As filed on December 11, 2000 File No. 033-63498
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 X
Pre-Effective Amendment No. _
Post-Effective Amendment No. 14 X
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 X
Amendment No. 15 X
INVESCO INTERNATIONAL FUNDS, INC.
(Exact Name of Registrant as Specified in Charter)
7800 E. Union Avenue, Denver, Colorado 80237
(Address of Principal Executive Offices)
P.O. Box 173706, Denver, Colorado 80217-3706
(Mailing Address)
Registrant's Telephone Number, including Area Code: (303) 930-6300
Glen A. Payne, Esq.
7800 E. Union Avenue
Denver, Colorado 80237
(Name and Address of Agent for Service)
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Copies to:
Clifford J. Alexander, Esq. Ronald M. Feiman, Esq.
Kirkpatrick & Lockhart LLP Mayer, Brown & Platt
1800 Massachusetts Avenue, N.W. 1675 Broadway
Second Floor New York, New York 10019-5820
Washington, D.C. 20036-1800
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Approximate Date of Proposed Public Offering: As soon as practicable after this
post-effective amendment becomes effective.
It is proposed that this filing will become effective (check appropriate box)
___ immediately upon filing pursuant to paragraph (b)
X on December 14, 2000, pursuant to paragraph (b)
___ 60 days after filing pursuant to paragraph (a)(1)
___ on ____________ pursuant to paragraph (a)(1)
___ 75 days after filing pursuant to paragraph (a)(2)
___ on _________, pursuant to paragraph (a)(2) of rule 485
If appropriate, check the following box:
X this post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
<PAGE>
PROSPECTUS | December 15, 2000
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YOU SHOULD KNOW WHAT INVESCO KNOWS (TM)
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INVESCO INTERNATIONAL FUNDS, INC.
INVESCO EUROPEAN FUND--CLASS K
A MUTUAL FUND DESIGNED FOR INVESTORS SEEKING INVESTMENT OPPORTUNITIES OVERSEAS.
CLASS K SHARES ARE SOLD TO QUALIFIED RETIREMENT PLANS, RETIREMENT SAVINGS
PROGRAMS, EDUCATIONAL SAVINGS PROGRAMS AND WRAP PROGRAMS PRIMARILY THROUGH THIRD
PARTIES, SUCH AS BROKERS, BANKS AND FINANCIAL PLANNERS.
TABLE OF CONTENTS
Investment Goals, Strategies And Risks.........................................3
Fund Performance...............................................................4
Fees And Expenses..............................................................6
Investment Risks...............................................................7
Principal Risks Associated With The Fund.......................................8
Temporary Defensive Positions.................................................10
Fund Management...............................................................11
Portfolio Managers............................................................11
Potential Rewards.............................................................12
Share Price...................................................................12
How To Buy Shares.............................................................13
Your Account Services.........................................................14
Taxes.........................................................................15
Dividends And Capital Gain Distributions......................................15
Financial Highlights..........................................................17
No dealer, salesperson, or any other person has been authorized to give any
information or to make any representations other than those contained in this
Prospectus, and you should not rely on such other information or
representations.
[INVESCO ICON] INVESCO FUNDS (R)
The Securities and Exchange Commission has not approved or disapproved the
shares of the Fund. Likewise, the Commission has not determined if this
Prospectus is truthful or complete. Anyone who tells you otherwise is committing
a federal crime.
<PAGE>
INVESCO Funds Group, Inc. ("INVESCO") is the investment adviser for the Fund.
Together with our affiliated companies, we at INVESCO direct all aspects of the
management and sale of the Fund.
This Prospectus contains important information about the Fund's Class K shares,
which are sold to qualified retirement plans, retirement savings programs,
educational savings programs and wrap programs primarily through third parties,
such as brokers, banks and financial planners. Please contact your plan or
program sponsor for more detailed information on suitability and transactional
issues (i.e., how to purchase or sell shares, minimum investment amounts, and
fees and expenses). The Fund also offers one or more additional classes of
shares through separate prospectuses. The Fund's classes have varying expenses,
with resulting effects on their performance. You can choose the class of shares
that is best for you, based on how much you plan to invest and other relevant
factors discussed in "How To Buy Shares." To obtain additional information about
other classes of shares, contact INVESCO Distributors, Inc. ("IDI") at
1-800-328-2234, or your broker, bank or financial planner who is offering the
Class K shares offered in this Prospectus.
THIS PROSPECTUS WILL TELL YOU MORE ABOUT:
[KEY ICON] INVESTMENT GOALS & STRATEGIES
[ARROWS ICON] POTENTIAL INVESTMENT RISKS
[GRAPH ICON] PAST PERFORMANCE
[INVESCO ICON] WORKING WITH INVESCO
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[KEY ICON] [ARROWS ICON] INVESTMENT GOALS, STRATEGIES AND RISKS
FACTORS COMMON TO THE FUND
FOR MORE DETAILS ABOUT THE FUND'S CURRENT INVESTMENTS AND MARKET OUTLOOK, PLEASE
SEE THE MOST RECENT ANNUAL OR SEMIANNUAL REPORT.
The Fund seeks to make your investment grow. It is aggressively managed. The
Fund invests primarily in equity securities that INVESCO believes will rise in
price faster than other securities, as well as in options and other investments
whose values are based upon the values of equity securities.
The Fund invests primarily in securities of foreign companies located in Western
Europe. We prefer companies with proven track records that are strongly managed.
Although the Fund invests predominately in mid- and large-capitalization stocks,
it also will hold positions in small-cap stocks. We define a "foreign" company
as one that has its principal business activities outside of the United States.
Since many companies do business all over the world, including in the United
<PAGE>
States, we look at several factors to determine where a company's principal
business activities are located, including:
o The physical location of the company's management personnel; and
o Whether more than 50% of its assets are located outside the United States;
or
o Whether more than 50% of its income is earned outside the United States.
The Fund combines bottom-up and top-down analysis to select securities for its
portfolio.
BOTTOM-UP: We perform fundamental analysis and extensive research on specific
stocks, which often includes visiting companies to meet with corporate
management and understand the businesses. We seek to invest in companies that
have an above-average earnings growth that we believe is not fully reflected in
the present market price of their securities. Also, we seek to increase
diversification by setting maximum limits on each security held in the
portfolio.
TOP-DOWN: Our regional and country equity teams look at broad global economic
trends and other factors that can affect markets. On a country-by-country basis,
anticipated political and currency stability are also considered. Using this
analysis, we decide how much the Fund will invest in each country and equity
market sector. Minimum and maximum weightings for both countries and sectors are
used to develop portfolio diversification. And, in some cases, our local
presence and fundamental research may provide investment insights into specific
opportunities and risks involved in a country or region.
This analysis is particularly important for investments in "emerging" markets
--- those countries that the international financial community considers to have
developing economies and securities markets that are not as established as those
in the United States. Emerging countries generally are considered to include
every nation in the world except the United States, Canada, Japan, Australia,
New Zealand and the nations in Western Europe (other than Greece, Portugal and
Turkey). In general, investments in emerging markets have a higher degree of
risk than investments in more established markets.
Other principal risks involved in investing in the Fund are foreign
securities, emerging market, market, liquidity, counterparty and lack of timely
information risks. These risks are described and discussed later in this
Prospectus under the headings "Investment Risks" and "Principal Risks Associated
With The Fund." An investment in the Fund is not a deposit of any bank and is
not insured or guaranteed by the Federal Deposit Insurance Corporation ("FDIC")
or any other government agency. As with any other mutual fund, there is always a
risk that you may lose money on your investment in the Fund.
[GRAPH ICON] FUND PERFORMANCE
Since the Fund's Class K shares were not offered until December 15, 2000, the
bar chart below shows the Fund's Investor Class shares' actual yearly
performance for the years ended December 31 (commonly known as its "total
return") over the past decade. INVESTOR CLASS SHARES ARE NOT OFFERED IN THIS
<PAGE>
PROSPECTUS. INVESTOR CLASS AND CLASS K RETURNS WOULD BE SIMILAR BECAUSE BOTH
CLASSES OF SHARES INVEST IN THE SAME PORTFOLIO OF SECURITIES. THE RETURNS OF THE
CLASSES WOULD DIFFER, HOWEVER, TO THE EXTENT OF DIFFERING LEVELS OF EXPENSES. IN
THIS REGARD, THE BAR CHART DOES NOT REFLECT AN ASSET-BASED SALES CHARGE IN
EXCESS OF 0.25% OF NET ASSETS; IF IT DID, THE TOTAL RETURNS SHOWN WOULD BE
LOWER. The table below shows average annual total returns for various periods
ended December 31, 1999 for the Fund's Investor Class shares compared to the
MSCI-AC Europe Index. The information in the chart and table illustrates the
variability of the Fund's Investor Class shares' total return and how its
performance compared to a broad measure of market performance. Remember, past
performance does not indicate how the Fund will perform in the future.
The chart below contains the following plot points:
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EUROPEAN FUND--INVESTOR CLASS
ACTUAL ANNUAL TOTAL RETURN(1)(2)(3)
================================================================================
[GRAPHIC OMITTED]
'90 '91 '92 '93 '94 '95 '96 '97 '98 '99
0.74% 7.99% (7.64%) 24.60% (3.05%) 19.19% 29.68% 15.15% 32.93% 37.50%
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Best Calendar Qtr. 12/99 43.53%
Worst Calendar Qtr. 9/98 (17.72%)
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<PAGE>
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AVERAGE ANNUAL TOTAL RETURN(1),(2),(3)
AS OF 12/31/99
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1 YEAR 5 YEARS 10 YEARS
European Fund - Investor Class 37.50% 26.61% 14.72%
MSCI-AC Europe Index(4) 16.23% 22.54% 14.50%
(1) Total return figures include reinvested dividends and capital gain
distributions and the effect of the Fund's expenses.
(2) The returns are for Investor Class shares that are not offered in this
Prospectus. Total returns of Class K shares will differ only to the extent
that the classes do not have the same expenses.
(3) The return for Investor Class shares of the Fund was (2.04)% year-to-date
as of the calendar quarter ended September 30, 2000.
(4) The MSCI-AC Europe Index is an unmanaged index that shows the performance
of common stocks for Europe. Please keep in mind that the index does not
pay brokerage, management, administrative or distribution expenses, all of
which are paid by the Fund and are reflected in its annual returns.
FEES AND EXPENSES
This table describes the fees and expenses that you may pay if you buy and hold
shares of the Fund.
SHAREHOLDER FEES PAID DIRECTLY FROM YOUR ACCOUNT
You pay no fees to purchase Fund shares, to exchange to another INVESCO fund, or
to sell your shares. Accordingly, no fees are paid directly from your
shareholder account.
ANNUAL FUND OPERATING EXPENSES THAT ARE DEDUCTED FROM FUND ASSETS
EUROPEAN FUND--CLASS K
Management Fees 0.70%
Distribution and Service (12b-1) Fees(1) 0.45%
Other Expenses(2) 0.67%
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Total Annual Fund Operating Expenses(2) 1.82%
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(1) Because the Fund's Class K shares pay a 12b-1 distribution and service fee
which is based upon the Fund's assets, if you own shares of the Fund for a
long period of time, you may pay more than the economic equivalent of the
maximum front-end sales charge permitted for mutual funds by the National
Association of Securities Dealers, Inc.
(2) Based on estimated expenses for the current fiscal year which may be more
or less than actual expenses. Actual expenses are not provided because the
Fund's Class K shares were not offered until December 15, 2000.
<PAGE>
EXAMPLE
The Example is intended to help you compare the cost of investing in the Class K
shares of the Fund to the cost of investing in other mutual funds.
The Example assumes that you invested $10,000 in the Class K shares of the Fund
for the time periods indicated and redeem all of your shares at the end of each
period. The Example also assumes that your investment had a hypothetical 5%
return each year and that the Fund's Class K shares' operating expenses remain
the same. Although the actual costs and performance of the Fund's Class K shares
may be higher or lower, based on these assumptions your costs would be:
1 year 3 years 5 years 10 years
$185 $573 $985 $2,137
[ARROWS ICON] INVESTMENT RISKS
BEFORE INVESTING IN THE FUND, YOU SHOULD DETERMINE THE LEVEL OF RISK WITH WHICH
YOU ARE COMFORTABLE. TAKE INTO ACCOUNT FACTORS LIKE YOUR AGE, CAREER, INCOME
LEVEL, AND TIME HORIZON.
You should determine the level of risk with which you are comfortable before you
invest. The principal risks of investing in any mutual fund, including the Fund,
are:
NOT INSURED. Mutual funds are not insured by the FDIC or any other government
agency, unlike bank deposits such as CDs or savings accounts.
NO GUARANTEE. No mutual fund can guarantee that it will meet its investment
objectives.
POSSIBLE LOSS OF INVESTMENT. A mutual fund cannot guarantee its performance, nor
assure you that the market value of your investment will increase. You may lose
the money you invest, and the Fund will not reimburse you for any of these
losses.
VOLATILITY. The price of your mutual fund shares will increase or decrease with
changes in the value of the Fund's underlying investments and changes in the
equity markets as a whole.
NOT A COMPLETE INVESTMENT PLAN. An investment in any mutual fund does not
constitute a complete investment plan. The Fund is designed to be only a part of
your personal investment plan.
<PAGE>
[ARROWS ICON] PRINCIPAL RISKS ASSOCIATED WITH THE FUND
You should consider the special factors associated with the policies discussed
below in determining the appropriateness of investing in the Fund. See the
Statement of Additional Information for a discussion of additional risk factors.
FOREIGN SECURITIES RISKS
Investments in foreign and emerging markets carry special risks, including
currency, political, regulatory and diplomatic risks. The Fund may invest up to
100% of its assets in foreign securities.
CURRENCY RISK. A change in the exchange rate between U.S. dollars and a
foreign currency may reduce the value of the Fund's investment in a
security valued in the foreign currency, or based on that currency
value.
POLITICAL RISK. Political actions, events or instability may result in
unfavorable changes in the value of a security.
REGULATORY RISK. Government regulations may affect the value of a
security. In foreign countries, securities markets that are less
regulated than those in the U.S. may permit trading practices that are
not allowed in the U.S.
DIPLOMATIC RISK. A change in diplomatic relations between the U.S. and a
foreign country could affect the value or liquidity of investments.
EUROPEAN ECONOMIC AND MONETARY UNION. Austria, Belgium, Finland, France,
Germany, Ireland, Italy, Luxembourg, The Netherlands, Portugal and Spain
are presently members of the European Economic and Monetary Union (the
"EMU") which as of January 1, 1999, adopted the euro as a common
currency. The national currencies will be sub-currencies of the euro
until July 1, 2002, at which time these currencies will disappear
entirely. Other European countries may adopt the euro in the future.
As the euro is implemented, there may be changes in the relative
strength and value of the U.S. dollar and other major currencies, as
well as possible adverse tax consequences. The euro transition by EMU
countries may affect the fiscal and monetary levels of those
participating countries. The outcome of these and other uncertainties
could have unpredictable effects on trade and commerce and result in
increased volatility for all financial markets.
EMERGING MARKETS RISK
Investments in emerging markets carry additional risks beyond typical
investments in foreign securities. Emerging markets are countries that the
international financial community considers to have developing economies and
securities markets that are not as established as those in the United States.
Emerging markets are generally considered to include every country in the world
<PAGE>
except the United States, Canada, Japan, Australia, New Zealand and nations in
Western Europe (other than Greece, Portugal and Turkey).
Investments in emerging markets have a higher degree of risk than investments in
more established markets. These countries generally have a greater degree of
social, political and economic instability than do developed markets.
Governments of emerging market countries tend to exercise more authority over
private business activities, and, in many cases, either own or control large
businesses in those countries. Businesses in emerging markets may be subject to
nationalization or confiscatory tax legislation that could result in
investors--including the Fund--losing their entire investment. Emerging markets
often have a great deal of social tension. Authoritarian governments and
military involvement in government is common. In such markets, there is often
social unrest, including insurgencies and terrorist activities.
Economically, emerging markets are generally dependent upon foreign trade and
foreign investment. Many of these countries have borrowed significantly from
foreign banks and governments. These debt obligations can affect not only the
economy of a developing country, but its social and political stability as well.
MARKET RISK
Equity stock prices vary and may fall, thus reducing the value of the Fund's
investments. Certain stocks selected for the Fund's portfolio may decline in
value more than the overall stock market. In general, the securities of large
businesses with outstanding securities worth $15 billion or more have less
volatility than those of mid-size businesses with outstanding securities worth
more than $2 billion, or small businesses with outstanding securities worth less
than $2 billion.
LIQUIDITY RISK
The Fund's portfolio is liquid if the Fund is able to sell the securities it
owns at a fair price within a reasonable time. Liquidity is generally related to
the market trading volume for a particular security. Investments in smaller
companies or in foreign companies or companies in emerging markets are subject
to a variety of risks, including potential lack of liquidity.
COUNTERPARTY RISK
This is a risk associated primarily with repurchase agreements and some
derivatives transactions. It is the risk that the other party in the transaction
will not fulfill its contractual obligation to complete the transaction with the
Fund.
LACK OF TIMELY INFORMATION RISK
Timely information about a security or its issuer may be unavailable, incomplete
or inaccurate. This risk is more common to securities issued by foreign
companies and companies in emerging markets than it is to the securities of
U.S.-based companies.
---------------------------------------------------
<PAGE>
Although the Fund generally invests in publicly traded securities, the Fund also
may invest in other types of securities and other financial instruments
indicated in the chart below. Although these investments typically are not part
of the Fund's principal investment strategy, they may constitute a significant
portion of the Fund's portfolio, thereby possibly exposing the Fund and its
investors to the following additional risks.
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INVESTMENT RISKS
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AMERICAN DEPOSITORY RECEIPTS (ADRs) Market, Information, Political,
These are securities issued by U.S. Regulatory, Diplomatic,
banks that represent shares of Liquidity and Currency Risks
foreign corporations held by those
banks. Although traded in U.S.
securities markets and valued in
U.S. dollars, ADRs carry most of
the risks of investing directly in
foreign securities.
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FORWARD FOREIGN CURRENCY CONTRACTS Currency, Political, Diplomatic,
A contract to exchange an amount of Counterparty and Regulatory Risks
currency on a date in the future at an
agreed-upon exchange rate might be used
by the Fund to hedge against changes in
foreign currency exchange rates when the
Fund invests in foreign securities. Such
contracts do not reduce price
fluctuations in foreign securities, or
prevent losses if the prices of those
securities decline.
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REPURCHASE AGREEMENTS Counterparty Risk
A contract under which the seller of a
security agrees to buy it back at an
agreed-upon price and time in the
future.
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[ARROWS ICON] TEMPORARY DEFENSIVE POSITIONS
When securities markets or economic conditions are unfavorable or unsettled, we
might try to protect the assets of the Fund by investing in securities that are
highly liquid, such as high quality money market instruments like short-term
U.S. government obligations, commercial paper or repurchase agreements, even
though that is not the normal investment strategy of the Fund. We have the right
to invest up to 100% of the Fund's assets in these securities, although we are
unlikely to do so. Even though the securities purchased for defensive purposes
often are considered the equivalent of cash, they also have their own risks.
Investments that are highly liquid or comparatively safe tend to offer lower
returns. Therefore, the Fund's performance could be comparatively lower if it
concentrates in defensive holdings.
<PAGE>
[INVESCO ICON] FUND MANAGEMENT
INVESTMENT ADVISER
INVESCO, located at 7800 East Union Avenue, Denver, Colorado, is the investment
adviser of the Fund. INVESCO was founded in 1932 and manages over $46.1 billion
for more than 2,320,000 shareholder accounts of 46 INVESCO funds. INVESCO
performs a wide variety of other services for the Fund, including administrative
and transfer agency functions (the processing of purchases, sales and exchanges
of Fund shares).
INVESCO IS A SUBSIDIARY OF AMVESCAP PLC, AN INTERNATIONAL INVESTMENT MANAGEMENT
COMPANY THAT MANAGES MORE THAN $414 BILLION IN ASSETS WORLDWIDE. AMVESCAP IS
BASED IN LONDON, WITH MONEY MANAGERS LOCATED IN EUROPE, NORTH AND SOUTH AMERICA,
AND THE FAR EAST.
INVESCO Asset Management Limited, ("IAML"), a division of INVESCO, Inc. located
at 11 Devonshire Square, London EC2M 4YR, is the sub-adviser to the Fund.
A wholly owned subsidiary of INVESCO, IDI is the Fund's distributor and is
responsible for the sale of the Fund's shares.
INVESCO, IAML and IDI are subsidiaries of AMVESCAP PLC.
The following table shows the fees the Fund paid to INVESCO for its advisory
services in the fiscal year ended October 31, 1999.
ADVISORY FEE AS A PERCENTAGE OF
FUND AVERAGE ANNUAL NET ASSETS UNDER MANAGEMENT
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European Fund 0.70%
[INVESCO ICON] PORTFOLIO MANAGERS
The Fund is managed on a day-to-day basis by IAML, which serves as sub-adviser
to the Fund. When we refer to team management without naming individual
portfolio managers, we mean a system by which a senior investment policy group
sets country-by-country allocation of Fund assets and risk controls, while
individual country specialists select individual securities within those
allocations.
FUND SUB-ADVISER PORTFOLIO MANAGER
European IAML Team Management
<PAGE>
[INVESCO ICON] POTENTIAL REWARDS
NO SINGLE FUND SHOULD REPRESENT YOUR COMPLETE INVESTMENT PROGRAM NOR SHOULD YOU
ATTEMPT TO USE THE FUND FOR SHORT-TERM TRADING PURPOSES.
The Fund offers shareholders the potential to increase the value of their
capital over time. Like most mutual funds, the Fund seeks to provide higher
returns than the market or its competitors, but cannot guarantee that
performance. The Fund seeks to minimize risk by investing in many different
companies in a variety of industries.
SUITABILITY FOR INVESTORS
Only you can determine if an investment in the Fund is right for you based upon
your own economic situation, the risk level with which you are comfortable and
other factors. In general, the Fund is most suitable for investors who:
o are willing to grow their capital over the long-term (at least five years).
o can accept the additional risks associated with international investing.
o understand that shares of the Fund can, and likely will, have daily price
fluctuations.
o are investing tax-deferred retirement accounts, such as Traditional and Roth
Individual Retirement Accounts ("IRAs"), as well as employer-sponsored
qualified retirement plans, including 401(k)s and 403(b)s, all of which have
longer investment horizons.
You probably do not want to invest in the Fund if you are:
o primarily seeking current dividend income.
o unwilling to accept potentially significant changes in the price of Fund
shares.
o speculating on short-term fluctuations in the stock markets.
o are uncomfortable with the special risks associated with international
investing.
[INVESCO ICON] SHARE PRICE
CURRENT MARKET VALUE OF FUND ASSETS
+ ACCRUED INTEREST AND DIVIDENDS
- FUND DEBTS,
INCLUDING ACCRUED EXPENSES
--------------------------
/ NUMBER OF SHARES
= YOUR SHARE PRICE (NAV).
The value of your Fund shares is likely to change daily. This value is known as
the Net Asset Value per share, or NAV. INVESCO determines the market value of
each investment in the Fund's portfolio each day that the New York Stock
Exchange ("NYSE") is open, at the close of the regular trading day on that
exchange (normally, 4:00 p.m. Eastern time). Therefore, shares of the Fund are
not priced on days when the NYSE is closed, which generally is on weekends and
national holidays in the NAV U.S. is calculated by adding together the current
market price of all of the Fund's investments and other assets, including
accrued interest and dividends; subtracting the Fund's debts, including accrued
expenses; and dividing that dollar amount by the total number of the Fund's
outstanding shares.
All purchases, sales and exchanges of Fund shares are made by INVESCO at the NAV
next calculated after INVESCO receives proper instructions from you to purchase,
redeem or exchange shares of the Fund. Your instructions must be received by
<PAGE>
INVESCO no later than the close of the NYSE to effect transactions at that day's
NAV. If INVESCO hears from you after that time, your instructions will be
processed at the NAV calculated at the end of the next day that the NYSE is
open.
Foreign securities exchanges, which set the prices for foreign securities held
by the Fund, are not always open the same days as the NYSE, and may be open for
business on days the NYSE is not. For example, Thanksgiving Day is a holiday
observed by the NYSE and not by overseas exchanges. In this situation, the Fund
would not calculate NAV on Thanksgiving Day (and INVESCO would not buy, sell or
exchange shares for you on that day), even though activity on foreign exchanges
could result in changes in the value of investments held by the Fund on that
day.
[INVESCO ICON] HOW TO BUY SHARES
TO BUY SHARES AT THAT DAY'S CLOSING PRICE, YOU MUST CONTACT US BEFORE THE CLOSE
OF THE NYSE, NORMALLY, 4:00 P.M. EASTERN TIME.
The Fund offers multiple classes of shares. A share of each class represents an
identical interest in the Fund and has the same rights, except that each class
bears its own distribution and shareholder servicing charges, and other
expenses. The income attributable to each class and the dividends payable on the
shares of each class will be reduced by the amount of the distribution fee or
service fee, if applicable, and other expenses payable by that class.
There is no charge to invest, exchange or redeem shares when you make
transactions directly through INVESCO. However, if you invest in the Fund
through a securities broker or any other third party, you may be charged a
commission or transaction fee for either purchases or sales of Fund shares. For
all new accounts, please send a completed application form, and specify the fund
or funds and the class or classes you wish to purchase.
EXCHANGE POLICY. You may exchange your shares in the Fund for shares of the same
class in another INVESCO fund on the basis of their respective NAVs at the time
of the exchange. You may also exchange between Class K and Investor Class shares
in any of the INVESCO funds on the basis of their respective NAVs at the time of
the exchange.
FUND EXCHANGES CAN BE A CONVENIENT WAY FOR YOU TO DIVERSIFY YOUR INVESTMENTS, OR
TO REALLOCATE YOUR INVESTMENTS WHEN YOUR OBJECTIVES CHANGE.
Before making any exchange, be sure to review the prospectuses of the funds
involved and consider the differences between the funds. Also, be certain that
you qualify to purchase certain classes of shares in the new fund. An exchange
is the sale of shares from one fund immediately followed by the purchase of
shares in another. Therefore, any gain or loss realized on the exchange is
recognizable for federal income tax purposes (unless, of course, you or your
account qualifies as tax-deferred under the Internal Revenue Code). If the
<PAGE>
shares of the fund you are selling have gone up in value since you bought them,
the sale portion of an exchange may result in taxable income to you.
We have the following policies governing exchanges:
o Both fund accounts involved in the exchange must be registered in exactly
the same name(s) and Social Security or federal tax I.D. number(s).
o You may make up to four exchanges out of the Fund per 12-month period.
o The Fund reserves the right to reject any exchange request, or to modify or
terminate the exchange policy, if it is in the best interests of the Fund
and its shareholders. Notice of all such modifications or terminations that
affect all shareholders of the Fund will be given at least 60 days prior to
the effective date of the change, except in unusual instances, including a
suspension of redemption of the exchanged security under Section 22(e) of
the Investment Company Act of 1940.
In addition, the ability to exchange may be temporarily suspended at any time
that sales of the fund into which you wish to exchange are temporarily stopped.
Please remember that if you pay by check, Automated Clearing House ("ACH"), or
wire and your funds do not clear, you will be responsible for any related loss
to the Fund or INVESCO. If you are already an INVESCO funds shareholder, the
Fund may seek reimbursement for any loss from your existing account(s).
CHOOSING A SHARE CLASS. The Fund has multiple classes of shares, each class
representing an interest in the same portfolio of investments. In deciding which
class of shares to purchase, you should consider, among other things, (i) the
length of time you expect to hold your shares, (ii) the provisions of the
distribution plan applicable to that class, if any, (iii) the eligibility
requirements that apply to purchases of a particular class, and (iv) any
services you may receive in making your investment determination. Your
investment representative can help you decide among the various classes. Please
contact your investment representative for several convenient ways to invest in
the Fund. Class K shares are available only to qualified retirement plans,
retirement savings programs, educational savings programs and wrap programs
through your investment representative.
DISTRIBUTION EXPENSES. We have adopted a Plan and Agreement of Distribution -
Class K (commonly known as a "12b-1 Plan") for the Fund's Class K shares. The
12b-1 fees paid by the Fund's Class K shares are used to pay distribution and
service fees to IDI for the sale and distribution of the Fund's shares and to
pay fees for services provided to shareholders, all or a substantial portion of
which are paid to the dealer or record. Because the Fund's Class K shares pay
these fees out of their assets on an ongoing basis, these fees increase the cost
of your investment.
YOUR ACCOUNT SERVICES
YOU CAN CHECK ON YOUR ACCOUNT THROUGH OUR TOLL-FREE TELEPHONE NUMBER. YOU MAY
ALSO ACCESS PERSONAL ACCOUNT INFORMATION AT OUR WEB SITE, INVESCOFUNDS.COM.
HOUSEHOLDING. To save money for the Fund, you may receive only one copy of a
prospectus or financial report to each household address. This process, known as
"householding," is used for most required shareholder mailings. It does not
apply to account statements. You may, of course, request an additional copy of a
<PAGE>
prospectus or financial report at any time by calling or writing INVESCO. You
may also request that householding be eliminated from all of your required
mailings.
[GRAPH ICON] TAXES
Everyone's tax status is unique. We encourage you to consult your own tax
adviser on the tax impact to you of investing in the Fund.
TO AVOID BACKUP WITHHOLDING, BE SURE WE HAVE YOUR CORRECT SOCIAL SECURITY OR
TAXPAYER IDENTIFICATION NUMBER.
The Fund customarily distributes to its shareholders substantially all of its
net investment income, net capital gains and net gains from foreign currency
transactions, if any. You receive a proportionate part of these distributions,
depending on the percentage of the Fund's shares that you own. These
distributions are required under federal tax laws governing mutual funds. It is
the policy of the Fund to distribute all investment company taxable income and
net capital gains. As a result of this policy and the Fund's qualification as a
regulated investment company, it is anticipated that the Fund will not pay any
federal income or excise taxes. Instead, the Fund will be accorded conduit or
"pass through" treatment for federal income tax purposes.
However, unless you are (or your account is) exempt from income taxes, you must
include all dividends and capital gain distributions paid to you by the Fund in
your taxable income for federal, state and local income tax purposes. You also
may realize capital gains or losses when you sell shares of the Fund at more or
less than the price you originally paid. An exchange is treated as a sale, and
is a taxable event. Dividends and other distributions usually are taxable
whether you receive them in cash or automatically reinvest them in shares of the
Fund or other INVESCO funds.
If you have not provided INVESCO with complete, correct tax information, the
Fund is required by law to withhold 31% of your distributions and any money that
you receive from the sale of shares of the Funds as a backup withholding tax.
Unless your account is held at a brokerage firm, we will provide you with
detailed information every year about your dividends and capital gain
distributions. Depending on the activity in your individual account, we may also
be able to assist with cost basis figures for shares you sell.
[GRAPH ICON] DIVIDENDS AND CAPITAL GAIN DISTRIBUTIONS
The Fund earns ordinary or investment income from dividends and interest on its
investments. The Fund expects to distribute substantially all of this investment
income, less Fund expenses, to shareholders annually, or at such other times as
the Fund may elect.
<PAGE>
NET INVESTMENT INCOME AND NET REALIZED CAPITAL GAINS ARE DISTRIBUTED TO
SHAREHOLDERS AT LEAST ANNUALLY. DISTRIBUTIONS ARE TAXABLE WHETHER REINVESTED IN
ADDITIONAL SHARES OR PAID TO YOU IN CASH (EXCEPT FOR TAX-EXEMPT ACCOUNTS).
The Fund also realizes capital gains or losses when it sells securities in its
portfolio for more or less than it had paid for them. If total gains on sales
exceed total losses (including losses carried forward from previous years), the
Fund has a net realized capital gain. Net realized capital gains, if any, are
distributed to shareholders at least annually, usually in November.
Under present federal income tax laws, capital gains may be taxable at different
rates, depending on how long the Fund has held the underlying investment.
Short-term capital gains which are derived from the sale of assets held one year
or less are taxed as ordinary income. Long-term capital gains which are derived
from the sale of assets held for more than one year are taxed at up to the
maximum capital gains rate, currently 20% for individuals.
Dividends and capital gain distributions are paid to you if you hold shares on
the record date of the distribution regardless of how long you have held your
shares. The Fund's NAV will drop by the amount of the distribution on the day
the distribution is declared. If you buy shares of the Fund just before a
distribution is declared, you may wind up "buying a distribution." This means
that if the Fund declares a dividend or capital gain distribution shortly after
you buy, you will receive some of your investment back as a taxable
distribution. Most shareholders want to avoid this. And, if you sell your shares
at a loss for tax purposes and purchase a substantially identical investment
within 30 days before or after that sale, the transaction is usually considered
a "wash sale" and you will not be able to claim a tax loss.
Dividends and capital gain distributions paid by the Fund are automatically
reinvested in additional Fund shares at the NAV on the ex-distribution date,
unless you choose to have them automatically reinvested in another INVESCO fund
or paid to you by check or electronic funds transfer. Dividends and other
distributions, whether received in cash or reinvested in additional Fund shares,
are generally subject to federal income tax.
<PAGE>
FINANCIAL HIGHLIGHTS
The financial highlights table is intended to help you understand the
financial performance of the Fund for the past five years. Certain information
reflects financial results for a single Investor Class share. Since Class K
shares are new, financial information is not available for this class as of the
date of this Prospectus. The total returns in the table represent the annual
percentages that an investor would have earned (or lost) on an investment in
Investor Class shares of the Fund (assuming reinvestment of all dividends and
distributions). With the exception of the six month period ended April 30, 2000,
this information has been audited by PricewaterhouseCoopers LLP, independent
accountants, whose report, along with the financial statements, is included in
INVESCO International Funds, Inc.'s 1999 Annual Report to Shareholders, which is
incorporated by reference into the Statement of Additional Information. This
Report is available without charge by contacting IDI at the address or telephone
number on the back cover of this Prospectus.
<TABLE>
<CAPTION>
SIX MONTHS
ENDED APRIL 30 YEAR ENDED OCTOBER 31
--------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
EUROPEAN FUND--INVESTOR CLASS 2000 1999(a) 1998 1997 1996
PER SHARE DATA UNAUDITED
Net Asset Value-- $18.01 $17.62 $17.34 $15.85 $14.09
Beginning of Period
--------------------------------------------------------------------------------------
INCOME FROM INVESTMENT
OPERATIONS(a)
Net Investment Income (Loss) (0.07) (0.09) 0.04 0.07 0.05
Net Gains on Securities (both
Realized and Unrealized) 8.47 2.18 3.58 2.63 3.00
--------------------------------------------------------------------------------------
TOTAL FROM INVESTMENT OPERATIONS 8.40 2.09 3.62 2.70 3.05
--------------------------------------------------------------------------------------
LESS DISTRIBUTIONS
Dividends from Net Investment Income 0.00 0.00 0.06 0.07 0.08
In Excess of Net Investment Income(b) 0.00 0.01 0.00 0.00 0.00
Distributions from Capital Gains 0.44 1.69 3.28 1.14 1.21
--------------------------------------------------------------------------------------
TOTAL DISTRIBUTIONS 0.44 1.70 3.34 1.21 1.29
--------------------------------------------------------------------------------------
NET ASSET VALUE--END OF PERIOD $25.97 $18.01 $17.62 $17.34 $15.85
======================================================================================
TOTAL RETURN 47.26%(c)(d) 12.64%(c) 24.92% 18.07% 23.47%
RATIOS
Net Assets--End of Period
($000 Omitted) $986,388 $546,257 $672,146 $324,819 $300,588
Ratio of Expenses to
Average Net Assets(e) (0.67%)(d) 1.56% 1.34% 1.25% 1.36%
Ratio of Net Investment Income
(Loss) to Average Net Assets (0.30%)(d) (0.48%) 0.24% 0.33% 0.37%
Portfolio Turnover Rate (45%)(d) 90% 102% 90% 91%
</TABLE>
<PAGE>
(a) The per share information was computed using average shares for the year
ended October 31, 1999.
(b) Distributions in excess of net investment income for the year ended October
31, 1998, aggregated to less than $0.01 on a per share basis.
(c) The applicable redemption fees for the Investor Class are not included in
the Total Return calculation.
(d) Based on operations for the period shown and, accordingly, are not
representative of a full year.
(e) Ratio is based on Total Expenses of the Class, which is before any expense
offset arrangements.
<PAGE>
DECEMBER 15, 2000
INVESCO INTERNATIONAL FUNDS, INC.
INVESCO EUROPEAN FUND-CLASS K
You may obtain additional information about the Fund from several sources.
FINANCIAL REPORTS. Although this Prospectus describes the Fund's anticipated
investments and operations, the Fund also prepares annual and semiannual reports
that detail the Fund's actual investments at the report date. These reports
include discussion of the Fund's recent performance, as well as market and
general economic trends affecting the Fund's performance. The annual report also
includes the report of the Fund's independent accountants.
STATEMENT OF ADDITIONAL INFORMATION. The SAI dated December 15, 2000 is a
supplement to this Prospectus and has detailed information about the Fund and
its investment policies and practices. A current SAI for the Fund is on file
with the Securities and Exchange Commission and is incorporated into this
Prospectus by reference; in other words, the SAI is legally a part of this
Prospectus, and you are considered to be aware of the contents of the SAI.
INTERNET. The current Prospectus of the Fund may be accessed through the INVESCO
Web site at invescofunds.com. In addition, the Prospectus, SAI, annual report
and semiannual report of the Fund are available on the SEC Web site at
www.sec.gov.
To obtain a free copy of the current Prospectus, SAI, annual report or
semiannual report, write to INVESCO Distributors, Inc., P.O. Box 17970, Denver,
Colorado 80217; or call 1-800-328-2234. Copies of these materials are also
available (with a copying charge) from the SEC's Public Reference Section at 450
Fifth Street, N.W., Washington, D.C. 20549-0102. This information can be
obtained by electronic request at the following E-mail address:
[email protected], or by calling 1-202-942-8090. The SEC file numbers for the
Fund are 811-7758 and 033-63498.
811-7758
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
INVESCO INTERNATIONAL FUNDS, INC.
INVESCO European Fund - Investor Class, Class C and Class K
INVESCO International Blue Chip Value Fund - Investor Class and Class C
Address: Mailing Address:
7800 E. Union Ave., Denver, CO 80237 P.O. Box 173706, Denver, CO 80217-3706
Telephone:
In continental U.S., call:
1-800-525-8085 for Investor Class and
1-800-328-2234 for Class C and Class K
December 15, 2000
--------------------------------------------------------------------------------
A Prospectus for the Investor Class shares of INVESCO European and INVESCO
International Blue Chip Value Funds dated February 15, 2000, a Prospectus for
the Class C shares of INVESCO European and INVESCO International Blue Chip Value
Funds dated February 15, 2000 and a Prospectus for Class K shares of INVESCO
European Fund dated December 15, 2000, provide the basic information you should
know before investing in a Fund. This Statement of Additional Information
("SAI") is incorporated by reference into the Funds' Prospectuses; in other
words, this SAI is legally part of the Funds' Prospectuses. Although this SAI is
not a prospectus, it contains information in addition to that set forth in the
Prospectuses. It is intended to provide additional information regarding the
activities and operations of the Funds and should be read in conjunction with
the Prospectuses.
You may obtain, without charge, the current Prospectuses, SAI and annual
and semiannual reports of the Funds by writing to INVESCO Distributors, Inc.,
P.O. Box 173706, Denver, CO 80217-3706 , or by calling 1-800-525-8085 for
Investor Class and 1-800-328-2234 for Class C and Class K. The Prospectuses of
the Investor Class, Class C and Class K shares of the Funds are also available
through the INVESCO Web site at invescofunds.com.
<PAGE>
TABLE OF CONTENTS
The Company................................................................22
Investments, Policies and Risks............................................22
Investment Restrictions....................................................42
Management of the Funds....................................................44
Other Service Providers....................................................71
Brokerage Allocation and Other Practices...................................71
Capital Stock..............................................................73
Tax Consequences of Owning Shares of a Fund................................74
Performance................................................................77
Code of Ethics.............................................................79
Financial Statements.......................................................79
Appendix A.................................................................80
<PAGE>
THE COMPANY
The Company was incorporated under the laws of Maryland as INVESCO
International Funds, Inc. on April 2, 1993. On July 1, 1993, the Company,
through the European Fund, assumed all of the assets and liabilities of the
European portfolio of Financial Strategic Portfolios, Inc. In addition, on July
1, 1993, the Company, through the International Growth Fund, assumed all of the
assets and liabilities of International Growth Fund, a series of Financial
Series Trust, a Massachusetts business trust. All financial information and
other information about the Company and the Funds for the periods prior to July
1, 1993 relates to Financial Strategic Portfolios, Inc. and Financial Series
Trust.
The Company is an open-end, diversified, management investment company currently
consisting of two portfolios of investments: INVESCO European Fund - Investor
Class, Class C, and Class K and INVESCO International Blue Chip Value Fund -
Investor Class and Class C (each a "Fund" and collectively, the "Funds").
Additional funds may be offered in the future.
"Open-end" means that each Fund issues an indefinite number of shares which it
continuously offers to redeem at net asset value per share ("NAV"). A
"management" investment company actively buys and sells securities for the
portfolio of each Fund at the direction of a professional manager. Open-end
management investment companies (or one or more series of such companies, such
as the Funds) are commonly referred to as mutual funds.
INVESTMENTS, POLICIES AND RISKS
The principal investments and policies of the Funds are discussed in the
Prospectuses of the Funds. The Funds also may invest in the following securities
and engage in the following practices.
ADRs -- American Depository Receipts, or ADRs, are securities issued by American
banks. ADRs are receipts for the shares of foreign corporations that are held by
the bank issuing the receipt. An ADR entitles its holder to all dividends and
capital gains on the underlying foreign securities, less any fees paid to the
bank. Purchasing ADRs gives a Fund the ability to purchase the functional
equivalent of foreign securities without going to the foreign securities markets
to do so. ADRs are bought and sold in U.S. dollars, not foreign currencies. An
ADR that is "sponsored" means that the foreign corporation whose shares are
represented by the ADR is actively involved in the issuance of the ADR, and
generally provides material information about the corporation to the U.S.
market. An "unsponsored" ADR program means that the foreign corporation whose
shares are held by the bank is not obligated to disclose material information in
the United States, and, therefore, the market value of the ADR may not reflect
important facts known only to the foreign company. Since they mirror their
underlying foreign securities, ADRs generally have the same risks as investing
directly in the underlying foreign securities.
CERTIFICATES OF DEPOSIT IN FOREIGN BANKS AND U.S. BRANCHES OF FOREIGN BANKS --
The Funds may maintain time deposits in and invest in U.S. dollar denominated
certificates of deposit ("CDs") issued by foreign banks and U.S. branches of
<PAGE>
foreign banks. The Funds limit investments in foreign bank obligations to U.S.
dollar denominated obligations of foreign banks which have more than $10 billion
in assets, have branches or agencies in the U.S., and meet other criteria
established by the board of directors. Investments in foreign securities involve
special considerations. There is generally less publicly available information
about foreign issuers since many foreign countries do not have the same
disclosure and reporting requirements as are imposed by the U.S. securities
laws. Moreover, foreign issuers are generally not bound by uniform accounting
and auditing and financial reporting requirements and standards of practice
comparable to those applicable to domestic issuers. Such investments may also
entail the risks of possible imposition of dividend withholding or confiscatory
taxes, possible currency blockage or transfer restrictions, expropriation,
nationalization or other adverse political or economic developments, and the
difficulty of enforcing obligations in other countries.
The Funds may also invest in bankers' acceptances, time deposits and
certificates of deposit of U.S. branches of foreign banks and foreign branches
of U.S. banks. Investments in instruments of U.S. branches of foreign banks will
be made only with branches that are subject to the same regulations as U.S.
banks. Investments in instruments issued by a foreign branch of a U.S. bank will
be made only if the investment risk associated with such investment is the same
as that involving an investment in instruments issued by the U.S. parent, with
the U.S. parent unconditionally liable in the event that the foreign branch
fails to pay on the investment for any reason.
COMMERCIAL PAPER -- Commercial paper is the term for short-term promissory notes
issued by domestic corporations to meet current working capital needs.
Commercial paper may be unsecured by the corporation's assets but may be backed
by a letter of credit from a bank or other financial institution. The letter of
credit enhances the commercial paper's creditworthiness. The issuer is directly
responsible for payment but the bank "guarantees" that if the note is not paid
at maturity by the issuer, the bank will pay the principal and interest to the
buyer. INVESCO Funds Group, Inc. ("INVESCO"), the Funds' investment adviser,
will consider the creditworthiness of the institution issuing the letter of
credit, as well as the creditworthiness of the issuer of the commercial paper,
when purchasing paper enhanced by a letter of credit. Commercial paper is sold
either as interest-bearing or on a discounted basis, with maturities not
exceeding 270 days.
DEBT SECURITIES -- Debt securities include bonds, notes and other securities
that give the holder the right to receive fixed amounts of principal, interest,
or both on a date in the future or on demand. Debt securities also are often
referred to as fixed income securities, even if the rate of interest varies over
the life of the security.
<PAGE>
Debt securities are generally subject to credit risk and market risk. Credit
risk is the risk that the issuer of the security may be unable to meet interest
or principal payments or both as they come due. Market risk is the risk that the
market value of the security may decline for a variety of reasons, including
changes in interest rates. An increase in interest rates tends to reduce the
market values of debt securities in which a Fund has invested. A decline in
interest rates tends to increase the market values of debt securities in which a
Fund has invested.
Moody's Investors Service, Inc. ("Moody's") and Standard & Poor's ("S&P")
ratings provide a useful guide to the credit risk of many debt securities. The
lower the rating of a debt security, the greater the credit risk the rating
service assigns to the security. To compensate investors for accepting that
greater risk, lower-rated debt securities tend to offer higher interest rates.
Lower-rated debt securities are often referred to as "junk bonds." Increasing
the amount of Fund assets invested in unrated or lower-grade straight debt
securities may increase the yield produced by a Fund's debt securities but will
also increase the credit risk of those securities. A debt security is considered
lower grade if it is rated Ba or less by Moody's, BB or less by S&P. Lower-rated
and non-rated debt securities of comparable quality are subject to wider
fluctuations in yields and market values than higher-rated debt securities and
may be considered speculative. Although a Fund may invest in debt securities
assigned lower grade ratings by S&P or Moody's, the Funds' investments have
generally been limited to debt securities rated B or higher by either S&P or
Moody's. Debt securities rated lower than B by either S&P or Moody's are usually
considered to be speculative. At the time of purchase, INVESCO will limit Fund
investments to debt securities which INVESCO believes are not highly speculative
and which are rated at least CCC by S&P or Caa by Moody's.
A significant economic downturn or increase in interest rates may cause issuers
of debt securities to experience increased financial problems which could
adversely affect their ability to pay principal and interest obligations, to
meet projected business goals, and to obtain additional financing. These
conditions more severely impact issuers of lower-rated debt securities. The
market for lower-rated straight debt securities may not be as liquid as the
market for higher-rated straight debt securities. Therefore, INVESCO attempts to
limit purchases of lower-rated securities to securities having an established
secondary market.
Debt securities rated Caa by Moody's may be in default or may present risks of
non-payment of principal or interest. Lower-rated securities by S&P (categories
BB, B or CCC) include those which are predominantly speculative because of the
issuer's perceived capacity to pay interest and repay principal in accordance
with their terms; BB indicates the lowest degree of speculation and CCC a high
degree of speculation. While such bonds will likely have some quality and
protective characteristics, these are usually outweighed by large uncertainties
or major risk exposures to adverse conditions.
The Funds expect that most emerging country debt securities in which they invest
will not be rated by U.S. rating services. Although bonds in the lowest
investment grade debt category (those rated BBB by S&P, Baa by Moody's or the
equivalent) are regarded as having adequate capability to pay principal and
interest, they have speculative characteristics. Adverse economic conditions or
changing circumstances are more likely to lead to a weakened capacity to make
principal and interest payments than is the case for higher-rated bonds.
Lower-rated bonds by Moody's (categories Ba, B or Caa) are of poorer quality and
<PAGE>
also have speculative characteristics. Bonds rated Caa may be in default or
there may be present elements of danger with respect to principal or interest.
Lower-rated bonds by S&P (categories BB, B or CCC) include those that are
regarded, on balance, as predominantly speculative with respect to the issuer's
capacity to pay interest and repay principal in accordance with their terms; BB
indicates the lowest degree of speculation and CCC a high degree of speculation.
While such bonds likely will have some quality and protective characteristics,
these are outweighed by large uncertainties or major risk exposures to adverse
conditions. Bonds having equivalent ratings from other ratings services will
have characteristics similar to those of the corresponding S&P and Moody's
ratings. For a specific description of S&P and Moody's corporate bond rating
categories, please refer to Appendix A.
The Funds may invest in zero coupon bonds and step-up bonds. Zero coupon bonds
do not make regular interest payments. Zero coupon bonds are sold at a discount
from face value. Principal and accrued discount (representing interest earned
but not paid) are paid at maturity in the amount of the face value. Step-up
bonds initially make no (or low) cash interest payments but begin paying
interest (or a higher rate of interest) at a fixed time after issuance of the
bond. The market values of zero coupon and step-up bonds generally fluctuate
more in response to changes in interest rates than interest-paying securities of
comparable term and quality. A Fund may be required to distribute income
recognized on these bonds, even though no cash may be paid to the Fund until the
maturity or call date of a bond, in order for the Fund to maintain its
qualification as a regulated investment company. These required distributions
could reduce the amount of cash available for investment by the Fund.
DOMESTIC BANK OBLIGATIONS -- U.S. banks (including their foreign branches) issue
CDs and bankers' acceptances which may be purchased by the Funds if an issuing
bank has total assets in excess of $5 billion and the bank otherwise meets the
Funds' credit rating requirements. CDs are issued against deposits in a
commercial bank for a specified period and rate and are normally negotiable.
Eurodollar CDs are certificates issued by a foreign branch (usually London) of a
U.S. domestic bank, and, as such, the credit is deemed to be that of the
domestic bank. Bankers' acceptances are short-term credit instruments evidencing
the promise of the bank (by virtue of the bank's "acceptance") to pay at
maturity a draft which has been drawn on it by a customer (the "drawer").
Bankers' acceptances are used to finance the import, export, transfer, or
storage of goods and reflect the obligation of both the bank and the drawer to
pay the face amount. Both types of securities are subject to the ability of the
issuing bank to meet its obligations, and are subject to risks common to all
debt securities. In addition, banker's acceptances may be subject to foreign
currency risk and certain other risks of investment in foreign securities.
EQUITY SECURITIES -- The Funds may invest in common, preferred and convertible
preferred stocks, and securities whose values are tied to the price of stocks,
such as rights, warrants and convertible debt securities. Common stocks and
preferred stocks represent equity ownership in a corporation. Owners of stock,
such as the Funds, share in a corporation's earnings through dividends which may
be declared by the corporation, although the receipt of dividends is not the
principal benefit that the Funds seek when they invest in stocks and similar
instruments.
<PAGE>
Instead, the Funds seek to invest in stocks that will increase in market value
and may be sold for more than a Fund paid to buy them. Market value is based
upon constantly changing investor perceptions of what the company is worth
compared to other companies. Although dividends are a factor in the changing
market value of stocks, many companies do not pay dividends, or pay
comparatively small dividends. The principal risk of investing in equity
securities is that their market value fluctuates constantly, often due to
factors entirely outside the control of the Funds or the company issuing the
stock. At any given time, the market value of an equity security may be
significantly higher or lower than the amount paid by a Fund to acquire it.
Owners of preferred stocks are entitled to dividends payable from the
corporation's earnings, which in some cases may be "cumulative" if prior
dividends on the preferred stock have not been paid. Dividends payable on
preferred stock have priority over distributions to holders of common stock, and
preferred stocks generally have a priority on the distribution of assets in the
event of the corporation's liquidation. Preferred stocks may be "participating,"
which means that they may be entitled to dividends in excess of the stated
dividend in certain cases. The holders of a company's debt securities generally
are entitled to be paid by the company before it pays anything to its
stockholders.
Rights and warrants are securities which entitle the holder to purchase the
securities of a company (usually, its common stock) at a specified price during
a specified time period. The value of a right or warrant is affected by many of
the same factors that determine the prices of common stocks. Rights and warrants
may be purchased directly or acquired in connection with a corporate
reorganization or exchange offer.
The Funds also may purchase convertible securities including convertible debt
obligations and convertible preferred stock. A convertible security entitles the
holder to exchange it for a fixed number of shares of common stock (or other
equity security), usually at a fixed price within a specified period of time.
Until conversion, the owner of convertible securities usually receives the
interest paid on a convertible bond or the dividend preference of a preferred
stock.
A convertible security has an "investment value" which is a theoretical value
determined by the yield it provides in comparison with similar securities
without the conversion feature. Investment value changes are based upon
prevailing interest rates and other factors. It also has a "conversion value,"
which is the market value the convertible security would have if it were
exchanged for the underlying equity security. Convertible securities may be
purchased at varying price levels above or below their investment values or
conversion values.
Conversion value is a simple mathematical calculation that fluctuates directly
with the price of the underlying security. However, if the conversion value is
substantially below the investment value, the market value of the convertible
security is governed principally by its investment value. If the conversion
value is near or above the investment value, the market value of the convertible
security generally will rise above the investment value. In such cases, the
market value of the convertible security may be higher than its conversion
value, due to the combination of the convertible security's right to interest
(or dividend preference) and the possibility of capital appreciation from the
conversion feature. However, there is no assurance that any premium above
investment value or conversion value will be recovered because prices change
and, as a result, the ability to achieve capital appreciation through conversion
<PAGE>
may be eliminated.
EUROBONDS AND YANKEE BONDS -- Bonds issued by foreign branches of U.S. banks
("Eurobonds") and bonds issued by a U.S. branch of a foreign bank and sold in
the United States ("Yankee bonds"). These bonds are bought and sold in U.S.
dollars, but generally carry with them the same risks as investing in foreign
securities.
FOREIGN SECURITIES -- Investments in the securities of foreign companies, or
companies that have their principal business activities outside the United
States, involve certain risks not associated with investments in U.S. companies.
Non-U.S. companies generally are not subject to the same uniform accounting,
auditing and financial reporting standards that apply to U.S. companies.
Therefore, financial information about foreign companies may be incomplete, or
may not be comparable to the information available on U.S. companies. There may
also be less publicly available information about a foreign company.
Although the volume of trading in foreign securities markets is growing,
securities of many non-U.S. companies may be less liquid and have greater swings
in price than securities of comparable U.S. companies. The costs of buying and
selling securities on foreign securities exchanges are generally significantly
higher than similar costs in the United States. There is generally less
government supervision and regulation of exchanges, brokers and issuers in
foreign countries than there is in the United States. Investments in non-U.S.
securities may also be subject to other risks different from those affecting
U.S. investments, including local political or economic developments,
expropriation or nationalization of assets, confiscatory taxation, and
imposition of withholding taxes on dividends or interest payments. If it becomes
necessary, it may be more difficult for a Fund to obtain or to enforce a
judgment against a foreign issuer than against a domestic issuer.
Securities traded on foreign markets are usually bought and sold in local
currencies, not in U.S. dollars. Therefore, the market value of foreign
securities acquired by a Fund can be affected -- favorably or unfavorably -- by
changes in currency rates and exchange control regulations. Costs are incurred
in converting money from one currency to another. Foreign currency exchange
rates are determined by supply and demand on the foreign exchange markets.
Foreign exchange markets are affected by the international balance of payments
and other economic and financial conditions, government intervention,
speculation and other factors, all of which are outside the control of each
Fund. Generally, the Funds' foreign currency exchange transactions will be
conducted on a cash or "spot" basis at the spot rate for purchasing or selling
currency in the foreign currency exchange markets.
FUTURES, OPTIONS AND OTHER FINANCIAL INSTRUMENTS
GENERAL. The adviser and/or sub-adviser may use various types of financial
instruments, some of which are derivatives, to attempt to manage the risk of a
Fund's investments or, in certain circumstances, for investment (e.g., as a
substitute for investing in securities). These financial instruments include
options, futures contracts (sometimes referred to as "futures"), forward
contracts, swaps, caps, floors and collars (collectively, "Financial
Instruments"). The policies in this section do not apply to other types of
instruments sometimes referred to as derivatives, such as indexed securities,
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mortgage-backed and other asset-backed securities, and stripped interest and
principal of debt.
Hedging strategies can be broadly categorized as "short" hedges and "long" or
"anticipatory" hedges. A short hedge involves the use of a Financial Instrument
in order to partially or fully offset potential variations in the value of one
or more investments held in a Fund's portfolio. A long or anticipatory hedge
involves the use of a Financial Instrument in order to partially or fully offset
potential increases in the acquisition cost of one or more investments that the
Fund intends to acquire. In an anticipatory hedge transaction, the Fund does not
already own a corresponding security. Rather, it relates to a security or type
of security that the Fund intends to acquire. If the Fund does not eliminate the
hedge by purchasing the security as anticipated, the effect on the Fund's
portfolio is the same as if a long position were entered into. Financial
Instruments may also be used, in certain circumstances, for investment (E.G., as
a substitute for investing in securities).
Financial Instruments on individual securities generally are used to attempt to
hedge against price movements in one or more particular securities positions
that a Fund already owns or intends to acquire. Financial Instruments on
indexes, in contrast, generally are used to attempt to hedge all or a portion of
a portfolio against price movements of the securities within a market sector in
which the Fund has invested or expects to invest.
The use of Financial Instruments is subject to applicable regulations of the
Securities and Exchange Commission ("SEC"), the several exchanges upon which
they are traded, and the Commodity Futures Trading Commission ("CFTC"). In
addition, the Funds' ability to use Financial Instruments will be limited by tax
considerations. See "Tax Consequences of Owning Shares of a Fund."
In addition to the instruments and strategies described below, the adviser
and/or sub-adviser may use other similar or related techniques to the extent
that they are consistent with a Fund's investment objective and permitted by its
investment limitations and applicable regulatory authorities. The Funds'
Prospectuses or SAI will be supplemented to the extent that new products or
techniques become employed involving materially different risks than those
described below or in the Prospectuses.
SPECIAL RISKS. Financial Instruments and their use involve special
considerations and risks, certain of which are described below.
(1) Financial Instruments may increase the volatility of a Fund. If the adviser
and/or sub-adviser employs a Financial Instrument that correlates imperfectly
with a Fund's investments, a loss could result, regardless of whether or not the
intent was to manage risk. In addition, these techniques could result in a loss
if there is not a liquid market to close out a position that a Fund has entered.
(2) There might be imperfect correlation between price movements of a Financial
Instrument and price movement of the investment(s) being hedged. For example, if
the value of a Financial Instrument used in a short hedge increased by less than
the decline in value of the hedged investment(s), the hedge would not be fully
successful. This might be caused by certain kinds of trading activity that
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distorts the normal price relationship between the security being hedged and the
Financial Instrument. Similarly, the effectiveness of hedges using Financial
Instruments on indexes will depend on the degree of correlation between price
movements in the index and price movements in the securities being hedged.
The Funds are authorized to use options and futures contracts related to
securities with issuers, maturities or other characteristics different from the
securities in which it typically invests. This involves a risk that the options
or futures position will not track the performance of a Fund's portfolio
investments.
The direction of options and futures price movements can also diverge from the
direction of the movements of the prices of their underlying instruments, even
if the underlying instruments match a Fund's investments well. Options and
futures prices are affected by such factors as current and anticipated
short-term interest rates, changes in volatility of the underlying instrument,
and the time remaining until expiration of the contract, which may not affect
security prices the same way. Imperfect correlation may also result from
differing levels of demand in the options and futures markets and the securities
markets, from structural differences in how options and futures and securities
are traded, or from imposition of daily price fluctuation limits or trading
halts. A Fund may take positions in options and futures contracts with a greater
or lesser face value than the securities it wishes to hedge or intends to
purchase in order to attempt to compensate for differences in volatility between
the contract and the securities, although this may not be successful in all
cases.
(3) If successful, the above-discussed hedging strategies can reduce risk of
loss by wholly or partially offsetting the negative effect of unfavorable price
movements of portfolio securities. However, such strategies can also reduce
opportunity for gain by offsetting the positive effect of favorable price
movements. For example, if a Fund entered into a short hedge because the adviser
and/or sub-adviser projected a decline in the price of a security in the Fund's
portfolio, and the price of that security increased instead, the gain from that
increase would likely be wholly or partially offset by a decline in the value of
the short position in the Financial Instrument. Moreover, if the price of the
Financial Instrument declined by more than the increase in the price of the
security, the Fund could suffer a loss.
(4) A Fund's ability to close out a position in a Financial Instrument prior to
expiration or maturity depends on the degree of liquidity of the market or, in
the absence of such a market, the ability and willingness of the other party to
the transaction (the "counterparty") to enter into a transaction closing out the
position. Therefore, there is no assurance that any position can be closed out
at a time and price that is favorable to a Fund.
(5) As described below, the Funds are required to maintain assets as "cover,"
maintain segregated accounts or make margin payments when they take positions in
Financial Instruments involving obligations to third parties (I.E., Financial
Instruments other than purchased options). If a Fund is unable to close out its
positions in such Financial Instruments, it might be required to continue to
maintain such assets or segregated accounts or make such payments until the
position expired. These requirements might impair a Fund's ability to sell a
portfolio security or make an investment at a time when it would otherwise be
favorable to do so, or require that the Fund sell a portfolio security at a
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disadvantageous time.
COVER. Positions in Financial Instruments, other than purchased options, expose
the Funds to an obligation to another party. A Fund will not enter into any such
transaction unless it owns (1) an offsetting ("covered") position in securities,
currencies or other options, futures contracts or forward contracts, or (2) cash
and liquid assets with a value, marked-to-market daily, sufficient to cover its
obligations to the extent not covered as provided in (1) above. The Funds will
comply with SEC guidelines regarding cover for these instruments and will, if
the guidelines so require, designate cash or liquid assets as segregated in the
prescribed amount as determined daily.
Assets used as cover or held as segregated cannot be sold while the position in
the corresponding Financial Instrument is open unless they are replaced with
other appropriate assets. As a result, the commitment of a large portion of a
Fund's assets to cover or to hold as segregated could impede portfolio
management or the Fund's ability to meet redemption requests or other current
obligations.
OPTIONS. Each Fund may engage in certain strategies involving options to attempt
to manage the risk of its investments or, in certain circumstances, for
investment (E.G., as a substitute for investing in securities). A call option
gives the purchaser the right to buy, and obligates the writer to sell the
underlying investment at the agreed-upon exercise price during the option
period. A put option gives the purchaser the right to sell, and obligates the
writer to buy the underlying investment at the agreed-upon exercise price during
the option period. Purchasers of options pay an amount, known as a premium, to
the option writer in exchange for the right under the option contract. See
"Options on Indexes" below with regard to cash settlement of option contracts on
index values.
The purchase of call options can serve as a hedge against a price rise of the
underlier and the purchase of put options can serve as a hedge against a price
decline of the underlier. Writing call options can serve as a limited short
hedge because declines in the value of the hedged investment would be offset to
the extent of the premium received for writing the option. However, if the
security or currency appreciates to a price higher than the exercise price of
the call option, it can be expected that the option will be exercised and a Fund
will be obligated to sell the security or currency at less than its market
value.
Writing put options can serve as a limited long or anticipatory hedge because
increases in the value of the hedged investment would be offset to the extent of
the premium received for writing the option. However, if the security or
currency depreciates to a price lower than the exercise price of the put option,
it can be expected that the put option will be exercised and a Fund will be
obligated to purchase the security or currency at more than its market value.
The value of an option position will reflect, among other things, the current
market value of the underlying investment, the time remaining until expiration,
the relationship of the exercise price to the market price of the underlying
investment, the price volatility of the underlying investment and general market
and interest rate conditions. Options that expire unexercised have no value.
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A Fund may effectively terminate its right or obligation under an option by
entering into a closing transaction. For example, the Fund may terminate its
obligation under a call or put option that it had written by purchasing an
identical call or put option; which is known as a closing purchase transaction.
Conversely, the Fund may terminate a position in a put or call option it had
purchased by writing an identical put or call option, which is known as a
closing sale transaction. Closing transactions permit a Fund to realize profits
or limit losses on an option position prior to its exercise or expiration.
RISKS OF OPTIONS ON SECURITIES. Options embody the possibility of large amounts
of exposure, which will result in a Fund's net asset value being more sensitive
to changes in the value of the related investment. A Fund may purchase or write
both exchange-traded and OTC options. Exchange-traded options in the United
States are issued by a clearing organization affiliated with the exchange on
which the option is listed that, in effect, guarantees completion of every
exchange-traded option transaction. In contrast, OTC options are contracts
between a Fund and its counterparty (usually a securities dealer or a bank) with
no clearing organization guarantee. Thus, when a Fund purchases an OTC option,
it relies on the counterparty from whom it purchased the option to make or take
delivery of the underlying investment upon exercise of the option. Failure by
the counterparty to do so would result in the loss of any premium paid by a Fund
as well as the loss of any expected benefit of the transaction.
The Funds' ability to establish and close out positions in options depends on
the existence of a liquid market. However, there can be no assurance that such a
market will exist at any particular time. Closing transactions can be made for
OTC options only by negotiating directly with the counterparty, or by a
transaction in the secondary market if any such market exists. There can be no
assurance that a Fund will in fact be able to close out an OTC option position
at a favorable price prior to expiration. In the event of insolvency of the
counterparty, a Fund might be unable to close out an OTC option position at any
time prior to the option's expiration. If a Fund is not able to enter into an
offsetting closing transaction on an option it has written, it will be required
to maintain the securities subject to the call or the liquid assets underlying
the put until a closing purchase transaction can be entered into or the option
expires. However, there can be no assurance that such a market will exist at any
particular time.
If a Fund were unable to effect a closing transaction for an option it had
purchased, it would have to exercise the option to realize any profit. The
inability to enter into a closing purchase transaction for a covered call option
written by a Fund could cause material losses because the Fund would be unable
to sell the investment used as cover for the written option until the option
expires or is exercised.
OPTIONS ON INDEXES. Puts and calls on indexes are similar to puts and calls on
securities or futures contracts except that all settlements are in cash and
changes in value depend on changes in the index in question. When a Fund writes
a call on an index, it receives a premium and agrees that, prior to the
expiration date, upon exercise of the call, the purchaser will receive from the
Fund an amount of cash equal to the positive difference between the closing
price of the index and the exercise price of the call times a specified multiple
("multiplier"), which determines the total dollar value for each point of such
difference. When a Fund buys a call on an index, it pays a premium and has the
same rights as to such call as are indicated above. When a Fund buys a put on an
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index, it pays a premium and has the right, prior to the expiration date, to
require the seller of the put to deliver to the Fund an amount of cash equal to
the positive difference between the exercise price of the put and the closing
price of the index times the multiplier. When a Fund writes a put on an index,
it receives a premium and the purchaser of the put has the right, prior to the
expiration date, to require the Fund to deliver to it an amount of cash equal to
the positive difference between the exercise price of the put and the closing
level of the index times the multiplier.
The risks of purchasing and selling options on indexes may be greater than
options on securities. Because index options are settled in cash, when a Fund
writes a call on an index it cannot fulfill its potential settlement obligations
by delivering the underlying securities. A Fund can offset some of the risk of
writing a call index option by holding a diversified portfolio of securities
similar to those on which the underlying index is based. However, a Fund cannot,
as a practical matter, acquire and hold a portfolio containing exactly the same
securities as underlie the index and, as a result, bears a risk that the value
of the securities held will vary from the value of the index.
Even if a Fund could assemble a portfolio that exactly reproduced the
composition of the underlying index, it still would not be fully covered from a
risk standpoint because of the "timing risk" inherent in writing index options.
When an index option is exercised, the amount of cash that the holder is
entitled to receive is determined by the difference between the exercise price
and the closing index level. As with other kinds of options, a Fund as the call
writer will not learn what it has been assigned until the next business day. The
time lag between exercise and notice of assignment poses no risk for the writer
of a covered call on a specific underlying security, such as common stock,
because in that case the writer's obligation is to deliver the underlying
security, not to pay its value as of a moment in the past. In contrast, the
writer of an index call will be required to pay cash in an amount based on the
difference between the closing index value on the exercise date and the exercise
price. By the time a Fund learns what it has been assigned, the index may have
declined. This "timing risk" is an inherent limitation on the ability of index
call writers to cover their risk exposure.
If a Fund has purchased an index option and exercises it before the closing
index value for that day is available, it runs the risk that the level of the
underlying index may subsequently change. If such a change causes the exercised
option to fall out-of-the-money, the Fund nevertheless will be required to pay
the difference between the closing index value and the exercise price of the
option (times the applicable multiplier) to the assigned writer.
OTC OPTIONS. Unlike exchange-traded options, which are standardized with respect
to the underlying instrument, expiration date, contract size, and strike price,
the terms of OTC options (options not traded on exchanges) generally are
established through negotiation with the other party to the option contract.
While this type of arrangement allows a Fund great flexibility to tailor the
option to its needs, OTC options generally involve greater risk than
exchange-traded options, which are guaranteed by the clearing organization of
the exchange where they are traded.
Generally, OTC foreign currency options used by a Fund are European-style
options. This means that the option is only exercisable immediately prior to its
expiration. This is in contrast to American-style options, which are exercisable
at any time prior to the expiration date of the option.
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FUTURES CONTRACTS AND OPTIONS ON FUTURES CONTRACTS. When a Fund purchases or
sells a futures contract, it incurs an obligation respectively to take or make
delivery of a specified amount of the obligation underlying the contract at a
specified time and price. When a Fund writes an option on a futures contract, it
becomes obligated to assume a position in the futures contract at a specified
exercise price at any time during the term of the option. If a Fund writes a
call, on exercise it assumes a short futures position. If it writes a put, on
exercise it assumes a long futures position.
The purchase of futures or call options on futures can serve as a long or an
anticipatory hedge, and the sale of futures or the purchase of put options on
futures can serve as a short hedge. Writing call options on futures contracts
can serve as a limited short hedge, using a strategy similar to that used for
writing call options on securities or indexes. Similarly, writing put options on
futures contracts can serve as a limited long or anticipatory hedge.
In addition, futures strategies can be used to manage the "duration" (a measure
of anticipated sensitivity to changes in interest rates, which is sometimes
related to the weighted average maturity of a portfolio) and associated interest
rate risk of a Fund's fixed-income portfolio. If the adviser and/or sub-adviser
wishes to shorten the duration of a Fund's fixed-income portfolio (i.e., reduce
anticipated sensitivity), the Fund may sell an appropriate debt futures contract
or a call option thereon, or purchase a put option on that futures contract. If
the adviser and/or sub-adviser wishes to lengthen the duration of a Fund's
fixed-income portfolio (i.e., increase anticipated sensitivity), the Fund may
buy an appropriate debt futures contract or a call option thereon, or sell a put
option thereon.
At the inception of a futures contract, a Fund is required to deposit "initial
margin" in an amount generally equal to 10% or less of the contract value.
Initial margin must also be deposited when writing a call or put option on a
futures contract, in accordance with applicable exchange rules. Subsequent
"variation margin" payments are made to and from the futures broker daily as the
value of the futures or written option position varies, a process known as
"marking-to-market." Unlike margin in securities transactions, initial margin on
futures contracts and written options on futures contracts does not represent a
borrowing on margin, but rather is in the nature of a performance bond or
good-faith deposit that is returned to the Fund at the termination of the
transaction if all contractual obligations have been satisfied. Under certain
circumstances, such as periods of high volatility, a Fund may be required to
increase the level of initial margin deposits. If the Fund has insufficient cash
to meet daily variation margin requirements, it might need to sell securities in
order to do so at a time when such sales are disadvantageous.
Purchasers and sellers of futures contracts and options on futures can enter
into offsetting closing transactions, similar to closing transactions on
options, by selling or purchasing, respectively, an instrument identical to the
instrument purchased or sold. However, there can be no assurance that a liquid
market will exist for a particular contract at a particular time. In such event,
it may not be possible to close a futures contract or options position.
Under certain circumstances, futures exchanges may establish daily limits on the
amount that the price of a futures contract or an option on a futures contract
can vary from the previous day's settlement price; once that limit is reached,
no trades may be made that day at a price beyond the limit. Daily price limits
do not limit potential losses because prices could move to the daily limit for
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several consecutive days with little or no trading, thereby preventing
liquidation of unfavorable positions.
If a Fund were unable to liquidate a futures contract or an option on a futures
contract position due to the absence of a liquid market or the imposition of
price limits, it could incur substantial losses. The Fund would continue to be
subject to market risk with respect to the position. In addition, except in the
case of purchased options, the Fund would continue to be required to make daily
variation margin payments and might be required to continue to maintain the
position being hedged by the futures contract or option or to continue to
maintain cash or securities in a segregated account.
To the extent that a Fund enters into futures contracts, options on futures
contracts and options on foreign currencies traded on a CFTC-regulated exchange,
in each case that is not for BONA FIDE hedging purposes (as defined by the
CFTC), the aggregate initial margin and premiums required to establish these
positions (excluding the amount by which options are "in-the-money" at the time
of purchase) may not exceed 5% of the liquidation value of the Fund's portfolio,
after taking into account unrealized profits and unrealized losses on any
contracts the Fund has entered into. This policy does not limit to 5% the
percentage of the Fund's assets that are at risk in futures contracts, options
on futures contracts and currency options.
RISKS OF FUTURES CONTRACTS AND OPTIONS THEREON. The ordinary spreads at a given
time between prices in the cash and futures markets (including the options on
futures markets), due to differences in the natures of those markets, are
subject to the following factors. First, all participants in the futures market
are subject to margin deposit and maintenance requirements. Rather than meeting
additional margin deposit requirements, investors may close futures contracts
through offsetting transactions, which could distort the normal relationship
between the cash and futures markets. Second, the liquidity of the futures
market depends on participants entering into offsetting transactions rather than
making or taking delivery. To the extent participants decide to make or take
delivery, liquidity in the futures market could be reduced, thus producing
distortion. Due to the possibility of distortion, a hedge may not be successful.
Although stock index futures contracts do not require physical delivery, under
extraordinary market conditions liquidity of such futures contracts also could
be reduced. Additionally, the adviser and/or sub-adviser may be incorrect in its
expectations as to the extent of various interest rates, currency exchange rates
or stock market movements or the time span within which the movements take
place.
INDEX FUTURES. The risk of imperfect correlation between movements in the price
of index futures and movements in the price of the securities that are the
subject of a hedge increases as the composition of a Fund's portfolio diverges
from the index. The price of the index futures may move proportionately more
than or less than the price of the securities being hedged. If the price of the
index futures moves proportionately less than the price of the securities that
are the subject of the hedge, the hedge will not be fully effective. Assuming
the price of the securities being hedged has moved in an unfavorable direction,
as anticipated when the hedge was put into place, the Fund would be in a better
position than if it had not hedged at all, but not as good as if the price of
the index futures moved in full proportion to that of the hedged securities.
However, if the price of the securities being hedged has moved in a favorable
direction, this advantage will be partially offset by movement of the price of
the futures contract. If the price of the futures contract moves more than the
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price of the securities, the Fund will experience either a loss or a gain on the
futures contract that will not be completely offset by movements in the price of
the securities that are the subject of the hedge.
Where index futures are purchased in an anticipatory hedge, it is possible that
the market may decline instead. If a Fund then decides not to invest in the
securities at that time because of concern as to possible further market decline
or for other reasons, it will realize a loss on the futures contract that is not
offset by a reduction in the price of the securities it had anticipated
purchasing.
FOREIGN CURRENCY HEDGING STRATEGIES--SPECIAL CONSIDERATIONS. A Fund may use
options and futures contracts on foreign currencies, as mentioned previously,
and forward currency contracts, as described below, to attempt to hedge against
movements in the values of the foreign currencies in which the Fund's securities
are denominated or, in certain circumstances, for investment (E.G., as a
substitute for investing in securities denominated in foreign currency).
Currency hedges can protect against price movements in a security that a Fund
owns or intends to acquire that are attributable to changes in the value of the
currency in which it is denominated.
A Fund might seek to hedge against changes in the value of a particular currency
when no Financial Instruments on that currency are available or such Financial
Instruments are more expensive than certain other Financial Instruments. In such
cases, a Fund may seek to hedge against price movements in that currency by
entering into transactions using Financial Instruments on another currency or a
basket of currencies, the value of which the adviser and/or sub-adviser believes
will have a high degree of positive correlation to the value of the currency
being hedged. The risk that movements in the price of the Financial Instrument
will not correlate perfectly with movements in the price of the currency subject
to the hedging transaction may be increased when this strategy is used.
The value of Financial Instruments on foreign currencies depends on the value of
the underlying currency relative to the U.S. dollar. Because foreign currency
transactions occurring in the interbank market might involve substantially
larger amounts than those involved in the use of such Financial Instruments, a
Fund could be disadvantaged by having to deal in the odd-lot market (generally
consisting of transactions of less than $1 million) for the underlying foreign
currencies at prices that are less favorable than for round lots.
There is no systematic reporting of last sale information for foreign currencies
or any regulatory requirement that quotations available through dealers or other
market sources be firm or revised on a timely basis. Quotation information
generally is representative of very large transactions in the interbank market
and thus might not reflect odd-lot transactions where rates might be less
favorable. The interbank market in foreign currencies is a global,
round-the-clock market. To the extent the U.S. options or futures markets are
closed while the markets for the underlying currencies remain open, significant
price and rate movements might take place in the underlying markets that cannot
be reflected in the markets for the Financial Instruments until they reopen.
Settlement of hedging transactions involving foreign currencies might be
required to take place within the country issuing the underlying currency. Thus,
a Fund might be required to accept or make delivery of the underlying foreign
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currency in accordance with any U.S. or foreign regulations regarding the
maintenance of foreign banking arrangements by U.S. residents and might be
required to pay any fees, taxes and charges associated with such delivery
assessed in the issuing country.
FORWARD CURRENCY CONTRACTS AND FOREIGN CURRENCY DEPOSITS. The Funds may enter
into forward currency contracts to purchase or sell foreign currencies for a
fixed amount of U.S. dollars or another foreign currency. A forward currency
contract involves an obligation to purchase or sell a specific currency at a
future date, which may be any fixed number of days (term) from the date of the
forward currency contract agreed upon by the parties, at a price set at the time
the forward currency contract is entered. Forward currency contracts are
negotiated directly between currency traders (usually large commercial banks)
and their customers.
Such transactions may serve as long or anticipatory hedges. For example, a Fund
may purchase a forward currency contract to lock in the U.S. dollar price of a
security denominated in a foreign currency that the Fund intends to acquire.
Forward currency contracts may also serve as short hedges. For example, a Fund
may sell a forward currency contract to lock in the U.S. dollar equivalent of
the proceeds from the anticipated sale of a security or a dividend or interest
payment denominated in a foreign currency.
The Funds may also use forward currency contracts to hedge against a decline in
the value of existing investments denominated in foreign currency. Such a hedge
would tend to offset both positive and negative currency fluctuations, but would
not offset changes in security values caused by other factors. A Fund could also
hedge the position by entering into a forward currency contract to sell another
currency expected to perform similarly to the currency in which the Fund's
existing investments are denominated. This type of hedge could offer advantages
in terms of cost, yield or efficiency, but may not hedge currency exposure as
effectively as a simple hedge against U.S. dollars. This type of hedge may
result in losses if the currency used to hedge does not perform similarly to the
currency in which the hedged securities are denominated.
The Funds may also use forward currency contracts in one currency or a basket of
currencies to attempt to hedge against fluctuations in the value of securities
denominated in a different currency if the adviser anticipates that there will
be a positive correlation between the two currencies.
The cost to a Fund of engaging in forward currency contracts varies with factors
such as the currency involved, the length of the contract period and the market
conditions then prevailing. Because forward currency contracts are usually
entered into on a principal basis, no fees or commissions are involved. When a
Fund enters into a forward currency contract, it relies on the counterparty to
make or take delivery of the underlying currency at the maturity of the
contract. Failure by the counterparty to do so would result in the loss of some
or all of any expected benefit of the transaction.
As is the case with futures contracts, purchasers and sellers of forward
currency contracts can enter into offsetting closing transactions, similar to
closing transactions on futures contracts, by selling or purchasing,
respectively, an instrument identical to the instrument purchased or sold.
Secondary markets generally do not exist for forward currency contracts, with
the result that closing transactions generally can be made for forward currency
contracts only by negotiating directly with the counterparty. Thus, there can be
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no assurance that a Fund will in fact be able to close out a forward currency
contract at a favorable price prior to maturity. In addition, in the event of
insolvency of the counterparty, the Fund might be unable to close out a forward
currency contract. In either event, the Fund would continue to be subject to
market risk with respect to the position, and would continue to be required to
maintain a position in securities denominated in the foreign currency or to
segregate cash or liquid assets.
The precise matching of forward currency contract amounts and the value of the
securities, dividends or interest payments involved generally will not be
possible because the value of such securities, dividends or interest payments,
measured in the foreign currency, will change after the forward currency
contract has been established. Thus, a Fund might need to purchase or sell
foreign currencies in the spot (cash) market to the extent such foreign
currencies are not covered by forward currency contracts. The projection of
short-term currency market movements is extremely difficult, and the successful
execution of a short-term hedging strategy is highly uncertain.
Forward currency contracts may substantially change a Fund's investment exposure
to changes in currency exchange rates and could result in losses to the Fund if
currencies do not perform as the adviser anticipates. There is no assurance that
the adviser's use of forward currency contracts will be advantageous to a Fund
or that it will hedge at an appropriate time.
The Funds may also purchase and sell foreign currency and invest in foreign
currency deposits. Currency conversion involves dealer spreads and other costs,
although commissions usually are not charged.
COMBINED POSITIONS. A Fund may purchase and write options or futures in
combination with each other, or in combination with futures or forward currency
contracts, to manage the risk and return characteristics of its overall
position. For example, a Fund may purchase a put option and write a call option
on the same underlying instrument, in order to construct a combined position
whose risk and return characteristics are similar to selling a futures contract.
Another possible combined position would involve writing a call option at one
strike price and buying a call option at a lower price, in order to reduce the
risk of the written call option in the event of a substantial price increase.
Because combined options positions involve multiple trades, they result in
higher transaction costs.
TURNOVER. The Funds' options and futures activities may affect their turnover
rates and brokerage commission payments. The exercise of calls or puts written
by a Fund, and the sale or purchase of futures contracts, may cause it to sell
or purchase related investments, thus increasing its turnover rate. Once a Fund
has received an exercise notice on an option it has written, it cannot effect a
closing transaction in order to terminate its obligation under the option and
must deliver or receive the underlying securities at the exercise price. The
exercise of puts purchased by a Fund may also cause the sale of related
investments, increasing turnover. Although such exercise is within the Fund's
control, holding a protective put might cause it to sell the related investments
for reasons that would not exist in the absence of the put. A Fund will pay a
brokerage commission each time it buys or sells a put or call or purchases or
sells a futures contract. Such commissions may be higher than those that would
apply to direct purchases or sales.
<PAGE>
SWAPS, CAPS, FLOORS AND COLLARS. The Funds are authorized to enter into swaps,
caps, floors and collars. Swaps involve the exchange by one party with another
party of their respective commitments to pay or receive cash flows, E.G., an
exchange of floating rate payments for fixed rate payments. The purchase of a
cap or a floor entitles the purchaser, to the extent that a specified index
exceeds in the case of a cap, or falls below in the case of a floor, a
predetermined value, to receive payments on a notional principal amount from the
party selling such instrument. A collar combines elements of buying a cap and
selling a floor.
ILLIQUID SECURITIES -- Securities which do not trade on stock exchanges or in
the over the counter market, or have restrictions on when and how they may be
sold, are generally considered to be "illiquid." An illiquid security is one
that a Fund may have difficulty -- or may even be legally precluded from --
selling at any particular time. A Fund may invest in illiquid securities,
including restricted securities and other investments which are not readily
marketable. A Fund will not purchase any such security if the purchase would
cause the Fund to invest more than 15% of its net assets, measured at the time
of purchase, in illiquid securities. Repurchase agreements maturing in more than
seven days are considered illiquid for purposes of this restriction.
The principal risk of investing in illiquid securities is that a Fund may be
unable to dispose of them at the time desired or at a reasonable price. In
addition, in order to resell a restricted security, a Fund might have to bear
the expense and incur the delays associated with registering the security with
the SEC, and otherwise obtaining listing on a securities exchange or in the over
the counter market.
INVESTMENT COMPANY SECURITIES -- To manage their daily cash positions, the Funds
may invest in securities issued by other investment companies that invest in
short-term debt securities and seek to maintain a net asset value of $1.00 per
share ("money market funds"). The Funds also may invest in Standard & Poor's
Depository Receipts ("SPDRs") and shares of other investment companies. SPDRs
are investment companies whose portfolios mirror the compositions of specific
S&P indices, such as the S&P 500 and the S&P 400. SPDRs are traded on the
American Stock Exchange. SPDR holders such as a Fund are paid a "Dividend
Equivalent Amount" that corresponds to the amount of cash dividends accruing to
the securities held by the SPDR Trust, net of certain fees and expenses. The
Investment Company Act of 1940, as amended (the "1940 Act") limits investments
in securities of other investment companies, such as the SPDR Trust. These
limitations include, among others, that, subject to certain exceptions, no more
than 10% of a Fund's total assets may be invested in securities of other
investment companies, no more than 5% of its total assets may be invested in the
securities of any one investment company and a Fund may not own more than 3% of
the outstanding shares of any investment company. As a shareholder of another
investment company, a Fund would bear its pro rata portion of the other
investment company's expenses, including advisory fees, in addition to the
expenses the Fund bears directly in connection with its own operations.
REITs -- Real Estate Investment Trusts are investment trusts that invest
primarily in real estate and securities of businesses connected to the real
estate industry.
REPURCHASE AGREEMENTS -- A Fund may enter into repurchase agreements, or REPOs,
on debt securities that the Fund is allowed to hold in its portfolio. This is a
way to invest money for short periods. A REPO is an agreement under which the
<PAGE>
Fund acquires a debt security and then resells it to the seller at an agreed
upon price and date (normally, the next business day). The repurchase price
represents an interest rate effective for the short period the debt security is
held by the Fund, and is unrelated to the interest rate on the underlying debt
security. A repurchase agreement is often considered as a loan collateralized by
securities. The collateral securities acquired by the Fund (including accrued
interest earned thereon) must have a total value in excess of the value of the
repurchase agreement. The collateral securities are held by the Fund's custodian
bank until the repurchase agreement is completed.
The Funds may enter into repurchase agreements with commercial banks, registered
broker-dealers or registered government securities dealers that are creditworthy
under standards established by the Company's board of directors. The Company's
board of directors has established standards that INVESCO and the applicable
sub-adviser must use to review the creditworthiness of any bank, broker or
dealer that is party to a REPO. REPOs maturing in more than seven days are
considered illiquid securities. A Fund will not enter into repurchase agreements
maturing in more than seven days if as a result more than 15% of the Fund's net
assets would be invested in these repurchase agreements and other illiquid
securities.
As noted above, the Funds use REPOs as a means of investing cash for short
periods of time. Although REPOs are considered to be highly liquid and
comparatively low-risk, the use of REPOs does involve some risks. For example,
if the other party to the agreement defaults on its obligation to repurchase the
underlying security at a time when the value of the security has declined, the
Fund may incur a loss on the sale of the collateral security. If the other party
to the agreement becomes insolvent and subject to liquidation or reorganization
under the Bankruptcy Code or other laws, a court may determine that the
underlying security is collateral for a loan by the Fund not within the control
of the Fund and therefore the realization by the Fund on such collateral may
automatically be stayed. Finally, it is possible that the Fund may not be able
to substantiate its interest in the underlying security and may be deemed an
unsecured creditor of the other party to the agreement.
RULE 144A SECURITIES -- A Fund also may invest in securities that can be resold
to institutional investors pursuant to Rule 144A under the Securities Act of
1933, as amended (the "1933 Act"). In recent years, a large institutional market
has developed for many Rule 144A Securities. Institutional investors generally
cannot sell these securities to the general public but instead will often depend
on an efficient institutional market in which Rule 144A Securities can readily
be resold to other institutional investors, or on an issuer's ability to honor a
demand for repayment. Therefore, the fact that there are contractual or legal
restrictions on resale to the general public or certain institutions does not
necessarily mean that a Rule 144A Security is illiquid. Institutional markets
for Rule 144A Securities may provide both reliable market values for Rule 144A
Securities and enable a Fund to sell a Rule 144A investment when appropriate.
For this reason, the Company's board of directors has concluded that if a
sufficient institutional trading market exists for a given Rule 144A security,
it may be considered "liquid," and not subject to a Fund's limitations on
investment in restricted securities. The Company's board of directors has given
INVESCO the day-to-day authority to determine the liquidity of Rule 144A
Securities, according to guidelines approved by the board. The principal risk of
investing in Rule 144A Securities is that there may be an insufficient number of
qualified institutional buyers interested in purchasing a Rule 144A Security
<PAGE>
held by a Fund, and the Fund might be unable to dispose of such security
promptly or at reasonable prices.
SECURITIES LENDING -- Each Fund may lend its portfolio securities. The advantage
of lending portfolio securities is that a Fund continues to have the benefits
(and risks) of ownership of the loaned securities, while at the same time
receiving interest from the borrower of the securities. The primary risk in
lending portfolio securities is that a borrower may fail to return a portfolio
security.
SOVEREIGN DEBT -- In certain emerging countries, the central government and its
agencies are the largest debtors to local and foreign banks and others.
Sovereign debt involves the risk that the government, as a result of political
considerations or cash flow difficulties, may fail to make scheduled payments of
interest or principal and may require holders to participate in rescheduling of
payments or even to make additional loans. If an emerging country government
defaults on its sovereign debt, there is likely to be no legal proceeding under
which the debt may be ordered repaid, in whole or in part. The ability or
willingness of a foreign sovereign debtor to make payments of principal and
interest in a timely manner may be influenced by, among other factors, its cash
flow, the magnitude of its foreign reserves, the availability of foreign
exchange on the payment date, the debt service burden to the economy as a whole,
the debtor's then current relationship with the International Monetary Fund and
its then current political constraints. Some of the emerging countries issuing
such instruments have experienced high rates of inflation in recent years and
have extensive internal debt. Among other effects, high inflation and internal
debt service requirements may adversely affect the cost and availability of
future domestic sovereign borrowing to finance government programs, and may have
other adverse social, political and economic consequences, including effects on
the willingness of such countries to service their sovereign debt. An emerging
country government's willingness and ability to make timely payments on its
sovereign debt also are likely to be heavily affected by the country's balance
of trade and its access to trade and other international credits. If a country's
exports are concentrated in a few commodities, such country would be more
significantly exposed to a decline in the international prices of one or more of
such commodities. A rise in protectionism on the part of its trading partners,
or unwillingness by such partners to make payment for goods in hard currency,
could also adversely affect the country's ability to export its products and
repay its debts. Sovereign debtors may also be dependent on expected receipts
from such agencies and others abroad to reduce principal and interest arrearages
on their debt. However, failure by the sovereign debtor or other entity to
implement economic reforms negotiated with multilateral agencies or others, to
achieve specified levels of economic performance, or to make other debt payments
when due, may cause third parties to terminate their commitments to provide
funds to the sovereign debtor, which may further impair such debtor's
willingness or ability to service its debts.
The Funds may invest in debt securities issued under the "Brady Plan" in
connection with restructurings in emerging country debt markets or earlier
loans. These securities, often referred to as "Brady Bonds," are, in some cases,
denominated in U.S. dollars and collateralized as to principal by U.S. Treasury
zero coupon bonds having the same maturity. At least one year's interest
payments, on a rolling basis, are collateralized by cash or other investments.
Brady Bonds are actively traded on an over-the-counter basis in the secondary
market for emerging country debt securities. Brady Bonds are lower-rated bonds
and highly volatile.
<PAGE>
U.S. GOVERNMENT SECURITIES -- Each Fund may, from time to time, purchase debt
securities issued by the U.S. government. These securities include Treasury
bills, notes, and bonds. Treasury bills have a maturity of one year or less,
Treasury notes generally have a maturity of one to ten years, and Treasury bonds
generally have maturities of more than ten years.
U.S. government debt securities also include securities issued or guaranteed by
agencies or instrumentalities of the U.S. government. Some obligations of U.S.
government agencies, which are established under the authority of an act of
Congress, such as Government National Mortgage Association ("GNMA")
Participation Certificates, are supported by the full faith and credit of the
U.S. Treasury. GNMA Certificates are mortgage-backed securities representing
part ownership of a pool of mortgage loans. These loans -- issued by lenders
such as mortgage bankers, commercial banks and savings and loan associations --
are either insured by the Federal Housing Administration or guaranteed by the
Veterans Administration. A "pool" or group of such mortgages is assembled and,
after being approved by GNMA, is offered to investors through securities
dealers. Once approved by GNMA, the timely payment of interest and principal on
each mortgage is guaranteed by GNMA and backed by the full faith and credit of
the U.S. government. The market value of GNMA Certificates is not guaranteed.
GNMA Certificates are different from bonds because principal is paid back
monthly by the borrower over the term of the loan rather than returned in a lump
sum at maturity, as is the case with a bond. GNMA Certificates are called
"pass-through" securities because both interest and principal payments
(including prepayments) are passed through to the holder of the GNMA
Certificate.
Other United States government debt securities, such as securities of the
Federal Home Loan Banks, are supported by the right of the issuer to borrow from
the Treasury. Others, such as bonds issued by Fannie Mae, a federally chartered
private corporation, are supported only by the credit of the corporation. In the
case of securities not backed by the full faith and credit of the United States,
a Fund must look principally to the agency issuing or guaranteeing the
obligation in the event the agency or instrumentality does not meet its
commitments. A Fund will invest in securities of such instrumentalities only
when INVESCO and the applicable sub-adviser are satisfied that the credit risk
with respect to any such instrumentality is comparatively minimal.
WHEN-ISSUED/DELAYED DELIVERY -- The Funds normally buy and sell securities on an
ordinary settlement basis. That means that the buy or sell order is sent, and a
Fund actually takes delivery or gives up physical possession of the security on
the "settlement date," which is three business days later. However, the Funds
also may purchase and sell securities on a when-issued or delayed delivery
basis.
When-issued or delayed delivery transactions occur when securities are purchased
or sold by a Fund and payment and delivery take place at an agreed-upon time in
the future. The Funds may engage in this practice in an effort to secure an
advantageous price and yield. However, the yield on a comparable security
available when delivery actually takes place may vary from the yield on the
security at the time the when-issued or delayed delivery transaction was entered
into. When a Fund engages in when-issued and delayed delivery transactions, it
relies on the seller or buyer to consummate the sale at the future date. If the
seller or buyer fails to act as promised, that failure may result in the Fund
missing the opportunity of obtaining a price or yield considered to be
advantageous. No payment or delivery is made by a Fund until it receives
<PAGE>
delivery or payment from the other party to the transaction. However,
fluctuation in the value of the security from the time of commitment until
delivery could adversely affect a Fund.
INVESTMENT RESTRICTIONS
The Funds operate under certain investment restrictions. For purposes of the
following restrictions, all percentage limitations apply immediately after a
purchase or initial investment. Any subsequent change in a particular percentage
resulting from fluctuations in value does not require elimination of any
security from a Fund.
The following restrictions are fundamental and may not be changed without prior
approval of a majority of the outstanding voting securities of a Fund, as
defined in the 1940 Act. Each Fund may not:
1. purchase the securities of any issuer (other than securities
issued or guaranteed by the U.S. government or any of its agencies or
instrumentalities, or securities of other investment companies) if, as
a result, more than 25% of the Fund's total assets would be invested in
the securities of companies whose principal business activities are in
the same industry;
2. with respect to 75% of the Fund's total assets, purchase the
securities of any issuer (other than securities issued or guaranteed by
the U.S. government or any of its agencies or instrumentalities, or
securities of other investment companies) if, as a result, (i) more than
5% of a Fund's total assets would be invested in the securities of that
issuer, or (ii) a Fund would hold more than 10% of the outstanding voting
securities of that issuer;
3. underwrite securities of other issuers, except insofar as it may
be deemed to be an underwriter under the 1933 Act in connection with the
disposition of the Fund's portfolio securities;
4. 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);
5. issue senior securities, except as permitted under the 1940 Act;
6. lend any security or make any loan if, as a result, more than
33 1/3% of its total assets would be lent to other parties, but this
limitation does not apply to the purchase of debt securities or to
repurchase agreements;
7. purchase or sell physical commodities; however, this policy
shall not prevent the Fund from purchasing and selling foreign currency,
futures contracts, options, forward contracts, swaps, caps, floors,
collars and other financial instruments; or
<PAGE>
8. purchase or sell real estate unless acquired as a result of
ownership of securities or other instruments (but this shall not prevent
the Fund from investing in securities or other instruments backed by real
estate or securities of companies engaged in the real estate business).
9. Each 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 or an
affiliate or a successor thereof, with substantially the same fundamental
investment objective, policies and limitations as the Fund.
In addition, each Fund has the following non-fundamental policies, which may be
changed without shareholder approval:
A. The Fund may not sell securities short (unless it owns or has
the right to obtain securities equivalent in kind and amount to the
securities sold short) or purchase securities on margin, except that (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.
B. The Fund may borrow money only from a bank or from an open-end
management investment company managed by INVESCO 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)).
C. The Fund does not currently intend to purchase any security if,
as a result, more than 15% of its net assets would be invested in
securities that are deemed to be illiquid because they are subject to
legal or contractual restrictions on resale or because they cannot be
sold or disposed of in the ordinary course of business at approximately
the prices at which they are valued.
D. 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.
E. With respect to fundamental limitation (1), domestic and foreign
banking will be considered to be different industries.
F. With respect to fundamental limitation (1), investments in
obligations issued by a foreign government, including the agencies or
instrumentalities of a foreign government, are considered to be
investments in a specific industry.
<PAGE>
In addition, with respect to a Fund that may invest in municipal obligations,
the following non-fundamental policy applies, which may be changed without
shareholder approval:
Each state (including the District of Columbia and Puerto Rico),
territory and possession of the United States, each political
subdivision, agency, instrumentality and authority thereof, and each
multi-state agency of which a state is a member is a separate "issuer."
When the assets and revenues of an agency, authority, instrumentality
or other political subdivision are separate from the government
creating the subdivision and the security is backed only by assets and
revenues of the subdivision, such subdivision would be deemed to be the
sole issuer. Similarly, in the case of an Industrial Development Bond
or Private Activity bond, if that bond is backed only by the assets and
revenues of the non-governmental user, then that non-governmental user
would be deemed to be the sole issuer. However, if the creating
government or another entity guarantees a security, then to the extent
that the value of all securities issued or guaranteed by that
government or entity and owned by a Fund exceeds 10% of the Fund's
total assets, the guarantee would be considered a separate security and
would be treated as issued by that government or entity. With respect
to a Fund that is not a money market fund, securities issued or
guaranteed by a bank or subject to financial guaranty insurance are not
subject to the limitations set forth in the preceding sentence.
Following is a chart outlining some of the limitations pursuant to
non-fundamental investment policies set by the board of directors. These
non-fundamental policies may be changed by the board of directors without
shareholder approval:
--------------------------------------------------------------------------------
INTERNATIONAL BLUE
INVESTMENT EUROPEAN CHIP VALUE
--------------------------------------------------------------------------------
EQUITY SECURITIES At least 80% in At least 65% in
companies domiciled securities of blue
in Western Europe. chip foreign companies.
--------------------------------------------------------------------------------
MANAGEMENT OF THE FUNDS
THE INVESTMENT ADVISER
INVESCO, located at 7800 East Union Avenue, Denver, Colorado, is the Company's
investment adviser. INVESCO was founded in 1932 and serves as an investment
adviser to:
INVESCO Counselor Series Funds, Inc.
(formerly, INVESCO Advantage Series Funds, Inc.)
INVESCO Bond Funds, Inc.
INVESCO Combination Stock & Bond Funds, Inc.
INVESCO International Funds, Inc.
<PAGE>
INVESCO Money Market Funds, Inc.
INVESCO Sector Funds, Inc.
INVESCO Stock Funds, Inc.
INVESCO Treasurer's Series Funds, Inc.
INVESCO Variable Investment Funds, Inc.
As of October 31, 2000, INVESCO managed 46 mutual funds having combined assets
of 46.1 billion on behalf of more than 2,320,000 shareholder accounts.
INVESCO is an indirect wholly owned subsidiary of AMVESCAP PLC, a publicly
traded holding company. Through its subsidiaries, AMVESCAP PLC engages in the
business of investment management on an international basis. AMVESCAP PLC is one
of the largest independent investment management businesses in the world, with
approximately $414 billion in assets under management on September 30, 2000.
AMVESCAP PLC's North American subsidiaries include:
INVESCO Retirement and Benefit Services, Inc. ("IRBS"), Atlanta,
Georgia, develops and provides domestic and international defined
contribution retirement plan services to plan sponsors, institutional
retirement plan sponsors, institutional plan providers and foreign
governments.
INVESCO Retirement Plan Services ("IRPS"), Atlanta, Georgia, a division
of IRBS, provides recordkeeping and investment selection services to
defined contribution plan sponsors of plans with between $2 million and
$200 million in assets. Additionally, IRPS provides investment
consulting services to institutions seeking to provide retirement plan
products and services.
Institutional Trust Company, doing business as INVESCO Trust Company
("ITC"), Denver, Colorado, a division of IRBS, provides retirement
account custodian and/or trust services for individual retirement
accounts ("IRAs") and other retirement plan accounts. This includes
services such as recordkeeping, tax reporting and compliance. ITC acts
as trustee or custodian to these plans. ITC accepts contributions and
provides complete transfer agency functions: correspondence,
sub-accounting, telephone communications and processing of
distributions.
INVESCO, Inc., Atlanta, Georgia, manages individualized investment
portfolios of equity, fixed income and real estate securities for
institutional clients, including mutual funds and the collective
investment entities. INVESCO, Inc. includes the following Divisions:
INVESCO Capital Management Division, Atlanta, Georgia, manages
institutional investment portfolios, consisting primarily of
discretionary employee benefit plans for corporations and state and
local governments, and endowment funds.
INVESCO Management & Research Division, Boston, Massachusetts,
primarily manages pension and endowment accounts.
<PAGE>
PRIMCO Capital Management Division, Louisville, Kentucky, specializes
in managing stable return investments, principally on behalf of Section
401(k) retirement plans.
INVESCO Realty Advisors Division, Dallas, Texas, is responsible for
providing advisory services in the U.S. real estate markets for
AMVESCAP PLC's clients worldwide. Clients include corporate pension
plans and public pension funds as well as endowment and foundation
accounts.
INVESCO (NY) Division, New York, is an investment adviser for
separately managed accounts, such as corporate and municipal pension
plans, Taft-Hartley Plans, insurance companies, charitable institutions
and private individuals. INVESCO NY further serves as investment
adviser to several closed-end investment companies, and as sub-adviser
with respect to certain commingled employee benefit trusts.
A I M Advisors, Inc., Houston, Texas, provides investment advisory and
administrative services for retail and institutional mutual funds.
A I M Capital Management, Inc., Houston, Texas, provides investment
advisory services to individuals, corporations, pension plans and other
private investment advisory accounts and also serves as a sub-adviser to
certain retail and institutional mutual funds, one Canadian mutual fund
and one portfolio of an open-end registered investment company that is
offered to separate accounts of insurance companies.
A I M Distributors, Inc. and Fund Management Company, Houston, Texas, are
registered broker-dealers that act as the principal underwriters for
retail and institutional mutual funds.
The corporate headquarters of AMVESCAP PLC are located at 11 Devonshire Square,
London, EC2M 4YR, England.
THE INVESTMENT ADVISORY AGREEMENT
INVESCO serves as investment adviser to the Funds under an Investment Advisory
Agreement dated February 28, 1997 (the "Agreement") with the Company.
The Agreement requires that INVESCO manage the investment portfolio of each Fund
in a way that conforms with the Fund's investment policies. INVESCO may directly
manage a Fund itself, or may hire a sub-adviser, which may be an affiliate of
INVESCO, to do so. Specifically, INVESCO is responsible for:
o managing the investment and reinvestment of all the assets of the
Funds, and executing all purchases and sales of portfolio securities;
o maintaining a continuous investment program for the Funds,
consistent with (i) each Fund's investment policies as set forth in the
Company's Articles of Incorporation, Bylaws and Registration Statement,
as from time to time amended, under the 1940 Act, and in any prospectus
<PAGE>
and/or statement of additional information of the Funds, as from time
to time amended and in use under the 1933 Act, and (ii) the Company's
status as a regulated investment company under the Internal Revenue
Code of 1986, as amended;
o determining what securities are to be purchased or sold for the
Funds, unless otherwise directed by the directors of the Company, and
executing transactions accordingly;
o providing the Funds the benefit of the investment analysis and
research, the reviews of current economic conditions and trends, and
the consideration of a long-range investment policy now or hereafter
generally available to the investment advisory customers of the adviser
or any sub-adviser;
o determining what portion of each Fund's assets should be invested in
the various types of securities authorized for purchase by the Fund;
and
o making recommendations as to the manner in which voting rights,
rights to consent to Fund action and any other rights pertaining to a
Fund's portfolio securities shall be exercised.
INVESCO also performs all of the following services for the Funds:
o administrative;
o internal accounting (including computation of net asset value);
o clerical and statistical;
o secretarial;
o all other services necessary or incidental to the administration of
the affairs of the Funds;
o supplying the Company with officers, clerical staff and other
employees;
o furnishing office space, facilities, equipment, and supplies;
providing personnel and facilities required to respond to inquiries
related to shareholder accounts;
o conducting periodic compliance reviews of the Funds' operations;
preparation and review of required documents, reports and filings by
INVESCO's in-house legal and accounting staff or in conjunction with
independent attorneys and accountants (including prospectuses,
statements of additional information, proxy statements, shareholder
reports, tax returns, reports to the SEC, and other corporate documents
of the Funds);
o supplying basic telephone service and other utilities; and
o preparing and maintaining certain of the books and records
<PAGE>
required to be prepared and maintained by the Funds under the 1940 Act.
Expenses not assumed by INVESCO are borne by the Funds. As full compensation for
its advisory services to the Company, INVESCO receives a monthly fee from each
Fund. The fee is calculated at the annual rate of:
European Fund
o 0.75% on the first $350 million of the Fund's average net assets;
o 0.65% on the next $350 million of the Fund's average net assets;
o 0.55% of the Fund's average net assets from $700 million;
o 0.45% of the Fund's average net assets from $2 billion;
o 0.40% of the Fund's average net assets from $4 billion;
o 0.375% of the Fund's average net assets from $6 billion; and
o 0.35% of the Fund's average net assets from $8 billion.
International Blue Chip Value Fund
o 0.75% on the first $500 million of the Fund's average net assets;
o 0.65% on the next $500 million of the Fund's average net assets;
o 0.55% of the Fund's average net assets from $1 billion;
o 0.45% of the Fund's average net assets from $2 billion;
o 0.40% of the Fund's average net assets from $4 billion;
o 0.375% of the Fund's average net assets from $6 billion; and
o 0.35% of the Fund's average net assets from $8 billion.
During the periods outlined in the table below, the Funds paid INVESCO advisory
fees in the dollar amounts shown below. Since the Funds' Class C shares were not
offered until February 15, 2000 and the European Fund's Class K shares were not
offered until December 15, 2000, no advisory fees were paid with respect to
Class C and Class K shares for the periods shown below. If applicable, the
advisory fees were offset by credits in the amounts shown below, so that the
Funds' fees were not in excess of the expense limitations shown below, which
have been voluntarily agreed to by the Company and INVESCO.
<PAGE>
ADVISORY TOTAL EXPENSE TOTAL EXPENSE
FEE DOLLARS REIMBURSEMENTS LIMITATIONS
INVESTOR CLASS
EUROPEAN FUND
Year Ended October 31, 1999 $4,445,112 $ 0 2.00%
Year Ended October 31, 1998 3,802,357 0 2.00%
Year Ended October 31, 1997 2,679,462 0 2.00%
INTERNATIONAL BLUE CHIP VALUE FUND
Year Ended October 31, 1999 $ 214,536 $ 133,898 2.00%
Period Ended October 31, 1998(1) 176 0 2.00%
(1) For the period October 28, 1998, commencement of operations, through October
31, 1998.
THE SUB-ADVISORY AGREEMENT
With respect to the European Fund, INVESCO Asset Management Limited ("IAML")
serves as sub-adviser to the Fund pursuant to a Sub-Advisory Agreement dated
February 28, 1997 (the "Sub-Agreement") with INVESCO. With respect to the
International Blue Chip Value Fund, INVESCO Global Asset Management
(N.A.)("IGAM") serves as the sub-adviser to the Fund pursuant to a sub-advisory
agreement dated September 18, 1998 (the "International Blue Chip Value
Sub-Agreement") with INVESCO.
The Sub-Agreement and International Blue Chip Value Sub-Agreement (the
"Sub-Agreements") provide that IAML or IGAM, as applicable, subject to the
supervision of INVESCO, shall manage the investment portfolios of the respective
Funds in conformity with each such Fund's investment policies. These management
services include: (a) managing the investment and reinvestment of all the
assets, now or hereafter acquired, of each Fund, and executing all purchases and
sales of portfolio securities; (b) maintaining a continuous investment program
for the Funds, consistent with (i) each Fund's investment policies as set forth
in the Company's Articles of Incorporation, Bylaws and Registration Statement,
as from time to time amended, under the 1940 Act, and in any prospectus and/or
statement of additional information of the Funds, as from time to time amended
and in use under the 1933 Act and (ii) the Company's status as a regulated
investment company under the Internal Revenue Code of 1986, as amended; (c)
determining what securities are to be purchased or sold for each Fund, unless
otherwise directed by the directors of the Company or INVESCO, and executing
transactions accordingly; (d) providing the Funds the benefit of all of the
investment analysis and research, the reviews of current economic conditions and
trends, and the consideration of long-range investment policy now or hereafter
generally available to investment advisory customers of IAML or IGAM; (e)
determining what portion of a Fund's assets should be invested in the various
types of securities authorized for purchase by such Fund; and (f) making
recommendations as to the manner in which voting rights, rights to consent to
Company action and any other rights pertaining to the portfolio securities of a
Fund shall be exercised.
<PAGE>
The Sub-Agreements provide that, as compensation for their services, IAML and
IGAM shall receive from INVESCO, at the end of each month, a fee based upon the
average daily value of the applicable Fund's net assets. The sub-advisory fees
are paid by INVESCO, NOT the Funds. The fees are calculated at the following
annual rates:
European Fund
o 0.30% on the first $350 million of the Fund's average net assets;
o 0.26% on the next $350 million of the Fund's average net assets;
o 0.22% of the Fund's average net assets from $700 million;
o 0.18% of the Fund's average net assets from $2 billion;
o 0.16% of the Fund's average net assets from $4 billion;
o 0.15% of the Fund's average net assets from $6 billion; and
o 0.14% of the Fund's average net assets from $8 billion.
International Blue Chip Value Fund
o 0.30% on the first $500 million of the Fund's average net assets;
o 0.26% on the next $500 million of the Fund's average net assets;
o 0.22% of the Fund's average net assets from $1 billion;
o 0.18% of the Fund's average net assets from $2 billion;
o 0.16% of the Fund's average net assets from $4 billion;
o 0.15% of the Fund's average net assets from $6 billion; and
o 0.14% of the Fund's average net assets from $8 billion.
ADMINISTRATIVE SERVICES AGREEMENT
INVESCO, either directly or through affiliated companies, provides certain
administrative, sub-accounting, and recordkeeping services to the Funds pursuant
to an Administrative Services Agreement dated June 1, 2000 with the Company.
The Administrative Services Agreement requires INVESCO to provide the following
services to the Funds:
<PAGE>
o such sub-accounting and recordkeeping services and functions as are
reasonably necessary for the operation of the Funds; and
o such sub-accounting, recordkeeping, and administrative services and
functions, which may be provided by affiliates of INVESCO, as are
reasonably necessary for the operation of Fund shareholder accounts
maintained by certain retirement plans and employee benefit plans for the
benefit of participants in such plans.
As full compensation for services provided under the Administrative Services
Agreement, each Fund pays a monthly fee to INVESCO consisting of a base fee of
$10,000 per year, plus an additional incremental fee computed daily and paid
monthly at an annual rate of 0.045% of the average net assets of each Fund.
Prior to May 13, 1999, the rate was 0.015% of the average net assets of each
Fund.
TRANSFER AGENCY AGREEMENT
INVESCO also performs transfer agent, dividend disbursing agent, and registrar
services for the Funds pursuant to a Transfer Agency Agreement dated June 1,
2000 with the Company.
The Transfer Agency Agreement provides that each Fund pays INVESCO an annual fee
of $22.50 ($20.00 prior to June 1, 2000) per shareholder account, or, where
applicable, per participant in an omnibus account. This fee is paid monthly at
the rate of 1/12 of the annual fee and is based upon the actual number of
shareholder accounts and omnibus account participants in each Fund at any time
during each month.
FEES PAID TO INVESCO
During the periods outlined in the table below, the Funds paid the following
fees to INVESCO (in some instances, prior to the absorption of certain Fund
expenses by INVESCO and the sub-adviser, where applicable). Since the Funds'
Class C shares were not offered until February 15, 2000 and the European Fund's
Class K shares were not offered until December 15, 2000, no fees were paid with
respect to Class C and Class K shares for the periods shown below.
ADMINISTRATIVE TRANSFER
ADVISORY SERVICES AGENCY
-------- -------- ------
INVESTOR CLASS
--------------
EUROPEAN FUND
Year Ended October 31, 1999 $4,445,112 $ 181,845 $1,883,782
Year Ended October 31, 1998 3,802,357 89,993 1,100,420
Year Ended October 31, 1997 2,679,462 63,965 985,603
<PAGE>
INTERNATIONAL BLUE CHIP VALUE FUND
Year Ended October 31, 1999 $ 214,536 $ 20,645 $ 199,248
Period Ended October 31, 1998(1) 176 84 0
(1) For the period October 28, 1998, commencement of operations, through October
31, 1998.
DIRECTORS AND OFFICERS OF THE COMPANY
The overall direction and supervision of the Company come from the board of
directors. The board of directors is responsible for making sure that the Funds'
general investment policies and programs are carried out and that the Funds are
properly administered.
The board of directors has an audit committee comprised of four of the directors
who are not affiliated with INVESCO (the "Independent Directors"). The committee
meets quarterly with the Company's independent accountants and officers to
review accounting principles used by the Company, the adequacy of internal
controls, the responsibilities and fees of the independent accountants, and
other matters.
The Company has a management liaison committee which meets quarterly with
various management personnel of INVESCO in order to facilitate better
understanding of management and operations of the Company, and to review legal
and operational matters which have been assigned to the committee by the board
of directors, in furtherance of the board of directors' overall duty of
supervision.
The Company has a brokerage committee. The committee meets periodically to
review soft dollar and other brokerage transactions by the Funds, and to review
policies and procedures of INVESCO with respect to brokerage transactions. It
reports on these matters to the Company's board of directors.
The Company has a derivatives committee. The committee meets periodically to
review derivatives investments made by the Funds. It monitors derivative usage
by the Funds and the procedures utilized by INVESCO to ensure that the use of
such instruments follows the policies on such instruments adopted by the
Company's board of directors. It reports on these matters to the Company's board
of directors.
The Company has a legal committee, an insurance committee and a compensation
committee. These committees meet when necessary to review legal, insurance and
compensation matters of importance to the Company.
The Company has a nominating committee. The committee meets periodically to
review and nominate candidates for positions as independent directors to fill
vacancies on the board of directors.
The officers of the Company, all of whom are officers and employees of INVESCO,
are responsible for the day-to-day administration of the Company and the Funds.
The officers of the Company receive no direct compensation from the Company or
the Funds for their services as officers. INVESCO has the primary responsibility
for making investment decisions on behalf of the Funds. These investment
decisions are reviewed by the investment committee of INVESCO.
All of the officers and directors of the Company hold comparable positions with
the following funds, which, with the Company, are collectively referred to as
the "INVESCO Funds":
<PAGE>
INVESCO Counselor Series Funds, Inc.
(formerly, INVESCO Advantage Series Funds, Inc.)
INVESCO Bond Funds, Inc.
INVESCO Combination Stock & Bond Funds, Inc.
INVESCO International Funds, Inc.
INVESCO Money Market Funds, Inc.
INVESCO Sector Funds, Inc.
INVESCO Stock Funds, Inc.
INVESCO Treasurer's Series Funds, Inc.
INVESCO Variable Investment Funds, Inc.
The table below provides information about each of the Company's directors and
officers. Their affiliations represent their principal occupations.
Name, Address, and Age Position(s) Held Principal Occupation(s)
With Company During Past Five Years
Mark H. Williamson (2)(3) President, Chief President, Chief
7800 E. Union Avenue Executive Officer and Executive Officer and
Denver, Colorado Chairman of the Chairman of the Board
Age: 49 Board of INVESCO Funds Group,
Inc.; President and
Chief Executive Officer
and Chairman of the
Board of INVESCO
Distributors, Inc.;
President, Chief
Operating Officer and
Chairman of the Board
of INVESCO Global
Health Sciences Fund;
formerly, Chairman and
Chief Executive Officer
of NationsBanc
Advisors, Inc.;
formerly, Chairman of
NationsBanc
Investments, Inc.
<PAGE>
Name, Address, and Age Position(s) Held Principal Occupation(s)
With Company During Past Five Years
Fred A. Deering(1)(2)(7)(8) Vice Chairman of Trustee of INVESCO
1551 Larimer Street, #1701 the Board Global Health
Denver, Colorado Sciences Fund;
Age: 72 formerly, Chairman of
the Executive Committee
and Chairman of the
Board of Security Life
of Denver Insurance
Company; Director of
ING American Holdings
Company and First ING
Life Insurance Company
of New York.
Victor L. Andrews, Ph.D. Director Professor Emeritus,
(4)(6)(10) Chairman Emeritus and
34 Seawatch Drive Chairman of the CFO
Savannah, Georgia Roundtable of the
Age: 70 Department of Finance
of Georgia State
University; President,
Andrews Financial
Associates, Inc.
(consulting firm);
Director of The
Sheffield Funds, Inc.;
formerly, member of the
faculties of the
Harvard Business School
and the Sloan School of
Management of MIT.
Bob R. Baker (2)(4)(5)(9) Director Consultant (since
37 Castle Pines Dr. N. 2000); formerly,
Castle Rock, Colorado President and Chief
Age: 64 Executive Officer (1989
to 2000) of AMC Cancer
Research Center,
Denver, Colorado; until
mid-December 1988, Vice
Chairman of the Board
of First Columbia
Financial Corporation,
Englewood, Colorado;
formerly, Chairman of
the Board and Chief
Executive Officer of
First Columbia
Financial Corporation.
<PAGE>
Name, Address, and Age Position(s) Held Principal Occupation(s)
With Company During Past Five Years
Charles W. Brady (3)(10) Director Chief Executive Officer
1315 Peachtree St., N.E. and Chairman of
Atlanta, Georgia AMVESCAP PLC, London,
Age: 65 England and various
subsidiaries of
AMVESCAP PLC; Trustee
of INVESCO Global
Health Sciences Fund.
Lawrence H. Budner(1)(5)(10) Director Trust Consultant; prior
7608 Glen Albens Circle to June 30, 1987,
Dallas, Texas Senior Vice President
Age: 70 and Senior Trust
Officer of InterFirst
Bank, Dallas, Texas.
James T. Bunch(4)(5)(9) Director Principal and Founder
3600 Republic Plaza of Green Manning &
370 Seventeenth Street Bunch Ltd., Denver,
Denver, Colorado Colorado, since August
Age: 58 1988; Director and
Secretary of Green
Manning & Bunch
Securities, Inc.,
Denver, Colorado since
September 1993; Vice
President and Director
of Western Golf
Association and Evans
Scholars Foundation;
formerly, General
Counsel and Director of
Boettcher & Co.,
Denver, Colorado;
formerly, Chairman and
Managing Partner of
Davis Graham & Stubbs,
Denver, Colorado.
<PAGE>
Name, Address, and Age Position(s) Held Principal Occupation(s)
With Company During Past Five Years
Wendy L. Gramm, Ph.D.(4)(6)(9) Director Self-employed (since
4201 N. Yuma Street, N.W. 1993); Distinguished
Washington, D.C. Senior Fellow and
Age: 55 Director, Regulatory
Studies Program,
Mercatus Center George
Mason University, VA;
formerly, Chairman,
Commodity Futures
Trading Commission;
Administrator for
Information and
Regulatory Affairs at
the Office of
Management and Budget;
Also, Director of Enron
Corporation, IBP, Inc.,
State Farm Insurance
Company, International
Republic Institute, and
the Texas Public Policy
Foundation; formerly,
Director of the Chicago
Mercantile Exchange
(1994 to 1999), Kinetic
Concepts, Inc. (1996 to
1997), and the
Independent Women's
Forum (1994 to 1999).
Richard W. Healey(3) Director Director and Senior
7800 E. Union Avenue Vice President of
Denver, Colorado INVESCO Funds Group,
Age: 46 Inc.; Director and
Senior Vice President
of INVESCO
Distributors, Inc.;
formerly, Senior Vice
President of GT
Global-North America
(1996 to 1998) and The
Boston Company (1993 to
1996).
<PAGE>
Name, Address, and Age Position(s) Held Principal Occupation(s)
With Company During Past Five Years
Gerald J. Lewis(1)(6)(7) Director Chairman of Lawsuit
701 "B" Street Resolution Services,
Suite 2100 San Diego, California
San Diego, California since 1987; Director of
Age: 67 General Chemical Group,
Inc., Hampdon, New
Hampshire, since 1996;
formerly, Associate
Justice of the
California Court of
Appeals; Director of
Wheelabrator
Technologies, Inc.,
Fisher Scientific,
Inc., Henley
Manufacturing, Inc.,
and California Coastal
Properties, Inc.;
Of Counsel, Latham &
Watkins, San Diego,
California (1987 to
1997).
John W. McIntyre(1)(2)(5)(7) Director Retired. Formerly, Vice
7 Piedmont Center Chairman of the Board
Suite 100 of Directors of The
Atlanta, Georgia Citizens and Southern
Age: 70 Corporation and
Chairman of the Board
and Chief Executive
Officer of The Citizens
and Southern Georgia
Corp. and The Citizens
and Southern National
Bank; Trustee of
INVESCO Global Health
Sciences Fund, Gables
Residential Trust,
Employee's Retirement
System of GA, Emory
University, and J.M.
Tull Charitable
Foundation; Director of
Kaiser Foundation
Health Plans of
Georgia, Inc.
<PAGE>
Name, Address, and Age Position(s) Held Principal Occupation(s)
With Company During Past Five Years
Larry Soll, Ph.D.(4)(6)(9)(10) Director Retired. Formerly,
2358 Sunshine Canyon Drive Chairman of the Board
Boulder, Colorado (1987 to 1994), Chief
Age: 58 Executive Officer (1982
to 1989 and 1993 to
1994) and President
(1982 to 1989) of
Synergen Inc.; Director
of Synergen since
incorporation in 1982;
Director of Isis
Pharmaceuticals, Inc.;
Trustee of INVESCO
Global Health Sciences
Fund.
Glen A. Payne Secretary Senior Vice President,
7800 E. Union Avenue General Counsel and
Denver, Colorado Secretary of INVESCO
Age: 53 Funds Group, Inc.;
Senior Vice President,
Secretary and General
Counsel of INVESCO
Distributors, Inc.;
Secretary of INVESCO
Global Health Sciences
Fund; formerly, General
Counsel of INVESCO
Trust Company (1989 to
1998) and employee of a
U.S. regulatory agency,
Washington, D.C. (1973
to 1989).
<PAGE>
Name, Address, and Age Position(s) Held Principal Occupation(s)
With Company During Past Five Years
Ronald L. Grooms Chief Accounting Senior Vice President,
7800 E. Union Avenue Officer, Chief Treasurer and Director
Denver, Colorado Financial Officer of INVESCO Funds Group,
Age: 54 and Treasurer Inc.; Senior Vice
President, Treasurer
and Director of
INVESCO Distributors,
Inc.; Treasurer and
Principal Financial
and Accounting Officer
of INVESCO Global
Health Sciences Fund;
formerly, Senior Vice
President and Treasurer
of INVESCO Trust
Company (1988 to 1998).
William J. Galvin, Jr. Assistant Secretary Senior Vice President,
7800 E. Union Avenue Assistant Secretary and
Denver, Colorado Director of INVESCO
Age: 44 Funds Group, Inc.;
Senior Vice President,
Assistant Secretary and
Director of INVESCO
Distributors, Inc.;
formerly, Trust Officer
of INVESCO Trust
Company (1995 to 1998).
Pamela J. Piro Assistant Treasurer Vice President and
7800 E. Union Avenue Assistant Treasurer of
Denver, Colorado INVESCO Funds Group,
Age: 40 Inc.; Assistant
Treasurer of INVESCO
Distributors, Inc.;
formerly, Assistant
Vice President (1996 to
1997), Director-
Portfolio Accounting
(1994 to 1996),
Portfolio Accounting
Manager (1993 to 1993)
and Assistant
Accounting Manager
(1990 to 1993).
<PAGE>
Name, Address, and Age Position(s) Held Principal Occupation(s)
With Company During Past Five Years
Alan I. Watson Assistant Secretary Vice President of
7800 E. Union Avenue INVESCO Funds Group,
Denver, Colorado Inc.; formerly, Trust
Age: 59 Officer of INVESCO
Trust Company.
Judy P. Wiese Assistant Secretary Vice President and
7800 E. Union Avenue Assistant Secretary of
Denver, Colorado INVESCO Funds Group,
Age: 52 Inc.; Assistant
Secretary of INVESCO
Distributors, Inc.;
formerly, Trust Officer
of INVESCO Trust
Company.
(1) Member of the audit committee of the Company.
(2) Member of the executive committee of the Company. On occasion, the
executive committee acts upon the current and ordinary business of the Company
between meetings of the board of directors. Except for certain powers which,
under applicable law, may only be exercised by the full board of directors, the
executive committee may exercise all powers and authority of the board of
directors in the management of the business of the Company. All decisions are
subsequently submitted for ratification by the board of directors.
(3) These directors are "interested persons" of the Company as defined in
the 1940 Act.
(4) Member of the management liaison committee of the Company.
(5) Member of the brokerage committee of the Company.
(6) Member of the derivatives committee of the Company.
(7) Member of the legal committee of the Company.
(8) Member of the insurance committee of the Company.
(9) Member of the nominating committee of the Company.
(10) Member of the compensation committee of the Company.
<PAGE>
The following table shows the compensation paid by the Company to its
Independent Directors for services rendered in their capacities as directors of
the Company; the benefits accrued as Company expenses with respect to the
Defined Benefit Deferred Compensation Plan discussed below; and the estimated
annual benefits to be received by these directors upon retirement as a result of
their service to the Company, all for the fiscal year ended October 31, 1999.
In addition, the table sets forth the total compensation paid by all of the
INVESCO Funds and INVESCO Global Health Sciences Fund (collectively, the
"INVESCO Complex") to these directors or trustees for services rendered in their
capacities as directors or trustees during the year ended December 31, 1999. As
of December 31, 1999, there were 45 funds in the INVESCO Complex.
--------------------------------------------------------------------------------
Name of Person Aggregate Benefits Estimated Total
and Compensation Accrued As Annual Compensation
Position From Part of Benefits From INVESCO
Company(1) Company Upon Complex Paid
Expenses(2) Retirement(3) To
Directors(7)
--------------------------------------------------------------------------------
Fred A. Deering,
Vice Chairman of
the Board $4,076 $1,897 $1,281 $107,050
--------------------------------------------------------------------------------
Victor L. Andrews 3,853 1,815 1,413 84,700
--------------------------------------------------------------------------------
Bob R. Baker 3,894 1,620 1,893 82,850
--------------------------------------------------------------------------------
Lawrence H. Budner 3,808 1,815 1,413 82,850
--------------------------------------------------------------------------------
James T. Bunch(4) 0 0 0 0
--------------------------------------------------------------------------------
Daniel D. Chabris(5) 1,655 1,854 1,162 34,000
--------------------------------------------------------------------------------
Wendy L. Gramm 3,793 0 0 81,350
--------------------------------------------------------------------------------
Kenneth T. King(5) 3,978 1,936 1,162 85,850
--------------------------------------------------------------------------------
Gerald J. Lewis(4) 0 0 0 0
--------------------------------------------------------------------------------
John W. McIntyre 4,023 0 0 108,700
--------------------------------------------------------------------------------
Larry Soll 3,793 0 0 100,900
--------------------------------------------------------------------------------
Total 32,873 10,937 8,324 768,250
--------------------------------------------------------------------------------
% of Net Assets 0.0046%(6) 0.0015%(6) 0.0024%(7)
--------------------------------------------------------------------------------
(1) The vice chairman of the board, the chairs of the Funds' committees who are
Independent Directors, and the members of the Funds' committees who are
Independent Directors, each receive compensation for serving in such capacities
in addition to the compensation paid to all Independent Directors.
<PAGE>
(2) Represents estimated benefits accrued with respect to the Defined Benefit
Deferred Compensation Plan discussed below, and not compensation deferred at the
election of the directors.
(3) These amounts represent the Company's share of the estimated annual benefits
payable by the INVESCO Funds upon the directors' retirement, calculated using
the current method of allocating director compensation among the INVESCO Funds.
These estimated benefits assume retirement at age 72. With the exception of Drs.
Soll and Gramm and Messrs. Bunch and Lewis, each of these directors has served
as a director of one or more of the funds in the INVESCO Funds for the minimum
five-year period required to be eligible to participate in the Defined Benefit
Deferred Compensation Plan. Mr. McIntyre became eligible to participate in the
Defined Benefit Deferred Compensation Plan as of November 1, 1998, and was not
included in the calculation of retirement benefits until November 1, 1999.
(4) Messrs. Bunch and Lewis became directors of the Company on January 1, 2000.
(5) Mr. Chabris retired as a director of the Company on September 30, 1998.
Mr. King retired as a director of the Company on December 31, 1999.
(6) Total as a percentage of the Company's net assets as of October 31, 1999.
(7) Total as a percentage of the net assets of the INVESCO Complex as of
December 31, 1999.
Messrs. Brady, Healey and Williamson, as "interested persons" of the Company and
the INVESCO Funds, receive compensation as officers or employees of INVESCO or
its affiliated companies, and do not receive any director's fees or other
compensation from the Company or the other funds in the INVESCO Funds for their
service as directors.
The boards of directors of the mutual funds in the INVESCO Funds have adopted a
Defined Benefit Deferred Compensation Plan (the "Plan") for the Independent
Directors of the funds. Under this Plan, each director who is not an interested
person of the funds (as defined in Section 2(a)(19) of the 1940 Act) and who has
served for at least five years (a "Qualified Director") is entitled to receive,
if the Qualified Director retires upon reaching 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), payment of a basic benefit for one year (the "First
Year Retirement Benefit"). Commencing with any such director's second year of
retirement, commencing with the first year of retirement of any Qualified
Director whose retirement has been extended by the boards for three years, and
commencing with attainment of age 72 by a Qualified Director who voluntarily
retires prior to reaching age 72, a Qualified Director shall receive quarterly
payments at an annual rate equal to 50% of the First Year Retirement Benefit.
These payments will continue for the remainder of the Qualified Director's life
or ten years, whichever is longer (the "Reduced Benefit Payments"). If a
Qualified Director dies or becomes disabled after age 72 and before age 74 while
still a director of the funds, the First Year Retirement Benefit and Reduced
Benefit Payments will be made to him/her or to his/her beneficiary or estate. If
a Qualified Director becomes disabled or dies either prior to age 72 or during
his/her 74th year while still a director of the funds, the director will not be
<PAGE>
entitled to receive the First Year Retirement Benefit; however, the Reduced
Benefit Payments will be made to him/her or to his/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 Funds in a manner
determined to be fair and equitable by the committee. The Company began making
payments under the plan to Mr. Chabris as of October 1, 1998 and to Mr. King as
of January 1, 2000. The Company has no stock options or other pension or
retirement plans for management or other personnel and pays no salary or
compensation to any of its officers. A similar plan has been adopted by INVESCO
Global Health Sciences Fund's board of trustees. All trustees of INVESCO Global
Health Sciences Fund are also directors of the INVESCO Funds.
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. Certain of the deferred amounts have been invested in the shares of all
INVESCO Funds except Funds offered by INVESCO Variable Investment Funds, Inc.,
in which the directors are legally precluded from investing. Each Independent
Director may, therefore, be deemed to have an indirect interest in shares of
each such INVESCO Fund, in addition to any INVESCO Fund shares the Independent
Director may own either directly or beneficially. Each of the Independent
directors has agreed to invest a minimum of $100,000 of his or her own resources
in shares of the INVESCO Funds. Compensation contributed to a deferred
compensation plan may constitute all or a portion of this $100,000 commitment.
CONTROL PERSONS AND PRINCIPAL SHAREHOLDERS
As of November 30, 2000, the following persons owned more than 5% of the
outstanding shares of the Funds indicated below. This level of share ownership
is considered to be a "principal shareholder" relationship with a Fund under the
1940 Act. Shares that are owned "of record" are held in the name of the person
indicated. Shares that are owned "beneficially" are held in another name, but
the owner has the full economic benefit of ownership of those shares:
INVESTOR CLASS
--------------
European Fund
--------------------------------------------------------------------------------
Name and Address Basis of Ownership Percentage Owned
(Record/Beneficial)
================================================================================
Charles Schwab & Co., Inc. Record 39.92%
Special Custody Account
for the Exclusive
Benefit of Customers
Attn: Mutual Funds
101 Montgomery St.
San Francisco, CA 94104-4122
--------------------------------------------------------------------------------
<PAGE>
--------------------------------------------------------------------------------
Name and Address Basis of Ownership Percentage Owned
(Record/Beneficial)
================================================================================
National Financial Services Corp. Record 8.79%
The Exclusive Benefit of
Customers
One World Financial Center
200 Liberty St., 5th Floor
Attn: Kate - Recon
New York, NY 10281-5500
--------------------------------------------------------------------------------
Merrill Lynch Record 8.09%
Security #97MMS
4800 Deer Lake Dr. East
Jacksonville, FL 32246-6486
--------------------------------------------------------------------------------
International Blue Chip Value Fund
--------------------------------------------------------------------------------
Name and Address Basis of Ownership Percentage Owned
(Record/Beneficial)
================================================================================
Muir & Co. Record 28.31%
Attn: Mutual Fund Area T-8
P.O. Box 2479
San Antonio, TX 78298-2479
--------------------------------------------------------------------------------
Charles Schwab & Co., Inc. Record 12.97%
Special Custody Account
for the Exclusive
Benefit of Customers
Attn: Mutual Funds
101 Montgomery St.
San Francisco, CA 94104-4122
--------------------------------------------------------------------------------
<PAGE>
CLASS C
European Fund
--------------------------------------------------------------------------------
Name and Address Basis of Ownership Percentage Owned
(Record/Beneficial)
================================================================================
Alan C Dadd Beneficial 11.42%
8516 W Lake Mead Blvd. #123
Las Vegas, NV 89128-7636
--------------------------------------------------------------------------------
International Blue Chip Value Fund
--------------------------------------------------------------------------------
Name and Address Basis of Ownership Percentage Owned
(Record/Beneficial)
================================================================================
Legg Mason Wood Walker Inc Record 8.26%
386-01104-14
PO Box 1476
Baltimore, MD 21202
--------------------------------------------------------------------------------
NFSC FEBO #0C8-310980 Record 6.03%
Patricia Sunkel TTEE
Patricia Sunkel Living Trust
V/A 1/26/88
1426 Keller Drive
West Palm Beach, FL 33406-7816
--------------------------------------------------------------------------------
NFSC FEBO # HDM-534447 Record 5.65%
Weldon C Backer
Ida Gay Backer
12918 North Normandy Way
Palm Beach Gardens, FL 33410-1411
--------------------------------------------------------------------------------
Donaldson Lufkin Jenrette Record 5.25%
Securities Corporation Inc
PO Box 2052
Jersey City, NJ 07303-2052
--------------------------------------------------------------------------------
<PAGE>
As of November 20, 2000, officers and directors of the Company, as a group,
beneficially owned less than 1% of any Fund's outstanding shares.
DISTRIBUTOR
INVESCO Distributors, Inc. ("IDI"), a wholly owned subsidiary of INVESCO, is the
distributor of the Funds. IDI bears all expenses, including the cost of printing
and distributing prospectuses, incident to marketing of the Funds' shares,
except for such distribution expenses as are paid out of Fund assets under the
Company's Plans of Distribution (collectively, the "Plans"), which have been
adopted by each Fund pursuant to Rule 12b-1 under the 1940 Act.
INVESTOR CLASS. The Company has adopted a Plan and Agreement of Distribution -
Investor Class (the "Investor Class Plan") with respect to Investor Class
shares, which provides that the Investor Class shares of each Fund will make
monthly payments to IDI computed at an annual rate no greater than 0.25% of
average net assets attributable to Investor Class shares. These payments permit
IDI, at its discretion, to engage in certain activities and provide services in
connection with the distribution of a Fund's Investor Class shares to investors.
Payments by a Fund under the Investor Class Plan, for any month, may be made to
compensate IDI for permissible activities engaged in and services provided.
CLASS C. The Company has adopted a Master Distribution Plan and Agreement -
Class C pursuant to Rule 12b-1 under the 1940 Act relating to the Class C shares
of the Funds (the "Class C Plan"). Under the Class C Plan, Class C shares of the
Funds pay compensation to IDI at an annual rate of 1.00% per annum of the
average daily net assets attributable to Class C shares for the purpose of
financing any activity which is primarily intended to result in the sale of
Class C shares. The Class C Plan is designed to compensate IDI for certain
promotional and other sales-related costs, and to implement a dealer incentive
program which provides for periodic payments to selected dealers who furnish
continuing personal shareholder services to their customers who purchase and own
Class C shares of a Fund. Payments can also be directed by IDI to selected
institutions that have entered into service agreements with respect to Class C
shares of each Fund and that provide continuing personal services to their
customers who own such Class C shares of a Fund.
Of the aggregate amount payable under the Class C Plan, payments to dealers and
other financial institutions that provide continuing personal shareholder
services to their customers who purchase and own Class C shares of a Fund, in
amounts of up to 0.25% of the average daily net assets of the Class C shares of
the Fund attributable to the customers of such dealers or financial
institutions, are characterized as a service fee. Payments to dealers and other
financial institutions in excess of such amount and payments to IDI would be
characterized as an asset-based sales charge pursuant to the Class C Plan. The
Class C Plan also imposes a cap on the total amount of sales charges, including
asset-based sales charges, that may be paid by the Company with respect to the
Class C shares of a Fund.
CLASS K (EUROPEAN FUND). The Company has adopted a Plan and Agreement of
Distribution - Class K pursuant to Rule 12b-1 under the 1940 Act relating to
<PAGE>
Class K shares (the "Class K Plan"). Under the Class K Plan, Class K shares of
the Funds pay compensation to IDI at an annual rate of 0.45% of average net
assets attributable to Class K shares for the purpose of financing any activity
which is primarily intended to result in the sale of Class K shares. The Class K
Plan is designed to compensate IDI for certain promotional and other
sales-related costs, and to implement a dealer incentive program which provides
for periodic payments to selected dealers who furnish continuing personal
shareholder services to their customers who purchase and own Class K shares of a
Fund. Payments can also be directed by IDI to selected institutions that have
entered into service agreements with respect to Class K shares of each Fund and
that provide continuing personal services to their customers who own such Class
K shares of a Fund.
Of the aggregate amount payable under the Class K Plan, payments to dealers and
other financial institutions that provide continuing personal shareholder
services to their customers who purchase and own Class K shares of a Fund may be
characterized as a service fee.
ALL PLANS. Activities appropriate for financing under the Plans include, but are
not limited to, the following: printing of prospectuses and statements of
additional information and reports for other than existing shareholders;
preparation and distribution of advertising material and sales literature;
expenses of organizing and conducting sales seminars; and supplemental payments
to dealers and other institutions such as asset-based sales charges or as
payments of service fees under shareholder service arrangements.
A significant expenditure under the Plans is compensation paid to securities
companies and other financial institutions and organizations, which may include
INVESCO-affiliated companies, in order to obtain various distribution-related
and/or administrative services for the Funds. Each Fund is authorized by a Plan
to use its assets to finance the payments made to obtain those services from
selected securities companies and other financial institutions and organizations
which may enter into agreements with IDI. Payments will be made by IDI to
broker-dealers who sell shares of a Fund and may be made to banks, savings and
loan associations and other depository institutions. Although the Glass-Steagall
Act limits the ability of certain banks to act as underwriters of mutual fund
shares, INVESCO does not believe that these limitations would affect the ability
of such banks to enter into arrangements with IDI, but can give no assurance in
this regard. However, to the extent it is determined otherwise in the future,
arrangements with banks might have to be modified or terminated, and, in that
case, the size of the Funds possibly could decrease to the extent that the banks
would no longer invest customer assets in the Funds. Neither the Company nor its
investment adviser will give any preference to banks or other depository
institutions which enter into such arrangements when selecting investments to be
made by a Fund. Financial institutions and any other person entitled to receive
compensation for selling Fund shares may receive different compensation for
<PAGE>
selling shares of one particular class instead of another.
The Funds made payments to IDI under the Investor Class Plan during the fiscal
year ended October 31, 1999, in the amounts of $1,594,765 and $63,975 for
European Fund- Investor Class and International Blue Chip Value Fund - Investor
Class, respectively. In addition, as of the fiscal year ended October 31, 1999,
$113,299 and $10,624 of additional distribution accruals had been incurred by
European Fund - Investor Class and International Blue Chip Value Fund - Investor
Class, respectively, and will be paid during the fiscal year ended October 31,
2000.
Since the Funds' Class C shares were not offered until February 15, 2000 and the
European Fund's Class K shares were not offered until December 15, 2000, they
made no payments to IDI under the Class C Plan or the Class K Plan during the
fiscal year or period ended October 31, 1999.
For the fiscal year ended October 31, 1999, allocation of 12b-1 amounts paid by
the Funds' Investor Class for the following categories of expenses were:
INVESTOR CLASS
--------------
EUROPEAN FUND
Advertising $554,579
Sales literature, printing, and postage $176,246
Direct Mail $ 69,728
Public Relations/Promotion $106,506
Compensation to securities dealers and other organizations $370,091
Marketing personnel $317,615
INTERNATIONAL BLUE CHIP VALUE FUND
Advertising $ 3,826
Sales literature, printing, and postage $ 22,439
Direct Mail $ 15,193
Public Relations/Promotion $ 1,593
Compensation to securities dealers and other organizations $ 17,760
Marketing personnel $ 3,164
The services which are provided by securities dealers and other organizations
may vary by dealer but include, among other things, processing new shareholder
account applications, preparing and transmitting to the Company's Transfer Agent
computer-processable tapes of all Fund transactions by customers, serving as the
primary source of information to customers in answering questions concerning the
Funds, and assisting in other customer transactions with the Funds.
<PAGE>
The Plans provide that they shall continue in effect with respect to each Fund
as long as such continuance is approved at least annually by the vote of the
board of directors of the Company cast in person at a meeting called for the
purpose of voting on such continuance, including the vote of a majority of the
Independent Directors. A Plan can be terminated at any time by a Fund, without
penalty, if a majority of the Independent Directors, or shareholders of the
relevant class of shares of the Fund, vote to terminate a Plan. The Company may,
in its absolute discretion, suspend, discontinue or limit the offering of its
shares at any time. In determining whether any such action should be taken, the
board of directors intends to consider all relevant factors including, without
limitation, the size of a Fund, the investment climate for a Fund, general
market conditions, and the volume of sales and redemptions of a Fund's shares.
The Plans may continue in effect and payments may be made under a Plan following
any temporary suspension or limitation of the offering of Fund shares; however,
the Company is not contractually obligated to continue a Plan for any particular
period of time. Suspension of the offering of a Fund's shares would not, of
course, affect a shareholder's ability to redeem his or her shares.
So long as the Plans are in effect, the selection and nomination of persons to
serve as Independent Directors of the Company shall be committed to the
Independent Directors then in office at the time of such selection or
nomination. The Plans may not be amended to increase the amount of a Fund's
payments under a Plan without approval of the shareholders of that Fund's
respective class of shares, and all material amendments to a Plan must be
approved by the board of directors of the Company, including a majority of the
Independent Directors. Under the agreement implementing the Plans, IDI or a
Fund, the latter by vote of a majority of the Independent Directors, or a
majority of the holders of the relevant class of a Fund's outstanding voting
securities, may terminate such agreement without penalty upon 30 days' written
notice to the other party. No further payments will be made by a Fund under a
Plan in the event of its termination.
To the extent that a Plan constitutes a plan of distribution adopted pursuant to
Rule 12b-1 under the 1940 Act, it shall remain in effect as such, so as to
authorize the use of Fund assets in the amounts and for the purposes set forth
therein, notwithstanding the occurrence of an assignment, as defined by the 1940
Act, and rules thereunder. To the extent it constitutes an agreement pursuant to
a plan, a Fund's obligation to make payments to IDI shall terminate
automatically, in the event of such "assignment." In this event, a Fund may
continue to make payments pursuant to a Plan only upon the approval of new
arrangements regarding the use of the amounts authorized to be paid by a Fund
under a Plan. Such new arrangements must be approved by the directors, including
a majority of the Independent Directors, by a vote cast in person at a meeting
called for such purpose. These new arrangements might or might not be with IDI.
On a quarterly basis, the directors review information about the distribution
services that have been provided to each Fund and the 12b-1 fees paid for such
services. On an annual basis, the directors consider whether a Plan should be
continued and, if so, whether any amendment to the Plan, including changes in
the amount of 12b-1 fees paid by each class of a Fund, should be made.
The only Company directors and interested persons, as that term is defined in
Section 2(a)(19) of the 1940 Act, who have a direct or indirect financial
interest in the operation of the Plans are the officers and directors of the
Company who are also officers either of IDI or other companies affiliated with
IDI. The benefits which the Company believes will be reasonably likely to flow
to a Fund and its shareholders under the Plans include the following:
<PAGE>
o Enhanced marketing efforts, if successful, should result in an increase
in net assets through the sale of additional shares and afford greater
resources with which to pursue the investment objectives of the Funds;
o The sale of additional shares reduces the likelihood that redemption of
shares will require the liquidation of securities of the Funds in amounts
and at times that are disadvantageous for investment purposes; and
o Increased Fund assets may result in reducing each investor's share of
certain expenses through economies of scale (e.g. exceeding established
breakpoints in an advisory fee schedule and allocating fixed expenses
over a larger asset base), thereby partially offsetting the costs of a
Plan.
The positive effect which increased Fund assets will have on INVESCO's revenues
could allow INVESCO and its affiliated companies:
o To have greater resources to make the financial commitments necessary
to improve the quality and level of the Funds' shareholder services (in
both systems and personnel);
o To increase the number and type of mutual funds available to investors
from INVESCO and its affiliated companies (and support them in their
infancy), and thereby expand the investment choices available to all
shareholders; and
o To acquire and retain talented employees who desire to be associated with
a growing organization.
DEALER CONCESSIONS
IDI may pay sales commissions to dealers and institutions that sell Class C
shares of the Funds at the time of such sales. Payments with respect to Class C
shares will equal 1.00% of the purchase price of the Class C shares sold by the
dealer or institution, and will consist of a sales commission of 0.75% of the
purchase price of the Class C shares sold plus an advance of the first year
service fee of 0.25% with respect to such shares. IDI will retain all payments
received by it relating to Class C shares for the thirteen months after they are
purchased. The portion of the payments to IDI under the Class C Plan which
constitutes an asset-based sales charge (0.75%) is intended in part to permit
IDI to recoup a portion of on-going sales commissions to dealers plus financing
costs, if any. After the first thirteen months, IDI will make such payments
quarterly to dealers and institutions based on the average net asset value of
Class C shares which are attributable to shareholders for whom the dealers and
institutions are designated as dealers of record. These commissions are not paid
on sales to investors who may not pay the CDSC and in circumstances where IDI
grants an exemption on particular transactions.
IDI may pay sales commissions to dealers and institutions that sell Class K
shares of the Funds at the time of such sales. Payments with respect to Class K
<PAGE>
shares will equal 0.45% of the purchase price of the Class K shares sold by the
dealer or institution.
OTHER SERVICE PROVIDERS
INDEPENDENT ACCOUNTANTS
PricewaterhouseCoopers LLP, 1670 Broadway, Suite 1000, Denver, Colorado, are the
independent accountants of the Company. The independent accountants are
responsible for auditing the financial statements of the Funds.
CUSTODIAN
State Street Bank and Trust Company, P.O. Box 351, Boston, Massachusetts, is the
custodian of the cash and investment securities of the Company. The custodian is
also responsible for, among other things, receipt and delivery of each Fund's
investment securities in accordance with procedures and conditions specified in
the custody agreement with the Company. The custodian is authorized to establish
separate accounts in foreign countries and to cause foreign securities owned by
the Funds to be held outside the United States in branches of U.S. banks and, to
the extent permitted by applicable regulations, in certain foreign banks and
securities depositories.
TRANSFER AGENT
INVESCO, 7800 E. Union Avenue, Denver, Colorado, is the Company's transfer
agent, registrar, and dividend disbursing agent. Services provided by INVESCO
include the issuance, cancellation and transfer of shares of the Funds, and the
maintenance of records regarding the ownership of such shares.
LEGAL COUNSEL
The firm of Kirkpatrick & Lockhart LLP, 1800 Massachusetts Avenue, N.W., 2nd
Floor, Washington, D.C., is legal counsel for the Company. The firm of Moye,
Giles, O'Keefe, Vermeire & Gorrell LLP, 1225 17th Street, Suite 2900, Denver,
Colorado, acts as special counsel to the Company.
BROKERAGE ALLOCATION AND OTHER PRACTICES
As the investment adviser to the Funds, INVESCO places orders for the purchase
and sale of securities with broker-dealers based upon an evaluation of the
financial responsibility of the broker-dealers and the ability of the
broker-dealers to effect transactions at the best available prices.
While INVESCO seeks reasonably competitive commission rates, the Funds do not
necessarily pay the lowest commission or spread available. INVESCO is permitted
to, and does, consider qualitative factors in addition to price in the selection
of brokers. Among other things, INVESCO considers the quality of executions
obtained on a Fund's portfolio transactions, viewed in terms of the size of
transactions, prevailing market conditions in the security purchased or sold,
and general economic and market conditions. INVESCO has found that a broker's
consistent ability to execute transactions is at least as important as the price
the broker charges for those services.
<PAGE>
In seeking to ensure that the commissions charged a Fund are consistent with
prevailing and reasonable commissions, INVESCO monitors brokerage industry
practices and commissions charged by broker-dealers on transactions effected for
other institutional investors like the Funds.
Consistent with the standard of seeking to obtain favorable execution on
portfolio transactions, INVESCO may select brokers that provide research
services to INVESCO and the Company, as well as other INVESCO mutual funds and
other accounts managed by INVESCO. Research services include statistical and
analytical reports relating to issuers, industries, securities and economic
factors and trends, which may be of assistance or value to INVESCO in making
informed investment decisions. Research services prepared and furnished by
brokers through which a Fund effects securities transactions may be used by
INVESCO in servicing all of its accounts and not all such services may be used
by INVESCO in connection with a particular Fund. Conversely, a Fund receives
benefits of research acquired through the brokerage transactions of other
clients of INVESCO.
In order to obtain reliable trade execution and research services, INVESCO may
utilize brokers that charge higher commissions than other brokers would charge
for the same transaction. This practice is known as "paying up." However, even
when paying up, INVESCO is obligated to obtain favorable execution of a Fund's
transactions.
Portfolio transactions also may be effected through broker-dealers that
recommend the Funds to their clients, or that act as agent in the purchase of a
Fund's shares for their clients. When a number of broker-dealers can provide
comparable best price and execution on a particular transaction, INVESCO may
consider the sale of a Fund's shares by a broker-dealer in selecting among
qualified broker-dealers.
Certain of the INVESCO Funds utilize fund brokerage commissions to pay custody
fees for each respective fund. This program requires that the participating
funds receive favorable execution.
The aggregate dollar amount of brokerage commissions and underwriting discounts
paid by each Fund for the periods outlined below were:
European Fund
Year Ended October 31, 1999 $ 3,436,316
Year Ended October 31, 1998 483,163
Year Ended October 31, 1997 1,477,524
International Blue Chip Value Fund
Year Ended October 31, 1999 $ 180,533
Period Ended October 31, 1998(1) 0
(1) For the period October 28, 1998, commencement of operations, through October
31, 1998.
<PAGE>
For the fiscal year ended October 31, 1999, brokers providing research services
received $0 in commissions on portfolio transactions effected for the Funds. The
aggregate dollar amount of such portfolio transactions was $0. Commissions
totaling $0 were allocated to certain brokers in recognition of their sales of
shares of the Funds on portfolio transactions of the Funds effected during the
fiscal year ended October 31, 1999.
At October 31, 1999, each Fund held debt securities of its regular brokers or
dealers, or their parents, as follows:
--------------------------------------------------------------------------------
Fund Broker or Dealer Value of Securities
at October 31, 1999
================================================================================
European State Street Bank and
Trust Company $ 6,916,000.00
General Electric $ 261,000.00
--------------------------------------------------------------------------------
International Blue None
Chip Value
--------------------------------------------------------------------------------
Neither INVESCO nor any affiliate of INVESCO receives any brokerage commissions
on portfolio transactions effected on behalf of the Funds, and there is no
affiliation between INVESCO or any person affiliated with INVESCO or the Funds
and any broker or dealer that executes transactions for the Funds.
CAPITAL STOCK
The Company is authorized to issue up to one billion five hundred million shares
of common stock with a par value of $0.01 per share. As of November 30, 2000,
the following shares of each Fund were outstanding:
European Fund - Investor Class 43,946,411
European Fund - Class C 125,597
European Fund - Class K 0
International Blue Chip Value Fund - Investor Class 5,770,419
International Blue Chip Value Fund - Class C 72,453
A share of each class of a Fund represents an identical interest in that Fund's
investment portfolio and has the same rights, privileges and preferences.
However, each class may differ with respect to sales charges, if any,
distribution and/or service fees, if any, other expenses allocable exclusively
to each class, voting rights on matters exclusively affecting that class, and
<PAGE>
its exchange privilege, if any. The different sales charges and other expenses
applicable to the different classes of shares of the Funds will affect the
performance of those classes. Each share of a Fund is entitled to participate
equally in dividends for that class, other distributions and the proceeds of any
liquidation of a class of that Fund. However, due to the differing expenses of
the classes, dividends and liquidation proceeds on Investor Class and Class C
shares will differ. All shares of a Fund will be voted together, except that
only the shareholders of a particular class of a Fund may vote on matters
exclusively affecting that class, such as the terms of a Rule 12b-1 Plan as it
relates to the class. All shares issued and outstanding are, and all shares
offered hereby, when issued will be, fully paid and nonassessable. The board of
directors has the authority to designate additional classes of common stock
without seeking the approval of shareholders and may classify and reclassify any
authorized but unissued shares.
Shares have no preemptive rights and are freely transferable on the books of
each Fund.
All shares of the Company have equal voting rights based on one vote for each
share owned. The Company is not generally required and does not expect to hold
regular annual meetings of shareholders. However, when requested to do so in
writing by the holders of 10% or more of the outstanding shares of the Company
or as may be required by applicable law or the Company's Articles of
Incorporation, the board of directors will call special meetings of
shareholders.
Directors may be removed by action of the holders of a majority of the
outstanding shares of the Company. The Funds will assist shareholders in
communicating with other shareholders as required by the 1940 Act.
Fund shares have noncumulative voting rights, which means that the holders of a
majority of the shares of the Company voting for the election of directors of
the Company can elect 100% of the directors if they choose to do so. If that
occurs, the holders of the remaining shares voting for the election of directors
will not be able to elect any person or persons to the board of directors.
Directors may be removed by action of the holders of a majority of the
outstanding shares of the Company.
TAX CONSEQUENCES OF OWNING SHARES OF A FUND
Each Fund intends to continue to conduct its business and satisfy the applicable
diversification of assets, distribution and source of income requirements to
qualify as a regulated investment company under Subchapter M of the Internal
Revenue Code of 1986, as amended. Each Fund qualified as a regulated investment
company and intends to continue to qualify during its current fiscal year. It is
the policy of each Fund to distribute all investment company taxable income and
net capital gains. As a result of this policy and the Funds' qualification as
regulated investment companies, it is anticipated that none of the Funds will
pay federal income or excise taxes and that all of the Funds will be accorded
conduit or "pass through" treatment for federal income tax purposes. Therefore,
any taxes that a Fund would ordinarily owe are paid by its shareholders on a
pro-rata basis. If a Fund does not distribute all of its net investment income
or net capital gains, it will be subject to income and excise taxes on the
amount that is not distributed. If a Fund does not qualify as a regulated
investment company, it will be subject to income tax on its net investment
income and net capital gains at the corporate tax rates.
<PAGE>
Dividends paid by a Fund from net investment income as well as distributions of
net realized short-term capital gains and net realized gains from certain
foreign currency transactions are taxable for federal income tax purposes as
ordinary income to shareholders. After the end of each calendar year, the Funds
send shareholders information regarding the amount and character of dividends
paid in the year, including the dividends eligible for the dividends-received
deduction for corporations. Dividends eligible for the dividends-received
deduction will be limited to the aggregate amount of qualifying dividends that a
Fund derives from its portfolio investments.
A Fund realizes a capital gain or loss when it sells a portfolio security for
more or less than it paid for that security. Capital gains and losses are
divided into short-term and long-term, depending on how long the Fund held the
security which gave rise to the gain or loss. If the security was held one year
or less the gain or loss is considered short-term, while holding a security for
more than one year will generate a long-term gain or loss. A capital gain
distribution consists of long-term capital gains which are taxed at the capital
gains rate. Short-term capital gains are included with income from dividends and
interest as ordinary income and are paid to shareholders as dividends, as
discussed above. If total long-term gains on sales exceed total short-term
losses, including any losses carried forward from previous years, a Fund will
have a net capital gain. Distributions by a Fund of net capital gains are, for
federal income tax purposes, taxable to the shareholder as a long-term capital
gain regardless of how long a shareholder has held shares of the particular
Fund. Such distributions are not eligible for the dividends-received deduction.
After the end of each calendar year, the Funds send information to shareholders
regarding the amount and character of distributions paid during the year.
All dividends and other distributions are taxable income to the shareholder,
whether or not such dividends and distributions are reinvested in additional
shares or paid in cash. If the net asset value of a Fund's shares should be
reduced below a shareholder's cost as a result of a distribution, such
distribution would be taxable to the shareholder although a portion would be a
return of invested capital. The net asset value of shares of a Fund reflects
accrued net investment income and undistributed realized capital and foreign
currency gains; therefore, when a distribution is declared, the net asset value
is reduced by the amount of the distribution. If shares of a Fund are purchased
shortly before a distribution, the full price for the shares will be paid and
some portion of the price may then be returned to the shareholder as a taxable
dividend or capital gain. However, the net asset value per share will be reduced
by the amount of the distribution, which would reduce any gain (or increase any
loss) for tax purposes on any subsequent redemption of shares.
If it invests in foreign securities, a Fund may be subject to the withholding of
foreign taxes on dividends or interest it receives on foreign securities.
Foreign taxes withheld will be treated as an expense of the Fund unless the Fund
meets the qualifications and makes the election to enable it to pass these taxes
through to shareholders for use by them as a foreign tax credit or deduction.
Tax conventions between certain countries and the United States may reduce or
eliminate such taxes.
A Fund may invest in the stock of "passive foreign investment companies"
("PFICs"). A PFIC is a foreign corporation that, in general, meets either of the
following tests: (1) at least 75% of its gross income is passive or (2) an
average value of at least 50% of its assets produce, or are held for the
production of, passive income. Each Fund intends to "mark-to-market" its stock
in any PFIC. In this context, "marking-to-market" means including in ordinary
income for each taxable year the excess, if any, of the fair market value of the
<PAGE>
PFIC stock over the Fund's adjusted basis in the PFIC stock as of the end of the
year. In certain circumstances, a Fund will also be allowed to deduct from
ordinary income the excess, if any, of its adjusted basis in PFIC stock over the
fair market value of the PFIC stock as of the end of the year. The deduction
will only be allowed to the extent of any PFIC mark-to-market gains recognized
as ordinary income in prior years. A Fund's adjusted tax basis in each PFIC
stock for which it makes this election will be adjusted to reflect the amount of
income included or deduction taken under the election.
Gains or losses (1) from the disposition of foreign currencies, (2) from the
disposition of debt securities denominated in foreign currencies that are
attributable to fluctuations in the value of the foreign currency between the
date of acquisition of each security and the date of disposition, and (3) that
are attributable to fluctuations in exchange rates that occur between the time a
Fund accrues interest, dividends or other receivables or accrues expenses or
other liabilities denominated in a foreign currency and the time the Fund
actually collects the receivables or pays the liabilities, generally will be
treated as ordinary income or loss. These gains or losses may increase or
decrease the amount of a Fund's investment company taxable income to be
distributed to its shareholders.
INVESCO may provide Fund shareholders with information concerning the average
cost basis of their shares in order to help them prepare their tax returns. This
information is intended as a convenience to shareholders, and will not be
reported to the Internal Revenue Service (the "IRS"). The IRS permits the use of
several methods to determine the cost basis of mutual fund shares. The cost
basis information provided by INVESCO will be computed using the single-category
average cost method, although neither INVESCO nor the Funds recommend any
particular method of determining cost basis. Other methods may result in
different tax consequences. If you have reported gains or losses for a Fund in
past years, you must continue to use the method previously used, unless you
apply to the IRS for permission to change methods. Even if you have reported
gains or losses for a Fund in past years using another basis method, you may be
able to use the average cost method for determining gains or losses in the
current year. However, once you have elected to use the average cost method, you
must continue to use it unless you apply to the IRS for permission to change
methods.
If you sell Fund shares at a loss after holding them for six months or less,
your loss will be treated as long-term (instead of short-term) capital loss to
the extent of any capital gain distributions that you may have received on those
shares.
Each Fund will be subject to a nondeductible 4% excise tax to the extent it
fails to distribute by the end of any calendar year substantially all of its
ordinary income for that year and its net capital gains for the one-year period
ending on October 31 of that year, plus certain other amounts.
You should consult your own tax adviser regarding specific questions as to
federal, state and local taxes. Dividends and capital gain distributions will
generally be subject to applicable state and local taxes. Qualification as a
regulated investment company under the Internal Revenue Code of 1986, as
amended, for income tax purposes does not entail government supervision of
management or investment policies.
<PAGE>
PERFORMANCE
To keep shareholders and potential investors informed, INVESCO will occasionally
advertise the Funds' total return for one-, five-, and ten-year periods (or
since inception).
Cumulative total return shows the actual rate of return on an investment for the
period cited; average annual total return represents the average annual
percentage change in the value of an investment. Both cumulative and average
annual total returns tend to "smooth out" fluctuations in a Fund's investment
results, because they do not show the interim variations in performance over the
periods cited. More information about the Funds' recent and historical
performance is contained in the Company's Annual Report to Shareholders. You can
get a free copy by calling or writing to INVESCO using the telephone number or
address on the back cover of the Funds' Prospectuses.
When we quote mutual fund rankings published by Lipper Inc., we may compare a
Fund to others in its appropriate Lipper category, as well as the broad-based
Lipper general fund groupings. These rankings allow you to compare a Fund to its
peers. Other independent financial media also produce performance- or
service-related comparisons, which you may see in our promotional materials.
Performance figures are based on historical earnings and are not intended to
suggest future performance.
Average annual total return performance for the one-, five-, and ten-year
periods ended October 31, 1999 was:
10 YEAR
FUND AND CLASS 1 YEAR 5 YEAR OR SINCE INCEPTION
-------------- ------ ------ ------------------
INVESTOR CLASS
--------------
European Fund 12.64% 17.77% 12.45%
International Blue Chip Value Fund 11.77% N/A 11.85%(1)
(1) The Fund commenced investment operations on February 15, 1995.
Average annual total return performance is not provided for each Fund's Class C
Shares and the European Fund's Class K Shares since they were not offered until
February 15, 2000 and December 15, 2000, respectively. Average annual total
return performance for each of the periods indicated was computed by finding the
average annual compounded rates of return that would equate the initial amount
invested to the ending redeemable value, according to the following formula:
<PAGE>
P(1 + T)[exponential n] = ERV
Where: P = a hypothetical initial payment of $10,000
T = average annual total return
n = number of years
ERV = ending redeemable value of initial payment
The average annual total return performance figures shown above were determined
by solving the above formula for "T" for each time period indicated.
In conjunction with performance reports, comparative data between a Fund's
performance for a given period and other types of investment vehicles, including
certificates of deposit, may be provided to prospective investors and
shareholders.
In conjunction with performance reports and/or analyses of shareholder services
for a Fund, comparative data between that Fund's performance for a given period
and recognized indices of investment results for the same period, and/or
assessments of the quality of shareholder service, may be provided to
shareholders. Such indices include indices provided by Dow Jones & Company, S&P,
Lipper Inc., Lehman Brothers, National Association of Securities Dealers
Automated Quotations, Frank Russell Company, Value Line Investment Survey, The
American Stock Exchange, Morgan Stanley Capital International, Wilshire
Associates, the Financial Times Stock Exchange, the New York Stock Exchange, the
Nikkei Stock Average and Deutcher Aktienindex, all of which are unmanaged market
indicators. In addition, rankings, ratings, and comparisons of investment
performance and/or assessments of the quality of shareholder service made by
independent sources may be used in advertisements, sales literature or
shareholder reports, including reprints of, or selections from, editorials or
articles about the fund. These sources utilize information compiled (i)
internally; (ii) by Lipper Inc.; or (iii) by other recognized analytical
services. The Lipper Inc. mutual fund rankings and comparisons which may be used
by the fund in performance reports will be drawn from the following mutual fund
groupings, in addition to the broad-based Lipper general fund groupings:
LIPPER MUTUAL
FUND FUND CATEGORY
---- -------------
EUROPEAN FUND EUROPEAN REGION FUNDS
INTERNATIONAL BLUE CHIP VALUE FUND INTERNATIONAL FUNDS
Sources for Fund performance information and articles about the Funds include,
but are not limited to, the following:
AMERICAN ASSOCIATION OF INDIVIDUAL INVESTORS' JOURNAL
BANXQUOTE
BARRON'S
BUSINESS WEEK
CDA INVESTMENT TECHNOLOGIES
CNBC
CNN
<PAGE>
CONSUMER DIGEST
FINANCIAL TIMES
FINANCIAL WORLD
FORBES
FORTUNE
IBBOTSON ASSOCIATES, INC.
INSTITUTIONAL INVESTOR
INVESTMENT COMPANY DATA, INC.
INVESTOR'S BUSINESS DAILY
KIPLINGER'S PERSONAL FINANCE
LIPPER INC.'S MUTUAL FUND
PERFORMANCE ANALYSIS
MONEY
MORNINGSTAR
MUTUAL FUND FORECASTER
NO-LOAD ANALYST
NO-LOAD FUND X
PERSONAL INVESTOR
SMART MONEY
THE NEW YORK TIMES
THE NO-LOAD FUND INVESTOR
U.S. NEWS AND WORLD REPORT
UNITED MUTUAL FUND SELECTOR
USA TODAY
THE WALL STREET JOURNAL
WIESENBERGER INVESTMENT COMPANIES SERVICES
WORKING WOMAN
WORTH
CODE OF ETHICS
INVESCO permits investment and other personnel to purchase and sell securities
for their own accounts, subject to a compliance policy governing personal
investing. This policy requires INVESCO's personnel to conduct their personal
investment activities in a manner that INVESCO believes is not detrimental to
the Funds or INVESCO's other advisory clients. The Code of Ethics is on file
with, and may be obtained from, the Commission.
FINANCIAL STATEMENTS
The financial statements for the Funds for the fiscal year ended October
31, 1999 are incorporated herein by reference from INVESCO International Funds,
Inc.'s Annual Report to Shareholders dated October 31, 1999. The financial
statements for the Funds for the semiannual period ended April 30, 2000 are
incorporated herein by reference from INVESCO International Funds, Inc.'s
SemiAnnual Report to Shareholders, dated April 30, 2000.
<PAGE>
APPENDIX A
BOND RATINGS
The following is a description of Moody's and S&P's bond ratings:
MOODY'S CORPORATE BOND RATINGS
Aaa - Bonds rated Aaa are judged to be of the best quality. They carry the
smallest degree of investment risk and are generally referred to as
"gilt-edged." Interest payments are protected by a large or by an exceptionally
stable margin, and principal is secure. While the various protective elements
are likely to change, such changes as can be visualized are most unlikely to
impair the fundamentally strong position of such issues.
Aa - Bonds rated Aa are judged to be of high quality by all standards. Together
with the Aaa group, they comprise what are generally known as high grade bonds.
They are rated lower than the best bonds because margins of protection may not
be as large as in Aaa securities or fluctuation of protective elements may be of
greater amplitude or there may be other elements present which make the long
term risk appear somewhat larger than in Aaa securities.
A - Bonds rated A possess many favorable investment attributes, and are to be
considered as upper medium grade obligations. Factors giving security to
principal and interest are considered adequate but elements may be present which
suggest a susceptibility to impairment sometime in the future.
Baa - Bonds rated Baa are considered as medium grade obligations, i.e., they are
neither highly protected nor poorly secured. Interest payments and principal
security appear adequate for the present but certain protective elements may be
lacking or may be characteristically unreliable over any great length of time.
Such bonds lack outstanding investment characteristics and in fact have
speculative characteristics as well.
Ba - Bonds rated Ba are judged to have speculative elements. Their future cannot
be considered as well assured. Often the protection of interest and principal
payments may be very moderate and thereby not well safeguarded during both good
and bad times over the future. Uncertainty of position characterizes bonds in
this class.
B - Bonds rated B generally lack characteristics of the desirable investment.
Assurance of interest and principal payments or maintenance of other terms of
the contract over any longer period of time may be small.
Caa - Bonds rated Caa are of poor standing. Such issues may be in default or
there may be present elements of danger with respect to principal or interest.
<PAGE>
S&P CORPORATE BOND RATINGS
AAA - This is the highest rating assigned by Standard & Poor's to a debt
obligation and indicates an extremely strong capacity to pay principal and
interest.
AA - Bonds rated AA also qualify as high-quality debt obligations. Capacity to
pay principal and interest is very strong, and in the majority of instances they
differ from AAA issues only in small degree.
A - Bonds rated A have a strong capacity to pay principal and interest, although
they are somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions than bonds in higher rated categories.
BBB - Bonds rated BBB are regarded as having an adequate capability to pay
principal and interest. Whereas they normally exhibit adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay principal and interest for bonds in
this category than for bonds in higher rated categories.
BB - Bonds rated BB have less near-term vulnerability to default than other
speculative issues. However, they face major ongoing uncertainties or exposure
to adverse business, financial, or economic conditions which could lead to
inadequate capacity to meet timely interest and principal payments.
B - Bonds rated B have a greater vulnerability to default but currently have the
capacity to meet interest payments and principal repayments. Adverse business,
financial, or economic conditions will likely impair capacity or willingness to
pay interest and repay principal.
CCC - Bonds rated CCC have a currently identifiable vulnerability to default and
are dependent upon favorable business, financial, and economic conditions to
meet timely payment of interest and repayment of principal. In the event of
adverse business, financial, or economic conditions, they are not likely to have
the capacity to pay interest and repay principal.
<PAGE>
PART C. OTHER INFORMATION
ITEM 23. EXHIBITS
(a) Articles of Amendment and Restatement of Articles of
Incorporation filed December 2, 1999.(9)
(1) Articles of Amendment to the Articles of Amendment and
Restatement of Articles of Incorporation, dated June 2,
2000(10)
(2) Articles Supplementary to the Articles of Amendment and
Restatement of the Articles of Incorporation filed December
4, 2000.
(3) Articles of Amendment to the Articles of Amendment and
Restatement of Articles of Incorporation, filed December 4,
2000
(b) Bylaws as of July 21, 1993.(3)
(c) Provisions of instruments defining the rights of holders of
Registrant's securities are contained in Articles III, IV, and
VII of the Articles of Incorporation and Articles II, VI, VII,
VIII, and IX of the Bylaws of Registrant.
(d) (1) Investment Advisory Agreement dated February 28, 1997(2)
(a) Amendment dated January 30, 1998 to Advisory
Agreement.(4)
(b) Amendment dated September 18, 1998 to Advisory
Agreement.(6)
(c) Amendment dated May 13, 1999 to Advisory
Agreement.(9)
(d) Amendment dated October 29, 1999 to Advisory
Agreement.(9)
(e) Form of Amendment dated November 28, 2000 to
Advisory Agreement.
(2) (a) Sub-advisory Agreement dated February 28, 1998
between INVESCO Funds Group, Inc. and INVESCO Asset
Management Limited with respect to European Fund.(2)
(1) Amendment dated January 1, 1998 to Sub-Advisory
Agreement.(9)
(2) Amendment dated May 13, 1999 to Sub-Advisory
Agreement.(9)
(3) Form of Amendment dated November 28, 2000 to
Sub-Advisory Agreement.
(b) 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 Value Fund.(6)
(1) Amendment dated May 13, 1999 to Sub-Advisory
Agreement.(9)
(e) Underwriting Agreement between Registrant and INVESCO
Distributors, Inc. dated June 1, 2000.
<PAGE>
(f) Defined Benefit Deferred Compensation Plan for
Non-Interested Directors and Trustees as amended June 1, 2000.
(g) Custody Agreement between Registrant and State Street Bank
and Trust Company dated July 1, 1993.(3)
(1) Amendment to Custody Agreement dated October 25,
1995.(1)
(2) Data Access Services Addendum.(3)
(3) Additional Fund Letter dated November 13, 1994.(4)
(4) Additional Fund Letter dated July 23, 1998.(6)
(5) Additional Fund Letter dated October 15, 1999.(9)
(6) Amended Fee Schedule effective January 1, 2000.(9)
(h) (1) Transfer Agency Agreement between Registrant and INVESCO
Funds Group, Inc. dated June 1, 2000.
(2) Administrative Services Agreement between Registrant and
INVESCO Funds Group, Inc. dated June 1, 2000.
(i) Opinion and consent of counsel as to the legality of the
securities being registered, indicating whether they will, when
sold, be legally issued, fully paid and non-assessable dated May
21, 1993.(3)
(j) Consent of Independent Accountants.
(k) Not applicable.
(l) Not applicable.
(m) (1) Master Plan and Agreement of Distribution adopted
pursuant to Rule 12b-1 under the Investment Company Act of 1940
dated June 1, 2000 with respect to the Funds' Investor Class
shares.(10)
(2) Master Distribution Plan and Agreement adopted pursuant
to Rule 12b-1 under the Investment Company Act of 1940 dated
June 1, 2000 with respect to the Funds' Class C shares.
(3) Form of Master Distribution Plan and Agreement adopted
pursuant to Rule 12b-1 under the Investment Company Act of
1940 dated ______, 2000 with respect to the INVESCO European
Fund's Class K shares.
(n) Not applicable.
(o) (1) Plan Pursuant to Rule 18f-3 under the Investment Company
Act of 1940 by the Company with respect to International Blue
Chip Fund adopted by the Board of Directors November 9, 1999.(9)
<PAGE>
(2) Plan Pursuant to Rule 18f-3 under the Investment Company
Act of 1940 by the Company with respect to European Fund
adopted by the Board of Directors November 9, 1999.(9)
(3) Plan Pursuant to Rule 18f-3 under the Investment Company
Act of 1940 by the Company with respect to Latin American
Growth Fund adopted by the Board of Directors November 9,
1999.(9)
(4) Plan Pursuant to Rule 18f-3 under the Investment Company
Act of 1940 by the Company with respect to Pacific Basin
Fund adopted by the Board of Directors November 9, 1999.(9)
(p) Code of Ethics pursuant to Rule 17j-1.(10)
(1) Previously filed with Post-Effective Amendment No. 3 to the Registration
Statement on December 22, 1995, and incorporated by reference herein.
(2) Previously filed with Post-Effective Amendment No. 4 to the Registration
Statement on February 25, 1997 and incorporated by reference herein.
(3) Previously filed with Post-Effective Amendment No. 5 to the Registration
Statement on November 17, 1997, and incorporated by reference herein.
(4) Previously filed with Post-Effective Amendment No. 6 to the Registration
Statement on February 26, 1998, and incorporated by reference herein.
(5) Previously filed with Post-Effective Amendment No. 7 to the Registration
Statement on July 10, 1998, and incorporated by reference herein.
(6) Previously filed with Post-Effective Amendment No. 8 to the Registration
Statement on December 30, 1998, and incorporated by reference herein.
(7) Previously filed with Post-Effective Amendment No. 9 to the Registration
Statement on March 1, 1999, and incorporated by reference herein.
(8) Previously filed with Post-Effective Amendment No. 10 to the Registration
Statement on October 26, 1999, and incorporated by reference herein.
(9) Previously filed with Post-Effective Amendment No. 11 to the Registration
Statement on January 25, 2000 and incorporated by reference herein.
(10) Previously filed with Post-Effective Amendment No. 13 to the Registration
Statement on October 12, 2000 and incorporated by reference herein.
ITEM 24. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH INVESCO
INTERNATIONAL FUNDS, INC. (THE "COMPANY")
No person is presently controlled by or under common control with the Company.
<PAGE>
ITEM 25. INDEMNIFICATION
Indemnification provisions for officers, directors and employees of the Company
are set forth in Article X of the Amended Bylaws and Article VII of the Articles
of Restatement of the Articles of Incorporation, and are hereby incorporated by
reference. See Item 23(a) and (b) above. Under these Articles, directors and
officers will be indemnified to the fullest extent permitted to directors by the
Maryland General Corporation Law, subject only to such limitations as may be
required by the Investment Company Act of 1940, as amended, and the rules
thereunder. Under the Investment Company Act of 1940, directors and officers of
the Company cannot be protected against liability to the Fund or its
shareholders to which they would be subject because of willful misfeasance, bad
faith, gross negligence or reckless disregard of the duties of their office. The
Company also maintains liability insurance policies covering its directors and
officers.
ITEM 26. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER
See "Fund Management" in the Funds' Prospectuses and "Management of the Fund" in
the Statement of Additional Information for information regarding the business
of the investment adviser, INVESCO.
Following are the names and principal occupations of each director and officer
of the investment adviser, INVESCO. Certain of these persons hold positions with
IDI, a subsidiary of INVESCO.
--------------------------------------------------------------------------------
Position with Principal Occupation and
Name Adviser Company Affiliation
--------------------------------------------------------------------------------
Mark H. Williamson Chairman & Officer Chairman of the Board,
President & Chief
Executive Officer
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
--------------------------------------------------------------------------------
Raymond R. Cunningham Officer & Director Senior Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
--------------------------------------------------------------------------------
William J. Galvin, Jr. Officer & Director Senior Vice President
& Assistant Secretary
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
--------------------------------------------------------------------------------
Mark D. Greenberg Officer Senior Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
--------------------------------------------------------------------------------
Ronald L. Grooms Officer & Director Senior Vice President
& Treasurer
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
--------------------------------------------------------------------------------
<PAGE>
--------------------------------------------------------------------------------
Brian B. Hayward Officer Senior Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
--------------------------------------------------------------------------------
Richard W. Healey Officer & Director Senior Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
--------------------------------------------------------------------------------
William R. Keithler Officer Senior Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
--------------------------------------------------------------------------------
Trent E. May Officer Senior Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
--------------------------------------------------------------------------------
Charles P. Mayer Officer Senior Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
--------------------------------------------------------------------------------
Timothy J. Miller Officer & Director Senior Vice President
& Chief Investment Officer
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
--------------------------------------------------------------------------------
Donovan J. (Jerry) Paul Officer Senior Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
--------------------------------------------------------------------------------
Glen A. Payne Officer Senior Vice President,
Secretary & General
Counsel
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
--------------------------------------------------------------------------------
John R. Schroer, II Officer Senior Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
--------------------------------------------------------------------------------
Marie E. Aro Officer Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
--------------------------------------------------------------------------------
Jeffrey R. Botwinick Officer Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
--------------------------------------------------------------------------------
<PAGE>
--------------------------------------------------------------------------------
Michael K. Brugman Officer Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
--------------------------------------------------------------------------------
Ingeborg S. Cosby Officer Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
--------------------------------------------------------------------------------
Stacie Cowell Officer Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
--------------------------------------------------------------------------------
Rhonda Dixon - Gunner Officer Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
--------------------------------------------------------------------------------
Delta L. Donohue Officer Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
--------------------------------------------------------------------------------
Harvey I. Fladeland Officer Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
--------------------------------------------------------------------------------
Linda J. Gieger Officer Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
--------------------------------------------------------------------------------
Richard R. Hinderlie Officer Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
--------------------------------------------------------------------------------
Stuart A. Holland Officer Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
--------------------------------------------------------------------------------
Thomas M. Hurley Officer Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
--------------------------------------------------------------------------------
Patricia F. Johnston Officer Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
--------------------------------------------------------------------------------
<PAGE>
--------------------------------------------------------------------------------
Campbell C. Judge Officer Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
--------------------------------------------------------------------------------
Thomas A. Kolbe Officer Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
--------------------------------------------------------------------------------
Peter M. Lovell Officer Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
--------------------------------------------------------------------------------
James F. Lummanick Officer Vice President & Assistant
General Counsel
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
--------------------------------------------------------------------------------
Thomas A. Mantone, Jr. Officer Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
--------------------------------------------------------------------------------
George A. Matyas Officer Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
--------------------------------------------------------------------------------
Corey M. McClintock Officer Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
--------------------------------------------------------------------------------
Douglas J. McEldowney Officer Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
--------------------------------------------------------------------------------
Frederick R. (Fritz) Meyer Officer Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
--------------------------------------------------------------------------------
Stephen A. Moran Officer Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
--------------------------------------------------------------------------------
Jeffrey G. Morris Officer Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
--------------------------------------------------------------------------------
<PAGE>
--------------------------------------------------------------------------------
Laura M. Parsons Officer Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
--------------------------------------------------------------------------------
Jon B. Pauley Officer Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
--------------------------------------------------------------------------------
Thomas E. Pellowe Officer Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
--------------------------------------------------------------------------------
Dean C. Phillips Officer Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
--------------------------------------------------------------------------------
Pamela J. Piro Officer Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
--------------------------------------------------------------------------------
Sean F. Reardon Officer Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
--------------------------------------------------------------------------------
Dale A. Reinhardt Officer Vice President and
Controller
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
--------------------------------------------------------------------------------
Anthony R. Rogers Officer Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
--------------------------------------------------------------------------------
Gary L. Rulh Officer Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
--------------------------------------------------------------------------------
Thomas R. Samuelson Officer Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
--------------------------------------------------------------------------------
James B. Sandidge Officer Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
--------------------------------------------------------------------------------
<PAGE>
--------------------------------------------------------------------------------
Thomas H. Scanlan Officer Vice President
INVESCO Funds Group, Inc.
12028 Edgepark Court
Potomac, MD 20854
--------------------------------------------------------------------------------
John S. Segner Officer Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
--------------------------------------------------------------------------------
Reagan A. Shopp Officer Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
--------------------------------------------------------------------------------
Terri B. Smith Officer Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
--------------------------------------------------------------------------------
Tane T. Tyler Officer Vice President & Assistant
General Counsel
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
--------------------------------------------------------------------------------
Thomas R. Wald Officer Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
--------------------------------------------------------------------------------
Alan I. Watson Officer Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
--------------------------------------------------------------------------------
Judy P. Wiese Officer Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
--------------------------------------------------------------------------------
Vaughn A. Greenlees Officer Assistant Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
--------------------------------------------------------------------------------
Matthew A. Kunze Officer Assistant Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
--------------------------------------------------------------------------------
Christopher T. Lawson Officer Assistant Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
--------------------------------------------------------------------------------
<PAGE>
--------------------------------------------------------------------------------
Michael D. Legoski Officer Assistant Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
--------------------------------------------------------------------------------
William S. Mechling Officer Assistant Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
--------------------------------------------------------------------------------
Donald R. Paddack Officer Assistant Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
--------------------------------------------------------------------------------
Craig J. St. Thomas Officer Assistant Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
--------------------------------------------------------------------------------
Kent T. Schmeckpeper Officer Assistant Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
--------------------------------------------------------------------------------
C. Vince Sellers Officer Assistant Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
--------------------------------------------------------------------------------
Jeraldine E. Kraus Officer Assistant Secretary
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
--------------------------------------------------------------------------------
ITEM 27. (a) PRINCIPAL UNDERWRITERS
INVESCO Counselor Series Funds, Inc.
(formerly, INVESCO Advantage Series Funds, Inc.)
INVESCO Bond Funds, Inc.
INVESCO Combination Stock & Bond Funds, Inc.
INVESCO International Funds, Inc.
INVESCO Money Market Funds, Inc.
INVESCO Sector Funds, Inc.
INVESCO Stock Funds, Inc.
INVESCO Treasurer's Series Funds, Inc.
INVESCO Variable Investment Funds, Inc.
(b)
Positions and Positions and
Name and Principal Offices with Offices with
Business Address Underwriter the Company
------------------ ------------ -------------
Raymond R. Cunningham Senior Vice
7800 E. Union Avenue President
Denver, CO 80237
<PAGE>
William J. Galvin, Jr. Senior Vice President, Assistant Secretary
7800 E. Union Avenue Asst. Secretary
Denver, CO 80237 & Director
Ronald L. Grooms Senior Vice President, Treasurer,
7800 E. Union Avenue Treasurer, & Chief Financial
Denver, CO 80237 Director and Accounting
Officer
Richard W. Healey Senior Vice President Director
7800 E. Union Avenue & Director
Denver, CO 80237
Timothy J. Miller Director
7800 E. Union Avenue
Denver, CO 80237
Glen A. Payne Senior Vice President, Secretary
7800 E. Union Avenue Secretary &
Denver, CO 80237 General Counsel
Pamela J. Piro Assistant Treasurer Assistant Treasurer
7800 E. Union Avenue
Denver, CO 80237
Judy P. Wiese Assistant Secretary Assistant Secretary
7800 E. Union Avenue
Denver, CO 80237
Mark H. Williamson Chairman of the Board, Chairman of the
7800 E. Union Avenue President, & Chief Board, President
Denver, CO 80237 Executive Officer & Chief Executive
Officer
(c) Not applicable.
ITEM 28. LOCATION OF ACCOUNTS AND RECORDS
--------------------------------
Mark H. Williamson
7800 E. Union Avenue
Denver, CO 80237
ITEM 29. MANAGEMENT SERVICES
-------------------
Not applicable.
ITEM 30. UNDERTAKINGS
------------
Not applicable
<PAGE>
Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940, the Company certifies that it meets all the requirements
for effectiveness of this Registration Statement under Rule 485(b) under the
Securities Act and has duly caused this post-effective amendment to be signed on
its behalf by the undersigned, thereunto duly authorized, in the City of Denver,
County of Denver, and State of Colorado, on the 11th day of December, 2000.
Attest: INVESCO International Funds, Inc.
/s/ Glen A. Payne /s/ Mark H. Williamson
------------------------------- ---------------------------------
Glen A. Payne, Secretary Mark H. Williamson,
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 date indicated.
/s/ Mark H. Williamson /s/ Lawrence H. Budner*
------------------------------- -----------------------------
Mark H. Williamson, President & Lawrence H. Budner, Director
Director (Chief Executive Officer)
/s/ Ronald L. Grooms /s/ John W. McIntyre*
------------------------------- -----------------------------
Ronald L. Grooms, Treasurer John W. McIntyre, Director
(Chief Financial and Accounting
Officer)
/s/ Richard W. Healey*
-----------------------------
/s/ Victor L. Andrews* Richard W. Healey, Director
-------------------------------
Victor L. Andrews, Director /s/ Fred A. Deering*
-----------------------------
/s/ Bob R. Baker* Fred A. Deering, Director
-------------------------------
Bob R. Baker, Director /s/ Larry Soll*
-----------------------------
/s/ Charles W. Brady* Larry Soll, Director
-------------------------------
Charles W. Brady, Director /s/ Wendy L. Gramm*
-----------------------------
/s/ James T. Bunch* Wendy L. Gramm, Director
-------------------------------
James T. Bunch, Director /s/ Gerald J. Lewis*
-----------------------------
Gerald J. Lewis, Director
By:_____________________________ By: /s/ Glen A. Payne
-------------------------
Edward F. O'Keefe Glen A. Payne
Attorney in Fact Attorney in Fact
* Original Powers of Attorney authorizing Edward F. O'Keefe and Glen A. Payne,
and each of them, to execute this post-effective amendment to the Registration
Statement of the Registrant on behalf of the above-named directors and officers
of the Registrant have been filed with the Securities and Exchange Commission on
June 29, 1993, February 24, 1994, February 17, 1995, December 22, 1995, November
17, 1997 and October 12, 2000.
<PAGE>
Exhibit Index
Page in
Exhibit Number Registration Statement
-------------- ----------------------
a(2) 95
a(3) 97
d(1)e 100
d(2)(a)(3) 101
e 102
f 114
h(1) 121
h(2) 138
j 146
m(2) 147
m(3) 159
