KNOWLEDGE DISCIPLINE SERVICE CHOICE
YOU SHOULD KNOW WHAT INVESCO KNOWS (TM)
INVESCO BLUE CHIP GROWTH FUND
(formerly, INVESCO Growth Fund)
SEMI-
ANNU
AL
INVESCO
SEMIANNUAL REPORT / February 28, 1999
<PAGE>
SHAREHOLDERS IN INVESCO BLUE CHIP GROWTH FUND RECENTLY RECEIVED IMPORTANT
PROXY INFORMATION. PLEASE BE SURE TO READ THE PROXY CAREFULLY AND VOTE PROMPTLY
ON ALL ISSUES.
"WE OFTEN TELL CLIENTS THAT WE ARE INTERESTED, NOT IN FINDING STOCKS THAT WILL
GROW FROM $10 PER SHARE TO $15 PER SHARE IN THE NEXT SIX MONTHS - BUT RATHER IN
FINDING COMPANIES THAT WILL GROW FROM $10 BILLION IN MARKET CAPITALIZATION TO
$100 BILLION." (PAGE 3)
BLUE CHIP GROWTH FUND
AVERAGE ANNUAL TOTAL RETURN,
PERIODS ENDED 2/28/99 (2)
6 months 37.22%
--------------------------------
1 year 31.62%
--------------------------------
5 years 20.65%
--------------------------------
10 years 18.89%
Graph:
This line graph represents a comparison of the value of a $10,000
investment in the INVESCO Blue Chip 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
2/28/99.
The line graph illustrates the value of a $10,000 investment, plus reinvested
dividends and capital gain distributions, for the 10-year period ended 2/28/99.
The chart and other total return figures cited reflect the fund's operating
expenses, but the index does not have expenses, which would, of course, have
lowered its performance. (Of course, past performance is not a guarantee of
future results.) (1)(2)
We are pleased to announce that Douglas J. McEldowney has jointed INVESCO Blue
Chip Growth Fund as co-manager. Doug will work with lead manager Trent May in
directing the portfolio.
<PAGE>
INVESCO / Semiannual Report / February 1999
Your Fund's Performance: A Report from the Managers
- -----------------------------------------------------
Dear Shareholder:
We are happy to report that the factors behind the strong performance of INVESCO
Blue Chip Growth Fund over the past few years were still in place during these
last six months. Low inflation and interest rates, accelerating technological
change, and resilient consumer demand have continued to favor the large, leading
companies in which we primarily invest. While the global financial turmoil of
late last summer certainly affected the fund, most investors eventually
determined it did not fundamentally alter these factors.
Over the six months ended February 28, 1999, your shares in INVESCO Blue Chip
Growth Fund rose 37.22%. This return exceeded that of the S&P 500 Index, which
gained 30.27% over the same period. (Of course, past performance is not a
guarantee of future results.)(1)(2)
Recently, much attention has been focused on the performance of large "growth"
company stocks versus those of "value" companies or small firms. Overall, stocks
of the largest companies have dramatically outperformed the rest of the market.
In some sense, this has reflected investors' concerns over a possible slowdown
in the economy, which would leave only the largest, best-performing companies
with healthy balance sheets. Indeed, earnings growth has increasingly become
concentrated among the largest companies. This attention has also reflected an
increasing tendency on the part of some to chase performance by investing in
high-flying stocks.
A STABLE SET OF IDEAS
Neither of these explanations accounts for our strategy, of course. Our focus on
large-capitalization companies is long-standing and premised on a relatively
stable set of ideas about the nature of a strong investment. Indeed, many stocks
have been part of the fund's portfolio for several years. If investing fashions
change next year, that will not alter the fundamentals of our strategy.
We often tell clients that we are interested, not in finding stocks that will
grow from $10 per share to $15 per share in the next six months -- but rather
in finding companies that will grow from $10 billion in market capitalization
to $100 billion over the next three to five years. Of course, we will not always
find them. And the markets may yet again determine that even earnings and
revenue growth are not enough to justify a given share price. Yet our long-term
track record, we believe, is evidence of the strength of this philosophy. (Of
course, past performance is not a guarantee of future results.)
A NEW NAME FOR AN OLD STRATEGY
To better reflect this approach, as you may have noticed, we have recently
changed the name of your fund to INVESCO Blue Chip Growth Fund. The name is
indicative of our long-standing commitment to investing in large companies with
established positions in their industries, a commitment that we believe will
continue to serve shareholders well.
We will look forward to reporting to you again in six months.
/s/ Trent May
Trent E. May
Vice President
<PAGE>
INVESCO / Semiannual Report / January 31, 1999
MOVING FORWARD
- --------------------------------------------------------------------------------
A REVIEW & STRATEGY SESSION WITH TRENT MAY
Fortune RECENTLY CHARACTERIZED YOU AS A DIVERSIFIED MANAGER WHO IS ENTHUSIASTIC
ABOUT TECHNOLOGY COMPANIES. WHAT'S THE SOURCE OF YOUR OPTIMISM?
I wouldn't necessarily say that it stems from any particular faith in
technology, but rather from a simple acknowledgement that technology is one of
the leading growth sectors of the economy. Our approach has always been to
identify the growing sectors, learn how the rules are played, and then invest in
the companies that appear best equipped to succeed.
Of course, technology presents its own particular challenges and opportunities.
We're beginning to look at the Internet, for example, but we know we have to
tread carefully, because we are just learning the rules.
WHAT ARE SOME OF THOSE RULES?
One rule that appears vitally important is that an Internet company must enjoy
what we call "mindspace," which you might think of as brand equity. Consumers
have to possess a strong sense of what the company does and that the firm can be
trusted. For example, we have recently taken advantage of some price weakness in
Amazon.com, the online bookseller, because it enjoys substantial mindspace.
That said, a company like Amazon--as it stands now--cannot be a core position in
our fund. It does not yet possess the financial stability of other technology
companies like Microsoft, which have dependable, growing earnings. We consider
Amazon only a potential growth company, and we'll pay special attention to it
going forward because of the heightened downside risks.
SPEAKING OF RISKS, WHAT HAZARDS ON THE INVESTMENT HORIZON CONCERN YOU?
Primary among them would be any substantial and lasting rise in interest rates.
This causes two concerns. First, growing companies are valuable in part because
of the earnings they promise to deliver in future years. Inflation and interest
rates serve as means of discounting those future earnings; higher interest
rates, in other words, mean that future profits are worth less today. Second,
growing firms often rely on borrowing to finance their growth. Higher interest
rates mean higher debt-servicing costs, which hurt the bottom line.
Let me add, though, that the whole market is to some degree reliant on the low
rates we are enjoying.
DO YOU PLAN TO ADJUST YOUR STRATEGY TO AVOID THESE RISKS?
Not significantly, and that is a function of our faith in our core portfolio
holdings. Clearly, if we were "momentum" investors trying to make short-term
plays on popular stocks, we would be concerned about getting out while the going
is good. The advantage of holding industry leaders with solid positions,
however, is that they are likely to be doing well five or ten years from now.
Interest in them may wane in the short-term, but we would often view that as an
opportunity to add to our positions.
------------------------------------------------
Investors should keep in mind that, because the fund is actively managed,
holdings will change over time.
FUND MANAGEMENT
TRENT E. MAY, CFA
VICE PRESIDENT TRENT E. MAY IS THE LEAD MANAGER OF BLUE CHIP GROWTH FUND. HE
RECEIVED A BA FROM THE FLORIDA INSTITUTE OF TECHNOLOGY AND AN MBA FROM ROLLINS
COLLEGE. TRENT BEGAN HIS INVESTMENT CAREER IN 1991, AND JOINED INVESCO IN 1996.
HE IS A CHARTERED FINANCIAL ANALYST. TRENT IS ASSISTED BY CO-MANAGER DOUG
MCELDOWNEY; THEY ARE MEMBERS OF THE INVESCO GROWTH TEAM, WHICH IS HEADED BY
SENIOR VICE PRESIDENT TIMOTHY J. MILLER.
<PAGE>
MARKET HEADLINES:
SEPTEMBER 1998-FEBRUARY 1999
If the last few months of 1998 were a time of healing for financial markets, it
was indeed a dramatic recovery--at least for some indexes. The worldwide
financial crisis set off in the previous summer by the Russian loan default and
other factors persisted through September. Given October's notorious reputation
in financial circles, many feared for the worst as we entered that month. Yet
beginning in early October, investors began to return to select domestic and
overseas markets.
Leading the way back were the Federal Reserve Board and other major central
banks. A series of interest rate cuts by the banks of most of the industrialized
Western nations restored confidence and liquidity to the markets. Many
large-company stocks, led by those in sectors such as technology and health
care, vaulted back to exceed the highs of the previous spring. Even some Asian
markets, most notably South Korea, recovered as well.
But had the markets truly healed? Many small-company stocks continued to
languish well below their highs. Meanwhile, many foreign markets remained unable
to make a clean break upward. Indeed, after experimenting with a recovery, Latin
American markets plunged back to new lows following the currency crisis in
Brazil.
Other pockets of the market experienced nagging pain. The "flight to quality"
and interest rate cuts helped the prices of low-risk bonds such as Treasuries,
but the high-yield fixed-income market saw buyers evaporate. Commodity prices
continued to slide lower, which provided a boon to American consumers while
taking a toll on commodity producers such as energy firms.
By the beginning of 1999, however, most investors' attention was focused on the
remarkable performance of large technology stocks and other favored names.
Continuing strong growth in the United States, rapid technological change, and
the remarkable absence of inflation appeared an ideal environment for the best
positioned firms. A cartoon in THE WALL STREET JOURNAL laid out the equation as
many saw it: Alan Greenspan plus the personal computer equals continuing
prosperity.
YEAR 2000 COMPUTER ISSUE.
Many computer systems in use today may not be able to recognize any date after
December 31, 1999. If these systems are not fixed by that date, it is possible
that they could generate erroneous information or fail altogether. INVESCO has
committed substantial resources in an effort to make sure that its own major
computer systems will continue to function on and after January 1, 2000. Of
course, INVESCO cannot fix systems that are beyond its control. If INVESCO's own
systems, or the systems of third parties upon which it relies, do not perform
properly after December 31, 1999, the Funds could be adversely affected.
In addition, the markets for, or values of, securities in which the Funds invest
may possibly be hurt by computer failures affecting portfolio investments or
trading of securities beginning January 1, 2000. For example, improperly
functioning computer systems could result in securities trade settlement
problems and liquidity issues, production issues for individual companies and
overall economic uncertainties. Individual issuers may incur increased costs in
making their own systems Year 2000 compliant. The combination of market
uncertainty and increased costs means that there is a possibility that Year 2000
computer issues may adversely affect the Funds' investments. At this time, it is
generally believed that foreign issuers, particularly those in emerging and
other markets, may be more vulnerable to Year 2000 problems than will be issuers
in the U.S.
(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 THE 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.
<PAGE>
TEN LARGEST COMMON STOCK HOLDINGS
BLUE CHIP GROWTH FUND
FEBRUARY 28, 1999
UNAUDITED
DESCRIPTION VALUE
- --------------------------------------------------------------------
Microsoft Corp $60,227,148
Citigroup Inc 54,044,419
American International Group 53,723,810
Merck & Co 52,310,190
Pfizer Inc 50,734,587
Lilly (Eli) & Co 49,803,731
Wal-Mart Stores 49,691,538
General Electric 47,557,153
AT&T Corp 46,886,805
Warner-Lambert Co 45,822,969
COMPOSITION OF HOLDINGS IS SUBJECT TO CHANGE.
STATEMENT OF INVESTMENT SECURITIES
BLUE CHIP GROWTH FUND
FEBRUARY 28, 1999
% DESCRIPTION SHARES VALUE
UNAUDITED
100.00 COMMON STOCKS
1.15 AUTOMOBILES
General Motors 161,925 $13,368,933
===============================================================================
3.35 BANKS
BB&T Corp 207,535 7,860,388
BankAmerica Corp 227,400 14,852,062
US Bancorp 506,075 16,352,548
===============================================================================
39,064,998
4.72 BEVERAGES
Coca-Cola Co 670,200 42,850,912
PepsiCo Inc 324,340 12,203,293
===============================================================================
55,054,205
2.77 BROADCASTING
Clear Channel Communications(a) 338,985 20,339,100
Infinity Broadcasting Class A(a) 504,000 11,970,000
===============================================================================
32,309,100
<PAGE>
% DESCRIPTION SHARES VALUE
2.20 COMMUNICATIONS -- EQUIPMENT & MANUFACTURING
Lucent Technologies 206,400 $20,962,500
Nokia Corp Sponsored ADR Representing
A Shrs 34,400 4,665,500
===============================================================================
25,628,000
11.61 COMPUTER RELATED
Cisco Systems(a) 232,035 22,695,923
Compaq Computer 487,865 17,197,241
Dell Computer(a) 246,225 19,728,778
International Business
Machines 90,550 15,393,500
Microsoft Corp(a) 401,180 60,227,148
===============================================================================
135,242,590
4.71 ELECTRICAL EQUIPMENT
General Electric 474,090 47,557,153
Solectron Corp(a) 163,400 7,301,938
===============================================================================
54,859,091
5.92 ELECTRONICS -- SEMICONDUCTOR
Altera Corp(a) 302,245 14,696,663
Intel Corp 243,510 29,205,981
Maxim Integrated Products(a) 352,775 14,706,308
Micron Technology(a) 179,200 10,326,400
===============================================================================
68,935,352
1.99 ENTERTAINMENT
Disney (Walt) Co 660,275 23,233,427
===============================================================================
0.89 EQUIPMENT -- SEMICONDUCTOR
Lam Research(a) 349,000 10,317,312
===============================================================================
6.59 FINANCIAL
Citigroup Inc 919,905 54,044,419
Fannie Mae 325,630 22,794,100
===============================================================================
76,838,519
20.9 HEALTH CARE DRUGS-- PHARMACEUTICALS
Bristol-Myers Squibb 356,065 44,841,936
Lilly (Eli) & Co 525,980 49,803,731
Merck & Co 639,880 52,310,190
Pfizer Inc 384,535 50,734,587
Warner-Lambert Co 663,500 45,822,969
===============================================================================
243,513,413
2.98 HOUSEHOLD PRODUCTS
Colgate-Palmolive Co 154,350 13,100,456
Procter & Gamble 241,900 21,650,050
===============================================================================
34,750,506
4.61 INSURANCE
American International Group 471,520 $ 53,723,810
===============================================================================
<PAGE>
% DESCRIPTION SHARES VALUE
3.74 OIL & GAS RELATED
Exxon Corp 472,740 31,466,756
Royal Dutch Petroleum New York
Registry 1.25 Gldr Shrs 276,530 12,132,754
===============================================================================
43,599,510
7.04 RETAIL
Amazon.com Inc(a) 64,900 8,315,312
Dayton Hudson 194,095 12,143,068
Home Depot 199,155 11,887,064
Wal-Mart Stores 575,300 49,691,538
===============================================================================
82,036,982
3.30 SERVICES
America Online(a) 432,540 38,469,026
===============================================================================
5.95 TELECOMMUNICATIONS -- LONG DISTANCE
AT&T Corp 570,920 46,886,805
MCI WorldCom(a) 272,200 22,456,500
===============================================================================
69,343,305
3.61 TELEPHONE
SBC Communications 796,580 42,119,168
===============================================================================
1.97 TOBACCO
Philip Morris 585,550 22,909,644
===============================================================================
100.00 TOTAL INVESTMENT SECURITIES AT VALUE
(Cost $883,483,751)
(Cost for Income Tax Purposes $890,480,675) $ 1,165,316,891
===============================================================================
(a) Security is non-income producing.
See Notes to Financial Statements
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES
BLUE CHIP GROWTH FUND
FEBRUARY 28, 1999
UNAUDITED
ASSETS
Investment Securities at Value (Cost $883,483,751) $ 1,165,316,891
Cash 4,622,003
Receivables:
Investment Securities Sold 15,429,782
Fund Shares Sold 1,085,842
Dividends and Interest 956,774
Prepaid Expenses and Other Assets 173,640
===============================================================================
TOTAL ASSETS 1,187,584,932
===============================================================================
LIABILITIES
Payables:
Investment Securities Purchased 20,621,838
Fund Shares Repurchased 518,377
Accrued Distribution Expenses 231,685
Accrued Expenses and Other Payables 130,314
===============================================================================
TOTAL LIABILITIES 21,502,214
===============================================================================
NET ASSETS AT VALUE $ 1,166,082,718
===============================================================================
NET ASSETS
Paid-in Capital(a) $ 837,587,213
Accumulated Undistributed Net Investment Income 458,372
Accumulated Undistributed Net Realized Gain on Investment
Securities and Foreign Currency Transactions 46,203,993
Net Appreciation of Investment Securities 281,833,140
===============================================================================
NET ASSETS AT VALUE $ 1,166,082,718
===============================================================================
NET ASSET VALUE, Offering and Redemption Price per Share $6.52
===============================================================================
(a) The Fund has 200 million authorized shares of common stock, par value of
$0.01 per share, of which 178,806,874 were outstanding at February 28, 1999.
See Notes to Financial Statements
<PAGE>
STATEMENT OF OPERATIONS
BLUE CHIP GROWTH FUND
SIX MONTHS ENDED FEBRUARY 28, 1999
UNAUDITED
INVESTMENT INCOME
INCOME
Dividends $ 5,510,572
Interest 194,364
Foreign Taxes Withheld (28,124)
===================================================================
TOTAL INCOME 5,676,812
===================================================================
EXPENSES
Investment Advisory Fees 2,837,564
Distribution Expenses 1,303,163
Transfer Agent Fees 737,792
Administrative Fees 82,317
Custodian Fees and Expenses 57,804
Directors' Fees and Expenses 27,868
Professional Fees and Expenses 30,551
Registration Fees and Expenses 52,436
Reports to Shareholders 125,404
Other Expenses 70,459
===================================================================
TOTAL EXPENSES 5,325,358
Fees and Expenses Paid Indirectly (72,147)
===================================================================
NET EXPENSES 5,253,211
===================================================================
NET INVESTMENT INCOME 423,601
===================================================================
REALIZED AND UNREALIZED GAIN
ON INVESTMENT SECURITIES
Net Realized Gain on Investment Securities 48,854,516
Change in Net Appreciation of Investment Securities 253,946,728
===================================================================
NET GAIN ON INVESTMENT SECURITIES 302,801,244
===================================================================
NET INCREASE IN NET ASSETS FROM OPERATIONS $ 303,224,845
===================================================================
See Notes to Financial Statements
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
BLUE CHIP GROWTH FUND
Six Months Year
Ended Ended
February 28 August 31
- --------------------------------------------------------------------------------
1999 1998
UNAUDITED
OPERATIONS
Net Investment Income $ 423,601 $ 2,968,238
Net Realized Gain on Investment
Securities and Foreign Currency
Transactions 48,854,516 104,101,420
Change in Net Appreciation of
Investment Securities 253,946,728 (9,504,119)
===============================================================================
NET INCREASE IN NET ASSETS FROM OPERATIONS 303,224,845 97,565,539
===============================================================================
DISTRIBUTIONS TO SHAREHOLDERS
Net Investment Income 0 (2,912,112)
Net Realized Gain on Investment
Securities and Foreign Currency
Transactions (84,852,738) (187,061,864)
===============================================================================
TOTAL DISTRIBUTIONS (84,852,738) (189,973,976)
===============================================================================
FUND SHARE TRANSACTIONS
Proceeds from Sales of Shares 627,952,161 547,827,536
Reinvestment of Distributions 75,202,308 168,012,124
===============================================================================
703,154,469 715,839,660
Amounts Paid for Repurchases of Shares (503,182,502) (584,913,034)
===============================================================================
NET INCREASE IN NET ASSETS FROM
FUND SHARE TRANSACTIONS 199,971,967 130,926,626
===============================================================================
Total Increase in Net Assets 418,344,074 38,518,189
NET ASSETS
Beginning of Period 747,738,644 709,220,455
===============================================================================
End of Period (Including Accumulated
Undistributed Net Investment Income
of $458,372 and $34,771, respectively) $ 1,166,082,718 $ 747,738,644
===============================================================================
-----------------------------------------------------------
FUND SHARE TRANSACTIONS
Shares Sold 101,090,863 94,746,511
Shares Issued from Reinvestment
of Distributions 12,450,572 34,540,804
===============================================================================
113,541,435 129,287,315
Shares Repurchased (79,857,318) (101,276,736)
===============================================================================
NET INCREASE IN FUND SHARES 33,684,117 28,010,579
===============================================================================
See Notes to Financial Statements
<PAGE>
INVESCO NOTES TO FINANCIAL STATEMENTS--BLUE CHIP GROWTH FUND
UNAUDITED
NOTE 1 -- ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES. INVESCO Growth
Funds, Inc. is incorporated in Maryland and presently consists of Blue Chip
Growth Fund (the "Fund") (formerly known as INVESCO Growth Fund, Inc.). 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 on foreign
securities 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.
<PAGE>
The Fund may have elements of risk due to investments in foreign issuers located
in a specific country. Such 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.
C. FEDERAL AND STATE TAXES -- The Fund has complied, and continues to comply,
with the provisions of the Internal Revenue Code applicable to regulated
investment companies and, accordingly, has made or intends to make sufficient
distributions of net investment income and net realized capital gains, if any,
to relieve it from all federal and state income taxes and federal excise taxes.
To the extent future capital gains are offset by capital loss carryovers, such
gains will not be distributed to shareholders.
Dividends paid by the Fund from net investment income and distributions of net
realized short-term capital gains are, for federal income tax purposes, taxable
as ordinary income to shareholders.
Investment income received from foreign sources may be subject to foreign
withholding taxes. Dividend and interest income is shown gross of foreign
withholding taxes in the accompanying financial statements.
D. DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS -- Dividends and distributions to
shareholders are recorded by the Fund on the ex dividend/distribution date. The
Fund distributes net realized capital gains, if any, to its shareholders at
least annually, if not offset by capital loss carryovers. Income distributions
and capital gain distributions are determined in accordance with income tax
regulations which may differ from generally accepted accounting principles.
These differences are primarily due to differing treatments for foreign currency
transactions, nontaxable dividends, net operating losses and expired capital
loss carryforwards.
E. 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 and Distribution Expenses are reduced by credits earned by the Fund
from security brokerage transactions under a broker/service arrangements with
third parties. Such credits are included in Fees and Expenses Paid Indirectly in
the Statement of Operations.
For the six months ended February 28, 1999, Fees and Expenses Paid Indirectly
consisted of $57,595 included in Custodain Fees and Expenses and $14,552
included in Distribution Expenses.
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.
A plan of distribution pursuant to Rule 12b-1 of the Act provides for
compensation of marketing and advertising expenditures to INVESCO Distributors,
Inc. ("IDI" or the "Distributor"), a wholly owned subsidiary of IFG, to a
maximum of 0.25% of annual average net assets. For the six months ended February
28, 1999, the Fund paid the Distributor $1,225,606 under the plan of
distribution.
<PAGE>
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 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.
NOTE 3 -- PURCHASES AND SALES OF INVESTMENT SECURITIES. For the six months ended
February 28, 1999, the aggregate cost of purchases and proceeds from sales of
investment securities (excluding all U.S. Government securities and short-term
securities) were $844,869,064 and $730,201,883, respectively.
There were no purchases or sales of U.S. Government securities.
NOTE 4 -- APPRECIATION AND DEPRECIATION. At February 28, 1999, the gross
appreciation of securities in which there was an excess of value over tax cost
amounted to $289,389,147 and the gross depreciation of securities in which there
was an excess of tax cost over value amounted to $14,552,931, resulting in net
appreciation of $274,836,216.
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 defined benefit deferred compensation plan
covering all independent directors of the Fund who will have served as an
independent director for at least five years at the time of retirement. Benefits
under this plan are based on an annual rate equal to 50% of the sum of the
retainer fee at the time of retirement plus the annual meeting fee.
Pension expenses for the six months ended February 28, 1999, included in
Directors' Fees and Expenses in the Statement of Operations were $10,363.
Unfunded accrued pension costs of $33,980 and pension liability of $81,464 are
included in Prepaid Expenses and Accrued Expenses, respectively, in the
Statement of Assets and Liabilities.
The independent directors have contributed to a deferred compensation plan,
pursuant to which they have deferred receipt of a portion of the compensation
which they would otherwise have been paid as directors of selected INVESCO
Funds. The deferred amounts may be invested in the shares of any of the INVESCO
or Treasurer's Series Trust Funds.
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 February 28, 1999, there
were no such borrowings.
<PAGE>
FINANCIAL HIGHLIGHTS
BLUE CHIP GROWTH FUND
(FOR A FUND SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
SIX MONTHS
ENDED
FEBRUARY 28 YEAR ENDED AUGUST 31
- --------------------------------------------------------------------------------
1999 1998 1997 1996 1995 1994
UNAUDITED
PER SHARE DATA
Net Asset Value --
Beginning of Period $ 5.15 $6.06 $5.44 $5.33 $5.34 $5.28
================================================================================
INCOME FROM INVESTMENT
OPERATIONS
Net Investment Income(a) 0.00 0.02 0.01 0.03 0.05 0.03
Net Gains on Securities
(Both Realized and
Unrealized) 1.88 0.69 1.39 0.95 0.49 0.11
================================================================================
Total from Investment
Operations 1.88 0.71 1.40 0.98 0.54 0.14
================================================================================
LESS DISTRIBUTIONS
Dividends from Net
InvestmentIncome(b) 0.00 0.02 0.01 0.03 0.05 0.03
Distributions from
Capital Gains 0.51 1.60 0.77 0.84 0.50 0.05
================================================================================
TOTAL DISTRIBUTIONS 0.51 1.62 0.78 0.87 0.55 0.08
================================================================================
Net Asset Value--
End of Period $ 6.52 $5.15 $6.06 $5.44 $5.33 $5.34
================================================================================
TOTAL RETURN 37.22%(c) 13.42% 28.14% 20.23% 12.05% 2.52%
RATIOS
Net Assets -- End
of Period($000 Omitted)
$1,166,083 $747,739 $709,220 $596,726 $501,285 $488,411
Ratio of Expenses to
Average Net Assets 0.51%(c)(d) 1.04%(d) 1.07%(d) 1.05%(d) 1.06% 1.03%
Ratio of Net Investment
Income to Average
Net Assets 0.04%(c) 0.37% 0.22% 0.64% 1.07% 0.47%
Portfolio Turnover Rate 71%(c) 153% 286% 207% 111% 63%
(a)Net Investment Income aggregated less than $0.01 on a per share basis for the
six months ended February 28, 1999.
(b)Distributions in excess of net investment income for the year ended August
31, 1995, aggregated less than $0.01 on a per share basis.
(c)Based on operations for the period shown and, accordingly, are not
representative of a full year.
(d)Ratio is based on Total Expenses of the Fund, which is before any expense
offset arrangements.
<PAGE>
INVESCO FAMILY OF FUNDS
Newspaper
Fund Name Fund Code Ticker Symbol Abbreviation
- ------------------------------------------------------------------------------
INTERNATIONAL
International Blue Chip 09 IIBCX ItlBlChp
International Growth 49 FSIGX IntlGr
Emerging Markets 43 * *
Asian Growth 41 IVAGX AsianGr
Pacific Basin 54 FPBSX PcBas
European 56 FEURX Europ
European Small Company 37 IVECX EuroSmCo
Latin American Growth 34 IVSLX LatinAmGr
- ------------------------------------------------------------------------------
SECTOR
Energy 50 FSTEX Enrgy
Environmental Services 59 FSEVX Envirn
Financial Services 57 FSFSX FinSvc
Gold 51 FGLDX Gold
Health Sciences 52 FHLSX HlthSc
Leisure 53 FLISX Leisur
Realty 42 IVSRX Realty
Technology 55 FTCHX Tech
Utilities 58 FSTUX Util
Worldwide Capital Goods 38 ISWGX WldCap
Worldwide Communications 39 ISWCX WldCom
- ------------------------------------------------------------------------------
STOCK
Growth & Income 21 IVGIX GRI
Growth 10 FLRFX Grwth
Dynamics 20 FIDYX Dynm
Small Company Growth 60 FIEGX SmCoGth
Value Equity 46 FSEQX ValEq
Small Company Value 74 IDSCX SmCoVal
S&P 500 Index Fund Class II 23 ISPIX SP500II
- ------------------------------------------------------------------------------
COMBINATION STOCK & BOND
Industrial Income 15 FIIIX IndInc
Multi-Asset Allocation 70 IMAAX MulAstAl
Total Return 48 FSFLX TotRtn
Balanced 71 IMABX Bal
- ------------------------------------------------------------------------------
BOND
Short-Term Bond 33 INIBX ShTrBd
Intermediate Government Bond 47 FIGBX IntGov
U.S. Government Securities 32 FBDGX USGvt
Select Income 30 FBDSX SelInc
High Yield 31 FHYPX HiYld
- ------------------------------------------------------------------------------
TAX-EXEMPT
Tax-Free Intermediate Bond 36 IVTIX *
Tax-Free Long-Term Bond 35 FTIFX TxFre
- ------------------------------------------------------------------------------
MONEY MARKET
U.S. Government Money Fund 44 FUGXX InvGvtMF
Cash Reserves 25 FDSXX InvCshR
Tax-Free Money Fund 40 FFRXX InvTaxFree
* Not yet available
For more complete information, including management fees, expenses, and risks,
call or write for a free prospectus. Read it carefully before you invest or
send money.
<PAGE>
INVESCO
YOU SHOULD KNOW WHAT INVESCO KNOWS (TM)
We're easy to stay in touch with:
Investor Services: 1-800-525-8085
PAL(R), your Personal Account Line: 1-800-424-8085
On the World Wide Web: 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
INVESCO Distributors, Inc.(SM), Distributor
Post Office Box 173706
Denver, Colorado 80217-3706
This information must be preceded or accompanied
by a current prospectus
