File No. 33-79290
As filed on August 30, 1995
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 X
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Pre-Effective Amendment No.
Post-Effective Amendment No. 6 X
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REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 X
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Amendment No. 7 X
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INVESCO SPECIALTY FUNDS, INC.
(Exact Name of Registrant as Specified in Charter)
7800 E. Union Avenue, Denver, Colorado 80237
(Address of Principal Executive Offices)
P.O. Box 173706, Denver, Colorado 80217-3706
(Mailing Address)
Registrant's Telephone Number, including Area Code: (303) 930-6300
Glen A. Payne, Esq.
7800 E. Union Avenue
Denver, Colorado 80237
(Name and Address of Agent for Service)
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Copies to:
Ronald M. Feiman, Esq.
Gordon Altman Butowsky
Weitzen Shalov & Wein
114 West 47th Street
New York, New York 10036
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Approximate Date of Proposed Public Offering: As soon as
practicable after this post-effective amendment becomes effective.
It is proposed that this filing will become effective immediately upon filing
pursuant to paragraph (b)
X on September 11, 1995 pursuant to paragraph (b) 60 days after filing
pursuant to paragraph (a)(i) on _____________ pursuant to paragraph (a)(i)
75 days after filing pursuant to paragraph (a)(ii) on _____________
pursuant to paragraph (a)(ii) of rule 485.
If appropriate, check the following box:
this post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
Registrant has previously elected, pursuant to Rule 24f-2 under the Investment
Company Act of 1940, to register an indefinite number of its shares of common
stock for sale under the Securities Act of 1933. Registrant's Rule 24f-2 Notice
for the fiscal year ended July 31, 1995, will be filed on or about September 26,
1995.
Page 1 of 180
Exhibit index is located at page 157
<PAGE>
INVESCO SPECIALTY FUNDS, INC.
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CROSS-REFERENCE SHEET
Form N-1A
Item Caption
Part A Prospectus
1....................... Cover Page
2....................... Annual Fund Expenses
3....................... Financial Highlights; Performance
Data
4....................... Investment Objectives and Policies;
Risk Factors; The Funds and Their
Management
5....................... The Funds and Their Management;
Additional Information
5A...................... Not Applicable
6....................... Services Provided by the Funds;
Taxes, Dividends and Capital Gain
Distributions; Additional
Information
7....................... How Shares Can Be Purchased;
Services Provided by the Funds
8....................... Services Provided by the Funds; How
to Redeem Shares
9....................... Not Applicable
Part B Statement of Additional Information
10...................... Cover Page
11...................... Table of Contents
<PAGE>
12...................... The Funds and Their Management
13...................... Investment Practices; Investment
Policies and Restrictions
14...................... The Funds and Their Management
15...................... The Funds and Their Management;
Additional Information
16...................... The Funds and Their Management;
Additional Information
17...................... Investment Practices; Investment
Policies and Restrictions
18...................... Additional Information
19...................... How Shares Can Be Purchased; How
Shares Are Valued; Services
Provided by the Funds; Tax-Deferred
Retirement Plans; How to Redeem
Shares
20...................... Dividends, Capital Gain
Distributions and Taxes
21...................... How Shares Can Be Purchased
22...................... Performance Data
23...................... Additional Information; Financial
Statements
Part C Other Information
Information required to be included in Part C is set forth under the
appropriate Item, so numbered, in Part C to this Registration Statement.
<PAGE>
PROSPECTUS
September 11, 1995
INVESCO WORLDWIDE CAPITAL GOODS FUND
INVESCO WORLDWIDE COMMUNICATIONS FUND
INVESCO Worldwide Capital Goods Fund (the "Capital Goods Fund") seeks to
achieve capital appreciation by investing, under normal circumstances, at least
65% of its total assets in companies that are primarily engaged in the design,
development, manufacture, distribution, sale or service of capital goods, or in
the mining, processing, manufacture or distribution of raw materials and
intermediate goods used by industry and agriculture.
INVESCO Worldwide Communications Fund (the "Communications Fund") seeks to
achieve a high total return on investment through capital appreciation and
current income by investing, under normal circumstances, at least 65% of its
total assets in companies that are primarily engaged in the design, development,
manufacture, distribution or sale of communications services and equipment. Up
to 35% of the Communications Fund's assets will be invested, under normal
circumstances, in companies that are engaged in developing, constructing or
operating infrastructure projects throughout the world, or in supplying
equipment or services to such companies.
Under normal circumstances, each Fund will invest at least 65% of its
total assets in issuers domiciled in at least three countries, one of which may
be the United States, although the Funds' investment adviser expects each Fund's
investments to be allocated among a larger number of countries. The percentage
of each Fund's assets invested in United States securities normally will be
higher than that invested in securities issued by companies in any other single
country. However, it is possible that at times a Fund may have 65% or more of
its total assets invested in foreign securities. The Funds have adopted certain
investment policies which may expose the Funds to increased risks or costs. See
"Risk Factors" and "Investment Objectives and Policies-Portfolio Turnover."
Each Fund is a series of INVESCO Specialty Funds, Inc. (the "Company"), a
diversified, managed, no-load mutual fund consisting of four separate portfolios
of investments. Separate prospectuses are available upon request from INVESCO
Funds Group, Inc. for the Company's other funds, INVESCO European Small Company
Fund and INVESCO Latin American Growth Fund. Investors may purchase shares of
any or all of the Funds. Additional funds may be offered in the future.
This Prospectus provides you with the basic information you should know
before investing in the Capital Goods Fund or Communications Fund. You should
read it and keep it for future reference. A Statement of Additional Information
containing further information about the Funds has been filed with the
Securities and Exchange Commission. You can obtain a copy without charge by
writing INVESCO Funds Group, Inc., Post Office Box 173706, Denver, Colorado
80217-3706; or by calling 1-800-525-8085.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE. SHARES OF THE FUNDS ARE NOT DEPOSITS OR OBLIGATIONS OF, OR
GUARANTEED OR ENDORSED BY ANY BANK OR OTHER FINANCIAL INSTITUTION. THE SHARES OF
THE FUNDS ARE NOT FEDERALLY INSURED BY THE FEDERAL DEPOSIT INSURANCE
CORPORATION, THE FEDERAL RESERVE BOARD OR ANY OTHER AGENCY.
THE STATEMENT OF ADDITIONAL INFORMATION, DATED SEPTEMBER 11, 1995, IS HEREBY
INCORPORATED BY REFERENCE INTO THIS PROSPECTUS.
<PAGE>
TABLE OF CONTENTS
Page
ANNUAL FUND EXPENSES 6
FINANCIAL HIGHLIGHTS 8
PERFORMANCE DATA 9
INVESTMENT OBJECTIVES AND POLICIES 9
RISK FACTORS 16
THE FUNDS AND THEIR MANAGEMENT 19
HOW SHARES CAN BE PURCHASED 22
SERVICES PROVIDED BY THE FUNDS 24
HOW TO REDEEM SHARES 28
TAXES, DIVIDENDS AND CAPITAL GAIN DISTRIBUTIONS 29
ADDITIONAL INFORMATION 31
<PAGE>
ANNUAL FUND EXPENSES
The Funds are no-load; there are no fees to purchase, exchange
or redeem shares. The Funds, however, are authorized to pay a
distribution fee pursuant to Rule 12b-1 under the Investment
Company Act of 1940. (See "How Shares Can Be
Purchased--Distribution Expenses.") Lower expenses benefit Fund
shareholders by increasing the Funds' total return.
Capital Goods Communications
Fund Fund
Shareholder Transaction Expenses
Sales load "charge" on purchases None None
Sales load "charge" on reinvested dividends None None
Redemption fees None None
Exchange fees None None
Annual Fund Operating Expenses
(as a percentage of average net assets)
Management Fee 0.65% 0.65%
12b-1 Fees 0.25% 0.25%
Other Expenses 1.10%(1) 1.05%
Transfer Agency Fee(2) 0.41%(1) 0.41%
General Services, Administrative 0.69%(1) 0.64%
Services, Registration, Postage(3)
Total Fund Operating Expenses 2.00%(1) 1.95%
(1) Certain Fund expenses are being absorbed voluntarily by INVESCO Funds
Group, Inc. ("INVESCO") to ensure that expenses for each Fund will not exceed
2.00% of each Fund's average net assets pursuant to an agreement between each
Fund, INVESCO and INVESCO Trust Company under which all expenses of each Fund
above that amount will be split evenly between these two companies. In the
absence of such voluntary expense limitation, the Capital Goods Fund's "Other
Expenses" and "Total Fund Operating Expenses" in the above table would have been
2.06% and 2.96%, respectively of the Capital Goods Fund's average net assets
based on the actual expenses of the Fund for the fiscal year ended July 31,
1995.
(2) Consists of the transfer agency fee described under
"Additional Information - Transfer and Dividend Disbursing Agent."
(3) Includes, but is not limited to, fees and expenses of directors,
custodian bank, legal counsel and auditors, securities pricing services, costs
of administrative services furnished under an Administrative Services Agreement,
costs of registration of Fund shares under applicable laws, and costs of
printing and distributing reports to shareholders.
<PAGE>
Example
A shareholder would pay the following expenses on a $1,000 investment for
the periods shown, assuming (1) a 5% annual return and (2) redemption at the end
of each time period:
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
Capital Goods Fund $21 $63 $109 $234
Communications Fund $20 $62 $106 $229
The purpose of the foregoing expense table and Example is to assist
investors in understanding the various costs and expenses that an investor in
the Funds will bear directly or indirectly. Such expenses are paid from the
respective Fund's assets. (See "The Funds and Their Management.") The Funds
charge no sales loads, redemption fees, or exchange fees. The Example should not
be considered a representation of past or future expenses, and actual expenses
may be greater or less than those shown. The assumed 5% annual return is
hypothetical and should not be considered a representation of past or future
annual returns, which may be greater or less than the assumed amount.
As a result of the 0.25% 12b-1 fee paid by each Fund, investors who own
Fund shares for a long period of time may pay more than the economic equivalent
of the maximum front-end sales charge permitted for mutual funds by the National
Association of Securities Dealers, Inc.
<PAGE>
INVESCO Specialty Funds, Inc.
FINANCIAL HIGHLIGHTS
(For a Fund Share Outstanding throughout each Period)
Year Ended July 31, 1995
The following information has been audited by Price Waterhouse LLP,
independent accountants. This information should be read in conjunction with
audited financial statements and the report of independent accountants thereon
appearing in the Funds' 1995 Annual Report to Shareholders which is incorporated
by reference into the Statement of Additional Information. Both are available
without charge by contacting INVESCO Funds Group, Inc. at the address or
telephone number shown below.
Period Ended July 31, 1995
Worldwide Worldwide
Capital Goods Communications
Fund Fund
PER SHARE DATA
Net Asset Value-- Beginning of Period $10.00 $10.00
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income 0.01 0.11
Net Gains or (Losses) on Securities
(Both Realized and Unrealized) (0.16) 2.35
Total from Investment Operations (0.15) 2.46
LESS DISTRIBUTIONS
Dividends from Net Investment Income 0.01 0.11
Distributions from Capital Gains 0.00 0.05
Total Distributions 0.01 0.16
Net Asset Value-- End of Period $9.84 $12.30
TOTAL RETURN (1.49%) 24.83%
>
RATIOS
Net Assets -- End of Period
($000 Omitted) $10,364 $27,254
Ratio of Expenses to Average
Net Assets# 2.00% 1.95%
Ratio of Net Investment Income to
Average Net Assets# 0.25% 1.43%
Portfolio Turnover Rate 193% 215%
#Various expenses of the Worldwide Capital Goods Fund were voluntarily
absorbed by IFG for the year ended July 31, 1995. If such expenses had not
been voluntarily absorbed, ratio of expenses to average net assets would have
been 2.96%, and ratio of net investment income to average net assets would have
been 0.71%.
~Annualized
Further information about the performance of the Funds is contained in the
Company's Annual Report to Shareholders, which may be obtained without charge by
writing INVESCO Funds Group, Inc., P.O. Box 173706, Denver, Colorado 80217-3706;
or by calling 1-800- 525-8085.
<PAGE>
PERFORMANCE DATA
From time to time, the Funds advertise their total return performance.
These figures are based upon historical investment results and are not intended
to indicate future performance. The "total return" of a Fund refers to the
average annual rate of return of an investment in the Fund. This figure is
computed by calculating the percentage change in value of an investment of
$1,000, assuming reinvestment of all income dividends and capital gain
distributions, to the end of a specified period. Thus, any given report of total
return performance should not be considered as representative of future
performance. The Funds charge no sales loads, redemption fees, or exchange fees
which would affect the total return computation.
In conjunction with performance reports and/or analyses of shareholder
service for the Funds, comparative data between the Funds' performance for a
given period and recognized indices of investment results for the same period,
and/or assessments of the quality of shareholder service, may be provided to
shareholders. Such indices include indices provided by Dow Jones & Company,
Standard & Poor's, Lipper Analytical Services, Inc., Lehman Brothers, National
Association of Securities Dealers Automated Quotations, Frank Russell Company,
Value Line Investment Survey, the American Stock Exchange, Morgan Stanley
Capital International, Wilshire Associates, the Financial Times-Stock Exchange,
the New York Stock Exchange, the Nikkei Stock Average and the Deutcher
Aktienindex, all of which are unmanaged market indicators. In addition,
rankings, ratings, and comparisons of investment performance and/or assessments
of the quality of shareholder service appearing in publications such as Money,
Forbes, Kiplinger's Personal Finance, Morningstar, and similar sources which
utilize information compiled (i) internally; (ii) by Lipper Analytical Services,
Inc.; or (iii) by other recognized analytical services, may be used in
advertising. The Lipper Analytical Services, Inc. mutual fund rankings and
comparisons, which may be used by the Funds in performance reports, will be
drawn from the "Global Funds" Lipper mutual fund grouping, in addition to the
broad-based Lipper general fund grouping.
INVESTMENT OBJECTIVES AND POLICIES
INVESCO WORLDWIDE CAPITAL GOODS FUND
INVESCO Worldwide Capital Goods Fund seeks to achieve capital appreciation
by investing, under normal circumstances, at least 65% of its total assets in
companies that are primarily engaged in the design, development, manufacture,
distribution, sale or service of capital goods, or in the mining, processing,
manufacture, or distribution of raw materials and intermediate goods used by
industry and agriculture. The foregoing investment objective is fundamental and
may not be changed in any material respect without the approval of the Capital
Goods Fund's shareholders. Capital goods include finished products and equipment
used by industrial and agricultural firms, such as industrial machinery,
construction equipment, computers, software, farm equipment, office equipment,
and electrical and telecommunications equipment, as well as components and
sub-assemblies of such products. Raw materials and intermediate goods include
chemicals, timber, paper, metals, textiles, cement, gypsum and other
commodities.
<PAGE>
INVESCO WORLDWIDE COMMUNICATIONS FUND
INVESCO Worldwide Communications Fund seeks to achieve a high total return
on investment through capital appreciation and current income by investing,
under normal circumstances, at least 65% of its total assets in companies that
are primarily engaged in the design, development, manufacture, distribution or
sale of communications services and equipment. The foregoing investment
objective is fundamental and may not be changed in any material respect without
the approval of the Communications Fund's shareholders. The Communications Fund
may invest in companies involved in services and products such as long distance,
local and cellular telephone service; wireless communications systems such as
personal communications networks, paging and special mobile radio; local and
wide area networks; fiber optic transmission; satellite communication; microwave
transmission; television and movie programming; broadcasting; and cable
television.
Up to 35% of the Communications Fund's assets will be invested, under
normal circumstances, in companies that are engaged in developing, constructing
or operating infrastructure projects throughout the world, or in supplying
equipment or services to such companies. Infrastructure projects include
communications systems such as those described above, as well as electric
utilities, water and sewer projects, natural gas and oil pipelines,
environmental projects, housing, and transportation projects such as airports,
railroads, highways, bridges and ports.
Investment Policies Applicable to Both Funds
Each Fund has a policy regarding concentration of its investments which is
fundamental and may not be changed without the approval of the respective Fund's
shareholders. The Capital Goods Fund will concentrate its investments (i.e.,
invest more than 25% of its total assets) in the capital goods, raw materials
and intermediate goods industries described above. The Communications Fund will
concentrate its investments (i.e., invest more than 25%of its total assets) in
the communications industries described above.
<PAGE>
A particular company will be deemed to be primarily engaged in the group of
industries designated for investment by a Fund if, in the determination of the
Funds' investment adviser and sub- adviser (collectively, "Fund Management"),
more than 50% of its gross income or net sales are derived from activities in
such industries or more than 50% of its assets are dedicated to the production
of revenues from such industries. In circumstances where, based on available
financial information, a question exists whether a company meets one of these
standards, the Fund may invest in equity securities of such company only if Fund
Management determines, after review of information describing the company and
its business activities, that the company's primary business is within the group
of industries designated for investment by that Fund, as such industries are
described above.
Under normal circumstances, each Fund will invest at least 65% of its
total assets in issuers domiciled in at least three countries, one of which may
be the United States, although Fund Management expects each Fund's investments
to be allocated among a larger number of countries. The percentage of each
Fund's assets invested in United States securities normally will be higher than
that invested in securities issued by companies in any other single country.
However, it is possible that at times a Fund may have 65% or more of its total
assets invested in foreign securities. Investments in foreign securities involve
certain risks which are discussed below under "Risk Factors."
Under normal conditions, each Fund will invest primarily in equity
securities (common stocks and, to a lesser degree, preferred stocks and
securities convertible into common stocks, such as rights, warrants and
convertible debt securities). In selecting the equity securities in which the
Funds invest, Fund Management attempts to identify companies that have
demonstrated or, in Fund Management's opinion, are likely to demonstrate in the
future, strong earnings growth relative to other companies in the same industry.
The dividend payment records of companies are also considered. Equity securities
may be issued by either established, well-capitalized companies or newly-formed,
small-cap companies, and may trade on regional or national stock exchanges or in
the over-the-counter market. The risks of investing in small capitalization
companies are discussed below under "Risk Factors."
Consistent with their investment objectives, the Funds also may invest in
fixed-income securities (corporate bonds, commercial paper, debt securities
issued by the U.S. government, its agencies and instrumentalities, or foreign
governments and, to a lesser extent, municipal bonds, asset-backed securities
and zero coupon bonds). Each Fund may invest no more than 15% of its total
assets in debt securities that are rated below BBB by Standard & Poor's Ratings
Group ("Standard & Poor's) or Baa by Moody's Investors Service, Inc. ("Moody's")
or, if unrated, they are judged by Fund Management to be equivalent in quality
to debt securities having such ratings (commonly referred to as "junk bonds").
In no event will a Fund ever invest in a debt security rated below CCC by
Standard & Poor's or Caa by Moody's. The risks of investing in lower rated debt
securities are discussed below under "Risk Factors."
<PAGE>
Each Fund may invest up to 35% of its total assets in securities of
companies that are engaged in businesses outside the field of business activity
in which at least 65% of the Fund's total assets is invested. These investments
may include equity securities or fixed-income securities selected to meet the
Capital Goods Fund's investment objective of capital appreciation or the
Communications Fund's objective of achieving a high total return on investment
through capital appreciation and current income, as the case may be. Such equity
securities may be issued by either established, well-capitalized companies or
newly-formed, small-cap companies, and may trade on regional or national stock
exchanges or in the over-the-counter market. Such fixed-income securities must
meet the quality standards described above. These equity and fixed-income
securities may be issued by either U.S. or foreign companies or governments. The
risks of investing in lower rated debt securities and in foreign securities are
discussed below under "Risk Factors." In addition, the Funds may hold certain
cash and cash equivalent securities as cash reserves ("cash securities").
The amount invested in stocks, bonds and cash securities may be varied
from time to time, depending upon Fund Management's assessment of business,
economic and market conditions. In periods of abnormal economic and market
conditions, as determined by Fund Management, either Fund may depart from its
basic investment objective and assume a temporary defensive position, with a
larger portion of its assets invested in U.S. government and agency securities,
investment grade corporate bonds or cash securities such as domestic
certificates of deposit and banker's acceptances, repurchase agreements and
commercial paper. The Funds reserve the right to hold equity, fixed income and
cash securities in whatever proportion is deemed desirable at any time for
defensive purposes. While a Fund is in a defensive position, the opportunity to
achieve capital appreciation will be limited; however, the ability to maintain a
defensive position enables the Funds to seek to avoid capital losses during
market downturns. Under normal market conditions, the Funds do not expect to
have a substantial portion of their assets invested in cash securities.
In order to hedge their portfolios, the Funds may purchase and write
options on securities (including index options and options on foreign
securities), and may invest in futures contracts for the purchase or sale of
foreign currencies, fixed-income securities and instruments based on financial
indices (collectively, "futures contracts"), options on futures contracts,
forward contracts and interest rate swaps and swap-related products. Interest
rate swaps involve the exchange by a Fund with another party of their respective
commitments to pay or receive interest, e.g., an exchange of floating rate
payments for fixed rate payments. These practices and securities, some of which
are known as derivatives, and their risks are discussed below under "Risk
Factors" and in the Statement of Additional Information.
Additional information on certain of the types of securities in which the
Funds may invest is set forth below:
<PAGE>
U.S. Government and Agency Securities
Investments in U.S. government securities may consist of securities issued
or guaranteed by the United States government and any agency or instrumentality
of the United States government. In some cases, these securities are direct
obligations of the U.S. government, such as U.S. Treasury bills, notes and
bonds. In other cases, these securities are obligations guaranteed by the U.S.
government, such as Government National Mortgage Association obligations, or
obligations of U.S. government authorities, agencies or instrumentalities, such
as the Federal National Mortgage Association, Federal Home Loan Bank, Federal
Financing Bank and Federal Farm Credit Bank, which are supported only by the
assets of the issuer.
When-Issued Securities
Each Fund may make commitments in an amount of up to 10% of the value of
its total assets at the time any commitment is made to purchase or sell equity
or debt securities on a when-issued or delayed delivery basis (i.e., securities
may be purchased or sold by the Fund with settlement taking place in the future,
often a month or more later). The payment obligation and, in the case of debt
securities, the interest rate that will be received on the securities generally
are fixed at the time the Fund enters into the commitment. During the period
between purchase and settlement, no payment is made by the Fund and no interest
accrues to the Fund. At the time of settlement, the market value of the security
may be more or less than the purchase price, and the Fund bears the risk of such
market value fluctuations. Each Fund maintains cash, U.S. government securities,
or other high-grade debt obligations readily convertible into cash having an
aggregate value equal to the amount of such purchase commitments, in a
segregated account until payment is made.
Illiquid and Rule 144A Securities
The Funds are authorized to invest in securities which are illiquid because
they are subject to restrictions on their resale ("restricted securities") or
because, based upon their nature or the market for such securities, they are not
readily marketable. However, a Fund will not purchase any such security if the
purchase would cause the Fund to invest more than 15% of its net assets in
illiquid securities. Repurchase agreements maturing in more than seven days will
be considered as illiquid for purposes of this restriction. Investments in
illiquid securities involve certain risks to the extent that a Fund may be
unable to dispose of such a security at the time desired or at a reasonable
price. In addition, in order to resell a restricted security, a Fund might have
to bear the expense and incur the delays associated with effecting registration.
<PAGE>
Certain restricted securities that are not registered for sale to the
general public, but that can be resold to institutional investors ("Rule 144A
Securities"), may be purchased without regard to the foregoing 15% limitation if
a liquid institutional trading market exists. The liquidity of the Fund's
investments in Rule 144A Securities could be impaired if dealers or
institutional investors become uninterested in purchasing these securities. The
Company's board of directors has delegated to Fund Management the authority to
determine the liquidity of Rule 144A Securities pursuant to guidelines approved
by the board. For more information concerning Rule 144A Securities, see the
Statement of Additional Information.
Repurchase Agreements
The Funds may enter into repurchase agreements with respect to debt
instruments eligible for investment by the Funds. These agreements are entered
into with member banks of the Federal Reserve System, registered broker-dealers,
and registered government securities dealers, which are deemed creditworthy. A
repurchase agreement, which may be considered a "loan" under the Investment
Company Act of 1940, is a means of investing monies for a short period. In a
repurchase agreement, a Fund acquires a debt instrument (generally a security
issued by the U.S. government or an agency thereof, a banker's acceptance, or a
certificate of deposit) subject to resale to the seller at an agreed upon price
and date (normally, the next business day). In the event that the original
seller defaults on its obligation to repurchase the security, the Fund could
incur costs or delays in seeking to sell such security. To minimize risk, the
securities underlying each repurchase agreement will be maintained with the
Fund's custodian in an amount at least equal to the repurchase price under the
agreement (including accrued interest), and such agreements will be effected
only with parties that meet certain creditworthiness standards established by
the Company's board of directors. A Fund will not enter into a repurchase
agreement maturing in more than seven days if as a result more than 15% of its
net assets would be invested in such repurchase agreements and other illiquid
securities. The Funds have not adopted any limit on the amount of their net
assets that may be invested in repurchase agreements maturing in seven days or
less.
Securities Lending
The Funds also may lend their securities to qualified brokers, dealers,
banks, or other financial institutions. This practice permits the Funds to earn
income, which, in turn, can be invested in additional securities of the type
described in this Prospectus in pursuit of the Funds' investment objectives.
Loans of securities by a Fund will be collateralized by cash, letters of credit,
or securities issued or guaranteed by the U.S. government or its agencies equal
to at least 100% of the current market value of the loaned securities,
determined on a daily basis. Cash collateral will be invested only in high
quality short-term investments offering maximum liquidity. Lending securities
involves certain risks, the most significant of which is the risk that a
borrower may fail to return a portfolio security. The Funds monitor the
creditworthiness of borrowers in order to minimize such risks. A Fund will not
lend any security if, as a result of the loan, the aggregate value of securities
then on loan would exceed 33-1/3% of the Fund's total assets (taken at market
value).
<PAGE>
Portfolio Turnover
There are no fixed limitations regarding portfolio turnover for the Funds'
portfolios. Although the Funds do not trade for short-term profits, securities
may be sold without regard to the time they have been held in a Fund when, in
the opinion of Fund Management, investment considerations warrant such action.
In addition, portfolio turnover rates may increase as a result of large amounts
of purchases or redemptions of Fund shares due to economic, market or other
factors that are not within the control of Fund Management. As a result, while
it is anticipated that the portfolio turnover rates for the Funds' portfolios
generally will not exceed 200%, under certain market conditions these portfolio
turnover rates may exceed 200%. Increased portfolio turnover would cause a Fund
to incur greater brokerage costs than would otherwise be the case, and may
result in the acceleration of capital gains that are taxable when distributed to
shareholders. The Funds' portfolio turnover rates are set forth under "Financial
Highlights" and, along with the Funds' brokerage allocation policies, are
discussed in the Statement of Additional Information.
Investment Restrictions
The Funds are subject to a variety of restrictions regarding their
investments that are set forth in this Prospectus and in the Statement of
Additional Information. Certain of the Funds' investment restrictions are
fundamental, and may not be altered without the approval of the respective
Fund's shareholders. Such fundamental investment restrictions include the
restrictions which prohibit a Fund from: lending more than 33-1/3% of its total
assets to other parties (excluding purchases of commercial paper, debt
securities and repurchase agreements); with respect to 75% of its total assets,
purchasing the securities of any one issuer (other than cash items and
government securities) if the purchase would cause the Fund to have more than 5%
of its total assets invested in the issuer or to own more than 10% of the
outstanding voting securities of the issuer; and borrowing money or issuing
senior securities except that a Fund may borrow money for temporary or emergency
purposes (not for leveraging or investment) and may enter into reverse
repurchase agreements in an aggregate amount not exceeding 33-1/3% of its total
assets. However, unless otherwise noted, the Funds' investment restrictions and
their investment policies are not fundamental and may be changed by action of
the Company's board of directors.
<PAGE>
Unless otherwise noted, all percentage limitations contained in
the Funds' investment policies and restrictions apply at the time an investment
is made. Thus, subsequent changes in the value of an investment after purchase
or in the value of the Funds' total assets will not cause any such limitation to
have been violated or to require the disposition of any investment, except as
otherwise required by law. If the credit ratings of an issuer are lowered below
those specified for investment by the Funds, the Funds are not required to
dispose of the obligations of that issuer. The determination of whether to sell
such an obligation will be made by Fund Management based upon an assessment of
credit risk and the prevailing market price of the investment. If a Fund borrows
money, its share price may be subject to greater fluctuation until the borrowing
is repaid. Each Fund attempts to minimize such fluctuations by not purchasing
additional securities when borrowings, including reverse repurchase agreements,
are greater than 5% of the value of the Fund's total assets. As a fundamental
policy in addition to the above, each Fund may, notwithstanding any other
investment policy or limitation (whether or not fundamental), invest all of its
assets in the securities of a single open-end management investment company with
substantially the same fundamental investment objectives, policies and
limitations as the Fund. See "Additional Information- Master/Feeder Option."
RISK FACTORS
There can be no assurance that the Funds will achieve their investment
objectives. The Funds' investments in common stocks and other equity securities
may, of course, decline in value. The Funds' investments in fixed-income
securities generally are subject to both credit risk and market risk. Credit
risk relates to the ability of the issuer to meet interest or principal
payments, or both, as they come due. Market risk relates to the fact that the
market values of the debt securities in which the Fund invests generally will be
affected by changes in the level of interest rates. An increase in interest
rates will tend to reduce the market values of debt securities, whereas a
decline in interest rates will tend to increase their values. Although the
Funds' investment adviser limits the Funds' investments in fixed-income
securities to securities it believes are not highly speculative, both kinds of
risk are increased by investing in debt securities rated below the top three
grades by Standard & Poor's or Moody's or, if unrated, securities determined by
the Funds' adviser to be of equivalent quality. Although bonds in the lowest
investment grade debt category (those rated BBB by Standard & Poor's or Baa by
Moody's) are regarded as having adequate capability to pay principal and
interest, they have speculative characteristics. Adverse economic conditions or
changing circumstances are more likely to lead to a weakened capacity to make
principal and interest payments than is the case for higher rated bonds. Lower
rated bonds by Moody's (categories Ba, B, Caa) are of poorer quality and also
have speculative characteristics. Bonds rated Caa may be in default or there may
be present elements of danger with respect to principal or interest. Lower rated
bonds by Standard & Poor's (categories BB, B, CCC) include those which 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. For a specific description of each corporate bond rating category,
please refer to Appendix B to the Statement of Additional Information.
<PAGE>
Industry Concentration
While the Funds diversify their investments by investing, with respect to
75% of their total assets, not more than 5% of their total assets in the
securities of any one issuer, Fund Management normally will invest each Fund's
assets primarily in companies engaged in the particular fields of business
activity designated for investment by that Fund. As a result of this investment
policy, an investment in a Fund may be subject to greater fluctuations in value
than generally would be the case if an investment were made in an investment
company that did not concentrate its investments in a similar manner. Certain
economic factors or specific events may exert a disproportionate impact upon the
prices of equity securities of companies within a particular industry relative
to their impact on the prices of securities of companies engaged in other
industries. For example, the success of the companies in which the Capital Goods
Fund may invest is closely related to overall capital spending levels. Capital
spending is influenced by broad factors such as economic cycles, interest rates,
technological obsolescence, foreign competition and governmental regulation, as
well as individual company factors such as profitability. The Communications
Fund may invest in companies that are developing new technologies and,
accordingly, are subject to the risks of intense competition, failure to obtain
adequate financing or necessary regulatory approvals and rapid product
obsolescence. In addition, the types of companies in which the Communications
Fund may invest generally are subject to substantial government regulation.
Companies engaged in infrastructure projects are subject to various risks,
including difficulties in securing financing for large projects and costs and
delays resulting from environmental considerations. In addition, changes in the
market price of the equity securities of a particular company which occupies a
dominant position in an industry may tend to influence the market prices of
other companies within the same industry. As a result of the foregoing factors,
an investment in one or both of the Funds may not constitute a complete,
balanced investment program.
<PAGE>
Foreign Securities
For U.S. investors, the returns on foreign securities are
influenced not only by the returns on the foreign investments
themselves, but also by currency risk (i.e., changes in the value
of the currencies in which the securities are denominated relative
to the U.S. dollar). In a period when the U.S. dollar generally
rises against foreign currencies, the returns on foreign securities
for a U.S. investor are diminished. By contrast, in a period when
the U.S. dollar generally declines, the returns on foreign
securities generally are enhanced.
Other risks and considerations of international investing include the
following: differences in accounting, auditing and financial reporting standards
which may result in less publicly available information than is generally
available with respect to U.S. issuers; generally higher commission rates on
foreign portfolio transactions and longer settlement periods; the smaller
trading volumes and generally lower liquidity of foreign stock markets, which
may result in greater price volatility; foreign withholding taxes payable on a
Fund's foreign securities, which may reduce dividend income payable to
shareholders; the possibility of expropriation or confiscatory taxation; adverse
changes in investment or exchange control regulations; political instability
which could affect U.S. investment in foreign countries; potential restrictions
on the flow of international capital; and the possibility of a Fund experiencing
difficulties in pursuing legal remedies and collecting judgments. The Fund's
investments in foreign securities may include investments in developing
countries. Many of these securities are speculative and their prices may be more
volatile than those of securities issued by companies located in more developed
countries.
Small Capitalization Companies
The Funds may invest in equity securities issued by small-cap companies.
The Funds' investments in small capitalization stocks may include companies that
have limited operating histories, product lines, and financial and managerial
resources. These companies may be subject to intense competition from larger
companies, and their stock may be subject to more abrupt or erratic market
movements than the stocks of larger, more established companies. Due to these
and other factors, small cap companies may suffer significant losses as well as
realize substantial growth.
Futures, Options and Other Derivative Instruments
The use of futures, options, forward contracts and swaps exposes the Funds
to additional investment risks and transaction costs. If Fund Management seeks
to protect the Funds against potential adverse movements in the securities,
foreign currency or interest rate markets using these instruments, and such
markets do not move in a direction adverse to the Funds, the Funds could be left
in a less favorable position than if such strategies had not been used. Risks
inherent in the use of futures, options, forward contracts and swaps include (1)
the risk that interest rates, securities prices and currency markets will not
move in the directions anticipated;
<PAGE>
(2) imperfect correlation between the price of futures, options and forward
contracts and movements in the prices of the securities or currencies being
hedged; (3) the fact that skills needed to use these strategies are different
from those needed to select portfolio securities; (4) the possible absence of a
liquid secondary market for any particular instrument at any time; and (5) the
possible need to defer closing out certain hedged positions to avoid adverse tax
consequences. Further information on the use of futures, options, forward
foreign currency contracts and swaps and swap-related products, and the
associated risks, is contained in the Statement of Additional Information.
THE FUNDS AND THEIR MANAGEMENT
The Company is a no-load mutual fund, registered with the Securities and
Exchange Commission as an open-end, diversified, management investment company.
It was incorporated on April 12, 1994, under the laws of Maryland. The overall
supervision of each Fund is the responsibility of the Company's board of
directors.
Pursuant to an agreement with the Company, INVESCO Funds Group, Inc.
("INVESCO"), 7800 E. Union Avenue, Denver, Colorado, serves as the Funds'
investment adviser. INVESCO is primarily responsible for providing the Funds
with various administrative services and supervising the Funds' daily business
affairs. These services are subject to review by the Company's board of
directors.
INVESCO is an indirect wholly-owned subsidiary of INVESCO PLC. INVESCO
PLC is a financial holding company that, through its subsidiaries, engages in
the business of investment management on an international basis. INVESCO was
established in 1932 and, as of July 31, 1995, managed 14 mutual funds,
consisting of 38 separate portfolios, with combined assets of approximately
$10.2 billion on behalf of over 790,000 shareholders.
Pursuant to an agreement with INVESCO, INVESCO Trust Company ("INVESCO
Trust"), 7800 E. Union Avenue, Denver, Colorado, serves as the sub-adviser to
each Fund. INVESCO Trust, a trust company founded in 1969, is a wholly-owned
subsidiary of INVESCO that served as adviser or sub-adviser to 41 investment
portfolios as of July 31, 1995, including 27 portfolios in the INVESCO group.
These 27 portfolios had aggregate assets of approximately $9.7 billion as of
July 31, 1995. In addition, INVESCO Trust provides investment management
services to private clients, including employee benefit plans that may be
invested in a collective trust sponsored by INVESCO Trust. INVESCO Trust,
subject to the supervision of INVESCO, is primarily responsible for selecting
and managing the Funds' investments. Although the Company is not a party to the
sub-advisory agreement, the agreement has been approved by INVESCO as the then
sole shareholder of the Company.
<PAGE>
The following individuals serve as portfolio managers for the Funds and
are primarily responsible for the day-to-day management of the Funds' portfolios
of securities:
Capital Goods Fund
Albert M. Grossi Portfolio manager of the Fund since 1995;
portfolio manager of INVESCO Trust
Company; formerly, portfolio
manager/senior analyst of Westinghouse
Pension Investments Corp. (1988 to 1995);
retail equity marketing coordinator for
E. F. Hutton (1981 to 1988); securities
analyst for Shearson American Express
(1975 to 1981); securities analyst for
Mutual Benefit Life Insurance (1974 to
1975); M.B.A. Rutgers University; B.A.,
Rutgers University.
Communications Fund
Brian F. Kelly Portfolio manager of the Fund since 1994;
portfolio manager of INVESCO Strategic
Utilities Portfolio and INVESCO VIF-
Utilities Portfolio, and co-portfolio
manager of INVESCO Balanced Fund;
portfolio manager (1993 to present) and
vice president (1994 to present) of
INVESCO Trust Company; formerly (1986 to
1993), senior equity investment analyst
with Sears Investment Management Company;
B.A., University of Notre Dame; M.B.A.
and J.D., University of Iowa; Certified
Public Accountant.
Each Fund pays INVESCO a monthly advisory fee which is based upon a
percentage of the average net assets of each Fund, determined daily. The maximum
advisory fee is computed at the annual rate of 0.65% on the first $500 million
of each Fund's average net assets, 0.55% on the next $500 million of each Fund's
average net assets and 0.45% on each Fund's average net assets over $1 billion.
Out of its advisory fee which it receives from the Funds, INVESCO pays
INVESCO Trust, as sub-adviser to the Funds, a monthly fee, which is computed at
the annual rate of 0.325% on the first $500 million of each Fund's average net
assets, 0.275% on the next $500 million of each Fund's average net assets and
0.225% on each Fund's average net assets in excess of $1 billion. No fee is paid
by the Funds to INVESCO Trust.
The Company also has entered into an Administrative Services Agreement (the
"Administrative Agreement") with INVESCO. Pursuant to the Administrative
Agreement, INVESCO performs certain administrative, recordkeeping and internal
sub-accounting services, including without limitation, maintaining general
ledger and capital stock accounts, preparing a daily trial balance, calculating
net asset value daily, providing selected generalledger reports and providing
sub-accounting and recordkeeping services for Fund shareholder accounts
maintained by certain retirement and employee benefit plans for the benefit of
participants in such plans.
<PAGE>
For such services, each Fund pays INVESCO a fee consisting of a base fee of
$10,000 per year, plus an additional incremental fee computed at the annual rate
of 0.015% per year of the average net assets of the Fund. INVESCO also is paid a
fee by each Fund for providing transfer agent services. See "Additional
Information."
Each Fund's expenses, which are accrued daily, are generally deducted from
the Fund's total income before dividends are paid. Total expenses of the Capital
Goods Fund and the Communications Fund for the fiscal year ended July 31, 1995,
including investment advisory fees (but excluding brokerage commissions, which
are a cost of acquiring securities), amounted to 2.00% and 1.95%, respectively,
of the Funds' average net assets. Certain expenses for each Fund are being
absorbed by INVESCO and INVESCO Trust Company voluntarily in order to ensure
that each Fund's total expenses do not exceed 2.00%. If such voluntary expense
limitation had not been in effect, the Fund's total expenses for the fiscal year
ended July 31, 1995, would have been 2.96% of the Fund's average net assets.
Fund Management places orders for the purchase and sale of portfolio
securities with brokers and dealers based upon Fund Management's evaluation of
their financial responsibility coupled with their ability to effect transactions
at the best available prices. As discussed under "How Shares Can Be Purchased -
Distribution Expenses," the Company may market shares of the Funds through
intermediary brokers or dealers that have entered into Dealer Agreements with
INVESCO, as the Company's Distributor. The Funds may place orders for portfolio
transactions with qualified broker/dealers that recommend the Funds, or sell
shares of the Funds to clients, or act as agent in the purchase of Fund shares
for clients, if Fund Management believes that the quality of execution of the
transaction and level of commission are comparable to those available from other
qualified brokerage firms.
Fund Management permits investment and other personnel to purchase and
sell securities for their own accounts, subject to a compliance policy governing
personal investing. This policy requires investment and other personnel to
conduct their personal investment activities in a manner that Fund Management
believes is not detrimental to the Funds or Fund Management's other advisory
clients. See the Statement of Additional Information for more detailed
information.
<PAGE>
HOW SHARES CAN BE PURCHASED
Shares of each Fund are sold on a continuous basis by INVESCO,
as the Funds' Distributor, at the net asset value per share next
calculated after receipt of a purchase order in good form. No
sales charge is imposed upon the sale of shares of the Funds. To
purchase shares of either or both Funds, send a check made payable to INVESCO
Funds Group, Inc., together with a completed application form, to:
INVESCO Funds Group, Inc.
Post Office Box 173706
Denver, Colorado 80217-3706
Purchase orders must specify the Fund in which the investment is to be
made.
The minimum initial purchase must be at least $1,000, with subsequent
investments of not less than $50, except that: (1) those shareholders
establishing an EasiVest or direct payroll purchase account, as described below
in the Prospectus section entitled "Services Provided by the Fund," may open an
account without making any initial investment if they agree to make regular,
minimum purchases of at least $50; (2) those shareholders investing in an
Individual Retirement Account (IRA), or through omnibus accounts where
individual shareholder recordkeeping and sub-accounting are not required, may
make initial minimum purchases of $250; (3) Fund Management may permit a lesser
amount to be invested in a Fund under a federal income tax-deferred retirement
plan (other than an IRA account), or under a group investment plan qualifying as
a sophisticated investor; and (4) Fund Management reserves the right to reduce
or waive the minimum purchase requirements in its sole discretion where it
determines such action is in the best interests of the Fund.
The purchase of Fund shares can be expedited by placing bank wire,
overnight courier or telephone orders. Overnight courier orders must meet the
above minimum requirements. In no case can a bank wire order or telephone order
be in an amount less than $1,000. For further information, the purchaser may
call the Funds' office by using the telephone number on the cover of this
Prospectus. Orders sent by overnight courier, including Express Mail, should be
sent to the street address, not Post Office Box, of INVESCO Funds Group, Inc.,
at 7800 E. Union Avenue, Denver, CO 80237.
Orders to purchase shares of either Fund can be placed by telephone.
Shares of the Funds will be issued at the net asset value per share next
determined after receipt of telephone instructions. Generally, payments for
telephone orders must be received by the respective Fund within three business
days or the transaction may be cancelled. In the event of such cancellation, the
purchaser will be held responsible for any loss resulting from a decline in the
value of the shares. In order to avoid such losses, purchasers should send
payments for telephone purchases by overnight courier or bank wire. INVESCO has
agreed to indemnify the Funds for any losses resulting from such cancellations
of telephone purchases.
<PAGE>
If your check does not clear, or if a telephone purchase must
be cancelled due to nonpayment, you will be responsible for any related loss a
Fund or INVESCO incurs. If you are already a shareholder in the INVESCO funds,
the Funds have the option to redeem shares from any identically registered
account in the Funds or any other INVESCO fund as reimbursement for any loss
incurred. You also may be prohibited or restricted from making future purchases
in any of the INVESCO funds.
Persons who invest in the Funds through a securities broker may be charged
a commission or transaction fee for the handling of the transaction if the
broker so elects. Any investor may deal directly with a Fund in any transaction.
In that event, there is no such charge.
Each Fund reserves the right in its sole discretion to reject any order
for purchase of its shares (including purchases by exchange) when, in the
judgment of management, such rejection is in the best interest of the Fund.
Net asset value per share is computed once each day that the New York
Stock Exchange is open as of the close of regular trading on that Exchange
(generally 4:00 p.m., New York time) and also may be computed on other days
under certain circumstances. Net asset value per share for each Fund is
calculated by dividing the market value of the Fund's securities plus the value
of its other assets (including dividends and interest accrued but not
collected), less all liabilities (including accrued expenses), by the number of
outstanding shares of that Fund. If market quotations are not readily available,
a security or other asset will be valued at fair value as determined in good
faith by the board of directors. Debt securities with remaining maturities of 60
days or less at the time of purchase will be valued at amortized cost, absent
unusual circumstances, so long as the Company's board of directors believes that
such value represents fair value.
Distribution Expenses. Each Fund is authorized under a Plan and Agreement
of Distribution pursuant to Rule 12b-1 under the Investment Company Act of 1940
(the "Plan") to use its assets to finance certain activities relating to the
distribution of its shares to investors. Under the Plan, monthly payments may be
made by the Fund to INVESCO to reimburse it for particular expenditures incurred
by INVESCO in connection with the distribution of the Fund's shares to
investors. These expenditures may include the payment of compensation (including
incentive compensation and/or continuing compensation based on the amount of
customer assets maintained in the Fund) to securities dealers and other
financial institutions and organizations, which may include INVESCO affiliated
companies, to obtain various distribution-related and/or administrative services
for the Fund. Such services may include, among other things, processing new
shareholder account applications, preparing and transmitting to the Fund's
Transfer Agent computer processable tapes of all transactions by customers, and
serving as the primary source of information to customers in answering questions
concerning the Fund and their transactions with the Fund.
<PAGE>
In addition, other reimbursable expenditures include those incurred for
advertising, the preparation and distribution of sales literature, the cost of
printing and distributing prospectuses to prospective investors, and such other
services and promotional activities for the Funds as may from time to time be
agreed upon by the Company and its board of directors, including public
relations efforts and marketing programs to communicate with investors and
prospective investors. These securities and activities may be conducted by the
staff of INVESCO or its affiliates or by third parties.
Under the Plan, the Company's reimbursement to INVESCO on behalf of each
Fund is limited to an amount computed at an annual rate of 0.25 of 1% of each
Fund's average net assets during the month. INVESCO is not entitled to
reimbursement for overhead expenses under the Plan, but may be reimbursed for
all or a portion of the compensation paid for salaries and other employee
benefits for the personnel of INVESCO whose primary responsibilities involve
marketing shares of the INVESCO funds, including the Funds. Payment amounts by
each Fund under the Plan, for any month, may only be made to reimburse or pay
expenditures incurred during the rolling 12-month period in which that month
falls, although this period is expanded to 24 months for expenses incurred
during the first 24 months of the Funds' operations. Therefore, any reimbursable
expenses incurred by INVESCO in excess of the limitations described above are
not reimbursable and will be borne by INVESCO. In addition, INVESCO may from
time to time make additional payments from its revenues to securities dealers
and other financial institutions that provide distribution related and/or
administrative services for the Funds. No further payments will be made by a
Fund under the Plan in the event of its termination. Also, any payments made by
a Fund may not be used to finance the distribution of shares of any other fund
of the Company or other mutual fund advised by INVESCO. Payments made by each
Fund under the Plan for compensation of marketing personnel, as noted above, are
based on an allocation formula designed to ensure that all such payments are
appropriate.
SERVICES PROVIDED BY THE FUNDS
Shareholder Accounts. INVESCO maintains a share account that reflects the
current holdings of each shareholder. Share certificates will be issued only
upon specific request. Since certificates must be carefully safeguarded, and
must be surrendered in order to exchange or redeem Fund shares, most
shareholders do not request share certificates in order to facilitate such
transactions. Each shareholder is sent a detailed confirmation of each
transaction in shares of the Funds. Shareholders whose only transactions are
through the EasiVest, direct payroll purchase, automatic monthly exchange or
periodic withdrawal programs, or are reinvestments of dividends or capital gains
in the same or another fund, will receive confirmations of those transactions on
their quarterly statements. These programs are discussed below. For information
regarding a shareholder's account and transactions, the shareholder may call the
Funds' office by using the telephone number on the cover of this Prospectus.
<PAGE>
Reinvestment of Distributions. Dividends and other distributions are
automatically reinvested in additional shares of the Fund making the
distribution at the net asset value per share of that Fund in effect on the
ex-dividend date. A shareholder may, however, elect to reinvest dividends and
other distributions in certain of the other no-load mutual funds advised and
distributed by INVESCO, or to receive payment of all dividends and other
distributions in excess of $10.00 by check by giving written notice to INVESCO
at least two weeks prior to the record date on which the change is to take
effect. Further information concerning these options can be obtained by
contacting INVESCO.
Periodic Withdrawal Plan. A Periodic Withdrawal Plan is available to
shareholders who own or purchase shares of any mutual funds advised by INVESCO
having a total value of $10,000 or more; provided, however, that at the time the
Plan is established, the shareholder owns shares having a value of at least
$5,000 in the fund from which the withdrawals will be made. Under the Periodic
Withdrawal Plan, INVESCO, as agent, will make specified monthly or quarterly
payments of any amount selected (minimum payment of $100) to the party
designated by the shareholder. Notice of all changes concerning the Periodic
Withdrawal Plan must be received by INVESCO at least two weeks prior to the next
scheduled check. Further information regarding the Periodic Withdrawal Plan and
its requirements and tax consequences can be obtained by contacting INVESCO.
Exchange Privilege. Shares of either Fund may be exchanged for shares of
any other Fund of the Company, as well as for shares of any of the following
other no-load mutual funds, which are also advised and distributed by INVESCO,
on the basis of their respective net asset values at the time of the exchange:
INVESCO Diversified Funds, Inc., INVESCO Dynamics Fund, Inc., INVESCO Emerging
Opportunity Funds, Inc., INVESCO Growth Fund, Inc., INVESCO Income Funds, Inc.,
INVESCO Industrial Income Fund, Inc., INVESCO International Funds, Inc., INVESCO
Money Market Funds, Inc., INVESCO Multiple Asset Funds, Inc., INVESCO Strategic
Portfolios, Inc., INVESCO Tax-Free Income Funds, Inc. and INVESCO Value Trust.
An exchange involves the redemption of shares in a Fund and investment of
the redemption proceeds in shares of another Fund of the Company or in shares of
one of the funds listed above. Exchanges will be made at the net asset value per
share next determined after receipt of an exchange request in proper order. Any
gain or loss realized on such an exchange is recognizable for federal income tax
purposes by the shareholder. Exchange requests may be made either by telephone
or by written request to INVESCO Funds Group, Inc., using the telephone number
or address on the cover of this Prospectus. Exchanges made by telephone must be
in an amount of at least $250, if the exchange is being made into an existing
account of one of the INVESCO funds. All exchanges that establish a new account
must meet the Fund's applicable minimum initial investment requirements. Written
exchange requests into an existing account have no minimum requirements other
than the Fund's applicable minimum subsequent investment requirements.
<PAGE>
The privilege of exchanging Fund shares by telephone is available to
shareholders automatically unless expressly declined. By signing the New Account
Application, a Telephone Transaction Authorization Form or otherwise utilizing
telephone exchange privileges, the investor has agreed that the Funds will not
be liable for following instructions communicated by telephone that they
reasonably believe to be genuine. The Funds employ procedures, which they
believe are reasonable, designed to confirm that exchange instructions are
genuine. These may include recording telephone instructions and providing
written confirmations of exchange transactions. As a result of this policy, the
investor may bear the risk of any loss due to unauthorized or fraudulent
instructions; provided, however, that if a Fund fails to follow these or other
reasonable procedures, the Fund may be liable.
In order to prevent abuse of this privilege to the disadvantage of other
shareholders, each Fund reserves the right to terminate the exchange privilege
of any shareholder who requests more than four exchanges in a year. A Fund will
determine whether to do so based on a consideration of both the number of
exchanges any particular shareholder or group of shareholders has requested and
the time period over which those exchange requests have been made, together with
the level of expense to the Fund which will result from effecting additional
exchange requests. The exchange privilege also may be modified or terminated at
any time. Except for those limited instances where redemptions of the exchanged
security are suspended under Section 22(e) of the Investment Company Act of
1940, or where sales of the fund into which the shareholder is exchanging are
temporarily stopped, notice of all such modifications or termination of the
exchange privilege will be given at least 60 days prior to the date of
termination or the effective date of the modification.
Before making an exchange, the shareholder should review the prospectuses
of the funds involved and consider their differences, and should be aware that
the exchange privilege may only be available in those states where exchanges
legally may be made, which will require that the shares being acquired are
registered for sale in the shareholder's state of residence. Shareholders
interested in exercising the exchange privilege may contact INVESCO for
information concerning their particular exchanges.
Automatic Monthly Exchange. Shareholders who have accounts in
any one or more of the mutual funds distributed by INVESCO may
arrange for a fixed dollar amount of their fund shares to be
automatically exchanged for shares of any other INVESCO mutual fund listed under
"Exchange Privilege" on a monthly basis. The minimum monthly exchange in this
program is $50.00. This automatic exchange program can be changed by the
shareholder at any time by notifying INVESCO at least two weeks prior to the
date the change is to be made. Further information regarding this service can be
obtained by contacting INVESCO.
<PAGE>
EasiVest. For shareholders who want to maintain a schedule of monthly
investments, EasiVest uses various methods to draw a preauthorized amount from
the shareholder's bank account to purchase Fund shares. This automatic
investment program can be changed by the shareholder at any time by writing to
INVESCO at least two weeks prior to the date the change is to be made. Further
information regarding this service can be obtained by contacting INVESCO.
Direct Payroll Purchase. Shareholders may elect to have their employer
make automatic purchases of Fund shares for them by deducting a specified amount
from their regular paychecks. This automatic investment program can be modified
or terminated at any time by the shareholder, by notifying the employer. Further
information regarding this service can be obtained by contacting INVESCO.
Tax-Deferred Retirement Plans. Shares of either Fund may be purchased for
self-employed individual retirement plans, IRAs, simplified employee pension
plans and corporate retirement plans. In addition, shares can be used to fund
tax qualified plans established under Section 403(b) of the Internal Revenue
Code by educational institutions, including public school systems and private
schools, and certain kinds of non-profit organizations, which provide deferred
compensation arrangements for their employees.
Prototype forms for the establishment of these various plans, including,
where applicable, disclosure statements required by the Internal Revenue
Service, are available from INVESCO. INVESCO Trust Company, a subsidiary of
INVESCO, is qualified to serve as trustee or custodian under these plans and
provides the required services at competitive rates. Retirement plans (other
than IRAs) receive monthly statements reflecting all transactions in their Fund
accounts. IRAs receive the confirmations and quarterly statements described
under "Shareholder Accounts." For complete information, including prototype
forms and service charges, call INVESCO at the telephone number listed on the
cover of this Prospectus or send a written request to: Retirement Services,
INVESCO Funds Group, Inc., Post Office Box 173706, Denver, Colorado 80217-3706.
<PAGE>
HOW TO REDEEM SHARES
Shares of either Fund may be redeemed at any time at their current net
asset value per share next determined after a request in proper form is received
at the Funds' office. (See "How Shares Can Be Purchased.") Net asset value per
share at the time of redemption may be more or less than the price you paid to
purchase your shares, depending primarily upon the Fund's investment
performance.
If the shares to be redeemed are represented by stock certificates, a
written request for redemption signed by the registered shareholder(s) and the
certificates must be forwarded to INVESCO Funds Group, Inc., Post Office Box
173706, Denver, Colorado 80217-3706. Redemption requests sent by overnight
courier, including Express Mail, should be sent to the street address, not Post
Office Box, of INVESCO Funds Group, Inc. at 7800 E. Union Avenue, Denver, CO
80237. If no certificates have been issued, a written redemption request signed
by each registered owner of the account may be submitted to INVESCO at the
address noted above. If shares are held in the name of a corporation, additional
documentation may be necessary. Call or write for specifics. If payment for the
redeemed shares is to be made to someone other than the registered owner(s), the
signature(s) must be guaranteed by a financial institution which qualifies as an
eligible guarantor institution. Redemption procedures with respect to accounts
registered in the names of broker/dealers may differ from those applicable to
other shareholders.
Be careful to specify the account from which the redemption is to be made.
Shareholders have a separate account for each Fund in which they invest.
Payment of redemption proceeds will be mailed within seven days following
receipt of the required documents. However, payment may be postponed under
unusual circumstances, such as when normal trading is not taking place on the
New York Stock Exchange, or an emergency as defined by the Securities and
Exchange Commission exists. If the shares to be redeemed were purchased by check
and that check has not yet cleared, payment will be made promptly upon clearance
of the purchase check (which may take up to 15 days).
If a shareholder participates in EasiVest, the Fund's automatic monthly
investment program, and redeems all of the shares in his Fund account, INVESCO
will terminate any further EasiVest purchases unless otherwise instructed by the
shareholder.
Because of the high relative costs of handling small accounts, should the
value of any shareholder's account fall below $250 as a result of shareholder
action, each Fund reserves the right to effect the involuntary redemption of all
shares in such account, in which case the account would be liquidated and the
proceeds forwarded to the shareholder. Prior to any such redemption, a
shareholder will be notified and given 60 days to increase the value of the
account to $250 or more.
<PAGE>
Fund shareholders (other than shareholders holding Fund shares in accounts
of IRA plans) may request expedited redemption of shares having a minimum value
of $250 (or redemption of all shares if their value is less than $250) held in
accounts maintained in their name by telephoning redemption instructions to
INVESCO, using the telephone number on the cover of this Prospectus. The
redemption proceeds, at the shareholder's option, either will be mailed to the
address listed for the shareholder's Fund account, or wired (minimum of $1,000)
or mailed to the bank which the shareholder has designated to receive the
proceeds of telephone redemptions. The Funds charge no fee for effecting such
telephone redemptions. Unless Fund Management permits a larger redemption
request to be placed by telephone, a shareholder may not place a redemption
request by telephone in excess of $25,000. These telephone redemption privileges
may be modified or terminated in the future at the discretion of Fund
Management.
For INVESCO Trust Company-sponsored federal income tax-deferred retirement
plans, the term "shareholders" is defined to mean plan trustees that file a
written request to be able to redeem Fund shares by telephone. Shareholders
should understand that, while the Funds will attempt to process all telephone
redemption requests on an expedited basis, there may be times, particularly in
periods of severe economic or market disruption, when (a) they may encounter
difficulty in placing a telephone redemption request, and (b) processing
telephone redemptions will require up to seven days following receipt of the
redemption request, or additional time because of the unusual circumstances set
forth above.
The privilege of redeeming Fund shares by telephone is available to
shareholders automatically unless expressly declined. By signing a New Account
Application, a Telephone Transaction Authorization Form or otherwise utilizing
telephone redemption privileges, the shareholder has agreed that the Funds will
not be liable for following instructions communicated by telephone that they
reasonably believe to be genuine. The Funds employ procedures, which they
believe are reasonable, designed to confirm that telephone instructions are
genuine. These may include recording telephone instructions and providing
written confirmation of transactions initiated by telephone. As a result of this
policy, the investor may bear the risk of any loss due to unauthorized or
fraudulent instructions; provided, however, that if a Fund fails to follow these
or other reasonable procedures, the Fund may be liable.
TAXES, DIVIDENDS AND CAPITAL GAIN DISTRIBUTIONS
Taxes. Each Fund intends to distribute to shareholders substantially all of
its net investment income, net capital gains and net gains from foreign currency
transactions, if any, in order to continue to qualify for tax treatment as a
regulated investment company. Thus, the Funds do not expect to pay any federal
income or excise taxes.
Unless shareholders are exempt from income taxes, they must include all
dividends and capital gain distributions in taxable income for federal, state,
and local income tax purposes. Dividends and other distributions are taxable
whether they are received in cash or automatically invested in shares of a
Fund or another fund in the INVESCO group.
<PAGE>
Each Fund may be subject to the withholding of foreign taxes on dividends
or interest it receives on foreign securities. Foreign taxes withheld will be
treated as an expense of the Fund unless the Fund meets the qualifications to
enable it to pass these taxes through to shareholders for use by them as a
foreign tax credit or deduction.
Shareholders may be subject to backup withholding of 31% on dividends,
capital gain distributions and redemption proceeds. Unless a shareholder is
subject to backup withholding for other reasons, the shareholder can avoid
backup withholding on his Fund account by ensuring that INVESCO has a correct,
certified tax identification number.
Dividends and Capital Gain Distributions. Each Fund earns ordinary or net
investment income, in the form of dividends and interest on its investments.Each
Fund's policy is to distribute substantially all of this income, less Fund
expenses, to shareholders on an annual basis, at the discretion of the Company's
board of directors.
In addition, each Fund realizes capital gains and losses when it sells
securities for more or less than it paid. If total gains on sales exceed total
losses (including losses carried forward from previous years), the Fund has a
net realized capital gain. Net realized capital gains, if any, are distributed
to shareholders at least annually, usually in December.
Dividends and capital gain distributions are paid to shareholders who hold
shares on the record date of the distribution regardless of how long the shares
have been held. A Fund's share price will then drop by the amount of the
distribution on the day the distribution is made. If a shareholder purchases
shares immediately prior to the distribution, the shareholder will, in effect,
have "bought" the distribution by paying full purchase price, a portion of which
is then returned in the form of a taxable distribution.
At the end of each year, information regarding the tax status of dividends
and capital gain distributions is provided to shareholders. Net realized capital
gains are divided into short-term and long-term gains depending on how long a
Fund held the security which gave rise to the gains. The capital gain
distribution consists of long-term capital gains which are taxed at the capital
gains rate. Short-term capital gains are included with income from dividends and
interest as ordinary income and are paid to shareholders as dividends.
Shareholders also may realize capital gains or losses when they sell Fund shares
at more or less than the price originally paid.
Shareholders are encouraged to consult their tax advisers with respect to
these matters. For further information see "Dividends, Capital Gain
Distributions and Taxes" in the Statement of Additional Information.
<PAGE>
ADDITIONAL INFORMATION
Voting Rights. All shares of the Funds have equal voting rights, based on
one vote for each share owned. Voting with respect to certain matters, such as
ratification of independent accountants and the election of directors, will be
by all Funds of the Company voting together. In other cases, such as voting upon
an investment advisory contract, voting is on a Fund-by-Fund basis. When not all
Funds are affected by a matter to be voted upon, only shareholders of the Fund
or Funds affected by the matter will be entitled to vote thereon. The Company is
not generally required, and does not expect, to hold regular annual meetings of
shareholders. However, the board of directors will call special meetings of
shareholders for the purpose, among other reasons, of voting upon the question
of removal of a director or directors when requested to do so in writing by the
holders of 10% or more of the outstanding shares of the Company or as may be
required by applicable law or the Company's Articles of Incorporation. The
Company will assist shareholders in communicating with other shareholders as
required by the Investment Company Act of 1940. Directors may be removed by
action of the holders of a majority or more of the outstanding shares of the
Company.
Master/Feeder Option. The Company may in the future seek to achieve each
Fund's investment objective by investing all of the Fund's assets in another
investment company having the same investment objective and substantially the
same investment policies and restrictions as those applicable to the Fund. It is
expected that any such investment company would be managed by INVESCO in
substantially the same manner as the existing Fund. If permitted by applicable
laws and policies then in effect, any such investment may be made in the sole
discretion of the Company's board of directors without further approval of the
shareholders of the respective Fund. However, Fund shareholders will be given at
least 30 days prior notice of any such investment. Such investment would be made
only if the Company's board of directors determines it to be in the best
interests of the respective Fund and its shareholders. In making that
determination, the board will consider, among other things, the benefits to
shareholders and/or the opportunity to reduce costs and achieve operational
efficiencies. No assurance can be given that costs will be materially reduced if
this option is implemented.
Shareholder Inquiries. All inquiries regarding the Funds should be
directed to the Funds at the telephone number or mailing address set forth on
the cover page of this Prospectus.
<PAGE>
Transfer and Dividend Disbursing Agent. INVESCO Funds Group, Inc., 7800 E.
Union Ave., Denver, Colorado 80237, acts as registrar, transfer agent, and
dividend disbursing agent for the Funds pursuant to a Transfer Agency Agreement
which provides that each Fund will pay an annual fee of $14.00 per shareholder
account or omnibus account participant. The transfer agency fee is not charged
to each shareholder's or participant's account, but is an expense of the Fund to
be paid from the Fund's assets. Registered broker-dealers, third party
administrators of tax-qualified retirement plans and other entities, including
affiliates of INVESCO, may provide sub-transfer agency services to a Fund which
reduce or eliminate the need for identical services to be provided on behalf of
the Fund by INVESCO. In such cases, INVESCO may pay the third party an annual
sub-transfer agency fee of up to $14.00 per participant in the third party's
omnibus account out of the transfer agency fee which is paid to INVESCO by the
Fund.
INVESCO SPECIALTY FUNDS, INC.
Two no-load mutual funds
investing globally in
designated market sectors.
PROSPECTUS
September 11, 1995
To receive general information and prospectuses on any of INVESCO's funds or
retirement plans, or to obtain current account or price information, call
toll-free:
1-800-525-8085
To reach PAL, your 24-hour Personal Account Line, call:
1-800-424-8085
Or write to:
INVESCO Funds Group, Inc., Distributor
Post Office Box 173706
Denver, Colorado 80217-3706
If you're in Denver, visit one of our convenient Investor Centers:
Cherry Creek
155-B Fillmore Street
Denver Tech Center
7800 East Union Avenue
Lobby Level
<PAGE>
PROSPECTUS
September 11, 1995
INVESCO LATIN AMERICAN GROWTH FUND
INVESCO Latin American Growth Fund (the "Fund") seeks to achieve capital
appreciation by investing, under normal circumstances, at least 65% of its total
assets in equity securities (common stocks and, to a lesser degree, depository
receipts, preferred stocks and securities convertible into common stocks, such
as rights, warrants and convertible debt securities) of Latin American issuers.
For purposes of this Fund Latin America will include: Mexico, Central America,
South America, and the Spanish speaking islands of the Caribbean. The Fund is
not intended as a complete investment program due to risks of investing in the
Fund. For a description of risks inherent in investing in the Fund see "Risk
Factors" on page 45 and "Portfolio Turnover" on page 43.
The Fund is a series of INVESCO Specialty Funds, Inc. (the "Company"), a
diversified, managed, no-load mutual fund consisting of four separate portfolios
of investments. Separate prospectuses are available upon request from INVESCO
Funds Group, Inc. for the Company's other funds, INVESCO Worldwide Capital Goods
Fund, INVESCO Worldwide Communications Fund, and INVESCO European Small Company
Fund. Investors may purchase shares of any or all of the Funds. Additional funds
may be offered in the future.
This Prospectus provides you with the basic information you should know
before investing in the Fund. You should read it and keep it for future
reference. A Statement of Additional Information containing further information
about the Fund has been filed with the Securities and Exchange Commission. You
can obtain a copy without charge by writing INVESCO Funds Group, Inc., Post
Office Box 173706, Denver, Colorado 80217-3706; or by calling 1- 800-525-8085.
The Fund may invest up to 35% of its assets in lower rated bonds and
foreign debt securities, commonly known as "junk bonds." Investments of this
type are subject to greater risks, including default risks, than those found in
higher rated securities. Purchaser should carefully assess the risks associated
with an investment in this Fund. See "Investment Objective and Policies" and
"Risk Factors."
------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE. SHARES OF THE FUND ARE NOT DEPOSITS OR
OBLIGATIONS OF, OR GUARANTEED OR ENDORSED BY, ANY BANK OR OTHER FINANCIAL
INSTITUTION. THE SHARES OF THE FUND ARE NOT FEDERALLY INSURED BY THE FEDERAL
DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD OR ANY OTHER AGENCY.
THE STATEMENT OF ADDITIONAL INFORMATION, DATED SEPTEMBER 11, 1995, IS HEREBY
INCORPORATED BY REFERENCE INTO THIS PROSPECTUS.
<PAGE>
TABLE OF CONTENTS Page
ANNUAL FUND EXPENSES 35
FINANCIAL HIGHLIGHTS 37
PERFORMANCE DATA 38
INVESTMENT OBJECTIVE AND POLICIES 39
RISK FACTORS 45
THE FUND AND ITS MANAGEMENT 52
HOW SHARES CAN BE PURCHASED 55
SERVICES PROVIDED BY THE FUND 57
HOW TO REDEEM SHARES 61
TAXES, DIVIDENDS AND CAPITAL GAIN DISTRIBUTIONS 63
ADDITIONAL INFORMATION 64
<PAGE>
ANNUAL FUND EXPENSES
The Fund is no-load; there are no fees to purchase, exchange or redeem
shares other than a fee to redeem or exchange shares held less than 12 months.
(See "Shareholder Transaction Expenses.") The Fund, however, is authorized to
pay a distribution fee pursuant to Rule 12b-1 under the Investment Company Act
of 1940. (See "How Shares Can Be Purchased--Distribution Expenses.") Lower
expenses benefit Fund shareholders by increasing the Fund's total return.
Shareholder Transaction Expenses
Sales load "charge" on purchases None
Sales load "charge" on reinvested dividends None
Redemption fees 2.00%*
Exchange fees 2.00%*
Annual Fund Operating Expenses
(as a percentage of average net assets)
Management Fee 0.75%
<PAGE>
12b-1 Fees 0.25%
Other Expenses 1.00%
(after voluntary expense limitation)(1)
Transfer Agency Fee(2) 0.23%
General Services, Administrative 0.77%
Services, Registration, Postage (3)
Total Fund Operating Expenses 2.00%
(after voluntary expense limitation)(1)
*There is a 2% fee retained by the Fund to offset transaction costs and other
expenses associated with short-term redemptions and exchanges, which is imposed
only on redemptions or exchanges of shares held less than 12 months.
(1) Certain Fund expenses are being absorbed voluntarily by INVESCO
Funds Group, Inc. ("INVESCO") and MIM International Limited to ensure that
expenses for the Fund will not exceed 2.00% of the Fund's average net assets
pursuant to an agreement among the Fund, INVESCO and MIM International Limited.
In the absence of such voluntary expense limitation, the Fund's "Other Expenses"
and "Total Fund Operating Expenses" in the above table would have been 3.49% and
4.49%, respectively, of the Fund's average net assets based on the actual
expenses of the Fund for the fiscal period ended July 31, 1995.
(2) Consists of the transfer agency fee described under
"Additional Information-Transfer and Dividend Disbursing Agent."
(3) Includes, but is not limited to, fees and expenses of directors,
custodian bank, legal counsel and auditors, a securities pricing service, costs
of administrative services furnished under an Administrative Services Agreement,
costs of registration of Fund shares under applicable laws, and costs of
printing and distributing reports to shareholders.
Example
A shareholder would pay the following expenses on a $1,000 investment for
the periods shown, assuming (1) a 5% annual return and (2) redemption at the end
of each time period:
1 Year 3 Years 5 Years 10 Years
$21 $63 $109 $234
The purpose of the foregoing expense table and Example is to assist
investors in understanding the various costs and expenses that an investor in
the Fund will bear directly or indirectly. Such expenses are paid from the
Fund's assets. (See "The Fund and Its Management.") The Example should not be
considered a representation of past or future expenses, and actual expenses may
be greater or less than those shown. The assumed 5% annual return is
hypothetical and should not be considered a representation of past or future
annual returns, which may be greater or less than the assumed amount.
As a result of the 0.25% 12b-1 fee paid by the Fund, investors who own
Fund shares for a long period of time may pay more than the economic equivalent
of the maximum front-end sales charge permitted for mutual funds by the National
Association of Securities Dealers, Inc.
<PAGE>
INVESCO Specialty Funds, Inc.
FINANCIAL HIGHLIGHTS
(For a Fund Share Outstanding throughout each Period)
Period Ended July 31, 1995
The following information has been audited by Price Waterhouse LLP,
independent accountants. This information should be read in conjunction with the
audited financial statements and the report of independent accountants thereon
appearing in the Fund's 1995 Annual Report to Shareholders, which is
incorporated by reference into the Statement of Additional Information. Both are
available without charge by contacting INVESCO Funds Group, Inc. at the address
or telephone number shown below.
Period Ended July 31, 1995
Latin American
Growth
Fund
PER SHARE DATA
Net Asset Value-- Beginning of Period $10.00
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income 0.02
Net Gains on Securities
(Both Realized and Unrealized) 1.69
Total from Investment Operations 1.71
LESS DISTRIBUTIONS
Dividends from Net Investment Income 0.02
Net Asset Value-- End of Period $11.69
TOTAL RETURN 17.09%*
RATIOS
Net Assets -- End of Period ($000 Omitted) $7,423
Ratio of Expenses to Average Net Assets# 2.00%~
Ratio of Net Investment Income to Average
Net Assets# 0.79%~
Portfolio Turnover Rate 30%*
^From February 15, 1995, commencement of operations, to July 31,
1995.
*These amounts are based on operations for the period shown and, accordingly,
are not representative of a full year. Total return for the Latin American
Growth Fund does not reflect the effect of the applicable redemption fees.
#Various expenses of the Latin American Growth Fund were voluntarily
absorbed by INVESCO for the period ended July 31, 1995. If such expenses had not
been voluntarily absorbed, ratio of expenses to average net assets would have
been 4.49% (annualized) and ratio of net investment income to average net
assets would have been (1.70%)(annualized).
~Annualized
Further information about the performance of the Fund is contained in the
Company's Annual Report to Shareholders, which may be obtained without charge by
writing INVESCO Funds Group, Inc., P.O. Box 173706, Denver, Colorado 80217-3706;
or by calling 1-800- 525-8085.
<PAGE>
PERFORMANCE DATA
From time to time, the Fund may advertise its total return performance.
These figures are based upon historical investment results and are not intended
to indicate future performance. The "total return" of the Fund refers to the
average annual rate of return of an investment in the Fund. This figure is
computed by calculating the percentage change in value of an investment of
$1,000, assuming reinvestment of all income dividends and other distributions,
to the end of a specified period. Periods of one year, five years, ten years
and/or life of the Fund are generally used. Thus, a report of total return
performance should not be considered as representative of future performance.
The Fund charges no sales loads which would affect the total return computation.
However, the total return computation may be affected as a result of the 2%
redemption or exchange fee which is retained by the Fund to offset transaction
costs and other expenses associated with short-term redemptions and exchanges,
which is imposed on redemptions or exchanges of shares held less than 12 months.
In conjunction with performance reports and/or analyses of shareholder
service for the Fund, comparative data between the Fund's performance for a
given period and recognized indices of investment results for the same period,
and/or assessments of the quality of shareholder service, may be provided to
shareholders. Such indices include indices provided by Dow Jones & Company,
Standard & Poor's, Lipper Analytical Services, Inc., Lehman Brothers, National
Association of Securities Dealers Automated Quotations, Frank Russell Company,
Value Line Investment Survey, the American Stock Exchange, Morgan Stanley
Capital International, Wilshire Associates, the Financial Times-Stock Exchange,
the New York Stock Exchange, the Nikkei Stock Average and the Deutcher
Aktienindex, all of which are unmanaged market indicators. In addition,
rankings, ratings, and comparisons of investment performance and/or assessments
of the quality of shareholder service appearing in publications such as Money,
Forbes, Kiplinger's Personal Finance, Morningstar, and similar sources which
utilize information compiled (i) internally; (ii) by Lipper Analytical Services,
Inc.; or (iii) by other recognized analytical services, may be used in
advertising. The Lipper Analytical Services, Inc. mutual fund rankings and
comparisons, which may be used by the Fund in performance reports, will be drawn
from the "Latin American" Lipper mutual fund grouping, in addition to the
broad-based Lipper general fund grouping.
<PAGE>
INVESTMENT OBJECTIVE AND POLICIES
INVESCO Latin American Growth Fund seeks to achieve capital appreciation
by investing, under normal circumstances, at least 65% of its total assets in
equity securities (common stocks and, to a lesser degree, depository receipts,
preferred stocks and securities convertible into common stocks, such as rights,
warrants and convertible debt securities) of Latin American issuers. The
foregoing investment objective is fundamental and may not be changed in any
material respect without the approval of the Fund's shareholders. For purposes
of this Fund Latin America will include: Mexico, Central America, South America,
and the Spanish speaking islands of the Caribbean. The Fund defines securities
of Latin American issuers as follows: (1) securities of companies organized
under the laws of a Latin American country; (2) securities of companies for
which the principal securities trading market is in Latin America; (3)
securities issued or guaranteed by a government agency, instrumentality,
political subdivision, or central bank of a Latin American country; (4)
securities of issuers, wherever organized, with at least 50% of the issuer's
assets, capitalization, gross revenues, or profit in any one of the two most
current fiscal years derived from activities or assets in Latin America; or (5)
securities of Latin American issuers, as defined above, in the form of
depository shares.
The economies of Latin American countries may vary widely in their
condition, and may be subject to certain changes that could have a positive or
negative impact on the Fund. Investments in foreign securities involve certain
risks which are discussed below under "Risk Factors."
Investment in this Fund involves above-average investment risk. It is
designed as a long-term investment and not for short-term trading purposes, and
should not be considered a complete investment program. A 2% fee, described more
fully under "Services Provided by the Fund" and "How to Redeem Shares," is
payable to the Fund for the benefit of remaining shareholders for redemption or
exchange of shares held less than one year.
Under normal conditions, the Fund will invest primarily in equity
securities (common stocks and, to a lesser degree, depository receipts,
preferred stocks and securities convertible into common stocks, such as rights,
warrants and convertible debt securities) which are discussed more fully in the
Statement of Additional Information. In selecting the equity securities in
<PAGE>
which the Fund invests, the Fund's investment adviser and sub-adviser
(collectively, "Fund Management") attempts to identify companies that have
demonstrated or, in Fund Management's opinion, are likely to demonstrate in the
future, strong earnings growth that reflects the underlying economic activity
within the country or countries in which they operate. The dividend payment
records of companies are also considered. Equity securities may be issued by
either established, well-capitalized companies or newly-formed, small-cap
companies, and may trade on regional or national stock exchanges or in the
over-the-counter market. The Fund's investments in small capitalization stocks
may include companies that have limited operating histories, product lines, and
financial and managerial resources. These companies may be subject to intense
competition from larger companies, and their stock may be subject to more abrupt
or erratic market movements than the stocks of larger, more established
companies. Due to these and other factors, small-cap companies may suffer
significant losses as well as realize substantial growth.
The balance of the Fund's assets may be invested in securities of U.S. and
other non-Latin American corporate or governmental issuers. These investments
may include equity securities or fixed-income securities selected to meet the
Fund's investment objective of capital appreciation. Such equity securities may
be issued by either established, well-capitalized companies or newly-formed,
small-cap companies, and may trade on regional or national stock exchanges or in
the over-the-counter market. Such fixed-income securities must meet the quality
standards described below. The risks of investing in lower rated debt securities
and in foreign securities are discussed below under "Risk Factors." In addition,
the Fund may hold certain cash and cash equivalent securities as cash reserves
("cash securities").
As discussed above, consistent with its investment objective, the Fund may
invest in fixed income securities (corporate bonds, commercial paper, debt
securities issued by the U.S. government, its agencies and instrumentalities, or
foreign governments and, to a lesser extent, municipal bonds, asset-backed
securities and zero coupon bonds). The Fund may invest up to 35% of its total
assets in debt securities that are rated below BBB by Standard & Poor's Ratings
Group ("Standard & Poor's") or Baa by Moody's Investors Service, Inc.
("Moody's") or, if unrated, that are judged by Fund Management to be equivalent
in quality to debt securities having such ratings (commonly referred to as "junk
bonds"). The Fund expects that most foreign debt securities in which it invests
will not be rated by U.S. rating services, as discussed more fully below. In no
event will the Fund ever invest in a debt security rated below CCC by Standard &
Poor's or Caa by Moody's. The risks of investing in lower rated debt securities
are discussed below under "Risk Factors."
The amounts invested in stocks, bonds and cash securities may be varied
from time to time, depending upon Fund Management's assessment of business,
economic and market conditions. In periods of adverse economic and market
conditions, as determined by Fund Management,
<PAGE>
the Fund may depart from its basic investment objective and assume a
temporary defensive position, with up to 100% of its assets invested in U.S.
government and agency securities, investment grade corporate bonds, or cash
securities such as domestic certificates of deposit and bankers' acceptances,
repurchase agreements and commercial paper. The Fund reserves the right to hold
equity, fixed income and cash securities in whatever proportion is deemed
desirable at any time for temporary defensive purposes. While the Fund is in a
temporary defensive position, the opportunity to achieve capital appreciation
will be limited; however, the ability to maintain a temporary defensive position
enables the Fund to seek to avoid capital losses during market downturns. Under
normal market conditions, the Fund does not expect to have a substantial portion
of its assets invested in cash securities.
In order to hedge its portfolio, the Fund may purchase and write options
on securities (including index options and options on foreign securities), and
may invest in futures contracts for the purchase or sale of foreign currencies,
fixed-income securities and instruments based on financial indices
(collectively, "futures contracts"), options on futures contracts, forward
contracts and interest rate swaps and swap-related products. Interest rate swaps
involve the exchange by the Fund with another party of their respective
commitments to pay or receive interest, e.g., an exchange of floating rate
payments for fixed rate payments. These practices and securities, some of which
are known as derivatives, and their risks are discussed below under "Risk
Factors" and in the Statement of Additional Information.
Additional information on certain types of securities in which the Fund
may invest is set forth below:
When-Issued Securities
The Fund may make commitments in an amount of up to 10% of the value of
its total assets at the time any commitment is made to purchase or sell equity
or debt securities on a when-issued or delayed delivery basis (i.e., securities
may be purchased or sold by the Fund with settlement taking place in the future,
often a month or more later). The payment obligation and, in the case of debt
securities, the interest rate that will be received on the securities generally
are fixed at the time the Fund enters into the commitment. During the period
between purchase and settlement, no payment is made by the Fund and no interest
accrues to the Fund. At the time of settlement, the market value of the security
may be more or less than the purchase price, and the Fund bears the risk of such
market value fluctuations. The Fund maintains cash, U.S. government securities,
or other high-grade debt obligations readily convertible into cash having an
aggregate value equal to the amount of such purchase commitments in a segregated
account until payment is made.
<PAGE>
Illiquid and Rule 144A Securities
The Fund is authorized to invest in securities that are illiquid because
they are subject to restrictions on their resale ("restricted securities") or
because, based upon their nature or the market for such securities, they are not
readily marketable. However, the Fund will not purchase any such security if the
purchase would cause the Fund to invest more than 15% of its net assets in
illiquid securities. Repurchase agreements maturing in more than seven days will
be considered as illiquid for purposes of this restriction. Investments in
illiquid securities involve certain risks to the extent that the Fund may be
unable to dispose of such a security at the time desired or at a reasonable
price. In addition, in order to resell a restricted security, the Fund might
have to bear the expense and incur the delays associated with effecting
registration.
Certain restricted securities that are not registered for sale to the
general public, but that can be resold to institutional investors ("Rule 144A
Securities"), may be purchased without regard to the foregoing 15% limitation if
a liquid institutional trading market exists. The liquidity of the Fund's
investments in Rule 144A Securities could be impaired if dealers or
institutional investors become uninterested in purchasing these securities. The
Company's board of directors has delegated to Fund Management the authority to
determine the liquidity of Rule 144A Securities pursuant to guidelines approved
by the board. The Fund has agreed with certain states that no more than 10% of
its total assets will be invested in restricted securities which are not
eligible for resale pursuant to Rule 144A. For more information concerning Rule
144A Securities, see the Statement of Additional Information.
The settlement period of securities transactions in foreign markets may be
longer than in domestic markets. These considerations generally are more of a
concern in developing countries. For example, the possibility of political
upheaval and the dependence on foreign economic assistance may be greater in
these countries than in developed countries.
Repurchase Agreements
The Fund may enter into repurchase agreements with respect to debt
instruments eligible for investment by the Fund. Such agreements may be
considered loans under the Investment Company Act of 1940. These agreements are
entered into with member banks of the Federal Reserve System, registered
broker-dealers, and registered government securities dealers, which are deemed
creditworthy. A repurchase agreement is a means of investing monies for a short
period. In a repurchase agreement, the Fund acquires a debt instrument
(generally a security issued by the U.S. government or an agency thereof, a
banker's acceptance, or a certificate of deposit) subject to resale to the
seller at an agreed upon price and date (normally, the next business day). In
the event that the original seller defaults on its obligation to repurchase the
security, the Fund could incur costs or delays in seeking to sell such security.
To minimize risk, the securities underlying each repurchase agreement will be
maintained with the Fund's custodian in an amount at least equal to the
repurchase price under the agreement (including accrued interest), and such
agreements will be effected only with parties that meet certain creditworthiness
standards established by the Company's board of directors. The Fund will not
enter into a repurchase agreement maturing in more than seven days if as a
result more than 10% of its total assets would be invested in such repurchase
agreements and other illiquid securities. The Fund has not adopted any limit on
the amount of its net assets that may be invested in repurchase agreements
maturing in seven days or less.
<PAGE>
Securities Lending
The Fund also may lend its securities to qualified brokers, dealers,
banks, or other financial institutions. This practice permits the Fund to earn
income, which, in turn, can be invested in additional securities of the type
described in this Prospectus in pursuit of the Fund's investment objective.
Loans of securities by the Fund will be collateralized by cash, letters of
credit, or securities issued or guaranteed by the U.S. government or its
agencies equal to at least 100% of the current market value of the loaned
securities, determined on a daily basis. Cash collateral will be invested only
in high quality short-term investments offering maximum liquidity. Lending
securities involves certain risks, the most significant of which is the risk
that a borrower may fail to return a portfolio security. The Fund monitors the
creditworthiness of borrowers in order to minimize such risks. The Fund will not
lend any security if, as a result of the loan, the aggregate value of securities
then on loan would exceed 33-1/3% of the Fund's total assets (taken at market
value).
Portfolio Turnover
There are no fixed limitations regarding portfolio turnover for the Fund's
portfolio. Although the Fund does not trade for short-term profits, securities
may be sold without regard to the time they have been held in the Fund when, in
the opinion of Fund Management, investment considerations warrant such action.
In addition, portfolio turnover rates may increase as a result of large amounts
of purchases or redemptions of Fund shares due to economic, market or other
factors that are not within the control of Fund Management. As a result, while
it is anticipated that the portfolio turnover rate for the Fund's portfolio
generally will not exceed 200%, under certain market conditions the portfolio
turnover rate may exceed 200%, and may be higher than that of other investment
companies seeking capital appreciation. Increased portfolio turnover would cause
the Fund to incur greater brokerage costs than would otherwise be the case, and
may result in the acceleration of capital gains that are taxable when
distributed to shareholders. The Fund's portfolio turnover rates are set forth
under "Financial Highlights" and, along with the Fund's brokerage allocation
policies, are discussed in the Statement of Additional Information.
<PAGE>
Investment Restrictions
The Fund is subject to a variety of restrictions regarding its investments
that are set forth in this Prospectus and in the Statement of Additional
Information. Certain of the Fund's investment restrictions are fundamental, and
may not be altered without the approval of the Fund's shareholders. Such
fundamental investment restrictions include the restrictions which prohibit the
Fund from: lending more than 33-1/3% of its total assets to other parties
(excluding purchases of commercial paper, debt securities and repurchase
agreements); investing more than 25% of the value of the Fund's total assets in
any one industry (other than government securities); with respect to 75% of its
total assets, purchasing the securities of any one issuer (other than cash items
and government securities) if the purchase would cause the Fund to have more
than 5% of its total assets invested in the issuer or to own more than 10% of
the outstanding voting securities of the issuer; and borrowing money or issuing
senior securities except that the Fund may borrow money for temporary or
emergency purposes (not for leveraging or investment) and may enter into reverse
repurchase agreements in an aggregate amount not exceeding 33-1/3% of its total
assets. However, unless otherwise noted, the Fund's investment restrictions and
its investment policies are not fundamental and may be changed by action of the
Company's board of directors. Unless otherwise noted, all percentage limitations
contained in the Fund's investment policies and restrictions apply at the time
an investment is made. Thus, subsequent changes in the value of an investment
after purchase or in the value of the Fund's total assets will not cause any
such limitation to have been violated or to require the disposition of any
investment, except as otherwise required by law. If the credit ratings of an
issuer are lowered below those specified for investment by the Fund, the Fund is
not required to dispose of the obligations of that issuer. The determination of
whether to sell such an obligation will be made by Fund Management based upon an
assessment of credit risk and the prevailing market price of the investment. If
the Fund borrows money, its share price may be subject to greater fluctuation
until the borrowing is repaid. The Fund attempts to minimize such fluctuations
by not purchasing additional securities when borrowings, including reverse
repurchase agreements, are greater than 5% of the value of the Fund's total
assets. As a fundamental policy in addition to the above, the Fund may,
notwithstanding any other investment policy or limitation (whether or not
fundamental), invest all of its assets in the securities of a single open-end
management investment company with substantially the same fundamental investment
objectives, policies and limitations as the Fund. See "Additional
Information-Master/Feeder Option."
<PAGE>
RISK FACTORS
There can be no assurance that the Fund will achieve its investment
objective. The Fund's investments in common stocks and other equity securities
may, of course, decline in value. The Fund's assets will be invested primarily
in non-U.S. issuers. Investors should recognize that investing in securities of
non-U.S. issuers involves certain risks and special considerations, including
those set forth below, which are not typically associated with investing in
securities of U.S. issuers. Further, certain investments that the Fund may
purchase, and investment techniques that the Fund may use, involve risks,
including those set forth below.
Social Political and Economic Risks
The Fund may make investments in developing countries that involve
exposure to economic structures that generally are less diverse and mature than
in the United States, and to political systems that may be less stable. A
developing country can be considered to be a country that is in the initial
stages of its industrialization cycle. In the past, markets of developing
countries have been more volatile than the markets of developed countries;
however, such markets often have provided higher rates of return to investors.
The Latin American countries in which the Fund will invest may be subject
to a substantially greater degree of social, political and economic instability
than is the case in the United States, Japan and Western European countries.
Such instability may result from, among other things, the following: (i)
authoritarian governments or military involvement in political and economic
decision-making, and changes in government through extra- constitutional means;
(ii) popular unrest associated with demands for improved political, economic and
social conditions; (iii) internal insurgencies and terrorist activities; (iv)
hostile relations with neighboring countries; and (v) drug trafficking. Social,
political and economic instability could significantly disrupt the principal
financial markets in which the Fund invests and adversely affect the value of
the Fund's assets.
The economies of individual Latin American countries may differ favorably
or unfavorably and significantly from the U.S. economy in such respects as the
rate of growth of gross domestic product or gross national product, rate of
inflation, currency depreciation, capital reinvestment, resource self-
sufficiency, structural unemployment and balance of payments position.
Governments of many Latin American countries have exercised and continue to
exercise substantial influence over many aspects of the private sector. In some
cases, the government owns or controls many companies, including some of the
largest in the country. Accordingly, government actions in the future could have
a significant effect on economic conditions in a Latin American country, which
could affect private sector companies and the Fund, and on market conditions,
prices and yields of securities in the Fund's portfolio. There may be the
possibility of nationalization, asset expropriations or future confiscatory
levels of taxation affecting the Fund. In the event of nationalization,
expropriation or other confiscation, the Fund may not be fairly compensated for
its loss and could lose its entire investment in the country involved.
<PAGE>
The economies of most Latin American countries are heavily dependent upon
international trade and accordingly are affected by protective trade barriers
and the economic conditions of their trading partners. The enactment by the
United States or other principal trading partners of protectionist trade
legislation, reduction of foreign investment in the local economies and general
declines in the international securities markets could have a significant
adverse effect upon the securities markets of these countries. The economies of
Latin American countries are vulnerable to weaknesses in world prices for their
commodity exports and natural resources.
Certain of the Latin American countries are among the largest debtors to
commercial banks and foreign governments. Currently, Brazil is the largest
debtor among developing countries followed by Mexico. Since 1982, certain Latin
American countries, including Argentina, Brazil, Chile and Mexico, have
experienced difficulty in servicing their sovereign debt obligations in a timely
manner. Many such countries have negotiated with foreign creditors to
restructure such sovereign debt and may enter into such negotiations in the
future. Obligations arising from past restructuring agreements have affected,
and those arising from future restructuring agreements may affect, the economic
performance and political and social stability of Latin American countries.
Changes in the political leadership or policies of the governments of the
Latin American countries in which the Fund invests or in other countries that
influence them, may effect a deterioration of the current climate for foreign
investment and result in a reduction in value of the Fund's investments there.
In the past, upon the assumption of power by authoritarian regimes in particular
Latin American countries, those governments expropriated significant real and
personal property holdings, without any or adequate compensation. There can be
no assurance that companies in which the Fund holds securities, property held by
such companies or the Fund's securities themselves, will not also be
expropriated, nationalized, or otherwise confiscated, resulting in substantial
losses to the Fund and its shareholders. The Fund's investments would similarly
be adversely affected by exchange control regulations in any of those countries.
Securities Markets
The market capitalizations of listed equity securities on exchanges in
Latin American nations is significantly smaller than those of the United States
and other major economies. Only a few issuers may constitute a major portion of
the market capitalization and trading equity. A large segment of the ownership
of many Latin American companies may be held by a limited number of persons and
families, which may limit the number of shares available for investment by the
Fund. As a consequence, individual Latin American securities markets are
vulnerable to the effect of large investors' trading significant blocks of
securities or by large dispositions of securities, e.g., as a result of margin
calls.
The resulting limitations on the liquidity of Latin American securities
will influence the Fund's capability for acquiring and disposing of such
securities at the price and time it desires to do so.
<PAGE>
Foreign Securities
Due to the absence of established securities markets in certain Latin
American countries, there may be restrictions on investment by foreigners in the
securities of companies in these countries, and difficulties in removing from
certain of these countries the dollars invested in such companies. The Fund's
ability to invest may be restricted to the use of investment vehicles authorized
by the local government, investment in shares of other investment companies; or
investments in American Depository Receipts ("ADRs"); American Depository
Shares, and Global Depository Shares.
ADRs are instruments, usually issued by a U.S. bank or trust company,
evidencing ownership of securities of a foreign issuer into which the ADRs may
be convertible. ADRs are designed for use in United States markets and may be
traded on U.S. securities exchanges or over-the-counter markets. They are
denominated in dollars rather than the currency of the country in which the
underlying securities are issued.
ADRs may be issued in sponsored or unsponsored programs. In sponsored
programs, the issuer makes arrangements to have its securities traded in the
form of ADRs; in unsponsored programs, the issuer may not be directly involved
in the creation of the program. Although the regulatory requirements with
respect to sponsored and unsponsored programs are generally similar, the issuers
of unsponsored ADRs are not obligated to disclose material information in the
U.S. and, therefore, such information may not be reflected in the market value
of the ADRs. ADRs are subject to certain of the same risks as direct investments
in foreign securities, including the risk that changes in the value of the
currency in which the security underlying an ADR is denominated relative to the
U.S. dollar may adversely affect the value of the ADR.
As indicated above, the Fund may deem it most practical to invest in
certain countries through other investment companies or similar vehicles,
although there can be no assurance that any such vehicles will be available or
will themselves have invested in the securities found most desirable by the
Fund. The Fund will not invest through other entities unless, in the opinion of
Fund Management, the potential advantages of such investment justify the Fund's
bearing its ratable share of the expenses of such entity (constituting duplicate
levels of advisory fees to be borne by the Fund and its shareholders) and its
share of any premium encompassed in the market value of such entity at the time
of the Fund's investment over the market value of the entity's underlying
holdings. In addition, there may be tax ramifications relating to investment in
such entities. Investments by the Fund in other investment companies are subject
to the following limits imposed by the Investment Company Act of 1940: no more
than 5% of the Fund's total assets may be invested in any one investment company
(but no more than 3% of the voting stock of the underlying investment company)
and no more than 10% of the Fund's total assets may be invested in other
investment companies in the aggregate.
<PAGE>
For U.S. investors, the returns on foreign securities are influenced not
only by the returns on the foreign investments themselves, but also by currency
fluctuations (i.e., changes in the value of the currencies in which the
securities are denominated relative to the U.S. dollar). In a period when the
U.S. dollar generally rises against foreign currencies, the returns on foreign
securities for a U.S. investor are diminished. By contrast, in a period when the
U.S. dollar generally declines, the returns on foreign securities generally are
enhanced. Currencies of certain Latin American countries have undergone sudden
devaluations relative to the U.S. dollar as a result of corresponding
inflationary trends or other reasons. Any such devaluation may have a
deleterious effect on the Fund's investments. Inflation may have strong negative
consequences for the economy and political stability of a country that
experiences it, and may seriously affect its securities markets.
The currencies of certain Latin American countries are not commonly traded
in foreign exchange markets. Certain Latin American countries have managed
currencies that, for foreign exchange purposes, do not float freely against the
U.S. dollar. Other governmental restrictions on the convertibility of their
currency may be imposed.
Securities exchanges and broker-dealers in most Latin American countries
are subject to less regulatory scrutiny than in the United States, as are Latin
American companies in such countries. The limited size of the markets for
securities may enable adverse publicity, investors' perceptions or traders'
positions or strategies to affect prices unduly, at times decreasing not only
the value but also the liquidity of the Fund's investments. The Fund may invest
no more than 15% of its net assets at the time of investment in illiquid
securities. Securities the proceeds of which are subject to limitations on
repatriation of principal or profits for more than seven days, and those for
which there ceases to be a ready market, will be deemed illiquid for this
purpose.
<PAGE>
Other risks and considerations of international investing include the
following: differences in accounting, auditing and financial reporting standards
which may result in less publicly available information than is generally
available with respect to U.S. issuers; generally higher commission rates on
foreign portfolio transactions and longer settlement periods; the smaller
trading volumes and generally lower liquidity of foreign stock markets, which
may result in greater price volatility; foreign withholding taxes payable on
income and/or gains from the Fund's foreign securities, which may reduce
dividend income or capital gains available for distribution to shareholders; the
possibility of expropriation or confiscatory taxation; adverse changes in
investment or exchange control regulations; political instability which could
affect U.S. investment in foreign countries; potential restrictions on the flow
of international capital; and the possibility of a Fund experiencing
difficulties in pursuing legal remedies and collecting judgments.
Debt Securities
The Fund's investments in fixed income securities generally are subject to
both credit risk and market risk. Credit risk relates to the ability of the
issuer to meet interest or principal payments, or both, as they come due. The
ratings given a security by Moody's and Standard & Poor's provide a generally
useful guide as to such credit risk. The lower the rating given a security by
such rating service, the greater the credit risk such rating service perceives
to exist with respect to such security. Increasing the amount of Fund assets
invested in unrated or lower grade securities, while intended to increase the
yield produced by those assets, also will increase the credit risk to which
those assets are subject.
Market risk relates to the fact that the market values of the debt
securities in which the Fund invests generally will be affected by changes in
the level of interest rates. An increase in interest rates will tend to reduce
the market values of debt securities, whereas a decline in interest rates will
tend to increase their values. Medium and lower rated securities (Baa or BBB and
lower) and non-rated securities of comparable quality tend to be subject to
wider fluctuations in yields and market values than higher rated securities and
may have speculative characteristics. Although Fund Management limits the Fund's
investments in fixed-income securities to securities it believes are not highly
speculative, both kinds of risk are increased by investing in debt securities
rated below the top three grades by Standard & Poor's or Moody's or, if unrated,
securities determined by Fund Management to be of equivalent quality. Of course,
relying in part on ratings assigned by credit agencies in making investments
will not protect the Fund from the risk that the securities in which it invests
will decline in value, since credit ratings represent evaluations of the safety
of principal, dividend and interest payments on preferred stocks and debt
securities, not the market value of such securities, and such ratings may not be
changed on a timely basis to reflect subsequent events. The Fund is not required
to sell immediately debt securities that go into default, but may continue to
hold such securities until such time as Fund Management determines it is in the
best interests of the Fund to sell such securities. Because investment in medium
and lower rated securities involves both greater credit risk and market risk,
achievement of the Fund's investment objectives may be more dependent on Fund
Management's own credit analysis than is the case for funds investing in higher
quality securities. In addition, the share price and yield of the Fund may be
expected to fluctuate more
<PAGE>
than in the case of funds investing in higher quality, shorter term securities.
Moreover, a significant economic downturn or major increase in interest rates
may result in issuers of lower rated securities experiencing increased financial
stress, which would adversely affect their ability to service their principal,
dividend and interest obligations, meet projected business goals, and obtain
additional financing. Expenses incurred to recover an investment in a defaulted
security may adversely affect the Fund's net asset value. Finally, while Fund
Management attempts to limit purchases of medium and lower rated securities to
securities having an established secondary market, the secondary market for such
securities may be less liquid than the market for higher quality securities. The
reduced liquidity of the secondary market for such securities may adversely
affect the market price of, and ability of the Fund to value, particular
securities at certain times, thereby making it difficult to make specific
valuation determinations.
The Fund expects that most foreign debt securities in which it will invest
will not be rated by U.S. rating services. Although bonds in the lowest
investment grade debt category (those rated BBB by Standard & Poor's or Baa by
Moody's) are regarded as having adequate capability to pay principal and
interest, they have speculative characteristics. Adverse economic conditions or
changing circumstances are more likely to lead to a weakened capacity to make
principal and interest payments than is the case for higher rated bonds. Lower
rated bonds by Moody's (categories Ba, B, Caa) are of poorer quality and also
have speculative characteristics. Bonds rated Caa may be in default or there may
be present elements of danger with respect to principal or interest. Lower rated
bonds by Standard & Poor's (categories BB, B, CCC) include those that are
regarded, on balance, as predominantly speculative with respect to the issuer's
capacity to pay interest and repay principal in accordance with their terms; BB
indicates the lowest degree of speculation and CCC a high degree of speculation.
While such bonds likely will have some quality and protective characteristics,
these are outweighed by large uncertainties or major risk exposures to adverse
conditions. For a specific description of each corporate bond rating category,
please refer to Appendix B to the Statement of Additional Information.
In certain Latin American countries, the central government and its
agencies are the largest debtors to local and foreign banks and others.
Argentina, Brazil and Mexico are the three largest debtors among the developing
countries. 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 a Latin American
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
<PAGE>
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 countries issuing such instruments have experienced high rates of
inflation in recent years and have extensive internal debt. Among other effects,
high inflation and internal debt service requirements may adversely affect the
cost and availability of future domestic sovereign borrowing to finance
governmental programs, and may have other adverse social, political and economic
consequences, including effects on the willingness of such countries to service
their sovereign debt. A Latin American government's willingness and ability to
make timely payments on their Sovereign Debt are also 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 of 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. In the past, some of the Latin American countries in which the Fund
expects to invest have encountered difficulties in servicing their Sovereign
Debt, withholding certain payments of interest or principal. Certain of these
obligations, particularly commercial bank loans, have been restructured, usually
by rescheduling principal payments, reducing interest rates and extending new
credits to finance interest payments on existing debt. Holders of Sovereign
Debt, including the Fund, may be asked to participate in similar restructurings.
The Fund may invest in debt securities issued under the "Brady Plan" in
connection with restructurings in Latin American 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 Latin American debt securities. "Brady Bonds" are lower rated bonds
and highly volatile. See "Risk Factors - Debt Securities."
<PAGE>
Futures, Options and Other Derivative Instruments
The use of futures, options, forward contracts and swaps exposes the Fund
to additional investment risks and transaction costs, and as a result, no more
than 5% of the Fund's total assets will be committed to such investments. If
Fund Management seeks to protect the Fund against potential adverse movements in
the securities, foreign currency or interest rate markets using these
instruments, and such markets do not move in a direction adverse to the Fund,
the Fund could be left in a less favorable position than if such strategies had
not been used. Risks inherent in the use of futures, options, forward contracts
and swaps include (1) the risk that interest rates, securities prices and
currency markets will not move in the directions anticipated; (2) imperfect
correlation between the price of futures, options and forward contracts and
movements in the prices of the securities or currencies being hedged; (3) the
fact that skills needed to use these strategies are different from those needed
to select portfolio securities; (4) the possible absence of a liquid secondary
market for any particular instrument at any time; and (5) the possible need to
defer closing out certain hedged positions to avoid adverse tax consequences.
Further information on the use of futures, options, forward foreign currency
contracts and swaps and swap-related products, and the associated risks, is
contained in the Statement of Additional Information.
THE FUND AND ITS MANAGEMENT
The Company is a no-load mutual fund, registered with the Securities and
Exchange Commission as an open-end, diversified, management investment company.
It was incorporated on April 12, 1994, under the laws of Maryland. The overall
supervision of the Fund is the responsibility of the Company's board of
directors.
Pursuant to an agreement with the Company, INVESCO Funds Group, Inc.
("INVESCO"), 7800 E. Union Avenue, Denver, Colorado, serves as the Fund's
investment adviser. INVESCO is primarily responsible for providing the Fund with
various administrative services and supervising the Fund's daily business
affairs. These services are subject to review by the Company's board of
directors.
INVESCO is an indirect wholly-owned subsidiary of INVESCO PLC. INVESCO
PLC is a financial holding company that, through its subsidiaries, engages in
the business of investment management on an international basis. INVESCO was
established in 1932 and, as of July 31, 1995, managed 14 mutual funds,
consisting of 38 separate portfolios, with combined assets of approximately
$10.2 billion on behalf of over 790,000 shareholders.
Pursuant to an agreement with INVESCO, MIM International Limited ("MIL")
serves as the sub-adviser to the Fund. In that capacity, MIL has the primary
responsibility, under the supervision of INVESCO, for providing portfolio
management services to the Fund. MIL also is an indirect wholly-owned subsidiary
of INVESCO PLC. MIL also acts as sub-adviser to the INVESCO European Fund, the
INVESCO Pacific Basin Fund and to INVESCO European Small Company Fund. MIL,
subject to the supervision of INVESCO, is primarily responsible for selecting
and managing the Fund's investments. Although the Company is not a party to the
sub- advisory agreement, the agreement has been approved by INVESCO as the then
sole shareholder of the Company.
<PAGE>
The following individual serves as lead portfolio manager for the Fund and
is primarily responsible for determining, in accordance with senior investment
policy group, the country-by- country allocation of the portfolio's assets,
overall stock selection methodology and the ongoing implementation and risk
control policies applicable to the portfolio:
Francesco Bertoni Lead portfolio manager of the Fund since
August 1995; Investment Director of
INVESCO Asset Management Ltd. since 1994
specializing in international equities;
Assistant Investment Director of INVESCO
Asset Management Ltd. since 1990; manager
specializing in European equities for the
Italian group IMI since 1987; began
investment career in 1986; degree in
Economics from the Bocconi University in
Milan, Italy.
Mr. Bertoni heads a team of individual country specialists who are
responsible for managing security selection for their assigned country's share
of the allocation within the parameters established by the investment policy
group of MIM International Limited, sub- adviser to the Fund.
The Fund pays INVESCO a monthly advisory fee which is based upon a
percentage of the average net assets of the Fund, determined daily. The maximum
advisory fee is computed at the annual rate of 0.75% on the first $500 million
of the Fund's average net assets, 0.65% on the next $500 million of the Fund's
average net assets and 0.55% on the Fund's average net assets over $1 billion.
The management fee of 0.75% is higher than that charged by most other mutual
funds, but is typical of the management fees charged by funds similar to the
Latin American Growth Fund.
Out of its advisory fee which it receives from the Fund, INVESCO pays MIL,
as sub-adviser to the Fund, a monthly fee, which is computed at the annual rate
of 0.375% on the first $500 million of the Fund's average net assets, 0.325% on
the next $500 million of the Fund's average net assets and 0.275% on the Fund's
average net assets in excess of $1 billion. No fee is paid by the Fund to MIL.
The Company also has entered into an Administrative Services Agreement (the
"Administrative Agreement") with INVESCO. Pursuant to the Administrative
Agreement, INVESCO performs certain administrative, recordkeeping and internal
sub-accounting services, including without limitation, maintaining general
ledger and capital stock accounts, preparing a daily trial balance, calculating
net asset value daily, providing selected general ledger reports and providing
sub-accounting and recordkeeping services for Fund shareholder accounts
maintained by certain retirement and employee benefit plans for the benefit of
participants in such plans. For such services, the Fund pays INVESCO a fee
consisting of a base fee of $10,000 per year, plus an additional incremental fee
computed at the annual rate of 0.015% per year of the average net assets of the
Fund. INVESCO also is paid a fee by the Fund for providing transfer agent
services. See "Additional Information."
<PAGE>
The Fund's expenses, which are accrued daily, are generally deducted from
the Fund's total income before dividends are paid. Total expenses for the Fund
for the fiscal period ended July 31, 1995, including investment advisory fees
(but excluding brokerage commissions, which are a cost of acquiring securities),
amounted to 2.00% of the Fund's average net assets. Certain expenses for the
Fund are being absorbed by INVESCO and MIL voluntarily in order to ensure that
the Fund's total expenses do not exceed 2.00%. If such voluntary expense
limitation had not been in effect, the Fund's total expenses for the period
February 15, 1995 (inception) through July 31, 1995 would have been 4.49% of the
Fund's average net assets.
Fund Management places orders for the purchase and sale of portfolio
securities with brokers and dealers based upon Fund Management's evaluation of
their financial responsibility coupled with their ability to effect transactions
at the best available prices. As discussed under "How Shares Can Be Purchased -
Distribution Expenses," the Company may market shares of the Fund through
intermediary brokers or dealers that have entered into Dealer Agreements with
INVESCO, as the Company's distributor. The Fund may place orders for portfolio
transactions with qualified broker/dealers that recommend the Fund, or sell
shares of the Fund to clients, or act as agent in the purchase of Fund shares
for clients, if Fund Management believes that the quality of execution of the
transaction and level of commission are comparable to those available from other
qualified brokerage firms.
Fund Management permits investment and other personnel to purchase and
sell securities for their own accounts, subject to a compliance policy governing
personal investing. This policy requires investment and other personnel to
conduct their personal investment activities in a manner that Fund Management
believes is not detrimental to the Funds or Fund Management's other advisory
clients. See the Statement of Additional Information for more detailed
information.
<PAGE>
HOW SHARES CAN BE PURCHASED
Shares of the Fund are sold on a continuous basis by INVESCO, as the Fund's
Distributor, at the net asset value per share next calculated after receipt of a
purchase order in good form. No sales charge is imposed upon the sale of shares
of the Fund. To purchase shares of the Fund, send a check made payable to
INVESCO Funds Group, Inc., together with a completed application form, to:
INVESCO Funds Group, Inc.
Post Office Box 173706
Denver, Colorado 80217-3706
Purchase orders must specify the Fund in which the investment is to be
made.
The minimum initial purchase must be at least $1,000, with subsequent
investments of not less than $50, except that: (1) those shareholders
establishing an EasiVest or direct payroll purchase account, as described below
in the Prospectus section entitled "Services Provided by the Fund," may open an
account without making any initial investment if they agree to make regular,
minimum purchases of at least $50; (2) those shareholders investing in an
Individual Retirement Account (IRA), or through omnibus accounts where
individual shareholder recordkeeping and sub-accounting are not required, may
make initial minimum purchases of $250; (3) Fund Management may permit a lesser
amount to be invested in a Fund under a federal income tax-deferred retirement
plan (other than an IRA account), or under a group investment plan qualifying as
a sophisticated investor; and (4) Fund Management reserves the right to reduce
or waive the minimum purchase requirements in its sole discretion where it
determines such action is in the best interests of the Fund.
The purchase of Fund shares can be expedited by placing bank wire,
overnight courier or telephone orders. Overnight courier orders must meet the
above minimum requirements. In no case can a bank wire order or telephone order
be in an amount less than $1,000. For further information, the purchaser may
call the Fund's office by using the telephone number on the cover of this
Prospectus. Orders sent by overnight courier, including Express Mail, should be
sent to the street address, not Post Office Box, of INVESCO Funds Group, Inc.,
at 7800 E. Union Avenue, Denver, CO 80237.
Orders to purchase shares of the Fund can be placed by telephone. Shares
of the Fund will be issued at the net asset value per share next determined
after receipt of telephone instructions. Generally, payments for telephone
orders must be received by the Fund within three business days or the
transaction may be cancelled. In the event of such cancellation, the purchaser
will be held responsible for any loss resulting from a decline in the value of
the shares. In order to avoid such losses, purchasers should send payments for
telephone purchases by overnight courier or bank wire. INVESCO has agreed to
indemnify the Fund for any losses resulting from such cancellations of telephone
purchases.
<PAGE>
If your check does not clear, or if a telephone purchase must be cancelled
due to nonpayment, you will be responsible for any related loss the Fund or
INVESCO incurs. If you are already a shareholder in the INVESCO funds, the Fund
has the option to redeem shares from any identically registered account in the
Fund or any other INVESCO fund as reimbursement for any loss incurred. You also
may be prohibited or restricted from making future purchases in any of the
INVESCO funds.
Persons who invest in the Fund through a securities broker may be charged
a commission or transaction fee for the handling of the transaction if the
broker so elects. Any investor may deal directly with the Fund in any
transaction. In that event, there is no such charge.
The Fund reserves the right in its sole discretion to reject any order for
purchase of its shares (including purchases by exchange) when, in the judgment
of management, such rejection is in the best interest of the Fund.
Net asset value per share is computed once each day that the New York
Stock Exchange is open, as of the close of regular trading on that Exchange
(generally 4:00 p.m., New York time) and also may be computed on other days
under certain circumstances. Net asset value per share for the Fund is
calculated by dividing the market value of the Fund's securities plus the value
of its other assets (including dividends and interest accrued but not
collected), less all liabilities (including accrued expenses), by the number of
outstanding shares of that Fund. If market quotations are not readily available,
a security or other asset will be valued at fair value as determined in good
faith by the board of directors. Debt securities with remaining maturities of 60
days or less at the time of purchase will be valued at amortized cost, absent
unusual circumstances, so long as the Company's board of directors believes that
such value represents fair value.
Distribution Expenses. The Fund is authorized under a Plan and Agreement
of Distribution pursuant to Rule 12b-1 under the Investment Company Act of 1940
(the "Plan") to use its assets to finance certain activities relating to the
distribution of its shares to investors. Under the Plan, monthly payments may be
made by the Fund to INVESCO to reimburse it for particular expenditures incurred
by INVESCO in connection with the distribution of the Fund's shares to
investors. These expenditures may include the payment of compensation (including
incentive compensation and/or continuing compensation based on the amount of
customer assets maintained in the Fund) to securities dealers and other
financial institutions and organizations, which may include INVESCO affiliated
companies, to obtain various distribution-related and/or administrative services
for the Fund. Such services may include, among other things, processing new
shareholder account applications, preparing and transmitting to the Fund's
Transfer Agent computer processable tapes of all transactions by customers, and
serving as the primary source of information to customers in answering questions
concerning the Fund and their transactions with the Fund.
<PAGE>
In addition, other reimbursable expenditures include those incurred for
advertising, the preparation and distribution of sales literature, the cost of
printing and distributing prospectuses to prospective investors, and such other
services and promotional activities for the Fund as may from time to time be
agreed upon by the Company and its board of directors, including public
relations efforts and marketing programs to communicate with investors and
prospective investors. These services and activities may be conducted by the
staff of INVESCO or its affiliates or by third parties.
Under the Plan, the Company's reimbursement to INVESCO on behalf of the
Fund is limited to an amount computed at an annual rate of 0.25 of 1% of the
Fund's average net assets during the month. INVESCO is not entitled to
reimbursement for overhead expenses under the Plan, but may be reimbursed for
all or a portion of the compensation paid for salaries and other employee
benefits for the personnel of INVESCO whose primary responsibilities involve
marketing shares of the INVESCO funds, including the Fund. Payment amounts by
the Fund under the Plan, for any month, may only be made to reimburse or pay
expenditures incurred during the rolling 12- month period in which that month
falls, although this period is expanded to 24 months for expenses incurred
during the first 24 months of the Fund's operations. Therefore, any reimbursable
expenses incurred by INVESCO in excess of the limitations described above are
not reimbursable and will be borne by INVESCO. In addition, INVESCO may from
time to time make additional payments from its revenues to securities dealers
and other financial institutions that provide distributor related and/or
administrative services for the Fund. No further payments will be made by the
Fund under the Plan in the event of its termination. Also, any payments made by
the Fund may not be used to finance the distribution of shares of any other fund
of the Company or other mutual fund advised by INVESCO. Payments made by the
Fund under the Plan for compensation of marketing personnel, as noted above, are
based on an allocation formula designed to ensure that all such payments are
appropriate.
SERVICES PROVIDED BY THE FUND
Shareholder Accounts. INVESCO maintains a share account that reflects the
current holdings of each shareholder. Share certificates will be issued only
upon specific request. Since certificates must be carefully safeguarded, and
must be surrendered in order to exchange or redeem Fund shares, most
shareholders do not request share certificates in order to facilitate such
transactions. Each shareholder is sent a detailed confirmation of each
transaction in shares of the Fund. Shareholders whose only transactions are
through the EasiVest, direct payroll purchase, automatic monthly exchange or
periodic withdrawal programs, or are reinvestments of dividends or capital gains
in the same or another fund, will receive confirmations of those transactions on
their quarterly statements. These programs are discussed below. For information
regarding a shareholder's account and transactions, the shareholder may call the
Fund's office by using the telephone number on the cover of this Prospectus.
<PAGE>
Reinvestment of Distributions. Dividends and other distributions are
automatically reinvested in additional shares of the Fund at the net asset value
per share of the Fund in effect on the ex-dividend date. A shareholder may,
however, elect to reinvest dividends and other distributions in certain of the
other no-load mutual funds advised and distributed by INVESCO, or to receive
payment of all dividends and other distributions in excess of $10.00 by check by
giving written notice to INVESCO at least two weeks prior to the record date on
which the change is to take effect. Further information concerning these options
can be obtained by contacting INVESCO.
Periodic Withdrawal Plan. A Periodic Withdrawal Plan is available to
shareholders who own or purchase shares of any mutual funds advised by INVESCO
having a total value of $10,000 or more; provided, however, that at the time the
Plan is established, the shareholder owns shares having a value of at least
$5,000 in the fund from which the withdrawals will be made. Under the Periodic
Withdrawal Plan, INVESCO, as agent, will make specified monthly or quarterly
payments of any amount selected (minimum payment of $100) to the party
designated by the shareholder. Notice of all changes concerning the Periodic
Withdrawal Plan must be received by INVESCO at least two weeks prior to the next
scheduled check. Further information regarding the Periodic Withdrawal Plan and
its requirements and tax consequences can be obtained by contacting INVESCO.
Exchange Privilege. Shares of the Fund may be exchanged for shares of any
other fund of the Company, as well as for shares of any of the following other
no-load mutual funds, which are also advised and distributed by INVESCO, on the
basis of their respective net asset values at the time of the exchange: INVESCO
Diversified Funds, Inc., INVESCO Dynamics Fund, Inc., INVESCO Emerging
Opportunity Funds, Inc., INVESCO Growth Fund, Inc., INVESCO Income Funds, Inc.,
INVESCO Industrial Income Fund, Inc., INVESCO International Funds, Inc., INVESCO
Money Market Funds, Inc., INVESCO Multiple Asset Funds, Inc., INVESCO Strategic
Portfolios, Inc., INVESCO Tax-Free Income Funds, Inc. and INVESCO Value Trust.
Upon an exchange of shares held less than a year (other than shares
acquired through reinvestment of dividends or other distributions), a fee of 2%
of the current net asset value of the shares being exchanged will be assessed
and retained by the Fund for the benefit of the remaining shareholders. This fee
is intended to encourage long-term investment in the Fund, to avoid transaction
and other expenses caused by early redemptions, and to facilitate portfolio
management. The fee is not a deferred sales charge, is not a commission paid to
INVESCO, and does not benefit INVESCO in any way. The fee applies to redemptions
from the Fund and exchanges into any of the other no-load mutual funds which are
<PAGE>
also advised and distributed by INVESCO. The Fund will use the "first-in,
first-out" method to determine the twelve month holding period. Under this
method the date of redemption or exchange will be compared with the earliest
purchase date of shares held in the account. If this holding period is less than
twelve months, the redemption/exchange fee will be assessed.
An exchange involves the redemption of shares in the Fund and investment
of the redemption proceeds in shares of another fund of the Company or in shares
of one of the funds listed above. Exchanges will be made at the net asset value
per share next determined after receipt of an exchange request in proper order.
Any gain or loss realized on such an exchange is recognizable for federal income
tax purposes by the shareholder. Exchange requests may be made either by
telephone or by written request to INVESCO Funds Group, Inc., using the
telephone number or address on the cover of this Prospectus. Exchanges made by
telephone must be in an amount of at least $250, if the exchange is being made
into an existing account of one of the INVESCO funds. All exchanges that
establish a new account must meet the Fund's applicable minimum initial
investment requirements. Written exchange requests into an existing account have
no minimum requirements other than the Fund's applicable minimum subsequent
investment requirements.
The privilege of exchanging Fund shares by telephone is available to
shareholders automatically unless expressly declined. By signing the New Account
Application, a Telephone Transaction Authorization Form or otherwise utilizing
telephone exchange privileges, the investor has agreed that the Fund will not be
liable for following instructions communicated by telephone that it reasonably
believes to be genuine. The Fund employs procedures, which it believes are
reasonable, designed to confirm that exchange instructions are genuine. These
may include recording telephone instructions and providing written confirmations
of exchange transactions. As a result of this policy, the investor may bear the
risk of any loss due to unauthorized or fraudulent instructions; provided,
however, that if the Fund fails to follow these or other reasonable procedures,
the Fund may be liable.
In order to prevent abuse of this privilege to the disadvantage of other
shareholders, the Fund reserves the right to terminate the exchange privilege of
any shareholder who requests more than four exchanges in a year. The Fund will
determine whether to do so based on a consideration of both the number of
exchanges any particular shareholder or group of shareholders has requested and
the time period over which those exchange requests have been made, together with
the level of expense to the Fund which will result from effecting additional
exchange requests. The exchange privilege also may be modified or terminated at
any time. Except for those limited instances where redemptions of the exchanged
security are suspended under Section 22(e) of the Investment Company Act of
1940, or where sales of the fund into which the shareholder is exchanging are
temporarily stopped, notice of all such modifications or termination of the
exchange privilege will be given at least 60 days prior to the date of
termination or the effective date of the modification.
<PAGE>
Before making an exchange, the shareholder should review the prospectuses
of the funds involved and consider their differences, and should be aware that
the exchange privilege may only be available in those states where exchanges
legally may be made, which will require that the shares being acquired are
registered for sale in the shareholder's state of residence. Shareholders
interested in exercising the exchange privilege may contact INVESCO for
information concerning their particular exchanges.
Automatic Monthly Exchange. Shareholders who have accounts in any one or
more of the mutual funds distributed by INVESCO may arrange for a fixed dollar
amount of their fund shares to be automatically exchanged for shares of any
other INVESCO mutual fund listed under "Exchange Privilege" on a monthly basis.
The minimum monthly exchange in this program is $50.00. This automatic exchange
program can be changed by the shareholder at any time by notifying INVESCO at
least two weeks prior to the date the change is to be made. Further information
regarding this service can be obtained by contacting INVESCO.
EasiVest. For shareholders who want to maintain a schedule of monthly
investments, EasiVest uses various methods to draw a preauthorized amount from
the shareholder's bank account to purchase Fund shares. This automatic
investment program can be changed by the shareholder at any time by writing to
INVESCO at least two weeks prior to the date the change is to be made. Further
information regarding this service can be obtained by contacting INVESCO.
Direct Payroll Purchase. Shareholders may elect to have their employer
make automatic purchases of Fund shares for them by deducting a specified amount
from their regular paychecks. This automatic investment program can be modified
or terminated at any time by the shareholder, by notifying the employer. Further
information regarding this service can be obtained by contacting INVESCO.
Tax-Deferred Retirement Plans. Shares of the Fund may be purchased for
self-employed individual retirement plans, IRAs, simplified employee pension
plans and corporate retirement plans. In addition, shares can be used to fund
tax qualified plans established under Section 403(b) of the Internal Revenue
Code by educational institutions, including public school systems and private
schools, and certain kinds of non-profit organizations, which provide deferred
compensation arrangements for their employees.
Prototype forms for the establishment of these various plans, including,
where applicable, disclosure statements required by the Internal Revenue
Service, are available from INVESCO. INVESCO Trust Company, a subsidiary of
INVESCO, is qualified to serve as trustee or custodian under these plans and
provides the required services at competitive rates.
<PAGE>
Retirement plans (other than IRAs) receive monthly statements
reflecting all transactions in their Fund accounts. IRAs receive the
confirmations and quarterly statements described under "Shareholder Accounts."
For complete information, including prototype forms and service charges, call
INVESCO at the telephone number listed on the cover of this Prospectus or send a
written request to: Retirement Services, INVESCO Funds Group, Inc., Post Office
Box 173706, Denver, Colorado 80217-3706.
HOW TO REDEEM SHARES
Shares of the Fund may be redeemed at any time at their current net asset
value per share next determined after a request in proper form is received at
the Fund's office. (See "How Shares Can Be Purchased.") Net asset value per
share at the time of redemption may be more or less than the price you paid to
purchase your shares, depending primarily upon the Fund's investment
performance. Upon the redemption of shares held less than a year (other than
shares acquired through reinvestment of dividends or other distributions), a fee
of 2% of the current net asset value of the shares will be assessed and retained
by the Fund for the benefit of remaining shareholders. This fee is intended to
encourage long-term investment in the Fund, to avoid transaction and other
expenses caused by early redemptions, and to facilitate portfolio management.
The fee is not a deferred sales charge, is not a commission paid to INVESCO, and
does not benefit INVESCO in any way. The fee applies to redemptions from the
Fund and exchanges into any of the other no-load mutual funds, which are also
advised and distributed by INVESCO. The Fund will use the "first-in, first-out"
method to determine the twelve month holding period. Under this method the date
of redemption or exchange will be compared with the earliest purchase date of
shares held in the account. If this holding period is less than twelve months,
the redemption/exchange fee will be assessed.
If the shares to be redeemed are represented by stock certificates, a
written request for redemption signed by the registered shareholder(s) and the
certificates must be forwarded to INVESCO Funds Group, Inc., Post Office Box
173706, Denver, Colorado 80217-3706. Redemption requests sent by overnight
courier, including Express Mail, should be sent to the street address, not Post
Office Box, of INVESCO Funds Group, Inc. at 7800 E. Union Avenue, Denver, CO
80237. If no certificates have been issued, a written redemption request signed
by each registered owner of the account must be submitted to INVESCO at the
address noted above. If shares are held in the name of a corporation, additional
documentation may be necessary. Call or write for specifics. If payment for the
redeemed shares is to be made to someone other than the registered owner(s), the
signature(s) must be guaranteed by a financial institution which qualifies as an
eligible guarantor institution. Redemption procedures with respect to accounts
registered in the names of broker/dealers may differ from those applicable to
other shareholders.
<PAGE>
Be careful to specify the account from which the redemption is to be made.
Shareholders have a separate account for each Fund in which they invest.
Payment of redemption proceeds will be mailed within seven days following
receipt of the required documents. However, payment may be postponed under
unusual circumstances, such as when normal trading is not taking place on the
New York Stock Exchange or an emergency as defined by the Securities and
Exchange Commission exists. If the shares to be redeemed were purchased by check
and that check has not yet cleared, payment will be made promptly upon clearance
of the purchase check (which may take up to 15 days).
If a shareholder participates in EasiVest, the Fund's automatic monthly
investment program, and redeems all of the shares in his Fund account, INVESCO
will terminate any further EasiVest purchases unless otherwise instructed by the
shareholder.
Because of the high relative costs of handling small accounts, should the
value of any shareholder's account fall below $250 as a result of shareholder
action, the Fund reserves the right to effect the involuntary redemption of all
shares in such account, in which case the account would be liquidated and the
proceeds forwarded to the shareholder. Prior to any such redemption, a
shareholder will be notified and given 60 days to increase the value of the
account to $250 or more.
Fund shareholders (other than shareholders holding Fund shares in accounts
of IRA plans) may request expedited redemption of shares having a minimum value
of $250 (or redemption of all shares if their value is less than $250) held in
accounts maintained in their name by telephoning redemption instructions to
INVESCO, using the telephone number on the cover of this Prospectus. The
redemption proceeds, at the shareholder's option, either will be mailed to the
address listed for the shareholder's Fund account, or wired (minimum of $1,000)
or mailed to the bank which the shareholder has designated to receive the
proceeds of telephone redemptions. The Fund charges no fee for effecting such
telephone redemptions. Unless Fund Management permits a larger redemption
request to be placed by telephone, a shareholder may not place a redemption
request by telephone in excess of $25,000. These telephone redemption privileges
may be modified or terminated in the future at the discretion of Fund
Management.
For INVESCO Trust Company-sponsored federal income tax-deferred retirement
plans, the term "shareholders" is defined to mean plan trustees that file a
written request to be able to redeem Fund shares by telephone. Shareholders
should understand that, while the Fund will attempt to process all telephone
redemption requests on an expedited basis, there may be times, particularly in
periods of severe economic or market disruption, when (a) they may encounter
difficulty in placing a telephone redemption request, and (b) processing
telephone redemptions will require up to seven days following receipt of the
redemption request, or additional time because of the unusual circumstances set
forth above.
<PAGE>
The privilege of redeeming Fund shares by telephone is available to
shareholders automatically unless expressly declined. By signing a New Account
Application, a Telephone Transaction Authorization Form or otherwise utilizing
telephone redemption privileges, the shareholder has agreed that the Fund will
not be liable for following instructions communicated by telephone that it
reasonably believe to be genuine. The Fund employs procedures, which it believes
are reasonable, designed to confirm that telephone instructions are genuine.
These may include recording telephone instructions and providing written
confirmation of transactions initiated by telephone. As a result of this policy,
the investor may bear the risk of any loss due to unauthorized or fraudulent
instructions; provided, however, that if the Fund fails to follow these or other
reasonable procedures, the Fund may be liable.
TAXES, DIVIDENDS AND CAPITAL GAIN DISTRIBUTIONS
Taxes. The Fund intends to distribute to shareholders substantially all of
its net investment income, net capital gains and net gains from foreign currency
transactions, if any, in order to continue to qualify for tax treatment as a
regulated investment company. Thus, the Fund does not expect to pay any federal
income or excise taxes.
Unless shareholders are exempt from income taxes, they must include all
dividends and capital gain distributions in taxable income for federal, state,
and local income tax purposes. Dividends and other distributions are taxable
whether they are received in cash or automatically invested in shares of the
Fund or another fund in the INVESCO group.
The Fund may be subject to the withholding of foreign taxes on dividends
or interest it receives on foreign securities. Foreign taxes withheld will be
treated as an expense of the Fund unless the Fund meets the qualifications to
enable it to pass these taxes through to shareholders for use by them as a
foreign tax credit or deduction.
Shareholders may be subject to backup withholding of 31% on dividends,
capital gain distributions and redemption proceeds. Unless a shareholder is
subject to backup withholding for other reasons, the shareholder can avoid
backup withholding on his Fund account by ensuring that INVESCO has a correct,
certified tax identification number.
Dividends and Capital Gain Distributions. The Fund earns ordinary or net
investment income, in the form of dividends and interest on its investments. The
Fund's policy is to distribute substantially all of this income, less Fund
expenses, to shareholders on an annual basis, at the discretion of the Company's
board of directors.
<PAGE>
In addition, the Fund realizes capital gains and losses when it sells
securities for more or less than it paid. If total gains on sales exceed total
losses (including losses carried forward from previous years), the Fund has a
net realized capital gain. Net realized capital gains, if any, are distributed
to shareholders at least annually, usually in December.
Dividends and capital gain distributions are paid to shareholders who hold
shares on the record date of the distribution regardless of how long the shares
have been held. The Fund's share price will then drop by the amount of the
distribution on the day the distribution is made. If a shareholder purchases
shares immediately prior to the distribution, the shareholder will, in effect,
have "bought" the distribution by paying full purchase price, a portion of which
is then returned in the form of a taxable distribution.
At the end of each year, information regarding the tax status of dividends
and capital gain distributions is provided to shareholders. Net realized capital
gains are divided into short-term and long-term gains depending on how long the
Fund held the security which gave rise to the gains. The capital gain
distribution consists of long-term capital gains which are taxed at the capital
gains rate. Short-term capital gains are included with income from dividends and
interest as ordinary income and are paid to shareholders as dividends.
Shareholders also may realize capital gains or losses when they sell Fund
shares at more or less than the price originally paid.
Shareholders are encouraged to consult their tax advisers with respect to
these matters. For further information see "Dividends, Capital Gain
Distributions and Taxes" in the Statement of Additional Information.
ADDITIONAL INFORMATION
Voting Rights. All shares of the Fund have equal voting rights, based on
one vote for each share owned. Voting with respect to certain matters, such as
ratification of independent accountants and the election of directors, will be
by all Funds of the Company voting together. In other cases, such as voting upon
an investment advisory contract, voting is on a Fund-by-Fund basis. When not all
Funds are affected by a matter to be voted upon, only shareholders of the Fund
or Funds affected by the matter will be entitled to vote thereon. The Company is
not generally required, and does not expect, to hold regular annual meetings of
shareholders. However, the board of directors will call special meetings of
shareholders for the purpose, among other reasons, of voting upon the question
of removal of a director or directors when requested to do so in writing by the
holders of 10% or more of the outstanding shares of the Company or as may be
required by applicable law or the Company's Articles of Incorporation. The
Company will assist shareholders in communicating with other shareholders as
required by the Investment Company Act of 1940. Directors may be removed by
action of the holders of a majority or more of the outstanding shares of the
Company.
<PAGE>
Master/Feeder Option. The Company may in the future seek to achieve the
Fund's investment objective by investing all of the Fund's assets in another
investment company or partnership having the same investment objective and
substantially the same investment policies and restrictions as those applicable
to the Fund. It is expected that any such investment company would be managed by
INVESCO in substantially the same manner as the existing Fund. If permitted by
applicable laws and policies then in effect, any such investment may be made in
the sole discretion of the Company's board of directors without further approval
of the shareholders of the Fund. However, Fund shareholders will be given at
least 30 days prior notice of any such investment. Such investment would be made
only if the Company's board of directors determines it to be in the best
interests of the respective Fund and its shareholders. In making that
determination, the board will consider, among other things, the benefits to
shareholders and/or the opportunity to reduce costs and achieve operational
efficiencies. No assurance can be given that costs will be materially reduced if
this option is implemented.
Shareholder Inquiries. All inquiries regarding the Fund should be directed
to the Fund at the telephone number or mailing address set forth on the cover
page of this Prospectus.
Transfer and Dividend Disbursing Agent. INVESCO Funds Group, Inc., 7800 E.
Union Ave., Denver, Colorado 80237, acts as registrar, transfer agent, and
dividend disbursing agent for the Fund pursuant to a Transfer Agency Agreement
which provides that the Fund will pay an annual fee of $14.00 per shareholder
account or omnibus account participant. The transfer agency fee is not charged
to each shareholder's or participant's account, but is an expense of the Fund to
be paid from the Fund's assets. Registered broker-dealers, third party
administrators of tax-qualified retirement plans and other entities, including
affiliates of INVESCO, may provide sub-transfer agency services to the Fund
which reduce or eliminate the need for identical services to be provided on
behalf of the Fund by INVESCO. In such cases, INVESCO may pay the third party an
annual sub-transfer agency fee of up to $14.00 per participant in the third
party's omnibus account out of the transfer agency fee which is paid to INVESCO
by the Fund.
<PAGE>
INVESCO LATIN AMERICAN GROWTH FUND A no-load
mutual fund seeking capital appreciation.
PROSPECTUS
September 11, 1995
To receive general information and prospectuses on any of INVESCO's funds or
retirement plans, or to obtain current account or price information, call
toll-free:
1-800-525-8085
To reach PAL, your 24-hour Personal Account Line, call:
1-800-424-8085
Or write to:
INVESCO Funds Group, Inc., Distributor
Post Office Box 173706
Denver, Colorado 80217-3706
If you're in Denver, visit one of our convenient Investor Centers:
Cherry Creek
155-B Fillmore Street
Denver Tech Center
7800 East Union Avenue
Lobby Level
<PAGE>
PROSPECTUS
September 11, 1995
INVESCO EUROPEAN SMALL COMPANY FUND
INVESCO European Small Company Fund (the "Fund") seeks to achieve capital
appreciation by investing, under normal circumstances, at least 65% of its total
assets in equity securities of European companies whose individual equity market
capitalizations would place them (at the time of purchase) in the same size
range as companies in approximately the lowest 25% of market capitalization of
companies that have equity securities listed on a U.S. national securities
exchange or trade in the NASDAQ system ("small companies"). Based on this
policy, the companies held by the Fund will typically have equity market
capitalizations under $1 billion. Additionally, the Fund will, under normal
circumstances, invest at least 65% of its total assets in issues domiciled in at
least five countries, although the Fund's investment adviser expects the Fund's
investments to be allocated among a larger number of countries. In this regard,
no more than 50% of the Fund's total assets will be invested in any one country.
For a description of risks inherent in investing in the Fund see "Risk Factors"
on page 78 and "Portfolio Turnover" on page 77. The Fund is not intended as a
complete investment program due to risks of investing in the Fund. See the
section entitled "Risk Factors."
The Fund is a series of INVESCO Specialty Funds, Inc. (the "Company"), a
diversified, managed, no-load mutual fund consisting of four separate portfolios
of investments. Separate prospectuses are available upon request from INVESCO
Funds Group, Inc. for the Company's other funds, INVESCO Worldwide Capital Goods
Fund, INVESCO Worldwide Communications Fund, and INVESCO Latin American Growth
Fund. Investors may purchase shares of any or all of the Funds. Additional funds
may be offered in the future.
This Prospectus provides you with the basic information you should know
before investing in the Fund. You should read it and keep it for future
reference. A Statement of Additional Information containing further information
about the Fund has been filed with the Securities and Exchange Commission. You
can obtain a copy without charge by writing INVESCO Funds Group, Inc., Post
Office Box 173706, Denver, Colorado 80217-3706; or by calling 1- 800-525-8085.
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TABLE OF CONTENTS
Page
ANNUAL FUND EXPENSES 69
FINANCIAL HIGHLIGHTS 71
PERFORMANCE DATA 72
INVESTMENT OBJECTIVE AND POLICIES 72
RISK FACTORS 78
THE FUND AND ITS MANAGEMENT 80
HOW SHARES CAN BE PURCHASED 83
SERVICES PROVIDED BY THE FUND 85
HOW TO REDEEM SHARES 89
TAXES, DIVIDENDS AND CAPITAL GAIN DISTRIBUTIONS 90
ADDITIONAL INFORMATION 92
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE. SHARES OF THE FUND ARE NOT DEPOSITS OR OBLIGATIONS OF, OR
GUARANTEED OR ENDORSED BY, ANY BANK OR OTHER FINANCIAL INSTITUTION. THE SHARES
OF THE FUND ARE NOT FEDERALLY INSURED BY THE FEDERAL
DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD OR ANY
OTHER AGENCY.
THE STATEMENT OF ADDITIONAL INFORMATION, DATED SEPTEMBER 11, 1995, IS HEREBY
INCORPORATED BY REFERENCE INTO THIS PROSPECTUS.
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ANNUAL FUND EXPENSES
The Fund is no-load; there are no fees to purchase, exchange
or redeem shares. The Fund, however, is authorized to pay a
distribution fee pursuant to Rule 12b-1 under the Investment
Company Act of 1940. (See "How Shares Can Be
Purchased--Distribution Expenses.") Lower expenses benefit Fund
shareholders by increasing the Fund's total return.
Shareholder Transaction Expenses
Sales load "charge" on purchases None
Sales load "charge" on reinvested dividends None
Redemption fees None
Exchange fees None
Annual Fund Operating Expenses
(as a percentage of average net assets)
Management Fee 0.75%
12b-1 Fees 0.25%
Other Expenses 1.00%
(after voluntary expense limitation)(1)
Transfer Agency Fee (2) 0.30%
General Services, Administrative 0.70%
Services, Registration, Postage (3)
Total Fund Operating Expenses 2.00%
(after voluntary expense limitation)(1)
(1) Certain Fund expenses are being absorbed voluntarily by INVESCO Funds
Group, Inc.("INVESCO") and MIM International Limited to ensure that expenses for
the Fund will not exceed 2.00% of the Fund's average net assets pursuant to an
agreement among the Fund, INVESCO and MIM International Limited. In the absence
of such voluntary expense limitation, the Fund's "Other Expenses" and "Total
Fund Operating Expenses" in the above table would have been 9.17% and 10.17% of
the Fund's average net assets based on the actual expenses of the Fund for the
fiscal period ended July 31, 1995.
(2) Consists of the transfer agency fee described under
"Additional Information - Transfer and Dividend Disbursing Agent."
(3) Includes, but is not limited to, fees and expenses of directors,
custodian bank, legal counsel and auditors, a securities pricing service, costs
of administrative services furnished under an Administrative Services Agreement,
costs of registration of Fund shares under applicable laws, and costs of
printing and distributing reports to shareholders.
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Example
A shareholder would pay the following expenses on a $1,000 investment for
the periods shown, assuming (1) a 5% annual return and (2) redemption at the end
of each time period:
1 Year 3 Years 5 Years 10 Years
$21 $63 $109 $234
The purpose of the foregoing expense table and Example is to assist
investors in understanding the various costs and expenses that an investor in
the Fund will bear directly or indirectly. Such expenses are paid from the
Fund's assets. (See "The Fund and Its Management.") The Fund charges no sales
loads, redemption fees, or exchange fees. The Example should not be considered a
representation of past or future expenses, and actual expenses may be greater or
less than those shown. The assumed 5% annual return is hypothetical and should
not be considered a representation of past or future annual returns, which may
be greater or less than the assumed amount.
As a result of the 0.25% 12b-1 fee paid by the Fund, investors who own
Fund shares for a long period of time may pay more than the economic equivalent
of the maximum front-end sales charge permitted for mutual funds by the National
Association of Securities Dealers, Inc.
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INVESCO Specialty Funds, Inc.
FINANCIAL HIGHLIGHTS
(For a Fund Share Outstanding throughout each Period)
Period Ended July 31, 1995
The following information has been audited by Price Waterhouse LLP,
independent accountants. This information should be read in conjunction with the
audited financial statements and the report of independent accountants thereon
appearing in the Fund's 1995 Annual Report to Shareholders which is incorporated
by reference into the Statement of Additional Information. Both are available
without charge by contacting INVESCO Funds Group, Inc. at the address or
telephone number shown below.
Period Ended July 31, 1995
European
Small Company
Fund^
PER SHARE DATA
Net Asset Value-- Beginning of Period $10.00
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income 0.04
Net Gains on Securities
(Both Realized and Unrealized) 1.56
Total from Investment Operations 1.60
LESS DISTRIBUTIONS
Dividends from Net Investment Income 0.04
Net Asset Value-- End of Period $11.56
TOTAL RETURN 15.98%*
RATIOS
Net Assets -- End of Period ($000 Omitted) $3,801
Ratio of Expenses to Average Net Assets# 2.00%~
Ratio of Net Investment Income to Average
Net Assets# 2.37%~
Portfolio Turnover Rate 0%*
^From February 15, 1995, commencement of operations, to July 31, 1995.
*These amounts are based on operations for the period shown and, accordingly,
are not representative of a full year.
#Various expenses of the European Small Company Fund were voluntarily
absorbed by INVESCO for the period ended July 31, 1995. If such expenses had not
been voluntarily absorbed, ratio of expenses to average net assets would have
been 10.17% (annualized), and ratio of net investment income to average net
assets would have been (5.80%) (annualized).
~Annualized
Further information about the performance of the Fund is contained in the
Company's Annual Report to Shareholders, which may be obtained without charge by
writing INVESCO Funds Group, Inc., P.O. Box 173706, Denver, Colorado 80217-3706;
or by calling 1-800- 525-8085.
<PAGE>
PERFORMANCE DATA
From time to time, the Fund may advertise its total return performance.
These figures are based upon historical earnings and are not intended to
indicate future performance. The "total return" of the Fund refers to the
average annual rate of return of an investment in the Fund. This figure is
computed by calculating the percentage change in value of an investment of
$1,000, assuming reinvestment of all income dividends and other distributions,
to the end of a specified period. Periods of one year, five years, ten years
and/or life of the Fund are used. Thus, a report of total return performance
should not be considered as representative of future performance. The Fund
charges no sales loads, redemption fees, or exchange fees which would affect the
total return computation.
In conjunction with performance reports and/or analyses of shareholder
service for the Fund, comparative data between the Fund's performance for a
given period and recognized indices of investment results for the same period,
and/or assessments of the quality of shareholder service, may be provided to
shareholders. Such indices include indices provided by Dow Jones & Company,
Standard & Poor's, Lipper Analytical Services, Inc., Lehman Brothers, National
Association of Securities Dealers Automated Quotations, Frank Russell Company,
Value Line Investment Survey, the American Stock Exchange, Morgan Stanley
Capital International, Wilshire Associates, the Financial Times-Stock Exchange,
the New York Stock Exchange, the Nikkei Stock Average, the James Capel European
Smaller Companies Index, the Hoare Govette Smaller Companies Index, the
FT-Actuaries Europe Index and the Deutcher Aktienindex, all of which are
unmanaged market indicators. In addition, rankings, ratings, and comparisons of
investment performance and/or assessments of the quality of shareholder service
appearing in publications such as Money, Forbes, Kiplinger's Personal Finance,
Morningstar, and similar sources which utilize information compiled (i)
internally; (ii) by Lipper Analytical Services, Inc.; or (iii) by other
recognized analytical services, may be used in advertising. The Lipper
Analytical Services, Inc. mutual fund rankings and comparisons, which may be
used by the Fund in performance reports, will be drawn from the "International
Small Company" Lipper mutual fund grouping, in addition to the broad-based
Lipper general fund grouping.
INVESTMENT OBJECTIVE AND POLICIES
INVESCO European Small Company Fund seeks to achieve capital appreciation
by investing, under normal circumstances, at least 65% of its total assets in
equity securities of European companies whose individual equity market
capitalizations would place them (at the time of purchase) in the same size
range of companies in approximately the lowest 25% of market capitalization of
companies that have equity securities listed on a U.S. national securities
exchange or traded in the NASDAQ system ("small companies"). Based on this
policy, the companies held by the Fund will typically have equity market
capitalizations under $1 billion. The foregoing investment objective is
fundamental and may not be changed without the approval of the INVESCO European
Small Company shareholders. The balance of the Fund's assets may be invested in
securities of companies other than European companies and companies whose
capitalizations exceed that of small companies. The Fund defines securities of
European companies as follows: (1) securities of companies organized under the
laws of a European country; (2) securities of companies for which the principal
securities trading market is in Europe; (3) securities issued or guaranteed by a
government agency, instrumentality, political subdivision, or central bank of a
European country; (4) securities of companies, wherever organized, with at least
50% of the issuer's assets, gross
<PAGE>
revenues, or profit in any one of the two most current fiscal years derived from
activities or assets in Europe; or (5) securities of European companies, as
defined above, in the form of depository receipts or shares. The Fund has not
established any minimum investment standards, such as earnings history, type of
industry, dividend payment history, etc., with respect to the Fund's investments
in foreign equity securities and, therefore, investors in the Fund should
consider that investments may consist in part of securities which may be deemed
to be speculative.
Additionally, under normal circumstances, the Fund will invest at least
65% of its total assets in issuers domiciled in at least five countries,
although Fund Management expects the Fund's investments to be allocated among a
larger number of countries. For purposes of this Fund, investments may be made
in any countries located on the European continent (which extends as far east as
Russia) including, but not limited to, Austria, Belgium, Denmark, Finland,
France, Germany, Greece, Holland, Ireland, Italy, Luxembourg, Norway, Portugal,
Spain, Sweden, Switzerland, Turkey and United Kingdom. In that regard, no more
than 50% of the Fund's total assets will be invested in securities issued by
companies domiciled in any one single country. The economies of European
countries may vary widely in their condition, and may be subject to sudden
changes that could have a positive or negative impact on the Fund. The
securities in which the Fund invests will typically be listed on the principal
stock exchanges in these countries, or in the secondary or junior markets,
although the Fund may purchase securities listed on the over-the-counter market
in these countries. While the Fund's investment adviser believes that smaller
companies can offer greater growth potential than larger, more established
firms, the former also involve greater risk and price volatility. To help reduce
risk, fund management expects, under normal market conditions, to vary its
portfolio investments by company, industry and country. Investments in foreign
securities involve certain risks which are discussed below under "Risk Factors."
Under normal conditions, the Fund will invest primarily in equity
securities (common stocks and, to a lesser degree, preferred stocks and
securities convertible into common stocks, such as rights, warrants and
convertible debt securities). In selecting the equity securities in which the
Funds invest, Fund Management attempts to identify small companies it believes
offer favorable long-term growth potential. It also invests in companies which
may receive greater market recognition over time. The Fund's investments in
small capitalization stocks may include companies that have limited operating
histories, product lines, and financial and managerial resources. These
companies may be subject to intense competition from larger companies, and their
stock may be subject to more abrupt or erratic market movements than the stocks
of larger, more established companies. Due to these and other factors, small
companies may suffer significant losses as well as realize substantial growth.
<PAGE>
Consistent with its investment objectives, the balance of the Fund's
assets may be invested in fixed-income securities (corporate bonds, commercial
paper, debt securities issued by the U.S. government, its agencies and
instrumentalities, or foreign governments and, to a lesser extent, municipal
bonds, asset-backed securities and zero coupon bonds). The Fund may invest no
more than 15% of its total assets in debt securities that are rated below BBB by
Standard & Poor's Corporation ("Standard & Poor's) or Baa by Moody's Investors
Service, Inc. ("Moody's") or, if unrated, that are judged by Fund Management to
be equivalent in quality to debt securities having such ratings (commonly
referred to as "junk bonds"). In no event will a Fund ever invest in a debt
security rated below CCC by Standard & Poor's or Caa by Moody's. The risks of
investing in lower rated debt securities are discussed below under "Risk
Factors."
The amounts invested in stocks, bonds and cash securities may be varied
from time to time, depending upon Fund Management's assessment of business,
economic and market conditions. In periods of abnormal economic and market
conditions, as determined by Fund Management, the Fund may depart from its basic
investment objective and assume a temporary defensive position, with a large
portion of its assets invested in U.S. government and agency securities,
investment grade corporate bonds, or cash securities such as domestic
certificates of deposit and banker's acceptances, repurchase agreements and
commercial paper. The Fund reserves the right to hold equity, fixed income and
cash securities in whatever proportion is deemed desirable at any time for
temporary defensive purposes. While a Fund is in a temporary defensive position,
the opportunity to achieve capital appreciation will be limited; however, the
ability to maintain a temporary defensive position enables the Fund to seek to
avoid capital losses during market downturns. Under normal market conditions,
the Fund does not expect to have a substantial portion of its assets invested in
cash securities.
In order to hedge its portfolio, the Fund may purchase and write options
on securities (including index options and options on securities), and may
invest in futures contracts for the purchase or sale of foreign currencies,
fixed-income securities and instruments based on financial indices
(collectively, "futures contracts"), options on futures contracts, forward
contracts and interest rate swaps and swap-related products. Interest rate swaps
involve the exchange by the Fund with another party of their respective
commitments to pay or receive interest, e.g., an exchange of floating rate
payments for fixed rate payments. These practices and instruments, some of which
are known as derivatives, and their risks are discussed below under "Risk
Factors" and in the Statement of Additional Information.
<PAGE>
Additional information on certain types of securities in which the Fund
may invest is set forth below:
When-Issued Securities
The Fund may make commitments in an amount of up to 10% of the value of
its total assets at the time any commitment is made to purchase or sell equity
or debt securities on a when-issued or delayed delivery basis (i.e., securities
may be purchased or sold by the Fund with settlement taking place in the future,
often a month or more later). The payment obligation and, in the case of debt
securities, the interest rate that will be received on the securities are
generally fixed at the time the Fund enters into the commitment. During the
period between purchase and settlement, no payment is made by the Fund and no
interest accrues to the Fund. At the time of settlement, the market value of the
security may be more or less than the purchase price, and the Fund bears the
risk of such market value fluctuations. The Fund maintains cash, U.S. government
securities, or other high-grade debt obligations readily convertible into cash
having an aggregate value equal to the amount of such purchase commitments in a
segregated account until payment is made.
Illiquid and Rule 144A Securities
The Fund is authorized to invest in securities which are illiquid because
they are subject to restrictions on their resale ("restricted securities") or
because, based upon their nature or the market for such securities, they are not
readily marketable. However, the Fund will not purchase any such security if the
purchase would cause the Fund to invest more than 15% of its net assets in
illiquid securities. Repurchase agreements maturing in more than seven days will
be considered as illiquid for purposes of this restriction. Investments in
illiquid securities involve certain risks to the extent that the Fund may be
unable to dispose of such a security at the time desired or at a reasonable
price. In addition, in order to resell a restricted security, the Fund might
have to bear the expense and incur the delays associated with effecting
registration.
Certain restricted securities that are not registered for sale to the
general public, but that can be resold to institutional investors ("Rule 144A
Securities"), may be purchased without regard to the foregoing 15% limitation if
a liquid institutional trading market exists. The liquidity of the Fund's
investments in Rule 144A Securities could be impaired if dealers or
institutional investors become uninterested in purchasing these securities. The
Company's board of directors has delegated to the adviser the authority to
determine the liquidity of Rule 144A Securities pursuant to guidelines approved
by the board. The Fund has agreed with certain states that no more than 10% of
its total assets will be invested in restricted securities which are not
eligible for resale pursuant to Rule 144A. For more information concerning Rule
144A Securities, see the Statement of Additional Information.
The settlement period of securities transactions in foreign markets may be
longer than in domestic markets. These considerations generally are more of a
concern in developing countries. For example, the possibility of political
upheaval and the dependence on foreign economic assistance may be greater in
these countries than in developed countries.
<PAGE>
Repurchase Agreements
The Fund may enter into repurchase agreements with respect to debt
instruments eligible for investment by the Fund. These agreements are entered
into with member banks of the Federal Reserve System, registered broker-dealers,
and registered government securities dealers, which are deemed creditworthy. A
repurchase agreement, which may be considered a "loan" under the Investment
Company Act of 1940, is a means of investing monies for a short period. In a
repurchase agreement, the Fund acquires a debt instrument (generally a security
issued by the U.S. government or an agency thereof, a banker's acceptance, or a
certificate of deposit) subject to resale to the seller at an agreed upon price
and date (normally, the next business day). In the event that the original
seller defaults on its obligation to repurchase the security, the Fund could
incur costs or delays in seeking to sell such security. To minimize risk, the
securities underlying each repurchase agreement will be maintained with the
Fund's custodian in an amount at least equal to the repurchase price under the
agreement (including accrued interest), and such agreements will be effected
only with parties that meet certain creditworthiness standards established by
the Company's board of directors. The Fund will not enter into a repurchase
agreement maturing in more than seven days if as a result more than 10% of its
total assets would be invested in such repurchase agreements and other illiquid
securities. The Fund has not adopted any limit on the amount of its net assets
that may be invested in repurchase agreements maturing in seven days or less.
Securities Lending
The Fund also may lend its securities to qualified brokers, dealers,
banks, or other financial institutions. This practice permits the Fund to earn
income, which, in turn, can be invested in additional securities of the type
described in this Prospectus in pursuit of the Fund's investment objective.
Loans of securities by a Fund will be collateralized by cash, letters of credit,
or securities issued or guaranteed by the U.S. government or its agencies equal
to at least 100% of the current market value of the loaned securities,
determined on a daily basis. Cash collateral will be invested only in high
quality short-term investments offering maximum liquidity. Lending securities
involves certain risks, the most significant of which is the risk that a
borrower may fail to return a portfolio security. The Fund monitors the
creditworthiness of borrowers in order to minimize such risks. The Fund will not
lend any security if, as a result of the loan, the aggregate value of securities
then on loan would exceed 33-1/3% of the Fund's total assets (taken at market
value).
<PAGE>
Portfolio Turnover
There are no fixed limitations regarding portfolio turnover for the Fund's
portfolio. Although the Fund does not trade for short-term profits, securities
may be sold without regard to the time they have been held in the Fund when, in
the opinion of Fund Management, investment considerations warrant such action.
In addition, portfolio turnover rates may increase as a result of large amounts
of purchases or redemptions of Fund shares due to economic, market or other
factors that are not within the control of Fund Management. As a result, while
it is anticipated that the portfolio turnover rates for the Fund's portfolio
generally will not exceed 200%, under certain market conditions these portfolio
turnover rates may exceed 200%. Increased portfolio turnover would cause the
Fund to incur greater brokerage costs than would otherwise be the case, and may
result in the acceleration of realized capital gains or losses that are taxable
when distributed to shareholders. The Fund's portfolio turnover rates are set
forth under "Financial Highlights" and, along with the Fund's brokerage
allocation policies, are discussed in the Statement of Additional Information.
Investment Restrictions
The Fund is subject to a variety of restrictions regarding its investments
that are set forth in this Prospectus and in the Statement of Additional
Information. Certain of the Fund's investment restrictions are fundamental, and
may not be altered without the approval of the Fund's shareholders. Such
fundamental investment restrictions include the restrictions which prohibit the
Fund from: lending more than 33-1/3% of its total assets to other parties
(excluding purchases of commercial paper, debt securities and repurchase
agreements); investing more than 25% of the value of the Fund's total assets in
any one industry (other than government securities); with respect to 75% of its
total assets, purchasing the securities of any one issuer (other than cash items
and government securities) if the purchase would cause the Fund to have more
than 5% of its total assets invested in the issuer or to own more than 10% of
the outstanding voting securities of the issuer; and borrowing money or issuing
senior securities except that the Fund may borrow money for temporary or
emergency purposes (not for leveraging or investment) including entering into
reverse repurchase agreements consistent with the provisions of its fundamental
and non-fundamental investment restrictions. However, unless otherwise noted,
the Fund's investment restrictions and its investment policies are not
fundamental and may be changed by action of the Company's board of directors.
Unless otherwise noted, all percentage limitations contained in the Fund's
investment policies and restrictions apply at the time an investment is made.
Thus, subsequent changes in the value of an investment after purchase or in the
value of the Fund's total assets will not cause any such limitation to have been
violated or to require the disposition of any investment, except as otherwise
required by law. If the credit ratings of an issuer are lowered below those
specified for investment by the Fund, the Fund is not required to dispose of the
obligations of that issuer.
<PAGE>
The determination of whether to sell such an obligation will be made by
Fund Management based upon an assessment of credit risk and the prevailing
market price of the investment. If the Fund borrows money, its share price may
be subject to greater fluctuation until the borrowing is repaid. The Fund
attempts to minimize such fluctuations by not purchasing additional securities
when borrowings, including reverse repurchase agreements, are greater than 5% of
the value of the Fund's total assets. As a fundamental policy in addition to the
above, the Fund may, notwithstanding any other investment policy or limitation
(whether or not fundamental), invest all of its assets in the securities of a
single open-end management investment company with substantially the same
fundamental investment objectives, policies and limitations as the Fund. See
"Additional Information-Master/Feeder Option."
RISK FACTORS
There can be no assurance that the Fund will achieve its investment
objective. The Fund's investments in common stocks and other equity securities
may, of course, decline in value. There is typically less publicly available
information concerning foreign and small companies than for domestic and larger,
more established companies. Some small companies have limited product lines,
distribution channels and financial and managerial resources. Also, because
smaller companies normally have fewer shares outstanding than larger companies
and trade less frequently, it may be more difficult for the Fund to buy and sell
significant amounts for such shares without an unfavorable impact on prevailing
market prices. Some of the companies in which the Fund may invest may
distribute, sell or produce products which have recently been brought to market
and may be dependent on key personnel with varying degrees of experience.
Foreign Securities
For U.S. investors, the returns on foreign securities are
influenced not only by the returns on the foreign investments
themselves, but also by currency risk (i.e., changes in the value
of the currencies in which the securities are denominated relative
to the U.S. dollar). In a period when the U.S. dollar generally
rises against foreign currencies, the returns on foreign securities
for a U.S. investor are diminished. By contrast, in a period when
the U.S. dollar generally declines, the returns on foreign
securities generally are enhanced.
Other risks and considerations of international investing include the
following: differences in accounting, auditing and financial reporting standards
which may result in less publicly available information than is generally
available with respect to U.S. issuers; generally higher commission rates on
foreign portfolio transactions and longer settlement periods; the smaller
trading volumes and generally lower liquidity of foreign stock markets, which
may result in greater price volatility; foreign withholding taxes payable on the
Fund's foreign securities, which
<PAGE>
may reduce dividend or capital gains income payable to shareholders; the
possibility of expropriation or confiscatory taxation; adverse changes in
investment or exchange control regulations; political instability which could
affect U.S. investment in foreign countries; potential restrictions on the flow
of international capital; and the possibility of a Fund experiencing
difficulties in pursuing legal remedies and collecting judgments. The Fund's
investments in foreign securities may include investments in developing
countries. Many of these securities are speculative and their prices may be more
volatile than those of securities issued by companies located in more developed
countries.
Lower Rated Securities
The Fund's investments in fixed-income securities generally are subject to
both credit risk and market risk. Credit risk relates to the ability of the
issuer to meet interest or principal payments, or both, as they come due. Market
risk relates to the fact that the market values of the debt securities in which
the Fund invests generally will be affected by changes in the level of interest
rates. An increase in interest rates will tend to reduce the market values of
debt securities, whereas a decline in interest rates will tend to increase their
values. Although the Fund's investment adviser limits the Fund's investments in
fixed-income securities to securities it believes are not highly speculative,
both kinds of risk are increased by investing in debt securities rated below the
top three grades by Standard & Poor's or Moody's or, if unrated, securities
determined by the Fund's adviser to be of equivalent quality. Although bonds in
the lowest investment grade debt category (those rated BBB by Standard & Poor's
or Baa by Moody's) 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 are commonly known as "junk bonds." Those so rated by Moody's
(categories Ba, B, Caa) are of poorer quality and also have speculative
characteristics. Bonds rated Caa may be in default or there may be present
elements of danger with respect to principal or interest. Lower rated bonds by
Standard & Poor's (categories BB, B, CCC) include those which 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. For a specific description of each corporate bond rating category,
please refer to Appendix B to the Statement of Additional Information.
<PAGE>
Futures, Options and Other Derivative Instruments
The use of futures, options, forward contracts and swaps exposes the Fund
to additional investment risks and transaction costs, and as a result, no more
than 5% of the Fund's total assets will be committed to such investments. If
Fund Management seeks to protect the Fund against potential adverse movements in
the securities, foreign currency or interest rate markets using these
instruments, and such markets do not move in a direction adverse to the Fund,
the Fund could be left in a less favorable position than if such strategies had
not been used. Risks inherent in the use of futures, options, forward contracts
and swaps include (1) the risk that interest rates, securities prices and
currency markets will not move in the directions anticipated; (2) imperfect
correlation between the price of futures, options and forward contracts and
movements in the prices of the securities or currencies being hedged; (3) the
fact that skills needed to use these strategies are different from those needed
to select portfolio securities; (4) the possible absence of a liquid secondary
market for any particular instrument at any time; and (5) the possible need to
defer closing out certain hedged positions to avoid adverse tax consequences.
Further information on the use of futures, options, forward foreign currency
contracts and swaps and swap-related products, and the associated risks, is
contained in the Statement of Additional Information.
THE FUND AND ITS MANAGEMENT
The Company is a no-load mutual fund, registered with the Securities and
Exchange Commission as an open-end, diversified, management investment company.
It was incorporated on April 12, 1994, under the laws of Maryland. The overall
supervision of the Fund is the responsibility of the Company's board of
directors.
INVESCO is an indirect wholly-owned subsidiary of INVESCO PLC. INVESCO
PLC is a financial holding company that, through its subsidiaries, engages in
the business of investment management on an international basis. INVESCO was
established in 1932 and, as of July 31, 1995, managed 14 mutual funds,
consisting of 38 separate portfolios, with combined assets of approximately
$10.2 billion on behalf of over 790,000 shareholders.
Pursuant to an agreement with INVESCO, MIM International Limited ("MIL")
serves as the sub-adviser to the Fund. In that capacity, MIL has the primary
responsibility, under the supervision of INVESCO, for providing portfolio
management services to the Fund. MIL also is an indirect wholly-owned subsidiary
of INVESCO PLC. MIL also acts as sub-adviser to the INVESCO European Fund, the
INVESCO Pacific Basin Fund and the INVESCO Latin American Growth Fund. MIL,
subject to the supervision of INVESCO, is primarily responsible for selecting
and managing the Fund's investments. Although the Company is not a party to the
sub- advisory agreement, the agreement has been approved by INVESCO as the then
sole shareholder of the Company.
<PAGE>
Pursuant to an agreement with the Company, INVESCO Funds
Group, Inc. ("INVESCO"), 7800 E. Union Avenue, Denver, Colorado,
serves as the Fund's investment adviser. INVESCO is primarily
responsible for providing the Fund with various administrative
services and supervising the Fund's daily business affairs. These
services are subject to review by the Company's board of directors.
The following individuals serve as lead portfolio managers for the Fund
and are supported by a team of fund managers primarily responsible for
determining, in accordance with a senior investment policy group, the
country-by-country allocation of the portfolio's assets, overall stock selection
and the ongoing implementation and risk control policies applicable to the
portfolio:
Andy Crossley Co-portfolio manager of the Fund since
1995 (inception); Fund manager of INVESCO
Asset Management Limited (1991 to
present); began investment career in
1988; B.S.-Banking and Finance,
Loughborough University; Associate of the
Chartered Institute of Bankers.
Claire Griffiths Co-portfolio manager of the Fund since
1995 (inception); Fund manager of INVESCO
Asset Management Limited (1991 to
present); began investment career in
1989; M.A. St. John's College, Cambridge.
Mr. Crossley and Ms. Griffiths head a team of individual
country specialists who are responsible for managing security
selection for their assigned country and sector within the
parameters established by the investment policy group of MIM
International Limited, sub-adviser to the Fund.
The Fund pays INVESCO a monthly advisory fee which is based upon a
percentage of the average net assets of the Fund, determined daily. The maximum
advisory fee is computed at the annual rate of 0.75% on the first $500 million
of the Fund's average net assets, 0.65% on the next $500 million of the Fund's
average net assets and 0.55% on the Fund's average net assets over $1 billion.
The management fee of 0.75% is higher than that charged by most other mutual
funds, but is typical of the management fees charged by funds similar to the
European Small Company Fund.
Out of its advisory fee which it receives from the Fund, INVESCO pays MIL,
as sub-adviser to the Fund, a monthly fee, which is computed at the annual rate
of 0.375% on the first $500 million of the Fund's average net assets, 0.325% on
the next $500 million of the Fund's average net assets and 0.275% on the Fund's
average net assets in excess of $1 billion. No fee is paid by the Funds to MIL.
The Company also has entered into an Administrative Services
Agreement (the "Administrative Agreement") with INVESCO. Pursuant
to the Administrative Agreement, INVESCO performs certain
<PAGE>
administrative, recordkeeping and internal sub-accounting services, including
without limitation, maintaining general ledger and capital stock accounts,
preparing a daily trial balance, calculating net asset value daily, providing
selected general ledger reports and providing sub-accounting and recordkeeping
services for Fund shareholder accounts maintained by certain retirement and
employee benefit plans for the benefit of participants in such plans. For such
services, the Fund pays INVESCO a fee consisting of a base fee of $10,000 per
year, plus an additional incremental fee computed at the annual rate of 0.015%
per year of the average net assets of the Fund. INVESCO also is paid a fee by
the Fund for providing transfer agent services. See "Additional Information."
The Fund's expenses, which are accrued daily, are generally deducted from
the Fund's total income before dividends are paid. Total expenses of the Fund
for the fiscal period ended July 31, 1995, including investment advisory fees
(but excluding brokerage commissions, which are a cost of acquiring securities),
amounted to 2.00% of the Fund's average net assets. Certain expenses for the
Fund are being absorbed by INVESCO and MIL voluntarily in order to ensure that
the Fund's total expenses do not exceed 2.00%. If such voluntary expense
limitation had not been in effect, the Fund's total expenses for the period from
February 15, 1995 (inception) through July 31, 1995, would have been 10.17% of
the Fund's average net assets.
Fund Management places orders for the purchase and sale of portfolio
securities with brokers and dealers based upon Fund Management's evaluation of
their financial responsibility coupled with their ability to effect transactions
at the best available prices. As discussed under "How Shares Can Be Purchased -
Distribution Expenses," the Company may market shares of the Funds through
intermediary brokers or dealers that have entered into Dealer Agreements with
INVESCO, as the Company's Distributor. The Funds may place orders for portfolio
transactions with qualified broker/dealers that recommend the Funds, or sell
shares of the Funds to clients, or act as agent in the purchase of Fund shares
for clients, if Fund Management believes that the quality of execution of the
transaction and level of commission are comparable to those available from other
qualified brokerage firms.
Fund Management permits investment and other personnel to purchase and
sell securities for their own accounts, subject to a compliance policy governing
personal investing. This policy requires investment and other personnel to
conduct their personal investment activities in a manner that Fund Management
believes is not detrimental to the Funds or Fund Management's other advisory
clients. See the Statement of Additional Information for more detailed
information.
<PAGE>
HOW SHARES CAN BE PURCHASED
Shares of the Fund are sold on a continuous basis by INVESCO,
as the Fund's Distributor, at the net asset value per share next calculated
after receipt of a purchase order in good form. No sales charge is imposed upon
the sale of shares of the Fund. To purchase shares of the Fund, send a check
made payable to INVESCO Funds Group, Inc., together with a completed application
form, to:
Funds Group, Inc.
Post Office Box 173706
Denver, Colorado 80217-3706
Purchase orders must specify the Fund in which the investment is to be
made.
The minimum initial purchase must be at least $1,000, with subsequent
investments of not less than $50, except that: (1) those shareholders
establishing an EasiVest or direct payroll purchase account, as described below
in the Prospectus section entitled "Services Provided by the Fund," may open an
account without making any initial investment if they agree to make regular,
minimum purchases of at least $50; (2) those shareholders investing in an
Individual Retirement Account (IRA), or through omnibus accounts where
individual shareholder recordkeeping and sub-accounting are not required, may
make initial minimum purchases of $250; (3) Fund Management may permit a lesser
amount to be invested in a Fund under a federal income tax-deferred retirement
plan (other than an IRA account), or under a group investment plan qualifying as
a sophisticated investor; and (4) Fund Management reserves the right to reduce
or waive the minimum purchase requirements in its sole discretion where it
determines such action is in the best interests of the Fund.
The purchase of Fund shares can be expedited by placing bank wire,
overnight courier or telephone orders. Overnight courier orders must meet the
above minimum requirements. In no case can a bank wire order or telephone order
be in an amount less than $1,000. For further information, the purchaser may
call the Fund's office by using the telephone number on the cover of this
Prospectus. Orders sent by overnight courier, including Express Mail, should be
sent to the street address, not Post Office Box, of INVESCO Funds Group, Inc.,
at 7800 E. Union Avenue, Denver, CO 80237.
Orders to purchase shares of the Fund can be placed by telephone. Shares
of the Fund will be issued at the net asset value per share next determined
after receipt of telephone instructions. Generally, payments for telephone
orders must be received by the Fund within three business days or the
transaction may be cancelled. In the event of such cancellation, the purchaser
will be held responsible for any loss resulting from a decline in the value of
the shares. In order to avoid such losses, purchasers should send payments for
telephone purchases by overnight courier or bank wire. INVESCO has agreed to
indemnify the Fund for any losses resulting from such cancellations of telephone
purchases.
<PAGE>
If your check does not clear, or if a telephone purchase must be cancelled
due to nonpayment, you will be responsible for any related loss the Fund or
INVESCO incurs. If you are already a shareholder in the INVESCO funds, the Fund
has the option to redeem shares from any identically registered account in the
Fund or any other INVESCO fund as reimbursement for any loss incurred. You also
may be prohibited or restricted from making future purchases in any of the
INVESCO funds.
Persons who invest in the Fund through a securities broker may be charged
a commission or transaction fee for the handling of the transaction if the
broker so elects. Any investor may deal directly with the Fund in any
transaction. In that event, there is no such charge.
The Fund reserves the right in its sole discretion to reject any order for
purchase of its shares (including purchases by exchange) when, in the judgment
of management, such rejection is in the best interest of the Fund.
Net asset value per share is computed once each day that the New York
Stock Exchange is open as of the close of regular trading on that Exchange
(usually 4:00 p.m., New York time) and also may be computed on other days under
certain circumstances. Net asset value per share for the Fund is calculated by
dividing the market value of the Fund's securities plus the value of its other
assets (including dividends and interest accrued but not collected), less all
liabilities (including accrued expenses), by the number of outstanding shares of
that Fund. If market quotations are not readily available, a security or other
asset will be valued at fair value as determined in good faith by the board of
directors. Debt securities with remaining maturities of 60 days or less at the
time of purchase will be valued at amortized cost, absent unusual circumstances,
so long as the Company's board of directors believes that such value represents
fair value.
Distribution Expenses. The Fund is authorized under a Plan and Agreement of
Distribution pursuant to Rule 12b-1 under the Investment Company Act of 1940
(the "Plan") to use its assets to finance certain activities relating to the
distribution of its shares to investors. Under the Plan, monthly payments may be
made by the Fund to INVESCO to reimburse it for particular expenditures incurred
by INVESCO in connection with the distribution of the Fund's shares to
investors. These expenditures may include the payment of compensation (including
incentive compensation and/or continuing compensation based on the amount of
customer assets maintained in the Fund) to securities dealers and other
financial institutions and organizations, which may include INVESCO affiliated
companies, to obtain various distribution-related and/or administrative services
for the Fund. Such services may include, among other things, processing new
shareholder account applications, preparing and transmitting to the Fund's
Transfer Agent computer processable tapes of all transactions by customers, and
serving as the primary source of information to customers in answering questions
concerning the Fund and their transactions with the Fund.
<PAGE>
In addition, other reimbursable expenditures include those incurred for
advertising, the preparation and distribution of sales literature, the cost of
printing and distributing prospectuses to prospective investors, and such other
services and promotional activities for the Fund as may from time to time be
agreed upon by the Company and its board of directors, including public
relations efforts and marketing programs to communicate with investors and
prospective investors. These services and activities may be conducted by the
staff of INVESCO or its affiliates or by third parties.
Under the Plan, the Company's reimbursement to INVESCO on behalf of the
Fund is limited to an amount computed at an annual rate of 0.25 of 1% of the
Fund's average net assets during the month. INVESCO is not entitled to
reimbursement for overhead expenses under the Plan, but may be reimbursed for
all or a portion of the compensation paid for salaries and other employee
benefits for the personnel of INVESCO whose primary responsibilities involve
marketing shares of the INVESCO funds, including the Fund. Payment amounts by
the Fund under the Plan, for any month, may only be made to reimburse or pay
expenditures incurred during the rolling 12- month period in which that month
falls, although this period is expanded to 24 months for expenses incurred
during the first 24 months of the Fund's operations. Therefore, any reimbursable
expenses incurred by INVESCO in excess of the limitations described above are
not reimbursable and will be borne by INVESCO. In addition, INVESCO may from
time to time make additional payments from its revenues to securities dealers
and other financial institutions that provide distributor related and/or
administrative services for the Fund. No further payments will be made by the
Fund under the Plan in the event of its termination. Also, any payments made by
the Fund may not be used to finance the distribution of shares of any other fund
of the Company or other mutual fund advised by INVESCO. Payments made by the
Fund under the Plan for compensation of marketing personnel, as noted above, are
based on an allocation formula designed to ensure that all such payments are
appropriate.
SERVICES PROVIDED BY THE FUND
Shareholder Accounts. INVESCO maintains a share account that reflects the
current holdings of each shareholder. Share certificates will be issued only
upon specific request. Since certificates must be carefully safeguarded, and
must be surrendered in order to exchange or redeem Fund shares, most
shareholders do not request share certificates in order to facilitate such
transactions. Each shareholder is sent a detailed confirmation of each
transaction in shares of the Fund. Shareholders whose only transactions are
through the EasiVest, direct payroll purchase, automatic monthly exchange or
periodic withdrawal programs, or are reinvestments of dividends or capital gains
in the same or another
<PAGE>
fund, will receive confirmations of those transactions on their quarterly
statements. These programs are discussed below. For information regarding a
shareholder's account and transactions, the shareholder may call the Fund's
office by using the telephone number on the cover of this Prospectus.
Reinvestment of Distributions. Dividends and other distributions are
automatically reinvested in additional shares of the Fund at the net asset value
per share in effect on the ex- dividend date. A shareholder may, however, elect
to reinvest dividends and other distributions in certain of the other no-load
mutual funds advised and distributed by INVESCO, or to receive payment of all
dividends and other distributions in excess of $10.00 by check by giving written
notice to INVESCO at least two weeks prior to the record date on which the
change is to take effect. Further information concerning these options can be
obtained by contacting INVESCO.
Periodic Withdrawal Plan. A Periodic Withdrawal Plan is available to
shareholders who own or purchase shares of any mutual funds advised by INVESCO
having a total value of $10,000 or more; provided, however, that at the time the
Plan is established, the shareholder owns shares having a value of at least
$5,000 in the fund from which the withdrawals will be made. Under the Periodic
Withdrawal Plan, INVESCO, as agent, will make specified monthly or quarterly
payments of any amount selected (minimum payment of $100) to the party
designated by the shareholder. Notice of all changes concerning the Periodic
Withdrawal Plan must be received by INVESCO at least two weeks prior to the next
scheduled check. Further information regarding the Periodic Withdrawal Plan and
its requirements and tax consequences can be obtained by contacting INVESCO.
Exchange Privilege. Shares of the Fund may be exchanged for shares of any
other fund of the Company, as well as for shares of any of the following other
no-load mutual funds, which are also advised and distributed by INVESCO, on the
basis of their respective net asset values at the time of the exchange: INVESCO
Diversified Funds, Inc., INVESCO Dynamics Fund, Inc., INVESCO Emerging
Opportunity Funds, Inc., INVESCO Growth Fund, Inc., INVESCO Income Funds, Inc.,
INVESCO Industrial Income Fund, Inc., INVESCO International Funds, Inc., INVESCO
Money Market Funds, Inc., INVESCO Multiple Asset Funds, Inc., INVESCO Strategic
Portfolios, Inc., INVESCO Tax-Free Income Funds, Inc. and INVESCO Value Trust.
An exchange involves the redemption of shares in the Fund and investment
of the redemption proceeds in shares of another fund of the Company or in shares
of one of the funds listed above. Exchanges will be made at the net asset value
per share next determined after receipt of an exchange request in proper order.
Any gain or loss realized on such an exchange is recognizable for federal income
tax purposes by the shareholder. Exchange requests may be made either by
telephone or by written request to INVESCO Funds Group, Inc., using the
telephone number or address on the cover of this Prospectus.
<PAGE>
Exchanges made by telephone must be in an amount of at least $250, if the
exchange is being made into an existing account of one of the INVESCO funds. All
exchanges that establish a new account must meet the Fund's applicable minimum
initial investment requirements. Written exchange requests into an existing
account have no minimum requirements other than the Fund's applicable minimum
subsequent investment requirements.
The privilege of exchanging Fund shares by telephone is available to
shareholders automatically unless expressly declined. By signing the New Account
Application, a Telephone Transaction Authorization Form or otherwise utilizing
telephone exchange privileges, the investor has agreed that the Funds will not
be liable for following instructions communicated by telephone that it
reasonably believes to be genuine. The Fund employs procedures, which it
believes are reasonable, designed to confirm that exchange instructions are
genuine. These may include recording telephone instructions and providing
written confirmations of exchange transactions. As a result of this policy, the
investor may bear the risk of any loss due to unauthorized or fraudulent
instructions; provided, however, that if the Fund fails to follow these or other
reasonable procedures, the Fund may be liable.
In order to prevent abuse of this privilege to the disadvantage of other
shareholders, the Fund reserves the right to terminate the exchange privilege of
any shareholder who requests more than four exchanges in a year. The Fund will
determine whether to do so based on a consideration of both the number of
exchanges any particular shareholder or group of shareholders has requested and
the time period over which those exchange requests have been made, together with
the level of expense to the Fund which will result from effecting additional
exchange requests. The exchange privilege also may be modified or terminated at
any time. Except for those limited instances where redemptions of the exchanged
security are suspended under Section 22(e) of the Investment Company Act of
1940, or where sales of the fund into which the shareholder is exchanging are
temporarily stopped, notice of all such modifications or termination of the
exchange privilege will be given at least 60 days prior to the date of
termination or the effective date of the modification.
Before making an exchange, the shareholder should review the prospectuses
of the funds involved and consider their differences, and should be aware that
the exchange privilege may only be available in those states where exchanges
legally may be made, which will require that the shares being acquired are
registered for sale in the shareholder's state of residence. Shareholders
interested in exercising the exchange privilege may contact INVESCO for
information concerning their particular exchanges.
Automatic Monthly Exchange. Shareholders who have accounts in any one or
more of the mutual funds distributed by INVESCO may arrange for a fixed dollar
amount of their fund shares to be automatically exchanged for shares of any
other INVESCO mutual fund listed under "Exchange Privilege" on a monthly basis.
The minimum monthly exchange in this program is $50.00. This automatic exchange
program can be changed by the shareholder at any time by notifying INVESCO at
least two weeks prior to the date the change is to be made. Further information
regarding this service can be obtained by contacting INVESCO.
<PAGE>
EasiVest. For shareholders who want to maintain a schedule of monthly
investments, EasiVest uses various methods to draw a preauthorized amount from
the shareholder's bank account to purchase Fund shares. This automatic
investment program can be changed by the shareholder at any time by writing to
INVESCO at least two weeks prior to the date the change is to be made. Further
information regarding this service can be obtained by contacting INVESCO.
Direct Payroll Purchase. Shareholders may elect to have their employer
make automatic purchases of Fund shares for them by deducting a specified amount
from their regular paychecks. This automatic investment program can be modified
or terminated at any time by the shareholder, by notifying the employer. Further
information regarding this service can be obtained by contacting INVESCO.
Tax-Deferred Retirement Plans. Shares of the Fund may be purchased for
self-employed individual retirement plans, IRAs, simplified employee pension
plans and corporate retirement plans. In addition, shares can be used to fund
tax qualified plans established under Section 403(b) of the Internal Revenue
Code by educational institutions, including public school systems and private
schools, and certain kinds of non-profit organizations, which provide deferred
compensation arrangements for their employees.
Prototype forms for the establishment of these various plans, including,
where applicable, disclosure statements required by the Internal Revenue
Service, are available from INVESCO. INVESCO Trust Company, a subsidiary of
INVESCO, is qualified to serve as trustee or custodian under these plans and
provides the required services at competitive rates. Retirement plans (other
than IRAs) receive monthly statements reflecting all transactions in their Fund
accounts. IRAs receive the confirmations and quarterly statements described
under "Shareholder Accounts." For complete information, including prototype
forms and service charges, call INVESCO at the telephone number listed on the
cover of this Prospectus or send a written request to: Retirement Services,
INVESCO Funds Group, Inc., Post Office Box 173706, Denver, Colorado 80217-3706.
<PAGE>
HOW TO REDEEM SHARES
Shares of the Fund may be redeemed at any time at their current net asset
value per share next determined after a request in proper form is received at
the Fund's office. (See "How Shares Can Be Purchased.") Net asset value per
share at the time of redemption may be more or less than the price you paid to
purchase your shares, depending primarily upon the Fund's investment
performance.
If the shares to be redeemed are represented by stock certificates, a
written request for redemption signed by the registered shareholder(s) and the
certificates must be forwarded to INVESCO Funds Group, Inc., Post Office Box
173706, Denver, Colorado 80217-3706. Redemption requests sent by overnight
courier, including Express Mail, should be sent to the street address, not Post
Office Box, of INVESCO Funds Group, Inc. at 7800 E. Union Avenue, Denver, CO
80237. If no certificates have been issued, a written redemption request signed
by each registered owner of the account must be submitted to INVESCO at the
address noted above. If shares are held in the name of a corporation, additional
documentation may be necessary. Call or write for specifics. If payment for the
redeemed shares is to be made to someone other than the registered owner(s), the
signature(s) must be guaranteed by a financial institution which qualifies as an
eligible guarantor institution. Redemption procedures with respect to accounts
registered in the names of broker/dealers may differ from those applicable to
other shareholders.
Be careful to specify the account from which the redemption is to be made.
Shareholders have a separate account for each Fund in which they invest.
Payment of redemption proceeds will be mailed within seven days following
receipt of the required documents. However, payment may be postponed under
unusual circumstances, such as when normal trading is not taking place on the
New York Stock Exchange, or an emergency as defined by the Securities and
Exchange Commission exists. If the shares to be redeemed were purchased by check
and that check has not yet cleared, payment will be made promptly upon clearance
of the purchase check (which may take up to 15 days).
If a shareholder participates in EasiVest, the Fund's automatic monthly
investment program, and redeems all of the shares in his Fund account, INVESCO
will terminate any further EasiVest purchases unless otherwise instructed by the
shareholder.
Because of the high relative costs of handling small accounts, should the
value of any shareholder's account fall below $250 as a result of shareholder
action, the Fund reserves the right to effect the involuntary redemption of all
shares in such account, in which case the account would be liquidated and the
proceeds forwarded to the shareholder. Prior to any such redemption, a
shareholder will be notified and given 60 days to increase the value of the
account to $250 or more.
Fund shareholders (other than shareholders holding Fund shares in accounts
of IRA plans) may request expedited redemption of shares having a minimum value
of $250 (or redemption of all shares
<PAGE>
if their value is less than $250) held in accounts maintained in their name by
telephoning redemption instructions to INVESCO, using the telephone number on
the cover of this Prospectus. The redemption proceeds, at the shareholder's
option, either will be mailed to the address listed for the shareholder's Fund
account, or wired (minimum of $1,000) or mailed to the bank which the
shareholder has designated to receive the proceeds of telephone redemptions. The
Fund charges no fee for effecting such telephone redemptions. Unless Fund
Management permits a larger redemption request to be placed by telephone, a
shareholder may not place a redemption request by telephone in excess of
$25,000. These telephone redemption privileges may be modified or terminated in
the future at the discretion of the Fund's management.
For INVESCO Trust Company-sponsored federal income tax-deferred retirement
plans, the term "shareholders" is defined to mean plan trustees that file a
written request to be able to redeem Fund shares by telephone. Shareholders
should understand that, while the Fund will attempt to process all telephone
redemption requests on an expedited basis, there may be times, particularly in
periods of severe economic or market disruption, when (a) they may encounter
difficulty in placing a telephone redemption request, and (b) processing
telephone redemptions will require up to seven days following receipt of the
redemption request, or additional time because of the unusual circumstances set
forth above.
The privilege of redeeming Fund shares by telephone is available to
shareholders automatically unless expressly declined. By signing a New Account
Application, a Telephone Transaction Authorization Form or otherwise utilizing
telephone redemption privileges, the shareholder has agreed that the Fund will
not be liable for following instructions communicated by telephone that it
reasonably believe to be genuine. The Fund employs procedures, which it believes
are reasonable, designed to confirm that telephone instructions are genuine.
These may include recording telephone instructions and providing written
confirmation of transactions initiated by telephone. As a result of this policy,
the investor may bear the risk of any loss due to unauthorized or fraudulent
instructions; provided, however, that if the Fund fails to follow these or other
reasonable procedures, the Fund may be liable.
TAXES, DIVIDENDS AND CAPITAL GAIN DISTRIBUTIONS
Taxes. The Fund intends to distribute to shareholders substantially all of
its net investment income, net capital gains and net gains from foreign currency
transactions, if any, in order to continue to qualify for tax treatment as a
regulated investment company. Thus, the Fund does not expect to pay any federal
income or excise taxes.
Unless shareholders are exempt from income taxes, they must include all
dividends and capital gain distributions in taxable income for federal, state,
and local income tax purposes.
<PAGE>
Dividends and other distributions are taxable whether they are received in cash
or automatically invested in shares of the Fund or another fund in the INVESCO
group.
The Fund may be subject to the withholding of foreign taxes on dividends
or interest it receives on foreign securities. Foreign taxes withheld will be
treated as an expense of the Fund unless the Fund meets the qualifications to
enable it to pass these taxes through to shareholders for use by them as a
foreign tax credit or deduction.
Shareholders may be subject to backup withholding of 31% on dividends,
capital gain distributions and redemption proceeds. Unless a shareholder is
subject to backup withholding for other reasons, the shareholder can avoid
backup withholding on his Fund account by ensuring that INVESCO has a correct,
certified tax identification number.
Dividends and Capital Gain Distributions. The Fund earns ordinary or net
investment income, in the form of dividends and interest on its investments. The
Fund's policy is to distribute substantially all of this income, less Fund
expenses, to shareholders on an annual basis, at the discretion of the Company's
board of directors.
In addition, the Fund realizes capital gains and losses when it sells
securities for more or less than it paid. If total gains on sales exceed total
losses (including losses carried forward from previous years), the Fund has a
net realized capital gain. Net realized capital gains, if any, are distributed
to shareholders at least annually, usually in December.
Dividends and capital gain distributions are paid to shareholders who hold
shares on the record date of the distribution regardless of how long the shares
have been held. The Fund's share price will then drop by the amount of the
distribution on the day the distribution is made. If a shareholder purchases
shares immediately prior to the distribution, the shareholder will, in effect,
have "bought" the distribution by paying full purchase price, a portion of which
is then returned in the form of a taxable distribution.
At the end of each year, information regarding the tax status of dividends
and capital gain distributions is provided to shareholders. Net realized capital
gains are divided into short-term and long-term gains depending on how long the
Fund held the security which gave rise to the gains. The capital gain
distribution consists of long-term capital gains which are taxed at the capital
gains rate. Short-term capital gains are included with income from dividends and
interest as ordinary income and are paid to shareholders as dividends.
Shareholders also may realize capital gains or losses when they sell Fund
shares at more or less than the price originally paid.
<PAGE>
Shareholders are encouraged to consult their tax advisers with respect to
these matters. For further information see "Dividends, Capital Gain
Distributions and Taxes" in the Statement of Additional Information.
ADDITIONAL INFORMATION
Voting Rights. All shares of the Fund have equal voting rights, based on
one vote for each share owned. Voting with respect to certain matters, such as
ratification of independent accountants and the election of directors, will be
by all Funds of the Company voting together. In other cases, such as voting upon
an investment advisory contract, voting is on a Fund-by-Fund basis. When not all
Funds are affected by a matter to be voted upon, only shareholders of the Fund
or Funds affected by the matter will be entitled to vote thereon. The Company is
not generally required, and does not expect, to hold regular annual meetings of
shareholders. However, the board of directors will call special meetings of
shareholders for the purpose, among other reasons, of voting upon the question
of removal of a director or directors when requested to do so in writing by the
holders of 10% or more of the outstanding shares of the Company or as may be
required by applicable law or the Company's Articles of Incorporation. The
Company will assist shareholders in communicating with other shareholders as
required by the Investment Company Act of 1940. Directors may be removed by
action of the holders of a majority or more of the outstanding shares of the
Company.
Master/Feeder Option. The Company may in the future seek to achieve the
Fund's investment objective by investing all of the Fund's assets in another
investment company or partnership having the same investment objective and
substantially the same investment policies and restrictions as those applicable
to the Fund. It is expected that any such investment company would be managed by
INVESCO in substantially the same manner as the existing Fund. If permitted by
applicable laws and policies then in effect, any such investment may be made in
the sole discretion of the Company's board of directors without further approval
of the shareholders of the Fund. However, Fund shareholders will be given at
least 30 days prior notice of any such investment. Such investment would be made
only if the Company's board of directors determines it to be in the best
interests of the Fund and its shareholders. In making that determination, the
board will consider, among other things, the benefits to shareholders and/or the
opportunity to reduce costs and achieve operational efficiencies. No assurance
can be given that costs will be materially reduced if this option is
implemented.
Shareholder Inquiries. All inquiries regarding the Fund should be directed
to the Fund at the telephone number or mailing address set forth on the cover
page of this Prospectus.
Transfer and Dividend Disbursing Agent. INVESCO Funds Group, Inc., 7800 E.
Union Ave., Denver, Colorado 80237, acts as registrar, transfer agent, and
dividend disbursing agent for the Fund pursuant to a Transfer Agency Agreement
which provides that the Fund will pay an annual fee of $14.00 per shareholder
account or omnibus account participant. The transfer agency fee is not charged
to each shareholder's or participant's account, but is an expense of the Fund to
be paid from the Fund's assets. Registered broker-dealers, third party
administrators of tax-qualified retirement plans and other entities, including
affiliates of INVESCO, may provide sub-transfer agency services to the Fund
which reduce or eliminate the need for identical services to be provided on
behalf of the Fund by INVESCO. In such cases, INVESCO may pay the third party an
annual sub-transfer agency fee of up to $14.00 per participant in the third
party's omnibus account out of the transfer agency fee which is paid to INVESCO
by the Fund.
<PAGE>
INVESCO EUROPEAN SMALL COMPANY FUND A
no-load mutual fund seeking capital
appreciation.
PROSPECTUS
September 11, 1995
To receive general information and prospectuses on any of INVESCO's funds or
retirement plans, or to obtain current account or price information, call
toll-free:
1-800-525-8085
To reach PAL, your 24-hour Personal Account Line, call:
1-800-424-8085
Or write to:
INVESCO Funds Group, Inc., Distributor
Post Office Box 173706
Denver, Colorado 80217-3706
If you're in Denver, visit one of our convenient Investor Centers:
Cherry Creek
155-B Fillmore Street
Denver Tech Center
7800 East Union Avenue
Lobby Level
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
September 11, 1995
INVESCO SPECIALTY FUNDS, INC.
Address: Mailing Address:
7800 E. Union Avenue Post Office Box 173706
Denver, Colorado 80237 Denver, Colorado 80217-3706
Telephone:
In continental U.S., 1-800-525-8085
- -----------------------------------------------------------------
INVESCO SPECIALTY FUNDS, INC. (the "Company") is a diversified, managed,
no-load mutual fund consisting of five separate portfolios of investments,
INVESCO Worldwide Capital Goods Fund (the "Capital Goods Fund"); INVESCO
Worldwide Communications Fund (the "Communications Fund"); INVESCO European
Small Company Fund (the "European Small Company Fund"); and INVESCO Latin
American Growth Fund (the "Latin American Growth Fund") (collectively, the
"Funds" and individually, a "Fund").
The Capital Goods Fund seeks to achieve capital appreciation by investing,
under normal circumstances, at least 65% of its total assets in companies that
are primarily engaged in the design, development, manufacture, distribution,
sale or service of capital goods, or in the mining, processing, manufacture or
distribution of raw materials and intermediate goods used by industry and
agriculture. The Communications Fund seeks to achieve a high total return on
investment through capital appreciation and current income by investing, under
normal circumstances, at least 65% of its total assets in companies that are
primarily engaged in the design, development, manufacture, distribution or sale
of communications services and equipment. Up to 35% of the Communication Fund's
assets will be invested, under normal circumstances, in companies that are
engaged in developing, constructing or operating infrastructure projects
throughout the world, or in supplying equipment or services to such companies.
Under normal circumstances, the Capital Goods Fund and Communications Fund will
invest at least 65% of their total assets in issuers domiciled in at least three
countries, one of which may be the United States, although the Capital Goods
Fund's and Communications Fund's investment adviser expects the Capital Goods
Fund's and Communications Fund's investments to be allocated among a larger
number of countries. The percentage of the Capital Goods Fund's and
Communication Fund's assets invested in United States securities normally will
be higher than that invested in securities issued by companies in any other
single country. However, it is possible that at times the Capital Goods Fund or
the Communications Fund may have 65% or more of its total assets invested in
foreign securities.
The European Small Company Fund seeks to achieve capital appreciation by
investing, under normal circumstances, at least 65% of its total assets in
equity securities of European companies whose individual equity market
capitalizations would place them (at the time of purchase) in the same size
range of companies in approximately the lowest 25% of market capitalization of
companies that have equity securities listed on a U.S. national securities
<PAGE>
exchange. Under normal circumstances, the European Small Company Fund will
invest at least 65% of its total assets in issuers domiciled in at least five
countries, although the European Small Company Fund's investment adviser expects
the European Small Company Fund's investments to be allocated among a larger
number of countries. In this regard, no more than 50% of the European Small
Company Fund's total assets will be invested in issuers domiciled in any one
country.
The Latin American Growth Fund seeks to achieve capital appreciation by
investing, under normal circumstances, at least 65% of its total assets in
securities of issuers domiciled in Latin America. For purposes of this Fund,
Latin America will include: Mexico, Central America, South America, and the
Spanish speaking islands of the Caribbean.
Investors may purchase shares of any or all of the Funds. Additional funds
may be added in the future.
Prospectuses for the Capital Goods Fund, the Communications Fund, the
European Small Company Fund, and the Latin American Growth Fund, dated September
11, 1995, which provide the basic information you should know before investing
in a Fund, may be obtained without charge from INVESCO Funds Group, Inc., P.O.
Box 173706, Denver, Colorado 80217-3706. This Statement of Additional
Information is not a Prospectus, but contains information in addition to and
more detailed than that set forth in the Prospectus. It is intended to provide
you with additional information regarding the activities and operations of the
Funds and should be read in conjunction with the Prospectus.
Investment Adviser and Distributor: INVESCO FUNDS GROUP, INC.
<PAGE>
TABLE OF CONTENTS Page
INVESTMENT POLICIES AND RESTRICTIONS 105
THE FUNDS AND THEIR MANAGEMENT 120
HOW SHARES CAN BE PURCHASED 134
HOW SHARES ARE VALUED 137
FUND PERFORMANCE 139
SERVICES PROVIDED BY THE FUNDS 140
TAX-DEFERRED RETIREMENT PLANS 141
HOW TO REDEEM SHARES 141
DIVIDENDS, CAPITAL GAIN DISTRIBUTIONS, AND TAXES 142
INVESTMENT PRACTICES 145
ADDITIONAL INFORMATION 147
<PAGE>
INVESTMENT POLICIES AND RESTRICTIONS
As discussed in each Fund's Prospectus in the section entitled "Investment
Objective and Policies," the Funds may invest in a variety of securities, and
employ a broad range of investment techniques in seeking to achieve their
respective investment objectives. Such securities and techniques include the
following:
Types of Equity Securities
As described in the Prospectuses, equity securities which may be purchased
by the Funds consist of common, preferred and convertible preferred stocks, and
securities having equity characteristics such as rights, warrants and
convertible debt securities. Common stocks and preferred stocks represent equity
ownership interests in a corporation and participate in the corporation's
earnings through dividends which may be declared by the corporation. Unlike
common stocks, preferred stocks are entitled to stated dividends payable from
the corporation's earnings, which in some cases may be "cumulative" if prior
stated dividends have not been paid. Dividends payable on preferred stock have
priority over distributions to holders of common stock, and preferred stocks
generally have preferences on the distribution of assets in the event of the
corporation's liquidation. Preferred stocks may be "participating," which means
that they may be entitled to dividends in excess of the stated dividend in
certain cases. The rights of common and preferred stocks are generally
subordinate to rights associated with a corporation's debt securities. Rights
and warrants are securities which entitle the holder to purchase the securities
of a company (generally, its common stock) at a specified price during a
specified time period. Because of this feature, the values of rights and
warrants are affected by factors similar to those which determine the prices of
common stocks and exhibit similar behavior. Rights and warrants may be purchased
directly or acquired in connection with a corporate reorganization or exchange
offer.
Convertible securities which may be purchased by the Funds include
convertible debt obligations and convertible preferred stock. A convertible
security entitles the holder to exchange it for a fixed number of shares of
common stock (or other equity security), usually at a fixed price within a
specified period of time. Until conversion, the holder receives the interest
paid on a convertible bond or the dividend preference of a preferred stock.
Convertible securities have an "investment value" which is the theoretical
value determined by the yield they provide in comparison with similar securities
without the conversion feature. Investment value changes are based upon
prevailing interest rates and other factors. They also have a "conversion value"
which is
<PAGE>
the worth in market value if the securities were exchanged for their underlying
equity securities. Conversion value fluctuates directly with the price of the
underlying security. If conversion value is substantially below investment
value, the price of the convertible security is governed principally by its
investment value. If the conversion value is near or above investment value, the
price of the convertible security generally will rise above investment value and
may represent a premium over conversion value due to the combination of the
convertible security's right to interest (or dividend preference) and the
possibility of capital appreciation from the conversion feature. A convertible
security's price, when price is influenced primarily by its conversion value,
generally will yield less than a senior non-convertible security of comparable
investment value. Convertible securities may be purchased at varying price
levels above their investment values or conversion values. However, there is no
assurance that any premium above investment value or conversion value will be
recovered because prices change and, as a result, the ability to achieve capital
appreciation through conversion may be eliminated.
Restricted/144A Securities
In recent years, a large institutional market has developed for certain
securities that are not registered under the Securities Act of 1933 (the "1933
Act"). Institutional investors generally will not seek to sell these instruments
to the general public, but instead will often depend on an efficient
institutional market in which such unregistered securities can readily be resold
or on an issuer's ability to honor a demand for repayment. Therefore, the fact
that there are contractual or legal restrictions on resale to the general public
or certain institutions is not dispositive of the liquidity of such investments.
Rule 144A under the 1933 Act establishes a "safe harbor" from the
registration requirements of the 1933 Act for resales of certain securities to
qualified institutional buyers. Institutional markets for restricted securities
that might develop as a result of Rule 144A could provide both readily
ascertainable values for restricted securities and the ability to liquidate an
investment in order to satisfy share redemption orders. An insufficient number
of qualified institutional buyers interested in purchasing a Rule 144A-eligible
security held by a Fund, however, could affect adversely the marketability of
such portfolio security and the Fund might be unable to dispose of such security
promptly or at reasonable prices.
Municipal Bonds
The Funds may invest in municipal bonds, the interest from which is exempt
from federal income taxes, when Fund Management believes that the potential
total return on the investment is better than the return that otherwise would be
achieved by investing in fixed-income securities issued by corporations or the
U.S. government or its agencies, the interest from which is not
<PAGE>
exempt from federal income taxes. Municipal bonds are issued by or on behalf of
states, territories and possessions of the United States and the District of
Columbia, and their political subdivisions, agencies and instrumentalities, to
obtain funds for various public purposes, including: the construction of a wide
range of public facilities such as airports, bridges, highways, housing,
hospitals, mass transportation, schools, streets, and water and sewer works;
refunding outstanding obligations; and obtaining funds for general operating
expenses. The Funds' investments in municipal bonds, as is true for any debt
securities, generally will be subject to both credit risk and market risk. See
the section of the Prospectuses entitled "Risk Factors."
Obligations of Domestic Banks
These obligations consist of certificates of deposit ("CDs") and banker's
acceptances issued by domestic banks (including their foreign branches) having
total assets in excess of $5 billion, which meet the Funds' minimum rating
requirements. CDs are issued against deposits in a commercial bank for a
specified period and rate and are normally negotiable. Eurodollar CDs are
certificates issued by a foreign branch (usually London) of a U.S. domestic
bank, and, as such, the credit is deemed to be that of the domestic bank.
Bankers' acceptances are short-term credit instruments evidencing the
promise of the bank (by virtue of the bank's "acceptance") to pay at maturity a
draft which has been drawn on it by a customer (the "drawer"). These instruments
are used to finance the import, export, transfer, or storage of goods and
reflect the obligation of both the bank and the drawer to pay the face amount.
Securities Lending
The Fund also may lend its securities to qualified brokers, dealers,
banks, or other financial institutions. This practice permits the Fund to earn
income, which, in turn, can be invested in additional securities of the type
described in this Prospectus in pursuit of the Fund's investment objective.
Loans of securities by the Fund will be collateralized by cash, letters of
credit, or securities issued or guaranteed by the U.S. government or its
agencies equal to at least 100% of the current market value of the loaned
securities, determined on a daily basis. Cash collateral will be invested only
in high quality short-term investments offering maximum liquidity. Lending
securities involves certain risks, the most significant of which is the risk
that a borrower may fail to return a portfolio security. The Fund monitors the
creditworthiness of borrowers in order to minimize such risks. The Fund will not
lend any security if, as a result of the loan, the aggregate value of securities
then on loan would exceed 33-1/3% of the Fund's total assets (taken at market
value).
<PAGE>
Commercial Paper
The Funds may invest in these obligations, which are short-term promissory
notes issued by domestic corporations to meet current working capital
requirements. Such paper may be unsecured or backed by a letter of credit.
Commercial paper issued with a letter of credit is, in effect, "two party
paper," with the issuer directly responsible for payment, plus a bank's
guarantee that if the note is not paid at maturity by the issuer, the bank will
pay the principal and interest to the buyer. Commercial paper is sold either as
interest-bearing or on a discounted basis, with maturities not exceeding 270
days. The Funds will only invest in commercial paper which at the date of
purchase is rated A-2 or higher by Standard & Poor's Ratings Group or Prime-2 or
higher by Moody's Investors Service, Inc. or, if unrated, commercial paper that
is judged by Fund Management to be equivalent in quality to commercial paper
having such ratings. A commercial paper rating of A-2 or Prime-2 indicates a
strong capacity for repayment of short-term promissory obligations.
Mortgage-Backed Securities
The Funds may invest in mortgage-backed securities issued or guaranteed by
the U.S. government, its agencies or instrumentalities, or institutions such as
banks, insurance companies, and savings and loans. Some of these securities,
such as Government National Mortgage Association ("GNMA") certificates, are
backed by the full faith and credit of the U.S. Treasury while others, such as
Federal Home Loan Mortgage Corporation ("Freddie Mac") certificates, are not.
The Funds currently do not intend to invest more than 5% of their respective net
assets in mortgage-backed securities.
Mortgage-backed securities represent interests in a pool of mortgages.
Principal and interest payments made on the mortgages in the underlying mortgage
pool are passed through to the Funds. Unscheduled prepayments of principal
shorten the securities' weighted average life and may lower their total return.
The value of these securities also may change because of changes in the market's
perception of the creditworthiness of the federal agency or private institution
that issued them. In addition, the mortgage securities market in general may be
adversely affected by changes in governmental regulation or tax policies.
Asset-Backed Securities
Asset-backed securities represent interests in pools of consumer loans
(generally unrelated to mortgage loans) and most often are structured as
pass-through securities. Interest and principal payments ultimately depend on
payment of the underlying loans by individuals, although the securities may be
supported by letters of credit or other credit enhancements. The underlying
assets (e.g., loans) are subject to prepayments which shorten the securities'
weighted average life and may lower their returns. If the credit support or
enhancement is exhausted, losses or delays in payment may result if the required
payments of principal and interest are not made.
<PAGE>
The value of these securities also may change because of changes in the
market's perception of the creditworthiness of the servicing agent for the pool,
the originator of the pool, or the financial institution providing the credit
support or enhancement. The Funds currently do not intend to invest more than 5%
of their respective net assets in asset- backed securities.
Zero Coupon Bonds
The Funds may invest in zero coupon bonds or "strips." Zero coupon bonds
do not make regular interest payments; rather, they are sold at a discount from
face value. Principal and accredited discount (representing interest accrued but
not paid) are paid at maturity. "Strips" are debt securities that are stripped
of their interest after the securities are issued, but otherwise are comparable
to zero coupon bonds. The issuers of all zero coupon bonds, and the obligor of
all "strips" purchased by the Funds, will be the U.S. government or its agencies
or instrumentalities. The market value of "strips" and zero coupon bonds
generally fluctuates in response to changes in interest rates to a greater
degree than interest-paying securities of comparable term and quality. In order
for a Fund to maintain its qualification as a regulated investment company, it
may be required to distribute income recognized on zero coupon bonds or "strips"
even though no cash may be paid to the Fund until the maturity or call date of
the bond, and any such distribution could reduce the amount of cash available
for investment by the Fund. The Funds currently do not intend to invest more
than 5% of their respective net assets in zero coupon bonds or "strips."
Futures and Options on Futures and Securities
As described in each Fund's Prospectus, the Funds may enter into futures
contracts, and purchase and sell ("write") options to buy or sell futures
contracts and other securities, which are included in the types of instruments
sometimes known as derivatives. The Funds will comply with and adhere to all
limitations in the manner and extent to which they effect transactions in
futures and options on such futures currently imposed by the rules and policy
guidelines of the Commodity Futures Trading Commission (the "CFTC") as
conditions for exemption of a mutual fund, or investment advisers thereto, from
registration as a commodity pool operator. Under those restrictions, a Fund will
not, as to any positions, whether long, short or a combination thereof, enter
into futures and options thereon for which the aggregate initial margins and
premiums exceed 5% of the fair market value of the Fund's total assets after
taking into account unrealized profits and losses on options it has entered
into. In the case of an option that is "in-the-money," as defined in the
Commodity Exchange Act (the "CEA"), the in-the-money amount may be excluded in
computing such 5%. (In general a call option on a future is "in-the-money" if
the value of the future exceeds the exercise ("strike") price of the call; a put
option on a future is
<PAGE>
"in-the-money" if the value of the future which is the subject of the put is
exceeded by the strike price of the put.) The Funds may use futures and options
thereon solely for bona fide hedging or for other non-speculative purposes
within the meaning and intent of the applicable provisions of the CEA and the
regulations thereunder. As to long positions which are used as part of the
Funds' portfolio management strategies and are incidental to their activities in
the underlying cash market, the "underlying commodity value" of the Funds'
futures and options thereon must not exceed the sum of (i) cash set aside in an
identifiable manner, or short-term U.S. debt obligations or other
dollar-denominated high-quality, short-term money instruments so set aside, plus
sums deposited on margin; (ii) cash proceeds from existing investments due in 30
days; and (iii) accrued profits held at the futures commission merchant. The
"underlying commodity value" of a future is computed by multiplying the size of
the future by the daily settlement price of the future. For an option on a
future, that value is the underlying commodity value of the future underlying
the option.
Unlike when a Fund purchases or sells a security, no price is paid or
received by a Fund upon the purchase or sale of a futures contract. Instead, the
Fund will be required to deposit in a segregated asset account with the broker
an amount of cash or qualifying securities (currently U.S. Treasury bills),
currently in a minimum amount of $15,000. This is called "initial margin." Such
initial margin is in the nature of a performance bond or good faith deposit on
the contract. However, since losses on open contracts are required to be
reflected in cash in the form of variation margin payments, the Fund may be
required to make additional payments during the term of the contracts to its
broker. Such payments would be required, for example, where, during the term of
an interest rate futures contract purchased by a Fund, there was a general
increase in interest rates, thereby making the Fund's portfolio securities less
valuable. In all instances involving the purchase of financial futures contracts
by a Fund, an amount of cash together with such other securities as permitted by
applicable regulatory authorities to be utilized for such purpose, at least
equal to the market value of the futures contracts, will be deposited in a
segregated account with the Fund's custodian to collateralize the position. At
any time prior to the expiration of a futures contract, the Fund may elect to
close its position by taking an opposite position which will operate to
terminate the Fund's position in the futures contract. For a more complete
discussion of the risks involved in futures and options on futures and other
securities, refer to Appendix A ("Description of Futures and Options
Contracts").
Where futures are purchased to hedge against a possible increase in the
price of a security before a Fund is able in an orderly fashion to invest in the
security, it is possible that the market may decline instead. If the Fund, as a
result, concluded not to make the planned investment at that time because of
concern as to possible further market decline or for other reasons, the Fund
would realize a loss on the futures contract that is notoffset by a reduction in
the price of securities purchased.
<PAGE>
In addition to the possibility that there may be an imperfect correlation
or no correlation at all between movements in the futures contract and the
portion of the portfolio being hedged, the price of futures may not correlate
perfectly with movements in the prices due to certain market distortions. All
participants in the futures market are subject to margin deposit and maintenance
requirements. Rather than meeting additional margin deposit requirements,
investors may close futures contracts through offsetting transactions which
could distort the normal relationship between the underlying securities and the
value of the futures contract. Moreover, the deposit requirements in the futures
market are less onerous than margin requirements in the securities market and
may therefore cause increased participation by speculators in the futures
market. Such increased participation may also cause temporary price distortions.
Due to the possibility of price distortion in the futures market and because of
the imperfect correlation between movements in the value of the underlying
securities and movements in the prices of futures contracts, the value of
futures contracts as a hedging device may be reduced.
In addition, if the Fund has insufficient available cash, it may at times
have to sell securities to meet variation margin requirements. Such sales may
have to be effected at a time when it may be disadvantageous to do so.
Options on Futures Contracts
The Funds may buy and write options on futures contracts for hedging
purposes, which are included in the types of instruments sometimes known as
derivatives. The purchase of a call option on a futures contract is similar in
some respects to the purchase of a call option on an individual security.
Depending on the pricing of the option compared to either the price of the
futures contract upon which it is based or the price of the underlying
instrument, ownership of the option may or may not be less risky than ownership
of the futures contract or the underlying instrument. As with the purchase of
futures contracts, when a Fund is not fully invested it may buy a call option on
a futures contract to hedge against a market advance.
The writing of a call option on a futures contract constitutes a partial
hedge against declining prices of the security or foreign currency which is
deliverable under, or of the index comprising, the futures contract. If the
futures price at the expiration of the option is below the exercise price, a
Fund will retain the full amount of the option premium which provides a partial
hedge against any decline that may have occurred in the Fund's portfolio
holdings. The writing of a put option on a futures contract constitutes a
partial hedge against increasing prices of the security or foreign currency
which is deliverable under, or of the index comprising, the futures contract. If
the futures price at expiration of the option is higher than the exercise price,
the
<PAGE>
Fund will retain the full amount of the option premium which provides a partial
hedge against any increase in the price of securities which the Fund is
considering buying. If a call or put option the Fund has written is exercised,
the Fund will incur a loss which will be reduced by the amount of the premium it
received. Depending on the degree of correlation between change in the value of
its portfolio securities and changes in the value of the futures positions, the
Fund's losses from existing options on futures may to some extent be reduced or
increased by changes in the value of portfolio securities.
The purchase of a put option on a futures contract is similar in some
respects to the purchase of protective put options on portfolio securities. For
example, a Fund may buy a put option on a futures contract to hedge the Fund's
portfolio against the risk of falling prices.
The amount of risk a Fund assumes when it buys an option on a futures
contract is the premium paid for the option plus related transaction costs. In
addition to the correlation risks discussed above, the purchase of an option
also entails the risk that changes in the value of the underlying futures
contract will not be fully reflected in the value of the options bought.
Forward Foreign Currency Contracts
The Funds may enter into forward currency contracts, which are included in
the types of instruments sometimes known as derivatives, to purchase or sell
foreign currencies (i.e., non-U.S. currencies) as a hedge against possible
variations in foreign exchange rates. A forward foreign currency contract is an
agreement between the contracting parties to exchange an amount of currency at
some future time at an agreed upon rate. The rate can be higher or lower than
the spot rate between the currencies that are the subject of the contract. A
forward contract generally has no deposit requirement, and such transactions do
not involve commissions. By entering into a forward contract for the purchase or
sale of the amount of foreign currency invested in a foreign security
transaction, a Fund can hedge against possible variations in the value of the
dollar versus the subject currency either between the date the foreign security
is purchased or sold and the date on which payment is made or received or during
the time the Fund holds the foreign security. Hedging against a decline in the
value of a currency in the foregoing manner does not eliminate fluctuations in
the prices of portfolio securities or prevent losses if the prices of such
securities decline. Furthermore, such hedging transactions preclude the
opportunity for gain if the value of the hedged currency should rise. The Funds
will not speculate in forward currency contracts. Although the Funds have not
adopted any limitations on their ability to use forward contracts as a hedge
against fluctuations in foreign exchange rates, the Funds do not attempt to
hedge all of their non-U.S. portfolio positions and will enter into such
transactions only to the extent, if any, deemed appropriate by their investment
adviser or sub-adviser. The Funds will not enter into forward contracts for a
term of more than one year.
<PAGE>
Swaps and Swap-Related Products
Interest rate swaps involve the exchange by a Fund with another party of
their respective commitments to pay or receive interest, e.g., an exchange of
floating rate payments for fixed rate payments. The exchange commitments can
involve payments to be made in the same currency or in different currencies. The
purchase of an interest rate cap entitles the purchaser, to the extent that a
specified index exceeds a predetermined interest rate, to receive payments of
interest on a contractually-based principal amount from the party selling the
interest rate cap. The purchase of an interest rate floor entitles the
purchaser, to the extent that a specified index falls below a predetermined
interest rate, to receive payments of interest on a contractually-based
principal amount from the party selling the interest rate floor.
The Funds may enter into interest rate swaps, caps and floors, which are
included in the types of instruments sometimes known as derivatives, on either
an asset-based or liability-based basis, depending upon whether they are hedging
their assets or their liabilities, and usually will enter into interest rate
swaps on a net basis, i.e., the two payment streams are netted out, with a Fund
receiving or paying, as the case may be, only the net amount of the two
payments. The net amount of the excess, if any, of a Fund's obligations over its
entitlement with respect to each interest rate swap will be calculated on a
daily basis, and an amount of cash or high-grade liquid assets having an
aggregate net asset value at least equal to the accrued excess will be
maintained in a segregated account by the Funds' custodian. If a Fund enters
into an interest rate swap on other than a net basis, the Fund would maintain a
segregated account in the full amount accrued on a daily basis of the Fund's
obligations with respect to the swap. The Funds will not enter into any interest
rate swap, cap or floor transaction unless the unsecured senior debt or the
claims-paying ability of the other party thereto is rated in one of the three
highest rating categories of at least one nationally recognized statistical
rating organization at the time of entering into such transaction. The Funds'
adviser or sub-adviser will monitor the creditworthiness of all counterparties
on an ongoing basis. If there is a default by the other party to such a
transaction, a Fund would have contractual remedies pursuant to the agreements
related to the transaction.
The swap market has grown substantially in recent years with a large
number of banks and investment banking firms acting both as principals and as
agents utilizing standardized swap documentation. Caps and floors are more
recent innovations for which standardized documentation has not yet been
developed and, accordingly, they are less liquid than swaps. To the extent a
Fund sells (i.e., writes) caps and floors, it will maintain in a segregated
account cash or high-grade liquid assets having an aggregate net asset value at
least equal to the full amount, accrued on a daily basis, of the Fund's
obligations with respect to any caps or floors.
<PAGE>
There is no limit on the amount of interest rate swap transactions that
may be entered into by a Fund. These transactions may in some instances involve
the delivery of securities or other underlying assets by a Fund or its
counterparty to collateralize obligations under the swap. The documentation
currently used in those markets attempts to limit the risk of loss with respect
to interest rate swaps to the net amount of the payments that a party is
contractually obligated to make. If the other party to an interest rate swap
that is not collateralized defaults, the Fund would anticipate losing the net
amount of the payments that the Fund contractually is entitled to receive over
the payments that the Fund is contractually obligated to make. The Funds may buy
and sell (i.e., write) caps and floors without limitation, subject to the
segregated account requirement described above as well as the Funds' other
investment restrictions set forth below.
Investment Restrictions
As described in the section of the Funds' Prospectuses entitled
"Investment Objectives and Policies," the Funds operate under certain investment
restrictions which are fundamental and may not be changed with respect to a
particular Fund without the prior approval of the holders of a majority, as
defined in the Investment Company Act of 1940, of the outstanding voting
securities of that Fund. For purposes of the following limitations, all
percentage limitations apply immediately after a purchase or initial investment.
Any subsequent change in a particular percentage resulting from fluctuations in
value does not require elimination of any security from a Fund.
Each Fund, unless otherwise indicated, may not:
1. With respect to seventy-five percent (75%) of each Fund's
total assets, purchase the securities of any one issuer
(except cash items and "Government securities" as defined
under the Investment Company Act of 1940, as amended (the
"1940 Act")), if the purchase would cause the Fund to have
more than 5% of the value of its total assets invested in
the securities of such issuer or to own more than 10% of
the outstanding voting securities of such issuer;
2. Borrow money or issue senior securities (as defined in the
1940 Act), except that the Fund may borrow money for
temporary or emergency purposes (not for leveraging or
investment) and may enter into reverse repurchase
agreements in an aggregate amount not exceeding 33-1/3% of
the value of its total assets (including the amount
borrowed) less liabilities (other than borrowings). Any
borrowings that come to exceed 33-1/3% of the value of the
Fund's total assets by reason of a decline in total assets
will be reduced within three business days to the extent necessary to
comply with the 33-1/3% limitation. This restriction shall not
prohibit deposits of assets to margin or guarantee positions in
futures, options, swaps or forward contracts, or the segregation of
assets in connection with such contracts.
<PAGE>
3. Invest directly in real estate or interests in real
estate; however, the Fund may own debt or equity
securities issued by companies engaged in those
businesses.
4. Purchase or sell physical commodities other than foreign currencies
unless acquired as a result of ownership of securities (but this
shall not prevent the Fund from purchasing or selling options,
futures, swaps and forward contracts or from investing in securities
or other instruments backed by physical commodities).
5. Lend any security or make any other loan if, as a result, more than
33-1/3% of its total assets would be lent to other parties (but this
limitation does not apply to purchases of commercial paper, debt
securities or to repurchase agreements.)
6. Act as an underwriter of securities issued by others, except to the
extent that it may be deemed an underwriter in connection with the
disposition of portfolio securities of the Fund.
7. The European Small Company Fund and the Latin American Growth Fund
may not invest more than 25% of the value of their respective total
assets in any particular industry (other than Government securities).
As a fundamental policy in addition to the above, each Fund may,
notwithstanding any other investment policy or limitation (whether or not
fundamental), invest all of its assets in the securities of a single open-end
management investment company with substantially the same fundamental investment
objectives, policies and limitations as the Fund.
Furthermore, the board of directors has adopted additional investment
restrictions for each Fund, unless specifically noted to the contrary. These
restrictions are operating policies of each Fund and may be changed by the board
of directors without shareholder approval. The additional investment
restrictions adopted by the board of directors to date include the following:
(a) The Fund's investments in warrants, valued at the lower of cost or
market, may not exceed 5% of the value of its net assets. Included
within that amount, but not to exceed 2% of the value of the Fund's
net assets, may be warrants that are not listed on the New York or
American Stock Exchanges.
<PAGE>
Warrants acquired by the Fund in units or attached to
securities shall be deemed to be without value unless such warrants
are separately transferable and current market prices are available,
or unless otherwise determined by the board of directors.
(b) The Fund will not (i) enter into any futures contracts or
options on futures contracts if immediately thereafter the
aggregate margin deposits on all outstanding futures
contracts positions held by the Fund and premiums paid on
outstanding options on futures contracts, after taking
into account unrealized profits and losses, would exceed
5% of the market value of the total assets of the Fund, or
(ii) enter into any futures contracts if the aggregate net
amount of the Fund's commitments under outstanding futures
contracts positions of the Fund would exceed the market
value of the total assets of the Fund.
(c) The Fund does not currently intend to sell securities short, unless
it owns or has the right to obtain securities equivalent in kind and
amount to the securities sold short without the payment of any
additional consideration therefor, and provided that transactions in
options, swaps and forward futures contracts are not deemed to
constitute selling securities short.
(d) The Fund does not currently intend to purchase securities on margin,
except that the Fund may obtain such short-term credits as are
necessary for the clearance of transactions, and provided that margin
payments and other deposits in connection with transactions in
options, futures, swaps and forward contracts shall not be deemed to
constitute purchasing securities on margin.
(e) The Fund does not currently intend to (i) purchase
securities of closed end investment companies, except in
the open market where no commission except the ordinary
broker's commission is paid, or (ii) purchase or retain
securities issued by other open-end investment companies.
Limitations (i) and (ii) do not apply to money market
funds or to securities received as dividends, through
offers of exchange, or as a result of a reorganization,
consolidation, or merger. If the Fund invests in a money
market fund, the Fund's investment adviser will waive its
advisory fee on the assets of the Fund which are invested
in the money market fund during the time that those assets
are so invested.
(f) The Fund may not mortgage or pledge any securities owned or held by
the Fund in amounts that exceed, in the aggregate, 15% of the Fund's
net assets, provided that this limitation does not apply to reverse
repurchase agreements or in the case of assets deposited to margin or
guarantee positions in futures, options, swaps or forward contracts
or placed in a segregated account in connection with such
contracts.
<PAGE>
(g) The Fund does not currently intend to purchase securities
of any issuer (other than U.S. Government agencies and
instrumentalities or instruments guaranteed by an entity
with a record of more than three years' continuous
operation, including that of predecessors) with a record
of less than three years' continuous operation (including
that of predecessors) if such purchase would cause the
Fund's investments in all such issuers to exceed 5% of the
Fund's total assets taken at market value at the time of
such purchase.
(h) The Fund does not currently intend to invest directly in oil, gas, or
other mineral development or exploration programs or leases; however,
the Fund may own debt or equity securities of companies engaged in
those businesses.
(i) The Fund does not currently intend to purchase any
security or enter into a repurchase agreement if, as a
result, more than 15% of its net assets would be invested
in repurchase agreements not entitling the holder to
payment of principal and interest within seven days and in
securities that are illiquid by virtue of legal or
contractual restrictions on resale or the absence of a
readily available market. The board of directors, or the
Fund's investment adviser acting pursuant to authority
delegated by the board of directors, may determine that a
readily available market exists for securities eligible
for resale pursuant to Rule 144A under the Securities Act
of 1933, or any successor to such rule, and therefore that
such securities are not subject to the foregoing
limitation.
(j) The Fund may not invest in companies for the purpose of exercising
control or management, except to the extent that exercise by the Fund
of its rights under agreements related to portfolio securities would
be deemed to constitute such control.
In applying restriction 7, above, the European Small Company Fund and the
Latin American Growth Fund use an industry classification system for
international securities based on information obtained from Bloomberg L.P.,
Moody's International and the O'Neil Database published by William O'Neil & Co.,
Inc.
With respect to investment restriction (i) above, the board of
directors has delegated to the Funds' investment adviser the
authority to determine whether a liquid market exists for
securities eligible for resale pursuant to Rule 144A under the
Securities Act of 1933, or any successor to such rule, and whether
such securities are subject to restriction (i) above. Under
<PAGE>
guidelines established by the board of directors, the adviser will consider the
following factors in making this determination: (1) the unregistered nature of a
Rule 144A security, (2) the frequency of trades and quotes for the security; (3)
the number of dealers willing to purchase or sell the security and the number of
other potential purchasers; (4) dealer undertakings to make a market in the
security; and (5) the nature of the security and the nature of marketplace
trades (e.g., the time needed to dispose of the security, the method of
soliciting offers and the mechanics of transfer).
On behalf of some of the Funds, the Company has given undertakings to a
number of state securities regulators and may provide additional such
undertakings in the future. Upon a change in position by any such regulator, any
undertaking given to such regulator may be modified or withdrawn without notice.
The undertakings currently in effect include the following:
The Company has given an undertaking to the State of Arizona that it will
notify the State immediately in the event of a change to its fiscal year.
The Company has given undertakings to the States of Arizona,
Massachusetts, Missouri, and Texas that it will comply with the Guidelines for
Registration of Master Fund/Feeder Funds adopted by the membership of the North
American Securities Administrators Association, Inc. then in effect in the event
that, in the future, any of the Funds is converted into a feeder fund in a
master fund/feeder fund structure. The Company has additionally undertaken to
the State of Massachusetts that, in the event that in the future the Company
determines that any of the Funds will be so converted, and if the NASAA
Guidelines at such time include a requirement for shareholder approval of
conversion of a fund into a feeder fund in a Master Fund/Feeder Fund structure,
the Company expressly agrees to obtain such approval prior to effecting the
conversion.
The Company has given an undertaking to the State of Arkansas that no Fund
will purchase puts, calls, straddles, spreads or any combination thereof if, by
reason thereof, the value of the Fund's aggregate investment in such classes of
securities would exceed 5% of the Fund's total assets. The European Small
Company Fund and the Latin American Growth Fund have also undertaken not to
invest more than 10% of each Fund's total assets in securities of issuers that
are restricted from being sold to the public without registration under the
Securities Act of 1933, excluding restricted securities eligible for resale
pursuant to Rule 144A under the Securities Act of 1933 that have been determined
to be liquid by the Company's Board of Directors based upon the trading markets
for the securities.
The Company has given an undertaking to the State of California that its
option transactions will comply with Rule 260.140.85(b) under the California
Corporate Securities Law of 1968, and that the aggregate value of the securities
underlying the calls written by a Fund, or the obligations underlying the puts
written by a Fund, as of the date the options are sold shall not exceed 25% of
the Fund's net assets.
<PAGE>
The Company has given an undertaking to the State of Maryland that the
European Small Company Fund will invest in no more than 15% of its total assets
in lower rated debt securities, commonly known as "junk bonds."
The Company has given undertakings to the State of Ohio that: (1) no Fund
will purchase or retain the securities of any issuer if the officers, directors,
advisers or managers of the Fund owning beneficially more than .50% of the
securities of an issuer together own beneficially more than 5% of the securities
of that issuer; (2) the Capital Goods Fund, the Communications Fund, the
European Small Company Fund, and the Latin American Growth Fund will not invest
more than 15% of their respective net assets in the securities of issuers which,
together with any predecessors, have a record of less than three years
continuous operation, or securities of issuers which are restricted as to
disposition; and (3) the Latin American Growth Fund will comply with the
provisions of Rule 1301:6-3-09(E)(10) of the Ohio Revised Code, which states
that the borrowing, pledging, mortgaging, or hypothecating of assets on behalf
of the Latin American Growth Fund in amounts in excess of one-third of total
fund assets is prohibited. In addition, the Company has undertaken to the State
of Ohio that it will not invest in the securities of other investment companies,
except by purchase in the open market where no commission or profit to a sponsor
or dealer results from the purchase other than the customary broker's
commission, or except when the purchase is part of a plan of merger,
consolidation, reorganization, or acquisition.
The Company has given an undertaking to the State of Texas that the Funds
will not purchase or sell real estate limited partnership interests.
THE FUNDS AND THEIR MANAGEMENT
The Company. The Company was incorporated on April 12, 1994,
under the laws of Maryland.
The Investment Adviser. INVESCO Funds Group, Inc., a Delaware corporation
("INVESCO"), is employed as the Company's investment adviser. INVESCO was
established in 1932 and also serves as an investment adviser to INVESCO
Diversified Funds, Inc., INVESCO Dynamics Fund, Inc., INVESCO Emerging
Opportunity Funds, Inc., INVESCO Growth Fund, Inc., INVESCO Income Funds, Inc.,
INVESCO Industrial Income Fund, Inc., INVESCO International Funds, Inc., INVESCO
Money Market Funds, Inc., INVESCO Multiple Asset Funds, Inc., INVESCO Strategic
Portfolios, Inc., INVESCO Tax-Free Income Funds, Inc., INVESCO Value Trust, and
INVESCO Variable Investment Funds, Inc.
<PAGE>
The Sub-Advisers. INVESCO, as investment adviser, has contracted with
INVESCO Trust Company ("INVESCO Trust") to provide investment advisory and
research services on behalf of the Capital Goods Fund and Communications Fund.
INVESCO Trust has the primary responsibility for providing portfolio investment
management services to these Funds. INVESCO Trust, a trust company founded in
1969, is a wholly-owned subsidiary of INVESCO.
Additionally, INVESCO, as investment adviser, has contracted with MIM
International Limited ("MIL") to provide investment advisory and research
services on behalf of the European Small Company Fund and Latin American Growth
Fund. MIL has the primary responsibility for providing portfolio investment
management services to these Funds. MIL is an indirect wholly-owned subsidiary
of INVESCO PLC.
INVESCO is an indirect, wholly-owned subsidiary of INVESCO PLC, a
publicly-traded holding company organized in 1935. Through subsidiaries located
in London, Denver, Atlanta, Boston, Louisville, Dallas, Tokyo, Hong Kong, and
the Channel Islands, INVESCO PLC provides investment services around the world.
INVESCO was acquired by INVESCO PLC in 1982 and as of May 31, 1995, managed 14
mutual funds, consisting of 38 separate portfolios, on behalf of over 800,000
shareholders. INVESCO PLC's other North American subsidiaries include the
following:
--INVESCO Capital Management, Inc. of Atlanta, Georgia,
manages institutional investment portfolios, consisting primarily
of discretionary employee benefit plans for corporations and state
and local governments, and endowment funds. INVESCO Capital
Management, Inc. is the sole shareholder of INVESCO Services, Inc.,
a registered broker-dealer whose primary business is the
distribution of shares of two registered investment companies.
--INVESCO Management & Research, Inc. (formerly Gardner and
Preston Moss, Inc.) of Boston, Massachusetts, primarily manages
pension and endowment accounts.
--PRIMCO Capital Management, Inc. of Louisville, Kentucky,
specializes in managing stable return investments, principally on
behalf of Section 401(k) retirement plans.
--INVESCO Realty Advisors of Dallas, Texas, is responsible for providing
advisory services in the U.S. real estate markets for INVESCO PLC's clients
worldwide. Clients include corporate plans, public pension funds as well as
endowment and foundation accounts.
The corporate headquarters of INVESCO PLC are located at 11 Devonshire
Square, London, EC2M 4YR, England.
As indicated in the Prospectuses, INVESCO permits investment and other
personnel to purchase and sell securities for their own accounts in accordance
with a compliance policy governing personal investing by directors, officers and
employees of INVESCO and its North American affiliates.
<PAGE>
The policy requires officers, inside directors, investment and other
personnel of INVESCO and its North American affiliates to pre-clear all
transactions in securities not otherwise exempt under the policy. Requests for
trading authority will be denied when, among other reasons, the proposed
personal transaction would be contrary to the provisions of the policy or would
be deemed to adversely affect any transaction then known to be under
consideration for or to have been effected on behalf of any client account,
including the Funds.
In addition to the pre-clearance requirement described above, the policy
subjects officers, inside directors, investment and other personnel of INVESCO
and its North American affiliates to various trading restrictions and reporting
obligations. All reportable transactions are reviewed for compliance with the
policy. The provisions of this policy are administered by and subject to
exceptions authorized by INVESCO.
Investment Advisory Agreement. INVESCO serves as investment adviser
pursuant to an investment advisory agreement (the "Agreement") with the Company
which was approved on April 20, 1994, by a vote cast in person by a majority of
the directors of the Company, including a majority of the directors who are not
"interested persons" of the Company or INVESCO at a meeting called for such
purpose. The Agreement was approved by INVESCO Funds Group, Inc. on July 12,
1994, as the then sole shareholder of the Capital Goods Fund and Communications
Fund. The Agreement is for an initial term expiring April 30, 1996. Thereafter,
the Agreement may be continued from year to year as to each Fund as long as each
such continuance is specifically approved at least annually by the board of
directors of the Company, or by a vote of the holders of a majority, as defined
in the Investment Company Act of 1940, of the outstanding shares of the Fund.
Any such continuance also must be approved by a majority of the Company's
directors who are not parties to the Agreement or interested persons (as defined
in the Investment Company Act of 1940) of any such party, cast in person at a
meeting called for the purpose of voting on such continuance. The Agreement may
be terminated at any time without penalty by either party upon sixty (60) days'
written notice and terminates automatically in the event of an assignment to the
extent required by the Investment Company Act of 1940 and the rules thereunder.
With respect to INVESCO European Small Company Fund and Latin American Growth
Fund, the agreement was approved by INVESCO on February 8, 1995 as the then sole
shareholder of each Fund.
The Agreement provides that INVESCO shall manage the investment portfolios
of the Funds in conformity with the Funds' investment policies (either directly
or by delegation to a sub-adviser, which may be a party affiliated with
INVESCO). Further, INVESCO shall perform all administrative, internal accounting
(including computation of net asset value), clerical, statistical, secretarial
and all other services necessary or incidental to the administration of the
affairs of the Funds excluding, however, those services that are the subject of
separate
<PAGE>
agreement between the Company and INVESCO or any affiliate thereof, including
the distribution and sale of Fund shares and provision of transfer agency,
dividend disbursing agency, and registrar services, and services furnished under
an Administrative Services Agreement with INVESCO dated as of May 2, 1994.
Services provided under the Agreement include, but are not limited to: supplying
the Company with officers, clerical staff and other employees, if any, who are
necessary in connection with the Funds' operations; furnishing office space,
facilities, equipment, and supplies; providing personnel and facilities required
to respond to inquiries related to shareholder accounts; conducting periodic
compliance reviews of the Funds' operations; preparation and review of required
documents, reports and filings by INVESCO's in-house legal and accounting staff
(including the prospectus, statement of additional information, proxy
statements, shareholder reports, tax returns, reports to the SEC, and other
corporate documents of the Funds), except insofar as the assistance of
independent accountants or attorneys is necessary or desirable; supplying basic
telephone service and other utilities; and preparing and maintaining certain of
the books and records required to be prepared and maintained by the Funds under
the Investment Company Act of 1940. Expenses not assumed by INVESCO are borne by
the Funds.
As full compensation for its advisory services to the Company, INVESCO
receives a monthly fee. The fee is based upon a percentage of each Fund's
average net assets, determined daily. With respect to the Capital Goods Fund and
the Communications Fund, the fee is calculated at the annual rate of: 0.65% on
the first $500 million of each Fund's average net assets; 0.55% on the next $500
million of each Fund's average net assets; and 0.45% on each Fund's average net
assets over $1 billion. With respect to the European Small Company Fund and the
Latin American Growth Fund, the fee is calculated at the annual rate of: 0.75%
on the first $500 million of each Fund's average net assets; 0.65% on the next
$500 million of each Fund's average net assets; and 0.55% on each Fund's average
net assets over $1 billion. For the fiscal year ended July 31, 1995, the Capital
Goods Fund and the Communications Fund paid INVESCO advisory fees of $32,382 and
$101,129, respectively, prior to the voluntary absorption of certain Fund
expenses by INVESCO and the applicable sub-adviser. For the period February 15,
1995 (inception) through July 31, 1995, the European Small Company Fund and
Latin American Growth Fund paid INVESCO advisory fees of $4,159 and $12,530,
respectively, prior to the voluntary absorption of certain Fund expenses by
INVESCO and the applicable sub-adviser.
Certain states in which the shares of the Funds are qualified for sale
currently impose limitations on the expenses of each of the Funds. At the date
of this Statement of Additional Information, the most restrictive state-imposed
annual expense limitation requires that INVESCO absorb the amount necessary to
prevent any Fund's aggregate ordinary operating expenses (excluding interest,
taxes, Rule 12b-1 fees, brokerage fees and commissions, and extraordinary
charges such as litigation costs) from exceeding in any fiscal year 2.5% on that
Fund's first $30 million of average
<PAGE>
net assets, 2.0% on the next $70 million of average net assets and 1.5% on the
remaining average net assets. No payment of the investment advisory fee will be
made to INVESCO which would result in a Fund's expenses exceeding on a
cumulative annualized basis this state limitation.
Sub-Advisory Agreements. INVESCO Trust serves as sub-adviser to the
Capital Goods Fund and Communications Fund pursuant to a sub-advisory agreement
(the "Capital Goods and Communications Sub-Agreement") with INVESCO which was
approved on April 20, 1994, by a vote cast in person by a majority of the
directors of the Company, including a majority of the directors who are not
"interested persons" of the Company, INVESCO or INVESCO Trust at a meeting
called for such purpose. The Capital Goods and Communications Sub-Agreement was
approved on July 12, 1994, by INVESCO as the then sole shareholder of the
Capital Goods Fund and Communications Fund for an initial term expiring April
30, 1996. The Capital Goods and Communications Sub-Agreement has been approved
through April 30, 1996. Thereafter, the Capital Goods and Communications
Sub-Agreement may be continued from year to year as to each Fund as long as each
such continuance is specifically approved by the board of directors of the
Company, or by a vote of the holders of a majority, as defined in the Investment
Company Act of 1940, of the outstanding shares of the Fund. Each such
continuance also must be approved by a majority of the directors who are not
parties to the Capital Goods and Communications Sub-Agreement or interested
persons (as defined in the Investment Company Act of 1940) of any such party,
cast in person at a meeting called for the purpose of voting on such
continuance. The Capital Goods and Communications Sub-Agreement may be
terminated at any time without penalty by either party or the Company upon sixty
(60) days' written notice, and terminates automatically in the event of an
assignment to the extent required by the Investment Company Act of 1940 and the
rules thereunder.
MIL serves as sub-adviser to the European Small Company Fund and the Latin
American Growth Fund pursuant to a sub-advisory agreement (the "European and
Latin American Sub-Agreement") with INVESCO which was approved on October 19,
1994 by a vote cast in person by a majority of the directors of the Company,
including a majority of the directors who are not "interested persons" of the
Company, INVESCO or MIL at a meeting called for such purpose. The European and
Latin American Sub-Agreement was approved on February 8, 1995, by INVESCO as the
then sole shareholder of the European Small Company Fund and the Latin American
Growth Fund for an initial term expiring April 30, 1996. Thereafter, the
European and Latin American Sub-Agreement may be continued from year to year as
to each Fund as long as each such continuance is specifically approved by the
board of directors of the Company, or by a vote of the holders of a majority, as
defined in the Investment Company Act of 1940, of the outstanding shares of the
Fund. Each such continuance also must be approved by a majority of the directors
who are not parties to the European and Latin American Sub- Agreement or
interested persons (as defined in the Investment
<PAGE>
Company Act of 1940) of any such party, cast in person at a meeting called for
the purpose of voting on such continuance. The European and Latin American
Sub-Agreement may be terminated at any time without penalty by either party or
the Company upon sixty (60) days' written notice, and terminates automatically
in the event of an assignment to the extent required by the Investment Company
Act of 1940 and the rules thereunder.
The Sub-Agreements provide that INVESCO Trust and MIL, subject to the
supervision of INVESCO, shall manage the investment portfolios of the respective
Funds in conformity with each Fund's investment policies. These management
services include: (a) managing the investment and reinvestment of all the
assets, now or hereafter acquired, of the Funds, 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 Investment Company Act of 1940, as
amended, and in any prospectus and/or statement of additional information of the
Company, as from time to time amended and in use under the Securities Act of
1933, as amended, and (ii) the Company's status as a regulated investment
company under the Internal Revenue Code of 1986, as amended; (c) determining
what securities are to be purchased or sold for each of the Funds, 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 the Sub-Advisers; (e)
determining what portion of each of the Funds should be invested in the various
types of securities authorized for purchase by each Fund; and (f) making
recommendations as to the manner in which voting rights, rights to consent to
Company action and any other rights pertaining to the portfolio securities of
each Fund shall be exercised.
The Capital Goods and Communications Sub-Agreement provides that as
compensation for its services, INVESCO Trust shall receive from INVESCO, at the
end of each month, a fee based upon the average daily value of the Capital Goods
Fund's and Communications Fund's net assets at the following annual rates:
0.325% on the first $500 million of each Fund's average net assets; 0.275% on
the next $500 million of each Fund's average net assets; and 0.225% on each
Fund's average net assets over $1 billion. The European and Latin American
Sub-Agreement provides that as compensation for its services, MIL shall receive
from INVESCO, at the end of each month, a fee based upon the average daily value
of the European Small Company Fund's and Latin American Growth Fund's net assets
at the following annual rates: 0.375% on the first $500 million of each Fund's
average net assets; 0.325% on the next $500 million of each Fund's average net
assets; and 0.275% on each Fund's average net assets over $1 billion. The
Sub-Advisory fees are paid by INVESCO, NOT the Funds.
<PAGE>
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 May 2, 1994 (the "Administrative Agreement"). The Administrative
Agreement was approved on April 20, 1994, by a vote cast in person by all of the
directors of the Company, including all of the directors who are not "interested
persons" of the Company or INVESCO at a meeting called for such purpose. The
Administrative Agreement was for an initial term expiring April 30, 1995 and has
been renewed through April 30, 1996. The Administrative Agreement may be
continued from year to year thereafter as long as each such continuance is
specifically approved by the board of directors of the Company, including a
majority of the directors who are not parties to the Administrative Agreement or
interested persons (as defined in the Investment Company Act of 1940) of any
such party, cast in person at a meeting called for the purpose of voting on such
continuance. The Administrative Agreement may be terminated at any time without
penalty by INVESCO on sixty (60) days' written notice, or by the Company upon
thirty (30) days' written notice, and terminates automatically in the event of
an assignment unless the Company's board of directors approves such assignment.
The Administrative Agreement provides that INVESCO shall provide the
following services to the Funds: (A) such sub-accounting and recordkeeping
services and functions as are reasonably necessary for the operation of the
Funds; and (B) such sub-accounting, recordkeeping, and administrative services
and functions, which may be provided by affiliates of INVESCO, as are reasonably
necessary for the operation of Fund shareholder accounts maintained by certain
retirement plans and employee benefit plans for the benefit of participants in
such plans.
As full compensation for services provided under the Administrative
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 0.015% per year of the average net assets of the
Fund. For the fiscal year ended July 31, 1995, the Capital Goods Fund and the
Communications Fund paid INVESCO administrative service fees in the amount of
$10,747 and $12,334, respectively, prior to the voluntary absorption of certain
Fund expenses by INVESCO and the applicable sub-adviser. For the period February
15, 1995 (inception) through July 31, 1995, the European Small Company Fund and
Latin American Growth Fund paid INVESCO administrative service fees in the
amount of $3,417 and $3,584, respectively, prior to the voluntary absorption of
certain Fund expenses by INVESCO and the applicable sub-adviser.
Transfer Agency Agreement. INVESCO also performs transfer agent, dividend
disbursing agent, and registrar services for the Funds pursuant to a Transfer
Agency Agreement which was approved by the board of directors of the Company,
including a majority of the Company's directors who are not parties to the
Transfer Agency
<PAGE>
Agreement or "interested persons" of any such party, on April 20, 1994, for an
initial term expiring April 30, 1995. The Transfer Agency Agreement has been
continued by action of the board of directors until April 30, 1996 and
thereafter may be continued from year to year as to each Fund as long as such
continuance is specifically approved at least annually by the board of directors
of the Company, or by a vote of the holders of a majority of the outstanding
shares of the Fund. Any such continuance also must be approved by a majority of
the Company's directors who are not parties to the Transfer Agency Agreement or
interested persons (as defined by the Investment Company Act of 1940) of any
such party, cast in person at a meeting called for the purpose of voting on such
continuance. The Transfer Agency Agreement may be terminated at any time without
penalty by either party upon sixty (60) days' written notice and terminates
automatically in the event of assignment.
The Transfer Agency Agreement provides that the Funds will pay to INVESCO
an annual fee of $14.00 per shareholder account and omnibus account participant.
This fee is paid monthly at 1/12 of the annual fee and is based upon the actual
number of shareholder accounts and omnibus account participants in existence
during each month. For the fiscal year ended July 31, 1995, the Capital Goods
Fund and the Communications Fund paid INVESCO transfer agency fees of $20,517
and $64,043, respectively, prior to the voluntary absorption of certain Fund
expenses by INVESCO and the applicable sub-adviser. For the period February 15,
1995 (inception) through July 31, 1995, the European Small Company Fund and
Latin American Growth Fund paid INVESCO transfer agency fees of $2,300 and
$5,295, respectively, prior to the voluntary absorption of certain Fund expenses
by INVESCO and the applicable sub-adviser.
Officers and Directors of the Company. The overall direction and
supervision of the Company is the responsibility of the board of directors,
which has the primary duty of seeing that the general investment policies and
programs of each of the Funds are carried out and that the Funds are properly
administered. The officers of the Company, all of whom are officers and
employees of, and are paid by, INVESCO, are responsible for the day-to-day
administration of the Company and each of the Funds. The investment adviser for
each Fund has the primary responsibility for making investment decisions on
behalf of that Fund. These investment decisions are reviewed by the investment
committee of INVESCO.
All of the officers and directors of the Company hold comparable positions
with INVESCO Diversified Funds, Inc., INVESCO Dynamics Fund, Inc., INVESCO
Emerging Opportunity Funds, Inc., INVESCO Growth Fund, Inc., INVESCO Income
Funds, Inc., INVESCO Industrial Income Fund, Inc., INVESCO International Funds,
Inc., INVESCO Money Market Funds, Inc., INVESCO Multiple Asset Funds, Inc.,
INVESCO Strategic Portfolios, Inc., INVESCO Tax-Free Income Funds, Inc. and
INVESCO Variable Investment Funds, Inc. All of the directors of the Company also
serve as trustees of INVESCO Value Trust. In addition, all of the directors of
the Company also are:
<PAGE>
with the exception of Messrs. Hesser and Sim, trustees of INVESCO Treasurer's
Series Trust and directors of The EBI Funds, Inc. All of the officers of the
Company also hold comparable positions with INVESCO Value Trust. Set forth below
is information with respect to each of the Company's officers and directors.
Unless otherwise indicated, the address of the directors and officers is Post
Office Box 173706, Denver, Colorado 80217-3706. Their affiliations represent
their principal occupations during the past five years.
CHARLES W. BRADY,*+ Chairman of the Board. Chief Executive
Officer and Director of INVESCO PLC, London, England, and of
various subsidiaries thereof; Chairman of the Board of The EBI
Funds, Inc., INVESCO Treasurer's Series Trust, and The Global Heath
Sciences Fund. Address: 1315 Peachtree Street, NE, Atlanta,
Georgia. Born: May 11, 1935.
FRED A. DEERING,+# Vice Chairman of the Board. Vice Chairman
of The EBI Funds, Inc. and INVESCO Treasurer's Series Trust.
Trustee of The Global Health Sciences Fund. Formerly, Chairman of
the Executive Committee and Chairman of the Board of Security Life
of Denver Insurance Company, Denver, Colorado. Director of
Midwestern United Life Insurance Company, Inc., Denver, Colorado;
Urbaine Life Insurance Co.; and ING American Life. Formerly
director of NN Financial, Toronto, Ontario, Canada. Director and
Chairman of the Executive Committee of ING American Life, Life
Insurance Co. of Georgia and Southland Life Insurance Company.
Address: Security Life Center, 1290 Broadway, Denver, Colorado.
Born: January 12, 1928.
DAN J. HESSER,+* President and Director. Chairman of the
Board, President and Chief Executive Officer of INVESCO Funds
Group, Inc. and Director of INVESCO Trust Company. Trustee of The
Global Health Sciences Fund. Born: December 27, 1939.
VICTOR L. ANDREWS,** Director. Mills Bee Lane Professor of
Banking and Finance and Chairman of the Department of Finance at
Georgia State University, Atlanta, Georgia, since 1968; since
October 1984, Director of the Center for the Study of Regulated
Industry at Georgia State University; formerly, member of the
faculties of the Harvard Business School and the Sloan School of
Management of MIT. Dr. Andrews is also a Director of The
Southeastern Thrift and Bank Fund, Inc. and The Sheffield Funds,
Inc. Address: Department of Finance, Georgia State University,
University Plaza, Atlanta, Georgia. Born: June 23, 1930.
BOB R. BAKER,+** Director. President and Chief Executive
Officer of AMC Cancer Research Center, Denver, Colorado, since
January 1989; until mid-December 1988, Vice Chairman of the Board
of First Columbia Financial Corporation (a financial institution),
Englewood, Colorado. Formerly, Chairman of the Board and Chief
Executive Officer of First Columbia Financial Corporation.
Address: 1775 Sherman Street, #1000, Denver, Colorado. Born:
August 7, 1936.
<PAGE>
FRANK M. BISHOP*, Director. President and Chief Operating
Officer of INVESCO Inc. since February, 1993; Director of INVESCO
Funds Group, Inc. since March 1993; Director (since February 1993),
Vice President (since December 1991), and Portfolio Manager (since
February 1987), of INVESCO Capital Management, Inc. (and
predecessor firms) Atlanta, Georgia. Address: 1315 Peachtree
Street, N.E., Atlanta, Georgia. Born: December 7, 1943.
LAWRENCE H. BUDNER,# Director. Trust Consultant; prior to
June 30, 1987, Senior Vice President and Senior Trust Officer of
InterFirst Bank, Dallas, Texas. Address: 7608 Glen Albens,
Dallas, Texas. Born: July 25, 1930.
DANIEL D. CHABRIS,+# Director. Financial Consultant;
Assistant Treasurer of Colt Industries Inc., New York, New York,
from 1966 to 1988. Address: 15 Sterling Road, Armonk, New York.
Born: August 1, 1923.
A. D. FRAZIER, JR.,** Director. Chief Operating Officer of
the Atlanta Committee for the Olympic Games. From 1982 to 1991,
Mr. Frazier was employed in various capacities by First Chicago
Bank, most recently as Executive Vice President of the North
American Banking Group. Trustee of The Global Health Sciences
Fund. Address: 250 Williams Street, Suite 6000, Atlanta, Georgia.
Born: June 29, 1944.
KENNETH T. KING,** Director. Formerly, Chairman of the Board
of The Capitol Life Insurance Company, Providence Washington
Insurance Company, and Director of numerous subsidiaries thereof in
the U.S. Formerly, Chairman of the Board of The Providence Capitol
Companies in the United Kingdom and Guernsey. Chairman of the
Board of the Symbion Corporation (a high technology company) until
1987. Address: 4080 North Circulo Manzanillo, Tucson, Arizona.
Born: November 16, 1925.
JOHN W. MC INTYRE,# Director. Retired. Formerly, Vice
Chairman of the Board of Directors of The Citizens and Southern
Corporation and Chairman of the Board and Chief Executive Officer
of The Citizens and Southern Georgia Corp. and Citizens and
Southern National Bank. Director of Golden Poultry Co., Inc.
Trustee of The Global Health Sciences Fund and Gables Residential
Trust. Address: 7 Piedmont Center, Suite 100, Atlanta, GA. Born:
September 14, 1930.
R. DALTON SIM*, Director. Chairman of the Board (since March
1993) and President (since January 1991) of INVESCO Trust Company;
Director since June 1987 and, formerly, Executive Vice President
and Chief Investment Officer (June 1987 to January 1991) of INVESCO
Funds Group, Inc.; President (since 1994) and Trustee (since 1991)
of The Global Health Sciences Fund. Born: July 18, 1939.
GLEN A. PAYNE, Secretary. Senior Vice President, General
Counsel and Secretary of INVESCO Funds Group, Inc. and INVESCO
Trust Company since April 1995 and formerly (May 1989 to April
1995) Vice President, Secretary and General Counsel of INVESCO
Funds Group, Inc. and INVESCO Trust Company. Born: September 25,
1947.
<PAGE>
RONALD L. GROOMS, Treasurer. Senior Vice President and
Treasurer of INVESCO Funds Group, Inc. and INVESCO Trust Company.
Born: October 1, 1946.
WILLIAM J. GALVIN, JR., Assistant Secretary. Senior Vice
President of INVESCO Funds Group, Inc. and Trust Officer of INVESCO
Trust Company since July 1995 and formerly (August 1992 to July
1995) Vice President of INVESCO Funds Group, Inc. and Trust Officer
of INVESCO Trust Company; Vice President of 440 Financial Group
from June 1990 to August 1992; Assistant Vice President of Putnam
Companies from November 1986 to June 1990. Born: August 21, 1956.
ALAN I. WATSON, Assistant Secretary. Vice President of
INVESCO Funds Group, Inc. and Trust Officer of INVESCO Trust
Company. Born: September 14, 1941.
JUDY P. WIESE, Assistant Treasurer. Vice President of INVESCO
Funds Group, Inc. and Trust Officer of INVESCO Trust Company.
Born: February 3, 1948.
#Member of the audit committee of the Company.
+Member of the executive committee of the Company. On occasion, the
executive committee acts upon the current and ordinary business of the Company
between meetings of the board of directors. Except for certain powers which,
under applicable law, may only be exercised by the full board of directors, the
executive committee may exercise all powers and authority of the board of
directors in the management of the business of the Company. All decisions are
subsequently submitted for ratification by the board of directors.
*These directors are "interested persons" of the Company as defined in the
Investment Company Act of 1940.
**Member of the management liaison committee of the Company.
As of August 23, 1995, officers and directors of the Company, as a group,
beneficially owned less than 1% of the Company's outstanding shares and less
than 1% of each Fund's outstanding shares.
Director Compensation
The following table sets forth, for the fiscal year ending July 31, 1995:
the compensation paid by the Company to its eight eligible independent directors
for services rendered in their capacities as directors of the Company; the
benefits accrued as Company expenses with respect to the Defined Benefit
Deferred Compensation Plan discussed below; and the estimated annual
<PAGE>
benefits to be received by these directors upon retirement as a result of their
service to the Company. In addition, the table sets forth the total compensation
paid by all of the mutual funds distributed by INVESCO Funds Group, Inc.
(including the Company), The EBI Funds, Inc., INVESCO Treasurer's Series Trust
and The Global Health Sciences Fund (collectively, the "INVESCO Complex") to
these directors for services rendered in their capacities as directors or
trustees during the year ended December 31, 1994. As of December 31, 1994, there
were 45 funds in the INVESCO Complex.
Total
Compensa-
Benefits Estimated tion From
Aggregate Accrued Annual INVESCO
Name of Compensa- As Part Benefits Complex
Person, tion From of Fund Upon Re- Paid To
Position Fund(1) Expenses(2) tirement(3) Directors(1)
Fred A.Deering, $ 529 $0 $0 $ 89,350
Vice Chairman of
the Board
Victor L. Andrews 521 0 0 68,000
Bob R. Baker 525 0 0 75,350
Lawrence H. Budner 521 0 0 68,000
Daniel D. Chabris 525 0 0 73,350
A. D. Frazier Jr.4 261 0 0 32,500
Kenneth T. King 524 0 0 71,000
John W. McIntyre4 261 0 0 33,000
------ ------ ----- --------
Total $3,6675 $0 $0 $ 510,550
% of Net Assets 0.0075%6 0.0000%6 .0052%7
1The vice chairman of the board, the chairmen of the audit, management
liaison and compensation committees, and the members of the executive and
valuation committees each receive compensation for serving in such capacities in
addition to the compensation paid to all independent directors.
2Represents estimated benefits accrued with respect to the Defined Benefit
Deferred Compensation Plan discussed below, and not compensation deferred at the
election of the directors.
3These figures represent the Company's share of the estimated annual
benefits payable by the INVESCO Complex (excluding The Global Health Sciences
Fund, which does not participate in any retirement plan) upon the directors'
retirement, calculated using
<PAGE>
the current method of allocating director compensation among the funds in the
INVESCO Complex. These estimated benefits assume retirement at age 72 and that
the basic retainer payable to the directors will be adjusted periodically for
inflation, for increases in the number of funds in the INVESCO Complex, and for
other reasons during the period in which retirement benefits are accrued on
behalf of the respective directors. This results in lower estimated benefits for
directors who are closer to retirement and higher estimated benefits for
directors who are further from retirement. With the exception of Messrs. Frazier
and McIntyre, each of these directors has served as a director/trustee of one or
more of the funds in the INVESCO Complex for the minimum five-year period
required to be eligible to participate in the Defined Benefit Deferred
Compensation Plan.
4Messrs. Frazier and McIntyre began serving as directors of
the Company on April 19, 1995.
5Amount only includes Worldwide Communications Fund effective
January 1, 1995. The Worldwide Capital Goods Fund, European Small
Company Fund and Latin American Growth Fund were not accruing
directors' fees as of July 31, 1995.
6Totals as a percentage of the Company's net assets as of July
31, 1995.
7Total as a percentage of the net assets of the INVESCO
Complex as of December 31, 1994.
Messrs. Bishop, Brady, Hesser and Sim, as "interested persons" of the
Company and of the other funds in the INVESCO Complex, receive compensation as
officers or employees of INVESCO or its affiliated companies, and do not receive
any director's fees or other compensation from the Company or the other funds in
the INVESCO Complex for their service as directors.
The board of directors has adopted a retirement policy for directors who
have attained 72 years of age. The retirement date for each director is the last
day of the calendar quarter in which he or she turns 72; provided, however, that
a majority of the directors may annually extend a director's retirement date for
a maximum period of three years, or through the calendar quarter in which the
director turns 75.
The boards of directors/trustees of the mutual funds managed by INVESCO,
The EBI Funds, Inc. and INVESCO Treasurer's Series Trust have adopted a Defined
Benefit Deferred Compensation Plan for the non-interested directors and trustees
of the funds. Under this plan, each director or trustee who is not an interested
person of the funds (as defined in the Investment Company Act of 1940) and who
has served for at least five years (a "qualified director") is entitled to
receive, upon retiring from the boards at the retirement age of 72 (or the
retirement age of 73 or 74, if the retirement date is extended by the boards for
one or two years but
<PAGE>
less than three years) continuation of payment for one year (the "first year
retirement benefit") of the annual basic retainer payable by the funds to the
qualified director at the time of his retirement (the "basic retainer").
Commencing with any such director's second year of retirement, and commencing
with the first year of retirement of a director whose retirement has been
extended by the board for three years, a qualified director shall receive
quarterly payments at an annual rate equal to 25% of the basic retainer. These
payments will continue for the remainder of the qualified director's life or ten
years, whichever is longer (the "reduced retainer payments"). If a qualified
director dies or becomes disabled after age 72 and before age 74 while still a
director of the funds, the first year retirement benefit and the reduced
retainer payments will be made to him or to his beneficiary or estate. If a
qualified director becomes disabled or dies either prior to age 72 or during
his/her 74th year while still a director of the funds, the director will not be
entitled to receive the first year retirement benefit; however, the reduced
retainer payments will be made to his beneficiary or estate. The plan is
administered by a committee of three directors who are also participants in the
plan and one director who is not a plan participant. The cost of the plan will
be allocated among the INVESCO, EBI and Treasurer's Series funds in a manner
determined to be fair and equitable by the committee. Although the Company is
not making any payments to directors under the plan as of the date of this
Statement of Additional Information, it will begin to accrue, as a current
expense, a proportionate amount of the estimated future cost of these benefits.
The Company has no stock options or other pension or retirement plans for
management or other personnel and pays no salary or compensation to any of its
officers.
The Company has an audit committee comprised of four of the directors who
are not interested persons of the Company. The committee meets periodically with
the Company's independent accountants and officers to review accounting
principles used by the Company, the adequacy of internal controls, the
responsibilities and fees of the independent accountants, and other matters.
The Company also has a management liaison committee which meets quarterly
with various management personnel of INVESCO in order (a) to facilitate better
understanding of management and operations of the Company, and (b) to review
legal and operational matters which have been assigned to the committee by the
board of directors in furtherance of the board of directors' overall duty of
supervision.
<PAGE>
HOW SHARES CAN BE PURCHASED
Shares of each Fund are sold on a continuous basis at the respective net
asset value per share of the Fund next calculated after receipt of a purchase
order in good form. The net asset value per share is computed separately for
each Fund and is determined once each day that the New York Stock Exchange is
open as of the close of regular trading on that Exchange, but may also be
computed at other times. See "How Shares Are Valued." INVESCO acts as the Funds'
Distributor under a distribution agreement with the Company under which it
receives no compensation and bears all expenses, including the costs of printing
and distributing prospectuses, incident to marketing of the Funds' shares,
except for such distribution expenses which are paid out of Fund assets under
the Company's Plan of Distribution which has been adopted by the Company in
accordance with Rule 12b-1 under The Investment Company Act of 1940.
Distribution Plan. As discussed under "How Shares Can Be Purchased" in the
Prospectuses, the Company has adopted a Plan and Agreement of Distribution (the
"Plan") pursuant to Rule 12b-1 under the Investment Company Act of 1940 ("the
Act"). The Plan provides that each of the Funds may make monthly payments to
INVESCO of amounts computed at an annual rate no greater than 0.25% on the
Fund's average net assets to reimburse it for expenses incurred by it in
connection with the distribution of each Fund's shares to investors. Payment
amounts by a Fund under the Plan, for any month, may only be made to reimburse
or pay expenditures incurred during the rolling 12-month period in which that
month falls, although this period is expanded to 24 months for expenses incurred
during the first 24 months of the Fund's operations. During the fiscal year
ended July 31, 1995, the Capital Goods Fund and Communications Fund incurred
$10,355 and $33,148 in distribution expenses, respectively, prior to the
voluntary absorption of certain Fund expenses by INVESCO and the applicable
sub-adviser. During the period ended July 31, 1995, the European Small Company
Fund and Latin American Growth Fund incurred $771 and $2,696, respectively, in
distribution expenses, prior to the voluntary absorption of certain Fund
expenses by INVESCO and the applicable sub-adviser. As noted in the
Prospectuses, one type of reimbursable expenditure is the payment of
compensation to securities companies and other financial institutions and
organizations, which may include INVESCO affiliated companies, in order to
obtain various distribution-related and/or administrative services for the
Funds. Each Fund is authorized by the Plan to use its assets to finance the
payments made to obtain those services. Payments will be made by INVESCO to
broker-dealers who sell shares of the Funds 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, the Company does not believe that these limitations would
affect the ability of such banks to enter into arrangements with INVESCO, but
can give no assurance in this regard. However, to the extent it is determined
otherwise in the future, arrangements with banks might have to be modified or
terminated, and, in that case, the size of one or more of the Funds possibly
could decrease to the extent that the banks would no longer invest customer
assets in a particular Fund. Neither the Company nor its investment adviser will
give any preference to banks or other depository institutions which enter into
such arrangements when selecting investments to be made by each Fund.
<PAGE>
For the fiscal year ended July 31, 1995, allocation of 12b-1 amounts paid
by the Capital Goods Fund and Communications Fund for the following categories
of expenses were, respectively: advertising--$3,881 and $12,134; sales
literature, printing, and postage--$2,852 and $9,128; direct mail--$2,669 and
$8,101; public relations/promotion--$293 and $1,196; compensation to securities
dealers and other organizations--$18 and $192; marketing personnel- -$642 and
$2,397. For the period February 15, 1995 (inception) through July 31, 1995,
allocations of 12b-1 amounts paid by the European Small Company Fund and Latin
American Growth Fund for the following categories of expenses were,
respectively: advertising-- $446 and $37; sales literature, printing, and
postage--$137 and $781; direct mail--$172 and $1,694; public
relations/promotion--$10 and $108; compensation to securities dealers and other
organizations--$1 and $15; marketing personnel--$5 and $61.
The nature and scope of services which are provided by securities dealers
and other organizations may vary by dealer but include, among other things,
processing new stockholder account applications, preparing and transmitting to
the Company's Transfer Agent computer-processable tapes of each Fund's
transactions by customers, serving as the primary source of information to
customers in answering questions concerning each Fund, and assisting in other
customer transactions with each Fund.
The Plan was approved on April 20, 1994, at a meeting called for such
purpose by a majority of the directors of the Company, including a majority of
the directors who neither are "interested persons" of the Company nor have any
financial interest in the operation of the Plan ("12b-1 directors"). The Plan
was approved by INVESCO on July 12, 1994, as the then sole shareholder of the
Capital Goods Fund and Communications Fund for an initial term expiring April
30, 1995 and has been continued by action of the board of directors until April
30, 1996. With respect to the INVESCO European Small Company Fund and Latin
American Growth Fund, the Plan was approved by INVESCO on February 8, 1995 as
the then sole shareholder of each Fund and has been continued by action of the
board of directors until April 30, 1996.
The Plan provides that it shall continue in effect with respect to each
Fund for so long as such continuance is approved at least annually by the vote
of the board of directors of the Company cast in person at a meeting called for
the purpose of voting on such continuance. The Plan also can be terminated at
any time with respect to any Fund, without penalty, if a majority of the 12b-1
directors, or shareholders of such Fund, vote to terminate the Plan. The Company
may, in its absolute discretion, suspend, discontinue or limit the offering of
the shares of any Fund at any time. In determining whether any such action
should be taken, the board of directors intends to consider all relevant factors
including, without limitation, the size of the Funds, the investment climate for
any particular Fund, general market
<PAGE>
conditions, and the volume of sales and redemptions of Fund shares. The Plan may
continue in effect and payments may be made under the Plan following any such
temporary suspension or limitation of the offering of a Fund's shares; however,
the Company is not contractually obligated to continue the Plan for any
particular period of time. Suspension of the offering of a Fund's shares would
not, of course, affect a shareholder's ability to redeem his shares. So long as
the Plan is in effect, the selection and nomination of persons to serve as
independent directors of the Company shall be committed to the independent
directors then in office at the time of such selection or nomination. The Plan
may not be amended to increase materially the amount of any Fund's payments
thereunder without approval of the shareholders of that Fund, and all material
amendments to the Plan must be approved by the board of directors of the
Company, including a majority of the 12b-1 directors. Under the agreement
implementing the Plan, INVESCO or the Funds, the latter by vote of a majority of
the 12b-1 directors or of the holders of a majority of any Fund's outstanding
voting securities, may terminate such agreement without penalty upon 30 days'
written notice to the other party. No further payments will be made by any Fund
under the Plan in the event of its termination as to that Fund.
To the extent that the Plan constitutes a plan of distribution adopted
pursuant to Rule 12b-1 under the Act, it shall remain in effect as such, so as
to authorize the use of each Fund's assets in the amounts and for the purposes
set forth therein, notwithstanding the occurrence of an assignment, as defined
by the Act, and rules thereunder. To the extent it constitutes an agreement
pursuant to a plan, each Fund's obligation to make payments to INVESCO shall
terminate automatically, in the event of such "assignment," in which event the
Funds may continue to make payments, pursuant to the Plan, to INVESCO or another
organization only upon the approval of new arrangements, which may or may not be
with INVESCO, regarding the use of the amounts authorized to be paid by it under
the Plan, by the directors, including a majority of the 12b-1 directors, by a
vote cast in person at a meeting called for such purpose.
Information regarding the services rendered under the Plan and the amounts
paid therefor by each Fund are provided to, and reviewed by, the directors on a
quarterly basis. In the quarterly review, the directors determine whether, and
to what extent, INVESCO will be reimbursed for expenditures which it has made
that are reimbursable under the Company's Rule 12b-1 Plan. On an annual basis,
the directors consider the continued appropriateness of the Plan at the level of
compensation provided therein.
The only directors or interested persons, as that term is
defined in Section 2(a)(19) of the Act, of the Company who have a
direct or indirect financial interest in the operation of the Plan
are the officers and directors of the Company listed under
"Officers and Directors of the Company" who are also officers
either of INVESCO or companies affiliated with INVESCO. The
benefits which the Company believes will be reasonably likely to flow to the
Funds and their shareholders under the Plan include the following:
<PAGE>
(1) Enhanced marketing efforts, if successful, should result in an
increase in net assets through the sale of additional shares and
afford greater resources with which to pursue the investment
objectives of the Funds;
(2) The sale of additional shares reduces the likelihood that redemption
of shares will require the liquidation of securities of the Funds in
amounts and at times that are disadvantageous for investment
purposes;
(3) The positive effect which increased Fund assets will have on its
revenues could allow INVESCO:
(a) To have greater resources to make the financial commitments
necessary to improve the quality and level of each Fund's
shareholder services (in both systems and personnel),
(b) To increase the number and type of mutual funds available to
investors from INVESCO (and support them in their infancy),
and thereby expand the investment choices available to all
shareholders, and
(c) To acquire and retain talented employees who desire
to be associated with a growing organization; and
(4) Increased Fund assets may result in reducing each investor's share
of certain expenses through economies of scale (e.g. exceeding
established breakpoints in the advisory fee schedule and allocating
fixed expenses over a larger asset base), thereby partially
offsetting the costs of the Plan.
HOW SHARES ARE VALUED
As described in the section of the Funds' Prospectuses entitled "How Shares
Can Be Purchased," the net asset value of shares of each Fund of the Company is
computed once each day that the New York Stock Exchange is open as of the close
of regular trading on that Exchange (generally 4:00 p.m., New York time) and
applies to purchase and redemption orders received prior to that time. Net asset
value per share is also computed on any other day on which there is a sufficient
degree of trading in the securities held by a Fund that the current net asset
value per share of such Fund might be materially affected by changes in the
value of the securities held, but only if on such day the Fund receives a
request to purchase or redeem shares. Net asset value per share is not
calculated on days the New York Stock Exchange is closed, such as federal
holidays, including New Year's Day, Presidents' Day, Good Friday, Memorial Day,
Independence Day, Labor Day, Thanksgiving, and Christmas.
<PAGE>
The net asset value per share of each Fund is calculated by dividing the
value of all securities held by the Fund and its other assets (including
dividends and interest accrued but not collected), less the Fund's liabilities
(including accrued expenses), by the number of outstanding shares of the Fund.
Securities traded on national securities exchanges, the NASDAQ National Market
System, the NASDAQ Small Cap market and foreign markets are valued at their last
sale prices on the exchanges or markets where such securities are primarily
traded. Securities traded in the over-the-counter market for which last sale
prices are not available, and listed securities for which no sales were reported
on a particular date, are valued at their highest closing bid prices (or, for
debt securities, yield equivalents thereof) obtained from one or more dealers
making markets for such securities. If market quotations are not readily
available, securities or other assets will be valued at their fair values as
determined in good faith by the Company's board of directors or pursuant to
procedures adopted by the board of directors. The above procedures may include
the use of valuations furnished by a pricing service which employs a matrix to
determine valuations for normal institutional-size trading units of debt
securities. Prior to utilizing a pricing service, the Company's board of
directors reviews the methods used by such service to assure itself that
securities will be valued at their fair values. The Company's board of directors
also periodically monitors the methods used by such pricing services. Debt
securities with remaining maturities of 60 days or less at the time of purchase
normally are valued at amortized cost.
The values of securities held by the Funds and other assets used in
computing net asset value generally are determined as of the time regular
trading in such securities or assets is completed each day. Since regular
trading in most foreign securities markets is completed simultaneously with, or
prior to, the close of regular trading on the New York Stock Exchange, closing
prices for foreign securities usually are available for purposes of computing
the Funds' net asset value. However, in the event that the closing price of a
foreign security is not available in time to calculate a Fund's net asset value
on a particular day, the Company's board of directors has authorized the use of
the market price for the security obtained from an approved pricing service at
an established time during the day which may be prior to the close of regular
trading in the security. The value of all assets and liabilities initially
expressed in foreign currencies will be converted into U.S. dollars at the spot
rate of such currencies against U.S. dollars provided by an approved pricing
service.
<PAGE>
FUND PERFORMANCE
As discussed in the Funds' Prospectuses, the Company
advertises the total return performance of the Funds. The total
return performance for the Capital Goods Fund and the Communications Fund for
the fiscal year ended July 31, 1995 and for the European Small Company Fund and
Latin American Growth Fund for the period from February 15, 1995 (inception)
through July 31, 1995 was as follows:
Fund Total Return
Capital Goods Fund (1.49)%
Communications Fund 24.83%
European Small Company Fund* 34.51%
Latin American Growth Fund* 37.10%
*not annualized
Average annual total return performance is computed by finding the average
annual compounded rates of return that would equate the initial amount invested
to the ending redeemable value, according to the following formula:
P(1 + T)n = ERV
where: P = initial payment of $1000
T = average annual total return
n = number of years
ERV = ending redeemable value of initial payment
In conjunction with performance reports, comparative data between the
Funds' performance for a given period and other types of investment vehicles,
including certificates of deposit, may be provided to prospective investors and
shareholders.
From time to time, evaluations of performance made by independent sources
may also be used in advertisements, sales literature or shareholder reports,
including reprints of, or selections from, editorials or articles about the
Funds. Sources for Fund performance information and articles about the Funds
include, but are not limited to, the following:
American Association of Individual Investors' Journal
Banxquote
Barron's
Business Week
CDA Investment Technologies
CNBC
CNN
Consumer Digest
Financial Times
Financial World
Forbes
Fortune
Ibbotson Associates, Inc.
Institutional Investor
Investment Company Data, Inc.
Investor's Business Daily
<PAGE>
Kiplinger's Personal Finance
Lipper Analytical Services, Inc.'s Mutual Fund
Performance Analysis
Money
Morningstar
Mutual Fund Forecaster
No-Load Analyst
No-Load Fund X
Personal Investor
Smart Money
The New York Times
The No-Load Fund Investor
U.S. News and World Report
United Mutual Fund Selector
USA Today
Wall Street Journal
Wiesenberger Investment Companies Services
Working Woman
Worth
SERVICES PROVIDED BY THE FUNDS
Periodic Withdrawal Plan. As described in the section of the Funds'
Prospectus entitled "Services Provided by the Funds," each Fund offers a
Periodic Withdrawal Plan. All dividends and distributions on shares owned by
shareholders participating in this Plan are reinvested in additional shares.
Since withdrawal payments represent the proceeds from sales of shares, the
amount of shareholders' investments in a Fund will be reduced to the extent that
withdrawal payments exceed dividends and other distributions paid and
reinvested. Any gain or loss on such redemptions must be reported for tax
purposes. In each case, shares will be redeemed at the close of business on or
about the 20th day of each month preceding payment and payments will be mailed
within five business days thereafter.
The Periodic Withdrawal Plan involves the use of principal and is not a
guaranteed annuity. Payments under such Plan do not represent income or a return
on investment.
A Periodic Withdrawal Plan may be terminated at any time by sending a
written request to INVESCO. Upon termination, all future dividends and capital
gain distributions will be reinvested in additional shares unless a shareholder
requests otherwise.
Exchange Privilege. As discussed in the section of the Funds' Prospectus
entitled "Services Provided by the Funds," the Funds offer shareholders the
privilege of exchanging shares of the Funds for shares of another fund or for
shares of certain other no-load mutual funds advised by INVESCO. Exchange
requests may be made either by telephone or by written request to INVESCO Funds
Group, Inc., using the telephone number or address on the cover of this
Statement of Additional Information. Exchanges made by telephone must be in an
amount of at least $250, if the exchange is being
<PAGE>
made into an existing account of one of the INVESCO funds. All exchanges that
have established a new account must meet the fund's applicable minimum initial
investment requirements. Written exchange requests into an existing account have
no minimum requirements other than the fund's applicable minimum subsequent
investment requirements. Any gain or loss realized on such an exchange is
recognized for federal income tax purposes. This privilege is not an option or
right to purchase securities, but is a revocable privilege permitted under the
present policies of each of the funds and is not available in any state or other
jurisdiction where the shares of the mutual fund into which transfer is to be
made are not qualified for sale, or when the net asset value of the shares
presented for exchange is less than the minimum dollar purchase required by the
appropriate prospectus.
TAX-DEFERRED RETIREMENT PLANS
As described in the section of the Funds' Prospectus entitled "Services
Provided by the Funds," shares of a Fund may be purchased as the investment
medium for various tax-deferred retirement plans. Persons who request
information regarding these plans from INVESCO will be provided with prototype
documents and other supporting information regarding the type of plan requested.
Each of these plans involves a long-term commitment of assets and is subject to
possible regulatory penalties for excess contributions, premature distributions
or for insufficient distributions after age 70-1/2. The legal and tax
implications may vary according to the circumstances of the individual investor.
Therefore, the investor is urged to consult with an attorney or other tax
adviser prior to the establishment of such a plan.
HOW TO REDEEM SHARES
Normally, payments for shares redeemed will be mailed within seven days
following receipt of the required documents as described in the section of the
Funds' Prospectus entitled "How to Redeem Shares." The right of redemption may
be suspended and payment postponed when: (a) the New York Stock Exchange is
closed for other than customary weekends and holidays; (b) trading on that
exchange is restricted; (c) an emergency exists as a result of which disposal by
a Fund of securities owned by it is not reasonably practicable or it is not
reasonably practicable for the Fund fairly to determine the value of its net
assets; or (d) the Securities and Exchange Commission by order so permits.
It is possible that in the future conditions may exist which would, in the
opinion of the Company's investment adviser, make it undesirable for a Fund to
pay for redeemed shares in cash. In such cases, the investment adviser may
authorize payment to be made in portfolio securities or other property of the
Fund. However, the Company is obligated under the Investment Company Act of 1940
to redeem for cash all shares of a Fund presented for redemption by any one
shareholder having a value up to $250,000 (or 1% of the Fund's net assets if
that is less) in any 90-day period.
<PAGE>
Securities delivered in payment of redemptions are selected entirely by the
investment adviser based on what is in the best interests of the Fund and its
shareholders, and are valued at the value assigned to them in computing the
Fund's net asset value per share. Shareholders receiving such securities are
likely to incur brokerage costs on their subsequent sales of the securities.
DIVIDENDS, CAPITAL GAIN DISTRIBUTIONS, AND TAXES
Each Fund intends to continue to conduct its business and satisfy the
applicable diversification of assets and source of income requirements to
qualify as a regulated investment company under Subchapter M of the Internal
Revenue Code of 1986, as amended. Each Fund so qualified in the fiscal year
ended July 31, 1995, and intends to continue to qualify during its current
fiscal year. As a result, it is anticipated that each Fund will pay no federal
income or excise taxes and will be accorded conduit or "pass through" treatment
for federal income tax purposes.
Dividends paid by each Fund from net investment income as well as
distributions of net realized short-term capital gains and net realized gains
from certain foreign currency transactions are, for federal income tax purposes,
taxable as ordinary income to shareholders. After the end of each calendar year,
each Fund sends shareholders information regarding the amount and character of
dividends paid in the year, including the dividends eligible for the
dividends-received deduction for corporations. Such amounts will be limited to
the aggregate amount of qualifying dividends which each Fund derives from its
portfolio investments.
Distributions by each Fund of net capital gain (the excess of net
long-term capital gain over net short term capital loss) are, for federal income
tax purposes, taxable to the shareholder as long-term capital gains regardless
of how long a shareholder has held shares of a Fund. Such distributions are
identified as such and are not eligible for the dividends-received deduction.
All dividends and other distributions are regarded as taxable to the
investor, whether or not such dividends and distributions are reinvested in
additional shares. If the net asset value of Fund shares should be reduced below
a shareholder's cost as a result of a distribution, such distribution would be
taxable to the shareholder although a portion would be, in effect, a return of
invested capital. The net asset value of shares of a Fund reflects accrued net
investment income and undistributed realized capital and foreign currency gains;
therefore, when a distribution is made, the net asset value is reduced by the
amount of the distribution. If shares are purchased shortly before a
distribution, the full price for the shares will be paid and some portion of the
price may then be returned to the shareholder as a taxable dividend or capital
gain. However, the net asset value per share will be reduced by the amount of
the distribution, which would reduce any gain (or increase any loss) for tax
purposes on any subsequent redemption of shares.
<PAGE>
Dividends and interest received by each Fund may give rise to withholding
and other taxes imposed by foreign countries. Tax conventions between certain
countries and the United States may reduce or eliminate such taxes.
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 a Fund
recommends any particular method of determining cost basis. Other methods may
result in different tax consequences. If a shareholder has reported gains or
losses for a Fund in past years, the shareholder must continue to use the method
previously used, unless the shareholder applies to the IRS for permission to
change methods.
If a Fund's shares are sold at a loss after being held for six months or
less, the loss will be treated as long-term, instead of short-term, capital loss
to the extent of any capital gain distributions received on those shares.
Each Fund will be subject to a nondeductible 4% excise tax to the extent
it fails to distribute by the end of any calendar year substantially all of its
ordinary income for that year and capital gain net income for the one-year
period ending on October 31 of that year, plus certain other amounts.
Dividends and interest received by a Fund may be subject to income,
withholding or other taxes imposed by foreign countries and U.S. possessions
that would reduce the yield on its securities. Tax conventions between certain
countries and the United States may reduce or eliminate these foreign taxes,
however, and many foreign countries do not impose taxes on capital gains in
respect of investments by foreign investors. If more than 50% of the value of a
Fund's total assets at the close of any taxable year consists of securities of
foreign corporations, the Fund will be eligible to, and may, file an election
with the Internal Revenue Service that will enable its shareholders, in effect,
to receive the benefit of the foreign tax credit with respect to any foreign and
U.S. possessions income taxes paid by it. Each Fund will report to its
shareholders shortly after each taxable year their respective shares of the
Fund's income from sources within, and taxes paid to, foreign countries and U.S.
possessions if it makes this election.
Each 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 of at least 50% of its assets produce, or are held for the
production of, passive income. Under certain circumstances, a Fund will be
<PAGE>
subject to federal income tax on a portion of any "excess distribution" received
on the stock of a PFIC or of any gain on disposition of the stock (collectively
"PFIC income"), plus interest thereon, even if a Fund distributes the PFIC
income as a taxable dividend to its shareholders. The balance of the PFIC income
will be included in a Fund's investment company taxable income and, accordingly,
will not be taxable to it to the extent that income is distributed to its
shareholders.
Gains or losses (1) from the disposition of foreign currencies, (2) from
the disposition of debt securities denominated in foreign currency that are
attributable to fluctuations in the value of the foreign currency between the
date of acquisition of each security and the date of disposition, and (3) that
are attributable to fluctuations in exchange rates that occur between the time a
Fund accrues interest, dividends or other receivables or accrues expenses or
other liabilities denominated in a foreign currency and the time each Fund
actually collects the receivables or pays the liabilities, generally will be
treated as ordinary income or loss. These gains or losses may increase or
decrease the amount of a Fund's investment company taxable income to be
distributed to its shareholders.
Shareholders should consult their own tax advisers regarding specific
questions as to federal, state and local taxes. Dividends and 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.
INVESTMENT PRACTICES
Portfolio Turnover. There are no fixed limitations regarding the portfolio
turnover of the Funds. The rate of portfolio turnover can fluctuate under
constantly changing economic conditions and market circumstances. Securities
initially satisfying the basic policies and objectives of a Fund may be disposed
of when they are no longer suitable. Brokerage costs to these Funds are
commensurate with the rate of portfolio activity. For the fiscal year ended July
31, 1995, the portfolio turnover rates for the Capital Goods Fund and
Communications Fund were 193% and 215%, respectively. For the period February
15, 1995 (inception) through July 31, 1995, the portfolio turnover rates for the
European Small Company Fund and Latin American Growth Fund were 0% and 30%,
respectively (not annualized). In computing portfolio turnover rates, all
investments with maturities or expiration dates at the time of acquisition of
one year or less are excluded. Subject to this exclusion, the turnover rate is
calculated by dividing (A) the lesser of purchases or sales of portfolio
securities for the fiscal year by (B) the monthly average of the value of
portfolio securities owned by the Fund during the fiscal year.
<PAGE>
Placement of Portfolio Brokerage. Either INVESCO, as the Company's
investment adviser, or INVESCO Trust or MIL, as the Company's sub-advisers,
places orders for the purchase and sale of securities with brokers and dealers
based upon INVESCO's, INVESCO Trust's or MIL's evaluation of their financial
responsibility, subject to their ability to effect transactions at the best
available prices. INVESCO, INVESCO Trust or MIL evaluates the overall
reasonableness of brokerage commissions or underwriting discounts (the
difference between the full acquisition price to acquire the new offering and
the discount offered to members of the underwriting syndicate) paid by reviewing
the quality of executions obtained on portfolio transactions of each Fund,
viewed in terms of the size of transactions, prevailing market conditions in the
security purchased or sold, and general economic and market conditions. In
seeking to ensure that the commissions or discounts charged the Funds are
consistent with prevailing and reasonable commissions or discounts, INVESCO,
INVESCO Trust or MIL also endeavor to monitor brokerage industry practices with
regard to the commissions or discounts charged by brokers and dealers on
transactions effected for other comparable institutional investors. While
INVESCO, INVESCO Trust or MIL seek reasonably competitive rates, the Funds do
not necessarily pay the lowest commission, spread or discount available.
Consistent with the standard of seeking to obtain the best execution on
portfolio transactions, INVESCO, INVESCO Trust or MIL may select brokers that
provide research services to effect such transactions. Research services consist
of statistical and analytical reports relating to issuers, industries,
securities and economic factors and trends, which may be of assistance or value
to INVESCO, INVESCO Trust or MIL in making informed investment decisions.
Research services prepared and furnished by brokers through which the Funds
effect securities transactions may be used by INVESCO, INVESCO Trust or MIL in
servicing all of their respective accounts and not all such services may be used
by INVESCO, INVESCO Trust or MIL in connection with the Funds.
In recognition of the value of the above-described brokerage and research
services provided by certain brokers, INVESCO, INVESCO Trust or MIL, consistent
with the standard of seeking to obtain the best execution on portfolio
transactions, may place orders with such brokers for the execution of
transactions for the Funds on which the commissions or discounts are in excess
of those which other brokers might have charged for effecting the same
transactions.
Portfolio transactions may be effected through qualified broker/dealers
who recommend the Funds to their clients, or who act as agent in the purchase of
any of the Fund's shares for their clients. When a number of brokers and dealers
can provide comparable best price and execution on a particular transaction, the
Company's adviser may consider the sale of Fund shares by a broker or dealer in
selecting among qualified broker/dealers.
<PAGE>
Neither INVESCO, INVESCO Trust nor MIL receives any brokerage commissions
on portfolio transactions effected on behalf of the Funds, and there is no
affiliation between INVESCO, INVESCO Trust, MIL or any person affiliated with
INVESCO, INVESCO Trust, MIL or the Funds and any broker or dealer that executes
transactions for the Funds.
The aggregate dollar amount of brokerage commissions paid by the Capital
Goods Fund and Communications Fund for the fiscal year ended July 31, 1995 was
$54,814 and $129,085, respectively. During the same period, brokers providing
research service received $27,515 and $39,843, respectively in commissions on
portfolio transactions effected for the Capital Goods Fund and Communications
Fund. The aggregate dollar amount of such portfolio transactions was $10,973,188
and $15,947,023. Commissions of $0 and $1,463 were allocated to certain brokers
in recognition of their sales of shares of the Capital Goods Fund and
Communications Fund effected during the fiscal year ended July 31, 1995.
The aggregate dollar amount of brokerage commissions paid by the European
Small Company Fund and Latin American Growth Fund for the period February 15,
1995 (inception) through July 31, 1995 was $141 and $2,102, respectively. For
the same period, brokers providing research services received $0 and $0,
respectively, in commissions on portfolio transactions effected for the Capital
Goods Fund and Communications Fund. The aggregate dollar amount of such
portfolio transactions was $0 and $0. Commissions of $0 and $0 were allocated to
certain brokers in recognition of their sales of shares of the Capital Goods
Fund and Communications Fund on portfolio transactions of the Funds effected
during the six-month period ended July 31, 1995.
At July 31, 1995, the Funds held securities of their regular brokers or
dealers, or their parents, as follows:
Value of Securities
Fund Broker or Dealer at 7/31/95
Capital Goods Fund Associated Corporation of 332,000
North American
Communications Fund State Street Bank and 12,179,000
Trust Company
Latin American Growth State Street Bank and 545,000
Fund
European Small Company State Street Bank and 625,000
Fund
Neither INVESCO, INVESCO Trust nor MIL receives any brokerage commissions
on portfolio transactions effected on behalf of the Funds, and there is no
affiliation between INVESCO, INVESCO Trust and MIL, or any person affiliated
with INVESCO, INVESCO Trust and MIL, or the Funds and any broker or dealer that
executes transactions for the Funds.
<PAGE>
ADDITIONAL INFORMATION
Common Stock. The Company was incorporated with 500,000,000 authorized
shares of common stock with a par value of $0.01 per share. Of the Company's
authorized shares, 100,000,000 shares have been allocated to each of the five
series, representing the Company's five Funds. As of July 31, 1995, 1,053,711
shares of the Capital Goods Fund, 2,215,366 shares of the Communications Fund,
328,778 shares of the European Small Company Fund and 635,049 shares of the
Latin American Growth Fund were outstanding. The board of directors has the
authority to designate additional series of common stock without seeking the
approval of shareholders, and may classify and reclassify any authorized but
unissued shares.
Shares of each series represent the interests of the shareholders of such
series in a particular portfolio of investments of the Company. Each series of
the Company's shares is preferred over all other series in respect of the assets
specifically allocated to that series, and all income, earnings, profits and
proceeds from such assets, subject only to the rights of creditors, are
allocated to shares of that series. The assets of each series are segregated on
the books of account and are charged with the liabilities of that series and
with a share of the Company's general liabilities. The board of directors
determines those assets and liabilities deemed to be general assets or
liabilities of the Company, and these items are allocated among series in a
manner deemed by the board of directors to be fair and equitable. Generally,
such allocation will be made based upon the relative total net assets of each
series. In the unlikely event that a liability allocable to one series exceeds
the assets belonging to the series, all or a portion of such liability may have
to be borne by the holders of shares of the Company's other series.
All shares, regardless of series, have equal voting rights. Voting with
respect to certain matters, such as ratification of independent accountants or
election of directors, will be by all series of the Company. When not all series
are affected by a matter to be voted upon, such as approval of an investment
advisory contract or changes in a Fund's investment policies, only shareholders
of the series affected by the matter may be entitled to vote. Company shares
have noncumulative voting rights, which means that the holders of a majority of
the shares voting for the election of directors can elect 100% of the directors
if they choose to do so. In such event, the holders of the remaining shares
voting for the election of directors will not be able to elect any person or
persons to the board of directors. After they have been elected by shareholders,
the directors will continue to serve until their successors are elected and have
qualified or they are removed from office, in either case by a shareholder vote,
or until death, resignation, or retirement. They may appoint their own
successors, provided that always at least a majority of the directors have been
elected the Company's shareholders. It is the intention of the Company not to
hold annual meetings of shareholders. The directors will call annual or special
meetings of shareholders for action by shareholder vote as may be required by
the Investment Company Act of 1940 or the Company's Articles of Incorporation,
or at their discretion.
<PAGE>
Principal Shareholders. As of July 31, 1995, the following
entities held more than 5% of the Funds' outstanding equity
securities.
Amount and Nature Percent
Name and Address of Ownership of Class
INVESCO Worldwide
Capital Goods Fund
Resources Trust 327,139.952 31.046%
Meridian Accts. Record
P.O. Box 3865
Englewood, CO 80155
Charles Schwab & Co. Inc. 186,705.506 17.719%
Reinvest Acct. Record
101 Montgomery St.
San Francisco, CA 94104
INVESCO Worldwide
Communications Fund
Charles Schwab & Co. Inc. 329,704.593 14.882%
Reinvest Acct. Record
101 Montgomery St.
San Francisco, CA 94104
INVESCO European
Small Company Fund
Charles Schwab & Co. Inc. 87,566.394 26.634%
Reinvest Acct. Record
101 Montgomery St.
San Francisco, CA 94104
INVESCO Latin American Growth Fund
Charles Schwab & Co. Inc. 201,473.598 31.725%
Reinvest Acct. Record
101 Montgomery St.
San Francisco, CA 94104
Independent Accountants. Price Waterhouse LLP, 950
Seventeenth Street, Denver, Colorado, has been selected as the
independent accountants of the Company. The independent
accountants are responsible for auditing the financial statements
of the Company.
Custodian. State Street Bank and Trust Company, P.O. Box 351,
Boston, Massachusetts, has been designated as custodian of the cash
<PAGE>
and investment securities of the Company. The bank is also responsible for,
among other things, receipt and delivery of the investment securities of the
Company's Funds in accordance with procedures and conditions specified in the
custody agreement.
Transfer Agent. The Company is provided with transfer agent, registrar,
and dividend disbursing agent services by INVESCO Funds Group, Inc., 7800 E.
Union Avenue, Denver, Colorado 80237, pursuant to the Transfer Agency Agreement
described herein. Such services include the issuance, cancellation and transfer
of shares of the Funds, and the maintenance of records regarding the ownership
of such shares.
Reports to Shareholders. The Company's fiscal year ends on July 31. The
Company distributes reports at least semiannually to its shareholders. Financial
statements regarding the Company, audited by the independent accountants, are
sent to shareholders annually.
Legal Counsel. The firm of Kirkpatrick & Lockhart LLP is legal counsel for
the Company. The firm of Moye, Giles, O'Keefe, Vermeire & Gorrell, Denver,
Colorado, acts as special counsel to the Company.
Financial Statements. The audited financial statements for the
Communications, Capital Goods, European Small Company and Latin American Growth
Funds and the notes thereto for the periods ending July 31, 1995, and the report
of Price Waterhouse LLP with respect to such financial statements, are
incorporated by reference from the Company's Annual Report to Shareholders for
the fiscal period ended July 31, 1995.
Prospectus. The Company will furnish, without charge, a copy of any Fund's
Prospectus upon request. Such requests should be made to the Company at the
mailing address or telephone number set forth on the first page of this
Statement of Additional Information.
Registration Statement. This Statement of Additional
Information and the related Prospectuses do not contain all of the
information set forth in the Registration Statement the Company has
filed with the Securities and Exchange Commission. The complete
Registration Statement may be obtained from the Securities and
Exchange Commission upon payment of the fee prescribed by the rules
and regulations of the Commission.
<PAGE>
APPENDIX A
DESCRIPTION OF FUTURES AND OPTIONS CONTRACTS
Options on Securities
An option on a security provides the purchaser, or "holder,"
with the right, but not the obligation, to purchase, in the case of
a "call" option, or sell, in the case of a "put" option, the security or
securities underlying the option, for a fixed exercise price up to a stated
expiration date. The holder pays a non-refundable purchase price for the option,
known as the "premium." The maximum amount of risk the purchaser of the option
assumes is equal to the premium plus related transaction costs, although the
entire amount may be lost. The risk of the seller, or "writer," however, is
potentially unlimited, unless the option is "covered," which is generally
accomplished through the writer's ownership of the underlying security, in the
case of a call option, or the writer's segregation of an amount of cash or
securities equal to the exercise price, in the case of a put option. If the
writer's obligation is not so covered, it is subject to the risk of the full
change in value of the underlying security from the time the option is written
until exercise.
Upon exercise of the option, the holder is required to pay the purchase
price of the underlying security, in the case of a call option, or to deliver
the security in return for the purchase price, in the case of a put option.
Conversely, the writer is required to deliver the security, in the case of a
call option, or to purchase the security, in the case of a put option. Options
on securities which have been purchased or written may be closed out prior to
exercise or expiration by entering into an offsetting transaction on the
exchange on which the initial position was established, subject to the
availability of a liquid secondary market.
Options on securities are traded on national securities exchanges, such as
the Chicago Board of Options Exchange and the New York Stock Exchange, which are
regulated by the Securities and Exchange Commission. The Options Clearing
Corporation guarantees the performance of each party to an exchange-traded
option, by in effect taking the opposite side of each such option. A holder or
writer may engage in transactions in exchange-traded options on securities and
options on indices of securities only through a registered broker/dealer which
is a member of the exchange on which the option is traded.
An option position in an exchange-traded option may be closed out only on
an exchange which provides a secondary market for an option of the same series.
Although the Funds will generally purchase or write only those options for which
there appears to be an active secondary market, there is no assurance that a
liquid secondary market on an exchange will exist for any particular option at
any particular time. In such event it might not be possible to effect closing
transactions in a particular option with the result that the Funds would have to
exercise the option in order to realize any profit. This would result in the
Funds incurring brokerage commissions upon the disposition of underlying
securities acquired through the exercise of a call option or upon the purchase
of underlying securities upon the exercise of a put option. If these Funds as
covered call option writers are unable to effect a closing purchase transaction
in a secondary market,
<PAGE>
unless the Funds are required to deliver the securities pursuant to the
assignment of an exercise notice, they will not be able to sell the underlying
security until the option expires.
Reasons for the potential absence of a liquid secondary market on an
exchange include the following: (i) there may be insufficient trading interest
in certain options; (ii) restrictions may be imposed by an exchange on opening
transactions or closing transactions or both; (iii) trading halts, suspensions
or other restrictions may be imposed with respect to particular classes or
series of options or underlying securities: (iv) unusual or unforeseen
circumstances may interrupt normal operations on an exchange; (v) the facilities
of an exchange or a clearing corporation may not at all times be adequate to
handle current trading volume or (vi) one or more exchanges could, for economic
or other reasons, decide or be compelled at some future date to discontinue the
trading of options (or particular class or series of options) in which event the
secondary market on that exchange (or in the class or series of options) would
cease to exist, although outstanding options on that exchange which had been
issued by a clearing corporation as a result of trades on that exchange would
continue to be exercisable in accordance with their terms. There is no assurance
that higher than anticipated trading activity or other unforeseen events might
not, at a particular time, render certain of the facilities of any of the
clearing corporations inadequate and thereby result in the institution by an
exchange of special procedures which may interfere with the timely execution of
customers' orders. However, the Options Clearing Corporation, based on forecasts
provided by the U.S. exchanges, believes that its facilities are adequate to
handle the volume of reasonably anticipated options transactions, and such
exchanges have advised such clearing corporation that they believe their
facilities will also be adequate to handle reasonably anticipated volume.
In addition, options on securities may be traded over-the-counter through
financial institutions dealing in such options as well as the underlying
instruments. OTC options are purchased from or sold (written) to dealers or
financial institutions which have entered into direct agreements with the Funds.
With OTC options, such variables as expiration date, exercise price and premium
will be agreed upon between the Funds and the transacting dealer, without the
intermediation of a third party such as the OCC. If the transacting dealer fails
to make or take delivery of the securities underlying an option it has written,
in accordance with the terms of that option as written, the Funds would lose the
premium paid for the option as well as any anticipated benefit of the
transaction. The Fund will engage in OTC option transactions only with primary
U.S. Government securities dealers recognized by the Federal Reserve Bank of New
York.
<PAGE>
Futures Contracts
A Futures Contract is a bilateral agreement providing for the purchase and
sale of a specified type and amount of a financial instrument or foreign
currency, or for the making and acceptance of a cash settlement, at a stated
time in the future, for a fixed price. By its terms, a Futures Contract provides
for a specified settlement date on which, in the case of the majority of
interest rate and foreign currency futures contracts, the fixed income
securities or currency underlying the contract are delivered by the seller and
paid for by the purchaser, or on which, in the case of stock index futures
contracts and certain interest rate and foreign currency futures contracts, the
difference between the price at which the contract was entered into and the
contract's closing value is settled between the purchaser and seller in cash.
Futures Contracts differ from options in that they are bilateral agreements,
with both the purchaser and the seller equally obligated to complete the
transaction. In addition, Futures Contracts call for settlement only on the
expiration date, and cannot be "exercised" at any other time during their term.
The purchase or sale of a Futures Contract also differs from the purchase
or sale of a security or the purchase of an option in that no purchase price is
paid or received. Instead, an amount of cash or cash equivalent, which varies
but may be as low as 5% or less of the value of the contract, must be deposited
with the broker as "initial margin." Subsequent payments to and from the broker,
referred to as "variation margin," are made on a daily basis as the value of the
index or instrument underlying the Futures Contract fluctuates, making positions
in the Futures Contract more or less valuable, a process known as "marking to
market."
A Futures Contract may be purchased or sold only on an exchange, known as
a "contract market," designated by the Commodity Futures Trading Commission for
the trading of such contract, and only through a registered futures commission
merchant which is a member of such contract market. A commission must be paid on
each completed purchase and sale transaction. The contract market clearing house
guarantees the performance of each party to a Futures Contract, by in effect
taking the opposite side of such Contract. At any time prior to the expiration
of a Futures Contract, a trader may elect to close out its position by taking an
opposite position on the contract market on which the position was entered into,
subject to the availability of a secondary market, which will operate to
terminate the initial position. At that time, a final determination of variation
margin is made and any loss experienced by the trader is required to be paid to
the contract market clearing house while any profit due to the trader must be
delivered to it.
Interest rate futures contracts currently are traded on a variety of fixed
income securities, including long-term U.S. Treasury Bonds, Treasury Notes,
Government National Mortgage Association modified pass-through mortgage-backed
securities, U.S. Treasury Bills, bank certificates of deposit and commercial
paper. In addition, interest rate futures contracts include contracts on indices
of municipal securities. Foreign currency futures contracts currently are traded
on the British pound, Canadian dollar, Japanese yen, Swiss franc, West German
mark and on Eurodollar deposits.
<PAGE>
Options on Futures Contracts
An Option on a Futures Contract provides the holder with the right to
enter into a "long" position in the underlying Futures Contract, in the case of
a call option, or a "short" position in the underlying Futures Contract, in the
case of a put option, at a fixed exercise price to a stated expiration date.
Upon exercise of the option by the holder, the contract market clearing house
establishes a corresponding short position for the writer of the option, in the
case of a call option, or a corresponding long position, in the case of a put
option. In the event that an option is exercised, the parties will be subject to
all the risks associated with the trading of Futures Contracts, such as payment
of variation margin deposits. In addition, the writer of an Option on a Futures
contract, unlike the holder, is subject to initial and variation margin
requirements on the option position.
A position in an Option on a Futures Contract may be terminated by the
purchaser or seller prior to expiration by effecting a closing purchase or sale
transaction, subject to the availability of a liquid secondary market, which is
the purchase or sale of an option of the same series (i.e., the same exercise
price and expiration date) as the option previously purchased or sold. The
difference between the premiums paid and received represents the trader's profit
or loss on the transaction.
An option, whether based on a Futures Contract, a stock index or a
security, becomes worthless to the holder when it expires. Upon exercise of an
option, the exchange or contract market clearing house assigns exercise notices
on a random basis to those of its members which have written options of the same
series and with the same expiration date. A brokerage firm receiving such
notices then assigns them on a random basis to those of its customers which have
written options of the same series and expiration date. A writer therefore has
no control over whether an option will be exercised against it, nor over the
time of such exercise.
APPENDIX B
BOND RATINGS
The following is a description of Standard & Poor's Ratings Group
("Standard & Poor's") and Moody's Investors Service, Inc.
("Moody's") bond rating categories:
Moody's Investors Service, Inc. 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.
<PAGE>
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.
Standard & Poor's Ratings Group 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.
<PAGE>
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>
<TABLE>
<CAPTION>
PART C. OTHER INFORMATION
Item 24. Financial Statements and Exhibits
<S> <C>
(a) Financial Statements:
Page in
Prospectus
(1) Financial statements and schedules
included in Prospectus (Part A):
Audited Financial Highlights for the Capital Goods Fund and 8
the Communications Fund for the fiscal year ended July 31,
1995.
Audited Financial Highlights for the Latin American Growth 38
Fund for the period February 15, 1995 (inception) through
July 31, 1995.
Audited Financial Highlights for the European Small Company
Fund for the period February 15, 1995 (inception) through
July 31, 1995. 72
(2) The following audited financial statements for the
Communications, Worldwide Capital Goods, European Small
Company and Latin American Growth Funds and the notes
thereto for the periods ended July 31, 1995, and the report of
Price Waterhouse LLP with respect to such financial
statements, are incorporated herein by reference from the
Company's Annual Report to Shareholders for the fiscal
period ended July 31, 1995: Statement of Investment
Securities as of July 31, 1995; Statement of Assets and
Liabilities as of July 31, 1995; Statement of Operations for
the Year ended July 31, 1995; Statement of Changes in Net
Assets for each of the two years ended July 31, 1995; and
Financial Highlights for each of the five years ended
July 31, 1995.
(3) Financial statements and schedules
included in Part C:
None
(b) Exhibits:
(1) (a) Articles of Incorporation(Charter).1
(b) Articles Supplementary to the Company's Articles of
Incorporation dated January 6, 1995.3
(c) Articles supplementary to the Company's Articles of
Incorporation dated January 6, 1995.
(d) Articles supplementary to the Company's Articles of
Incorporation dated June 20, 1995.
(2) Bylaws.1
(3) Not applicable.
(4) Specimen stock certificates for INVESCO Worldwide
Capital Goods Fund and INVESCO Worldwide Communications
Fund.1
(b) Specimen stock certificate for INVESCO European Small
Company Fund.2
(c) Specimen stock certificate for INVESCO Latin American
Growth Fund.3
(5) (a) Investment Advisory Agreement Between Registrant and
Funds Group, Inc. dated May 2, 1994.1
<PAGE>
(b) Amendment of Investment Advisory Agreement dated
January 6, 1995.3
(c) Amendment of Investment Advisory Agreement dated
June 20, 1995.
(d) Sub-Advisory Agreement Between INVESCO Funds Group,
Inc. and INVESCO Trust Company dated May 2,1994.1
(e) Sub-advisory Agreement between INVESCO Funds Group,
Inc. and INVESCO MIM International Limited dated
January 13, 1995.3
(f) Sub-advisory Agreement between INVESCO Funds Group,
Inc. and INVESCO Asia Ltd. dated June 20, 1995.
(6) General Distribution Agreement Between Registrant and
INVESCO Funds Group, Inc. dated May 2, 1994.1
(7) Defined Benefit Deferred Compensation Plan for Non-
Interested Directors and Trustees.1
(8) Custody Agreement Between Registrant and State Street
Bank and Trust Company dated May 2, 1994.1
(9) (a) Transfer Agency Agreement Between Registrant and
INVESCO Funds Group, Inc. dated May 2, 1994.1
Amendment No. 1 dated May 3, 1994 to Transfer Agency
Agreement.3
(b) Administrative Services Agreement between Registrant
and INVESCO Funds Group, Inc. dated May 2, 1994.1
(10) Opinion and consent of counsel as to the legality of the
securities being registered, indicating whether they
will, when sold, be legally issued, fully paid and
nonassessable dated May 18, 1994.1
<PAGE>
(11) Consent of Independent Accountants.
(12) Not applicable.
(13) Not applicable.
(14) Copies of model plans used in the establishment of
retirement plans as follows: Non-standardized Profit
Sharing Plan; Non- standardized Money Purchase Pension
Plan; Standardized Profit Sharing Plan Adoption
Agreement; Standardized Money Purchase Pension Plan;
Non-standardized 401(k) Plan Adoption Agreement;
Standardized 401(k) Paired Profit Sharing Plan;
Standardized Simplified Profit Sharing Plan;
Standardized Simplified Money Purchase Plan; Defined
Contribution Master Plan & Trust Agreement; and
Financial 403(b) Retirement Plan, all filed with
Registration Statement No. 33- 63498 of INVESCO
International Funds, Inc. filed May 27, 1993, and herein
incorporated by reference.
(15) Plan and Agreement of Distribution dated May 2, 1994
adopted pursuant to Rule 12b-1 under the Investment
Company Act of 1940.1 Amendment of Plan and Agreement
of Distribution dated July 19, 1995.
(16) (a) Schedule for Computation of Performance Data for
Worldwide Capital Goods Fund.3
(b) Schedule for Computation of Performance Data for
Worldwide Communications Fund.3
(17) (a) Financial Data Schedule for Worldwide Capital Goods
Fund.
(b) Financial Data Schedule for Worlwide Communications
Fund.
(c) Financial Data Schedule for Latin American Growth
Fund.
(d) Financial Data Schedule for European Small Company
Fund.
(18) Not applicable.
<FN>
- ---------------
1Previously filed with the original Registration Statement on May 23, 1994 and
incorporated by reference herein.
2Previously filed with Post-Effective Amendment No. 1 to this
Registration Statement on October 27, 1994, and incorporated by
reference herein.
3Previously filed with Post-Effective Amendment No. 3 to this
Registration Statement on January 27, 1995, and incorporated by
reference herein.
</FN>
</TABLE>
<PAGE>
Item 25. Persons Controlled by or Under Common Control With
Registrant
No person is presently controlled by or under common control with
Registrant.
Item 26. Number of Holders of Securities
Number of Record
Holders as of
Title of Class July 31, 1995
-------------- -------------
INVESCO Worldwide Capital Goods Fund 1,202
INVESCO Worldwide Communications Fund 5,321
INVESCO European Small Company Fund 670
INVESCO Latin American Growth Fund 1,306
INVESCO Asian Growth Fund -0-
Item 27. Indemnification
Indemnification provisions for officers and directors of Registrant are
set forth in Article VII, Section 2 of the Articles of Incorporation, and are
hereby incorporated by reference. See Item 24(b)(1) above. Under these Articles,
officers and directors will be indemnified to the fullest extent permitted to
directors by the Maryland General Corporation Law, subject only to such
limitations as may be required by the Investment Company Act of 1940, as
amended, and the rules thereunder. Under the Investment Company Act of 1940,
Fund directors and officers cannot be protected against liability to the Company
or its shareholders to which they would be subject because of willful
misfeasance, bad faith, gross negligence or reckless disregard of the duties of
their office. The Company also maintains liability insurance policies covering
its directors and officers.
Item 28. Business and Other Connections of Investment Adviser
See "The Funds and Their Management" in the Funds' Prospectuses and
in the Statement of Additional Information for information regarding the
business of the investment adviser. For information as to the business,
profession, vocation or employment of a substantial nature of each of the
officers and directors of INVESCO Funds Group, Inc., reference is made to the
Schedule Ds to the Form ADV filed under the Investment Advisers Act of 1940 by
INVESCO Funds Group, Inc., which schedules are herein incorporated by reference.
Item 29. Principal Underwriters
(a) INVESCO Diversified Funds, Inc.
INVESCO Dynamics Fund, Inc.
INVESCO Emerging Opportunity Funds, Inc.
INVESCO Growth Fund, Inc.
INVESCO Income Funds, Inc.
INVESCO Industrial Income Fund, Inc.
INVESCO International Funds, Inc.
INVESCO Money Market Funds, Inc.
INVESCO Multiple Asset Funds, Inc.
INVESCO Strategic Portfolios, Inc.
INVESCO Tax-Free Income Funds, Inc.
INVESCO Value Trust
INVESCO Variable Investment Funds, Inc.
<PAGE>
(b)
Positions and Positions and
Name and Principal Offices with Offices with
Business Address Underwriter Registrant
David W. Altimont Regional Vice
7800 E. Union Ave. President
Denver, CO 80237
David D. Barrett Vice President
7800 E. Union Avenue
Denver, CO 80237
Frank M. Bishop Director Director
1315 Peachtree Street NE
Atlanta, GA 30309
Charles W. Brady Chairman of
1315 Peachtree Street NE the Board
Atlanta, GA 30309
Kenneth R. Christoffersen Vice President
7800 E. Union Avenue Asst. General Counsel
Denver, CO 80237
M. Anthony Cox Senior Vice
1315 Peachtree Street NE President
Atlanta, GA 30309
Steven T. Cox, Jr. Regional Vice
7800 E. Union Avenue President
Denver, CO 80237
Robert D. Cromwell Asst. Vice President
7800 E. Union Avenue
Denver, CO 80237
Philip J. Crosley Vice President
7800 E. Union Avenue
Denver, CO 80237
<PAGE>
Samuel T. DeKinder Director
1315 Peachtree Street NE
Atlanta, GA 30309
William H. Eigen Regional Vice
7800 E. Union Avenue President
Denver, CO 80237
William J. Galvin, Jr. Senior Vice Asst. Sec.
7800 E. Union Avenue President
Denver, CO 80237
Linda J. Gieger Vice President
7800 E. Union Avenue
Denver, CO 80237
Ronald L. Grooms Senior Vice Treasurer,
7800 E. Union Avenue President Chief Fin'l
Denver, CO 80237 & Treasurer Officer, and
Chief Acctg.
Officer
Wylie G. Hairgrove Vice President
7800 E. Union Avenue
Denver, CO 80237
Dan J. Hesser Chairman of the President
7800 E. Union Avenue Board, President, & Director
Denver, CO 80237 CEO & Director
Mark A. Jones Regional Vice
7800 E. Union Avenue President
Denver, CO 80237
Jeraldine E. Kraus Assistant Secretary
7800 E. Union Avenue
Denver, CO 80237
Michael D. Legoski Asst. Vice
7800 E. Union Avenue President
Denver, CO 80237
Walter R. Lewis, Jr. Regional Vice
1315 Peachtree Street N.E. President
Atlanta, GA 30309
Dennis J. McCarthy Regional Vice
7800 E. Union Avenue President
Denver, CO 80237
David G. Mertens Regional Vice
1315 Peachtree Street N.E. President
Atlanta, GA 30309
<PAGE>
Timothy J. Milligan Regional Vice
7800 E. Union Avenue President
Denver, CO 80237
Brian Minturn Executive Vice
7800 E. Union Ave. President
Denver, CO 80237
Robert J. O'Connor Director
1355 Peachtree Street N.E.
Atlanta, GA 30309
Laura M. Parsons Vice President
7800 E. Union Avenue
Denver, CO 80237
Glen A. Payne Sr. Vice President Secretary
7800 E. Union Avenue Secretary
Denver, CO 80237 General Counsel
M. Ellen Phillips Regional Vice
7800 E. Union Avenue President
Denver, CO 80237
R. Dalton Sim Director Director
7800 E. Union Avenue
Denver, CO 80237
James S. Skesavage Regional Vice
1315 Peachtree Street N.E. President
Atlanta, GA 30309
Katha Hall Stuart Regional Vice
1315 Peachtree Street N.E. President
Atlanta, GA 30309
Terri Berg Smith Vice President
7800 E. Union Avenue
Denver, CO 80237
Alan I. Watson Vice President Asst. Sec.
7800 E. Union Avenue
Denver, CO 80237
Judy P. Wiese Vice President Asst. Treas.
7800 E. Union Avenue
Denver, CO 80237
John F. Yeager, III Vice President
7800 E. Union Avenue
Denver, CO 80237
Allyson B. Zoellner Vice President
7800 E. Union Avenue
Denver, CO 80237
<PAGE>
(c) Not applicable.
Item 30. Location of Accounts and Records
Dan J. Hesser
7800 E. Union Avenue
Denver, CO 80237
Item 31. Management Services
Not applicable.
Item 32. Undertakings
(a) The Registrant shall furnish each person to whom a prospectus
is delivered with a copy of the Registrant's latest annual
report to shareholders, upon request and without charge.
(b) Insofar as indemnification for liability arising
under the Securities Act of 1933 may be permitted
to directors, officers and controlling persons of
the Registrant pursuant to the foregoing
provisions, or otherwise, the Registrant has been
advised that in the opinion of the Securities and
Exchange Commission such indemnification is against
public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a
claim for indemnification against such liabilities
(other than the payment by the Registrant of
expense incurred or paid by a director, officer or
controlling person of the Registrant in the
successful defense of any action, suit or
proceeding) is asserted by such director, officer
or controlling person in connection with the
securities being registered, the Registrant will,
unless in the opinion of its counsel the matter has
been settled by controlling precedent, submit to a
court of appropriate jurisdiction the question
whether such indemnification by it is against
public policy as expressed in the Act and will be
governed by the final adjudication of such issue.
(c) The Registrant hereby undertakes that the board of
directors will call a special meeting of
shareholders for the purpose of voting on the
question of removal of a director or directors of
the Registrant if requested to do so in writing by
the holders of at least 10% of the outstanding
shares of the Registrant, and to assist the
shareholders in communicating with other
shareholders as required by the Investment Company
Act of 1940.
<PAGE>
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the registrant certifies that it meets all of
the requirements for effectiveness of this Registration Statement pursuant to
Rule 485(b) under the Securities Act of 1933 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 25th day of August, 1995.
Attest: INVESCO Specialty Funds, Inc.
/s/ Glen A. Payne /s/ Dan J. Hesser
- ----------------------- ------------------------
Glen A. Payne, Secretary Dan J. Hesser, President
Pursuant to the requirements of the Securities Act of 1933,
this post-effective amendment to Registrant's Registration
Statement has been signed by the following persons in the
capacities indicated on this 25th day of August, 1995.
/s/ Dan J. Hesser /s/ Lawrence H. Budner
- ----------------------- -----------------------
Dan J. Hesser, President & Trustee Lawrence H. Budner, Trustee
(Chief Executive Officer)
/s/ Ronald L. Grooms /s/ Daniel D. Chabris
- ----------------------- ------------------------
Ronald L. Grooms, Treasurer Daniel D. Chabris, Trustee
(Chief Financial and
Accounting Officer)
/s/ Victor L. Andrews /s/ Fred A. Deering
- ---------------------- ----------------------
Victor L. Andrews, Trustee Fred A. Deering, Trustee
/s/ Bob R. Baker /s/ A. D. Frazier, Jr.
- ---------------------- -------------------------
Bob R. Baker, Trustee A. D. Frazier, Jr., Director
/s/ Frank M. Bishop /s/ Kenneth T. King
- --------------------- -----------------------
Frank M. Bishop, Trustee Kenneth T. King, Director
/s/ Charles W. Brady /s/ John W. McIntyre
- -------------------- ------------------------
Charles W. Brady, Trustee John W. McIntyre
/s /R. Dalton Sim
--------------------
R. Dalton Sim, 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
May 23, 1994 and June 22, 1995.
<PAGE>
Exhibit Index
Page in
Exhibit Number Registration Statement
1(c) 157
1(d) 159
5(c) 161
5(f) 162
11 170
15 171
17(a) 174
17(b) 175
17(c) 176
17(d) 177
EXHIBIT 1(c)
ARTICLES SUPPLEMENTARY TO
ARTICLES OF INCORPORATION OF
INVESCO SPECIALTY FUNDS, INC.
INVESCO Specialty Funds, Inc., a corporation organized and existing under
the General Corporation Law of the State of Maryland (the "Company"), hereby
certifies that:
FIRST: The aggregate number of shares of stock of all series which the
Company shall have authority to issue both before and after creation of
two new series of Common Stock, is five hundred million (500,000,000)
shares of Common Stock. Prior to creation of the two new series of Common
Stock, the Company's Common Stock was divided into two (2) series
consisting of 100 million (100,000,000) shares of Common Stock designated
as the INVESCO Worldwide Capital Goods Fund and 100 million (100,000,000)
shares of Common Stock designated as the INVESCO Worldwide Communications
Fund. The Company is now creating two new series of Common Stock,
consisting of 100 million (100,000,000) shares to be designated as the
INVESCO European Small Company Fund and the INVESCO Latin American Growth
Fund. Both before and after creation of the two new series of Common
Stock, shares of Common Stock, regardless of series or class, have a par
value of 1 cent ($.01) per share, with the aggregate par value of the
Company's five hundred million authorized shares of Common Stock being 5
million dollars ($5,000,000).
SECOND: The Company is registered as an open-end company
under the Investment Company Act of 1940.
THIRD: The total number of shares of capital stock that the Company has
authority to issue has not been increased or decreased by the board of
directors, but it has authorized in accordance with ss.2-105(c) of the
General Corporation Law of the State of Maryland the issuance of 100
million (100,000,000) shares of the new INVESCO European Small Company
Fund Common Stock and 100 million (100,000,000) shares of the new INVESCO
Latin American Growth Fund Common Stock.
The undersigned, President of the Company, who is executing on behalf of
the Company the foregoing Articles Supplementary, of which this paragraph is
made a part, hereby acknowledges, in the name and on behalf of the Company, the
foregoing Articles Supplementary to be the corporate act of the Company and
further verifies under oath that, to the best of his knowledge, information and
belief, the matters and facts set forth herein are true in all material
respects, under the penalties of perjury.
<PAGE>
IN WITNESS WHEREOF, INVESCO Specialty Funds, Inc. has caused these Articles
Supplementary to be signed in its name and on its behalf by its President and
witnessed by its Secretary on the 6th day of January, 1995.
These Articles of Amendment shall be effective upon acceptance by the Maryland
State Department of Assessments and Taxation.
INVESCO SPECIALTY FUNDS, INC.
BY:
[SEAL] /s/ Dan J. Hesser
----------------------------
DAN J. HESSER, President
WITNESSED:
/s/ Glen A. Payne
- ----------------------------------
GLEN A. PAYNE, Secretary
CERTIFICATION
I, Ruth A. Christensen, a notary public in and for the County of Denver, City of
Denver, and State of Colorado, do hereby certify that Dan J. Hesser, personally
known to me to be the person whose name is subscribed to the foregoing Articles
Supplementary, appeared before me this date in person and acknowledged that he
signed, sealed and delivered said instrument as his free and voluntary act and
deed for the uses and purposes therein set forth.
Given my hand and official seal this 6th day of January,
1995.
/s/ Ruth A. Christensen
-------------------------------
[SEAL] Notary Public
7800 E. Union Avenue
Denver, Colorado 80237
My commission expires March 16, 1998.
EXHIBIT 1(d)
ARTICLES SUPPLEMENTARY TO
ARTICLES OF INCORPORATION OF
INVESCO SPECIALTY FUNDS, INC.
INVESCO Specialty Funds, Inc., a corporation organized and existing under
the General Corporation Law of the State of Maryland (the "Company"), hereby
certifies that:
FIRST: The aggregate number of shares of stock of all series which the
Company shall have authority to issue both before and after creation of a
new series of Common Stock, is five hundred million (500,000,000) shares
of Common Stock. Prior to creation of the new series of Common Stock, the
Company's Common Stock was divided into four (4) series consisting of 100
million (100,000,000) shares of Common Stock designated as the INVESCO
Worldwide Capital Goods Fund; 100 million (100,000,000) shares of Common
Stock designated as the INVESCO Worldwide Communications Fund; 100 million
(100,000,000) shares of Common Stock designated as the INVESCO European
Small Company Fund; and 100 million (100,000,000) shares of Common Stock
designated as the INVESCO Latin American Growth Fund. The Company is now
creating a new series of Common Stock, consisting of 100 million
(100,000,000) shares to be designated as the INVESCO Asian Growth Fund.
Both before and after creation of the new series of Common Stock, shares
of Common Stock, regardless of series or class, have a par value of 1 cent
($.01) per share, with the aggregate par value of the Company's five
hundred million authorized shares of Common Stock being 5 million dollars
($5,000,000).
SECOND: The Company is registered as an open-end company
under the Investment Company Act of 1940.
THIRD: The total number of shares of capital stock that the Company has
authority to issue has not been increased or decreased by the board of
directors, but it has authorized in accordance with ss.2-105(c) of the
General Corporation Law of the State of Maryland the issuance of 100
million (100,000,000) shares of the new INVESCO Asian Growth Fund Common
Stock.
The undersigned, President of the Company, who is executing on behalf of
the Company the foregoing Articles Supplementary, of which this paragraph is
made a part, hereby acknowledges, in the name and on behalf of the Company, the
foregoing Articles Supplementary to be the corporate act of the Company and
further verifies under oath that, to the best of his knowledge, information and
belief, the matters and facts set forth herein are true in all material
respects, under the penalties of perjury.
<PAGE>
IN WITNESS WHEREOF, INVESCO Specialty Funds, Inc. has caused these Articles
Supplementary to be signed in its name and on its behalf by its President and
witnessed by its Secretary on the 20th day of June, 1995.
These Articles of Amendment shall be effective upon acceptance by the Maryland
State Department of Assessments and Taxation.
INVESCO SPECIALTY FUNDS, INC.
BY:
[SEAL] /s/ Dan J. Hesser
-----------------------
DAN J. HESSER, President
WITNESSED:
/s/ Glen A. Payne
- ------------------------
GLEN A. PAYNE, Secretary
CERTIFICATION
I, Ruth A. Christensen, a notary public in and for the County of Denver, City of
Denver, and State of Colorado, do hereby certify that Dan J. Hesser, personally
known to me to be the person whose name is subscribed to the foregoing Articles
Supplementary, appeared before me this date in person and acknowledged that he
signed, sealed and delivered said instrument as his free and voluntary act and
deed for the uses and purposes therein set forth.
Given my hand and official seal this 20th day of June, 1995.
/s/ Ruth A. Christensen
-------------------------------
[SEAL] Notary Public
7800 E. Union Avenue
Denver, Colorado 80237
My commission expires March 16, 1998.
EXHIBIT 5(c)
Amendment to Investment Advisory Agreement
This is an Amendment to the Investment Advisory Agreement made and entered
into between INVESCO Specialty Funds, Inc., a Maryland corporation (the
"Company"), and INVESCO Funds Group, Inc., a Delaware corporation ("IFG"), as of
the 20th day of June, 1995 (the "Agreement").
WHEREAS, the Company desires to have IFG perform investment advisory,
statistical, research, and certain administrative and clerical services with
respect to management of the assets of the Company allocable to the INVESCO
Asian Growth Fund of the Company, and IFG is willing and able to perform such
services on the terms and conditions set forth in the Agreement;
NOW, THEREFORE, in consideration of the premises and the mutual covenants
contained in the Agreement, it is agreed that the terms and conditions of the
Agreement shall be applicable to the Company's assets allocable to the INVESCO
Asian Growth Fund, to the same extent as if the INVESCO Asian Growth Fund were
to be added to the definition of "Funds" as utilized in the Agreement, and that
the INVESCO Asian Growth Fund shall pay IFG a fee for services provided to it by
IFG under the Agreement as follows: 0.75% of the first $500 million of the
Portfolio's average net assets; 0.65% of the next $500 million of the
Portfolio's average net assets; and 0.55% of the Portfolio's average net assets
over $1 billion.
IN WITNESS WHEREOF, the parties hereto have executed this Amendment to
Agreement on this 20th day of June, 1995.
INVESCO SPECIALTY FUNDS, INC.
By /s/ Dan J. Hesser
-------------------------
Dan J. Hesser, President
ATTEST:
/s/ Glen A. Payne
- -----------------------
Glen A. Payne, Secretary
(CORPORATE SEAL) INVESCO FUNDS GROUP, INC.
By /s/ Ronald L. Grooms
-----------------------------
ATTEST: Ronald L. Grooms, Senior
Vice President
/s/ Glen A. Payne
- -----------------------
Glen A. Payne, Secretary
(CORPORATE SEAL)
EXHIBIT 5(f)
SUB-ADVISORY AGREEMENT
AGREEMENT made this 20th day of June, 1995, by and between INVESCO Fund
Group, Inc. ("INVESCO"), a Delaware corporation, and INVESCO Asia Limited, a
Hong Kong corporation ("the Sub-Adviser").
W I T N E S S E T H:
WHEREAS, INVESCO SPECIALTY FUND, INC. (the "Company") is engaged in
business as a diversified, open-end management investment company registered
under the Investment Company Act of 1940, as amended (hereinafter referred to as
the "Investment Company Act") and has one class of shares (the "Shares"), which
is divided into series, each representing an interest in a separate portfolio of
investments, with one such series being designated the INVESCO Asian Growth Fund
(the "Fund"); and
WHEREAS, INVESCO and the Sub-Adviser are engaged in rendering investment
advisory services and are registered as investment advisers under the Investment
Advisers Act of 1940; and
WHEREAS, the Sub-Adviser is a member of the Securities and Futures
Commission (SFC) in Hong Kong and as such is regulated by SFC in the conduct of
its business; further the Sub-Adviser shall provide services to INVESCO as a
"Business Investor" as defined under the Rules of SFC and as such certain rules
designed for the protection of private customers shall not apply; and
WHEREAS, INVESCO has entered into an Investment Advisory Agreement with
the Company (the "INVESCO Investment Advisory Agreement"), pursuant to which
INVESCO is required to provide investment advisory services to the Company, and,
upon receipt of written approval of the Company, is authorized to retain
companies which are affiliated with INVESCO to provide such services; and
WHEREAS, the Sub-Adviser is willing to provide investment advisory
services to the Company on the terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and the covenants
hereinafter contained, INVESCO and the Sub-Adviser hereby agree as follows:
ARTICLE I
DUTIES OF THE SUB-ADVISER
INVESCO hereby employs the Sub-Adviser to act as investment adviser to the
Company and to furnish the investment advisory services described below, subject
to the broad supervision of INVESCO and Board of Directors of the Company, for
the period and on the terms and conditions set forth in this Agreement. The Sub-
Adviser hereby accepts such assignment and agrees during such period, at its own
expense, to render such services and to assume the obligations herein set forth
for the compensation provided for herein. The Sub-Adviser shall for all purposes
herein be deemed to be an independent contractor and, unless otherwise expressly
provided or authorized herein, shall have no authority to act for or represent
the Company in any way or otherwise be deemed an agent of the Company.
<PAGE>
The Sub-Adviser hereby agrees to manage the investment operations of the
Fund, subject to the supervision of the Company's directors (the "Directors")
and INVESCO. Specifically, the Sub-Adviser agrees to perform the following
services:
(a) to manage the investment and reinvestment of all the assets, now or
hereafter acquired, of the Fund, and to execute all purchases and sales of
portfolio securities;
(b) to maintain a continuous investment program for the Fund, consistent
with (i) the Fund's investment policies as set forth in the Company's
Articles of Incorporation, Bylaws, and Registration Statement, as from
time to time amended, under the Investment Company Act of 1940, as amended
(the "1940 Act"), and in any prospectus and/or statement of additional
information of the Fund, as from time to time amended and in use under the
Securities Act of 1933, as amended, and (ii) the Company's status as a
regulated investment company under the Internal Revenue Code of 1986, as
amended;
(c) to determine what securities are to be purchased or sold for the Fund,
unless otherwise directed by the Directors of the Company or INVESCO, and
to execute transactions accordingly;
(d) to provide to the Fund the benefit of all of the investment analysis
and research, the reviews of current economic conditions and trends, and
the consideration of long-range investment policy now or hereafter
generally available to investment advisory customers of the Sub-Adviser;
(e) to determine what portion of the Fund should be invested in the
various types of securities authorized for purchase by the Fund; and
(f) to make recommendations as to the manner in which voting rights,
rights to consent to Fund action and any other rights pertaining to the
Fund's portfolio securities shall be exercised.
With respect to execution of transactions for the Fund, the Sub-Adviser is
authorized to employ such brokers or dealers as may, in the Sub-Adviser's best
judgment, implement the policy of the Fund to obtain prompt and reliable
execution at the most favorable price obtainable. In assigning an execution or
negotiating the commission to be paid therefor, the Sub-Adviser is authorized to
consider the full range and quality of a broker's services which benefit the
Fund, including but not limited to research and analytical capabilities,
reliability of performance, and financial soundness and responsibility. Research
services prepared and furnished by brokers through which the Sub-Adviser effects
securities transactions on behalf of the Fund may be used by the Sub-Adviser in
servicing all of its accounts, and not all such services may be used by the Sub-
Adviser in connection with the Fund. In the selection of a broker or dealer for
execution of any negotiated transaction, the Sub-Adviser shall have no duty or
<PAGE>
obligation to seek advance competitive bidding for the most favorable negotiated
commission rate for such transaction, or to select any broker solely on the
basis of its purported or "posted" commission rate for such transaction,
provided, however, that the Sub-Adviser shall consider such "posted" commission
rates, if any, together with any other information available at the time as to
the level of commissions known to be charged on comparable transactions by other
qualified brokerage firms, as well as all other relevant factors and
circumstances, including the size of any contemporaneous market in such
securities, the importance to the Fund of speed, efficiency, and confidentiality
of execution, the execution capabilities required by the circumstances of the
particular transactions, and the apparent knowledge or familiarity with sources
from or to whom such securities may be purchased or sold. Where the commission
rate reflects services, reliability and other relevant factors in addition to
the cost of execution, the Sub-Adviser shall have the burden of demonstrating
that such expenditures were bona fide and for the benefit of the Fund.
The Sub-Adviser may recommend transactions in which it has directly or
indirectly a material interest, in unregulated collective investment schemes
including any operated or advised by the Sub-Adviser or in margined
transactions. Advice on investments may extend to investments not traded or
exchanges recognized or designated by the Securities and Investments Board.
Both parties acknowledge that the advice given under this Agreement may
involve liabilities in one currency matched by assets in another currency and
that accordingly movements in rates of exchange may have a separate effect,
unfavorable as well as favorable on the gain or loss experienced on an
investment.
In carrying out its duties hereunder, the Sub-Adviser shall comply with
all instructions of INVESCO in connection therewith such instructions may be
given by letter, telex, telephone or facsimile by any Director or Officer of
INVESCO or by any other person authorized by INVESCO.
Any instructions which appear to conflict with the terms of this Agreement
may be confirmed by the Sub-Adviser with INVESCO prior to execution.
<PAGE>
ARTICLE II
ALLOCATION OF CHARGES AND EXPENSES
The Sub-Adviser assumes and shall pay for maintaining the staff and
personnel necessary to perform its obligations under this Agreement, and shall,
at its own expense, provide the office space, equipment and facilities necessary
to perform its obligations under this Agreement. Except to the extent expressly
assumed by the Sub-Adviser herein and except to the extent required by law to be
paid by the Sub-Adviser, INVESCO and/or the Company shall pay all costs and
expenses in connection with the operations of the Fund.
ARTICLE III
COMPENSATION OF THE SUB-ADVISER
For the services rendered, facilities furnished, and expenses assumed by
the Sub-Adviser, INVESCO shall pay to the Sub-Adviser a fee, computed daily and
paid as of the last day of each month, using for each daily calculation the most
recently determined net asset value of the Fund, as determined by a valuation
made in accordance with the Fund's procedures for calculating its net asset
value as described in the Fund's Prospectus and/or Statement of Additional
Information. The advisory fee to the Sub-Adviser shall be computed at the annual
rate of 0.375% of the Fund's daily net assets up to $500 million; 0.325% of the
Fund's daily net assets in excess of $500 million but not more than $1 billion;
and 0.275% of the Fund's daily net assets in excess of $1 billion. During any
period when the determination of the Fund's net asset value is suspended by the
Directors of the Fund, the net asset value of a share of the Fund as of the last
business day prior to such suspension shall, for the purpose of this Article
III, be deemed to be the net asset value at the close of each succeeding
business day until it is again determined. However, no such fee shall be paid to
the Sub- Adviser with respect to any assets of the Fund which may be invested in
any other investment company for which the Sub-Adviser serves as investment
adviser or sub- adviser. The fee provided for hereunder shall be prorated in any
month in which this Agreement is not in effect for the entire month. The
Sub-Adviser shall be entitled to receive fees hereunder only for such periods as
the INVESCO Investment Advisory Agreement remains in effect.
ARTICLE IV
ACTIVITIES OF THE SUB-ADVISER
The services of the Sub-Adviser to the Fund are not to be deemed to be
exclusive, the Sub-Adviser and any person controlled by or under common control
with the Sub-Adviser (for purposes of this Article IV referred to as
"affiliates") being free to render services to others. It is understood that
directors, officers, employees and shareholders of the Fund are or may become
interested in the Sub-Adviser and its affiliates, as directors, officers,
employees and shareholders or otherwise and that directors, officers, employees
and shareholders of the Sub-Adviser, INVESCO and their affiliates are or may
become interested in the Fund as directors, officers and employees.
<PAGE>
ARTICLE V
AVOIDANCE OF INCONSISTENT POSITIONS AND COMPLIANCE WITH APPLICABLE LAWS
In connection with purchases or sales of securities for the investment
portfolio of the Fund, neither the Sub-Adviser nor any of its directors,
officers or employees will act as a principal or agent for any party other than
the Fund or receive any commissions. The Sub-Adviser will comply with all
applicable laws in acting hereunder including, without limitation, the 1940 Act;
the Investment Advisers Act of 1940, as amended; the Rules and Regulations of
the SFC; and all rules and regulations duly promulgated under the foregoing.
ARTICLE VI
DURATION AND TERMINATION OF THIS AGREEMENT
This Agreement shall become effective as of the date it is approved by a
majority of the outstanding voting securities of the Fund of the Company, unless
sooner terminated, as hereinafter provided. Thereafter, this Agreement shall
remain in force for an initial term of two years from the date of execution, and
from year to year thereafter until its termination in accordance with this
Article VI, but only so long as such continuance is specifically approved at
least annually by (i) the Directors of the Company, or by the vote of a majority
of the outstanding voting securities of the Fund, and (ii) a majority of those
Directors who are not parties to this Agreement or interested persons of any
such party cast in person at a meeting called for the purpose of voting on such
approval.
This Agreement may be terminated at any time, without the payment of any
penalty, by INVESCO, the Fund by vote of the Directors of the Company, or by
vote of a majority of the outstanding voting securities of the Fund, or by the
Sub- Adviser. A termination by INVESCO or the Sub-Adviser shall require sixty
days' written notice to the other party and to the Company, and a termination by
the Company shall require such notice to each of the parties. This Agreement
shall automatically terminate in the event of its assignment to the extent
required by the Investment Company Act of 1940 and the Rules thereunder.
The Sub-Adviser agrees to furnish to the Directors of the Company such
information on an annual basis as may reasonably be necessary to evaluate the
terms of this Agreement.
Termination of this Agreement shall not affect the right of the
Sub-Adviser to receive payments on any unpaid balance of the compensation
described in Article III hereof earned prior to such termination.
<PAGE>
ARTICLE VII
LIABILITY
The Sub-Adviser agrees to use its best efforts and judgement and due care
in carrying out its duties under this Agreement provided however that the Sub-
Adviser shall not be liable to INVESCO for any loss suffered by INVESCO or the
Fund advised in connection with the subject matter of this Agreement unless such
loss arises from the willful misfeasance, bad faith or negligence in the
performance of the Sub-Adviser's duties and subject and without prejudice to the
foregoing. INVESCO hereby undertakes to indemnify and to keep indemnified the
Sub-Adviser from and against any and all liabilities, obligations, losses,
damages, suits and expenses which may be incurred by or asserted against the
Sub- Adviser for which it is responsible pursuant to Article I hereof provided
always that the Sub-Adviser shall send to INVESCO as soon as possible all
claims, letters, summonses, writs or documents which it receives from third
parties and provide whatever information and assistance INVESCO may require and
no liability of any sort shall be admitted and no undertaking shall be given nor
shall any offer, promise or payment be made or legal expenses incurred by the
Sub-Adviser without written consent of INVESCO who shall be entitled if it so
desires to take over and conduct in the name of the Sub-Adviser the defense of
any action or to prosecute any claim for indemnity or damages or otherwise
against any third party.
ARTICLE VIII
AMENDMENTS OF THIS AGREEMENT
No provision of this Agreement may be orally changed or discharged, but
may only be modified by an instrument in writing signed by the Sub-Adviser and
INVESCO. In addition, no amendment to this Agreement shall be effective unless
approved by (1) the vote of a majority of the Directors of the Company,
including a majority of the Directors who are not parties to this Agreement or
interested persons of any such party cast in person at a meeting called for the
purpose of voting on such amendment and (2) the vote of a majority of the
outstanding voting securities of the Fund (other than an amendment which can be
effective without shareholder approval under applicable law).
ARTICLE IX
DEFINITIONS OF CERTAIN TERMS
In interpreting the provisions of this Agreement, the terms "vote of a
majority of the outstanding voting securities," "assignments," "affiliated
person" and "interested person," when used in this Agreement, shall have the
respective meanings specified in the Investment Company Act and the Rules and
Regulations thereunder, subject, however, to such exemptions as may be granted
by the Securities and Exchange Commission under said Act.
<PAGE>
ARTICLE X
GOVERNING LAW
This Agreement shall be construed in accordance with the laws of the State
of Colorado and the applicable provisions of the Investment Company Act. To the
extent that the applicable laws of the State of Colorado, or any of the
provisions herein, conflict with the applicable provisions of the Investment
Company Act, the latter shall control.
ARTICLE XI
MISCELLANEOUS
Advice. Any recommendation or advice given by the Sub-Adviser to INVESCO
hereunder shall be given in writing or by mail, telex, telefacsimile or by
telephone, such telephone advice to be confirmed by mail, telex, telefacsimile
or in writing to such place as INVESCO shall from time to time require; further
the Sub-Adviser shall be free to telephone INVESCO as it sees fit in the
performance of its duties.
Complaints. The Sub-Adviser has in operation a written procedure for the
proper handling of complaints from clients; if the matter of complaint cannot be
resolved to INVESCO's satisfaction, INVESCO has the right of recourse to the
SFC.
Notice. Any notice under this Agreement shall be in writing, addressed and
delivered or mailed, postage prepaid, to the other party at such address as such
other party may designate for the receipt of such notice.
Severability. Each provision of this Agreement is intended to be
severable. If any provision of this Agreement shall be held illegal or made
invalid by a court decision, statute, rule or otherwise, such illegality or
invalidity shall not affect the validity or enforceability of the remainder of
this Agreement.
Headings. The headings in this Agreement are inserted for convenience and
identification only and are in no way intended to describe, interpret, define or
limit the size, extent or intent of this Agreement or any provision hereof.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the date first above written.
INVESCO FUNDS GROUP, INC.
ATTEST: By: /s/ Dan J. Hesser
---------------------
Dan J. Hesser
/s/ Glen A. Payne President
- -----------------------
Glen A. Payne
Secretary INVESCO ASIA LIMITED
By: /s/ Andrew Lo
ATTEST: --------------------
Andrew Lo
/s/ Fanny Lee Managing Director
- ------------------------
Fanny Lee
Secretary
EXHIBIT 11
Consent of Independent Accountants
We hereby consent to the use in the Statement of Additional Information
constituting part of this Post-Effective Amendment No. 5 to the registration
statement on Form N-IA (the "Registration Statement") of our report dated August
21, 1995, relating to the financial statements and financial highlights of
INVESCO Specialty Funds, Inc., which appears in such Statement of Additional
Information, and to the incorporation by reference of our report into the
Prospectus which constitutes part of this Registration Statement. We also
consent to the reference to us under the heading "Independent Accountants" in
such Statement of Additional Information and to the reference to us under the
heading "Financial Highlights" in such Prospectus.
PRICE WATERHOUSE LLP
Denver, Colorado
August 25, 1995
EXHIBIT 15
AMENDMENT OF PLAN AND AGREEMENT OF DISTRIBUTION
PURSUANT TO RULE 12B-1
This Amendment of Plan and Agreement of Distribution Pursuant to Rule
12b-1 (this "Amendment") is entered into as of the 19th day of July, 1995, by
and between INVESCO Specialty Funds, Inc., a Maryland corporation (the
"Company"), and INVESCO Funds Group, Inc., a Delaware corporation ("INVESCO").
WHEREAS, the Company and INVESCO have entered into a Plan and Agreement of
Distribution Pursuant to Rule 12b-1, dated as of May 2, 1994 (the "Plan and
Agreement"); and
WHEREAS, the Plan and Agreement may be amended provided that all material
amendments to the Plan and Agreement are approved by the vote of the board of
directors of the Company, including a majority of the Disinterested Directors,
cast in person at a meeting called for the purpose of voting on such amendment
and, provided further, that the Plan may not be amended to increase the amount
to be spent by a Fund thereunder without approval of a majority of the
outstanding voting securities of that Fund; and
WHEREAS, the Company has determined to amend the Plan, and the Company and
INVESCO have mutually determined to amend the Agreement, in the manner set forth
in this Amendment, and such amendments were approved by the vote of the board of
directors of the Company, including a majority of the Disinterested Directors,
cast in person at a meeting held on July 19, 1995, called for the purpose of
voting on such amendments; and
WHEREAS, the Company has determined that the amendments to the Plan
contained in this Amendment will not increase the amount to be spent by any Fund
under the Plan, and therefore do not require the approval of a majority of the
outstanding voting securities of any Fund;
NOW, THEREFORE, the parties hereby agree as follows:
1. All capitalized terms used in this Amendment, unless otherwise defined,
shall have the meanings assigned to them in the Plan and Agreement.
2. The Company hereby adopts the amendments to the Plan set forth below,
and the Company and INVESCO hereby agree to the amendments to the Agreement set
forth below.
3. Section 2 of the Plan and Agreement is hereby amended to read as
follows:
<PAGE>
Subject to the supervision of the board of directors, the Company hereby
retains INVESCO to promote the distribution of shares of each of the Funds
by providing services and engaging in activities beyond those specifically
required by the Distribution Agreement between the Company and INVESCO and
to provide related services. The activities and services to be provided by
INVESCO hereunder shall include one or more of the following: (a) the
payment of compensation (including trail commissions and incentive
compensation) to securities dealers, financial institutions and other
organizations, which may include INVESCO- affiliated companies, that
render distribution and administrative services in connection with the
distribution of the shares of each of the Funds; (b) the printing and
distribution of reports and prospectuses for the use of potential
investors in each Fund; (c) the preparing and distributing of sales
literature; (d) the providing of advertising and engaging in other
promotional activities, including direct mail solicitation, and
television, radio, newspaper and other media advertisements; and (e) the
providing of such other services and activities as may from time to time
be agreed upon by the Company. Such reports and prospectuses, sales
literature, advertising and promotional activities and other services and
activities may be prepared and/or conducted either by INVESCO's own staff,
the staff of INVESCO-affiliated companies, or third parties.
4. Section 4 of the Plan and Agreement is hereby amended to read
as follows:
Each Fund is hereby authorized to expend, out of its assets, on a monthly
basis, and shall reimburse INVESCO to such extent, for INVESCO's actual
direct expenditures incurred over a rolling twelve-month period (or the
rolling twenty-four month period specified below) in engaging in the
activities and providing the services specified in paragraph (2) above, an
amount computed at an annual rate of .25 of 1% of the average daily net
assets of the Fund during the month. INVESCO shall not be entitled
hereunder to reimbursement for overhead expenses (overhead expenses
defined as customary overhead not including the costs of INVESCO's
personnel whose primary responsibilities involve marketing of the INVESCO
Funds). Payments by a Fund hereunder, for any month, may be made only with
respect to: (a) expenditures incurred by INVESCO during the rolling
twelve-month period in which that month falls, or (b) to the extent
permitted by applicable law, for any month during the first twenty-four
months following a Fund's commencement of operations, expenditures
incurred by INVESCO during the rolling twenty-four month period in which
that month falls, and any expenditures incurred in excess of the
limitations described above are not reimbursable. No Fund shall be
authorized to expend, for any month, a greater amount out of its assets to
reimburse INVESCO for expenditures incurred during the rolling twenty-
<PAGE>
four month period referred to above than it would otherwise be authorized
to expend out of its assets to reimburse INVESCO for expenditures incurred
during the rolling twelve month period referred to above. No payments will
be made by the Company hereunder after the date of termination of the Plan
and Agreement.
5. Except to the extent modified by this Amendment, the Plan and
Agreement shall remain in full force and effect.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Amendment on the day and year first above written.
INVESCO Specialty Funds, Inc.
By: /s/ Dan J. Hesser
-------------------------
Dan J. Hesser, President
ATTEST: /s/ Glen A. Payne
-----------------------
Glen A. Payne, Secretary
INVESCO Funds Group, Inc.
By: /s/ Ronald L. Grooms
------------------------
Ronald L. Grooms,
Senior Vice President
ATTEST: /s/ Glen A. Payne
------------------------
Glen A. Payne, Secretary
[ARTICLE] 6 EXHIBIT 17(a)
[CIK] 0000923705
[NAME] INVESCO SPECIALTY FUNDS, INC.
[SERIES]
[NUMBER] 1
[NAME] INVESCO WORLDWIDE CAPITAL GOODS FUND
<TABLE>
<S> <C>
[PERIOD-TYPE] YEAR
[FISCAL-YEAR-END] JUL-31-1995
[PERIOD-END] JUL-31-1995
[INVESTMENTS-AT-COST] 9578545
[INVESTMENTS-AT-VALUE] 10396930
[RECEIVABLES] 530141
[ASSETS-OTHER] 12879
[OTHER-ITEMS-ASSETS] 757
[TOTAL-ASSETS] 10940707
[PAYABLE-FOR-SECURITIES] 429284
[SENIOR-LONG-TERM-DEBT] 0
[OTHER-ITEMS-LIABILITIES] 147799
[TOTAL-LIABILITIES] 577083
[SENIOR-EQUITY] 0
[PAID-IN-CAPITAL-COMMON] 9934840
[SHARES-COMMON-STOCK] 1053711
[SHARES-COMMON-PRIOR] 0
[ACCUMULATED-NII-CURRENT] 784
[OVERDISTRIBUTION-NII] 0
[ACCUMULATED-NET-GAINS] (390413)
[OVERDISTRIBUTION-GAINS] 0
[ACCUM-APPREC-OR-DEPREC] 818413
[NET-ASSETS] 10363624
[DIVIDEND-INCOME] 83937
[INTEREST-INCOME] 36395
[OTHER-INCOME] (8200)
[EXPENSES-NET] 99638
[NET-INVESTMENT-INCOME] 12494
[REALIZED-GAINS-CURRENT] (390413)
[APPREC-INCREASE-CURRENT] 818413
[NET-CHANGE-FROM-OPS] 428000
[EQUALIZATION] 0
[DISTRIBUTIONS-OF-INCOME] 11710
[DISTRIBUTIONS-OF-GAINS] 0
[DISTRIBUTIONS-OTHER] 0
[NUMBER-OF-SHARES-SOLD] 2497352
[NUMBER-OF-SHARES-REDEEMED] 1444811
[SHARES-REINVESTED] 1170
[NET-CHANGE-IN-ASSETS] 10313624
[ACCUMULATED-NII-PRIOR] 0
[ACCUMULATED-GAINS-PRIOR] 0
[OVERDISTRIB-NII-PRIOR] 0
[OVERDIST-NET-GAINS-PRIOR] 0
[GROSS-ADVISORY-FEES] 32382
[INTEREST-EXPENSE] 0
[GROSS-EXPENSE] 147688
[AVERAGE-NET-ASSETS] 4974493
[PER-SHARE-NAV-BEGIN] 10.00
[PER-SHARE-NII] 0.01
[PER-SHARE-GAIN-APPREC] (0.16)
[PER-SHARE-DIVIDEND] 0.01
[PER-SHARE-DISTRIBUTIONS] 0
[RETURNS-OF-CAPITAL] 0
[PER-SHARE-NAV-END] 9.84
[EXPENSE-RATIO] 2
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] 0
</TABLE>
[ARTICLE] 6 EXHIBIT 17(b)
[CIK] 0000923705
[NAME] INVESCO SPECIALTY FUNDS, INC.
[SERIES]
[NUMBER] 2
[NAME] INVESCO WORLDWIDE COMMUNICATIONS FUND
<TABLE>
<S> <C>
[PERIOD-TYPE] YEAR
[FISCAL-YEAR-END] JUL-31-1995
[PERIOD-END] JUL-31-1995
[INVESTMENTS-AT-COST] 26907958
[INVESTMENTS-AT-VALUE] 28478205
[RECEIVABLES] 261630
[ASSETS-OTHER] 21773
[OTHER-ITEMS-ASSETS] 5905
[TOTAL-ASSETS] 28767513
[PAYABLE-FOR-SECURITIES] 124568
[SENIOR-LONG-TERM-DEBT] 0
[OTHER-ITEMS-LIABILITIES] 1388615
[TOTAL-LIABILITIES] 1513183
[SENIOR-EQUITY] 0
[PAID-IN-CAPITAL-COMMON] 23727232
[SHARES-COMMON-STOCK] 2215366
[SHARES-COMMON-PRIOR] 0
[ACCUMULATED-NII-CURRENT] 5200
[OVERDISTRIBUTION-NII] 0
[ACCUMULATED-NET-GAINS] 1951578
[OVERDISTRIBUTION-GAINS] 0
[ACCUM-APPREC-OR-DEPREC] 1570320
[NET-ASSETS] 27254330
[DIVIDEND-INCOME] 153500
[INTEREST-INCOME] 377753
[OTHER-INCOME] (6134)
[EXPENSES-NET] 303392
[NET-INVESTMENT-INCOME] 221727
[REALIZED-GAINS-CURRENT] 2030773
[APPREC-INCREASE-CURRENT] 1570320
[NET-CHANGE-FROM-OPS] 3601093
[EQUALIZATION] 0
[DISTRIBUTIONS-OF-INCOME] 216527
[DISTRIBUTIONS-OF-GAINS] 79195
[DISTRIBUTIONS-OTHER] 0
[NUMBER-OF-SHARES-SOLD] 4393249
[NUMBER-OF-SHARES-REDEEMED] 2203878
[SHARES-REINVESTED] 25995
[NET-CHANGE-IN-ASSETS] 27204330
[ACCUMULATED-NII-PRIOR] 0
[ACCUMULATED-GAINS-PRIOR] 0
[OVERDISTRIB-NII-PRIOR] 0
[OVERDIST-NET-GAINS-PRIOR] 0
[GROSS-ADVISORY-FEES] 101129
[INTEREST-EXPENSE] 0
[GROSS-EXPENSE] 303392
[AVERAGE-NET-ASSETS] 15471140
[PER-SHARE-NAV-BEGIN] 10.00
[PER-SHARE-NII] 0.11
[PER-SHARE-GAIN-APPREC] 2.35
[PER-SHARE-DIVIDEND] 0.11
[PER-SHARE-DISTRIBUTIONS] 0.05
[RETURNS-OF-CAPITAL] 0.00
[PER-SHARE-NAV-END] 12.30
[EXPENSE-RATIO] 2
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] 0
</TABLE>
[ARTICLE] 6 EXHIBIT 17(c)
[CIK] 0000923705
[NAME] INVESCO SPECIALTY FUNDS, INC.
[SERIES]
[NUMBER] 3
[NAME] INVESCO LATIN AMERICAN GROWTH FUND
<TABLE>
<S> <C>
[PERIOD-TYPE] YEAR
[FISCAL-YEAR-END] JUL-31-1995
[PERIOD-END] JUL-31-1995
[INVESTMENTS-AT-COST] 7530416
[INVESTMENTS-AT-VALUE] 7535492
[RECEIVABLES] 43084
[ASSETS-OTHER] 25828
[OTHER-ITEMS-ASSETS] 71625
[TOTAL-ASSETS] 7676029
[PAYABLE-FOR-SECURITIES] 212638
[SENIOR-LONG-TERM-DEBT] 0
[OTHER-ITEMS-LIABILITIES] 40825
[TOTAL-LIABILITIES] 253463
[SENIOR-EQUITY] 0
[PAID-IN-CAPITAL-COMMON] 7191927
[SHARES-COMMON-STOCK] 635049
[SHARES-COMMON-PRIOR] 0
[ACCUMULATED-NII-CURRENT] 1189
[OVERDISTRIBUTION-NII] 0
[ACCUMULATED-NET-GAINS] 224463
[OVERDISTRIBUTION-GAINS] 0
[ACCUM-APPREC-OR-DEPREC] 4987
[NET-ASSETS] 7422566
[DIVIDEND-INCOME] 37027
[INTEREST-INCOME] 14654
[OTHER-INCOME] (5058)
[EXPENSES-NET] 33415
[NET-INVESTMENT-INCOME] 13208
[REALIZED-GAINS-CURRENT] 224463
[APPREC-INCREASE-CURRENT] 4987
[NET-CHANGE-FROM-OPS] 229450
[EQUALIZATION] 0
[DISTRIBUTIONS-OF-INCOME] 12019
[DISTRIBUTIONS-OF-GAINS] 0
[DISTRIBUTIONS-OTHER] 0
[NUMBER-OF-SHARES-SOLD] 887351
[NUMBER-OF-SHARES-REDEEMED] 253326
[SHARES-REINVESTED] 1024
[NET-CHANGE-IN-ASSETS] 7422566
[ACCUMULATED-NII-PRIOR] 0
[ACCUMULATED-GAINS-PRIOR] 0
[OVERDISTRIB-NII-PRIOR] 0
[OVERDIST-NET-GAINS-PRIOR] 0
[GROSS-ADVISORY-FEES] 12530
[INTEREST-EXPENSE] 0
[GROSS-EXPENSE] 75085
[AVERAGE-NET-ASSETS] 4097723
[PER-SHARE-NAV-BEGIN] 10.00
[PER-SHARE-NII] 0.02
[PER-SHARE-GAIN-APPREC] 1.69
[PER-SHARE-DIVIDEND] 0.02
[PER-SHARE-DISTRIBUTIONS] 0.00
[RETURNS-OF-CAPITAL] 0.00
[PER-SHARE-NAV-END] 11.69
[EXPENSE-RATIO] 1
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] 0
</TABLE>
[ARTICLE] 6 EXHIBIT 17(d)
[CIK] 0000923705
[NAME] INVESCO SPECIALTY FUNDS, INC.
[SERIES]
[NUMBER] 4
[NAME] INVESCO EUROPEAN SMALL COMPANY FUND
<TABLE>
<S> <C>
[PERIOD-TYPE] YEAR
[FISCAL-YEAR-END] JUL-31-1995
[PERIOD-END] JUL-31-1995
[INVESTMENTS-AT-COST] 4226434
[INVESTMENTS-AT-VALUE] 4487348
[RECEIVABLES] 124260
[ASSETS-OTHER] 23714
[OTHER-ITEMS-ASSETS] 70121
[TOTAL-ASSETS] 4705443
[PAYABLE-FOR-SECURITIES] 861192
[SENIOR-LONG-TERM-DEBT] 0
[OTHER-ITEMS-LIABILITIES] 43266
[TOTAL-LIABILITIES] 904458
[SENIOR-EQUITY] 0
[PAID-IN-CAPITAL-COMMON] 3538120
[SHARES-COMMON-STOCK] 328778
[SHARES-COMMON-PRIOR] 0
[ACCUMULATED-NII-CURRENT] 983
[OVERDISTRIBUTION-NII] 0
[ACCUMULATED-NET-GAINS] 899
[OVERDISTRIBUTION-GAINS] 0
[ACCUM-APPREC-OR-DEPREC] 260983
[NET-ASSETS] 3800985
[DIVIDEND-INCOME] 19860
[INTEREST-INCOME] 7117
[OTHER-INCOME] (2747)
[EXPENSES-NET] 11091
[NET-INVESTMENT-INCOME] 13139
[REALIZED-GAINS-CURRENT] 899
[APPREC-INCREASE-CURRENT] 260983
[NET-CHANGE-FROM-OPS] 261882
[EQUALIZATION] 0
[DISTRIBUTIONS-OF-INCOME] 12156
[DISTRIBUTIONS-OF-GAINS] 0
[DISTRIBUTIONS-OTHER] 0
[NUMBER-OF-SHARES-SOLD] 499857
[NUMBER-OF-SHARES-REDEEMED] 172126
[SHARES-REINVESTED] 1047
[NET-CHANGE-IN-ASSETS] 3800985
[ACCUMULATED-NII-PRIOR] 0
[ACCUMULATED-GAINS-PRIOR] 0
[OVERDISTRIB-NII-PRIOR] 0
[OVERDIST-NET-GAINS-PRIOR] 0
[GROSS-ADVISORY-FEES] 4159
[INTEREST-EXPENSE] 0
[GROSS-EXPENSE] 56402
[AVERAGE-NET-ASSETS] 1539524
[PER-SHARE-NAV-BEGIN] 10.00
[PER-SHARE-NII] 0.04
[PER-SHARE-GAIN-APPREC] 1.56
[PER-SHARE-DIVIDEND] 0.04
[PER-SHARE-DISTRIBUTIONS] 0.00
[RETURNS-OF-CAPITAL] 0.00
[PER-SHARE-NAV-END] 11.56
[EXPENSE-RATIO] 2
[AVG-DEBT-OUTSTANDING] 0
[AVG-DEBT-PER-SHARE] 0
</TABLE>
