PROSPECTUS
December 29, 1995
INVESCO GROWTH FUND, INC.
INVESCO Growth Fund, Inc. (the "Fund") is a mutual fund that seeks
long-term capital growth. The Fund also seeks, as a secondary objective, to
obtain investment income through the purchase of securities of carefully
selected companies representing major fields of business and industrial
activity. In pursuing its objectives, the Fund invests primarily in common
stocks, but may also invest in other kinds of securities, including convertible
and straight issues of debentures and preferred stock.
This Prospectus provides you with the basic information you should know
before investing in the Fund. You should read it and keep it for future
reference. A Statement of Additional Information containing further information
about the Fund, dated December 29, 1995, has been filed with the Securities and
Exchange Commission and is incorporated by reference into this Prospectus. You
can obtain a copy without charge by writing INVESCO Funds Group, Inc., P.O. Box
173706, Denver, Colorado 80217-3706; or by calling 1-800-525-8085.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE. SHARES OF THE FUND ARE NOT DEPOSITS OR OBLIGATIONS OF, OR
GUARANTEED OR ENDORSED BY, ANY BANK OR OTHER FINANCIAL INSTITUTION. THE SHARES
OF THE FUND ARE NOT FEDERALLY INSURED BY THE FEDERAL DEPOSIT INSURANCE
CORPORATION, THE FEDERAL RESERVE BOARD OR ANY OTHER AGENCY.
<PAGE>
TABLE OF CONTENTS
Page
----
Annual Fund Expenses........................................................ 2
Financial Highlights........................................................ 3
Performance Data............................................................ 4
Investment Objective and Policies........................................... 4
Risk Factors................................................................ 6
The Fund and Its Management................................................. 7
How Shares Can Be Purchased................................................. 8
Services Provided By the Fund.............................................. 10
How To Redeem Shares........................................................ 13
Taxes, Dividends, and Capital Gain Distributions............................ 14
Additional Information...................................................... 15
<PAGE>
ANNUAL FUND EXPENSES
The Fund is no-load; there are no fees to purchase, exchange or redeem
shares. The Fund, however, is authorized to pay a distribution fee pursuant to
Rule 12b-1 under the Investment Company Act of 1940. (See "How Shares Can Be
Purchased -- Distribution Expenses.") Lower expenses benefit Fund shareholders
by increasing the Fund's total return.
Shareholder Transaction Expenses
Sales load "charge" on purchases None
Sales load "charge" on reinvested dividends None
Redemption fees None
Exchange fees None
Annual Fund Operating Expenses
(as a percentage of average net assets)
Management Fee 0.55%
12b-1 Fees 0.25%
Other Expenses 0.26%
Transfer Agency Fee(1) 0.15%
General Services, Administrative 0.11%
Services, Registration, Postage (2)
Total Fund Operating Expenses 1.06%
(1) Consists of the transfer agency fee described under "Additional
Information - Transfer and Dividend Disbursing Agent."
(2) Includes, but is not limited to, fees and expenses of directors,
custodian bank, legal counsel and auditors, costs of administrative services
furnished under an Administrative Services Agreement, securities pricing
services, costs of registration of Fund shares under applicable laws, and costs
of printing and distributing reports to shareholders.
Example
A shareholder would pay the following expenses on a $1,000 investment for
the periods shown, assuming (1) a 5% annual return and (2) redemption at the end
of each time period:
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
$11 $34 $59 $130
The purpose of the foregoing table is to assist investors in understanding
the various costs and expenses that an investor in the Fund will bear directly
or indirectly. Such expenses are paid from the Fund's assets. (See "The Fund and
Its Management.") The Fund charges no sales load, redemption fee or exchange
fee. THE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
EXPENSES, AND ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN. The
assumed 5% annual return is hypothetical and should not be considered a
representation of past or future annual returns, which may be greater or less
than the assumed amount.
As a result of the 0.25% Rule 12b-1 fee paid by the Fund, investors who
own Fund shares for a long period of time may pay more than the economic
equivalent of the maximum front-end sales charge permitted for mutual funds by
the National Association of Securities Dealers, Inc.
<PAGE>
FINANCIAL HIGHLIGHTS
(For a Fund share Outstanding throughout Each Period)
The following information has been audited by Price Waterhouse LLP,
independent accountants. This information should be read in conjunction with the
audited financial statements and the report of independent accountants thereon
appearing in the Fund's 1995 Annual Report to Shareholders, which is
incorporated by reference into the Statement of Additional Information. Both are
available without charge by contacting INVESCO Funds Group, Inc. at the address
or telephone number shown below.
<TABLE>
<CAPTION>
Year Ended August 31
-----------------------------------------------------------------------------------------
1995 1994 1993 1992 1991 1990 1989 1988 1987 1986
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PER SHARE DATA
Net Asset Value -
Beginning of Period $ 5.34 $ 5.28 $ 4.72 $ 5.26 $ 4.37 $ 4.54 $ 3.48 $ 4.64 $ 4.14 $ 4.09
-----------------------------------------------------------------------------------------
INCOME FROM INVESTMENT
OPERATIONS
Net Investment Income 0.05 0.03 0.04 0.05 0.07 0.10 0.10 0.07 0.07 0.10
Net Gains or (Losses)
on Securities (Both
Realized and Unrealized) 0.49 0.11 1.00 0.05 1.28 (0.14) 1.06 (1.16) 1.15 1.09
-----------------------------------------------------------------------------------------
Total from Investment
Operations 0.54 0.14 1.04 0.10 1.35 (0.04) 1.16 (1.09) 1.22 1.19
-----------------------------------------------------------------------------------------
LESS DISTRIBUTIONS
Dividends from Net
Investment Income+ 0.05 0.03 0.04 0.05 0.08 0.11 0.10 0.07 0.08 0.12
Distributions from
Capital Gains 0.50 0.05 0.44 0.59 0.38 0.02 0.00 0.00 0.64 1.02
-----------------------------------------------------------------------------------------
Total Distributions 0.55 0.08 0.48 0.64 0.46 0.13 0.10 0.07 0.72 1.14
-----------------------------------------------------------------------------------------
Net Asset Value -
End of Period $ 5.33 $ 5.34 $ 5.28 $ 4.72 $ 5.26 $ 4.37 $ 4.54 $ 3.48 $ 4.64 $ 4.14
=========================================================================================
TOTAL RETURN 12.05% 2.52% 22.17% 2.04% 31.16% (1.01%) 33.70% (23.43%) 29.59% 29.12%
<PAGE>
RATIOS
Net Assets - End of Period
($000 Omitted) $501,285 $488,411 $483,957 $408,218 $428,564 $339,927 $383,099 $328,043 $480,135 $397,223
Ratio of Expenses to
Average Net Assets 1.06% 1.03% 1.04% 1.04% 1.00% 0.78% 0.82% 0.81% 0.77% 0.74%
Ratio of Net Investment
Income to Average
Net Assets 1.07% 0.47% 0.72% 0.93% 1.52% 2.17% 2.60% 1.84% 1.56% 2.16%
Portfolio Turnover Rate 111% 63% 77% 77% 69% 86% 90% 116% 250% 227%
<FN>
+ Distributions in excess of net investment income for the year ended August 31,
1995, aggregated less than $0.01 on a per share basis.
</FN>
</TABLE>
Further information about the performance of the Fund is contained in the
Fund's Annual Report to Shareholders, which may be obtained without charge by
writing INVESCO Funds Group, Inc., P.O. Box 173706, Denver, Colorado 80217-3706;
or by calling 1-800-525-8085.
<PAGE>
PERFORMANCE DATA
From time to time, the Fund advertises its total return performance.
Performance figures are based upon historical investment results and are not
intended to indicate future performance. "Total return" of the Fund refers to
the average annual rate of return of an investment in the Fund. This figure is
computed by calculating the percentage change in value of an investment of
$1,000, assuming reinvestment of all income dividends and capital gain
distributions, to the end of a specified period. Periods of one year, five years
and ten years are used. Thus, any given report of total return performance
should not be considered as representative of future performance. The Fund
charges no sales load, redemption fee, or exchange fee which would affect the
total return computation.
In conjunction with performance reports and/or analyses of shareholder
service for the Fund, comparative data between the Fund's performance for a
given period and recognized indices of investment results for the same period,
and/or assessments of the quality of shareholder service, may be provided to
shareholders. Such indices include indices provided by Dow Jones & Company,
Standard & Poor's, Lipper Analytical Services, Inc., Lehman Brothers, National
Association of Securities Dealers Automated Quotations, Frank Russell Company,
Value Line Investment Survey, the American Stock Exchange, Morgan Stanley
Capital International, Wilshire Associates, the Financial Times Stock Exchange,
the New York Stock Exchange, the Nikkei Stock Average and the Deutcher
Aktienindex, all of which are unmanaged market indicators. In addition,
rankings, ratings, and comparisons of investment performance and/or assessments
of the quality of shareholder service appearing in publications such as Money,
Forbes, Kiplinger's Personal Finance, Morningstar, and similar sources which
utilize information compiled (i) internally; (ii) by Lipper Analytical Services,
Inc.; or (iii) by other recognized analytical services, may be used in
advertising. The Lipper Analytical Services, Inc. mutual fund rankings and
comparisons, which may be used by the Fund in performance reports, will be drawn
from the "Growth Funds" mutual fund grouping in addition to the broad-based
Lipper general fund groupings.
INVESTMENT OBJECTIVE AND POLICIES
The investment objective of the Fund, which may be changed only by a vote
of the shareholders, is to seek long-term capital growth. The Fund also seeks,
as a secondary objective, to obtain investment income through the purchase of
securities of carefully selected companies representing major fields of business
and industrial activity. The Fund normally holds common stocks (including
securities convertible into common stocks) although it may invest in the
following other securities: commercial paper and convertible debentures and
straight debt securities having an investment grade rating (Baa or above by
Moody's Investors Service, Inc. ("Moody's") or BBB or above by Standard & Poor's
<PAGE>
("S&P")) and preferred stocks. In each instance, the Fund endeavors to
invest in securities offering the possibility of capital enhancement and some
current income. A bond rating of Baa by Moody's indicates that the bond issue is
of "medium grade," 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 have speculative characteristics as well. A bond rating of
BBB by S&P indicates that the bond issue is in the lowest "investment grade"
security rating. Bonds rated BBB are regarded as having an adequate capacity 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 the A category, and they may have speculative
characteristics.
In periods of uncertain market and economic conditions, as determined by
the Fund's investment adviser, the Fund may depart from the basic investment
objective and assume a defensive position with up to 100% of its assets
temporarily invested in high quality corporate bonds or notes and government
issues, or held in cash. Because prices of stocks fluctuate from day to day, the
value of an investment in the Fund will vary based upon the Fund's investment
performance. The Fund invests in many different companies in a variety of
industries in order to attempt to reduce its overall exposure to investment and
market risks. There is no assurance that the Fund will attain its objectives.
In selecting securities for investment, the investment adviser or
sub-adviser (collectively, "Fund Management") will seek to identify companies
that have a better than average earnings growth potential and those industries
that stand to enjoy the greatest benefit from the predicted economic
environment. The Fund seeks to purchase the securities of companies that are
thought to be best situated in those industry groupings. While dividends are of
secondary consideration, dividend payment records of companies are also
considered.
Foreign Securities. The Fund's investments in equity securities and
corporate debt obligations may consist of securities issued by foreign issuers.
Up to 25% of the Fund's total assets, measured at the time of purchase, may be
invested directly in foreign securities. Securities of Canadian issuers and
securities purchased by means of American Depository Receipts ("ADRs") are not
subject to this 25% limitation. Investments in foreign securities involve
certain risks which are discussed below under "Risk Factors."
Repurchase Agreements. The Fund may enter into repurchase agreements with
respect to debt instruments eligible for investment by the Fund. These
agreements are entered into with member banks of the Federal Reserve System,
registered broker-dealers, and
<PAGE>
registered U.S. government securities dealers, which are deemed creditworthy. A
repurchase agreement is a means of investing monies for a short period. In a
repurchase agreement, the Fund acquires a debt instrument (generally a security
issued by the U.S. government or an agency thereof, a banker's acceptance or a
certificate of deposit) subject to resale to the seller at an agreed upon price
and date (normally, the next business day). In the event that the original
seller defaults on its obligation to repurchase the security, the Fund could
incur costs or delays in seeking to sell such security. To minimize risk, the
securities 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), and such agreements will be
effected only with parties that meet certain creditworthiness standards
established by the Fund's board of directors. The Fund will not enter into a
repurchase agreement maturing in more than seven days if as a result more than
10% of the Fund's net assets would be invested in such repurchase agreements.
The Fund has not adopted any limit on the amount of its total assets that may be
invested in repurchase agreements maturing in seven days or less.
Rule 144A Securities. The Fund may not purchase securities which are not
readily marketable. However, certain securities that are not registered for sale
to the general public, but that can be resold to institutional investors ("Rule
144A Securities"), may be purchased if a liquid institutional trading market
exists. The liquidity of the Fund's investments in Rule 144A Securities could be
impaired if dealers or institutional investors become uninterested in purchasing
these securities. The Company's board of directors has delegated to Fund
Management the authority to determine the liquidity of Rule 144A Securities
pursuant to guidelines approved by the board. In the event that a Rule 144A
Security subsequently is determined to be illiquid, the security will be sold as
soon as that can be done in an orderly fashion consistent with the best
interests of the Fund's shareholders. For more information concerning Rule 144A
Securities, see the Statement of Additional Information.
Securities Lending. The Fund also may lend its securities to qualified
brokers, dealers, banks, or other financial institutions. This practice permits
the Fund to earn income, that, in turn, can be invested in additional securities
to pursue the Fund's investment objective. Loans of securities by the Fund will
be collateralized by cash, letters of credit, or securities issued or guaranteed
by the U.S. government or its agencies equal to at least 100% of the current
market value of the loaned securities, determined on a daily basis. Lending
securities involves certain risks, the most significant of which is the risk
that a borrower may fail to return a portfolio security. The Fund monitors the
creditworthiness of borrowers in order to minimize such risks. The Fund will not
lend any security if, as a result of such loan, the aggregate value of
securities then on loan would exceed 33-1/3% of the Fund's total assets (taken
at market value).
<PAGE>
Portfolio Turnover. While the Fund purchases portfolio securities with the
view of retaining them on a long-term basis, the Fund may sell any security
without regard to the period of time it has been held. This trading policy may
cause the Fund's portfolio turnover rate to exceed 100%. Increased Portfolio
turnover may cause the Fund to incur greater brokerage commissions than would
otherwise be the case, and may result in the acceleration of capital gains that
are taxable when distributed to shareholders. The Fund's portfolio turnover
rates are set forth under "Financial Highlights" and, along with the Fund's
brokerage allocation policies, are discussed in the Statement of Additional
Information.
Investment Restrictions. The Fund is subject to certain restrictions
regarding its investments, which are set forth in the Statement of Additional
Information, and which may not be altered without the approval of the Fund's
shareholders. Those restrictions include, among others, limitations with respect
to the percentages of the value of its total assets which may be invested in any
one company or in any one industry.
RISK FACTORS
Debt Securities. The Fund's assets invested in straight debt securities
generally will be subject to two kinds of risk, credit risk and market risk, as
is described more fully in the Statement of Additional Information. While the
Fund's investment adviser continuously monitors all of the debt securities in
the Fund's portfolio for the issuers' ability to make required principal and
interest payments and other quality factors, the adviser may retain in the
portfolio a debt security whose rating is changed to one below the minimum
rating required for purchase of such a security.
Foreign Securities. For U.S. investors, the returns on foreign securities
are influenced not only by the returns on the foreign investments themselves,
but also by currency fluctuations (i.e., changes in the value of the currencies
in which the securities are denominated relative to the U.S. dollar). In a
period when the U.S. dollar generally rises against foreign currencies, the
returns on foreign securities for a U.S. investor are diminished. By contrast,
in a period when the U.S. dollar generally declines, the returns on foreign
securities are enhanced.
Other risks and considerations of international investing include the
following: differences in accounting, auditing and financial reporting standards
which may result in less publicly available information than is generally
available with respect to U.S. issuers; generally higher commission rates on
foreign portfolio transactions and, in some cases, longer settlement periods;
the smaller trading volumes and generally lower liquidity of foreign stock
markets, which may result in greater price volatility; foreign withholding taxes
<PAGE>
payable on the Fund's foreign securities, which may reduce dividend income
payable to shareholders; the possibility of expropriation or confiscatory
taxation; adverse changes in investment or exchange control regulations;
political instability which could affect U.S. investment in foreign countries;
potential restrictions on the flow of international capital; and the possibility
of the Fund experiencing difficulties in pursuing legal remedies and collecting
judgments. Certain of these risks, as well as currency risks, also apply to
Canadian securities, which are not subject to the Fund's 25% limitation even
though they are foreign securities. The Fund's investments in foreign securities
may include investments in developing countries. Many of these securities are
speculative and their prices may be more volatile than those of securities
issued by companies located in more developed countries.
ADRs are receipts, typically issued by a U.S. bank or trust company,
evidencing ownership of the underlying foreign securities. ADRs are denominated
in U.S. dollars and trade in the U.S. securities markets. ADRs may be issued in
sponsored or unsponsored programs. In sponsored programs, the issuer makes
arrangements to have its securities traded in the form of ADRs; in unsponsored
programs, the issuer may not be directly involved in the creation of the
program. Although the regulatory requirements with respect to sponsored and
unsponsored programs are generally similar, the issuers of unsponsored ADRs are
not obligated to disclose material information in the United States and,
therefore, such information may not be reflected in the market value of the
ADRs. ADRs are subject to certain of the same risks as direct investments in
foreign securities, including the risk that changes in the value of the currency
in which the security underlying an ADR is denominated relative to the U.S.
dollar may adversely affect the value of the ADR.
THE FUND AND ITS MANAGEMENT
The Fund 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 January 8, 1935, under the laws of Maryland. The overall
supervision of the Fund is the responsibility of the Fund's board of directors.
Pursuant to an agreement with the Fund, INVESCO Funds Group, Inc.
("INVESCO"), 7800 E. Union Avenue, Denver, Colorado, serves as the Fund's
investment adviser. INVESCO is primarily responsible for providing the Fund with
various administrative services, and supervising the Fund's daily business
affairs. These services are subject to review by the Fund's board of directors.
INVESCO is an indirect wholly-owned subsidiary of INVESCO PLC. INVESCO PLC
is a financial holding company that, through its subsidiaries, engages in the
business of investment management on an international basis. INVESCO was
established in 1932 and, as of August 31, 1995, managed 14 mutual funds,
<PAGE>
consisting of 38 portfolios, with combined assets of approximately $10.6
billion on behalf of over 788,000 shareholders.
Pursuant to an agreement with INVESCO, INVESCO Trust Company ("INVESCO
Trust"), 7800 E. Union Avenue, Denver, Colorado, serves as the Fund's
sub-adviser. INVESCO Trust, a trust company founded in 1969, is a wholly-owned
subsidiary of INVESCO that served as adviser or sub-adviser to 41 investment
portfolios as of August 31, 1995, including 27 portfolios in the INVESCO group.
These 41 portfolios had aggregate assets of approximately $9.9 billion as of
August 31, 1995. In addition, INVESCO Trust provides investment management
services to private clients, including employee benefit plans that may be
invested in a collective trust sponsored by INVESCO Trust. INVESCO Trust,
subject to the supervision of INVESCO, is primarily responsible for selecting
and managing the Fund's investments. Although the Fund is not a party to the
sub- advisory agreement, the agreement has been approved by the shareholders of
the Fund.
The following individual serves as portfolio manager of the Fund and is
primarily responsible for the day-to-day management of the Fund's portfolio of
securities:
Douglas Pratt, C.F.A. Portfolio manager of the Fund since 1995;
portfolio manager of the Financial
Services Portfolio of INVESCO Strategic
Portfolios, Inc.; vice president (1993 to
present) and portfolio manager (1992 to
present) of INVESCO Trust Company.
Formerly (1987 to 1992), equity analyst
with Loomis, Sayles & Company; began
financial and analytical research career
in 1982; A.B., Brown University; M.B.A.,
Columbia University; Chartered Financial
Analyst.
The Fund pays INVESCO a monthly fee which is based upon a percentage of
the Fund's average net assets determined daily. The maximum advisory fee payable
by the Fund for each fiscal year is 0.60% on the first $350 million of the
average net assets of the Fund; 0.55% on the next $350 million of the Fund's
average net assets; and 0.50% on the Fund's average net assets in excess of $700
million. For the fiscal year ended August 31, 1995, investment advisory fees
paid by the Fund amounted to 0.55% of the Fund's net assets.
Out of its advisory fee which it receives from the Fund, INVESCO pays
INVESCO Trust, as the Fund's sub-adviser, a monthly fee, which is computed at
the annual rate of 0.25% on the first $200 million of the Fund's average net
assets, and 0.20% on the Fund's average net assets in excess of $200 million. No
fee is paid by the Fund to INVESCO Trust.
<PAGE>
The Fund also has entered into an Administrative Services Agreement (the
"Administrative Agreement"), with INVESCO. Pursuant to the Administrative
Agreement, INVESCO performs certain administrative, recordkeeping and internal
sub-accounting services, including without limitation, maintaining general
ledger and capital stock accounts, preparing a daily trial balance, calculating
net asset value daily, providing selected general ledger reports and providing
sub-accounting and recordkeeping services for shareholder accounts maintained by
certain retirement and employee benefit plans for the benefit of participants in
such plans. For such services, the Fund pays INVESCO a fee consisting of a base
fee of $10,000 per year, plus an additional incremental fee computed at the
annual rate of 0.015% per year of the average net assets of the Fund. INVESCO
also is paid a fee by the Fund for providing transfer agent services. See
"Additional Information."
The Fund's expenses, which are accrued daily, are generally deducted from
the Fund's total income before dividends are paid. Total expenses of the Fund
for the fiscal year ended August 31, 1995, including investment advisory fees
(but excluding brokerage commissions, which are a cost of acquiring securities),
amounted to 1.06% of the Fund's average net assets.
Fund Management places orders for the purchase and sale of portfolio
securities with brokers and dealers based upon Fund Management's evaluation of
their financial responsibility coupled with their ability to effect transactions
at the best available prices. As discussed under "How Shares Can be Purchased -
Distribution Expenses," the Fund may market its shares through intermediary
brokers or dealers that have entered into Dealer Agreements with INVESCO, 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.
Fund Management permits investment and other personnel to purchase and
sell securities for their own accounts, subject to a compliance policy governing
personal investing. This policy requires investment and other personnel to
conduct their personal investment activities in a manner that Fund Management
believes is not detrimental to the Fund or Fund Management's other advisory
clients. See the Statement of Additional Information for more detailed
information.
HOW SHARES CAN BE PURCHASED
The Fund's shares are sold on a continuous basis by INVESCO, as the Fund's
distributor, at the net asset value per share next calculated after receipt of a
purchase order in good form. No sales charge is imposed upon the sale of shares
of the Fund. To purchase shares of the Fund, send a check made payable to
INVESCO Funds Group, Inc. together with a completed application form, to:
<PAGE>
INVESCO FUNDS GROUP, INC.
Post Office Box 173706
Denver, Colorado 80217-3706
The minimum initial purchase must be at least $1,000, with subsequent
investments of not less than $50, except that: (1) those shareholders
establishing an EasiVest or direct payroll purchase account, as described below
in the Prospectus section entitled "Services Provided by the Fund," may open an
account without making any initial investment if they agree to make regular,
minimum purchases of at least $50; (2) those shareholders investing in an
Individual Retirement Account ("IRA"), or through omnibus accounts where
individual shareholder recordkeeping and sub-accounting are not required, may
make initial minimum purchases of $250; (3) Fund Management may permit a lesser
amount to be invested in the Fund under a federal income tax-deferred retirement
plan (other than an IRA), or under a group investment plan qualifying as a
sophisticated investor; and (4) Fund Management reserves the right to reduce or
waive the minimum purchase requirements in its sole discretion where it
determines such action is in the best interests of the Fund. The minimum initial
purchase requirement of $1,000, as described above, does not apply to
shareholder account(s) in any of the INVESCO funds opened prior to January 1,
1993, and thus, is not a minimum balance requirement for those existing
accounts. However, for shareholders already having accounts in any of the
INVESCO funds, all initial share purchases in a new Fund account, including
those made using the exchange privilege, must meet the Fund's applicable minimum
investment requirement.
The purchase of Fund shares can be expedited by placing bank wire,
overnight courier, or telephone orders. Overnight courier orders must meet the
above minimum investment requirements. In no case can a bank wire or telephone
order be in an amount less than $1,000. For further information, the purchaser
may call the Fund's office by using the telephone number on the cover of this
Prospectus. Orders sent by overnight courier, including Express Mail, should be
sent to the street address, not Post Office Box, of INVESCO Funds Group, Inc.,
at 7800 E. Union Avenue, Denver, CO 80237.
Orders to purchase Fund shares can be placed by telephone. Shares of the
Fund will be issued at the net asset value next determined after receipt of
telephone instructions. Generally, payments for telephone orders must be
received by the Fund within three business days or the transaction may be
cancelled. In the event of such cancellation, the purchaser will be held
responsible for any loss resulting from a decline in the value of the shares. In
order to avoid such losses, purchasers should send payments for telephone
purchases by overnight courier or bank wire. INVESCO has agreed to indemnify the
Fund for any losses resulting from the cancellation of telephone purchases.
<PAGE>
If your check does not clear, or if a telephone purchase must be cancelled
due to non-payment, you will be responsible for any related loss the Fund or
INVESCO incurs. If you are already a shareholder in the INVESCO funds, the Fund
has the option to redeem shares from any identically registered account in the
Fund or any other INVESCO fund as reimbursement for any loss incurred. You also
may be prohibited or restricted from making future purchases in any of the
INVESCO funds.
Persons who invest in the Fund through a securities broker may be charged
a commission or transaction fee by the broker for the handling of the
transaction if the broker so elects. Any investor may deal directly with the
Fund in any transaction. In that event, there is no such charge.
The Fund reserves the right in its sole discretion to reject any order for
purchase of its shares (including purchases by exchange) when, in the judgment
of Fund Management, such rejection is in the best interest of the Fund.
Net asset value per share of the Fund 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 may also be computed on other
days under certain circumstances. Net asset value per share is calculated by
dividing the market value of the Fund's portfolio securities plus the value of
its other assets (including dividends, and interest accrued but not collected),
less all liabilities (including accrued expenses), by the number of outstanding
shares of the Fund. If market quotations are not readily available, a security
will be valued at fair value as determined in good faith by the board of
directors. Debt securities with remaining maturities of 60 days or less at the
time of purchase will be valued at amortized cost, absent unusual circumstances,
so long as the Fund's board of directors believes that such value represents
fair value.
Distribution Expenses. The Fund is authorized under a Plan and Agreement
of Distribution (the "Plan") pursuant to Rule 12b-1 under the Investment Company
Act of 1940 (the "1940 Act") to use its assets to finance certain activities
relating to the distribution of its shares to investors. Under the Plan, monthly
payments may be made by the Fund to INVESCO to reimburse it for particular
expenditures incurred by INVESCO during the rolling 12- month period in which
that month falls in connection with the distribution of the Fund's shares to
investors. These expenditures may include the payment of compensation (including
incentive compensation and/or continuing compensation based on the amount of
customer assets maintained in the Fund) to securities dealers and other
financial institutions and organizations, which may include INVESCO-affiliated
companies, to obtain various distribution- related and/or administrative
<PAGE>
services for the Fund. Such services may include, among other things,
processing new shareholder account applications, preparing and transmitting to
the Fund's Transfer Agent computer processable tapes of all transactions by
customers, and serving as the primary source of information to customers in
answering questions concerning the Fund and their transactions with the Fund.
In addition, other reimbursable expenditures include those incurred for
advertising, the preparation and distribution of sales literature, the cost of
printing and distributing prospectuses to prospective investors, and such other
services and promotional activities as may from time to time be agreed upon by
the Fund and its board of directors, including public relations efforts and
marketing programs to communicate with investors and prospective investors.
These services and activities may be conducted by the staff of INVESCO or its
affiliates or by third parties.
Under the Plan, the Fund's reimbursement to INVESCO is limited to an
amount computed at the annual rate of 0.25 of 1% of the Fund's average net
assets during the month. INVESCO is not entitled to reimbursement for overhead
expenses under the Plan, but may be reimbursed for all or a portion of the
compensation paid for salaries and other employee benefits for the personnel of
INVESCO, whose primary responsibilities involve marketing shares of the INVESCO
funds, including the Fund. Payment amounts by the Fund under the Plan, for any
month, may only be made to reimburse or pay expenditures incurred during the
rolling 12-month period in which that month falls; therefore, any reimbursable
expenses incurred by INVESCO in excess of the limitation described above are not
reimbursable and will be borne by INVESCO. In addition, INVESCO may from time to
time make additional payments from its revenues to securities dealers and other
financial institutions that provide distribution related and/or administrative
services for the Fund. No further payments will be made by the Fund under the
Plan in the event of its termination. Also, any payments made by the Fund may
not be used to finance the distribution of shares of any other mutual fund
advised by INVESCO. Payments made by the Fund under the Plan for compensation of
marketing personnel, as noted above, are based on an allocation formula designed
to ensure that all such payments are appropriate.
SERVICES PROVIDED BY THE FUND
Shareholder Accounts. INVESCO maintains a share account that reflects the
current holdings of each shareholder. Share certificates will be issued only
upon specific request. Since certificates must be carefully safeguarded, and
must be surrendered in order to exchange or redeem Fund shares, most
shareholders do not request share certificates in order to facilitate such
transactions. Each shareholder is sent a detailed confirmation of each
transaction in shares of the Fund. Shareholders whose only transactions are
through the EasiVest, direct payroll purchase, automatic monthly exchange or
periodic withdrawal programs, or are reinvestments of dividends or capital gains
<PAGE>
in the same or another fund, will receive confirmations of those
transactions on their quarterly statements. These programs are discussed below.
For information regarding a shareholder's account and transactions, the
shareholder may call the Fund's office by using the telephone number on the
cover of this Prospectus.
Reinvestment of Distributions. Dividends and other distributions are
automatically reinvested in additional Fund shares at the net asset value per
share of the Fund in effect on the ex-dividend date. A shareholder may, however,
elect to reinvest dividends and other distributions in certain of the other
no-load mutual funds advised and distributed by INVESCO, or to receive payment
of all dividends and other distributions in excess of $10.00 by check by giving
written notice to INVESCO at least two weeks prior to the record date on which
the change is to take effect. Further information concerning these options can
be obtained by contacting INVESCO.
Periodic Withdrawal Plan. A Periodic Withdrawal Plan is available to
shareholders who own or purchase shares of any mutual funds advised by INVESCO
having a total value of $10,000 or more; provided, however, that at the time the
Plan is established, the shareholder owns shares having a value of at least
$5,000 in the fund from which withdrawals will be made. Under the Periodic
Withdrawal Plan, INVESCO, as agent, will make specified monthly or quarterly
payments of any amount selected (minimum payment of $100) to the party
designated by the shareholder. Notice of all changes concerning the Periodic
Withdrawal Plan must be received by INVESCO at least two weeks prior to the next
scheduled check. Further information regarding the Periodic Withdrawal Plan and
its requirements and tax consequences can be obtained by contacting INVESCO.
Exchange Privilege. Shares of the Fund may be exchanged for shares of any
of the following other no-load mutual funds, which are also advised and
distributed by INVESCO, on the basis of their respective net asset values at the
time of the exchange: INVESCO Diversified Funds, Inc., INVESCO Dynamics Fund,
Inc., INVESCO Emerging Opportunity Funds, Inc., INVESCO 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., and INVESCO Value Trust.
An exchange involves the redemption of shares in the Fund and investment
of the redemption proceeds in shares of one of the funds listed above. Exchanges
will be made at the net asset value per share next determined after receipt of
an exchange request in proper order. Any gain or loss realized on an exchange is
recognizable for federal income tax purposes by the shareholder. Exchange
requests may be made either by telephone or by written request to INVESCO Funds
Group, Inc. using the telephone number or address on the cover of this
<PAGE>
Prospectus. Exchanges made by telephone must be in an amount of at least
$250, if the exchange is being made into an existing account of one of the
INVESCO funds. All exchanges that establish a new account must meet the Fund's
applicable minimum initial investment requirements. Written exchange requests
into an existing account have no minimum requirements other than the Fund's
applicable minimum subsequent investment requirements.
The privilege of exchanging Fund shares by telephone is available to
shareholders automatically unless expressly declined. By signing the new account
Application, a Telephone Transaction Authorization Form or otherwise utilizing
telephone exchange privileges, the investor has agreed that the Fund will not be
liable for following instructions communicated by telephone that it reasonably
believes to be genuine. The Fund employs procedures, which it believes are
reasonable, designed to confirm that exchange instructions are genuine. These
may include recording telephone instructions and providing written confirmations
of exchange transactions. As a result of this policy, the investor may bear the
risk of any loss due to unauthorized or fraudulent instructions; provided,
however, that if the Fund fails to follow these or other reasonable procedures,
the Fund may be liable.
In order to prevent abuse of this privilege to the disadvantage of other
shareholders, the Fund reserves the right to terminate the exchange privilege of
any shareholder who requests more than four exchanges a year. The Fund will
determine whether to do so based on a consideration of both the number of
exchanges any particular shareholder or group of shareholders has requested and
the time period over which those exchange requests have been made, together with
the level of expense to the Fund which will result from effecting additional
exchange requests. The exchange privilege also may be modified or terminated at
any time. Except for those limited instances where redemptions of the exchanged
security are suspended under Section 22(e) of the 1940 Act, or where sales of
the fund into which the shareholder is exchanging are temporarily stopped,
notice of all such modifications or termination of the exchange privilege will
be given at least 60 days prior to the date of termination or the effective date
of the modification.
Before making an exchange, the shareholder should review the prospectuses
of the funds involved and consider their differences, and should be aware that
the exchange privilege may only be available in those states where exchanges
legally may be made, which will require that the shares being acquired are
registered for sale in the shareholder's state of residence. Shareholders
interested in exercising the exchange privilege may contact INVESCO for
information concerning their particular exchanges.
Automatic Monthly Exchange. Shareholders who have accounts in one or more
of the mutual funds distributed by INVESCO may arrange for a fixed dollar amount
of their fund shares to be automatically exchanged for shares of any other
<PAGE>
INVESCO mutual fund listed under "Exchange Privilege" on a monthly basis.
The minimum monthly exchange in this program is $50.00. This automatic exchange
program can be changed by the shareholder at any time by notifying INVESCO at
least two weeks prior to the date the change is to be made. Further information
regarding this service can be obtained by contacting INVESCO.
EasiVest. For shareholders who want to maintain a schedule of monthly
investments, EasiVest uses various methods to draw a preauthorized amount from
the shareholder's bank account to purchase Fund shares. This automatic
investment program can be changed by the shareholder at any time by notifying
INVESCO at least two weeks prior to the date the change is to be made. Further
information regarding this service can be obtained by contacting INVESCO.
Direct Payroll Purchase. Shareholders may elect to have their employers
make automatic purchases of Fund shares for them by deducting a specified amount
from their regular paychecks. This automatic investment program can be modified
or terminated at any time by the shareholder by notifying the employer. Further
information regarding this service can be obtained by contacting INVESCO.
Tax-Deferred Retirement Plans. Shares of the Fund may be purchased for
self-employed individual retirement plans, IRAs, simplified employee pension
plans, and corporate retirement plans. In addition, shares can be used to fund
tax qualified plans established under Section 403(b) of the Internal Revenue
Code of 1986 by educational institutions, including public school systems and
private schools, and certain types of non-profit organizations, which provide
deferred compensation arrangements for their employees.
Prototype forms for the establishment of these various plans, including,
where applicable, disclosure statements required by the Internal Revenue
Service, are available from INVESCO. INVESCO Trust Company, a subsidiary of
INVESCO, is qualified to serve as trustee or custodian under these plans and
provides the required services at competitive rates. Retirement plans (other
than IRAs) receive monthly statements reflecting all transactions in their Fund
accounts. IRAs receive the confirmations and quarterly statements described
under "Shareholder Accounts." For complete information, including prototype
forms and service charges, call INVESCO at the telephone number listed on the
cover of this Prospectus or send a written request to: Retirement Services,
INVESCO Funds Group, Inc., Post Office Box 173706, Denver, Colorado 80217-3706.
HOW TO REDEEM SHARES
Shares of the Fund may be redeemed at any time at their current net asset
value per share next determined after a request in proper form is received at
<PAGE>
the Fund's office. (See "How Share Can Be Purchased.") Net asset value per
share 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.
If the shares to be redeemed are represented by stock certificates, a
written request for redemption signed by the registered shareholder(s) and the
certificates must be forwarded to INVESCO Funds Group, Inc., Post Office Box
173706, Denver, Colorado 80217-3706. Redemption requests sent by overnight
courier, including Express Mail, should be sent to the street address, not Post
Office Box, of INVESCO Funds Group, Inc. at 7800 E. Union Avenue, Denver, CO
80237. If no certificates have been issued, a written redemption request signed
by each registered owner of the account may be submitted to INVESCO at the
address noted above. If shares are held in the name of a corporation, additional
documentation may be necessary. Call or write for specifics. If payment for the
redeemed shares is to be made to someone other than the registered owner(s), the
signature(s) must be guaranteed by a financial institution which qualifies as an
eligible guarantor institution. Redemption procedures with respect to accounts
registered in the names of broker-dealers may differ from those applicable to
other shareholders.
Payment of redemption proceeds will be mailed within seven days following
receipt of the required documents. However, payment may be postponed under
unusual circumstances, such as when normal trading is not taking place on the
New York Stock Exchange or an emergency as defined by the Securities and
Exchange Commission exists. If the shares to be redeemed were purchased by check
and that check has not yet cleared, payment will be made promptly upon clearance
of the purchase check (which may take up to 15 days).
If a shareholder participates in EasiVest, the Fund's automatic monthly
investment program, and redeems all of the shares in his Fund account, INVESCO
will terminate any further EasiVest purchases unless otherwise instructed by the
shareholder.
Because of the high relative costs of handling small accounts, should the
value of any shareholder's account fall below $250, as a result of shareholder
action, the Fund reserves the right to effect the involuntary redemption of all
shares in such account, in which case the account would be liquidated and the
proceeds forwarded to the shareholder. Prior to any such redemption, a
shareholder will be notified and given 60 days to increase the value of the
account to $250 or more.
Fund shareholders (other than shareholders holding Fund shares in accounts
of IRA plans) may request expedited redemption of shares having a minimum value
of $250 (or redemption of all shares if their value is less than $250) held in
accounts maintained in their name by telephoning redemption instructions to
INVESCO, using the telephone number on the cover of this Prospectus. The
redemption proceeds, at the shareholder's option, either will be mailed to the
<PAGE>
mailed to the address listed for the shareholder on its Fund account, or wired
(minimum of $1,000) or mailed to the bank which the shareholder has designated
to receive the proceeds of telephone redemptions. The Fund charges no fee for
effecting such telephone redemptions. Unless Fund Management permits a larger
redemption request to be placed by telephone, a shareholder may not place a
redemption request by telephone in excess of $25,000. These telephone redemption
privileges may be modified or terminated in the future at the discretion of Fund
Management.
For INVESCO Trust Company-sponsored federal income tax-deferred retirement
plans, the term "shareholders" is defined to mean plan trustees that file a
written request to be able to redeem Fund shares by telephone. Shareholders
should understand that, while the Fund will attempt to process all telephone
redemption requests on an expedited basis, there may be times, particularly in
periods of severe economic or market disruption, when (a) they may encounter
difficulty in placing a telephone redemption request, and (b) processing
telephone redemptions may require up to seven days following receipt of the
telephone redemption request, or additional time because of postponements
resulting from the unusual circumstances set forth above.
The privilege of redeeming Fund shares by telephone is available to
shareholders automatically unless expressly declined. By signing a new account
Application, a Telephone Transaction Authorization Form or otherwise utilizing
telephone redemption privileges, the shareholder has agreed that the Fund will
not be liable for following instructions communicated by telephone that it
reasonably believes to be genuine. The Fund employs procedures, which it
believes are reasonable, designed to confirm that telephone instructions are
genuine. These may include recording telephone instructions and providing
written confirmation of transactions initiated by telephone. As a result of this
policy, the investor may bear the risk of any loss due to unauthorized or
fraudulent instructions; provided, however, that if the Fund fails to follow
these or other reasonable procedures, the Fund may be liable.
TAXES, DIVIDENDS AND CAPITAL GAIN DISTRIBUTIONS
Taxes. The Fund intends to distribute to shareholders substantially all of
its net investment income, net capital gains and net gains from foreign currency
transactions, if any, in order to continue to qualify for tax treatment as a
regulated investment company. Thus, the Fund does not expect to pay any federal
income or excise taxes.
Unless shareholders are exempt from income taxes, they must include all
dividends and capital gain distributions in taxable income for federal, state
and local income tax purposes. Dividends and other distributions are taxable
whether they are received in cash or automatically invested in shares of the
Fund or another fund in the INVESCO group.
<PAGE>
The Fund may be subject to the withholding of foreign taxes on dividends
or interest it receives on foreign securities. Foreign taxes withheld will be
treated as an expense of the Fund unless the Fund meets the qualifications to
enable it to pass these taxes through to shareholders for use by them as a
foreign tax credit or deduction.
Shareholders may be subject to backup withholding of 31% on dividends,
capital gain distributions and redemption proceeds. Unless a shareholder is
subject to backup withholding for other reasons, the shareholder can avoid
backup withholding on his Fund account by ensuring that INVESCO has a correct,
certified tax identification number.
Dividends and Capital Gain Distributions. The Fund earns ordinary or net
investment income in the form of dividends and interest on its investments. The
Fund's policy is to distribute substantially all of this income, less Fund
expenses, to shareholders on a quarterly basis at the discretion of the Fund's
board of directors.
In addition, the Fund realizes capital gains and losses when it sells
securities for more or less than it paid. If total gains on sales exceed total
losses (including losses carried forward from previous years), the Fund has a
net realized capital gain. Net realized capital gains, if any, are distributed
to shareholders at least annually, usually in December.
Dividends and capital gain distributions are paid to shareholders who hold
shares on the record date of the distribution regardless of how long the shares
have been held. The Fund's share price will then drop by the amount of the
distribution on the day the distribution is made. If a shareholder purchases
shares immediately prior to the distribution, the shareholder will, in effect,
have "bought" the distribution by paying full purchase price, a portion of which
is then returned in the form of a taxable distribution.
At the end of each year, information regarding the tax status of dividends
and capital gain distributions is provided to shareholders. Net realized capital
gains are divided into short-term and long-term gains depending on how long a
Fund held the security which gave rise to the gains. The capital gain
distribution consists of long-term capital gains which are taxed at the capital
gains rate. Short-term capital gains are included with income from dividends and
interest as ordinary income and are paid to shareholders as dividends.
Shareholders also may realize capital gains or losses when they sell Fund
shares at more or less than the price originally paid.
<PAGE>
Shareholders are encouraged to consult their tax advisers with respect to
these matters. For further information see "Dividends, Capital Gain
Distributions and Taxes" in the Statement of Additional Information.
ADDITIONAL INFORMATION
Voting Rights. All shares of the Fund have equal voting rights based on
one vote for each share owned and a corresponding fractional vote for each
fractional share owned. The Fund is not generally required, and does not expect
to hold regular annual meetings of shareholders. However, the board of directors
will call special meetings of shareholders for the purpose, among other reasons,
of voting upon the question of removal of a director or directors when requested
to do so in writing by the holders of 10% or more of the outstanding shares of
the Fund or as may be required by applicable law or the Fund's Articles of
Incorporation. The Fund will assist shareholders in communicating with other
shareholders as required by the 1940 Act. Directors may be removed by action of
the holders of a majority or more of the outstanding shares of the Fund.
Shareholder Inquiries. All inquiries regarding the Fund should be directed
to the Fund at the telephone number or mailing address set forth on the cover
page of this Prospectus.
Transfer and Dividend Disbursing Agent. INVESCO Funds Group, Inc., 7800
East Union Avenue, Denver, Colorado 80237, acts as registrar, transfer agent,
and dividend disbursing agent for the Fund pursuant to a Transfer Agency
Agreement which provides that the Fund shall pay an annual fee of $14.00 per
shareholder account or omnibus account participant. The transfer agency fee is
not charged to each shareholder's or participant's account but is an expense of
the Fund to be paid from the Fund's assets. Registered broker-dealers, third
party administrators of tax-qualified retirement plans and other entities,
including affiliates of INVESCO, may provide sub-transfer agency services to the
Fund which reduce or eliminate the need for identical services to be provided on
behalf of the Fund by INVESCO. In such cases, INVESCO may pay the third party an
annual sub-transfer agency or record-keeping fee of up to $14.00 per participant
in the third party's omnibus account out of the transfer agency fee which is
paid to INVESCO by the Fund.
<PAGE>
INVESCO GROWTH FUND, INC.
A no-load mutual fund seeking
long-term capital growth and
current income
PROSPECTUS
December 29, 1995
To receive general information and prospectuses on any of INVESCO's funds or
retirement plans, or to obtain current account or price information, call
toll-free:
1-800-525-8085
To reach PAL, your 24-hour Personal Account Line, call:
1-800-424-8085
Or write to:
INVESCO Funds Group. Inc., Distributor
Post Office Box 173706
Denver, Colorado 80217-3706
If you're in Denver, visit one of our convenient Investor Centers:
Cherry Creek
155-B Fillmore Street
Denver Tech Center
7800 East Union Avenue
Lobby Level
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
December 29, 1995
INVESCO GROWTH FUND, INC.
A no-load mutual fund seeking long-
term capital growth and current income
Address: Mailing Address:
7800 East Union Avenue Post Office Box 173706
Denver, Colorado 80237 Denver, Colorado 80217-3706
Telephone:
In Continental U.S., 1-800-525-8085
- --------------------------------------------------------------------------------
INVESCO GROWTH FUND, INC. (the "Fund") is a mutual fund that seeks
long-term capital growth. The Fund also seeks, as a secondary objective, to
obtain investment income through the purchase of securities of carefully
selected companies representing major fields of business and industrial
activity. In pursuing its objectives, the Fund invests primarily in common
stocks, but may also invest in other kinds of securities, including convertible
and straight issues of debentures and preferred stock.
A Prospectus for the Fund dated December 29, 1995, which provides the
basic information you should know before investing in the Fund, may be obtained
without charge from INVESCO Funds Group, Inc., Post Office Box 173706, Denver,
Colorado 80217-3706. This Statement of Additional Information is not a
Prospectus, but contains information in addition to and more detailed than that
set forth in the Prospectus. It is intended to provide you with additional
information regarding the activities and operations of the Fund, and should be
read in conjunction with the Prospectus.
Investment Adviser and Distributor: INVESCO FUNDS GROUP, INC.
- --------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
Page
Investment Policies and Restrictions....................................... 3
The Fund and Its Management................................................ 6
How Shares Can Be Purchased................................................ 18
How Shares Are Valued...................................................... 22
Fund Performance........................................................... 23
Services Provided By the Fund.............................................. 24
Tax-Deferred Retirement Plans.............................................. 25
How To Redeem Shares....................................................... 25
Dividencs, Capital Gain Distributions and Taxes............................ 26
Investment Practices....................................................... 28
Additional Information..................................................... 30
<PAGE>
INVESTMENT POLICIES AND RESTRICTIONS
- ------------------------------------
Debt Securities. As discussed in the section of the Fund's Prospectus
entitled "Risk Factors," the straight debt securities in which the Fund invests
generally are subject to two kinds of risk: credit risk and market risk. Credit
risk relates to the ability of the issuer to meet interest or principal payments
or both as they come due. The ratings given a debt security by Moody's Investors
Service, Inc. ("Moody's") and Standard & Poor's ("S&P") provide a generally
useful guide as to such credit risk. Market risk relates to the fact that the
market values of debt securities in which the Fund invests generally will be
affected by changes in the level of interest rates. An increase in interest
rates will tend to reduce the market values of such debt securities, whereas a
decline in interest rates will tend to increase their values.
Repurchase Agreements. As discussed in the Prospectus, the Fund may enter
into repurchase agreements with respect to debt instruments eligible for
investment by the Fund with member banks of the Federal Reserve System,
registered broker-dealers, and registered U.S. government securities dealers. A
repurchase agreement may be considered a loan collateralized by securities. The
resale price reflects an agreed upon interest rate effective for the period the
instrument is held by the Fund and is unrelated to the interest rate on the
underlying instrument. In these transactions, the securities acquired by the
Fund (including accrued interest earned thereon) must have a total value in
excess of the value of the repurchase agreement, and are held by the Fund's
custodian bank until repurchased.
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 Rule 144A-eligible
securities held by a Fund, however, could affect adversely the marketability of
such portfolio securities and the Fund might be unable to dispose of such
securities promptly or at reasonable prices.
<PAGE>
Lending of Securities. Another practice in which the Fund may engage is to
lend its securities to qualified brokers, dealers, banks, or other financial
institutions. While voting rights may pass with the loaned securities, if a
material event (e.g., proposed merger, sale of assets, or liquidation) is to
occur affecting an investment on loan, the loan must be called and the
securities voted. Loans of securities made by the Fund will comply with all
other applicable regulatory requirements, including the rules of the New York
Stock Exchange and the requirements of the Investment Company Act of 1940 (the
"1940 Act") and the Rules of the Securities and Exchange Commission thereunder.
Investment Restrictions. As described in the section of the Fund's
Prospectus entitled "Investment Objective and Policies," the Fund has adopted
certain fundamental investment restrictions. Under these restrictions, the Fund
will not:
(1) issue preference shares or create any funded debt;
(2) sell short or buy on margin, except if the Fund ever
commences writing put or call options (which the Fund
currently does not anticipate doing);
(3)* borrow money except from banks, and then not in excess
of 5% of the value of its total net assets, and only as
a temporary measure for emergency purposes;
(4) invest in the securities of any other investment company
except for a purchase or acquisition in accordance with
a plan of reorganization, merger or consolidation;
(5) purchase securities if the purchase would cause the Fund,
at the time, to have more than 5% of the value of its
total assets invested in the securities of any one
company or to own more than 10% of the voting securities
of any one company (except obligations issued or
guaranteed by the U.S. Government);
(6) make loans to any person, except through the purchase
of debt securities in accordance with the Fund's
investment policies, or the lending of portfolio
securities to broker-dealers or other institutional
investors, or the entering into repurchase agreements
with member banks of the Federal Reserve System,
registered broker-dealers and registered government
securities dealers. The aggregate value of all
portfolio securities loaned may not exceed 33-1/3%
of the Fund's total net assets (taken at current
value). No more than 10% of the Fund's total net
assets may be invested in repurchase agreements
maturing in more than seven days;
<PAGE>
(7) buy or sell commodities, commodity contracts or real
estate (however, the Fund may purchase securities of
companies investing in real estate);
(8) invest in any company for the purpose of exercising
control or management;
(9) buy other than readily marketable securities;
(10) engage in the underwriting of any securities;
(11) purchase securities of any company in which any officer
or director of the Fund or its investment adviser owns
more than 1/2 of 1% of the outstanding securities, or
in which all of the officers and directors of the Fund
and its investment adviser, as a group, own more than
5% of such securities;
(12) invest more than 25% of the value of the Fund's assets
in one particular industry.
The restrictions set forth above may not be changed without prior approval
by the holders of a majority, as defined in the 1940 Act, of the outstanding
shares of the Fund.
*The Fund has never borrowed money for other than temporary cash flow purposes
and has no intention of doing so in the foreseeable future unless unexpected
developments make borrowing of money by the Fund under this fundamental
investment restriction desirable in order to allow the Fund to meet its
obligation (e.g., processing redemptions in a timely manner).
With respect to investment restriction (9) above, the board of directors
has delegated to the Funds' investment adviser the authority to determine
whether a liquid market exists for securities eligible for resale pursuant to
Rule 144A under the Securities Act of 1933, or any successor to such rule, and
that such securities are not subject to restriction (9) above. Under guidelines
established by the board of directors, the adviser 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).
In applying restriction (12), above, the Fund uses an industry
classification system based on O'Neil Database published by William O'Neil &
Co., Inc.
<PAGE>
The Fund has no written policy regarding the writing of put and call
options but has not engaged in such practices and does not currently anticipate
doing so.
The Fund has given an undertaking to the State of Texas that the Fund will
not invest in any oil, gas, or mineral leases; and will not invest in real
estate limited partnership interests.
Under the 1940 Act, Fund directors and officers cannot be protected
against liability to the Fund or its shareholders to which they would be subject
because of willful misfeasance, bad faith, gross negligence or reckless
disregard of duties of their office.
THE FUND AND ITS MANAGEMENT
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The Fund. The Fund was incorporated under the laws of Maryland on January
8, 1935. On December 2, 1994, the Fund's name was changed from "Financial
Industrial Fund, Inc." to "INVESCO Growth Fund, Inc."
The Investment Adviser. INVESCO Funds Group, Inc., a Delaware corporation
("INVESCO"), is employed as the Fund's investment adviser. INVESCO was
established in 1932 and also serves as an investment adviser to INVESCO
Diversified Funds, Inc., INVESCO Dynamics Fund, Inc., INVESCO Emerging
Opportunity Funds, Inc., INVESCO 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, and INVESCO Variable Investment Funds, Inc.
The Sub-Adviser. INVESCO, as investment adviser, has contracted with
INVESCO Trust Company ("INVESCO Trust") to provide investment advisory and
research services on behalf of the Fund. INVESCO Trust has the primary
responsibility for providing portfolio investment management services to the
Fund. INVESCO Trust, a trust company founded in 1969, is a wholly-owned
subsidiary of INVESCO.
INVESCO is an indirect wholly-owned subsidiary of INVESCO PLC, a publicly
traded holding company organized in 1935. Through subsidiaries located in
London, Denver, Atlanta, Boston, Louisville, Dallas, Tokyo, Hong Kong and the
Channel Islands, INVESCO PLC provides investment services around the world.
INVESCO was acquired by INVESCO PLC in 1982 and, as of August 31, 1995, managed
14 mutual funds, consisting of 38 separate portfolios, on behalf of over 788,000
shareholders. INVESCO PLC's other North American subsidiaries include the
following:
-- INVESCO Capital Management, Inc. of Atlanta, Georgia manages
institutional investment portfolios, consisting primarily or discretionary
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employee benefit plans for corporations and state and local governments,
and endowment funds. INVESCO Capital Management, Inc. is the sole shareholder of
INVESCO Services, Inc., a registered broker-dealer whose primary business is the
distribution of shares of two registered investment companies.
-- INVESCO Management & Research, Inc. (formerly, Gardner and Preston Moss,
Inc.) of Boston, Massachusetts, primarily manages pension and endowment
accounts.
-- PRIMCO Capital Management, Inc. of Louisville, Kentucky, specializes in
managing stable return investments, principally on behalf of Section 401(k)
retirement plans.
-- INVESCO Realty Advisors, Inc. of Dallas, Texas is responsible for
providing advisory services in the U.S. real estate markets for INVESCO PLC's
clients worldwide. Clients include corporate plans, public pension funds as well
as endowment and foundation accounts.
The corporate headquarters of INVESCO PLC are located at 11 Devonshire
Square, London, EC2M 4YR, England.
As indicated in the Prospectus, INVESCO permits investment and other
personnel to purchase and sell securities for their own accounts in accordance
with a compliance policy governing personal investing by directors, officers and
employees of INVESCO and its North American affiliates. The policy requires
officers, inside directors, investment and other personnel of INVESCO and its
North American affiliates to pre-clear all transactions in securities not
otherwise exempt under the policy. Requests for trading authority will be denied
when, among other reasons, the proposed personal transaction would be contrary
to the provisions of the policy or would be deemed to adversely affect any
transaction then known to be under consideration for or to have been effected on
behalf of any client account, including the Fund.
In addition to the pre-clearance requirement described above, the policy
subjects officers, inside directors, investment and other personnel of INVESCO
and its North American affiliates to various trading restrictions and reporting
obligations. All reportable transactions are reviewed for compliance with the
policy. The provisions of this policy are administered by and subject to
exceptions authorized by INVESCO.
Investment Advisory Agreement. INVESCO serves as investment adviser
pursuant to an investment advisory agreement with the Fund (the "Agreement")
which was approved on April 24, 1991, by vote cast in person by a majority of
the directors of the Fund, including a majority of the directors who are not
"interested persons" of the Fund or INVESCO at a meeting called for such
purpose. The Agreement was approved by Fund shareholders on September 30, 1991,
for an initial term expiring April 30, 1993, and has been continued by action of
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the board of directors until April 30, 1996. Thereafter, the Agreement may
be continued from year to year as long as such continuance is specifically
approved at least annually by the board of directors of the Fund, 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 Fund's directors who are not parties to the Agreement or interested persons
(as defined in the 1940 Act) of any such party, cast in person at a meeting
called for the purpose of voting on such continuance. The Agreement may be
terminated at any time without penalty by either party upon sixty (60) days'
written notice and terminates automatically in the event of an assignment to the
extent required by the 1940 Act and the Rules thereunder.
The Agreement provides that INVESCO shall manage the investment portfolio
of the Fund in conformity with the Fund's investment policies (either directly
or by delegation to a sub- adviser which may be a company affiliated with
INVESCO). Further, INVESCO shall perform all administrative, internal accounting
(including computation of net asset value), clerical, statistical, secretarial,
and all other services necessary or incidental to the administration of the
affairs of the Fund excluding, however, those services that are the subject of
separate agreement between the Fund and INVESCO or any affiliate thereof,
including the distribution and sale of Fund shares and provision of transfer
agency, dividend disbursing agency, and registrar services, and services
furnished under an Administrative Services Agreement with INVESCO discussed
below. Services provided under the Agreement include, but are not limited to:
supplying the Fund with officers, clerical staff and other employees, if any,
who are necessary in connection with the Fund's 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 Fund's operations; preparation and review of
required documents, reports and filings by the Adviser'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 Fund), 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 Fund under
the 1940 Act. Expenses not assumed by INVESCO are borne by the Fund.
As full compensation for its advisory services provided to the Fund,
INVESCO is entitled to receive a monthly fee. The fee is calculated daily at an
annual rate of: 0.60% on the first $350 million of the average net assets of the
Fund; reduced to 0.55% on the next $350 million of the average net assets of the
Fund; and further reduced to 0.50% on the Fund's average net assets exceeding
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$700 million. For the fiscal years ended August 31, 1995, 1994 and 1993,
the Fund paid INVESCO advisory fees of $2,757,404, $2,879,668 and $2,658,775,
respectively.
Certain states in which the shares of the Fund are qualified for sale
currently impose limitations on the expenses of the Fund. As of the date of this
Statement of Additional Information, the most restrictive state-imposed annual
expense limitation requires that INVESCO absorb any amount necessary to prevent
the Fund's aggregate ordinary operating expenses (excluding interest, taxes,
brokerage fees and commissions, and extraordinary charges such as litigation
costs) from exceeding in any fiscal year 2.5% on the Fund's first $30 million of
average net assets, 2.0% on the next $70 million of average net assets and 1.5%
on the remaining average net assets. No payment of the investment advisory fee
will be made to INVESCO which would result in Fund expenses exceeding on a
cumulative annualized basis this state limitation. During the fiscal year ended
August 31, 1995, INVESCO did not absorb any amounts under this provision.
Sub-Advisory Agreement. INVESCO Trust serves as sub-adviser to the Fund
pursuant to a sub-advisory agreement (the "Sub- Agreement") with INVESCO which
was approved on April 24, 1991, by a vote cast in person by a majority of the
directors of the Fund, including a majority of the directors who are not
"interested persons" of the Fund, INVESCO, or INVESCO Trust at a meeting called
for such purpose. The Sub-Agreement was approved on September 30, 1991, by Fund
shareholders for an initial term expiring April 30, 1993, and has been continued
by action of the board of directors until April 30, 1996. Thereafter, the
Sub-Agreement may be continued from year to year as long as each such
continuance is specifically approved by the board of directors of the Fund, 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 must also be approved by a
majority of the directors who are not parties to the 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 Sub-Agreement
may be terminated at any time without penalty by either party or the 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 Sub-Agreement provides that INVESCO Trust, subject to the supervision
of INVESCO, shall manage the investment portfolio of the Fund in conformity with
the Fund's investment policies. These management services include: (a) managing
the investment and reinvestment of all the assets, now or hereafter acquired, of
the Fund, and executing all purchases and sales of portfolio securities; (b)
maintaining a continuous investment program for the Fund, consistent with (i)
the Fund's investment policies as set forth in the Fund's Articles of
Incorporation, Bylaws, and Registration Statement, as from time to time amended,
under the 1940 Act, as amended, and in any prospectus and/or statement of
<PAGE>
additional information of the Fund, as from time to time amended and in use
under the Securities Act of 1933, as amended, and (ii) the Fund'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 the
Fund, unless otherwise directed by the directors of the Fund or INVESCO, and
executing transactions accordingly; (d) providing the Fund the benefit of all of
the investment analysis and research, the reviews of current economic conditions
and trends, and the consideration of long-range investment policy now or
hereafter generally available to investment advisory customers of the
Sub-Adviser; (e) determining what portion of the Fund should be invested in the
various types of securities authorized for purchase by the Fund; and (f) making
recommendations as to the manner in which voting rights, rights to consent to
Fund action and any other rights pertaining to the Fund's portfolio securities
shall be exercised.
The Sub-Agreement provides that as compensation for its services, INVESCO
Trust shall receive from INVESCO, at the end of each month, a fee based upon the
average daily value of the Fund's net assets at the following annual rates:
0.25% on the first $200 million of the average net assets of the Fund, and 0.20%
on the Fund's average net assets in excess of $200 million. The Sub- Advisory
fee is paid by INVESCO, NOT the Fund.
Administrative Services Agreement. INVESCO, either directly or through
affiliated companies, also provides certain administrative, sub-accounting, and
recordkeeping services to the Fund pursuant to an Administrative Services
Agreement dated April 30, 1991 (the "Administrative Agreement"). The
Administrative Agreement was approved on April 24, 1991, by a vote cast in
person by all of the directors of the Fund, including all of the directors who
are not "interested persons" of the Fund or INVESCO at a meeting called for such
purpose. The Administrative Agreement was for an initial term of one year
expiring April 30, 1992 and has been continued by action of the board of
directors until April 30, 1996. The Administrative Agreement may be continued
from year to year as long as each such continuance is specifically approved by
the board of directors of the Fund, including a majority of the directors who
are not parties to the Administrative Agreement or interested persons (as
defined in the 1940 Act) of any such party, cast in person at a meeting called
for the purpose of voting on such continuance. The Administrative Agreement may
be terminated at any time without penalty by INVESCO on sixty (60) days' written
notice, or by the Fund upon thirty (30) days' written notice, and terminates
automatically in the event of an assignment unless the Fund's board of directors
approves such assignment.
The Administrative Agreement provides that INVESCO shall provide the
following services to the Fund: (A) such sub- accounting and recordkeeping
services and functions as are reasonably necessary for the operation of the
Fund; and (B) such sub-accounting, recordkeeping, and administrative services
and functions, which may be provided by affiliates of INVESCO, as are reasonably
<PAGE>
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, the Fund pays a fee to INVESCO consisting of a base fee of $10,000
per year, plus an additional incremental fee computed daily and paid monthly at
an annual rate of 0.015% per year of the average net assets of the Fund.
During the fiscal years ended August 31, 1995, 1994 and 1993, the Fund
paid INVESCO administrative services fees in the amount of $80,433, $83,764 and
$77,744, respectively.
Transfer Agency Agreement. INVESCO also performs transfer agent, dividend
disbursing agent, and registrar services for the Fund pursuant to a Transfer
Agency Agreement which was approved by the board of directors of the Fund,
including a majority of the Fund's directors who are not parties to the Transfer
Agency Agreement or "interested persons" of any such party, in April 1992, for a
term of one year. The Transfer Agency Agreement has been continued by action of
the board of directors until April 30, 1996, and thereafter may be continued
from year to year as long as such continuance is specifically approved at least
annually by the board of directors of the Fund, 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 Fund'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 the Fund shall pay to INVESCO
an annual fee of $14.00 per shareholder account or omnibus account participant.
This fee is paid monthly at 1/12 of the annual fee and is based upon the number
of shareholder or omnibus account participants in existence at any time during
each month. For the fiscal years ended August 31, 1995, 1994 and 1993, the Fund
paid INVESCO transfer agency fees of $681,911, $556,206 and $505,634,
respectively.
Officers and Directors of the Fund. The overall direction and supervision
of the Fund is the responsibility of the board of directors, which has the
primary duty of seeing that the Fund's general investment policies and programs
of the Fund are carried out and that the Fund's portfolio is properly
administered. The officers of the Fund, all of whom are officers and employees
of, and are paid by, INVESCO, are responsible for the day-to-day administration
of the Fund. The investment adviser for the Fund has the primary responsibility
for making investment decisions on behalf of the Fund. These investment
decisions are reviewed by the investment committee of INVESCO.
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All of the officers and directors of the Fund hold comparable positions
with INVESCO Diversified Funds, Inc., INVESCO Dynamics Fund, Inc., INVESCO
Emerging Opportunity Funds, 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., and
INVESCO Variable Investment Funds, Inc. All of the directors of the Fund also
serve as trustees of INVESCO Value Trust. In addition, all of the directors of
the Fund, with the exception of Messrs. Hesser and Sim, also are trustees of
INVESCO Treasurer's Series Trust and directors of The EBI Funds, Inc. All of the
officers of the Fund also hold comparable positions with INVESCO Value Trust.
Set forth below is information with respect to each of the Fund's officers and
directors. Unless otherwise indicated, the address of the directors and officers
is Post Office Box 173706, Denver, Colorado 80217-3706. Their affiliations
represent their principal occupations during the past five years.
CHARLES W. BRADY,*+ Chairman of the Board. Chief Executive Officer and
Director of INVESCO PLC, London, England, and of subsidiaries thereof; Chairman
of the Board of The EBI Funds, Inc., INVESCO Treasurer's Series Trust and The
Global Health Sciences Fund. Address: 1315 Peachtree Street, NE, Atlanta,
Georgia. Born: May 11, 1935.
FRED A. DEERING,+# Vice Chairman of the Board. Vice Chairman of The EBI
Funds, Inc., and INVESCO Treasurer's Series Trust. Trustee of The Global Health
Sciences Fund. Formerly, Chairman of the Executive Committee and Chairman of the
Board of Security Life of Denver Insurance Company, Denver, Colorado; Director
of NN Financial, Toronto, Ontario, Canada; Director and Chairman of the
Executive Committee of ING America Life, Life Insurance Co. of Georgia and
Southland Life Insurance Company. Address: Security Life Center, 1290 Broadway,
Denver, Colorado. Born: January 12, 1928.
DAN J. HESSER,+* President and Director. Chairman of the Board, President,
and Chief Executive Officer of INVESCO Funds Group, Inc. and Director of INVESCO
Trust Company. Trustee of The Global Health Sciences Fund. Born: December 27,
1939.
VICTOR L. ANDREWS,** Director. Mills Bee Lane Professor of Banking and
Finance and Chairman of the Department of Finance at Georgia State University,
Atlanta, Georgia, since 1968; since October 1984, Director of the Center for the
Study of Regulated Industry at Georgia State University; formerly, member of the
faculties of the Harvard Business School and the Sloan School of Management of
MIT. Dr. Andrews is also a Director of The Southeastern Thrift and Bank Fund,
Inc. and The Sheffield Funds, Inc. Address: Department of Finance, Georgia State
University, University Plaza, Atlanta, Georgia. Born: June 23, 1930.
<PAGE>
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.
FRANK M. BISHOP*, Director. President and Chief Operating Officer of
INVESCO Inc. since February, 1993; Director of INVESCO Funds Group, Inc. since
March 1993; Director (since February 1993), Vice President (since December
1991), and Portfolio Manager (since February 1987), of INVESCO Capital
Management, Inc. (and predecessor firms), Atlanta, Georgia. Address: 1315
Peachtree Street, N.E., Atlanta, Georgia. Born: December 7, 1943.
LAWRENCE H. BUDNER,# Director. Trust Consultant; prior to June 30, 1987,
Senior Vice President and Senior Trust Officer of InterFirst Bank, Dallas,
Texas. Address: 7608 Glen Albens, Dallas, Texas. Born: July 25, 1930.
DANIEL D. CHABRIS,+# Director. Financial Consultant; Assistant Treasurer of
Colt Industries Inc., New York, New York, from 1966 to 1988. Address: 15
Sterling Road, Armonk, New York. Born: August 1, 1923.
A. D. FRAZIER, JR.,** Director. Chief Operating Officer of the Atlanta
Committee for the Olympic Games. From 1982 to 1991, Mr. Frazier was employed in
various capacities by First Chicago Bank, most recently as Executive Vice
President of the North American Banking Group. Director of Charter Medical
Corporation, Atlanta, Georgia. Trustee of The Global Health Sciences Fund.
Address: 250 Williams Street, Suite 600, Atlanta, Georgia 30301. Born: June 29,
1944.
KENNETH T. KING,** Director. Formerly, Chairman of the Board of The Capitol
Life Insurance Company, Providence Washington Insurance Company, and Director of
numerous subsidiaries thereof in the U.S. Formerly, Chairman of the Board of The
Providence Capitol Companies in the United Kingdom and Guernsey. Chairman of the
Board of the Symbion Corporation (a high technology company) until 1987.
Address: 4080 North Circulo Manzanillo, Tucson, Arizona. Born: November 16,
1925.
JOHN W. MC INTYRE,# Director. Retired. Formerly, Vice Chairman of the Board
of Directors of the Citizens and Southern Corporation and Chairman of the Board
and Chief Executive Officer of the Citizens and Southern Georgia Corporation and
Citizens and Southern National Bank, Director of Golden Poultry Co., Inc.
Trustee of The Global Health Sciences Fund and Gables Residential Trust.
Address: Seven Piedmont Center, Suite 100, Atlanta, Georgia 30305. Born:
September 14, 1930.
<PAGE>
R. DALTON SIM*, Director. Chairman of the Board (since March 1993) and
President (since January 1991) of INVESCO Trust Company; Director since June
1987 and, formerly, Executive Vice President and Chief Investment Officer (June
1987 to January 1991) of INVESCO Funds Group, Inc.; President (since 1994) and
Trustee (since 1991) of The Global Health Sciences Fund since 1991. Born: July
18, 1939.
GLEN A. PAYNE, Secretary. Senior Vice President, General Counsel and
Secretary of INVESCO Funds Group, Inc. and INVESCO Trust Company. Formerly,
employee of a U.S. regulatory agency, Washington, D.C. (June 1973 through May
1989). Born: September 25, 1947.
RONALD L. GROOMS, Treasurer. Senior Vice President and Treasurer of INVESCO
Funds Group, Inc. and INVESCO Trust Company since January 1988. Born: October 1,
1946.
WILLIAM J. GALVIN, JR., Assistant Secretary. Senior Vice President of
INVESCO Funds Group, Inc. and Trust Officer of INVESCO Trust Company since
August 1992. Formerly, Vice President of 440 Financial Group from June 1990 to
August 1992 and Assistant Vice President of Putnam Companies from November 1986
to June 1990. Born: August 21, 1956.
ALAN I. WATSON, Assistant Secretary. Vice President of INVESCO Funds Group,
Inc. and Trust Officer of INVESCO Trust Company. Born: September 14, 1941.
JUDY P. WIESE, Assistant Treasurer. Vice President of INVESCO Funds Group,
Inc. and Trust Officer of INVESCO Trust Company. Born: February 3, 1948.
#Member of the audit committee of the Fund.
+Member of the executive committee of the Fund. On occasion, the executive
committee acts upon the current and ordinary business of the Fund 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 Fund. All decisions are
subsequently submitted for ratification by the board of directors.
*These directors are "interested persons" of the Fund as defined in the
1940 Act.
**Member of the management liaison committee of the Fund.
As of December 8, 1995, officers and directors of the Fund, as a group,
beneficially owned 0.01% of the Fund's outstanding shares.
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Director Compensation
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The following table sets forth, for the fiscal year ended August 31, 1995:
the compensation paid by the Fund to its eight independent directors for
services rendered in their capacities as directors of the Fund; the benefits
accrued as Fund 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
Fund. In addition, the table sets forth the total compensation paid by all of
the mutual funds distributed by INVESCO Funds Group, Inc. (including the Fund),
The EBI Funds, Inc., INVESCO Treasurer's Series Trust and The Global Health
Sciences Fund (collectively, the "INVESCO Complex") to these directors for
services rendered in their capacities as directors or trustees during the year
ended December 31, 1994. As of December 31, 1994, there were 45 funds in the
INVESCO Complex.
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Total
Retirement Compensa-
Benefits Estimated tion From
Aggregate Accrued As Annual INVESCO
Compensa- Part of Benefits Complex
tion From Fund Upon Paid To
Fund1 Expenses2 Retirement3 Directors1
Fred A.Deering, $2,613 $1,783 $855 $89,350
Vice Chairman of
the Board
Victor L. Andrews 2,229 1,685 990 68,000
Bob R. Baker 2,472 1,504 1,327 75,350
Lawrence H. Budner 2,229 1,685 990 68,000
Daniel D. Chabris 2,472 1,922 704 73,350
A. D. Frazier, Jr.4 930 0 0 32,500
Kenneth T. King 2,320 1,851 776 71,000
John W. McIntyre4 1,063 0 0 33,000
Total $16,328 $10,430 $5,642 $510,550
% of Net Assets 0.0033%5 0.0021%5 0.0052%6
1The vice chairman of the board, the chairmen of the audit, management
liaison and compensation committees, and the members of the executive and
valuation committees each receive compensation for serving in such capacities in
addition to the compensation paid to all independent directors.
2Represents benefits accrued with respect to the Defined Benefit Deferred
Compensation Plan discussed below, and not compensation deferred at the election
of the directors.
3These figures represent the Fund's share of the estimated annual benefits
payable by the INVESCO Complex (excluding the Global Health Sciences Fund which
does not participate in any retirement plan) upon the directors' retirement,
calculated using the current method of allocating director compensation among
the funds in the INVESCO Complex. These estimated benefits assume retirement at
age 72 and that the basic retainer payable to the directors will be adjusted
periodically for inflation, for increases in the number of funds in the INVESCO
Complex, and for other reasons during the period in which retirement benefits
are accrued on behalf of the respective directors. This results in lower
estimated benefits for directors who are closer to retirement and higher
estimated benefits for directors who are further from retirement. With the
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exception of Messrs. Frazier and McIntyre, each of these directors has served
as a director/trustee of one or more of the funds in the INVESCO Complex for the
minimum five-year period required to be eligible to participate in the Defined
Benefit Deferred Compensation Plan.
4Messrs. Frazier and McIntyre began serving as directors of the Fund on
April 19, 1995.
5Total as a percentage of the Fund's net assets as of August 31, 1995.
6Total as a percentage of the net assets of the INVESCO Complex as of
December 31, 1994.
Messrs. Bishop, Brady, Hesser, and Sim, as "interested persons" of the
Fund and other funds in the INVESCO Complex, receive compensation as officers or
employees of INVESCO or its affiliated companies, and do not receive any
director's fees or other compensation from the Fund or other funds in the
INVESCO Complex for their service as directors.
The boards of directors/trustees of the mutual funds managed by INVESCO,
The EBI Funds, Inc. and INVESCO Treasurer's Series Trust have adopted a Defined
Benefit Deferred Compensation Plan for the non-interested directors and trustees
of the funds. Under this plan, each director or trustee who is not an interested
person of the funds (as defined in the 1940 Act) and who has served for at least
five years (a "qualified director") is entitled to receive, upon retiring from
the boards at the retirement age of 72 (or the retirement age of 73 to 74, if
the retirement date is extended by the boards for one or two years, but less
than three years) continuation of payment for one year (the "first year
retirement benefit") of the annual basic retainer payable by the funds to the
qualified director at the time of his retirement (the "basic retainer").
Commencing with any such director's second year of retirement, and commencing
with the first year of retirement of a director whose retirement has been
extended by the board for three years, a qualified director shall receive
quarterly payments at an annual rate equal to 25% of the basic retainer. These
payments will continue for the remainder of the qualified director's life or ten
years, whichever is longer (the "reduced retainer payments"). If a qualified
director dies or becomes disabled after age 72 and before age 74 while still a
director of the funds, the first year retirement benefit and the reduced
retainer payments will be made to him or to his beneficiary or estate. If a
qualified director becomes disabled or dies either prior to age 72 or during
his/her 74th year while still a director of the funds, the director will not be
entitled to receive the first year retirement benefit; however, the reduced
retainer payments will be made to his beneficiary or estate. The plan is
administered by a committee of three directors who are also participants in the
plan and one director who is not a plan participant. The cost of the plan will
be allocated among the INVESCO, EBI and Treasurer's Series funds in a manner
<PAGE>
determined to be fair and equitable by the committee. The Fund is not
making any payments to directors under the plan as of the date of this Statement
of Additional Information. The Fund 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 Fund has an audit committee comprised of four of the directors who are
not interested persons of the Fund. The committee meets periodically with the
Fund's independent accountants and officers to review accounting principles used
by the Fund, the adequacy of internal controls, the responsibilities and fees of
the independent accountants, and other matters.
The Fund also has a management liaison committee which meets quarterly
with various management personnel of INVESCO in order (a) to facilitate better
understanding of management and operations of the Fund, 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
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The Fund's shares are sold on a continuous basis at the net asset value
per share next calculated after receipt of a purchase order in good form. Net
asset value per share of the Fund is computed once each day that the New York
Stock Exchange is open as of the close of regular trading on that Exchange, but
may also be computed at other times. See "How Shares Are Valued." INVESCO acts
as the Fund's Distributor under a distribution agreement with the Fund under
which it receives no compensation and bears all expenses, including the costs of
printing and distributing prospectuses, incident to marketing of the Fund's
shares, except for such distribution expenses which are paid out of Fund assets
under the Fund's Plan of Distribution which has been adopted by the Fund in
accordance with Rule 12b-1 under the Investment Company Act of 1940.
Distribution Plan. As discussed under "How Shares Can Be Purchased" in the
Prospectus, the Fund has adopted a Plan and Agreement of Distribution (the
"Plan") pursuant to Rule 12b-1 under the 1940 Act. The Plan provides that the
Fund may make monthly payments to INVESCO of amounts computed at an annual rate
no greater than 0.25% of the Fund's average net assets during any 12- month
period to reimburse it for expenses incurred by it in connection with the
distribution of the Fund's shares to investors. For the fiscal year ended August
31, 1995, the Fund made payments to INVESCO under the Plan in the amount of
$582,941. In addition, as of August 31, 1995, $111,780 of additional
distribution expenses had been incurred for the Fund, subject to payment upon
approval of the Fund's directors, which payment was approved on October 25,
1995. As noted in the Prospectus, one type of reimbursable expenditure is the
payment of compensation to securities companies and other financial institutions
and organizations, which may include INVESCO-affiliated companies, in order to
<PAGE>
obtain various distribution-related and/or administrative services for the
Fund. The Fund is authorized by the Plan to use its assets to finance the
payments made to obtain those services. Payments will be made by INVESCO to
broker-dealers who sell shares of the Fund and may be made to banks, savings and
loan associations and other depository institutions. Although the Glass-Steagall
Act limits the ability of certain banks to act as underwriters of mutual fund
shares, the Fund does not believe that these limitations would affect the
ability of such banks to enter into arrangements with INVESCO, but can give no
assurance in this regard. However, to the extent it is determined otherwise in
the future, arrangements with banks might have to be modified or terminated,
and, in that case, the size of the Fund possibly could decrease to the extent
that the banks would no longer invest customer assets in the Fund. Neither the
Fund 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 the Fund.
For the fiscal year ended August 31, 1995, allocation of 12b-1 amounts
paid by the Fund for the following categories of expenses were:
Advertising--$62,786; sales literature, printing, and postage--$125,415; direct
mail--$55,359; public relations/promotion--$106,910; compensation to securities
dealers and other organizations--$44,475; and marketing personnel-- $187,996.
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 Fund's Transfer Agent computer-processable tapes of all Fund transactions by
customers, serving as the primary source of information to customers in
answering questions concerning the Fund, and assisting in other customer
transactions with the Fund.
The Plan was approved on April 17, 1990, at a meeting called for such
purpose by a majority of the directors of the Fund, including a majority of the
directors who neither are "interested persons" of the Fund nor have any
financial interest in the operation of the Plan ("12b-1 directors"), and was
also approved by holders of a majority of the outstanding shares of the Fund on
June 29, 1990. The Plan has been continued by action of the board of directors
until April 30, 1996.
The Plan provides that it shall continue in effect with respect to the
Fund for so long as such continuance is approved at least annually by the vote
of the board of directors of the Fund cast in person at a meeting called for the
purpose of voting on such continuance. The Plan can also be terminated at any
time with respect to the Fund, without penalty, if a majority of the 12b-1
directors, or shareholders of the Fund, vote to terminate the Plan. The Fund
may, in its absolute discretion, suspend, discontinue or limit the offering of
its shares at any time. In determining whether any such action should be taken,
<PAGE>
the board of directors intends to consider all relevant factors including,
without limitation, the size of the Fund, the investment climate for the 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 Fund
shares; however, the Fund is not contractually obligated to continue the Plan
for any particular period of time. Suspension of the offering of Fund shares
would not, of course, affect a shareholder's ability to redeem his shares. So
long as the Plan is in effect, the selection and nomination of persons to serve
as independent directors of the Fund 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 the Fund's payments
thereunder without approval of the shareholders of the Fund, and all material
amendments to the Plan must be approved by the Board of Directors of the Fund,
including a majority of the 12b-1 directors. Under the agreement implementing
the Plan, INVESCO or the Fund, the latter by vote of a majority of the 12b-1
directors, or of the holders of a majority of the Fund's outstanding voting
securities, may terminate such agreement without penalty upon thirty days'
written notice to the other party. No further payments will be made by the Fund
under the Plan in the event of its termination.
To the extent that the Plan constitutes a plan of distribution adopted
pursuant to Rule 12b-1 under the 1940 Act, it shall remain in effect as such, so
as to authorize the use of Fund assets in the amounts and for the purposes set
forth therein, notwithstanding the occurrence of an assignment, as defined by
the 1940 Act, and rules thereunder. To the extent it constitutes an agreement
pursuant to a plan, the Fund's obligation to make payments to INVESCO shall
terminate automatically, in the event of such "assignment," in which event the
Fund may continue to make payments, pursuant to the Plan, to INVESCO or another
organization only upon the approval of new arrangements, which may or may not be
with INVESCO, regarding the use of the amounts authorized to be paid by it under
the Plan, by the directors, including a majority of the 12b-1 directors, by a
vote cast in person at a meeting called for such purpose.
Information regarding the services rendered under the Plan and the amounts
paid therefor by the Fund are provided to, and reviewed by, the directors on a
quarterly basis. In the quarterly review, the directors shall determine whether,
and to what extent, INVESCO will be reimbursed for expenditures which it has
made that are reimbursable under the Fund's Rule 12b-1 Plan. On an annual basis,
the directors shall consider the continued appropriateness of the Plan and the
level of compensation provided therein.
The only directors or interested persons, as that term is defined in
Section 2(a)(19) of the 1940 Act, of the Fund who have a direct or indirect
financial interest in the operation of the Plan are the officers and directors
of the Fund listed herein under the section entitled "The Fund and Its
<PAGE>
Management--Officers and Directors of the Fund" hereof who are also
officers either of INVESCO or companies affiliated with INVESCO. The benefits
which the Fund believes will be reasonably likely to flow to it and its
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 Fund;
(2) The sale of additional shares reduces the likelihood that redemption
of shares will require the liquidation of Fund securities in amounts
and at times that are disadvantageous for investment purposes;
(3) The positive effect which increased Fund assets will have on its
revenues could allow INVESCO:
(a) To have greater resources to make the financial commitments
necessary to improve the quality and level of Fund and
shareholder services (in both systems and personnel),
(b) To increase the number and type of mutual funds available to
investors from INVESCO (and support them in their infancy),
and thereby expand the investment choices available to all
shareholders, and
(c) To acquire and retain talented employees who desire to be
associated with a growing organization; and
(4) Increased Fund assets may result in reducing each investor's share
of certain expenses through economies of scale (e.g. exceeding
established breakpoints in the advisory fee schedule and allocating
fixed expenses over a larger asset base), thereby partially
offsetting the costs of the Plan.
<PAGE>
HOW SHARES ARE VALUED
- ---------------------
As described in the section of the Fund's Prospectus entitled "How Shares
Can Be Purchased," the net asset value of shares of the Fund is computed once
each day that the New York Stock Exchange is open as of the close of regular
trading on the New York Stock 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 the Fund that the current net asset
value per share might be materially affected by changes in the value of the
securities held, but only if on such day the Fund receives a request to purchase
or redeem shares. Net asset value per share is not calculated on days the New
York Stock Exchange is closed, such as federal holidays, including New Year's
Day, Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving, and Christmas.
The net asset value per share of the Fund is calculated by dividing the
value of all securities held by the Fund and its other assets (including
dividends and interest accrued but not collected), less the Fund's liabilities
(including accrued expenses), by the number of outstanding shares of the Fund.
Securities traded on national securities exchanges, the NASDAQ National Market
System, the NASDAQ Small Cap Market and foreign markets are valued at their last
sale prices on the exchanges or markets where such securities are primarily
traded. Securities traded in the over-the-counter market for which last sale
prices are not available and listed securities for which no sales are 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 will be valued at fair value as determined in good faith
by the Fund'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 board of directors of the Fund will review the methods used
by such service to assure itself that securities will be valued at their fair
values. The Fund's Board of Directors also periodically monitors the methods
used by such pricing services. Debt securities with remaining maturities of 60
days or less at the time of purchase are normally valued at amortized cost.
The values of securities held by the Fund and other assets used in
computing net asset value generally are determined as of the time regular
trading in such securities or assets is completed each day. Since regular
trading in most foreign securities markets is completed simultaneously with, or
prior to, the close of regular trading on the New York Stock Exchange, closing
prices for foreign securities usually are available for purposes of computing
the Fund's net asset value. However, in the event that the closing price of a
<PAGE>
price of a foreign security is not available in time to calculate a Fund's net
asset value on a particular day, the Company's board of directors has authorized
the use of the market price for the security obtained from an approved pricing
service at an established time during the day, which may be prior to the close
of regular trading in the security. The value of all assets and liabilities
initially expressed in foreign currencies will be converted into U.S. dollars at
the spot rates of such currencies against the U.S. dollar provided by an
approved pricing service.
FUND PERFORMANCE
- ----------------
As described in the section of the Prospectus entitled "Performance Data,"
the Fund advertises its total return performance. Average annual total return
performance for the one-, five- and ten-year periods ended August 31, 1995 was
12.05%, 13.44%, and 12.28%, respectively. Average annual total return
performance for each of the periods indicated was computed by finding the
average annual compounded rates of return that would equate the initial amount
invested to the ending redeemable value, according to the following formula:
P(1 + T)n = ERV
where: P = initial payment of $1000
T = average annual total return
n = number of years
ERV = ending redeemable value of initial payment
The average annual total return performance figures shown above were
determined by solving the above formula for "T" for each time period.
In conjunction with performance reports, comparative data between the
Fund's performance for a given period and other types of investment vehicles,
including certificates of deposit, may be provided to prospective investors and
shareholders.
From time to time, evaluations of performance made by independent sources
may also be used in advertisements, sales literature or shareholder reports,
including reprints of, or selections from, editorials or articles about the
Funds. Sources for Fund performance information and articles about the Funds
include, but are not limited to, the following:
American Association of Individual Investors' Journal
Banxquote
Barron's
Business Week
CDA Investment Technologies
CNBC
CNN
Consumer Digest
Financial Times
Financial World
<PAGE>
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 FUND
- -----------------------------
Periodic Withdrawal Plan. As described in the section of the Fund's
Prospectus entitled "Services Provided by The Fund," the Fund offers a Periodic
Withdrawal Plan. All dividends and distributions on shares owned by shareholders
participating in this Plan are reinvested in additional shares. Since withdrawal
payments represent the proceeds from sales of shares, the amount of
shareholders' investments in the Fund will be reduced to the extent that
withdrawal payments exceed dividends and other distributions paid and
reinvested. Any gain or loss on such redemptions must be reported for tax
purposes. In each case, shares will be redeemed at the close of business on or
about the 20th day of each month preceding payment and payments will be mailed
within five business days thereafter.
The Periodic Withdrawal Plan involves the use of principal and is not a
guaranteed annuity. Payments under such a Plan do not represent income or a
return on investment.
A Periodic Withdrawal Plan may be terminated at any time by sending a
written request to INVESCO. Upon termination, all future dividends and capital
gain distributions will be reinvested in additional shares unless a shareholder
requests otherwise.
<PAGE>
Exchange Privilege. As discussed in the section of the Prospectus entitled
"Services Provided by the Fund," the Fund offers shareholders the privilege of
exchanging shares of the Fund for shares of certain other mutual funds advised
by INVESCO. Exchange requests may be made either by telephone or by written
request to INVESCO Funds Group, Inc. using the telephone number or address on
the cover of this Statement of Additional Information. Exchanges made by
telephone must be in an amount of at least $250, if the exchange is being made
into an existing account of one of the INVESCO funds. All exchanges that
establish a new account must meet the fund's applicable minimum initial
investment requirements. Written exchange requests into an existing account have
no minimum requirements. Any gain or loss realized on an exchange is recognized
for federal income tax purposes. This privilege is not an option or right to
purchase securities, but is a revocable privilege permitted under the present
policies of each of the funds and is not available in any state or other
jurisdiction where the shares of the mutual fund into which transfer is to be
made are not qualified for sale, or when the net asset value of the shares
presented for exchange is less than the minimum dollar purchase required by the
appropriate prospectus.
TAX-DEFERRED RETIREMENT PLANS
- -----------------------------
As described in the section of the Fund's Prospectus entitled "Services
Provided by the Fund," shares of the Fund may be purchased as the investment
medium for various tax-deferred retirement plans. Persons who request
information regarding these plans from INVESCO will be provided with prototype
documents and other supporting information regarding the type of plan requested.
Each of these plans involves a long-term commitment of assets and is subject to
possible regulatory penalties for excess contributions, premature distributions
or for insufficient distributions after age 70-1/2. The legal and tax
implications may vary according to the circumstances of the individual investor.
Therefore, the investor is urged to consult with an attorney or 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 section of
the Prospectus entitled "How to Redeem Shares." The right of redemption may be
suspended and payment postponed when: (a) the New York Stock Exchange is closed
for other than customary weekends and holidays; (b) trading on that exchange is
restricted; (c) an emergency exists as a result of which disposal by the Fund of
securities owned by it is not reasonably practicable or it is not reasonably
practicable for the Fund fairly to determine the value of its net assets; or (d)
the Securities and Exchange Commission by order so permits.
It is possible that in the future conditions may exist which would, in the
opinion of the Fund's investment adviser, make it undesirable for the Fund to
pay for redeemed shares in cash. In such cases, the investment adviser may
<PAGE>
authorize payment to be made in portfolio securities or other property of
the Fund. However, the Fund has obligated itself under the 1940 Act to redeem
for cash all shares of the Fund presented for redemption by any one shareholder
having a value up to $250,000 (or 1% of the Fund's net assets if that is less)
in any 90-day period. Securities delivered in payment of redemptions are
selected entirely by the investment adviser based on what is in the best
interests of the Fund and its shareholders, and are valued at the value assigned
to them in computing the Fund's net asset value per share. Shareholders
receiving such securities are likely to incur brokerage costs on their
subsequent sales of the securities.
DIVIDENDS, CAPITAL GAIN DISTRIBUTIONS AND TAXES
- -----------------------------------------------
The 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. The Fund so qualified for the fiscal year
ended August 31, 1995, and intends to continue to qualify during its current
fiscal year. As a result, it is anticipated that the 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 the 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,
the 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 the Fund derives from its
portfolio investments.
Distributions by the Fund of net capital gains (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 the 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 Fund shares reflects accrued net
investment income and undistributed realized capital and foreign currency gains;
therefore, when a distribution is made, the net asset value is reduced by the
amount of the distribution. If shares are purchased shortly before a
distribution, the full price for the shares will be paid and some portion of the
<PAGE>
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.
INVESCO may provide Fund shareholders with information concerning the
average cost basis of their shares in order to help them prepare their tax
returns. This information is intended as a convenience to shareholders, and will
not be reported to the Internal Revenue Service (the "IRS"). The IRS permits the
use of several methods to determine the cost basis of mutual fund shares. The
cost basis information provided by INVESCO will be computed using the
single-category average cost method, although neither INVESCO nor the 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 the 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 Fund 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.
The 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 net capital gains for the one-year period
ending on October 31 of that year, plus certain other amounts.
Dividends and interest received by the 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
the 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 IRS 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. The 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.
The 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,
<PAGE>
passive income. Under certain circumstances, the 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 the Fund distributes the PFIC income as
a taxable dividend to its shareholders. The balance of the PFIC income will be
included in the Fund's investment company taxable income and, accordingly, will
not be taxable to the Fund 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 the Fund
actually collects the receivables or pays the liabilities, generally will be
treated as ordinary income or loss. These gains or losses may increase or
decrease the amount of the 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 generally will 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 Fund's
portfolio turnover. The rate of portfolio turnover can fluctuate under
constantly changing economic conditions and market circumstances. Securities
initially satisfying basic policies and objectives of the Fund may be disposed
of when they are no longer suitable. Brokerage costs to the Fund are
commensurate with the rate of portfolio activity. Portfolio turnover rates for
the fiscal years ended August 31, 1995 and 1994 were 111% and 63%, respectively.
In computing the portfolio turnover rate, all investments with maturities or
expiration dates at the time of acquisition of one year or less are excluded.
Subject to this exclusion, the turnover rate is calculated by dividing (A) the
lesser of purchases or sales of portfolio securities for the fiscal year by (B)
the monthly average of the value of portfolio securities owned by the Fund
during the fiscal year. The portfolio turnover rate increased in fiscal 1995
over fiscal 1994 primarily as a result of a restructuring of the Fund's
portfolio that occurred during that year.
<PAGE>
Placement of Portfolio Brokerage. INVESCO, as the Fund's investment
adviser, and INVESCO Trust, as the Fund's sub-adviser, place orders for the
purchase and sale of securities with brokers and dealers based upon INVESCO's or
INVESCO Trust's evaluation of their financial responsibility subject to their
ability to effect transactions at the best available prices. INVESCO or INVESCO
Trust evaluates the overall reasonableness of brokerage commissions paid, by
reviewing the quality of executions obtained on the 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 the commissions or discounts charged the
Fund are consistent with prevailing and reasonable commissions or discounts,
INVESCO or INVESCO Trust also endeavors to monitor brokerage industry practices
with regard to the commissions or discounts charged by broker/dealers on
transactions effected for other comparable institutional investors. While
INVESCO or INVESCO Trust seeks reasonably competitive rates, the Fund does not
necessarily pay the lowest commission, spread or discount available.
Consistent with the standard of seeking to obtain the best execution on
portfolio transactions, INVESCO or INVESCO Trust may select brokers that provide
research services to effect such transactions. Research services consist of
statistical and analytical reports relating to issuers, industries, securities
and economic factors and trends, which may be of assistance or value to INVESCO
or INVESCO Trust in making informed investment decisions. Research services
prepared and furnished by brokers through which the Fund effects securities
transactions may be used by INVESCO or INVESCO Trust in servicing all of its
accounts and not all such services may be used by INVESCO or INVESCO Trust in
connection with the Fund.
In recognition of the value of the above-described brokerage and research
services provided by certain brokers, INVESCO or INVESCO Trust, consistent with
the standard of seeking to obtain the best execution on portfolio transactions,
may place orders with such brokers for the execution of Fund transactions on
which the commissions or discounts are in excess of those which other brokers
might have charged for effecting the same transactions.
Fund transactions may be effected through qualified broker/dealers who
recommend the Fund to their clients, or who act as agent in the purchase 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
Fund's adviser may consider the sale of Fund shares by a broker or dealer in
selecting among qualified broker/dealers.
The aggregate dollar amounts of brokerage commissions paid by the Fund for
the fiscal years ended August 31, 1995, 1994 and 1993 were $1,775,478,
$1,410,331 and $2,043,647, respectively. For the fiscal year ended August 31,
<PAGE>
1995, brokers providing research services received $1,007,221 in commissions on
portfolio transactions effected for the Fund. The aggregate dollar amount of
such portfolio transactions was $605,642,989. As a result of selling shares of
the Fund, brokers received $1,885 in commissions on portfolio transactions
effected for the Fund during the fiscal year ended August 31, 1995.
At August 31, 1995 the Fund held securities of its regular brokers or
dealers, or their parents, as follows:
Value of Securities
Broker or Dealer at 8/31/95
- ---------------- -------------------
Associates Corporation of North America $16,740,000.00
Sears Roebuck Acceptance Corporation $6,960,625.00
Neither INVESCO nor INVESCO Trust receives any brokerage commissions on
portfolio transactions effected on behalf of the Fund, and there is no
affiliation between INVESCO, INVESCO Trust or any person affiliated with
INVESCO, INVESCO Trust, or the Fund and any broker or dealer that executes
transactions for the Fund.
ADDITIONAL INFORMATION
- ----------------------
Common Stock. The Fund has 200,000,000 authorized shares of common stock
with a par value of $0.01 per share. As of August 31, 1995, 93,991,658 of those
shares were outstanding. All shares currently outstanding and being offered are
of one class with equal rights as to voting, dividends and liquidation. All
shares offered hereby, when issued, will be fully paid and nonassessable. Shares
have no preemptive rights and are fully tradeable on the books of the Fund.
Fund shares have noncumulative voting rights, which means that the holders
of a majority of the shares voting for the election of directors of the Fund can
elect 100% of the directors if they choose to do so, and, in such event, the
holders of the remaining shares voting for the election of directors will not be
able to elect any person or persons to the board of directors. After they have
been elected by shareholders, the directors will continue to serve until their
successors are elected and have qualified or they are removed from office, in
either case by a shareholder vote, or until death, resignation, or retirement.
They may appoint their own successors, provided that always at least a majority
of the directors have been elected by the Fund's shareholders. It is the
intention of the Fund not to hold annual meetings of shareholders. The directors
may call annual or special meetings of shareholders for action by shareholder
vote as may be required by the 1940 Act or the Fund's Articles of Incorporation,
or at their discretion.
Principal Shareholders. As of November 30, 1995, no entities held more than
5% of the outstanding securities of the Fund.
<PAGE>
Independent Accountants. Price Waterhouse LLP, 950 Seventeenth Street,
Denver, Colorado, has been selected as the independent accountants of the Fund.
The independent accountants are responsible for auditing the financial
statements of the Fund.
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 Fund. The bank is also responsible for, among other things,
receipt and delivery of the Fund's investment securities in accordance with
procedures and conditions specified in the custody agreement.
Transfer Agent. The Fund is provided with transfer agent services by
INVESCO Funds Group, Inc., 7800 E. Union Avenue, Denver, Colorado, pursuant to
the Transfer Agency Agreement described herein. Such services include the
issuance, cancellation, and transfer of shares of the Fund, and the maintenance
of records regarding the ownership of such shares.
Reports to Shareholders. The Fund's fiscal year ends on August 31. The
Fund distributes reports at least semiannually to its shareholders. Financial
statements regarding the Fund, 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 Fund. The firm of Moye, Giles, O'Keefe, Vermeire &
Gorrell, Denver, Colorado, acts as special counsel to the Fund.
Financial Statements. The Fund's audited financial statements and the
notes thereto for the fiscal year ended August 31, 1995, and the report of Price
Waterhouse LLP with respect to such financial statements are incorporated herein
by reference from the Fund's Annual Report to Shareholders for the fiscal year
ended August 31, 1995.
Prospectus. The Fund will furnish, without charge, a copy of the
Prospectus upon request. Such requests should be made to the Fund 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
Prospectus do not contain all of the information set forth in the Registration
Statement the Fund 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-BOND RATINGS
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Description of Moody's Investors Service, Inc.'s corporate bond
ratings:
Aaa--Bonds which are 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
edge." 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 which are 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 risks appear somewhat larger than in Aaa securities.
A--Bonds which are 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 which are 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 have
speculative characteristics as well.
Rating Refinements: Moody's may apply the numerical modifier "1", for
municipally-backed bonds, and modifiers "1", "2" and "3" for corporate-backed
municipals. The modifier 1 indicates that the security ranks in the higher end
of its generic rating category; the modifier 2 indicates a mid-range ranking;
and modifier 3 indicates that the issue ranks in the lower end of its generic
rating category.
Description of Standard & Poor's corporate bond ratings:
AAA--This is the highest rating assigned by Standard & Poor's to a debt
obligation and indicates an extremely strong capacity to pay principal and
interest.
AA--Bonds rated AA also qualify as high-quality debt obligations. Capacity to
pay principal and interest is very strong, and in the majority of instances they
differ from AAA issues only in a small degree.
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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.
BBB--Bonds rated BBB are regarded as having an adequate capacity 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 the A category.
Plus (+) or Minus (-): The ratings may be modified by the addition of a plus or
minus sign to show relative standing within the major rating categories.
Description of Moody's Investors Service, Inc.'s preferred stock ratings:
"aaa"--An issue which is rated "aaa" is considered to be a top-quality
preferred stock. This rating indicates good asset protection and the least risk
of dividend impairment within the universe of preferred stocks.
"aa"--An issue which is rated "aa" is considered a high-grade preferred stock.
This rating indicates that there is a reasonable assurance that earnings and
asset protection will remain relatively well maintained in the foreseeable
future.
"a"--An issue which is rated "a" is considered to be an upper-medium grade
preferred stock. While risks are judged to be somewhat greater than in the "aaa"
and "aa" classification, earnings and asset protection are, nevertheless,
expected to be maintained at adequate levels.
"baa"--An issue which is rated "baa" is considered to be a medium-grade
preferred stock, neither highly protected nor poorly secured. Earnings and asset
protection appear adequate at present but may be questionable over any great
length of time.
Note: Moody's applies numerical modifiers 1, 2 and 3 in each rating
classification: the modifier 1 indicates that the security ranks in the higher
end of its generic rating category; the modifier 2 indicates a mid-range ranking
and the modifier 3 indicates that the issue ranks in the lower end of its
generic rating category.
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Description of Standard & Poor's preferred stock ratings:
"AAA"--This is the highest rating that may be assigned by Standard & Poor's to a
preferred stock issue and indicates an extremely strong capacity to pay the
preferred stock obligations.
"AA"--A preferred stock issue rated "AA" also qualifies as a high-quality fixed
income security. The capacity to pay preferred stock obligations is very strong,
although not as overwhelming as for issues rated "AAA."
"A"--An issue rated "A" is backed by a sound capacity to pay the preferred stock
obligations, although it is somewhat more susceptible to the adverse effects of
changes in circumstances and economic conditions.
"BBB"--An issue rated "BBB" is regarded as backed by an adequate capacity to pay
the preferred stock obligations. Whereas it normally exhibits adequate
protection parameters, adverse economic conditions or changing circumstances are
more likely to lead to a weakened capacity to make payments for a preferred
stock in this category than for issues in the "A" category.
Plus (+) or Minus (-): To provide more detailed indications of preferred stock
quality, the ratings from "AA" to "CCC" may be modified by the addition of a
plus or minus sign to show relative standing within the major rating categories.
