File No. 33-79290
As filed on ^ November 22, 1996
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 X
Pre-Effective Amendment No.
Post-Effective Amendment No. ^ 10 X
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REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 X
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Amendment No. ^ 11 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)
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^ X on December 1, 1996, pursuant to paragraph (b)
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60 days after filing pursuant to paragraph (a)(i)
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on _____________ pursuant to paragraph (a)(i)
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75 days after filing pursuant to paragraph (a)(ii)
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on _____________ pursuant to paragraph (a)(ii) of rule 485.
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If appropriate, check the following box:
this post-effective amendment designates a new effective date for a
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previously filed post-effective amendment.
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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, 1996, ^ was filed on or about September ^ 18,
1996.
Page 1 of 328
Exhibit index is located at page 203
<PAGE>
NOTE
This Post-Effective Amendment (Form N-1A) is being filed to ^ update the
Prospectuses for five series of INVESCO Specialty Funds, Inc.: INVESCO Worldwide
Capital Goods Fund and INVESCO Worldwide Communications Fund which were declared
effective on August 1, 1994; INVESCO European Small Company Fund and INVESCO
Latin American Growth Fund, which were declared effective on February 15, 1995;
and INVESCO Asian Growth Fund which was declared effective September 11, 1995
and does not affect the new series, INVESCO ^ Realty Fund, which was filed with
Post-Effective Amendment ^ No. 9 on October 11, 1996 and is expected to become
effective December 26, 1996.
<PAGE>
INVESCO SPECIALTY FUNDS, INC.
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CROSS-REFERENCE SHEET
Form N-1A
Item Caption
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Part A Prospectus
1....................... Cover Page
2....................... Annual Fund Expenses^
3....................... Financial Highlights; Performance
Data^
4....................... Investment ^ Objective 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
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<PAGE>
Form N-1A
Item Caption
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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; Unaudited
Financial Statements for INVESCO
Asian Growth Fund
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.
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<PAGE>
PROSPECTUS
^ December 1, 1996
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 ^ five 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 ^, INVESCO Latin American Growth Fund and INVESCO Asian Growth
Fund. Investors may purchase shares of any or all of the Funds.
Additional funds may be offered in the future.
<PAGE>
TABLE OF CONTENTS
Page
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ANNUAL FUND EXPENSES 8
FINANCIAL HIGHLIGHTS 10
PERFORMANCE DATA 12
INVESTMENT OBJECTIVES AND POLICIES 12
RISK FACTORS 19
THE FUNDS AND THEIR MANAGEMENT 22
HOW SHARES CAN BE PURCHASED 24
SERVICES PROVIDED BY THE FUNDS 27
HOW TO REDEEM SHARES 31
TAXES, DIVIDENDS AND CAPITAL GAIN DISTRIBUTIONS 32
ADDITIONAL INFORMATION 34
<PAGE>
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; by calling 1-800-525-8085; or on the World Wide Web:
http://www.invesco.com
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 DECEMBER 1, 1996, IS HEREBY
INCORPORATED BY REFERENCE INTO THIS PROSPECTUS.
<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
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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 ^1.21%(1)(2) 0.76%(1)
Transfer Agency ^ Fee(3) 0.44%(1)(2) 0.39%(1)
General Services,
Administrative ^0.77%(1)(2) 0.37%(1)
Services, Registration,
^ Postage(4)
Total Fund Operating
Expenses ^2.11%(1)(2) 1.66%(1)
^(1) It should be noted that the Fund's actual total operating expenses
were lower than the figures shown because the Fund's custodian fees and pricing
expenses were reduced under an expense offset arrangement. However, as a result
of an SEC requirement for mutual funds to state their total operating expenses
without crediting any such expense offset arrangement, the figures shown above
DO NOT reflect these reductions. In comparing expenses for different years,
please note that the ratios of Expenses to Average Net Assets shown under
"Financial Highlights" DO reflect reductions for periods prior to the fiscal
year ended July 31, ^ 1996. See "The Funds and Their Management."
^(2) Certain Fund expenses are being voluntarily absorbed by INVESCO Funds
Group, Inc. ("INVESCO"). In the absence of such absorbed expenses, the Capital
Goods Fund's "Other Expenses" and "Total Fund Operating Expenses" in the above
table would have been 1.59% and 2.49%, 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, 1996.
<PAGE>
(3) Consists of the transfer agency fee described under
"Additional Information - Transfer and Dividend Disbursing Agent."
^(4) Includes, but is not limited to, fees and expenses of directors,
custodian bank, legal counsel and ^ independent accountants, securities pricing
services, costs of administrative services furnished under an Administrative
Services Agreement, costs of registration of Fund shares under applicable laws,
and costs of printing and distributing reports to shareholders.
Example
A shareholder would pay the following expenses on a $1,000 investment for
the periods shown, assuming (1) a 5% annual return and (2) redemption at the end
of each time period:
1 Year 3 Years 5 Years 10 Years
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Capital Goods Fund ^ $22 $67 $114 $246
Communications Fund ^ $17 $53 $ 91 $197
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, ^ 1996
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 Funds' ^ 1996 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.
<TABLE>
<CAPTION>
Worldwide ^ Capital Goods Worldwide Communications
Fund Fund
^ Year Ended July 31 Year Ended July 31
^ 1996 1995 1996 1995
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<S> <C> <C> <C> <C>
PER SHARE DATA
Net Asset Value ^- Beginning of Period ^ $9.84 $10.00 $12.30 $10.00
------------------------------- -------------------------------
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income 0.01 0.01 0.22 0.11
Net Gains or (Losses) on Securities
(Both Realized and Unrealized) ^ 0.01 (0.16) 1.38 2.35
------------------------------- -------------------------------
Total from Investment Operations 0.02 (0.15) 1.60 2.46
LESS DISTRIBUTIONS
Dividends from Net Investment Income 0.00 0.01 0.22 0.11
Distributions from Capital Gains ^ 0.25 0.00 1.25 0.05
------------------------------- -------------------------------
Total Distributions ^ 0.25 0.01 1.47 0.16
^------------------------------- -------------------------------
^ Net Asset Value - End of Period $9.61 $9.84 $12.43 $12.30
=============================== ===============================
TOTAL RETURN 0.27% (1.49%) 13.67% 24.83%
<PAGE>
RATIOS
Net Assets ^- End of Period
($000 Omitted) $7,731 $10,364 $50,516 $27,254
Ratio of Expenses to Average
Net Assets# 2.11%@ 2.00% 1.66%@ 1.95%
Ratio of Net Investment Income to
Average Net Assets# 0.05% 0.25% 1.78% 1.43%
Portfolio Turnover Rate ^ 247% 193% 157% 215%
Average Commission Rate Paid^^ $0.0907 - $0.1285 -
</TABLE>
# Various expenses of the Worldwide Capital Goods Fund were voluntarily absorbed
by IFG and ITC for the ^ years ended July 31, 1996 and 1995. If such expenses
had not been voluntarily absorbed, ratio of expenses to average net assets would
have ^ been 2.49% and 2.96%, respectively, and ratio of net investment income to
average net assets would have been ^(0.33%) and (0.71%), respectively.
^@ Ratio is based on Total Expenses of the Fund, less Expenses Absorbed by
Investment Adviser, which is before any expense offset arrangements.
^^ The average commission rate paid is the total brokerage commissions paid on
applicable purchases and sales of securities for the period divided by the total
number of related shares purchased or sold, which was a new disclosure
requirement effective September 1, 1995.
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 ^
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. Periods of one year, five years, and ten years and/or
life of the Fund are used if available. 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
<PAGE>
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.
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. 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
<PAGE>
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."
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
<PAGE>
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.
Certain restricted securities that are not registered for sale
to the general public, but that can be resold to institutional investors ("Rule
<PAGE>
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
<PAGE>
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).
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. 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
<PAGE>
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
<PAGE>
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.
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.
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.
<PAGE>
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; (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
<PAGE>
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
On November 4, 1996 an Agreement and Plan of Merger among INVESCO plc,
INVESCO Group Services, Inc. ("Services") and AIM Management Group, Inc. ("AIM")
was signed under which AIM will be merged with Services. When this merger takes
effect, which is expected to occur in the first part of 1997, the Funds'
Investment Advisory, Sub-Advisory, Distribution, Administrative Services,
Transfer Agency, and Rule 12b-1 Agreements (the "Agreements") will automatically
terminate. Consummation of this merger is conditioned, among other things, on
new Agreements, essentially identical to the existing Agreements, including the
provisions governing fees, being presented, and approved by, the Company's Board
of Directors, and, where necessary, the Funds' shareholders prior to this merger
taking effect. The meeting of the Funds' shareholders to consider approving the
necessary new Agreements is expected to occur in early 1997. Fund Management
anticipates that the key personnel responsible for providing services to the
Funds will remain unchanged.
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. Under this agreement, 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, ^ 1996, managed 14 mutual funds,
consisting of ^ 39 separate portfolios, with combined assets of approximately ^
$12.2 billion on behalf of over ^ 821,000 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 ^ 46 investment
portfolios as of July 31, ^ 1996, including 27 portfolios in the INVESCO group.
These ^ 46 portfolios had aggregate assets of approximately ^ $11.4 billion as
of July 31, ^ 1996. 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
<PAGE>
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.
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
^ Jeffrey G. Morris Portfolio manager of the Fund since ^
1996, portfolio manager of INVESCO ^
Trust Company. Mr. Morris also manages
the INVESCO Strategic Portfolios, Inc. -
Environmental Services and Utilities
Portfolios and the INVESCO VIF -
Utilities Portfolio^. Mr. Morris joined
INVESCO in 1991 and served as a research
analyst (1994-1995). He earned a B.S.
from Colorado State University. He is a
Chartered Financial Analyst.
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.
<PAGE>
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, 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 (prior to any expense offset) and the Communications Fund for the
fiscal year ended July 31, ^ 1996, including investment ^ management fees (but
excluding brokerage commissions, which are included as a cost of acquiring
securities), amounted to ^ 2.11% and ^ 1.66%, respectively, of ^ each Fund's
average net assets. Certain expenses for each Fund are ^ voluntarily absorbed by
INVESCO and INVESCO Trust Company ^ pursuant to a commitment to the Funds in
order to ensure that each Fund's total operating expenses do not exceed 2.00%. ^
This commitment may be changed following consultation with the Company's board
of directors. In the absence of such voluntary expense limitation ^, the Capital
Goods Fund's total expenses for the fiscal year ended July 31, ^ 1996, would
have been ^ 2.49% 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 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.
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
<PAGE>
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 by the broker 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. INVESCO may from
time to time make payments from its revenues to securities dealers and other
financial institutions that provide distribution-related and/or administrative
services for the Funds.
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
^(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 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
<PAGE>
shareholder account applications, preparing and transmitting to the Fund's
Transfer Agent computer processable tapes of all transactions by customers, and
serving as the primary source of information to customers in answering questions
concerning the Fund and their transactions with the Fund.
In addition, other 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
<PAGE>
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.
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
<PAGE>
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 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
<PAGE>
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 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,
<PAGE>
INVESCO Funds Group, Inc., Post Office Box 173706, Denver, Colorado
80217-3706.
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
<PAGE>
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 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
<PAGE>
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.
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
<PAGE>
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 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
<PAGE>
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.
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 ^ $20.00 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 or record-keeping
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 ^ or record-keeping fee out of the
transfer agency fee which is paid to INVESCO by the Fund.
<PAGE>
INVESCO SPECIALTY FUNDS, INC.
Two no-load mutual funds
investing globally in
designated market sectors.
PROSPECTUS
^ December 1, 1996
To receive general information and prospectuses on any of INVESCO's funds or
retirement plans, or to obtain current account or price information or responses
to other questions, call toll-free:
1-800-525-8085
To reach PAL, your 24-hour Personal Account Line, call:
1-800-424-8085
You can find us on the World Wide Web:
http://www.invesco.com
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
^ December 1, 1996
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 50 and "Portfolio Turnover" on page 49. 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 ^ five 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, ^ INVESCO Latin
American Growth Fund and INVESCO Asian 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; ^ by calling 1-800- 525-8085; or
on the World Wide Web: http://www.invesco.com.
<PAGE>
TABLE OF CONTENTS
Page
----
ANNUAL FUND EXPENSES ^ 40
FINANCIAL HIGHLIGHTS ^ 42
PERFORMANCE DATA ^ 44
INVESTMENT OBJECTIVE AND POLICIES ^ 44
RISK FACTORS ^ 50
THE FUND AND ITS MANAGEMENT ^ 52
HOW SHARES CAN BE PURCHASED ^ 55
SERVICES PROVIDED BY THE FUND ^ 58
HOW TO REDEEM SHARES ^ 61
TAXES, DIVIDENDS AND CAPITAL GAIN DISTRIBUTIONS ^ 63
ADDITIONAL INFORMATION ^ 64
<PAGE>
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE. SHARES OF THE FUND ARE NOT DEPOSITS OR OBLIGATIONS OF, OR
GUARANTEED OR ENDORSED BY, ANY BANK OR OTHER FINANCIAL INSTITUTION. THE SHARES
OF THE FUND ARE NOT FEDERALLY INSURED BY THE FEDERAL DEPOSIT INSURANCE
CORPORATION, THE FEDERAL RESERVE BOARD OR ANY OTHER AGENCY.
THE STATEMENT OF ADDITIONAL INFORMATION, DATED ^ DECEMBER 1, 1996 , IS HEREBY
INCORPORATED BY REFERENCE INTO THIS PROSPECTUS.
<PAGE>
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)(2) 0.68% ^
Transfer Agency Fee^(3) 0.18%
General Services, Administrative ^ 0.50%
Services, Registration, Postage^(4)
Total Fund Operating Expenses ^ 1.68%
(after voluntary expense limitation)(1)(2)^
^(1) It should be noted that the Fund's actual total operating expenses
were lower than the figures shown because the Fund's custodian fees and pricing
expenses were reduced under an expense offset arrangement. However, as a result
of an SEC requirement for mutual funds to state their total operating expenses
without crediting any such expense offset arrangement, the figures shown above
DO NOT reflect these reductions. In comparing expenses for different years,
please note that the ratios of Expenses to Average Net Assets shown under
"Financial Highlights" DO reflect reductions for periods prior to the fiscal
year ended July 31, 1996. See "The Fund and Its Management."
(2) Ratio is based on Total Expenses of the Funds, which is before any
expense offset arrangements.
(3) Consists of the transfer agency fee described under
"Additional Information - Transfer and Dividend Disbursing Agent."
^(4) Includes, but is not limited to, fees and expenses of directors,
custodian bank, legal counsel and ^ independent accountants, 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.
<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
------ ------- ------- --------
^ $17 $53 $92 $200
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.
<PAGE>
INVESCO Specialty Funds, Inc.
FINANCIAL HIGHLIGHTS
(For a Fund Share Outstanding ^ Throughout Each Period)
Period Ended July 31, ^ 1996
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 ^ 1996 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.
Year Period
Ended Ended
July 31^ July 31
----------- -----------
1996 1995
European ^ Small Company ^ Fund^
PER SHARE DATA
Net Asset Value ^- Beginning of Period $11.56 $10.00
----------- -----------
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income 0.07 0.04
Net Gains on Securities
(Both Realized and Unrealized) 3.52 1.56
----------- -----------
Total from Investment Operations 3.59 1.60
----------- -----------
LESS DISTRIBUTIONS
Dividends from Net Investment Income ^ 0.07 0.04
^ Distributions from Capital Gains 0.00 0.00
^----------- -----------
Total Distributions 0.07 0.04
----------- -----------
Net Asset Value - End of Period $15.08 $11.56
=========== ===========
TOTAL RETURN 31.07% 15.98%*
<PAGE>
RATIOS
Net Assets ^- End of Period
($000 Omitted) $94,261 $3,801
Ratio of Expenses to Average
Net Assets# 1.68%@ 2.00%~
Ratio of Net Investment Income to
Average^ Net Assets# 1.23% 2.37%~
Portfolio Turnover Rate ^ 141% 0%*
^ Average Commission Rate Paid^^ $0.0125 -
^* 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 ^ IFG, and IAML 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).
@ Ratio is based on Total Expenses of the Fund, less Expenses Absorbed by
Investment Adviser, if applicable, which is before any expense offset
arrangements.
~ Annualized
^^ The average commission rate paid is the total brokerage commissions paid on
applicable purchases and sales of securities for the period divided by the total
number of related shares purchased or sold which was a new disclosure
requirement effective September 1, 1995.^
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 ^
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 if available. 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
<PAGE>
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 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
<PAGE>
Fund invests, 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.
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
<PAGE>
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.
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
<PAGE>
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.^ 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. 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
<PAGE>
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 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,
<PAGE>
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."
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.
<PAGE>
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 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
<PAGE>
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.
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
On November 4, 1996 an Agreement and Plan of Merger among INVESCO plc,
INVESCO Group Services, Inc. ("Services") and AIM Management Group, Inc. ("AIM")
was signed under which AIM will be merged with Services. When this merger takes
effect, which is expected to occur in the first part of 1997, the Fund's
Investment Advisory, Sub-Advisory, Distribution, Administrative Services,
Transfer Agency, and Rule 12b-1 Agreements (the "Agreements") will automatically
terminate. Consummation of this merger is conditioned, among other things, on
new Agreements, essentially identical to the existing Agreements, including the
provisions governing fees, being presented to, and approved by, the Company's
Board of Directors, and, where necessary, the Fund's shareholders prior to this
merger taking effect. The meeting of the Fund's shareholders to consider
approving the necessary new Agreements is expected to occur in early 1997. Fund
Management anticipates that the key personnel responsible for providing services
to the Fund will remain unchanged.
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.
<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. Under this agreement, 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, ^ 1996, managed 14 mutual
funds, consisting of ^ 39 separate portfolios, with combined assets of
approximately ^ $12.2 billion on behalf of over ^ 821,000 shareholders.
Pursuant to an agreement with INVESCO, ^ INVESCO Asset Management Limited
^("IAML") serves as the sub-adviser to the Fund. ^ IAML also is an indirect
wholly-owned subsidiary of INVESCO PLC. ^ IAML also acts as sub-adviser to the
INVESCO European Fund, the INVESCO Pacific Basin Fund and the INVESCO Latin
American Growth Fund. ^ IAML, 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. ^
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 ^ IAML,
sub-adviser to the Fund.
<PAGE>
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. ^
Out of its advisory fee which it receives from the Fund, INVESCO pays ^
IAML, 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 IAML.
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."
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, ^ 1996, including investment ^ management
fees (but excluding brokerage commissions, which are included as a cost of
acquiring securities), amounted to ^ 1.68% of the Fund's average net assets.
Certain expenses for the Fund are ^ voluntarily absorbed by INVESCO and ^ IAML
pursuant to a commitment to the Fund in order to ensure that the Fund's total
operating expenses do not exceed 2.00%. ^ This commitment may be changed
following consultation with the Company's board of directors.
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
<PAGE>
believes is not detrimental to the Funds or Fund Management's other
advisory clients. See the Statement of Additional Information for more detailed
information.
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
<PAGE>
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.
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 by the broker for the handling of the
transaction if the broker so elects. Any investor may deal directly with the
Fund in any transaction. In that event, there is no such charge. INVESCO may
from time to time make payments from its revenues to securities dealers and
other financial institutions that provide distribution-related and/or
administrative services for the Fund.
The Fund reserves the right in its sole discretion to reject any order for
purchase of its shares (including purchases by exchange) when, in the judgment
of 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.
<PAGE>
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.
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.
<PAGE>
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.
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
<PAGE>
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. 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.
<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. Retirement plans (other
than IRAs) receive monthly statements reflecting all transactions in their Fund
<PAGE>
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.
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
<PAGE>
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 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.
<PAGE>
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.
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.
<PAGE>
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.
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
<PAGE>
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 ^ $20.00 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 or record-keeping
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 ^ or record-keeping fee 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
^ December 1, 1996
To receive general information and prospectuses on any of INVESCO's funds or
retirement plans, or to obtain current account or price information or responses
to other questions, call toll-free:
1-800-525-8085
To reach PAL, your 24-hour Personal Account Line, call:
1-800-424-8085
You can find us on the World Wide Web:
http://www.invesco.com
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
^ December 1, 1996
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 ^ 80 and "Portfolio Turnover" on page ^ 79.
The Fund is a series of INVESCO Specialty Funds, Inc. (the "Company"), a
diversified, managed, no-load mutual fund consisting of ^ five 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, ^ INVESCO European
Small Company Fund and INVESCO Asian 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; ^ by calling 1-800- 525-8085; or
on the World Wide Web: http://www.invesco.com.
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."
------------
<PAGE>
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE. SHARES OF THE FUND ARE NOT DEPOSITS OR OBLIGATIONS OF, OR
GUARANTEED OR ENDORSED BY, ANY BANK OR OTHER FINANCIAL INSTITUTION. THE SHARES
OF THE FUND ARE NOT FEDERALLY INSURED BY THE FEDERAL DEPOSIT INSURANCE
CORPORATION, THE FEDERAL RESERVE BOARD OR ANY OTHER AGENCY.
THE STATEMENT OF ADDITIONAL INFORMATION, DATED ^ DECEMBER 1, 1996 , IS HEREBY
INCORPORATED BY REFERENCE INTO THIS PROSPECTUS.
<PAGE>
TABLE OF CONTENTS Page
----
ANNUAL FUND EXPENSES 70
FINANCIAL HIGHLIGHTS 72
PERFORMANCE DATA 74
INVESTMENT OBJECTIVE AND POLICIES 74
RISK FACTORS 80
THE FUND AND ITS MANAGEMENT 88
HOW SHARES CAN BE PURCHASED 90
SERVICES PROVIDED BY THE FUND 93
HOW TO REDEEM SHARES 97
TAXES, DIVIDENDS AND CAPITAL GAIN DISTRIBUTIONS 99
ADDITIONAL INFORMATION 100
<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 3 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%
12b-1 Fees 0.25%
Other Expenses(1)(2) 1.14% ^
Transfer Agency ^ Fee(3) 0.27%
General Services, Administrative ^0.87%
Services, Registration, Postage ^(4)
Total Fund Operating Expenses(1)(2) 2.14% ^
*There is a 1% 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 3 months.
(1) ^ It should be noted that the Fund's actual total operating expenses
were lower than the figures shown because the Fund's custodian fees and pricing
expenses were reduced under an expense offset arrangement. However, as a result
of an SEC requirement for mutual funds to state their total operating expenses
without crediting any such expense offset arrangement, the figures shown above
DO NOT reflect these restrictions. In comparing expenses for different years,
please note that the ratios of Expenses to Average Net Assets shown under
"Financial Highlights" DO reflect reductions for periods prior to the fiscal
year ended July 31, 1996. See "The Fund and Its Management."
^(2) Ratio is based on Total Expenses of the Fund, which is before any
expense offset arrangement.
(3) Consists of the transfer agency fee described under
"Additional Information-Transfer and Dividend Disbursing Agent."
^(4) 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.
<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
------ ------- ------- --------
^ $22 $68 $116 $249
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, ^ 1996
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 ^ 1996 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.
Year Ended Period Ended
July 31^ July 31
------------- ------------
1996 1995
PER SHARE DATA
Net Asset Value ^- Beginning of Period $11.69 $10.00
------------- ------------
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income 0.08 0.02
Net Gains on Securities
(Both Realized and Unrealized) ^ 1.62 1.69
------------- ------------
Total from Investment Operations ^ 1.70 1.71
------------- ------------
LESS DISTRIBUTIONS
Dividends from Net Investment Income ^ 0.09 0.02
^ Distributions from Capital Gains 0.44 0.00
^------------- ------------
Total Distributions 0.53 0.02
------------- ------------
Net Asset Value - End of Period $12.86 $11.69
============= ============
TOTAL RETURN+ 15.27% 17.09%*
RATIOS
Net Assets ^- End of Period
($000 Omitted) $32,064 $7,423
Ratio of Expenses to Average
Net Assets# 2.14%@ 2.00%~
Ratio of Net Investment Income to
Average^ Net Assets# 1.26% 0.79%~
Portfolio Turnover Rate ^ 29% 30%*
^ Average Commission Rate Paid^^ $0.0001 -
<PAGE>
^+ Total return for the Latin American Growth Fund does not reflect the effect
of the applicable redemption fees.
* Based on operations for the period shown and, accordingly, are
not representative of a full year. ^
# Various expenses of the Latin American Growth Fund were voluntarily absorbed
by ^ IFG and MIL 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).
@ Ratio is based on Total Expenses of the Fund, less Expenses Absorbed by
Investment Adviser, if applicable, which is before any expense offset
arrangements.
~ Annualized
^^ The average commission rate paid is the total brokerage commissions paid on
applicable purchases and sales of securities for the period divided by the total
number of related shares purchased or sold which was a new disclosure
requirement effective September 1, 1995.^
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 ^
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 if available. 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 1% 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 3 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.
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
<PAGE>
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 three months.
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 which
the Fund invests, the Fund's investment adviser and sub-adviser (collectively,
"Fund Management") attempt 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.
<PAGE>
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, 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.
<PAGE>
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.
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.
<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.
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.
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,
<PAGE>
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.
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
<PAGE>
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."
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
<PAGE>
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. 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
<PAGE>
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.
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
<PAGE>
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.
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
<PAGE>
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.
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
<PAGE>
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 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
<PAGE>
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 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 its sovereign debt are also likely to be heavily
<PAGE>
affected by the country's balance of trade and its access to trade and
other international credits. If a country's exports are concentrated in a few
commodities, such country would be more significantly exposed to a decline in
the international prices of one or more of such commodities. A rise in
protectionism on the part of its trading partners, or unwillingness by such
partners to make payment for goods in hard currency, could also adversely affect
the country's ability to export its products and repay its debts. Sovereign
debtors may also be dependent on expected receipts from such agencies and others
abroad to reduce principal and interest arrearages on their debt. However,
failure by the sovereign debtor or other entity to implement economic reforms
negotiated with multilateral agencies or others, to achieve specified levels of
economic performance, or to make other debt payments when due, may cause third
parties to terminate their commitments to provide funds to the sovereign debtor,
which may further impair such debtor's willingness or ability to service its
debts. 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."
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
<PAGE>
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
On November 4, 1996 an Agreement and Plan of Merger among INVESCO plc,
INVESCO Group Services, Inc. ("Services") and AIM Management Group, Inc. ("AIM")
was signed under which AIM will be merged with Services. When this merger takes
effect, which is expected to occur in the first part of 1997, the Fund's
Investment Advisory, Sub-Advisory, Distribution, Administrative Services,
Transfer Agency, and Rule 12b-1 Agreements (the "Agreements") will automatically
terminate. Consummation of this merger is conditioned, among other things, on
new Agreements, essentially identical to the existing Agreements, including the
provisions governing fees, being presented to, and approved by, the Company's
Board of Directors, and, where necessary, the Fund's shareholders prior to this
merger taking effect. The meeting of the Fund's shareholders to consider
approving the necessary new Agreements is expected to occur in early 1997. Fund
Management anticipates that the key personnel responsible for providing services
to the Fund will remain unchanged.
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. Under this agreement, 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, ^ 1996, managed 14 mutual funds,
consisting of ^ 39 separate portfolios, with combined assets of approximately ^
$12.2 billion on behalf of over ^ 821,000 shareholders.
Pursuant to an agreement with INVESCO, ^ INVESCO Asset Management Limited
^("IAML") serves as the sub-adviser to the Fund. ^ IAML also is an indirect
wholly-owned subsidiary of INVESCO PLC. ^ IAML also acts as sub-adviser to the
INVESCO European Fund, the INVESCO Pacific Basin Fund and to INVESCO European
Small Company Fund. ^ IAML, 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 individuals serve as co-portfolio managers for the Fund and
are primarily responsible for determining, in consultation with the senior
investment policy group of IAML, 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:
Peter Jones Co-portfolio manager of the fund since 1996; fund manager
with INVESCO Asset Management Limited since 1993
specializing in Latin American equities; Mr. Jarvis earned
a B.A. from St. John's College, Oxford Unversity.
Jane Lyon Co-portfolio manager of the Fund since 1996; fund manager
with INVESCO Asset Management Limited specializing in Latin
American equities; began investment career in 1986. Ms.
Lyon earned a B.A. from Oxford University.
Mr. Jarvis and Ms. Lyon head 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 ^ IAML's investment
policy group.
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 ^
IAML, 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 ^ IAML.
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, ^ 1996, including investment ^ management
fees (but excluding brokerage commissions, which are a cost of acquiring
securities), amounted to ^ 2.14% 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.
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,
<PAGE>
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.
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 by the broker for the handling of the
transaction if the broker so elects. Any investor may deal directly with the
Fund in any transaction. In that event, there is no such charge. INVESCO may
from time to time make payments from its revenues to securities dealers and
other financial institutions that provide distribution-related and/or
administrative services for the Fund.
<PAGE>
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.
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.
<PAGE>
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.
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
<PAGE>
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 three months (other than shares
acquired through reinvestment of dividends or other distributions), a fee of 1%
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
also advised and distributed by INVESCO. The Fund will use the "first-in,
first-out" method to determine the three 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 three
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
<PAGE>
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.
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
<PAGE>
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. 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,
<PAGE>
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 three months (other
than shares acquired through reinvestment of dividends or other distributions),
a fee of 1% 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 three 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 three
months, the redemption/exchange fee will be assessed on the current net asset
value of the shares being redeemed.
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
<PAGE>
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.
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
<PAGE>
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.
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.
<PAGE>
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.
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
<PAGE>
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 ^ $20.00 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 or record-keeping
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 ^ or record-keeping fee 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
^ December 1, 1996
To receive general information and prospectuses on any of INVESCO's funds or
retirement plans, or to obtain current account or price information or responses
to other questions, call toll-free:
1-800-525-8085
To reach PAL, your 24-hour Personal Account Line, call:
1-800-424-8085
You can find us on the World Wide Web:
http://www.invesco.com
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
^ December 1, 1996
INVESCO ASIAN GROWTH FUND
INVESCO Asian Growth Fund (the "Fund") seeks to achieve capital
appreciation by investing, under normal circumstances, at least 65% of its total
assets in equity securities of companies domiciled or with primary operations in
Asia, excluding Japan. For purposes of this prospectus, Asia will include, but
not necessarily be limited to: China, Hong Kong, India, Indonesia, Malaysia,
Philippines, Singapore, South Korea, Taiwan and Thailand, as well as Pakistan
and Indochina as their markets become more accessible ("Asian Issuers.") 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 118 and "Portfolio Turnover" on page 116.
The Fund is a series of INVESCO Specialty Funds, Inc. (the "Company"), a
diversified, open-end, managed, no-load mutual fund consisting of five 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, 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 Fund. You should read it and keep it for future
reference. A Statement of Additional Information containing further information
about the Fund, dated ^ December 1, 1996, as supplemented, has been filed with
the Securities and Exchange Commission and is incorporated by reference into
this prospectus. ^ You may obtain a ^ copy^ without charge by ^ writing ^
INVESCO Funds Group, Inc., ^ Post Office Box 173706, Denver, Colorado
80217-3706; ^ by ^ calling 1-800-525-8085; or on the World Wide Web:
http://www.invesco.com.
-----------
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.
<PAGE>
TABLE OF CONTENTS Page
----
ANNUAL FUND EXPENSES 105
FINANCIAL HIGHLIGHTS 107
PERFORMANCE DATA 109
INVESTMENT OBJECTIVE AND POLICIES 109
RISK FACTORS 114
THE FUND AND ITS MANAGEMENT 119
HOW SHARES CAN BE PURCHASED 121
SERVICES PROVIDED BY THE FUND 124
HOW TO REDEEM SHARES 127
TAXES, DIVIDENDS AND CAPITAL GAIN DISTRIBUTIONS 130
ADDITIONAL INFORMATION 131
<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 90 days.
(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 1.00%*
Exchange fees 1.00%*
Annual Fund Operating Expenses
(as a percentage of average net assets)
Management Fee 0.75%
12b-1 Fees 0.25%
Other Expenses(1)(2) 1.19%~^
Transfer Agency ^ Fee(3) 0.48%
General Services, Administrative ^ 0.71%
Services, Registration, Postage^(4)
Total Fund Operating Expenses ^ 2.19%~
(after voluntary expense limitation)(1)(2)
*There is a 1% 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 ^ three
months.
^(1) It should be noted that the Fund's actual total operating expenses
were lower than the figures shown because the Fund's custodian fees and pricing
expenses were reduced under an expense offset arrangement. However, as a result
of an SEC requirement, the figures shown above DO NOT reflect these reductions.
In comparing expenses for different years, please note that the ratios of
Expenses to Average Net Assets shown under "Financial Highlights" DO reflect
reductions for periods prior to the fiscal year ended July 31, 1996. See "The
Fund and Its Management."
(2) Certain Fund expenses are voluntarily absorbed by INVESCO
Funds Group, Inc. ^("INVESCO"). In the absence of such absorbed
expenses, the Fund's "Other Expenses" and "Total Fund Operating
Expenses" ^ in the above table would have been 1.79% (annualized)
and 2.79% (annualized), of the Fund's average net assets^ based on
the actual expenses of the Fund for the fiscal year ended July 31,
1996. See "The Fund and Its Management."
(3) Consists of the transfer agency fee described under
"Additional Information-Transfer and Dividend Disbursing Agent."
<PAGE>
^(4) Includes, but is not limited to, fees and expenses of directors,
custodian bank, legal counsel and ^ independent accountants, securities pricing
services, costs of administrative services 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
------ ------- ------- --------
$22 $69 $118 $254 ^
The purpose of the foregoing table 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)
Year Ended July 31, 1996
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 Funds' 1996 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
-----------
1996
PER SHARE DATA
Net Asset Value - Beginning of Period $10.00
-----------
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income 0.02
Net Losses on Securities
(Both Realized and Unrealized) (1.05)
-----------
Total from Investment Operations (1.03)
-----------
LESS DISTRIBUTIONS
Dividends from Net Investment Income 0.02
Distributions from Capital Gains 0.00
-----------
Total Distributions 0.02
-----------
Net Asset Value - End of Period $8.95
===========
TOTAL RETURN+ (10.31%)*
RATIOS
Net Assets - End of Period
($000 Omitted) $14,315
Ratio of Expenses to Average Net Assets# 2.19%@~
Ratio of Net Investment Income to
Average Net Assets# 0.94%~
Portfolio Turnover Rate 2%*
Average Commission Rate Paid^^ $0.0198*
^ From March 1, 1996, commencement of operations, to July 31, 1996.
+ Total return for the Asian Growth Fund does not reflect the effect of the
applicable redemption fees.
<PAGE>
* Based on operations for the period shown and, accordingly, are not
representative of a full year.
# Various expenses of the Asian Growth Fund were voluntarily absorbed by IFG and
INVESCO Asia for the period ended July 31, 1996. If such expenses had not been
voluntarily absorbed, ratio of expenses to average net assets would have been
2.79% (annualized) and ratio of net investment income to average net assets
would have been 0.34% (annualized).
@ Ratio is based on Total Expenses of the Fund, less Expenses Absorbed by
Investment Adviser, if applicable, which is before any expense offset
arrangements.
~ Annualized
^^ The average commission rate paid is the total brokerage commissions paid on
applicable purchases and sales of securities for the period divided by the total
number of related shares purchased or sold which was a new disclosure
requirement effective September 1, 1995.
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 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 capital gain
distributions, to the end of a specified period. Periods of one year, five
years, ten years and/or life of the Fund are ^ used if available. Thus, a report
of total return performance should not be considered as representative of future
performance. The Fund charges no sales loads ^ that would affect the total
return computation. However, the total return computation may be affected as a
result of the 1% 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 and exchanges had
less than three 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 "Pacific Region" Lipper mutual fund grouping, in addition to the
broad-based Lipper general fund grouping.
INVESTMENT OBJECTIVE AND POLICIES
INVESCO Asian 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, shares of other
investment companies, preferred stocks and securities convertible into common
stocks such as rights, warrants and convertible debt securities) of large and
small companies domiciled or with primary operations in Asia, excluding Japan.
The foregoing investment objective is fundamental and may not be changed without
the approval of the Fund's shareholders. For purposes of the Fund, Asia
territories will include, but not necessarily be limited to: China, Hong Kong,
<PAGE>
India, Indonesia, Malaysia, Philippines, Singapore, South Korea, Taiwan and
Thailand, as well as Pakistan and Indochina as their markets become more
accessible. The Fund defines securities of Asian Issuers as any issuer which, in
the opinion of the Fund's investment adviser or sub-adviser (collectively, "Fund
Management"), issues: (1) securities of companies organized under the laws of an
Asian territory, other than Japan; (2) securities of companies for which the
principal securities trading market is in Asian territories; (3) securities
issued or guaranteed by a government agency, instrumentality, political
subdivision, or central bank of an Asian territory; (4) securities of issuers,
wherever organized, with at least 50% of the issuer's assets, gross revenues, or
profit in any one of the two most current fiscal years derived from activities
or assets in Asian territories, other than Japan; or (5) securities of Asian
Issuers, as defined above, in the form of depository shares or receipts. 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. While
more than 25% of the Fund's total assets on occasion may be invested in
securities of Asian issuers domiciled in, or with primary operations in, a
single country, Fund Management does not normally intend to manage the Fund's
investments with the view of investing more than 25% of the Fund's total assets
in securities of Asian Issuers domiciled in, or with primary operations in, any
one particular country.
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 of securities that may
be deemed to be speculative.
The economies of Asian 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."
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 Fund Management 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."
Consistent with its investment objective, the balance of the Fund's assets
may be invested in debt securities (corporate bonds, commercial paper, debt
<PAGE>
securities issued by the U.S. government, its agencies and
instrumentalities, Asian Issuers or foreign governments and, to a lesser extent,
municipal bonds, asset-backed securities and zero coupon bonds). The Fund may
invest no more than 30% of its total assets in debt securities that are rated
below BBB by Standard & Poor's ("S&P") 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 the Fund ever invest in a debt security rated below
CCC by S&P or Caa by Moody's or, if unrated, is judged by Fund Management to be
equivalent in quality to debt securities having such ratings. 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. However, the Fund does not currently intend to
invest any portion of its assets in Japan. 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
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 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 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.
As a non-fundamental policy, 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, in order to hedge
its portfolio. 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.
Additional information on certain types of securities in which the Fund
may invest is set forth below:
<PAGE>
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 later or more). 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.
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, as a non-fundamental policy 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. ^ For more information concerning Rule 144A
Securities, see the Statement of Additional Information.
<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 by
Fund Management. A repurchase agreement, which may be considered a "loan" under
the Investment Company Act of 1940 (the "1940 Act"), 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 15% of its net 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.
Portfolio Turnover
The Fund has no fixed limitations regarding portfolio turnover. 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%. A portfolio turnover rate in excess of 100% may be considered
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 rate, along with the Fund's brokerage allocation policies,
are discussed further 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 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); investing more than 25% of the value of the Fund's total assets in
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), except the Fund 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. The Fund does not intend to invest more than
5% of its assets in reverse repurchase agreements. 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. The Fund's assets will be invested primarily
<PAGE>
in Asian Issuers. Investors should realize that investing in securities of
Asian 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.
Investment in the 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.
Political and Economic Risks
The Fund may make investments in developing countries which involve
exposure to economic structures that generally are less diverse and mature than
in the United States, and to political systems which may be less stable. A
developing country can be considered to be a country which 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.
Investing in securities of issuers in Asian countries involves certain
considerations not typically associated with investing in securities of United
States companies, including (1) restrictions on foreign investment and on
repatriation of capital invested in Asian countries, (2) currency fluctuations,
(3) the cost of converting foreign currency into United States dollars, (4)
potential price volatility and lesser liquidity of shares traded on Asian
country securities markets and (5) political and economic risks, including the
risk of nationalization or expropriation of assets and the risk of war.
Certain Asian countries are more vulnerable to the ebb and flow of
international trade, trade barriers and other protectionist or retaliatory
measures. Investments in countries that have recently opened their capital
market, including China, which appear to have relaxed their central planning
requirement and those that have privatized some of their state-owned industries
toward free markets, should be regarded as speculative.
Securities Markets
The settlement period of securities transactions in foreign markets may be
longer than in domestic markets. These considerations are generally 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 developed countries.
<PAGE>
Securities exchanges and broker-dealers in some Asian countries are
subject to less regulatory scrutiny than in the United States, as are Asian
Issuers 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.
Foreign Securities
Due to the absence of established securities markets in certain Asian
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 in certain countries 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 receipts, typically issued by a U.S. bank or trust company,
evidencing ownership of the underlying securities. ADRs are denominated in U.S.
dollars and trade in the U.S. markets. 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 United States 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
<PAGE>
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 1940 Act: 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.
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
fluctuation (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 may be reduced. By contrast, in a period when the
U.S. dollar generally declines, the returns on foreign securities generally may
be 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 income and/or gains from the Fund's foreign securities, which may reduce
dividend and/or interest 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 the Fund
experiencing difficulties in pursuing legal remedies and collecting judgments.
Debt Securities
The Fund's investments in debt securities generally are subject to both
credit risk and market risk. Credit risk relates to the ability of the issuer to
meet interest or principal payments, or both, as they come due. 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 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
<PAGE>
grades by Standard & Poor's or Moody's or, if unrated, securities
determined by Fund Management to be of equivalent quality. The Fund expects that
most foreign debt securities in which it would 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 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.
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.
<PAGE>
Securities Lending
The Fund may seek to earn additional income by lending securities to
qualified brokers, dealers, banks, or other financial institutions, on a fully
collateralized basis. For further information on this policy, see "Investment
Policies and Restrictions" in the Statement of Additional Information.
THE FUND AND ITS MANAGEMENT
On November 4, 1996 an Agreement and Plan of Merger among INVESCO plc,
INVESCO Group Services, Inc. ("Services") and AIM Management Group, Inc. ("AIM")
was signed under which AIM will be merged with Services. When this merger takes
effect, which is expected to occur in the first part of 1997, the Fund's
Investment Advisory, Sub-Advisory, Distribution, Administrative Services,
Transfer Agency, and Rule 12b-1 Agreements (the "Agreements") will automatically
terminate. Consummation of this merger is conditioned, among other things, on
new Agreements, essentially identical to the existing Agreements, including the
provisions governing fees, being presented to, and approved by, the Company's
Board of Directors, and, where necessary, the Fund's shareholders prior to this
merger taking effect. The meeting of the Fund's shareholders to consider
approving the necessary new Agreements is expected to occur in early 1997. Fund
Management anticipates that the key personnel responsible for providing services
to the Fund will remain unchanged.
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. Under this agreement, 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, ^ 1996, managed 14 mutual funds,
consisting of ^ 39 separate portfolios, with combined assets of approximately ^
$12.2 billion on behalf of approximately ^ 821,000 shareholders.
Pursuant to an agreement with INVESCO, INVESCO Asia Limited ("INVESCO
Asia") serves as the sub-adviser to the Fund. In that capacity, INVESCO Asia has
the primary responsibility, under the supervision of INVESCO, for providing
portfolio management services to the Fund. INVESCO Asia is an indirect
wholly-owned subsidiary of INVESCO PLC. INVESCO Asia, 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
Fund.
<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:
William Barron Portfolio manager of the Fund since 1996
(inception); Director and portfolio
manager for INVESCO Asia Limited since
1995; formerly (1990-1995), portfolio
manager, Aetna Investment Management Hong Kong
Limited and (1985-1990) portfolio manager for
Chase Manhattan Trust; began investment career in
1986; BA in Government from Harvard University.
He is a Chartered Financial Analyst.
Mr. Barron heads a team of individual country specialists who are
responsible for managing security selections for their assigned country's share
of the allocation within the parameters established by INVESCO Asia's investment
policy group.
The Fund pays INVESCO a monthly advisory fee which is based upon a
percentage of the 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 on 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 Asian
Growth Fund. ^ Out of its advisory fee which it receives from the Fund, INVESCO
pays INVESCO Asia, 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 INVESCO Asia.
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."
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 year ended July 31, 1996, including investment management fees
<PAGE>
(but excluding brokerage commissions, which are included as a cost of
acquiring securities), amounted to 2.19% (annualized) of the Fund's average net
assets. Certain expenses of the Fund are voluntarily absorbed by INVESCO and
INVESCO Asia ^ pursuant to a commitment to the Fund ^ in order to ensure that
the Fund's total operating expenses do not exceed 2.00%. This commitment may be
changed following consultation with the Company's board of directors. ^ In the
absence of such voluntary expense limitation, the Fund's total expenses for the
fiscal year ended July 31, 1996 would have been 2.79% (annualized) 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 the 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.
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,
<PAGE>
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 can be placed by telephone. Shares of the Fund
will be issued at the net asset value next determined after receipt of telephone
instructions. Generally, payments for telephone orders must be received by the
Fund within three business days or the transaction may be cancelled. In the
event of such cancellation, the purchaser will be held responsible for any loss
resulting from a decline in the value of the shares. In order to avoid such
losses, purchasers should send payments for telephone purchases by overnight
courier or bank wire. INVESCO has agreed to indemnify the Fund for any losses
resulting from the cancellation of telephone purchases.
If your check does not clear, or if a telephone purchase must be cancelled
due to nonpayment, you will be responsible for any related loss the Fund or
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 by the broker for the handling of the
transaction if the broker so elects. Any investor may deal directly with the
Fund in any transaction. In that event, there is no such charge. INVESCO may
from time to time make payments from its revenues to securities dealers and
other financial institutions that provide distribution-related and/or
administrative services for the Fund.
The Fund reserves the right in its sole discretion to reject any order for
purchase of its shares (including purchases by exchange) when, in the judgment
of Fund Management, such rejection is in the best interest of the Fund.
<PAGE>
Net asset value per share is computed once each day that the New York
Stock Exchange is open as of the close of regular trading on that Exchange
(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 1940 Act (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.
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 .25% 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
<PAGE>
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 distribution-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.
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
<PAGE>
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 ^ three months (other than
shares acquired through reinvestment of dividends or other distributions), a fee
of 1% 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 or exchanges, 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 ^ three-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 ^ three months as to any shares, the redemption/exchange fee
will be assessed on the current net asset value of those shares.
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
<PAGE>
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 1940 Act, 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
<PAGE>
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 of 1986 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.
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
<PAGE>
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 ^ three months (other
than shares acquired through reinvestment of dividends or other distributions),
a fee of 1% 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 or exchanges, 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 ^ three-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 ^ three months as to any shares, the redemption/exchange fee
will be assessed on the current net asset value of those shares.
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).
<PAGE>
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.
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 believes 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
<PAGE>
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 annually, 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
<PAGE>
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 and a corresponding fractional vote for each
fractional share owned. Voting with respect to certain matters, such as
ratification of independent accountants and the election of directors, will be
by all funds of the Company voting together. In other cases, such as voting upon
the investment advisory contract, voting is on a fund-by-fund basis. To the
extent permitted by law, when not all funds are affected by a matter to be voted
upon, only 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 1940 Act. 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
<PAGE>
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 ^ $20.00 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 or record-keeping
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 ^ or record-keeping fee out of the
transfer agency fee which is paid to INVESCO by the Fund.
<PAGE>
INVESCO ASIAN GROWTH FUND
A no-load mutual fund seeking capital
appreciation.
PROSPECTUS
^ December 1, 1996
To receive general information and prospectuses on any of INVESCO's funds or
retirement plans, or to obtain current account or price information or responses
to other questions, call toll-free:
1-800-525-8085
To reach PAL, your 24-hour Personal Account Line, call:
1-800-424-8085
You can find us on the World Wide Web:
http://www.invesco.com
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
December ^ 1, 1996
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"); INVESCO Latin American
Growth Fund (the "Latin American Growth Fund"); and INVESCO Asian Growth Fund
(the "Asian 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
total 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.
<PAGE>
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
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.
^ The Asian Growth Fund seeks to achieve capital appreciation by
investing, under normal circumstances, at least 65% of its total assets in
equity securities of companies domiciled or with primary operations in Asia and
the Pacific Rim, excluding Japan. For purposes of this prospectus, Asia and
Pacific Rim territories will include, but not necessarily be limited to: China,
Hong Kong, India, Indonesia, Malaysia, Philippines, Singapore, South Korea,
Taiwan and Thailand, as well as Pakistan and Indochina as their markets become
more accessible.
^
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, the Latin American Growth Fund, ^ and the Asian
Growth Fund, dated ^ December 1, 1996, 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.
<PAGE>
Investment Adviser and Distributor: INVESCO FUNDS GROUP, INC.
TABLE OF CONTENTS Page
INVESTMENT POLICIES AND RESTRICTIONS 137
THE FUNDS AND THEIR MANAGEMENT 150
HOW SHARES CAN BE PURCHASED 166
HOW SHARES ARE VALUED 171
FUND PERFORMANCE 172
SERVICES PROVIDED BY THE FUNDS 173
TAX-DEFERRED RETIREMENT PLANS 174
HOW TO REDEEM SHARES 174
DIVIDENDS, CAPITAL GAIN DISTRIBUTIONS, AND TAXES 175
INVESTMENT PRACTICES 177
ADDITIONAL INFORMATION 181
<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 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
<PAGE>
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 their investment adviser and sub-adviser
(collectively, "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 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
<PAGE>
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 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 each Fund's investment objective.
Loans of securities by the Funds 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. The Funds 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 each Fund's total assets (taken
at market value).
Commercial Paper
The Funds may invest in these obligations, which are short-term promissory
notes issued by domestic corporations to meet current working capital
<PAGE>
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 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.
^
<PAGE>
Zero Coupon Bonds and Pay-In-Kind 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."
^
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. 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.
^
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
<PAGE>
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 "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
<PAGE>
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 not offset by a reduction
in the price of securities purchased.
In addition to the possibility that there may be an imperfect correlation
or no correlation at all between movements in the futures contract and the
portion of the portfolio being hedged, the price of futures may not correlate
perfectly with movements in the 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
<PAGE>
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 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
<PAGE>
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.
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
<PAGE>
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.
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 (the "1940 Act"), 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
<PAGE>
items and "Government securities" as defined under the 1940 Act,
if the purchase would cause the Fund to have more than 5% of the
value of its total assets invested in the securities of such issuer
or to own more than 10% of the outstanding voting securities of such
issuer;
2. Borrow money or issue senior securities (as defined in
the 1940 Act), except that the Fund may borrow money for
temporary or emergency purposes (not for leveraging or
investment) and may enter into reverse repurchase
agreements in an aggregate amount not exceeding 33-1/3% of
the value of its total assets (including the amount
borrowed) less liabilities (other than borrowings). Any
borrowings that come to exceed 33-1/3% of the value of the
Fund's total assets by reason of a decline in total assets
will be reduced within three business days to the extent
necessary to comply with the 33-1/3% limitation. This
restriction shall not prohibit deposits of assets to
margin or guarantee positions in futures, options, swaps
or forward contracts, or the segregation of assets in
connection with such contracts.
3. Invest directly in real estate or interests in real
estate; however, the Fund may own debt or equity
securities issued by companies engaged in those
businesses.^
4. Purchase or sell physical commodities other than foreign currencies
unless acquired as a result of ownership of securities (but this
shall not prevent the Fund from purchasing or selling options,
futures, swaps and forward contracts or from investing in securities
or other instruments backed by physical commodities).
5. Lend any security or make any other loan if, as a result, more than
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, the Latin American
Growth Fund and the Asian 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
<PAGE>
management investment company with substantially the same fundamental
investment objectives, policies and limitations as the Fund.
In applying restriction 7 above, the European Small Company Fund, the
Latin American Growth Fund and the Asian Growth Fund use an industry
classification system for international securities based on the information
obtained from Bloomberg L.P., Moody's International and the O'Neil Database
published by William O'Neil & Co., Inc.
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. 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
<PAGE>
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.
(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
<PAGE>
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.
With respect to investment restriction (i) above, the board of directors
has delegated to Fund Management the authority to determine that a liquid market
exists for securities eligible for resale pursuant to Rule 144A under the 1933
Act, or any successor to such rule, and that such securities are not subject to
restriction (i) above. Under guidelines established by the board of directors,
Fund Management will consider the following factors, among others, in making
this determination: (1) the unregistered nature of a Rule 144A security, (2) the
frequency of trades and quotes for the security; (3) the number of dealers
willing to purchase or sell the security and the number of other potential
purchasers; (4) dealer undertakings to make a market in the security; and (5)
the nature of the security and the nature of marketplace trades (e.g., the time
needed to dispose of the security, the method of soliciting offers and the
mechanics of transfer).
^ The Company has voluntarily undertaken to 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 voluntarily
undertaken ^ 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 voluntarily undertaken ^ 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 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
<PAGE>
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.
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 INVESCO
Asset Management Limited ("IAML") to provide investment advisory and research
services on behalf of the European Small Company Fund and Latin American Growth
Fund. IAML has the primary responsibility for providing portfolio investment
management services to these Funds. IAML is an indirect wholly-owned subsidiary
of INVESCO PLC.
Additionally, INVESCO, as investment adviser, has contracted with INVESCO
Asia Ltd. ("INVESCO Asia") to provide investment advisory and research services
on behalf of the Asian Growth Fund. INVESCO Asia has primary responsibility for
providing portfolio investment management services to this Fund. INVESCO Asia 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 July 31, 1996, managed 14
mutual funds, consisting of ^ 39 separate portfolios, on behalf of over 821,000
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.
<PAGE>
--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. 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. INVESCO Asia and IAML are
subject to similar policies.
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. The
Agreement has been continued by action of the board of directors through April
30, 1997. Thereafter, the Agreement may be continued from year to year as to
each Fund as long as each such continuance is specifically approved at least
annually by the board of directors of the Company, or by a vote of the holders
of a majority, as defined in the 1940 Act, of the outstanding shares of the
Fund. Any such continuance also must be approved by a majority of the Company's
directors who are not parties to the Agreement or interested persons (as defined
<PAGE>
in the 1940 Act) of any such party, cast in person at a meeting called for
the purpose of voting on such continuance. The Agreement may be terminated at
any time without penalty by either party upon sixty (60) days' written notice
and terminates automatically in the event of an assignment to the extent
required by the 1940 Act and the rules thereunder. 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 and is for an initial term expiring April 30, 1997. With respect to the
Asian Growth Fund, the Agreement was approved by INVESCO on September 12, 1995
as the then sole shareholder of the Fund and is for an initial term expiring
April 30, 1997. ^
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 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 discussed
below. Services provided under the Agreement include, but are not limited to:
supplying the Company with officers, clerical staff and other employees, if any,
who are necessary in connection with the Funds' operations; furnishing office
space, facilities, equipment, and supplies; providing personnel and facilities
required to respond to inquiries related to shareholder accounts; conducting
periodic compliance reviews of the Funds' operations; preparation and review of
required documents, reports and filings by 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 1940 Act. Expenses not assumed by INVESCO are borne by the Funds.
As full compensation for its advisory services to the Company, INVESCO
receives a monthly fee. 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, the
<PAGE>
Latin American Growth Fund and the Asian 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. ^
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 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, 1997. 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 1940 Act,
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 1940
Act) 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 1940 Act and the rules
thereunder.
IAML 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 that was assumed by IAML from
MIM International Limited ("MIL"), another indirect wholly-owned subsidiary of
INVESCO PLC, on November 10, 1995. This agreement was approved on October 19,
<PAGE>
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, IAML 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. The
European and Latin American Sub-Agreement has been approved through April 30,
1997. 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 1940 Act) 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 1940 Act and the rules thereunder.
INVESCO Asia serves as sub-adviser to the Asian Growth Fund pursuant to a
sub-advisory agreement (the "Asian Growth Sub- Agreement") with INVESCO which
was approved on September 12, 1995 by INVESCO as the then sole shareholder of
the Asian Growth Fund for an initial term expiring April 30, 1996. The Asian
Growth Sub- Agreement has been approved through April 30, 1997. Thereafter the
Asian Growth Sub-Agreement may be continued from year to year as long as it 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 1940 Act, of the outstanding shares
of the Fund. Each such continuance also must be approved by a majority of
directors who are not parties to the Asian Growth Sub-Agreement or interested
persons (as defined in the 1940 Act) of any such party, cast in person at a
meeting called for the purpose of voting on such continuance. The Asian Growth
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 1940 Act and the
rules thereunder.
^
The Sub-Agreements provide that INVESCO Trust, IAML, and INVESCO Asia ^
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
<PAGE>
program for the Funds, consistent with (i) each Fund's investment policies
as set forth in the Company's Articles of Incorporation, Bylaws, and
Registration Statement, as from time to time amended, under the 1940 Act, and in
any prospectus and/or statement of additional information of the Company, as
from time to time amended and in use under the 1933 Act, and (ii) the Company's
status as a regulated investment company under the Internal Revenue Code of
1986, as amended; (c) determining what securities are to be purchased or sold
for each 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-Agreements provide 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, ^ IAML 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 Asian Growth Sub-Agreement provides that, as compensation
for its services, INVESCO Asia shall receive from INVESCO, at the end of each
month, a fee based upon the average daily value of the Asian Growth Fund's net
assets at the following rates: 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. ^
The Sub-Advisory fees are paid by INVESCO, NOT the Funds.
Administrative Services Agreement. INVESCO, either directly or through
affiliated companies, provides certain administrative, sub-accounting, and
recordkeeping services to the Funds pursuant to an Administrative Services
Agreement dated 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
<PAGE>
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, 1997. 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 1940 Act) of any such party, cast in
person at a meeting called for the purpose of voting on such continuance. The
Administrative Agreement may be terminated at any time without penalty by
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.
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 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,
1997 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 1940 Act) of any such party,
cast in person at a meeting called for the purpose of voting on such
continuance. The Transfer Agency Agreement may be terminated at any time without
penalty by either party upon sixty (60) days' written notice and terminates
automatically in the event of assignment.
<PAGE>
The Transfer Agency Agreement provides that the Funds will pay to INVESCO
an annual fee of $20.00 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.
Set forth below is a table showing the advisory fees, administrative
services fees, and transfer agency fees paid by each of the Funds for the period
shown.
<PAGE>
<TABLE>
<CAPTION>
Year Ended Year Ended
July 31, 1996(1) July 31, 1995(1)
Adminis- Adminis-
Transfer trative Transfer trative
Advisory Agency Services Advisory Agency Services
Fees Fees Fees Fees Fees Fees
<S> <C> <C> <C> <C> <C> <C>
Worldwide Capital Goods $52,495 $35,801 $11,211 $32,382 $20,517 $10,747
Worldwide Communications $255,873 $151,435 $15,905 $101,129 $64,043 $12,334
European Small Company $271,008 $66,181 $15,420 $4,159(2) $2,300(2) $3,417(2)
Latin American Growth $130,913 $47,581 $12,618 $12,530(2) $5,295(2) ^ $3,584(2)
Asian Growth Fund(3) $26,564 $16,399 $3,031 -0- -0- -0-
</TABLE>
(1) These amounts do not reflect the voluntary expense limitations described in
the Funds' prospectuses.
(2) For the period February 15, 1995 (inception) through July 31, 1995.
(3) The Asian Growth Fund did not pay any of the fees listed in this table for
the year ended July 31, 1995 since it did not commence a public offering of its
shares until March 1, 1996. In addition, the fees listed in the table for the
year ended July 31, 1996 are for the five month period begining March 1, 1996
(inception). ^
<PAGE>
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 directors of INVESCO Advisor Funds, Inc. (formerly known
as The EBI Funds, Inc."); and, with the exception of Mr. Hesser, trustees of
INVESCO Treasurer's Series Trust. All of the officers of the Company also hold
comparable positions with INVESCO Value Trust. Set forth below is information
with respect to each of the Company's officers and directors. Unless otherwise
indicated, the address of the directors and officers is Post Office Box 173706,
Denver, Colorado 80217-3706. Their affiliations represent their principal
occupations during the past five years.
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 ^ INVESCO
Advisor 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 INVESCO Advisor 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 ING America Life Insurance Company, Urbaine Life
Insurance Company and Midwestern United Life Insurance Company.
Address: Security Life Center, 1290 Broadway, Denver, Colorado.
Born: January 12, 1928.
DAN J. HESSER,+* President and Director. Chairman of the
Board, President, and Chief Executive Officer of INVESCO Funds
Group, Inc. ^ and Director of INVESCO Trust Company. Director of
INVESCO Advisor Funds, Inc. Trustee of The Global Health Sciences
Fund. Born: December 27, 1939.
<PAGE>
VICTOR L. ANDREWS,** Director. Professor Emeritus, Chairman
Emeritus and Chairman of the CFO Roundtable of the Department of
Finance at Georgia State University, Atlanta, Georgia; President,
Andrews Financial Associates, Inc. (consulting firm); 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: 4625 Jettridge Drive, 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.
LAWRENCE H. BUDNER,# Director. Trust Consultant; prior to
June 30, 1987, Senior Vice President and Senior Trust Officer of
InterFirst Bank, Dallas, Texas. Address: 7608 Glen Albens Circle,
Dallas, Texas. Born: July 25, 1930.
DANIEL D. CHABRIS,+# Director. Financial Consultant;
Assistant Treasurer of Colt Industries Inc., New York, New York,
from 1966 to 1988. Address: 15 Sterling Road, Armonk, New York.
Born: August 1, 1923.
A. D. FRAZIER, JR.,*,** Director. Executive Vice President
of INVESCO PLC (since November 1996). Formerly, Senior Executive
Vice President and 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^. Trustee of The
Global Health Sciences Fund. Director of Magellan Health Services,
Inc. and of Charter Medical Corp. Address: 250 Williams Street,
Suite 6000, Atlanta, Georgia 30301. Born: June 23, 1944.
HUBERT L. HARRIS, JR.*, Director. Chairman (since May 1996),
President (January 1990 to April 1996) of INVESCO Services, Inc.
Director of INVESCO PLC and Chief ^ Executive Officer of INVESCO
Individual Services Group. Member of the Executive Committee of
the Alumni Board of Trustees of Georgia Institute of Technology.
Address: 1315 Peachtree Street, NE, Atlanta, Georgia. Born: July
15, 1943.
KENNETH T. KING,** Director. Formerly, Chairman of the Board
of The Capitol Life Insurance Company, Providence Washington
Insurance Company, and Director of numerous subsidiaries thereof in
the U.S. Formerly, Chairman of the Board of The Providence Capitol
Companies in the United Kingdom and Guernsey. Chairman of the
Board of the Symbion Corporation (a high technology company) until 1987.
<PAGE>
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.
^
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. Formerly, employee of
a U.S. regulatory agency, Washington, D.C. (June 1973 through May
1989). Born: September 25, 1947.
RONALD L. GROOMS, Treasurer. Senior Vice President and
Treasurer of INVESCO Funds Group, Inc. and INVESCO Trust Company
since January 1988. 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. Formerly, Vice President of 440
Financial Group from June 1990 to August 1992 and Assistant Vice
President of Putnam Companies from November 1986 to June 1990.
Born: August 21, 1956.
ALAN I. WATSON, Assistant Secretary. Vice President of
INVESCO Funds Group, Inc. 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.
<PAGE>
*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 ^ November 11, 1996, officers and directors of the Company, as a
group, beneficially owned less than 1% of the Company's outstanding shares ^
broken down as 0.28% of the Worldwide Capital Goods Fund, ^ 0.02% of the
Worldwide Communications Fund, ^ 0.02% of the European Small Company Fund, ^
0.06% of the Latin American Growth Fund and ^ 0.02% of the Asian Growth Fund.
Director Compensation
The following table sets forth, for the fiscal year ending July 31, 1996:
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 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), ^ INVESCO Advisor 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, 1995. As of December 31, 1995, there were 49
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, $2,388 $71 $59 $ 87,350
Vice Chairman of
the Board
Victor L. Andrews 2,363 62 65 68,000
Bob R. Baker 2,370 64 87 73,000
Lawrence H. Budner 2,353 67 65 68,350
Daniel D. Chabris 2,371 76 46 73,350
A. D. Frazier Jr.(4),(5) 2,342 0 0 63,500
<PAGE>
Kenneth T. King 2,364 73 53 70,000
John W. McIntyre4 2,350 0 0 67,850
------- ---- ---- --------
Total $18,9016 $413 $375 $571,400
% of Net Assets 0.0095%7 0.0002%7 .0043%8
(1)The vice chairman of the board, the chairmen of the audit, management
liaison and compensation committees, and the members of the executive and
valuation committees each receive compensation for serving in such capacities in
addition to the compensation paid to all independent directors.
(2)Represents estimated benefits accrued with respect to the Defined
Benefit Deferred Compensation Plan discussed below, and not compensation
deferred at the election of the directors.
(3)These 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 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.
(4)Messrs. Frazier and McIntyre began serving as directors of the Company
on April 19, 1995.
^ (5)Effective November 1, 1996, Mr. Frazier was employed by INVESCO PLC, a
company affiliated with INVESCO ^. Because it was possible that Mr. Frazier
would be employed with INVESCO PLC effective May 1, 1996, he was deemed to be an
"interested person" of the Company and of the other funds in the INVESCO Complex
^. Effective November 1, 1996, Mr. Frazier will no longer receive any director's
fees or other compensation from the Company or other funds in the INVESCO
Complex for his service as a director.
(6)Amount includes Worldwide Communications Fund for the fiscal year ended
July 31, 1996, Worldwide Capital Goods Fund for the period October 1, 1995
through July 31, 1996, and Latin American Growth and European Small Company
<PAGE>
Funds for the period April 1, 1996 through July 31, 1996. The Asian Growth
Fund did not accrue directors fees as of July 31, 1996.
(7)Totals as a percentage of the Company's net assets as of July 31, 1996.
(8)Total as a percentage of the net assets of the INVESCO Complex as of
December 31, 1995.
Messrs. Brady, Harris ^, Hesser and, effective November 1, 1996, Frazier,
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 boards of directors/trustees of the mutual funds managed by INVESCO,
INVESCO Advisor 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 1940 Act) and who has served
for at least five years (a "qualified director") is entitled to receive, upon
retiring from the boards at the retirement age of 72 (or the retirement age of
73 to 74, if the retirement date is extended by the boards for one or two years,
but less than three years) continuation of payment for one year (the "first year
retirement benefit") of the annual basic retainer 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, INVESCO Advisor and Treasurer's Series funds in
a manner determined to be fair and equitable by the committee. The Company is
not making any payments to directors under the plan as of the date of this
Statement of Additional Information. The Company has no stock options or other
<PAGE>
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 which is 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.
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 1940 Act.
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 1940 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 a
Fund's operations. During the fiscal year ended July 31, 1996, the Capital Goods
Fund, Worldwide Communications Fund, European Small Company Fund and Latin
American Growth Fund incurred ^ $20,544, $93,172, $64,913 and $38,021 in
distribution expenses, respectively, prior to the voluntary absorption of
certain Fund expenses by INVESCO and the applicable sub-adviser. During the
<PAGE>
period ended July 31, 1996, the Asian Growth Fund incurred $5,613 in
distribution expenses, prior to the voluntary absorption of certain Fund
expenses by INVESCO and the applicable sub-adviser. In addition, as of July 31,
1996 the Worldwide Capital Goods Fund, Worldwide Communications Fund, European
Small Company Fund, Latin American Growth Fund and Asian Growth Fund incurred
$1,746, $11,017, $26,038, $7,098 and $3,241 of additional distribution expenses
subject to the approval of the Company's directors, which approval was scheduled
for October 30, 1996. 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.
For the fiscal year ended July 31, 1996, allocation of 12b-1 amounts paid
by the Capital Goods Fund for the following categories of expenses were:
advertising --$4,874; sales literature, printing and postage--$8,620; direct
mail--$507; public relations/promotion- -$646; compensation to securities
dealers and other organizations-- $2,959; marketing personnel--$2,938. For the
fiscal year ended July 31, 1996, allocation of 12b-1 amounts paid by the
Communications Fund for the following categories of expenses were: advertising
- --$44,031; sales literature, printing and postage-- $23,855; direct
mail--$12,178; public relations/promotion--$1,218; compensation to securities
dealers and other organizations--$5,673; marketing personnel--$6,217. For the
fiscal year ended July 31, 1996, allocation of 12b-1 amounts paid by the
European Small Company Fund for the following categories of expenses were:
advertising --$30,195; sales literature, printing and postage-- $16,374; direct
mail--$3,195; public relations/promotion--$1,185; compensation to securities
dealers and other organizations--$6,934; marketing personnel--$7,031. For the
fiscal year ended July 31, 1996, allocation of 12b-1 amounts paid by the Latin
American Growth Fund for the following categories of expenses were: advertising
- -- $18,145; sales literature, printing and postage--$9,468; direct mail--$760;
<PAGE>
public relations/promotion--$925; compensation to securities dealers and
other organizations--$4,151; marketing personnel--$4,572. For the period March
1, 1996 (inception) through July 31, 1996, allocation of 12b-1 amounts paid by
the Asian American Growth Fund for the following categories of expenses were:
advertising --$1,440; sales literature, printing and postage--$1,233; direct
mail--$2,781; public relations/promotion-- $40; compensation to securities
dealers and other organizations-- $47; marketing personnel--$72.
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, 1997. 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, 1997. With respect to the Asian Growth Fund,
the Plan was approved by INVESCO on September 12, 1995 as the then sole
shareholder of the Fund and has been continued by action of the board of
directors until April 30, 1997.
^
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 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
<PAGE>
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.
<PAGE>
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 (usually 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.
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
are normally valued at amortized cost.
The values of securities held by the Funds 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
<PAGE>
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.
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, Communications, European Small Company and Latin American Growth Funds
for the fiscal year ended July 31, 1996 and for the Asian Growth Fund for the
period from March 1, 1996 (inception) through July 31, 1996 was as follows:
Fund One Year Life of Fund
---- -------- ------------
Capital Goods Fund* 0.27% (0.61)%
Communications Fund* 13.67% 19.12%
European Small Company Fund~ 31.07% 32.21%
Latin American Growth Fund~ 15.27% 22.13%
Asian Growth Fund^ N/A ^(10.31)%
*Inception date: August 1, 1994
~Inception date: February 15, 1995
^Inception date: March 1, 1996
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
<PAGE>
Funds. Sources for Fund performance information and articles about the
Funds include, but are not limited to, the following:
American Association of Individual Investors' Journal
Banxquote
Barron's
Business Week
CDA Investment Technologies
CNBC
CNN
Consumer Digest
Financial Times
Financial World
Forbes
Fortune
Ibbotson Associates, Inc.
Institutional Investor
Investment Company Data, Inc.
Investor's Business Daily
Kiplinger's Personal Finance
Lipper Analytical Services, Inc.'s Mutual Fund
Performance Analysis
Money
Morningstar
Mutual Fund Forecaster
No-Load Analyst
No-Load Fund X
Personal Investor
Smart Money
The New York Times
The No-Load Fund Investor
U.S. News and World Report
United Mutual Fund Selector
USA Today
Wall Street Journal
Wiesenberger Investment Companies Services
Working Woman
Worth
SERVICES PROVIDED BY THE FUNDS
Periodic Withdrawal Plan. As described in the Funds' Prospectuses, 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.
<PAGE>
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 Funds' Prospectuses, 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 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 Funds' Prospectuses, 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
<PAGE>
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 1940 Act 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. 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, 1996, 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.
<PAGE>
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.
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,
<PAGE>
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
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. Brokerage costs to these Funds are
<PAGE>
commensurate with the rate of portfolio activity. As of the date of this
Statement of Additional Information, the Asian Growth Fund had not commenced a
public offering of its shares, and therefore had not experienced any portfolio
turnover. Portfolio turnover rates for the fiscal years ended July 31, 1996 and
1995 were 247% and 193%, respectively, for the Worldwide Capital Goods Fund and
157% and 215%, respectively, for the Worldwide Communications Fund. Portfolio
turnover rates for the fiscal year ended July 31, 1996 and the period ended July
31, 1995 were 141% and 0.00%, respectively for the European Small Company Fund
and 29% and 30%, respectively, for the Latin American Growth Fund. For the
period March 1, 1996 (inception) through July 31, 1996, the portfolio turnover
rate for the Asian Growth Fund was 2%. The higher portfolio turnover rate for
the Worldwide Capital Goods Fund was primarily due to a repositioning of the
Fund's portfolio. The high portfolio turnover rate for the European Small
Company Fund was primarily due to the increase in the size of the Fund and the
fact that the fiscal year 1996 figure reflects a full year of operations. 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.
Placement of Portfolio Brokerage. Either INVESCO, as the Company's
investment adviser, or INVESCO Trust, IAML or INVESCO Asia, 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, IAML's or INVESCO Asia's
evaluation of their financial responsibility, subject to their ability to effect
transactions at the best available prices. Fund Management evaluates the overall
reasonableness of brokerage commissions paid by reviewing the quality of
executions obtained on portfolio transactions of each Fund, viewed in terms of
the size of transactions, prevailing market conditions in the security purchased
or sold, and general economic and market conditions. In seeking to ensure that
the commissions charged the Funds are consistent with prevailing and reasonable
commissions, Fund Management also endeavors to monitor brokerage industry
practices with regard to the commissions charged by brokers and dealers on
transactions effected for other comparable institutional investors. While Fund
Management seeks reasonably competitive rates, the Funds do not necessarily pay
the lowest commission or spread available.
Consistent with the standard of seeking to obtain the best execution on
portfolio transactions, Fund Management may select brokers that provide research
services to effect such transactions. Research services consist of statistical
and analytical reports relating to issuers, industries, securities and economic
factors and trends, which may be of assistance or value to Fund Management in
making informed investment decisions. Research services prepared and furnished
by brokers through which the Funds effect securities transactions may be used
<PAGE>
by Fund Management in servicing all of their respective accounts and not
all such services may be used by Fund Management in connection with the Funds.
In recognition of the value of the above-described brokerage and research
services provided by certain brokers, Fund Management, consistent with the
standard of seeking to obtain the best execution on portfolio transactions, may
place orders with such brokers for the execution of transactions for the Funds
on which the commissions are in excess of those which other brokers might have
charged for effecting the same transactions.
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.
Neither INVESCO, INVESCO Trust, IAML nor INVESCO Asia receives any
brokerage commissions on portfolio transactions effected on behalf of the Funds,
and there is no affiliation between INVESCO, INVESCO Trust, IAML, INVESCO Asia
or any person affiliated with INVESCO, INVESCO Trust, IAML, INVESCO Asia or the
Funds and any broker or dealer that executes transactions for the Funds.
Certain financial institutions (including brokers who may sell shares of
the Funds, or affiliates of such brokers) are paid a fee (the "Services Fee")
for recordkeeping, shareholder communications and other services provided by the
brokers to investors purchasing shares of the Funds through no transaction fee
programs ("NTF Programs") offered by the financial institution or its affiliates
broker (an "NTF Program Sponsor"). The Services Fee is based on the average
daily value of the investments in each Fund made in the name of such NTF Program
Sponsor and held in omnibus accounts maintained on behalf of investors
participating in the NTF Program. With respect to certain NTF Programs, the
directors of the Company have authorized the Funds to apply dollars generated
from the Company's Plan and Agreement of Distribution pursuant to Rule 12b-1
under the 1940 Act (the "Plan") to pay the entire Services Fee, subject to the
maximum Rule 12b-1 fee permitted by the Plan. With respect to other NTF
Programs, the Company's directors have authorized the Funds to pay transfer
agency fees to INVESCO based on the number of investors who have beneficial
interests in the NTF Program Sponsor's omnibus accounts in the Funds. INVESCO,
in turn, pays these transfer agency fees to the NTF Program Sponsor as a
sub-transfer agency or recordkeeping fee in payment of all or a portion of the
Services Fee. In the event that the sub-transfer agency or recordkeeping fee is
insufficient to pay all of the Services Fee with respect to these NTF Programs,
the directors of the Company have authorized the Company to apply dollars
generated from the Plan to pay the remainder of the Services Fee, subject to the
<PAGE>
maximum Rule 12b-1 fee permitted by the Plan. INVESCO itself pays the
portion of each Fund's Services Fee, if any, that exceeds the sum of the
sub-transfer agency or recordkeeping fee and Rule 12b-1 fee. The Company's
directors have further authorized INVESCO to place a portion of each Fund's
brokerage transactions with certain NTF Program Sponsors or their affiliated
brokers, if INVESCO reasonably believes that, in effecting the Fund's
transactions in portfolio securities, the broker is able to provide the best
execution of orders at the most favorable prices. A portion of the commissions
earned by such a broker from executing portfolio transactions on behalf of the
Funds may be credited by the NTF Program Sponsor against its Services Fee. Such
credit shall be applied first against any sub-transfer agency or recordkeeping
fee payable with respect to the Funds, and second against any Rule 12b-1 fees
used to pay a portion of the Services Fee, on a basis which has resulted from
negotiations between INVESCO and the NTF Program Sponsor. Thus, the Funds pay
sub-transfer agency or recordkeeping fees to the NTF Program Sponsor in payment
of the Services Fee only to the extent that such fees are not offset by a Fund's
credits. In the event that the transfer agency fee paid by the Funds to INVESCO
with respect to investors who have beneficial interests in a particular NTF
Program Sponsor's omnibus accounts in a Fund exceeds the Services Fee applicable
to the Fund, after application of credits, INVESCO may carry forward the excess
and apply it to future Services Fees payable to that NTF Program Sponsor with
respect to a Fund. The amount of excess transfer agency fees carried forward
will be reviewed for possible adjustment by INVESCO prior to each fiscal
year-end of the Funds. The Company's board of directors has also authorized the
Funds to pay to INVESCO the full Rule 12b-1 fees contemplated by the Plan in
reimbursement of expenses incurred by INVESCO in engaging in the activities and
providing the services on behalf of the Funds contemplated by the Plan, subject
to the maximum Rule 12b-1 fee permitted by the Plan, notwithstanding that
credits have been applied to reduce the portion of the 12b-1 fee that would have
been used to reimburse INVESCO for payments to such NTF Program Sponsor absent
such credits.
The aggregate amount of brokerage commissions paid for the fiscal years
ended July 31, 1996 and 1995 were $141,314 and $54,814, respectively, for the
Worldwide Capital Goods Fund and $239,095 and $129,085 for the Worldwide
Communications Fund. The aggregate amount of brokerage commissions paid for the
fiscal year ended July 31, 1996 and the period ended July 31, 1995 were $417,140
and $141, respectively, for the European Small Company Fund and $102,029 and
$2,012, respectively, for the Latin American Growth Fund. The aggregate amount
of brokerage commission paid for the period March 1, 1996 (inception) through
July 31, 1996 for the Asian Growth Fund was $105,714. For the fiscal years ended
July 31, 1996 and 1995, brokers providing research services received commissions
on portfolio transactions of $32,164 and $27,515, respectively, for the
Worldwide Capital Goods Fund and $64,810 and $39,843, respectively, for the
Worldwide Communications Fund. For the fiscal year ended July 31, 1996 and the
period ended July 31, 1995, brokers providing research services received
<PAGE>
commissions on portfolio transactions of $38 and $0, respectively, for the
European Small Company Fund and $0 and $0, respectively, for the Latin American
Growth Fund. For the period March 1, 1996 (inception) through July 31, 1996,
brokers providing research services received commissions on portfolio
transactions of $0 for the Asian Growth Fund. The aggregate amount of such
portfolio transactions was $15,731,437 and $10,973,188, respectively, for the
Worldwide Capital Goods Fund; $27,956,526 and $15,947,023, respectively, for the
Worldwide Communications Fund; $19,063 and $0, respectively, for the European
Small Company Fund; and $53,125 and $0, respectively, for the Latin American
Growth Fund. The Funds paid no compensation to brokers for the sales of shares
of the Funds during the year ended July 31, 1996.
At July 31, 1996, the Funds held securities of their regular brokers or
dealers, or their parents, as follows:
Value of
Securities
Fund Broker or Dealer at 7/31/96
- ---- ---------------- ----------
Capital Goods Fund State Street Bank and
Trust North America 1,506,000
Communications Fund State Street Bank and
Trust North America 11,109,000
Latin American Growth Fund None
European Small Company Fund None
Asian Growth Fund State Street Bank and
Trust North America 1,485,000
Neither INVESCO, INVESCO Trust, IAML nor INVESCO Asia receives any
brokerage commissions on portfolio transactions effected on behalf of the Funds,
and there is no affiliation between INVESCO, INVESCO Trust, IAML and INVESCO
Asia, or any person affiliated with INVESCO, INVESCO Trust, IAML and INVESCO
Asia, or the Funds and any broker or dealer that executes transactions for the
Funds.
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, 1996, 804,518
shares of the Capital Goods Fund, 4,064,157 shares of the Communications Fund,
6,248,937 shares of the European Small Company Fund, 2,493,265 shares of the
Latin American Growth Fund and 1,599,695 shares of the Asian Growth Fund were
outstanding. The board of directors has the authority to designate additional
<PAGE>
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 1940 Act or the Company's Articles of Incorporation, or at their discretion.
Principal Shareholders. As of ^ November 1, 1996, the
following entities held more than 5% of the Funds' outstanding
equity securities.
<PAGE>
Amount and Nature Percent
Name and Address of Ownership of Class
- ---------------- ----------------- --------
INVESCO Worldwide
Capital Goods Fund
Charles Schwab & Co.^ Inc. 121,973.1510 29.854%
Special Custody Acct. for the ^
Exclusive Benefit of Customers
101 Montgomery St.
San Francisco, CA 94104
INVESCO Funds Group, Inc. 30,835.7980 7.547% ^
P.O. Box 173706
Denver, CO ^ 80201
INVESCO Trust Company 25,696.4980 6.289% ^
P.O. Box 173706
Denver, CO ^ 80201
INVESCO Worldwide
Communications Fund
Charles Schwab & Co.^ Inc. 878,268.0630 22.539%
Special Custody Acct. for the ^
Exclusive Benefit of Customers
101 Montgomery St.
San Francisco, CA 94104
<PAGE>
INVESCO European
Small Company Fund
Charles Schwab & Co.^ Inc. 3,498,943.0080 45.598%
Special Custody Acct. for the ^
Exclusive Benefit of Customers
101 Montgomery St.
San Francisco, CA 94104
^
INVESCO Latin American Growth Fund
Charles Schwab & Co.^ Inc. 1,149,048.4580 47.013%
Special Custody Acct. for the ^
Exclusive Benefit of Customers
101 Montgomery St.
San Francisco, CA 94104
INVESCO Asian Growth Fund
Charles Schwab & Co.^ Inc. 389,901.7910 22.200%
Special Custody Acct. for the ^
Exclusive Benefit of Customers
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 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.
<PAGE>
Legal Counsel. The firm of Kirkpatrick & Lockhart LLP, Washington, D.C., is
legal counsel for the Company. The firm of Moye, Giles, O'Keefe, Vermeire &
Gorrell LLP, Denver, Colorado, acts as special counsel to the Company.
Financial Statements. The audited financial statements for the
Communications, Capital Goods, European Small Company, Latin American Growth and
Asian Growth Funds and the notes thereto for the period ending July 31, 1996,
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, 1996.
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
<PAGE>
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, 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
<PAGE>
transaction. The Fund will engage in OTC option transactions only with
primary U.S. Government securities dealers recognized by the Federal Reserve
Bank of New York.
Futures Contracts
A Futures Contract is a bilateral agreement providing for the purchase and
sale of a specified type and amount of a financial instrument or foreign
currency, or for the making and acceptance of a cash settlement, at a stated
time in the future, for a fixed price. By its terms, a Futures Contract provides
for a specified settlement date on which, in the case of the majority of
interest rate and foreign currency futures contracts, the fixed income
securities or currency underlying the contract are delivered by the seller and
paid for by the purchaser, or on which, in the case of stock index futures
contracts and certain interest rate and foreign currency futures contracts, the
difference between the price at which the contract was entered into and the
contract's closing value is settled between the purchaser and seller in cash.
Futures Contracts differ from options in that they are bilateral agreements,
with both the purchaser and the seller equally obligated to complete the
transaction. In addition, Futures Contracts call for settlement only on the
expiration date, and cannot be "exercised" at any other time during their term.
The purchase or sale of a Futures Contract also differs from the purchase
or sale of a security or the purchase of an option in that no purchase price is
paid or received. Instead, an amount of cash or cash equivalent, which varies
but may be as low as 5% or less of the value of the contract, must be deposited
with the broker as "initial margin." Subsequent payments to and from the broker,
referred to as "variation margin," are made on a daily basis as the value of the
index or instrument underlying the Futures Contract fluctuates, making positions
in the Futures Contract more or less valuable, a process known as "marking to
market."
A Futures Contract may be purchased or sold only on an exchange, known as
a "contract market," designated by the Commodity Futures Trading Commission for
the trading of such contract, and only through a registered futures commission
merchant which is a member of such contract market. A commission must be paid on
each completed purchase and sale transaction. The contract market clearing house
guarantees the performance of each party to a Futures Contract, by in effect
taking the opposite side of such Contract. At any time prior to the expiration
of a Futures Contract, a trader may elect to close out its position by taking an
opposite position on the contract market on which the position was entered into,
subject to the availability of a secondary market, which will operate to
terminate the initial position. At that time, a final determination of variation
margin is made and any loss experienced by the trader is required to be paid to
the contract market clearing house while any profit due to the trader must be
delivered to it.
<PAGE>
Interest rate futures contracts currently are traded on a variety of fixed
income securities, including long-term U.S. Treasury Bonds, Treasury Notes,
Government National Mortgage Association modified pass-through mortgage-backed
securities, U.S. Treasury Bills, bank certificates of deposit and commercial
paper. In addition, interest rate futures contracts include contracts on indices
of municipal securities. Foreign currency futures contracts currently are traded
on the British pound, Canadian dollar, Japanese yen, Swiss franc, West German
mark and on Eurodollar deposits.
Options on Futures Contracts
An Option on a Futures Contract provides the holder with the right to
enter into a "long" position in the underlying Futures Contract, in the case of
a call option, or a "short" position in the underlying Futures Contract, in the
case of a put option, at a fixed exercise price to a stated expiration date.
Upon exercise of the option by the holder, the contract market clearing house
establishes a corresponding short position for the writer of the option, in the
case of a call option, or a corresponding long position, in the case of a put
option. In the event that an option is exercised, the parties will be subject to
all the risks associated with the trading of Futures Contracts, such as payment
of variation margin deposits. In addition, the writer of an Option on a Futures
contract, unlike the holder, is subject to initial and variation margin
requirements on the option position.
A position in an Option on a Futures Contract may be terminated by the
purchaser or seller prior to expiration by effecting a closing purchase or sale
transaction, subject to the availability of a liquid secondary market, which is
the purchase or sale of an option of the same series (i.e., the same exercise
price and expiration date) as the option previously purchased or sold. The
difference between the premiums paid and received represents the trader's profit
or loss on the transaction.
An option, whether based on a Futures Contract, a stock index or a
security, becomes worthless to the holder when it expires. Upon exercise of an
option, the exchange or contract market clearing house assigns exercise notices
on a random basis to those of its members which have written options of the same
series and with the same expiration date. A brokerage firm receiving such
notices then assigns them on a random basis to those of its customers which have
written options of the same series and expiration date. A writer therefore has
no control over whether an option will be exercised against it, nor over the
time of such exercise.
<PAGE>
APPENDIX B
BOND RATINGS
The following is a description of Standard & Poor's ("S&P") 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.
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.
<PAGE>
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 Corporate Bond Ratings
AAA - This is the highest rating assigned by Standard & Poor's to a debt
obligation and indicates an extremely strong capacity to pay principal and
interest.
AA - Bonds rated AA also qualify as high-quality debt obligations.
Capacity to pay principal and interest is very strong, and in the majority of
instances they differ from AAA issues only in small degree.
A - Bonds rated A have a strong capacity to pay principal and interest,
although they are somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions than bonds in higher rated categories.
BBB - Bonds rated BBB are regarded as having an adequate capability to pay
principal and interest. Whereas they normally exhibit adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay principal and interest for bonds in
this category than for bonds in higher rated categories.
BB - Bonds rated BB have less near-term vulnerability to default than
other speculative issues. However, they face major ongoing uncertainties or
exposure to adverse business, financial, or economic conditions which could lead
to inadequate capacity to meet timely interest and principal payments.
B - Bonds rated B have a greater vulnerability to default but currently
have the capacity to meet interest payments and principal repayments. Adverse
business, financial, or economic conditions will likely impair capacity or
willingness to pay interest and repay principal.
CCC - Bonds rated CCC have a currently identifiable vulnerability to
default and are dependent upon favorable business, financial, and economic
conditions to meet timely payment of interest and repayment of principal. In the
event of adverse business, financial, or economic conditions, they are not
likely to have the capacity to pay interest and repay principal.
<PAGE>
PART C. OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) Financial Statements:
Page in
Prospectus
(1) Financial statements and schedules
included in Prospectus (Part A):
Financial Highlights for the Worldwide 10
Capital Goods and Worldwide Communications
Funds for each of the two years ended
July 31, 1996.
Financial Highlights for the European Small 42
Company Fund for the year ended July 31, 1996
and the period February 15, 1995 (inception)
through July 31, 1995.
Financial Highlights for the Latin American 72
Growth Fund for the year ended July 31,
1996 and the period February 15, 1995
(inception) through July 31, 1995.
Financial Highlights for the Asian Growth 107
Fund for the period March 1, 1996
(commencement of options) through July
31, 1996.
(2) The following financial statements for
the Worldwide Communications, Worldwide
Capital Goods, European Small Company,
Latin American Growth and Asian Growth
Funds and the notes thereto for the
period ended July 31, 1996, 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, 1996: Statement of Investment
Securities as of July 31, 1996;
Statement of Assets and Liabilities as
of July 31, 1996; Statement of
Operations for the period ended July 31,
1996; Statement of Changes in Net Assets
for the year ended July 31, 1996 and the
period ended July 31, 1995; and
Financial Highlights for the year ended
July 31, 1996 and the period ended July
31, 1995.
<PAGE>
(3) Financial statements and schedules
included in Part C:
None
(b) Exhibits:
(1) (a) Articles of Incorporation ^
(Charter).
(b) Articles Supplementary to the
Company's Articles of Incorporation
dated January 6, ^ 1995.
(c) Articles supplementary to the
Company's Articles of Incorporation
dated ^ June 20, 1995.
(d) Form of Articles ^
Supplementary to the Company's
Articles of ^ Incorporation.(1)
^(2) Bylaws.
(3) Not applicable.
(4) Not required to be filed on EDGAR.
^
(5) (a) Investment Advisory Agreement
Between Registrant and INVESCO
Funds Group, Inc. dated May 2, ^
1994.
(i) Amendment of Investment
Advisory Agreement^ dated
January 6, ^ 1995.
(ii) Amendment of Investment
Advisory Agreement dated June
20, ^ 1995.
(iii) Form of Amendment of
Investment Advisory Agreement
dated ^______________, 1996.(1)
(b) Sub-Advisory Agreement Between
INVESCO Funds Group, Inc. and
INVESCO Trust Company dated May 2,
^ 1994.
<PAGE>
(c) Sub-advisory Agreement between
INVESCO Funds Group, Inc. and MIM
International Limited dated January
13, ^ 1995.
(d) Sub-advisory Agreement between
INVESCO Funds Group, Inc. and
INVESCO Asia Ltd. dated June 20, ^
1995.
(e) Sub-advisory Agreement between
INVESCO Funds Group, Inc. and
INVESCO Asset Management Limited
dated November 10, ^ 1995.
(f) Form of Sub-Advisory Agreement
between INVESCO Funds Group, Inc.
and INVESCO Realty Advisors dated
December __, ^ 1996.(1)
(6) General Distribution Agreement
Between Registrant and INVESCO
Funds Group, Inc. dated May 2, ^
1994.
(7) Defined Benefit Deferred
Compensation Plan for Non-
Interested Directors and ^
Trustees.(4)
(8) Custody Agreement Between
Registrant and State Street Bank
and Trust Company dated May 2, ^
1994.
(a) Amendment to Custody Agreement
dated October 25, ^ 1995.
(9) (a) Transfer Agency Agreement
Between Registrant and INVESCO
Funds Group, Inc. dated May 2, ^
1994.
(i) Amendment No. 2 dated May
1, 1996 to Transfer Agency
Agreement.
(b) Administrative Services
Agreement between Registrant and
INVESCO Funds Group, Inc. dated May
2, ^ 1994.
<PAGE>
(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.(3)
(11) Consent of Independent Accountants.
(12) Not applicable.
(13) Not applicable.
(14) Copies of model plans used in the
establishment of retirement plans
as follows: 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.(2) Amendment
of Plan and Agreement of
Distribution dated July 19, ^
1995.(2)
(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)
<PAGE>
(17) (a) Financial Data Schedule for
Worldwide Capital Goods Fund.
(b) Financial Data Schedule for
Worldwide Communications Fund.
(c) Financial Data Schedule for
Latin American Growth Fund.
(d) Financial Data Schedule for
European Small Company Fund.
(e) Financial Data Schedule for
Asian Growth Fund.
(18) Not applicable.
- ---------------
(1)Previously filed on EDGAR with Post-Effective Amendment No. ^ 9 to
the Registration Statement on ^ October 11, 1996, and incorporated
by reference herein.
(2)Previously filed on EDGAR with Post-Effective Amendment No. ^ 6 to
the Registration Statement on ^ August 30, 1995, and incorporated
by reference herein.
(3)Previously^ filed with Post-Effective Amendment No. 3 to this Registration
Statement on January 27, 1995, and incorporated by reference herein.
(4)Previously filed with the original Registration Statement on May 23,
1994 and incorporated by referenced herein.
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 ^ October 31, 1996
-------------- ----------------
INVESCO Worldwide Capital Goods Fund ^ 717
INVESCO Worldwide Communications Fund ^ 8,301
INVESCO European Small Company Fund ^ 9,265
INVESCO Latin American Growth Fund ^ 3,775
INVESCO Asian Growth Fund ^ 3,251
<PAGE>
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
- ------------------ ------------- -------------
Frank M. Bishop Director
1315 Peachtree Street NE
Atlanta, GA 30309
Charles W. Brady Chairman of
1315 Peachtree Street NE the Board
Atlanta, GA 30309
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 Regional Vice
7800 E. Union Avenue President
Denver, CO 80237
Samuel T. DeKinder Director
1315 Peachtree Street NE
Atlanta, GA 30309
Douglas P. Dohm Regional Vice
1355 Peachtree Street NE President
Atlanta, GA 30309
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
<PAGE>
Positions and Positions and
Name and Principal Offices with Offices with
Business Address Underwriter Registrant
- ------------------ ------------- -------------
Wylie G. Hairgrove Vice President
7800 E. Union Avenue
Denver, CO 80237
Hubert L. Harris, Jr. Director Director
1315 Peachtree Street NE
Atlanta, GA 30309
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
James F. Lummanick Vice President;
7800 E. Union Avenue Asst. General
Denver, CO 80237 Counsel
Brian N. Minturn Executive Vice
7800 E. Union Ave. President
Denver, CO 80237
Robert J. O'Connor Director
1355 Peachtree Street NE
Atlanta, GA 30309
^
Donald R. Paddack Asst. Vice
7800 E. Union Avenue President
Denver, CO 80237
Laura M. Parsons Vice President
7800 E. Union Avenue
Denver, CO 80237
<PAGE>
Positions and Positions and
Name and Principal Offices with Offices with
Business Address Underwriter Registrant
- ------------------ ------------- -------------
Glen A. Payne Sr. Vice President Secretary
7800 E. Union Avenue Secretary
Denver, CO 80237 General Counsel
Pamela J. Piro Asst. Vice
7800 E. Union Avenue President
Denver, CO 80237
Gary J. Ruhl Vice President
7800 E. Union Avenue
Denver, CO 80237
R. Dalton Sim Director
7800 E. Union Avenue
Denver, CO 80237
James S. Skesavage Regional Vice
1315 Peachtree Street NE President
Atlanta, GA 30309
Terri Berg Smith Vice President
7800 E. Union Avenue
Denver, CO 80237
Tane T. Tyler Assistant
7800 E. Union Avenue Vice President
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
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) The Registrant hereby undertakes to file a post-effective
amendment containing reasonably current financial statements
for INVESCO Realty Fund within four to six months from the
effective date of Post Effective Amendment No. 9.
<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 the 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 ^22nd day of ^ November, 1996.
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 ^22nd day of ^
November, 1996.
/s/ Dan J. Hesser /s/ Lawrence H. Budner
- --------------------------------- ------------------------------------
Dan J. Hesser, President & Trustee Lawrence H. Budner, Director
(Chief Executive Officer)
/s/ Ronald L. Grooms /s/ Daniel D. Chabris
- --------------------------------- ------------------------------------
Ronald L. Grooms, Treasurer Daniel D. Chabris, Director
(Chief Financial and
Accounting Officer)
/s/ Victor L. Andrews /s/ Fred A. Deering
- --------------------------------- ------------------------------------
Victor L. Andrews, Trustee Fred A. Deering, Director
/s/ Bob R. Baker /s/ A. D. Frazier, Jr.
- --------------------------------- ------------------------------------
Bob R. Baker, Director A. D. Frazier, Jr., Director
/s/ Hubert L. Harris, Jr. /s/ Kenneth T. King
- --------------------------------- ------------------------------------
Hubert L. Harris, Jr., Director Kenneth T. King, Director
/s/ Charles W. Brady /s/ John W. McIntyre
- --------------------------------- ------------------------------------
Charles W. Brady, Director John W. McIntyre, Director
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, June 22, 1995, August 25, 1995^ and August 30, 1996.
<PAGE>
Exhibit Index
Page in
Exhibit Number Registration Statement
^ 1(a) 204
^ 1(b) 213
^ 1(c) 215
2 217
5(a) 234
5(a)(i) 242
5(a)(ii) 243
5(b) 244
5(c) 250
5(d) 257
5(e) 264
6 271
8 279
8(a) 304
9(a) 305
9(a)(i) 318
9(b) 319
11 323
17(a) 324
17(b) 325
17(c) 326
17(d) 327
17(e) 328
ARTICLES OF INCORPORATION
OF
INVESCO SPECIALTY FUNDS, INC.
THIS IS TO CERTIFY to the Maryland State Department of Assessments that
the undersigned, Dan J. Hesser, whose post office address is 7800 E. Union
Avenue, Suite 800, Denver, Colorado 80237, and being at least 18 years of age,
does hereby declare that he is an incorporator intending to form a corporation
under and by virtue of the general laws of the State of Maryland authorizing the
formation of corporations.
ARTICLE I
NAME AND TERM
The name of the corporation is INVESCO Specialty Funds, Inc. The
corporation shall have perpetual existence.
ARTICLE II
POWERS AND PURPOSES
The nature of the business and the objects and purposes to be transacted,
promoted and carried on by the corporation are as follows:
1. To engage in the business of an incorporated investment company of
open-end management type and to engage in all legally permissible
activities and operations usual, customary, or necessary in
connection therewith.
2. In general, to engage in any other business permitted to
corporations by the laws of the State of Maryland and to have and
exercise all powers conferred upon or permitted to corporations by
the Maryland General Corporation Law and any other laws of the State
of Maryland; provided, however, that the corporation shall be
restricted from engaging in any activities or taking any actions
which would preclude its compliance with applicable provisions of
the Investment Company Act of 1940, as amended, applicable to open-
end management type investment companies or applicable rules
promulgated thereunder.
ARTICLE III
CAPITALIZATION
Section 1. The aggregate number of shares the corporation shall have the
authority to issue is five hundred million (500,000,000) shares of Common Stock,
having a par value of one cent ($0.01) per share. The aggregate par value of all
shares which the corporation shall have the authority to issue is five million
dollars ($5,000,000). Such stock may be issued as full shares or as fractional
shares.
<PAGE>
In the exercise of the powers granted to the board of directors pursuant
to Section 3 of this Article III, the board of directors initially designates
two series of shares of Common Stock of the corporation, to be designated as the
INVESCO Worldwide Capital Goods Fund and the INVESCO Worldwide Communications
Fund, respectively. Initially, one hundred million (100,000,000) shares of the
corporation's Common Stock are classified as and are allocated to each such
designated series.
Unless otherwise prohibited by law, so long as the corporation is
registered as an open-end investment company under the Investment Company Act of
1940, as amended, the total number of shares which the corporation is authorized
to issue may be increased or decreased by the board of directors in accordance
with the applicable provisions of the Maryland General Corporation Law.
Section 2. No holder of stock of the corporation shall be entitled as a
matter of right to purchase or subscribe for any shares of the capital stock of
the corporation which it may issue or sell, whether out of the number of shares
authorized by these articles of incorporation, or out of any shares of the
capital stock of the corporation acquired by it after the issue thereof.
Section 3. The corporation is authorized to issue its stock in one or more
series or one or more classes of shares, and, subject to the requirements of the
Investment Company Act of 1940, as amended, particularly Section 18(f) thereof
and Rule 18f-2 thereunder, the different series and classes, if any, shall be
established and designated, and the variations in the relative preferences,
conversion and other rights, voting powers, restrictions, limitations as to
dividends, qualifications and terms and conditions of redemption as between the
different series or classes shall be fixed and determined and may be classified
and reclassified by the board of directors; provided that the board of directors
shall not classify or reclassify any of such shares into any class or series of
stock which is prior to any class or series of stock then outstanding with
respect to rights upon the liquidation, dissolution or winding up of the affairs
of, or upon any distribution of the general assets of, the corporation, except
that there may be variations so fixed and determined between different series or
classes as to investment objective, purchase price, right of redemption, special
rights as to dividends and on liquidation with respect to assets and income
belonging to a particular series or class, voting powers and conversion rights.
All references to shares in these articles of incorporation shall be deemed to
be shares of any or all series and classes of shares of the corporation's
capital stock as the context may require.
(a) The number of authorized shares allocated to each series or class
and the number of shares of each series or of each class that may be
issued shall be in such number as may be determined by the board of
directors. The directors may classify or reclassify any unissued
shares or any shares previously issued and reacquired of any series
or class into one or more series or one or more classes that may be
established and designated by the board of directors from time to
time. The directors may hold as treasury shares (of the same or
some other series or class), reissue for such consideration and on
such terms as they may determine, or cancel any shares of any series
or any class reacquired by the corporation at their discretion from
time to time.
<PAGE>
(b) All consideration received by the corporation for the issue or sale
of shares of a particular series or class, together with all assets
in which such consideration is invested or reinvested, all income,
earnings, profits and proceeds thereof, including any proceeds
derived from the sale, exchange or liquidation of such assets, and
any funds or payments derived from any reinvestment of such proceeds
in whatever form the same may be, shall irrevocably belong to that
series or class for all purposes, subject only to the rights of
creditors of that series or class, and shall be so recorded upon the
books of account of the corporation. In the event that there are
any assets, income, earnings, profits and proceeds thereof, funds,
or payments which are not readily identifiable as belonging to any
particular series or class, the directors shall allocate them among
any one or more of the series or classes established and designated
from time to time in such manner and on such basis as they, in their
sole discretion, deem fair and equitable. Each such allocation by
the corporation shall be conclusive and binding upon the
stockholders of all series or classes for all purposes. The
directors shall have full discretion, to the extent not inconsistent
with the Investment Company Act of 1940, as amended, and the
Maryland General Corporation Law to determine which items shall be
treated as income and which items shall be treated as capital; and
each such determination and allocation shall be conclusive and
binding upon the stockholders.
(c) The assets belonging to each particular class or series shall be
charged with the liabilities of the corporation in respect to that
class or series and all expenses, costs, charges and reserves
attributable to that class or series, and any general liabilities,
expenses, costs, charges or reserves of the corporation which are
not readily identifiable as belonging to any particular class or
series shall be allocated and charged by the directors to and among
any one or more of the classes or series established and designated
from time to time in such manner and on such basis as the directors
in their sole discretion deem fair and equitable. Each allocation
of liabilities, expenses, costs, charges and reserves by the
directors shall be conclusive and binding upon the stockholders of
all series and classes for all purposes.
(d) Dividends and distributions on shares of a particular series or
class may be paid with such frequency as the directors may
determine, which may be daily or otherwise, pursuant to a standing
resolution or resolutions adopted only once or with such frequency
as the board of directors may determine, to the holders of shares of
that series or class, from such of the income and capital gains,
accrued or realized, from the assets belonging to that series or
class, as the directors may determine, after providing for actual
and accrued liabilities belonging to that series or class. All
dividends and distributions on shares of a particular series or
class shall be distributed pro rata to the holders of that series or
class in proportion to the number of shares of that series or class
held by such holders at the date and time of record established for
the payment of such dividends or distributions except that in
connection with any dividend or distribution program or procedure,
<PAGE>
the board of directors may determine that no dividend or
distribution shall be payable on shares as to which the
stockholder's purchase order and/or payment have not been received
by the time or times established by the board of directors under
such program or procedure.
The corporation intends to have each series that may be established
to represent interests of a separate investment portfolio qualify as
a "regulated investment company" under the Internal Revenue Code of
1986, or any successor comparable statute thereto, and regulations
promulgated thereunder. Inasmuch as the computation of net income
and gains for federal income tax purposes may vary from the
computation thereof on the books of the corporation, the board of
directors shall have the power, in its sole discretion, to
distribute in any fiscal year as dividends, including dividends
designated in whole or in part as capital gains distributions,
amounts sufficient, in the opinion of the board of directors, to
enable the respective series to qualify as regulated investment
companies and to avoid liability of such series for federal income
tax in respect of that year. However, nothing in the foregoing shall
limit the authority of the board of directors to make distributions
greater than or less than the amount necessary to qualify the series
as regulated investment companies and to avoid liability of such
series for such tax.
(e) Dividends and distributions may be made in cash, property or
additional shares of the same or another class or series, or a
combination thereof, as determined by the board of directors or
pursuant to any program that the board of directors may have in
effect at the time for the election by each stockholder of the mode
of the making of such dividend or distribution to that stockholder.
Any such dividend or distribution paid in shares will be paid at the
net asset value thereof as defined in section (4) below.
(f) In the event of the liquidation or dissolution of the corporation or
of a particular class or series, the stockholders of each class or
series that has been established and designated and is being
liquidated shall be entitled to receive, as a class or series, when
and as declared by the board of directors, the excess of the assets
belonging to that class or series over the liabilities belonging to
that class or series. The holders of shares of any particular class
or series shall not be entitled thereby to any distribution upon
liquidation of any other class or series. The assets so
distributable to the stockholders of any particular class or series
shall be distributed among such stockholders in proportion to the
number of shares of that class or series held by them and recorded
on the books of the corporation. The liquidation of any particular
class or series in which there are shares then outstanding may be
authorized by vote of a majority of the board of directors then in
office, subject to the approval of a majority of the outstanding
securities of that class or series, as defined in the Investment
Company Act of 1940, as amended, and without the vote of the holders
of any other class or series. The liquidation or dissolution of a
particular class or series may be accomplished, in whole or in part,
<PAGE>
by the transfer of assets of such class or series to another class
or series or by the exchange of shares of such class or series for
the shares of another class or series.
(g) On each matter submitted to a vote of the stockholders, each holder
of a share shall be entitled to one vote for each share standing in
his name on the books of the corporation, irrespective of the class
or series thereof, and all shares of all classes or series shall
vote as a single class or series ("single class voting"); provided,
however that (i) as to any matter with respect to which a separate
vote of any class or series is required by the Investment Company
Act of 1940, as amended, or by the Maryland General Corporation Law,
such requirement as to a separate vote by that class or series shall
apply in lieu of single class voting as described above; (ii) in the
event that the separate vote requirements referred to in (i) above
apply with respect to one or more but not all classes or series,
then, subject to (iii) below, the shares of all other classes or
series shall vote as a single class or series; and (iii) as to any
matter which does not affect the interest of a particular class or
series, only the holders of shares of the one or more affected
classes shall be entitled to vote. Holders of shares of the stock
of the corporation shall not be entitled to exercise cumulative
voting in the election of directors or on any other matter.
(h) The establishment and designation of any series or class of shares,
in addition to the initial class of shares which has been
established in section (1) above, shall be effective upon the
adoption by a majority of the then directors of a resolution setting
forth such establishment and designation and the relative rights and
preferences of such series or class, or as otherwise provided in
such instrument and the filing with the proper authority of the
State of Maryland of Articles Supplementary setting forth such
establishment and designation and relative rights and preferences.
Section 4. The corporation shall, upon due presentation of a share or
shares of stock for redemption, redeem such share or shares of stock at a
redemption price prescribed by the board of directors in accordance with
applicable laws and regulations; provided that in no event shall such price be
less than the applicable net asset value per share of such class or series as
determined in accordance with the provisions of this section (4), less such
redemption or other charge as is determined by the board of directors. Subject
to applicable law, the corporation may redeem shares, not offered by a
stockholder for redemption, held by any stockholder whose shares of a class or
series had a value less than such minimum amount as may be fixed by the board of
directors from time to time or prescribed by applicable law, other than as a
result of a decline in value of such shares because of market action; provided
that before the corporation redeems such shares it must notify the shareholder
by first-class mail that the value of his shares is less than the required
minimum value and allow him 60 days to make an additional investment in an
amount which will increase the value of his account to the required minimum
value. Unless otherwise required by applicable law, the price to be paid for
shares redeemed pursuant to the preceding sentence shall be the aggregate net
asset value of the shares at the close of business on the date of redemption,
and the shareholder shall have no right to object to the redemption of his
shares. The corporation shall pay redemption prices in cash, except that the
corporation may at its sole option pay redemption prices in kind in such manner
as is consistent with and not in contravention of Section 18(f) of the
Investment Company Act of 1940, as amended, and any Rules or Regulations
thereunder. Redemption prices shall be paid exclusively out of the assets of the
class or series whose shares are being redeemed.
Notwithstanding the foregoing, the corporation may postpone payment of
redemption proceeds and may suspend the right of the holders of shares of any
class or series to require the corporation to redeem shares of that class or
series during any period or at any time when and to the extent permissible under
the Investment Company Act of 1940, as amended, or any rule or order thereunder.
The net asset value of a share of any class or series of common stock of
the corporation shall be determined in accordance with applicable laws and
regulations or under the supervision of such persons and at such time or times
as shall from time to time be prescribed by the board of directors.
Section 5. The corporation may issue, sell, redeem, repurchase and
otherwise deal in and with shares of its stock in fractional denominations and
such fractional denominations shall, for all purposes, be shares having
proportionately to the respective fractions represented thereby all the rights
of whole shares, including without limitation, the right to vote, the right to
receive dividends and distributions, and the right to participate upon
liquidation of the corporation; provided that the issue of shares in fractional
denominations shall be limited to such transactions and be made upon such terms
as may be fixed by or under authority of the bylaws.
<PAGE>
Section 6. The corporation shall not be obligated to issue certificates
representing shares of any class or series unless it shall receive a written
request therefor from the record holder thereof in accordance with procedures
established in the bylaws or by the board of directors.
ARTICLE IV
PREEMPTIVE RIGHTS
No stockholder of the corporation of any class or series, whether now or
hereafter authorized, shall have any preemptive or preferential or other right
of purchase of or subscription to any share of any class or series of stock, or
shares convertible into, exchangeable for or evidencing the right to purchase
stock of any class or series whatsoever, whether or not the stock in question be
of the same class or series as may be held by such stockholder, and whether now
or hereafter authorized and whether issued for cash, property, services or
otherwise, other than such, if any, as the board of directors in its discretion
may from time to time fix.
ARTICLE V
PRINCIPAL OFFICE AND REGISTERED AGENT
The post office address of the principal office of the corporation in the
State of Maryland is 32 South Street, Baltimore, Maryland 21202. The resident
agent of the corporation is The Corporation Trust Incorporated, whose post
office address is 32 South Street, Baltimore, Maryland 21202. Said resident
agent is a corporation of the State of Maryland.
ARTICLE VI
DIRECTORS
Section 1. The initial board of directors shall consist of three members
who need not be residents of the State of Maryland or stockholders of the
corporation.
Section 2. The names of the persons who shall act as directors until the
first meeting of stockholders or until their successors shall have been elected
and qualified are as follows:
Charles W. Brady 1315 Peachtree Street, N.E., Atlanta, Georgia
R. Dalton Sim 7800 E. Union Avenue, Denver, Colorado
Dan J. Hesser 7800 E. Union Avenue, Denver, Colorado
Section 3. The number of directors may be increased or decreased in
accordance with the bylaws, provided that the number shall not be reduced to
less than three.
Section 4. A majority of the directors shall constitute a quorum for the
transaction of business, unless the bylaws shall provide that a different number
shall constitute a quorum; provided, however, that in no case shall a quorum be
less than one-third (1/3) of the total number of directors or less than two (2)
directors.
<PAGE>
Section 5. Except for the initial board of directors designated in Section
2 of this Article VI, no person shall serve as a director unless elected by the
stockholders at an annual meeting or a special meeting called for such purpose;
provided, however, that vacancies occurring between such meetings may be filled
by the directors in accordance with the bylaws, and subject to such limitations
as may be set forth by applicable laws and regulations.
Section 6. The board of directors of the corporation is hereby empowered
to authorize the issuance from time to time of shares of stock, whether of a
class or series now or hereafter authorized, for such consideration as it deems
advisable, subject to such limitations as may be set forth herein, in the
bylaws, in the Maryland General Corporation Law, and in the Investment Company
Act of 1940, as amended.
Section 7. The board of directors of the corporation may make, alter or
repeal from time to time any of the bylaws of the corporation except any
particular bylaw which is specified as not subject to alternation or repeal by
the board of directors.
ARTICLE VII
LIABILITY AND INDEMNIFICATION
Section 1. Directors and officers of the corporation, including persons
who formerly have served in such capacities, shall have limitations on, and/or
immunity from, liability of such directors and officers to the fullest extent
permitted by the Maryland General Corporation Law, subject only to such
restrictions as may be required by the Investment Company Act of 1940, as
amended, and the rules thereunder. Such limitations and/or immunity will apply
to acts or omissions occurring at the time an individual serves as a director or
officer of the corporation, whether such person is a director or officer of the
corporation at the time of any proceeding in which liability is asserted against
the director or officer. No amendment to these Articles of Incorporation or
repeal of any of its provisions shall limit or eliminate the benefits provided
to directors and officers under this provision with respect to any act or
omission which occurred prior to such amendment or repeal.
Section 2. The corporation shall indemnify and advance expenses to its
directors and officers, including persons who formerly have served in such
capacities, to the fullest extent permitted to directors by the Maryland General
Corporation Law and the bylaws of the corporation, as such Law and bylaws now or
in the future may be in effect, subject only to such limitations as may be
required by the Investment Company Act of 1940, as amended, and the rules
thereunder.
ARTICLE VIII
SPECIAL VOTING AND MEETING PROVISIONS
Section 1. Notwithstanding any provision of Maryland law requiring a
greater proportion than a majority of the votes of all classes or of any class
of stock entitled to be cast to take or authorize any action, the corporation
may take or authorize any such action upon the concurrence of a majority of the
aggregate number of the votes entitled to be cast thereon.
<PAGE>
Section 2. The presence in person or by proxy of the holders of one-third
of the shares of stock of the corporation entitled to vote without regard to
class shall constitute a quorum at any meeting of stockholders, except with
respect to any matter which by law requires the separate approval of one or more
classes of stock, in which case the presence in person or by proxy of the
holders of one-third of the shares of stock of each class entitled to vote on
the matter shall constitute a quorum for that class.
Section 3. So long as the corporation is registered pursuant to the
Investment Company Act of 1940, as amended, the corporation will not be required
to hold annual shareholder meetings in years in which the election of directors
is not required to be acted upon under the Investment Company Act of 1940, as
amended.
ARTICLE IX
AMENDMENT
The corporation reserves the right from time to time to make any amendment
of its articles of incorporation now or hereafter authorized by law, including
any amendment which alters the contract rights, as expressly set forth in such
articles, of any outstanding stock by classification, reclassification or
otherwise, but no such amendment which changes the terms or rights of any of its
outstanding shares shall be valid unless such amendment shall have been
authorized by not less than a majority of the aggregate number of votes entitled
to be cast thereon, by a vote at a meeting or in writing with or without a
meeting.
IN WITNESS WHEREOF, I have signed these articles of incorporation on this
8th day of April, 1994.
/s/ Dan J. Hesser
------------------------------------
Dan J. Hesser
STATE OF COLORADO )
) ss.
CITY AND COUNTY OF DENVER )
I hereby certify that on the 8th day of April, 1994, before me, the
subscriber, a Notary Public of the State of Colorado, in and for the City and
County of Denver, personally appeared Dan J. Hesser who acknowledged the
foregoing articles of incorporation to be his act.
WITNESS my hand and notarial seal, the day and year first above written.
/s/ Dorothy E. Olson
------------------------------
Notary Public
My commission expires: 1/30/95.
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:/s/ Dan J. Hesser
--------------------------
[SEAL] 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.
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.
[SEAL] By:/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.
BYLAWS
OF
INVESCO SPECIALTY FUNDS, INC.
AS OF APRIL 12, 1994
ARTICLE I.
SHAREHOLDERS
Section 1. Annual Meeting. Unless otherwise determined by the board of
directors or required by applicable law, no annual meeting of
shareholders shall be required to be held in any year in which
the election of directors is not required under the Investment
Company Act of 1940. If the corporation is required to hold
a meeting of shareholders to elect directors, the meeting
shall be designated as the annual meeting of shareholders for
that year, and shall be held no later than 120 days after
occurrence of the event requiring the meeting at a place
within or without the State of Maryland.
Section 2. Special Meetings. Special meetings of the shareholders
entitled to vote shall be called upon the request in writing
of the president or, in his absence, a vice president, or by a
vote of a majority of the board of directors, or upon the
request in writing of shareholders of the Company representing
not less than ten percent (10%) of the votes entitled to be
cast at the meeting.
Section 3. Place of Meetings. Each annual and any special meeting of
the shareholders shall be held at the principal office of the
corporation in Denver, Colorado, or at such alternate site as
may be determined by the board of directors.
Section 4. Notices. Notices of every meeting, annual or special, shall
specify the place, day and hour of the meeting and shall be
mailed not less than ten (10) days nor more than ninety (90)
days before such meeting. Such notice shall be given by the
Secretary of the Corporation to each shareholder entitled to
notice of and entitled to vote at the meeting. In the event
that a special meeting is called by the shareholders entitled
to vote, the Secretary of the Corporation shall inform the
shareholders who make the request of the reasonably estimated
cost of preparing and mailing a notice of the meeting, and
upon payment of these costs to the Corporation, shall notify
each shareholder entitled to notice of the meeting. Notice of
every special meeting shall indicate briefly its purpose.
Notice shall be deemed delivered where it is personally
delivered to the individual, left at the individual's usual
place of business, or mailed to the individual at the
individual's address as it appears on the records of the
Corporation.
<PAGE>
Section 5. Quorum. At every meeting of the shareholders, the presence in
person or by proxy of the holders of one-third of all of the
shares of stock of the corporation issued and outstanding and
entitled to vote without regard to class shall constitute a
quorum, except with respect to any matter which by law
requires the separate approval of one or more classes of
stock, in which case the presence in person or by proxy of the
holders of one-third of the shares of stock of each class
entitled to vote on the matter shall constitute a quorum for
that class; provided, however, that at every meeting of the
shareholders, the representation of a larger number of
shareholders shall constitute a quorum if required by the
Investment Company Act of 1940, as amended, other applicable
law, or by the Articles of Incorporation.
Section 6. Voting. At every meeting of the shareholders at which a
quorum is present, each shareholder entitled to vote shall be
entitled to vote in person, or by proxy appointed by
instrument in writing subscribed by such shareholder, or his
duly authorized attorney, and he shall have one (1) vote for
each share of stock standing registered in his name on each
matter submitted at the meeting on which such share is
entitled to vote and for each director to be elected.
Fractional shares shall be entitled to proportionate
fractional votes. Every proxy shall be dated and no proxy
shall be valid after eleven (11) months from its date unless
otherwise provided in the proxy. There shall be no cumulative
voting in the election of directors. Except as otherwise
provided by law, by the charter of the corporation, or by
these bylaws, at each meeting of stockholders at which a
quorum is present, all matters shall be decided by a majority
of the votes cast by the stockholders present in person or
represented by proxy and entitled to vote with respect to any
such matter.
Section 7. Qualification of Voters. At every meeting of shareholders,
unless the voting is conducted by inspectors, the proxies and
ballots shall be received, and all questions with respect to
the qualification of voters and the validity of proxies and
the acceptance or rejection of votes shall be decided by the
chairman of the meeting. If demanded by shareholders present
in person or by proxy entitled to cast twenty-five per cent
(25%) in number of votes, or if ordered by the chairman of the
meeting, the vote upon any election or question shall be taken
by ballot and, upon such demand or order, the voting shall be
conducted by two (2) inspectors appointed by the chairman, in
which event the proxies and ballots shall be received and all
questions with respect to the qualification of votes and the
validity of proxies and the acceptance or rejection of votes
shall be decided by such inspectors. Unless so demanded or
ordered, no vote need be by ballot and the voting need not be
conducted by inspectors.
<PAGE>
Section 8. Waiver of Notice. A waiver of notice of any meeting of
shareholders signed by any shareholder entitled to such notice
filed with the records of the meeting, whether before or after
the holding thereof or actual attendance at the meeting in
person or by proxy, shall be deemed equivalent to the giving
of notice to such shareholder.
Section 9. Adjournment. A meeting of shareholders convened on the date
for which it was called may be adjourned from time to time
without further notice to a date not more than 120 days after
the original record date of the meeting.
Section 10. Action by Shareholders Without Meeting. Except as
otherwise provided by law, the provisions of these bylaws
relating to notices and meetings to the contrary
notwithstanding, any action required or permitted to be taken
at any meeting of shareholders may be taken without a meeting
if a consent in writing setting forth the action shall be
signed by all the shareholders entitled to vote upon the
action and such consent shall be filed with the records of the
corporation.
ARTICLE II.
BOARD OF DIRECTORS
Section 1. Powers. The business and property of the corporation shall
be conducted and managed by its board of directors, which may
exercise all of the powers of the corporation, except such as
are by statute, by the charter or by the bylaws, conferred
upon or reserved to the shareholders. The board of directors
shall keep full and complete records of its transactions.
Section 2. Number. By vote of a majority of the entire board of
directors, the number of directors may be increased or
decreased from time to time; provided that, in no event, may
the number be decreased to less than three.
Section 3. Election. The members of the board of directors shall be
elected by the shareholders by plurality vote at the annual
meeting, or at any special meeting called for such purpose.
Each director shall hold office until his successor shall have
been duly chosen and qualified, or until he shall have
resigned or shall have been removed in the manner provided by
law. Any vacancy, including one created by an increase in the
number of directors on the board (except where such vacancy is
created by removal by the shareholders), may be filled by the
vote of a majority of the remaining directors, although such
majority is less than a quorum; provided, however, that
immediately after filling any vacancy by such action of the
board of directors, at least two-thirds (2/3) of the directors
then holding office shall have been elected by the
shareholders at an annual or special meeting.
<PAGE>
Section 4. Regular Meetings. The board of directors shall schedule an
Annual Meeting at such place and time as they may designate
for the purpose of organization, the election of officers, and
the transaction of other business. Other regular meetings may
be held as scheduled by a majority of the directors.
Section 5. Special Meetings. Special meetings of the board of directors
may be called at any time by the president or by a majority of
the directors or by a majority of the executive committee.
Section 6. Notice of Meetings. Notice of the place, day and hour of
every special meeting shall be given to each director at least
two (2) days before the meeting, by written announcement,
telephone, telegraph and/or mail addressed to him at his post
office address, according to the records of the corporation.
Unless required by resolution of the board of directors, no
notice of any meeting of the board of directors need state the
business to be transacted thereat. No notice of any meeting
of the board of directors need be given to any director who
attends, or to any director who, in writing executed and filed
with the records of the meeting either before or after the
holding thereof, waives such notice. Any meeting of the board
of directors may adjourn from time to time to reconvene at the
same or some other place, and no notice need be given of any
such adjourned meeting other than by announcement.
Section 7. Quorum. At all meetings of the board of directors,
one-third of the total number of directors or not less than
two (2) directors shall constitute a quorum for the
transaction of business. In the absence of a quorum, the
directors present by a majority vote and without notice other
than by announcement may adjourn the meeting from time to time
until a quorum shall be present. At any such adjourned
meeting, any business may be transacted which might have been
transacted at the meeting as originally notified.
Section 8. Compensation of Directors. Directors shall be entitled to
receive such compensation from the corporation for their
services as may from time to time be voted by the board of
directors. All directors shall be reimbursed for their
reasonable expenses of attendance, if any, at the board and
committee meetings. Any director of the corporation may also
serve the corporation in any other capacity and receive
compensation therefor.
Section 9. Vacancies. Any vacancy occurring in the board of directors
may be filled by the affirmative vote of a majority of the
remaining directors though less than a quorum of the board of
directors. A director elected to fill a vacancy shall be
elected for the unexpired term of his predecessor in office.
Any directorship to be filled by reason of an increase in the
number of directors may be filled by election by the board of
directors for a term of office continuing only until the next
election of directors by the shareholders.
<PAGE>
Section 10. Resignation and Removal of Directors. Any director or
member of any committee may resign at any time. Such
resignation shall be made in writing and shall take effect at
the time specified therein. If no time is specified, it shall
take effect from the time of its receipt by the Secretary, who
shall record such resignation, noting the day and hour of its
reception. The acceptance of a resignation shall not be
necessary to make it effective. Notwithstanding anything to
the contrary in Article I, Section 2 hereof, a meeting for
removing a director shall be called in accordance with the
procedures specified in Section 16(c) of the Investment
Company Act of 1940, and the shareholder communications
provisions of said Section 16(c) shall be following by the
corporation. At any meeting of shareholders, duly called and
at which a quorum is present, the shareholders may, by
affirmative vote of the holders of a majority of the votes
entitled to be cast thereon, remove any director or directors
from office and may elect a successor or successors to fill
any resulting vacancies to hold office until the next annual
meeting of shareholders or until a successor or successors are
elected and qualify.
Section 11. Telephone Meetings. Any member or members of the board of
directors or of any committee designated by the board of
directors, may participate in a meeting of the board, or any
such committee, as the case may be, by means of a conference
telephone or similar communications equipment if all persons
participating in the meeting can hear each other at the same
time. Participation in a meeting by these means constitutes
presence in person at the meeting. This Section 11 shall not
be applicable to meetings held for the purpose of voting in
respect of approval of contracts or agreements whereby a
person undertakes to serve or act as investment adviser of, or
principal underwriter for, the corporation or in respect to
other matters as to which the Investment Company Act of 1940
or the rules thereunder require that votes be cast in person.
Section 12. Action by Directors Without Meeting. The provisions of these
bylaws covering notices and meetings to the contrary
notwithstanding, and except as required by law (including
Section 15 of the Investment Company Act of 1940), any action
required or permitted to be taken at any meeting of the board
of directors may be taken without a meeting if a consent in
writing setting forth the action shall be signed by all of the
directors entitled to vote upon the action and such written
consent is filed with the minutes of proceedings of the board
of directors.
ARTICLE III.
COMMITTEES
Section 1. Executive Committee. The board of directors, by resolution
adopted by a majority of the whole board of directors, may
<PAGE>
provide for an executive committee of three (3) or more
directors. If provision be made for an executive committee,
the members thereof shall be elected by the board of directors
to serve during the pleasure of the board of directors.
Unless otherwise provided by resolution of the board of
directors, the president shall be a member and the chairman of
the executive committee shall preside at all meetings thereof.
During the intervals between the meetings of the board of
directors, the executive committee shall possess and may
exercise all of the powers of the board of directors in the
management of the business and affairs of the corporation
conferred by the bylaws or otherwise, to the extent authorized
by the resolution providing for such executive committee or by
subsequent resolution adopted by a majority of the whole board
of directors, in all cases in which specific directions shall
not have been given by the board of directors.
Notwithstanding the foregoing, the executive committee shall
not have the power to: (i) declare dividends or distributions
on stock; (ii) issue stock other than as provided by the
Maryland General Corporation Law; (iii) recommend to the
shareholders any action which requires shareholder approval;
(iv) amend these bylaws; or (v) approve any merger or share
exchange which does not require shareholder approval. The
executive committee shall maintain written records of its
transactions. All action by the executive committee shall be
reported to the board of directors at its meeting next
succeeding such action, and shall be subject to ratification,
with or without revision or alteration, by such vote of the
board of directors as would have been required under Article
II, Section 7, hereof, had such action been taken by the board
of directors. Vacancies in the executive committee shall be
filled by the board of directors.
Section 2. Meetings of the Executive Committee. The executive committee
shall fix its own rules of procedure and shall meet as
provided by such rules or by resolution of the board of
directors, and it shall also meet at the call of the chairman
or of any two (2) members of the committee. A majority of the
executive committee shall constitute a quorum. Except in
cases in which it is otherwise provided by resolution of the
board of directors, the vote of a majority of such quorum at
a duly constituted meeting shall be sufficient to elect and to
pass any measure, subject to ratification by the board of
directors as provided in Section 1 of this Article III.
Section 3. Other Committees. The board of directors may by resolution
provide for such other standing or special committees as it
deems desirable, and discontinue the same at its pleasure.
Each such committee shall have such powers and perform such
duties as may be assigned to it by the board of directors.
Section 4. Committee Action Without Meeting. The provisions of these
bylaws covering notices and meetings to the contrary
<PAGE>
notwithstanding, and except as required by law, any action
required or permitted to be taken at any meeting of any
committee of the board of directors appointed pursuant to
these bylaws may be taken without a meeting if a consent in
writing setting forth the action shall be signed by all
members of the committee entitled to vote upon the action, and
such written consent is filed with the records of the
proceedings of the committee.
ARTICLE IV.
OFFICERS
Section 1. Numbers; Qualifications; Term of Office; Vacancies. The board
of directors may select one of their number as chairman of the
board and may select one of their number as vice chairman of
the board (neither of which positions shall be considered to
be the designation of a position as an officer of the
corporation), and shall choose as officers a president from
among the directors and a treasurer and a secretary who need
not be directors. The board of directors may also choose one
or more vice presidents, one or more assistant secretaries and
one or more assistant treasurers, none of whom need be a
director. Any two or more of such offices, except those of
president and vice president, may be held by the same person,
but no officer shall execute, acknowledge or verify any
instrument in more than one capacity if such instrument is
required by law or by the certificate of incorporation or by
these bylaws or by resolution of the board of directors to be
executed, acknowledged or verified by any two or more
officers. Each such officer shall hold office until the first
meeting of the board of directors after the annual meeting of
the shareholders next following his election or, if no such
annual meeting of the shareholders is held, until the annual
meeting of the board of directors in the year following his
election, and, until his successor is chosen and qualified or
until he shall have resigned or died, or until he shall have
been removed as hereinafter provided in Section 3 of this
Article IV. Any vacancy in any of the above offices may be
filled by the board of directors at any regular or special
meeting. All officers and agents of the corporation, as
between themselves and the corporation, shall have such
authority and perform such duties in the management of the
corporation as may be provided in or pursuant to these bylaws,
or, to the extent not so provided, as may be prescribed by the
board of directors; provided, that no rights of any third
party shall be affected or impaired by any such bylaws or
resolution of the board unless the third party has knowledge
thereof.
<PAGE>
Section 2. Subordinate Officers. The board of directors, or any
officer thereunto authorized by it, may appoint from time to
time such other officers and agents for such terms of office
and with such powers and duties as may be prescribed by the
board of directors or the officer making such appointment.
Section 3. Removal. Any officer or agent may be removed by the board
of directors whenever, in its judgment, the best interests of
the corporation will be served thereby, but such removal shall
be without prejudice to the contractual rights, if any, of the
person so removed.
Section 4. Chairman of the Board. The chairman of the board, if one
shall be elected, shall preside at all meetings of the board
of directors, and shall appoint all committees except such as
are required by statute, these bylaws or a resolution of the
board of directors or of the executive committee to be
otherwise appointed, and shall have other such duties as may
be assigned to him from time to time by the board of
directors. In recognition of notable and distinguished
services to the corporation, the board of directors may
designate one of its members as honorary chairman, who shall
have such duties as the board may, from time to time, assign
him by appropriate resolution, excluding, however, any
authority or duty vested by law or these bylaws in any other
officer.
Section 5. Vice Chairman of the Board. The vice chairman of the board,
if one shall be elected, shall preside at all meetings of the
board of directors at which the chairman of the board is not
present, shall call at his discretion and shall preside at
meetings of those directors of the corporation who are not
affiliated with the corporation's investment adviser,
distributor, or affiliates thereof, and shall perform such
other duties as may be assigned to the vice chairman from time
to time by the board of directors.
Section 6. President. The president shall preside at all meetings of the
shareholders and, in the absence of the chairman and the vice
chairman of the board or if a chairman and vice chairman of
the board are not elected, at all meetings of the board of
directors. Unless otherwise provided by the board of
directors, he shall have direct control of and any authority
over the business and affairs and over the officers of the
corporation, and shall preside at all meetings of the
executive committee. The president shall also perform all
such other duties as are incident to his office and as may be
assigned to him from time to time by the board of directors.
Section 7. Vice Presidents. The vice president or vice presidents, at
the request of the president or in his absence or inability to
act, shall perform the duties and exercise the functions of
the president in such manner as may be directed by the
<PAGE>
president, the board of directors or the executive committee.
The vice president or vice presidents shall have such other
powers and perform all such other duties as may be assigned to
them by the board of directors, the executive committee, or
the president.
Section 8. Secretary. The secretary shall see that all notices are duly
given in accordance with these bylaws; he shall keep the
minutes of all meetings of the shareholders and, if directed
to do so by the chairman of the meeting, of meetings of the
board of directors and of the executive committee at which he
shall be present; he shall have charge of the books and
records and the corporate seal or seals of the corporation; he
shall see that the corporate seal is affixed to all documents,
the execution of which under the seal of the corporation is
duly authorized and is necessary; and he shall make such
reports and perform all such other duties as are incident to
his office and as may be assigned to him from time to time by
the board of directors or by the president.
Section 9. Treasurer. The treasurer shall be the chief financial officer
of the corporation, and as such shall have supervision of the
custody of all funds, securities and valuable documents of the
corporation, subject to such arrangements as may be authorized
or approved by the board of directors with respect to the
custody of assets of the corporation; shall receive, or cause
to be received, and give, or cause to be given, receipts for
all funds, securities or valuable documents paid or delivered
to, or for the account of, the corporation, and cause such
funds, securities or valuable documents to be deposited for
the account of the corporation with such banks or trust
companies as shall be designated by the board of directors;
shall pay or cause to be paid out of the funds of the
corporation all just debts of the corporation upon their
maturity; shall maintain, or cause to be maintained, accurate
records of all receipts, disbursements, assets, liabilities,
and transactions of the corporation; shall see that adequate
audits thereof are regularly made; shall, when required by the
board of directors, render accurate statements of the
condition of the corporation; and shall perform all such other
duties as are incident to his office and as may be assigned to
him by the board of directors or by the president.
Section 10. Assistant Secretaries, Assistant Treasurers. The assistant
secretaries and assistant treasurers shall have such duties as
from time to time may be assigned to them by the board of
directors, or by the president.
Section 11. Compensation. The board of directors shall have the power
to fix the compensation of all officers and agents of the
corporation, but may delegate to any officer or committee the
power of determining the amount of salary to be paid to any
officer or agent of the corporation other than the chairman of
the board, the president, the vice presidents, the secretary
and the treasurer.
<PAGE>
Section 12. Contracts. Except as otherwise provided by law or by the
charter, no contract or transaction between the corporation
and any partnership or corporation, and no act of the
corporation, shall in any way be affected or invalidated by
the fact that any officer or director of the corporation is
pecuniarily or otherwise interested therein or is a member,
officer or director of such other partnership or corporation
if such interest shall be known to the board of directors of
the corporation. Specifically, but without limitation of the
foregoing, the corporation may enter into one or more
contracts appointing INVESCO Funds Group, Inc. investment
adviser of the corporation, and may otherwise do business with
INVESCO Funds Group, Inc., notwithstanding the fact that one
or more of the directors of the corporation and some or all of
its officers are, have been or may become directors, officers,
members, employees, or shareholders of INVESCO Funds Group,
Inc. and may deal freely with each other, and neither such
contract appointing INVESCO Funds Group, Inc. investment
adviser to the corporation nor any other contract or
transaction between the corporation and INVESCO Funds Group,
Inc. shall be invalidated or in any way affected thereby, nor
shall any director or officer of the corporation by reason
thereof be liable to the corporation or to any shareholder or
creditor of the corporation or to any other person for any
loss incurred under or by reason of any such contract or
transaction. For purposes of this paragraph, any reference to
"INVESCO Funds Group, Inc." shall be deemed to include said
company and any parent, subsidiary or affiliate of said
company and any successor (by merger, consolidation or
otherwise) to said company or any such parent, subsidiary or
affiliate.
Section 13. Delegation of Duties. Whenever an officer is absent or
disabled, or whenever for any reason the board of directors
may deem it desirable, the board may delegate the powers and
duties of an officer to any other officer or officers or to
any director or directors.
ARTICLE V.
CAPITAL STOCK
Section 1. Issuance of Stock. The corporation shall not issue its shares
of capital stock except as approved by the board of directors.
Upon the sale of each share of its common stock, except as
otherwise permitted by applicable laws and regulations, the
corporation shall receive in cash or in securities valued as
provided in Article VIII of these bylaws, not less than the
current net asset value thereof, exclusive of any distributing
commission or discount, and in no event less than the par
value thereof.
<PAGE>
Section 2. Certificates. Certificates for the Corporation's classes of
Common Stock shall be issued only upon the specific request of
a shareholder. If certificates are requested, they shall be
issued in such a form as may be approved by the board of
directors, they shall be respectively numbered serially for
each class of shares, or series thereof, as they are issued,
and shall be signed by, or bear a facsimile of the signatures
of, the president or a vice president, and shall also be
signed by, or bear a facsimile of the signature of some other
person who is one of the following: the treasurer, an
assistant treasurer, the secretary, or an assistant secretary;
and shall be sealed with, or bear a facsimile of, the seal of
the corporation. In case any officer of the corporation whose
signature or facsimile signature appears on such certificates
shall cease to be such officer, whether because of death,
resignation or otherwise, certificates may nevertheless be
issued and delivered as though such person had not ceased to
be an officer.
Section 3. Transfers. Subject to the Maryland General Corporation Law,
the board of directors shall have power and authority to make
all such rules and regulations as it may deem expedient
concerning the issue, transfer and registration of
certificates of stock; and may appoint transfer agents and
registrars thereof. The duties of transfer agent and registrar
may be combined.
Section 4. Stock Ledgers. Original or duplicate stock ledgers,
containing the names and addresses of the shareholders of the
corporation and the number of shares of each class held by
them respectively, shall be kept at an office or agency of the
corporation in such city or town as may be designated by the
board of directors.
Section 5. Closing of Transfer Books or Fixing of Record Date. For the
purpose of determining shareholders entitled to notice of or
to vote at any meeting of shareholders or any adjournment
thereof, or shareholders entitled to receive payment of any
dividend, or in order to make a determination of shareholders
for any other purpose, the board of directors of the
Corporation may provide that the share transfer books shall be
closed for a stated period but not to exceed, in any case,
twenty days. If the share transfer books shall be closed for
<PAGE>
the purpose of determining shareholders entitled to notice of
or to vote at a meeting of shareholders, such books shall be
closed for at least ten days immediately preceding such
meeting. In lieu of closing the share transfer books, the
board of directors may fix in advance a date as the record
date for any such determination of shareholders, such date in
any case to be not more than ninety days and, in case of a
meeting of shareholders, not less than ten days prior to the
date on which the particular action, requiring such
determination of shareholders, is to be taken. If the share
transfer books are not closed and no record date is fixed for
the determination of shareholders entitled to notice of or to
vote at a meeting of shareholders, the later of the close of
business on the date on which notice of the meeting is mailed
or the thirtieth day before the meeting shall be the record
date for determining shareholders entitled to notice of or to
vote at a meeting of shareholders. The record date for
determining shareholders entitled to receive payment of a
dividend or an allotment of any rights shall be the close of
business on the day on which the resolution of the board of
directors declaring such dividend or allotment of rights is
adopted. But the payment or allotment may not be made more
than 60 days after the date on which the resolution is
adopted. When a determination of shareholders entitled to vote
at any meeting of shareholders has been made as provided in
this section, such determination shall apply to any
adjournment thereof.
Section 6. New Certificates. In case any certificate of stock is lost,
stolen, mutilated or destroyed, the board of directors may
authorize the issue of a new certificate in place thereof upon
such terms and conditions as it may deem advisable; or the
board of directors may delegate such power to any officer or
officers of the corporation; but the board of directors or
such officer or officers, in their discretion, may refuse to
issue such new certificate, save upon the order of some court
having jurisdiction in the premises.
Section 7. Registered Owners of Stock. The corporation shall be entitled
to recognize the exclusive right of a person registered on its
books as the owner of shares of stock to receive dividends,
and to vote as such owner, and to hold liable for calls and
assessments a person registered on its books as the owner of
shares of stock, and shall not be bound to recognize any
equitable or other claim to or interest in such share or
shares on the part of any other person, whether or not it
shall have express or other notice thereof, except as
otherwise provided by the laws of Maryland.
Section 8. Fractional Denominations. Subject to any applicable
provisions of law and the charter of the corporation, the
corporation may issue shares of its capital stock in
fractional denominations, provided that the transactions in
<PAGE>
which and the terms and conditions upon which shares in
fractional denominations may be issued from time to time be
limited or determined by or under the authority of the board
of directors.
ARTICLE VI.
FINANCES
Section 1. Checks, drafts, etc. All instruments, documents, and other
papers shall be executed in the name and on behalf of the
corporation, and all drafts, checks, notes and other
obligations for the payment of money by the corporation shall,
unless otherwise provided by resolution of the board of
directors, be signed by the president or vice president and
countersigned by the secretary or treasurer.
Section 2. Annual Reports. A statement of the affairs of the corporation
shall be submitted at the annual meeting of the shareholders
and, within twenty (20) days after the meeting, shall be
placed on file at the corporation's principal office. If the
corporation is not required to hold an annual meeting of
shareholders, the corporation's statement of affairs shall be
placed on file at the corporation's principal office within
one hundred and twenty (120) days after the end of its fiscal
year. Such statement shall be prepared by such executive
officer of the corporation as may be designated by resolution
of the board of directors. If no other executive officer is
so designated, it shall be the duty of the president to
prepare such statement.
Section 3. Fiscal Year. The fiscal year of the corporation shall begin
on the 1st day of April in each year and end on the 31st day
of March following.
Section 4. Dividends and Distributions. Subject to any applicable
provisions of law and the charter of the corporation,
dividends and distributions upon the common stock of the
corporation may be declared at such intervals as the board of
directors may determine, in cash, in securities or other
property, or in shares of stock of the corporation, from any
sources permitted by law, all as the board of directors shall
from time to time determine.
Section 5. Location of Books and Records. The books and records of the
corporation may be kept outside the State of Maryland at the
principal office of the corporation or at such place or places
as the board of directors may from time to time determine,
except as otherwise required by law.
<PAGE>
ARTICLE VII.
REDEMPTION OF STOCK
The registered owner of the outstanding stock of the corporation shall
have the right to require the corporation to redeem his shares at the asset
value thereof, as hereinafter defined in Article VIII of these bylaws, upon
delivery to the corporation of any certificate, or certificates, properly
endorsed, which have been issued as evidence of ownership of such stock, and a
written request for redemption in a form satisfactory to the corporation.
Stock of the corporation shall be redeemed at the current net asset value
per share next determined after a request in proper form has been received from
the registered owner or owner's designee at the office of the corporation
designated to receive redemption requests. Any certificates delivered at the
designated principal place of business of the corporation on a day which is not
a business day as herein defined, shall be deemed to have been received on the
business day next succeeding the day of such delivery. Subject to the
limitations of the Investment Company Act of 1940, the board of directors shall
have authority to fix a reasonable service charge for redemption of its stock,
including redemption pursuant to any periodic withdrawal or variable payment
plan or contract.
ARTICLE VIII.
DETERMINATION OF ASSET VALUE
Section 1. Net Asset Value. The net asset value of a share of common
stock of the corporation shall be determined in accordance
with applicable laws and regulations under the supervision of
such persons and at such time or times, including the close of
business on each business day, as shall be prescribed by the
board of directors. Each such determination shall be made by
subtracting from the value of the assets of the corporation
(as determined pursuant to Section 2 of this Article of the
bylaws) the amount of its liabilities, dividing the remainder
by the number of shares of common stock issued and
outstanding, and adjusting the results to the nearest full
cent per share.
Section 2. Valuation of Portfolio Securities and Other Assets. Except
as otherwise required by any applicable law or regulation of
any regulatory agency having jurisdiction over the activities
of the corporation, the corporation shall determine the value
of its portfolio securities and other assets as follows:
(a) securities for which market quotations are readily
available shall be valued at current market value
determined in such manner as the board of directors may
from time to time prescribe;
<PAGE>
(b) all other securities and assets shall be valued at
amounts deemed best to reflect their fair value as
determined in good faith by or under the supervision of
such persons and at such time or times as shall from
time to time be prescribed by the board of directors;
All quotations, sale prices, bid and asked prices and other
information shall be obtained from such sources as the persons
making such determination believe to be reliable, and any
determination of net asset value based thereon shall be
conclusive.
ARTICLE IX.
PERIOD OF EMERGENCY
During any period of emergency, the board of directors, at its option, may
suspend the computation of asset value for the purpose of issuing or redeeming
it stock, and may suspend any obligation to accept payments for the acquisition
of additional stock of the corporation and may suspend the obligation of the
corporation to redeem stock. A period of emergency is defined to be:
(a) A period during which the New York Stock Exchange is closed other
than customary weekend and holiday closings, or during which trading
on the New York Stock Exchange is restricted;
(b) A period during which disposal by the corporation of securities
owned by it is not reasonably practicable, or during which it is not
reasonably practicable for the corporation to fairly to determine
the value of its net assets; or
(c) Such other periods as the Securities and Exchange Commission
pursuant to the provisions of the Investment Company Act of 1940 may
by order declare as an emergency period or periods.
ARTICLE X.
MISCELLANEOUS PROVISIONS
Section 1. Seal. The board of directors shall provide a suitable seal,
bearing the name of the corporation, which shall be in the
charge of the secretary. The board of directors may authorize
one or more duplicate seals and provide for the custody
thereof.
Section 2. Bonds. The board of directors may require any officer,
agent or employee of the corporation to give a bond to the
corporation, conditioned upon the faithful discharge of his
duties, with one or more sureties and in such amount as may be
satisfactory to the board of directors.
<PAGE>
Section 3. Voting upon Stock in Other Corporations. Any stock in other
corporations or associations, which may from time to time be
held by the corporation, may be voted at any meeting of the
shareholders thereof by the president or a vice president of
the corporation or by proxy or proxies appointed by the
president or one of the vice presidents of the corporation.
The board of directors, however, may by resolution appoint
some other person or persons to vote such stock, in which
case, such person or persons shall be entitled to vote such
stock upon the production of a certified copy of such
resolution.
Section 4. Bylaws. The board of directors shall have the power to make,
amend and repeal the bylaws of the corporation which may
contain any provision for regulation and management of the
affairs of the corporation not inconsistent with law or the
certificate of incorporation; provided that any and all
provisions of the bylaws, notwithstanding the power of the
directors to act with respect thereto, may be altered or
repealed, and new provisions may be adopted by the
shareholders or at any annual meeting or any special meeting
called for that purpose.
Section 5. Appointment and Duties of Custodian. The corporation shall
at all times employ a bank or trust company having the
qualifications specified by the Investment Company Act of
1940, as amended, as custodian with authority as its agent,
but subject to such restrictions, limitations and other
requirements, if any, as may be contained in these bylaws and
the Investment Company Act of 1940, as amended:
(1) to receive and hold the securities owned by the
corporation and deliver the same upon written order;
(2) to receive and receipt for any moneys due to the
corporation and deposit the same in its own banking
department or elsewhere as the board of directors may
direct;
(3) to disburse such funds upon orders or vouchers;
(4) and to provide such additional services as may be
requested by the corporation;
all upon such basis of compensation as may be agreed upon
between the board of directors and the custodian.
The board of directors may also authorize the custodian to employ one or
more sub-custodians from time to time to perform such of the acts and
services of the custodian, and upon such terms and conditions, as may be
agreed upon between the custodian and such sub-custodian and approved by
the board of directors.
<PAGE>
Section 6. Central Certification System. Subject to such rules,
regulations and orders as the U.S. Securities and Exchange
Commission may adopt, the board of directors may direct the
custodian to deposit all or any part of the securities owned
by the corporation in a system for the central handling of
securities established by a national securities exchange or a
national securities association registered with the SEC under
the Securities Exchange Act of 1934, or such other person as
may be permitted by the SEC or its staff in accordance with
the Investment Company Act of 1940, as amended, and any rule
or staff interpretation thereof, pursuant to which system all
securities of any particular class or series of any issuer
deposited within the system are treated as fungible and may be
transferred or pledged by bookkeeping entry without physical
delivery of such securities, provided that all such deposits
shall be subject to withdrawal only upon the order of the
corporation.
Section 7. Compliance with Federal Regulations. The board of directors
is hereby empowered to take such action as it may deem to be
necessary, desirable or appropriate so that the corporation is
or shall be in compliance with any federal or state statute,
rule or regulation with which compliance by the corporation is
required.
Section 8. Waiver of Notice. Whenever any notice of the time, place or
purpose of any meeting of shareholders, directors, or of any
committee is required to be given under the provisions of
statute or under the provisions of the charter of the
corporation or these bylaws, a waiver thereof in writing,
signed by the person or person entitled to such notice and
filed with the records of the meeting, whether before or after
the holding thereof, or actual attendance at the meeting of
directors or committee in person, shall be deemed equivalent
to the giving of such notice to such person.
Section 9. Offices. The principal office of the corporation in the
State of Maryland shall be in the City of Baltimore. In
addition to its principal office in the State of Maryland, the
corporation may have an office or offices in the City of
Denver, State of Colorado, and at such other places as the
board of directors may from time to time designate or the
business of the corporation may require.
Section 10. Definitions. For all purposes of the certificate of
incorporation and these bylaws, the terms:
(a) "business day" shall be defined as a day with respect to
which the New York Stock Exchange is open for business,
and with respect to which the actual time of closing of
such exchange is that time which shall have been
scheduled for such closing in advance of the opening of
such exchange;
(b) "the close of business" shall be defined as the time of
closing of the New York Stock Exchange.
INVESTMENT ADVISORY AGREEMENT
THIS AGREEMENT is made this 2nd day of May, Denver, Colorado, by and
between INVESCO Funds Group, Inc. (the "Adviser"), a Delaware corporation, and
INVESCO Specialty Funds, Inc., a Maryland Corporation (the "Company").
W I T N E S S E T H :
WHEREAS, the Company is a corporation organized under the laws of the
State of Maryland; and
WHEREAS, the Company is registered under the Investment Company Act of
1940, as amended (the "Investment Company Act"), as a diversified, open-end
management investment company and has one class of shares (the "Shares"), which
is divided into two series, each representing an interest in a separate
portfolio of investments (such series initially being the INVESCO Worldwide
Capital Goods Fund and INVESCO Worldwide Communications Fund (individually, the
"Fund" and collectively, the "Funds")); and
WHEREAS, the Company desires that the Adviser manage its investment
operations and the Adviser desires to manage said operations;
NOW, THEREFORE, in consideration of these premises and of the mutual
covenants and agreements hereinafter contained, the parties hereto agree as
follows:
1. Investment Management Services. The Adviser hereby agrees to manage
the investment operations of the Company and its Funds, subject to
the terms of this Agreement and to the supervision of the Company's
directors (the "Directors"). The Adviser agrees to perform, or
arrange for the performance of, the following specific services for
the Company:
(a) to manage the investment and reinvestment of all the assets,
now or hereafter acquired, of the Company and the Funds of the
Company;
(b) to maintain a continuous investment program for the Company
and each Fund of the Company, consistent with (i) the
Company's and each Fund's investment policies as set forth in
the Company's 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 Company or any Fund 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) to determine what securities are to be purchased or sold for
the Company and its Funds, unless otherwise directed by the
Directors of the Company, and to execute transactions
accordingly;
<PAGE>
(d) to provide to the Company and the Funds of the Company the
benefit of all of the investment analyses 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
Adviser;
(e) to determine what portion of the Company and each Fund of the
Company should be invested in common stocks, preferred stocks,
Government obligations, commercial paper, certificates of
deposit, bankers' acceptances, variable amount notes,
corporate debt obligations, and any other authorized
securities;
(f) to make recommendations as to the manner in which voting
rights, rights to consent to Company and/or Fund action and
any other rights pertaining to the Company's portfolio
securities shall be exercised; and
(g) to calculate the net asset value of the Company and each Fund,
as applicable, as required by the 1940 Act, subject to such
procedures as may be established from time to time by the
Company's Directors, based upon the information provided to
the Adviser by the Company or by the custodian, co-custodian
or sub-custodian of the Company's or any of the Funds' assets
(the "Custodian") or such other source as designated by the
Directors from time to time.
With respect to execution of transactions for the Company and for
the Funds, the Adviser shall place, or arrange for the placement of,
all orders for the purchase or sale of portfolio securities with
brokers or dealers selected by the Adviser. In connection with the
selection of such brokers or dealers and the placing of such orders,
the Adviser is directed at all times to obtain for the Company and
the Funds the most favorable execution and price; after fulfilling
this primary requirement of obtaining the most favorable execution
and price, the Adviser is hereby expressly authorized to consider as
a secondary factor in selecting brokers or dealers with which such
orders may be placed whether such firms furnish statistical,
research and other information or services to the Adviser. Receipt
by the Adviser of any such statistical or other information and
services should not be deemed to give rise to any requirement for
adjustment of the advisory fee payable pursuant to paragraph 4
hereof. The Adviser may follow a policy of considering sales of
shares of the Company as a factor in the selection of broker/dealers
to execute portfolio transactions, subject to the requirements of
best execution discussed above.
The Adviser shall for all purposes herein provided be deemed to be
an independent contractor.
<PAGE>
2. Allocation of Costs and Expenses. The Adviser shall reimburse the
Company monthly for any salaries paid by the Company to officers,
Directors, and full-time employees of the Company who also are
officers, general partners or employees of the Adviser or its
affiliates. Except for such subaccounting, recordkeeping, and
administrative services which are to be provided by the Adviser to
the Company under the Administrative Services Agreement between the
Company and the Adviser dated May 2, 1994, which was approved on
April 20, 1994, by the Company's board of directors, including all
of the independent directors, at the Company's request the Adviser
shall also furnish to the Company, at the expense of the Adviser,
such competent executive, statistical, administrative, internal
accounting and clerical services as may be required in the judgment
of the Directors of the Company. These services will include, among
other things, the maintenance (but not preparation) of the Company's
accounts and records, and the preparation (apart from legal and
accounting costs) of all requisite corporate documents such as tax
returns and reports to the Securities and Exchange Commission and
Company shareholders. The Adviser also will furnish, at the
Adviser's expense, such office space, equipment and facilities as
may be reasonably requested by the Company from time to time.
Except to the extent expressly assumed by the Adviser herein and
except to the extent required by law to be paid by the Adviser, the
Company shall pay all costs and expenses in connection with the
operations and organization of the Company. Without limiting the
generality of the foregoing, such costs and expenses payable by the
Company include the following:
(a) all brokers' commissions, issue and transfer taxes, and other
costs chargeable to the Company and any Fund in connection
with securities transactions to which the Company or any Fund
is a party or in connection with securities owned by the
Company or any Fund;
(b) the fees, charges and expenses of any independent public
accountants, custodian, depository, dividend disbursing agent,
dividend reinvestment agent, transfer agent, registrar,
independent pricing services and legal counsel for the Company
or for any Fund;
(c) the interest on indebtedness, if any, incurred by the Company
or any Fund;
(d) the taxes, including franchise, income, issue, transfer,
business license, and other corporate fees payable by the
Company or any Fund to federal, state, county, city, or other
governmental agents;
(e) the fees and expenses involved in maintaining the registration
and qualification of the Company and of its shares under laws
administered by the Securities and Exchange Commission or
under other applicable regulatory requirements, including the
preparation and printing of prospectuses and statements of
additional information;
<PAGE>
(f) the compensation and expenses of its Directors;
(g) the costs of printing and distributing reports, notices of
shareholders' meetings, proxy statements, dividend notices,
prospectuses, statements of additional information and other
communications to the Company's shareholders, as well as all
expenses of shareholders' meetings and Directors' meetings;
(h) all costs, fees or other expenses arising in connection with
the organization and filing of the Company's Articles of
Incorporation, including its initial registration and
qualification under the 1940 Act and under the Securities Act
of 1933, as amended, the initial determination of its tax
status and any rulings obtained for this purpose, the initial
registration and qualification of its securities under the
laws of any state and the approval of the Company's operations
by any other federal or state authority;
(i) the expenses of repurchasing and redeeming shares of the
Company;
(j) insurance premiums;
(k) the costs of designing, printing, and issuing certificates
representing shares of common stock of the Company;
(l) extraordinary expenses, including fees and disbursements of
Company counsel, in connection with litigation by or against
the Company or any Fund;
(m) premiums for the fidelity bond maintained by the Company
pursuant to Section 17(g) of the 1940 Act and rules
promulgated thereunder (except for such premiums as may be
allocated to the Adviser as an insured thereunder);
(n) association and institute dues; and
(o) the expenses, if any, of distributing shares of the Company
paid by the Company pursuant to a Plan and Agreement of
Distribution adopted under Rule 12b-1 of the Investment
Company Act of 1940.
3. Use of Affiliated Companies. In connection with the rendering of
the services required to be provided by the Adviser under this
Agreement, the Adviser may, to the extent it deems appropriate and
subject to compliance with the requirements of applicable laws and
regulations, and upon receipt of written approval of the Company,
make use of its affiliated companies and their employees; provided
that the Adviser shall supervise and remain fully responsible for
all such services in accordance with and to the extent provided by
this Agreement and that all costs and expenses associated with the
providing of services by any such companies or employees and
required by this Agreement to be borne by the Adviser shall be borne
by the Adviser or its affiliated companies.
<PAGE>
4. Compensation of the Adviser. For the services to be rendered and
the charges and expenses to be assumed by the Adviser hereunder, the
Company shall pay to the Adviser an advisory fee which will be
computed on a daily basis and paid as of the last day of each month,
using for each daily calculation the most recently determined net
asset value of each Fund of the Company, as determined by valuations
made in accordance with the Company's procedure for calculating the
Funds' net asset value as described in the Company's Prospectus
and/or Statement of Additional Information. The advisory fee to the
Adviser with respect to each Fund shall be computed at the following
annual rate: 0.65% of the first $500 million of the Fund's average
net assets, 0.55% of the Fund's average net assets in excess of $500
million but not more than $1 billion, and 0.45% of the Fund's
average net assets in excess of $1 billion.
During any period when the determination of the Funds' net asset
value is suspended by the Directors of the Company, the net asset
value of a share of the Funds as of the last business day prior to
such suspension shall, for the purpose of this Paragraph 4, 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 Adviser with respect to any assets of the
Company or any Fund thereof which may be invested in any other
investment company for which the Adviser serves as investment
adviser. The fee provided for hereunder shall be prorated in any
month in which this Agreement is not in effect for the entire month.
If, in any given year, the sum of a Fund's expenses exceeds the most
restrictive state imposed annual expense limitation, the Adviser
will be required to reimburse the Fund for such excess expenses
promptly. Interest, taxes and extraordinary items such as litigation
costs are not deemed expenses for purposes of this paragraph and
shall be borne by the Company or such Fund in any event.
Expenditures, including costs incurred in connection with the
purchase or sale of portfolio securities, which are capitalized in
accordance with generally accepted accounting principles applicable
to investment companies, are accounted for as capital items and
shall not be deemed to be expenses for purposes of this paragraph.
5. Avoidance of Inconsistent Positions and Compliance with Laws.
In connection with purchases or sales of securities for the
investment portfolio of the Company or any Fund, neither the Adviser
nor its officers or employees will act as a principal or agent for
any party other than the Company or any Fund or receive any
commissions. The Adviser will comply with all applicable laws in
acting hereunder including, without limitation, the 1940 Act; the
Investment Advisers Act of 1940, as amended; and all rules and
regulations duly promulgated under the foregoing.
6. Duration and Termination. This Agreement shall become effective as
of the date it is approved by a majority of the outstanding voting
securities of the Funds of the Company, and unless sooner terminated
as hereinafter provided, shall remain in force for an initial term
expiring April 30, 1996, and from year to year thereafter, but only
<PAGE>
as long as such continuance is specifically approved at least
annually (i) by a vote of a majority of the outstanding voting
securities of the Funds of the Company or by the Directors of the
Company, and (ii) by a majority of the Directors of the Company who
are not interested persons of the Adviser or the Company by votes
cast in person at a meeting called for the purpose of voting on such
approval. In the event of the disapproval of this Agreement, or of
the continuation hereof, by the shareholders of a particular Fund
(or by the Directors of the Company as to a particular Fund), the
parties intend that such disapproval shall be effective only as to
such Fund, and that such disapproval shall not affect the validity
or effectiveness of the approval of this Agreement, or of the
continuation hereof, by the shareholders of any other Fund (or by
the Directors, including a majority of the disinterested Directors)
as to such other Fund; in such case, this Agreement shall be deemed
to have been validly approved or continued, as the case may be, as
to such other Fund.
This Agreement may, on 60 days' prior written notice, be terminated
without the payment of any penalty, by a majority of the Directors
of the Company, or by the vote of a majority of the outstanding
voting securities of the Company or, with respect to a particular
Fund, by a majority of the outstanding voting securities of that
Fund, as the case may be, or by the Adviser. This Agreement shall
immediately terminate in the event of its assignment, unless an
order is issued by the Securities and Exchange Commission
conditionally or unconditionally exempting such assignment from the
provisions of Section 15(a) of the 1940 Act, in which event this
Agreement shall remain in full force and effect subject to the terms
and provisions of said order. In interpreting the provisions of this
paragraph 6, the definitions contained in Section 2(a) of the 1940
Act and the applicable rules under the 1940 Act (particularly the
definitions of "interested person," "assignment" and "vote of a
majority of the outstanding voting securities") shall be applied.
The 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
Adviser to receive payments on any unpaid balance of the
compensation described in paragraph 4 earned prior to such
termination.
7. Non-Exclusive Services. The Adviser shall, during the term of this
Agreement, be entitled to render investment advisory services to
others, including, without limitation, other investment companies
with similar objectives to those of the Company or any Fund of the
Company. The Adviser may, when it deems such to be advisable,
aggregate orders for its other customers together with any
securities of the same type to be sold or purchased for the Company
or any Fund in order to obtain best execution and lower brokerage
commissions. In such event, the Adviser shall allocate the shares so
purchased or sold, as well as the expenses incurred in the
<PAGE>
transaction, in the manner it considers to be most equitable and
consistent with its fiduciary obligations to the Company or any Fund
and the Adviser's other customers.
8. Liability. The Adviser shall have no liability to the Company or any
Fund or to the Company's shareholders or creditors, for any error of
judgment, mistake of law, or for any loss arising out of any
investment, nor for any other act or omission, in the performance of
its obligations to the Company or any Fund not involving willful
misfeasance, bad faith, gross negligence or reckless disregard of
its obligations and duties hereunder.
9. Miscellaneous Provisions.
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.
Amendments Hereof. No provision of this Agreement may be changed,
waived, discharged or terminated orally, but only by an instrument
in writing signed by the Company and the Adviser, and no material
amendment of 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
any Fund of the Company affected by such amendment; provided,
however, that this paragraph shall not prevent any immaterial
amendment(s) to this Agreement, which amendment(s) may be made
without shareholder approval, if such amendment(s) are made with the
approval of (1) the Directors and (2) a majority of the Directors of
the Company who are not interested persons of the Adviser or the
Company. In the event of the disapproval of an amendment of this
Agreement by the shareholders of a particular Fund (or by the
Directors of the Company as to a particular Fund), the parties
intend that such disapproval shall be effective only as to such
Fund, and that such disapproval shall not affect the validity or
effectiveness of the approval of the amendment by the shareholders
of any other Fund (or by the Directors, including a majority of the
disinterested Directors) as to such other Fund; in such case, this
Agreement shall be deemed to have been validly amended as to such
other Fund.
Severability. Each provision of this Agreement is intended to be
severable. If any provision of this Agreement shall be held illegal
or made invalid by a court decision, statute, rule or otherwise,
such illegality or invalidity shall not affect the validity or
enforceability of the remainder of this Agreement.
<PAGE>
Headings. The headings in this Agreement are inserted for
convenience and identification only and are in no way intended to
describe, interpret, define or limit the size, extent or intent of
this Agreement or any provision hereof.
Applicable Law. This Agreement shall be construed in accordance
with the laws of the State of Colorado and the applicable provisions
of the 1940 Act. To the extent that the applicable laws of the
State of Colorado, or any of the provisions herein, conflict with
applicable provisions of the 1940 Act, the latter shall control.
IN WITNESS WHEREOF, the Adviser and the Company each has caused this
Agreement to be duly executed on its behalf by an officer thereunto duly
authorized, the day and year first above written.
INVESCO SPECIALTY FUNDS, INC.
ATTEST:
By: /s/ Dan J. Hesser
------------------------
/s/ Glen A. Payne Dan J. Hesser
- ----------------- President
Glen A. Payne
Secretary
INVESCO FUNDS GROUP, INC.
ATTEST:
By: /s/ Ronald L. Grooms
------------------------
/s/ Glen A. Payne Ronald L. Grooms,
- ----------------- Senior Vice President
Glen A. Payne
Secretary
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 6th day of January, 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
European Small Company Fund and INVESCO Latin American 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
European Small Company Fund and INVESCO Latin American Growth Fund, to the same
extent as if the INVESCO European Small Company Fund and INVESCO Latin American
Growth Fund were to be added to the definition of "Funds" as utilized in the
Agreement, and that INVESCO European Small Company Fund and INVESCO Latin
American Growth Fund shall pay IFG a fee for services provided to them 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 6th day of January, 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,
Senio Vice President
/s/ Glen A. Payne
- ------------------------
Glen A. Payne, Secretary
(CORPORATE SEAL)
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 10th 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 10th 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)
SUB-ADVISORY AGREEMENT
AGREEMENT made this 2nd day of May 1994, by and between INVESCO Funds
Group, Inc. ("INVESCO"), a Delaware corporation, and INVESCO Trust Company,
Inc., a Colorado corporation ("the Sub-Adviser").
W I T N E S S E T H:
WHEREAS, INVESCO SPECIALTY FUNDS, INC. (the "Company") is engaged in
business as a diversified, open-end management investment company registered
under the Investment Company Act of 1940, as amended (hereinafter referred to as
the "Investment Company Act") and has one class of shares (the "Shares"), which
is divided into series, each representing an interest in a separate portfolio of
investments, two such series being designated the INVESCO Worldwide Capital
Goods Fund and INVESCO Worldwide Communications Fund (individually, a "Fund" and
collectively, the "Funds"); and
WHEREAS, INVESCO and the Sub-Adviser are engaged in rendering investment
advisory services and are registered as investment advisers under the Investment
Advisers Act of 1940; and
WHEREAS, INVESCO has entered into an Investment Advisory Agreement with
the Company (the "INVESCO Investment Advisory Agreement"), pursuant to which
INVESCO is required to provide investment advisory services to the Company, and,
upon receipt of written approval of the Company, is authorized to retain
companies which are affiliated with INVESCO to provide such services; and
WHEREAS, the Sub-Adviser is willing to provide investment advisory
services to the Company on the terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and the covenants
hereinafter contained, INVESCO and the Sub-Adviser hereby agree as follows:
ARTICLE I
DUTIES OF THE SUB-ADVISER
INVESCO hereby employs the Sub-Adviser to act as investment adviser to the
Company and to furnish the investment advisory services described below, subject
to the broad supervision of INVESCO and Board of Directors of the Company, for
the period and on the terms and conditions set forth in this Agreement. The
Sub-Adviser hereby accepts such assignment and agrees during such period, at its
own expense, to render such services and to assume the obligations herein set
forth for the compensation provided for herein. The Sub-Adviser shall for all
purposes herein be deemed to be an independent contractor and, unless otherwise
expressly provided or authorized herein, shall have no authority to act for or
represent the Company in any way or otherwise be deemed an agent of the Company.
The Sub-Adviser hereby agrees to manage the investment operations of the
Funds, subject to the supervision of the Company's directors (the "Directors")
and INVESCO. Specifically, the Sub-Adviser agrees to perform the following
services:
<PAGE>
(a) to manage the investment and reinvestment of all the assets, now or
hereafter acquired, of the Funds, and to execute all purchases and
sales of portfolio securities;
(b) to maintain a continuous investment program for the Funds,
consistent with (i) each Fund's investment policies as set forth in
the Company's 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 Funds, 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
Funds, unless otherwise directed by the Directors of the Company or
INVESCO, and to execute transactions accordingly;
(d) to provide to 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-Adviser;
(e) to determine what portion of each 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
each Fund's portfolio securities shall be exercised.
With respect to execution of transactions for the Funds, 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 Funds 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
Funds, 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 Funds 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 Funds. The Sub-Adviser may follow a policy of
considering sales of shares of the Funds as a factor in the selection of
broker/dealers to execute portfolio transactions, subject to the requirements of
best execution discussed above. In the selection of a broker or dealer for
execution of any negotiated transaction, the Sub-Adviser shall have no duty or
obligation to seek advance competitive bidding for the most favorable negotiated
commission rate for such transaction, or to select any broker solely on the
basis of its purported or "posted" commission rate for such transaction,
provided, however, that the Sub-Adviser shall consider such "posted" commission
rates, if any, together with any other information available at the time as to
the level of commissions known to be charged on comparable transactions by other
qualified brokerage firms, as well as all other relevant factors and
<PAGE>
circumstances, including the size of any contemporaneous market in such
securities, the importance to the Funds 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 Funds.
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 Funds.
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 an annual 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 each Fund, as
determined by a valuation made in accordance with the Funds' procedures for
calculating their net asset value as described in the Funds' Prospectus and/or
Statement of Additional Information. The advisory fee to the Sub-Adviser shall
be computed at the annual rate of 0.325% of the first $500 million of each
Fund's average net assets, 0.275% of each Fund's average net assets in excess of
$500 million but not more than $1 billion, and 0.225% of each Fund's average net
assets in excess of $1 billion. During any period when the determination of a
Fund's net asset value is suspended by the Directors of the Company, the net
asset value of a share of the respective 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 a 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.
<PAGE>
ARTICLE IV
LIMITATION OF LIABILITY OF SUB-ADVISER
The Sub-Adviser shall not be liable for any error of judgment, mistake of
law or for any loss arising out of any investment or for any act or omission in
the performance of sub-advisory services rendered with respect to the Company or
the Funds, except for willful misfeasance, bad faith or gross negligence in the
performance of its duties or by reason of reckless disregard of its obligations
and duties hereunder. As used in this Article IV, "Sub-Adviser" shall include
any affiliates of the Sub-Adviser performing services contemplated hereby and
directors, officers and employees of the Sub-Adviser and such affiliates.
ARTICLE V
ACTIVITIES OF THE SUB-ADVISER
The services of the Sub-Adviser to the Funds 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 V referred to as
"affiliates") being free to render services to others. It is understood that
directors, officers, employees and shareholders of the Company 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 Company as directors, officers and employees.
ARTICLE VI
AVOIDANCE OF INCONSISTENT POSITIONS AND COMPLIANCE WITH APPLICABLE LAWS
In connection with purchases or sales of securities for the investment
portfolios of the Funds, 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 Funds or receive any commissions. The Sub-Adviser will comply with all
applicable laws in acting hereunder including, without limitation, the 1940 Act;
the Investment Advisers Act of 1940, as amended; and all rules and regulations
duly promulgated under the foregoing.
ARTICLE VII
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 Funds, and shall remain in
force for an initial term expiring April 30, 1996, and from year to year
thereafter until its termination in accordance with this Article VII, 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 Funds, 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. In the
event of the disapproval of this Agreement, or of the continuation hereof, by
<PAGE>
the shareholders of a particular Fund (or by the Directors of the Company as to
a particular Fund), the parties intend that such disapproval shall be effective
only as to such Fund, and that such disapproval shall not affect the validity of
effectiveness of the approval of this Agreement, or of the continuation hereof,
by the shareholders of any other Fund (or by the Directors, including a majority
of the disinterested Directors) as to such other Fund; in such case, this
Agreement shall be deemed to have been validly approved or continued, as the
case may be, as to such other Fund.
This Agreement may be terminated at any time, without the payment of any
penalty, by INVESCO; the Funds by vote of a majority of the Directors of the
Company; by vote of a majority of the outstanding voting securities of the
Funds; or, with respect to a particular Fund, by a majority of the outstanding
voting securities of that Fund, as the case may be; or by the Sub-Adviser. A
termination by INVESCO or the Sub-Adviser shall require sixty days' written
notice to the other party and to the Company, and a termination by the Company
shall require such notice to each of the parties. This Agreement shall
automatically terminate in the event of its assignment to the extent required by
the Investment Company Act of 1940 and the Rules thereunder.
The Sub-Adviser agrees to furnish to the Directors of the Company such
information on an annual basis as may reasonably be necessary to evaluate the
terms of this Agreement.
Termination of this Agreement shall not affect the right of the
Sub-Adviser to receive payments on any unpaid balance of the compensation
described in Article III hereof earned prior to such termination.
ARTICLE 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 Funds (other than an amendment which can be
effective without shareholder approval under applicable law). In the event of
the disapproval of an amendment of this Agreement by the shareholders of a
particular Fund (or by the Directors of the Company as to a particular Fund),
the parties intend that such disapproval shall be effective only as to such
Fund, and that such disapproval shall not affect the validity or effectiveness
of the approval of the amendment by the shareholders of any other Fund (or by
the Directors, including a majority of the disinterested Directors) as to such
other Fund; in such case, this Agreement shall be deemed to have been validly
amended as to such other Fund.
<PAGE>
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.
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
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.
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
/s/ Glen A. Payne ---------------------
- ----------------- Dan J. Hesser
Glen A. Payne President
Secretary
INVESCO TRUST COMPANY
ATTEST:
By: /s/ R. Dalton Sim
---------------------
/s/ Glen A. Payne R. Dalton Sim
- ----------------- President
Glen A. Payne
Secretary
SUB-ADVISORY AGREEMENT
AGREEMENT made this 13th day of January, 1995, by and between INVESCO
Funds Group, Inc. ("INVESCO"), a Delaware corporation, and MIM International
Limited, a United Kingdom corporation ("the Sub-Adviser").
W I T N E S S E T H:
WHEREAS, INVESCO SPECIALTY FUNDS, INC. (the "Company") is engaged in
business as a diversified, open-end management investment company registered
under the Investment Company Act of 1940, as amended (hereinafter referred to as
the "Investment Company Act") and has one class of shares (the "Shares"), which
is divided into series, each representing an interest in a separate portfolio of
investments, with two such series being designated the INVESCO European Small
Company Fund and INVESCO Latin American Growth Fund, (collectively, the
"Funds"); 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 Investment Management
Regulatory Organization Limited ("IMRO") in the United Kingdom and as such is
regulated by IMRO 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 IMRO 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 Funds, and to execute all purchases and
sales of portfolio securities;
(b) to maintain a continuous investment program for the Funds,
consistent with (i) the Funds' 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 Funds,
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
Funds, unless otherwise directed by the Directors of the Company or
INVESCO, and to execute transactions accordingly;
(d) to provide to 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-Adviser;
(e) to determine what portion of the Funds should be invested in the
various types of securities authorized for purchase by the Funds;
and
(f) to make recommendations as to the manner in which voting rights,
rights to consent to Funds action and any other rights pertaining to
the Fund's portfolio securities shall be exercised.
With respect to execution of transactions for the Funds, 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
Funds, 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 Funds may be used by the Sub-Adviser in
servicing all of its accounts, and not all such services may be used by the Sub-
<PAGE>
Adviser in connection with the Funds. In the selection of a broker or dealer for
execution of any negotiated transaction, the Sub-Adviser shall have no duty or
obligation to seek advance competitive bidding for the most favorable negotiated
commission rate for such transaction, or to select any broker solely on the
basis of its purported or "posted" commission rate for such transaction,
provided, however, that the Sub-Adviser shall consider such "posted" commission
rates, if any, together with any other information available at the time as to
the level of commissions known to be charged on comparable transactions by other
qualified brokerage firms, as well as all other relevant factors and
circumstances, including the size of any contemporaneous market in such
securities, the importance to the Funds 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 Funds.
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.
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 Funds.
<PAGE>
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 Funds, 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 Funds' net asset value is suspended by the
Directors of the Fund, the net asset value of a share of the Funds 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 Funds 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 Funds 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 Funds 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 Funds as directors, officers and employees.
ARTICLE V
AVOIDANCE OF INCONSISTENT POSITIONS AND COMPLIANCE WITH APPLICABLE LAWS
In connection with purchases or sales of securities for the investment
portfolios of the Funds, 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 Funds 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
IMRO; and all rules and regulations duly promulgated under the foregoing.
<PAGE>
ARTICLE VI
DURATION AND TERMINATION OF THIS AGREEMENT
This Agreement shall become effective as of the date it is approved by a
majority of the outstanding voting securities of the Fund 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 Funds, 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 Funds by vote of the Directors of the Company, or by
vote of a majority of the outstanding voting securities of the Funds, or by the
Sub-Adviser. A termination by INVESCO or the Sub-Adviser shall require sixty
days' written notice to the other party and to the Company, and a termination by
the Company shall require such notice to each of the parties. This Agreement
shall automatically terminate in the event of its assignment to the extent
required by the Investment Company Act of 1940 and the Rules thereunder.
The Sub-Adviser agrees to furnish to the Directors of the Company such
information on an annual basis as may reasonably be necessary to evaluate the
terms of this Agreement.
Termination of this Agreement shall not affect the right of the
Sub-Adviser to receive payments on any unpaid balance of the compensation
described in Article III hereof earned prior to such termination.
ARTICLE VII
LIABILITY
The Sub-Adviser agrees to use its best efforts and judgement and due care
in carrying out its duties under this Agreement provided however that the Sub-
Adviser shall not be liable to INVESCO for any loss suffered by INVESCO or the
funds 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
<PAGE>
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 Funds (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.
ARTICLE X
GOVERNING LAW
This Agreement shall be construed in accordance with the laws of the State
of Colorado and the applicable provisions of the Investment Company Act. To the
extent that the applicable laws of the State of Colorado, or any of the
provisions herein, conflict with the applicable provisions of the Investment
Company Act, the latter shall control.
ARTICLE XI
MISCELLANEOUS
Advice. Any recommendation or advice given by the Sub-Adviser to INVESCO
hereunder shall be given in writing or by mail, telex, telefacsimile or by
telephone, such telephone advice to be confirmed by mail, telex, telefacsimile
or in writing to such place as INVESCO shall from time to time require; further
the Sub-Adviser shall be free to telephone INVESCO as it sees fit in the
performance of its duties.
Complaints. The Sub-Adviser has in operation a written procedure for the
proper handling of complaints from clients; if the matter of complaint cannot be
resolved to INVESCO's satisfaction, INVESCO has the right of recourse to IMRO.
Notice. Any notice under this Agreement shall be in writing, addressed and
delivered or mailed, postage prepaid, to the other party at such address as such
other party may designate for the receipt of such notice.
<PAGE>
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.
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
---------------------
/s/ Glen A. Payne Dan J. Hesser
- ----------------- President
Glen A. Payne
Secretary MIM INTERNATIONAL LIMITED
By: David D. Gillan
---------------------
ATTEST: David C. Gillan
Managing Director
/s/ Graeme J. Proudfoot
- -----------------------
Graeme J. Proudfoot
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
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
<PAGE>
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.
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
<PAGE>
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.
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
<PAGE>
least annually by (i) the Directors of the Company, or by the vote of a majority
of the outstanding voting securities of the Fund, and (ii) a majority of those
Directors who are not parties to this Agreement or interested persons of any
such party cast in person at a meeting called for the purpose of voting on such
approval.
This Agreement may be terminated at any time, without the payment of any
penalty, by INVESCO, the Fund by vote of the Directors of the Company, or by
vote of a majority of the outstanding voting securities of the Fund, or by the
Sub- Adviser. A termination by INVESCO or the Sub-Adviser shall require sixty
days' written notice to the other party and to the Company, and a termination by
the Company shall require such notice to each of the parties. This Agreement
shall automatically terminate in the event of its assignment to the extent
required by the Investment Company Act of 1940 and the Rules thereunder.
The Sub-Adviser agrees to furnish to the Directors of the Company such
information on an annual basis as may reasonably be necessary to evaluate the
terms of this Agreement.
Termination of this Agreement shall not affect the right of the
Sub-Adviser to receive payments on any unpaid balance of the compensation
described in Article III hereof earned prior to such termination.
ARTICLE VII
LIABILITY
The Sub-Adviser agrees to use its best efforts and judgement and due care
in carrying out its duties under this Agreement provided however that the Sub-
Adviser shall not be liable to INVESCO for any loss suffered by INVESCO or the
Fund advised in connection with the subject matter of this Agreement unless 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.
<PAGE>
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.
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.
<PAGE>
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.
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
---------------------
/s/ Glen A. Payne Dan J. Hesser
- ----------------- President
Glen A. Payne
Secretary INVESCO ASIA LIMITED
By: /s/ Andrew Lo
---------------------
ATTEST: Andrew Lo
Managing Director
/s/ Fanny Lee
- -----------------
Fanny Lee
Secretary
SUB-ADVISORY AGREEMENT
AGREEMENT made this 10th day of November, 1995, by and between INVESCO
Funds Group, Inc. ("INVESCO"), a Delaware corporation, and INVESCO Asset
Management Limited, a United Kingdom corporation ("the Sub-Adviser").
W I T N E S S E T H:
WHEREAS, INVESCO SPECIALTY FUNDS, INC. (the "Company") is engaged in
business as a diversified, open-end management investment company registered
under the Investment Company Act of 1940, as amended (hereinafter referred to as
the "Investment Company Act") and has one class of shares (the "Shares"), which
is divided into series, each representing an interest in a separate portfolio of
investments, with two such series being designated the INVESCO European Small
Company Fund and INVESCO Latin American Growth Fund, (collectively, the
"Funds"); 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 Investment Management
Regulatory Organization Limited ("IMRO") in the United Kingdom and as such is
regulated by IMRO 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 IMRO 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 Funds, and to execute all purchases and
sales of portfolio securities;
(b) to maintain a continuous investment program for the Funds,
consistent with (i) the Funds' 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 Funds,
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
Funds, unless otherwise directed by the Directors of the Company or
INVESCO, and to execute transactions accordingly;
(d) to provide to 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-Adviser;
(e) to determine what portion of the Funds should be invested in the
various types of securities authorized for purchase by the Funds;
and
(f) to make recommendations as to the manner in which voting rights,
rights to consent to Funds action and any other rights pertaining to
the Fund's portfolio securities shall be exercised.
With respect to execution of transactions for the Funds, 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
Funds, 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 Funds 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 Funds. In the selection of a broker or dealer for
execution of any negotiated transaction, the Sub-Adviser shall have no duty or
obligation to seek advance competitive bidding for the most favorable negotiated
commission rate for such transaction, or to select any broker solely on the
basis of its purported or "posted" commission rate for such transaction,
<PAGE>
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 Funds 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 Funds.
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.
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 Funds.
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 Funds, as determined by a valuation
<PAGE>
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 Funds' net asset value is suspended by the
Directors of the Fund, the net asset value of a share of the Funds 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 Funds 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 Funds 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 Funds 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 Funds as directors, officers and employees.
ARTICLE V
AVOIDANCE OF INCONSISTENT POSITIONS AND COMPLIANCE WITH APPLICABLE LAWS
In connection with purchases or sales of securities for the investment
portfolios of the Funds, 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 Funds 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
IMRO; 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
<PAGE>
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 Funds, 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 Funds by vote of the Directors of the Company, or by
vote of a majority of the outstanding voting securities of the Funds, or by the
Sub-Adviser. A termination by INVESCO or the Sub-Adviser shall require sixty
days' written notice to the other party and to the Company, and a termination by
the Company shall require such notice to each of the parties. This Agreement
shall automatically terminate in the event of its assignment to the extent
required by the Investment Company Act of 1940 and the Rules thereunder.
The Sub-Adviser agrees to furnish to the Directors of the Company such
information on an annual basis as may reasonably be necessary to evaluate the
terms of this Agreement.
Termination of this Agreement shall not affect the right of the
Sub-Adviser to receive payments on any unpaid balance of the compensation
described in Article III hereof earned prior to such termination.
ARTICLE VII
LIABILITY
The Sub-Adviser agrees to use its best efforts and judgement and due care
in carrying out its duties under this Agreement provided however that the Sub-
Adviser shall not be liable to INVESCO for any loss suffered by INVESCO or the
funds 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.
<PAGE>
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 Funds (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.
ARTICLE X
GOVERNING LAW
This Agreement shall be construed in accordance with the laws of the State
of Colorado and the applicable provisions of the Investment Company Act. To the
extent that the applicable laws of the State of Colorado, or any of the
provisions herein, conflict with the applicable provisions of the Investment
Company Act, the latter shall control.
ARTICLE XI
MISCELLANEOUS
Advice. Any recommendation or advice given by the Sub-Adviser to INVESCO
hereunder shall be given in writing or by mail, telex, telefacsimile or by
telephone, such telephone advice to be confirmed by mail, telex, telefacsimile
or in writing to such place as INVESCO shall from time to time require; further
the Sub-Adviser shall be free to telephone INVESCO as it sees fit in the
performance of its duties.
Complaints. The Sub-Adviser has in operation a written procedure for the
proper handling of complaints from clients; if the matter of complaint cannot be
resolved to INVESCO's satisfaction, INVESCO has the right of recourse to IMRO.
Notice. Any notice under this Agreement shall be in writing, addressed and
delivered or mailed, postage prepaid, to the other party at such address as such
other party may designate for the receipt of such notice.
<PAGE>
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.
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
-----------------
/s/ Glen A. Payne Dan J. Hesser
- ----------------------------- President
Glen A. Payne
Secretary
INVESCO ASSET MANAGEMENT LIMITED
ATTEST By: /s/ Norman Riddell
------------------
/s/ Graeme J. Proudfoot Norman Riddell
- ----------------------------- Chairman
Graeme J. Proudfoot
DISTRIBUTION AGREEMENT
THIS AGREEMENT is made this 2nd day of May, 1994 between INVESCO SPECIALTY
FUNDS, INC., a Maryland corporation (the "Company"), and INVESCO FUNDS GROUP,
INC., a Delaware corporation (the "Underwriter").
W I T N E S S E T H:
WHEREAS, the Company is registered under the Investment Company Act of
1940, as amended (the "Investment Company Act"), as a diversified, open-end
management investment company and currently proposes to have one class of shares
(the "Shares") which is divided into two series, and which may be divided into
additional series (individually, the "Fund" and collectively, the "Funds"), each
representing an interest in a separate portfolio of investments, and it is in
the interest of the Company to offer the Shares for sale continuously; and
WHEREAS, the Underwriter is engaged in the business of selling shares of
investment companies either directly to investors or through other securities
dealers; and
WHEREAS, the Company and the Underwriter wish to enter into an agreement
with each other with respect to the continuous offering of the Shares of each
Fund in order to promote growth of the Company and facilitate the distribution
of the Shares;
NOW, THEREFORE, in consideration of the mutual covenants hereinafter
contained, it is hereby agreed by and between the parties hereto as follows:
1. The Company hereby appoints the Underwriter its agent for the
distribution of Shares of each Fund in jurisdictions wherein such
Shares legally may be offered for sale; provided, however, that the
Company in its absolute discretion may (a) issue or sell Shares of
each Fund directly to purchasers, or (b) issue or sell Shares of a
particular Fund to the shareholders of any other Fund or to the
shareholders of any other investment company, for which the
Underwriter or any affiliate thereof shall act as exclusive
distributor, who wish to exchange all or a portion of their
investment in Shares of such Fund or in shares of such other
investment company for the Shares of a particular Fund.
Notwithstanding any other provision hereof, the Company may
terminate, suspend or withdraw the offering of Shares whenever, in
its sole discretion, it deems such action to be desirable. The
Company reserves the right to reject any subscription in whole or in
part for any reason.
2. The Underwriter hereby agrees to serve as agent for the distribution
of the Shares and agrees that it will use its best efforts with
reasonable promptness to sell such part of the authorized Shares
remaining unissued as from time to time shall be effectively
registered under the Securities Act of 1933, as amended (the "1933
Act"), at such prices and on such terms as hereinafter set forth,
all subject to applicable federal and state securities laws and
regulations. Nothing herein shall be construed to prohibit the
Underwriter from engaging in other related or unrelated businesses.
<PAGE>
3. In addition to serving as the Company's agent in the distribution of
the Shares, the Underwriter shall also provide to the holders of the
Shares certain maintenance, support or similar services
("Shareholder Services"). Such services shall include, without
limitation, answering routine shareholder inquiries regarding the
Company, assisting shareholders in considering whether to change
dividend options and helping to effectuate such changes, arranging
for bank wires, and providing such other services as the Company may
reasonably request from time to time. It is expressly understood
that the Underwriter or the Company may enter into one or more
agreements with third parties pursuant to which such third parties
may provide the Shareholder Services provided for in this paragraph.
Nothing herein shall be construed to impose upon the Underwriter any
duty or expense in connection with the services of any registrar,
transfer agent or custodian appointed by the Company, the
computation of the asset value or offering price of Shares, the
preparation and distribution of notices of meetings, proxy
soliciting material, annual and periodic reports, dividends and
dividend notices, or any other responsibility of the Company.
4. Except as otherwise specifically provided for in this Agreement, the
Underwriter shall sell the Shares directly to purchasers, or through
qualified broker-dealers or others, in such manner, not inconsistent
with the provisions hereof and the then effective Registration
Statement of the Company under the 1933 Act (the "Registration
Statement") and related Prospectus (the "Prospectus") and Statement
of Additional Information ("SAI") of the Company as the Underwriter
may determine from time to time; provided that no broker-dealer or
other person shall be appointed or authorized to act as agent of the
Company without the prior consent of the directors (the "Directors")
of the Company. The Underwriter will require each broker-dealer to
conform to the provisions hereof and of the Registration Statement
(and related Prospectus and SAI) at the time in effect under the
1933 Act with respect to the public offering price of the Shares of
any Fund. The Company will have no obligation to pay any
commissions or other remuneration to such broker-dealers.
5. The Shares of each Fund offered for sale or sold by the Underwriter
shall be offered or sold at the net asset value per share determined
in accordance with the then current Prospectus and/or SAI relating
to the sale of the Shares of the appropriate Fund except as
departure from such prices shall be permitted by the then current
Prospectus and/or SAI of the Company, in accordance with applicable
rules and regulations of the Securities and Exchange Commission.
The price the Company shall receive for the Shares of each Fund
purchased from the Company shall be the net asset value per share of
such Share, determined in accordance with the Prospectus and/or SAI
applicable to the sale of the Shares of such Fund.
6. Except as may be otherwise agreed to by the Company, the Underwriter
shall be responsible for issuing and delivering such confirmations
of sales made by it pursuant to this Agreement as may be required;
provided, however, that the Underwriter or the Company may utilize
<PAGE>
the services of other persons or entities believed by it to be
competent to perform such functions. Shares shall be registered on
the transfer books of the Company in such names and denominations as
the Underwriter may specify.
7. The Company will execute any and all documents and furnish any and
all information which may be reasonably necessary in connection with
the qualification of the Shares for sale (including the
qualification of the Company as a broker-dealer where necessary or
advisable) in such states as the Underwriter may reasonably request
(it being understood that the Company shall not be required without
its consent to comply with any requirement which in the opinion of
the Directors of the Company is unduly burdensome). The
Underwriter, at its own expense, will effect all qualifications of
itself as broker or dealer, or otherwise, under all applicable state
or Federal laws required in order that the Shares may be sold in
such states or jurisdictions as the Company may reasonably request.
8. The Company shall prepare and furnish to the Underwriter from time
to time the most recent form of the Prospectus and/or SAI of the
Company and/or of each Fund. The Company authorizes the Underwriter
to use the Prospectus and/or SAI, in the forms furnished to the
Underwriter from time to time, in connection with the sale of the
Shares of the Company and/or of each Fund. The Company will furnish
to the Underwriter from time to time such information with respect
to the Company, each Fund, and the Shares as the Underwriter may
reasonably request for use in connection with the sale of the
Shares. The Underwriter agrees that it will not use or distribute or
authorize the use, distribution or dissemination by broker-dealers
or others in connection with the sale of the Shares any statements,
other than those contained in a current Prospectus and/or SAI of the
Company or applicable Fund, except such supplemental literature or
advertising as shall be lawful under Federal and state securities
laws and regulations, and that it will promptly furnish the Company
with copies of all such material.
9. The Underwriter will not make, or authorize any broker-dealers or
others to make any short sales of the Shares of the Company or
otherwise make any sales of the Shares unless such sales are made in
accordance with a then current Prospectus and/or SAI relating to the
sale of the applicable Shares.
10. The Underwriter, as agent of and for the account of the Company, may
cause the redemption of the Shares at such prices and upon such
terms and conditions as shall be specified in a then current
Prospectus and/or SAI. In selling or redeeming the Shares for the
account of the Company, the Underwriter will in all respects conform
to the requirements of all state and federal laws and the Rules of
Fair Practice of the National Association of Securities Dealers,
Inc., relating to such sale or redemption, as the case may be. The
Underwriter will observe and be bound by all the provisions of the
<PAGE>
Articles of Incorporation or Bylaws of the Company and of any
provisions in the Registration Statement, Prospectus and SAI, as
such may be amended or supplemented from time to time, notice of
which shall have been given to the Underwriter, which at the time in
any way require, limit, restrict or prohibit or otherwise regulate
any action on the part of the Underwriter.
11. (a) The Company shall indemnify, defend and hold harmless the
Underwriter, its officers and directors and any person who
controls the Underwriter within the meaning of the 1933 Act,
from and against any and all claims, demands, liabilities and
expenses (including the cost of investigating or defending
such claims, demands or liabilities and any attorney fees
incurred in connection therewith) which the Underwriter, its
officers and directors or any such controlling person, may
incur under the federal securities laws, the common law or
otherwise, arising out of or based upon any alleged untrue
statement of a material fact contained in the Registration
Statement or any related Prospectus and/or SAI or arising out
of or based upon any alleged omission to state a material fact
required to be stated therein or necessary to make the
statements therein not misleading.
Notwithstanding the foregoing, this indemnity agreement, to
the extent that it might require indemnity of the Underwriter
or any person who is an officer, director or controlling
person of the Underwriter, shall not inure to the benefit of
the Underwriter or officer, director or controlling person
thereof unless a court of competent jurisdiction shall
determine, or it shall have been determined by controlling
precedent, that such result would not be against public policy
as expressed in the federal securities laws and in no event
shall anything contained herein be so construed as to protect
the Underwriter against any liability to the Company, the
Directors or the Company's shareholders to which the
Underwriter would otherwise be subject by reason of willful
misfeasance, bad faith or gross negligence in the performance
of its duties or by reason of its reckless disregard of its
obligations and duties under this Agreement.
This indemnity agreement is expressly conditioned upon the
Company's being notified of any action brought against the
Underwriter, its officers or directors or any such controlling
person, which notification shall be given by letter or by
telegram addressed to the Company at its principal address in
Denver, Colorado and sent to the Company by the person against
whom such action is brought within ten (10) days after the
summons or other first legal process shall have been served
upon the Underwriter, its officers or directors or any such
controlling person. The failure to notify the Company of any
such action shall not relieve the Company from any liability
which it may have to the person against whom such action is
brought by reason of any such alleged untrue statement or
<PAGE>
omission otherwise than on account of the indemnity agreement
contained in this paragraph. The Company shall be entitled to
assume the defense of any suit brought to enforce such claim,
demand, or liability, but in such case the defense shall be
conducted by counsel chosen by the Company and approved by the
Underwriter, which approval shall not be unreasonably
withheld. If the Company elects to assume the defense of any
such suit and retain counsel approved by the Underwriter, the
defendant or defendants in such suit shall bear the fees and
expenses of an additional counsel obtained by any of them.
Should the Company elect not to assume the defense of any such
suit, or should the Underwriter not approve of counsel chosen
by the Company, the Company will reimburse the Underwriter,
its officers and directors or the controlling person or
persons named as defendant or defendants in such suit, for the
reasonable fees and expenses of any counsel retained by the
Underwriter or them. In addition, the Underwriter shall have
the right to employ counsel to represent it, its officers and
directors and any such controlling person who may be subject
to liability arising out of any claim in respect of which
indemnity may be sought by the Underwriter against the Company
hereunder if in the reasonable judgment of the Underwriter it
is advisable for the Underwriter, its officers and directors
or such controlling person to be represented by separate
counsel, in which event the reasonable fees and expenses of
such separate counsel shall be borne by the Company. This
indemnity agreement and the Company's representations and
warranties in this Agreement shall remain operative and in
full force and effect and shall survive the delivery of any of
the Shares as provided in this Agreement. This indemnity
agreement shall inure exclusively to the benefit of the
Underwriter and its successors, the Underwriter's officers and
directors and their respective estates and any such
controlling person and their successors and estates. The
Company shall promptly notify the Underwriter of the
commencement of any litigation or proceeding against it in
connection with the issue and sale of the Shares.
(b) The Underwriter agrees to indemnify, defend and hold harmless
the Company, its Directors and any person who controls the
Company within the meaning of the 1933 Act, from and against
any and all claims, demands, liabilities and expenses
(including the cost of investigating or defending such claims,
demands or liabilities and any attorney fees incurred in
connection therewith) which the Company, its Directors or any
such controlling person may incur under the Federal securities
laws, the common law or otherwise, but only to the extent that
such liability or expense incurred by the Company, its
Directors or such controlling person resulting from such
claims or demands shall arise out of or be based upon (a) any
alleged untrue statement of a material fact contained in
information furnished in writing by the Underwriter to the
Company specifically for use in the Registration Statement or
any related Prospectus and/or SAI or shall arise out of or be
based upon any alleged omission to state a material fact in
<PAGE>
connection with such information required to be stated in the
Registration Statement or the related Prospectus and/or SAI or
necessary to make such information not misleading and (b) any
alleged act or omission on the Underwriter's part as the
Company's agent that has not been expressly authorized by the
Company in writing.
Notwithstanding the foregoing, this indemnity agreement, to
the extent that it might require indemnity of the Company or
any Director or controlling person of the Company, shall not
inure to the benefit of the Company or Director or controlling
person thereof unless a court of competent jurisdiction shall
determine, or it shall have been determined by controlling
precedent, that such result would not be against public policy
as expressed in the federal securities laws and in no event
shall anything contained herein be so construed as to protect
any Director of the Company against any liability to the
Company or the Company's shareholders to which the Director
would otherwise be subject by reason of willful misfeasance,
bad faith or gross negligence or reckless disregard of the
duties involved in the conduct of his office.
This indemnity agreement is expressly conditioned upon the
Underwriter's being notified of any action brought against the
Company, its Directors or any such controlling person, which
notification shall be given by letter or telegram addressed to
the Underwriter at its principal office in Denver, Colorado,
and sent to the Underwriter by the person against whom such
action is brought, within ten (10) days after the summons or
other first legal process shall have been served upon the
Company, its Directors or any such controlling person. The
failure to notify the Underwriter of any such action shall not
relieve the Underwriter from any liability which it may have
to the person against whom such action is brought by reason of
any such alleged untrue statement or omission otherwise than
on account of the indemnity agreement contained in this
paragraph. The Underwriter shall be entitled to assume the
defense of any suit brought to enforce such claim, demand, or
liability, but in such case the defense shall be conducted by
counsel chosen by the Underwriter and approved by the Company,
which approval shall not be unreasonably withheld. If the
Underwriter elects to assume the defense of any such suit and
retain counsel approved by the Company, the defendant or
defendants in such suit shall bear the fees and expenses of an
additional counsel obtained by any of them. Should the
Underwriter elect not to assume the defense of any such suit,
or should the Company not approve of counsel chosen by the
Underwriter, the Underwriter will reimburse the Company, its
Directors or the controlling person or persons named as
defendant or defendants in such suit, for the reasonable fees
and expenses of any counsel retained by the Company or them.
In addition, the Company shall have the right to employ
counsel to represent it, its Directors and any such
<PAGE>
controlling person who may be subject to liability arising out
of any claim in respect of which indemnity may be sought by
the Company against the Underwriter hereunder if in the
reasonable judgment of the Company it is advisable for the
Company, its Directors or such controlling person to be
represented by separate counsel, in which event the reasonable
fees and expenses of such separate counsel shall be borne by
the Underwriter. This indemnity agreement and the
Underwriter's representations and warranties in this Agreement
shall remain operative and in full force and effect and shall
survive the delivery of any of the Shares as provided in this
Agreement. This indemnity agreement shall inure exclusively to
the benefit of the Company and its successors, the Company's
Directors and their respective estates and any such
controlling person and their successors and estates. The
Underwriter shall promptly notify the Company of the
commencement of any litigation or proceeding against it in
connection with the issue and sale of the Shares.
12. The Company will pay or cause to be paid (a) expenses (including the
fees and disbursements of its own counsel) of any registration of
the Shares under the 1933 Act, as amended, (b) expenses incident to
the issuance of the Shares, and (c) expenses (including the fees and
disbursements of its own counsel) incurred in connection with the
preparation, printing and distribution of the Company's
Prospectuses, SAIs, and periodic and other reports sent to holders
of the Shares in their capacity as such. The Underwriter shall
prepare and provide necessary copies of all sales literature subject
to the Company's approval thereof.
13. This Agreement shall become effective as of May 2, 1994, and shall
continue in effect for an initial term expiring April 30, 1995, and
from year to year thereafter, but only so long as such continuance
is specifically approved at least annually (a)(i) by a vote of the
Directors of the Company or (ii) by a vote of a majority of the
outstanding voting securities of the Company, and (b) by a vote of
a majority of the Directors of the Company who are not "interested
persons," as defined in the Investment Company Act, of the Company
cast in person at a meeting for the purpose of voting on this
Agreement.
Either party hereto may terminate this Agreement on any date,
without the payment of a penalty, by giving the other party at least
60 days' prior written notice of such termination specifying the
date fixed therefor. In particular, this Agreement may be terminated
at any time, without payment of any penalty, by vote of a majority
of the members of the Directors of the Company or by a vote of a
majority of the outstanding voting securities of the Company on not
more than 60 days' written notice to the Underwriter.
Without prejudice to any other remedies of the Company provided for
in this Agreement or otherwise, the Company may terminate this
Agreement at any time immediately upon the Underwriter's failure to
fulfill any of the obligations of the Underwriter hereunder.
<PAGE>
14. The Underwriter expressly agrees that, notwithstanding anything to
the contrary herein, or in any applicable law, it will look solely
to the assets of the Company for any obligations of the Company
hereunder and nothing herein shall be construed to create any
personal liability on the part of any Director or any shareholder of
the Company.
15. This Agreement shall automatically terminate in the event of its
assignment. In interpreting the provisions of this Section 15, the
definition of "assignment" contained in the Investment Company Act
shall be applied.
16. 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.
17. No provision of this Agreement may be changed, waived, discharged or
terminated orally, but only by an instrument in writing signed by
the Company and the Underwriter and, if applicable, approved in the
manner required by the Investment Company Act.
18. 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.
19. This Agreement and the application and interpretation hereof shall
be governed exclusively by the laws of the State of Colorado.
IN WITNESS WHEREOF, the Company and the Underwriter have each caused this
Agreement to be executed on its behalf by an officer thereunto duly authorized
and the Underwriter has caused its corporate seal to be affixed as of the day
and year first above written.
INVESCO SPECIALTY FUNDS, INC.
ATTEST:
By: /s/ Dan J. Hesser
/s/ Glen A. Payne ------------------------
- ----------------- Dan J. Hesser
Glen A. Payne President
Secretary
INVESCO FUNDS GROUP, INC.
ATTEST:
By: /s/ Ronald L. Grooms
-----------------------
/s/ Glen A. Payne Ronald L. Grooms
- ----------------- Senior Vice President
Glen A. Payne
Secretary
CUSTODIAN CONTRACT
Between
INVESCO SPECIALTY FUNDS, INC.
and
STATE STREET BANK AND TRUST COMPANY
<PAGE>
TABLE OF CONTENTS
Page
1. Employment of Custodian and Property to be Held By It............ 1
2. Duties of the Custodian with Respect to Property
of the Fund Held by the Custodian in the United States........... 2
2.1 Holding Securities......................................... 2
2.2 Delivery of Securities..................................... 2
2.3 Registration of Securities................................. 5
2.4 Bank Accounts.............................................. 6
2.5 Availability of Federal Funds.............................. 6
2.6 Collection of Income....................................... 6
2.7 Payment of Fund Monies..................................... 7
2.8 Liability for Payment in Advance of Receipt of Securities
Purchased.................................................. 9
2.9 Appointment of Agents...................................... 9
2.10 Deposit of Fund Assets in Securities System................ 9
2.10A Fund Assets Held in the Custodian's Direct Paper System.... 11
2.11 Segregated Account......................................... 12
2.12 Ownership Certificates for Tax Purposes.................... 13
2.13 Proxies.................................................... 13
2.14 Communications Relating to Portfolio Securities............ 13
3. Duties of the Custodian with Respect to Property of
the Fund Held Outside of the United States....................... 13
3.1 Appointment of Foreign Sub-Custodians...................... 13
3.2 Assets to be Held.......................................... 14
3.3 Foreign Securities Depositories............................ 14
3.4 Agreements with Foreign Banking Institutions............... 14
3.5 Access of Independent Accountants of the Fund.............. 15
3.6 Reports by Custodian....................................... 15
3.7 Transactions in Foreign Custody Account.................... 15
3.8 Liability of Foreign Sub-Custodians........................ 16
3.9 Liability of Custodian..................................... 16
3.10 Reimbursement for Advances................................. 17
3.11 Monitoring Responsibilities................................ 17
3.12 Branches of U.S. Banks..................................... 17
3.13 Tax Law.................................................... 18
4. Payments for Sales or Repurchase or Redemptions of
Shares of the Fund............................................... 18
5. Proper Instructions.............................................. 19
6. Actions Permitted Without Express Authority...................... 19
7. Evidence of Authority............................................ 20
8. Duties of Custodian With Respect to the Books of Account
and Calculation of Net Asset Value and Net Income................ 20
<PAGE>
9. Records.......................................................... 20
10. Opinion of Fund's Independent Accountants........................ 21
11. Reports to Fund by Independent Public Accountants................ 21
12. Compensation of Custodian........................................ 21
13. Responsibility of Custodian...................................... 21
14. Effective Period, Termination and Amendment...................... 23
15. Successor Custodian.............................................. 24
16. Interpretive and Additional Provisions........................... 25
17. Additional Funds................................................. 25
18. Massachusetts Law to Apply....................................... 25
19. Shareholder Communications....................................... 25
<PAGE>
CUSTODIAN CONTRACT
This Contract between INVESCO Specialty Funds, Inc., a corporation
organized and existing under the laws of Maryland, having its principal place of
business at 7800 East Union Avenue, Denver, Colorado 80237 hereinafter called
the "Fund", and State Street Bank and Trust Company, a Massachusetts trust
company, having its principal place of business at 225 Franklin Street, Boston,
Massachusetts, 02110, hereinafter called the "Custodian",
WITNESSETH:
WHEREAS, the Fund is authorized to issue shares in separate series, with
each such series representing interests in a separate portfolio of securities
and other assets; and
WHEREAS, the Fund intends to initially offer shares in two series, INVESCO
Worldwide Capital Goods Fund and INVESCO Worldwide Communications Fund (such
series together with all other series subsequently established by the Fund and
made subject to this Contract in accordance with paragraph 17, being herein
referred to as the "Portfolio(s)");
NOW THEREFORE, in consideration of the mutual covenants and agreements
hereinafter contained, the parties hereto agree as follows:
1. Employment of Custodian and Property to be Held by It
The Fund hereby employs the Custodian as the custodian of the assets of the
Portfolios of the Fund, including securities which the Fund, on behalf of the
applicable Portfolio desires to be held in places within the United States
("domestic securities") and securities it desires to be held outside the United
States ("foreign securities") pursuant to the provisions of the Articles of
Incorporation. The Fund on behalf of the Portfolio(s) agrees to deliver to the
Custodian all securities and cash of the Portfolios, and all payments of income,
payments of principal or capital distributions received by it with respect to
all securities owned by the Portfolio(s) from time to time, and the cash
consideration received by it for such new or treasury shares of capital stock of
the Fund representing interests in the Portfolios, ("Shares") as may be issued
or sold from time to time. The Custodian shall not be responsible for any
property of a Portfolio held or received by the Portfolio and not delivered to
the Custodian.
Upon receipt of "Proper Instructions" (within the meaning of Article 5),
the Custodian shall on behalf of the applicable Portfolio(s) from time to time
employ one or more sub-custodians, located in the United States but only in
accordance with an applicable vote by the Board of Directors of the Fund on
behalf of the applicable Portfolio(s), and provided that the Custodian shall
have no more or less responsibility or liability to the Fund on account of any
actions or omissions of any sub-custodian so employed than any such
sub-custodian has to the Custodian. The Custodian may employ as sub-custodian
for the Fund's foreign securities on behalf of the applicable Portfolio(s) the
foreign banking institutions and foreign securities depositories designated in
Schedule A hereto but only in accordance with the provisions of Article 3.
2. Duties of the Custodian with Respect to Property of the Fund Held By the
Custodian in the United States
2.1 Holding Securities. The Custodian shall hold and physically segregate for
the account of each Portfolio all non-cash property, to be held by it in
the United States including all domestic securities owned by such
Portfolio, other than (a) securities which are maintained pursuant to
Section 2.10 in a clearing agency which acts as a securities depository
or in a book-entry system authorized by the U.S. Department of the
<PAGE>
Treasury, collectively referred to herein as "Securities System" and (b)
commercial paper of an issuer for which State Street Bank and Trust
Company acts as issuing and paying agent ("Direct Paper") which is
deposited and/or maintained in the Direct Paper System of the Custodian
pursuant to Section 2.10A.
2.2 Delivery of Securities. The Custodian shall release and deliver domestic
securities owned by a Portfolio held by the Custodian or in a Securities
System account of the Custodian or in the Custodian's Direct Paper book
entry system account ("Direct Paper System Account") only upon receipt of
Proper Instructions from the Fund on behalf of the applicable Portfolio,
which may be continuing instructions when deemed appropriate by the
parties, and only in the following cases:
1) Upon sale of such securities for the account of the Portfolio
and receipt of payment therefor;
2) Upon the receipt of payment in connection with any repurchase
agreement related to such securities entered into by the
Portfolio;
3) In the case of a sale effected through a Securities System, in
accordance with the provisions of Section 2.10 hereof;
4) To the depository agent in connection with tender or other
similar offers for securities of the Portfolio;
5) To the issuer thereof or its agent when such securities are
called, redeemed, retired or otherwise become payable;
provided that, in any such case, the cash or other
consideration is to be delivered to the Custodian;
6) To the issuer thereof, or its agent, for transfer into the
name of the Portfolio or into the name of any nominee or
nominees of the Custodian or into the name or nominee name of
any agent appointed pursuant to Section 2.9 or into the name
or nominee name of any sub-custodian appointed pursuant to
Article l; or for exchange for a different number of bonds,
certificates or other evidence representing the same aggregate
face amount or number of units; provided that, in any such
case, the new securities are to be delivered to the Custodian;
7) Upon the sale of such securities for the account of the
Portfolio, to the broker or its clearing agent, against a
receipt, for examination in accordance with "street delivery"
custom; provided that in any such case, the Custodian shall
have no responsibility or liability for any loss arising from
the delivery of such securities prior to receiving payment for
such securities except as may arise from the Custodian's own
negligence or willful misconduct;
8) For exchange or conversion pursuant to any plan of merger,
consolidation, recapitalization, reorganization or
readjustment of the securities of the issuer of such
securities, or pursuant to provisions for conversion contained
in such securities, or pursuant to any deposit agreement;
provided that, in any such case, the new securities and cash,
if any, are to be delivered to the Custodian;
9) In the case of warrants, rights or similar securities, the
surrender thereof in the exercise of such warrants, rights or
similar securities or the surrender of interim receipts or
temporary securities for definitive securities provided that,
in any such case, the new securities and cash, if any, are to
be delivered to the Custodian;
<PAGE>
10) For delivery in connection with any loans of securities made
by the Portfolio, but only against receipt of adequate
collateral as agreed upon from time to time by the Custodian
and the Fund on behalf of the Portfolio, which may be in the
form of cash or obligations issued by the United States
government, its agencies or instrumentalities, except that in
connection with any loans for which collateral is to be
credited to the Custodian's account in the book-entry system
authorized by the U.S. Department of the Treasury, the
Custodian will not be held liable or responsible for the
delivery of securities owned by the Portfolio prior to the
receipt of such collateral;
11) For delivery as security in connection with any borrowings by
the Fund on behalf of the Portfolio requiring a pledge of
assets by the Fund on behalf of the Portfolio, but only
against receipt of amounts borrowed;
12) For delivery in accordance with the provisions of any
agreement among the Fund on behalf of the Portfolio, the
Custodian and a broker-dealer registered under the Securities
Exchange Act of 1934 (the "Exchange Act") and a member of The
National Association of Securities Dealers, Inc. ("NASD"),
relating to compliance with the rules of The Options Clearing
Corporation and of any registered national securities
exchange, or of any similar organization or organizations,
regarding escrow or other arrangements in connection with
transactions by the Portfolio of the Fund;
13) For delivery in accordance with the provisions of any
agreement among the Fund on behalf of the Portfolio, the
Custodian, and a Futures Commission Merchant registered under
the Commodity Exchange Act, relating to compliance with the
rules of the Commodity Futures Trading Commission and/or any
Contract Market, or any similar organization or organizations,
regarding account deposits in connection with transactions by
the Portfolio of the Fund;
14) Upon receipt of instructions from the transfer agent
("Transfer Agent") for the Fund, for delivery to such Transfer
Agent or to the holders of shares in connection with
distributions in kind, as may be described from time to time
in the currently effective prospectus and statement of
additional information of the Fund, related to the Portfolio
("Prospectus"), in satisfaction of requests by holders of
Shares for repurchase or redemption; and
15) For any other proper corporate purpose, but only upon receipt
of, in addition to Proper Instructions from the Fund on behalf
of the applicable Portfolio, a certified copy of a resolution
of the Board of Directors or of the Executive Committee signed
by an officer of the Fund and certified by the Secretary or an
Assistant Secretary, specifying the securities of the
Portfolio to be delivered, setting forth the purpose for which
such delivery is to be made, declaring such purpose to be a
proper corporate purpose, and naming the person or persons to
whom delivery of such securities shall be made.
<PAGE>
2.3 Registration of Securities. Domestic securities held by the
Custodian (other than bearer securities) shall be registered in the
name of the Portfolio or in the name of any nominee of the Fund on
behalf of the Portfolio or of any nominee of the Custodian which
nominee shall be assigned exclusively to the Portfolio, unless the
Fund has authorized in writing the appointment of a nominee to be
used in common with other registered investment companies having the
same investment adviser as the Portfolio, or in the name or nominee
name of any agent appointed pursuant to Section 2.9 or in the name
or nominee name of any sub-custodian appointed pursuant to Article
1. All securities accepted by the Custodian on behalf of the
Portfolio under the terms of this Contract shall be in "street name"
or other good delivery form. If, however, the Fund directs the
Custodian to maintain securities in "street name", the Custodian
shall utilize its best efforts only to timely collect income due the
Fund on such securities and to notify the Fund on a best efforts
basis only of relevant corporate actions including, without
limitation, pendency of calls, maturities, tender or exchange
offers.
2.4 Bank Accounts. The Custodian shall open and maintain a separate bank
account or accounts in the United States in the name of each
Portfolio of the Fund, subject only to draft or order by the
Custodian acting pursuant to the terms of this Contract, and shall
hold in such account or accounts, subject to the provisions hereof,
all cash received by it from or for the account of the Portfolio,
other than cash maintained by the Portfolio in a bank account
established and used in accordance with Rule 17f-3 under the
Investment Company Act of 1940. Funds held by the Custodian for a
Portfolio may be deposited by it to its credit as Custodian in the
Banking Department of the Custodian or in such other banks or trust
companies as it may in its discretion deem necessary or desirable;
provided, however, that every such bank or trust company shall be
qualified to act as a custodian under the Investment Company Act of
1940 and that each such bank or trust company and the funds to be
deposited with each such bank or trust company shall on behalf of
each applicable Portfolio be approved by vote of a majority of the
Board of Directors of the Fund. Such funds shall be deposited by the
Custodian in its capacity as Custodian and shall be withdrawable by
the Custodian only in that capacity.
2.5 Availability of Federal Funds. Upon mutual agreement between the
Fund on behalf of each applicable Portfolio and the Custodian, the
Custodian shall, upon the receipt of Proper Instructions from the
Fund on behalf of a Portfolio, make federal funds available to such
Portfolio as of specified times agreed upon from time to time by the
Fund and the Custodian in the amount of checks received in payment
for Shares of such Portfolio which are deposited into the
Portfolio's account.
2.6 Collection of Income. Subject to the provisions of Section 2.3, the
Custodian shall collect on a timely basis all income and other
payments with respect to registered domestic securities held
hereunder to which each Portfolio shall be entitled either by law or
pursuant to custom in the securities business, and shall collect on
a timely basis all income and other payments with respect to bearer
<PAGE>
domestic securities if, on the date of payment by the issuer, such
securities are held by the Custodian or its agent thereof and shall
credit such income, as collected, to such Portfolio's custodian
account. Without limiting the generality of the foregoing, the
Custodian shall detach and present for payment all coupons and other
income items requiring presentation as and when they become due and
shall collect interest when due on securities held hereunder. Income
due each Portfolio on securities loaned pursuant to the provisions
of Section 2.2 (10) shall be the responsibility of the Fund. The
Custodian will have no duty or responsibility in connection
therewith, other than to provide the Fund with such information or
data as may be necessary to assist the Fund in arranging for the
timely delivery to the Custodian of the income to which the
Portfolio is properly entitled.
2.7 Payment of Fund Monies. Upon receipt of Proper Instructions from
the Fund on behalf of the applicable Portfolio, which may be
continuing instructions when deemed appropriate by the parties, the
Custodian shall pay out monies of a Portfolio in the following cases
only:
1) Upon the purchase of domestic securities, options, futures
contracts or options on futures contracts for the account of
the Portfolio but only (a) against the delivery of such
securities or evidence of title to such options, futures
contracts or options on futures contracts to the Custodian (or
any bank, banking firm or trust company doing business in the
United States or abroad which is qualified under the
Investment Company Act of 1940, as amended, to act as a
custodian and has been designated by the Custodian as its
agent for this purpose) registered in the name of the
Portfolio or in the name of a nominee of the Custodian
referred to in Section 2.3 hereof or in proper form for
transfer; (b) in the case of a purchase effected through a
Securities System, in accordance with the conditions set forth
in Section 2.10 hereof; (c) in the case of a purchase
involving the Direct Paper System, in accordance with the
conditions set forth in Section 2.10A; (d) in the case of
repurchase agreements entered into between the Fund on behalf
of the Portfolio and the Custodian, or another bank, or a
broker-dealer which is a member of NASD, (i) against delivery
of the securities either in certificate form or through an
entry crediting the Custodian's account at the Federal Reserve
Bank with such securities or (ii) against delivery of the
receipt evidencing purchase by the Portfolio of securities
owned by the Custodian along with written evidence of the
agreement by the Custodian to repurchase such securities from
the Portfolio or (e) for transfer to a time deposit account of
the Fund in any bank, whether domestic or foreign; such
transfer may be effected prior to receipt of a confirmation
from a broker and/or the applicable bank pursuant to Proper
Instructions from the Fund as defined in Article 5;
2) In connection with conversion, exchange or surrender of
securities owned by the Portfolio as set forth in Section 2.2
hereof;
3) For the redemption or repurchase of Shares issued by the
Portfolio as set forth in Article 4 hereof;
<PAGE>
4) For the payment of any expense or liability incurred by the
Portfolio, including but not limited to the following payments
for the account of the Portfolio: interest, taxes, management,
accounting, transfer agent and legal fees, and operating
expenses of the Fund whether or not such expenses are to be in
whole or part capitalized or treated as deferred expenses;
5) For the payment of any dividends on Shares of the Portfolio
declared pursuant to the governing documents of the Fund;
6) For payment of the amount of dividends received in respect of
securities sold short;
7) For any other proper purpose, but only upon receipt of, in
addition to Proper Instructions from the Fund on behalf of the
Portfolio, a certified copy of a resolution of the Board of
Directors or of the Executive Committee of the Fund signed by
an officer of the Fund and certified by its Secretary or an
Assistant Secretary, specifying the amount of such payment,
setting forth the purpose for which such payment is to be
made, declaring such purpose to be a proper purpose, and
naming the person or persons to whom such payment is to be
made.
2.8 Liability for Payment in Advance of Receipt of Securities Purchased.
Except as specifically stated otherwise in this Contract, in any and
every case where payment for purchase of domestic securities for the
account of a Portfolio is made by the Custodian in advance of
receipt of the securities purchased in the absence of specific
written instructions from the Fund on behalf of such Portfolio to so
pay in advance, the Custodian shall be absolutely liable to the Fund
for such securities to the same extent as if the securities had been
received by the Custodian.
2.9 Appointment of Agents. The Custodian may at any time or times in its
discretion appoint (and may at any time remove) any other bank or
trust company which is itself qualified under the Investment Company
Act of 1940, as amended, to act as a custodian, as its agent to
carry out such of the provisions of this Article 2 as the Custodian
may from time to time direct; provided, however, that the
appointment of any agent shall not relieve the Custodian of its
responsibilities or liabilities hereunder.
2.10 Deposit of Fund Assets in Securities Systems. The Custodian may
deposit and/or maintain securities owned by a Portfolio in a
clearing agency registered with the Securities and Exchange
Commission under Section 17A of the Securities Exchange Act of 1934,
which acts as a securities depository, or in the book-entry system
authorized by the U.S. Department of the Treasury and certain
federal agencies, collectively referred to herein as "Securities
System" in accordance with applicable Federal Reserve Board and
Securities and Exchange Commission rules and regulations, if any,
and subject to the following provisions: 1) The Custodian may keep
securities of the Portfolio in a Securities System provided that
such securities are represented in an account ("Account") of the
Custodian in the Securities System which shall not include any
assets of the Custodian other than assets held as a fiduciary,
custodian or otherwise for customers;
2) The records of the Custodian with respect to securities of the
Portfolio which are maintained in a Securities System shall
identify by book-entry those securities belonging to the
Portfolio;
<PAGE>
3) The Custodian shall pay for securities purchased for the
account of the Portfolio upon (i) receipt of advice from the
Securities System that such securities have been transferred
to the Account, and (ii) the making of an entry on the records
of the Custodian to reflect such payment and transfer for the
account of the Portfolio. The Custodian shall transfer
securities sold for the account of the Portfolio upon (i)
receipt of advice from the Securities System that payment for
such securities has been transferred to the Account, and (ii)
the making of an entry on the records of the Custodian to
reflect such transfer and payment for the account of the
Portfolio. Copies of all advices from the Securities System of
transfers of securities for the account of the Portfolio shall
identify the Portfolio, be maintained for the Portfolio by the
Custodian and be provided to the Fund at its request. Upon
request, the Custodian shall furnish the Fund on behalf of the
Portfolio confirmation of each transfer to or from the account
of the Portfolio in the form of a written advice or notice and
shall furnish to the Fund on behalf of the Portfolio copies of
daily transaction sheets reflecting each day's transactions in
the Securities System for the account of the Portfolio.
4) The Custodian shall provide the Fund for the Portfolio with
any report obtained by the Custodian on the Securities
System's accounting system, internal accounting control and
procedures for safeguarding securities deposited in the
Securities System;
5) The Custodian shall have received from the Fund on behalf of
the Portfolio the initial or annual certificate, as the case
may be, required by Article 14 hereof;
6) Anything to the contrary in this Contract notwithstanding, the
Custodian shall be liable to the Fund for the benefit of the
Portfolio for any loss or damage to the Portfolio resulting
from use of the Securities System by reason of any negligence,
misfeasance or misconduct of the Custodian or any of its
agents or of any of its or their employees or from failure of
the Custodian or any such agent to enforce effectively such
rights as it may have against the Securities System; at the
election of the Fund, it shall be entitled to be subrogated to
the rights of the Custodian with respect to any claim against
the Securities System or any other person which the Custodian
may have as a consequence of any such loss or damage if and to
the extent that the Portfolio has not been made whole for any
such loss or damage.
2.10A Fund Assets Held in the Custodian's Direct Paper System. The
Custodian may deposit and/or maintain securities owned by a
Portfolio in the Direct Paper System of the Custodian subject to the
following provisions:
1) No transaction relating to securities in the Direct Paper
System will be effected in the absence of Proper Instructions
from the Fund on behalf of the Portfolio;
2) The Custodian may keep securities of the Portfolio in the
Direct Paper System only if such securities are represented in
an account ("Account") of the custodian in the Direct Paper
System which shall not include any assets of the Custodian
other than assets held as a fiduciary, custodian or otherwise
for customers;
<PAGE>
3) The records of the Custodian with respect to securities of the
Portfolio which are maintained in the Direct Paper System
shall identify by book-entry those securities belonging to the
Portfolio;
4) The Custodian shall pay for securities purchased for the
account of the Portfolio upon the making of an entry on the
records of the Custodian to reflect such payment and transfer
of securities to the account of the Portfolio. The Custodian
shall transfer securities sold for the account of the
Portfolio upon the making of an entry on the records of the
Custodian to reflect such transfer and receipt of payment for
the account of the Portfolio;
5) The Custodian shall furnish the Fund or behalf of the
Portfolio confirmation of each transfer to or from the account
of the Portfolio, in the form of a written advice or notice,
of Direct Paper on the next business day following such
transfer and shall furnish to the Fund on behalf of the
Portfolio copies of daily transaction sheets reflecting each
day's transaction in the Securities System for the account of
the Portfolio;
6) The Custodian shall provide the Fund on behalf of the
Portfolio with any report on its system of internal accounting
control as the Fund may reasonably request from time to time.
2.11 Segregated Account. The Custodian shall upon receipt of Proper
Instructions from the Fund on behalf of each applicable Portfolio
establish and maintain a segregated account or accounts for and on
behalf of each such Portfolio, into which account or accounts may be
transferred cash and/or securities, including securities maintained
in an account by the Custodian pursuant to Section 2.10 hereof, (i)
in accordance with the provisions of any agreement among the Fund on
behalf of the Portfolio, the Custodian and a broker-dealer
registered under the Exchange Act and a member of the NASD (or any
futures commission merchant registered under the Commodity Exchange
Act), relating to compliance with the rules of The Options Clearing
Corporation and of any registered national securities exchange (or
the Commodity Futures Trading Commission or any registered contract
market), or of any similar organization or organizations, regarding
escrow or other arrangements in connection with transactions by the
Portfolio, (ii) for purposes of segregating cash or government
securities in connection with options purchased, sold or written by
the Portfolio or commodity futures contracts or options thereon
purchased or sold by the Portfolio, (iii) for the purposes of
compliance by the Portfolio with the procedures required by
Investment Company Act Release No. 10666, or any subsequent release
or releases of the Securities and Exchange Commission relating to
the maintenance of segregated accounts by registered investment
companies and (iv) for other proper corporate purposes, but only, in
the case of clause (iv), upon receipt of, in addition to Proper
Instructions from the Fund on behalf of the applicable Portfolio, a
certified copy of a resolution of the Board of Directors or of the
Executive Committee signed by an officer of the Fund and certified
by the Secretary or an Assistant Secretary, setting forth the
purpose or purposes of such segregated account and declaring such
purposes to be proper corporate purposes.
<PAGE>
2.12 Ownership Certificates for Tax Purposes. The Custodian shall execute
ownership and other certificates and affidavits for all federal and
state tax purposes in connection with receipt of income or other
payments with respect to domestic securities of each Portfolio held
by it and in connection with transfers of securities.
2.13 Proxies. The Custodian shall, with respect to the domestic
securities held hereunder, cause to be promptly executed by the
registered holder of such securities, if the securities are
registered otherwise than in the name of the Portfolio or a nominee
of the Portfolio, all proxies, without indication of the manner in
which such proxies are to be voted, and shall promptly deliver to
the Portfolio such proxies, all proxy soliciting materials and all
notices relating to such securities.
2.14 Communications Relating to Portfolio Securities. Subject to the
provisions of Section 2.3, the Custodian shall transmit promptly to
the Fund for each Portfolio all written information (including,
without limitation, pendency of calls and maturities of domestic
securities and expirations of rights in connection therewith and
notices of exercise of call and put options written by the Fund on
behalf of the Portfolio and the maturity of futures contracts
purchased or sold by the Portfolio) received by the Custodian from
issuers of the securities being held for the Portfolio. With respect
to tender or exchange offers, the Custodian shall transmit promptly
to the Portfolio all written information received by the Custodian
from issuers of the securities whose tender or exchange is sought
and from the party (or his agents) making the tender or exchange
offer. If the Portfolio desires to take action with respect to any
tender offer, exchange offer or any other similar transaction, the
Portfolio shall notify the custodian at least, three business days
prior to the date on which the Custodian is to take such action.
3. Duties of the Custodian with Respect to Property of the Fund Held Outside
of the United States
3.1 Appointment of Foreign Sub-Custodians. The Fund hereby authorizes
and instructs the Custodian to employ as sub-custodians for the
Portfolio's securities and other assets maintained outside the
United States the foreign banking institutions and foreign
securities depositories designated on Schedule A hereto ("foreign
sub-custodians"). Upon receipt of "Proper Instructions", as defined
in Section 5 of this Contract, together with a certified resolution
of the Fund's Board of Directors, the Custodian and the Fund may
agree to amend Schedule A hereto from time to time to designate
additional foreign banking institutions and foreign securities
depositories to act as sub-custodian. Upon receipt of Proper
Instructions, the Fund may instruct the Custodian to cease the
employment of any one or more such sub-custodians for maintaining
custody of the Portfolio's assets.
3.2 Assets to be Held. The Custodian shall limit the securities and
other assets maintained in the custody of the foreign sub-custodians
to: (a) "foreign securities", as defined in paragraph (c)(l) of Rule
17f-5 under the Investment Company Act of 1940, and (b) cash and
cash equivalent in such amounts as the Custodian or the Fund may
determine to be reasonably necessary to effect the Portfolio's
foreign securities transactions. The Custodian shall identify on its
books as belonging to the Fund, the foreign securities of the Fund
held by each foreign sub-custodian.
<PAGE>
3.3 Foreign Securities Depositories. Except as may otherwise be agreed
upon in writing by the Custodian and the Fund, assets of the
Portfolios shall be maintained in foreign securities depositories
only through arrangements implemented by the foreign banking
institutions serving as sub-custodians pursuant to the terms hereof.
Where possible, such arrangements shall include entry into
agreements containing the provisions set forth in Section 3.4
hereof.
3.4 Agreements with Foreign Banking Institutions. Each agreement with a
foreign banking institution shall be substantially in the form set
forth in Exhibit 1 hereto and shall provide that: (a) the assets of
each Portfolio will not be subject to any right, charge, security
interest, lien or claim of any kind in favor of the foreign banking
institution or its creditors or agent, except a claim of payment for
their safe custody or administration; (b) beneficial ownership for
the assets of each Portfolio will be freely transferable without the
payment of money or value other than for custody or administration;
(c) adequate records will be maintained identifying the assets as
belonging to each applicable Portfolio; (d) officers of or auditors
employed by, or other representatives of the Custodian, including to
the extent permitted under applicable law the independent public
accountants for the Fund, will be given access to the books and
records of the foreign banking institution relating to its actions
under its agreement with the Custodian; and (e) assets of the
Portfolios held by the foreign sub-custodian will be subject only to
the instructions of the Custodian or its agents.
3.5 Access of Independent Accountants of the Fund. Upon request of the
Fund, the Custodian will use its best efforts to arrange for the
independent accountants of the Fund to be afforded access to the
books and records of any foreign banking institution employed as a
foreign sub-custodian insofar as such books and records relate to
the performance of such foreign banking institution under its
agreement with the Custodian.
3.6 Reports by Custodian. The Custodian will supply to the Fund from
time to time, as mutually agreed upon, statements in respect of the
securities and other assets of the Portfolio(s) held by foreign
sub-custodians, including but not limited to an identification of
entities having possession of the Portfolio(s) securities and other
assets and advices or notifications of any transfers of securities
to or from each custodial account maintained by a foreign banking
institution for the Custodian on behalf of each applicable Portfolio
indicating, as to securities acquired for a Portfolio, the identity
of the entity having physical possession of such securities.
3.7 Transactions in Foreign Custody Account. (a) Except as otherwise
provided in paragraph (b) of this Section 3.7, the provision of
Sections 2.2 and 2.7 of this Contract shall apply, mutatis mutandis
to the foreign securities of the Fund held outside the United States
by foreign sub-custodians. (b) Notwithstanding any provision of this
Contract to the contrary, settlement and payment for securities
received for the account of each applicable Portfolio and delivery
of securities maintained for the account of each applicable
Portfolio may be effected in accordance with the customary
established securities trading or securities processing practices
<PAGE>
and procedures in the jurisdiction or market in which the
transaction occurs, including, without limitation, delivering
securities to the purchaser thereof or to a dealer therefor (or an
agent for such purchaser or dealer) against a receipt with the
expectation of receiving later payment for such securities from such
purchaser or dealer. (c) Securities maintained in the custody of a
foreign sub-custodian may be maintained in the name of such entity's
nominee to the same extent as set forth in Section 2.3 of this
Contract, and the Fund agrees to hold any such nominee harmless from
any liability as a holder of record of such securities.
3.8 Liability of Foreign Sub-Custodians. Each agreement pursuant to
which the Custodian employs a foreign banking institution as a
foreign sub-custodian shall require the institution to exercise
reasonable care in the performance of its duties and to indemnify,
and hold harmless, the Custodian and each Fund from and against any
loss, damage, cost, expense, liability or claim arising out of or in
connection with the institution's performance of such obligations.
At the election of the Fund, it shall be entitled to be subrogated
to the rights of the Custodian with respect to any claims against a
foreign banking institution as a consequence of any such loss,
damage, cost, expense, liability or claim if and to the extent that
the Fund has not been made whole for any such loss, damage, cost,
expense, liability or claim.
3.9 Liability of Custodian. The Custodian shall be liable for the acts
or omissions of a foreign banking institution to the same extent as
set forth with respect to sub-custodians generally in this Contract
and, regardless of whether assets are maintained in the custody of a
foreign banking institution, a foreign securities depository or a
branch of a U.S. bank as contemplated by paragraph 3.12 hereof, the
Custodian shall not be liable for any loss, damage, cost, expense,
liability or claim resulting from nationalization, expropriation,
currency restrictions, or acts of war or terrorism or any loss where
the sub-custodian has otherwise exercised reasonable care.
Notwithstanding the foregoing provisions of this paragraph 3.9, in
delegating custody duties to State Street London Ltd., the Custodian
shall not be relieved of any responsibility to the Fund for any loss
due to such delegation, except such loss as may result from (a)
political risk (including, but not limited to, exchange control
restrictions, confiscation, expropriation, nationalization,
insurrection, civil strife or armed hostilities) or (b) other losses
(excluding a bankruptcy or insolvency of State Street London Ltd.
not caused by political risk) due to Acts of God, nuclear incident
or other losses under circumstances where the Custodian and State
Street London Ltd. have exercised reasonable care.
3.10 Reimbursement for Advances. If the Fund requires the Custodian to
advance cash or securities for any purpose for the benefit of a
Portfolio including the purchase or sale of foreign exchange or of
contracts for foreign exchange, or in the event that the Custodian
or its nominee shall incur or be assessed any taxes, charges,
expenses, assessments, claims or liabilities in connection with the
performance of this Contract, except such as may arise from its or
its nominee's own negligent action, negligent failure to act or
willful misconduct, any property at any time held for the account of
the applicable Portfolio shall be security therefore and should the
Fund fail to repay the Custodian promptly, the Custodian shall be
entitled to utilize available cash and to dispose of such Portfolios
assets to the extent necessary to obtain reimbursement.
<PAGE>
3.11 Monitoring Responsibilities. The Custodian shall furnish annually to
the Fund, during the month of June, information concerning the
foreign sub-custodians employed by the Custodian. Such information
shall be similar in kind and scope to that furnished to the Fund in
connection with the initial approval of this Contract. In addition,
the Custodian will promptly inform the Fund in the event that the
Custodian learns of a material adverse change in the financial
condition of a foreign sub-custodian or any material loss of the
assets of the Fund or in the case of any foreign sub-custodian not
the subject of an exemptive order from the Securities and Exchange
Commission is notified by such foreign sub-custodian that there
appears to be a substantial likelihood that its shareholders' equity
will decline below $200 million (U.S. dollars or the equivalent
thereof) or that its shareholders' equity has declined below $200
million (in each case computed in accordance with generally accepted
U.S. accounting principles).
3.12 Branches of U.S. Banks. (a) Except as otherwise set forth in this
Contract, the provisions hereof shall not apply where the custody of
the portfolios assets are maintained in a foreign branch of a
banking institution which is a "bank" as defined by Section 2(a)(5)
of the Investment Company Act of 1940 meeting the qualification set
forth in Section 26(a) of said Act. The appointment of any such
branch as a sub-custodian shall be governed by paragraph 1 of this
Contract. (b) Cash held for each Portfolio of the Fund in the United
Kingdom shall be maintained in an interest bearing account
established for the Fund with the Custodian's London branch, which
account shall be subject to the direction of the Custodian, State
Street London Ltd. or both.
3.13 Tax Law. The Custodian shall have no responsibility or liability for
any obligations now or hereafter imposed on the Fund or the
Custodian as custodian of the Fund by the tax law of the United
States of America or any state or political subdivision thereof. It
shall be the responsibility of the Fund to notify the Custodian of
the obligations imposed on the Fund or the Custodian as custodian of
the Fund by the tax law of jurisdictions other than those mentioned
in the above sentence, including responsibility for withholding and
other taxes, assessments or other governmental charges,
certifications and governmental reporting. The sole responsibility
of the Custodian with regard to such tax law shall be to use
reasonable efforts to assist the Fund with respect to any claim for
exemption or refund under the tax law of jurisdictions for which the
Fund has provided such information.
4. Payments for Sales or Repurchases or Redemptions of Shares of the Fund
The Custodian shall receive from the distributor for the Shares or from the
Transfer Agent of the Fund and deposit into the account of the appropriate
Portfolio such payments as are received for Shares of that Portfolio issued or
sold from time to time by the Fund. The Custodian will provide timely
notification to the Fund on behalf of each such Portfolio and the Transfer Agent
of any receipt by it of payments for Shares of such Portfolio.
From such funds as may be available for the purpose but subject to the
limitations of the Articles of Incorporation and any applicable votes of the
Board of Directors of the Fund pursuant thereto, the Custodian shall, upon
<PAGE>
receipt of instructions from the Transfer Agent, make funds available for
payment to holders of Shares who have delivered to the Transfer Agent a request
for redemption or repurchase of their Shares. In connection with the redemption
or repurchase of Shares of a Portfolio, the Custodian is authorized upon receipt
of instructions from the Transfer Agent to wire funds to or through a commercial
bank designated by the redeeming shareholders. In connection with the redemption
or repurchase of Shares of the Fund, the Custodian shall honor checks drawn on
the Custodian by a holder of Shares, which checks have been furnished by the
Fund to the holder of Shares, when presented to the Custodian in accordance with
such procedures and controls as are mutually agreed upon from time to time
between the Fund and the Custodian. 5. Proper Instructions
Proper Instructions as used throughout this Contract means a writing
signed or initialled by one or more person or persons as the Board of Directors
shall have from time to time authorized. Each such writing shall set forth the
specific transaction or type of transaction involved, including a specific
statement of the purpose for which such action is requested. Oral instructions
will be considered Proper Instructions if the Custodian reasonably believes them
to have been given by a person authorized to give such instructions with respect
to the transaction involved. The Fund shall cause all oral instructions to be
confirmed in writing. Upon receipt of a certificate of the Secretary or an
Assistant Secretary as to the authorization by the Board of Directors of the
Fund accompanied by a detailed description of procedures approved by the Board
of Directors, Proper Instructions may include communications effected directly
between electro-mechanical or electronic devices provided that the Board of
Directors and the Custodian are satisfied that such procedures afford adequate
safeguards for the Portfolios' assets. For purposes of this Section, Proper
Instructions shall include instructions received by the Custodian pursuant to
any three-party agreement which requires a segregated asset account in
accordance with Section 2.11. 6. Actions Permitted without Express Authority
The Custodian may in its discretion, without express authority from the
Fund on behalf of each applicable Portfolio:
1) make payments to itself or others for minor expenses of handling
securities or other similar items relating to its duties under this Contract,
provided that all such payments shall be accounted for to the Fund on behalf of
the Portfolio;
2) surrender securities in temporary form for securities in definitive
form;
3) endorse for collection, in the name of the Portfolio, checks, drafts
and other negotiable instruments; and
4) in general, attend to all non-discretionary details in connection
with the sale, exchange, substitution, purchase, transfer and other dealings
with the securities and property of the Portfolio except as otherwise directed
by the Board of Directors of the Fund.
7. Evidence of Authority
The Custodian shall be protected in acting upon any instructions, notice,
request, consent, certificate or other instrument or paper believed by it to be
genuine and to have been properly executed by or on behalf of the Fund. The
Custodian may receive and accept a certified copy of a vote of the Board of
Directors of the Fund as conclusive evidence (a) of the authority of any person
to act in accordance with such vote or (b) of any determination or of any action
by the Board of Directors pursuant to the Articles of Incorporation as described
in such vote, and such vote may be considered as in full force and effect until
receipt by the custodian of written notice to the contrary. 8. Duties of
Custodian with Respect to the Books of Account and Calculation of Net Asset
Value and Net Income
<PAGE>
The Custodian shall cooperate with and supply necessary information to the
entity or entities appointed by the Board of Directors of the Fund to keep the
books of account of each Portfolio and/or compute the net asset value per share
of the outstanding shares of each Portfolio or, if directed in writing to do so
by the Fund on behalf of the Portfolio, shall itself keep such books of account
and/or compute such net asset value per share. If so directed, the Custodian
shall also calculate daily the net income of the Portfolio as described in the
Fund's currently effective prospectus related to such Portfolio and shall advise
the Fund and the Transfer Agent daily of the total amounts of such net income
and, if instructed in writing by an officer of the Fund to do so, shall advise
the Transfer Agent periodically of the division of such net income among its
various components. The calculations of the net asset value per share and the
daily income of each Portfolio shall be made at the time or times described from
time to time in the Fund's currently effective prospectus related to such
Portfolio. 9. Records
The Custodian shall with respect to each Portfolio create and maintain all
records relating to its activities and obligations under this Contract in such
manner as will meet the obligations of the Fund under the Investment Company Act
of 1940, with particular attention to Section 31 thereof and Rules 31a-1 and
31a-2 thereunder. All such records shall be the property of the Fund and shall
at all times during the regular business hours of the Custodian be open for
inspection by duly authorized officers, employees or agents of the Fund and
employees and agents of the Securities and Exchange Commission. The Custodian
shall, at the Fund's request, supply the Fund with a tabulation of securities
owned by each Portfolio and held by the Custodian and shall, when requested to
do so by the Fund and for such compensation as shall be agreed upon between the
Fund and the Custodian, include certificate numbers in such tabulations. 10.
Opinion of Fund's Independent Accountant
The Custodian shall take all reasonable action, as the Fund on behalf of
each applicable Portfolio may from time to time request, to obtain from year to
year favorable opinions from the Fund's independent accountants with respect to
its activities hereunder in connection with the preparation of the Fund's Form
N-lA, and Form N-SAR or other annual reports to the Securities and Exchange
Commission and with respect to any other requirements of such Commission.
11. Reports to Fund by Independent Public Accountants
The Custodian shall provide the Fund, on behalf of each of the Portfolios
at such times as the Fund may reasonably require, with reports by independent
public accountants on the accounting system, internal accounting control and
procedures for safeguarding securities, futures contracts and options on futures
contracts, including securities deposited and/or maintained in a Securities
System, relating to the services provided by the Custodian under this Contract;
such reports, shall be of sufficient scope and in sufficient detail, as may
reasonably be required by the Fund to provide reasonable assurance that any
material inadequacies would be disclosed by such examination, and, if there are
no such inadequacies, the reports shall so state.
12. Compensation of Custodian
The Custodian shall be entitled to reasonable compensation for its services
and expenses as Custodian, as agreed upon from time to time between the Fund on
behalf of each applicable Portfolio and the Custodian.
13. Responsibility of Custodian
So long as and to the extent that it is in the exercise of reasonable
care, the Custodian shall not be responsible for the title, validity or
genuineness of any property or evidence of title thereto received by it or
delivered by it pursuant to this Contract and shall be held harmless in acting
upon any notice, request, consent, certificate or other instrument reasonably
believed by it to be genuine and to be signed by the proper party or parties,
<PAGE>
including any future commission merchant acting pursuant to the terms of a
three-party futures or options agreement. The Custodian shall be held to the
exercise of reasonable care in carrying out the provisions of this Contract, but
shall be kept indemnified by and shall be without liability to the Fund for any
action taken or omitted by it in good faith without negligence. It shall be
entitled to rely on and may act upon advice of Counsel (who may be counsel for
the Fund) on all matters, and shall be without liability for any action
reasonably taken or omitted pursuant to such advice.
The Custodian shall be liable for the acts or omissions of a foreign
banking institution appointed pursuant to the provisions of Article 3 to the
same extent as set forth in Article 1 hereof with respect to sub-custodians
located in the United States (except as specifically provided in Article 3.9)
and, regardless of whether assets are maintained in the custody of a foreign
banking institution, a foreign securities depository or a branch of a U.S. bank
as contemplated by paragraph 3.12 hereof, the Custodian shall not be liable for
any loss, damage, cost, expense, liability or claim resulting from, or caused
by, the direction of or authorization by the Fund to maintain custody of any
securities or cash of the Fund in a foreign country including, but not limited
to, losses resulting from nationalization, expropriation, currency restrictions,
or acts of war or terrorism.
If the Fund on behalf of a Portfolio requires the Custodian to take any
action with respect to securities, which action involves the payment of money or
which action may, in the opinion of the Custodian, result in the Custodian or
its nominee assigned to the Fund or the Portfolio being liable for the payment
of money or incurring liability of some other form, the Fund on behalf of the
Portfolio, as a prerequisite to requiring the Custodian to take such action,
shall provide indemnity to the Custodian in an amount and form satisfactory to
it.
If the Fund requires the Custodian, its affiliates, subsidiaries or agents,
to advance cash or securities for any purpose (including but not limited to
securities settlements, foreign exchange contracts and assumed settlement) for
the benefit of a Portfolio including the purchase or sale of foreign exchange or
of contracts for foreign exchange or in the event that the Custodian or its
nominee shall incur or be assessed any taxes, charges, expenses, assessments,
claims or liabilities in connection with the performance of this Contract,
except such as may arise from its or its nominee's own negligent action,
negligent failure to act or willful misconduct, any property at any time held
for the account of the applicable Portfolio shall be security therefor and
should the Fund fail to repay the Custodian promptly, the Custodian shall be
entitled to utilize available cash and to dispose of such Portfolio's assets to
the extent necessary to obtain reimbursement.
14. Effective Period. Termination and Amendment
This Contract shall become effective as of its execution, shall continue
in full force and effect until terminated as hereinafter provided, may be
amended at any time by mutual agreement of the parties hereto and may be
terminated by either party by an instrument in writing delivered or mailed,
postage prepaid to the other party, such termination to take effect not sooner
than thirty (30) days after the date of such delivery or mailing; provided,
however that the Custodian shall not with respect to a Portfolio act under
Section 2.10 hereof in the absence of receipt of an initial certificate of the
Secretary or an Assistant Secretary that the Board of Directors of the Fund has
approved the initial use of a particular Securities System by such Portfolio and
<PAGE>
the receipt of an annual certificate of the Secretary or an Assistant Secretary
that the Board of Directors has reviewed the use by such Portfolio of such
Securities System, as required in each case by Rule 17f-4 under the Investment
Company Act of 1940, as amended and that the Custodian shall not with respect to
a Portfolio act under Section 2.10A hereof in the absence of receipt of an
initial certificate of the Secretary or an Assistant Secretary that the Board of
Directors has approved the initial use of the Direct Paper System by such
Portfolio and the receipt of an annual certificate of the Secretary or an
Assistant Secretary that the Board of Directors has reviewed the use by such
Portfolio of the Direct Paper System; provided further, however, that the Fund
shall not amend or terminate this Contract in contravention of any applicable
federal or state regulations, or any provision of the Articles of Incorporation,
and further provided, that the Fund on behalf of one or more of the Portfolios
may at any time by action of its Board of Directors (i) substitute another bank
or trust company for the Custodian by giving notice as described above to the
Custodian, or (ii) immediately terminate this Contract in the event of the
appointment of a conservator or receiver for the Custodian by the Comptroller of
the Currency or upon the happening of a like event at the direction of an
appropriate regulatory agency or court of competent jurisdiction.
Upon termination of the Contract, the Fund on behalf of each applicable
Portfolio shall pay to the Custodian such compensation as may be due as of the
date of such termination and shall likewise reimburse the Custodian for its
costs, expenses and disbursements.
15. Successor Custodian
If a successor custodian for the Fund, of one or more of the Portfolios
shall be appointed by the Board of Directors of the Fund, the Custodian shall,
upon termination, deliver to such successor custodian at the office of the
Custodian, duly endorsed and in the form for transfer, all securities of each
applicable Portfolio then held by it hereunder and shall transfer to an account
of the successor custodian all of the securities of each such Portfolio held in
a Securities System.
If no such successor custodian shall be appointed, the Custodian shall, in
like manner, upon receipt of a certified copy of a vote of the Board of
Directors of the Fund, deliver at the office of the Custodian and transfer such
securities, funds and other properties in accordance with such vote.
In the event that no written order designating a successor custodian or
certified copy of a vote of the Board of Directors shall have been delivered to
the Custodian on or before the date when such termination shall become
effective, then the Custodian shall have the right to deliver to a bank or trust
company, which is a "bank" as defined in the Investment Company Act of 1940,
doing business in Boston, Massachusetts, of its own selection, having an
aggregate capital, surplus, and undivided profits, as shown by its last
published report, of not less than $25,000,000, all securities, funds and other
properties held by the Custodian on behalf of each applicable Portfolio and all
instruments held by the Custodian relative thereto and all other property held
by it under this Contract on behalf of each applicable Portfolio and to transfer
to an account of such successor custodian all of the securities of each such
Portfolio held in any Securities System. Thereafter, such bank or trust company
shall be the successor of the Custodian under this Contract.
In the event that securities, funds and other properties remain in the
possession of the Custodian after the date of termination hereof owing to
failure of the Fund to procure the certified copy of the vote referred to or of
the Board of Directors to appoint a successor custodian, the Custodian shall be
<PAGE>
entitled to fair compensation for its services during such period as the
Custodian retains possession of such securities, funds and other properties and
the provisions of this Contract relating to the duties and obligations of the
Custodian shall remain in full force and effect.
16. Interpretive and Additional Provisions
In connection with the operation of this Contract, the Custodian and the
Fund on behalf of each of the Portfolios, may from time to time agree on such
provisions interpretive of or in addition to the provisions of this Contract as
may in their joint opinion be consistent with the general tenor of this
Contract. Any such interpretive or additional provisions shall be in a writing
signed by both parties and shall be annexed hereto, provided that no such
interpretive or additional provisions shall contravene any applicable federal or
state regulations or any provision of the Articles of Incorporation of the Fund.
No interpretive or additional provisions made as provided in the preceding
sentence shall be deemed to be an amendment of this Contract. 17. Additional
Funds
In the event that the Fund establishes one or more series of Shares in
addition to INVESCO Worldwide Capital Goods Fund and INVESCO Worldwide
Communications Fund with respect to which it desires to have the Custodian
render services as custodian under the terms hereof, it shall so notify the
Custodian in writing, and if the Custodian agrees in writing to provide such
services, such series of Shares shall become a Portfolio hereunder.
18. Massachusetts Law to Apply
This Contract shall be construed and the provisions thereof interpreted
under and in accordance with laws of The Commonwealth of Massachusetts.
19. Shareholder Communications
Securities and Exchange Commission Rule 14b-2 requires banks which hold
securities for the account of customers to respond to requests by issuers of
securities for the names, addresses and holdings of beneficial owners of
securities of that issuer held by the bank unless the beneficial owner has
expressly objected to disclosure of this information. In order to comply with
the rule, the Custodian needs the Fund to indicate whether it authorizes the
Custodian to provide the Fund's name, address, and share position to requesting
companies whose securities the Fund owns. If the Fund tells the Custodian "no",
the Custodian will not provide this information to requesting companies. If the
Fund tells the Custodian "yes" or does not check either "yes" or "no" below, the
Custodian is required by the rule to treat the Fund as consenting to disclosure
of this information for all securities owned by the Fund or any funds or
accounts established by the Fund. For the Fund's protection, the Rule prohibits
the requesting company from using the Fund's name and address for any purpose
other than corporate communications. Please indicate below whether the Fund
consents or objects by checking one of the alternatives below.
YES [ ] The Custodian is authorized to release the Fund's name,
address, and share positions.
NO [X] The Custodian is not authorized to release the Fund's name,
address, and share positions
<PAGE>
IN WITNESS WHEREOF, each of the parties has caused this instrument to be
executed in its name and behalf by its duly authorized representative and its
seal to be hereunder affixed as of the 2nd day of May, 1994.
ATTEST INVESCO SPECIALTY FUNDS, INC.
/s/ Glen A. Payne By: /s/Dan J. Hesser
- -------------------- ------------------------
Glen A. Payne Dan J. Hesser
ATTEST STATE STREET BANK AND TRUST COMPANY
/s/ David A. Hufnagle By: /s/ Ronald E. Logue
- --------------------- -------------------------------
David A. Hufnagle Executive Vice President
<PAGE>
Schedule A
The following foreign banking institutions and foreign securities
depositories have been approved by the Board of Directors of INVESCO Specialty
Funds, Inc. for use as sub-custodians for the Fund's securities and other
assets:
Foreign
Country Subcustodian Bank Applicable Depository
Argentina Citibank, N.A. Caja de Valores S.A.
Australia Westpac Banking Austraclear Limited
Corporation Reserve Bank
Information and
Transfer System
(RITS)
Austria GiroCredit Bank Oesterreichische
Aktiengesellschaft Kontrollbank AG
der Sparkassen
Bangladesh Standard Chartered Bank None
Belgium Generale Bank Caisse
Interprofessionnelle
de Depots et de
Virements de Titres
S.A. (CIK)
Banque Nationale de
Belgique
Brazil Citibank, N.A. Bolsa de Valores de
Sao Paulo (Bovespa)
Banco Central do
Brasil, Systema
Especial de
Liquidacao e
Custodian (SELIC)
Canada Canada Trustco The Canadian
Mortgage Company Depository for
Securities Limited
(CDS)
Chile Citibank, N.A. None
China The Hongkong and Shanghai Shanghai Securities
Banking Corporation Limited Central Clearing and
Registration
Corporation (SSCCRC)
<PAGE>
Shenzhen Securities
Registrars Co., Ltd.
and its designated
agent banks
Colombia Cititrust Colombia S.A. None
Sociedad Fiduciaria
Cyprus Barclays Bank PLC None
Denmark Den Danske Bank Vaerdipapircentralen
The Danish Securities
Center (VP)
Finland Kansallis-Osake-Pankki The Central Share
Register of Finland
France Banque Paribas Societe
Interprofessionnelle
pour la Compensation
des Valeurs
Mobilieres (SICOVAM)
Banque de France,
Saturne System
Germany Berliner Handels-und The Deutscher
Frankfurter Bank Kassenverein AG
Greece National Bank of Greece The Central
S.A. Depository
(Apothetirio Titlon
A.E.)
Hong Kong Standard Chartered Bank The Central Clearing
and Settlement System
(CCASS)
Hungary Citibank Budapest Rt. None
India The Hongkong and Shanghai None
Banking Corporation Limited
Indonesia Standard Chartered Bank None
Ireland Bank of Ireland None
The Central Bank of
Ireland, The Gilt
Settlement Office
(GSO)
<PAGE>
Israel Bank Hapoalim B.M. The Clearing House of
the Tel Aviv Stock
Exchange
Italy Morgan Guaranty Trust Monte Titoli, S.p.A.
Company
Banca d'Italia
Japan Sumitomo Trust & None
Banking Co., Ltd.
Bank of Japan Net
System
Korea Bank of Seoul None
Malaysia Standard Chartered Bank None
Mexico Citibank, N.A. S.D. INDEVAL, S.A. de
C.V. (Instituto para
el Deposito de
Valores)
Banco de Mexico
Netherlands MeesPierson N.V. Netherlands Centraal
Instituut voor Giraal
Effectenverkeer B.V.
(NECIGEF)
New Zealand ANZ Banking Group None
(New Zealand) Limited
The Reserve Bank of
New Zealand,
Austraclear NZ
Norway Christiania Bank og Verdipapirsentralen-
Kreditkasse The Norwegian
Registry of
Securities (VPS)
Pakistan Deutsche Bank AG None
Peru Citibank, N.A. Caja de Valores
(CAVAL)
Philippines Standard Chartered Bank None
Portugal Banco Comercial Portugues Central de Valores
Mobiliarios (Central)
Singapore The Development Bank of The Central
Singapore Ltd. Depository (Ptc)
Limited (CDP)
<PAGE>
Spain Banco Santander, S.A. Servicio de
Compensacion y
Liquidacion de
Valores (SCLV)
Banco de Espana,
Anotaciones en Cuenta
Sri Lanka The Hongkong and Shanghai The Central
Banking Corporation Limited Depository System
(Pvt) Limited
Sweden Skandinaviska Enskilda Vardepapperscentralen
Banken The Swedish
Securities Register
Center (VPC)
Switzerland Union Bank of Schweizerische
Switzerland Effekten-Giro AG
(SEGA)
Taiwan Central Trust of China The Taiwan Securities
Central Depository
Company, Ltd. (TSCD)
Thailand Standard Chartered Bank The Share Depository
Center (SDC)
Turkey Citibank, N.A. None
United Kingdom State Street Bank and None
Trust Company
The Bank of England,
The Central Gilts
Office (CGO); The
Central Moneymarkets
Office (CMO)
Uruguay Citibank, N.A. None
Venezuela Citibank, N.A. None
AMENDMENT TO CUSTODIAN CONTRACT
Agreement made by and between State Street Bank and Trust Company (the
"Custodian") and INVESCO Specialty Funds, Inc. (the "Fund").
WHEREAS, the Custodian and the Fund are parties to a custodian contract
dated May 2, 1994 (the "Custodian Contract") governing the terms and conditions
under which the Custodian maintains custody of the securities and other assets
of the Fund; and
WHEREAS, the Custodian and the Fund desire to amend the terms and
conditions under which the Custodian maintains the Fund's securities and other
non-cash property in the custody of certain foreign sub-custodians in conformity
with the requirements of Rule 17f-5 under the Investment Company Act of 1940, as
amended;
NOW THEREFORE, in consideration of the premises and covenants contained
herein, the Custodian and the Fund hereby amend the Custodian Contract by the
addition of the following terms and provisions;
1. Notwithstanding any provisions to the contrary set forth in the
Custodian Contract, the Custodian may hold securities and other non-cash
property for all of its customers, including the Fund, with a foreign
sub-custodian in a single account that is identified as belonging to the
Custodian for the benefit of its customers, provided however, that (i) the
records of the Custodian with respect to securities and other non-cash property
of the Fund which are maintained in such account shall identify by bookentry
those securities and other non-cash property belonging to the Fund and (ii) the
Custodian shall require that securities and other non-cash property so held by
the foreign sub-custodian be held separately from any assets of the foreign
sub-custodian or of others.
2. Except as specifically superseded or modified herein, the terms and
provisions of the Custodian Contract shall continue to apply with full force and
effect.
IN WITNESS WHEREOF, each of the parties has caused this instrument to be
executed as a sealed instrument in its name and behalf by its duly authorized
representative this 25day of October, 1995.
INVESCO SPECIALTY FUNDS, INC.
By: /s/ Glen A. Payne
-------------------------
Glen A. Payne
Title: Secretary
STATE STREET BANK AND TRUST COMPANY
By: /s/ Charles N. Whittemore, Jr.
-------------------------------
Charles N. Whittemore, Jr.
Title: Vice President
TRANSFER AGENCY AGREEMENT
AGREEMENT made as of this 2nd day of May, 1994, between INVESCO Specialty
Funds, Inc., a Maryland corporation, having its principal office and place of
business at 7800 East Union Avenue, Denver, Colorado, 80237 (hereinafter
referred to as the "Company") and INVESCO Funds Group, Inc., a Delaware
corporation, having its principal place of business at 7800 E. Union Avenue,
Denver, CO 80237 (hereinafter referred to as the "Transfer Agent").
WITNESSETH:
That for and in consideration of mutual promises hereinafter set forth,
the Company and the Transfer Agent agree as follows:
1. Definitions. Whenever used in this Agreement, the following words
and phrases, unless the context otherwise requires, shall have the
following meanings:
(a) "Authorized Person" shall be deemed to include the President,
any Vice President, the Secretary, Treasurer, or any other
person, whether or not any such person is an officer or
employee of the Company, duly authorized to give Oral
Instructions and Written Instructions on behalf of the Company
as indicated in a certification as may be received by the
Transfer Agent from time to time;
(b) "Certificate" shall mean any notice, instruction or other
instrument in writing, authorized or required by this
Agreement to be given to the Transfer Agent, which is actually
received by the Transfer Agent and signed on behalf of the
Company by any two officers thereof;
(c) "Commission" shall have the meaning given it in the 1940 Act;
(d) "Custodian" refers to the custodian of all of the securities
and other moneys owned by the Company;
(e) "Oral Instructions" shall mean verbal instructions actually
received by the Transfer Agent from a person reasonably
believed by the Transfer Agent to be an Authorized Person;
(f) "Prospectus" shall mean the currently effective prospectus
relating to the Company's Shares registered under the
Securities Act of 1933;
(g) "Shares" refers to the shares of common stock, $.01 par value,
of the Company;
(h) "Shareholder" means a record owner of Shares;
(i) "Written Instructions" shall mean a written communication
actually received by the Transfer Agent where the receiver is
able to verify with a reasonable degree of certainty the
authenticity of the sender of such communication; and
<PAGE>
(j) The "1940 Act" refers to the Investment Company Act of 1940
and the Rules and Regulations thereunder, all as amended from
time to time.
2. Representation of Transfer Agent. The Transfer Agent does hereby
represent and warrant to the Company that it has an effective
registration statement on SEC Form TA-1 and, accordingly, has duly
registered as a transfer agent as provided in Section 17A(c) of the
Securities Exchange Act of 1934.
3. Appointment of the Transfer Agent. The Company hereby appoints and
constitutes the Transfer Agent as transfer agent for all of the
Shares of the Company authorized as of the date hereof, and the
Transfer Agent accepts such appointment and agrees to perform the
duties herein set forth. If the board of directors of the Company
hereafter reclassifies the Shares, by the creation of one or more
additional series or otherwise, the Transfer Agent agrees that it
will act as transfer agent for the Shares so reclassified on the
terms set forth herein.
4. Compensation.
(a) The Company will initially compensate the Transfer Agent for
its services rendered under this Agreement in accordance with
the fees set forth in the Fee Schedule annexed hereto and
incorporated herein.
(b) The parties hereto will agree upon the compensation for acting
as transfer agent for any series of Shares hereafter
designated and established at the time that the Transfer Agent
commences serving as such for said series, and such agreement
shall be reflected in a Fee Schedule for that series, dated
and signed by an authorized officer of each party hereto, to
be attached to this Agreement.
(c) Any compensation agreed to hereunder may be adjusted from time
to time by attaching to this Agreement a revised Fee Schedule,
dated and signed by an authorized officer of each party
hereto, and a certified copy of the resolution of the board of
directors of the Company authorizing such revised Fee
Schedule.
(d) The Transfer Agent will bill the Company as soon as
practicable after the end of each calendar month, and said
billings will be detailed in accordance with the Fee Schedule
for the Company. The Company will promptly pay to the Transfer
Agent the amount of such billing.
5. Documents. In connection with the appointment of the Transfer
Agent, the Company shall, on or before the date this Agreement goes
into effect, file with the Transfer Agent the following documents:
<PAGE>
(a) A certified copy of the Articles of Incorporation of the
Company, including all amendments thereto, as then in effect;
(b) A certified copy of the Bylaws of the Company, as then in
effect;
(c) Certified copies of the resolutions of the board of directors
authorizing this Agreement and designating Authorized Persons
to give instructions to the Transfer Agent;
(d) A specimen of the certificate for Shares of the Company in the
form approved by the board of directors, with a certificate of
the Secretary of the Company as to such approval;
(e) All account application forms and other documents relating to
Shareholder accounts;
(f) A certified list of Shareholders of the Company with the name,
address and tax identification number of each Shareholder, and
the number of Shares held by each, certificate numbers and
denominations (if any certificates have been issued), lists of
any accounts against which stops have been placed, together
with the reasons for said stops, and the number of Shares
redeemed by the Company;
(g) Copies of all agreements then in effect between the Company
and any agent with respect to the issuance, sale, or
cancellation of Shares; and
(h) An opinion of counsel for the Company with respect to the
validity of the Shares.
6. Further Documentation. The Company will also furnish from time to
time the following documents:
(a) Each resolution of the board of directors authorizing the
original issue of Shares;
(b) Each Registration Statement filed with the Commission, and
amendments and orders with respect thereto, in effect with
respect to the sale of Shares of the Company;
(c) A certified copy of each amendment to the Articles of
Incorporation and the Bylaws of the Company;
(d) Certified copies of each resolution of the board of directors
designating Authorized Persons to give instructions to the
Transfer Agent;
(e) Certificates as to any change in any officer, director, or
Authorized Person of the Company;
<PAGE>
(f) Specimens of all new certificates for Shares accompanied by
the Company's resolutions of the board of directors approving
such forms; and
(g) Such other certificates, documents or opinions as may mutually
be deemed necessary or appropriate for the Transfer Agent in
the proper performance of its duties.
7. Certificates for Shares and Records Pertaining Thereto.
(a) At the expense of the Company, the Transfer Agent shall
maintain an adequate supply of blank share certificates to
meet the Transfer Agent's requirements therefor. Such share
certificates shall be properly signed by facsimile. The
Company agrees that, notwithstanding the death, resignation,
or removal of any officer of the Company whose signature
appears on such certificates, the Transfer Agent may continue
to countersign certificates which bear such signatures until
otherwise directed by the Company.
(b) The Transfer Agent agrees to prepare, issue and mail
certificates as requested by the Shareholders for Shares of
the Company in accordance with the instructions of the Company
and to confirm such issuance to the Shareholder and the
Company or its designee.
(c) The Company hereby authorizes the Transfer Agent to issue
replacement share certificates in lieu of certificates which
have been lost, stolen or destroyed, without any further
action by the board of directors or any officer of the
Company, upon receipt by the Transfer Agent of properly
executed affidavits or lost certificate bonds, in form
satisfactory to the Transfer Agent, with the Company and the
Transfer Agent as obligees under any such bond.
(d) The Transfer Agent shall also maintain a record of each
certificate issued, the number of Shares represented thereby
and the holder of record. The Transfer Agent shall further
maintain a stop transfer record on lost and/or replaced
certificates.
(e) The Transfer Agent may establish such additional rules and
regulations governing the transfer or registration of
certificates for Shares as it may deem advisable and
consistent with such rules and regulations generally adopted
by transfer agents.
8. Sale of Company Shares.
(a) Whenever the Company or its authorized agent shall sell or
cause to be sold any Shares, the Company or its authorized
agent shall provide or cause to be provided to the Transfer
Agent information including: (i) the number of Shares sold,
trade date, and price; (ii) the amount of money to be
<PAGE>
delivered to the Custodian for the sale of such Shares; (iii)
in the case of a new account, a new account application or
sufficient information to establish an account.
(b) The Transfer Agent will, upon receipt by it of a check or
other payment identified by it as an investment in Shares of
the Company and drawn or endorsed to the Transfer Agent as
agent for, or identified as being for the account of, the
Company, promptly deposit such check or other payment to the
appropriate account postings necessary to reflect the
investment. The Transfer Agent will notify the Company, or
its designee, and the Custodian of all purchases and related
account adjustments.
(c) Upon receipt of the notification required under paragraph (a)
hereof and the notification from the Custodian that such money
has been received by it, the Transfer Agent shall issue to the
purchaser or his authorized agent such Shares as he is
entitled to receive, based on the appropriate net asset value
of the Company's Shares, determined in accordance with
applicable federal law or regulation, as described in the
Prospectus for the Company. In issuing Shares to a purchaser
or his authorized agent, the Transfer Agent shall be entitled
to rely upon the latest written directions, if any, previously
received by the Transfer Agent from the purchaser or his
authorized agent concerning the delivery of such Shares.
(d) The Transfer Agent shall not be required to issue any Shares
of the Company where it has received Written Instructions from
the Company or written notification from any appropriate
federal or state authority that the sale of the Shares of the
Company has been suspended or discontinued, and the Transfer
Agent shall be entitled to rely upon such Written Instructions
or written notification.
(e) Upon the issuance of any Shares of the Company in accordance
with the foregoing provision of this Article, the Transfer
Agent shall not be responsible for the payment of any original
issue or other taxes required to be paid by the Company in
connection with such issuance.
9. Returned Checks. In the event that any check or other order for the
payment of money is returned unpaid for any reason, the Transfer
Agent will: (i) give prompt notice of such return to the Company or
its designee; (ii) place a stop transfer order against all Shares
issued or held on deposit as a result of such check or order; (iii)
in the case of any Shareholder who has obtained redemption checks,
place a stop payment order on the checking account on which such
checks are issued; and (iv) take such other steps as the Transfer
Agent may, in its discretion, deem appropriate or as the Company or
its designee may instruct.
<PAGE>
10. Redemptions.
(a) Redemptions By Mail or In Person. Shares of the Company will
be redeemed upon receipt by the Transfer Agent of: (i) a
written request for redemption, signed by each registered
owner exactly as the Shares are registered; (ii) certificates
properly endorsed for any Shares for which certificates have
been issued; (iii) signature guarantees to the extent required
by the Transfer Agent as described in the Prospectus for the
Company; and (iv) any additional documents required by the
Transfer Agent for redemption by corporations, executors,
administrators, trustees and guardians.
(b) Wire Orders or Telephone Redemptions. The Transfer Agent
will, consistent with procedures which may be established by
the Company from time to time for redemption by wire or
telephone, upon receipt of such a wire order or telephone
redemption request, redeem Shares and transmit the proceeds of
such redemption to the redeeming Shareholder as directed. All
wire or telephone redemptions will be subject to such
additional requirements as may be described in the Prospectus
for the Company. Both the Company and the Transfer Agent
reserve the right to modify or terminate the procedures for
wire order or telephone redemptions at any time.
(c) Processing Redemptions. Upon receipt of all necessary
information and documentation relating to a redemption, the
Transfer Agent will issue to the Custodian an advice setting
forth the number of Shares of the Company received by the
Transfer Agent for redemption and that such shares are valid
and in good form for redemption. The Transfer Agent shall,
upon receipt of the moneys paid to it by the Custodian for the
redemption of Shares, pay such moneys to the Shareholder, his
authorized agent or legal representative.
11. Transfers and Exchanges. The Transfer Agent is authorized to review
and process transfers of Shares of the Company and to the extent, if
any, permitted in the Prospectus for the Company, exchanges between
the Company and other mutual funds advised by INVESCO Funds Group,
Inc., on the records of the Company maintained by the Transfer
Agent. If Shares to be transferred are represented by outstanding
certificates, the Transfer Agent will, upon surrender to it of the
certificates in proper form for transfer, and upon cancellation
thereof, countersign and issue new certificates for a like number of
Shares and deliver the same. If the Shares to be transferred are
not represented by outstanding certificates, the Transfer Agent
will, upon an order therefor by or on behalf of the registered
holder thereof in proper form, credit the same to the transferee on
its books. If Shares are to be exchanged for Shares of another
mutual fund, the Transfer Agent will process such exchange in the
<PAGE>
same manner as a redemption and sale of Shares, except that it may
in its discretion waive requirements for information and
documentation.
12. Right to Seek Assurances. The Transfer Agent reserves the right to
refuse to transfer or redeem Shares until it is satisfied that the
requested transfer or redemption is legally authorized, and it shall
incur no liability for the refusal, in good faith, to make transfers
or redemptions which the Transfer Agent, in its judgment, deems
improper or unauthorized, or until it is satisfied that there is no
basis for any claims adverse to such transfer or redemption. The
Transfer Agent may, in effecting transfers, rely upon the provisions
of the Uniform Act for the Simplification of Fiduciary Security
Transfers or the Uniform Commercial Code, as the same may be amended
from time to time, which in the opinion of legal counsel for the
Company or of its own legal counsel protect it in not requiring
certain documents in connection with the transfer or redemption of
Shares of the Company, and the Company shall indemnify the Transfer
Agent for any act done or omitted by it in reliance upon such laws
or opinions of counsel to the Company or of its own counsel.
13. Distributions.
(a) The Company will promptly notify the Transfer Agent of the
declaration of any dividend or distribution. The Company
shall furnish to the Transfer Agent a resolution of the board
of directors of the Company certified by the Secretary
authorizing the declaration of dividends and authorizing the
Transfer Agent to rely on Oral Instructions or a Certificate
specifying the date of the declaration of such dividend or
distribution, the date of payment thereof, the record date as
of which Shareholders entitled to payment shall be determined,
the amount payable per share to Shareholders of record as of
that date, and the total amount payable to the Transfer Agent
on the payment date.
(b) The Transfer Agent will, on or before the payable date of any
dividend or distribution, notify the Custodian of the
estimated amount of cash required to pay said dividend or
distribution, and the Company agrees that, on or before the
mailing date of such dividend or distribution, it shall
instruct the Custodian to place in a dividend disbursing
account funds equal to the cash amount to be paid out. The
Transfer Agent, in accordance with Shareholder instructions,
will calculate, prepare and mail checks to, or (where
appropriate) credit such dividend or distribution to the
account of, Company Shareholders, and maintain and safeguard
all underlying records.
(c) The Transfer Agent will replace lost checks upon receipt of
properly executed affidavits and maintain stop payment orders
against replaced checks.
(d) The Transfer Agent will maintain all records necessary to
reflect the crediting of dividends which are reinvested in
Shares of the Company.
<PAGE>
(e) The Transfer Agent shall not be liable for any improper
payments made in accordance with the resolution of the board
of directors of the Company.
(f) If the Transfer Agent shall not receive from the Custodian
sufficient cash to make payment to all Shareholders of the
Company as of the record date, the Transfer Agent shall, upon
notifying the Company, withhold payment to all Shareholders of
record as of the record date until such sufficient cash is
provided to the Transfer Agent.
14. Other Duties. In addition to the duties expressly provided for
herein, the Transfer Agent shall perform such other duties and
functions as are set forth in the Fee Schedules(s) hereto from time
to time.
15. Taxes. It is understood that the Transfer Agent shall file such
appropriate information returns concerning the payment of dividends
and capital gain distributions with the proper federal, state and
local authorities as are required by law to be filed by the Company
and shall withhold such sums as are required to be withheld by
applicable law.
16. Books and Records.
(a) The Transfer Agent shall maintain records showing for each
investor's account the following: (i) names, addresses, tax
identifying numbers and assigned account numbers; (ii) numbers
of Shares held; (iii) historical information regarding the
account of each Shareholder, including dividends paid and date
and price of all transactions on a Shareholder's account; (iv)
any stop or restraining order placed against a Shareholder's
account; (v) information with respect to withholdings in the
case of a foreign account; (vi) any capital gain or dividend
reinvestment order, plan application, dividend address and
correspondence relating to the current maintenance of a
Shareholder's account; (vii) certificate numbers and
denominations for any Shareholders holding certificates; and
(viii) any information required in order for the Transfer
Agent to perform the calculations contemplated or required by
this Agreement.
(b) Any records required to be maintained by Rule 31a-1 under the
1940 Act will be preserved for the periods prescribed in Rule
31a-2 under the 1940 Act. Such records may be inspected by
the Company at reasonable times. The Transfer Agent may, at
its option at any time, and shall forthwith upon the Company's
demand, turn over to the Company and cease to retain in the
Transfer Agent's files, records and documents created and
maintained by the Transfer Agent in performance of its
services or for its protection. At the end of the six-year
retention period, such records and documents will either be
turned over to the Company, or destroyed in accordance with
the Company's authorization.
<PAGE>
17. Shareholder Relations.
(a) The Transfer Agent will investigate all Shareholder inquiries
related to Shareholder accounts and respond promptly to
correspondence from Shareholders.
(b) The Transfer Agent will address and mail all communications to
Shareholders or their nominees, including proxy material and
periodic reports to Shareholders.
(c) In connection with special and annual meetings of
Shareholders, the Transfer Agent will prepare Shareholder
lists, mail and certify as to the mailing of proxy materials,
process and tabulate returned proxy cards, report on proxies
voted prior to meetings, and certify to the Secretary of the
Company Shares to be voted at meetings.
18. Reliance by Transfer Agent; Instructions.
(a) The Transfer Agent shall be protected in acting upon any paper
or document believed by it to be genuine and to have been
signed by an Authorized Person and shall not be held to have
any notice of any change of authority of any person until
receipt of written certification thereof from the Company. It
shall also be protected in processing Share certificates which
it reasonably believes to bear the proper manual or facsimile
signatures of the officers of the Company and the proper
countersignature of the Transfer Agent.
(b) At any time the Transfer Agent may apply to any Authorized
Person of the Company for Written Instructions, and, at the
expense of the Company, may seek advice from legal counsel for
the Company, with respect to any matter arising in connection
with this Agreement, and it shall not be liable for any action
taken or not taken or suffered by it in good faith in
accordance with such Written Instructions or with the opinion
of such counsel. In addition, the Transfer Agent, its
officers, agents or employees, shall accept instructions or
requests given to them by any person representing or acting on
behalf of the Company only if said representative is known by
the Transfer Agent, its officers, agents or employees, to be
an Authorized Person. The Transfer Agent shall have no duty
or obligation to inquire into, nor shall the Transfer Agent be
responsible for, the legality of any act done by it upon the
request or direction of Authorized Persons of the Company.
(c) Notwithstanding any of the foregoing provisions of this
Agreement, the Transfer Agent shall be under no duty or
obligation to inquire into, and shall not be liable for: (i)
the legality of the issue or sale of any Shares of the
Company, or the sufficiency of the amount to be received
<PAGE>
therefor; (ii) the legality of the redemption of any Shares of
the Company, or the propriety of the amount to be paid
therefor; (iii) the legality of the declaration of any
dividend by the Company, or the legality of the issue of any
Shares of the Company in payment of any stock dividend; or
(iv) the legality of any recapitalization or readjustment of
the Shares of the Company.
19. Standard of Care and Indemnification.
(a) The Transfer Agent may, in connection with this Agreement,
employ agents or attorneys in fact, and shall not be liable
for any loss arising out of or in connection with its actions
under this Agreement so long as it acts in good faith and with
due diligence, and is not negligent or guilty of any willful
misconduct.
(b) The Company hereby agrees to indemnify and hold harmless the
Transfer Agent from and against any and all claims, demands,
expenses and liabilities (whether with or without basis in
fact or law) of any and every nature which the Transfer Agent
may sustain or incur or which may be asserted against the
Transfer Agent by any person by reason of, or as a result of:
(i) any action taken or omitted to be taken by the Transfer
Agent in good faith in reliance upon any Certificate,
instrument, order or stock certificate believed by it to be
genuine and to be signed, countersigned or executed by any
duly Authorized Person, upon the Oral Instructions or Written
Instructions of an Authorized Person of the Company or upon
the opinion of legal counsel for the Company or its own
counsel; or (ii) any action taken or omitted to be taken by
the Transfer Agent in connection with its appointment in good
faith in reliance upon any law, act, regulation or
interpretation of the same even though the same may thereafter
have been altered, changed, amended or repealed. However,
indemnification hereunder shall not apply to actions or
omissions of the Transfer Agent or its directors, officers,
employees or agents in cases of its own gross negligence,
willful misconduct, bad faith, or reckless disregard of its or
their own duties hereunder.
20. Affiliation Between Company and Transfer Agent. It is understood
that the directors, officers, employees, agents and Shareholders of
the Company, and the officers, directors, employees, agents and
shareholders of the Company's investment adviser, INVESCO Funds
Group, Inc. (the "Adviser"), are or may be interested in the
Transfer Agent as directors, officers, employees, agents,
shareholders, or otherwise, and that the directors, officers,
employees, agents or shareholders of the Transfer Agent may be
interested in the Company as directors, officers, employees, agents,
shareholders, or otherwise, or in the Adviser as officers,
directors, employees, agents, shareholders or otherwise.
<PAGE>
21. Term.
(a) This Agreement shall become effective on May 2, 1994, and
shall continue in effect for an initial term expiring April
30, 1995, and from year to year thereafter, so long as such
continuance is specifically approved at least annually both:
(i) by either the board of directors or the vote of a majority
of the outstanding voting securities of the Company; and (ii)
by a vote of the majority of the directors who are not
interested persons of the Company (as defined in the 1940 Act)
cast in person at a meeting called for the purpose of voting
upon such approval.
(b) Either of the parties hereto may terminate this Agreement by
giving to the other party a notice in writing specifying the
date of such termination, which shall not be less than 60 days
after the date of receipt of such notice. In the event such
notice is given by the Company, it shall be accompanied by a
resolution of the board of directors, certified by the
Secretary, electing to terminate this Agreement and
designating a successor transfer agent.
22. Amendment. This Agreement may not be amended or modified in any
manner except by a written agreement executed by both parties with
the formality of this Agreement, and (i) authorized or approved by
the resolution of the board of directors, including a majority of
the directors of the Company who are not interested persons of the
Company as defined in the 1940 Act, or (ii) authorized and approved
by such other procedures as may be permitted or required by the 1940
Act.
23. Subcontracting. The Company agrees that the Transfer Agent may, in
its discretion, subcontract for certain of the services to be
provided hereunder; provided, however, that the transfer agent will
be liable to the Company for any loss arising out of or in
connection with the actions of any subcontractor, if the
subcontractor fails to act in good faith and with due diligence or
is negligent or guilty of any willful misconduct.
24. Miscellaneous.
(a) Any notice and other instrument in writing, authorized or
required by this Agreement to be given to the Company or the
Transfer Agent, shall be sufficiently given if addressed to
that party and mailed or delivered to it at its office set
forth below or at such other place as it may from time to time
designate in writing.
To the Company:
INVESCO Specialty Funds, Inc.
Post Office Box 173706
Denver, Colorado 80217-3706
Attention: Dan J. Hesser, President
<PAGE>
To the Transfer Agent:
INVESCO Funds Group, Inc.
Post Office Box 173706
Denver, Colorado 80217-3706
Attention: Ronald L. Grooms, Senior Vice President
(b) This Agreement shall not be assignable and in the event of its
assignment (in the sense contemplated by the 1940 Act), it
shall automatically terminate.
(c) This Agreement shall be construed in accordance with the laws
of the State of Colorado.
(d) This Agreement may be executed in any number of counterparts,
each of which shall be deemed to be an original; but such
counterparts shall, together, constitute only one instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective corporate officers thereunder duly authorized and
their respective corporate seals to be hereunto affixed, as of 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.
ATTEST:
By: /s/ Ronald L. Grooms
/s/ Glen A. Payne -------------------------
- ------------------------ Ronald L. Grooms,
Glen A. Payne,Secretary Senior Vice President
<PAGE>
FEE SCHEDULE
for
Services Pursuant to Transfer Agency Agreement, dated May 2, 1994, between
INVESCO Specialty Funds, Inc. (the "Company") and INVESCO Funds Group, Inc. as
Transfer Agent (the "Agreement").
Account Maintenance Charges. Fees are based on an annual charge set forth
below per shareholder account or omnibus account participant for account
maintenance, as described in the Agreement. This charge, in the amount of $14.00
per shareholder account per year, or in the case of omnibus accounts that are
invested in the Company, $14.00 per participant in such accounts per year, is
billable monthly at the rate of one-twelfth (1/12) of the annual fee. A charge
is made for an account in the month that it opens or closes, as well as in each
month which the account remains open, regardless of the account balance.
Expenses. The Company shall not be liable for reimbursement to the
Transfer Agent of expenses incurred by it in the performance of services
pursuant to the Agreement, provided, however, that nothing herein or in the
Agreement shall be construed as affecting in any manner any obligations assumed
by the Company with respect to expense payment or reimbursement pursuant to a
separate written agreement between the Company and the Transfer Agent or any
affiliate thereof.
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,
ATTEST: Senior Vice President
/s/ Glen A. Payne
- --------------------------
Glen A. Payne, Secretary
AMENDMENT NO. 1
to
FEE SCHEDULE
for
Services pursuant to a Transfer Agency Agreement, dated May 2, 1994
between INVESCO Specialty Funds, Inc. (the "Fund") and INVESCO Funds Group, Inc.
as Transfer Agent (the "Agreement").
Account Maintenance Charges. Fees are based on an annual charge set forth
below per shareholder account or omnibus account participant for account
maintenance, as described in the Agreement. This charge, in the amount of $20.00
per shareholder account per year, or in the case of omnibus accounts that are
invested in the Fund $20.00 per participant in such accounts per year, is
billable monthly at the rate of one-twelfth (1/12) of the annual fee. A charge
is made for an account in the month that is opens or closes, as well as in each
month which the account remains open, regardless of the account balance.
Expenses. The Fund shall not be liable for reimbursement to the Transfer
Agent of expenses incurred by it in the performance of services pursuant to the
Agreement, provided, however, that nothing herein or in the Agreement shall be
construed as affecting in any manner any obligations assumed by the Fund with
respect to expense payment or reimbursement pursuant to a separate written
agreement between the Fund and the Transfer Agent or any affiliate thereof.
Effective this 1st day of May, 1996.
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
ADMINISTRATIVE SERVICES AGREEMENT
AGREEMENT made as of the 2nd day of May, 1994, in Denver, Colorado, by and
between INVESCO Specialty Funds, Inc., a Maryland corporation (the "Company"),
and INVESCO Funds Group, Inc., a Delaware corporation (hereinafter referred to
as "INVESCO").
WHEREAS, the Company is engaged in business as an open-end management
investment company, is registered as such under the Investment Company Act of
1940, as amended (the "Act"), and is authorized to issue shares representing
interests in the following separate portfolios of investments: INVESCO Worldwide
Capital Goods Fund and INVESCO Worldwide Communications Fund (individually, the
"Fund" and collectively, the "Funds"), and which may be authorized to issue
shares representing interests in additional portfolios of investments; and
WHEREAS, INVESCO is registered as an investment adviser under the
Investment Advisers Act of 1940, and engages in the business of acting as
investment adviser and providing certain other administrative, sub-accounting,
and recordkeeping services to certain investment companies, including the Funds;
and
WHEREAS, the Company desires to retain INVESCO to render certain
administrative, sub-accounting, and recordkeeping services (the "Services") in
the manner and on the terms and conditions hereinafter set forth; and
WHEREAS, INVESCO desires to be retained to perform such services on said
terms and conditions;
NOW, THEREFORE, in consideration of the premises and the mutual covenants
hereinafter contained, the Company and INVESCO agree as follows:
1. The Company hereby retains INVESCO to provide, or, upon receipt of
written approval of the Company arrange for other companies,
including affiliates of INVESCO, to provide to the Funds: A) such
sub-accounting and recordkeeping services and functions as are
reasonably necessary for the operation of the Funds. Such services
shall include, but shall not be limited to, preparation and
maintenance of the following required books, records and other
documents: (1) journals containing daily itemized records of all
purchases and sales, and receipts and deliveries of securities and
all receipts and disbursements of cash and all other debits and
credits, in the form required by Rule 31a-1(b)(1) under the Act; (2)
general and auxiliary ledgers reflecting all asset, liability,
reserve, capital, income and expense accounts, in the form required
by Rules 31a-1(b)(2)(i) - (iii) under the Act; (3) a securities
record or ledger reflecting separately for each portfolio security
as of trade date all "long" and "short" positions carried by the
Funds for the account of the Funds, if any, and showing the location
of all securities long and the off-setting position to all
securities short, in the form required by Rule 31a-1(b)(3) under the
Act; (4) a record of all portfolio purchases or sales, in the form
required by Rule 31a-1(b)(6) under the Act; (5) a record of all
puts, calls, spreads, straddles and all other options, if any, in
<PAGE>
which the Funds have any direct or indirect interest or which the
Funds have granted or guaranteed, in the form required by Rule
31a-1(b)(7) under the Act; (6) a record of the proof of money
balances in all ledger accounts maintained pursuant to this
Agreement, in the form required by Rule 31a-1(b)(8) under the Act;
and (7) price make-up sheets and such records as are necessary to
reflect the determination of the Funds' net asset value. The
foregoing books and records shall be maintained and preserved by
INVESCO in accordance with and for the time periods specified by
applicable rules and regulations, including Rule 31a-2 under the
Act. All such books and records shall be the property of the
Company and, upon request therefor, INVESCO shall surrender to the
Company such of the books and records so requested; and B) such
sub-accounting, recordkeeping, and administrative services and
functions, which shall be furnished by INVESCO's affiliated
corporation, INVESCO Solutions, Inc., as are reasonably necessary
for the operation of Company shareholder accounts maintained by
certain retirement plans and employee benefit plans for the benefit
of participants in such plans. Such services and functions shall
include, but shall not be limited to: (1) establishing new
retirement plan participant accounts; (2) receipt and posting of
weekly, bi-weekly and monthly retirement plan contributions; (3)
allocation of contributions to each participant's individual Fund
account; (4) maintenance of separate account balances for each
source of retirement plan money (i.e., Company, Employee, Voluntary,
Rollover) invested in the Funds; (5) purchase, sale, exchange or
transfer of monies in the retirement plan as directed by the
relevant party; (6) distribution of monies for participant loans,
hardships, terminations, death or disability payments; (7)
distribution of periodic payments for retired participants; (8)
posting of distributions of interest, dividends and long-term
capital gains to participants by the Funds; (9) production of
monthly, quarterly and/or annual statements of all Fund activity for
the relevant parties; (10) processing of participant maintenance
information for investment election changes, address changes,
beneficiary changes and Qualified Domestic Relations Orders; (11)
responding to telephone and written inquiries concerning Fund
investments, retirement plan provisions and compliance issues; (12)
performing discrimination testing and counseling employers on cure
options on failed tests; (13) preparation of 1099R and W2P
participant IRS tax forms; (14) preparation of, or assisting in the
preparation of, 5500 Series tax forms, Summary Plan Descriptions and
Determination Letters; and (15) reviewing legislative and IRS
changes to keep the retirement plan in compliance with applicable
law.
2. INVESCO shall, at its own expense, maintain such staff and employ or
retain such personnel and consult with such other persons as it
shall from time to time determine to be necessary or useful to the
performance of its obligations under this Agreement. Without
limiting the generality of the foregoing, such staff and personnel
shall be deemed to include officers of INVESCO and persons employed
or otherwise retained by INVESCO to provide or assist in providing
the Services to the Funds.
<PAGE>
3. INVESCO shall, at its own expense, provide such office space,
facilities and equipment (including, but not limited to, computer
equipment, communication lines and supplies) and such clerical help
and other services as shall be necessary to provide the Services to
the Funds. In addition, INVESCO may arrange on behalf of the Funds
to obtain pricing information regarding the Funds' investment
securities from such company or companies as are approved by a
majority of the Company's board of directors; and, if necessary, the
Company shall be financially responsible to such company or
companies for the reasonable cost of providing such pricing
information.
4. The Company will, from time to time, furnish or otherwise make
available to INVESCO such information relating to the business and
affairs of the Funds as INVESCO may reasonably require in order to
discharge its duties and obligations hereunder.
5. For the services rendered, facilities furnished, and expenses
assumed by INVESCO under this Agreement, the Company shall pay to
INVESCO a $10,000 per year per Fund base fee, plus an additional
fee, computed on a daily basis and paid on a monthly basis. For
purposes of each daily calculation of this additional fee, the most
recently determined net asset value of each Fund, as determined by a
valuation made in accordance with the Company's procedure for
calculating each Fund's net asset value as described in the Funds'
Prospectus and/or Statement of Additional Information, shall be
used. The additional fee to INVESCO under this Agreement shall be
computed at the annual rate of 0.015% of each Fund's daily net
assets as so determined. During any period when the determination of
a Fund's net asset value is suspended by the directors of the
Company, the net asset value of a share of that Fund as of the last
business day prior to such suspension shall, for the purpose of this
Paragraph 5, be deemed to be the net asset value at the close of
each succeeding business day until it is again determined.
6. INVESCO will permit representatives of the Company, including the
Company's independent auditors, to have reasonable access to the
personnel and records of INVESCO in order to enable such
representatives to monitor the quality of services being provided
and the level of fees due INVESCO pursuant to this Agreement. In
addition, INVESCO shall promptly deliver to the board of directors
of the Company such information as may reasonably be requested from
time to time to permit the board of directors to make an informed
determination regarding continuation of this Agreement and the
payments contemplated to be made hereunder.
7. This Agreement shall remain in effect until no later than April 30,
1995 and from year to year thereafter provided such continuance is
approved at least annually by the vote of a majority of the
directors of the Company who are not parties to this Agreement or
"interested persons" (as defined in the Act) of any such party,
<PAGE>
which vote must be cast in person at a meeting called for the
purpose of voting on such approval; and further provided, however,
that (a) the Company may, at any time and without the payment of any
penalty, terminate this Agreement upon thirty days written notice to
INVESCO; (b) the Agreement shall immediately terminate in the event
of its assignment (within the meaning of the Act and the Rules
thereunder) unless the Board of Directors of the Company approves
such assignment; and (c) INVESCO may terminate this Agreement
without payment of penalty on sixty days written notice to the
Company. Any notice under this Agreement shall be given in writing,
addressed and delivered, or mailed postage prepaid, to the other
party at the principal office of such party.
8. This Agreement shall be construed in accordance with the laws of the
State of Colorado and the applicable provisions of the Act. To the
extent the applicable law of the State of Colorado or any of the
provisions herein conflict with the applicable provisions of the
Act, the latter shall control.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement on the day and year first above written.
INVESCO SPECIALTY FUNDS, INC.
By: /s/ Dan J. Hesser
-------------------------
Dan J. Hesser
ATTEST: President
/s/ Glen A. Payne
- -------------------------
Glen A. Payne, Secretary
INVESCO FUNDS GROUP, INC.
By: /s/ Ronald L. Grooms
------------------------
ATTEST: Ronald L. Grooms
Senior Vice President
/s/ Glen A. Payne
- -------------------------
Glen A. Payne, Secretary
Consent of Independent Accountants
We hereby consent to the incorporation by reference in the Statement of
Additional Information constituting part of this Post-Effective Amendment No. 10
to the registration statement on Form N-1A (the "Registration Statement") of our
report dated August 30, 1996, relating to the financial statements and financial
highlights appearing in the July 31, 1996 Annual Report to Shareholders of
INVESCO Specialty Funds, Inc., which is also incorporated by reference into the
Registration Statement. We also consent to the references to us under the
heading "Financial Highlights" in the Statement of Additional Information.
/s/ Price Waterhouse LLP
- ------------------------
Price Waterhouse LLP
Denver, Colorado
November 22, 1996
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000923705
<NAME> INVESCO SPECIALTY FUNDS, INC.
<SERIES>
<NUMBER> 1
<NAME> INVESCO WORLDWIDE CAPITAL GOODS FUND
<S> <C>
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