May 31, 1998
INVESCO Money
Market Funds
Cash Reserves Fund
U.S. Government Money Fund
Tax-Free Money Fund
You should know what INVESCO knows.(TM)
INVESCO FUNDS
<PAGE>
Market Overview June 1998
The market's strength continues to surprise even the most bullish pundits.
Since the economic recession in 1990, equity prices in the U.S. have advanced
with limited interruptions. From a historical perspective, this is the greatest
bull market of all time. Exemplifying the underlying strength of this market,
the Dow Jones Industrial Average (an unmanaged index composed of 30 domestic
large-capitalization stocks) reached these historic milestones on the following
dates:
o 1000 on November 14, 1972
o 2000 on January 8, 1987
o 3000 on April 17, 1991
o 4000 on February 23, 1995
o 5000 on November 21, 1995
o 6000 on October 14, 1996
o 7000 on February 13, 1997
o 8000 on July 16, 1997
o 9000 on April 6, 1998
Notice that it took the Dow approximately 15 years to double from 1000 to
2000, eight years to double from 2000 to 4000, and a little over two years to
double from 4000 to 8000. The phenomenal bull market of the 1990s has created
more financial wealth than at any other time in history. Nonetheless, equity
markets do go up and down, and it is highly unusual for stocks to consistently
produce returns of 20% to 30% annually. Instead, history has shown that stock
indexes average between 10% to 12% over longer time periods, and investors may
need to adjust their expectations accordingly.
Equity markets produced astonishingly strong returns in the last six
months, although day-to-day volatility was extreme. Since the Asian financial
crisis led to a correction in the fall of 1997, many domestic indexes have
advanced by more than 20%. Although the crisis increased negative sentiment
about the future direction of the economy and the market, it has done little to
affect either so far. Domestic economic growth continues to exceed its
historical average of 2% to 3%, yet we see no signs of inflation on the horizon
- -- an oxymoron in economic textbooks. (Historically, strong economic growth
increases the demand for labor, which leads to increased wages and eventually
inflation.) In fact, both consumer and producer prices remain stable and in many
cases are declining.
<PAGE>
Understandably, consumer confidence is at its highest level in more than 27
years. Real wages are increasing and intense global competition is decreasing
retail prices for many consumer goods. Plus, the chronic budget deficit, which
has plagued the government for the last 18 years, might become a surplus in 1998
- -- thus improving the chances for a tax cut for many Americans.
At present, the economy is in what some call a "sweet spot," as benign
inflation, strong economic growth, and low unemployment have increased
consumers' confidence and willingness to spend money. The key to maintaining
this environment will be continued gains in worker productivity and low interest
rates. A decrease in productivity may lead to a slowdown in corporate earnings,
which has been one of the underlying fundamentals of the bull market. In
addition, a significant increase in interest rates could slow the rate of growth
in the economy, and most likely reduce the price-to-earnings multiple that
investors are willing to pay for equity securities. Meanwhile, the technical
underpinnings needed to support a buoyant equity market, namely a strong and
healthy economy, remain intact.
------------------------------
INVESCO's money market funds are actively managed to pursue high current
income along with safety of principal. The funds seek to maintain a constant
price per share of $1.00, although this cannot be guaranteed. Shares of the
funds arenot issued or guaranteed by the U.S. government. If you are interested
in obtaining current yield information, please call 1-800-525-8085.
Fund Management
Since 1993, U.S. Government Money Fund and Cash Reserves Fund have been
managed by INVESCO Vice President Richard R. Hinderlie. He began his investment
career in 1973, and has extensive experience in fixed-income analysis and
portfolio management. Dick received his MBA from Arizona State University and BA
in economics from Pacific Lutheran University. He is also manager of INVESCO
U.S. Government Securities Fund and co-manager of INVESCO Short-Term Bond Fund.
INVESCO Vice President Ingeborg S. Cosby has managed Tax-Free Money Fund
since 1992. She launched her investment career in 1982 as a portfolio manager
assistant with First Affiliated Securities. Inge joined INVESCO's fixed-income
management group in 1985.
<PAGE>
<TABLE>
<CAPTION>
INVESCO Money Market Funds, Inc.
Statement of Investment Securities
May 31, 1998
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Effective
Interest Principal
Description Rate% Amount Value
- ---------------------------------------------------------------------------------------------
CASH RESERVES Fund
SHORT-TERM INVESTMENTS 100.00%
US Government Agency Obligations 5.24%
Student Loan Marketing Association
1/13/1999 5.34 $ 25,000,000 $ 25,000,000
2/8/1999 5.34 12,750,000 12,750,000
-------------
TOTAL US GOVERNMENT AGENCY OBLIGATIONS
(Cost $37,750,000) 37,750,000
-------------
Commercial Paper 94.76%
AUTO PARTS 1.38%
PACCAR Financial, 6/15/1998 5.61 10,000,000 9,978,516
-------------
AUTOMOBILES 12.35%
Chrysler Financial, 6/1/1998 5.65 25,000,000 25,000,000
Ford Motor Credit
7/7/1998 5.56 6,000,000 6,000,000
7/8/1998 5.56 11,000,000 11,000,000
7/9/1998 5.56 11,000,000 11,000,000
General Motors Acceptance
6/3/1998 5.53 21,000,000 21,000,000
6/11/1998 5.54 15,000,000 15,000,000
-------------
89,000,000
-------------
BANKS 4.84%
Norwest Corp
6/16/1998 5.61 15,000,000 14,965,489
6/18/1998 5.61 10,000,000 9,973,925
6/19/1998 5.61 10,000,000 9,972,391
-------------
34,911,805
-------------
CONSUMER FINANCE 9.05%
American Express Credit, 6/29/1998 5.54 30,000,000 30,000,000
Beneficial Corp
6/17/1998 5.56 15,000,000 15,000,000
6/25/1998 5.57 20,200,000 20,200,000
-------------
65,200,000
-------------
ELECTRIC UTILITIES 3.47%
National Rural Utilities Cooperative
Finance, 6/1/1998 5.61 25,000,000 25,000,000
-------------
<PAGE>
ELECTRICAL EQUIPMENT 4.16%
General Electric
6/1/1998 5.55 5,000,000 5,000,000
6/26/1998 5.57 25,000,000 25,000,000
-------------
30,000,000
-------------
FINANCIAL 11.23%
General Electric Capital, 6/30/1998 5.58 15,000,000 15,000,000
Heller Financial
6/24/1998 5.69 11,500,000 11,500,000
6/29/1998 5.73 17,500,000 17,500,000
Transamerica Finance
6/2/1998 5.62 12,000,000 11,998,153
6/12/1998 5.63 25,000,000 24,957,646
-------------
80,955,799
-------------
INSURANCE 14.76%
American General
6/22/1998 5.55 $ 12,500,000 $ 12,500,000
6/23/1998 5.55 25,000,000 25,000,000
CIGNA Corp
6/4/1998 5.52 11,000,000 11,000,000
6/5/1998 5.52 11,000,000 11,000,000
6/30/1998 5.53 13,000,000 13,000,000
Prudential Funding
6/15/1998 5.55 5,000,000 5,000,000
6/30/1998 5.66 16,000,000 15,928,422
6/30/1998 5.57 10,000,000 10,000,000
SAFECO Credit, 6/8/1998 5.66 3,000,000 2,996,748
-------------
106,425,170
-------------
INVESTMENT BANK/BROKER FIRM 15.07%
Bear Stearns
6/15/1998 5.67 15,000,000 14,967,466
7/6/1998 5.64 20,000,000 19,892,373
Merrill Lynch & Co
6/22/1998 5.64 10,000,000 9,967,672
6/24/1998 5.63 25,000,000 24,911,698
Morgan Stanley Dean Witter Discover & Co
6/15/1998 5.62 25,000,000 24,946,185
7/7/1998 5.64 14,000,000 13,922,520
-------------
108,607,914
-------------
MACHINERY 8.74%
Deere & Co
7/8/1998 5.56 9,000,000 9,000,000
7/10/1998 5.56 15,000,000 15,000,000
<PAGE>
Deere (John) Capital
6/9/1998 5.53 15,000,000 15,000,000
6/10/1998 5.53 15,000,000 15,000,000
7/9/1998 5.56 9,000,000 9,000,000
-------------
63,000,000
-------------
RETAIL 4.51%
Penney (J C) Funding, 6/8/1998 5.61 15,000,000 14,983,894
Sears Roebuck Acceptance
6/15/1998 5.55 10,000,000 10,000,000
6/22/1998 5.58 7,500,000 7,500,000
-------------
32,483,894
-------------
SERVICES 5.20%
Hertz Corp
6/1/1998 5.57 11,500,000 11,500,000
7/2/1998 5.58 6,000,000 6,000,000
8/17/1998 5.61 20,000,000 20,000,000
-------------
37,500,000
-------------
TOTAL COMMERCIAL PAPER
(Cost $683,063,098) 683,063,098
-------------
TOTAL INVESTMENT SECURITIES
AT VALUE 100.00%
(Cost $720,813,098#) $ 720,813,098
=============
TAX-FREE MONEY Fund
SHORT-TERM MUNICIPAL INVESTMENTS 100.00%
ALABAMA 1.37%
Alabama Indl Dev Auth, FR, Spl Tax,
Series 1998, 2/1/1999 3.60 $ 375,000 $ 375,962
Univ of Alabama Brd of Trustees,
FR, Gen Fee Rev, Univ of Alabama,
Series 1997, 6/1/1998 3.85 370,000 370,000
-------------
745,962
-------------
ALASKA 1.03%
North Slope Borough, Alaska, FR,
Gen Oblig, Series 1992A, 6/30/1998 3.60 560,000 560,529
-------------
ARIZONA 1.25%
Arizona Hlth Facils Auth (Arizona
Vol Hosp Fedn), AR, Mode Bonds,
1985 Series A, 10/1/2015~+ 3.85 480,000 480,000
Arizona Transn Brd (Maricopa Cnty
Regl Area Road), FR, Transn
Excise Tax Rev,
1992 Series A, 7/1/1998 3.90 100,000 100,076
Tuscon, Arizona, FR, Gen Oblig
Current Int Ref, Series 1993,
7/1/1998 3.90 100,000 100,330
-------------
680,406
-------------
<PAGE>
ARKANSAS 0.92%
Crosset, Arkansas (Gerogia-Pac Corp
Proj), A/FR, PCR Ref,
Series 1991, 10/1/1998 3.90 500,000 500,000
-------------
CALIFORNIA 5.15%
Contra Costa Wtr Auth, California
(Contra Costa Cnty), FR, Wtr
Treatment Rev
Ref, 1993 Series A, 10/1/1998 3.65 250,000 250,513
Los Angeles Regl Airports Impt,
California (Los Angeles Intl Airport),
DATES,
Facils Sublease Rev, Issue 1985,
12/1/2025~ 4.00 2,200,000 2,200,000
Northern California Pwr Agency
(Geothermal Proj #3), FR, Rev, 1996
Ref, Series B, 7/1/1998 3.50 350,000 350,415
-------------
2,800,928
-------------
COLORADO 0.55%
Adams Cnty School Dist #12, Colorado
(Adams Twelve Five Star Schools), FR,
Conv Gen Oblig Ref, Series 1995D,
12/15/1998 3.68 300,000 300,821
-------------
DELAWARE 3.67%
Delaware Econ Dev Auth (Delaware
Clean Pwr Proj), AR, IDR,
Series 1997C, 8/1/2029~ 3.90 2,000,000 2,000,000
-------------
FLORIDA 3.91%
Florida State Brd Ed, FR, Pub Ed
Cap Outlay Ref, Series 1987-B1,
6/1/2019 ~ 3.80 215,000 219,300
Pasco Cnty School Brd, Florida, VR,
Ctfs of Participation, Series 1996,
8/1/2026~ 3.85 1,000,000 1,000,000
St Lucie Cnty, Florida (Savannah Hosp
Proj), FRD, IDR, Series 1985,
11/1/2015~ 3.95 910,000 910,000
-------------
2,129,300
-------------
GEORGIA 8.53%
Atlanta, Georgia, FR, Airport Facils
Rev Ref, Series 1996, 1/1/1999 3.80 200,000 201,650
Burke Cnty Dev Auth, Georgia
(Oglethorpe Pwr Vogtle Proj),
AR, Adj Tender PCR, Series 1993A,
1/1/2016~ 3.90 850,000 850,000
<PAGE>
DeKalb Cnty Hosp Auth, Georgia
(DeKalb Med Ctr Proj), AR, RAC,
Series 1993B, 9/1/2009~+ 3.90 1,145,000 1,145,000
DeKalb Private Hosp Auth, Georgia
(Egleston Children's Hosp at Emory
Univ Proj), VRD, RAC, Series 1994B,
12/1/2017~ 3.90 500,000 500,000
Macon-Bibb Cnty Hosp Auth, Georgia
(Med Ctr of Cent Georgia), AR, RAC,
Series 1994, 4/1/2007~+ 3.90 1,445,000 1,445,000
Savannah Econ Dev Auth, Georgia
(Home Depot Proj), AR, Exmp Facil Rev,
Series 1995B, 8/1/2025~ 3.95 500,000 500,000
-------------
4,641,650
-------------
ILLINOIS 5.20%
Chicago, Illinois, AR, Gen Oblig
Tender Notes, Series 1997, 1/31/1999 3.56 500,000 500,000
Hoffman Estates, Cook & Kane Cntys,
Illinois (Hoffman Estates Econ
Dev Proj Area), FR, Tax Increment Rev,
Series 1990, 11/15/1998 3.60 250,000 253,797
Illinois Dev Fin Auth (6 West Hubbard
Street Proj), F/FR, IDR, Series 1986,
12/1/2016~ 4.05 875,000 875,000
Illinois Dev Fin Auth (Kindlon Partners
Proj), VR, Indl Proj Rev, Series 1991,
5/1/2006~ 3.95 700,000 700,000
Illinois Hlth Facils Auth (Sherman
Hlth Systems), FR, Rev, Series 1997,
8/1/1998 3.90 250,000 250,000
Oak Lawn Park Dist, Cook Cnty,
Illinois (Alternate Rev Source), FR,
Gen Oblig Ref Park, Series 1997,
12/1/1998 3.70 250,000 250,294
-------------
2,829,091
-------------
INDIANA 5.51%
Daviess Cnty, Indiana (Perdue Farms/
Shenandoah Valley Farms Facil),
V/FRD, Econ Dev Rev, 1987 Issue,
9/1/2007~ 3.75 1,500,000 1,500,000
Indiana Muni Pwr Agency, VRD, Pwr
Supply System Ref Rev, 1998 Series A,
1/1/2018~ 3.95 1,000,000 1,000,000
Newton Cnty, Indiana (Intec Group Proj),
A/FR, Econ Dev Rev, Series 1994,
9/1/2010~ 3.95 500,000 500,000
-------------
3,000,000
-------------
IOWA 3.49%
Iowa Fin Auth (Burlington Med Ctr),
AR, Adj Demand Rev, Series 1997,
6/1/2027~ 3.90 1,900,000 1,900,000
-------------
<PAGE>
KANSAS 1.84%
Fairway, Kansas (Nichols (J C) Co
Proj), FRD, Indl Rev, Series 1984,
11/1/2014~ 4.15 500,000 500,000
Spring Hill, Kansas (Abrasive Engr &
Mfg Proj), VR, Indl Rev, Series 1996,
9/1/2016~ 3.95 500,000 500,000
-------------
1,000,000
-------------
LOUISIANA 3.19%
Louisiana, FR, Gen Oblig Ref,
Series 1987-A, 8/1/1998 3.80 170,000 170,792
Series 1993-A, 8/1/1998 3.95 100,000 100,102
Series 1993-B, 8/1/1998 3.95 200,000 200,195
Louisana Pub Facils Auth (Touro
Infirmary Proj), FR, Hosp Rev & Ref,
Series 1988A, 6/1/2009~ 3.80 175,000 178,500
Louisiana Recovery Dist, Sales Tax
Ref, FR, Series 1992, 7/1/1998 3.85 350,000 350,511
Louisiana Recovery Dist, Sales Tax
Rev, VR, Series 1988, 7/1/1998 3.82 735,000 735,221
-------------
1,735,321
-------------
MASSACHUSETTS 0.52%
Boston, Massachusetts, FR, Gen Oblig,
1990 Series A, 2/1/1999 3.65 180,000 183,806
Massachusetts Hlth & Edl Facils Auth
(Cap Asset Prog), FR, Rev,
Series G-2, 7/1/1998 4.00 100,000 100,223
-------------
284,029
-------------
MICHIGAN 1.84%
Kent Hosp Fin Auth, Michigan
(Butterworth Hosp), ACES, Hosp Rev,
Series 1991A, 1/15/2020~ 3.95 1,000,000 1,000,000
-------------
MISSOURI 3.22%
Columbia, Missouri, VR, Spl Oblig
Insured Reserve, Series 1988A,
6/1/2008~ 3.95 1,750,000 1,750,000
-------------
NEBRASKA 0.84%
Hamilton Cnty, Nebraska (Iams Co Proj),
VR, IDR Ref, Series 1990, 7/1/2005~ 3.95 455,000 455,000
-------------
NEVADA 0.92%
Clark Cnty, Nevada, AR, Airport System
Ref Rev, Series 1993A, 7/1/2012~+ 3.90 500,000 500,000
-------------
NEW JERSEY 5.11%
New Jersey Econ Dev Auth (Glenyte
Camden Cnty Proj), AR, IDR Ref,
Series 1990, 12/19/2009~ 3.90 2,300,000 2,300,000
New Jersey Hwy Auth (Garden State Pkwy),
FR, Sr Pkwy Rev, 1989 Series,
1/1/2009~ 3.60 200,000 208,085
1/1/2016~ 3.60 260,000 270,511
-------------
2,778,596
-------------
<PAGE>
NEW MEXICO 1.84%
Gallup-McKinley Cnty School Dist #1,
New Mexico, FR, Gen Oblig School
Bldg, Series August 1, 1997, 8/1/1998 3.90 500,000 501,674
New Mexico State Hwy Commn, AR, Sub
Tax Lien Hwy Rev, Series 1996,
6/15/2011~ 3.85 500,000 500,000
-------------
1,001,674
-------------
NEW YORK 3.67%
Monroe Cnty Indl Dev Agency, New York
(Ron Ink Proj), VR, IDR,
Series 1996, 7/1/2013~ 4.15 1,600,000 1,600,000
New York, New York, AR, Gen Oblig,
Fiscal 1994 Series A,
Subseries A-8, 8/1/2017~ 4.00 400,000 400,000
-------------
2,000,000
-------------
NORTH CAROLINA 5.88%
North Carolina Edl Facils Fin Agency
(Bowman Gray School of Medicine Proj),
VR, Rev, Series 1990, 9/1/2020~ 3.90 500,000 500,000
North Carolina Med Care Commn
(Wayne Mem Hosp Proj), ACES, Hosp
Rev, Series 1991B, 10/1/2013~ 4.00 2,700,000 2,700,000
-------------
3,200,000
-------------
OHIO 0.48%
Cleveland City School Dist Brd Ed,
Ohio (Gen Oblig Unltd Tax), FR,
School Impt, Series 1989, 12/1/2008~ 3.75 250,000 259,325
-------------
OKLAHOMA 0.57%
Central Oklahoma Transn & Parking Auth,
(Oklahoma City), FR, Parking Sys Rev
& Ref, Series 1996, 7/1/1998 3.65 310,000 310,099
-------------
PENNSYLVANIA 5.33%
Delaware Valley Regl Fin Auth,
Pennsylvania (Bucks, Chester, Delaware
& Montgomery Cntys), AR, Loc Govt Rev,
Series 1985A, 12/1/2020~ 3.90 1,200,000 1,200,000
Series 1985D, 12/1/2020~ 3.90 700,000 700,000
Emmaus Gen Auth, Pennsylvania
(Pennsylvania VR Ln Prog), VRD,
Series 1996, 12/1/2028~ 3.80 1,000,000 1,000,000
-------------
2,900,000
-------------
SOUTH CAROLINA 1.10%
Anderson Cnty, South Carolina (Belton
Inds Proj), AR, Indl Rev,
Series 1991A, 7/1/2004~ 4.05 600,000 600,000
-------------
<PAGE>
TENNESSEE 2.26%
Decatur Cnty, Tennessee, FR, School,
Series 1998, 6/1/1999~^ 3.80 330,000 331,521
Greeneville Hlth & Edl Facils Brd,
Tenessee (Laughlin Mem Hosp Proj),
VRD, Rev, Series 1992, 10/1/2014~ 3.90 900,000 900,000
-------------
1,231,521
-------------
TEXAS 17.14%
Aransas Pass, Texas (San Patricio,
Aransas & Nueces Cntys), FR, Gen
Oblig Ref, Series 1998, 2/1/1999 3.90 190,000 190,000
Bridgestone Muni Util Dist, Texas
(Harris Cnty), FR, Wtrwks & Swr
System Combination Unltd Tax & Rev Ref,
Series 1998, 11/1/1998 3.70 815,000 815,000
Colorado River Muni Wtr Dist, Texas
(Wtr Transmission Facils Proj), FR,
Wtr System Rev, Series 1991-A,
1/1/1999 3.78 760,000 780,457
Corpus Christi Jr College Dist, Texas
(Del Mar College, Nueces Cnty), FR,
Combined Fee Rev, Series 1997,
8/15/1998 4.02 475,000 477,571
Cypress-Fairbanks Indpt School Dist,
Texas (Harris Cnty), FR, Unltd Tax
Ref, Series 1996, 2/1/1999 3.65 300,000 302,628
Eagle Pass Indpt School Dist, Texas
(Maverick Cnty), FR, School Bldg
Unltd Tax, Series 1997, 8/15/1998 3.81 700,000 703,734
Gainesville, Texas (Cooke Cnty), FR,
Combination Tax & Wtrwks & Swr System
Rev, Ctfs of Oblig, Series 1998,
2/15/1999 3.84 215,000 215,000
Grapevine Indl Dev, Texas (American
Airlines Proj), VR, Multiple Mode
Rev, 1984, Series A-3, 12/1/2024~ 4.00 500,000 500,000
Houston, Texas, FR, Swr System Impt
Rev, Series 1984, 10/1/2008~ 3.90 215,000 219,059
Lone Star Airport Impt Auth, Texas
(American Airlines Proj), V/FRD,
Multiple Mode Rev, 1984,
Series A-3, 12/1/2014~ 4.00 600,000 600,000
Series A-4, 12/1/2014~ 4.00 600,000 600,000
Series B-2, 12/1/2014~ 4.00 100,000 100,000
Lumberton Indpt School Dist, Texas
(Hardin Cnty), FR, Unltd Tax School
Bldg, Series 1998, 11/15/1998 3.66 200,000 203,288
North Richland Hills, Texas (Tarrant
Cnty), FR, Gen Oblig, Series 1998,
2/15/1999^ 4.17 150,000 151,263
North Richland Hills, Texas (Tarrant
Cnty), FR, Tax & Wtrwks & Swr System,
Rev Ctfs of Oblig, Series 1998,
2/15/1999^ 4.02 190,000 191,324
Nueces River Auth, Texas (Reynolds
Metals Proj), DATES, PCR Ref,
Series 1985, 12/1/1999~ 4.00 300,000 300,000
<PAGE>
Plano Indpt School Dist, Texas
(Collin Cnty), VR, Unltd Tax School
Bldg, Series 1997, 8/15/2017~ 3.55 1,000,000 1,000,000
Socorro Indpt School Dist, Texas
(El Paso Cnty), FR, Unltd Tax Ref &
School Bldg, Series 1986, 9/1/1998 3.86 200,000 201,790
Spring Indpt School Dist, Texas (Harris
Cnty), FR, Unltd Tax Schoolhouse &
Ref, Series 1998, 2/15/1999^ 3.80 275,000 275,000
Texas, FR, TRAN, Series 1997A, 8/31/1998 3.82 1,500,000 1,502,955
-------------
9,329,069
-------------
UTAH 0.92%
Tremonton City, Box Elder Cnty, Utah
(La-Z-Boy Chair Proj), VRD, IDR,
Series 1990, 6/1/2000~ 4.15 500,000 500,000
-------------
WASHINGTON 2.13%
Spokane Cnty, Washington, FR, Swr Rev
& Ref, Series 1994A, 12/1/1998 3.60 155,000 155,304
Washington, FR, Gen Oblig, 6/1/2004~ 3.75 500,000 500,000
Washington, FR, Gen Oblig & Gen Oblig
Ref, Series 1992A & AT-6, 2/1/1999 3.75 500,000 505,026
-------------
1,160,330
-------------
WISCONSIN 0.62%
Lake Geneva, Walworth Cnty, Wisconsin,
FR, Gen Oblig Prom Notes, 9/1/1998 3.60 335,000 335,465
-------------
TOTAL INVESTMENT SECURITIES AT
VALUE 100.00%
(Cost $54,419,116#) $ 54,419,116
=============
U.S. GOVERNMENT MONEY Fund
SHORT-TERM INVESTMENTS 100.00%
US Government Agency Obligations 100.00%
Freddie Mac
6/1/1998 5.49 $ 20,000,000 $ 20,000,000
6/15/1998 5.52 5,000,000 4,989,434
6/26/1998 5.53 25,560,000 25,463,574
6/30/1998 5.59 20,000,000 19,911,527
Student Loan Marketing Association,
1/13/1999 5.37 5,000,000 5,000,000
-------------
TOTAL INVESTMENT SECURITIES
AT VALUE 100.00%
(Cost $75,364,535#) $ 75,364,535
=============
</TABLE>
<PAGE>
The following abbreviations may be used in portfolio descriptions:
A/FR* - Adjustable/Fixed Rate
ACES* - Adjustable Convertible Extendable Securities
AR* - Adjustable Rate
ARD* - Adjustable Rate Demand RAN - Revenue Anticipation Notes
ATS* - Adjustable Tender Securities
BAN - Bond Anticipation Notes
DATES* - Daily Adjustable Tax-Exempt Securities
FDR* - Flexible Demand Revenue
F/FR - Floating/Fixed Rate
FR - Fixed Rate
FRD* - Floating Rate Demand
GAN - Grant Anticipation Notes
IDR - Industrial Development Revenue
MAVRIC* - Multi-Mode and Variable Rate Investment Certificates
PCR - Pollution Control Revenue
RAC - Revenue Anticipation Certificates
RAN - Revenue Anticipation Notes
TAN - Tax Anticipation Notes
TEAMS* - Tax-Exempt Adjustable Mode Securities
TECP - Tax-Exempt Commercial Paper
TRAN - Tax & Revenue Anticipation Notes
UPDATES*- Unit Priced Demand Tax-Exempt Securities
V/FRD* - Variable/Fixed Rate Demand
VR* - Variable Rate
VRD* - Variable Rate Demand
* Rate is subject to change. Rate shown reflects current rate.
~ All securities with a maturity date greater than one year have either a
variable rate, demand feature, optional or mandatory put resulting in an
effective maturity of one year or less. Rate shown reflects current rate.
# Also represents cost for income tax purposes.
+ Security has been designated as collateral for when-issued (W/I)
securities.
^ Security is a when-issued (W/I) security.
See Notes to Financial Statements
<PAGE>
<TABLE>
<CAPTION>
INVESCO Money Market Funds, Inc.
Statement of Assets and Liabilities
May 31, 1998
Cash Tax-Free U.S. Government
Reserves Money Money
Fund Fund Fund
---------------------------------------------------
<S> <C> <C> <C>
ASSETS
Investment Securities:
At Cost $720,813,098 $54,419,116 $75,364,535
===================================================
At Value $720,813,098 $54,419,116 $75,364,535
Cash 0 36,851 0
Receivables:
Fund Shares Sold 61,180,242 1,121,542 2,462,559
Interest 1,871,007 471,086 35,930
Prepaid Expenses and Other Assets 120,194 21,161 39,764
---------------------------------------------------
TOTAL ASSETS 783,984,541 56,069,756 77,902,788
---------------------------------------------------
LIABILITIES
Payables:
Custodian 3,936,123 0 2,865
Distributions to Shareholders 31,250 5,155 5,233
Investment Securities Purchased 0 1,205,463 0
Fund Shares Repurchased 13,264,002 49,009 3,966,199
Accrued Expenses and Other Payables 82,997 9,005 10,208
---------------------------------------------------
TOTAL LIABILITIES 17,314,372 1,268,632 3,984,505
---------------------------------------------------
Net Assets at Value* $766,670,169 $54,801,124 $73,918,283
===================================================
Shares Outstanding 766,670,169 54,801,124 73,918,283
Net Asset Value, Offering
and Redemption
Price per Share $1.00 $1.00 $1.00
===================================================
</TABLE>
* The Fund has ten billion authorized shares of common stock, par value of
$0.01 per share. Of such shares, five billion, one billion and one billion
have been allocated to Cash Reserves, Tax-Free Money and U.S. Government
Money Funds, respectively. Each Fund's paid-in capital was $766,670,169,
$54,801,124 and $73,918,283, respectively.
See Notes to Financial Statements
<PAGE>
<TABLE>
<CAPTION>
INVESCO Money Market Funds, Inc.
Statement of Operations
Year Ended May 31, 1998
Cash Tax-Free U.S. Government
Reserves Money Money
Fund Fund Fund
------------------------------------------------
<S> <C> <C> <C>
INVESTMENT INCOME
INTEREST INCOME $37,584,851 $1,796,622 $4,124,226
------------------------------------------------
EXPENSES
Investment Advisory Fees 2,789,986 238,537 369,593
Transfer Agent Fees 2,779,935 151,577 303,712
Administrative Fees 109,499 17,156 21,088
Custodian Fees and Expenses 108,920 11,626 15,472
Directors' Fees and Expenses 46,407 11,816 13,262
Professional Fees and Expenses 38,445 21,164 14,193
Registration Fees and Expenses 141,985 38,653 74,678
Reports to Shareholders 140,248 8,115 13,879
Other Expenses 21,143 9,491 3,215
------------------------------------------------
TOTAL EXPENSES 6,176,568 508,135 829,092
Fees and Expenses Absorbed
by Investment Adviser (140,835) (144,423) (187,969)
Fees and Expenses Paid
Indirectly (15,441) (3,761) (3,642)
------------------------------------------------
NET EXPENSES 6,020,292 359,951 637,481
------------------------------------------------
Net Investment Income and
Net Increase in Net Assets
from Operations $31,564,559 $1,436,671 $3,486,745
================================================
</TABLE>
See Notes to Financial Statements
<PAGE>
<TABLE>
<CAPTION>
INVESCO Money Market Funds, Inc.
Statement of Changes in Net Assets
Year Ended May 31
Cash Reserves Tax-Free U.S. Government
Fund Money Fund Money Fund
--------------------------------- ---------------------------- ------------------------------
1998 1997 1998 1997 1998 1997
<S> <C> <C> <C> <C> <C> <C>
OPERATIONS AND DISTRIBUTIONS
TO SHAREHOLDERS
Net Investment Income Earned
and Distributed to
Shareholders $ 31,564,559 $ 33,561,267 $ 1,436,671 $ 1,618,005 $ 3,486,745 $ 3,851,426
================================= ============================ ==============================
FUND SHARE TRANSACTIONS
Proceeds from Sales of
Shares $5,919,135,596 $ 5,620,288,150 $243,725,325 $ 209,826,221 $ 1,190,183,900 $1,073,544,769
Reinvestment of Distributions 28,060,789 25,866,718 1,317,326 1,489,166 2,868,947 3,296,282
------------------------------- ---------------------------- ------------------------------
5,947,196,385 5,646,154,868 245,042,651 211,315,387 1,193,052,847 1,076,841,051
Amounts Paid for Repurchases
of Shares (5,842,174,016) (5,571,784,092) (237,818,652) (215,386,841) (1,185,586,043) 1,089,781,101)
------------------------------- ---------------------------- -------------------------------
NET INCREASE (DECREASE) IN
NET ASSETS FROM FUND
SHARE TRANSACTIONS 105,022,369 74,370,776 7,223,999 (4,071,454) 7,466,804 (12,940,050)
NET ASSETS
Beginning of Period 661,647,800 587,277,024 47,577,125 51,648,579 66,451,479 79,391,529
------------------------------ ---------------------------- ------------------------------
End of Period $ 766,670,169 $ 661,647,800 $ 54,801,124 $ 47,577,125 $ 73,918,283 $ 66,451,479
============================== ============================ =============================
-------------------------------------------------------------------
FUND SHARE TRANSACTIONS
Shares Sold 5,919,135,596 5,620,288,150 243,725,325 209,826,221 1,190,183,900 1,073,544,769
Shares Issued from Reinvestment
of Distributions 28,060,789 25,866,718 1,317,326 1,489,166 2,868,947 3,296,282
------------------------------- ---------------------------- ------------------------------
5,947,196,385 5,646,154,868 245,042,651 211,315,387 1,193,052,847 1,076,841,051
Shares Repurchased (5,842,174,016) (5,571,784,092) (237,818,652) (215,386,841) (1,185,586,043)(1,089,781,101)
------------------------------- --------------------------- ------------------------------
Net Increase (Decrease) in
Fund Shares 105,022,369 74,370,776 7,223,999 (4,071,454) 7,466,804 (12,940,050)
=============================== ============================ ==============================
</TABLE>
See Notes to Financial Statements
<PAGE>
INVESCO Money Market Funds, Inc.
Notes to Financial Statements
NOTE 1 - ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES. INVESCO Money Market
Funds, Inc. (the "Fund") is incorporated in Maryland and presently consists of
three separate Funds: Cash Reserves Fund, Tax-Free Money Fund and U.S.
Government Money Fund. The investment objectives are: to seek as high a level of
current income for Cash Reserves Fund; to seek as high a level of current income
exempt from federal income taxation for Tax-Free Money Fund; and to seek current
income by investing only in debt obligations issued or guaranteed by the U.S.
Government or its agencies for U.S. Government Money Fund. The Fund is
registered under the Investment Company Act of 1940 (the "Act") as a
diversified, open-end management investment company.
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. The
preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of income and expenses during the reporting period. Actual
results could differ from those estimates.
A. SECURITY VALUATION - Securities held by the Fund are valued at their market
value determined by the amortized cost method of valuation. If management
believes that such valuation does not reflect the securities' fair value,
these securities are valued at fair value as determined in good faith under
procedures established by the Fund's board of directors.
B. WHEN-ISSUED SECURITIES - When-issued securities held by the Fund are fully
collateralized by other securities which are notated in the Statement of
Investment Securities. Such collateral is in the possession of the Fund's
custodian. The collateral is evaluated daily to ensure its market value
equals or exceeds the current market value of the when-issued securities.
C. SECURITY TRANSACTIONS AND RELATED INVESTMENT INCOME - Security transactions
are accounted for on the trade date. Interest income, which may be
comprised of stated coupon rate, market discount, original issue discount
and amortized premium, is recorded on the accrual basis. The Fund amortizes
discounts and premiums paid on purchases of securities to the earliest put
or call date. Cost is determined on the specific identification basis.
D. FEDERAL AND STATE TAXES - The Fund has complied, and continues to comply,
with the provisions of the Internal Revenue Code applicable to regulated
investment companies and, accordingly, has made or intends to make
sufficient distributions of net investment income and net realized capital
gains, if any, to relieve it from all federal and state income taxes and
federal excise taxes. Of the distributions paid by Tax-Free Money Fund for
the year ended May 31, 1998, 100.00% were exempt from federal income taxes.
E. DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS - All of the Fund's net
investment income is distributed to shareholders by dividends declared
daily and paid monthly. Income dividends are reinvested at the month-end
net asset value.
F. EXPENSES - Each of the Funds bears expenses incurred specifically on its
behalf and, in addition, each Fund bears a portion of general expenses,
based on the relative net assets of each Fund.
Under an agreement between each Fund and the Fund's Custodian, agreed
upon Custodian Fees and Expenses are reduced by credits granted by the
Custodian from any temporarily uninvested cash. Such credits are included
in Fees and Expenses Paid Indirectly in the Statement of Operations.
<PAGE>
NOTE 2 - INVESTMENT ADVISORY AND OTHER AGREEMENTS. INVESCO Funds Group, Inc.
("IFG") serves as the Fund's investment adviser. As compensation for its
services to the Fund, IFG receives an investment advisory fee which is accrued
daily at the applicable rate and paid monthly. The fee for each Fund is based on
the annual rate of 0.50% on the first $300 million of average net assets;
reduced to 0.40% on the next $200 million of average net assets; and 0.30% on
average net assets in excess of $500 million.
In accordance with a Sub-Advisory Agreement between IFG and INVESCO Trust
Company ("ITC"), a wholly owned subsidiary of IFG, investment decisions of each
Fund were made by ITC. Fees for such sub-advisory services were paid by IFG.
Effective February 4, 1998, such responsibilities were transferred to IFG.
In accordance with an Administrative Agreement, each Fund pays IFG an
annual fee of $10,000, plus an additional amount computed at an annual rate of
0.015% of average net assets to provide administrative, accounting and clerical
services. The fee is accrued daily and paid monthly.
IFG receives a transfer agent fee at an annual rate of $27.00 per
shareholder account, or, where applicable, per participant in an omnibus
account, per year. IFG may pay such fee for participants in omnibus accounts to
affiliates or third parties. The fee is paid monthly at one-twelfth of the
annual fee and is based upon the actual number of accounts in existence during
each month.
IFG has voluntarily agreed, in some instances, to absorb certain fees and
expenses incurred by each Fund.
NOTE 3 - TRANSACTIONS WITH AFFILIATES. Certain of the Fund's officers and
directors are also officers and directors of IFG or ITC.
The Fund has adopted an unfunded deferred compensation plan covering all
independent directors of the Fund who will have served as an independent
director for at least five years at the time of retirement. Benefits under this
plan are based on an annual rate equal to 40% of the retainer fee at the time of
retirement. As of July 1, 1998, benefits will be based on an annual rate of 50%
of the sum of the retainer fee at the time of retirement plus the annual meeting
fee.
Pension expenses for the year ended May 31, 1998, included in Directors'
Fees and Expenses in the Statement of Operations, and unfunded accrued pension
costs and pension liability included in Prepaid Expenses and Accrued Expenses,
respectively, in the Statement of Assets and Liabilities were as follows:
<TABLE>
<CAPTION>
Unfunded
Pension Accrued Pension
Fund Expenses Pension Costs Liability
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Cash Reserves Fund $11,446 $34,317 $75,642
Tax-Free Money Fund 881 3,280 7,060
U.S. Government Money Fund 1,365 3,544 8,135
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
INVESCO Money Market Funds, Inc.
Financial Highlights
(For a Fund Share Outstanding Throughout Each Period)
Year Ended May 31
-------------------------------------------------------------------
1998 1997 1996 1995 1994
Cash Reserves Fund
<S> <C> <C> <C> <C> <C>
PER SHARE DATA
Net Asset Value-- Beginning of Period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
--------------------------------------------------------------------
INCOME AND DISTRIBUTIONS FROM
INVESTMENT OPERATIONS
Net Investment Income Earned and
Distributed to Shareholders 0.05 0.05 0.05 0.05 0.03
Net Asset Value-- End of Period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
====================================================================
TOTAL RETURN 4.82% 4.69% 5.01% 4.76% 2.58%
RATIOS
Net Assets -- End of Period
($000 Omitted) $766,670 $661,648 $587,277 $644,341 $747,551
Ratio of Expenses to Average
Net Assets# 0.91%@ 0.86%@ 0.87%@ 0.75% 0.81%
Ratio of Net Investment Income
to Average Net Assets# 4.76% 4.62% 4.86% 4.65% 2.61%
</TABLE>
# Various expenses of the Fund were voluntarily absorbed by IFG for the years
ended May 31, 1998, 1997, 1996 and 1995. If such expenses had not been
voluntarily absorbed, ratio of expenses to average net assets would have
been 0.93%, 0.92%, 0.92% and 0.85%, respectively, and ratio of net
investment income to average net assets would have been 4.74%, 4.56%, 4.81%
and 4.55%, respectively.
@ Ratio is based on Total Expenses of the Fund, less Expenses Absorbed by
Investment Adviser, which is before any expense offset arrangements.
<PAGE>
<TABLE>
<CAPTION>
INVESCO Money Market Funds, Inc.
Financial Highlights (Continued)
(For a Fund Share Outstanding Throughout Each Period)
Year Ended May 31
-------------------------------------------------------------------
1998 1997 1996 1995 1994
Tax-Free Money Fund
<S> <C> <C> <C> <C> <C>
Net Asset Value-- Beginning of Period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
-------------------------------------------------------------------
INCOME AND DISTRIBUTIONS FROM
INVESTMENT OPERATIONS
Net Investment Income Earned and
Distributed to Shareholders 0.03 0.03 0.03 0.03 0.02
-------------------------------------------------------------------
Net Asset Value-- End of Period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
===================================================================
TOTAL RETURN 3.03% 2.90% 3.08% 2.86% 1.84%
RATIOS
Net Assets -- End of Period
($000 Omitted) $54,801 $47,577 $51,649 $58,780 $84,521
Ratio of Expenses to Average
Net Assets# 0.76%@ 0.76%@ 0.77%@ 0.75% 0.75%
Ratio of Net Investment Income to
Average Net Assets# 3.01% 2.86% 3.03% 2.77% 1.83%
# Various expenses of the Fund were voluntarily absorbed by IFG and ITC for
the years ended May 31, 1998, 1997, 1996, 1995 and 1994. If such expenses
had not been voluntarily absorbed, ratio of expenses to average net assets
would have been 1.06%, 1.01%, 1.05%, 1.00% and 1.00%, respectively, and
ratio if net investment income to average net assets would have been 2.71%,
2.61%, 2.75%, 2.52% and 1.58%, respectively.
@ Ratio is based on Total Expenses of the Fund, less Expenses Absorbed by
Investment Adviser, which is before any expense offset arrangements.
<PAGE>
</TABLE>
<TABLE>
<CAPTION>
INVESCO Money Market Funds, Inc.
Financial Highlights (Continued)
(For a Fund Share Outstanding Throughout Each Period)
Year Ended May 31
-------------------------------------------------------------------
1998 1997 1996 1995 1994
U.S. Government Money Fund
<S> <C> <C> <C> <C> <C>
PER SHARE DATA
Net Asset Value-- Beginning of Period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
-------------------------------------------------------------------
INCOME AND DISTRIBUTIONS FROM
INVESTMENT OPERATIONS
Net Investment Income Earned and
Distributed to Shareholders 0.05 0.04 0.05 0.05 0.03
-------------------------------------------------------------------
Net Asset Value-- End of Period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
===================================================================
TOTAL RETURN 4.74% 4.57% 4.90% 4.66% 2.56%
RATIOS
Net Assets -- End of Period
($000 Omitted) $73,918 $66,451 $79,392 $60,843 $73,912
Ratio of Expenses to Average
Net Assets# 0.87%@ 0.86%@ 0.87%@ 0.75% 0.75%
Ratio of Net Investment Income to
Average Net Assets# 4.72% 4.51% 4.78% 4.55% 2.60%
# Various expenses of the Fund were voluntarily absorbed by IFG for the years
ended May 31, 1998, 1997, 1996, 1995 and 1994. If such expenses had not
been voluntarily absorbed, ratio of expenses to average net assets would
have been 1.12%, 1.06%, 1.05%, 1.10% and 1.00%, respectively, and ratio of
net investment income to average net assets would have been 4.47%, 4.31%,
4.59%, 4.20% and 2.35%, respectively.
@ Ratio is based on Total Expenses of the Fund, less Expenses Absorbed by
Investment Adviser, which is before any expense offset arrangements.
<PAGE>
Report of Independent Accountants
To the Board of Directors and Shareholders of
INVESCO Money Market Funds, Inc.
In our opinion, the accompanying statement of assets and liabilities, including
the statement of investment securities, and the related statements of operations
and of changes in net assets and the financial highlights present fairly, in all
material respects. the financial position of Cash Reserves Fund, Tax-Free Money
Fund, and U.S. Government Money Fund (constituting INVESCO Money Market Funds,
Inc., hereafter referred to as the "Fund") at May 31, 1998, the results of each
of their operations for the year then ended, the changes in each of their net
assets for each of the two years in the period then ended and the financial
highlights for each of the five years in the period then ended, in conformity
with generally accepted accounting principles. These financial statements and
financial highlights (hereafter referred to as "financial statements") are the
responsibility of the Fund's management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these financial statements in accordance with generally accepted
auditing standards which require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits, which included confirmation of securities at May 31, 1998 by
correspondence with the custodian and the application of alternative auditing
procedures where securities purchased had not been received, provide a
reasonable basis for the opinion expressed above.
Price Waterhouse LLP
Denver, Colorado
June 30, 1998
<PAGE>
INVESCO FUNDS
INVESCO Distributors, Inc.,(SM)
Distributor
Post Office Box 173706
Denver, CO 80217-3706
1-800-525-8085
PAL(R): 1-800-424-8085
http://www.invesco.com
In Denver, visit one of our
convenient Investor Centers:
Cherry Creek,
155-B Fillmore Street
Denver Tech Center,
7800 East Union Avenue,
Lobby Level
This information must be
preceded or accompanied
by a current prospectus.
</TABLE>
