File No. 33-63498
As filed on July 10, 1998
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 X
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Pre-Effective Amendment No.
Post-Effective Amendment No. 7 X
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REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 X
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Amendment No. 8 X
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INVESCO INTERNATIONAL FUNDS, INC.
(Exact Name of Registrant as Specified in Charter)
7800 E. Union Avenue, Denver, Colorado 80237
(Address of Principal Executive Offices)
P.O. Box 173706, Denver, Colorado 80217-3706
(Mailing Address)
Registrant's Telephone Number, including Area Code: (303) 930-6300
Glen A. Payne, Esq.
7800 E. Union Avenue
Denver, Colorado 80237
(Name and Address of Agent for Service)
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Copies to:
Ronald M. Feiman, Esq.
Gordon Altman Butowsky
Weitzen Shalov & Wein
114 W. 47th St.
New York, New York 10036
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Approximate Date of Proposed Public Offering: As soon as practicable after this
post-effective amendment becomes effective.
It is proposed that this filing will become effective (check appropriate box)
___ immediately upon filing pursuant to paragraph (b)
___ on _________________, pursuant to paragraph (b)
___ 60 days after filing pursuant to paragraph (a)(1)
___ on _________________, pursuant to paragraph (a)(1)
_X_ 75 days after filing pursuant to paragraph (a)(2) on
___ _________________, pursuant to paragraph (a)(2) of rule 485.
If appropriate, check the following:
___ this post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
<PAGE>
Registrant has previously elected to register an indefinite number of shares of
its common stock pursuant to Rule 24f-2 under the Investment Company Act.
Registrant's Rule 24f-2 Notice for the fiscal year ended October 31, 1997, was
filed on or about December 19, 1997.
Page 1 of 142
Exhibit index is located at page 118
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INVESCO INTERNATIONAL FUNDS, INC.
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CROSS-REFERENCE SHEET
Form N-1A
Item Caption
Part A Prospectus
1....................... Cover Page
2....................... Annual Fund Expenses
3....................... Not Applicable
4....................... Investment Objective and
Policies; The Fund(s) and
Its/Their Management
5....................... The Fund(s) and Its/Their
Management; Additional
Information
5A...................... Not Applicable
6....................... Services Provided by the Fund(s);
Taxes, Dividends and Other
Distributions; Additional
Information
7....................... How Shares Can Be Purchased;
Services Provided by the Fund(s)
8....................... Services Provided by the Fund(s);
How to Redeem Shares
9....................... Not Applicable
Part B Statement of Additional
Information
10....................... Cover Page
11....................... Table of Contents
-i-
<PAGE>
Form N-1A
Item Caption
12....................... The Funds and Their Management
13....................... Investment Practices; Investment
Policies and Restrictions
14....................... The Funds and Their Management
15....................... The Funds and Their Management
16....................... The Funds and Their Management
17....................... Investment Practices; Investment
Policies and Restrictions
18....................... Additional Information
19....................... How Shares Can Be Purchased; How
Shares Are Valued; Services
Provided by the Funds; Tax-
Deferred Retirement Plans; How to
Redeem Shares
20....................... Dividends, Other Distributions
and Taxes
21....................... How Shares Can Be Purchased
22....................... Calculation of Yield
23....................... Additional Information
Part C Other Information
Information required to be included in Part C is set forth under the
appropriate Item, so numbered, in Part C to this Registration Statement.
-ii-
<PAGE>
PROSPECTUS
September __, 1998
INVESCO INTERNATIONAL BLUE CHIP FUND
INVESCO INTERNATIONAL BLUE CHIP FUND (the "Fund") seeks to achieve a high
total return through capital appreciation and current income. The Fund intends
to accomplish its objective by investing substantially all of its assets in
securities of foreign companies identified by applying both a quantitative
analysis and an individual company analysis. Such securities may take the form
of American Depository Receipts, but may also consist of common or preferred
stocks of foreign issuers which are registered with the SEC and traded on a U.S.
stock exchange, as well as foreign securities traded on overseas exchanges. 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 five separate funds,
each of which represents a separate portfolio of investments. This Prospectus
relates to shares of the INVESCO International Blue Chip Fund. Separate
Prospectuses are available upon request from INVESCO Distributors, Inc. ("IDI")
for the Company's other funds, INVESCO European Fund, INVESCO Pacific Basin
Fund, INVESCO Emerging Markets Fund, and INVESCO International Growth 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 September __, 1998, has been filed with the Securities and
Exchange Commission, and is incorporated by reference into this Prospectus. To
obtain a free copy, write to INVESCO Distributors, Inc., P.O. Box 173706,
Denver, Colorado 80217- 3706; call 1-800-525-8085; or visit our web site at:
http://www.invesco.com.
<PAGE>
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.
TABLE OF CONTENTS
Page
ANNUAL FUND EXPENSES...........................................................7
PERFORMANCE DATA..............................................................10
INVESTMENT OBJECTIVE AND POLICIES.............................................10
RISK FACTORS..................................................................12
THE FUND AND ITS MANAGEMENT...................................................14
HOW SHARES CAN BE PURCHASED...................................................16
SERVICES PROVIDED BY THE FUND.................................................19
HOW TO REDEEM SHARES..........................................................21
TAXES, DIVIDENDS AND OTHER DISTRIBUTIONS......................................23
ADDITIONAL INFORMATION........................................................24
<PAGE>
ANNUAL FUND EXPENSES
The Fund is 100% no-load; there are no fees to purchase, exchange or redeem
shares* (see "Shareholder Transaction Expenses"). The Fund is authorized to pay
a Rule 12b-1 distribution fee of up to one quarter of one percent of the Fund's
average net assets each year. (See "How To Buy Shares - Distribution Expenses").
(See "How Shares Can Be Purchased Distribution 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 0.75%
12b-1 Fees 0.25%
Other Expenses (after voluntary expense limitation)(1) 1.00%
Transfer Agency Fee(2) 0.55%
General Services, Administrative 0.45%
Services, Registration, Postage(3)
Total Fund Operating Expenses 2.00%
(after voluntary expense limitation)(1)
* The Fund has no present intention of imposing redemption fees during the
fiscal year ending October 31, 1998. If the Fund determines it is in the best
interest of shareholders to impose redemption fees, the Fund would be able to
assess and collect a 1% fee that would be retained by the Fund to offset
transaction costs and other expenses associated with short-term redemptions and
exchanges, which would be imposed only on shares held less than 3 months.
(1) Based on estimated expenses for the current fiscal year, which may be
more or less than actual expenses. Actual expenses are not provided because the
Fund did not begin a public offering of its shares until September 30, 1998. If
necessary, certain Fund expenses will be absorbed voluntarily for at least the
first fiscal year of the Fund's operations in order to ensure that expenses for
the Fund will not exceed 2.00% of the Fund's average net assets pursuant to an
agreement among the Company, IFG, and INVESCO Global Asset Management (N.A.). If
such voluntary expense limit were not in effect, the Fund's "Other Expenses" and
"Total Fund Operating Expenses" for the fiscal year ending October 31, 1998
would be estimated to be 1.18% and 2.18%, respectively of the Fund's average net
assets.
(2) Consists of the transfer agency fee described under "Additional
Information - Transfer and Dividend Disbursing Agent."
<PAGE>
(3) Includes, but is not limited to, fees and expenses of directors,
custodian bank, legal counsel and independent accountants, securities pricing
services, costs of administrative services furnished under an Administrative
Services Agreement, costs of registration of Fund shares under applicable laws,
and costs of printing and distributing reports to shareholders.
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
------ -------
$20 $63
The purpose of the foregoing table and Example is to assist investors in
understanding the various costs and expenses that an investor in the Fund will
bear directly or indirectly. Such expenses are paid from the Fund's assets. (See
"The Fund and Its Management.") This Fund charges no sales load, redemption fee
or exchange fee. 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.
As a result of the 0.25% 12b-1 fee paid by the Fund, investors who own Fund
shares for a long period of time may pay more than the economic equivalent of
the maximum front-end sales charge permitted for mutual funds by the National
Association of Securities Dealers, Inc.
Historical Investment Results of Sub-Adviser
The table below shows performance results relating to certain assets
similarly managed by the Sub-Adviser in the INVESCO Retirement Trust -
International Equity Fund ("IRT"). These results are not those of the Fund. The
investment objective of the IRT is substantially similar to that of the Fund and
it is managed by the same personnel who are using substantially similar
investment strategies and techniques as those of the Fund. It cannot be
determined that future holdings of the Fund would be substantially identical to
those in the IRT.
The IRT is not subject to certain limitations, diversification requirements
and other restrictions that are imposed by the Investment Company Act of 1940,
as amended (the "Act") and the Internal Revenue Code on investment companies
such as the Fund. If these restrictions had been applicable to the IRT, such
restrictions might have adversely affected the performance reflected below.
The performance presented is not intended to predict or suggest that such
returns will be experienced by the Fund or by an investor investing in the Fund.
An investor should not rely on the following performance information to be an
indication of future performance of the Fund. Different methods of determining
performance from those described in the footnotes below, including standard
methods used by mutual funds, will result in different performance figures.
<PAGE>
Yearly Total Return
Year Lipper
Ended IRT International Category MSCI-EAFE
1994 (2.70)% (0.74)% 8.06%
1995 17.18% 10.02% 11.55%
1996 22.51% 14.43% 6.36%
1997 15.95% 7.25% 2.06%
1997 62.80% 34.03% 30.85%
Cumulative
Total Return
Notes to Historical Investment Results of Sub-Adviser
(1) IRT
The INVESCO Retirement Trust - International Equity Fund ("IRT") commenced
operations on January 1, 1994. The IRT is not a registered investment
company and is exempt from registration under the 1940 Act.
(2) Fees
Fees for the IRT are contractual with each client and vary among clients.
Performance is net of expenses including investment management fees and
transaction costs. Fund expenses are higher than the average expenses borne
by the IRT. If the Fund's fee expenses were applied to the IRT, performance
results would have been lower.
(3) Lipper
The Lipper Analytical Services, Inc. - International Category was chosen
for comparison purposes because it contains performance figures for mutual
funds that are similar to the Fund. Lipper is a widely recognized
independent mutual fund analyst, which tracks total return unadjusted for
commissions.
(4) MSCI-EAFE
The Morgan Stanley Capital Index - Europe/Australia/Far East was chosen for
comparison purposes because it contains companies which are eligible for
investment by the Fund and the IRT. The MSCI-EAFE Index is a widely
recognized weighted index of international stock market performance. The
index does not have expenses. If the Fund's fee expenses were applied to
the index, performance results would have been lower.
<PAGE>
PERFORMANCE DATA
From time to time, the Fund may advertise its total return performance.
These figures are based upon historical investment results and are not intended
to indicate future performance. The "total return" of the Fund refers to the
annual rate of return of an investment in the Fund. Total return is computed by
calculating the percentage change in value of an investment of $1,000, assuming
reinvestment of all income dividends and capital gain distributions, to the end
of a specified period. Periods of one year, five years and ten years and/or life
of Fund are generally used. 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. Any given
report of total return performance should not be considered as representative of
future performance. The Fund charges no sales load, 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 the performance of recognized stock 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. ("S&P"), Lipper Analytical Services,
Inc., Lehman Brothers, National Association of Securities Dealers Automated
Quotations, Frank Russell Company, Value Line Investment Survey, the American
Stock Exchange, Morgan Stanley Capital International, 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.
Further information about the performance of the Fund will be contained in
the Company's annual report to shareholders which may be obtained without charge
by writing INVESCO Distributors, Inc., P.O. Box 173706, Denver, Colorado
80217-3706; by calling 1-800-525- 8085; or by visiting our website at
http://www.invesco.com.
INVESTMENT OBJECTIVE AND POLICIES
This Prospectus relates to INVESCO International Blue Chip Fund, one of the
Company's five separate portfolios of investments. Each portfolio is represented
by a different class of the Company's common stock. Separate prospectuses are
available for INVESCO European Fund, INVESCO Pacific Basin Fund, INVESCO
Emerging Markets Fund, and INVESCO International Growth Fund.
The Fund seeks to achieve a high total return through capital appreciation
and current income. This investment objective is fundamental and may not be
changed without the approval of a majority of the Fund's shareholders. 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.
<PAGE>
The Fund intends to accomplish its objective by investing substantially all
of its assets in securities of foreign companies identified by applying both a
quantitative analysis and an individual company analysis. Such securities may
take the form of American Depository Receipts ("ADRs"), but may also consist of
common or preferred stocks of foreign issuers which are registered with the SEC
and traded on a U.S. stock exchange, as well as foreign securities traded on
overseas exchanges. The Fund primarily invests in medium and large market
capitalization securities traded in the primary international securities markets
but may, on occasion, have limited exposure to smaller, emerging stock markets.
Whether the Fund invests in the primary markets or the smaller markets, it
attempts to select securities that have a higher than average probability of
extending their established performance records into the future. 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 or securities registered in foreign countries and traded on
overseas exchanges. 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 will require a
determination that 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.
The Fund has not established any minimum investment standards, with respect
to the Fund's equity investments in foreign securities, such as an issuer's
asset level, earnings history, type of industry, or dividend payment history.
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, the Fund may assume a defensive
position by temporarily investing up to 100% of its assets 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
Investors Services, Inc. ("Moody's"), and repurchase agreements with banks and
securities dealers, seeking to protect its assets until conditions stabilize.
It is presently anticipated that the Fund may invest in companies based in
(or governments of or within) various areas of the world. The economies of the
various countries may vary widely and may be subject to sudden changes that
could have a positive or negative impact on the 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 primary international securities markets but the Fund may, on occasion,
have limited exposure to smaller, emerging stock markets.
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 will be affected by changes in
currency exchange rates. Because the Fund's assets may 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 one or more foreign
currencies 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).
For additional information concerning the investment objectives and
operation of the INVESCO International Blue Chip Fund, see "Investment
Objectives and Policies" in the Statement of Additional Information.
<PAGE>
RISK FACTORS
Investors should consider the special factors associated with the policies
discussed below in determining the appropriateness of an investment in the Fund.
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 a foreign currency, returns for a U.S. investor on foreign securities
denominated in that foreign currency may decrease. By contrast, in a period when
the U.S. dollar generally declines, those returns may increase.
Other aspects of international investing to consider include:
-less publicly available information than is generally available about U.S.
issuers;
-differences in accounting, auditing and financial reporting standards;
-generally higher commission rates on foreign portfolio transactions and
longer settlement periods;
-smaller trading volumes and generally lower liquidity of foreign stock
markets, which may cause greater price volatility;
-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.
ADRs represent shares of a foreign corporation held by a U.S. bank that
entitle the holder to all dividends and capital gains, net of certain fees paid
to the bank. ADRs are denominated in U.S. dollars and trade in the U.S.
securities markets. ADRs are subject to some of the same risks as direct
investments in foreign securities, including the risk that material information
about the issuer may not be disclosed in the United States and the risk that
currency fluctuations may adversely affect the value of an ADR.
Year 2000 Computer Issue. Due to the fact that many computer systems in use
today cannot recognize the year 2000, but will, unless corrected, revert to 1900
or 1980 or cease to function at that time, the markets for securities in which
the Funds invest may be detrimentally affected by computer failures throughout
the financial services industry beginning January 1, 2000. Improperly
functioning trading systems may result in settlement problems and liquidity
issues. In addition, corporate and governmental data processing errors may
result in production issues for individual companies and overall economic
uncertainties. Earnings of individual issuers will be affected by remediation
costs, which may be substantial, and may be reported inconsistently in U.S. and
foreign financial statements. The Fund's investments may be adversely affected.
<PAGE>
Options, Futures and Other Financial Instruments. The Fund may use various
types of financial instruments, some of which are derivatives, to attempt to
manage the risk of its investments or, in certain circumstances, for investment
(e.g., as a substitute for investing in securities). These financial instruments
include options, futures contracts, forward contracts, swaps, caps, floors and
collars (collectively, "Financial Instruments"). For descriptions and other
information on these Financial Instruments and strategies and their risk
considerations, see the Statement of Additional Information ("SAI"). Financial
Instruments may be used in an attempt to manage the Fund's foreign currency
exposure as well as other risks of the Fund's investments that can cause
fluctuations in its net asset value. The Fund may use Financial Instruments to
increase or decrease its exposure to changing securities prices, interest rates,
currency exchange rates or other factors. The policies in this section do not
apply to other types of instruments sometimes referred to as derivatives, such
as indexed securities, mortgage-backed and other asset-backed securities, and
stripped interest and principal of debt.
The Fund's ability to use Financial Instruments may be limited by market
conditions, regulatory limits and tax considerations. The Fund might not use any
of these Financial Instruments, and there can be no assurance that any strategy
using a Financial Instrument will fully achieve its objective.
Subject to the further limitations stated in the SAI, generally, the Fund
is authorized to use any type of Financial Instrument. However, as a
non-fundamental policy, the Fund will only use a particular Financial Instrument
(other than those related to foreign currency) if the Fund is authorized to take
a position in the type of asset to which the return on, or value of, the
Financial Instrument is primarily related. Therefore, for example, if the Fund
is authorized to invest in a particular type of security (such as an equity
security), it could take a position in an option on an index relating to equity
securities. As a non-fundamental policy, because it invests in foreign
securities, the Fund may use foreign currency Financial Instruments. In
addition, the Fund presently has a non-fundamental policy to utilize only
exchange-traded Financial Instruments, other than forward currency contracts.
This policy would not, however, prevent the Fund from investing in a security,
such as an indexed security, with an imbedded component, such as a cap or a
floor.
Illiquid and Rule 144A Securities. The Fund may invest up to 15% of its net
assets, measured at the time of purchase, in investments that are illiquid
because they are subject to restrictions on their resale ("restricted
securities") or because, based upon the nature of the market for such
investments, they are not readily marketable. Investments in illiquid securities
are subject to the risk that the Fund may not be able to sell such securities at
the time or price desired. In addition, in order to resell a restricted
security, the Fund might have to bear the expense and incur the delays
associated with registration of the security. The Fund may purchase certain
securities that are not registered for sale to the general public, but that can
be resold to institutional investors ("Rule 144A Securities") without regard to
the foregoing 15% limitation, if a liquid trading market exists. 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. In the event that a Rule 144A Security held by the Fund is subsequently
determined to be illiquid, the security will be sold as soon as that can be done
in an orderly fashion consistent with the best interests of the Fund's
shareholders. For more information concerning Rule 144A Securities, see
"Investment Policies and Restrictions" in the Statement of Additional
Information.
<PAGE>
Repurchase Agreements. The Fund may invest money, for as short a time as
overnight, using repurchase agreements ("repos"). With a repo, the Fund buys a
debt instrument, agreeing simultaneously to sell it back to the prior owner at
an agreed-upon price and on an agreed-upon date. The Fund could incur costs or
delays in seeking to sell the instrument if the prior owner defaults on its
repurchase obligation. To reduce that risk, securities that are the subject of a
repurchase agreement will be maintained with the Fund's custodian in an amount
at least equal to the repurchase price under the agreement (including accrued
interest). These agreements are entered into only with member banks of the
Federal Reserve System, registered broker-dealers, and registered U.S.
government securities dealers that are deemed creditworthy under standards
established by the Fund's board of directors.
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).
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 capital gains that are taxable when distributed to
shareholders. The Fund's portfolio turnover rate and the Company's brokerage
allocation policies are 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.
The overall supervision of the Fund is the responsibility of the Company's board
of directors.
INVESCO Funds Group, Inc., 7800 E. Union Avenue, Denver, Colorado, serves
as the Company's investment adviser pursuant to an investment advisory agreement
with the Company. Under this agreement, IFG 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 Company's board of directors.
Pursuant to an agreement with IFG, INVESCO Global Asset Management
(N.A.)("IGAM") serves as the sub-adviser to the Fund. In that capacity, IGAM has
the primary responsibility, under the supervision of IFG, for providing
portfolio management services to the Fund. IGAM also acts as sub-adviser to the
I.R.T. International Equity Fund, I.R.T. International Bond Fund, I.R.T.
Lifestyle Aggressive Fund, I.R.T. Lifestyle Conservative Fund and I.R.T.
Lifestyle Moderate Fund.
<PAGE>
IDI, established in 1997, is a registered broker-dealer that acts as
distributor for all retail funds advised by IFG pursuant to a distribution
agreement with the Company.
IFG, IGAM and IDI are indirect wholly-owned subsidiaries of AMVESCAP PLC.
AMVESCAP PLC is a publicly-traded holding company that, through its
subsidiaries, engages in the business of investment management on an
international basis. INVESCO PLC changed its name to AMVESCO PLC on March 3,
1997 and to AMVESCAP PLC on May 8, 1997, as part of a merger between a direct
subsidiary of INVESCO PLC and A I M Management Group Inc., that created one of
the largest independent investment management businesses in the world. IFG and
IGAM continue to operate under their existing names. AMVESCAP PLC had
approximately $192.2 billion in assets under management as of December 31, 1997.
IFG was established in 1932 and, as of April 30, 1998, managed 14 mutual funds,
consisting of 48 separate portfolios, with combined assets of approximately
$19.3 billion on behalf of 1,492,189 shareholders.
The Fund is managed by IGAM's International Equity Team, which is headed by
Lindsay Davidson.
W. Lindsay Davidson is lead portfolio manager of the Fund. He has been with
INVESCO Capital Management in Atlanta as an international equity portfolio
manager since 1993. Mr. Davidson joined INVESCO in 1984 as a Director managing
UK pension plan portfolios, after beginning his career in 1974 as an investment
manager for Norwich England. Mr. Davidson was educated at Waid Academy in
Scotland and received an MA in Economics from Edinburgh University in 1974.
Erik B. Granade, a Certified Financial Analyst and Chartered Investment
Counselor, is co-manager of the Fund. Mr. Granade joined INVESCO Capital
Management in 1996 as an international portfolio manager. Mr. Granade began his
investment career in 1986 and prior to joining INVESCO was a partner and
international equity portfolio manager with Cashman, Farrell & Associates. Mr.
Granade earned his BA in Economics from Trinity College.
Michele T. Garren, a Certified Financial Analyst, is co-manager of the
Fund. Ms. Garren joined INVESCO Capital Management in 1997 as an international
equity specialist. Ms. Garren began her investment career in 1987 and prior to
joining INVESCO was a vice president and senior portfolio manager with AIG
Global Investment Corporation in New York. Ms. Garran earned her MBA in Finance
from New York University and her BBA in Finance from Southern Methodist
University.
The Fund pays IFG a monthly advisory fee which is based upon a percentage
of the average net assets of the Fund, determined daily. The maximum advisory
fee payable under the agreement is computed at an annual rate of 0.75% of the
Fund's average net assets.
Out of the advisory fees which it receives from the Fund, IFG pays IGAM, as
sub-adviser to the Fund, a monthly fee, which is computed at an annual rate of
0.30% of the Fund's average net assets.
The Company also has entered into an Administrative Services Agreement
dated February 28, 1997 (the "Administrative Agreement"), with IFG. Pursuant to
the Administrative Agreement, IFG performs certain administrative, recordkeeping
and internal 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 Fund maintained by certain retirement and employee benefit plans for the
benefit of participants of such plans. For such services, the Fund pays IFG a
<PAGE>
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. IFG also is paid a fee by the Company for providing transfer agent
services. See "Additional Information."
The management and custodial services provided to the Fund by its Adviser
and the Fund's custodian, and the services provided to shareholders by IDI and
IFG, depend on the continued functioning of their computer systems. Many
computer systems in use today cannot recognize the year 2000, but will revert to
1900 or 1980 or will cease to function due to the manner in which dates were
encoded and are calculated. That failure could have a negative impact on the
handling of the Fund's securities trades, its share pricing and its account
services. The Fund and its service providers have been actively working on
necessary changes to their computer systems to deal with the year 2000 and
expect that their systems will be adapted before that date, but there can be no
assurance that they will be successful. Furthermore, services may be impaired at
that time as a result of the interaction of their systems with others'
noncomplying computer systems.
If necessary, certain Fund expenses will be absorbed by IFG and IGAM
voluntarily for at least the first fiscal year of the Fund's operations in order
to ensure that the Fund's total expenses do not exceed 2.00%. This commitment
may be changed following consultation with the Company's board of directors. As
of this date, IFG held all of the outstanding shares of the Fund and should be
regarded as the control person of the Fund.
Fund Management places orders for the purchase and sale of portfolio
securities with brokers and dealers based upon Fund Management's evaluation of
such broker-dealers' financial responsibility coupled with their ability to
effect transactions at the best available prices. As discussed under "How Shares
Can Be Purchased - Distribution Expenses," the Company may market shares of the
Fund through intermediary brokers or dealers that have entered into Dealer
Agreements with IFG or IDI as the Company's distributor. The Fund may place
orders for portfolio transactions with qualified broker-dealers which recommend
the Fund to clients, or sell shares of the Fund to clients, or act as agent in
the purchase of Fund shares for clients, if Fund Management believes that the
quality of 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 IDI, as the Fund's
distributor, at the net asset value per share next calculated after receipt of a
purchase order in good form. No sales charge is imposed upon the sale of shares
of the Fund. To purchase shares of the Fund, send a check made payable to
INVESCO Funds Group, Inc., together with a completed application form, to:
INVESCO FUNDS GROUP, INC.
Post Office Box 173706
Denver, Colorado 80217-3706
<PAGE>
Purchase orders must specify the fund in which the investment is to be
made.
The minimum initial purchase must be at least $1,000, with subsequent
investments of not less than $50, except that: (1) those shareholders
establishing an EasiVest or direct payroll purchase account, as described below
in the section entitled "Services Provided by the Fund," may open an account
without making any initial investment if they agree to make minimum monthly
purchases of $50; (2) Fund Management may permit a lesser amount to be invested
in the Fund under a federal income tax-deferred retirement plan (other than an
Individual Retirement Account ("IRA")), or under a group investment plan
qualifying as a sophisticated investor; (3) those shareholders investing in an
IRA, or through omnibus accounts where individual shareholder recordkeeping and
sub-accounting are not required, may make initial minimum purchases of $250; and
(4) Fund Management reserves the right to increase, reduce or waive the minimum
purchase requirements in its sole discretion where it determines such action is
in the best interests of the Fund.
The purchase of Fund shares can be expedited by placing bank wire,
overnight courier or telephone orders. Overnight courier orders must meet the
above minimum 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 Fund shares can be placed by telephone. Shares of the
Fund will be issued at the net asset value next determined after receipt of
telephone instructions. Generally, payments for telephone orders must be
received by the Fund within three business days or the transaction may be
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. IFG has agreed to indemnify the
Fund for any losses resulting from the cancellation of telephone purchases.
If your check does not clear, or if a telephone purchase must be cancelled
due to nonpayment, you will be responsible for any related loss the Fund or IFG
incurs. If you are already a shareholder in the INVESCO funds, the 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 the 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 Fund in any
transaction. In that event, there is no such charge. IFG or IDI may from time to
time make payments from its revenues to securities dealers and other financial
institutions that provide distribution-related and/or administrative services
for the Fund.
The Fund reserves the right in its sole discretion to reject any order for
purchase of its shares (including purchases by exchange) when, in the judgment
of Fund Management, such rejection is in the best interest of the Fund.
<PAGE>
Net asset value per share is computed once each day that the New York Stock
Exchange is open as of the close of regular trading on that Exchange (generally
4:00 p.m., New York time) and also may be computed on other days under certain
circumstances. Net asset value per share for the Fund is calculated by dividing
the market value of 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.
Distribution Expenses. The Fund is authorized under a Plan and Agreement of
Distribution pursuant to Rule 12b-1 under the Investment Company Act of 1940
(the "Plan") to use its assets to finance certain activities relating to the
distribution of its shares to investors. Under the Plan, monthly payments may be
made by the Fund to IDI to permit it, at IDI's discretion, to engage in certain
activities and provide certain services approved by the board of directors in
connection with the distribution of the Fund's shares to investors. These
activities and services may include the payment of compensation (including
incentives, compensation and/or continuing compensation based on the amount of
customer assets maintained in the Fund) to securities dealers and other
financial institutions and organizations, which may include IFG-affiliated
companies, to obtain various distribution-related and/or administrative services
for the Fund (except administrative services already provided under separate
agreements with IFG- affiliated companies). Such services may include, among
other things, processing new shareholder account applications, preparing and
transmitting to the Fund's transfer agent computer processable tapes of all
transactions by customers, and serving as the primary source of information to
customers in answering questions concerning the Fund and their transactions with
the Fund.
In addition, other permissible activities and services include advertising,
the preparation, printing and distribution of sales literature, printing and
distribution of prospectuses to prospective investors, and such other services
and promotional activities for the Fund as may from time to time be agreed upon
by the Company and the board of directors, including public relations efforts
and marketing programs to communicate with investors and prospective investors.
These services and activities may be conducted by the staff of IFG or its
affiliates or by third parties.
Under the Plan, the Fund's payments to IDI are limited to an amount
computed at an annual rate of 0.25% of the Fund's average net assets. IDI is not
entitled to payment for overhead expenses under the Plan, but may be paid for
all or a portion of the compensation paid for salaries and other employee
benefits for the personnel of IFG or IDI whose primary responsibilities involve
marketing shares of the INVESCO Mutual Funds, including the Fund. Subject to
review by the Fund's directors, such payments are based on an allocation formula
designed to ensure that all such payments are appropriate.
Payments made by the Fund may not be used to finance directly the
distribution of shares of any other Fund of the Company or other mutual funds
advised by IFG. However, payments received by IDI which are not used to finance
the distribution of shares of the Fund become part of IDI's revenues and may be
used by IDI for activities that promote distribution of any of the mutual funds
advised by IFG. IDI may from time to time make additional payments from other
revenue sources to securities dealers, financial advisers and financial
institutions that provide distribution- related and/or administrative services
<PAGE>
to the Fund. In this connection, the Plan authorizes any financing of
distribution which may result from IDI's use of its own resources, including
profits received from the Fund, provided that such fees are legitimate and not
excessive.
Payments by the Fund under the Plan, for any month, may be made to
compensate IDI for permissible activities engaged in and services provided by
IDI during the rolling 12-month period in which that month falls, although this
period is expanded to 24 months for obligations incurred during the first 24
months of the Fund's operations. Any obligations incurred by IDI in excess of
these limitations will not be paid by the Fund under the Plan, and will be borne
by IDI. No further payments will be made by the Fund under the Plan in the event
of its termination. For more information see "How Shares Can be Purchased" in
the Statement of Additional Information.
SERVICES PROVIDED BY THE FUND
Shareholder Accounts. IFG maintains a share account that reflects the
current holdings of each shareholder. Share certificates will be issued only
upon specific request. 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 or ex-distribution date. A shareholder
may, however, elect to reinvest dividends and other distributions in certain of
the other no-load mutual funds advised by IFG and distributed by IDI, or to
receive payment of all dividends and other distributions in excess of ten
dollars by check by giving written notice to IFG at least two weeks prior to the
record date on which the change is to take effect. Further information
concerning these options can be obtained by contacting IFG.
Periodic Withdrawal Plan. A Periodic Withdrawal Plan is available to
shareholders who own or purchase shares of any mutual funds advised by IFG
having a total value of $10,000 or more; provided, however, that at the time the
Plan is established, the shareholder owns shares having a value of at least
$5,000 in the fund from which the withdrawals will be made. Under the Periodic
Withdrawal Plan, IFG, as agent, will make specified monthly or quarterly
payments of any amount selected (minimum payment of $100) to the party
designated by the shareholder. Notice of all changes concerning the Periodic
Withdrawal Plan must be received by IFG at least two weeks prior to the next
scheduled check. Further information regarding the Periodic Withdrawal Plan and
its requirements and tax consequences can be obtained by contacting IFG.
Exchange Policy. Shares of 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 by IFG and distributed by IDI, on
the basis of their respective net asset values at the time of the exchange:
INVESCO Capital Appreciation Funds, Inc. (formerly, INVESCO Dynamics Fund,
Inc.), INVESCO Diversified Funds, Inc., INVESCO Emerging Opportunity Funds,
Inc., INVESCO Growth Fund, Inc., INVESCO Income Funds, Inc., INVESCO Industrial
<PAGE>
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 shares of
one of the INVESCO funds listed above. Exchanges will be made at the net asset
value per share next determined after receipt of an exchange request in proper
order. Any gain or loss realized on such an exchange is recognizable for federal
income tax purposes by the shareholder. Exchange requests may be made either by
telephone or by written request to IFG using the telephone number or address on
the cover of this Prospectus. Exchanges made by telephone must be in an amount
of at least $250 if the exchange is being made into an existing account of one
of the INVESCO funds. All exchanges that establish a new account must meet the
Fund's applicable minimum initial investment requirements. Written exchange
requests into an existing account have no minimum requirements other than the
Fund's applicable minimum subsequent investment requirements.
The option to exchange Fund shares by telephone is available to
shareholders automatically unless expressly declined. By signing the New Account
Application or a Telephone Transaction Authorization Form or otherwise utilizing
the telephone exchange option, the investor has agreed that the Fund will not be
liable for following instructions communicated by telephone that it reasonably
believes to be genuine. The Fund employs procedures designed to confirm that
exchange instructions are genuine, which it believes are reasonable. These may
include recording telephone instructions and providing written confirmations of
exchange transactions. As a result of this policy, the investor may bear the
risk of any loss due to unauthorized or fraudulent instructions; provided,
however, that if the Fund fails to follow these or other reasonable procedures,
the Fund may be liable.
In order to prevent abuse of this policy to the disadvantage of other
shareholders, the Fund reserves the right to temporarily or permanently
terminate the exchange option of any shareholder who requests more than four
exchanges in a year, or at any time the Fund determines the actions of the
shareholder is detrimental to Fund performance and shareholders. 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 Fund is intended to be a long-term investment
vehicle and is not designed to provide investors the means of speculation on
short-term market movements. The exchange policy 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 policy
will be given at least 60 days prior to the date of termination or the effective
date of the modification.
Before making an exchange, the shareholder should review the prospectuses
of the funds involved and consider their differences, and should be aware that
the exchange privilege may only be available in those states where exchanges may
legally be made, which will require that the shares being acquired are legally
available for purchase in the shareholder's state of residence. Shareholders
interested in exercising the exchange option may contact IFG for information
concerning their particular exchanges.
<PAGE>
Automatic Monthly Exchange. Shareholders who have accounts in any one or
more of the mutual funds distributed by IDI may arrange for a fixed dollar
amount of their fund shares to be automatically exchanged for shares of any
other INVESCO mutual fund listed under "Exchange Policy" on a monthly basis. The
minimum monthly exchange in this program is $50.00. This automatic exchange
program can be changed by the shareholder at any time by notifying IFG at least
two weeks prior to the date the change is to be made. Further information
regarding this service can be obtained by contacting IFG.
EasiVest. For shareholders who want to maintain a schedule of monthly
investments, EasiVest uses various methods to draw a preauthorized amount from
the shareholder's bank account to purchase Fund shares. This automatic
investment program can be changed by the shareholder at any time by notifying
IFG at least two weeks prior to the date the change is to be made. Further
information regarding this service can be obtained by contacting IFG.
Direct Payroll Purchase. Shareholders may elect to have their 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 IFG.
Tax-Deferred Retirement Plans. Shares of the Fund may be purchased for
self-employed individual retirement plans, various 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 IFG. Institutional Trust Company (formerly, INVESCO
Trust Company), a subsidiary of IFG, is qualified to serve as trustee or
custodian under these plans and provides the required services at competitive
rates. Retirement plans (other than IRAs) receive monthly statements reflecting
all transactions in their Fund accounts. IRAs receive the confirmations and
quarterly statements described under "Shareholder Accounts." For complete
information, including prototype forms and service charges, call 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 the 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) must be
forwarded with the certificates 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 IFG
at the address noted above. If shares are held in the name of a corporation,
<PAGE>
additional documentation may be necessary. Call or write for specific
information. If payment for the redeemed shares is to be made to someone other
than the registered owner(s) of the account, the signature(s) must be guaranteed
by a financial institution which qualifies as an eligible guarantor institution.
Redemption procedures with respect to accounts registered in the names of
broker-dealers may differ from those applicable to other shareholders.
Be careful to specify the account from which the redemption is to be made.
Shareholders have a separate account for each fund in which they invest.
Payment of redemption proceeds will be mailed within seven days following
receipt of the required documents. However, payment may be postponed under
unusual circumstances, such as when normal trading is not taking place on the
New York Stock Exchange or an emergency as defined by the Securities and
Exchange Commission exists. If the shares to be redeemed were purchased by check
and that check has not yet cleared, payment will be made 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 his/her Fund account, IFG
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 Fund reserves the right to effect the involuntary redemption of all
shares in such account, in which case the account would be liquidated and the
proceeds forwarded to the shareholder. Prior to any such redemption, a
shareholder will be notified and given 60 days to increase the value of the
account to $250 or more.
Fund shareholders (other than shareholders holding Fund shares in accounts
of IRA plans) may request expedited redemption of shares having a minimum value
of $250 (or redemption of all shares if their value is less than $250) held in
accounts maintained in their name by telephoning redemption instructions to IFG,
using the telephone number on the cover of this Prospectus. The redemption
proceeds, at the shareholder's option, either will be mailed to the address
listed for the shareholder's Fund account, or wired (minimum of $1,000) or
mailed to the bank which the shareholder has designated to receive the proceeds
of telephone redemptions. The Fund charges no fee for effecting such telephone
redemptions. Unless 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. These telephone redemption privileges may be
modified or terminated in the future at the discretion of Fund Management.
For Institutional Trust Company-sponsored federal income tax-sheltered
retirement plans, the term "shareholders" is defined to mean plan trustees that
file a written request to be able to redeem Fund shares by telephone. 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)
<PAGE>
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 designed to
confirm that telephone instructions are genuine, which it believes are
reasonable. These may include recording telephone instructions and providing
written confirmation of transactions initiated by telephone. As a result of this
policy, the investor may bear the risk of any loss due to unauthorized or
fraudulent instructions; provided, however, that if the Fund fails to follow
these or other reasonable procedures, the Fund may be liable.
TAXES, DIVIDENDS AND OTHER DISTRIBUTIONS
Taxes. The Fund intends to distribute to shareholders all of its net
investment income, net capital gains and net gains from foreign currency
transactions, if any. Distribution of substantially all net investment income to
shareholders allows the Fund to maintain its tax status as a regulated
investment company. Due to its tax status as a regulated investment company, 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 other distributions in taxable income for federal, state and local
income tax purposes. Dividends and other distributions are taxable whether they
are received in cash or automatically reinvested in shares of the Fund or
another fund in the INVESCO group.
Net realized capital gains of the Fund are classified as short-term and
long-term gains depending upon how long the Fund held the security that gave
rise to the gains. Short-term capital gains are included in income from
dividends and interest as ordinary income and are taxed at the taxpayer's
marginal tax rate. Long-term gains realized on the sale of securities held for
more than one year but not for more than 18 months are taxable at a maximum rate
of 28% (depending on the shareholders marginal tax rate). This category of
long-term gains is often referred to as "mid-term" gains but is technically
termed "28% rate gains." Long- term gains realized on the sale of securities
held for more than 18 months are taxable at a maximum rate of 20% (depending on
the shareholders marginal tax rate). At the end of each year, information
regarding the tax status of dividends and other distributions is provided to
shareholders. Shareholders should consult their tax adviser as to the effect of
distributions by the Fund.
Shareholders also may realize capital gains or losses when they sell their
Fund shares at more or less than the price originally paid. Capital gain on
shares held for more than one year will be long-term capital gain, in which
event it will be subject to federal income tax at the rates indicated above.
The Fund may be subject to 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.
Individual and other non-corporate shareholders may be subject to backup
withholding of 31% on dividends, capital gains, and other distributions and
redemption proceeds. Unless you are subject to backup withholding for other
reasons, you can avoid backup withholding on your Fund account by ensuring that
we have a correct, certified tax identification number.
<PAGE>
We encourage you to consult a tax adviser with respect to these matters.
For further information see "Dividends, Other Distributions And Taxes" in the
Statement of Additional Information.
Dividends and Other Distributions. The Fund earns ordinary or net
investment income in the form of dividends on its investments. Dividends paid by
the Fund will be based solely on the income earned by it. The Fund's policy is
to distribute all of this income, less expenses, to shareholders on an annual
basis, at the discretion of the Company's board of directors. Dividends are
automatically reinvested in additional shares of the Fund, unless otherwise
requested, at the net asset value on the ex-dividend date.
In addition, the Fund realizes capital gains and losses when it sells
securities or derivatives for more or less than it paid. If total gains on sales
exceed total losses (including losses carried forward from previous years), the
Fund has a net realized capital gain. Net realized capital gains, if any,
together with gains, if any, realized on foreign currency transactions are
distributed to shareholders at least annually, usually in December. Capital gain
distributions are automatically reinvested in additional shares of the Fund,
unless otherwise requested, at the net asset value on the ex-dividend date.
Dividends and other distributions are paid to shareholders who hold shares
on the record date of the distribution, regardless of how long the shares have
been held. The Fund's share price will then drop by the amount of the
distribution on the ex-dividend or ex-distribution date. If a shareholder
purchases shares immediately prior to the distribution, the shareholder will, in
effect, have "bought" the distribution by paying full purchase price, a portion
of which is then returned in the form of a taxable distribution.
ADDITIONAL INFORMATION
Voting Rights. All shares of the 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.
Master/Feeder Option. The Company may in the future seek to achieve the
Fund's investment objective by investing all of the Fund's assets in another
investment company or partnership having the same investment objective and
substantially the same investment policies and restrictions as those applicable
to the Fund. It is expected that any such investment company would be managed by
IFG in substantially the same manner as the existing Fund. If permitted by
applicable laws and policies then in effect, any such investment may be made in
the sole discretion of the Company's board of directors without further approval
of the shareholders of the Fund. However, Fund shareholders will be given at
<PAGE>
least 30 days prior notice of any such investment. Such investment would be made
only if the Company's board of directors determines it to be in the best
interests of the Fund and its shareholders. In making that determination, the
board will consider, among other things, the benefits to shareholders and/or the
opportunity to reduce costs and achieve operational efficiencies. No assurance
can be given that costs will be materially reduced if this option is
implemented.
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, also acts as registrar, transfer agent and
dividend disbursing agent for the Fund pursuant to a Transfer Agency Agreement
which provides that the Fund will pay an annual fee of $20.00 per shareholder
account or, where applicable, per participant in an omnibus account. The
transfer agency fee is not charged to each shareholder's or participant's
account but is an expense of the Fund to be paid from the Fund's assets.
Registered broker-dealers, third party administrators of tax-qualified
retirement plans and other entities, including affiliates of IFG, may provide
sub-transfer agency services to the Fund which reduce or eliminate the need for
identical services to be provided on behalf of the Fund by IFG. In such cases,
IFG may pay the third party an annual sub-transfer agency or record-keeping fee
out of the transfer agency fee which is paid to IFG by the Fund.
<PAGE>
PROSPECTUS
September __, 1998
INVESCO INTERNATIONAL BLUE CHIP FUND
A no-load mutual fund seeking to achieve a high
total return through long-term capital
appreciation and current income.
INVESCO FUNDS
INVESCO Distributors, Inc.(sm)
Distributor
Post Office Box 173706
Denver, Colorado 80217-3706
1-800-525-8085
PAL(R): 1-800-424-8085
http://www.invesco.com
In Denver, visit one of our
convenient Investor Centers:
Cherry Creek,
155-B Fillmore Street;
Denver Tech Center,
7800 East Union Avenue,
Lobby Level
In addition, all documents filed by
the Company with the Securities and
Exchange Commission can be located
on a web site maintained by the
Commission at http://www.sec.gov.
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
^ September __, 1998
INVESCO INTERNATIONAL FUNDS, INC.
^
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 ^ five funds: the
INVESCO European Fund (the "European Fund"), the INVESCO Pacific Basin Fund (the
"Pacific Basin Fund"), the INVESCO International Growth Fund (the "International
Growth Fund") ^ the INVESCO Emerging Markets Fund (the "Emerging Markets
Fund")^, and the INVESCO International Blue Chip Fund (the "International Blue
Chip Fund") (the "Funds"). The European, Pacific Basin and Emerging Markets
Funds seek to provide investors with capital appreciation. The International
Growth Fund seeks to achieve a high total return on investment through capital
appreciation and current income. The International Blue Chip Fund seeks to
achieve high total return 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 Funds are available:
The EUROPEAN FUND seeks to achieve its investment objective by investing
primarily in equity securities of companies domiciled in specific European
countries.
The PACIFIC BASIN FUND seeks to achieve its investment objective by
investing primarily in equity securities of companies domiciled in specific Far
Eastern or Western Pacific countries
The INTERNATIONAL GROWTH FUND seeks to achieve its investment objective by
investing substantially all of its assets in foreign securities. This Fund
invests principally in equity securities. The term "foreign securities" refers
to securities of issuers, wherever organized, which in the judgment of
management have their principal business activities outside of the United
States. In determining whether an issuer's principal activities are outside of
the United States, consideration is given to such factors as the location of the
issuer's assets, personnel, sales and earnings.
<PAGE>
The INTERNATIONAL BLUE CHIP FUND seeks to achieve its investment objective
by investing substantially all of its assets in securities of foreign companies
identified by applying both a quantitative analysis and an individual company
analysis. Such securities may take the form of American Depository Receipts, but
may also consist of common or preferred stocks of foreign issuers which are
registered with the SEC and traded on a U.S. stock exchange, as well as foreign
securities traded on overseas exchanges.
The EMERGING MARKETS FUND seeks to achieve its investment objective by
investing primarily in equity securities of emerging country issuers.
Additional funds may be offered in the future.
Separate Prospectuses for the European and Pacific Basin^ Funds and the
International Growth^ Fund, each dated March 1, 1998, the Emerging Markets Fund
dated March 1, 1998 as supplemented March 23, 1998, and the International Blue
Chip Fund, dated September __, 1998, which provide the basic information you
should know before investing in ^ a Fund, may be obtained without charge from
INVESCO Distributors, Inc., Post Office Box 173706, Denver, Colorado 80217-3706.
This Statement of Additional Information is not a prospectus but contains
information in addition to and more detailed than that set forth in each
Prospectus. It is intended to provide you additional information regarding the
activities and operations of the Funds and should be read in conjunction with
the Prospectuses.
Investment Adviser: INVESCO FUNDS GROUP, INC.
Distributor: INVESCO DISTRIBUTORS, INC.
<PAGE>
TABLE OF CONTENTS
Page
INVESTMENT POLICIES AND RESTRICTIONS..........................................30
THE FUNDS AND THEIR MANAGEMENT................................................64
HOW SHARES CAN BE PURCHASED...................................................79
HOW SHARES ARE VALUED.........................................................82
FUND PERFORMANCE..............................................................83
SERVICES PROVIDED BY THE FUNDS................................................85
TAX-DEFERRED RETIREMENT PLANS.................................................86
HOW TO REDEEM SHARES..........................................................86
DIVIDENDS, OTHER DISTRIBUTIONS AND TAXES......................................87
INVESTMENT PRACTICES..........................................................89
ADDITIONAL INFORMATION........................................................93
APPENDIX A....................................................................97
APPENDIX B...................................................................101
<PAGE>
INVESTMENT POLICIES AND RESTRICTIONS
The investment objectives and policies of the Funds are discussed in their
respective Prospectuses under the heading "Investment Objective and Policies."
Further information about the Funds' respective investment policies and
restrictions is set forth below.
Types of Equity Securities
As described in the Prospectuses, equity securities which may be purchased
by the Funds consist of common, preferred and convertible preferred stocks, and
securities having equity characteristics such as rights, warrants and
convertible debt securities. Common stocks and preferred stocks represent equity
ownership interests in a corporation and participate in the corporation's
earnings through dividends which may be declared by the corporation. Unlike
common stocks, preferred stocks are entitled to stated dividends payable from
the corporation's earnings, which in some cases may be "cumulative" if prior
stated dividends have not been paid. Dividends payable on preferred stock have
priority over distributions to holders of common stock, and preferred stocks
generally have preferences on the distribution of assets in the event of the
corporation's liquidation. Preferred stocks may be "participating," which means
that they may be entitled to dividends in excess of the stated dividend in
certain cases. The rights of common and preferred stocks are generally
subordinate to rights associated with a corporation's debt securities. Rights
and warrants are securities which entitle the holder to purchase the securities
of a company (generally, its common stock) at a specified price during a
specified time period. Because of this feature, the values of rights and
warrants are affected by factors similar to those which determine the prices of
common stocks and exhibit similar behavior. Rights and warrants may be purchased
directly or acquired in connection with a corporate reorganization or exchange
offer.
Convertible securities which may be purchased by the Funds include
convertible debt obligations and convertible preferred stock. A convertible
security entitles the holder to exchange it for a fixed number of shares of
common stock (or other equity security), usually at a fixed price within a
specified period of time. Until conversion, the holder receives the interest
paid on a convertible bond or the dividend preference of a preferred stock.
Convertible securities have an "investment value" which is the theoretical
value determined by the yield they provide in comparison with similar securities
without the conversion feature. Investment value changes are based upon
prevailing interest rates and other factors. They also have a "conversion value"
which is the amount that would be received ^ in market value if the security
were exchanged for the underlying equity security. Conversion value fluctuates
directly with the price of the underlying security. If conversion value is
<PAGE>
substantially below investment value, the price of the convertible security is
governed principally by its investment value. If the conversion value is near or
above investment value, the price of the convertible security generally will
rise above investment value and may represent a premium over conversion value
due to the combination of the convertible security's right to interest (or
dividend preference) and the possibility of capital appreciation from the
conversion feature. A convertible security's price, when price is influenced
primarily by its conversion value, generally will yield less than a senior
non-convertible security of comparable investment value. Convertible securities
may be purchased at varying price levels above their investment values or
conversion values. However, there is no assurance that any premium above
investment value or conversion value will be recovered because prices change
and, as a result, the ability to achieve capital appreciation through conversion
may be eliminated.
Foreign Securities. ^ Each Fund invests 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.
For additional information regarding forward foreign currency contracts and the
<PAGE>
INVESCO International Blue Chip Fund, see the section titled "INVESCO
International Blue Chip Fund" in this document. A forward foreign currency
exchange contract ("forward contract") is an agreement between the contracting
parties to exchange an amount of currency at some future time at an agreed- upon
rate. The rate can be higher or lower than the spot rate between the currencies
that are the subject of the contract. A forward contract generally has no
deposit requirement, and such transactions do not involve commissions. By
entering into a forward contract for the purchase or sale of the amount of
foreign currency invested in a foreign security transaction, a Fund can hedge
against possible variations in the value of the dollar versus the subject
currency either between the date the foreign security is purchased or sold and
the date on which payment is made or received or during the time the Fund holds
the foreign security. Hedging against a decline in the value of a currency in
the foregoing manner does not eliminate fluctuations in the prices of portfolio
securities or prevent losses if the prices of such securities decline.
Furthermore, such hedging transactions preclude the opportunity for gain if the
value of the hedged currency should rise. The Funds will not speculate in
forward currency contracts. The Funds will not attempt to hedge all of their
non-U.S. portfolio positions and will enter into such transactions only to the
extent, if any, deemed appropriate by their investment adviser and sub-adviser
(collectively, "Fund Management"). The Funds will not enter into forward
contracts for a term of more than one year. Forward contracts may, from time to
time, be considered illiquid, in which case they would be subject to a Fund's
limitations on investing in illiquid securities, discussed in the Prospectuses.
Restricted/144A Securities. As discussed in the Funds' Prospectuses, each
Fund may invest in restricted securities, including restricted securities that
can be resold to institutional investors pursuant to Rule 144A under the
Securities Act of 1933 ("Rule 144A Securities"). In recent years, a large
institutional market has developed for certain Rule 144A Securities.
Institutional investors generally will not seek to sell these instruments to the
general public but instead will often depend on an efficient institutional
market in which Rule 144A Securities can readily be resold or on an issuer's
ability to honor a demand for repayment. Therefore, the fact that there are
contractual or legal restrictions on resale to the general public or certain
institutions is not dispositive of the liquidity of such investments.
Rule 144A under the 1933 Act establishes a "safe harbor" from the
registration requirements of the 1933 Act for resales of certain securities to
qualified institutional buyers. Institutional markets for 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
<PAGE>
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.
Securities Lending. ^ Each of the Funds may lend their portfolio securities
to brokers, dealers and other financial institutions, provided that such loans
are callable at any time by the Funds and are at all times secured by collateral
consisting of cash, letters of credit or securities issued or guaranteed by the
U.S. government or its agencies, or any combination thereof, equal to at least
the market value, determined daily, of the loaned securities. The advantage of
such loans is that ^ a 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 ^ a 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, plus accrued interest and
dividends), ^ a Fund will require the deposit of additional collateral not later
than the business day following the day on which a collateral deficiency occurs
or the collateral appears inadequate. If the deficiency is not remedied by the
end of that period, the Fund will use the collateral to replace the securities
while holding the borrower liable for any excess of replacement cost over
collateral. Upon termination of the loan, the borrower is required to return the
securities to the Fund. Any gain or loss on the security during the loan period
would inure to the Fund.
^
U.S. Government Obligations
These securities consist of treasury bills, treasury notes, and treasury
bonds, which differ only in their interest rates, maturities, and dates of
issuance. Treasury bills have a maturity of one year or less. Treasury notes
generally have a maturity of one to ten years, and treasury bonds generally have
maturities of more than ten years. U.S. government obligations also include
securities issued or guaranteed by agencies or instrumentalities of the U.S.
government.
Some obligations of U.S. government agencies, which are established under
the authority of an act of Congress, such as Government National Mortgage
Association (GNMA) participation certificates, are supported by the full faith
and credit of the United States Treasury. GNMA Certificates are mortgage-backed
securities representing part ownership of a pool of mortgage loans. These loans
- -- issued by lenders such as mortgage bankers, commercial banks and savings and
loan associations -- are either insured by the Federal Housing Administration or
guaranteed by the Veterans Administration. A "pool" or group of such mortgages
<PAGE>
is assembled and, after being approved by GNMA, is offered to investors through
securities dealers. Once approved by GNMA, the timely payment of interest and
principal on each mortgage is guaranteed by GNMA and backed by the full faith
and credit of the U.S. government. The market value of GNMA Certificates is not
guaranteed. GNMA Certificates differ from bonds in that principal is paid back
monthly by the borrower over the term of the loan rather than returned in a lump
sum at maturity. GNMA Certificates are called "pass-through" securities because
both interest and principal payments (including prepayments) are passed through
to the holder of the Certificate. Upon receipt, principal payments will be used
by ^ a Fund to purchase additional securities under its investment objective and
investment policies.
Other U.S. government obligations, such as securities of the Federal Home
Loan Banks, are supported by the right of the issuer to borrow from the Treasury
to repay its obligations. Still others, such as bonds issued by Fannie Mae, a
federally chartered private corporation, are supported only by the credit of the
instrumentality.
Obligations of Domestic Banks
These obligations consist of certificates of deposit ("CDs") and bankers'
acceptances issued by domestic banks (including their foreign branches) having
total assets in excess of $5 billion, which meet the Funds' minimum rating
requirements. CDs are issued against deposits in a commercial bank for a
specified period and rate and are normally negotiable. Eurodollar CDs are
certificates issued by a foreign branch (usually London) of a U.S. domestic
bank, and, as such, the credit is deemed to be that of the domestic bank.
Bankers' acceptances are short-term credit instruments evidencing the
promise of the bank (by virtue of the bank's "acceptance") to pay at maturity a
draft which has been drawn on it by a customer (the "drawer"). These instruments
are used to finance the import, export, transfer, or storage of goods and
reflect the obligation of both the bank and the drawer to pay the face amount.
<PAGE>
Debt Securities
The Funds' investments in debt securities generally are subject to both
credit risk and market risk. Credit risk relates to the ability of the issuer to
meet interest or principal payments, or both, as they come due. The ratings
given a security by Moody's, S&P and other ratings services provide a generally
useful guide as to such credit risk. The lower the rating given a security by
such rating service, the greater the credit risk such rating service perceives
to exist with respect to such security. Increasing the amount of a Fund's assets
invested in unrated or lower grade securities, while intended to increase the
yield produced by those assets, also will increase the credit risk to which
those assets are subject.
Market risk relates to the fact that the market values of the debt
securities in which the Funds invest generally will be affected by changes in
the level of interest rates. An increase in interest rates will tend to reduce
the market values of debt securities, whereas a decline in interest rates will
tend to increase their values. Medium and lower rated securities (Baa, BBB or
the equivalent and lower) and non-rated securities of comparable quality tend to
be subject to wider fluctuations in yields and market values than higher rated
securities and may have speculative characteristics. Although Fund Management
limits a Fund's investments in debt securities to securities it believes are not
highly speculative, both kinds of risk are increased by investing in debt
securities rated below the top three grades by S&P or Moody's or equivalent
ratings of other ratings services or, if unrated, securities determined by Fund
Management to be of equivalent quality. Of course, relying in part on ratings
assigned by credit agencies in making investments will not protect a Fund from
the risk that the securities in which it invests will decline in value, since
credit ratings represent evaluations of the safety of principal, dividend and
interest payments on preferred stocks and debt securities, not the market value
of such securities, and such ratings may not be changed on a timely basis to
reflect subsequent events. A Fund is not required to sell immediately debt
securities that go into default, but may continue to hold such securities until
such time as Fund Management determines it is in the best interests of the Fund
to sell such securities. Because investment in medium and lower rated securities
involves both greater credit risk and market risk, achievement of a Fund's
investment objectives may be more dependent on Fund Management's own credit
analysis than is the case for funds investing in higher quality securities. In
addition, the share price and yield of the Funds may be expected to fluctuate
more than in the case of funds investing in higher quality, shorter term
securities. Moreover, a significant economic downturn or major increase in
interest rates may result in issuers of lower rated securities experiencing
increased financial stress, which would adversely affect their ability to
service their principal, dividend and interest obligations, meet projected
business goals, and obtain additional financing. Expenses incurred to recover an
<PAGE>
investment in a defaulted security may adversely affect a Fund's net asset
value. Finally, while Fund Management attempts to limit purchases of medium and
lower rated securities to securities having a secondary market, the secondary
market for such securities may be less liquid than the market for higher quality
securities. The reduced liquidity of the secondary market for such securities
may adversely affect the market price of, and ability of a Fund to value,
particular securities at certain times, thereby making it difficult to make
specific valuation determinations.
The Funds expect that most emerging country debt securities in which they
invest will not be rated by U.S. rating services. Although bonds in the lowest
investment grade debt category (those rated BBB by S&P, Baa by Moody's or the
equivalent) are regarded as having adequate capability to pay principal and
interest, they have speculative characteristics. Adverse economic conditions or
changing circumstances are more likely to lead to a weakened capacity to make
principal and interest payments than is the case for higher rated bonds. Lower
rated bonds by Moody's (categories Ba, B, Caa) are of poorer quality and also
have speculative characteristics. Bonds rated Caa may be in default or there may
be present elements of danger with respect to principal or interest. Lower rated
bonds by S&P (categories BB, B, CCC) include those that are regarded, on
balance, as predominantly speculative with respect to the issuer's capacity to
pay interest and repay principal in accordance with their terms; BB indicates
the lowest degree of speculation and CCC a high degree of speculation. While
such bonds likely will have some quality and protective characteristics, these
are outweighed by large uncertainties or major risk exposures to adverse
conditions. Bonds having equivalent ratings from other ratings services will
have characteristics similar to those of the corresponding S&P and Moody's
ratings. For a specific description of S&P and Moody's corporate bond rating
categories, please refer to Appendix B to the Statement of Additional
Information.
Sovereign Debt
In certain emerging countries, the central government and its agencies are
the largest debtors to local and foreign banks and others. Sovereign debt
involves the risk that the government, as a result of political considerations
or cash flow difficulties, may fail to make scheduled payments of interest or
principal and may require holders to participate in rescheduling of payments or
even to make additional loans. If an emerging country government defaults on its
sovereign debt, there is likely to be no legal proceeding under which the debt
may be ordered repaid, in whole or in part. The ability or willingness of a
foreign sovereign debtor to make payments of principal and interest in a timely
manner may be influenced by, among other factors, its cash flow, the magnitude
of its foreign reserves, the availability of foreign exchange on the payment
date, the debt service burden to the economy as a whole, the debtor's then
current relationship with the International Monetary Fund and its then current
<PAGE>
political constraints. Some of the emerging countries issuing such instruments
have experienced high rates of inflation in recent years and have extensive
internal debt. Among other effects, high inflation and internal debt service
requirements may adversely affect the cost and availability of future domestic
sovereign borrowing to finance governmental programs, and may have other adverse
social, political and economic consequences, including effects on the
willingness of such countries to service their sovereign debt. An emerging
country government's willingness and ability to make timely payments on its
sovereign debt also are likely to be heavily affected by the country's balance
of trade and its access to trade and other international credits. If a country's
exports are concentrated in a few commodities, such country would be more
significantly exposed to a decline in the international prices of one or more of
such commodities. A rise in protectionism on the part of its trading partners,
or unwillingness by such partners to make payment for goods in hard currency,
could also adversely affect the country's ability to export its products and
repay its debts. Sovereign debtors may also be dependent on expected receipts
from such agencies and others abroad to reduce principal and interest arrearages
on their debt. However, failure by the sovereign debtor or other entity to
implement economic reforms negotiated with multilateral agencies or others, to
achieve specified levels of economic performance, or to make other debt payments
when due, may cause third parties to terminate their commitments to provide
funds to the sovereign debtor, which may further impair such debtor's
willingness or ability to service its debts.
The Funds may invest in debt securities issued under the "Brady Plan" in
connection with restructurings in emerging country debt markets or earlier
loans. These securities, often referred to as "Brady Bonds," are, in some cases,
denominated in U.S. dollars and collateralized as to principal by U.S. Treasury
zero coupon bonds having the same maturity. At least one year's interest
payments, on a rolling basis, are collateralized by cash or other investments.
Brady Bonds are actively traded on an over-the-counter basis in the secondary
market for emerging country debt securities. "Brady Bonds" are lower rated bonds
and highly volatile.
Repurchase Agreements
The Funds may engage in repurchase agreements with banks, registered
broker-dealers, and registered government securities dealers that are deemed
creditworthy. A repurchase agreement is a transaction in which a Fund purchases
a security and simultaneously commits to sell the security to the seller at an
agreed upon price and date (usually not more than seven days) after the date of
purchase. The resale price reflects the purchase price plus an agreed upon
market rate of interest which is unrelated to the coupon rate or maturity of the
purchased security. A Fund's risk is limited to the ability of the seller to pay
the agreed upon amount on the delivery date. In the event the seller should
default, the underlying security constitutes collateral for the seller's
<PAGE>
obligations to pay. This collateral will be held by the Fund's custodian. The
Fund may experience delays and incur costs in realizing on the collateral if the
other party to the agreement becomes insolvent. To the extent that the proceeds
from a sale of the collateral upon a default in the obligation to repurchase are
less than the repurchase price, a Fund would suffer a loss. Although the Funds
have not adopted any limit on the amount of its total assets that may be
invested in repurchase agreements, it is the intention of Fund Management that
the market value of a fund's securities subject to repurchase agreements not
exceed 20% of the total assets of the Fund.
Commercial Paper
These obligations are short-term promissory notes issued by domestic
corporations to meet current working capital requirements. Such paper may be
unsecured or backed by a bank letter of credit. Commercial paper issued with a
letter of credit is, in effect, "two party paper," with the issuer directly
responsible for payment, plus a bank's guarantee that if the note is not paid at
maturity by the issuer, the bank will pay the principal and interest to the
buyer. Commercial paper is sold either as interest-bearing or on a discounted
basis, with maturities not exceeding 270 days.
INVESCO Emerging Markets Fund
Futures Contracts and Options on Futures Contracts
As described in the Emerging Markets Fund's Prospectus, this Fund may enter
into futures contracts, and purchase and sell ("write") options to buy or sell
futures contracts.
^ To the extent that the Fund enters into futures contracts, options on
futures contracts and options on foreign currencies traded on a Commodity
Futures Trading Commission (the ^ "CFTC") -regulated exchange, in each case that
is not for bona fide hedging purposes (as defined by the CFTC), the aggregate
initial ^ margin and premiums required to establish these positions (excluding
the amount by which options are "in-the-money" at the time of purchase) may not
exceed 5% of the liquidation value of the Fund's portfolio, after taking into
account unrealized profits and ^ unrealized losses on any contracts the Fund has
entered into. This policy does not limit to 5% the percentage of the Fund's
assets that are at risk in futures contracts, options on futures contracts and
currency options.
Unlike when the Emerging Markets Fund purchases or sells a security, no
price is paid or received by the Fund upon the purchase or sale of a futures
contract. Instead, the Fund will be required to deposit in a segregated asset
account with the broker an amount of cash or qualifying securities (currently
U.S. Treasury bills), currently in a minimum amount of $15,000. This is called
"initial margin." Such initial margin is in the nature of a performance bond or
good faith deposit on the contract. However, since losses on open contracts are
<PAGE>
required to be reflected in cash in the form of variation margin payments, the
Fund may be required to make additional payments during the term of the
contracts to its broker. Such payments would be required, for example, where,
during the term of an interest rate futures contract purchased by the Fund,
there was a general increase in interest rates, thereby making the Fund's
portfolio securities less valuable. In all instances involving the purchase of
financial futures contracts by the Fund, an amount of cash together with such
other securities as permitted by applicable regulatory authorities to be
utilized for such purpose, at least equal to the market value of the futures
contracts, will be deposited in a segregated account with the Fund's custodian
to collateralize the position. At any time prior to the expiration of a futures
contract, the Fund may elect to close its position by taking an opposite
position which will operate to terminate the Fund's position in the futures
contract.
Where futures are purchased to hedge against a possible increase in the
price of a security before ^ the Fund is able in an orderly fashion to invest in
the security, it is possible that the market may decline instead. If the Fund,
as a result, concluded not to make the planned investment at that time because
of concern as to possible further market decline or for other reasons, the Fund
would realize a loss on the futures contract that is not offset by a reduction
in the price of securities purchased.
In addition to the possibility that there may be an imperfect correlation
or no correlation at all between movements in the futures contract and the
portion of the portfolio being hedged, the price of futures may not correlate
perfectly with movements in the portfolio prices due to certain market
distortions. All participants in the futures market are subject to margin
deposit and maintenance requirements. Rather than meeting additional margin
deposit requirements, investors may close futures contracts through offsetting
transactions which could distort the normal relationship between the underlying
securities and the value of the futures contract. Moreover, the deposit
requirements in the futures market are less onerous than margin requirements in
the securities market and may therefore cause increased participation by
speculators in the futures market. Such increased participation may also cause
temporary price distortions. Due to the possibility of price distortion in the
futures market and because of the imperfect correlation between movements in the
value of the underlying securities and movements in the prices of futures
contracts, the value of futures contracts as a hedging device may be reduced.
In addition, if the Emerging Markets Fund has insufficient available cash,
it may at times have to sell securities to meet variation margin requirements.
Such sales may have to be effected at a time when it may be disadvantageous to
do so.
<PAGE>
Options on Futures Contracts
The Emerging Markets Fund may buy and write options on futures contracts
for hedging purposes. Options on futures contracts are included among the types
of instruments sometimes known as derivatives. The purchase of a call option on
a futures contract is similar in some respects to the purchase of a call option
on an individual security. Depending on the pricing of the option compared to
either the price of the futures contract upon which it is based or the price of
the underlying instrument, ownership of the option may or may not be less risky
than ownership of the futures contract or the underlying instrument. As with the
purchase of futures contracts, when the Fund is not fully invested it may buy a
call option on a futures contract to hedge against a market advance.
The writing of a call option on a futures contract constitutes a partial
hedge against declining prices of the security or foreign currency which is
deliverable under, or of the index comprising, the futures contract. If the
futures price at the expiration of the option is below the exercise price, the
Emerging Markets Fund will retain the full amount of the option premium which
provides a partial hedge against any decline that may have occurred in the
Fund's portfolio holdings. The writing of a put option on a futures contract
constitutes a partial hedge against increasing prices of the security or foreign
currency which is deliverable under, or of the index comprising, the futures
contract. If the futures price at expiration of the option is higher than the
exercise price, the Fund will retain the full amount of the option premium which
provides a partial hedge against any increase in the price of securities which
the Fund is considering buying. If a call or put option the Fund has written is
exercised, the Fund will incur a loss which will be reduced by the amount of the
premium it received. Depending on the degree of correlation between change in
the value of its portfolio securities and changes in the value of the futures
positions, the Fund's losses from existing options on futures may to some extent
be reduced or increased by changes in the value of portfolio securities.
The purchase of a put option on a futures contract is similar in some
respects to the purchase of protective put options on portfolio securities. For
example, the Emerging Markets Fund may buy a put option on a futures contract to
hedge the Fund's portfolio against the risk of falling prices.
The amount of risk the Emerging Markets Fund assumes when it buys an option
on a futures contract is the premium paid for the option plus related
transaction costs. In addition to the correlation risks discussed above, the
purchase of an option also entails the risk that changes in the value of the
underlying futures contract will not be fully reflected in the value of the
options bought.
For a more complete discussion of the risks involved in futures and options
on futures and other securities, refer to Appendix A ("Description of Futures,
Options and Forward Contracts").
<PAGE>
Swaps and Swap-Related Products
Interest rate swaps involve the exchange by the Emerging Markets Fund with
another party of their respective commitments to pay or receive interest, e.g.,
an exchange of floating rate payments for fixed rate payments. The exchange
commitments can involve payments to be made in the same currency or in different
currencies. The purchase of an interest rate cap entitles the purchaser, to the
extent that a specified index exceeds a predetermined interest rate, to receive
payments of interest on a contractually-based principal amount from the party
selling the interest rate cap. The purchase of an interest rate floor entitles
the purchaser, to the extent that a specified index falls below a predetermined
interest rate, to receive payments of interest on a contractually-based
principal amount from the party selling the interest rate floor.
The Emerging Markets Fund may enter into interest rate swaps, caps and
floors, which are included among the types of instruments sometimes known as
derivatives, on either an asset-based or liability-based basis, depending upon
whether it is hedging its assets or its liabilities, and usually will enter into
interest rate swaps on a net basis, i.e., the two payment streams are netted
out, with the Fund receiving or paying, as the case may be, only the net amount
of the two payments. The net amount of the excess, if any, of the Fund's
obligations over its entitlement with respect to each interest rate swap will be
calculated on a daily basis, and an amount of cash or high-grade liquid assets
having an aggregate net asset value at least equal to the accrued excess will be
maintained in a segregated account by the Fund's custodian. If the Fund enters
into an interest rate swap on other than a net basis, the Fund would maintain a
segregated account in the full amount accrued on a daily basis of the Fund's
obligations with respect to the swap. The Fund will not enter into any interest
rate swap, cap or floor transaction unless the unsecured senior debt or the
claims-paying ability of the other party thereto is rated in one of the three
highest rating categories of at least one nationally recognized statistical
rating organization at the time of entering into such transaction. Fund
Management will monitor the creditworthiness of all counterparties on an ongoing
basis. If there is a default by the other party to such a transaction, the Fund
would have contractual remedies pursuant to the agreements related to the
transaction.
The swap market has grown substantially in recent years with a large number
of banks and investment banking firms acting both as principals and as agents
utilizing standardized swap documentation. Caps and floors are more recent
innovations for which standardized documentation has not yet been developed and,
accordingly, they are less liquid than swaps. To the extent the Emerging Markets
Fund sells (i.e., writes) caps and floors, it will maintain in a segregated
account cash or high-grade liquid assets having an aggregate net asset value at
least equal to the full amount, accrued on a daily basis, of the Fund's
obligations with respect to any caps or floors.
<PAGE>
These transactions may in some instances involve the delivery of securities
or other underlying assets by ^ a Fund or its counterparty to collateralize
obligations under the swap. The documentation currently used in those markets
attempts to limit the risk of loss with respect to interest rate swaps to the
net amount of the payments that a party is contractually obligated to make. If
the other party to an interest rate swap that is not collateralized defaults,
the Fund would anticipate losing the net amount of the payments that the Fund
contractually is entitled to receive over the payments that the Fund is
contractually obligated to make. The Fund may buy and sell (i.e., write) caps
and floors without limitation, subject to the segregated account requirement
described above as well as the Fund's other investment restrictions set forth
below.
INVESCO International Blue Chip Fund
General. As discussed in the Prospectus for the INVESCO International Blue
Chip Fund, Fund Management may use various types of financial instruments, some
of which are derivatives, to attempt to manage the risk of the Fund's
investments or, in certain circumstances, for investment (e.g., as a substitute
for investing in securities). These financial instruments include options,
futures contracts (sometimes referred to as "futures"), forward contracts,
swaps, caps, floors and collars (collectively, "Financial Instruments"). The
policies in this section do not apply to other types of instruments sometimes
referred to as derivatives, such as indexed securities, mortgage-backed and
other asset-backed securities, and stripped interest and principal of debt.
Generally, the Fund is authorized to use any type of Financial Instrument.
However, as a non-fundamental policy, the Fund will only use a particular
Financial Instrument (other than those related to foreign currency) if the Fund
is authorized to take a position in the type of asset to which the return on, or
value of, the Financial Instrument is primarily related. Therefore, for example,
if the Fund is authorized to invest in a particular type of security (such as an
equity security), it could take a position in an option on an index relating to
equity securities. As a non-fundamental policy the Fund may use foreign currency
Financial Instruments. In addition, the Fund presently has a non-fundamental
policy to utilize only exchange-traded Financial Instruments, other than forward
currency contracts. This policy would not, however, prevent the Fund from
investing in a security, such as an indexed security, with an imbedded
component, such as a cap or a floor.
Hedging strategies can be broadly categorized as "short" hedges and "long"
or "anticipatory" hedges. A short hedge involves the use of a Financial
Instrument in order to partially or fully offset potential variations in the
value of one or more investments held in the Fund's portfolio. A long or
<PAGE>
anticipatory hedge involves the use of a Financial Instrument in order to
partially or fully offset potential increases in the acquisition cost of one or
more investments that the Fund intends to acquire. In an anticipatory hedge
transaction, the Fund does not already own a corresponding security. Rather, it
relates to a security or type of security that the Fund intends to acquire. If
the Fund does not eliminate the hedge by purchasing the security as anticipated,
the effect on the Fund's portfolio is the same as if a long position were
entered into. Financial Instruments may also be used, in certain circumstances,
for investment (e.g., as a substitute for investing in securities).
Financial Instruments on individual securities generally are used to
attempt to hedge against price movements in one or more particular securities
positions that the Fund already owns or intends to acquire. Financial
Instruments on indexes, in contrast, generally are used to attempt to hedge all
or a portion of a portfolio against price movements of the securities within a
market sector in which the Fund has invested or expects to invest.
The use of Financial Instruments is subject to applicable regulations of
the Securities and Exchange Commission ("SEC"), the several exchanges upon which
they are traded, and the Commodity Futures Trading Commission ("CFTC"). In
addition, the Fund's ability to use Financial Instruments will be limited by tax
considerations. See "Dividends, Other Distributions and Taxes."
In addition to the instruments and strategies described below, Fund
Management may use other similar or related techniques to the extent that they
are consistent with the Fund's investment objective and permitted by the Fund's
investment limitations and applicable regulatory authorities. The Fund's
Prospectus or Statement of Additional Information ("SAI") will be supplemented
to the extent that new products or techniques become employed involving
materially different risks than those described below or in the Prospectus.
Special Risks. Financial Instruments and their use involve special
considerations and risks, certain of which are described below.
(1) If Fund Management employs a Financial Instrument that correlates
imperfectly with the Fund's investments, a loss could result,
regardless of whether or not the intent was to manage risk. Financial
Instruments may increase the volatility of the Fund. In addition,
these techniques could result in a loss if there is not a liquid
market to close out a position that the Fund has entered.
(2) There might be imperfect correlation between price movements of a
Financial Instrument and price movements of the investments being
<PAGE>
hedged. For example, if the value of a Financial Instrument used in a
short hedge increased by less than the decline in value of the hedged
investment, the hedge would not be fully successful. This might be
caused by certain kinds of trading activity that distorts the normal
price relationship between the security being hedged and the Financial
Instrument. Similarly, the effectiveness of hedges using Financial
Instruments on indexes will depend on the degree of correlation
between price movements in the index and price movements in the
securities being hedged.
The Fund presently has a non-fundamental policy to utilize only
exchange-traded Financial Instruments, other than forward currency
contracts. Because there are a limited number of types of
exchange-traded options and futures contracts, it is likely that the
standardized contracts available will not match the Fund's current or
anticipated investments exactly. The Fund is authorized to use options
and futures contracts related to securities with issuers, maturities
or other characteristics different from the securities in which it
typically invests. This involves a risk that the options or futures
position will not track the performance of the Fund's portfolio
investments.
The direction of options and futures price movements can also diverge
from the direction of the movements of the prices of their underlying
instruments, even if the underlying instruments match the Fund's
investments well. Options and futures prices are affected by such
factors as current and anticipated short-term interest rates, changes
in volatility of the underlying instrument, and the time remaining
until expiration of the contract, which may not affect security prices
the same way. Imperfect correlation may also result from differing
levels of demand in the options and futures markets and the securities
markets, from structural differences in how options and futures and
securities are traded, or from imposition of daily price fluctuation
limits or trading halts. The Fund may take positions in options and
futures contracts with a greater or lesser face value than the
securities it wishes to hedge or intends to purchase in order to
attempt to compensate for differences in volatility between the
contract and the securities, although this may not be successful in
all cases.
(3) If successful, the above-discussed hedging strategies can reduce risk
of loss by wholly or partially offsetting the negative effect of
unfavorable price movements of portfolio securities. However, such
strategies can also reduce opportunity for gain by offsetting the
positive effect of favorable price movements. For example, if the Fund
<PAGE>
entered into a short hedge because Fund Management projected a decline
in the price of a security in the Fund's portfolio, and the price of
that security increased instead, the gain from that increase would
likely be wholly or partially offset by a decline in the value of the
short position in the Financial Instrument. Moreover, if the price of
the Financial Instrument declined by more than the increase in the
price of the security, the Fund could suffer a loss.
(4) The Fund's ability to close out a position in an exchange-traded
Financial Instrument prior to expiration or maturity depends on the
degree of liquidity of the market.
(5) As described below, the Fund is required to maintain assets as
"cover," maintain segregated accounts or make margin payments when it
takes positions in Financial Instruments involving obligations to
third parties (i.e., Financial Instruments other than purchased
options). If the Fund were unable to close out its positions in such
Financial Instruments, it might be required to continue to maintain
such assets or segregated accounts or make such payments until the
position expired. These requirements might impair the Fund's ability
to sell a portfolio security or make an investment at a time when it
would otherwise be favorable to do so, or require that the Fund sell a
portfolio security at a disadvantageous time.
Cover. Positions in Financial Instruments, other than purchased options,
expose the Fund to an obligation to another party. The Fund will not enter into
any such transactions unless it owns either (1) an offsetting ("covered")
position in securities, currencies or other options, futures contracts or
forward contracts, or (2) cash and liquid assets with a value, marked-to-market
daily, sufficient to cover its potential obligations to the extent not covered
as provided in (1) above. The Fund will comply with SEC guidelines regarding
cover for these instruments and will, if the guidelines so require, set aside
cash or liquid assets in a segregated account with its custodian in the
prescribed amount as determined daily.
Assets used as cover or held in a segregated account cannot be sold while
the position in the corresponding Financial Instrument is open unless they are
replaced with other appropriate assets. As a result, the commitment of a large
portion of the Fund's assets to cover or in segregated accounts could impede
portfolio management or the Fund's ability to meet redemption requests or other
current obligations.
Options. The Fund may engage in certain strategies involving options to
attempt to manage the risk of its investments or, in certain circumstances, for
investment (e.g., as a substitute for investing in securities). A call option
<PAGE>
gives the purchaser the right to buy, and obligates the writer to sell, the
underlying investment at the agreed-upon exercise price during the option
period. A put option gives the purchaser the right to sell, and obligates the
writer to buy, the underlying investment at the agreed-upon exercise price
during the option period. Purchasers of options pay an amount, known as a
premium, to the option writer in exchange for the right under the option
contract. See "Options on Indexes" below with regard to cash settlement of
option contracts on index values.
The purchase of call options can serve as a hedge against a price rise of
the underlier and the purchase of put options can serve as a hedge against a
price decline of the underlier. Writing call options can serve as a limited
short hedge because declines in the value of the hedged investment would be
offset to the extent of the premium received for writing the option. However, if
the security or currency appreciates to a price higher than the exercise price
of the call option, it can be expected that the option will be exercised and the
Fund will be obligated to sell the security or currency at less than its market
value.
Writing put options can serve as a limited long or anticipatory hedge
because increases in the value of the hedged investment would be offset to the
extent of the premium received for writing the option. However, if the security
or currency depreciates to a price lower than the exercise price of the put
option, it can be expected that the put option will be exercised and the Fund
will be obligated to purchase the security or currency at more than its market
value.
The value of an option position will reflect, among other things, the
current market value of the underlying investment, the time remaining until
expiration, the relationship of the exercise price to the market price of the
underlying investment, the price volatility of the underlying investment and
general market and interest rate conditions. Options that expire unexercised
have no value.
The Fund may effectively terminate its right or obligation under an option
by entering into a closing transaction. For example, the Fund may terminate its
obligation under a call or put option that it had written by purchasing an
identical call or put option; this is known as a closing purchase transaction.
Conversely, the Fund may terminate a position in a put or call option it had
purchased by writing an identical put or call option; this is known as a closing
sale transaction. Closing transactions permit the Fund to realize profits or
limit losses on an option position prior to its exercise or expiration.
Risks of Options on Securities. Options embody the possibility of large
amounts of exposure, which will result in the Fund's net asset value being more
sensitive to changes in the value of the related investment.
<PAGE>
The Fund's ability to establish and close out positions in exchange-listed
options depends on the existence of a liquid market. If the Fund is not able to
enter into an offsetting closing transaction on an option it has written, it
will be required to maintain the securities subject to the call or the liquid
assets underlying the put until a closing purchase transaction can be entered
into or the option expires. However, there can be no assurance that such a
market will exist at any particular time.
If the Fund were unable to effect a closing transaction for an option it
had purchased, it would have to exercise the option to realize any profit. The
inability to enter into a closing purchase transaction for a covered call option
written by the Fund could cause material losses because the Fund would be unable
to sell the investment used as cover for the written option until the option
expires or is exercised.
Options on Indexes. Puts and calls on indexes are similar to puts and calls
on securities or futures contracts except that all settlements are in cash and
changes in value depend on changes in the index in question. When the Fund
writes a call on an index, it receives a premium and agrees that, prior to the
expiration date, upon exercise of the call, the purchaser will receive from the
Fund an amount of cash equal to the positive difference between the closing
price of the index and the exercise price of the call times a specified multiple
("multiplier"), which determines the total dollar value for each point of such
difference. When the Fund buys a call on an index, it pays a premium and has the
same rights as to such call as are indicated above. When the Fund buys a put on
an index, it pays a premium and has the right, prior to the expiration date, to
require the seller of the put to deliver to the Fund an amount of cash equal to
the positive difference between the exercise price of the put and the closing
price of the index times the multiplier. When the Fund writes a put on an index,
it receives a premium and the purchaser of the put has the right, prior to the
expiration date, to require the Fund to deliver to it an amount of cash equal to
the positive difference between the exercise price of the put and the closing
level of the index times the multiplier.
The risks of purchasing and selling options on indexes may be greater than
options on securities. Because index options are settled in cash, when the Fund
writes a call on an index it cannot fulfill its potential settlement obligations
by delivering the underlying securities. The Fund can offset some of the risk of
writing a call index option by holding a diversified portfolio of securities
similar to those on which the underlying index is based. However, the Fund
cannot, as a practical matter, acquire and hold a portfolio containing exactly
the same securities as underlie the index and, as a result, bears a risk that
the value of the securities held will vary from the value of the index.
<PAGE>
Even if the Fund could assemble a portfolio that exactly reproduced the
composition of the underlying index, it still would not be fully covered from a
risk standpoint because of the "timing risk" inherent in writing index options.
When an index option is exercised, the amount of cash that the holder is
entitled to receive is determined by the difference between the exercise price
and the closing index level. As with other kinds of options, the Fund as the
call writer will not learn that the Fund has been assigned until the next
business day. The time lag between exercise and notice of assignment poses no
risk for the writer of a covered call on a specific underlying security, such as
common stock, because in that case the writer's obligation is to deliver the
underlying security, not to pay its value as of a moment in the past. In
contrast, the writer of an index call will be required to pay cash in an amount
based on the difference between the closing index value on the exercise date and
the exercise price. By the time it learns that it has been assigned, the index
may have declined. This "timing risk" is an inherent limitation on the ability
of index call writers to cover their risk exposure.
If the Fund has purchased an index option and exercises it before the
closing index value for that day is available, it runs the risk that the level
of the underlying index may subsequently change. If such a change causes the
exercised option to fall out-of-the-money, the Fund nevertheless will be
required to pay the difference between the closing index value and the exercise
price of the option (times the applicable multiplier) to the assigned writer.
Futures Contracts and Options on Futures Contracts. When the Fund purchases
or sells a futures contract, it incurs an obligation respectively to take or
make delivery of a specified amount of the obligation underlying the contract at
a specified time and price. When the Fund writes an option on a futures
contract, it becomes obligated to assume a position in the futures contract at a
specified exercise price at any time during the term of the option. If the Fund
writes a call, on exercise it assumes a short futures position. If it writes a
put, on exercise it assumes a long futures position.
The purchase of futures or call options on futures can serve as a long or
an anticipatory hedge, and the sale of futures or the purchase of put options on
futures can serve as a short hedge. Writing call options on futures contracts
can serve as a limited short hedge, using a strategy similar to that used for
writing call options on securities or indexes. Similarly, writing put options on
futures contracts can serve as a limited long or anticipatory hedge.
In addition, futures strategies can be used to manage the duration and
associated interest rate risk of the Fund's fixed-income portfolio. If Fund
Management wishes to shorten the duration of the Fund's fixed-income portfolio,
the Fund may sell an appropriate debt futures contract or a call option thereon,
or purchase a put option on that futures contract. If Fund Management wishes to
<PAGE>
lengthen the duration of the Fund's fixed-income portfolio, the Fund may buy an
appropriate debt futures contract or a call option thereon, or sell a put option
thereon.
At the inception of a futures contract, the Fund is required to deposit
"initial margin" in an amount generally equal to 10% or less of the contract
value. Initial margin must also be deposited when writing a call or put option
on a futures contract, in accordance with applicable exchange rules. Subsequent
"variation margin" payments are made to and from the futures broker daily as the
value of the futures or written option position varies, a process known as
"marking-to-market." Unlike margin in securities transactions, initial margin on
futures contracts and written options on futures contracts does not represent a
borrowing on margin, but rather is in the nature of a performance bond or
good-faith deposit that is returned to the Fund at the termination of the
transaction if all contractual obligations have been satisfied. Under certain
circumstances, such as periods of high volatility, the Fund may be required to
increase the level of initial margin payments. If the Fund has insufficient cash
to meet daily variation margin requirements, it might need to sell securities in
order to do so at a time when such sales are disadvantageous.
Purchasers and sellers of futures contracts and options on futures can
enter into offsetting closing transactions, similar to closing transactions on
options, by selling or purchasing, respectively, an instrument identical to the
instrument purchased or sold. Positions in futures and options on futures used
by the Fund may be closed only on an exchange or board of trade that provides a
market. However, there can be no assurance that a liquid market will exist for a
particular contract at a particular time. In such event, it may not be possible
to close a futures contract or options position.
Under certain circumstances, futures exchanges may establish daily limits
on the amount that the price of a futures contract or an option on a futures
contract can vary from the previous day's settlement price; once that limit is
reached, no trades may be made that day at a price beyond the limit. Daily price
limits do not limit potential losses because prices could move to the daily
limit for several consecutive days with little or no trading, thereby preventing
liquidation of unfavorable positions.
If the Fund were unable to liquidate a futures contract or an option on a
futures contract position due to the absence of a liquid market or the
imposition of price limits, it could incur substantial losses. The Fund would
continue to be subject to market risk with respect to the position. In addition,
except in the case of purchased options, the Fund would continue to be required
to make daily variation margin payments and might be required to continue to
maintain the position being hedged by the futures contract or option or to
continue to maintain cash or securities in a segregated account.
<PAGE>
To the extent that the Fund enters into futures contracts, options on
futures contracts and options on foreign currencies traded on a CFTC-regulated
exchange, in each case that is not for bona fide hedging purposes (as defined by
the CFTC), the aggregate initial margin and premiums required to establish these
positions (excluding the amount by which options are "in-the-money" at the time
of purchase) may not exceed 5% of the liquidation value of the Fund's portfolio,
after taking into account unrealized profits and unrealized losses on any
contracts the Fund has entered into. This policy does not limit to 5% the
percentage of the Fund's assets that are at risk in futures contracts, options
on futures contracts and currency options.
Risks of Futures Contracts and Options Thereon. The ordinary spreads at a
given time between prices in the cash and futures markets (including the options
on futures markets), due to differences in the natures of those markets, are
subject to the following factors. First, all participants in the futures market
are subject to margin deposit and maintenance requirements. Rather than meeting
additional margin deposit requirements, investors may close futures contracts
through offsetting transactions, which could distort the normal relationship
between the cash and futures markets. Second, the liquidity of the futures
market depends on participants entering into offsetting transactions rather than
making or taking delivery. To the extent participants decide to make or take
delivery, liquidity in the futures market could be reduced, thus producing
distortion. Due to the possibility of distortion, a hedge may not be successful.
Additionally, Fund Management may be incorrect in its expectations as to the
extent of various interest rate, currency exchange rate or stock market
movements or the time span within which the movements take place.
Index Futures. The risk of imperfect correlation between movements in the
price of index futures and movements in the price of the securities that are the
subject of a hedge increases as the composition of the Fund's portfolio diverges
from the index. The price of the index futures may move proportionately more
than or less than the price of the securities being hedged. If the price of the
index futures moves proportionately less than the price of the securities that
are the subject of the hedge, the hedge will not be fully effective. However, if
the price of the securities being hedged has moved in an unfavorable direction,
the Fund would be in a better position than if it had not hedged at all. If the
price of the securities being hedged has moved in a favorable direction, this
advantage will be partially offset by movement of the price of the futures
contract. If the price of the futures contract moves more than the price of the
securities, the Fund will experience either a loss or a gain on the futures
contract that will not be completely offset by movements in the price of the
securities that are the subject of the hedge.
Where index futures are purchased in an anticipatory hedge, it is possible
that the market may decline instead. If the Fund then decides not to invest in
<PAGE>
the securities at that time because of concern as to possible further market
decline or for other reasons, it will realize a loss on the futures contract
that is not offset by a reduction in the price of the securities it had
anticipated purchasing.
Foreign Currency Hedging Strategies--Special Considerations. The Fund may
use options and futures contracts on foreign currencies, as mentioned
previously, and forward currency contracts, as described below, to attempt to
hedge against movements in the values of the foreign currencies in which the
Fund's securities are denominated or, in certain circumstances, for investment
(e.g., as a substitute for investing in securities denominated in foreign
currency). Currency hedges can protect against price movements in a security
that the Fund owns or intends to acquire that are attributable to changes in the
value of the currency in which it is denominated.
The Fund might seek to hedge against changes in the value of a particular
currency when no Financial Instruments on that currency are available or such
Financial Instruments are more expensive than certain other Financial
Instruments. In such cases, the Fund may seek to hedge against price movements
in that currency by entering into transactions using Financial Instruments on
another currency or a basket of currencies, the value of which Fund Management
believes will have a high degree of positive correlation to the value of the
currency being hedged. The risk that movements in the price of the Financial
Instrument will not correlate perfectly with movements in the price of the
currency subject to the hedging transaction may be increased when this strategy
is used.
The value of Financial Instruments on foreign currencies depends on the
value of the underlying currency relative to the U.S. dollar. Because foreign
currency transactions occurring in the interbank market might involve
substantially larger amounts than those involved in the use of such Financial
Instruments, the Fund could be disadvantaged by having to deal in the odd lot
market (generally consisting of transactions of less than $1 million) for the
underlying foreign currencies at prices that are less favorable than for round
lots.
There is no systematic reporting of last sale information for foreign
currencies or any regulatory requirement that quotations available through
dealers or other market sources be firm or revised on a timely basis. Quotation
information generally is representative of very large transactions in the
interbank market and thus might not reflect odd-lot transactions where rates
might be less favorable. The interbank market in foreign currencies is a global,
round-the-clock market. To the extent the U.S. options or futures markets are
closed while the markets for the underlying currencies remain open, significant
price and rate movements might take place in the underlying markets that cannot
be reflected in the markets for the Financial Instruments until they reopen.
<PAGE>
Settlement of hedging transactions involving foreign currencies might be
required to take place within the country issuing the underlying currency. Thus,
the Fund might be required to accept or make delivery of the underlying foreign
currency in accordance with any U.S. or foreign regulations regarding the
maintenance of foreign banking arrangements by U.S. residents and might be
required to pay any fees, taxes and charges associated with such delivery
assessed in the issuing country.
Forward Currency Contracts and Foreign Currency Deposits. The Fund may
enter into forward currency contracts to purchase or sell foreign currencies for
a fixed amount of U.S. dollars or another foreign currency. A forward currency
contract involves an obligation to purchase or sell a specific currency at a
future date, which may be any fixed number of days (term) from the date of the
forward currency contract agreed upon by the parties, at a price set at the time
the forward currency contract is entered. Forward currency contracts are
negotiated directly between currency traders (usually large commercial banks)
and their customers.
Such transactions may serve as long or anticipatory hedges; for example,
the Fund may purchase a forward currency contract to lock in the U.S. dollar
price of a security denominated in a foreign currency that the Fund intends to
acquire. Forward currency contracts may also serve as short hedges; for example,
the Fund may sell a forward currency contract to lock in the U.S. dollar
equivalent of the proceeds from the anticipated sale of a security or a dividend
or interest payment denominated in a foreign currency.
The Fund may also use forward currency contracts to hedge against a decline
in the value of existing investments denominated in foreign currency. Such a
hedge would tend to offset both positive and negative currency fluctuations, but
would not offset changes in security values caused by other factors. The Fund
could also hedge the position by entering into a forward currency contract to
sell another currency expected to perform similarly to the currency in which the
Fund's existing investments are denominated. This type of hedge could offer
advantages in terms of cost, yield or efficiency, but may not hedge currency
exposure as effectively as a simple hedge against U.S. dollars. This type of
hedge may result in losses if the currency used to hedge does not perform
similarly to the currency in which the hedged securities are denominated.
The Fund may also use forward currency contracts in one currency or a
basket of currencies to attempt to hedge against fluctuations in the value of
securities denominated in a different currency if Fund Management anticipates
that there will be a positive correlation between the two currencies.
The cost to the Fund of engaging in forward currency contracts varies with
factors such as the currency involved, the length of the contract period and the
<PAGE>
market conditions then prevailing. Because forward currency contracts are
usually entered into on a principal basis, no fees or commissions are involved.
When the Fund enters into a forward currency contract, it relies on the
counterparty to make or take delivery of the underlying currency at the maturity
of the contract. Failure by the counterparty to do so would result in the loss
of some or all of any expected benefit of the transaction.
As is the case with futures contracts, purchasers and sellers of forward
currency contracts can enter into offsetting closing transactions, similar to
closing transactions on futures contracts, by selling or purchasing,
respectively, an instrument identical to the instrument purchased or sold.
Secondary markets generally do not exist for forward currency contracts, with
the result that closing transactions generally can be made for forward currency
contracts only by negotiating directly with the counterparty. Thus, there can be
no assurance that the Fund will in fact be able to close out a forward currency
contract at a favorable price prior to maturity. In addition, in the event of
insolvency of the counterparty, the Fund might be unable to close out a forward
currency contract. In either event, the Fund would continue to be subject to
market risk with respect to the position, and would continue to be required to
maintain a position in securities denominated in the foreign currency or to
maintain cash or liquid assets in a segregated account.
The precise matching of forward currency contract amounts and the value of
the securities, dividends or interest payments involved generally will not be
possible because the value of such securities, dividends or interest payments,
measured in the foreign currency, will change after the forward currency
contract has been established. Thus, the Fund might need to purchase or sell
foreign currencies in the spot (cash) market to the extent such foreign
currencies are not covered by forward currency contracts. The projection of
short-term currency market movements is extremely difficult, and the successful
execution of a short-term hedging strategy is highly uncertain.
Forward currency contracts may substantially change the Fund's investment
exposure to changes in currency exchange rates and could result in losses to the
Fund if currencies do not perform as Fund Management anticipates. There is no
assurance that Fund Management's use of forward currency contracts will be
advantageous to the Fund or that it will hedge at an appropriate time.
The Fund may also purchase and sell foreign currency and invest in foreign
currency deposits. Currency conversion involves dealer spreads and other costs,
although commissions usually are not charged.
Combined Positions. The Fund may purchase and write options in combination
with each other, or in combination with futures or forward currency contracts,
to manage the risk and return characteristics of its overall position. For
<PAGE>
example, the Fund may purchase a put option and write a call option on the same
underlying instrument, in order to construct a combined position whose risk and
return characteristics are similar to selling a futures contract. Another
possible combined position would involve writing a call option at one strike
price and buying a call option at a lower price, in order to reduce the risk of
the written call option in the event of a substantial price increase. Because
combined options positions involve multiple trades, they result in higher
transaction costs.
Turnover. The Fund's options and futures activities may affect its turnover
rate and brokerage commission payments. The exercise of calls or puts written by
the Fund, and the sale or purchase of futures contracts, may cause it to sell or
purchase related investments, thus increasing its turnover rate. Once the Fund
has received an exercise notice on an option it has written, it cannot effect a
closing transaction in order to terminate its obligation under the option and
must deliver or receive the underlying securities at the exercise price. The
exercise of puts purchased by the Fund may also cause the sale of related
investments, also increasing turnover; although such exercise is within the
Fund's control, holding a protective put might cause it to sell the related
investments for reasons that would not exist in the absence of the put. The Fund
will pay a brokerage commission each time it buys or sells a put or call or
purchases or sells a futures contract. Such commissions may be higher than those
that would apply to direct purchases or sales.
Swaps, Caps, Floors and Collars. The Fund is authorized to enter into
swaps, caps, floors and collars. However, these instruments are not
exchange-traded and the Fund presently has a non-fundamental policy to utilize
only exchange-traded Financial Instruments.
Swaps involve the exchange by one party with another party of their
respective commitments to pay or receive cash flows, e.g., an exchange of
floating rate payments for fixed rate payments. The purchase of a cap or a floor
entitles the purchaser, to the extent that a specified index exceeds in the case
of a cap, or falls below in the case of a floor, a predetermined value, to
receive payments on a notional principal amount from the party selling such
instrument. A collar combines elements of buying a cap and selling a floor.
Illiquid Investments
Illiquid investments are investments that cannot be sold or disposed of in
the ordinary course of business within seven days at approximately the prices at
which they are valued by the Fund. Investments currently considered to be
illiquid include: (1) repurchase agreements not terminable within seven days;
(2) securities for which market quotations are not readily available; (3) bank
deposits, unless they are payable on demand or within seven days after demand;
<PAGE>
(4) non-government stripped fixed-rate mortgage-backed securities; (5) direct
debt instruments; and (6) restricted securities not determined to be liquid
pursuant to guidelines established by the Company's board of directors. If
through a change in values, net assets, or other circumstances, the Fund were in
a position where more than 15% of its net assets were invested in illiquid
securities, it would seek to take appropriate steps to protect liquidity.
Investment Restrictions. As described in the section of each Fund's
prospectus entitled "Investment Objective and Policies," the Funds operate under
certain investment restrictions.^ For purposes of the following restrictions,
all percentage limitations apply immediately after a purchase or initial
investment. Any subsequent change in a particular percentage resulting from
fluctuations in value does not require elimination of any security from the
Fund.
INVESCO Pacific Basin and European Funds
The following restrictions are fundamental and may not be changed with
respect to the INVESCO Pacific Basin and European Funds 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"). The INVESCO Pacific Basin and European Funds, and the Company on
behalf of such Funds, unless otherwise indicated, may not:
(1) issue senior securities as defined in the 1940 Act (except insofar as
the Company may be deemed to have issued a senior security by reason
of entering into a repurchase agreement, or borrowing money, in
accordance with the restrictions described below, and in accordance
with the position of the staff of the Securities and Exchange
Commission set forth in Investment Company Act Release No. 10666);
(2) mortgage, pledge or hypothecate portfolio securities or borrow money,
except borrowings from banks for temporary or emergency purposes (but
not for investment) are permitted in an amount not exceeding 10% of
total net assets. A Fund will not purchase additional securities while
any borrowings on behalf of that Fund exist;
(3) buy or sell commodities, commodity contracts, oil, gas or other
mineral interests or exploration programs (however, the Fund may
purchase securities of companies which invest in the foregoing and may
enter into forward contracts for the purchase or sale of foreign
currencies);
(4) purchase the securities of any company if as a result of such purchase
more than 10% of total assets would be invested in securities which
are subject to legal or contractual restrictions on resale
("restricted securities") and in securities for which there are no
<PAGE>
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;
(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 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 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
<PAGE>
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
The following restrictions are fundamental and may not be changed with
respect to the INVESCO International Growth Fund without the prior approval of
the holders of a majority of the outstanding voting securities of the Fund, as
defined in the 1940 Act. The INVESCO International Growth Fund and the Company
on behalf of such Fund, unless otherwise indicated, may not:
(1) other than investments by the Fund in obligations issued or guaranteed
by the U.S. government, its agencies or instrumentalities, invest in
the securities of issuers conducting their principal business
activities in the same industry (investments in obligations issued by
a foreign government, including the agencies or instrumentalities of a
foreign government, are considered to be investments in a single
industry), if immediately after such investment the value of the
Fund's investments in such industry would exceed 25% of the value of
the Fund's total assets;
(2) invest in the securities of any one issuer, other than the U.S.
government, if immediately after such investment more than 5% of the
value of the Fund's total assets, taken at market value, would be
invested in such issuer or more than 10% of such issuer's outstanding
voting securities would be owned by the Fund;
(3) underwrite securities of other issuers, except insofar as it may
technically be deemed an "underwriter" under the 1933 Act, as amended,
in connection with the disposition of the Fund's portfolio securities;
(4) invest in companies for the purpose of exercising control or
management;
<PAGE>
(5) issue any class of senior securities or borrow money, except
borrowings from banks for temporary or emergency purposes not in
excess of 5% of the value of the Fund's total assets at the time the
borrowing is made;
(6) mortgage, pledge, hypothecate or in any manner transfer as security
for indebtedness any securities owned or held except to an extent not
greater than 5% of the value of the Fund's total assets;
(7) sell short or buy on margin, exept for the Fund's purchase or sale of
options or futures, or writing, purchasing or selling put or call
options;
(8) purchase or sell real estate or interests in real estate. The Fund may
invest in securities secured by real estate or interests therein or
issued by companies, including real estate investment trusts, which
invest in real estate or interests therein;
(9) purchase or sell commodities or commodity contracts. This restriction
shall not prevent the Fund from purchasing or selling options on
individual securities, security indexes and currencies or financial
futures or options on financial futures, or undertaking forward
foreign currency contracts.
(10) make loans to other persons, provided that the Fund may purchase debt
obligations consistent with its investment objectives and policies and
may lend limited amounts (not to exceed 10% of its total assets) of
its portfolio securities to broker-dealers or other institutional
investors;
(11) purchase securities of other investment companies except (i) in
connection with a merger, consolidation, acquisition or
reorganization, or (ii) by purchase in the open market of securities
of other investment companies involving only customary brokers'
commissions and only if immediately thereafter (i) no more than 3% of
the voting securities of any one investment company are owned by the
Fund, (ii) no more than 5% of the value of the total assets of the
Fund would be invested in any one investment company, and (iii) no
more than 10% of the value of the total assets of the Fund would be
invested in the securities of such investment companies. The Company
may invest from time to time a portion of the Fund's cash in
investment companies to which the Adviser serves as investment
adviser; provided that no management or distribution fee will be
charged by the Adviser with respect to any such assets so invested and
provided further that at no time will more than 3% of the Fund's
assets be so invested. Should the Fund purchase securities of other
investment companies, shareholders may incur additional management and
distribution fees;
<PAGE>
(12) invest in securities for which there are legal or contractual
restrictions on resale, except that the Fund may invest no more than
2% of the value of the Fund's total assets in such securities, or
invest in securities for which there is no readily available market,
except that the Fund may invest no more than 5% of the value of the
Fund's total assets in such securities.
In applying restriction (12) above, the INVESCO International Growth Fund
also includes illiquid securities (those which cannot be sold in the ordinary
course of business within seven days at approximately the valuation given to
them by the Fund) among the securities subject to the 5% of total assets limit.
INVESCO International Blue Chip Fund
The following restrictions are fundamental and may not be changed with
respect to the INVESCO International Blue Chip Fund without the prior approval
of a majority of the outstanding voting securities of the Fund, as defined in
the 1940 Act. The INVESCO International Blue Chip Fund and the Company on behalf
of such Fund, unless otherwise indicated, may not:
(1) purchase the securities of any issuer (other than securities issued or
guaranteed by the U.S. Government or any of its agencies or
instrumentalities) if, as a result, more than 25% of the Fund's total
assets would be invested in the securities of companies whose
principal business activities are in the same industry;
(2) with respect to 75% of the Fund's total assets, purchase the
securities of any issuer (other than securities issued or guaranteed
by the U.S. Government or any of its agencies or instrumentalities, or
securities of other investment companies) if, as a result, (i) more
than 5% of the Fund's total assets would be invested in the securities
of that issuer, or (ii) the Fund would hold more than 10% of the
outstanding voting securities of that issuer;
(3) underwrite securities of other issuers, except insofar as it may be
deemed to be an underwriter under the Securities Act of 1933, as
amended, in connection with the disposition of the Fund's portfolio
securities;
(4) borrow money, except that the Fund may borrow money for temporary or
emergency purposes (not for leveraging or investing) in an amount not
exceeding 33 1/3% of its total assets (including the amount borrowed)
less liabilities (other than borrowings);
<PAGE>
(5) issue senior securities, except as permitted under the Investment
Company Act of 1940;
(6) lend any security or make any loan if, as a result, more than 33 1/3%
of its total assets would be lent to other parties, but this
limitation does not apply to the purchase of debt securities or to
repurchase agreements;
(7) purchase or sell physical commodities; however, this policy shall not
prevent the Fund from purchasing and selling foreign currency, futures
contracts, options, forward contracts, swaps, caps, floors, collars
and other financial instruments;
(8) purchase or sell real estate unless acquired as a result of ownership
of securities or other instruments (but this shall not prevent the
Fund from investing in securities or other instruments backed by real
estate or securities of companies engaged in the real estate
business);
(9) The Fund may, notwithstanding any other fundamental investment policy
or limitation, invest all of its assets in the securities of a single
open-end management investment company managed by INVESCO Funds Group,
Inc. or an affiliate or successor thereof with substantially the same
fundamental investment objective, policies and limitations as the
Fund.
The Fund may, notwithstanding any other investment policy or limitation
(whether or not fundamental), invest all of its assets in the securities of a
single, open-end management investment company with substantially the same
fundamental investment objectives, policies and limitations as the Fund.
In addition, INVESCO International Blue Chip Fund has the following
non-fundamental policies, which may be changed without shareholder approval:
(a) The Fund may not sell securities short (unless it owns or has the
right to obtain securities equivalent in kind and amount to the
securities sold short) or purchase securities on margin, except that
(a) this policy does not prevent the Fund from entering into short
positions in foreign currency, futures contracts, options, forward
contracts, swaps, caps, floors, collars and other financial
instruments, (b) the Fund may obtain such short-term credits as are
necessary for the clearance of transactions, and (c) the Fund may make
margin payments in connection with futures contracts, options, forward
contracts, swaps, caps, floors, collars and other financial
instruments;
(b) The Fund may borrow money only from a bank or by engaging in reverse
repurchase agreements with any party (reverse repurchase agreements
<PAGE>
will be treated as borrowings for purposes of fundamental limitation
(4)). The Fund will not purchase any security while borrowings
representing more than 5% of its total assets are outstanding;
(c) The Fund does not currently intend to purchase any security if, as a
result, more than 15% of its net assets would be invested in
securities that are deemed to be illiquid because they are subject to
legal or contractual restrictions on resale or because they cannot be
sold or disposed of in the ordinary course of business at
approximately the prices at which they are valued.
INVESCO Emerging Markets Fund
The following restrictions are fundamental and may not be changed with
respect the INVESCO Emerging Markets Fund without the prior approval of the
holders of a majority of the outstanding voting securities of the Fund, as
defined in 1940 Act. The Emerging Markets Fund, and the Company on behalf of
such Fund, unless otherwise indicated, may not:
^(1) With respect to seventy-five percent (75%) of the Fund's total assets,
purchase the securities of any one issuer (except cash items and
"government securities" as defined under the 1940 Act), if the
purchase would cause the Fund to have more than 5% of the value of its
total assets invested in the securities of such issuer or to own more
than 10% of the outstanding voting securities of such issuer;
^(2) Borrow money or issue senior securities (as defined in the 1940 Act),
except that the Fund may borrow money for temporary or emergency
purposes (not for leveraging or investment) and may enter into reverse
repurchase agreements in an aggregate amount not exceeding 33-1/3% of
the value of its total assets (including the amount borrowed) less
liabilities (other than borrowings). Any borrowings that come to
exceed 33-1/3% of the value of the Fund's total assets by reason of a
decline in total assets will be reduced within three business days to
the extent necessary to comply with the 33-1/3% limitation. This
restriction shall not prohibit deposits of assets to margin or
guarantee positions in futures, options, swaps or forward contracts,
or the segregation of assets in connection with such contracts.
^(3) Invest directly in real estate or interests in real estate; however,
the Fund may own debt or equity securities issued by companies engaged
in those businesses.
^(4) Purchase or sell physical commodities other than foreign currencies
unless acquired as a result of ownership of securities (but this shall
<PAGE>
not prevent the Fund from purchasing or selling options, futures,
swaps and forward contracts or from investing in securities or other
instruments backed by physical commodities).
^(5) Lend any security or make any other loan if, as a result, more than
10% of its total assets would be lent to other parties (but this
limitation does not apply to purchases of commercial paper, debt
securities or to repurchase agreements.)
^(6) Act as an underwriter of securities issued by others, except to the
extent that it may be deemed an underwriter in connection with the
disposition of portfolio securities of the Fund.
^(7) Invest more than 25% of the value of its total assets in any
particular industry (other than government securities).
As a fundamental policy in addition to the above, the Emerging Markets Fund
may, notwithstanding any other investment policy or limitation (whether or not
fundamental), invest all of its assets in the securities of a single open-end
management investment company with substantially the same fundamental investment
objectives, policies and limitations as the Fund.
Furthermore, the Company's board of directors has adopted additional
investment restrictions for the Emerging Markets Fund. These restrictions are
operating policies of the Fund and may be changed by the board of directors
without shareholder approval. The additional investment restrictions adopted by
the board of directors to date with respect to the Emerging Markets Fund include
the following:
(a) The Fund will not (i) enter into any futures contracts or options on
futures contracts if immediately thereafter the aggregate margin
deposits on all outstanding futures contracts positions held by the
Fund and premiums paid on outstanding options on futures contracts,
after taking into account unrealized profits and losses, would exceed
5% of the market value of the total assets of the Fund, or (ii) enter
into any futures contracts if the aggregate net amount of the Fund's
commitments under outstanding futures contracts positions of the Fund
would exceed the market value of the total assets of the Fund.
(b) The Fund does not currently intend to sell securities short, unless it
owns or has the right to obtain securities equivalent in kind and
amount to the securities sold short without the payment of any
additional consideration therefor, and provided that transactions in
options, swaps and forward futures contracts are not deemed to
constitute selling securities short.
<PAGE>
(c) The Fund does not currently intend to purchase securities on margin,
except that the Fund may obtain such short-term credits as are
necessary for the clearance of transactions, and provided that margin
payments and other deposits in connection with transactions in
options, futures, swaps and forward contracts shall not be deemed to
constitute purchasing securities on margin.
(d) The Fund does not currently intend to (i) purchase securities of
closed-end investment companies, except in the open market where no
commission except the ordinary broker's commission is paid, or (ii)
purchase or retain securities issued by other open-end investment
companies other than money market funds or funds which are the only
practical means, or one of the few practical means, of investing in a
particular emerging country. Limitations (i) and (ii) do not apply to
securities received as dividends, through offers of exchange, or as a
result of a reorganization, consolidation, or merger.
(e) The Fund may not mortgage or pledge any securities owned or held by
the Fund in amounts that exceed, in the aggregate, 10% of the Fund's
net assets, provided that this limitation does not apply to reverse
repurchase agreements or in the case of assets deposited to margin or
guarantee positions in futures, options, swaps or forward contracts or
placed in a segregated account in connection with such contracts.
(f) The Fund does not currently intend to purchase any security or enter
into a repurchase agreement if, as a result, more than 15% of its net
assets would be invested in repurchase agreements not entitling the
holder to payment of principal and interest within seven days and in
securities that are illiquid by virtue of legal or contractual
restrictions on resale or the absence of a readily available market.
The board of directors, or the Fund's investment adviser acting
pursuant to authority delegated by the board of directors, may
determine that a readily available market exists for securities
eligible for resale pursuant to Rule 144A under the Securities Act of
1933, or any successor to such rule, and therefore that such
securities are not subject to the foregoing limitation.
With respect to investment restriction (4) applicable to the Pacific Basin
and European Funds, restriction (12) applicable to the International Growth Fund
and restriction (f) applicable to the Emerging Markets Fund, the board of
directors has delegated to Fund Management the authority to determine 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
<PAGE>
securities, securities that are not readily marketable or securities which do
not have readily available market quotations. Under guidelines established by
the board of directors, Fund Management will consider the following factors,
among others, in making this determination: (1) the unregistered nature of a
Rule 144A security; (2) the frequency of trades and quotes for the security; (3)
the number of dealers willing to purchase or sell the security and the number of
other potential purchasers; (4) dealer undertakings to make a market in the
security; and (5) the nature of the security and the nature of marketplace
trades (e.g., the time needed to dispose of the security, the method of
soliciting offers and the mechanics of transfer). However, Rule 144A Securities
are still subject to the Funds' respective limitations on investments in
restricted securities (securities for which there are legal or contractual
restrictions on resale), unless they are readily marketable outside the United
States, in which case they are not deemed to be restricted.
In applying the industry concentration investment restrictions applicable
to the Funds, the Company uses an industry classification system for
international securities based on information obtained from Bloomberg L.P.,
Moody's International and a modified S&P industry code classification schema
which uses various sources to classify.
THE FUNDS AND THEIR MANAGEMENT
The Company. The Company was incorporated on April 2, 1993, under the laws
of Maryland. On July 1, 1993, the Company, through the European Fund and Pacific
Basin Fund, assumed all of the assets and liabilities of the European Portfolio
and Pacific Basin Portfolio, respectively, of Financial Strategic Portfolios,
Inc., which was incorporated under the laws of Maryland on August 10, 1983. In
addition, on July 1, 1993, the Company, through the International Growth Fund,
assumed all of the assets and liabilities of the Financial International Growth
Fund, a series of Financial Series Trust, a Massachusetts business trust
organized on July 15, 1987. All financial and other information about the Funds
for periods prior to July 1, 1993, relates to such former portfolios and series.
The Investment Adviser. INVESCO Funds Group, Inc., a Delaware corporation
("IFG"), is employed as the Company's investment adviser. IFG was established in
1932 and also serves as an investment adviser to INVESCO Capital Appreciation
Funds, Inc. (formerly, INVESCO Dynamics Fund, Inc.), INVESCO Diversified Funds,
Inc., INVESCO Emerging Opportunity Funds, Inc., INVESCO Growth Fund, Inc.,
INVESCO Income Funds, Inc., INVESCO Industrial Income Fund, Inc., INVESCO Money
Market Funds, Inc., INVESCO Multiple Asset Funds, Inc., INVESCO Specialty Funds,
Inc., INVESCO Strategic Portfolios, Inc., INVESCO Tax-Free Income Funds, Inc.,
INVESCO Value Trust, and INVESCO Variable Investment Funds, Inc.
<PAGE>
The Sub-Adviser. IFG, as investment adviser, has contracted with INVESCO
Asset Management Limited ^("IAML") to provide investment advisory and research
services on behalf of the ^ INVESCO Pacific Basin Fund, the INVESCO European
Fund, the INVESCO International Growth Fund and the INVESCO Emerging Markets
Fund. IFG, as investment adviser, has contracted with INVESCO Global Asset
Management (N.A.)("IGAM") to provide investment advisory and research services
on behalf of the INVESCO International Blue Chip Fund. IAML and IGAM have the
primary responsibility for providing portfolio investment management services to
the respective Funds.
The Distributor. Effective September 30, 1997 (upon inception with respect
to the Emerging Markets and International Blue Chip Funds), INVESCO
Distributors, Inc. ("IDI") became the Funds' distributor. IDI, established in
1997, is a registered broker-dealer that acts as distributor for all retail
funds advised by IFG. Prior to September 30, 1997, IFG served as the Funds'
distributor.
IFG, IAML, IGAM and IDI are indirect, wholly-owned subsidiaries of AMVESCAP
PLC, a publicly-traded holding company that, through its subsidiaries, engages
in the business of investment management on an international basis. INVESCO PLC
changed its name to AMVESCO PLC on March 3, 1997, and to AMVESCAP PLC on May 8,
1997 as part of a merger between a direct subsidiary of INVESCO PLC and A I M
Management Group Inc., that created one of the largest independent investment
management businesses in the world with approximately [$192.2] billion in assets
under management. IFG was established in 1932 and as of ^ April 30, 1998,
managed 14 mutual funds, consisting of ^ 49 separate portfolios, on behalf of ^
over 1,492,189 shareholders. AMVESCAP PLC's North American subsidiaries include
the following:
--INVESCO Capital Management, Inc. of Atlanta, Georgia manages
institutional investment portfolios, consisting primarily of discretionary
employee benefit plans for corporations and state and local governments, and
endowment funds. INVESCO Capital Management, Inc. is the sole shareholder of
INVESCO Services, Inc., a registered broker-dealer whose primary business is the
distribution of shares of two registered investment companies.
--INVESCO Management & Research, Inc. of Boston, Massachusetts, primarily
manages pension and endowment accounts.
--PRIMCO Capital Management, Inc. of Louisville, Kentucky specializes in
managing stable return investments, principally on behalf of Section 401(k)
retirement plans.
--INVESCO Realty Advisors, Inc. of Dallas, Texas is responsible for
providing advisory services in the U.S. real estate markets for AMVESCAP PLC's
clients worldwide. Clients include corporate plans, public pension funds as well
as endowment and foundation accounts.
<PAGE>
--A I M Advisors, Inc. of Houston, Texas provides investment advisory and
administrative services for retail and institutional mutual funds.
--A I M Capital Management, Inc. of Houston, Texas provides investment
advisory services to individuals, corporations, pension plans and other private
investment advisory accounts and also serves as a sub-adviser to certain retail
and institutional mutual funds, one Canadian mutual fund and one portfolio of an
open-end registered investment company that is offered to separate accounts of
insurance companies offering variable annuities and variable life insurance
products.
--A I M Distributors, Inc. and Fund Management Company of Houston, Texas
are registered broker-dealers that act as the principal underwriters for retail
and institutional mutual funds.
The corporate headquarters of AMVESCAP PLC are located at 11 Devonshire
Square, London, EC2M4YR, England.
As indicated in the Funds' Prospectuses, IFG, IGAM, and IAML permit
investment and other personnel to purchase and sell securities for their own
accounts in accordance with compliance policies governing personal investing by
directors, officers and employees of IFG, IGAM, IAML and their North American
affiliates. These policies require officers, inside directors, investment and
other personnel of IFG, IGAM, IAML and their North American affiliates to
pre-clear all transactions in securities not otherwise exempt under the
policies. Requests for trading authority will be denied if, among other reasons,
the proposed personal transaction would be contrary to the provisions of the
applicable policy or would be deemed to adversely affect any transaction then
known to be under consideration for or to have been effected on behalf of any
client account, including the Funds.
In addition to the pre-clearance requirement described above, the policies
subject officers, inside directors, investment and other personnel of IFG, IGAM,
IAML and their North American affiliates to various trading restrictions and
reporting obligations. All reportable transactions are reviewed for compliance
with the policies. The provisions of these policies are administered by and
subject to exceptions authorized by IFG, IGAM or IAML.
Investment Advisory Agreement. IFG serves as investment adviser to the
Funds pursuant to an investment advisory agreement dated February 28, 1997 (the
"Agreement") with the Company which was approved on November 6, 1996, by a vote
cast in person by a majority of the directors of the Company, including a
majority of the directors who are not "interested persons" of the Company or IFG
at a meeting called for such purpose. The Agreement was approved by shareholders
of each Fund of the Company on January 31, 1997, for an initial term expiring
February 28, 1999. The Agreement was approved by IFG as sole shareholder of the
Emerging Markets Fund with respect to that Fund on January 30, 1998, for an
<PAGE>
initial term expiring on January 30, 2000. The Agreement was approved by IFG as
sole shareholder of the International Blue Chip Fund with respect to that Fund
on September _, 1998, for an initial term expiring on September __, 2000.
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 IFG shall manage the investment portfolios of
the Funds in conformity with each Fund's investment policies (either directly or
by delegation to a sub-adviser which may be a company affiliated with IFG).
Further, IFG shall perform all administrative, internal accounting (including
computation of net asset value), clerical, statistical, secretarial and all
other services necessary or incidental to the administration of the affairs of
the Funds excluding, however, those services that are the subject of separate
agreement between the Company and IFG or any affiliate thereof, including the
distribution and sale of Fund shares and provision of transfer agency, dividend
disbursing agency and registrar services, and services furnished under an
Administrative Services Agreement with IFG discussed below. Services provided
under the Agreement include but are not limited to: supplying the Company with
officers, clerical staff and other employees, if any, who are necessary in
connection with the Funds' operations; furnishing office space, facilities,
equipment and supplies; providing personnel and facilities required to respond
to inquiries related to shareholder accounts; conducting periodic compliance
reviews of the Funds' operations; preparation and review of required documents,
reports and filings by IFG's in-house legal and accounting staff (including the
prospectuses, statement of additional information, proxy statements, shareholder
reports, tax returns, reports to the SEC and other corporate documents of the
Funds), except insofar as the assistance of independent accountants or attorneys
is necessary or desirable; supplying basic telephone service and other
utilities; and preparing and maintaining certain of the books and records
required to be prepared and maintained by the Funds under the 1940 Act. Expenses
not assumed by IFG are borne by the Funds.
As full compensation for its advisory services to the Company, IFG receives
a monthly fee. The fee is calculated daily at an annual rate of:
<PAGE>
(a) Pacific Basin and European Funds: 0.75% on the first $350 million of
each Fund's average net assets; 0.65% on the next $350 million of each
Fund's average net assets; and 0.55% on each Fund's average net assets
in excess of $700 million;
(b) International Growth Fund: 1.00% on the first $500 million of the
Fund's average net assets; 0.75% on the next $500 million of the
Fund's average net assets; and 0.65% on the Fund's average net assets
in excess of $1 billion.
(c) Emerging Markets Fund: 1.00% on the first $500 million of the Fund's
average net assets; 0.85% on the next $500 million of the Fund's
average net assets; and 0.75% on the Fund's average net assets in
excess of $1 billion.
(d) International Blue Chip Fund: 0.75% on the Fund's average net assets.
The advisory fee is calculated daily at the applicable annual rate and paid
monthly.
Sub-Advisory Agreement. With respect to the European, Pacific Basin and
International Growth Funds, IAML serves as sub-adviser to the Funds pursuant to
a sub-advisory agreement dated February 28, 1997 (the "Sub-Agreement") with ^
IFG which was approved on November 6, 1996, by a vote cast in person by a
majority of the directors of the Company, including a majority of the directors
who are not "interested persons" of the Company, IFG or IAML, at a meeting
called for such purpose. The Sub-Agreement was approved on January 31, 1997, by
the shareholders of each of the Funds ^ for an initial term expiring February
28, 1999.
^ With respect to the Emerging Markets Fund, IAML serves as sub-adviser to
the Fund pursuant to a sub-advisory agreement dated January 30, 1998 (the
"Emerging Markets Sub-Agreement") with IFG that was approved on May 13, 1998 by
a vote cast in person by a majority of the directors of the Company, including a
majority of the directors who are not "interested persons" of the Company, IFG
or IAML, at a meeting called for such purpose. The Emerging Markets
Sub-Agreement was approved on January 30, 1998 by IFG as sole shareholder of the
^ Fund for an initial term expiring on January 30, 2000.
With respect to the International Blue Chip Fund,IGAM serves as the
sub-adviser to the Fund pursuant to a sub-advisory agreement dated September __,
1998 (the "International Blue Chip Sub-Agreement") with IFG which was approved
on May 12, 1998 by a vote cast in person by a majority of the directors of
the Company, including a majority of the directors who are not "interested
persons" of the Company, IFG or IGAM, at a meeting called for such purpose. The
International Blue Chip Sub-Agreement was approved by IFG as sole shareholder of
the Fund on September __, 1998, for an initial term expiring on September __,
2000.
<PAGE>
Thereafter, the Sub-Agreement, Emerging Markets Sub-Agreement and
International Blue Chip Sub-Agreement (the "Sub-Agreements") 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-^ Agreements 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-^ Agreements may be
terminated at any time without penalty by either party or the Company upon sixty
(60) days' written notice and terminates automatically in the event of an
assignment to the extent required by the 1940 Act and the rules thereunder.
The Sub-^ Agreements provide that IGAM and IAML, as applicable, subject to
the supervision of IFG, shall manage the investment portfolios of the respective
Funds in conformity with each such Fund's investment policies. These management
services would include: (a) managing the investment and reinvestment of all the
assets, now or hereafter acquired, of each Fund, and executing all purchases and
sales of portfolio securities; (b) maintaining a continuous investment program
for the Funds, consistent with (i) each Fund's investment policies as set forth
in the Company's Articles of Incorporation, Bylaws and Registration Statement,
as from time to time amended, under the 1940 Act, as amended, and in any
prospectus and/or statement of additional information of the Company, as from
time to time amended and in use under the 1933 Act and (ii) the Company's status
as a regulated investment company under the Internal Revenue Code of 1986, as
amended; (c) determining what securities are to be purchased or sold for each
Fund, unless otherwise directed by the directors of the Company or IFG, and
executing transactions accordingly; (d) providing the Funds the benefit of all
of the investment analysis and research, the reviews of current economic
conditions and trends, and the consideration of long-range investment policy now
or hereafter generally available to investment advisory customers of IGAM or
IAML; (e) determining what portion of each applicable ^ Fund's assets 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-^ Agreements provide that, as compensation for its services, IGAM
and IAML shall receive from IFG, at the end of each month, a fee based upon the
average daily value of the applicable Fund's net assets. With respect to the
European and Pacific Basin Funds, the fee is calculated at the following annual
rates: prior to January 1, 1998, 0.45% on the first $350 million of each Fund's
average net assets; 0.40% on the next $350 million of each Fund's average net
assets; and 0.35% on each Fund's average net assets in excess of $700 million
<PAGE>
and effective January 1, 1998, ^ 0.30% on the first $350 million; ^ 0.26% on the
next $350 million and ^ 0.22% on each Fund's net assets in excess of $700
million. With respect to the International Growth Fund, the fee is computed at
the following annual rates: prior to January 1, 1998, 0.25% on the first $500
million of the Fund's average net assets; 0.1875% on the next $500 million of
the Fund's average net assets; and 0.1625% on the Fund's average net assets in
excess of $1 billion and effective January 1, 1998, ^ 0.40% on the first $500
million; ^ 0.30% on the next $500 million and ^ 0.26% on the Fund's average net
assets in excess of $1 billion. With respect to the Emerging Markets Fund, the
fee is computed at the annual rate of ^ 0.40% on the first $500 million of the
Fund's average net assets; ^ 0.34% on the next $500 million of the Fund's
average net assets; and ^ 0.30% on the Fund's average net assets in excess of $1
billion. With respect to the International Blue Chip Fund, the fee is computed
at the annual rate of .30% of the Fund's average net assets. The sub-advisory
fees are paid by INVESCO, NOT the Funds.
Administrative Services Agreement. IFG, either directly or through
affiliated companies, also provides certain administrative, sub-accounting and
recordkeeping services to the Company pursuant to an Administrative Services
Agreement dated February 28, 1997 (the "Administrative Agreement"). The
Administrative Agreement was approved on November 6, 1996, by a vote cast in
person by all of the directors of the Company, including all of the directors
who are not "interested persons" of the Company or IFG, at a meeting called for
such purpose. The Administrative Agreement is for an initial term of one year.
Thereafter, the Administrative Agreement may be continued from year to year as
long as each such continuance is specifically approved by the board of directors
of the Company, including a majority of the directors who are not parties to the
Administrative Agreement or interested persons (as defined in the 1940 Act) of
any such party, cast in person at a meeting called for the purpose of voting on
such continuance. The Administrative Agreement may be terminated at any time
without penalty by IFG on sixty (60) days' written notice, or by the Company
upon thirty (30) days' written notice, and terminates automatically in the event
of an assignment unless the Company's board of directors approves such
assignment.
The Administrative Agreement provides that IFG shall provide the following
services to the Funds: (A) such sub-accounting and recordkeeping services and
functions as are reasonably necessary for the operation of the Fund; and (B)
such sub-accounting, recordkeeping and administrative services and functions,
which may be provided by affiliates of IFG, as are reasonably necessary for the
operation of Fund shareholder accounts maintained by certain retirement plans
and employee benefit plans for the benefit of participants of such plans. As
full compensation for services provided under the Administrative Agreement, the
Company pays a monthly fee to IFG consisting of a base fee of $10,000 per year
per Fund, plus an additional incremental fee computed daily and paid monthly at
an annual rate of 0.015% per year of the average net assets of each Fund ^.
<PAGE>
Transfer Agency Agreement. IFG also performs transfer agent, dividend
disbursing agent and registrar services for the Company pursuant to a Transfer
Agency Agreement dated February 28, 1997 which was approved by the board of
directors of the Company, including a majority of the Company's directors who
are not parties to the Transfer Agency Agreement or "interested persons" of any
such party, on November 6, 1996. The Transfer Agency Agreement was for an
initial term expiring February 28, 1998 and has been extended by the board of
directors until May 15, ^ 1999. Thereafter, the Transfer Agency Agreement may be
continued from year to year as to each Fund as long as such continuance is
specifically approved at least annually by the board of directors of the
Company, or by a vote of the holders of a majority of the outstanding shares of
the Fund. Any such continuance also must be approved by a majority of the
Company's directors who are not parties to the Transfer Agency Agreement or
interested persons (as defined by the 1940 Act) of any such party, cast in
person at a meeting called for the purpose of voting on such continuance. The
Transfer Agency Agreement may be terminated at any time without penalty by
either party upon sixty (60) days' written notice and terminates automatically
in the event of assignment.
The Transfer Agency Agreement provides that the Company shall pay to
INVESCO an annual fee of $20.00 per shareholder account or, where applicable,
per participant in an omnibus account. This fee is paid monthly at a rate of
1/12 of the annual fee and is based upon the actual number of shareholder
accounts, or, where applicable, per participant in an omnibus account.
For the fiscal years ended October 31, 1997, 1996 and 1995, the Funds paid
the following advisory fees, administrative services fees and transfer agency
fees:
European Fund
Fiscal Year
Ended Advisory Administrative Transfer
October 31 Fee Services Fee Agency Fee
- ---------- -------- -------------- ----------
1997 $2,679,462 $63,965 $985,603
1996 1,793,380 45,868 839,761
1995 1,815,386 46,308 869,684
Pacific Basin Fund
Fiscal Year
Ended Advisory Administrative Transfer
October 31 Fee Services Fee Agency Fee
- ---------- -------- -------------- ----------
1997 $939,420 $28,788 $677,811
1996 1,396,490 37,930 870,770
1995 1,571,623 41,483 852,343
<PAGE>
International Growth Fund
Fiscal Year
Ended Advisory Administrative Transfer
October 31 Fee Services Fee Agency Fee
- ---------- -------- -------------- ----------
1997 $987,897 $24,818 $377,527
1996 893,966 23,409 383,054
1995 963,765 24,541 361,657
Emerging Markets Fund
The Emerging Markets Fund paid IFG no advisory, administrative or transfer
agency fees as of ^ October 31, 1997 since the Fund did not commence a public
offering of its shares until February 12, 1998.
International Blue Chip Fund
The International Blue Chip Fund paid IFG no advisory, administrative or
transfer agency fees as of October 31, 1997 since the Fund did not commence a
public offering of its shares until September __, 1998.
Officers and Directors of the Company. The overall direction and
supervision of the Company is the responsibility of the board of directors,
which has the primary duty of seeing that the general investment policies and
programs of each of the Funds are carried out and that the Funds' portfolios are
properly administered. The officers of the Company, all of whom are officers and
employees of, and are paid by, IFG, are responsible for the day-to-day
administration of the Company and each of the Funds. The investment adviser for
the Company has the primary responsibility for making investment decisions on
behalf of ^ each Fund. These investment decisions are reviewed by the investment
committee of IFG.
All of the officers and directors of the Company hold comparable positions
with INVESCO Capital Appreciation Funds, Inc. (formerly, INVESCO Dynamics Fund,
Inc.), INVESCO Diversified Funds, Inc., INVESCO Emerging Opportunity Funds,
Inc., INVESCO Growth Fund, Inc., INVESCO Income Funds, Inc., INVESCO Industrial
Income Fund, Inc., INVESCO Money Market Funds, Inc., INVESCO Multiple Asset
Funds, Inc., INVESCO Specialty Funds, Inc., INVESCO Strategic Portfolios, Inc.,
INVESCO Tax-Free Income Funds, Inc. and INVESCO Variable Investment Funds, Inc.
All of the directors of the Company also serve as trustees of INVESCO Value
Trust. In addition, all of the directors of the Fund, with the exception of Dan
Hesser, also are directors of INVESCO Treasurer's Series Trust. All of the
officers of the Company also hold comparable positions with INVESCO Value Trust.
Set forth below is information with respect to each of the Company's officers
and directors. Unless otherwise indicated, the address of the directors and
officers is Post Office Box 173706, Denver, Colorado 80217-3706. Their
affiliations represent their principal occupations during the past five years.
<PAGE>
CHARLES W. BRADY,*+ Chairman of the Board. Chief Executive Officer and
Director of AMVESCAP PLC, London, England, and of various subsidiaries thereof;
Chairman of the Board of INVESCO Treasurer's Series Trust. Address: 1315
Peachtree Street, NE, Atlanta, Georgia. Born: May 11, 1935.
FRED A. DEERING,+# Vice Chairman of the Board. Vice Chairman of INVESCO
Treasurer's Series Trust. Trustee of INVESCO Global Health Sciences Fund.
Formerly, Chairman of the Executive Committee and Chairman of the Board of
Security Life of Denver Insurance Company, Denver, Colorado; Director of ING
America Life Insurance Company, Urbaine Life Insurance Company and Midwestern
United Life Insurance Company. Address: Security Life Center, 1290 Broadway,
Denver, Colorado. Born: January 12, 1928.
DAN J. HESSER,+* President, CEO and Director. Chairman of the Board^ of
INVESCO Funds Group, Inc. and INVESCO Distributors, Inc.; ^ President and Chief
Operating Officer of INVESCO Global Health Sciences Fund. Formerly, President
and Chief Executive Officer of INVESCO Funds Group, Inc. (1991-1998). Born:
December 27, 1939.
VICTOR L. ANDREWS,** Director. Professor Emeritus, Chairman Emeritus and
Chairman of the CFO Roundtable of the Department of Finance at Georgia State
University, Atlanta, Georgia; President, Andrews Financial Associates, Inc.
(consulting firm); since October 1984, Director of the Center for the Study of
Regulated Industry of Georgia State University; formerly, member of the
faculties of the Harvard Business School and the Sloan School of Management of
MIT. Dr. Andrews is also a director of the Southeastern Thrift and Bank Fund,
Inc. and The Sheffield Funds, Inc. Address: 34 Seawatch Drive, Savannah,
Georgia. Born: June 23, 1930.
BOB R. BAKER,+** Director. President and Chief Executive Officer of AMC
Cancer Research Center, Denver, Colorado, since January 1989; until mid-December
1988, Vice Chairman of the Board of First Columbia Financial Corporation (a
financial institution), Englewood, Colorado. Formerly, Chairman of the Board and
Chief Executive Officer of First Columbia Financial Corporation. Address: 1775
Sherman Street, #1000, Denver, Colorado. Born: August 7, 1936.
LAWRENCE H. BUDNER,# Director. Trust Consultant; prior to June 30, 1987,
Senior Vice President and Senior Trust Officer of InterFirst Bank, Dallas,
Texas. Address: 7608 Glen Albens Circle, Dallas, Texas. Born: July 25, 1930.
DANIEL D. CHABRIS,+# Director. Financial Consultant; Assistant Treasurer of
Colt Industries Inc., New York, New York, from 1966 to 1988. Address: 19
Kingsbridge Way, Madison, Connecticut. Born: August 1, 1923.
WENDY L. GRAMM, Ph.D.,** Director. Self-employed (since 1993); Professor of
Economics and Public Administration, University of Texas at Arlington. Formerly,
Chairman, Commodity Futures Trading Commission from 1988 to 1993, administrator
<PAGE>
for Information and Regulatory Affairs at the Office of Management and Budget
from 1985 to 1988, Executive Director of the Presidential Task Force on
Regulatory Relief and Director of the Federal Trade Commission's Bureau of
Economics. Dr. Gramm is also a director of the Chicago Mercantile Exchange,
Enron Corporation, IBP, Inc., State Farm Insurance Company, State Farm Life
Insurance Company, Independent Women's Forum, International Republic Institute,
and the Republican Women's Federal Forum. Dr. Gramm is also a member of the
Board of Visitors, College of Business Administration, University of Iowa, and a
member of the Board of Visitors, Center for Study of Public Choice, George Mason
University. Address: 4201 Yuma Street, N.W., Washington, D.C. Born: January 10,
1945.
HUBERT L. HARRIS, JR.,* Director. Chairman (since 1996) and President
(January 1990 to May 1996) of INVESCO Services, Inc.; Chief Executive Officer of
INVESCO Individual Services Group. ^ Trustee of INVESCO Global Health Sciences
Fund. Member of the Executive Committee of the Alumni Board of Trustees of
Georgia Institute of Technology. Address: 1315 Peachtree Street, NE, Atlanta,
Georgia. Born: July 15, 1943.
KENNETH T. KING,# Director. Formerly, Chairman of the Board of The Capitol
Life Insurance Company, Providence Washington Insurance Company, and Director of
numerous subsidiaries thereof in the U.S. Formerly, Chairman of the Board of The
Providence Capitol Companies in the United Kingdom and Guernsey. Chairman of the
Board of the Symbion Corporation (a high technology company) until 1987.
Address: 4080 North Circulo Manzanillo, Tucson, Arizona. Born: November 16,
1925.
JOHN W. MCINTYRE,# Director. Retired. Formerly, Vice Chairman of the Board
of Directors of The Citizens and Southern Corporation and Chairman of the Board
and Chief Executive Officer of The Citizens and Southern Georgia Corp. and
Citizens and Southern National Bank. Director of Golden Poultry Co., Inc.
Trustee of INVESCO Global Health Sciences Fund and Gables Residential Trust.
Address: 7 Piedmont Center, Suite 100, Atlanta, Georgia. Born: September 14,
1930.
LARRY SOLL, Ph.D.,** Director. Retired. Formerly, Chairman of the Board
(1987 to 1994), Chief Executive Officer (1982 to 1989 and 1993 to 1994) and
President (1982 to 1989) of Synergen Corp. Director of Synergen since its
incorporation in 1982. Director of ISI Pharmaceuticals, Inc. Trustee of INVESCO
Global Health Sciences Fund. Address: 345 Poorman Road, Boulder, Colorado. Born:
April 26, 1942.
GLEN A. PAYNE, Secretary. Senior Vice President (since 1995), General
Counsel and Secretary of INVESCO Funds Group, Inc. and INVESCO Trust Company
(since 1989) and of INVESCO Distributors, Inc. (since 1997); Vice President (May
1989 to April 1995). Formerly, employee of a U.S. regulatory agency, Washington,
D.C. (June 1973 through May 1989). Born: September 25, 1947.
<PAGE>
RONALD L. GROOMS, Treasurer. Senior Vice President and Treasurer of INVESCO
Funds Group, Inc. and INVESCO Trust Company (since 1988) and of INVESCO
Distributors, Inc. (since 1997). Born: October 1, 1946.
WILLIAM J. GALVIN, JR., Assistant Secretary. Senior Vice President of
INVESCO Funds Group, Inc. (since 1995) and of INVESCO Distributors, Inc. (since
1997) and Trust Officer of INVESCO Trust Company since July 1995 and formerly
(August 1992 to July 1995) Vice President of INVESCO Funds Group, Inc. and Trust
Officer of INVESCO Trust Company. Formerly, Vice President of 440 Financial
Group from June 1990 to August 1992 and Assistant Vice President of Putnam
Companies from November 1986 to June 1990. Born: August 21, 1956.
ALAN I. WATSON, Assistant Secretary. Vice President of INVESCO Funds Group,
Inc. (since 1984) and Trust Officer of INVESCO Trust Company. Born: September
14, 1941.
JUDY P. WIESE, Assistant Treasurer. Vice President of INVESCO Funds Group,
Inc. (since 1984) and of INVESCO Distributors, Inc. (since 1997) and Trust
Officer of INVESCO Trust Company. Born: February 3, 1948.
#Member of the audit committee of the Company.
+Member of the executive committee of the Company. On occasion, the
executive committee acts upon the current and ordinary business of the Company
between meetings of the board of directors. Except for certain powers which,
under applicable law, may only be exercised by the full board of directors, the
executive committee may exercise all powers and authority of the board of
directors in the management of the business of the Company. All decisions are
subsequently submitted for ratification by the board of directors.
*These directors are "interested persons" of the Company as defined in the
Investment Company Act of 1940.
**Member of the management liaison committee of the Company.
As of ^ June 10, 1998, officers and directors of the Company, as a group,
beneficially owned less than 1% of the Company's outstanding shares and 1% of
each Fund's outstanding shares.
Director Compensation
The following table sets forth, for the fiscal year ended October 31, 1997:
the compensation paid by the Company to its eligible 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
<PAGE>
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 IDI (including the Company), INVESCO Advisor
Funds, Inc., INVESCO Treasurer's Series Trust and INVESCO Global Health Sciences
Fund (collectively, the "INVESCO Complex") to these directors for services
rendered in their capacities as directors or trustees during the year ended
December 31, 1996. As of December 31, 1996, there were 49 funds in the INVESCO
Complex. Dr. Soll became an independent director of the Company effective May
15, 1997. Dr. Gramm became an independent director of the Company effective July
29, 1997.
Total
Compensa-
Benefits Estimated tion From
Aggregate Accrued As Annual INVESCO
Compensa- Part of Benefits Complex
Name of Person, tion From Company Upon Paid To
Position Company(1) Expenses(2) Retirement(3) Directors(1)
Fred A.Deering, $ 4,650 $1,028 $1,001 $ 98,850
Vice Chairman of
the Board
Victor L. Andrews 4,627 972 1,159 84,350
Bob R. Baker 4,713 868 1,553 84,850
Lawrence H. Budner 4,528 972 1,159 80,350
Daniel D. Chabris 4,611 1,109 824 84,850
A. D. Frazier, Jr.(4) 1,007 0 0 81,500
Wendy Gramm 1,019 0 0 0
Kenneth T. King 4,209 1,068 908 71,350
John W. McIntyre 4,423 0 0 90,350
Larry Soll 1,983 0 0 17,500
------ ------ ------ -------
Total $35,770 $6,017 $6,604 $693,950
% of Net Assets 0.0079%(5) 0.0013%(5) 0.0045%(6)
(1)The vice chairman of the board, the chairmen of the audit, management
liaison and compensation committees, and the members of the executive and
valuation committees each receive compensation for serving in such capacities in
addition to the compensation paid to all independent directors.
(2)Represents benefits accrued with respect to the Defined Benefit Deferred
Compensation Plan discussed below and not compensation deferred at the election
of the directors.
<PAGE>
(3)These figures represent the Company's share of the estimated annual
benefits payable by the INVESCO Complex (excluding INVESCO Global Health
Sciences Fund which does not participate in any retirement plan) upon the
directors' retirement, calculated using the current method of allocating
director compensation among the funds in the INVESCO Complex. These estimated
benefits assume retirement at age 72 and that the basic retainer payable to the
directors will be adjusted periodically for inflation, for increases in the
number of funds in the INVESCO Complex and for other reasons during the period
in which retirement benefits are accrued on behalf of the respective directors.
This results in lower estimated benefits for directors who are closer to
retirement and higher estimated benefits for directors who are further from
retirement. With the exception of Messrs. Frazier and McIntyre and Drs. Gramm
and Soll, each of these directors has served as a director/trustee of one or
more of the funds in the INVESCO Complex for the minimum five-year period
required to be eligible to participate in the Defined Benefit Deferred
Compensation Plan.
(4)Effective February 28, 1997, Mr. Frazier resigned as a director of the
Company. Effective November 1, 1996 Mr. Frazier was employed by INVESCO PLC (the
predecessor to AMVESCAP PLC), a company affiliated with IFG and did not receive
any director's fees or other compensation from the Company or other funds in the
INVESCO Complex for his services as a director after that date.
(5)Total as a percentage of the Company's net assets as of October 31,
1997.^
(6)Total as a percentage of the net assets of the INVESCO Complex as of
December 31, 1996.
Messrs. Brady, Harris and Hesser, as "interested persons" of the Company
and other funds in the INVESCO Complex, receive compensation as officers or
employees of IFG or its affiliated companies and do not receive any director's
fees or other compensation from the Company or other funds in the INVESCO
Complex for their services as directors.
The boards of directors/trustees of the mutual funds managed by IFG and
INVESCO Treasurer's Series Trust have adopted a Defined Benefit Deferred
Compensation Plan for the non-interested directors and trustees of the funds.
Under this plan, each director or trustee who is not an interested person of the
funds (as defined in the 1940 Act) and who has served for at least five years (a
"qualified director") is entitled to receive, upon retiring from the boards at
the retirement age of 72 (or the retirement age of 73 to 74, if the retirement
date is extended by the boards for one or two years but less than three years)
continuation of payment for one year (the "first year retirement benefit") of
the annual basic retainer and annualized board meeting fees payable by the funds
<PAGE>
to the qualified director at the time of his or her retirement (the "basic
retainer"). Commencing with any such director's second year of retirement, and
commencing with the first year of retirement of a director whose retirement has
been extended by the board for three years, a qualified director shall receive
quarterly payments at an annual rate equal to ^ 50% 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 ^ retainer
payments will be made to the director or to his or her beneficiary or estate. If
a qualified director becomes disabled or dies either prior to age 72 or during
his or her 74th year while still a director of the funds, the director will not
be entitled to receive the first year retirement benefit; however, the ^
retainer payments will be made to his or her beneficiary or estate. The plan is
administered by a committee of three directors who are also participants in the
plan and one director who is not a plan participant. The cost of the plan will
be allocated among the INVESCO and Treasurer's Series Trust funds in a manner
determined to be fair and equitable by the committee. The Company is not making
any payments to directors under the plan as of the date of this Statement of
Additional Information. The Company has no stock options or other pension or
retirement plans for management or other personnel and pays no salary or
compensation to any of its officers.
The independent directors have contributed to a deferred compensation plan,
pursuant to which they have deferred receipt of a portion of the compensation
which they would otherwise have been paid as directors of the INVESCO and
Treasurer's Series Funds. The deferred amounts are being invested in the shares
of all of the INVESCO and Treasurer's Series Funds. Each independent director
is, therefore, an indirect owner of shares of each INVESCO and Treasurer's
Series Fund.
The Company has an audit committee that is comprised of five of the
directors who are not interested persons of the Company. The committee meets
periodically with the Company's independent accountants and officers to review
accounting principles used by the Funds, the adequacy of internal controls, the
responsibilities and fees of the independent accountants, and other matters.
The Company also has a management liaison committee which meets quarterly
with various management personnel of IFG in order (a) to facilitate better
understanding of management and operations of the Company, and (b) to review
legal and operational matters which have been assigned to the committee by the
board of directors, in furtherance of the board of directors' overall duty of
supervision.
<PAGE>
HOW SHARES CAN BE PURCHASED
The shares of each Fund are sold on a continuous basis at the net asset
value per share next calculated after receipt of a purchase order in good form.
The net asset value for each Fund is computed once each day that the New York
Stock Exchange is open as of the close of regular trading on that Exchange but
may also be computed at other times. See "How Shares Are Valued." IDI acts as
the Funds' distributor under a distribution agreement with the Company under
which it receives no compensation and bears all expenses, including the costs of
printing and distribution of prospectuses incident to direct sales and
distribution of each of the Fund's shares on a no-load basis.
Distribution Plan. As discussed in the Prospectuses, the Company has
adopted a Plan and Agreement of Distribution (the "Plan") pursuant to Rule 12b-1
under the 1940 Act. The Plan was approved on May 16, 1997, at a meeting called
for such purpose by a majority of the directors of the Company, including a
majority of the directors who neither are "interested persons" of the Company
nor have any financial interest in the operation of the Plan (" ^ independent
directors"). The Plan was approved by shareholders of the European and
International Growth Funds on October 28, 1997, shareholders of the Pacific
Basin Fund on ^November 25, 1997, and by IFG on behalf of the Emerging Markets
Fund on January 30, 1998 and on behalf of the International Blue Chip Fund on
September __, 1998, for initial terms expiring October 28, 1998, ^ November 25,
1998, ^ January 30, 1999 and September __, 1999, respectively.
The Plan provides that each Fund may make monthly payments to IDI of
amounts computed at the following annual rates: with respect to the European and
International Growth Funds, no greater than 0.25% of new sales of shares,
exchanges into each Fund and reinvestments of dividends and other distributions
added after November 1, 1997^; with respect to the Pacific Basin Fund, no
greater than 0.25% of the Fund's new sales of shares, exchanges into the Fund
and reinvestment of dividends and other distributions added after December 1,
1997 ^; with respect to the Emerging Markets Fund, no greater than 0.25% of the
Fund's average net assets; with respect to the International Blue Chip Fund, no
greater than 0.25% of the Fund's average net assets, to permit IDI, at its
discretion, to engage in certain activities and provide certain services in
connection with the distribution of each Fund's shares to investors. Payments by
a Fund under the Plan, for any month, may be made to compensate IDI for
permissible activities engaged in and services provided by IDI during the
rolling 12-month period in which that month falls, although this period is
extended to 24 months for obligations incurred during the first 24 months of a
Fund's operations. As noted in the Prospectuses, one type of expenditure
permitted by the Plan is the payment of compensation to securities companies and
other financial institutions and organizations, which may include IDI-affiliated
companies, in order to obtain various distribution-related and/or administrative
services for the Funds. Each Fund is authorized by the Plan to use its assets to
finance the payments made to obtain those services. Payments will be made by IDI
to broker-dealers who sell shares of the Funds and may be made to banks, savings
<PAGE>
and loan associations and other depository institutions. Although the
Glass-Steagall Act limits the ability of certain banks to act as underwriters of
mutual fund shares, the Company does not believe that these limitations would
affect the ability of such banks to enter into arrangements with IDI, but can
give no assurance in this regard. However, to the extent it is determined
otherwise in the future, arrangements with banks might have to be modified or
terminated, and, in that case, the size of one or more of the Funds possibly
could decrease to the extent that the banks would no longer invest customer
assets in a particular Fund. Neither the Company nor its investment adviser will
give any preference to banks or other depository institutions which enter into
such arrangements when selecting investments to be made by each Fund.
The Plan was ^ implemented ^ on November 1, 1997 with respect to the
European and International Growth Funds, December 1, 1997 with respect to the
Pacific Basin Fund ^, February 2, 1998 with respect to the Emerging Markets
Fund, and ----------, 1998 with respect to the International Blue Chip Fund.
The nature and scope of services which are provided by securities dealers
and other organizations may vary by dealer but include, among other things,
processing new stockholder account applications, preparing and transmitting to
the Company's Transfer Agent computer-processable tapes of each Fund's
transactions by customers, serving as the primary source of information to
customers in answering questions concerning each Fund, and assisting in other
customer transactions with each Fund.
The Plan provides that it shall continue in effect with respect to each
Fund for so long as such continuance is approved at least annually by the vote
of the board of directors of the Company cast in person at a meeting called for
the purpose of voting on such continuance. The Plan ^ can be terminated at any
time with respect to any Fund, without penalty, if a majority of the ^
independent directors, or shareholders of such Fund, vote to terminate the Plan.
The Company may, in its absolute discretion, suspend, discontinue or limit the
offering of the shares of any Fund at any time. In determining whether any such
action should be taken, the board of directors intends to consider all relevant
factors including, without limitation, the size of the Funds, the investment
climate for any particular Fund, general market conditions, and the volume of
sales and redemptions of Fund shares. The Plan may continue in effect and
payments may be made under the Plan following any such temporary suspension or
limitation of the offering of a Fund's shares; however, the Company is not
contractually obligated to continue the Plan for any particular period of time.
Suspension of the offering of a Fund's shares would not, of course, affect a
shareholder's ability to redeem his or her shares. So long as the Plan is in
effect, the selection and nomination of persons to serve as independent
directors of the Company shall be committed to the independent directors then in
office at the time of such selection or nomination. The Plan may not be amended
<PAGE>
to increase materially the amount of any Fund's payments thereunder without
approval of the shareholders of that Fund, and all material amendments to the
Plan must be approved by the board of directors of the Company, including a
majority of the ^ independent directors. Under the agreement implementing the
Plan, IDI or the Funds, the latter by vote of a majority of the ^ independent
directors or of the holders of a majority of any Fund's outstanding voting
securities, may terminate such agreement without penalty upon 30 days' written
notice to the other party. No further payments will be made by any Fund under
the Plan in the event of its termination as to that Fund.
To the extent that the Plan constitutes a plan of distribution adopted
pursuant to Rule 12b-1 under the Act, it shall remain in effect as such, so as
to authorize the use of each Fund's assets in the amounts and for the purposes
set forth therein, notwithstanding the occurrence of an assignment, as defined
by the Act, and rules thereunder. To the extent it constitutes an agreement
pursuant to a plan, each Fund's obligation to make payments to IDI shall
terminate automatically, in the event of such "assignment," in which event the
Funds may continue to make payments, pursuant to the Plan, to IDI or another
organization only upon the approval of new arrangements, which may or may not be
with IDI, regarding the use of the amounts authorized to be paid by it under the
Plan, by the directors, including a majority of the 12b-1 directors, by a vote
cast in person at a meeting called for such purpose.
Information regarding the services rendered under the Plan and the amounts
paid therefor by each Fund are provided to, and reviewed by, the directors on a
quarterly basis. On an annual basis, the directors consider the continued
appropriateness of the Plan at the level of compensation provided therein.
The only members of the board of directors or officers of the Fund who are
interested persons, as that term is defined in Section 2(a)(19) of the Act, of
the Company who have a direct or indirect financial interest in the operation of
the Plan are the officers and directors of the Company listed under "The Funds
and Their Management -- Officers and Directors of the Company" who are also
officers either of IFG or companies affiliated with IFG. The benefits which the
Company believes will be reasonably likely to flow to the Funds and their
respective shareholders under the Plan include the following:
(1) Enhanced marketing efforts, if successful, should result in an
increase in net assets through the sale of additional shares and
afford greater resources with which to pursue the investment
objectives of the Funds;
(2) The sale of additional shares reduces the likelihood that redemption
of shares will require the liquidation of securities of ^ a Fund in
amounts and at times that are disadvantageous for investment purposes;
<PAGE>
(3) The positive effect which increased Fund assets will have on its
revenues could allow IFG and its affiliated companies:
(a) To have greater resources to make the financial commitments
necessary to improve the quality and level of each Fund's
shareholder services (in both systems and personnel),
(b) To increase the number and type of mutual funds available to
investors from IFG and its affiliated companies (and support them
in their infancy), and thereby expand the investment choices
available to all shareholders, and
(c) To acquire and retain talented employees who desire to be
associated with a growing organization; and
(4) Increased Fund assets may result in reducing each investor's share of
certain expenses through economies of scale (e.g. exceeding
established breakpoints in the advisory fee schedule and allocating
fixed expenses over a larger asset base), thereby partially offsetting
the costs of the Plan.
HOW SHARES ARE VALUED
As described in the section of each Fund's prospectus entitled "How Shares
Can Be Purchased," the net asset value of shares of each Fund is computed once
each day that the New York Stock Exchange is open as of the close of regular
trading on that Exchange (generally 4:00 p.m., New York time) and applies to
purchase and redemption orders received prior to that time. Net asset value per
share is also computed on any other day on which there is a sufficient degree of
trading in the securities held by a Fund that the current net asset value per
share might be materially affected by changes in the value of the securities
held, but only if on such day the Fund receives a request to purchase or redeem
shares of that Fund. Net asset value per share is not calculated on days the New
York Stock Exchange is closed, such as federal holidays including New Year's
Day, Martin Luther King, Jr. Day, Presidents' Day, Good Friday, Memorial Day,
Independence Day, Labor Day, Thanksgiving and Christmas. The net asset value per
share of each Fund is calculated by dividing the value of all securities held by
the Fund and its other assets (including dividends and interest accrued but not
collected), less the Fund's liabilities (including accrued expenses), by the
number of outstanding shares of that Fund.
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
<PAGE>
were reported on a particular date, are valued at their highest closing bid
prices (or, for debt securities, yield equivalents thereof) obtained from one or
more dealers making markets for such securities. If market quotations are not
readily available, securities will be valued at their fair values as determined
in good faith by the Company's board of directors or pursuant to procedures
adopted by the board of directors. The above procedures may include the use of
valuations furnished by a pricing service which employs a matrix to determine
valuations for normal institutional-size trading units of debt securities. Prior
to utilizing a pricing service, the Fund's board of directors reviews the
methods used by such service to assure itself that securities will be valued at
their fair values. The Fund's board of directors also periodically monitors the
methods used by such pricing services. Debt securities with remaining maturities
of 60 days or less at the time of purchase are normally valued at amortized
cost.
The value of securities held by each Fund, and other assets used in
computing net asset value, generally is determined as of the time regular
trading in such securities or assets is completed each day. Because regular
trading in most foreign securities markets is completed simultaneously with, or
prior to, the close of regular trading on the New York Stock Exchange, closing
prices for foreign securities usually are available for purposes of computing
the Funds' net asset values. However, in the event that the closing price of a
foreign security is not available in time to calculate a Fund's net asset value
on a particular day, the Company's board of directors has authorized the use of
the market price for the security obtained from an approved pricing service at
an established time during the day which may be prior to the close of regular
trading in the security. The value of all assets and liabilities initially
expressed in foreign currencies will be converted into U.S. dollars at the spot
rate of such currencies against U.S. dollars provided by an approved pricing
service.
FUND PERFORMANCE
As discussed in the section of each Fund's Prospectus entitled "Performance
Data," all of the Funds advertise their total return performance. Average annual
total return performance for each Fund for the indicated periods ended October
31, 1997, was as follows:
<PAGE>
10 Years/
Life of
Fund 1 Year 5 Years Fund
- --------- ------ ------- ---------
European 18.07% 16.07% 11.41%
Pacific Basin -26.65% 2.06% 2.80%
International Growth 2.65% 9.70% 5.38%(1)
Emerging Markets (2) N/A N/A N/A
^ International Blue Chip (2) N/A N/A N/A
- -------------------------
(1) 109 months (9.08 yrs.)
(2) The Emerging Markets ^ and International Blue Chip Funds did not
operate during these time periods.
Average annual total return performance for each of the periods indicated was
computed by finding the average annual compounded rates of return that would
equate the initial amount invested to the ending redeemable value, according to
the following formula:
P(1 + T)n = ERV
where: P = initial payment of $1000
T = average annual total return
n = number of years
ERV = ending redeemable value of initial payment
The average annual total return performance figures shown above were
determined by solving the above formula for "T" for each time period and Fund
indicated.
From time to time, evaluations of performance made by independent sources
may also be used in advertisements, sales literature or shareholder reports,
including reprints of, or selections from, editorials or articles about the
Funds. Sources for Fund performance information and articles about the Funds
include, but are not limited to, the following:
American Association of Individual Investors' Journal
Banxquote
Barron's
Business Week
CDA Investment Technologies
CNBC
CNN
Consumer Digest
Financial Times
Financial World
Forbes
Fortune
Ibbotson Associates, Inc.
Institutional Investor
Investment Company Data, Inc.
Investor's Business Daily
Kiplinger's Personal Finance
<PAGE>
Lipper Analytical Services, Inc.'s Mutual Fund Performance Analysis
Money
Morningstar
Mutual Fund Forecaster
No-Load Analyst
No-Load Fund X
Personal Investor
Smart Money
The New York Times
The No-Load Fund Investor
U.S. News and World Report
United Mutual Fund Selector
USA Today
Wall Street Journal
Wiesenberger Investment Companies Services
Working Woman
Worth
SERVICES PROVIDED BY THE FUNDS
Periodic Withdrawal Plan. As described in the section of each Fund's
prospectus entitled "Services Provided By the Funds," each Fund offers a
Periodic Withdrawal Plan. All dividends and distributions on shares owned by
shareholders participating in this Plan are reinvested in additional shares.
Because withdrawal payments represent the proceeds from sales of shares, the
amount of shareholders' investments in that Fund will be reduced to the extent
that withdrawal payments exceed dividends and other distributions paid and
reinvested. Any gain or loss on such redemptions must be reported for tax
purposes. In each case, shares will be redeemed at the close of business on or
about the 20th day of each month preceding payment and payments will be mailed
within five business days thereafter.
The Periodic Withdrawal Plan involves the use of principal and is not a
guaranteed annuity. Payments under such a Plan do not represent income or a
return on investment.
Participation in the Periodic Withdrawal Plan may be terminated at any time
by sending a written request to IFG. Upon termination, all future dividends and
capital gain distributions will be reinvested in additional shares unless a
shareholder requests otherwise.
Exchange Policy. As discussed in the section of each Fund's Prospectus
entitled "Services Provided by the Funds," the Funds offer shareholders the
ability to exchange shares of the Funds for shares of certain other mutual funds
advised by IFG. Exchange requests may be made either by telephone or by written
request to IFG, using the telephone number or address on the cover of this
Statement of Additional Information. Exchanges made by telephone must be in an
amount of at least $250 if the exchange is being made into an existing account
<PAGE>
of one of the INVESCO funds. All exchanges that establish a new account must
meet the fund's applicable minimum initial investment requirements. Written
exchange requests into an existing account have no minimum requirements other
than the fund's applicable minimum subsequent investment requirements. Any gain
or loss realized on such an exchange is recognized for federal income tax
purposes. This privilege is not an option or right to purchase securities but is
a revocable privilege permitted under the present policies of each of the funds
and is not available in any state or other jurisdiction where the shares of the
mutual fund into which transfer is to be made are not qualified for sale, or
when the net asset value of the shares presented for exchange is less than the
minimum dollar purchase required by the appropriate prospectus.
TAX-DEFERRED RETIREMENT PLANS
As described in the section of each Fund's prospectus entitled "Services
Provided by the Funds," shares of the Funds may be purchased as the investment
medium for various tax-deferred retirement plans. Persons who request
information regarding these plans from IFG will be provided with prototype
documents and other supporting information regarding the type of plan requested.
Each of these plans involves a long-term commitment of assets and is subject to
possible regulatory penalties for excess contributions, premature distributions
or insufficient distributions after age 70-1/2. The legal and tax implications
may vary according to the circumstances of the individual investor. Therefore,
the investor is urged to consult with an attorney or tax adviser prior to the
establishment of such a plan.
HOW TO REDEEM SHARES
Normally, payments for shares redeemed will be mailed within seven (7) days
following receipt of the required documents as described in the section of each
Fund's prospectus entitled "How to Redeem Shares." The right of redemption may
be suspended and payment postponed when: (a) the New York Stock Exchange is
closed for other than customary weekends and holidays; (b) trading on that
exchange is restricted; (c) an emergency exists as a result of which disposal by
a particular Fund of securities owned by it is not reasonably practicable, or it
is not reasonably practicable for a particular Fund fairly to determine the
value of its net assets; or (d) the Securities and Exchange Commission ("SEC")
by order so permits.
It is possible that in the future conditions may exist which would, in the
opinion of the Company's investment adviser, make it undesirable for a Fund to
pay for redeemed shares in cash. In such cases, the investment adviser may
authorize payment to be made in portfolio securities or other property of the
Fund. However, the Company is obligated under the 1940 Act to redeem for cash
all shares of a Fund presented for redemption by any one shareholder up to
<PAGE>
$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, OTHER DISTRIBUTIONS AND TAXES
The Funds intend to continue to conduct their business and satisfy the
applicable diversification of assets and source of income requirements to
qualify as a regulated investment company under Subchapter M of the Internal
Revenue Code of 1986, as amended (the "Code"). The INVESCO European Fund,
INVESCO Pacific Basin Fund and INVESCO International Growth Fund so qualified
for the taxable year ended October 31, 1997, and intend to continue to qualify
during their current taxable year. The INVESCO Emerging Markets Fund commenced ^
operations on February 12, 1998 and intends to qualify during its current
taxable year. The International Blue Chip Fund commenced operations on September
30, 1998 and intends to qualify during its current taxable year. As a result,
because the Funds intend to distribute all of their income and recognized gains,
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 the Funds from net investment income as well as
distributions of net realized short-term capital gains and net realized gains
from certain foreign currency transactions are, for federal income tax purposes,
taxable as ordinary income to shareholders. After the end of each calendar year,
the Funds send shareholders information regarding the amount and character of
dividends paid in the year.
Distributions by the Funds of net capital gain (the excess of net long-term
capital gain over net short-term capital loss) are, for federal income tax
purposes, taxable to the shareholder as long-term capital gains regardless how
long a shareholder has held shares of the Fund. ^ Long-term gains realized on
the sale of securities held for more than one year but not for more than 18
months are taxable at a maximum rate of 28% (depending on the shareholder's
marginal tax rate). This category of long-term gains is often referred to as
"mid-term" gains but is technically termed "28% rate gains". Long-term gains
realized on the sale of securities held for more than 18 months are taxable at a
maximum rate of 20% (depending on the shareholder's marginal tax rate). At the
end of each year, information regarding the tax status of dividends and other
distributions is provided to shareholders. Shareholders should consult their tax
advisers as to the effect of the Tax Act on distributions by the Fund of net
capital gain.
All dividends and other distributions are regarded as taxable to the
investor, regardless whether such dividends and distributions are reinvested in
<PAGE>
additional shares of the Funds or another fund in the INVESCO group. The net
asset value of Fund shares reflects accrued net investment income and
undistributed realized capital and foreign currency gains; therefore, when a
distribution is made, the net asset value is reduced by the amount of the
distribution. If the net asset value of Fund shares were reduced below a
shareholder's cost as a result of a distribution, such distribution would be
taxable to the shareholder although a portion would be, in effect, a return of
invested capital. However, the net asset value per share will be reduced by the
amount of the distribution, which would reduce any gain (or increase any loss)
for tax purposes on any subsequent redemption of shares by the shareholder.
IFG may provide Fund shareholders with information concerning the average
cost basis of their shares in order to help them prepare their tax returns. This
information is intended as a convenience to shareholders and will not be
reported to the Internal Revenue Service (the "IRS"). The IRS permits the use of
several methods to determine the cost basis of mutual fund shares. The cost
basis information provided by IFG will be computed using the single-category
average cost method, although neither IFG nor the Funds recommend any particular
method of determining cost basis. Other methods may result in different tax
consequences. If a shareholder has reported gains or losses with respect to
shares of a Fund in past years, the shareholder must continue to use the cost
basis method previously used unless the shareholder applies to the IRS for
permission to change the method.
If Fund shares are sold at a loss after being held for six months or less,
the loss will be treated as a long-term, instead of short-term, capital loss to
the extent of any capital gain distributions received on those shares.
Each Fund will be subject to a non-deductible 4% excise tax to the extent
it fails to distribute by the end of any calendar year substantially all of its
ordinary income for that year and net capital gains for the one-year period
ending on October 31 of that year, plus certain other amounts.
Dividends and interest received by each 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. Foreign taxes withheld will be
treated as an expense of the Fund.
Each Fund may invest in the stock of "passive foreign investment companies"
(PFICs). A PFIC is a foreign corporation (other than a controlled foreign
corporation) that, in general, meets either of the following tests: (1) at least
75% of its gross income is passive or (2) an average of at least 50% of its
<PAGE>
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 the
Fund to the extent that income is distributed to its shareholders.
A Fund may elect to "mark-to-market" its stock in any PFIC.
Marking-to-market, in this context, means including in ordinary income for each
taxable year the excess, if any, of the fair market value of the PFIC stock over
the Fund's adjusted tax basis therein as of the end of that year. Once the
election has been made, the Fund also will be allowed to deduct from ordinary
income the excess, if any, of its adjusted basis in PFIC stock over the fair
market value thereof as of the end of the year, but only to the extent of any
net mark-to-market gains with respect to that PFIC stock included by the Fund
for prior taxable years. A Fund's adjusted tax basis in each PFIC's stock with
respect to which it makes this election will be adjusted to reflect the amounts
of income included and deductions taken under the election.
Gains or losses (1) from the disposition of foreign currencies, (2) from
the disposition of debt securities denominated in foreign currency that are
attributable to fluctuations in the value of the foreign currency between the
date of acquisition of each security and the date of disposition, and (3) that
are attributable to fluctuations in exchange rates that occur between the time
the Fund accrues interest, dividends or other receivables or accrues expenses or
other liabilities denominated in a foreign currency and the time the Fund
actually collects the receivables or pays the liabilities, generally will be
treated as ordinary income or loss. These gains or losses may increase or
decrease the amount of a Fund's investment company taxable income to be
distributed to its shareholders.
Shareholders should consult their own tax advisers regarding specific
questions as to federal, state and local taxes. Dividends and other
distributions generally will be subject to applicable state and local taxes.
Qualification as a regulated investment company under the Code for federal
income tax purposes does not entail government supervision of management or
investment policies.
INVESTMENT PRACTICES
Portfolio Turnover. There are no fixed limitations regarding portfolio
turnover for any of the Funds. Brokerage costs to each Fund are commensurate
with the rate of portfolio activity. During the fiscal years ended October 31,
1997, 1996 and 1995, the European Fund's portfolio turnover rates were 90%, 91%
and 96%, respectively; the Pacific Basin Fund's portfolio turnover rates were
<PAGE>
86%, 70% and 56%, respectively; and the International Growth Fund's portfolio
turnover rates were 57%, 64% and 62%, respectively. The Emerging Markets Fund
International Blue Chip Fund did not operate during these time periods.
In computing the portfolio turnover rate, all investments with maturities
or expiration dates at the time of acquisition of one year or less are excluded.
Subject to this exclusion, the turnover rate is calculated by dividing (A) the
lesser of purchases or sales of portfolio securities for the fiscal year by (B)
the monthly average of the value of portfolio securities owned by the Fund
during the fiscal year.
Placement of Portfolio Brokerage. Either IFG, IGAM or IAML, as the ^
investment adviser or sub-adviser to a Fund, 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 any commissions or
discounts 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, spread or discount available.
Consistent with the standard of seeking to obtain the best execution on
portfolio transactions, Fund Management may select brokers that provide research
services to effect such transactions. Research services consist of statistical
and analytical reports relating to issuers, industries, securities and economic
factors and trends, which may be of assistance or value to Fund Management in
making informed investment decisions. Research services prepared and furnished
by brokers through which the Funds effect securities transactions may be used by
Fund Management in servicing all of their respective accounts and not all such
services may be used by Fund Management in connection with the Funds.
In recognition of the value of the above-described brokerage and research
services provided by certain brokers, Fund Management, consistent with the
standard of seeking to obtain the best execution on portfolio transactions, may
place orders with such brokers for the execution of transactions for the Funds
on which the commissions are in excess of those which other brokers might have
charged for effecting the same transactions.
<PAGE>
Portfolio transactions may be effected through qualified broker-dealers
that recommend the Funds to their clients or who act as agent in the purchase of
any of the Funds' shares for their clients. When a number of brokers and dealers
can provide comparable best price and execution on a particular transaction, the
Company's adviser may consider the sale of Fund shares by a broker or dealer in
selecting among qualified broker-dealers.
Certain financial institutions (including brokers who may sell shares of
the Fund, or affiliates of such brokers) are paid a fee (the "Services Fee") for
recordkeeping, shareholder communications and other services provided by the
brokers to investors purchasing shares of the Fund through no transaction fee
programs ("NTF Programs") offered by the financial institution or its affiliated
broker (an "NTF Program Sponsor"). The Services Fee is based on the average
daily value of the investments in each Fund made in the name of such NTF Program
Sponsor and held in omnibus accounts maintained on behalf of investors
participating in the NTF Program. With respect to certain NTF Programs, the
Company's directors have authorized the Funds to apply dollars generated from
the Fund's Plan and Agreement of Distribution pursuant to Rule 12b-1 under the
1940 Act (the "Plan") to pay the entire Services Fee, subject to the maximum
Rule 12b-1 fee permitted by the Plan. With respect to other NTF Programs, the
Company's directors have authorized the Funds to pay transfer agency fees to IFG
based on the number of investors who have beneficial interests in the NTF
Program Sponsor's omnibus accounts in that Fund. IFG, in turn, pays these
transfer agency fees to the NTF Program Sponsor as a sub-transfer agency or
recordkeeping fee in payment of all or a portion of the Services Fee. In the
event that the sub-transfer agency or recordkeeping fee is insufficient to pay
all of the Services Fee with respect to these NTF Programs, the directors of the
Company have authorized the Funds to apply dollars generated from the Plan to
pay the remainder of the Services Fee, subject to the maximum Rule 12b-1 fee
permitted by the Plan. IFG itself pays the portion of the Fund's Services Fee,
if any, that exceeds the sum of the sub-transfer agency or recordkeeping fee and
Rule 12b-1 fee. The Company's directors have further authorized IFG to place a
portion of the Funds' brokerage transactions with certain NTF Program Sponsors
or their affiliated brokers, if IFG reasonably believes that, in effecting the
Fund's transactions in portfolio securities, the broker is able to provide the
best execution of orders at the most favorable prices. A portion of the
commissions earned by such a broker from executing portfolio transactions on
behalf of the Funds may be credited by the NTF Program Sponsor against its
Services Fee. Such credit shall be applied first against any sub-transfer agency
or recordkeeping fee payable with respect to the Funds, and second against any
Rule 12b-1 fees used to pay a portion of the Services Fee, on a basis which has
resulted from negotiations between IFG or IDI and the NTF Program Sponsor. Thus,
the Funds pay sub-transfer agency or recordkeeping fees to the NTF Program
Sponsor in payment of the Services Fee only to the extent that such fees are not
offset by the Funds' credits. In the event that the transfer agency fee paid by
the Funds to IFG with respect to investors who have beneficial interests in a
<PAGE>
particular NTF Program Sponsor's omnibus accounts in the Funds exceeds the
Services Fee applicable to that Fund, after application of credits, IFG may
carry forward the excess and apply it to future Services Fees payable to that
NTF Program Sponsor with respect to the Funds. The amount of excess transfer
agency fees carried forward will be reviewed for possible adjustment by IFG
prior to each fiscal year-end of the Company. The Company's board of directors
has also authorized the Funds to pay to IDI the full Rule 12b-1 fees
contemplated by the Plan to compensate IDI for expenses incurred by IDI in
engaging in the activities and providing the services on behalf of the Funds
contemplated by the Plan, subject to the maximum Rule 12b-1 fee permitted by the
Plan, notwithstanding that credits have been applied to reduce the portion of
the 12b-1 fee that would have been used to compensate IDI for payments to such
NTF Program Sponsor absent such credits.
The aggregate dollar amounts of brokerage commissions paid by the Company,
on behalf of the Funds, for the fiscal years ended October 31, 1997, 1996 and
1995 were $2,845,570, $2,717,105 and $105,752, respectively. The aggregate
dollar amounts of brokerage commissions paid by the INVESCO European, Pacific
Basin and International Growth Funds for the fiscal years ended October 31,
1997, 1996 and 1995, were $1,477,524, $1,070,781 and $51,678, respectively, for
the INVESCO European Fund; $1,007,320, $1,284,787 and $18,451 respectively, for
the INVESCO Pacific Basin Fund; and $360,726, $361,537 and $35,623 for the
INVESCO International Growth Fund. For the fiscal year ended October 31, 1997,
brokers providing research services received $0 in commissions on portfolio
transactions effected for the Company on aggregate portfolio transactions of $0.
The Company paid $0 in compensation to brokers for the sale of shares of these
Funds during the fiscal year ended October 31, 1997. The Emerging Markets Fund
and International Blue Chip Fund did not incur any brokerage commissions during
these time periods.
The increased brokerage commissions paid by the Funds in fiscal 1996 versus
the prior fiscal years were primarily the result of the increased volume of
purchases and sales of Fund shares by investors, which resulted in higher levels
of purchases and sales of portfolio securities and corresponding increases in
the amounts of brokerage commissions.
At October 31, 1997, 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 10/31/97
- ---- ---------------- -----------
Pacific Basin State Street Bank and Trust $5,661,000
Fund
European Fund $0
International State Street Bank and Trust 289,000
Growth Fund North America
^ Emerging Markets
Fund ^(1) N/A N/A
International Blue
Chip Fund (1) N/A N/A
<PAGE>
(1) The Emerging Markets and International Blue Chip Funds were not operating at
this time.
Neither IFG, IGAM nor IAML receives any brokerage commissions on portfolio
transactions effected on behalf of any of the Funds, and there is no affiliation
between IFG, IGAM, IAML or any person affiliated with IFG, IGAM, 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, 1997, the following
shares were outstanding: INVESCO European Fund, 18,729,780, INVESCO
International Growth Fund, 5,149,447, and INVESCO Pacific Basin Fund, 6,565,265.
Of the Company's authorized shares, 100,000,000 shares have been allocated to
each of the Company's ^ five Funds. The board of directors has the authority to
designate additional classes of Common Stock without seeking the approval of
shareholders and may classify and reclassify any authorized but unissued shares.
Shares of each class represent the interests of the shareholders of such
class in a particular portfolio of investments of the Company. Each class of the
Company's shares is preferred over all other classes in respect of the assets
specifically allocated to that class, and all income, earnings, profits and
proceeds from such assets, subject only to the rights of creditors, are
allocated to shares of that class. The assets of each class are segregated on
the books of account and are charged with the liabilities of that class and with
a share of the Company's general liabilities. The board of directors determines
those assets and liabilities deemed to be general assets or liabilities of the
Company, and these items are allocated among classes in a manner deemed by the
board of directors to be fair and equitable. Generally, such allocation will be
made based upon the relative total net assets of each class. In the unlikely
event that a liability allocable to one class exceeds the assets belonging to
the class, all or a portion of such liability may have to be borne by the
holders of shares of the Company's other classes.
All shares, regardless of class, have equal voting rights. Voting with
respect to certain matters, such as ratification of independent accountants or
election of directors, will be by all classes of the Company. When not all
series are affected by a matter to be voted upon, such as approval of an
investment advisory contract or changes in a Fund's investment policies, only
shareholders of the Fund 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 ^ June 30, 1998, the following entities held
more than 5% of the Funds' outstanding equity securities.
<PAGE>
Amount and Nature Percent
Name and Address of Ownership of Class
- ---------------- ------------ --------
Pacific Basin Fund
Charles Schwab & Co., Inc. ^ 2,391,566.6230 36.12%
Special Custody Acct. for
the Exclusive Benefit of
Customers
Attn: Mutual Funds
101 Montgomery St.
San Francisco, CA 94104
European Fund
Charles Schwab & Co., Inc. ^ 11,819,215.7470 35.21%
Special Custody Acct. for
the Exclusive Benefit of
Customers
Attn: Mutual Funds
101 Montgomery St.
San Francisco, CA 94104
National Financial Services Corp. ^ 3,138,173.1800 9.35%
The Exclusive Benefit of Customers
One World Financial Center
200 Liberty Street, 5th Floor
Attn: Kate - Recon
New York, NY 10281-1003
Donaldson, Lufkin & Jenrette 1,898,004.1630 5.65%
Securities Corp.
Mutual Funds, 5th Floor
P.O. Box 2052
Jersey City, NJ 07303-2052
International Growth Fund
^
Charles Schwab & Co., Inc. ^ 474,254.2570 15.18%
Special Custody Acct. for
the Exclusive Benefit of
Customers
Attn: Mutual Funds
101 Montgomery St.
San Francisco, CA 94104
<PAGE>
The 401(k) Retirement & 160,474.3540 5.14%
Savings Plan for Employees
of Fairfield, Inc.
Attn: Terri Winstead - Benefits
US 52 South P.O. Box 7940
Lafayette, IN 47903
Wachovia Bank NA TR 157,665.7140 5.05%
Coca-Cola Enterprises
Supplemental MCSIP
301 N. Main St. MCNC 31057
P.O. Box 3073
Winston-Salem, NC 27150-0001
Emerging Markets Fund
INVESCO Funds Group, Inc. 36,673.6720 32.55%
Attn: Sheila Wendland
P.O. Box 173706
Denver, CO 80217-3706
Charles Schwab & Co., Inc. 9,261.5110 8.22%
Special Custody Acct. for
the Exclusive Benefit of
Customers
Attn: Mutual Funds
101 Montgomery St.
San Francisco, CA 94104
A. Blankenburg 7,218.4160 6.41%
Edna Blankenburg JT TEN
109 W. 6th St.
Oakley, KS 67748-1613
International Blue Chip Fund
The International Blue Chip ^ Fund was not operating ^ during this time
period.
Independent Accountants. ^ PricewaterhouseCoopers 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 countries and to cause foreign securities owned by the Company to be
<PAGE>
held outside the United States in branches of U.S. banks and, to the extent
permitted by applicable regulations, in certain foreign banks and securities
depositories.
Transfer Agent. The Company is provided with transfer agent, registrar and
dividend disbursing agent services by IFG, 7800 E. Union Avenue, Denver,
Colorado 80237, pursuant to the Transfer Agency Agreement described herein. Such
services include the issuance, cancellation and transfer of shares of each of
the Funds, and the maintenance of records regarding the ownership of such
shares.
Reports to Shareholders. The Company's fiscal year ends on October 31. The
Fund distributes reports at least semiannually to its shareholders. Financial
statements regarding the Company, audited by the independent accountants, are
sent to shareholders annually.
Legal Counsel. The firm of Kirkpatrick & Lockhart LLP, Washington, D.C., is
legal counsel for the Company. The firm of Moye, Giles, O'Keefe, Vermeire &
Gorrell, Denver, Colorado, acts as special counsel to the Funds.
Financial Statements. The Company's audited financial statements and the
notes thereto for the fiscal year ended October 31, 1997 and the report of Price
Waterhouse LLP with respect to such financial statements are incorporated herein
by reference from the Company's Annual Report to Shareholders for the fiscal
year ended October 31, 1997.
Prospectuses. The Company will furnish, without charge, a copy of the
prospectus for each of its Funds, upon request. Such requests should be made to
the Company at the mailing address or telephone number set forth on the first
page of this Statement of Additional Information.
Registration Statement. This Statement of Additional Information and the
Prospectuses do not contain all of the information set forth in the Registration
Statement the Company has filed with the SEC. The complete Registration
Statement may be obtained from the SEC upon payment of the fee prescribed by the
rules and regulations of the SEC.
<PAGE>
APPENDIX A
DESCRIPTION OF FUTURES, OPTIONS AND FORWARD CONTRACTS
(International Growth Fund, European Fund, Pacific Basin Fund and Emerging
Markets Fund only)
Options on Securities
An option on a security provides the purchaser, or "holder," with the
right, but not the obligation, to purchase, in the case of a "call" option, or
sell, in the case of a "put" option, the security or securities underlying the
option, for a fixed exercise price up to a stated expiration date. The holder
pays a non-refundable purchase price for the option, known as the "premium." The
maximum amount of risk the purchaser of the option assumes is equal to the
premium plus related transaction costs, although the entire amount may be lost.
The risk of the seller, or "writer," however, is potentially unlimited, unless
the option is "covered," which is generally accomplished through the writer's
ownership of the underlying security, in the case of a call option, or the
writer's segregation of an amount of cash or securities equal to the exercise
price, in the case of a put option. If the writer's obligation is not so
covered, it is subject to the risk of the full change in value of the underlying
security from the time the option is written until exercise.
Upon exercise of the option, the holder is required to pay the purchase
price of the underlying security, in the case of a call option, or to deliver
the security in return for the purchase price, in the case of a put option.
Conversely, the writer is required to deliver the security, in the case of a
call option, or to purchase the security, in the case of a put option. Options
on securities which have been purchased or written may be closed out prior to
exercise or expiration by entering into an offsetting transaction on the
exchange on which the initial position was established, subject to the
availability of a liquid secondary market.
Options on securities are traded on national securities exchanges, such as
the Chicago Board of Options Exchange and the New York Stock Exchange, which are
regulated by the Securities and Exchange Commission. The Options Clearing
Corporation guarantees the performance of each party to an exchange-traded
option, by in effect taking the opposite side of each such option. A holder or
writer may engage in transactions in exchange-traded options on securities and
options on indices of securities only through a registered broker/dealer which
is a member of the exchange on which the option is traded.
An option position in an exchange-traded option may be closed out only on
an exchange which provides a secondary market for an option of the same series.
Although the Fund will generally purchase or write only those options for which
there appears to be an active secondary market, there is no assurance that a
<PAGE>
liquid secondary market on an exchange will exist for any particular option at
any particular time. In such event it might not be possible to effect closing
transactions in a particular option with the result that the Fund would have to
exercise the option in order to realize any profit. This would result in the
Fund incurring brokerage commissions upon the disposition of underlying
securities acquired through the exercise of a call option or upon the purchase
of underlying securities upon the exercise of a put option. If the Fund as
covered call option writer is unable to effect a closing purchase transaction in
a secondary market, unless the Fund is required to deliver the securities
pursuant to the assignment of an exercise notice, it will not be able to sell
the underlying security until the option expires.
Reasons for the potential absence of a liquid secondary market on an
exchange include the following: (i) there may be insufficient trading interest
in certain options; (ii) restrictions may be imposed by an exchange on opening
transactions or closing transactions or both; (iii) trading halts, suspensions
or other restrictions may be imposed with respect to particular classes or
series of options or underlying securities: (iv) unusual or unforeseen
circumstances may interrupt normal operations on an exchange; (v) the facilities
of an exchange or a clearing corporation may not at all times be adequate to
handle current trading volume or (vi) one or more exchanges could, for economic
or other reasons, decide or be compelled at some future date to discontinue the
trading of options (or particular class or series of options) in which event the
secondary market on that exchange (or in the class or series of options) would
cease to exist, although outstanding options on that exchange which had been
issued by a clearing corporation as a result of trades on that exchange would
continue to be exercisable in accordance with their terms. There is no assurance
that higher than anticipated trading activity or other unforeseen events might
not, at a particular time, render certain of the facilities of any of the
clearing corporations inadequate and thereby result in the institution by an
exchange of special procedures which may interfere with the timely execution of
customers' orders. However, the Options Clearing Corporation, based on forecasts
provided by the U.S. exchanges, believes that its facilities are adequate to
handle the volume of reasonably anticipated options transactions, and such
exchanges have advised such clearing corporation that they believe their
facilities will also be adequate to handle reasonably anticipated volume.
In addition, options on securities may be traded over-the-counter through
financial institutions dealing in such options as well as the underlying
instruments. OTC options are purchased from or sold (written) to dealers or
financial institutions which have entered into direct agreements with the Fund.
With OTC options, such variables as expiration date, exercise price and premium
will be agreed upon between the Fund and the transacting dealer, without the
intermediation of a third party such as the OCC. If the transacting dealer fails
to make or take delivery of the securities underlying an option it has written,
<PAGE>
in accordance with the terms of that option as written, the Fund would lose the
premium paid for the option as well as any anticipated benefit of the
transaction. The Fund will engage in OTC option transactions only with primary
U.S. Government securities dealers recognized by the Federal Reserve Bank of New
York.
Futures Contracts
A Futures Contract is a bilateral agreement providing for the purchase and
sale of a specified type and amount of a financial instrument or foreign
currency, or for the making and acceptance of a cash settlement, at a stated
time in the future, for a fixed price. By its terms, a Futures Contract provides
for a specified settlement date on which, in the case of the majority of
interest rate and foreign currency futures contracts, the fixed income
securities or currency underlying the contract are delivered by the seller and
paid for by the purchaser, or on which, in the case of stock index futures
contracts and certain interest rate and foreign currency futures contracts, the
difference between the price at which the contract was entered into and the
contract's closing value is settled between the purchaser and seller in cash.
Futures Contracts differ from options in that they are bilateral agreements,
with both the purchaser and the seller equally obligated to complete the
transaction. In addition, Futures Contracts call for settlement only on the
expiration date, and cannot be "exercised" at any other time during their term.
The purchase or sale of a Futures Contract also differs from the purchase
or sale of a security or the purchase of an option in that no purchase price is
paid or received. Instead, an amount of cash or cash equivalent, which varies
but may be as low as 5% or less of the value of the contract, must be deposited
with the broker as "initial margin." Subsequent payments to and from the broker,
referred to as "variation margin," are made on a daily basis as the value of the
index or instrument underlying the Futures Contract fluctuates, making positions
in the Futures Contract more or less valuable, a process known as "marking to
market."
A Futures Contract may be purchased or sold only on an exchange, known as a
"contract market," designated by the Commodity Futures Trading Commission for
the trading of such contract, and only through a registered futures commission
merchant which is a member of such contract market. A commission must be paid on
each completed purchase and sale transaction. The contract market clearing house
guarantees the performance of each party to a Futures Contract, by in effect
taking the opposite side of such Contract. At any time prior to the expiration
of a Futures Contract, a trader may elect to close out its position by taking an
opposite position on the contract market on which the position was entered into,
subject to the availability of a secondary market, which will operate to
terminate the initial position. At that time, a final determination of variation
margin is made and any loss experienced by the trader is required to be paid to
<PAGE>
the contract market clearing house while any profit due to the trader must be
delivered to it.
Interest rate futures contracts currently are traded on a variety of fixed
income securities, including long-term U.S. Treasury Bonds, Treasury Notes,
Government National Mortgage Association modified pass-through mortgage-backed
securities, U.S. Treasury Bills, bank certificates of deposit and commercial
paper. In addition, interest rate futures contracts include contracts on indices
of municipal securities. Foreign currency futures contracts currently are traded
on the British pound, Canadian dollar, Japanese yen, Swiss franc, West German
mark and on Eurodollar deposits.
Options on Futures Contracts
An Option on a Futures Contract provides the holder with the right to enter
into a "long" position in the underlying Futures Contract, in the case of a call
option, or a "short" position in the underlying Futures Contract, in the case of
a put option, at a fixed exercise price to a stated expiration date. Upon
exercise of the option by the holder, the contract market clearing house
establishes a corresponding short position for the writer of the option, in the
case of a call option, or a corresponding long position, in the case of a put
option. In the event that an option is exercised, the parties will be subject to
all the risks associated with the trading of Futures Contracts, such as payment
of variation margin deposits. In addition, the writer of an Option on a Futures
contract, unlike the holder, is subject to initial and variation margin
requirements on the option position.
A position in an Option on a Futures Contract may be terminated by the
purchaser or seller prior to expiration by effecting a closing purchase or sale
transaction, subject to the availability of a liquid secondary market, which is
the purchase or sale of an option of the same series (i.e., the same exercise
price and expiration date) as the option previously purchased or sold. The
difference between the premiums paid and received represents the trader's profit
or loss on the transaction.
An option, whether based on a Futures Contract, a stock index or a
security, becomes worthless to the holder when it expires. Upon exercise of an
option, the exchange or contract market clearing house assigns exercise notices
on a random basis to those of its members which have written options of the same
series and with the same expiration date. A brokerage firm receiving such
notices then assigns them on a random basis to those of its customers which have
written options of the same series and expiration date. A writer therefore has
no control over whether an option will be exercised against it, nor over the
time of such exercise.
<PAGE>
APPENDIX B
BOND RATINGS
The following is a description of Moody's and S&P's bond ratings:
Moody's Corporate Bond Ratings
Aaa - Bonds rated Aaa are judged to be of the best quality. They carry the
smallest degree of investment risk and are generally referred to as
"gilt-edged." Interest payments are protected by a large or by an exceptionally
stable margin, and principal is secure. While the various protective elements
are likely to change, such changes as can be visualized are most unlikely to
impair the fundamentally strong position of such issues.
Aa - Bonds rated Aa are judged to be of high quality by all standards.
Together with the Aaa group, they comprise what are generally known as high
grade bonds. They are rated lower than the best bonds because margins of
protection may not be as large as in Aaa securities or fluctuation of protective
elements may be of greater amplitude or there may be other elements present
which make the long term risk appear somewhat larger than in Aaa securities.
A - Bonds rated A possess many favorable investment attributes, and are to
be considered as upper medium grade obligations. Factors giving security to
principal and interest are considered adequate but elements may be present which
suggest a susceptibility to impairment sometime in the future.
Baa - Bonds rated Baa are considered as medium grade obligations, i.e.,
they are neither highly protected nor poorly secured. Interest payments and
principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and in
fact have speculative characteristics as well.
Ba - Bonds rated Ba are judged to have speculative elements. Their future
cannot be considered as well assured. Often the protection of interest and
principal payments may be very moderate and thereby not well safeguarded during
both good and bad times over the future. Uncertainty of position characterizes
bonds in this class.
B - Bonds rated B generally lack characteristics of the desirable
investment. Assurance of interest and principal payments or maintenance of other
terms of the contract over any longer period of time may be small.
Caa - Bonds rated Caa are of poor standing. Such issues may be in default
or there may be present elements of danger with respect to principal or
interest.
<PAGE>
S&P Corporate Bond Ratings
AAA - This is the highest rating assigned by Standard & Poor's to a debt
obligation and indicates an extremely strong capacity to pay principal and
interest.
AA - Bonds rated AA also qualify as high-quality debt obligations. Capacity
to pay principal and interest is very strong, and in the majority of instances
they differ from AAA issues only in small degree.
A - Bonds rated A have a strong capacity to pay principal and interest,
although they are somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions than bonds in higher rated categories.
BBB - Bonds rated BBB are regarded as having an adequate capability to pay
principal and interest. Whereas they normally exhibit adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay principal and interest for bonds in
this category than for bonds in higher rated categories.
BB - Bonds rated BB have less near-term vulnerability to default than other
speculative issues. However, they face major ongoing uncertainties or exposure
to adverse business, financial, or economic conditions which could lead to
inadequate capacity to meet timely interest and principal payments.
B - Bonds rated B have a greater vulnerability to default but currently
have the capacity to meet interest payments and principal repayments. Adverse
business, financial, or economic conditions will likely impair capacity or
willingness to pay interest and repay principal.
CCC - Bonds rated CCC have a currently identifiable vulnerability to
default and are dependent upon favorable business, financial, and economic
conditions to meet timely payment of interest and repayment of principal. In the
event of adverse business, financial, or economic conditions, they are not
likely to have the capacity to pay interest and repay principal.
<PAGE>
PART C. OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) Financial Statements:
Page in
Prospectus
(1) Financial statements and schedules
included in Prospectuses (Part A):
^ None.
Page in
Statement
of Addi-
tional In-
formation
(2) The following audited financial statements
of the INVESCO European Fund, the INVESCO
Pacific Basin Fund and the INVESCO
International Growth Fund and the notes thereto
for the fiscal year ended October 31, 1997,
and the report of Price Waterhouse LLP with
respect to such financial statements,
are incorporated in the Statement of Additional
Information by reference from the Company's
Annual Report to Shareholders for the fiscal
year ended October 31, 1997: Statement of
Investment Securities as of October 31, 1997;
Statement of Assets and Liabilities as of
October 31, 1997; Statement of Operations for
the year ended October 31, 1997; Statement of
Changes in Net Assets for each of the two years
in the period ended October 31, 1997; Financial
Highlights for the INVESCO European Fund and
INVESCO Pacific Basin Fund for the five years
ended October 31, 1997, and for the INVESCO
International Growth Fund for the four years
ended October 31, 1997, the ten-month fiscal
period ended October 31, 1993, the year ended
December 31, 1992, and the year ended December
31, 1982.
(3) Financial statements and schedules included
in Part C:
<PAGE>
None: Schedules have been omitted as all
information has been presented in the
financial statements.
(b) Exhibits:
(1) Articles of Incorporation (Charter)--
dated April 2, 1993.(2)
(a) Articles Supplementary dated
November 14, ^ 1997.(4)
(b)Form of Articles Supplementary dated
----------------.
(2) Bylaws, as amended July 21, 1993.(3)
(3) Not applicable.
(4) Not required to be filed on EDGAR.
(5) (a) Investment Advisory
Agreement--between Registrant and
INVESCO Funds Group, Inc. dated February
28, 1997.(2)
(i) Amendment to Advisory
Agreement dated January 30, ^
1998.(4)
(ii) Form of Amendment to Advisory
Agreement dated ____________, 1998.
(b) Sub-Advisory Agreement between
INVESCO Funds Group, Inc. and INVESCO
Asset Management Limited with respect to
European, Pacific Basin and
International Growth Funds dated
February 28, 1997.(2)
(c) Sub-Advisory Agreement dated January
30, 1998 between INVESCO Funds Group,
Inc. and INVESCO Asset Management
Limited with respect to Emerging Markets
Fund.(4)
(d) Form of Sub-Advisory Agreement dated
__________ between INVESCO Funds Group,
Inc. and INVESCO Global Asset Management
(N.A.) with respect to INVESCO
International Blue Chip Fund.
(6) (a) Distribution Agreement Between
Registrant and INVESCO Funds Group, Inc.
dated February 28, 1997.(2)
<PAGE>
(b) Distribution Agreement Between
Registrant and INVESCO Distributors,
Inc. dated September 30, 1997.(3)
(7) Defined Benefit Deferred Compensation
Plan for Non-Interested Directors and ^
Trustees.
(8) Custody Agreement Between Registrant and
State Street Bank and Trust Company
dated July 1, 1993.(3)
(a) Amendment to Custody Agreement dated
October 25, 1995.(1)
(b) Data Access Services Addendum.(3)
(c) Additional Fund Letter dated
November 13, ^ 1997.(4)
(d) Additional Funds Letter dated
----------------.
(9) (a) Transfer Agency Agreement Between
Registrant and INVESCO Funds Group, Inc.
dated February 28, 1997.(2)
(b) Administrative Services Agreement
Between Registrant and INVESCO Funds
Group, Inc. dated February 28, 1997.(2)
(10) Opinion and consent of counsel as to the
legality of the securities being
registered, indicating whether they
will, when sold, be legally issued,
fully paid and non-assessable, dated May
21, 1993.(3)
(11) Consent of Independent Accountants.
(12) Not applicable.
(13) Not applicable.
(14) Copies of model plans used in the
establishment of retirement plans as
follows:
(a) Non-standardized Profit Sharing ^
Plan;(4)
(b) Non-standardized Money Purchase
Pension ^ Plan;(4)
<PAGE>
(c) Standardized Profit Sharing Plan
Adoption ^ Agreement;)4)
(d) Standardized Money Purchase Pension
^ Plan;)4)
(e) Non-standardized 401(k) Plan
Adoption ^ Agreement;(4)
(f) Standardized 401(k) Paired Profit
Sharing ^ Plan;(4)
(g) Standardized Simplified Profit
Sharing ^ Plan;(4)
(h) Defined Contribution Master Plan &
Trust ^ Agreement;(4)
(15) (a) Plan and Agreement of Distribution
dated November 1, 1997 adopted pursuant
to Rule 12b-1 under the Investment
Company Act of 1940.(3)
(16) (a) Schedule for computation of
performance data for the European Fund.(3)
(b) Schedule for computation of
performance dated for the Pacific Basin
Fund.(3)
(c) Schedule for computation of
performance data for the International
Growth Fund.(3)
(17) (a) Financial Data Schedule for the
period ended October 31, 1997 for
INVESCO European Fund.
(b) Financial Data Schedule for the
period ended October 31, 1997 for
INVESCO Pacific Basin Fund.
(c) Financial Data Schedule for the
period ended October 31, 1997 for
INVESCO International Growth Fund.
(18) Not applicable.
- ----------------
1Previously filed on EDGAR with Post-Effective Amendment No. 3 to Registrant's
Registration Statement on Form N-1A on December 22, 1995, and herein
incorporated by reference.
2Previously filed on EDGAR with Post-Effective Amendment No. 4 to Registrant's
Registration Statement on Form N-1A on February 25, 1997, and herein
incorporated by reference.
<PAGE>
(3)Previously filed on EDGAR with Post-Effective Amendment No. 5 to Registrant's
Registration Statement on Form N-1A on November 17, 1997, and herein
incorporated by reference.
(4)Previously filed on EDGAR with Post-Effective Amendment No. 6 to Registrant's
Registration Statement on Form N-1A on February 26, 1998, and herein
incorporated by reference.
Item 25. Persons Controlled by or Under Common Control with
Registrant
--------------------------------------------------
No person is presently controlled by or under common control with
Registrant.
Item 26. Number of Holders of Securities
Number of
Record Holders
Title of Class ^ June 30, 1998
-------------- ----------------
INVESCO European Fund ^ 27,358
Common stock
INVESCO Pacific Basin Fund ^ 9,710
Common stock
INVESCO International Growth Fund ^ 7,687
^ Common Stock
INVESCO Emerging Markets Fund 238
Common Stock
INVESCO International Blue Chip Fund 0
Common Stock
Item 27. Indemnification
Indemnification provisions for officers, directors and employees of
Registrant are set forth in Article VII, Section 2 of the Articles of
Incorporation and are hereby incorporated by reference. See Item 24(b)(1) above.
Under this Article, officers and directors will be indemnified to the fullest
extent permitted to directors by the Maryland General Corporation Law, subject
only to such limitations as may be required by the Investment Company Act of
1940, as amended, and the rules thereunder. Under the Investment Company Act of
1940, Fund directors and officers cannot be protected against liability to the
Company or its shareholders to which they would be subject because of willful
misfeasance, bad faith, gross negligence or reckless disregard of the duties of
their office. The Company also intends to maintain liability insurance policies
covering its directors and officers.
<PAGE>
Item 28. Business and Other Connections of Investment Adviser
See ^ "The Company and Its Management" in the Prospectus and Statement of
Additional Information for information regarding the business of the investment
adviser ^, IFG.
^ Following are the names and principal occupations of each director and
officer of the investment adviser, IFG. Certain of these persons hold positions
with IDI, a subsidiary of IFG, and, during the past two fiscal years, have held
positions with INVESCO Trust Company, another subsidiary of IFG.
Position
with Principal Occupation and
Name Adviser Company Affiliation
---- -------- ------------------------
Dan J. Hesser Chairman Chairman
and INVESCO Funds Group, Inc.
Director 7800 East Union Avenue
Denver, CO 80237
Mark H. Williamson Officer & President & Chief
Director Executive Officer
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
William J. Galvin, Jr. Officer Senior Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
Ronald L. Grooms Officer Senior Vice President &
Treasurer
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
Gregory E. Hyde Officer Senior Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
Daniel B. Leonard Officer Senior Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
Charles P. Mayer Officer & Senior Vice President
Director INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
<PAGE>
Position
with Principal Occupation and
Name Adviser Company Affiliation
---- -------- ------------------------
Timothy J. Miller Officer Senior Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
Donovan J. (Jerry) Paul Officer Senior Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
Glen A. Payne Officer Senior Vice President,
Secretary & General
Counsel
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
John R. Schroer, II Officer Senior Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
Ingeborg S. Cosby Officer Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
Elroy E. Frye, Jr. Officer Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
Linda J. Gieger Officer Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
James S. Grabovac Officer Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
Mark D. Greenberg Officer Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
<PAGE>
Position
with Principal Occupation and
Name Adviser Company Affiliation
---- -------- ------------------------
Gerard F. Hallaren, Jr. Officer Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
Richard R. Hinderlie Officer Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
Thomas M. Hurley Officer Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
Patricia F. Johnston Officer Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
James F. Lummanick Officer Vice President &
Assistant General Counsel
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
Thomas A. Mantone, Jr. Officer Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
Trent E. May Officer Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
Frederick R. (Fritz) Officer Vice President
Meyer INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
Jeffrey G. Morris Officer Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
Laura M. Parsons Officer Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
<PAGE>
Position
with Principal Occupation and
Name Adviser Company Affiliation
---- -------- ------------------------
Pamela J. Piro Officer Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
Gary L. Rulh Officer Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
John S. Segner Officer Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
Terry B. Smith Officer Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
Alan I. Watson Officer Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
Judy P. Wiese Officer Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
Ronald C. Lively Officer Senior Regional Vice
President
INVESCO Funds Group, Inc.
17406 Brown Road
Odessa, FL 33556
<PAGE>
Position
with Principal Occupation and
Name Adviser Company Affiliation
---- -------- ------------------------
Scott E. Stapley Officer Senior Regional Vice
President
INVESCO Funds Group, Inc.
1615 Arch Bay Drive
Newport Beach, CA 92660
David B. McElroy Officer Regional Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
Ryland K. Pruett, Jr. Officer Regional Vice President
INVESCO Funds Group, Inc.
2337 Mirow Place
Charlotte, NC 28270
Thomas H. Scanlan Officer Regional Vice President
INVESCO Funds Group, Inc.
12028 Edgepark Court
Potomac, MD 20854
Michael D. Legoski Officer Assistant Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
Stephen A. Moran Officer Assistant Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
Donald R. Paddack Officer Assistant Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
Kent T. Schmeckpeper Office Assistant Vice President
Account Relationship
Manager
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
Tane' T. Tyler Officer Assistant Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
<PAGE>
Position
with Principal Occupation and
Name Adviser Company Affiliation
---- -------- ------------------------
Jeraldine E. Kraus Officer Assistant Secretary
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
Robert J. O'Connor Officer Chief Executive Officer
INVESCO Retirement Plan
Services
1201 Peachtree Street, NE
Atlanta, GA 30361
Scott P. Brogan Officer Senior Vice President
INVESCO Retirement Plan
Services
1201 Peachtree Street, NE
Atlanta, GA 30361
Mark A. Cox Officer Senior Vice President
INVESCO Retirement Plan
Services
1201 Peachtree Street, NE
Atlanta, GA 30361
Joseph B. Jennings Officer Senior Vice President
INVESCO Retirement Plan
Services
1201 Peachtree Street, NE
Atlanta, GA 30361
Mark A. Jones Officer Senior Vice President
INVESCO Retirement Plan
Services
1201 Peachtree Street, NE
Atlanta, GA 30361
Barbara L. March Officer Senior Vice President
INVESCO Retirement Plan
Services
1201 Peachtree Street, NE
Atlanta, GA 30361
Robert D. (Toby) Officer Regional Vice President
Cromwell INVESCO Retirement Plan
Services
7800 East Union Avenue
Denver, CO 80237
<PAGE>
Position
with Principal Occupation and
Name Adviser Company Affiliation
---- -------- ------------------------
Leo W. Cullen Officer Regional Vice President
INVESCO Retirement Plan
Services
101 Federal Street
Boston, MA 02110
Douglas P. Dohm Officer Regional Vice President
INVESCO Retirement Plan
Services
1201 Peachtree Street, NE
Atlanta, GA 30361
Rayane S. Clark Officer Vice President
INVESCO Retirement Plan
Services
1201 Peachtree Street, NE
Atlanta, GA 30361
Frederick W. Braley Officer Chief Financial Officer &
Treasurer
INVESCO Retirement Plan
Services
1201 Peachtree Street, NE
Atlanta, GA 30361
Robert E. Starr Officer Secretary & General
Counsel
INVESCO Retirement Plan
Services
1201 Peachtree Street, NE
Atlanta, GA 30361
Item 29. Principal Underwriters
(a) INVESCO Capital Appreciation Funds, Inc.
INVESCO Diversified Funds, Inc.
INVESCO Emerging Opportunity Funds, Inc.
INVESCO Growth Fund, Inc.
INVESCO Income Funds, Inc.
INVESCO Industrial Income Fund, Inc.
INVESCO Money Market Funds, Inc.
INVESCO Multiple Asset Funds, Inc.
INVESCO Specialty Funds, Inc.
INVESCO Strategic Portfolios, Inc.
INVESCO Tax-Free Income Funds, Inc.
INVESCO Value Trust
INVESCO Variable Investment Funds, Inc.
<PAGE>
(b)
Positions and Positions and
Name and Principal Offices with Offices with
Business Address Underwriter Registrant
- ---------------- ----------- ----------
William J. Galvin, Jr. Senior Vice Assistant
7800 E. Union Avenue President Secretary
Denver, CO 80237
Ronald L. Grooms Senior Vice Treasurer,
7800 E. Union Avenue President & Chief Fin'l
Denver, CO 80237 Treasurer Officer, and
Chief Acctg.
Off.
Hubert L. Harris, Jr. Director
1315 Peachtree Street, N.E.
Atlanta, GA 30309
Dan J. Hesser Chairman of President,
7800 E. Union Avenue the Board, CEO & Dir.
Denver, CO 80237 ^ & ^ Director
Gregory E. Hyde Vice President
7800 E. Union Avenue
Denver, CO 80237
Charles P. Mayer Director
7800 E. Union Avenue
Denver, CO 80237
Glen A. Payne Senior Vice Secretary
7800 E. Union Avenue President,
Denver, CO 80237 Secretary &
General Counsel
Judy P. Wiese Vice President Asst. Treas.
7800 E. Union Avenue
Denver, CO 80237
<PAGE>
(c) Not applicable.
Item 30. Location of Accounts and Records
Dan J. Hesser
7800 E. Union Avenue
Denver, CO 80237
Item 31. Management Services
Not applicable.
Item 32. Undertakings
The Registrant shall furnish each person to whom a Prospectus is delivered
with a copy of the Registrant's latest annual report to shareholders, upon
request and without charge.
The Registrant hereby undertakes that the board of directors will call a
special shareholders meeting for the purpose of voting on the question of
removal of a director or directors of the Company if requested to do so in
writing by the holders of at least 10% of the outstanding shares of the Company,
and to assist the shareholders in communicating with other shareholders as
required by the Investment Company Act of 1940.
If required, the Registrant hereby undertakes to file a post-effective
amendment containing reasonably current financial statements for INVESCO
International Blue Chip Fund within four to six months from the effective date
of Post-Effective Amendment No. 7.
<PAGE>
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the registrant has duly caused this
post-effective amendment to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Denver, County of Denver, and State of
Colorado, on the 10th day of ^ July, 1998.
Attest: INVESCO International Funds, Inc.
/s/ Glen A. Payne /s/ Dan J. Hesser
- ----------------------------------- --------------------------------------
Glen A. Payne, Secretary Dan J. Hesser, President
Pursuant to the requirements of the Securities Act of 1933, this
post-effective amendment to Registrant's Registration Statement has been signed
by the following persons in the capacities indicated on this 10th day of ^ July,
1998.
/s/ Dan J. Hesser /s/ Lawrence H. Budner
- ------------------------------------ --------------------------------------
Dan J. Hesser, President & Lawrence H. Budner, Director
Director (Chief Executive Officer)
/s/ Ronald L. Grooms /s/ Daniel D. Chabris
- ------------------------------------ --------------------------------------
Ronald L. Grooms, Treasurer Daniel D. Chabris, Director
(Chief Financial and Accounting
Officer)
/s/ Victor L. Andrews /s/ Fred A. Deering
- ------------------------------------ --------------------------------------
Victor L. Andrews, Director Fred A. Deering, Director
/s/ Bob R. Baker /s/ Larry Soll
- ------------------------------------ --------------------------------------
Bob R. Baker, Director Larry Soll, Director
/s/ Hubert L. Harris, Jr. /s/ Kenneth T. King
- ------------------------------------ --------------------------------------
Hubert L. Harris, Jr., Director Kenneth T. King, Director
/s/ Charles W. Brady /s/ John W. McIntyre
- ------------------------------------ --------------------------------------
Charles W. Brady, Director John W. McIntyre, Director
/s/ Wendy L. Gramm
- ------------------------------------
Wendy L. Gramm, Director
By*--------------------------------- By* /s/ Glen A. Payne
Edward F. O'Keefe ------------------------------------
Attorney in Fact Glen A. Payne
Attorney in Fact
* Original Powers of Attorney authorizing Edward F. O'Keefe and Glen A. Payne,
and each of them, to execute this post-effective amendment to the Registration
Statement of the Registrant on behalf of the above-named directors and officers
of the Registrant have been filed with the Securities and Exchange Commission on
June 29, 1993, February 24, 1994, February 17, 1995, December 22, 1995, and
November 17, 1997.
<PAGE>
Exhibit Index
Page in
Exhibit Number Registration Statement
^ 1(b) 119
^ 5(a)(ii) 121
^ 5(d) 122
^ 7 131
8(d) 138
11 139
17(a) 140
17(b) 141
17(c) 142
FORM OF
ARTICLES SUPPLEMENTARY
TO
ARTICLES OF INCORPORATION
OF
INVESCO INTERNATIONAL FUNDS, INC.
INVESCO International Funds, Inc., a corporation organized and existing
under the General Corporation Law of the State of Maryland, registered as an
open-end investment company under the Investment Company Act of 1940, and having
its registered office in Baltimore, Maryland (hereinafter called the
"Corporation"), hereby certifies to the State Department of Assessments and
Taxation of Maryland that:
FIRST: By unanimous approval, the board of directors of the Corporation
created an additional class of shares of common stock of the Corporation
designated as the INVESCO International Blue Chip Fund, and has authorized
100,000,000 shares of the Corporation's common stock to be allocated to that
Fund. The aggregate number of shares the Corporation shall have the authority to
issue, both before and after creation of the additional class, is five hundred
million (500,000,000) shares of Common Stock. The aggregate par value of all
shares which the Corporation shall have the authority to issue, both before and
after creation of the additional class, is five million dollars ($5,000,000).
The new series of common stock designated INVESCO International Blue Chip Fund
has a par value of $0.01 per share.
SECOND: Shares of each class have been duly authorized and classified by
the board of directors pursuant to authority and power contained in the Articles
of Incorporation of the Corporation.
THIRD: A description of the Common Stock so classified, including the
powers, preferences, participating, voting or other special rights and
qualifications, restrictions and limitations thereof, is as outlined in the
Articles of Incorporation of the Corporation.
FOURTH: The Corporation is registered as an open-end management
investment company under the Investment Company Act of 1940.
FIFTH: The undersigned, the President of the Corporation, who is executing
on behalf of the Corporation the foregoing Articles Supplementary, of which this
paragraph is a part, hereby acknowledges, in the name of and on behalf of the
Corporation, that the foregoing Articles Supplementary are the corporate act of
the Corporation and further verifies under oath that, to the best of his
knowledge, information and belief, the matters and facts set forth herein are
true in all material respects, under the penalties of perjury.
IN WITNESS WHEREOF, INVESCO International Funds, Inc. has caused these
Articles Supplementary to be signed in its name and on its behalf by its
<PAGE>
President and witnessed by its Secretary on the _______ day of
____________, 1998.
These Articles Supplementary shall be effective upon acceptance by the
Maryland State Department of Assessments and Taxation.
INVESCO INTERNATIONAL FUNDS, INC.
By: ______________________________
Dan J. Hesser, President
WITNESSED:
By: _____________________________
Glen A. Payne, Secretary
I, Ruth Christensen, a notary public in and for the City and County of
Denver, and State of Colorado, do hereby certify that Dan J. Hesser, personally
known to me to be the person whose name is subscribed to the foregoing Articles
Supplementary, appeared before me this date in person and acknowledged that he
signed, sealed and delivered said instrument as his free and voluntary act and
deed for the uses and purposes therein set forth.
Given my hand and official seal this _____ day of __________, 1998.
-------------------------------
Notary Public
My Commission Expires: __________________
Form of
Amendment to Investment Advisory Agreement
This is an Amendment to the Investment Advisory Agreement made and entered
into between INVESCO International Funds, Inc., a Maryland corporation (the
"Company") and INVESCO Funds Group, Inc., a Delaware corporation ("IFG"), as of
the 30th day of January, 1998 (the "Agreement").
WHEREAS, the Company desires to have IFG perform investment advisory,
statistical, research, and certain administrative and clerical services with
respect to management of the assets of the Company allocable to the INVESCO
International Blue Chip Fund, and IFG is willing and able to perform such
services on the terms and conditions set forth in the Agreement;
NOW, THEREFORE, in consideration of the premises and mutual covenants
contained in the Agreement, it is agreed that the terms and conditions of the
Agreement shall be applicable to the Company's assets allocable to the INVESCO
International Blue Chip Fund, to the same extent as if the INVESCO International
Blue Chip Fund was to be added to the definition of "Funds" as utilized in the
Agreement, and that INVESCO International Blue Chip Fund shall pay IFG a fee for
services provided to them by IFG under the Agreement as follows:
0.75% on the first Fund's average net assets.
IN WITNESS WHEREOF, the parties have executed this Agreement on this _____
day of __________, 1998.
INVESCO INTERNATIONAL FUNDS, INC.
By: _________________________
Dan J. Hesser,
ATTEST: President
- ------------------------
Glen A. Payne, Secretary
INVESCO FUNDS GROUP, INC.
By: _________________________
Ronald L. Grooms,
ATTEST: Senior Vice President
- -------------------------
Glen A. Payne, Secretary
FORM OF
SUB ADVISORY AGREEMENT
AGREEMENT made this _____ day of __________, 1998, by and between INVESCO
Fund Group, Inc. ("INVESCO"), a Delaware corporation, and INVESCO Global Asset
Management Limited, a Delaware corporation ("the Sub Adviser").
W I T N E S S E T H:
WHEREAS, INVESCO INTERNATIONAL FUNDS, INC. (the "Company") is engaged in
business as a diversified, open end management investment company registered
under the Investment Company Act of 1940, as amended (hereinafter referred to as
the "Investment Company Act") and has one class of shares (the "Shares"), which
is divided into series, each representing an interest in a separate portfolio of
investments, with one such series being designated the INVESCO International
Blue Chip Fund (the "Fund"); and
WHEREAS, INVESCO and the Sub Adviser are engaged in rendering investment
advisory services and are registered as investment advisers under the Investment
Advisers Act of 1940; and
WHEREAS, INVESCO has entered into an Investment Advisory Agreement with
the Company (the "INVESCO Investment Advisory Agreement"), pursuant to which
INVESCO is required to provide investment advisory services to the Company, and,
upon receipt of written approval of the Company, is authorized to retain
companies which are affiliated with INVESCO to provide such services; and
WHEREAS, the Sub Adviser is willing to provide investment advisory
services to the Company on the terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and the covenants
hereinafter contained, INVESCO and the Sub Adviser hereby agree as follows:
ARTICLE I
DUTIES OF THE SUB ADVISER
INVESCO hereby employs the Sub Adviser to act as investment adviser to the
Company and to furnish the investment advisory services described below, subject
<PAGE>
to the broad supervision of INVESCO and Board of Directors of the Company,
for the period and on the terms and conditions set forth in this Agreement. The
Sub Adviser hereby accepts such assignment and agrees during such period, at its
own expense, to render such services and to assume the obligations herein set
forth for the compensation provided for herein. The Sub Adviser shall for all
purposes herein be deemed to be an independent contractor and, unless otherwise
expressly provided or authorized herein, shall have no authority to act for or
represent the Company in any way or otherwise be deemed an agent of the Company.
The Sub Adviser hereby agrees to manage the investment operations of the
Fund, subject to the supervision of the Company's directors (the "Directors")
and INVESCO. Specifically, the Sub Adviser agrees to perform the following
services:
(a) to manage the investment and reinvestment of all the assets, now or
hereafter acquired, of the Fund, and to execute all purchases and sales of
portfolio securities;
(b) to maintain a continuous investment program for the Fund, consistent
with (i) the Fund's investment policies as set forth in the Company's Articles
of Incorporation, Bylaws, and Registration Statement, as from time to time
amended, under the Investment Company Act of 1940, as amended (the "1940 Act"),
and in any prospectus and/or statement of additional information of the Fund, as
from time to time amended and in use under the Securities Act of 1933, as
amended, and (ii) the Company's status as a regulated investment company under
the Internal Revenue Code of 1986, as amended;
(c) to determine what securities are to be purchased or sold for the Fund,
unless otherwise directed by the Directors of the Company or INVESCO, and to
execute transactions accordingly;
(d) to provide to the Fund the benefit of all of the investment analysis
and research, the reviews of current economic conditions and trends, and the
consideration of long range investment policy now or hereafter generally
available to investment advisory customers of the Sub Adviser;
(e) to determine what portion of the Fund should be invested in the various
types of securities authorized for purchase by the Fund; and
<PAGE>
(f) to make recommendations as to the manner in which voting rights,
rights to consent to Fund action and any other rights pertaining to the Fund's
portfolio securities shall be exercised.
With respect to execution of transactions for the Fund, the Sub Adviser is
authorized to employ such brokers or dealers as may, in the Sub Adviser's best
judgment, implement the policy of the Fund to obtain prompt and reliable
execution at the most favorable price obtainable. In assigning an execution or
negotiating the commission to be paid therefor, the Sub Adviser is authorized to
consider the full range and quality of a broker's services which benefit the
Fund, including but not limited to research and analytical capabilities,
reliability of performance, and financial soundness and responsibility. Research
services prepared and furnished by brokers through which the Sub Adviser effects
securities transactions on behalf of the Fund may be used by the Sub Adviser in
servicing all of its accounts, and not all such services may be used by the Sub
Adviser in connection with the Fund. In the selection of a broker or dealer for
execution of any negotiated transaction, the Sub Adviser shall have no duty or
obligation to seek advance competitive bidding for the most favorable negotiated
commission rate for such transaction, or to select any broker solely on the
basis of its purported or "posted" commission rate for such transaction,
provided, however, that the Sub Adviser shall consider such "posted" commission
rates, if any, together with any other information available at the time as to
the level of commissions known to be charged on comparable transactions by other
qualified brokerage firms, as well as all other relevant factors and
circumstances, including the size of any contemporaneous market in such
securities, the importance to the Fund of speed, efficiency, and confidentiality
of execution, the execution capabilities required by the circumstances of the
particular transactions, and the apparent knowledge or familiarity with sources
from or to whom such securities may be purchased or sold. Where the commission
rate reflects services, reliability and other relevant factors in addition to
the cost of execution, the Sub Adviser shall have the burden of demonstrating
that such expenditures were bona fide and for the benefit of the Fund.
The Sub-Adviser may recommend transactions in which it has directly or
indirectly a material interest, in unregulated collective investment schemes
including any operated or advised by the Sub-Adviser or in margined
transactions. Advice on investments may extend to investments not traded or
exchanges recognized or designated by the Securities and Investments Board.
<PAGE>
Both parties acknowledge that the advice given under this Agreement may
involve liabilities in one currency matched by assets in another currency and
that accordingly movements in rates of exchange may have a separate effect,
unfavorable as well as favorable on the gain or loss experienced on an
investment.
In carrying out its duties hereunder, the Sub-Adviser shall comply with
all instructions of INVESCO in connection therewith such instructions may be
given by letter, telex, telephone or facsimile by any Director or Officer of
INVESCO or by any other person authorized by INVESCO.
Any instructions which appear to conflict with the terms of this Agreement
may be confirmed by the Sub-Adviser with INVESCO prior to execution.
ARTICLE II
ALLOCATION OF CHARGES AND EXPENSES
The Sub Adviser assumes and shall pay for maintaining the staff and
personnel necessary to perform its obligations under this Agreement, and shall,
at its own expense, provide the office space, equipment and facilities necessary
to perform its obligations under this Agreement. Except to the extent expressly
assumed by the Sub Adviser herein and except to the extent required by law to be
paid by the Sub Adviser, INVESCO and/or the Company shall pay all costs and
expenses in connection with the operations of the Fund.
ARTICLE III
COMPENSATION OF THE SUB ADVISER
For the services rendered, facilities furnished, and expenses assumed by
the Sub Adviser, INVESCO shall pay to the Sub Adviser a fee, computed daily and
paid as of the last day of each month, using for each daily calculation the most
recently determined net asset value of the Fund, as determined by a valuation
made in accordance with the Fund's procedures for calculating its net asset
value as described in the Fund's Prospectus and/or Statement of Additional
Information. The advisory fee to the Sub Adviser with respect to the Fund shall
be computed at the annual rate of 0.30% of the Fund's daily net assets. During
any period when the determination of the Fund's net asset value is suspended by
<PAGE>
the Directors of the Company, the net asset value of a share of the Fund as
of the last business day prior to such suspension shall, for the purpose of this
Article III, be deemed to be the net asset value at the close of each succeeding
business day until it is again determined. However, no such fee shall be paid to
the Sub Adviser with respect to any assets of the Fund which may be invested in
any other investment company for which the Sub Adviser serves as investment
adviser or sub adviser. The fee provided for hereunder shall be prorated in any
month in which this Agreement is not in effect for the entire month. The Sub
Adviser shall be entitled to receive fees hereunder only for such periods as the
INVESCO Investment Advisory Agreement remains in effect.
ARTICLE IV
ACTIVITIES OF THE SUB ADVISER
The services of the Sub Adviser to the Fund are not to be deemed to be
exclusive, the Sub Adviser and any person controlled by or under common control
with the Sub Adviser (for purposes of this Article IV referred to as
"affiliates") being free to render services to others. It is understood that
directors, officers, employees and shareholders of the Fund are or may become
interested in the Sub Adviser and its affiliates, as directors, officers,
employees and shareholders or otherwise and that directors, officers, employees
and shareholders of the Sub Adviser, INVESCO and their affiliates are or may
become interested in the Fund as directors, officers and employees.
ARTICLE V
AVOIDANCE OF INCONSISTENT POSITIONS AND COMPLIANCE WITH
APPLICABLE LAWS
In connection with purchases or sales of securities for the investment
portfolios of the Fund, neither the Sub Adviser nor any of its directors,
officers or employees will act as a principal or agent for any party other than
the Fund or receive any commissions. The Sub Adviser will comply with all
applicable laws in acting hereunder including, without limitation, the 1940 Act;
the Investment Advisers Act of 1940, as amended; and all rules and regulations
duly promulgated under the foregoing.
<PAGE>
ARTICLE VI
DURATION AND TERMINATION OF THIS AGREEMENT
This Agreement shall become effective as of the date it is approved by a
majority of the outstanding voting securities of the Fund. Thereafter, this
Agreement shall remain in force for an initial term of two years from the date
of execution, and from year to year thereafter until its termination in
accordance with this Article VI, but only so long as such continuance is
specifically approved at least annually by (i) the Directors of the Company, or
by the vote of a majority of the outstanding voting securities of the Fund, and
(ii) a majority of those Directors who are not parties to this Agreement or
interested persons of any such party cast in person at a meeting called for the
purpose of voting on such approval.
This Agreement may be terminated at any time, without the payment of any
penalty, by INVESCO, the Fund by vote of the Directors of the Company, or by
vote of a majority of the outstanding voting securities of the Fund, or by the
Sub Adviser. A termination by INVESCO or the Sub Adviser shall require sixty
days' written notice to the other party and to the Company, and a termination by
the Company shall require such notice to each of the parties. This Agreement
shall automatically terminate in the event of its assignment to the extent
required by the Investment Company Act of 1940 and the Rules thereunder.
The Sub Adviser agrees to furnish to the Directors of the Company such
information on an annual basis as may reasonably be necessary to evaluate the
terms of this Agreement.
Termination of this Agreement shall not affect the right of the Sub
Adviser to receive payments on any unpaid balance of the compensation described
in Article III hereof earned prior to such termination.
ARTICLE VII
LIABILITY
The Sub-Adviser agrees to use its best efforts and judgement and due care
in carrying out its duties under this Agreement provided however that the
Sub-Adviser shall not be liable to INVESCO for any loss suffered by INVESCO or
the Fund advised in connection with the subject matter of this Agreement unless
<PAGE>
such loss arises from the willful misfeasance, bad faith or negligence in
the performance of the Sub-Adviser's duties and subject and without prejudice to
the foregoing. INVESCO hereby undertakes to indemnify and to keep indemnified
the Sub-Adviser from and against any and all liabilities, obligations, losses,
damages, suits and expenses which may be incurred by or asserted against the
Sub-Adviser for which it is responsible pursuant to Article I hereof provided
always that the Sub-Adviser shall send to INVESCO as soon as possible all
claims, letters, summonses, writs or documents which it receives from third
parties and provide whatever information and assistance INVESCO may require and
no liability of any sort shall be admitted and no undertaking shall be given nor
shall any offer, promise or payment be made or legal expenses incurred by the
Sub-Adviser without written consent of INVESCO who shall be entitled if it so
desires to take over and conduct in the name of the Sub-Adviser the defense of
any action or to prosecute any claim for indemnity or damages or otherwise
against any third party.
ARTICLE VIII
AMENDMENTS OF THIS AGREEMENT
No provision of this Agreement may be orally changed or discharged, but
may only be modified by an instrument in writing signed by the Sub Adviser and
INVESCO. In addition, no amendment to this Agreement shall be effective unless
approved by (1) the vote of a majority of the Directors of the Company,
including a majority of the Directors who are not parties to this Agreement or
interested persons of any such party cast in person at a meeting called for the
purpose of voting on such amendment and (2) the vote of a majority of the
outstanding voting securities of the Fund (other than an amendment which can be
effective without shareholder approval under applicable law).
ARTICLE IX
DEFINITIONS OF CERTAIN TERMS
In interpreting the provisions of this Agreement, the terms "vote of a
majority of the outstanding voting securities," "assignments," "affiliated
person" and "interested person," when used in this Agreement, shall have the
respective meanings specified in the Investment Company Act and the Rules and
<PAGE>
Regulations thereunder, subject, however, to such exemptions as may be granted
by the Securities and Exchange Commission under said Act.
ARTICLE X
GOVERNING LAW
This Agreement shall be construed in accordance with the laws of the State
of Colorado and the applicable provisions of the Investment Company Act. To the
extent that the applicable laws of the State of Colorado, or any of the
provisions herein, conflict with the applicable provisions of the Investment
Company Act, the latter shall control.
ARTICLE XI
MISCELLANEOUS
Advice. Any recommendation or advice given by the Sub-Adviser to INVESCO
hereunder shall be given in writing or by mail, telex, telefacsimile or by
telephone, such telephone advice to be confirmed by mail, telex, telefacsimile
or in writing to such place as INVESCO shall from time to time require; further
the Sub-Adviser shall be free to telephone INVESCO as it sees fit in the
performance of its duties.
Complaints. The Sub-Adviser has in operation a written procedure for the
proper handling of complaints from clients; if the matter of complaint cannot be
resolved to INVESCO's satisfaction, INVESCO has the right of recourse to IMRO.
Notice. Any notice under this Agreement shall be in writing, addressed and
delivered or mailed, postage prepaid, to the other party at such address as such
other party may designate for the receipt of such notice.
Severability. Each provision of this Agreement is intended to be
severable. If any provision of this Agreement shall be held illegal or made
invalid by a court decision, statute, rule or otherwise, such illegality or
invalidity shall not affect the validity or enforceability of the remainder of
this Agreement.
<PAGE>
Headings. The headings in this Agreement are inserted for convenience and
identification only and are in no way intended to describe, interpret, define or
limit the size, extent or intent of this Agreement or any provision hereof.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the date first above written.
INVESCO FUNDS GROUP, INC.
ATTEST:
By:
----------------------------------
- ------------------------ Dan J. Hesser, President
Glen A. Payne, Secretary
INVESCO GLOBAL ASSET
MANAGEMENT (N.A.), Inc.
ATTEST:
By:
----------------------------------
- ------------------------
FORM OF
DEFINED BENEFIT DEFERRED COMPENSATION PLAN
FOR NON-INTERESTED DIRECTORS AND TRUSTEES
The registered, open-end management investment companies referred to on
Schedule A as the Schedule may hereafter be revised by the addition and deletion
of investment companies (the "Funds") have adopted this Defined Benefit Deferred
Compensation Plan ("Plan") for the benefit of those directors and trustees of
the Funds who are not interested directors or trustees thereof as defined in
Section 2(a)(19) of the Investment Company Act of 1940, as amended ("Independent
Directors").
1. Eligibility
Each Independent Director who has served as such ("Eligible Service") on
the boards of any of the Funds and their predecessor and successor entities, if
any, or as an Independent Director of the now-defunct investment management
company known as FG Series for an aggregate of at least five years at the time
of his Service Termination Date (as defined in paragraph 2) will be entitled to
receive benefits under the Plan. An Independent Director's period of Eligible
Service commences on the date of election to the board of directors or trustees
of any one or more of the Funds ("Board"). Hereafter, references in this Plan to
Independent Directors shall be deemed to include only those Directors who have
met the Eligible Service requirement for Plan participation.
2. Service Termination and Service Termination Date
a. Service Termination. Service Termination means termination of service
(other than by disability or death) of an Independent Director which results
from the Director's having reached his Service Termination Date.
b. Service Termination Date. An Independent Director's Service Termination
Date is normally the last day of the calendar quarter in which such Director's
seventy-second birthday occurs. A majority of the Board of a Fund may annually
extend a Director's Service Termination Date for a maximum period of three
years, through the date not later than the last day of the calendar quarter in
which such Director's seventy-fifth birthday occurs.
As used in this Plan unless otherwise stipulated, Service Termination Date
shall mean an Independent Director's normal
<PAGE>
Service Termination Date, or the Director's extended Service Termination Date,
whichever may be applicable to the Independent Director.
3. Defined Payments and Benefit
a. Payments. If an Independent Director's Service Termination Date occurs
on a date not later than the last day of the calendar quarter in which such
Director's seventy-fourth birthday occurs, the Independent Director will receive
four quarterly payments during the first twelve months subsequent to his Service
Termination Date (the "First Year Retirement Payments"), with each payment to be
equal to 50 percent of the annual basic retainer and annualized board meeting
fees payable by each Fund to the Independent Director on his Service Termination
Date (excluding any fees relating to chairing committees).
b. Benefit. Commencing with the first anniversary of the Service
Termination Date of any Independent Director who has received the First Year
Retirement Payments, and commencing as of the Service Termination Date of an
Independent Director whose Service Termination Date is subsequent to the date of
the last day of the calendar quarter in which such Director's seventy-fourth
birthday occurred, the Independent Director will receive, for the remainder of
his life, a benefit (the "Benefit"), payable quarterly, with each quarterly
payment to be equal to 50 percent of the annual basic retainer and annualized
board meeting fees payable by each Fund to the Independent Director on his
Service Termination Date (excluding any fees relating to chairing committees).
c. Death Provisions. If an Independent Director's service as a Director is
terminated because of his death subsequent to the last day of the calendar
quarter in which such Director's seventy-second birthday occurred and prior to
the last day of the calendar quarter in which such Director's seventy-fourth
birthday occurs, the designated beneficiary of the Independent Director shall
receive the First Year Retirement Payments and shall, commencing with the
quarter following the quarter in which the last First Year Retirement Payment is
made, receive the Benefit for a period of ten years, with quarterly payments to
be made to the designated beneficiary.
If an Independent Director's service as a Director is terminated because of
his death prior to the last day of the calendar quarter in which such Director's
seventy-second birthday
<PAGE>
occurs or subsequent to the last day of the calendar quarter in which such
Director's seventy-fourth birthday occurred, the designated beneficiary of the
Independent Director shall receive the Benefit for a period of ten years, with
quarterly payments to be made to the designated beneficiary commencing in the
first quarter following the Director's death.
d. Disability Provisions. If an Independent Director's service as a
Director is terminated because of his disability subsequent to the last day of
the calendar quarter in which such Director's seventy-second birthday occurred
and prior to the last day of the calendar quarter in which such Director's
seventy-fourth birthday occurs, the Independent Director shall receive the First
Year Retirement Payments and shall, commencing with the quarter following the
quarter in which the last First Year Retirement Payment is made, receive the
Benefit for the remainder of his life, with quarterly payments to be made to the
disabled Independent Director. If the disabled Independent Director should die
before the First Year Retirement Payments are completed and before forty
quarterly Benefit payments are made, such payments will continue to be made to
the Independent Director's designated beneficiary until the aggregate of the
First Year Retirement Payments and forty quarterly Benefit payments have been
made to the disabled Independent Director and the Director's designated
beneficiary.
If an Independent Director's service as a Director is terminated because of
his disability prior to the last day of the calendar quarter in which such
Director's seventy-second birthday occurs or subsequent to the last day of the
calendar quarter in which such Director's seventy-fourth birthday occurred, the
Independent Director shall receive the Benefit for the remainder of his life,
with quarterly payments to be made to the disabled Independent Director
commencing in the first quarter following the Director's termination for
disability. If the disabled Independent Director should die before forty
quarterly payments are made, payments will continue to be made to the
Independent Director's designated beneficiary until the aggregate of forty
quarterly payments has been made to the disabled Independent Director and the
Director's designated beneficiary.
e. Death of Independent Director and Beneficiary. If the Independent
Director and his designated beneficiary should die before the First Year
Retirement Payments and/or a total of forty quarterly Benefit payments are made,
the remaining value of the Independent Director's First Year Retirement Payments
<PAGE>
and/or Benefit shall be determined as of the date of the death of the
Independent Director's designated beneficiary and shall be paid to the estate of
the designated beneficiary in one lump sum or in periodic payments, with the
determinations with respect to the value of the First Year Retirement Payments
and/or Benefit and the method and frequency of payment to be made by the
Committee (as defined in paragraph 8.a.) in its sole discretion.
4. Designated Beneficiary
The beneficiary referred to in paragraph 3 may be designated or changed by
the Independent Director without the consent of any prior beneficiary on a form
provided by the Committee (as defined in paragraph 8.a.) and delivered to the
Committee before the Independent Director's death. If no such beneficiary shall
have been designated, or if no designated beneficiary shall survive the
Independent Director, the value or remaining value of the Independent Director's
First Year Retirement Payments and/or Benefit shall be determined as of the date
of the death of the Independent Director by the Committee and shall be paid as
promptly as possible in one lump sum to the Independent Director's estate.
5. Disability
An Independent Director shall be deemed to have become disabled for the
purposes of paragraph 3 if the Committee shall find on the basis of medical
evidence satisfactory to it that the Independent Director is disabled, mentally
or physically, as a result of an accident or illness, so as to be prevented from
performing each of the duties which are incumbent upon an Independent Director
in fulfilling his responsibilities as such.
6. Time of Payment
The First Year Retirement Payments and/or the Benefit for each year will be
paid in quarterly installments that are as nearly equal as possible.
7. Payment of First Year Retirement Payments and/or Benefit: Allocation of Costs
Each Fund is responsible for the payment of the amount of the First Year
Retirement Payments and/or Benefit applicable to the Fund, as well as its
proportionate share of all expenses of administration of the Plan, including
<PAGE>
without limitation all accounting and legal fees and expenses and fees and
expenses of any Actuary. The obligations of each Fund to pay such First Year
Retirement Payments and/or Benefit and expenses will not be secured or funded in
any manner, and such obligations will not have any preference over the lawful
claims of each Fund's creditors and shareholders. To the extent that the First
Year Retirement Payments and/or Benefit is paid by more than one Fund, such
costs and expenses will be allocated among such Funds in a manner that is
determined by the Committee to be fair and equitable under the circumstances. To
the extent that one or more of such Funds consist of one or more separate
portfolios, such costs and expenses allocated to any such Fund will thereafter
be allocated among such portfolios by the Board of the Fund in a manner that is
determined by such Board to be fair and equitable under the circumstances.
8. Administration
a. The Committee. Any question involving entitlement to payments under or
the administration of the Plan will be referred to a four-person committee (the
"Committee") composed of three Independent Directors designated by all of the
Independent Directors of the Funds and one director of the Funds who is not an
Independent Director, designated by the non-Independent Directors. Except as
otherwise provided herein, the Committee will make all interpretations and
determinations necessary or desirable for the Plan's administration, and such
interpretations and determinations will be final and conclusive. Committee
members will be elected annually.
b. Powers of the Committee. The Committee will represent and act on behalf
of the Funds in respect of the Plan and, subject to the other provisions of the
Plan, the Committee may adopt, amend or repeal bylaws or other regulations
relating to the administration of the Plan, the conduct of the Committee's
affairs, its rights or powers, or the rights or powers of its members. The
Committee will report to the Independent Directors and to the Boards of the
Funds from time to time on its activities in respect of the Plan. The Committee
or persons designated by it will cause such records to be kept as may be
necessary for the administration of the Plan.
9. Miscellaneous Provisions
a. Rights Not Assignable. Other than as is specifically provided in
paragraph 3, the right to receive any payment under the Plan is not transferable
<PAGE>
or assignable, and nothing in the Plan shall create any benefit, cause of
action, right of sale, transfer, assignment, pledge, encumbrance, or other such
right in any heirs or the estate of any Independent Director.
b. Amendment, etc. The Committee, with the concurrence of the Board of any
Fund, may as to the specific Fund at any time amend or terminate the Plan or
waive any provision of the Plan; provided, however, that subject to the
limitations imposed by paragraph 7, no amendment, termination or waiver will
impair the rights of an Independent Director to receive the payments which would
have been made to such Independent Director had there been no such amendment,
termination, or waiver.
c. No Right to Reelection. Nothing in the Plan will create any obligation
on the part of the Board of any Fund to nominate any Independent Director for
reelection.
d. Consulting. Subsequent to his Service Termination Date, an Independent
Director may render such services for any Fund, for such compensation, as may be
agreed upon from time to time by such Independent Director and the Board of the
Fund which desires to procure such services.
e. Effectiveness. The Plan will be effective for all Independent Directors
who have Service Termination Dates occurring on and after October 20, 1993.
Periods of Eligible Service shall include periods commencing prior and
subsequent to such date. Upon its adoption by the Board of a Fund, the Plan will
become effective as to that Fund on the date when the Committee determines that
any regulatory approval or advice that may be necessary or appropriate in
connection with the Plan have been obtained.
Adopted October 20, 1993.
Amended October 19, 1994.
Amended May 1, 1996, effective July 1, 1996.
Amended May 14, 1998, effective July 1, 1998.
<PAGE>
SCHEDULE A
TO
DEFINED BENEFIT DEFERRED COMPENSATION PLAN
FOR NON-INTERESTED DIRECTORS AND TRUSTEES
INVESCO Diversified Funds, Inc.
INVESCO Capital Appreciation Funds, Inc.
INVESCO Emerging Opportunity Funds, Inc.
INVESCO Growth Fund, Inc.
INVESCO Income Funds, Inc.
INVESCO Industrial Income Fund, Inc.
INVESCO International Funds, Inc.
INVESCO Money Market Funds, Inc.
INVESCO Multiple Asset Funds, Inc.
INVESCO Specialty Funds, Inc.
INVESCO Strategic Portfolios, Inc.
INVESCO Tax-Free Income Funds, Inc.
INVESCO Value Trust
INVESCO Variable Investment Funds, Inc.
INVESCO Treasurer's Series Trust
INVESCO FUNDS INVESCO FUNDS GROUP, INC.
7800 East Union Avenue
Denver, Colorado 80237
Post Office Box 173706
Denver, Colorado 80217-3706
Telephone: 303-930-6300
__________________ , 1998
Mr. Christopher J. Meyers
Assistant Vice President
State Street Bank and Trust Company
1776 Heritage Drive
North Quincy, MA 02171
RE: INVESCO International Funds, Inc.
Dear Chris:
This is to advise you that INVESCO International Funds, Inc. (the
"Company") has established a new series of shares to be known as INVESCO
International Blue Chip Fund. In accordance with the Additional Funds provision
in Paragraph 17 of the Custodian Contract dated July 1, 1993 between the Company
and State Street Bank and Trust Company, the Company hereby requests that you
act as Custodian for the new series under the terms of the Contract.
Please indicate your acceptance of the foregoing by executing two copies of this
Letter Agreement, returning one to the Company and retaining one copy for your
records.
Sincerely,
Glen A. Payne
Secretary
Agreed to this ______ day of _______________, 1998.
STATE STREET BANK AND TRUST COMPANY
By: _____________________________________
Vice President
Consent of Independent Accountants
We hereby consent to the incorporation by reference in the Statement of
Additional Information constituting parts of this Post-Effective Amendment No. 7
to the registration statement on Form N-1A (the "Registration Statement") of our
report dated December 9, 1997, relating to the financial statements and
financial highlights appearing in the October 31, 1997 Annual Report to
Shareholders of the INVESCO International Funds, Inc., which is also
incorporated by reference into the Registration Statement. We also consent to
the references to us under the headings "Independent Accountants" and "Financial
Statements" in the Statement of Additional Information.
/s/ Price Waterhouse LLP
- -------------------------
Price Waterhouse LLP
Denver, Colorado
July 6, 1998
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000906334
<NAME> INVESCO INTERNATIONAL FUNDS INC.
<SERIES>
<NUMBER> 2
<NAME> INVESCO EUROPEAN FUND
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> OCT-31-1997
<PERIOD-END> OCT-31-1997
<INVESTMENTS-AT-COST> 242994200
<INVESTMENTS-AT-VALUE> 296171470
<RECEIVABLES> 70067486
<ASSETS-OTHER> 90232
<OTHER-ITEMS-ASSETS> 7743288
<TOTAL-ASSETS> 374072476
<PAYABLE-FOR-SECURITIES> 9263262
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 39989904
<TOTAL-LIABILITIES> 49253166
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 212249369
<SHARES-COMMON-STOCK> 18729780
<SHARES-COMMON-PRIOR> 18969832
<ACCUMULATED-NII-CURRENT> 543861
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 58883886
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