As filed with the Securities and Exchange Commission on January 25, 1999
Registration No. 33-____
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-14
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
[ ] Pre-Effective Amendment No.___ [ ] Post-Effective Amendment No.___
INVESCO INTERNATIONAL FUNDS, INC.
(Exact Name of Registrant as Specified in Charter)
7800 E. Union Avenue
Denver, Colorado 80237
(Address of Principal Executive Offices)
P.O. Box 173706, Denver, Colorado 80217-3706
(Mailing Address)
(303) 930-6300
(Registrant's Area Code and Telephone Number)
Glen A. Payne, Esq.
7800 E. Union Avenue
Denver, Colorado 80237
(Name and Address of Agent for Service)
Copies to:
Susan M. Casey, Esq.
Anil D. Aggarwal, Esq.
Kirkpatrick & Lockhart LLP
1800 Massachusetts Avenue, N.W.
2nd Floor
Washington, D.C. 20036-1800
Telephone: (202) 778-9036
Approximate Date of Proposed Public Offering: as soon as practicable after
this Registration Statement becomes effective under the Securities Act of 1933.
Title of securities being registered: Common stock, par value $0.01 per
share.
<PAGE>
No filing fee is required because of reliance on Section 24(f) of the
Investment Company Act of 1940, as amended.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
<PAGE>
INVESCO INTERNATIONAL FUNDS, INC.
CONTENTS OF REGISTRATION STATEMENT
This Registration Statement contains the following papers and documents:
Cover Sheet
Contents of Registration Statement
Cross Reference Sheets
Letter to Shareholders
Notice of Special Meeting
Part A - Prospectus/Proxy Statement
Part B - Statement of Additional Information
Part C - Other Information
Signature Page
Exhibits
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INVESCO INTERNATIONAL FUNDS, INC.
FORM N-14 CROSS REFERENCE SHEET
Part A Item No. Prospectus/Proxy
and Caption Statement Caption
- --------------- -----------------
1. Beginning of Registration Statement Cover Page
and Outside Front Cover Page of
Prospectus
2. Beginning and Outside Back Cover Page Table of Contents
of Prospectus
3. Synopsis Information and Risk Factors Synopsis; Comparison of Principal
Risk Factors
4. Information About the Transaction Synopsis; The Proposed Transaction
5. Information About the Registrant Synopsis; Comparison of Principal
Risk Factors; Miscellaneous; See
also, the Prospectus for INVESCO
International Blue Chip Fund,
dated March 1, 1999, previously
filed on EDGAR, Accession Number
0000906334-98-000019.
6. Information About the Company Being Synopsis; Comparison of Principal
Acquired Risk Factors; Miscellaneous; See
also, the Prospectus for INVESCO
International Growth Fund, dated
March 1, 1999, previously filed on
EDGAR, Accession Number
0000906334-98-000019.
7. Voting Information Voting Information
8. Interest of Certain Persons and Experts Not Applicable
9. Additional Information Required for Not Applicable
Re-offering by Persons Deemed to be
Underwriters
Part B Item No. Statement of Additional
and Caption Information Caption
- --------------- -----------------------
10. Cover Page Cover Page
11. Table of Contents Not Applicable
<PAGE>
12. Additional Information About the Statement of Additional
Registrant Information of INVESCO
International Blue Chip Fund,
dated March 1, 1999, previously
filed on EDGAR, Accession Number
0000906334-98-000019.
13. Additional Information About the Statement of Additional
Company Being Acquired Information of INVESCO
International Growth Fund, dated
March 1, 1999, previously filed on
EDGAR, Accession Number
0000906334-98-000019.
14. Financial Statements Annual Report of INVESCO
International Blue Chip Fund for
Fiscal Period Ended October 31,
1998, previously filed on EDGAR,
Accession Number 0000906334-98-
000018; Annual Report of INVESCO
International Growth Fund for
Fiscal Year Ended October 31,
1998, previously filed on EDGAR,
Accession Number 0000906334-98-
000018.
<PAGE>
Part C
------
Information required to be included in Part C is set forth under the
appropriate item, so numbered, in Part C of this Registration Statement.
<PAGE>
INVESCO INTERNATIONAL FUNDS, INC.
PART A
<PAGE>
INVESCO INTERNATIONAL GROWTH FUND
(a series of INVESCO International Funds, Inc.)
---------------------------------------------
March __, 1999
Dear INVESCO International Growth Fund Shareholder:
The attached proxy materials describe a proposal that INVESCO International
Growth Fund ("Growth Fund") reorganize and become part of INVESCO International
Blue Chip Fund ("Blue Chip Fund"). If the proposal is approved and implemented,
each shareholder of Growth Fund will automatically become a shareholder of Blue
Chip Fund.
The attached proxy materials also describe other proposals to approve
certain changes in the fundamental investment restrictions of Growth Fund (if
the reorganization is not approved, or cannot be completed for some other
reason), to elect directors, and to ratify the appointment of
PricewaterhouseCoopers LLP as independent accountants of Growth Fund.
YOUR BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ALL PROPOSALS. The board
believes that combining the two Funds will benefit Growth Fund's shareholders by
providing them with a portfolio that has an investment objective that is
substantially identical to that of Growth Fund, that has a similar investment
strategy and that, both before and after taking into account voluntary fee
waivers and expense reimbursements, will have lower operating expenses as a
percentage of net assets. If, however, the reorganization is not approved or
cannot be completed for some other reason, you are also being asked to approve
certain changes to the fundamental investment restrictions of Growth Fund that
will update and streamline the restrictions. The attached proxy materials
provide more information about the proposed reorganization and the two Funds, as
well as the proposed changes in fundamental investment restrictions and the
other matters you are being asked to vote upon.
YOUR VOTE IS IMPORTANT NO MATTER HOW MANY SHARES YOU OWN. Voting your
shares early will permit Growth Fund to avoid costly follow-up mail and
telephone solicitation. After reviewing the attached materials, please complete,
date and sign your proxy card and mail it in the enclosed return envelope today.
As an alternative to using the paper proxy card to vote, you may vote by mail,
by telephone, by facsimile, through the Internet, or in person.
Very truly yours,
/s/ Mark H. Williamson
-----------------------
Mark H. Williamson
President
INVESCO International Growth Fund
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[HEADLINE] WHAT YOU SHOULD KNOW ABOUT
THIS PROPOSED FUND MERGER
March 23, 1999
INVESCO AND THE FUND'S BOARD OF DIRECTORS ENCOURAGE YOU TO READ THE ENCLOSED
PROXY STATEMENT CAREFULLY. THE FOLLOWING IS A BRIEF OVERVIEW OF THE KEY ISSUE.
WHY IS MY FUND HOLDING A SPECIAL SHAREHOLDERS MEETING?
The main reason for the meeting is so that shareholders of INVESCO International
Growth Fund can decide whether or not to reorganize their fund. If shareholders
decide in favor of the proposal, INTERNATIONAL GROWTH FUND WILL MERGE with
another, similar mutual fund managed by INVESCO, and you will become a
shareholder of INVESCO INTERNATIONAL BLUE CHIP FUND. Whether or not shareholders
decide they wish to merge the Funds, there are other matters of business to be
considered. So, no matter how you choose to vote on the proposed merger, please
do review all of the other proposals and vote on them as well.
WHAT ARE THE ADVANTAGES OF MERGING THE FUNDS?
There are three key potential advantages:
INTERNATIONAL BLUE CHIP GROWTH FUND IS MANAGED BY AN AWARD-WINNING TEAM OF
INTERNATIONAL INVESTING EXPERTS with INVESCO Global Asset Management.
o By combining the Funds, SHAREHOLDERS MAY ENJOY LOWER EXPENSE RATIOS over time.
Larger funds tend to enjoy economies of scale not available to funds with
smaller assets under management.
o These LOWER COSTS MAY LEAD TO STRONGER PERFORMANCE, since total return to a
fund's shareholders is net of fund expenses.
The potential benefits and possible disadvantages are explained in more detail
in the enclosed proxy statement.
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HOW ARE THESE TWO FUNDS ALIKE?
The investment goals of the Funds are basically the same: They both seek high
total return through capital appreciation and current income. Each invests
primarily overseas. In general, the Funds are subject to similar risks and offer
similar opportunities for growth and income. There are some differences in
investment strategy:
o INTERNATIONAL GROWTH FUND may invest in the stocks of any size company. This
Fund may also invest in debt securities, while International Blue Chip Fund
currently cannot.
o Through a bottom-up stock analysis process, INTERNATIONAL BLUE CHIP FUND
specifically focuses on large-capitalization stocks of high quality companies,
which may experience less price volatility than smaller-cap stocks. In addition,
the managers of this Fund enjoy greater investment flexibility; for instance,
they may use certain financial instruments to hedge the portfolio and further
help reduce risk.
WHAT HAPPENS IF SHAREHOLDERS DECIDE IN FAVOR OF A MERGER?
A Closing Date will be set for the reorganization. Shareholders will receive
full and fractional shares of International Blue Chip Fund equal in value to the
shares of International Growth Fund that they owned on the Closing Date.
The net asset value per share of International Blue Chip Fund will not be
affected by the transaction. That means the reorganization will not result in a
dilution of any shareholder's interest.
IF THE FUNDS MERGE, WILL THERE BE TAX CONSEQUENCES FOR ME?
Unlike a transaction where you direct INVESCO to sell shares of one fund in
order to buy shares of another, the reorganization WILL NOT BE CONSIDERED A
TAXABLE EVENT. The Funds themselves will recognize no gains or losses on assets
as a result of a reorganization. So you will not have reportable capital gains
or losses due to the reorganization.
However, you should consult your own tax advisor regarding any possible effect a
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reorganization might have on you, given your personal circumstances --
particularly regarding state and local taxes.
WHO WILL PAY FOR THIS REORGANIZATION?
The expenses of the reorganization, including legal expenses, printing,
packaging and postage, plus the costs of any supplementary solicitation, will be
borne partly by INVESCO and partly by the two Funds.
WHAT DOES THE FUND'S BOARD OF DIRECTORS RECOMMEND?
The Board believes you should vote in favor of the reorganization. More
important, though, the directors recommend that you study the issues involved,
call us with any questions, and vote promptly to ensure that a quorum of
International Growth Fund shares will be represented at the Fund's special
shareholders meeting.
WHERE DO I GET MORE INFORMATION ABOUT INVESCO INTERNATIONAL BLUE CHIP FUND?
o Please visit our Web site at WWW.INVESCO.COM
o Or call Investor Services toll-free at 1-800-646-8372
[BACK COVER] YOU SHOULD KNOW WHAT INVESCO KNOWS
At INVESCO, we've built a global reputation on professional investment
management. Some of the world's largest institutions and more than a million
individuals rely on our knowledgeable investment specialists for effective
management of their portfolios. INVESCO provides investors the perspective
gained from more than 65 years of helping clients seek their financial goals.
The heart of INVESCO's business is to provide strong core mutual fund portfolios
designed as solid foundations for our clients' investments. We draw on the
resources of affiliates worldwide, so we have seasoned experts in the investment
strategies you want to pursue -- both for your core investments as well as to
meet special needs. And we offer award-winning service to help you better take
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advantage of our investment expertise. Call us to learn more about your choices
at INVESCO.
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INVESCO INTERNATIONAL GROWTH FUND (A SERIES OF INVESCO
INTERNATIONAL FUNDS, INC.)
------------
NOTICE OF
SPECIAL MEETING OF SHAREHOLDERS
MAY 20, 1999
------------
To The Shareholders:
A special meeting of shareholders of the INVESCO International Growth Fund
("Growth Fund"), a series of INVESCO International Funds, Inc. ("International
Funds"), will be held on May 20, 1999, at 10:00 a.m., Mountain Time, at the
office of INVESCO Funds Group, Inc., 7800 E. Union Avenue, Denver, Colorado, for
the following purposes:
(1) To approve a Plan of Reorganization and Termination under which the
INVESCO International Blue Chip Fund ("Blue Chip Fund"), another series of
International Funds would acquire all of the assets of Growth Fund in exchange
solely for shares of Blue Chip Fund and the assumption by Blue Chip Fund of all
of Growth Fund's liabilities, followed by the distribution of those shares to
the shareholders of Growth Fund, all as described in the accompanying
Prospectus/Proxy Statement;
(2) To approve certain changes to the fundamental investment restrictions
of Growth Fund;
(3) To elect a board of directors of International Funds;
(4) To ratify the selection of PricewaterhouseCoopers LLP as independent
accountants of Growth Fund, Inc.; and
(5) To transact such other business as may properly come before the meeting
or any adjournment thereof.
<PAGE>
You are entitled to vote at the meeting and any adjournment thereof if you
owned shares of Growth Fund at the close of business on March 12, 1999. IF YOU
ATTEND THE MEETING, YOU MAY VOTE YOUR SHARES IN PERSON. IF YOU DO NOT EXPECT TO
ATTEND THE MEETING, PLEASE COMPLETE, SIGN, DATE, AND RETURN THE ENCLOSED PROXY
CARD IN THE ENCLOSED POSTAGE PAID ENVELOPE.
By order of the board of directors,
Glen A. Payne
Secretary
March ___, 1999
Denver, Colorado
YOUR VOTE IS IMPORTANT
NO MATTER HOW MANY SHARES YOU OWN
Please indicate your voting instructions on the enclosed proxy card, sign
and date the card, and return it in the envelope provided. IF YOU SIGN, DATE AND
RETURN THE PROXY CARD BUT GIVE NO VOTING INSTRUCTIONS, YOUR SHARES WILL BE VOTED
"FOR" THE PROPOSALS DESCRIBED ABOVE. In order to avoid the additional expense of
further solicitation, we ask your cooperation in mailing your proxy card
promptly. As an alternative to using the paper proxy card to vote, you may vote
by mail, by telephone, through the Internet, by facsimile machine, or in person.
To vote by telephone, please call the toll-free number listed on the enclosed
proxy card(s). Shares that are registered in your name, as well as shares held
in "street name" through a broker, may be voted via the Internet or by
telephone. To vote in this manner, you will need the 12-digit "control"
number(s) that appear on your proxy card(s). To vote via the Internet, please
access www.___.com on the World Wide Web. In addition, shares that are
registered in your name may be voted by faxing your completed proxy card(s) to
1-800______. If we do not receive your completed proxy cards after several
weeks, you may be contacted by our proxy solicitor, [name of proxy solicitor
company]. Our proxy solicitor will remind you to vote your shares or will record
your vote over the phone if you choose to vote in that manner. You may also call
[name of proxy solicitor company] directly at [1-800-_____, extension ___,] and
vote by phone.
Unless proxy cards submitted by corporations and partnerships are signed by
the appropriate persons as indicated in the voting instructions on the proxy
card, they will not be voted.
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INVESCO INTERNATIONAL GROWTH FUND
(a series of INVESCO INTERNATIONAL FUNDS, INC.)
---------------------------------------------
7800 East Union Avenue
DEnver, Colorado 80237
(Toll Free) 1-800-646-8372
PROSPECTUS/PROXY STATEMENT
March __, 1999
This Prospectus/Proxy Statement ("Proxy Statement") is being furnished to
shareholders of the INVESCO International Growth Fund ("Growth Fund"), a series
of INVESCO International Funds, Inc. ("International Funds"), in connection with
the solicitation of proxies by its Board for use at a special meeting of its
shareholders to be held on May 20, 1999, at 10:00 a.m., Mountain Time, and at
any adjournment of the meeting, if the meeting is adjourned for any reason.
As more fully described in this Proxy Statement, one of the main purposes
of the meeting is to vote on a proposed reorganization. In the reorganization,
the INVESCO International Blue Chip Fund ("Blue Chip Fund"), another series of
International Funds, would acquire all of the assets of Growth Fund in exchange
solely for shares of Blue Chip Fund and the assumption by Blue Chip Fund of all
of the liabilities of Growth Fund. Those shares of Blue Chip Fund would then be
distributed to the shareholders of Growth Fund, so that each shareholder of
Growth Fund would receive a number of full and fractional shares of Blue Chip
Fund having an aggregate value that, on the effective date of the
reorganization, is equal to the aggregate net asset value of the shareholder's
shares of Growth Fund. As soon as practicable following the distribution of
shares, Growth Fund will be terminated.
Blue Chip Fund is a diversified series of International Funds, which is an
open-end management investment company. Blue Chip Fund's investment objective is
to achieve a high total return through long-term capital appreciation and
current income.
This Proxy Statement, which should be retained for future reference, sets
forth concisely the information about the reorganization and Blue Chip Fund that
a shareholder should know before voting on the reorganization. A Statement of
Additional Information, dated March __, 1999, relating to the reorganization and
including historical financial statements, has been filed with the Securities
and Exchange Commission ("SEC") and is incorporated herein by reference (that
is, the Statement of Additional Information is legally a part of this Proxy
Statement). A Prospectus and a Statement of Additional Information for Growth
Fund, each dated March 1, 1999, and Growth Fund's Annual Report to Shareholders
for the fiscal year ended October 31, 1998, have been filed with the SEC and are
incorporated herein by reference. A Prospectus and a Statement of Additional
Information for Blue Chip Fund, each dated March 1, 1999, and Blue Chip Fund's
Annual Report to Shareholders for the fiscal period ended October 31, 1998, have
been filed with the SEC and also are incorporated herein by reference. Copies of
Blue Chip Fund's Prospectus and Annual Report to Shareholders accompany this
<PAGE>
Proxy Statement. Copies of the other referenced documents, as well as Growth
Fund's Annual Report to Shareholders for the fiscal year period October 31,
1998, may be obtained without charge, and further inquiries may be made, by
writing to INVESCO Distributors, Inc., P.O. Box 173706, Denver, Colorado
80217-3706, or by calling toll-free 1-800-646-8372.
The Securities and Exchange Commission ("SEC") maintains a website
(http://www.sec.gov) that contains the Statement of Additional Information and
other material incorporated by reference, together with other information
regarding Blue Chip Fund and Growth Fund.
THE SEC HAS NOT APPROVED OR DISAPPROVED THE SHARES OF THE BLUE CHIP FUND OR
DETERMINED WHETHER THIS PROXY STATEMENT IS ACCURATE OR COMPLETE. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
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TABLE OF CONTENTS
VOTING INFORMATION.............................................................1
PART I: THE REORGANIZATION.....................................................4
PROPOSAL 1. To approve a Plan of Reorganization and Termination
under which Blue Chip Fund would acquire all of the
assets of Growth Fund in exchange solely for shares of Blue Chip Fund
and the assumption by Blue Chip Fund of all of Growth Fund's liabilities
followed by the distribution of those shares to the shareholders of
Growth Fund................................................................4
Synopsis.................................................................. 4
Comparison of Principal Risk Factors .....................................12
The Proposed Transaction..................................................14
PART II: PROPOSED ROUTINE ORGANIZATIONAL MATTERS AND
MODIFICATIONS TO FUNDAMENTAL INVESTMENT
LIMITATIONS.......................................................19
PROPOSAL 2. To approve amendments to the fundamental investment
restrictions of Growth Fund...............................................19
a. Modification of fundamental restriction on industry concentration..20
b. Modification of fundamental restriction on issuer diversification..21
c. Modification of fundamental restriction on underwriting............22
d. Elimination of fundamental restriction on investing in companies
for the purpose of exercising control or management..........22
e. Modification of fundamental restriction on borrowing and adoption
of non-fundamental restriction on borrowing..................22
f. Modification of fundamental restriction on the issuance of
senior securities............................................23
g. Elimination of fundamental restrictions on mortgaging, pledging or
hypothecating securities.....................................24
h. Elimination of fundamental restriction concerning short sales and
margin purchases.............................................24
i. Modification of fundamental restriction on real estate
investment...................................................25
j. Modification of fundamental restriction on loans.................25
k. Modification of fundamental restriction on investing
in commodities...............................................26
l. Modification of fundamental restriction regarding investing
in another investment company and adoption of a
non-fundamental restriction regarding investment in
securities issued by other investment companies..............27
m. Elimination of fundamental restriction on investing in
illiquid securities and adoption of non-fundamental
restriction on investing in illiquid securities .............28
PROPOSAL 3. To elect a Board of Directors of International Funds.........29
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PROPOSAL 4. To ratify the selection of
PricewaterhouseCoopers LLP as Independent Accountants of the Fund.........35
OTHER BUSINESS................................................................36
INFORMATION CONCERNING ADVISER, SUB-ADVISER, DISTRIBUTOR,
AND AFFILIATED COMPANIES......................................................36
MISCELLANEOUS.................................................................37
Available Information.....................................................37
Legal Matters.............................................................38
Experts...................................................................38
APPENDIX A: PLAN OF REORGANIZATION AND TERMINATION.......................... A-1
APPENDIX B: PRINCIPAL SHAREHOLDERS.......................................... B-1
<PAGE>
INVESCO INTERNATIONAL GROWTH FUND
(a series of INVESCO International Funds, Inc.)
---------------------------------------------
-----------
PROSPECTUS/PROXY STATEMENT
SPECIAL MEETING OF SHAREHOLDERS
May 20, 1999
-----------
VOTING INFORMATION
This Prospectus/Proxy Statement ("Proxy Statement") is being furnished to
shareholders of INVESCO International Growth Fund ("Growth Fund"), a series of
INVESCO International Funds, Inc. ("International Funds"), in connection with
the solicitation of proxies from Growth Fund shareholders by the board of
directors of International Funds ("Board") for use at a special meeting of
shareholders to be held on May 20, 1999 ("Meeting"), and at any adjournment of
the Meeting. This Proxy Statement will first be mailed to shareholders on or
about March 23, 1999.
One-third of Growth Fund's shares outstanding on March 12, 1999,
represented in person or by proxy, shall constitute a quorum and must be present
for the transaction of business at the Meeting. If a quorum is not present at
the Meeting or a quorum is present but sufficient votes to approve one or more
of the proposals are not received, the persons named as proxies may propose one
or more adjournments of the Meeting to permit further solicitation of proxies.
Any such adjournment will require the affirmative vote of a majority of those
shares represented at the Meeting in person or by proxy. The persons named as
proxies will vote those proxies that they are entitled to vote FOR any proposal
in favor of such an adjournment and will vote those proxies required to be voted
AGAINST a proposal against such adjournment. A shareholder vote may be taken on
one or more of the proposals in this Proxy Statement prior to any such
adjournment if sufficient votes have been received and it is otherwise
appropriate.
Broker non-votes are shares held in street name for which the broker
indicates that instructions have not been received from the beneficial owners or
other persons entitled to vote and for which the broker does not have
discretionary voting authority. Abstentions and broker non-votes will be counted
as shares present for purposes of determining whether a quorum is present but
will not be voted for or against any adjournment or proposal. Accordingly,
abstentions and broker non-votes effectively will be a vote against adjournment
or against any proposal where the required vote is a percentage of the shares
present or outstanding. Abstentions and broker non-votes will not be counted,
however, as votes cast for purposes of determining whether sufficient votes have
been received to approve a proposal.
The individuals named as proxies on the enclosed proxy card will vote in
accordance with your directions as indicated on the proxy card, if your proxy
card is received properly executed by you or by your duly appointed agent or
attorney-in-fact. If you sign, date and return the proxy card, but give no
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voting instructions, your shares will be voted in favor of approval of each of
the proposals and the duly appointed proxies may, in their discretion, vote upon
such other matters as may come before the Meeting. The proxy card may be revoked
by giving another proxy or by letter or telegram revoking the initial proxy. To
be effective, revocation must be received by International Funds prior to the
Meeting and must indicate your name and account number. If you attend the
Meeting in person you may, if you wish, vote by ballot at the Meeting, thereby
canceling any proxy previously given.
In order to reduce costs, the notices to a shareholder having more than one
account in Growth Fund listed under the same Social Security number at a single
address have been combined. The proxy cards have been coded so that a
shareholder's votes will be counted for each such account.
As of March 12, 1999 ("Record Date"), Growth Fund had _______ shares of
common stock outstanding. The solicitation of proxies, the cost of which will be
borne half by INVESCO Funds Group, Inc. ("INVESCO"), the investment adviser and
transfer agent of Growth Fund and half by INVESCO International Blue Chip Fund
("Blue Chip Fund"), another series of International Funds, and Growth Fund, will
be made primarily by mail but also may be made by telephone or oral
communications by representatives of INVESCO and INVESCO Distributors, Inc.
("IDI"), the distributor of the INVESCO group of investment companies ("INVESCO
Funds"), who will not receive any compensation for these activities from either
Growth Fund or Blue Chip Fund, or by [name of proxy solicitor company],
professional proxy solicitors, who will be paid fees and expenses of up to
approximately $_______ for soliciting services. If votes are recorded by
telephone, [name of proxy solicitor company] will use procedures designed to
authenticate shareholders' identities, to allow shareholders to authorize the
voting of their shares in accordance with their instructions, and to confirm
that a shareholder's instructions have been properly recorded. You may also vote
by mail, by facsimile or through a secure Internet site. Proxies voted by
telephone, facsimile or Internet may be revoked at any time before they are
voted in the same manner that proxies voted by mail may be revoked.
Except as set forth in Appendix B, INVESCO does not know of any person who
owns beneficially 5% or more of the shares of Growth Fund or Blue Chip Fund
(each a "Fund"). Directors and officers of International Funds own in the
aggregate less than 1% of the shares of Growth Fund.
VOTE REQUIRED. Approval of Proposal 1 requires the affirmative vote of a
majority of the outstanding voting securities of Growth Fund. Approval of
Proposal 2 requires the affirmative vote of a "majority of the outstanding
voting securities" of Growth Fund, as defined in the Investment Company Act of
1940, as amended ("1940 Act"). This means that Proposal 2 must be approved by
the lesser of (1) 67% of Growth Fund's shares present at a meeting of
shareholders if the owners of more than 50% of Growth Fund's shares then
outstanding are present in person or by proxy or (2) more than 50% of Growth
Fund's outstanding shares. A plurality of the votes cast at the Meeting, and at
the concurrent meeting of the shareholders of all other series of International
Funds, taken in the aggregate, is sufficient to approve Proposal 3. Approval of
Proposal 4 requires the affirmative vote of a majority of the votes present at
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the Meeting, provided a quorum is present. Each outstanding full share of Growth
Fund is entitled to one vote, and each outstanding fractional share thereof is
entitled to a proportionate fractional share of one vote. If any Proposal is not
approved by the requisite vote of shareholders of Growth Fund, the persons named
as proxies may propose one or more adjournments of the Meeting to permit further
solicitation of proxies.
PART I. THE REORGANIZATION
PROPOSAL 1. TO APPROVE A PLAN OF REORGANIZATION AND TERMINATION
("REORGANIZATION PLAN") UNDER WHICH BLUE CHIP FUND WOULD ACQUIRE ALL
OF THE ASSETS OF GROWTH FUND IN EXCHANGE SOLELY FOR SHARES OF BLUE
CHIP FUND AND THE ASSUMPTION BY BLUE CHIP FUND OF ALL OF GROWTH FUND'S
LIABILITIES, FOLLOWED BY THE DISTRIBUTION OF THOSE SHARES TO THE
SHAREHOLDERS OF GROWTH FUND ("REORGANIZATION").
SYNOPSIS
The following is a summary of certain information contained elsewhere in
this Proxy Statement, the Prospectus and Statement of Additional Information of
Blue Chip Fund (which are incorporated herein by reference), the Prospectus and
Statement of Additional Information of Growth Fund (which are incorporated
herein by reference), and the Reorganization Plan (which is attached as Appendix
A to this Proxy Statement). As discussed more fully below, the Board believes
that the Reorganization will benefit Growth Fund's shareholders. Blue Chip Fund
has an investment objective that is substantially similar to the investment
objective of Growth Fund and has similar investment strategies. It is
anticipated that, following the Reorganization, the total operating expenses for
the combined Fund, both before and after taking into account voluntary fee
waivers and expense reimbursements, will be lower as a percentage of net assets
than those of Growth Fund.
THE PROPOSED REORGANIZATION
The Board considered and approved the Reorganization Plan at a meeting held
on [February 3], 1999. The Reorganization Plan provides for the acquisition of
all the assets of Growth Fund by Blue Chip Fund, in exchange solely for shares
of common stock of Blue Chip Fund and the assumption by Blue Chip Fund of all
the liabilities of Growth Fund. Growth Fund then will distribute those shares of
Blue Chip Fund to its shareholders, so that each Growth Fund shareholder will
receive the number of full and fractional shares that is equal in value to the
value of the shareholder's holdings in Growth Fund as of the day the
Reorganization is completed. Growth Fund will be terminated as soon as
practicable thereafter.
The Reorganization will occur as of the close of business on June __, 1999,
or at a later date when the conditions to the closing are satisfied ("Closing
Date").
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For the reasons set forth below under "The Proposed Transaction Reasons for
the Reorganization," the Board, including its directors who are not "interested
persons," as that term is defined in the 1940 Act, of International Funds
("Independent Directors"), has determined that the Reorganization is in the best
interests of Growth Fund, that the terms of the Reorganization are fair and
reasonable and that the interests of Growth Fund's shareholders will not be
diluted as a result of the Reorganization. Accordingly, the Board recommends
approval of the transaction. In addition, the Board, including its Independent
Directors, has determined that the Reorganization is in the best interests of
Blue Chip Fund, that the terms of the Reorganization are fair and reasonable and
that the interests of Blue Chip Fund's shareholders will not be diluted as a
result of the Reorganization.
COMPARATIVE FEE TABLE
Certain fees and expenses that Growth Fund's shareholders pay, directly or
indirectly, are slightly different from those incurred by Blue Chip Fund's
shareholders, although neither Fund's shares are subject to any shareholder
transaction expenses, I.E., there are no sales charges on shares purchased or
deferred sales charges for shares redeemed. The following tables show (1) fees
currently incurred by shareholders of each Fund and fees that each shareholder
will incur after giving effect to the Reorganization, and (2) the current fees
and expenses incurred for the fiscal year ended October 31, 1998 by Blue Chip
Fund and Growth Fund, and PRO FORMA fees for Blue Chip Fund after giving effect
to the Reorganization.
SHAREHOLDER FEES (fees paid directly from your investment)
Blue Chip Fund Growth Fund Combined Fund
-------------- ----------- -------------
Sales charge (load) on purchases of None None None
shares
Sales charge (load) on reinvested None None None
dividends
Redemption fee or deferred sales None* None None
charge (load)
Exchange Fee None* None None
ANNUAL FUND OPERATING EXPENSES (expenses that are deducted from Fund assets) (as
a percentage of average daily net assets)
Combined Fund
Blue Chip Fund Growth Fund (Pro Forma)
-------------- ----------- -------------
Management Fees 0.75% 1.00% 0.75%
Distribution (12b-1) Fees(1) 0.25% 0.25%(1) 0.25%
Other Expenses 2.24%(3) 1.18%(2), (5) 1.14%
----- ----- -----
Total Fund Operating Expenses 3.24%(3)(4) 2.43%(2), (5) 2.14%
6
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* [Effective April __,1999, Blue Chip Fund will impose redemption and exchange
fees of 2.00% on shares held three months or less and 1.00% on shares held
more than three months but less than six months. The fee will be retained by
the Fund to offset transaction costs and other expenses associated with
short-term redemptions and exchanges. This redemption fee will not apply to
shares of Blue Chip Fund issued in the Reorganization.]
(1)Because each Fund pays distribution fees, long-term shareholders could pay
more than the economic equivalent of the maximum front-end sales charge
permitted by the National Association of Securities Dealers, Inc. Effective
November 1, 1997, Growth Fund was authorized to pay a distribution (12b-1)
fee of up to 0.25% of new assets (new sales of shares, exchanges into the
Fund, and reinvestments of dividends and other distributions made on or after
November 1, 1997). For the fiscal year ended October 31, 1998, actual
distribution (12b-1) fees were 0.22% of average net assets.
(2)Growth Fund's actual Other Expenses and Total Fund Operating Expenses were
lower than the figures shown, because their transfer agent and/or custodian
fees were reduced under an expense offset arrangement. Because of an SEC
requirement, the figures shown above DO NOT reflect these reductions.
(3)These are estimated expenses for the first year of Blue Chip Fund's
operations. It is expected that expenses will decrease as the Fund's asset
size increases.
(4)If necessary in order to keep expenses competitive, INVESCO Funds Group,
Inc. ("INVESCO") and INVESCO Global Asset Management (N.A.) ("IGAM") as
adviser and sub-adviser, respectively, will voluntarily reimburse Blue Chip
Fund for certain expenses in excess of 2.00% (excluding excess amounts that
have been offset by the expense offset arrangement described above) of the
Fund's average net assets for a period of at least one year after the
Reorganization.
(5)Certain expenses of Growth Fund are being absorbed voluntarily by INVESCO as
adviser. Accordingly, the Other Expenses and Total Fund Operating Expenses
paid, after absorption, by Growth Fund were 0.80% and 2.05%, respectively.
INVESCO does not intend to continue absorbing the expenses of Growth Fund.
Thus, if the Reorganization is not approved, Growth Fund's actual Other
Expenses and Total Fund Operating Expenses paid by the Fund will likely
increase.
EXAMPLE OF EFFECT ON FUND EXPENSES
This Example is intended to help you compare the cost of investing in
Growth Fund with the cost of investing in Blue Chip Fund and the cost of
investing in Blue Chip Fund assuming the Reorganization has been completed.
The Example assumes that you invest $10,000 in the specified Fund for the
time periods indicated and redeem all of your shares at the end of those
periods. The Example also assumes that your investment has a 5% return each
year, that all dividends and other distributions are reinvested and that the
Fund's operating expenses remain the same. Although your actual costs and
returns may be higher or lower, based on these assumptions, your costs would be:
ONE YEAR THREE YEARS FIVE YEARS TEN YEARS
-------- ----------- ---------- ---------
Blue Chip Fund $332 $1,013 $1,717 $3,583
Growth Fund $249 $766 $1,309 $2,792
Combined Fund $219 $677 $1,160 $2,492
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THIS EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
EXPENSES, AND EACH FUND'S ACTUAL EXPENSES MAY BE MORE OR LESS THAN THOSE SHOWN.
The actual expenses of each Fund will depend upon, among other things, the level
of its average net assets and the extent to which it incurs variable expenses,
such as transfer agency costs.
FORMS OF ORGANIZATION
Each Fund is a separate series of International Funds, a no-load, open-end,
diversified management investment company that was organized as a Maryland
corporation on April 2, 1993. On July 1, 1993, Growth Fund acquired all of the
assets and assumed all of the liabilities of the Financial International Growth
Fund of Financial Series Trust, a Massachusetts business trust organized on July
15, 1987. All financial and other information about Growth Fund for the periods
prior to July 1, 1993 relate to such former fund. International Funds' Articles
of Incorporation authorize the directors to issue up to 500 million shares, par
value $0.01 per share. Of the authorized shares of International Funds, 100
million have been allocated to Blue Chip Fund and 100 million have been
allocated to Growth Fund. Neither Growth Fund nor Blue Chip Fund is required to
(nor do they) hold annual shareholder meetings. Neither Growth Fund nor Blue
Chip Fund issues share certificates.
INVESTMENT ADVISER
INVESCO is the investment adviser to each Fund. In this capacity, INVESCO
supervises all aspects of each Fund's operations and administration. IGAM is the
sub-adviser of Blue Chip Fund and INVESCO Asset Management Limited ("IAML") is
the sub-adviser of Growth Fund. Each sub-adviser is primarily responsible for
managing the applicable Fund's investments.
INVESCO is currently paid (1) by Blue Chip Fund a monthly management fee
computed at the annual rate of 0.75% of the Fund's average net assets, and (2)
by Growth Fund a monthly management fee computed at the annual rate of 1.00% on
the first $500 million of the Fund's average net assets, 0.75% on the next $500
million of such assets, and 0.65% on such assets over $1 billion. For the fiscal
period ended October 31, 1998 Blue Chip Fund paid an investment management fee
of 0.01% and for the fiscal year ended October 31, 1998 Growth Fund paid a fee
of 1.00% of its respective average net assets. Following the Reorganization, the
initial management fee for the combined fund is expected to be 0.75% of average
net assets. With respect to Blue Chip Fund, INVESCO (not the Fund) pays IGAM a
fee for its sub-advisory services in an amount equal to 0.30% of the Fund's
average net assets. With respect to Growth Fund INVESCO (not the Fund) pays IAML
a fee for its sub-advisory services in an amount equal to up to 0.40% on the
first $500 million of the Fund's average net assets, 0.30% on the next $500
million of such assets, and 0.26% on such assets over $1 billion.
Following the Reorganization, INVESCO, in its capacity as investment
adviser, and IGAM, in its capacity as sub-adviser, to Blue Chip Fund, will have
responsibility for managing the Fund's combined assets.
INVESTMENT OBJECTIVES AND POLICIES
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<PAGE>
The investment objective and policies of each Fund are set forth below.
Blue Chip Fund has an investment objective generally similar to that of Growth
Fund in that each Fund seeks high total return through investment primarily in
equity securities of foreign companies. However, Blue Chip Fund invests
primarily in securities of larger, more established companies whereas Growth
Fund typically invests in a broader range of companies. In addition, although
each Fund may invest in markets throughout the world, Blue Chip Fund generally
invests a smaller portion of its assets in the securities of emerging markets
issuers than does Growth Fund. Growth Fund also may invest in debt securities in
pursuing its objective. Blue Chip Fund does not currently have this capability.
Blue Chip Fund may use options, futures, forward contracts and a variety of
other financial instruments for risk management and certain investment purposes.
Growth Fund is limited in this regard to the use of forward foreign currency
contracts for hedging purposes. There can be no assurance that either Fund will
achieve its investment objective.
BLUE CHIP FUND. The investment objective of Blue Chip Fund is to seek high
total return through long-term capital appreciation and current income. The Fund
seeks to accomplish its objective by investing substantially all (and in no
event less than 65%) of its assets in securities of blue chip foreign companies
identified by applying both a quantitative analysis and an individual company
analysis. A blue chip company is a large company with a solid record of stable
earnings and/or dividend growth and a reputation for high quality management.
Such securities may take the form of American Depositary Receipts ("ADRs"), but
may also consist of common or preferred stocks of foreign issuers which are
registered with the SEC and traded on U.S. stock exchanges, as well as foreign
securities traded on overseas exchanges. The Fund primarily invests in medium-
and large-market capitalization securities traded in the primary international
securities markets but may, on occasion, have limited exposure to smaller,
emerging stock markets. The Fund in all cases attempts to select securities that
have a higher than average probability of extending their established
performance records into the future.
Blue Chip Fund may use various types of financial instruments, some of
which are derivatives, to attempt to manage the risk of its investments or, in
certain circumstances, for investment purposes. These financial instruments
include options, futures contracts, forward contracts, swaps, caps, floors and
collars ("Financial Instruments").
GROWTH FUND. The investment objective of Growth Fund is to seek high total
return through capital appreciation and current income. The Fund seeks to
accomplish its objective by investing substantially all of its assets in foreign
securities. During normal market conditions, at least 65% of the Fund's total
assets will be invested in foreign securities representing at least three
different countries outside the United States. The Fund invests principally in
equity securities (common stocks and securities convertible into common stocks,
including convertible debt obligations and convertible preferred stocks),
although it also may purchase debt securities. Such debt securities either will
be rated "investment grade" by a nationally recognized statistical rating agency
or determined by the Fund's investment adviser or sub-adviser to be of
comparable quality. The Fund is not required to dispose of debt securities that
are downgraded below investment grade. The Fund may invest in companies based in
(or governments of or within) various areas of the world, including the Far
East, Western Europe, Australia and Canada. The securities in which the Fund
9
<PAGE>
invests typically will be traded on the principal stock exchanges in such
countries but also may be traded on regional stock exchanges or on the
over-the-counter markets in such countries. The Fund may invest in companies
located in developing or emerging market countries. In general, the Fund's
investment adviser and sub-adviser consider this to include any country that is
included in the Morgan Stanley Capital International World Index, a group
generally consisting of countries located in Central and South America, Middle
and Eastern Europe, Asia and Africa. The Fund will limit its investments in
developing countries to no more than 20% of its total assets.
Growth Fund may enter into contracts to purchase or sell foreign currencies
at a future date as a hedge against fluctuations in foreign exchange rates
pending the settlement of transactions in foreign securities or during the time
the Fund holds foreign securities. The Fund will only attempt to hedge its
foreign currency exposure to the extent, if any, deemed appropriate by the
Fund's investment adviser or sub-adviser.
FOREIGN SECURITIES. For each Fund, the term "foreign securities" refers to
securities of issuers, wherever organized, that in the judgment of the Fund's
investment adviser or sub-adviser have their principal place of business
activities outside of the United States. The determination of whether an
issuer's principal activities are outside of the United States will be based on
the location of the issuer's assets, personnel, sales and earnings, and
specifically whether more than 50% of the issuer's assets are located, or more
than 50% of the issuer's gross income is earned, outside of the United States.
Neither Fund has established any minimum investment standards, such as an
issuer's asset level, earnings history, type of industry, dividend payment
history, and the like. Therefore, investors should consider that investments may
consist in part of securities which may be deemed to be speculative.
OTHER POLICIES OF BOTH FUNDS. Both Funds may invest in illiquid securities,
including securities that are subject to restrictions on resale and securities
that are not readily marketable; the Funds may also invest in restricted
securities that may be resold to institutional investors. Both Funds also may
enter into repurchase agreements with member banks of the Federal Reserve
System, registered broker-dealers, and registered U.S. government securities
dealers. In addition, each Fund may seek to earn additional income by lending
its portfolio securities to qualified brokers, dealers, banks, or other
financial institutions, on a fully collateralized basis.
The securities in each Fund's portfolio may be sold without regard to the
time they have been held when, in the opinion of the respective Fund's
investment adviser and sub-adviser, investment consideration warrants such
actions. At times, Growth Fund's portfolio turnover rate may exceed 100%, while
that of Blue Chip Fund may exceed 200%, resulting in greater brokerage
commissions and acceleration of capital gains, which are taxable when
distributed to shareholders.
When market or economic conditions are unfavorable, each Fund may assume a
defensive position by temporarily investing up to 100% of its assets in
high-quality money market instruments, such as short-term U.S. government
obligations, commercial paper or repurchase agreements, seeking to protect its
assets until conditions stabilize.
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<PAGE>
OPERATIONS OF BLUE CHIP FUND FOLLOWING THE REORGANIZATION
As indicated above, the investment objectives and policies of the two Funds
are substantially similar, although Blue Chip Fund may not currently invest in
debt securities. Based on its review of the investment portfolios of each Fund,
INVESCO believes that all of the assets held by Growth Fund will be consistent
with the investment policies of Blue Chip Fund and thus can be transferred to
and held by Blue Chip Fund if the Reorganization Plan is approved. If the
Reorganization Plan is approved, however, and Growth Fund has assets that may
not be held by Blue Chip Fund, Growth Fund will sell any assets that are not
consistent with Blue Chip Fund's investment policies prior to the
Reorganization. The proceeds of such sales will be held in temporary investments
or reinvested in assets that qualify to be held by Blue Chip Fund. The possible
need for Growth Fund to dispose of assets prior to the Reorganization could
result in selling securities at a disadvantageous time and could result in
Growth Fund's realizing losses that would not otherwise have been realized.
Alternatively, these sales could result in Growth Fund's realizing gains that
would not otherwise have been realized, the net proceeds of which would be
included in a distribution to its shareholders prior to the Reorganization
mentioned below.
As discussed above, INVESCO serves as investment adviser to both Funds,
while IGAM serves as sub-adviser to Blue Chip Fund and IAML serves as
sub-adviser to Growth Fund. After the Reorganization, INVESCO will maintain its
oversight function and IGAM will serve as sub-adviser with primary
responsibility for managing the Funds' combined assets. In addition, the
directors and officers of Blue Chip Fund, its distributor, administrator and
other outside agents will continue to serve the Fund in their current
capacities.
PURCHASES AND REDEMPTIONS
PURCHASES. Shares of each Fund may be purchased by wire, telephone, mail or
direct payroll purchase. The shares of each Fund are sold on a continuous basis
at the net asset value ("NAV") per share next calculated after receipt of a
purchase order in good form. The NAV per share for each Fund is computed
separately and is determined once each day that the New York Stock Exchange is
open, as of the close of regular trading ("Business Day") but may also be
computed at other times. For a more complete discussion of share purchases, see
"How to Buy Shares" in either Fund's Prospectus.
REDEMPTIONS. Shares of each Fund may be redeemed by telephone, by mail, by
exchange, by periodic withdrawal plan, or by payment to a third party. Such
redemptions are made at the NAV per share next determined after a request in
proper form is received at the Fund's office. Normally, payment of redemption
proceeds will be mailed within seven days following receipt of the required
documents. For a more complete discussion of share redemption procedures, see
"How to Sell Shares" in either Fund's Prospectus.
[Effective April __, 1999, Blue Chip Fund will impose redemption and
exchange fees of 2.00% on shares held three months or less and 1.00% on shares
held more than three months but less than six months. The fee will be retained
by the Fund to offset transaction costs and other expenses associated with
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<PAGE>
short-term redemptions and exchanges. This redemption fee will not apply to
shares of Blue Chip Fund issued in the Reorganization.]
[Growth Fund shares will no longer be available for purchase beginning on
the Business Day following the date on which the Reorganization is approved and
all contingencies have been met. Redemptions of Growth Fund's shares may be
effected through the Closing Date.]
EXCHANGES
Shares of the Funds are exchangeable for shares of another INVESCO Fund on
the basis of their respective NAVs per share at the time of the exchange. After
the Reorganization, shares of Blue Chip Fund will continue to be exchangeable
for shares of any other INVESCO Fund. For a more complete discussion of the
Funds' exchange policies, see "How to Buy Shares" in either Fund's Prospectus.
DIVIDENDS AND OTHER DISTRIBUTIONS
Each Fund earns investment income in the form of dividends and interest on
its investments. Dividends paid by each Fund are based solely on its investment
income. Each Fund's policy is to distribute substantially all of this investment
income, less expenses, to shareholders on a quarterly basis, at the discretion
of the Board. Dividends are automatically reinvested in additional shares of a
Fund at the NAV on the ex-dividend date unless otherwise requested.
Each Fund also realizes capital gains and losses when it sells securities
or derivatives for more or less than it paid. If total gains on these sales
exceed total losses (including losses carried forward from previous years), a
Fund has capital gain net income. Net realized capital gains, if any, together
with net gains realized on foreign currency transactions, if any, are
distributed to shareholders at least annually, usually in December. Capital
gains distributions are automatically reinvested in shares of the respective
Fund at the NAV on the ex-dividend date unless otherwise requested. Dividends
and other distributions are paid to holders of shares on the record date of
distribution regardless of how long a Fund's shares have been held by the
shareholder.
On or before the Closing Date, Growth Fund will declare as a distribution
substantially all of its net investment income and realized net capital gain, if
any, and distribute that amount plus any previously declared but unpaid
dividends, in order to continue to maintain its tax status as a regulated
investment company.
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<PAGE>
FEDERAL INCOME TAX CONSEQUENCES OF THE REORGANIZATION
International Funds will receive an opinion of its counsel, Kirkpatrick &
Lockhart LLP, to the effect that the Reorganization will constitute a tax-free
reorganization within the meaning of section 368(a)(1)(D) of the Internal
Revenue Code of 1986, as amended ("Code"). Accordingly, neither Fund nor any of
their shareholders will recognize any gain or loss as a result of the
Reorganization. See "The Proposed Transaction - Federal Income Tax
Considerations," page 17.
COMPARISON OF PRINCIPAL RISK FACTORS
An investment in Blue Chip Fund is subject to specific risks arising from
the types of securities in which the Fund invests as well as to general risks
arising from investing in any mutual fund. The principal specific risks
associated with investing in Blue Chip Fund include:
FOREIGN SECURITIES. The Fund invests primarily in foreign securities.
Investments in foreign securities are influenced not only by the returns on the
foreign investments themselves, but also by currency fluctuations. In addition,
there is generally less publicly available information, reports and ratings
about foreign companies and other foreign issuers than that which is available
about companies and issuers in the United States. Foreign issuers are also
generally subject to fewer uniform accounting, auditing and financial reporting
standards, practices and requirements as compared to those applicable to U.S.
issuers. The Fund's investment adviser normally purchases foreign securities in
over-the-counter markets or on foreign exchanges, which are generally not as
developed or efficient as those in the United States and are subject to less
government supervision and regulation. Moreover, with respect to certain foreign
countries, there is the possibility of adverse changes in investment or exchange
control regulations, expropriation or confiscatory taxation, limitations on the
removal of funds or other assets of a fund, political or social instability, or
diplomatic developments that could affect U.S. investments in those countries.
The Fund may also invest in ADRs. ADRs are subject to some of the same risks as
direct investments in foreign securities, including the risk that material
information about the issuer may not be disclosed in the United States and the
risk that currency fluctuations may adversely affect the value of the ADR.
ILLIQUID AND RULE 144A SECURITIES. The Fund may invest in illiquid
securities, including restricted securities and other investments that are not
readily marketable. Restricted securities are securities that are subject to
restrictions on their resale because they have not been registered under the
Securities Act of 1933, as amended ("1933 Act"), or because, based upon their
nature or the market for such securities, they are not readily marketable. These
limitations on resale and marketability may have the effect of preventing the
Fund from disposing of such a security at the time desired or at a reasonable
price. In addition, in order to resell a restricted security, the Fund might
have to bear the expense and incur the delays associated with registering the
security. The Fund may also invest in restricted securities that can be resold
to institutional investors in accordance with Rule 144A under the 1933 Act
("Rule 144A securities"). However, an insufficient number of qualified
institutional buyers interested in purchasing a Rule 144A security held by the
Fund could adversely affect the marketability of such security, and the Fund
might be unable to dispose of the security promptly or at a reasonable price.
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<PAGE>
FINANCIAL INSTRUMENTS. Financial Instruments may be used in an attempt to
manage the Fund's foreign currency exposure as well as other risks of the Fund's
investments that can cause fluctuations in its net asset value. The Fund may use
Financial Instruments to increase or decrease its exposure to changing
securities prices, interest rates, currency exchange rates or other factors. The
Fund's ability to use Financial Instruments may be limited by market conditions,
regulatory limits and tax considerations. The Fund might not use any Financial
Instruments, and there can be no assurance that any strategy using a Financial
Instrument will fully achieve its objective. For a more detailed discussion of
the Fund's use of Financial Instruments and the risks of these investment
practices, see "Investment Policies and Restrictions" in Blue Chip Fund's
Statement of Additional Information.
TURNOVER RATE. The Fund's investment portfolio is actively traded. The
securities in the Fund's portfolio may be sold without regard to the time they
have been held when investment considerations warrant such action. As a result,
the Fund's portfolio turnover rate may be higher than that of many other mutual
funds, sometimes exceeding 200%. This turnover may result in greater brokerage
commissions and acceleration of capital gains, which are taxable when
distributed to shareholders.
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 its own major computer systems will continue to function on and after
January 1, 2000. In addition, the markets for, or value 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 systems could result in securities trade settlement
problems and liquidity issues, production issues for individual companies and
overall economic uncertainties. Individual issuers may incur increased costs in
making their own systems Year 2000 compliant. The combination of market
uncertainty and increased costs means that there is a possibility that Year 2000
computer issues may adversely affect the Fund's investments.
COMPARISON TO GROWTH FUND. Because Growth Fund's investment objective and
policies are substantially similar to those of Blue Chip Fund, an investment in
Growth Fund is subject to many of the same specific risks as an investment in
Blue Chip Fund. To the extent that Growth Fund exercises its ability to invest
to a greater degree than Blue Chip Fund in (a) securities of smaller, less
established (i.e., non-blue chip) companies or (b) issuers located in developing
countries, Growth Fund will incur a higher degree of the investment risks
associated with such investments. Moreover, because Growth Fund, unlike Blue
Chip Fund, may invest in debt securities, it is subject to the market and credit
risks that such investments entail. On the other hand, because Growth Fund is
limited in its use of Financial Instruments to forward foreign currency
contracts employed for hedging purposes, it is not subject to the risks
associated with the use of other Financial Instruments that Blue Chip Fund may
incur. Although Growth Fund's investment portfolio may be traded without regard
to the time investments are held, its portfolio turnover rate (which at times
exceeds 100%) is generally lower than that of Blue Chip Fund. As a result,
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<PAGE>
Growth Fund may be expected to have lower brokerage fees and be less likely to
experience accelerated capital gains.
THE PROPOSED TRANSACTION
REORGANIZATION PLAN
The terms and conditions under which the proposed transaction will be
consummated are set forth in the Reorganization Plan. Significant provisions of
the Reorganization Plan are summarized below; however, this summary is qualified
in its entirety by reference to the Reorganization Plan, which is attached as
Appendix A to this Proxy Statement.
The Reorganization Plan provides for (a) the acquisition by Blue Chip Fund
on the Closing Date of all of the assets of Growth Fund in exchange solely for
Blue Chip Fund shares and the assumption by Blue Chip Fund of all of Growth
Fund's liabilities, and (b) the distribution of those Blue Chip Fund shares to
the shareholders of Growth Fund.
The assets of Growth Fund to be acquired by Blue Chip Fund include all
cash, cash equivalents, securities, receivables, claims and rights of action,
rights to register shares under applicable securities laws, books and records,
deferred and prepaid expenses shown as assets on Growth Fund's books and all
other property owned by Growth Fund. Blue Chip Fund will assume from Growth Fund
all liabilities, debts, obligations and duties of Growth Fund of whatever kind
or nature; provided, however, that Growth Fund will use its best efforts to
discharge all of its known debts, liabilities, obligations and duties before the
Closing Date. Blue Chip Fund will deliver its shares to Growth Fund, which will
distribute the shares to Growth Fund's shareholders.
The value of Growth Fund's net assets to be acquired by Blue Chip Fund and
the NAV per share of the shares of Blue Chip Fund to be exchanged for those
assets will be determined as of the close of regular trading on the New York
Stock Exchange on the Closing Date ("Valuation Time"), using the valuation
procedures described in each Fund's then-current Prospectus and Statement of
Additional Information. Fund's net value shall be the value of its assets to be
acquired by Blue Chip Fund, less the amount of Growth Fund's liabilities, as of
the Valuation Time.
On, or as soon as practicable after, the Closing Date, Growth Fund will
distribute the Blue Chip Fund shares it receives PRO RATA to its shareholders of
record as of the effective time of the Reorganization, so that each Growth Fund
shareholder will receive a number of full and fractional Blue Chip Fund shares
equal in aggregate value to the shareholder's holdings in Growth Fund. Growth
Fund will be terminated as soon as practicable after the share distribution. The
shares will be distributed by opening accounts on the books of Blue Chip Fund in
the names of Growth Fund shareholders and by transferring to those accounts the
shares previously credited to the account of Growth Fund on those books.
Fractional shares in Blue Chip Fund will be rounded to the third decimal place.
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<PAGE>
Accordingly, immediately after the Reorganization, each former shareholder
of Growth Fund will own Blue Chip Fund shares that will be equal in aggregate
value to that shareholder's Growth Fund shares immediately prior to the
Reorganization. Moreover, because Blue Chip Fund shares will be issued at NAV in
exchange for the net assets of Growth Fund, the aggregate value of Blue Chip
Fund shares issued to Growth Fund shareholders will equal the aggregate value of
Growth Fund shares. The NAV per share of Blue Chip Fund will be unchanged by the
transaction. Thus, the Reorganization will not result in a dilution of any
shareholder's interest.
Any transfer taxes payable upon issuance of Blue Chip Fund shares in a name
other than that of the registered holder of the shares on the books of Growth
Fund shall be paid by the person to whom those shares are to be issued as a
condition of such transfer. Any reporting responsibility of Growth Fund to a
public authority will continue to be its responsibility until it is dissolved.
Half of the cost of the Reorganization, including professional fees and the
cost of soliciting proxies for the Meeting, consisting principally of printing
and mailing expenses, together with the cost of any supplementary solicitation,
will be borne by INVESCO, the investment adviser to each Fund, and half by Blue
Chip Fund and Growth Fund. The Board considered the fact that INVESCO will pay
half of these expenses in approving the Reorganization and finding that the
Reorganization is in the best interests of the Funds.
The consummation of the Reorganization is subject to a number of conditions
set forth in the Reorganization Plan, some of which may be waived by either
Fund. In addition, the Reorganization Plan may be amended in any mutually
agreeable manner, except that no amendment may be made subsequent to the Meeting
that has a material adverse effect on the interests of Growth Fund's
shareholders.
REASONS FOR THE REORGANIZATION
The Board, including a majority of its Independent Directors, has
determined that the Reorganization is in the best interests of each Fund, that
the terms of the Reorganization are fair and reasonable and that the interests
of each Fund's shareholders will not be diluted as a result of the
Reorganization.
In approving the Reorganization, the Board, including a majority of its
Independent Directors, on behalf of each Fund, considered a number of factors,
including the following:
(1) the compatibility of the Funds' investment objectives, policies and
restrictions;
(2) the effect of the Reorganization on the Funds' expected investment
performance;
(3) the effect of the Reorganization on the expense ratio of each Fund
relative to its current expense ratio;
(4) the costs to be incurred by each Fund as a result of the
Reorganization;
(5) the tax consequences of the Reorganization;
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(6) possible alternatives to the Reorganization, including whether Growth
Fund could continue to operate on a stand-alone basis or should be liquidated;
and
(7) the potential benefits of the Reorganization to INVESCO and to other
persons.
The Reorganization was recommended to the Board on behalf of each Fund by
INVESCO at meetings of the Board held on [February 3], 1999. In recommending the
Reorganization, INVESCO advised the Board that the investment advisory and
administration fee schedule applicable to Blue Chip Fund would be equal to or
lower than that currently in effect for Growth Fund. Further, the Board was
advised by INVESCO that, because Blue Chip Fund is expected to gather greater
net assets than Growth Fund, combining the two Funds is expected over time to
reduce the expenses borne by the shareholders of Growth Fund as a percentage of
net assets.
DESCRIPTION OF SECURITIES TO BE ISSUED
International Funds is registered with the SEC as an open-end management
investment company. It has an authorized capitalization of 500 million shares of
common stock (par value $0.01 per share). Shares of Blue Chip Fund entitle their
holders to one vote per full share and fractional votes for fractional shares
held.
Blue Chip Fund does not hold annual meetings of shareholders. There
normally will be no meetings of shareholders for the purpose of electing
directors unless fewer than a majority of the directors holding office have been
elected by shareholders, at which time the directors then in office will call a
shareholders' meeting for the election of directors. The directors will call
annual or special meetings of shareholders for action by shareholder vote as may
be required by the 1940 Act or International Fund's Articles of Incorporation,
or at their discretion.
Both Funds are series of International Funds. Thus, the rights of
shareholders of each Fund with respect to shareholder meetings, inspection of
shareholder lists, and distributions on liquidation of a Fund are identical.
TEMPORARY WAIVER OF INVESTMENT RESTRICTIONS
Certain fundamental investment restrictions of Growth Fund, which prohibit
it from acquiring more than a stated percentage of ownership of another company,
might be construed as restricting its ability to carry out the Reorganization.
By approving the Reorganization Plan, Growth Fund shareholders will be agreeing
to waive, only for the purpose of the Reorganization, those fundamental
investment restrictions that could prohibit or otherwise impede the transaction.
FEDERAL INCOME TAX CONSIDERATIONS
The exchange of Growth Fund's assets for Blue Chip Fund shares and Blue
Chip Fund's assumption of Growth Fund's liabilities is intended to qualify for
federal income tax purposes as a tax-free reorganization under section
368(a)(1)(D) of the Code. International Funds will receive an opinion of its
counsel, Kirkpatrick & Lockhart LLP, substantially to the effect that:
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(1) Blue Chip Fund's acquisition of Growth Fund's assets in exchange
solely for Blue Chip Fund shares and Blue Chip Fund's assumption of Growth
Fund's liabilities, followed by Growth Fund's distribution of those shares
PRO RATA to its shareholders constructively in exchange for their Growth
Fund shares, will constitute a "reorganization" within the meaning of
section 368(a)(1)(D) of the Code, and each Fund will be "a party to a
reorganization" within the meaning of section 368(b) of the Code;
(2) Growth Fund will recognize no gain or loss on the transfer to
Blue Chip Fund of its assets in exchange solely for Blue Chip Fund shares
and Blue Chip Fund's assumption of Growth Fund's liabilities or on the
subsequent distribution of those shares to Growth Fund's shareholders in
constructive exchange for their Growth Fund shares;
(3) Blue Chip Fund will recognize no gain or loss on its receipt of
the transferred assets in exchange solely for Blue Chip Fund shares and
its assumption of Growth Fund's liabilities;
(4) Blue Chip Fund's basis for the transferred assets will be the
same as the basis thereof in Growth Fund's hands immediately before the
Reorganization, and Blue Chip Fund's holding period for those assets will
include Growth Fund's holding period therefor;
(5) A Growth Fund shareholder will recognize no gain or loss on the
constructive exchange of all its Growth Fund shares solely for Blue Chip
Fund shares pursuant to the Reorganization; and
(6) A Growth Fund shareholder's aggregate basis for the Blue Chip
Fund shares to be received by it in the Reorganization will be the same as
the aggregate basis for its Growth Fund shares to be constructively
surrendered in exchange for those Blue Chip Fund shares, and its holding
period for those Blue Chip Fund shares will include its holding period for
those Growth Fund shares, provided they are held as capital assets by the
shareholder on the Closing Date.
The tax opinion may state that no opinion is expressed as to the effect of the
Reorganization on the Funds or any shareholder with respect to any asset as to
which any unrealized gain or loss is required to be recognized for federal
income tax purposes at the end of a taxable year (or on the termination or
transfer thereof) under a mark-to-market system of accounting.
Shareholders of Growth Fund should consult their tax advisers regarding the
effect, if any, of the Reorganization in light of their individual
circumstances. Because the foregoing discussion only relates to federal income
tax consequences of the Reorganization, those shareholders also should consult
their tax advisers about state and local tax consequences, if any, of the
Reorganization.
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CAPITALIZATION
The following table shows the capitalization of each Fund as of October 31,
1998, and on a pro forma combined basis (unaudited) as of October 31, 1998
giving effect to the Reorganization:
Combined Fund
Blue Chip Fund Growth Fund (Pro Forma)
-------------- ----------- -------------
Net Assets.................. $6,287,249 $46,090,833 $52,378,082
Net Asset Value Per Share... $10.02 $13.25 $10.02
Shares Outstanding.......... 627,517 348,622 5,227,401
REQUIRED VOTE. Approval of the Reorganization requires the affirmative vote
of a majority of the outstanding voting securities of Growth Fund.
THE BOARD UNANIMOUSLY RECOMMENDS THAT THE SHAREHOLDERS VOTE
"FOR" PROPOSAL 1
PART II. PROPOSED ROUTINE ORGANIZATIONAL MATTERS AND
MODIFICATIONS TO FUNDAMENTAL INVESTMENT RESTRICTIONS
PROPOSAL 2. TO APPROVE AMENDMENTS TO THE FUNDAMENTAL INVESTMENT
RESTRICTIONS OF GROWTH FUND
As required by the 1940 Act, Growth Fund has adopted certain fundamental
investment restrictions ("fundamental restrictions"), which are set forth in the
Fund's Statement of Additional Information. These fundamental restrictions may
be changed only with shareholder approval. Restrictions and policies that the
Fund has not specifically designated as fundamental are considered to be
"non-fundamental" and may be changed by the Board without shareholder approval.
Some of Growth Fund's fundamental restrictions reflect past regulatory,
business or industry conditions, practices or requirements that are no longer in
effect. Also, as other INVESCO Funds have been created over the years, they have
adopted substantially similar fundamental restrictions that often have been
phrased in slightly different ways, resulting in minor but unintended
differences in effect or potentially giving rise to unintended differences in
interpretation. Accordingly, the Board has approved revisions to Growth Fund's
fundamental restrictions in order to simplify, modernize and make the Fund's
fundamental restrictions more uniform with those of the other INVESCO Funds.
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The Board believes that eliminating the disparities among the INVESCO
Funds' fundamental restrictions will enhance management's ability to manage the
Fund's assets efficiently and effectively in changing regulatory and investment
environments and permit the Board to review and monitor investment policies more
easily. In addition, standardizing the fundamental restrictions of the INVESCO
Funds will assist the INVESCO Funds in making required regulatory filings in a
more efficient and cost-effective way. Although the proposed changes in
fundamental restrictions will allow Growth Fund greater investment flexibility
to respond to future investment opportunities, the Board does not anticipate
that the changes, individually or in the aggregate, will result at this time in
a material change in the level of investment risk associated with an investment
in the Fund.
The text and a summary description of each proposed change to Growth Fund's
fundamental restrictions are set forth below, together with the text of each
current corresponding fundamental restriction. The text below also describes any
non-fundamental restrictions that would be adopted by the Board in conjunction
with the revision of certain fundamental restrictions. Any non-fundamental
restriction may be modified or eliminated by the Board at any future date
without further shareholder approval.
If approved by Growth Fund's shareholders at the Meeting, the proposed
changes in Growth Fund's fundamental restrictions will be adopted by the Fund
only if the Reorganization is NOT approved by Growth Fund's shareholders. In
that event, Growth Fund's Statement of Additional Information will be revised to
reflect those changes as soon as practicable following the Meeting. If the
Reorganization is approved, the proposed changes in the Fund's fundamental
restrictions will not be implemented. Instead, as described in Proposal 1,
Growth Fund shareholders will become shareholders of Blue Chip Fund, whose
shareholders are being asked to approve substantially similar changes in Blue
Chip Fund's fundamental restrictions.
a. MODIFICATION OF FUNDAMENTAL RESTRICTION ON INDUSTRY CONCENTRATION
Growth Fund's current fundamental restriction on industry concentration is
as follows:
The Fund may not 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.
The Board recommends that shareholders vote to replace this restriction
with the following fundamental restriction:
The Fund may not purchase the securities of any issuer (other than
securities issued or guaranteed by the U.S. Government or any of its
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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.
If the proposed revision is approved, the Board would also adopt the
following non-fundamental restriction:
With respect to fundamental limitation (1), domestic and foreign
banking will be considered to be different industries.
The primary purpose of the modification is to eliminate minor differences
in the wording of the INVESCO Funds' current restrictions on concentration for
greater uniformity and to avoid unintended limitations. If the proposal is
adopted, the provision that investments in obligations of a foreign government
are considered to be investments in a single industry will be made
non-fundamental such that it may be changed without shareholder approval to
reflect any changes in the regulatory positions on which it is based. The Board
believes that the proposed changes will enhance the ability of Growth Fund's
management to adapt to changing market conditions and regulatory developments.
b. MODIFICATION OF FUNDAMENTAL RESTRICTION ON ISSUER DIVERSIFICATION
Growth Fund's current fundamental restriction on issuer diversification is
as follows:
The Fund may not 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.
The Board recommends that this restriction be replaced with the following
fundamental restriction:
The Fund may not, with respect to 75% of the Fund's total assets,
purchase the securities of any issuer (other than securities issued or
guaranteed by the U.S. Government or any of its agencies or
instrumentalities, or securities of other investment companies) if, as
a result, (i) more than 5% of the Fund's total assets would be
invested in the securities of that issuer, or (ii) the Fund would hold
more than 10% of the outstanding voting securities of that issuer.
The proposed fundamental restriction concerning diversification is the
limitation imposed by the 1940 Act for diversified investment companies. The
amended fundamental restriction would allow the Fund, with respect to 25% of its
total assets, to invest more than 5% of its assets in the securities of one or
more issuers and to hold more than 10% of the voting securities of an issuer.
The Fund will continue to be required to invest 75% of its total assets so that
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no more than 5% of total assets are invested in any one issuer, and so that the
Fund will not own more than 10% of the voting securities of an issuer.
The amended restriction would give the Fund greater investment flexibility
by permitting it to acquire larger positions in the securities of a particular
issuer, consistent with its investment objective and strategies. This increased
flexibility could provide opportunities to enhance the Fund's performance.
Investing a larger percentage of the Fund's assets in a single issuer's
securities, however, increases the Fund's exposure to credit and other risks
associated with that issuer's financial condition and operations, including the
risk of default on debt securities.
The amended fundamental restriction would also permit the Fund to invest
without limit in the securities of other investment companies. The Fund has no
current intention of doing so, and, as noted below, the 1940 Act imposes
restrictions on the extent to which a fund may invest in the securities of other
investment companies. The revision would, however, give the Fund flexibility to
invest in other investment companies in the event legal and other regulatory
requirements change.
c. MODIFICATION OF FUNDAMENTAL RESTRICTION ON UNDERWRITING
Growth Fund's current fundamental restriction on underwriting securities
is as follows:
The Fund may not underwrite securities of other issuers, except
insofar as it may technically be deemed an "underwriter" under the
Securities Act of 1933, as amended, in connection with the disposition
of the Fund's portfolio securities.
The Board recommends that shareholders vote to replace this restriction
with the following fundamental restriction:
The Fund may not underwrite securities of other issuers, except
insofar as it may be deemed to be an underwriter under the Securities
Act of 1933, as amended, in connection with the disposition of the
Fund's portfolio securities.
The primary purpose of the proposal is to eliminate a minor difference in
the wording of the Fund's current fundamental restriction on underwriting for
greater uniformity with the fundamental restrictions of other INVESCO Funds. The
change does not materially alter the investment restriction.
d. ELIMINATION OF FUNDAMENTAL RESTRICTION ON INVESTING INCOMPANIES FOR THE
PURPOSE OF EXERCISING CONTROL OR MANAGEMENT
Growth Fund's current fundamental restriction regarding investing in
companies for the purpose of exercising control or management is as follows:
The Fund may not invest in companies for the purpose of exercising
control or management.
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The Board recommends that shareholders vote to eliminate this restriction.
There is no legal requirement that a fund have an affirmative policy on
investment for the purpose of exercising control or management if it does NOT
intend to make investments for that purpose. The Fund has no intention of
investing in any company for the purpose of exercising control or management. By
eliminating this restriction, the Board may, however, be able to authorize such
a strategy in the future if it concludes that doing so would be in the best
interest of the Fund and its shareholders.
e. MODIFICATION OF FUNDAMENTAL RESTRICTION ON BORROWING AND ADOPTION OF
NON-FUNDAMENTAL RESTRICTION ON BORROWING
Growth Fund's current fundamental restriction on borrowing is as follows:
The Fund may not 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.
The Board recommends that shareholders vote to replace this restriction
with the following fundamental restriction:
The Fund may not borrow money, except that the Fund may borrow money
in an amount not exceeding 33 1/3% of its total assets (including the
amount borrowed) less liabilities (other than borrowings).
Currently, the Fund's fundamental restriction is significantly more
limiting than the restrictions imposed by the 1940 Act in that it limits the
purposes for which the Growth Fund may borrow money and it limits all borrowings
to 5% of the Fund's total assets. The proposal eliminates the fundamental nature
of the restrictions on the purposes for which the Fund may borrow money and it
increases the Fund's fundamental borrowing authority from 5% to 33 1/3% of the
Funds total assets. The proposal also separates the restriction on the issuance
of senior securities from the Fund's restriction on borrowing (see below).
If the proposal is approved, the Board will adopt a non-fundamental
restriction as follows:
The Fund may borrow money only from a bank or from an open-end
management investment company managed by INVESCO Funds Group, Inc. or
an affiliate or a successor thereof for temporary or emergency
purposes (not for leveraging or investing) 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 non-fundamental restriction reflects the Fund's current policy that
borrowing by the Fund may only be done for temporary or emergency purposes. In
addition to borrowing from banks, as permitted under the Fund's current policy,
the non-fundamental restriction permits the Fund to borrow from open-end funds
managed by INVESCO or an affiliate or successor thereof. The Fund would not be
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<PAGE>
able to do so, however, unless it obtains permission for such borrowings from
the SEC. The non-fundamental restriction also clarifies that reverse repurchase
agreements will be treated as borrowings. The Board believes that this approach,
making the Fund's fundamental restriction on borrowing no more limiting than is
required under the 1940 Act, while incorporating more strict limits on borrowing
in the Fund's non-fundamental restriction, will maximize the Fund's flexibility
for future contingencies.
f. MODIFICATION OF FUNDAMENTAL RESTRICTION ON THE ISSUANCE OF SENIOR
SECURITIES
Currently, the Fund's fundamental restriction on the issuance of senior
securities is combined with its restriction on borrowing (see above). To conform
the Fund's restriction on the issuance of senior securities (i.e., obligations
that have a priority over the Fund's shares with respect to the distribution of
Fund assets or the payment of dividends) with those of the other INVESCO Funds,
the Board recommends that shareholders vote to adopt the following separate
fundamental restriction:
The Fund will not issue senior securities, except as permitted under
the Investment Company Act of 1940.
The Board believes that the adoption of the proposed fundamental
restriction, which does not specify the manner in which senior securities may be
issued and is no more limiting than is required under the 1940 Act, would
maximize the Fund's borrowing flexibility for future contingencies and would
conform to the fundamental restrictions of the other INVESCO Funds on the
issuance of senior securities.
g. ELIMINATION OF FUNDAMENTAL RESTRICTIONS ON MORTGAGING, PLEDGING OR
HYPOTHECATING SECURITIES
Growth Fund currently has the following fundamental restriction on
mortgaging, pledging or hypothecating securities.
The Fund may not 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.
This restriction is derived from a state "blue sky" requirement, which has
been preempted by recent amendments of the federal securities laws. Accordingly,
the Board recommends that shareholders vote to eliminate this restriction.
h. ELIMINATION OF FUNDAMENTAL RESTRICTION CONCERNING SHORT SALES AND
MARGIN PURCHASES
Growth Fund's current fundamental restriction on short sales and margin
purchases is as follows:
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<PAGE>
The Fund may not 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.
The Board recommends that shareholders vote to eliminate the above
fundamental restriction.
If the proposal is approved by shareholders, the Fund would adopt the
following non-fundamental restriction:
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
(i) this policy does not prevent the Fund from entering into short
positions in foreign currency, futures contracts, options, forward
contracts, swaps, caps, floors, collars and other financial
instruments, (ii) the Fund may obtain such short-term credits as are
necessary for the clearance of transactions, and (iii) the Fund may
make margin payments in connection with futures contracts, options,
forward contracts, swaps, caps, floors, collars and other financial
instruments.
The proposed changes clarify the wording of the restriction and expand the
restriction, which generally prohibits the Fund from selling securities short or
buying on margin. Margin purchases involve the purchase of securities with money
borrowed from a broker. "Margin" is the cash or eligible securities that the
borrower places with a broker as collateral against the loan. In a short sale,
an investor sells a borrowed security and has a corresponding obligation to the
lender to return the identical security. In a short sale "against the box"
transaction, a fund engages in a short sale of a security that it already owns
or has the right to own. The non-fundamental policy clarifies that the Fund is
permitted to engage in short sales "against the box." The non-fundamental policy
also clarifies that a broader range of financial and derivative instruments than
those listed in the current policy are not intended to be covered by the policy.
The Board believes that elimination of the fundamental restriction and adoption
of the non-fundamental restriction will provide the Fund with greater investment
flexibility.
i. MODIFICATION OF FUNDAMENTAL RESTRICTION ON REAL ESTATE INVESTMENT
Growth Fund's current fundamental restriction on real estate investment is
as follows:
The Fund may not 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.
The Board recommends that shareholders vote to replace this restriction
with the following fundamental restriction:
The Fund may not purchase or sell real estate unless acquired as a
result of ownership of securities or other instruments (but this shall
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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).
The primary purpose of the proposal is to eliminate minor differences in
the wording of the Fund's fundamental restriction in order to conform it to that
of the other INVESCO Funds. Adoption of the proposed fundamental restrictions is
not expected to affect the securities in which the Fund invests.
j. MODIFICATION OF FUNDAMENTAL RESTRICTION ON LOANS
Growth Fund's current fundamental restriction on loans is as follows:
The Fund may not 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.
The Board recommends that shareholders vote to replace this restriction
with the following fundamental restriction:
The Fund may not lend any security or make any 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 the purchase of debt securities
or to repurchase agreements.
The primary purpose of the proposal is to expand the Fund's lending
limitation from 10% to 33 1/3% of its assets and to conform the Fund's
fundamental restriction on loans to those of the other INVESCO Funds for greater
uniformity. The Fund's current investment restriction is considerably more
limiting than the provisions in the 1940 Act governing lending. The proposed
changes to this investment restriction would maximize the Fund's lending
flexibility for future contingencies.
k. MODIFICATION OF FUNDAMENTAL RESTRICTION ON INVESTING IN COMMODITIES
Growth Fund's current fundamental restriction on the purchase of
commodities is as follows:
The Fund may not 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.
The Board recommends that shareholders vote to replace this restriction
with the following fundamental restriction:
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The Fund may not purchase or sell physical commodities; however, this
policy shall not prevent the Fund from purchasing and selling foreign
currency, futures contracts, options, forward contracts, swaps, caps,
floors, collars and other financial instruments.
The proposed changes to this investment restriction are intended to
conform the restriction to those of the other INVESCO Funds and ensure that
Growth Fund will have the maximum flexibility to enter into hedging or other
transactions utilizing financial instruments and derivative products when doing
so is permitted by operating policies established for the Fund by the Board. Due
to the rapid and continuing development of derivative products and the
possibility of changes in the definition of "commodities," particularly in the
context of the jurisdiction of the Commodities Futures Trading Commission, it is
important for the Fund's policy to be flexible enough to allow it to enter into
hedging and other transactions using these products when doing so is deemed
appropriate by INVESCO and is within the investment parameters established by
the Board. To maximize that flexibility, the Board recommends that the Fund's
fundamental restriction on commodities investments be clear in permitting the
use of a wide range of derivative products, even if the current non-fundamental
investment restrictions of the Fund would not permit investment in one or more
of the permitted transactions.
l. MODIFICATION OF FUNDAMENTAL RESTRICTION REGARDING INVESTING IN ANOTHER
INVESTMENT COMPANY AND ADOPTION OF A NON-FUNDAMENTAL RESTRICTION REGARDING
INVESTMENT IN SECURITIES ISSUED BY OTHER INVESTMENT COMPANIES
Growth Fund's current fundamental restriction regarding investments in
other investment companies is as follows:
The Fund may not 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 the investment
adviser; provided that no management or distribution fee will be
charged by the Adviser with respect to any such assets so investment
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.
The Board recommends that shareholders vote to replace this restriction
with the following fundamental restriction:
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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 a successor thereof, with substantially the
same fundamental investment objective, policies and limitations as the
Fund.
The proposed revision to the Fund's current fundamental restriction would
ensure that the INVESCO Funds have uniform policies permitting each Fund to
adopt a "master/feeder" structure whereby one or more Funds invest all of their
assets in another Fund. The master/feeder structure has the potential, under
certain circumstances, to minimize administration costs and maximize the
possibility of gaining a broader investor base. Currently, none of the INVESCO
Funds intend to establish a master/feeder structure; however, the Board
recommends that Growth Fund shareholders adopt a policy that would permit this
structure in the event that the Board determines to recommend the adoption of a
master/feeder structure by the Fund. The proposed revision would require that
any fund in which the Fund may invest under a master/feeder structure be advised
by INVESCO or an affiliate.
If the proposed revision is approved, the Board will adopt a
non-fundamental restriction as follows:
The Fund may invest in securities issued by other investment companies
to the extent that such investments are consistent with the Fund's
investment objective and policies and permissible under the 1940 Act.
The primary purpose of this non-fundamental restriction is to conform to
the other INVESCO Funds and to the 1940 Act requirements for investing in other
investment companies. Currently, the Fund's fundamental restriction is much more
limiting than the restriction imposed by the 1940 Act. Adoption of this
non-fundamental restriction will enable the Fund to purchase the securities of
other investment companies to the extent permitted under the 1940 Act or
pursuant to an exemption granted by the SEC.
m. ELIMINATION OF FUNDAMENTAL RESTRICTION ON INVESTING IN ILLIQUID
SECURITIES AND ADOPTION OF NON-FUNDAMENTAL RESTRICTION ON INVESTING IN
ILLIQUID SECURITIES
Growth Fund's current fundamental restriction on investment in illiquid
securities is as follows:
The Fund may not 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.
The Board recommends that shareholders vote to eliminate this restriction.
If the proposal is approved, the Board will adopt the following non-fundamental
restriction:
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The Fund does not currently intend to purchase any security if, as a
result, more than 15% of its net assets would be invested in
securities that are deemed to be illiquid because they are subject to
legal or contractual restrictions on resale or because they cannot be
sold or disposed of in the ordinary course of business at
approximately the prices at which they are valued.
The primary purpose of the proposal is to conform to the federal
securities law requirements regarding investment in illiquid securities and to
conform the investment restrictions of the Fund to those of the other INVESCO
Funds. Growth Fund is currently limited in its ability to invest in illiquid
securities. The Board believes that the proposed elimination of the fundamental
restriction and subsequent adoption of the non-fundamental restriction will make
the restriction more accurately reflect market conditions and will maximize the
Fund's flexibility for future contingencies. The Board may delegate to INVESCO,
the Fund's investment adviser, the authority to determine whether a security is
liquid for the purposes of this investment limitation.
REQUIRED VOTE. Approval of Proposal 2 requires the affirmative vote of a
"majority of the outstanding voting securities" of Growth Fund, which for this
purpose means the affirmative vote of the lesser of (1) 67% or more of the
shares of the Fund present at the Meeting or represented by proxy if more than
50% of the outstanding shares of the Fund are so present or represented, or (2)
more than 50% of the outstanding shares of the Fund. SHAREHOLDERS WHO VOTE "FOR"
PROPOSAL 2 WILL VOTE "FOR" EACH PROPOSED CHANGE DESCRIBED ABOVE. THOSE
SHAREHOLDERS WHO WISH TO VOTE AGAINST ANY OF THE SPECIFIC PROPOSED CHANGES
DESCRIBED ABOVE MAY DO SO ON THE PROXY PROVIDED.
THE BOARD UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" PROPOSAL 2.
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PROPOSAL 3. TO ELECT THE BOARD OF DIRECTORS OF INTERNATIONAL FUNDS
----------
The Board of International Funds has nominated the individuals identified
below for election to the Board at the Meeting. International Funds currently
has ten directors. Vacancies on the Board are generally filled by appointment by
the remaining directors. However, the 1940 Act provides that vacancies may not
be filled by directors unless thereafter at least two-thirds of the directors
shall have been elected by shareholders. To ensure continued compliance with
this rule without incurring the expense of calling additional shareholder
meetings, shareholders are being asked at this meeting to elect the current ten
directors. Consistent with the provisions of International Funds' by-laws, and
as permitted by Maryland law, International Funds does not anticipate holding
annual shareholder meetings. Thus, the directors will be elected for indefinite
terms, subject to termination or resignation. Each nominee has indicated a
willingness to serve if elected. If any of the nominees should not be available
for election, the persons named as proxies (or their substitutes) may vote for
other persons in their discretion. Management has no reason to believe that any
nominee will be unavailable for election.
All of the Independent Directors now being proposed for election were
nominated and selected by Independent Directors. Eight of the ten current
directors are Independent Directors.
The persons named as attorneys-in-fact in the enclosed proxy have advised
International Funds that unless a proxy instructs them to withhold authority to
vote for all listed nominees or for any individual nominee, they will vote all
validly executed proxies for the election of the nominees named below.
The nominees for director, their ages, a description of their principal
occupations, the number of Growth Fund shares owned by each, and their
respective memberships on Board committees are listed in the table below.
Name, Position Principal Occupation and Director Number of Member
with Business Experience or Growth Fund Of
International (During the past five Executive Shares Committee
Funds, and Age years) Officer Beneficially ---------
- -------------- ------------------------ Of Inter- Owned
national directly or
Funds Indirectly on
Since Dec. 31, 1998(1)
-------- ---------------
CHARLES W. Chief Executive Officer 1993 0 (3),
BRADY, CHAIRMAN and Director of (5), (6)
OF THE BOARD, AMVESCAP, PLC, London,
AGE 63* England, and of various
subsidiaries thereof.
Chairman of the Board of
INVESCO Global Health
Sciences Fund.
FRED A. Trustee of INVESCO 1993 8.534 (2),
DEERING, VICE Global Health Sciences (3), (5)
CHAIRMAN OF THE Fund. Formerly,
BOARD, AGE 70 Chairman of the
Executive Committee and
Chairman of the Board of
Security Life of Denver
Insurance Company,
Denver, Colorado;
Director of ING America
Life Insurance Company.
30
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MARK H. President, Chief 1998 0 (3),
WILLIAMSON, Executive Officer, and (4), (5)
PRESIDENT, Director, INVESCO
CHIEF EXECUTIVE Distributors Inc.;
OFFICER, AND President, Chief
DIRECTOR, AGE Executive Officer, and
47* Director, INVESCO;
President, INVESCO
Global Health Sciences
Fund. Formerly,
Chairman of the Board
and Chief Executive
Officer, NationsBanc
Advisors, Inc.
(1995-1997); Chairman of
the Board, NationsBanc
Investments, Inc.
(1997-1998).
DR. VICTOR L. Professor Emeritus, 1993 8.534 (4),
ANDREWS, Chairman Emeritus and (6), (8)
DIRECTOR, AGE 68 Chairman of the CFO
Roundtable of the
Department of Finance at
Georgia State
University, Atlanta,
Georgia; President,
Andrews Financial
Associates, Inc.
(consulting firm); since
October 1984, Director of
the Center for the Study
of Regulated Industry at
Georgia State University;
formerly, member of the
faculties of the Harvard
Business School and the Sloan
School of Management of
MIT. Dr. Andrews is also
a director of the
Southeastern Thrift and
Bank Fund, Inc. and the
Sheffield Funds, Inc.
BOB R. BAKER, President and Chief 1993 8.534 (3),
DIRECTOR, AGE 62 Executive Officer of AMC (4), (5)
Cancer Research Center,
Denver, Colorado, since
January 1989; until
December 1988, Vice
Chairman of the Board,
First Columbia Financial
Corporation, Englewood,
Colorado. Formerly, Chairman
of the Board and Chief
Executive Officer of First
Columbia Financial Corporation.
LAWRENCE H. Trust Consultant; Prior 1993 8.534 (2),
BUDNER, to June 1987, Senior (6), (7)
DIRECTOR, Vice President and
AGE 68 Senior Trust Officer,
InterFirst Bank, Dallas,
Texas.
DR. WENDY LEE Self-employed (since 1997 8.534 (4), (8)
GRAMM, 1993). Professor of
DIRECTOR, Economics and Public
Age 53 Administration,
University of Texas at
Arlington. Formerly,
Chairman, Commodities
Futures Trading
Commission (1988-1993);
Administrator for
Information and
Regulatory Affairs,
Office of Management and
Budget (1985-1988);
Executive Director,
Presidential Task Force
on Regulatory Relief;
Director, Federal Trade
Commission Bureau of
31
<PAGE>
Economics; Director of
the Chicago Mercantile
Exchange; Enron
Corporation; IBP, Inc.;
State Farm Insurance
Company; Independent
Women's Forum;
International Republic
Institute; and the
Republican Women's
Federal Forum.
KENNETH T. Presently retired. 1993 8.534 (2), (3),
KING, DIRECTOR, Formerly, Chairman of (5), (6),
AGE 73 the Board of the Capitol (7)
Life Insurance Company,
Providence Washington
Insurance Company, and
Director of numerous
subsidiaries thereof in
the United States.
Formerly, Chairman of
the Board of the
Providence Capitol
Companies in the United
Kingdom and Guernsey.
Until 1987, Chairman of
the Board, Symbion
Corporation.
31a
<PAGE>
JOHN W. Presently retired. 1995 8.534 (2), (3),
MCINTYRE, Formerly, Vice Chairman (7)
DIRECTOR, of the Board of The
AGE 68 Citizens and Southern
Corporation; Chairman
of the Board and Chief
Executive Officer of The
Citizens and Southern
Georgia Corporation;
Chairman of the Board and
Chief Executive Officer of
Citizens and Southern
National Bank. Trustee of
INVESCO Global Health
Sciences Fund and Gables
Residential Trust.
DR. LARRY SOLL, Presently retired. 1997 8.534 (4), (8)
DIRECTOR, Chairman of the Board
AGE 56 (1987-1994), Chief Executive
Officer (1982-1989 and
1993-1994) and President
(1982-1989) of Synergen
Corporation. Director of
Synergen Corporation since
incorporation in 1982.
Director of ISI
Pharmaceuticals, Inc.
Trustee of INVESCO Global
Health Sciences Fund.
*Because of his affiliation with INVESCO, with Growth Fund's investment adviser,
or with companies affiliated with INVESCO, this individual is deemed to be an
"interested person" of International Funds as that term is defined in the 1940
Act.
(1) = As interpreted by the SEC, a security is beneficially owned by a
person if that person has or shares voting power or investment power with
respect to that security. The persons listed have partial or complete voting and
investment power with respect to their respective Fund shares.
(2) = Member of the Audit Committee
(3) = Member of the Executive Committee
(4) = Member of the Management Liaison Committee
(5) = Member of the Valuation Committee
(6) = Member of the Compensation Committee
(7) = Member of the Soft Dollar Brokerage Committee
(8) = Member of the Derivatives Committee
The Board has audit, management liaison, soft dollar brokerage, and
derivatives committees, consisting of Independent Directors and compensation,
executive, and valuation committees consisting of both Independent Directors and
non-independent directors. The Board does not have a nominating committee. The
audit committee, consisting of four Independent Directors, meets quarterly with
International Funds' independent accountants and executive officers of
International Funds. This committee reviews the accounting principles being
applied by International Funds in financial reporting, the scope and adequacy of
internal controls, the responsibilities and fees of the independent accountants,
and other matters. All of the recommendations of the audit committee are
reported to the full Board. During the intervals between the meetings of the
Board, the executive committee may exercise all powers and authority of the
Board in the management of International Funds' business, except for certain
powers which, under applicable law and/or International Funds' by-laws, may only
be exercised by the full Board. All decisions are subsequently submitted for
ratification by the Board. The management liaison committee meets quarterly with
various management personnel of INVESCO in order to facilitate better
understanding of management and operations of International Funds, and to review
legal and operational matters that have been assigned to the committee by the
Board, in furtherance of the Board's overall duty of supervision. The soft
dollar brokerage committee meets periodically to review soft dollar transactions
by International Funds, and to review policies and procedures of International
Funds' adviser with respect to soft dollar brokerage transactions. The committee
then reports on these matters to the Board. The derivatives committee meets
periodically to review derivatives investments made by International Funds. The
committee monitors derivatives usage by International Funds and the procedures
utilized by International Funds' adviser to ensure that the use of such
instruments follows the policies on such instruments adopted by the Board. The
committee then reports on these matters to the Board.
32
<PAGE>
During the past fiscal year, the Board met four times, the audit committee
met four times, the compensation committee met once, the management liaison
committee met four times, the soft dollar brokerage committee met twice, and the
derivatives committee met twice. The executive committee did not meet. During
International Funds' last fiscal year, each Director nominee attended 75% or
more of the Board meetings and meeting of the committees of the Board on which
he or she served.
The Independent Directors nominate individuals to serve as Independent
Directors, without any specific nominating committee. The Board ordinarily will
not consider unsolicited director nominations recommended by International
Funds' shareholders. The Board, including its Independent Directors, unanimously
approved the nomination of the foregoing persons to serve as directors and
directed that the election of these nominees be submitted to International
Funds' shareholders.
The following table sets forth information relating to the compensation
paid to directors during the last fiscal year:
COMPENSATION TABLE
AMOUNTS PAID DURING THE MOST RECENT
FISCAL YEAR BY INTERNATIONAL FUNDS TO DIRECTORS
Name of Person, Aggregate Pension Or Estimated Total
Position Compensation Retirement Annual Compensation
- -------------- from Benefits Benefits Upon from
International Accrued as Retirement(3) International
Funds(1) Part of ------------- Funds and
------------ International INVESCO Funds
Funds Paid to
Expenses(2) Directors(1)
----------- ------------
FRED A DEERING, $ 4,395 $1,355 $870 $113,700
VICE CHAIRMAN OF
THE BOARD AND
DIRECTOR
DR. VICTOR L. $4,306 $1,281 $1,007 $80,350
ANDREWS, DIRECTOR
BOB R. BAKER, $4,421 $1,143 $1,349 $84,000
DIRECTOR
LAWRENCE H. $4,240 $1,281 $1,007 $79,350
BUDNER, DIRECTOR
DANIEL D. $4,330 $1,384 $751 $70,000
CHABRIS4, DIRECTOR
KENNETH T. KING, $4,151 $1,407 $789 $77,050
DIRECTOR
JOHN W. MCINTYRE, $4,198 $0 $0 $98,500
DIRECTOR
DR. WENDY L. $4,163 $0 $0 $79,000
GRAMM, DIRECTOR
DR. LARRY SOLL, $4,198 $0 $0 $96,000
DIRECTOR
------- ------ ------ --------
TOTAL $38,402 $7,851 $5,773 $767,950
- -----
AS A PERCENTAGE 0.0050%(5) 0.0010%(5) 0.0035%(6)
OF NET ASSETS
- ---------------
(1) The Vice Chairman of the Board, the chairmen of the audit, management
liaison, derivatives, soft dollar brokerage and compensation committees, and
Independent Director members of the committees of each Fund receive compensation
for serving in such capacities in addition to the compensation paid to all
Independent Directors.
(2) Represents benefits accrued with respect to the Defined Benefit Deferred
Compensation Plan discussed below, and not compensation deferred at the election
of the directors.
(3) These figures represent the Funds' share of the estimated annual benefits
payable by the INVESCO Complex (excluding INVESCO Global Health Sciences Fund
which does not participate in this retirement plan) upon the directors'
retirement, calculated using the current method of allocating director
33
<PAGE>
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
Complex, and for other reasons during the period in which retirement benefits
are accrued on behalf of the respective directors. This results in lower
estimated benefits for directors who are closer to retirement and higher
estimated benefits for directors who are farther from retirement. With the
exception of Drs. Soll and Gramm, each of these directors has served as director
of one or more of 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 effective September 30, 1998.
(5) Total as a percentage of the Fund's net assets as of October 31, 1998.
(6) Total as a percentage of the INVESCO Complex's net assets as of December
31, 1998.
International Funds pays its Independent Directors, Board vice chairman,
and committee chairmen and members the fees described above. International Funds
also reimburses its Independent Directors for travel expenses incurred in
attending meetings. Charles W. Brady, Chairman of the Board, and Mark H.
Williamson, President, Chief Executive Officer, and Director, as "interested
persons" of International Funds and of other INVESCO Funds receive compensation
and are reimbursed for travel expenses incurred in attending meetings as
officers or employees of INVESCO or its affiliated companies, but do not receive
any director's fees or other compensation from International Funds or other
INVESCO Funds for their services as directors.
The overall direction and supervision of International Funds is the
responsibility of the Board, which has the primary duty of ensuring that
International Funds' general investment policies and programs are adhered to and
that International Funds is properly administered. The officers of International
Funds, all of whom are officers and employees of and paid by INVESCO, are
responsible for the day-to-day administration of International Funds. The
investment sub-adviser for International Funds has the primary responsibility
for making investment decisions on behalf of International Funds. These
investment decisions are reviewed by the investment committee of INVESCO.
All of the officers and directors of International Funds hold comparable
positions with the following INVESCO Funds: INVESCO Bond Funds, Inc. (formerly,
INVESCO Income Funds, Inc.), INVESCO Combination Stock & Bond Funds, Inc.
(formerly, INVESCO Flexible Funds, Inc. and INVESCO Multiple Asset 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 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. and
INVESCO Capital Appreciation Funds, Inc.), INVESCO Tax-Free Income Funds, Inc.,
and INVESCO Variable Investment Funds, Inc. All of the directors and officers of
International Funds also serve as trustees of INVESCO Value Trust and INVESCO
Treasurer's Series Trust.
The Boards of the funds managed by INVESCO, INVESCO Treasurer's Series
Trust, and INVESCO Value Trust have adopted a Defined Benefit Deferred
Compensation Plan (the "Plan") for the non-interested directors and trustees of
the Funds. Under the Plan, each director or trustee who is not an interested
person of the Funds (as defined in Section 2(a)(47) of the 1940 Act) and who has
served for at least five years (a "Qualified Director") is entitled to receive,
upon termination of service as director (normally at retirement age 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
34
<PAGE>
annualized board meeting fees payable by the funds to the Qualified Director at
the time of his or her retirement. Commencing with any such director's second
year of retirement, and commencing with the first year of retirement of any
director whose retirement has been extended by the Board for three years, a
Qualified Director shall receive quarterly payments at an annual rate equal to
50% of the basic retainer and annualized board meeting fees. 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 Reduced Retainer Payments will be made to him or her or
to his or her beneficiary or estate. If a Qualified Director becomes disabled or
dies either prior to age 72 or during his or her 74th year while still a
director of the funds, the director will not be entitled to receive the First
Year Retirement Benefit; however, the retirement payments will be made to his or
her beneficiary or estate. The Plan is administered by a committee of three
directors who are also participants in the Plan and one director who is not a
Plan participant. The cost of the Plan will be allocated among the INVESCO,
Treasurer's Series Trust, and Value Trust Funds (the "INVESCO Funds") in a
manner determined to be fair and equitable by the committee. The Fund began
making payments to Mr. Chabris as of October 1, 1998 under the Plan. The Fund
has no stock options or other pension or retirement plans for management or
other personnel and pays no salary or compensation to any of its officers.
The Independent Directors have contributed to a deferred compensation plan,
pursuant to which they have deferred receipt of a portion of the compensation
which they would otherwise have been paid as directors of certain of the INVESCO
Funds. The deferred amounts, once the amount that has been deferred totals at
least $100, are invested in shares of all of the INVESCO Funds. Each Independent
Director is, therefore, an indirect owner of shares of each INVESCO Fund, in
addition to any Fund shares that may be owned directly.
REQUIRED VOTE. Election of each nominee as a director of International
Funds requires, in the aggregate, the vote of a plurality of all the outstanding
shares of Growth Fund present at the Meeting in person or by proxy, and of the
outstanding shares of the other series of International Funds present at
concurrent meetings of the shareholders of those series.
THE BOARD, INCLUDING THE INDEPENDENT DIRECTORS, UNANIMOUSLY
RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" EACH OF THE NOMINEES
IN PROPOSAL 3
PROPOSAL 4. TO RATIFY THE SELECTION OF PRICEWATERHOUSECOOPERS LLP AS
INDEPENDENT ACCOUNTANTS OF GROWTH FUND.
The Board, including all of its Independent Directors, has selected
PricewaterhouseCoopers LLP to continue to serve as independent accountants of
Growth Fund, subject to ratification by Growth Fund's shareholders.
PricewaterhouseCoopers LLP has no direct financial interest or material indirect
financial interest in Growth Fund. Representatives of PricewaterhouseCoopers LLP
are not expected to attend the Meeting, but have been given the opportunity to
35
<PAGE>
make a statement if they so desire, and will be available should any matter
arise requiring their presence.
The independent accountants examine annual financial statements for Growth
Fund and provide other audit and tax-related services. In recommending the
selection of PricewaterhouseCoopers LLP, the directors reviewed the nature and
scope of the services to be provided (including non-audit services) and whether
the performance of such services would affect the accountants' independence.
REQUIRED VOTE. Approval of Proposal 4 requires the affirmative vote of
a majority of the votes present at the Meeting, provided that a quorum is
present.
THE BOARD UNANIMOUSLY RECOMMENDS THAT THE SHAREHOLDERS VOTE "FOR" PROPOSAL 4
OTHER BUSINESS
The Board knows of no other business to be brought before the Meeting. If,
however, any other matters properly come before the Meeting, it is the intention
that proxies that do not contain specific instructions to the contrary will be
voted on such matters in accordance with the judgment of the persons designated
in the proxies.
INFORMATION CONCERNING ADVISER, SUB-ADVISER, DISTRIBUTOR AND
AFFILIATED COMPANIES
INVESCO, a Delaware corporation, serves as Growth Fund's investment
adviser, and provides other services to Growth Fund and International Funds.
IDI, a Delaware corporation that serves as Growth Fund's distributor, is a
wholly owned subsidiary of INVESCO. IAML, a United Kingdom corporation, serves
as Growth Fund's sub-adviser. IAML also serves as the sub-adviser to INVESCO
Emerging Markets Fund, INVESCO European Fund, INVESCO European Small Company
Fund, INVESCO Latin American Growth Fund, and INVESCO Pacific Basin Fund.
INVESCO is a wholly owned subsidiary of INVESCO North American Holdings, Inc.
("INAH"), 1315 Peachtree Street, N.E., Atlanta, Georgia 30309. INAH is an
indirect wholly owned subsidiary of AMVESCAP PLC.(1) The corporate headquarters
of AMVESCAP PLC are located at 11 Devonshire Square, London EC2M 4YR, England.
INVESCO's and IDI's offices are located at 7800 East Union Avenue, Denver,
Colorado 80237. IAML's offices are located at 11 Devonshire Square, London EC2M
4YR, England. INVESCO currently serves as investment adviser of 14 open-end
investment companies having approximate aggregate net assets in excess of $21.1
billion as of December 31, 1998.
- --------------------------
(1) The intermediary companies between INAH and AMVESCAP PLC are as
follows: INVESCO, Inc., INVESCO Group Services, Inc. and INVESCO North American
Group, Ltd., each of which is wholly owned by its immediate parent.
36
<PAGE>
The principal executive officers and directors of INVESCO and their
principal occupations are:
Mark H. Williamson, Chairman of the Board, President, Chief Executive
Officer and Director, also, President and Chief Executive Officer of IDI;
Charles P. Mayer, Director and Senior Vice President, also, Senior Vice
President and Director of IDI; and Ronald L. Grooms, Senior Vice President and
Treasurer, also, Senior Vice President and Treasurer of IDI; and Glen A. Payne,
Senior Vice President, Secretary and General Counsel, also, Senior Vice
President, Secretary and General Counsel of IDI.
The address of each of the foregoing officers and directors is 7800 East
Union Avenue, Denver, Colorado 80237.
The principal executive officers and directors of IAML and their principal
occupations are:
Robert J. A. Cackett, Company Secretary; and Jeffrey C. Attfield, Managing
Director, Institutional Business Group; and Peter J. Glynne-Percy, Director; and
Sarah C. Bates, Managing Director, Closed End Funds; and Adam D. Cooke,
Director; and Ian A. Carstairs, Director; and Francesco Bertoni, Director; and
David C. Gillan, Director; and Tristan P. A. Hillgarth, Chairman of the Board,
Chief Executive Officer and Director; and Anthony Broccardo, Director; and
Andrew D. Crossley, Director; and Jeremy C. Lambourne, Director; and Claire
Griffiths, Director; and Rory S. Powe, Director; and Thomas J. Berger, Director;
and Riccardo Ricciardi, Chief Investment Officer and Director; and Roy N.
Bracher, Managing Director, CEAM; and Steven A. Chamberlain; Director; and
Oliver De Faramond, Director; and Jean-Baptiste De Ville De Franssu, Director;
and Patricia A. Lockwood, Director; Deborah A. Lamb, Acting Agent; and Anthony
A. Myers, Director; and Robert D. Messenger, Director.
The address of each of the foregoing officers and directors is 11
Devonshire Square, London EC2M 4YR, England.
Pursuant to an Administrative Services Agreement between International
Funds and INVESCO, INVESCO provides administrative services to International
Funds, including sub-accounting and recordkeeping services and functions. During
the fiscal year ended October 31, 1998, International Funds paid INVESCO, which
also serves as International Funds' registrar, transfer agent and dividend
disbursing agent, total compensation of $309,305 for such services.
MISCELLANEOUS
AVAILABLE INFORMATION
Each Fund is subject to the information requirements of the Securities
Exchange Act of 1934 and the 1940 Act and in accordance with those requirements
files reports, proxy material and other information with the SEC. These reports,
37
<PAGE>
proxy material and other information can be inspected and copied at the Public
Reference Room maintained by the SEC at 450 Fifth Street, N.W., Washington, D.C.
20549, the Midwest Regional office of the SEC, Northwest Atrium Center, 500 West
Madison Street, Suite 400, Chicago, Illinois 60611, and the Northeast Regional
Office of the SEC, Seven World Trade Center, Suite 1300, New York, New York
10048. Copies of such material can also be obtained from the Public Reference
Branch, Office of Consumer Affairs and Information Services, Securities and
Exchange Commission, Washington, D.C. 20459 at prescribed rates.
LEGAL MATTERS
Certain legal matters in connection with the issuance of Blue Chip Fund
shares as part of the Reorganization will be passed upon by Blue Chip Fund's
counsel, Kirkpatrick & Lockhart LLP.
EXPERTS
The audited financial statements of Blue Chip Fund and Growth Fund,
incorporated herein by reference and incorporated by reference or included in
their respective Statements of Additional Information, have been audited by
PricewaterhouseCoopers LLP, independent accountants for the Funds, whose reports
thereon are included in the Funds' Annual Reports to Shareholders for the fiscal
year ended October 31, 1998. The financial statements audited by
PricewaterhouseCoopers LLP have been incorporated herein by reference in
reliance on their reports given on their authority as experts in auditing and
accounting matters.
38
<PAGE>
APPENDIX A
PLAN OF REORGANIZATION AND TERMINATION
THIS PLAN OF REORGANIZATION AND TERMINATION ("Plan") is made by INVESCO
International Funds, Inc., a Maryland corporation ("Corporation"), on behalf of
INVESCO International Growth Fund ("Target") and INVESCO International Blue Chip
Fund ("Acquiring Fund"), and is effective as of the date of its adoption by
Corporation's board of directors. (Acquiring Fund and Target are sometimes
referred to herein individually as a "Fund" and collectively as the "Funds.")
Corporation is a corporation duly organized, validly existing, and in good
standing under the laws of the State of Maryland; and a copy of its Articles of
Incorporation is on file with the Secretary of State of Maryland. Each Fund is a
duly established and designated segregated portfolio of assets ("series") of
Corporation.
This Plan is intended to be, and is adopted as, a plan of a
reorganization described in section 368(a)(1)(D) of the Internal Revenue Code of
1986, as amended ("Code"). The reorganization will involve the transfer to
Acquiring Fund of Target's assets in exchange solely for voting shares of common
stock in Acquiring Fund, par value $0.01 per share ("Acquiring Fund Shares"),
and the assumption by Acquiring Fund of Target's liabilities, followed by the
constructive distribution of the Acquiring Fund Shares PRO RATA to the holders
of shares of common stock in Target ("Target Shares") in exchange therefor, all
on the terms and conditions set forth herein. The foregoing transactions are
referred to herein collectively as the "Reorganization."
Each Fund issues a single class of shares, which are substantially
similar to each other. Each Fund's shares (1) are offered at net asset value
("NAV") and (2) are subject to a service fee at the annual rate of 0.25% of its
net assets imposed pursuant to a plan of distribution adopted in accordance with
Rule 12b-1 promulgated under the Investment Company Act of 1940, as amended
("1940 Act").
1. THE REORGANIZATION
------------------
1.1. Target shall assign, sell, convey, transfer, and deliver all of its
assets described in paragraph 1.2 ("Assets") to Acquiring Fund. In exchange
therefor, Acquiring Fund shall --
(a) issue and deliver to Target the number of full and fractional
(rounded to the third decimal place) Acquiring Fund Shares,
determined by dividing the net value of Target (computed as set
forth in paragraph 2.1) by the NAV of an Acquiring Fund Share
(computed as set forth in paragraph 2.2), and
(b) assume all of Target's liabilities described in paragraph 1.3
("Liabilities").
Such transactions shall take place at the Closing (as defined in paragraph 3.1).
1.2. The Assets shall include, without limitation, all cash, cash
equivalents, securities, receivables (including interest and dividends
receivable), claims and rights of action, rights to register shares under
<PAGE>
applicable securities laws, books and records, deferred and prepaid expenses
shown as assets on Target's books, and other property owned by Target at the
Effective Time (as defined in paragraph 3.1).
1.3. The Liabilities shall include (except as otherwise provided herein)
all of Target's liabilities, debts, obligations, and duties of whatever kind or
nature, whether absolute, accrued, contingent, or otherwise, whether or not
arising in the ordinary course of business, whether or not determinable at the
Effective Time, and whether or not specifically referred to in this Plan.
Notwithstanding the foregoing, Target shall use its best efforts to discharge
all its known Liabilities before the Effective Time.
1.4. At or immediately before the Effective Time, Target shall declare and
pay to its shareholders a dividend and/or other distribution in an amount large
enough so that it will have distributed substantially all (and in any event not
less than 90%) of its investment company taxable income (computed without regard
to any deduction for dividends paid) and substantially all of its realized net
capital gain, if any, for the current taxable year through the Effective Time.
1.5. At the Effective Time (or as soon thereafter as is reasonably
practicable), Target shall distribute the Acquiring Fund Shares received by it
pursuant to paragraph 1.1 to Target's shareholders of record, determined as of
the Effective Time (each a "Shareholder" and collectively "Shareholders"), in
constructive exchange for their Target Shares. Such distribution shall be
accomplished by Acquiring Fund's transfer agent's opening accounts on Acquiring
Fund's share transfer books in the Shareholders' names and transferring such
Acquiring Fund Shares thereto. Each Shareholder's account shall be credited with
the respective PRO RATA number of full and fractional (rounded to the third
decimal place) Acquiring Fund Shares due that Shareholder. All outstanding
Target Shares, including any represented by certificates, shall simultaneously
be canceled on Target's share transfer books. Acquiring Fund shall not issue
certificates representing the Acquiring Fund Shares issued in connection with
the Reorganization.
1.6. As soon as reasonably practicable after distribution of the Acquiring
Fund Shares pursuant to paragraph 1.5, but in all events within twelve months
after the Effective Time, Target shall be terminated and any further actions
shall be taken in connection therewith as required by applicable law.
1.7. Any reporting responsibility of Target to a public authority is and
shall remain its responsibility up to and including the date on which it is
terminated.
1.8. Any transfer taxes payable upon issuance of Acquiring Fund Shares in
a name other than that of the registered holder on Target's books of the Target
Shares constructively exchanged therefor shall be paid by the person to whom
such Acquiring Fund Shares are to be issued, as a condition of such transfer.
2. VALUATION
---------
2.1. For purposes of paragraph 1.1(a), Target's net value shall be (a) the
value of the Assets computed as of the close of regular trading on the New York
A-2
<PAGE>
Stock Exchange ("NYSE") on the date of the Closing ("Valuation Time"), using the
valuation procedures set forth in Target's then-current prospectus and statement
of additional information less (b) the amount of the Liabilities as of the
Valuation Time.
2.2. For purposes of paragraph 1.1(a), the NAV of an Acquiring Fund Share
shall be computed as of the Valuation Time, using the valuation procedures set
forth in Acquiring Fund's then-current prospectus and statement of additional
information.
2.3. All computations pursuant to paragraphs 2.1 and 2.2 shall be made by
or under the direction of INVESCO Funds Group, Inc. ("INVESCO").
3. CLOSING AND EFFECTIVE TIME
--------------------------
3.1. The Reorganization, together with related acts necessary to
consummate the same ("Closing"), shall occur at Corporation's principal office
on June 18, 1999, or at such other place and/or on such other date as to which
the parties may agree. All acts taking place at the Closing shall be deemed to
take place simultaneously as of the close of business on the date thereof or at
such other time as to which the parties may agree ("Effective Time"). If,
immediately before the Valuation Time, (a) the NYSE is closed to trading or
trading thereon is restricted or (b) trading or the reporting of trading on the
NYSE or elsewhere is disrupted, so that accurate appraisal of the net value of
Target and the NAV of an Acquiring Fund Share is impracticable, the Effective
Time shall be postponed until the first business day after the day when such
trading shall have been fully resumed and such reporting shall have been
restored.
3.2. Corporation's fund accounting and pricing agent shall deliver at the
Closing a certificate of an authorized officer verifying that the information
(including adjusted basis and holding period, by lot) concerning the Assets,
including all portfolio securities, transferred by Target to Acquiring Fund, as
reflected on Acquiring Fund's books immediately following the Closing, does or
will conform to such information on Target's books immediately before the
Closing. Corporation's custodian shall deliver at the Closing a certificate of
an authorized officer stating that (a) the Assets held by the custodian will be
transferred to Acquiring Fund at the Effective Time and (b) all necessary taxes
in conjunction with the delivery of the Assets, including all applicable federal
and state stock transfer stamps, if any, have been paid or provision for payment
has been made.
3.3. Corporation's transfer agent shall deliver at the Closing a
certificate as to the opening on Acquiring Fund's share transfer books of
accounts in the Shareholders' names.
4. CONDITIONS
----------
Each Fund's obligations hereunder are subject to satisfaction of each
condition indicated in this section 4 as being applicable to it either at the
time stated therein or, if no time is so stated, at or before (and continuing
through) the Effective Time:
A-3
<PAGE>
4.1. CONDITIONS TO EACH FUND'S OBLIGATIONS:
-------------------------------------
4.1.1. This Plan and the transactions contemplated hereby shall have
been approved by Target's shareholders in accordance with applicable law;
4.1.2. The aggregate fair market value of the Acquiring Fund Shares,
when received by the Shareholders, will be approximately equal to the
aggregate fair market value of their Target Shares constructively
surrendered in exchange therefor;
4.1.3. Corporation's management (a) is unaware of any plan or
intention of Shareholders to redeem or otherwise dispose of any portion of
the Acquiring Fund Shares to be received by them in the Reorganization and
(b) does not anticipate dispositions of those Acquiring Fund Shares at the
time of or soon after the Reorganization to exceed the usual rate and
frequency of dispositions of shares of Target as a series of an open-end
investment company. Consequently, Corporation's management expects that
the percentage of Shareholder interests, if any, that will be disposed of
as a result of or at the time of the Reorganization will be DE MINIMIS.
Nor does Corporation's management anticipate that there will be
extraordinary redemptions of Acquiring Fund Shares immediately following
the Reorganization;
4.1.4. The Shareholders will pay their own expenses, if any, incurred
in connection with the Reorganization;
4.1.5. Immediately following consummation of the Reorganization,
Acquiring Fund will hold substantially the same assets and be subject to
substantially the same liabilities that Target held or was subject to
immediately prior thereto (in addition to the assets and liabilities
Acquiring Fund then held or was subject to), plus any liabilities and
expenses of the parties incurred in connection with the Reorganization;
4.1.6. The fair market value of the Assets on a going concern basis
will equal or exceed the Liabilities to be assumed by Acquiring Fund and
those to which the Assets are subject;
4.1.7. There is no intercompany indebtedness between the Funds that
was issued or acquired, or will be settled, at a discount;
4.1.8. Pursuant to the Reorganization, Target will transfer to
Acquiring Fund, and Acquiring Fund will acquire, at least 90% of the fair
market value of the net assets, and at least 70% of the fair market value
of the gross assets, held by Target immediately before the Reorganization.
For the purposes of this representation, any amounts used by Target to pay
its Reorganization expenses and to make redemptions and distributions
immediately before the Reorganization (except (a) redemptions not made as
part of the Reorganization and (b) distributions made to conform to its
policy of distributing all or substantially all of its income and gains to
avoid the obligation to pay federal income tax and/or the excise tax under
section 4982 of the Code) will be
A-4
<PAGE>
included as assets thereof held immediately before the Reorganization;
4.1.9. None of the compensation received by any Shareholder who is an
employee of or service provider to Target will be separate consideration
for, or allocable to, any of the Target Shares held by such Shareholder;
none of the Acquiring Fund Shares received by any such Shareholder will be
separate consideration for, or allocable to, any employment agreement,
investment advisory agreement, or other service agreement; and the
consideration paid to any such Shareholder will be for services actually
rendered and will be commensurate with amounts paid to third parties
bargaining at arm's-length for similar services;
4.1.10. Immediately after the Reorganization, the Shareholders will
own shares constituting "control" of Acquiring Fund within the meaning of
section 304(c) of the Code;
4.1.11. Neither Fund will be reimbursed for any expenses incurred by
it or on its behalf in connection with the Reorganization unless those
expenses are solely and directly related to the Reorganization (determined
in accordance with the guidelines set forth in Rev. Rul. 73-54, 1973-1
C.B. 187) ("Reorganization Expenses"); and
4.1.12. Corporation shall have received an opinion of Kirkpatrick &
Lockhart LLP ("Counsel"), addressed to and in form and substance
satisfactory to it, as to the federal income tax consequences mentioned
below ("Tax Opinion"). In rendering the Tax Opinion, Counsel may assume
satisfaction of all the conditions set forth in this section 4 (and treat
them as representations by Corporation to Counsel) and may rely as to any
factual matters, exclusively and without independent verification, on such
representations and any other representations made to Counsel by
responsible officers of Corporation. The Tax Opinion shall be
substantially to the effect that, based on the facts and assumptions
stated therein, for federal income tax purposes:
4.1.12.1. Acquiring Fund's acquisition of the Assets in exchange
solely for Acquiring Fund Shares and Acquiring Fund's assumption of
the Liabilities, followed by Target's distribution of those shares PRO
RATA to the Shareholders constructively in exchange for the
Shareholders' Target Shares, will constitute a reorganization within
the meaning of section 368(a)(1)(D) of the Code, and each Fund will be
"a party to a reorganization" within the meaning of section 368(b) of
the Code;
4.1.12.2. Target will recognize no gain or loss on the transfer to
Acquiring Fund of the Assets in exchange solely for Acquiring Fund
Shares and Acquiring Fund's assumption of the Liabilities or on the
subsequent distribution of those shares to the Shareholders in
constructive exchange for their Target Shares;
4.1.12.3. Acquiring Fund will recognize no gain or loss on its
receipt of the Assets in exchange solely for Acquiring Fund Shares and
its assumption of the Liabilities;
A-5
<PAGE>
4.1.12.4. Acquiring Fund's basis for the Assets will be the same
as the basis thereof in Target's hands immediately before the
Reorganization, and Acquiring Fund's holding period for the Assets
will include Target's holding period therefor;
4.1.12.5. A Shareholder will recognize no gain or loss on the
constructive exchange of all its Target Shares solely for Acquiring
Fund Shares pursuant to the Reorganization; and
4.1.12.6. A Shareholder's aggregate basis for the Acquiring Fund
Shares to be received by it in the Reorganization will be the same as
the aggregate basis for its Target Shares to be constructively
surrendered in exchange for those Acquiring Fund Shares, and its
holding period for those Acquiring Fund Shares will include its
holding period for those Target Shares, provided they are held as
capital assets by the Shareholder at the Effective Time.
Notwithstanding subparagraphs 4.1.12.2 and 4.1.12.4, the Tax Opinion may
state that no opinion is expressed as to the effect of the Reorganization
on the Funds or any Shareholder with respect to any asset as to which any
unrealized gain or loss is required to be recognized for federal income
tax purposes at the end of a taxable year (or on the termination or
transfer thereof) under a mark-to-market system of accounting.
4.2. CONDITIONS TO ACQUIRING FUND'S OBLIGATIONS:
------------------------------------------
4.2.1. At the Closing, Target will have good and marketable title to
the Assets and full right, power, and authority to sell, assign, transfer,
and deliver the Assets free of any liens or other encumbrances; and upon
delivery and payment for the Assets, Acquiring Fund will acquire good and
marketable title thereto;
4.2.2. The Liabilities were incurred by Target in the ordinary course
of its business;
4.2.3. Target is a "fund" as defined in section 851(g)(2) of the
Code; it qualified for treatment as a regulated investment company under
Subchapter M of the Code ("RIC") for each past taxable year since it
commenced operations and will continue to meet all the requirements for
such qualification for its current taxable year; and it has no earnings
and profits accumulated in any taxable year in which the provisions of
Subchapter M did not apply to it. The Assets shall be invested at all
times through the Effective Time in a manner that ensures compliance with
the foregoing;
4.2.4. Target is not under the jurisdiction of a court in a
proceeding under Title 11 of the United States Code or similar case within
the meaning of section 368(a)(3)(A) of the Code;
4.2.5. Not more than 25% of the value of Target's total assets
(excluding cash, cash items, and U.S. government securities) is invested
A-6
<PAGE>
in the stock and securities of any one issuer, and not more than 50% of
the value of such assets is invested in the stock and securities of five
or fewer issuers; and
4.2.6. Target will be terminated as soon as reasonably practicable
after the Effective Time, but in all events within twelve months
thereafter.
4.3. CONDITIONS TO TARGET'S OBLIGATIONS:
----------------------------------
4.3.1. No consideration other than Acquiring Fund Shares (and Acquiring
Fund's assumption of the Liabilities) will be issued in exchange for the Assets
in the Reorganization;
4.3.2. The Acquiring Fund Shares to be issued and delivered to Target
hereunder will, at the Effective Time, have been duly authorized and, when
issued and delivered as provided herein, will be duly and validly issued and
outstanding shares of Acquiring Fund, fully paid and non-assessable;
4.3.3. Acquiring Fund is a "fund" as defined in section 851(g)(2) of the
Code; it qualified for treatment as a RIC for each past taxable year since it
commenced operations and will continue to meet all the requirements for such
qualification for its current taxable year; Acquiring Fund intends to continue
to meet all such requirements for the next taxable year; and it has no earnings
and profits accumulated in any taxable year in which the provisions of
Subchapter M of the Code did not apply to it;
4.3.4. Acquiring Fund has no plan or intention to issue additional
Acquiring Fund Shares following the Reorganization except for shares issued in
the ordinary course of its business as a series of an open-end investment
company; nor does Acquiring Fund have any plan or intention to redeem or
otherwise reacquire any Acquiring Fund Shares issued to the Shareholders
pursuant to the Reorganization, except to the extent it is required by the 1940
Act to redeem any of its shares presented for redemption at net asset value in
the ordinary course of that business;
4.3.5. Following the Reorganization, Acquiring Fund (a) will continue
Target's "historic business" (within the meaning of section 1.368-1(d)(2) of the
Income Tax Regulations under the Code), (b) use a significant portion of
Target's historic business assets (within the meaning of section 1.368-1(d)(3)
of the Income Tax Regulations under the Code) in a business, (c) has no plan or
intention to sell or otherwise dispose of any of the Assets, except for
dispositions made in the ordinary course of that business and dispositions
necessary to maintain its status as a RIC, and (d) expects to retain
substantially all the Assets in the same form as it receives them in the
Reorganization, unless and until subsequent investment circumstances suggest the
desirability of change or it becomes necessary to make dispositions thereof to
maintain such status;
A-7
<PAGE>
4.3.6. There is no plan or intention for Acquiring Fund to be dissolved or
merged into another corporation or a business trust or any "fund" thereof
(within the meaning of section 851(g)(2) of the Code) following the
Reorganization;
4.3.7. Immediately after the Reorganization, (a) not more than 25% of the
value of Acquiring Fund's total assets (excluding cash, cash items, and U.S.
government securities) will be invested in the stock and securities of any one
issuer and (b) not more than 50% of the value of such assets will be invested in
the stock and securities of five or fewer issuers; and
4.3.8. Acquiring Fund does not directly or indirectly own, nor at the
Effective Time will it directly or indirectly own, nor has it at any time during
the past five years directly or indirectly owned, any shares of Target.
5. EXPENSES
--------
Except as otherwise provided herein, 50% of the total Reorganization
Expenses will be borne by INVESCO and the remaining 50% will be borne partly by
each Fund.
6. TERMINATION
-----------
Corporation's board of directors may terminate this Plan and abandon the
Reorganization at any time prior to the Closing if circumstances develop that,
in its judgment, make proceeding with the Reorganization inadvisable for either
Fund.
7. GOVERNING LAW
-------------
This Plan shall be governed by and construed in accordance with the
internal laws of the State of Maryland; provided that, in the case of any
conflict between such laws and the federal securities laws, the latter shall
govern.
A-8
<PAGE>
APPENDIX B
----------
PRINCIPAL SHAREHOLDERS
----------------------
As of March 12, 1999 the following entities held more than 5% of each
Fund's outstanding equity securities:
NATURE OF COMBINED
BLUE CHIP FUND OWNERSHIP $ OWNED FUND %
- -------------- --------- ------- --------
Charles Schwab & Co. Inc.
Special Custody Account for the
Exclusive Benefit of Customers
101 Montgomery Street
San Francisco, CA 94104-4122
Steven Jay Rosansky
206 Juarez Court
Columbia, SC 29206-1428
GROWTH FUND
- -----------
Charles Schwab & Co., Inc.
Special Custody Account for the
Exclusive Benefit of Customers
101 Montgomery Street
San Francisco, CA 94104-4122
B-1
<PAGE>
INVESCO INTERNATIONAL GROWTH FUND
INVESCO INTERNATIONAL BLUE CHIP FUND
(EACH A SERIES OF INVESCO INTERNATIONAL FUNDS, INC.)
7800 E. UNION AVENUE
DENVER, COLORADO 80237
STATEMENT OF ADDITIONAL INFORMATION
This Statement of Additional Information relates specifically to the
proposed Reorganization whereby INVESCO International Blue Chip Fund ("Blue Chip
Fund") would acquire the assets of INVESCO International Growth Fund ("Growth
Fund") in exchange solely for shares of Blue Chip Fund and the assumption by
Blue Chip Fund of Growth Fund's liabilities. This Statement of Additional
Information consists of this cover page, the attached pro forma financial
statements and schedules, and the following described documents, each of which
is incorporated by reference herein:
(1) The Statement of Additional Information of Blue Chip Fund, dated
December 1, 1998.
(2) The Statement of Additional Information of Growth Fund, dated
December 1, 1998.
(3) The Annual Report to Shareholders of Blue Chip Fund for the fiscal
period ended October 31, 1998.
(4) The Annual Report to Shareholders of Growth Fund for the fiscal
year ended October 31, 1998.
This Statement of Additional Information is not a prospectus and should
be read only in conjunction with the Prospectus/Proxy Statement dated March __,
1999 relating to the above-referenced matter. A copy of the Prospectus/Proxy
Statement may be obtained by calling toll-free 1-800-646-8372. This Statement of
Additional Information is dated March __, 1999.
<PAGE>
PRO FORMA STATEMENT OF OPERATIONS
PERIOD ENDED OCTOBER 31, 1998 (NOTE 1)
UNAUDITED
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
INTERNATIONAL
INTERNATIONAL BLUE CHIP PRO FORMA PRO FORMA
GROWTH FUND FUND(A) ADJUSTMENTS COMBINED
-------------------------------------------------------------------
INVESTMENT INCOME
INCOME
Dividends $ 838,539 $ 0 114,385 (c) $ 952,924
Interest 202,778 2,491 27,661 (c) 232,930
Foreign Taxes Withheld (97,006) 0 (13,233)(c) (110,239)
- ----------------------------------------------------------------------------------------------------------------------------
TOTAL INCOME 944,311 2,491 1,075,615
- ----------------------------------------------------------------------------------------------------------------------------
EXPENSES
Investment Advisory Fees (Note 3) 512,097 176 $(130,660)(b) 381,613
Distribution Expenses (Note 3) 112,705 59 14,440 (b) 127,204
Transfer Agent Fees 351,924 0 (59,981)(c) 291,943
Administrative Fees (Note 3) 17,681 84 (133)(b) 17,632
Custodian Fees and Expenses 87,303 0 12,697 (c) 100,000
Directors' Fees and Expenses 12,339 0 (4,915)(c) 7,424
Professional Fees and Expenses 26,898 0 3,485 (c) 30,383
Registration Fees and Expenses 72,503 0 7,000 (c) 79,503
Reports to Shareholders 35,715 0 3,572 (c) 39,287
Other Expenses 11,158 0 5,084 (c) 16,242
- ----------------------------------------------------------------------------------------------------------------------------
TOTAL EXPENSES 1,240,323 319 1,091,231
Fees and Expenses Absorbed by Investment Adviser (192,883) 0 152,074 (d) (40,809)
Fees and Expenses Paid Indirectly (32,788) 0 (32,788)
- ----------------------------------------------------------------------------------------------------------------------------
NET EXPENSES 1,014,652 319 2,663 1,017,634
- ----------------------------------------------------------------------------------------------------------------------------
NET INVESTMENT INCOME (70,341) 2,172 126,150 57,981
- ----------------------------------------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENT SECURITIES
Net Realized Gain (Loss) on:
Investment Securities 10,454,552 0 10,454,552
Foreign Currency Transactions (4,079,892) 0 (4,079,892)
- ----------------------------------------------------------------------------------------------------------------------------
Total Net Realized Gain 6,374,660 0 6,374,660
- ----------------------------------------------------------------------------------------------------------------------------
Change in Net Appreciation (Depreciation) of:
Investment Securities (7,555,097) 14,355 (7,540,742)
Foreign Currency Transactions 3,231,078 (7,155) 3,223,923
- ----------------------------------------------------------------------------------------------------------------------------
Total Net Appreciation (Depreciation) (4,324,019) 7,200 (4,316,819)
- ----------------------------------------------------------------------------------------------------------------------------
NET GAIN ON INVESTMENT SECURITIES AND
FOREIGN CURRENCY TRANSACTIONS 2,050,641 7,200 2,057,841
============================================================================================================================
NET INCREASE IN NET ASSETS FROM OPERATIONS $ 1,980,300 $ 9,372 $ 126,150 $ 2,115,822
============================================================================================================================
(a) International Blue Chip Fund commenced investment operations on October 28, 1998.
(b) Reflects adjustments to Investment Advisory Fees, Distribution Expenses and Administrative Fees based on the surviving
Fund's contractual fee obligation.
(c) Reflects elimination of duplicate services or fees using estimated annual expenses for International Blue Chip Fund.
(d) Reflects adjustment to the level of the surviving Fund's voluntary expense reimbursement.
See Notes to Financial Statements
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
PRO FORMA STATEMENT OF ASSETS AND LIABILITIES
October 31, 1998
UNAUDITED
INTERNATIONAL
INTERNATIONAL BLUE CHIP PRO FORMA PRO FORMA
GROWTH FUND FUND ADJUSTMENTS COMBINED
----------------------------------------------------------------------
ASSETS
<S> <C> <C> <C>
Investment Securities:
At Cost(a) $ 39,996,145 $ 9,917,175 $ 49,913,320
====================================================================================================================================
At Value(a) $ 44,569,989 $ 9,924,375 $ 54,494,364
Cash 186 0 186
Receivables:
Investment Securities Sold 238,752 0 238,752
Fund Shares Sold 2,339,512 1,438,462 3,777,974
Dividends and Interest 90,748 1,904 92,652
Prepaid Expenses and Other Assets 24,754 0 24,754
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL ASSETS 47,263,941 11,364,741 58,628,682
- ------------------------------------------------------------------------------------------------------------------------------------
LIABILITIES
Payables:
Custodian 0 1,566,105 1,566,105
Foreign Sub-Custodian (Cost $30,314, $0 and $30,314, respectively) 30,324 0 30,324
Investment Securities Purchased 200,614 3,504,020 3,704,634
Fund Shares Repurchased 913,217 0 913,217
Depreciation on Forward Foreign Currency Contracts 153 7,155 7,308
Accrued Distribution Expenses 7,833 59 7,892
Accrued Expenses and Other Payables 20,967 153 21,120
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES 1,173,108 5,077,492 6,250,600
- ------------------------------------------------------------------------------------------------------------------------------------
NET ASSETS AT VALUE $ 46,090,833 $ 6,287,249 $ 52,378,082
====================================================================================================================================
NET ASSETS
Paid-in Capital $ 35,567,919 $ 6,277,877 $ 41,845,796
Accumulated Undistributed (Distributions in Excess of)
Net Investment Income (7,811) 2,172 (5,639)
Accumulated Undistributed Net Realized Gain on Investment
Securities and Foreign Currency Transactions 5,953,316 0 5,953,316
Net Appreciation of Investment Securities and Foreign Currency
Transactions 4,577,409 7,200 4,584,609
====================================================================================================================================
NET ASSETS AT VALUE $ 46,090,833 $ 6,287,249 $ 52,378,082
====================================================================================================================================
Shares Outstanding 3,478,622 627,517 1,121,262 (b) 5,227,401
NET ASSET VALUE, Offering and Redemption Price per Share $ 13.25 $ 10.02 $ 10.02
====================================================================================================================================
(a) Investment securities at cost and value at October 31, 1998 include repurchase agreements of $9,931,000 and $6,406,000 for
International Growth and International Blue Chip Funds, respectively.
(b) Adjustment to reflect the exchange of shares of common stock outstanding from International Growth Fund to International Blue
Chip Fund.
See Notes to Financial Statements
</TABLE>
<PAGE>
Pro Forma Summary of Investments by Industry
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
% OF INVESTMENT SECURITIES VALUE
- ---------------------------------------- -------------------------------------------
International International
International Blue Chip Pro Forma INDUSTRY International Blue Chip Pro Forma
Growth Fund Fund Combined INDUSTRY CODE Growth Fund Fund Combined
- ------------------------------------------------------------------------------------------------------------------------------------
1.75 % 1.43 % Air Freight AF $ 779,033 $ 779,033
0.76 % 0.14 Airlines AR $ 75,625 75,625
0.35 0.28 Auto Parts AP 154,080 154,080
0.77 1.27 0.87 Automobiles AM 345,263 126,041 471,304
14.69 5.75 13.06 Banks BK 6,547,248 570,360 7,117,608
1.85 1.48 1.78 Beverages BV 822,367 147,168 969,535
0.34 0.28 Building Materials BD 149,412 149,412
0.42 1.66 0.64 Chemicals CH 185,222 165,016 350,238
3.78 3.09 Communications-- Equipment & CM 1,685,294 1,685,294
Manufacturing
3.60 2.95 Computer Related CO 1,605,389 1,605,389
0.42 0.34 Consumer Finance CF 185,926 185,926
1.55 2.17 1.66 Electric Utilities EU 690,549 215,155 905,704
0.18 1.19 0.36 Electrical Equipment EE 78,778 118,450 197,228
1.67 0.89 1.53 Electronics EL 745,623 88,389 834,012
0.37 0.30 Electronics-- Semiconductor ES 164,293 164,293
1.10 0.90 Financial FN 488,503 488,503
3.56 2.17 3.31 Foods FD 1,587,662 215,333 1,802,995
0.96 0.79 Footwear FT 427,545 427,545
0.75 0.14 Gold & Precious Metals Mining GP 74,739 74,739
7.25 4.42 6.74 Health Care Drugs-- Pharmaceuticals HD 3,232,216 438,597 3,670,813
0.83 0.15 Household Furniture & Appliances HF 82,312 82,312
3.83 1.30 3.37 Insurance IN 1,706,444 129,478 1,835,922
0.24 0.19 Investment Bank/Broker Firm IV 105,724 105,724
1.18 0.96 Lodging-- Hotels LH 525,014 525,014
1.80 1.47 Machinery MY 803,780 803,780
0.55 0.10 Manufacturing MG 305 54,221 54,526
0.30 0.58 0.35 Office Equipment & Supplies OE 132,455 57,750 190,205
3.79 3.85 3.80 Oil & Gas Related OG 1,689,423 381,702 2,071,125
0.74 0.13 Photography & Imaging PI 73,286 73,286
1.49 0.69 1.34 Publishing PB 663,322 68,017 731,339
22.28 64.55 29.98 Repurchase Agreements RA 9,931,000 6,406,000 16,337,000
1.04 0.85 Restaurants RS 464,691 464,691
3.99 0.75 3.40 Retail RT 1,779,380 74,105 1,853,485
5.36 4.39 Services SV 2,390,129 2,390,129
3.51 0.59 2.98 Telecommunications-- Cellular & Wireless TC 1,565,464 58,080 1,623,544
2.06 1.68 Telecommunications-- Long Distance TL 916,102 916,102
4.25 2.21 3.88 Telephone TN 1,895,433 219,938 2,115,371
0.28 0.85 0.39 Toys TY 126,920 84,613 211,533
====================================================================================================================================
100.00 % 100.00 % 100.00 % $44,569,989 $9,924,375 $54,494,364
====================================================================================================================================
See Notes to Financial Statements
</TABLE>
<PAGE>
PRO FORMA FINANCIAL STATEMENTS
PRO FORMA STATEMENT OF INVESTMENT SECURITIES
October 31, 1998
UNAUDITED
<TABLE>
<CAPTION>
SHARES OR PRINCIPAL AMOUNT VALUE
- ------------------------------------ -----------------------------------------
INTERNATIONAL INTERNATIONAL
INTERNATIONAL BLUE CHIP PRO FORMA INDUSTRY INTERNATIONAL BLUE CHIP PRO FORMA
GROWTH FUND FUND COMBINED DESCRIPTION CODE GROWTH FUND FUND COMBINED
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
COMMON STOCKS 67.99%
ARGENTINA 0.16%
Yacimientos Petroliferos Fiscades SA Sponsored
3,000 3,000 ADR Representing Class D Shrs OG $ 86,812 $ 86,812
====================================================================================================================================
AUSTRALIA 4.13%
215,000 215,000 Foster's Brewing Group Ltd BV $ 525,812 525,812
66,000 6,000 72,000 National Australia Bank Ltd BK 870,722 79,157 949,879
10,000 10,000 News Corp Ltd PB 68,017 68,017
6,000 6,000 Rio Tinto Ltd GP 74,739 74,739
180,000 180,000 Woolworths Ltd FD 630,639 630,639
====================================================================================================================================
2,249,086
CHINA 0.39%
680,000 680,000 Beijing Datang Power Generation Ltd EU 210,689 210,689
====================================================================================================================================
DENMARK 0.23%
500 500 Den Danske Bank Group BK 67,899 67,899
Novo-Nordisk A/S Sponsored ADR
1,000 1,000 Representing 1/2 Class B Shr HD 58,062 58,062
===================================================================================================================================
125,961
FRANCE 7.05%
1,000 1,000 AXA Sponsored ADR Representing 1/2 Shr IN 56,875 56,875
2,500 2,500 Accor SA LH 525,014 525,014
5,250 5,250 Alcatel Alsthom CM 584,803 584,803
3,200 3,200 Cap Gemini SA CO 480,835 480,835
1,000 1,000 Credit Commercial de France BK 70,218 70,218
3,600 3,600 Elf Aquitaine SA OG 416,556 416,556
500 500 Louis Vuitton Moet Hennessy BV 92,676 92,676
3,650 3,650 Pinault-Printemps-Redoute SA RT 610,851 610,851
500 500 Societe Generale Series A BK 66,133 66,133
2,145 2,145 TOTAL SA Series B Shrs OG 247,426 247,426
3,030 3,030 Vivendi SV 691,933 691,933
===================================================================================================================================
3,843,320
GERMANY 5.42%
3,650 3,650 Adidas-Salomon AG FT 427,545 427,545
2,000 2,000 BASF AG CH 84,410 84,410
2,000 2,000 Bayer AG CH 80,606 80,606
4,450 4,450 Daimler-Benz AG AM 345,263 345,263
1,000 1,000 Deutsche Bank AG BK 64,636 64,636
16,300 16,300 Deutsche Telekom AG TL 444,062 444,062
8,200 8,200 HypoVereinsbank AG BK 651,069 651,069
16,300 16,300 Mannesmann AG MY 803,780 803,780
1,000 1,000 RWE AG MG 54,221 54,221
===================================================================================================================================
2,955,592
GREECE 0.46%
11,111 11,111 Hellenic Telecommunication Organization SA TL 252,590 252,590
===================================================================================================================================
HUNGARY 0.50%
MOL Magyar Olaj-es Gazipari Rt Regulation S
12,000 12,000 Sponsored GDR Representing Ord Shrs(b) OG 271,200 271,200
===================================================================================================================================
INDIA 0.40%
Videsh Sanchar Nigam Ltd Regulation S GDR
21,000 21,000 Representing 1/2 Ord Shr(b) TL 219,450 219,450
===================================================================================================================================
<PAGE>
SHARES OR PRINCIPAL AMOUNT VALUE
- ------------------------------------ -----------------------------------------
INTERNATIONAL INTERNATIONAL
INTERNATIONAL BLUE CHIP PRO FORMA INDUSTRY INTERNATIONAL BLUE CHIP PRO FORMA
GROWTH FUND FUND COMBINED DESCRIPTION CODE GROWTH FUND FUND COMBINED
- ------------------------------------------------------------------------------------------------------------------------------------
IRELAND 0.86%
25,400 25,400 Bank of Ireland PLC BK $ 469,411 $ 469,411
===================================================================================================================================
ISRAEL 0.52%
22,000 22,000 Blue Square-Israel Ltd Sponsored ADR
Representing Ord Shrs RT 283,250 283,250
===================================================================================================================================
ITALY 6.03%
61,000 61,000 Autogrill SpA RS 464,691 464,691
10,000 Ente Nazionale Idrocarburi SpA OG $ 59,515 59,515
30,000 30,000 Istituto Mobiliare Italiano SpA(a) BK 461,468 461,468
Istituto Mobiliare Italiano SpA Sponsored ADR
1,500 1,500 Representing 3 Shrs BK 69,563 69,563
148,200 10,000 158,200 Telecom Italia Mobile SpA TC 860,750 58,080 918,830
106,000 106,000 Telecom Italia SpA Savings Shrs TN 534,448 534,448
1,000 1,000 Telecom Italia SpA Sponsored ADR
Representing 10 Ord Shrs TN 72,625 72,625
131,000 131,000 Unicredito Italiano SpA BK 703,678 703,678
===================================================================================================================================
3,284,818
JAPAN 5.11%
8,000 8,000 Asahi Breweries Ltd BV 114,305 114,305
850 850 Bank of Tokyo-Mitsubishi Ltd BK 7,885 7,885
7,000 7,000 Bridgestone Corp AP 154,080 154,080
7,000 7,000 Canon Inc OE 132,455 132,455
3,000 3,000 Canon Inc Sponsored ADR Representing Ord Shrs OE 57,750 57,750
4,000 4,000 Daiichi Pharmaceutical Ltd HD 66,764 66,764
17,000 17,000 Fast Retailing Ltd RT 196,945 196,945
2,000 2,000 Fuji Photo Film PI 73,286 73,286
17,000 17,000 Fujikura Ltd EE 78,778 78,778
11,000 11,000 Fujitsu Ltd CO 117,051 117,051
1,000 1,000 Hitachi Ltd Sponsored ADR Representing
10 Shrs EE 51,000 51,000
1,000 1,000 Honda Motor Ltd Sponsored ADR Representing
2 ORD Shrs AM 61,375 61,375
12,000 12,000 JUSCO Co Ltd RT 193,598 193,598
1,200 1,200 Keyence Corp EL 120,278 120,278
5,000 5,000 Kirin Brewery Ltd BV 54,492 54,492
50 50 Kitagawa Industries Ltd MG 305 305
2,000 2,000 Kyocera Corp EL 88,389 88,389
2,000 2,000 Murata Manufacturing Ltd EE 67,450 67,450
2,300 2,300 Nichiei Co Ltd CF 185,926 185,926
1,500 1,000 2,500 Nintendo Co Ltd TY 126,920 84,613 211,533
14,000 14,000 Nomura Securities Ltd IV 105,724 105,724
46 46 NTT Data CO 194,611 194,611
2,000 2,000 Rohm Co Ltd EL 176,779 176,779
1,700 1,700 Sony Corp EL 107,955 107,955
35,000 35,000 Toshiba Corp ES 164,293 164,293
===================================================================================================================================
2,783,007
MEXICO 0.71%
55,000 55,000 Cemex SA de CV Series B Shrs BD 149,412 149,412
9,000 9,000 Panamerican Beverages Class A BV 182,250 182,250
Telefonos de Mexico SA Class L Sponsored ADR
1,000 1,000 Representing 20 Series L Shrs TN 52,813 52,813
===================================================================================================================================
384,475
NETHERLANDS 5.17%
2,000 2,000 Akzo Nobel NV HD 77,743 77,743
6,840 6,840 Equant NV(a) CO 296,396 296,396
13,000 1,500 14,500 ING Groep NV IN 629,223 72,603 701,826
6,400 6,400 Koninklijke Philips Electronics NV EL 340,611 340,611
Philips Electronics NV New York Registered Shrs
1,500 1,500 Representing Ord Shrs HF 82,312 82,312
29,100 29,100 TNT Post Group NV AF 779,033 779,033
1,000 1,000 Unilever NV New York Registered Shrs FD 75,250 75,250
2,400 2,400 Wolters Kluwer NV PB 465,171 465,171
===================================================================================================================================
2,818,342
<PAGE>
SHARES OR PRINCIPAL AMOUNT VALUE
- ------------------------------------ -----------------------------------------
INTERNATIONAL INTERNATIONAL
INTERNATIONAL BLUE CHIP PRO FORMA INDUSTRY INTERNATIONAL BLUE CHIP PRO FORMA
GROWTH FUND FUND COMBINED DESCRIPTION CODE GROWTH FUND FUND COMBINED
- ------------------------------------------------------------------------------------------------------------------------------------
NEW ZEALAND 0.94%
125,000 125,000 Telecom Corp of New Zealand Ltd CM $ 512,856 $ 512,856
===================================================================================================================================
NORWAY 0.16%
2,000 2,000 Norsk Hydro A/S Sponsored ADR Representing
Ord Shrs OG $ 86,875 86,875
===================================================================================================================================
PORTUGAL 0.17%
2,000 2,000 Portugal Telecom SA Sponsored ADR
Representing ORD Shrs TN 94,500 94,500
===================================================================================================================================
SPAIN 2.89%
28,600 28,600 Argentaria Bancaria de Espana SA
Registered Shrs BK 621,166 621,166
10,000 10,000 Banco Bilbao Vizcaya SA Registered Shrs BK 134,637 134,637
2,500 1,000 3,500 Banco Popular Espanol SA BK 154,124 61,650 215,774
3,000 3,000 Endesa SA EU 75,468 75,468
1,500 1,500 Repsol SA Sponsored ADR Representing Ord Shrs OG 75,000 75,000
10,000 10,000 Telefonica SA TN 450,680 450,680
===================================================================================================================================
1,572,725
SWEDEN 2.38%
5,000 5,000 Astra AB Sponsored ADR Representing
Series A Shrs HD 82,188 82,188
93,900 93,900 Nordbanken Holding AB BK 562,168 562,168
26,100 26,100 Telefonaktiebolaget LM Ericsson Series B Shrs CM 587,635 587,635
3,000 3,000 Volvo AB Series B AM 64,666 64,666
===================================================================================================================================
1,296,657
SWITZERLAND 7.92%
1,500 1,500 Adecco SA Bearer Shrs SV 598,139 598,139
450 35 485 Nestle SA Registered Shrs FD 957,023 74,435 1,031,458
500 50 550 Novartis AG Registered Shrs HD 900,901 90,090 990,991
50 50 Roche Holdings AG Non-Voting Shrs HD 583,370 583,370
315 315 Swiss Re Group Registered Shrs IN 701,551 701,551
810 810 Swisscom AG Registered Shrs(a) TN 274,546 274,546
500 500 UBS AG Registered Shrs BK 137,166 137,166
===================================================================================================================================
4,317,221
UNITED KINGDOM 16.39%
7,000 7,000 Associated British Foods PLC FD 65,648 65,648
28,000 28,000 BTP PLC CH 185,222 185,222
8,480 8,480 Barclays PLC BK 182,773 182,773
1,000 1,000 British Airways PLC Sponsored ADR Representing
10 Ord Shrs AR 75,625 75,625
36,799 36,799 British Petroleum PLC OG 540,471 540,471
25,680 25,680 British Telecommunications PLC TN 332,009 332,009
23,700 23,700 CGU PLC IN 375,670 375,670
25,440 25,440 Compass Group PLC SV 257,756 257,756
11,600 11,600 EMAP PLC PB 198,151 198,151
4,000 4,000 HSBC Holdings PLC BK 91,104 91,104
33,290 33,290 Hays PLC SV 490,885 490,885
20,080 20,080 Kingfisher PLC RT 176,379 176,379
41,200 41,200 Legal & General Group PLC FN 488,503 488,503
84,800 84,800 Lloyds TSB Group PLC BK 1,047,357 1,047,357
42,960 10,000 52,960 Marks & Spencer PLC RT 318,357 74,105 392,462
5,000 5,000 PowerGen PLC EU 70,756 70,756
34,120 34,120 Reuters Group PLC SV 351,416 351,416
28,600 28,600 Schroders PLC BK 543,624 543,624
41,480 7,000 48,480 Scottish Power PLC EU 408,463 68,931 477,394
Shell Transport & Trading PLC Sponsored ADR
2,000 2,000 Representing 5 Ord Shrs OG 73,500 73,500
108,400 108,400 SmithKline Beecham PLC HD 1,356,085 1,356,085
SmithKline Beecham PLC Sponsored ADR
1,000 1,000 Representing 5 Ord Shrs HD 63,750 63,750
52,600 52,600 Vodafone Group PLC TC 704,714 704,714
10,200 10,200 Zeneca Group PLC HD 391,860 391,860
===================================================================================================================================
8,933,114
TOTAL COMMON STOCKS
(Cost $29,187,551, $3,511,175 and $32,698,726, respectively) 37,051,951
===================================================================================================================================
PREFERRED STOCKS 2.03%
BRAZIL 1.08%
Cia Energetica de Minas Gerais Sponsored ADR
<PAGE>
SHARES OR PRINCIPAL AMOUNT VALUE
- ------------------------------------ -----------------------------------------
INTERNATIONAL INTERNATIONAL
INTERNATIONAL BLUE CHIP PRO FORMA INDUSTRY INTERNATIONAL BLUE CHIP PRO FORMA
GROWTH FUND FUND COMBINED DESCRIPTION CODE GROWTH FUND FUND COMBINED
- ------------------------------------------------------------------------------------------------------------------------------------
3,671 3,671 Representing 1,000 Non-Voting Pfd Shrs EU $ 71,397 $ 71,397
Petroleo Brasileiro SA Sponsored ADR
17,000 17,000 Representing 100 Pfd Shrs OG 213,770 213,770
Telecom Brasileiras SA Sponsored ADR
4,000 4,000 Representing 1,000 Pfd Shrs TN 303,750 303,750
===================================================================================================================================
588,917
GERMANY 0.95%
1,060 1,060 SAP AG, Non-Voting Pfd CO 516,496 516,496
===================================================================================================================================
TOTAL PREFERRED STOCKS
(Cost $877,594, $0 and $877,594, respectively) 1,105,413
===================================================================================================================================
SHORT-TERM INVESTMENTS -- REPURCHASE AGREEMENTS 29.98%
UNITED STATES 29.98%
Repurchase Agreement with State Street dated
10/30/1998 due 11/2/1998 at 5.350%, repurchased
at $9,935,428 (Collateralized by US Treasury
Bonds due 5/15/2017 at 8.750%, value
$10,107,282)
$9,931,000 $ 9,931,000 (Cost $9,931,000, $0 and $9,931,000, RA 9,931,000 9,931,000
respectively)
Repurchase Agreement with State Street dated
10/30/1998 due 11/2/1998 at 5.350%,
repurchased at $6,408,856 (Collateralized
by US Treasury Bonds due 11/15/2015 at
9.875%, value $6,523,381)
$6,406,000 $ 6,406,000 (Cost $0, $6,406,000 and $6,406,000, $ 6,406,000 6,406,000
respectively)
===================================================================================================================================
16,337,000
TOTAL INVESTMENT SECURITIES AT VALUE 100.00%
(Cost $39,996,145, $9,917,175 and $49,913,320,
respectively)
(Cost for income tax purposes $40,229,000,
$9,917,175 and $50,146,175, respectively) $44,569,989 $9,924,375 $54,494,364
===================================================================================================================================
(a) Security is non-income producing.
(b) Security is a restrictied security.
See Notes to Financial Statements
</TABLE>
<PAGE>
PRO FORMA NOTES TO FINANCIAL STATEMENTS
UNAUDITED
NOTE 1 - BASIS OF COMBINATION. International Growth Fund and International Blue
Chip Fund (the "Fund") are each a series of INVESCO International Funds, Inc.
which is incorporated in Maryland. The Fund is registered under the Investment
Company Act of 1940 as a diversified, open-end management investment company.
The Pro Forma Statement of Assets and Liabilities, including the Statement of
Investments at October 31, 1998, and the related Pro Forma Statements of
Operations ("Pro Forma Statements") for the period ended October 31, 1998,
reflect the combined operations of International Growth Fund and International
Blue Chip Fund. International Blue Chip Fund commenced investment operations on
October 28, 1998. Annualized income and expenses for International Blue Chip
Fund have been estimated through proforma adjustments to provide more meaningful
information regarding combined operations.
The Pro Forma Statements give effect to the proposed transfer of all assets and
liabilities of International Growth Fund in exchange for shares in International
Blue Chip Fund. Under generally accepted accounting principles, the historical
cost of investment securities will be carried forward to the surviving entity
and the results of operations of the International Growth Fund for
pre-combination periods will be not restated. The Pro Forma Statements do no
reflect the expenses of either Fund in carrying out its obligations under the
proposed Agreement and Plan of Reorganization and Termination. The Pro Forma
Statements should be read in conjunction with the historical financial
statements of each Fund included in their respective Statements of Additional
Information.
NOTE 2 - SHARES OUTSTANDING. Shareholders of International Growth Fund would
become shareholders of International Blue Chip Fund upon receiving shares of
International Blue Chip Fund equal to the value of their holdings in
International Growth Fund as of the date of the reorganization.
NOTE 3 - PRO FORMA OPERATIONS. The Pro Forma Statement of Operations assumes
that the combined gross investment income is equal to the sum of each Fund's
actual gross investment income for the period ended October 31, 1998. Operating
expenses combine the actual expenses of each Fund with certain expenses adjusted
to reflect the changes in expenses resulting from the combination. The
Investment Advisory, Distribution Expenses and Administrative Fees have been
calculated for the combined Fund based on contractual rates expected to be in
effect for the International Blue Chip Fund at the time of reorganization based
upon the combined level of average net assets for the period ended October 31,
1998.
<PAGE>
INVESCO INTERNATIONAL FUNDS, INC.
(INVESCO INTERNATIONAL BLUE CHIP FUND)
PART C
OTHER INFORMATION
Item 15. INDEMNIFICATION
---------------
Indemnification provisions for officers and directors of Registrant are
set forth in Article VII, Section 2 of the Articles of Incorporation, and are
hereby incorporated by reference. See Item 16(1) below. Under this Article,
officers and directors will be indemnified to the fullest extent permitted to
directors by the Maryland General Corporation Law, subject only to such
limitations as may be required by the Investment Company Act of 1940, as amended
("1940 Act"), and the rules thereunder. Under the 1940 Act, directors and
officers of Registrant cannot be protected against liability to Registrant 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.
Registrant also maintains liability insurance policies covering its directors
and officers.
Item 16. EXHIBITS
--------
(1) Articles of Incorporation.(2)
(a) Articles Supplementary to the Fund's Articles of Incorporation
dated November 11, 1997.(4)
(b) Articles Supplementary to Articles of Incorporation dated
December 4, 1998.(6)
(2) By-Laws, as of July 21, 1993.(3)
(3) Voting trust agreement - none.
(4) Agreement and Plan of Reorganization and Termination is attached
hereto as Appendix A to the Prospectus/Proxy Statement.
(5) Provisions of instruments defining the rights of holders of
securities are contained in Articles III, IV, VI, VIII of the
Registrant's Articles of Incorporation as amended, and Articles I,
II, V, VI, VII, VIII, IX and X of the Registrant's Bylaws.
(6) (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.(6)
(ii)(a) Sub-advisory Agreement dated February 28, 1998 between
INVESCO Funds Group, Inc. and INVESCO Asset Management
Limited with respect to European, Pacific Basin and
International Growth 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)
<PAGE>
(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.(6)
(7) (a) General Distribution Agreement dated February 28, 1997.(2)
(b) Distribution Agreement between Registrant and INVESCO
Distributors, Inc. dated September 30, 1997.(3)
(8) Defined Benefit Deferred Compensation Plan for Non-Interested
Directors and Trustees.(5)
(9) Custody Agreement between Registrant and State Street Bank and Trust
Company dated July 1, 1993.(3)
(a) Amendment to Custody Agreement dated October 25, 1995.(1)
(b) Data Access Service Addendum.(3)
(c) Additional Fund Letter dated November 13, 1994.(4)
(d) Additional Fund Letter dated July 23, 1998.(6)
(10) Plan and Agreement of Distribution dated November 1, 1997 adopted
pursuant to Rule 12b-1 under the Investment Company Act of 1940.(3)
(11) Opinion and consent of Kirkpatrick & Lockhart LLP regarding the
legality of securities being registered (filed herewith).
(12)(a) Opinion and consent of Kirkpatrick & Lockhart LLP regarding
certain tax matters in connection with INVESCO International
Blue Chip Fund (to be filed).
(b) Opinion and Consent of Kirkpatrick & Lockhart LLP regarding
certain tax matters in connection with INVESCO International
Growth Fund (to be filed).
(13)(a) Transfer Agency Agreement dated February 28, 1997.(2)
(b) Administrative Services Agreement between Registrant and INVESCO
Funds Group, Inc. dated February 28, 1997.(2)
(14) Consent of PricewaterhouseCoopers LLP (filed herewith).
(15) Financial statements omitted from part B - none.
(16) Copies of manually signed Powers of Attorney - incorporated by
reference to Powers of Attorney previously filed with the Securities
and Exchange Commission on June 29, 1993, February 24, 1994,
February 17, 1995, December 22, 1995 and November 17, 1997.
(17) Additional Exhibits.
(a) Form of Proxy Card (filed herewith).
- ----------------
1 Incorporated by reference from Post-Effective Amendment No. 3 to the
registration statement, filed December 22, 1995.
2 Incorporated by reference from Post-Effective Amendment No. 4 to the
registration statement, filed February 25, 1997.
3 Incorporated by reference from Post-Effective Amendment No. 5 to the
registration statement, filed November 17, 1997.
4 Incorporated by reference from Post-Effective Amendment No. 6 to the
registration statement, filed February 26, 1998.
5 Incorporated by reference from Post-Effective Amendment No. 7 to the
registration statement, filed July 10, 1998.
<PAGE>
6 Incorporated by reference from Post-Effective Amendment No. 8 to the
registration statement, filed December 30, 1998.
Item 17. UNDERTAKINGS
------------
(1) The undersigned Registrant agrees that prior to any public
re-offering of the securities registered through the use of the prospectus which
is a part of this Registration Statement by any person or party who is deemed to
be an underwriter within the meaning of Rule 145(c) of the Securities Act of
1933, the re-offering prospectus will contain the information called for by the
applicable registration form for re-offering by persons who may be deemed
underwriters, in addition to the information called for by the other items of
the applicable form.
(2) The undersigned Registrant agrees that every prospectus that is filed
under paragraph (1) above will be filed as a part of an amendment to the
Registration Statement and will not be used until the amendment is effective,
and that, in determining any liability under the Securities Act of 1933, each
post-effective amendment shall be deemed to be a new Registration Statement for
the securities offered therein, and the offering of the securities at that time
shall be deemed to be the initial bona fide offering of them.
<PAGE>
SIGNATURES
As required by the Securities Act of 1933, as amended, this Registration
Statement has been signed on behalf of Registrant, in the City of Denver and the
State of Colorado, on this 25th day of January 1999.
Attest: INVESCO International Funds, Inc.
/s/ GLEN A. PAYNE By: /s/ MARK H. WILLIAMSON
- -------------------------- ------------------------------------
Glen A. Payne Mark H. Williamson
Secretary President
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 dates indicated:
SIGNATURE TITLE DATE
- --------- ----- ----
/S/ MARK H. WILLIAMSON President, Director and January 25, 1999
- ------------------------
Mark H. Williamson Chief Executive Officer
/S/ RONALD L. GROOMS Treasurer and January 25, 1999
- ---------------------- Chief Financial and
Ronald L. Grooms. Accounting Officer
* Director January 25, 1999
- ----------------------
Victor L. Andrews
* Director January 25, 1999
- ----------------------
Bob R. Baker
* Director January 25, 1999
- ----------------------
Charles W. Brady
* Director January 25, 1999
- ----------------------
Wendy L. Gramm
* Director January 25, 1999
- ----------------------
Lawrence H. Budner
* Director January 25, 1999
- ----------------------
Fred A. Deering
* Director January 25, 1999
- ----------------------
Larry Soll
<PAGE>
* Director January 25, 1999
- ----------------------
Kenneth T. King
* Director January 25, 1999
- ----------------------
John W. McIntyre
By * January 25, 1999
------------------
Edward F. O'Keefe
Attorney in Fact
By * /s/ GLEN A. PAYNE January 25, 1999
-------------------
Glen A. Payne
Attorney in Fact
* Original Powers of Attorney authorizing Edward F. O'Keefe and Glen A. Payne,
and each of them, to execute this Registration Statement on Form N-14 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,
Februsary 24, 1994, February 17, 1995, December 22, 1995, November 17, 1997,
respectively.
<PAGE>
EXHIBIT INDEX
(1) Articles of Incorporation.(2)
(a) Articles Supplementary to the Fund's Articles of Incorporation
dated November 11, 1997.(4)
(b) Articles Supplementary to Articles of Incorporation dated
December 4, 1998.(6)
(2) By-Laws, as of July 21, 1993.(3)
(3) Voting trust agreement - none.
(4) Agreement and Plan of Reorganization and Termination is attached
hereto as Appendix A to the Prospectus/Proxy Statement.
(5) Provisions of instruments defining the rights of holders of
securities are contained in Articles III, IV, VI, VIII of the
Registrant's Articles of Incorporation as amended, and Articles I,
II, V, VI, VII, VIII, IX and X of the Registrant's Bylaws.
(6) (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.(6)
(ii)(a) Sub-advisory Agreement dated 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.(6)
(7) (a) General Distribution Agreement dated February 28, 1997.(2)
(b) Distribution Agreement between Registrant and INVESCO
Distributors, Inc. dated September 30, 1997.(3)
(8) Defined Benefit Deferred Compensation Plan for Non-Interested
Directors and Trustees.(5)
(9) Custody Agreement between Registrant and State Street Bank and Trust
Company dated July 1, 1993.(3)
(a) Amendment to Custody Agreement dated October 25, 1995.(1)
(b) Data Access Service Addendum.(3)
(c) Additional Fund Letter dated November 13, 1994.(4)
(d) Additional Fund Letter dated July 23, 1998.(6)
(10) Plan and Agreement of Distribution dated November 1, 1997 adopted
pursuant to Rule 12b-1 under the Investment Company Act of 1940.(3)
(11) Opinion and consent of Kirkpatrick & Lockhart LLP regarding the
legality of securities being registered (filed herewith).
(12)(a) Opinion and consent of Kirkpatrick & Lockhart LLP regarding
certain tax matters in connection with INVESCO International
Blue Chip Fund (to be filed).
(b) Opinion and Consent of Kirkpatrick & Lockhart LLP regarding
<PAGE>
certain tax matters in connection with INVESCO International
Growth Fund (to be filed).
(13)(a) Transfer Agency Agreement dated February 28, 1997.(2)
(b) Administrative Services Agreement between Registrant and INVESCO
Funds Group, Inc. dated February 28, 1997.(2)
(14) Consent of PricewaterhouseCoopers LLP (filed herewith).
(15) Financial statements omitted from part B - none.
(16) Copies of manually signed Powers of Attorney - incorporated by
reference to Powers of Attorney previously filed with the Securities
and Exchange Commission on June 29, 1993, February 24, 1994,
February 17, 1995, December 22, 1995 and November 17, 1997.
(17) Additional Exhibits.
(a) Form of Proxy Card (filed herewith).
- ----------------
1 Incorporated by reference from Post-Effective Amendment No. 3 to the
registration statement, filed December 22, 1995.
2 Incorporated by reference from Post-Effective Amendment No. 4 to the
registration statement, filed February 25, 1997.
3 Incorporated by reference from Post-Effective Amendment No. 5 to the
registration statement, filed November 17, 1997.
4 Incorporated by reference from Post-Effective Amendment No. 6 to the
registration statement, filed February 26, 1998.
5 Incorporated by reference from Post-Effective Amendment No. 7 to the
registration statement, filed July 10, 1998.
6 Incorporated by reference from Post-Effective Amendment No. 8 to the
registration statement, filed December 30, 1998.
KIRKPATRICK & LOCKHART LLP
1800 Massachusetts Avenue, N.W.
2nd Floor
Washington, D.C. 20036-1800
TELEPHONE (202) 778-9000
FACSIMILE (202) 778-9100
www.kl.com
January 25, 1999
INVESCO International Funds, Inc.
7800 E. Union Avenue
Denver, Colorado 80237
Ladies and Gentlemen:
You have requested our opinion as to certain matters regarding the
issuance by INVESCO International Funds, Inc. ("Company"), a corporation
organized under the laws of the State of Maryland, of shares of common stock
(the "Shares") of INVESCO International Blue Chip Fund ("Blue Chip Fund"), a
series of the Company, pursuant to a Plan of Reorganization and Termination
("Plan") by the Company on behalf of its series Blue Chip Fund and INVESCO
International Growth Fund ("Growth Fund"). Under the Plan, Blue Chip Fund would
acquire the assets of Growth Fund in exchange for the Shares and the assumption
by Blue Chip Fund of Growth Fund's liabilities. In connection with the Plan, the
Company is about to file a Registration Statement on Form N-14 (the "N-14") for
the purpose of registering the Shares under the Securities Act of 1933, as
amended ("1933 Act"), to be issued pursuant to the Plan.
We have examined originals or copies believed by us to be genuine of
the Company's Articles of Incorporation and By-Laws, minutes of meetings of the
Company's board of directors, the form of Plan, and such other documents
relating to the authorization and issuance of the Shares as we have deemed
relevant. Based upon that examination, we are of the opinion that the Shares
being registered by the N-14 may be issued in accordance with the Plan and the
Company's Articles of Incorporation and By-Laws, subject to compliance with the
1933 Act, the Investment Company Act of 1940, as amended, and applicable state
laws regulating the distribution of securities, and when so issued, those Shares
will be legally issued, fully paid and non-assessable.
We hereby consent to this opinion accompanying the Form N-14 that the
Company plans to file with the Securities and Exchange Commission and to the
reference to our firm under the caption "Miscellaneous -- Legal Matters" in the
Prospectus/Proxy Statement filed as part of the Form N-14.
Sincerely yours,
/s/ KIRKPATRICK & LOCKHART LLP
KIRKPATRICK & LOCKHART LLP
EXHIBIT 14
PRICEWATERHOUSECOOPERS
PricewaterhouseCoopers LLP
950 Seventeenth Street
Suite 2500
Denver, CO 80202
Telephone (303) 893-8100
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Statement of
Additional Information constituting part of this registration statement on Form
N-14 (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 Growth
Fund (one of the portfolios constituting INVESCO International Funds, Inc.) and
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 Blue Chip Fund (one of the portfolios
constituting INVESCO International Funds, Inc.), which are also incorporated by
reference into the Statement of Additional Information.
We also consent to the reference to us under the heading "Experts" in the
combined Prospectus/Proxy Statement, constituting part of this Registration
Statement.
/s/ Pricewaterhouse Coopers LLP
PricewaterhouseCoopers LLP
Denver, Colorado
January 25, 1999
Exhibit 17(a)
[Name and Address]
INVESCO INTERNATIONAL GROWTH
INVESCO INTERNATIONAL FUNDS, INC.
PROXY FOR THE SPECIAL MEETING OF SHAREHOLDERS
MAY 20, 1999
This proxy is being solicited on behalf of the Board of Directors of
INVESCO International Funds, Inc. ("Company") and relates to the proposals with
respect to the Company and to INVESCO International Growth Fund, a series of the
Company ("Fund"). The undersigned hereby appoints as proxies [ ] and [ ], and
each of them (with power of substitution), to vote all shares of common stock of
the undersigned in the Fund at the Special Meeting of Shareholders to be held at
10:00 a.m., Mountain Standard Time, on May 20, 1999, at the offices of the
Company, 7800 E. Union Avenue, Denver, Colorado 80237, and any adjournment
thereof ("Meeting"), with all the power the undersigned would have if personally
present.
The shares represented by this proxy will be voted as instructed.
Unless indicated to the contrary, this proxy shall be deemed to grant authority
to vote "FOR" all proposals relating to the Company and the Fund with
discretionary power to vote upon such other business as may properly come before
the Meeting.
YOUR VOTE IS IMPORTANT. IF YOU ARE NOT VOTING BY PHONE, FACSIMILE, OR
INTERNET, PLEASE DATE AND SIGN THIS PROXY BELOW AND RETURN IT PROMPTLY IN THE
ENCLOSED ENVELOPE.
TO VOTE BY TOUCH-TONE PHONE OR THE INTERNET, PLEASE CALL 1-800-[ ] TOLL
FREE OR VISIT WWW.[ ].COM. TO VOTE BY FACSIMILE TRANSMISSION, PLEASE FAX YOUR
COMPLETED PROXY CARD TO 1-800-[ ].
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
[INVXXX] KEEP THIS PORTION FOR YOUR RECORDS
<PAGE>
DETACH AND RETURN THIS PORTION ONLY
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
INVESCO INTERNATIONAL GROWTH FUND
INVESCO INTERNATIONAL FUNDS, INC.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
VOTE ON DIRECTORS FOR WITHHOLD ALL FOR ALL
ALL EXCEPT
3. Election of the Company's Board of Directors; / / / / / / To withhold authority
(1) Charles W. Brady; (2) Fred A. Deering; (3) to vote for any
Mark H. Williamson; (4) Dr. Victor L. Andrews; individual nominee(s),
(5) Bob R. Baker; (6) Lawrence H. Budner; mark "For All Except"
(7) Dr. Wendy Lee Gramm; (8) Kenneth T. King; and write the nominee's
(9) John W. McIntyre; and (10) Dr. Larry Soll number on the line
below.
-------------------------
VOTE ON PROPOSALS FOR AGAINST ABSTAIN
1. Approval of a plan of reorganization and termination under which / / / / / /
INVESCO International Blue Chip Fund ("Blue Chip"), another series of
INVESCO International Funds, Inc., would acquire all of the assets of the
Fund in exchange solely for shares of Blue Chip Fund and the assumption by
Blue Chip Fund of all of the Fund's liabilities, followed by the
distribution of those shares to the shareholders of the Fund, all as
described in the accompanying Prospectus/Proxy Statement;
2. Approval of changes to the fundamental investment policies;
/ / To vote against the proposed changes to one or more of the specific / / / / / /
fundamental investment policies, but to approve others, PLACE AN "X" IN THE
BOX AT left and indicate the number(s) (as set forth in the proxy
statement) of the investment policy or policies you do not want to change
on the line below.
---------------------------------------------------------------------------
4. Ratification of the selection of PricewaterhouseCoopers LLP as the / / / / / /
Company's Independent Public Accountants;
</TABLE>
YOUR VOTE IS IMPORTANT. IF YOU ARE NOT VOTING BY PHONE, FACSIMILE, OR INTERNET,
PLEASE DATE AND SIGN THIS PROXY BELOW AND RETURN IT PROMPTLY IN THE ENCLOSED
ENVELOPE.
TO VOTE BY TOUCH-TONE PHONE OR THE INTERNET, PLEASE CALL 1-800-[ ] TOLL FREE OR
VISIT WWW.[ ].COM. TO VOTE BY FACSIMILE TRANSMISSION, PLEASE FAX YOUR COMPLETED
PROXY CARD TO 1-800-[ ].
Please sign exactly as name appears hereon. If stock is held in the name of
joint owners, each should sign. Attorneys-in-fact, executors, administrators,
etc. should so indicate. If shareholder is a corporation or partnership, please
sign in full corporate or partnership name by authorized person
<PAGE>
- --------------------------------------- -----------------------------------
Signature Date
- --------------------------------------- -----------------------------------
Signature (Joint Owners) Date
