INVESCO TAX FREE INCOME FUNDS INC
485APOS, 1995-08-31
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                            As filed on August 31, 1995

                         SECURITIES AND EXCHANGE COMMISSION
                               Washington, D.C. 20549
                                     FORM N-1A

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933                       X
                                                                             --
      Pre-Effective Amendment No. ________
      Post-Effective Amendment No.    23                                      X
                                   --------                                  --

REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940               X
                                                                             --
      Amendment No.     24                                                    X
                    ----------                                               --
    

                        INVESCO TAX-FREE INCOME FUNDS, INC.
                 (Exact Name of Registrant as Specified in Charter)

                    7800 E. Union Avenue, Denver, Colorado 80237
                      (Address of Principal Executive Offices)

                    P.O. Box 173706, Denver, Colorado 80217-3706
                                 (Mailing Address)

         Registrant's Telephone Number, including Area Code: (303) 930-6300

                                Glen A. Payne, Esq.
                                7800 E. Union Avenue
                               Denver, Colorado 80237
                      (Name and Address of Agent for Service)
                                -------------------
                                     Copies to:
                               Ronald M. Feiman, Esq.
                               Gordon Altman Butowsky
                               Weitzen Shalov & Wein
                                  114 W. 47th St.
                              New York, New York 10036
                                -------------------
Approximate Date of Proposed Public Offering:  As soon as practicable
after this post-effective amendment becomes effective.

   
It is proposed that this filing will become effective (check appropriate
box)
 ___  immediately  upon filing  pursuant to  paragraph  (b) 
 ___  on  _______________, pursuant to  paragraph  (b) 
 ___  60 days after  filing  pursuant  to  paragraph(a)(1)
 X    on October 31, 1995  pursuant to  paragraph  (a)(1) 
___   75 days after  filing pursuant to  paragraph  (a)(2)
___   on  _______________,  pursuant  to  paragraph(a)(2) of rule 485.
    

If appropriate, check the following box:
___   this  post-effective  amendment  designates  a new  effective  date  for a
      previously filed post-effective amendment.

   
Registrant has previously  elected to register an indefinite number of shares of
its common  stock  pursuant  to Rule 24f-2  under the  Investment  Company  Act.
Registrant's  Rule 24f-2  Notice for the fiscal  year ended June 30,  1995,  was
filed on or about August 21, 1995.
                                    Page 1 of 125
                        Exhibit index is located at page 114
                     
    


<PAGE>


                          INVESCO TAX-FREE INCOME FUNDS, INC.
                            -----------------------------

                            CROSS-REFERENCE SHEET

Form N-1A
Item                                Caption

Part A                              Prospectus

    1.......................        Cover Page

   
    2.......................        Annual Fund Expenses; Essential
                                    Information

    3.......................        Financial Highlights; Fund Price
                                    and Performance

    4.......................        Investment Objective and Strategy;
                                    Investment Policies and Risks; The
                                    Fund and Its Management
    

    5.......................        The Fund and Its Management

    5A......................        Not Applicable

   
    6.......................        Fund Services; Taxes, Dividends and
                                    Capital Gain Distributions;
                                    Additional Information

    7.......................        How to Buy Shares; Fund Price and
                                    Performance; Fund Services; The
                                    Fund and Its Management

    8.......................        Fund Services; How to Sell Shares
    

    9.......................        Not Applicable

Part B                              Statement of Additional Information

    10.......................       Cover Page

    11.......................       Table of Contents

   
    12.......................       The Fund and Its Management

    13.......................       Investment Practices; Investment
                                    Policies and Restrictions
<PAGE>

    14.......................       The Fund and Its Management

    15.......................       The Fund and Its Management;
                                    Additional Information

    16.......................       The Fund and Its Management;
                                    Additional Information

    17.......................       Investment Practices; Investment
                                    Policies and Restrictions
    

    18.......................       Additional Information

   
    19.......................       How Shares Can Be Purchased; How
                                    Shares Are Valued; Services
                                    Provided by the Fund; How to Redeem
                                    Shares

    20.......................       Dividends, Capital Gain
                                    Distributions, and Taxes

    21.......................       How Shares Can Be Purchased

    22.......................       Fund Performance
    

    23.......................       Additional Information

Part C                              Other Information

      Information  required  to be  included  in Part C is set  forth  under the
appropriate Item, so numbered, in Part C to this Registration Statement.
<PAGE>


   
PROSPECTUS
October 31, 1995
    

                   INVESCO TAX-FREE INTERMEDIATE BOND FUND

   
      INVESCO Tax-Free  Intermediate  Bond Fund (the "Fund") is actively managed
to seek as high a level of current income exempt from federal income taxes as is
consistent  with the  preservation  of capital,  by investing  in a  diversified
portfolio of  intermediate-  term  obligations,  the interest on which is exempt
from federal  income  taxes.  These  "municipal  bonds" may be issued by states,
territories,  and possessions of the United States and the District of Columbia,
as well as their political  subdivisions,  agencies, and instrumentalities.  The
dollar  weighted  average  maturity of the  obligations in the Fund's  portfolio
normally will range from five to 10 years.

     This  prospectus  provides you with the basic  information  you should know
before  investing  in the  Fund.  You  should  read it and  keep  it for  future
reference.  A Statement of Additional Information containing further information
about the Fund,  dated October 31, 1995,  has been filed with the Securities and
Exchange Commission,  and is incorporated by reference into this prospectus.  To
obtain afree copy, write to INVESCO Funds Group, Inc., P.O. Box 173706,  Denver,
Colorado 80217-3706; or call 1-800-525-8085. 
    


<PAGE>


                                                                             



TABLE OF CONTENTS


   
ESSENTIAL INFORMATION......................................................  6
    

ANNUAL FUND EXPENSES.......................................................  8

FINANCIAL HIGHLIGHTS.......................................................  9

   
INVESTMENT OBJECTIVE AND STRATEGY.......................................... 10

INVESTMENT POLICIES AND RISKS.............................................. 10
    

THE FUND AND ITS MANAGEMENT................................................ 14

   
FUND PRICE AND PERFORMANCE................................................. 17

HOW TO BUY SHARES.......................................................... 18

FUND SERVICES.............................................................. 22

HOW TO SELL SHARES......................................................... 23

TAXES, CAPITAL GAIN DISTRIBUTIONS, AND DIVIDENDS........................... 25
    

ADDITIONAL INFORMATION..................................................... 26



   
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.
    

ESSENTIAL INFORMATION

   
      Investment Goal And Strategy.  INVESCO Tax-Free Intermediate
Bond Fund is a diversified mutual fund that seeks current income
free from federal income taxes. The Fund invests primarily in
municipal obligations, and the average dollar-weighted maturity for
its entire portfolio normally will range from five to 10 years.
There is no guarantee that the Fund will meet its objective. See
"Investment Objective And Strategy."
    


<PAGE>


                                                                             


   
      Designed For: Investors primarily seeking current income free from federal
income  taxes.  While  not a  complete  investment  program,  the  Fund may be a
valuable  element  of your  investment  portfolio.  The  Fund is not a  suitable
investment  for  tax-sheltered  retirement  programs  such as the IRA,  SEP-IRA,
SARSEP, 401(k), Profit Sharing, Money Purchase Pension, or 403(b) plans.

     Time Horizon. The Fund is managed for daily income, paid monthly. Investors
should  not  consider  this Fund for the  portion  of their  savings  devoted to
capital growth.

     Risks.  The  Fund  uses  a  moderate  investment  strategy,  but  like  all
fixed-income  investments,  it is subject to both  credit and market  risk.  See
"Investment Policies and Risks."

     Organization  and  Management.  The Fund is a series  of  INVESCO  Tax-Free
Income Funds, Inc. (the "Company"), a diversified, managed, no-load mutual fund.
The Fund is owned by its  shareholders.  It employs  INVESCO  Funds Group,  Inc.
("IFG"),  founded  in  1932,  to  serve as  investment  adviser,  administrator,
distributor,  and transfer agent; and INVESCO Trust Company  ("INVESCO  Trust"),
founded in 1969, as  sub-adviser.  Together,  IFG and INVESCO  Trust  constitute
"Fund Management."

     The Fund's  investments  are  selected by INVESCO vice  president  James S.
Grabovac.  A Chartered  Financial Analyst,  Mr. Grabovac earned his MBA from the
University of Michigan and a BA from Lawrence University.  See "The Fund And Its
Management."

      IFG and INVESCO Trust are part of a global firm that managed approximately
$74 billion as of June 30, 1995.  The parent  company,  INVESCO PLC, is based in
London, with money managers located in Europe, North America, and the Far East.

      This Fund Offers all of the  following  services  at no charge: 
      Telephone purchases 
      Telephone exchanges 
      Telephone redemptions 
      Automatic reinvestment of distributions  
      Regular investment plans (EasiVest (the Fund's automatic
      monthly  investment  program),  Direct  Payroll  Purchase,  
     and  Automatic Monthly Exchange) Periodic withdrawal plans

      See "How To Buy Shares" and "How To Sell Shares."

     Minimum Initial Investment:  $1,000, which is waived for regular investment
plans, including EasiVest and Direct Payroll Purchase.

      Minimum Subsequent Investment: $50
    



<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 Rule 12b-1 distribution fee of
one quarter of one percent  each year.  (See "How To Buy Shares --  Distribution
Expenses.")

      Like any  company,  the Fund has  operating  expenses -- such as portfolio
management,   accounting,  shareholder  servicing,  maintenance  of  shareholder
accounts,  and other  expenses.  These expenses are paid from the Fund's assets.
Lower  expenses  therefore  benefit  investors  by  increasing  the Fund's total
return.

      We  calculate  annual  operating  expenses as a  percentage  of the Fund's
average  annual net assets.  To keep expenses  competitive,  the Fund's  manager
voluntarily  reimburses  the Fund for  amounts in excess of 0.70% of average net
assets.
    

Annual Fund Operating Expenses
(as a percentage of average net assets)

   
Management Fee                                                         0.50%
12b-1 Fees (after absorbed expenses)1                                  0.20%
Other Expenses (after absorbed expenses)1                              0.00%
Total Fund Operating Expenses (after absorbed expenses)1               0.70%

1In the absence of the voluntary  expense  limitation,  the Fund's "12b-1 Fees,"
"Other  Expenses"  and "Total Fund  Operating  Expenses"  would have been 0.25%,
1.70% and 2.45%,  respectively,  based on the  Fund's  actual  expenses  for the
fiscal year ended June 30, 1995.
    

Example

   
      A shareholder would pay the following  expenses on a $1,000 investment for
the periods shown,  assuming a  hypothetical  5% annual return and redemption at
the end of each time period. (Of course, actual operating expenses are paid from
the Fund's  assets,  and are deducted  from the amount of income  available  for
distribution  to  shareholders;  they are not charged  directly  to  shareholder
accounts.)
    

                  1 Year      3 Years     5 Years     10 Years
                  $7          $22         $39         $87

   
      The  purpose of this table is to assist you in  understanding  the various
costs and expenses that you will bear directly or indirectly. The example should
not be considered a  representation  of past or future  performance or expenses,
and actual annual  returns and expenses may be greater or less than those shown.
For more information on the Fund's  expenses,  see "The Fund and Its Management"
and "How to Buy Shares -- Distribution Expenses."

 Since the Fund pays a distribution fee,  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 independent  accountant's report 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 IFG at the address or telephone number on the cover
of this prospectus.  The Annual Report also contains more information  about the
Fund's performance.

                                                           Year           Period
                                                          Ended            Ended
                                                        June 30          June 30
                                                           1995            1994^

Tax-Free Intermediate Bond Fund

PER SHARE DATA
Net Asset Value - Beginning of Period                  $9.52           $10.00
                                                     -------          -------
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income                                   0.44             0.19
Net Gains or (Losses) on Securities
   (Both Realized and Unrealized)                       0.18           (0.48)
                                                     -------          -------
Total From Investment Operations                        0.62           (0.29)
                                                     -------          -------
LESS DISTRIBUTIONS
Dividends from Net Investment Income                    0.44             0.19
                                                     -------          -------
Net Asset Value - End of Period                        $9.70            $9.52
                                                     =======          =======

TOTAL RETURN                                           6.67%          (2.93%) *

RATIOS
Net Assets - End of Period
   ($000 Omitted)                                     $4,907           $5,083
Ratio of Expenses to Average
   Net Assets#                                         0.70%           0.70%~
Ratio of Net Investment Income to
   Average Net Assets#                                 4.56%           3.75%~
Portfolio Turnover Rate                                  23%              55% *

                                                                           
^From December 1, 1993, commencement of operations, to June 30,
1994.

*These  amounts are based on operations  for the period shown and,  accordingly,
are not representative of a full year.

#Various  expenses  of the Fund were  voluntarily  absorbed  by IFG for the year
ended June 30, 1995 and for the period ended June 30, 1994. If such expenses had
not been voluntaily absorbed, ratio of expenses to average net assets would have
been  2.45%  and  3.09%,  respectively,  and ratio of net  investment  income to
average net assets would have been 2.81% and 1.36%, respectively.

~Annualized
    
<PAGE>

   
INVESTMENT OBJECTIVE AND STRATEGY

      The Fund  seeks as high a level of  current  income  exempt  from  federal
income taxes as is consistent with the preservation of capital.  This investment
objective  is  fundamental  and cannot be changed  without  the  approval of the
Fund's shareholders.  Our strategy is moderate, so we focus on intermediate-term
municipal  bonds,  which may  include  any  combination  of general  obligation,
revenue, or industrial  development bonds. As a matter of fundamental investment
policy,  at least 80% of the  Fund's  total  assets  normally  will  consist  of
municipal bonds rated investment quality. Under ordinary circumstances,  no more
than 20% of the  Fund's  total may  consist  of AMT  bonds,  short-term  taxable
securities, debt obligations rated below investment grade, and cash. There is no
assurance that the Fund's investment objective will be met.

      The  dollar-weighted  average  maturity of the  obligations  in the Fund's
portfolio  normally  will  range  from five to 10  years,  and will vary as Fund
Management responds to changes in interest rates.

INVESTMENT POLICIES AND RISKS

      Investors  should  expect to see their  price per share vary with moves in
the municipal  bond market,  economic  conditions  and other  factors.  The Fund
invests  in  many  different  issues  over  a  wide  geographical   range;  this
diversification  reduces the Fund's  overall  exposure to investment  and market
risks, but cannot eliminate these risks.

     Municipal  Securities.  When we  assess  an  issuer's  ability  to meet its
interest  rate  obligations  and repay its debt when due,  we are  referring  to
"credit risk."  Municipal  obligations are rated based on their estimated credit
risk by  independent  services  such as Standard & Poor's  Ratings  Group (S&P),
Moody's  Investors  Service,  Inc.  (Moody's),  Fitch Investors  Services,  Inc.
(Fitch) or Duff & Phelps,  Inc.  (D&P).  "Market risk" refers to  sensitivity to
changes in interest rates:  For instance,  when interest rates go up, the market
value of a previously  issued bond generally  declines;  on the other hand, when
interest rates go down, bonds generally see their prices increase.
    
<PAGE>


                                                               
   
      The lower a bond's  quality,  the more it is  subject  to credit  risk and
market  risk and the more  speculative  it  becomes.  This is also  true of most
unrated municipal securities. Therefore, the Fund does not invest in obligations
it believes to be highly speculative.  In practice, this means we primarily hold
municipal  bonds rated AAA, AA, A or BBB by S&P or Aaa, Aa, A or Baa by Moody's.
Overall,  these municipal  securities  enjoy strong to adequate  capacity to pay
principal  and  interest.  No more than 10% of the  Fund's  total  assets may be
invested in issues rated below investment  grade quality  (commonly called "junk
bonds," and rated BB or lower by S&P or Ba or lower by Moody's,  or, if unrated,
judged by Fund  Management to be of equivalent  quality);  these include  issues
which  are of poorer  quality  and may have  some  speculative  characteristics,
according to the ratings services. Never, under any circumstances, does the Fund
invest  in  bonds  which  are  rated  below  CCC  or  Caa  by  S&P  or  Moody's,
respectively.  Bonds  rated CCC or Caa may be in default or there may be present
elements of danger with respect to payment of principal or interest.  While Fund
Management  continuously  monitors  all of the  municipal  bonds  in the  Fund's
portfolio  for the  issuer's  ability to make  required  principal  and interest
payments and other quality factors, it may retain a bond whose rating is changed
to one below the minimum  rating  required for purchase of the  security.  For a
detailed  description of municipal bond ratings, see the Statement of Additional
Information and Appendix A therein.

      As discussed above,  under normal  circumstances,  no more than 20% of the
Fund's  total assets may be invested in the  aggregate in AMT bonds,  short-term
taxable securities, debt obligations rated below investment grade and cash.

      AMT Bonds. These are "private activity bonds" issued after August 7, 1986;
the  proceeds   are  directed  in  full  or  in  part  to  private,   for-profit
organizations.  The income from AMT bonds is exempt from federal income tax, but
is subject  to the  alternative  minimum  tax -- a special  tax that  applies to
taxpayers who have certain adjustments to income or tax preference items.

     Short-Term Taxable  Investments.  These investments,  if any, normally will
consist  of notes  having  quality  ratings  within  the two  highest  grades of
Moody's, S&P, Fitch or D&P; obligations of the U.S. government,  its agencies or
instrumentalities;  commercial paper rated at least P-2 by Moody's,  A-2 by S&P;
certificates of deposit of U.S.  domestic banks,  including  foreign branches of
domestic  banks,  with  assets of $1 billion of more;  time  deposits;  banker's
acceptances and other short-term bank  obligations;  and repurchase  agreements.
Dividends paid by the Fund  attributable to income from such investments will be
taxable to investors. See "Taxes, Capital Gain Distributions and Dividends."
    

<PAGE>

                                                                    
   
      When we believe market or economic  conditions are  unfavorable,  the Fund
may assume a  defensive  position  by  temporarily  investing  up to 100% of its
assets in short-term  taxable  investments,  seeking to protect its assets until
conditions stabilize.

      Tender  Option  Bonds.  The  Fund may seek to earn  additional  income  by
purchasing  "tender option bonds,"  municipal  bonds which have  relatively long
maturities  and offer  fixed  income at a  substantially  higher rate than other
short-term  tax-exempt  bonds.  Tender option bonds involve three  parties:  the
issuer, the buyer, and a third party, such as a bank, broker-dealer,  or another
financial  institution.  In exchange for a periodic fee, this third party allows
the  purchaser  to cash in  ("tender")  the bond for its face value at  periodic
intervals.

      Tender   option   bonds  must  be  carefully   evaluated,   based  on  the
creditworthiness  of the issuer and third  party.  At times,  the tender  option
feature on these bonds may be terminable; in such an instance, the tender option
bonds may be considered illiquid securities.

      Futures and Options.  A futures  contract is an agreement to buy or sell a
specific amount of a financial  instrument or commodity at a particular price on
a particular  date.  The Fund will use futures  contracts  only to hedge against
price changes in the value of its current or intended investments in securities.
In the event that an anticipated  decrease in the value of portfolio  securities
occurs as a result of a general decrease in prices,  the adverse effects of such
changes  may be  offset,  at  least in  part,  by  gains on the sale of  futures
contracts.  Conversely,  the  increased  cost  of  portfolio  securities  to  be
acquired,  caused by a general  increase in prices,  may be offset,  at least in
part, by gains on futures  contracts  purchased by the Fund.  Brokerage fees are
paid to trade  futures  contracts,  and the Fund is required to maintain  margin
deposits.

     Put and call options on futures  contracts or  securities  may be traded by
the Fund in  order to  protect  against  declines  in the  values  of  portfolio
securities or against  increases in the cost of  securities to be acquired.  Put
and call  options  are  contracts  which  grant the right to sell at a specified
price a specific  security or futures contract by a certain date. The put option
buyer gains this right in return for a premium.  Purchases of options on futures
contracts may present less dollar risk in hedging the Fund's  portfolio than the
purchase and sale of the underlying futures contracts,  since the potential loss
is limited to the amount of the premium  plus  related  transaction  costs.  The
premium  paid for such a put or call  option  plus any  transaction  costs  will
reduce the benefit, if any, realized by the Fund upon exercise or liquidation of
the option,  and, unless the price of the underlying  futures  contract  changes
sufficiently, the option may expire without value to the Fund. 
    


<PAGE>

   
                                                                         
      Although the Fund will enter into futures contracts and options on futures
contracts and securities  solely for hedging or other  nonspeculative  purposes,
their use does involve certain risks. For example, a lack of correlation between
the value of an  instrument  underlying  an option or futures  contract  and the
assets being hedged,  or unexpected  adverse price  movements,  could render the
Fund's hedging strategy  unsuccessful  and could result in losses.  In addition,
thee can be no  assurance  that a liquid  secondary  market  will  exist for any
contract  purchased or sold, and the Fund may be required to maintain a position
until  exercise or  expiration,  which could result in losses.  Transactions  in
futures  contracts and options are subject to other risks as well, which are set
forth in greater detail in the Statement of Additional  Information and Appendix
B therein.

      Zero  Coupon  Securities.  These  securities  make  no  periodic  interest
payments.  Instead, they are sold at a discount from their face value. The buyer
of the security  receives the rate of return by the gradual  appreciation in the
price of the  security,  which is  redeemed  at face  value at  maturity.  Being
extremely  responsive  to changes in interest  rates,  the market  price of zero
coupon  securities  may be more  volatile  than  other  bonds.  The  Fund may be
required to distribute  income  recognized  on these bonds,  even though no cash
interest payments are received,  which could reduce the amount of cash available
for  investment  by the Fund.  Of the 10% of the Fund's total assets that may be
invested in debt obligations  rated below  investment  grade, no more than 5% of
the Fund's  total  assets may be  invested  in zero  coupon  bonds  having  such
ratings.

      Delayed Delivery or When-Issued  Purchases.  Municipal  obligations may at
times be  purchased  or sold by the Fund  with  settlement  taking  place in the
future.  The payment  obligation  and the interest rate that will be received on
the  securities  generally  are  fixed  at the time  the  Fund  enters  into the
commitment.  Between the date of purchase and the settlement  date, the value of
the securities is subject to market fluctuations,  and no interest is payable to
the Fund prior to the settlement date.

      Securities Lending. The Fund may seek to earn additional income by lending
securities  to  qualified   brokers,   dealers,   banks,   or  other   financial
institutions,  on a fully collateralized  basis. For further information on this
policy,  see  "Investment   Policies  and  Restrictions"  in  the  Statement  of
Additional Information.

     Repurchase  Agreements.  The Fund may invest money,  for as short a time as
overnight,  using repurchase agreements ("repos").  With a repo, the Fund buys a
debt instrument,  agreeing  simultaneously to sell it back to the prior owner at
an  agreed-upon  price.  The Fund could incur costs or delays in seeking to sell
the  instrument if the prior owner  defaults on its  repurchase  obligation.  To
reduce  that  risk,  the  securities  which are the  subject  of the  repurchase
agreement  will be  maintained  with the Fund's  custodian in an amount at least
equal to the repurchase price under the agreement  (including accrued interest).
These  agreements are entered into only with member banks of the Federal Reserve
System,  registered  broker-dealers,  and registered U.S. government  securities
dealers that are deemed  creditworthy under standards set by the Fund's board of
directors.
    
<PAGE>

   
                                                                         
      The Fund may invest in illiquid securities,  including securities that are
subject  to   restrictions  on  resale  and  securities  that  are  not  readily
marketable. The Fund also may invest in restricted securities that may be resold
to  institutional   investors,   known  as  "Rule  144A  Securities."  For  more
information  concerning  illiquid  and Rule  144A  Securities,  see  "Investment
Policies and Restrictions" in the Statement of Additional Information.

      For a further  discussion  of risks  associated  with an investment in the
Fund, see "Investment  Policies and Restrictions" and "Investment  Practices" in
the Statement of Additional Information.

      Investment Restrictions.  Certain restrictions, which are set forth in the
Statement of Additional Information,  may not be altered without the approval of
the Fund's shareholders.  For example,  with respect to 75% of its total assets,
the Fund limits to 5% the portion of its total  assets that may be invested in a
single  issuer.  In  addition,  the Fund  limits to 25% the portion of its total
assets that may be invested in any one industry.  Municipal  securities  are not
considered to be an "industry" for this purpose, although industrial development
bonds are grouped into industries depending upon the businesses of the companies
that have the ultimate responsibility for payment. Except where indicated to the
contrary,   the  investment  policies  described  in  this  prospectus  are  not
considered  fundamental  and  may  be  changed  without  a vote  of  the  Fund's
shareholders.

THE FUND AND ITS MANAGEMENT

      The Company is a no-load mutual fund,  registered  with the Securities and
Exchange Commission as a diversified,  open-end,  management investment company.
It was incorporated on April 2, 1993, under the laws of Maryland.

     The Company's board of directors has responsibility for overall supervision
of the Fund, and reviews the services  provided by the adviser and  sub-adviser.
Under an agreement with the Company,  INVESCO Funds Group, Inc. ("IFG"), 7800 E.
Union Avenue,  Denver,  Colorado 80237, serves as the Fund's investment manager;
it is primarily  responsible for providing the Fund with various  administrative
services.   IFG's  wholly-owned   subsidiary,   INVESCO  Trust,  is  the  Fund's
sub-adviser and is primarily  responsible  for managing the Fund's  investments.
Together, IFG and INVESCO Trust constitute "Fund Management."
    
<PAGE>

                                                                           

      James  S.  Grabovac,  portfolio  manager  for the  Fund  since  1995,  has
responsibility  for the day-to-day  management of the Fund's  holdings.  He also
manages INVESCO Tax-Free Long-Term Bond Fund. A Chartered Financial Analyst, Mr.
Grabovac is a vice president of INVESCO Trust;  previously,  his career included
these  highlights:  He was a  principal  and fund  manager  (1991  to 1995)  and
portfolio  manager  (1989 to 1991) with Stein Roe & Farnham  Inc., a futures and
options trader with Continental  Illinois National Bank (1987), a corporate bond
trader with The Chicago  Corporation  from 1985 to 1987,  and Midwest  municipal
underwriting  manager with Continental Illinois National Bank from 1982 to 1985.
He  holds  an MBA  from  the  University  of  Michigan  and a BA  from  Lawrence
University.

      Fund  Management  permits  investment and other  personnel to purchase and
sell securities for their own accounts, subject to a compliance policy governing
personal investing.  This policy requires Fund Management's personnel to conduct
their personal  investment  activities in a manner that Fund Management believes
is not detrimental to the Fund or Fund Management's other advisory clients.  See
the Statement of Additional Information for more detailed information.

      The  Fund  pays  IFG a  monthly  management  fee  which  is  based  upon a
percentage of the Fund's average net assets  determined daily; in turn, IFG pays
INVESCO Trust a sub-advisory  fee out of its management  fee. The management fee
is computed at the annual rate of 0.50% on the first $300  million of the Fund's
average net  assets;  0.40% on the next $200  million of the Fund's  average net
assets;  and 0.30% on the Fund's  average net assets over $500 million.  For the
fiscal year ended June 30,  1995,  investment  management  fees paid by the Fund
amounted to 0.50% of the Fund's average net assets. Out of this fee, IFG paid an
amount  equal to 0.24% of the Fund's  average  net assets to INVESCO  Trust as a
sub- advisory fee. No fee is paid by the Fund to INVESCO Trust.

      Under a Transfer Agency Agreement, IFG acts as registrar,  transfer agent,
and  dividend  disbursing  agent  for the Fund.  The Fund pays an annual  fee of
$20.00  per  shareholder  account  or  omnibus  account  participant  for  these
services. Registered broker-dealers, third party administrators of tax-qualified
retirement  plans and other entities,  including  affiliates of IFG, may provide
equivalent  services to the Fund. In these cases, IFG may pay, out of the fee it
receives from the Fund, an annual  sub-transfer  agency or record-keeping fee to
the third party.

    


<PAGE>
                                                                               

      In  addition,  under an  Administrative  Services  Agreement,  IFG handles
additional administrative,  record-keeping, and internal sub-accounting services
for the Fund.  For the fiscal year ended June 30, 1995,  the Fund paid IFG a fee
for these services equal to 0.21% (prior to the voluntary  absorption of certain
Fund expenses by IFG) of the Fund's average net assets.

      The Fund's  expenses,  which are accrued  daily,  are deducted  from total
income before dividends are paid. Total expenses of the Fund for the fiscal year
ended  June 30,  1995,  including  investment  management  fees  (but  excluding
brokerage commissions,  which are a cost of acquiring  securities),  amounted to
0.70% of the Fund's  average net assets.  Certain  Fund  expenses  are  absorbed
voluntarily by IFG in order to ensure that the Fund's total  operating  expenses
do not exceed  0.70% of the Fund's  average net  assets.  In the absence of this
voluntary  expense  limitation,  the Fund's total operating  expenses would have
been 2.45% 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  to Buy  Shares  --
Distribution  Expenses,"  the Fund may market its  shares  through  intermediary
brokers or dealers  that have entered  into Dealer  Agreements  with IFG, as the
Fund's  Distributor.  The Fund may place orders for portfolio  transactions with
qualified  broker/dealers  which recommend the Fund, or sell shares of the Fund,
to clients,  or act as agent in the purchase of Fund shares for clients, if Fund
Management  believes  that the quality of the execution of the  transaction  and
level of commission  are  comparable  to those  available  from other  qualified
brokerage firms. For further information, see "Investment Practices -- Placement
of Portfolio Brokerage" in the Statement of Additional Information.

      The parent  company for IFG and INVESCO  Trust is INVESCO  PLC, a publicly
traded holding company whose subsidiaries provide investment services around the
world.  IFG was established in 1932 and, as of June 30, 1995,  managed 14 mutual
funds,   consisting  of  38  separate   portfolios,   with  combined  assets  of
approximately  $10.2  billion on behalf of over  790,000  shareholders.  INVESCO
Trust  (founded  in 1969)  served as adviser  or  sub-adviser  to 41  investment
portfolios as of June 30, 1995,  including 27  portfolios in the INVESCO  group.
These portfolios had aggregate  assets of approximately  $9.5 billion as of June
30, 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.


    

<PAGE>

   
FUND PRICE AND PERFORMANCE
                                                                            

      Determining  Price.  The  value of your  investment  in the Fund will vary
daily.  The price per share is also  known as the Net  Asset  Value  (NAV).  IFG
prices the Fund every day that the New York Stock  Exchange  is open,  as of the
close of regular trading (normally, 4:00 p.m., New York time). NAV is calculated
by  adding  together  the  current  market  value of all of the  Fund's  assets,
including  accrued  interest  and  dividends;   then  subtracting   liabilities,
including accrued expenses; and finally dividing that dollar amount by the total
number of shares outstanding.

      Performance Data. To keep shareholders and potential  investors  informed,
we will occasionally  advertise the Fund's total return and yield.  Total return
figures  show the average  annual rate of return on a $1,000  investment  in the
Fund, assuming reinvestment of all dividends and capital gain distributions, for
one-, five- and ten-year periods.  Cumulative total return shows the actual rate
of return on an investment;  average annual total return  represents the average
annual  percentage  change in the value of an  investment.  Both  cumulative and
average  annual total  returns tend to "smooth out"  fluctuations  in the Fund's
investment  results,  not showing the interim variations in performance over the
periods cited.

      The yield of the Fund refers to the income  generated by an  investment in
the Fund over a 30-day or one month period,  and is computed by dividing the net
investment  income per share earned during the period by the net asset value per
share at the end of the  period,  then  adjusting  the  result  to  provide  for
semi-annual  compounding.  We may also  discuss the Fund's  "taxable  equivalent
yield" -- the yield a taxable  investment  would  have to  generate  in order to
provide the same income as the Fund,  assuming  certain federal tax rates.  This
yield  quotation  allows  investors to compare taxable and tax-exempt bond funds
more fairly.

      More  information  about the Fund's recent and  historical  performance is
contained in the Fund's Annual Report to  shareholders.  You can get a free copy
by calling  or writing to IFG using the phone  number or address on the cover of
this prospectus.

      When  we  quote  mutual  fund  rankings  published  by  Lipper  Analytical
Services,  Inc.,  we  may  compare  the  fund  to  others  in  its  category  of
Intermediate  Municipal Debt Funds,  as well as the  broad-based  Lipper general
fund groupings. These rankings allow you to compare the Fund to its peers. Other
independent   financial  media  also  produce  performance-  or  service-related
comparisons,   which  you  may  see  in  our  promotional  materials.  For  more
information see "Fund Performance" in the Statement of Additional Information.

      Performance figures are based on historical investment results and are not
intended to suggest future performance.

    



<PAGE>
   

HOW TO BUY SHARES
                                                                           

      The following  chart shows several  convenient ways to invest in the Fund.
Your new Fund shares will be priced at the NAV next determined  after your order
is received in proper form.  There is no charge to invest,  exchange,  or redeem
shares when you make transactions  directly through IFG. However,  if you invest
in the Fund through a  securities  broker,  you may be charged a  commission  or
transaction fee. For all new accounts, please send a completed application form.
Please specify which Fund you wish to purchase.

      Fund  Management  reserves  the  right  to  reduce  or waive  the  minimum
investment requirements in its sole discretion,  where it determines this action
is in the best  interests of the Fund.  Further,  Fund  Management  reserves the
right in its sole discretion to reject any order for the purchase of Fund shares
(including  purchases by exchange)  when, in its judgment,  such rejection is in
the Fund's best interests.

================================================================================
Method                      Investment Minimum          Please Remember
- --------------------------------------------------------------------------------
By Check                    $1,000 for regular          If your check does
Mail to:                    account;                    not clear, you will
INVESCO Funds               $50 minimum for             be responsible for
Group, Inc.                 each subsequent             any related loss
P.O. Box 173706             investment.                 the Fund or IFG
Denver, CO 80217-                                       incurs. If you are
3706.                                                   already a
Or you may send                                         shareholder in the
your check by                                           INVESCO funds, the
overnight courier                                       Fund may seek
to: 7800 E. Union                                       reimbursement from
Ave.,                                                   your existing
Denver, CO 80237.                                       account(s) for any
                                                        loss incurred.

    

<PAGE>
                                                                               


- --------------------------------------------------------------------------------
By Telephone or             $1,000.                     Payment must be
Wire                                                    received within 3
Call 1-800-525-8085                                     business days, or
to request your                                         the transaction may
purchase. Then send                                     be cancelled. If a
your check by                                           telephone purchase
overnight courier                                       is cancelled due to
to our street                                           nonpayment, you
address:                                                will be responsible
7800 E. Union Ave.,                                     for any related
Denver, CO 80237.                                       loss the Fund or
Or you may transmit                                     IFG incurs. If you
your payment by                                         are already a
bank wire (call IFG                                     shareholder in the
for instructions).                                      INVESCO funds, the
                                                        Fund       may      seek
                                                        reimbursement  from your
                                                        existing  account(s) for
                                                        any loss incurred.
- --------------------------------------------------------------------------------
With EasiVest or            $50 per month for           Like all regular
Direct Payroll              EasiVest; $50 per           investment plans,
Purchase                    pay period for              neither EasiVest
You may enroll on           Direct Payroll              nor Direct Payroll
the fund                    Purchase. You may           Purchase ensures a
application, or             start or stop your          profit or protects
call us for the             regular investment          against loss in a
correct form and            plan at any time,           falling market.
more details.               with two weeks'             Because you'll
Investing the same          notice to IFG.              invest continually,
amount on a monthly                                     regardless of
basis allows you to                                     varying price
buy more shares                                         levels, consider
when prices are low                                     your financial
and fewer shares                                        ability to keep
when prices are                                         buying through low
high. This "dollar-                                     price levels. And
cost averaging" may                                     remember that you
help offset market                                      will lose money if
fluctuations. Over                                      you redeem your
a period of time,                                       shares when the
your average cost                                       market value of all
per share may be                                        your shares is less
less than the                                           than their cost.
actual average
price per share.

    

<PAGE>
   

                                                                           
- --------------------------------------------------------------------------------
By PAL                      $1,000.                     Be sure to write
Your "Personal                                          down the
Account Line" is                                        confirmation number
available for                                           provided by PAL.
subsequent                                              Payment must be
purchases and                                           received within 3
exchanges 24-hours                                      business days, or
a day. Simply call                                      the transaction may
1-800-424-8085.                                         be cancelled. If a
                                                        telephone   purchase  is
                                                        cancelled     due     to
                                                        nonpayment,  you will be
                                                        responsible    for   any
                                                        related loss the Fund or
                                                        IFG  incurs.  If you are
                                                        already a shareholder in
                                                        the INVESCO  funds,  the
                                                        Fund       may      seek
                                                        reimbursement  from your
                                                        existing  account(s) for
                                                        any loss incurred.
- --------------------------------------------------------------------------------
By Exchange                 $1,000 to open a            See "Exchange
Between this and            new account; $50            Privilege" below.
another of the              for written
INVESCO funds. Call         requests to
funds. You may also         purchase additional
establish an Automatic      shares for an
Monthly Exchange            existing account.
service between two         (The exchange
INVESCO funds; call         minimum is $250 for
IFG for further details     purchases requested
from the correct form.      by telephone).



      Your order to purchase  Fund shares will not begin  earning  dividends  or
other  distributions  until your payment can be converted into available federal
funds under regular  banking  procedures  or, if you are acquiring  shares in an
exchange  from  another  INVESCO  fund,  the Fund  receives  the proceeds of the
exchange.  Checks  normally are  converted  into federal  funds  (moneys held on
deposit  within the Federal  Reserve  System)  within two or three business days
after we receive  them,  although  this period may be longer for checks drawn on
banks that are not members of the Federal Reserve System.
    

<PAGE>
   

                                                                            
      Exchange Privilege. You may exchange your shares in this Fund for those in
another  INVESCO fund, on the basis of their  respective net asset values at the
time of the  exchange.  Before  making  any  exchange,  be sure  to  review  the
prospectuses of the funds involved and consider their differences.

      Please note these policies regarding exchanges of fund shares:

      1)  The fund accounts must be identically registered.

      2)  You may make four exchanges out of each fund during each
calendar year.

      3) An exchange is the  redemption  of shares from one fund followed by the
purchase  of shares in  another.  Therefore,  any gain or loss  realized  on the
exchange is  recognizable  for federal income tax purposes  (unless,  of course,
your account is tax-deferred).

      4) The Fund  reserves  the right to reject  any  exchange  request,  or to
modify or terminate exchange  privileges,  in the best interests of the Fund and
its shareholders.  Notice of all such modifications or termination will be given
at least 60 days prior to the effective date of the change in privilege,  except
for unusual  instances  (such as when  redemptions  of the exchanged  shares are
suspended  under  Section 22(e) of the  Investment  Company Act of 1940, or when
sales of the fund into which you are exchanging are temporarily stopped).

      Distribution  Expenses.  The Fund is authorized under a Plan and Agreement
of Distribution  pursuant to Rule 12b-1 under the Investment Company Act of 1940
(the  "Plan") to use its assets to finance  certain  activities  relating to the
distribution of shares. These expenditures may include  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  IFG-affiliated
companies, to obtain various distribution-related and/or administrative services
for the Fund.  Such  services may include,  among other things,  processing  new
shareholder  account  applications,  preparing  and  transmitting  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.

      In  addition,   other  reimbursable   expenditures   include  advertising,
preparation and distribution of sales  literature,  printing and distribution of
prospectuses  to prospective  investors,  public  relations  efforts,  marketing
programs and such other  services and  promotional  activities  agreed upon from
time to  time by the  Fund  and its  board  of  directors.  These  services  and
activities  may be conducted by the staff of IFG or its  affiliates  or by third
parties.
    

<PAGE>
   

                                                                            
      IFG 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 IFG personnel  whose primary  responsibilities
involve  marketing  shares of the INVESCO funds,  including the Fund.  Also, any
payments made by the Fund may not be used to finance the  distribution of shares
of any other  mutual fund  advised by IFG.  Payments  made by the Fund under the
Plan for  compensation of marketing  personnel,  as noted above, are based on an
allocation formula designed to ensure that all such payments are appropriate.

      Under the Plan,  the Fund's  reimbursement  to IFG is limited to an amount
computed  at a maximum  annual  rate of 0.25% of the Fund's  average net assets.
Payments  by the  Fund  under  the  Plan,  for any  month,  may  only be made to
reimburse expenditures incurred during the rolling 12-month period in which that
month falls, although this period is expanded to 24 months for expenses incurred
during the first 24 months of the Fund's operations. Therefore, any reimbursable
expenses  incurred by IFG in excess of the  limitations  described above are not
reimbursable  and will be borne by IFG. In  addition,  IFG 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.

FUND SERVICES

      Shareholder Accounts. IFG will maintain a share account that reflects your
current holdings.  Share certificates will be issued only upon specific request.
You will have greater flexibility to conduct  transactions if you do not request
certificates.

      Transaction  Confirmations.  You will receive  detailed  confirmations  of
individual  purchases,   exchanges,  and  redemptions.  If  you  choose  certain
recurring transaction plans (for instance,  EasiVest), your transactions will be
confirmed on your quarterly Investment Summary.

      Investment  Summaries.  Each  calendar  quarter,  shareholders  receive  a
written statement which  consolidates and summarizes  account activity and value
at the beginning and end of the period for each of their INVESCO funds.

      Reinvestment of  Distributions.  Dividends and capital gain  distributions
are  automatically  invested  in  additional  fund  shares  at  the  NAV  on the
ex-dividend  date,  unless  you choose to have  dividends  and/or  capital  gain
distributions  automatically reinvested in another INVESCO fund or paid by check
(minimum of $10.00).

    

<PAGE>
   

                                                                            
      Telephone  Transactions.  All  shareholders  may  exchange and redeem Fund
shares by telephone,  unless they expressly decline these privileges. By signing
the new account  Application,  a Telephone  Transaction  Authorization  Form, or
otherwise using these privileges,  the investor has agreed that, if the Fund has
followed reasonable  procedures,  such as recording  telephone  instructions and
sending written transaction  confirmations,  it will not be liable for following
telephoned  instructions  that it believes  to be  genuine.  As a result of this
policy,  the  investor  may bear the  risk of any  loss due to  unauthorized  or
fraudulent instructions.

HOW TO SELL SHARES

      The  following  chart shows  several  convenient  ways to redeem your Fund
shares. Shares of the Fund may be redeemed at any time at their current NAV next
determined after a request in proper form is received at the Fund's office.  The
NAV at the time of the redemption may be more or less than the price you paid to
purchase  your  shares,   depending   primarily   upon  the  Fund's   investment
performance.

      Please be specific from which fund you wish to redeem shares. Shareholders
have a separate account for each fund in which they invest.

================================================================================
Method                      Minimum Redemption          Please Remember
================================================================================
By Telephone                $250 (or, if less,          These telephone
Call us toll-free           full liquidation of         redemption
at 1-800-525-8085.          the account) for a          privileges may be
                            redemption check;           modified or
                            $1,000 for a wire           terminated in the
                            to bank of record.          future at the
                            The maximum amount          discretion of IFG.
                            which may be
                            redeemed by
                            telephone is
                            generally $25,000.
- --------------------------------------------------------------------------------
In Writing                  Any amount. The             If the shares to be
Mail your request           redemption request          redeemed are
to INVESCO Funds            must be signed by           represented by
Group, Inc., P.O.           all registered              stock certificates,
Box 173706                  shareholders(s).            the certificates
Denver, CO 80217-           Payment will be             must be sent to
3706. You may also          mailed to your              IFG.
send your request           address of record,
by overnight                or to a pre-
courier to 7800 E.          designated bank.
Union Ave., Denver,
CO 80237.

    

<PAGE>
                                                                               


- --------------------------------------------------------------------------------
By Exchange                 $1,000 to open a            See "Exchange
Between this and            new account; $50            Privilege," above.
another of the              for written
INVESCO funds. Call         requests to
1-800-525-8085 for          purchase additional
prospectuses of             shares for an
other INVESCO               existing account.
funds. You may also         (The exchange
establish an                minimum is $250 for
automatic monthly           exchanges requested
exchange service            by telephone.)
between two INVESCO
funds; call IFG for
further details and
the correct form.
- --------------------------------------------------------------------------------
Periodic Withdrawal         $100 per payment,           You must have at
Plan                        on a monthly or             least $10,000 total
You may call us to          quarterly basis.            invested with the
request the                 The redemption              INVESCO funds, with
appropriate form            check may be made           at least $5,000 of
and more                    payable to any              that total invested
information at 1-           party you                   in the fund from
800-525-8085.               designate.                  which withdrawals
                                                        will be made.
- --------------------------------------------------------------------------------
Payment To Third            Any amount.                 All registered
Party                                                   owners of the
Mail your request                                       account must sign
to INVESCO Funds                                        the request, with a
Group, Inc., P.O.                                       signature guarantee
Box 173706                                              from an eligible
Denver, CO 80217-                                       guarantor financial
3706.                                                   institution, such
                                                        as a commercial
                                                        bank or recognized
                                                        national or
                                                        regional securities
                                                        firm.
================================================================================

      While the Fund will  attempt to process  telephone  redemptions  promptly,
there may be times --  particularly  in  periods  of severe  economic  or market
disruption -- when you may experience delays in redeeming shares by phone.

      Payments of redemption proceeds will be mailed within seven days following
receipt  of the  redemption  request in proper  form.  However,  payment  may be
postponed under unusual  circumstances -- for instance, if normal trading is not
taking place on the New York Stock Exchange or during an emergency as defined by
the Securities and Exchange Commission. If your shares were purchased by a check
which has not yet cleared,  payment will be made promptly upon  clearance of the
purchase check (which may take up to 15 days).
    
<PAGE>
                                                                             



      If you participate in EasiVest,  the Fund's automatic  monthly  investment
program,  and redeem all of the shares in your  account,  we will  terminate any
further EasiVest purchases unless you instruct us otherwise.

      Because of the high relative costs of handling small accounts,  should the
value of any  shareholder's  account fall below $250 as a result of  shareholder
action,  the Fund reserves the right to involuntarily  redeem all shares in such
account,  in  which  case  the  account  would be  liquidated  and the  proceeds
forwarded to the shareholder.  Prior to any such redemption,  a shareholder will
be notified  and given 60 days to  increase  the value of the account to $250 or
more.

TAXES, CAPITAL GAIN DISTRIBUTIONS, AND DIVIDENDS

      Taxes. The Fund intends to distribute to shareholders substantially all of
its net investment income and net capital gains, 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.

      Exempt-interest  dividends  paid by the Fund are normally  free of federal
income tax to shareholders,  although they are subject to state and local income
taxes.  Unless  shareholders  are exempt from income taxes,  however,  they must
include all capital gain  distributions,  as well as any dividends earned on the
Fund's short-term taxable investments, in taxable income for federal, state, and
local income tax  purposes.  These  distributions  are taxable  whether they are
received in cash or  automatically  distributed in shares of the Fund or another
fund in the INVESCO group.

      For  federal  income  tax  purposes,  distributions  generated  by private
activity bonds are items of tax preference and not excludable  from gross income
of shareholders subject to the federal alternative minimum tax.

      Shareholders  may be subject to backup  withholding of 31% on capital gain
distributions  and  redemption  proceeds.  Unless  you  are  subject  to  backup
withholding  for other  reasons,  you can avoid backup  withholding on your Fund
account by ensuring that we have a correct, certified tax identification number.

      Dividends  and  Capital  Gain  Distributions.  The Fund  earns  daily  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 monthly basis, at the discretion of the Fund's
board of directors.

    

<PAGE>
   
                                                                           
      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 distribution regardless of how long the shares have
been  held.  The  Fund's  share  price  will  then  drop  by the  amount  of the
distribution  on the day the  distribution  is made. If a shareholder  purchases
shares  immediately prior to the distribution,  the shareholder will, in effect,
have "bought" the  distribution  by paying the full purchase price, a portion of
which is then returned in the form of a  distribution,  some or all of which may
be taxable.

      At  the  end of  each  year,  information  regarding  the  tax  status  of
dividends,  capital  gain  distributions,   and  distributions  subject  to  tax
preference is provided to  shareholders.  Net realized capital gains are divided
into  short-term and long-term  gains  depending upon how long the Fund held the
security which gave rise to the gains. The capital gains  distribution  consists
of long-term capital gains which are taxed at the capital gains rate. Short-term
capital gains are included with any ordinary,  taxable income from dividends and
interest as ordinary income and are paid to shareholders as taxable dividends.

      Shareholders also may realize capital gains or losses when they sell their
Fund shares at more or less than the price originally paid.

      We encourage  you to consult a tax adviser with respect to these  matters.
For further information see "Dividends, Capital Gain Distributions and Taxes" in
the Statement of Additional Information.

ADDITIONAL INFORMATION

     Voting Rights.  All shares of the Company have equal voting rights based on
one vote for each share owned.  Voting with respect to certain matters,  such as
ratification of independent  accountants and the election of directors,  will be
by all the funds of the Company voting together.  In other cases, such as voting
upon an investment advisory contract,  voting is on a fund-by-fund basis. To the
extent permitted by law, when not all funds are affected by a matter to be voted
upon,  only  shareholders  of the fund or funds  affected  by the matter will be
entitled to vote  thereon.  The Company is not  generally  required and does not
expect to hold regular annual meetings of shareholders.  However, when requested
to do so in writing by the holders of 10% or more of the  outstanding  shares of
the Company or as may be required by applicable law or the Company's Articles of
Incorporation,   the  board  of  directors   will  call   special   meetings  of
shareholders. Directors may be removed by action of the holders of a majority of
the outstanding shares of the Company.  The Company will assist  shareholders in
communicating  with other shareholders as required by the Investment Company Act
of 1940.
    
<PAGE>


                                                                            



                                    INVESCO  TAX-FREE  INTERMEDIATE  BOND FUND A
                                    no-load  mutual fund seeking as high a level
                                    of current  income exempt from federal taxes
                                    as is consistent  with the  preservation  of
                                    capital.

   
                                    PROSPECTUS
                                    October 31, 1995

To receive general  information and  prospectuses on any of the INVESCO 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 (PAL) call:

      1-800-424-8085

Or write to:

   
      INVESCO Funds Group, Inc., Distributor
      7800 E. Union Avenue
      Post Office Box 173706
      Denver, Colorado  80217-3706
    

If you're in Denver, please visit one of our convenient Investor Centers:

      Cherry Creek
      155-B Fillmore Street

      Denver Tech Center
      7800 East Union Avenue
      Lobby Level


<PAGE>


   
PROSPECTUS
October 31, 1995
    

                     INVESCO TAX-FREE LONG-TERM BOND FUND


                                                                           
   
      INVESCO  Tax-Free  Long-Term Bond Fund (the "Fund") is actively managed to
seek as high a level of current income exempt from federal  income taxes,  as is
consistent  with the  preservation  of capital  by  investing  in a  diversified
portfolio of long-term obligations, the interest on which is exempt from federal
income taxes. These "municipal bonds" may be issued by states, territories,  and
possessions of the United States and the District of Columbia,  as well as their
political  subdivisions,  agencies, and  instrumentalities.  The dollar weighted
average maturity of the obligations in the Fund's portfolio  normally will be at
least 10 years.

      This  prospectus  provides you with the basic  information you should know
before  investing  in the  Fund.  You  should  read it and  keep  it for  future
reference.  A Statement of Additional Information containing further information
about the Fund,  dated October 31, 1995,  has been filed with the Securities and
Exchange  Commission and is incorporated by reference into this  prospectus.  To
obtain a free copy, write to INVESCO Funds Group, Inc., P.O. Box 173706, Denver,
Colorado 80217-3706; or call 1-800-525-8085.
    
<PAGE>

TABLE OF CONTENTS


   
ESSENTIAL INFORMATION...................................................... 30
    

ANNUAL FUND EXPENSES....................................................... 31

FINANCIAL HIGHLIGHTS....................................................... 33

   
INVESTMENT OBJECTIVE AND STRATEGY.......................................... 34

INVESTMENT POLICIES AND RISKS.............................................. 34
    

THE FUND AND ITS MANAGEMENT................................................ 37

   
FUND PRICE AND PERFORMANCE................................................. 39

HOW TO BUY SHARES.......................................................... 40
    

FUND SERVICES.............................................................. 44

   
HOW TO SELL SHARES......................................................... 45

TAXES, CAPITAL GAIN DISTRIBUTIONS, AND DIVIDENDS........................... 47
    

ADDITIONAL INFORMATION..................................................... 48



   
     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>
   
ESSENTIAL INFORMATION

     Investment  Goal And Strategy.  INVESCO  Tax-Free  Long-Term Bond Fund is a
diversified  mutual  fund that seeks  current  income free from  federal  income
taxes.  The Fund invests  primarily in  municipal  obligations,  and the average
dollar-weighted  maturity for its entire  portfolio will normally be 10 years or
longer.  There is no  guarantee  that  the Fund  will  meet its  objective.  See
"Investment Objective And Strategy."

      Designed For: Investors primarily seeking current income free from federal
income  taxes.  While  not a  complete  investment  program,  the  Fund may be a
valuable  element  of your  investment  portfolio.  The  Fund is not a  suitable
investment  for  tax-sheltered  retirement  programs  such as the IRA,  SEP-IRA,
SARSEP, 401(k), Profit Sharing, Money Purchase Pension, or 403(b) plans.

     Time Horizon. The Fund is managed for daily income, paid monthly. Investors
should  not  consider  this Fund for the  portion  of their  savings  devoted to
capital growth.

     Risks.  The  Fund  uses  a  moderate  investment  strategy,  but  like  all
fixed-income  investments,  it is subject to both  credit and market  risk.  See
"Investment Policies and Risks."

     Organization  and  Management.  The Fund is a series  of  INVESCO  Tax-Free
Income Funds, Inc. (the "Company"), a diversified, managed, no-load mutual fund.
The Fund is owned by its  shareholders.  It employs  INVESCO  Funds Group,  Inc.
("IFG"),  founded  in  1932,  to  serve as  investment  adviser,  administrator,
distributor,  and transfer agent; and INVESCO Trust Company  ("INVESCO  Trust"),
founded in 1969, as  sub-adviser.  Together,  IFG and INVESCO  Trust  constitute
"Fund Management."

     The Fund's  investments  are  selected by INVESCO vice  president  James S.
Grabovac.  A Chartered  Financial Analyst,  Mr. Grabovac earned his MBA from the
University of Michigan and a BA from Lawrence University.  See "The Fund And Its
Management."

      IFG and INVESCO Trust are part of a global firm that managed approximately
$74 billion as of June 30, 1995.  The parent  company,  INVESCO PLC, is based in
London, with money managers located in Europe, North America, and the Far East.
    

<PAGE>

   
                                                                            
      This Fund Offers all of the  following  services  at no charge:  Telephone
      purchases Telephone exchanges Telephone redemptions Automatic reinvestment
      of distributions  Regular investment plans (EasiVest (the Fund's automatic
      monthly  investment  program),  Direct  Payroll  Purchase,  and  Automatic
      Monthly Exchange) Periodic withdrawal plans

      See "How To Buy Shares" and "How To Sell Shares."

     Minimum Initial Investment:  $1,000, which is waived for regular investment
plans, including EasiVest and Direct Payroll Purchase.

      Minimum Subsequent Investment: $50.

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 Rule 12b-1 distribution fee of
one quarter of one percent  each year.  (See "How To Buy Shares --  Distribution
Expenses.")

      Like any  company,  the Fund has  operating  expenses -- such as portfolio
management,   accounting,  shareholder  servicing,  maintenance  of  shareholder
accounts,  and other  expenses.  These expenses are paid from the Fund's assets.
Lower  expenses  therefore  benefit  investors  by  increasing  the Fund's total
return.

      We  calculate  annual  operating  expenses as a  percentage  of the Fund's
average  annual net assets.  To keep expenses  competitive,  the Fund's  manager
voluntarily  reimburses  the Fund for  amounts in excess of 0.90% of average net
assets.

Annual Fund Operating Expenses
(as a percentage of average net assets)
Management Fee                                                          0.55%
12b-1 Fees                                                              0.25%
Other Expenses (after absorbed expenses)1                               0.10%
Total Fund Operating Expenses (after absorbed expenses)1                0.90%

1Assumes that the current voluntary expense limitation had been in effect during
the entire  fiscal year ended June 30,  1995.  In the  absence of the  voluntary
expense  limitation,  the Fund's  "Other  Expenses"  and "Total  Fund  Operating
Expenses"  would have been 0.25% and  1.05%,  respectively,  based on the Fund's
actual expenses for that fiscal year.
    

<PAGE>

   
Example

      A shareholder would pay the following  expenses on a $1,000 investment for
the periods shown,  assuming a  hypothetical  5% annual return and redemption at
the end of each time period. (Of course, actual operating expenses are paid from
the Fund's  assets,  and are deducted  from the amount of income  available  for
distribution  to  shareholders;  they are not charged  directly  to  shareholder
accounts.)


                  1 Year      3 Years     5 Years     10 Years
                  $9          $29         $50         $111

      The  purpose of this table is to assist you in  understanding  the various
costs and expenses that you will bear directly or indirectly. The example should
not be considered a  representation  of past or future  performance or expenses,
and actual annual  returns and expenses may be greater or less than those shown.
For more information on the Fund's  expenses,  see "The Fund and Its Management"
and "How to Buy Shares -- Distribution Expenses."

      Since the Fund pays a distribution fee,  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 independent  accountant's report 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 IFG at the address or telephone number on the cover
of this prospectus.  The Annual Report also contains more information  about the
Fund's performance.
<TABLE>
<CAPTION>


                                                                        Year Ended June 30
<S>                     <C>       <C>         <C>      <C>        <C>        <C>       <C>       <C>        <C>       <C>
                    ---------------------------------------------------------------------------------------------------------
                          1995      1994       1993      1992       1991      1990       1989      1988       1987      1986

Tax-Free Long-Term Bond Fund

PER SHARE DATA
Net Asset Value -
   Beginning of
   Period               $15.29    $16.35     $15.69    $15.05     $14.90    $15.15     $13.82    $13.86     $15.20    $14.32
                    ---------------------------------------------------------------------------------------------------------

INCOME FROM
   INVESTMENT OPERATIONS

   Net Investment
   Income                 0.80      0.83       0.87      0.92       0.96      0.99       1.01      1.00       1.09      1.21
Net Gains or (Losses)
   on Securities
   (Both Realized
   and Unrealized)        0.09    (1.00)       1.04      0.95       0.27    (0.25)       1.33    (0.04)     (0.28)      1.69
                    ---------------------------------------------------------------------------------------------------------
Total From Investment
   Operations             0.89    (0.17)       1.91      1.87       1.23      0.74       2.34      0.96       0.81      2.90
                    ---------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS
Dividends from Net
   Investment Income      0.80      0.83       0.87      0.92       0.96      0.99       1.01      1.00       1.09      1.21
Distributions from
   Capital Gains          0.31      0.06       0.38      0.31       0.12      0.00       0.00      0.00       1.06       .81
                    ---------------------------------------------------------------------------------------------------------
Total Distributions       1.11      0.89       1.25      1.23       1.08      0.99       1.01      1.00       2.15      2.02
                    ---------------------------------------------------------------------------------------------------------
Net Asset Value -
   End of Period        $15.07    $15.29     $16.35    $15.69     $15.05    $14.90     $15.15    $13.82     $13.86    $15.20
                    =========================================================================================================

TOTAL RETURN             6.16%   (1.16%)     12.57%    12.79%      8.55%     5.10%     17.64%     7.29%      4.99%    21.00%

RATIOS
Net Assets -
   End of Period
   ($000 Omitted)     $254,584  $282,407   $332,239  $272,382   $208,100  $179,107   $143,678  $109,132   $117,875  $108,499
Ratio of Expenses
   to Average
   Net Assets#           0.92%     1.00%      1.03%     1.02%      0.93%     0.75%      0.74%     0.77%      0.70%     0.68%
Ratio of Net
   Investment Income
   to Average
   Net Assets#           5.31%     5.14%      5.43%     5.90%      6.39%     6.67%      7.06%     7.33%      7.04%     7.86%
Portfolio
   Turnover Rate           99%       28%        30%       28%        25%       27%        27%       41%        98%       92%


                                                                           
<FN>

#Various  expenses  of the Fund were  voluntarily  absorbed  by IFG for the year
ended June 30, 1995. If such expenses had not been voluntaily absorbed, ratio of
expenses  to  average  net  assets  would  have  been  1.05%,  and  ratio of net
investment income to average net assets would have been 5.18%.
</FN>
</TABLE>
    

<PAGE>
   

INVESTMENT OBJECTIVE AND STRATEGY

      The Fund  seeks as high a level of  current  income  exempt  from  federal
income taxes as is consistent with the preservation of capital.  This investment
objective  is  fundamental  and cannot be changed  without  the  approval of the
Fund's  shareholders.  We focus on long-term  municipal bonds, which may include
any combination of general obligation, revenue, or industrial development bonds.
As a matter of fundamental  investment policy, at least 80% of the Fund's assets
normally will consist of municipal bonds rated investment quality and short-term
municipal  notes  rated  within the two  highest  ratings  by  Standard & Poor's
Ratings Group (S&P) or Moody's Investors Service, Inc. (Moody's). Under ordinary
circumstances,  no more than 20% of the Fund's  assets may consist of  municipal
bonds rated below investment grade,  temporary  taxable  investments (the income
from  which may be  subject  to  federal  income  tax),  and  cash.  There is no
assurance that the Fund's investment objective will be met.

      The  dollar-weighted  average  maturity of the  obligations  in the Fund's
portfolio  normally will be at least 10 years,  and will vary as Fund Management
responds to changes in interest  rates.  There is no  limitation  on the maximum
maturities of investments that may be purchased by the Fund.

INVESTMENT POLICIES AND RISKS

     Investors should expect to see their price per share vary with moves in the
municipal bond market,  economic conditions and other factors.  The Fund invests
in many different issues over a wide geographical  range;  this  diversification
reduces the Fund's overall  exposure to investment and market risks,  but cannot
eliminate these risks.

      Municipal  Securities.  When we assess  an  issuer's  ability  to meet its
interest  rate  obligations  and repay its debt when due,  we are  referring  to
"credit risk."  Municipal  obligations are rated based on their estimated credit
risk by  independent  services  such as S&P or Moody's.  "Market risk" refers to
sensitivity to changes in interest rates:  For instance,  when interest rates go
up, the market  value of a previously  issued bond  generally  declines;  on the
other hand,  when  interest  rates go down,  bonds  generally  see their  prices
increase.

     The lower a bond's  quality,  the more it is  subject  to  credit  risk and
market  risk and the more  speculative  it  becomes;  this is also  true of most
unrated municipal securities. Therefore, the Fund does not invest in obligations
it believes to be highly speculative.  In practice, this means we primarily hold
municipal  bonds rated AAA, AA, A or BBB by S&P or Aaa, Aa, A or Baa by Moody's.
Overall,  these municipal  securities  enjoy strong to adequate  capacity to pay
principal  and  interest.  No more than 10% of assets may be  invested in issues
rated below investment grade quality (commonly called "junk bonds," and rated BB
or lower by S&P or Ba or lower by  Moody's  or, if  unrated,  are judged by Fund
Management  to be of  equivalent  quality);  these  include  issues which are of
poorer quality and may have some speculative  characteristics,  according to the
ratings services. Never, under any circumstances,  does the Fund invest in bonds
which are rated below B- or B by S&P and Moody's,  respectively.  Bonds rated B-
or B may be in default or there may be present  elements of danger with  respect
to payment of principal or interest. While Fund Management continuously monitors
all of the municipal bonds in the Fund's  portfolio for the issuer's  ability to
make required principal and interest payments and other quality factors,  it may
retain a bond whose rating is changed to one below the minimum  rating  required
for purchase of the  security.  For a detailed  description  of  municipal  bond
ratings,  see the  Statement of Additional  Information  and Appendix A therein.
Futures  and  Options.  A  futures  contract  is an  agreement  to buy or sell a
specific amount of a financial  instrument or commodity at a particular price on
a particular  date.  The Fund will use futures  contracts  only to hedge against
price changes in the value of its current or intended investments in securities.
In the event that an anticipated  decrease in the value of portfolio  securities
occurs as a result of a general decrease in prices,  the adverse effects of such
changes  may be  offset,  at  least in  part,  by  gains on the sale of  futures
contracts.  Conversely,  the  increased  cost  of  portfolio  securities  to  be
acquired,  caused by a general  increase in prices,  may be offset,  at least in
part,  by gains  on  futures  contracts  purchased  by the  Fund.  
     
<PAGE>
   
     The board of directors has adopted a  non-fundamental  restriction that the
aggregate market value of the futures contracts the Fund holds cannot exceed 30%
of the  market  value  of its  total  assets.  Brokerage  fees are paid to trade
futures contracts, and the Fund is required to maintain margin deposits. Put and
call  options on futures  contracts or  securities  may be traded by the Fund in
order to protect  against  declines  in the values of  portfolio  securities  or
against increases in the cost of securities to be acquired. Put and call options
are  contracts  which  grant the right to sell at a  specified  price a specific
security or futures  contract by a certain date. The put option buyer gains this
right in return for a premium.  Purchases  of options on futures  contracts  may
present less dollar risk in hedging the Fund's  portfolio  than the purchase and
sale of the underlying futures contracts, since the potential loss is limited to
the amount of the premium plus related  transaction  costs. The premium paid for
such a put or call option plus any transaction costs will reduce the benefit, if
any,  realized by the Fund upon  exercise  or  liquidation  of the option,  and,
unless the price of the underlying  futures contract changes  sufficiently,  the
option may expire without value to the Fund. 

      Although the Fund will enter into futures contracts and options on futures
contracts and securities  solely for hedging or other  nonspeculative  purposes,
their use does involve certain risks. For example, a lack of correlation between
the value of an  instrument  underlying  an option or futures  contract  and the
assets being hedged,  or unexpected  adverse price  movements,  could render the
Fund's hedging strategy  unsuccessful  and could result in losses.  In addition,
thee can be no  assurance  that a liquid  secondary  market  will  exist for any
contract  purchased or sold, and the Fund may be required to maintain a position
until  exercise or  expiration,  which could result in losses.  Transactions  in
futures  contracts and options are subject to other risks as well, which are set
forth in greater detail in the Statement of Additional  Information and Appendix
B therein.

      Zero  Coupon  Securities.  These  securities  make  no  periodic  interest
payments.  Instead, they are sold at a discount from their face value. The buyer
of the security  receives the rate of return by the gradual  appreciation in the
price of the  security,  which is  redeemed  at face  value at  maturity.  Being
extremely  responsive  to changes in interest  rates,  the market  price of zero
coupon  securities  may be more  volatile  than  other  bonds.  The  Fund may be
required to distribute  income  recognized  on these bonds,  even though no cash
interest payments are received,  which could reduce the amount of cash available
for investment by the Fund.

     Delayed  Delivery or When-Issued  Purchases.  Municipal  obligations may at
times be  purchased  or sold by the Fund  with  settlement  taking  place in the
future.  The payment  obligation  and the interest rate that will be received on
the  securities  generally  are  fixed  at the time  the  Fund  enters  into the
commitment.  Between the date of purchase and the settlement  date, the value of
the securities is subject to market fluctuations,  and no interest is payable to
the Fund prior to the settlement date.
    
<PAGE>


   

                                                                            
      Securities Lending. The Fund may seek to earn additional income by lending
securities  to  qualified   brokers,   dealers,   banks,   or  other   financial
institutions,  on a fully collateralized  basis. For further information on this
policy,  see  "Investment   Policies  and  Restrictions"  in  the  Statement  of
Additional Information.

      Repurchase  Agreements.  The Fund may invest money, for as short a time as
overnight,  using repurchase agreements ("repos").  With a repo, the Fund buys a
debt instrument,  agreeing  simultaneously to sell it back to the prior owner at
an  agreed-upon  price.  The Fund could incur costs or delays in seeking to sell
the  instrument if the prior owner  defaults on its  repurchase  obligation.  To
reduce  that  risk,  the  securities  which are the  subject  of the  repurchase
agreement  will be  maintained  with the Fund's  custodian in an amount at least
equal to the repurchase price under the agreement  (including accrued interest).
These  agreements are entered into only with member banks of the Federal Reserve
System,  registered  broker-dealers,  and registered U.S. government  securities
dealers that are deemed  creditworthy under standards set by the Fund's board of
directors.

      When we believe market or economic  conditions are  unfavorable,  the Fund
may assume a defensive position by temporarily investing a portion of its assets
in short-term  taxable  investments or cash, seeking to protect its assets until
conditions  stabilize.  Short- term taxable  investments,  if any, normally will
consist   of   obligations   of   the   U.S.   government,   its   agencies   or
instrumentalities;   obligations  of  banks  regulated  by  the  United  States,
including  negotiable  certificates  of deposit and  banker's  acceptances;  and
commercial paper rated at least P-2 by Moody's or A-2 by S&P.  Dividends paid by
the Fund  attributable  to  income  from such  investments  will be  taxable  to
investors. See "Taxes, Capital Gain Distributions and Dividends."

      For a further  discussion  of risks  associated  with an investment in the
Fund, see "Investment  Policies and Restrictions" and "Investment  Practices" in
the Statement of Additional Information.

     Investment Restrictions.  Certain restrictions,  which are set forth in the
Statement of Additional Information,  may not be altered without the approval of
the Fund's  shareholders.  For example, the Fund limits to 5% the portion of its
total  assets which may be invested in a single  issuer,  and to 25% the portion
that  may  be  invested  in any  one  industry.  Municipal  securities  are  not
considered to be an "industry" for this purpose, although industrial development
bonds are grouped into industries depending upon the businesses of the companies
that have the ultimate  responsibility  for payment.  In addition,  except where
indicated to the contrary,  the investment  objective and policies  described in
this  prospectus are  fundamental  and may not be changed  without a vote of the
Fund's shareholders.
    
<PAGE>
   

                                                                        
THE FUND AND ITS MANAGEMENT

      The Company is a no-load mutual fund,  registered  with the Securities and
Exchange Commission as a diversified,  open-end,  management investment company.
It was  incorporated  on April  22,  1981,  under the laws of  Colorado  and was
reorganized as a Maryland corporation on November 1, 1993.

      The  Company's   board  of  directors  has   responsibility   for  overall
supervision  of the Fund,  and reviews the services  provided by the adviser and
sub-adviser.  Under an agreement  with the Company,  INVESCO  Funds Group,  Inc.
("IFG"),  7800 E. Union Avenue,  Denver,  Colorado  80237,  serves as the Fund's
investment  manager;  it is primarily  responsible  for  providing the Fund with
various administrative services.  IFG's wholly-owned subsidiary,  INVESCO Trust,
is the Fund's  sub-adviser and is primarily  responsible for managing the Fund's
investments. Together, IFG and INVESCO Trust constitute "Fund Management."

      James  S.  Grabovac,  portfolio  manager  for the  Fund  since  1995,  has
responsibility  for the day-to-day  management of the Fund's  holdings.  He also
manages INVESCO Tax-Free  Intermediate Bond Fund. A Chartered Financial Analyst,
Mr.  Grabovoc  is a vice  president  of INVESCO  Trust;  previously,  his career
included  these  highlights:  He was a principal and fund manager (1991 to 1995)
and  portfolio  manager  (1989 to 1991) with Stein Roe & Farnham Inc., a futures
and options trader with Continental  Illinois  National Bank (1987), a corporate
bond  trader  with  The  Chicago  Corporation  from  1985 to 1987,  and  Midwest
municipal underwriting manager with Continental Illinois National Bank from 1982
to 1985. He holds an MBA from the  University of Michigan and a BA from Lawrence
University.

      Fund  Management  permits  investment and other  personnel to purchase and
sell securities for their own accounts, subject to a compliance policy governing
personal investing.  This policy requires Fund Management's personnel to conduct
their personal  investment  activities in a manner that Fund Management believes
is not detrimental to the Fund or Fund Management's other advisory clients.  See
the Statement of Additional Information for more detailed information.

     The Fund pays IFG a monthly management fee which is based upon a percentage
of the Fund's  average net assets  determined  daily;  in turn, IFG pays INVESCO
Trust a  sub-advisory  fee out of its  management  fee.  The  management  fee is
computed  at the annual  rate of 0.55% on the first  $300  million of the Fund's
average net  assets;  0.45% on the next $200  million of the Fund's  average net
assets;  and 0.35% on the Fund's  average net assets over $500 million.  For the
fiscal year ended June 30,  1995,  investment  management  fees paid by the Fund
amounted to 0.55% of its average net assets. Out of this fee, IFG paid an amount
equal  to  0.24%  of the  Fund's  average  net  assets  to  INVESCO  Trust  as a
sub-advisory fee. No fee is paid by the Fund to INVESCO Trust. 
     
<PAGE> 
   
     Under a Transfer Agency Agreement,  IFG acts as registrar,  transfer agent,
and  dividend  disbursing  agent  for the Fund.  The Fund pays an annual  fee of
$20.00  per  shareholder  account  or  omnibus  account  participant  for  these
services. Registered broker-dealers, third party administrators of tax-qualified
retirement  plans and other entities,  including  affiliates of IFG, may provide
equivalent  services to the Fund. In these cases, IFG may pay, out of the fee it
receives from the Fund, an annual  sub-transfer  agency or record-keeping fee to
the third party.

      In  addition,  under an  Administrative  Services  Agreement,  IFG handles
additional administrative,  record-keeping, and internal sub-accounting services
for the Fund.  For the fiscal year ended June 30, 1995,  the Fund paid IFG a fee
for these services equal to 0.02% (prior to the voluntary  absorption of certain
fund expenses by IFG) of the Fund's average net assets.

      The Fund's  expenses,  which are accrued  daily,  are deducted  from total
income before dividends are paid. Total expenses of the Fund for the fiscal year
ended  June 30,  1995,  including  investment  management  fees  (but  excluding
brokerage commissions,  which are a cost of acquiring  securities),  amounted to
0.92% of the Fund's  average net assets.  Certain  Fund  expenses  are  absorbed
voluntarily by IFG in order to ensure that the Fund's total  operating  expenses
do not exceed  0.90% of the Fund's  average net  assets.  In the absence of this
voluntary  expense  limitation,  the Fund's total operating  expenses would have
been 1.05% of its 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  to Buy  Shares  --
Distribution  Expenses,"  the Fund may market its  shares  through  intermediary
brokers or dealers  that have entered  into Dealer  Agreements  with IFG, as the
Fund's  Distributor.  The Fund may place orders for portfolio  transactions with
qualified  broker/dealers  which recommend the Fund, or sell shares of the Fund,
to clients,  or act as agent in the purchase of Fund shares for clients, if Fund
Management  believes  that the quality of the execution of the  transaction  and
level of commission  are  comparable  to those  available  from other  qualified
brokerage firms. For further information, see "Investment Practices -- Placement
of Portfolio Brokerage" in the Statement of Additional Information.
                                                                         
      The parent  company for IFG and INVESCO  Trust is INVESCO  PLC, a publicly
traded holding company whose subsidiaries provide investment services around the
world.  IFG was established in 1932 and, as of June 30, 1995,  managed 14 mutual
funds,   consisting  of  38  separate   portfolios,   with  combined  assets  of
approximately  $10.2  billion on behalf of over  790,000  shareholders.  INVESCO
Trust  (founded  in 1969)  served as adviser  or  sub-adviser  to 41  investment
portfolios as of June 30, 1995,  including 27  portfolios in the INVESCO  group.
These portfolios had aggregate  assets of approximately  $9.5 billion as of June
30, 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.
    
<PAGE>

FUND PRICE AND PERFORMANCE
   
      Determining  Price.  The  value of your  investment  in the Fund will vary
daily.  The price per share is also  known as the Net  Asset  Value  (NAV).  IFG
prices the Fund every day that the New York Stock  Exchange  is open,  as of the
close of regular trading (normally, 4:00 p.m., New York time). NAV is calculated
by  adding  together  the  current  market  value of all of the  Fund's  assets,
including  accrued  interest  and  dividends;   then  subtracting   liabilities,
including accrued expenses; and finally dividing that dollar amount by the total
number of shares outstanding.

      Performance Data. To keep shareholders and potential  investors  informed,
we will occasionally  advertise the Fund's total return and yield.  Total return
figures  show the average  annual rate of return on a $1,000  investment  in the
Fund, assuming  reinvestment of all dividends and capital gain distributions for
one-, five- and ten-year periods.  Cumulative total return shows the actual rate
of return on an investment;  average annual total return  represents the average
annual  percentage  change in the value of an  investment.  Both  cumulative and
average  annual total  returns tend to "smooth out"  fluctuations  in the Fund's
investment  results,  not showing the interim variations in performance over the
periods cited.

      The yield of the Fund refers to the income  generated by an  investment in
the Fund over a 30-day or one month period,  and is computed by dividing the net
investment  income per share earned during the period by the net asset value per
share at the end of the  period,  then  adjusting  the  result  to  provide  for
semi-annual  compounding.  We may also  discuss the Fund's  "taxable  equivalent
yield" -- the yield a taxable  investment  would  have to  generate  in order to
provide the same income as the Fund,  assuming  certain federal tax rates.  This
yield  quotation  allows  investors to compare taxable and tax-exempt bond funds
more fairly.

     More  information  about the Fund's recent and  historical  performance  is
contained in the Fund's Annual Report to  shareholders.  You can get a free copy
by calling or writing to IFG using the telephone  number or address on the cover
of this prospectus.

      When  we  quote  mutual  fund  rankings  published  by  Lipper  Analytical
Services,  Inc.,  we may compare  the fund to others in its  category of General
Municipal Bond Funds, as well as the broad-based  Lipper general fund groupings.
These  rankings  allow you to compare the Fund to its peers.  Other  independent
financial media also produce performance- or service-related comparisons,  which
you may  see in our  promotional  materials.  For  more  information  see  "Fund
Performance" in the Statement of Additional Information.

      Performance figures are based on historical investment results and are not
intended to suggest future performance.
    
<PAGE>
   
HOW TO BUY SHARES

      The following  chart shows several  convenient ways to invest in the Fund.
Your new Fund shares will be priced at the NAV next determined  after your order
is received in proper form.  There is no charge to invest,  exchange,  or redeem
shares when you make transactions  directly through IFG. However,  if you invest
in the Fund through a  securities  broker,  you may be charged a  commission  or
transaction fee. For all new accounts, please send a completed application form.
Please specify which Fund you wish to purchase.

      Fund  Management  reserves  the  right  to  reduce  or waive  the  minimum
investment requirements in its sole discretion,  where it determines this action
is in the best  interests of the Fund.  Further,  Fund  Management  reserves the
right in its sole discretion to reject any order for the purchase of Fund shares
(including  purchases by exchange)  when, in its judgment,  such rejection is in
the Fund's best interests.

================================================================================
Method                      Investment Minimum          Please Remember
- --------------------------------------------------------------------------------
By Check                    $1,000 for regular          If your check does
Mail to:                    account;                    not clear, you will
INVESCO Funds               $50 minimum for             be responsible for
Group, Inc.                 each subsequent             any related loss
P.O. Box 173706             investment.                 the Fund or IFG
Denver, CO 80217-                                       incurs. If you are
3706.                                                   already a
Or you may send                                         shareholder in the
your check by                                           INVESCO funds, the
overnight courier                                       Fund may seek
to: 7800 E. Union                                       reimbursement from
Ave.,                                                   your existing
Denver, CO 80237.                                       account(s) for any
                                                        loss incurred.
- --------------------------------------------------------------------------------
By Telephone or             $1,000.                     Payment must be
Wire                                                    received within 3
Call 1-800-525-8085                                     business days, or
to request your                                         the transaction may
purchase. Then send                                     be cancelled. If a
your check by                                           telephone purchase
overnight courier                                       is cancelled due to
to our street                                           nonpayment, you
address:                                                will be responsible
7800 E. Union Ave.,                                     for any related
Denver, CO 80237.                                       loss the Fund or
Or you may transmit                                     IFG incurs. If you
your payment by                                         are already a
bank wire (call IFG                                     shareholder in the
for instructions).                                      INVESCO funds, the
                                                        Fund       may      seek
                                                        reimbursement  from your
                                                        existing  account(s) for
                                                        any loss incurred.
    
<PAGE>
                                                          
- --------------------------------------------------------------------------------
With EasiVest or            $50 per month for           Like all regular
Direct Payroll              EasiVest; $50 per           investment plans,
Purchase                    pay period for              neither EasiVest
You may enroll on           Direct Payroll              nor Direct Payroll
the fund                    Purchase. You may           Purchase ensures a
application, or             start or stop your          profit or protects
call us for the             regular investment          against loss in a
correct form and            plan at any time,           falling market.
more details.               with two weeks'             Because you'll
Investing the same          notice to IFG.              invest continually,
amount on a monthly                                     regardless of
basis allows you to                                     varying price
buy more shares                                         levels, consider
when prices are low                                     your financial
and fewer shares                                        ability to keep
when prices are                                         buying through low
high. This "dollar-                                     price levels. And
cost averaging" may                                     remember that you
help offset market                                      will lose money if
fluctuations. Over                                      you redeem your
a period of time,                                       shares when the
your average cost                                       market value of all
per share may be                                        your shares is less
less than the                                           than their cost.
actual average
price per share.
- -------------------------------------------------------------------------------
By PAL                      $1,000.                     Be sure to write
Your "Personal                                          down the
Account Line" is                                        confirmation number
available for                                           provided by PAL.
subsequent                                              Payment must be
purchases and                                           received within 3
exchanges 24-hours                                      business days, or
a day. Simply call                                      the transaction may
1-800-424-8085.                                         be cancelled. If a
                                                        telephone   purchase  is
                                                        cancelled     due     to
                                                        nonpayment,  you will be
                                                        responsible    for   any
                                                        related loss the Fund or
                                                        IFG  incurs.  If you are
                                                        already a shareholder in
                                                        the INVESCO  funds,  the
                                                        Fund       may      seek
                                                        reimbursement  from your
                                                        existing  account(s) for
                                                        any loss incurred.
    
<PAGE>
   
- --------------------------------------------------------------------------------
By Exchange                 $1,000 to open a            See "Exchange
Between this and            new account; $50            Privilege" below.
another of the              for written
INVESCO funds. Call         requests to
1-800-525-8085 for          purchase additional
prospectuses of             shares for an
other INVESCO funds.        existing account.
You may also establish      (The exchange minimum
an Automatic Monthly        is $250 for purchases
Exchage service between     requested by telephone).
two INVESCO funds; call
IFG for further details
and the correct form.


      Your order to purchase  Fund shares will not begin  earning  dividends  or
other  distributions  until your payment can be converted into available federal
funds under regular  banking  procedures  or, if you are acquiring  shares in an
exchange  from  another  INVESCO  fund,  the Fund  receives  the proceeds of the
exchange.  Checks  normally are  converted  into federal  funds  (moneys held on
deposit  within the Federal  Reserve  System)  within two or three business days
after we receive  them,  although  this period may be longer for checks drawn on
banks that are not members of the Federal Reserve System.
                                                                        
      Exchange Privilege. You may exchange your shares in this Fund for those in
another  INVESCO fund, on the basis of their  respective net asset values at the
time of the  exchange.  Before  making  any  exchange,  be sure  to  review  the
prospectuses of the funds involved and consider their differences.

      Please note these policies regarding exchanges of fund shares:

      1)  The fund accounts must be identically registered.

      2)  You may make four exchanges out of each fund during each
calendar year.

      3) An exchange is the  redemption  of shares from one fund followed by the
purchase  of shares in  another.  Therefore,  any gain or loss  realized  on the
exchange is  recognizable  for federal income tax purposes  (unless,  of course,
your account is tax-deferred).

      4) The Fund  reserves  the right to reject  any  exchange  request,  or to
modify or terminate exchange  privileges,  in the best interests of the Fund and
its shareholders.  Notice of all such modifications or termination will be given
at least 60 days prior to the effective date of the change in privilege,  except
for unusual  instances  (such as when  redemptions  of the exchanged  shares are
suspended  under  Section 22(e) of the  Investment  Company Act of 1940, or when
sales of the fund into which you are exchanging are temporarily stopped).
    
<PAGE>
   
      Distribution  Expenses.  The Fund is authorized under a Plan and Agreement
of Distribution  pursuant to Rule 12b-1 under the Investment Company Act of 1940
(the  "Plan") to use its assets to finance  certain  activities  relating to the
distribution of shares. These expenditures may include  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  IFG-affiliated
companies, to obtain various distribution-related and/or administrative services
for the Fund.  Such  services may include,  among other things,  processing  new
shareholder  account  applications,  preparing  and  transmitting  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.

      In  addition,   other  reimbursable   expenditures   include  advertising,
preparation and distribution of sales  literature,  printing and distribution of
prospectuses  to prospective  investors,  public  relations  efforts,  marketing
programs and such other  services and  promotional  activities  agreed upon from
time to  time by the  Fund  and its  board  of  directors.  These  services  and
activities  may be conducted by the staff of IFG or its  affiliates  or by third
parties.                                                                        

      IFG 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 IFG personnel  whose primary  responsibilities
involve  marketing  shares of the INVESCO funds,  including the Fund.  Also, any
payments made by the Fund may not be used to finance the  distribution of shares
of any other  mutual fund  advised by IFG.  Payments  made by the Fund under the
Plan for  compensation of marketing  personnel,  as noted above, are based on an
allocation formula designed to ensure that all such payments are appropriate.

      Under the Plan,  the Fund's  reimbursement  to IFG is limited to an amount
computed  at a maximum  annual  rate of 0.25% of the Fund's  average net assets.
Payments  by the  Fund  under  the  Plan,  for any  month,  may  only be made to
reimburse expenditures incurred during the rolling 12-month period in which that
month falls.  Therefore,  any reimbursable expenses incurred by IFG in excess of
the limitation described above are not reimbursable and will be borne by IFG. In
addition,  IFG 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.
    
<PAGE>
   
FUND SERVICES

      Shareholder Accounts. IFG will maintain a share account that reflects your
current holdings.  Share certificates will be issued only upon specific request.
You will have greater flexibility to conduct  transactions if you do not request
certificates.

      Transaction  Confirmations.  You will receive  detailed  confirmations  of
individual  purchases,   exchanges,  and  redemptions.  If  you  choose  certain
recurring transaction plans (for instance,  EasiVest), your transactions will be
confirmed on your quarterly Investment Summary.

      Investment  Summaries.  Each  calendar  quarter,  shareholders  receive  a
written statement which  consolidates and summarizes  account activity and value
at the beginning and end of the period for each of their INVESCO funds.

      Reinvestment of  Distributions.  Dividends and capital gain  distributions
are  automatically  invested  in  additional  fund  shares  at  the  NAV  on the
ex-dividend  date,  unless  you choose to have  dividends  and/or  capital  gain
distributions  automatically reinvested in another INVESCO fund or paid by check
(minimum of $10.00).

     Telephone  Transactions.  All  shareholders  may  exchange  and redeem Fund
shares by telephone,  unless they expressly decline these privileges. By signing
the new account  Application,  a Telephone  Transaction  Authorization  Form, or
otherwise using these privileges,  the investor has agreed that, if the Fund has
followed reasonable  procedures,  such as recording  telephone  instructions and
sending written transaction  confirmations,  it will not be liable for following
telephoned  instructions  that it believes  to be  genuine.  As a result of this
policy,  the  investor  may bear the  risk of any  loss due to  unauthorized  or
fraudulent instructions.
    
<PAGE>
   
HOW TO SELL SHARES

      The  following  chart shows  several  convenient  ways to redeem your Fund
shares. Shares of the Fund may be redeemed at any time at their current NAV next
determined after a request in proper form is received at the Fund's office.  The
NAV at the time of the redemption may be more or less than the price you paid to
purchase  your  shares,   depending   primarily   upon  the  Fund's   investment
performance.

      Please be specific from which fund you wish to redeem shares. Shareholders
have a separate account for each fund in which they invest.

================================================================================
Method                      Minimum Redemption          Please Remember
================================================================================
By Telephone                $250 (or, if less,          These telephone
Call us toll-free           full liquidation of         redemption
at 1-800-525-8085.          the account) for a          privileges may be
                            redemption check;           modified or
                            $1,000 for a wire           terminated in the
                            to bank of record.          future at the
                            The maximum amount          discretion of IFG.
                            which may be
                            redeemed by
                            telephoneis
                            generally $25,000.
- --------------------------------------------------------------------------------
In Writing                  Any amount. The             If the shares to be
Mail your request           redemption request          redeemed are
to INVESCO Funds            must be signed by           represented by
Group, Inc., P.O.           all registered              stock certificates,
Box 173706                  shareholders(s).            the certificates
Denver, CO 80217-           Payment will be             must be sent to
3706. You may also          mailed to your              IFG.
send your request           address of record,
by overnight                or to a pre-
courier to 7800 E.          designated bank.
Union Ave., Denver,
CO 80237.
- --------------------------------------------------------------------------------
By Exchange                 $1,000 to open a            See "Exchange
Between this and            new account; $50            Privilege," above.
another of the              for written
INVESCO funds. Call         requests to
1-800-525-8085 for          purchase additional
prospectuses of             shares for an
other INVESCO               existing account.
funds. You may also         (The exchange
establish an                minimum is $250 for
automatic monthly           exchanges requested
exchange service            by telephone.)
between two INVESCO
funds; call IFG for
further details and
the correct form.
    
<PAGE>
   
- --------------------------------------------------------------------------------
Periodic Withdrawal         $100 per payment,           You must have at
Plan                        on a monthly or             least $10,000 total
You may call us to          quarterly basis.            invested with the
request the                 The redemption              INVESCO funds, with
appropriate form            check may be made           at least $5,000 of
and more                    payable to any              that total invested
information at 1-           party you                   in the fund from
800-525-8085.               designate.                  which withdrawals
                                                        will be made.
- --------------------------------------------------------------------------------
Payment To Third            Any amount.                 All registered
Party                                                   owners of the
Mail your request                                       account must sign
to INVESCO Funds                                        the request, with a
Group, Inc., P.O.                                       signature guarantee
Box 173706                                              from an eligible
Denver, CO 80217-                                       guarantor financial
3706.                                                   institution, such
                                                        as a commercial
                                                        bank or recognized
                                                        national or
                                                        regional securities
                                                        firm.
================================================================================

      While the Fund will  attempt to process  telephone  redemptions  promptly,
there may be times --  particularly  in  periods  of severe  economic  or market
disruption -- when you may experience delays in redeeming shares by phone.

     Payments of redemption  proceeds will be mailed within seven days following
receipt  of the  redemption  request in proper  form.  However,  payment  may be
postponed under unusual  circumstances -- for instance, if normal trading is not
taking place on the New York Stock Exchange or during an emergency as defined by
the Securities and Exchange Commission. If your shares were purchased by a check
which has not yet cleared,  payment will be made promptly upon  clearance of the
purchase check (which may take up to 15 days).

      If you participate in EasiVest,  the Fund's automatic  monthly  investment
program,  and redeem all of the shares in your  account,  we will  terminate any
further EasiVest purchases unless you instruct us otherwise.

      Because of the high relative costs of handling small accounts,  should the
value of any  shareholder's  account fall below $250 as a result of  shareholder
action,  the Fund reserves the right to involuntarily  redeem all shares in such
account,  in  which  case  the  account  would be  liquidated  and the  proceeds
forwarded to the shareholder.  Prior to any such redemption,  a shareholder will
be notified  and given 60 days to  increase  the value of the account to $250 or
more.
    
<PAGE>
   
TAXES, CAPITAL GAIN DISTRIBUTIONS, AND DIVIDENDS

      Taxes. The Fund intends to distribute to shareholders substantially all of
its net investment income and net capital gains, 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.

      Exempt-interest  dividends  paid by the Fund are normally  free of federal
income tax to shareholders,  although they are subject to state and local income
taxes.  Unless  shareholders  are exempt from income taxes,  however,  they must
include all capital gain  distributions,  as well as any dividends earned on the
Fund's short-term taxable investments, in taxable income for federal, state, and
local income tax  purposes.  These  distributions  are taxable  whether they are
received in cash or  automatically  distributed in shares of the Fund or another
fund in the INVESCO group.

      For  federal  income  tax  purposes,  distributions  generated  by private
activity bonds are items of tax preference and not excludable  from gross income
of shareholders subject to the federal alternative minimum tax.

      Shareholders  may be subject to backup  withholding of 31% on capital gain
distributions  and  redemption  proceeds.  Unless  you  are  subject  to  backup
withholding  for other  reasons,  you can avoid backup  withholding on your Fund
account by ensuring that we have a correct, certified tax identification number.

      Dividends, Capital Gain Distributions. The Fund earns daily 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 monthly  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 distribution regardless of how long the shares have
been  held.  The  Fund's  share  price  will  then  drop  by the  amount  of the
distribution  on the day the  distribution  is made. If a shareholder  purchases
shares  immediately prior to the distribution,  the shareholder will, in effect,
have "bought" the  distribution  by paying the full purchase price, a portion of
which is then returned in the form of a  distribution,  some or all of which may
be taxable.
    
<PAGE>
   
      At  the  end of  each  year,  information  regarding  the  tax  status  of
dividends,  capital  gain  distributions,   and  distributions  subject  to  tax
preference is provided to  shareholders.  Net realized capital gains are divided
into  short-term and long-term  gains  depending upon how long the Fund held the
security which gave rise to the gains. The capital gains  distribution  consists
of long-term capital gains which are taxed at the capital gains rate. Short-term
capital gains are included with any ordinary,  taxable income from dividends and
interest as ordinary income and are paid to shareholders as taxable dividends.

      Shareholders also may realize capital gains or losses when they sell their
Fund shares at more or less than the price originally paid.

      We encourage  you to consult a tax adviser with respect to these  matters.
For further information see "Dividends, Capital Gain Distributions and Taxes" in
the Statement of Additional Information.

ADDITIONAL INFORMATION

     Voting Rights.  All shares of the Company have equal voting rights based on
one vote for each share owned.  Voting with respect to certain matters,  such as
ratification of independent  accountants and the election of directors,  will be
by all the funds of the Company voting together.  In other cases, such as voting
upon an investment advisory contract,  voting is on a fund-by-fund basis. To the
extent permitted by law, when not all funds are affected by a matter to be voted
upon,  only  shareholders  of the fund or funds  affected  by the matter will be
entitled to vote  thereon.  The Company is not  generally  required and does not
expect to hold regular annual meetings of shareholders.  However, when requested
to do so in writing by the holders of 10% or more of the  outstanding  shares of
the Company or as may be required by applicable law or the Company's Articles of
Incorporation,   the  board  of  directors   will  call   special   meetings  of
shareholders. Directors may be removed by action of the holders of a majority of
the  outstanding  shares of the Company.  The Fund will assist  shareholders  in
communicating  with other shareholders as required by the Investment Company Act
of 1940.
    

<PAGE>


                                                                            ]

   
                      INVESCO TAX-FREE LONG-TERM BOND FUND
                        A no-load mutual fund seeking as
                         high a level of current income
                        exempt from federal taxes as is
                      consistent with the preservation of
                                    capital.

                                    PROSPECTUS
                                    October 31, 1995

To receive general  information and  prospectuses on any of the INVESCO 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 (PAL) call:

      1-800-424-8085

Or write to:

   
      INVESCO Funds Group, Inc., Distributor
      7800 E. Union Avenue
      Post Office Box 173706
      Denver, Colorado  80217-3706


If you're in Denver, please visit one of our convenient Investor Centers:
    

      Cherry Creek
      155-B Fillmore Street

   
      Denver Tech Center
      7800 East Union Avenue
      Lobby Level
    
<PAGE>


   
STATEMENT OF ADDITIONAL INFORMATION
October 31, 1995
    


                     INVESCO TAX-FREE INCOME FUNDS, INC.

             Two no-load  investment  funds  seeking as high a level of interest
             income exempt from federal income taxes
              as is consistent with the preservation of capital

Address:                                  Mailing Address:

   
7800 E. Union Avenue                      Post Office Box 173706
Denver, Colorado  80237                   Denver, Colorado  80217-3706
    

                                                                       
                                  Telephone:
                     In continental U.S., 1-800/525-8085
- --------------------------------------------------------------------------

      INVESCO  TAX-FREE INCOME FUNDS,  INC. (the  "Company"),  is a diversified,
managed,   no-load  mutual  fund,  consisting  of  two  separate  portfolios  of
investments:   INVESCO  Tax-Free   Long-Term  Bond  Fund  and  INVESCO  Tax-Free
Intermediate Bond Fund (collectively,  the "Funds" and individually,  a "Fund").
The  investment  objective  of each  Fund is to seek as high a level of  current
income  exempt  from  federal  income   taxation  as  is  consistent   with  the
preservation of capital.  The Funds will pursue this objective by investing in a
diversified   portfolio  of  obligations  issued  by  states,   territories  and
possessions  of the  United  States  and the  District  of  Columbia  and  their
political subdivisions, agencies and instrumentalities, the interest on which is
exempt from federal taxes ("municipal bonds").  Such obligations may include any
combination  of  general   obligation  bonds,   revenue  bonds,  and  industrial
development bonds.

   
      Separate  Prospectuses for each Fund dated October 31, 1995, which provide
the basic  information  you  should  know  before  investing  in a 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  additional  information
regarding the  activities  and  operations  of the Funds,  and should be read in
conjunction with the Prospectus.
    

Investment Adviser and Distributor:  INVESCO FUNDS GROUP, INC.
- --------------------------------------------------------------------------
<PAGE>

TABLE OF CONTENTS


INVESTMENT POLICIES AND RESTRICTIONS                                        52

THE FUNDS AND THEIR MANAGEMENT                                              65

HOW SHARES CAN BE PURCHASED                                                 77

HOW SHARES ARE VALUED                                                       81

   
FUND PERFORMANCE                                                            82
    

SERVICES PROVIDED BY THE FUNDS                                              85

HOW TO REDEEM SHARES                                                        86

DIVIDENDS, CAPITAL GAIN DISTRIBUTIONS, AND TAXES                            86
                                                                         
INVESTMENT PRACTICES                                                        88

ADDITIONAL INFORMATION                                                      90

APPENDIX                                                                    94
<PAGE>


INVESTMENT POLICIES AND RESTRICTIONS

Municipal Obligations

   
      As discussed in the section of each Fund's Prospectus entitled "Investment
Objective  and  Strategy"  and  "Investment  Policies  and Risks," the Funds may
purchase or sell a variety of tax-exempt  securities in seeking to achieve their
investment objective without regard to how long the securities have been held in
a Fund's portfolio.  Although  short-term trading increases  portfolio turnover,
execution  costs  associated  with the purchase or sale of  municipal  bonds are
substantially  less than the costs  incurred in  transactions  involving  equity
securities of equivalent  dollar values.  Gains, if any, realized by a Fund as a
result of sales of municipal  bonds or other  securities  are subject to federal
income taxes.
    

      Securities in which the Funds invest include the following:

      Municipal  Bonds.  Municipal bonds are debt  obligations  issued to obtain
funds for various public purposes, including the construction of a wide range of
public facilities such as airports,  bridges, highways, housing, hospitals, mass
transportation,  schools,  streets  and  water  and sewer  works.  Other  public
purposes for which municipal bonds may be issued include  refunding  outstanding
obligations,  obtaining funds for general operating expenses and obtaining funds
to loan to other public institutions and facilities. In addition,  certain kinds
of industrial development bonds are issued by or on behalf of public authorities
to obtain  funds to provide to privately  operated  housing  facilities,  sports
facilities,  convention or trade show facilities, airport, mass transit, port or
parking facilities,  air or water pollution control facilities and certain local
facilities for water supply, gas,  electricity,  sewage or solid waste disposal.
Such  obligations  are  considered  to be municipal  bonds if the interest  paid
thereon  qualifies  as exempt  from  federal  income  taxation.  Other  kinds of
industrial  development  bonds,  the  proceeds  from  which  are  used  for  the
construction,  equipment, repair or improvement of privately operated industrial
or commercial  facilities,  may also be considered municipal bonds. Although the
current  federal tax laws  impose  substantial  limitations  on the size of such
issues, the Fund will only invest in industrial  development bonds, the interest
from which is exempt from federal income taxation.
                                                                         
      There are two principal  classifications  of tax-exempt  municipal  bonds:
"general  obligation" and "revenue" bonds.  General obligation bonds are secured
by the issuer's pledge of its full faith,  credit and unlimited taxing power for
the payment of principal and  interest.  Revenue bonds are payable only from the
revenues  generated  by a particular  facility or class of facility,  or in some
cases from the  proceeds  of a special  excise tax or specific  revenue  source.
Industrial development obligations are a particular kind of municipal bond which
are issued by or on behalf of public  authorities  to obtain  funds for  various
local,  privately  operated  facilities.  Such  obligations  are, in most cases,
revenue bonds that  generally  are secured by a lease with a particular  private
corporation.  A Fund's  portfolio  may  consist  of any  combination  of general
obligation and revenue bonds.  Municipal  Notes are debt  obligations  issued by
municipalities  which  normally  have a maturity at the time of issuance of from
six months to three years.
<PAGE>

      From time to time,  proposals to restrict or eliminate the federal  income
tax  exemption  for  interest on  municipal  bonds have been  introduced  before
Congress.  Similar proposals may be introduced in the future. If such a proposal
were enacted, the availability of municipal bonds for investment by a Fund might
be  adversely  affected.  In  such  event,  the  Funds  would  reevaluate  their
investment  objective and policies and submit possible  changes in the structure
of the Funds for the consideration of shareholders.

   
      As discussed in each  Prospectus,  the  municipal  securities in which the
Funds invest are generally  subject to two kinds of risk, credit risk and market
risk. The ratings given a municipal security by Moody's Investors Service,  Inc.
("Moody's")  and  Standard  & Poor's  Ratings  Group  ("S&P")  for the  Tax-Free
Long-Term Bond Fund and the ratings given a municipal security by Moody's,  S&P,
Fitch Investor Services, Inc. ("Fitch"), and Duff & Phelps, Inc. ("D&P") for the
Tax-Free  Intermediate  Bond Fund  provide a generally  useful  guide as to such
credit  risk.  The lower the rating  given a  municipal  security by such rating
service, the greater the credit risk such rating service perceives to exist with
respect to such security.
    

     Increasing the amount of a Fund's assets invested in unrated or lower grade
(Ba or less by Moody's, BB or less by S&P) municipal securities,  while intended
to increase the yield  produced by the Fund's  municipal  securities,  will also
increase the credit risk to which those municipal securities are subject.  Lower
rated municipal  securities and non-rated  securities of comparable quality tend
to be subject to wider  fluctuations  in yields and market  values  than  higher
rated  securities  and may have  speculative  characteristics.  In  addition,  a
significant  economic  downturn or major  increase  in  interest  rates may well
result in issuers of lower rated  municipal  securities  experiencing  increased
financial  stress which would  adversely  affect their  ability to service their
principal and interest obligations and to obtain additional financing.

      Municipal Notes. The principal  classifications of municipal notes are tax
anticipation  notes, bond anticipation  notes, and revenue  anticipation  notes.
Notes sold in  anticipation  of collection  of taxes,  a bond sale or receipt of
other revenues are normally obligations of the issuing municipality or agency.

      While the Funds'  investment  adviser attempts to limit purchases of lower
rated municipal  securities to securities having an established retail secondary
market,  the market for such  securities  may not be as liquid as the market for
higher rated municipal securities.
<PAGE>

Other Permissible Investments

      Temporary  Investments.  As  discussed  in  the  section  of  each  Fund's
Prospectus entitled "Investment Objective and Policies," the Funds may from time
to time  invest a portion of their  assets on a  temporary  basis in  "temporary
investments,"  the income from which may be subject to federal  income tax.  Any
net  interest  income  on  taxable  temporary  investments  will be  taxable  to
shareholders as ordinary income when distributed.

   
      When-Issued  Purchases.  As  discussed  in  the  section  of  each  Fund's
Prospectus entitled "Investment  Policies and Risks," municipal  obligations may
at  times  be  acquired  on  a  when-issued  basis.  Securities  purchased  on a
when-issued  basis and the securities held in a Fund's  portfolio are subject to
changes in value based on the public's perception of the creditworthiness of the
issuers and  changes in the level of  interest  rates  (generally  resulting  in
appreciation  when interest rates decline and  depreciation  when interest rates
rise).  The Funds will  maintain a separate  account with their  custodian  bank
consisting  of a  combination  of  cash  and any  high-grade,  short  term  debt
securities  currently  held by a Fund  equal  in  value  to the  amount  of such
commitments.  A Fund will only make commitments to purchase  securities with the
intention of actually  acquiring the securities;  however, a Fund may sell these
commitments  before the  settlement  date if to do so is deemed  advisable  as a
matter of investment strategy.
    

     If the market value of securities in a Fund's  separate  account  declines,
the Fund will place  additional  cash or securities  in the account,  on a daily
basis if  necessary,  so that the market value of the account  will  continue to
equal  the  amount  of the  Fund's  commitments.  To the  extent a Fund  remains
substantially invested in debt securities at the same time that it has committed
to purchase securities on a when-issued basis, which it would normally expect to
do, there will be greater  fluctuations in the Fund's net asset value than if it
set aside cash to pay for when-issued securities.  In addition,  there will be a
greater  potential for the  realization of capital  gains,  which are not exempt
from  federal  income  taxation,  and of  capital  losses.  When the  payment of
when-issued  securities  must be met, a Fund will provide payment from available
cash  flow,  sale of  portfolio  securities  (possibly  at a gain or  loss)  or,
although it would not  normally  expect to do so,  from sale of the  when-issued
securities  themselves  (which  may at the time of sale have a value  greater or
less than a Fund's payment obligation).  The risk of fluctuation in value of the
short-term  securities  in the separate  account is  different  from the risk of
fluctuation in the value of the Funds' portfolio  securities.  Each Fund intends
to enter into commitments to purchase  securities on a when-issued basis only to
the extent deemed  advisable to further its pursuit of its investment  objective
and policies regarding investments. Such commitments will not ordinarily involve
a substantial portion of a Fund's assets,  defined as available cash reserves of
a Fund plus proceeds of unsettled  regular-way sales of Fund securities.  
<PAGE>
Futures Contracts and Options on Futures

   
     As described in the Funds'  Prospectuses,  the Funds may enter into futures
contracts  and may  purchase and sell  ("write")  options to buy or sell futures
contracts.  The Funds  will  comply  with and adhere to all  limitations  in the
manner and extent to which they  effect  transactions  in futures and options on
such  futures  currently  imposed  by the rules  and  policy  guidelines  of the
Commodity  Futures  Trading  Commission as conditions  for exemption of a mutual
fund, or investment  advisers  thereto,  from  registration  as a commodity pool
operator.  Under those  restrictions,  each Fund will not, as to any  positions,
whether  long,  short or a combination  thereof,  enter into futures and options
thereon for which the aggregate  initial  margins and premiums  exceed 5% of the
fair market value of its assets after taking into account unrealized profits and
losses  on  options  it has  entered  into.  In the  case of an  option  that is
"in-the-money,"  as defined  in the  Commodity  Exchange  Act (the  "CEA"),  the
in-the-money  amount may be  excluded in  computing  such 5%. (In general a call
option on a future is  "in-the-money"  if the value of the  future  exceeds  the
exercise   ("strike")   price  of  the  call;  a  put  option  on  a  future  is
"in-the-money"  if the value of the  future  which is the  subject of the put is
exceeded by the strike  price of the put.) The Funds may use futures and options
thereon  solely  for bona fide  hedging  or for other  non-speculative  purposes
within the meaning  and intent of the  applicable  provisions  of the CEA. As to
long positions which are used as part of the Funds' portfolio strategies and are
incidental to their  activities in the underlying  cash market,  the "underlying
commodity  value" of the respective  Fund's futures and options thereon must not
exceed the sum of (i) cash set aside in an  identifiable  manner,  or short-term
U.S. debt obligations or other dollar-denominated high-quality, short-term money
instruments so set aside, plus sums deposited on margin; (ii) cash proceeds from
existing  investments  due in 30 days;  and (iii)  accrued  profits  held at the
futures  commission  merchant.  The "underlying  commodity value" of a future is
computed by multiplying the size of the future by the daily  settlement price of
the future.  For an option on a future,  that value is the underlying  commodity
value of the future underlying the option.

      Unlike when the Funds  purchase  or sell a  security,  no price is paid or
received by a Fund upon the purchase or sale of a futures contract. Instead, the
Funds are  required to deposit in a  segregated  asset  account with a commodity
broker an amount  of cash or  qualifying  securities  (currently  U.S.  Treasury
bills)  currently  in a minimum  amount  of  $15,000.  This is  called  "initial
margin."  Such  initial  margin is in the nature of a  performance  bond or good
faith  deposit on the  contract.  However,  since losses on open  contracts  are
required to be  reflected in cash in the form of variation  margin  payments,  a
Fund  may be  required  to  make  additional  payments  during  the  term of the
contracts to its broker.  Such payments would be required,  for example,  where,
during the term of an interest  rate  futures  contract  purchased  by the Fund,
there was a general  increase  in  interest  rates,  thereby  making  the Fund's
portfolio  securities less valuable.  In all instances involving the purchase of
financial  futures  contracts by a Fund,  an amount of cash  together  with such
other  securities  as  permitted  by  applicable  regulatory  authorities  to be
utilized  for such  purpose,  at least equal to the market  value of the futures
contracts,  will be deposited in a segregated  account with the Fund's custodian
to collateralize the position.  At any time prior to the expiration of a futures
contract,  the Fund may  elect to close  its  position  by  taking  an  opposite
position  which will  operate to  terminate  the Fund's  position in the futures
contract.  For a more complete  discussion of the risks  involved in futures and
options on futures and other  securities,  refer to Appendix B ("Description  of
Futures Contracts and Options").
    

      Where futures are  purchased to hedge  against a possible  increase in the
price of a security before a Fund is able in an orderly fashion to invest in the
security,  it is possible that the market may decline instead. If the Fund, as a
result,  concluded  not to make the planned  investment  at that time because of
concern as to possible  further market  decline or for other  reasons,  the Fund
would  realize a loss on the futures  contract that is not offset by a reduction
in the price of securities purchased.
<PAGE>

     In addition to the possibility  that there may be an imperfect  correlation
or no  correlation  at all between  movements in the futures  contracts  and the
portion of the portfolio  being  hedged,  the price of futures may not correlate
perfectly with movements in the prices due to certain  market  distortions.  All
participants in the futures market are subject to margin deposit and maintenance
requirements.  Rather  than  meeting  additional  margin  deposit  requirements,
investors may close futures  contracts  through  offsetting  transactions  which
could distort the normal  relationship  between  underlying  instruments and the
value of the futures contract. Moreover, the deposit requirements in the futures
market are less onerous than margin  requirements  in the securities  market and
may  therefore  cause  increased  participation  by  speculators  in the futures
market. Such increased participation may also cause temporary price distortions.
Due to the possibility of price  distortion in the futures market and because of
the imperfect  correlation  between  movements in the underlying  instrument and
movements in the prices of futures contracts,  the value of futures contracts as
a hedging device may be reduced.

      In addition,  if a Fund has  insufficient  available cash, it may at times
have to sell securities to meet variation  margin  requirements.  Such sales may
have to be effected at a time when it may be disadvantageous to do so.

   
      The Funds may buy and write  options  on  futures  contracts  for  hedging
purposes. The purchase of a call option on a futures contract is similar in some
respects to the purchase of a call option on an individual  security.  Depending
on the  pricing  of the  option  compared  to either  the  price of the  futures
contract  upon  which  it is based or the  price of the  underlying  instrument,
ownership  of the  option may or may not be less  risky  than  ownership  of the
futures contract or the underlying  instrument.  As with the purchase of futures
contracts,  when a Fund is not  fully  invested  it may buy a call  option  on a
futures contract to hedge against a market advance.
    

      The writing of a call option on a futures  contract  constitutes a partial
hedge against declining prices of the security which is deliverable under, or of
the  index  comprising,  the  futures  contract.  If the  futures  price  at the
expiration  of the option is below the  exercise  price,  a Fund will retain the
full amount of the option  premium  which  provides a partial  hedge against any
decline that may have occurred in the Fund's portfolio holdings.  The writing of
a  put  option  on a  futures  contract  constitutes  a  partial  hedge  against
increasing  prices of the security which is deliverable  under,  or of the index
comprising,  the futures  contract.  If the futures  price at  expiration of the
option is higher than the exercise  price, a Fund will retain the full amount of
the option  premium  which  provides a partial hedge against any increase in the
price of  securities  which  the Fund is  considering  buying.  If a call or put
option which a Fund has written is  exercised,  the Fund will incur a loss which
will be reduced  by the amount of the  premium  it  received.  Depending  on the
degree of correlation  between  change in the value of its portfolio  securities
and changes in the value of the futures positions, a Fund's losses from existing
options on futures may to some extent be reduced or  increased by changes in the
value of portfolio securities.



<PAGE>


                                                                       
      The  purchase  of a put  option on a futures  contract  is similar in some
respects to the purchase of protective put options on portfolio securities.  For
example,  a Fund  may buy a put  option  on a  futures  contract  to  hedge  its
portfolio against the risk of falling prices.

      The  amount  of risk a Fund  assumes  when it buys an  option on a futures
contract is the premium paid for the option plus related  transaction  costs. In
addition to the  correlation  risks discussed  above,  the purchase of an option
also  entails  the risk  that  changes  in the value of the  underlying  futures
contract will not be reflected fully in the value of the options bought.

   
      Illiquid  and 144A  Securities.  The Tax-Free  Intermediate  Bond 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.  The 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"). The Fund'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 Fund is authorized to invest up to 5% of its total assets in illiquid
securities.  Liquid Rule 144A  Securities  are not  subject to this  limitation,
although the Fund may not invest more than 15% of its total assets in restricted
securities.

      Investments in restricted  securities  involve certain risks to the extent
that the Fund might  have to bear the  expense  and incur the delays  associated
with effecting registration in order to sell the security.

      In recent years, a large institutional  market has developed for Rule 144A
Securities.  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 Rule 144A  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.
Institutional  markets  for  Rule  144A  Securities  may  provide  both  readily
ascertainable  values for Rule 144A  Securities  and the ability to liquidate an
investment in order to satisfy share redemption  orders. An insufficient  number
of qualified  institutional buyers interested in purchasing a Rule 144A Security
held by the Fund,  however,  could adversely  affect the  marketability  of such
security,  and the Fund might be unable to dispose of such security  promptly or
at reasonable prices.
    



<PAGE>

                                                                    
   
      Repurchase  Agreements.  As discussed in the  Prospectuses,  the Funds may
enter into repurchase  agreements with respect to debt instruments  eligible for
investment  by the  Funds  with  member  banks of the  Federal  Reserve  System,
registered  broker-dealers,  and registered government securities dealers, which
are deemed  creditworthy  under  standards  established  by the Fund's  board of
directors.  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 Funds 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 as
collateral  by the Funds'  custodian  bank  until the  repurchase  agreement  is
completed.

      Loans  of  Portfolio  Securities.   The  Funds  also  may  lend  portfolio
securities  to  qualified   brokers,   dealers,   banks,   or  other   financial
institutions. This practice permits the Fund to earn income, which, 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 Funds monitor the creditworthiness of borrowers
in order to minimize  such risks.  The Funds 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 Funds' net assets  (taken at market  value).  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,  as  amended  (the  "1940  Act"),  and the  rules  of the
Securities and Exchange Commission (the "SEC") thereunder.

      Investment Restrictions. As described in each Fund's Prospectus, the Funds
operate under certain  investment  restrictions that are fundamental and may not
be changed with respect to a particular  Fund without the prior  approval of the
holders of a  majority,  as defined in the 1940 Act, of the  outstanding  voting
securities  of  that  Fund.  For  purposes  of the  following  limitations,  all
percentage limitations apply immediately after a purchase or initial investment.
Any subsequent change in a particular  percentage resulting from fluctuations in
value does not require elimination of any security from a Fund.
    



<PAGE>


                                                                            

      Under  the  Tax-Free   Long-Term   Bond  Fund's   fundamental   investment
restrictions, the Tax-Free Long-Term Bond Fund may not:

      (1)   issue preference shares or create any funded debt;

      (2)   sell short or buy on margin;

      (3)   mortgage,  pledge or hypothecate its portfolio  securities or borrow
            money,  except from banks for  temporary or emergency  purposes (but
            not for  investment)  and then in an amount not exceeding 10% of the
            value  of  the  Fund's  net  assets.  The  Fund  will  not  purchase
            additional securities while any such borrowings exist;

      (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 (except obligations issued or guaranteed by the
            U.S.  Government) if the purchase would cause the Fund, at the time,
            to have more than 5% of the value of its total  assets  invested  in
            securities  of  any  one  issuer  or to  own  more  than  10% of the
            outstanding securities of any one issuer;

      (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;

   
      (7)   buy or sell commodities or commodity contracts, oil, gas,
            or other mineral interest or exploration programs, or
            real estate or interests therein.  However, the Fund may
            purchase municipal bonds or other permitted securities
            secured by real estate or which may represent indirect
            interests therein and may buy and sell options and
            futures contracts for the purpose of hedging the value of
            its securities portfolio, provided that the Fund will not
            enter into options or futures contracts for which the
            aggregate initial margins exceed 5% of the fair market
            value of the Fund's assets;
    

      (8)   invest in any issuer for the purpose of exercising
            control or management;


<PAGE>


                                                                           
      (9)   purchase securities which have legal or contractual  restrictions on
            resale  or  purchase  securities  for  which  there  is  no  readily
            available market;

      (10)  engage in the underwriting of any securities of other issuers except
            to the  extent  that  the  purchase  of  municipal  bonds  or  other
            permitted  investments  directly  from the  issuer  thereof  and the
            subsequent  disposition of such  investments  may be deemed to be an
            underwriting;

      (11)  purchase or retain  securities of any issuer in which any officer or
            director of the Fund or its  investment  adviser  beneficially  owns
            more than 1/2 of 1% of the outstanding  securities,  or in which all
            of the  officers  and  directors  of the Company and its  investment
            adviser,  as  a  group,  beneficially  own  more  than  5%  of  such
            securities;

      (12)  purchase equity securities or securities convertible into
            equity securities;

      (13)  participate on a joint or a joint and several basis in
            any securities trading account or purchase warrants;

      (14)  invest more than 25% of its total assets in any
            particular industry or industries, except municipal
            securities, or obligations issued or guaranteed by the
            U.S. government, its agencies or instrumentalities.
            (Industrial development bonds are grouped into an
            "industry" where the payment of principal and interest is
            the ultimate responsibility of companies within the same
            industry.)

   
      The Company has given undertakings to the State of Texas that the Tax-Free
Long-Term Bond Fund may not invest in any oil, gas, or mineral  leases;  and may
not invest in real estate limited partnership interests.
    

      Under the Tax-Free Intermediate Bond Fund's fundamental
investment restrictions, the Tax-Free Intermediate Bond Fund may
not:

      (1)   With respect to seventy five percent (75%) of the value
            of its total assets, purchase the securities of any one
            issuer (except cash items and "Government securities" as
            defined under the 1940 Act), if the purchase would cause
            the Fund to have more than 5% of the value of its total
            assets invested in the securities of such issuer or to
            own more than 10% of the outstanding voting securities of
            such issuer;

      


<PAGE>

      (2)   Borrow money, except that the Fund may borrow money for temporary or
            emergency purposes (not for leveraging or investment) and may enter 
            into reverse  repurchase  agreements in an aggregate  amount  not  
            exceeding  33 1/3% of the value of its total assets (including the 
            amount borrowed) less liabilities  (other than borrowings). Any 
            borrowings that come to exceed 33 1/3% of the value of the Fund's 
            total assets by reason of a decline in net assets will be reduced  
            within three  business  days to the extent  necessary to comply 
            with the 33 1/3%  limitation.  This  restriction  shall  not
            prohibit  deposits  of assets to margin or  guarantee  positions  in
            futures, options, swaps, or forward contracts, or the segregation of
            assets in connection with such contracts.

      (3)   Invest  more  than  25% of the  value  of its  total  assets  in any
            particular  industry  (other  than  municipal   securities  or  U.S.
            Government securities).

      (4)   Invest directly in real estate or interests in real estate; however,
            the  Tax-Free   Intermediate  Bond  Fund  may  own  debt  or  equity
            securities issued by companies engaged in those businesses.

      (5)   Purchase or sell physical commodities other than foreign
            currencies unless acquired as a result of ownership of
            securities (but this shall not prevent the Tax-Free
            Intermediate Bond Fund from purchasing or selling
            options, futures, and forward contracts or from investing
            in securities or other instruments backed by physical
            commodities).

      (6)   Lend any security or make any other loan if, as a result,  more than
            33 1/3% of its total assets would be lent to other parties (but this
            limitation  does not apply to purchases of  commercial  paper,  debt
            securities or to repurchase agreements.)

      (7)   Act as an underwriter of securities issued by others,  except to the
            extent that it may be deemed an underwriter  in connection  with the
            disposition  of portfolio  securities  of the Tax-Free  Intermediate
            Bond Fund.

      In applying the industry concentration  investment restrictions (no. 14 in
the  case of the  Tax-Free  Long-Term  Bond  Fund,  and no. 3 in the case of the
Tax-Free  Intermediate  Bond  Fund),  the Funds use an  industry  classification
system based on the O'Neil Database published by William O'Neil & Co., Inc.

      Additional investment restrictions adopted by the Company on behalf of the
INVESCO  Tax-Free  Intermediate  Bond  Fund  and  which  may be  changed  by the
directors,  at their  discretion,  without  shareholder  approval,  include  the
following:



<PAGE>

                                                                           

      (1)   The Tax-Free Intermediate Bond Fund's investments in
            warrants, valued at the lower of cost or market, may not
            exceed 5% of the value of its total assets.  Included
            within that amount, but not to exceed 2% of the value of
            the Tax-Free Intermediate Bond Fund's total assets, may
            be warrants that are not listed on the New York,
            American, or other United States Securities exchanges.
            Warrants acquired by the Tax-Free Intermediate Bond Fund
            in units or attached to securities shall be deemed to be
            without value.

      (2)   The Tax-Free Intermediate Bond Fund will not (i) enter
            into any futures contracts or options on futures
            contracts if immediately thereafter the aggregate margin
            deposits on all outstanding futures contracts positions
            held by the Fund and premiums paid on outstanding options
            on futures contracts, after taking into account
            unrealized profits and losses, would exceed 5% of the
            market value of the total assets of the Fund, or (ii)
            enter into any futures contracts if the aggregate net
            amount of the Tax-Free Intermediate Bond Fund's
            commitments under outstanding futures contracts positions
            of the Tax-Free Intermediate Bond Fund would exceed the
            market value of the total assets of the Fund.

      (3)   The Tax-Free Intermediate Bond Fund does not currently
            intend to sell securities short, unless it owns or has
            the right to obtain securities equivalent in kind and
            amount to the securities sold short without the payment
            of any additional consideration therefor, and provided
            that transactions in options and forward futures
            contracts are not deemed to constitute selling securities
            short.

      (4)   The Tax-Free Intermediate Bond Fund does not currently
            intend to purchase securities on margin, except that the
            Fund may obtain such short-term credits as are necessary
            for the clearance of transactions, and provided that
            margin payments and other deposits in connection with
            transactions in options, futures, and forward contracts
            shall not be deemed to constitute purchasing securities
            on margin.

      (5)   The Tax-Free Intermediate Bond Fund does not currently
            intend to (i) purchase securities of other investment
            companies, except in the open market where no commission
            except the ordinary broker's commission is paid, or (ii)
            purchase or retain securities issued by other open-end
            investment companies.  Limitations (i) and (ii) do not
            apply to money market funds or to securities received as
            dividends, through offers of exchange, or as a result of
            a reorganization, consolidation, or merger.  If the Tax-


<PAGE>


                                                                           
            Free  Intermediate  Bond Fund invests in a money  market  fund,  the
            Tax-Free Intermediate Bond Fund's investment adviser will reduce its
            advisory  fee  by  the  amount  of  any   investment   advisory  and
            administrative  services fees paid to the investment  manager of the
            money market fund.

      (6)   The Tax-Free Intermediate Bond Fund may not mortgage or
            pledge any securities owned or held by the Fund in
            amounts that exceed, in the aggregate, 15% of the Fund's
            net asset value, provided that this limitation does not
            apply to reverse repurchase agreements, to assets
            deposited to margin or guarantee positions in futures,
            options, swaps or forward contracts or to assets placed
            in a segregated account in connection with such
            contracts.

      (7)   The Tax-Free  Intermediate  Bond Fund does not  currently  intend to
            invest  directly  in oil,  gas,  or  other  mineral  development  or
            exploration programs or leases;  however, the Tax-Free  Intermediate
            Bond Fund may own debt or equity  securities of companies engaged in
            those businesses.

      (8)   The Tax-Free Intermediate Bond Fund does not currently
            intend to purchase any illiquid securities or enter into
            a repurchase agreement if, as a result, more than 10% 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 for which there is no readily available
            market.  The board of directors, or the Tax-Free
            Intermediate Bond 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 that such securities are not
            subject to the foregoing limitation.

      (9)   The Tax-Free  Intermediate Bond Fund may not invest in companies for
            the  purpose  of  exercising  control or  management,  except to the
            extent  that  exercise  by the Fund of its rights  under  agreements
            related to portfolio  securities  would be deemed to constitute such
            control.

      (10)  The Tax-Free Intermediate Bond Fund may not invest more
            than 25% of the value of its total assets in any
            particular industry or industries, except municipal
            securities, or obligations issued or guaranteed by the
            U.S. government, its agencies or instrumentalities.
            (Industrial development bonds are grouped into an
            "industry"  where the  payment  of  principal  and  interest  is 
            the ultimate responsibility of companies within the same industry.)

<PAGE>

         

   
      With respect to investment restriction 8 above, the board of directors has
delegated  to the  Tax-Free  Intermediate  Bond  Funds'  investment  adviser the
authority to determine that 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 8 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).
    

      The Tax-Free  Intermediate Bond Fund has given an undertaking to the State
of Arkansas that the Fund will not invest in  securities of unseasoned  issuers,
including  their  predecessors,  which  have been in  operation  for less than 3
years, and equity securities of issuers which are not readily marketable,  if by
reason thereof the value of its aggregate  investment in such  securities  would
exceed 5% of its total assets. Additionally,  the Fund may purchase or write put
and call options on securities or straddles,  spreads or  combinations  thereof,
only if by reason thereof the value of the Fund's  aggregate  investment in such
classes of  securities  will be 5% or less of its total assets.  Also,  the Fund
will not buy or sell commodities or commodity contracts.

      Both Funds have also given an  undertaking  to the State of Kentucky  that
they will not invest in oil, gas or other  mineral  development  or  exploration
programs or leases.

      The Tax-Free  Intermediate Bond Fund has given an undertaking to the State
of Ohio that the Fund will not purchase or retain the  securities  of any issuer
if the officers, directors, advisers or managers of the Fund owning beneficially
more  than  one-half  of  1%  of  the  securities  of  an  issuer  together  own
beneficially  more than 5% of the securities of that issuer.  Additionally,  the
Fund  will not  invest  more  than 15% of the  Fund's  total  net  assets in the
securities of issuers which,  together with any  predecessors,  have a record of
less than three years continuous operations,  or securities of issuers which are
restricted as to disposition.





<PAGE>

THE FUNDS AND THEIR MANAGEMENT
                                                                            

      The Company.  The Company was  incorporated  under the laws of Maryland on
April 2, 1993.  On November 1, 1993,  the  Tax-Free  Long- Term Bond Fund of the
Company  assumed all the assets and  liabilities  of Financial  Tax-Free  Income
Shares, Inc. ("FTFIS"),  a Colorado corporation  incorporated on April 22, 1981.
All financial and other information  about the Tax-Free  Long-Term Bond Fund for
periods prior to November 1, 1993, relates to FTFIS.

   
      The Investment Adviser. INVESCO Funds Group, Inc., a Delaware corporation,
("INVESCO")  is  employed  as  the  Funds'  investment   adviser.   INVESCO  was
established  in 1932  and also  serves  as the  investment  adviser  to  INVESCO
Diversified   Funds,   Inc.,  INVESCO  Dynamics  Fund,  Inc.,  INVESCO  Emerging
Opportunity  Funds, Inc., INVESCO Growth Fund, Inc., INVESCO Income Funds, Inc.,
INVESCO Industrial Income Fund, Inc., INVESCO International Funds, Inc., INVESCO
Money Market Funds,  Inc., INVESCO Multiple Asset Funds, Inc., INVESCO Specialty
Funds,  Inc.,  INVESCO  Strategic  Portfolios,  Inc.,  INVESCO Value Trust,  and
INVESCO Variable Investment Funds, Inc.
    

      The  Sub-Adviser.  INVESCO Trust Company  ("INVESCO  Trust") serves as the
sub-adviser to the Funds,  pursuant to an agreement  between INVESCO and INVESCO
Trust.  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 June 30, 1995,  managed 14
mutual funds,  consisting of 38 separate  portfolios,  on behalf of over 790,000
shareholders.  INVESCO  PLC's  other  North  American  subsidiaries  include the
following:

      --INVESCO Capital Management, Inc. of Atlanta, Georgia,
manages institutional investment portfolios, consisting primarily
of discretionary employee benefit plans for corporations and state
and local governments, and endowment funds.  INVESCO Capital
Management, Inc. is the sole shareholder of INVESCO Services, Inc.,
a registered broker-dealer whose primary business is the
distribution of shares of two registered investment companies.

      --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 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.
    



<PAGE>


                                                                             
      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 Funds.

      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 the  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 (the "Agreement") with the Company
which was  approved on April 21,  1993,  by vote cast in person by a majority of
the directors of the Company,  including a majority of the directors who are not
"interested  persons" of the Company or  INVESCO,  at a meeting  called for such
purpose.  Pursuant to authorization  granted by the public shareholders of FTFIS
on May 24, 1993, FTFIS, as the initial shareholder of the Company,  approved the
Agreement on October 27, 1993 for an initial term expiring  April 30, 1995.  The
Agreement has been  continued by action of the board of directors  through April
30, 1996.  Thereafter,  the Agreement  may be continued  from year to year as to
each Fund as long as such continuance is specifically approved at least annually
by the board of  directors  of the  Company,  or by a vote of the  holders  of a
majority,  as defined in the Investment  Company Act of 1940, of the outstanding
shares of such Fund. Any such continuance also must be approved by a majority of
the  Company's  directors  who are not parties to the  Agreement  or  interested
persons  (as defined in the  Investment  Company Act of 1940) 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 Investment  Company
Act of 1940 and the Rules  thereunder.  The Agreement was approved by INVESCO on
November 26, 1993 as the then sole shareholder of the Tax-Free Intermediate Bond
Fund. 
    


<PAGE>                                                                      



   
      The Agreement provides that INVESCO shall manage the investment portfolios
of the Funds in conformity with the Funds' 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 Funds excluding,  however, those services that are the subject of
separate  agreement  between  the Funds and  INVESCO or any  affiliate  thereof,
including  the  distribution  and sale of shares of the Funds 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  Funds  with  officers,  clerical  staff  and other
employees,  if any, who are necessary in connection with the Funds'  operations;
furnishing  office  space,  facilities,   equipment,  and  supplies;   providing
personnel and facilities required to respond to inquiries related to shareholder
accounts;  conducting  periodic  compliance  reviews of the  Funds'  operations;
preparation and review of required  documents,  reports and filings by INVESCO'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 Funds under the Investment  Company Act of 1940.  Expenses not
assumed by INVESCO are borne by the Funds.

     As full compensation for its advisory  services to the Company,  INVESCO is
entitled to receive a monthly fee. The fee is calculated daily at an annual rate
of:  0.55% on the first $300  million of the average net assets of the  Tax-Free
Long-Term  Bond Fund;  reduced to 0.45% on the next $200  million of the average
net assets of the Tax-Free  Long-Term Bond Fund; and further reduced to 0.35% on
the average net assets of the  Tax-Free  Long-Term  Bond Fund  greater than $500
million.  For the fiscal years ended June 30, 1995, 1994, and 1993, the Tax-Free
Long-Term  Bond Fund paid  INVESCO  advisory  fees of  $1,471,474  (prior to the
voluntary  absorption  of certain  Fund  expenses by INVESCO),  $1,758,722,  and
$1,636,627,  respectively.  The fee for the Tax-Free  Intermediate  Bond Fund is
calculated  daily at an annual rate of:  0.50% on the first $300  million of the
average net assets; reduced to 0.40% on the next $200 million of the average net
assets; and further reduced to 0.30% on the average net assets greater than $500
million.  For the fiscal year ended June 30, 1995 and the period  ended June 30,
1994, the Tax-Free  Intermediate  Bond Fund paid INVESCO advisory fees (prior to
the  voluntary  absorption  of certain Fund  expenses by INVESCO) of $23,812 and
$9,874, respectively.
    

<PAGE>



      Certain  states in which the  shares of the Funds are  qualified  for sale
currently  impose  limitations on the expenses of the Funds. At 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
each 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% of the Fund's first $30,000,000 of
average net assets,  2.0% of the next $70,000,000 of average net assets and 1.5%
of the remaining average net assets.  No payment of the investment  advisory fee
will be made to INVESCO which would result in either Fund's  expenses  exceeding
on a cumulative  annualized basis this state  limitation.  During the past year,
INVESCO did not absorb any amounts under this provision for any Fund.

   
      Sub-Advisory  Agreement.  INVESCO Trust serves as sub-adviser to the Funds
pursuant to a sub-advisory  agreement (the  "Sub-Agreement")  with INVESCO which
was  approved on April 21,  1993,  by a vote cast in person by a majority of the
directors  of the  Company,  including a majority of the  directors  who are not
"interested  persons" of the  Company,  INVESCO,  or INVESCO  Trust at a meeting
called  for such  purpose.  Pursuant  to  authorization  granted  by the  public
shareholders of FTFIS on May 24, 1993, FTFIS, as the initial  shareholder of the
Company,  approved  the Sub-  Agreement  on October 27, 1993 for an initial term
expiring April 30, 1995.  Thereafter,  the  Sub-Agreement  may be continued from
year to year as to each Fund as long as each such  continuance  is  specifically
approved by the board of directors  of the Company,  or by a vote of the holders
of a  majority,  as defined in the 1940 Act, of the  outstanding  shares of such
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 Funds  upon sixty (60) days'
written notice,  and terminates  automatically  in the event of an assignment to
the  extent  required  by the  Investment  Company  Act of 1940  and  the  rules
thereunder.  The Sub- Agreement was approved by INVESCO on November 26, 1993, as
the then sole  shareholder  of the  Tax-Free  Intermediate  Bond Fund.  The Sub-
Agreement has been  continued by action of the board of directors  through April
30, 1996.
    



<PAGE>


                                                                            

   
      The Sub-Agreement  provides that INVESCO Trust, subject to the supervision
of INVESCO,  shall manage the  investment  portfolios of each Fund in conformity
with each Fund's investment  policies.  These management services would include:
(a) managing the investment and reinvestment of all the assets, now or hereafter
acquired,  of the Funds,  and  executing  all  purchases  and sales of portfolio
securities;  (b)  maintaining  a  continuous  investment  program for the Funds,
consistent  with  (i)  each  Fund's  investment  policies  as set  forth  in the
Company's Articles of Incorporation, Bylaws, and Registration Statement, as from
time to time  amended,  under the 1940 Act,  as amended,  and in any  prospectus
and/or  statement of additional  information of the Funds,  as from time to time
amended and in use under the  Securities  Act of 1933, as amended,  and (ii) the
Company's  status as a regulated  investment  company under the Internal Revenue
Code of 1986, as amended; (c) determining what securities are to be purchased or
sold for the Funds, unless otherwise directed by the directors of the Company or
INVESCO,  and executing  transactions  accordingly;  (d) providing the Funds the
benefit of all of the investment  analysis and research,  the reviews of current
economic  conditions and trends, and the consideration of long-range  investment
policy now or hereafter  generally available to investment advisory customers of
the Sub-Adviser; (e) determining what portion of the Funds should be invested in
the various types of securities  authorized  for purchase by each Fund;  and (f)
making  recommendations  as to the  manner  in which  voting  rights,  rights to
consent  to  Company  action  and any other  rights  pertaining  to each  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 Tax- Free Long-Term Bond Fund's average net assets at
the following annual rates:  0.25% of the average net assets up to $200 million,
and 0.20% of the average net assets in excess of $200  million,  and a fee based
upon the  average  daily  value of the  Tax-Free  Intermediate  Bond Fund at the
following  annual  rates:  0.25% of the average  net assets up to $300  million;
0.20% of the next $200  million of average net assets;  and 0.15% of the average
net assets in excess of $500 million.  The  Sub-Advisory fee is paid by INVESCO,
NOT the Funds.

     Administrative  Services  Agreement.  INVESCO,  either  directly or through
affiliated companies, also provides certain administrative,  sub-accounting, and
recordkeeping  services  to the Funds  pursuant  to an  Administrative  Services
Agreement   dated  April  30,  1993  (the   "Administrative   Agreement").   The
Administrative  Agreement  was  approved  on April 21,  1993,  by a vote cast in
person by all of the  directors of the Company,  including  all of the directors
who are not  "interested  persons" of the Company or INVESCO at a meeting called
for such purpose.  The  Administrative  Agreement was for an initial term of one
year expiring  April 30, 1994,  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 such  continuance is  specifically  approved by the
board of directors of the Company, including a majority of the directors who are
not parties to the Administrative Agreement or interested persons (as defined in
the 1940 Act) of any such  party,  cast in person  at a meeting  called  for the
purpose  of voting on such  continuance.  The  Administrative  Agreement  may be
terminated  at any time without  penalty by INVESCO on sixty (60) days'  written
notice, or by the Company upon thirty (30) days' written notice,  and terminates
automatically  in the  event of an  assignment  unless  the  Company's  board of
directors approves such assignment.
    
<PAGE>

      The  Administrative  Agreement  provides  that INVESCO  shall  provide the
following  services  to the Funds:  (A) such  sub-accounting  and  recordkeeping
services and  functions as are  reasonably  necessary  for the  operation of the
Funds; and (B) such sub-accounting,  recordkeeping,  and administrative services
and functions which may be provided by affiliates of INVESCO,  as are reasonably
necessary  for the  operation of a Fund's  shareholder  accounts  maintained  by
certain  retirement  plans  and  employee  benefit  plans  for  the  benefit  of
participants in such plans.

      As full  compensation  for  services  provided  under  the  Administrative
Agreement,  each Fund pays a 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 each Fund.

   
      During the fiscal year ended June 30, 1995,  1994,  and 1993, the Tax-Free
Long-Term Bond Fund paid INVESCO  administrative  services fees in the amount of
$50,131 (prior to the voluntary absorption of certain Fund expenses by INVESCO),
$58,680, and $54,853,  respectively.  During the fiscal year ended June 30, 1995
and the period ended June 30, 1994,  the  Tax-Free  Intermediate  Bond Fund paid
INVESCO administrative  services fees in the amount of $10,714 and (prior to the
voluntary absorption of certain Fund expenses by INVESCO) $6,129, respectively.

     Transfer Agency Agreement.  INVESCO also performs transfer agent,  dividend
disbursing  agent,  and registrar  services for the Funds pursuant to a Transfer
Agency  Agreement  which was  approved by the board of directors of the Company,
including  a majority  of the  Company's  directors  who are not  parties to the
Transfer  Agency  Agreement or "interested  persons" of any such party, on April
21, 1993,  for an initial term  expiring  April 30,  1994.  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  Company,  or by a vote of the holders of a majority  of the  outstanding
shares of each of the Funds.  Any such  continuance  also must be  approved by a
majority of the Company's  directors who are not parties to the Transfer  Agency
Agreement or interested  persons (as defined by the 1940 Act) of any such party,
cast  in  person  at a  meeting  called  for  the  purpose  of  voting  on  such
continuance. The Transfer Agency Agreement may be terminated at any time without
penalty by either  party upon sixty  (60) days'  written  notice and  terminates
automatically  in the  event of  assignment.  Prior to March 8,  1991,  transfer
agency  services  were  provided  by  INVESCO  Trust  Company,  a  wholly  owned
subsidiary of INVESCO.
    
<PAGE>

   
      The Transfer Agency Agreement provides that the Funds shall pay to INVESCO
a fee of $20.00 per shareholder account or omnibus account participant per year.
This fee is paid  monthly at 1/12 of the annual fee and is based upon the actual
number of shareholder  accounts or omnibus account  participants in existence at
any time during each month.  For the fiscal years ended June 30, 1995, 1994, and
1993,  the Tax-Free  Long-Term  Bond Fund paid INVESCO  transfer  agency fees of
$390,390  (prior  to the  voluntary  absorption  of  certain  Fund  expenses  by
INVESCO), $310,709, and $310,270,  respectively.  For the fiscal year ended June
30, 1995 and the period ended June 30, 1994, the Tax-Free Intermediate Bond Fund
paid INVESCO transfer agency fees (prior to the voluntary  absorption of certain
Fund expenses by INVESCO) of $12,446 and $3,083, respectively.
    

      Officers  and  Directors  of  the  Company.   The  overall  direction  and
supervision  of the  Company is the  responsibility  of the board of  directors,
which has the primary  duty of seeing that the general  investment  policies and
programs of each Fund are carried out and that each Fund's portfolio is properly
administered.  The  officers  of the  Company,  all of  whom  are  officers  and
employees  of,  and  paid  by,  INVESCO,  are  responsible  for  the  day-to-day
administration  of the  Funds.  The  investment  adviser  for each  Fund has the
primary  responsibility for making investment  decisions on behalf of each Fund.
These investment decisions are reviewed by the investment committee of INVESCO.

   
     All of the officers and directors of the Company hold comparable  positions
with INVESCO  Diversified  Funds,  Inc.,  INVESCO Dynamics Fund,  Inc.,  INVESCO
Emerging  Opportunity  Funds,  Inc.,  INVESCO Growth Fund, Inc.,  INVESCO Income
Funds, Inc., INVESCO Industrial Income Fund, Inc., INVESCO  International Funds,
Inc.,  INVESCO Money Market Funds,  Inc.,  INVESCO  Multiple Asset Funds,  Inc.,
INVESCO Specialty Funds, Inc., INVESCO Strategic  Portfolios,  Inc., and INVESCO
Variable  Investment  Funds,  Inc. All of the  directors of the Company also are
trustees of INVESCO  Value  Trust.  In  addition,  all of the  directors  of the
Company also are, with the exception of Messrs. Hesser and Sim, directors of The
EBI Funds,  Inc. and trustees of INVESCO  Treasurer's  Series Trust.  All of the
officers of the Company also hold comparable positions with INVESCO Value Trust.
Set forth below is  information  with respect to each of the Company's  officers
and  directors.  Unless  otherwise  indicated,  the address of the directors and
officers  is  Post  Office  Box  173706,  Denver,  Colorado  80217-3706.   Their
affiliations represent their principal occupations during the past five years.
    
<PAGE>

   
      CHARLES W. BRADY,*+  Chairman of the Board.  Chief Executive
Officer and Director of INVESCO PLC, London, England, and of
various 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 82
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.

      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.
    


<PAGE>
                                                                            



   
      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 South, 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.  Trustee of The Global Health Sciences
Fund.  Address: 250 Williams Street, Suite 6000, Atlanta, Georgia.
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. MCINTYRE,#  Director.  Retired.  Formerly, Vice
Chairman of the Board of Directors of The Citizens and Southern
Corporation and Chairman of the Board and Chief Executive Officer
of The Citizens and Southern Georgia Corp. and Citizens and
Southern National Bank.  Trustee of The Global Health Sciences Fund
and Gables Residential Trust.  Director of Golden Poultry Co., Inc.
Address: 7 Piedmont Center, Suite 100, Atlanta, Georgia.  Born:
September 14, 1930.

      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.  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.
    


<PAGE>
                                                                            


   
      RONALD L. GROOMS, Treasurer.  Senior Vice President and
Treasurer of INVESCO Funds Group, Inc. and INVESCO Trust Company.
Born: October 1, 1946.

      WILLIAM J. GALVIN, JR., Assistant Secretary.  Vice President
of INVESCO Funds Group, Inc. and Trust Officer of INVESCO Trust
Company since August 1992; Vice President of 440 Financial Group
from June 1990 to August 1992; 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 Company.

      +Member of the  executive  committee  of the  Company.  On  occasion,  the
executive  committee acts upon the current and ordinary  business of the Company
between  meetings of the board of  directors.  Except for certain  powers which,
under applicable law, may only be exercised by the full board of directors,  the
executive  committee  may  exercise  all  powers and  authority  of the board of
directors in the  management  of the business of the Company.  All decisions are
subsequently submitted for ratification by the board of directors.

   
      *These directors are "interested persons" of the Company as
defined in the 1940 Act.
    

      **Member of the management liaison committee of the Company.

   
      As of August 23, 1995,  officers and directors of the Company, as a group,
beneficially owned less than 1% of the Fund's outstanding shares.

Director Compensation

     The  following  table sets forth,  for the fiscal year ended June 30, 1995:
the  compensation  paid by the Company to its eight  independent  directors  for
services rendered in their capacities as directors of the Company;  the benefits
accrued  as  Company  expenses  with  respect to the  Defined  Benefit  Deferred
Compensation  Plan  discussed  below;  and the estimated  annual  benefits to be
received by these  directors upon retirement as a result of their service to the
Company. In addition, the table sets forth the total compensation paid by all of
the mutual  funds  distributed  by INVESCO  Funds  Group,  Inc.  (including  the
Company),  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. 
    


<PAGE>


                                                                            


   
                                                                         Total
                                                                     Compensa-
                                        Benefits      Estimated      tion From
                        Aggregate     Accrued As         Annual        INVESCO
                        Compensa-        Part of       Benefits        Complex
                        tion From        Company           Upon        Paid To
                         Company1      Expenses2    Retirement3     Directors1

Fred A.Deering,            $2,615           $949           $501        $89,350
Vice Chairman of
  the Board

Victor L. Andrews           2,303            897            580         68,000

Bob R. Baker                2,506            801            777         75,350

Lawrence H. Budner          2,303            897            580         68,000

Daniel D. Chabris           2,449          1,023            412         73,350

A. D. Frazier, Jr.4           666              0              0         32,500

Kenneth T. King             2,414            986            454         71,000

John W. McIntyre4             666              0              0         33,000

Total                     $15,922         $5,553         $3,304       $510,550

% of Net Assets          0.0061%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 Company'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
/
    

<PAGE>

   
                                                                            

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  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 Company on April 19, 1995.

      5Totals as a percentage of the Company's net assets as of June
30, 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
Company 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  Company or other funds in the
INVESCO Complex for their services 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
/
    

<PAGE>


                                                                            

   
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 determined to be
fair and equitable by the  committee.  The Company is not making any payments to
directors  under  the  plan  as of the  date  of this  Statement  of  Additional
Information.  The Company has no stock  options or other  pension or  retirement
plans for management or other  personnel and pays no salary or  compensation  to
any of its officers.

      The Company has an audit committee  comprised of four of the directors who
are not interested persons of the Company. The committee meets periodically with
the  Company's  independent   accountants  and  officers  to  review  accounting
principles  used  by  the  Company,  the  adequacy  of  internal  controls,  the
responsibilities and fees of the independent accountants, and other matters.
    

      The Company also has a management  liaison committee which meets quarterly
with various  management  personnel of INVESCO in order (a) to facilitate better
understanding  of management  and  operations of the Company,  and (b) to review
legal and  operational  matters which have been assigned to the committee by the
board of directors,  in furtherance  of the board of directors'  overall duty of
supervision.

HOW SHARES CAN BE PURCHASED

   
      Each 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. The
net  asset  value per share 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 Funds'  Distributor  under a  distribution  agreement with the Company under
which it receives no compensation and bears all expenses,  including the cost of
printing  and  distributing  prospectuses,  incident  to  marketing  of a Fund's
shares,  except for such  distribution  expenses  which are paid out of a Fund's
assets under the Company's  Plan of  Distribution  which has been adopted by the
Company pursuant Rule 12b-1 under the 1940 Act.

      Distribution  Plan. As discussed  under "How To Buy Shares -  Distribution
Expenses"  in the  Prospectus,  the Funds have  adopted a Plan and  Agreement of
Distribution  (the "Plan")  pursuant to Rule 12b-1 under the 1940 Act, which was
implemented  on  November  1, 1990.  The Plan  provides  that the Funds may make
monthly  payments  to INVESCO of amounts  computed  at an annual rate no greater
than
    


<PAGE>
   
                                                                         

0.25% of each Fund's average net assets to reimburse it for expenses incurred by
it in connection with the distribution of a Fund's shares to investors.  Payment
amounts by a 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, although this period is expanded to 24 months for expenses incurred
during the first 24 months of the Fund's  operations.  For the fiscal year ended
June 30, 1995, the Tax-Free  Intermediate Bond Fund and Tax-Free  Long-Term Bond
Fund made  payments  to  INVESCO  under the 12b-1 Plan  (prior to the  voluntary
absorption  of certain  Fund  expenses  by INVESCO) in the amount of $11,963 and
$677,992,  respectively. In addition, as of June 30, 1995, $4,342 and $16,638 of
additional  distribution  expenses  had  been  incurred  under  the Plan for the
Tax-Free Intermediate Bond Fund and Tax-Free Long-Term Bond Fund,  respectively,
subject to payment  upon  approval of the Funds'  directors,  which  payment was
approved  on  July  19,  1995.  As  noted  in  the  Prospectuses,  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 obtain various  distribution-related
and/or  administrative  services for the Funds.  Each Fund is  authorized by the
Plan to use its assets to finance the payments  made to obtain  those  services.
Payments will be made by INVESCO to broker-dealers who sell shares of a 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 Funds do 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 one or
more of the Funds  possibly could decrease to the extent that the banks would no
longer invest customer assets in a particular Fund.  Neither the Company nor its
investment  adviser  will  give any  preference  to  banks  or other  depository
institutions which enter into such arrangements when selecting investments to be
made by each Fund.

      For the 12 months ended June 30, 1995, allocation of 12b-1 amounts paid by
the Tax-Free Long-Term Bond Fund for the following  categories of expenses were:
advertising--$83,066;  sales literature, printing and postage--$160,815;  direct
mail--$96,592; public  relations/promotion--$56,247;  compensation to securities
dealers and other organizations--$134,070;  marketing  personnel--$147,202.  For
the 12 months  ended June 30,  1995,  allocations  of 12b-1  amounts paid by the
Tax-Free  Intermediate Bond Fund for the following  categories of expenses were:
advertising -- $1,319; sales literature,  printing and postage -- $5,688; direct
mail -- $1,193; public relations/promotion -- $1,042; compensation to securities
dealers and other organizations -- $490; marketing personnel -- $2,231.
    


<PAGE>
                                                                            


      The nature and scope of services which are provided by securities  dealers
and other  organizations  may vary by dealer but  include,  among other  things,
processing new stockholder account  applications,  preparing and transmitting to
the  Company's  Transfer  Agent   computer-processable   tapes  of  each  Fund's
transactions  by  customers,  serving as the primary  source of  information  to
customers in answering  questions  concerning  each Fund, and assisting in other
customer transactions with each Fund.

   
      The Plan was  approved  on April 21,  1993,  at a meeting  called for such
purpose by a majority of the  directors of the Company,  including a majority of
the directors who neither are  "interested  persons" of the Company nor have any
financial  interest in the operation of the Plan ("12b-1  directors").  The Plan
was approved by INVESCO on November 26, 1993,  as the then sole  shareholder  of
the Tax-Free  Intermediate Bond Fund.  Pursuant to authorization  granted by the
public  shareholders of FTFIS on May 24, 1993 FTFIS, as the initial  shareholder
of the Tax-Free Long-Term Bond Fund,  approved the Agreement on October 27, 1993
for an initial  term  expiring  April 30, 1994.  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 each
Fund for so long as such  continuance  is approved at least annually by the vote
of the board of directors of the Company cast in person at a meeting  called for
the purpose of voting on such  continuance.  The Plan can also be  terminated at
any time with respect to any Fund,  without penalty,  if a majority of the 12b-1
directors, or shareholders of such Fund, vote to terminate the Plan. The Company
may, in its absolute discretion,  suspend,  discontinue or limit the offering of
its  shares of any Fund at any time.  In  determining  whether  any such  action
should be taken, the board of directors intends to consider all relevant factors
including,  without  limitation,  the size of a particular  Fund, the investment
climate for any particular Fund,  general market  conditions,  and the volume of
sales and  redemptions of a Fund's  shares.  The Plan may continue in effect and
payments may be made under the Plan following any such  temporary  suspension or
limitation  of the  offering  of a  Fund's  shares;  however,  neither  Fund  is
contractually  obligated to continue the Plan for any particular period of time.
Suspension  of the offering of a Fund's  shares  would not, of course,  affect a
shareholder's  ability to redeem his  shares.  So long as the Plan is in effect,
the selection and nomination of persons to serve as independent directors of the
Company shall be committed to the  independent  directors  then in office at the
time of such  selection or  nomination.  The Plan may not be amended to increase
materially the amount of any Fund's payments  thereunder without approval of the
shareholders  of that  Fund,  and all  material  amendments  to the Plan must be
approved by the board of directors  of the Company,  including a majority of the
12b-1  directors.  Under the  agreement  implementing  the Plan,  INVESCO or the
Funds, the latter by vote of a majority of the 12b-1


<PAGE>


                                                                            

directors,  or of the  holders  of a  majority  of a Fund's  outstanding  voting
securities, may terminate such agreement as to that Fund without penalty upon 30
days' written notice to the other party.  No further  payments will be made by a
Fund under the Plan in the event of its termination as to that Fund.

   
      To the extent that the Plan  constitutes  a plan of  distribution  adopted
pursuant to Rule 12b-1 under the 1940 Act, it shall remain in effect as such, so
as to  authorize  the use of  each  Fund's  assets  in the  amounts  and for the
purposes set forth therein,  notwithstanding the occurrence of an assignment, as
defined by the 1940 Act, and rules  thereunder.  To the extent it constitutes an
agreement pursuant to a plan, each Fund's obligation to make payments to INVESCO
shall terminate automatically,  in the event of such "assignment," in which case
the Funds 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 Funds are provided to, and reviewed by, the directors on a
quarterly basis. In the quarterly review, the directors  determine whether,  and
to what extent,  INVESCO will be reimbursed for  expenditures  which it has made
that are reimbursable  under the Funds' Rule 12b-1 Plan. On an annual basis, the
directors  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 Company who have a direct or indirect
financial  interest in the  operation of the Plan are the officers and directors
of the  Company  listed  herein  under the  section  entitled  "The Fund and Its
Management-- Officers and Directors of the Company" who are also officers either
of INVESCO or companies  affiliated with INVESCO. The benefits which the Company
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 Funds;

      (2)   The sale of additional shares reduces the likelihood that redemption
            of shares will require the liquidation of securities of the Funds in
            amounts  and  at  times  that  are  disadvantageous  for  investment
            purposes;



<PAGE>
                                                                            

      (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 each  Fund's
                  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.

HOW SHARES ARE VALUED

   
      As described in the section of each Fund's Prospectus entitled "Fund Price
and  Performance,"  the net asset value of shares of each Fund is computed  once
each day that the New York  Stock  Exchange  is open as of the close of  regular
trading on that  Exchange  (generally  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 in which there is a sufficient degree of
trading in the  securities  held by a 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 a 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 is  calculated  by
dividing the value of all securities held by a particular Fund plus other assets
(including interest accrued but not collected),  less all liabilities (including
accrued expenses,  but excluding  capital and surplus),  by the number of shares
outstanding.
    
      The Funds value municipal  securities  (including  commitments to purchase
such  securities  on a when-issued  basis) on the basis of prices  provided by a
pricing  service which uses  information  with respect to transactions in bonds,
quotations from bond dealers,  market transactions in comparable  securities and
various



<PAGE>
                                                                           

   
relationships  between securities in determining values. The Company's directors
have approved the use of these pricing  procedures and will continue to evaluate
their appropriateness as necessary. Under these procedures, the last quoted sale
price is used to value  municipal  securities  where trades have occurred on the
valuation  date.  In  addition,  where  trades may not have  occurred  but where
reliable  market  quotations  are readily  available  for an issue of  municipal
securities held by the Funds, such securities are valued at the bid price on the
basis of such quotations.  Non tax-exempt securities for which market quotations
are readily  available  are valued on a  consistent  basis at market value based
upon such quotations; any securities for which market quotations are not readily
available  and other assets will be valued at fair value as  determined  in good
faith using methods  prescribed by the Company's board of directors  (presently,
"matrix  pricing"  as provided by the  pricing  service).  Prior to  utilizing a
pricing  service,  the Company's board of directors will review the methods used
by such service to assure  itself that  securities  will be valued at their fair
values. The Company's board of directors also periodically  monitors the methods
used by such pricing  services.  Absent unusual  circumstances,  short-term debt
securities with remaining  maturities of 60 days or less at the time of purchase
are valued at amortized cost.

FUND PERFORMANCE

      As discussed in the section of each Fund's Prospectus entitled "Fund Price
and Performance," the Funds advertise their total return  performance and yield.
The total return  performance  for the Tax-Free  Intermediate  Bond Fund for the
one-year   period  ended  June  30,  1995  and  the  period   December  1,  1993
(commencement of operations of the Fund) to June 30, 1995 (life of the Fund) was
6.67% and 2.23%,  respectively.  Average annual total return performance for the
Tax-Free Long-Term Bond Fund for the one-, five- and ten-year periods ended June
30, 1995 was 6.16%, 7.66% and 9.32%,  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 indicated.



<PAGE>

                                                                            

   
      The 30-day  compounded yield at June 30, 1995, for the Tax-Free  Long-Term
Bond  Fund of 5.14%  and the  Tax-Free  Intermediate  Bond  Fund of  4.55%,  was
determined  by computing  the yield of each  obligation  held by the  respective
Fund,  based  on  market  value  of the  obligation  (including  actual  accrued
interest) at the close of business on the last  business day of each month,  or,
with respect to obligations  purchased during the month, the purchase price plus
actual accrued interest. The resultant yield is divided by 360 and multiplied by
the market value of the obligation (including actual accrued interest),  and the
result is  multiplied  by the  number of days in the  subsequent  month that the
obligation is held by the Fund (assuming each month has 30 days).
    

      The yield of each security is determined as follows;

      1) For obligations issued without original issue discount (OID) and having
a current market premium,  yield to maturity (or yield to call if applicable) is
used.

      2) For obligations issued without OID and having a current
market discount, coupon rate is used.

      3) For obligations issued with OID, trading at a discount to the remaining
portion of OID, yield to maturity,  based on the OID  calculation at issue date,
is used.

      4) For obligations  issued with OID, trading at a premium to the remaining
portion of OID, yield to maturity is used.

      Current  yield  will  fluctuate  from  day to day  and is not  necessarily
representative of future results.  A shareholder should remember that yield is a
function of the kind and quality of the  instruments  in each Fund's  portfolio,
portfolio maturity and operating  expenses.  A number of factors should be taken
into  account  before using yield  information  as a basis for  comparison  with
alternative investments. An investment in a Fund is not insured and its yield is
not guaranteed.

   
      Any  tax  equivalent  yield  quotation  of a Fund  will be  calculated  as
follows:  If the entire  current yield  quotation for such period is tax-exempt,
the tax  equivalent  yield will be the current  yield  quotation  divided by one
minus a stated  income  tax rate or rates.  If a portion  of the  current  yield
quotation is not  tax-exempt,  the tax  equivalent  yield will be the sum of (a)
that portion of the yield which is tax-exempt divided by 1 minus a stated income
tax rate or rates and (b) the portion of the yield which is not tax-exempt.  The
tax  equivalent  yield of the Tax-Free  Long-Term Bond Fund as of June 30, 1995,
was 6.05% at the 15% tax bracket, 7.14% at the 28% tax bracket, and 7.67% at the
33% tax bracket. The tax equivalent yield of the Tax-Free Intermediate Bond Fund
as of June 30,  1994  was  5.35%  at the 15% tax  bracket,  6.32% at the 28% tax
bracket, and 6.79% at the 33% tax bracket.
    


<PAGE>
                                                                            


      In conjunction  with  performance  reports,  comparative data between each
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.

   
      In conjunction  with  performance  reports and/or  analyses of shareholder
service for the Funds, comparative data between a 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 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 made by independent  sources may be used in advertisements,
sales literature or shareholder  reports,  including  reprints of, or selections
from,  editorials or articles about the Funds. These sources utilize information
compiled (i) internally;  (ii) by Lipper Analytical Services,  Inc.; or (iii) by
other recognized  analytical  services.  The Lipper  Analytical  Services,  Inc.
mutual fund  rankings and  comparisons  which may be used by the Tax-Free  Long-
Term Bond Fund and the Tax-Free  Intermediate  Bond Fund in performance  reports
will be drawn from the General  Municipal Bond Funds and Intermediate  Municipal
Debt Funds mutual fund groupings,  respectively,  in addition to the broad-based
Lipper general fund  groupings.  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
      Forbes
      Fortune
      Ibbotson Associates, Inc.
      Institutional Investor
      Investment Company Data, Inc.
      Investor's Business Daily
      Kiplinger's Personal Finance


<PAGE>
                                                                            

      Lipper Analytical Services, Inc.'s Mutual Fund Performance
      Analysis
      Money
      Morningstar
      Mutual Fund Forecaster
      No-Load Analyst
      No-Load Fund X
      Personal Investor
      Smart Money
      The New York Times
      The No-Load Fund Investor
      U.S. News and World Report
      United Mutual Fund Selector
      USA Today
      Wall Street Journal
      Wiesenberger Investment Companies Services
      Working Woman
      Worth

SERVICES PROVIDED BY THE FUNDS

      Periodic  Withdrawal  Plan.  As  described  in the  section of each Fund's
Prospectus entitled "How to Sell Shares," each Fund offers a Periodic Withdrawal
Plan.  All  dividends  and   distributions   on  shares  owned  by  shareholders
participating in this Plan are reinvested in additional shares. Since withdrawal
payments   represent  the  proceeds   from  sales  of  shares,   the  amount  of
shareholders'  investments  in a  particular  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 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.

   
     Exchange  Privilege.  As discussed in the section of each Fund's Prospectus
entitled "How to Buy Shares - Exchange  Privilege," the Funds offer shareholders
the  privilege of  exchanging  shares of the Funds for shares of another fund or
for shares of certain  other no-load  mutual funds advised by INVESCO.  Exchange
requests may be made 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
    


<PAGE>
                                                                            

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.  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.

HOW TO REDEEM SHARES

   
      Normally,  payment for shares  redeemed  will be mailed  within seven days
following receipt of the required  documents as described in the section of each
Fund's Prospectus  entitled "How to Sell 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 Funds
of securities owned by it is not reasonably practicable, or it is not reasonably
practicable  for a 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 Company's  investment adviser,  make it undesirable for a Fund to
pay for  redeemed  shares in cash.  In such cases,  the  investment  adviser may
authorize  payment to be made in portfolio  securities or other  property of the
Funds.  However,  the Company has obligated itself under the Investment  Company
Act of 1940 to redeem for cash all shares of a Fund  presented for redemption by
any one  shareholder  having a value up to  $250,000  (or 1% of the  Fund's  net
assets if that is less) in any 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 a Fund and its  shareholders,  and are valued at the value
assigned  to  them  in  computing   each  Fund's  net  asset  value  per  share.
Shareholders  receiving such  securities are likely to incur  brokerage costs on
their subsequent sales of the securities.

DIVIDENDS, CAPITAL GAIN DISTRIBUTIONS, AND TAXES

   
     Each Fund  intends to  continue  to conduct  its  business  and satisfy the
applicable  diversification  of assets  and  source of income  and  distribution
requirements to qualify as a regulated  investment company under Subchapter M of
the  Internal  Revenue Code of 1986,  as amended.  Each Fund so qualified in the
fiscal year ended June 30,  1995,  and each Fund  intends to continue to qualify
during its current fiscal year. As a result,  it is  anticipated  that each Fund
will pay no federal income or excise taxes and will be accorded conduit or "pass
through" treatment for federal income tax purposes.
    

<PAGE>                                                                      


   
      As discussed  in the section of each Fund's  Prospectus  entitled  "Taxes,
Capital Gain  Distributions  and Dividends," the Funds also intend to qualify to
pay "exempt-interest  dividends" to its shareholders.  The Funds will so qualify
if at least 50% of their total assets are invested in  municipal  securities  at
the close of each  quarter of the  Company's  fiscal year.  The exempt  interest
portion of the income  dividend  which is  payable  monthly  may be based on the
ratio of each Fund's  tax-exempt  income to taxable income for the entire fiscal
year. In such case, the ratio would be determined  and reported to  shareholders
after the close of each fiscal year of the Funds.  Thus, the tax-exempt  portion
of any  particular  dividend  may be based  upon the  tax-exempt  portion of all
distributions  for the year,  rather  than upon the  tax-exempt  portion of that
particular dividend.  Exemption of exempt-interest  dividends for federal income
tax purposes does not necessarily  result in exemption under the income or other
tax laws of any  state or  local  taxing  authority.  Although  these  dividends
generally will be subject to such state and local taxes, the laws of the several
states and local  taxing  authorities  vary with respect to the taxation of such
exempt-interest  dividends,  other dividends and distributions of capital gains.
In addition,  interest on indebtedness incurred or continued by a shareholder to
purchase or carry shares of the Funds is not  deductible  for federal income tax
purposes.  Shareholders  of the  Funds  are  advised  to  consult  their own tax
advisers with respect to these matters.
    

      As discussed in each Fund's  Prospectus,  certain  corporations  which are
subject  to the  alternative  minimum  tax may have to  include  exempt-interest
dividends in calculating  their  alternative  taxable income in situations where
the  "adjusted  current  earnings" of the  corporation  exceeds its  alternative
minimum  taxable  income.  In  addition,  to the extent that the Funds invest in
certain  "private  activity  bonds"  issued  after  August 7, 1986, a portion of
exempt-interest  dividends  attributable  to such bonds  would be an item of tax
preference to shareholders.

      Any loss realized on the sale or exchange of shares in the Funds that have
been held by the shareholder for six months or less (unless Treasury regulations
are issued which provide for a shorter  period) is not  deductible to the extent
of the amount of any exempt-interest dividend paid with respect to such shares.

   
     If the Fund's  shares are sold at a loss after being held for six months or
less, the loss will be treated as long-term, instead of short-term, capital loss
to the extent of any capital gain distributions received on those shares.
    

<PAGE>



   
      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 Company
recommends any particular  method of determining  cost basis.  Other methods may
result in different tax  consequences.  If a shareholder  has reported  gains or
losses for a Fund in past years, the shareholder must continue to use the method
previously  used,  unless the  shareholder  applies to the IRS for permission to
change methods.

      Shareholders  should  consult  their own tax advisers  regarding  specific
questions  as to federal,  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 Funds'
portfolio turnover. Since the Tax-Free Long-Term Bond Fund started business, the
rate of portfolio  turnover has fluctuated  under constantly  changing  economic
conditions  and market  circumstances.  During the fiscal  years  ended June 30,
1995,  1994, and 1993, the Tax-Free  Long-Term  Bond Fund's  portfolio  turnover
rates were 99%, 28%, and 30%,  respectively.  For the fiscal year ended June 30,
1995 and period  ended June 30,  1994,  the  Tax-Free  Intermediate  Bond Fund's
portfolio  turnover rates were 23% and 55%,  respectively.  The higher portfolio
turnover rate for the Tax-Free  Long-Term Bond Fund during the fiscal year ended
June 30,  1995,  was  primarily  the  result of a  restructuring  of the  Fund's
portfolio to extend  duration,  increase call  protection  and increase  overall
credit  quality.   Securities   initially  satisfying  the  basic  policies  and
objectives  of a Fund may be  disposed of when they are no longer  suitable.  In
computing  the portfolio  turnover  rate,  all  investments  with  maturities or
expiration  dates at the time of acquisition of one year or less, were 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 each Fund
during  the fiscal  year.  Prior to 1985,  all  investments  in U.S.  government
securities were excluded in computing the portfolio turnover rate.
    



<PAGE>
                                                                            

      Placement  of  Portfolio  Brokerage.  Either  INVESCO,  as  the  Company's
investment  adviser,  or INVESCO  Trust,  as the Company's  sub-adviser,  places
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 any brokerage
commissions  paid by reviewing the quality of executions  obtained on the Funds'
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  charged each Fund
are consistent  with prevailing and reasonable  commissions,  INVESCO or INVESCO
Trust also endeavors to monitor brokerage  industry practices with regard to the
commissions  charged by brokers and dealers on  transactions  effected for other
comparable  institutional  investors.  While  INVESCO  or  INVESCO  Trust  seeks
reasonably  competitive  rates,  a Fund  does  not  necessarily  pay the  lowest
commission or spread available.

      Portfolio  securities are usually  purchased from an underwriter at prices
which  include  underwriting  fees paid by the  issuer or from a primary  market
maker acting as principal for the  securities on a net basis,  with no brokerage
commission  being paid by the Funds.  On occasion,  securities  may be purchased
directly  from the issuer.  Other  purchases and all sales are placed with those
dealers  from  whom the  investment  manager  believes  best  execution  will be
obtained,  which  may be  acting as either  agents  or  principals.  Usually  no
brokerage commissions are paid by the Funds for such transactions.  Transactions
placed through dealers serving as primary market makers normally are executed at
a price based on the bid and asked prices.

      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 Funds.

     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  are in excess of those  which other  brokers  might have
charged for effecting the same transactions.

<PAGE>


      Portfolio  transactions may be effected through  qualified  broker/dealers
who recommend the Funds to their clients, or who act as agent in the purchase of
a Fund's  shares for their  clients.  When a number of brokers  and  dealers can
provide  comparable  best price and execution on a particular  transaction,  the
Company's adviser may consider the sale of a Fund's shares by a broker or dealer
in selecting among qualified broker/dealers.

   
      The aggregate dollar amount of brokerage  commissions paid by the Tax-Free
Intermediate  Bond Fund for the year  ended June 30,  1995 and the period  ended
June 30,  1994 was $4,147 and  $6,541,  respectively,  and for the fiscal  years
ended June 30, 1995,  1994,  and 1993 were  $393,584,  $258,985,  and  $240,938,
respectively,  for Tax-Free  Long-Term  Bond Fund. The higher level of brokerage
commissions paid by the Tax-Free Long-Term Bond Fund for the year ended June 30,
1995 was primarily due to the Fund's higher level of portfolio  turnover in that
year. For the period ended June 30, 1995, no commissions were paid to brokers in
connection with their provision of research services to either Fund.
    

      Neither  INVESCO nor INVESCO Trust receive any  brokerage  commissions  on
portfolio  transactions  effected  on  behalf  of the  Funds,  and  there  is no
affiliation  between  INVESCO,  INVESCO  Trust,  or any person  affiliated  with
INVESCO,  INVESCO  Trust,  or the Funds,  and any broker or dealer that executes
transactions for the Funds.

ADDITIONAL INFORMATION

   
      Common  Stock.  The Company has 500  million  authorized  shares of common
stock with a par value of $0.01 per share. Of the Company's  authorized  shares,
100 million shares have been  allocated to the Tax-Free  Long-Term Bond Fund and
100 million shares have been allocated to Tax-Free Intermediate Bond Fund. As of
June 30, 1995, 16,896,247 shares of the Tax-Free Long-Term Bond Fund and 506,037
shares of the  Tax-Free  Intermediate  Bond Fund were  outstanding.  All  shares
issued and outstanding are, and all shares offered hereby, when issued, will be,
fully  paid and  nonassessable.  The board of  directors  has the  authority  to
designate  additional  classes of common stock  without  seeking the approval of
shareholders and may classify and reclassify any authorized but unissued shares.
    

      Shares of each class  represent the interests of the  shareholders of such
class in a particular portfolio of investments of the Company. Each class of the
Company's  shares is preferred over all other classes with respect to the assets
specifically  allocated  to that class,  and all income,  earnings,  profits and
proceeds  from  such  assets,  subject  only to the  rights  of  creditors,  are
allocated to shares of that class. The assets of each class


<PAGE>
                                                                            

are  segregated on the books of account and are charged with the  liabilities of
that class and with a share of the Company's general  liabilities.  The board of
directors determines those assets and liabilities deemed to be general assets or
liabilities  of the Company,  and those items are  allocated  among classes in a
manner deemed by the board to be fair and equitable.  Generally, such allocation
will be made based upon the  relative  total net  assets of each  class.  In the
unlikely  event  that a  liability  allocable  to one class  exceeds  the assets
belonging to the class,  all or a portion of such liability may have to be borne
by the holders of shares of the Company's other classes.

      All  dividends on shares of a  particular  class shall be paid only out of
the income  belonging to that class,  pro rata to the holders of that class.  In
the event of the  liquidation  or  dissolution of the Company or of a particular
class, the shareholders of each class that is being liquidated shall be entitled
to receive,  as a class,  when and as declared  by the board of  directors,  the
excess of the assets  belonging to that class over the liabilities  belonging to
that  class.  The  holders of shares of any class  shall not be  entitled to any
distribution upon liquidation of any other class. The assets so distributable to
the  shareholders  of any  particular  class  shall be  distributed  among  such
shareholders  in  proportion  to the number of shares of that class held by them
and recorded on the books of the Company.

      All Fund shares,  regardless of class,  have equal voting  rights.  Voting
with respect to certain matters, such as ratification of independent accountants
or election of  directors,  will be by all classes of the Company.  When not all
classes  are  affected  by a matter to be voted  upon,  such as  approval  of an
investment  advisory contract or changes in a Fund's investment  policies,  only
shareholders  of the class  affected  by the matter  will be  entitled  to vote.
Company shares have noncumulative voting rights, which means that the holders of
a majority of the shares voting for the election of directors of the Company can
elect 100% of the directors if they choose to do so. In such event,  the holders
of the remaining shares voting for the election of directors will not be able to
elect any  person or  persons  to the board of  directors.  After they have been
elected by  shareholders,  the  directors  will  continue  to serve  until their
successors  are elected and have  qualified or they are removed from office,  in
either case by a shareholder  vote, or until death,  resignation  or retirement.
They may appoint their own successors,  provided that always at least a majority
of the  directors  have been elected by the  Company's  shareholders.  It is the
intention  of the  Company  not to hold annual  meetings  of  shareholders.  The
directors  will call annual or special  meetings of  shareholders  for action by
shareholder vote as may be required by the 1940 Act or the Company's Articles of
Incorporation, or at their discretion.



<PAGE>

                                                                            

      Principal Shareholders.  As of August 1, 1995, the following
entities held more than 5% of the outstanding securities of the
Funds listed below.

Name and Address of
Beneficial Owner                    Number of Shares        Percent of Class

INVESCO Tax-Free
  Intermediate Bond Fund

Alice T. Campbell                   65,283.626                    12.716%
3355 Stonecrest Ct.                 Record and Beneficial
Atlanta, GA  30341

   
John Canaday                        32,759.384                     6.381%
745 Pine St.                        Record and Beneficial
Boulder, CO  80302
    

Charles Schwab & Co., Inc.          28,473.097                     5.546%
Attn:  Mutual Fund Dept.            Record
101 Montgomery St.
San Francisco, CA  94104

INVESCO Tax-Free
  Long-Term Bond Fund

      -0-                           -0-                           -0-

      Independent  Accountants.  Price Waterhouse,  LLP, 950 Seventeenth Street,
Denver,  Colorado,  has been  selected  as the  independent  accountants  of the
Company. The independent  accountants are responsible for auditing the financial
statements of the Company.

      Custodian.  State Street Bank and Trust  Company,  P.O.  Box 351,  Boston,
Massachusetts,  has been  designated  as  custodian  of the cash and  investment
securities of the Company. The bank is also responsible for, among other things,
receipt and delivery of the Company's  investment  securities in accordance with
procedures and conditions specified in the custody agreement.

      Transfer Agent.  The Company is provided with transfer  agent,  registrar,
and dividend  disbursing  agent services by INVESCO Funds Group,  Inc.,  7800 E.
Union  Avenue,  Denver,  Colorado,  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  Company's  fiscal year ends on June 30. The
Company distributes reports at least semiannually to its shareholders. Financial
statements regarding the Company,  audited by the independent  accountants,  are
sent to shareholders annually.

<PAGE>
                                                                            


     Legal  Counsel.  The firm of Kirkpatrick & Lockhart,  Washington,  D.C., is
legal  counsel for the Company.  The firm of Moye,  Giles,  O'Keefe,  Vermeire &
Gorrell, Denver, Colorado, serves as special counsel to the Company.

   
      Financial  Statements.  The Funds'  audited  financial  statements and the
notes  thereto for the fiscal year ended June 30, 1995,  and the report of Price
Waterhouse  LLP with  respect to such  financial  statements,  are  incorporated
herein by reference from the Funds' Annual Report to Shareholders for the fiscal
year ended June 30, 1995.
    

      Prospectus.  The  Company  will  furnish,  without  charge,  a copy of the
applicable  Prospectus  for each of its Funds upon request.  There is a separate
Prospectus  available for each Fund. Such requests should be made to the Company
at the mailing  address or telephone  number set forth on the first page of this
Statement of Additional Information.

   
      Registration  Statement.  This Statement of Additional Information and the
Prospectus do not contain all of the information  set forth in the  Registration
Statement  the  Company  has  filed  with the  SEC.  The  complete  Registration
Statement may be obtained from the SEC upon payment of the fee prescribed by the
rules and regulations of, the SEC.
    
<PAGE>

APPENDIX A

Description of Moody's Investors Service, Inc.'s municipal 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.

Ba--Bonds  which are rated Ba are  judged to have  speculative  elements:  their
future cannot be considered  as well assured.  Often the  protection of interest
and  principal  payments may be very  moderate and thereby not well  safeguarded
during  both  good  and bad  times  over the  future.  Uncertainty  of  position
characterizes bonds in this class.

B--Bonds  which  are  rated B  generally  lack  characteristics  of a  desirable
investment.  Assurance of interest and principal  payments of, or maintenance of
other terms of, the contract over any long period of time may be small.

Caa--Bonds  rated Caa are of poor  standing.  Such  issues  may be in default or
there may be present elements of danger with respect to principal or interest.
<PAGE>

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 Ratings Group's municipal 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.

     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.

BB,B--Bonds rated BB or B are regarded, on balance, as predominantly speculative
with  respect to the issuer's  capacity to pay  interest and repay  principal in
accordance with the terms of the  obligation.  BB indicates the lowest degree of
speculation and B a higher degree of  speculation.  While such bonds will likely
have some quality and protective characteristics,  these are outweighed by large
uncertainties or major risk exposures to adverse conditions.

CCC--Bonds rated CCC have a currently identifiable  vulnerability to default and
are dependent upon favorable  business,  financial,  and economic  conditions to
meet timely  payment of interest  and  repayment of  principal.  In the event of
adverse business, financial, or economic conditions, they are not likely to have
the capacity to pay interest and repay principal.
<PAGE>

Description of Fitch Investors Service, Inc. corporate and municipal bond 
ratings:

AAA--Bonds  considered to be investment grade and of the highest credit quality.
The  obligor  has an  exceptionally  strong  ability to pay  interest  and repay
principal, which is unlikely to be affected by reasonably foreseeable events.

AA--Bonds considered to be investment grade and of very high credit quality. The
obligor's  ability to pay interest and repay principal is very strong,  although
not quite as strong as bonds  rated AAA.  Because  bonds rated in the AAA and AA
categories are not significantly  vulnerable to foreseeable future developments,
short-term debt of these issuers is generally rated F-1+.

A--Bonds  considered  to be  investment  grade and of high credit  quality.  The
obligor's  ability to pay  interest  and repay  principal  is  considered  to be
strong, but may be more vulnerable to adverse changes in economic conditions and
circumstances than bonds with higher ratings.

BBB--Bonds considered to be investment grade and of satisfactory credit quality.
The  obligor's  ability to pay interest and repay  principal is considered to be
adequate. Adverse changes in economic conditions and circumstances, however, are
more likely to have adverse impact on these bonds, and therefore impair timely
payment.  The  likelihood  that the  ratings  of these  bonds  will  fall  below
investment grade is higher than for bonds with higher ratings.

Plus (+) or Minus  (-):  Plus and minus  signs are used with a rating  symbol to
indicate the relative position of a credit within the rating category.  Plus and
minus signs, however, are not used in the AAA category.

Description of Duff & Phelps Inc. long-term corporate and municipal
debt ratings:

AAA--Highest  credit  quality.  The risk  factors  are  negligible,  being  only
slightly more than for risk-free U.S. Treasury debt.

AA+,  AA, AA- --High  credit  quality.  Protection  factors are strong.  Risk is
modest but may vary slightly from time to time because of economic conditions.

BBB+,  BBB,  BBB-  --Below  average  protection  factors  but  still  considered
sufficient  for  prudent  investment.  Considerable  variability  in risk during
economic cycles.

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.
<PAGE>

Description of Moody's Investors Service,  Inc.'s ratings of state and municipal
notes:

Moody's ratings for state and municipal and other short-term obligations will be
designated Moody's Investment Grade ("MIG").  This distinction is in recognition
of the differences  between  short-term credit risk and long-term risk.  Factors
affecting  the  liquidity  of  the  borrower  are  uppermost  in  importance  in
short-term borrowing, while various factors of the first importance in long-term
borrowing risk are of lesser importance in the short run.
Symbols will be used as follows:

MIG-1--Notes  bearing this  designation are of the best quality  enjoying strong
protection  from  established  cash flows of funds for their  servicing  or from
established and broad-based access to the market for refinancing, or both.

MIG-2--Notes  bearing  this  designation  are of high  quality,  with margins of
protection ample although not so large as in the preceding group.

   
Description of Standard & Poor's Ratings  Group's  ratings for investment  grade
municipal notes and short-term demand obligations:
    
                                                                            

SP-1:  Issues carrying this designation have a very strong or strong capacity to
pay principal and interest.  Issues  determined to possess  overwhelming  safety
characteristics will be given a "plus" designation.

SP-2:  Issues  carrying this  designation  have a  satisfactory  capacity to pay
principal and interest.

Description  of  Moody's  Investors  Service,   Inc.'s  tax-exempt  and  taxable
commercial paper ratings:

Moody's Commercial Paper ratings are opinions of the ability of issuers to repay
punctually  promissory  obligations not having an original maturity in excess of
nine months.  Moody's makes no  representation  that such obligations are exempt
from  registration  under the Securities Act of 1933, nor does it represent that
any  specific  note is a  valid  obligation  of a  rated  issuer  or  issued  in
conformity with any applicable law. The following designations, all judged to be
investment grade,  indicate the relative  repayment capacity of rated issuers of
securities in which the Fund may invest:
<PAGE>

Prime-1:  Issuers  rated  Prime-1  have a superior  capacity for  repayment  for
short-term promissory obligations.

Prime-2:  Issuers  rated  Prime-2  have  a  strong  capacity  for  repayment  of
short-term promissory obligations.

   
Description of Standard & Poor's Ratings Group's ratings for demand  obligations
and taxable and tax-exempt commercial paper:
    

S&P's ratings are a current  assessment of the  likelihood of timely  payment of
debt  having an  original  maturity  of no more than 365  days.  The two  rating
categories for securities in which the Fund may invest are as follows:

A-1: This designation indicates the degree of safety regarding timely payment is
either  overwhelming or very strong.  Issues determined to possess  overwhelming
safety characteristics will be given a "plus" designation.

A-2:  Capacity  for timely  payment on issues with this  designation  is strong.
However,  the relative degree of safety is not as high as for issues  designated
A-1.
<PAGE>

APPENDIX B

DESCRIPTION OF FUTURES CONTRACTS AND OPTIONS

Options on Securities
                                                                           
      An option on a security  provides the  purchaser,  or  "holder,"  with the
right, but not the obligation,  to purchase,  in the case of a "call" option, or
sell, in the case of a "put" option,  the security or securities  underlying the
option,  for a fixed exercise price up to a stated  expiration  date. The holder
pays a non-refundable purchase price for the option, known as the "premium." The
maximum  amount of risk the  purchaser  of the  option  assumes  is equal to the
premium plus related transaction costs,  although the entire amount may be lost.
The risk of the seller, or "writer," however, is potentially  unlimited,  unless
the option is "covered,"  which is generally  accomplished  through the writer's
ownership  of the  underlying  security,  in the case of a call  option,  or the
writer's  segregation  of an amount of cash or securities  equal to the exercise
price,  in the  case  of a put  option.  If the  writer's  obligation  is not so
covered, it is subject to the risk of the full change in value of the underlying
security from the time the option is written until exercise.

      Upon  exercise of the option,  the holder is required to pay the  purchase
price of the underlying  security,  in the case of a call option,  or to deliver
the  security  in return for the  purchase  price,  in the case of a put option.
Conversely,  the writer is required to deliver  the  security,  in the case of a
call option, or to purchase the security,  in the case of a put option.  Options
on  securities  which have been  purchased or written may be closed out prior to
exercise  or  expiration  by  entering  into an  offsetting  transaction  on the
exchange  on  which  the  initial  position  was  established,  subject  to  the
availability of a liquid secondary market.

      Options on securities are traded on national securities exchanges, such as
the Chicago Board of Options Exchange and the New York Stock Exchange, which are
regulated  by the  Securities  and  Exchange  Commission.  The Options  Clearing
Corporation  guarantees  the  performance  of each  party to an  exchange-traded
option,  by in effect taking the opposite side of each such option.  A holder or
writer may engage in transactions in  exchange-traded  options on securities and
options on indices of securities only through a registered  broker/dealer  which
is a member of the exchange on which the option is traded.

      An option position in an exchange-traded  option may be closed out only on
an exchange which provides a secondary  market for an option of the same series.
Although the Fund will generally  purchase or write only those options for which
there appears to be an active  secondary  market,  there is no assurance  that a
liquid secondary  market on an exchange will exist for any particular  option at
any  particular  time. In such event it might not be possible to effect  closing
transactions in a particular option with the result that this Fund would have to
exercise  the option in order to realize any profit.  This would  result in this
Fund incurring brokerage commissions upon the disposition of underlying


<PAGE>
                                                                            

securities  acquired  through the exercise of a call option or upon the purchase
of underlying  securities  upon the exercise of a put option.  If these Funds as
covered call option writers are unable to effect a closing purchase  transaction
in a secondary  market,  unless the Funds are required to deliver the securities
pursuant to the assignment of an exercise notice,  they will not be able to sell
the underlying security until the option expires.

      Reasons  for the  potential  absence  of a liquid  secondary  market on an
exchange include the following:  (i) there may be insufficient  trading interest
in certain options;  (ii)  restrictions may be imposed by an exchange on opening
transactions or closing  transactions or both; (iii) trading halts,  suspensions
or other  restrictions  may be imposed  with  respect to  particular  classes or
series  of  options  or  underlying  securities:   (iv)  unusual  or  unforeseen
circumstances may interrupt normal operations on an exchange; (v) the facilities
of an  exchange  or a clearing  corporation  may not at all times be adequate to
handle current trading volume or (vi) one or more exchanges  could, for economic
or other reasons,  decide or be compelled at some future date to discontinue the
trading of options (or particular class or series of options) in which event the
secondary  market on that exchange (or in the class or series of options)  would
cease to exist,  although  outstanding  options on that exchange  which had been
issued by a clearing  corporation  as a result of trades on that exchange  would
continue to be exercisable in accordance with their terms. There is no assurance
that higher than anticipated  trading activity or other unforeseen  events might
not,  at a  particular  time,  render  certain of the  facilities  of any of the
clearing  corporations  inadequate and thereby  result in the  institution by an
exchange of special  procedures which may interfere with the timely execution of
customers' orders. However, the Options Clearing Corporation, based on forecasts
provided by the U.S.  exchanges,  believes that its  facilities  are adequate to
handle the  volume of  reasonably  anticipated  options  transactions,  and such
exchanges  have  advised  such  clearing  corporation  that they  believe  their
facilities will also be adequate to handle reasonably anticipated volume.

     In addition,  options on securities may be traded over-the-counter  through
financial  institutions  dealing  in such  options  as  well  as the  underlying
instruments.  OTC options are  purchased  from or sold  (written)  to dealers or
financial  institutions which have entered into direct agreements with the Fund.
With OTC options,  such variables as expiration date, exercise price and premium
will be agreed upon  between the Fund and the  transacting  dealer,  without the
intermediation of a third party such as the OCC. If the transacting dealer fails
to make or take delivery of the securities  underlying an option it has written,
in accordance with the terms of that option as written,  the Fund would lose the
premium  paid  for  the  option  as  well  as  any  anticipated  benefit  of the
transaction.  The Fund will engage in OTC option  transactions only with primary
U.S. Government securities dealers recognized by the Federal Reserve Bank of New
York.

<PAGE>
                                                                          

Futures Contracts

      A Futures Contract is a bilateral agreement providing for the purchase and
sale of a  specified  type and  amount  of a  financial  instrument  or  foreign
currency,  or for the making and  acceptance of a cash  settlement,  at a stated
time in the future, for a fixed price. By its terms, a Futures Contract provides
for a  specified  settlement  date on  which,  in the  case of the  majority  of
interest  rate  and  foreign  currency  futures  contracts,   the  fixed  income
securities or currency  underlying  the contract are delivered by the seller and
paid for by the  purchaser,  or on  which,  in the case of stock  index  futures
contracts and certain interest rate and foreign currency futures contracts,  the
difference  between the price at which the  contract  was  entered  into and the
contract's  closing  value is settled  between the purchaser and seller in cash.
Futures  Contracts  differ from options in that they are  bilateral  agreements,
with both the  purchaser  and the  seller  equally  obligated  to  complete  the
transaction.  In addition,  Futures  Contracts call for  settlement  only on the
expiration date, and cannot be "exercised" at any other time during their term.

      The purchase or sale of a Futures  Contract also differs from the purchase
or sale of a security or the purchase of an option in that no purchase  price is
paid or received.  Instead,  an amount of cash or cash equivalent,  which varies
but may be as low as 5% or less of the value of the contract,  must be deposited
with the broker as "initial margin." Subsequent payments to and from the broker,
referred to as "variation margin," are made on a daily basis as the value of the
index or instrument underlying the Futures Contract fluctuates, making positions
in the Futures  Contract more or less  valuable,  a process known as "marking to
market."

      A Futures Contract may be purchased or sold only on an exchange,  known as
a "contract market,"  designated by the Commodity Futures Trading Commission for
the trading of such contract,  and only through a registered  futures commission
merchant which is a member of such contract market. A commission must be paid on
each completed purchase and sale transaction. The contract market clearing house
guarantees  the  performance of each party to a Futures  Contract,  by in effect
taking the opposite side of such  Contract.  At any time prior to the expiration
of a Futures Contract, a trader may elect to close out its position by taking an
opposite position on the contract market on which the position was entered into,
subject  to the  availability  of a  secondary  market,  which  will  operate to
terminate the initial position. At that time, a final determination of variation
margin is made and any loss  experienced by the trader is required to be paid to
thecontract market clearing house while any profit due to the trader must be 
delivered to it. 


<PAGE>


                                                                          
      Interest rate futures contracts currently are traded on a variety of fixed
income  securities,  including  long-term U.S.  Treasury Bonds,  Treasury Notes,
Government National Mortgage Association modified  pass-through  mortgage-backed
securities,  U.S.  Treasury Bills,  bank  certificates of deposit and commercial
paper. In addition, interest rate futures contracts include contracts on indices
of municipal securities. Foreign currency futures contracts currently are traded
on the British pound,  Canadian dollar,  Japanese yen, Swiss franc,  West German
mark and on Eurodollar deposits.

Options on Futures Contracts

      An Option on a Futures  Contract  provides  the  holder  with the right to
enter into a "long" position in the underlying Futures Contract,  in the case of
a call option, or a "short" position in the underlying Futures Contract,  in the
case of a put option,  at a fixed  exercise price to a stated  expiration  date.
Upon exercise of the option by the holder,  the contract  market  clearing house
establishes a corresponding  short position for the writer of the option, in the
case of a call option,  or a corresponding  long position,  in the case of a put
option. In the event that an option is exercised, the parties will be subject to
all the risks associated with the trading of Futures Contracts,  such as payment
of variation margin deposits. In addition,  the writer of an Option on a Futures
contract,  unlike  the  holder,  is  subject to  initial  and  variation  margin
requirements on the option position.

      A position in an Option on a Futures  Contract  may be  terminated  by the
purchaser or seller prior to expiration by effecting a closing  purchase or sale
transaction,  subject to the availability of a liquid secondary market, which is
the purchase or sale of an option of the same series  (i.e.,  the same  exercise
price and  expiration  date) as the option  previously  purchased  or sold.  The
difference between the premiums paid and received represents the trader's profit
or loss on the transaction.

      An  option,  whether  based  on a  Futures  Contract,  a stock  index or a
security,  becomes worthless to the holder when it expires.  Upon exercise of an
option,  the exchange or contract market clearing house assigns exercise notices
on a random basis to those of its members which have written options of the same
series and with the same  expiration  date.  A  brokerage  firm  receiving  such
notices then assigns them on a random basis to those of its customers which have
written options of the same series and expiration  date. A writer  therefore has
no control  over  whether an option will be  exercised  against it, nor over the
time of such exercise.



<PAGE>
                                                                           

                          PART C. OTHER INFORMATION


Item 24.  Financial Statements and Exhibits

            (a)  Financial Statements:
                                                                         Page in
                                                                      Prospectus

            (1)   Financial statements and schedules
                  included in Prospectus (Part A):

                  Financial  Highlights for the period from  
                  commencement of the INVESCO Tax-Free Intermediate       9
                  Bond Fund's operations (December 1, 1993) until  
                  June 30, 1994; and the year ended June 30, 1995.
                 
                  Financial  Highlights  for each of the ten             33
                  years in the period ended June 30, 1995 for
                  the Tax-Free Long-Term Bond Fund.


                                                                         Page in
                                                                       Statement
                                                                        of Addi-
                                                                          tional
                                                                     Information

   
            (2)   The following audited financial
                  statements of the INVESCO Tax-Free Long-
                  Term Bond Fund and the INVESCO Tax-Free
                  Intermediate Bond Fund and the notes
                  thereto for the fiscal year ended June
                  30, 1995, and the report of Price
                  Waterhouse LLP with respect to such
                  financial statements, are incorporated in
                  the Statement of Additional Information
                  by reference from the Company's Annual
                  Report to Shareholders for the fiscal
                  year ended June 30, 1995:  Statement of
                  Investment Securities as of June 30,
                  1995; Statement of Assets and Liabilities
                  as of June 30, 1995; Statement of
                  Operations for the year ended June 30,
                  1995; Statement of Changes in Net Assets
                  for the year ended June 30, 1995 and the
                  period from commencement of the Fund's
                  operations (December 1, 1993) until June
                  30, 1994 for the Tax-Free Intermediate
                  Bond Fund and for each of the two years
                  in the period ended June 30, 1995 for the
    


<PAGE>
                                                                          
   
                  Tax-Free  Long-Term  Bond Fund;  Financial  
                  Highlights for the year ended June 30, 1995 
                  and the period from  commencement  of the Fund's  
                  operations  (December 1, 1993) until June 30, 1994
                  for the  Tax-Free  Intermediate  Bond Fund and for
                  each of the five years ended June 30, 1995 for the 
                  Tax-Free Long-Term Bond Fund.
    

            (3)   Financial statements and schedules
                  included in Part C:

                  None:  Schedules have been omitted as all
                  information has been presented in the
                  financial statements.

            (b)   Exhibits:

                  (1)   Articles of Incorporation (Charter)1

                  (2)   Bylaws1

                  (3)   Not applicable.

                  (4)   (a)  Specimen stock certificate for Tax-Free
                        Long-Term Bond Fund.1

                        (b)  Specimen stock certificate for Tax-Free
                        Intermediate Bond Fund.2

                  (5)   (a)  Investment Advisory Agreement between the
                        Company and INVESCO Funds Group, Inc. dated
                        April 30, 1993.1

                        (b)  Amendment of Investment Advisory
                        Agreement dated October 20, 1993.3

                        (c)  Sub-Advisory Agreement between INVESCO
                        Funds Group, Inc. and INVESCO Trust Company
                        dated April 30, 1993.1

                        (d)  Amendment of Sub-Advisory Agreement dated
                        October 20, 1993.3

                  (6)   General Distribution Agreement between the
                        Company and INVESCO Funds Group, Inc. dated
                        April 30, 1993.1

                  (7)   Defined Benefit Deferred Compensation Plan for
                        Non-Interested Directors and Trustees.3



<PAGE>


                                                                           

                  (8)   Custody Agreement between the Company and
                        State Street Bank and Trust Company dated July
                        1, 1993.1

                  (9)   (a) Transfer Agency Agreement between the
                        Company and INVESCO Funds Group, Inc. dated
                        April 30, 1993.1

   
                        (b) Amendment to Fee Schedule dated April 1,
                        1994.

                        (c) Administrative Services Agreement between
                        the Company and INVESCO Funds Group, Inc.,
                        dated April 30, 1993.1
    

                  (10)  Opinion and consent of counsel as to the
                        legality of the securities being registered,
                        indicating  whether they will,  when  sold,
                        be  legally  issued,  fully paid and
                        non-assessable.1

                  (11)  Consent of Independent Accountants.

                  (12)  Not applicable.

                  (13)  Not applicable.

                  (14)  Copies  of  model  plans  used in the  
                        establishment  of retirement  plans as  follows:  
                        Non-standardized  Profit Sharing Plan; Non-standardized
                        Money Purchase Pension Plan;   Standardized   Profit   
                        Sharing  Plan   Adoption Agreement;  Standardized  Money
                        Purchase  Pension Plan; Non-standardized   401(k)  Plan 
                        Adoption   Agreement; Standardized  401(k) Paired Profit
                        Sharing  Plan; Standardized Simplified Profit   Sharing
                        Plan;Standardized  Simplified  Money Purchase  Plan;
                        Defined Contribution Master Plan & Trust Agreement;  and
                        Financial   403(b)   Retirement  Plan,  all  filed  with
                        Registration  Statement of INVESCO  International Funds,
                        Inc. (File No. 33-63498), filed May 27, 1993, and herein
                        incorporated by reference.

   
                  (15)  (a) Plan and Agreement of  Distribution  dated April 30,
                        1993,   adopted   pursuant   to  Rule  12b-1  under  the
                        Investment Company Act of 1940.1

                        (b) Amendment of Plan and Agreement of
                        Distribution dated July 19, 1995.
    

                  (16)  Schedule for computation of performance data--
                        previously filed with Post-Effective Amendment
                        

<PAGE>

                         No. 11 dated September 1, 1988, and herein
                         incorporated by reference.

   
                  (17)  (a)  Financial  Data  Schedule for the period ended June
                        30, 1995, for INVESCO Tax-Free Long-Term Bond Fund.

                        (b)  Financial  Data  Schedule for the period ended June
                        30, 1995, for INVESCO Tax-Free Intermediate Bond Fund.

                  (18)  Not applicable.
    

1Previously filed with Post-Effective Amendment No. 18 to the
Registrant's Registration Statement on Form N-1A on September 1,1993 and 
incorporated herein by reference.


2Previously filed with Post-Effective Amendment No. 19 to the
Registrant's Registration Statement on September 24, 1993 and
incorporated herein by reference.

3Previously filed with Post-Effective Amendment No. 20 to the
Registrant's Registration Statement on December 1, 1993 and
incorporated herein by reference.

Item 25.    Persons Controlled by or Under Common Control with
            Registrant

            No person is presently  controlled  by or under common  control with
Registrant.


Item 26.    Number of Holders of Securities
                                                            Number of Record
                                                            Holders as of
            Title of Class                                  July 31, 1995

            INVESCO Tax-Free
            Long-Term Bond Fund
            Common Stock                                    11,128

            INVESCO Tax-Free
            Intermediate Bond Fund
            Common Stock                                       391

Item 27.    Indemnification

            Indemnification  provisions for officers and directors of Registrant
are set forth in Article VII,  Section 2 of the Articles of  Incorporation,  and
are hereby  incorporated  by  reference.  See Item 24(b)(1)  above.  Under these
Articles,  officers and  directors  will be  indemnified  to the fullest  extent
permitted to directors by


<PAGE>
                                                                           
the Maryland General Corporation Law, subject only to such limitations as may be
required  by the  Investment  Company  Act of 1940,  as  amended,  and the rules
thereunder.  Under  the  Investment  Company  Act of 1940,  Fund  directors  and
officers  cannot  be  protected   against   liability  to  the  Company  or  its
shareholders to which they would be subject because of willful misfeasance,  bad
faith, gross negligence or reckless disregard of the duties of their office. The
Company also maintains  liability  insurance policies covering its directors and
officers.

Item 28.    Business and Other Connections of Investment Adviser

            See "The Fund and Its Management" in the Prospectus and Statement of
Additional  Information for information regarding the business of the investment
adviser. For information as to the business, profession,  vocation or employment
of a  substantial  nature of each of the officers and directors of INVESCO Funds
Group,  Inc.,  reference  is made to Schedule Ds to the Form ADV filed under the
Investment  Advisers Act of 1940 by INVESCO Funds Group,  Inc.,  which schedules
are herein incorporated by reference.

Item 29.    Principal Underwriters

   
            (a)   INVESCO Diversified Funds, Inc.
                  INVESCO Dynamics Fund, Inc.
                  INVESCO Emerging Opportunity Funds, Inc.
                  INVESCO Growth Fund, Inc.
                  INVESCO Income Funds, Inc.
                  INVESCO Industrial Income Fund, Inc.
                  INVESCO International Funds, Inc.
                  INVESCO Money Market Funds, Inc.
                  INVESCO Multiple Asset Funds, Inc.
                  INVESCO Specialty Funds, Inc.
                  INVESCO Strategic Portfolios, Inc.
                  INVESCO Value Trust
                  INVESCO Variable Investment Funds, Inc.
    

<PAGE>
            (b)

   
                                    Positions and             Positions and
Name and Principal                  Offices with              Offices with
Business Address                    Underwriter               Registrant
    

David W. Altimont                   Regional Vice
7800 E. Union Ave.                  President
Denver, CO  80237

David D. Barrett                    Vice President
7800 E. Union Avenue
Denver, CO  80237

Frank M. Bishop                     Director                  Director
1315 Peachtree Street NE
Atlanta, GA  30309

Charles W. Brady                                              Chairman of
1315 Peachtree Street NE                                      the Board
Atlanta, GA  30309

Kenneth R. Christoffersen           Vice President
7800 E. Union Avenue                Asst. General Counsel
Denver, CO  80237

   
M. Ellen Clark                      Regional Vice
7800 E. Union Avenue                President
Denver, CO  80237
    

M. Anthony Cox                      Senior Vice
1315 Peachtree Street NE            President
Atlanta, GA  30309

Steven T. Cox, Jr.                  Regional Vice
7800 E. Union Avenue                President
Denver, CO  80237

Robert D. Cromwell                  Asst. Vice
7800 E. Union Avenue                President
Denver, CO  80237

Philip J. Crosley                   Vice President
7800 E. Union Avenue
Denver, CO  80237
<PAGE>

Samuel T. DeKinder                  Director
1315 Peachtree Street NE
Atlanta, GA  30309

William H. Eigen                    Regional Vice
7800 E. Union Avenue                President
Denver, CO  80237

   
William J. Galvin, Jr.              Senior Vice               Assistant
7800 E. Union Avenue                President                 Secretary
Denver, CO  80237

Linda J. Gieger                     Vice President
7800 E. Union Avenue
Denver, CO  80237
    

Ronald L. Grooms                    Senior Vice               Treasurer,
7800 E. Union Avenue                President                 Chief Fin'l
Denver, CO  80237                   & Treasurer               Officer, and
                                                              Chief Acctg.
                                                              Officer

Wylie G. Hairgrove                  Vice President
7800 E. Union Avenue
Denver, CO  80237

   
Dan J. Hesser                       Chairman of the           Pres. & Dir.
7800 E. Union Avenue                Board, President,
Denver, CO  80237                   CEO & Director

Mark A. Jones                       Regional Vice
1315 Peachtree Street NE            President
Atlanta, GA  30309

Jeraldine E. Kraus                  Assistant Secretary
7800 E. Union Avenue
Denver, CO  80237
    
<PAGE>

   
Michael D. Legoski                  Asst. Vice President
7800 E. Union Avenue
Denver, CO  80237
    

Walter R. Lewis, Jr.                Regional Vice
1315 Peachtree Street N.E.          President
Atlanta, GA  30309

Dennis J. McCarthy                  Regional Vice
7800 E. Union Avenue                President
Denver, CO  80237

David G. Mertens                    Regional Vice
1315 Peachtree Street N.E.          President
Atlanta, GA  30309

Timothy J. Milligan                 Regional Vice
7800 E. Union Avenue                President
Denver, CO  80237

   
Brian Minturn                       Executive
7800 E. Union Avenue                Vice President
Denver, CO  80237

Robert J. O'Connor                  Director
1355 Peachtree Street N.E.
Atlanta, GA  30309
    

Laura M. Parsons                    Vice President
7800 E. Union Avenue
Denver, CO  80237

Glen A. Payne                       Senior Vice               Secretary
7800 E. Union Avenue                President, Secretary
Denver, CO  80237                   General Counsel

   
R. Dalton Sim                       Director                  Director
7800 E. Union Avenue
Denver, CO  80237

James S. Skesavage                  Regional Vice
1315 Peachtree Street N.E.          President
Atlanta, GA  30309
    
<PAGE>

   
Terri Berg Smith                    Vice President
7800 E. Union Avenue
Denver, CO  80237

Katha Hall Stuart                   Regional Vice
1315 Peachtree Street, N.E.         President
Atlanta, GA  30309

Alan I. Watson                      Vice President            Asst. Sec.
7800 E. Union Avenue
Denver, CO 80237

Judy P. Wiese                       Vice President            Asst. Treas.
7800 E. Union Avenue
Denver, CO  80237

John F. Yeager III                  Vice President            Vice Pres.
7800 E. Union Avenue
Denver, CO  80237
    

Allyson B. Zoellner                 Vice President
7800 E. Union Avenue
Denver, CO  80237

            (c)  Not applicable.

Item 30.    Location of Accounts and Records

            Dan J. Hesser
            7800 E. Union Avenue
            Denver, CO  80237

Item 31.    Management Services

            Not applicable.

<PAGE>

Item 32.    Undertakings

            (a)   The Registrant  hereby  undertakes that the board of directors
                  will  call  such  meetings  of  shareholders   for  action  by
                  shareholder vote,  including acting on the question of removal
                  of a director or director, as may be  requested in writing by 
                  the holders of at least 10% of the outstanding shares of the 
                  Fund or as may be required by applicable law or the Company's 
                  Articles of Incorporation, and to  assist shareholders  in 
                  communicating  with  other shareholders  as  required  by the
                  Investment  Company Act of 1940.

            (b)   Insofar as indemnification for liability arising
                  under the Securities Act of 1933 may be permitted
                  to directors, officers and controlling persons of
                  the Registrant pursuant to the foregoing
                  provisions, or otherwise, the Registrant has been
                  advised that in the opinion of the Securities and
                  Exchange Commission such indemnification is against
                  public policy as expressed in the Act and is,
                  therefore, unenforceable.  In the event that a
                  claim for indemnification against such liabilities
                  (other than the payment by the Registrant of
                  expense incurred or paid by a director, officer or
                  controlling person of the Registrant in the
                  successful defense of any action, suit or
                  proceeding) is asserted by such director, officer
                  or controlling person in connection with the
                  securities being registered, the Registrant will,
                  unless in the opinion of its counsel the matter has
                  been settled by controlling precedent, submit to a
                  court of appropriate jurisdiction the question
                  whether such indemnification by it is against
                  public policy as expressed in the Act and will be
                  governed by the final adjudication of such issue.

            (c)   The Registrant  shall furnish each person to whom a prospectus
                  is delivered  with a copy of the  Registrant's  latest  annual
                  report to shareholders, upon request and without charge.
<PAGE>
   
      Pursuant  to the  requirements  of the  Securities  Act of  1933  and  the
Investment   Company  Act  of  1940,   the   registrant  has  duly  caused  this
pre-effective amendment to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Denver, County of Denver, and State of Colorado,
on the 30th day of August, 1995.

Attest:                             INVESCO Tax-Free Income
                                    Funds, Inc.

/s/ Glen A. Payne                   /s/ Dan J. Hesser
- ------------------------           ------------------------------            
Glen A. Payne, Secretary            Dan J. Hesser, President

                                                                          
      Pursuant  to  the  requirements  of  the  Securities  Act  of  1933,  this
pre-effective  amendment to Registrant's  Registration Statement has been signed
by the following persons in the capacities indicated on this 30th day of August,
1995.

/s/ Dan J. Hesser                   /s/ Lawrence H. Budner
- ------------------------            -----------------------------
Dan J. Hesser, President &          Lawrence H. Budner, Director
Director
(Chief Executive Officer)

/s/ Ronald L. Grooms                /s/ Daniel D. Chabris
- ------------------------           ------------------------------
Ronald L. Grooms, Treasurer         Daniel D. Chabris, Director
(Chief Financial and Accounting Officer)

/s/ Victor L. Andrews               /s/ Fred A. Deering
- ------------------------           ------------------------------
Victor L. Andrews, Director         Fred A. Deering, Director

/s/ Bob R. Baker                    /s/ A. D. Frazier, Jr.
- ------------------------           ------------------------------
Bob R. Baker, Director              A. D. Frazier, Jr., Director

/s/ Frank M. Bishop                 /s/ Kenneth T. King, Director
- ------------------------           ------------------------------
Frank M. Bishop, Director           Kenneth T. King, Director

/s/ Charles W. Brady                /s/ John W. McIntyre
- ------------------------           ------------------------------
Charles W. Brady, Director          John W. McIntyre, Director

                                   /s/ R. Dalton Sim  
                                   ------------------------------
                                    R. Dalton Sim, Director


By*                            By*   /s/ Glen A. Payne
  --------------------              ------------------------------  
 Edward F. O'Keefe                   Glen A. Payne
 Attorney in Fact                    Attorney in Fact

* Original Powers of Attorney  authorizing  Edward F. O'Keefe and Glen A. Payne,
and each of them, to execute this  post-effective  amendment to the Registration
Statement of the Registrant on behalf of the above-named  directors and officers
of the Registrant have been filed with the Securities and Exchange Commission on
July 20, 1989,  January 9, 1990,  May 22, 1992,  September 1, 1993,  December 1,
1993, August 30, 1995.
    

<PAGE>

                     Exhibit Index

                                           Page in
Exhibit Number                      Registration Statement

   
      9(b)                                   115
      11                                     116
      15(b)                                  117
      17(a)                                  120
      17(b)                                  121
    





<PAGE>




                                  AMENDMENT
                                      to
                                 FEE SCHEDULE

                                     for

      Services Pursuant to Transfer Agency Agreement, dated April 30, 1993,
between INVESCO Tax-Free Income Funds, Inc.(the "Fund")and INVESCO Funds Group,
Inc. as Transfer Agent (the "Agreement").

      Account Maintenance Charges.  Fees are based on an annual charge set forth
below per  shareholder  account  or  omnibus  account  participant  for  account
maintenance, as described in the Agreement. This charge, in the amount of $20.00
per  shareholder  account per year, or in the case of omnibus  accounts that are
invested  in the Fund  $20.00 per  participant  in such  accounts  per year,  is
billable  monthly at the rate of one-twelfth  (1/12) of the annual fee. A charge
is made for an account in the month that it opens or closes,  as well as in each
month which the account remains open, regardless of the account balance.

      Expenses.  The Fund shall not be liable for  reimbursement to the Transfer
Agent of expenses  incurred by it in the performance of services pursuant to the
Agreement,  provided,  however, that nothing herein or in the Agreement shall be
construed as affecting  in any manner any  obligations  assumed by the Fund with
respect  to expense  payment or  reimbursement  pursuant  to a separate  written
agreement between the Fund and the Transfer Agent or any affiliate thereof.

      Effective this 1st day of April, 1994.

                              INVESCO TAX-FREE INCOME FUNDS, INC.


                              By:   /s/ Dan J. Hesser
                                   ------------------------
                                    Dan J. Hesser, President

ATTEST:

/s/ Glen A. Payne
- ---------------------
Glen A. Payne, Secretary
                           INVESCO FUNDS GROUP, INC.


                              By:   /s/ Ronald L. Grooms
                                    -----------------------
                                    Ronald L. Grooms,
                                    Senior Vice President
ATTEST:

/s/ Glen A. Payne
- ---------------------
Glen A. Payne, Secretary




                       Consent of Independent Accountants


We hereby  consent to the  incorporation  by  reference  in the  Prospectus  and
Statement of Additional  Information  constituting parts of this  Post-Effective
Amendment No. 23 to the registration  statement on Form N-1A (the  "Registration
Statement")  of our report  dated  August 4,  1995,  relating  to the  financial
statements and financial highlights appearing in the June 30, 1995 Annual Report
to Shareholders of INVESCO Tax-Free  Intermediate Bond Fund and INVESCO Tax-Free
Long-Term Bond Fund (constituting the INVESCO Tax-Free Income Funds, Inc.) which
is also  incorporated  by reference  into the  Registration  Statement.  We also
consent to the references to us under the heading "Financial  Highlights" in the
Prospectus  and under the  headings  "Independent  Accountants"  and  "Financial
Statements" in the Statement of Additional Information.




Price Waterhouse LLP

Denver, Colorado
August 30, 1995








           AMENDMENT OF PLAN AND AGREEMENT OF DISTRIBUTION
                         PURSUANT TO RULE 12B-1

      This  Amendment  of Plan and  Agreement of  Distribution  Pursuant to Rule
12b-1 (this  "Amendment")  is entered into as of the 19th day of July,  1995, by
and between INVESCO  Tax-Free Income Funds,  Inc., a Maryland  corporation  (the
"Company"), and INVESCO Funds Group, Inc., a Delaware corporation ("INVESCO").

      WHEREAS, the Company and INVESCO have entered into a Plan and Agreement of
Distribution  Pursuant to Rule 12b-1,  dated as of April 30, 1993 (the "Plan and
Agreement"); and

      WHEREAS,  the Plan and Agreement may be amended provided that all material
amendments  to the Plan and  Agreement  are approved by the vote of the board of
directors of the Company,  including a majority of the Disinterested  Directors,
cast in person at a meeting  called for the purpose of voting on such  amendment
and, provided  further,  that the Plan may not be amended to increase the amount
to be  spent  by a  Fund  thereunder  without  approval  of a  majority  of  the
outstanding voting securities of that Fund; and

      WHEREAS, the Company has determined to amend the Plan, and the Company and
INVESCO have mutually determined to amend the Agreement, in the manner set forth
in this Amendment, and such amendments were approved by the vote of the board of
directors of the Company,  including a majority of the Disinterested  Directors,
cast in person at a meeting  held on July 19,  1995,  called for the  purpose of
voting on such amendments; and

      WHEREAS,  the  Company  has  determined  that the  amendments  to the Plan
contained in this Amendment will not increase the amount to be spent by any Fund
under the Plan,  and  therefore do not require the approval of a majority of the
outstanding voting securities of any Fund;

      NOW, THEREFORE, the parties hereby agree as follows:

      1. All capitalized terms used in this Amendment, unless otherwise defined,
shall have the meanings assigned to them in the Plan and Agreement.

      2. The Company  hereby adopts the  amendments to the Plan set forth below,
and the Company and INVESCO  hereby agree to the amendments to the Agreement set
forth below.

      3.    Section 2 of the Plan and Agreement is hereby amended to read as
follows:




<PAGE>



      Subject to the  supervision of the board of directors,  the Company hereby
      retains INVESCO to promote the distribution of shares of each of the Funds
      by providing services and engaging in activities beyond those specifically
      required by the Distribution Agreement between the Company and INVESCO and
      to provide related services. The activities and services to be provided by
      INVESCO  hereunder  shall  include one or more of the  following:  (a) the
      payment  of  compensation   (including  trail  commissions  and  incentive
      compensation)  to securities  dealers,  financial  institutions  and other
      organizations,  which may  include  INVESCO-  affiliated  companies,  that
      render  distribution  and  administrative  services in connection with the
      distribution  of the shares of each of the  Funds;  (b) the  printing  and
      distribution  of  reports  and  prospectuses  for  the  use  of  potential
      investors  in each  Fund;  (c) the  preparing  and  distributing  of sales
      literature;  (d) the  providing  of  advertising  and  engaging  in  other
      promotional   activities,   including   direct  mail   soliditation,   and
      television,  radio, newspaper and other media advertisements;  and (e) the
      providing of such other  services and  activities as may from time to time
      be agreed  upon by the  Company.  Such  reports  and  prospectuses,  sales
      literature,  advertising and promotional activities and other services and
      activities may be prepared and/or conducted either by INVESCO's own staff,
      the staff of INVESCO-affiliated companies, or third parties.

            4. Section 4 of the Plan and Agreement is hereby amended to read as
      follows:

      Each Fund is hereby authorized to expend,  out of its assets, on a monthly
      basis,  and shall reimburse  INVESCO to such extent,  for INVESCO's actual
      direct  expenditures  incurred over a rolling  twelve-month period (or the
      rolling  twenty-four  month  period  specified  below) in  engaging in the
      activities and providing the services specified in paragraph (2) above, an
      amount  computed at an annual  rate of .25 of 1% of the average  daily net
      assets  of the Fund  during  the  month.  INVESCO  shall  not be  entitled
      hereunder  to  reimbursement  for  overhead  expenses  (overhead  expenses
      defined  as  customary  overhead  not  including  the  costs of  INVESCO's
      personnel whose primary  responsibilities involve marketing of the INVESCO
      Funds). Payments by a Fund hereunder, for any month, may be made only with
      respect  to:  (a)  expenditures  incurred  by INVESCO  during the  rolling
      twelve-month  period  in which  that  month  falls,  or (b) to the  extent
      permitted by  applicable  law, for any month during the first  twenty-four
      months  following  a  Fund's  commencement  of  operations,   expenditures
      incurred by INVESCO during the rolling  twenty-four  month period in which
      that  month  falls,  and  any  expenditures  incurred  in  excess  of  the
      limitations  described  above  are  not  reimbursable.  No Fund  shall  be
      authorized to expend, for any month, a greater amount out of its assets to
      reimburse INVESCO for expenditures incurred during the rolling twenty-




<PAGE>


      four month period  referred to above than it would otherwise be authorized
      to expend out of its assets to reimburse INVESCO for expenditures incurred
      during the rolling twelve month period referred to above. No payments will
      be made by the Company hereunder after the date of termination of the Plan
      and Agreement.

            5.    Except to the extent modified by this Amendment, the Plan and
      Agreement shall remain in full force and effect.

      IN WITNESS  WHEREOF,  the parties  hereto have executed and delivered this
      Amendment on the day and year first above written.


                                             INVESCO Tax-Free Income Funds, Inc.


                                                By /s/ Dan J. Hesser
                                                  --------------------------
                                                   Dan J. Hesser, President
      ATTEST: /s/ Glen A. Payne
              ----------------------
             Glen A. Payne, Secretary


                                                       INVESCO Funds Group, Inc.


                                                By: /s/ Ronald L. Grooms
                                                    -----------------------
                                                    Ronald L. Grooms,
                                                    Senior Vice President
      ATTEST: /s/ Glen A. Payne
             ------------------------
             Glen A. Payne, Secretary








[ARTICLE] 6
[SERIES]
   [NUMBER] 1
   [NAME] INVESCO TAX-FREE LONG-TERM BOND FUND
<TABLE>
<S>                             <C>
[PERIOD-TYPE]                   12-MOS
[FISCAL-YEAR-END]                          JUN-30-1995
[PERIOD-END]                               JUN-30-1995
[INVESTMENTS-AT-COST]                        252710986
[INVESTMENTS-AT-VALUE]                       254857481
[RECEIVABLES]                                  4916085
[ASSETS-OTHER]                                   44679
[OTHER-ITEMS-ASSETS]                             94664
[TOTAL-ASSETS]                               259912909
[PAYABLE-FOR-SECURITIES]                       4914839
[SENIOR-LONG-TERM-DEBT]                              0
[OTHER-ITEMS-LIABILITIES]                       413782
[TOTAL-LIABILITIES]                            5328621
[SENIOR-EQUITY]                                      0
[PAID-IN-CAPITAL-COMMON]                     249281887
[SHARES-COMMON-STOCK]                         16896247
[SHARES-COMMON-PRIOR]                         18468738
[ACCUMULATED-NII-CURRENT]                            0
[OVERDISTRIBUTION-NII]                               0
[ACCUMULATED-NET-GAINS]                        3155906
[OVERDISTRIBUTION-GAINS]                             0
[ACCUM-APPREC-OR-DEPREC]                       2146495
[NET-ASSETS]                                 254584288
[DIVIDEND-INCOME]                                    0
[INTEREST-INCOME]                             16650519
[OTHER-INCOME]                                       0
[EXPENSES-NET]                                 2456046
[NET-INVESTMENT-INCOME]                       14194473
[REALIZED-GAINS-CURRENT]                       4076999
[APPREC-INCREASE-CURRENT]                    (2732724)
[NET-CHANGE-FROM-OPS]                          1344275
[EQUALIZATION]                                       0
[DISTRIBUTIONS-OF-INCOME]                     14194473
[DISTRIBUTIONS-OF-GAINS]                       5294008
[DISTRIBUTIONS-OTHER]                                0
[NUMBER-OF-SHARES-SOLD]                        5319259
[NUMBER-OF-SHARES-REDEEMED]                    7938397
[SHARES-REINVESTED]                            1046647
[NET-CHANGE-IN-ASSETS]                      (27822359)
[ACCUMULATED-NII-PRIOR]                              0
[ACCUMULATED-GAINS-PRIOR]                      4372915
[OVERDISTRIB-NII-PRIOR]                              0
[OVERDIST-NET-GAINS-PRIOR]                           0
[GROSS-ADVISORY-FEES]                          1471474
[INTEREST-EXPENSE]                                   0
[GROSS-EXPENSE]                                2793377
[AVERAGE-NET-ASSETS]                         268119881
[PER-SHARE-NAV-BEGIN]                            15.29
[PER-SHARE-NII]                                   0.80
[PER-SHARE-GAIN-APPREC]                           0.09
[PER-SHARE-DIVIDEND]                              0.80
[PER-SHARE-DISTRIBUTIONS]                         0.31
[RETURNS-OF-CAPITAL]                                 0
[PER-SHARE-NAV-END]                              15.07
[EXPENSE-RATIO]                                      1
[AVG-DEBT-OUTSTANDING]                               0
[AVG-DEBT-PER-SHARE]                                 0
</TABLE>


[ARTICLE] 6
[SERIES]
   [NUMBER] 2
   [NAME] INVESCO TAX-FREE INTERMEDIATE BOND FUND
<TABLE>
<S>                             <C>
[PERIOD-TYPE]                   12-MOS
[FISCAL-YEAR-END]                          JUN-30-1995
[PERIOD-END]                               JUN-30-1995
[INVESTMENTS-AT-COST]                          4652965
[INVESTMENTS-AT-VALUE]                         4638506
[RECEIVABLES]                                   201404
[ASSETS-OTHER]                                    9779
[OTHER-ITEMS-ASSETS]                             59859
[TOTAL-ASSETS]                                 4909548
[PAYABLE-FOR-SECURITIES]                             0
[SENIOR-LONG-TERM-DEBT]                              0
[OTHER-ITEMS-LIABILITIES]                         2484
[TOTAL-LIABILITIES]                               2484
[SENIOR-EQUITY]                                      0
[PAID-IN-CAPITAL-COMMON]                       5059028
[SHARES-COMMON-STOCK]                           506037
[SHARES-COMMON-PRIOR]                           534010
[ACCUMULATED-NII-CURRENT]                            0
[OVERDISTRIBUTION-NII]                               0
[ACCUMULATED-NET-GAINS]                       (137505)
[OVERDISTRIBUTION-GAINS]                             0
[ACCUM-APPREC-OR-DEPREC]                       (14459)
[NET-ASSETS]                                   4907064
[DIVIDEND-INCOME]                                    0
[INTEREST-INCOME]                               250382
[OTHER-INCOME]                                       0
[EXPENSES-NET]                                   33331
[NET-INVESTMENT-INCOME]                         217051
[REALIZED-GAINS-CURRENT]                       (56737)
[APPREC-INCREASE-CURRENT]                       136725
[NET-CHANGE-FROM-OPS]                            79988
[EQUALIZATION]                                       0
[DISTRIBUTIONS-OF-INCOME]                       217051
[DISTRIBUTIONS-OF-GAINS]                             0
[DISTRIBUTIONS-OTHER]                                0
[NUMBER-OF-SHARES-SOLD]                         726499
[NUMBER-OF-SHARES-REDEEMED]                     775587
[SHARES-REINVESTED]                              21115
[NET-CHANGE-IN-ASSETS]                        (176215)
[ACCUMULATED-NII-PRIOR]                              0
[ACCUMULATED-GAINS-PRIOR]                      (80768)
[OVERDISTRIB-NII-PRIOR]                              0
[OVERDIST-NET-GAINS-PRIOR]                           0
[GROSS-ADVISORY-FEES]                            23812
[INTEREST-EXPENSE]                                   0
[GROSS-EXPENSE]                                 116748
[AVERAGE-NET-ASSETS]                           4799870
[PER-SHARE-NAV-BEGIN]                             9.52
[PER-SHARE-NII]                                   0.44
[PER-SHARE-GAIN-APPREC]                           0.18
[PER-SHARE-DIVIDEND]                              0.44
[PER-SHARE-DISTRIBUTIONS]                            0
[RETURNS-OF-CAPITAL]                                 0
[PER-SHARE-NAV-END]                               9.70
[EXPENSE-RATIO]                                      1
[AVG-DEBT-OUTSTANDING]                               0
[AVG-DEBT-PER-SHARE]                                 0
</TABLE>


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