As filed on November 16, 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. 37 X
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 X
Amendment No. 24 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
------------
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 January 17, 2000, 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>
NOTE
This Post-Effective Amendment (Form N-1A) is being filed to add [Class C]
shares of INVESCO Cash Reserves Fund and does not affect the current class of
shares of that Fund or the other Funds - INVESCO Tax-Free Money Fund and INVESCO
U.S. Government Money Fund.
<PAGE>
Prospectus | January __, 2000
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YOU SHOULD KNOW WHAT INVESCO KNOWS (TM)
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INVESCO MONEY
MARKET FUNDS, INC.
INVESCO CASH RESERVES FUND--[CLASS C]
A mutual fund designed for investors seeking a high level of current income,
consistent with the preservation of capital and the maintenance of liquidity.
[[Class C] shares are sold exclusively through third parties, such as brokers,
banks, and financial planners.]]
TABLE OF CONTENTS
Investment Goals, Strategies And Risks...................4
Fund Performance.........................................5
Fees And Expenses........................................6
Investment Risks.........................................7
Risks Associated With Particular Investments.............8
Fund Management..........................................9
Portfolio Manager .......................................9
Potential Rewards........................................9
Share Price.............................................10
How To Buy Shares.......................................11
Your Account Services...................................14
How To Sell Shares......................................15
Dividends And Taxes.....................................17
Financial Highlights....................................19
[INVESCO ICON]
INVESCO
The Securities and Exchange Commission has not approved or disapproved the
shares of the Fund. 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
[INVESCO ICON] Working With INVESCO
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[KEY ICON] [ARROW ICON] INVESTMENT GOALS, STRATEGIES AND RISKS
INVESCO Funds Group, Inc. ("INVESCO") is the investment adviser for the
Fund. Together with our affiliated companies, we at INVESCO direct all aspects
of the management of the Fund.
[The Fund's [Class C] shares are sold exclusively through third parties,
such as brokers, banks, and financial planners. You cannot purchase the Fund's
[Class C] shares directly from INVESCO or its affiliated companies.] This
Prospectus contains important information about the Fund's [Class C] shares. One
or more additional classes of shares are offered directly to the public through
separate prospectuses. Those other classes of shares have lower sales charges
and expenses, with resulting positive effects on their performance. You can
choose the class of shares that is best for you, based on how much you plan to
invest and how long you plan to hold your shares. To obtain additional
information about other classes of shares, contact INVESCO Distributors, Inc.
("IDI") at 1-800-_______________. You may also obtain information concerning
other classes offered from your broker, bank, or financial planner who is
offering the [Class C] shares offered in this Prospectus.
No dealer, sales person, or any other person has been authorized to give
any information or to make any representation other than those contained in this
Prospectus, and you should not rely on such other information or
representations.
FOR MORE DETAILS ABOUT THE FUND'S CURRENT INVESTMENTS AND MARKET OUTLOOK, PLEASE
SEE THE MOST RECENT ANNUAL OR SEMIANNUAL REPORT.
The Fund is a money market fund. It invests 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 the Fund's portfolio is 90
days or less.
The 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>
The Fund is not intended for investors seeking capital appreciation. While
not intended as a complete investment program, the Fund may be a valuable
element of your investment portfolio.
The Fund operates 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 Fund's investments;
o maintaining a short average portfolio maturity;
o ensuring adequate diversification of both the issuers of the Fund's
investments and the guarantors of those investments, if any; and
o monitoring accurate pricing of the Fund's investments so unfairness does
not result from the use of the amortized cost method to value those
investments.
[ARROW ICON] An investment in the Fund is not insured or guaranteed by the
Federal Deposit Insurance Corporation ("FDIC") or any other governmental agency.
Although the Fund seeks to preserve the value of your investment at $1.00 per
share, it is possible to lose money by investing in the Fund
[GRAPH ICON] FUND PERFORMANCE
Since the Fund's [Class C] shares did not commence investment operations
until January __, 2000, the bar chart below shows the Fund's [Class II] shares'
actual yearly performance for the years ended December 31 (commonly known as its
"total return") over the past decade. [Class II] shares are not offered in this
Prospectus. THE BAR CHART DOES NOT REFLECT CONTINGENT DEFERRED SALES CHARGES OR
ASSET BASED SALES CHARGES IN EXCESS OF 0.25% OF NET ASSETS; IF THEY DID, THE
TOTAL RETURN SHOWN WOULD BE LOWER. The table below shows average annual total
returns for various periods ended December 31 for the Fund. To obtain the Fund's
current 7-day yield information, please call INVESCO at 1-800-525-8085.
Remember, past performance does not indicate how the Fund will perform in the
future.
The chart below contains the following plot points:
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CASH RESERVES FUND-[CLASS II]
AVERAGE ANNUAL TOTAL RETURN(1),(2)
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1989 1990 1991 1992 1993 1994 1995 1996 1997 1998
8.82% 7.10% 5.58% 3.16% 2.36% 3.70% 5.26% 4.70% 4.81% 4.74%
Best Calendar Qtr. 6/95 1.32%
Worst Calendar Qtr. 3/93 0.55%
<PAGE>
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AVERAGE ANNUAL TOTAL RETURN (1),(2)
AS OF 12/31/99
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1 YEAR 5 YEARS 10 YEARS
Cash Reserves Fund--[Class II] ____ ____ _____
(1) Total return figures include reinvested dividends and include the
effect of the Fund's expenses.
(2) The total and average annual returns are for a separate class of shares
that is not offered in this Prospectus. Total returns of [Class C] shares will
differ only to the extent that the classes do not have the same expenses.
FEES AND EXPENSES
This table describes the fees and expenses that you may pay if you
buy and hold shares of the Fund:
SHAREHOLDER FEES PAID DIRECTLY FROM YOUR ACCOUNT
[CLASS C] SHARES
Maximum Sales Charge (Load) Imposed on Purchases
(as a percentage of offering price) None
Maximum Deferred Sales Charge (Load) 1.00%*
Maximum Sales Charge (Load) Imposed on Reinvested
Dividends and Other Distributions None
Redemption Fee (as a percentage of amount redeemed) None
Exchange Fee None
Maximum Account Fee None
* A 1% contingent deferred sales charge is charged on redemptions or
exchanges of shares held thirteen months or less other than shares acquired
through reinvestment of dividends and other distributions.
ANNUAL FUND OPERATING EXPENSES THAT ARE DEDUCTED FROM FUND ASSETS
CASH RESERVES FUND--[CLASS C]
Management Fees 0.40%
Distribution and Service (12b-1)Fees(1) 1.00%
Other Expenses (2) ----%
Total Annual Fund Operating Expenses (2) ====%
(1) Because the Fund pays a 12b-1 distribution and service fee which is based
upon the Fund's assets, if you own shares of the Fund for a long period of
time, you may pay more than the economic equivalent of the maximum front-end
sales charge permitted for mutual funds by the National Association of
Securities Dealers, Inc.
(2) Based on estimated expenses for the current fiscal year which may be more
or less than actual expenses. Actual expenses are not provided because the
Fund did not begin a public offering of its shares until January __, 2000.
If necessary, certain expenses of the Fund will be absorbed by INVESCO for
at least the first fiscal year of the Fund's operations in order to ensure
that expenses for Cash Reserves Fund--[Class C] will not exceed ____% of
the Fund's average net assets pursuant to an agreement between the Fund
and INVESCO. This commitment may be changed at any time following
consultation with the board of directors. After absorption, the Cash
Reserves Fund--[Class C]'s Other Expenses and Total Annual Fund Operating
Expenses for the fiscal year ending May 31, 2000 are estimated to be ____%
and ____%, respectively, of the Fund's average net assets.
<PAGE>
EXAMPLES
These Examples are intended to help you compare the cost of investing in
the Fund to the cost of investing in other mutual funds.
The Examples assume that you invested $10,000 in [Class C] shares of the
Fund for the time periods indicated. The first Example assumes that you redeem
all of your shares at the end of those periods. The second Example assumes that
you keep your shares. Both Examples also assume that your investment had a
hypothetical 5% return each year, and assume that the [Class C]'s operating
expenses remained the same. Although the Fund's actual costs and performance may
be higher or lower, based on these assumptions your costs would have been:
IF SHARES ARE REDEEMED 1 year 3 years
Cash Reserves Fund--[Class C] $___ $___
IF SHARES ARE NOT REDEEMED 1 year 3 years
Cash Reserves Fund--[Class C] $___ $___
[ARROW ICON] INVESTMENT RISKS
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 the Fund,
are:
BEFORE INVESTING IN THE 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.
NOT INSURED. Mutual funds are not insured by the 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
Fund 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 Fund is 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
<PAGE>
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 Fund could be
adversely affected.
In addition, the markets for, or value of, securities in which the Fund
invests 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 Fund's 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 the Fund. See
the Statement of Additional Information for a discussion of additional risk
factors.
INTEREST RATE RISK
Changes in interest rates will affect the resale value of debt securities
held in the Fund's portfolio. When interest rates go up, the market values of
previously issued debt securities generally decline. Also, the Fund's new
investments are likely to be in debt securities paying lower rates than the rest
of the Fund's portfolio when interest rates go down. This reduces the Fund's
yield. A weak economy or strong stock market may cause interest rates to
decline.
CREDIT RISK
The Fund invests 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 thus missing the opportunity on other less conservative
but potentially more rewarding investments. The Fund has an investment goal of
current income, not capital appreciation. Therefore the Fund, by itself, 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.
<PAGE>
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 the Fund.
[INVESCO ICON] FUND MANAGEMENT
INVESTMENT ADVISER
INVESCO IS A SUBSIDIARY OF AMVESCAP PLC, AN INTERNATIONAL INVESTMENT MANAGEMENT
COMPANY THAT MANAGES MORE THAN $291 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 Fund. INVESCO was founded in 1932 and manages over $____ billion
for more than _______ shareholders of ___ INVESCO mutual funds. INVESCO performs
a wide variety of other services for the Fund, 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 Fund's distributor and is responsible for the sale of the Fund's
shares.
INVESCO and IDI are subsidiaries of AMVESCAP PLC.
Since the Fund's [Class C] shares did not commence operations until January __,
2000, [Class C] shares paid no fee to INVESCO for the advisory services in the
period ended May 31, 1999.
[INVESCO ICON] PORTFOLIO MANAGER
The following individual is primarily responsible for the day-to-day
management of the Fund's portfolio holdings:
RICHARD R. HINDERLIE is the portfolio manager of the Fund and a vice
president of INVESCO. Dick received his M.B.A. from Arizona State University and
his B.A. in Economics from Pacific Lutheran University.
[INVESCO ICON] POTENTIAL REWARDS
NO SINGLE FUND SHOULD REPRESENT YOUR COMPLETE INVESTMENT PROGRAM NOR SHOULD YOU
ATTEMPT TO USE THE FUND FOR LONG-TERM CAPITAL GROWTH PURPOSES.
The Fund offers shareholders the potential for monthly payment of daily
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 Fund seeks to
provide higher returns than other money market funds and the money market in
general, but cannot guarantee that performance.
<PAGE>
SUITABILITY FOR INVESTORS
Only you can determine if an investment in the 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 Fund is 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
You probably do not want to invest in the Fund if you are:
o primarily seeking long-term growth (although the Fund 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 the Fund's portfolio
each day that the New York Stock Exchange ("NYSE") is open, at the close of the
regular trading day on that exchange (normally 4:00 p.m. Eastern time).
Therefore, shares of the Fund 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 Fund uses the amortized cost method for establishing the value of its
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
Fund declares dividends daily, based upon the interest earned by the Fund's
investments that day. The combination of the amortized cost method of valuation
and the daily declaration of dividends means that the Fund's net asset value is
expected to be $1.00 per share, despite changes in the market value of the
Fund's securities. However, we cannot guarantee that the 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 the 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.
Many of the INVESCO Funds have multiple classes of shares, each class
representing an interest in the same portfolio of investments. When choosing a
share class, you should consider which class best meets your situation. Your
investment representative can help you decide. Contact your investment
representative for several convenient ways to invest in the Fund. [[Class C]
shares are available only through your investment representative.] There is no
charge to invest directly through INVESCO. However, with respect to [Class C]
shares, upon redemption or exchange of [Class C] shares held thirteen months or
less (other than [Class C] shares acquired through reinvestment of dividends or
other distributions), a contingent deferred sales charge of 1% of the current
net value of [Class C] shares will be assessed. If you invest in the 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 the Fund's minimum
investment requirements in its sole discretion, if it determines this action is
in the best interests of the 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 [Class C] shares in the Fund for
[Class C] shares 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:
<PAGE>
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 the Fund per 12-month period, but
you may be subject to the contingent deferred sales charge, described
below.
o The 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.
Please remember that if you pay by check or wire and your funds do not
clear, you will be responsible for any related loss to any Fund or INVESCO. If
you are already an INVESCO funds shareholder, the Fund may seek reimbursement
for any loss from your existing account(s).
CONTINGENT DEFERRED SALES CHARGE (CDSC). If you exchange or redeem [Class
C] shares of the Fund after holding them thirteen months or less (other than
shares acquired through reinvestment of dividends or other distributions), a
CDSC of 1% of the current net asset value of the shares being exchanged will be
assessed. The fee applies to redemptions from the Fund and exchanges (other than
exchanges into [Class C] shares) into any of the other mutual funds which are
also advised by INVESCO and distributed by IDI. We will use the "first-in,
first-out" method to determine your holding period. Under this method, the date
of redemption or exchange will be compared with the earliest purchase date of
shares held in your account. If your holding period is less than thirteen
months, the CDSC will be assessed on the current net asset value of those
shares.
The CDSC for [Class C] shares generally will be waived:
o to pay account fees;
o for IRA distributions due to death or disability or upon periodic
distributions based on life expectancy;
o to return excess contributions (and earnings, if applicable) from
retirement plan accounts; or
o for redemptions following the death of a shareholder or beneficial
owner.
<PAGE>
METHOD INVESTMENT MINIMUM PLEASE REMEMBER
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THROUGH YOUR Contact your
INVESTMENT investment
REPRESENTATIVE representative.
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BY CHECK $1,000 for
Mail to: regular
INVESCO Funds Group, accounts;
Inc., $250 for an IRA;
P.O. Box 173706, $50 minimum for
Denver, CO each subsequent
80217-3706. investment.
You may send your
check
by overnight
courier to:
7800 E. Union Ave.
Denver, CO 80237.
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BY WIRE $1,000
You may send your
payment by bank
wire (call INVESCO
for instructions).
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BY TELEPHONE WITH ACH $50 You must forward your
Call 1-800-525-8085 bank account
to request your information to INVESCO
purchase. INVESCO prior to using this
will move money from option.
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 $50 per month Like all regular
WITH EASIVEST OR for EasiVest; investment plans, nei-
DIRECT PAYROLL $50 per pay ther EasiVest nor
PURCHASE period for Direct Payroll Pur-
You may enroll on Direct Payroll chase ensures a profit
your fund Purchase. You or protects against
application, or call may start or loss in a falling
us for a separate stop your market. Because you'll
form and more regular invest continually,
details. Investing investment plan regardless of varying
the same amount on a at any time, price levels, con-
monthly basis allows with two weeks' sider your financial
you to buy more notice to ability to keep buying
shares when prices INVESCO. through low price
are low and fewer levels. And remember
shares when prices that you will lose
are high. This money if you redeem
"dollar cost your shares when the
averaging" may help market value of all
offset market your shares is less
fluctuations. Over than their cost.
a period of time,
your average cost
per share may be
less than the actual
average price per
share.
<PAGE>
METHOD INVESTMENT MINIMUM PLEASE REMEMBER
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BY PAL(R) $1,000; (The Be sure to write down
Your "Personal exchange mini- the confirmation
Account Line" is mum is $250 for number provided by
available for subsequent PAL(R). You must forward
subsequent pur purchses your bank account
chases and exchanges requested by information to
24 hours a day. telephone.) INVESCO prior to using
Simply call this option.
1-800-424-8085.
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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 addi-
other INVESCO funds. tional shares
Exchanges may be for an existing
made by phone or at account. (The
our Web site at exchange minimum
www.invesco.com. You is $250 for
may also establish exchanges
an automatic monthly requested by
exchange service telephone.)
between two INVESCO
funds; call us for
further details and
the correct form.
DISTRIBUTION EXPENSES. We have adopted a Master Distribution Plan (commonly
known as a "12b-1 Plan") for the Fund's [Class C] shares. The 12b-1 fees paid by
the Fund's [Class C] shares are used to pay distribution fees to IDI for the
sale and distribution of its shares and fees for services provided to
shareholders, all or a substantial portion of which are paid to the dealer of
record. Because the Fund's [Class C] shares pay these fees out of their assets
on an ongoing basis, over time these fees will increase the cost of your
investment.
[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 Fund does 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 (for instance, EasiVest), your transactions are confirmed on your
quarterly Investment Summaries.
<PAGE>
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.
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.
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.
[INVESCO ICON] HOW TO SELL SHARES
Contact your investment representative for several convenient ways to sell
your Fund shares. Shares of the Fund 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 Fund performance, 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.
<PAGE>
If you participate in EasiVest, the Fund's 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 Fund's 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 the
Fund falls below $250 as a result of your actions (for example, sale of your
Fund shares), the 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 REDEMPTION MINIMUM PLEASE REMEMBER
- --------------------------------------------------------------------------------
THROUGH YOUR Contact your
INVESTMENT investment
REPRESENTATIVE representative
- --------------------------------------------------------------------------------
BY TELEPHONE $250 (or, if less, INVESCO's telephone redemp-
Call us toll-free at: full liquidation of tion privileges may be
1-800-525-8085. the account) for a modified or terminated in the
redemption check; future at INVESCO's
$1,000 for a wire discretion.
to your bank of
record. 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
80217-3706. You may will be mailed to
also send your your address as it
request by overnight appears on
courier to 7800 E. INVESCO's records,
Union Ave., Denver, or to a bank
CO 80237. designated by you
in writing.
- --------------------------------------------------------------------------------
BY TELEPHONE WITH ACH $50. You must forward
Call 1-800-525-8085 your bank account
to request your information to
redemption. INVESCO INVESCO prior to
will automatically using this option.
pay the proceeds
into your designated
bank account.
<PAGE>
METHOD REDEMPTION MINIMUM PLEASE REMEMBER
- --------------------------------------------------------------------------------
BY EXCHANGE $250 for exchanges See "Exchange
Between two INVESCO requested by Policy."
funds. Call telephone. When opening a new
1-800-525-8085 for account,
prospectuses of investment
other INVESCO funds. minimums apply.
Exchanges may be made
by phone or at our Web
site at www.invesco.com.
You 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 You must have at
PLAN on a monthly or least $10,000
You may call us to quarterly basis. total invested
request the The redemption with the INVESCO
appropriate form and check may be made funds with at
more information at payable to any least $5,000 of
1-800-525-8085. party you that total
designate. invested in the
fund from which
withdrawals will
be made.
- --------------------------------------------------------------------------------
PAYMENT TO THIRD Any amount. All registered
PARTY account owners
Mail your request to must sign the
INVESCO request, with
Funds Group, Inc., signature
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 Fund. The Fund earns
ordinary or investment income from interest on its investments. The Fund expects
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
the Fund, and that income is paid by the Fund to you once a month. Dividends are
automatically reinvested in additional shares of the Fund at the net asset value
on the monthly dividend distribution date, unless you request that dividends be
paid in cash.
Unless you are (or your account is) exempt from income taxes, you must
include all dividends paid to you by the Fund in your taxable income for
federal, state and local income tax purposes. Dividends and other distributions
<PAGE>
usually are taxable whether you receive them in cash or automatically reinvest
them in shares of the Fund or other INVESCO funds.
If you have not provided INVESCO with complete, correct tax information,
the Fund is required by law to withhold 31% of your distributions and any money
that you receive from the sale of shares of the Fund as a backup withholding
tax.
We will provide you with detailed information every year about your
dividends.
<PAGE>
Financial Highlights
The financial highlights table is intended to help you understand the
financial performance of [Class II] shares of the Fund for the past five years
(or, if shorter, the period of the Fund's operations). Certain information
reflects financial results for a single Fund share. Since [Class C] shares are
new, financial information is not available for that class as of the date of
this Prospectus. The total returns in the table represent the rate that an
investor would have earned (or lost) on an investment in a Fund (assuming
reinvestment of all dividends and distributions). This information has been
audited by PricewaterhouseCoopers LLP, independent accountants, whose report,
along with the financial statements, is included in INVESCO Money Market Funds,
Inc.'s 1999 Annual Report to Shareholders, which is incorporated by reference
into the Statement of Additional Information. This Report is available without
charge by contacting IDI at the address or telephone number on the back cover of
this Prospectus.
YEAR ENDED MAY 31
- --------------------------------------------------------------------------------
1999 1998 1997 1996 1995
CASH RESERVES FUND - [CLASS II]
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 $766,670 $661,648 $587,277 $644,341
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>
JANUARY __, 2000
INVESCO MONEY MARKET FUNDS, INC.
INVESCO CASH RESERVES FUND--[CLASS C]
You may obtain additional information about the Fund from several sources:
FINANCIAL REPORTS. Although this Prospectus describes the Fund's
anticipated investments and operations, the Fund also prepares annual and
semiannual reports that detail the Fund's actual investments at the report date.
These reports include discussion of the Fund's recent performance, as well as
market and general economic trends affecting the Fund's performance. The annual
report also includes the report of the Fund's independent accountants.
STATEMENT OF ADDITIONAL INFORMATION. The SAI dated January __, 2000 is a
supplement to this Prospectus and has detailed information about the Fund and
its investment policies and practices. A current SAI for the Fund 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 Fund may be accessed through the
INVESCO Web site at www.invesco.com. In addition, the current Prospectus, SAI,
annual or semiannual report are available on the SEC Web site at www.sec.gov.
To obtain a free copy of the current Prospectus, SAI, annual report or
semiannual report, 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- [Class II and Class C]
INVESCO Tax-Free Money Fund - [Class II]
INVESCO U.S. Government Money Fund - [Class II]
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
January __, 2000
- ------------------------------------------------------------------------------
A Prospectus for INVESCO Cash Reserves - [Class II], INVESCO Tax-Free Money -
[Class II] and INVESCO U.S. Government Money [Class II] Funds dated September
30, 1999 and a Prospectus for INVESCO Cash Reserves Fund - [Class C] provide the
basic information you should know before investing in a Fund. This Statement of
Additional Information ("SAI") is incorporated by reference into the Funds'
Prospectuses; in other words, this SAI is legally part of the Funds'
Prospectuses. Although this SAI is not a prospectus, it contains information in
addition to that set forth in the Prospectuses. It is intended to provide
additional information regarding the activities and operations of the Funds and
should be read in conjunction with the Prospectuses.
You may obtain, without charge, the current Prospectuses, SAI and annual
and semiannual reports of the Funds by writing to INVESCO Distributors, Inc.,
P.O. Box 173706, Denver, CO 80217-3706 , or by calling 1-800-525-8085. The
Prospectuses of the [Class II] shares of the Funds and the Prospectus of the
[Class C] shares of INVESCO Cash Reserves Fund 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. . . . . . . . . . . . . . . . . . . . 30
Management of the Funds . . . . . . . . . . . . . . . . . . . 33
Other Service Providers . . . . . . . . . . . . . . . . . . . .53
Brokerage Allocation and Other Practices . . . . . . . . . . . 53
Capital Stock . . . . . . . . . . . . . . . . . . . . . . . . .55
Tax Consequences of Owning Shares of a Fund . . . . . . . . . .56
Performance . . . . . . . . . . . . . . . . . . . . . . . . . 57
Financial Statements . . . . . . . . . . . . . . . . . . . . . 59
Appendix A . . . . . . . . . . . . . . . . . . . . . . . . . . 60
<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, management investment company currently
consisting of three portfolios of investments: INVESCO Cash Reserves Fund -
[Class II and Class C], INVESCO Tax-Free Money Fund [Class II] and INVESCO U.S.
Government Money Fund - [Class II] (each a "Fund" and collectively, 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 the
portfolio of each Fund 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. However, the Class C shares of Cash
Reserves Fund pays a 12b-1 distribution and service fee which is computed and
paid monthly at an annual rate of 1.00% of average net assets attributable to
Class C shares.
INVESTMENTS, POLICIES AND RISKS
The principal investments and policies of the Funds are discussed in the
Prospectuses 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 INVESCO Funds Group, Inc.
("INVESCO"), the Funds' 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 Standard & Poor's
("S&P") or Moody's Investors Services, Inc. ("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.
<PAGE>
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.
COMMERCIAL PAPER -- Commercial paper is the term for short-term promissory notes
issued by domestic corporations to meet current working capital needs.
Commercial paper may be unsecured by the corporation's assets but may be backed
by a letter of credit from a bank or other financial institution. 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 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 INVESCO to be of
equivalent credit quality to the rated securities in which a Fund may invest. In
INVESCO's opinion, obligations that are not rated are 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.
<PAGE>
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.
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).
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.
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.
<PAGE>
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.
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.
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
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.
MUNICIPAL OBLIGATIONS -- Tax-Free Money Fund may invest in short-term municipal
debt securities including municipal bonds, notes and commercial paper.
Municipal Bonds -- Municipal bonds are classified as general obligation or
revenue bonds. General obligation bonds are secured by the issuer's pledge
of its full faith, credit and unlimited taxing power for the payment of
principal and interest. Revenue bonds are payable only from the revenues
generated by a particular facility or class of facility, or in some cases
from the proceeds of a special excise tax or specific revenue source.
Industrial development obligations are a particular kind of municipal bond
which are issued by or on behalf of public authorities to obtain funds for
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.
<PAGE>
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
municipality'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 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.
<PAGE>
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.
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 INVESCO to be of good
standing and will not be made unless, in the judgment of INVESCO, the
consideration to be earned from such loans would justify the risk. INVESCO 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.
REPURCHASE AGREEMENTS -- A Fund 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.
<PAGE>
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
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.
U.S. GOVERNMENT SECURITIES -- Each Fund may purchase debt securities issued by
the U.S. government without limit. These securities include Treasury bills,
notes and 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 U.S.
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
U.S. 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,
a 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 INVESCO is satisfied that the credit risk with respect to any such
instrumentality is comparatively minimal.
<PAGE>
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.
INVESTMENT RESTRICTIONS
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.
The following restrictions are fundamental and may not be changed without
prior approval of a majority of the outstanding voting securities of a Fund, as
defined in the 1940 Act. Each Fund, 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;
<PAGE>
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 or an affiliate
or a successor thereof, with substantially the same fundamental investment
objective, policies and limitations as the Fund.
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 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.
<PAGE>
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.
Following is a chart outlining some of the limitations pursuant to
non-fundamental investment policies set by the board of directors. These
non-fundamental policies may be changed by the board of directors without
shareholder approval:
- --------------------------------------------------------------------------------
INVESTMENT CASH RESERVES TAX-FREE MONEY U.S. GOVERNMENT MONEY
- --------------------------------------------------------------------------------
DEBT SECURITIES At least 95% in
Corporate Debt the highest
short-term
rating category
- --------------------------------------------------------------------------------
U.S. Government No Limit Up to 20%, No Limit
Obligations including
private
activity bonds
and other tax-
able
- --------------------------------------------------------------------------------
Municipal At least 80%
Obligations
- --------------------------------------------------------------------------------
Private Activity Up to 20%,
Bonds and including U.S.
taxable securities government
obligations
- --------------------------------------------------------------------------------
TEMPORARY TAXABLE Up to 100% for
defensive
purposes
- --------------------------------------------------------------------------------
<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 Stock Funds, Inc. (formerly, INVESCO Equity Funds, Inc.)
INVESCO Treasurer's Series Funds, Inc. (formerly, INVESCO Treasurer's
Series Trust)
INVESCO Variable Investment Funds, Inc.
As of _____________, 1999, INVESCO managed __ mutual funds having combined
assets of $__ billion, on behalf of more than ____________ 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 $291 billion in assets under management on September 30, 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
custodian to these plans. ITC accepts contributions and provides complete
transfer agency functions: correspondence, sub-accounting, telephone
communications and processing of distributions.
<PAGE>
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 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 a 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 insurance companies that offer variable
life and variable annuity insurance products.
A I M Distributors, Inc. and Fund Management Company, 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
Articles of Incorporation, 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 full 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. Since Cash Reserves
Fund's [Class C] shares did not commence operations until January __, 2000, no
advisory fee was paid with respect to [Class C] shares for that Fund for the
period shown below. If applicable, the advisory fees were offset by credits in
the amounts shown below, so that INVESCO's fees were not 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 - [Class II]
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 - [Class II]
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 - [Class II]
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.
<PAGE>
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 dated February 28, 1997 with
the Company.
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.
As full compensation for services provided under the Administrative Services
Agreement, each Fund pays a monthly fee to INVESCO consisting of a base fee of
$10,000 per year plus an additional incremental fee computed daily and paid
monthly at an annual rate of 0.015% 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 dated February
28, 1997 with the Company.
The Transfer Agency Agreement provides that each Fund pays 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' [Class II]
shares paid the following fees to INVESCO (prior to the absorption of certain
Fund expenses by INVESCO). Since Cash Reserves Fund's [Class C] shares did not
commence operations until January __, 2000, no fees were paid with respect to
Class C shares for that Fund for the periods shown below.
<PAGE>
Cash Reserves Fund - [Class II]
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 - [Class II]
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
U.S. Government Money Fund - [Class II]
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 INVESCO 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 INVESCO 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.
<PAGE>
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. INVESCO has the primary responsibility
for making investment decisions on behalf of the Funds. These investment
decisions are reviewed by the investment committee of INVESCO.
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 Stock Funds, Inc. (formerly, INVESCO Equity 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. Their affiliations represent their principal occupations.
Position(s) Held Principal
Name, Address, and Age With Company Occupation(s) During
Past Five Years
Charles W. Brady *+ Director and Chairman of the Board
1315 Peachtree St., N.E. Chairman of the Board of INVESCO Global
Atlanta, Georgia Health Sciences Fund;
Age: 64 Chief Executive Officer
and Director of AMVESCAP
PLC, London, England and
various subsidiaries of
AMVESCAP PLC.
<PAGE>
Fred A. Deering +# Director and Vice Trustee of INVESCO Glo-
Security Life Center Chairman of the Board bal Health Sciences
1290 Broadway Fund; formerly,
Denver, Colorado Chairman of the
Age: 72 Executive Committee and
Chairman of the Board of
Security Life of Denver
Insurance Company;
Director of ING American
Holdings Company and First
ING Life Insurance
Company of New York.
Mark H. Williamson *+ President, Chief President, Chief Execu-
7800 E. Union Avenue Executive Officer tive Officer and
Denver, Colorado and Director Director of INVESCO
Age: 48 Funds Group, Inc.;
President, Chief Executive
Officer and Director of
INVESCO Distributors,
Inc.; President, Chief
Operating Officer and
Trustee of INVESCO Global
Health Sciences Fund;
formerly, Chairman and
Chief Executive Officer
of NationsBanc Advisors,
Inc.; formerly, Chairman
of NationsBanc
Investments, Inc.
<PAGE>
Position(s) Held Principal
Name, Address, and Age With Company Occupation(s) During
Past Five Years
Victor L. Andrews, Ph.D. Director Professor Emeritus,
**! Chairman Emeritus and
34 Seawatch Drive Chairman of the CFO
Savannah, Georgia Roundtable of the
Age: 69 Department of Finance of
Georgia State University;
President, Andrews Finan-
cial Associates, Inc.(con-
sulting 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.
Bob R. Baker +** Director President and Chief
AMC Cancer Research Executive Officer of
Center AMC Cancer Research
1600 Pierce Street Center, Denver,
Denver, Colorado Colorado, since January
Age: 63 1989; until mid-December
1988, Vice Chairman of the
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;
7608 Glen Albens Circle prior to June 30,
Dallas, Texas 1987, Senior Vice
Age: 69 President and Senior
Trust Officer of
InterFirst Bank,
Dallas, Texas.
<PAGE>
Position(s) Held Principal
Name, Address, and Age With Company Occupation(s) During
Past Five Years
Wendy L. Gramm, Ph.D.**! Director Self-employed (since
4201 Yuma Street, N.W. 1993); Professor of
Washington, DC Economics and Public
Age: 55 Administration,
University of Texas at
Arlington; formerly,
Chairman, Commodity
Futures Trading
Commission; Administrator
for Information and
Regulatory Affairs at the
Office of Management and
Budget; Executive Direc-
tor of the Presidential
Task Force on Regulatory
Relief; and Director of
the Federal Trade Commis-
sion's Bureau of Econom-
ics; also, Director of
Chicago Mercantile
Exchange, Enron Corpora-
tion, 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(s) Held Principal
Name, Address, and Age With Company Occupation(s) During
Past Five Years
Kenneth T. King +#@ Director Retired. Formerly,
4080 North Circulo Chairman of the Board
Manzanillo of The Capitol Life
Tucson, Arizona Insurance Company,
Age: 74 Providence Washington
Insurance Company and
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,
7 Piedmont Center Vice Chairman of the
Suite 100 Board of Directors of
Atlanta, Georgio the Citizens and
Age: 69 Southern Corporation and
Chairman of the Board and
Chief Executive Officer
of the Citizens and
Southern Georgia Corp. and
the Citizens and Southern
National Bank; Trustee of
INVESCO Global 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(s) Held Principal
Name, Address, and Age With Company Occupation(s) During
Past Five Years
Larry Soll, Ph.D.!** Director Retired. Formerly,
345 Poorman Road Boulder, Chairman of the Board
Boulder, Colorado (1987 to 1994), Chief
Age: 57 Executive Officer (1982 to
1989 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,
7800 E. Union Avenue General Counsel and
Denver, Colorado Secretary of INVESCO
Age: 52 Funds Group, Inc.; Senior
Vice 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(s) Held Principal
Name, Address, and Age With Company Occupation(s) During
Past Five Years
Ronald L. Grooms Chief Accounting Senior Vice President,
7800 E. Union Avenue Officer, Chief Finan- Treasurer and Director
Denver, Colorado cial Officer and of INVESCO Funds
Age: 53 Treasurer Group, Inc.; Senior
Vice President,
Treasurer and Direc-
tor of INVESCO
Distributors, 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
7800 E. Union Avenue and Assistant
Denver, Colorado Secretary of INVESCO
Age: 43 Funds Group, Inc.;
Senior Vice President
and Assistant
Secretary of INVESCO
Distributors, Inc.;
formerly, Trust
Officer of INVESCO
Trust Company (1995 to
1998).
Pamela J. Piro Assistant Treasurer Vice President and
7800 E. Union Avenue Assistant Treasurer
Denver, Colorado of INVESCO Funds
Age: 39 Group, Inc.; Assistant
Treasurer of INVESCO
Distributors, Inc.;
formerly, Assistant
Vice President (1996
to 1997), Director -
Portfolio Accounting
(1994 to 1996),
Portfolio Accounting
Manager (1993 to 1994)
and Assistant
Accounting Manager
(1990 to 1993).
<PAGE>
Position(s) Held Principal
Name, Address, and Age With Company Occupation(s) During
Past Five Years
Alan I. Watson Assistant Secretary Vice President of
7800 E. Union Avenue INVESCO Funds Group,
Denver, Colorado Inc.; formerly, Trust
Age: 58 Officer of INVESCO
Trust Company.
Judy P. Wiese Assistant Secretary Vice President and
7800 E. Union Avenue Assistant Secretary
Denver, Colorado of INVESCO Funds
Age: 51 Group, Inc.; Assistant
Secretary of INVESCO
Distributors, Inc.;
formerly, Trust Officer of
INVESCO Trust Company.
# 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 or trustees for services rendered in their
capacities as directors or trustees during the year ended December 31, 1998. As
of December 31, 1998, there were 53 funds in the INVESCO Complex.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------
Name of Person Aggregate Compen- Benefits Accrued As Estimated Annual Total Compsenation
and Position sation From Company(1) Part of Company Benefits Upon From INVESCO Complex
Expenses(2) Retirement(3) Paid to Directors(6)
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Fred A. Deering, Vice $4,671 $3,014 $2,036 $103,700
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 Funds upon the directors' retirement, calculated
using the current method of allocating director compensation among the INVESCO
Funds. These estimated benefits assume retirement at age 72 and that the basic
retainer payable to the directors will be adjusted periodically for inflation,
for increases in the number of funds in the INVESCO Funds, and for other reasons
<PAGE>
during the period in which retirement benefits are accrued on behalf of the
respective directors. This results in lower estimated benefits for directors who
are closer to retirement and higher estimated benefits for directors who are
further from retirement. With the exception of Drs. Soll and Gramm, each of
these directors has served as a director of one or more of the funds in the
INVESCO Funds 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
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's 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. Certain of the deferred amounts have been invested in the shares of all
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 SHAREHOLDERS
As of October 31, 1999, no persons owned more than 5% of the outstanding shares
of the Funds.
As of November 10, 1999, officers and directors of the Company, as a group,
beneficially owned less than 3% of any Fund's outstanding shares.
DISTRIBUTOR
INVESCO Distributors, Inc. ("IDI"), a wholly owned subsidiary of INVESCO, is the
distributor of the Funds. IDI receives no compensation and bears all expenses,
including the cost of printing and distributing prospectuses, incident to
marketing of the Fund's shares, except for such distribution expenses as are
paid out of Fund assets under the Company's Master Distribution Plan which has
been adopted by Cash Reserves Fund - [Class C] pursuant to Rule 12b-1 under the
1940 Act.
The Company has adopted a Master Distribution Plan pursuant to Rule 12b-1 under
the 1940 Act relating to the [Class C] shares of Cash Reserves Fund (the "[Class
C] Plan"). Under the [Class C] Plan, [Class C] shares of the Fund pays
compensation to IDI at an annual rate of 1.00% per annum of the average daily
net assets attributable to [Class C] shares for the purpose of financing any
activity which is primarily intended to result in the sale of [Class C] shares.
The [Class C] Plan is designed to compensate IDI, on a quarterly basis, for
certain promotional and other sales-related costs, and to implement a dealer
incentive program which provides for periodic payments to selected dealers who
furnish continuing personal shareholder services to their customers who purchase
and own [Class C] shares of the Fund. Payments can also be directed by IDI to
selected institutions who have entered into service agreements with respect to
[Class C] shares of the Cash Reserves Fund and who provide continuing personal
services to their customers who own such [Class C] shares of the Fund. The
service fees payable to selected institutions are calculated at the annual rate
of 0.25% of the average daily net assets value of Fund shares that are held in
such institution's customers' accounts. Activities appropriate for financing
under the [Class C] Plan include, but are not limited to, the following:
printing of prospectuses and statements of additional information and reports
for other than existing shareholders; overhead; preparation and distribution of
advertising material and sales literature; expenses of organizing and conducting
sales seminars; supplemental payments to dealers and other institutions such as
<PAGE>
asset-based sales charges or as payments of service fees under shareholder
service arrangements; and costs of administering the [Class C] Plan.
Of the aggregate amount payable under the [Class C] Plan, payments to dealers
and other financial institutions that provide continuing personal shareholder
services to their customers who purchase and own [Class C] shares of Cash
Reserves Fund, in amounts of up to 0.25% of the average daily net assets of the
[Class C] shares of the Fund attributable to the customers of such dealers or
financial institutions are characterized as a service fee, and payments to
dealers and other financial institutions in excess of such amount and payments
to IDI would be characterized as an asset-based sales charge pursuant to the
[Class C] Plan. Payments pursuant to the [Class C] Plan are subject to any
applicable limitations imposed by rules of the National Association of
Securities Dealers, Inc. ("NASD"). The [Class C] Plan conforms to rules of the
NASD by limiting payments made to dealers and other financial institutions who
provide continuing personal shareholder services to their customers who purchase
and own [Class C] shares of the Cash Reserves Fund to no more than 0.25% per
annum of the average daily net assets of the [Class C] shares of the Fund
attributable to the customers of such dealers or financial institutions, and by
imposing a cap on the total sales charges, including asset-based sales charges,
that may be paid by the Fund.
IDI may pay sales commissions to dealers and institutions who sell [Class C]
shares of Cash Reserves Fund at the time of such sales. Payments with respect to
[Class C] shares will equal 1.00% of the purchase price of the [Class C] shares
sold by the dealer or institution, and will consist of a sales commission of
0.75% of the purchase price of [Class C] shares sold plus an advance of the
first year service fee of 0.25% with respect to such shares. IDI will retain all
payments received by it relating to [Class C] shares for the first thirteen
months after they are purchased. The portion of the payments to IDI under the
[Class C] Plan attributable to [Class C] shares which constitutes an asset-based
sales charge (0.75%) is intended in part to permit IDI to recoup a portion of
on-going sales commissions to dealers plus financing costs, if any. After the
first thirteen months, IDI will make such payments quarterly to dealers and
institutions based on the average net asset value of [Class C] shares which are
attributable to shareholders for whom the dealers and institutions are
designated as dealers of record.
A significant expenditure under the [Class C] Plan is compensation paid to
securities companies and other financial institutions and organizations, which
may include INVESCO-affiliated companies, in order to obtain various
distribution-related and/or administrative services for Cash Reserves Fund. Cash
Reserves Fund is authorized by the [Class C] Plan to use its assets to finance
the payments made to obtain those services. Payments will be made by IDI to
broker-dealers who sell shares of Cash Reserves Fund and may be made to banks,
savings and loan associations and other depository institutions. Although the
Glass-Steagall Act limits the ability of certain banks to act as underwriters of
mutual fund shares, INVESCO does not believe that these limitations would affect
the ability of such banks to enter into arrangements with IDI, but can give no
assurance in this regard. However, to the extent it is determined otherwise in
the future, arrangements with banks might have to be modified or terminated,
and, in that case, the size of the Fund possibly could decrease to the extent
that the banks would no longer invest customer assets in the Fund. Neither the
Company nor its investment adviser will give any preference to banks or other
depository institutions which enter into such arrangements when selecting
investments to be
<PAGE>
made by Cash Reserves Fund. Financial institutions and any other person entitled
to receive compensation for selling Fund shares may receive different
compensation for selling shares of one particular class over another.
Since Cash Reserves Fund's [Class C] shares did not commence operations
until January __, 2000, no payments were made to IDI under the [Class C] Plan
for the fiscal year ended May 31, 1999.
The services which are provided by securities dealers and other organizations
may vary by dealer but include, among other things, processing new shareholder
account applications, preparing and transmitting to the Company's Transfer Agent
computer-processable tapes of all Fund transactions by customers, serving as the
primary source of information to customers in answering questions concerning
Cash Reserves Fund, and assisting in other customer transactions with the Fund.
The [Class C] Plan provides that it shall continue in effect with respect
to the Fund as long as such continuance is approved at least annually by the
vote of the board of directors of the Company cast in person at a meeting called
for the purpose of voting on such continuance, including the vote of a majority
of the Independent Directors. The [Class C] Plan can also be terminated at any
time by Cash Reserves Fund, without penalty, if a majority of the Independent
Directors, or shareholders of the relevant class of shares of the Fund, vote to
terminate the [Class C] Plan. The Company may, in its absolute discretion,
suspend, discontinue or limit the offering of its shares at any time. In
determining whether any such action should be taken, the board of directors
intends to consider all relevant factors including, without limitation, the size
of Cash Reserves Fund, the investment climate for the Fund, general market
conditions, and the volume of sales and redemptions of the Fund's shares. The
[Class C] Plan may continue in effect and payments may be made under the [Class
C] Plan following any temporary suspension or limitation of the offering of Fund
shares; however, the Company is not contractually obligated to continue the
[Class C] Plan for any particular period of time. Suspension of the offering of
Cash Reserves Fund's shares would not, of course, affect a shareholder's ability
to redeem his or her shares.
So long as the [Class C] Plan is in effect, the selection and nomination of
persons to serve as Independent Directors of the Company shall be committed to
the Independent Directors then in office at the time of such selection or
nomination. The [Class C] Plan may not be amended to increase the amount of Cash
Reserves Fund's payments under the [Class C] Plan without approval of the
shareholders of that Fund, and all material amendments to the [Class C] Plan
must be approved by the board of directors of the Company, including a majority
of the Independent Directors. Under the agreement implementing the [Class C]
Plan, IDI or Cash Reserves Fund, the latter by vote of a majority of the
Independent Directors, or a majority of the holders of the relevant class of the
Fund's outstanding voting securities, may terminate such agreement without
penalty upon 30 days' written notice to the other party. No further payments
will be made by Cash Reserves Fund under the [Class C] Plan in the event of its
termination.
To the extent that the [Class C] Plan constitutes a plan of distribution
adopted pursuant to Rule 12b-1 under the 1940 Act, it shall remain in effect as
such, so as to authorize the use of Fund assets in the amounts and for the
purposes set forth therein, notwithstanding the occurrence of an assignment, as
defined by the 1940 Act, and rules thereunder. To the extent it constitutes an
agreement pursuant to a plan, Cash Reserves Fund's obligation to make payments
to IDI shall terminate automatically, in the event of such "assignment." In this
event, Cash Reserves
<PAGE>
Fund may continue to make payments pursuant to the [Class C] Plan only upon
the approval of new arrangements regarding the use of the amounts authorized to
be paid by the Fund under the [Class C] Plan. Such new arrangements must be
approved by the directors, including a majority of the Independent Directors, by
a vote cast in person at a meeting called for such purpose. These new
arrangements might or might not be with IDI. On a quarterly basis, the directors
review information about the distribution services that have been provided to
Cash Reserves Fund and the 12b-1 fees paid for such services. On an annual
basis, the directors consider whether the [Class C] Plan should be continued
and, if so, whether any amendment to the [Class C] Plan, including changes in
the amount of 12b-1 fees paid by Cash Reserves Fund, should be made.
The only Company directors and interested persons, as that term is defined
in Section 2(a)(19) of the 1940 Act, who have a direct or indirect financial
interest in the operation of the [Class C] Plan are the officers and directors
of the Company who are also officers either of IDI or other companies affiliated
with IDI. The benefits which the Company believes will be reasonably likely to
flow to Cash Reserves Fund and its shareholders under the [Class C] Plan include
the following:
o Enhanced marketing efforts, if successful, should result in an increase
in net assets through the sale of additional shares and afford greater
resources with which to pursue the investment objectives of the Fund;
o The sale of additional shares reduces the likelihood that redemption of
shares will require the liquidation of securities of the Fund in amounts
and at times that are disadvantageous for investment purposes; and
o Increased Fund assets may result in reducing each investor's share of
certain expenses through economies of scale (e.g., exceeding
established breakpoints in an advisory fee schedule and allocating
fixed expenses over a larger asset base), thereby partially offsetting
the costs of the [Class C] Plan.
The positive effect which increased Fund assets will have on INVESCO's revenues
could allow INVESCO and its affiliated companies:
o To have greater resources to make the financial commitments necessary to
improve the quality and level of the Fund's shareholder services (in
both systems and personnel);
o To increase the number and type of mutual funds available to investors
from INVESCO and its affiliated companies (and support them in their
infancy), and thereby expand the investment choices available to all
shareholders; and
o To acquire and retain talented employees who desire to be associated
with a growing organization.
<PAGE>
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.
TRANSFER AGENT
INVESCO, 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 other INVESCO 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
<PAGE>
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.
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 $43,000,000.00
Company
- --------------------------------------------------------------------------------
Associates Corp of $40,000,000.00
North America
- --------------------------------------------------------------------------------
Ford Motor Credit $40,000,000.00
- --------------------------------------------------------------------------------
Morgan Stanley Dean $39,994,654.31
Witter
- --------------------------------------------------------------------------------
Household Finance $38,000,000.00
- --------------------------------------------------------------------------------
General Motors $31,822,934.33
Acceptance
- --------------------------------------------------------------------------------
Merrill Lynch $19,973,171.93
- --------------------------------------------------------------------------------
State Street Bank and $ 2,940,000.00
Trust
- --------------------------------------------------------------------------------
Tax-Free Money General Electric $ 2,200,000.00
Capital
- --------------------------------------------------------------------------------
U.S. Government Money State Street Bank and $13,205,000.00
Trust
- --------------------------------------------------------------------------------
<PAGE>
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 October 31, 1999, the following shares of
each Fund were outstanding:
Cash Reserves Fund - [Class II] 781,561,951
Cash Reserves Fund - [Class C] 0
Tax-Free Money Fund - [Class II] 39,621,232
U.S. Government Money Fund - [Class II] 87,618,544
A share of each class of a Fund represents an identical interest in that
Fund's investment portfolio and has the same rights, privileges and preferences.
However, each class may differ with respect to sales charges, if any,
distribution and/or service fees, if any, other expenses allocable exclusively
to each class, voting rights on matters exclusively affecting that class, and
its exchange privilege, if any. The different sales charges and other expenses
applicable to the different classes of shares of the Funds will affect the
performance of those classes. Each share of a Fund is entitled to participate
equally in dividends, other distributions and the proceeds of any liquidation of
that Fund. However, due to the differing expenses of the classes, dividends and
liquidation proceeds on [Class II and Class C] shares will differ. 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 1940 Act.
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.
<PAGE>
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.
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, each 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
<PAGE>
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
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 telephone number or
address on the back cover of the Funds' Prospectuses.
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.
<PAGE>
Average annual total return performance for the one-, five-, and ten-year
periods (or since inception) ended May 31, 1999 was:
Name of Fund 1 Year 5 Year 10 Year
- ------------ ------ ------ -------
Cash Reserves Fund - [Class II] 4.45% 4.74% 4.87%
Tax-Free Money Fund - [Class II] 2.63% 2.90% 3.19%
U.S. Government Money Fund - [Class II] 4.36% 4.65% 4.07%*
* Inception date of April 26, 1991
Average annual total return performance is not provided for Cash Reserves Fund's
[Class C] shares since it did not commence operations until January __, 2000.
Average annual total return performance for each of the periods indicated was
computed by finding the average annual compounded rates of return that would
equate the initial amount invested to the ending redeemable value, according to
the following formula:
P(1 + T)n = ERV
where: P = 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, S&P,
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
<PAGE>
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
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
ranking; and the modifier 3 indicates a ranking in the lower end of this rating
category.
<PAGE>
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) Distribution Agreement between Registrant and INVESCO
Distributors, Inc. dated September 30, 1997.(2)
(f)(1) Amended Defined Benefit Deferred Compensation Plan for
Non-Interested Directors and Trustees.(4)
(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.(3)
(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.
(l) Not Applicable.
(m) Not Applicable.
<PAGE>
(n) Not Applicable
(o)(1) Form of Plan and Agreement of Distribution pursuant to
Rule 12b-1 under the Investment Company Act of 1940 with
respect to Cash Reserves Fund dated November __, 1999.
(1) Previously filed with Post-Effective Amendment No. 33 to the
Registration Statement on July 30, 1997, and incorporated by reference herein.
(2) Previously filed with Post-Effective Amendment No. 34 to the
Registration Statement on September 28, 1998 and incorporated by reference
herein.
(3) Previously filed with Post-Effective Amendment No. 35 to the
Registration Statement on July 28, 1999 and incorporated by reference herein.
(4) Previously filed with Post-Effective Amendment No. 36 to the
Registration Statement on September 27, 1999 and incorporated by reference
herein.
ITEM 24. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH INVESCO MONEY
MARKET FUNDS, INC. (THE "COMPANY")
No person is presently controlled by or under common control with the Company.
ITEM 25. INDEMNIFICATION
Indemnification provisions for officers, directors and employees of the Company
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,
directors and officers of the Company 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. The Company 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.
<PAGE>
</TABLE>
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Name Position With Adviser Principal Occupation and Company Affiliation
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Mark H. Williamson Chairman, President & Chief Executive
Director and Officer
Officer INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
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Raymond R. Cunningham Officer Senior Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
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William J. Galvin, Jr. Officer Senior Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
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Ronald L. Grooms Officer & Senior Vice President & Treasurer
Director INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
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Richard W. Healey Officer & Senior Vice President
Director INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
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William R. Keithler Officer Senior Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
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Charles P. Mayer Officer & Senior Vice President
Director INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
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Timothy J. Miller Officer & Senior Vice President
Director INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
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Donovan J. (Jerry) Paul Officer Senior Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
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Glen A. Payne Officer Senior Vice President, Secretary
& General Counsel
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
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John R. Schroer, II Officer Senior Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
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Marie E. Aro Officer Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
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Ingeborg S. Cosby Officer Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
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Stacie Cowell Officer Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
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Dawn Daggy-Mangerson Officer Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
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Elroy E. Frye, Jr. Officer Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
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Linda J. Gieger Officer Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
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Mark D. Greenberg Officer Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
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Brian B. Hayward Officer Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
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Richard R. Hinderlie Officer Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
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Thomas M. Hurley Officer Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
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Patricia F. Johnston Officer Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
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Campbell C. Judge Officer Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
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Peter M. Lovell Officer Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
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James F. Lummanick Officer Vice President & Assistant
General Counsel
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
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Thomas A. Mantone, Jr. Officer Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
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Trent E. May Officer Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
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Corey M. McClintock Officer Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
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Douglas J. McEldowney Officer Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
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Frederick R. (Fritz) Meyer Officer Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
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Stephen A. Moran Officer Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
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Jeffrey G. Morris Officer Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
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Laura M. Parsons Officer Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
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Jon B. Pauley Officer Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
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Pamela J. Piro Officer Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
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Anthony R. Rogers Officer Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
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Gary L. Rulh Officer Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
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James B. Sandidge Officer Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
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John S. Segner Officer Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
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Terri B. Smith Officer Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
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Tane T. Tyler Officer Vice President & Assistant
General Counsel
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
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Thomas R. Wald Officer Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
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Alan I. Watson Officer Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
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Judy P. Wiese Officer Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
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Thomas H. Scanlan Officer Regional Vice President
INVESCO Funds Group, Inc.
12028 Edgepark Court
Potomac, MD 20854
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Reagan A. Shopp Officer Regional Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
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Michael D. Legoski Officer Assistant Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
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Donald R. Paddack Officer Assistant Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
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Kent T. Schmeckpeper Officer Assistant Vice President
Account Relationship Manager
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
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Jeraldine E. Kraus Officer Assistant Secretary
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
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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 Stock 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
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William J. Galvin, Jr. Senior Vice Asst. Secretary
Asst. Secretary President &
7800 E. Union Avenue
Denver, CO 80237
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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
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
Pamela J. Piro Assistant Treasurer Assistant Treasurer
7800 E. Union Avenue
Denver, CO 80237
Judy P. Wiese Assistant Secretary Assistant Secretary
7800 E. Union Avenue
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
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Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940, the Fund certifies that it 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 16th day of November, 1999.
Attest: INVESCO Money Market Funds, Inc.
/s/ Glen A. Payne /s/ Mark H. Williamson
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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*
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Mark H. Williamson, President & Lawrence H. Budner, Director
Director (Chief Executive Officer)
/s/ Ronald L. Grooms /s/ John W. McIntyre*
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Ronald L. Grooms, Treasurer John W. McIntyre, Director
(Chief Financial and Accounting
Officer)
/s/ Victor L. Andrews* /s/ Fred A. Deering*
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Victor L. Andrews, Director Fred A. Deering, Director
/s/ Bob R. Baker* /s/ Larry Soll*
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Bob R. Baker, Director Larry Soll, Director
/s/ Charles W. Brady* /s/ Kenneth T. King*
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Charles W. Brady, Director Kenneth T. King, Director
/s/ Wendy L. Gramm*
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Wendy L. Gramm, Director
By _____________________________ By /s/ Glen A. Payne
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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.
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Exhibit Index
Page in
Exhibit Number Registration Statement
j 75
o(1) 76
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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. 37 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
headings "Independent Accountants" and "Financial Statements" in the Statement
of Additional Information.
/s/ PricewaterhouseCoopers LLP
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PricewaterhouseCoopers LLP
Denver, Colorado
November 15, 1999
FORM OF
INVESCO CASH RESERVES FUND PLAN PURSUANT TO RULE 18F-3
January __, 2000
1. The Plan. This Plan is the written multiple class plan for the INVESCO
Cash Reserves Fund (the "Fund") for INVESCO Distributors, Inc. ("IDI"),
the general distributor of shares of the Fund and INVESCO Funds Group,
Inc. ("INVESCO"), the investment adviser of the Fund. It is the
written plan contemplated by Rule 18f-3 (the "Rule") under the
Investment Company Act of 1940 (the "1940 Act"), pursuant to which the
Fund may issue multiple classes of shares. The terms and provisions of
this Plan shall be interpreted and defined in a manner consistent with
the provisions and definitions contained in the Rule.
2. Similarities and Differences Among Classes. The Fund agrees that one or
more classes of that Fund:
(1) may have a separate service plan or distribution and service
plan ("12b-1 Plan"), and shall pay all of the expenses incurred
pursuant to that arrangement, and may pay a different share of
expenses ("Class Expenses") if such expenses are actually incurred
in a different amount by that class, or if the class receives
services of a different kind or to a different degree than that of
other classes. Class Expenses are those expenses specifically
attributable to the particular class of shares, namely (a) 12b-1
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Plan fees, (b) transfer and shareholder servicing agent fees and
administrative service fees, (c) shareholder meeting expenses, (d)
blue sky and SEC registration fees and (e) any other incremental
expenses subsequently identified that should be allocated to one
class which shall be approved by a vote of that Fund's Board of
Directors (the "Directors"). Expenses identified in Items (c)
through (e) may involve issues relating either to a specific class
or to the entire Fund; such expenses constitute Class Expenses only
when they are attributable to a specific class. Because Class
Expenses may be accrued at different rates for each class of the
Fund, dividends distributable to shareholders and net asset values
per share may differ for shares of different classes of the Fund.
(2) shall have exclusive voting rights on any matters that relate
solely to that class's arrangements, including without limitation
voting with respect to a 12b-1 Plan for that class;
(3) shall have separate voting rights on any matter submitted to
shareholders in which the interests of one class differ from the
interests of any other class;
(4) may have a different arrangement for shareholder services, in-
cluding different sales charges, sales charge waivers, purchase and
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redemption features, exchange privileges, loan privileges, the
availability of certificated shares and/or conversion features; and
(5) shall have in all other respects the same rights and obligations
as each other class.
3. Allocations of Income, Capital Gains and Losses and Expenses. Income,
realized and unrealized capital gains and losses, and expenses of the Fund
other than Class Expenses allocated to a particular class shall be
allocated to each class on the basis of the net asset value of that class
in relation to the net asset value of the Fund.
4. Expense Waivers and Reimbursements. From time to time the Adviser may
voluntarily undertake to (i) waive any portion of the management fee
charged to the Fund, and/or (ii) reimburse any portion of the expenses
of the Fund or of one or more of its classes, but is not required to do
so or to continue to do so for any period of time. The quarterly
report by the Advisor to the Directors of Fund expense reimbursements
shall disclose any reimbursements that are not equal for all classes of
the Fund.
5. Disclosure. The classes of shares to be offered by the Fund, and other
material distribution arrangements with respect to such classes, shall be
disclosed in the prospectus and/or statement of additional information
used to offer that class of shares. Such prospectus or statement of
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additional information shall be supplemented or amended to reflect any
change(s) in classes of shares to be offered or in the material
distribution arrangements with respect to such classes.
6. Independent Audit. The methodology and procedures for calculating the net
asset value, dividends and distributions of each class shall be reviewed
by an independent auditing firm (the "Expert"). At least annually, the
Expert, or an appropriate substitute expert, will render a report to the
Funds on policies and procedures placed in operation and tests of
operating effectiveness as defined and described in SAS 70 of the AICPA.
7. Offers and Sales of Shares. INVESCO will maintain compliance standards as
to when each class of shares may appropriately be sold to particular
investors, and will require all persons selling shares of the Fund to
agree to conform to such standards.
8. Rule 12b-1 Payments. The Treasurer of INVESCO Money Market Funds, Inc.
(the "Company") shall provide to the Directors of the Company, and the
Directors shall review, at least quarterly, the written report required
by the Company's 12b-1 Plan. The report shall include information on
(i) the amounts expended pursuant to the 12b-1 Plan, (ii) the purposes
for which such expenditures were made and (iii) the amount of INVESCO's
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unpaid distribution costs (if recovery of such costs in future periods
is permitted by that 12b-1 Plan), taking into account 12b-1 Plan
payments paid to INVESCO.
9. Conflicts. On an ongoing basis, the Directors of the Company, pursuant to
their fiduciary responsibilities under the 1940 Act and otherwise, will
monitor the Fund for the existence of any material conflicts among the
interests of the classes. INVESCO will be responsible for reporting any
potential or existing conflicts to the Directors. In the event a conflict
arises, the Directors shall take such action as they deem appropriate.
10. Effectiveness and Amendment. This Plan takes effect for the Fund as of
the date of adoption shown below. This Plan has been approved by a
majority vote of the Board of the Company and of the Company's Board
members who are not "interested persons" (as defined in the 1940 Act)
and who have no direct or indirect financial interest in the operation
of the Plan or any agreements relating to the Plan (the "Independent
Directors") of the Fund at meetings called on this Plan. Prior to that
vote, (i) the Board was furnished by the methodology used for net asset
value and dividend and distribution determinations for the Fund, and
(ii) a majority of the Board and its Independent Directors determined
that the Plan as proposed to be adopted, including the expenses
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allocation, is in the best interests of the Fund as a whole and to each
class of the Fund individually. Prior to any material amendment to the
Plan, the Board shall request and evaluate, and INVESCO shall furnish,
such information as may be reasonably necessary to evaluate such
amendment, and a majority of the Board and its Independent Directors
shall find that the Plan as proposed to be amended, including the
expense allocation, is in the best interest of each class, the Fund as
a whole and each class of the Fund individually. No material amendment
to the Plan shall be made by any Fund's Prospectus or Statement of
Additional Information or any supplement to either of the foregoing,
unless such amendment has first been approved by a majority of the
Fund's Board and its Independent Directors.
Adopted by the Board of INVESCO Money Market Funds, Inc. on January __, 2000.
________________________
Glen A. Payne, Secretary
