File No. 33-79290
As filed on ^ June 27, 1997
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 X
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Pre-Effective Amendment No.
Post-Effective Amendment No. ^ 11 X
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REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 X
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Amendment No. ^ 12 X
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INVESCO SPECIALTY FUNDS, INC.
(Exact Name of Registrant as Specified in Charter)
7800 E. Union Avenue, Denver, Colorado 80237
(Address of Principal Executive Offices)
P.O. Box 173706, Denver, Colorado 80217-3706
(Mailing Address)
Registrant's Telephone Number, including Area Code: (303) 930-6300
Glen A. Payne, Esq.
7800 E. Union Avenue
Denver, Colorado 80237
(Name and Address of Agent for Service)
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Copies to:
Ronald M. Feiman, Esq.
Gordon Altman Butowsky
Weitzen Shalov & Wein
114 West 47th Street
New York, New York 10036
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Approximate Date of Proposed Public Offering: As soon as practicable after this
post-effective amendment becomes effective.
It is proposed that this filing will become effective
- ---- immediately upon filing pursuant to paragraph (b)
X on ^ June 30, 1997, pursuant to paragraph (b)
- ---- 60 days after filing pursuant to paragraph (a)(i)
- ---- on _____________ pursuant to paragraph (a)(i)
- ---- 75 days after filing pursuant to paragraph (a)(ii)
on _____________ pursuant to paragraph (a)(ii) of rule 485.
If appropriate, check the following box:
- ---- this post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
Registrant has previously elected, pursuant to Rule 24f-2 under the Investment
Company Act of 1940, to register an indefinite number of its shares of common
stock for sale under the Securities Act of 1933. Registrant's Rule 24f-2 Notice
for the fiscal year ended July 31, 1996, was filed on or about September 18,
1996.
Page 1 of 203
Exhibit index is located at page 117
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NOTE
This Post-Effective Amendment (Form N-1A) is being filed to ^ comply with
an undertaking contained in Post-Effective Amendment No. 10 to the Registration
Statement filed November 22, 1996 to file an amendment containing unaudited
financial statements for the new series, INVESCO Realty Fund^ within four to six
months from the effective date (December 9, 1996). Because the Fund was not
marketed until January 2, 1997, the four to six month financials are not due
until July 1, 1997. This Post-Effective Amendment ^ does not affect the
Prospectuses for the INVESCO Worldwide Capital Goods, INVESCO Worldwide
Communications, INVESCO European Small Company, INVESCO Latin American Growth
and INVESCO Asian Growth Funds.
<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; Essential
Information
3....................... Financial Highlights; Fund Price
and Performance ^
4....................... Investment Objective and Strategy;
Investment Policies ^ and Risks;
The ^ Fund and ^ Its Management
5....................... The ^ Fund and ^ Its Management^
5A...................... Not Applicable
6....................... Fund Services ^; Taxes, Dividends
and Capital Gain Distributions;
Additional Information
7....................... How ^ To Buy Shares; Fund Price and
Performance; Fund Services; The
Fund and Its Management
8....................... Fund Services ^; How to ^ Sell
Shares
9....................... Not Applicable
Part B Statement of Additional Information
10...................... Cover Page
11...................... Table of Contents
-i-
<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 ^
Realty 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.
-ii-
<PAGE>
PROSPECTUS
^ June 30, 1997
INVESCO REALTY FUND
INVESCO Realty Fund (the "Fund") seeks to provide above-average current
income. Long-term capital growth potential is an additional consideration in
selecting securities for the Fund's investment portfolio. The Fund normally
invests at least 65% of its total assets in dividend-paying, publicly-traded
stocks of companies in the real estate industry. The remaining assets are
invested in other income-producing securities such as corporate bonds.
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 ^ January 1, 1997, has been filed with the Securities and
Exchange Commission and is incorporated by reference into this prospectus. To
obtain a free copy, write to INVESCO Funds Group, Inc., P.O. Box 173706, Denver,
Colorado 80217-3706; or call 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
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ESSENTIAL INFORMATION........................................................7
ANNUAL FUND EXPENSES.........................................................8
FINANCIAL HIGHLIGHTS........................................................10
INVESTMENT OBJECTIVE AND STRATEGY...........................................12
INVESTMENT POLICIES AND RISKS...............................................12
THE FUND AND ITS MANAGEMENT.................................................20
FUND PRICE AND PERFORMANCE..................................................22
HOW TO BUY SHARES...........................................................22
FUND SERVICES...............................................................27
HOW TO SELL SHARES..........................................................27
TAXES, DIVIDENDS AND CAPITAL GAIN DISTRIBUTIONS.............................30
ADDITIONAL INFORMATION......................................................31
<PAGE>
ESSENTIAL INFORMATION
Investment Goal And Strategy. INVESCO Realty Fund seeks to provide
above-average current income. Long-term capital growth potential is an
additional consideration in selecting securities for the Fund's investment
portfolio. The Fund normally invests at least 65% of its total assets in
publicly-traded stocks of companies primarily engaged in the real estate
industry. The remaining assets are invested in other income-producing securities
such as mortgage-backed securities and corporate bonds. There is no guarantee
that the Fund will meet its objective. See "Investment Objective And Strategy"
and "Investment Policies and Risks."
Designed For: Investors primarily seeking above-average current income
consistent with reasonable risk, without sacrificing the potential for long-term
capital growth. While not a complete investment program, the Fund may be a
valuable element of your investment portfolio. You also may wish to consider the
Fund as part of a Uniform Gift/Trust To Minors Account or systematic investing
strategy. The Fund may be a suitable investment for many types of retirement
programs, including IRA, SEP-IRA, SIMPLE-IRA, 401(k), Profit Sharing, Money
Purchase Pension, and 403(b) plans.
Time Horizon. Since stock prices fluctuate on a daily basis, the Fund's
price per share varies daily. Potential shareholders should consider this a
long-term investment.
Risks. The Fund focuses on equity securities of companies in the real
estate industry. As such, in addition to the normal market risks associated with
investments in securities generally, the Fund is particularly sensitive to
conditions in the real estate industry. Real estate is a cyclical industry that
is sensitive to, among other things, interest rates, property tax rates,
national, regional and local economic conditions and availability of materials.
The Fund's investments in debt securities are subject to credit risk and market
risk, both of which are increased by investing in lower rated securities. The
returns on foreign investments may be influenced by the risks of investing
overseas. Rapid portfolio turnover may result in higher brokerage commissions
and the acceleration of taxable capital gains. These policies make the Fund
unsuitable for that portion of your savings dedicated to preservation of capital
over the short term. See ^"Investment Objective and Strategy^" and ^"Investment
Policies and Risks.^"
Organization and Management. The Fund is a series of INVESCO Specialty
Funds, Inc., a diversified, managed no-load mutual fund. The Fund is owned by
its shareholders. It employs INVESCO Funds Group, Inc. ("IFG") (founded in 1932)
to serve as investment adviser, administrator, distributor^ and transfer agent;
and INVESCO Realty Advisors, Inc. ("IRAI") to serve as sub-adviser.
IFG and IRAI are ^ subsidiaries of AMVESCAP PLC, an international
investment management company, that manages approximately $165 billion in
assets. AMVESCAP PLC is based in London, with money managers located in Europe,
North America, and the Far East.
<PAGE>
The Fund's investments are selected by a team of IRAI portfolio managers
that is collectively responsible for the investment decisions relating to the
Fund.
This Fund offers all of the following services at no charge:
Telephone purchases
Telephone exchanges
Telephone redemptions
Automatic reinvestment of distributions
Regular investment plans, such as EasiVest (the Fund's automatic monthly
investment program), Direct Payroll Purchase, and Automatic Monthly
Exchange^
Periodic withdrawal plans
See "How To Buy Shares" and "How To Sell Shares."
Minimum Initial Investment: $1,000, which is waived for regular investment
plans, including EasiVest and Direct Payroll Purchase, and certain retirement
plans.
Minimum Subsequent Investment: $50 (Minimums are lower for certain
retirement plans.)
ANNUAL FUND EXPENSES
The Fund is no-load; there are no fees to purchase, exchange or redeem
shares. The Fund is authorized to pay a Rule 12b-1 distribution fee of one
quarter of one percent of the Fund's average net assets each year. (See "How To
Buy Shares --Distribution Expenses.")
Like any company, the Fund has operating expenses -- such as portfolio
management, accounting, shareholder servicing, maintenance of shareholder
accounts^ and other expenses. These expenses are paid from the Fund's assets.
Lower expenses benefit investors by increasing the Fund's total return. ^
Annual Fund Operating Expenses
(as a percentage of average net assets)
Management Fee 0.75%
12b-1 Fees 0.25%
Other Expenses (after expense limitation)(1) 0.20%
Total Fund Operating Expenses
(after expense limitation)(1) 1.20%
(1) Based on estimated expenses for the current fiscal year. If necessary,
certain Fund expenses will be absorbed voluntarily by IFG for at least the first
fiscal year of the Fund's operations in order to ensure that expenses for the
Fund will not exceed 1.20% of the Fund's average net assets pursuant to an
agreement ^ among the Fund, IFG, and IRAI. If such voluntary expense limit were
<PAGE>
not in effect, the Fund's "Other Expenses" and "Total Fund Operating
Expenses" for the fiscal year ending July 31, 1997, are estimated to be 1.36%
and 2.36%, respectively, of the Fund's average net assets. Actual expenses are
not provided because the Fund did not begin a public offering of its securities
until ^ January 2, 1997.
Example
A shareholder would pay the following expenses on a $1,000 investment for
the periods shown, assuming a hypothetical 5% annual return and redemption at
the end of each time period. (Of course, actual operating expenses are paid from
the Fund's assets, and are deducted from the amount of income available for
distribution to shareholders; they are not charged directly to shareholder
accounts.)
1 Year 3 Years
------ -------
$12 $38
The purpose of this table is to assist you in understanding the various
costs and expenses that you will bear directly or indirectly. THE ABOVE FIGURES
ARE ESTIMATES SINCE THE FUND HAS NOT YET COMPLETED ITS FIRST FISCAL YEAR OF
OPERATIONS. The example should not be considered a representation of past or
future performance or expenses, and actual annual returns and expenses may be
greater or less than those shown. For more information on the Fund's expenses,
see "The Fund ^ And Its Management" and "How ^ To Buy Shares -- Distribution
Expenses."
^ Because the Fund pays a distribution fee, 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>
FINANCIAL HIGHLIGHTS
(For a Fund Share Outstanding Throughout the Period)
Period Ended May 31, 1997
UNAUDITED
The following information is for the period January 2, 1997 (commencement
of operations) to May 31, 1997. This information should be read in conjunction
with the unaudited financial statements appearing in the Company's 1996
Semi-Annual Report to Shareholders which is incorporated by reference into the
Statement of Additional Information and the Fund's unaudited financial
statements for the period January 2, 1997 (commencement of operations) through
May 31, 1997 attached to the Statement of Additional Information. Both are
available without charge by contacting INVESCO Funds Group, Inc. at the address
or telephone number shown on the cover of this prospectus.
PER SHARE DATA
Net Asset Value -- Beginning of Period $ 10.00
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INCOME FROM INVESTMENT OPERATIONS
Net Investment Income 0.13
Net Losses on Securities
(Both Realized and Unrealized) (0.06)
Total from Investment Operations 0.07
LESS DISTRIBUTIONS FROM NET INVESTMENT
INCOME 0.12
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Net Asset Value -- End of Period $ 9.95
==========
TOTAL RETURN* 0.75% *
RATIOS
Net Assets -- End of Period ($000 Omitted) $28,892
Ratio of Expenses to Average Net Assets# 0.49% * @
Ratio of Net Investment Income to
Average Net Assets# 1.47% *
Portfolio Turnover Rate* 57% *
Average Commission Rate Paid^^ $0.0537 *
* Based on operations for the period shown and, accordingly, is not
representative of a full year.
# Various expenses of the Fund were voluntarily absorbed by IFG for the
period ended May 31, 1997. If such expenses had not been voluntarily
absorbed, ratio of expenses to average net assets would have been 0.71%
(not annualized) and ratio of net investment income to average net assets
would have been 1.25% (not annualized).
@ Ratio is based on Total Expenses of the Fund, less Expenses Absorbed by
Investment Adviser, which is before any expense offset arrangements.
<PAGE>
^^ 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.
<PAGE>
INVESTMENT OBJECTIVE AND STRATEGY
The Fund seeks to provide above-average current income while following
sound investment practices. This investment objective is fundamental and cannot
be changed without the approval of the Fund's shareholders. Long-term capital
growth potential is an additional, but secondary, consideration in the selection
of portfolio securities. There is no assurance that the Fund's investment
objective will be met.
The Fund normally invests at least 65% of its total assets in equity
securities of companies principally engaged in the real estate industry. A
company is "principally engaged" in that industry if at least 50% of its assets,
gross income or net profits are attributable to the ownership, construction,
management or sale of residential, commercial or industrial real estate. Such
companies may include, for example, real estate investment trusts ("REITs"),
real estate brokers, home builders or real estate developers, companies with
substantial real estate holdings (such as paper and lumber producers,
agricultural businesses and lodging and entertainment companies) and companies
with significant involvement in the real estate industry, such as building
supply companies and financial institutions that write real estate mortgages. In
addition to common stocks, "equity securities" may include preferred stocks,
securities convertible into common stock and warrants.
The Fund's investments in equity securities are diversified by both
property type and geographic region. No one property type represents more than
50% of the Fund's total assets. The remaining assets of the Fund are invested in
debt securities, including mortgage-backed securities and debt or equity
securities of companies which may or may not be principally involved in the real
estate industry, including non-investment grade and unrated debt securities. The
Fund may invest up to 25% of its total assets in foreign securities.
When the Fund believes market or economic conditions are adverse, the Fund
may act defensively -- that is, temporarily invest up to 100% of its total
assets in equity, fixed-income and cash securities in whatever proportion deemed
desirable under the circumstances at such times, seeking to protect its assets
until conditions stabilize.
INVESTMENT POLICIES AND RISKS
Investors generally should expect to see their price per share vary with
movements in the securities markets, changes in economic conditions and interest
rates, and other factors.
Concentration. The Fund's performance is tied closely to conditions
affecting the real estate industry, which has historically been cyclical. The
real estate industry is highly sensitive to national, regional and local
economic conditions, in addition to such factors as interest rates, changes in
<PAGE>
property taxes and real estate values, overbuilding, and changes in rental
income. The structure, management and cash flow of many of the companies in the
industry also may heavily impact their performance. Although the Fund does not
intend to invest directly in private real estate assets, it conceivably could
own real estate directly as a result of default on debt securities that it holds
in its portfolio. Therefore, the Fund may be subject to certain risks associated
with the direct ownership of real estate, including, among others, difficulties
in valuing and trading real estate and declines in the value of real estate.
Corporate Bonds. When we assess an issuer's ability to meet its interest
rate obligations and repay its debt when due, we are referring to "credit risk."
Debt obligations are rated based on their estimated credit risk by independent
services such as Standard & Poor's ^, a division of The McGraw-Hill Companies,
Inc. ("S&P") or Moody's Investors Services, Inc. ("Moody's"). "Market risk"
refers to sensitivity to changes in interest rates. For instance, when interest
rates go up, the market value of a previously issued bond generally declines; on
the other hand, when interest rates go down, the prices of bonds generally ^
increase.
Risks of Lower Rated Bonds. The lower a bond's quality, the more it is
subject to credit risk and market risk and the more speculative it becomes. This
is also true of most unrated securities. No more than 15% of the total assets of
the Fund may be invested in issues rated below investment grade quality
(commonly called "junk bonds," and rated BB or lower by S&P or Ba or lower by
Moody's or, if unrated, are judged by the Fund's investment adviser or
sub-adviser (collectively, "Fund Management") to be of equivalent quality).
These include issues which are of poorer quality and may have some speculative
characteristics, according to the ratings services. Investments in unrated
securities may not exceed 25% of the Fund's total assets. Never, under any
circumstances, is the Fund permitted to ^ purchase bonds which are rated below B
by Moody's or B- by S&P. Bonds rated B or B-generally lack characteristics of a
desirable investment and are deemed speculative with respect to the issuer's
capacity to pay interest and repay principal over a long period of time. While
Fund Management continuously monitors all of the corporate bonds in the Fund's
investment portfolio for the issuer's ability to make required principal and
interest payments and other quality factors, it may retain a bond whose rating
is changed to one below the minimum rating required for purchase of the
security.
Because investment in medium- and lower-rated securities involves both
greater credit risk and market risk, achievement of the Fund's investment
objective 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
<PAGE>
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. In this regard, it should be noted that while the market for high
yield corporate bonds has been in existence for many years and from time to time
has experienced economic downturns, this market has involved a significant
increase in the use of high yield corporate debt securities to fund highly
leveraged corporate acquisitions and restructurings. Past experience may not,
therefore, provide an accurate indication of future performance of the high
yield bond market, particularly during periods of economic recession.
Furthermore, expenses incurred to recover an investment in a defaulted security
may adversely affect the Fund's net asset value. Finally, while Fund Management
attempts to limit purchases of medium- and lower-rated securities to securities
having an established secondary market, the secondary market for such securities
may be less liquid than the market for higher-quality securities. The reduced
liquidity of the secondary market for such securities may adversely affect the
market price of, and ability of the Fund to value, particular securities at
certain times, thereby making it difficult to make specific valuation
determinations.
For a detailed description of corporate bond ratings, refer to Appendix B
to the Statement of Additional Information.
REITs. Real estate investment trusts (REITs) are pooled investment
vehicles that invest primarily in income-producing real estate or real estate
related loans or interests. REITs are generally classified as either equity or
mortgage, or a combination of the two. An equity REIT invests the majority of
its assets directly in real estate^ and derives most of its income from rents. A
mortgage REIT invests the majority of its assets in real estate mortgages^ and
derives most of its income from interest payments. In addition to the risks
inherent in any investment in the real estate industry, investments in REITs
have certain unique risks. Equity REITs can be affected by changes in the value
of the underlying property owned by them; mortgage REITs are affected by the
quality of the credit extended. REITs are not diversified, and are subject to
the risks of real estate financing, including cash flow dependency and defaults
by borrowers. REITs attempt to qualify for beneficial tax treatment by
distributing 95% of their taxable income to their interest holders. If a REIT
fails to qualify for such beneficial tax treatment, it would be taxed as a
corporation, and distributions to its shareholders (including the Fund) would be
reduced. By investing in REITs indirectly through the Fund, a Fund shareholder
will bear not only a proportionate share of the expenses of the Fund, but also,
indirectly, similar expenses of the REIT. For taxable shareholders, a portion of
the dividends paid by a REIT may be considered return on capital and would not
currently be regarded as taxable income. Therefore, depending upon an
individual's tax bracket, the dividend yield may have a higher tax-effective
yield.
<PAGE>
Mortgage-Backed Securities. The Fund may invest in mortgage-backed
securities issued or guaranteed by the U.S. government or federal agencies such
as ^ Government National Mortgage Association ("GNMA"), Fannie Mae (formerly
known as the Federal National Mortgage Association) and Federal Home Loan
Mortgage Corporation ("FHLMC"). Some of these securities, such as GNMA
certificates, are backed by the full faith and credit of the U.S. Treasury while
others, such as FHLMC certificates, are not. Mortgage-backed securities
represent interests in pools of mortgages which have been purchased from loan
institutions such as banks and savings & loans, and packaged for resale in the
secondary market. Interest and principal are "passed through" to the holders of
the securities. The timely payment of interest and principal is guaranteed by a
federal agency, but the market value of the security is not guaranteed and will
vary. The Fund also may invest in mortgage-backed securities issued by private,
non-governmental issuers such as banks and broker-dealers. When interest rates
drop, many home buyers choose to refinance their mortgages. These prepayments
may shorten the average weighted lives of mortgage-backed securities and may
lower their returns. Prepayment rates cannot be predicted with any accuracy.
Under certain interest rate and prepayment rate structures, it is possible that
the Fund may fail to recoup the full amount of its investment in mortgage-backed
securities, despite any direct or indirect governmental or agency guarantee.
When the Fund reinvests amounts received representing unscheduled prepayments of
principal, it likely will receive a rate of interest that is lower than the rate
on then-existing adjustable rate mortgage pass-through securities.
Collateralized mortgage obligations ("CMOs") may be issued by, among
others, U.S. government agencies and instrumentalities. CMOs are issued in
classes, with the principal of, and interest on, the underlying mortgage assets
allocated among the several classes. Each class is commonly referred to as a
"tranche," and is issued at a specific or adjustable interest rate. Each tranche
must be fully retired no later than its final distribution date. Generally,
interest is paid or accrued monthly. CMOs typically are collateralized by GNMA,
^ Fannie Mae or FHLMC certificates. They also may be collateralized by other
mortgage assets, including whole loans or private mortgage pass-through
securities. CMOs are paid from payments of principal and interest on collateral
of mortgaged assets^ and any reinvestment income thereon. Risks of investing in
CMOs, in addition to the general risks of investing in the real estate industry,
include failure of the counter-party to meet its commitments, the effects of
prepayment on mortgage cash flows and adverse interest rate changes. Investing
in the lower tranches of CMOs presents risks similar to investments in equity
securities. The yield of CMOs may be affected by adjustability of interest rates
and the possibility that prepayments of principal may be made significantly
earlier than the final distribution dates. These practices and risks are
discussed under "Investment Policies and ^ Restrictions" in the Statement of
Additional Information.
<PAGE>
Interest Rate Futures Contracts. The Fund may buy and sell interest rate
futures contracts relating to U.S. government securities for the purpose of
hedging the value of its securities portfolio. These practices and their risks
are discussed under "Investment Policies and Restrictions" in the Statement of
Additional Information.
Foreign Securities. The Fund's investments may include debt and equity
securities issued by foreign governments and foreign corporations. As a matter
of policy, which may be changed without a vote of shareholders, up to 25% of the
Fund's total assets, measured at the time of purchase, may be invested directly
in foreign securities. Securities of Canadian issuers are not subject to this
25% limitation.
Investments in foreign securities involve certain risks. 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. That is, when the U.S. dollar generally rises against foreign
currencies, returns on foreign securities for a U.S. investor may decrease. By
contrast, in a period when the U.S. dollar generally declines, those returns may
increase.
Other aspects of international investing to consider include:
-less publicly available information than is generally available about
U.S. issuers;
-differences in accounting, auditing and financial reporting standards;
-generally higher commission rates on foreign portfolio transactions and
longer settlement periods;
-smaller trading volumes and generally lower liquidity of foreign stock
markets, which may cause greater price volatility; and
-investments in certain countries may be subject to foreign withholding
taxes, which may reduce dividends or capital gains payable to shareholders.
There is also the possibility of expropriation or confiscatory taxation;
adverse changes in investment or exchange control regulations; political
instability; potential restrictions on the flow of international capital; and
the possibility of the Fund experiencing difficulties in pursuing legal remedies
and collecting judgments.
Illiquid and Rule 144A Securities. The Fund may invest up to 15% of its
total assets, measured at the time of purchase, in securities which are illiquid
because they are subject to restrictions on ^ their resale ("restricted
<PAGE>
securities") or because, based upon the nature of the market for such
securities, they are not readily marketable. Investments in illiquid securities
involve the risk that the Fund may not be able to sell such securities at the
time or price desired. In addition, in order to resell a restricted security,
the Fund might have to bear the expense and incur the delays associated with
registration of the security. The Fund may purchase certain securities that are
not registered for sale to the general public, but that can be resold to
institutional investors ^("Rule 144A ^ Securities"), without regard to the
foregoing 10% limitation, if a liquid trading market exists. 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.
In the event that a Rule 144A Security held by the Fund is subsequently
determined to be illiquid, the security will be sold as soon as that can be done
in an orderly fashion consistent with the best interests of the Fund's
shareholders. For more information concerning Rule 144A Securities, see
^"Investment Policies and Restrictions^" in the Statement of Additional
Information.
Delayed Delivery or When-Issued Purchases. Securities may at times be
purchased or sold by the Fund with settlement taking place in the future. The
Fund may invest, and hold, up to 10% of its net assets in when-issued
securities. In the case of debt securities, the payment obligations and the
interest rates that will be received on the securities generally are fixed at
the time the Fund enters into the commitment. Between the date of purchase and
the settlement date, the value of the securities is subject to market
fluctuations, and no interest is payable to the Fund prior to the settlement
date.
Futures Contracts and Options. The Fund may enter into futures contracts
for hedging or other non-speculative purposes within the meaning and intent of
applicable rules of the Commodity Futures Trading Commission ("CFTC"). For
example, futures contracts may be purchased or sold to attempt to hedge against
the effects of interest or exchange rate changes on the Fund's current or
intended investments. If an anticipated decrease in the value of portfolio
securities occurs as a result of a general increase in interest rates or a
change in exchange rates, the adverse effects of such changes may be offset, in
whole or part, by gains on the sale of futures contracts. Conversely, an
increase in the cost of portfolio securities to be acquired caused by a general
decline in interest rates or a change in exchange rates may be offset, in whole
or part, by gains on futures contracts purchased by the Fund. The Fund will
incur brokerage fees when it purchases and sells futures contracts, and it will
be required to maintain margin deposits.
The Fund also may use options to buy or sell futures contracts or debt
securities. Such investment strategies will be used as a hedge and not for
speculation.
<PAGE>
Put and call options on futures contracts or securities may be traded by
the Fund in order to protect against declines in the values of portfolio
securities or against increases in the cost of securities to be acquired.
Purchases of options on futures contracts may present less dollar risk in
hedging the Fund's portfolio than the purchase and sale of the underlying
futures contracts, since the potential loss is limited to the amount of the
premium plus related transaction costs. The premium paid for such a put or call
option plus any transaction costs will reduce the benefit, if any, realized by
the Fund upon exercise or liquidation of the option; and, unless the price of
the underlying futures contract changes sufficiently, the option may expire
without value to the Fund. The writing of covered options does not present less
risk than the trading of futures contracts^ and will constitute only a partial
hedge, up to the amount of the premium received. Additionally, if an option is
exercised, the Fund may suffer a loss on the transaction.
The Fund may purchase put or call options in anticipation of changes in
interest rates or other factors which may adversely affect the value of its
portfolio or the prices of securities which the Fund anticipates purchasing at a
later date. The Fund may be able to offset such adverse effects on its
portfolio, in whole or in part, through the options purchased.
The Fund may, from time to time, also sell ("write") covered call options
or cash secured puts in order to attempt to increase the yield on its portfolio
or to protect against declines in the value of its portfolio securities. By
writing a covered call option, the Fund, in return for the premium income
realized from the sale of the option, gives up the opportunity to profit from a
price increase in the underlying security above the option exercise price, if
the price increase occurs while the option is in effect. In addition, the Fund's
ability to sell the underlying security will be limited while the option is in
effect. By writing a cash secured put, the Fund, which receives the premium, has
the obligation during the option period, upon assignment of an exercise notice,
to buy the underlying security at a specified price. A put is secured by cash if
the Fund maintains at all times cash, Treasury bills or other high grade
short-term obligations with a value equal to the option exercise price in a
segregated account with its custodian.
Although the Fund will enter into options and futures contracts solely for
hedging or other non-speculative purposes, within the meaning and intent of
applicable rules of the CFTC, their use does involve certain risks. For example,
a lack of correlation between the value of an instrument underlying an option or
futures contract and the assets being hedged, or unexpected adverse price
movements, could render the Fund's hedging strategy unsuccessful and could
result in losses. In addition, there can be no assurance that a liquid secondary
market will exist for any contract purchased or sold, and the Fund may be
required to maintain a position until exercise or expiration, which could result
<PAGE>
in losses. Transactions in futures contracts and options are subject to
other risks as well.
The risks related to transactions in options and futures to be entered
into by the Fund are set forth in greater detail in the Statement of Additional
Information, which should be reviewed in conjunction with the foregoing
discussion.
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.
Repurchase Agreements. The Fund may invest money, for as short a time as
overnight, using repurchase agreements ("repos"). With a repo, the Fund buys a
debt instrument, agreeing simultaneously to sell it back to the prior owner at
an agreed-upon price. The Fund could incur costs or delays in seeking to sell
the instrument if the prior owner defaults on its repurchase obligation. To
reduce that risk, the securities which are the subject of the 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).
These agreements are entered into only with member banks of the Federal Reserve
System, registered broker-dealers, and registered U.S. government securities
dealers that are deemed creditworthy under standards set by the Fund's board of
directors.
Portfolio Turnover. Although the Fund seeks to invest for the long term,
the Fund retains the right to sell portfolio securities without regard to how
long they have been in the Fund's portfolio. The Fund anticipates a portfolio
turnover rate of between 60% and 75%. A portfolio turnover rate of 75% would
occur if three-quarters of the Fund's portfolio securities were sold within one
year. ^
Investment Restrictions. Certain restrictions, which are set forth in the
Statement of Additional Information, may not be altered without the approval of
the Fund's shareholders. For example, the Fund limits to 5% the portion of its
total assets which may be invested in a single issuer. The Fund's ability to
borrow money is limited to borrowings from banks for temporary or emergency
purposes in amounts not exceeding 33-1/3% of net assets. Except where indicated
to the contrary, the investment objectives and policies described in this
prospectus are not fundamental and may be changed without a vote of the Fund's
shareholders.
For a further discussion of risks associated with an investment in the
Fund, see "Investment Policies and Restrictions" and "Investment Practices" in
the Statement of Additional Information.
<PAGE>
THE FUND AND ITS MANAGEMENT
The Company is a no-load mutual fund, registered with the Securities and
Exchange Commission as an open-end, diversified, management investment company.
It was incorporated on April 12, 1994, under the laws of Maryland.
The Company's board of directors has responsibility for overall supervision
of the Fund^ and reviews the services provided by the adviser and sub-adviser.
Under an agreement with the Fund, 7800 E. Union Avenue, Denver, Colorado 80237,
serves as the Fund's investment ^ adviser; it is primarily responsible for
providing the Fund with various administrative services.
IRAI is the Fund's sub-adviser and is primarily responsible for managing
the Fund's investments. Although the Company is not a party to the sub- advisory
agreement, the agreement has been approved by ^ IFG as the then sole shareholder
of the Fund. Together, IFG and IRAI constitute "Fund Management."
The Fund's investments are selected by a team of IRAI portfolio managers
that is collectively responsible for the investment decisions relating to the
Fund.
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 Fund Management's personnel to conduct
their personal investment activities in a manner that Fund Management believes
is not detrimental to the Fund or Fund Management's other advisory clients. See
the Statement of Additional Information for more detailed information concerning
this policy.
The Fund pays IFG a monthly management fee which is based upon a
percentage of the Fund's average net assets determined daily. The management fee
is computed at the annual rate of 0.75% of the Fund's average net assets. Out of
this fee, IFG pays an amount equal to 0.30% of the Fund's average net assets to
IRAI. No fee is paid by the Fund to IRAI.
Under a Transfer Agency Agreement, IFG acts as registrar, transfer agent^
and dividend disbursing agent for the Fund. The Fund pays an annual fee of
$20.00 per shareholder account or, where applicable, per participant in an
omnibus account per year. Registered broker-dealers, third party administrators
of tax-qualified retirement plans and other entities, including affiliates of
IFG, may provide equivalent services to the Fund. In these cases, IFG may pay,
out of the fee it receives from the Fund, an annual sub-transfer agency or
record-keeping fee to the third party.
<PAGE>
In addition, under an Administrative Services Agreement, IFG handles
additional administrative, record-keeping, and internal sub-accounting services
for the Fund.
The Fund's expenses, which are accrued daily, are deducted from total
income before dividends are paid. Total expenses of the Fund ^ for the period
January 2, 1997 (commencement of operations) through May 31, 1997, including
investment management fees (but excluding brokerage commissions, which are a
cost of acquiring securities), amounted to 0.49% of the Fund's average net
assets. If necessary, certain Fund expenses will be absorbed voluntarily by IFG
in order to ensure that the fund's total operating expenses will not exceed
1.20% 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 to Buy Shares --
Distribution Expenses," the Fund may market its shares through intermediary
brokers or dealers that have entered into Dealer Agreements with IFG, as the
Fund's Distributor. The Fund may place orders for portfolio transactions with
qualified broker-dealers which 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. For further information, see "Investment Practices -- Placement
of Portfolio Brokerage" in the Statement of Additional Information.
^ IFG is an indirect wholly owned subsidiary of AMVESCAP PLC. AMVESCAP PLC
is a publicly-traded holding company ^ that, through its subsidiaries, engages
in the business of investment management on an international basis. INVESCO PLC
changed its name to AMVESCO PLC on March 3, 1997, and to AMVESCAP PLC on May 8,
1997, as part of a merger between a direct subsidiary of INVESCO PLC and A I M
Management Group Inc., that created one of the largest independent investment
management businesses in the world. IFG and IRAI will continue to operate under
their existing names. AMVESCAP PLC has approximately $165 billion in assets
under management. IFG was established in 1932 and, as of ^ April 30, 1997,
managed 14 mutual funds, consisting of ^ 45 separate portfolios, with combined
assets of approximately ^ $14.0 billion on behalf of over ^ 855,000
shareholders. ^ IRAI (founded in 1983 and acquired by INVESCO in 1990) is a
registered investment adviser that currently manages $2.7 billion of assets
(both securities and direct investments in real estate) for its clients. ^
IRAI's clients include corporate plans and public pension funds, as well as
endowment and foundation accounts. It presently serves as sub-adviser to one
other INVESCO mutual fund portfolio. As of ^ March 31, ^ 1997, the portfolio of
direct investments in real estate managed by ^ IRAI for its clients contained
<PAGE>
^ 99 properties totalling more than ^ 27.0 million square feet of commercial
real estate and ^ 14,265 apartment units.
FUND PRICE AND PERFORMANCE
Determining Price. The value of your investment in the Fund will vary
daily. The price per share is also known as the Net Asset Value (NAV). IFG
prices the Fund every day that the New York Stock Exchange is open, as of the
close of regular trading (normally, 4:00 p.m., New York time). NAV is calculated
by adding together the current market value of all of the Fund's assets,
including accrued interest and dividends; then subtracting liabilities,
including accrued expenses; and finally dividing that dollar amount by the total
number of shares outstanding.
Performance Data. To keep shareholders and potential investors informed,
we will occasionally advertise the Fund's total return and yield. Total return
figures show the rate of return on a $1,000 investment in the Fund, assuming
reinvestment of all dividends and capital gain distributions for one-, five-,
and ten-year periods. Cumulative total return shows the actual rate of return on
an investment; average annual total return represents the average annual
percentage change in the value of an investment. Both cumulative and average
annual total returns tend to "smooth out" fluctuations in the Fund's investment
results, not showing the interim variations in performance over the periods
cited. The yield of the Fund refers to the income generated by an investment in
the Fund over a 30-day or one-month period, and is computed by dividing the net
investment income per share earned during the period by the net asset value per
share at the end of the period, then adjusting the result to provide for
semi-annual compounding.^
When we quote mutual fund rankings published by Lipper Analytical
Services, Inc., we may compare the ^ Fund to others in its category of ^ Real
Estate Funds, as well as the broad-based Lipper general fund groupings. These
rankings allow you to compare the Fund to its peers. Other independent financial
media also produce performance- or service-related comparisons, which you may
see in our promotional materials. For more information see "Fund Performance" in
the Statement of Additional Information.
Performance figures are based on historical investment results and are not
intended to suggest future performance.
HOW TO BUY SHARES
The chart on page 23 shows several convenient ways to invest in the Fund.
Your new Fund shares will be priced at the NAV next determined after your order
is received in proper form. There is no charge to invest, exchange^ or redeem
shares when you make transactions directly through IFG. However, if you invest
in the Fund through a securities broker, you may be charged a commission or
transaction fee. For all new accounts, please send a completed application form.
Please specify which Fund you wish to purchase.
<PAGE>
^ Fund Management reserves the right to increase, reduce or waive the
minimum investment requirements in its sole discretion, where it determines this
action is in the best interests of the Fund. Further, IFG reserves the right in
its sole discretion to reject any order for the purchase of Fund shares
(including purchases by exchange) when, in its judgment, such rejection is in
the Fund's best interests.
HOW TO BUY SHARES
================================================================================
Method Investment Minimum Please Remember
================================================================================
By Check
Mail to: $1,000 for regular If your check does
INVESCO Funds account; not clear, you will
Group, Inc. $250 for an be responsible for
P.O. Box 173706 Individual any related loss
Denver, CO 80217- Retirement Account; the Fund or IFG
3706. $50 minimum for incurs. If you are
Or you may send each subsequent already a
your check by investment. shareholder in the
overnight courier INVESCO funds, the
to: 7800 E. Union Fund may seek
Ave., Denver, CO reimbursement from
80237. your existing
account(s) for any
loss incurred.
- --------------------------------------------------------------------------------
By Telephone or
Wire
Call 1-800-525-8085 $1,000. Payment must be
to request your received within 3
purchase. Then send business days, or
your check by the transaction may
overnight courier be cancelled. If a
to our street telephone purchase
address: is cancelled due to
7800 E. Union Ave., nonpayment, you
Denver, CO 80237. will be responsible
Or you may transmit for any related
your payment by loss the Fund or
bank wire (call IFG IFG incurs. If you
for instructions). are already a
shareholder in the
INVESCO funds, the Fund
may seek reimbursement
from your existing
account(s) for any loss
incurred.
<PAGE>
================================================================================
With EasiVest or
Direct Payroll
Purchase
You may enroll on $50 per month for Like all regular
the fund EasiVest; $50 per investment plans,
application, or pay period for neither EasiVest
call us for the Direct Payroll nor Direct Payroll
correct form and Purchase. You may Purchase ensures a
more details. start or stop your profit or protects
Investing the same regular investment against loss in a
amount on a monthly plan at any time, falling market.
basis allows you to with two weeks' Because you'll
buy more shares notice to IFG. invest continually,
when prices are low regardless of
and fewer shares varying price
when prices are levels, consider
high. This "dollar- your financial
cost averaging" may ability to keep
help offset market buying through low
fluctuations. Over price levels. And
a period of time, remember that you
your average cost will lose money if
per share may be you redeem your
less than the shares when the
actual average market value of all
price per share. your shares is less
than their cost.
- --------------------------------------------------------------------------------
By PAL
Your "Personal $1,000. Be sure to write
Account Line" is down the
available for confirmation number
subsequent provided by PAL.
purchases and Payment must be
exchanges 24 hours received within 3
a day. Simply call business days, or
1-800-424-8085. the transaction may
be cancelled. If a
telephone purchase is
cancelled due to
nonpayment, you will be
responsible for any
related loss the Fund or
IFG incurs. If you are
already a shareholder in
the INVESCO funds, the
Fund may seek
reimbursement from your
existing account(s) for
any loss incurred.
<PAGE>
- --------------------------------------------------------------------------------
By Exchange
Between this and $1,000 to open a See "Exchange
another of the new account; $50 Privilege" below.
INVESCO funds. Call for written
1-800-525-8085 for requests to
prospectuses of purchase additional
other INVESCO shares for an
funds. You may also existing account.
establish an (The exchange
Automatic Monthly minimum is $250 for
Exchange service purchases requested
between two INVESCO by telephone.)
funds; call IFG for
further details and
the correct form.
================================================================================
Exchange Privilege. You may exchange your shares in this Fund for those in
another INVESCO fund, on the basis of their respective net asset values at the
time of the exchange. Before making any exchange, be sure to review the
prospectuses of the funds involved and consider their differences.
Please note these policies regarding exchanges of fund shares:
1) ^ The fund accounts must be identically registered.
2) ^ You may make four exchanges out of each fund during each calendar
year.
3) ^ An exchange is the redemption of shares from one fund followed by
the purchase of shares in another. Therefore, any gain or loss
realized on the exchange is recognizable for federal income tax
purposes (unless, of course, your account is tax-deferred).
4) ^ The Fund reserves the right to reject any exchange request, or to
modify or terminate exchange privileges, in the best interests of
the Fund and its shareholders. Notice of all such modifications or
termination will be given at least 60 days prior to the effective
date of the change in privilege, except for unusual instances (such
as when redemptions of the exchanged shares are suspended under
Section 22(e) of the Investment Company Act of 1940, or when sales
of the fund into which you are exchanging are temporarily stopped).
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
IFG to ^ permit IFG at its discretion, to engage in certain activities, and
provide certain services approved by the board of directors in connection with
<PAGE>
the distribution of the Fund's shares to investors. These ^ activities and
services 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 IFG-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 ^ permissible activities and services include
advertising, the preparation and distribution of sales literature, ^ 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 IFG or its
affiliates or by third parties.
Under the Plan, the Company's ^ payments to IFG on behalf of the Fund ^ are
limited to an amount computed at an annual rate of 0.25% of the Fund's average
net assets during the month. IFG is not entitled to ^ payment for overhead
expenses under the Plan, but may be ^ paid for all or a portion of the
compensation paid for salaries and other employee benefits for the personnel of
IFG 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 ^ compensate IFG for permissible activities engaged
in and services provided by IFG during the rolling 12-month period in which that
month falls, although this period is expanded to 24 months for ^ obligations
incurred during the first 24 months of the Fund's operations. Therefore, any ^
obligations incurred by IFG in excess of the limitations described above ^ will
not be paid by the Fund under the Plan, and will be borne by IFG. In addition,
IFG 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 the Plan's termination. Also,
any payments made by the Fund may not be used to finance directly the
distribution of shares of any other fund of the Company or other mutual fund
advised by IFG. 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. For more information see "How
Shares Can Be Purchased - Distribution Plan" in the Statement of Additional
Information.
<PAGE>
FUND SERVICES
Shareholder Accounts. IFG will maintain a share account that reflects your
current holdings. Share certificates will be issued only upon specific request.
You will have greater flexibility to conduct transactions if you do not request
certificates.
Transaction Confirmations. You will receive detailed confirmations of
individual purchases, exchanges, and redemptions. If you choose certain
recurring transaction plans (for instance, EasiVest), your transactions will be
confirmed on your quarterly Investment Summary.
Investment Summaries. Each calendar quarter, shareholders receive a
written statement which consolidates and summarizes account activity and value
at the beginning and end of the period for each of their INVESCO funds.
Reinvestment of Distributions. Dividends and capital gain distributions
are automatically invested in additional fund shares at the NAV on the
ex-dividend date, unless you choose to have dividends and/or capital gain
distributions automatically reinvested in another INVESCO fund or paid by check
(minimum of $10.00).
Telephone Transactions. All shareholders may exchange and redeem Fund
shares by telephone, unless they expressly decline these privileges. By signing
the new account Application, a Telephone Transaction Authorization Form, or
otherwise using these privileges, the investor has agreed that, if the Fund has
followed reasonable procedures, such as recording telephone instructions and
sending written transaction confirmations, it will not be liable for following
telephoned instructions that it believes to be genuine. As a result of this
policy, the investor may bear the risk of any loss due to unauthorized or
fraudulent instructions.
Retirement Plans And IRAs. Fund shares may be purchased for Individual
Retirement Accounts (IRAs) and many types of tax-deferred retirement plans. IFG
can supply you with information and forms to establish or transfer your existing
plan or account.
HOW TO SELL SHARES
The chart on page 28 shows several convenient ways to redeem your Fund
shares. Shares of the Fund may be redeemed at any time at their current NAV next
determined after a request in proper form is received at the Fund's office. The
NAV at the time of the redemption may be more or less than the price you paid to
purchase your shares, depending primarily upon the Fund's investment
performance.
Please ^ specify from which fund you wish to redeem shares. Shareholders
have a separate account for each fund in which they invest.
<PAGE>
HOW TO SELL SHARES
================================================================================
Method Minimum Redemption Please Remember
================================================================================
By Telephone
Call us toll-free $250 (or, if less, This option is not
at 1-800-525-8085. full liquidation of available for
the account) for a shares held in
redemption check; Individual
$1,000 for a wire Retirement Accounts
to bank of record. (IRAs).
The maximum amount
which may be
redeemed by
telephone is
generally $25,000.
These telephone
redemption
privileges may be
modified or
terminated in the
future at the
discretion of IFG.
- --------------------------------------------------------------------------------
In Writing
Mail your request Any amount. The If the shares to be
to INVESCO Funds redemption request redeemed are
Group, Inc., P.O. must be signed by represented by
Box 173706 all registered ^ stock certificates,
Denver, CO 80217- owners of the the certificates
3706. You may also account. Payment must be sent to
send your request will be mailed to IFG.
by overnight your address of
courier to 7800 E. record^ or to a
Union Ave., Denver, pre-designated
CO 80237. bank.
- --------------------------------------------------------------------------------
By Exchange
Between this and $1,000 to open a See "Exchange
another of the new account; $50 Privilege," ^ page 25.
INVESCO funds. Call for written
1-800-525-8085 for requests to
prospectuses of purchase additional
other INVESCO shares for an
funds. You may also existing account.
establish an (The exchange
automatic monthly minimum is $250 for
exchange service exchanges requested
between two INVESCO by telephone.)
funds; call IFG for
further details and
the correct form.
<PAGE>
- --------------------------------------------------------------------------------
Periodic Withdrawal
Plan
You may call us to $100 per payment, You must have at
request the on a monthly or least $10,000 total
appropriate form quarterly basis. invested with the
and more The redemption INVESCO funds, with
information at 1- check may be made at least $5,000 of
800-525-8085. payable to any that total invested
party you in the fund from
designate. which withdrawals
will be made.
- --------------------------------------------------------------------------------
Payment To Third
Party
Mail your request Any amount. All registered
to INVESCO Funds owners of the
Group, Inc., P.O. account must sign
Box 173706 the request, with a
Denver, CO 80217- signature guarantee
3706. from an eligible
guarantor financial
institution, such as a
commercial bank or
recognized national or
regional securities firm.
================================================================================
While the Fund will attempt to process telephone redemptions promptly,
there may be times -- particularly in periods of severe economic or market
disruption -- when you may experience delays in redeeming shares by phone.
Payments of redemption proceeds will be mailed within seven days following
receipt of the redemption request in proper form. However, payment may be
postponed under unusual circumstances --for instance, if normal trading is not
taking place on the New York Stock Exchange or during an emergency as defined by
the Securities and Exchange Commission. If your shares were purchased by a check
which has not yet cleared, payment will be made promptly upon clearance of the
purchase check (which ^ will take up to 15 days).
If you participate in EasiVest, the Fund's automatic monthly investment
program, and redeem all of the shares in your account, we will terminate any
further EasiVest purchases unless you instruct us otherwise.
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 involuntarily redeem all shares in such
account, in which case the account would be liquidated and the proceeds
forwarded to the shareholder. Prior to any such redemption, a shareholder will
be notified and given 60 days to increase the value of the account to $250 or
more.
<PAGE>
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 distributed in shares of the
Fund or another fund in the INVESCO group.
The Fund may be subject to 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 you are subject to
backup withholding for other reasons, you can avoid backup withholding on your
Fund account by ensuring that we have 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 a quarterly basis, at the discretion of the Fund'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 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 the 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 upon how long
the Fund held the security which gave rise to the gains. The capital gains
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 income and are paid to shareholders as dividends.
<PAGE>
Shareholders also may realize capital gains or losses when they sell their
Fund shares at more or less than the price originally paid.
We encourage you to consult a tax adviser 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. The Fund is not generally required and does not
expect to hold regular annual meetings of shareholders. However, when requested
to do so in writing by the holders of 10% or more of the outstanding shares of
the Fund or as may be required by applicable law or the Fund's Articles of
Incorporation, the board of directors will call special meetings of
shareholders. Directors may be removed by action of the holders of a majority of
the outstanding shares of the Fund. The Fund will assist shareholders in
communicating with other shareholders as required by the Investment Company Act
of 1940.
^ Master/Feeder Option. As a matter of fundamental policy, 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 having substantially the same
investment objectives, policies and limitations. It is expected that any such
investment may be made in the sole discretion of the Company's board of
directors without a vote of the Fund's shareholders. However, shareholders will
be given at least 30 days prior notice of any such investment. Such an
investment would be made only if the board of directors determines it to be in
the best interests of the Fund and its shareholders based on potential cost
savings, operational efficiencies or other factors. No assurance can be given
that costs would be materially reduced if these options were implemented.
<PAGE>
^ PROSPECTUS
June 30, 1997
To receive general information and prospectuses on any of the INVESCO 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 (PAL) 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, please visit one of our convenient Investor Centers:
Cherry Creek
155-B Fillmore Street
Denver Tech Center
7800 East Union Avenue, Lobby Level
In addition, all documents filed by the Company with the Securities and Exchange
Commission can be located on a web site maintained by the Commission at
http://www.sec.gov.
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
^ June 30, 1997
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 ^ six 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"); ^ INVESCO Asian Growth Fund (the
"Asian Growth Fund"); and INVESCO Realty Fund (the "Realty 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
each 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
<PAGE>
Goods Fund's and Communications Fund's investments to be allocated among a
larger number of countries. The percentage of the Capital Goods Fund's and
Communication Fund's assets invested in United States securities normally will
be higher than that invested in securities issued by companies in any other
single country. However, it is possible that at times the Capital Goods Fund or
the Communications ^ Fund may have 65% or more of its total assets invested in
foreign securities.
The European Small Company Fund seeks to achieve capital appreciation by
investing, under normal circumstances, at least 65% of its total assets in
equity securities of European companies whose individual equity market
capitalizations would place them (at the time of purchase) in the same size
range of companies in approximately the lowest 25% of market capitalization of
companies that have equity securities listed on a U.S. national securities
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.
The Realty Fund seeks to achieve above average current income by
investing, under normal circumstances, at least 65% of its total assets in
publicly-traded stocks of companies primarily engaged in the real estate
industry.
Investors may purchase shares of any or all of the Funds. Additional funds
may be added in the future.
<PAGE>
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, and the Realty Fund dated June 30, 1997,
which provide the basic information you should know before investing in a Fund,
may be obtained without charge from INVESCO Funds Group, Inc., P.O. Box 173706,
Denver, Colorado 80217-3706. This Statement of Additional Information is not a
Prospectus, but contains information in addition to and more detailed than that
set forth in the Prospectus. It is intended to provide you with additional
information regarding the activities and operations of the Funds and should be
read in conjunction with the Prospectus.
Investment Adviser and Distributor: INVESCO FUNDS GROUP, INC.
<PAGE>
TABLE OF CONTENTS Page
INVESTMENT POLICIES AND RESTRICTIONS 37
THE FUNDS AND THEIR MANAGEMENT 51
HOW SHARES CAN BE PURCHASED 67
HOW SHARES ARE VALUED 72
FUND PERFORMANCE 73
SERVICES PROVIDED BY THE FUNDS 74
TAX-DEFERRED RETIREMENT PLANS 75
HOW TO REDEEM SHARES 76
DIVIDENDS, CAPITAL GAIN DISTRIBUTIONS^ AND TAXES 76
INVESTMENT PRACTICES 79
ADDITIONAL INFORMATION 83
APPENDIX A 87
APPENDIX B 91
FINANCIAL STATEMENTS 93
<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
<PAGE>
investment value, the price of the convertible security is governed
principally by its investment value. If the conversion value is near or above
investment value, the price of the convertible security generally will rise
above investment value and may represent a premium over conversion value due to
the combination of the convertible security's right to interest (or dividend
preference) and the possibility of capital appreciation from the conversion
feature. A convertible security's price, when price is influenced primarily by
its conversion value, generally will yield less than a senior non-convertible
security of comparable investment value. Convertible securities may be purchased
at varying price levels above their investment values or conversion values.
However, there is no assurance that any premium above investment value or
conversion value will be recovered because prices change and, as a result, the
ability to achieve capital appreciation through conversion may be eliminated.
Restricted/144A Securities
In recent years, a large institutional market has developed for certain
securities that are not registered under the Securities Act of 1933 (the "1933
Act"). Institutional investors generally will not seek to sell these instruments
to the general public, but instead will often depend on an efficient
institutional market in which such unregistered securities can readily be resold
or on an issuer's ability to honor a demand for repayment. Therefore, the fact
that there are contractual or legal restrictions on resale to the general public
or certain institutions is not dispositive of the liquidity of such investments.
Rule 144A under the 1933 Act establishes a "safe harbor" from the
registration requirements of the 1933 Act for resales of certain securities to
qualified institutional buyers. Institutional markets for restricted securities
that might develop as a result of Rule 144A could provide both readily
ascertainable values for restricted securities and the ability to liquidate an
investment in order to satisfy share redemption orders. An insufficient number
of qualified institutional buyers interested in purchasing a Rule 144A-eligible
security held by a Fund, however, could affect adversely the marketability of
such portfolio security and the Fund might be unable to dispose of such security
promptly or at reasonable prices.
Municipal Bonds
The Funds may invest in municipal bonds, the interest from which is exempt
from federal income taxes, when 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
<PAGE>
political subdivisions, agencies and instrumentalities, to obtain funds for
various public purposes, including: the construction of a wide range of public
facilities such as airports, bridges, highways, housing, hospitals, mass
transportation, schools, streets, and water and sewer works; refunding
outstanding obligations; and obtaining funds for general operating expenses. The
Funds' investments in municipal bonds, as is true for any debt securities,
generally will be subject to both credit risk and market risk. See the section
of the Prospectuses entitled "Risk Factors."
Obligations of Domestic Banks
These obligations consist of certificates of deposit ("CDs") and banker's
acceptances issued by domestic banks (including their foreign branches) having
total assets in excess of $5 billion, which meet the Funds' minimum rating
requirements. CDs are issued against deposits in a commercial bank for a
specified period and rate and are normally negotiable. Eurodollar CDs are
certificates issued by a foreign branch (usually London) of a U.S. domestic
bank, and, as such, the credit is deemed to be that of the domestic bank.
Bankers' acceptances are short-term credit instruments evidencing the
promise of the bank (by virtue of the bank's "acceptance") to pay at maturity a
draft which has been drawn on it by a customer (the "drawer"). These instruments
are used to finance the import, export, transfer, or storage of goods and
reflect the obligation of both the bank and the drawer to pay the face amount.
Securities Lending
The 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 ^ a Fund's Prospectus in pursuit of ^ the 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, plus accrued interest and dividends, 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).
<PAGE>
Commercial Paper
The Funds may invest in these obligations, which are short-term promissory
notes issued by domestic corporations to meet current working capital
requirements. Such paper may be unsecured or backed by a letter of credit.
Commercial paper issued with a letter of credit is, in effect, "two party
paper," with the issuer directly responsible for payment, plus a bank's
guarantee that if the note is not paid at maturity by the issuer, the bank will
pay the principal and interest to the buyer. Commercial paper is sold either as
interest-bearing or on a discounted basis, with maturities not exceeding 270
days. The Funds will only invest in commercial paper which at the date of
purchase is rated A-2 or higher by Standard & Poor's 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, with the exception of the Realty Fund, 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.
The Realty Fund also may invest in a variety of mortgage-backed securities
known as commercial mortgage-backed securities ("CMBs"). CMBs are derivative
multiple-class mortgage-backed securities. CMBs are generally structured with
two classes, each receiving a different proportion of interest and principal
distributions on a pool of mortgage assets. In general, one class will receive
most of the principal payments and some of the interest, with the other class
receiving some of the principal and most of the interest payments.
<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."
The Realty Fund may invest in zero coupon bonds and pay-in- kind ("PIK")
bonds if Fund Management determines that the risk of a default on the security,
which could result in adverse tax consequences, is not significant. PIK bonds
pay interest in cash or additional securities, at the issuer's option, for a
specified period. Being extremely responsive to changes in interest rates, the
market price of zero coupon and PIK bonds may be more volatile than other bonds.
The Realty Fund may be required to distribute income recognized on these bonds,
even though no cash interest payments are received, which could reduce the
amount of cash available for investment by the Fund.
Asset-Backed Securities
Asset-backed securities represent interests in pools of consumer loans
^(other than 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
<PAGE>
not intend to invest more than 5% of their respective net assets in
asset-backed securities.
The Realty Fund may invest in real estate mortgage investment conduit
certificates ("REMICs"). REMICs are a specialized form of CMOs that qualify for
favorable tax treatment because they invest in certain mortgages secured by
interests in real estate and other permitted investments. Investors may purchase
"regular" and "residual" interest shares of beneficial interest in REMIC trusts.
REMICs are subject to the same general risks as CMOs.
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 ^ referred to as "derivatives." The Funds will comply with and adhere
to all limitations in the manner and extent to which they effect transactions in
futures and options on such futures currently imposed by the rules and policy
guidelines of the Commodity Futures Trading Commission (the "CFTC") as
conditions for exemption of a mutual fund, or investment advisers thereto, from
registration as a commodity pool operator. Under those restrictions, a Fund will
not, as to any positions, whether long, short or a combination thereof, enter
into futures and options thereon for which the aggregate initial margins and
premiums exceed 5% of the fair market value of the Fund's total assets after
taking into account unrealized profits and losses on options it has entered
into. In the case of an option that is "in-the-money," as defined in the
Commodity Exchange Act (the "CEA"), the in-the-money amount may be excluded in
computing such 5%. (In general a call option on a future is "in-the-money" if
the value of the future exceeds the exercise ("strike") price of the call; a put
option on a future is "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 ^ liquid securities 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
<PAGE>
Fund will be required to deposit in a segregated asset account with the
broker an amount of cash or qualifying securities (currently U.S. Treasury
bills), currently in a minimum amount of $15,000. This is called "initial
margin." Such initial margin is in the nature of a performance bond or good
faith deposit on the contract. However, since losses on open contracts are
required to be reflected in cash in the form of variation margin payments, the
Fund may be required to make additional payments during the term of the
contracts to its broker. Such payments would be required, for example, where,
during the term of an interest rate futures contract purchased by a Fund, there
was a general increase in interest rates, thereby making the Fund's portfolio
securities less valuable. In all instances involving the purchase of financial
futures contracts by a Fund, an amount of cash together with such other
securities as permitted by applicable regulatory authorities to be utilized for
such purpose, at least equal to the market value of the futures contracts, will
be deposited in a segregated account with the Fund's custodian to collateralize
the position. At any time prior to the expiration of a futures contract, the
Fund may elect to close its position by taking an opposite position which will
operate to terminate the Fund's position in the futures contract. For a more
complete discussion of the risks involved in futures and options on futures and
other securities, refer to Appendix A ("Description of Futures and Options
Contracts").
Where futures are purchased to hedge against a possible increase in the
price of a security before a Fund is able in an orderly fashion to invest in the
security, it is possible that the market may decline instead. If the Fund, as a
result, concluded not to make the planned investment at that time because of
concern as to possible further market decline or for other reasons, the Fund
would realize a loss on the futures contract that is 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.
<PAGE>
In addition, if ^ a 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 ^ the Fund.
Options on Futures Contracts
The Funds may buy and write options on futures contracts for hedging
purposes, which are included in the types of instruments sometimes known as
derivatives. The purchase of a call option on a futures contract is similar in
some respects to the purchase of a call option on an individual security.
Depending on the pricing of the option compared to either the price of the
futures contract upon which it is based or the price of the underlying
instrument, ownership of the option may or may not be less risky than ownership
of the futures contract or the underlying instrument. As with the purchase of
futures contracts, when a Fund is not fully invested it may buy a call option on
a futures contract to hedge against a market advance.
The writing of a call option on a futures contract constitutes a partial
hedge against declining prices of the security or foreign currency which is
deliverable under, or of the index comprising, the futures contract. If the
futures price at the expiration of the option is below the exercise price, a
Fund will retain the full amount of the option premium which provides a partial
hedge against any decline that may have occurred in the Fund's portfolio
holdings. The writing of a put option on a futures contract constitutes a
partial hedge against increasing prices of the security or foreign currency
which is deliverable under, or of the index comprising, the futures contract. If
the futures price at expiration of the option is higher than the exercise price,
^ a 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 ^ a 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, ^ a
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
<PAGE>
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. These instruments are sometimes referred
to as "derivatives." A forward foreign currency contract is an agreement between
the contracting parties to exchange an amount of currency at some future time at
an agreed upon rate. The rate can be higher or lower than the spot rate between
the currencies that are the subject of the contract. A forward contract
generally has no deposit requirement, and such transactions do not involve
commissions. By entering into a forward contract for the purchase or sale of the
amount of foreign currency invested in a foreign security transaction, a Fund
can hedge against possible variations in the value of the dollar versus the
subject currency either between the date the foreign security is purchased or
sold and the date on which payment is made or received or during the time the
Fund holds the foreign security. Hedging against a decline in the value of a
currency in the foregoing manner does not eliminate fluctuations in the prices
of portfolio securities or prevent losses if the prices of such securities
decline. Furthermore, such hedging transactions preclude the opportunity for
gain if the value of the hedged currency should rise. The Funds will not
speculate in forward currency contracts. Although the Funds have not adopted any
limitations on their ability to use forward contracts as a hedge against
fluctuations in foreign exchange rates, the Funds do not attempt to hedge all of
their non-U.S. portfolio positions and will enter into such transactions only to
the extent, if any, deemed appropriate by their investment adviser or
sub-adviser. The Funds will not enter into forward contracts for a term of more
than one year.
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.
<PAGE>
The Funds may enter into interest rate swaps, caps and floors, which are
included in the types of instruments sometimes known as derivatives, on either
an asset-based or liability-based basis, depending upon whether they are hedging
their assets or their liabilities, and usually will enter into interest rate
swaps on a net basis, i.e., the two payment streams are netted out, with a Fund
receiving or paying, as the case may be, only the net amount of the two
payments. The net amount of the excess, if any, of a Fund's obligations over its
entitlement with respect to each interest rate swap will be calculated on a
daily basis, and an amount of cash or high-grade liquid assets having an
aggregate net asset value at least equal to the accrued excess will be
maintained in a segregated account by the Funds' custodian. If a Fund enters
into an interest rate swap on other than a net basis, the Fund would maintain a
segregated account in the full amount accrued on a daily basis of the Fund's
obligations with respect to the swap. The Funds will not enter into any interest
rate swap, cap or floor transaction unless the unsecured senior debt or the
claims-paying ability of the other party thereto is rated in one of the three
highest rating categories of at least one nationally recognized statistical
rating organization at the time of entering into such transaction. The Funds'
adviser or sub-adviser will monitor the creditworthiness of all counterparties
on an ongoing basis. If there is a default by the other party to such a
transaction, a Fund would have contractual remedies pursuant to the agreements
related to the transaction.
The swap market has grown substantially in recent years with a large
number of banks and investment banking firms acting both as principals and as
agents utilizing standardized swap documentation. Caps and floors are more
recent innovations for which standardized documentation has not yet been
developed and, accordingly, they are less liquid than swaps. To the extent a
Fund sells (i.e., writes) caps and floors, it will maintain in a segregated
account cash or high-grade liquid assets having an aggregate net asset value at
least equal to the full amount, accrued on a daily basis, of the Fund's
obligations with respect to any caps or floors.
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
<PAGE>
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 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. This restriction
shall not prohibit the Realty Fund from directly holding real
estate if such real estate is acquired by that Fund as a
result of a default on debt securities held by that Fund.
4. Purchase or sell physical commodities other than foreign
currencies unless acquired as a result of ownership of
<PAGE>
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). The Realty Fund may invest
more than 25% of the value of its total assets in
securities of the Real Estate Industry.
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.
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 with respect to each Fund 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
<PAGE>
current market prices are available, or unless otherwise
determined by the board of directors.
(b) The Fund will not (i) enter into any futures contracts or
options on futures contracts if immediately thereafter the
aggregate margin deposits on all outstanding futures
contracts positions held by the Fund and premiums paid on
outstanding options on futures contracts, after taking
into account unrealized profits and losses, would exceed
5% of the market value of the total assets of the Fund, or
(ii) enter into any futures contracts if the aggregate net
amount of the Fund's commitments under outstanding futures
contracts positions of the Fund would exceed the market
value of the total assets of the Fund.
(c) The Fund does not currently intend to sell securities
short, unless it owns or has the right to obtain securities
equivalent in kind and amount to the securities sold short
without the payment of any additional consideration therefor,
and provided that transactions in options, swaps and forward
futures contracts are not deemed to constitute selling
securities short.
(d) The Fund does not currently intend to purchase securities
on margin, except that the Fund may obtain such short-term
credits as are necessary for the clearance of transactions,
and provided that margin payments and other deposits in
connection with transactions in options, futures, swaps
and forward contracts shall not be deemed to constitute
purchasing securities on margin.
(e) The Fund does not currently intend to (i) purchase
securities of closed end investment companies, except in
the open market where no commission except the ordinary
broker's commission is paid, or (ii) purchase or retain
securities issued by other open-end investment companies.
Limitations (i) and (ii) do not apply to money market
funds or to securities received as dividends, through
offers of exchange, or as a result of a reorganization,
consolidation, or merger. If the Fund invests in a money
market fund, the Fund's investment adviser will waive its
advisory fee on the assets of the Fund which are invested
in the money market fund during the time that those assets
are so invested.
(f) The Fund may not mortgage or pledge any securities owned
or held by the Fund in amounts that exceed, in the
aggregate, 15% of the Fund's net assets, provided that
this limitation does not apply to reverse repurchase
agreements or in the case of assets deposited to margin or
guarantee positions in futures, options, swaps or forward
contracts or placed in a segregated account in connection
with such contracts.
<PAGE>
(g) The Fund does not currently intend to purchase securities
of any issuer (other than U.S. Government agencies and
instrumentalities or instruments guaranteed by an entity
with a record of more than three years' continuous
operation, including that of predecessors) with a record
of less than three years' continuous operation (including
that of predecessors) if such purchase would cause the
Fund's investments in all such issuers to exceed 5% of the
Fund's total assets taken at market value at the time of
such purchase.
(h) The Fund does not currently intend to invest directly in
oil, gas, or other mineral development or exploration
programs or leases; however, the Fund may own debt or
equity securities of companies engaged in those businesses.
(i) The Fund does not currently intend to purchase any
security or enter into a repurchase agreement if, as a
result, more than 15% of its net assets would be invested
in repurchase agreements not entitling the holder to
payment of principal and interest within seven days and in
securities that are illiquid by virtue of legal or
contractual restrictions on resale or the absence of a
readily available market. The board of directors, or the
Fund's investment adviser acting pursuant to authority
delegated by the board of directors, may determine that a
readily available market exists for securities eligible
for resale pursuant to Rule 144A under the Securities Act
of 1933, or any successor to such rule, and therefore that
such securities are not subject to the foregoing
limitation.
(j) The Fund may not invest in companies for the purpose of
exercising control or management, except to the extent
that exercise by the Fund of its rights under agreements
related to portfolio securities would be deemed to
constitute such control.
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
<PAGE>
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
^("IFG"), is employed as the Company's investment adviser. ^ IFG was established
in 1932 and also serves as an investment adviser to INVESCO Diversified Funds,
Inc., INVESCO Dynamics Fund, Inc., INVESCO Emerging Opportunity Funds, Inc.,
INVESCO Growth Fund, Inc., INVESCO Income Funds, Inc., INVESCO Industrial Income
Fund, Inc., INVESCO International Funds, Inc., INVESCO Money Market Funds, Inc.,
INVESCO Multiple Asset Funds, Inc., INVESCO Strategic Portfolios, Inc., INVESCO
Tax-Free Income Funds, Inc., INVESCO Value Trust, and INVESCO Variable
Investment Funds, Inc.
^ IFG is an indirect, wholly-owned subsidiary of AMVESCAP ^ PLC, a
publicly-traded holding company ^ that, through its subsidiaries, engages on an
international basis in the business of investment management. INVESCO PLC
changed its name to AMVESCO PLC on March 3, 1997, and to AMVESCAP PLC on May 8,
1997 as part of a merger between a direct subsidiary of INVESCO PLC and A I M
Management Group, Inc., that created one of the largest independent investment
management businesses in the world with approximately $165 billion in assets
under management. IFG was established in 1932 and as of July 31, 1996, managed
14 mutual funds, consisting of 39 separate portfolios, on behalf of over 821,000
shareholders. ^ AMVESCAP PLC's ^ 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
<PAGE>
endowment funds. INVESCO Capital Management, Inc. is the sole shareholder
of INVESCO Services, Inc., a registered broker-dealer whose primary business is
the distribution of shares of two registered investment companies.
--INVESCO Management & Research, Inc. (formerly Gardner and Preston Moss,
Inc.) of Boston, Massachusetts, primarily manages pension and endowment
accounts.
--PRIMCO Capital Management, Inc. of Louisville, Kentucky, specializes in
managing stable return investments, principally on behalf of Section 401(k)
retirement plans.
--INVESCO Realty Advisors, Inc. of Dallas, Texas, is responsible for
providing advisory services in the U.S. real estate markets for ^ AMVESCAP PLC's
clients worldwide. Clients include corporate plans, public pension funds as well
as endowment and foundation accounts.
--A I M Advisors, Inc. of Houston, Texas provides investment advisory and
administrative services for retail and institutional mutual funds.
--A I M Capital Management, Inc. of Houston, Texas provides investment
advisory services to individuals, corporations, pension plans and other private
investment advisory accounts and also serves as a sub-adviser to certain retail
and institutional mutual funds, one Canadian mutual fund and one portfolio of an
open-end registered investment company that is offered to separate accounts of
variable insurance companies.
--A I M Distributors, Inc. and Fund Management Company of Houston, Texas
are registered broker-dealers that act as the principal underwriters for retail
and institutional mutual funds.
The corporate headquarters of ^ AMVESCAP PLC are located at 11 Devonshire
Square, London, EC2M 4YR, England.
The Sub-Advisers. IFG, 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 IFG.
Additionally, IFG 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 AMVESCAP PLC.
<PAGE>
Additionally, IFG 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 AMVESCAP PLC.
Additionally, IFG has contracted with INVESCO Realty Advisors, Inc.
("IRAI") to provide investment advisory and research services on behalf of the
Realty Fund. IRAI has the primary responsibility for providing portfolio
investment management services to the Fund. IRAI is an indirect, wholly-owned
subsidiary of AMVESCAP PLC.
As indicated in the Prospectuses, ^ IFG 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 ^ IFG and its North American affiliates. The policy requires
officers, inside directors, investment and other personnel of ^ IFG 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
^ if, 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 ^ IFG 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 ^ IFG.
Investment Advisory Agreement. ^ IFG serves as investment adviser pursuant
to an investment advisory agreement dated February 28, 1997 (the "Agreement")
with the Company which was approved ^ by the board of directors on November 6,
1996 by a vote cast in person by a majority of the directors of the Company,
including a majority of the directors who are not "interested persons" of the
Company or ^ IFG at a meeting called for such purpose. ^ Shareholders of the
Capital Goods Fund ^, the Communications Fund, the European Small Company Fund,
the Latin American Growth Fund and the Asian Growth Fund approved the Agreement
on January 31, 1997 for an initial term expiring ^ February 28, 1999. With
respect to the Realty Fund, the Agreement was approved by IFG on December 9,
1996, as the then sole shareholder of the Fund and is for an initial term
expiring December 9, 1998. 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
<PAGE>
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 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.
^
The Agreement provides that ^ IFG 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 ^ IFG).
Further, ^ IFG 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 any
separate agreement between the Company and ^ IFG 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 ^ IFG 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 ^ IFG'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 ^ IFG are borne by the Funds.
As full compensation for its advisory services to the Company, ^ IFG
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
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
<PAGE>
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. With respect to the
Realty Fund, the fee is calculated at the annual rate of 0.75% of the Fund's
average net assets. ^
Sub-Advisory Agreements. INVESCO Trust serves as sub-adviser to the
Capital Goods Fund and Communications Fund pursuant to a sub-advisory agreement
dated February 28, 1997 (the "Capital Goods and Communications Sub-Agreement")
with ^ IFG which was approved ^ by the board of directors on November 6, 1996,
by a vote cast in person by a majority of the directors of the Company,
including a majority of the directors who are not "interested persons" of the
Company, ^ IFG or INVESCO Trust at a meeting called for such purpose. ^
Shareholders of the Capital Goods and Communications Funds approved the Capital
Goods and Communications Sub-Agreement ^ on January 31, 1997 for an initial term
expiring ^ February 28, 1999. 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 dated February 28,
1997 (the "European and Latin American Sub-Agreement") with ^ IFG. The European
and Latin American Sub-Agreement was approved by the board of directors on
November 6, 1996 by a vote cast in person by a majority of the directors of the
Company, including a majority of the directors who are not "interested persons"
of the Company, ^ IFG or IAML ^ at a meeting called for such purpose. ^
Shareholders of the European Small Company and Latin American Growth Funds
approved the European and Latin American Sub-Agreement ^ on January 31, 1997 for
an initial term expiring ^ February 28, 1999. 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
<PAGE>
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 dated February 28, 1997 (the "Asian Growth
Sub-Agreement") with IFG. The Asian Growth Sub-Agreement was approved by the
board of directors on November 6, 1996 by a vote cast in person by a majority of
the directors who are not "interested persons" of the Company, IFG or INVESCO
Asia at a meeting called for such purpose. Shareholders of the Asian Growth Fund
approved the Asian Growth Sub-Agreement on January 31, 1997 for an initial term
expiring February 28, 1999. 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.
IRAI serves as sub-adviser to the ^ Realty Fund pursuant to a sub-advisory
agreement ^ dated December 9, 1996 (the "Realty Sub-Agreement") with ^ IFG
which was approved on ^ December 9, 1996 by IFG as the then sole shareholder of
the ^ Realty Fund for an initial term expiring ^ December 9, 1998. Thereafter,
the Realty 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 ^ Realty 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 ^ Realty 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 ^ he extent required by the 1940 Act and the rules
thereunder.
The Sub-Agreements provide that INVESCO Trust, IAML, ^ INVESCO Asia and
IRAI, subject to the supervision of ^ IFG, shall manage the investment
portfolios of the respective Funds in conformity with each Fund's investment
policies. These management services include: (a) managing the investment and
reinvestment of all the assets, now or hereafter acquired, of the Funds, and
executing all purchases and sales of portfolio securities; (b) maintaining a
continuous investment program for the Funds, consistent with (i) each Fund's
<PAGE>
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 ^ IFG, 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 ^ IFG, 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 ^ IFG, 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 ^ IFG, 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 Realty Sub-Agreement
provides that as compensation for its services, IRAI shall receive a fee from
IFG, at the end of each month, at the rate of 0.30% of the Fund's average daily
net assets. The Sub-Advisory fees are paid by ^ IFG, NOT the Funds.
Administrative Services Agreement. ^ IFG, either directly or through
affiliated companies, provides certain administrative, sub-accounting, and
recordkeeping services to the Funds pursuant to an Administrative Services
Agreement dated ^ February 28, 1997 (the "Administrative Agreement"). The
Administrative Agreement was approved on ^ November 6, 1996, by a vote cast in
person by all of the directors of the Company, including all of the directors
<PAGE>
who are not "interested persons" of the Company or ^ IFG at a meeting
called for such purpose. The Administrative Agreement was for an initial term
expiring ^ February 28, 1998 and has been extended by action of the board of
directors until May 15, 1998. 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 ^ IFG 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 ^ IFG 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 ^ IFG, 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 ^ IFG 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. ^ IFG also performs transfer agent, dividend
disbursing agent, and registrar services for the Funds pursuant to a Transfer
Agency Agreement dated February 28, 1997 which was approved by the board of
directors of the Company, 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 ^ November 6, 1996. The Transfer Agency Agreement was for an
initial term expiring ^ February 28, 1998 and has been extended by the board of
directors until ^ May 15, 1998. Thereafter, the Transfer Agency Agreement 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 ^ IFG 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 Service
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-
Realty Fund(4) $72,430 $45,182 $4,782 -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 ^(commencement of operations) 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
^(commencement of operations).
(4) For the period January 2, 1997 (commencement of operations) through May 31,
1997.
<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, ^ IFG, 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 ^ IFG.
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 ^, with the exception of Mr. Hesser, are also 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 ^ AMVESCAP PLC, London, England, and of various subsidiaries
thereof; Chairman of the Board of INVESCO ^ Treasurer's Series Trust, and ^
INVESCO 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
Treasurer's Series Trust. Trustee of ^ INVESCO 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, CEO and Director. Chairman of the Board,
President, and Chief Executive Officer of INVESCO Funds Group, Inc. and
President and Director of INVESCO Trust Company. ^ President and Chief Operating
Officer of INVESCO 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: ^ 19
Kingsbridge Way, Madison, Connecticut. Born: August 1, 1923.
^
KENNETH T. KING,** Director. Formerly, Chairman of the Board of The Capitol
Life Insurance Company, Providence Washington Insurance Company, and Director of
numerous subsidiaries thereof in the U.S. Formerly, Chairman of the Board of The
Providence Capitol Companies in the United Kingdom and Guernsey. Chairman of the
Board of the Symbion Corporation (a high technology company) until 1987.
Address: 4080 North Circulo Manzanillo, Tucson, Arizona. Born: November 16,
1925.
JOHN W. ^ MCINTYRE,# 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 ^ INVESCO Global Health Sciences Fund and Gables Residential Trust.
Address: 7 Piedmont Center, Suite 100, Atlanta, GA. Born: September 14, 1930.
LARRY SOLL, Ph.D., Director. Retired. Formerly, Chairman of the Board (1987
to 1994), Chief Executive Officer (1982 to 1989 and 1993 to 1994) and President
(1982 to 1989) of Synergen Corp. Director of Synergen since its incorporation in
1982. Director of ISI Pharmaceuticals, Inc. Trustee of INVESCO Global Health
Sciences Fund. Address: 345 Poorman Road, Boulder, Colorado. Born: April 26,
1942.
<PAGE>
GLEN A. PAYNE, Secretary. Senior Vice President (since 1995), General
Counsel and Secretary of INVESCO Funds Group, Inc. and INVESCO Trust Company ^;
Vice President (May 1989 to April 1995) ^, 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.
*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 ^ June 2, 1997, officers and directors of the Company, as a group,
beneficially owned less than 1% of the Company's outstanding shares broken down
as ^ 0.252% of the Worldwide Capital Goods Fund, ^ 0.023% of the Worldwide
Communications Fund, ^ 0.00027% of the European Small Company Fund, ^ 0.157% of
the Latin American Growth Fund ^, 0.023% of the Asian Growth Fund and 0.145% of
the Realty Fund.
<PAGE>
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 ^
INVESCO Global Health Sciences Fund (collectively, the "INVESCO Complex") to
these directors for services rendered in their capacities as directors or
trustees during the year ended December 31, 1995. As of December 31, 1995, there
were 49 funds in the INVESCO Complex. Dr. Soll became an independent director of
the Company effective May 15, 1997, and is not included in the following chart.
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) 2,342 0 0 63,500
Kenneth T. King 2,364 73 53 70,000
John W. McIntyre4 2,350 0 0 67,850
------- ---- ---- --------
Total ^ $18,901(5) $413 $375 $571,400
% of Net Assets ^ 0.0095%(6) 0.0002% .0043%(7)
<PAGE>
(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 ^ INVESCO 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)Effective February 28, 1997, Mr. Frazier resigned as a director of the
Company. Effective November 1, 1996, Mr. Frazier was employed by ^ AMVESCAP PLC,
a company affiliated with ^ IFG. Because it was possible that Mr. Frazier would
be employed with ^ AMVESCAP 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 ^ no longer ^ received any
director's fees or other compensation from the Company or other funds in the
INVESCO Complex for his service as a director.
^(5)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
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.
^(6)Totals as a percentage of the Company's net assets as of July 31, 1996.
^(7)Total as a percentage of the net assets of the INVESCO Complex as of
December 31, 1995.
<PAGE>
Messrs. Brady^ and Hesser, as "interested persons" of the Company and of
the other funds in the INVESCO Complex, receive compensation as officers or
employees of ^ IFG 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 ^ IFG 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 ^ 40% 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 ^ IFG 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 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,
<PAGE>
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 ^ IFG 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." ^ IFG 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 ^ IFG of amounts computed at an annual
rate no greater than 0.25% ^ of the Fund's average net assets to ^ permit IFG,
at its discretion, to engage in certain activities and provide certain services
in connection with the distribution of each Fund's shares to investors. Payment
amounts by a Fund under the Plan, for any month, may ^ be made to compensate IFG
for permissible activities engaged in and services provided by IFG during the
rolling 12-month period in which that month falls, although this period is ^
extended to 24 months for ^ obligations 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 ^ IFG and the applicable sub-adviser. During the 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 ^ IFG
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 ^ which were
<PAGE>
approved by the Company's directors^ on October 30, 1996. During the period
January 2, 1997 (commencement of operations) through May 31, 1997, the Realty
Fund incurred $17,909 in distribution expenses, prior to the voluntary
absorption of certain Fund expenses by IFG. As noted in the Prospectuses, one
type of ^ expenditure is the payment of compensation to securities companies and
other financial institutions and organizations, which may include ^ IFG
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 ^ IFG 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 ^ IFG, 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; 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;
<PAGE>
direct mail--$2,781; public relations/promotion--$40; compensation to
securities dealers and other organizations--$47; marketing personnel--$72. For
the period January 2, 1997 (commencement of operations) through May 31, 1997,
allocation of 12b-1 amounts paid by the Realty Fund for the following categories
of expenses were: advertising--$1,107; sales literature, printing and
postage--$4,310; direct mail--$10,618; public relations/promotion--$524;
compensation to securities dealers and other organizations--$614; marketing
personnel--$736.
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 ^ IFG 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 ^ May
15, 1998. With respect to the INVESCO European Small Company Fund and Latin
American Growth Fund, the Plan was approved by ^ IFG on February 8, 1995 as the
then sole shareholder of each Fund and has been continued by action of the board
of directors until ^ May 15, 1998. With respect to the Asian Growth Fund, the
Plan was approved by ^ IFG on September 12, 1995 as the then sole shareholder of
the Fund and has been continued by action of the board of directors until ^ May
15, 1998. With respect to the Realty Fund, the Plan was approved by IFG on
December 9, 1996, as the then sole shareholder of the Fund and has been
continued by action of the board of directors until May 15, 1998. With respect
to all of the Funds, the board of directors on February 4, 1997, approved
amending the Plan, effective January 1, 1997, to convert the Plan to a
compensation type Rule 12b-1 plan. This amendment of the Plan will NOT result in
increasing the amount of any Fund's payments thereunder.
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
<PAGE>
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 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, ^ IFG 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 ^ IFG shall
terminate automatically, in the event of such "assignment," in which event the
Funds may continue to make payments, pursuant to the Plan, to ^ IFG or another
organization only upon the approval of new arrangements, which may or may not be
with ^ IFG, 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.^ 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 ^ IFG or companies affiliated with ^ IFG. The benefits which
<PAGE>
the Company believes will be reasonably likely to flow to the Funds and
their shareholders under the Plan include the following:
(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 ^ IFG:
(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 ^ IFG (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, Martin Luther King, Jr. 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. ^ Because
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 ^, for the Asian Growth Fund for the
period from March 1, 1996 ^(commencement of operations) through July 31, 1996
and for the Realty Fund for the period January 2, 1997 (commencement of
operations) through May 31, 1997 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)%
Realty Fund> N/A 0.75%
*Commencement of Operations^: August 1, 1994
~ Commencement of Operations: February 15, 1995
^ Commencement of Operations: March 1, 1996
>Commencement of Operations: January 2, 1997
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.
<PAGE>
From time to time, evaluations of performance made by independent sources
may also be used in advertisements, sales literature or shareholder reports,
including reprints of, or selections from, editorials or articles about the
Funds. Sources for Fund performance information and articles about the Funds
include, but are not limited to, the following:
American Association of Individual Investors' Journal
Banxquote
Barron's
Business Week
CDA Investment Technologies
CNBC
CNN
Consumer Digest
Financial Times
Financial World
Forbes
Fortune
Ibbotson Associates, Inc.
Institutional Investor
Investment Company Data, Inc.
Investor's Business Daily
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. ^ Because 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
<PAGE>
reported for tax purposes. In each case, shares will be redeemed at the
close of business on or about the 20th day of each month preceding payment and
payments will be mailed within five business days thereafter.
The Periodic Withdrawal Plan involves the use of principal and is not a
guaranteed annuity. Payments under ^ the Periodic Withdrawal Plan do not
represent income or a return on investment.
A participant in the Periodic Withdrawal Plan may be terminated at any
time by sending a written request to ^ IFG. Upon termination, all future
dividends and capital gain distributions will be reinvested in additional shares
unless ^ the 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 ^
IFG. 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 ^ IFG 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 ^ IFG 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.
<PAGE>
HOW TO REDEEM SHARES
Normally, payments for shares redeemed will be mailed within seven days
following receipt of the required documents as described in the section of the
Funds' Prospectus entitled "How to Redeem Shares." The right of redemption may
be suspended and payment postponed when: (a) the New York Stock Exchange is
closed for other than customary weekends and holidays; (b) trading on that
exchange is restricted; (c) an emergency exists as a result of which disposal by
a Fund of securities owned by it is not reasonably practicable or it is not
reasonably practicable for the Fund fairly to determine the value of its net
assets; or (d) the Securities and Exchange Commission by order so permits.
It is possible that in the future conditions may exist which would, in the
opinion of the Company's investment adviser, make it undesirable for a Fund to
pay for redeemed shares in cash. In such cases, the investment adviser may
authorize payment to be made in portfolio securities or other property of the
Fund. However, the Company is obligated under the 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.
<PAGE>
Distributions by each Fund of net capital gain (the excess of net
long-term capital gain over net short-term capital loss) are, for federal income
tax purposes, taxable to the shareholder as long-term capital gains regardless
of how long a shareholder has held shares of a Fund. Such distributions are
identified as such and are not eligible for the dividends-received deduction.
All dividends and other distributions are regarded as taxable to the
investor, whether or not such dividends and distributions are reinvested in
additional shares. If the net asset value of Fund shares should be reduced below
a shareholder's cost as a result of a distribution, such distribution would be
taxable to the shareholder although a portion would be, in effect, a return of
invested capital. The net asset value of shares of a Fund reflects accrued net
investment income and undistributed realized capital and foreign currency gains;
therefore, when a distribution is made, the net asset value is reduced by the
amount of the distribution. If shares are purchased shortly before a
distribution, the full price for the shares will be paid and some portion of the
price may then be returned to the shareholder as a taxable dividend or capital
gain. However, the net asset value per share will be reduced by the amount of
the distribution, which would reduce any gain (or increase any loss) for tax
purposes on any subsequent redemption of shares.
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.
^ IFG 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 ^ IFG will be computed using the
single-category average cost method, although neither ^ IFG 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
<PAGE>
ordinary income for that year and capital gain net income for the one-year
period ending on October 31 of that year, plus certain other amounts.
Dividends and interest received by a Fund may be subject to income,
withholding or other taxes imposed by foreign countries and U.S. possessions
that would reduce the yield on its securities. Tax conventions between certain
countries and the United States may reduce or eliminate these foreign taxes,
however, and many foreign countries do not impose taxes on capital gains in
respect of investments by foreign investors. If more than 50% of the value of a
Fund's total assets at the close of any taxable year consists of securities of
foreign corporations, the Fund will be eligible to, and may, file an election
with the Internal Revenue Service that will enable its shareholders, in effect,
to receive the benefit of the foreign tax credit with respect to any foreign and
U.S. possessions income taxes paid by it. Each Fund will report to its
shareholders shortly after each taxable year their respective shares of the
Fund's income from sources within, and taxes paid to, foreign countries and U.S.
possessions if it makes this election.
Each Fund may invest in the stock of "passive foreign investment
companies" (PFICs"). A PFIC is a foreign corporation that, in general, meets
either of the following tests: (1) at least 75% of its gross income is passive
or (2) an average of at least 50% of its assets produce, or are held for the
production of, passive income. Under certain circumstances, a Fund will be
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
<PAGE>
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 commensurate with the
rate of portfolio activity.^ 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%. For the
period January 2, 1997 (commencement of operations) through May 31, 1997, the
portfolio turnover rate for the Realty Fund was 57%. 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 ^ IFG, as the Company's
investment adviser, or INVESCO Trust, IAML ^, INVESCO Asia or IRAI, as the
Company's sub-advisers, places orders for the purchase and sale of securities
with brokers and dealers based upon ^ IFG'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
<PAGE>
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 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 ^
that recommend the Funds to their clients^ or ^ that 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.
^
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 ^
affiliate 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 ^ IFG based on the number of investors who have beneficial
interests in the NTF Program Sponsor's omnibus accounts in the Funds. ^ IFG, 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
<PAGE>
generated from the Plan to pay the remainder of the Services Fee, subject
to the maximum Rule 12b-1 fee permitted by the Plan. ^ IFG 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 ^ IFG to place a portion of each Fund's
brokerage transactions with certain NTF Program Sponsors or their affiliated
brokers, if ^ IFG 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 ^ IFG 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 ^ IFG
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, ^ IFG 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 ^ IFG prior to each fiscal year-end
of the Funds. The Company's board of directors has also authorized the Funds to
pay to ^ IFG the full Rule 12b-1 fees contemplated by the Plan to compensate IFG
for expenses incurred by ^ IFG 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 ^ IFG 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. The aggregate amount of
brokerage commissions paid for the period January 2, 1997 (commencement of
operations) through May 31, 1997 for the Realty Fund was $132,935. 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,
<PAGE>
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 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. For the period
January 2, 1997 (commencement of operations) through May 31, 1997, brokers
providing research services received commissions on portfolio transactions of $0
for the Realty 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. For the period
January 2, 1997 (commencement of operations) through May 31, 1997, the aggregate
amount of such portfolio transactions for the Realty Fund was $0. 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 ^ IFG, INVESCO Trust, IAML, INVESCO Asia nor IRAI receives any
brokerage commissions on portfolio transactions effected on behalf of the Funds,
and there is no affiliation between IFG, INVESCO Trust, IAML ^, INVESCO Asia and
IRAI, or any person affiliated with IFG, INVESCO Trust, IAML ^, INVESCO Asia and
IRAI, or the Funds and any broker or dealer that executes transactions for the
Funds.
<PAGE>
ADDITIONAL INFORMATION
Common Stock. The Company ^ has 600,000,000 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 ^ six series, representing
the Company's ^ six Funds. As of ^ May 31, ^ 1997, 688,925 shares of the Capital
Goods Fund, ^ 4,334,996 shares of the Communications Fund, ^ 7,287,464 shares of
the European Small Company Fund, ^ 6,128,330 shares of the Latin American Growth
Fund ^, 2,586,615 shares of the Asian Growth Fund, and 2,902,326 shares of the
Realty Fund were outstanding. The board of directors has the authority to
designate additional series of common stock without seeking the approval of
shareholders, and may classify and reclassify any authorized but unissued
shares.
Shares of each series represent the interests of the shareholders of such
series in a particular portfolio of investments of the Company. Each series of
the Company's shares is preferred over all other series in respect of the assets
specifically allocated to that series, and all income, earnings, profits and
proceeds from such assets, subject only to the rights of creditors, are
allocated to shares of that series. The assets of each series are segregated on
the books of account and are charged with the liabilities of that series and
with a share of the Company's general liabilities. The board of directors
determines those assets and liabilities deemed to be general assets or
liabilities of the Company, and these items are allocated among series in a
manner deemed by the board of directors to be fair and equitable. Generally,
such allocation will be made based upon the relative total net assets of each
series. In the unlikely event that a liability allocable to one series exceeds
the assets belonging to the series, all or a portion of such liability may have
to be borne by the holders of shares of the Company's other series.
All Fund 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
<PAGE>
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 ^ June 1, ^ 1997, the following entities
held more than 5% of the Funds' outstanding equity securities.
Amount and Nature Percent
Name and Address of Ownership of Class
- ---------------- ----------------- --------
INVESCO Worldwide
Capital Goods Fund
Charles Schwab & Co. Inc. ^ 167,249.5750 23.774
Special Custody Acct. for the
Exclusive Benefit of Customers
101 Montgomery St.
San Francisco, CA 94104
^ FTC & Co. 112,301.3830 15.963
Attn: Datalynx
#B38
P.O. Box 5508
Denver, CO 80217
<PAGE>
INVESCO Worldwide
Communications Fund
Charles Schwab & Co. Inc. ^ 824,712.8000 18.578
Special Custody Acct. for the
Exclusive Benefit of Customers
101 Montgomery St.
San Francisco, CA 94104
^ INVESCO European
Small Company Fund
Charles Schwab & Co. Inc. ^ 3,271,968.5740 45.340
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. ^ 2,109,256.3660 34.299
Special Custody Acct. for the
Exclusive Benefit of Customers
101 Montgomery St.
San Francisco, CA 94104
INVESCO Asian Growth Fund
Charles Schwab & Co. Inc. ^ 874,323.7610 33.001
Special Custody Acct. for the
Exclusive Benefit of Customers
101 Montgomery St.
San Francisco, CA 94104
INVESCO Realty Fund
Charles Schwab & Co. Inc. 545,669.5900 18.750
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.
<PAGE>
Under the contract with the Company, the custodian is authorized to establish
separate accounts in foreign countries and to cause foreign securities owned by
the Company to be held outside the United States in branches of U.S. banks and,
to the extent permitted by applicable regulations, in certain foreign banks and
securities depositories.
Transfer Agent. The Company is provided with transfer agent, registrar^
and dividend disbursing agent services by INVESCO Funds Group, Inc., 7800 E.
Union Avenue, Denver, Colorado 80237, pursuant to the Transfer Agency Agreement
described herein. Such services include the issuance, cancellation and transfer
of shares of the Funds, and the maintenance of records regarding the ownership
of such shares.
Reports to Shareholders. The Company's fiscal year ends on July 31. The
Company distributes reports at least semiannually to its shareholders. Financial
statements regarding the Company, audited by the independent accountants, are
sent to shareholders annually.
Legal Counsel. The firm of Kirkpatrick & Lockhart LLP, 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 Worldwide
Communications, Worldwide Capital Goods, European Small Company, Latin American
Growth ^ for the fiscal year ended July 31, 1996 and for the Asian Growth ^ Fund
for the period ^ ended July 31, 1996, and the notes thereto, 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. The Company's unaudited financial statements for the
Funds and the notes thereto are incorporated by reference from the Company's
Semi-Annual Report to Shareholders for the period ended January 31, 1997. The
unaudited financial statements for the Realty Fund for the period January 2,
1997 (commencement of operations) through May 31, 1997 are attached hereto.
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 Ratings Services
("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 Ratings Services 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>
INVESCO Specialty Funds, Inc. - Realty Fund
STATEMENT OF INVESTMENT SECURITIES
May 31,1997
UNAUDITED
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------
Shares or
Industry Principal
Description Code Amount Value
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
COMMON STOCKS 100.00%
CANADA 3.92%
Four Seasons Hotels Ltd Voting Shrs LH 11,600 $ 301,600
Trizec Hahn RE 39,000 843,375
-------------
1,144,975
-------------
HONG KONG 2.08%
Cheung Kong Holdings Ltd ADR RE 18,300 186,294
New World Development Ltd Sponsored ADR RE 18,600 235,988
Sun Hung Kai Properties Ltd Sponsored ADR RE 15,100 185,618
-------------
607,900
-------------
SINGAPORE 0.86%
Singapore Land Ltd ADR RE 49,000 250,223
-------------
UNITED STATES 93.14%
American General Hospitality RE 39,600 1,024,650
Amerin Corp* FN 12,500 293,750
AMRESCO INC* FN 29,200 514,650
Arden Realty Group RE 30,900 799,537
Bay Apartment Communities RE 15,040 530,160
Beacon Properties RE 32,500 1,007,500
Bedford Property Investors RE 25,100 470,625
CBL & Associates Properties RE 22,600 536,750
Cali Realty RE 18,600 551,025
Capstead Mortgage RE 12,700 304,800
Catellus Development* RE 44,800 756,000
Centex Corp BD 3,600 143,550
Chelsea GCA Realty RE 8,200 298,275
Crescent Real Estate Equities RE 22,200 604,950
Duke Realty Investments RE 20,100 766,312
<PAGE>
- --------------------------------------------------------------------------------------------------------------
Shares or
Industry Principal
Description Code Amount Value
- --------------------------------------------------------------------------------------------------------------
Equity Residential Properties Trust SBI RE 20,450 966,262
Essex Property Trust RE 33,700 998,362
FelCor Suite Hotels RE 34,900 1,300,025
First Industrial Realty Trust RE 37,700 1,112,150
Gables Residential Trust SBI RE 21,400 535,000
Glenborough Realty Trust RE 13,800 300,150
Healthcare Realty Trust RE 27,700 720,200
Highwoods Properties RE 9,100 275,275
Irvine Apartment Communities RE 20,800 585,000
JDN Realty RE 13,500 389,812
JP Realty RE 5,000 129,375
Kilroy Realty RE 34,460 827,040
Kimco Realty RE 15,100 475,650
Koger Equity RE 41,000 681,625
Liberty Property Trust SBI RE 41,400 993,600
MGI Properties RE 27,500 577,500
Meridian Industrial Trust RE 15,100 347,300
Merry Land & Investment RE 20,700 434,700
Patriot American Hospitality RE 48,400 1,046,650
Prentiss Properties Trust SBI RE 24,900 585,150
Price REIT RE 19,300 735,813
Public Storage RE 20,300 540,488
RFS Hotel Investors RE 18,100 337,113
Rouse Co RE 12,300 342,863
Shurgard Storage Centers Class A RE 25,900 725,200
Simon DeBartolo Group RE 23,630 714,808
Starwood Lodging Trust SBI RE 10,000 372,500
Sun Communities RE 16,100 525,263
Sunstone Hotel Investors RE 28,100 358,275
TriNet Corporate Realty Trust RE 20,100 658,275
-------------
27,193,958
-------------
TOTAL INVESTMENT
SECURITIES AT VALUE 100.00%
(Cost $29,634,349#) $ 29,197,056
=============
</TABLE>
* Security is non-income producing.
# Also represents cost for income tax purposes.
<PAGE>
Summary of Investments by Industry
<TABLE>
<CAPTION>
% of
Industry Investment
Industry Code Securities Value
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Building Materials BD 0.49% $ 143,550
Financial FN 2.77% 808,400
Lodging - Hotels LH 1.03% 301,600
Real Estate Investment Trust RE 95.71% 27,943,506
------------------------------
100.00% $29,197,056
==============================
See Notes to Financial Statements
</TABLE>
<PAGE>
INVESCO Specialty Funds, Inc. - Realty Fund
STATEMENT OF ASSETS AND LIABILITIES
May 31, 1997
UNAUDITED
ASSETS
Investment Securities at Value
(Cost $29,634,349) $ 29,197,056
Receivables:
Investment Securities Sold 580,973
Fund Shares Sold 156,161
Dividends and Interest 5,567
Prepaid Expenses 95,689
---------------
TOTAL ASSETS 30,035,446
---------------
LIABILITIES
Payables:
Custodian 491,024
Investment Securities Purchased 148,973
Fund Shares Repurchased 482,160
Accrued Distribution Expenses 6,234
Accrued Expenses and Other Payables 14,895
---------------
TOTAL LIABILITIES 1,143,286
---------------
Net Assets at Value $ 28,892,160
===============
NET ASSETS
Paid-in Capital* $ 29,931,039
Accumulated Undistributed Net Investment Income 37,302
Accumulated Undistributed Net Realized Loss on Investment
Securities and Foreign Currency Transactions (638,888)
Net Depreciation of Investment Securities and
Foreign Currency Transactions (437,293)
---------------
Net Assets at Value $ 28,892,160
===============
Net Asset Value, Offering and Redemption
Price per Share $9.95
* The Fund has 100 million authorized shares of common stock, par value of
$0.01 per share, of which 2,902,326 were outstanding at May 31, 1997.
See Notes to Financial Statements
<PAGE>
INVESCO Specialty Funds, Inc. - Realty Fund
STATEMENT OF OPERATIONS Period Ended May 31, 1997 (Note 1)
UNAUDITED
INVESTMENT INCOME
INCOME
Dividends $ 476,315
Interest 36,042
--------------
TOTAL INCOME 512,357
--------------
EXPENSES
Investment Advisory Fees 72,430
Distribution Expenses 24,143
Transfer Agent Fees 45,182
Administrative Fees 4,782
Custodian Fees and Expenses 7,961
Directors' Fees and Expenses 1,313
Professional Fees and Expenses 15,810
Registration Fees and Expenses 12,758
Reports to Shareholders 1,595
Other Expenses 354
--------------
TOTAL EXPENSES 186,328
Fees and Expenses Absorbed by Investment Adviser (57,277)
--------------
NET EXPENSES 129,051
--------------
NET INVESTMENT INCOME 383,306
--------------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENT SECURITIES
Net Realized Loss on Investment Securities
and Foreign Currency Transactions (638,888)
Change in Net Depreciation of Investment Securities
and Foreign Currency Transactions (437,293)
--------------
NET LOSS ON INVESTMENT SECURITIES (1,076,181)
--------------
Net Decrease in Net Assets from Operations $ (692,875)
==============
See Notes to Financial Statements
<PAGE>
INVESCO Specialty Funds, Inc. - Realty Fund
STATEMENT OF CHANGES IN NET ASSETS
Period Ended May 31, 1997 (Note 1)
UNAUDITED
OPERATIONS
Net Investment Income $ 383,306
Net Realized Loss
on Investment Securities and
Foreign Currency Transactions (638,888)
Change in Net Depreciation of Investment
Securities and Foreign Currency
Transactions (437,293)
--------------
NET DECREASE IN NET
ASSETS FROM OPERATIONS (692,875)
--------------
DISTRIBUTIONS TO SHAREHOLDERS
FROM NET INVESTMENT INCOME (346,004)
--------------
FUND SHARE TRANSACTIONS
Proceeds from Sales of Shares 62,630,582
Reinvestment of Distributions 341,038
--------------
62,971,620
Amounts Paid for Repurchases of Shares (33,040,581)
--------------
NET INCREASE IN NET ASSETS FROM
FUND SHARE TRANSACTIONS 29,931,039
--------------
Total Increase in Net Assets 28,892,160
NET ASSETS
Beginning of Period 0
--------------
End of Period (Including
Accumulated Undistributed Net
Investment Income of $37,302) $ 28,892,160
==============
FUND SHARE TRANSACTIONS
Shares Sold 6,127,517
Shares Issued from Reinvestment of Distributions 35,636
--------------
6,163,153
Shares Repurchased (3,260,827)
--------------
Net Increase in Fund Shares 2,902,326
==============
See Notes to Financial Statements
<PAGE>
INVESCO Specialty Funds, Inc. - Realty Fund
FINANCIAL HIGHLIGHTS
(For a Fund Share Outstanding Throughout the Period)
Period Ended May 31, 1997 (Note 1)
UNAUDITED
PER SHARE DATA
Net Asset Value -- Beginning of Period $ 10.00
-----------
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income 0.13
Net Losses on Securities
(Both Realized and Unrealized) (0.06)
-----------
Total from Investment Operations 0.07
-----------
LESS DISTRIBUTIONS FROM NET INVESTMENT
INCOME 0.12
-----------
Net Asset Value -- End of Period $ 9.95
===========
TOTAL RETURN* 0.75% *
RATIOS
Net Assets -- End of Period ($000 Omitted) $28,892
Ratio of Expenses to Average Net Assets# 0.49% * @
Ratio of Net Investment Income to
Average Net Assets# 1.47% *
Portfolio Turnover Rate* 57% *
Average Commission Rate Paid^^ $0.0537 *
* Based on operations for the period shown and, accordingly, are not
representative of a full year.
# Various expenses of the Fund were voluntarily absorbed by IFG for the
period ended May 31, 1997. If such expenses had not been voluntarily
absorbed, ratio of expenses to average net assets would have been 0.71%
(not annualized) and ratio of net investment income to average net assets
would have been 1.25% (not annualized).
@ 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.
<PAGE>
INVESCO Specialty Funds, Inc. -- Realty Fund
NOTES TO FINANCIAL STATEMENTS
UNAUDITED
NOTE 1 -- ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES. INVESCO Specialty
Funds, Inc., was incorporated in Maryland and presently consists of seven
separate Funds: Asian Growth Fund, European Small Company Fund, Latin American
Growth Fund, Realty Fund, Worldwide Capital Goods Fund and Worldwide
Communications Fund. Realty Fund (the "Fund") is presented herein. The
investment objective of the Fund is to achieve current income. The Fund is
registered under the Investment Company Act of 1940 (the "Act") as a
diversified, open-end management investment company. Investment operations of
the Fund commenced on January 2, 1997.
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. The
preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of income and expenses during the reporting period. Actual
results could differ from those estimates.
A. SECURITY VALUATION -- Equity securities traded on national securities
exchanges or in the over-the-counter market are valued at the last sales
price in the market where such securities are primarily traded. If last
sales prices are not available, securities are valued at the highest closing
bid price obtained from one or more dealers making a market for such
securities or by a pricing service approved by the Fund's board of
directors.
Foreign securities are valued at the closing price on the principal
stock exchange on which they are traded. In the event that closing prices
are not available for foreign securities, prices will be obtained from the
principal stock exchange at or prior to the close of the New York Stock
Exchange. Foreign currency exchange rates are determined daily prior to
the close of the New York Stock Exchange.
If market quotations or pricing service valuations are not readily
available, securities are valued at fair value as determined in good faith
by the Fund's board of directors.
Assets and liabilities initially expressed in terms of foreign
currencies are translated into U.S. dollars at the prevailing market
rates as quoted by one or more banks or dealers on the date of
valuation. The cost of securities is translated into U.S. dollars
at the rates of exchange prevailing when such securities were
acquired. Income and expenses are translated into U.S. dollars at
rates of exchange prevailing when accrued.
B. SECURITY TRANSACTIONS AND RELATED INVESTMENT INCOME -- Security
transactions are accounted for on the trade date and dividend income is
recorded on the ex dividend date. Certain dividends from foreign
securities will be recorded as soon as the Fund is informed of the
dividend if such information is obtained subsequent to the ex dividend
date. Interest income, which may be comprised of stated coupon rate,
market discount, original issue discount and amortized premium is recorded
<PAGE>
on the accrual basis. Cost is determined on the specific identification
basis.
The Fund may have elements of risk due to concentrated investments
in specific industries or foreign issuers located in a specific country.
Such concentrations may subject the Fund to additional risks resulting
from future political or economic conditions and/or possible impositions
of adverse foreign governmental laws or currency exchange restrictions.
Net realized and unrealized gain or loss from investments includes
fluctuations from currency exchange rates and fluctuations in market
value.
The Fund's use of short-term forward foreign currency contracts may
subject it to certain risks as a result of unanticipated movements in
foreign exchange rates. The Fund does not hold short-term forward foreign
currency contracts for trading purposes. The Fund may hold foreign
currency in anticipation of settling foreign security transactions and not
for investment purposes.
C. FEDERAL AND STATE TAXES -- The Fund has complied and continues to comply
with the provisions of the Internal Revenue Code applicable to regulated
investment companies and, accordingly, has made or intends to make
sufficient distributions of net investment income and net realized capital
gains, if any, to relieve it from all federal and state income taxes and
federal excise taxes.
To the extent future capital gains are offset by capital loss
carryovers, such gains will not be distributed to shareholders.
Dividends paid by the Fund from net investment income and
distributions of net realized short-term capital gains are, for federal
income tax purposes, taxable as ordinary income to shareholders.
Investment income received from foreign sources may be subject to
foreign withholding taxes. Dividend and interest income is shown gross of
foreign withholding taxes in the accompanying financial statements.
D. DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS-- Dividends and distributions to
shareholders are recorded by the Fund on the ex dividend/distribution date.
The Fund distributes net realized capital gains, if any, to its shareholders
at least annually, if not offset by capital loss carryovers. Income
distributions and capital gain distributions are determined in accordance
with income tax regulations which may differ from generally accepted
accounting principles. These differences are primarily due to differing
treatments for foreign currency transactions, nontaxable dividends, net
operating losses and expired capital loss carryforwards.
E. FORWARD FOREIGN CURRENCY CONTRACTS-- The Fund enters into short-term forward
foreign currency contracts in connection with planned purchases or sales of
securities as a hedge against fluctuations in foreign exchange rates pending
the settlement of transactions in foreign securities. A forward foreign
currency contract is an agreement between contracting parties to exchange an
amount of currency at some future time at an agreed upon rate. These
contracts are marked-to-market daily and the related appreciation or
depreciation of the contracts is presented in the Statement of Assets and
Liabilities.
<PAGE>
F. EXPENSES -- Each of the Funds bears expenses incurred specifically on its
behalf and, in addition, each Fund bears a portion of general expenses,
based on the relative net assets of each Fund.
NOTE 2 -- INVESTMENT ADVISORY AND OTHER AGREEMENTS. INVESCO Funds Group, Inc.
("IFG") serves as the Fund's investment adviser. As compensation for its
services to the Fund, IFG receives an investment advisory fee which is accrued
daily at the applicable rate and paid monthly. The fee is based on the annual
rate of 0.75% of the Fund's average net assets.
In accordance with a Sub-Advisory Agreement between IFG and INVESCO Realty
Advisors ("INVESCO Realty"), an affiliate of IFG, investment decisions of the
Fund are made by INVESCO Realty. Fees for such sub-advisory services are paid
by IFG.
In accordance with an Administrative Agreement, the Fund pays IFG an
annual fee of $10,000, plus an additional amount computed at an annual rate of
0.015% of average net assets to provide administrative, accounting and clerical
services. The fee is accrued daily and paid monthly.
IFG receives a transfer agent fee at an annual rate of $20.00 per
shareholder account, or, where applicable, per participant in an omnibus
account, per year. IFG may pay such fee for participants in omnibus accounts to
affiliates or third parties. The fee is paid monthly at one-twelfth of the
annual fee and is based upon the actual number of accounts in existence during
each month.
A plan of distribution pursuant to Rule 12b-1 of the Act has provided for
compensation of marketing and advertising expenditures to IFG (the
"Distributor") to a maximum of 0.25% of average annual net assets. Amounts
accrued by the Fund are available to compensate the Distributor for actual
expenditures incurred within a rolling twenty-four-month period ending December
31, 1998 for the Fund and for a rolling twelve-month period thereafter. For the
period ended May 31, 1997, the Fund paid the distributor $17,909 for
compensation of expenses incurred.
IFG has voluntarily agreed, in some instances, to absorb certain fees and
expenses incurred by the Fund.
NOTE 3 -- PURCHASES AND SALES OF INVESTMENT SECURITIES. For the period ended
May 31, 1997, the aggregate cost of purchases and proceeds from sales of
investment securities (excluding all U.S. Government securities and short-term
securities) were $46,096,107 and $15,822,856, respectively.
There were no purchases or sales of U.S. Government securities.
NOTE 4 -- APPRECIATION AND DEPRECIATION. At May 31, 1997, the gross appreciation
of securities in which there was an excess of value over tax cost amounted to
$583,959 and the gross depreciation of securities in which there was an excess
of tax cost over value amounted to $1,021,252, resulting in net depreciation of
$437,293.
NOTE 5 -- TRANSACTIONS WITH AFFILIATES. Certain of the Fund's officers and
directors are also officers and directors of IFG or INVESCO Realty. The Fund has
adopted an unfunded deferred compensation plan covering all independent
directors of the Fund who will have served as an independent director for at
least five years at the time of retirement. Benefits under this plan are based
on an annual rate of 40% of the retainer fee at the time of retirement.
Pension expenses for the period ended May 31, 1997, included in Directors'
Fees and Expenses in the Statement of Operations, and unfunded accrued pension
<PAGE>
costs and pension liability included in Prepaid Expenses and Accrued
Expenses, respectively, in the Statement of Assets and Liabilities were
insignificant.
NOTE 6 -- LINE OF CREDIT. The Fund has available a Redemption Line of Credit
Facility ("LOC"), from a consortium of national banks, to be used for temporary
or emergency purposes to fund redemptions of investor shares. The LOC permits
borrowings to a maximum of 10% of the Net Assets at Value of the Fund. The Fund
agrees to pay annual fees and interest on the unpaid principal balance based on
prevailing market rates as defined in the agreement. At May 31, 1997, there were
no such borrowings.
<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):
Unaudited Financial Highlights for the Realty 10
Fund for the period January 2, 1997 (commence-
ment of operations) through May 31, 1997.
Page in
Statement
of Addi-
tional In-
formation
(2) Unaudited Statement of Investment Securities 93
for the Realty Fund as of May 31, 1997.
Unaudited Statement of Assets and Liabilities 96
for the Realty Fund as of May 31, 1997.
Unaudited Statement of Operations for the 97
Realty Fund for the period January 2, 1997
(commencement of operations) through
May 31, 1997.
Unaudited Statement of Changes in Net Assets 98
for the Realty Fund for the period January 2,
1997 (commencement of operations) through
May 31, 1997.
Unaudited Financial Highlights for the Realty 99
Fund for the period January 2, 1997 (commencement
of operations) through May 31, 1997.
^ 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 ^ year ended July 31, 1996:
<PAGE>
Statement of Investment Securities as of July 31,
1996; Statement of Assets and Liabilities as of July
31, 1996; Statement of Operations for the ^ year
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.
The following unaudited financial statements for
the Worldwide Communications, Worldwide Capital
Goods, European Small Company, Latin American
Growth, Asian Growth and Realty Funds and the notes
thereto for the period ended January 31, 1997
are incorporated by reference from the Company's
Semi-Annual Report to Shareholders for the period
ended January 31, 1997; Statement of Investment
Securities as of January 31, 1997; Statement of
Assets and Liabilities as of January 31, 1997;
Statement of Operations as of January 31, 1997;
Statement of Changes in Net Assets as of January
31, 1997; and Financial Highlights as of January
31, 1997.
(3) Financial statements and schedules included
in Part C:
None
(b) Exhibits:
(1) (a) Articles of Incorporation
^(Charter).(3)
(b) Articles Supplementary to the
Company's Articles of Incorporation
dated January 6, ^ 1995.(3)
(c) Articles supplementary to the
Company's Articles of Incorporation
dated June 20, ^ 1995.(3)
(d) ^ Articles Supplementary to the
Company's Articles of ^ Incorporation
dated November 26, 1996.
^(2) Bylaws.(3)
<PAGE>
(3) Not applicable.
(4) Not required to be filed on EDGAR.
(5) (a) Investment Advisory Agreement
Between Registrant and INVESCO Funds
Group, Inc. dated ^ February 28, 1997.
^
(b) Sub-Advisory Agreement Between
INVESCO Funds Group, Inc. and INVESCO
Trust Company dated ^ February 28, 1997.
^(c) Sub-advisory Agreement between
INVESCO Funds Group, Inc. and INVESCO
Asia Ltd. dated ^ February 28, 1997.
^(d) Sub-advisory Agreement between
INVESCO Funds Group, Inc. and INVESCO
Asset Management Limited dated ^
February 28, 1997.
^(e) Sub-Advisory Agreement between
INVESCO Funds Group, Inc. and INVESCO
Realty Advisors dated December ^ 9,
1996.
(6) ^ Distribution Agreement Between
Registrant and INVESCO Funds Group, Inc.
dated ^ February 28, 1997.
(7) Defined Benefit Deferred Compensation
Plan for Non-Interested Directors and ^
Trustees.
<PAGE>
(8) Custody Agreement Between Registrant and
State Street Bank and Trust Company
dated May 2, ^ 1994.(3)
(a) Amendment to Custody Agreement dated
October 25, ^ 1995.(3)
(9) (a) Transfer Agency Agreement Between
Registrant and INVESCO Funds Group, Inc.
dated February 28, 1997. ^
(b) Administrative Services Agreement
between Registrant and INVESCO Funds
Group, Inc. dated ^ February 28, 1997.
(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.
(11) Consent of Independent Accountants.
(12) Not applicable.
(13) Not applicable.
(14) Copies of model plans used in the
establishment of retirement plans as
follows: Non-standardized Profit
Sharing Plan; Non-standardized Money
Purchase Pension Plan; Standardized
Profit Sharing Plan Adoption Agreement;
Standardized Money Purchase Pension
Plan; Non-standardized 401(k) Plan
Adoption Agreement; Standardized 401(k)
Paired Profit Sharing Plan; Standardized
Simplified Profit Sharing Plan;
Standardized Simplified Money Purchase
Plan; Defined Contribution Master Plan &
Trust Agreement; and Financial 403(b)
Retirement Plan, all filed with
Registration Statement No. 33-63498 of
INVESCO International Funds, Inc. filed
May 27, 1993, and herein incorporated by
reference.
(15) Plan and Agreement of Distribution dated
May 2, 1994 adopted pursuant to Rule 12b-1
under the Investment Company Act of ^ 1940.(1)
<PAGE>
(a) Amendment of Plan and Agreement of
Distribution dated July 19, ^ 1995.(1)
(b) Amended Plan and Agreement of
Distribution Pursuant to 12b-1 dated
January 1, 1997.
(16) (a) Schedule for Computation of
Performance Data for Worldwide Capital
Goods ^ Fund.
(b) Schedule for Computation of
Performance Data for Worldwide
Communications ^ Fund.
(17) (a) Financial Data Schedule for Worldwide
Capital Goods Fund for the period ended
January 31, 1997.
(b) Financial Data Schedule for
Worldwide Communications Fund for the
period ended January 31, 1997.
(c) Financial Data Schedule for Latin
American Growth Fund for the period
ended January 31, 1997.
(d) Financial Data Schedule for European
Small Company Fund for the period ended
January 31, 1997.
(e) Financial Data Schedule for Asian
Growth Fund for the period ended January
31, 1997.
(f) Financial Data Schedule for Realty
Fund for the period January 2, 1997
through May 31, 1997.
(18) Not applicable.
- ---------------
(1)Previously filed on EDGAR with Post-Effective Amendment No. ^ 6 to the
Registration Statement on ^ August 30, 1995, and incorporated by reference
herein.
(2)Previously filed on EDGAR with Post-Effective Amendment No. ^ 9 to the
Registration Statement on ^ October 11, 1996, and incorporated by reference
herein.
<PAGE>
(3)Previously filed on EDGAR with Post-Effective Amendment No. ^ 10 to ^ the
Registration Statement on ^ November 22, 1996, and incorporated by reference. ^
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 ^ May 31, ^ 1997
-------------- ----------------
INVESCO Worldwide Capital Goods Fund ^ 1,144
INVESCO Worldwide Communications Fund ^ 9,237
INVESCO European Small Company Fund ^ 11,004
INVESCO Latin American Growth Fund ^ 9,570
INVESCO Asian Growth Fund ^ 4,419
INVESCO Realty Fund 5,694
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.
<PAGE>
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
- ------------------ ------------- -------------
^
Charles W. Brady Chairman of
1315 Peachtree Street NE the Board
Atlanta, GA 30309
^ Darryl C. Celkupa Vice President
^ 7800 E. Union Avenue
^ Denver, CO 80237
^ Robert D. Cromwell Assistant Vice
7800 E. Union Avenue President
Denver, CO 80237
^
William J. Galvin, Jr. Senior Vice Asst. Sec.
7800 E. Union Avenue President
Denver, CO 80237
Linda J. Gieger Vice President
7800 E. Union Avenue
Denver, CO 80237
Ronald L. Grooms Senior Vice Treasurer,
7800 E. Union Avenue President Chief Fin'l
Denver, CO 80237 & Treasurer Officer, and
Chief Acctg.
Officer
Hubert L. Harris, Jr. Director
1315 Peachtree Street NE
Atlanta, GA 30309
Dan J. Hesser Chairman of the President, CEO
7800 E. Union Avenue Board, President, & Director
Denver, CO 80237 CEO & Director
Thomas M. Hurley 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
- ------------------ ------------- -------------
^ Gregory E. Hyde Vice President
7800 E. Union Avenue
^ 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
Charles P. Mayer Director
7800 E. Union Avenue
Denver, CO 80237
Brian N. Minturn Executive Vice
7800 E. Union Ave. President
Denver, CO 80237
Robert J. O'Connor Director
^ 1201 Peachtree Street NE
Atlanta, GA ^ 30361
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
^
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
<PAGE>
Positions and Positions and
Name and Principal Offices with Offices with
Business Address Underwriter Registrant
- ------------------ ------------- -------------
Gary J. Ruhl Vice President
7800 E. Union Avenue
Denver, CO 80237
^ Kent T. Schmeckpeper Assistant Vice
7800 E. Union Avenue President ^
^ Denver, CO 80237
^
Terri Berg Smith Vice President
7800 E. Union Avenue
Denver, CO 80237
Larry Soll Director
345 Poorman Road
Boulder, CO 80302
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>
The following is a list of officers of INVESCO Retirement Plan Services, Inc.
("IRPS"), a division of INVESCO Funds Group, Inc., the underwriter:
Name and Principal Positions and Offices
Business Address with IRPS
- ------------------ ---------------------
Fredrick W. Braley Chief Financial Officer
400 Colony Square, Suite 2200 and Treasurer
1201 Peachtree St., N.E.
Atlanta, GA 30361
Scott P. Brogan Senior Vice President
400 Colony Square, Suite 2200
1201 Peachtree St., N.E.
Atlanta, GA 30361
Rayane S. Clark Vice President - Defined
400 Colony Square, Suite 2200 Contributions Operations
1201 Peachtree St., N.E.
Atlanta, GA 30361
M. Anthony Cox Senior Vice President
400 Colony Square, Suite 2200
1201 Peachtree St., N.E.
Atlanta, GA 30361
Mary Ann Dallenbach Senior Vice President
400 Colony Square, Suite 2200
1201 Peachtree St., N.E.
Atlanta, GA 30361
Douglas P. Dohm Regional Vice President
400 Colony Square, Suite 2200
1201 Peachtree St., N.E.
Atlanta, GA 30361
Joseph B. Jennings Senior Vice President
400 Colony Square, Suite 2200
1201 Peachtree St., N.E.
Atlanta, GA 30361
Mark A. Jones Senior Vice President
400 Colony Square, Suite 2200
1201 Peachtree St., N.E.
Atlanta, GA 30361
<PAGE>
Name and Principal Positions and Offices
Business Address with IRPS
- ------------------ ---------------------
Barbara L. March Senior Vice President
400 Colony Square, Suite 2200
1201 Peachtree St., N.E.
Atlanta, GA 30361
Robert J. O'Connor Chief Executive Officer
400 Colony Square, Suite 2200
1201 Peachtree St., N.E.
Atlanta, GA 30361
E. Eric Starr Secretary and General
400 Colony Square, Suite 2200 Counsel
1201 Peachtree St., N.E.
Atlanta, GA 30361
(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.
^
<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 ^27th day of ^ June, 1997.
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 ^27th day of ^
June, 1997.
/s/ Dan J. Hesser /s/ Lawrence H. Budner
- ------------------------------------ ------------------------------------
Dan J. Hesser, President & ^ Lawrence H. Budner, Director
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/ ^ Larry Soll
- ------------------------------------ ------------------------------------
Bob R. Baker, Director ^ Larry Soll, Director
/s/ ^ Charles W. Brady /s/ Kenneth T. King
- ------------------------------------ ------------------------------------
^ Charles W. Brady, Director Kenneth T. King, Director
^/s/ John W. McIntyre
------------------------------------
^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 ^, August 30, 1996 and November 22,
1996.
<PAGE>
Exhibit Index
Page in
Exhibit Number Registration Statement
- -------------- ----------------------
^ 1(d) 118
^ 5(a) 120
5(b) 127
5(c) 134
5(d) 141
5(e) 148
6 155
^ 7 164
9(a) 170
9(b) 183
10 187
11 189
15(b) 190
16(a) 195
16(b) 196
17(a) 197
17(b) 198
17(c) 199
17(d) 200
17(e) 201
17(f) 202
Ex 99 POA Soll 203
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, registered as an open-end
investment company under the Investment Company Act of 1940, and having its
registered office in Baltimore, Maryland (hereinafter called the "Corporation"),
hereby certifies to the State Department of Assessments and Taxation of Maryland
that:
FIRST: By unanimous approval, at a meeting held on May 1, 1996, the board
of directors of the Corporation has created an additional class of shares of
common stock of the Corporation designated as the INVESCO Realty Fund, and has
authorized 100,000,000 additional shares of stock to be allocated to INVESCO
Realty Fund. The aggregate number of shares of stock of all series which the
Corporation shall have the authority to issue after creation of a new series of
Common Stock, is six hundred million (600,000,000) shares of Common Stock. The
newly designated series of common stock designated as INVESCO Realty Fund has a
par value of $.01 per share.
SECOND: Shares of each class have been duly classified by the board of
directors pursuant to authority and power contained in the Articles of
Incorporation of the Corporation.
THIRD: A description of the common stock so classified, including the
powers, preferences, participating, voting or other special rights and
qualifications, restrictions and limitations thereof, is as outlined in the
Articles of Incorporation of the Corporation.
FOURTH: The Corporation is registered as an open-end management investment
company under the Investment Company Act of 1940.
FIFTH: The undersigned, the president of the Corporation, who is executing
on behalf of the Corporation the foregoing Articles Supplementary, of which this
paragraph is a part, hereby acknowledges, in the name of and on behalf of the
Corporation, that the foregoing Articles Supplementary are the corporate act of
the Corporation and further verifies under oath that, to the best of his
knowledge, information and belief, the matters and facts set forth herein are
true in all material respects, under the penalties of perjury.
IN WITNESS WHEREOF, INVESCO 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 7th day of November, 1996.
<PAGE>
These Articles Supplementary shall be effective upon acceptance by the
Maryland State Department of Assessments and Taxation.
INVESCO SPECIALTY FUNDS, INC.
By: /s/ Dan J. Hesser
------------------------
Dan J. Hesser, President
ATTEST:
By: /s/ Glen A. Payne
------------------------
Glen A. Payne, Secretary
I, Ruth Christensen, a notary public in and for the City and County of
Denver, and State of Colorado, do hereby certify that Dan J. Hesser, personally
known to me to be the person whose name is subscribed to the foregoing Articles
Supplementary, appeared before me this date in person and acknowledged that he
signed, sealed and delivered said instrument as his full and voluntary act and
deed for the uses and purposes therein set forth.
Given my hand and official seal this 7th day of November, 1996.
/s/ Ruth Christensen
------------------------------------
Notary Public
My Commission Expires: 3/16/98
INVESTMENT ADVISORY AGREEMENT
THIS AGREEMENT is made this 28th day of February, 1997, in Denver,
Colorado, by and between INVESCO FUNDS GROUP, INC. (the "Adviser"), a Delaware
corporation, and INVESCO Specialty Funds, Inc., a Maryland corporation (the
"Company").
WITNESSETH:
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 five series, each representing an interest in a separate
portfolio of investments (such series initially being the INVESCO Worldwide
Capital Goods Fund, INVESCO Worldwide Communications Fund, INVESCO European
Small Company Fund, INVESCO Latin American Growth Fund, and INVESCO Asian Growth
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;
(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;
<PAGE>
(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.
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 sub-accounting,
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
<PAGE>
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;
(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;
<PAGE>
(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.
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 the INVESCO Worldwide Capital Goods Fund and INVESCO Worldwide
Communications Fund shall be computed at the following annual rate: 0.65% of the
first $500 million of each 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. The advisory fee
to the Adviser with respect to the INVESCO European Small Company Fund, INVESCO
Latin American Growth Fund and INVESCO Asian Growth Fund shall be computed at
the following annual rate: 0.75% of the first $500 million of each Fund's
average net assets, 0.65% of the next $500 million of each Fund's average net
assets and 0.55% of each Fund's average net assets over $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
<PAGE>
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 of two years from the date of
execution, and from year to year thereafter, but only 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
<PAGE>
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 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
<PAGE>
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.
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.
By: /s/ Dan J. Hesser
---------------------------------
President
ATTEST:
/s/ Glen A. Payne
- -------------------------------
Secretary
INVESCO FUNDS GROUP, INC.
By: /s/ Ronald L. Grooms
---------------------------------
Senior Vice President
ATTEST:
/s/ Glen A. Payne
- -------------------------------
Secretary
SUB-ADVISORY AGREEMENT
AGREEMENT made this 28th day of February, 1997, by and between INVESCO Funds
Group, Inc. ("INVESCO"), a Delaware corporation, and INVESCO TRUST COMPANY, a
Colorado corporation ("the Sub-Adviser").
WITNESSETH:
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
<PAGE>
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.
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 of two years from the date of execution, 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
<PAGE>
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 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
<PAGE>
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.
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.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the date first above written.
INVESCO FUNDS GROUP, INC.
By: /s/ Ronald L. Grooms
---------------------
Senior Vice President
ATTEST:
/s/ Glen A. Payne
--------------------------
Secretary
INVESCO TRUST COMPANY
By: /s/ Dan J. Hesser
-----------------
President
ATTEST:
/s/ Glen A. Payne
---------------------------
Secretary
SUB-ADVISORY AGREEMENT
AGREEMENT made this 28th day of February, 1997, by and between INVESCO Fund
Group, Inc. ("INVESCO"), a Delaware corporation, and INVESCO ASIA LIMITED, a
Hong Kong corporation ("the Sub-Adviser").
WITNESSETH:
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
<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 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
<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 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.
By: /s/ Dan J. Hesser
---------------------
President
ATTEST:
/s/ Glen A. Payne
- -----------------
Secretary
INVESCO ASIA LIMITED
By: /s/ Andrew Lo
-------------
President
ATTEST:
/s/ Iris Lee
- -----------------
Secretary
SUB-ADVISORY AGREEMENT
AGREEMENT made this 28th day of February, 1997, by and between INVESCO Funds
Group, Inc. ("INVESCO"), a Delaware corporation, and INVESCO ASSET MANAGEMENT
LIMITED, a United Kingdom corporation ("the Sub-Adviser").
WITNESSETH:
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
<PAGE>
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.
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
<PAGE>
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
<PAGE>
no liability of any sort shall be admitted and no undertaking shall be given nor
shall any offer, promise or payment be made or legal expenses incurred by the
Sub-Adviser without written consent of INVESCO who shall be entitled if it so
desires to take over and conduct in the name of the Sub-Adviser the defense of
any action or to prosecute any claim for indemnity or damages or otherwise
against any third party.
ARTICLE VIII
AMENDMENTS OF THIS AGREEMENT
No provision of this Agreement may be orally changed or discharged, but may
only be modified by an instrument in writing signed by the Sub-Adviser and
INVESCO. In addition, no amendment to this Agreement shall be effective unless
approved by (1) the vote of a majority of the Directors of the Company,
including a majority of the Directors who are not parties to this Agreement or
interested persons of any such party cast in person at a meeting called for the
purpose of voting on such amendment and (2) the vote of a majority of the
outstanding voting securities of the 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.
<PAGE>
Complaints. The Sub-Adviser has in operation a written procedure for the
proper handling of complaints from clients; if the matter of complaint cannot be
resolved to INVESCO's satisfaction, INVESCO has the right of recourse to IMRO.
Notice. Any notice under this Agreement shall be in writing, addressed and
delivered or mailed, postage prepaid, to the other party at such address as such
other party may designate for the receipt of such notice.
Severability. Each provision of this Agreement is intended to be severable.
If any provision of this Agreement shall be held illegal or made invalid by a
court decision, statute, rule or otherwise, such illegality or invalidity shall
not affect the validity or enforceability of the remainder of this Agreement.
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.
By: /s/ Dan J. Hesser
---------------------
President
ATTEST:
/s/ Glen A. Payne
- -----------------
Secretary
INVESCO ASSET MANAGEMENT LIMITED
By: /s/ Tristan Hilgarth
----------------------------
Chief Executive Officer
ATTEST:
/s/ Robert J. Cackett
- ---------------------
Secretary
SUB-ADVISORY AGREEMENT
AGREEMENT made this 28th day of February, 1997, by and between INVESCO
Funds Group, Inc. ("INVESCO"), a Delaware corporation, and INVESCO Realty
Advisors, Inc., a Delaware corporation ("the Sub-Adviser").
WITNESSETH:
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, one such series being designated the INVESCO Realty Fund (the
"Fund"); and
WHEREAS, INVESCO and the Sub-Adviser are engaged in rendering investment
advisory services and are registered as investment advisers under the Investment
Advisers Act of 1940; and
WHEREAS, INVESCO has entered into an Investment Advisory Agreement with the
Company (the "INVESCO Investment Advisory Agreement"), pursuant to which INVESCO
is required to provide investment advisory services to the Company, and, upon
receipt of written approval of the Company, is authorized to retain companies
which are affiliated with INVESCO to provide such services; and
WHEREAS, the Sub-Adviser is willing to provide investment advisory services
to the Company on the terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and the covenants
hereinafter contained, INVESCO and the Sub-Adviser hereby agree as follows:
ARTICLE I
DUTIES OF THE SUB-ADVISER
INVESCO hereby employs the Sub-Adviser to act as investment adviser to the
Company and to furnish the investment advisory services described below, subject
to the broad supervision of INVESCO and Board of Directors of the Company, for
the period and on the terms and conditions set forth in this Agreement. The
Sub-Adviser hereby accepts such assignment and agrees during such period, at its
own expense, to render such services and to assume the obligations herein set
forth for the compensation provided for herein. The Sub-Adviser shall for all
purposes herein be deemed to be an independent contractor and, unless otherwise
expressly provided or authorized herein, shall have no authority to act for or
represent the Company in any way or otherwise be deemed an agent of the Company.
The Sub-Adviser hereby agrees to manage the investment operations of the
Fund, subject to the supervision of the Company's directors (the "Directors")
and INVESCO. Specifically, the Sub-Adviser agrees to perform the following
services:
(a) to manage the investment and reinvestment of all the assets, now or
hereafter acquired, of the Fund, and to execute all purchases and sales of
portfolio securities;
<PAGE>
(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
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 each
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. The Sub-Adviser may follow a policy of
considering sales of shares of the Fund 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
circumstances, including the size of any contemporaneous market in such
securities, the importance to the Fund of speed, efficiency, and confidentiality
<PAGE>
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.
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 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 the Fund, as
determined by a valuation made in accordance with the Fund's procedures for
calculating their 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 0.325% of the first $500 million of the Fund's
average net assets, 0.275% of the Fund's average net assets in excess of $500
million but not more than $1 billion, and 0.225% of the Fund's average 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 Company, the net
asset value of a share of the Fund as of the last business day prior to such
suspension shall, for the purpose of this Article III, be deemed to be the net
asset value at the close of each succeeding business day until it is again
determined. However, no such fee shall be paid to the Sub-Adviser with respect
to any assets of the Fund which may be invested in any other investment company
for which the Sub-Adviser serves as investment adviser or sub-adviser. The fee
provided for hereunder shall be prorated in any month in which this Agreement is
not in effect for the entire month. The Sub-Adviser shall be entitled to receive
fees hereunder only for such periods as the INVESCO Investment Advisory
Agreement remains in effect.
ARTICLE IV
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
<PAGE>
the performance of sub-advisory services rendered with respect to the Company or
the Fund, 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 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 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 Fund, neither the Sub-Adviser nor any of its directors,
officers or employees will act as a principal or agent for any party other than
the Fund or receive any commissions. The Sub-Adviser will comply with all
applicable laws in acting hereunder including, without limitation, the 1940 Act;
the Investment Advisers Act of 1940, as amended; and all rules and regulations
duly promulgated under the foregoing.
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 Fund, and 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 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 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. In the event of the disapproval of this Agreement, or of the
<PAGE>
continuation hereof, by the shareholders of the Fund (or by the Directors of the
Company as to the Fund), the parties intend that such disapproval shall be
effective only as to the 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 Fund by vote of a majority of the Directors of the
Company; by vote of a majority of the outstanding voting securities of the Fund;
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 Fund (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.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the date first above written.
INVESCO FUNDS GROUP, INC.
By: /s/ Dan J. Hesser
--------------------
Dan J. Hesser
President
ATTEST:
/s/ Glen A. Payne
- -----------------
Glen A. Payne
Secretary
INVESCO REALTY ADVISORS, INC.
By: /s/ David A. Ridley
-----------------------
David A. Ridley
President
ATTEST:
/s/ Shellie Simms
- -----------------
Shellie Simms
Secretary
DISTRIBUTION AGREEMENT
THIS AGREEMENT is made this 28th day of February, 1997 between INVESCO
SPECIALTY FUNDS, INC., a Maryland corporation (the "Fund"), and INVESCO FUNDS
GROUP, INC., a Delaware corporation (the "Underwriter").
W I T N E S S E T H:
WHEREAS, the Fund 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 has one class of shares (the "Shares") which is
divided into six series, and which may be divided into additional series (the
"Series"), each representing an interest in a separate portfolio of investments,
and it is in the interest of the Fund 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 Fund and the Underwriter wish to enter into an agreement with
each other with respect to the continuous offering of the Shares of each Series
in order to promote growth of the Fund 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 Fund hereby appoints the Underwriter its agent for the
distribution of Shares of each Series in jurisdictions wherein such
Shares legally may be offered for sale; provided, however, that the
Fund in its absolute discretion may (a) issue or sell Shares of each
Series directly to purchasers, or (b) issue or sell Shares of a
particular Series to the shareholders of any other Series 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 Series or in shares of such other
investment company for the Shares of a particular Series.
Notwithstanding any other provision hereof, the Fund may terminate,
suspend or withdraw the offering of Shares whenever, in its sole
discretion, it deems such action to be desirable. The Fund reserves
the right to reject any subscription in whole or in part for any
reason.
<PAGE>
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.
3. In addition to serving as the Fund'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 Fund, 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
Fund may reasonably request from time to time. It is expressly
understood that the Underwriter or the Fund 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 Fund,
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 Fund.
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 Fund under the 1933 Act (the
"Registration Statement") and related Prospectus (the "Prospectus")
and Statement of Additional Information ("SAI") of the Fund 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 Fund without the prior consent of the directors
(the "Directors") of the Fund. 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 Series. The Fund will have no obligation
to pay any commissions or other remuneration to such broker-dealers.
5. The Shares of each Series 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
<PAGE>
and/or SAI relating to the sale of the Shares of the appropriate
Series except as departure from such prices shall be permitted by
the then current Prospectus and/or SAI of the Fund, in accordance
with applicable rules and regulations of the Securities and Exchange
Commission. The price the Fund shall receive for the Shares of each
Series purchased from the Fund 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 Series.
6. Except as may be otherwise agreed to by the Fund, 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 Fund may
utilize 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 Fund in such names and denominations as
the Underwriter may specify.
7. The Fund 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 Fund as a broker-dealer where necessary or
advisable) in such states as the Underwriter may reasonably request
(it being understood that the Fund shall not be required without its
consent to comply with any requirement which in the opinion of the
Directors of the Fund 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 Fund may reasonably request.
8. The Fund shall prepare and furnish to the Underwriter from
time to time the most recent form of the Prospectus and/or SAI of
the Fund and/or of each Series of the Fund. The Fund 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 Fund and/or of each Series of the Fund. The Fund
will furnish to the Underwriter from time to time such information
with respect to the Fund, each Series, 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 Fund or applicable Series, 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 Fund with copies of all such material.
<PAGE>
9. The Underwriter will not make, or authorize any
broker-dealers or others to make any short sales of the Shares of
the Fund 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
Fund, may cause the redemption or repurchase 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, redeeming or
repurchasing the Shares for the account of the Fund, 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,
redemption or repurchase, as the case may be. The Underwriter will
observe and be bound by all the provisions of the Articles of
Incorporation or Bylaws of the Fund 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 Fund 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
<PAGE>
liability to the Fund, the Directors or the Fund'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
Fund'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 Fund at its principal address in
Denver, Colorado and sent to the Fund 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 Fund of any such action shall
not relieve the Fund 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 Fund
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 Fund and
approved by the Underwriter, which approval shall not be
unreasonably withheld. If the Fund 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 Fund elect not to assume the defense of any such
suit, or should the Underwriter not approve of counsel chosen
by the Fund, the Fund 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 Fund
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 Fund. This
indemnity agreement and the Fund'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
<PAGE>
controlling person and their successors and estates. The Fund
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 Fund, its Directors and any person who controls the Fund
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 Fund, 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 Fund, 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 Fund
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
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
Fund's agent that has not been expressly authorized by the
Fund in writing.
Notwithstanding the foregoing, this indemnity agreement, to the
extent that it might require indemnity of the Fund or any
Director or controlling person of the Fund, shall not inure to
the benefit of the Fund 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 Fund against any liability to the Fund or
the Fund'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
Fund, 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 Fund, its
<PAGE>
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 Fund, 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 Fund, 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 Fund not
approve of counsel chosen by the Underwriter, the Underwriter
will reimburse the Fund, 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 Fund or them. In addition, the Fund shall have
the right to employ counsel to represent it, its 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 Fund against the Underwriter hereunder if in the
reasonable judgment of the Fund it is advisable for the Fund,
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 Fund and its successors, the Fund's Directors
and their respective estates and any such controlling person
and their successors and estates. The Underwriter shall
promptly notify the Fund of the commencement of any litigation
or proceeding against it in connection with the issue and sale
of the Shares.
12. The Fund 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 Fund'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 Fund's
approval thereof.
<PAGE>
13. This Agreement shall become effective as of the date it is
approved by a majority vote of the Directors of the Fund, as
well as a majority vote of the Directors who are not "interested
persons" (as defined in the Investment Company Act) of the Fund,
and shall continue in effect for an initial term expiring
February 28, 1998, 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 Fund or (ii)
by a vote of a majority of the outstanding voting securities of
the Fund, and (b) by a vote of a majority of the Directors of
the Fund who are not "interested persons," as defined in the
Investment Company Act, of the Fund 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 Fund or by a vote of a majority of the outstanding
voting securities of the Fund on not more than 60 days' written
notice to the Underwriter.
Without prejudice to any other remedies of the Fund provided for
in this Agreement or otherwise, the Fund may terminate this
Agreement at any time immediately upon the Underwriter's
failure to fulfill any of the obligations of the Underwriter
hereunder.
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 Fund for any obligations of the
Fund hereunder and nothing herein shall be construed to create
any personal liability on the part of any Director or any
shareholder of the Fund.
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 Fund and the Underwriter and, if
applicable, approved in the manner required by the Investment
Company Act.
<PAGE>
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 Fund 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
Glen A. Payne Senior Vice President
Secretary
DEFINED BENEFIT DEFERRED COMPENSATION PLAN
FOR NON-INTERESTED DIRECTORS AND TRUSTEES
The registered, open-end management investment companies referred to on
Schedule A as the Schedule may hereafter be revised by the addition and deletion
of investment companies (the "Funds") have adopted this Defined Benefit Deferred
Compensation Plan ("Plan") for the benefit of those directors and trustees of
the Funds who are not interested directors or trustees thereof as defined in
Section 2(a)(19) of the Investment Company Act of 1940, as amended ("Independent
Directors").
1. Eligibility
Each Independent Director who has served as such ("Eligible Service") on
the boards of any of the Funds and their predecessor and successor entities, if
any, or as an Independent Director of the now-defunct investment management
company known as FG Series for an aggregate of at least five years at the time
of his Service Termination Date (as defined in paragraph 2) will be entitled to
receive benefits under the Plan. An Independent Director's period of Eligible
Service commences on the date of election to the board of directors or trustees
of any one or more of the Funds ("Board"). Hereafter, references in this Plan to
Independent Directors shall be deemed to include only those Directors who have
met the Eligible Service requirement for Plan participation.
2. Service Termination and Service Termination Date
a. Service Termination. Service Termination means termination of service
(other than by disability or death) of an Independent Director which results
from the Director's having reached his Service Termination Date.
b. Service Termination Date. An Independent Director's Service Termination
Date is normally the last day of the calendar quarter in which such Director's
seventy-second birthday occurs. A majority of the Board of a Fund may annually
extend a Director's Service Termination Date for a maximum period of three
years, through the date not later than the last day of the calendar quarter in
which such Director's seventy-fifth birthday occurs.
As used in this Plan unless otherwise stipulated, Service Termination Date
shall mean an Independent Director's normal Service Termination Date, or the
Director's extended Service Termination Date, whichever may be applicable to the
Independent Director.
3. Defined Payments and Benefit
a. Payments. If an Independent Director's Service Termination Date occurs
on a date not later than the last day of the calendar quarter in which such
Director's seventy-fourth birthday occurs, the Independent Director will receive
four quarterly payments during the first twelve months subsequent to his Service
Termination Date (the "First Year Retirement Payments"), with each payment to be
equal to 25 percent of the annual basic retainer payable by each Fund to the
Independent Director on his Service Termination Date (excluding any fees
relating to attending meetings or chairing committees).
<PAGE>
b. Benefit. Commencing with the first anniversary of the Service
Termination Date of any Independent Director who has received the First Year
Retirement Payments, and commencing as of the Service Termination Date of an
Independent Director whose Service Termination Date is subsequent to the date of
the last day of the calendar quarter in which such Director's seventy-fourth
birthday occurred, the Independent Director will receive, for the remainder of
his life, a benefit (the "Benefit"), payable quarterly, with each quarterly
payment to be equal to 10 percent of the annual basic retainer payable by each
Fund to the Independent Director on his Service Termination Date (excluding any
fees relating to attending meetings or chairing committees).
c. Death Provisions. If an Independent Director's service as a Director is
terminated because of his death subsequent to the last day of the calendar
quarter in which such Director's seventy-second birthday occurred and prior to
the last day of the calendar quarter in which such Director's seventy-fourth
birthday occurs, the designated beneficiary of the Independent Director shall
receive the First Year Retirement Payments and shall, commencing with the
quarter following the quarter in which the last First Year Retirement Payment is
made, receive the Benefit for a period of ten years, with quarterly payments to
be made to the designated beneficiary.
If an Independent Director's service as a Director is terminated because of
his death prior to the last day of the calendar quarter in which such Director's
seventy-second birthday occurs or subsequent to the last day of the calendar
quarter in which such Director's seventy-fourth birthday occurred, the
designated beneficiary of the Independent Director shall receive the Benefit for
a period of ten years, with quarterly payments to be made to the designated
beneficiary commencing in the first quarter following the Director's death.
d. Disability Provisions. If an Independent Director's service as a
Director is terminated because of his disability subsequent to the last day of
the calendar quarter in which such Director's seventy-second birthday occurred
and prior to the last day of the calendar quarter in which such Director's
seventy-fourth birthday occurs, the Independent Director shall receive the First
Year Retirement Payments and shall, commencing with the quarter following the
quarter in which the last First Year Retirement Payment is made, receive the
Benefit for the remainder of his life, with quarterly payments to be made to the
disabled Independent Director. If the disabled Independent Director should die
before the First Year Retirement Payments are completed and before forty
quarterly Benefit payments are made, such payments will continue to be made to
the Independent Director's designated beneficiary until the aggregate of the
First Year Retirement Payments and forty quarterly Benefit payments have been
made to the disabled Independent Director and the Director's designated
beneficiary.
If an Independent Director's service as a Director is terminated because of
his disability prior to the last day of the calendar quarter in which such
Director's seventy-second birthday occurs or subsequent to the last day of the
calendar quarter in which such Director's seventy-fourth birthday occurred, the
Independent Director shall receive the Benefit for the remainder of his life,
with quarterly payments to be made to the disabled Independent Director
commencing in the first quarter following the Director's termination for
disability. If the disabled Independent Director should die before forty
quarterly payments are made, payments will continue to be made to the
<PAGE>
Independent Director's designated beneficiary until the aggregate of forty
quarterly payments has been made to the disabled Independent Director and the
Director's designated beneficiary.
e. Death of Independent Director and Beneficiary. If the Independent
Director and his designated beneficiary should die before the First Year
Retirement Payments and/or a total of forty quarterly Benefit payments are made,
the remaining value of the Independent Director's First Year Retirement Payments
and/or Benefit shall be determined as of the date of the death of the
Independent Director's designated beneficiary and shall be paid to the estate of
the designated beneficiary in one lump sum or in periodic payments, with the
determinations with respect to the value of the First Year Retirement Payments
and/or Benefit and the method and frequency of payment to be made by the
Committee (as defined in paragraph 8.a.) in its sole discretion.
4. Designated Beneficiary
The beneficiary referred to in paragraph 3 may be designated or changed by
the Independent Director without the consent of any prior beneficiary on a form
provided by the Committee (as defined in paragraph 8.a.) and delivered to the
Committee before the Independent Director's death. If no such beneficiary shall
have been designated, or if no designated beneficiary shall survive the
Independent Director, the value or remaining value of the Independent Director's
First Year Retirement Payments and/or Benefit shall be determined as of the date
of the death of the Independent Director by the Committee and shall be paid as
promptly as possible in one lump sum to the Independent Director's estate.
5. Disability
An Independent Director shall be deemed to have become disabled for the
purposes of paragraph 3 if the Committee shall find on the basis of medical
evidence satisfactory to it that the Independent Director is disabled, mentally
or physically, as a result of an accident or illness, so as to be prevented from
performing each of the duties which are incumbent upon an Independent Director
in fulfilling his responsibilities as such.
6. Time of Payment
The First Year Retirement Payments and/or the Benefit for each year will be
paid in quarterly installments that are as nearly equal as possible.
7. Payment of First Year Retirement Payments and/or Benefit: Allocation of
Costs
Each Fund is responsible for the payment of the amount of the First Year
Retirement Payments and/or Benefit applicable to the Fund, as well as its
proportionate share of all expenses of administration of the Plan, including
without limitation all accounting and legal fees and expenses and fees and
expenses of any Actuary. The obligations of each Fund to pay such First Year
Retirement Payments and/or Benefit and expenses will not be secured or funded in
any manner, and such obligations will not have any preference over the lawful
<PAGE>
claims of each Fund's creditors and shareholders. To the extent that the First
Year Retirement Payments and/or Benefit is paid by more than one Fund, such
costs and expenses will be allocated among such Funds in a manner that is
determined by the Committee to be fair and equitable under the circumstances. To
the extent that one or more of such Funds consist of one or more separate
portfolios, such costs and expenses allocated to any such Fund will thereafter
be allocated among such portfolios by the Board of the Fund in a manner that is
determined by such Board to be fair and equitable under the circumstances.
8. Administration
a. The Committee. Any question involving entitlement to payments under or
the administration of the Plan will be referred to a four-person committee (the
"Committee") composed of three Independent Directors designated by all of the
Independent Directors of the Funds and one director of the Funds who is not an
Independent Director, designated by the non-Independent Directors. Except as
otherwise provided herein, the Committee will make all interpretations and
determinations necessary or desirable for the Plan's administration, and such
interpretations and determinations will be final and conclusive. Committee
members will be elected annually.
b. Powers of the Committee. The Committee will represent and act on behalf
of the Funds in respect of the Plan and, subject to the other provisions of the
Plan, the Committee may adopt, amend or repeal bylaws or other regulations
relating to the administration of the Plan, the conduct of the Committee's
affairs, its rights or powers, or the rights or powers of its members. The
Committee will report to the Independent Directors and to the Boards of the
Funds from time to time on its activities in respect of the Plan. The Committee
or persons designated by it will cause such records to be kept as may be
necessary for the administration of the Plan.
9. Miscellaneous Provisions
a. Rights Not Assignable. Other than as is specifically provided in
paragraph 3, the right to receive any payment under the Plan is not transferable
or assignable, and nothing in the Plan shall create any benefit, cause of
action, right of sale, transfer, assignment, pledge, encumbrance, or other such
right in any heirs or the estate of any Independent Director.
b. Amendment, etc. The Committee, with the concurrence of the Board of any
Fund, may as to the specific Fund at any time amend or terminate the Plan or
waive any provision of the Plan; provided, however, that subject to the
limitations imposed by paragraph 7, no amendment, termination or waiver will
impair the rights of an Independent Director to receive the payments which would
have been made to such Independent Director had there been no such amendment,
termination, or waiver.
c. No Right to Reelection. Nothing in the Plan will create any obligation
on the part of the Board of any Fund to nominate any Independent Director for
reelection.
<PAGE>
d. Consulting. Subsequent to his Service Termination Date, an Independent
Director may render such services for any Fund, for such compensation, as may be
agreed upon from time to time by such Independent Director and the Board of the
Fund which desires to procure such services.
e. Effectiveness. The Plan will be effective for all Independent Directors
who have Service Termination Dates occurring on and after October 20, 1993.
Periods of Eligible Service shall include periods commencing prior and
subsequent to such date. Upon its adoption by the Board of a Fund, the Plan will
become effective as to that Fund on the date when the Committee determines that
any regulatory approval or advice that may be necessary or appropriate in
connection with the Plan have been obtained.
Adopted October 20, 1993. Amended October 19, 1994.
Amended May 1, 1996, effective July 1, 1996.
<PAGE>
SCHEDULE A
TO
DEFINED BENEFIT DEFERRED COMPENSATION PLAN
FOR NON-INTERESTED DIRECTORS AND TRUSTEES
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 Specialty Funds, Inc.
INVESCO Strategic Portfolios, Inc.
INVESCO Tax-Free Income Funds, Inc.
INVESCO Value Trust
INVESCO Variable Investment Funds, Inc.
The INVESCO Advisor Funds, Inc.
INVESCO Treasurer's Series Trust
TRANSFER AGENCY AGREEMENT
AGREEMENT made as of this 28th day of February, 1997, 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 "Fund") and INVESCO FUNDS GROUP, INC., a Delaware
corporation, having its principal place of business at 7800 East Union Avenue,
Denver, Colorado 80237 (hereinafter referred to as the "Transfer Agent").
WITNESSETH:
That for and in consideration of mutual promises hereinafter set forth,
the Fund 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 Fund, duly authorized to give Oral
Instructions and Written Instructions on behalf of the Fund 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
Fund 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 Fund;
(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 Fund's Shares registered under the Securities
Act of 1933;
(g) "Shares" refers to the shares of common stock, $.01 par value,
of the Fund;
(h) "Shareholder" means a record owner of Shares;
<PAGE>
(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
(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 Fund 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 Fund hereby appoints and
constitutes the Transfer Agent as transfer agent for all of the
Shares of the Fund 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 Fund
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 Fund 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 Fund authorizing such revised Fee Schedule.
(d) The Transfer Agent will bill the Fund 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 Fund.
The Fund will promptly pay to the Transfer Agent the amount of
such billing.
<PAGE>
5. Documents. In connection with the appointment of the Transfer Agent,
the Fund shall, on or before the date this Agreement goes into
effect, file with the Transfer Agent the following documents:
(a) A certified copy of the Articles of Incorporation of the Fund,
including all amendments thereto, as then in effect;
(b) A certified copy of the Bylaws of the Fund, 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 Fund in the
form approved by the board of directors, with a certificate of
the Secretary of the Fund as to such approval;
(e) All account application forms and other documents relating to
Shareholder accounts;
(f) A certified list of Shareholders of the Fund 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 Fund;
(g) Copies of all agreements then in effect between the Fund and
any agent with respect to the issuance, sale, or cancellation
of Shares; and
(h) An opinion of counsel for the Fund with respect to the
validity of the Shares.
6. Further Documentation. The Fund 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 Fund;
(c) A certified copy of each amendment to the Articles of
Incorporation and the Bylaws of the Fund;
(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 Fund;
<PAGE>
(f) Specimens of all new certificates for Shares accompanied by
the Fund'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 Fund, 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 Fund
agrees that, notwithstanding the death, resignation, or
removal of any officer of the Fund whose signature appears on
such certificates, the Transfer Agent may continue to
countersign certificates which bear such signatures until
otherwise directed by the Fund.
(b) The Transfer Agent agrees to prepare, issue and mail
certificates as requested by the Shareholders for Shares of
the Fund in accordance with the instructions of the Fund and
to confirm such issuance to the Shareholder and the Fund or
its designee.
(c) The Fund 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 Fund,
upon receipt by the Transfer Agent of properly executed
affidavits or lost certificate bonds, in form satisfactory to
the Transfer Agent, with the Fund 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 Fund Shares.
(a) Whenever the Fund or its authorized agent shall sell or cause
to be sold any Shares, the Fund or its authorized agent shall
provide or cause to be provided to the Transfer Agent
information including: (i) the number of Shares sold, trade
<PAGE>
date, and price; (ii) the amount of money to be 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 Fund and drawn or endorsed to the Transfer Agent as agent
for, or identified as being for the account of, the Fund,
promptly deposit such check or other payment to the
appropriate account postings necessary to reflect the
investment. The Transfer Agent will notify the Fund, 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 Fund's Shares, determined in accordance with applicable
federal law or regulation, as described in the Prospectus for
the Fund. 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 Fund where it has received Written Instructions from
the Fund or written notification from any appropriate federal
or state authority that the sale of the Shares of the Fund
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 Fund 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 Fund 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 Fund 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 Fund or its designee
may instruct.
<PAGE>
10. Redemptions.
(a) Redemptions By Mail or In Person. Shares of the Fund 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
Fund; 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
Fund 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
Fund. Both the Fund 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 Fund 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 Fund and to the extent, if
any, permitted in the Prospectus for the Fund, exchanges between the
Fund and other mutual funds advised by INVESCO Funds Group, Inc., on
the records of the Fund 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 same manner as a redemption
and sale of Shares, except that it may in its discretion waive
requirements for information and documentation.
<PAGE>
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
Fund or of its own legal counsel protect it in not requiring certain
documents in connection with the transfer or redemption of
Shares of the Fund, and the Fund shall indemnify the Transfer Agent
for any act done or omitted by it in reliance upon such laws or
opinions of counsel to the Fund or of its own counsel.
13. Distributions.
(a) The Fund will promptly notify the Transfer Agent of the
declaration of any dividend or distribution. The Fund shall
furnish to the Transfer Agent a resolution of the board of
directors of the Fund 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 Fund 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, Fund 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 Fund.
<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 Fund.
(f) If the Transfer Agent shall not receive from the Custodian
sufficient cash to make payment to all Shareholders of the
Fund as of the record date, the Transfer Agent shall, upon
notifying the Fund, 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 Fund 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
Fund at reasonable times. The Transfer Agent may, at its
option at any time, and shall forthwith upon the Fund's
demand, turn over to the Fund 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 Fund, or destroyed in accordance with the
Fund'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
Fund 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 Fund. 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 Fund and the proper
countersignature of the Transfer Agent.
(b) At any time the Transfer Agent may apply to any Authorized
Person of the Fund for Written Instructions, and, at the
expense of the Fund, may seek advice from legal counsel for
the Fund, 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 Fund 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 Fund.
(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 Fund,
or the sufficiency of the amount to be received therefor; (ii)
the legality of the redemption of any Shares of the Fund, or
<PAGE>
the propriety of the amount to be paid therefor; (iii) the
legality of the declaration of any dividend by the Fund, or
the legality of the issue of any Shares of the Fund in payment
of any stock dividend; or (iv) the legality of any
recapitalization or readjustment of the Shares of the Fund.
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 Fund 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 Fund or
upon the opinion of legal counsel for the Fund 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 Fund and Transfer Agent. It is understood that
the directors, officers, employees, agents and Shareholders of the
Fund, and the officers, directors, employees, agents and
shareholders of the Fund'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 Fund 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 February 28, 1997
after approval by vote of a majority (as defined in the 1940
Act) of the Fund's board of directors, including a majority
of the directors who are not interested persons of the Fund
(as defined in the 1940 Act), and shall continue in effect
for an initial term expiring February 28, 1998 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 Fund; and (ii) by a vote
of the majority of the directors who are not interested
persons of the Fund (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 Fund, 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 Fund who are not interested persons of the
Fund 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 Fund 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 Fund 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 Fund 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.
<PAGE>
To the Fund:
INVESCO Specialty Funds, Inc.
Post Office Box 173706
Denver, Colorado 80217-3706
Attention: Dan J. Hesser, President
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.
By: /s/ Ronald L. Grooms
---------------------------------------
Ronald L. Grooms, Senior Vice President
ATTEST:
/s/ Glen A. Payne
- ------------------------
Glen A. Payne, Secretary
<PAGE>
FEE SCHEDULE
for
Services Pursuant to Transfer Agency Agreement, dated February 28, 1997,
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 it 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 28th day of February, 1997.
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 28th day of February, 1997, in Denver, Colorado,
by and between INVESCO SPECIALTY FUNDS, INC., a Maryland corporation (the
"Fund"), and INVESCO FUNDS GROUP, INC., a Delaware corporation (hereinafter
referred to as "INVESCO").
WHEREAS, the Fund 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: (1) INVESCO Asian
Growth Fund, (2) INVESCO European Small Company Fund, (3) INVESCO Latin American
Growth Fund, (4) INVESCO Realty Fund, (5) INVESCO S&P 500 Index Fund, (6)
INVESCO Worldwide Capital Goods Fund, and (7) INVESCO Worldwide Communications
Fund (the "Portfolios"); 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 Fund;
and
WHEREAS, the Fund 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 Fund and INVESCO agree as follows:
1. The Fund hereby retains INVESCO to provide, or, upon receipt of written
approval of the Fund arrange for other companies, including affiliates of
INVESCO, to provide to the Portfolios: A) such sub-accounting and recordkeeping
services and functions as are reasonably necessary for the operation of the
Portfolios. 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 Portfolios for the account of the
Portfolios, 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 which the Portfolios
have any direct or indirect interest or which the Portfolios have granted or
<PAGE>
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 Portfolios' 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
Fund and, upon request therefor, INVESCO shall surrender to the Fund such of the
books and records so requested; and B) such sub-accounting, recordkeeping and
administrative services and functions, which shall be furnished by a
wholly-owned subsidiary of INVESCO, as are reasonably necessary for the
operation of Portfolio 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 Portfolio account; (4)
maintenance of separate account balances for each source of retirement plan
money (i.e., Company, Employee, Voluntary, Rollover) invested in the Portfolios;
(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
Portfolios; (9) production of monthly, quarterly and/or annual statements of all
Portfolio 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 Portfolio 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 Portfolios.
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 Portfolios. In addition, INVESCO may
arrange on behalf of the Fund to obtain pricing information regarding the
Portfolios' investment securities from such company or companies as are approved
by a majority of the Fund's board of directors; and, if necessary, the Fund
shall be financially responsible to such company or companies for the reasonable
cost of providing such pricing information.
<PAGE>
4. The Fund will, from time to time, furnish or otherwise make available to
INVESCO such information relating to the business and affairs of the Portfolios
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 Fund shall pay to INVESCO a $10,000 per year
per Portfolio 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 Portfolio,
as determined by a valuation made in accordance with the Fund's procedure for
calculating each Portfolio's net asset value as described in the Portfolios'
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 Portfolio's daily net assets as so determined. During any
period when the determination of a Portfolio's net asset value is suspended by
the directors of the Fund, the net asset value of a share of that Portfolio 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 Fund including the Fund'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 Fund 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 February 28,
1998 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 Fund who are
not parties to this Agreement or "interested persons" (as defined in the Act) of
any such party, 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
Fund 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 Fund approves
such assignment; and (c) INVESCO may terminate this Agreement without payment of
penalty on sixty days written notice to the Fund. Any notice under this
Agreement shall be given in writing, addressed and delivered, or mailed postage
pre-paid, 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.
<PAGE>
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
-------------------------
ATTEST: Dan J. Hesser
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
MOYE, GILES, O'KEEFE, VERMEIRE & GORRELL
A Law Partnership
Including Professional Corporations
29th Floor
1225 Seventeenth Street
Denver, Colorado 80202-5529
Telephone (303) 292-2900
Telecopier (303) 292-4510
May 18, 1994
INVESCO Specialty Funds, Inc.
7800 E. Union Avenue, Suite 800
Denver, Colorado 80237
Gentlemen:
This is in response to your request for our opinion as to the legality of
the registration of an indefinite number of shares of capital stock ($0.01) par
value per share) of INVESCO Specialty Funds, Inc., being registered with the
Securities and Exchange Commission under the Investment Company Act of 1940 and
the Securities Act of 1933, as amended (Form N-1A). This share registration is
being requested pursuant to the provisions of Rule 24f-2 under Section 24(f) of
the Investment Company Act of 1940.
We have examined the articles of incorporation of INVESCO Specialty Funds,
Inc. as filed for record with the State Department of Assessments and Taxation
of the State of Maryland on April 12, 1994; the bylaws; the minute book setting
forth, among other things, the actions taken by the board of directors
authorizing the issuance and sale of the corporation's capital stock and related
acts and procedures; the registration statement including all exhibits thereto;
and have made such other examinations as deemed necessary in the premises.
Based upon our examination, we are of the opinion that INVESCO Specialty
Funds, Inc. is a corporation duly organized and existing under and by virtue of
the laws of the State of Maryland, with full power to issue its shares of
capital stock. Said shares, up to the maximum amount hereinafter indicated, when
issued and sold in the manner and on the terms set forth in the registration
statement, will be legally and validly issued, fully paid and non-assessable
shares of the corporation of the par value of $0.01 per share. The maximum
<PAGE>
number of shares which has been authorized by the Corporation, and thus the
maximum number which may be legally and validly be issued, is five hundred
million shares of such capital stock.
We hereby consent to the use of this opinion in the registration
statement and further consent to the reference to our name therein.
Very truly yours,
MOYE, GILES, O'KEEFE,
VERMIERE & GORRELL
By: Edward F. O'Keefe, P.C.
By: /s/ Edward F. O'Keefe
---------------------
Edward F. O'Keefe, President
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. 11
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
headings "Independent Accountants" and "Financial Statements" in the Statement
of Additional Information.
/S/ Price Waterhouse LLP
- -------------------------
PRICE WATERHOUSE LLP
Denver, Colorado
June 25, 1997
AMENDED PLAN AND AGREEMENT OF DISTRIBUTION PURSUANT TO RULE 12b-1
PLAN AND AGREEMENT made as of 1st day of January, 1997, by and between
INVESCO Specialty Funds, Inc., a Maryland corporation (hereinafter called the
"Company"), and INVESCO FUNDS GROUP, Inc., a Delaware corporation ("INVESCO").
WHEREAS, the Company engages in business as an open-end management
investment company, and is registered as such under the Investment Company Act
of 1940, as amended (the "Act"); and
WHEREAS, the Company desires to finance the distribution of the shares of
each of its six classes or series of common stock, each of which represents an
interest in a separate portfolio of investments, together with any additional
such classes or series that may hereafter be offered to the public
(individually, a "Fund" and collectively, the "Funds"), in accordance with this
Plan and Agreement of Distribution pursuant to Rule 12b-1 under the Act (the
"Plan and Agreement"); and
WHEREAS, INVESCO desires to be retained to perform services in accordance
with such Plan and Agreement and on said terms and conditions; and
WHEREAS, this Plan and Agreement has been approved by a vote of the board
of directors of the Company, including a majority of the directors who are not
interested persons of the Company, as defined in the Act, and who have no direct
or indirect financial interest in the operation of this Plan and Agreement (the
"Disinterested Directors") cast in person at a meeting called for the purpose of
voting on this Plan and Agreement;
NOW, THEREFORE, the Company hereby adopts the Plan set forth herein and
the Company and INVESCO hereby enter into this Agreement pursuant to the Plan in
accordance with the requirements of Rule 12b-1 under the Act, and provide and
agree as follows:
1. The Plan is defined as those provisions of this document
by which the Company adopts a Plan pursuant to Rule 12b-
1 under the Act and authorizes payments as described
herein. The Agreement is defined as those provisions of
this document by which the Company retains INVESCO to
provide distribution services beyond those required by
the General Distribution Agreement between the parties,
as are described herein. The Company may retain the Plan
notwithstanding termination of the Agreement.
Termination of the Plan will automatically terminate the
Agreement. Each Fund is hereby authorized to utilize the
assets of the Company to finance certain activities in
connection with distribution of the Company's shares.
<PAGE>
2. Subject to the supervision of the board of directors, the
Company hereby retains INVESCO to promote the
distribution of shares of each of the Funds by providing
services and engaging in activities beyond those
specifically required by the Distribution Agreement
between the Company and INVESCO and to provide related
services. The activities and services to be provided by
INVESCO hereunder shall include one or more of the
following: (a) the payment of compensation (including
trail commissions and incentive compensation) to
securities dealers, financial institutions and other
organizations, which may include INVESCO-affiliated
companies, that render distribution and administrative
services in connection with the distribution of the
shares of each of the Funds; (b) the printing and
distribution of reports and prospectuses for the use of
potential investors in each Fund; (c) the preparing and
distributing of sales literature; (d) the providing of
advertising and engaging in other promotional activities,
including direct mail solicitation, and television,
radio, newspaper and other media advertisements; and (e)
the providing of such other services and activities as
may from time to time be agreed upon by the Company.
Such reports and prospectuses, sales literature,
advertising and promotional activities and other services
and activities may be prepared and/or conducted either by
INVESCO's own staff, the staff of INVESCO-affiliated
companies, or third parties.
3. INVESCO hereby undertakes to use its best efforts to promote sales
of shares of each of the Funds to investors by engaging in those
activities specified in paragraph (2) above as may be necessary and
as it from time to time believes will best further sales of such
shares.
4. Each Fund is hereby authorized to expend, out of its
assets, on a monthly basis, and shall pay INVESCO to such
extent, to enable INVESCO at its discretion to engage
over a rolling twelve-month period (or the rolling
twenty-four month period specified below) in the
activities and provide the services specified in
paragraph (2) above, an amount computed at an annual rate
of .25 of 1% of the average daily net assets of the Fund
during the month. INVESCO shall not be entitled
hereunder to payment for overhead expenses (overhead
expenses defined as customary overhead not including the
---
costs of INVESCO's personnel whose primary
responsibilities involve marketing of the INVESCO
Funds). Payments by a Fund hereunder, for any month, may
be used to compensate INVESCO for: (a) activities engaged
in and services provided by INVESCO during the rolling
twelve-month period in which that month falls, or (b) to
<PAGE>
the extent permitted by applicable law, for any month during the
first twenty-four months following a Fund's commencement of
operations, activities engaged in and services provided by INVESCO
during the rolling twenty-four month period in which that month
falls, and any obligations incurred by INVESCO in excess of the
limitation described above shall not be paid for out of Fund assets.
No Fund shall be authorized to expend, for any month, a greater
percentage of its assets to pay INVESCO for activities engaged in
and services provided by INVESCO during the rolling twenty-four
month period referred to above than it would otherwise be authorized
to expend out of its assets to pay INVESCO for activities engaged in
and services provided by INVESCO during the rolling twelve-month
period referred to above, and no Fund shall be authorized to expend,
for any month, a greater percentage of its assets to pay INVESCO for
activities engaged in and services provided by INVESCO pursuant to
the Plan and Agreement than it would otherwise have been authorized
to expend out of its assets to reimburse INVESCO for expenditures
incurred by INVESCO pursuant to the Plan and Agreement as it existed
prior to February 5, 1997. No payments will be made by the Company
hereunder after the date of termination of the Plan and Agreement.
5. To the extent that obligations incurred by INVESCO out of
its own resources to finance any activity primarily
intended to result in the sale of shares of a Fund,
pursuant to this Plan and Agreement or otherwise, may be
deemed to constitute the indirect use of Fund assets,
such indirect use of Fund assets is hereby authorized in
addition to, and not in lieu of, any other payments
authorized under this Plan and Agreement.
6. The Treasurer of INVESCO shall provide to the board of
directors of the Company, at least quarterly, a written
report of all moneys spent by INVESCO on the activities
and services specified in paragraph (2) above pursuant to
the Plan and Agreement. Each such report shall itemize
the activities engaged in and services provided by
INVESCO to a Fund as authorized by the penultimate
sentence of paragraph (4) above. Upon request, but no
less frequently than annually, INVESCO shall provide to
the board of directors of the Company such information as
may reasonably be required for it to review the
continuing appropriateness of the Plan and Agreement.
7. This Plan and Agreement shall each become effective immediately upon
approval by a vote of a majority of the outstanding voting
securities of the Company as defined in the Act, and shall continue
in effect until February 5, 1998 unless terminated as provided
<PAGE>
below. Thereafter, the Plan and Agreement shall continue in effect
from year to year, provided that the continuance of each is approved
at least annually by a vote of the board of directors of the
Company, including a majority of the Disinterested Directors, cast
in person at a meeting called for the purpose of voting on such
continuance. The Plan may be terminated at any time as to any Fund,
without penalty, by the vote of a majority of the Disinterested
Directors or by the vote of a majority of the outstanding voting
securities of that Fund. INVESCO, or the Company, by vote of a
majority of the Disinterested Directors or of the holders of a
majority of the outstanding voting securities of the Fund, may
terminate the Agreement under this Plan as to such Fund, without
penalty, upon 30 days' written notice to the other party. In the
event that neither INVESCO nor any affiliate of INVESCO serves the
Company as investment adviser, the agreement with INVESCO pursuant
to this Plan shall terminate at such time. The board of directors
may determine to approve a continuance of the Plan, but not a
continuance of the Agreement, hereunder.
8. So long as the Plan remains in effect, the selection and
nomination of persons to serve as directors of the
Company who are not "interested persons" of the Company
shall be committed to the discretion of the directors
then in office who are not "interested persons" of the
Company. However, nothing contained herein shall prevent
the participation of other persons in the selection and
nomination process, provided that a final decision on any
such selection or nomination is within the discretion of,
and approved by, a majority of the directors of the
Company then in office who are not "interested persons"
of the Company.
9. This Plan may not be amended to increase the amount to be
spent by a Fund hereunder without approval of a majority
of the outstanding voting securities of that Fund. All
material amendments to the Plan and to the Agreement must
be approved by the vote of the board of directors of the
Company, including a majority of the Disinterested
Directors, cast in person at a meeting called for the
purpose of voting on such amendment.
10. To the extent that this Plan and Agreement 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 by each Fund of
its assets in the amounts and for the purposes set forth herein,
notwithstanding the occurrence of an "assignment," as defined by the
Act and the rules thereunder. To the extent it constitutes an
<PAGE>
agreement with INVESCO pursuant to a plan, it shall terminate
automatically in the event of such "assignment." Upon a termination
of the agreement with INVESCO, the Funds may continue to make
payments pursuant to the Plan only upon the approval of a new
agreement under this Plan and Agreement, which may or may not be
with INVESCO, or the adoption of other arrangements regarding the
use of the amounts authorized to be paid by the Funds hereunder, by
the Company's board of directors in accordance with the procedures
set forth in paragraph 7 above.
11. The Company shall preserve copies of this Plan and
Agreement and all reports made pursuant to paragraph 6
hereof, together with minutes of all board of directors
meetings at which the adoption, amendment or continuance
of the Plan were considered (describing the factors
considered and the basis for decision), for a period of
not less than six years from the date of this Plan and
Agreement, or any such reports or minutes, as the case
may be, the first two years in an easily accessible
place.
12. This Plan and Agreement shall be construed in accordance with the
laws of the State of Colorado and applicable provisions of the Act.
To the extent the applicable laws of the State of Colorado, or any
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
Plan and Agreement on the 5th day of February, 1997.
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
SCHEDULE FOR COMPUTATION OF PERFORMANCE DATA
INVESCO Worldwide Capital Goods Fund
TOTAL RETURN
Formula prescribed by Item 22 of Form N-1A:
P = $1,000 initial payment
T = average annual total return
n = number of years (including fractional portions)
ERV = ending redeemable value
P(1 + T)n = ERV
for the period August 1, 1994 to November 30, 1994:
1000 (1- 4.70%) = 953
annualized percentage:
1000(1 - 13.45%)4/12 = 953
The formula given in Item 22 is written to solve for Finding Redeemable Value.
However, the quantity to be reported is T(Average Annual Total Return).
Because P, n and ERV are known values, we have solved for T as follows,
T = n
-----------------
T = (IERV/P) - 1
for the period August 1, 1994 to November 30, 1994:
(.0470) = (953/1000) - 1
annualized percentage:
(.1324) = (953/1000 divided by 4/12) - 1
and have reported those amounts as the total return
SCHEDULE FOR COMPUTATION OF PERFORMANCE DATA
INVESCO Worldwide Communications Fund
TOTAL RETURN
Formula prescribed by Item 22 of Form N-1A:
P = $1,000 initial payment
T = average annual total return
n = number of years (including fractional portions)
ERV = ending redeemable value
P(1 + T)n = ERV
for the period August 1, 1994 to November 30, 1994:
1000 (1 + 5.70%) = 1,057
annualized percentage:
1000(1 + 18.09%)4/12 = 1,057
The formula given in Item 22 is written to solve for Finding Redeemable Value.
However, the quantity to be reported is T(Average Annual Total Return).
Because P, n and ERV are known values, we have solved for T as follows,
T = n
-----------------
T = (IERV/P) - 1
for the period August 1, 1994 to November 30, 1994:
(.0570) = (1,057/1000) - 1
annualized percentage:
(.1809) = (1,057/1000 divided by 4/12) - 1
and have reported those amounts as the total return
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POWER OF ATTORNEY
The person executing this Power of Attorney hereby appoints Edward F.
O'Keefe and Glen A. Payne, or either of them, as his attorney-in-fact to execute
and to file such Registration Statements under federal and state securities laws
and such Post-Effective Amendments to such Registration Statements of the
hereinafter described entities as such attorney-in-fact, or either of them, may
deem appropriate:
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 Specialty Funds, Inc.
INVESCO Strategic Portfolios, Inc.
INVESCO Tax-Free Income Funds, Inc.
INVESCO Value Trust
INVESCO Variable Investment Funds, Inc.
This Power of Attorney, which shall not be affected by the disability of
the undersigned, is executed and effective as of the 4th day of June, 1997.
/s/ Larry Soll
--------------
Larry Soll
STATE OF WASHINGTON )
)
COUNTY OF SAN JUAN )
SUBSCRIBED, SWORN TO AND ACKNOWLEDGED before me by Larry Soll, as a
director or trustee of each of the above-described entities, this 4th day of
June, 1997.
Mary Paulette Weaver
--------------------
Notary Public
My Commission Expires: 1-27-99
