INVESCO TAX-FREE LONG-TERM
BOND FUND
INVESCO TAX-FREE INTERMEDIATE
BOND FUND
Supplement to Prospectuses
dated November 1, 1994
The section of each Fund's prospectus entitled "The Fund and Its Management" is
amended to delete the third and fourth paragraphs concerning William W. Veronda
serving as portfolio manager of the Fund, and to substitute the following
paragraphs for the deleted paragraphs:
The following individual serves as portfolio manager for the Fund and is
primarily responsible for the day-to-day management of the Fund's portfolio of
securities:
James S. Grabovac, CFA
Portfolio manager of the INVESCO Tax-Free Long-Term Bond Fund and the INVESCO
Tax-Free Intermediate Bond Fund since 1995; portfolio manager and vice president
of INVESCO Trust Company; formerly, principal and fund manager (1991 to 1995)
and portfolio manager (1989 to 1991) with Stein Roe & Farnham Inc., futures and
options trader with Continental Illinois National Bank (1987), corporate bond
trader with The Chicago Corporation (1985 to 1987), and Midwest municipal
underwriting manager with Continental Illinois National Bank (1982 to 1985);
B.A., Lawrence University; M.B.A., University of Michigan; Chartered Financial
Analyst.
This supplement is dated April 3, 1995.
<PAGE>
PROSPECTUS
November 1, 1994
INVESCO TAX-FREE LONG-TERM BOND FUND
INVESCO Tax-Free Long-Term Bond Fund (the "Fund") pursues its investment
objective of seeking as high a level of current income exempt from federal
income taxation as is consistent with the preservation of capital by investing
in a diversified portfolio of long-term 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. The dollar weighted average maturity of the
obligations in the Fund's portfolio normally will be at least 10 years.
The Fund is a series of INVESCO Tax-Free Income Funds, Inc. (the
"Company"), a diversified, managed, no-load mutual fund consisting of two
separate portfolios of investments. This Prospectus relates to shares of the
Fund. A separate prospectus is available upon request from INVESCO Funds Group,
Inc. for the Company's other fund, INVESCO Tax-Free Intermediate Bond Fund.
Investors may purchase shares of either or both funds. Additional funds may be
offered in the future as series of the Company.
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 has been
filed with the Securities and Exchange Commission. You can obtain
a copy without charge by writing INVESCO Funds Group, Inc., Post
Office Box 173706, Denver, Colorado 80217-3706; or by calling 1- 800-525-8085.
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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.
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THE STATEMENT OF ADDITIONAL INFORMATION, DATED NOVEMBER 1, 1994, IS HEREBY
INCORPORATED BY REFERENCE INTO THIS PROSPECTUS.
<PAGE>
TABLE OF CONTENTS Page
ANNUAL FUND EXPENSES 32
FINANCIAL HIGHLIGHTS 34
PERFORMANCE DATA 35
INVESTMENT OBJECTIVE, POLICIES AND RISK FACTORS 36
THE FUND AND ITS MANAGEMENT 41
HOW SHARES CAN BE PURCHASED 43
SERVICES PROVIDED BY THE FUND 46
HOW TO REDEEM SHARES 49
DIVIDENDS, CAPITAL GAIN DISTRIBUTIONS, AND TAXES 50
ADDITIONAL INFORMATION 52
<PAGE>
ANNUAL FUND EXPENSES
The Fund is no-load; there are no fees to purchase, exchange or redeem
shares. The Fund, however, is authorized to pay a distribution fee pursuant to
Rule 12b-1 under the Investment Company Act of 1940. (See "How Shares Can Be
Purchased -- Distribution Expenses.") Lower expenses benefit Fund shareholders
by increasing the Fund's total return.
Shareholder Transaction Expenses
Sales load "charge" on purchases None
Sales load "charge" on reinvested dividends None
Redemption fees None
Exchange fees None
Annual Fund Operating Expenses (After voluntary expense
limitation)
(as a percentage of average net assets)
Management Fee 0.55%
12b-1 Fees 0.25%
Other Expenses 0.10%
Transfer Agency Fee 0.12%
General Services, Administrative (0.02%)
Services, Registration, Postage(1)
Total Fund Operating Expenses 0.90%(2)
(1) Includes, but is not limited to, fees and expenses of directors,
custodian bank, legal counsel and auditors, a securities pricing service, costs
of administrative services furnished under an Administrative Services Agreement,
costs of registration of Fund shares under applicable laws, and costs of
printing and distributing reports to shareholders.
(2) Certain Fund expenses will be absorbed voluntarily by the Fund's
investment adviser and sub-adviser in order to ensure that the Fund's total
annual operating expenses will not exceed 0.90% of the Fund's average net
assets. This policy is applicable to Fund expenses incurred on or after
September 1, 1994. The expense information in the foregoing table has been
presented on a basis that assumes that this expense limitation had been in
effect during the year ended June 30, 1994. In the absence of such voluntary
expense limitation, the Fund's "Other Expenses" and "Total Fund Operating
Expenses" would have been 0.23% and 1.03%, respectively.
<PAGE>
Example
A shareholder would pay the following expenses on a $1,000 investment for
the periods shown, assuming (1) a 5% annual return and (2) redemption at the end
of each time period:
1 Year 3 Years 5 Years 10 Years
------ ------- ------- --------
$9 $29 $50 $111
The purpose of the foregoing table is to assist investors in understanding
the various costs and expenses that an investor in the Fund will bear directly
or indirectly. Such expenses are paid from the Fund's assets. (See "The Fund and
Its Management.") The Fund charges no sales load, redemption fee, or exchange
fee. The Example should not be considered a representation of past or future
expenses, and actual expenses may be greater or less than those shown. The
assumed 5% annual return is hypothetical and should not be considered a
representation of past or future annual returns, which may be greater or less
than the assumed amount.
As a result of the 0.25% Rule 12b-1 fee paid by the Fund, investors who
own Fund shares for a long period of time may pay more than the economic
equivalent of the maximum front-end sales charge permitted for mutual funds by
the National Association of Securities Dealers, Inc., which currently ranges
from 6.25% to 8.5% of the amount invested.
<PAGE>
FINANCIAL HIGHLIGHTS
(For a Fund Share Outstanding throughout each Period)
The following information has been audited by Price Waterhouse LLP,
independent accountants. This information should be read in conjunction with the
audited financial statements and the report of independent accountants thereon
appearing in the Fund's 1994 Annual Report to Shareholders and in the Statement
of Additional Information, both of which are available without charge by
contacting INVESCO Funds Group, Inc. at the address or telephone number on the
cover of this Prospectus.
<TABLE>
<CAPTION>
Year Ended June 30
-------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1994 1993 1992 1991 1990 1989 1988 1987 1986 1985
PER SHARE DATA
Net Asset Value --
Beginning of Period $16.35 $15.69 $15.05 $14.90 $15.15 $13.82 $13.86 $15.20 $14.32 $13.07
------------------------------------------------------------------------------------------
INCOME FROM
INVESTMENT OPERATIONS
Net Investment Income 0.83 0.87 0.92 0.96 0.99 1.01 1.00 1.09 1.21 1.27
Net Gains or (Losses)
on Securities (Both Realized
and Unrealized) (1.00) 1.04 0.95 0.27 (0.25) 1.33 (0.04) (0.28) 1.69 1.95
------------------------------------------------------------------------------------------
Total From Investment
Operations (0.17) 1.91 1.87 1.23 0.74 2.34 0.96 0.81 2.90 3.22
------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS
Dividends (from Net
Investment Income) 0.83 0.87 0.92 0.96 0.99 1.01 1.00 1.09 1.21 1.27
Distributions (from
Capital Gains) 0.06 0.38 0.31 0.12 0.00 0.00 0.00 1.06 0.81 0.70
------------------------------------------------------------------------------------------
Total Distributions 0.89 1.25 1.23 1.08 0.99 1.01 1.00 2.15 2.02 1.97
Net Asset Value--
End of Period $15.29 $16.35 $15.69 $15.05 $14.90 $15.15 $13.82 $13.86 $15.20 $14.32
==========================================================================================
TOTAL RETURN (1.16%) 12.57% 12.79% 8.55% 5.10% 17.64% 7.29% 4.99% 21.00% 25.66%
RATIOS
Net Assets -- End of Period
($000 Omitted) $282,407 $332,239 $272,382 $208,100 $179,107 $143,678 $109,132 $117,875 $108,499 $85,440
Ratio of Expenses to
Average Net Assets 1.00% 1.03% 1.02% 0.93% 0.75% 0.74% 0.77% 0.70% 0.68% 0.65%
Ratio of Net Investment
Income to Average Net
Assets 5.14% 5.43% 5.90% 6.39% 6.67% 7.06% 7.33% 7.04% 7.86% 9.05%
Portfolio Turnover Rate 28% 30% 28% 25% 27% 27% 41% 98% 92% 156%
</TABLE>
Further information about the performance of the Fund is contained in the
Company's annual report to shareholders, which may be obtained without charge by
writing INVESCO Funds Group, Inc., Post Office Box 173706, Denver, Colorado
80217-3706; or by calling
1-800-525-8085.
<PAGE>
PERFORMANCE DATA
From time to time, the Fund advertises its yield and its total return
performance. The Fund also may provide a "tax equivalent yield." Both the yield
and total return performance are based upon historical investment results and
are not intended to indicate future performance. The "total return" of the Fund
refers to the average annual rate of return of an investment in the Fund. This
figure is computed by calculating the percentage change in value of an
investment of $1,000, assuming reinvestment of all income dividends and capital
gain distributions, to the end of a specified period.
The "yield" of the Fund refers to the income generated by an investment in
the Fund over a 30-day or one-month period (which period will be stated in the
advertisement). Yield quotations are computed by dividing investment income per
share earned during the period as calculated according to a formula by the net
asset value per share at the end of the period, then adjusting the result to
provide for semiannual compounding.
Statements of the Fund's total return performance are based upon
investment results during a specified period and assume reinvestment of all
dividends and capital gains, if any, paid during that period. Any given report
of total return should not be considered as representative of future
performance. The Fund charges no sales load, redemption fee, or exchange fee
which would affect the total return computation.
In conjunction with performance reports and/or analyses of shareholder
service for the Fund, comparative data between the Fund's performance for a
given period and recognized indices of investment results for the same period,
and/or assessments of the quality of shareholder service, may be provided to
shareholders. Such indices include indices provided by Dow Jones & Company,
Standard & Poor's, Lipper Analytical Services, Inc., Lehman Brothers, National
Association of Securities Dealers Automated Quotations, Frank Russell Company,
Value Line Investment Survey, the American Stock Exchange, Morgan Stanley
Capital International, Wilshire Associates, the Financial Times-Stock Exchange,
the New York Stock Exchange, the Nikkei Stock Average and the Deutcher
Aktienindex, all of which are unmanaged market indicators. In addition,
rankings, ratings, and comparisons of investment performance and/or assessments
of the quality of shareholder service appearing in publications such as Money,
Forbes, Kiplinger's Personal Finance, Morningstar, and similar sources which
utilize information compiled (i) internally; (ii) by Lipper Analytical Services,
Inc.; or (iii) by other recognized analytical services, may be used in
advertising. The "tax equivalent yield" of the Fund refers to the yield that a
taxable income fund would have to generate in order to produce an after-tax
yield equivalent to that of the Fund. The use of a tax equivalent yield allows
investors to compare the yields of the Fund, which are exempt from federal
personal income taxes, with yields of income funds which
<PAGE>
are not tax-exempt. The Lipper Analytical Services, Inc. mutual
fund rankings and comparisons, which may be used by the Fund in
performance reports will be drawn from the "General Municipal Bond
Funds" Lipper mutual fund grouping, in addition to the broad-based
Lipper general fund grouping.
INVESTMENT OBJECTIVE, POLICIES AND RISK FACTORS
The Company consists of two separate portfolios of investments, each
represented by a different class of the Company's common stock. This Prospectus
relates to INVESCO Tax-Free Long- Term Bond Fund; a separate prospectus for
INVESCO Tax-Free Intermediate Bond Fund is available by contacting INVESCO Funds
Group, Inc. at the address or telephone number shown on the cover of this
Prospectus. The investment objective of the Fund, which may be changed only by a
vote of the shareholders, is to seek as high a level of current income exempt
from federal income taxes as is consistent with the preservation of capital.
While there can be no assurance that this objective will be achieved, the Fund
seeks to achieve its objective through investment in a diversified portfolio of
long-term obligations issued by or on behalf of 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 income taxes ("municipal bonds"). In this regard, the Fund's
investment adviser or sub-adviser (collectively, "Fund Management") may rely on
the determination of the issuer's legal counsel with regard to the tax-exempt
status under federal law, at the time of issuance of such securities, of
municipal securities held by the Fund. The dollar weighted average maturity of
the obligations in the Fund's portfolio normally will be at least 10 years.
There is no limitation on the maximum maturities of investments that may be
purchased by the Fund. The average portfolio maturity of the Fund's investments
will be maintained in a manner consistent with the Fund's investment objective.
The value of the Fund's portfolio securities, and therefore the Fund's net
asset value per share, may fluctuate in response to various factors, principally
interest rate changes and the ability of the issuers of municipal obligations to
pay interest and principal on those obligations. Investors should consider the
Fund's policies with respect to ratings of bonds held in its portfolio,
when-issued purchases and the purchase of certain non-tax-exempt temporary
investments, as explained below.
As a matter of fundamental investment policy, at least 80% of the Fund's
assets will, under normal circumstances, consist of: (1) municipal bonds which
are rated at the time of purchase within the four highest grades assigned by
Moody's Investors Service, Inc. ("Moody's") (ratings of Aaa, Aa, A or Baa) or
Standard & Poor's Corporation ("Standard & Poor's") (ratings of AAA, AA, A or
BBB), and (2) short-term municipal notes (those having remaining maturities of
less than one year) of issuers which are rated at the time of purchase within
the two highest ratings assigned by
<PAGE>
Standard & Poor's (SP-1 or SP-2) or Moody's (MIG-1 or MIG-2), or if the notes
are unrated the issuers have at the time of purchase an issue of outstanding
municipal bonds rated as described above. A bond rating of Baa by Moody's
indicates that the bond issue is of "medium grade," neither highly protected nor
poorly secured. Interest payments and principal security appear adequate for the
present, but certain protective elements may be lacking or may be
characteristically unreliable over any great length of time. Such bonds lack
outstanding investment characteristics, and have speculative characteristics as
well. A bond rating of BBB by Standard & Poor's indicates that the bond issue is
in the lowest "investment grade" security rating. Bonds rated BBB are regarded
as having an adequate capacity to pay principal and interest. Whereas they
normally exhibit adequate protection parameters, adverse economic conditions or
changing circumstances are more likely to lead to a weakened capacity to pay
principal and interest for bonds in this category than the bonds in the A
category. Municipal Notes rated MIG-2 by Moody's are of high quality, with
margins of protection ample although not as large as in the MIG-1 group.
Municipal Notes rated SP-2 by Standard & Poor's have a satisfactory capacity to
pay principal and interest. For a detailed description of these ratings, see the
Statement of Additional Information and the "Appendix" therein. There is no
limitation upon the maximum percentage of the Fund's assets that may be invested
in any of the ratings categories listed above, and the percentage invested in
any such category will vary from time to time. While Fund Management
continuously monitors all of the municipal securities in the Fund's portfolio
for the issuers' ability to make required principal and interest payments and
other quality factors, the adviser may retain in the portfolio a municipal
security whose rating is changed to one below the minimum rating required for
purchase of such a security.
The balance of the Fund's assets, in an amount under normal circumstances
not to exceed 20% of the Fund's assets (measured at the time any investment is
purchased), may be invested in (1) municipal bonds which are not rated within
the grades referred to above (no more than 10% can be invested in securities
rated Ba or below by Moody's or BB or below by Standard & Poor's or if unrated,
are judged by Fund Management to be of equivalent quality), (2) temporary
taxable investments as described below, and (3) cash. Lower rated bonds by
Moody's (categories Ba, B) are of poorer quality and may be speculative
investments. Bonds rated B may be in default or there may be present elements of
danger with respect to principal or interest. Lower rated bonds by Standard &
Poor's (categories BB, B) include those which are regarded, on balance, as
predominantly speculative with respect to the issuer's capacity to pay interest
and repay principal in accordance with their terms; BB indicates the lowest
degree of speculation and B a greater degree of speculation. The Fund may
purchase or sell its securities without regard to the length of time the
securities have been held in the Fund's portfolio to take advantage of
short-term differentials in bond yields consistent with its objective. The
Fund's portfolio turnover rate, which along with the Fund's
<PAGE>
brokerage allocation policies is discussed in the Statement of Additional
Information, has ranged from 28% to 30% over the last three fiscal years.
The Fund's investments in municipal securities, as is true for any debt
securities, will generally be subject to both credit risk and market risk.
Credit risk relates to the ability of the issuer to meet interest or principal
payments, or both, as they come due. Market risk relates to the fact that the
market values of municipal securities in which the Fund invests generally will
be affected by changes in the level of interest rates. An increase in interest
rates will tend to reduce the market values of municipal securities, whereas a
decline in interest rates will tend to increase their values. Although the
Fund's investment adviser limits the Fund's municipal security investments to
securities it believes are not highly speculative, both kinds of risk are
increased by investing in municipal securities rated below the top three grades
by Standard & Poor's or Moody's and unrated municipal securities. In order to
decrease its risk in investing in municipal securities, the Fund will invest no
more than 10% of its assets in municipal securities rated below the top four
grades by Standard & Poor's or Moody's (as defined above), and in no event will
the Fund ever invest in a security rated below B by Moody's or B- by Standard &
Poor's. These lower bond ratings are described above. For more information on
the Fund's investments and municipal securities, see the Statement of Additional
Information.
For defensive purposes, Fund Management may cause the Fund from time to
time to invest a portion of its assets on a temporary basis in "temporary
investments," the income from which may be subject to federal income tax, or
hold a portion of its assets in cash. Such investments may consist only of
obligations issued or guaranteed as to interest and principal by the United
States Government or its agencies or instrumentalities; obligations of banks
regulated by the U. S., including negotiable certificates of deposit and
banker's acceptances; and commercial paper which at the date of purchase is
rated A-2 or higher by Standard & Poor's or Prime-2 or higher by Moody's. A
rating of A-2 or Prime-2 indicates a strong capacity for repayment of short-term
promissory obligations.
Municipal obligations may at times be purchased or sold on a delayed
delivery, or a when-issued basis (i.e., securities may be purchased or sold by
the Fund with settlement taking place in the future, often a month or more
later). The payment obligation and the interest rate that will be received on
the securities 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. When the Fund purchases securities on a
when-issued basis, its custodian bank will place cash or liquid debt securities
in a separate account of the Fund in an amount equal to the amount of the
purchase obligation.
<PAGE>
The Fund may also buy and sell municipal bond futures contracts for the
purpose of hedging (i.e., protecting) the value of its securities portfolio.
Fundamental investment policies of the Fund, which cannot be changed without
approval of the shareholders, are that the Fund's use of futures contracts is
limited to those relating to municipal bonds and that the Fund will not enter
into futures contracts for which the aggregate initial margins exceed 5% of the
fair market value of the Fund's assets. Additionally, the board of directors has
adopted a restriction that the aggregate market value of the futures contracts
which the Fund holds not exceed 20% of the market value of its total assets;
this restriction is not a fundamental policy and could be changed by the board
of directors.
The primary risks associated with the use of futures are: (i) imperfect
correlation between the change in the market value of the municipal bonds held
by the Fund and the prices of futures relating to municipal bonds purchased or
sold by the Fund; (ii) incorrect forecasts by the Adviser concerning interest
rates which may result in the hedge being ineffective; and (iii) possible lack
of a liquid secondary market for any futures contract; the resulting inability
to close a futures position could have an adverse impact on the Fund's ability
to hedge or increase income. For a hedge to be completely effective, the price
change of the hedging instrument should equal the price change of the security
being hedged. Such equal price changes are not always possible because the
investment underlying the hedging instrument may not be the same investment that
is being hedged. Although the Fund intends to buy and sell municipal bond
futures only on exchanges where there appears to be an active secondary market,
there is no assurance that a liquid secondary market will exist for any
particular municipal bond future at any particular time. In such event, it may
not be possible to close a futures position. See the Statement of Additional
Information and the Appendix therein for further information about these
instruments and their risks.
Other Investment Practices
Repurchase Agreements
The Fund may enter into repurchase agreements with respect to debt
instruments eligible for investment by the Fund. These agreements are entered
into with member banks of the Federal Reserve System, registered broker-dealers,
and registered government securities dealers, which are deemed creditworthy. A
repurchase agreement, which may be considered a "loan" under the Investment
Company Act of 1940, is a means of investing monies for a short period. In a
repurchase agreement, the Fund acquires a debt instrument (generally a security
issued by the U.S. government or an agency thereof, a banker's acceptance or a
certificate of deposit) subject to resale to the seller at an agreed upon price
and date (normally, the next business day). In the event that the original
seller defaults on its obligation to repurchase the security, the Fund could
incur costs or delays in seeking to sell
<PAGE>
such security. To minimize risk, the securities underlying each repurchase
agreement will be maintained with the Company's custodian in an amount at least
equal to the repurchase price under the agreement (including accrued interest),
and such agreements will be effected only with parties that meet certain
creditworthiness standards established by the Company's board of directors. The
Fund will not enter into a repurchase agreement maturing in more than seven days
if as a result more than 10% of the Fund's net assets would be invested in such
repurchase agreements and other illiquid securities. (Currently, the Fund is not
able to purchase illiquid securities under its fundamental restrictions.) The
Fund has not adopted any limit on the amount of its net assets that may be
invested in repurchase agreements maturing in seven days or less.
Securities Lending
Another practice in which the Fund may engage is to lend its 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 Fund monitors the creditworthiness of borrowers in order to
minimize such risks. The Fund will not lend any security if, as a result of such
loan, the aggregate value of securities then on loan would exceed 33-1/3% of the
Fund's total net assets (taken at market value).
Investment Restrictions
The Fund is subject to certain restrictions upon its investments, which
are set forth in the Statement of Additional Information, which may not be
altered without the approval of the Fund's shareholders. Those restrictions
include, among others, limitations with respect to the percentages of the value
of its total assets which may be invested in any one company or in one industry.
In addition, except where indicated to the contrary, the investment objectives
and policies described in this section are fundamental and may not 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 an open-end, diversified management investment company.
The Company was incorporated on April 2, 1993, under the laws of Maryland. On
November 1, 1993, the Fund assumed all of the assets and liabilities of the
Fund's
<PAGE>
predecesser, Financial Tax-Free Income Shares, Inc., which was incorporated
under the laws of Colorado on April 22, 1981. All financial and other
information about the Fund for periods prior to November 1, 1993 relates to such
former fund. The overall supervision of the Fund is the responsibility of the
Company's board of directors.
Pursuant to an agreement with the Company, INVESCO Funds Group, Inc.
("INVESCO"), 7800 E. Union Avenue, Denver, Colorado, serves as the Fund's
investment adviser. INVESCO is primarily responsible for providing the Fund with
various administrative services, and supervising the Fund's daily business
affairs. These services are subject to review by the Company's board of
directors.
The following individual serves as portfolio manager for the Fund and is
primarily responsible for the day-to-day management of the Fund's portfolio of
securities:
William W. Veronda Portfolio manager of the Fund since 1984;
portfolio manager of the INVESCO High
Yield Fund from 1984 to 1994 and INVESCO
Tax-Free Intermediate Bond Fund since
1993; senior vice president (1989 to
present) and vice president (1985 to
1989) of INVESCO Trust Company; B.S.-
Economics, The Wharton School, University
of Pennsylvania; Chartered Financial
Analyst.
INVESCO is an indirect wholly-owned subsidiary of INVESCO PLC. INVESCO PLC
is a financial holding company which, through its subsidiaries, engages in the
business of investment management on an international basis. INVESCO was
established in 1932 and, as of June 30, 1994, managed thirteen mutual funds,
consisting of 34 separate portfolios, with combined assets of approximately $9.3
billion on behalf of over 860,500 shareholders.
Pursuant to an agreement with INVESCO, INVESCO Trust Company ("INVESCO
Trust"), 7800 E. Union Avenue, Denver, Colorado, serves as the Fund's
sub-adviser. INVESCO Trust, a trust company founded in 1969, is a wholly-owned
subsidiary of INVESCO that served as adviser or sub-adviser to 31 investment
portfolios as of June 30, 1994, including 25 portfolios in the INVESCO Group.
These 31 portfolios had aggregate assets of approximately $9.3 billion as of
June 30, 1994. In addition, INVESCO Trust provides investment management
services to private clients, including employee benefit plans that may be
invested in a collective trust sponsored by INVESCO Trust. INVESCO Trust,
subject to the supervision of INVESCO, is primarily responsible for selecting
and managing the Fund's investments. Although the Fund is not a party to the
sub- advisory agreement, the agreement has been approved by the shareholders of
the Fund.
<PAGE>
The Fund pays INVESCO a monthly fee which is based upon a percentage of
the Fund's average net assets determined daily. The 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% of
the Fund's average net assets in excess of $500 million. For the fiscal year
ended June 30, 1994, the investment advisory fee paid by the Fund amounted to
0.55% of the Fund's average net assets. Out of its advisory fee which it
receives from the Fund, INVESCO pays INVESCO Trust, as the Fund's sub-adviser, a
monthly fee, which is computed at the annual rate of 0.25% of the Fund's average
net assets up to $200 million, and 0.20% of the Fund's average net assets in
excess of $200 million. No fee is paid by the Fund to INVESCO Trust.
The Company also has entered into an Administrative Services Agreement,
dated April 30, 1993 (the "Administrative Agreement"), with INVESCO. Pursuant to
the Administrative Agreement, INVESCO performs certain administrative,
recordkeeping and internal sub-accounting services, including without
limitation, maintaining general ledger and capital stock accounts, preparing a
daily trial balance, calculating net asset value daily, providing selected
general ledger reports and providing sub-accounting and recordkeeping services
for shareholder accounts maintained by certain retirement and employee benefit
plans for the benefit of participants in such plans. For such services, the Fund
pays INVESCO a fee consisting of a base fee of $10,000 per year, plus an
additional incremental fee computed at the annual rate of 0.015% per year of the
average net assets of the Fund. INVESCO also is paid a fee by the Fund for
providing transfer agent services. See "Additional Information."
The Fund's expenses, which are accrued daily, are deducted from total
income before dividends are paid. Total expenses of the Fund for the fiscal year
ended June 30, 1994, including investment advisory fees (but excluding brokerage
commissions, which are a cost of acquiring securities) amounted to 1.03% of the
Fund's average net assets. Certain Fund expenses will be absorbed voluntarily by
INVESCO and INVESCO Trust in order to ensure that the Fund's total annual
operating expenses will not exceed 0.90% of the Fund's average net assets. This
policy is applicable to Fund expenses incurred on or after September 1, 1994.
INVESCO, as the Company's investment adviser, or INVESCO Trust, as the
Company's sub-adviser, places orders for the purchase and sale of portfolio
securities with brokers and dealers based upon INVESCO's evaluation of their
financial responsibility coupled with their ability to effect transactions at
the best available prices. The Company may market its shares of the Fund through
intermediary brokers or dealers that have entered into Dealer Agreements with
INVESCO, as the Company's Distributor, under which such intermediary brokers or
dealers generally are compensated through the payment of continuing quarterly
fees at the annual rate of up to 0.25% of the average aggregate net asset value
of outstanding Fund shares sold by such entities, measured on each
<PAGE>
business day during a calendar quarter. 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 management of the Fund believes that the quality of the
transaction and commission are comparable to those available from other
qualified brokerage firms.
HOW SHARES CAN BE PURCHASED
Shares of the Fund are sold on a continuous basis by INVESCO, as the
Company's Distributor, at the net asset value per share next calculated after
receipt of a purchase order in good form. No sales charge is imposed upon the
sale of shares of the Fund. To purchase shares of the Fund, send a check made
payable to INVESCO Funds Group, Inc., together with a completed application form
to:
INVESCO FUNDS GROUP, INC.
Post Office Box 173706
Denver, Colorado 80217-3706
Purchase orders must specify the Fund in which the investment is to be
made.
The minimum initial purchase must be at least $1,000, with subsequent
investments of not less than $50, except that: (1) those shareholders
establishing an EasiVest or direct payroll purchase account, as described below
in the Prospectus section entitled "Services Provided by the Fund," may open an
account without making any initial investment if they agree to make regular,
minimum purchases of at least $50; (2) Fund management may permit a lesser
amount to be invested in the Fund under a group investment plan qualifying as a
sophisticated investor; and (3) Fund management reserves the right to reduce or
waive the minimum purchase requirements in its sole discretion where it
determines such action is in the best interests of the Fund. The minimum initial
purchase requirement of $1,000, as described above, does not apply to
shareholder account(s) in any of the INVESCO funds opened prior to January 1,
1993, and, thus, is not a minimum balance requirement for those existing
accounts. However, for shareholders already having accounts in any of the
INVESCO funds, all initial share purchases in a new Fund account, including
those made using the exchange privilege, must meet the Fund's applicable minimum
investment requirement.
An order to purchase shares will not begin earning dividends or other
distributions until the investor's check can be converted into available federal
funds (i.e., moneys held on deposit within the Federal Reserve System) under
regular banking processing procedures. Checks drawn on a member bank of the
Federal Reserve System normally are converted into federal funds within two or
three business days following receipt of the checks by the Fund. In the case of
checks drawn on banks which are not members of the
<PAGE>
Federal Reserve System, it may take longer for federal funds to become
available.
The purchase of shares can be expedited by placing bank wire orders or
using overnight courier. Overnight courier orders must meet the above minimum
requirements. In no case can a bank wire order be in an amount less than $1,000.
For further information, the purchaser may call the Fund's office by using the
telephone number on the cover of this Prospectus. Orders sent by overnight
courier, including Express Mail, should be sent to the street address, not Post
Office Box, of INVESCO Funds Group, Inc., at 7800 E. Union Avenue, Denver, CO
80237.
If your check does not clear, you will be responsible for any related loss
the Fund or INVESCO incurs. If you are already a shareholder in the INVESCO
funds, the Fund has the option to redeem shares from any identically registered
account in the Fund or any other INVESCO fund as reimbursement for any loss
incurred. You also may be prohibited or restricted from making future purchases
in any of the INVESCO funds.
Persons who invest in the Fund through a securities broker may be charged
a commission or transaction fee for the handling of the transaction if the
broker so elects. Any investor may deal directly with the Fund in any
transaction. In that event, there is no such charge.
The Fund reserves the right in its sole discretion to reject any order for
purchase of its shares (including purchases by exchange) when, in the judgment
of management, such rejection is in the best interests of the Fund.
Net asset value per share is computed once each day on which the New York
Stock Exchange is open as of the close of trading on that Exchange (presently
4:00 p.m., New York time) and also may be computed on other days under certain
circumstances. Net asset value per share of the Fund is calculated by dividing
the market value of all of the Fund's securities plus the value of its other
assets (including dividends and interest accrued but not collected), less all
liabilities (including accrued expenses), by the number of outstanding shares of
the Fund. If market quotations are not readily available, a security will be
valued at fair value as determined in good faith by the board of directors. Debt
securities with remaining maturities of 60 days or less will be valued at
amortized cost, absent unusual circumstances, so long as the Company's board of
directors believes that such value represents fair value.
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 its shares to investors. Under the Plan, which was implemented
on November 1, 1990, monthly payments may be made by the Fund to
<PAGE>
INVESCO to reimburse it for particular expenditures incurred by INVESCO during
the rolling 12-month period in which that month falls in connection with the
distribution of the Fund's shares to investors. These expenditures may include
the payment of compensation (including incentive compensation and/or continuing
compensation based on the amount of customer assets maintained in the Fund) to
securities dealers and other financial institutions and organizations to obtain
various distribution-related and/or adminstrative services for the Fund. Such
services may include, among other things, processing new shareholder account
applications, preparing and transmitting to the Fund's Transfer Agent computer
processable tapes of all transactions by customers, and serving as the primary
source of information to customers in answering questions concerning the Fund,
and their transactions with the Fund.
In addition, other reimbursable expenditures include those incurred for
advertising, the preparation and distribution of sales literature, the cost of
printing and distributing prospectuses to prospective investors, and such other
services and promotional activities for the Fund as may from time to time be
agreed upon by the Company and its board of directors, including public
relations efforts and marketing programs to communicate with investors and
prospective investors.
Under the Plan, the Company's reimbursement to INVESCO on behalf of the
Fund is limited to an amount computed at the annual rate of 0.25% of the Fund's
average net assets during the month. INVESCO is not entitled to reimbursement
for overhead expenses under the Plan, but may be reimbursed for all or a portion
of the compensation paid for salaries and other employee benefits for the
personnel of INVESCO, whose primary responsibilities involve marketing shares of
the INVESCO funds, including the Fund. Payment amounts by the Fund under the
Plan, for any month, may only be made to reimburse or pay expenditures incurred
during the rolling 12-month period in which that month falls. Any reimbursable
expenses in excess of the limitation described above are not reimbursable and
will be borne by INVESCO. No further payments will be made by the Fund under the
Plan in the event of its termination. Also, any payments made by the Fund may
not be used to finance the distribution of shares of any other fund of the
Company or other mutual fund advised by INVESCO. Payments made by the Fund under
the Plan for compensation of marketing personnel, as noted above, are based on
an allocation formula designed to ensure that all such payments are appropriate.
SERVICES PROVIDED BY THE FUND
Shareholder Accounts. INVESCO maintains a share account that reflects the
current holdings of each shareholder. A separate account will be maintained for
a shareholder for each fund in which the shareholder invests. Share certificates
will be issued only upon specific request. Since certificates must be carefully
safeguarded and must be surrendered in order to exchange or redeem
<PAGE>
Fund shares, most shareholders do not request share certificates in order to
facilitate such transactions. Each shareholder is sent a detailed confirmation
of each transaction in shares of the Fund. Shareholders whose only transactions
are through the EasiVest, direct payroll purchase, automatic monthly exchange or
periodic withdrawal programs, or are reinvestments of dividends or capital gains
in the same or another fund, will receive confirmations of those transactions on
their quarterly statements. These programs are discussed below. For information
regarding a shareholder's account and transactions, the shareholder may call the
Fund's office by using the telephone number on the cover of this Prospectus.
Reinvestment of Distributions. Income dividends and capital gain
distributions are automatically reinvested in additional shares of the Fund at
the net asset value per share of the Fund in effect on the ex-dividend date. A
shareholder may, however, elect to reinvest dividends and capital gain
distributions in certain of the other no-load mutual funds advised and
distributed by INVESCO, or receive payment of all dividends and distributions in
excess of $10.00 by check by giving written notice to INVESCO at least two weeks
prior to the record date on which the change is to take effect. Further
information concerning these options can be obtained by contacting INVESCO.
Periodic Withdrawal Plan. A Periodic Withdrawal Plan is available to
shareholders who own or purchase shares of any mutual funds advised by INVESCO
having a total value of $10,000 or more; provided, however, that at the time the
Plan is established, the shareholder owns shares having a value of at least
$5,000 in the fund from which withdrawals will be made. Under the Periodic
Withdrawal Plan, INVESCO, as agent, will make specified monthly or quarterly
payments of any amount selected (minimum payment of $100) to the party
designated by the shareholder. Notice of all changes concerning the Periodic
Withdrawal Plan must be received by INVESCO at least two weeks prior to the next
scheduled check. Further information regarding the Periodic Withdrawal Plan and
its requirements and tax consequences can be obtained by contacting INVESCO.
Exchange Privilege. Shares of the Fund may be exchanged for shares of any
other fund of the Company, as well as for shares of any of the following other
no-load mutual funds which are also advised and distributed by INVESCO, on the
basis of their respective net asset values at the time of the exchange: INVESCO
Diversified Funds, Inc., INVESCO Dynamics Fund, Inc., INVESCO Emerging Growth
Fund, 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 Value Trust,
An exchange involves the redemption of shares in the Fund and investment
of the redemption proceeds in shares of another fund of
<PAGE>
the Company or in shares of one of the funds listed above. Exchanges will be
made at the net asset value per share next determined after receipt of an
exchange request in proper order. Any gain or loss realized on such exchange is
recognizable for federal income tax purposes by the shareholder. Exchange
requests may be made either by telephone or by written request to INVESCO Funds
Group, Inc., using the telephone number or address on the cover of this
Prospectus. Exchanges made by telephone must be in an amount of at least $250,
if the exchange is being made into an existing account of one of the INVESCO
funds. All exchanges that establish a new account must meet the Fund's
applicable minimum initial investment requirements. Written exchange requests
into an existing account have no minimum requirements other than the Fund's
applicable minimum subsequent investment requirements.
The privilege of exchanging Fund shares by telephone is available to
shareholders automatically unless expressly declined. By signing the new account
Application, a Telephone Transaction Authorization Form or otherwise utilizing
telephone exchange privileges, the investor has agreed that the Fund will not be
liable for following instructions communicated by telephone that it reasonably
believes to be genuine. The Fund employs procedures, which it believes are
reasonable, designed to confirm that exchange instructions are genuine. These
may include recording telephone instructions and providing written confirmations
of exchange transactions. As a result of this policy, the investor may bear the
risk of any loss due to unauthorized or fraudulent instructions; provided,
however, that if the Fund fails to follow, these or other reasonable procedures,
the Fund may be liable.
In order to prevent abuse of this privilege to the disadvantage of other
shareholders, the Fund reserves the right to terminate the exchange privilege of
any shareholder who requests more than four exchanges a year. The Fund will
determine whether to do so based on a consideration of both the number of
exchanges any particular shareholder or group of shareholders has requested and
the time period over which those exchange requests have been made, together with
the level of expense to the Fund which will result from effecting additional
exchange requests. The exchange privilege also may be modified or terminated at
any time. Except for those limited instances where redemptions of the exchanged
security are suspended under Section 22(e) of the Investment Company Act of
1940, or where sales of the fund into which the shareholder is exchanging are
temporarily stopped, notice of all such modifications or termination of the
exchange privilege will be given at least 60 days prior to the date of
termination or the effective date of the modification.
Before making an exchange, the shareholder should review the
prospectuses of the funds involved and consider their differences,
and should be aware that the exchange privilege may only be
available in those states where exchanges may legally be made,
which will require that the shares being acquired are registered
for sale in the shareholder's state of residence. Shareholders
<PAGE>
interested in exercising the exchange privilege may contact INVESCO for
information concerning their particular exchanges.
Automatic Monthly Exchange. Shareholders who have accounts in any one or
more of the mutual funds distributed by INVESCO may arrange for a fixed dollar
amount of their fund shares to be automatically exchanged for shares of any
other INVESCO mutual fund listed under "Exchange Privilege" on a monthly basis.
The minimum monthly exchange in this program is $50.00. This automatic exchange
program can be changed by the shareholder at any time by notifying INVESCO at
least two weeks prior to the date the change is to be made. Further information
regarding this service can be obtained by contacting INVESCO.
EasiVest. For shareholders who want to maintain a schedule of monthly
investments, EasiVest uses various methods to draw a preauthorized amount from
the shareholder's bank account to purchase Fund shares. This automatic
investment program can be changed by the shareholder at any time by writing to
INVESCO at least two weeks prior to the date the change is to be made. Further
information regarding this service can be obtained by contacting INVESCO.
Direct Payroll Purchase. Shareholders may elect to have their employers
make automatic purchases of Fund shares for them, by deducting a specified
amount from their regular paychecks. This automatic investment program can be
modified or terminated at any time by the shareholder, by notifying the
employer. Further information regarding this service can be obtained by
contacting INVESCO.
HOW TO REDEEM SHARES
You may redeem all or any portion of the shares in your account at any
time by telephone or mail as described below. Shares of the Fund may be redeemed
at their current net asset value per share next determined after a request in
proper form is received at the Fund's office. (See "How Shares Can Be
Purchased.") Net asset value per share at the time of redemption may be more or
less than the price you paid to purchase your shares, depending primarily upon
the Fund's investment performance.
If the shares being redeemed are represented by stock certificates, a
written request for redemption signed by the registered shareholder(s) and the
certificates must be forwarded to INVESCO Funds Group, Inc., Post Office Box
173706, Denver, Colorado 80217-3706. Redemption requests sent by overnight
courier, including Express Mail, should be sent to the street address, not Post
Office Box, of INVESCO Funds Group, Inc. at 7800 E. Union Avenue, Denver, CO
80237. If no certificates have been issued, a written redemption request signed
by each registered owner of the account may be submitted to INVESCO at the
address noted above. If shares are held in the name of a corporation, additional
documentation may be necessary. Call or write for specifics. If
<PAGE>
payment for the redeemed shares is to be made to someone other than the
registered owner(s), the signature(s) must be guaranteed by a financial
institution which qualifies as an eligible guarantor institution. Redemption
procedures with respect to accounts registered in the names of broker/dealers
may differ from those applicable to other shareholders.
Be careful to specify the account from which the redemption is to be made.
Shareholders have a separate account for each Fund in which they invest.
Payment of redemption proceeds will be mailed within seven days following
receipt of the required documents. However, payment may be postponed under
unusual circumstances, such as when normal trading is not taking place on the
New York Stock Exchange, an emergency exists as defined by the Securities and
Exchange Commission, or the shares to be redeemed were purchased by check and
that check has not yet cleared; provided, however, that all redemption proceeds
will be paid out promptly upon clearance of the purchase check (which may take
up to 15 days).
Because of the high relative costs of handling small accounts, should the
value of any shareholder's account fall below $250, as a result of shareholder
action, the Fund reserves the right to effect the involuntary redemption of all
shares in such account, in which case the account would be liquidated and the
proceeds forwarded to the shareholder. Prior to any such redemption, a
shareholder will be notified and given 60 days to increase the value of the
account to $250 or more.
Fund shareholders (other than shareholders holding Fund shares in accounts
of IRA plans) may request expedited redemption of shares having a minimum value
of $250 (or redemption of all shares if their value is less than $250) held in
accounts maintained in their name by telephoning redemption instructions to
INVESCO, using the telephone number on the cover of this Prospectus. Unless the
Fund's management permits a larger redemption request to be placed by telephone,
a shareholder may not place a redemption request by telephone in excess of
$25,000. The redemption proceeds, at the shareholder's option, either will be
mailed to the address listed on the shareholder's Fund account, or wired
(minimum of $1,000) or mailed to the bank which the shareholder has designated
to receive the proceeds of telephone redemptions. The Fund charges no fee for
effecting such telephone redemptions. These telephone redemption privileges may
be modified or terminated in the future at the discretion of the Fund's
management. Shareholders should understand that while the Fund will attempt to
process all telephone redemption requests on an expedited basis, there may be
times, particularly in periods of severe economic or market disruption, when (a)
they may encounter difficulty in placing a telephone redemption request, and (b)
processing telephone redemptions may require up to seven days following receipt
of the telephone redemption request, or additional time because of
<PAGE>
postponements resulting from the unusual circumstances set forth
above.
The privilege of redeeming Fund shares by telephone is available to
shareholders automatically unless expressly declined. By signing a new account
Application, a Telephone Redemption Authorization Form or otherwise utilizing
telephone redemption privileges, the shareholder has agreed that the Fund will
not be liable for following instructions communicated by telephone that it
reasonably believes to be genuine. The Fund employs procedures, which it
believes are reasonable, designed to confirm that telephone instructions are
genuine. These may include recording telephone instructions and providing
written confirmation of transactions initiated by telephone. As a result of this
policy, the investor may bear the risk of any loss due to unauthorized or
fraudulent instructions; provided, however, that if the Fund fails to follow
these or other reasonable procedures, the Fund may be liable.
DIVIDENDS, CAPITAL GAIN DISTRIBUTIONS, AND TAXES
Dividends and Capital Gain Distributions. All of the Fund's net investment
income is paid out to shareholders. Net investment income consists of all
interest income accrued on portfolio securities, less all expenses of the Fund
for the applicable period. Dividends from net investment income are declared
daily and paid monthly. Distributions of net realized capital gains, if any,
will be made at least annually, usually in December. Dividends and capital
gains, if any, are automatically reinvested in additional shares of the Fund at
the net asset value on the ex- dividend date, unless otherwise requested. (See
"Services Provided by the Fund - Reinvestment of Distributions.")
Taxes. The Fund intends to continue to comply with the provisions of
Subchapter M of the Internal Revenue Code applicable to regulated investment
companies and to make sufficient distributions of investment income and capital
gains to relieve it from all federal income taxes. In addition, the Fund intends
to qualify during each fiscal year to pay "exempt-interest dividends" to its
shareholders. Exempt-interest dividends, which are derived from net income
earned by the Fund on municipal obligations, will be excludable from gross
income of the shareholders for federal income tax purposes and, therefore, free
from regular income tax. Any distributions to shareholders from net interest
income earned by the Fund from taxable temporary investments, or from net
capital gains, whether paid in cash or reinvested in additional shares, would be
subject to federal income taxation. Distributions of net realized short-term
capital gains are, for federal income tax purposes, taxable as ordinary income
to shareholders. Under the Tax Reform Act of 1986, interest on certain "private
activity bonds" issued after August 7, 1986, is an item of tax preference for
purposes of the alternative minimum tax in taxable years beginning after
December 31, 1986. The Fund intends to limit, and has limited in the past, its
investments in such "private activity
<PAGE>
bonds" to not more than 20% of the Fund's assets. The portion of exempt-interest
dividends paid by the Fund which is attributable to such "private activity
bonds" would be an item of tax preference to shareholders. Additionally, certain
corporations also may have to include exempt-interest dividends in calculating
alternative minimum taxable income in situations where the "adjusted current
earnings" of the corporation exceeds its alternative minimum taxable income.
At the end of each calendar year, shareholders are sent full information
on dividends and capital gain distributions for tax purposes. The Fund
anticipates that substantially all of the dividends to be paid by the Fund will
be exempt from federal income taxes. During the fiscal year ended June 30, 1994,
99.61% of the dividends declared by the Fund were exempt from federal income
taxes. There is no assurance that this will be the case in future years. If any
portion of such dividends is not exempt, the Fund will advise shareholders of
the proportion thereof in its annual tax notice. 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. Shareholders of the Fund are advised to
consult their own tax advisers with respect to these matters.
ADDITIONAL INFORMATION
Voting Rights. All shares of the Fund and the other fund 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 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. 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, the board of
directors will call special meetings of shareholders for the purpose, among
other reasons, of voting upon the question of removal of a director or directors
when requested to do so in writing by the holders of 10% or more of the
outstanding shares of the Company or as may be required by applicable law or the
Company's Articles of Incorporation. The Company will assist shareholders in
communicating with other shareholders as required by the Investment Company Act
of 1940. Directors may be removed by action of the holders of a majority or more
of the outstanding shares of the Company.
<PAGE>
Shareholder Inquiries. All inquiries regarding the Fund should be directed
to the Fund at the telephone number or mailing address set forth on the cover
page of this Prospectus.
Transfer and Dividend Disbursing Agent. INVESCO Funds Group, Inc., 7800 E.
Union Ave., Denver, Colorado 80237, acts as registrar, transfer agent, and
dividend disbursing agent for the Fund pursuant to a Transfer Agency Agreement
which provides that the Fund will pay a fee of $20.00 per shareholder account or
omnibus account participant per year. The transfer agency fee is not charged to
each shareholder's or participant's account, but is an expense of the Fund to be
paid from the Fund's assets. In addition, registered broker-dealers, third party
administrators of tax-qualified retirement plans and other entities may provide
sub- transfer agency services to the Fund which reduce or eliminate the need for
identical services to be provided on behalf of the Fund by INVESCO. In such
cases, INVESCO is authorized to pay the third party an annual sub-transfer
agency fee of up to $20.00 per participant in the third party's omnibus account
out of the transfer agency fee which is paid to INVESCO by the Fund.
<PAGE>
INVESCO TAX-FREE LONG-TERM BOND FUND A no-load
mutual fund seeking as high a level of interest
income exempt from federal income taxes as is
consistent with the preservation of capital.
PROSPECTUS November 1, 1994
To receive general information and prospectuses on any of INVESCO's funds or
retirement plans, or to obtain current account or price information, call
toll-free:
1-800-525-8085
To reach PAL, your 24-hour Personal Account Line, call:
1-800-424-8085
Or write to:
INVESCO Funds Group, Inc., Distributor
Post Office Box 173706
Denver, Colorado 80217-3706
If you're in Denver, visit one of our convenient Investors Centers:
Cherry Creek
155-B Fillmore Street
Denver Tech Center
7800 E. Union Avenue
Lobby Level
