File No. 33-79290
As filed on ^ October 1, 1997
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 X
--
Pre-Effective Amendment No.
Post-Effective Amendment No. ^ 13 X
-------- --
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 X
--
Amendment No. ^ 14 X
------------ --
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)
-------------------
Copies to:
Ronald M. Feiman, Esq.
Gordon Altman Butowsky
Weitzen Shalov & Wein
114 West 47th Street
New York, New York 10036
-------------------
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
_X_ immediately upon filing pursuant to paragraph (b)
- --- on ________________, 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, ^ 1997, was filed on or about September ^ 22,
1997.
Page 1 of 150
Exhibit index is located at page 115
<PAGE>
NOTE
This Post-Effective Amendment (Form N-1A) is being filed to ^ update the
Prospectus for ^ the INVESCO S&P 500 Index Fund, a new series which was
originally filed on July 16, 1997, and does not affect the Prospectuses for the
INVESCO Worldwide Capital Goods, INVESCO Worldwide Communications, INVESCO
European Small Company, INVESCO Latin American Growth, INVESCO Asian Growth and
INVESCO Realty Funds.
<PAGE>
INVESCO SPECIALTY FUNDS, INC.
---------------------------
CROSS-REFERENCE SHEET
Form N-1A
Item Caption
--------- -------
Part A Prospectus
1....................... Cover Page
2....................... Annual Fund Expenses; Essential
Information
3....................... 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
--------- -------
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
October ^ 1, 1997
INVESCO S&P 500 INDEX FUND
Class I and Class II Shares
INVESCO S&P 500 Index Fund (the "Fund") seeks to provide both price
performance and income comparable to the Standard & Poor's 500 Composite Stock
Index (the "S&P 500" or the "Index"), which is composed of 500 selected large
capitalization stocks. In pursuing this objective, the Fund will invest in the
equity securities that comprise the S&P 500 in approximately the same
proportions that they are represented in the Index, and in other instruments
that are based upon the value of the Index.
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 October ^ 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 ^ Distributors, Inc., P.O. Box 173706,
Denver, Colorado 80217-3706; or call 1-800-525-8085; or ^ visit our web site at
http://www.invesco.com.
The Fund offers two classes of shares. Class I shares are not subject to
any distribution fee; Class II shares are subject to an annual distribution fee
of 0.25% of the Fund's average daily net assets attributable to Class II shares.
Both Class I and Class II shares may be subject to a redemption fee.
The Fund is a series of INVESCO Specialty Funds, Inc. (the "Company"), a
diversified, open-end managed no-load mutual fund consisting of seven separate
portfolios of investments. Separate Prospectuses are available upon request from
INVESCO ^ Distributors, Inc. for the Company's other funds: INVESCO Worldwide
Capital Goods Fund, INVESCO Worldwide Communications Fund, INVESCO European
Small Company Fund, INVESCO Latin American Growth Fund, INVESCO Asian Growth
Fund and INVESCO Realty Fund. Investors may purchase shares of any or all of the
Funds. Additional Funds may be offered by the Company in the future.
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
----
ESSENTIAL INFORMATION........................................................7
ANNUAL FUND EXPENSES.........................................................8
INVESTMENT OBJECTIVE AND STRATEGY...........................................10
INVESTMENT POLICIES AND RISKS...............................................12
THE FUND AND ITS MANAGEMENT.................................................15
FUND PRICE AND PERFORMANCE..................................................18
HOW TO BUY SHARES...........................................................19
FUND SERVICES...............................................................24
HOW TO SELL SHARES..........................................................25
TAXES, DIVIDENDS AND CAPITAL GAIN DISTRIBUTIONS.............................28
ADDITIONAL INFORMATION......................................................30
<PAGE>
ESSENTIAL INFORMATION
Investment Goal And Strategy. INVESCO S&P 500 Index Fund seeks to provide
price performance and income comparable to that of the S&P 500, an index
comprised of common stocks of U.S. companies that is weighted to companies with
large market capitalizations. The Fund also may invest in other instruments
whose value depends upon or derives from the value of the S&P 500. 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 a competitive long-term
investment return through a diversified portfolio. 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. Stock prices may decline for extended periods.
Potential shareholders should consider this a long-term investment.
Risks. The Fund's investment strategy seeks to track the investment
composition and performance of the S&P 500 by investing in the common stocks
that comprise the Index in approximately the same proportions as they are
represented in the Index and in other instruments whose value depends upon or
derives from the value of the S&P 500. Accordingly, the Fund does not employ
traditional methods of investment management to select the securities held in
its portfolio. Since the Fund ^ will attempt to ^ track the Index, when the
overall stock market rises or falls, the price of shares in the Fund can be
expected to rise and fall at the same time. The Fund does not eliminate market
risk; rather, it attempts to ensure that its returns will be comparable to those
of the overall stock market. 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 the Company, 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^ and transfer agent. ^ World Asset Management
("World") ^ serves as sub-adviser. Together, IFG and World constitute "Fund
Management." INVESCO Distributors, Inc. ("IDI"), founded in 1997 as a
wholly-owned subsidiary of IFG, is the Fund's distributor."
<PAGE>
^ IFG and IDI 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, South America and the Far East.
Under an agreement with IFG, World serves as sub-advisor to the Fund. In
that capacity, World has the primary responsibility, under the supervision of
IFG, for providing portfolio management services to the Fund. See "The Fund and
Its Management."
This Fund offers all of the following services at no charge:
-----------------------------------------------------------
Class I and II Shares
---------------------
Telephone purchases
Telephone exchanges
Telephone redemptions
Automatic reinvestment of distributions
Class II Shares Only
--------------------
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: For Class I shares, the minimum initial
investment is ^ $250,000^. For Class II shares, the minimum initial investment
is $5000 for individual accounts and $2000 for Individual Retirement Accounts
("IRAs") which is waived for regular investment plans, including EasiVest and
Direct Payroll Purchase.
Minimum Subsequent Investment: For Class I shares, the minimum subsequent
investment is $25,000 and for Class II shares, the minimum subsequent investment
is $1,000. (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, other than a fee to redeem or exchange shares held less than three
months. See "Shareholder Transactions Expenses." The Fund is authorized to pay a
Rule 12b-1 distribution fee of one quarter of one percent of the average net
assets attributable to Class II shares of the Fund 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 therefore benefit investors by increasing the Fund's total
return.
<PAGE>
We calculate annual operating expenses as a percentage of the Fund's
estimated expenses for the current fiscal year. To keep expenses competitive,
the Fund's adviser will voluntarily reimburse the Fund for amounts in excess of
0.30% of average net assets relating to Class I shares and 0.55% of average net
assets relating to Class II shares.
Class I Class II
------- --------
Shareholder Transaction Expenses
- --------------------------------
Sales load "charge" on purchases None None
Sales load "charge" on reinvested
dividends None None
Redemption fees 1.00%* 1.00%
Exchange fees 1.00%* 1.00%*
Annual Fund Operating Expenses
- ------------------------------
(as a percentage of average net assets)
Management Fee 0.25% 0.25%
12b-1 Fees None 0.25%
Other Expenses (1) ^ 0.05% ^ 0.05%^
Total Fund Operating Expenses (1) ^ 0.30% ^ 0.55%^
*There is a 1% fee retained by the Fund to offset transaction costs and other
expenses associated with short-term redemptions and exchanges, which is imposed
only on redemptions or exchanges of shares held less than three months.
(1) Based on estimated expenses for the current fiscal year, which may be more
or less than actual expenses. 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 ^ 0.30%
of average daily net assets ^ relating to Class I shares and 0.55% of average
daily net assets relating to Class II shares. If such voluntary expense ^ limits
were not in effect, the Fund's "Other Expenses" and "Total Fund Operating
Expenses" for the fiscal year ending July 31, 1998 are estimated to be ^ 0.42%
and ^ 0.67%, respectively, of Class I shares average net assets and ^ 0.60% and
^ 1.10%, respectively, of Class II shares average net assets. Actual expenses
are not provided because the Fund ^ does not expect to begin a public offering
of its securities until ^ on or about November 15, 1997.
<PAGE>
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
------ -------
Class I ^ $3 $10
Class II ^ $6 $18
The purpose of this table is to assist you in understanding the various
costs and expenses that you will bear directly or indirectly. 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 on Class II shares, investors who
own Class II shares of the Fund 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.
INVESTMENT OBJECTIVE AND STRATEGY
The Fund seeks to track the aggregate price and income performance of the
S&P 500, an index comprised of common stocks of U.S. companies that emphasizes
large-capitalization companies. This investment objective is fundamental and
cannot be changed without the approval of the Fund's shareholders. The Fund ^
will seek to achieve its objective by investing in the common stocks that
comprise the Index in approximately the same proportions as they are represented
in the S&P 500. The Fund also may invest in other instruments that are based
upon the value of the Index, including Standard & Poor's Depository Receipts
("SPDRs"), and it may ^ also purchase and sell futures contracts and options on
the Index. There is no assurance that the Fund's investment objective will be
met.
The S&P 500 is comprised of 500 common stocks that are chosen by Standard
& Poor's Corporation ("S&P") for inclusion in the Index. As of June 30, 1997 the
S&P 500 represented approximately ^ 71% of the market capitalization of
publicly-traded common stocks in the United States. The Index is weighted by
market value. Because of this weighting, the ^ 144 largest companies in the S&P
500 accounted for approximately ^ 75% of the Index at June 30, 1997. Typically,
companies included in the S&P 500 are dominant firms in their industries, and
approximately 75% of them trade on the New York Stock Exchange.
<PAGE>
The Fund is managed through the use of an "indexing" investment style,
which attempts to track the investment composition of the S&P 500 through
statistical methods. Therefore, the Fund does not employ typical methods of
mutual fund investment management, such as selecting securities on the basis of
economic, financial or market analysis. The Fund is managed without regard to
potential tax ramifications.
The Fund cannot precisely duplicate the investment composition or
performance of the Index because, unlike the Fund, the Index is unmanaged and
has no expenses. Moreover, the Fund must take into account sales and redemptions
of Fund shares and other factors that are inapplicable to the Index itself.
Although the Fund at any given time may not hold securities of all 500 companies
represented in the Index, ^ at commencement of operations it will hold
securities of a relatively small number of those companies. As assets in the
Fund increase, it normally will hold securities of at least 95% of those
companies. Because at any given time the Fund likely will not precisely mirror
the S&P 500, the Fund would ordinarily place heavier concentration on industry
sectors dominated by large corporations, such as communications or automobiles.
Until the Fund's portfolio is fully invested (except for cash), the Fund will
attempt to identify sectors that are underrepresented in the Fund's portfolio
and purchase balancing securities until the Fund's portfolio sector weightings
closely match those of the Index.
Redemptions of large numbers of shares of the Fund could reduce the number
of issuers represented in the Fund's portfolio, which could adversely affect the
accuracy with which the Fund tracks the performance of the S&P 500.
^ The Fund is not sponsored, endorsed, sold or promoted by S&P^. S&P makes
no representation or warranty, express or implied, to the owners of the Fund or
any member of the public regarding the advisability of investing in ^ securities
generally or in the Fund particularly or the ability of the S&P 500 to trace
general stock market performance. S&P's only relationship to ^ the Company is
the licensing of ^ certain trademarks and trade names of S&P and of the S&P 500
which is determined, composed and calculated by S&P without regard to the
Company or the Fund. S&P has no obligation to take ^ the needs of the Company^
or the owners of the Fund into consideration in determining, composing or
calculating the ^ S&P 500. S&P is not responsible for and has not participated
in the determination of the prices and amount of the Fund or the timing of the
issuance or sale of Fund shares or in the determination of calculation of the
equation by which the Fund is to be converted into cash. S&P has no obligation
or liability in connection with ^ administration, marketing or trading of the
Fund.
<PAGE>
S&P does not guaranty the accuracy and/or the completeness of the S&P 500
or any data included therein and S&P shall have no liability for any errors,
omissions, or interruptions therein. S&P makes no warranty, express or implied,
^ as to results to be obtained by the Company, owners of the Fund, or any other
person or entity from the use of the S&P 500 or any data included therein. S&P
makes no express or implied warranty, and expressly disclaims all warranties of
merchantability or fitness for a particular purpose or use with respect to the
S&P 500 Index or any data included therein. Without limiting any of the
foregoing, in no event shall S&P have any liability for any special, punitive,
indirect or consequential damages (including lost profits), even if notified of
the possibility of such damages.
INVESTMENT POLICIES AND RISKS
Investors generally should expect to see their price per share of the Fund
vary with movements in the securities markets, changes in economic conditions
and other factors. Due to the composition of the Index, the Fund invests in many
different companies in a variety of industries; this diversification reduces the
Fund's overall exposure to investment and market risks, but cannot eliminate
them.
Limited Portfolio. While the S&P 500 includes the majority of large market
capitalization stocks in the U.S. stock market, it ^ excludes the stocks of most
medium and smaller sized companies that comprise the remaining ^ capitalization
of the U.S. stock market. Similarly, it excludes securities of most foreign
issuers. The Fund's portfolio, therefore, will exclude securities excluded from
the Index. While the large capitalization stocks that comprise the S&P 500
historically have shown less price volatility than the stocks excluded from the
Index and the Fund, the excluded stocks may or may not offer better price
performance and income than those included in the Index and the Fund.
From time to time, the Fund may receive securities that are not included
in the Index as a result of a corporate reorganization of a S&P 500 company.
Such securities will be disposed of in due course in accordance with the Fund's
investment objective. Conversely, if an issuer included in the S&P 500 has a
change in rank within the Index, or is dropped from it entirely, the Fund may be
required to sell some or all of the common stock of that issuer held by the
Fund. Such sales may result in the Fund realizing lower prices, or losses, that
might not have been incurred if the Fund were not required to effect such sales.
Indexing. In the event of a decline in the S&P 500, the Fund and its shares
will sustain a similar decline. Since the Fund's investment objective is to
track the aggregate price and income performance of the Index, the Fund will not
be actively managed in an attempt to reduce the risk inherent in the Index or
the stock market. Due to purchases and sales of portfolio securities to meet
investor purchases and redemptions, the Fund will not have a 100% correlation to
<PAGE>
the Index. ^ At commencement of operations, the Fund expects that the
composition of its portfolio will have approximately an 80% correlation to the
composition of the S&P 500. Under ordinary circumstances, the Fund expects that
the composition of its portfolio will have at least a 95% correlation to the
composition of the S&P 500.
Investment Company Securities. To manage its daily cash positions, the
Fund may invest in securities issued by other investment companies that invest
in short-term debt securities and seek to maintain a net asset value of $1.00
per share ("money market funds"). The Fund also may invest in SPDRs and shares
of other investment companies that are structured to seek a similar correlation
to the performance of the S&P 500. SPDRs are traded on the American Stock
Exchange. SPDR holders such as the Fund are paid a "Dividend Equivalent Amount"
that corresponds to the amount of cash dividends accruing to the securities held
by the SPDR Trust, net of certain fees and expenses. Therefore, the dividend
yield of SPDRs may be less than that of the Index. The Investment Company Act of
1940 limits investments in securities of other investment companies, such as the
SPDR Trust. These limitations include, among others, that, subject to certain
exceptions, no more than 10% of the Fund's total assets may be invested in
securities of other investment companies, and, with respect to 75% of the Fund's
total assets, no more than 5% of its total assets may be invested in the
securities of any one investment company. As a shareholder of another investment
company, the Fund would bear its pro rata portion of the other investment
company's expenses, including advisory fees, in addition to the expenses the
Fund bears directly in connection with its own operations.
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"), or for
liquidity.
For example, futures contracts may be purchased or sold to attempt to
hedge against a price movement in the S&P at times when the Fund is not fully
invested in stocks included in the S&P 500. In such circumstances, purchasing a
futures contract may reduce the potential that cash inflows to the Fund will
interfere with its ability to track the Index, since futures contracts may serve
as a temporary substitute for stocks until the stocks can be purchased by the
Fund in a cost-effective manner. Inasmuch as futures contracts require a
comparatively small initial margin deposit, the Fund may be able to be fully
exposed to price movements in the S&P 500 while still keeping a cash reserve to
meet potential redemptions.
The Fund also may use options to buy or sell futures contracts with respect
to the Index or securities comprising the Index. 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
<PAGE>
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 also may purchase put or call options on the Index and on the
Standard & Poor's 100 Composite Index (the "S&P 100") in order to have fuller
exposure to price movements in the Index pending investment of purchase orders
or to maintain liquidity in anticipation of potential Fund shareholder
redemptions.
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 ^ liquid
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, liquidity 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
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.
^
<PAGE>
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, securities that 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.
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.
Portfolio Turnover. Although the Fund seeks to invest for the long term,
the Fund retains the right to sell portfolio securities regardless of the length
of time they have been in the Fund's portfolio. The indexing method of portfolio
management is expected to generate a portfolio turnover rate of less than 50%,
which would occur if one-half of the Fund's portfolio securities were sold
within one year. Ordinarily, portfolio investments are sold by the Fund only to
reflect changes in the S&P 500 (for example, mergers involving companies
included in the Index, or new weightings of securities within the Index) or to
accommodate cash flows in and out of the Fund while attempting to maintain the
similarity of the Fund's portfolio to the composition of the S&P 500.
Investment Restrictions. Certain restrictions, which are set forth in the
Statement of Additional Information, are fundamental and may not be altered
without the approval of the Fund's shareholders. For example, with respect to
75% of the Fund's total assets, the Fund limits to 5% of its total assets the
amount 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.^
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.
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.
<PAGE>
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 ^ Company, IFG, 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. World
is the Fund's sub-adviser, and is primarily responsible for managing the Fund's
investments.
IFG and IDI are ^ indirect wholly-owned ^ subsidiaries 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
continues to operate under its existing name. AMVESCAP PLC has approximately ^
$165 billion in assets under management. IFG was established in 1932 and, as of
May 31, 1997, managed 14 mutual funds, consisting of 45 separate portfolios,
with combined assets of approximately $14.8 billion on behalf of more than
859,000 shareholders. IDI was established in 1997 and is the distributor for 14
mutual funds consisting of 45 separate portfolios.
World ^ is the Fund's sub-adviser and is primarily responsible for
managing the Fund's investments. Under the terms of the sub- advisory agreement,
World provides the Fund with certain recordkeeping and management services in
connection with the Fund, including monitoring the Index and determining which
securities to purchase and sell in order to keep the Fund's portfolio in balance
with the Index. ^ The agreement was approved by IFG as the then sole shareholder
of the Fund on ^ October 1,1997.
World is a general partnership organized by Munder Capital Management
("MCM"), a general partnership formed in December 1994 which engages in
investment management and advisory services. As of December 31, 1996, World's
total assets under management were approximately $11 billion (including index
mutual fund portfolios), and MCM's total assets under management were
approximately $38 billion. The principal business address for World is 255 Brown
Street Centre, 2nd Floor, Birmingham, Michigan 48009.
The Fund's investments are selected by a team of World 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.
<PAGE>
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 0.25% of the Fund's average net assets. Out of
this fee, IFG pays to World an amount equal to 0.07% of the Fund's average net
assets up to $10 million, 0.05% of the Fund's average net assets in excess of
$10 million up to $40 million, and 0.03% of the Fund's average net assets in
excess of $40 million. No fee is paid by the Fund to World.
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 ^. 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
recordkeeping fee to the third party.
In addition, under an Administrative Services Agreement, IFG handles
additional administrative, record-keeping, and internal sub-accounting services
for the Fund.
The expenses of each class of the Fund, which are accrued daily, are
deducted from total income before dividends are paid. 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 ^ 0.30% ^ for Class I shares and ^
0.55% ^ for Class II shares. This commitment may be changed following
consultation with the Company's board of directors.
Fund Management places orders for the purchase and sale of portfolio
securities with brokers and dealers based upon Fund Management's evaluation of
their financial responsibility coupled with their ability to effect transactions
at the best available prices. As discussed under "How to Buy Shares --
Distribution Expenses," the Fund may market its shares through intermediary
brokers or dealers that have entered into Dealer Agreements with ^ IDI, as the
Fund's Distributor. The Fund may place orders for portfolio transactions with
qualified broker-dealers that recommend the Fund, or sell shares of the Fund, to
clients, or act as agent in the purchase of Fund shares for clients, if Fund
Management believes that the quality of the execution of the transaction and
level of commission are comparable to those available from other qualified
brokerage firms. For further information, see "Investment Practices -- Placement
of Portfolio Brokerage" in the Statement of Additional Information.
<PAGE>
FUND PRICE AND PERFORMANCE
Determining Price. The value of your investment in the Fund will vary
daily. The price per share of each class of the Fund is also known as the Net
Asset Value ^("NAV"). IFG prices each class of 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 for each class of shares is calculated separately by
adding together the current market value of all of the ^ class' assets,
including accrued interest and dividends; then subtracting liabilities,
including accrued expenses; and finally dividing that dollar amount by the total
number of shares of the class 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 (or since inception). Cumulative total return shows the
actual rate of return on an investment for the periods cited; average annual
total return represents the average annual percentage change in the value of an
investment. Both cumulative and average annual total returns tend to "smooth
out" fluctuations in the Fund's investment results, ^ because they do not show
interim variations in performance ^ that occur during 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 ^ large-cap funds
and/or S&P 500 indices, 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 Fund offers two classes of shares. Each class represents an identical
interest in the investment portfolio of the Fund and has the same rights, except
that each class bears its own distribution and shareholder servicing charges.
The income attributable to each class and the dividends payable on the shares of
each class will be reduced by the amount of the distribution fee or service fee,
if applicable, payable by that class.
<PAGE>
In deciding which class of shares to purchase, you should consider, among
other things, (i) the length of time you expect to hold your shares, (ii) the
charges of the distribution plan applicable to the class, if any, ^ and (iii)
the eligibility requirements that apply to purchases of a particular class.
Generally, the minimum initial investment in Class I shares is ^ $250,000
^ and the minimum subsequent investment is $25,000, except that IFG may permit a
lesser amount to be invested in the Fund under a federal income tax-deferred
retirement plan (other than an ^ Individual Retirement Account ("IRA"), or under
a group investment plan qualifying as a sophisticated investor. Generally, the
minimum initial investment in Class II shares is $5,000 ($2,000 for IRA
accounts) and the minimum subsequent investment is $1,000.
The following chart 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 when you do so directly
through ^ IDI, although in some circumstances a ^ fee may be charged on
exchanges or redemptions. 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 and^ which class of shares^ you wish to purchase.
IFG 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: Class I If your check does
INVESCO Funds ^ $250,000^; not clear, you will
Group, Inc. $25,000 ^ for each be responsible for
P.O. Box 173706 subsequent any related loss
Denver, CO 80217- investment. the Fund or IFG
3706. incurs. If you are
Or you may send Class II already a
your check by $5,000 for regular shareholder in the
overnight courier account; INVESCO funds, the
to: 7800 E. Union $2,000 for an ^ Fund may seek
Ave., Denver, CO IRA; reimbursement from
80237. $1,000 minimum for your existing
each subsequent account(s) for any
investment. loss incurred.
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
By Telephone or
Wire
Call 1-800-525-8085 Class I Payment must be
to request your ^ $250,000^; received within 3
purchase. Then send $25,000 ^ for each business days, or
your check by subsequent the transaction may
overnight courier investment. be cancelled. If a
to our street telephone purchase
address: Class II is cancelled due to
7800 E. Union Ave., $5,000 for regular nonpayment, you
Denver, CO 80237. account; will be responsible
Or you may transmit $2,000 for an ^ for any related
your payment by IRA; loss the Fund or
bank wire (call IFG $1,000 minimum for IFG incurs. If you
for instructions). each subsequent are already a
investment. shareholder in the
INVESCO funds, the
Fund may seek
reimbursement from
your existing
account(s) for any
loss incurred.
- --------------------------------------------------------------------------------
With EasiVest or
Direct Payroll
Purchase
You may enroll on Class I Like all regular
the fund EasiVest and Direct investment plans,
application, or Payroll Purchase neither EasiVest
call us for the plans are not nor Direct Payroll
correct form and available to class Purchase ensures a
more details. I purchasers or profit or protects
Investing the same shareholders. against loss in a
amount on a monthly falling market.
basis allows you to Class II Because you'll
buy more shares $50 per month for invest continually,
when prices are low EasiVest; $50 per regardless of
and fewer shares pay period for varying price
when prices are Direct Payroll levels, consider
high. This "dollar- Purchase. You may your financial
cost averaging" may start or stop your ability to keep
help offset market regular investment buying through low
fluctuations. Over plan at any time, price levels. And
a period of time, with two weeks' remember that you
your average cost notice to IFG. 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.
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
By PAL
Your "Personal Class I Be sure to write
Account Line" is ^ $25,000^ down the
available for confirmation number
subsequent Class II provided by PAL.
purchases and $1,000 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.
- --------------------------------------------------------------------------------
By Exchange
Between this and Class I See "Exchange ^
another of the ^ $250,000 ^ to Policy" below.
INVESCO funds. Call open a new account;
1-800-525-8085 for ^ $25,000 ^ for
prospectuses of written requests to
other INVESCO purchase additional
funds. You may also shares. The
establish an exchange minimum is
Automatic Monthly $1,000 for
Exchange service purchases requested
between two INVESCO by telephone.
funds; call IFG for
further details and Class II
the correct form. $5,000 to open a
new account; $2,000
for ^ IRAs; $1,000
for written
requests to
purchase additional
shares. The
exchange minimum is
^ $1,000 for
purchases requested
by telephone.
================================================================================
<PAGE>
Exchange ^ Policy. 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.
Upon the exchange of shares of the Fund held less than three months (other
than shares acquired through reinvestment of dividends or other distributions),
a fee of 1% of the current net asset value of the shares will be assessed and
retained by the Fund for the benefit of remaining shareholders. This fee is
intended to encourage long-term investments in the Fund, to avoid transaction
and other expenses caused by early redemptions, and to facilitate portfolio
management. The fee is not a deferred sales charge, is not a commission paid to
IFG, or otherwise result in a direct payment to IFG. The fee applies to
redemptions from the Fund and exchanges into any of the other no-load mutual
funds that are advised by IFG and distributed by ^ IDI. The Fund will use the
"first in, first out" method to determine the three-month holding period. Under
this method, the date of exchange will be compared with the earliest purchase
date of shares held in the account. If this holding period is less than three
months, the redemption fee will be assessed on the current net asset value of
the shares being redeemed. IFG reserves the right, in the sole determination of
IFG, to waive the redemption fee.
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, subject to a charge of 1% of the NAV of Fund shares held for
less than three months discussed above.
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 the exchange ^ policy, in the best interests of
the Fund and its shareholders. Notice of all such modifications or
terminations 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).
<PAGE>
Distribution Expenses. The Fund is authorized under a Plan and Agreement
of Distribution pursuant to Rule 12b-1 under the Investment Company Act of 1940
(the "Plan") to use its assets to finance certain activities relating to the
distribution of its Class II shares to investors. Under the Plan, monthly
payments may be made by the Fund to ^ IDI to permit ^ IDI, at its discretion, to
engage in certain activities and provide certain services approved by the board
of directors of the Company in connection with 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 ^
IDI-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 electronically to the Fund's Transfer Agent ^ 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, printing and distribution of sales literature^ and
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 ^ IDI or its affiliates or by
third parties.
Under the Plan, the Company's payments to ^ IDI 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 attributable to the Fund's Class II shares during the month. ^ IDI 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 ^ IDI 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 be made to compensate ^ IDI for
permissible activities engaged in and services provided by ^ IDI 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 ^ IDI in excess of the
limitations described above will not be paid by the Fund under the Plan and will
be borne by ^ IDI. In addition, ^ IDI and its affiliates 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
<PAGE>
Plan in the event of its 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.
There is no distribution fee applicable to Class I shares.
FUND SERVICES
Shareholder Accounts. IFG will maintain a separate 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 or 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
telephone 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 ^ 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.
<PAGE>
HOW TO SELL SHARES
The following chart shows several convenient ways to redeem your Fund
shares. Shares of each class 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.
Upon the redemption of shares held less than three months (other than
shares acquired through reinvestment of dividends or other distributions), a fee
of 1% of the current net asset value of the shares will be assessed and retained
by the Fund for the benefit of remaining shareholders. This fee is intended to
encourage long-term investments in the Fund, to avoid transaction and other
expenses caused by early redemptions, and to facilitate portfolio management.
The fee is not a deferred sales charge, is not a commission paid to IFG, and
does not benefit IFG in any way. The fee applies to redemptions from the Fund
and exchanges into any of the other no-load mutual funds that are advised by IFG
and distributed by ^ IDI. The Fund will use the "first in, first out" method to
determine the three-month holding period. Under this method, the date of
redemption or exchange will be compared with the earliest purchase date of
shares held in the account. If this holding period is less than three months,
the redemption/exchange fee will be assessed on the current net asset value of
the shares being redeemed. IFG reserves the right, in ^ its sole ^ discretion,
to waive the redemption fee.
Please specify from which fund and class, if any, 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 Class I This option is not
at 1-800-525-8085. $1,000 (or, if available for
less, full shares held in ^
liquidation of the IRAs^.
account) for a
redemption check;
no minimum for a
wire to bank of
record.
Class II
$250 (or, if less,
full liquidation of
the account) for a
redemption check;
$1,000 for a wire
to bank of record.
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 pre-
Union Ave., Denver, designated bank.
CO 80237.
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
By Exchange
Between this and Class I See "Exchange ^
another of the ^ $250,000 ^ to Policy," above.
INVESCO funds. Call open a new account;
1-800-525-8085 for ^ $25,000 ^ for
prospectuses of written requests to
other INVESCO purchase additional
funds. You may also shares for an
establish an existing account.
automatic monthly The exchange
exchange service minimum is $1,000
between two INVESCO for purchases
funds; call IFG for requested by
further details and telephone.
the correct form.
Class II
$5,000 to open a
new account; $2,000
for ^ IRAs; $1,000
for written
requests to
purchase additional
shares for an
existing account.
The exchange
minimum is ^ $1,000
for purchases
requested by
telephone.
- --------------------------------------------------------------------------------
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.
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
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 ^ $50,000 for Class I shares, or
$5,000 for Class II shares ($2,000 for ^ IRAs) 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 the above
minimums.
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.
<PAGE>
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 reinvested in shares of the
Fund or another fund in the INVESCO group.
The Taxpayer Relief Act of 1997 (the "Tax Act"), enacted in August 1997,
changed the taxation of capital gains by applying different capital gains rates
depending on the taxpayer's holding period and marginal rate of federal income
tax. Net realized capital gains of the Fund are classified as short-term,
mid-term and long-term gains depending on how long the Fund held the security
which gave rise to the gains. Short-term capital gains are included in income
from dividends and interest as ordinary income and are taxed at the taxpayer's
marginal tax rate.
Shareholders also may realize capital gains or losses when they sell their
Fund shares at more or less than the price originally paid.
At the end of each year, information regarding the tax status of
dividends, capital gain distributions and the portion, if any, of distributions
that is an item of tax preference is provided to shareholders.
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.
^ Individuals and certain other non-corporate 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.
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.
Dividends and Capital Gain Distributions. The Fund may earn 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
Company's board of directors.
In addition, the Fund realizes capital gains and losses when it sells
securities for more or less than it paid. If total gains on sales exceed total
losses (including losses carried forward from previous years), the Fund has a
net realized capital gain. Net realized capital gains, if any, are distributed
to shareholders at least annually, usually in December.
<PAGE>
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.
^
ADDITIONAL INFORMATION
Voting Rights. All shares of the Fund of the Company have equal voting
rights based on one vote for each share owned and a corresponding fractional
vote for each fractional share owned, except that only shares of a class are
entitled to vote on matters concerning only that class of shares, and holders of
each class of shares have separate voting rights on matters in which the
interests of the class differ from the interests of the other class, to the
extent required by applicable law, regulation and regulatory interpretation. The
Company is not generally required and does not expect to hold regular annual
meetings of shareholders. However, when requested to do so in writing by the
holders of 10% or more of the outstanding shares of the 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 ^
Company. 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 company would be managed by IFG in substantially the same manner as
the Fund. If permitted by applicable law, 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 the
option were implemented.
<PAGE>
INVESCO Specialty Funds, Inc.
INVESCO S&P 500 Index Fund
PROSPECTUS
October ^ 1, 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 ^ Distributors, 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
October ^ 1, 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 ^ investment management company consisting of seven 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"); ^ INVESCO Realty Fund (the "Realty Fund"); and
INVESCO S&P 500 Index Fund (the "S&P 500 Index 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
Goods Fund's and Communications Fund's investments to be allocated among a
larger number of countries. The percentage of the Capital Goods Fund's and
Communication Fund's assets invested in United States securities normally will
be higher than that invested in securities issued by companies in any other
single country. However, it is possible that at times the Capital Goods Fund or
the Communications Fund may have 65% or more of its total assets invested in
foreign securities.
<PAGE>
The European Small Company Fund seeks to achieve capital appreciation by
investing, under normal circumstances, at least 65% of its total assets in
equity securities of European companies whose individual equity market
capitalizations would place them (at the time of purchase) in the same size
range of companies in approximately the lowest 25% of market capitalization of
companies that have equity securities listed on a U.S. national securities
exchange. Under normal circumstances, the European Small Company Fund will
invest at least 65% of its total assets in issuers domiciled in at least five
countries, although the European Small Company Fund's investment adviser expects
the European Small Company Fund's investments to be allocated among a larger
number of countries. In this regard, no more than 50% of the European Small
Company Fund's total assets will be invested in issuers domiciled in any one
country.
The Latin American Growth Fund seeks to achieve capital appreciation by
investing, under normal circumstances, at least 65% of its total assets in
securities of issuers domiciled in Latin America. For purposes of this Fund,
Latin America will include: Mexico, Central America, South America, and the
Spanish speaking islands of the Caribbean.
The Asian Growth Fund seeks to achieve capital appreciation by investing,
under normal circumstances, at least 65% of its total assets in equity
securities of companies domiciled or with primary operations in Asia and the
Pacific Rim, excluding Japan. For purposes of this prospectus, Asia and Pacific
Rim territories will include, but not necessarily be limited to: China, Hong
Kong, India, Indonesia, Malaysia, Philippines, Singapore, South Korea, Taiwan
and Thailand, as well as Pakistan and Indochina as their markets become more
accessible.
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.
The S&P 500 Index Fund seeks to provide both price performance and income
comparable to the Standard & Poor's 500 Composite Index (the "Index" or the "S&P
500") by investing in the equity securities that comprise the S&P 500 in
approximately the same proportion that they are represented in the Index and in
other instruments whose value depends upon or derives from the value of the
Index.
Investors may purchase shares of any or all of the Funds. Additional funds
may be added in the future.
Prospectuses for the Capital Goods Fund, the Communications Fund, the
European Small Company Fund, the Latin American Growth Fund, and the Asian
Growth Fund, dated December 1, 1996, the Realty Fund dated June 30, 1997 and the
S&P 500 Index Fund dated October ^ 1, 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
<PAGE>
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 ^: INVESCO FUNDS GROUP, INC.
Distributor: INVESCO DISTRIBUTORS, INC.
<PAGE>
TABLE OF CONTENTS Page
INVESTMENT POLICIES AND RESTRICTIONS 36
THE FUNDS AND THEIR MANAGEMENT 49
HOW SHARES CAN BE PURCHASED 65
HOW SHARES ARE VALUED 70
FUND PERFORMANCE 71
SERVICES PROVIDED BY THE FUNDS 72
TAX-DEFERRED RETIREMENT PLANS 73
HOW TO REDEEM SHARES 73
DIVIDENDS, CAPITAL GAIN DISTRIBUTIONS AND TAXES 74
INVESTMENT PRACTICES 76
ADDITIONAL INFORMATION 80
APPENDIX A 85
APPENDIX B 89
FINANCIAL STATEMENTS 91
<PAGE>
INVESTMENT POLICIES AND RESTRICTIONS
As discussed in each Fund's Prospectus ^, the Funds may invest in a
variety of securities, and employ a broad range of investment techniques in
seeking to achieve their respective investment objectives. Such securities and
techniques include the following:
Types of Equity Securities
As described in the Prospectuses, equity securities which may be purchased
by the Funds consist of common, preferred and convertible preferred stocks, and
securities having equity characteristics such as rights, warrants and
convertible debt securities. Common stocks and preferred stocks represent equity
ownership interests in a corporation and participate in the corporation's
earnings through dividends which may be declared by the corporation. Unlike
common stocks, preferred stocks are entitled to stated dividends payable from
the corporation's earnings, which in some cases may be "cumulative" if prior
stated dividends have not been paid. Dividends payable on preferred stock have
priority over distributions to holders of common stock, and preferred stocks
generally have preferences on the distribution of assets in the event of the
corporation's liquidation. Preferred stocks may be "participating," which means
that they may be entitled to dividends in excess of the stated dividend in
certain cases. The rights of common and preferred stocks are generally
subordinate to rights associated with a corporation's debt securities. Rights
and warrants are securities which entitle the holder to purchase the securities
of a company (generally, its common stock) at a specified price during a
specified time period. Because of this feature, the values of rights and
warrants are affected by factors similar to those which determine the prices of
common stocks and exhibit similar behavior. Rights and warrants may be purchased
directly or acquired in connection with a corporate reorganization or exchange
offer.
Convertible securities which may be purchased by the Funds include
convertible debt obligations and convertible preferred stock. A convertible
security entitles the holder to exchange it for a fixed number of shares of
common stock (or other equity security), usually at a fixed price within a
specified period of time. Until conversion, the holder receives the interest
paid on a convertible bond or the dividend preference of a preferred stock.
Convertible securities have an "investment value" which is the theoretical
value determined by the yield they provide in comparison with similar securities
without the conversion feature. Investment value changes are based upon
prevailing interest rates and other factors. They also have a "conversion value"
which is the worth in market value if the securities were exchanged for their
underlying equity securities. Conversion value fluctuates directly with the
price of the underlying security. If conversion value is substantially below
investment value, the price of the convertible security is governed principally
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
<PAGE>
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
Except for the S&P 500 Index Fund, the Funds may invest in municipal bonds,
the interest from which is exempt from federal income taxes, when their
investment adviser and sub-adviser (collectively, "Fund Management") believes
that the potential total return on the investment is better than the return that
otherwise would be achieved by investing in fixed-income securities issued by
corporations or the U.S. government or its agencies, the interest from which is
not exempt from federal income taxes. Municipal bonds are issued by or on behalf
of states, territories and possessions of the United States and the District of
Columbia, and their political subdivisions, agencies and instrumentalities, to
obtain funds for 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."
<PAGE>
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).
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.
<PAGE>
Mortgage-Backed Securities
^ Except for the S&P 500 Index Fund, 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.
Zero Coupon Bonds and Pay-In-Kind Bonds
^ Except for the S&P 500 Index Fund, 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."
<PAGE>
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
Except for the S&P 500 Index Fund, the Funds may invest in 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
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, Securities and Indices
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 or indices, which are included in the types of
instruments sometimes referred to as "derivatives," because their value depends
upon or derives from the value of an underlying asset, reference rate or index.
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
<PAGE>
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 ^. To the
extent that the Fund enters into futures contracts, options on futures contracts
and options on foreign currencies traded on a CFTC-regulated exchange, in each
case that is not for bona fide hedging purposes (as defined by the CFTC), the
aggregate initial margins and premiums required to establish these positions
(excluding the amount by which options are "in-the-money" at the time of
purchase) may not exceed 5% of the liquidation value of the Fund's portfolio,
after taking into account unrealized profits and unrealized losses on any
contracts that the Fund has entered into. (In general, a call option on a
futures contract is "in-the-money" if the value of the futures contract exceeds
the exercise ("strike") price of the call; a put option on a futures contract is
"in-the-money" if the value of the futures contract that is the subject of the
put is exceeded by the strike price of the put.)
Unlike when a Fund purchases or sells a security, no price is paid or
received by a Fund upon the purchase or sale of a futures contract. Instead, the
Fund will be required to deposit in a segregated asset account with the broker
an amount of cash or qualifying securities (currently U.S. Treasury bills),
currently in a minimum amount of $15,000. This is called "initial margin." Such
initial margin is in the nature of a performance bond or good faith deposit on
the contract. However, since losses on open contracts are required to be
reflected in cash in the form of variation margin payments, the Fund may be
required to make additional payments during the term of the contracts to its
broker. Such payments would be required, for example, where, during the term of
an interest rate futures contract purchased by a Fund, there was a general
increase in interest rates, thereby making the Fund's portfolio securities less
valuable. In all instances involving the purchase of financial futures contracts
by a Fund, an amount of cash together with such other securities as permitted by
applicable regulatory authorities to be utilized for such purpose, at least
equal to the market value of the futures contracts, will be deposited in a
segregated account with the Fund's custodian to collateralize the position. At
any time prior to the expiration of a futures contract, the Fund may elect to
close its position by taking an opposite position which will operate to
terminate the Fund's position in the futures contract. For a more complete
discussion of the risks involved in futures and options on futures and other
securities, refer to Appendix A ("Description of Futures and Options
Contracts").
<PAGE>
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, ^ determined not to make the planned investment at that time because of
concern as to possible further market decline or for other reasons, the Fund
would realize a loss on the futures contract that is not offset by a reduction
in the price of securities purchased.
In addition to the possibility that there may be an imperfect correlation
or no correlation at all between movements in the futures contract and the
portion of the portfolio being hedged, the price of futures may not correlate
perfectly with movements in the prices due to certain market distortions. All
participants in the futures market are subject to margin deposit and maintenance
requirements. Rather than meeting additional margin deposit requirements,
investors may close futures contracts through offsetting transactions which
could distort the normal relationship between the underlying securities and the
value of the futures contract. Moreover, the deposit requirements in the futures
market are less onerous than margin requirements in the securities market and
may therefore cause increased participation by speculators in the futures
market. Such increased participation may also cause temporary price distortions.
Due to the possibility of price distortion in the futures market and because of
the imperfect correlation between movements in the value of the underlying
securities and movements in the prices of futures contracts, the value of
futures contracts as a hedging device may be reduced.
In addition, if 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 which may be disadvantageous to the Fund.
Options on Futures Contracts
The Funds may buy and write options on futures contracts for hedging
purposes^; options are also 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.
<PAGE>
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
also entails the risk that changes in the value of the underlying futures
contract will not be fully reflected in the value of the options bought.
Forward Foreign Currency Contracts
The Funds may enter into forward currency contracts, which are included in
the types of instruments sometimes known as derivatives, to purchase or sell
foreign currencies (i.e., non-U.S. currencies) as a hedge against possible
variations in foreign exchange rates. ^ A forward foreign currency contract is
an agreement between the contracting parties to exchange an amount of currency
at some future time at an agreed upon rate. The rate can be higher or lower than
the spot rate between the currencies that are the subject of the contract. A
forward contract generally has no deposit requirement, and such transactions do
not involve commissions. By entering into a forward contract for the purchase or
sale of the amount of foreign currency invested in a foreign security
transaction, a Fund can hedge against possible variations in the value of the
dollar versus the subject currency either between the date the foreign security
is purchased or sold and the date on which payment is made or received or during
the time the Fund holds the foreign security. Hedging against a decline in the
value of a currency in the foregoing manner does not eliminate fluctuations in
the prices of portfolio securities or prevent losses if the prices of such
<PAGE>
securities decline. Furthermore, such hedging transactions preclude the
opportunity for gain if the value of the hedged currency should rise. The Funds
will not speculate in forward currency contracts. Although the Funds have not
adopted any limitations on their ability to use forward contracts as a hedge
against fluctuations in foreign exchange rates, the Funds do not attempt to
hedge all of their non-U.S. portfolio positions and will enter into such
transactions only to the extent, if any, deemed appropriate by their investment
adviser or sub-adviser. The Funds will not enter into forward contracts for a
term of more than one year.
Swaps and Swap-Related Products
Interest rate swaps involve the exchange by a Fund with another party of
their respective commitments to pay or receive interest, e.g., an exchange of
floating rate payments for fixed rate payments. The exchange commitments can
involve payments to be made in the same currency or in different currencies. The
purchase of an interest rate cap entitles the purchaser, to the extent that a
specified index exceeds a predetermined interest rate, to receive payments of
interest on a contractually-based principal amount from the party selling the
interest rate cap. The purchase of an interest rate floor entitles the
purchaser, to the extent that a specified index falls below a predetermined
interest rate, to receive payments of interest on a contractually-based
principal amount from the party selling the interest rate floor.
The Funds may enter into interest rate swaps, caps and floors, which are
included in the types of instruments sometimes known as derivatives, on either
an asset-based or liability-based basis, depending upon whether they are hedging
their assets or their liabilities, and usually will enter into interest rate
swaps on a net basis, i.e., the two payment streams are netted out, with a Fund
receiving or paying, as the case may be, only the net amount of the two
payments. The net amount of the excess, if any, of a Fund's obligations over its
entitlement with respect to each interest rate swap will be calculated on a
daily basis, and an amount of cash or ^ 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.
<PAGE>
The swap market has grown substantially in recent years with a large
number of banks and investment banking firms acting both as principals and as
agents utilizing standardized swap documentation. Caps and floors are more
recent innovations for which standardized documentation has not yet been
developed and, accordingly, they are less liquid than swaps. To the extent a
Fund sells (i.e., writes) caps and floors, it will maintain in a segregated
account cash or high-grade liquid assets having an aggregate net asset value at
least equal to the full amount, accrued on a daily basis, of the Fund's
obligations with respect to any caps or floors.
There is no limit on the amount of interest rate swap transactions that may
be entered into by a Fund. These transactions may in some instances involve the
delivery of securities or other underlying assets by a Fund or its counterparty
to collateralize obligations under the swap. The documentation currently used in
those markets attempts to limit the risk of loss with respect to interest rate
swaps to the net amount of the payments that a party is contractually obligated
to make. If the other party to an interest rate swap that is not collateralized
defaults, the Fund would anticipate losing the net amount of the payments that
the Fund contractually is entitled to receive over the payments that the Fund is
contractually obligated to make. The Funds may buy and sell (i.e., write) caps
and floors without limitation, subject to the segregated account requirement
described above as well as the Funds' other investment restrictions set forth
below.
Investment Restrictions
As described in the Funds' Prospectuses, the Funds operate under certain
investment restrictions ^. These restrictions 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
<PAGE>
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 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 2 above, if the S&P 500 Index Fund has borrowed
money in an amount exceeding 5% of the value of the Fund's net assets, the Fund
will not purchase additional securities while any such borrowings exist.
<PAGE>
In applying restriction 7 above, the European Small Company Fund, the
Latin American Growth Fund and the Asian Growth Fund use an industry
classification system for international securities based on the information
obtained from Bloomberg L.P., Moody's International and the O'Neil Database
published by William O'Neil & Co., Inc.
Furthermore, the board of directors has adopted additional investment
restrictions for each Fund, unless specifically noted to the contrary. These
restrictions are operating policies of each Fund and may be changed by the board
of directors without shareholder approval. The additional investment
restrictions adopted by the board of directors to date with respect to each Fund
include the following:
(a) The Fund's investments in warrants, valued at the lower of cost or
market, may not exceed 5% of the value of its net assets. Included
within that amount, but not to exceed 2% of the value of the Fund's
net assets, may be warrants that are not listed on the New York or
American Stock Exchanges. Warrants acquired by the Fund in units or
attached to securities shall be deemed to be without value unless
such warrants are separately transferable and current market prices
are available, or unless otherwise determined by the board of
directors.
(b) The Fund will not (i) enter into any futures contracts or options on
futures contracts if immediately thereafter the aggregate margin
deposits on all outstanding futures contracts positions held by the
Fund and premiums paid on outstanding options on futures contracts,
after taking into account unrealized profits and losses, would exceed
5% of the market value of the total assets of the Fund, or (ii) enter
into any futures contracts if the aggregate net amount of the Fund's
commitments under outstanding futures contracts positions of the Fund
would exceed the market value of the total assets of the Fund.
(c) The Fund does not currently intend to sell securities short, unless
it owns or has the right to obtain securities equivalent in kind and
amount to the securities sold short without the payment of any
additional consideration therefor, and provided that transactions in
options, swaps and forward futures contracts are not deemed to
constitute selling securities short.
(d) The Fund does not currently intend to purchase securities on margin,
except that the Fund may obtain such short-term credits as are
necessary for the clearance of transactions, and provided that margin
payments and other deposits in connection with transactions in
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)
<PAGE>
purchase or retain securities issued by other open-end investment
companies. Limitations (i) and (ii) do not apply to money market
funds or to securities received as dividends, through offers of
exchange, or as a result of a reorganization, consolidation, or
merger. If the Fund invests in a money market fund, the Fund's
investment adviser will waive its advisory fee on the assets of the
Fund which are invested in the money market fund during the time
that those assets are so invested.
(f) The Fund may not mortgage or pledge any securities owned or held by
the Fund in amounts that exceed, in the aggregate, 15% of the Fund's
net assets, provided that this limitation does not apply to reverse
repurchase agreements or in the case of assets deposited to margin or
guarantee positions in futures, options, swaps or forward contracts
or placed in a segregated account in connection with such contracts.
(g) The Fund does not currently intend to purchase securities of any
issuer (other than U.S. Government agencies and instrumentalities or
instruments guaranteed by an entity with a record of more than three
years' continuous operation, including that of predecessors) with a
record of less than three years' continuous operation (including
that of predecessors) if such purchase would cause the Fund's
investments in all such issuers to exceed 5% of the Fund's total
assets taken at market value at the time of such purchase.
(h) The Fund does not currently intend to invest directly in oil, gas, or
other mineral development or exploration programs or leases; however,
the Fund may own debt or equity securities of companies engaged in
those businesses.
(i) The Fund does not currently intend to purchase any security or enter
into a repurchase agreement if, as a result, more than 15% of its net
assets would be invested in repurchase agreements not entitling the
holder to payment of principal and interest within seven days and in
securities that are illiquid by virtue of legal or contractual
restrictions on resale or the absence of a readily available market.
The board of directors, or the Fund's investment adviser acting
pursuant to authority delegated by the board of directors, may
determine that a readily 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
<PAGE>
Act, or any successor to such rule, and that such securities are not subject to
restriction (i) above. Under guidelines established by the board of directors,
Fund Management will consider the following factors, among others, in making
this determination: (1) the unregistered nature of a Rule 144A security, (2) the
frequency of trades and quotes for the security; (3) the number of dealers
willing to purchase or sell the security and the number of other potential
purchasers; (4) dealer undertakings to make a market in the security; and (5)
the nature of the security and the nature of marketplace trades (e.g., the time
needed to dispose of the security, the method of soliciting offers and the
mechanics of transfer).
The Company has voluntarily undertaken 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 Capital Appreciation
Funds, Inc. (formerly, INVESCO Dynamics Fund, Inc.), INVESCO Diversified Funds,
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 ^ 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 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 Distributors, Inc. of Denver, Colorado is a registered
broker-dealer that acts as the principal underwriter for retail mutual funds.
--INVESCO Capital Management, Inc. of Atlanta, Georgia^ manages
institutional investment portfolios, consisting primarily of discretionary
employee benefit plans for corporations and state and local governments, and
endowment funds. INVESCO Capital Management, Inc. is the sole shareholder of
INVESCO Services, Inc., a registered broker-dealer whose primary business is the
distribution of shares of two registered investment companies.
<PAGE>
--INVESCO Management & Research, 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 ^
insurance companies offering variable annuities and variable life insurance
products.
--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.
^ 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>
^ 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.
^ 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.
^ IFG has contracted with World Asset Management ("World") to provide
investment advisory and certain recordkeeping services to the S&P 500 Index
Fund. World has the primary responsibility for providing portfolio investment
management services to this Fund. World is unaffiliated with any IFG entity.
As indicated in the Fund's Prospectuses, IFG ^ and INVESCO Trust permit
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, INVESCO Trust and ^ their North
American affiliates. The policy requires officers, inside directors, investment
and other personnel of IFG, INVESCO Trust and ^ their 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, IAML, IRAI and World 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,
INVESCO Trust and ^ their 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 to each of
the Funds 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
<PAGE>
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 for an initial term expiring December 9, 1998. With respect to
the S&P 500 Index Fund, the Agreement was approved by IFG on ^ October 1, 1997
for an initial term ending ^ October 1, 1999. Thereafter, the Agreement may be
continued from year to year as to each Fund as long as each such continuance is
specifically approved at least annually by the board of directors of the
Company, or by a vote of the holders of a majority, as defined in the 1940 Act,
of the outstanding shares of the Fund. Any such continuance also must be
approved by a majority of the Company's directors who are not parties to the
Agreement or interested persons (as defined 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, or by a Fund with respect to that Fund, 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 ^ each Fund's 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
<PAGE>
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
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. With respect to the S&P 500 Index Fund, the fee is
calculated at the annual rate of 0.25% 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 of the Company 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 of the Company 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
<PAGE>
interested persons (as defined in the 1940 Act) of any such party, cast in
person at a meeting called for the purpose of voting on such continuance. The
European and Latin American Sub- Agreement may be terminated at any time without
penalty by either party or the Company upon sixty (60) days' written notice, and
terminates automatically in the event of an assignment to the extent required by
the 1940 Act and the rules thereunder.
INVESCO Asia serves as sub-adviser to the Asian Growth Fund pursuant to a
sub-advisory agreement dated February 28, 1997 (the "Asian Growth
Sub-Agreement") with IFG. The Asian Growth Sub- Agreement was approved by the
board of directors of the Company on November 6, 1996 by a vote cast in person
by a majority of the directors, including 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. The
Realty Sub-Agreement was approved by the board of directors of the Company on
November 6, 1996 by a vote cast in person by a majority of the directors
including a majority of the directors who are not "interested persons" of the
Company, IFG or IRAI at a meeting called for such purpose. The Realty Sub-
Agreement was approved 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.
<PAGE>
World serves as sub-adviser to the S&P 500 Index Fund pursuant to a
sub-advisory agreement dated ^ October 1, 1997 (the "S&P 500 Index
Sub-Agreement") with IFG which was approved by the board of directors on August
12, 1996, by a vote cast in person by a majority of the directors, including a
majority of the directors who are not "interested persons" of the Company, IFG
or World at a meeting called for such purpose. IFG approved the S&P 500 Index
Sub-Agreement on ^ October 1, 1997, for an initial term expiring ^ October 1,
1999. Thereafter, the S&P 500 Index 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 S&P 500 Index
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 S&P 500 Index Sub- Agreement may be terminated at any time
without penalty by either party or the Company upon sixty (60) days' written
notice, and terminates automatically in the event of an assignment to the extent
required by the 1940 Act and the rules thereunder.
The Sub-Agreements provide that INVESCO Trust, IAML, INVESCO Asia, IRAI and
World, 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 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
<PAGE>
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 S&P 500 Index Sub-Agreement provides that as compensation for
its services, World shall receive a fee from IFG at the end of each month, at
the rate of 0.07% of the Fund's average net assets up to $10 million, 0.05% of
the Fund's average net assets in excess of $10 million up to $40 million, and
0.03% of the Fund's average net assets in excess of $40 million. 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 by the board of directors on November 6,
1996, by a vote cast in person by all of the directors of the Company, including
all of the directors who are not "interested persons" of the Company or 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)
<PAGE>
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.
The Transfer Agency Agreement provides that ^ each Fund will pay to IFG an
annual fee of $20.00 per shareholder account ^ or, where applicable, per
participant in an omnibus account ^. This fee is paid monthly at a rate of 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.
Rule 18f-3 under the 1940 Act ("Rule 18f-3") permits a fund to use a
multiclass system, including separate class arrangements for distribution of
shares and related exchange privileges applicable to the classes. The S&P 500
Index Fund's Plan Pursuant to Rule 18f-3 provides that advisory and
administrative services fees that are expenses of the Fund but are not otherwise
attributable to a particular class of Fund shares shall be allocated to each
class on the basis of its net asset value relative to the net asset value of the
Fund.
<PAGE>
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.
<TABLE>
<CAPTION>
Year Ended Year Ended
July 31, 1996(1) July 31, 1995(1)
-------------------------------- ------------------------------------
Adminis- Adminis-
Transfer trative Transfer trative
Advisory Agency Services Advisory Agency Services
Fees Fees Fees Fees Fees Fees
-------- -------- -------- ----------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Worldwide Capital Goods $52,495 $35,801 $11,211 $32,382 $20,517 $10,747
Worldwide Communications $255,873 $151,435 $15,905 $101,129 $64,043 $12,334
European Small Company $271,008 $66,181 $15,420 $4,159(2) $2,300(2) $3,417(2)
Latin American Growth $130,913 $47,581 $12,618 $12,530(2) $5,295(2) $3,584(2)
Asian Growth Fund(3) $26,564 $16,399 $3,031 -0- -0- -0-
Realty Fund(4) $72,430 $45,182 $4,782 -0- -0- -0-
S&P 500 Index Fund(5) -0- -0- -0- -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.
(5) The S&P 500 Index Fund paid IFG no advisory, administrative or transfer
agency fees as of the date of this Statement of Additional Information since it
^ is not anticipated that the Fund will commence a public offering of its
securities until ^ November 15, 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' portfolios
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 Capital Appreciation Funds, Inc. (formerly, INVESCO Dynamics Fund,
Inc.), INVESCO Diversified Funds, 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. 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 INVESCO
Distributors, Inc.; 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); since October 1984, Director of the Center for the Study of
Regulated Industry of Georgia State University; formerly, member of the
faculties of the Harvard Business School and the Sloan School of Management of
MIT. Dr. Andrews is also a director of the Southeastern Thrift and Bank Fund,
Inc. and The Sheffield Funds, Inc. Address: 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.
WENDY L. GRAMM, Ph.D.,**# Director. Self-employed (since 1993); Professor
of Economics and Public Administration, University of Texas at Arlington.
Formerly, Chairman, Commodity Futures Trading Commission from 1988 to 1993,
administrator for Information and Regulatory Affairs at the Office of Management
and Budget from 1985 to 1988, Executive Director of the Presidential Task Force
on Regulatory Relief and Director of the Federal Trade Commission's Bureau of
Economics. Dr. Gramm is also a director of the Chicago Mercantile Exchange,
Enron Corporation, IBP, Inc., State Farm Insurance Company, State Farm Life
Insurance Company, Kinetic Concepts, Inc., Independant Women's Forum,
International Republic Institute, and the Republican Women's Federal Forum. Dr.
Gramm is also a member of the Board of Visitors, College of Business
Administration, University of Iowa, and a member of the Board of Visitors,
Center for Study of Public Choice, George Mason University. Address: 4201 Yuma
Street, N.W., Washington, D.C. Born: January 10, 1945.
HUBERT L. HARRIS, JR.,* Director. Chairman (since 1996) and President
(January 1990 to May 1996) of INVESCO Services, Inc.; Chief Executive Officer of
INVESCO Individual Services Group. Member of the Executive Committee of the
Alumni Board of Trustees of Georgia Institute of Technology. Address: 1315
Peachtree Street, NE, Atlanta, Georgia. Born: July 15, 1943.
<PAGE>
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.
GLEN A. PAYNE, Secretary. Senior Vice President (since 1995), General
Counsel and Secretary of INVESCO Funds Group, Inc. and INVESCO Trust Company
(since 1995) and of INVESCO Distributors, Inc. (since 1997); 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 1988) and of INVESCO
Distributors, Inc. (since 1997). Born: October 1, 1946.
WILLIAM J. GALVIN, JR., Assistant Secretary. Senior Vice President of
INVESCO Funds Group, Inc. (since 1995) and of INVESCO Distributors, Inc. (since
1997) 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. (since 1984) and of INVESCO Distributors, Inc. (since 1997) and Trust
Officer of INVESCO Trust Company. Born: September 14, 1941.
JUDY P. WIESE, Assistant Treasurer. Vice President of INVESCO Funds Group,
Inc. (since 1984) and of INVESCO Distributors, Inc. (since 1997) and Trust
Officer of INVESCO Trust Company. Born: February 3, 1948.
#Member of the audit committee of the Company.
<PAGE>
+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 ^ September 18, 1997, officers and directors of the Company, as a
group, beneficially owned less than 1% of the Company's outstanding shares
broken down as ^.00093% of the Worldwide Capital Goods Fund, ^.00022% of the
Worldwide Communications Fund, ^.00047% of the European Small Company Fund,
^.00157% of the Latin American Growth Fund, ^.00009% of the Asian Growth Fund
and ^.00116% of the Realty Fund.
Director Compensation
The following table sets forth, for the fiscal year ending July 31, 1996:
the compensation paid by the Company to its eight eligible independent directors
for services rendered in their capacities as directors of the Company; the
benefits accrued as Company expenses with respect to the Defined Benefit
Deferred Compensation Plan discussed below; and the estimated annual benefits to
be received by these directors upon retirement as a result of their service to
the Company. In addition, the table sets forth the total compensation paid by
all of the mutual funds distributed by ^ IDI (including the Company), ^ 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. Dr. Gramm became an independent director of the
Company effective July 29, 1997, and is not included in the following chart. Mr.
Frazier resigned as a director of the Company effective February 28, 1997.
<PAGE>
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. McIntyre 2,350 0 0 67,850
------- ---- ---- --------
Total $18,9015 $413 $375 $571,400
% of Net Assets 0.0095%(6) 0.0002% .0043%(7)
(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.
<PAGE>
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 INVESCO PLC
(the predecessor to AMVESCAP PLC), a company affiliated with IFG. Because it was
possible that Mr. Frazier would be so employed ^, he was deemed to be an
"interested person" of the Company and of the other funds in the INVESCO Complex
effective May 1, 1996. 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.
Messrs. Brady, Harris 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
<PAGE>
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 Trust 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 ^ five of the
directors who are not interested persons of the Company. The committee meets
periodically with the Company's independent accountants and officers to review
accounting principles used by the Company, the adequacy of internal controls,
the responsibilities and fees of the independent accountants, and other matters.
The Company also has a management liaison committee which meets quarterly
with various management personnel of 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." ^ IDI 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 ^ in the Prospectuses, the Company has
adopted a Plan and Agreement of Distribution (the "Plan") pursuant to Rule 12b-1
under the 1940 Act^. There is no distribution fee applicable to Class I shares
of the S&P 500 Index Fund. The Plan provides that each Fund may make monthly
<PAGE>
payments to ^ IDI of amounts computed at an annual rate no greater than
0.25% of a Fund's average net assets to permit ^ IDI, 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 ^ IDI for permissible
activities engaged in and services provided by ^ IDI 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. All distribution expenses paid by the Funds for the fiscal year
ended July 31, 1996, were paid to IFG, the predecessor of IDI, distributor of
shares of the Funds. During the fiscal year ended July 31, 1996, the Capital
Goods Fund, Communications Fund, European Small Company Fund and Latin American
Growth Fund incurred ^ $20,545, $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 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 ^ IDI-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 ^ IDI 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 ^ IDI, but can
give no assurance in this regard. However, to the extent it is determined
otherwise in the future, arrangements with banks might have to be modified or
terminated, and, in that case, the size of 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--^ $4,875; 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
<PAGE>
July 31, 1996, allocation of 12b-1 amounts paid by the European Small Company
Fund for the following categories of expenses were: advertising--^ $30,194;
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 ^ Growth Fund for the following categories of expenses were:
advertising--$1,440; sales literature, printing and postage-- $1,233; direct
mail--$2,781; public relations/promotion--$40; compensation to securities
dealers and other organizations--$47; marketing personnel--$72. 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 initial 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 and has been continued by action of the board of directors until May 15,
1998. ^ 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 did not result in increasing the amount of any
<PAGE>
Fund's payments thereunder. With respect to Class II shares of the S&P 500 Index
Fund, the Plan was approved by action of the board of directors of the Company
on August 12, 1996 for a period running to May 15, 1998. Pursuant to
authorization granted by the Company's board of directors on September 2, 1997,
a new Plan became effective on September 29, 1997, under which IDI assumes all
obligations related to distribution from IFG.
The Plan provides that it shall continue in effect with respect to each
Fund for so long as such continuance is approved at least annually by the vote
of the board of directors of the Company cast in person at a meeting called for
the purpose of voting on such continuance. The Plan also can be terminated at
any time with respect to any Fund, without penalty, if a majority of the 12b-1
directors, or shareholders of such Fund, vote to terminate the Plan. The Company
may, in its absolute discretion, suspend, discontinue or limit the offering of
the shares of any Fund at any time. In determining whether any such action
should be taken, the board of directors intends to consider all relevant factors
including, without limitation, the size of the Funds, the investment climate for
any particular Fund, general market conditions, and the volume of sales and
redemptions of Fund shares. The Plan may continue in effect and payments may be
made under the Plan following any such temporary suspension or limitation of the
offering of a Fund's shares; however, the Company is not contractually obligated
to continue the Plan for any particular period of time. Suspension of the
offering of a Fund's shares would not, of course, affect a shareholder's ability
to redeem his or her shares. So long as the 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, ^ IDI 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 ^ IDI shall
terminate automatically, in the event of such "assignment," in which event the
Funds may continue to make payments, pursuant to the Plan, to ^ IDI or another
organization only upon the approval of new arrangements, which may or may not be
with ^ IDI, 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.
<PAGE>
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 ^"The Funds and Their Management -- Officers and
Directors of the Company" who are also officers either of IFG or companies
affiliated with IFG. The benefits which 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 ^ IDI and its affiliated companies:
(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 ^ IDI and its affiliated companies (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 ^ Funds' Prospectuses ^, the net asset value of shares
or class 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 ^ that 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 or class of shares 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 liabilities of the Fund or class
(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 value of securities held by the Funds ^ is 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
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
<PAGE>
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) exponent n = ERV
where: P = initial payment of $1000
T = average annual total return
n = number of years
ERV = ending redeemable value of initial payment
In conjunction with performance reports, comparative data between the
Funds' performance for a given period and other types of investment vehicles,
including certificates of deposit, may be provided to prospective investors and
shareholders.
From time to time, evaluations of performance made by independent sources
may also be used in advertisements, sales literature or shareholder reports,
including reprints of, or selections from, editorials or articles about the
Funds. Sources for Fund performance information and articles about the Funds
include, but are not limited to, the following:
<PAGE>
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 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.
<PAGE>
Participation 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 ^ Policy. As discussed in the Funds' Prospectuses, the Funds offer
shareholders the ^ ability to exchange 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 INVESCO funds. All exchanges that have established a NEW
account must meet the fund's applicable minimum initial investment requirements.
Written exchange requests into an existing account have no minimum requirements
other than the fund's applicable minimum subsequent investment requirements. Any
gain or loss realized on such an exchange is recognized for federal income tax
purposes. This privilege is not an option or right to purchase securities, but
is a revocable privilege permitted under the present policies of each of the
funds and is not available in any state or other jurisdiction where the shares
of the mutual fund into which transfer is to be made are not qualified for sale,
or when the net asset value of the shares presented for exchange is less than
the minimum dollar purchase required by the appropriate prospectus.
TAX-DEFERRED RETIREMENT PLANS
As described in the Funds' Prospectuses, shares of a Fund may be purchased
as the investment medium for various tax-deferred retirement plans. Persons who
request information regarding these plans from 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.
HOW TO REDEEM SHARES
Normally, payments for shares redeemed will be mailed within seven (7)
days following receipt of the required documents as described in the ^ Funds'
Prospectuses ^. 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 SEC by order so
permits.
<PAGE>
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 ^
three-month 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 so qualify during its current
fiscal year. As a result, it is anticipated that each Fund will pay no federal
income or excise taxes and will be accorded conduit or "pass through" treatment
for federal income tax purposes.
Dividends paid by each Fund from net investment income as well as
distributions of net realized short-term capital gains and net realized gains
from certain foreign currency transactions are, for federal income tax purposes,
taxable as ordinary income to shareholders. After the end of each calendar year,
each Fund sends shareholders information regarding the amount and character of
dividends paid in the year, including the dividends eligible for the
dividends-received deduction for corporations. Such amounts will be limited to
the aggregate amount of qualifying dividends which each Fund derives from its
portfolio investments.
Distributions by each Fund of net capital gain (the excess of net
long-term capital gain over net short-term capital loss) are, for federal income
tax purposes, taxable to the shareholder as long-term capital gains regardless
of how long a shareholder has held shares of a Fund. Such distributions are
identified as such and are not eligible for the dividends-received deduction.
All dividends and other distributions are regarded as taxable to the
investor, whether or not such dividends and distributions are reinvested in
additional shares. If the net asset value of Fund shares should be reduced below
a shareholder's cost as a result of a distribution, such distribution would be
taxable to the shareholder although a portion would be, in effect, a return of
invested capital. The net asset value of shares of a Fund reflects accrued net
investment income and undistributed realized capital and foreign currency gains;
<PAGE>
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
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.
<PAGE>
Each Fund, except the S&P 500 Index Fund, may invest in the stock of
"passive foreign investment companies" (PFICs"). A PFIC is a foreign corporation
that, in general, meets either of the following tests: (1) at least 75% of its
gross income is passive or (2) an average of at least 50% of its assets produce,
or are held for the production of, passive income. Under certain circumstances,
a Fund will be subject to federal income tax on a portion of any "excess
distribution" received on the stock of a PFIC or of any gain on disposition of
the stock (collectively "PFIC income"), plus interest thereon, even if a Fund
distributes the PFIC income as a taxable dividend to its shareholders. The
balance of the PFIC income will be included in a Fund's investment company
taxable income and, accordingly, will not be taxable to it to the extent that
income is distributed to its shareholders.
Gains or losses (1) from the disposition of foreign currencies, (2) from
the disposition of debt securities denominated in foreign currency that are
attributable to fluctuations in the value of the foreign currency between the
date of acquisition of each security and the date of disposition, and (3) that
are attributable to fluctuations in exchange rates that occur between the time a
Fund accrues interest, dividends or other receivables or accrues expenses or
other liabilities denominated in a foreign currency and the time each Fund
actually collects the receivables or pays the liabilities, generally will be
treated as ordinary income or loss. These gains or losses may increase or
decrease the amount of a Fund's investment company taxable income to be
distributed to its shareholders.
Shareholders should consult their own tax advisers regarding specific
questions as to federal, state and local taxes. Dividends and capital gain
distributions will generally be subject to applicable state and local taxes.
Qualification as a regulated investment company under the Internal Revenue Code
of 1986, as amended, for income tax purposes does not entail government
supervision of management or investment policies.
INVESTMENT PRACTICES
Portfolio Turnover. There are no fixed limitations regarding the portfolio
turnover of the Funds. Brokerage costs to these Funds are 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
<PAGE>
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, IRAI or World, as the Funds'
sub-advisers, places orders for the purchase and sale of securities with brokers
and dealers based upon IFG's, INVESCO Trust's, IAML's, INVESCO Asia's, IRAI's or
World'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 each Fund's portfolio transactions ^, viewed
in terms of the size of transactions, prevailing market conditions in the
security purchased or sold, and general economic and market conditions. In
seeking to ensure that ^ any commissions charged the Funds are consistent with
prevailing and reasonable commissions^. Each Fund's advisor or sub-advisor also
endeavor to monitor brokerage industry practices with regard to the commissions
charged by brokers and dealers on transactions effected for other comparable
institutional investors. While ^ each Fund's advisor or sub-advisor seeks
reasonably competitive rates, the Funds do not necessarily pay the lowest
commission or spread available.
Consistent with the standard of seeking to obtain the best execution on
portfolio transactions, Fund Management may select brokers that provide research
services to effect such transactions. Research services consist of statistical
and analytical reports relating to issuers, industries, securities and economic
factors and trends, which may be of assistance or value to Fund Management in
making informed investment decisions. Research services prepared and furnished
by brokers through which the Funds effect securities transactions may be used 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.
<PAGE>
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 ^ IDI based on the number of investors who have beneficial
interests in the NTF Program Sponsor's omnibus accounts in the Funds. ^ IDI, in
turn, pays these transfer agency fees to the NTF Program Sponsor as a
sub-transfer agency or recordkeeping fee in payment of all or a portion of the
Services Fee. In the event that the sub-transfer agency or recordkeeping fee is
insufficient to pay all of the Services Fee with respect to these NTF Programs,
the directors of the Company have authorized the Company to apply dollars
generated from the Plan to pay the remainder of the Services Fee, subject to the
maximum Rule 12b-1 fee permitted by the Plan. ^ IDI 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 ^ IDI to place a portion of each Fund's brokerage
transactions with certain NTF Program Sponsors or their affiliated brokers, if ^
IDI 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 ^ IDI 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 ^ IDI 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, ^ IDI 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 ^ IDI prior to each fiscal year-end of the Funds. The
Company's board of directors has also authorized the Funds to pay to ^ IDI the
full Rule 12b-1 fees contemplated by the Plan ^ to compensate IDI for expenses
incurred by ^ IDI 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 ^ compensate
IDI for payments to such NTF Program Sponsor absent such credits.
<PAGE>
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,
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
<PAGE>
Neither IFG, INVESCO Trust, IAML, INVESCO Asia, IRAI nor World 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, IRAI and World, or any person affiliated with IFG, INVESCO Trust, IAML,
INVESCO Asia, IRAI and World, or the Funds and any broker or dealer that
executes transactions for the Funds.
ADDITIONAL INFORMATION
Common Stock. The Company has ^ 800,000,000 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 Capital Goods,
Communications, European Small Company, Latin American Growth, Asian Growth and
Realty Funds, and 200,000,000 shares have been allocated to the S&P 500 Index
Fund -- 100,000,000 to each class. As of June 30, 1997, 1,605,932 shares of the
Capital Goods Fund, 4,391,558 shares of the Communications Fund, 6,250,882
shares of the European Small Company Fund, 7,163,898 shares of the Latin
American Growth Fund, 2,931,885 shares of the Asian Growth Fund, and 3,199,973
shares of the Realty Fund were outstanding. The S&P 500 Index Fund has been
allocated 100,000,000 shares to each of its classes; however, no shares were
outstanding as of the date of this Statement of Additional Information. 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 or class of series in a particular portfolio of investments of the
Company. Each series or class of series of the Company's shares is preferred
over all other series or class of series with respect to the assets specifically
allocated to that series or class of 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 or class of series. The assets of each series
or class of series are segregated on the books of account and are charged with
the liabilities of that series or class of 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 and classes of 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 or class of
series. In the unlikely event that a liability allocable to one series or class
of series exceeds the assets belonging to the series or class of series, all or
a portion of such liability may have to be borne by the holders of shares of the
Company's other series or class of series.
All Fund shares^ 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
<PAGE>
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. Directors may appoint their own
successors, provided that always at least a majority of the directors have been
elected by 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 ^ September 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. ^ 298,598.6010 16.957
Special Custody Acct. for the
Exclusive Benefit of Customers
101 Montgomery St.
San Francisco, CA 94104
FTC & Co. 146,372.8550 8.312
Attn: Datalynx
#B38
P.O. Box 5508
Denver, CO 80217
National Financial Services Corp. ^ 144,767.7660 8.221
The Exclusive Benefit of Cust.
One World Financial Center
200 Liberty St. 5th Floor
New York, NY 10281
^
<PAGE>
INVESCO Worldwide
Communications Fund
- -------------------
Charles Schwab & Co. Inc. ^ 834,445.4410 20.099
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. ^ 1,596,683.2920 37.369
Special Custody Acct. for the
Exclusive Benefit of Customers
101 Montgomery St.
San Francisco, CA 94104
Donaldson Lufkin & Jenrette ^ 250,024.3490 5.852
Securities Corp.
Mutual Funds
Fifth Floor
P.O. Box 2052
Jersey City, NJ 07303
INVESCO Latin American Growth Fund
- ----------------------------------
Charles Schwab & Co. Inc. ^ 2,517,360.4740 37.222
Special Custody Acct. for the
Exclusive Benefit of Customers
101 Montgomery St.
San Francisco, CA 94104
INVESCO Asian Growth Fund
- -------------------------
Charles Schwab & Co. Inc. ^ 665,626.6810 29.381
Special Custody Acct. for the
Exclusive Benefit of Customers
101 Montgomery St.
San Francisco, CA 94104
<PAGE>
INVESCO Realty Fund
- -------------------
Charles Schwab & Co. Inc. ^ 567,709.6020 17.761
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.
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
Communications, Capital Goods, European Small Company and Latin American Growth
Funds for the fiscal year ended July 31, 1996 and for the Asian Growth Fund for
the period 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.
<PAGE>
Prospectus. The Company will furnish, without charge, a copy of any Fund's
Prospectus upon request. Such requests should be made to the Company at the
mailing address or telephone number set forth on the first page of this
Statement of Additional Information.
Registration Statement. This Statement of Additional Information and the
related Prospectuses do not contain all of the information set forth in the
Registration Statement the Company has filed with the Securities and Exchange
Commission. The complete Registration Statement may be obtained from the
Securities and Exchange Commission upon payment of the fee prescribed by the
rules and regulations of the Commission.
<PAGE>
APPENDIX A
DESCRIPTION OF FUTURES AND OPTIONS CONTRACTS
Options on Securities
An option on a security provides the purchaser, or "holder," with the
right, but not the obligation, to purchase, in the case of a "call" option, or
sell, in the case of a "put" option, the security or securities underlying the
option, for a fixed exercise price up to a stated expiration date. The holder
pays a non-refundable purchase price for the option, known as the "premium." The
maximum amount of risk the purchaser of the option assumes is equal to the
premium plus related transaction costs, although the entire amount may be lost.
The risk of the seller, or "writer," however, is potentially unlimited, unless
the option is "covered," which is generally accomplished through the writer's
ownership of the underlying security, in the case of a call option, or the
writer's segregation of an amount of cash or securities equal to the exercise
price, in the case of a put option. If the writer's obligation is not so
covered, it is subject to the risk of the full change in value of the underlying
security from the time the option is written until exercise.
Upon exercise of the option, the holder is required to pay the purchase
price of the underlying security, in the case of a call option, or to deliver
the security in return for the purchase price, in the case of a put option.
Conversely, the writer is required to deliver the security, in the case of a
call option, or to purchase the security, in the case of a put option. Options
on securities which have been purchased or written may be closed out prior to
exercise or expiration by entering into an offsetting transaction on the
exchange on which the initial position was established, subject to the
availability of a liquid secondary market.
Options on securities are traded on national securities exchanges, such as
the Chicago Board of Options Exchange and the New York Stock Exchange, which are
regulated by the Securities and Exchange Commission. The Options Clearing
Corporation guarantees the performance of each party to an exchange-traded
option, by in effect taking the opposite side of each such option. A holder or
writer may engage in transactions in exchange-traded options on securities and
options on indices of securities only through a registered broker/dealer which
is a member of the exchange on which the option is traded.
An option position in an exchange-traded option may be closed out only on
an exchange which provides a secondary market for an option of the same series.
Although the Funds will generally purchase or write only those options for which
there appears to be an active secondary market, there is no assurance that a
liquid secondary market on an exchange will exist for any particular option at
any particular time. In such event it might not be possible to effect closing
transactions in a particular option with the result that the Funds would have to
exercise the option in order to realize any profit. This would result in the
Funds incurring brokerage commissions upon the disposition of underlying
securities acquired through the exercise of a call option or upon the purchase
<PAGE>
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
transaction. The Fund will engage in OTC option transactions only with primary
U.S. Government securities dealers recognized by the Federal Reserve Bank of New
York.
<PAGE>
Futures Contracts
A Futures Contract is a bilateral agreement providing for the purchase and
sale of a specified type and amount of a financial instrument or foreign
currency, or for the making and acceptance of a cash settlement, at a stated
time in the future, for a fixed price. By its terms, a Futures Contract provides
for a specified settlement date on which, in the case of the majority of
interest rate and foreign currency futures contracts, the fixed income
securities or currency underlying the contract are delivered by the seller and
paid for by the purchaser, or on which, in the case of stock index futures
contracts and certain interest rate and foreign currency futures contracts, the
difference between the price at which the contract was entered into and the
contract's closing value is settled between the purchaser and seller in cash.
Futures Contracts differ from options in that they are bilateral agreements,
with both the purchaser and the seller equally obligated to complete the
transaction. In addition, Futures Contracts call for settlement only on the
expiration date, and cannot be "exercised" at any other time during their term.
The purchase or sale of a Futures Contract also differs from the purchase
or sale of a security or the purchase of an option in that no purchase price is
paid or received. Instead, an amount of cash or cash equivalent, which varies
but may be as low as 5% or less of the value of the contract, must be deposited
with the broker as "initial margin." Subsequent payments to and from the broker,
referred to as "variation margin," are made on a daily basis as the value of the
index or instrument underlying the Futures Contract fluctuates, making positions
in the Futures Contract more or less valuable, a process known as "marking to
market."
A Futures Contract may be purchased or sold only on an exchange, known as a
"contract market," designated by the Commodity Futures Trading Commission for
the trading of such contract, and only through a registered futures commission
merchant which is a member of such contract market. A commission must be paid on
each completed purchase and sale transaction. The contract market clearing house
guarantees the performance of each party to a Futures Contract, by in effect
taking the opposite side of such Contract. At any time prior to the expiration
of a Futures Contract, a trader may elect to close out its position by taking an
opposite position on the contract market on which the position was entered into,
subject to the availability of a secondary market, which will operate to
terminate the initial position. At that time, a final determination of variation
margin is made and any loss experienced by the trader is required to be paid to
the contract market clearing house while any profit due to the trader must be
delivered to it.
Interest rate futures contracts currently are traded on a variety of fixed
income securities, including long-term U.S. Treasury Bonds, Treasury Notes,
Government National Mortgage Association modified pass-through mortgage-backed
securities, U.S. Treasury Bills, bank certificates of deposit and commercial
paper. In addition, interest rate futures contracts include contracts on indices
of municipal securities. Foreign currency futures contracts currently are traded
on the British pound, Canadian dollar, Japanese yen, Swiss franc, West German
mark and on Eurodollar deposits.
<PAGE>
Options on Futures Contracts
An Option on a Futures Contract provides the holder with the right to
enter into a "long" position in the underlying Futures Contract, in the case of
a call option, or a "short" position in the underlying Futures Contract, in the
case of a put option, at a fixed exercise price to a stated expiration date.
Upon exercise of the option by the holder, the contract market clearing house
establishes a corresponding short position for the writer of the option, in the
case of a call option, or a corresponding long position, in the case of a put
option. In the event that an option is exercised, the parties will be subject to
all the risks associated with the trading of Futures Contracts, such as payment
of variation margin deposits. In addition, the writer of an Option on a Futures
contract, unlike the holder, is subject to initial and variation margin
requirements on the option position.
A position in an Option on a Futures Contract may be terminated by the
purchaser or seller prior to expiration by effecting a closing purchase or sale
transaction, subject to the availability of a liquid secondary market, which is
the purchase or sale of an option of the same series (i.e., the same exercise
price and expiration date) as the option previously purchased or sold. The
difference between the premiums paid and received represents the trader's profit
or loss on the transaction.
An option, whether based on a Futures Contract, a stock index or a
security, becomes worthless to the holder when it expires. Upon exercise of an
option, the exchange or contract market clearing house assigns exercise notices
on a random basis to those of its members which have written options of the same
series and with the same expiration date. A brokerage firm receiving such
notices then assigns them on a random basis to those of its customers which have
written options of the same series and expiration date. A writer therefore has
no control over whether an option will be exercised against it, nor over the
time of such exercise.
<PAGE>
APPENDIX B
BOND RATINGS
The following is a description of ^ the Moody's and S&P 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.
^ S&P Corporate Bond Ratings
AAA - This is the highest rating assigned by Standard & Poor's to a debt
obligation and indicates an extremely strong capacity to pay principal and
interest.
AA - Bonds rated AA also qualify as high-quality debt obligations.
Capacity to pay principal and interest is very strong, and in the majority of
instances they differ from AAA issues only in small degree.
A - Bonds rated A have a strong capacity to pay principal and interest,
although they are somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions than bonds in higher rated categories.
BBB - Bonds rated BBB are regarded as having an adequate capability to pay
principal and interest. Whereas they normally exhibit adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay principal and interest for bonds in
this category than for bonds in higher rated categories.
BB - Bonds rated BB have less near-term vulnerability to default than
other speculative issues. However, they face major ongoing uncertainties or
exposure to adverse business, financial, or economic conditions which could lead
to inadequate capacity to meet timely interest and principal payments.
B - Bonds rated B have a greater vulnerability to default but currently
have the capacity to meet interest payments and principal repayments. Adverse
business, financial, or economic conditions will likely impair capacity or
willingness to pay interest and repay principal.
CCC - Bonds rated CCC have a currently identifiable vulnerability to
default and are dependent upon favorable business, financial, and economic
conditions to meet timely payment of interest and repayment of principal. In the
event of adverse business, financial, or economic conditions, they are not
likely to have the capacity to pay interest and repay principal.
<PAGE>
FINANCIAL STATEMENTS
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>
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
on the accrual basis. Cost is determined on the specific identification
basis.
<PAGE>
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.
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.
<PAGE>
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
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):
None.
Page in
Statement
of Addi-
tional In-
formation
----------
(2) Unaudited Statement of 91
Investment Securities for the
Realty Fund as of May 31,
1997.
Unaudited Statement of Assets 94
and Liabilities for the Realty
Fund as of May 31, 1997.
Unaudited Statement of 95
Operations for the Realty Fund
for the period January 2, 1997
(commencement of operations)
through May 31, 1997.
Unaudited Statement of Changes 96
in Net Assets for the Realty
Fund for the period January 2,
1997 (commencement of
operations) through May 31,
1997.
Unaudited Financial Highlights 97
for the Realty 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
<PAGE>
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:
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 ^ for the European Small
Company, Latin American Growth,
Worldwide Capital Goods
and Worldwide Communications
Funds and for the period ended
July 31, ^ 1996 for the Asian
Growth Fund; Statement of Changes
in Net Assets for the year ended
July 31, 1996 and ^ July 31,
1995 for the Worldwide Capital
Goods and Worldwide
Communications Funds, for the
year ended July 31, 1996 and
the period ended July 31, 1995
for the European Small Company
and Latin American Growth Funds
and for the period ended July 31,
1996 for the Asian Growth Fund;
and Financial Highlights for the
year ended July 31, 1996 and
July 31, 1995 for the Worldwide
Capital Goods and Worldwide
Communications Funds, for the
year ended July 31, 1996 and the
period ended July 31, 1995 for
the European Small Company and
Latin American Growth Funds and
for the period ended July 31,
1996 for the Asian Growth Fund.
<PAGE>
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
7, 1996.(4)
<PAGE>
(e) ^ Articles Supplementary
to the Company's Articles
of Incorporation dated
^ September 25, 1997.
(2) Bylaws.(3)
(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.(5)
(i) ^ Amendment to
Investment Advisory
Agreement dated ^ October
1, 1997.
(b) Sub-Advisory Agreement
Between INVESCO Funds Group,
Inc. and INVESCO Trust Company
dated February 28, 1997.(4)
(c) Sub-advisory Agreement
between INVESCO Funds Group,
Inc. and INVESCO Asia Ltd.
dated February 28, 1997.(4)
(d) Sub-advisory Agreement
between INVESCO Funds Group,
Inc. and INVESCO Asset
Management Limited dated
February 28, 1997.(4)
(e) Sub-Advisory Agreement
between INVESCO Funds Group,
Inc. and INVESCO Realty
Advisors dated ^ February 28,
1997.(4)
<PAGE>
(f) ^ Sub-Advisory Agreement
between INVESCO Funds Group,
Inc. and World Asset
Management.
(6) (a) Distribution Agreement
Between Registrant and
INVESCO Funds Group, Inc.
dated February 28, 1997.(4)
(b) Form of Distribution
Agreement Between
Registrant and
INVESCO
Distributors, Inc.
dated _____________.
(7) Defined Benefit Deferred
Compensation Plan for Non-
Interested Directors and
Trustees.(4)
(8) Custody Agreement Between
Registrant and State Street
Bank and Trust Company dated
May 2, 1994.(3)
(a) Amendment to Custody
Agreement dated October 25,
1995.(3)
(b) Data Access Services ^
Addendum.(5)
(9) (a) Transfer Agency Agreement
Between Registrant and INVESCO
Funds Group, Inc. dated
February 28, 1997.(4)
(b) Administrative Services
Agreement between Registrant
and INVESCO Funds Group, Inc.
dated February 28, 1997.(4)
<PAGE>
(10) Opinion and consent of counsel
as to the legality of the
securities being registered,
indicating whether they will,
when sold, be legally issued,
fully paid and nonassessable
dated May 18, 1994.(4)
(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) (a) Plan and Agreement of
Distribution dated May 2,
1994 adopted pursuant to
Rule 12b-1 under the
Investment Company Act of
1940.(1)
^(i) Amendment of Plan
and Agreement of
Distribution dated
July 19, 1995.(1)
<PAGE>
^(ii) Amended Plan and
Agreement of
Distribution
Pursuant to 12b-1
dated January 1,
1997.(4)
(b) Form of Plan and
Agreement of
Distribution dated
__________________
between the
Registrant and
INVESCO
Distributors, Inc.
adopted pursuant to
Rule 12b-1 under the
Investment Company
Act of 1940.
(16) (a) Schedule for Computation
of Performance Data for
Worldwide Capital Goods
Fund.(4)
(b) Schedule for Computation
of Performance Data for
Worldwide Communications
Fund.(4)
(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.
<PAGE>
(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) ^ Form of Plan Pursuant to Rule 18f-3
under the Investment Company Act
of 1940 by the Registrant adopted
by the Board of Directors May 16,
1997.
- ---------------
(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.
(3)Previously filed on EDGAR with Post-Effective Amendment No. 10 to the
Registration Statement on November 22, 1996, and incorporated by reference
herein.
(4)Previously filed on EDGAR with Post-Effective Amendment No. 11 to the
Registration Statement on June 27, 1997, and incorporated by reference herein.
(5)Previously filed on EDGAR with Post-Effective Amendment No. 12 to the
Registration Statement on July 16, 1997, and incorporated by reference herein.
Item 25. Persons Controlled by or Under Common Control With
Registrant
No person is presently controlled by or under common control with
Registrant.
<PAGE>
Item 26. Number of Holders of Securities
Number of Record
Holders as of
Title of Class ^ September 1, 1997
-------------- -----------------
INVESCO Worldwide Capital Goods Fund ^ 2,219
INVESCO Worldwide Communications Fund ^ 9,254
INVESCO European Small Company Fund ^ 8,686
INVESCO Latin American Growth Fund ^ 11,571
INVESCO Asian Growth Fund ^ 4,233
INVESCO Realty Fund ^ 5,943
Item 27. Indemnification
Indemnification provisions for officers and directors of Registrant are
set forth in Article VII, Section 2 of the Articles of Incorporation, and are
hereby incorporated by reference. See Item 24(b)(1) above. Under these Articles,
officers and directors will be indemnified to the fullest extent permitted to
directors by the Maryland General Corporation Law, subject only to such
limitations as may be required by the Investment Company Act of 1940, as
amended, and the rules thereunder. Under the Investment Company Act of 1940,
Fund directors and officers cannot be protected against liability to the Company
or its shareholders to which they would be subject because of willful
misfeasance, bad faith, gross negligence or reckless disregard of the duties of
their office. The Company also maintains liability insurance policies covering
its directors and officers.
Item 28. Business and Other Connections of Investment Adviser
See "The Funds and Their Management" in the Funds' Prospectuses and
in the Statement of Additional Information for information regarding the
business of the investment adviser. For information as to the business,
profession, vocation or employment of a substantial nature of each of the
officers and directors of INVESCO Funds Group, Inc., reference is made to the
Schedule Ds to the Form ADV filed under the Investment Advisers Act of 1940 by
INVESCO Funds Group, Inc., which schedules are herein incorporated by reference.
Item 29. Principal Underwriters
(a) INVESCO Capital Appreciation Funds, Inc.
INVESCO Diversified Funds, 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 ^ St. NE the Board
Atlanta, GA 30309
Frederick W. Braley Chief Financial
400 Colony Square, Suite 2200 Officer and
1201 Peachtree St., N.E. Treasurer
Atlanta, GA 30361
Scott P. Brogan Senior Vice
400 Colony Square, Suite 2200 President
1201 Peachtree St., N.E.
Atlanta, GA 30361
Darryl ^ Celkupa Vice President
7800 E. Union Avenue
Denver, CO 80237
Rayane S. Clark Vice President -
400 Colony Square, Suite 2200 Defined Contribu-
1201 Peachtree St., N.E. tions, Operations
Atlanta, GA 30361
M. Anthony Cox Senior Vice
1315 Peachtree St., N.E. President
Atlanta, GA 30309
Robert D. Cromwell ^ Regional Vice
7800 E. Union Avenue President
Denver, CO 80237
^ Mary Ann Dallenbach Senior Vice
400 Colony Square, Suite 2200 President
1201 Peachtree St., N.E.
Atlanta, GA 30361
<PAGE>
Positions and Positions and
Name and Principal Offices with Offices with
Business Address Underwriter Registrant
- ------------------ ------------- -------------
Douglas P. Dohm Regional Vice
400 Colony Square, Suite 2200 President
1201 Peachtree St., N.E.
Atlanta, GA 30361
William J. Galvin, Jr. Senior Vice Assistant
7800 E. Union Avenue President Secretary
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.
Off.
Hubert L. Harris, Jr. Director Director
1315 Peachtree Street NE
Atlanta, GA 30309
Dan J. Hesser Chairman of the President,
7800 E. Union Avenue Board, President, CEO & Dir.
Denver, CO 80237 Chief Executive
Officer, &
Director
Thomas M. Hurley Vice President
7800 E. Union Avenue
Denver, CO 80237
Gregory E. Hyde Vice President
7800 E. Union Avenue
Denver, CO 80237
Joseph B. Jennings Senior Vice
400 Colony Square, Suite 2200 President
1201 Peachtree St., N.E.
Atlanta, GA 30361
<PAGE>
Positions and Positions and
Name and Principal Offices with Offices with
Business Address Underwriter Registrant
- ------------------ ------------- -------------
Mark A. Jones Senior Vice
400 Colony Square, Suite 2200 President
1201 Peachtree St., N.E.
Atlanta, GA 30361
Jeraldine E. Kraus Assistant ^
7800 E. Union Avenue Secretary
Denver, CO 80237
Michael D. Legoski ^ Assistant Vice
7800 E. Union Avenue President
Denver, CO 80237
James F. Lummanick Vice President;
7800 E. Union Avenue ^ Assistant
^ Denver, CO 80237 General Counsel
Barbara L. March Senior Vice
400 Colony Square, Suite 2200 President
1201 Peachtree St., N.E.
Atlanta, GA 30361
Charles P. Mayer Director
7800 E. Union Avenue
Denver, CO 80237
Robert J. O'Connor Director
1201 Peachtree Street NE
Atlanta, GA 30361
^
Laura M. Parsons Vice President
7800 E. Union Avenue
Denver, CO 80237
Glen A. Payne Senior Vice Secretary ^
7800 E. Union Avenue President,
Denver, CO 80237 Secretary &
General Counsel
<PAGE>
Positions and Positions and
Name and Principal Offices with Offices with
Business Address Underwriter Registrant
- ------------------ ------------- -------------
^ Kent Schmeckpepper Assistant Vice
7800 E. Union Avenue President
Denver, CO 80237
Terri Berg Smith Vice President
7800 E. Union Avenue
Denver, CO 80237
^ Tane T. Tyler Asst. Vice
7800 E. Union Avenue ^ 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 ^ 80239
^
(c) Not applicable.
Item 30. Location of Accounts and Records
Dan J. Hesser
7800 E. Union Avenue
Denver, CO 80237
Item 31. Management Services
Not applicable.
Item 32. Undertakings
(a) The Registrant shall furnish each person to whom a prospectus
is delivered with a copy of the Registrant's latest annual
report to shareholders, upon request and without charge.
(b) The Registrant hereby undertakes to file a post-effective
amendment containing reasonably current financial statements
for INVESCO S&P 500 Index Fund within four to six months from
the effective date of Post-Effective Amendment No. ^ 13.
<PAGE>
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the registrant certifies that it meets all of
the requirements for effectiveness of this Registration Statement pursuant to
rule 485(b) under the Securities Act of 1933 and has duly caused this
post-effective amendment to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Denver, County of Denver, and State of
Colorado, on the ^ 1st day of ^ October, 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 ^ 1st day of ^
October, 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/ Hubert L. Harris, Jr. /s/ John W. McIntyre
- ------------------------------------ ------------------------------------
Hubert L. Harris, Jr. Director John W. McIntyre, Director
/s/ Wendy L. Gramm
- ------------------------------------
Wendy L. Gramm, 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 (with the exception of Wendy L. Gramm) have been
filed with the Securities and Exchange Commission on May 23, 1994, June 22,
1995, August 25, 1995, August 30, 1996, November 22, 1996 and June 27, 1997.
<PAGE>
Exhibit Index
Page in
Exhibit Number Registration Statement
- -------------- ----------------------
1(e) 116
^ 5(a)(i) 118
5(f) 119
^ 6(b) 126
11 135
^ 15(b) 136
17(a) 141
17(b) 142
17(c) 143
17(d) 144
17(e) 145
17(f) 146
18 147
99.POA GRAMM 150
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 16, 1997, the board
of directors of the Corporation has created an additional class of shares of
common stock of the Corporation designated as the INVESCO S&P 500 Index Fund
consisting of Class I and Class II shares, and has authorized 200,000,000
additional shares of stock to be allocated to INVESCO S&P 500 Index Fund --
100,000,000 shares to Class I and 100,000,000 shares to Class II. 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 eight
hundred million (800,000,000) shares of Common Stock. The newly designated
series of common stock designated as INVESCO S&P 500 Index Fund has a par value
of $.01 per share.
SECOND: Shares of each class have been duly authorized and 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 25th day of September, 1997.
<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 25th day of September, 1997.
Ruth A. Christensen
------------------------------------
Notary Public
My Commission Expires: 3/16/98
----------------
Amendment to Investment Advisory Agreement
This is an Amendment to the Investment Advisory Agreement made and entered
into between INVESCO Specialty Funds, Inc., a Maryland corporation (the
"Company") and INVESCO Funds Group, Inc., a Delaware corporation ("IFG"), as of
the 28th day of February, 1997 (the "Agreement").
WHEREAS, the Company desires to have IFG perform investment advisory,
statistical, research, and certain administrative and clerical services with
respect to management of the assets of the Company allocable to the INVESCO S&P
500 Index Fund, and IFG is willing and able to perform such services on the
terms and conditions set forth in the Agreement;
NOW, THEREFORE, in consideration of the premises and mutual covenants
contained in the Agreement, it is agreed that the terms and conditions of the
Agreement shall be applicable to the Company's assets allocable to the INVESCO
S&P 500 Index Fund, to the same extent as if the INVESCO S&P 500 Index Fund were
to be added to the definition of "Funds" as utilized in the Agreement, and that
INVESCO S&P 500 Index Fund shall pay IFG a fee for services provided to them by
IFG under the Agreement as follows:
0.25% of the Fund's average net assets.
IN WITNESS WHEREOF, the parties have executed this Agreement on this 22nd
day of September, 1997.
INVESCO SPECIALTY FUNDS, INC.
By: /s/ Dan J. Hesser
--------------------------
Dan J. Hesser,
ATTEST: President
/s/ Glen A. Payne
- ------------------------
Glen A. Payne, Secretary
INVESCO FUNDS GROUP, INC.
By: /s/ Ronald L. Grooms
--------------------------
Ronald L. Grooms,
ATTEST: Senior Vice President
/s/ Glen A. Payne
- -------------------------
Glen A. Payne, Secretary
SUB ADVISORY AGREEMENT
AGREEMENT made this 1st day of October, 1997, by and between INVESCO Funds
Group, Inc. ("INVESCO"), a Delaware corporation, and World Asset Management, a
general partnership organized under the laws of the State of Delaware ("the Sub
Adviser").
W I T N E S S E T H:
WHEREAS, INVESCO SPECIALTY FUNDS, INC. (the "Company") is engaged in
business as a diversified, open end management investment company registered
under the Investment Company Act of 1940, as amended (hereinafter referred to as
the "Investment Company Act") and has one class of shares (the "Shares"), which
is divided into series, each representing an interest in a separate portfolio of
investments, with one such series being designated the INVESCO S&P 500 Index
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 other
parties 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, to execute all purchases and sales of
portfolio securities and to vote all proxies 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 Funds'
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. In the selection of a broker or dealer for
execution of any negotiated transaction, the Sub Adviser shall have no duty or
obligation to seek advance competitive bidding for the most favorable negotiated
commission rate for such transaction, or to select any broker solely on the
basis of its purported or "posted" commission rate for such transaction,
provided, however, that the Sub Adviser shall consider such "posted" commission
rates, if any, together with any other information available at the time as to
the level of commissions known to be charged on comparable transactions by other
qualified brokerage firms, as well as all other relevant factors and
circumstances, including the size of any contemporaneous market in such
securities, the importance to the Funds of speed, efficiency, and
<PAGE>
confidentiality of execution, the execution capabilities required by the
circumstances of the particular transactions, and the apparent knowledge or
familiarity with sources from or to whom such securities may be purchased or
sold. Where the commission rate reflects services, reliability and other
relevant factors in addition to the cost of execution, the Sub Adviser shall
have the burden of demonstrating that such expenditures were bona fide and for
the benefit of the Funds.
The Sub-Adviser may recommend transactions in which it has directly or
indirectly a material interest, in unregulated collective investment schemes
including any operated or advised by the Sub-Adviser or in margined
transactions. Advice on investments may extend to investments not traded or
exchanges recognized or designated by the Securities and Investments Board.
Both parties acknowledge that the advice given under this Agreement may
involve liabilities in one currency matched by assets in another currency and
that accordingly movements in rates of exchange may have a separate effect,
unfavorable as well as favorable on the gain or loss experienced on an
investment.
In carrying out its duties hereunder, the Sub-Adviser shall comply with
all instructions of INVESCO in connection therewith such instructions may be
given by letter, telex, telephone or facsimile by any Director or Officer of
INVESCO or by any other person authorized by INVESCO.
Any instructions which appear to conflict with the terms of this Agreement
may be confirmed by the Sub-Adviser with INVESCO prior to execution.
ARTICLE II
ALLOCATION OF CHARGES AND EXPENSES
The Sub Adviser assumes and shall pay for maintaining the staff and
personnel necessary to perform its obligations under this Agreement, and shall,
at its own expense, provide the office space, equipment and facilities necessary
to perform its obligations under this Agreement. Except to the extent expressly
assumed by the Sub Adviser herein and except to the extent required by law to be
paid by the Sub Adviser, INVESCO and/or the Company shall pay all costs and
expenses in connection with the operations of the Funds.
ARTICLE III
COMPENSATION OF THE SUB ADVISER
For the services rendered, facilities furnished, and expenses assumed by
the Sub Adviser, INVESCO shall pay to the Sub Adviser a fee, computed daily and
paid as of the last day of each month, using for each daily calculation the most
recently determined net asset value of the Funds, as determined by a valuation
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 with respect to the Fund shall
<PAGE>
be computed at the annual rate of 0.07% of the Fund's daily net assets up to $10
million; 0.05% of the Fund's daily net assets in excess of $10 million but not
more than $50 million; and 0.03% of the Fund's daily net assets in excess of
$$50 million. During any period when the determination of the Funds' net asset
value is suspended by the Directors of the Funds, 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; 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. Thereafter, this
Agreement shall remain in force for an initial term of two years from the date
<PAGE>
of execution, and from year to year thereafter until its termination in
accordance with this Article VI, but only so long as such continuance is
specifically approved at least annually by (i) the Directors of the Company, or
by the vote of a majority of the outstanding voting securities of the Funds, and
(ii) a majority of those Directors who are not parties to this Agreement or
interested persons of any such party cast in person at a meeting called for the
purpose of voting on such approval.
This Agreement may be terminated at any time, without the payment of any
penalty, by INVESCO, the Funds by vote of the Directors of the Company, or by
vote of a majority of the outstanding voting securities of the Funds, or by the
Sub Adviser. A termination by INVESCO or the Sub Adviser shall require sixty
days' written notice to the other party and to the Company, and a termination by
the Company shall require such notice to each of the parties. This Agreement
shall automatically terminate in the event of its assignment to the extent
required by the Investment Company Act of 1940 and the Rules thereunder.
The Sub Adviser agrees to furnish to the Directors of the Company such
information on an annual basis as may reasonably be necessary to evaluate the
terms of this Agreement.
Termination of this Agreement shall not affect the right of the Sub
Adviser to receive payments on any unpaid balance of the compensation described
in Article III hereof earned prior to such termination.
ARTICLE VII
LIABILITY
The Sub Adviser agrees to use its best efforts and judgement and due care
in carrying out its duties under this Agreement provided however that the Sub
Adviser shall not be liable to INVESCO for any loss suffered by INVESCO or the
funds advised in connection with the subject matter of this Agreement unless
such loss arises from the willful misfeasance, bad faith or negligence in the
performance of the Sub-Adviser's duties and subject and without prejudice to the
foregoing. INVESCO hereby undertakes to indemnify and to keep indemnified the
Sub Adviser from and against any and all liabilities, obligations, losses,
damages, suits and expenses which may be incurred by or asserted against the Sub
Adviser for which it is responsible pursuant to Article I hereof provided always
that the Sub-Adviser shall send to INVESCO as soon as possible all claims,
letters, summonses, writs or documents which it receives from third parties and
provide whatever information and assistance INVESCO may require and no liability
of any sort shall be admitted and no undertaking shall be given nor shall any
offer, promise or payment be made or legal expenses incurred by the Sub Adviser
without written consent of INVESCO who shall be entitled if it so desires to
take over and conduct in the name of the Sub Adviser the defense of any action
or to prosecute any claim for indemnity or damages or otherwise against any
third party.
<PAGE>
ARTICLE VIII
AMENDMENTS OF THIS AGREEMENT
No provision of this Agreement may be orally changed or discharged, but
may only be modified by an instrument in writing signed by the Sub Adviser and
INVESCO. In addition, no amendment to this Agreement shall be effective unless
approved by (1) the vote of a majority of the Directors of the Company,
including a majority of the Directors who are not parties to this Agreement or
interested persons of any such party cast in person at a meeting called for the
purpose of voting on such amendment and (2) the vote of a majority of the
outstanding voting securities of the Funds (other than an amendment which can be
effective without shareholder approval under applicable law).
ARTICLE IX
DEFINITIONS OF CERTAIN TERMS
In interpreting the provisions of this Agreement, the terms "vote of a
majority of the outstanding voting securities," "assignments," "affiliated
person" and "interested person," when used in this Agreement, shall have the
respective meanings specified in the Investment Company Act and the Rules and
Regulations thereunder, subject, however, to such exemptions as may be granted
by the Securities and Exchange Commission under said Act.
ARTICLE X
GOVERNING LAW
This Agreement shall be construed in accordance with the laws of the State
of Colorado and the applicable provisions of the Investment Company Act. To the
extent that the applicable laws of the State of Colorado, or any of the
provisions herein, conflict with the applicable provisions of the Investment
Company Act, the latter shall control.
ARTICLE XI
MISCELLANEOUS
Advice. Any recommendation or advice given by the Sub Adviser to INVESCO
hereunder shall be given in writing or by mail, telex, telefacsimile or by
telephone, such telephone advice to be confirmed by mail, telex, telefacsimile
or in writing to such place as INVESCO shall from time to time require; further
the Sub Adviser shall be free to telephone INVESCO as it sees fit in the
performance of its duties.
Notice. Any notice under this Agreement shall be in writing, addressed and
delivered or mailed, postage prepaid, to the other party at such address as such
other party may designate for the receipt of such notice.
<PAGE>
Severability. Each provision of this Agreement is intended to be
severable. If any provision of this Agreement shall be held illegal or made
invalid by a court decision, statute, rule or otherwise, such illegality or
invalidity shall not affect the validity or enforceability of the remainder of
this Agreement.
Headings. The headings in this Agreement are inserted for convenience and
identification only and are in no way intended to describe, interpret, define or
limit the size, extent or intent of this Agreement or any provision hereof.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the date first above written.
INVESCO FUNDS GROUP, INC.
ATTEST:
By: ____________________________
________________________ President
Glen A. Payne, Secretary
WORLD ASSET MANAGEMENT
ATTEST:
________________________ By: ____________________________
DISTRIBUTION AGREEMENT
THIS AGREEMENT is made this 30th day of September, 1997 between INVESCO
SPECIALTY FUNDS, INC., a Maryland corporation (the "Fund"), and INVESCO
DISTRIBUTORS, 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.
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
<PAGE>
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.
<PAGE>
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 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
<PAGE>
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.
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.
<PAGE>
Notwithstanding the foregoing, this indemnity agreement, to
the extent that it might require indemnity of the Underwriter
or any person who is an officer, director or controlling
person of the Underwriter, shall not inure to the benefit of
the Underwriter or officer, director or controlling person
thereof unless a court of competent jurisdiction shall
determine, or it shall have been determined by controlling
precedent, that such result would not be against public policy
as expressed in the federal securities laws and in no event
shall anything contained herein be so construed as to protect
the Underwriter against any liability to the 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
<PAGE>
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 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
<PAGE>
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 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
<PAGE>
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.
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
September 30, 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.
<PAGE>
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.
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: ____________________________
Dan J. Hesser
President
- ---------------------------
Glen A. Payne
Secretary
INVESCO DISTRIBUTORS, INC.
ATTEST:
By: ____________________________
Ronald L. Grooms
Senior Vice President
- ---------------------------
Glen A. Payne
Secretary
Consent of Independent Accountants
We hereby consent to the incorporation by reference in the Statement of
Additional Information constituting part of this Post-Effective Amendment No. 13
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
September 30, 1997
PLAN AND AGREEMENT OF DISTRIBUTION PURSUANT TO RULE 12b-1
PLAN AND AGREEMENT made as of _____ day of __________, 1997, by and
between INVESCO Specialty Funds, Inc., a Maryland corporation (hereinafter
called the "Company"), and INVESCO Distributors, 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.
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
<PAGE>
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 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
<PAGE>
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
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
<PAGE>
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
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.
<PAGE>
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: _________________________
Dan J. Hesser, President
ATTEST: ________________________
Glen A. Payne, Secretary
INVESCO DISTRIBUTORS, INC.
By: _________________________
Ronald L. Grooms,
Senior Vice President
ATTEST: ________________________
Glen A. Payne, Secretary
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000923705
<NAME> INVESCO SPECIALTY FUNDS, INC.
<SERIES>
<NUMBER> 1
<NAME> INVESCO WORLDWIDE CAPITAL GOODS FUND
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUL-31-1997
<PERIOD-END> JAN-31-1997
<INVESTMENTS-AT-COST> 4506123
<INVESTMENTS-AT-VALUE> 4916906
<RECEIVABLES> 237622
<ASSETS-OTHER> 73816
<OTHER-ITEMS-ASSETS> 93
<TOTAL-ASSETS> 5228437
<PAYABLE-FOR-SECURITIES> 56490
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 94317
<TOTAL-LIABILITIES> 150807
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 4448546
<SHARES-COMMON-STOCK> 514339
<SHARES-COMMON-PRIOR> 804518
<ACCUMULATED-NII-CURRENT> 975
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 217295
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 410814
<NET-ASSETS> 5077630
<DIVIDEND-INCOME> 44851
<INTEREST-INCOME> 25506
<OTHER-INCOME> (924)
<EXPENSES-NET> 52798
<NET-INVESTMENT-INCOME> 16635
<REALIZED-GAINS-CURRENT> 527309
<APPREC-INCREASE-CURRENT> 391085
<NET-CHANGE-FROM-OPS> 918394
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 20500
<DISTRIBUTIONS-OF-GAINS> 487207
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 629148
<NUMBER-OF-SHARES-REDEEMED> 972902
<SHARES-REINVESTED> 53575
<NET-CHANGE-IN-ASSETS> (2653335)
<ACCUMULATED-NII-PRIOR> 4840
<ACCUMULATED-GAINS-PRIOR> 177193
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 17859
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 84622
<AVERAGE-NET-ASSETS> 5410594
<PER-SHARE-NAV-BEGIN> 961
<PER-SHARE-NII> 4
<PER-SHARE-GAIN-APPREC> 153
<PER-SHARE-DIVIDEND> 4
<PER-SHARE-DISTRIBUTIONS> 127
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 987
<EXPENSE-RATIO> 1
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000923705
<NAME> INVESCO SPECIALTY FUNDS, INC.
<SERIES>
<NUMBER> 2
<NAME> WORLDWIDE COMMUNICATIONS FUND
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUL-31-1997
<PERIOD-END> JAN-31-1997
<INVESTMENTS-AT-COST> 51874101
<INVESTMENTS-AT-VALUE> 56479660
<RECEIVABLES> 1072743
<ASSETS-OTHER> 30778
<OTHER-ITEMS-ASSETS> 677379
<TOTAL-ASSETS> 58260560
<PAYABLE-FOR-SECURITIES> 676500
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 825241
<TOTAL-LIABILITIES> 1501741
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 50395875
<SHARES-COMMON-STOCK> 4376852
<SHARES-COMMON-PRIOR> 4064157
<ACCUMULATED-NII-CURRENT> 122033
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 1642380
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 4598531
<NET-ASSETS> 56758819
<DIVIDEND-INCOME> 431989
<INTEREST-INCOME> 206680
<OTHER-INCOME> (27610)
<EXPENSES-NET> 442651
<NET-INVESTMENT-INCOME> 168408
<REALIZED-GAINS-CURRENT> 2054905
<APPREC-INCREASE-CURRENT> 4270263
<NET-CHANGE-FROM-OPS> 6325168
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 50000
<DISTRIBUTIONS-OF-GAINS> 3951559
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 3437947
<NUMBER-OF-SHARES-REDEEMED> 3433979
<SHARES-REINVESTED> 308727
<NET-CHANGE-IN-ASSETS> 6242435
<ACCUMULATED-NII-PRIOR> 3625
<ACCUMULATED-GAINS-PRIOR> 3539034
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 174553
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 449155
<AVERAGE-NET-ASSETS> 52554529
<PER-SHARE-NAV-BEGIN> 1243
<PER-SHARE-NII> 4
<PER-SHARE-GAIN-APPREC> 153
<PER-SHARE-DIVIDEND> 1
<PER-SHARE-DISTRIBUTIONS> 102
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 1297
<EXPENSE-RATIO> 1
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000923705
<NAME> INVESCO SPECIALTY FUNDS, INC.
<SERIES>
<NUMBER> 3
<NAME> LATIN AMERICAN GROWTH FUND
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUL-31-1997
<PERIOD-END> JAN-31-1997
<INVESTMENTS-AT-COST> 48157220
<INVESTMENTS-AT-VALUE> 53645174
<RECEIVABLES> 598499
<ASSETS-OTHER> 71143
<OTHER-ITEMS-ASSETS> 1070258
<TOTAL-ASSETS> 55385074
<PAYABLE-FOR-SECURITIES> 1137384
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 558720
<TOTAL-LIABILITIES> 1696104
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 47937136
<SHARES-COMMON-STOCK> 3720300
<SHARES-COMMON-PRIOR> 2493265
<ACCUMULATED-NII-CURRENT> (40145)
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 304965
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 5487014
<NET-ASSETS> 53688970
<DIVIDEND-INCOME> 245012
<INTEREST-INCOME> 37264
<OTHER-INCOME> (7204)
<EXPENSES-NET> 315597
<NET-INVESTMENT-INCOME> (40525)
<REALIZED-GAINS-CURRENT> 738040
<APPREC-INCREASE-CURRENT> 4311528
<NET-CHANGE-FROM-OPS> 5049568
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 28000
<DISTRIBUTIONS-OF-GAINS> 763348
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 2513983
<NUMBER-OF-SHARES-REDEEMED> 1348600
<SHARES-REINVESTED> 61652
<NET-CHANGE-IN-ASSETS> 21625070
<ACCUMULATED-NII-PRIOR> 28380
<ACCUMULATED-GAINS-PRIOR> 330273
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 131340
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 335697
<AVERAGE-NET-ASSETS> 35143085
<PER-SHARE-NAV-BEGIN> 1286
<PER-SHARE-NII> (1)
<PER-SHARE-GAIN-APPREC> 195
<PER-SHARE-DIVIDEND> 1
<PER-SHARE-DISTRIBUTIONS> 36
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 1443
<EXPENSE-RATIO> 1
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000923705
<NAME> INVESCO SPECIALTY FUNDS, INC.
<SERIES>
<NUMBER> 4
<NAME> EUROPEAN SMALL COMPANY FUND
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUL-31-1997
<PERIOD-END> JAN-31-1997
<INVESTMENTS-AT-COST> 133333941
<INVESTMENTS-AT-VALUE> 143937854
<RECEIVABLES> 6699078
<ASSETS-OTHER> 382386
<OTHER-ITEMS-ASSETS> 2941111
<TOTAL-ASSETS> 153960429
<PAYABLE-FOR-SECURITIES> 6294355
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1292253
<TOTAL-LIABILITIES> 7586608
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 134462465
<SHARES-COMMON-STOCK> 8992687
<SHARES-COMMON-PRIOR> 6248937
<ACCUMULATED-NII-CURRENT> (182960)
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 1364305
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 10730011
<NET-ASSETS> 146373821
<DIVIDEND-INCOME> 490435
<INTEREST-INCOME> 337728
<OTHER-INCOME> (83799)
<EXPENSES-NET> 932050
<NET-INVESTMENT-INCOME> (187686)
<REALIZED-GAINS-CURRENT> 1580094
<APPREC-INCREASE-CURRENT> 11698660
<NET-CHANGE-FROM-OPS> 13278754
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 3898451
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 15815925
<NUMBER-OF-SHARES-REDEEMED> 13311513
<SHARES-REINVESTED> 239338
<NET-CHANGE-IN-ASSETS> 52112814
<ACCUMULATED-NII-PRIOR> 4726
<ACCUMULATED-GAINS-PRIOR> 3682662
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 462700
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 959727
<AVERAGE-NET-ASSETS> 119665550
<PER-SHARE-NAV-BEGIN> 1508
<PER-SHARE-NII> (2)
<PER-SHARE-GAIN-APPREC> 175
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 53
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 1628
<EXPENSE-RATIO> 1
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000923705
<NAME> INVESCO SPECIALTY FUNDS, INC.
<SERIES>
<NUMBER> 5
<NAME> ASIAN GROWTH
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUL-31-1997
<PERIOD-END> JAN-31-1997
<INVESTMENTS-AT-COST> 45643683
<INVESTMENTS-AT-VALUE> 48387735
<RECEIVABLES> 2119237
<ASSETS-OTHER> 68514
<OTHER-ITEMS-ASSETS> 62735
<TOTAL-ASSETS> 50638221
<PAYABLE-FOR-SECURITIES> 1745245
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 89363
<TOTAL-LIABILITIES> 1834608
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 46120054
<SHARES-COMMON-STOCK> 4592437
<SHARES-COMMON-PRIOR> 1599695
<ACCUMULATED-NII-CURRENT> (36818)
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (67944)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 2788321
<NET-ASSETS> 48803613
<DIVIDEND-INCOME> 105910
<INTEREST-INCOME> 84391
<OTHER-INCOME> (111)
<EXPENSES-NET> 229599
<NET-INVESTMENT-INCOME> (39409)
<REALIZED-GAINS-CURRENT> (28869)
<APPREC-INCREASE-CURRENT> 4436091
<NET-CHANGE-FROM-OPS> 4407222
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 3865041
<NUMBER-OF-SHARES-REDEEMED> 872299
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 34488909
<ACCUMULATED-NII-PRIOR> 2591
<ACCUMULATED-GAINS-PRIOR> (39075)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 94768
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 258741
<AVERAGE-NET-ASSETS> 25978845
<PER-SHARE-NAV-BEGIN> 895
<PER-SHARE-NII> (1)
<PER-SHARE-GAIN-APPREC> 169
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 1063
<EXPENSE-RATIO> 1
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000923705
<NAME> INVESCO SPECIALTY FUNDS, INC.
<SERIES>
<NUMBER> 6
<NAME> INVESCO REALTY FUND
<S> <C>
<PERIOD-TYPE> 5-MOS
<FISCAL-YEAR-END> JUL-31-1997
<PERIOD-END> MAY-31-1997
<INVESTMENTS-AT-COST> 29,634,349
<INVESTMENTS-AT-VALUE> 29,197,056
<RECEIVABLES> 742,701
<ASSETS-OTHER> 95,689
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 30,035,446
<PAYABLE-FOR-SECURITIES> 148,973
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 994,313
<TOTAL-LIABILITIES> 1,143,286
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 29,931,039
<SHARES-COMMON-STOCK> 2,902,326
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 37,302
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (638,888)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (437,293)
<NET-ASSETS> 28,892,160
<DIVIDEND-INCOME> 476,315
<INTEREST-INCOME> 36,042
<OTHER-INCOME> 0
<EXPENSES-NET> 129,051
<NET-INVESTMENT-INCOME> 383,306
<REALIZED-GAINS-CURRENT> (638,888)
<APPREC-INCREASE-CURRENT> (437,293)
<NET-CHANGE-FROM-OPS> (1,076,181)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 346,004
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 6,127,517
<NUMBER-OF-SHARES-REDEEMED> 3,260,827
<SHARES-REINVESTED> 35,636
<NET-CHANGE-IN-ASSETS> 28,892,160
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 72,430
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 186,328
<AVERAGE-NET-ASSETS> 28,892,160
<PER-SHARE-NAV-BEGIN> 10.00
<PER-SHARE-NII> 0.13
<PER-SHARE-GAIN-APPREC> (0.06)
<PER-SHARE-DIVIDEND> 0.12
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 9.95
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
INVESCO S&P 500 INDEX FUND PLAN PURSUANT TO RULE 18F-3
May 16, 1997
1. The Plan. This Plan is the written multiple class plan for the INVESCO
S&P 500 Index Fund (the "Fund") for INVESCO Funds Group, Inc., the general
distributor of shares of the Fund and the investment adviser of the Fund
("INVESCO"). It is the written plan contemplated by Rule 18f-3 (the
"Rule") under the Investment Company Act of 1940 (the "1940 Act"),
pursuant to which the Fund may issue multiple classes of shares. The
terms and provisions of this Plan shall be interpreted and defined in a
manner consistent with the provisions and definitions contained in the
Rule.
2. Similarities and Differences Among Classes. The Fund agrees that one or
more classes of that Fund:
(1) may have a separate service plan or distribution and service
plan ("12b-1 Plan"), and shall pay all of the expenses incurred
pursuant to that arrangement, and may pay a different share of
expenses ("Class Expenses") if such expenses are actually incurred
in a different amount by that class, or if the class receives
services of a different kind or to a different degree than that of
other classes. Class Expenses are those expenses specifically
attributable to the particular class of shares, namely (a) 12b-1
Plan fees, (b) transfer and shareholder servicing agent fees and
administrative service fees, (c) shareholder meeting expenses,
(d) blue sky and SEC registration fees and (e) any other incremental
expenses subsequently identified that should be allocated to one
class which shall be approved by a vote of that Fund's Board of
Directors (the "Directors"). Expenses identified in Items (c)
through (e) may involve issues relating either to a specific class
or to the entire Fund; such expenses constitute Class Expenses only
when they are attributable to a specific class. Because Class
Expenses may be accrued at different rates for each class of the
Fund, dividends distributable to shareholders and net asset values
per share may differ for shares of different classes of the Fund.
(2) shall have exclusive voting rights on any matters that relate solely
to that class's arrangements, including without limitation voting with
respect to a 12b-1 Plan for that class;
(3) shall have separate voting rights on any matter submitted to
shareholders in which the interests of one class differ from the interests
of any other class;
(4) may have a different arrangement for shareholder services, including
different sales charges, sales charge waivers, purchase and redemption
features, exchange privileges, loan privileges, the availability of
certificated shares and/or conversion features; and
(5) shall have in all other respects the same rights and obligations as
each other class.
<PAGE>
3. Allocations of Income, Capital Gains and Losses and Expenses. Income,
realized and unrealized capital gains and losses, and expenses of the Fund
other than Class Expenses allocated to a particular class shall be
allocated to each class on the basis of the net asset value of that class
in relation to the net asset value of the Fund.
4. Expense Waivers and Reimbursements. From time to time the Adviser may
voluntarily undertake to (i) waive any portion of the management fee
charged to the Fund, and/or (ii) reimburse any portion of the expenses of
the Fund or of one or more of its classes, but is not required to do so or
to continue to do so for any period of time. The quarterly report by the
Advisor to the Directors of Fund expense reimbursements shall disclose any
reimbursements that are not equal for all classes of the Fund.
5. Disclosure. The classes of shares to be offered by the Fund, and other
material distribution arrangements with respect to such classes, shall be
disclosed in the prospectus and/or statement of additional information
used to offer that class of shares. Such prospectus or statement of
additional information shall be supplemented or amended to reflect any
change(s) in classes of shares to be offered or in the material
distribution arrangements with respect to such classes.
6. Independent Audit. The methodology and procedures for calculating the net
asset value, dividends and distributions of each class shall be reviewed
by an independent auditing firm (the "Expert"). At least annually, the
Expert, or an appropriate substitute expert, will render a report to the
Funds on policies and procedures placed in operation and tests of
operating effectiveness as defined and described in SAS 70 of the AICPA.
7. Offers and Sales of Shares. INVESCO will maintain compliance standards as
to when each class of shares may appropriately be sold to particular
investors, and will require all persons selling shares of the Fund to
agree to conform to such standards.
8. Rule 12b-1 Payments. The Treasurer of INVESCO Specialty Funds, Inc. (the
"Company") shall provide to the Directors of the Company, and the
Directors shall review, at least quarterly, the written report required by
the Company's 12b-1 Plan. The report shall include information on (i) the
amounts expended pursuant to the 12b-1 Plan, (ii) the purposes for which
such expenditures were made and (iii) the amount of INVESCO's unpaid
distribution costs (if recovery of such costs in future periods is
permitted by that 12b-1 Plan), taking into account 12b-1 Plan payments
paid to INVESCO.
9. Conflicts. On an ongoing basis, the Directors of the Company, pursuant to
their fiduciary responsibilities under the 1940 Act and otherwise, will
monitor the Fund for the existence of any material conflicts among the
interests of the classes. INVESCO will be responsible for reporting any
potential or existing conflicts to the Directors. In the event a conflict
arises, the Directors shall take such action as they deem appropriate.
<PAGE>
10. Effectiveness and Amendment. This Plan takes effect for the Fund as of
the date of adoption shown below. This Plan has been approved by a
majority vote of the Board of the Company and of the Company's Board
members who are not "interested persons" (as defined in the 1940 Act) and
who have no direct or indirect financial interest in the operation of the
Plan or any agreements relating to the Plan (the "Independent Directors")
of the Fund at meetings called on this Plan. Prior to that vote, (i) the
Board was furnished by the methodology used for net asset value and
dividend and distribution determinations for the Fund, and (ii) a majority
of the Board and its Independent Directors determined that the Plan as
proposed to be adopted, including the expenses allocation, is in the best
interests of the Fund as a whole and to each class of the Fund
individually. Prior to any material amendment to the Plan, the Board
shall request and evaluate, and INVESCO shall furnish, such information as
may be reasonably necessary to evaluate such amendment, and a majority of
the Board and its Independent Directors shall find that the Plan as
proposed to be amended, including the expense allocation, is in the best
interest of each class, the Fund as a whole and each class of the Fund
individually. No material amendment to the Plan shall be made by any
Fund's Prospectus or Statement of Additional Information or any supplement
to either of the foregoing, unless such amendment has first been approved
by a majority of the Fund's Board and its Independent Directors.
Adopted by the Board of INVESCO Specialty Funds, Inc. on May 16, 1997.
---------------------------------
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 Capital Appreciation Funds, Inc.
INVESCO Diversified Funds, 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 25th day of August, 1997.
/s/ Wendy L. Gramm
------------------------------------------
Wendy L. Gramm
STATE OF District of
Columbia )
)
COUNTY OF )
SUBSCRIBED, SWORN TO AND ACKNOWLEDGED before me by Wendy L. Gramm, as a
director or trustee of each of the above-described entities, this 25th day of
August, 1997.
/s/ Margaret Foster
------------------------------------------
Notary Public
My Commission Expires: February 14, 2000
