ANNUAL REPORT
August 31, 1998
INVESCO GROWTH FUND
INVESCO
YOU SHOULD KNOW WHAT INVESCO KNOWS. (TM)
<PAGE>
Market Overview September 1998
What a difference a year makes. In the summer of 1997, market pundits were
concerned that the Federal Reserve Board would have to raise interest rates to
cool an overheating economy. Now, speculation has intensified that the Fed will
continue to lower interest rates to address worldwide liquidity problems and
keep the U.S. economy growing in the face of a global slowdown brought about by
the emerging market currency crisis. But what has really changed in the last 12
months?
o Market psychology for equities has deteriorated. After more than seven
years of a bull market producing strong returns with limited volatility,
equity markets experienced two painful corrections in the last 12
months. In fact, August 1998 was the worst month for equities since
October 1987, as many equity indexes experienced declines over 15%.
o Corporate earnings have slowed in 1998, as the strong dollar and slower
global growth have made it difficult for many U.S. companies to sell
their products overseas. In addition, intense global competition has
kept prices in check -- making it difficult for companies to enhance
earnings by increasing prices.
o Inflation appears to be comatose. Although real wages are starting to
increase, declining commodity prices and a flood of cheaper products
from the world's emerging markets have decreased consumer prices and
reduced the threat of inflation.
o Interest rates have declined significantly. The implied yield on a 30-
year U.S. government bond reached 7.17% in April 1997, and the economy
appeared on the verge of overheating. But, as the Asian currency crisis
intensified, a flight to quality occurred in the fixed-income market
in the fall of 1997, and the yield on the 30-year bond dropped to 5.97%
by year-end. As the global currency turmoil continued in 1998, the
yield on the 30-year bond decreased and ended September at 4.95%.
Interest rates are presently at levels not seen in the last three
decades.
The next six to 12 months may be difficult for equity investors. Although
the economy still appears to be in good shape fundamentally, the emerging market
turmoil has spread from Asia to Russia and is attempting to infect Latin America
- -- which is a large trade partner of the U.S. Investors should be prepared for
continued volatility for the rest of 1998. However, once the turmoil passes, it
could create enormous opportunities for U.S. companies to increase their global
presence.
For fixed-income investors, global currency problems will continue to exert
deflationary pressures on the U.S. economy, increasing the potential for lower
interest rates. With inflation hibernating, the risks associated with owning
fixed-income securities have decreased -- especially for high quality
obligations.
Recent market volatility is not necessarily indicative of a long-term
downturn in the equity markets. For the patient investor with a long time
horizon, stocks have offered the best opportunities to accumulate wealth. But if
you are an investor who is uncomfortable with wide price swings, it may be a
good time to evaluate your financial goals and adjust your portfolio
accordingly. Remember that one of the best ways to reduce volatility is through
diversification.
INVESCO Growth Fund
INVESCO Growth Fund
Average Annual Total Return
as of 8/31/98(2)
1 Year 13.42%
-----------------------------------
5 Years 14.95%
-----------------------------------
10 Years 15.82%
-----------------------------------
<PAGE>
For the one-year period ended 8/31/98, INVESCO Growth Fund achieved a total
return of 13.42%, outperforming the one-year figure of 8.08% for the S&P 500
broad market index. (Of course, past performance is not a guarantee of future
results.)(1)(2)
INVESCO Growth Fund received the prestigious five-star rating for
risk-adjusted performance by Morningstar for the three-year period ended
8/31/98, among 2,603 domestic equity funds. For both the five-year and 10-year
periods ended 8/31/98, the fund received four stars among 1,520 and 710 domestic
equity funds, respectively.(3)
The following line graph illustrates the growth of the S&P 500 compared to
the value of a $10,000 investment in INVESCO Growth Fund, plus reinvested
dividends and capital gain distributions, for the ten years ended 8/31/98. The
chart and other total return figures cited reflect the fund's operating
expenses. However, the index does not have expenses, which would, of course,
have lowered its performance.(2)
Graph: This line graph represents a comparison of the value of a $10,000
investment in the INVESCO Growth Fund to the value of a $10,000
investment in the S&P 500 Index, assuming in each case reinvestment
of all dividends and capital gain distributions, for the ten-year
period ended 8/31/98.
Review & Outlook
A Discussion with Portfolio Manager Trent May
Have you made any major changes in the portfolio in the last 12 months?
We have made only minor adjustments over the past year. We continue to keep
the portfolio relatively concentrated, focusing on 30 to 40 names. In this
investment environment, we feel it's crucial not to dilute our best investment
ideas by having too many securities in the portfolio.
What sectors have produced the strongest gains for the fund?
Although we use a bottom-up approach to select securities for the
portfolio, the fund focuses on sectors or industries that we feel can generate
above-average growth rates for the next three to five years. We prefer markets
or industries which leadership is in a few hands, with a bias toward
market-leading companies with strong, defensible positions. Presently, we
believe that some of the best investment opportunities are in the following
areas:
o Consumer cyclicals
o Financial services
o Health care
o Technology
During the last 12 months, pharmaceuticals and retailers produced the
strongest returns for the fund. Large-capitalization pharmaceutical companies
are benefiting from an improved regulatory environment and strong new product
pipelines. The Federal Drug Administration (FDA) has dramatically cut the
approval time for new drugs. This has improved the profitability of large-cap
pharmaceuticals, since new drugs sales typically drive their revenue and
earnings growth. Not only are new drugs coming to the market sooner, but a
better-educated consumer is increasing the demand for these new products. One of
our favorite investments in the pharmaceutical industry remains Pfizer Inc.
Pfizer Inc. is a market-leading pharmaceutical with a strong new product
pipeline. In addition, Pfizer's new drug for sexual dysfunction, Viagra,
is one of the fastest-selling new drugs of all time, which should enhance
earnings for years to come.
Retailers who are benefiting from continued strength in the domestic
economy also produced strong returns for the fund. Many retailers import goods
from the world's emerging markets and sell these products domestically. As
global currencies have devalued, many retailers' operating margins have
improved. Wal-Mart remains one of our favorite retailers.
Wal-Mart is the leading discount retailer in the world. Not only is it a
great business, but management continues to enhance shareholder value, and
the firm is increasing its presence in international markets as well.
Any disappointments in the last 12 months?
The technology sector experienced extreme volatility, as the currency
crisis in the emerging markets dampened investors' enthusiasm towards these
companies. However, we believe the long-term prospects for this sector are
bright, and we will continue to invest in companies with proprietary technology
and market-leading positions -- like Microsoft Corp.
<PAGE>
What's your outlook for the next six to 12 months?
I think the equity markets will continue to experience extreme volatility
on a day-to-day basis, as international problems influence the market. Within
this environment, stock selectivity remains crucial and we will continue to
concentrate the portfolio on 30 to 40 names. For long-term investors, I believe
the outlook for market leading, large-capitalization growth com-panies is
positive and the fund will stay fully invested.
Graph: Portfolio Composition by Sector or Industry
This bar chart refelects the allocation of the Growth Fund's portfolio by
value of net assets in basic materials, capital goods, communications
services, consumer cyclicals, consumer staples, energy, finance, health
care, technology and transportation.
Fund Management
INVESCO Growth Fund is managed by Vice President Trent E. May. He received
a BS from the Florida Institute of Technology and an MBA from Rollins College.
Before joining INVESCO in 1996, Trent was a senior equity manager/equity analyst
with Munder Capital Management. He is a Chartered Financial Analyst.
Senior Vice President Timothy J. Miller is co-manager of the fund, and
heads the INVESCO Growth Team. He received his MBA from the University of
Missouri, and a BSBA from St. Louis University. A 20-year veteran of the
investment business, he is a Chartered Financial Analyst. Before joining INVESCO
in 1992, Tim was an analyst and portfolio manager with Mississippi Valley
Advisors.
(1)The S&P 500 is an unmanaged index of common stocks considered
representative of the broad U.S. equity market, while the Dow Jones Industrial
Average reflects performance of large-capitalization stocks.
(2)Total return assumes reinvestment of dividends and capital gain
distributions for the periods indicated. Past performance is not a guarantee of
future results. Investment return and principal value will fluctuate so that,
when redeemed, an investor's shares may be worth more or less than when
purchased.
(3)Morningstar proprietary rankings reflect historical risk-adjusted
performance and are subject to change every month. Ratings are calculated for
the fund's three-, five-, and 10-year average annual returns (based on available
track records) in excess of 90 day Treasury bill returns. The top 10% of funds
in an investment category receive 5 stars; the next 22.5%, 4 stars; and the next
35%, 3 stars.
<PAGE>
Ten Largest Common Stock Holdings -- Growth Fund
August 31, 1998
Description Value
- -------------------------------------------------------------------------------
Philip Morris $ 34,449,078
Lilly (Eli) & Co 34,105,850
Wal-Mart Stores 33,540,375
SBC Communications 33,096,100
Fannie Mae 32,401,305
Johnson & Johnson 32,098,800
Microsoft Corp 31,851,250
Bell Atlantic 30,503,612
Procter & Gamble 30,209,850
Merck & Co 29,865,500
Composition of holdings is subject to change.
-----------------------------------
Statement of Investment Securities--Growth Fund
August 31, 1998
- -------------------------------------------------------------------------------
% Description Shares Value
- -------------------------------------------------------------------------------
99.57 COMMON STOCKS
1.84 AUTOMOBILES
Ford Motor 312,850 $13,765,400
- -------------------------------------------------------------------------------
0.86 BANKS
BankAmerica Corp 100,300 6,425,469
- -------------------------------------------------------------------------------
3.51 BEVERAGES
Coca-Cola Co 402,800 26,232,350
- -------------------------------------------------------------------------------
0.96 BROADCASTING
CBS Corp 276,400 7,186,400
- -------------------------------------------------------------------------------
2.49 CHEMICALS
du Pont (E I) de Nemours 322,400 18,598,450
- -------------------------------------------------------------------------------
12.09 COMPUTER RELATED
Cisco Systems(a) 55,700 4,560,437
Compaq Computer 463,740 12,955,736
Dell Computer(a) 69,800 6,980,000
EMC Corp(a) 118,250 5,343,422
Edwards (J D) & Co(a) 116,000 4,698,000
International Business Machines 130,550 14,703,194
Microsoft Corp(a) 332,000 31,851,250
Wind River Systems(a) 248,660 9,324,750
- -------------------------------------------------------------------------------
90,416,789
- -------------------------------------------------------------------------------
3.79 ELECTRICAL EQUIPMENT
General Electric 354,100 28,328,000
- -------------------------------------------------------------------------------
3.53 ELECTRONICS -- SEMICONDUCTOR
Intel Corp 244,000 17,369,750
Maxim Integrated Products(a) 327,550 9,007,625
- -------------------------------------------------------------------------------
26,377,375
- -------------------------------------------------------------------------------
3.03 ENTERTAINMENT
Disney (Walt) Co 826,200 22,668,862
- -------------------------------------------------------------------------------
<PAGE>
5.54 FINANCIAL
Associates First Capital Class A 152,503 9,016,740
Fannie Mae 570,320 32,401,305
- -------------------------------------------------------------------------------
41,418,045
- -------------------------------------------------------------------------------
20.72 HEALTH CARE DRUGS -- PHARMACEUTICALS
Bristol-Myers Squibb 300,000 29,362,500
Johnson & Johnson 465,200 32,098,800
Lilly (Eli) & Co 520,700 34,105,850
Merck & Co 257,600 29,865,500
Pfizer Inc 317,250 29,504,250
- -------------------------------------------------------------------------------
154,936,900
- -------------------------------------------------------------------------------
4.98 HOUSEHOLD PRODUCTS
Colgate-Palmolive Co 97,400 7,024,975
Procter & Gamble 394,900 30,209,850
- -------------------------------------------------------------------------------
37,234,825
- -------------------------------------------------------------------------------
7.08 INSURANCE
American International Group 356,200 27,538,713
Travelers Group 572,650 25,411,344
- -------------------------------------------------------------------------------
52,950,057
- -------------------------------------------------------------------------------
4.64 OIL & GAS RELATED
Exxon Corp 379,900 24,859,706
Royal Dutch Petroleum New
York Registry 1.25 Gldr Shrs 247,400 9,834,150
- -------------------------------------------------------------------------------
34,693,856
- -------------------------------------------------------------------------------
0.63 PERSONAL CARE
Gillette Co 114,500 4,708,813
- -------------------------------------------------------------------------------
1.51 RAILROADS
Kansas City Southern Industries 343,900 11,305,713
- -------------------------------------------------------------------------------
4.48 RETAIL
Wal-Mart Stores 570,900 33,540,375
- -------------------------------------------------------------------------------
0.84 SERVICES
America Online(a) 77,200 6,325,575
- -------------------------------------------------------------------------------
3.94 TELECOMMUNICATIONS -- LONG DISTANCE
AT&T Corp 587,500 29,448,438
- -------------------------------------------------------------------------------
8.50 TELEPHONE
Bell Atlantic 691,300 30,503,612
SBC Communications 870,950 33,096,100
- -------------------------------------------------------------------------------
63,599,712
- -------------------------------------------------------------------------------
4.61 TOBACCO
Philip Morris 828,850 34,449,078
- -------------------------------------------------------------------------------
TOTAL COMMON STOCKS
(Cost $715,720,295) 744,610,482
- -------------------------------------------------------------------------------
0.43 PREFERRED STOCKS
0.43 COMPUTER RELATED
SAP AG Sponsored ADR
Representing 1/12 Pfd Shrs
(Cost $4,241,759) 77,325 3,237,984
- -------------------------------------------------------------------------------
<PAGE>
100.00 TOTAL INVESTMENT SECURITIES AT VALUE
(Cost $719,962,054)
(Cost for Income Tax Purposes
$722,606,357) $ 747,848,466
===============================================================================
(a) Security is non-income producing.
See Notes to Financial Statements
<PAGE>
Statement of Assets and Liabilities -- Growth Fund
August 31, 1998
ASSETS
Investment Securities at Value
(Cost $719,962,054) $ 747,848,466
Receivables:
Investment Securities Sold 11,051,332
Fund Shares Sold 1,603,336
Dividends 783,017
Prepaid Expenses and Other Assets 82,306
- -------------------------------------------------------------------------------
TOTAL ASSETS 761,368,457
- -------------------------------------------------------------------------------
LIABILITIES
Payables:
Custodian 5,625,483
Distributions to Shareholders 336,459
Investment Securities Purchased 5,004,015
Fund Shares Repurchased 2,408,873
Accrued Distribution Expenses 168,680
Accrued Expenses and Other Payables 86,303
- -------------------------------------------------------------------------------
TOTAL LIABILITIES 13,629,813
- -------------------------------------------------------------------------------
Net Assets at Value $ 747,738,644
===============================================================================
NET ASSETS
Paid-in Capital(a) $ 637,615,246
Accumulated Undistributed Net
Investment Income 34,771
Accumulated Undistributed Net Realized
Gain on Investment Securities and
Foreign Currency Transactions 82,202,215
Net Appreciation of Investment Securities 27,886,412
- -------------------------------------------------------------------------------
Net Assets at Value $ 747,738,644
===============================================================================
Net Asset Value, Offering and Redemption
Price per Share $ 5.15
===============================================================================
(a) The Fund has 200 million authorized shares of common stock, par value of
$0.01 per share, of which 145,122,757 were outstanding at August 31, 1998.
See Notes to Financial Statements
<PAGE>
Statement of Operations -- Growth Fund
Year Ended August 31, 1998
INVESTMENT INCOME
INCOME
Dividends $ 11,263,873
Interest 148,388
Foreign Taxes Withheld (108,534)
- --------------------------------------------------------------------------------
TOTAL INCOME 11,303,727
- --------------------------------------------------------------------------------
EXPENSES
Investment Advisory Fees 4,561,574
Distribution Expenses 2,027,117
Transfer Agent Fees 1,160,513
Administrative Fees 131,098
Custodian Fees and Expenses 108,512
Directors' Fees and Expenses 49,585
Professional Fees and Expenses 59,734
Registration Fees and Expenses 100,310
Reports to Shareholders 180,511
Other Expenses 49,665
- --------------------------------------------------------------------------------
TOTAL EXPENSES 8,428,619
Fees and Expenses Paid Indirectly (93,130)
- --------------------------------------------------------------------------------
NET EXPENSES 8,335,489
- --------------------------------------------------------------------------------
NET INVESTMENT INCOME 2,968,238
- --------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS
Net Realized Gain on:
Investment Securities 104,055,439
Foreign Currency Transactions 45,981
- --------------------------------------------------------------------------------
Total Net Realized Gain 104,101,420
- --------------------------------------------------------------------------------
Change in Net Appreciation of Investment Securities (9,504,119)
- --------------------------------------------------------------------------------
NET GAIN ON INVESTMENTS 94,597,301
- --------------------------------------------------------------------------------
Net Increase in Net Assets from Operations $ 97,565,539
================================================================================
See Notes to Financial Statements
<PAGE>
Statement of Changes in Net Assets -- Growth Fund
Year Ended August 31
- --------------------------------------------------------------------------------
1998 1997
OPERATIONS
Net Investment Income $ 2,968,238 $ 1,584,172
Net Realized Gain on Investment
Securities and Foreign Currency
Transactions 104,101,420 185,903,395
Change in Net Appreciation of
Investment Securities (9,504,119) (23,243,958)
- --------------------------------------------------------------------------------
NET INCREASE IN NET
ASSETS FROM OPERATIONS 97,565,539 164,243,609
- --------------------------------------------------------------------------------
DISTRIBUTIONS TO
SHAREHOLDERS
Net Investment Income (2,912,112) (1,500,483)
Net Realized Gain on Investment
Securities and Foreign Currency
Transactions (187,061,864) (84,751,427)
- --------------------------------------------------------------------------------
TOTAL DISTRIBUTIONS (189,973,976) (86,251,910)
- --------------------------------------------------------------------------------
FUND SHARE TRANSACTIONS
Proceeds from Sales of Shares 547,827,536 647,469,283
Reinvestment of Distributions 168,012,124 77,405,695
- --------------------------------------------------------------------------------
715,839,660 724,874,978
Amounts Paid for Repurchases
of Shares (584,913,034) (690,372,256)
- --------------------------------------------------------------------------------
NET INCREASE IN NET
ASSETS FROM FUND
SHARE TRANSACTIONS 130,926,626 34,502,722
- --------------------------------------------------------------------------------
Total Increase in Net Assets 38,518,189 112,494,421
NET ASSETS
Beginning of Period 709,220,455 596,726,034
- --------------------------------------------------------------------------------
End of Period (Including
Accumulated Undistributed
(Distributions in Excess of) Net
Investment Income of $34,771
and ($24,778), respectively) $ 747,738,644 $ 709,220,455
================================================================================
-----------------------------------------
FUND SHARE TRANSACTIONS
Shares Sold 94,746,511 113,639,331
Shares Issued from Reinvestment
of Distributions 34,540,804 14,903,327
- --------------------------------------------------------------------------------
129,287,315 128,542,658
Shares Repurchased (101,276,736) (121,110,949)
- --------------------------------------------------------------------------------
Net Increase in Fund Shares 28,010,579 7,431,709
================================================================================
See Notes to Financial Statements
<PAGE>
Notes to Financial Statements -- Growth Fund
NOTE 1 -- ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES. INVESCO Growth
Fund, Inc. (the "Fund") is incorporated in Maryland. The investment objective of
the Fund is to seek long-term capital growth. The Fund is registered under the
Investment Company Act of 1940 (the "Act") as a diversified, open-end management
investment company.
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. The
preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of income and expenses during the reporting period. Actual
results could differ from those estimates.
A. SECURITY VALUATION -- Equity securities traded on national securities
exchanges or in the over-the-counter market are valued at the last sales
price in the market where such securities are primarily traded. If last sales
prices are not available, securities are valued at the highest closing bid
price obtained from one or more dealers making a market for such securities
or by a pricing service approved by the Fund's board of directors.
Foreign securities are valued at the closing price on the principal stock
exchange on which they are traded. In the event that closing prices are not
available for foreign securities, prices will be obtained from the principal
stock exchange at or prior to the close of the New York Stock Exchange.
Foreign currency exchange rates are determined daily prior to the close of
the New York Stock Exchange.
If market quotations or pricing service valuations are not readily
available, securities are valued at fair value as determined in good faith
under procedures established by the Fund's board of directors.
Short-term securities are stated at amortized cost (which approximates
market value) if maturity is 60 days or less at the time of purchase, or
market value if maturity is greater than 60 days.
Assets and liabilities initially expressed in terms of foreign currencies
are translated into U.S. dollars at the prevailing market rates as quoted by
one or more banks or dealers on the date of valuation.
B. SECURITY TRANSACTIONS AND RELATED INVESTMENT INCOME -- Security transactions
are accounted for on the trade date and dividend income is recorded on the ex
dividend date. Certain dividends from foreign securities will be recorded as
soon as the Fund is informed of the dividend if such information is obtained
subsequent to the ex dividend date. Interest income, which may be comprised
of stated coupon rate, market discount, original issue discount, and
amortized premium, is recorded on the accrual basis. Income and expenses are
translated into U.S. dollars at the rates of exchange prevailing when
accrued. Cost is determined on the specific identification basis. The cost of
foreign securities is translated into U.S. dollars at the rates of exchange
prevailing when such securities are acquired.
The Fund may have elements of risk due to investments in foreign issuers
located in a specific country. Such foreign investments may subject the Fund
to additional risks resulting from future political or economic conditions
and/or possible impositions of adverse foreign governmental laws or currency
exchange restrictions. Net realized and unrealized gain or loss from
investment securities includes fluctuations from currency exchange rates and
fluctuations in market value.
The Fund's use of short-term forward foreign currency contracts may
subject it to certain risks as a result of unanticipated movements in foreign
exchange rates. The Fund does not hold short-term forward foreign currency
contracts for trading purposes. The Fund may hold foreign currency in
anticipation of settling foreign security transactions and not for investment
purposes.
<PAGE>
C. FEDERAL AND STATE TAXES -- The Fund has complied, and continues to comply,
with the provisions of the Internal Revenue Code applicable to regulated
investment companies and, accordingly, has made or intends to make sufficient
distributions of net investment income and net realized capital gains, if
any, to relieve it from all federal and state income taxes and federal excise
taxes.
To the extent future capital gains are offset by capital loss carryovers,
such gains will not be distributed to shareholders.
Dividends paid by the Fund from net investment income and distributions of
net realized short-term capital gains are, for federal income tax purposes,
taxable as ordinary income to shareholders. Of the ordinary income
distributions declared for the year ended August 31, 1998, 2.18% qualified
for the dividends received deduction available to the Fund's corporate
shareholders.
Investment income received from foreign sources may be subject to foreign
withholding taxes. Dividend and interest income is shown gross of foreign
withholding taxes in the accompanying financial statements.
D. DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS -- Dividends and distributions to
shareholders are recorded by the Fund on the ex dividend/distribution date.
The Fund distributes net realized capital gains, if any, to its shareholders
at least annually, if not offset by capital loss carryovers. Income
distributions and capital gain distributions are determined in accordance
with income tax regulations which may differ from generally accepted
accounting principles. These differences are primarily due to differing
treatments for foreign currency transactions, nontaxable dividends, net
operating losses and expired capital loss carryforwards. For the year ended
August 31, 1998, the Fund reclassified $841 from accumulated undistributed
net realized gain on investment securities to accumulated undistributed net
investment income and reclassified $2,582 from paid-in capital to accumulated
undistributed net investment income. Net investment income, net realized
gains and net assets were not affected.
E. EXPENSES -- Under an agreement between the Fund and the Fund's Custodian,
agreed upon Custodian Fees and Expenses are reduced by credits granted by the
Custodian from any temporarily uninvested cash. Similarly, Custodian Fees and
Expenses, Distribution Expenses and Transfer Agent Fees are reduced by
credits earned by the Fund from security brokerage transactions under certain
broker/service arrangements with third parties. Such credits are included in
Fees and Expenses Paid Indirectly in the Statement of Operations.
For the year ended August 31, 1998, Fees and Expenses Paid Indirectly
consisted of $84,119 included in Custodian Fees and Expenses, $8,818 included
in Distribution Expenses and $193 included in Transfer Agent Fees.
NOTE 2 -- INVESTMENT ADVISORY AND OTHER AGREEMENTS. INVESCO Funds Group, Inc.
("IFG") serves as the Fund's investment adviser. As compensation for its
services to the Fund, IFG receives an investment advisory fee which is accrued
daily at the applicable rate and paid monthly. The fee is based on the annual
rate of 0.60% on the first $350 million of average net assets; reduced to 0.55%
on the next $350 million of average net assets; and 0.50% on average net assets
in excess of $700 million.
IFG receives a transfer agent fee at an annual rate of $20.00 per shareholder
account, or, where applicable, per participant in an omnibus account, per year.
IFG may pay such fee for participants in omnibus accounts to affiliates or third
parties. The fee is paid monthly at one-twelfth of the annual fee and is based
upon the actual number of accounts in existence during each month.
In accordance with a Sub-Advisory Agreement between IFG and INVESCO Trust
Company ("ITC"), a wholly owned subsidiary of IFG, investment decisions of the
Fund were made by ITC. Fees for such sub-advisory services are paid by IFG.
Effective February 4, 1998, such responsibilities were transferred to IFG.
A plan of distribution pursuant to Rule 12b-1 of the Act provided for
compensation of marketing and advertising expenditures to IFG (the
"Distributor") to a maximum of 0.25% of annual average net assets. For the year
ended August 31, 1998, the Fund paid the Distributor $2,009,378 under the plan
of distribution. Effective September 29,1997, INVESCO Distributors, Inc.
("IDI"), a wholly owned subsidiary of IFG, replaced IFG as Distributor.
In accordance with an Administrative Agreement, the Fund pays IFG an annual
fee of $10,000, plus an additional amount computed at an annual rate of 0.015%
of average net assets to provide administrative, accounting and clerical
services. The fee is accrued daily and paid monthly.
<PAGE>
NOTE 3 -- PURCHASES AND SALES OF INVESTMENT SECURITIES. For the year ended
August 31, 1998, the aggregate cost of purchases and proceeds from sales of
investment securities (excluding all U.S. Government securities and short-term
securities) were $1,212,888,644 and $1,269,513,941, respectively.
There were no purchases or sales of U.S. Government securities.
NOTE 4 -- APPRECIATION AND DEPRECIATION. At August 31, 1998, the gross
appreciation of securities in which there was an excess of value over tax cost
amounted to $65,931,427 and the gross depreciation of securities in which there
was an excess of tax cost over value amounted to $40,689,318, resulting in net
appreciation of $25,242,109.
NOTE 5 -- TRANSACTIONS WITH AFFILIATES. Certain of the Fund's officers and
directors are also officers and directors of IFG or IDI.
The Fund has adopted an unfunded deferred compensation plan covering all
independent directors of the Fund who will have served as an independent
director for at least five years at the time of retirement. Benefits under this
plan were based on an annual rate of 40% of the retainer fee at the time of
retirement. As of July 1, 1998, benefits are based on an annual rate of 50% of
the sum of the retainer fee at the time of retirement plus the annual meeting
fee.
Pension expenses for the year ended August 31, 1998, included in Directors'
Fees and Expenses in the Statement of Operations were $13,129. Unfunded accrued
pension costs of $28,806 and pension liability of $66,734 are included in
Prepaid Expenses and Accrued Expenses, respectively, in the Statement of Assets
and Liabilities.
NOTE 6 -- LINE OF CREDIT. The Fund has available a Redemption Line of Credit
Facility ("LOC"), from a consortium of national banks, to be used for temporary
or emergency purposes to fund redemptions of investor shares. The LOC permits
borrowings to a maximum of 5% of the Net Assets at Value of the Fund. The Fund
agrees to pay annual fees and interest on the unpaid principal balance based on
prevailing market rates as defined in the agreement. At August 31, 1998, there
were no such borrowings.
<PAGE>
Financial Highlights -- Growth Fund
(For a Fund Share Outstanding Throughout Each Period)
<TABLE>
<CAPTION>
Year Ended August 31
- -----------------------------------------------------------------------------------------------------------
1998 1997 1996 1995 1994
<S> <C> <C> <C> <C> <C>
PER SHARE DATA
Net Asset Value-- Beginning of Period $ 6.06 $ 5.44 $ 5.33 $ 5.34 $ 5.28
- -----------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income 0.02 0.01 0.03 0.05 0.03
Net Gains on Securities
(Both Realized and Unrealized) 0.69 1.39 0.95 0.49 0.11
- -----------------------------------------------------------------------------------------------------------
Total from Investment Operations 0.71 1.40 0.98 0.54 0.14
- -----------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS
Dividends from Net Investment Income(a) 0.02 0.01 0.03 0.05 0.03
Distributions from Capital Gains 1.60 0.77 0.84 0.50 0.05
- -----------------------------------------------------------------------------------------------------------
Total Distributions 1.62 0.78 0.87 0.55 0.08
- -----------------------------------------------------------------------------------------------------------
Net Asset Value-- End of Period $ 5.15 $ 6.06 $ 5.44 $ 5.33 $ 5.34
===========================================================================================================
TOTAL RETURN 13.42% 28.14% 20.23% 12.05% 2.52%
RATIOS
Net Assets-- End of Period ($000 Omitted) $747,739 $ 709,220 $ 596,726 $ 501,285 $ 488,411
Ratio of Expenses to Average Net Assets 1.04%(b) 1.07%(b) 1.05%(b) 1.06% 1.03%
Ratio of Net Investment Income to Average
Net Assets 0.37% 0.22% 0.64% 1.07% 0.47%
Portfolio Turnover Rate 153% 286% 207% 111% 63%
(a) Distributions in excess of net investment income for the year ended
August 31, 1995, aggregated less than $0.01 on a per share basis.
(b) Ratio is based on Total Expenses of the Fund, which is before any
expense offset arrangements.
</TABLE>
<PAGE>
Report of Independent Accountants
To the Board of Directors and Shareholders of
INVESCO Growth Fund, Inc.
In our opinion, the accompanying statement of assets and liabilities, including
the statement of investment securities, and the related statements of operations
and of changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of INVESCO Growth Fund, Inc. (the
"Fund") at August 31, 1998, the results of its operations for the year then
ended, the changes in its net assets for each of the two years in the period
then ended and the financial highlights for each of the five years in the period
then ended, in conformity with generally accepted accounting principles. These
financial statements and financial highlights (hereafter referred to as
"financial statements") are the responsibility of the Fund's management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these financial statements in accordance
with generally accepted auditing standards which require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audits, which included confirmation of securities at August
31, 1998 by correspondence with the custodian, provide a reasonable basis for
the opinion expressed above.
PricewaterhouseCoopers LLP
Denver, Colorado
September 30, 1998
<PAGE>
INVESCO
INVESCO Distributors, Inc.
Distributor
Post Office Box 173706
Denver, Colorado 80217-3706
1-800-525-8085
PAL(R): 1-800-424-8085
www.invesco.com
In Denver, visit one of our
convenient Investor Centers:
Cherry Creek,
155-B Fillmore Street
Denver Tech Center,
7800 East Union Avenue,
Lobby Level
This information must be
preceded or accompanied
by a current prospectus.
