INVESCO INCOME FUNDS, INC.
INVESCO High Yield Fund
Supplement to Prospectus
Dated December 29, 1995
The section of the Fund's prospectus entitled "Investment Policies and
Risks - Illiquid and Rule 144A Securities" is hereby amended to read as follows:
Illiquid and Rule 144A Securities. The Fund may invest up to 15% of its
net assets in securities that are illiquid because they are subject to
restrictions on resale ("restricted securities") or because they are not
readily marketable. The Fund may not be able to dispose of illiquid
securities at the time desired or at a reasonable price. In addition, if
the securities are not registered, their marketability and value could be
adversely affected. The Fund may purchase certain securities that are not
registered for sale to the general public, but that can be resold to
institutional investors ("Rule 144A Securities") if a liquid trading
market exists. The liquidity of the Fund's investments in Rule 144A
Securities could be impaired if dealers or institutional investors become
no longer interested 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, and therefore such securities determined to be liquid are not
subject to the foregoing 15% limitation. For more information concerning
illiquid Rule 144A Securities, see "Investment Policies and Restrictions"
in the Statement of Additional Information.
The date of this Supplement is October 22, 1996.
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INVESCO INCOME FUNDS, INC.
INVESCO High Yield Fund
Supplement to Statement of Additional Information
Dated December 29, 1995
The section of the INVESCO Income Funds, Inc. Statement of Additional
Information entitled "Investment Policies and Restrictions - IIliquid and 144A
Securities" is hereby amended to (1) delete the 15th and 16th paragraphs and (2)
substitute the following new paragraphs in their place:
Illiquid and 144A Securities. The High Yield Fund may invest in
securities that are illiquid because they are subject to restrictions on
their resale ("restricted securities") or because, based upon their nature
or the market for such securities, they are not readily marketable.
However, the High Yield Fund will not purchase any such security if the
purchase would cause the Fund to invest more than 15% of its net assets,
measured at the time of purchase, in illiquid securities. Repurchase
agreements maturing in more than seven days will be considered as illiquid
for purposes of this restriction. Investments in illiquid securities
involve certain risks to the extent that the High Yield Fund may be unable
to dispose of such a security at the time desired or at a reasonable
price. In addition, in order to resell a restricted security, the High
Yield Fund might have to bear the expense and incur the delays associated
with effecting registration.
Each Fund also may invest in restricted securities that can be
resold to institutional investors pursuant to Rule 144A under the
Securities Act of 1933, as amended (the "1933 Act") (hereinafter referred
to as "Rule 144A Securities"). These securities may be purchased by the
Funds if a liquid institutional trading market exists subject only to the
State of Ohio's 15% of net assets limit on such 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.
The section of the Fund's Statement of Additional Information entitled
"Investment Restrictions" is amended to (1) delete paragraph 10 (investment
restriction no. 8) and (2) substitute the following new paragraph in its place:
(8) other than the INVESCO High Yield Fund, buy other than readily
marketable securities;
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The section of the Fund's Statement of Additional Information entitled
"Investment Restrictions" is amended to (1) delete paragraph 13 (investment
restriction no. 11) and (2) substitute the following new paragraph in its place:
(11) purchase equity securities; provided, however, that the INVESCO High
Yield Fund may purchase convertible and non-convertible preferred
stock. This shall not be deemed to prohibit the acquisition of
equity securities resulting from the ownership of debt securities,
as, for example, the conversion of convertible bonds or an exchange
in connection with a corporate reorganization;
The section of the Fund's Statement of Additional Information entitled
"Investment Restrictions" is amended to (1) delete paragraph 14 (investment
restriction no. 12) and (2) substitute the following new paragraph in its place:
(12) other than the INVESCO High Yield Fund, purchase the securities of
any issuer having a record, together with predecessors, of less than
three years of continuous operation;
The section of the Fund's Statement of Additional Information entitled
"Investment Restrictions" is amended to (1) delete paragraphs 21 and 22, (2)
substitute the following new paragraphs in their place and (3) add a new
paragraph no. 23, without deleting the current paragraphs 23 through 26.
In applying restriction (8) above, the Funds also include illiquid
securities (those which cannot be sold in the ordinary course of business
within seven days at approximately the valuation given to them by the
Fund) among the securities subject to the limitations of that paragraph.
The Company's board of directors has delegated to the Funds' investment
adviser the authority to determine that a liquid market exists for
securities eligible for resale pursuant to Rule 144A under the 1933 Act,
or any successor to such rule, and that such securities are not subject to
the Funds' limitations on investing in illiquid securities or securities
that are not readily marketable. 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 the 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 (11) above, the Funds consider acquisitions
of equity securities as components of units which consist primarily of
debt securities as permissible acquisitions resulting from the ownership
of debt securities.
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In applying restriction (14) above, the Funds consider warrants
acquired as components of units consisting primarily of debt securities to
be permissible investments as contemplated by restriction (11) above.
The section of the Fund's Statement of Additional Information entitled
"Investment Restrictions" is amended to add paragraphs 28 through 31:
Non-fundamental investment restrictions adopted by the Company on
behalf of the Funds and which may be changed by the directors, at their
discretion, without shareholder approval, include the following:
(1) The High Yield Fund will not purchase any security or enter
into a repurchase agreement if, as a result, more than 15% of
its net assets would be invested in repurchase agreements not
entitling the holder to payment of principal and interest
within seven days and in securities that are illiquid by
virtue of legal or contractual restrictions on resale or the
absence of a readily available market. The board of directors,
or the Fund's investment adviser acting pursuant to authority
delegated by the board of directors, may determine that a
readily available market exists for securities eligible for
resale pursuant to Rule 144A under the Securities Act of 1933,
or any successor to such rule, and therefore that such
securities are not subject to the foregoing limitation.
(2) The High Yield Fund will not purchase securities of any issuer
(other than U.S. government agencies and instrumentalities or
instruments guaranteed by any entity with a record of more
than three years' continuous operation (including that of
predecessors) with a record of less than three years'
continuous operation (including that of predecessors) if such
purchase would cause the Fund's investments in all such
issuers to exceed 5% of the Fund's total assets taken at
market value at the time of such purchase.
With respect to the non-fundamental investment restriction (1)
above, the board of directors has delegated to the Fund's investment
adviser the authority to determine whether a liquid market exists for
securities eligible for resale pursuant to Rule 144A under the 1933 Act,
or any successor to such rule, and that whether or not such securities are
subject to the non-fundamental restriction (1) 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
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of the security and the nature of marketplace trades (e.g., the time needed
to dispose of the security, the method of soliciting offers and the
mechanics of transfer).
The date of this Supplement is October 22, 1996.
