INVESCO INTERNATIONAL FUNDS INC, 485APOS, 1998-12-30

INVESCO INTERNATIONAL FUNDS INC
485APOS, 1998-12-30

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As filed on December 30, 1998 File No. 033-63498

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form N-1A

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 X
-
Pre-Effective Amendment No.
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Post-Effective Amendment No. 8 X
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REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 X
-
Amendment No. 9 X
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INVESCO INTERNATIONAL FUNDS 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)
------------
Copies to:
Ronald M. Feiman, Esq.
Gordon Altman Butowsky
Weitzen Shalov & Wein
114 W. 47th St.
New York, New York 10036
------------
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)
- ---
X on March 1, 1999, pursuant to paragraph (a)(1)
- --
75 days after filing pursuant to paragraph (a)(2)
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on _________, pursuant to paragraph (a)(2) of rule 485
- ---
If appropriate, check the following box:
this post-effective amendment designates a new effective date for a
- ---
previously filed post-effective amendment.

Page 1 of 126
Exhibit index is located at page 107

<PAGE>

INVESCO INTERNATIONAL FUNDS, INC.
__________________________________

CROSS-REFERENCE SHEET

Form N-A
Item Caption
- -------- -------

Part A Prospectus

1. . . . . . . . . . Cover Page; Back Cover Page
2. . . . . . . . . . Investment Goals and Strategies; Fund Performance
3. . . . . . . . . . Fees and Expenses; Investment Risks
4. . . . . . . . . . Investment Goals and Strategies; Investment Risks
5. . . . . . . . . . Not Applicable
6 . . . . . . . . . Fund Management
7. . . . . . . . . . Share Price; How To Buy Shares; Your Account Services;
. . . . . . . . . . . How To Sell Shares; Taxes
8. . . . . . . . . . Distribution Expenses
9. . . . . . . . . . Financial Highlights

Part B Statement of Additional Information
10. . . . . . . . . . Cover Page; Table of Contents
11. . . . . . . . . . The Company
12. . . . . . . . . .

Investment Policies and Risks; Investment Risks and Strategies
13. . . . . . . . . . Management of the Funds
14. . . . . . . . . . Control Persons and Principal Shareholders
15. . . . . . . . . . Management of the Funds
16. . . . . . . . . . Brokerage Allocation and Other Practices
17. . . . . . . . . . Capital Stock
18. . . . . . . . . . Contained in Prospectuses
19. . . . . . . . . . Tax Consequences of Owning Shares of the Funds
20. . . . . . . . . . Not Applicable
21. . . . . . . . . . Performance
22. . . . . . . . . . Financial Statements

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.

<PAGE>
- --------------------------------------------------------------------------------
PROSPECTUS March 1, 1999

INVESCO INTERNATIONAL FUNDS, INC.
INVESCO EMERGING MARKETS FUND
INVESCO EUROPEAN FUND
INVESCO INTERNATIONAL BLUE CHIP FUND
INVESCO INTERNATIONAL GROWTH FUND
INVESCO PACIFIC BASIN FUND

NO-LOAD MUTUAL FUNDS DESIGNED FOR INVESTORS SEEKING INVESTMENT OPPORTUNITIES
OVERSEAS

The Securities and Exchange Commission has not approved or disapproved the
shares of these Funds. Likewise, it has not determined if this Prospectus is
truthful or complete. Anyone who informs you otherwise is committing a federal
crime.

This Prospectus will tell you more about:

ICON - Key Investment Objectives & Strategies

ICON - Arrows Potential Investment Risks

ICON - Graph Past Performance & Potential Advantages

ICON - INVESCO ICON Working with INVESCO

<PAGE>
- --------------------------------------------------------------------------------
INVESTMENT GOALS AND STRATEGIES ICON - Key

For more details about
each Fund's current
investments and market
outlook, please see the
most recent annual or
semiannual report.

INVESCO Funds Group, Inc. ("INVESCO") is the investment adviser for the
Funds. Together with our affiliated companies, we at INVESCO control all aspects
of the management and sale of the Funds. All of the Funds attempt to make your
investment grow.
The Funds are aggressively managed. Although the Funds can invest in debt
securities, they primarily invest in equity securities that INVESCO believes
will rise in price faster than other securities, as well as options and other
investments whose value is based upon the values of equity securities.
Each Fund has a specific investment objective and strategy. The Funds
invest primarily in securities of foreign companies. We define a "foreign"
company as one that has its principal business activities outside of the United
States.
Since many companies have activities all over the world, including in the
United States, we look at several factors to determine where a company's
principal business activities are located, including:

* The physical location of the company's management personnel; and

* Whether more than 50% of its assets are located outside the United States; or

* Whether more than 50% of its income is earned outside the United States.

The Funds share a common investment process which combines top-down and
bottom-up evaluations to select securities for their portfolios.

TOP-DOWN: Our regional and country equity teams look at broad global
economic trends and other factors that can affect markets. On a
country-by-country basis, anticipated political and currency stability are also
considered. Using this analysis, we decide how much the Fund will invest in each
country and equity market sector. Minimum and maximum weightings for both
countries and sectors are used to develop portfolio diversification. And, in
some cases, our local presence and fundamental research may provide investment
insights into specific opportunities and risks involved in each country or
region.
This analysis is particularly important for investments in "emerging"
markets - those countries that the international financial community considers
to have developing economies and securities markets that are not as established
as those in the United States. Emerging countries generally are considered to
include every nation in the world except the United States, Canada, Japan,
Australia, New Zealand and the nations in Western Europe (other than Greece,
Portugal and Turkey). In general, investments in emerging markets have a higher
degree of risk than investments in more established markets.

<PAGE>

BOTTOM-UP: We also perform fundamental analysis and extensive research on
specific stocks, often including visiting companies to meet with corporate
management and understand the businesses. We seek to invest in companies that
have an above-average earnings growth that we believe is not fully reflected in
the present market price of their securities. Also, we seek to increase
diversification by setting maximum limits on each security held in the
portfolio.

EMERGING MARKETS FUND ICON - Key
This Fund attempts to make your investment grow. It uses an aggressive
strategy, and invests most of its assets in equity securities of emerging
country issuers around the world, including Europe, Latin America, and the Far
East. Emerging markets tend to be less liquid and well-regulated than the
markets of more developed countries; political instability and currency
fluctuations may also be more extreme. We tend to focus the Fund's holdings on
countries that are undertaking economic and political reforms that may encourage
rapid growth.

EUROPEAN FUND ICON - Key
This Fund attempts to make your investment grow. It primarily invests in
equity securities of companies located in Western Europe. We prefer companies
with proven track records that are strongly managed. Although the Fund invests
predominately in mid- and large-capitalization stocks, it also will hold
positions in small-cap stocks.

INTERNATIONAL BLUE CHIP FUND ICON - Key
This Fund seeks high total return through long-term capital appreciation
and current income. It invests most of its assets in equity securities of
larger-capitalization companies with a record of stable earnings or dividends
and a reputation for high-quality management. Although some of its investments
may be in smaller, emerging stock markets, the Fund generally invests in
securities that are traded in larger, more liquid international securities
exchanges.

INTERNATIONAL GROWTH FUND ICON - Key
This Fund seeks high total return through capital appreciation and current
income. The Fund uses a moderately aggressive strategy. It favors larger, more
liquid markets but it will also take positions in less liquid, emerging markets,
which tend to be more volatile. In most cases, the Fund invests in large- and
mid-capitalization stocks, but may invest in small-cap stocks.

PACIFIC BASIN FUND ICON - Key
The Fund attempts to make your investment grow. It invests in the equity
securities of companies located in the Far East and Pacific Rim, including
Australia, Hong Kong, New Zealand, Singapore and Japan, in addition to
investments in smaller, less liquid, emerging markets throughout that region.
Although the Fund invests predominately in mid- and large-capitalization stocks,
it also will hold positions in small-cap stocks.
The Funds generally invest in equity securities of foreign companies.
However, in an effort to diversify their holdings and provide some protection
against the risk of other investments, the Funds also may invest in other types
of securities and other financial instruments, as detailed in the chart below.

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------
B E I E P
Investment Risks C M G R B
- --------------------------------------------------------------------------------
ILLIQUID SECURITIES
A security that cannot
be sold quickly at its Liquidity Risk X
fair value.
- --------------------------------------------------------------------------------

<PAGE>

RULE 144A SECURITIES
Securities that are not
registered, but which are
bought and sold solely by
institutional investors.
The Fund considers many
Rule 144A securities to
be "liquid," although the Liquidity Risk X X
market for such
securities typically is
less active than the
public securities
markets.
- --------------------------------------------------------------------------------
DEBT SECURITIES
Securities issued by
private companies or
governments representing
an obligation to pay Market, Credit, X X X
interest and to repay Interest Rate and
principal when the Duration Risk
security matures.
- --------------------------------------------------------------------------------
JUNK BONDS Market, Credit, X
Debt Securities that Interest Rate and
are rated BBB or lower by Duration Risk
Standard & Poors or Baa
or lower by Moody's.
Tend to pay higher
interest rates than
higher-rated debt
securities, but carry a
higher credit risk.
- --------------------------------------------------------------------------------
FORWARD FOREIGN CURRENCY
CONTRACTS
A contract to exchange
an amount of currency on
a date in the future at
an agreed-upon exchange
rate might be used by the
Fund to hedge against Currency, X X X X X
changes in foreign Political,
currency exchange rates Diplomatic and
when the Fund invests in Regulatory Risks
foreign securities. Does
not reduce price
fluctuations in foreign
securities, or prevent
losses if the prices of
those securities decline.
- -------------------------------------------------------------------------------

REPURCHASE AGREEMENTS
A contract under which
the seller of a security
agrees to buy it back at Credit and X X X X X
an agreed-upon price and Counterparty Risk
time in the future.
- --------------------------------------------------------------------------------

<PAGE>

COUNTRY FUNDS
Closed-end mutual funds Market, Informa- X X
that invest in the tion, Political,
the securities of Regulatory, Diplo-
particular countries may matic, Liquidity
particularly be used when and Currency Risks
non-residents may not
invest directly in
securities of companies
in those countries.
Country funds have
operating expenses,
including management fees,
which reduce the invest-
ment return.
- --------------------------------------------------------------------------------
DELAYED DELIVERY OR WHEN-
ISSUED SECURITIES
Ordinarily, the Fund Market and X X X
purchases securities and Interest Rate
pays for them in cash at Risks
the normal trade
settlement time. When
the Fund purchases a
delayed delivery or when-
issued security, it
promises to pay in the
future, for example, when
the security is actually
available for delivery to
the Fund. The Fund's
obligation to pay and the
interest rate it receives,
in the case of debt
securities, usually are
fixed when the Fund
promises to pay. Between
the date the Fund
promises to pay and the
date the securities are
actually received, the
Fund receives no interest
on its investment, and
bears the risk that the
market value of the
when-issued security
may decline.
- --------------------------------------------------------------------------------
AMERICAN DEPOSITORY
RECEIPTS (ADRs)
These are securities Market, Informa- X
issued by U.S. banks tion, Political,
that represent shares of Regulatory, Diplo-
foreign corporations matic, Liquidity
held by those banks. and Currency
Although traded in U.S.
securities markets and
valued in U.S. dollars,
ADRs carry most of the
risks of investing
directly in foreign
securities.
- --------------------------------------------------------------------------------
</TABLE>

<PAGE>
- --------------------------------------------------------------------------------
FUND PERFORMANCE
The bar charts below show each Fund's actual yearly performance (commonly
known as it "total return") over the past decade, compared to one of the
following indexes: MSCI-AC Europe, MSCI-Europe/Australia/Far East or
MSCI-Pacific, depending upon the Fund. The table below shows actual annual
returns for various periods ended December 31, 1997. Remember, past performance
does not indicate how a Fund or any of the above indexes will perform in the
future.

For the 10 Calendar year
year period ended 12/31/97
Actual Annual Total Return Worst Calendar Best Calendar
1 YEAR 5 YEARS 10 YEARS Quarter Quarter
- --------------------------------------------------------------------------------
European Fund 15.15% 16.55% 11.49% 9/90 -15.10% 9/91 11.30%
Pacific Basin Fund -36.86% -0.38% 0.71% 12/97 -29.1% 3/88 14.75%
International Growth
Fund -1.90% 8.87% 5.18% 9/90 -20.91% 9/89 13.51
- --------------------------------------------------------------------------------

ACTUAL ANNUAL TOTAL RETURN CHART FOR THE EUROPEAN FUND.

ACTUAL ANNUAL TOTAL RETURN CHART FOR THE PACIFIC BASIN FUND.

ACTUAL ANNUAL TOTAL RETURN CHART FOR THE INTERNATIONAL GROWTH FUND.

The above bar graphs compare the actual annual total return for the Funds
compared to the actual annual total return of the following indexes: MSIC-AC
Europe, MSCI-Pacific or MSCI-Europe/Australia/Far East for the ten-year period
ended October 31, 1997.

Fund performance information is not provided for the Emerging Markets and
International Blue Chip Funds, as such Funds did not commence operations until
February 12, 1998 and October 28, 1998, respectively.

<PAGE>
- -------------------------------------------------------------------------------
FEES AND EXPENSES

SHAREHOLDER FEES PAID DIRECTLY FROM YOUR ACCOUNT

You pay no fees to purchase Fund shares, to exchange to another INVESCO
fund, or to sell your shares. Accordingly, no fees are paid directly from your
shareholder account. The only Fund costs you pay are annual Fund operating
expenses that are deducted from Fund assets.

ANNUAL FUND OPERATING EXPENSES THAT ARE DEDUCTED FROM

Fund Assets
<TABLE>
<CAPTION>
INVESCO Emerging Markets Fund*
<S> <C>
Management Fees 1.00%
Distribution and Service (12b-1) Fees(1) 0.25%
Other Expenses (for instance, shareholder servicing)(2) 14.33%
Total AnnualFund Expenses(1)(2) 15.58%
</TABLE>

<TABLE>
<CAPTION>
INVESCO European Fund
<S> <C>
Management Fees 0.71%
Distribution and Service (12b-1) Fees(1) 0.25%
Other Expenses (for instance, shareholder servicing) 0.38%
Total Fund Expenses(1) 1.34%
</TABLE>

<TABLE>
<CAPTION>
INVESCO International Blue Chip Fund*
<S> <C>
Management Fees 0.50%
Distribution and Service (12b-1) Fees(1) 0.25%
Other Expenses (for instance, shareholder servicing) 0.15%
Total Fund Expenses(1) 0.90%
</TABLE>

<TABLE>
<CAPTION>
INVESCO International Growth Fund
<S> <C>
Management Fees 1.00%
Distribution and Service (12b-1) Fees(1) 0.25%
Other Expenses (for instance, shareholder servicing)(2) 1.18%
Total Fund Expenses(1)(2) 2.43%
</TABLE>

<TABLE>
<CAPTION>
INVESCO Pacific Basin Fund
<S> <C>
Management Fees 0.75%
Distribution and Service (12b-1) Fees(1) 0.25%
Other Expenses (for instance, shareholder servicing)(2) 1.56%
Total Fund Expenses(1)(2) 2.56%
</TABLE>
<PAGE>

(1) Because the Funds pay 12b-1 distribution fees which are based upon each
Fund's assets, if you own shares of a Fund for a long period of time, you 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.

(2) Certain expenses of the Emerging Markets, International Growth and
Pacific Basin funds are being absorbed voluntarily by INVESCO pursuant to a
commitment to those Funds. After absorption, the Emerging Markets Fund "Other
Expenses" and "Total Annual Fund Operating Expenses" were 1.79% and 3.04%,
respectively, the International Growth Fund "Other Expenses" and "Total Annual
Fund Operationg Expenses" were 0.80% and 2.05%, respectively; and the Pacific
Basin " Other Expenses" and "Total Annual Fund Operating Expenses" were 1.07%
and 1.56%, respectively. This commitment may be changed at any time time
following consultation with the board of directors.

EXAMPLE
THIS EXAMPLE IS INTENDED TO HELP YOU COMPARE THE COST OF INVESTING IN THE
FUNDS TO THE COST OF INVESTING IN OTHER MUTUAL FUNDS.

THE EXAMPLE ASSUMES THAT YOU INVESTED $10,000 IN A FUND FOR THE TIME
PERIODS INDICATED AND REDEEM ALL OF YOUR SHARES AT THE END OF EACH PERIOD. THE
EXAMPLE ALSO ASSUMES THAT YOUR INVESTMENT HAS A HYPOTHETICAL 5% RETURN EACH
YEAR, AND ASSUMES THAT A FUND'S EXPENSES REMAIN THE SAME. ALTHOUGH A FUND'S
ACTUAL COSTS AND PERFORMANCE MAY BE HIGHER OR LOWER, BASED ON THESE ASSUMPTIONS
YOUR COSTS WOULD BE:

<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS

<S> <C> <C> <C> <C>
INVESCO Emerging Markets Fund $312 $952 $1,617 $3,393
INVESCO European Fund $137 $427 $738 $1,621
INVESCO International Blue Chip Fund $93 $289 $503 $1,116
INVESCO International Growth Fund $210 $649 $1,113 $2,398
INVESCO Pacific Basin Fund $212 $655 $1,124 $2,419
</TABLE>

- -------------------------------------------------------------------------------
INVESTMENT RISKS ICON - Arrows

Before investing in
a Fund, you should
determine the level
of risk with which
you are comfortable.
Take into account
factors like your
age, career, income
level, and time horizon
<PAGE>

You should determine the level of risk with which you are comfortable before
you invest. The principal risks of investing in any mutual fund, including these
Funds, are:
NOT INSURED. Mutual funds are not insured by the Federal Deposit Insurance
Corporation ("FDIC") or any other agency, unlike bank deposits such as CDs or
savings accounts.
NO GUARANTEE. No mutual fund can guarantee that it will meet its investment
objectives.
POSSIBLE LOSS OF INVESTMENT. A mutual fund cannot guarantee its
performance, nor assure you that the market value of your investment will
increase. You may lose the money you invest, and the Funds will not reimburse
you for any of these losses.
VOLATILITY. The price of your mutual fund shares will increase or decrease
with changes in the value of a Fund's underlying investments.
NOT A COMPLETE INVESTMENT PLAN. An investment in any mutual fund does not
constitute a complete investment plan. The Funds are designed to be only a part
of your personal investment plan.
YEAR 2000. Many computer systems in use today may not be able to recognize
any date after December 31, 1999. If these systems are not fixed by that date,
it is possible that they could generate erroneous information or fail
altogether. INVESCO has committed substantial resources in an effort to make
sure that is own major computer systems will continue to function on and after
January 1, 2000. Of course, INVESCO cannot fix systems that are beyond its
control. If INVESCO's own systems, or the systems of third parties upon which it
relies, do not perform properly after December 31, 1999, the Funds could be
adversely affected.

In addition, the markets for, or values of, securities in which the Funds
invest may possibly be hurt by computer failures affecting portfolio investments
or trading of securities beginning January 1, 2000. For example, improperly
functioning computer systems could result in securities trade settlement
problems and liquidity issues, production issues for individual companies and

<PAGE>

overall economic uncertainties. Individual issuers may incur costs in making
their own systems Year 2000 compliant. The combination of market uncertainty and
increased costs means that there is a possiblility that Year 2000 computer
issues may adversely affect the Funds' investments.

RISKS ASSOCIATED WITH PARTICULAR INVESTMENTS ICON - Arrows

FOREIGN SECURITIES. Investments in foreign and emerging markets carry
special risks, including currency, political, regulatory and diplomatic risks.
CURRENCY RISK. A change in the exchange rate between U.S. dollars and a
foreign currency may reduce the value of a Fund's investment in a security
valued in the foreign currency, or based on that currency value.
POLITICAL RISK. Political actions, events or instability may result in
unfavorable changes in the value of a security.
REGULATORY RISK. Government regulations may affect the value of a security.
In foreign countries, securities markets that are less regulated than those in
the United States may permit trading practices that are not allowed in the U.S.
DIPLOMATIC RISK. A change in diplomatic relations between the United States
and a foreign country could affect the value or liquidity of investments.
EUROPEAN ECONOMIC AND MONETARY UNION. Austria, Belgium, Finland, France,
Germany, Ireland, Italy, Luxembourg, The Netherlands, Portugal and Spain are
presently members of the European Economic and Monetary Union (the "EMU") which
as of 1/1/1999 adopted the Euro as a common currency. The national currencies
will be sub-currencies of the euro until July 1, 2002, at which time these
currencies will disappear entirely. Other European countries may adopt the Euro
in the future.
The introduction of the euro presents some uncertainties and possible
risks, which could adversely affect the value of securities held by the Funds.
EMU countries as a single marker may affect future investment decisions of the
Funds. As the euro is implemented, there may be changes in the relative strength
and value of the U.S. dollar and other major currencies, as well as possible
adverse tax consequences. The euro transition by EMU countries - present and
future - may affect the fiscal and monetary levels of those participating
countries. There may be increased levels of price competition among business
firms within EMU countries and between businesses in EMU and non-EMU countries.
The outcome of these uncertainties could have unpredictable effects on trade and
commerce and result in increased volatility for all financial markets.

<PAGE>

The Energy, Financial Services, Health Sciences, Leisure, Technology and
Utilities Funds may invest up to 25% of their respective total assets in
securities of non-U.S. issuers. However, the impact of the euro may be even
greater for the Gold and Environmental Services Funds, since these two Funds
have the ability to invest more than 25% of their respective total assets in the
securities of non-U.S. issuers.
MARKET RISK. Equity stock prices vary and may fall, thus reducing the value
of your Fund's investment. Certain stocks selected for any Fund's portfolio may
decline in value more than the overall stock market.
CREDIT RISK. The Funds may invest in debt instruments, such as notes and
bonds. There is a possibility that the issuers of these instruments will be
unable to meet interest payments or repay principal. Changes in the financial
strength of an issuer may reduce the credit rating of its debt instruments and
may affect their value.
INTEREST RATE RISK. Changes in interest rates will affect the resale value of
debt securities held in a Fund's portfolio. In general, as interest rates rise,
the resale value of debt securities decreases; as interest rates decline, the
resale value of debt securities generally increases. Debt securities with longer
maturities usually are more sensitive to interest rate movements.
DURATION RISK. Duration is a measure of a debt security's sensitivity to
interest rate changes. Duration is usually expressed in terms of years, with
longer durations usually more sensitive to interest rate fluctuations.
LIQUIDITY RISK. A Fund's portfolio is liquid if the Fund is able to sell
the securities it owns at a fair price within a reasonable time. Liquidity of a
particular security is generally related to the market trading volume for that
security. Investments in smaller companies or in foreign companies or emerging
markets are subject to a variety of risks, including potential lack of
liquidity.
DERIVATIVES RISK. A derivative is a financial instrument whose value is
"derived", in some manner, from the price of another security, index, asset or
rate. Derivatives include options and futures contracts, among a wide range of
other instruments. The principal risk of investments in derivatives is that the
fluctuations in their values may not correlate perfectly with the overall
securities markets. Some derivatives are more sensitive to interest rate changes
and market price fluctuations than others. Also, derivatives are subject to
counterparty risk.
OPTIONS AND FUTURES. Options and futures are common types of derivatives
that a Fund might occasionally use to hedge their investments. An option is the
right to buy or sell a security at a specific price on or before a specific
date. A future is an agreement to buy or sell a security at a specific price on
a specific date.
COUNTERPARTY RISK. This is a risk associated primarily with repurchase
agreements and some derivatives transactions. It is the risk that the other
party in such a transaction will not fulfill its contractual obligation to
complete a transaction with a Fund.

<PAGE>

LACK OF TIMELY INFORMATION RISK. Timely information about a security or its
issuer may be unavailable, incomplete or inaccurate. This risk is more common to
securities issued by foreign companies and companies in emerging markets than it
is to the securities of U.S.-based companies.

TEMPORARY DEFENSIVE POSITIONS ICON - Arrows

When securities markets or economic conditions are unfavorable or
unsettled, we might try to protect the assets of any Fund by investing in
securities that are highly liquid such as high quality money market instruments,
like short-term U.S. government obligations, commercial paper or repurchase
agreements. We have the right to invest up to 100% of a Fund's assets in these
securities, although we are unlikely to do so. Even though the securities
purchased for defensive purposes often are considered the equivalent of cash,
they also have their own risks. Investments that are highly liquid or
comparatively safe tend to offer lower returns. Therefore, a Fund's performance
could be comparatively lower if it concentrates in defensive holdings.

PORTFOLIO TURNOVER ICON - Arrows

We actively manage and trade the Funds' portfolios. Therefore, some of the
Funds may have a higher portfolio turnover rate compared to many other mutual
funds. The Funds with higher than average portfolio turnover rates for the
fiscal year ended October 31, 1998 are:

INVESCO European Fund 102%
INVESCO International Growth Fund 102%
INVESCO Pacific Basin Fund 114%

A portfolio turnover rate of 200%, for example, is equivalent to a Fund
buying and selling all of the securities in its portfolio two times in the
course of a year. A comparatively high turnover rate may result in higher
brokerage commissions and taxable capital gain or loss distributions to a Fund's
shareholders.

<PAGE>
- --------------------------------------------------------------------------------
FUND MANAGEMENT ICON - INVESCO ICON

The Investment Adviser
INVESCO is a subsidiary
of AMVESCAP PLC, an
international
investment management
company that manages
more than $ 240 billion
in assets worldwide.
AMVESCAP is based in
London, with money
managers located in Europe,
North and South America,
and the Far East.

INVESCO is the investment adviser of the Funds. INVESCO was founded in 1932
and manages over $ 18.9 billion for more than 904,160 shareholders of 14 INVESCO
mutual funds. INVESCO performs a wide variety of other services for the Funds,
including administration and transfer agency functions (the processing of
purchases, sales and exchanges of Fund shares). INVESCO Assets Management
Limited ("IAML") is the sub-advisor to the Emerging Markets, European,
International Growth and Pacific Basin Funds. INVESCO Global Asset Management
(N.A.) ("IGAM") is the sub-adviser to the International Blue Chip Fund. A wholly
owned subsidiary of INVESCO, INVESCO Distributors, Inc. ("IDI"), is the Funds'
distributor and is responsible for the sale of the Funds' shares. INVESCO, IAML,
IGAM and IDI are subsidiaries of AMVESCAP PLC.

The following table shows the fees the Funds paid to INVESCO for its advisory
services in the fiscal year ended OCTOBER 31, 1998:
<TABLE>
<CAPTION>
<S> <C>

- ----------------------------------------------------------------------------
FUND ADVISORY FEE AS A PERCENTAGE OF AVERAGE
ANNUAL ASSETS UNDER MANAGEMENT
- ----------------------------------------------------------------------------
INVESCO Emerging Markets Fund 1.00% (Annualized)
- ----------------------------------------------------------------------------
INVESCO European Fund 0.71%
- ----------------------------------------------------------------------------
INVESCO International Blue Chip 0.50% (Annualized)
Fund
- ----------------------------------------------------------------------------
INVESCO International Growth 1.00%
Fund
- ----------------------------------------------------------------------------
INVESCO Pacific Basin Fund 0.75%
- ----------------------------------------------------------------------------
</TABLE>

THE PORTFOLIO MANAGERS

The Funds are managed on a day to day basis by IIGAM and IAML, which serve
as sub-advisers to the Funds. When we refer to team management without naming
individual portfolio managers, we mean a system by which a senior investment
policy group sets country-by-country allocation of Fund assets and risk
controls, while individual country specialists select individual securities
within those allocations.

<PAGE>

FUND SUB-ADVISER PORTFOLIO MANAGER
- -------------------------------------------------------------------------------

Emerging Markets IAML Team Management
International Blue Chip IGAM Erik B. Granade
International Growth IAML Richard D. Beggs
European IAML Team Management
Pacific Basin IAML Team Management

ERIK B. GRANADE, a Certified Financial Analyst and Chartered Investment
Counselor, has been co-manager of the International Blue Chip Fund since its
inception. He joined INVESCO as an international portfolio manager in 1996, and
before that managed international equity portfolios for Cashman, Farrell &
Associates. He received his B.A. in Economics from Trinity College.

RICHARD D. BEGGS has been the lead portfolio manager of the International
Growth Fund since 1997, and has been with IAML since 1995. Prior to joining
IAML, he was a portfolio manager with Cazenove Fund Management and worked in
other capacities with Cazenove & Co. (1989 to 1995). He received a B.A. in
Economics and Statistics from the University of Exeter in Devon, England.

- -------------------------------------------------------------------------------
POTENTIAL REWARDS ICON - Graph

The Funds offer shareholders the potential to increase the value of their
capital over time; International Blue Chip Fund and International Growth Fund
also offer the opportunity for current income. Like most mutual funds, each Fund
seeks to provide higher return. Each Fund seeks to minimize risk by investing in
many different companies in a variety of industries.

No single Fund
should represent
your complete
investment program
nor should you
use the Funds for
short-term trading
purposes.

SUITABILITY FOR INVESTORS
Only you can determine if an investment in a Fund is the right choice for
you based upon your own economic situation, the risk level with which you are
comfortable and other factors. In general, the Funds are most suitable for
investors who:

* are willing to grow their capital over the long-term (at least five years)

* can accept the additional risks associated with international investing

* understand that shares of a Fund can and likely will have significant price
fluctuations

* are investing tax-deferred retirement accounts, such as Traditional and Roth
IRAs, as well as employer-sponsored qualified retirement plans, including
401(k)s and 403(b)s, all of which have longer investment horizons.

* You probably do not want to invest in the Funds if you are:
primarily seeking current dividend income

<PAGE>

* unwilling to accept potentially significant changes in the price of Fund
shares

* speculating on short-term fluctuations in the stock markets

* are uncomfortable with the special risks associated with international
investing

- -------------------------------------------------------------------------------
SHARE PRICE ICON - Graph

Current market value
of Fund assets +
Accrued interest &
dividends - Fund
debts, including
accrued expenses /
Number of shares =
Your share price
(NAV)

The value of your Fund shares is likely to change daily. This value is
known as the Net Asset Value per share, or NAV. INVESCO determines the market
value of each investment in each Fund's portfolio each day that the New York
Stock Exchange ("NYSE") is open, at the close of trading on that exchange
(normally, 4:00 p.m. New York time).
NAV is calculated by adding together the current market price of all of a
Fund's investments and other assets, including accrued interest and dividends;
subtracting the Fund's debts, including accrued expenses; and dividing that
dollar amount by the total number of the Fund's outstanding shares.
All purchases, sales and exchanges of Fund shares are made by INVESCO at
the NAV next calculated after INVESCO receives proper instructions from you to
purchase, redeem or exchange shares of a Fund. Your instructions must be
received by INVESCO no later than the close of the NYSE to effect transactions
at that day's NAV. If INVESCO hears from you after that time, your instructions
will be processed at the NAV calculated at the end of the next day that the NYSE
is open.
Please note that shares of the Funds are not priced on days when the NYSE
is closed, which, generally, is on weekends and national holidays in the United
States.
In addition, foreign securities exchanges, which set the prices for foreign
securities held by the Funds, are not always open the same days as the NYSE, and
may be open for business on days the NYSE is not. For example, Thanksgiving Day
is a holiday observed by the NYSE and not by overseas exchanges. In this
situation, the Funds would not calculate NAV on Thanksgiving Day (and INVESCO
would not buy, sell or exchange shares for you on that day), even though
activity on foreign exchanges could result in changes in the value of
investments held by the Funds on that day.

<PAGE>

- -------------------------------------------------------------------------------
HOW TO BUY SHARES ICON - INVESCO Logal

To buy shares at that
day's closing price, you
must contact us before
the close of the NYSE,
normally 4:00 p.m.
Eastern Time.

The following chart shows several convenient ways to invest in the Funds.
There is no charge to invest, exchange or redeem shares when you make
transactions directly through INVESCO. However, if you invest in a Fund through
a securities broker, you may be charged a commission or transaction fee for
either purchases or sales of Fund shares. For all new accounts, please send a
completed application form, and specify the fund or funds you wish to purchase.

INVESCO reserves the right to increase, reduce or waive each Fund's minimum
investment requirements in its sole discretion, if it determines this action is
in the best interests of that Fund's shareholders. INVESCO also reserves the
right in its sole discretion to reject any order to buy Fund shares, including
purchases by exchange.

MINIMUM INITIAL INVESTMENT. $ 1,000, which is waived for regular investment
plans, including EasiVest and Direct Payroll Purchase, and certain retirement
plans, including IRAs.

MINIMUM SUBSEQUENT INVESTMENT. $ 50 (Minimums are lower for certain retirement
plans.)

Fund exchange can be a
convenient way for you
to diversify your
investments, or to
reallocate your
investments when your
objectives change.

EXCHANGE POLICY. You may exchange your shares in any of the Funds for those
in another INVESCO mutual fund on the basis of their respective NAVs at the time
of the exchange. Before making any exchange, be sure to review the prospectuses
of the funds involved and consider the differences between the funds. Also, be
certain that you qualify to purchase certain classes of shares in the new fund.
An exchange is the sale of shares from one fund immediately followed by the
purchase of shares in another. Therefore, any gain or loss realized on the
exchange is recognizable for federal income tax purposes (unless, of course, you
or your account qualifies as tax-deferred under the Internal Revenue Code). If
the shares of the fund you are selling have gone up in value since you bought
them, the sale portion of an exchange may result in taxable income to you.

We have the following policies governing exchanges:

Both fund accounts involved in the exchange must be registered in exactly
the same name(s) and Social Security or federal tax I.D. number(s).

You may make up to FOUR exchanges out of each Fund during each calendar
year.

Each Fund reserves the right to reject any exchange request, or to modify
or terminate the exchange policy, in the best interests of the Fund and its
shareholders. Notice of all such modifications or termination that will affect
all shareholders of the Fund will be given at least 60 days prior to the
effective date of the change, except in unusual instances. Such circumstances
are defined in Section 22(e) of the Investment Company Act of 1940, and include:

o days when trading on the NYSE is restricted,
o when, due to some emergency, the Fund cannot fairly price its shares
o when the Securities and Exchange Commission determines that trading
should be halted
<PAGE>

In addition, the exchange privilege may be temporarily suspended at any time
that sales of the Fund into which you wish to exchange are temporarily stopped.

Please remember that if you pay by check or wire and your funds do not clear,
you will be responsible for any related loss to any Fund or INVESCO. If you are
already an INVESCO funds shareholder, the Fund may seek reimbursement for any
loss from your existing account(s).

- -------------------------------------------------------------------------------
HOW TO BUY SHARES

Method Investment Minimum Please Remember
- -------------------------------------------------------------------------------

BY CHECK $ 1,000 for regular
Mail to: account;
INVESCO Funds Group, $ 250 for an
Inc. Individual Retirement
P.O. BOX 173706, DENVER, Account;
CO 80217-3706. $ 50 minimum for each
Or you may send us a subsequent
check by overnight investment.
courier to: 7800 E.
UNION AVE., DENVER, CO
80237.
- --------------------------------------------------------------------------------

BY TELEPHONE OR WIRE $ 1,000 Payment must be received
Call 1-800-525-8085 to within 3 business days, or
request a purchase. Then the transaction may be
send your check by cancelled.
overnight courier to our
street address:
7800 E. UNION AVE.,
DENVER, CO 80237. Or
you may send your
payment by bank wire
(call INVESCO for
instructions).

- --------------------------------------------------------------------------------

REGULAR INVESTING WITH $ 50 per month for Like all regular investment
EASIVEST OR DIRECT EasiVest; $ 50 per plans, neither EasiVest nor
PAYROLL PURCHASE pay period for Direct Direct Payroll Purchase
You may enroll on your Payroll Purchase. You ensures a profit or
Fund application, or may start or stop protects against loss in a
call us for a separate your regular falling market. Because
form and more details. investment plan at you'll invest continually,
Investing the same any time, with two regardless of varying price
amount on a monthly weeks' notice to levels, consider your
basis allows you to buy INVESCO. financial ability to keep
more shares when prices buying through low price
are low and fewer shares levels. This "dollar-cost
when prices are high. averaging" may help offset
market fluctuations. Over a
period of time, your
average cost per share may
be less than the actual
average price per share.
And remember that you will
lose money if you redeem
your shares when the market
value of all your shares is
less than their cost.
- -------------------------------------------------------------------------------
<PAGE>

BY PAL $ 1,000 Be sure to write down the
Your "Personal Account confirmation number
Line" is available for provided by PAL. Payment
subsequent purchases and must be received within 3
exchanges 24 hours a business days, or the
day. Simply call transaction may be
1-800-525-8085. cancelled.
- -------------------------------------------------------------------------------
BY EXCHANGE $ 1,000 to open a new See "Exchange Policy"
Between two INVESCO account; $ 50 for
Funds. Call written requests to
1-800-525-8085 for purchase additional
prospectuses of other shares for an
INVESCO funds. Exchanges existing account.
may be made by phone or (The exchange minimum
at our Web site at is $ 1,000 for
www.invesco.com. You may exchanges requested
also establish an by telephone.)
automatic monthly
exchange service between
two INVESCO Funds; call
us for further details
and the correct form.
- -------------------------------------------------------------------------------

- -------------------------------------------------------------------------------
DISTRIBUTION EXPENSES

We have adopted a Plan and Agreement of Distribution (commonly known as a
"12b-1 Plan") for the Funds. The 12b-1 fees paid by each Fund are used to defray
all or part of the cost of preparing and distributing prospectuses and
promotional materials, as well as to pay for certain distribution-related and
other services. These services include compensation to third party brokers,
financial advisers and financial services companies that sell Fund shares and/or
service shareholder accounts.
Under the Plan, each Fund's payments are limited to an amount computed at
an annual rate of 0.25% of the Fund's average net assets. If distribution
expenses for a Fund exceed these computed amounts, INVESCO pays the difference.

- -------------------------------------------------------------------------------
YOUR ACCOUNT SERVICES ICON - INVESCO ICON

INVESCO provides
you with services
designed to make it
simple for you to buy,
sell or exchange your
shares of any INVESCO
mutual fund.

SHAREHOLDER ACCOUNTS. INVESCO maintains your share account, which contains
your current Fund holdings. The Funds no longer issues share certificates. You
have greater flexibility to conduct transactions without certificates. If you
hold share certificates, you will have to return them to INVESCO in order to
sell or exchange your shares, which will delay your sale.

QUARTERLY INVESTMENT SUMMARIES. Each calendar quarter, you receive a
written statement which consolidates and summarizes account activity and value
at the beginning and end of the period for each of your INVESCO Funds.

<PAGE>

TRANSACTION CONFIRMATIONS. You receive detailed confirmations of individual
purchases, exchanges, and sales. If you choose certain recurring transaction
plans (for instance, EasiVest), your transactions are confirmed on your
quarterly Investment Summaries.

You can conduct most
transactions
and check on your
account through
our toll-free telephone
number.
You may also access
personal
account information at
our Web site,
www.invesco.com

TELEPHONE TRANSACTIONS. You may buy, exchange and sell Fund shares by
telephone, unless you specifically decline these privileges when you fill out
the INVESCO new account Application.

Unless you decline the telephone transaction privileges, when you fill out
and sign the new account Application, a Telephone Transaction Authorization
Form, or otherwise use your telephone transaction privileges, you lose certain
rights if someone gives fraudulent or unauthorized instructions to INVESCO that
result in a loss to you. In general, if INVESCO has followed reasonable
procedures, such as recording telephone instructions and sending written
transaction confirmations, INVESCO is not liable for following telephone
instructions that it believes to be genuine. Therefore, you have the risk of
loss due to unauthorized or fraudulent instructions.

IRAS AND OTHER RETIREMENT PLANS. Shares of any INVESCO mutual fund may be
purchased for Individual Retirement Accounts (IRAs) and many other types of
tax-deferred retirement plans. Please call INVESCO for information and forms to
establish or transfer your existing plan or account.
<PAGE>

- -------------------------------------------------------------------------------
HOW TO SELL SHARES ICON - INVESCO ICON

To sell shares at that
day's closing price,
you must contact us
before 4:00 p.m.
Eastern Time.

The following chart shows several convenient ways to sell your Fund shares.
Shares of the Funds may be sold at any time at the next NAV calculated after
your request to sell in proper form is received by INVESCO. Depending on the
performance of any Fund, the NAV at the time you sell your shares may be more or
less than the price you paid to purchase your shares.

If you own shares in more than one INVESCO Fund, please specify the Fund whose
shares you wish to sell. Remember that any sale or exchange of shares in a
non-retirement account will likely result in a taxable gain or loss.

While INVESCO attempts to process telephone redemptions promptly, there may be
times -- particularly in periods of severe economic or market disruption -- when
you may experience delays in redeeming shares by phone.

<PAGE>

INVESCO usually mails you the proceeds from the sale of Fund shares within
seven days after we receive your request to sell in proper form. However,
payment may be postponed under unusual circumstances -- for instance, if normal
trading is not taking place on the New York Stock Exchange, or during an
emergency as defined by the Securities and Exchange Commission. If your INVESCO
fund shares were purchased by a check which has not yet cleared, payment will be
made promptly when your purchase check does clear; that can take up to 15 days.

If you participate in EasiVest, the Funds' automatic monthly investment
program, and sell all of the shares in your account, we will not make any
additional EasiVest purchases unless you give us other instructions.

Because of the Funds' expense structure, it costs as much to handle a small
account as it does to handle a large one. If the value of your account in any
Fund falls below $250 as a result of your actions (for example, sale of your
Fund shares), each Fund reserves the right to sell all of your shares, send the
proceeds of the sale to you, and close your account. Before this is done, you
will be notified and given 60 days to increase the value of your account to $250
or more.

Method Minimum Redemption Please Remember
- -------------------------------------------------------------------------------

BY TELEPHONE $250 (or, if less, full
Call us toll-free at liquidation of the
1-800-525-8985 account) for a
redemption check; $1,000
for a wire to your bank
of record. The maximum
amount which may be
redeemed by telephone is
generally $25,000.
INVESCO's telephone
redemption privileges
may be modified or
terminated in the future
at INVESCO's discretion.
- -------------------------------------------------------------------------------
IN WRITING
Any amount.
Mail your request to Any amount. The redemption The INVESCO Funds
Funds Group, Inc., P.O. be signed by all no longer issue
Box 173706, Denver, CO registered account owners paper certificates
80217-3706 Payment will be mailed for shares. If
You may also send your to your address as it the shares you are
request by overnight appears on INVESCO's selling are repre-
courier to 7800 E. Union records, or to a bank sented by stock
Ave., Denver, CO 80237 designated by you in certificates, the
writing. certificates must
be sent to INVESCO
before we can
process your
redemption.
- --------------------------------------------------------------------------------

<PAGE>
- --------------------------------------------------------------------------------
BY EXCHANGE
Between two INVESCO funds. $1,000 to open a new account; See "Exchange
Call 1-800-525-8085 for $50 for written requests Policy."
prospectuses of other to purchase additional
INVESCO Funds. Exchanges shares for an existing
may be made by phone or account. (The exchange
at our Web site at minimum is $250 for
www.invesco.com. You exchanges requested by
may also establish an telephone.)
automatic monthly exchange
service between two
INVESCO funds; call us
for further details and
the correct form.
- --------------------------------------------------------------------------------
PERIODIC WITHDRAWAL PLAN
You may call us to request $100 per payment on a You must have at
the appropriate form and monthly or quarterly least $10,000
more information at basis. The redemption total invested
1-800-525-8085. check may be made with the INVESCO
payable to any party funds, with at
you designate. least $5,000 of
that total
invested in the
fund from which
withdrawals will
be made.
- --------------------------------------------------------------------------------
PAYMENT TO THIRD PARTY
Mail you request to INVESCO Any amount. All registered
Funds Group, Inc., P.O. account owners
Box 173706, Denver, CO must sign the re-
80217-3706. quest, with
signature guaran-
tees from an
eligible institu-
tion, such as a
commercial bank or
a recognized
national or re-
gional securities
firm.
- --------------------------------------------------------------------------------

<PAGE>

- --------------------------------------------------------------------------------
TAXES

To avoid backup
withholding,
be sure we have your
correct Social
Security or Taxpayer
Identification Number.
We will provide you
with detailed
information every year
about your dividends
and capital gain
distributions.
Depending on the
activity in your individual
account, we may also be
able to assist with cost
basis figures
for shares you sell.

Everyone's tax status is unique. We encourage you to consult your own tax
adviser on the tax impact to you of investing in the Funds.

Each Fund customarily distributes to its shareholders substantially all of
its net investment income, net capital gains and net gains from foreign currency
transactions, if any. You receive a proportionate part of these distributions,
depending on the percentage of each Fund's shares that you own. These
distributions are required under federal tax laws governing mutual funds. It is
the policy of each Fund to distribute all investment company taxable income and
net capital gains. As a result of this policy and the Funds' qualification as
regulated investment companies, it is anticipated that none of the Funds will
pay federal income or excise taxes and will be accorded conduit or "pass
through" treatment for federal income tax purposes.

However, unless you are (or your account is) exempt from income taxes, you
must include all dividends and capital gain distributions paid to you by a Fund
in your taxable income for federal, state, and local income tax purposes. You
also may realize capital gains or losses when you sell shares of a Fund at more
or less than the price you originally paid. An exchange is treated as a sale,
and is a taxable event. Dividends and other distributions usually are taxable
whether you receive them in cash or automatically reinvest them in shares of the
distributing Funds or other INVESCO funds.

If you have not provided INVESCO with complete, correct tax information,
the Fund is required by law to withhold 31% of your distributions and any money
that you receive from the sale of shares of the Fund as a backup withholding
tax.

Each year, INVESCO will provide you with information about the Fund's
dividend and capital gain distributions that is required for you to complete
your yearly tax filings.

<PAGE>

- -------------------------------------------------------------------------------
DIVIDENDS AND CAPITAL GAIN DISTRIBUTIONS ICON - Graph

Net investment income
and net realized capital
gains
are distributed to
shareholders at least
annually.
Distributions are taxable
whether reinvested in
additional shares or you
received them in cash
(except for tax-exempt
accounts).

The Funds earn ordinary or net investment income from dividends and
interest on their investments. The Funds expect to distribute substantially all
of this income, less Fund expenses, to shareholders annually, or at such other
times as the Funds may elect.

A Fund also realizes capital gains and losses when it sells securities in
its portfolio for more or less than it paid for them. If total gains on sales
exceed total losses (including losses carried forward from previous years), a
Fund has a net realized capital gain. Net realized capital gains, if any, are
distributed to shareholders at least annually, usually in December.

Under present federal income tax laws, capital gains may be taxable at
different rates, depending on how long a Fund has held the underlying
investment. Short-term capital gains which are derived from the sale of assets
held one year or less are taxed as ordinary income. Long-term capital gains
which are derived from the sale of assets held for more than one year are taxed
at the maximum capital gains rate, currently 20%.

Dividends and capital gain distributions are paid to you if you hold shares
on the record date of the distribution regardless of how long you have held your
shares. A Fund's NAV will drop by the amount of the distribution on the day the
distribution is made. If you buy shares of a Fund just before a distribution,
you may wind up "buying a dividend." This means that if the Fund makes a
dividend or capital gain distribution shortly after you buy, you will receive
some of your investment back as a taxable distribution. Most shareholders want
to avoid this. And, if you sell your shares at a loss for tax purposes and
purchase a substantially identical investment within 30 days before or after
that sale, the transaction is usually considered a "wash sale" and you will not
be able to claim a tax loss.

Dividends and capital gain distributions by each Fund are automatically
reinvested in additional Fund shares at the NAV on the ex-dividend date, unless
you choose to have them automatically reinvested in another INVESCO fund or paid
to you by check or electronic funds transfer. If you choose to be paid by check,
the minimum amount of the check must be at least $10; amounts lower than that
will be automatically reinvested. Dividends and other distributions, whether
received in cash or reinvested in additional Fund shares, may be subject to
federal income tax.

<PAGE>

FINANCIAL HIGHLIGHTS
(For a Fund Share Outstanding Throughout Each Period)
<TABLE>
<CAPTION>
Period Ended October 31, 1998(a)
--------------------------------
Emerging Markets Fund
<S> <C>
PER SHARE DATA $10.00
Net Asset Value - Beginning of Period
- -------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income 0.03
Net Gains on Securities (Both Realized and (2.49)
Unrealized)
- -------------------------------------------------------------------------------
TOTAL FROM INVESTMENT OPERATIONS (2.46)
- -------------------------------------------------------------------------------
Net Asset Value - End of Period $7.54
===============================================================================

TOTAL RETURN (24.60%)(b)

RATIOS
Net Assets - End of Period ($000 Omitted) $1,178
Ratio of Expenses to Average Net Assets(c)(d) 3.04%(e)
Ratio of Net Investment Income to Average Net
Assets(d) 0.91%(e)
Portfolio Turnover Rate 42%(b)
</TABLE>

(a) From February 12, 1998, commencement of investment operations, to
October 31, 1998.

(b) Based on operations for the period shown and, accordingly, is not
representative of a full year.

(c) Ratio is based on Total Expenses of the Fund, less Expenses Absorbed by
Investment Adviser, which is before any expense offset arrangements.

(d) Various expenses of the Fund were voluntarily absorbed by INVESCO and IAML
for the period ended October 31, 1998. If such expenses had not been
voluntarily absorbed, ratio of expenses to average net assets would have
been 15.58% (annualized) and ratio of net investment loss to average net
assets would have been (11.63%) (annualized).

(e) Annualized

<PAGE>

FINANCIAL HIGHLIGHTS (CONTINUED)
(For a Fund Share Outstanding Throughout Each Period)
<TABLE>
<CAPTION>
Year Ended October 31
--------------------------------------------------------------------------------
1998 1997 1996 1995 1994
European Fund
<S> <C> <C> <C> <C> <C>
PER SHARE DATA
Net Asset Value - Beginning of Period $ 17.34 $ 15.85 $ 14.09 $ 12.95 $ 12.20
- -----------------------------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income 0.04 0.07 0.05 0.23 0.16
Net Gains on Securities
(Both Realized and Unrealized) 3.58 2.63 3.00 1.12 0.75
- -----------------------------------------------------------------------------------------------------------------------------------
TOTAL FROM INVESTMENT OPERATIONS 3.62 2.70 3.05 1.35 0.91
- -----------------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS
Dividends from Net Investment Income(a) 0.06 0.07 0.08 0.21 0.16
Distributions from Capital Gains 3.28 1.14 1.21 0.00 0.00
- -----------------------------------------------------------------------------------------------------------------------------------
TOTAL DISTRIBUTIONS 3.34 1.21 1.29 0.21 0.16
- -----------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE - END OF PERIOD $ 17.62 $ 17.34 $ 15.85 $ 14.09 $ 12.95
===================================================================================================================================

TOTAL RETURN 24.92% 18.07% 23.47% 10.42% 7.42%

RATIOS

Net Assets - End of Period ($000 Omitted) $ 672,146 $ 324,819 $ 300,588 $ 224,200 $ 349,842
Ratio of Expenses to Average Net Assets 1.34%(b) 1.25%(b) 1.36%(b) 1.40%(b) 1.20%
Ratio of Net Investment Income to Average Net
Assets 0.24% 0.33% 0.37% 1.26% 1.28%
Portfolio Turnover Rate 102% 90% 91% 96% 70%
</TABLE>

(a) Distributions in excess of net investment income for the year ended October
31, 1998, amounted to less than $0.01 on a per share basis.

(b) Ratio is based on Total Expenses of the Fund, which is before any expense
offset arrangements.

<PAGE>

FINANCIAL HIGHLIGHTS (CONTINUED)
(For a Fund Share Outstanding Throughout Each Period)
<TABLE>
<CAPTION>
Period Ended October 31, 1998(a)
----------------------------------
International Blue Chip Fund
<S> <C>
PER SHARE DATA
Net Asset Value - Beginning of Period $ 10.00
- -------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
Net Gains on Securities (Both Realized and Unrealized) 0.02
- -------------------------------------------------------------------------------
NET ASSET VALUE - END OF PERIOD $ 10.02
===============================================================================

TOTAL RETURN 0.20%(b)

RATIOS
Net Assets - End of Period ($000 Omitted) $ 6,287
Ratio of Expenses to Average Net Assets(c) 0.90%(d)
Ratio of Net Investment Income to Average
Net Assets 6.16%(d)
Portfolio Turnover Rate 0%(b)
</TABLE>

(a) From October 28, 1998, commencement of investment operations, to
October 31, 1998.

(b) Based on operations for the period shown and, accordingly, is not
representative of a full year.

(d) Annualized

<PAGE>

<S> <C> <C> <C> <C> <C>
PER SHARE DATA
Net Asset Value - Beginning of Period $ 16.46 $ 16.91 $ 15.78 $ 17.29 $ 15.75
- -----------------------------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income (Loss) (0.02) 0.06 0.07 0.08 0.04
Net Gains(Losses) on Securities
(Both Realized and Unrealized (0.45) 0.37 1.77 (0.61) 1.57
- -----------------------------------------------------------------------------------------------------------------------------------
TOTAL FROM INVESTMENT OPERATIONS (0.47) 0.43 1.84 (0.53) 1.61
- -----------------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS
Dividends from Net Investment Income 0.25 0.08 0.15 0.09 0.07
In Excess of Net Investment Income(c) 0.00 0.00 0.00 0.03 0.00
Distributions from Capital Gains 2.49 0.80 0.56 0.86 0.00
- -----------------------------------------------------------------------------------------------------------------------------------
TOTAL DISTRIBUTIONS 2.74 0.88 0.71 0.98 0.07
- -----------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE - END OF PERIOD $ 13.25 $ 16.46 $ 16.91 $ 15.78 $ 17.29
===================================================================================================================================

TOTAL RETURN (2.75%) 2.65% 12.01% (2.84%) 10.21%

RATIOS
Net Assets - End of Period ($000 Omitted) $ 46,091 $ 84,779 $ 94,586 $ 75,391 $ 161,884
Ratio of Expenses to Average Net Assets(d) 2.05%(e) 1.71%(e) 1.80%(e) 1.81%(e) 1.50%
Ratio of Net Investment Income (Loss) to
Average Net Assets(d) (0.14%) 0.26% 0.43% 0.41% 0.46%
Portfolio Turnover Rate 102% 57% 64% 62% 87%
</TABLE>

(a) The per share information was computed based on average shares.

(b) The per share information was computed based on weighted average shares.

(c) Distributions in excess of net investment income for the years ended October
31, 1998, 1997 and 1996 aggregated less than $0.01 on a per share basis.

(d) Various expenses of the Fund were voluntarily absorbed by INVESCO for the
year ended October 31, 1998. If such expenses had not been voluntarily
absorbed, ratio of expenses to average net assets would have been 2.43% and
ratio of net investment loss to average net assets would have been (0.52%).

(e) Ratio is based on Total Expenses of the Fund, less Expenses Absorbed by
Investment Advisor, if applicable, which is before any expense offset
arrangements.

<PAGE>

FINANCIAL HIGHLIGHTS (CONTINUED)
(For a Fund Share Outstanding Throughout Each Period)
<TABLE>
<CAPTION>
Year Ended October 31
-------------------------------------------------------------------------
1998 1997 1996 1995 1994
Pacific Basin Fund
<S> <C> <C> <C> <C> <C>
PER SHARE DATA
Net Asset Value - Beginning of Period $ 9.74 $ 14.11 $ 13.83 $ 17.07 $ 15.11
- -----------------------------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income (Loss) 0.07 (0.09) (0.02) 0.06 0.04
Net Gains (Losses) on Securities (Both
Realized and Unrealized) (2.80) (3.45) 0.51 (1.45) 2.28
- -----------------------------------------------------------------------------------------------------------------------------------
TOTAL FROM INVESTMENT OPERATIONS (2.73) (3.54) 0.49 (1.39) 2.32
- -----------------------------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS
Dividends from Net Investment Income(a) 0.12 0.00 0.03 0.06 0.04
Distributions from Capital Gains 0.00 0.83 0.18 1.79 0.32
In Excess of Capital Gains 0.20 0.00 0.00 0.00 0.00
- -----------------------------------------------------------------------------------------------------------------------------------
TOTAL DISTRIBUTIONS 0.32 0.83 0.21 1.85 0.36
- -----------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE - END OF PERIOD $ 6.69 $ 9.74 $ 14.11 $ 13.83 $ 17.07
===================================================================================================================================

TOTAL RETURN (28.68%) (26.55%) 3.55% (8.31%) 15.62%

RATIOS
Net Assets - End of Period ($000 Omitted) $ 45,070 $ 63,943 $ 149,870 $ 154,374 $ 352,888
Ratio of Expenses to Average Net Assets(b) 2.07%(c) 1.72%(c) 1.60%(c) 1.52%(c) 1.24%
Ratio of Net Investment Income (Loss) to Average Net
Assets(b) 0.25% (0.44%) (0.04%) 0.37% 0.28%
Portfolio Turnover Rate 114% 86% 70% 56% 70%
</TABLE>

(a) Distributions in excess of net investment income for the years ended October
31, 1998, 1997 and 1996 aggregated less than $0.01 on a per share basis.

(b) Various expenses of the Fund were voluntarily absorbed by INVESCO for the
year ended October 31, 1998. If such expenses had not been voluntarily
absorbed, ratio of expenses to average net assets would have been 2.56% and
ratio of net investment loss to average net assets would have been (0.24%).

(c) Ratio is based on Total Expenses of the Fund, less Expenses Absorbed by
Investment Advisor, if applicable, which is before any expense offset
arrangements.

<PAGE>

INVESCO INTERNATIONAL FUNDS, INC.
INVESCO EMERGING MARKETS FUND
INVESCO EUROPEAN FUND
INVESCO INTERNATIONAL BLUE CHIP FUND
INVESCO INTERNATIONAL GROWTH FUND
INVESCO PACIFIC BASIN FUND

MARCH 1, 1999

You may obtain additional information about the Funds from several sources.

FINANCIAL REPORTS. Although this Prospectus describes the Funds'
anticipated investments and operations, the Funds also prepare annual and
semiannual reports that detail the Funds' actual investments at the report date.
These reports include discussion of each Fund's recent performance, as well as
market and general economic trends affecting each Fund's performance. The annual
report also includes the report of the Funds' independent accountants.

STATEMENT OF ADDITIONAL INFORMATION. The SAI dated March 1, 1999, is a
supplement to this Prospectus, and has detailed information about the Funds and
their investment policies and practices. A current SAI for the Funds is on file
with the Securities and Exchange Commission and is incorporated in this
Prospectus by reference; in other words, the SAI is legally a part of this
Prospectus, and you are considered to be aware of the contents of the SAI.

INTERNET. The current Prospectus, SAI and annual or semiannual reports of
the Funds may be accessed through the INVESCO Web site at www.invesco.com or
through the SEC Web site at www.sec.gov.

To obtain a free copy of the current annual report, semiannual report or
SAI, write to INVESCO Distributors, Inc., P.O. Box 173706, Denver, Colorado
173706; or call 1-800-525-8085. Copies of these materials are also available
(with a copying charge) from the SEC's Public Reference Section at 450 Fifth
Street, N.W., Washington, D.C. Information on the Public Reference Section can
be obtained by calling 1-800-SEC-0330. The SEC file number for the Funds is
002-85905.

To reach PAL, your 24-hour Personal Account Line, call: 1-800-
1-800-424-8085

If you're in Denver, please visit one of our convenient Investor Centers:

Cherry Creek
155-B Fillmore Street

Denver Tech Center
7800 East Union Avenue

<PAGE>

STATEMENT OF ADDITIONAL INFORMATION

INVESCO INTERNATIONAL FUNDS, INC.

INVESCO Emerging Markets Fund
INVESCO European Fund
INVESCO International Blue Chip Fund
INVESCO International Growth Fund
INVESCO Pacific Basin Fund

Address: Mailing Address:

7800 E. Union Ave., Denver, CO 80237 P.O. Box 173706, Denver, CO 80217-3706

Telephone:

In continental U.S., 1-800-525-8085

March 1, 1999

- --------------------------------------------------------------------------------

A Prospectus for the Emerging Markets, European, International Blue Chip,
International Growth and Pacific Basin Funds dated March 1, 1999 provides the
basic information you should know before investing in a Fund. This Statement of
Additional Information ("SAI") is incorporated by reference into the Funds'
Prospectus; in other words, this SAI is legally part of the Funds' Prospectus.
Although this SAI is not a prospectus, it contains information in addition to
that set forth in the Prospectus. It is intended to provide additional
information regarding the activities and operations of the Funds and should be
read in conjunction with the Prospectus.

You may obtain, without charge, copies of the current Prospectus of the Funds,
SAI and current annual and semi-annual reports by writing to INVESCO
Distributors, Inc., P.O. Box 173706, Denver, CO 80217-3706, or by calling
1-800-525-8085. Copies of these materials also are available through the INVESCO
web site at www.invesco.com.

<PAGE>
TABLE OF CONTENTS

The Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35

Investments, Policies and Risks . . . . . . . . . . . . . . . . . . . . 35

Investments, Risks and Strategies . . . . . . . . . . . . . . . . . . . . 55

Management of the Funds . . . . . . . . . . . . . . . . . . . . . . . . 61

Other Service Providers . . . . . . . . . . . . . . . . . . . . . . . . . 83

Brokerage Allocation and Other Practices . . . . . . . . . . . . . . . . 83

Capital Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86

Tax Consequences of Owning Shares of the Fund . . . . . . . . . . . . . . 87

Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89

Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . 91
<PAGE>

History of the Company

The Company was incorporated under the laws of Maryland as INVESCO International
Funds, Inc. on April 2, 1993. On July 1, 1993, the Company, through the European
and Pacific Basin Fund, assumed all of the assets and liabilities of Strategic
Financial Portfolios, Inc., which was incorporated in Maryland on August 10,
1993. In addition, on July 1, 1993, the Company, through the International
Growth Fund, assumed all of the assets and liabilities of Financial
International Growth Fund, which was incorporated in Massachusetts on July 15,
1987. All financial and other information about the Company and the Funds for
periods prior to July 1, 1993 relates to INVESCO International Funds, Inc.

The Company

The Company is an open-end, diversified, no-load management investment company
currently consisting of: five portfolios of investments: the INVESCO Emerging
Markets Fund, INVESCO European Fund, INVESCO International Blue Chip Fund,
INVESCO International Growth Fund and INVESCO Pacific Basin Fund (the "Funds").

"Open-end" means that each Fund issues an indefinite number of shares which it
continuously offers to redeem at net asset value per share ("NAV"). A
"management" investment company actively buys and sells securities for each
portfolio at the direction of a professional manager. Open-end management
investment companies (or one or more series of such companies, such as the
Funds) are commonly referred to as mutual funds. The Funds do not charge sales
fees to purchase their shares. However, the Funds do pay a 12b-1 distribution
fee which is computed and paid monthly at an annual rate of 0.25% of each Fund's
average net assets.

Investments, Policies and Risks

The principal investments and policies of the Funds are discussed in the
Prospectus of the Funds. The Funds also may invest in the following securities
and engage in the following practices, although they do not do so at this time
to a significant degree.

ADRs -- American Depository Receipts, or ADRs, are securities issued by American
banks. ADRs are receipts for the shares of foreign corporations that are held by
the bank issuing the receipt. An ADR entitles its holder to all dividends and
capital gains on the underlying foreign securities, less any fees paid to the
bank. Purchasing ADRs gives a Fund the ability to purchase the functional
equivalent of foreign securities without going to the foreign securities markets
to do so. ADRs are bought and sold in U.S. dollars, not foreign currencies. An
ADR that is "sponsored" means that the foreign corporation whose shares are
represented by the ADR is actively involved in the issuance of the ADR, and
generally provides material information about the corporation to the U.S.
market. An "unsponsored" ADR program means that the foreign corporation whose
shares are held by the bank is not obligated to disclose material information in
the United States, and, therefore, the market value of the ADR may not reflect
important facts known only to the foreign company.

<PAGE>

Since they mirror their underlying foreign securities, ADRs generally have the
same risks as investing directly in the underlying foreign securities.

Debt Securities -- Debt securities include bonds, notes and other securities
that give the holder the right to receive fixed amounts of principal, interest,
or both on a date in the future or on demand. Debt securities also are often
referred to as fixed income securities, even if the rate of interest varies over
the life of the security.

Debt securities are generally subject to credit risk and market risk. Credit
risk is the risk that the issuer of the security may be unable to meet interest
or principal payments or both as they come due. Market risk is the risk that the
market value of the security may decline for a variety of reasons, including
changes in interest rates. An increase in interest rates tends to reduce the
market values of debt securities in which a Fund has invested. A decline in
interest rates tends to increase the market values of debt securities in which a
Fund has invested.

Moody's Investor Services, Inc. ("Moody's") and Standard & Poor's, a division of
The McGraw-Hill Companies, Inc. ("S&P") ratings provide a useful guide to the
credit risk of many debt securities. The lower the rating of a debt security,
the greater the credit risk the rating service assigns to the security. To
compensate investors for accepting that greater risk, lower-rated debt
securities tend to offer higher interest rates. Lower-rated debt securities are
often referred to as "junk bonds." Increasing the amount of Fund assets invested
in unrated or lower grade straight debt securities may increase the yield
produced by a Fund's debt securities but will also increase the credit risk of
those securities. A debt security is considered lower grade if it is rated Ba or
less by Moody's, BB or less by S&P.

Lower-rated and non-rated debt securities of comparable quality are subject to
wider fluctuations in yields and market values than higher-rated debt securities
and may be considered speculative. Although a Fund may invest in debt securities
assigned lower grade ratings by S&P or Moody's, the Funds' investments have
generally been limited to debt securities rated B or higher by either S&P or
Moody's. Debt securities rated lower than B by either S&P or Moody's are usually
considered to be highly speculative. The Funds' investment adviser will limit
Fund investments to debt securities which the adviser believes are not highly
speculative and which are rated at least CCC by S&P or Caa by Moody's.

A significant economic downturn or increase in interest rates may cause issuers
of debt securities to experience increased financial problems which could
adversely affect their ability to pay principal and interest obligations, to
meet projected business goals, and to obtain additional financing. These
conditions more severely impact issuers of lower-rated debt securities. The
market for lower-rated straight debt securities may not be as liquid as the
market for higher-rated straight debt securities. Therefore, a Fund's investment
adviser attempts to limit purchases of lower-rated securities to securities
having an established secondary market.

Debt securities rated Caa by Moody's may be in default or may present risks
of non-payment of principal or interest. Lower rated securities by S&P
(categories BB, B, CCC) include those which are predominantly speculative
because of the issuer's perceived 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 will likely have some
quality and protective characteristics, these are usually outweighed by large
uncertainties or major risk exposures to adverse conditions.
<PAGE>

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.

Domestic Bank Obligations -- U.S. banks (including their foreign branches) issue
certificates of deposit (CDs) and bankers' acceptances which may be purchased by
the Funds if an issuing bank has total assets in excess of $5 billion and the
bank otherwise meets the Funds' credit 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"). Bankers' acceptances 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. Both types of securities are subject
to the ability of the issuing bank to meet its obligations, and are subject to
risks common to all debt securities. In addition, banker's acceptances may be
subject to foreign currency risk and certain other risks of investment in
foreign securities.

Equity Securities -- The Funds may invest in common, preferred and convertible
preferred stocks, and securities whose values are tied to the price of stocks,
such as rights, warrants and convertible debt securities. Common stocks and
preferred stocks represent equity ownership in a corporation. Owners of stock,
such as the Funds, share in a corporation's earnings through dividends which may
be declared by the corporation, although the receipt of dividends is not the
principal benefit that the Funds seek when they invest in stocks and similar
instruments.

Instead, the Funds seek to invest in stocks that will increase in market value
and may be sold for more than a Fund paid to buy them. Market value is based
upon constantly changing investor perceptions of what the company is worth
compared to other companies. Although dividends are a factor in the changing
market value of stocks, many companies do not pay dividends, or pay
comparatively small dividends. The principal risk of investing in equity
securities is that their market value fluctuates constantly, often due to
factors entirely outside the control of the Funds or the company issuing the
stock. At any given time, the market value of an equity security may be
significantly higher or lower than the amount paid by a Fund to acquire it.
<PAGE>

Owners of preferred stocks are entitled to dividends payable from the
corporation's earnings, which in some cases may be "cumulative" if prior
dividends on the preferred stock have not been paid. Dividends payable on
preferred stock have priority over distributions to holders of common stock, and
preferred stocks generally have a priority 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 holders of a company's debt securities generally
are entitled to be paid by the company before it pays anything to its
stockholders.

Rights and warrants are securities which entitle the holder to purchase the
securities of a company (usually, its common stock) at a specified price during
a specified time period. The value of a right or warrant is affected by many of
the same factors that determine the prices of common stocks. Rights and warrants
may be purchased directly or acquired in connection with a corporate
reorganization or exchange offer.

The Funds also may purchase convertible securities including 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 owner of convertible securities usually receives the
interest paid on a convertible bond or the dividend preference of a preferred
stock.

A convertible security has an "investment value" which is a theoretical value
determined by the yield it provides in comparison with similar securities
without the conversion feature. Investment value changes are based upon
prevailing interest rates and other factors. It also has a "conversion value,"
which is the market value the convertible security would have if it were
exchanged for the underlying equity security. Convertible securities may be
purchased at varying price levels above or below their investment values or
conversion values.

Conversion value is a simple mathematical calculation that fluctuates directly
with the price of the underlying security. However, if the conversion value is
substantially below investment value, the market value of the convertible
security is governed principally by its investment value. If the conversion
value is near or above investment value, the market value of the convertible
security generally will rise above investment value. In such cases, the market
value of the convertible security may be higher than its 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. 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.

Eurobonds -- The Funds may invest in bonds issued by foreign branches of U.S.
banks ("Eurobonds") and bonds issued by a U.S. branch of a foreign bank and sold
in the United States ("Yankee bonds"). These bonds are bought and sold in U.S.
dollars, but generally carry with them the same risks as investing in foreign
securities.

<PAGE>

Foreign Securities -- Investments in the securities of foreign companies, or
companies that have their principal business activities outside the United
States, involve certain risks not associated with investment in U.S. companies.
Non-U.S. companies generally are not subject to the same uniform accounting,
auditing and financial reporting standards that apply to U.S. companies.
Therefore, financial information about foreign companies may be incomplete, or
may not be comparable to the information available on U.S. companies. There may
also 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 have greater swings
in price than securities of comparable U.S. companies. The costs of buying and
selling securities on foreign securities exchanges is generally significantly
higher than similar costs in the United States. 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. If it becomes
necessary, it may be more difficult for a Fund to obtain or to enforce a
judgment against a foreign issuer than against a domestic issuer.

Securities traded on foreign markets are usually bought and sold in local
currencies, not in U.S. dollars. Therefore, the market value of foreign
securities acquired by a Fund can be affected -- favorably or unfavorably -- by
changes in currency rates and exchange control regulations. Costs are incurred
in converting money from one currency to another. Foreign currency exchange
rates are determined by supply and demand on the foreign exchange markets.
Foreign exchange markets are affected by the international balance of payments
and other economic and financial conditions, government intervention,
speculation and other factors, all of which are outside the control of each
Fund. Generally, the Funds' foreign currency exchange transactions will be
conducted on a cash or "spot" basis at the spot rate for purchasing or selling
currency in the foreign currency exchange markets.

Forward Foreign Currency Exchange Contracts -- The Funds may enter into
contracts to purchase or sell foreign currencies in the future as a hedge
against possible changes in foreign exchange rates. A forward foreign currency
exchange contract is an agreement between the contracting parties to exchange an
amount of currency at some future time at an agreed upon rate. The rate can be
higher or lower than the cash or "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. A Fund can hedge against possible variations in the
value of the dollar versus another currency by entering into a forward contract
for the purchase or sale of all or part of the amount of foreign currency
invested in a foreign security. A hedge can be used between the date the foreign
security transaction is executed and the date on which payment is made or
received, or a hedge may be used during the time a Fund holds the foreign
security. Hedging against a change in the value of a currency does not eliminate
fluctuations in the prices of securities or prevent losses if the prices of the
securities decline. Furthermore, such hedging transactions preclude the
opportunity for gain if the value of the hedged currency should rise. There can
be no assurance that a Fund will be in a better or a worse position than if it
had not entered into any forward contracts. In addition, a Fund may find it
impossible at times to hedge certain currencies.
<PAGE>

The Funds will not speculate in forward foreign currency exchange
contracts. Although the Funds have no limit on their ability to use forward
foreign currency exchange contracts as a hedge against fluctuations in foreign
exchange rates (except to the extent that in certain situations hedging
instruments may not be available), the Funds do not attempt to hedge all of
their non-U.S. portfolio positions. The Funds will enter into forward foreign
currency exchange contracts only to the extent, if any, deemed appropriate by
the adviser and sub-adviser. Forward contracts may, from time to time, be
considered illiquid, in which case they would be subject to the Funds'
limitations on investing in illiquid securities. The Funds will not enter into
forward contracts for a term of more than one year.

Illiquid Securities -- Securities which do not trade on stock exchanges or in
the over the counter market, or have restrictions on when and how they may be
sold, are generally considered to be "illiquid." An illiquid security is one
that a Fund may have difficulty -- or may even be legally precluded from --
selling at any particular time. The Funds may invest in illiquid securities,
including restricted securities and other investments which are not readily
marketable. A Fund will not purchase any such security if the purchase would
cause the Fund to invest more than 15% of its total assets, measured at the time
of purchase, in illiquid securities. Repurchase agreements maturing in more than
seven days are considered illiquid for purposes of this restriction.

The principal risk of investing in illiquid securities is that a Fund may be
unable to dispose of them at the time desired or at a reasonable price. In
addition, in order to resell a restricted security, a Fund might have to bear
the expense and incur the delays associated with registering the securities with
the SEC, and otherwise obtaining listing on a securities exchange or in the over
the counter market.

A Fund also may invest in securities that can be resold to institutional
investors pursuant to Rule 144A under the Securities Act of 1933, as amended
(the "1933 Act"). In recent years, a large institutional market has developed
for many Rule 144A Securities. Institutional investors generally cannot sell
these securities to the general public but instead will often depend on an
efficient institutional market in which Rule 144A Securities can readily be
resold to other institutional investors, 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 does not
necessarily mean that a Rule 144A Security is illiquid. Institutional markets
for Rule 144A Securities may provide both reliable market values for Rule 144A
Securities and enable a Fund to sell a Rule 144A investment when appropriate.
For this reason, the Company's board of directors has concluded that if a
sufficient institutional trading market exists for a given Rule 144A security,
it may be considered "liquid," and not subject to a Fund's limitations on
investment in restricted securities. The Company's board of directors has given
INVESCO the day-to-day authority to determine the liquidity of Rule 144A
Securities, according to guidelines approved by the board. The principal risk of
investing in Rule 144A Securities is that there may be an insufficient number of
qualified institutional buyers interested in purchasing a Rule 144A Security
held by a Fund, and the Fund might be unable to dispose of such security
promptly or at reasonable prices.

Repurchase Agreements -- A Fund may enter into repurchase agreements, or REPOs,
on debt securities that the Fund is allowed to hold in its portfolio. This is a
way to invest money for short periods. A REPO is an agreement under which the
Fund acquires a debt security and then resells it to the seller at an agreed
upon price and date (normally, the next business day). The repurchase price
represents an interest rate effective for the short period the debt security is
held by the Fund, and is unrelated to the interest rate on the underlying debt
security. A repurchase agreement is often considered as a loan collateralized by
securities. The collateral securities acquired by the Fund (including accrued
interest earned thereon) must have a total value in excess of the value of the
repurchase agreement. The collateral securities are held by the Fund's custodian
bank until the repurchase agreement is completed.
<PAGE>

The Funds may enter into repurchase agreements with commercial banks, registered
broker-dealers or registered government securities dealers, that are
creditworthy under standards established by the Company's board of directors.
The Company's board of directors has established standards that the investment
adviser and sub-adviser must use to review the creditworthiness of any bank,
broker or dealer that is party to a REPO. REPOs maturing in more than seven days
are considered illiquid securities. A Fund will not enter into repurchase
agreements maturing in more than seven days if as a result more than 20% of the
Fund's total assets would be invested in these repurchase agreements and other
illiquid securities.

As noted above, the Funds use REPOs as a means of investing cash for short
periods of time. Although REPOs are considered to be highly liquid and
comparatively low-risk, the use of REPOs does involve some risks. For example,
if the other party to the agreement defaults on its obligation to repurchase the
underlying security at a time when the value of the security has declined, the
Fund may incur a loss on the sale of the collateral security. If the other party
to the agreement becomes insolvent and subject to liquidation or reorganization
under the Bankruptcy Code or other laws, a court may determine that the
underlying security is collateral for a loan by the Fund not within the control
of the Fund and therefore the realization by the Fund on such collateral may
automatically be stayed. Finally, it is possible that the Fund may not be able
to substantiate its interest in the underlying security and may be deemed an
unsecured creditor of the other party to the agreement.

Securities Lending -- Although they do not do so at this time, and have no
present intention of doing so, the Funds may lend their portfolio securities to
qualified brokers, dealers, banks, or other financial institutions. The
advantage of lending portfolio securities is that a Fund continues to have the
benefits (and risks) of ownership of the loaned securities, while at the same
time receiving interest from the borrower of the securities. The primary risk in
lending portfolio securities is that a borrower may fail to return a portfolio
security.

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 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.

<PAGE>

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.

U.S. Government Securities -- Each Fund may, from time to time, purchase debt
securities issued by the U.S. government. These securities include treasury
bills, treasury notes, and treasury bonds. 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 debt securities also include securities issued or guaranteed by
agencies or instrumentalities of the U.S. government. Some obligations of United
States government agencies, which are established under the authority of an act
of Congress, such as Government National Mortgage Association ("GNMA")
participation certificates, are supported by the full faith and credit of the
United States Treasury. GNMA Certificates are mortgage-backed securities
representing part ownership of a pool of mortgage loans. These loans -- issued
by lenders such as mortgage bankers, commercial banks and savings and loan
associations -- are either insured by the Federal Housing Administration or
guaranteed by the Veterans Administration. A "pool" or group of such mortgages
is assembled and, after being approved by GNMA, is offered to investors through
securities dealers. Once approved by GNMA, the timely payment of interest and
principal on each mortgage is guaranteed by GNMA and backed by the full faith
and credit of the U.S. government. The market value of GNMA Certificates is not
guaranteed. GNMA Certificates are different from bonds because principal is paid
back monthly by the borrower over the term of the loan rather than returned in a
lump sum at maturity, as is the case with a bond. GNMA Certificates are called
"pass-through" securities because both interest and principal payments
(including prepayments) are passed through to the holder of the GNMA
Certificate.

Other United States government debt securities, such as securities of the
Federal Home Loan Banks, are supported by the right of the issuer to borrow from
the Treasury. Others, such as bonds issued by Fannie Mae, a federally chartered
private corporation, are supported only by the credit of the corporation. In the
case of securities not backed by the full faith and credit of the United States,
the Fund must look principally to the agency issuing or guaranteeing the
obligation in the event the agency or instrumentality does not meet its
commitments. A Fund will invest in securities of such instrumentalities only
when its investment adviser and sub-advisers are satisfied that the credit risk
with respect to any such instrumentality is comparatively minimal.

INVESCO Emerging Markets Fund

Futures Contracts and Options on Futures Contracts

This Fund may enter into futures contracts, and purchase and sell ("write")
options to buy or sell futures contracts.

<PAGE>

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
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.

<PAGE>

In addition, if the Emerging Markets Fund has insufficient available cash, it
may at times have to sell securities to meet variation margin requirements. Such
sales may have to be effected at a time when it may be disadvantageous to do so.

Options on Futures Contracts. The Emerging Markets Fund may buy and write
options on futures contracts for hedging purposes. Options on futures contracts
are included among the types of instruments sometimes known as derivatives. The
purchase of a call option on a futures contract is similar in some respects to
the purchase of a call option on an individual security. Depending on the
pricing of the option compared to either the price of the futures contract upon
which it is based or the price of the underlying instrument, ownership of the
option may or may not be less risky than ownership of the futures contract or
the underlying instrument. As with the purchase of futures contracts, when the
Fund is not fully invested it may buy a call option on a futures contract to
hedge against a market advance.

The writing of a call option on a futures contract constitutes a partial hedge
against declining prices of the security or foreign currency which is
deliverable under, or of the index comprising, the futures contract. If the
futures price at the expiration of the option is below the exercise price, the
Emerging Markets Fund will retain the full amount of the option premium which
provides a partial hedge against any decline that may have occurred in the
Fund's portfolio holdings. The writing of a put option on a futures contract
constitutes a partial hedge against increasing prices of the security or foreign
currency which is deliverable under, or of the index comprising, the futures
contract. If the futures price at expiration of the option is higher than the
exercise price, the Fund will retain the full amount of the option premium which
provides a partial hedge against any increase in the price of securities which
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").

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.

<PAGE>

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.

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, 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.

<PAGE>

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 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 "Tax Consequences of Owning Shares of the Funds"

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.

<PAGE>

(2) There might be imperfect correlation between price movements of a
Financial Instrument and price movements of the investments being 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 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.

<PAGE>

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
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.

<PAGE>

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.

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.

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.
<PAGE>

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
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.
<PAGE>

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.

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 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.
<PAGE>

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.

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.
<PAGE>

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
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.
<PAGE>

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 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; (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," each Fund operates 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.

<PAGE>

Investments Risks and Strategies (Emerging Markets Fund)

The Fund operates 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.

The following restrictions are fundamental and may not be changed with respect
to the Funds without prior approval of a majority of the outstanding voting
securities of the Fund, as defined in the Investment Company Act of 1940, as
amended (the "1940 Act"). The aforementioned 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 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, not withstanding 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.

<PAGE>

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
including 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 contract 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.

(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.

Investments Risks and Strategies (European and Pacific Basin Funds)

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 a Fund.
<PAGE>

The following restrictions are fundamental and may not be changed with respect
to the Funds without prior approval of a majority of the outstanding voting
securities of a Fund, as defined in the 1940 Act. The aforementioned 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, or commodity contracts, oil, gas or other
mineral interests or exploration programs (however, the Fund may purchase
securities of companies which invest in the foregoing and may enter into forward
contracts for the purchase or sale of foreign currencies).

(4) purchase the securities of any company if as a result of such purchase
more than 10% of total assets would be invested in securities which are subject
to legal or contractual restrictions on resale ("restricted securities") and in
securities for which there are no readily available market quotations; or enter
into a repurchase agreement maturing in more than seven days, if as a result,
such repurchase agreements, together with restricted securities and securities
for which there are no 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 European Fund's and the
Pacific Basin 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
Fund 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 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;
<PAGE>

(11) purchase securities of any company in which any officer or director of
the Company or its investment adviser owns more than 1/2 of 1% of the
outstanding securities of such company and in which the officers and directors
of the Company and its investment adviser, as a group, own more than 5% of such
securities;

(12) purchase securities (except obligations issued or guaranteed by the
U.S. government, its agencies or instrumentalities) if the purchase would cause
a Fund at the time to have more than 5% of the value of its total assets
invested in the securities of any one issuer or to own more than 10% of the
outstanding voting securities of any one issuer;

(13) invest more than 5% of its total assets in an issuer having a record,
together with predecessors, of less than three years' continuous operation.

In addition to the above restrictions, a fundamental policy of the European
Fund and the Pacific Basin 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 European and Pacific Basin 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.

Investments Risks and Strategies (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 the holders of a majority of the outstanding voting securities of the Fund,
as defined in the 1940 Act. The International Blue Chip Fund, and the Company on
behalf of such Fund, unless otherwise indicated, may not:

(1) purchase the securities of any one issuer (other than securites issued
or guaranteed by the U.S. Government or any of its agencies or instrumentalities
or municipal securities), 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 municipal securities, 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 to the extent that it
may be deemed an underwriter in connection with the disposition of portfolio
securities of the Fund;

(4) borrow money in an amount exceeding 331/3% of its total assets
(including the amount borrowed) less liabilities (other than borrowings);

(5) issue senior securities, except as permitted under the 1940 Act;

(6) lend any security or make any other loan if, as a result, more than
331/3% 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);

(7) purchase or sell physical commodities; however, this policy shall not
prevent the Fund from purchasing and selling foreign currency, futures
contracts, options, swaps, forward contracts, caps, floors, collars and other
financial instruments;
<PAGE>

(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, swaps, forward contracts, 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, swaps, forward
contracts, 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 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 becasuse they are subject to legal or contractual
restrictions on resale or because thay cannot be sold or disposed of in the
ordinary course of business at approximately the prices at which they are
valued.

Investments Risks and Strategies (International Growth Fund)

The following restrictions are fundamental and may not be changed with respect
to the Funds without prior approval of a majority of the outstanding voting
securities of the Fund, as defined in the 1940 Act. The aforementioned 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;

<PAGE>

(2) invest in the securities of any one issuer, other than the U.S.
government, if immediately after such investment more than 5% of the value of
the Fund's total assets, taken at market value, would be invested in such issuer
or more than 10% of such issuer's outstanding voting securities would be owned
by the Fund;

(3) underwrite securities of other issuers, except insofar as it may
technically be deemed an "underwriter" under the 1933 Act, as amended, in
connection with the disposition of the Fund's portfolio securities;

(4) invest in companies for the purpose of exercising control or
management;

(5) issue any class of senior securities or borrow money, except borrowings
from banks for temporary or emergency purposes not in excess of 5% of the value
of the Fund's total assets at the time the borrowing is made;

(6) mortgage, pledge, hypothecate or in any manner transfer as security for
indebtedness any securities owned or held except to an extent not greater than
5% of the value of the Fund's total assets;

(7) sell short or buy on margin, except 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;

(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.

<PAGE>

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.

With respect to investment restriction (4) applicable to the Pacific Basin
and European Funds, restriction (12) applicable to the International Growth
Fund, restriction (f) applicable to the Emerging Markets Fund and restriction
(c) applicable to the INVESCO International Blue Chip Fund, the board of
directors has delegated to Fund Management the authority to determine that a
liquid market exists for securities eligible for resale pursuant to Rule 144A
under the Securities Act of 1933, or any successor to such rule, and that such
securities are not subject to the Funds' limitations on investing in illiquid
securities, securities that are not readily marketable or securities which do
not have readily available market quotations. Under guidelines established by
the board of directors, Fund Management will consider the following factors,
among others, in making this determination: (1) the unregistered nature of a
Rule 144A security; (2) the frequency of trades and quotes for the security; (3)
the number of dealers willing to purchase or sell the security and the number of
other potential purchasers; (4) dealer undertakings to make a market in the
security; and (5) the nature of the security and the nature of marketplace
trades (e.g., the time needed to dispose of the security, the method of
soliciting offers and the mechanics of transfer). However, Rule 144A Securities
are still subject to the Funds' respective limitations on investments in
restricted securities (securities for which there are legal or contractual
restrictions on resale), unless they are readily marketable outside the United
States, in which case they are not deemed to be restricted.

In applying the industry concentration investment restrictions applicable
to the Funds, the Company uses an industry classification system for
international securities based on information obtained from Bloomberg L.P.,
Moody's International and a modified S&P industry code classification schema
which uses various sources to classify securities.

Management of the Funds

The Investment Adviser

INVESCO Funds Group, Inc., a Delaware corporation ("INVESCO"), is the
Company's investment adviser. INVESCO was founded in 1932 and serves as an
investment adviser to:

INVESCO Bond Funds, Inc. (formerly, INVESCO Income Funds, Inc.)
INVESCO Combination Stock & Bond Funds, Inc. (formerly, INVESCO
Flexible Funds, Inc.)
INVESCO Diversified Funds, Inc.
INVESCO Emerging Opportunity Funds, Inc.
INVESCO Growth Funds, Inc. (formerly, INVESCO Growth Fund, Inc.)
INVESCO Industrial Income Fund, Inc.
INVESCO International Funds, Inc.
INVESCO Money Market Funds, Inc.
INVESCO Sector Funds, Inc.(formerly, INVESCO Strategic Portfolios,
Inc.)
INVESCO Specialty Funds, Inc.
INVESCO Stock Funds, Inc. (formerly, INVESCO Equity Funds, Inc.)
INVESCO Tax-Free Income Funds, Inc.
INVESCO Value Trust
INVESCO Variable Investment Funds, Inc.

As of October 31, 1998, INVESCO managed 14 mutual funds having combined
assets of $18.9 billion, consisting of 51 separate portfolios, on behalf of more
than 904,160 shareholders.

<PAGE>

INVESCO is an indirect wholly owned subsidiary of AMVESCAP PLC, a publicly
traded holding company. Through its subsidiaries, AMVESCAP PLC engages in the
business of investment management on an international basis. AMVESCAP PLC is one
of the largest independent investment management businesses in the world, with
approximately $ billion in assets under management on .

AMVESCAP PLC's North American subsidiaries include:

INVESCO Retirement and Benefit Services, Inc. ("IRBS"), Atlanta,
Georgia, develops and provides domestic and international defined
contribution retirement plan services to plan sponsors, institutional
retirement plan sponsors, institutional plan providers and foreign
governments.

INVESCO Retirement Plan Services ("IRPS"), Atlanta, Georgia, a division
of IRBS, provides recordkeeping and investment selection services to
defined contribution plan sponsors of plans with between $2 million and
$200 million in assets. Additionally, IRPS provides investment consulting
services to institutions seeking to provide retirement plan products and
services.

Institutional Trust Company, doing business as INVESCO Trust Company
("ITC"), Denver, Colorado, a division of IRBS, provides retirement account
custodian and/or trust services for individual retirement accounts
("IRAs") and other retirement plan accounts. This includes services such
as recordkeeping, tax reporting and compliance. ITC acts as trustee or
custodian to these plans. ITC accepts contributions and provides, through
INVESCO, complete transfer agency functions: correspondence,
sub-accounting, telephone communications and processing of distributions.

INVESCO Capital Management, Inc., 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 one registered
investment company.

INVESCO Management & Research, Inc., Boston, Massachusetts, primarily
manages pension and endowment accounts.

PRIMCO Capital Management, Inc., Louisville, Kentucky, specializes in
managing stable return investments, principally on behalf of Section
401(k) retirement plans.

INVESCO Realty Advisors, Inc., Dallas, Texas, is responsible for
providing advisory services in the U.S. real estate markets for AMVESCAP
PLC's clients worldwide. Clients include corporate pension plans and
public pension funds as well as endowment and foundation accounts.

INVESCO (NY), Inc., New York, is an investment adviser for separately
managed accounts, such as corporate and municipal pension plans,
Taft-Hartley Plans, insurance companies, charitable institutions and
private individuals. INVESCO NY also offers the opportunity for its
clients to invest both directly and indirectly through partnerships in
primarily private investments or privately negotiated transactions.
INVESCO NY further serves as investment adviser to several closed-end
investment companies, and as sub-adviser with respect to certain
commingled employee benefit trusts. INVESCO NY specializes in the
fundamental research investment approach, with the help of quantitative
tools.

A I M Advisors, Inc., Houston, Texas, provides investment
advisory and administrative services for retail and institutional mutual
funds.
<PAGE>

A I M Capital Management, Inc., Houston, Texas provides investment
advisory services to individuals, corporations, pension plans and other
private investment advisory accounts and also serves as a sub-adviser to
certain retail and institutional mutual funds, one Canadian mutual fund
and one portfolio of an open-end registered investment company that is
offered to separate accounts of variable insurance companies.

A I M Distributors, Inc. and Fund Management Company, Houston, Texas
are registered broker-dealers that act as the principal underwriters for
retail and institutional mutual funds.

The corporate headquarters of AMVESCAP PLC are located at 11 Devonshire Square,
London, EC2M4YR, England.

The Investment Advisory Agreement

INVESCO serves as investment adviser to the Funds under an investment advisory
agreement dated February 28, 1997 (the "Agreement") with the Company which was
last approved by the board of directors for a term expiring May 15, 1999.. The
board vote was cast in person, at a meeting called for this purpose, by a
majority of the directors of the Company, including a majority of the directors
who are not "interested persons" of the Company or INVESCO ("Independent
Directors"). Shareholders of each Fund approved the Agreement on January 31,
1997.

After that date, the Agreement may be continued from year to year if 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 continuance also must be
approved by a majority of the Company's Independent Directors, 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 requires that INVESCO manage the investment portfolio of each Fund
in a way that conforms with the Fund's investment policies. INVESCO may directly
manage a Fund itself, or may hire a sub-adviser, which may be an affiliate of
INVESCO, to do so.
Specifically, INVESCO is responsible for:

o managing the investment and reinvestment of all the assets of the Funds,
and executing all purchases and sales of portfolio
securities;

o maintaining a continuous investment program for the Funds, consistent
with (i) each Fund's investment policies as set forth in the Company's
Bylaws, and Registration Statement, as from time to time amended, under
the 1940 Act, and in any prospectus and/or statement of additional
information of the Funds, 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;

o determining what securities are to be purchased or sold for the Funds,
unless otherwise directed by the directors of the Company, and executing
transactions accordingly;

<PAGE>

*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 a long-range investment policy now or hereafter
generally available to the investment advisory customers of the Adviser
or any Sub-Adviser;

*determining what portion of each Fund's assets should be invested in the
various types of securities authorized for purchase by the Fund; and

*making recommendations as to the manner in which voting rights, rights to
consent to Fund action and any other rights pertaining to a Fund's
portfolio securities shall be exercised.

INVESCO also performs all of the following services for the Funds:

*administrative

*internal accounting (including computation of net asset value)

*clerical and statistical

*secretarial

*all other services necessary or incidental to the administration of the
affairs of the Funds

*supplying the Company with officers, clerical staff and other employees

*furnishing office space, facilities, equipment, and supplies; providing
personnel and facilities required to respond to inquiries related to
shareholder accounts

*conducting periodic compliance reviews of the Funds' operations;
preparation and review of required documents, reports and filings by
INVESCO's in-house legal and accounting staff or in conjunction with
independent attorneys and accountants (including the prospectus,
statement of additional information, proxy statements, shareholder
reports, tax returns, reports to the SEC, and other corporate
documents of the Funds)

*supplying basic telephone service and other utilities

*preparing and maintaining certain of the books and records required to
be prepared and maintained by the Funds under the 1940 Act.

Expenses not assumed by INVESCO are borne by the Funds. As full compensation for
its advisory services to the Company, INVESCO receives a monthly fee from each
Fund. The fee is calculated at the annual rate of:

Emerging Markets Fund

o 1.00% on the first $500 million of the Fund's average net assets;

o 0.85% on the next $500 million of the Fund's average net assets; and

o 0.75% on the Fund's average net assets in excess of $1 billion.

European and Pacific Basin Funds

o 0.75% on the first $350 million of each Fund's average net assets;

o 0.65% on the next $350 million of each Fund's average net assets; and

o 0.55% on each Fund's average net assets in excess of $700 million.

<PAGE>

International Blue Chip Fund

*0.75% on the Fund's average net assets;

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.

During the fiscal years ended October 31, 1998, 1997 and 1996, the Funds paid
INVESCO advisory fees in the dollar amounts shown below. If applicable, the
advisory fees were offset by credits in the amounts shown below, so that
INVESCO's fees are not in excess of the expense limitations shown below, which
have been agreed to by the Company and INVESCO.

<TABLE>
<CAPTION>
Advisory Total Expense Total Expense
Fee Dollars Reimbursements Limitations
<S> <C> <C> <C>
Emerging Markets
1998 $6,025 $0 2.00%
1997 N/A N/A N/A
1996 N/A N/A N/A

European
1998 $3,802,357 $0 2.00%
1997 $2,679,462 $0 2.00%
1996 $1,793,380 $0 N/A

International Blue Chip
1998 $176 $0 2.00%
1997 N/A N/A N/A
1996 N/A N/A N/A

International Growth
1998 $512,097 $0 2.00%
1997 $987,897 $0 2.00%
1996 $893,966 $0 N/A

Pacific Basin
1998 $368,580 $0 2.00%
1997 $939,420 $0 2.00%
1996 $1,396,490 $0 N/A
</TABLE>

The Sub-Advisory Agreement

With respect to the European, Pacific Basin and International Growth Funds,
INVESCO Asset Management Limited ("IAML") serves as sub-adviser to the Funds
pursuant to a sub-advisory agreement dated February 28, 1997 (the
"Sub-Agreement") with INVESCO which was approved on November 6, 1996, by a vote
cast in person by a majority of the directors of the Company, including a
majority of the directors who are not "interested persons" of the Company,
INVESCO or IAML, at a meeting called for such purpose. The Sub-Agreement was
approved on January 31, 1997, by the shareholders of each of the Funds for an
initial term expiring February 28, 1999. On May 13, 1998, this period was
extended by the Company's board of directors through May 15, 1999.

<PAGE>

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 INVESCO 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,
INVESCO or IAML, at a meeting called for such purpose. The Emerging Markets
Sub-Agreement was approved on January 30, 1998 by INVESCO as sole shareholder of
the Fund for an initial term expiring on January 30, 2000.

With respect to the International Blue Chip Fund, INVESCO Global Asset
management (N.A.)("IGAM") serves as the sub-adviser to the Fund pursuant to a
sub-advisory agreement dated September 23, 1998 (the "International Blue Chip
Sub-Agreement") with INVESCO 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, INVESCO or IGAM,
at a meeting called for such purpose. The International Blue Chip Sub-Agreement
was approved by INVESCO as sole shareholder of the Fund on September 28, 1998,
for an initial term expiring on September 28, 2000.

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. Each 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 INVESCO, shall manage the investment portfolios of the respective
Funds in conformity with each such Fund's investment policies. These management
services include: (a) managing the investment and reinvestment of all the
assets, now or hereafter acquired, of each Fund, and executing all purchases and
sales of portfolio securities; (b) maintaining a continuous investment program
for the Funds, consistent with (i) each Fund's investment policies as set forth
in the Company's Articles of Incorporation, Bylaws and Registration Statement,
as from time to time amended, under the 1940 Act, as amended, and in any
prospectus and/or statement of additional information of the Company, as from
time to time amended and in use under the 1933 Act and (ii) the Company's status
as a regulated investment company under the Internal Revenue Code of 1986, as
amended; (c) determining what securities are to be purchased or sold for each
Fund, unless otherwise directed by the directors of the Company or INVESCO, and
executing transactions accordingly; (d) providing the Funds the benefit of all
of the investment analysis and research, the reviews of current economic
conditions and trends, and the consideration of long-range investment policy now
or hereafter generally available to investment advisory customers of 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 their services, IGAM and
IAML shall receive from INVESCO, at the end of each month, a fee based upon the
average daily value of the applicable Fund's net assets. With respect to the
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
and effective January 1, 1998, 0.30% on the first $350 million; 0.26% on the

<PAGE>

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

INVESCO, either directly or through affiliated companies, provides certain
administrative, sub-accounting, and recordkeeping services to the Funds pursuant
to an Administrative Services Agreement dated February 28, 1997. The
Administrative Services Agreement was approved on November 6, 1996, at a meeting
called for that purpose, by a vote cast in person by all of the directors of the
Company, including all of the directors who are not "interested persons" of the
Company or INVESCO.

The Administrative Services Agreement was for an initial term expiring in
one year and has been extended by action of the board of directors through May
15, 1999. The Administrative Services 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 Company's Independent
Directors. The Administrative Services Agreement may be terminated at any time
without penalty by INVESCO on sixty (60) days' written notice, or by the Funds
upon thirty (30) days' written notice, and ends automatically in the event of an
assignment unless the Company's board of directors, including a majority of the
Company's Independent Directors, approves such assignment.

The Administrative Services Agreement requires INVESCO to provide the following
services to the Funds:

*such sub-accounting and recordkeeping services and functions as are
reasonably necessary for the operation of the Funds; and

*such sub-accounting, recordkeeping, and administrative services and
functions, which may be provided by affiliates of INVESCO, as are
reasonably necessary for the operation of Fund shareholder accounts
maintained by certain retirement plans and employee benefit plans for the
benefit of participants in such plans.

Transfer Agency Agreement

INVESCO also performs transfer agent, dividend disbursing agent, and
registrar services for the Funds pursuant to a Transfer Agency Agreement dated
February 28, 1997, which was approved by the board of directors of the Company
on November 6, 1996 for an initial term expiring and has been extended by action
of the board of directors through May 15, 1999. The Transfer Agency Agreement
may be continued from year to year as long as such continuance is specifically
approved at least annually by the board of directors of the Company, including a
majority of the Company's Independent Directors, or by a vote of the holders of
a majority of the outstanding shares of the Funds. 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.

<PAGE>

The Transfer Agency Agreement provides that the Funds pay INVESCO an annual
fee of $20.00 per shareholder account, or, where applicable, per participant in
an omnibus account. This fee is paid monthly at 1/12 of the annual fee and is
based upon the actual number of shareholder accounts and omnibus account
participants in a Fund at any time during each month.

Fees Paid To INVESCO

For the fiscal years ended , 1997 and 1996, the Funds paid the following fees to
INVESCO (prior to the voluntary absorption of certain Fund expenses by INVESCO):

Emerging Markets Fund

Type of Fee 1998 1997 1996
- --------------------------------------------------------------------------------
Advisory $6,025 N/A N/A
Administrative Services $7,282 N/A N/A
Transfer Agency $3,114 N/A N/A

European Fund

Type of Fee 1998 1997 1996
- --------------------------------------------------------------------------------
Advisory $3,802,357 $2,679,462 $1,793,380
Administrative Services $89,993 $63,965 $45,868
Transfer Agency $1,100,420 $985,603 $839,761

International Blue Chip Fund

Type of Fee 1998 1997 1996
- --------------------------------------------------------------------------------
Advisory $176 N/A N/A
Administrative Services $84 N/A N/A
Transfer Agency $0 N/A N/A

International Growth Fund

Type of Fee 1998 1997 1996
- --------------------------------------------------------------------------------
Advisory $512,097 $987,897 $893,966
Administrative Services $17,681 $24,818 $23,409
Transfer Agency $351,924 $377,527 $383,054

Pacific Basin Fund

Type of Fee 1998 1997 1996
- --------------------------------------------------------------------------------
Advisory $368,580 $939,420 $1,396,490
Administrative Services $17,399 $28,788 $37,930
Transfer Agency $499,564 $677,811 $870,770

Directors and Officers of the Company

The overall direction and supervision of the Company come from the board of
directors. The board of directors is responsible for making sure that the Funds'
general investment policies and programs are carried out and that the Funds are
properly administered.

The board of directors has an audit committee comprised of four of the directors
who are not affiliated with INVESCO (the "Independent Directors"). The committee
meets periodically with the Company's independent accountants and officers to
review accounting principles used by the Company, the adequacy of internal
controls, the responsibilities and fees of the independent accountants, and
other matters.

<PAGE>

The Company has a management liaison committee which meets quarterly with
various management personnel of INVESCO in order to facilitate better
understanding of management and operations of the Company, and 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.

The Company has a soft dollar brokerage committee. The committee meets
periodically to review soft dollar brokerage transactions by the Funds, and to
review policies and procedures of the Funds' adviser with respect to soft dollar
brokerage transactions. It reports on these matters to the Company's board of
directors.

The Company has a derivatives committee. The committee meets periodically to
review derivatives investments made by the Funds. It monitors derivatives usage
by the Funds and the procedures utilized by the Funds' adviser to ensure that
the use of such instruments follows the policies on such instruments adopted by
the Company's board of directors. It reports on these matters to the Company's
board of directors.

The officers of the Company, all of whom are officers and employees of INVESCO,
are responsible for the day-to-day administration of the Company and the Funds.
The officers of the Company receive no direct compensation from the Company for
their services as officers. The investment adviser for the Funds has the primary
responsibility for making investment decisions on behalf of the Funds. These
investment decisions are reviewed by the investment committee of INVESCO.

All of the officers and directors of the Company hold comparable positions with
the following funds, which, with the Company, are collectively referred to as
the INVESCO funds:

INVESCO Bond Funds, Inc. (formerly, INVESCO Income Funds, Inc.)
INVESCO Combination Stock and Bond Funds, Inc. (formerly, INVESCO
Flexible Funds, Inc.)
INVESCO Diversified Funds, Inc.
INVESCO Emerging Opportunity Funds, Inc.
INVESCO Growth Funds, Inc. (formerly, INVESCO Growth Fund, Inc.)
INVESCO Industrial Income Fund, Inc.
INVESCO International Funds, Inc.
INVESCO Money Market Funds, Inc.
INVESCO Sector Funds, Inc. (formerly, INVESCO Strategic Portfolios,
Inc.)
INVESCO Specialty Funds, Inc.
INVESCO Stock Funds, Inc. (formerly, INVESCO Equity Funds, Inc.)
INVESCO Tax-Free Income Funds, Inc.
INVESCO Treasurer's Series Trust
INVESCO Value Trust
INVESCO Variable Investment Funds, Inc.

The table below provides information about each of the Company's directors and
officers. Unless otherwise indicated, the address of the directors and officers
is P.O. Box 173706, Denver, CO 80217-3706. Their affiliations represent their
principal occupations.

<PAGE>

Name, Address, and Age Position(s) Held Principal Occupation(s)
With Fund During Past Five Years

Charles W. Brady *+** Director and Chairman Chairman of the Board of
1315 Peachtree St., N.E. of the Board INVESCO Global Health
Atlanta, Georgia Sciences Fund; Chief
Age: 62 Executive Officer and
Director of AMVESCAP
PLC, London, England
and various subsidiaries
of AMVESCAP PLC.

Fred A. Deering +# Director and Vice Trustee of INVESCO Global
Security Life Center Chairman of the Board Health Sciences Fund;
1290 Broadway formerly, Chairman of the
Denver, Colorado Executive Committee and
Age: 70 Chairman of the Board of
Security Life of Denver
Insurance Company;
Director of ING America
Life Insurance Co.

Mark H. Williamson*+ President, Chief Exec- President and Chief Exec-
7800 E. Union Avenue Officer and Director utive Officer and Director
Denver, Colorado of INVESCO Distributors,
Age: 47 Inc.; President, Chief
Executive Officer and
Director of INVESCO
Funds Group, Inc.; Presi-
dent, Chief Operating
Officer and Trustee of
INVESCO Global Health
Sciences Fund; formerly,
Chairman and Chief Execu-
tive Officer of Nations-
Banc Advisors, Inc.

<PAGE>

Name, Address and Age Position(s) Held Principal Occupation(s)
With Fund During Past Five Years

Victor L. Andrews, Ph.D. Director Professor Emeritus, Chair-
**! man Emeritus and Chair-
34 Seawatch Drive man of the CFO
Savannah, Georgia Roundtable of the Depart-
Age: 67 ment of Finance of Georgia
State University;
President, Andrews Finan-
cial Associates, Inc.
(consulting firm); for-
merly, member of the
faculties of the Harvard
Business School and the
Sloan School of Management
of MIT; Director of The
Southeastern Thrift and
Bank Fund, Inc. and The
Sheffield Funds, Inc.

Bob R. Baker +** Director President and Chief
AMC Cancer Research Executive Officer of AMC
Center Cancer Research Center,
1600 Pierce Street Denver, Colorado, since
Denver, Colorado January 1989; until mid-
Age: 61 December 1988, Vice
Chairman of the Board of
First Columbia Financial
Corporation, Englewood,
Colorado; formerly,
Chairman of the Board
and Chief Executive
Officer of First Columbia
Financial Corporation.

Lawrence H. Budner #@ Director Trust Consultant; prior to
7608 Glen Albens Circle June 30, 1987, Senior
Dallas, Texas Vice President and Senior
Age: 67 Trust Officer of Inter-
First Bank, Dallas, Texas.
<PAGE>

Name, Address, and Age Position(s) Held Principal Occupation(s)
With Fund During Past Five Years

Wendy L. Gramm, Ph.D.**! Director Self-employed (since
4201 Yuma Street, N.W. 1993); Professor of Eco-
Washington, D.C. nomics and Public Admin-
Age: 54 istration, University of
Texas at Arlington.
Formerly, Chairman, Com-
modity Futures Trading
Commission, Administrator
for Information and
Regulatory Affairs at the
Office of Management and
Budget, Executive Director
of the Presidential Task
Force on Regulatory
Relief, and Director
of the Federal Trade
Commission's Bureau of
Economics. Also,
Director of Chicago
Mercantile Exchange,
Enron Corporation, IBP,
Inc., State Farm
Insurance Company,
Independent Women's Forum,
International Republic
Institute, and the
Republican Women's Forum.
Also, Member of Board of
Visitors, College of
Business Administration,
University of Iowa, and
Member of Board of
Visitors, Center for
Study of Public Choice,
George Mason University.

<PAGE>

Name, Address and Age Position(s) Held Principal Occupation(s)
With Fund During Past Five Years

Kenneth T. King +#@ Director Formerly, Chairman of the
4080 North Circulo Board of The Capitol Life
Manzanillo Insurance Company,
Tucson, Arizona Providence Washington
Age: 72 Insurance Company and
Director of numerous U.S.
subsidiaries thereof;
formerly, Chairman of the
Board of The Providence
Capitol Companies in the
United Kingdom and
Guernsey; Chairman of
the Board of the Symbion
Corporation until 1987.

John W. McIntyre +#@ Director Retired; formerly, Vice
7 Piedmont Center Chairman of the Board of
Suite 100 Directors of The Citizens
Atlanta, Georgia and Southern Corporation
Age: 69 and Chairman of the
Board and Chief Executive
Officer of The Citizens
and Southern Georgia Corp.
and Citizens and Southern
National Bank; Trustee of
INVESCO Global Health
Sciences Fund and Gables
Residential Trust;
Director of Golden
Poultry Co., Inc.

<PAGE>

Name, Address, and Age Position(s) Held Principal Occupation(s)
With Fund During Past Five Years

Larry Soll, Ph.D.!** Director Retired. Formerly,
345 Poorman Road Chairman of the Board
Boulder, Colorado (1987 to 1994), Chief
Age: 55 Executive Officer (1982
to 1989 and 1993 to 1994)
and President (1982 to
1989) of Synergen Corp.,
Director of Synergen
since incorporation in
1982; Director of ISD
Pharmaceuticals, Inc.;
Trustee of INVESCO Global
Health Sciences Fund.

Glen A. Payne Secretary Senior Vice President,
7800 E. Union Avenue General Counsel and
Denver, Colorado Secretary of INVESCO
Age: 50 Funds Group, Inc., Senior
Vice President, Secretary
and General Counsel of
INVESCO Distriutors, Inc.,
Secretary of INVESCO
Global Health Sciences
Fund. Formerly, General
Counsel of INVESCO Trust
Trust Companyu (1989 to
1998). Formerly,
employee of a U.S.
regulatory agency,
Washington, D.C. (June
1973 through May 1989).
<PAGE>

Name, Address and Age Position(s) Held Principal Occupation(s)
With Fund During Past Five Years

Ronald L. Grooms Treasurer Senior Vice President and
Treasurer of INVESCO
Funds Group, Inc., Senior
Vice President and
Treasurer of INVESCO
Distributors, Inc.,
Treasurer and Principal
Financial and Accounting
Officer of INVESCO Global
Health Sciences Fund, and
Senior Vice President and
Treasurer of INVESCO
Trust Company (1988 to
1998).

William J. Galvin, Jr. Assistant Secretary Senor Vice President of
7800 E. Union Avenue INVESCO Funds Group, Inc.,
Denver, Colorado Senior Vice President of
Age: 41 INVESCO Distributors,
Inc.; formerly, Trust
Officer of INVESCO Trust
Company (1995 to 1998);
formerly, Vice President
of INVESCO Funds Group,
Inc.; formerly, Vice
President of 440 Financial
Group; Assistant Vice
President of Putnam
Companies.

Alan I. Watson Assistant Secretary Vice President of
7800 E. Union Avenue INVESCO Funds Group, Inc.;
Denver, Colorado formerly, Trust Officer
Age: 56 of INVESCO Trust Company.

Judy P. Wiese Assistant Treasurer Vice President of
7800 E. Union Avenue INVESCO Funds Group, Inc.;
Denver, Colorado formerly, Trust Officer
Age: 49 of INVESCO Trust Company

</TABLE>
<PAGE>

# Member of the audit committee of the Company.

+ Member of the executive committee of the Company. On occasion, the
executive committee acts upon the current and ordinary business of the Company
between meetings of the board of directors. Except for certain powers which,
under applicable law, may only be exercised by the full board of directors, the
executive committee may exercise all powers and authority of the board of
directors in the management of the business of the Company. All decisions are
subsequently submitted for ratification by the board of directors.

* These directors are "interested persons" of the Company as defined in the
1940 Act.

** Member of the management liaison committee of the Company.

@ Member of the soft dollar committee of the Company.

! Member of the derivatives committee of the Company.

The following table shows the compensation paid by the Company to its
independent directors for services rendered in their capacities as directors of
the Company; the benefits accrued as Company expenses with respect to the
Defined Benefit Deferred Compensation Plan discussed below; and the estimated
annual benefits to be received by these directors upon retirement as a result of
their service to the Company, all for the fiscal year ended.

In addition, the table sets forth the total compensation paid by all of the
mutual funds distributed by INVESCO Funds Group, Inc. (including the Company),
INVESCO 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 . As of
October 31, 1998, there were 16 funds in the INVESCO Complex.

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------------------
Aggregate Name of Benefits Accrued As Part of Total Estimated Compensation From
Person, Position Compensation Company Annual Benefits INVESCO Complex Paid
From Company(1) Expenses(2) Upon Retirement(3) To Directors(6)
- ------------------------ ---------------------- ---------------------- ---------------------- ----------------------
Fred A. Deering $ 4,395 $ 1,355 $ 870 $113,350
Vice Chairman of the
Board
- ------------------------ ---------------------- ---------------------- ---------------------- ----------------------
Victor L. Andrews 4,306 1,281 1,007 92,700
- ------------------------ ---------------------- ---------------------- ---------------------- ----------------------
Bob R. Baker 4,421 1,143 1,349 96,050
- ------------------------ ---------------------- ---------------------- ---------------------- ----------------------
Lawrence H. Budner 4,240 1,281 1,007 91,000
- ------------------------ ---------------------- ---------------------- ---------------------- ----------------------
Daniel D. Chabris 4,330 1,384 751 89,350
- ------------------------ ---------------------- ---------------------- ---------------------- ----------------------
Wendy Gramm 4,163 0 0 39,000
- ------------------------ ---------------------- ---------------------- ---------------------- ----------------------
Kenneth T. King 4,151 1,407 789 94,350
- ------------------------ ---------------------- ---------------------- ---------------------- ----------------------
John W. McIntyre 4,198 0 0 78,000
- ------------------------ ---------------------- ---------------------- ---------------------- ----------------------
Larry Soll 4,198 0 0 78,000
- ------------------------ ---------------------- ---------------------- ---------------------- ----------------------
Total 38,402 7,851 5,773 797,800
- ------------------------ ---------------------- ---------------------- ---------------------- ----------------------
% of Net Assets 0.0050%(5) 0.0010%(5) 0.0046%(5)
- ------------------------ ---------------------- ---------------------- ---------------------- ----------------------
</TABLE>
<PAGE>

(1) The vice chairman of the board, the chairmen of the audit, management
liaison, soft dollar brokerage, derivatives, 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 estimated benefits accrued with respect to the Defined Benefit
Deferred Compensation Plan discussed below, and not compensation deferred at the
election of the directors.

(3) These amounts represent the Company's share of the estimated annual benefits
payable by the INVESCO funds upon the directors' retirement, calculated using
the current method of allocating director compensation among the INVESCO funds.
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 funds, 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 Drs. Soll and Gramm, each of
these directors has served as a director/trustee of one or more of the funds in
the INVESCO funds for the minimum five-year period required to be eligible to
participate in the Defined Benefit Deferred Compensation Plan.

(4) Mr. Chabris retired as a director of the Company on September 30, 1998.

(5) Totals as a percentage of the Company's net assets as of October 31, 1998.

(6) Total as a percentage of the net assets of the INVESCO Complex as of
December 31, 1997.

Messrs. Brady and Williamson, as "interested persons" of the Company, and the
other Funds and investment companies in the INVESCO funds, receive compensation
as officers or employees of INVESCO or its affiliated companies, and do not
receive any director's fees or other compensation from the Company or the other
funds in the INVESCO funds for their service as directors.

The boards of directors/trustees of the mutual funds in the INVESCO funds 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 or 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 to the qualified director at
the time of his retirement. 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
annual basic retainer and annualized board meeting fees payable by the funds to
the qualified director at the time of his/her retirement. These payments will
continue for the remainder of the qualified director's life or ten years,
whichever is longer. 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 retirement payments will be made to him/her or to
his/her beneficiary or estate. If a qualified director becomes disabled or dies
either prior to age 72 or during his/her 74th year while still a director of the
funds, the director will not be entitled to receive the first year retirement
benefit; however, the reduced retainer payments will be made to his beneficiary
or estate. The plan is administered by a committee of three directors who are
also participants in the plan and one director who is not a plan participant.
The cost of the plan will be allocated among the INVESCO funds in a manner
determined to be fair and equitable by the committee. The Company began making
payments under the plan to Mr. Chabris as of October 1, 1998. 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.
<PAGE>

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 selected INVESCO
Funds. The deferred amounts are being invested in the shares of all of the
INVESCO and INVESCO Treasurer's Series Trust Funds. Each independent director
is, therefore, an indirect owner of shares of each INVESCO AND INVESCO
Treasurer's Series Trust Fund.

Control Persons and Principal Shareholder

As of November 30, 1998, the following persons owned more than 5% of the
outstanding shares of the Funds indicated below. This level of share ownership
is considered to be a "principal shareholder" relationship with a Fund under the
1940 Act. Shares that are owned "of record" are held in the name of the person
indicated. Shares that are owned "beneficially" are held in another name, but
the owner has the full economic benefit of ownership of those shares:

Emerging Markets Fund
<TABLE>
<CAPTION>
<S> <C> <C>
- --------------------------------------------- -------------------------------- --------------------------------
Basis of Ownership
Name and Address (Record/Beneficial) Percentage Owned
============================================= ================================ ================================
INVESCO Funds Group, Inc. Record 22.19%
Attn: Sheila Wendland
PO Box 173706
Denver, CO 80217-3706
- --------------------------------------------- -------------------------------- --------------------------------
Charles Schwab & Co., Inc. Record 6.91%
Special Custody Account for the Exclusive
Benefit of Customers
Attn: Mutual Funds
101 Montgomery St.
San Francisco, CA 94104-4122
- --------------------------------------------- -------------------------------- --------------------------------

European Fund

- --------------------------------------------- -------------------------------- --------------------------------
Basis of Ownership
Name and Address (Record/Beneficial) Percentage Owned
============================================= ================================ ================================
Charles Schwab & Co., Inc. Record 32.99%
Special Custody Account for the Exclusive
Benefit of Customers
Attn: Mutual Funds
101 Montgomery St.
San Francisco, CA 94104-4122
- --------------------------------------------- -------------------------------- --------------------------------
National Financial Services Corp. Record 8.56%
The Exclusive Benefit of Customers
One World Financial Center
200 Liberty St., 5th Floor
Attn: Kate - Recon
New York, NY 10281-5500
- --------------------------------------------- -------------------------------- --------------------------------

<PAGE>
- --------------------------------------------- -------------------------------- --------------------------------
Merrill Lynch Professional Clearing Corp. Record 6.40%
FBO Susquehanna Investment Group
Attn: Joann Palmeri
101 Hudson St., Floor 7
Jersey City, NJ 07302-3915
- --------------------------------------------- -------------------------------- --------------------------------

International Blue Chip Fund

International Growth Fund

- ---------------------------------------------- -------------------------------- --------------------------------
Basis of Ownership
Name and Address (Record/Beneficial) Percentage Owned
============================================= ================================ ================================
Charles Schwab & Co., Inc. Record 15.96%
Special Custody Account for the Exclusive
Benefit of Customers
Attn: Mutual Funds
101 Montgomery St.
San Francisco, CA
94104-4122
- --------------------------------------------- -------------------------------- --------------------------------
Wachovia Bank NA TR Record 6.60%
Coca-Cola Enterprises
Supplemental MCSIP
301 N Main St. MCNC 31057
PO Box 3073
Winston-Salem, NC
27150-0001
- --------------------------------------------- -------------------------------- --------------------------------
The 401(k) Retirement & Savings Plan for Record 5.75%
Employees of Fairfield, Inc.
Attn: Emily Whiteman - Benefits
US 52 South
PO Box 7940
Lafayette, IN 47903
- --------------------------------------------- -------------------------------- --------------------------------

Pacific Basin Fund

<PAGE>

As of December 22, 1998, officers and directors of the Company, as a group,
beneficially owned less than 3% of any Fund's outstanding shares.

Distributor

INVESCO Distributors, Inc. ("IDI"), a wholly-owned subsidiary of INVESCO, is the
distributor of the Funds. IDI receives no compensation and bears all expenses,
including the cost of printing and distributing prospectuses, incident to
marketing of the Funds' shares, except for such distribution expenses as are
paid out of Fund assets under the Company's plan of distribution which has been
adopted by each Fund pursuant to Rule 12b-1 under the 1940 Act.

The Company has adopted a Plan and Agreement of Distribution (the "Plan").
The Plan, which was originally implemented on November 1, 1997, is permitted
under Rule 12b-1 under the 1940 Act. The Plan provides that each Fund will make
monthly payments to IDI, a wholly-owned subsidiary of INVESCO, computed at an
annual rate no greater than 0.25% of a Fund's average net assets. These payments
permit IDI, at its discretion, to engage in certain activities and provide
services in connection with the distribution of a 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 during the rolling
12-month period in which that month falls.

A significant expenditure under the Plan is compensation paid to securities
companies and other financial institutions and organizations, which may include
INVESCO-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 a Fund and may
be made to banks, savings and loan associations and other depository
institutions. Although the Glass-Steagall Act limits the ability of certain
banks to act as underwriters of mutual fund shares, INVESCO does not believe
that these limitations would affect the ability of such banks to enter into
arrangements with IDI, but can give no assurance in this regard. However, to the
extent it is determined otherwise in the future, arrangements with banks might
have to be modified or terminated, and, in that case, the size of the Funds
possibly could decrease to the extent that the banks would no longer invest
customer assets in the Funds. 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 a Fund.

During the fiscal year ended October 31, 1998, the Funds made payments to IDI
under the Plan in the amounts of $1,272, $1,404,872, $91,513 and $1,119,634 for
the Emerging Markets, International Growth, Pacific Basin and European Funds,
respectively. No amounts were paid by the International Blue Chip Fund. In
addition, as of October 31, 1998, $242, $8, 081, $9,205 $125,572 and $88 of
additional distribution accruals had been incurred for Emerging Markets,
International Growth, Pacific Basin, European and International Blue Chip Fund,
respectively, and will be paid during the fiscal year ended October 31, 1999.
For the fiscal year ended October 31, 1998, allocation of 12b-1 amounts paid by
the Funds for the following categories of expenses were:

Emerging Markets Fund

Advertising--$110;
Sales literature, printing, and postage--$555;
Direct Mail--$535;
Public Relations/Promotion--$26;
Compensation to securities dealers and other organizations--$1; and
Marketing personnel--$45.

<PAGE>

European Fund

Advertising--$443,981;
Sales literature, printing, and postage--$118,189;
Direct Mail--$102,572;
Public Relations/Promotion--$63,548;
Compensation to securities dealers and other organizations--$186,342; and
Marketing personnel--$205,002.

International Growth Fund

Advertising--$36,050;
Sales literature, printing, and postage--$17,185;
Direct Mail--$6,243;
Public Relations/Promotion--$5,748;
Compensation to securities dealers and other organizations--$19,908; and
Marketing personnel--$19,738.

Pacific Basin Fund

Advertising--$34,515;
Sales literature, printing, and postage--$16,916;
Direct Mail--$6,958;
Public Relations/Promotion--$6,290;
Compensation to securities dealers and other organizations--$4,197; and
Marketing personnel--$22,637.

The services which are provided by securities dealers and other organizations
may vary by dealer but include, among other things, processing new shareholder
account applications, preparing and transmitting to the Company's Transfer Agent
computer-processable tapes of all Fund transactions by customers, serving as the
primary source of information to customers in answering questions concerning the
Funds, and assisting in other customer transactions with the Funds.

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
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 INVESCO on
behalf of the Emerging Markets Fund on January 30, 1998 and on behalf of the
International Blue Chip Fund on October 28, 1998, for initial terms expiring
October 28, 1998, November 25, 1998, January 30, 1999 and October 28, 1999,
respectively. With respect to the European, International Growth and Pacific
Basin Funds, the Plan has been continued through May 15, 1999 by action of the
board of directors. 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 October 28, 1998 with respect to the International Blue Chip Fund.

The Plan provides that it shall continue in effect with respect to each Fund as
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, including the vote of a majority of the
Independent Directors. The Plan can also be terminated at any time by a Fund,
without penalty, if a majority of the Independent Directors, or shareholders of
the Fund, vote to terminate the Plan. The Company may, in its absolute
discretion, suspend, discontinue or limit the offering of its shares 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 a Fund, the investment climate for a Fund, general

<PAGE>

market conditions, and the volume of sales and redemptions of a Fund's shares.
The Plan may continue in effect and payments may be made under the Plan
following any temporary suspension or limitation of the offering of Fund shares;
however, the Company is not contractually obligated to continue the Plan for any
particular period of time. Suspension of the offering of a Fund's shares would
not, of course, affect a shareholder's ability to redeem his or her shares.

So long as the Plan is in effect, the selection and nomination of persons to
serve as independent directors of the Company shall be committed to the
Independent Directors then in office at the time of such selection or
nomination. The Plan may not be amended to increase the amount of a Fund's
payments under the Plan 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 a Fund, the latter by vote of a majority
of the Independent Directors, or the holders of a majority of the 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
the Fund under the Plan in the event of its termination.

To the extent that the Plan constitutes a plan of distribution adopted pursuant
to Rule 12b-1 under the 1940 Act, it shall remain in effect as such, so as to
authorize the use of Fund assets in the amounts and for the purposes set forth
therein, notwithstanding the occurrence of an assignment, as defined by the 1940
Act, and rules thereunder. To the extent it constitutes an agreement pursuant to
a plan, a Fund's obligation to make payments to IDI shall terminate
automatically, in the event of such "assignment." In this event, a Fund may
continue to make payments pursuant to the Plan only upon the approval of new
arrangements regarding the use of the amounts authorized to be paid by the Fund
under the Plan. Such new arrangements must be approved by the directors,
including a majority of the Independent Directors, by a vote cast in person at a
meeting called for such purpose. These new arrangements might or might not be
with IDI. On a quarterly basis, the directors review information about the
distribution services that have been provided to each Fund and the 12b-1 fees
paid for such services. On an annual basis, the directors consider whether the
Plan should be continued and, if so, whether any amendment to the Plan,
including changes in the amount of 12b-1 fees paid by each Fund, should be made.

The only Company directors and interested persons, as that term is defined in
Section 2(a)(19) of the 1940 Act, who have a direct or indirect financial
interest in the operation of the Plan are the officers and directors of the
Company who are also officers either of IDI or other companies affiliated with
IDI. The benefits which the Company believes will be reasonably likely to flow
to a Fund and its shareholders under the Plan include the following:

* 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;

* The sale of additional shares reduces the likelihood that redemption
of shares will require the liquidation of securities of the Funds in
amounts and at times that are disadvantageous for investment purposes;
and

<PAGE>

* Increased Fund assets may result in reducing each investor's share of
certain expenses through economies of scale (e.g. exceeding
established breakpoints in an advisory fee schedule and allocating
fixed expenses over a larger asset base), thereby partially offsetting
the costs of the plan.

The positive effect which increased Fund assets will have on INVESCO's revenues
could allow INVESCO and its affiliated companies:

* To have greater resources to make the financial commitments necessary
to improve the quality and level of the Funds' shareholder services
(in both systems and personnel);

* To increase the number and type of mutual funds available to investors
from INVESCO and its affiliated companies (and support them in their
infancy), and thereby expand the investment choices available to all
shareholders; and

* To acquire and retain talented employees who desire to be associated
with a growing organization.

Other Service Providers

Independent Accountants

PricewaterhouseCoopers LLP, 950 Seventeenth Street, Denver, Colorado, are the
independent accountants of the Company. The independent accountants are
responsible for auditing the financial statements of the Funds.

Custodian

State Street Bank and Trust Company, P.O. Box 351, Boston, Massachusetts, is the
custodian of the cash and investment securities of the Company. The custodian 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 with the Company. The custodian is authorized to establish
separate accounts in foreign countries and to cause foreign securities owned by
the Funds to be held outside the United States in branches of U.S. banks and, to
the extent permitted by applicable regulations, in certain foreign banks and
securities depositories.

Transfer Agent

INVESCO Funds Group, Inc., 7800 E. Union Avenue, Denver, Colorado is the
Company's transfer agent, registrar, and dividend disbursing agent. Services
provided by INVESCO include the issuance, cancellation and transfer of shares of
the Funds, and the maintenance of records regarding the ownership of such
shares.

Legal Counsel

The firm of Kirkpatrick & Lockhart LLP, Washington, D.C., is legal counsel for
the Company. The firm of Moye, Giles, O'Keefe, Vermeire & Gorrell, Denver,
Colorado, acts as special counsel to the Company.

Brokerage Allocation and Other Practices

As the investment adviser to the Funds, INVESCO places orders for the purchase
and sale of securities with broker-dealers based upon an evaluation of the
financial responsibility of the brokers and dealers and the ability of the
broker-dealers to effect transactions at the best available prices.

<PAGE>

While INVESCO seeks reasonably competitive commission rates, the Funds do not
necessarily pay the lowest commission or spread available. INVESCO is permitted
to, and does, consider qualitative factors in addition to price in the selection
of brokers. Among other things, INVESCO considers the quality of executions
obtained on a Fund's portfolio transactions, viewed in terms of the size of
transactions, prevailing market conditions in the security purchased or sold,
and general economic and market conditions. INVESCO has found that a broker's
consistent ability to execute transactions is at least as important as the price
the broker charges for those services.

In seeking to ensure that the commissions charged a Fund are consistent with
prevailing and reasonable commissions, INVESCO monitors brokerage industry
practices and commissions charged by broker-dealers on transactions effected for
other institutional investors like the Funds.

Consistent with the standard of seeking to obtain the best qualitative execution
on portfolio transactions, INVESCO may select brokers that provide research
services to INVESCO and the Company, as well as other INVESCO mutual funds and
other accounts managed by INVESCO. Research services include statistical and
analytical reports relating to issuers, industries, securities and economic
factors and trends, which may be of assistance or value to INVESCO in making
informed investment decisions. Research services prepared and furnished by
brokers through which a Fund effects securities transactions may be used by
INVESCO in servicing all of its accounts and not all such services may be used
by INVESCO in connection with a particular Fund. Conversely, a Fund receives
benefits of research acquired through the brokerage transactions of other
clients of INVESCO.

In order to obtain reliable trade execution and research services, INVESCO may
utilize brokers that charge higher commissions than other brokers would charge
for the same transaction. This practice is known as "paying up." However, even
when paying up, INVESCO is obligated to obtain best qualitative execution of a
Fund's transactions.

Portfolio transactions also may be effected through brokers and dealers that
recommend the Funds to their clients, or that act as agent in the purchase of a
Fund's shares for their clients. When a number of brokers and dealers can
provide comparable best price and execution on a particular transaction, INVESCO
may consider the sale of a Fund's shares by a broker or dealer in selecting
among qualified broker-dealers.

Certain financial institutions (including brokers who may sell shares of a Fund,
or affiliates of such brokers) are paid a fee (the "Services Fee") for
recordkeeping, shareholder communications and other services provided by the
institutions to investors purchasing shares of the Funds through no transaction
fee programs ("NTF Programs") offered by the financial institution or its
affiliated broker (an "NTF Program Sponsor"). The Services Fee is based on the
average daily value of the investments in each Fund made in the name of such NTF
Program Sponsor and held in omnibus accounts maintained on behalf of investors
participating in the NTF Programs. With respect to certain NTF Programs, the
directors of the Company have authorized the Funds to apply dollars generated
from the Plan to pay the entire Services Fee, subject to the maximum Rule 12b-1
fee permitted by the Plan, which presently is 0.25%.

With respect to other NTF Programs, the Company's directors have authorized the
Funds to pay transfer agency fees to INVESCO based on the number of investors
who have beneficial interests in the NTF Program Sponsor's omnibus accounts in a
Fund. INVESCO, 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 Company 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. INVESCO itself pays
the portion of a Fund's Services Fee, if any, that exceeds the sum of the
sub-transfer agency or recordkeeping fee and Rule 12b-1 fee.

<PAGE>

The Company's directors have further authorized INVESCO to place a portion of a
Fund's brokerage transactions with certain NTF Program Sponsors or their
affiliated brokers, if INVESCO reasonably believes that, in effecting a Fund's
transactions in portfolio securities, the broker is able to provide the best
execution of orders at the most favorable prices. A portion of the commissions
earned by such a broker from executing portfolio transactions on behalf of a
Fund may be credited by the NTF Program Sponsor against its Services Fee. Such
credit shall be applied first against any sub-transfer agency or recordkeeping
fee payable with respect to the Fund, 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 INVESCO and the NTF Program Sponsor. Thus, the Fund pays
sub-transfer agency or recordkeeping fees to the NTF Program Sponsor in payment
of the Services Fee only to the extent that such fees are not offset by the
Fund's credits.

In the event that the transfer agency fee paid by a Fund to INVESCO with respect
to investors who have beneficial interests in a particular NTF Program Sponsor's
omnibus accounts in that Fund exceeds the Services Fee applicable to the Fund,
after application of credits, INVESCO may carry forward the excess and apply it
to future Services Fees payable to that NTF Program Sponsor with respect to that
Fund. The amount of excess transfer agency fees carried forward will be reviewed
for possible adjustment by INVESCO prior to the fiscal year-end of each Fund.

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 it
incurs 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 reimburse IDI for payments
to such NTF Program Sponsor absent such credits.

The aggregate dollar amount of brokerage commissions paid by each Fund for the
fiscal years ended October 31, 1998, 1997 and 1996 were:

<TABLE>
<CAPTION>
<S> <C> <C> <C>
October 31, 1998 October 31, 1997 October 31, 1996

Emerging Markets Fund 0 N/A N/A

Euorpean Fund 483,163 1,477, 524 1,070,781

International Blue Chip Fund 0 N/A N/A

International Growth Fund 157,998 360,726 361,537

Pacific Basin Fund 125,870 1,007,320 1,284,787
</TABLE>

For the fiscal year ended October 31, 1998, brokers providing research services
received $0 in commissions on portfolio transactions effected for the Funds. The
aggregate dollar amount of such portfolio transactions was $0. Commissions
totaling $0 were allocated to certain brokers in recognition of their sales of
shares of the Funds on portfolio transactions of the Funds effected during the
fiscal year ended.

At October 31, 1998, each Fund held debt securities of its regular brokers or
dealers, or their parents, as follows:

<PAGE>

- --------------------------------------------------------------------------------
Fund Broker or Dealer Value of Securities
at October 31, 1998
================================================================================
Emerging Markets State Street Bank & Trust $209,000.00
- --------------------------------------------------------------------------------
European State Street Bank & Trust $37,827,000.00
- --------------------------------------------------------------------------------
International Blue Chip State Street Bank & Trust $6,406,000.00
- --------------------------------------------------------------------------------
International Growth State Street Bank & Trust $9,931,000.00
- --------------------------------------------------------------------------------
Pacific Basin State Street Bank & Trust $2,834,000.00
- --------------------------------------------------------------------------------

Neither INVESCO nor any affiliate of INVESCO receives any brokerage commissions
on portfolio transactions effected on behalf of the Funds, and there is no
affiliation between INVESCO or any person affiliated with INVESCO or the Funds
and any broker or dealer that executes transactions for the Funds.

Capital Stock

The Company is authorized to issue up to Five Hundred Million shares of
common stock with a par value of $0.01 per share. As of , the following shares
of each Fund were outstanding:

Emerging Markets Fund 156,241
European Fund 38,150,545
International Blue Chip Fund 627,517
International Growth Fund 3,478,622
Pacific Basin Fund 6,733,646

All shares of each Fund are of one class with equal rights as to voting,
dividends and liquidation. All shares issued and outstanding are, and all shares
offered hereby, when issued, will be, fully paid and nonassessable. 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 have no preemptive rights and are freely transferable on the books of
each Fund.

All shares of the Company have equal voting rights based on one vote for each
share owned. The Company is not generally required and does not expect to hold
regular annual meetings of shareholders. However, when requested to do so in
writing by the holders of 10% or more of the outstanding shares of the Company
or as may be required by applicable law or the Company's Articles of
Incorporation, the board of directors will call special meetings of
shareholders.

Directors may be removed by action of the holders of a majority of the
outstanding shares of the Company. The Funds will assist shareholders in
communicating with other shareholders as required by the Investment Company Act
of 1940.

Fund shares have noncumulative voting rights, which means that the holders of a
majority of the shares of the Company voting for the election of directors of
the Company can elect 100% of the directors if they choose to do so. If that
occurs, 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.
Directors may be removed by action of the holders of a majority of the
outstanding shares of the Company.

<PAGE>

Tax Consequences of Owning Shares of the Fund

Each Fund intends to continue to conduct its business and satisfy the
applicable diversification of assets, distribution and source of income
requirements to qualify as a regulated investment company under Subchapter M of
the Internal Revenue Code of 1986, as amended. Each Fund qualified as a
regulated investment company in the fiscal year ended October 31, 1998, and
intends to continue to qualify during its current fiscal year. It is the policy
of each Fund to distribute all investment company taxable income and net capital
gains. As a result of this policy and the Funds' qualification as regulated
investment companies, it is anticipated that none of the Funds will pay federal
income or excise taxes and that all of the Funds will be accorded conduit or
"pass through" treatment for federal income tax purposes. Therefore, any taxes
that a Fund would ordinarily owe are paid by its shareholders on a pro-rata
basis. If a Fund does not qualify as a regulated investment company, it will be
subject to corporate tax on its net investment income and net capital gains at
the corporate tax rates. If a Fund does not distribute all of its net investment
income or net capital gains, it will be subject to tax on the amount that is not
distributed.

Dividends paid by a Fund from net investment income as well as distributions of
net realized short-term capital gains and net realized gains from certain
foreign currency transactions are taxable for federal income tax purposes 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, including the dividends eligible for the
dividends-received-deduction for corporations. Dividends eligible for the
dividends-received-deduction will be limited to the aggregate amount of
qualifying dividends that a Fund derives from its portfolio investments.

A Fund realizes a capital gain or loss when it sells a portfolio security for
more or less than it paid for that security. Capital gains and losses are
divided into short-term and long-term, depending on how long the Fund held the
security which gave rise to the gain or loss. If the security was held one year
or less the gain or loss is considered short-term, while holding a security for
more than one year will generate a long-term gain or loss. A capital gain
distribution consists of long-term capital gains which are taxed at the capital
gains rate. Short-term capital gains are included with income from dividends and
interest as ordinary income and are paid to shareholders as dividends. If total
long-term gains on sales exceed total short-term losses, including any losses
carried forward from previous years, a Fund will have a net capital gain.

Distributions by a Fund of net capital gain (the excess of net long-term capital
gain over net short-term capital loss) are, for federal income tax purposes,
taxable to the shareholder as a long-term capital gain regardless of how long a
shareholder has held shares of the particular Fund. Such distributions are not
eligible for the dividends-received-deduction. After the end of each calendar
year, the Funds send information to shareholders regarding the amount and
character of distributions paid during the year.

All dividends and other distributions are taxable income to the shareholder,
whether or not such dividends and distributions are reinvested in additional
shares or paid in cash. If the net asset value of a Fund's shares should be
reduced below a shareholder's cost as a result of a distribution, such
distribution would be taxable to the shareholder although a portion would be a
return of invested capital. The net asset value of shares of a Fund reflects
accrued net investment income and undistributed realized capital and foreign
currency gains; therefore, when a distribution is made, the net asset value is
reduced by the amount of the distribution. If shares of a Fund are purchased
shortly before a distribution, the full price for the shares will be paid and
some portion of the price may then be returned to the shareholder as a taxable
dividend or capital gain. However, the net asset value per share will be reduced
by the amount of the distribution, which would reduce any gain (or increase any
loss) for tax purposes on any subsequent redemption of shares.

<PAGE>

If it invests in foreign securities, a Fund may be subject to the withholding of
foreign taxes on dividends or interest it receives on foreign securities.
Foreign taxes withheld will be treated as an expense of the Fund unless the Fund
meets the qualifications and makes the election to enable it to pass these taxes
through to shareholders for use by them as a foreign tax credit or deduction.
Tax conventions between certain countries and the United States may reduce or
eliminate such taxes. A Fund may invest in the stock of "passive foreign
investment companies" ("PFICs"). A PFIC is a foreign corporation that, in
general, meets either of the following tests: (1) at least 75% of its gross
income is passive or (2) an average value of at least 50% of its assets produce,
or are held for the production of, passive income. Each Fund intends to "mark to
market" its stock in any PFIC. In this context, "marking to market" 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 basis in the PFIC
stock as of the end of the year. In certain circumstances, a Fund will also be
allowed to deduct from ordinary income the excess, if any, of its adjusted basis
in PFIC stock over the fair market value of the PFIC stock as of the end of the
year. The deduction will only be allowed to the extent of any PFIC
mark-to-market gains recognized as ordinary income in prior years (for tax years
beginning after December 31, 1997). A Fund's adjusted tax basis in each PFIC
stock for which it makes this election will be adjusted to reflect the amount of
income included or deduction taken under the election.

Gains or losses (1) from the disposition of foreign currencies, (2) from the
disposition of debt securities denominated in foreign currencies that are
attributable to fluctuations in the value of the foreign currency between the
date of acquisition of each security and the date of disposition, and (3) that
are attributable to fluctuations in exchange rates that occur between the time a
Fund accrues interest, dividends or other receivables or accrues expenses or
other liabilities denominated in a foreign currency and the time the Fund
actually collects the receivables or pays the liabilities, generally will be
treated as ordinary income or loss. These gains or losses may increase or
decrease the amount of a Fund's investment company taxable income to be
distributed to its shareholders.

INVESCO may provide Fund shareholders with information concerning the average
cost basis of their shares in order to help them prepare their tax returns. This
information is intended as a convenience to shareholders, and will not be
reported to the Internal Revenue Service (the "IRS"). The IRS permits the use of
several methods to determine the cost basis of mutual fund shares. The cost
basis information provided by INVESCO will be computed using the single-category
average cost method, although neither INVESCO nor the Funds recommend any
particular method of determining cost basis. Other methods may result in
different tax consequences. If you have reported gains or losses for a Fund in
past years, you must continue to use the method previously used, unless you
apply to the IRS for permission to change methods. If you sell Fund shares at a
loss after holding them for six months or less, your loss will be treated as
long-term (instead of short-term) capital loss to the extent of any capital gain
distributions that you may have received on those shares.

Each Fund will be subject to a nondeductible 4% excise tax to the extent it
fails to distribute by the end of any calendar year substantially all of its
ordinary income for that year and its net capital gains for the one-year period
ending on October 31 of that year, plus certain other amounts.

You should consult your own tax adviser regarding specific questions as to
federal, state and local taxes. Dividends and capital gain distributions will
generally be subject to applicable state and local taxes. Qualification as a
regulated investment company under the Internal Revenue Code of 1986, as
amended, for income tax purposes does not entail government supervision of
management or investment policies.

<PAGE>

Performance

To keep shareholders and potential investors informed, INVESCO will occasionally
advertise the Funds' total return for one-, five-, and ten-year periods (or
since inception). Total return figures show the rate of return on a $10,000
investment in a Fund, assuming reinvestment of all dividends and capital gain
distributions for the periods cited.

Cumulative total return shows the actual rate of return on an investment for the
period cited; average annual total return represents the average annual
percentage change in the value of an investment. Both cumulative and average
annual total returns tend to "smooth out" fluctuations in a Fund's investment
results, because they do not show the interim variations in performance over the
periods cited. More information about the Funds' recent and historical
performance is contained in the Company's Annual Report to Shareholders. You can
get a free copy by calling or writing to INVESCO using the phone number or
address on the back cover of the Funds' prospectus.

When we quote mutual fund rankings published by Lipper, Inc., we may compare a
Fund to others in its appropriate Lipper category, as well as the broad-based
Lipper general fund groupings. These rankings allow you to compare a Fund to its
peers. Other independent financial media also produce performance- or
service-related comparisons, which you may see in our promotional materials.

Performance figures are based on historical earnings and are not intended to
suggest future performance.

Average annual total return performance for the one-, five-, and ten-year
periods ended was:

Names of Fund 1 Year 5 Year 10 Year

Emerging Markets Fund N/A N/A -32.42%*
European Fund 24.92% 16.66% 12.40%
International Blue Chip N/A N/A 4.13%#
International Growth Fund -2.75% 3.67% 3.87%
Pacific Basin Fund -28.68% -10.50% -2.91%
* Since inception 2/12/98 (Annualized)
# Since inception 10/28/98 (Annualized)

Average annual total return performance for each of the periods indicated was
computed by finding the average annual compounded rates of return that would
equate the initial amount invested to the ending redeemable value, according to
the following formula:

P(1 + T) exponent n = ERV

where: P = a hypothetical initial payment of $10,000
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 indicated.

In conjunction with performance reports, comparative data between a Fund's
performance for a given period and other types of investment vehicles, including
certificates of deposit, may be provided to prospective investors and
shareholders.

<PAGE>

In conjunction with performance reports and/or analyses of shareholder services
for a Fund, comparative data between that Fund's performance for a given period
and recognized indices of investment results for the same period, and/or
assessments of the quality of shareholder service, may be provided to
shareholders. Such indices include indices provided by Dow Jones & Company,
Standard & Poor's, Lipper, 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 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 made by independent sources may be used in advertisements,
sales literature or shareholder reports, including reprints of, or selections
from, editorials or articles about the Fund. These sources utilize information
compiled (i) internally; (ii) by Lipper Analytical Services, Inc.; or (iii) by
other recognized analytical services. The Lipper Analytical Services, Inc.
mutual fund rankings and comparisons which may be used by the Fund in
performance reports will be drawn from the following mutual fund groupings, in
addition to the broad-based Lipper general fund groupings:

Emerging Markets Fund Emerging Markets Funds
European Fund European Region Funds
International Blue Chip Fund International Funds
International Growth Fund International Funds
Pacific Basin Fund Pacific Region Funds

Sources for Fund performance information and articles about the Funds include,
but are not limited to, the following:

American Association of Individual Investors' Journal
Banxquote
Barron's
Business Week
CDA Investment Technologies
CNBC
CNN
Consumer Digest
Financial Times
Financial World
Forbes
Fortune
Ibbotson Associates, Inc.
Institutional Investor
Investment Company Data, Inc.
Investor's Business Daily
Kiplinger's Personal Finance
Lipper Analytical Services, Inc.'s Mutual Fund
Performance Analysis
Money
Morningstar
Mutual Fund Forecaster
No-Load Analyst
No-Load Fund X
Personal Investor
Smart Money
The New York Times
The No-Load Fund Investor
U.S. News and World Report
United Mutual Fund Selector
USA Today
The Wall Street Journal
Wiesenberger Investment Companies Services
Working Woman
Worth

<PAGE>

FINANCIAL STATEMENTS

The Financial Statements for the Company for the fiscal year ended October 31,
1998 are incorporated herein by reference from the Company's Annual Report
to Shareholders dated October 31, 1998.

<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
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.

<PAGE>

Reasons for the potential absence of a liquid secondary market on an exchange
include the following: (i) there may be insufficient trading interest in certain
options; (ii) restrictions may be imposed by an exchange on opening transactions
or closing transactions or both; (iii) trading halts, suspensions or other
restrictions may be imposed with respect to particular classes or series of
options or underlying securities: (iv) unusual or unforeseen circumstances may
interrupt normal operations on an exchange; (v) the facilities of an exchange or
a clearing corporation may not at all times be adequate to handle current
trading volume or (vi) one or more exchanges could, for economic or other
reasons, decide or be compelled at some future date to discontinue the trading
of options (or particular class or series of options) in which event the
secondary market on that exchange (or in the class or series of options) would
cease to exist, although outstanding options on that exchange which had been
issued by a clearing corporation as a result of trades on that exchange would
continue to be exercisable in accordance with their terms. There is no assurance
that higher than anticipated trading activity or other unforeseen events might
not, at a particular time, render certain of the facilities of any of the
clearing corporations inadequate and thereby result in the institution by an
exchange of special procedures which may interfere with the timely execution of
customers' orders. However, the Options Clearing Corporation, based on forecasts
provided by the U.S. exchanges, believes that its facilities are adequate to
handle the volume of reasonably anticipated options transactions, and such
exchanges have advised such clearing corporation that they believe their
facilities will also be adequate to handle reasonably anticipated volume.

In addition, options on securities may be traded over-the-counter through
financial institutions dealing in such options as well as the underlying
instruments. OTC options are purchased from or sold (written) to dealers or
financial institutions which have entered into direct agreements with the Fund.
With OTC options, such variables as expiration date, exercise price and premium
will be agreed upon between the Fund and the transacting dealer, without the
intermediation of a third party such as the OCC. If the transacting dealer fails
to make or take delivery of the securities underlying an option it has written,
in accordance with the terms of that option as written, the Fund would lose the
premium paid for the option as well as any anticipated benefit of the
transaction. The Fund will engage in OTC option transactions only with primary
U.S. Government securities dealers recognized by the Federal Reserve Bank of New
York.

Futures Contracts

A Futures Contract is a bilateral agreement providing for the purchase and sale
of a specified type and amount of a financial instrument or foreign currency, or
for the making and acceptance of a cash settlement, at a stated 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."

<PAGE>

A Futures Contract may be purchased or sold only on an exchange, known as a
"contract market," designated by the Commodity Futures Trading Commission for
the trading of such contract, and only through a registered futures commission
merchant which is a member of such contract market. A commission must be paid on
each completed purchase and sale transaction. The contract market clearing house
guarantees the performance of each party to a Futures Contract, by in effect
taking the opposite side of such Contract. At any time prior to the expiration
of a Futures Contract, a trader may elect to close out its position by taking an
opposite position on the contract market on which the position was entered into,
subject to the availability of a secondary market, which will operate to
terminate the initial position. At that time, a final determination of variation
margin is made and any loss experienced by the trader is required to be paid to
the contract market clearing house while any profit due to the trader must be
delivered to it.

Interest rate futures contracts currently are traded on a variety of fixed
income securities, including long-term U.S. Treasury Bonds, Treasury Notes,
Government National Mortgage Association modified pass-through mortgage-backed
securities, U.S. Treasury Bills, bank certificates of deposit and commercial
paper. In addition, interest rate futures contracts include contracts on indices
of municipal securities. Foreign currency futures contracts currently are traded
on the British pound, Canadian dollar, Japanese yen, Swiss franc, West German
mark and on Eurodollar deposits.

Options on Futures Contracts

An Option on a Futures Contract provides the holder with the right to enter into
a "long" position in the underlying Futures Contract, in the case of a call
option, or a "short" position in the underlying Futures Contract, in the case of
a put option, at a fixed exercise price to a stated expiration date. Upon
exercise of the option by the holder, the contract market clearing house
establishes a corresponding short position for the writer of the option, in the
case of a call option, or a corresponding long position, in the case of a put
option. In the event that an option is exercised, the parties will be subject to
all the risks associated with the trading of Futures Contracts, such as payment
of variation margin deposits. In addition, the writer of an Option on a Futures
contract, unlike the holder, is subject to initial and variation margin
requirements on the option position.

A position in an Option on a Futures Contract may be terminated by the purchaser
or seller prior to expiration by effecting a closing purchase or sale
transaction, subject to the availability of a liquid secondary market, which is
the purchase or sale of an option of the same series (i.e., the same exercise
price and expiration date) as the option previously purchased or sold. The
difference between the premiums paid and received represents the trader's profit
or loss on the transaction.

An option, whether based on a Futures Contract, a stock index or a security,
becomes worthless to the holder when it expires. Upon exercise of an option, the
exchange or contract market clearing house assigns exercise notices on a random
basis to those of its members which have written options of the same series and
with the same expiration date. A brokerage firm receiving such notices then
assigns them on a random basis to those of its customers which have written
options of the same series and expiration date. A writer therefore has no
control over whether an option will be exercised against it, nor over the time
of such exercise.

<PAGE>

APPENDIX B

BOND RATINGS

The following is a description of Moody's and S&P's bond ratings:

Moody's Corporate Bond Ratings

Aaa - Bonds rated Aaa are judged to be of the best quality. They carry the
smallest degree of investment risk and are generally referred to as
"gilt-edged." Interest payments are protected by a large or by an exceptionally
stable margin, and principal is secure. While the various protective elements
are likely to change, such changes as can be visualized are most unlikely to
impair the fundamentally strong position of such issues.

Aa - Bonds rated Aa are judged to be of high quality by all standards. Together
with the Aaa group, they comprise what are generally known as high grade bonds.
They are rated lower than the best bonds because margins of protection may not
be as large as in Aaa securities or fluctuation of protective elements may be of
greater amplitude or there may be other elements present which make the long
term risk appear somewhat larger than in Aaa securities.

A - Bonds rated A possess many favorable investment attributes, and are to be
considered as upper medium grade obligations. Factors giving security to
principal and interest are considered adequate but elements may be present which
suggest a susceptibility to impairment sometime in the future.

Baa - Bonds rated Baa are considered as medium grade obligations, i.e., they are
neither highly protected nor poorly secured. Interest payments and principal
security appear adequate for the present but certain protective elements may be
lacking or may be characteristically unreliable over any great length of time.
Such bonds lack outstanding investment characteristics and in fact have
speculative characteristics as well.

Ba - Bonds rated Ba are judged to have speculative elements. Their future cannot
be considered as well assured. Often the protection of interest and principal
payments may be very moderate and thereby not well safeguarded during both good
and bad times over the future. Uncertainty of position characterizes bonds in
this class.

B - Bonds rated B generally lack characteristics of the desirable investment.
Assurance of interest and principal payments or maintenance of other terms of
the contract over any longer period of time may be small.

Caa - Bonds rated Caa are of poor standing. Such issues may be in default or
there may be present elements of danger with respect to principal or
interest.

S&P Corporate Bond Ratings

AAA - This is the highest rating assigned by Standard & Poor's to a debt
obligation and indicates an extremely strong capacity to pay principal and
interest.

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.

<PAGE>

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 23. Exhibits

(a) Articles of Incorporation filed April 2, 1993.(2)

(i) Articles Supplementary to the Fund's Articles of
Incorporation filed November 17, 1997.(4)

(ii) Articles Supplementary to Articles of
Incorporation filed December 7, 1998.

(b) Bylaws as of July 21, 1993.(3)

(d) (i) Investment Advisory Agreement dated February
28, 1997.(2)

(a) Amendment to Advisory Agreement dated
January 30, 1998.(4)

(b) Amendment to Advisory Agreement dated
September 18, 1998.

(ii)(a) Sub-advisory Agreementdated February
28, 1998 between INVESCO Funds Group, Inc.
and INVESCO Asset Management Limited with
respect to European, Pacific Basin and
International Funds.(2)

(b) Sub-advisory Agreement dated January
30, 1998 between INVESCO Funds Group, Inc.
and INVESCO Asset Management Limited with
respect to Emerging Markets Fund.(4)

(c) Sub-advisory Agreement dated September
18, 1998 between INVESCO Funds Group, Inc.
and INVESCO Global Asset Management (N.A.)
with respect to International Blue Chip
Fund.

(e) (i) General Distribution Agreement dated February
28, 1997.(2)

(ii)Distribution Agreement between Registrant and
INVESCO Distributors, Inc. dated September 30,
1997.(3)

(f) (i) Defined Benefit Deferred Compensation Plan
for Non-Interested Directors and Trustees.(5)

(g) Custody Agreement between Registrant and State
Street Bank and Trust Company dated July 1,
1993.(3)

(i) Amendment to Custody Agreement dated October 25,
1995.(1)

(ii) Data Access Services Addendum.(3)

<PAGE>

(iii)Additional Fund Letter dated November 13,
1994.(4)

(iv)Additional Fund Letter dated July 23, 1998.

(h)(i) Transfer Agency Agreement dated February 28,
1997.(2)

(ii)Administrative Services Agreement between the
Fund and INVESCO Funds Group, Inc. dated February 28,
1997.(2)

(i) 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)

(j) Consent of Independent Accountants.

(k) Not applicable.

(l) Not applicable.

(m) (i) Plan and Agreement of Distribution dated November
1, 1997 adopted pursuant to Rule 12b-1 under the
Investment Company Act of 1940.(3)

(n) (i) Financial Data Schedule for the year ended October
31, 1998 for the Emerging Markets Fund.

(ii) Financial Data Schedule for the year ended October
31, 1998 for the European Fund.

(iii) Financial Data Schedule for the year ended
October 31, 1998 for the International Blue Chip Fund.

(iv) Financial Data Schedule for the year ended October
31, 1998 for the International Growth Fund.

(v) Financial Data Schedule for the year ended October
31, 1998 for the Pacific Basin Fund.

(1)Previously filed on EDGAR with Post-Effective Amendment No. 3 to the
Registration Statement on December 22, 1995, and incorporated by reference
herein.

(2)Previously filed on EDGAR with Post-Effective Amendment No. 4 to the
Registration Statement on February 25, 1997 and incorporated by reference
herein.

(3)Previously filed on EDGAR with Post-Effective Amendment No. 5 to the
Registration Statement on November 17, 1997, and incorporated by reference
herein.

(4Previously filed on EDGAR with Post-Effective Amendment No. 6 to the
Registration Statement on February 26, 1998, and incorporated by reference
herein.

(5)Previously filed on EDGAR with Post-Effective Amendment No. 7 to the
Registration Statement on July 10, 1998, and incorporated by reference herein.

<PAGE>

Item 24. Persons Controlled by or Under Common Control with the Fund

No person is presently controlled by or under common control with the Fund.

ITEM 25. INDEMNIFICATION

Indemnification provisions for officers, directors and employees of Registrant
are set forth in Article X of the Amended Bylaws and Article Seventh (3) of the
Articles of Restatement of the Articles of Incorporation, and are hereby
incorporated by reference. See Item 24(b)(1) and (2) above. Under these
Articles, directors and officers 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 Fund 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 Fund also maintains liability insurance policies covering its directors and
officers.

ITEM 26. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER

See "The Fund and Its Management" in the Fund's Prospectus and in the Statement
of Additional Information for information regarding the business of the
investment adviser, INVESCO.

Following are the names and principal occupations of each director and officer
of the investment adviser, INVESCO. Certain of these persons hold positions
with IDI, a subsidiary of INVESCO, and, during the past two fiscal years, have
held positions with Institutional Trust Company d.b.a. INVESCO Trust Company, an
affiliate of INVESCO.

<TABLE>
<CAPTION>
<S> <C> <C>
Position with
Name Adviser Principal Occupation and
Company Affiliation
------------------------------------------------------------------------------
Dan J. Hesser Chairman and Chairman
Director INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
------------------------------------------------------------------------------
Mark H. Williamson Officer & Director President & Chief 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

<PAGE>
------------------------------------------------------------------------------
Ronald L. Grooms Officer Senior Vice President & Treasurer
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
------------------------------------------------------------------------------
Richard W. Healey 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 & Director Senior Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
------------------------------------------------------------------------------
Timothy J. Miller Officer Senior Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
------------------------------------------------------------------------------
Donovan J. (Jerry) Officer Senior Vice President
Paul 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

<PAGE>

------------------------------------------------------------------------------
Mark D. Greenberg Officer Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
------------------------------------------------------------------------------
Brian B. Hayward 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
------------------------------------------------------------------------------
Stephen A. Moran Officer Vice President
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
<PAGE>

------------------------------------------------------------------------------
Laura M. Parsons Officer Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
------------------------------------------------------------------------------
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
------------------------------------------------------------------------------
Terri B. Smith Officer Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
------------------------------------------------------------------------------
Tane T. Tyler 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
------------------------------------------------------------------------------
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
<PAGE>

------------------------------------------------------------------------------
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
------------------------------------------------------------------------------
Donald R. Paddack Officer Assistant Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
------------------------------------------------------------------------------
Kent T. Schmeckpeper Officer Assistant Vice President
Account Relationship Manager
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
------------------------------------------------------------------------------
Jeraldine E. Kraus Officer Assistant Secretary
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
------------------------------------------------------------------------------
</TABLE>

<PAGE>

Item 27. PRINCIPAL UNDERWRITERS
INVESCO Bond Funds, Inc.
INVESCO Combination Stock & Bond Funds, Inc.
INVESCO Diversified Funds, Inc.
INVESCO Emerging Opportunity Funds, Inc.
INVESCO Growth Funds, Inc.
INVESCO International Funds, Inc.
INVESCO Money Market Funds, Inc.
INVESCO Sector Funds, Inc.
INVESCO Specialty Funds, Inc.
INVESCO Stock Funds, Inc.
INVESCO Tax-Free Income Funds, Inc.
INVESCO Value Trust
INVESCO Variable Investment Funds, Inc.

(b)

Positions and Positions and
Name and Principal Offices with Offices with
Business Address Underwriter the Fund
- ------------------ ------------- -----------

William J. Galvin, Jr. Sr. Vice Assistant
7800 E. Union Avenue President & Secretary
Denver, CO 80237 Assistant
Secretary

<PAGE>

Ronald L. Grooms Sr. Vice Treasurer,
7800 E. Union Avenue President Chief Fin'l
Denver, CO 80237 & Treasurer Officer, and
Chief Acctg.
Off.

Richard W. Healey Sr. Vice
7800 E. Union Avenue President
Denver, CO 80237

Dan J. Hesser Chairman of the
7800 E. Union Avenue Board & Director
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 & Assistant
Denver, CO 80237 Treasurer

Mark H. Williamson President, President,
7800 E. Union Avenue Chief Executive CEO & Director
Denver, CO 80237 Officer &
Director

Item 28. Location of Accounts and Records
--------------------------------

Mark H. Williamson
7800 E. Union Avenue
Denver, CO 80237

Item 29. Management Services
-------------------

Not applicable.

Item 30. Undertakings
------------

Not applicable

<PAGE>

Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940, the Fund 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 30th day of
December, 1998.

INVESCO International Funds, Inc.

/s/ Mark H. Williamson
__________________________________
Attest:
/s/ Glen A. Payne
- ------------------------
Glen A. Payne, Secretary

Pursuant to the requirements of the Securities Act of 1933, this registration
statement has been signed below by the following persons in the capacities and
on the date indicated.

/s/ Mark H. Williamson /s/ Lawrence H. Budner
_______________________________ _____________________________
Mark H. Williamson, President & Lawrence H. Budner, Director
Director (Chief Executive Officer)

/s/ Ronald L. Grooms /s/ John W. Mcintyre
_______________________________ _____________________________
Ronald L. Grooms, Treasurer John W. McIntyre, 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/ Charles W. Brady /s/ Kenneth T. King
_______________________________ _____________________________
Charles W. Brady, Director Kenneth T. King, Director

/s/ Wendy L. Gramm
_______________________________
Wendy L. Gramm, Director

By*_____________________________ By* /s/ Glen A. Payne
_________________________
Edward F. O'Keefe Glen A. Payne
Attorney in Fact Attorney in Fact

* Original Powers of Attorney authorizing Edward F. O'Keefe and Glen A. Payne,
and each of them, to execute this post-effective amendment to the Registration
Statement of the Registrant on behalf of the above-named directors and officers
of the Registrant have been filed with the Securities and Exchange Commission on
June 29, 1993, February 24, 1994, February 17, 1995, December 22, 1995, November
17, 1997.

<PAGE>

Exhibit Index

Page in
Exhibit Number Registration Statement
- -------------- ----------------------

a(ii) 108
d(i)(b) 110
d(ii)(c) 111
g(iv) 120
j 121
n(i) 122
n(ii) 123
n(iii) 124
n(iv) 125
n(v) 126

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 4th day of
December, 1998.

These Articles Supplementary shall be effective upon acceptance by the
Maryland State Department of Assessments and Taxation.

INVESCO INTERNATIONAL FUNDS, INC.

By: /s/ Mark H. Williamson
-----------------------------
Mark H. Williamson, President

WITNESSED:

By: /s/ Glen A. Payne
------------------------
Glen A. Payne, Secretary

I, Michael Branstiter, 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 4th day of December, 1998.

/s/ Michael T. Branstiter
-------------------------------
Notary Public

My Commission Expires: 3/14/2002

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 18th
day of September, 1998.

INVESCO INTERNATIONAL FUNDS, INC.

By: /s/ Mark H. Williamson
----------------------------
Mark H. Williamson,
ATTEST: President

/s/ Glen A. Payne
- ------------------------
Glen A. Payne, Secretary
INVESCO FUNDS GROUP, INC.

By: /s/ Ronald L. Grooms
----------------------------
Ronald L. Grooms,
ATTEST: Senior Vice President

/s/ Glen A. Payne
- -------------------------
Glen A. Payne, Secretary

SUB ADVISORY AGREEMENT

AGREEMENT made this 18th day of September, 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: /s/ Mark H. Williamson
/s/ Glen A. Payne ----------------------------------
- ------------------------ Mark H. Williamson, President
Glen A. Payne, Secretary

INVESCO GLOBAL ASSET
MANAGEMENT (N.A.), Inc.

ATTEST:
By: /s/John D. Rogers
----------------------------------
John D. Rogers, President
/s/ Luis A. Aguilar
- ---------------------------
Luis A. Aguilar, Secretary

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

July 23, 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,

/s/ Glen A. Payne

Glen A. Payne
Secretary

Agreed to this 4th day of August, 1998.

STATE STREET BANK AND TRUST COMPANY

By: Charles R. Whittemore, Jr.
--------------------------
Vice President

Consent of Independent Accountants

We hereby consent to the incorporation by reference in the Prospectus and
Statement of Additional Information constituting part of this Post-Effective
Amendment No. 8 to the registration statement on Form N-1A (the "Registration
Statement") of our report dated December 9, 1998, relating to the financial
statements and financial highlights appearing in the October 31, 1998 Annual
Report to Shareholders of INVESCO International Funds, Inc., (formerly known as
INVESCO Strategic Portfolios, Inc., now known as INVESCO Sector Funds, Inc.)
which is also incorporated by reference into the Registration Statement. We also
consent to the references to us under the headings "Financial Highlights" in the
Prospectuses and under the heading "Independent Accountants" in the Statement of
Additional Information.

/s/ Price Waterhouse LLP
- ------------------------

PricewaterhouseCoopers LLP
Denver, Colorado
December 28, 1998

[ARTICLE] 6
[CIK] 0000906334
[NAME] INVESCO INTERNATIONAL FUNDS, INC.
[SERIES]
[NUMBER] 1
[NAME] INVESCO EMERGING MARKETS FUND
<TABLE>
<S> <C>
[PERIOD-TYPE] YEAR
[FISCAL-YEAR-END] OCT-31-1998
[PERIOD-END] OCT-31-1998
[INVESTMENTS-AT-COST] 1371832
[INVESTMENTS-AT-VALUE] 1103392
[RECEIVABLES] 3090
[ASSETS-OTHER] 15676
[OTHER-ITEMS-ASSETS] 134523
[TOTAL-ASSETS] 1256681
[PAYABLE-FOR-SECURITIES] 60392
[SENIOR-LONG-TERM-DEBT] 0
[OTHER-ITEMS-LIABILITIES] 18614
[TOTAL-LIABILITIES] 79006
[SENIOR-EQUITY] 0
[PAID-IN-CAPITAL-COMMON] 1553698
[SHARES-COMMON-STOCK] 156241
[SHARES-COMMON-PRIOR] 0
[ACCUMULATED-NII-CURRENT] 4945
[OVERDISTRIBUTION-NII] 0
[ACCUMULATED-NET-GAINS] (112449)
[OVERDISTRIBUTION-GAINS] 0
[ACCUM-APPREC-OR-DEPREC] (268519)
[NET-ASSETS] 1177675
[DIVIDEND-INCOME] 11183
[INTEREST-INCOME] 7016
[OTHER-INCOME] (547)
[EXPENSES-NET] 12105
[NET-INVESTMENT-INCOME] 5547
[REALIZED-GAINS-CURRENT] (113051)
[APPREC-INCREASE-CURRENT] (268519)
[NET-CHANGE-FROM-OPS] (381570)
[EQUALIZATION] 0
[DISTRIBUTIONS-OF-INCOME] 0
[DISTRIBUTIONS-OF-GAINS] 0
[DISTRIBUTIONS-OTHER] 0
[NUMBER-OF-SHARES-SOLD] 196213
[NUMBER-OF-SHARES-REDEEMED] 39972
[SHARES-REINVESTED] 0
[NET-CHANGE-IN-ASSETS] 1177675
[ACCUMULATED-NII-PRIOR] 0
[ACCUMULATED-GAINS-PRIOR] 0
[OVERDISTRIB-NII-PRIOR] 0
[OVERDIST-NET-GAINS-PRIOR] 0
[GROSS-ADVISORY-FEES] 6025
[INTEREST-EXPENSE] 406
[GROSS-EXPENSE] 94364
[AVERAGE-NET-ASSETS] 874023
[PER-SHARE-NAV-BEGIN] 10.00
[PER-SHARE-NII] 0.03
[PER-SHARE-GAIN-APPREC] (2.49)
[PER-SHARE-DIVIDEND] 0.00
[PER-SHARE-DISTRIBUTIONS] 0.00
[RETURNS-OF-CAPITAL] 0.00
[PER-SHARE-NAV-END] 7.54
[EXPENSE-RATIO] .03
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] 0
</TABLE>

[ARTICLE] 6
[CIK] 0000906334
[NAME] INVESCO INTERNATIONAL FUNDS, INC.
[SERIES]
[NUMBER] 2
[NAME] INVESCO EUROPEAN FUND
<TABLE>
<S> <C>
[PERIOD-TYPE] YEAR
[FISCAL-YEAR-END] OCT-31-1998
[PERIOD-END] OCT-31-1998
[INVESTMENTS-AT-COST] 582379312
[INVESTMENTS-AT-VALUE] 656127345
[RECEIVABLES] 26127207
[ASSETS-OTHER] 100005
[OTHER-ITEMS-ASSETS] 5688854
[TOTAL-ASSETS] 688043411
[PAYABLE-FOR-SECURITIES] 5646145
[SENIOR-LONG-TERM-DEBT] 0
[OTHER-ITEMS-LIABILITIES] 10251497
[TOTAL-LIABILITIES] 15897642
[SENIOR-EQUITY] 0
[PAID-IN-CAPITAL-COMMON] 539575042
[SHARES-COMMON-STOCK] 38150545
[SHARES-COMMON-PRIOR] 18729780
[ACCUMULATED-NII-CURRENT] 169684
[OVERDISTRIBUTION-NII] 0
[ACCUMULATED-NET-GAINS] 58378482
[OVERDISTRIBUTION-GAINS] 0
[ACCUM-APPREC-OR-DEPREC] 74022561
[NET-ASSETS] 672145769
[DIVIDEND-INCOME] 8167932
[INTEREST-INCOME] 1127629
[OTHER-INCOME] (1060803)
[EXPENSES-NET] 6970793
[NET-INVESTMENT-INCOME] 1263965
[REALIZED-GAINS-CURRENT] 58673849
[APPREC-INCREASE-CURRENT] 20880367
[NET-CHANGE-FROM-OPS] 79554216
[EQUALIZATION] 0
[DISTRIBUTIONS-OF-INCOME] 1823992
[DISTRIBUTIONS-OF-GAINS] 58987304
[DISTRIBUTIONS-OTHER] 0
[NUMBER-OF-SHARES-SOLD] 144625579
[NUMBER-OF-SHARES-REDEEMED] 129075181
[SHARES-REINVESTED] 3870367
[NET-CHANGE-IN-ASSETS] 347326459
[ACCUMULATED-NII-PRIOR] 543861
[ACCUMULATED-GAINS-PRIOR] 58883886
[OVERDISTRIB-NII-PRIOR] 0
[OVERDIST-NET-GAINS-PRIOR] 0
[GROSS-ADVISORY-FEES] 3802357
[INTEREST-EXPENSE] 0
[GROSS-EXPENSE] 7188742
[AVERAGE-NET-ASSETS] 534811988
[PER-SHARE-NAV-BEGIN] 17.34
[PER-SHARE-NII] 0.04
[PER-SHARE-GAIN-APPREC] 3.58
[PER-SHARE-DIVIDEND] 0.06
[PER-SHARE-DISTRIBUTIONS] 3.28
[RETURNS-OF-CAPITAL] 0.00
[PER-SHARE-NAV-END] 17.62
[EXPENSE-RATIO] .01
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] 0
</TABLE>

[ARTICLE] 6
[CIK] 0000906334
[NAME] INVESCO INTERNATIONAL FUNDS, INC.
[SERIES]
[NUMBER] 5
[NAME] INVESCO INTERNATIONAL BLUE CHIP FUND
<TABLE>
<S> <C>
[PERIOD-TYPE] 1-MO
[FISCAL-YEAR-END] OCT-31-1998
[PERIOD-END] OCT-31-1998
[INVESTMENTS-AT-COST] 9917175
[INVESTMENTS-AT-VALUE] 9924375
[RECEIVABLES] 1440366
[ASSETS-OTHER] 0
[OTHER-ITEMS-ASSETS] 0
[TOTAL-ASSETS] 11364741
[PAYABLE-FOR-SECURITIES] 3504020
[SENIOR-LONG-TERM-DEBT] 0
[OTHER-ITEMS-LIABILITIES] 1573472
[TOTAL-LIABILITIES] 5077492
[SENIOR-EQUITY] 0
[PAID-IN-CAPITAL-COMMON] 6277877
[SHARES-COMMON-STOCK] 627517
[SHARES-COMMON-PRIOR] 0
[ACCUMULATED-NII-CURRENT] 2172
[OVERDISTRIBUTION-NII] 0
[ACCUMULATED-NET-GAINS] 0
[OVERDISTRIBUTION-GAINS] 0
[ACCUM-APPREC-OR-DEPREC] 7200
[NET-ASSETS] 6287249
[DIVIDEND-INCOME] 0
[INTEREST-INCOME] 2491
[OTHER-INCOME] 0
[EXPENSES-NET] 319
[NET-INVESTMENT-INCOME] 2172
[REALIZED-GAINS-CURRENT] 0
[APPREC-INCREASE-CURRENT] 7200
[NET-CHANGE-FROM-OPS] 7200
[EQUALIZATION] 0
[DISTRIBUTIONS-OF-INCOME] 0
[DISTRIBUTIONS-OF-GAINS] 0
[DISTRIBUTIONS-OTHER] 0
[NUMBER-OF-SHARES-SOLD] 627880
[NUMBER-OF-SHARES-REDEEMED] 363
[SHARES-REINVESTED] 0
[NET-CHANGE-IN-ASSETS] 6287249
[ACCUMULATED-NII-PRIOR] 0
[ACCUMULATED-GAINS-PRIOR] 0
[OVERDISTRIB-NII-PRIOR] 0
[OVERDIST-NET-GAINS-PRIOR] 0
[GROSS-ADVISORY-FEES] 176
[INTEREST-EXPENSE] 0
[GROSS-EXPENSE] 319
[AVERAGE-NET-ASSETS] 6287249
[PER-SHARE-NAV-BEGIN] 10.00
[PER-SHARE-NII] 0.00
[PER-SHARE-GAIN-APPREC] 0.02
[PER-SHARE-DIVIDEND] 0.00
[PER-SHARE-DISTRIBUTIONS] 0.00
[RETURNS-OF-CAPITAL] 0.00
[PER-SHARE-NAV-END] 10.02
[EXPENSE-RATIO] 0.00
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] 0
</TABLE>

[ARTICLE] 6
[CIK] 0000906334
[NAME] INVESCO INTERNATIONAL FUNDS, INC.
[SERIES]
[NUMBER] 3
[NAME] INVESCO INTERNATIONAL GROWTH FUND
<TABLE>
<S> <C>
[PERIOD-TYPE] YEAR
[FISCAL-YEAR-END] OCT-31-1998
[PERIOD-END] OCT-31-1998
[INVESTMENTS-AT-COST] 39996145
[INVESTMENTS-AT-VALUE] 44569989
[RECEIVABLES] 2669012
[ASSETS-OTHER] 24754
[OTHER-ITEMS-ASSETS] 186
[TOTAL-ASSETS] 47263941
[PAYABLE-FOR-SECURITIES] 200614
[SENIOR-LONG-TERM-DEBT] 0
[OTHER-ITEMS-LIABILITIES] 972494
[TOTAL-LIABILITIES] 1173108
[SENIOR-EQUITY] 0
[PAID-IN-CAPITAL-COMMON] 35567919
[SHARES-COMMON-STOCK] 3478622
[SHARES-COMMON-PRIOR] 5149447
[ACCUMULATED-NII-CURRENT] 0
[OVERDISTRIBUTION-NII] (7811)
[ACCUMULATED-NET-GAINS] 5953316
[OVERDISTRIBUTION-GAINS] 0
[ACCUM-APPREC-OR-DEPREC] 4577409
[NET-ASSETS] 46090833
[DIVIDEND-INCOME] 838539
[INTEREST-INCOME] 202778
[OTHER-INCOME] (97006)
[EXPENSES-NET] 1014652
[NET-INVESTMENT-INCOME] (70341)
[REALIZED-GAINS-CURRENT] 6374660
[APPREC-INCREASE-CURRENT] (4324019)
[NET-CHANGE-FROM-OPS] 2050641
[EQUALIZATION] 0
[DISTRIBUTIONS-OF-INCOME] 681867
[DISTRIBUTIONS-OF-GAINS] 6800237
[DISTRIBUTIONS-OTHER] 0
[NUMBER-OF-SHARES-SOLD] 28328985
[NUMBER-OF-SHARES-REDEEMED] 30552325
[SHARES-REINVESTED] 552515
[NET-CHANGE-IN-ASSETS] (38688422)
[ACCUMULATED-NII-PRIOR] 675691
[ACCUMULATED-GAINS-PRIOR] 6420735
[OVERDISTRIB-NII-PRIOR] 0
[OVERDIST-NET-GAINS-PRIOR] 0
[GROSS-ADVISORY-FEES] 512097
[INTEREST-EXPENSE] 61
[GROSS-EXPENSE] 1240323
[AVERAGE-NET-ASSETS] 53279318
[PER-SHARE-NAV-BEGIN] 16.46
[PER-SHARE-NII] (0.02)
[PER-SHARE-GAIN-APPREC] (0.45)
[PER-SHARE-DIVIDEND] 0.25
[PER-SHARE-DISTRIBUTIONS] 2.49
[RETURNS-OF-CAPITAL] 0.00
[PER-SHARE-NAV-END] 13.25
[EXPENSE-RATIO] .02
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] 0
</TABLE>

[ARTICLE] 6
[CIK] 0000906334
[NAME] INVESCO INTERNATIONAL FUNDS, INC.
[SERIES]
[NUMBER] 4
[NAME] INVESCO PACIFIC BASIN FUND
<TABLE>
<S> <C>
[PERIOD-TYPE] YEAR
[FISCAL-YEAR-END] OCT-31-1998
[PERIOD-END] OCT-31-1998
[INVESTMENTS-AT-COST] 47521525
[INVESTMENTS-AT-VALUE] 44035416
[RECEIVABLES] 3258519
[ASSETS-OTHER] 48854
[OTHER-ITEMS-ASSETS] 172274
[TOTAL-ASSETS] 47515063
[PAYABLE-FOR-SECURITIES] 418186
[SENIOR-LONG-TERM-DEBT] 0
[OTHER-ITEMS-LIABILITIES] 2028437
[TOTAL-LIABILITIES] 2446623
[SENIOR-EQUITY] 0
[PAID-IN-CAPITAL-COMMON] 70490092
[SHARES-COMMON-STOCK] 6733646
[SHARES-COMMON-PRIOR] 6565265
[ACCUMULATED-NII-CURRENT] 233342
[OVERDISTRIBUTION-NII] 0
[ACCUMULATED-NET-GAINS] (20458031)
[OVERDISTRIBUTION-GAINS] 0
[ACCUM-APPREC-OR-DEPREC] (5196963)
[NET-ASSETS] 45068440
[DIVIDEND-INCOME] 910732
[INTEREST-INCOME] 258341
[OTHER-INCOME] (68440)
[EXPENSES-NET] 979540
[NET-INVESTMENT-INCOME] 121093
[REALIZED-GAINS-CURRENT] (19918269)
[APPREC-INCREASE-CURRENT] 7204445
[NET-CHANGE-FROM-OPS] (12713824)
[EQUALIZATION] 0
[DISTRIBUTIONS-OF-INCOME] 666752
[DISTRIBUTIONS-OF-GAINS] 1134104
[DISTRIBUTIONS-OTHER] 0
[NUMBER-OF-SHARES-SOLD] 52503576
[NUMBER-OF-SHARES-REDEEMED] 52543507
[SHARES-REINVESTED] 208312
[NET-CHANGE-IN-ASSETS] (18874587)
[ACCUMULATED-NII-PRIOR] 523439
[ACCUMULATED-GAINS-PRIOR] 856554
[OVERDISTRIB-NII-PRIOR] 0
[OVERDIST-NET-GAINS-PRIOR] 0
[GROSS-ADVISORY-FEES] 368580
[INTEREST-EXPENSE] (2350)
[GROSS-EXPENSE] 1253416
[AVERAGE-NET-ASSETS] 50117243
[PER-SHARE-NAV-BEGIN] 9.74
[PER-SHARE-NII] 0.07
[PER-SHARE-GAIN-APPREC] (2.80)
[PER-SHARE-DIVIDEND] 0.12
[PER-SHARE-DISTRIBUTIONS] 0.20
[RETURNS-OF-CAPITAL] 0.00
[PER-SHARE-NAV-END] 6.69
[EXPENSE-RATIO] .02
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] 0
</TABLE>