As filed on July 28, 1999
File No. 002-55079
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 X
Pre-Effective Amendment No.
Post-Effective Amendment No. 35 X
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 X
Amendment No. 22 X
INVESCO MONEY MARKET FUNDS, INC.
(Exact Name of Registrant as Specified in Charter)
7800 E. Union Avenue, Denver, Colorado 80237
(Address of Principal Executive Offices)
P.O. Box 173706, Denver, Colorado 80217-3706
(Mailing Address)
Registrant's Telephone Number, including Area Code: (303) 930-6300
Glen A. Payne, Esq.
7800 E. Union Avenue
Denver, Colorado 80237
(Name and Address of Agent for Service)
------------
Copies to:
Ronald M. Feiman, Esq.
Mayer, Brown & Platt
1675 Broadway
New York, New York 10019-5820
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Approximate Date of Proposed Public Offering: As soon as practicable after
this post-effective amendment becomes effective.
It is proposed that this filing will become effective (check appropriate box)
___ immediately upon filing pursuant to paragraph (b)
___ on __________, pursuant to paragraph (b)
___ 60 days after filing pursuant to paragraph (a)(1)
_X_ on September 27, 1999, pursuant to paragraph (a)(1)
___ 75 days after filing pursuant to paragraph (a)(2)
___ on __________, pursuant to paragraph (a)(2) of rule 485
If appropriate, check the following box:
___ this post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
Page 1 of 80
Exhibit index is located at page 71
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PROSPECTUS | September 30, 1999
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YOU SHOULD KNOW WHAT INVESCO KNOWS (TM)
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INVESCO MONEY MARKET FUNDS, INC.
INVESCO CASH RESERVES FUND
INVESCO TAX-FREE MONEY FUND
INVESCO U.S. GOVERNMENT MONEY FUND
THREE NO-LOAD MUTUAL FUNDS DESIGNED FOR INVESTORS SEEKING A HIGH LEVEL OF
CURRENT INCOME, CONSISTENT WITH THE PRESERVATION OF CAPITAL AND THE MAINTENANCE
OF LIQUIDITY.
TABLE OF CONTENTS
Investment Goals And Strategies................3
Fund Performance...............................4
Fees And Expenses..............................6
Investment Risks...............................7
Risks Associated With Particular Investments...7
Fund Management................................9
Portfolio Managers.............................9
Potential Rewards.............................10
Share Price...................................10
How To Buy Shares.............................11
Your Account Services.........................13
How To Sell Shares............................14
Dividends And Taxes...........................15
Financial Highlights..........................17
[INVESCO ICON]
INVESCO
An investment in any of the Funds is not insured or guaranteed by the Federal
Deposit Insurance Corporation or any other governmental agency. Although the
Funds seek to preserve the value of your investment at $1.00 per share, it is
possible to lose money by investing in any of the Funds.
The Securities and Exchange Commission has not approved or disapproved the
shares of these Funds. Likewise, the Commission has not determined if this
Prospectus is truthful or complete. Anyone who tells you otherwise is committing
a federal crime.
<PAGE>
THIS PROSPECTUS WILL TELL YOU MORE ABOUT:
[KEY ICON] Investment Objectives & Strategies
[ARROW ICON] Potential Investment Risks
[GRAPH ICON] Past Performance & Potential Advantages
[INVESCO ICON] Working With INVESCO
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[KEY ICON]
INVESTMENT GOALS AND STRATEGIES
FACTORS COMMON TO ALL THE FUNDS
INVESCO Funds Group, Inc. ("INVESCO") is the investment adviser for the Funds.
Together with our affiliated companies, we at INVESCO direct all aspects of the
management and sale of the Funds.
FOR MORE DETAILS ABOUT EACH FUND'S CURRENT INVESTMENTS AND MARKET OUTLOOK,
PLEASE SEE THE MOST RECENT ANNUAL OR SEMIANNUAL REPORT.
The Funds are money market funds. They invest in "money market" securities,
which are high quality debt securities with a life span or remaining maturity of
397 days or less. The average dollar-weighted maturity of each Fund's portfolio
is 90 days or less.
The Funds are not intended for investors seeking capital appreciation. While not
intended as a complete investment program, any of these Funds may be a valuable
element of your investment portfolio.
INVESTMENT POLICIES APPLICABLE TO ALL THE FUNDS
The Funds operate under policies designed to ensure compliance with specific
federal regulations applied to money market funds. These policies include
requirements for:
o maintaining high credit quality of the Funds' investments;
o maintaining a short average portfolio maturity;
o ensuring adequate diversification of both the issuers of the Funds'
investments and the guarantors of those investments, if any; and
o monitoring accurate pricing of the Funds' investments so unfairness does not
result from the use of the amortized cost method to value those investments.
[ARROW ICON]
An investment in any of the Funds is not insured or guaranteed by the Federal
Deposit Insurance Corporation or any other governmental agency. Although the
Funds seek to preserve the value of your investment at $1.00 per share, it is
possible to lose money by investing in any of the Funds.
[KEY ICON]
INVESCO CASH RESERVES FUND
Cash Reserves Fund invests primarily in short-term debt securities issued by
large creditworthy corporations, banks and finance companies, and debt
securities issued by the U.S. government. These securities include corporate
debt securities, bank obligations, short-term commercial paper, U.S. government
debt, and repurchase agreements.
<PAGE>
[KEY ICON]
INVESCO TAX-FREE MONEY FUND
Tax-Free Money Fund invests primarily in short-term municipal securities issued
by state, county, and city governments, including industrial development
obligations and private activity bonds which generally are not guaranteed by the
governmental entity that issues them. The interest on these securities is
generally exempt from federal income tax, although the interest may be included
in your income if you are subject to the federal alternative minimum tax. The
interest on these securities may be subject to state and/or local income taxes.
These securities include municipal notes, short-term municipal bonds, and
variable rate debt obligations. Municipal obligations may be purchased or sold
on a delayed delivery or a when-issued basis with settlement taking place in the
future. The Fund may purchase securities together with the right to resell them
to the seller at an agreed-upon price or yield within a specific time period
prior to the maturity date of the securities. This is commonly known as a
"demand feature" or a "put."
The rest of the Fund's investment portfolio may be invested in short-term
taxable instruments. These may include corporate debt securities, bank
obligations, commercial paper, U.S. government debt, and repurchase agreements.
The circumstances under which the Fund will invest in taxable securities include
but are not limited to: (a) pending investment of proceeds or sales of shares of
portfolio securities; (b) pending settlement of portfolio securities; and (c)
maintaining liquidity to meet the need for anticipated redemptions. We seek to
manage the Fund so that substantially all of the income produced is exempt from
federal income tax when paid to you, although we cannot guarantee this result.
[KEY ICON]
INVESCO U.S. GOVERNMENT MONEY FUND
U.S. Government Money Fund invests in debt securities issued or guaranteed by
the U.S. government or its agencies. Direct U.S. government obligations include
Treasury bonds, bills and notes, and are backed by the full faith and credit of
the U.S. Treasury. Federal agency securities are direct obligations of the
issuing agency, and may or may not be guaranteed by the U.S. government (GNMA,
FNMA, FHLMC). Treasury bills, notes, bonds and some agency securities are exempt
from state income tax.
[GRAPH ICON]
FUND PERFORMANCE
The bar charts below show each Fund's actual yearly performance for the
years ended December 31 (commonly known as its "total return") over the past
decade. The table below shows average annual total returns for various periods
ended December 31, 1998 for each Fund. To obtain a Fund's current 7-day yield
information, please call INVESCO at 1-800-525-8085. The bar charts provide some
indication of the risks of investing in the Funds by showing changes in the year
to year performance of each Fund. Remember, past performance does not indicate
how a Fund will perform in the future.(1)
<PAGE>
ACTUAL ANNUAL TOTAL RETURN(1)(2) ACTUAL ANNUAL TOTAL RETURN(1)(2)
The bar chart shows the Cash The bar chart shows the Tax-Free
Reserves Fund's actual yearly Money Fund's actual yearly
performance for the years ended performance for the years ended
December 31. December 31.
Best Calendar Qtr. 6/95 1.32% Best Calendar Qtr. 6/89 2.29%
Worse Calendar Qtr. 3/93 0.55% Worse Calendar Qtr. 6/93 0.56%
ACTUAL ANNUAL TOTAL RETURN(1)(2)
The bar chart shows the U.S.
Government Money Fund's actual
yearly performance for the years
ended December 31.
Best Calendar Qtr. 6/89 1.51%
Worse Calendar Qtr. 3/94 0.43%
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AVERAGE ANNUAL TOTAL RETURN
AS OF 12/31/98
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1 year 5 years 10 years
Cash Reserves Fund 4.74% 4.64% 5.08%
U.S. Government Money Fund 4.66% 4.54% 4.08%
Tax-Free Money Fund 2.87% 2.85% 3.34%
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(1) Total return figures include reinvested dividends and the effect of each
Fund's expenses.
(2) Year-to-date return for the Cash Reserves, Tax-Free Money and U.S.
Government Money Funds was __%, __%, and __%, respectively, for the
quarter ended August 31, 1999.
(3) Since inception April 26, 1991.
<PAGE>
FEES AND EXPENSES
SHAREHOLDER FEES PAID DIRECTLY FROM YOUR ACCOUNT
You pay no fees to purchase Fund shares, to exchange to another INVESCO fund, or
to sell your shares. Accordingly, no fees are paid directly from your
shareholder account. The only Fund costs you pay are annual Fund operating
expenses that are deducted from Fund assets.
ANNUAL FUND OPERATING EXPENSES THAT ARE DEDUCTED FROM FUND ASSETS
Cash Reserves Fund
Management Fees 0.40%
Distribution and Service (12b-1) Fees None
Other Expenses (1)(2) 0.51%
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Total Annual Fund Operating Expenses (1)(2)(3) 0.91%
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Tax-Free Money Fund
Management Fees 0.50%
Distribution and Service (12b-1) Fees None
Other Expenses(1)(2) 0.52%
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Total Annual Fund Operating Expenses (1)(2)(3) 1.02%
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U.S. Government Money Fund
Management Fees 0.50%
Distribution and Service (12b-1) Fees None
Other Expenses(1)(2) 0.58%
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Total Annual Fund Operating Expenses (1)(2)(3) 1.08%
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(1) Each Fund's actual Total Annual Operating Expenses were lower than the
figures shown, because their custodian fees were reduced under expense
offset arrangements. Because of an SEC requirement, the figures shown do not
reflect these reductions.
(2) The expense information presented in the table has been restated to reflect
a change in the administrative services fee.
(3) Certain expenses of each Fund's are being absorbed voluntarily by INVESCO
pursuant to a commitment to the Funds. After absorption, the Cash Reserves
Money Fund's "Other Expenses" and "Total Annual Fund Operating Expenses"
were 0.50% and 0.90%, respectively; the Tax-Free Money Fund's "Other
Expenses" and "Total Annual Fund Operating Expenses" were 0.27% and 0.77%,
respectively; and U.S. Government Money Fund's "Other Expenses" and "Total
Annual Fund Operating Expenses" were 0.36% and 0.86%, respectively. This
commitment may be changed at any time following consultation with the board
of directors.
INVESCO has voluntarily agreed to absorb certain expenses of Cash Reserves,
Tax-Free Money and U.S. Government Money Funds, so that each Fund's total
operating expenses (excluding excess amounts that have been offset by the
expense offset arrangements described above) do not exceed 0.90%, 0.85% (0.75%
prior to May 13, 1999) and 0.85%, respectively, of each Fund's average net
assets. This commitment may be changed at any time following consultation with
the board of directors.
EXAMPLE
This Example is intended to help you compare the cost of investing in the Funds
to the cost of investing in other mutual funds.
The Example assumes that you invested $10,000 in a Fund for the time periods
indicated and redeemed all of your shares at the end of each period. The Example
also assumes that your investment had a hypothetical 5% return each year, and
assumes that a Fund's expenses remained the same. Although a Fund's actual costs
<PAGE>
and performance may be higher or lower, based on these assumptions your costs
would have been:
1 year 3 years 5 years 10 years
Cash Reserves Fund $93 $290 $504 $1,120
Tax-Free Money Fund $104 $325 $563 $1,248
U.S. Government Money Fund $110 $343 $595 $1,317
[ARROW ICON]
INVESTMENT RISKS
BEFORE INVESTING IN A FUND, YOU SHOULD DETERMINE THE LEVEL OF RISK WITH WHICH
YOU ARE COMFORTABLE. TAKE INTO ACCOUNT FACTORS LIKE YOUR AGE, CAREER, INCOME
LEVEL, AND TIME HORIZON.
You should determine the level of risk with which you are comfortable before you
invest. The principal risks of investing in any mutual fund, including these
Funds, are:
NOT INSURED. Mutual funds are not insured by the Federal Deposit Insurance
Corporation ("FDIC") or any other agency unlike bank deposits such as CDs or
savings accounts.
NO GUARANTEE. No mutual fund can guarantee that it will meet its investment
objectives.
POSSIBLE LOSS OF INVESTMENT. A mutual fund cannot guarantee its performance.
Investment professionals generally consider money market funds conservative and
safe investments, compared to many other investment alternatives. However, as
with all types of securities investing, investments in money market funds are
not guaranteed, and do present some risk of loss. The Funds will not reimburse
you for any losses.
NOT A COMPLETE INVESTMENT PLAN. An investment in any mutual fund does not
constitute a complete investment plan. The Funds are designed to be only a part
of your personal investment plan.
YEAR 2000. Many computer systems in use today may not be able to recognize any
date after December 31, 1999. If these systems are not fixed by that date, it is
possible that they could generate erroneous information or fail altogether.
INVESCO has committed substantial resources in an effort to make sure that its
own major computer systems will continue to function on and after January 1,
2000. Of course, INVESCO cannot fix systems that are beyond its control. If
INVESCO's own systems, or the systems of third parties upon which it relies, do
not perform properly after December 31, 1999, the Funds could be adversely
affected.
In addition, the markets for, or value of, securities in which the Funds invest
may possibly be hurt by computer failures affecting portfolio investments or
trading of securities beginning January 1, 2000. For example, improperly
functioning systems could result in securities trade settlement problems and
liquidity issues, production issues for individual companies and overall
economic uncertainties. Individual issuers may incur increased costs in making
their own systems Year 2000 compliant. The combination of market uncertainty and
increased costs means that there is a possibility that Year 2000 computer issues
may adversely affect the Funds' investments.
[ARROW ICON]
RISKS ASSOCIATED WITH PARTICULAR INVESTMENTS
You should consider the special factors associated with the policies discussed
below in determining the appropriateness of investing in a Fund. See the
Statement of Additional Information for a discussion of additional risk factors.
<PAGE>
INTEREST RATE RISK
Interest rate risk is the risk that changes in interest rates will change the
value of debt securites. When interest rates go up, the market values of
previously issued debt securities generally decline. Also, a Fund's new
investments are likely to be in debt securities paying lower rates than the rest
of a Fund's portfolio when interest rates go down. This reduces a Fund's
yield. A weak economy or strong stock market may cause interest rates to
decline.
CREDIT RISK
The Funds invest in debt instruments, such as notes, bonds and commercial paper.
There is a possibility that the issuers of these instruments will be unable to
meet interest payments or repay principal. Changes in the financial strength of
an issuer may reduce the credit rating of its debt instruments and may affect
their value.
DURATION RISK
Duration is a measure of a debt security's sensitivity to interest rate changes.
Duration of money market securities is usually expressed in terms of days or
months, with longer durations usually more sensitive to interest rate
fluctuations.
OPPORTUNITY RISK
With long term investment plans, there may be a risk that you are not taking
enough risk, and missing the opportunity on other less conservative but
potentially more rewarding investments. The Funds have an investment goal of
current income, not capital appreciation. Therefore the Funds, by themselves,
will not be a suitable investment for people seeking long-term growth for
objectives such as retirement or the funding of a child's college education.
COUNTERPARTY RISK
This is a risk associated primarily with repurchase agreements. It is the risk
that the other party in the transaction will not fulfill its contractual
obligation to complete the transaction with a Fund.
<PAGE>
[INVESCO ICON]
FUND MANAGEMENT
THE INVESTMENT ADVISER
INVESCO IS A SUBSIDIARY OF AMVESCAP PLC, AN INTERNATIONAL INVESTMENT MANAGEMENT
COMPANY THAT MANAGES MORE THAN $281 BILLION IN ASSETS WORLDWIDE. AMVESCAP IS
BASED IN LONDON, WITH MONEY MANAGERS LOCATED IN EUROPE, NORTH AND SOUTH AMERICA,
AND THE FAR EAST.
INVESCO, located at 7800 E. Union Avenue, Denver, Colorado, is the investment
adviser of the Funds. INVESCO was founded in 1932 and manages over $22.7 billion
for more than 916,165 shareholders of 10 INVESCO mutual funds consisting of 50
separate portfolios. INVESCO performs a wide variety of other services for the
Funds, including administrative and transfer agent functions (the processing of
purchases, sales and exchanges of Fund shares).
A wholly owned subsidiary of INVESCO, INVESCO Distributors, Inc. ("IDI") is the
Funds' distributor and is responsible for the sale of the Funds' shares. INVESCO
and IDI are subsidiaries of AMVESCAP PLC.
The following table shows the fees the Funds paid to INVESCO for its advisory
services in the fiscal year ended May 31, 1999:
ADVISORY FEE AS A PERCENTAGE OF
AVERAGE ANNUAL ASSETS UNDER MANAGEMENT
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Cash Reserves Fund 0.40%
Tax-Free Money Fund 0.50%
U.S. Government Money Fund 0.50%
[INVESCO ICON]
PORTFOLIO MANAGERS
The following individuals are primarily responsible for the day-to-day
management of each Fund's portfolio holdings:
RICHARD R. HINDERLIE is the portfolio manager of Cash Reserves Fund and U.S.
Government Money Fund and a vice president of INVESCO. Before joining INVESCO in
1993, he was with Bank Western. Dick received his M.B.A. from Arizona State
University and his B.A. in Economics from Pacific Lutheren University.
INGEBORG S. COSBY is the portfolio manager of Tax-Free Money Fund and a vice
president of INVESCO where she has had progressively more responsible investment
professional positions since joining INVESCO in 1985. Before joining INVESCO,
Inge was a portfolio manager assistant at First Affiliated Securities, Inc.
<PAGE>
[INVESCO ICON]
POTENTIAL REWARDS
NO SINGLE FUND SHOULD REPRESENT YOUR COMPLETE INVESTMENT PROGRAM NOR SHOULD YOU
ATTEMPT TO USE THE FUNDS FOR LONG-TERM CAPITAL GROWTH PURPOSES.
The Funds offer shareholders the potential for monthly payment of income, while
maintaining a stable share value, at a level of risk lower than many other types
of investments. Yields on short-term securities tend to be lower than the yields
on longer term fixed-income securities. The Funds seek to provide higher returns
than other money market funds and the money market in general, but cannot
guarantee that performance.
SUITABILITY FOR INVESTORS
Only you can determine if an investment in a Fund is right for you based upon
your own economic situation, the risk level with which you are comfortable and
other factors. In general, the Funds are most suitable for investors who:
o want to earn income at current money market rates
o want to preserve the value of their investment
o do not want to be exposed to a high level of risk
o are seeking federally tax-exempt income (Tax-Free Money Fund only)
o are seeking state tax-exempt income (U.S. Government Money Fund only)
You probably do not want to invest in the Funds if you are:
o primarily seeking long-term growth (although the Funds may serve as the cash
equivalent portion of a balanced investment program).
[INVESCO ICON]
SHARE PRICE
The value of your Fund shares is not likely to change from $1.00, although this
cannot be guaranteed. This value is known as the Net Asset Value per share, or
NAV. INVESCO determines the value of each investment in each Fund's portfolio
each day that the New York Stock Exchange ("NYSE") is open, at the close of
trading on that exchange (normally 4:00 p.m. Eastern time). Therefore, shares of
the Funds are not priced on days when the NYSE is closed, which, generally is on
weekends and national holidays in the U.S.
THE COMBINATION OF THE AMORTIZED COST METHOD OF VALUATION AND THE DAILY
DECLARATION OF DIVIDENDS MEANS THAT EACH FUND'S NET ASSET VALUE IS EXPECTED TO
BE $1.00 PER SHARE, DESPITE CHANGES IN THE MARKET VALUE OF A FUND'S SECURITIES.
The Funds use the amortized cost method for establishing the value of their
investments. The amortized cost method values securities at their cost at the
time of purchase, and then amortizes the discount or premium to maturity. The
Funds declare dividends daily, based upon the interest earned by the Funds'
investments that day. The combination of the amortized cost method of valuation
and the daily declaration of dividends means that each Fund's net asset value is
expected to be $1.00 per share, despite changes in the market value of a Fund's
securities. However, we cannot guarantee that each Fund's net asset value will
be maintained at a constant value of $1.00 per share.
All purchases, sales and exchanges of Fund shares are made by INVESCO at the NAV
next calculated after INVESCO receives proper instructions from you to purchase,
redeem or exchange shares of a Fund. Your instructions must be received by
INVESCO no later than the close of the NYSE to effect transactions that day. If
INVESCO hears from you after that time, your instructions will be processed on
the next day that the NYSE is open.
<PAGE>
[INVESCO ICON]
HOW TO BUY SHARES
TO BUY SHARES AT THAT DAY'S CLOSING PRICE, YOU MUST CONTACT US BEFORE THE
CLOSE OF THE NYSE, NORMALLY 4:00 P.M. EASTERN TIME.
The following chart shows several convenient ways to invest in the Funds. There
is no charge to invest, exchange or redeem shares when you make transactions
directly through INVESCO. However, if you invest in a Fund through a securities
broker, you may be charged a commission or transaction fee for either purchases
or sales of Fund shares. For all new accounts, please send a completed
application form, and specify the fund or funds you wish to purchase.
INVESCO reserves the right to increase, reduce or waive each Fund's minimum
investment requirements in its sole discretion, if it determines this action is
in the best interests of that Fund's shareholders. INVESCO also reserves the
right in its sole discretion to reject any order to buy Fund shares, including
purchases by exchange.
MINIMUM INITIAL INVESTMENT. $1,000, which is waived for regular investment
plans, including EasiVest and Direct Payroll Purchase, and certain retirement
plans, including IRAs.
MINIMUM SUBSEQUENT INVESTMENT. $50 (Minimums are lower for certain retirement
plans.)
EXCHANGE POLICY. You may exchange your shares in any of the Funds for those in
another INVESCO mutual fund on the basis of their respective NAVs at the time of
the exchange.
FUND EXCHANGES CAN BE A CONVENIENT WAY FOR YOU TO DIVERSIFY YOUR INVESTMENTS, OR
TO REALLOCATE YOUR INVESTMENTS WHEN YOUR OBJECTIVES CHANGE.
Before making any exchange, be sure to review the prospectuses of the funds
involved and consider the differences between the funds. Also, be certain that
you qualify to purchase certain classes of shares in the new fund. An exchange
is the sale of shares from one fund immediately followed by the purchase of
shares in another. Therefore, any gain or loss realized on the exchange is
recognizable for federal income tax purposes (unless, of course, you or your
account qualifies as tax-deferred under the Internal Revenue Code). If the
shares of the fund you are selling have gone up in value since you bought them,
the sale portion of an exchange may result in taxable income to you.
We have the following policies governing exchanges:
o Both fund accounts involved in the exchange must be registered in exactly the
same name(s) and Social Security or federal tax I.D. number(s).
o You may make up to four exchanges out of each Fund per year.
o Each Fund reserves the right to reject any exchange request, or to modify or
terminate the exchange policy if it is in the best interests of the Fund and
its shareholders. Notice of all such modifications or termination that affect
all shareholders of the Fund will be given at least 60 days prior to the
effective date of the change, except in unusual instances, including a
suspension of redemption of the exchanged security under Section 22(e) of the
Investment Company Act of 1940.
In addition, the ability to exchange may be temporarily suspended at any time
that sales of the fund into which you wish to exchange are temporarily stopped.
<PAGE>
METHOD INVESTMENT MINIMUM PLEASE REMEMBER
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BY CHECK $1,000 for regular Please remember that
Mail to: accounts; if you pay by check or
INVESCO Funds Group, Inc., $250 for an IRA; wire and your funds do
P.O. Box 173706, $50 minimum for not clear, you will be
Denver, CO 80217-3706. each subsequent responsible for any
You may send your check investment. related loss to any
by overnight courier to: Fund or INVESCO. If
7800 E. Union Ave. you are already an
Denver, CO 80237. INVESCO funds
shareholder, the Fund
may seek reimbursement
for any loss from your
existing account(s).
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BY WIRE $1,000 Payment must be
Send your payment by received within 3
bank wire (call INVESCO business days, or the
for instructions). transaction may be
cancelled.
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BY TELEPHONE WITH ACH $50.
Call 1-800-525-8085 to
request your purchase.
INVESCO will move money
from your designated
bank/credit union
checking or savings
account in order to
purchase shares, upon
your telephone
instructions, whenever
your wish.
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REGULAR INVESTING WITH $50 per month for Like all regular
EASIVEST EasiVest; $50 investment plans, neither
OR DIRECT PAYROLL per pay period for EasiVest nor
PURCHASE Direct Pay roll Direct Payroll Purchase
You may enroll on your Purchase. You may ensures a profit
fund start or stop your or protects against
application, or call us regular investment loss in a falling
for a separate plan at any time, market. Because you'll
form and more details. with two weeks' invest continually,
Investing notice to INVESCO. regardless of varying
the same amount on a price levels, consider
monthly basis your financial ability
allows you to buy more to keep buying
shares when prices are through low price
low and fewer shares levels. And remember
when prices are high. that you will lose
This "dollar cost averag money if you redeem
ing" may help offset your shares when the
market fluctuations. market value of all
Over a period of time, your shares is less
your average cost per than their cost.
share may be less than
the actual average price
per share.
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BY PAL(R) $1,000; $250 for Be sure to write down
Your "Personal Account an IRA. the confirmation
Line" is available number provided by
for subsequent PAL(R). Payment must be
purchases and received within 3
exchanges 24 hours a business days, or
day. Simply call the transaction may be
1-800-525-8085. cancelled.
<PAGE>
METHOD INVESTMENT MINIMUM PLEASE REMEMBER
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BY EXCHANGE $1,000 to open a See "Exchange Policy."
Between two INVESCO new account; $50
funds. Call for written
1-800-525-8085 for requests to
prospectuses of purchase additional
other INVESCO funds. shares for an
Exchanges may be made existing account.
by phone or at our (The exchange
Web site at minimum is $250
www.invesco.com. You for exchanges
may also establish an requested by
automatic monthly telephone.)
exchange service between
two INVESCO funds; call
us for further details
and the correct form.
[INVESCO ICON]
YOUR ACCOUNT SERVICES
INVESCO PROVIDES YOU WITH SERVICES DESIGNED TO MAKE IT SIMPLE FOR YOU TO BUY,
SELL OR EXCHANGE YOUR SHARES OF ANY INVESCO MUTUAL FUND.
SHAREHOLDER ACCOUNTS. INVESCO maintains your share account, which contains
your current Fund holdings. The Funds do not issue share certificates.
QUARTERLY INVESTMENT SUMMARIES. Each calendar quarter, you receive a written
statement which consolidates and summarizes account activity and value at the
beginning and end of the period for each of your INVESCO funds.
TRANSACTION CONFIRMATIONS. You receive detailed confirmations of individual
purchases, exchanges and sales. If you choose certain recurring transaction
plans your transactions are confirmed on your quarterly Investment Summaries.
CHECKWRITING. If you have $1,000 or more in your account, you may redeem shares
of a Fund by check. We will provide personalized checks at no charge within 30
days of your account opening. Checks may be made payable to any party in any
amount of $500 or more. Shares of the Fund will be redeemed to cover payment of
the check. INVESCO reserves the right to institute a charge for this service
upon notice to all shareholders. Further information about this option may be
obtained from INVESCO.
YOU CAN CONDUCT MOST TRANSACTIONS AND CHECK ON YOUR ACCOUNT THROUGH OUR
TOLL-FREE TELEPHONE NUMBER. YOU MAY ALSO ACCESS PERSONAL ACCOUNT INFORMATION AT
OUR WEB SITE, WWW.INVESCO.COM.
TELEPHONE TRANSACTIONS. You may exchange and sell Fund shares by telephone,
unless you specifically decline these privileges when you fill out the INVESCO
new account Application.
Unless you decline the telephone transaction privileges, when you fill out and
sign the new account Application, a Telephone Transaction Authorization Form, or
use your telephone transaction privileges, you lose certain rights if someone
gives fraudulent or unauthorized instructions to INVESCO that result in a loss
to you. In general, if INVESCO has followed reasonable procedures, such as
recording telephone instructions and sending written transaction confirmations,
INVESCO is not liable for following telephone instructions that it believes to
be genuine. Therefore, you have the risk of loss due to unauthorized or
fraudulent instructions.
IRAS AND OTHER RETIREMENT PLANS. Shares of any INVESCO mutual fund may be
purchased for IRAs and many other types of tax-deferred retirement plans. Please
call INVESCO for information and forms to establish or transfer your existing
retirement plan or account.
<PAGE>
[INVESCO ICON]
HOW TO SELL SHARES
The following chart shows several convenient ways to sell your Fund shares.
Shares of the Funds may be sold at any time at the next NAV calculated after
your request to sell in proper form is received by INVESCO. Depending on the
performance of any Fund, the NAV at the time you sell your shares may be more or
less than the price you paid to purchase your shares.
TO SELL SHARES AT THAT DAY'S CLOSING PRICE, YOU MUST CONTACT US BEFORE
4:00 P.M. EASTERN TIME.
If you own shares in more than one INVESCO fund, please specify the fund whose
shares you wish to sell. Remember that any sale or exchange of shares in a
non-retirement account will likely result in a taxable gain or loss.
While INVESCO attempts to process telephone redemptions promptly, there may be
times - particularly in periods of severe economic or market disruption - when
you may experience delays in redeeming shares by phone.
INVESCO usually mails you the proceeds from the sale of fund shares within seven
days after we receive your request to sell in proper form. However, payment may
be postponed under unusual circumstances -- for instance, if normal trading is
not taking place on the NYSE, or during an emergency as defined by the
Securities and Exchange Commission. If your INVESCO fund shares were purchased
by a check which has not yet cleared, payment will be made promptly when your
purchase check does clear; that can take up to 15 days.
If you participate in EasiVest, the Funds' automatic monthly investment program,
and sell all of the shares in your account, we will not make any additional
EasiVest purchases unless you give us other instructions.
Because of the Funds' expense structure, it costs as much to handle a small
account as it does to handle a large one. If the value of your account in a Fund
falls below $250 as a result of your actions (for example, sale of your Fund
shares), each Fund reserves the right to sell all of your shares, send the
proceeds of the sale to you and close your account. Before this is done, you
will be notified and given 60 days to increase the value of your account to $250
or more.
METHOD INVESTMENT MINIMUM PLEASE REMEMBER
- --------------------------------------------------------------------------------
BY TELEPHONE $250 (or, if less, INVESCO's telephone
Call us toll-free at: full liquidation of redemption privileges
1-800-825-8085 the account) for a may be modified or
redemption check; terminated in the
$1,000 for a wire to future at INVESCO's
your bank of record. discretion.
The maximum amount
which may be redeemed
by telephone is
generally $25,000.
- --------------------------------------------------------------------------------
IN WRITING Any amount. The redemption
Mail your request to request must be
INVESCO Funds Group, signed by all
Inc., P.O. Box registered account
173706, Denver, CO owners. Payment will
80217-3706. You may be mailed to your
also send your address as it appears
request by overnight on INVESCO's records,
courier to 7800 E. or to a bank
Union Ave., designated by you in
Denver, CO 80237. writing.
<PAGE>
METHOD INVESTMENT MINIMUM PLEASE REMEMBER
- --------------------------------------------------------------------------------
BY CHECK $500 minimum per Personalized checks
check. are available from
INVESCO without charge upon
request. Checks may be
payable to any party.
- --------------------------------------------------------------------------------
BY TELEPHONE WITH ACH $50.
Call 1-800-525-8085
to request your
redemption. INVESCO
will automatically
pay the proceeds into
your designated bank
account.
- --------------------------------------------------------------------------------
BY EXCHANGE $1,000 to open a new See "Exchange Policy."
Between two INVESCO account; $50 for
funds. Call written requests to
1-800-525-8085 for purchase additional
prospectuses of other shares for an
INVESCO funds. existing account.
Exchanges may be made (The exchange
by phone or at our minimum is $250 for
Web site at exchanges requested
www.invesco.com. You by telephone.)
may also establish an
automatic monthly exchange
service between two
INVESCO funds; call us
for further details and
the correct form.
- --------------------------------------------------------------------------------
PERIODIC WITHDRAWAL $100 per payment on a You must have at
PLAN monthly or quarterly least $10,000 total
You may call us to basis. The redemption invested with the
request the check may be made INVESCO funds with at
appropriate form and payable to any party least $5,000 of that
more information at you designate. total invested in the
1-800-525-8085. fund from which
withdrawals will be
made.
- --------------------------------------------------------------------------------
PAYMENT TO THIRD Any amount. All registered
PARTY account owners must
Mail your request to sign the request,
INVESCO Funds Group, with signature
Inc., P.O. Box guarantees from an
173706, Denver, CO eligible guarantor
80217-3706. financial institution,
such as a commercial bank
or a recognized national
or regional securities
firm.
[INVESCO ICON]
DIVIDENDS AND TAXES
TO AVOID BACKUP WITHHOLDING, BE SURE WE HAVE YOUR CORRECT SOCIAL SECURITY OR
TAXPAYER IDENTIFICATION NUMBER. WE WILL PROVIDE YOU WITH DETAILED INFORMATION
EVERY YEAR ABOUT YOUR DIVIDENDS.
Everyone's tax status is unique. We encourage you to consult your own tax
adviser on the tax impact to you of investing in the Funds.
Each Fund earns ordinary or investment income from interest on its investments.
The Funds expect to distribute substantially all of this investment income, less
Fund expenses, to shareholders. You will ordinarily earn income on each day you
are invested in one of the Funds, and that income is paid by the Fund to you
once a month. Dividends are automatically reinvested in additional shares of a
Fund at the net asset value on the monthly dividend distribution date, unless
you request that dividends be paid in cash.
<PAGE>
Unless you are (or your account is) exempt from income taxes, you must include
all dividends paid to you by the Cash Reserves and U.S. Government Money Funds
in your taxable income for federal, state and local income tax purposes.
Dividends and other distributions usually are taxable whether you receive them
in cash or automatically reinvest them in shares of the distributing Fund or
other INVESCO funds.
Substantially all of the dividends that you receive from the Tax-Free Money Fund
are expected to be exempt from federal income taxes, but there is no assurance
that this will be the case. For the fiscal year ended May 31, 1999, _____% of
the dividends declared by this Fund were exempt from federal income taxes. There
is no assurance that this will be the case in future years. Dividends that you
receive from the Tax-Free Money Fund may be subject to state and local taxes, or
to the federal Alternative Minimum Tax.
If you have not provided INVESCO with complete, correct tax information, the
Funds are required by law to withhold 31% of your distributions and any money
that you receive from the sale of shares of the Funds as a backup withholding
tax.
Each year, INVESCO will provide you with information about any Fund dividends,
and the tax status of your dividends, that is required for you to complete your
yearly tax filings.
<PAGE>
FINANCIAL HIGHLIGHTS
(For a Fund Share Outstanding Throughout Each Period)
The following information has been audited by PricewaterhouseCoopers 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 Company's 1999 Annual Report to Shareholders, which is
incorporated by reference into the Statement of Additional Information. Both are
available without charge by contacting IDI at the address or telephone number on
the back cover of this Prospectus. The Annual Report also contains information
about the Funds' performance.
YEAR ENDED MAY 31
--------------------------------------------
1999 1998 1997 1996 1995
CASH RESERVES FUND
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 0.04 0.05 0.05 0.05 0.05
================================================================================
Net Asset Value--End of Period $1.00 $1.00 $1.00 $1.00 $1.00
================================================================================
TOTAL RETURN 4.45% 4.82% 4.69% 5.01% 4.76%
RATIOS
Net Assets--End of Period
($000 Omitted) $814,158 $661,648 $587,277 $644,341 $766,670
Ratio of Expenses to Average
Net Assets(a) 0.90%(b) 0.91%(b) 0.86%(b) 0.87%(b) 0.75%
Ratio of Net Investment Income
to Average Net Assets(a) 4.36% 4.76% 4.62% 4.86% 4.65%
(a) Various expenses of the Fund were voluntarily absorbed by INVESCO for the
years ended May 31, 1999, 1998, 1997, 1996 and 1995. If such expenses had
not been voluntarily absorbed, ratio of expenses to average net assets would
have been 0.91%, 0.93%, 0.92%, 0.92% and 0.85%, respectively, and ratio of
net investment income to average net assets would have been 4.35%, 4.74%,
4.56%, 4.81% and 4.55%, respectively.
(b) Ratio is based on Total Expenses of the Fund, less Expenses Absorbed by
INVESCO, which is before any expense offset arrangements.
<PAGE>
FINANCIAL HIGHLIGHTS (continued)
(For a Fund Share Outstanding Throughout Each Period)
YEAR ENDED MAY 31
--------------------------------------------
1999 1998 1997 1996 1995
TAX-FREE MONEY FUND
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 0.03 0.03 0.03 0.03 0.03
================================================================================
Net Asset Value End of Period $1.00 $1.00 $1.00 $1.00 $1.00
================================================================================
TOTAL RETURN 2.63% 3.03% 2.90% 3.08% 2.86%
RATIOS
Net Assets--End of Period
($000 Omitted) $50,697 $54,801 $47,577 $51,649 $58,780
Ratio of Expenses to Average
Net Assets(a) 0.77%(b) 0.76%(b) 0.76%(b) 0.77%(b) 0.75%
Ratio of Net Investment Income
to Average Net Assets(a) 2.61% 3.01% 2.86% 3.03% 2.77%
(a) Various expenses of the Fund were voluntarily absorbed by INVESCO for the
years ended May 31, 1999, 1998, 1997, 1996 and 1995. If such expenses had
not been voluntarily absorbed, ratio of expenses to avaerage net assets
would have been 1.02%, 1.06%, 1.01%, 1.05% and 1.00%, respectively, and
ratio of net investment income to average net assets would have been 2.36%,
2.71%, 2.61%, 2.75% and 2.52%, respectively.
(b) Ratio is based on Total Expenses of the Fund, less Expenses Absorbed by
INVESCO, which is before any expense offset arrangements.
<PAGE>
FINANCIAL HIGHLIGHTS (continued)
(For a Fund Share Outstanding Throughout Each Period)
YEAR ENDED MAY 31
--------------------------------------------
1999 1998 1997 1996 1995
U.S. GOVERNMENT MONEY FUND
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 0.04 0.05 0.04 0.05 0.05
================================================================================
Net Asset Value--End of Period $1.00 $1.00 $1.00 $1.00 $1.00
================================================================================
TOTAL RETURN 4.36% 4.74% 4.57% 4.90% 4.66%
RATIOS
Net Assets--End of Period
($000 Omitted) $91,509 $73,918 $66,451 $79,392 $60,843
Ratio of Expenses to Average
Net Assets(a) 0.86%(b) 0.87%(b) 0.86%(b) 0.87%(b) 0.75%
Ratio of Net Investment Income
to Average Net Assets(a) 4.28% 4.72% 4.51% 4.78% 4.55%
(a) Various expenses of the Fund were voluntarily absorbed by INVESCO for the
years ended May 31, 1999, 1998, 1997, 1996 and 1995. If such expenses had
not been voluntarily absorbed, ratio of expenses to average net assets would
have been 1.08%, 1.12%, 1.06%, 1.05% and 1.10%, respectively, and ratio of
net investment income to average net assets would have been 4.06%, 4.47%,
4.31%, 4.60% and 4.20%, respectively.
(b) Ratio is based on Total Expenses of the Fund, less Expenses Absorbed by
INVESCO, which is before any expense offset arrangements.
<PAGE>
September 30, 1999
INVESCO MONEY MARKET FUNDS, INC.
INVESCO CASH RESERVES FUND
INVESCO TAX-FREE MONEY FUND
INVESCO U.S. GOVERNMENT MONEY FUND
You may obtain additional information about the Funds from several sources:
FINANCIAL REPORTS. Although this Prospectus describes the Funds' anticipated
investments and operations, the Funds also prepare annual and semiannual reports
that detail the Funds' actual investments at the report date. These reports
include discussion of each Fund's recent performance, as well as market and
general economic trends affecting each Fund's performance. The annual report
also includes the report of the Funds' independent accountants.
STATEMENT OF ADDITIONAL INFORMATION. The SAI dated September 30, 1999 is a
supplement to this Prospectus and has detailed information about the Funds and
their investment policies and practices. A current SAI for the Funds is on file
with the Securities and Exchange Commission and is incorporated in this
Prospectus by reference; in other words, the SAI is legally a part of this
Prospectus, and you are considered to be aware of the contents of the SAI.
INTERNET. The current Prospectus of the Funds may be accessed through the
INVESCO Web site at www.invesco.com. In addition, the current Prospectus, SAI
and annual or semiannual report are available on the SEC Web site at
www.sec.gov.
To obtain a free copy of the current Prospectus, annual report, semiannual
report or SAI, write to INVESCO Distributors, Inc., P.O. Box 173706, Denver,
Colorado 80217-3706; or call 1-800-525-8085. Copies of these materials are also
available (with a copying charge) from the SEC's Public Reference Section at 450
Fifth Street, N.W., Washington, D.C. Information on the Public Reference Section
can be obtained by calling 1-800-SEC-0330. The SEC file numbers for the Funds
are 811-2606 and 002-55079.
811-2606
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
INVESCO Money Market Funds, Inc.
INVESCO Cash Reserves Fund
INVESCO Tax-Free Money Fund
INVESCO U.S. Government Money Fund
Address: Mailing Address:
7800 E. Union Ave., Denver, CO 80237 P.O. Box 173706, Denver, CO 80217-3706
Telephone:
In continental U.S., 1-800-525-8085
September 30, 1999
- --------------------------------------------------------------------------------
A Prospectus for INVESCO Cash Reserves, INVESCO Tax-Free Money and INVESCO U.S.
Government Money Funds dated September 30, 1999 provides the basic information
you should know before investing in a Fund. This Statement of Additional
Information ("SAI") is incorporated by reference into the Funds' Prospectus; in
other words, this SAI is legally part of the Funds' Prospectus. Although this
SAI is not a prospectus, it contains information in addition to that set forth
in the Prospectus. It is intended to provide additional information regarding
the activities and operations of the Funds and should be read in conjunction
with the Prospectus.
You may obtain, without charge, copies of the current Prospectus of the Funds,
SAI and current annual and semiannual reports by writing to INVESCO
Distributors, Inc., P.O. Box 173706, Denver, CO 80217-3706 , or by calling
1-800-525-8085. Copies of the Prospectus are also available through the INVESCO
web site at www.invesco.com.
<PAGE>
TABLE OF CONTENTS
The Company...................................................................23
Investments, Policies and Risks...............................................23
Investment Restrictions and Strategies........................................30
Management of the Funds.......................................................33
Other Service Providers.......................................................49
Brokerage Allocation and Other Practices......................................50
Capital Stock.................................................................51
Tax Consequences of Owning Shares of a Fund...................................52
Performance...................................................................53
Financial Statements..........................................................56
Appendix A....................................................................57
<PAGE>
THE COMPANY
The Company was incorporated on April 2, 1993, under the laws of Maryland. On
July 1, 1993, the Company, through Cash Reserves Fund, Tax-Free Money Fund and
U.S. Government Money Fund, respectively, assumed all of the assets and
liabilities of Financial Daily Income Shares, Inc. (incorporated in colorado on
October 14, 1975), Financial Tax-Free Money Fund, Inc. (incorporated in Colorado
on March 4, 1983) and Financial U.S. Government Money Fund, a series of
Financial Series Trust (organized as a Massachusetts business trust on July 15,
1987) (collectively, the "Predecessor Funds"). All financial and other
information about the Funds for the period prior to July 1, 1993, relates to
such Predecessor Funds.
The Company is an open-end, diversified, no-load management investment company
currently consisting of three portfolios of investments: INVESCO Cash Reserves
Fund, INVESCO Tax-Free Money Fund and INVESCO U.S. Government Money Fund (the
"Funds"). Additional funds may be offered in the future.
"Open-end" means that each Fund issues an indefinite number of shares which it
continuously offers to redeem at net asset value per share ("NAV"). A
"management" investment company actively buys and sells securities for each
portfolio at the direction of a professional manager. Open-end management
investment companies (or one or more series of such companies, such as the
Funds) are commonly referred to as mutual funds. The Funds do not charge sales
fees to purchase their shares.
INVESTMENTS, POLICIES AND RISKS
The principal investments and policies of the Funds are discussed in the
Prospectus of the Funds. The investment objective of each of the Funds is to
achieve as high a level of current income as is consistent with the preservation
of capital, the maintenance of liquidity, and investing in high-quality debt
securities. (What constitutes a high-quality debt security varies with the type
of security and, where applicable, is noted in the discussion of each security.)
Tax-Free Money Fund also seeks income exempt from federal income tax. Each
Fund's assets are invested in securities having maturities of 397 days or less,
and the dollar-weighted average maturity of the portfolio will not exceed 90
days. The Funds buy only securities determined by the Adviser, pursuant to
procedures approved by the board of directors, to be of high quality with
minimal credit risk and to be eligible for investment by the Funds under
applicable U.S. Securities and Exchange Commission ("SEC") rules. Generally, the
Funds are required to invest at least 95% of their total assets in the
securities of issuers with the highest credit rating. Credit ratings are the
opinion of the private companies (such as S&P or Moody's) that rate companies on
their securities; they are not guarantees. See Appendix A for descriptions of
the investment instruments referred to below, as well as discussions of the
degrees of risk involved in purchasing these instruments.
DIVERSIFICATION -- The Company is a diversified investment company under the
Investment Company Act of 1940, as amended ("the 1940 Act"). Except to the
extent permitted under Rule 2a-7 of the 1940 Act or any successor rule thereto,
no more than 5% of the value of each Fund's total assets can be invested in the
securities of any one issuer (other than securities issued or guaranteed by the
U.S. government or any of its agencies or instrumentalities, or securities of
other investment companies).
U.S. GOVERNMENT SECURITIES -- Each Fund may invest in U.S. government
obligations without limit. These securities include treasury bills, treasury
<PAGE>
notes, and treasury bonds. Treasury bills have a maturity of one year or less.
Treasury notes generally have a maturity of one to ten years, and treasury bonds
generally have maturities of more than ten years.
U.S. government debt securities also include securities issued or guaranteed by
agencies or instrumentalities of the U.S. government. Some obligations of United
States government agencies, which are established under the authority of an act
of Congress, such as Government National Mortgage Association ("GNMA")
participation certificates, are supported by the full faith and credit of the
United States Treasury. GNMA Certificates are mortgage-backed securities
representing part ownership of a pool of mortgage loans. These loans -- issued
by lenders such as mortgage bankers, commercial banks and savings and loan
associations -- are either insured by the Federal Housing Administration or
guaranteed by the Veterans Administration. A "pool" or group of such mortgages
is assembled and, after being approved by GNMA, is offered to investors through
securities dealers. Once approved by GNMA, the timely payment of interest and
principal on each mortgage is guaranteed by GNMA and backed by the full faith
and credit of the U.S. government. The market value of GNMA Certificates is not
guaranteed. GNMA Certificates are different from bonds because principal is paid
back monthly by the borrower over the term of the loan rather than returned in a
lump sum at maturity, as is the case with a bond. GNMA Certificates are called
"pass-through" securities because both interest and principal payments
(including prepayments) are passed through to the holder of the GNMA
Certificate.
Other United States government debt securities, such as securities of the
Federal Home Loan Banks, are supported by the right of the issuer to borrow from
the Treasury. Others, such as bonds issued by Fannie Mae, a federally chartered
private corporation, are supported only by the credit of the corporation. In the
case of securities not backed by the full faith and credit of the United States,
the Fund must look principally to the agency issuing or guaranteeing the
obligation in the event the agency or instrumentality does not meet its
commitments. A Fund will invest in securities of such instrumentalities only
when its investment adviser and sub-advisers are satisfied that the credit risk
with respect to any such instrumentality is comparatively minimal.
COMMERCIAL PAPER -- Commercial paper is the term for short-term promissory notes
issued by domestic corporations to meet current working capital needs. The
letter of credit enhances the paper's creditworthiness. The issuer is directly
responsible for payment but the bank "guarantees" that if the note is not paid
at maturity by the issuer, the bank will pay the principal and interest to the
buyer. INVESCO Funds Group, Inc. ("INVESCO"), the Fund's adviser, will consider
the creditworthiness of the institution issuing the letter of credit, as well as
the creditworthiness of the issuer of the commercial paper, when purchasing
paper enhanced by a letter of credit. Commercial paper is sold either as
interest-bearing or on a discounted basis, with maturities not exceeding 270
days.
Commercial paper acquired by a Fund must be rated by at least two
nationally recognized securities ratings organizations (NRSROs), generally S&P
and Moody's, in the highest rating category (A-1 by S&P or P-1 by Moody's), or,
where the obligation is rated by only S&P or Moody's and not by any other NRSRO,
such obligation is rated A-1 or P-1. Money market instruments purchased by a
Fund which are not rated by any NRSRO must be determined by the Adviser to be of
equivalent credit quality to the rated securities in which a Fund may invest. In
the Adviser's opinion, obligations that are not rated are
<PAGE>
not necessarily of lower quality than those which are rated; however, they may
be less marketable and typically may provide higher yields. The Funds invest in
unrated securities only when such an investment is in accordance with a Fund's
investment objective of achieving a high level of current income and when such
investment will not impair the Fund's ability to comply with requests for
redemptions. Commercial paper is usually secured by the corporation's assets but
may sometimes be backed by a letter of credit from a bank or other financial
institution.
DOMESTIC BANK OBLIGATIONS -- U.S. banks (including their foreign branches) issue
certificates of deposit (CDs) and bankers' acceptances which may be purchased by
the Funds if an issuing bank has total assets in excess of $5 billion and the
bank otherwise meets the Funds' credit rating requirements. CDs are issued
against deposits in a commercial bank for a specified period and rate and are
normally negotiable. Eurodollar CDs are certificates issued by a foreign branch
(usually London) of a U.S. domestic bank, and, as such, the credit is deemed to
be that of the domestic bank. Bankers' acceptances are short-term credit
instruments evidencing the promise of the bank (by virtue of the bank's
"acceptance") to pay at maturity a draft which has been drawn on it by a
customer (the "drawer"). Bankers' acceptances are used to finance the import,
export, transfer, or storage of goods and reflect the obligation of both the
bank and the drawer to pay the face amount. Both types of securities are subject
to the ability of the issuing bank to meet its obligations, and are subject to
risks common to all debt securities. In addition, banker's acceptances may be
subject to foreign currency risk and certain other risks of investment in
foreign securities.
CERTIFICATES OF DEPOSIT IN FOREIGN BANKS AND U.S. BRANCHES OF FOREIGN BANKS --
The Funds may maintain time deposits in and invest in U.S. dollar denominated
CDs issued by foreign banks and U.S. branches of foreign banks. The Funds limit
investments in foreign bank obligations to U.S. dollar denominated obligations
of foreign banks which have more than $10 billion in assets, have branches or
agencies in the U.S., and meet other criteria established by the board of
directors. Investments in foreign securities involve special considerations.
There is generally less publicly available information about foreign issuers
since many foreign countries do not have the same disclosure and reporting
requirements as are imposed by the U.S. securities laws. Moreover, foreign
issuers are generally not bound by uniform accounting and auditing and financial
reporting requirements and standards of practice comparable to those applicable
to domestic issuers. Such investments may also entail the risks of possible
imposition of dividend withholding or confiscatory taxes, possible currency
blockage or transfer restrictions, expropriation, nationalization or other
adverse political or economic developments, and the difficulty of enforcing
obligations in other countries.
The Funds may also invest in bankers' acceptances, time deposits and
certificates of deposit of U.S. branches of foreign banks and foreign branches
of U.S. banks. Investments in instruments of U.S. branches of foreign banks will
be made only with branches that are subject to the same regulations as U.S.
banks. Investments in instruments issued by a foreign branch of a U.S. bank will
be made only if the investment risk associated with such investment is the same
as that involving an investment in instruments issued by the U.S. parent, with
the U.S. parent unconditionally liable in the event that the foreign branch
fails to pay on the investment for any reason.
MUNICIPAL OBLIGATIONS -- Tax-Free Money Fund may invest in short-term municipal
debt securities including municipal bonds, notes and commercial paper.
<PAGE>
Municipal Bonds -- Municipal bonds are classified as general obligation or
revenue bonds. General obligations bonds are secured by the issuer's
pledge of its full faith, credit and unlimited taxing power for the
payment of principal and interest. Revenue bonds are payable only from the
revenues generated by a particular facility or class of facility, or in
some cases from the proceeds of a special excise tax or specific revenue
source. Industrial development obligations are a particular kind of
municipal bond which are issued by or on behalf of public authorities to
obtain funds for many kinds of local, privately operated facilities. Such
obligations are, in most cases, revenue bonds that generally are secured
by a lease with a particular private corporation.
Municipal Notes -- Municipal notes are short-term debt obligations issued
by municipalities which normally have a maturity at the time of issuance
of six months to three years. Such notes include tax anticipation notes,
bond anticipation notes, revenue anticipation notes and project notes.
Notes sold in anticipation of collection of taxes, a bond sale or receipt
of other revenues are normally obligations of the issuing municipality or
agency.
Municipal Commercial Paper -- Municipal commercial paper is short-term
debt obligations issued by municipalities which may be issued at a
discount (sometimes referred to as Short-Term Discount Notes). These
obligations are issued to meet seasonal working capital needs of a
municipality or interim construction financing and are paid from a
municipalitiy's general revenues or refinanced with long-term debt.
Although the availability of municipal commercial paper has been limited,
from time to time the amounts of such debt obligations offered have
increased, and INVESCO believes that this increase may continue.
Variable Rate Obligations -- The interest rate payable on a variable rate
municipal obligation is adjusted either at predetermined periodic
intervals or whenever there is a change in the market rate of interest
upon which the interest rate payable is based. A variable rate obligation
may include a demand feature pursuant to which the Fund would have the
right to demand prepayment of the principal amount of the obligation prior
to its stated maturity. The issuer of the variable rate obligation may
retain the right to prepay the principal amount prior to maturity.
It is a policy of the Tax-Free Money Fund that, under normal market conditions,
it will have at least 80% of its net assets invested in municipal obligations
that, based on the opinion of counsel to the issuer, pay interest free from
federal income tax. It is the Fund's present intention to invest its assets so
that substantially all of its annual income will be tax-exempt. The Funds may
invest in municipal obligations whose interest income may be specially treated
as a tax preference item under the alternative minimum tax ("AMT"). Securities
that generate income that is a tax preference item may not be counted towards
the 80% tax exempt threshold described above. Tax-exempt income may result in an
indirect tax preference item for corporations, which may subject an investor to
liability under the AMT depending on its particular situation. Tax-Free Money
Fund, however, will not invest more than 20% of its net assets in obligations
the interest from which gives rise to a preference item for the purpose of the
AMT and in other investments subject to
<PAGE>
federal income tax. Distributions from this Fund may be subject to state and
local taxes.
Tax-Free Money Fund will not purchase a municipal obligations unless the Fund
has been advised that the issuer's bond counsel has rendered an opinion that
such obligations have been validly issued and that the interest thereon is
exempt from federal income taxation. In addition, Tax-Free Money Fund will not
purchase a municipal obligation that, in the opinion of INVESCO, is reasonably
likely to be held not to be validly issued or to pay interest thereon which is
not exempt from federal income taxation.
Municipal obligations purchased by a Fund must be rated by at least two NRSROs -
generally S&P and Moody's - in the highest rating category (AAA or AA by S&P or
Aaa or Aa by Moody's), or by one NRSRO in the highest rating category if such
obligations are rated by only one NRSRO. Municipal notes or municipal commercial
paper must be rated in the highest rating category by at least two NRSROs, or
where the note or paper is rated only by one NRSRO, in the highest rating
category by that NRSRO. If a security is unrated, a Fund may invest in such
security if the Adviser determines, in an analysis similar to that performed by
Moody's or S&P in rating similar securities and issuers, that the security is
comparable to that eligible for investment by the Fund. After a Fund has
purchased an issue of municipal obligations, such issue might cease to be rated
or its rating might be reduced below the minimum required for purchase. If a
security originally rated in the highest rating category by a NRSRO has been
downgraded to the second highest rating category, INVESCO must assess promptly
whether the security presents minimal credit risk and must take such action with
respect to the security as it determines to be in the best interest of the Fund.
If a security is downgraded below the second highest rating of an NRSRO, is in
default, or no longer presents a minimal credit risk, the security must be
disposed of either within five business days of INVESCO becoming aware of the
new rating, the default or the credit risk, or as soon as practicable consistent
with achieving an orderly disposition of the security, whichever is the first to
occur, unless the executive committee of the Company's board of directors
determines within the aforesaid five business days that holding the security is
in the best interest of a Fund.
CREDIT ENHANCEMENTS -- The Funds may acquire a right to sell an obligation to
another party at a guaranteed price approximating par value, either on demand or
at specified intervals. The right to sell may form part of the obligation or be
acquired separately by a Fund. These rights may be referred to as demand
features, guarantees or puts, depending on their characteristics (collectively
referred to as "Guarantees"), and may involve letters of credit or other credit
support arrangements supplied by domestic or foreign banks supporting the other
party's ability to purchase the obligation from a Fund. The Funds will acquire
Guarantees solely to facilitate portfolio liquidity and does not intend to
exercise them for trading purposes. In considering whether an obligation meets
the Fund's quality standards, a Fund may look to the creditworthiness of the
party providing the right to sell or to the quality of the obligation itself.
The acquisition of a Guarantee will not affect the valuation of the underlying
obligation which will continue to be valued in accordance with the amortized
cost method of valuation.
<PAGE>
Guarantees acquired by the Funds will have the following features: (1) they will
be in writing and will be physically held by the Funds' custodian; (2) a Fund's
right to exercise them will be unconditional and unqualified; (3) they will be
entered into only with sellers which in the Adviser's opinion present a minimal
risk of default; (4) although Guarantees will not be transferable, municipal
obligations purchased subject to such rights may be sold to a third party at any
time, even though the right is outstanding; and (5) their exercise price will be
(i) a Fund's acquisition cost (excluding the cost, if any, of the Guarantee) of
the municipal obligations which are subject to the right (excluding any accrued
interest which a Fund paid on their acquisition), less any amortized market
premium or plus any amortized market or original issue discount during the
period a Fund owned the securities, plus (ii) all interest accrued on the
securities since the last interest payment date.
REPURCHASE AGREEMENTS -- The Funds may enter into repurchase agreements and
reverse repurchase agreements. (See Appendix A to this SAI for a discussion of
these agreements and the risks involved with such transactions.) The Funds will
enter into repurchase agreements and reverse repurchase agreements only with (i)
banks which have total assets in excess of $4 billion and meet other criteria
established by the board of directors and (ii) with registered broker-dealers or
registered government securities dealers which have outstanding either
commercial paper or other debt obligations rated in the highest rating category
by at least two NRSROs or by one NRSRO if such obligations are rated by only one
NRSRO. INVESCO Funds Group, Inc. ("INVESCO") as investment adviser of the Funds,
will monitor the creditworthiness of such entities in accordance with procedures
adopted and monitored by the board of directors. The Funds will enter into
repurchase agreements whenever, in the opinion of INVESCO, such transactions
would be advantageous to the Funds. Repurchase agreements afford an opportunity
for the Funds to earn a return on temporarily available cash. The Funds will
enter into reverse repurchase agreements only for the purpose of obtaining funds
necessary for meeting redemption requests of shareholders. Interest earned by
the Funds on repurchase agreements would not be tax-exempt, and thus would
constitute taxable income.
LOAN PARTICIPATION INTERESTS -- The Funds may purchase loan participation
interests in all or part of specific holdings of corporate debt obligations. The
issuer of such debt obligations is also the issuer of the loan participation
interests into which the obligations have been apportioned. A Fund will purchase
only loan participation interests issued by companies whose commercial paper is
currently rated in the highest rating category by at least two NRSROs, generally
<PAGE>
S&P and Moody's (A-1 by S&P or P-1 by Moody's), or where such instrument is
rated only by S&P or Moody's and not by any other NRSRO, such instrument is
rated A-1 or P-1. Such loan participation interests will only be purchased from
banks which meet the criteria for banks discussed above and registered
broker-dealers or registered government securities dealers which have
outstanding either commercial paper or other short-term debt obligations rated
in the highest rating category by at least two NRSROs or by one NRSRO if such
obligation is rated by only one NRSRO. Such banks and security dealers are not
guarantors of the debt obligations represented by the loan participation
interests, and therefore are not responsible for satisfying such debt
obligations in the event of default. Additionally, such banks and securities
dealers act merely as facilitators, with regard to repayment by the issuer, with
no authority to direct or control repayment. A Fund will attempt to ensure that
there is a readily available market for all of the loan participation interests
in which it invests. The Funds' investments in loan participation interests for
which there is not a readily available market are considered to be investments
in illiquid securities.
INSURANCE FUNDING AGREEMENTS -- The Funds may also invest in funding agreements
issued by domestic insurance companies. Such funding agreements will only be
purchased from insurance companies which have outstanding an issue of long-term
debt securities rated AAA or AA by S&P, or Aaa or Aa by Moody's. In all cases,
the Funds will attempt to obtain the right to demand payment, on not more than
seven days' notice, for all or any part of the amount subject to the funding
agreement, plus accrued interest. The Funds intend to execute their right to
demand payment only as needed to provide liquidity to meet redemptions, or to
maintain a high quality investment portfolio. A Fund's investments in funding
agreements that do not have this demand feature, or for which there is not a
readily available market, are considered to be investments in illiquid
securities.
WHEN-ISSUED/DELAYED DELIVERY -- Ordinarily, the Funds buy and sell securities on
an ordinary settlement basis. That means that the buy or sell order is sent, and
a Fund actually takes delivery or gives up physical possession of the security
on the "settlement date," which is three business days later. However, the Funds
also may purchase and sell securities on a when-issued or delayed delivery
basis.
When-issued or delayed delivery transactions occur when securities are purchased
or sold by a Fund and payment and delivery take place at an agreed-upon time in
the future. The Funds may engage in this practice in an effort to secure an
advantageous price and yield. However, the yield on a comparable security
available when delivery actually takes place may vary from the yield on the
security at the time the when-issued or delayed delivery transaction was entered
into. When a Fund engages in when-issued and delayed delivery transactions, it
relies on the seller or buyer to consummate the sale at the future date. If the
seller or buyer fails to act as promised, that failure may result in the Fund
missing the opportunity of obtaining a price or yield considered to be
advantageous. No payment or delivery is made by a Fund until it receives
delivery or payment from the other party to the transaction. However,
fluctuation in the value of the security from the time of commitment until
delivery could adversely affect a Fund.
TEMPORARY DEFENSIVE POSITION -- From time to time, on a temporary basis for
defensive purposes, the Fund may also hold 100% of its assets in cash or invest
in taxable short term investments ("taxable investments"), including obligations
of the U.S. government, its agencies or instrumentalities; commercial paper
<PAGE>
limited to obligations which are rated by at least two NRSROs - generally S&P
and Moody's - in the highest rating category (A-1 by S&P and P-1 by Moody's), or
by one NRSRO if such obligations are rated by only one NRSRO; certificates of
deposit of U.S. domestic banks, including foreign branches of domestic banks
meeting the criteria described in the discussion above; time deposits; and
repurchase agreements with respect to any of the foregoing with registered
broker-dealers, registered government securities dealers or banks.
ILLIQUID SECURITIES -- Securities which do not trade on stock exchanges or in
the over the counter market, or have restrictions on when and how they may be
sold, are generally considered to be "illiquid." An illiquid security is one
that a Fund may have difficulty -- or may even be legally precluded from --
selling at any particular time. The Funds may invest in illiquid securities,
including restricted securities and other investments which are not readily
marketable. The Funds do not currently intend to purchase any security if, as a
result, more than 10% of its net assets would be invested in securities that are
deemed to be illiquid because they are subject to legal or contractual
restrictions on resale or because they cannot be sold or disposed of in the
ordinary course of business at approximately the prices at which they are
valued. Repurchase agreements maturing in more than seven days are considered
illiquid for purposes of this restriction.
The principal risk of investing in illiquid securities is that a Fund may be
unable to dispose of them at the time desired or at a reasonable price. In
addition, in order to resell a restricted security, a Fund might have to bear
the expense and incur the delays associated with registering the securities with
the SEC and obtaining listing on a securities exchange or in the over the
counter market.
PORTFOLIO SECURITIES LOANS -- The Company, on behalf of each of the Funds, may
lend limited amounts of its portfolio securities (not to exceed 33 1/3% of a
Fund's total assets). Because there could be delays in recovery of loaned
securities or even a loss of rights in collateral should the borrower fail
financially, loans will be made only to firms deemed by the Adviser to be of
good standing and will not be made unless, in the judgment of the Adviser, the
consideration to be earned from such loans would justify the risk. The Adviser
will evaluate the creditworthiness of such borrowers in accordance with
procedures adopted and monitored by the board of directors. It is expected that
the Company, on behalf of the applicable Fund, will use the cash portions of
loan collateral to invest in short-term income producing securities for the
Fund's account and that the Company may share some of the income from these
investments with the borrower. See "Portfolio Securities Loans" at Appendix A to
this SAI.
INVESTMENT RESTRICTIONS AND STRATEGIES
The Funds operate under certain investment restrictions. For purposes of the
following restrictions, all percentage limitations apply immediately after a
purchase or initial investment. Any subsequent change in a particular percentage
resulting from fluctuations in value does not require elimination of any
security from a Fund.
<PAGE>
The following restrictions are fundamental policies and may not be changed with
respect to a Fund without prior approval of a majority of the outstanding voting
securities of that Fund, as defined in the 1940 Act. Each Fund, unless otherwise
indicated, may not:
1. purchase the securities of any issuer (other than securities issued or
guaranteed by the U.S. government or any of its agencies or
instrumentalities, municipal securities or securities issued or
guaranteed by domestic banks, including U.S. branches of foreign banks
and foreign branches of U.S. banks) if, as a result, more than 25% of
the Fund's total assets would be invested in the securities of
companies whose principal business activities are in the same industry;
2. except to the extent permitted under Rule 2a-7 of the 1940 Act, or any
successor rule thereto, purchase the securities of any issuer (other
than securities issued or guaranteed by the U.S. government or any of
its agencies or instrumentalities, or securities of other investment
companies) if, as a result, (i) more than 5% of the Fund's total assets
would be invested in the securities of that issuer, or (ii) the Fund
would hold more than 10% of the outstanding voting securities of that
issuer;
3. underwrite securities of other issuers, except insofar as it may be
deemed to be an underwriter under the Securities Act of 1933 (the "1933
Act"), as amended, in connection with the disposition of the Fund's
portfolio securities;
4. borrow money, except that the Fund may borrow money in an amount not
exceeding 33 1/3% of its total assets (including the amount borrowed)
less liabilities (other than borrowings);
5. issue senior securities, except as permitted under the 1940 Act;
6. lend any security or make any loan if, as a result, more than 33 1/3%
of its total assets would be lent to other parties, but this limitation
does not apply to the purchase of debt securities or to repurchase
agreements;
7. purchase or sell physical commodities; however, this policy shall not
prevent the Fund from purchasing and selling foreign currency, futures
contracts, options, forward contracts, swaps, caps, floors, collars and
other financial instruments; or
8. purchase or sell real estate unless acquired as a result of ownership
of securities or other instruments (but this shall not prevent the Fund
from investing in securities or other instruments backed by real estate
or securities of companies engaged in the real estate business).
9. Each Fund may, notwithstanding any other fundamental investment policy
or limitation, invest all of its assets in the securities of a single
open-end management investment company managed by INVESCO Funds Group,
Inc. or an affiliate or a successor thereof, with substantially the
same fundamental investment objective, policies and limitations as the
Fund.
<PAGE>
In addition, each Fund has the following non-fundamental policies, which
may be changed without shareholder approval:
A. The Fund may not sell securities short (unless it owns or has the right
to obtain securities equivalent in kind and amount to the securities sold
short) or purchase securities on margin, except that (i) this policy does
not prevent the Fund from entering into short positions in foreign
currency, futures contracts, options, forward contracts, swaps, caps,
floors, collars and other financial instruments, (ii) the Fund may obtain
such short-term credits as are necessary for the clearance of
transactions, and (iii) the Fund may make margin payments in connection
with futures contracts, options, forward contracts, swaps, caps, floors,
collars and other financial instruments.
B. The Fund may borrow money only from a bank or from an open-end
management investment company managed by INVESCO Funds Group, Inc. or an
affiliate or a successor thereof for temporary or emergency purposes (not
for leveraging or investing) or by engaging in reverse repurchase
agreements with any party (reverse repurchase agreements will be treated
as borrowings for purposes of fundamental limitation (4)).
C. The Fund does not currently intend to purchase any security if, as a
result, more than 10% of its net assets would be invested in securities
that are deemed to be illiquid because they are subject to legal or
contractual restrictions on resale or because they cannot be sold or
disposed of in the ordinary course of business at approximately the prices
at which they are valued.
D. The Fund may invest in securities issued by other investment companies
to the extent that such investments are consistent with the Fund's
investment objective and policies and permissible under the 1940 Act.
E. With respect to fundamental limitation (1), domestic and foreign
banking will be considered to be different industries.
In addition, with respect to a Fund that may invest in municipal
obligations, the following non-fundamental policy applies, which may be
changed without shareholder approval:
Each state (including the District of Columbia and Puerto Rico), territory
and possession of the United States, each political subdivision, agency,
instrumentality and authority thereof, and each multi-state agency of
which a state is a member is a separate "issuer." When the assets and
revenues of an agency, authority, instrumentality or other political
subdivision are separate from the government creating the subdivision and
the security is backed only by assets and revenues of the subdivision,
such subdivision would be deemed to be the sole issuer. Similarly, in the
case of an Industrial Development Bond or Private Activity Bond, if that
bond is backed only by the assets and revenues of the non-governmental
user, then that non-governmental user would be deemed to be the sole
issuer.
<PAGE>
MANAGEMENT OF THE FUNDS
THE INVESTMENT ADVISER
INVESCO, located at 7800 East Union Avenue, Denver, Colorado, is the
Company's investment adviser. INVESCO was founded in 1932 and serves as
investment adviser to:
INVESCO Bond Funds, Inc. (formerly, INVESCO Income Funds, Inc.)
INVESCO Combination Stock & Bond Funds, Inc. (formerly, INVESCO Flexible
Funds, Inc.)
INVESCO International Funds, Inc.
INVESCO Money Market Funds, Inc.
INVESCO Sector Funds, Inc. (formerly, INVESCO Strategic Portfolios, Inc.)
INVESCO Specialty Funds, Inc.
INVESCO Stock Funds, Inc. (formerly, INVESCO Equity Funds, Inc.)
INVESCO Tax-Free Income Funds, Inc.
INVESCO Treasurer's Series Funds, Inc. (formerly, INVESCO Treasurer's
Series Trust)
INVESCO Variable Investment Funds, Inc.
As of May 31, 1999, INVESCO managed 10 mutual funds having combined assets of
$22.7 billion, consisting of 50 separate portfolios, on behalf of more than
916,125 shareholders.
INVESCO is an indirect, wholly owned subsidiary of AMVESCAP PLC, a
publicly traded holding company. Through its subsidiaries, AMVESCAP PLC engages
in the business of investment management on an international basis. AMVESCAP PLC
is one of the largest independent investment management businesses in the world
with approximately $281 billion in assets under management on March 31, 1999.
AMVESCAP PLC's North American subsidiaries include:
INVESCO Retirement and Benefit Services, Inc. ("IRBS"), Atlanta, Georgia,
develops and provides domestic and international defined contribution
retirement plan services to plan sponsors, institutional retirement plan
sponsors, institutional plan providers and foreign governments.
INVESCO Retirement Plan Services ("IRPS"), Atlanta, Georgia, a division of
IRBS, provides recordkeeping and investment selection services to defined
contribution plan sponsors of plans with between $2 million and $200 million
in assets. Additionally, IRPS provides investment consulting services to
institutions seeking to provide retirement plan products and services.
Institutional Trust Company doing business as INVESCO Trust Company
("ITC"), Denver, Colorado, a division of IRBS, provides retirement account
custodian and/or trust services for individual retirement accounts ("IRAs")
and other retirement plan accounts. This includes services such as
recordkeeping, tax reporting and compliance. ITC acts as trustee or
<PAGE>
custodian to these plans. ITC accepts contributions and provides, through
INVESCO, complete transfer agency functions: correspondence, sub-accounting,
telephone, communications and processing of distributions.
INVESCO Capital Management, Inc., Atlanta, Georgia, manages institutional
investment portfolios, consisting primarily of discretionary employee
benefit plans for corporations and state and local governments, and
endowment funds.
INVESCO Management & Research, Inc., Boston, Massachusetts, primarily
manages pension and endowment accounts.
PRIMCO Capital Management, Inc., Louisville, Kentucky, specializes in
managing stable return investments, principally on behalf of Section 401(k)
retirement plans.
INVESCO Realty Advisors, Inc., Dallas, Texas, is responsible for providing
advisory services in the U.S. real estate markets for AMVESCAP PLC's clients
worldwide. Clients include corporate pension plans and public pension funds
as well as endowment and foundation accounts.
INVESCO (NY), Inc., New York, is an investment adviser for separately
managed accounts, such as corporate and municipal pension plans,
Taft-Hartley Plans, insurance companies, charitable institutions and private
individuals. INVESCO NY also offers the opportunity for its clients to
invest both directly and indirectly through partnerships in primarily
private investments or privately negotiated transactions. INVESCO NY further
serves as investment adviser to several closed-end investment companies, and
as sub-adviser with respect to certain commingled employee benefit trusts.
A I M Advisors, Inc., Houston, Texas, provides investment advisory and
administrative services for retail and institutional mutual funds.
A I M Capital Management, Inc., Houston, Texas, provides investment
advisory services to individuals, corporations, pension plans and other
private investment advisory accounts and also serves as sub-adviser to
certain retail and institutional mutual funds, one Canadian mutual fund and
one portfolio of an open-end registered investment company that is offered
to separate accounts of variable insurance companies.
A I M Distributors, Inc. and Fund Management Trust, Houston, Texas are
registered broker-dealers that act as the principal underwriters for retail
and institutional mutual funds.
The corporate headquarters of AMVESCAP PLC are located at 11 Devonshire Square,
London, EC2M4YR, England.
THE INVESTMENT ADVISORY AGREEMENT
INVESCO serves as investment adviser to the Funds under an investment advisory
agreement dated February 28, 1997 (the "Agreement") with the Company.
<PAGE>
The Agreement requires that INVESCO manage the investment portfolio of each Fund
in a way that conforms with the Fund's investment policies. INVESCO may
directly manage a Fund itself, or may hire a sub-adviser, which may be an
affiliate of INVESCO, to do so. Specifically, INVESCO is responsible for:
o managing the investment and reinvestment of all the assets of the Funds,
and executing all purchases and sales of portfolio securities;
o maintaining a continuous investment program for the Funds, consistent with
(i) each Fund's investment policies as set forth in the Company's Bylaws
and Registration Statement, as from time to time amended, under the 1940
Act, and in any prospectus and/or statement of additional information of
the Funds, as from time to time amended and in use under the 1933 Act, and
(ii) the Company's status as a regulated investment company under the
Internal Revenue Code of 1986, as amended;
o determining what securities are to be purchased or sold for the Funds,
unless otherwise directed by the directors of the Company, and executing
transactions accordingly;
o providing the Funds the benefit of all of the investment analysis and
research, the reviews of current economic conditions and trends, and the
consideration of a long-range investment policy now or hereafter generally
available to the investment advisory customers of the adviser or any
sub-adviser;
o determining what portion of each Fund's assets should be invested in the
various types of securities authorized for purchase by a Fund; and
o making recommendations as to the manner in which voting rights, rights to
consent to Fund action and any other rights pertaining to a Fund's
portfolio securities shall be exercised.
INVESCO also performs all of the following services for the Funds:
o administrative
o internal accounting (including computation of net asset value)
o clerical and statistical
o secretarial
o all other services necessary or incidental to the administration of the
affairs of the Funds
o supplying the Company with officers, clerical staff and other employees
o furnishing office space, facilities, equipment, and supplies; providing
personnel and facilities required to respond to inquiries related to
shareholder accounts
<PAGE>
o conducting periodic compliance reviews of the Funds' operations;
preparation and review of required documents, reports and filings by
INVESCO's in-house legal and accounting staff or in conjunction with
independent attorneys and accountants (including the prospectus, statement
of additional information, proxy statements, shareholder reports, tax
returns, reports to the SEC, and other corporate documents of the Funds)
o supplying basic telephone service and other utilities
o preparing and maintaining certain of the books and records required to be
prepared and maintained by the Funds under the 1940 Act.
Expenses not assumed by INVESCO are borne by the Funds. As compensation for its
advisory services to the Company, INVESCO receives a monthly fee from each Fund.
The fee is calculated at the annual rate of 0.50% on the first $300 million of
each Fund's average net assets, 0.40% on the next $200 million of each Fund's
average net assets and 0.30% on each Fund's average net assets in excess of $500
million.
During the fiscal years ended May 31, 1999, 1998 and 1997, the Funds paid
INVESCO advisory fees in the dollar amounts shown below. If applicable, the
advisory fees were offset by credits in the amounts shown below, so that
INVESCO's fees would not be in excess of the expense limitations shown below,
which have been voluntarily agreed to by the Company and INVESCO.
Advisory Total Expense Total Expense
Fee Dollars Reimbursements Limitations
----------- -------------- -------------
Cash Reserves Fund
May 31, 1999 $3,157,241 $ 87,157 0.90%
May 31, 1998 $2,789,986 $140,835 0.90%
May 31, 1997 $2,978,520 $430,651 0.85%
Tax-Free Money Fund
May 31, 1999 $ 246,764 $123,371 0.85%*
May 31, 1998 $ 238,537 $144,423 0.75%
May 31, 1997 $ 282,216 $143,085 0.75%
U.S. Government Money
Fund
May 31, 1999 $ 450,781 $195,925 0.85%
May 31, 1998 $ 369,593 $187,969 0.85%
May 31, 1997 $ 426,139 $172,695 0.85%
*0.75% prior to May 13, 1999.
ADMINISTRATIVE SERVICES AGREEMENT
INVESCO, either directly or through affiliated companies, provides certain
administrative, sub-accounting, and recordkeeping services to the Funds pursuant
to an Administrative Services Agreement.
<PAGE>
The Administrative Services Agreement requires INVESCO to provide the following
services to the Funds:
o such sub-accounting and recordkeeping services and functions as are
reasonably necessary for the operation of the Funds; and
o such sub-accounting, recordkeeping, and administrative services and
functions, which may be provided by affiliates of INVESCO, as are
reasonably necessary for the operation of Fund shareholder accounts
maintained by certain retirement plans and employee benefit plans for the
benefit of participants in such plans.
The Administrative Services Agreement provides that each Fund pay INVESCO an
annual base fee per Fund of $10,000 plus an additional incremental fee computed
daily and paid monthly by each Fund, at an annual rate of 0.015% of the average
net assets of each Fund prior to May 13, 1999 and 0.045% per year of the average
net assets of each Fund effective May 13, 1999.
TRANSFER AGENCY AGREEMENT
INVESCO also performs transfer agent, dividend disbursing agent, and registrar
services for the Funds pursuant to a Transfer Agency Agreement.
The Transfer Agency Agreement provides that each Fund pay INVESCO an annual fee
of $27.00 per shareholder account, or, where applicable, per participant in an
omnibus account. This fee is paid monthly at the rate of 1/12 of the annual fee
and is based upon the actual number of shareholder accounts and omnibus account
participants in each Fund at any time during each month.
FEES PAID TO INVESCO
For the fiscal years ended May 31, 1999, 1998 and 1997, the Funds paid the
following fees to INVESCO (prior to the absorption of certain Fund expenses by
INVESCO):
Cash Reserves Fund
Type of Fee 1999 1998 1997
- ----------- ---- ---- ----
Advisory $3,157,241 $2,789,986 $2,978,520
Administrative Services 140,326 109,499 118,983
Transfer Agency 3,167,337 2,779,935 2,995,219
Tax-Free Money Fund
Type of Fee 1999 1998 1997
- ----------- ---- ---- ----
Advisory $ 246,764 $ 238,537 $ 282,216
Administrative Services 18,152 17,156 18,463
Transfer Agency 138,487 151,577 174,207
<PAGE>
U.S. Government Money Fund
Type of Fee 1999 1998 1997
- ----------- ---- ---- ----
Advisory $ 450,781 $ 369,593 $ 426,139
Administrative Services 24,949 21,088 22,784
Transfer Agency 363,724 303,712 339,383
DIRECTORS AND OFFICERS OF THE COMPANY
The overall direction and supervision of the Company come from the board of
directors. The board of directors is responsible for making sure that the Funds'
general investment policies and programs are carried out and that the Funds are
properly administered.
The board of directors has an audit committee comprised of four of the directors
who are not affiliated with INVESCO (the "Independent Directors"). The committee
meets quarterly with the Company's independent accountants and officers to
review accounting principles used by the Company, the adequacy of internal
controls, the responsibilities and fees of the independent accountants, and
other matters.
The Company has a management liaison committee which meets quarterly with
various management personnel of INVESCO in order to facilitate better
understanding of management and operations of the Company, and to review legal
and operational matters which have been assigned to the committee by the board
of directors, in furtherance of the board of directors' overall duty of
supervision.
The Company has a soft dollar brokerage committee. The committee meets
periodically to review soft dollar and other brokerage transactions by the
Funds, and to review policies and procedures of the Funds' adviser with respect
to brokerage transactions. It reports on these matters to the Company's board of
directors.
The Company has a derivatives committee. The committee meets periodically to
review derivatives investments made by the Funds. It monitors derivatives usage
by the Funds and the procedures utilized by the Funds' adviser to ensure that
the use of such instruments follows the policies on such instruments adopted by
the Company's board of directors. It reports on these matters to the Company's
board of directors.
The officers of the Company, all of whom are officers and employees of INVESCO,
are responsible for the day-to-day administration of the Company and the Funds.
The officers of the Company receive no direct compensation from the Company or
the Funds for their services as officers. The investment adviser for the Funds
has the primary responsibility for making investment decisions on behalf of the
Funds.
<PAGE>
All of the officers and directors of the Company hold comparable positions with
the following funds, which, with the Company, are collectively referred to as
the "INVESCO Funds":
INVESCO Bond Funds, Inc. (formerly, INVESCO Income Funds, Inc.)
INVESCO Combination Stock & Bond Funds, Inc. (formerly, INVESCO Flexible
Funds, Inc.)
INVESCO International Funds, Inc.
INVESCO Money Market Funds, Inc.
INVESCO Sector Funds, Inc. (formerly, INVESCO Strategic Portfolios, Inc.)
INVESCO Specialty Funds, Inc.
INVESCO Stock Funds, Inc. (formerly, INVESCO Equity Funds, Inc.)
INVESCO Tax-Free Income Funds, Inc.
INVESCO Treasurer's Series Funds, Inc. (formerly, INVESCO Treasurer's
Series Trust)
INVESCO Variable Investment Funds, Inc.
The table below provides information about each of the Company's directors and
officers. Unless otherwise indicated, the address of the directors and officers
is P.O. Box 173706, Denver, CO 80217-3706 . Their affiliations represent their
principal occupations.
<TABLE>
<CAPTION>
POSITION HELD WITH PRINCIPAL OCCUPATION(S)
NAME, ADDRESS, AND AGE COMPANY DURING PAST FIVE YEARS
- ---------------------- ------------------ ----------------------
<S> <C> <C>
Charles W. Brady *+ Director and Chairman Chairman of the Board of INVESCO
1315 Peachtree St., N.E. of the Board Global Health Sciences Fund; Chief
Atlanta, Georgia Executive Officer and Director
Age: 64 of AMVESCAP PLC, London, England
and various subsidiaries of
AMVESCAP PLC.
Fred A. Deering +# Director and Vice Chairman of Trustee of INVESCO Glo bal Health
Security Life Center the Board Sciences Fund; formerly, Chairman
1290 Broadway of the Executive Committee and
Denver, Colorado Chairman of the Board of Security Life
Age: 71 of Denver Insurance Company; Director
of ING American Holdings Company
and First ING Life Insurance Company
of New York.
<PAGE>
POSITION HELD WITH PRINCIPAL OCCUPATION(S)
NAME, ADDRESS, AND AGE COMPANY DURING PAST FIVE YEARS
- ---------------------- ------------------ ----------------------
Mark H. Williamson *+ President, Chief Executive President, Chief Execu tive
7800 E. Union Avenue Officer and Director Officer and Director of INVESCO
Denver, Colorado Distributors, Inc.; President,
Age: 48 Chief Executive Officer and
Director of INVESCO Funds Group,
Inc.; President, Chief Operating
Officer and Trustee of INVESCO
Global Health Sciences Fund;
formerly, Chairman and Chief
Executive Officer of Nations Banc
Advisors, Inc.; formerly, Chairman
of NationsBanc Investments, Inc.
Victor L. Andrews, Ph.D.**! Director Professor Emeritus, Chair man
34 Seawatch Drive Emeritus and Chair man of the CFO
Savannah, Georgia Roundtable of the Department of
Age: 69 Finance of Georgia State University;
President, Andrews Financial
Associates, Inc. (consulting firm);
formerly, member of the faculties
of the Harvard Business School and
the Sloan School of Management of
MIT; Director of The Sheffield
Funds, Inc.
<PAGE>
POSITION HELD WITH PRINCIPAL OCCUPATION(S)
NAME, ADDRESS, AND AGE COMPANY DURING PAST FIVE YEARS
- ---------------------- ------------------ ----------------------
Bob R. Baker +** Director President and Chief Exec utive
AMC Cancer Research Officer of AMC Cancer Research
Center Center, Denver, Colorado, since
1600 Pierce Street January 1989; until mid-December
Denver, Colorado 1988, Vice Chairman of the
Age: 62 Board of First Columbia Financial
Corporation, Englewood, Colorado;
formerly, Chairman of the Board
and Chief Executive Officer of
First Columbia Financial Corporation.
Lawrence H. Budner # @ Director Trust Consultant; prior to June
7608 Glen Albens Circle 30, 1987, Senior Vice President
Dallas, Texas and Senior Trust Officer of
Age: 69 InterFirst Bank, Dallas, Texas.
<PAGE>
POSITION HELD WITH PRINCIPAL OCCUPATION(S)
NAME, ADDRESS, AND AGE COMPANY DURING PAST FIVE YEARS
- ---------------------- ------------------ ----------------------
Wendy L. Gramm, Ph.D**! Director Self-employed (since 1993);
4201 Yuma Street, N.W. Professor of Economics and Public
Washington, DC Administration, University of
Age: 54 Texas at Arlington; formerly,
Chairman, Commodity Futures
Trading Commission; Administrator
for Information and Regulatory
Affairs at the Office of
Management and Budget; Executive
Director of the Presidential Task
Force on Regulatory Relief; and
Director of the Federal Trade
Commission's Bureau of Economics;
also, Director of Chicago Mercantile
Exchange, Enron Corporation, IBP,
Inc., State Farm Insurance Company,
Independent Women's Forum,
International Republic Institute,
and the Republican Women's Federal
Forum. Also, Member of Board of
Visitors, College of Business
Administration, University of Iowa,
and Member of Board of Visitors,
Center for Study of Public Choice,
George Mason University.
<PAGE>
POSITION HELD WITH PRINCIPAL OCCUPATION(S)
NAME, ADDRESS, AND AGE COMPANY DURING PAST FIVE YEARS
- ---------------------- ------------------ ----------------------
Kenneth T. King +#@ Director Retired. Formerly, Chair man of
4080 North Circulo the Board of The Capitol Life
Manzanillo Insurance Company, Providence
Tucson, Arizona Washington Insurance Company and
Age: 73 Director of numerous U.S.
subsidiaries thereof; formerly,
Chairman of the Board of The
Providence Capitol Companies in the
United Kingdom and Guernsey;
Chairman of the Board of the
Symbion Corporation until 1987.
John W. McIntyre + #@ Director Retired. Formerly, Vice Chairman
7 Piedmont Center of the Board of Directors of the
Suite 100 Citizens and Southern Corporation
Atlanta, Georgia and Chairman of the Board and
Age: 68 Chief Executive Officer of the
Citizens and Southern Georgia
Corp. and the Citizens and
Southern National Bank; Trustee of
INVESCO Glo bal Health Sciences
Fund, Gables Residential Trust,
Employee's Retirement System of
GA, Emory University and J.M. Tull
Charitable Foundation; Director of
Kaiser Foun dation Health Plans of
Georgia, Inc.
<PAGE>
POSITION HELD WITH PRINCIPAL OCCUPATION(S)
NAME, ADDRESS, AND AGE COMPANY DURING PAST FIVE YEARS
- ---------------------- ------------------ ----------------------
Larry Soll, Ph.D.!** Director Retired. Formerly, Chair man of
345 Poorman Road the Board (1987 to 1994), Chief
Boulder, Colorado Executive Officer (1982 to 1989
Age: 57 and 1993 to 1994) and President
(1982 to 1989) of Synergen Inc.;
Director of Synergen since
incorporation in 1982; Director
of Isis Pharmaceuticals, Inc.;
Trustee of INVESCO Global Health
Sciences Fund.
Glen A. Payne Secretary Senior Vice President, General
7800 E. Union Avenue Counsel and Secretary of INVESCO
Denver, Colorado Funds Group, Inc.; Senior Vice
Age: 51 President, Secretary and General
Counsel of INVESCO Distributors,
Inc.; Secretary, INVESCO Global
Health Sciences Fund; formerly,
General Counsel of INVESCO Trust
Company (1989 to 1998); formerly,
employee of a U.S. regulatory
agency, Washington, D.C. (1973 to
1989).
<PAGE>
POSITION HELD WITH PRINCIPAL OCCUPATION(S)
NAME, ADDRESS, AND AGE COMPANY DURING PAST FIVE YEARS
- ---------------------- ------------------ ----------------------
Ronald L. Grooms Chief Accounting Officer, Senior Vice President and
7800 E. Union Avenue Chief Financial Officer and Treasurer of INVESCO Funds Group,
Denver, Colorado Treasurer Inc.; Senior Vice President and
Age: 52 Treasurer of INVESCO Dis-
tributors, Inc.; Treasurer,
Principal Financial and Accounting
Officer of INVESCO Global Health
Sciences Fund; formerly, Senior
Vice President and Treasurer of
INVESCO Trust Company (1988 to
1998).
William J. Galvin, Jr. Assistant Secretary Senior Vice President of INVESCO
7800 E. Union Avenue Funds Group, Inc.; Senior Vice
Denver, Colorado President of INVESCO Distributors,
Age: 42 Inc.; formerly, Trust Officer of
INVESCO Trust Company.
Pamela J. Piro Assistant Treasurer Vice President of INVESCO Funds
7800 E. Union Avenue Group, Inc.; formerly, Assistant
Denver, Colorado Vice President (1996 to 1997),
Age: 38 Director - Portfolio Accounting
(1994 to 1996), Portfolio Account
ing Manager (1993 to 1994) and
Assistant Accounting Manager (1990
to 1993).
Alan I. Watson Assistant Secretary Vice President of INVESCO Funds
7800 E. Union Avenue Group, Inc.; formerly, Trust
Denver, Colorado Officer of INVESCO Trust Company.
Age: 57
<PAGE>
POSITION HELD WITH PRINCIPAL OCCUPATION(S)
NAME, ADDRESS, AND AGE COMPANY DURING PAST FIVE YEARS
- ---------------------- ------------------ ----------------------
Judy P. Wiese Assistant Treasurer Vice President of INVESCO Funds
7800 E. Union Avenue Group, Inc.; formerly, Trust
Denver, Colorado Officer of INVESCO Trust Company.
Age: 51
</TABLE>
# Member of the audit committee of the Company.
+ Member of the executive committee of the Company. On occasion, the
executive committee acts upon the current and ordinary business of the Company
between meetings of the board of directors. Except for certain powers which,
under applicable law, may only be exercised by the full board of directors, the
executive committee may exercise all powers and authority of the board of
directors in the management of the business of the Company. All decisions are
subsequently submitted for ratification by the board of directors.
* These directors are "interested persons" of the Company as defined in the
1940 Act.
** Member of the management liaison committee of the Company.
@ Member of the soft dollar brokerage committee of the Company.
! Member of the derivatives committee of the Company.
The following table shows the compensation paid by the Company to its
Independent Directors for services rendered in their capacities as directors of
the Company; the benefits accrued as Company expenses with respect to the
Defined Benefit Deferred Compensation Plan discussed below; and the estimated
annual benefits to be received by these directors upon retirement as a result of
their service to the Company, all for the fiscal year ended May 31, 1999.
<PAGE>
In addition, the table sets forth the total compensation paid by all of the
INVESCO Funds and INVESCO Global Health Sciences Fund (collectively, the
"INVESCO Complex") to these directors for services rendered in their capacities
as directors during the year ended December 31, 1998. As of December 31, 1998,
there were 16 funds in the INVESCO Complex.
- --------------------------------------------------------------------------------
Name of Person Aggregate Benefits Estimated Total
and Position Compensation Accrued As Annual Compensation
From Part of Benefits From INVESCO
Company(1) Company Upon Complex Paid
Expenses(2) Retirement(3) To Directors(6)
- --------------------------------------------------------------------------------
Fred A. Deering, $4,671 $3,014 $2,036 $103,700
Vice Chairman of
the Board
- --------------------------------------------------------------------------------
Victor L. Andrews 4,345 2,883 2,244 80,350
- --------------------------------------------------------------------------------
Bob R. Baker 4,423 2,574 3,007 84,000
- --------------------------------------------------------------------------------
Lawrence H. Budner 4,330 2,883 2,244 79,350
- --------------------------------------------------------------------------------
Daniel D. Chabris(4) 2,752 2,946 1,846 70,000
- --------------------------------------------------------------------------------
Wendy L. Gramm 4,280 0 0 79,000
- --------------------------------------------------------------------------------
Kenneth T. King 4,573 3,076 1,846 77,050
- --------------------------------------------------------------------------------
John W. McIntyre 4,555 0 0 98,500
- --------------------------------------------------------------------------------
Larry Soll 4,280 0 0 96,000
- --------------------------------------------------------------------------------
Total $38,209 $17,376 $13,233 $767,950
- --------------------------------------------------------------------------------
% of Net Assets 0.0039%(5) 0.0018%(5) 0.0035%(6)
- --------------------------------------------------------------------------------
(1) The vice chairman of the board, the chairmen of the Funds' committees who
are Independent Directors, and the members of the Funds' committees who are
Independent Directors each receive compensation for serving in such capacities
in addition to the compensation paid to all Independent Directors.
(2) Represents estimated benefits accrued with respect to the Defined Benefit
Deferred Compensation Plan discussed below, and not compensation deferred at the
election of the directors.
(3) These amounts represent the Company's share of the estimated annual
benefits payable by the INVESCO Complex upon the directors' retirement,
calculated using the current method of allocating director compensation among
the INVESCO Complex. These estimated benefits assume retirement at age 72 and
further assume that the basic retainer payable to the directors will be adjusted
periodically for inflation, for increases in the number of funds in the INVESCO
Complex, and for other reasons during the period in which retirement benefits
are accrued on behalf of the respective directors. This results in lower
<PAGE>
estimated benefits for directors who are closer to retirement and higher
estimated benefits for directors who are further from retirement. With the
exception of Drs. Soll and Gramm, each of these directors has served as a
director of one or more of the funds in the INVESCO Complex for the minimum
five-year period required to be eligible to participate in the Defined Benefit
Deferred Compensation Plan. Although Mr. McIntyre became eligible to participate
in the Defined Benefit Deferred Compensation Plan as of November 1, 1998, he
will not be included in the calculation of retirement benefits until November 1,
1999.
(4) Mr. Chabris retired as a director of the Company on September 30, 1998.
(5) Totals as a percentage of the Company's net assets as of May 31, 1999.
(6) Total as a percentage of the net assets of the INVESCO Complex as of
December 31, 1998.
Messrs. Brady and Williamson, as "interested persons" of the Company and the
other INVESCO Funds, receive compensation as officers or employees of INVESCO or
its affiliated companies, and do not receive any director's fees or other
compensation from the Company or the other funds in the INVESCO Funds for their
service as directors.
The boards of directors of the mutual funds in the INVESCO Funds have adopted a
Defined Benefit Deferred Compensation Plan (the "Plan") for the Independent
Directors of the funds. Under this Plan, each director who is not an interested
person of the funds (as defined in Section 2(a)(19) of the 1940 Act) and who has
served for at least five years (a "Qualified Director") is entitled to receive,
upon termination of service as a director (normally, at the retirement age of 72
or the retirement age of 73 or 74, if the retirement date is extended by the
boards for one or two years, but less than three years), continuation of payment
for one year (the "First Year Retirement Benefit") of the annual basic retainer
and annualized board meeting fees payable by the funds to the Qualified Director
at the time of his/her retirement (the "Basic Benefit"). Commencing with any
such director's second year of retirement, and commencing with the first year of
retirement of a director whose retirement has been extended by the board for up
to three years, a Qualified Director shall receive quarterly payments at an
annual rate equal to 50% of the Basic Benefit. These payments will continue for
the remainder of the Qualified Director's life or ten years, whichever is longer
(the "Reduced Benefit Payments"). If a Qualified Director dies or becomes
disabled after age 72 and before age 74 while still a director of the funds, the
First Year Retirement Benefit and Reduced Benefit Payments will be made to
him/her or to his/her beneficiary or estate. If a Qualified Director becomes
disabled or dies either prior to age 72 or during his/her 74th year while still
a director of the funds, the director will not be entitled to receive the First
Year Retirement Benefit; however, the Reduced Benefit Payments will be made to
his/her beneficiary or estate. The Plan is administered by a committee of three
directors who are also participants in the Plan and one director who is not a
Plan participant. The cost of the Plan will be allocated among the INVESCO Funds
in a manner determined to be fair and equitable by the committee. The Company
began making payments under the Plan to Mr. Chabris as of October 1, 1998. The
Company has no stock options or other pension or retirement plans for management
<PAGE>
or other personnel and pays no salary or compensation to any of its officers. A
similar plan has been adopted by INVESCO Global Health Sciences Fund board of
trustees. All trustees of INVESCO Global Health Sciences Fund are also directors
of the INVESCO Funds.
The Independent Directors have contributed to a deferred compensation plan,
pursuant to which they have deferred receipt of a portion of the compensation
which they would otherwise have been paid as directors of certain of the INVESCO
Funds. The deferred amounts have been invested in the shares of certain INVESCO
Funds, except Funds offered by INVESCO Variable Investment Funds, Inc., in which
the directors are legally precluded from investing. Each Independent Director
may, therefore, be deemed to have an indirect interest in shares of each such
INVESCO Fund, in addition to any INVESCO Fund shares the Independent Directors
may own either directly or beneficially.
CONTROL PERSONS AND PRINCIPAL SHAREHOLDER
As of June 30, 1999, no persons owned more than 5% of the outstanding shares of
the Funds.
As of July 14, 1999, officers and directors of the Company, as a group,
beneficially owned less than 4% of any Fund's outstanding shares.
DISTRIBUTOR
INVESCO Distributors, Inc. ("IDI"), a wholly owned subsidiary of INVESCO, is the
distributor of the Funds.
OTHER SERVICE PROVIDERS
INDEPENDENT ACCOUNTANTS
PricewaterhouseCoopers LLP, 950 Seventeenth Street, Suite 2500, Denver,
Colorado, are the independent accountants of the Company. The independent
accountants are responsible for auditing the financial statements of the Funds.
CUSTODIAN
State Street Bank and Trust Company, P.O. Box 351, Boston, Massachusetts, is the
custodian of the cash and investment securities of the Company. The custodian is
also responsible for, among other things, receipt and delivery of each Fund's
investment securities in accordance with procedures and conditions specified in
the custody agreement with the Company. The custodian is authorized to establish
separate accounts in foreign countries and to cause foreign securities owned by
the Funds to be held outside the United States in branches of U.S. banks and, to
the extent permitted by applicable regulations, in certain foreign banks and
securities depositories.
<PAGE>
TRANSFER AGENT
INVESCO Funds Group, Inc., 7800 E. Union Avenue, Denver, Colorado, is the
Company's transfer agent, registrar, and dividend disbursing agent. Services
provided by INVESCO include the issuance, cancellation and transfer of shares of
the Funds, and the maintenance of records regarding the ownership of such
shares.
LEGAL COUNSEL
The firm of Kirkpatrick & Lockhart LLP, 1800 Massachusetts Avenue, N.W., 2nd
Floor, Washington, D.C., is legal counsel for the Company. The firm of Moye,
Giles, O'Keefe, Vermeire & Gorrell LLP, 1225 17th Street, Suite 2900, Denver,
Colorado, acts as special counsel to the Company.
BROKERAGE ALLOCATION AND OTHER PRACTICES
As the investment adviser to the Funds, INVESCO places orders for the purchase
and sale of securities with broker-dealers based upon an evaluation of the
financial responsibility of the broker-dealers and the ability of the
broker-dealers to effect transactions at the best available prices.
Consistent with the standard of seeking to obtain favorable execution on
portfolio transactions, INVESCO may select brokers that provide research
services to INVESCO and the Company, as well as mutual funds and other accounts
managed by INVESCO. Research services include statistical and analytical reports
relating to issuers, industries, securities and economic factors and trends,
which may be of assistance or value to INVESCO in making informed investment
decisions. Research services prepared and furnished by brokers through which a
Fund effects securities transactions may be used by INVESCO in servicing all of
its accounts and not all such services may be used by INVESCO in connection with
a particular Fund. Conversely, a Fund receives benefits of research acquired
through the brokerage transactions of other clients of INVESCO.
Because the securities that the Funds invest in are generally traded on a
principal basis, it is unusual for a Fund to pay any brokerage commissions. The
Funds paid no brokerage commissions for the fiscal years ended May 31, 1999,
1998 and 1997. For the fiscal year ended May 31, 1999, brokers providing
research services received $0 in commissions on portfolio transactions effected
for the Funds. The aggregate dollar amount of such portfolio transactions was
$0. Commissions totaling $0 were allocated to certain brokers in recognition of
their sales of shares of the Funds on portfolio transactions of the Funds
effected during the fiscal year ended May 31, 1999.
<PAGE>
At May 31, 1999, each Fund held debt securities of its regular brokers or
dealers, or their parents, as follows:
- --------------------------------------------------------------------------------
Fund Broker or Dealer Value of Securities
at May 31, 1999
- --------------------------------------------------------------------------------
Cash Reserves Heller Financial $45,000,000.00
- --------------------------------------------------------------------------------
American Express Credit $43,000,000.00
- --------------------------------------------------------------------------------
General Electric Company $43,000,000.00
- --------------------------------------------------------------------------------
Associates Corp of $40,000,000.00
North America
- --------------------------------------------------------------------------------
Ford Motor Credit $40,000,000.00
- --------------------------------------------------------------------------------
Morgan Stanley Dean Witter $39,994,654.31
- --------------------------------------------------------------------------------
Household Finance $38,000,000.00
- --------------------------------------------------------------------------------
General Motors Acceptance $31,822,934.33
- --------------------------------------------------------------------------------
Merrill Lynch $19,973,171.93
- --------------------------------------------------------------------------------
State Street Bank and Trust $2,940,000.00
- --------------------------------------------------------------------------------
Tax-Free Money General Electric Capital $2,200,000.00
- --------------------------------------------------------------------------------
U.S. Government Money State Street Bank and Trust $13,205,000.00
- --------------------------------------------------------------------------------
Neither INVESCO nor any affiliate of INVESCO receives any brokerage commissions
on portfolio transactions effected on behalf of the Funds, and there is no
affiliation between INVESCO or any person affiliated with INVESCO or the Funds
and any broker or dealer that executes transactions for the Funds.
CAPITAL STOCK
The Company is authorized to issue up to ten billion shares of common stock with
a par value of $0.01 per share. As of June 30, 1999, the following shares of
each Fund were outstanding:
<PAGE>
Cash Reserves Fund 732,017,795
Tax-Free Money Fund 44,048,426
U.S. Government Money Fund 82,512,836
All shares of each Fund are of one class with equal rights as to voting,
dividends and liquidation. All shares issued and outstanding are, and all shares
offered hereby when issued will be, fully paid and nonassessable. The board of
directors has the authority to designate additional classes of common stock
without seeking the approval of shareholders and may classify and reclassify any
authorized but unissued shares.
Shares have no preemptive rights and are freely transferable on the books of
each Fund.
All shares of the Company have equal voting rights based on one vote for each
share owned. The Company is not generally required and does not expect to hold
regular annual meetings of shareholders. However, when requested to do so in
writing by the holders of 10% or more of the outstanding shares of the Company
or as may be required by applicable law or the Company's Articles of
Incorporation, the board of directors will call special meetings of
shareholders.
Directors may be removed by action of the holders of a majority of the
outstanding shares of the Company. The Funds will assist shareholders in
communicating with other shareholders as required by the Investment Company Act
of 1940.
Fund shares have noncumulative voting rights, which means that the holders of a
majority of the shares of the Company voting for the election of directors of
the Company can elect 100% of the directors if they choose to do so. If that
occurs, the holders of the remaining shares voting for the election of directors
will not be able to elect any person or persons to the board of directors.
Directors may be removed by action of the holders of a majority of the
outstanding shares of the Company.
TAX CONSEQUENCES OF OWNING SHARES OF A FUND
Each Fund intends to continue to conduct its business and satisfy the applicable
diversification of assets, distribution and source of income requirements to
qualify as a regulated investment company under Subchapter M of the Internal
Revenue Code of 1986, as amended. Each Fund qualified as a regulated investment
company and intends to continue to qualify during its current fiscal year. It is
the policy of each Fund to distribute all investment company taxable income. As
a result of this policy and the Funds' qualifications as regulated investment
companies, it is anticipated that none of the Funds will pay federal income or
excise taxes and that the Funds will be accorded conduit or "pass through"
treatment for federal income tax purposes. Therefore, any taxes that a Fund
would ordinarily owe are paid by its shareholders on a pro-rata basis. If a Fund
does not distribute all of its net investment income, it will be subject to
income and excise tax on the amount that is not distributed. If a Fund does not
qualify as a regulated investment company, it will be subject to corporate tax
on its net investment income at the corporate tax rates.
<PAGE>
Tax-Free Money Fund intends to qualify to pay "exempt-interest dividends" to its
shareholders. The Fund will qualify if at least 50% of the value of its total
assets are invested in municipal securities at the end of each quarter of the
Fund's fiscal year. The exempt interest portion of the monthly income dividend
may be based on the ratio of that Fund's tax-exempt income to taxable income for
the entire fiscal year. The ratio is calculated and reported to shareholders at
the end of each fiscal year of the Fund. The tax-exempt portion of any
particular dividend may be based on the tax-exempt portion of all distributions
for the year, rather than on the tax-exempt portion of that particular dividend.
A corporation includes exempt-interest dividends in calculating its alternative
minimum taxable income in situations where the adjusted current earnings of the
corporation exceed its alternative minimum taxable income.
Entities or persons who are "substantial users" (or persons related to
"substantial users") of facilities financed by private activity bonds or
industrial development bonds should consult their tax advisers before purchasing
shares of the Tax-Exempt Fund because, for users of certain of these facilities,
the interest on such bonds is not exempt from federal income tax. For these
purposes, the term "substantial user" is defined generally to include a
"non-exempt person" who regularly uses in trade or business a part of a facility
financed from the proceeds of such bonds.
The Funds' investment objectives and policies, including their policy of
attempting to maintain a net asset value of $1.00 per share, make it unlikely
that any capital gains will be paid to investors. However, the Fund cannot
guarantee that such a net asset value will be maintained. Accordingly, a
shareholder may realize a capital gain or loss upon redemption of shares of a
Fund. Capital gain or loss on shares held for one year or less is classified as
short-term capital gain or loss while capital gain or loss on shares held for
more than one year is classified as long-term capital gain or loss. Any loss
realized on the redemption of fund shares held for six months or less is
nondeductible to the extent of any exempt-interest dividends paid with respect
to such shares. Each Fund will be subject to a nondeductible 4% excise tax to
the extent it fails to distribute by the end of any calendar year substantially
all of its ordinary income for that year and its net capital gains for the
one-year period ending on October 31 of that year, plus certain other amounts.
You should consult your own tax adviser regarding specific questions as to
federal, state and local taxes. Dividends will generally be subject to
applicable state and local taxes. Qualification as a regulated investment
company under the Internal Revenue Code of 1986, as amended, for income tax
purposes does not entail government supervision of management or investment
policies.
PERFORMANCE
To keep shareholders and potential investors informed, INVESCO will occasionally
advertise the Funds' total returns for one-, five-, and ten-year periods (or
since inception). Total return figures show the rate of return on a $10,000
investment in a Fund, assuming reinvestment of all dividends for the periods
cited.
Cumulative total return shows the actual rate of return on an investment for the
period cited; average annual total return represents the average annual
percentage change in the value of an investment. Both cumulative and average
annual total returns tend to "smooth out" fluctuations in a Fund's investment
results, because they do not show the interim variations in performance over the
<PAGE>
periods cited. More information about the Funds' recent and historical
performance is contained in the Company's Annual Report to Shareholders. You can
get a free copy by calling or writing to INVESCO using the phone number or
address on the back cover of the Funds' prospectus.
We may also advertise a Fund's "yield" and "effective yield." Both yield figures
are based on historical earnings and are not intended to indicate future
performance. The "yield" of a Fund refers to the income generated by an
investment in the Fund over a seven-day period (which period will be stated in
the advertisement). This income is then "annualized." That is, the amount of
income generated by the investment during that week is assumed to be generated
each week over a 52-week period and is shown as a percentage of the investment.
The "effective yield" is calculated similarly but, when annualized, the income
earned by an investment in the Fund is assumed to be reinvested. The "effective
yield" will be slightly higher than the "yield" because of the compounding
effect of this assumed reinvestment. For the seven days ended May 31, 1999, Cash
Reserves Fund's current and effective yields were 4.00% and 4.08%, respectively;
Tax-Free Money Fund's current and effective yields were 2.61% and 2.64%,
respectively; and U.S. Government Money Fund's current and effective yields were
4.00% and 4.08%, respectively.
When we quote mutual fund rankings published by Lipper Inc., we may compare a
Fund to others in its appropriate Lipper category, as well as the broad-based
Lipper general fund groupings. These rankings allow you to compare a Fund to its
peers. Other independent financial media also produce performance- or
service-related comparisons, which you may see in our promotional materials.
Performance figures are based on historical earnings and are not intended to
suggest future performance.
Average annual total return performance for the one-, five-, and ten-year
periods ended May 31, 1999 was:
Name of Fund 1 Year 5 Year 10 Year
- ------------ ------ ------ -------
Cash Reserves Fund 4.45% 4.74% 4.87%
Tax-Free Money Fund 2.63% 2.90% 3.19%
U.S. Government Money Fund 4.36% 4.65% 4.07%*
* Inception date of April 26, 1991
Average annual total return performance for each of the periods indicated was
computed by finding the average annual compounded rates of return that would
equate the initial amount invested to the ending redeemable value, according to
the following formula:
P(1 + T)n = ERV
<PAGE>
where: P = a hypothetical initial payment of $10,000
T = average annual total return
n = number of years
ERV = ending redeemable value of initial payment
The average annual total return performance figures shown above were determined
by solving the above formula for "T" for each time period indicated.
In conjunction with performance reports, comparative data between a Fund's
performance for a given period and other types of investment vehicles, including
certificates of deposit, may be provided to prospective investors and
shareholders.
In conjunction with performance reports and/or analyses of shareholder services
for a Fund, comparative data between that 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, Inc., Lehman Brothers, National Association of
Securities Dealers Automated Quotations, Frank Russell Company, Value Line
Investment Survey, the American Stock Exchange, Morgan Stanley Capital
International, Wilshire Associates, the Financial Times Stock Exchange, the New
York Stock Exchange, the Nikkei Stock Average and Deutcher Aktienindex, all of
which are unmanaged market indicators. In addition, rankings, ratings, and
comparisons of investment performance and/or assessments of the quality of
shareholder service made by independent sources may be used in advertisements,
sales literature or shareholder reports, including reprints of, or selections
from, editorials or articles about the Fund. These sources utilize information
compiled (i) internally; (ii) by Lipper Inc.; or (iii) by other recognized
analytical services. The Lipper Inc. mutual fund rankings and comparisons which
may be used by the Fund in performance reports will be drawn from the Money
Market Funds mutual fund groupings for Cash Reserves Fund, the Tax-Exempt Money
Market Funds mutual fund groupings for Tax-Free Money Fund, and the U.S.
Government Money Market Funds mutual fund grouping for U.S. Government Money
Fund, in addition to the broad-based Lipper general fund groupings:
Sources for Fund performance information and articles about the Funds include,
but are not limited to, the following:
AMERICAN ASSOCIATION OF INDIVIDUAL INVESTORS' JOURNAL
BANXQUOTE
BARRON'S
BUSINESS WEEK
CDA INVESTMENT TECHNOLOGIES
CNBC
CNN
CONSUMER DIGEST
FINANCIAL TIMES
FINANCIAL WORLD
FORBES
FORTUNE
<PAGE>
IBBOTSON ASSOCIATES, INC.
INSTITUTIONAL INVESTOR
INVESTMENT COMPANY DATA, INC.
INVESTOR'S BUSINESS DAILY
KIPLINGER'S PERSONAL FINANCE
LIPPER INC.'S MUTUAL FUND PERFORMANCE ANALYSIS
MONEY
MORNINGSTAR
MUTUAL FUND FORECASTER
NO-LOAD ANALYST
NO-LOAD FUND X
PERSONAL INVESTOR
SMART MONEY
THE NEW YORK TIMES
THE NO-LOAD FUND INVESTOR
U.S. NEWS AND WORLD REPORT
UNITED MUTUAL FUND SELECTOR
USA TODAY
THE WALL STREET JOURNAL
WIESENBERGER INVESTMENT COMPANIES SERVICES
WORKING WOMAN
WORTH
FINANCIAL STATEMENTS
The financial statements for the Company for the fiscal year ended May 31, 1999
are incorporated herein by reference from the Company's Annual Report to
Shareholders dated May 31, 1999.
<PAGE>
APPENDIX A
Some of the terms used in the Statement of Additional Information are
described below.
BANK OBLIGATIONS include certificates of deposit which are negotiable
certificates evidencing the indebtedness of a commercial bank to repay funds
deposited with it for a definite period of time (usually from 14 days to one
year) at a stated interest rate.
BANKERS' ACCEPTANCES are credit instruments evidencing the obligation of a
bank to pay a draft which has been drawn on it by a customer. These instruments
reflect the obligation both of the bank and of the drawer to pay the face amount
of the instrument upon maturity.
BOND ANTICIPATION NOTES normally are issued to provide interim financing
until long-term financing can be arranged. The long-term bonds then provide the
money for the repayment of the Notes.
BONDS: MUNICIPAL BONDS may be issued to raise money for various public
purposes -- like constructing public facilities and making loans to public
institutions. Certain types of municipal bonds, such as certain project notes,
are backed by the full faith and credit of the United States. Certain types of
municipal bonds are issued to obtain funding for privately operated facilities.
The two principal classifications of municipal bonds are "general obligation"
and "revenue" bonds. General obligation bonds are backed by the taxing power of
the issuing municipality and are considered the safest type of municipal bond.
Issuers of general obligation bonds include states, counties, cities, towns and
regional districts. The proceeds of these obligations are used to fund a wide
range of public projects including the construction or improvement of schools,
highways and roads, water and sewer systems and a variety of other public
purposes. The basic security of general obligation bonds is the issuer's pledge
of its faith, credit, and taxing power for the payment of principal and
interest. Revenue bonds are backed by the net revenues derived from a particular
facility or group of facilities of a municipality or, in some cases, from the
proceeds of a special excise or other specific revenue source. Although the
principal security behind these bonds varies widely, many provide additional
security in the form of a debt service reserve fund whose monies may also be
used to make principal and interest payments on the issuer's obligations.
Industrial development revenue bonds are a specific type of revenue bond backed
by the credit and security of a private user and therefore investments in these
bonds have more potential risk. Although nominally issued by municipal
authorities, industrial development revenue bonds are generally not secured by
the taxing power of the municipality but are secured by the revenues of the
authority derived from payments by the industrial user.
COMMERCIAL PAPER consists of short-term (usually one to 180 days)
unsecured promissory notes issued by corporations in order to finance their
current operations.
CORPORATE DEBT OBLIGATIONS are bonds and notes issued by corporations and
other business organizations, including business trusts, in order to finance
their long-term credit needs.
MONEY MARKET refers to the marketplace composed of the financial
institutions which handle the purchase and sale of liquid, short-term,
high-grade debt instruments. The money market is not a single entity, but
<PAGE>
consists of numerous separate markets, each of which deals in a different type
of short-term debt instrument. These include U.S. government securities,
commercial paper, certificates of deposit and bankers' acceptances, which are
generally referred to as money market instruments.
PORTFOLIO SECURITIES LOANS: The Company, on behalf of each of the Funds,
may lend limited amounts of its portfolio securities (not to exceed 33 1/3% of a
particular Fund's total assets). Management of the Company understands that it
is the current view of the staff of the SEC that the Funds are permitted to
engage in loan transactions only if the following conditions are met: (1) the
applicable Fund must receive 100% collateral in the form of cash or cash
equivalents, e.g., U.S. Treasury bills or notes, from the borrower; (2) the
borrower must increase the collateral whenever the market value of the
securities (determined on a daily basis) rises above the level of the
collateral; (3) the Company must be able to terminate the loan after notice; (4)
the applicable Fund must receive reasonable interest on the loan or a flat fee
from the borrower, as well as amounts equivalent to any dividends, interest or
other distributions on the securities loaned and any increase in market value;
(5) the applicable Fund may pay only reasonable custodian fees in connection
with the loan; (6) voting rights on the securities loaned may pass to the
borrower; however, if a material event affecting the investment occurs, the
Company must be able to terminate the loan and vote proxies or enter into an
alternative arrangement with the borrower to enable the Company to vote proxies.
Excluding items (1) and (2), these practices may be amended from time to time as
regulatory provisions permit.
REPURCHASE AGREEMENTS: A repurchase agreement is a transaction in which a
Fund purchases a security and simultaneously commits to sell the security to the
seller at an agreed upon price and date (usually not more than seven days) after
the date of purchase. The resale price reflects the purchase price plus an
agreed upon market rate of interest which is unrelated to the coupon rate or
maturity of the purchased security. A Fund's risk is limited to the ability of
the seller to pay the agreed upon amount on the delivery date. In the opinion of
management this risk is not material; if the seller defaults, the underlying
security constitutes collateral for the seller's obligations to pay. This
collateral will be held by the custodian for the Company's assets. However, in
the absence of compelling legal precedents in this area, there can be no
assurance that the Company will be able to maintain its rights to such
collateral upon default of the issuer of the repurchase agreement. To the extent
that the proceeds from a sale upon a default in the obligation to repurchase are
less than the repurchase price, the particular Fund would suffer a loss.
REVENUE ANTICIPATION NOTES are issued in expectation of receipt of other
kinds of revenue, such as federal revenues available under the Federal Revenue
Sharing Program.
REVERSE REPURCHASE AGREEMENTS are transactions where a Fund temporarily
transfers possession of a portfolio security to another party, such as a bank or
broker-dealer, in return for cash, and agrees to buy the security back at a
future date and price. The use of reverse repurchase agreements will create
leverage, which is speculative. Reverse repurchase agreements are borrowings
subject to the Funds' investment restrictions applicable to that activity. The
Company will enter into reverse repurchase agreements solely for the purpose of
obtaining funds necessary for meeting redemption requests. The proceeds received
from a reverse repurchase agreement will not be used to purchase securities for
investment purposes.
<PAGE>
SHORT-TERM DISCOUNT NOTES (tax-exempt commercial paper) are promissory
notes issued by municipalities to supplement their cash flow. The ratings A-1
and P-1 are the highest commercial paper ratings assigned by S&P and Moody's,
respectively.
TAX ANTICIPATION NOTES are to finance working capital needs of
municipalities and are issued in anticipation of various seasonal tax revenues,
to be payable from these specific future taxes.
TIME DEPOSITS are non-negotiable deposits maintained in a banking
institution for a specified period of time at a stated interest rate. Time
deposits which may be held by the Funds will not benefit from insurance from the
Federal Deposit Insurance Corporation.
U.S. GOVERNMENT SECURITIES are debt securities (including bills, notes,
and bonds) issued by the U.S. Treasury or issued by an agency or instrumentality
of the U.S. government which is established under the authority of an Act of
Congress. Such agencies or instrumentalities include, but are not limited to,
Fannie Mae, Ginnie Mae (also known as Government National Mortgage Association),
the Federal Farm Credit Bank, and the Federal Home Loan Banks. Although all
obligations of agencies, authorities and instrumentalities are not direct
obligations of the U.S. Treasury, payment of the interest and principal on these
obligations may be backed directly or indirectly by the U.S. government. This
support can range from the backing of the full faith and credit of the United
States to U.S. Treasury guarantees, or to the backing solely of the issuing
instrumentality itself. In the case of securities not backed by the full faith
and credit of the United States, the investor must look principally to the
agency issuing or guaranteeing the obligation for ultimate repayment, and may
not be able to assert a claim against the United States itself in the event the
agency or instrumentality does not meet its commitments.
RATINGS OF MUNICIPAL AND CORPORATE DEBT OBLIGATIONS
The four highest ratings of Moody's and S&P for municipal and corporate
debt obligations are Aaa, Aa, A and Baa and AAA, AA, A and BBB, respectively.
MOODY'S. The characteristics of these debt obligations rated
by Moody's are generally as follows:
Aaa -- Bonds which are rated Aaa are judged to be of the best quality.
They carry the smallest degree of investment risk and are generally referred to
as "gilt edge." Interest payments are protected by a large or by an
exceptionally stable margin and principal is secure. While the various
protective elements are likely to change, such changes as can be visualized are
most unlikely to impair the fundamentally strong position of such issues.
Aa -- Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are generally known as
high grade bonds. They are rated lower than the best bonds because margins of
protection may not be as large as in Aaa securities or fluctuation of protective
elements may be of greater amplitude or there may be other elements present
which make the long-term risks appear somewhat larger than in Aaa securities.
Moody's applies the numerical modifiers 1, 2 and 3 to the Aa rating
classification. The modifier 1 indicates a ranking for the security in the
higher end of this rating category; the modifier 2 indicates a mid- range
<PAGE>
ranking; and the modifier 3 indicates a ranking in the lower end of this rating
category.
A -- Bonds which are rated A possess many favorable investment attributes
and are to be considered as upper medium grade obligations. Factors giving
security to principal and interest are considered adequate but elements may be
present which suggest a susceptibility to impairment sometime in the future.
Baa -- Bonds which are rated Baa are considered as medium grade
obligations, i.e., they are neither highly protected nor poorly secured.
Interest payments and principal security appear adequate for the present but
certain protective elements may be lacking or may be characteristically
unreliable over any great length of time. Such bonds lack outstanding investment
characteristics and in fact have speculative characteristics as well.
Moody's ratings for state and municipal notes and other short-term loans
are designated Moody's Investment Grade ("MIG"). This distinction is in
recognition of the difference between short-term credit and long-term credit. A
short-term rating may also be assigned on an issue having a demand feature. Such
ratings are designated as VMIG. Short-term ratings on issues with demand
features are differentiated by the use of the VMIG symbol to reflect such
characteristics as payment upon demand rather than fixed maturity dates and
payment relying on external liquidity.
MIG 1/VMIG 1 -- Notes and loans bearing this designation are of the best
quality, enjoying strong protection from established cash flows of funds for
their servicing or from established and broad-based access to the market for
refinancing, or both.
MIG 2/VMIG 2 -- Notes and loans bearing this designation are of high
quality, with margins of protection ample although not so large as in the
preceding group.
S&P'S RATING SERVICES. The characteristics of these debt obligations rated by
S&P are generally as follows:
AAA -- This is the highest rating assigned by Standard & Poor's to a debt
obligation and indicates an extremely strong capacity to pay principal and
interest.
AA -- Bonds rated AA also qualify as high quality debt obligations.
Capacity to pay principal and interest is very strong, and in the majority of
instances they differ from AAA issues only in small degree.
A -- Debt rated A has a strong capacity to pay interest and repay
principal although it is somewhat more susceptible to the adverse effects of
changes in circumstances and economic conditions than debt in higher rated
categories.
BBB -- Debt rated BBB is regarded as having an adequate capacity to pay
interest and repay principal. Whereas it normally exhibits adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay interest and repay principal for
debt in this category than in higher rated categories.
<PAGE>
S&P ratings for short-term notes are as follows:
SP-1 -- Very strong capacity to pay principal and interest.
SP-2 -- Satisfactory capacity to pay principal and interest.
SP-3 -- Speculative capacity to pay principal and interest.
A debt rating is not a recommendation to purchase, sell or hold a
security, inasmuch as it does not comment as to market price or suitability for
a particular investor.
RATINGS OF COMMERCIAL PAPER
DESCRIPTION OF MOODY'S COMMERCIAL PAPER RATINGS. Among the factors
considered by Moody's Investors Services, Inc. in assigning commercial paper
ratings are the following: (1) evaluation of the management of the issuer; (2)
economic evaluation of the issuer's industry or industries and an appraisal of
the risks which may be inherent in certain areas; (3) evaluation of the issuer's
products in relation to competition and customer acceptance; (4) liquidity; (5)
amount and quality of long-term debt; (6) trend of earnings over a period of ten
years; (7) financial strength of a parent company and the relationships which
exist with the issuer; and (8) recognition by the management of obligations
which may be present or may arise as a result of public interest questions and
preparations to meet such obligations. Relative differences in strength and
weakness in respect to these criteria would establish a rating of one of three
classifications; P-1 (Highest Quality), P-2 (Higher Quality) or P-3 (High
Quality).
DESCRIPTION OF S&P COMMERCIAL PAPER RATINGS. An S&P commercial paper
rating is a current assessment of the likelihood of timely payment of debt
having an original maturity of no more than 365 days. Ratings are graded into
four categories, ranging from "A" for the highest quality obligations to "D" for
the lowest. The "A" categories are as follows:
A -- Issues assigned this highest rating are regarded as having the
greatest capacity for timely payment. Issues in this category are delineated
with the numbers 1, 2, and 3 to indicate the relative degree of safety.
A-1 -- This designation indicates that the degree of safety regarding
timely payment is either overwhelming or very strong.
A-2 -- Capacity for timely payment on issues with this designation is
strong. However, the relative degree of safety is not as high as for issues
designated A-1.
A-3 -- Issues carrying this designation have a satisfactory capacity for
timely payment. They are, however, somewhat more vulnerable to the adverse
effects of changes in circumstances than obligations carrying the higher
designations.
<PAGE>
PART C. OTHER INFORMATION
Item 23. Exhibits
(a) Articles of Incorporation(1).
(b) Bylaws(1).
(c) Not applicable.
(d)(1) Investment Advisory Agreement between Registrant and
INVESCO Funds Group, Inc. dated February 28, 1997(1).
(e)(1) General Distribution Agreement between Registrant and
INVESCO Funds Group, Inc. dated February 28, 1997(1).
(2) Distribution Agreement between Registrant and INVESCO
Distributors, Inc. dated September 30, 1997(2).
(f)(1) Defined Benefit Deferred Compensation Plan for
Non-Interested Directors and Trustees(1).
(2) Amended Defined Benefit Deferred Compensation Plan for
Non-Interested Directors and Trustees.
(g) Custody Agreement between Registrant and State Street Bank
and Trust Company dated July 1, 1993(1).
(1) Additional Fund Letter Agreement dated January 20, 1994 to
Custody Agreement(1).
(2) Amendment dated October 25, 1995 to Custody Agreement(1).
(3) Data Access Services Addendum to Custody Agreement(1).
(h)(1) Transfer Agency Agreement between Registrant and INVESCO
Funds Group, Inc. dated February 28, 1997(1).
(2) Administrative Services Agreement between Registrant and
INVESCO Funds Group, Inc. dated February 28, 1997(1).
(a) Amendment to Administrative Services Agreement dated
May 13, 1999.
(i) Opinion and consent of counsel as to the legality of the
securities being registered, indicating whether they will, when
sold, be legally issued, fully paid and non-assessable dated June
4, 1993(1).
(j) Consent of Independent Accountants.
(k) Not applicable.
<PAGE>
(l) Not Applicable.
(m) Not Applicable.
(n) Not Applicable.
(1)Previously filed on EDGAR with Post-Effective Amendment No. 33 to the
Registration Statement on July 30, 1997, and incorporated by reference herein.
(2)Previously filed on EDGAR with Post-Effective Amendment No. 34 to the
Registration Statement on September 28, 1998 and incorporated by reference
herein.
Item 24. Persons Controlled by or Under Common Control with the Fund
No person is presently controlled by or under common control with the Fund.
Item 25. Indemnification
Indemnification provisions for officers, directors and employees of Registrant
are set forth in Article Seventh of the Articles of Incorporation, and are
hereby incorporated by reference. See Item 23(a) above. Under these Articles,
directors and officers will be indemnified to the fullest extent permitted to
directors by the Maryland General Corporation Law, subject only to such
limitations as may be required by the Investment Company Act of 1940, as
amended, and the rules thereunder. Under the Investment Company Act of 1940,
Fund directors and officers cannot be protected against liability to a Fund or
its shareholders to which they would be subject because of willful misfeasance,
bad faith, gross negligence or reckless disregard of the duties of their office.
Each Fund also maintains liability insurance policies covering its directors and
officers.
Item 26. Business and Other Connections of Investment Adviser
See "Fund Management" in the Funds' Prospectus and "Management of the Funds" in
the Statement of Additional Information for information regarding the business
of the investment
adviser, INVESCO.
Following are the names and principal occupations of each director and officer
of the investment adviser, INVESCO. Certain of these persons hold positions with
IDI, a subsidiary of INVESCO, and, during the past two fiscal years, have held
positions with Institutional Trust Company d.b.a. INVESCO Trust Company, an
affiliate of INVESCO.
- --------------------------------------------------------------------------------
POSITION WITH PRINCIPAL OCCUPATION AND COMPANY
NAME ADVISER AFFILIATION
- --------------------------------------------------------------------------------
Mark H. Williamson Chairman, President & Chief Executive
Director and Officer
Officer INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
- --------------------------------------------------------------------------------
Raymond Roy Cunningham Officer Senior Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
William J. Galvin, Jr. Officer Senior Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
- --------------------------------------------------------------------------------
Ronald L. Grooms Officer Senior Vice President & Treasurer
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
- --------------------------------------------------------------------------------
Richard W. Healey Officer Senior Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
- --------------------------------------------------------------------------------
William Ralph Keithler Officer Senior Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
- --------------------------------------------------------------------------------
Charles P. Mayer Officer & Senior Vice President
Director INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
- --------------------------------------------------------------------------------
Timothy J. Miller Officer Senior Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
- --------------------------------------------------------------------------------
Donovan J. (Jerry) Paul Officer Senior Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
- --------------------------------------------------------------------------------
Glen A. Payne Officer Senior Vice President, Secretary
& General Counsel
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
- --------------------------------------------------------------------------------
John R. Schroer, II Officer Senior Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
- --------------------------------------------------------------------------------
Marie E. Aro Officer Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
- --------------------------------------------------------------------------------
Ingeborg S. Cosby Officer Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
Stacie Cowell Officer Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
- --------------------------------------------------------------------------------
Dawn Daggy-Mangerson Officer Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
- --------------------------------------------------------------------------------
Elroy E. Frye, Jr. Officer Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
- --------------------------------------------------------------------------------
Linda J. Gieger Officer Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
- --------------------------------------------------------------------------------
Mark D. Greenberg Officer Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
- --------------------------------------------------------------------------------
Brian B. Hayward Officer Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
- --------------------------------------------------------------------------------
Richard R. Hinderlie Officer Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
- --------------------------------------------------------------------------------
Thomas M. Hurley Officer Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
- --------------------------------------------------------------------------------
Patricia F. Johnston Officer Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
- --------------------------------------------------------------------------------
Campbell C. Judge Officer Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
- --------------------------------------------------------------------------------
Peter M. Lovell Officer Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
James F. Lummanick Officer Vice President & Assistant
General Counsel
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
- --------------------------------------------------------------------------------
Thomas A. Mantone, Jr. Officer Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
- --------------------------------------------------------------------------------
Trent E. May Officer Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
- --------------------------------------------------------------------------------
Corey M. McClintock Officer Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
- --------------------------------------------------------------------------------
Douglas J. McEldowney Officer Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
- --------------------------------------------------------------------------------
Frederick R. (Fritz) Meyer Officer Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
- --------------------------------------------------------------------------------
Stephen A. Moran Officer Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
- --------------------------------------------------------------------------------
Jeffrey G. Morris Officer Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
- --------------------------------------------------------------------------------
Laura M. Parsons Officer Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
- --------------------------------------------------------------------------------
Jon B. Pauley Officer Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
- --------------------------------------------------------------------------------
Pamela J. Piro Officer Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
Anthony R. Rogers Officer Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
- --------------------------------------------------------------------------------
Gary L. Rulh Officer Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
- --------------------------------------------------------------------------------
James B. Sandidge Officer Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
- --------------------------------------------------------------------------------
John S. Segner Officer Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
- --------------------------------------------------------------------------------
Terri B. Smith Officer Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
- --------------------------------------------------------------------------------
Tane T. Tyler Officer Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
- --------------------------------------------------------------------------------
Thomas R. Wald Officer Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
- --------------------------------------------------------------------------------
Alan I. Watson Officer Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
- --------------------------------------------------------------------------------
Judy P. Wiese Officer Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
- --------------------------------------------------------------------------------
Thomas H. Scanlan Officer Regional Vice President
INVESCO Funds Group, Inc.
12028 Edgepark Court
Potomac, MD 20854
- --------------------------------------------------------------------------------
Reagan A. Shopp Officer Regional Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
Michael D. Legoski Officer Assistant Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
- --------------------------------------------------------------------------------
Donald R. Paddack Officer Assistant Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
- --------------------------------------------------------------------------------
Kent T. Schmeckpeper Officer Assistant Vice President
Account Relationship Manager
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
- --------------------------------------------------------------------------------
Jeraldine E. Kraus Officer Assistant Secretary
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
- --------------------------------------------------------------------------------
Item 27. (a)
PRINCIPAL UNDERWRITERS
INVESCO Bond Funds, Inc.
INVESCO Combination Stock & Bond Funds, Inc.
INVESCO International Funds, Inc.
INVESCO Money Market Funds, Inc.
INVESCO Sector Funds, Inc.
INVESCO Specialty Funds, Inc.
INVESCO Stock Funds, Inc.
INVESCO Tax-Free Income Funds, Inc.
INVESCO Treasurer's Series Funds, Inc.
INVESCO Variable Investment Funds, Inc.
(b)
POSITIONS AND POSITIONS AND
NAME AND PRINCIPAL OFFICES WITH OFFICES WITH
BUSINESS ADDRESS UNDERWRITER THE COMPANY
- ------------------ ------------ -------------
William J. Galvin, Jr. Senior Vice Asst. Secretary
7800 E. Union Avenue President &
Denver, CO 80237 Asst. Secretary
Ronald L. Grooms Senior Vice Treasurer,
7800 E. Union Avenue President, Chief Fin'l
Denver, CO 80237 Treasurer, & Officer, and
Director Chief Acctg.
Off.
Richard W. Healey Senior Vice
7800 E. Union Avenue President &
Denver, CO 80237 Director
<PAGE>
Charles P. Mayer Director
7800 E. Union Avenue
Denver, CO 80237
Timothy J. Miller Director
7800 E. Union Avenue
Denver, CO 80237
Glen A. Payne Senior Vice Secretary
7800 E. Union Avenue President,
Denver, CO 80237 Secretary &
General Counsel
Judy P. Wiese Vice President
7800 E. Union Avenue Asst. Treasurer Asst. Secretary
Denver, CO 80237
Mark H. Williamson Chairman of the Board, President,
7800 E. Union Avenue President, & Chief CEO & Director
Denver, CO 80237 Executive Officer
(c) Not applicable.
Item 28. Location of Accounts and Records
--------------------------------
Mark H. Williamson
7800 E. Union Avenue
Denver, CO 80237
Item 29. Management Services
-------------------
Not applicable.
Item 30. Undertakings
------------
Not applicable
<PAGE>
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Fund has duly caused this post-effective
amendment to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Denver, County of Denver, and State of Colorado, on
the 28th day of July, 1999.
Attest: INVESCO Money Market Funds, Inc.
/s/ Glen A. Payne /s/ Mark H. Williamson
- ------------------------------ -----------------------------
Glen A. Payne, Secretary Mark H. Williamson, President
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed below by the following persons in the
capacities and on the date indicated.
/s/ Mark H. Williamson /s/ Lawrence H. Budner
- ------------------------------- -----------------------------
Mark H. Williamson, President & Lawrence H. Budner, Director
Director (Chief Executive Officer)
/s/ Ronald L. Grooms /s/ John W. McIntyre
- ------------------------------- -----------------------------
Ronald L. Grooms, Treasurer John W. McIntyre, Director
(Chief Financial and Accounting
Officer)
/s/ Victor L. Andrews /s/ Fred A. Deering
- ------------------------------- -----------------------------
Victor L. Andrews, Director Fred A. Deering, Director
/s/ Bob R. Baker /s/ Larry Soll
- ------------------------------- -----------------------------
Bob R. Baker, Director Larry Soll, Director
/s/ Charles W. Brady /s/ Kenneth T. King
- ------------------------------- -----------------------------
Charles W. Brady, Director Kenneth T. King, Director
/s/ Wendy L. Gramm
- -------------------------------
Wendy L. Gramm, Director
By*---------------------------- By* /s/ Glen A. Payne
-----------------------------
Edward F. O'Keefe Glen A. Payne
Attorney in Fact Attorney in Fact
* Original Powers of Attorney authorizing Edward F. O'Keefe and Glen A.
Payne, and each of them, to execute this post-effective amendment to the
Registration Statement of the Registrant on behalf of the above-named directors
and officers of the Registrant have been filed with the Securities and Exchange
Commission on April 12 and May 12, 1990, May 27, 1992, September 26, 1994,
September 21, 1995, July 30, 1997 and September 28, 1998, respectively.
<PAGE>
Exhibit Index
Page in
Exhibit Number Registration Statement
- -------------- ----------------------
f(2) 72
h(2)(a) 78
j 80
Exhibit f(2)
DEFINED BENEFIT DEFERRED COMPENSATION PLAN
FOR NON-INTERESTED DIRECTORS AND TRUSTEES
The registered, open-end management investment companies referred to on
Schedule A as the Schedule may hereafter be revised by the addition and deletion
of investment companies (the "Funds") have adopted this Defined Benefit Deferred
Compensation Plan ("Plan") for the benefit of those directors and trustees of
the Funds who are not interested directors or trustees thereof as defined in
Section 2(a)(19) of the Investment Company Act of 1940, as amended ("Independent
Directors").
1. Eligibility
Each Independent Director who has served as such ("Eligible Service")
on the boards of any of the Funds and their predecessor and successor entities,
if any, or as an Independent Director of the now-defunct investment management
company known as FG Series for an aggregate of at least five years at the time
of his Service Termination Date (as defined in paragraph 2) will be entitled to
receive benefits under the Plan. An Independent Director's period of Eligible
Service commences on the date of election to the board of directors or trustees
of any one or more of the Funds ("Board"). Hereafter, references in this Plan to
Independent Directors shall be deemed to include only those Directors who have
met the Eligible Service requirement for Plan participation.
2. Service Termination and Service Termination Date
a. Service Termination. Service Termination means termination of
service (other than by disability or death) of an Independent Director which
results from the Director's having reached his Service Termination Date.
b. Service Termination Date. An Independent Director's Service
Termination Date is normally the last day of the calendar quarter in which such
Director's seventy-second birthday occurs. A majority of the Board of a Fund may
annually extend a Director's Service Termination Date for a maximum period of
three years, through the date not later than the last day of the calendar
quarter in which such Director's seventy-fifth birthday occurs.
As used in this Plan unless otherwise stipulated, Service Termination
Date shall mean an Independent Director's normal Service Termination Date, or
the Director's extended Service Termination Date, whichever may be applicable to
the Independent Director.
3. Defined Payments and Benefit
a. Payments. If an Independent Director's Service Termination Date
occurs on a date not later than the last day of the calendar quarter in which
such Director's seventy-fourth birthday occurs, the Independent Director will
receive four quarterly payments during the first twelve months subsequent to his
<PAGE>
Service Termination Date (the "First Year Retirement Payments"), with each
payment to be equal to 50 percent of the annual basic retainer and annualized
board meeting fees payable by each Fund to the Independent Director on his
Service Termination Date (excluding any fees relating to chairing committees).
b. Benefit. Commencing with the first anniversary of the Service
Termination Date of any Independent Director who has received the First Year
Retirement Payments, and commencing as of the Service Termination Date of an
Independent Director whose Service Termination Date is subsequent to the date of
the last day of the calendar quarter in which such Director's seventy-fourth
birthday occurred, the Independent Director will receive, for the remainder of
his life, a benefit (the "Benefit"), payable quarterly, with each quarterly
payment to be equal to 50 percent of the annual basic retainer and annualized
board meeting fees payable by each Fund to the Independent Director on his
Service Termination Date (excluding any fees relating to chairing committees).
c. Death Provisions. If an Independent Director's service as a Director
is terminated because of his death subsequent to the last day of the calendar
quarter in which such Director's seventy-second birthday occurred and prior to
the last day of the calendar quarter in which such Director's seventy-fourth
birthday occurs, the designated beneficiary of the Independent Director shall
receive the First Year Retirement Payments and shall, commencing with the
quarter following the quarter in which the last First Year Retirement Payment is
made, receive the Benefit for a period of ten years, with quarterly payments to
be made to the designated beneficiary.
If an Independent Director's service as a Director is terminated
because of his death prior to the last day of the calendar quarter in which such
Director's seventy-second birthday occurs or subsequent to the last day of the
calendar quarter in which such Director's seventy-fourth birthday occurred, the
designated beneficiary of the Independent Director shall receive the Benefit for
a period of ten years, with quarterly payments to be made to the designated
beneficiary commencing in the first quarter following the Director's death.
d. Disability Provisions. If an Independent Director's service as a
Director is terminated because of his disability subsequent to the last day of
the calendar quarter in which such Director's seventy-second birthday occurred
and prior to the last day of the calendar quarter in which such Director's
seventy-fourth birthday occurs, the Independent Director shall receive the First
Year Retirement Payments and shall, commencing with the quarter following the
quarter in which the last First Year Retirement Payment is made, receive the
Benefit for the remainder of his life, with quarterly payments to be made to the
disabled Independent Director. If the disabled Independent Director should die
before the First Year Retirement Payments are completed and before forty
<PAGE>
quarterly Benefit payments are made, such payments will continue to be made to
the Independent Director's designated beneficiary until the aggregate of the
First Year Retirement Payments and forty quarterly Benefit payments have been
made to the disabled Independent Director and the Director's designated
beneficiary.
If an Independent Director's service as a Director is terminated
because of his disability prior to the last day of the calendar quarter in which
such Director's seventy-second birthday occurs or subsequent to the last day of
the calendar quarter in which such Director's seventy-fourth birthday occurred,
the Independent Director shall receive the Benefit for the remainder of his
life, with quarterly payments to be made to the disabled Independent Director
commencing in the first quarter following the Director's termination for
disability. If the disabled Independent Director should die before forty
quarterly payments are made, payments will continue to be made to the
Independent Director's designated beneficiary until the aggregate of forty
quarterly payments has been made to the disabled Independent Director and the
Director's designated beneficiary.
e. Death of Independent Director and Beneficiary. If the Independent
Director and his designated beneficiary should die before the First Year
Retirement Payments and/or a total of forty quarterly Benefit payments are made,
the remaining value of the Independent Director's First Year Retirement Payments
and/or Benefit shall be determined as of the date of the death of the
Independent Director's designated beneficiary and shall be paid to the estate of
the designated beneficiary in one lump sum or in periodic payments, with the
determinations with respect to the value of the First Year Retirement Payments
and/or Benefit and the method and frequency of payment to be made by the
Committee (as defined in paragraph 8.a.) in its sole discretion.
4. Designated Beneficiary
The beneficiary referred to in paragraph 3 may be designated or changed
by the Independent Director without the consent of any prior beneficiary on a
form provided by the Committee (as defined in paragraph 8.a.) and delivered to
the Committee before the Independent Director's death. If no such beneficiary
shall have been designated, or if no designated beneficiary shall survive the
Independent Director, the value or remaining value of the Independent Director's
First Year Retirement Payments and/or Benefit shall be determined as of the date
of the death of the Independent Director by the Committee and shall be paid as
promptly as possible in one lump sum to the Independent Director's estate.
5. Disability
An Independent Director shall be deemed to have become disabled for the
purposes of paragraph 3 if the Committee shall find on the basis of medical
evidence satisfactory to it that the Independent Director is disabled, mentally
or physically, as a result of an accident or illness, so as to be prevented from
<PAGE>
performing each of the duties which are incumbent upon an Independent Director
in fulfilling his responsibilities as such.
6. Time of Payment
The First Year Retirement Payments and/or the Benefit for each year
will be paid in quarterly installments that are as nearly equal as possible.
7. Payment of First Year Retirement Payments and/or Benefit: Allocation of Costs
Each Fund is responsible for the payment of the amount of the First
Year Retirement Payments and/or Benefit applicable to the Fund, as well as its
proportionate share of all expenses of administration of the Plan, including
without limitation all accounting and legal fees and expenses and fees and
expenses of any Actuary. The obligations of each Fund to pay such First Year
Retirement Payments and/or Benefit and expenses will not be secured or funded in
any manner, and such obligations will not have any preference over the lawful
claims of each Fund's creditors and shareholders. To the extent that the First
Year Retirement Payments and/or Benefit is paid by more than one Fund, such
costs and expenses will be allocated among such Funds in a manner that is
determined by the Committee to be fair and equitable under the circumstances. To
the extent that one or more of such Funds consist of one or more separate
portfolios, such costs and expenses allocated to any such Fund will thereafter
be allocated among such portfolios by the Board of the Fund in a manner that is
determined by such Board to be fair and equitable under the circumstances.
8. Administration
a. The Committee. Any question involving entitlement to payments under
or the administration of the Plan will be referred to a four-person committee
(the "Committee") composed of three Independent Directors designated by all of
the Independent Directors of the Funds and one director of the Funds who is not
an Independent Director, designated by the non-Independent Directors. Except as
otherwise provided herein, the Committee will make all interpretations and
determinations necessary or desirable for the Plan's administration, and such
interpretations and determinations will be final and conclusive. Committee
members will be elected annually.
b. Powers of the Committee. The Committee will represent and act on
behalf of the Funds in respect of the Plan and, subject to the other provisions
of the Plan, the Committee may adopt, amend or repeal bylaws or other
regulations relating to the administration of the Plan, the conduct of the
Committee's affairs, its rights or powers, or the rights or powers of its
members. The Committee will report to the Independent Directors and to the
Boards of the Funds from time to time on its activities in respect of the Plan.
<PAGE>
The Committee or persons designated by it will cause such records to be kept as
may be necessary for the administration of the Plan.
9. Miscellaneous Provisions
a. Rights Not Assignable. Other than as is specifically provided in
paragraph 3, the right to receive any payment under the Plan is not transferable
or assignable, and nothing in the Plan shall create any benefit, cause of
action, right of sale, transfer, assignment, pledge, encumbrance, or other such
right in any heirs or the estate of any Independent Director.
b. Amendment, etc. The Committee, with the concurrence of the Board of
any Fund, may as to the specific Fund at any time amend or terminate the Plan or
waive any provision of the Plan; provided, however, that subject to the
limitations imposed by paragraph 7, no amendment, termination or waiver will
impair the rights of an Independent Director to receive the payments which would
have been made to such Independent Director had there been no such amendment,
termination, or waiver.
c. No Right to Reelection. Nothing in the Plan will create any
obligation on the part of the Board of any Fund to nominate any Independent
Director for reelection.
d. Consulting. Subsequent to his Service Termination Date, an
Independent Director may render such services for any Fund, for such
compensation, as may be agreed upon from time to time by such Independent
Director and the Board of the Fund which desires to procure such services.
e. Effectiveness. The Plan will be effective for all Independent
Directors who have Service Termination Dates occurring on and after October 20,
1993. Periods of Eligible Service shall include periods commencing prior and
subsequent to such date. Upon its adoption by the Board of a Fund, the Plan will
become effective as to that Fund on the date when the Committee determines that
any regulatory approval or advice that may be necessary or appropriate in
connection with the Plan have been obtained.
Adopted October 20, 1993.
Amended October 19, 1994.
Amended May 1, 1996, effective July 1, 1996.
Amended May 14, 1998, effective July 1, 1998.
<PAGE>
SCHEDULE A
TO
DEFINED BENEFIT DEFERRED COMPENSATION PLAN
FOR NON-INTERESTED DIRECTORS AND TRUSTEES
INVESCO Diversified Funds, Inc.
INVESCO Capital Appreciation Funds, Inc.
INVESCO Emerging Opportunity Funds, Inc.
INVESCO Growth Fund, Inc.
INVESCO Income Funds, Inc.
INVESCO Industrial Income Fund, Inc.
INVESCO International Funds, Inc.
INVESCO Money Market Funds, Inc.
INVESCO Multiple Asset Funds, Inc.
INVESCO Specialty Funds, Inc.
INVESCO Strategic Portfolios, Inc.
INVESCO Tax-Free Income Funds, Inc.
INVESCO Value Trust
INVESCO Variable Investment Funds, Inc.
INVESCO Treasurer's Series Trust
Exhibit h(2)(a)
AMENDMENT TO ADMINISTRATIVE SERVICES AGREEMENT
This is an Amendment to the Administrative Services Agreement made and
entered into between INVESCO Funds Group, Inc., a Delaware corporation
("INVESCO"), and INVESCO Money Market Funds, Inc., a Maryland corporation (the
"Fund") as of the 28th day of February, 1997 (the "Agreement").
WHEREAS, the Fund and INVESCO are affiliated companies; and
WHEREAS, the Fund desires to amend the amount of payment that it pays
to INVESCO for certain administrative, sub-accounting and recordkeeping services
as described in the Agreement;
NOW, THEREFORE, in consideration of the premises and mutual covenants
contained in the Agreement, it is agreed that paragraph 5 of the Agreement is
hereby amended to read as follows:
For the services rendered, facilities furnished, and
expenses assumed by INVESCO under this Agreement, the Fund
shall pay to INVESCO a $10,000 per year per Portfolio base
fee, plus an additional fee, computed on a daily basis and
paid on a monthly basis. For purposes of each daily
calculation of this additional fee, the most recently
determined net asset value of the INVESCO Small Company Value
Fund (the "Portfolio"), as determined by a valuation made in
accordance with the Fund's procedure for calculating the
Portfolio's net asset value as described in the Portfolio's
Prospectus and/or Statement of Additional Information, shall
be used. The additional fee to INVESCO under this Agreement
shall be computed at the annual rate of 0.045% of the
Portfolio's daily net assets as so determined. During any
period when the determination of the Portfolio's net asset
value is suspended by the directors of the Fund, the net
asset value of a share of the Portfolio as of the last
business day prior to such suspension shall, for the purpose
of this Paragraph 5, be deemed to be the net asset value at
the close of each succeeding business day until it is again
determined.
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement effective as of
the 13th day of May, 1999.
INVESCO FUNDS GROUP, INC.
By:/s/ Mark H. Williamson
---------------------------------
Mark H. Williamson
President
ATTEST:
/s/ Glen A. Payne
- ----------------------------------
Glen A. Payne
Secretary
INVESCO MONEY MARKET FUNDS, INC.
By:/s/ Ronald L. Grooms
---------------------------------
Ronald L. Grooms
Treasurer & Chief Financial
Officer & Accounting Officer
ATTEST:
/s/ Glen A. Payne
- ----------------------------------
Glen A. Payne
Secretary
Exhibit j
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Prospectus and
Statement of Additional Information constituting parts of this Post-Effective
Amendment No. 35 to the registration statement on Form N-1A (the "Registration
Statement") of our report dated July 6, 1999, relating to the financial
statements and financial highlights appearing in the May 31, 1999 Annual Report
to Shareholders of INVESCO Money Market Funds, Inc., which is also incorporated
by reference into the Registration Statement. We also consent to the references
to us under the heading "Financial Highlights" in the Prospectus and under the
heading "Independent Accountants" in the Statement of Additional Information.
/s/ PricewaterhouseCoopers
- ------------------------------
PricewaterhouseCoopers LLP
Denver, Colorado
July 26, 1999
