
securities and, therefore, investors in the Funds should consider that
investments may consist in part of securities which may be deemed to be
speculative.
INVESCO European Fund. Under normal conditions, at least 80% of the total
assets of INVESCO European Fund are invested in the equity securities of
companies domiciled in the following European countries: England, France,
Germany, Belgium, Italy, the Netherlands, Switzerland, Denmark, Sweden, Norway,
Finland and Spain. The economies of these countries may vary widely in their
condition and may be subject to sudden changes that could have a positive or
negative impact on the Fund. The securities in which the Fund invests typically
will be listed on the principal stock exchanges in such countries but also may
be traded on regional stock exchanges or on the over-the-counter market in these
countries. There are no limitations on the percentage of the Fund's assets which
may be invested in companies domiciled in any one country.
INVESCO Pacific Basin Fund. Under normal conditions, at least 80% of the
total assets of INVESCO Pacific Basin Fund are invested in the equity securities
of companies domiciled in the following Far Eastern or Western Pacific
countries: Japan, Australia, Hong Kong, Malaysia, Singapore and the Philippines.
The economies of these countries may vary widely in their condition and may be
subject to sudden changes that could have a positive or negative impact on the
Fund. The equity securities in which the Fund invests typically will be listed
on the principal stock exchanges in such countries but also may be traded on
regional stock exchanges or on the over-the-counter market in these countries.
While it is anticipated that substantial investments will be made in companies
domiciled in Japan, there are no limitations on the percentage of the Fund's
assets which may be invested in companies domiciled in any one Far Eastern or
Western Pacific country.
The balance of each Fund's total assets may be held as cash or invested in
any securities or other instruments deemed appropriate at the time of investment
by the Funds' investment adviser and sub-adviser (collectively, "Fund
Management"), consistent with the Funds' investment policies and restrictions.
These investments include debt securities issued by companies domiciled in the
Funds' respective geographic sectors, and debt or equity securities issued
by companies domiciled outside the Funds' respective geographic sectors. Such
debt securities either will be investment grade (rated Baa or higher by Moody's
Investors Service, Inc. ("Moody's") or BBB or higher by Standard & Poor's
Ratings Services, a division of The McGraw-Hill Companies, Inc. ("S&P")) or, if
unrated, will have been determined by Fund Management to be of investment grade
quality. The Funds are not required to dispose of debt securities whose ratings
are down-graded below investment grade. Such equity securities may be issued by
either established, well-capitalized companies or newly-formed, small-cap
companies and may be traded on national or regional stock exchanges or in the
over-the-counter market. This portion of each Fund's assets also may be invested
in short-term debt obligations maturing no later than one year from the date of
purchase, which are determined by Fund Management to be of high quality.
Investments in high-quality, short-term debt securities will consist of U.S.
government and agency securities, domestic bank certificates of deposit,
commercial paper rated A-2 or higher by S&P or P-2 or higher by Moody's, and
repurchase agreements with banks and securities dealers. In addition, each Fund
may hold cash or invest temporarily in such short-term securities in an amount
up to 100% of its total assets as a temporary defensive measure if Fund
Management determines it to be appropriate for purposes of enhancing liquidity
or preserving capital in light of prevailing market or economic conditions.
<PAGE>
While a Fund is in a defensive position, the opportunity to achieve capital
growth will be limited and, to the extent that this assessment of market
conditions is incorrect, the Fund will be foregoing the opportunity to benefit
from capital growth resulting from increases in the value of equity investments.
There can be no assurance that the Funds will be able to achieve their
investment objective.
The investment objective of each Fund and its investment policies, except
where indicated to the contrary, are deemed to be fundamental policies and thus
may not be changed without prior approval by the holders of a majority of the
outstanding voting securities of the Fund, as defined in the Investment Company
Act of 1940 (the "1940 Act"). In addition, each Fund is subject to certain
investment restrictions which are set forth in the Statement of Additional
Information and which may not be altered without similar approval of the Fund's
shareholders. One of those restrictions limits each Fund's borrowing of money to
borrowings from banks for temporary or emergency purposes (but not for
investment) in an amount not to exceed 10% of net assets of the Fund.
Repurchase Agreements. Investments in short-term securities may include
repurchase agreements. The Funds may enter into repurchase agreements with
respect to debt instruments eligible for investment by the Funds. These
agreements are entered into with member banks of the Federal Reserve System,
registered broker-dealers and registered government securities dealers, which
are deemed creditworthy. A repurchase agreement, which may be considered a
"loan" under the 1940 Act, is a means of investing monies for a short period. In
a repurchase agreement, a Fund acquires a debt instrument (generally a security
issued by the U.S. government or an agency thereof, a banker's acceptance or a
certificate of deposit) subject to resale to the seller at an agreed-upon price
and date (normally, the next business day). In the event that the original
seller defaults on its obligation to repurchase the security, a Fund could incur
costs or delays in seeking to sell such security. To minimize risk, the
securities underlying each repurchase agreement will be maintained with the
Funds' custodian in an amount at least equal to the repurchase price under the
agreement (including accrued interest), and such agreements will be effected
only with parties that meet certain creditworthiness standards established by
the Company's board of directors. A Fund will not enter into a repurchase
agreement maturing in more than seven days if as a result more than 10% of its
total assets would be invested in such repurchase agreements and other illiquid
securities. The Funds have not adopted any limit on the amount of their total
assets that may be invested in repurchase agreements maturing in seven days or
less.
Securities Lending. The Funds also may lend their securities to qualified
brokers, dealers, banks or other financial institutions. This practice permits
the Funds to earn income which, in turn, can be invested in additional
securities to pursue the Funds' investment objectives. Loans of securities by
the Funds will be collateralized by cash, letters of credit, or securities
issued or guaranteed by the U.S. government or its agencies equal to at least
100% of the current market value of the loaned securities, determined on a daily
basis. Lending securities involves certain risks, the most significant of which
is the risk that a borrower may fail to return a portfolio security. The Funds
monitor the creditworthiness of borrowers in order to minimize such risks. The
Funds will not lend any security if, as a result of such loan, the aggregate
value of securities then on loan would exceed 33-1/3% of a Fund's net assets
(taken at market value).
<PAGE>
Country Funds. The Funds may invest in companies domiciled in certain
countries by purchasing common shares of closed-end investment companies
organized to invest in the securities markets of particular countries (so-called
"country funds"). They may do so, however, only where it is not possible for
non-residents to make direct investments in securities of companies in those
countries and where the investment objective of the country fund is consistent
with the Funds' objective of seeking capital appreciation. The Funds may not
purchase shares of a country fund if (a) such a purchase would cause a Fund to
own more than 3% of the total outstanding voting stock of a particular country
fund, or (b) such a purchase would cause a Fund to have more than 5% of its
total assets invested in a particular country fund or more than 10% of its total
assets invested in the securities of other investment companies. Investment in
certain country funds may involve the payment of substantial premiums above the
value of such funds' portfolio securities. Investing in shares of such country
funds presents the additional risk that the market price of the funds' shares
may fall below the funds' net asset values (i.e., that the funds will trade at a
discount from their net asset values). The Funds do not intend to invest in
country funds which are trading at a premium unless, in the judgment of Fund
Management, the potential benefits of such investments justify the payment of
the applicable premiums. To the extent the Funds invest in country funds, the
investment return will be reduced by the operating expenses of such funds,
including fees paid to the investment managers of those funds, resulting in
duplication of advisory fees paid on any Fund assets invested in country funds.
At such time as direct investment in a country is allowed, the Funds will invest
directly in securities of companies domiciled in such country.
RISK FACTORS
Investors should consider the special factors associated with the policies
discussed below in determining the appropriateness of an investment in either of
the Funds. The Funds' policies regarding investments in foreign securities and
foreign currencies are not fundamental and may be changed by vote of the
Company's board of directors.
Foreign Securities. The Funds may invest in foreign securities and may do
so without limitation on the percentage of assets which may be so invested.
Investments in securities of foreign companies and in foreign markets involve
certain additional risks not associated with investments in domestic companies
and markets. For U.S. investors, the returns on foreign securities are
influenced not only by the returns on the foreign investments themselves but
also by currency fluctuations. That is, when the U.S. dollar generally rises
against foreign currencies, returns on foreign securities for a U.S. investor
may decrease. By contrast, in a period when the U.S. dollar generally declines,
those returns may increase.
Other aspects of international investing to consider include:
-less publicly available information than is generally
available about U.S. issuers;
-differences in accounting, auditing and financial reporting
standards;
<PAGE>
-generally higher commission rates on foreign portfolio
transactions and longer settlement periods;
-smaller trading volumes and generally lower liquidity of foreign stock
markets, which may cause greater price volatility;
-less government regulation of stock exchanges, brokers and
listed companies abroad than in the United States; and
-investments in certain countries may be subject to foreign withholding
taxes, which may reduce dividend income or capital gains payable to
shareholders.
There is also the possibility of expropriation or confiscatory taxation;
adverse changes in investment or exchange control regulations; political
instability; potential restrictions on the flow of international capital; and
the possibility of the Funds experiencing difficulties in pursuing legal
remedies and collecting judgments.
When the Funds invest in foreign securities, such securities are usually
denominated in foreign currency and the Funds may temporarily hold funds in
foreign currencies. Thus, the Funds' share values are affected by changes in
currency exchange rates. Because the Funds' assets will be invested in foreign
securities and because substantially all revenues will be received in foreign
currencies, the dollar equivalent of the Funds' net assets and distributions
would be adversely affected by a reduction in the value of the foreign currency
relative to the United States dollar. The Funds will pay dividends in dollars
and in such event will incur currency conversion costs.
Forward Foreign Currency Contracts. The Funds 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 Funds hold 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 Funds have not adopted any limitations on their ability to use
forward contracts as a hedge against fluctuations in foreign exchange rates, the
Funds do not attempt to hedge all of their foreign investment positions and will
enter into forward contracts only to the extent, if any, deemed appropriate by
Fund Management. The Funds 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 value of a currency in the foregoing
manner does not eliminate fluctuations in the prices of portfolio securities or
prevent losses if the prices of such securities decline. Furthermore, such
hedging transactions preclude the opportunity for gain if the value of the
hedged currency should rise. No predictions can be made with respect to whether
the total of such transactions will result in a better or a worse position than
had the Funds 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 Funds' limitation on investing in illiquid securities, discussed below.
For additional information regarding forward foreign currency contracts, see the
Company's Statement of Additional Information.
<PAGE>
Illiquid and Rule 144A Securities. The Funds are authorized to invest in
securities which 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, a Fund
will not purchase any such security if the purchase would cause the Fund to
invest more than 10% of its total assets, measured at the time of purchase, in
illiquid securities. 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"). The liquidity of a 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.
Portfolio Turnover. There are no fixed limitations regarding portfolio
turnover. Although the Funds do not trade for short-term profits, securities may
be sold without regard to the time they have been held in a Fund when, in the
opinion of Fund Management, investment considerations warrant such action. As a
result, under certain market conditions, the portfolio turnover rate for each
Fund may exceed 100% and may be higher than that of other investment companies
seeking capital appreciation. Increased portfolio turnover would cause a Fund to
incur greater brokerage costs than would otherwise be the case and may result in
the acceleration of capital gains that are taxable when distributed to
shareholders. The Funds' portfolio turnover rates are set forth under "Financial
Highlights" and, along with the Company's brokerage allocation policies, are
discussed in the Statement of Additional Information.
THE FUNDS AND THEIR 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 Funds'
predecessor portfolios, the European Portfolio and Pacific Basin Portfolio of
Financial Strategic Portfolios, Inc., which was incorporated under the laws of
Maryland on August 10, 1983. All financial and other information about the Funds
for periods prior to July 1, 1993, relates to such former portfolios. 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.
<PAGE>
Pursuant to an agreement with the Company, INVESCO Funds Group, Inc.
("INVESCO"), 7800 E. Union Avenue, Denver, Colorado, serves as the Company's
investment adviser pursuant to an investment advisory agreement. Under this
agreement, INVESCO is primarily responsible for providing the Funds with various
administrative services and supervising the Funds' daily business affairs. These
services are subject to review by the Company's board of directors.
INVESCO is an indirect, wholly-owned subsidiary of AMVESCO PLC. AMVESCO
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 February 28, 1997, as part of a merger
between INVESCO PLC and A I M Management Group, Inc., thus creating one of the
largest independent investment management businesses in the world. INVESCO and
INVESCO Asset Management Limited ("IAML") will continue to operate under their
existing names. AMVESCO PLC has approximately $150 billion in assets under
management. INVESCO was established in 1932 and, as of October 31, 1996, managed
14 mutual funds, consisting of 39 separate portfolios, with combined assets of
approximately $13.4 billion on behalf of over 829,000 shareholders.
Pursuant to an agreement with INVESCO, IAML serves as the sub-adviser to
INVESCO European Fund and INVESCO Pacific Basin Fund. In that capacity, IAML has
the primary responsibility, under the supervision of INVESCO, for providing
portfolio management services to the Funds. IAML also is an indirect,
wholly-owned subsidiary of AMVESCO PLC. IAML also acts as sub-adviser to the
INVESCO International Growth Fund, the INVESCO European Small Company Fund and
the INVESCO Latin American Growth Fund. Although the Funds are not parties to
the sub-advisory agreement, that agreement has been approved by the shareholders
of the Funds.
Each Fund is managed by a team of portfolio managers. A senior investment
policy group determines the country-by-country allocation of each Fund's assets,
overall stock selection methodology and the ongoing implementation and risk
control policies applicable to each 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.
Each Fund pays INVESCO a monthly advisory fee which is based upon a
percentage of the average net assets of the Fund, determined daily. The maximum
advisory fee payable under the agreement is computed at the annual rate of 0.75%
on the first $350 million of the average net assets of a Fund; 0.65% on the next
$350 million of a Fund's average net assets; and 0.55% on a Fund's average net
assets in excess of $700 million. For the fiscal year ended October 31, 1996,
the Funds paid fees equal to the following percentage of their net assets as
follows: European Fund, 0.75%; Pacific Basin Fund, 0.75%.
Out of the advisory fees which it receives from the Funds, INVESCO pays
IAML, as sub-adviser to these Funds, a monthly fee with respect to each Fund
computed at the following annual rates: 0.45% on the first $350 million of a
Fund's average net assets; 0.40% on the next $350 million of a Fund's average
net assets; and 0.35% on a Fund's average net assets in excess of $700 million.
No fee is paid by either Fund to IAML.
<PAGE>
The Company also has entered into an Administrative Services Agreement
dated February 28, 1997 (the "Administrative Agreement"), with INVESCO. Pursuant
to the Administrative Agreement, INVESCO 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 shareholder accounts in the Funds maintained by certain retirement and
employee benefit plans for the benefit of participants in such plans. For such
services, each Fund pays INVESCO a fee consisting of a base fee of $10,000 per
year, plus an additional incremental fee computed at the annual rate of 0.015%
per year of the average net assets of the Fund. INVESCO also is paid a fee by
the Company for providing transfer agent services. See "Additional Information."
Each Fund's expenses, which are accrued daily, are deducted from its total
income before dividends are paid. Total expenses of the Funds (prior to any
expense offset), including investment advisory fees (but excluding brokerage
commissions, which are a cost of acquiring securities), as a percentage of their
average net assets for the fiscal year ended October 31, 1996, were 1.36% for
INVESCO European Fund and 1.60% for INVESCO Pacific Basin Fund.
Fund Management places orders for the purchase and sale of portfolio
securities with brokers and dealers based upon its evaluation of their financial
responsibility coupled with their ability to effect transactions at the best
available prices. The Funds may place orders for portfolio transactions with
qualified broker-dealers that recommend the Funds to clients, or act as agent in
the purchase of Fund shares for clients, if Fund Management believes that the
quality of 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 compliance policies governing
personal investing. These policies require Fund Management's personnel to
conduct their personal investment activities in a manner that Fund Management
believes is not detrimental to the Funds or Fund Management's other advisory
clients. See the Statement of Additional Information for more detailed
information.
HOW SHARES CAN BE PURCHASED
Shares of each Fund are sold on a continuous basis by INVESCO, as the
Funds' 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 a Fund. To purchase shares of one or both of the Funds, 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 account, as described below in the prospectus section
entitled "Services Provided by the Funds," may open an account without making
any initial investment if they agree to make minimum monthly purchases of $50;
(2) those shareholders investing in an Individual Retirement Account ("IRA"), or
through omnibus accounts where individual shareholder recordkeeping and
sub-accounting are not required, may make initial minimum purchases of $250; (3)
Fund Management may permit a lesser amount to be invested in the Funds under a
federal income tax-sheltered retirement plan (other than an IRA) or under a
group investment plan qualifying as a sophisticated investor; and (4) Fund
Management reserves the right to 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 minimum initial purchase requirement of $1,000,
as described above, does not apply to shareholder account(s) in any of the
INVESCO funds opened prior to January 1, 1993, and thus is not a minimum balance
requirement for those existing accounts. However, for shareholders already
having accounts in any of the INVESCO funds, all initial share purchases in a
new fund account, including those made using the exchange privilege, must meet
the fund's applicable minimum investment requirement.
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 investment requirements. In no case can a bank wire order or a
telephone order be in an amount less than $1,000. For further information, the
purchaser may call the Company'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, Denver, Colorado 80237.
Orders to purchase shares of either Fund can be placed by telephone. Shares
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
Company within three business days or the transaction may be cancelled. 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. INVESCO has agreed to indemnify the Funds 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 non-payment, you will be responsible for any related loss the Company or
INVESCO incurs. If you are already a shareholder in the INVESCO funds, the
Company, on behalf of the Funds, has the option to redeem shares from any
identically registered account in the Company 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 Funds through a securities broker may be charged
a commission or transaction fee by the broker for the handling of the
transaction, if the broker so elects. Any investor may deal directly with the
Funds in any transaction. In that event, there is no such charge. INVESCO 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 Funds.
<PAGE>
Each 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 Fund 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 (usually
4:00 p.m., New York time) and also may be computed on other days under certain
circumstances. Net asset value per share for each Fund is calculated by dividing
the market value of all 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 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.
SERVICES PROVIDED BY THE FUNDS
Shareholder Accounts. INVESCO maintains a share account that reflects the
current holdings of each shareholder. Share certificates will be issued only
upon specific request. Because 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 for each
transaction in shares of the Funds. 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
Funds' 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 making the
distribution at the net asset value per share of that Fund 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 and
distributed by INVESCO, or to receive payment of all dividends and other
distributions in excess of ten dollars by check by giving written notice to
INVESCO at least two weeks prior to the ex-dividend date on which the change is
to take effect. Further information concerning these options can be obtained by
contacting INVESCO.
Periodic Withdrawal Plan. A Periodic Withdrawal Plan is available to
shareholders who own or purchase shares of any mutual funds advised by INVESCO
having a total value of $10,000 or more; provided, however, that at the time the
<PAGE>
Plan is established, the shareholder owns shares having a value of at least
$5,000 in the fund from which withdrawals will be made. Under the Periodic
Withdrawal Plan, INVESCO, 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 INVESCO 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 INVESCO.
Exchange Privilege. Shares of either Fund may be exchanged for shares of
any other fund of the Company, as well as for shares of any of the following
other no-load mutual funds, which are also advised and distributed by INVESCO,
on the basis of their respective net asset values at the time of the exchange:
INVESCO Diversified Funds, Inc., INVESCO Dynamics Fund, Inc., INVESCO Emerging
Opportunity Funds, Inc., INVESCO Growth Fund, Inc., INVESCO Income Funds, Inc.,
INVESCO Industrial Income Fund, Inc., INVESCO Money Market Funds, Inc., INVESCO
Multiple Asset Funds, Inc., INVESCO Specialty Funds, Inc., INVESCO Strategic
Portfolios, Inc., INVESCO Tax-Free Income Funds, Inc. and INVESCO Value Trust.
An exchange involves the redemption of shares in a Fund and investment of
the redemption proceeds in shares of another fund of the Company or in one of
the 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 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 INVESCO Funds Group, Inc., 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 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 privilege of exchanging Fund shares by telephone is available to
shareholders automatically unless expressly declined. By signing the New Account
Application or a Telephone Transaction Authorization Form or otherwise utilizing
telephone exchange privileges, the investor has agreed that the Funds will not
be liable for following instructions communicated by telephone that they
reasonably believe to be genuine. The Funds employ procedures, which they
believe 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 a Fund fails to follow these or other
reasonable procedures, the Fund may be liable.
In order to prevent abuse of this privilege to the disadvantage of other
shareholders, the Funds reserve the right to terminate the exchange privilege of
any shareholder who requests more than four exchanges a year. The Funds 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 privilege also may be modified or
<PAGE>
terminated at any time. Except for those limited instances where redemptions of
the exchanged security are suspended under Section 22(e) of the 1940 Act, 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
privilege 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 privilege may only be available in those states where exchanges may
legally 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 privilege may contact INVESCO for
information concerning their particular exchanges.
Automatic Monthly Exchange. Shareholders who have accounts in one or more
of the mutual funds distributed by INVESCO 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 Privilege" 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 INVESCO at
least two weeks prior to the date the change is to be made. Further information
regarding this service can be obtained by contacting INVESCO.
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 writing to
INVESCO at least two weeks prior to the date the change is to be made. Further
information regarding this service can be obtained by contacting INVESCO.
Direct Payroll Purchase. Shareholders may elect to have their employers
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 INVESCO.
Tax-Deferred Retirement Plans. Shares of either Fund may be purchased for
self-employed individual retirement plans, 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 INVESCO. INVESCO Trust Company, a subsidiary of
INVESCO, 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 INVESCO 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.
<PAGE>
HOW TO REDEEM SHARES
Shares of either Fund may be redeemed at any time at their net asset value
next determined after a request in proper form is received at the Funds' office.
(See "How Shares Can Be Purchased.") Net asset value per share at the time of
the redemption may be more or less than the price you paid to purchase your
shares, depending primarily upon the Fund's investment performance.
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,
Colorado 80237. If no certificates have been issued, a written redemption
request signed by each registered owner of the account may be submitted to
INVESCO at the address noted above. If shares are held in the name of a
corporation, additional documentation may be necessary. Call or write for
specifics. If payment for the redeemed shares is to be made to someone other
than the registered owner(s), 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 promptly upon clearance
of the purchase check (which will take up to 15 days).
If a shareholder participates in EasiVest, the Funds' automatic monthly
investment program, and redeems all of the shares in a Fund account, INVESCO
will terminate any further 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 Company 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
INVESCO, using the telephone number on the cover of this prospectus. For INVESCO
Trust Company-sponsored federal income tax-deferred retirement plans, the term
<PAGE>
"shareholders" is defined to mean plan trustees that file a written request
to be able to redeem Fund shares by telephone. Unless Fund Management 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. The redemption proceeds,
at the shareholder's option, either will be mailed to the address listed for the
shareholder on its 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 Funds charge no fee for effecting such telephone redemptions.
These telephone redemption privileges may be modified or terminated in the
future at the discretion of Fund Management. Shareholders should understand
that, while the Funds 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 may
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 or a Telephone Transaction Authorization Form or otherwise utilizing
telephone redemption privileges, the shareholder has agreed that the Funds will
not be liable for following instructions communicated by telephone that they
reasonably believe to be genuine. The Funds employ procedures, which they
believe 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 a Fund fails to follow these
or other reasonable procedures, the Fund may be liable.
TAXES, DIVIDENDS AND CAPITAL GAIN DISTRIBUTIONS
Taxes. Each Fund intends to distribute to shareholders substantially all of
its net investment income, net capital gains and net gains from foreign currency
transactions, if any, in order to 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 capital gain distributions in taxable income for federal, state
and local income tax purposes. Dividends and other distributions are taxable
whether they are received in cash or automatically invested in shares of a Fund
or another fund in the INVESCO group.
Each Fund may be subject to the withholding of foreign taxes on dividends
or interest it receives on foreign securities. Foreign taxes withheld will be
treated as an expense of the Fund unless the Fund qualifies and elects to pass
these taxes through to shareholders for use by them as a foreign tax credit or
deduction.
Shareholders may be subject to backup withholding of 31% on dividends,
capital gain distributions and redemption proceeds. Unless a shareholder is
subject to backup withholding for other reasons, the shareholder can avoid
backup withholding on a Fund account by ensuring that INVESCO has a correct,
certified tax identification number.
<PAGE>
Dividends and Capital Gain Distributions. The Funds earn ordinary or net
investment income in the form of dividends and interest on their investments.
The Funds' policy is to distribute substantially all of this income, less Fund
expenses, to shareholders annually, at the discretion of the Company's board of
directors.
In addition, each Fund realizes capital gains and losses when it sells
securities for more or less than it paid. If total gains on sales exceed total
losses (including losses carried forward from previous years), the Fund has a
net realized capital gain. Net realized capital gains, if any, are distributed
to shareholders at least annually, usually in December.
Dividends and capital gain distributions are paid to shareholders who hold
shares on the record date of the distribution regardless of how long the shares
have been held. The Fund's share price will then drop by the amount of the
distribution on the day the distribution is made. If a shareholder purchases
shares immediately prior to the distribution, the shareholder will, in effect,
have "bought" the distribution by paying full purchase price, a portion of which
is then returned in the form of a taxable distribution.
At the end of each year, information regarding the tax status of dividends
and capital gain distributions is provided to shareholders. Net realized capital
gains are divided into short-term and long-term gains depending on how long a
Fund held the security which gave rise to the gains. The capital gain
distribution consists of long-term capital gains which are taxed at the capital
gains rate. Short-term capital gains are included with income from dividends and
interest as ordinary income and are paid to shareholders as dividends.
Shareholders also may realize capital gains or losses when they sell Fund
shares at more or less than the price originally paid.
Shareholders are encouraged to consult their tax advisers with respect to
these matters. For further information, see "Dividends, Capital Gain
Distributions and Taxes" in the Statement of Additional Information.
ADDITIONAL INFORMATION
Voting Rights. All shares of the Company's funds have equal voting rights.
When shareholders are entitled to vote upon a matter, each shareholder is
entitled to 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
the investment advisory contract for the individual funds, voting is on a
fund-by-fund basis. To the extent permitted by law, when not all funds are
affected by a matter to be voted upon, only shareholders of the fund or funds
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 1940 Act. Directors may be removed by action of the holders of a
majority of the outstanding shares of the Company.
<PAGE>
Shareholder Inquiries. All inquiries regarding the Funds should be
directed to the Funds 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 each Fund pursuant to a Transfer Agency Agreement
which provides that the Fund will pay an annual fee of $20.00 per shareholder
account or omnibus account participant. 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 INVESCO, may provide sub-transfer agency services to the Fund
which reduce or eliminate the need for identical services to be provided by
INVESCO. In such cases, INVESCO may pay the third party an annual sub-transfer
agency or record-keeping fee out of the transfer agency fee which is paid to
INVESCO by the Fund.
<PAGE>
INVESCO EUROPEAN FUND
INVESCO PACIFIC BASIN FUND
Two no-load mutual funds seeking
capital appreciation through
investments in designated
geographical sectors
PROSPECTUS
March 1, 1997
To receive general information and prospectuses on any of INVESCO's funds or
retirement plans, or to obtain current account or price information or responses
to other questions, call toll-free:
1-800-525-8085
To reach PAL, your 24-hour Personal Account Line, call:
1-800-424-8085
You can find us on the World Wide Web:
http://www.invesco.com
Or write to:
INVESCO Funds Group, Inc., Distributor
Post Office Box 173706
Denver, Colorado 80217-3706
If you're in Denver, please visit one of our convenient Investor Centers:
Cherry Creek, 155-B Fillmore Street;
Denver Tech Center,
7800 East Union Avenue, Lobby Level
In addition, all documents filed by the Company with the Securities and Exchange
Commission can be located on a web site maintained by the Commission at
http://www.sec.gov.
<PAGE>
PROSPECTUS
March 1, 1997
INVESCO INTERNATIONAL GROWTH FUND
INVESCO INTERNATIONAL GROWTH FUND (the "Fund") seeks to achieve a high
total return through capital appreciation and current income 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 Fund's investments may consist in
part of securities which may be deemed to be speculative. (See "Investment
Objective and Policies.")
The Fund is a series of INVESCO International Funds, Inc. (the "Company"),
an open-end management investment company consisting of three separate funds,
each of which represents a separate portfolio of investments. This prospectus
relates to shares of INVESCO International Growth Fund. A separate prospectus is
available upon request from INVESCO Funds Group, Inc. for the Company's other
funds, INVESCO European Fund and INVESCO Pacific Basin Fund. 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 March 1, 1997, has been filed with the Securities and
Exchange Commission, and is incorporated by reference into this prospectus. To
obtain a free copy write to INVESCO Funds Group, Inc., P.O. Box 173706, Denver,
Colorado 80217-3706; or call 1-800-525-8085.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION, NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY
STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF
THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE. SHARES OF THE FUND ARE NOT DEPOSITS OR OBLIGATIONS OF,
OR GUARANTEED OR ENDORSED BY, ANY BANK OR OTHER FINANCIAL
INSTITUTION. THE SHARES OF THE FUND ARE NOT FEDERALLY INSURED BY
THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE
BOARD OR ANY OTHER AGENCY.
----------
<PAGE>
TABLE OF CONTENTS
Page
ANNUAL FUND EXPENSES....................................................... 2
FINANCIAL HIGHLIGHTS....................................................... 3
PERFORMANCE DATA........................................................... 4
INVESTMENT OBJECTIVE AND POLICIES.......................................... 4
RISK FACTORS............................................................... 6
THE FUND AND ITS MANAGEMENT................................................ 8
HOW SHARES CAN BE PURCHASED................................................ 10
SERVICES PROVIDED BY THE FUND.............................................. 11
HOW TO REDEEM SHARES....................................................... 13
TAXES, DIVIDENDS AND CAPITAL GAIN DISTRIBUTIONS............................ 14
ADDITIONAL INFORMATION..................................................... 15
<PAGE>
ANNUAL FUND EXPENSES
The Fund is 100% no-load; there are no fees to purchase, exchange or
redeem shares, nor any ongoing marketing ("12b-1") expenses. 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 None
Exchange fees None
Annual Fund Operating Expenses
(as a percentage of average net assets)
Management Fee 1.00%
12b-1 Fees None
Other Expenses 0.80%
Transfer Agency Fee(1) 0.43%
General Services, Administrative
Services, Registration, Postage(2) 0.37%
Total Fund Operating Expenses(3) 1.80%
(1) Consists of the transfer agency fee described under
"Additional Information - Transfer and Dividend Disbursing Agent."
(2) 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 furnished under an Administrative
Services Agreement, costs of registration of Fund shares under applicable laws,
and costs of printing and distributing reports to shareholders.
(3) It should be noted that the Fund's actual total operating expenses
were lower than the figures shown because the Fund's custodian fees and transfer
agency fees were reduced under an expense offset arrangement. However, as a
result of an SEC requirement for mutual funds to state their total operating
expenses without crediting any such expense offset arrangement, the figures
shown above DO NOT reflect these reductions. In comparing expenses for different
years, please note that the Ratios of Expenses to Average Net Assets shown under
"Financial Highlights" do reflect any reductions for periods prior to the fiscal
year ended October 31, 1996. See "The Fund and Its Management."
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:
<PAGE>
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
$18 $57 $98 $213
The purpose of the foregoing table is to assist investors in understanding
the various costs and expenses that an investor in this Fund will bear directly
or indirectly. Such expenses are paid from this Fund's assets. (See "The Fund
and Its Management.") This Fund charges no sales load, redemption fee or
exchange fee and bears no distribution expenses. THE EXAMPLE SHOULD NOT BE
CONSIDERED A REPRESENTATION OF PAST OR 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 past or future
annual returns, which may be greater or less than the assumed amount.
<PAGE>
FINANCIAL HIGHLIGHTS
(For a Fund Share Outstanding Throughout Each Period)
The following information for each of the three years ended October 31,
1996, the period January 1, 1993 to October 31, 1993, and each of the four years
in the period ended December 31, 1992 has been audited by Price Waterhouse LLP,
independent accountants. Prior years' information was audited by another
independent accounting firm. This information should be read in conjunction with
the audited financial statements and the Report of Independent Accountants
thereon appearing in the Fund's 1996 Annual Report to Shareholders which is
incorporated by reference into the Statement of Additional Information. Both are
available without charge by contacting INVESCO Funds Group, Inc. at the address
or telephone number on the cover of this prospectus. All per share data has been
adjusted to reflect an 80 to 1 stock split which was effected on January 2,
1991.
<TABLE>
<CAPTION>
Period Period
Year Ended Ended
Ended October December
October 31 31 Year Ended December 31 31
------------------------ ------- ------------------------------------------ -------
1996 1995 1994< 1993 1992 1991 1990 1989 1988 1987>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
International Growth Fund
PER SHARE DATA
Net Asset Value -
Beginning of Period $15.78 $17.29 $15.75 $12.57 $14.51 $13.69 $16.16 $14.49 $12.51 $12.50
------------------------ ------- ------------------------------------------ -------
INCOME FROM INVESTMENT
OPERATIONS
Net Investment Income 0.07 0.08 0.04 0.08 0.12 0.17 0.26 0.18 0.08 0.15
Net Gains or (Losses) on
Securities (Both Realized
and Unrealized) 1.77 (0.61) 1.57 3.16 (1.94) 0.82 (2.65) 2.16 1.98 0.00
------------------------ ------- ------------------------------------------ -------
Total from Investment
Operations 1.84 (0.53) 1.61 3.24 (1.82) 0.99 (2.39) 2.34 2.06 0.15
------------------------ ------- ------------------------------------------ -------
LESS DISTRIBUTIONS
Dividends from Net
Investment Income 0.15 0.09 0.07 0.06 0.11 0.17 0.02 0.17 0.08 0.14
In Excess of Net
Investment Income 0.00 0.03 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Distributions from
Capital Gains 0.56 0.86 0.00 0.00 0.01 0.00 0.06 0.50 0.00 0.00
------------------------ ------- ------------------------------------------ -------
Total Distributions 0.71 0.98 0.07 0.06 0.12 0.17 0.08 0.67 0.08 0.14
------------------------ ------- ------------------------------------------ -------
<PAGE>
Net Asset Value -
End of Period $16.91 $15.78 $17.29 $15.75 $12.57 $14.51 $13.69 $16.16 $14.49 $12.51
======================== ======= ========================================== =======
TOTAL RETURN 12.01% (2.84%) 10.21% 29.08%* (12.52%) 7.19% (14.62%) 16.07% 16.61% 1.20%*
RATIOS
Net Assets - End of Period
($000 Omitted) $94,586 $75,391 $161,884 $108,677 $35,192 $42,039 $39,237 $41,456 $12,099 $102
Ratio of Expenses to
Average Net Assets# 1.80%@ 1.81%@ 1.50% 1.43%~ 1.36% 1.48% 1.48% 1.24% 1.26% 0.99%~
Ratio of Net Investment Income
to Average Net Assets# 0.43% 0.41% 0.46% 0.94%~ 0.83% 1.17% 1.85% 1.18% 1.14% 4.32%~
Portfolio Turnover Rate 64% 62% 87% 46%* 50% 71% 78% 35% 73% 0%*
Average Commission Rate Paid^^ $0.0329 - - - - - - - - -
</TABLE>
< The per share information was computed based on weighted average shares.
^ From January 1, 1993 to October 31, 1993, the Fund's current fiscal year-end.
> From September 22, 1987, commencement of operations, to December 31, 1987.
* Based on operations for the period shown and, accordingly, are not
representative of a full year.
# Various expenses of the Fund were voluntarily absorbed by IFG for the years
ended December 31, 1990, 1989, 1988 and the period ended December 31, 1987. If
such expenses had not been voluntarily absorbed, ratio of expenses to average
net assets would have been 1.49%, 1.71%, 2.00% and 2.00%, respectively, and
ratio of net investment income to average net assets would have been 1.84%,
0.71%, 0.40% and 3.31%, respectively.
@ Ratio is based on Total Expenses of the Fund, which is before any expense
offset arrangements.
~ Annualized
^ The average commission rate paid is the total brokerage commissions paid on
applicable purchases and sales of securities for the period divided by the total
number of related shares purchased or sold, which is required to be disclosed
for fiscal years beginning September 1, 1995 and thereafter.
<PAGE>
PERFORMANCE DATA
From time to time, the Fund advertises its total return performance. These
figures are based upon historical investment results and are not intended to
indicate future performance. Total return is computed by calculating the
percentage change in value of an investment, assuming reinvestment of all income
dividends and capital gain distributions, to the end of a specified period.
Cumulative total return reflects actual performance over a stated period of
time. Average annual total return is a hypothetical rate of return that, if
achieved annually, would have produced the same cumulative total return if
performance had been constant over the entire period.
Thus, a given report of total return performance should not be considered
as representative of future performance. The Fund charges no sales load,
redemption fee or exchange fee which would affect the total return computation.
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 bond indices and indices of investment results for
the same period, and/or assessments of the quality of shareholder service, may
be provided to shareholders. Such indices include indices provided by Dow Jones
& Company, Standard & Poor's Ratings Services, a division of The McGraw-Hill
Companies, Inc., Lipper Analytical Services, Inc., Lehman Brothers, National
Association of Securities Dealers Automated Quotations, Frank Russell Company,
Value Line Investment Survey, the American Stock Exchange, Morgan Stanley
Capital International, Wilshire Associates, the Financial Times-Stock Exchange,
the New York Stock Exchange, the Nikkei Stock Average and 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 ranking and
comparisons, which may be used by the Fund in performance reports, will be drawn
from the "International Funds" Lipper mutual fund groupings, in addition to the
broad-based Lipper general fund groupings.
INVESTMENT OBJECTIVE AND POLICIES
The Company consists of three separate portfolios of investments, each
represented by a different class of the Company's common stock. This prospectus
relates to INVESCO International Growth Fund; a separate prospectus for INVESCO
European Fund and INVESCO Pacific Basin Fund is available.
<PAGE>
The investment objective of the INVESCO International Growth Fund is to
seek a high total return on investment through capital appreciation and current
income. Funds having an investment objective of seeking a high total return may
be limited in their ability to obtain their objective by the limitations on the
types of securities in which they may invest. Therefore, no assurance can be
given that the Fund will be able to achieve its investment objective.
The Fund intends to accomplish its objective by investing substantially
all of its assets in foreign securities. The term "foreign securities" refers to
securities of issuers, wherever organized, which in the judgment of the Fund's
investment adviser or sub-adviser (collectively, "Fund Management") have their
principal business activities outside of the United States. The determination of
whether an issuer's principal activities are outside of the United States will
be based on the location of the issuer's assets, personnel, sales and earnings,
and specifically whether more than 50% of the issuer's assets are located, or
more than 50% of the issuer's gross income is earned, outside of the United
States. During normal market conditions, at least 65% of the Fund's total assets
will be invested in foreign securities representing at least three different
countries outside of the United States.
The Fund invests principally in equity securities (common stocks and
securities convertible into common stocks, including convertible debt
obligations and convertible preferred stock), although it also may purchase debt
securities. Such debt securities either will be investment grade (rated Baa or
higher by Moody's Investors Service, Inc. ("Moody's") or BBB or higher by
Standard & Poor's Ratings Services, a division of The McGraw-Hill Companies,
Inc. ("S&P")) or, if unrated, will have been determined by Fund Management to be
of investment grade quality. The Fund is not required to dispose of debt
securities whose ratings are downgraded below investment grade. The Fund has not
established any minimum investment standards, such as an issuer's asset level,
earnings history, type of industry, dividend payment history, etc., with respect
to the Fund's equity investments in foreign securities and, therefore, investors
in this Fund should consider that investments may consist in part of securities
which may be deemed to be speculative. When market, business or economic
conditions indicate, in the judgment of Fund Management, that a different
investment stance should be assumed, up to 100% of the assets of the Fund may be
invested temporarily in domestic securities consisting of obligations issued or
guaranteed by the United States or any instrumentality thereof, domestic bank
certificates of deposit, commercial paper rated A-2 or higher by S&P or P-2 or
higher by Moody's, and repurchase agreements with banks and securities dealers.
While the Fund is in such a defensive position, the opportunity to achieve a
high total return will be limited and, to the extent that this assessment of
market conditions is incorrect, the Fund will be foregoing the opportunity to
benefit from capital appreciation resulting from increases in the value of
equity investments.
It is presently anticipated that the Fund may invest in companies based in
(or governments of or within) various areas of the world, including the Far East
(Japan, Hong Kong, Korea, Singapore and Malaysia), Western Europe (United
Kingdom, Germany, France, Italy and Switzerland), Australia and Canada. The
economies of these countries may vary widely in their condition and may be
subject to sudden changes that could have a positive or negative impact on the
<PAGE>
Fund. Of course, the Fund may invest in such other areas and countries as Fund
Management may determine from time to time. The securities in which the Fund
invests typically will be traded on the principal stock exchanges in such
countries but also may be traded on regional stock exchanges or on the
over-the-counter market in such countries.
The Fund also may invest in companies located in developing countries. In
general, Fund Management considers any country that is not included in the
Morgan Stanley Capital International ("MSCI") World Index to be a developing
country. As of the date of this prospectus, the MSCI World Index consists of the
United States, Canada, Japan, Australia, New Zealand, Hong Kong, Malaysia,
Singapore and the nations of Western Europe (other than Greece, Portugal and
Turkey). (In addition, the MSCI World Index includes certain South African gold
mining companies, although Fund Management considers South Africa to be a
developing country.) Thus, with the exceptions noted above, developing countries
generally include the countries located in Central and South America, Middle and
Eastern Europe, Asia and Africa. Investors should recognize that, compared to
the United States and other developed countries, developing countries may have
relatively unstable governments, economies based on only a few industries, and
securities markets which trade a small number of securities. Prices in these
markets tend to be volatile. In addition, investments in developing countries
are subject to the same risks as those involved in foreign investments
generally. See "Risk Factors." The Fund will limit its investments in developing
countries to no more than 20% of its total assets.
When the Fund invests in foreign securities, such securities are usually
denominated in foreign currency and the Fund may temporarily hold funds in
foreign currencies. Thus, the Fund's share value is affected by changes in
currency exchange rates. Because the Fund's assets will be invested in foreign
securities and because substantially all revenues will be received in foreign
currencies, the dollar equivalent of the Fund's net assets and distributions
would be adversely affected by a reduction in the value of the foreign currency
relative to the United States dollar. The Fund will pay dividends in dollars and
in such event will incur currency conversion costs. As one way of managing
exchange rate risk, the Fund may enter into forward foreign currency exchange
contracts (i.e., purchasing or selling foreign currencies at a future date).
<PAGE>
The investment objective of the Fund and its investment policies, except
where indicated to the contrary, are deemed to be fundamental policies and thus
may not be changed without prior approval by the holders of a majority of the
outstanding voting securities, as defined in the Investment Company Act of 1940
(the "1940 Act"). In addition, the Fund is subject to certain investment
restrictions which are set forth in the Statement of Additional Information and
which may not be altered without approval of shareholders. One of those
restrictions limits the Fund's borrowing of money to borrowings from banks for
temporary or emergency purposes (but not for investment) in an amount not to
exceed 5% of total assets of the Fund.
For additional information concerning the investment objectives and
operation of the INVESCO International Growth Fund, see "Investment Objectives
and Policies" in the Statement of Additional Information.
RISK FACTORS
Investors should consider the special factors associated with the policies
discussed below in determining the appropriateness of an investment in the Fund.
The Fund's policies regarding investments in foreign securities and foreign
currencies are not fundamental and may be changed by vote of the Company's board
of directors.
Foreign Securities. The Fund may invest in foreign securities and may do so
without limitation on the percentage of assets which may be so invested.
Investments in securities of foreign companies and in foreign markets involve
certain additional risks not associated with investments in domestic companies
and markets. For U.S. investors, the returns on foreign securities are
influenced not only by the returns on the foreign investments themselves but
also by currency fluctuations. That is, when the U.S. dollar generally rises
against foreign currencies, returns on foreign securities for a U.S. investor
may decrease. By contrast, in a period when the U.S. dollar generally declines,
those returns may increase.
Other aspects of international investing to consider include:
-less publicly available information than is generally
available about U.S. issuers;
-differences in accounting, auditing and financial reporting
standards;
-generally higher commission rates on foreign portfolio
transactions and longer settlement periods;
<PAGE>
-smaller trading volumes and generally lower liquidity of foreign stock
markets, which may cause greater price volatility;
-less government regulation of stock exchanges, brokers and
listed companies abroad than in the United States; and
-investments in certain countries may be subject to foreign withholding
taxes, which may reduce dividend income or capital gains payable to
shareholders.
There is also the possibility of expropriation or confiscatory taxation;
adverse changes in investment or exchange control regulations; political
instability; potential restrictions on the flow of international capital; and
the possibility of the Fund experiencing difficulties in pursuing legal remedies
and collecting judgments.
Repurchase Agreements. The Fund may enter into repurchase agreements with
respect to debt instruments eligible for investment by the Fund with member
banks of the Federal Reserve System, registered broker-dealers and registered
government securities dealers, which are deemed creditworthy. A repurchase
agreement, which may be considered a "loan" under the 1940 Act, is a means of
investing monies for a short period. In a repurchase agreement, the Fund
acquires a debt instrument (generally a security issued by the U.S. government
or an agency thereof, a banker's acceptance or a certificate of deposit),
subject to resale to the seller at an agreed-upon price and date (normally, the
next business day). In the event that the original seller defaults on its
obligation to repurchase the security, the Fund could incur costs or delays in
seeking to sell such security. To minimize risk, the securities underlying each
repurchase agreement will be maintained with the Fund's custodian in an amount
at least equal to the repurchase price under the agreement (including accrued
interest), and such agreements will be effected only with parties that meet
certain creditworthiness standards established by the Company's board of
directors. Although the Fund has not adopted any limit on the amount of its
total assets that may be invested in repurchase agreements, the Fund intends
that at no time will the market value of its securities subject to repurchase
agreements exceed 20% of the total assets of the Fund.
Restricted Securities. The Fund may invest from time to time in securities
subject to legal or contractual restrictions on resale ("restricted securities")
or securities without readily available market quotations or 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). However, on the date
of purchase, no such investment may increase the Fund's holdings of restricted
securities to more than 2% of the Fund's total assets or its holdings of
illiquid securities or those without readily available market quotations to more
than 5% of the value of the Fund's total assets. The restricted securities that
<PAGE>
may be purchased subject to the foregoing 2% limitation include securities that
can be resold to institutional investors pursuant to Rule 144A under the
Securities Act of 1933. The Fund is not required to receive registration rights
in connection with the purchase of restricted securities and, in the absence of
such rights, marketability and value can be adversely affected because the Fund
may be unable to dispose of such securities 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 delays associated with effecting
registration.
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 value of a currency in the foregoing manner
does not eliminate fluctuations in the prices of portfolio securities or prevent
losses if the prices of such securities decline. Furthermore, such hedging
transactions preclude the opportunity for gain if the value of the hedged
currency should rise. No predictions can be made with respect to whether the
total of such transactions will result in a better or a worse position than had
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 forward contracts, see the Company's Statement
of Additional Information.
Securities Lending. The Fund also may lend its securities to qualified
brokers, dealers, banks or other financial institutions. This practice permits
the Fund to earn income which, in turn, can be invested in additional securities
to pursue the Fund's investment objective. Loans of securities by the Fund will
be collateralized by cash, letters of credit, or securities issued or guaranteed
by the U.S. government or its agencies equal to at least 100% of the current
market value of the loaned securities, determined on a daily basis. Lending
securities involves certain risks, the most significant of which is the risk
that a borrower may fail to return a portfolio security. The Fund monitors the
creditworthiness of borrowers in order to minimize such risks. The Fund will not
lend any security if, as a result of such loan, the aggregate value of
securities then on loan would exceed 10% of the Fund's total assets (taken at
market value).
<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, under certain market conditions, the portfolio
turnover rate for the Fund may exceed 100%. Increased portfolio turnover would
cause the Fund to incur greater brokerage costs than would otherwise be the case
and may result in the acceleration of capital gains that are taxable when
distributed to shareholders. The Fund's portfolio turnover rate is set forth
under "Financial Highlights" and, along with the Company's brokerage allocation
policies, is discussed in the Statement of Additional Information.
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 Fund's
predecessor portfolio, the Financial International Growth Fund of Financial
Series Trust, a Massachusetts business trust organized on July 15, 1987. All
financial and other information about the Fund for periods prior to July 1,
1993, relates to such former fund. On July 1, 1993, the Company also assumed,
through its INVESCO European and Pacific Basin Funds, all of the assets and
liabilities of those funds' predecessors, the European and Pacific Basin
Portfolios of Financial Strategic Portfolios, Inc., which was incorporated under
the laws of Maryland on August 10, 1983. The overall supervision of the Fund is
the responsibility of the Company's board of directors.
Pursuant to an agreement with the Company, INVESCO Funds Group, Inc.
("INVESCO"), 7800 E. Union Avenue, Denver, Colorado, serves as the Company's
investment adviser. Under this agreement, INVESCO is primarily responsible for
providing the Fund with portfolio management and various administrative services
and supervising the Fund's daily business affairs. These services are subject to
review by the Fund's board of directors.
INVESCO is an indirect, wholly-owned subsidiary of AMVESCO PLC. AMVESCO 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 February 28, 1997, as part of a merger
between INVESCO PLC and A I M Management Group, Inc., thus creating one of the
largest independent investment management businesses in the world. INVESCO and
INVESCO Asset Management Limited ("IAML") will continue to operate under their
existing names. AMVESCO PLC has approximately $150 billion in assets under
management. INVESCO was established in 1932 and, as of October 31, 1996, managed
14 mutual
<PAGE>
funds, consisting of 39 separate portfolios, with combined assets of
approximately $13.4 billion on behalf of over 829,000 shareholders.
Pursuant to an agreement with INVESCO, IAML serves as the sub-adviser to
the Fund. In that capacity, IAML has the primary responsibility, under the
supervision of INVESCO, for providing portfolio management services to the Fund.
IAML also is an indirect, wholly-owned subsidiary of AMVESCO PLC. IAML also acts
as sub-adviser to the INVESCO European Fund, the INVESCO Pacific Basin Fund, the
INVESCO European Small Company Fund and the INVESCO Latin American Growth Fund.
Although the Fund is not a party to the sub-advisory agreement, that agreement
has been approved by the shareholders of the Fund.
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 INVESCO a monthly advisory fee which is based upon a
percentage of the average net assets of the Fund, determined daily. The maximum
advisory fee payable under the agreement is computed at an annual rate of 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 average net
assets of the Fund in excess of $1 billion. For the fiscal period ended October
31, 1996, the advisory fees paid to INVESCO amounted to an annual rate of 1.00%
of the average net assets of the Fund. While the portions of INVESCO's fees
which are equal to or higher than 0.75% of the Fund's net assets are higher than
those generally charged by investment advisers to mutual funds, they are not
higher than those charged by most other investment advisers to funds of
comparable asset levels to the INVESCO International Growth Fund whose assets
are invested primarily in equity securities of companies located outside the
United States.
Out of the advisory fees which it receives from the Fund, INVESCO pays
IAML, as sub-adviser to the Fund, a monthly fee, which is computed at the annual
rates of 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. No fee is paid by the
Fund to IAML.
The Company also has entered into an Administrative Services Agreement
dated February 28, 1997 (the "Administrative Agreement"), with INVESCO. Pursuant
to the Administrative Agreement, INVESCO performs certain administrative,
recordkeeping and internal accounting services, including without limitation,
maintaining
<PAGE>
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 shareholder accounts
in the Fund maintained by certain retirement and employee benefit plans for the
benefit of participants of such plans. For such services, the Fund pays INVESCO
a fee consisting of a base fee of $10,000 per year, plus an additional
incremental fee computed at an annual rate of 0.015% per annum of the average
net assets of the Fund. INVESCO also is paid a fee by the Company for providing
transfer agent services. See "Additional Information."
The Fund's expenses, which are accrued daily, are deducted from its total
income before dividends are paid. Total expenses of the Fund (prior to any
expense offset), including investment advisory fees (but excluding brokerage
commissions, which are a cost of acquiring securities), as a percentage of its
average net assets for the fiscal period ended October 31, 1996, were 1.80%.
Fund Management places orders for the purchase and sale of portfolio
securities with brokers and dealers based upon its evaluation of broker-dealer
financial responsibility coupled with broker-dealer ability to effect
transactions at the best available prices. The Fund may place orders for
portfolio transactions with qualified broker-dealers which recommend the Fund to
clients, or act as agent in the purchase of Fund shares for clients, if Fund
Management believes that the quality of 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 compliance policies governing
personal investing. These policies require Fund Management's personnel to
conduct their personal investment activities in a manner that Fund Management
believes is not detrimental to the Fund or Fund Management's other advisory
clients. See the Statement of Additional Information for more detailed
information.
HOW SHARES CAN BE PURCHASED
The Fund's shares are sold on a continuous basis by INVESCO, 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 account, as described below in the prospectus section
entitled "Services Provided by the Fund," may open an account without making any
initial investment if they agree to make minimum monthly purchases of $50; (2)
those shareholders investing in an Individual Retirement Account ("IRA"), or
through omnibus accounts where individual shareholder recordkeeping and
sub-accounting are not required, may make initial minimum purchases of $250; (3)
Fund Management may permit a lesser amount to be invested in the Fund under a
federal income tax-sheltered retirement plan (other than an IRA) or under a
group investment plan qualifying as a sophisticated investor; and (4) Fund
Management reserves the right to 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 minimum initial purchase requirement of $1,000,
as described above, does not apply to shareholder account(s) in any of the
INVESCO funds opened prior to January 1, 1993, and thus is not a minimum balance
requirement for those existing accounts. However, for shareholders already
having accounts in any of the INVESCO funds, all initial share purchases in a
new fund account, including those made using the exchange privilege, must meet
the fund's applicable minimum investment requirement.
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 investment requirements. In no case can a bank wire order or a
telephone order be in an amount less than $1,000. For further information, the
purchaser may call the Company'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., 7800 E. Union Avenue, Denver, Colorado 80237.
Orders to purchase shares of the Fund can be placed by telephone. Shares
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 cancelled. 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. INVESCO 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 Company or
INVESCO incurs. If you are already a shareholder in the INVESCO funds, the
<PAGE>
Company, on behalf of the Fund, has the option to redeem shares from any
identically registered account in the Company 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 this Fund through a securities broker may be charged
a commission or transaction fee by the broker for the handling of the
transaction, if the broker so elects. Any investor may deal directly with the
Company in any transaction. In that event, there is no such charge. INVESCO 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.
The Company 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 Fund Management, such rejection is in the best interest of the
Company.
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
(usually 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 all 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 the Fund. If market quotations are not readily available, a security
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.
SERVICES PROVIDED BY THE FUND
Shareholder Accounts. INVESCO maintains a share account that reflects the
current holdings of each shareholder. Share certificates will be issued only
upon specific request. Because 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 for 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 and distributed by INVESCO, or to receive payment of all
<PAGE>
dividends and other distributions in excess of ten dollars by check by giving
written notice to INVESCO 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 INVESCO.
Periodic Withdrawal Plan. A Periodic Withdrawal Plan is available to
shareholders who own or purchase shares of any mutual funds advised by INVESCO
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, INVESCO, 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 INVESCO 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 INVESCO.
Exchange Privilege. Shares of this Fund may be exchanged for shares of any
other fund of the Company, as well as for shares of any of the following other
no-load mutual funds, which are also advised and distributed by INVESCO, on the
basis of their respective net asset values at the time of the exchange: INVESCO
Diversified Funds, Inc., INVESCO Dynamics Fund, Inc., INVESCO Emerging
Opportunity Funds, Inc., INVESCO Growth Fund, Inc., INVESCO Income Funds, Inc.,
INVESCO Industrial Income Fund, Inc., INVESCO Money Market Funds, Inc., INVESCO
Multiple Asset Funds, Inc., INVESCO Specialty Funds, Inc., INVESCO Strategic
Portfolios, Inc., INVESCO Tax-Free Income Funds, Inc. and INVESCO Value Trust.
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 one of
the 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 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 INVESCO using the telephone number or address on the cover of
this prospectus. Exchanges made by telephone must be in the amount of at least
$250 if the exchange is being made into an existing account of one of the
INVESCO funds. All exchanges that establish a NEW account must meet the Fund's
applicable minimum initial investment requirements. Written exchange requests
into an existing account have no minimum requirements other than the Fund's
applicable minimum subsequent investment requirements.
<PAGE>
The privilege of exchanging Fund shares by telephone is available to
shareholders automatically unless expressly declined. By signing the New Account
Application or a Telephone Transaction Authorization Form or otherwise utilizing
telephone exchange privileges, 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 privilege to the disadvantage of other
shareholders, the Fund reserves the right to terminate the exchange privilege of
any shareholder who requests more than four exchanges 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 privilege 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 1940 Act, or
where sales of the fund into which the shareholder is exchanging are temporarily
stopped, notice of all such modifications or terminations of the exchange
privilege 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 privilege may only be available in those states where exchanges may
legally 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 privilege may contact INVESCO for
information concerning their particular exchanges.
Automatic Monthly Exchange. Shareholders who have accounts in any one or
more of the mutual funds distributed by INVESCO 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 Privilege" 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 INVESCO at
least two weeks prior to the date the change is to be made. Further information
regarding this service can be obtained by contacting INVESCO.
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 writing to
INVESCO at least two weeks prior to the date the change is to be made. Further
information regarding this service can be obtained by contacting INVESCO.
<PAGE>
Direct Payroll Purchase. Shareholders may elect to have their employers
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 INVESCO.
Tax-Deferred Retirement Plans. Shares of this Fund may be purchased for
self-employed individual retirement plans, 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 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 INVESCO. INVESCO Trust Company, a subsidiary of
INVESCO, 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 INVESCO 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 this Fund may be redeemed at any time at their net asset value
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 of the Fund at
the time of the redemption may be more or less than the price originally paid to
purchase shares, depending primarily upon the Fund's investment performance.
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,
Colorado 80237. If no certificates have been issued, a written redemption
request signed by each registered owner of the account may be submitted to
INVESCO at the address noted above. If shares are held in the name of a
corporation, additional documentation may be necessary. Call or write for
specifics. If payment for the redeemed shares is to be made to someone other
than the registered owner(s), 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.
<PAGE>
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 promptly upon 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 a Fund account, INVESCO
will terminate any further 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 Company 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
INVESCO, using the telephone number on the cover of this prospectus. For INVESCO
Trust Company-sponsored federal income tax-deferred 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. Unless Fund Management 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. The redemption proceeds,
at the shareholder's option, either will be mailed to the address listed for the
shareholder on its Fund account, or wired (minimum $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.
These telephone redemption privileges may be modified or terminated in the
future at the discretion of Fund Management. 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 or 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 believes 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.
<PAGE>
TAXES, DIVIDENDS AND CAPITAL GAIN DISTRIBUTIONS
Taxes. The Fund intends to distribute to shareholders substantially all of
its net investment income, net capital gains and net gains from foreign currency
transactions, if any, in order to qualify for tax treatment as a regulated
investment company. Thus, the Fund does not expect to pay any federal income or
excise taxes.
Unless shareholders are exempt from income taxes, they must include all
dividends and capital gain distributions in taxable income for federal, state
and local income tax purposes. Dividends and other distributions are taxable
whether they are received in cash or automatically invested in shares of the
Fund or another fund in the INVESCO group.
The Fund may be subject to the withholding of foreign taxes on dividends or
interest it receives on foreign securities. Foreign taxes withheld will be
treated as an expense of the Fund unless the Fund qualifies and elects to pass
these taxes through to shareholders for use by them as a foreign tax credit or
deduction.
Shareholders may be subject to backup withholding of 31% on dividends,
capital gain distributions and redemption proceeds. Unless a shareholder is
subject to backup withholding for other reasons, the shareholder can avoid
backup withholding on a Fund account by ensuring that INVESCO has a correct,
certified tax identification number.
Dividends and Capital Gain Distributions. The Fund earns ordinary or net
investment income in the form of dividends and interest on its investments. The
Fund's policy is to distribute substantially all of this income, less Fund
expenses, to shareholders annually, at the discretion of the Company's board of
directors.
In addition, the Fund realizes capital gains and losses when it sells
securities for more or less than it paid. If total gains on sales exceed total
losses (including losses carried forward from previous years), the Fund has a
net realized capital gain. Net realized capital gains, if any, are distributed
to shareholders at least annually, usually in December.
Dividends and capital gain distributions are paid to shareholders who hold
shares on the record date of the distribution regardless of how long the shares
have been held. The Fund's share price will then drop by the amount of the
distribution on the day the distribution is made. If a shareholder purchases
shares immediately prior to the distribution, the shareholder will, in effect,
have "bought" the distribution by paying full purchase price, a portion of which
is then returned in the form of a taxable distribution.
At the end of each year, information regarding the tax status of dividends
and capital gain distributions is provided to shareholders. Net realized capital
gains are divided into short-term and long-term gains depending on how long the
Fund held the security which gave rise to the gains. The capital gain
distribution consists of long-term capital gains which are taxed at the capital
gains rate. Short-term capital gains are included with income from dividends and
interest as ordinary income and are paid to shareholders as dividends.
Shareholders also may realize capital gains or losses when they sell Fund
shares at more or less than the price originally paid.
<PAGE>
Shareholders are encouraged to consult their tax advisers with respect to
these matters. For further information, see "Dividends, Capital Gain
Distributions and Taxes" in the Statement of Additional Information.
ADDITIONAL INFORMATION
Voting Rights. All shares of the Company's funds have equal voting rights.
When shareholders are entitled to vote upon a matter, each shareholder is
entitled to 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
the investment advisory contract for an individual fund, voting is on a
fund-by-fund basis. To the extent permitted by law, when not all funds are
affected by a matter to be voted upon, only the shareholders of the fund or
funds affected by the matter will be entitled to vote. 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 1940 Act. Directors may be removed by action of the holders of a
majority of the outstanding shares of the Company.
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 omnibus account participant. 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 INVESCO, may provide sub-transfer agency services to the Fund
which reduce or eliminate the need for identical services to be provided by
INVESCO. In such cases, INVESCO may pay the third party an annual sub-transfer
agency or record-keeping fee out of the transfer agency fee which is paid to
INVESCO by the Fund.
<PAGE>
INVESCO INTERNATIONAL GROWTH FUND
A no-load mutual fund seeking
capital appreciation through
investment in designated
geographical sectors.
PROSPECTUS
March 1, 1997
To receive general information and prospectuses on any of INVESCO's funds or
retirement plans, or to obtain current account or price information or responses
to other questions, call toll-free:
1-800-525-8085
To reach PAL, your 24-hour Personal Account Line, call:
1-800-424-8085
You can find us on the World Wide Web:
http://www.invesco.com
Or write to:
INVESCO Funds Group, Inc., Distributor
Post Office Box 173706
Denver, Colorado 80217-3706
If you're in Denver, please visit one of our convenient Investor Centers:
Cherry Creek, 155-B Fillmore Street;
Denver Tech Center,
7800 East Union Avenue, Lobby Level
In addition, all documents filed by the Company with the Securities and Exchange
Commission can be located on a web site maintained by the Commission at
http://www.sec.gov.
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
March 1, 1997
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 three funds: the
INVESCO European Fund, the INVESCO Pacific Basin Fund and the INVESCO
International Growth Fund (the "Funds"). The INVESCO European Fund and INVESCO
Pacific Basin Fund seek to provide investors with capital appreciation. The
INVESCO 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 INVESCO EUROPEAN FUND seeks to achieve its investment objective by
investing primarily in equity securities of companies domiciled in specific
European countries.
The INVESCO PACIFIC BASIN FUND seeks to achieve its investment objective
by investing primarily in equity securities of companies domiciled in specific
Far Eastern or Western Pacific countries
The INVESCO INTERNATIONAL GROWTH FUND seeks to achieve its investment
objective by investing substantially all of its assets in foreign securities.
This Fund invests principally in equity securities. The term "foreign
securities" refers to securities of issuers, wherever organized, which in the
judgment of management have their principal business activities outside of the
United States. In determining whether an issuer's principal activities are
outside of the United States, consideration is given to such factors as the
location of the issuer's assets, personnel, sales and earnings.
Additional funds may be offered in the future.
<PAGE>
Separate prospectuses for the Funds dated March 1, 1997, which provide the
basic information you should know before investing in the Funds, may be obtained
without charge from INVESCO Funds Group, Inc., Post Office Box 173706, Denver,
Colorado 80217-3706. This Statement of Additional Information is not a
prospectus but contains information in addition to and more detailed than that
set forth in each prospectus. It is intended to provide you additional
information regarding the activities and operations of the Funds and should be
read in conjunction with the prospectus.
Investment Adviser and Distributor: INVESCO Funds Group, Inc.
<PAGE>
TABLE OF CONTENTS
Page
INVESTMENT POLICIES AND RESTRICTIONS....................................... 4
THE FUNDS AND THEIR MANAGEMENT............................................. 11
HOW SHARES CAN BE PURCHASED................................................ 24
HOW SHARES ARE VALUED...................................................... 24
FUND PERFORMANCE........................................................... 25
SERVICES PROVIDED BY THE FUND.............................................. 27
TAX-DEFERRED RETIREMENT PLANS.............................................. 28
HOW TO REDEEM SHARES....................................................... 28
DIVIDENDS, CAPITAL GAIN DISTRIBUTIONS AND TAXES............................ 31
INVESTMENT PRACTICES....................................................... 34
ADDITIONAL INFORMATION..................................................... 79
<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.
Foreign Securities. The Funds invest primarily in foreign securities.
Investments in non-U.S. securities involve certain risks not associated with
investment in U.S. companies. Non-U.S. companies generally are not subject to
uniform accounting, auditing and financial reporting standards comparable to
those applicable to domestic companies, and there may be less publicly available
information about a foreign company. Although the volume of trading in foreign
securities markets is growing, securities of many non-U.S. companies may be less
liquid and more volatile than securities of comparable U.S. companies.
Transaction costs on foreign securities exchanges are generally higher than in
the United States and there is generally less government supervision and
regulation of exchanges, brokers and issuers in foreign countries than there is
in the United States. Investment in non- U.S. securities may also be subject to
other risks different from those affecting U.S. investments, including local
political or economic developments, expropriation or nationalization of assets,
confiscatory taxation, and imposition of withholding taxes on dividends or
interest payments. Securities denominated in non-U.S. currencies, whether issued
by a non-U.S. or a U.S. issuer, may be affected favorably or unfavorably by
changes in currency rates and exchange control regulations, and costs will be
incurred in connection with conversions from one currency to another. Foreign
currency exchange rates are determined by forces of supply and demand on the
foreign exchange markets. These forces are, in turn, affected by the
international balance of payments and other economic and financial conditions,
government intervention, speculation and other factors. Generally, the foreign
currency exchange transactions of the Funds will be conducted on a spot basis
(i.e., cash basis) at the spot rate for purchasing or selling currency
prevailing in the foreign currency exchange market.
Forward Foreign Currency Contracts. The Funds may enter into forward
currency contracts to purchase or sell foreign currencies (i.e., non-U.S.
currencies) as a hedge against possible variations in foreign exchange rates. A
forward foreign currency exchange contract is an agreement between the
contracting parties to exchange an amount of currency at some future time at an
agreed-upon rate. The rate can be higher or lower than the spot rate between the
currencies that are the subject of the contract. A forward contract generally
has no deposit requirement, and such transactions do not involve commissions. By
entering into a forward contract for the purchase or sale of the amount of
foreign currency invested in a foreign security transaction, a Fund can hedge
against possible variations in the value of the dollar versus the subject
currency either between the date the foreign security
<PAGE>
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 the Funds' limitations on investing in illiquid securities,
discussed in the prospectuses.
Restricted/144A Securities. In recent years, a large institutional market
has developed for certain securities that are not registered under the
Securities Act of 1933 (the "1933 Act"). Institutional investors generally will
not seek to sell these instruments to the general public but instead will often
depend on an efficient institutional market in which such unregistered
securities can readily be resold or on an issuer's ability to honor a demand for
repayment. Therefore, the fact that there are contractual or legal restrictions
on resale to the general public or certain institutions is not dispositive of
the liquidity of such investments.
Rule 144A under the 1933 Act establishes a "safe harbor" from the
registration requirements of the 1933 Act for resales of certain securities to
qualified institutional buyers. Institutional markets for restricted securities
that might develop as a result of Rule 144A could provide both readily
ascertainable values for restricted securities and the ability to liquidate an
investment in order to satisfy share redemption orders. An insufficient number
of qualified institutional buyers interested in purchasing Rule 144A-eligible
securities held by a Fund, however, could affect adversely the marketability of
such portfolio securities and the Fund might be unable to dispose of such
securities promptly or at reasonable prices.
Loans of Portfolio Securities. All of the Funds may lend their portfolio
securities to brokers, dealers and other financial institutions, provided that
such loans are callable at any time by the Funds and are at all times secured by
collateral consisting of cash, letters of credit or securities issued or
guaranteed by the United States Government or its agencies, or any combination
thereof, equal to at least the market value, determined daily, of the loaned
securities. The advantage of such loans is that the Fund continues to 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
collateral (at least 100% of the market value of the borrowed securities), the
Fund will require the deposit of additional collateral not later than the
business day following the day on which a collateral deficiency occurs or the
collateral appears inadequate. If the deficiency is not remedied by the end of
<PAGE>
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. A
repurchase agreement is a means of investing monies for a short period. The
resale price reflects an agreed-upon interest rate effective for the period the
instrument is held by a Fund and is unrelated to the interest rate on the
underlying instrument. In these transactions, the collateral securities acquired
by a Fund (including accrued interest earned thereon) must have a total value in
excess of the value of the repurchase agreement and are held as collateral by
the Company's custodian bank until the repurchase agreement is completed.
Investment Restrictions. As described in the section of each Fund's
prospectus entitled "Investment Objectives and Policies," the Funds operate
under certain investment restrictions. These policies are fundamental and may
not be changed with respect to a particular Fund without the prior approval of
the holders of a majority of the outstanding voting securities of that Fund, as
defined in the Investment Company Act of 1940, as amended (the "1940 Act"). For
purposes of the following limitations, all percentage limitations apply
immediately after a purchase or initial investment. Any subsequent change in a
particular percentage resulting from fluctuations in value does not require
elimination of any security from the Fund.
INVESCO Pacific Basin and European Funds
Under these restrictions, neither the INVESCO Pacific Basin or European
Funds, nor the Company on behalf of such Funds, will:
(1) issue senior securities as defined in the 1940 Act (except insofar
as the Company may be deemed to have issued a senior security by
reason of entering into a repurchase agreement, or borrowing money,
in accordance with the restrictions described below, and in
accordance with the position of the staff of the Securities and
Exchange Commission set forth in Investment Company Act Release
No. 10666);
(2) mortgage, pledge or hypothecate portfolio securities or borrow
money, except borrowings from banks for temporary or emergency
purposes (but not for investment) are permitted in an amount not
exceeding 10% of total net assets. A Fund will not purchase
additional securities while any borrowings on behalf of that Fund
exist;
(3) buy or sell commodities, commodity contracts, oil, gas or other
mineral interests or exploration programs (however, the Fund may
purchase securities of companies which invest in the foregoing and
may enter into forward contracts for the purchase or sale of foreign
currencies);
(4) purchase the securities of any company if as a result of
such purchase more than 10% of total assets would be
<PAGE>
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;
(10) make loans to any person, except through the purchase of
debt securities in accordance with the investment policies of the
<PAGE>
Funds, or the lending of portfolio securities to broker-dealers or other
institutional investors, or the entering into of repurchase agreements with
member banks of the Federal Reserve System, registered broker-dealers and
registered government securities dealers. The aggregate value of all portfolio
securities loaned may not exceed 33-1/3% of a Fund's total net assets (taken at
current value). No more than 10% of a Fund's total net assets may be invested in
repurchase agreements maturing in more than seven days;
(11) purchase securities of any company in which any officer or director
of the Company or its investment adviser owns more than 1/2 of 1% of
the outstanding securities of such company and in which the officers
and directors of the Company and its investment adviser, as a group,
own more than 5% of such securities;
(12) purchase securities (except obligations issued or
guaranteed by the U.S. Government, its agencies or
instrumentalities) if the purchase would cause a Fund at
the time to have more than 5% of the value of its total
assets invested in the securities of any one issuer or to
own more than 10% of the outstanding voting securities of
any one issuer;
(13) invest more than 5% of its total assets in an issuer having a
record, together with predecessors, of less than three years'
continuous operation.
In addition to the above restrictions, a fundamental policy of the INVESCO
Pacific Basin Fund and the INVESCO European Fund is not to invest more than 25%
of their respective total assets (taken at market value at the time of each
investment) in the securities of issuers in any one industry.
In applying restriction (1) above, the INVESCO Pacific Basin and European
Funds will enter into repurchase agreements only if such agreements are in
accordance with all applicable positions of the staff of the Securities and
Exchange Commission, including Investment Company Act Release No. 10666.
INVESCO International Growth Fund
Under these restrictions, neither INVESCO International Growth Fund, nor
the Company on behalf of such Fund, will:
(1) other than investments by the Fund in obligations issued
or guaranteed by the U.S. Government, its agencies or
instrumentalities, invest in the securities of issuers
conducting their principal business activities in the
same industry (investments in obligations issued by a
foreign government, including the agencies or
instrumentalities of a foreign government, are considered
to be investments in a single industry), if immediately
after such investment the value of the Fund's investments
in such industry would exceed 25% of the value of the
Fund's total assets;
<PAGE>
(2) invest in the securities of any one issuer, other than the United
States Government, if immediately after such investment more than 5%
of the value of the Fund's total assets, taken at market value,
would be invested in such issuer or more than 10% of such issuer's
outstanding voting securities would be owned by the Fund;
(3) underwrite securities of other issuers, except insofar as it may
technically be deemed an "underwriter" under the 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) make short sales of securities or maintain a short
position;
(8) purchase securities on margin, except that the Fund may obtain such
short-term credit as may be necessary for the clearance of purchases
and sales of portfolio securities;
(9) purchase or sell real estate or interests in real estate. The Fund
may invest in securities secured by real estate or interests therein
or issued by companies, including real estate investment trusts,
which invest in real estate or interests therein;
(10) purchase or sell commodities or commodity contracts;
(11) make loans to other persons, provided that the Fund may purchase
debt obligations consistent with its investment objectives and
policies and may lend limited amounts (not to exceed 10% of its
total assets) of its portfolio securities to broker-dealers or other
institutional investors;
(12) purchase securities of other investment companies except
(i) in connection with a merger, consolidation,
acquisition or reorganization, or (ii) by purchase in the
open market of securities of other investment companies
involving only customary brokers' commissions and only if
immediately thereafter (i) no more than 3% 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
<PAGE>
value of the total assets of the Fund would be invested
in the securities of such investment companies. The
Company may invest from time to time a portion of the
Fund's cash in investment companies to which the Adviser
serves as investment adviser; provided that no management
or distribution fee will be charged by the Adviser with
respect to any such assets so invested and provided
further that at no time will more than 3% of the Fund's
assets be so invested. Should the Fund purchase
securities of other investment companies, shareholders
may incur additional management and distribution fees;
(13) invest in securities for which there are legal or
contractual restrictions on resale, except that the Fund
may invest no more than 2% of the value of the Fund's
total assets in such securities, or invest in securities
for which there is no readily available market, except
that the Fund may invest no more than 5% of the value of
the Fund's total assets in such securities.
In applying restriction (13) above, the INVESCO International Growth Fund
also includes illiquid securities (those which cannot be sold in the ordinary
course of business within seven days at approximately the valuation given to
them by the Fund) among the securities subject to the 5% of total assets limit.
With respect to investment restriction (4) applicable to the INVESCO
Pacific Basin and European Funds, and restriction (13) applicable to the INVESCO
International Growth Fund, the board of directors has delegated to Fund
Management the authority to determine that a liquid market exists for securities
eligible for resale pursuant to Rule 144A under the Securities Act of 1933, or
any successor to such rule, and that such securities are not subject to the
Funds' limitations on investing in illiquid securities, securities that are not
readily marketable or securities which do not have readily available market
quotations. Under guidelines established by the board of directors, 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 the O'Neil Database published by William O'Neil & Co.,
Inc.
<PAGE>
THE FUNDS AND THEIR MANAGEMENT
The Company. The Company was incorporated on April 2, 1993, under the laws
of Maryland. On July 1, 1993, the Company, through the INVESCO European Fund and
INVESCO Pacific Basin Fund, assumed all of the assets and liabilities of the
European Portfolio and Pacific Basin Portfolio, respectively, of Financial
Strategic Portfolios, Inc., which was incorporated under the laws of Maryland on
August 10, 1983. In addition, on July 1, 1993, the Company, through the INVESCO
International Growth Fund, assumed all of the assets and liabilities of the
Financial International Growth Fund, a series of Financial Series Trust, a
Massachusetts business trust organized on July 15, 1987. All financial and other
information about the Funds for periods prior to July 1, 1993, relates to such
former portfolios and series.
The Investment Adviser. INVESCO Funds Group, Inc., a Delaware corporation
("INVESCO"), is employed as the Company's investment adviser. INVESCO was
established in 1932 and also serves as an investment adviser to INVESCO
Diversified Funds, Inc., INVESCO Dynamics Fund, Inc., INVESCO Emerging
Opportunity Funds, Inc., INVESCO Growth Fund, Inc., INVESCO Income Funds, Inc.,
INVESCO Industrial Income Fund, Inc., INVESCO Money Market Funds, Inc., INVESCO
Multiple Asset Funds, Inc., INVESCO Specialty Funds, Inc., INVESCO Strategic
Portfolios, Inc., INVESCO Tax-Free Income Funds, Inc., INVESCO Value Trust and
INVESCO Variable Investment Funds, Inc.
INVESCO is an indirect, wholly-owned subsidiary of AMVESCO PLC, a
publicly-traded holding company that, through its subsidiaries engages on an
international basis in the business of investment management. INVESCO PLC
changed its name to AMVESCO PLC on February 28, 1997 as part of a merger between
INVESCO PLC and AIM Management Group, Inc., thus creating one of the largest
independent investment management businesses in the world with approximately
$150 billion in assets under management. INVESCO was established in 1932 and as
of October 31, 1996, managed 14 mutual funds, consisting of 39 separate
portfolios, on behalf of over 829,000 shareholders. AMVESCO PLC's other 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 of Dallas, Texas, is responsible for providing
advisory services in the U.S. real estate markets for AMVESCO PLC's clients
worldwide. Clients include corporate plans and public pension funds as well as
endowment and foundation accounts.
<PAGE>
The corporate headquarters of AMVESCO PLC are located at 11 Devonshire
Square, London, EC2M 4YR, England.
The Sub-Adviser. INVESCO, as investment adviser, has contracted with
INVESCO Asset Management Limited ("IAML") to provide investment advisory and
research services on behalf of INVESCO European Fund, INVESCO Pacific Basin Fund
and INVESCO International Growth Fund. IAML has the primary responsibility for
providing portfolio investment management services to these Funds. IAML is also
an indirect, wholly-owned subsidiary of AMVESCO PLC.
As indicated in the prospectuses, INVESCO 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 INVESCO and IAML. These policies require officers,
inside directors, investment and other personnel of INVESCO and IAML 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 INVESCO
and IAML 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 INVESCO or IAML.
Investment Advisory Agreement. INVESCO 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
INVESCO 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. Thereafter, the Agreement may be continued from
year to year as to each Fund as long as each such continuance is specifically
approved at least annually by the board of directors of the Company or by a vote
of the holders of a majority, as defined in the 1940 Act, of the outstanding
shares of the Fund. Any such continuance must also be approved by a majority of
the Company's directors who are not parties to the Agreement or interested
persons (as defined in the 1940 Act) of any such party, cast in person at a
meeting called for the purpose of voting on such continuance. The Agreement may
be terminated at any time without penalty by either party upon sixty (60) days'
written notice and terminates automatically in the event of an assignment to the
extent required by the 1940 Act and the rules thereunder.
The Agreement provides that INVESCO shall manage the investment portfolios
of the Funds in conformity with each Fund's investment policies (either directly
or by delegation to a sub- adviser which may be a company affiliated with
INVESCO). Further, INVESCO shall perform all administrative, internal accounting
(including computation of net asset value), clerical, statistical, secretarial
and all other services necessary or incidental to the administration of the
affairs of the Funds excluding, however, those services that are the subject of
separate agreement between the Company and INVESCO or any affiliate thereof,
<PAGE>
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 INVESCO 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 INVESCO's in-house legal
and accounting staff (including the prospectuses, statement of additional
information, proxy statements, shareholder reports, tax returns, reports to the
SEC and other corporate documents of the Funds), except insofar as the
assistance of independent accountants or attorneys is necessary or desirable;
supplying basic telephone service and other utilities; and preparing and
maintaining certain of the books and records required to be prepared and
maintained by the Funds under the 1940 Act. Expenses not assumed by INVESCO are
borne by the Funds.
As full compensation for its advisory services to the Company, INVESCO
receives a monthly fee. The fee is calculated daily at an annual rate of:
(a) INVESCO Pacific Basin and European Funds: 0.75% on the
first $350 million of each Fund's average net assets;
0.65% on the next $350 million of each Fund's average net
assets; and 0.55% on each Fund's average net assets in
excess of $700 million;
(b) INVESCO International Growth Fund: 1.00% on the first
$500 million of the Fund's average net assets; 0.75% on
the next $500 million of the Fund's average net assets;
and 0.65% 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.
Sub-Advisory Agreement. 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, INVESCO 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 for an initial term expiring February 28,
1999. 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.
<PAGE>
The Sub-Agreement provides that IAML, subject to the supervision of
INVESCO, 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 INVESCO, and
executing transactions accordingly; (d) providing the Funds the benefit of all
of the investment analysis and research, the reviews of current economic
conditions and trends, and the consideration of long-range investment policy now
or hereafter generally available to investment advisory customers of 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 INVESCO, 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
INVESCO European and Pacific Basin Funds, the fee is calculated at the annual
rate of: 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. With respect to the
INVESCO International Growth Fund, the fee is computed at the annual rate of:
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. The sub-advisory fees are paid by
INVESCO, NOT the Funds.
Administrative Services Agreement. INVESCO, either directly or through
affiliated companies, also provides certain administrative, sub-accounting and
recordkeeping services to the Company pursuant to an Administrative Services
Agreement dated 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 INVESCO, 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 INVESCO on sixty (60) days' written notice, or by
the Company upon thirty (30) days' written notice, and terminates automatically
in the event of an assignment unless the Company's board of directors approves
such assignment.
<PAGE>
The Administrative Agreement provides that INVESCO shall provide the
following services to the Funds: (A) such sub- accounting and recordkeeping
services and functions as are reasonably necessary for the operation of the
Fund; and (B) such sub-accounting, recordkeeping and administrative services and
functions, which may be provided by affiliates of INVESCO, as are reasonably
necessary for the operation of Fund shareholder accounts maintained by certain
retirement plans and employee benefit plans for the benefit of participants of
such plans. As full compensation for services provided under the Administrative
Agreement, the Company pays a monthly fee to INVESCO consisting of a base fee of
$10,000 per year per Fund, plus an additional incremental fee computed daily and
paid monthly at an annual rate of 0.015% per year of the average net assets of
each Fund of the Company.
Transfer Agency Agreement. INVESCO also performs transfer agent, dividend
disbursing agent and registrar services for the Company pursuant to a Transfer
Agency Agreement dated February 28, 1997 which was approved by the board of
directors of the Company, including a majority of the Company's directors who
are not parties to the Transfer Agency Agreement or "interested persons" of any
such party, on November 6, 1996, for a term of one year. 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 1/12 of the
annual fee and is based upon the actual number of shareholder accounts and
omnibus account participants in existence during each month.
For the fiscal years ended October 31, 1996, 1995 and 1994, the Funds paid
the following advisory fees, administrative services fees and transfer agency
fees:
INVESCO 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
<PAGE>
INVESCO 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
INVESCO 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
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, INVESCO, are responsible for the day-to-day
administration of the Company and each of the Funds. The investment adviser for
the Company has the primary responsibility for making investment decisions on
behalf of the Company. These investment decisions are reviewed by the investment
committee of INVESCO.
All of the officers and directors of the Company hold comparable positions
with INVESCO Diversified Funds, Inc., INVESCO Dynamics Fund, Inc., INVESCO
Emerging Opportunity Funds, Inc., INVESCO Growth Fund, Inc., INVESCO Income
Funds, Inc., INVESCO Industrial Income Fund, Inc., INVESCO Money Market Funds,
Inc., INVESCO Multiple Asset Funds, Inc., INVESCO Specialty Funds, Inc., INVESCO
Strategic Portfolios, Inc., INVESCO Tax-Free Income Funds, Inc. 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 Advisor
Funds, Inc. (formerly known as "The EBI Funds, Inc.") and trustees of INVESCO
Treasurer's Series Trust. All of the officers of the Company also hold
comparable positions with INVESCO Value Trust. Set forth below is information
with respect to each of the Company's officers and directors. Unless otherwise
indicated, the address of the directors and officers is Post Office Box 173706,
Denver, Colorado 80217-3706. Their affiliations represent their principal
occupations during the past five years.
<PAGE>
CHARLES W. BRADY,*+ Chairman of the Board. Chief Executive Officer and
Director of AMVESCO PLC, London, England, and of various subsidiaries thereof;
Chairman of the Board of INVESCO Advisor Funds, Inc. and INVESCO Treasurer's
Series Trust. Address: 1315 Peachtree Street, NE, Atlanta, Georgia. Born: May
11, 1935.
FRED A. DEERING,+# Vice Chairman of the Board. Vice Chairman of INVESCO
Advisor Funds, Inc. and INVESCO Treasurer's Series Trust. Trustee of The Global
Health Sciences Fund. Formerly, Chairman of the Executive Committee and Chairman
of the Board of Security Life of Denver Insurance Company, Denver, Colorado;
former director of Midwestern United Life Insurance Company. Director of ING
American Holdings Company and First ING Life Insurance Company of New York.
Address: Security Life Center, 1290 Broadway, Denver, Colorado. Born: January
12, 1928.
DAN J. HESSER,+* President and Director. Chairman of the Board, President,
and Chief Executive Officer of INVESCO Funds Group, Inc.; President and Director
of INVESCO Trust Company ^. President and Chief Operating Officer of The Global
Health Sciences Fund ^. Born: December 27, 1939.
VICTOR L. ANDREWS,** Director. Professor Emeritus, Chairman Emeritus and
Chairman of the CFO Roundtable of the Department of Finance of Georgia State
University, Atlanta, Georgia; President, Andrews Financial Associates, Inc.
(consulting firm); 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: 15
Sterling Road, Armonk, New York. Born: August 1, 1923.
KENNETH T. KING,+** Director. Formerly, Chairman of the Board of The
Capitol Life Insurance Company, Providence Washington Insurance Company, and
Director of numerous subsidiaries thereof in the U.S. Formerly, Chairman of the
Board of The Providence Capitol Companies in the United Kingdom and Guernsey.
Chairman of the Board of the Symbion Corporation (a high technology company)
until 1987. Address: 4080 North Circulo Manzanillo, Tucson, Arizona. Born:
November 16, 1925.
<PAGE>
JOHN W. MCINTYRE,# Director. Retired. Formerly, Vice Chairman of the Board
of Directors of The Citizens and Southern Corporation and Chairman of the Board
and Chief Executive Officer of The Citizens and Southern Georgia Corp. and
Citizens and Southern National Bank. Director of Golden Poultry Co., Inc.
Trustee of The Global Health Sciences Fund and Gables Residential Company.
Address: 7 Piedmont Center, Suite 100, Atlanta, GA. Born: September 14, 1930.
GLEN A. PAYNE, Secretary. Senior Vice President (since 1995), General
Counsel and Secretary of INVESCO Funds Group, Inc. and INVESCO Trust Company;
Vice President (May 1989 to April 1995) of INVESCO Funds Group, Inc. and INVESCO
Trust Company. 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. Born: October 1, 1946.
WILLIAM J. GALVIN, JR., Assistant Secretary. Senior Vice President of
INVESCO Funds Group, Inc. and Trust Officer of INVESCO Trust Company since July
1995 and formerly (August 1992 to July 1995) Vice President of INVESCO Funds
Group, Inc. and Trust Officer of INVESCO Trust Company. Formerly, Vice President
of 440 Financial Group from June 1990 to August 1992; Assistant Vice President
of Putnam Companies from November 1986 to June 1990. Born: August 21, 1956.
ALAN I. WATSON, Assistant Secretary. Vice President of INVESCO Funds Group,
Inc. and Trust Officer of INVESCO Trust Company. Born: September 14, 1941.
JUDY P. WIESE, Assistant Treasurer. Vice President of INVESCO Funds Group,
Inc. and Trust Officer of INVESCO Trust Company. Born: February 3, 1948.
#Member of the audit committee of the Company.
+Member of the executive committee of the Company. On occasion, the
executive committee acts upon the current and ordinary business of the Company
between meetings of the board of directors. Except for certain powers which,
under applicable law, may only be exercised by the full board of directors, the
executive committee may exercise all powers and authority of the board of
directors in the management of the business of the Company. All decisions are
subsequently submitted for ratification by the board of directors.
*These directors are "interested persons" of the Company as defined in the
Investment Company Act of 1940.
**Member of the management liaison committee of the Company.
As of February 13, 1997, officers and directors of the Company, as a
group, beneficially owned less than 1% of each Fund's outstanding shares.
<PAGE>
Director Compensation
The following table sets forth, for the fiscal year ended October 31, 1996:
the compensation paid by the Company to its eight independent directors for
services rendered in their capacities as directors of the Company; the benefits
accrued as Company expenses with respect to the Defined Benefit Deferred
Compensation Plan discussed below; and the estimated annual benefits to be
received by these directors upon retirement as a result of their service to the
Company. In addition, the table sets forth the total compensation paid by all of
the mutual funds distributed by INVESCO Funds Group, Inc. (including the
Company), INVESCO Advisor Funds, Inc., INVESCO Treasurer's Series Trust and The
Global Health Sciences Fund (collectively, the "INVESCO Complex") to these
directors for services rendered in their capacities as directors or trustees
during the year ended December 31, 1996. As of December 31, 1996, there were 49
funds in the INVESCO Complex.
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) etirement(3) Directors(1)
- -------------- --------- --------- ----------- ----------
Fred A.Deering, $ 4,309 $ 887 $ 738 $ 98,850
Vice Chairman of
the Board
Victor L. Andrews 4,089 781 813 84,350
Bob R. Baker 4,140 805 1,090 84,850
Lawrence H. Budner 4,026 838 813 80,350
Daniel D. Chabris 4,154 956 578 84,850
A. D. Frazier, Jr.(4) 3,973 0 0 81,500
Kenneth T. King 4,108 921 669 71,350
John W. McIntyre 3,987 0 0 90,350
Total $32,786 $5,188 $4,701 $676,450
% of Net Assets 0.0060%(5) 0.0010%(5) 0.0044%(6)
(1)The vice chairman of the board, the chairmen of the audit, management
liaison and compensation committees, and the members of the executive and
valuation committees each receive compensation for serving in such capacities in
addition to the compensation paid to all independent directors.
<PAGE>
(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 The Global Health Sciences
Fund which does not participate in any retirement plan) upon the directors'
retirement, calculated using the current method of allocating director
compensation among the funds in the INVESCO Complex. These estimated benefits
assume retirement at age 72 and that the basic retainer payable to the directors
will be adjusted periodically for inflation, for increases in the number of
funds in the INVESCO Complex and for other reasons during the period in which
retirement benefits are accrued on behalf of the respective directors. This
results in lower estimated benefits for directors who are closer to retirement
and higher estimated benefits for directors who are further from retirement.
With the exception of Messrs. Frazier and McIntyre, each of these directors has
served as a director/trustee of one or more of the funds in the INVESCO Complex
for the minimum five-year period required to be eligible to participate in the
Defined Benefit Deferred Compensation Plan.
(4)Effective November 1, 1996, Mr.Frazier was employed by AMVESCO PLC, a
company affiliated with INVESCO. Because it was possible that Mr. Frazier would
be employed with AMVESCO PLC, he was deemed to be an "interested person" of the
Fund and of the other funds in the INVESCO Complex effective May 1, 1996.
Effective November 1, 1996, Mr. Frazier ceased to receive any director's fees or
other compensation from the Funds or other funds in the INVESCO Complex for his
service as a director. Effective February 28, 1997, Mr. Frazier resigned as a
director of the Company.
(5)Total as a percentage of the Company's net assets as of
October 31, 1996.
(6)Total as a percentage of the net assets of the INVESCO
Complex as of December 31, 1996.
Messrs. Brady^ and Hesser, as "interested persons" of the Company and
other funds in the INVESCO Complex, receive compensation as officers or
employees of INVESCO or its affiliated companies and do not receive any
director's fees or other compensation from the Company or other funds in the
INVESCO Complex for their services as directors.
The boards of directors/trustees of the mutual funds managed by INVESCO,
INVESCO Advisor Funds, Inc. and INVESCO Treasurer's Series Trust have adopted a
Defined Benefit Deferred Compensation Plan for the non-interested directors and
trustees of the funds. Under this plan, each director or trustee who is not an
interested person of the funds (as defined in the 1940 Act) and who has served
<PAGE>
for at least five years (a "qualified director") is entitled to receive,
upon retiring from the boards at the retirement age of 72 (or the retirement age
of 73 to 74, if the retirement date is extended by the boards for one or two
years but less than three years) continuation of payment for one year (the
"first year retirement benefit") of the annual basic retainer payable by the
funds to the qualified director at the time of his retirement (the "basic
retainer"). Commencing with any such director's second year of retirement, and
commencing with the first year of retirement of a director whose retirement has
been extended by the board for three years, a qualified director shall receive
quarterly payments at an annual rate equal to 40% of the basic retainer. These
payments will continue for the remainder of the qualified director's life or ten
years, whichever is longer (the "reduced retainer payments"). If a qualified
director dies or becomes disabled after age 72 and before age 74 while still a
director of the funds, the first year retirement benefit and the reduced
retainer payments will be made to him or to his beneficiary or estate. If a
qualified director becomes disabled or dies either prior to age 72 or during his
74th year while still a director of the funds, the director will not be entitled
to receive the first year retirement benefit; however, the reduced retainer
payments will be made to his beneficiary or estate. The plan is administered by
a committee of three directors who are also participants in the plan and one
director who is not a plan participant. The cost of the plan will be allocated
among the INVESCO, INVESCO Advisor and Treasurer's Series funds in a manner
determined to be fair and equitable by the committee. The Company is not making
any payments to directors under the plan as of the date of this Statement of
Additional Information. The Company has no stock options or other pension or
retirement plans for management or other personnel and pays no salary or
compensation to any of its officers.
The Company has an audit committee which is comprised of four 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
<PAGE>
Stock Exchange is open as of the close of regular trading on that Exchange
but may also be computed at other times. See "How Shares Are Valued." INVESCO
acts as the Funds' distributor under a distribution agreement with the Company
under which it receives no compensation and bears all expenses, including the
costs of printing and distribution of prospectuses incident to direct sales and
distribution of each of the Fund's shares on a no-load basis.
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 (usually 4:00 p.m., New York time) and applies to
purchase and redemption orders received prior to that time. Net asset value per
share is also computed on any other day on which there is a sufficient degree of
trading in the securities held by a Fund that the current net asset value per
share might be materially affected by changes in the value of the securities
held, but only if on such day the Fund receives a request to purchase or redeem
shares of that Fund. Net asset value per share is not calculated on days the New
York Stock Exchange is closed, such as federal holidays including New Year's
Day, Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving and Christmas.
The net asset value per share of each Fund is calculated by dividing the
value of all securities held by the Fund and its other assets (including
dividends and interest accrued but not collected), less the Fund's liabilities
(including accrued expenses), by the number of outstanding shares of that Fund.
Securities traded on national securities exchanges, the NASDAQ National Market
System, the NASDAQ Small Cap market and foreign markets are valued at their last
sale prices on the exchanges or markets where such securities are primarily
traded. Securities traded in the over-the-counter market for which last sale
prices are not available, and listed securities for which no sales were reported
on a particular date, are valued at their highest closing bid prices (or, for
debt securities, yield equivalents thereof) obtained from one or more dealers
making markets for such securities. If market quotations are not readily
available, securities will be valued at their fair values as determined in good
faith by the Company's board of directors or pursuant to procedures adopted by
the board of directors. The above procedures may include the use of valuations
furnished by a pricing service which employs a matrix to determine valuations
for normal institutional-size trading units of debt securities. Prior to
utilizing a pricing service, the Fund's board of directors reviews the methods
used by such service to assure itself that securities will be valued at their
fair values. The Fund's board of directors also periodically monitors the
methods used by such pricing services. Debt securities with remaining maturities
of 60 days or less at the time of purchase are normally valued at amortized
cost.
<PAGE>
The values of securities held by the Funds, and other assets used in
computing net asset value, generally are determined as of the time regular
trading in such securities or assets is completed each day. 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," the Company advertises the total return performance of its
Funds. Average annual total return performance for each Fund for the indicated
periods ended October 31, 1996, was as follows:
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)
- -----------------
(1) 109 months (9.08 yrs.)
Average annual total return performance for each of the periods indicated was
computed by finding the average annual compounded rates of return that would
equate the initial amount invested to the ending redeemable value, according to
the following formula:
<PAGE>
P(1 + T)n = ERV
where: P = initial payment of $1000
T = average annual total return
n = number of years
ERV = ending redeemable value of initial payment
The average annual total return performance figures shown above were
determined by solving the above formula for "T" for each time period and Fund
indicated.
From time to time, evaluations of performance made by independent sources
may also be used in advertisements, sales literature or shareholder reports,
including reprints of, or selections from, editorials or articles about the
Funds. Sources for Fund performance information and articles about the Funds
include, but are not limited to, the following:
American Association of Individual Investors' Journal
Banxquote
Barron's
Business Week
CDA Investment Technologies
CNBC
CNN
Consumer Digest
Financial Times
Financial World
Forbes
Fortune
Ibbotson Associates, Inc.
Institutional Investor
Investment Company Data, Inc.
Investor's Business Daily
Kiplinger's Personal Finance
Lipper Analytical Services, Inc.'s Mutual Fund Performance
Analysis
Money
Morningstar
Mutual Fund Forecaster
No-Load Analyst
No-Load Fund X
Personal Investor
Smart Money
The New York Times
The No-Load Fund Investor
U.S. News and World Report
United Mutual Fund Selector
USA Today
Wall Street Journal
Wiesenberger Investment Companies Services
<PAGE>
Working Woman
Worth
SERVICES PROVIDED BY THE FUND
Periodic Withdrawal Plan. As described in the section of each Fund's
prospectus entitled "Services Provided By the Funds," each Fund offers a
Periodic Withdrawal Plan. All dividends and distributions on shares owned by
shareholders participating in this Plan are reinvested in additional shares.
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.
A Periodic Withdrawal Plan may be terminated at any time by sending a
written request to INVESCO. Upon termination, all future dividends and capital
gain distributions will be reinvested in additional shares unless a shareholder
requests otherwise.
Exchange Privilege. As discussed in the section of each Fund's prospectus
entitled "Services Provided by the Funds," the Funds offer shareholders the
privilege of exchanging shares of the Funds for shares of certain other mutual
funds advised by INVESCO. Exchange requests may be made either by telephone or
by written request to INVESCO Funds Group, Inc., using the telephone number or
address on the cover of this Statement of Additional Information. Exchanges made
by telephone must be in an amount of at least $250 if the exchange is being made
into an existing account of one of the INVESCO funds. All exchanges that
establish a NEW account must meet the fund's applicable minimum initial
investment requirements. Written exchange requests into an existing account have
no minimum requirements other than the fund's applicable minimum subsequent
investment requirements. Any gain or loss realized on such an exchange is
recognized for federal income tax purposes. This privilege is not an option or
right to purchase securities but is a revocable privilege permitted under the
present policies of each of the funds and is not available in any state or other
jurisdiction where the shares of the mutual fund into which transfer is to be
made are not qualified for sale, or when the net asset value of the shares
presented for exchange is less than the minimum dollar purchase required by the
appropriate prospectus.
<PAGE>
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 INVESCO will be provided with prototype
documents and other supporting information regarding the type of plan requested.
Each of these plans involves a long-term commitment of assets and is subject to
possible regulatory penalties for excess contributions, premature distributions
or 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 has obligated itself under the 1940 Act to redeem for
cash all shares of a Fund presented for redemption by any one shareholder up to
$250,000 (or 1% of the Fund's net assets if that is less) in any 90-day period.
Securities delivered in payment of redemptions are selected entirely by the
investment adviser based on what is in the best interests of the Fund and its
shareholders, and are valued at the value assigned to them in computing the
Fund's net asset value per share. Shareholders receiving such securities are
likely to incur brokerage costs on their subsequent sales of the securities.
DIVIDENDS, CAPITAL GAIN DISTRIBUTIONS AND TAXES
The Company 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 Company so qualified in the fiscal year
<PAGE>
ended October 31, 1996, and intends to continue to qualify during its
current fiscal year. As a result, it is anticipated that the Funds 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 each 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, each Fund sends shareholders information regarding the amount and
character of dividends paid in the year, information on foreign source income
and foreign taxes, and the dividends eligible for the dividends-received
deduction for corporations. Such amounts will be limited to the aggregate amount
of qualifying dividends which each Fund derives from its portfolio investments.
Distributions by each Fund of net capital gains (the excess of net
long-term capital gain over net short-term capital loss) are, for federal income
tax purposes, taxable to the shareholder as long-term capital gains regardless
of how long a shareholder has held shares of the Fund. Such distributions are
identified as such and are not eligible for the dividends-received deduction.
All dividends and other distributions are regarded as taxable to the
investor, whether or not such dividends and distributions are reinvested in
additional shares. If the net asset value of Fund shares should be reduced below
a shareholder's cost as a result of a distribution, such distribution would be
taxable to the shareholder although a portion would be, in effect, a return of
invested capital. The net asset value of each Fund's 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 shares are purchased shortly before a
distribution, the full price for the shares will be paid and some portion of the
price may then be returned to the shareholder as a taxable dividend or capital
gain. However, the net asset value per share will be reduced by the amount of
the distribution, which would reduce any gain (or increase any loss) for tax
purposes on any subsequent redemption of shares.
INVESCO may provide Fund shareholders with information concerning the
average cost basis of their shares in order to help them prepare their tax
returns. This information is intended as a convenience to shareholders and will
not be reported to the Internal Revenue Service (the "IRS"). The IRS permits the
use of several methods to determine the cost basis of mutual fund shares. The
cost basis information provided by INVESCO will be computed using the
single-category average cost method, although neither INVESCO nor the Company
recommends any particular method of determining cost basis. Other methods may
result in different tax consequences. If a shareholder has reported gains or
losses for a Fund in past years, the shareholder must continue to use the method
previously used, unless the shareholder applies to the IRS for permission to
change methods.
<PAGE>
If Fund shares are sold at a loss after being held for six months or less,
the loss will be treated as long-term, instead of short-term, capital loss to
the extent of any capital gain distributions received on those shares.
Each Fund will be subject to a nondeductible 4% excise tax to the extent it
fails to distribute by the end of any calendar year substantially all of its
ordinary income for that year and capital gain net income for the one-year
period ending on October 31 of that year, plus certain other amounts.
Dividends and interest received by each Fund may be subject to income,
withholding or other taxes imposed by foreign countries and U.S. possessions
that would reduce the yield on its securities. Tax conventions between certain
countries and the United States may reduce or eliminate these foreign taxes,
however, and many foreign countries do not impose taxes on capital gains in
respect of investments by foreign investors. If more than 50% of the value of a
Fund's total assets at the close of any taxable year consists of securities of
foreign corporations, the Fund will be eligible to, and may, file an election
with the IRS that will enable its shareholders, in effect, to receive the
benefit of the foreign tax credit with respect to any foreign and U.S.
possessions income taxes paid by it. Each Fund will report to its shareholders
shortly after each taxable year their respective shares of the Fund's income
from sources within, and taxes paid to, foreign countries and U.S. possessions
if it makes this election.
The Funds may invest in the stock of "passive foreign investment companies"
("PFICs"). A PFIC is a foreign corporation that, in general, meets either of the
following tests: (1) at least 75% of its gross income is passive or (2) an
average of at least 50% of its assets produce, or are held for the production
of, passive income. Under certain circumstances, a Fund will be subject to
federal income tax on a portion of any "excess distribution" received on the
stock of a PFIC or of any gain on disposition of the stock (collectively "PFIC
income"), plus interest thereon, even if the Fund distributes the PFIC income as
a taxable dividend to its shareholders. The balance of the PFIC income will be
included in the Fund's investment company taxable income and, accordingly, will
not be taxable to it to the extent that income is distributed to its
shareholders.
Gains or losses (1) from the disposition of foreign currencies, (2) from
the disposition of debt securities denominated in foreign currency that are
attributable to fluctuations in the value of the foreign currency between the
date of acquisition of each security and the date of disposition, and (3) that
are attributable to fluctuations in exchange rates that occur between the time a
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 a Fund's investment company taxable income to be
distributed to its shareholders.
<PAGE>
Shareholders should consult their own tax advisers regarding specific
questions as to federal, state and local taxes. Dividends and capital gains
distributions will generally be subject to applicable state and local taxes.
Qualification as a regulated investment company under the Internal Revenue Code
of 1986, as amended, for income tax purposes does not entail government
supervision of management or investment policies.
INVESTMENT PRACTICES
Portfolio Turnover. There are no fixed limitations regarding portfolio
turnover for any of the 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 INVESCO European Fund's portfolio turnover rates were
91%, 96% and 70%, respectively; the INVESCO Pacific Basin Fund's portfolio
turnover rates were 70%, 56% and 70%, respectively; and the INVESCO
International Growth Fund's portfolio turnover rates were 64%, 62% and 87%,
respectively.
In computing the portfolio turnover rate, all investments with maturities
or expiration dates at the time of acquisition of one year or less are excluded.
Subject to this exclusion, the turnover rate is calculated by dividing (A) the
lesser of purchases or sales of portfolio securities for the fiscal year by (B)
the monthly average of the value of portfolio securities owned by the Fund
during the fiscal year.
Placement of Portfolio Brokerage. Either INVESCO 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.
<PAGE>
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 brokers are paid a fee (the "Broker's Fee") for recordkeeping,
shareholder communications and other services provided by the brokers to
investors purchasing shares of the Funds through no transaction fee programs
("NTF Programs") offered by the brokers. The Broker's Fee is based on the
average daily value of the investments in each Fund made by a broker and held in
omnibus accounts maintained on behalf of investors participating in the NTF
Program. The Company's directors have authorized each Fund to pay transfer
agency fees to INVESCO based on the number of investors who have beneficial
interests in a broker's omnibus accounts in that Fund. INVESCO, in turn, pays
these transfer agency fees to the broker as a sub-transfer agency or
recordkeeping fee in payment of all or a portion of the Broker's Fee. The
Company's directors have further authorized INVESCO to place a portion of each
Fund's brokerage transactions with certain brokers that sponsor NTF Programs, if
INVESCO 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 a broker
from executing portfolio transactions on behalf of a specific Fund may be
credited by the broker against the sub-transfer agency or recordkeeping fee
payable with respect to that Fund, on a basis negotiated between INVESCO and the
broker. INVESCO, in turn, applies any such credits to the transfer agency fee it
charges to the Fund. Thus, the Fund pays sub-transfer agency or recordkeeping
fees to the broker in payment of the Broker's Fee only to the extent that such
fees are not offset by the Fund's credits. INVESCO itself pays the portion of a
Fund's Broker's Fee, if any, that exceeds the sub-transfer agency or
recordkeeping fee. In the event that the transfer agency fee paid by a Fund to
INVESCO with respect to investors who have beneficial interests in a particular
broker's omnibus accounts in that Fund exceeds the Broker's Fee applicable to
that Fund, INVESCO may carry forward the excess through the end of the Company's
fiscal year and apply it to future Broker's Fees payable to that broker with
respect to the Fund. The amount of excess transfer agency fees carried forward
will be reviewed for possible adjustment by INVESCO prior to each fiscal
year-end of the Company.
<PAGE>
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
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 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 America $9,640,000
International State Street Bank and Trust 3,061,000
Growth Fund North America
Neither INVESCO nor IAML receives any brokerage commissions on portfolio
transactions effected on behalf of any of the Funds, and there is no affiliation
between INVESCO, IAML or any person affiliated with INVESCO, IAML or the Funds
and any broker or dealer that executes transactions for the Funds.
ADDITIONAL INFORMATION
Common Stock. The Company has 500,000,000 authorized shares of common stock
with a par value of $0.01 per share. As of October 31, 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 three Funds. The board of directors
has the authority to designate additional classes of Common Stock without
seeking the approval of shareholders and may classify and reclassify any
authorized but unissued shares.
<PAGE>
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 February 1, 1997, the following entities held
more than 5% of the Funds' outstanding equity securities.
Amount and Nature Percent
Name and Address of Ownership of Class
- ---------------- ----------------- --------
INVESCO Pacific Basin Fund
Charles Schwab & Co., Inc. 4,719,280.403 sh. 45.166%
Special Custody Acct. for the Record
Exclusive Benefit of Customers
Attn: Mutual Funds
101 Montgomery St.
San Francisco, CA 94104
<PAGE>
INVESCO European Fund
Charles Schwab & Co., Inc. 8,354,270.094 sh. 37.808%
Special Custody Acct. for the Record
Exclusive Benefit of Customers
Attn: Mutual Funds
101 Montgomery St.
San Francisco, CA 94104
INVESCO International Growth Fund
Commerce Bank of Kansas 2,098,203.618 sh. 36.316%
City Trustee for Record and
Farmland Industries Beneficial
Coop Retirement Plan
P.O. Box 13366
Kansas City, MO 64199
Charles Schwab & Co., Inc. 628,360.341 sh. 10.876%
Special Custody Acct. for the Record
Exclusive Benefit of Customers
Attn: Mutual Funds
101 Montgomery St.
San Francisco, CA 94104
Independent Accountants. Price Waterhouse LLP, 950 Seventeenth Street,
Denver, Colorado, has been selected as the independent accountants of the
Company. The independent accountants are responsible for auditing the financial
statements of the Company.
Custodian. State Street Bank and Trust Company, P.O. Box 351, Boston,
Massachusetts, has been designated as custodian of the cash and investment
securities of the Company. The bank is also responsible for, among other things,
receipt and delivery of each Fund's investment securities in accordance with
procedures and conditions specified in the custody agreement. Under its contract
with the Company, the custodian is authorized to establish separate accounts in
foreign currencies and to cause foreign securities owned by the Company to be
held outside the United States in branches of U.S. banks and, to the extent
permitted by applicable regulations, in certain foreign banks and securities
depositories.
Transfer Agent. The Company is provided with transfer agent, registrar and
dividend disbursing agent services by INVESCO Funds Group, Inc., 7800 E. Union
Avenue, Denver, Colorado 80237, pursuant to the Transfer Agency Agreement
described herein. Such services include the issuance, cancellation and transfer
of shares of each of the Funds, and the maintenance of records regarding the
ownership of such shares.
Reports to Shareholders. The Company's fiscal year ends on October 31. The
Fund distributes reports at least semiannually to its shareholders. Financial
statements regarding the Company, audited by the independent accountants, are
sent to shareholders annually.
Legal Counsel. The firm of Kirkpatrick & Lockhart 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.
<PAGE>
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.
^
