As filed on November 4, 1999 File No. 002-26125
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. 53 X
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 X
Amendment No. 27 X
INVESCO STOCK FUNDS, INC.
(formerly, INVESCO Equity Funds, Inc.;
formerly, INVESCO Capital Appreciation 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)
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Copies to:
Ronald M. Feiman, Esq.
Mayer, Brown & Platt
1675 Broadway
New York, New York 10019-5820
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Approximate Date of Proposed Public Offering: As soon as practicable after this
post-effective amendment becomes effective.
It is proposed that this filing will become effective (check appropriate box)
- -- immediately upon filing pursuant to paragraph (b)
- -- on , pursuant to paragraph (b)
X 60 days after filing pursuant to paragraph (a)(1)
- -- on _____________, 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 Blue Chip Growth Fund, INVESCO Dynamics Fund, INVESCO Endeavor
Fund, INVESCO Growth & Income Fund, INVESCO Small Company Growth Fund and
INVESCO Value Equity Fund and does not affect the current class of shares of
those Funds.
<PAGE>
PROSPECTUS | January __, 2000
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YOU SHOULD KNOW WHAT INVESCO KNOWS (TM)
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INVESCO STOCK FUNDS, INC.
INVESCO BLUE CHIP GROWTH FUND - [CLASS C]
INVESCO DYNAMICS FUND - [CLASS C]
INVESCO ENDEAVOR FUND - [CLASS C]
INVESCO GROWTH & INCOME FUND - [CLASS C]
INVESCO SMALL COMPANY GROWTH - [CLASS C]
INVESCO S&P 500 INDEX FUND - [CLASS C]
INVESCO VALUE EQUITY FUND - [CLASS C]
SIX MUTUAL FUNDS SEEKING LONG-TERM CAPITAL APPRECIATION.[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....................................7
Fees And Expenses...................................9
Investment Risks...................................12
Risks Associated With Particular Investments.......12
Temporary Defensive Positions......................18
Portfolio Turnover.................................18
Fund Management....................................18
Portfolio Managers.................................19
Potential Rewards..................................21
Share Price........................................21
How To Buy Shares..................................22
Your Account Services..............................25
How To Sell Shares.................................25
Taxes..............................................28
Dividends And Capital Gain Distributions...........28
Financial Highlights...............................30
[INVESCO ICON]
INVESCO
The Securities and Exchange Commission has not approved or disapproved the
shares of these Funds. Likewise, the Commission has not determined if this
Prospectus is truthful or complete. Anyone who tells you otherwise is
committing a federal crime.
<PAGE>
This Prospectus Will Tell You More About:
[KEY ICON] Investment Objectives & Strategies
[ARROW ICON] Potential Investment Risks
[GRAPH ICON] Past Performance
[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 Funds.
Together with our affiliated companies, we at INVESCO direct all aspects of the
management and sale of the Funds.
The Funds' [Class C] shares are sold exclusively through third parties, such as
brokers, banks, and financial planners. You cannot purchase the Funds' [Class C]
shares directly from INVESCO or its affiliated companies. This Prospectus
contains important information about the Funds' [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 Distributor's, Inc. ("IDI") at
1-800-___-____. You may also obtain additional information concerning other
classes offered from your broker,bank, or financial planner who is offereing the
[Class C] shares offered in this Prospectus.
No dealer, sales person,or any other person has been authorized to give any
information or make any representations other than those contained in this
Prospectus, and you should not rely on such other information or
representations.
FOR MORE DETAILS ABOUT EACH FUND'S CURRENT INVESTMENTS AND MARKET OUTLOOK,
PLEASE SEE THE MOST RECENT ANNUAL OR SEMIANNUAL REPORT.
All of the Funds attempt to make your investment grow. The Funds are
aggressively managed. The Funds invest primarily in equity securities that
INVESCO believes will rise in price faster than other securities, as well as in
options and other investments whose values are based upon the values of equity
securities. They can also invest in debt securities.
All of the Funds (except Value Equity Fund) are managed in the growth style. At
INVESCO, growth investing starts with research from the "bottom up," and focuses
on company fundamentals and growth prospects.
We require that securities purchased for the Funds meet the following
standards:
o Exceptional growth: The markets and industries they represent are growing
significantly faster than the economy as a whole.
o Leadership: They are leaders - or emerging leaders - in these markets,
securing their position through technology, marketing, distribution or
some other innovative means.
o Financial validation: Their returns - in the form of sales unit growth,
rising operating margins, internal funding and other factors -
demonstrate exceptional growth and leadership.
Value Equity Fund is managed in the value style. That means we seek
securities, particularly stocks, that are currently undervalued by the
market - companies that are performing well, or have solid management and
products, but whose stock prices do not reflect that value. Through our
value process, we seek to provide reasonably consistent returns over a
variety of market cycles.
[ARROW ICON] In addition to the risks outlined in the following sections for
each Fund, the Funds are subject to other principal risks such as market,
liquidity, derivatives, options and futures, counterparty, interest rate,
duration, foreign securities, lack of timely information and credit
risks. These risks are described and discussed later in the Prospectus
under the headings "Investment Risks" and "Risks Associated With Particular
Investments." An investment in a Fund is not a deposit of any bank and is
not insured or guaranteed by the Federal Deposit Insurance Corporation
("FDIC") or any other government agency. As with any mutual fund, there is
always a risk that you can lose money on your investment in a Fund.
<PAGE>
[KEY ICON] INVESCO BLUE CHIP GROWTH FUND - [CLASS C]
The Fund tries to buy securities that will increase in value over the long term;
current income is a secondary goal.
The Fund invests primarily in common stocks of large companies with market
capitalizations of more than $10 billion that have a history of consistent
earnings growth regardless of business cycles. In addition, INVESCO tries to
identify companies that have - or are expected to have - growing earnings,
revenues and strong cash flows. INVESCO also examines a variety of industries
and businesses, and seeks to purchase the securities of companies that we
believe are best situated to grow in their industry categories. We also consider
the dividend payment records of the companies whose securities the Fund buys.
The Fund also may invest in preferred stocks (which generally pay higher
dividends than common stocks) and debt instruments that are convertible into
common stocks, as well as in securities of foreign companies. In recent years,
the core of the Fund's investments has been concentrated in the securities of
three or four dozen large, high quality companies.
[ARROW ICON] Although the Fund is subject to a number of risks that could affect
its performance, its principal risk is market risk - that is, that the prices of
the securities in its portfolio will rise and fall due to price movements in the
securities markets, and that the securities held in the Fund's portfolio may
decline in value more than the overall securities markets.
[KEY ICON] INVESCO DYNAMICS FUND - [CLASS C]
This Fund attempts to make your investment grow. It invests primarily in common
stocks of mid-sized U.S. companies -- those with market capitalizations between
$1 billion and $10 billion -- but also has the flexibility to invest in other
types of securities including preferred stocks, convertible securities and
bonds.
The core of the Fund's portfolio is invested in securities of established
companies that are leaders in attractive growth markets with a history of strong
returns. The remainder of the portfolio is invested in securities of companies
that show accelerating growth, driven by product cycles, favorable industry or
sector conditions and other factors that INVESCO believes will lead to rapid
sales or earnings growth.
The Fund's strategy relies on many short-term factors including current
information about a company, investor interest, price movements of a company's
securities and general market and monetary conditions. Consequently, the Fund's
investments are usually bought and sold relatively frequently.
[ARROW ICON] While the Fund generally invests in mid-sized companies, the Fund
sometimes invests in the securities of smaller companies. The prices of these
securities tend to move up and down more rapidly than the securities prices of
larger, more established companies, and the price of Fund shares tends to
fluctuate more than it would if the Fund invested in the securities of larger
companies.
<PAGE>
[KEY ICON] INVESCO ENDEAVOR FUND - [CLASS C]
The Fund attempts to make your investment grow. It uses an aggressive
strategy and invests primarily in common stocks. The Fund invests in companies
of all sizes and also has the flexibility to invest in other types of
securities, including preferred stocks, convertible securities, warrants, bonds
and other debt securities.
The Fund's strategy relies on many short-term factors including current
information about a company, investor interest, price movements of a company's
securities and general market and monetary conditions. Consequently, the Fund's
investments are usually bought and sold relatively frequently.
[ARROW ICON] The Fund's investments are not limited to companies of a particular
size. It invests in the securities of smaller companies, including companies
just entering the securities marketplace with initial public offerings. The
prices of these securities tend to move up and down more rapidly than the
securities prices of larger, more established companies. When the Fund
concentrates its investments in the securities of smaller companies, the price
of Fund shares tends to fluctuate more than it would if the Fund invested in the
securities of larger companies.
[KEY ICON] INVESCO GROWTH & INCOME FUND - [CLASS C]
The Fund attempts to obtain a high rate of total return. Income on
investments (dividends and interest), plus increases in the value of
investments, make up total return. The Fund invests most of its assets in common
stocks, preferred stocks and securities convertible into common stocks. The
Fund's core investments are in well-established, large growth companies with a
strong record of paying dividends. The Fund may also invest in securities which
do not pay dividends but that INVESCO believes have the potential to increase in
value, regardless of the potential for dividends.
The Fund's strategy relies on many short-term factors including current
information about a company, investor interest, price movements of a company's
securities and general market and monetary conditions. Consequently, the Fund's
investments are usually bought and sold relatively frequently.
[ARROW ICON] The Fund's portfolio is presently concentrated in the stocks of
approximately 50 companies. Although INVESCO believes that this level of
diversification is appropriate, the Fund is not as diversified as some other
mutual funds.
[KEY ICON] INVESCO SMALL COMPANY GROWTH FUND - [CLASS C]
The Fund seeks long-term capital growth. Most holdings are in
small-capitalization companies -- those with market capitalizations under $1
billion at the time of purchase. We are primarily looking for companies in the
developing stages of their life cycles, which are currently priced below our
estimation of their potential, have earnings which may be expected to grow
faster than the U.S. economy in general, and/or offer the potential for
accelerated earnings growth due to rapid growth of sales, new products,
management changes, or structural changes in the economy.
<PAGE>
[ARROW ICON] Investments in small, developing companies carry greater risk than
investments in larger, more established companies. Developing companies
generally face intense competition, and have a higher rate of failure than
larger companies. On the other hand, large companies were once small companies
themselves, and the growth opportunities of some small companies may be quite
high.
[KEY ICON] INVESCO VALUE EQUITY FUND - [CLASS C]
The Fund seeks high total return from capital appreciation and current
income. The portfolio emphasizes high-quality, larger capitalization companies
which are temporarily out of favor with investors. Our value-based process
evaluates numerous factors on a current and historical basis, seeking
undiscovered values in the market. The philosophy of value investing is based
upon the belief that certain securities are undervalued by the market. As such,
when the market "discovers" these securities, their value should increase.
[ARROW ICON] Although the Fund is subject to a number of risks, its principal
risk is market risk. Undervalued stocks may not realize their perceived value
for extened periods of time. Value-oriented funds may underperform when another
investing style is in favor.
[GRAPH ICON] FUND PERFORMANCE
Since the Funds' [Class C] shares did not commence investment operations until
January ___, 2000, the bar charts below show Blue Chip Growth - [Class II],
Dynamics - [Class II], Small Company Growth - [Class II], and Value Equity -
[Class II] Funds' actual yearly performance for the years ended December 31
(commonly known as their "total return") over the past decade or since
inception. These funds are not offered in this Prospectus. THE BAR CHARTS DO NOT
REFLECT CONTINGENT DEFERRED SALES CHARGES OR ASSET BASED SALES CHARGES IN EXCESS
OF 0.25% OF NET ASSETS; IF THEY DID, THE TOTAL RETURNS SHOWN WOULD BE LOWER. The
table below shows average annual total returns for various periods ended
December 31, 1998 for each [Class II] Fund compared to the relevant following
indexes: S&P Midcap 400 Index, S&P 500 Composite Index and Russell 2000 Index.
The information in the charts and table illustrates the variability of each
[Class II] Fund's return and how its performance compared to a broad measure of
market performance. Remember, past performance does not indicate how a Fund will
perform in the future.
Fund performance information is not provided for Endeavor - [Class II] and
Growth & Income - [Class II] Funds, as those Funds did not commence investment
operations until October 28, 1998 and July 1, 1998, respectively.
<PAGE>
The four charts below contain the following plot points:
<TABLE>
<CAPTION>
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BLUE CHIP GROWTH FUND - [CLASS II]
ACTUAL ANNUAL TOTAL RETURN(1),(2),(5)
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'89 '90 '91 '92 '93 '94 '95 '96 '97 '98
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
31.36% (1.18%) 42.05% 2.88% 18.01% (8.80%) 29.54% 20.96% 27.22% 41.72%
Best Calendar Qtr. 12/98 26.85%
Worst Calendar Qtr. 9/90 (16.37%)
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DYNAMICS FUND - [CLASS II]
ACTUAL ANNUAL TOTAL RETURN(1),(2),(5)
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'89 '90 '91 '92 '93 '94 '95 '96 '97 '98
22.64% (6.35%) 67.00% 13.15% 19.10% (1.95%) 37.55% 15.65% 24.09% 23.25%
Best Calendar Qtr. 3/91 28.82%
Worst Calendar Qtr. 9/90 (19.61%)
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SMALL COMPANY GROWTH FUND - [CLASS II]
ACTUAL ANNUAL TOTAL RETURN(1),(2),(3),(5)
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'92 '93 '94 '95 '96 '97 '98
25.27% 23.38% (3.74%) 30.02% 23.38% 11.62% 18.31%
Best Calendar Qtr. 12/98 26.27%
Worst Calendar Qtr. 9/98 (16.94%)
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VALUE EQUITY FUND - [CLASS II]
ACTUAL ANNUAL TOTAL RETURN(1),(2),(3),(5)
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'89 '90 '91 '92 '93 '94 '95 '96 '97 '98
21.34% (5.80%) 35.84% 4.98% 10.43% 4.04% 30.60% 18.48% 28.00% 15.05%
Best Calendar Qtr. 3/91 18.10%
Worst Calendar Qtr. 9/90 (15.24%)
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</TABLE>
<PAGE>
<TABLE>
<CAPTION>
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AVERAGE ANNUAL RETURN(1),(2),(5)
AS OF 12/31/98
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1 YEAR 5 YEARS 10 YEARS
<S> <C> <C> <C>
Dynamics Fund - [Class II] 23.25% 18.99% 19.95%
S&P MidCap 400 Index(4) 18.25% 18.67% 19.29%
Blue Chip Growth Fund - [Class II] 41.72% 20.84% 19.15%
Value Equity Fund - [Class II] 15.05% 18.84% 15.61%
S&P 500 Composite Index(4) 28.58% 24.03% 19.17%
Small Company Growth Fund - [Class II](3) 14.90% 13.69% N/A
Russell 2000 Index(4) (2.55%) 11.87% 12.92%
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</TABLE>
(1)Total return figures include reinvested dividends and capital gain
distributions, and include the effect of the Fund's expenses.
(2)Year-to-date return for Blue Chip Growth - [Class II], Dynamics - [Class II],
Small Company Growth - [Class II] and Value Equity - [Class II] Funds were
_____%, _____%, _____% and _____%, respectively, as of the calender quarter
ended September 30, 1999.
(3)The Fund commenced investment operations on December 27, 1991.
(4)The S&P MidCap 400 is an unmanaged index indicative of domestic
mid-capitalization stocks. The S&P 500 Index is an unmanaged index considered
representative of the performance of the broad U.S. stock market. The Russell
2000 Index is an unmanaged index indicative of small capitalization stocks.
Please keep in mind that the indexes do not pay brokerage, management,
administrative or distribution expenses, all of which are paid by the Funds and
are reflected in their annual returns.
(5)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 Funds:
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 dividens and other distributions.
<PAGE>
ANNUAL FUND OPERATING EXPENSES THAT ARE DEDUCTED FROM FUND ASSETS
BLUE CHIP GROWTH FUND - [CLASS C]
Management Fees 0.55%
Distribution and Service (12b-1) Fees(1) 1.00%
Other Expenses(2) ____%
Total Annual Fund Operating Expenses(2) ____%
DYNAMICS FUND - [CLASS C]
Management Fees 0.52%
Distribution and Service (12b-1) Fees(1) 1.00%
Other Expenses (2) ____%
Total Annual Fund Operating Expenses(2) ____%
ENDEAVOR FUND - [CLASS C]
Management Fees 0.75%
Distribution and Service (12b-1) Fees(1) 1.00%
Other Expenses(2) ____%
Total Annual Fund Operating Expenses(2) ____%
GROWTH & INCOME FUND - [CLASS C]
Management Fees 0.75%
Distribution and Service (12b-1) Fees(1) 1.00%
Other Expenses(2) ____%
Total Annual Fund Operating Expenses(2) ____%
SMALL COMPANY GROWTH FUND - [CLASS C]
Management Fees 0.72%
Distribution and Service (12b-1) Fees(1) 1.00%
Other Expenses(2) ____%
Total Annual Fund Operating Expenses(2) ____%
VALUE EQUITY FUND - [CLASS C]
Management Fees 0.75%
Distribution and Service (12b-1) Fees(1) 1.00%
Other Expenses(2) ____%
Total Annual Fund Operating Expenses(2) ____%
(1) Because the Funds pay 12b-1 distribution and service fees which are based
upon each Fund's assets, if you own shares of a 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
Funds did not begin a public offering of their shares until January ___,
2000. If necessary, certain expenses of the Funds will be absorbed by
INVESCO for at least the first fiscal year of each Fund's operations in
order to ensure that expenses for Blue Chip Growth - [Class C], Dynamics -
[Class C], Endeavor - [Class C], Growth & Income - [Class C], Small Company
Growth - [Class C] and Value Equity - [Class C] Funds will not exceed ___%,
___%, ___%, ___%, ___% and ___%, respectively, of each Fund's average net
assets pursuant to an agreement between the Funds and INVESCO. These
commitments may be changed at any time following consultation with the
board of directors. After absorption, Blue Chip Growth Fund - [Class C's]
Other Expenses and Total Annual Fund Operating Expenses for the fiscal year
ending July 31, 2000 are estmiated to be ___% and ___%, respectively, of
the Fund's average net assets; Dynamics Fund - [Class C's] Other Expenses
and Total Annual Fund Operating Expenses for the fiscal year ending July
31, 2000 are estmiated to be ___% and ___%, respectively, of the Fund's
average net assets; Endeavor Fund - [Class C's] Other Expenses and Total
Annual Fund Operating Expenses for the fiscal year ending July 31, 2000 are
estmiated to be ___% and ___%, respectively, of the Fund's average net
assets; Growth & Income Fund - [Class C's] Other Expenses and Total Annual
Fund Operating Expenses for the fiscal year ending July 31, 2000 are
estmiated to be ___% and ___%, respectively, of the Fund's average net
assets; Small Company Growth Fund - [Class C's] Other Expenses and Total
Annual Fund Operating Expenses for the fiscal year ending July 31, 2000 are
estmiated to be ___% and ___%, respectively, of the Fund's average net
assets; and Value Equity Fund - [Class C's] Other Expenses and Total Annual
Fund Operating Expenses for the fiscal year ending July 31, 2000 are
estmiated 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
Funds to the cost of investing in other mutual funds.
The Examples assume that you invested $10,000 in [Class C] shares of a 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 a 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
Blue Chip Growth Fund - [Class C] $ ___ $ ___
Dynamics Fund - [Class C] $ ___ $ ___
Endeavor Fund - [Class C] $ ___ $ ___
Growth & Income Fund - [Class C] $ ___ $ ___
Small Company Growth Fund - [Class C] $ ___ $ ___
S&P 500 Index Fund - [Class C] $ ___ $ ___
Value Equity Fund - [Class C] $ ___ $ ___
IF SHARES ARE NOT REDEEMED:
1 year 3 years
Blue Chip Growth Fund - [Class C] $ ___ $ ___
Dynamics Fund - [Class C] $ ___ $ ___
Endeavor Fund - [Class C] $ ___ $ ___
Growth & Income Fund - [Class C] $ ___ $ ___
Small Company Growth Fund - [Class C] $ ___ $ ___
S&P 500 Index Fund - [Class C] $ ___ $ ___
Value Equity Fund - [Class C] $ ___ $ ___
<PAGE>
[ARROW ICON] INVESTMENT RISKS
BEFORE INVESTING IN A FUND, YOU SHOULD DETERMINE THE LEVEL OF RISK WITH
WHICH YOU ARE COMFORTABLE. TAKE INTO ACCOUNT FACTORS LIKE YOUR AGE, CAREER,
INCOME LEVEL, AND TIME HORIZON.
You should determine the level of risk with which you are comfortable
before you invest. The principal risks of investing in any mutual fund,
including these Funds, are:
NOT INSURED. Mutual funds are not insured by the 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, nor assure you that the market value of your investment will
increase. You may lose the money you invest, and the Funds will not reimburse
you for any of these losses.
VOLATILITY. The price of your mutual fund shares will increase or decrease
with changes in the value of a Fund's underlying investments and changes in the
equity markets as a whole.
NOT A COMPLETE INVESTMENT PLAN. An investment in any mutual fund does not
constitute a complete investment plan. The Funds are designed to be only a part
of your personal investment plan.
YEAR 2000. Many computer systems in use today may not be able to recognize
any date after December 31, 1999. If these systems are not fixed by that date,
it is possible that they could generate erroneous information or fail
altogether. INVESCO has committed substantial resources in an effort to make
sure that its own major computer systems will continue to function on and after
January 1, 2000. Of course, INVESCO cannot fix systems that are beyond its
control. If INVESCO's own systems, or the systems of third parties upon which it
relies, do not perform properly after December 31, 1999, the Funds could be
adversely affected.
In addition, the markets for, or values of, securities in which the Funds
invest may possibly be hurt by computer failures affecting portfolio investments
or trading of securities beginning January 1, 2000. For example, improperly
functioning computer systems could result in securities trade settlement
problems and liquidity issues, production issues for individual companies and
overall economic uncertainties. Individual issuers may incur increased costs in
making their own systems Year 2000 compliant. The combination of market
uncertainty and increased costs means that there is a possibility that Year 2000
computer issues may adversely affect the Funds' investments. At this time, it is
generally believed that foreign issuers, particularly those in emerging and
other markets, may be more vulnerable to Year 2000 problems than will be issuers
in the U.S.
[ARROW ICON] RISKS ASSOCIATED WITH PARTICULAR INVESTMENTS
You should consider the special factors associated with the policies
discussed below in determining the appropriateness of investing in a Fund.
See the Statement of Additional Information for a discussion of additional
risk factors.
MARKET RISK
Equity stock prices vary and may fall, thus reducing the value of a
Fund's investments. Certain stocks selected for any Fund's portfolio may
decline in value more than the overall stock market. In general, the
securities of large businesses with outstanding securities worth $5 billion or
more have less volatility than those of mid-size businesses with outstanding
securities worth more than $1 billion, or small businesses with outstanding
securities worth less than $1 billion.
<PAGE>
LIQUIDITY RISK
A Fund's portfolio is liquid if the Fund is able to sell the securities it
owns at a fair price within a reasonable time. Liquidity is generally related to
the market trading volume for a particular security. Investments in smaller
companies or in foreign companies or companies in emerging markets are subject
to a variety of risks, including potential lack of liquidity.
DERIVATIVES RISK
A derivative is a financial instrument whose value is "derived," in some manner,
from the price of another security, index, asset or rate. Derivatives include
options and futures contracts, among a wide range of other instruments. The
principal risk of investments in derivatives is that the fluctuations in their
values may not correlate perfectly with the overall securities markets. Some
derivatives are more sensitive to interest rate changes and market price
fluctuations than others. Also, derivatives are subject to counterparty risk as
described below.
OPTIONS AND FUTURES RISK
Options and futures are common types of derivatives that a Fund may
occasionally use to hedge its investments. An option is the right to buy or sell
a security or other instrument, index or commodity at a specific price on or
before a specific date. A future is an agreement to buy or sell a security or
other instrument, index or commodity at a specific price on a specific date.
COUNTERPARTY RISK
This is a risk associated primarily with repurchase agreements and some
derivatives transactions. It is the risk that the other party in the transaction
will not fulfill its contractual obligation to complete the transaction with a
Fund.
INTEREST RATE RISK
Changes in interest rates will affect the resale value of debt securities
held in a Fund's portfolio. In general, as interest rates rise, the resale value
of debt securities decreases; as interest rates decline, the resale value of
debt securities generally increases. Debt securities with longer maturities
usually are more sensitive to interest rate movements.
DURATION RISK
Duration is a measure of a debt security's sensitivity to interest rate
changes. Duration is usually expressed in terms of years, with longer durations
usually more sensitive to interest rate fluctuations.
FOREIGN SECURITIES RISKS
Investments in foreign and emerging markets carry special risks, including
currency, political, regulatory and diplomatic risks. Each Fund may invest up to
25% of its respective assets in securities of non-U.S. issuers. Securities of
Canadian issuers and American Depository Receipts are not subject to this 25%
limitation.
CURRENCY RISK. A change in the exchange rate between U.S. dollars and a
foreign currency may reduce the value of a Fund's investment in a security
valued in the foreign currency, or based on that currency value.
POLITICAL RISK. Political actions, events or instability may result in
unfavorable changes in the value of a security.
<PAGE>
REGULATORY RISK. Government regulations may affect the value of a security.
In foreign countries, securities markets that are less regulated than those
in the U.S. may permit trading practices that are not allowed in the U.S.
DIPLOMATIC RISK. A change in diplomatic relations between the U.S. and a
foreign country could affect the value or liquidity of investments.
EUROPEAN ECONOMIC AND MONETARY UNION. Austria, Belgium, Finland,
France, Germany, Ireland, Italy, Luxembourg, The Netherlands, Portugal
and Spain are presently members of the European Economic and Monetary
Union (the "EMU") which as of January 1, 1999, adopted the euro as a
common currency. The national currencies will be sub-currencies of the
euro until July 1, 2002, at which time these currencies will disappear
entirely. Other European countries may adopt the euro in the future.
The introduction of the euro presents some uncertainties and possible
risks, which could adversely affect the value of securities held by the
Funds.
EMU countries, as a single market, may affect future investment
decisions of the Funds. As the euro is implemented, there may be
changes in the relative strength and value of the U.S. dollar and other
major currencies, as well as possible adverse tax consequences. The
euro transition by EMU countries - present and future - may affect the
fiscal and monetary levels of those participating countries. There may
be increased levels of price competition among business firms within
EMU countries and between businesses in EMU and non-EMU countries. The
outcome of these uncertainties could have unpredictable effects on
trade and commerce and result in increased volatility for all financial
markets.
LACK OF TIMELY INFORMATION RISK
Timely information about a security or its issuer may be unavailable,
incomplete or inaccurate. This risk is more common to securities issued by
foreign companies and companies in emerging markets than it is to the securities
of U.S.-based companies.
CREDIT RISK
The Funds may invest in debt instruments, such as notes, bonds and
commercial paper. There is a possibility that the issuers of these instruments
will be unable to meet interest payments or repay principal. Changes in the
financial strength of an issuer may reduce the credit rating of its debt
instruments and may affect their value.
----------------------------------------------------------
The Funds generally invest in equity securities of growing companies.
However, in an effort to diversify their holdings and provide some protection
against the risk of other investments, the Funds also may invest in other types
of securities and other financial instruments, as indicated in the chart below.
These investments, which at any given time may constitute a significant portion
of a Fund's portfolio, have their own risks.
<PAGE>
- --------------------------------------------------------------------------------
INVESTMENT RISKS APPLIES TO THESE FUNDS
- --------------------------------------------------------------------------------
AMERICAN DEPOSITORY Market Blue Chip Growth, Dynamics, Endeavor,
RECEIPTS (ADRS) informa- Growth & Income, Small Company Growth
These are securities tion, and Value Equity
issued by U.S. banks Political,
that represent shares of Regula-
foreign corporations tory,
held by those banks. Diplo-
Although traded in U.S. matic,
securities markets and Liquidity
valued in U.S. dollars, and Cur-
ADRs carry most of the rency
risks of investing Risks
directly in foreign
securities.
- --------------------------------------------------------------------------------
DEBT SECURITIES Market, Blue Chip Growth, Dynamics, Endeavor,
Securities issued by Credit, Growth & Income, Small Company Growth
private companies or Interest and Value Equity
governments repre- Rate and
senting an obligation Duration
to pay interest Risks
principal when the
security matures.
- --------------------------------------------------------------------------------
DELAYED DELIVERY OR Market Blue Chip Growth, Dynamics, Endeavor,
WHEN ISSUED SECURITIES and Growth & Income, Small Company Growth
Ordinarily, the Fund Interest and Value Equity
purchases securities and Rate Risks
pays for them in cash at
the normal trade
settlement time. When
the Fund purchases a
delayed delivery or
when-issued security,
it promises to pay in
the future - for example,
when the security is
actually available for
delivery to the Fund.
The Fund's obligation
to pay and the interest
rate it receives, in the
case of debt securities,
usually are fixed when
the Fund promises to pay.
Between the date the Fund
promises to pay and the
date the securities are
actually received, the
Fund receives no interest
on its investment, and
bears the risk that the
market value of the when-
issued security may decline.
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
INVESTMENT RISKS APPLIES TO THESE FUNDS
- --------------------------------------------------------------------------------
FORWARD FOREIGN Blue Chip Growth, Dynamics, Endeavor,
CURRENCY CONTRACTS Growth & Income, Small Company Growth
A contract to and Value Equity
exchange an amount of Currency,
currency on a date in Political,
the future at an Diplomatic,
agreed-upon exchange Counter-
rate might be used by party, and
the Fund to hedge Regula-
against changes in tory Risks
foreign currency
exchange rates when the
Fund invests in foreign
securities. Does not
reduce price
fluctuations in foreign
securities, or prevent
losses if the prices of
those securi ties
decline.
- --------------------------------------------------------------------------------
FUTURES Market, Blue Chip Growth, Dynamics, Endeavor,
A futures contract Liquidity Growth & Income, Small Company Growth
is an agreement and and Value Equity
to buy or sell a Options
specific amount of a and
financial instrument Futures
(such as an index Risks
option) at a stated
price on a stated date.
The Fund may use futures
contracts to provide
liquidity and to hedge
portfolio value.
- --------------------------------------------------------------------------------
JUNK BONDS Blue Chip Growth, Dynamics, Endeavor,
Debt Securities that Market, Growth & Income and Small Company
are rated BB or lower Credit, Growth
by S&P or Ba or Interest
lower by Moody's. Rate and
Tend to pay higher Duration
interest rates than Risks
higher-rated debt
securities, but carry
a higher credit risk.
- --------------------------------------------------------------------------------
<PAGE>
- -------------------------------------------------------------------------------
INVESTMENT RISKS APPLIES TO THESE FUNDS
- --------------------------------------------------------------------------------
OPTIONS Credit, Blue Chip Growth, Dynamics, Endeavor,
The obligation Informa- Growth & Income, Small Company Growth
or right to deliver or tion, and Value Equity
receive a security or Liquidity
other instrument, index and
or com modity, or cash Options
payment depend ing on and
the price of the Futures
underlying security or Risks
the performance of an
index or other benchmark.
Includes options on
specific securities and
stock indices, and
options on stock index
futures. May be used
in the Fund's portfolio
to provide liquidity
and hedge
portfolio value.
- --------------------------------------------------------------------------------
OTHER FINANCIAL Blue Chip Growth, Dynamics, Endeavor,
INSTRUMENTS Growth & Income, Small Company Growth
These may Counter- and Value Equity
include forward party,
contracts, swaps, caps, Credit,
floors and collars. Currency,
They may be used to try Interest
to manage the Fund's Rate,
foreign cur rency Liquidity,
exposure and other Market
invest ment risks, which and Regu-
can cause its net asset latory
value to rise or fall. Risks
The Fund may use these
financial instruments,
commonly known as
"derivatives," to
increase or decrease its
exposure to changing
securities prices,
interest rates, currency
exchange rates or other
factors.
- --------------------------------------------------------------------------------
REPURCHASE AGREEMENTS Blue Chip Growth, Dynamics, Endeavor,
A contract Credit and Growth & Income, Small Company Growth
under which the seller Counter- and Value Equity
of a security agrees to party Risks
buy it back at an
agreed-upon price and
time in the future.
- --------------------------------------------------------------------------------
RULE 144A SECURITIES Blue Chip Growth, Dynamics, Endeavor,
Securities that are Liquidity Growth & Income and Value Equity
not registered, but Risk
which are bought and
sold solely by insti-
tutional investors.
The Fund considers
many Rule 144A sec-
urities to be "liquid,"
although the market
for such securities
typically is less
active than the public
securities markets.
- --------------------------------------------------------------------------------
<PAGE>
[ARROW ICON] TEMPORARY DEFENSIVE POSITIONS
When securities markets or economic conditions are unfavorable or unsettled, we
might try to protect the assets of a Fund by investing in securities that are
highly liquid, such as high quality money market instruments like short-term
U.S. government obligations, commercial paper or repurchase agreements, even
though that is not the normal investment strategy of any Fund. We have the right
to invest up to 100% of a Fund's assets in these securities, although we are
unlikely to do so. Even though the securities purchased for defensive purposes
often are considered the equivalent of cash, they also have their own risks.
Investments that are highly liquid or comparatively safe tend to offer lower
returns. Therefore, a Fund's performance could be comparatively lower if it
concentrates in defensive holdings.
[ARROW ICON] PORTFOLIO TURNOVER
We actively manage and trade the Funds' portfolios. Therefore, the Funds may
have a higher portfolio turnover rate compared to many other mutual funds. The
Funds' portfolio turnover rates for the period ended July 31, 1999 were:
INVESCO Blue Chip Growth Fund 134%(a)
INVESCO Dynamics Fund 23%(b)
INVESCO Endeavor Fund 47%(b)
INVESCO Growth & Income Fund 46%(b)
INVESCO Small Company Growth Fund 41%(c)
INVESCO Value Equity Fund 22%(a)
(a) From September 1, 1998 to July 31, 1999
(b) From May 1, 1999 to July 31, 1999
(c) From June 1, 1999 to July 31, 1999
A portfolio turnover rate of 200%, for example, is equivalent to a Fund
buying and selling all of the securities in its portfolio two times in the
course of a year. A comparatively high turn-over rate may result in higher
brokerage commissions and taxable capital gain distributions to a Fund's
shareholders.
[INVESCO ICON] FUND MANAGEMENT
INVESTMENT ADVISER
INVESCO IS A SUBSIDIARY OF AMVESCAP PLC, AN INTERNATIONAL INVESTMENT
MANAGEMENT COMPANY THAT MANAGES MORE THAN $296 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 East Union Avenue, Denver, Colorado, is the investment
adviser of the Funds. 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 Funds, including
administrative and transfer agency functions (the processing of purchases, sales
and exchanges of Fund shares).
INVESCO Capital Management, Inc. ("ICM"), located at 1360 Peachtree Street,
N.E., Suite 100, Atlanta, Georgia, is the sub-adviser to Value Equity Fund.
<PAGE>
A wholly owned subsidiary of INVESCO, INVESCO Distributors, Inc. ("IDI") is
the Funds' distributor and is responsible for the sale of the Funds' shares.
INVESCO, ICM 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 fees to INVESCO for its advisory services in the
period ended July 31, 1999.
[INVESCO ICON] PORTFOLIO MANAGERS
The following individuals are primarily responsible for the day-to-day
management of each Fund's portfolio holdings:
FUND PORTFOLIO MANAGER(S)
Blue Chip Growth Trent E. May
Douglas J. McEldowney
Dynamics Timothy J. Miller
Thomas Wald
Endeavor Timothy J. Miller
Growth & Income Trent E. May
Fritz Meyer
Small Company Growth Stacie Cowell
Timothy J. Miller
Trent E. May
Value Equity Michael E. Harhai
Terrence Irrgang
TIMOTHY J. MILLER is the leader of INVESCO's Growth Team and the lead
portfolio manager of Dynamics and Endeavor Funds and a Chartered Financial
Analyst. He is also a director and senior vice president of INVESCO, where he
has had progressively more responsible investment professional positions since
joining the company in 1992. Before joining INVESCO, Tim was a portfolio manager
with Mississippi Valley Advisors. He holds an M.B.A. from the University of
Missouri -- St. Louis and a B.S.B.A. from St. Louis University.
<PAGE>
STACIE COWELL is the lead portfolio manager of Small Company Growth
Fund and a Chartered Financial Analyst who joined INVESCO in 1997. She is also a
vice president of INVESCO. Before joining us, she was senior equity analyst with
Founders Asset Management and capital markets and trading analyst with Chase
Manhatten Bank in New York. Stacie holds a B.A. in Economics from Colgate
University.
MICHAEL C. HARHAI is the portfolio manager of Value Equity Fund and a
Chartered Financial Analyst who joined INVESCO Capital Management, Inc. in 1992.
He is also an executive vice president of ICM. Before joining ICM, he was
employed by Sovran Capital Management Corp., C&S/Sovran Capital Management and
Citizens & Southern Investment Advisors, Inc. Michael holds a B.A. from the
University of South Florida and an M.B.A. from the University of Central
Florida.
TERRENCE IRRGANG is the co-portfolio manager of Value Equity Fund who joined
INVESCO Capital Management, Inc. in 1992. He is also a vice president of ICM.
Before joining ICM, he was a consultant for Towers, Perrin, Forster & Crosby.
Terrence holds a B.A. from Gettysburg College and an M.B.A. from Temple
University.
TRENT E. MAY is the lead portfolio manager of Growth & Income Fund and
a Chartered Financial Analyst who joined INVESCO in 1996. Trent is also a vice
president of INVESCO. Before joining us, he was with Munder Capital Management
and SunBank Capital Management. He holds an M.B.A. from Rollins College and a
B.S. in Engineering from Florida Institute of Technology.
DOUGLAS J. MCELDOWNEY is the co-portfolio manager of Blue Chip Growth Fund who
joined INVESCO in 1999. Doug is also a vice president of INVESCO. Before joining
INVESCO, Doug was with Bank of America Investment Management, Inc., SunTrust
Banks, Inc. and Merrill Lynch & Company, Inc. He holds a B.B.A. in Finance from
University of Kentucky and an M.B.A. from the Crummer Graduate School at Rollins
College.
FRITZ MEYER is the co-portfolio manager of Growth & Income Fund who
joined INVESCO in 1996. He is also a vice president of INVESCO. Before joining
us, he was an executive vice president and portfolio manager with Nelson, Benson
& Zellmer, Inc. Fritz holds an M.B.A. from Amos Tuck School -- Dartmouth College
and an B.A. with a distinction in Economics from Dartmouth College.
THOMAS WALD is the co-portfolio manager of Dynamics Fund and a Chartered
Financial Analyst who joined INVESCO in 1997. He is also a vice president of
INVESCO. Before joining us, he was employed by Munder Capital Management, Duff &
Phelps and Prudential Investment Corp. He holds an M.B.A. from the Wharton
School at the University of Pennsylvania and a B.A. from Tulane University.
Tim Miller, Stacie Cowell, Trent May, Doug McEldowney, Fritz Meyer and Tom
Wald are each members of the INVESCO Growth Team, which is led by Tim Miller.
<PAGE>
[INVESCO ICON] POTENTIAL REWARDS
NO SINGLE FUND SHOULD REPRESENT YOUR COMPLETE INVESTMENT PROGRAM NOR SHOULD
YOU ATTEMPT TO USE THE FUNDS FOR SHORT-TERM TRADING PURPOSES.
The Funds offer shareholders the potential to increase the value of their
capital over time; Blue Chip Growth, Growth & Income and Value Equity Funds also
offer the opportunity for current income. Like most mutual funds, each Fund
seeks to provide higher returns than the market or its competitors, but cannot
guarantee that performance. Each Fund seeks to minimize risk by investing in
many different companies in a variety of industries.
SUITABILITY FOR INVESTORS
Only you can determine if an investment in a Fund is right for you based upon
your own economic situation, the risk level with which you are comfortable and
other factors. In general, the Funds are most suitable for investors who:
o are willing to grow their capital over the long term (at least five
years).
o understand that shares of a Fund can, and likely will, have daily price
fluctuations.
o are investing tax-deferred retirement accounts, such as traditional and
Roth Individual Retirement Accounts ("IRAs"), as well as employer-
sponsored qualified retirement plans, including 401(k)s and 403(b)s,
all of which have longer investment horizons.
You probably do not want to invest in the Funds if you are:
o primarily seeking current dividend income.
o unwilling to accept potentially significant changes in the price of Fund
shares.
o speculating on short-term fluctuations in the stock markets.
[INVESCO ICON] SHARE PRICE
CURRENT MARKET VALUE OF FUND ASSETS
+ ACCRUED INTEREST AND DIVIDENDS
- - FUND DEBTS,
INCLUDING ACCRUED EXPENSES
- --------------------------------------
/ NUMBER OF SHARES
= YOUR SHARE PRICE (NAV).
The value of your Fund shares is likely to change daily. This value is known as
the Net Asset Value per share, or NAV. INVESCO determines the market value of
each investment in each Fund's portfolio each day that the New York Stock
Exchange ("NYSE") is open, at the close of trading on that exchange (normally
4:00 p.m. Eastern time). Therefore, shares of the Funds are not priced on days
when the NYSE is closed, which generally is on weekends and national holidays in
the U.S.
NAV is calculated by adding together the current market price of all of a Fund's
investments and other assets, including accrued interest and dividends;
subtracting the Fund's debts, including accrued expenses; and dividing that
dollar amount by the total number of the Fund's outstanding shares.
All purchases, sales and exchanges of Fund shares are made by INVESCO at the NAV
next calculated after INVESCO receives proper instructions from you to purchase,
redeem or exchange shares of a Fund. Your instructions must be received by
INVESCO no later than the close of the NYSE to effect transactions at that day's
NAV. If INVESCO hears from you after that time, your instructions will be
processed at the NAV calculated at the end of the next day that the NYSE is
open.
Foreign securities exchanges, which set the prices for foreign securities held
by the Funds, are not always open the same days as the NYSE, and may be open for
business on days the NYSE is not. For example, Thanksgiving Day is a holiday
observed by the NYSE and not by overseas exchanges. In this situation, the Funds
would not calculate NAV on Thanksgiving Day (and INVESCO would not buy, sell
exchange shares for you on that day), even though activity on foreign exchanges
could result in changes in the value of investments held by the Funds on that
day.
<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 Funds. [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 asset value of the [Class C] shares will be assessed. If you invest in a
Fund through a securities broker, you may be charged a commission or transaction
fee for either purchases or sales of Fund shares. For all new accounts, please
send a completed application form, and specify the fund or funds you wish to
purchase.
INVESCO reserves the right to increase, reduce or waive each Fund's minimum
investment requirements in its sole discretion, if it determines this action is
in the best interests of that Fund's shareholders. INVESCO also reserves the
right in its sole discretion to reject any order to buy Fund shares, including
purchases by exchange.
MINIMUM INITIAL INVESTMENT. $1,000, which is waived for regular investment
plans, including EasiVest and Direct Payroll Purchase, and certain retirement
plans, including IRAs.
MINIMUM SUBSEQUENT INVESTMENT. $50 (Minimums are lower for certain retirement
plans.)
EXCHANGE POLICY. You may exchange your [Class C] shares in any of the Funds 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:
o Both fund accounts involved in the exchange must be registered in exactly the
same name(s) and Social Security or federal tax I.D. number(s).
o You may make up to four exchanges out of each Fund per 12-month period.
o Each Fund reserves the right to reject any exchange request, or to modify or
terminate the exchange policy, if it is in the best interests of the Fund and
its shareholders. Notice of all such modifications or termination that affect
all shareholders of the Fund will be given at least 60 days prior to the
effective date of the change, except in unusual instances, including a
suspension of redemption of the exchanged security under Section 22(e) of the
Investment Company Act of 1940.
<PAGE>
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 a 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 any Fund after holding them twelve months or less (other than shares
acquired through reinvestment of dividends or other distributions), a contingent
deferred sales charge 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
no-load 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 twelve 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.
METHOD INVESTMENT MINIMUM PLEASE REMEMBER
- -------------------------------------------------------------------------------
THROUGH YOUR INVESTMENT Contact you invest-
REPRESENTATIVE ment representative
- -------------------------------------------------------------------------------
BY CHECK $1,000 for regular
Mail to: accounts;
INVESCO Funds Group, $250 for an IRA;
Inc., $50 minimum for
P.O. Box 173706, each subsequent
Denver, CO 80217-3706. investment.
You may send your check
by overnight courier to:
7800 E. Union Ave.
Denver, CO 80237.
- -------------------------------------------------------------------------------
BY WIRE $1,000.
You may send your
payment by bank
wire (call INVESCO
for instructions).
<PAGE>
METHOD INVESTMENT MINIMUM PLEASE REMEMBER
- -------------------------------------------------------------------------------
BY TELEPHONE WITH ACH $50. You must forward your
Call 1-800-525-8085 to bank account
request your purchase. information to INVESCO
INVESCO will move money prior to using this
from your designated option.
bank/credit union
checking or savings
account in order to
purchase shares, upon
your telephone
instructions, whenever
you wish.
- -------------------------------------------------------------------------------
REGULAR INVESTING WITH $50 per month for Like all regular
EASIVEST EasiVest; $50 investment plans, nei
OR DIRECT PAYROLL per pay period for ther EasiVest nor
PURCHASE Direct Payroll Direct Payroll Pur
You may enroll on your Purchase. You may chase ensures a profit
fund start or stop your or protects against
application, or call us regular investment loss in a falling
for a separate plan at any time, market. Because you'll
form and more details. with two weeks' invest continually,
Investing notice to INVESCO. regardless of varying
the same amount on a price levels, con-
monthly basis sider your financial
allows you to buy more ability to keep buying
shares when prices are through low price
low and fewer shares levels. And remember
when prices are high. that you will lose
This "dollar cost money if you redeem
averaging" may help your shares when the
offset market fluctua- market value of all
tions. Over a period of your shares is less
time, your average cost than their cost.
per share may be less
than the actual average
price per share.
- -------------------------------------------------------------------------------
BY PAL(R) $1,000. (The Be sure to write down
Your "Personal Account exchange minimum the confirmation
Line" is available for is $250 for number provided by
subsequent purchases subsequent pur- PAL(R). You must
and exchanges 24 chases requested forward your bank
hours a day. by telephone.) account information
Simply call to INVESCO prior to
1-800-424-8085. using this option.
- ------------------------------------------------------------------------------
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 pur
prospectuses of chase additional
other INVESCO funds. shares for an
Exchanges existing account.
may be made by phone or (The exchange
at our Web site at minimum is $250
www.invesco.com. You for exchanges
may also establish an requested by
automatic monthly telephone.)
exchange service between
two INVESCO funds; call
us for further details
and the correct form.
DISTRIBUTION EXPENSES. We have adopted Master Distribution Plan (commonly known
as a "12b-1 Plan") for the Funds' [Class C] shares. The 12b-1 fees paid by each
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 sustantial portion of which are paid to the dealer of record. Because
the Funds' [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.
<PAGE>
[INVESCO ICON] YOUR ACCOUNT SERVICES
INVESCO PROVIDES YOU WITH SERVICES DESIGNED TO MAKE IT SIMPLE FOR YOU TO BUY,
SELL OR EXCHANGE YOUR SHARES OF ANY INVESCO MUTUAL FUND.
SHAREHOLDER ACCOUNTS. INVESCO maintains your share account, which contains
your current Fund holdings. The Funds do not issue share certificates.
QUARTERLY INVESTMENT SUMMARIES. Each calendar quarter, you receive a written
statement which consolidates and summarizes account activity and value at the
beginning and end of the period for each of your INVESCO funds.
TRANSACTION CONFIRMATIONS. You receive detailed confirmations of individual
purchases, exchanges and sales. If you choose certain recurring transaction
plans (for instance, EasiVest), your transactions are confirmed on your
quarterly Investment Summaries.
TELEPHONE TRANSACTIONS. You may buy, 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 representative for several convenient ways to sell your Fund
shares. Shares of the Funds may be sold at any time at the next NAV calculated
after your request to sell in proper form is received by INVESCO. Depending on
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.
<PAGE>
While INVESCO attempts to process telephone redemptions promptly, there may
be times particularly in periods of severe economic or market disruption - when
you may experience delays in redeeming shares by phone.
INVESCO usually mails you the proceeds from the sale of fund shares within
seven days after we receive your request to sell in proper form. However,
payment may be postponed under unusual circumstances -- for instance, if normal
trading is not taking place on the NYSE, or during an emergency as defined by
the Securities and Exchange Commission. If your INVESCO fund shares were
purchased by a check which has not yet cleared, payment will be made promptly
when your purchase check does clear; that can take up to 15 days.
If you participate in EasiVest, the Funds' automatic monthly investment
program, and sell all of the shares in your account, we will not make any
additional EasiVest purchases unless you give us other instructions.
Because of the Funds' expense structure, it costs as much to handle a small
account as it does to handle a large one. If the value of your account in a Fund
falls below $250 as a result of your actions (for example, sale of your Fund
shares), each Fund reserves the right to sell all of your shares, send the
proceeds of the sale to you and close your account. Before this is done, you
will be notified and given 60 days to increase the value of your account to $250
or more.
<PAGE>
METHOD MINIMUM REDEMPTION PLEASE REMEMBER
- -------------------------------------------------------------------------------
THROUGH YOUR INVESTMENT Contact you invest-
REPRESENTATIVE ment representative
- -------------------------------------------------------------------------------
BY TELEPHONE $250 (or, if less, INVESCO's telephone
Call us toll-free at: full liquidation of redemption privileges
1-800-525-8085. the account) for a may be modified or
redemption check; terminated in the
$1,000 for a wire to Future at INVESCO's
your bank of record. discretion.
The maximum amount
which may be redeemed
by telephone is
generally $25,000.
- -------------------------------------------------------------------------------
IN WRITING Any amount. The redemption
Mail your request to request must be
INVESCO Funds Group, signed by all
Inc., P.O. Box registered account
173706, Denver, CO owners. Payment will
80217-3706. You may be mailed to your
also send your address as it appears
request by overnight on INVESCO's records,
courier to 7800 E. or to a bank
Union Ave., designated by you in
Denver, CO 80237. writing.
- -------------------------------------------------------------------------------
BY TELEPHONE WITH ACH $50. You must forward your
Call 1-800-525-8085 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.
- -------------------------------------------------------------------------------
BY EXCHANGE $250 for exchanges See "Exchange Policy."
Between two INVESCO requested by When opening a new
funds. Call telephone. account, investment
1-800-525-8085 for S&P 500 Index minimums apply.
prospectuses of other Fund-Class II -
INVESCO funds. $1,000 for purchases
Exchanges may be made requested by
by phone or at our telephone.
Web site at
www.invesco.com.
You may also estab-
lish an automatic
monthly exchange
service between two
INVESCO funds; call
us for further
details and the
correct form.
- -------------------------------------------------------------------------------
PERIODIC WITHDRAWAL $100 per payment on a You must have at
PLAN monthly or quarterly least $10,000 total
You may call us to basis. The redemption invested with the
request the check may be made INVESCO funds with at
appropriate form and payable to any party least $5,000 of that
more information at you designate. total invested in
1-800-525-8085. the fund from which
withdrawals will be
made.
- -------------------------------------------------------------------------------
PAYMENT TO THIRD Any amount. All registered
PARTY account owners must
Mail your request to sign the request,
INVESCO Funds Group, Inc., with signature
P.O. Box 173706 guarantees from an
Denver, CO 80217-3706. eligible guarantor
financial institution,
such as a commercial
bank or a recognized
national or regional
securities firm.
<PAGE>
[GRAPH ICON] TAXES
Everyone's tax status is unique. We encourage you to consult your own tax
adviser on the tax impact to you of investing in the Funds.
TO AVOID BACKUP WITHHOLDING, BE SURE WE HAVE YOUR CORRECT SOCIAL SECURITY OR
TAXPAYER IDENTIFICATION NUMBER.
Each Fund customarily distributes to its shareholders substantially all of
its net investment income, net capital gains and net gains from foreign currency
transactions, if any. You receive a proportionate part of these distributions,
depending on the percentage of each Fund's shares that you own. These
distributions are required under federal tax laws governing mutual funds. It is
the policy of each Fund to distribute all investment company taxable income and
net capital gains. As a result of this policy and each Fund's qualification as a
regulated investment company, it is anticipated that none of the Funds will pay
any federal income or excise taxes. Instead, each Fund will be accorded conduit
or "pass through" treatment for federal income tax purposes.
However, unless you are (or your account is) exempt from income taxes, you
must include all dividends and capital gain distributions paid to you by a Fund
in your taxable income for federal, state and local income tax purposes. You
also may realize capital gains or losses when you sell shares of a Fund at more
or less than the price you originally paid. An exchange is treated as a sale,
and is a taxable event. Dividends and other distributions usually are taxable
whether you receive them in cash or automatically reinvest them in shares of the
distributing Fund(s) or other INVESCO funds.
If you have not provided INVESCO with complete, correct tax information,
the Funds are required by law to withhold 31% of your distributions and any
money that you receive from the sale of shares of the Funds as a backup
withholding tax.
We will provide you with detailed information every year about your
dividends and capital gain distributions. Depending on the activity in your
individual account, we may also be able to assist with cost basis figures for
shares you sell.
[GRAPH ICON] DIVIDENDS AND CAPITAL GAIN DISTRIBUTIONS
The Funds earn ordinary or investment income from dividends and interest on
their investments. The Funds expect to distribute substantially all of this
investment income, less Fund expenses, to shareholders annually, with respect to
Blue Chip Growth, Dynamics, Endeavor and Small Company Growth Funds, and
quarterly, with respect to Growth & Income and Value Equity Funds, or at such
other times as the Funds may elect.
NET INVESTMENT INCOME AND NET REALIZED CAPITAL GAINS ARE DISTRIBUTED TO
SHAREHOLDERS AT LEAST ANNUALLY. DISTRIBUTIONS ARE TAXABLE WHETHER REINVESTED IN
ADDITIONAL SHARES OR PAID TO YOU IN CASH (EXCEPT FOR TAX-EXEMPT ACCOUNTS).
A Fund also realizes capital gains and losses when it sells securities in its
portfolio for more or less than it had paid for them. If total gains on sales
exceed total losses (including losses carried forward from previous years), a
Fund has a net realized capital gain. Net realized capital gains, if any, are
distributed to shareholders at least annually, usually in December.
<PAGE>
Under present federal income tax laws, capital gains may be taxable at
different rates, depending on how long a Fund has held the underlying
investment. Short-term capital gains which are derived from the sale of assets
held one year or less are taxed as ordinary income. Long-term capital gains
which are derived from the sale of assets held for more than one year are taxed
at up to the maximum capital gains rate, currently 20% for individuals.
Dividends and capital gain distributions are paid to you if you hold shares
on the record date of the distribution regardless of how long you have held your
shares. A Fund's NAV will drop by the amount of the distribution on the day the
distribution is made. If you buy shares of a Fund just before a distribution is
declared, you may wind up "buying a distribution." This means that if the Fund
makes a dividend or capital gain distribution shortly after you buy, you will
receive some of your investment back as a taxable distribution. Most
shareholders want to avoid this. And, if you sell your shares at a loss for tax
purposes and purchase a substantially identical investment within 30 days before
or after that sale, the transaction is usually considered a "wash sale" and you
will not be able to claim a tax loss.
Dividends and capital gain distributions paid by each Fund are
automatically reinvested in additional Fund shares at the NAV on the ex-dividend
date, unless you choose to have them automatically reinvested in another INVESCO
fund or paid to you by check or electronic funds transfer. If you choose to be
paid by check, the minimum amount of the check must be at least $10; amounts
less than that will be automatically reinvested. Dividends and other
distributions, whether received in cash or reinvested in additional Fund shares,
may be subject to federal income tax.
<PAGE>
FINANCIAL HIGHLIGHTS
The financial highlights table is intended to help you understand the
financial performance of [Class II] shares of a 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 those classes 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, are included in INVESCO Stock Funds, Inc.'s
1999 Annual Report to Shareholders which is available without charge by
contacting IDI at the address or telephone number on the back cover of this
Prospectus.
<TABLE>
<CAPTION>
PERIOD
ENDED
JULY 31 YEAR ENDED AUGUST 31
- --------------------------------------------------------------------------------------------------
BLUE CHIP GROWTH FUND - 1999(a) 1998 1997 1996 1995 1994
[Class II]
<S> <C> <C> <C> <C> <C> <C>
PER SHARE DATA
Net Asset Value -
Beginning of Period $ 5.15 $ 6.06 $ 5.44 $ 5.33 $ 5.34 $ 5.28
- --------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT
OPERATIONS
Net Investment Income(b) 0.00 0.02 0.01 0.03 0.05 0.03
Net Gains on Securities
(Both Realized and
Unrealized) 2.11 0.69 1.39 0.95 0.49 0.11
- --------------------------------------------------------------------------------------------------
TOTAL FROM INVESTMENT
OPERATIONS 2.11 0.71 1.40 0.98 0.54 0.14
- --------------------------------------------------------------------------------------------------
Less Distributions
Dividends from Net
Investment Income(c) 0.00 0.02 0.01 0.03 0.05 0.03
Distributions from
Capital Gains 0.51 1.60 0.77 0.84 0.50 0.05
- --------------------------------------------------------------------------------------------------
TOTAL DISTRIBUTIONS 0.51 1.62 0.78 0.87 0.55 0.08
- --------------------------------------------------------------------------------------------------
Net Asset Value -
End of Period $ 6.75 $ 5.15 $ 6.06 $ 5.44 $ 5.33 $ 5.34
==================================================================================================
TOTAL RETURN 42.06%(d) 13.42% 28.14% 20.23% 12.05% 2.52%
RATIOS
Net Assets - End of
Period ($000 Omitted) $1,232,908 $747,739 $709,220 $596,726 $501,285 $488,411
Ratio of Expenses to
Average Net Assets 1.03%(e)(f) 1.04%(e) 1.07%(e) 1.05%(e) 1.06% 1.03%
Ratio of Net Investment
Income to Average Net
Assets (0.08%)(f) 0.37% 0.22% 0.64% 1.07% 0.47%
Portfolio Turnover Rate 134%(d) 153% 286% 207% 111% 63%
</TABLE>
(a) From September 1, 1998 to July 31, 1999, the Fund's current fiscal year
end.
(b) Net Investment Income for the period ended July 31, 1999, aggregated less
than $0.01 on a per share basis.
(c) Distributions in excess of net investment income for the period ended July
31, 1999 and for the year ended July 31, 1999 and for the year ended August
31, 1995, aggregated less than $0.01 on a per share basis.
(d) Based on operations for the period shown and, accordingly, are not
representative of a full year.
(e) Ratio is based on Total Expenses of the Fund, which is before any expense
offset arrangements.
(f) Annualized
<PAGE>
FINANCIAL HIGHLIGHTS (CONTINUED)
<TABLE>
<CAPTION>
PERIOD ENDED
JULY 31 YEAR ENDED APRIL 30
- --------------------------------------------------------------------------------------------------
DYNAMICS FUND - [Class II] 1999(a) 1999 1998 1997 1996 1995
<S> <C> <C> <C> <C> <C> <C>
PER SHARE DATA
Net Asset Value -
Beginning of Period $18.15 $16.41 $12.02 $13.61 $11.38 $10.15
- --------------------------------------------------------------------------------------------------
INCOME FROM
INVESTMENT OPERATIONS
Net Investment
Income (Loss)(b) 0.00 0.00 (0.05) (0.04) 0.02 0.03
Net Gains or Losses
on Securities
(Both Realized
and Unrealized) 1.24 3.04 6.39 (0.19) 3.94 1.34
- --------------------------------------------------------------------------------------------------
TOTAL FROM INVESTMENT
OPERATIONS 1.24 3.04 6.34 (0.23) 3.96 1.37
- --------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS
Dividends from Net
Investment Income (c) 0.00 0.00 0.00 0.00 0.02 0.03
Distributions from
Capital Gains 0.00 1.30 1.95 1.36 1.71 0.11
- --------------------------------------------------------------------------------------------------
TOTAL DISTRIBUTIONS 0.00 1.30 1.95 1.36 1.73 0.14
- --------------------------------------------------------------------------------------------------
Net Asset Value -
End of Period $19.39 $18.15 $16.41 $12.02 $13.61 $11.38
==================================================================================================
TOTAL RETURN 6.83%(d) 20.83% 56.42% (2.34%) 36.32% 13.57%
RATIOS
Net Assets - End of
Period ($000 Omitted) $2,471,482 $2,044,321 $1,340,299 $762,396 $778,416 $421,600
Ratio of Expenses to
Average Net Assets 1.03%(e)(g) 1.05%(e) 1.08%(e) 1.16%(e) 1.14%(e) 1.20%(f)
Ratio of Net
Investment Income
(Loss) to Average (0.32%)(g) (0.41%) (0.43%) (0.31%) 0.16% 0.33%(f)
Net Assets
Portfolio Turnover Rate 23%(d) 129% 178% 204% 196% 176%
</TABLE>
(a) From May 1, 1999 to July 31, 1999, the Fund's current fiscal year end.
(b) Net Investment Income (Loss) aggregated less than $0.01 on a per share basis
for the period ended July 31, 1999 and for the year ended April 30, 1999.
(c) Distributions in excess of net investment income for the year ended April
30, 1996, aggregated less than $0.01 on a per share basis.
(d) Based on operations for the period shown and, accordingly, are not
representative of a full year.
(e) Ratio is based on Total Expenses of the Fund, which is before any expense
offset arrangements.
(f) Various expenses of the Fund were voluntarily absorbed by INVESCO for the
year ended April 30, 1995. If such expenses had not been voluntarily
absorbed, ratio of expenses to average net assets would have been 1.22% and
ratio of net investment income to average net assets would have been 0.31%.
(g) Annualized
<PAGE>
FINANCIAL HIGHLIGHTS (CONTINUED)
PERIOD ENDED PERIOD ENDED
JULY 31 April 30
- --------------------------------------------------------------------------------
1999(a)(b) 1999(c)
INVESCO ENDEAVOR FUND - [Class II]
PER SHARE DATA
Net Asset Value -
Beginning of Period $16.32 $10.00
- --------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
Net Investment Loss (0.03) (0.03)
Net Loss on Securities (Both
Realized and Unrealized) 0.32 6.35
- --------------------------------------------------------------------------------
TOTAL FROM INVESTMENT OPERATIONS 0.29 6.32
- --------------------------------------------------------------------------------
Net Asset Value - End of Period $16.61 $16.32
================================================================================
TOTAL RETURN 1.78%(d) 63.20%(d)
RATIOS
Net Assets-End of Period ($000 Omitted) $109,532 $72,592
Ratio of Expenses to Average
Net Assets(e) 1.49%(f) 1.43%(f)
Ratio of Net Investment Loss
to Average Net Assets (0.83%)(f) (0.55%)(f)
Portfolio Turnover Rate 47%(d) 107%(d)
(a) From May 1, 1999 to July 31, 1999.
(b) The per share information was computed using average shares.
(c) From October 28, 1998, commencement of investment operations,
to April 30, 1999.
(d) Based on operations for the period shown and, accordingly, are not
representative of a full year.
(e) Ratio is based on Total Expenses of the Fund, which is before any expense
offset arrangements.
(f) Annualized
<PAGE>
FINANCIAL HIGHLIGHTS (CONTINUED)
PERIOD ENDED PERIOD ENDED
JULY 31 April 30
- --------------------------------------------------------------------------------
1999(a) 1999(b)
GROWTH & INCOME FUND - [Class II]
PER SHARE DATA
Net Asset Value -
Beginning of Period $14.54 $10.00
- --------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
Net Investment Loss(c) 0.00 0.00
Net Loss on Securities (Both
Realized and Unrealized) 0.83 5.22
- --------------------------------------------------------------------------------
TOTAL FROM INVESTMENT OPERATIONS 0.83 5.22
- --------------------------------------------------------------------------------
LESS DISTRIBUTIONS
Distributions from Capital Gains 0.00 0.68
- --------------------------------------------------------------------------------
Net Asset Value - End of Period $15.37 $14.54
================================================================================
TOTAL RETURN 5.71%(d) 53.07%(d)
RATIOS
Net Assets-End of Period ($000 Omitted) $61,316 $53,994
Ratio of Expenses to Average
Net Assets(e)(f) 1.52%(g) 1.52%(g)
Ratio of Net Investment Loss
to Average Net Assets (f) (0.45%)(g) (0.25%)(g)
Portfolio Turnover Rate 46%(d) 121%(d)
(a) From the period May 1, 1999 to July 31, 1999, the Fund's current fiscal
year end.
(b) From July 1, 1998, commencement of investment operations, to April 30, 1999.
(c) Net Investment Loss aggregated less than $0.01 on a per share basis for the
periods ended July 31, 1999 and April 30, 1999.
(d) Based on operations for the period shown and, accordingly, are not
representative of a full year.
(e) Ratio is based on Total Expenses of the Fund, less Expenses Absorbed by
Investment Adviser, which is before any expense offset arrangements.
(f) Various expenses of the Fund were voluntarily absorbed by INVESCO for the
periods ended July 31, 1999 and April 30, 1999. If such expenses had not
been voluntarily absorbed, ratio of expenses to average net assets would
have been 1.75% (annualized) and 1.71% (annualized), respectively, and ratio
of net investment loss to average net assets would have been (0.68%)
(annualized) and (0.44%) (annualized), respectively.
(g) Annualized
<PAGE>
FINANCIAL HIGHLIGHTS (CONTINUED)
<TABLE>
<CAPTION>
PERIOD
ENDED
JULY 31 YEAR ENDED MAY 31
- --------------------------------------------------------------------------------------------------
SMALL COMPANY GROWTH FUND - 1999(a) 1999 1998 1997 1996 1995
[Class II]
<S> <C> <C> <C> <C> <C> <C>
PER SHARE DATA
Net Asset Value -
Beginning of Period $12.08 $11.90 $12.82 $14.38 $9.37 $11.40
- --------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT
OPERATIONS
Net Investment Income
(Loss)(b) 0.00 0.00 (0.06) (0.07) (0.06) 0.04
Net Gains or (Losses) on
Securities (Both
Realized and Unrealized) 1.53 1.35 2.56 (0.96) 5.25 0.46
- --------------------------------------------------------------------------------------------------
TOTAL FROM INVESTMENT
OPERATIONS 1.53 1.35 2.50 (1.03) 5.19 0.50
- --------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS
Dividends from Net
Investment Income 0.00 0.00 0.00 0.00 0.00 0.04
Distributions from
Capital Gains 0.00 1.17 3.42 0.53 0.18 2.49
- --------------------------------------------------------------------------------------------------
TOTAL DISTRIBUTIONS 0.00 1.17 3.42 0.53 0.18 2.53
- --------------------------------------------------------------------------------------------------
Net Asset Value End
of Period $13.61 $12.08 $11.90 $12.82 $14.38 $9.37
==================================================================================================
TOTAL RETURN 12.67%(c) 12.91% 22.65% (7.08%) 55.78% 4.98%
RATIOS
Net Assets - End of
Period ($000 Omitted) $452,861 $318,109 $272,619 $294,259 $370,029 $153,727
Ratio of Expenses to
Average Net Assets(d) 1.50%(e)(f) 1.51%(e) 1.48%(e) 1.52%(e) 1.48%(e) 1.49%
Ratio of Net Investment
Income (Loss) to
Average Net Assets(d) (0.69%)(f) (0.58%) (0.42%) (0.55%) (0.78%) 0.41%
Portfolio Turnover Rate 41%(c) 203% 158% 216% 221% 228%
</TABLE>
(a) From June 1, 1999 to July 31, 1999, the Fund's current fiscal year end.
(b) Net Investment Income (Loss) for the period ended July 31, 1999 and the
year ended May 31, 1999 aggregated less than $0.01 on a per share basis.
(c) Based on operations for the period shown and, accordingly, are not
representative of a full year.
(d) Various expenses of the Fund were voluntarily absorbed by INVESCO for the
period ended July 31, 1999 and for the years ended May 31, 1999, 1997 and
1995. If such expenses had not been voluntarily absorbed, ratio of expenses
to average net assets would have been 1.62% (annualized), 1.59%, 1.54% and
1.52%, respectively, and ratio of net investment income (loss) to average
net assets would have been (0.81%) (annualized), (0.66%), (0.57%) and
0.38%, respectively.
(e) Ratio is based on Total Expenses of the Fund, less Expenses Absorbed by
Investment Adviser, if applicable, which is before any expense offset
arrangements.
(f) Annualized
<PAGE>
FINANCIAL HIGHLIGHTS (CONTINUED)
<TABLE>
<CAPTION>
PERIOD
ENDED
JULY 31 YEAR ENDED AUGUST 31
- --------------------------------------------------------------------------------------------------
VALUE EQUITY FUND - 1999(a) 1998 1997 1996 1995 1994
[Class II]
<S> <C> <C> <C> <C> <C> <C>
PER SHARE DATA
Net Asset Value -
Beginning of Period $25.68 $28.30 $22.24 $19.53 $18.12 $17.79
- --------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT
OPERATIONS
Net Investment Income 0.17 0.26 0.35 0.35 0.39 0.36
Net Gains or (Losses)
on Securities (Both
Realized and Unrealized) 6.25 (0.43) 6.62 3.09 2.58 1.20
- --------------------------------------------------------------------------------------------------
TOTAL FROM INVESTMENT
OPERATIONS 6.42 (0.17) 6.97 3.44 2.97 1.56
- --------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS
Dividends from Net
Investment Income 0.17 0.26 0.35 0.35 0.39 0.31
In Excess of Net
Investment Income(b) 0.00 0.00 0.00 0.00 0.00 0.04
Distributions from
Capital Gains 2.32 2.19 0.56 0.38 1.17 0.88
- --------------------------------------------------------------------------------------------------
Total Distributions 2.49 2.45 0.91 0.73 1.56 1.23
- --------------------------------------------------------------------------------------------------
Net Asset Value -
End of Period $29.61 $25.68 $28.30 $22.24 $19.53 $18.12
==================================================================================================
TOTAL RETURN 25.41%(c) (1.06%) 32.04% 17.77% 17.84% 9.09%
RATIOS
Net Assets - End of
Period ($000 Omitted) $369,982 $349,984 $369,766 $200,046 $153,171 $111,850
Ratio of Expenses to
Average Net Assets(d) 1.27%(e)(f) 1.15%(e) 1.04%(e) 1.01%(e) 0.97% 1.01%
Ratio of Net Investment
Income to Average Net
Assets (d) 0.63%(f) 0.86% 1.35% 1.64% 2.17% 1.80%
Portfolio Turnover Rate 22%(c) 48% 37% 27% 34% 53%
</TABLE>
(a) From September 1, 1998 to July 31, 1999, the Fund's currect fiscal
year end.
(b) Distributions in excess of net investment income for the period ended July
31, 1999 and for the year ended August 31, 1998, aggregated less than $0.01
on a per share basis.
(c) Based on operations for the period shown and, accordingly, are not
representative of a full year.
(d) Various expenses of the Fund were voluntarily absorbed by INVESCO for the
period ended July 31, 1999 and for the year ended August 31, 1998. If such
expenses had not been voluntarily absorbed, the ratio of expenses to
average net assets would have been 1.38% (annualized) and 1.19%,
respectively, and the ratio of net investment income to average net assets
would have been 0.52% (annualized) and 0.82%, respectively.
(e) Ratio is based on Total Expenses of the Fund, less Expenses Absorbed by
Investment Adviser, if applicable, which is before any expense offset
arrangements.
(f) Annualized
<PAGE>
January ___, 2000
INVESCO STOCK FUNDS, INC.
INVESCO BLUE CHIP GROWTH FUND - [CLASS C]
INVESCO DYNAMICS FUND - [CLASS C]
INVESCO ENDEAVOR FUND - [CLASS C]
INVESCO GROWTH & INCOME FUND - [CLASS C]
INVESCO SMALL COMPANY GROWTH FUND - [CLASS C]
INVESCO S&P 500 INDEX FUND - [CLASS C]
INVESCO VALUE EQUITY FUND - [CLASS C]
You may obtain additional information about the Funds from several sources:
FINANCIAL REPORTS. Although this Prospectus describes the Funds'
anticipated investments and operations, the Funds also prepare annual and
semiannual reports that detail the Funds' actual investments at the report date.
These reports include discussion of each Fund's recent performance, as well as
market and general economic trends affecting each Fund's performance. The annual
report also includes the report of the Funds' independent accountants.
STATEMENT OF ADDITIONAL INFORMATION. The SAI, dated January __, 2000, is a
supplement to this Prospectus and has detailed information about the Funds and
their investment policies and practices. A current SAI for the Funds is on file
with the Securities and Exchange Commission and is incorporated into this
Prospectus by reference; in other words, the SAI is legally a part of this
Prospectus, and you are considered to be aware of the contents of the SAI.
INTERNET. The current Prospectus of the Funds' [Class II] shares may be
accessed through the INVESCO Web site at www.invesco.com. In addition, the
Prospectus, SAI, annual report and semiannual report of the Funds 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 811-1474 and 002-26125.
811-1474
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
INVESCO STOCK FUNDS, INC.
INVESCO Blue Chip Growth Fund - [Class II and Class C]
INVESCO Dynamics Fund - [Class II and Class C]
INVESCO Endeavor Fund - [Class II and Class C]
INVESCO Growth & Income Fund - [Class II and Class C]
INVESCO Small Company Growth Fund - [Class II and Class C]
INVESCO S&P 500 Index Fund - [Class I and Class II]
INVESCO Value Equity Fund - [Class II and Class C]
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 Blue Chip Growth - [Class II], INVESCO Dynamics -
[Class II], INVESCO Endeavor - [Class II], INVESCO Growth & Income - [Class II],
INVESCO Small Company Growth - [Class II], INVESCO S&P 500 Index - [Class II]
and INVESCO Value Equity - [Class II] Funds dated August 31, 1999, a Prospectus
for INVESCO S&P 500 Index Fund - [Class I] dated August 31, 1999, and a
Prospectus for INVESCO Blue Chip Growth - [Class C], INVESCO Dynamics - [Class
C], INVESCO Endeavor - [Class C], INVESCO Growth & Income - [Class C], INVESCO
Small Company Growth - [Class C], and INVESCO Value Equity - [Class C] Funds
dated January ___, 2000, 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, copies of the current Prospectuses of the Funds,
SAI and current annual and semiannual reports by writing to INVESCO
Distributors, Inc., P.O. Box 173706, Denver, CO 80217-3706 , or by calling
1-800-525-8085. Copies of the Prospectus for Blue Chip Growth - [Class II],
Dynamics - [Class II], Endeavor - [Class II], Growth & Income - [Class II],
Small Company Growth - [Class II], S&P 500 Index - [Class II] and Value Equity -
[Class II] Funds are also available through the INVESCO web site at
www.invesco.com.
<PAGE>
Table of Contents
The Company. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Investments, Policies and Risks . . . . . . . . . . . . . . . . . . . . . . .40
Investment Restrictions. . . . . . . . . . . . . . . . . . . . . . . . . . . 58
Management of the Funds . . . . . . . . . . . . . . . . . . . . . . . . . . .60
Other Service Providers. . . . . . . . . . . . . . . . . . . . . . . . . . . 90
Brokerage Allocation and Other Practice . . . . . . . . . . . . . . . . . . .91
Capital Stock. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94
Tax Consequences of Owning Shares of a Fund. . . . . . . . . . . . . . . . . 95
Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 98
Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . .100
Appendix A . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .101
<PAGE>
THE COMPANY
The Company was incorporated under the laws of Maryland as INVESCO Dynamics
Fund, Inc. on April 2, 1993. On July 1, 1993, the Company assumed all of the
assets and liabilities of Financial Dynamics Fund, Inc. ("FDF"), which was
incorporated in Colorado on February 17, 1967. All financial and other
information about the Company for periods prior to July 1, 1993 relates to FDF.
On June 26, 1997, the Company changed its name to INVESCO Capital Appreciation
Funds, Inc. and designated two series of shares of common stock of the Company
as the INVESCO Dynamics Fund and the INVESCO Growth & Income Fund. On August 28,
1998, the Company changed its name to INVESCO Equity Funds, Inc. and designated
a third series of shares of common stock of the Company as the INVESCO Endeavor
Fund. On October 29, 1998 the Company changed its name to INVESCO Stock Funds,
Inc. On July 15, 1999, the Company assumed all of the assets and liabilities of
INVESCO Blue Chip Growth Fund, a series of INVESCO Growth Fund, Inc.; INVESCO
Small Company Growth Fund, a series of INVESCO Emerging Opportunity Funds, Inc.;
INVESCO S&P 500 Index Fund, a series of INVESCO Specialty Funds, Inc.; and
INVESCO Value Equity Fund, a series of INVESCO Value Trust.
The Company is an open-end, diversified, management investment company currently
consisting of seven portfolios of investments: INVESCO Blue Chip Growth Fund -
[Class II and Class C], INVESCO Dynamics Fund - [Class II and Class C], INVESCO
Endeavor Fund - [Class II and Class C], INVESCO Growth & Income Fund - [Class II
and Class C], INVESCO Small Company Growth Fund - [Class II and Class C],
INVESCO S&P 500 Index Fund - [Class I and Class II] and INVESCO Value Equity
Fund - [Class II and Class C] (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 II] shares of each Fund
do pay a 12b-1 distribution fee which is computed and paid monthly at an annual
rate of 0.25% of average net assets attributable to [Class II] shares. The
[Class C] shares of each Fund pay a 12b-1 distribution/service fee which is
computed and paid monthly at an annual rate of 1.00% of average net assets
attributable to [Class C] shares.
Although S&P 500 Index Fund attempts to mirror the performance of the S&P 500
Composite Stock Price Index, the Fund is not affiliated in any way with Standard
& Poor's ("S&P"). S&P is not involved in the determination of the prices and
amount of the securities bought by the Fund, the sale of Fund shares or the
calculation of the equation by which Fund shares are to be converted into cash.
S&P does not guarantee the accuracy and/or the completeness of the S&P 500 or
any data included therein and S&P shall have no liability for any errors,
omissions or interruptions therein. S&P makes no warranty, express or implied,
as to results to be obtained by the Company, shareholders of the Fund or any
other person or entity from the use of the S&P 500 or any data included therein.
S&P makes no express or implied warranty, and expressly disclaims all
warranties of merchantability or fitness for a particular purpose or use with
respect to the S&P 500 Index or any data included therein. Without limiting
any of the foregoing, in no event shall S&P have any liability for any special,
punitive, indirect or consequential damages (including lost profits), even if
notified of the possibility of such damages.
<PAGE>
INVESTMENTS, POLICIES AND RISKS
The principal investments and policies of the Funds are discussed in the
Prospectuses of the Funds. The Funds also may invest in the following securities
and engage in the following practices.
ADRS -- American Depository Receipts, or ADRs, are securities issued by American
banks. ADRs are receipts for the shares of foreign corporations that are held by
the bank issuing the receipt. An ADR entitles its holder to all dividends and
capital gains on the underlying foreign securities, less any fees paid to the
bank. Purchasing ADRs gives a Fund the ability to purchase the functional
equivalent of foreign securities without going to the foreign securities markets
to do so. ADRs are bought and sold in U.S. dollars, not foreign currencies. An
ADR that is "sponsored" means that the foreign corporation whose shares are
represented by the ADR is actively involved in the issuance of the ADR, and
generally provides material information about the corporation to the U.S.
market. An "unsponsored" ADR program means that the foreign corporation whose
shares are held by the bank is not obligated to disclose material information in
the United States, and, therefore, the market value of the ADR may not reflect
important facts known only to the foreign company. Since they mirror their
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.
<PAGE>
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 Funds Group, Inc. ("INVESCO"), the Funds' adviser, will consider the
creditworthiness of the institution issuing the letter of credit, as well as the
creditworthiness of the issuer of the commercial paper, when purchasing paper
enhanced by a letter of credit. Commercial paper is sold either as
interest-bearing or on a discounted basis, with maturities not exceeding 270
days.
DEBT SECURITIES -- Debt securities include bonds, notes and other securities
that give the holder the right to receive fixed amounts of principal, interest,
or both on a date in the future or on demand. Debt securities also are often
referred to as fixed income securities, even if the rate of interest varies over
the life of the security.
Debt securities are generally subject to credit risk and market risk. Credit
risk is the risk that the issuer of the security may be unable to meet interest
or principal payments or both as they come due. Market risk is the risk that the
market value of the security may decline for a variety of reasons, including
changes in interest rates. An increase in interest rates tends to reduce the
market values of debt securities in which a Fund has invested. A decline in
interest rates tends to increase the market values of debt securities in which a
Fund has invested.
Moody's Investor Services, Inc. ("Moody's") and S&P ratings provide a useful
guide to the credit risk of many debt securities. The lower the rating of a debt
security, the greater the credit risk the rating service assigns to the
security. To compensate investors for accepting that greater risk, lower-rated
debt securities tend to offer higher interest rates. Each Fund, with the
exception of S&P 500 Index Fund, may invest up to 25% of its portfolio in
lower-rated debt securities, which are often referred to as "junk bonds."
Increasing the amount of Fund assets invested in unrated or lower-grade straight
debt securities may increase the yield produced by the Fund's debt securities
but will also increase the credit risk of those securities. A debt security is
considered lower grade if it is rated Ba or less by Moody's or BB or less by
S&P.
Lower-rated and non-rated debt securities of comparable quality are subject to
wider fluctuations in yields and market values than higher-rated debt securities
and may be considered speculative. Although a Fund may invest in debt securities
assigned lower grade ratings by S&P or Moody's, at the time of purchase, the
Funds are not permitted to invest in bonds that are in default or are rated CCC
or below by S&P or Caa or below by Moody's or, if unrated, are judged by the
adviser to be of equivalent quality. Debt securities rated lower than B by
either S&P or Moody's are usually considered to be speculative. At the time of
purchase, INVESCO will limit Fund investments to debt securities which INVESCO
believes are not highly speculative and which are rated at least B by S&P and
Moody's.
A significant economic downturn or increase in interest rates may cause issuers
of debt securities to experience increased financial problems which could
adversely affect their ability to pay principal and interest obligations, to
meet projected business goals, and to obtain additional financing. These
conditions more severely impact issuers of lower-rated debt securities. The
<PAGE>
market for lower-rated straight debt securities may not be as liquid as the
market for higher-rated straight debt securities. Therefore, INVESCO attempts to
limit purchases of lower-rated securities to securities having an established
secondary market.
Lower-rated securities by S&P (categories BB and B) include those which are
predominantly speculative because of the issuer's perceived capacity to pay
interest and repay principal in accordance with their terms; BB indicates the
lowest degree of speculation and B a higher degree of speculation. While such
bonds will likely have some quality and protective characteristics, these are
usually outweighed by large uncertainties or major risk exposures to adverse
conditions.
Although bonds in the lowest investment grade debt category (those rated BBB by
S&P, Baa by Moody's or the equivalent) are regarded as having adequate
capability to pay principal and interest, they have speculative characteristics.
Adverse economic conditions or changing circumstances are more likely to lead to
a weakened capacity to make principal and interest payments than is the case for
higher-rated bonds. Lower-rated bonds by Moody's (categories Ba, B and Caa) are
of poorer quality and also have speculative characteristics. Bonds having
equivalent ratings from other ratings services will have characteristics similar
to those of the corresponding S&P and Moody's ratings. For a specific
description of S&P and Moody's corporate bond rating categories, please refer to
Appendix A.
The Funds, except for S&P 500 Index Fund, may invest in zero coupon bonds and
step-up bonds. Zero coupon bonds do not make regular interest payments. Zero
coupon bonds are sold at a discount from face value. Principal and accrued
discount (representing interest earned but not paid) are paid at maturity in the
amount of the face value. Step-up bonds initially make no (or low) cash interest
payments but begin paying interest (or a higher rate of interest) at a fixed
time after issuance of the bond. The market values of zero coupon and step-up
bonds generally fluctuates more in response to changes in interest rates than
interest-paying securities of comparable term and quality. A Fund may be
required to distribute income recognized on these bonds, even though no cash may
be paid to the Fund until the maturity or call date of a bond, in order for the
Fund to maintain its qualification as a regulated investment company. These
required distributions could reduce the amount of cash available for investment
by a Fund.
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.
<PAGE>
EQUITY SECURITIES -- The Funds may invest in common, preferred and convertible
preferred stocks, and securities whose values are tied to the price of stocks,
such as rights, warrants and convertible debt securities. Common stocks and
preferred stocks represent equity ownership in a corporation. Owners of stock,
such as the Funds, share in a corporation's earnings through dividends which may
be declared by the corporation, although the receipt of dividends is not the
principal benefit that the Funds seek when they invest in stocks and similar
instruments.
Instead, the Funds seek to invest in stocks that will increase in market value
and may be sold for more than a Fund paid to buy them. Market value is based
upon constantly changing investor perceptions of what the company is worth
compared to other companies. Although dividends are a factor in the changing
market value of stocks, many companies do not pay dividends, or pay
comparatively small dividends. The principal risk of investing in equity
securities is that their market values fluctuate constantly, often due to
factors entirely outside the control of the Funds or the company issuing the
stock. At any given time, the market value of an equity security may be
significantly higher or lower than the amount paid by a Fund to acquire it.
Owners of preferred stocks are entitled to dividends payable from the
corporation's earnings, which in some cases may be "cumulative" if prior
dividends on the preferred stock have not been paid. Dividends payable on
preferred stock have priority over distributions to holders of common stock, and
preferred stocks generally have a priority on the distribution of assets in the
event of the corporation's liquidation. Preferred stocks may be "participating,"
which means that they may be entitled to dividends in excess of the stated
dividend in certain cases. The holders of a company's debt securities generally
are entitled to be paid by the company before it pays anything to its
stockholders.
Rights and warrants are securities which entitle the holder to purchase the
securities of a company (usually, its common stock) at a specified price during
a specified time period. The value of a right or warrant is affected by many of
the same factors that determine the prices of common stocks. Rights and warrants
may be purchased directly or acquired in connection with a corporate
reorganization or exchange offer.
The Funds also may purchase convertible securities including convertible debt
obligations and convertible preferred stock. A convertible security entitles the
holder to exchange it for a fixed number of shares of common stock (or other
equity security), usually at a fixed price within a specified period of time.
Until conversion, the owner of convertible securities usually receives the
interest paid on a convertible bond or the dividend preference of a preferred
stock.
A convertible security has an "investment value" which is a theoretical value
determined by the yield it provides in comparison with similar securities
without the conversion feature. Investment value changes are based upon
prevailing interest rates and other factors. It also has a "conversion value,"
which is the market value the convertible security would have if it were
exchanged for the underlying equity security. Convertible securities may be
purchased at varying price levels above or below their investment values or
conversion values.
Conversion value is a simple mathematical calculation that fluctuates directly
with the price of the underlying security. However, if the conversion value is
<PAGE>
substantially below investment value, the market value of the convertible
security is governed principally by its investment value. If the conversion
value is near or above investment value, the market value of the convertible
security generally will rise above investment value. In such cases, the market
value of the convertible security may be higher than its conversion value, due
to the combination of the convertible security's right to interest (or dividend
preference) and the possibility of capital appreciation from the conversion
feature. However, there is no assurance that any premium above investment value
or conversion value will be recovered because prices change and, as a result,
the ability to achieve capital appreciation through conversion may be
eliminated.
EUROBONDS AND YANKEE BONDS (ALL FUNDS, EXCEPT S&P 500 INDEX FUND) -- Bonds
issued by foreign branches of U.S. banks ("Eurobonds") and bonds issued by a
U.S. branch of a foreign bank and sold in the United States ("Yankee bonds").
These bonds are bought and sold in U.S. dollars, but generally carry with them
the same risks as investing in foreign securities.
FOREIGN SECURITIES -- Investments in the securities of foreign companies,
or companies that have their principal business activities outside the United
States, involve certain risks not associated with investment in U.S. companies.
Non-U.S. companies generally are not subject to the same uniform accounting,
auditing and financial reporting standards that apply to U.S. companies.
Therefore, financial information about foreign companies may be incomplete, or
may not be comparable to the information available on U.S. companies. There may
also be less publicly available information about a foreign company.
Although the volume of trading in foreign securities markets is growing,
securities of many non-U.S. companies may be less liquid and have greater swings
in price than securities of comparable U.S. companies. The costs of buying and
selling securities on foreign securities exchanges is generally significantly
higher than similar costs in the United States. There is generally less
government supervision and regulation of exchanges, brokers and issuers in
foreign countries than there is in the United States. Investment in non-U.S.
securities may also be subject to other risks different from those affecting
U.S. investments, including local political or economic developments,
expropriation or nationalization of assets, confiscatory taxation, and
imposition of withholding taxes on dividends or interest payments. If it becomes
necessary, it may be more difficult for a Fund to obtain or to enforce a
judgment against a foreign issuer than against a domestic issuer.
Securities traded on foreign markets are usually bought and sold in local
currencies, not in U.S. dollars. Therefore, the market value of foreign
securities acquired by a Fund can be affected -- favorably or unfavorably -- by
changes in currency rates and exchange control regulations. Costs are incurred
in converting money from one currency to another. Foreign currency exchange
rates are determined by supply and demand on the foreign exchange markets.
Foreign exchange markets are affected by the international balance of payments
and other economic and financial conditions, government intervention,
speculation and other factors, all of which are outside the control of each
Fund. Generally, the Funds' foreign currency exchange transactions will be
conducted on a cash or "spot" basis at the spot rate for purchasing or selling
currency in the foreign currency exchange markets.
<PAGE>
FUTURES, OPTIONS AND OTHER FINANCIAL INSTRUMENTS
GENERAL. As discussed in the Prospectuses, the adviser and/or sub-adviser may
use various types of financial instruments, some of which are derivatives, to
attempt to manage the risk of a Fund's investments or, in certain circumstances,
for investment (e.g., as a substitute for investing in securities). These
financial instruments include options, futures contracts (sometimes referred to
as "futures"), forward contracts, swaps, caps, floors and collars (collectively,
"Financial Instruments"). The policies in this section do not apply to other
types of instruments sometimes referred to as derivatives, such as indexed
securities, mortgage-backed and other asset-backed securities, and stripped
interest and principal of debt.
Hedging strategies can be broadly categorized as "short" hedges and "long" or
"anticipatory" hedges. A short hedge involves the use of a Financial Instrument
in order to partially or fully offset potential variations in the value of one
or more investments held in a Fund's portfolio. A long or anticipatory hedge
involves the use of a Financial Instrument in order to partially or fully offset
potential increases in the acquisition cost of one or more investments that the
Fund intends to acquire. In an anticipatory hedge transaction, the Fund does not
already own a corresponding security. Rather, it relates to a security or type
of security that the Fund intends to acquire. If the Fund does not eliminate the
hedge by purchasing the security as anticipated, the effect on the Fund's
portfolio is the same as if a long position were entered into. Financial
Instruments may also be used, in certain circumstances, for investment (e.g., as
a substitute for investing in securities).
Financial Instruments on individual securities generally are used to attempt to
hedge against price movements in one or more particular securities positions
that a Fund already owns or intends to acquire. Financial Instruments on
indexes, in contrast, generally are used to attempt to hedge all or a portion of
a portfolio against price movements of the securities within a market sector in
which the Fund has invested or expects to invest.
The use of Financial Instruments is subject to applicable regulations of the
Securities and Exchange Commission ("SEC"), the several exchanges upon which
they are traded, and the Commodity Futures Trading Commission ("CFTC"). In
addition, the Funds' ability to use Financial Instruments will be limited by tax
considerations. See "Tax Consequences of Owning Shares of a Fund."
In addition to the instruments and strategies described below, the adviser
and/or sub-adviser may use other similar or related techniques to the extent
that they are consistent with a Fund's investment objective and permitted by its
investment limitations and applicable regulatory authorities. The Funds'
Prospectuses or Statement of Additional Information ("SAI") will be supplemented
to the extent that new products or techniques become employed involving
materially different risks than those described below or in the Prospectuses.
<PAGE>
Special Risks. Financial Instruments and their use involve special
considerations and risks, certain of which are described below.
(1) Financial Instruments may increase the volatility of a Fund. If the adviser
and/or sub-adviser employs a Financial Instrument that correlates imperfectly
with a Fund's investments, a loss could result, regardless of whether or not the
intent was to manage risk. In addition, these techniques could result in a loss
if there is not a liquid market to close out a position that a Fund has entered.
(2) There might be imperfect correlation between price movements of a Financial
Instrument and price movement of the investment(s) being hedged. For example, if
the value of a Financial Instrument used in a short hedge increased by less than
the decline in value of the hedged investment(s), the hedge would not be fully
successful. This might be caused by certain kinds of trading activity that
distorts the normal price relationship between the security being hedged and the
Financial Instrument. Similarly, the effectiveness of hedges using Financial
Instruments on indexes will depend on the degree of correlation between price
movements in the index and price movements in the securities being hedged.
The Funds are authorized to use options and futures contracts related to
securities with issuers, maturities or other characteristics different from the
securities in which it typically invests. This involves a risk that the options
or futures position will not track the performance of a Fund's portfolio
investments.
The direction of options and futures price movements can also diverge from the
direction of the movements of the prices of their underlying instruments, even
if the underlying instruments match a Fund's investments well. Options and
futures prices are affected by such factors as current and anticipated
short-term interest rates, changes in volatility of the underlying instrument,
and the time remaining until expiration of the contract, which may not affect
security prices the same way. Imperfect correlation may also result from
differing levels of demand in the options and futures markets and the securities
markets, from structural differences in how options and futures and securities
are traded, or from imposition of daily price fluctuation limits or trading
halts. A Fund may take positions in options and futures contracts with a greater
or lesser face value than the securities it wishes to hedge or intends to
purchase in order to attempt to compensate for dif-ferences in volatility
between the contract and the securities, although this may not be successful in
all cases.
(3) If successful, the above-discussed hedging strategies can reduce risk of
loss by wholly or partially offsetting the negative effect of unfavorable price
movements of portfolio securities. However, such strategies can also reduce
opportunity for gain by offsetting the positive effect of favorable price
movements. For example, if a Fund entered into a short hedge because the adviser
and/or sub-adviser projected a decline in the price of a security in the Fund's
portfolio, and the price of that security increased instead, the gain from that
increase would likely be wholly or partially offset by a decline in the value of
the short position in the Financial Instrument. Moreover, if the price of the
Financial Instrument declined by more than the increase in the price of the
security, the Fund could suffer a loss.
<PAGE>
(4) A Fund's ability to close out a position in a Financial Instrument prior to
expiration or maturity depends on the degree of liquidity of the market or, in
the absence of such a market, the ability and willingness of the other party to
the transaction (the "counterparty") to enter into a transaction closing out the
position. Therefore, there is no assurance that any position can be closed out
at a time and price that is favorable to a Fund.
(5) As described below, the Funds are required to maintain assets as "cover,"
maintain segregated accounts or make margin payments when they take positions in
Financial Instruments involving obligations to third parties (i.e., Financial
Instruments other than purchased options). If a Fund is unable to close out its
positions in such Financial Instruments, it might be required to continue to
maintain such assets or segregated accounts or make such payments until the
position expired. These requirements might impair a Fund's ability to sell a
portfolio security or make an investment at a time when it would otherwise be
favorable to do so, or require that the Fund sell a portfolio security at a
disadvantageous time.
Cover. Positions in Financial Instruments, other than purchased options, expose
the Funds to an obligation to another party. A Fund will not enter into any such
transaction unless it owns (1) an offsetting ("covered") position in securities,
currencies or other options, futures contracts or forward contracts, or (2) cash
and liquid assets with a value, marked-to-market daily, sufficient to cover its
obligations to the extent not covered as provided in (1) above. The Funds will
comply with SEC guidelines regarding cover for these instruments and will, if
the guidelines so require, designate cash or liquid assets as segregated in the
prescribed amount as determined daily.
Assets used as cover or held as segregated cannot be sold while the position in
the corresponding Financial Instrument is open unless they are replaced with
other appropriate assets. As a result, the commitment of a large portion of a
Fund's assets to cover or to hold as segregated could impede portfolio
management or the Fund's ability to meet redemption requests or other current
obligations.
Options. Each Fund may engage in certain strategies involving options to attempt
to manage the risk of its investments or, in certain circumstances, for
investment (e.g., as a substitute for investing in securities). A call option
gives the purchaser the right to buy, and obligates the writer to sell the
underlying investment at the agreed-upon exercise price during the option
period. A put option gives the purchaser the right to sell, and obligates the
writer to buy the underlying investment at the agreed-upon exercise price during
the option period. Purchasers of options pay an amount, known as a premium, to
the option writer in exchange for the right under the option contract. See
"Options on Indexes" below with regard to cash settlement of option contracts on
index values.
The purchase of call options can serve as a hedge against a price rise of the
underlier and the purchase of put options can serve as a hedge against a price
decline of the underlier. Writing call options can serve as a limited short
hedge because declines in the value of the hedged investment would be offset to
the extent of the premium received for writing the option. However, if the
security or currency appreciates to a price higher than the exercise price of
the call option, it can be expected that the option will be exercised and a Fund
will be obligated to sell the security or currency at less than its market
value.
<PAGE>
Writing put options can serve as a limited long or anticipatory hedge because
increases in the value of the hedged investment would be offset to the extent of
the premium received for writing the option. However, if the security or
currency depreciates to a price lower than the exercise price of the put option,
it can be expected that the put option will be exercised and a Fund will be
obligated to purchase the security or currency at more than its market value.
The value of an option position will reflect, among other things, the current
market value of the underlying investment, the time remaining until expiration,
the relationship of the exercise price to the market price of the underlying
investment, the price volatility of the underlying investment and general market
and interest rate conditions. Options that expire unexercised have no value.
A Fund may effectively terminate its right or obligation under an option by
entering into a closing transaction. For example, the Fund may terminate its
obligation under a call or put option that it had written by purchasing an
identical call or put option, which is known as a closing purchase transaction.
Conversely, the Fund may terminate a position in a put or call option it had
purchased by writing an identical put or call option, which is known as a
closing sale transaction. Closing transactions permit a Fund to realize profits
or limit losses on an option position prior to its exercise or expiration.
Risks of Options on Securities. Options embody the possibility of large amounts
of exposure, which will result in a Fund's net asset value being more sensitive
to changes in the value of the related investment. A Fund may purchase or write
both exchange-traded and OTC options. Exchange-traded options in the United
States are issued by a clearing organization affiliated with the exchange on
which the option is listed that, in effect, guarantees completion of every
exchange-traded option transaction. In contrast, OTC options are contracts
between a Fund and its counterparty (usually a securities dealer or a bank) with
no clearing organization guarantee. Thus, when a Fund purchases an OTC option,
it relies on the counterparty from whom it purchased the option to make or take
delivery of the underlying investment upon exercise of the option. Failure by
the counterparty to do so would result in the loss of any premium paid by a Fund
as well as the loss of any expected benefit from the transaction.
The Funds' ability to establish and close out positions in options depends on
the existence of a liquid market. However, there can be no assurance that such a
market will exist at any particular time. Closing transactions can be made for
OTC options only by negotiating directly with the counterparty, or by a
transaction in the secondary market if any such market exists. There can be no
assurance that a Fund will in fact be able to close out an OTC option position
at a favorable price prior to expiration. In the event of insolvency of the
counterparty, a Fund might be unable to close out an OTC option position at any
time prior to the option's expiration. If a Fund is not able to enter into an
offsetting closing transaction on an option it has written, it will be required
to maintain the securities subject to the call or the liquid assets underlying
the put until a closing purchase transaction can be entered into or the option
expires. However, there can be no assurance that such a market will exist at any
particular time.
If a Fund were unable to effect a closing transaction for an option it had
purchased, it would have to exercise the option to realize any profit. The
inability to enter into a closing purchase transaction for a covered call option
<PAGE>
written by a Fund could cause material losses because the Fund would be unable
to sell the investment used as cover for the written option until the option
expires or is exercised.
Options on Indexes. Puts and calls on indexes are similar to puts and calls on
securities or futures contracts except that all settlements are in cash and
changes in value depend on changes in the index in question. When a Fund writes
a call on an index, it receives a premium and agrees that, prior to the
expiration date, upon exercise of the call, the purchaser will receive from the
Fund an amount of cash equal to the positive difference between the closing
price of the index and the exercise price of the call times a specified multiple
("multiplier"), which determines the total dollar value for each point of such
difference. When a Fund buys a call on an index, it pays a premium and has the
same rights as to such call as are indicated above. When a Fund buys a put on an
index, it pays a premium and has the right, prior to the expiration date, to
require the seller of the put to deliver to the Fund an amount of cash equal to
the positive difference between the exercise price of the put and the closing
price of the index times the multiplier. When a Fund writes a put on an index,
it receives a premium and the purchaser of the put has the right, prior to the
expiration date, to require the Fund to deliver to it an amount of cash equal to
the positive difference between the exercise price of the put and the closing
level of the index times the multiplier.
The risks of purchasing and selling options on indexes may be greater than
options on securities. Because index options are settled in cash, when a Fund
writes a call on an index it cannot fulfill its potential settlement obligations
by delivering the underlying securities. A Fund can offset some of the risk of
writing a call index option by holding a diversified portfolio of securities
similar to those on which the underlying index is based. However, a Fund cannot,
as a practical matter, acquire and hold a portfolio containing exactly the same
securities as underlie the index and, as a result, bears a risk that the value
of the securities held will vary from the value of the index.
Even if a Fund could assemble a portfolio that exactly reproduced the
composition of the underlying index, it still would not be fully covered from a
risk standpoint because of the "timing risk" inherent in writing index options.
When an index option is exercised, the amount of cash that the holder is
entitled to receive is determined by the difference between the exercise price
and the closing index level. As with other kinds of options, a Fund as the call
writer will not learn what it has been assigned until the next business day. The
time lag between exercise and notice of assignment poses no risk for the writer
of a covered call on a specific underlying security, such as common stock,
because in that case the writer's obligation is to deliver the underlying
security, not to pay its value as of a moment in the past. In contrast, the
writer of an index call will be required to pay cash in an amount based on the
difference between the closing index value on the exercise date and the exercise
price. By the time a Fund learns what it has been assigned, the index may have
declined. This "timing risk" is an inherent limitation on the ability of index
call writers to cover their risk exposure.
If a Fund has purchased an index option and exercises it before the closing
index value for that day is available, it runs the risk that the level of the
underlying index may subsequently change. If such a change causes the exercised
option to fall out-of-the-money, the Fund nevertheless will be required to pay
the difference between the closing index value and the exercise price of the
option (times the applicable multiplier) to the assigned writer.
<PAGE>
OTC Options. Unlike exchange-traded options, which are standardized with respect
to the underlying instrument, expiration date, contract size, and strike price,
the terms of OTC options (options not traded on exchanges) generally are
established through negotiation with the other party to the option contract.
While this type of arrangement allows a Fund great flexibility to tailor the
option to its needs, OTC options generally involve greater risk than
exchange-traded options, which are guaranteed by the clearing organization of
the exchange where they are traded.
Generally, OTC foreign currency options used by a Fund are European-style
options. This means that the option is only exercisable immediately prior to its
expiration. This is in contrast to American-style options, which are exercisable
at any time prior to the expiration date of the option.
Futures Contracts and Options on Futures Contracts. When a Fund purchases or
sells a futures contract, it incurs an obligation respectively to take or make
delivery of a specified amount of the obligation underlying the contract at a
specified time and price. When a Fund writes an option on a futures contract, it
becomes obligated to assume a position in the futures contract at a specified
exercise price at any time during the term of the option. If a Fund writes a
call, on exercise it assumes a short futures position. If it writes a put, on
exercise it assumes a long futures position.
The purchase of futures or call options on futures can serve as a long or an
anticipatory hedge, and the sale of futures or the purchase of put options on
futures can serve as a short hedge. Writing call options on futures contracts
can serve as a limited short hedge, using a strategy similar to that used for
writing call options on securities or indexes. Similarly, writing put options on
futures contracts can serve as a limited long or anticipatory hedge.
In addition, futures strategies can be used to manage the "duration" (a measure
of anticipated sensitivity to changes in interest rates, which is sometimes
related to the weighted average maturity of a portfolio) and associated interest
rate risk of a Fund's fixed-income portfolio. If the adviser and/or sub-adviser
wishes to shorten the duration of a Fund's fixed-income portfolio (i.e., reduce
anticipated sensitivity), the Fund may sell an appropriate debt futures contract
or a call option thereon, or purchase a put option on that futures contract. If
the adviser and/or sub-adviser wishes to lengthen the duration of a Fund's
fixed-income portfolio (i.e., increase anticipated sensitivity), the Fund may
buy an appropriate debt futures contract or a call option thereon, or sell a put
option thereon.
At the inception of a futures contract, a Fund is required to deposit "initial
margin" in an amount generally equal to 10% or less of the contract value.
Initial margin must also be deposited when writing a call or put option on a
futures contract, in accordance with applicable exchange rules. Subsequent
"variation margin" payments are made to and from the futures broker daily as the
value of the futures or written option position varies, a process known as
"marking-to-market." Unlike margin in securities transactions, initial margin on
futures contracts and written options on futures contracts does not represent a
borrowing on margin, but rather is in the nature of a performance bond or
good-faith deposit that is returned to the Fund at the termination of the
transaction if all contractual obligations have been satisfied. Under certain
circumstances, such as periods of high volatility, a Fund may be required to
increase the level of initial margin deposits. If the Fund has insufficient cash
to meet daily variation margin requirements, it might need to sell securities in
order to do so at a time when such sales are disadvantageous.
<PAGE>
Purchasers and sellers of futures contracts and options on futures can enter
into offsetting closing transactions, similar to closing transactions on
options, by selling or purchasing, respectively, an instrument identical to the
instrument purchased or sold. However, there can be no assurance that a liquid
market will exist for a particular contract at a particular time. In such event,
it may not be possible to close a futures contract or options position.
Under certain circumstances, futures exchanges may establish daily limits on the
amount that the price of a futures contract or an option on a futures contract
can vary from the previous day's settlement price; once that limit is reached,
no trades may be made that day at a price beyond the limit. Daily price limits
do not limit potential losses because prices could move to the daily limit for
several consecutive days with little or no trading, thereby preventing
liquidation of unfavorable positions.
If a Fund were unable to liquidate a futures contract or an option on a futures
contract position due to the absence of a liquid market or the imposition of
price limits, it could incur substantial losses. The Fund would continue to be
subject to market risk with respect to the position. In addition, except in the
case of purchased options, the Fund would continue to be required to make daily
variation margin payments and might be required to continue to maintain the
position being hedged by the futures contract or option or to continue to
maintain cash or securities in a segregated account.
To the extent that a Fund enters into futures contracts, options on futures
contracts and options on foreign currencies traded on a CFTC-regulated exchange,
in each case that is not for bona fide hedging purposes (as defined by the
CFTC), the aggregate initial margin and premiums required to establish these
positions (excluding the amount by which options are "in-the-money" at the time
of purchase) may not exceed 5% of the liquidation value of the Fund's portfolio,
after taking into account unrealized profits and unrealized losses on any
contracts the Fund has entered into. This policy does not limit to 5% the
percentage of the Fund's assets that are at risk in futures contracts, options
on futures contracts and currency options.
Risks of Futures Contracts and Options Thereon. The ordinary spreads at a given
time between prices in the cash and futures markets (including the options on
futures markets), due to differences in the natures of those markets, are
subject to the following factors. First, all participants in the futures market
are subject to margin deposit and maintenance requirements. Rather than meeting
additional margin deposit requirements, investors may close futures contracts
through offsetting transactions, which could distort the normal relationship
between the cash and futures markets. Second, the liquidity of the futures
market depends on participants entering into offsetting transactions rather than
making or taking delivery. To the extent participants decide to make or take
delivery, liquidity in the futures market could be reduced, thus producing
distortion. Due to the possibility of distortion, a hedge may not be successful.
Although stock index futures contracts do not require physical delivery, under
extraordinary market conditions, liquidity of such futures contracts also could
be reduced. Additionally, the adviser and/or sub-adviser may be incorrect in its
expectations as to the extent of various interest rates, currency exchange rates
or stock market movements or the time span within which the movements take
place.
<PAGE>
Index Futures. The risk of imperfect correlation between movements in the price
of index futures and movements in the price of the securities that are the
subject of a hedge increases as the composition of a Fund's portfolio diverges
from the index. The price of the index futures may move proportionately more
than or less than the price of the securities being hedged. If the price of the
index futures moves proportionately less than the price of the securities that
are the subject of the hedge, the hedge will not be fully effective. Assuming
the price of the securities being hedged has moved in an unfavorable direction,
as anticipated when the hedge was put into place, the Fund would be in a better
position than if it had not hedged at all, but not as good as if the price of
the index futures moved in full proportion to that of the hedged securities.
However, if the price of the securities being hedged has moved in a favorable
direction, this advantage will be partially offset by movement of the price of
the futures contract. If the price of the futures contract moves more than the
price of the securities, the Fund will experience either a loss or a gain on the
futures contract that will not be completely offset by movements in the price of
the securities that are the subject of the hedge.
Where index futures are purchased in an anticipatory hedge, it is possible that
the market may decline instead. If a Fund then decides not to invest in the
securities at that time because of concern as to possible further market decline
or for other reasons, it will realize a loss on the futures contract that is not
offset by a reduction in the price of the securities it had anticipated
purchasing.
Foreign Currency Hedging Strategies--Special Considerations. A Fund may use
options and futures contracts on foreign currencies, as mentioned previously,
and forward currency contracts, as described below, to attempt to hedge against
movements in the values of the foreign currencies in which the Fund's securities
are denominated or, in certain circumstances, for investment (e.g., as a
substitute for investing in securities denominated in foreign currency).
Currency hedges can protect against price movements in a security that a Fund
owns or intends to acquire that are attributable to changes in the value of the
currency in which it is denominated.
A Fund might seek to hedge against changes in the value of a particular currency
when no Financial Instruments on that currency are available or such Financial
Instruments are more expensive than certain other Financial Instruments. In such
cases, a Fund may seek to hedge against price movements in that currency by
entering into transactions using Financial Instruments on another currency or a
basket of currencies, the value of which the adviser and/or sub-adviser believes
will have a high degree of positive correlation to the value of the currency
being hedged. The risk that movements in the price of the Financial Instrument
will not correlate perfectly with movements in the price of the currency subject
to the hedging transaction may be increased when this strategy is used.
The value of Financial Instruments on foreign currencies depends on the value of
the underlying currency relative to the U.S. dollar. Because foreign currency
transactions occurring in the interbank market might involve substantially
larger amounts than those involved in the use of such Financial Instruments, a
Fund could be disadvantaged by having to deal in the odd-lot market (generally
consisting of transactions of less than $1 million) for the underlying foreign
currencies at prices that are less favorable than for round lots.
<PAGE>
There is no systematic reporting of last sale information for foreign currencies
or any regulatory requirement that quotations available through dealers or other
market sources be firm or revised on a timely basis. Quotation information
generally is representative of very large transactions in the interbank market
and thus might not reflect odd-lot transactions where rates might be less
favorable. The interbank market in foreign currencies is a global,
round-the-clock market. To the extent the U.S. options or futures markets are
closed while the markets for the underlying currencies remain open, significant
price and rate movements might take place in the underlying markets that cannot
be reflected in the markets for the Financial Instruments until they reopen.
Settlement of hedging transactions involving foreign currencies might be
required to take place within the country issuing the underlying currency. Thus,
a Fund might be required to accept or make delivery of the underlying foreign
currency in accordance with any U.S. or foreign regulations regarding the
maintenance of foreign banking arrangements by U.S. residents and might be
required to pay any fees, taxes and charges associated with such delivery
assessed in the issuing country.
Forward Currency Contracts and Foreign Currency Deposits. The Funds may enter
into forward currency contracts to purchase or sell foreign currencies for a
fixed amount of U.S. dollars or another foreign currency. A forward currency
contract involves an obligation to purchase or sell a specific currency at a
future date, which may be any fixed number of days (term) from the date of the
forward currency contract agreed upon by the parties, at a price set at the time
the forward currency contract is entered. Forward currency contracts are
negotiated directly between currency traders (usually large commercial banks)
and their customers.
Such transactions may serve as long or anticipatory hedges. For example, a Fund
may purchase a forward currency contract to lock in the U.S. dollar price of a
security denominated in a foreign currency that the Fund intends to acquire.
Forward currency contracts may also serve as short hedges. For example, a Fund
may sell a forward currency contract to lock in the U.S. dollar equivalent of
the proceeds from the anticipated sale of a security or a dividend or interest
payment denominated in a foreign currency.
The Funds may also use forward currency contracts to hedge against a decline in
the value of existing investments denominated in foreign currency. Such a hedge
would tend to offset both positive and negative currency fluctuations, but would
not offset changes in security values caused by other factors. A Fund could also
hedge the position by entering into a forward currency contract to sell another
currency expected to perform similarly to the currency in which the Fund's
existing investments are denominated. This type of hedge could offer advantages
in terms of cost, yield or efficiency, but may not hedge currency exposure as
effectively as a simple hedge against U.S. dollars. This type of hedge may
result in losses if the currency used to hedge does not perform similarly to the
currency in which the hedged securities are denominated.
The Funds may also use forward currency contracts in one currency or a basket of
currencies to attempt to hedge against fluctuations in the value of securities
denominated in a different currency if the adviser anticipates that there will
be a positive correlation between the two currencies.
<PAGE>
The cost to a Fund of engaging in forward currency contracts varies with factors
such as the currency involved, the length of the contract period and the market
conditions then prevailing. Because forward currency contracts are usually
entered into on a principal basis, no fees or commissions are involved. When a
Fund enters into a forward currency contract, it relies on the counterparty to
make or take delivery of the underlying currency at the maturity of the
contract. Failure by the counterparty to do so would result in the loss of some
or all of any expected benefit of the transaction.
As is the case with futures contracts, purchasers and sellers of forward
currency contracts can enter into offsetting closing transactions, similar to
closing transactions on futures contracts, by selling or purchasing,
respectively, an instrument identical to the instrument purchased or sold.
Secondary markets generally do not exist for forward currency contracts, with
the result that closing transactions generally can be made for forward currency
contracts only by negotiating directly with the counterparty. Thus, there can be
no assurance that a Fund will in fact be able to close out a forward currency
contract at a favorable price prior to maturity. In addition, in the event of
insolvency of the counterparty, the Fund might be unable to close out a forward
currency contract. In either event, the Fund would continue to be subject to
market risk with respect to the position, and would continue to be required to
maintain a position in securities denominated in the foreign currency or to
segregate cash or liquid assets.
The precise matching of forward currency contract amounts and the value of the
securities, dividends or interest payments involved generally will not be
possible because the value of such securities, dividends or interest payments,
measured in the foreign currency, will change after the forward currency
contract has been established. Thus, a Fund might need to purchase or sell
foreign currencies in the spot (cash) market to the extent such foreign
currencies are not covered by forward currency contracts. The projection of
short-term currency market movements is extremely difficult, and the successful
execution of a short-term hedging strategy is highly uncertain.
Forward currency contracts may substantially change a Fund's investment exposure
to changes in currency exchange rates and could result in losses to the Fund if
currencies do not perform as the adviser anticipates. There is no assurance that
the adviser's and/or sub-adviser's use of forward currency contracts will be
advantageous to a Fund or that it will hedge at an appropriate time.
The Funds may also purchase and sell foreign currency and invest in foreign
currency deposits. Currency conversion involves dealer spreads and other costs,
although commissions usually are not charged.
Combined Positions. A Fund may purchase and write options or futures in
combination with each other, or in combination with futures or forward currency
contracts, to manage the risk and return characteristics of its overall
position. For example, a Fund may purchase a put option and write a call option
on the same underlying instrument, in order to construct a combined position
whose risk and return characteristics are similar to selling a futures contract.
Another possible combined position would involve writing a call option at one
strike price and buying a call option at a lower price, in order to reduce the
risk of the written call option in the event of a substantial price increase.
Because combined options positions involve multiple trades, they result in
higher transaction costs.
<PAGE>
Turnover. The Funds' options and futures activities may affect their turnover
rates and brokerage commission payments. The exercise of calls or puts written
by a Fund, and the sale or purchase of futures contracts, may cause it to sell
or purchase related investments, thus increasing its turnover rate. Once a Fund
has received an exercise notice on an option it has written, it cannot effect a
closing transaction in order to terminate its obligation under the option and
must deliver or receive the underlying securities at the exercise price. The
exercise of puts purchased by a Fund may also cause the sale of related
investments, increasing turnover. Although such exercise is within the Fund's
control, holding a protective put might cause it to sell the related investments
for reasons that would not exist in the absence of the put. A Fund will pay a
brokerage commission each time it buys or sells a put or call or purchases or
sells a futures contract. Such commissions may be higher than those that would
apply to direct purchases or sales.
Swaps, Caps, Floors and Collars. The Funds are authorized to enter into swaps,
caps, floors and collars. Swaps involve the exchange by one party with another
party of their respective commitments to pay or receive cash flows, e.g., an
exchange of floating rate payments for fixed rate payments. The purchase of a
cap or a floor entitles the purchaser, to the extent that a specified index
exceeds in the case of a cap, or falls below in the case of a floor, a
predetermined value, to receive payments on a notional principal amount from the
party selling such instrument. A collar combines elements of buying a cap and
selling a floor.
ILLIQUID SECURITIES (ALL FUNDS, EXCEPT S&P 500 INDEX FUND) -- 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. A Fund will not purchase any such
security if the purchase would cause the Fund to invest more than 15% of its net
assets, measured at the time of purchase, in illiquid securities. Repurchase
agreements maturing in more than seven days are considered illiquid for purposes
of this restriction.
The principal risk of investing in illiquid securities is that a Fund may be
unable to dispose of them at the time desired or at a reasonable price. In
addition, in order to resell a restricted security, a Fund might have to bear
the expense and incur the delays associated with registering the securities with
the SEC, and otherwise obtaining listing on a securities exchange or in the over
the counter market.
INVESTMENT COMPANY SECURITIES -- To manage their daily cash positions, the Funds
may invest in securities issued by other investment companies that invest in
short-term debt securities and seek to maintain a net asset value of $1.00 per
share ("money market funds"). The Funds also may invest in Standard & Poor's
Depository Receipts ("SPDRs") and shares of other investment companies. SPDRs
are investment companies whose portfolios mirror the compositions of specific
S&P indices, such as the S&P 500 and the S&P 400. SPDRs are traded on the
American Stock Exchange. SPDR holders such as a Fund are paid a "Dividend
Equivalent Amount" that corresponds to the amount of cash dividends accruing to
<PAGE>
the securities held by the SPDR Trust, net of certain fees and expenses. The
Investment Company Act of 1940 limits investments in securities of other
investment companies, such as the SPDR Trust. These limitations include, among
others, that, subject to certain exceptions, no more than 10% of a Fund's total
assets may be invested in securities of other investment companies and no more
than 5% of its total assets may be invested in the securities of any one
investment company. As a shareholder of another investment company, a Fund would
bear its pro rata portion of the other investment company's expenses, including
advisory fees, in addition to the expenses the Fund bears directly in connection
with its own operations.
REITS -- Real Estate Investment Trusts are investment trusts that invest
primarily in real estate and securities of businesses connected to the real
estate industry.
REPURCHASE AGREEMENTS -- A Fund may enter into repurchase agreements, or REPOs,
on debt securities that the Fund is allowed to hold in its portfolio. This is a
way to invest money for short periods. A REPO is an agreement under which the
Fund acquires a debt security and then resells it to the seller at an
agreed-upon price and date (normally, the next business day). The repurchase
price represents an interest rate effective for the short period the debt
security is held by the Fund, and is unrelated to the interest rate on the
underlying debt security. A repurchase agreement is often considered as a loan
collateralized by securities. The collateral securities acquired by the Fund
(including accrued interest earned thereon) must have a total value in excess of
the value of the repurchase agreement. The collateral securities are held by the
Fund's custodian bank until the repurchase agreement is completed.
The Funds may enter into repurchase agreements with commercial banks, registered
broker-dealers or registered government securities dealers that are creditworthy
under standards established by the Company's board of directors. The Company's
board of directors has established standards that the investment adviser and
sub-adviser must use to review the creditworthiness of any bank, broker or
dealer that is party to a REPO. REPOs maturing in more than seven days are
considered illiquid securities. A Fund will not enter into repurchase agreements
maturing in more than seven days if as a result more than 15% of the Fund's net
assets would be invested in these repurchase agreements and other illiquid
securities.
As noted above, the Funds use REPOs as a means of investing cash for short
periods of time. Although REPOs are considered to be highly liquid and
comparatively low-risk, the use of REPOs does involve some risks. For example,
if the other party to the agreement defaults on its obligation to repurchase the
underlying security at a time when the value of the security has declined, the
Fund may incur a loss on the sale of the collateral security. If the other party
to the agreement becomes insolvent and subject to liquidation or reorganization
under the Bankruptcy Code or other laws, a court may determine that the
underlying security is collateral for a loan by the Fund not within the control
of the Fund and therefore the realization by the Fund on such collateral may
automatically be stayed. Finally, it is possible that the Fund may not be able
to substantiate its interest in the underlying security and may be deemed an
unsecured creditor of the other party to the agreement.
RULE 144A SECURITIES -- The Funds, except S&P 500 Index Fund, also may invest in
securities that can be resold to institutional investors pursuant to Rule 144A
under the Securities Act of 1933, as amended (the "1933 Act"). In recent years,
a large institutional market has developed for many Rule 144A Securities.
Institutional investors generally cannot sell these securities to the general
<PAGE>
public but instead will often depend on an efficient institutional market in
which Rule 144A Securities can readily be resold to other institutional
investors, or on an issuer's ability to honor a demand for repayment. Therefore,
the fact that there are contractual or legal restrictions on resale to the
general public or certain institutions does not necessarily mean that a Rule
144A Security is illiquid. Institutional markets for Rule 144A Securities may
provide both reliable market values for Rule 144A Securities and enable a Fund
to sell a Rule 144A investment when appropriate. For this reason, the Company's
board of directors has concluded that if a sufficient institutional trading
market exists for a given Rule 144A security, it may be considered "liquid," and
not subject to a Fund's limitations on investment in restricted securities. The
Company's board of directors has given INVESCO the day-to-day authority to
determine the liquidity of Rule 144A Securities, according to guidelines
approved by the board. The principal risk of investing in Rule 144A Securities
is that there may be an insufficient number of qualified institutional buyers
interested in purchasing a Rule 144A Security held by a Fund, and the Fund might
be unable to dispose of such security promptly or at reasonable prices.
SECURITIES LENDING -- Each Fund may lend its portfolio securities. The advantage
of lending portfolio securities is that a Fund continues to have the benefits
(and risks) of ownership of the loaned securities, while at the same time
receiving interest from the borrower of the securities. The primary risk in
lending portfolio securities is that a borrower may fail to return a portfolio
security.
U.S. GOVERNMENT SECURITIES -- Each Fund may, from time to time, purchase debt
securities issued by the U.S. government. 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.
<PAGE>
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 its investment adviser and sub-advisers are satisfied that the credit risk
with respect to any such instrumentality is comparatively minimal.
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 restictions 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 Investment Company Act of 1940, as amended (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 or municipal securities) 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. with respect to 75% of the Fund's total assets, purchase the securities
of any issuer (other than securities issued or guaranteed by the U.S.
<PAGE>
government or any of its agencies or instrumentalities, or securities of
other investment companies) if, as a result, (i) more than 5% of a Fund's
total assets would be invested in the securities of that issuer, or (ii) a
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, as amended,
in connection with the disposition of the Fund's portfolio securities;
4. borrow money, except that the Fund may borrow money in an amount not
exceeding 33 1/3% of its total assets (including the amount borrowed) less
liabilities (other than borrowings);
5. issue senior securities, except as permitted under the 1940 Act;
6. lend any security or make any loan if, as a result, more than 33 1/3%
of its total assets would be lent to other parties, but this limitation
does not apply to the purchase of debt securities or to repurchase
agreements;
7. purchase or sell physical commodities; however, this policy shall not
prevent the Fund from purchasing and selling foreign currency, futures
contracts, options, forward contracts, swaps, caps, floors, collars and
other financial instruments; or
8. purchase or sell real estate unless acquired as a result of ownership
of securities or other instruments (but this shall not prevent the Fund
from investing in securities or other instruments backed by real estate or
securities of companies engaged in the real estate business).
9. Each Fund may, notwithstanding any other fundamental investment policy
or limitation, invest all of its assets in the securities of a single
open-end management investment company managed by INVESCO 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
<PAGE>
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 15% of its net assets would be invested in securities
that are deemed to be illiquid because they are subject to legal or
contractual restrictions on resale or because they cannot be sold or
disposed of in the ordinary course of business at approximately the prices
at which they are valued.
D. The Fund may invest in securities issued by other investment companies
to the extent that such investments are consistent with the Fund's
investment objective and policies and permissible under the 1940 Act.
E. With respect to fundamental limitation (1), domestic and foreign
banking will be considered to be different industries.
In addition, with respect to a Fund that may invest in municipal obligations,
the following non-fundamental policy applies, which may be changed without
shareholder approval:
Each state (including the District of Columbia and Puerto Rico), territory
and possession of the United States, each political subdivision, agency,
instrumentality and authority thereof, and each multi-state agency of
which a state is a member is a separate "issuer." When the assets and
revenues of an agency, authority, instrumentality or other political
subdivision are separate from the government creating the subdivision and
the security is backed only by assets and revenues of the subdivision,
such subdivision would be deemed to be the sole issuer. Similarly, in the
case of an Industrial Development Bond or Private Activity bond, if that
bond is backed only by the assets and revenues of the non-governmental
user, then that non-governmental user would be deemed to be the sole
issuer. However, if the creating government or another entity guarantees a
security, then to the extent that the value of all securities issued or
guaranteed by that government or entity and owned by a Fund exceeds 10% of
the Fund's total assets, the guarantee would be considered a separate
security and would be treated as issued by that government or entity.
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 an 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.
<PAGE>
INVESCO Sector Funds, Inc. (formerly, INVESCO Strategic Portfolios, Inc.)
INVESCO Specialty Funds, 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 $296 billion in assets under management on June 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.
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.
<PAGE>
INVESCO Realty Advisors, Inc., Dallas, Texas, is responsible for providing
advisory services in the U.S. real estate markets for AMVESCAP PLC's clients
worldwide. Clients include corporate pension plans and public pension funds
as well as endowment and foundation accounts.
INVESCO (NY), Inc., New York, is an investment adviser for separately
managed accounts, such as corporate and municipal pension plans,
Taft-Hartley Plans, insurance companies, charitable institutions and private
individuals. INVESCO NY also offers the opportunity for its clients to
invest both directly and indirectly through partnerships in primarily
private investments or privately negotiated transactions. INVESCO NY further
serves as investment adviser to several closed-end investment companies, and
as sub-adviser with respect to certain commingled employee benefit trusts.
A I M Advisors, Inc., Houston, Texas, provides investment advisory and
administrative services for retail and institutional mutual funds.
A I M Capital Management, Inc., Houston, Texas, provides investment
advisory services to individuals, corporations, pension plans and other
private investment advisory accounts and also serves as 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 variable insurance companies.
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.
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;
</[Class II and Class C]R>
<PAGE>
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 the 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
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
<PAGE>
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:
Blue Chip Growth and Dynamics Funds
o 0.60% on the first $350 million of each Fund's average net assets;
o 0.55% on the next $350 million of each Fund's average net assets;
o 0.50% of each Fund's average net assets from $700 million;
o 0.45% of each Fund's average net assets from $2 billion;
o 0.40% of each Fund's average net assets from $4 billion;
o 0.375% of each Fund's average net assets from $6 billion; and
o 0.35% of each Fund's average net assets from $8 billion.
Endeavor and Growth & Income Funds
o 0.75% on the first $500 million of each Fund's average net assets;
o 0.65% on the next $500 million of each Fund's average net assets;
o 0.55% of each Fund's average net assets from $1 billion;
o 0.45% of each Fund's average net assets from $2 billion;
o 0.40% of each Fund's average net assets from $4 billion;
o 0.375% of each Fund's average net assets from $6 billion; and
o 0.35% of each Fund's average net assets from $8 billion.
Small Company Growth Fund
o 0.75% on the first $350 million of the Fund's average net assets;
o 0.65% on the next $350 million of the Fund's average net assets;
o 0.55% of the Fund's average net assets from $700 million;
o 0.45% of the Fund's average net assets from $2 billion;
<PAGE>
o 0.40% of the Fund's average net assets from $4 billion;
o 0.375% of the Fund's average net assets from $6 billion; and
o 0.35% of the Fund's average net assets from $8 billion.
S&P 500 Index Fund
o 0.25% of the Fund's average net assets.
Value Equity Fund
o 0.75% on the first $500 million of the Fund's average net assets;
o 0.65% on the next $500 million of the Fund's average net assets;
o 0.50% of the Fund's average net assets from $1 billion;
o 0.45% of the Fund's average net assets from $2 billion;
o 0.40% of the Fund's average net assets from $4 billion;
o 0.375% of the Fund's average net assets from $6 billion; and
o 0.35% of the Fund's average net assets from $8 billion.
During the periods outlined in the table below, the Funds paid INVESCO advisory
fees in the dollar amounts shown below. Since the Funds' [Class C] shares did
not commence operations until January __, 2000, no advisory fees were paid with
respect to [Class C] shares for the periods 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.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Advisory Total Expense Total Expense
Fee Dollars Reimbursements Limitations
Blue Chip Growth Fund - [Class II]
July 31, 1999(a) $5,712,698 $0 N/A
August 31, 1998 $4,561,574 $0 N/A
August 31, 1997 $3,922,981 $0 N/A
August 31, 1996 $3,196,929 $0 N/A
Dynamics Fund - [Class II]
July 31, 1999(b) $2,927,803 $0 1.20%(c)
April 30, 1999 $7,750,919 $0 1.21%
April 30, 1998 $5,874,212 $0 1.21%
April 30, 1997 $4,550,303 $0 1.21%
<PAGE>
Endeavor Fund - [Class II]
July 31, 1999(b) $ 173,488 $0 1.50%
April 30, 1999 $ 206,836 $0 1.50%
Growth & Income Fund - [Class II]
July 31, 1999(b) $ 107,949 $33,201 1.50%
April 30, 1999 $ 209,172 $53,659 1.50%
Small Company Growth Fund - [Class II]
July 31, 1999(d) $ 512,934 $ 84,361 1.50%
May 31, 1999 $1,973,393 $201,069 1.50%
May 31, 1998 $2,334,680 $ 0 1.50%
May 31, 1997 $2,029,312 $ 59,729 1.50%
S&P 500 Index Fund - [Class I]
July 31, 1999(e) $ 9,042 $ 29,912 0.35%
July 31, 1998 $ 3,729 $ 31,239 0.30%
S&P 500 Index Fund - [Class II]
July 31, 1999(e) $ 99,317 $155,166 0.60%
July 31, 1998 $ 10,030 $ 44,823 0.55%
Value Equity Fund - [Class II]
July 31, 1999(a) $2,756,316 $397,754 1.30%
August 31, 1998 $3,080,351 $164,235 1.25%
August 31, 1997 $2,250,039 $ 0 N/A
August 31, 1996 $1,382,049 $ 0 N/A
(a) For the period September 1, 1998 through July 31, 1999
(b) For the period May 1, 1999 through July 31, 1999
(c) Effective May 13, 1999, the Total Expense Limitation was changed to 1.20%
(d) For the period June 1, 1999 through July 31, 1999
(e) For the period August 1, 1998 through July 31, 1999
</TABLE>
THE SUB-ADVISORY AGREEMENT
With respect to the S&P 500 Index Fund, World Asset Management ("World") serves
as sub-adviser to the Fund pursuant to a sub-advisory agreement dated October
1, 1997.
With respect to the Value Equity Fund, INVESCO Capital Management ("ICM") serves
as sub-adviser to the Fund pursuant to a sub-advisory agreement dated February
28, 1997.
<PAGE>
The Sub-Agreements provide that World and ICM, as applicable, subject to the
supervision of INVESCO, shall manage the investment portfolios of the respective
Funds in conformity with each such Fund's investment policies. These management
services include: (a) managing the investment and reinvestment of all the
assets, now or hereafter acquired, of each Fund, and executing all purchases and
sales of portfolio securities; (b) maintaining a continuous investment program
for the Funds, consistent with (i) each Fund's investment policies as set forth
in the Company's Articles of Incorporation, Bylaws and Registration Statement,
as from time to time amended, under the 1940 Act, as amended, and in any
prospectus and/or statement of additional information of the Company, 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; (c) determining what securities are to be purchased or sold for each
Fund, unless otherwise directed by the directors of the Company or INVESCO, and
executing transactions accordingly; (d) providing the Funds the benefit of all
of the investment analysis and research, the reviews of current economic
conditions and trends, and the consideration of long-range investment policy now
or hereafter generally available to investment advisory customers of World or
ICM; (e) determining what portion of each applicable Fund's assets should be
invested in the various types of securities authorized for purchase by such
Fund; and (f) making recommendations as to the manner in which voting rights,
rights to consent to Company action and any other rights pertaining to the
portfolio securities of each applicable Fund shall be exercised.
The Sub-Agreements provide that, as compensation for their services, World and
ICM shall receive from INVESCO, at the end of each month, a fee based upon the
average daily value of the applicable Fund's net assets. The fees are calculated
at the following annual rates:
S&P 500 Index Fund
o 0.07% on the first $10 million of the Fund's average net assets;
o 0.05% on the next $40 million of the Fund's average net assets; and
o 0.03% of the Fund's average net assets from $50 million.
Value Equity Fund
o 0.30% on the first $500 million of the Fund's average net assets;
o 0.26% on the next $500 million of the Fund's average net assets;
o 0.20% of the Fund's average net assets from $1 billion;
o 0.18% of the Fund's average net assets from $2 billion;
o 0.16% of the Fund's average net assets from $4 billion;
<PAGE>
o 0.15% of the Fund's average net assets from $6 billion; and
o 0.14% of the Fund's average net assets from $8 billion.
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.
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% per year of the average net assets of each
Fund prior to May 13, 1999, and 0.045% per year of the average net assets of
each Fund effective May 13, 1999.
TRANSFER AGENCY AGREEMENT
INVESCO also performs transfer agent, dividend disbursing agent and registrar
services for the Funds pursuant to a Transfer Agency Agreement.
The Transfer Agency Agreement provides that each Fund pays INVESCO an annual
fee of $20.00 per shareholder account, or, where applicable, per participant
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 periods outlined in the table below for each Fund, the Funds' [Class II]
shares paid the following fees to INVESCO (prior to the absorption of certain
Fund expenses by INVESCO). Since the Funds' [Class C] shares did not commence
operations until January __, 2000, no fees were paid with respect to [Class C]
shares for the periods shown below.
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Blue Chip Growth Fund - [Class II]
July 31, August 31
Type of Fee 1999(a) 1998 1997 1996
Advisory $5,712,698 $4,561,574 $3,922,981 $3,196,929
Administrative Services 248,879 131,098 112,386 92,412
Transfer Agency $1,500,795 1,160,513 1,066,438 751,390
Dynamics Fund - [Class II]
July 31, April 30
Type of Fee 1999(b) 1999 1998 1997
Advisory $2,927,803 $7,750,919 $5,874,212 $4,550,303
Administrative Services $ 236,694 226,800 170,476 130,696
Transfer Agency $ 993,382 2,693,081 2,156,766 1,964,970
Endeavor Fund - [Class II]
July 31, April 30
Type of Fee 1999(b) 1999(c)
Advisory $ 173,488 $ 206,836
Administrative Services $ 12,209 9,217
Transfer Agency $ 57,863 52,532
Growth & Income Fund - [Class II]
July 31, April 30
Type of Fee 1999(b) 1999(d)
Advisory $ 107,949 $ 209,172
Administrative Services $ 8,442 12,517
Transfer Agency $ 47,918 70,040
Small Company Growth Fund - [Class II]
July 31, May 31
Type of Fee 1999(e) 1999 1998 1997
Advisory $ 512,934 $1,973,393 $2,334,680 $2,029,312
Administrative Services $ 33,164 54,324 56,738 50,660
Transfer Agency $ 327,104 1,116,282 1,090,224 1,043,895
S&P 500 Index Fund - [Class I]
July 31
Type of Fee 1999 1998
Advisory $ 9,042 $ 3,729
Administrative Services $ 1,793 $ 2,624
Transfer Agency $ 2,447 $ 266
<PAGE>
S&P 500 Index Fund - [Class II]
July 31
Type of Fee 1999 1998
Advisory $ 99,317 $ 10,030
Administrative Services $ 19,051 $ 4,250
Transfer Agency $ 76,345 $ 7,631
Value Equity Fund - [Class II]
July 31, August 31
Type of Fee 1999(f) 1998 1997 1996
Advisory $ 2,756,316 $3,080,351 $ 2,250,039 $ 1,382,049
Administrative Services $ 89,785 71,607 55,001 37,641
Transfer Agency $ 1,011,717 918,694 610,115 282,255
(a) From September 1, 1998 to July 31, 1999
(b) From May 1, 1999 to July 31, 1999
(c) From October 28, 1998 (commencement of operations) to April 30, 1999
(d) From July 1, 1998 (commencement of operations) to April 30, 1999
(e) From June 1, 1999 to July 31, 1999
(f) From September 1, 1998 to July 31, 1999
</TABLE>
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
<PAGE>
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.
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 Specialty Funds, 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.
Name, Address, and Age Position(s) Held With Principal Occupations(s)
Company During Past Five Years
Charles W. Brady *+ Director and Chairman Chairman of the Board of
1315 Peachtree St., N.E. of the Board INVESCO Global Health
Atlanta, Georgia Sciences Fund; Chief
Age: 64 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 Global
Security Life Center Chairman of the Board Health Sciences Fund;
1290 Broadway formerly, Chairman of the
Denver, Colorado Executive Committee and
Age: 71 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 Executive
7800 E. Union Avenue Executive Officer Officer and Director of
Denver, Colorado and Director INVESCO Funds Group,
Age: 48 Inc.; President, Chief
Executive Officer and
Director of INVESCO Distr-
ibutors, 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>
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 Center Executive Officer of
1600 Pierce Street AMC Cancer Research
Denver, Colorado Center, Denver,
Age: 62 Colorado, since January
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>
Name, Address, and Age Position(s) Held With Principal Occupation(s)
Company 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: 54 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,
Inde pendent Women's
Forum, International
Republic Institute, and
the Republi can 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>
Name, Address, and Age Position(s) Held With Principal Occupation(s)
Company 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: 73 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, Georgia the Citizens and
Age: 68 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>
Name, Address, and Age Position(s) Held With Principal Occupation(s)
Company During Past Five Years
Larry Soll, Ph.D.!** Director Retired. Formerly,
345 Poorman Road 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: 51 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>
Name, Address, and Age Position(s) Held With Principal Occupation(s)
Company During Past Five Years
Ronald L. Grooms Chief Accounting Senior Vice President,
7800 E. Union Avenue Officer, Chief Treasurer and Director of
Denver, Colorado Financial Officer and INVESCO Funds Group,
Age: 52 Treasurer Inc.; Senior Vice
President and Trea
surer of INVESCO Dis
tributors, Inc.;
Treasurer, Principal
Financial and
Accounting Officer of
INVESCO Global Health
Sciences Fund;
formerly, Senior Vice
President and
Treasurer of INVESCO
Trust Company (1988 to
1998).
William J. Galvin, Jr. Assistant Secretary Senior Vice President and
7800 E. Union Avenue Assistant Secretary of
Denver, Colorado INVESCO Funds Group, Inc.;
Age: 42 Senior Vice President of
INVESCO Distributors,
Inc.; formerly, Trust
Officer of INVESCO
Trust Company.
Pamela J. Piro Assistant Treasurer Vice President and Assist-
7800 E. Union Avenue ant Treasurer of INVESCO
Denver, Colorado Funds Group, Inc.;Assist-
Age: 39 ant 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).
Alan I. Watson Assistant Secretary Vice President of
7800 E. Union Avenue INVESCO Funds Group,
Denver, Colorado Inc.; formerly, Trust
Age: 57 Officer of INVESCO
Trust Company.
<PAGE>
Name, Address, and Age Position(s) Held With Principal Occupation(s)
Company During Past Five Years
Judy P. Wiese Assistant Secretary Vice President and Assist-
7800 E. Union Avenue ant Secretary of INVESCO
Denver, Colorado Funds Group, Inc.;
Age: 51 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 period ended July 31, 1999.
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.
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------
Name of Person Aggregate Compen- Benefits Accrued Estimated Annual Total Compensa-
and Position sation From As Part of Company Benefits Upon tion From
Company(1) Expenses(2) Retirement(3) INVESCO Com-
plex Paid To
Directors(6)
- -------------------------------------------------------------------------------------------------------
Fred A. $6,164 $8,033 $5,425 $103,700
Deering, Vice
Chairman of
the Board
- -------------------------------------------------------------------------------------------------------
Victor L. Andrews 5,589 7,684 5,981 80,350
- -------------------------------------------------------------------------------------------------------
Bob R. Baker 5,672 6,862 8,016 84,000
- -------------------------------------------------------------------------------------------------------
Lawrence H. Budner 5,561 7,684 5,981 79,350
- -------------------------------------------------------------------------------------------------------
Daniel D. Chabris(4) 2,366 7,852 4,921 70,000
- -------------------------------------------------------------------------------------------------------
Wendy L. Gramm 5,449 0 0 79,000
- -------------------------------------------------------------------------------------------------------
Kenneth T. King 6,014 8,199 4,921 77,050
- -------------------------------------------------------------------------------------------------------
John W. McIntyre 6,135 0 0 98,500
- -------------------------------------------------------------------------------------------------------
Larry Soll 5,449 0 0 96,000
- -------------------------------------------------------------------------------------------------------
Total 48,399 46,314 35,245 767,950
- -------------------------------------------------------------------------------------------------------
% of Net Assets 0.0010%(5) 0.0010%(5) 0.0035%(6)
- -------------------------------------------------------------------------------------------------------
</TABLE>
(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
during the period in which retirement benefits are accrued on behalf of the
respective directors. This results in lower estimated benefits for directors who
<PAGE>
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 or trustee 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 July 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 any director whose retirement has been extended by the board for
up to three years, a Qualified Director shall receive quarterly payments at an
annual rate equal to 50% of the Basic Benefit. These payments will continue for
the remainder of the Qualified Director's life or ten years, whichever is longer
(the "Reduced Benefit Payments"). If a Qualified Director dies or becomes
disabled after age 72 and before age 74 while still a director of the funds, the
First Year Retirement Benefit and Reduced Benefit Payments will be made to
him/her or to his/her beneficiary or estate. If a Qualified Director becomes
disabled or dies either prior to age 72 or during his/her 74th year while still
a director of the funds, the director will not be entitled to receive the First
Year Retirement Benefit; however, the Reduced Benefit Payments will be made to
his/her beneficiary or estate. The Plan is administered by a committee of three
directors who are also participants in the Plan and one director who is not a
Plan participant. The cost of the Plan will be allocated among the INVESCO Funds
in a manner determined to be fair and equitable by the committee. The Company
began making payments under the Plan to Mr. Chabris as of October 1, 1998. The
Company has no stock options or other pension or retirement plans for management
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 INVESCO Funds.
<PAGE>
The Independent Directors have contributed to the Plan, pursuant to which they
have deferred receipt of a portion of the compensation which they would
otherwise have been paid as directors of all INVESCO Funds. Certain of the
deferred amounts have been invested in the shares of certain INVESCO Funds,
except Funds offered by INVESCO Variable Investment Funds, Inc., in which the
directors are legally precluded from investing . Each Independent Director may,
therefore, be deemed to have an indirect interest in shares of each such INVESCO
Fund, in addition to any INVESCO Fund shares the Independent Director may own
either directly or beneficially.
CONTROL PERSONS AND PRINCIPAL SHAREHOLDERS
As of October 31, 1999, the following persons owned more than 5% of the
outstanding shares of the Funds indicated below. This level of share ownership
is considered to be a "principal shareholder" relationship with a Fund under the
1940 Act. Shares that are owned "of record" are held in the name of the person
indicated. Shares that are owned "beneficially" are held in another name, but
the owner has the full economic benefit of ownership of those shares:
Blue Chip Growth Fund
- --------------------------------------------------------------------------------
Name and Address Basis of Ownership Percentage Owned
(Record/Beneficial)
================================================================================
None
- --------------------------------------------------------------------------------
Dynamics Fund
- --------------------------------------------------------------------------------
Name and Address Basis of OwnershiP Percentage Owned
(Record/Beneficial)
================================================================================
Charles Schwab & Co., Inc. Record 14.22%
Special Custody Account for
the Exclusive Benefit of
Customers
Attn: Mutual Funds
101 Montgomery St.
San Francisco, CA 94104-4122
- --------------------------------------------------------------------------------
<PAGE>
Endeavor Fund
- --------------------------------------------------------------------------------
Name and Address Basis of Ownership Percentage Owned
(Record/Beneficial)
================================================================================
Charles Schwab & Co., Inc. Record 24.35%
Special Custody Account for
the Exclusive Benefit of
Customers
Attn: Mutual Funds
101 Montgomery St.
San Francisco, CA 94104-4122
- --------------------------------------------------------------------------------
National Financial Services
Corp. Record 7.08%
The Exclusive Benefit of
Customers
One World Financial Center
200 Liberty St., 5th Floor
Attn: Kate - Recon
New York, NY 10281-5500
- --------------------------------------------------------------------------------
Growth & Income Fund
- --------------------------------------------------------------------------------
Name and Address Basis of Ownership Percentage Owned
(Record/Beneficial)
================================================================================
Charles Schwab & Co., Inc. Record 27.01%
Special Custody Account for
the Exclusive Benefit of
Customers
Attn: Mutual Funds
101 Montgomery St.
San Francisco, CA 94104-4122
- --------------------------------------------------------------------------------
Nat'l Financial Services Corp.
The Exclusive Benefit of Cust. Record 5.65%
One World Financial Center
200 Liberty Street, 5th Floor
Attn: Kate Recon
New York, NY 10281-1003
- --------------------------------------------------------------------------------
Nat'l Investor Services Corp. Record 5.32%
For The Exclusive Benefit of
Our Customers
55 Water St.
New York, NY 10041-0098
- --------------------------------------------------------------------------------
<PAGE>
Small Company Growth Fund
- --------------------------------------------------------------------------------
Name and Address Basis of Ownership Percentage Owned
(Record/Beneficial)
================================================================================
Connecticut General Life Record 15.73%
Insurance
c/o Liz Pezda M-110
P.O. Box 2975 H 19 B
Hartford, CT 06104-2975
- --------------------------------------------------------------------------------
Charles Schwab & Co., Inc. Record 9.17%
Special Custody Account for
the Exclusive Benefit of
Customers
Attn: Mutual Funds
101 Montgomery St.
San Francisco, CA 94104-4122
- --------------------------------------------------------------------------------
S&P 500 Index Fund
- --------------------------------------------------------------------------------
Name and Address Basis of Ownership Percentage Owned
(Record/Beneficial)
================================================================================
INVESCO Trust Company Record 41.29%
Right Choice Managed Care Inc.
Supp Exec Retirement Plan
1831 Chestnut Street
St. Louis, MO 63103-2231
- --------------------------------------------------------------------------------
INVESCO Trust Company Record 19.69%
Right Choice Managed Care Inc.
Exec Def Retirement Plan
1831 Chestnut Street
St. Louis, MO 63103-2231
- --------------------------------------------------------------------------------
INVESCO Trust Company Record 17.90%
Compass Group USA
Non-Qualified Plan IRPS
Attn: Kelly Allen
P.O. Box 1350
Winston-Salem, NC 27102-1350
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
Name and Address Basis of Ownership Percentage Owned
(Record/Beneficial)
================================================================================
Ronald L. Grooms
7800 East Union Avenue Record 10.98%
Denver, CO 80237-2715
- --------------------------------------------------------------------------------
Value Equity Fund
- --------------------------------------------------------------------------------
Name and Address Basis of Ownership Percentage Owned
(Record/Beneficial)
================================================================================
Charles Schwab & Co., Inc. Record 6.58%
Special Custody Account for
the Exclusive Benefit of
Customers
Attn: Mutual Funds
101 Montgomery St.
San Francisco, CA 94104-4122
- --------------------------------------------------------------------------------
INVESCO Trust Company TR Record 6.31%
Morris Communications Corp.
Employee's Profit Sharing
Retirement Plan
725 Broad Street
Augusta, GA 30901-1336
- --------------------------------------------------------------------------------
INVESCO Trust Company Record 5.80%
The Ritz Carlton Hotel Company
LLC
Special Reserve Plan DC
400 Colony Square Suite 2200
1201 Peachtree Street NE
Atlanta, GA 30361-3500
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
Name and Address Basis of Ownership Percentage Owned
(Record/Beneficial)
================================================================================
INVESCO Trust Company
Carle Clinic Association Record 5.33%
Profit Sharing Plan
602 West University Avenue
Urbana, IL 61801-2530
- --------------------------------------------------------------------------------
As of October 25, 1999, officers and directors of the Company, as a group,
beneficially owned less than 1% of each of the Blue Chip Growth - [Class II and
Class C], Dynamics - [Class II and Class C], Endeavor - [Class II and Class C],
Growth & Income - [Class II and Class C], Small Company Growth - [Class II and
Class C], and Value Equity - [Class II and Class C] Funds' outstanding shares
and less than 12% of the S&P 500 Index Fund's [Class I and II]'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 Funds' shares, except for such distribution expenses as are
paid out of Fund assets under the Company's plans of distribution which has
been adopted by each Fund pursuant to Rule 12b-1 under the 1940 Act.
[CLASS II]. Company has adopted a Plan and Agreement of Distribution (the
"[Class II] Plan"), with respect to [Class II] shares, which provides that the
[Class II] shares of each Fund will make monthly payments to IDI computed at an
annual rate no greater than 0.25% of average net assets attributable to [Class
II] shares. These payments permit IDI, at its discretion, to engage in certain
activities and provide services in connection with the distribution of a Fund's
shares to investors. Payments by a Fund under the [Class II] Plan, for any
month, may be made to compensate IDI for permissible activities engaged in and
services provided during the rolling 12-month period in which that month falls.
[CLASS C]. The Company has adopted a Master Distribution Plan pursuant to
Rule 12b-1 under the 1940 Act relating to the [Class C] shares of the Funds
(the "[Class C] Plan"). Under the [Class C] Plan, [Class C] shares of the Funds
pay 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 a Fund. Payments can also be directed by IDI to
selected institutions who have enetered into service agreements with respect to
[Class C] shares of each Fund and who provide continuing personal services to
their customers who own such [Class C] shares of a 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 those Fund shares that are held in such
institutions'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
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
a 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
<PAGE>
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 Funds to no more than 0.25% per annum of the average daily net
assets of the [Class C] shares of the Funds 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 Funds.
IDI may pay sales commissions to dealers and institutions who sell [Class
C] shares of the Funds 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 II and Class C] Plans
(collectively, the "Plans") 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 the Funds. Each Fund is authorized by a 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 a Fund and may
be made to banks, savings and loan associations and other depository
institutions. Although the Glass-Steagall Act limits the ability of certain
banks to act as underwriters of mutual fund shares, 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 Funds
possibly could decrease to the extent that the banks would no longer invest
customer assets in the Funds. Neither the Company nor its investment adviser
will give any preference to banks or other depository institutions which enter
into such arrangements when selecting investments to be made by a 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.
<PAGE>
During the period ended July 31, 1999, the Funds made payments to IDI under
the [Class II] Plan in the amounts of $2,507,538, $1,291,398, $9,244, $34,245,
$138,369, $88,491 and $915,156 for Blue Chip Growth - [Class II], Dynamics -
[Class II], Endeavor - [Class II], Growth & Income - [Class II], Small Company
Growth - [Class II], S&P 500 Index Fund - [Class II] and Value Equity - [Class
II] Funds, respectively. In addition, as of July 31, 1999, $285,827, $541,380,
$24,607, $13,370, $101,305, $14,306 and $85,592 of additional distribution
accruals had been incurred for Blue Chip Growth - [Class II], Dynamics - [Class
II], Endeavor - [Class II], Growth & Income - [Class II], Small Company Growth -
[Class II], S&P 500 Index Fund - [Class II] and Value Equity - [Class II] Funds,
respectively, and will be paid during the fiscal year ended July 31, 2000. Since
the Funds' [Class C] shares did not commence operations until January ___, 2000,
the Funds' [Class C] shares made no payments to IDI under the Plans during the
period ended July 31, 1999. For the fiscal year ended July 31, 1999, allocation
of 12b-1 amounts paid by the Funds for the following categories of expenses
were:
Blue Chip Growth Fund - [Class II]
Advertising--$1,251,932.37;
Sales literature, printing, and postage--$259,216.50;
Direct Mail--$166,036.43;
Public Relations/Promotion--$112,721.81;
Compensation to securities dealers and other organizations--$396,205.03; and
Marketing personnel--$321,425.91.
Dynamics Fund - [Class II]
Advertising--$333,432.88;
Sales literature, printing, and postage--$82,179.48;
Direct Mail--$39,011.09;
Public Relations/Promotion--$62,799.29;
Compensation to securities dealers and other organizations--$636,303.50; and
Marketing personnel--$137,671.31.
Endeavor Fund - [Class II]
Advertising--$31,870.82;
Sales literature, printing, and postage--$3,067.35;
Direct Mail--$2,645.46;
Public Relations/Promotion--$2,056.27;
Compensation to securities dealers and other organizations--$6,725.66; and
Marketing personnel--$2,878.01.
Growth & Income Fund - [Class II]
Advertising--$25,827.93;
Sales literature, printing, and postage--$2,003.30;
Direct Mail--$1,342.87;
Public Relations/Promotion--$1,012.89;
Compensation to securities dealers and other organizations--$2,726.96; and
Marketing personnel--$1,330.91.
<PAGE>
Small Company Growth Fund - [Class II]
Advertising--$6,604.98;
Sales literature, printing, and postage--$9,551.33;
Direct Mail--$8,894.95;
Public Relations/Promotion--$11,675.10;
Compensation to securities dealers and other organizations--$76,798.69; and
Marketing personnel--$24,843.49.
S&P 500 Index Fund - [Class II]
Advertising--$24,615.95;
Sales literature, printing, and postage--$22,774.65;
Direct Mail--$2,759.43;
Public Relations/Promotion--$4,380.13;
Compensation to securities dealers and other organizations--$20,335.39; and
Marketing personnel--$13,625.18.
Value Equity Fund - [Class II]
Advertising--$134,414.11;
Sales literature, printing, and postage--$68,375.63;
Direct Mail--$19,218.14;
Public Relations/Promotion--$26,708.56;
Compensation to securities dealers and other organizations--$573,142.13; and
Marketing personnel--$93,297.02.
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 the
Funds, and assisting in other customer transactions with the Funds.
The Plans provide that they shall continue in effect with respect to each
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. A Plan can also be terminated at any time by a Fund,
without penalty, if a majority of the Independent Directors, or shareholders of
the relevant class of shares of the Fund, vote to terminate a 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 a Fund, the investment climate for a Fund,
general market conditions, and the
<PAGE>
volume of sales and redemptions of a Fund's shares. The Plans may continue in
effect and payments may be made under a Plan following any temporary
suspension or limitation of the offering of Fund shares; however, the Company is
not contractually obligated to continue the Plan for any particular period of
time. Suspension of the offering of a Fund's shares would not, of course, affect
a shareholder's ability to redeem his or her shares.
So long as the Plans are 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 Plans may not be amended to increase the amount of a Fund's
payments under a Plan without approval of the shareholders of that Fund, and all
material amendments to a Plan must be approved by the board of directors of the
Company, including a majority of the Independent Directors. Under the agreement
implementing the Plan, IDI or a Fund, the latter by vote of a majority of the
Independent Directors or the holders of a majority 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 a Fund
under a Plan in the event of its termination.
To the extent that a 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, a Fund's obligation to make payments to IDI shall terminate
automatically, in the event of such "assignment." In this event, a Fund may
continue to make payments pursuant to the Plan only upon the approval of new
arrangements regarding the use of the amounts authorized to be paid by a Fund
under the 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 each Fund and the 12b-1 fees
paid for such services. On an annual basis, the directors consider whether a
Plan should be continued and, if so, whether any amendment to the Plan,
including changes in the amount of 12b-1 fees paid by each 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 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 a Fund and its shareholders under the Plans 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 Funds;
o The sale of additional shares reduces the likelihood that redemption of
shares will require the liquidation of securities of the Funds in amounts
and at times that are disadvantageous for investment purposes; and
o Increased Fund assets may result in reducing each investor's share of
certain expenses through economies of scale (e.g., exceeding established
<PAGE>
breakpoints in an advisory fee schedule and allocating fixed expenses over
a larger asset base), thereby partially offsetting the costs of a 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 Funds' 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.
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.
<PAGE>
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.
While INVESCO seeks reasonably competitive commission rates, the Funds do not
necessarily pay the lowest commission or spread available. INVESCO is permitted
to, and does, consider qualitative factors in addition to price in the selection
of brokers. Among other things, INVESCO considers the quality of executions
obtained on a Fund's portfolio transactions, viewed in terms of the size of
transactions, prevailing market conditions in the security purchased or sold,
and general economic and market conditions. INVESCO has found that a broker's
consistent ability to execute transactions is at least as important as the price
the broker charges for those services.
In seeking to ensure that the commissions charged a Fund are consistent with
prevailing and reasonable commissions, INVESCO monitors brokerage industry
practices and commissions charged by broker-dealers on transactions effected for
other institutional investors like the Funds.
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
benefits of research acquired through the brokerage transactions of other
clients of INVESCO.
In order to obtain reliable trade execution and research services, INVESCO may
utilize brokers that charge higher commissions than other brokers would charge
for the same transaction. This practice is known as "paying up." However, even
when paying up, INVESCO is obligated to obtain favorable execution of a Fund's
transactions.
Portfolio transactions also may be effected through broker-dealers that
recommend the Funds to their clients, or that act as agent in the purchase of a
Fund's shares for their clients. When a number of broker-dealers can provide
comparable best price and execution on a particular transaction, INVESCO may
consider the sale of a Fund's shares by a broker-dealer in selecting among
qualified broker-dealers.
Certain of the INVESCO Funds utilize fund brokerage commissions to pay custody
fees for each respective fund. This program requires that the participating
funds receive favorable execution.
<PAGE>
The aggregate dollar amount of brokerage commissions paid by each Fund for the
periods outlined in the table below were:
Blue Chip Growth Fund
Period Ended July 31, 1999(a) $3,975,896
Year Ended August 31, 1998 $2,574,626
Year Ended August 31, 1997 $5,300,030
Year Ended August 31, 1996 $2,703,470
Dynamics Fund
Period Ended July 31, 1999(b) $3,309,214
Year Ended April 30, 1999 $7,689,483
Year Ended April 30, 1998 $7,542,687
Year Ended April 30, 1997 $5,707,197
Endeavor Fund
Period Ended July 31, 1999(b) $1,463,690
Period Ended April 30, 1999(c) $ 466,439
Growth & Income Fund
Period Ended July 31, 1999(b) $ 165,787
Period Ended April 30, 1999(d) $ 438,309
Small Company Growth Fund
Period Ended July 31, 1999(e) $1,414,200
Year Ended May 31, 1998 $3,319,634
Year Ended May 31, 1997 $4,167,020
Year Ended May 31, 1996 $3,987,784
S&P 500 Index Fund
Year Ended July 31, 1999 $ 18,707
Year Ended July 31, 1998 $ 0
Value Equity Fund
Period Ended July 31, 1999(a) $ 272,645
Year Ended August 31, 1998 $ 194,473
Year Ended August 31, 1997 $ 470,619
(a) From September 1, 1998 to July 31, 1999
(b) From May 1, 1999 to July 31, 1999
(c) From October 28, 1998 (commencement of operations) to April 30, 1999
(d) From July 1, 1998 (commencement of operations) to April 30, 1999
(e) From June 1, 1999 to July 31, 1999
(f) From September 1, 1998 to July 31, 1999
<PAGE>
For the fiscal year ended July 31, 1999, brokers providing research services
received $4,720,262 in commissions on portfolio transactions effected for the
Funds. The aggregate dollar amount of such portfolio transactions was
$3,759,723,892. 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 July 31, 1999.
At July 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 July 31, 1999
================================================================================
Blue Chip Growth General Electric $50,662,110
- --------------------------------------------------------------------------------
Dynamics PaineWebber Group $ 5,400,000
- --------------------------------------------------------------------------------
State Street Bank & Trust 5,853,000
- --------------------------------------------------------------------------------
American Express Credit 45,000,000
- --------------------------------------------------------------------------------
GE Companies 30,000,000
- --------------------------------------------------------------------------------
Endeavor State Street Bank & Trust $ 3,745,000
- --------------------------------------------------------------------------------
General Electric 1,486,215
- --------------------------------------------------------------------------------
Growth & Income State Street Bank & Trust $ 1,145,000
- --------------------------------------------------------------------------------
American Express 615,273
- --------------------------------------------------------------------------------
General Electric 2,078,630
- --------------------------------------------------------------------------------
Small Company Growth State Street Bank & Trust $80,476,000
- --------------------------------------------------------------------------------
S&P 500 Index Morgan Stanley Dean Witter $ 296,421
- --------------------------------------------------------------------------------
Merrill Lynch 144,224
- --------------------------------------------------------------------------------
BankBoston Corp 79,324
- --------------------------------------------------------------------------------
PaineWebber Group 32,000
- --------------------------------------------------------------------------------
Morgan (JP) & Co. 117,261
- --------------------------------------------------------------------------------
State Street Bank & Trust 5,182,000
- --------------------------------------------------------------------------------
American Express 343,209
- --------------------------------------------------------------------------------
Ford Motor 344,654
- --------------------------------------------------------------------------------
General Electric 2,130,841
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
Fund Broker or Dealer Value of Securities
at July 31, 1999
================================================================================
American General 105,230
- --------------------------------------------------------------------------------
Sears Roebuck 91,409
- --------------------------------------------------------------------------------
CIGNA Corp 109,970
- --------------------------------------------------------------------------------
State Street 71,300
- --------------------------------------------------------------------------------
Value Equity State Street Bank & Trust $ 5,686,000
- --------------------------------------------------------------------------------
Ford Motor 6,253,175
- --------------------------------------------------------------------------------
General Electric 7,902,500
- --------------------------------------------------------------------------------
American General 6,963,750
- --------------------------------------------------------------------------------
State Street 1,842,750
- --------------------------------------------------------------------------------
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 2 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:
Blue Chip Growth Fund - [Class II] 179,799,327
Blue Chip Growth Fund - [Class C] 0
Dynamics Fund - [Class II] 145,772,666
Dynamics Fund - [Class C] 0
Endeavor Fund - [Class II] 8,828,672
Endeavor Fund - [Class C] 0
Growth & Income Fund - [Class II] 6,368,749
Growth & Income Fund - [Class C] 0
Small Company Growth Fund - [Class II] 33,844,482
Small Company Growth Fund - [Class C] 0
S&P 500 Index Fund - [Class I] 296,310
S&P 500 Index Fund - [Class II] 5,141,217
Value Equity Fund - [Class II] 11,912,495
Value Equity Fund - [Class C] 0
<PAGE>
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 I, II and C shares will differ.
All shares of a Fund will be voted together except that only the
shareholders of a particular class of a Fund may vote on matters exclusively
affecting that class, such as the terms of a Rule 12b-1 Plan as it relates to
the class. 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.
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 and
net capital gains. As a result of this policy and the Funds' qualification as
regulated investment companies, it is anticipated that none of the Funds will
pay federal income or excise taxes and that all of the Funds will be accorded
conduit or "pass through" treatment for federal income tax purposes. Therefore,
<PAGE>
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
or net capital gains, 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 and
net capital gains at the corporate tax rates.
Dividends paid by a Fund from net investment income as well as distributions of
net realized short-term capital gains and net realized gains from certain
foreign currency transactions are taxable for federal income tax purposes as
ordinary income to shareholders. After the end of each calendar year, the Funds
send shareholders information regarding the amount and character of dividends
paid in the year, including the dividends eligible for the dividends received
deduction for corporations. Dividends eligible for the dividends received
deduction will be limited to the aggregate amount of qualifying dividends that a
Fund derives from its portfolio investments.
A Fund realizes a capital gain or loss when it sells a portfolio security for
more or less than it paid for that security. Capital gains and losses are
divided into short-term and long-term, depending on how long the Fund held the
security which gave rise to the gain or loss. If the security was held one year
or less the gain or loss is considered short-term, while holding a security for
more than one year will generate a long-term gain or loss. A capital gain
distribution consists of long-term capital gains which are taxed at the capital
gains rate. Short-term capital gains are included with income from dividends and
interest as ordinary income and are paid to shareholders as dividends, as
discussed above. If total long-term gains on sales exceed total short-term
losses, including any losses carried forward from previous years, a Fund will
have a net capital gain. Distributions by a Fund of net capital gain are, for
federal income tax purposes, taxable to the shareholder as a long-term capital
gain regardless of how long a shareholder has held shares of the particular
Fund. Such distributions are not eligible for the dividends received deduction.
After the end of each calendar year, the Funds send information to shareholders
regarding the amount and character of distributions paid during the year.
All dividends and other distributions are taxable income to the shareholder,
whether or not such dividends and distributions are reinvested in additional
shares or paid in cash. If the net asset value of a Fund's shares should be
reduced below a shareholder's cost as a result of a distribution, such
distribution would be taxable to the shareholder although a portion would be a
return of invested capital. The net asset value of shares of a Fund reflects
accrued net investment income and undistributed realized capital and foreign
currency gains; therefore, when a distribution is made, the net asset value is
reduced by the amount of the distribution. If shares of a Fund are purchased
shortly before a distribution, the full price for the shares will be paid and
some portion of the price may then be returned to the shareholder as a taxable
dividend or capital gain. However, the net asset value per share will be reduced
by the amount of the distribution, which would reduce any gain (or increase any
loss) for tax purposes on any subsequent redemption of shares.
If it invests in foreign securities, a Fund may be subject to the withholding of
foreign taxes on dividends or interest it receives on foreign securities.
Foreign taxes withheld will be treated as an expense of the Fund unless the Fund
meets the qualifications and makes the election to enable it to pass these taxes
through to shareholders for use by them as a foreign tax credit or deduction.
Tax conventions between certain countries and the United States may reduce or
eliminate such taxes.
<PAGE>
A Fund may invest in the stock of "passive foreign investment companies"
("PFICs"). A PFIC is a foreign corporation that, in general, meets either of the
following tests: (1) at least 75% of its gross income is passive or (2) an
average value of at least 50% of its assets produce, or are held for the
production of, passive income. Each Fund intends to "mark to market" its stock
in any PFIC. In this context, "marking to market" means including in ordinary
income for each taxable year the excess, if any, of the fair market value of the
PFIC stock over the Fund's adjusted basis in the PFIC stock as of the end of the
year. In certain circumstances, a Fund will also be allowed to deduct from
ordinary income the excess, if any, of its adjusted basis in PFIC stock over the
fair market value of the PFIC stock as of the end of the year. The deduction
will only be allowed to the extent of any PFIC mark-to-market gains recognized
as ordinary income in prior years. A Fund's adjusted tax basis in each PFIC
stock for which it makes this election will be adjusted to reflect the amount of
income included or deduction taken under the election.
Gains or losses (1) from the disposition of foreign currencies, (2) from the
disposition of debt securities denominated in foreign currencies that are
attributable to fluctuations in the value of the foreign currency between the
date of acquisition of each security and the date of disposition, and (3) that
are attributable to fluctuations in exchange rates that occur between the time a
Fund accrues interest, dividends or other receivables or accrues expenses or
other liabilities denominated in a foreign currency and the time the Fund
actually collects the receivables or pays the liabilities, generally will be
treated as ordinary income or loss. These gains or losses may increase or
decrease the amount of a Fund's investment company taxable income to be
distributed to its shareholders.
INVESCO may provide Fund shareholders with information concerning the average
cost basis of their shares in order to help them prepare their tax returns. This
information is intended as a convenience to shareholders, and will not be
reported to the Internal Revenue Service (the "IRS"). The IRS permits the use of
several methods to determine the cost basis of mutual fund shares. The cost
basis information provided by INVESCO will be computed using the single-category
average cost method, although neither INVESCO nor the Funds recommend any
particular method of determining cost basis. Other methods may result in
different tax consequences. If you have reported gains or losses for a Fund in
past years, you must continue to use the method previously used, unless you
apply to the IRS for permission to change methods.
If you sell Fund shares at a loss after holding them for six months or less,
your loss will be treated as long-term (instead of short-term) capital loss to
the extent of any capital gain distributions that you may have received on those
shares.
Each Fund will be subject to a nondeductible 4% excise tax to the extent it
fails to distribute by the end of any calendar year substantially all of its
ordinary income for that year and its net capital gains for the one-year period
ending on October 31 of that year, plus certain other amounts.
You should consult your own tax adviser regarding specific questions as to
federal, state and local taxes. Dividends and capital gain distributions 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.
<PAGE>
PERFORMANCE
To keep shareholders and potential investors informed, INVESCO will occasionally
advertise the Funds' total return 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 and capital gain
distributions 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 phone number or
address on the back cover of the Funds' prospectus.
When we quote mutual fund rankings published by Lipper Inc., we may compare a
Fund to others in its appropriate Lipper category, as well as the broad-based
Lipper general fund groupings. These rankings allow you to compare a Fund to its
peers. Other independent financial media also produce performance- or
service-related comparisons, which you may see in our promotional materials.
Performance figures are based on historical earnings and are not intended to
suggest future performance.
Average annual total return performance for the one-, five-, and ten-year
periods (or since inception) ended July 31, 1999 was:
<TABLE>
<CAPTION>
10 Year
Name of Fund 1 Year 5 Year or Since Inception
<S> <C> <C> <C>
Blue Chip Growth Fund - [Class II] 42.06%(a) 23.66% 16.87%
Dynamics Fund - [Class II] 6.83%(b) 25.43% 20.11%
Endeavor Fund - [Class II] 1.78%(b) N/A 66.10%(c)
Growth & Income Fund - [Class II] 5.71%(b) N/A 55.82%(d)
Small Company Growth Fund - [Class II] 12.67%(e) 18.45% 18.39%(f)
S&P 500 Index Fund - [Class I] 20.40% N/A 26.36%(g)
S&P 500 Index Fund - [Class II] 20.09% N/A 26.92%(g)
Value Equity Fund - [Class II] 25.41%(a) 18.78% 13.56%
</TABLE>
<PAGE>
(a) From September 1, 1998 to July 31, 1999
(b) From May 1, 1999 to July 31, 1999
(c) Since inception October 28, 1998
(d) Since inception July 1, 1998
(e) From June 1, 1999 to July 31, 1999
(f) Since inception December 27, 1991
(g) Since inception December 23, 1997
Average annual total return performance is not provided for each Fund's
[Class C] shares since they 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 following mutual fund
groupings, in addition to the broad-based Lipper general fund groupings:
Blue Chip Growth Fund Large-Cap Growth Funds
Dynamics Fund Mid-Cap Growth Funds
Endeavor Fund Multi-Cap Growth Funds
<PAGE>
Growth & Income Fund Large-Cap Core Funds
Small Company Growth Small-Cap Growth Funds
S&P 500 Index Fund S&P 500 Funds
Value Equity Fund Multi-Cap Value Funds
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 Funds' Class II shares for the fiscal year
ended July 31, 1999, are incorporated herein by reference from INVESCO Stock
Funds, Inc.'s Annual Report to Shareholders dated July 31, 1999.
<PAGE>
APPENDIX A
BOND RATINGS
The following is a description of Moody's and S&P's bond ratings:
Moody's Corporate Bond Ratings
Aaa - Bonds 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-edged." 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 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 risk appear somewhat larger than in Aaa securities.
A - Bonds 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 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.
Ba - Bonds rated Ba are judged to have speculative elements. Their future cannot
be considered as well assured. Often the protection of interest and principal
payments may be very moderate and thereby not well safeguarded during both good
and bad times over the future. Uncertainty of position characterizes bonds in
this class.
B - Bonds rated B generally lack characteristics of the desirable investment.
Assurance of interest and principal payments or maintenance of other terms of
the contract over any longer period of time may be small.
Caa - Bonds rated Caa are of poor standing. Such issues may be in default
or there may be present elements of danger with respect to principal or
interest.
<PAGE>
S&P Corporate Bond Ratings
AAA - This is the highest rating assigned by Standard & Poor's to a debt
obligation and indicates an extremely strong capacity to pay principal and
interest.
AA - Bonds rated AA also qualify as high-quality debt obligations. Capacity to
pay principal and interest is very strong, and in the majority of instances they
differ from AAA issues only in small degree.
A - Bonds rated A have a strong capacity to pay principal and interest, although
they are somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions than bonds in higher rated categories.
BBB - Bonds rated BBB are regarded as having an adequate capability to pay
principal and interest. Whereas they normally exhibit adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay principal and interest for bonds in
this category than for bonds in higher rated categories.
BB - Bonds rated BB have less near-term vulnerability to default than other
speculative issues. However, they face major ongoing uncertainties or exposure
to adverse business, financial, or economic conditions which could lead to
inadequate capacity to meet timely interest and principal payments.
B - Bonds rated B have a greater vulnerability to default but currently have the
capacity to meet interest payments and principal repayments. Adverse business,
financial, or economic conditions will likely impair capacity or willingness to
pay interest and repay principal.
CCC - Bonds rated CCC have a currently identifiable vulnerability to default and
are dependent upon favorable business, financial, and economic conditions to
meet timely payment of interest and repayment of principal. In the event of
adverse business, financial, or economic conditions, they are not likely to have
the capacity to pay interest and repay principal.
<PAGE>
PART C. OTHER INFORMATION
ITEM 23. EXHIBITS
(a) Articles of Incorporation filed April 2, 1993.(2)
(1) Articles of Amendment to Articles of
Incorporation filed June 26, 1997.(3)
(2) Articles Supplementary to Articles of Incorporation filed
May 18, 1998.(5)
(3) Articles of Amendment of Articles of Incorporation filed
August 28, 1998.(6)
(4) Articles of Amendment to Articles of Incorporation filed
October 29, 1998.(8)
(5) Articles of Amendment to Articles of Incorporation filed
May 24, 1999.(7)
(6) Articles of Amendment to Articles of Incorporation filed
July 15, 1999.(8)
(7) Articles of Transfer of INVESCO Growth Funds, Inc. and
INVESCO Stock Funds, Inc., filed July 15, 1999.(9)
(8) Articles of Transfer of INVESCO Emerging Opportunity
Funds, Inc. and INVESCO Stock Funds, Inc., filed July 15,
1999.(9)
(9) Form of Amended and Restated Articles of Incorporation
Filed ______, 2000.
(b) Bylaws, as amended July 21, 1993.(2)
(c) Not applicable.
(d)(1) Investment Advisory Agreement dated February 28, 1997.(3)
(a) Amendment dated June 30, 1998 to Advisory
Agreement.(4)
(b) Amendment dated September 18, 1998 to Advisory
Agreement.(8)
(c) Amendment dated May 13, 1999 to Advisory
Agreement. (9)
(e)(1) General Distribution Agreement dated February 28, 1997.(3)
(2) Distribution Agreement between Registrant and INVESCO
Distributors, Inc. dated September 30, 1997.(4)
(f)(1) Defined Benefit Deferred Compensation Plan for
Non-Interested Directors and Trustees.
(g) Custody Agreement between Registrant and State Street Bank
and Trust Company dated July 1, 1993(1)
(1) Amendment to Custody Agreement dated
October 25, 1995.(3)
(2)Data Access Services Addendum.(4)
(3)Additional Fund Letter dated April 15, 1998.(4)
<PAGE>
(4)Additional Fund Letter dated August 27, 1998.(8)
(5)Additional Fund Letter dated August 27, 1999.
(h)(1) Transfer Agency Agreement dated February 28, 1997.(3)
(a) Amendment dated October 28, 1998 to Transfer Agency
Agreement.(9)
(2) Administrative Services Agreement between the Fund and
INVESCO Funds Group, Inc. dated February 28, 1997.(2)
(a) Amendment dated June 29, 1998 to Administrative
Services Agreement.(9)
(b) Amendment dated October 16, 1998 to Administrative
Services Agreement.(9)
(c) Amendment dated May 13, 1999 to Administrative
Services Agreement.(9)
(i)(1) 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 January 16, 1968.(4)
(2) Opinion and consent of counsel with respect to INVESCO
Blue Chip Growth Fund, INVESCO Small Company Growth Fund,
INVESCO S&P 500 Index Fund and INVESCO Value Equity Fund as to
the legality of the securities being registered dated July 14,
1999.(7)
(j) Consent of Independent Accountants.
(k) Not applicable.
(l) Not applicable.
(m)(1) Amended Plan and Agreement of Distribution dated January
1, 1997 adopted pursuant to Rule 12b-1 under the
Investment Company Act of 1940.(3)
(n) Not Applicable.
(o)(1) Plan pursuant to Rule 18f-3 under the Investment Company
Act of 1940 with respect to INVESCO S&P 500 Index Fund
adopted February 3, 1999.
(2) Plan pursuant to Rule 18f-3 under the Investment Company
Act of 1940 with respect to INVESCO Blue Chip Growth Fund
adopted __________, 1999.
(3) Plan pursuant to Rule 18f-3 under the Investment Company
Act of 1940 with respect to INVESCO Dynamics Fund
adopted __________, 1999.
(4) Plan pursuant to Rule 18f-3 under the Investment Company
Act of 1940 with respect to INVESCO Endeavor Fund
adopted __________, 1999.
(5) Plan pursuant to Rule 18f-3 under the Investment Company
Act of 1940 with respect to INVESCO Growth & Income Fund
adopted __________, 1999.
(6) Plan pursuant to Rule 18f-3 under the Investment Company
Act of 1940 with respect to INVESCO Small Company Growth Fund
adopted __________, 1999.
(7) Plan pursuant to Rule 18f-3 under the Investment Company
Act of 1940 with respect to INVESCO Value Equity Fund
adopted __________, 1999.
(1)Previously filed with Post-Effective Amendment No. 44 to the Registration
Statement on June 22, 1993, and incorporated by reference herein.
(2)Previously filed with Post-Effective Amendment No. 45 to the Registration
Statement on August 27, 1996 and incorporated by reference herein.
(3)Previously filed with Post-Effective Amendment No. 46 to the Registration
Statement on June 30, 1997, and incorporated by reference herein.
(4)Previously filed with Post-Effective Amendment No. 47 to the Registration
Statement on April 16, 1998, and incorporated by reference herein.
(5)Previously filed with Post-Effective Amendment No. 48 to the Registration
Statement on July 10, 1998, and incorporated by reference herein.
<PAGE>
(6)Previously filed with Post-Effective Amendment No. 49 to the Registration
Statement on August 28, 1998, and incorporated by reference herein.
(7)Previously filed with Post-Effective Amendment No. 50 to the Registration
Statement on July 14, 1999, and incorporated by reference herein.
(8)Previously filed with Post-Effective Amendment No. 51 to the Registration
Statement on July 15, 1999 and incorporated by reference herein.
(9)Previously filed with Post-Effective Amendment No. 52 to the Registration
Statement on August 31, 1999 and incorporated by reference herein.
ITEM 24. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH INVESCO
SPECIALTY 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 X of the Amended Bylaws and Article Seventh (3)
of the Articles of Restatement of the Articles of Incorporation, and are hereby
incorporated by reference. See Item 24(b)(1) and (2) 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' Prospectuses 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.
- --------------------------------------------------------------------------------
Position
Name with Adviser Principal Occupation and Company
Affiliation
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Mark H. Williamson Chairman, President & Chief Executive
Director and Officer
Officer INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Raymond R. Cunningham Officer Senior Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
William J. Galvin, Jr. Officer Senior Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Ronald L. Grooms Officer & Senior Vice President & Treasurer
Director INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Richard W. Healey Officer & Senior Vice President
Director INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
William R. Keithler Officer Senior Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Charles P. Mayer Officer & Senior Vice President
Director INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Timothy J. Miller Officer & Senior Vice President
Director INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Donovan J. (Jerry) Paul Officer Senior Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Glen A. Payne Officer Senior Vice President, Secretary
& General Counsel
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
John R. Schroer, II Officer Senior Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Marie E. Aro Officer Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Ingeborg S. Cosby Officer Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
Stacie Cowell Officer Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Dawn Daggy-Mangerson Officer Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Elroy E. Frye, Jr. Officer Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Linda J. Gieger Officer Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Mark D. Greenberg Officer Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Brian B. Hayward Officer Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Richard R. Hinderlie Officer Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Thomas M. Hurley Officer Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Patricia F. Johnston Officer Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Campbell C. Judge Officer Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Peter M. Lovell Officer Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
James F. Lummanick Officer Vice President & Assistant
General Counsel
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Thomas A. Mantone, Jr. Officer Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Trent E. May Officer Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Corey M. McClintock Officer Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Douglas J. McEldowney Officer Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Frederick R. (Fritz) Meyer Officer Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Stephen A. Moran Officer Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Jeffrey G. Morris Officer Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Laura M. Parsons Officer Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Jon B. Pauley Officer Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Pamela J. Piro Officer Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
Anthony R. Rogers Officer Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Gary L. Rulh Officer Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
James B. Sandidge Officer Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
John S. Segner Officer Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Terri B. Smith Officer Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Tane T. Tyler Officer Vice President & Assistant
General Counsel
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Thomas R. Wald Officer Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Alan I. Watson Officer Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Judy P. Wiese Officer Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Thomas H. Scanlan Officer Regional Vice President
INVESCO Funds Group, Inc.
12028 Edgepark Court
Potomac, MD 20854
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Reagan A. Shopp Officer Regional Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
Michael D. Legoski Officer Assistant Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Donald R. Paddack Officer Assistant Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Kent T. Schmeckpeper Officer Assistant Vice President
Account Relationship Manager
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Jeraldine E. Kraus Officer Assistant Secretary
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
- --------------------------------------------------------------------------------
ITEM 27.(A) PRINCIPAL UNDERWRITERS
INVESCO Bond Funds, Inc.
INVESCO Combination Stock & Bond Funds, Inc.
INVESCO International Funds, Inc.
INVESCO Money Market Funds, Inc.
INVESCO Sector Funds, Inc.
INVESCO Specialty Funds, Inc.
INVESCO Stock Funds, Inc.
INVESCO Treasurer's Series Funds, Inc.
INVESCO Variable Investment Funds, Inc.
(b)
Positions and Positions and
Name and Principal Offices with Offices with
Business Address Underwriter the Company
William J. Galvin, Jr. Senior Vice Assistant Secretary
7800 E. Union Avenue President &
Denver, CO 80237 Asst. Secretary
Ronald L. Grooms Senior Vice Treasurer,
7800 E. Union Avenue President, Chief Fin'l
Denver, CO 80237 Treasurer, & Officer, and
Director Chief Acctg. Off.
Richard W. Healey Senior Vice
7800 E. Union Avenue President &
Denver, CO 80237 Director
<PAGE>
Charles P. Mayer Director
7800 E. Union Avenue
Denver, CO 80237
Timothy J. Miller Director
7800 E. Union Avenue
Denver, CO 80237
Glen A. Payne Senior Vice Secretary
7800 E. Union Avenue President,
Denver, CO 80237 Secretary &
General Counsel
Pamela J. Piro Assistant Treasurer Assistant Treasurer
7800 E. Union Avenue
Denver, CO 80237
Judy P. Wiese Assistant Assistant Secretary
7800 E. Union Avenue Secretary
Denver, CO 80237
Mark H. Williamson Chairman of the Board, President,
7800 E. Union Avenue President, & Chief CEO & Director
Denver, CO 80237 Executive Officer
(c) Not applicable.
ITEM 28. LOCATION OF ACCOUNTS AND RECORDS
Mark H. Williamson
7800 E. Union Avenue
Denver, CO 80237
ITEM 29. MANAGEMENT SERVICES
Not applicable.
ITEM 30. UNDERTAKINGS
Not applicable
<PAGE>
Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940, the Company 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 4th day of
November, 1999.
Attest: INVESCO Stock Funds, Inc.
/s/ Glen A. Payne /s/ Mark H. Williamson
- ------------------------------ ----------------------------------
Glen A. Payne, Secretary Mark H. Williamson, President
Pursuant to the requirements of the Securities Act of 1933, this registration
statement has been signed below by the following persons in the capacities and
on the date indicated.
/s/ Mark H. Williamson /s/ Lawrence H. Budner*
- ------------------------------- -----------------------------
Mark H. Williamson, President & Lawrence H. Budner, Director
Director (Chief Executive Officer)
/s/ Ronald L. Grooms /s/ John W. McIntyre*
- ------------------------------- -----------------------------
Ronald L. Grooms, Treasurer John W. McIntyre, Director
(Chief Financial and Accounting
Officer)
/s/ Victor L. Andrews* /s/ Fred A. Deering*
- ------------------------------- -----------------------------
Victor L. Andrews, Director Fred A. Deering, Director
/s/ Bob R. Baker* /s/ Larry Soll*
- ------------------------------- -----------------------------
Bob R. Baker, Director Larry Soll, Director
/s/ Charles W. Brady* /s/ Kenneth T. King*
- ------------------------------- -----------------------------
Charles W. Brady, Director Kenneth T. King, Director
/s/ Wendy L. Gramm*
- -------------------------------
Wendy L. Gramm, Director
By _____________________________ By /s/ Glen A. Payne
-------------------------
Edward F. O'Keefe Glen A. Payne
Attorney in Fact Attorney in Fact
* Original Powers of Attorney authorizing Edward F. O'Keefe and Glen A. Payne,
and each of them, to execute this post-effective amendment to the Registration
Statement of the Registrant on behalf of the above-named directors and officers
of the Registrant have been filed with the Securities and Exchange Commission on
June 15, 1993, June 22, 1994, June 22, 1995, June 30, 1997 and August 28, 1998,
respectively.
<PAGE>
Exhibit Index
Page in
Exhibit Number Registration Statement
- -------------- ----------------------
a(9) 114
f(1) 122
g(5) 127
j 128
o(2) 129
o(3) 131
o(4) 133
o(5) 135
o(6) 137
o(7) 139
FORM OF
ARTICLES OF AMENDMENT AND RESTATEMENT
OF THE
ARTICLES OF INCORPORATION
OF
INVESCO STOCK FUNDS, INC.
INVESCO Stock Funds, Inc., a corporation organized and existing under the
General Corporation Law of the State of Maryland, certifies to the Maryland
State Department of Assessments and Taxation that:
FIRST: INVESCO Stock Funds, Inc. desires to amend and restate its Articles
of Incorporation as currently in effect. The provisions set forth in these
Articles of Amendment and Restatement have been approved by a majority of the
entire board of directors of INVESCO Stock Funds, Inc. and are all the
provisions of the Articles of Incorporation currently in effect. These Articles
of Amendment and Restatement amend the Articles of Incorporation. The Articles
of Incorporation of INVESCO Stock Funds, Inc. are hereby amended and restated in
the following manner:
ARTICLE I
NAME AND TERM
The name of the corporation is INVESCO Stock Funds, Inc. (the "Company").
The corporation shall have perpetual existence.
ARTICLE II
POWERS AND PURPOSES
The nature of the business and the objects and purposes to be transacted,
promoted and carried on by the Company are as follows:
1. To engage in the business of an incorporated investment company of
open-end management type and to engage in all legally permissible
activities and operations usual, customary, or necessary in connection
therewith.
2. In general, to engage in any other business permitted to corporations
by the laws of the State of Maryland and to have and exercise all
powers conferred upon or permitted to corporations by the Maryland
General Corporation Law and any other laws of the State of Maryland;
provided, however, that the Company shall be restricted from engaging
in any activities or taking any actions which would preclude its
compliance with applicable provisions of the Investment Company Act of
1940, as amended, applicable to open-end management type investment
companies or applicable rules promulgated thereunder.
ARTICLE III
CAPITALIZATION
Section 1. The aggregate number of shares of stock of all series that the
Company shall have the authority to issues is three billion (3,000,000,000)
shares of Common Stock, having a par value of one cent ($0.01) per share of all
authorized shares, having an aggregate par value of thirty million dollars
($30,000,000.00). Such stock may be issued as full shares or as fractional
shares.
In the exercise of the powers granted to the board of directors pursuant
to Section 3 of this Article III, the board of directors designates eight series
of shares of common stock of the Company, with two or more classes of shares of
common stock for each series, designated as follows:
<PAGE>
<TABLE>
<CAPTION>
Fund Name and Class Allocated Shares
------------------- -----------------
<S> <C>
INVESCO Blue Chip Growth Fund-Class II Four hundred million shares (400,000,000)
INVESCO Blue Chip Growth Fund-Class II Four hundred million shares (400,000,000)
INVESCO Dynamics Fund-Class II Two hundred million shares (200,000,000)
INVESCO Dynamics Fund-Class C Two hundred million shares (200,000,000)
INVESCO Endeavor Fund-Class II One hundred million shares (100,000,000)
INVESCO Endeavor Fund-Class C One hundred million shares (100,000,000)
INVESCO Growth & Income Fund-Class II One hundred million shares (100,000,000)
INVESCO Growth & Income Fund-Class C One hundred million shares (100,000,000)
INVESCO Small Company Growth Fund-Class II Two hundred million shares (200,000,000)
INVESCO Small Company Growth Fund-Class C Two hundred million shares (200,000,000)
INVESCO S&P 500 Index Fund-Class I One hundred million shares (100,000,000)
INVESCO S&P 500 Index Fund-Class II One hundred million shares (100,000,000)
INVESCO Value Equity Fund-Class II One hundred million shares (100,000,000)
INVESCO Value Equity Fund-Class C One hundred million shares (100,000,000)
</TABLE>
Unless otherwise prohibited by law, so long as the Company is registered
as an open-end investment company under the Investment Company Act of 1940, as
amended, the total number of shares that the Company is authorized to issue may
be increased or decreased by the board of directors in accordance with the
applicable provisions of the Maryland General Corporation Law.
Section 2. No holder of stock of the Company shall be entitled as a matter
of right to purchase or subscribe for any shares of the capital stock of the
Company which it may issue or sell, whether out of the number of shares
authorized by these articles of incorporation, or out of any shares of the
capital stock of the Company acquired by it after the issue thereof.
Section 3. The Company is authorized to issue its stock in one or more
series or one or more classes of shares, and, subject to the requirements of the
Investment Company Act of 1940, as amended, particularly Section 18(f) thereof
and Rule 18f-2 thereunder, the different series and classes, if any, shall be
established and designated, and the variations in the relative preferences,
conversion and other rights, voting powers, restrictions, limitations as to
dividends, qualifications and terms and conditions of redemption as between the
different series or classes shall be fixed and determined and may be classified
and reclassified by the board of directors; provided that the board of directors
shall not classify or reclassify any of such shares into any class or series of
stock which is prior to any class or series of stock then outstanding with
respect to rights upon the liquidation, dissolution or winding up of the affairs
of, or upon any distribution of the general assets of, the Company, except that
there may be variations so fixed and determined between different series or
classes as to investment objective, purchase price, right of redemption, special
rights as to dividends and on liquidation with respect to assets and income
belonging to a particular series or class, voting powers and conversion rights.
All references to shares in these articles of incorporation shall be deemed to
be shares of any or all series and classes of shares of the Company's capital
stock as the context may require.
(a) The number of authorized shares allocated to each series or class and
the number of shares of each series or of each class that may be
issued shall be in such number as may be determined by the board of
directors. The directors may classify or reclassify any unissued
shares or any shares previously issued and reacquired of any series or
class into one or more series or one or more classes that may be
established and designated by the board of directors from time to
time. The directors may hold as treasury shares (of the same or some
other series or class), reissue for such consideration and on such
terms as they may determine, or cancel any shares of any series or any
class reacquired by the Company at their discretion from time to time.
<PAGE>
(b) All consideration received by the Company for the issue or sale of
shares of a particular series or class, together with all assets in
which such consideration is invested or reinvested, all income,
earnings, profits and proceeds thereof, including any proceeds derived
from the sale, exchange or liquidation of such assets, and any funds
or payments derived from any reinvestment of such proceeds in whatever
form the same may be, shall irrevocably belong to that series or class
for all purposes, subject only to the rights of creditors of that
series or class, and shall be so recorded upon the books of account of
the Company. In the event that there are any assets, income, earnings,
profits and proceeds thereof, funds, or payments which are not readily
identifiable as belonging to any particular series or class, the
directors shall allocate them among any one or more of the series or
classes established and designated from time to time in such manner
and on such basis as they, in their sole discretion, deem fair and
equitable. Each such allocation by the Company shall be conclusive and
binding upon the stockholders of all series or classes for all
purposes. The directors shall have full discretion, to the extent not
inconsistent with the Investment Company Act of 1940, as amended, and
the Maryland General Corporation Law to determine which items shall be
treated as income and which items shall be treated as capital; and
each such determination and allocation shall be conclusive and binding
upon the stockholders.
(c) The assets belonging to each particular class or series shall be
charged with the liabilities of the Company in respect to that class
or series and all expenses, costs, charges and reserves attributable
to that class or series, and any general liabilities, expenses, costs,
charges or reserves of the Company which are not readily identifiable
as belonging to any particular class or series shall be allocated and
charged by the directors to and among any one or more of the classes
or series established and designated from time to time in such manner
and on such basis as the directors in their sole discretion deem fair
and equitable. Each allocation of liabilities, expenses, costs,
charges and reserves by the directors shall be conclusive and binding
upon the stockholders of all series and classes for all purposes.
(d) Dividends and distributions on shares of a particular series or class
may be paid with such frequency as the directors may determine, which
may be daily or otherwise, pursuant to a standing resolution or
resolutions adopted only once or with such frequency as the board of
directors may determine, to the holders of shares of that series or
class, from such of the income and capital gains, accrued or realized,
from the assets belonging to that series or class, as the directors
may determine, after providing for actual and accrued liabilities
belonging to that series or class. All dividends and distributions on
shares of a particular series or class shall be distributed pro rata
to the holders of that series or class in proportion to the number of
shares of that series or class held by such holders at the date and
time of record established for the payment of such dividends or
distributions except that in connection with any dividend or
distribution program or procedure, the board of directors may
determine that no dividend or distribution shall be payable on shares
as to which the stockholder's purchase order and/or payment have not
been received by the time or times established by the board of
directors under such program or procedure.
The Company intends to have each series that may be established to
represent interests of a separate investment portfolio qualify as a
"regulated investment company" under the Internal Revenue Code of
1986, or any successor comparable statute thereto, and regulations
promulgated thereunder. Inasmuch as the computation of net income
and gains for federal income tax purposes may vary from the
computation thereof on the books of the Company, the board of
directors shall have the power, in its sole discretion, to
distribute in any fiscal year as dividends, including dividends
designated in whole or in part as capital gains distributions,
amounts sufficient, in the opinion of the board of directors, to
enable the respective series to qualify as regulated investment
<PAGE>
companies and to avoid liability of such series for federal income
tax in respect of that year. However, nothing in the foregoing shall
limit the authority of the board of directors to make distributions
greater than or less than the amount necessary to qualify the series
as regulated investment companies and to avoid liability of such
series for such tax.
(e) Dividends and distributions may be made in cash, property or
additional shares of the same or another class or series, or a
combination thereof, as determined by the board of directors or
pursuant to any program that the board of directors may have in effect
at the time for the election by each stockholder of the mode of the
making of such dividend or distribution to that stockholder. Any such
dividend or distribution paid in shares will be paid at the net asset
value thereof as defined in section (4) below.
(f) In the event of the liquidation or dissolution of the Company or of a
particular class or series, the stockholders of each class or series
that has been established and designated and is being liquidated shall
be entitled to receive, as a class or series, when and as declared by
the board of directors, the excess of the assets belonging to that
class or series over the liabilities belonging to that class or
series. The holders of shares of any particular class or series shall
not be entitled thereby to any distribution upon liquidation of any
other class or series. The assets so distributable to the stockholders
of any particular class or series shall be distributed among such
stockholders in proportion to the number of shares of that class or
series held by them and recorded on the books of the Company. The
liquidation of any particular class or series in which there are
shares then outstanding may be authorized by vote of a majority of the
board of directors then in office, subject to the approval of a
majority of the outstanding securities of that class or series, as
defined in the Investment Company Act of 1940, as amended, and without
the vote of the holders of any other class or series. The liquidation
or dissolution of a particular class or series may be accomplished, in
whole or in part, by the transfer of assets of such class or series to
another class or series or by the exchange of shares of such class or
series for the shares of another class or series.
(g) On each matter submitted to a vote of the stockholders, each holder of
a share shall be entitled to one vote for each share standing in his
name on the books of the Company, irrespective of the class or series
thereof, and all shares of all classes or series shall vote as a
single class or series ("single class voting"); provided, however that
(i) as to any matter with respect to which a separate vote of any
class or series is required by the Investment Company Act of 1940, as
amended, or by the Maryland General Corporation Law, such requirement
as to a separate vote by that class or series shall apply in lieu of
single class voting as described above; (ii) in the event that the
separate vote requirements referred to in (i) above apply with respect
to one or more but not all classes or series, then, subject to (iii)
below, the shares of all other classes or series shall vote as a
single class or series; and (iii) as to any matter which does not
affect the interest of a particular class or series, only the holders
of shares of the one or more affected classes shall be entitled to
vote. Holders of shares of the stock of the Company shall not be
entitled to exercise cumulative voting in the election of directors or
on any other matter.
(h) The establishment and designation of any series or class of shares, in
addition to the initial class of shares which has been established in
section (1) above, shall be effective upon the adoption by a majority
of the then directors of a resolution setting forth such establishment
and designation and the relative rights and preferences of such series
or class, or as otherwise provided in such instrument and the filing
with the proper authority of the State of Maryland of Articles
Supplementary setting forth such establishment and designation and
relative rights and preferences.
<PAGE>
Section 4. The Company shall, upon due presentation of a share or shares
of stock for redemption, redeem such share or shares of stock at a redemption
price prescribed by the board of directors in accordance with applicable laws
and regulations; provided that in no event shall such price be less than the
applicable net asset value per share of such class or series as determined in
accordance with the provisions of this section (4), less such redemption or
other charge as is determined by the board of directors. Subject to applicable
law, the Company may redeem shares, not offered by a stockholder for redemption,
held by any stockholder whose shares of a class or series had a value less than
such minimum amount as may be fixed by the board of directors from time to time
or prescribed by applicable law, other than as a result of a decline in value of
such shares because of market action; provided that before the Company redeems
such shares it must notify the shareholder by first-class mail that the value of
his shares is less than the required minimum value and allow him 60 days to make
an additional investment in an amount which will increase the value of his
account to the required minimum value. Unless otherwise required by applicable
law, the price to be paid for shares redeemed pursuant to the preceding sentence
shall be the aggregate net asset value of the shares at the close of business on
the date of redemption, and the shareholder shall have no right to object to the
redemption of his shares. The Company shall pay redemption prices in cash,
except that the Company may at its sole option pay redemption prices in kind in
such manner as is consistent with and not in contravention of Section 18(f) of
the Investment Company Act of 1940, as amended, and any Rules or Regulations
thereunder. Redemption prices shall be paid exclusively out of the assets of the
class or series whose shares are being redeemed.
Notwithstanding the foregoing, the Company may postpone payment of
redemption proceeds and may suspend the right of the holders of shares of any
class or series to require the Company to redeem shares of that class or series
during any period or at any time when and to the extent permissible under the
Investment Company Act of 1940, as amended, or any rule or order thereunder.
The net asset value of a share of any class or series of common stock of
the Company shall be determined in accordance with applicable laws and
regulations or under the supervision of such persons and at such time or times
as shall from time to time be prescribed by the board of directors.
Section 5. The Company may issue, sell, redeem, repurchase and otherwise
deal in and with shares of its stock in fractional denominations and such
fractional denominations shall, for all purposes, be shares having
proportionately to the respective fractions represented thereby all the rights
of whole shares, including without limitation, the right to vote, the right to
receive dividends and distributions, and the right to participate upon
liquidation of the Company; provided that the issue of shares in fractional
denominations shall be limited to such transactions and be made upon such terms
as may be fixed by or under authority of the bylaws.
Section 6. The Company shall not be obligated to issue certificates
representing shares of any class or series unless it shall receive a written
request therefor from the record holder thereof in accordance with procedures
established in the bylaws or by the board of directors.
ARTICLE IV
PREEMPTIVE RIGHTS
No stockholder of the Company of any class or series, whether now or
hereafter authorized, shall have any preemptive or preferential or other right
of purchase of or subscription to any share of any class or series of stock, or
shares convertible into, exchangeable for or evidencing the right to purchase
stock of any class or series whatsoever, whether or not the stock in question be
of the same class or series as may be held by such stockholder, and whether now
or hereafter authorized and whether issued for cash, property, services or
otherwise, other than such, if any, as the board of directors in its discretion
may from time to time fix.
<PAGE>
ARTICLE V
PRINCIPAL OFFICE AND REGISTERED AGENT
The post office address of the principal office of the Company in the
State of Maryland is 32 South Street, Baltimore, Maryland 21202. The resident
agent of the Company is The Corporation Trust Incorporated, whose post office
address is 32 South Street, Baltimore, Maryland 21202. Said resident agent is a
corporation of the State of Maryland. The Company owns no interest in land
located in the State of Maryland.
ARTICLE VI
DIRECTORS
Section 1. The board of directors currently consists of ten members who
need not be residents of the State of Maryland or stockholders of the Company.
Section 2. The names of the current directors who shall act until their
successors are duly elected and qualified are as follows:
Charles W. Brady
Fred A. Deering
Mark H. Williamson
Dr. Victor L. Andrews
Bob R. Baker
Lawrence H. Budner
Dr. Wendy L. Gramm
Kenneth T. King
John W. McIntyre
Dr. Larry Soll
Section 3. The number of directors may be increased or decreased in
accordance with the bylaws, provided that the number shall not be reduced to
less than three.
Section 4. A majority of the directors shall constitute a quorum for the
transaction of business, unless the bylaws shall provide that a different number
shall constitute a quorum; provided, however, that in no case shall a quorum be
less than one-third (1/3) of the total number of directors or less than two (2)
directors.
Section 5. No person shall serve as a director, unless elected by the
stockholders at an annual meeting or a special meeting called for such purpose;
except that vacancies occurring between such meetings may be filled by the
directors in accordance with the bylaws, and subject to such limitations as may
be set forth by applicable laws and regulations.
Section 6. The board of directors of the Company is hereby empowered to
authorize the issuance from time to time of shares of stock, whether of a class
or series now or hereafter authorized, for such consideration as it deems
advisable, subject to such limitations as may be set forth herein, in the
bylaws, in the Maryland General Corporation Law, and in the Investment Company
Act of 1940, as amended.
Section 7. The board of directors of the Company may make, alter or repeal
from time to time any of the bylaws of the Company except any particular bylaw
that is specified as not subject to alternation or repeal by the board of
directors.
ARTICLE VII
LIABILITY AND INDEMNIFICATION
Section 1. Directors and officers of the Company, including persons who
formerly have served in such capacities, shall have limitations on, and/or
immunity from, liability of such directors and officers to the fullest extent
permitted by the Maryland General Corporation Law, subject only to such
restrictions as may be required by the Investment Company Act of 1940, as
amended, and the rules thereunder. Such limitations and/or immunity will apply
to acts or omissions occurring at the time an individual serves as a director or
officer of the Company, whether such person is a director or officer of the
<PAGE>
Company at the time of any proceeding in which liability is asserted against the
director or officer. No amendment to these Articles of Incorporation or repeal
of any of its provisions shall limit or eliminate the benefits provided to
directors and officers under this provision with respect to any act or omission
which occurred prior to such amendment or repeal.
Section 2. The Company shall indemnify and advance expenses to its
directors and officers, including persons who formerly have served in such
capacities, to the fullest extent permitted to directors by the Maryland General
Corporation Law and the bylaws of the Company, as such Law and bylaws now or in
the future may be in effect, subject only to such limitations as may be required
by the Investment Company Act of 1940, as amended, and the rules thereunder.
ARTICLE VIII
SPECIAL VOTING AND MEETING PROVISIONS
Section 1. Notwithstanding any provision of Maryland law requiring a
greater proportion than a majority of the votes of all classes or of any class
of stock entitled to be cast to take or authorize any action, the Company may
take or authorize any such action upon the concurrence of a majority of the
aggregate number of the votes entitled to be cast thereon.
Section 2. The presence in person or by proxy of the holders of one-third
of the shares of stock of the Company entitled to vote without regard to class
shall constitute a quorum at any meeting of stockholders, except with respect to
any matter which by law requires the approval of one or more classes of stock,
in which case the presence in person or by proxy of the holders of one-third of
the shares of stock of each class entitled to vote on the matter shall
constitute a quorum.
Section 3. So long as the Company is registered pursuant to the Investment
Company Act of 1940, as amended, the Company will not be required to hold annual
shareholder meetings in years in which the election of directors is not required
to be acted upon under the Investment Company Act of 1940, as amended.
ARTICLE IX
AMENDMENT
The Company reserves the right from time to time to make any amendment of
its articles of incorporation now or hereafter authorized by law, including any
amendment which alters the contract rights, as expressly set forth in such
articles, of any outstanding stock by classification, reclassification or
otherwise, but no such amendment which changes the terms or rights of any of its
outstanding shares shall be valid unless such amendment shall have been
authorized by not less than a majority of the aggregate number of votes entitled
to be cast thereon, by a vote at a meeting or in writing with or without a
meeting.
SECOND: The foregoing amendment was duly adopted in accordance with the
requirements of ss.ss. 2-408, -607, and -608 of the General Corporation Law of
the State of Maryland. The undersigned Secretary of the Company who is executing
on behalf of the Company the foregoing Articles of Restatement, of which this
paragraph is made a part, hereby acknowledges, in the name and on behalf of the
Company, the foregoing Articles of Restatement to be the corporate act of the
Company and further verifies under oath that, to the best of his knowledge,
information and belief, the matters and facts set forth herein are true in all
material respects, under penalties of perjury.
<PAGE>
IN WITNESS WHEREOF, INVESCO Stock Funds, Inc. has caused these Articles of
Amendment and Restatement to be signed in its name and on its behalf by its
President and witnessed by its Secretary on this ___ day of January, 2000.
INVESCO STOCK FUNDS, INC.
By:
---------------------------
Mark H. Williamson, President
[SEAL]
WITNESSED
By:
------------------------
Glen A. Payne, Secretary
STATE OF COLORADO )
) ss.
CITY AND COUNTY OF DENVER )
I, Ruth A. Christensen, a Notary Public in the City and County of Denver,
State of Colorado, do hereby certify that Mark H. Williamson, personally known
to me to be the person whose name is subscribed to the foregoing Articles of
Incorporation, appeared before me this date in person and acknowledged that he
signed, sealed and delivered said instrument as his full and voluntary act and
deed for the uses and purposes therein set forth.
Witness my hand and official seal this ____ day of January, 2000.
--------------------
Notary Public
My commission expires March 16, 2002.
DEFINED BENEFIT DEFERRED COMPENSATION PLAN
FOR NON-INTERESTED DIRECTORS AND TRUSTEES
As Amended Effective July 1, 1998
The registered, open-end management investment companies referred to on
Schedule A as the Schedule may hereafter be revised by the addition and deletion
of investment companies (the "Funds") have adopted this Defined Benefit Deferred
Compensation Plan ("Plan") for the benefit of those directors and trustees of
the Funds who are not interested directors or trustees thereof as defined in
Section 2(a)(19) of the Investment Company Act of 1940, as amended ("Independent
Directors").
1. Eligibility
Each Independent Director who has served as such ("Eligible Service") on
the boards of any of the Funds and their predecessor and successor entities, if
any, for an aggregate of at least five years at the time of his/her Service
Termination Date (as defined in paragraph 2) will be entitled to receive
benefits under the Plan. An Independent Director's period of Eligible Service
commences on the date of election to the board of directors or trustees of any
one or more of the Funds ("Board"). Hereafter, references in this Plan to
Independent Directors shall be deemed to include only those Directors who have
met the Eligible Service requirement for Plan participation.
2. Service Termination and Service Termination Date
a. Service Termination. Service Termination means termination of service
(other than by disability or death) of an Independent Director which results
from the Director's having reached his Service Termination Date.
b. Service Termination Date. An Independent Director's Service Termination
Date is that date upon which he or she no longer serves as a director. Normally,
an Independent Director's Service Termiantion Date will be the last day of the
calendar quarter in which such Director's seventy-second birthday occurs. A
majority of the Board of a Fund may annually extend a Director's normal Service
Termination Date for a maximum period of three years, through the date not later
than the last day of the calendar quarter in which such Director's seventy-fifth
birthday occurs.
As used in this Plan unless otherwise stipulated, Service Termination Date
shall mean the date upon which the Director no longer serves as a director.
3. Defined Payments and Benefit
a. Payments. If an Independent Director's Service Termination Date occurs
on a date not later than the last day of the calendar quarter in which such
Director's seventy-fourth birthday occurs, the Independent Director will receive
four quarterly payments during the first twelve months subsequent to his/her
Service Termination Date (the "First Year Retirement Payments"), with each
payment to be equal to 25 percent of the sum of the annual basic retainer and
annualized quarterly Board meeting fees payable by each Fund to the Independent
Director on his/her Service Termination Date (excluding any fees relating to
attending or chairing committee meetings or other fees payable to an Independent
Director).
b. Benefit. Commencing with the first anniversary of the Service
Termination Date of any Independent Director who has received the First Year
Retirement Payments, and commencing as of the Service Termination Date of an
Independent Director whose Service Termination Date is subsequent to the date of
the last day of the calendar quarter in which such Director's seventy-fourth
birthday occurred, the Independent Director will receive, for the remainder of
his/her life, a benefit (the "Benefit"), payable quarterly, with each quarterly
payment to be equal to 12.50 percent of the sum of the annual basic retainer and
annualized quarterly Board meeting fees payable by each Fund to the Independent
Director on his/her Service Termination Date (excluding any fees relating to
attending or chairing committee meetings or other fees payable to an Independent
Director).
<PAGE>
Example: As of July 1, 1998, the annual Benefit would be $34,000 (annual
basic retainer of $56,000 plus annualized quarterly Board meeting fees of
$12,000 times 12.50 percent of the total each quarter: $56,000 + $12,000 =
$68,000 x .125 = $8,500 x 4 = $34,000). As of July 1, 1998, the vice chairman of
the Funds receives an aggregate annual retainer of $62,000. The vice chairman's
annual Benefit would be $37,000. The annual Benefit may increase or decrease in
the future in accordance with changes in the Independent Directors' annual basic
retainer and/or Board meeting fees.
c. Death Provisions. If an Independent Director's service as a Director is
terminated because of his/her death subsequent to the last day of the calendar
quarter in which such Director's seventy-second birthday occurred and prior to
the last day of the calendar quarter in which such Director's seventy-fourth
birthday occurs, the designated beneficiary of the Independent Director shall
receive the First Year Retirement Payments and shall, commencing with the
quarter following the quarter in which the last First Year Retirement Payment is
made, receive the Benefit for a period of ten years, with quarterly payments to
be made to the designated beneficiary.
If an Independent Director's service as a Director is terminated because
of his/her death prior to the last day of the calendar quarter in which such
Director's seventy-second birthday occurs or subsequent to the last day of the
calendar quarter in which such Director's seventy-fourth birthday occurred, the
designated beneficiary of the Independent Director shall receive the Benefit for
a period of ten years, with quarterly payments to be made to the designated
beneficiary commencing in the first quarter following the Director's death.
d. Disability Provisions. If an Independent Director's service as a
Director is terminated because of his disability subsequent to the last day of
the calendar quarter in which such Director's seventy-second birthday occurred
and prior to the last day of the calendar quarter in which such Director's
seventy-fourth birthday occurs, the Independent Director shall receive the First
Year Retirement Payments and shall, commencing with the quarter following the
quarter in which the last First Year Retirement Payment is made, receive the
Benefit for the remainder of his/her life, with quarterly payments to be made to
the disabled Independent Director. If the disabled Independent Director should
die before the First Year Retirement Payments are completed and before forty
quarterly Benefit payments are made, such payments will continue to be made to
the Independent Director's designated beneficiary until the aggregate of the
First Year Retirement Payments and forty quarterly Benefit payments have been
made to the disabled Independent Director and the Director's designated
beneficiary.
If an Independent Director's service as a Director is terminated because
of his/her disability prior to the last day of the calendar quarter in which
such Director's seventy-second birthday occurs or subsequent to the last day of
the calendar quarter in which such Director's seventy-fourth birthday occurred,
the Independent Director shall receive the Benefit for the remainder of his/her
life, with quarterly payments to be made to the disabled Independent Director
commencing in the first quarter following the Director's termination for
disability. If the disabled Independent Director should die before forty
quarterly payments are made, payments will continue to be made to the
Independent Director's designated beneficiary until the aggregate of forty
quarterly payments has been made to the disabled Independent Director and the
Director's designated beneficiary.
e. Death of Independent Director and Beneficiary. If, subsequent to the
death of the Independent Director, his/her designated beneficiary should die
before the First Year Retirement Payments and/or a total of forty quarterly
Benefit payments are made, the remaining value of the Independent Director's
First Year Retirement Payments and/or Benefit (which Benefit shall in no event
exceed the value of forty quarterly payments minus the number of payments made)
shall be determined as of the date of the death of the Independent Director's
designated beneficiary and shall be paid to the estate of the designated
beneficiary in one lump sum or in periodic payments, with the determinations
with respect to the value of the First Year Retirement Payments and/or Benefit
and the method and frequency of payment to be made by the Committee (as defined
in paragraph 8.a.) in its sole discretion.
<PAGE>
4. Designated Beneficiary
The beneficiary referred to in paragraph 3 may be designated or changed by
the Independent Director without the consent of any prior beneficiary on a form
provided by the Committee (as defined in paragraph 8.a.) and delivered to the
Committee before the Independent Director's death. If no such beneficiary shall
have been designated, or if no designated beneficiary shall survive the
Independent Director, the value or remaining value of the Independent Director's
First Year Retirement Payments and/or Benefit shall be determined as of the date
of the death of the Independent Director by the Committee and shall be paid as
promptly as possible in one lump sum to the Independent Director's estate.
5. Disability
An Independent Director shall be deemed to have become disabled for the
purposes of paragraph 3 if the Committee shall find on the basis of medical
evidence satisfactory to it that the Independent Director is disabled, mentally
or physically, as a result of an accident or illness, so as to be prevented from
performing each of the duties which are incumbent upon an Independent Director
in fulfilling his responsibilities as such.
6. Time of Payment
The First Year Retirement Payments and/or the Benefit for each year will
be paid in quarterly installments that are as nearly equal as possible.
7. Payment of First Year Retirement Payments and/or Benefit: Allocation of
Costs
Each Fund is responsible for the payment of the amount of the First Year
Retirement Payments and/or Benefit applicable to the Fund, as well as its
proportionate share of all expenses of administration of the Plan, including
without limitation all accounting and legal fees and expenses and fees and
expenses of any Actuary. The obligations of each Fund to pay such First Year
Retirement Payments and/or Benefit and expenses will not be secured or funded in
any manner, and such obligations will not have any preference over the lawful
claims of each Fund's creditors and shareholders. To the extent that the First
Year Retirement Payments and/or Benefit is paid by more than one Fund, such
costs and expenses will be allocated among such Funds in a manner that is
determined by the Committee to be fair and equitable under the circumstances. To
the extent that one or more of such Funds consist of one or more separate
portfolios, such costs and expenses allocated to any such Fund will thereafter
be allocated among such portfolios by the Board of the Fund in a manner that is
determined by such Board to be fair and equitable under the circumstances.
8. Administration
a. The Committee. Any question involving entitlement to payments under or
the administration of the Plan will be referred to a four-person committee (the
"Committee") composed of three Independent Directors designated by all of the
Independent Directors of the Funds and one director of the Funds who is not an
Independent Director, designated by the non-Independent Directors. Except as
otherwise provided herein, the Committee will make all interpretations and
determinations necessary or desirable for the Plan's administration, and such
interpretations and determinations will be final and conclusive. Committee
members will be elected annually.
b. Powers of the Committee. The Committee will represent and act on behalf
of the Funds in respect of the Plan and, subject to the other provisions of the
Plan, the Committee may adopt, amend or repeal bylaws or other regulations
relating to the administration of the Plan, the conduct of the Committee's
affairs, its rights or powers, or the rights or powers of its members. The
Committee will report to the Independent Directors and to the Boards of the
Funds from time to time on its activities in respect of the Plan. The Committee
or persons designated by it will cause such records to be kept as may be
necessary for the administration of the Plan.
<PAGE>
9. Miscellaneous Provisions
a. Rights Not Assignable. Other than as is specifically provided in
paragraph 3, the right to receive any payment under the Plan is not transferable
or assignable, and nothing in the Plan shall create any benefit, cause of
action, right of sale, transfer, assignment, pledge, encumbrance, or other such
right in any heirs or the estate of any Independent Director.
b. Amendment, etc. The Committee, with the concurrence of the Board of any
Fund, may as to the specific Fund at any time amend or terminate the Plan or
waive any provision of the Plan; provided, however, that subject to the
limitations imposed by paragraph 7, no amendment, termination or waiver will
impair the rights of an Independent Director to receive the payments which would
have been made to such Independent Director had there been no such amendment,
termination, or waiver.
c. No Right to Reelection. Nothing in the Plan will create any obligation
on the part of the Board of any Fund to nominate any Independent Director for
reelection.
d. Consulting. Subsequent to his Service Termination Date, an Independent
Director may render such services for any Fund, for such compensation, as may be
agreed upon from time to time by such Independent Director and the Board of the
Fund which desires to procure such services.
e. Effectiveness. The Plan will be effective for all Independent Directors
who have Service Termination Dates occurring on and after October 20, 1993.
Periods of Eligible Service shall include periods commencing prior and
subsequent to such date. Upon its adoption by the Board of a Fund, the Plan will
become effective as to that Fund on the date when the Committee determines that
any regulatory approval or advice that may be necessary or appropriate in
connection with the Plan have been obtained.
Adopted October 20, 1993.
Amended October 19, 1994.
Amended May 1, 1996, effective July 1, 1996.
Amended May 14, 1998, effective July 1, 1998.
<PAGE>
SCHEDULE A
TO
DEFINED BENEFIT DEFERRED COMPENSATION PLAN
FOR NON-INTERESTED DIRECTORS AND TRUSTEES
INVESCO Capital Appreciation Funds, Inc.
INVESCO Diversified Funds, Inc.
INVESCO Emerging Opportunity Funds, Inc.
INVESCO Growth Fund, Inc.
INVESCO Income Funds, Inc.
INVESCO Industrial Income Fund, Inc.
INVESCO International Funds, Inc.
INVESCO Money Market Funds, Inc.
INVESCO Multiple Asset Funds, Inc.
INVESCO Specialty Funds, Inc.
INVESCO Strategic Portfolios, Inc.
INVESCO Tax-Free Income Funds, Inc.
INVESCO Value Trust
INVESCO Variable Investment Funds, Inc.
INVESCO Treasurer's Series Trust
[INVESCO ICON] INVESCO FUNDS INVESCO FUNDS GROUP, INC.
7800 East Union Avenue
Denver, Colorado 80237
Post Office Box 173706
Denver, Colorado 80217-3706
Telephone: 303-930-6300
August 27, 1999
Mr. Christopher J. Meyers
Assistant Vice President
State Street Bank and Trust Company
1776 Heritage Drive
North Quincy, MA 02171
RE: INVESCO Stock Funds, Inc.
Dear Mr. Meyers:
This is to advise you that INVESCO Blue Chip Growth Fund, the sole series of
INVESCO Growth Funds, Inc., INVESCO Small Company Growth Fund, the sole series
of INVESCO Emerging Opportunity Funds, Inc.; INVESCO S&P 500 Index Fund, a
series of INVESCO Specialty Funds, Inc. and INVESCO Value Equity, the sole
series of INVESCO Value Trust, have been reorganized into INVESCO Stock Funds,
Inc. (the "Company") effective July 15, 1999. In accordance with the Additional
Funds provision in Paragraph 17 of the Custodian Contract dated July 1, 1993
between the Company and State Street Bank and Trust Company, the Company hereby
requests that you act as Custodian for these series under the terms of the
Contract.
Please indicate your acceptance of the foregoing by executing two copies of this
Letter Agreement, returning one to the Company and retaining one copy for your
records.
Sincerely,
/s/ Alan I. Watson
- ------------------------------
Alan I. Watson
Assistant Secretary
Agreed to this 31st day of August, 1999.
STATE STREET BANK AND TRUST COMPANY
By: /s/ Charles R. Whittemore, Jr.
------------------------------
Vice President
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. 53 to the registration statement on Form N-1A (the "Registration
Statement") of our report dated August 25, 1999, relating to the financial
statements and financial highlights appearing in the July 31, 1999 Accual Report
to Shareholders of INVESCO Stock Funds, Inc., which is also incorporated be
reference into the Registration Statement. We also consent to the references to
us under the heading "Financial Highlights" in the Prospectus and under the
heading "Independent Accountants" and "Financial Statements" in the Statement of
Additional Information.
/s/ PricewaterhouseCoopers LLP
- ------------------------------
PricewaterhouseCoopers LLP
Denver, Colorado
November 3, 1999
FORM OF
INVESCO BLUE CHIP GROWTH FUND PLAN PURSUANT TO RULE 18F-3
January __, 2000
1. The Plan. This Plan is the written multiple class plan for the INVESCO
Blue Chip Growth 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
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,
including different sales charges, sales charge waivers, purchase
and 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.
<PAGE>
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
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 Stock 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
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
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 Stock Funds, Inc. on January __, 2000.
------------------------
Glen A. Payne, Secretary
FORM OF
INVESCO DYNAMICS FUND PLAN PURSUANT TO RULE 18F-3
January __, 2000
1. The Plan. This Plan is the written multiple class plan for the INVESCO
Dynamics 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
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,
including different sales charges, sales charge waivers, purchase
and 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
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.
<PAGE>
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 Stock 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
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
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 Stock Funds, Inc. on January __, 2000.
------------------------
Glen A. Payne, Secretary
FORM OF
INVESCO ENDEAVOR FUND PLAN PURSUANT TO RULE 18F-3
January __, 2000
1. The Plan. This Plan is the written multiple class plan for the INVESCO
Endeavor 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
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,
including different sales charges, sales charge waivers, purchase
and 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.
<PAGE>
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
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 Stock 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
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
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 Stock Funds, Inc. on January __, 2000.
------------------------
Glen A. Payne, Secretary
FORM OF
INVESCO GROWTH & INCOME FUND PLAN PURSUANT TO RULE 18F-3
January __, 2000
1. The Plan. This Plan is the written multiple class plan for the INVESCO
Growth & Income 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
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,
including different sales charges, sales charge waivers, purchase
and 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.
<PAGE>
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
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 Stock 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
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
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 Stock Funds, Inc. on January __, 2000.
------------------------
Glen A. Payne, Secretary
FORM OF
INVESCO SMALL COMPANY GROWTH FUND PLAN PURSUANT TO RULE 18F-3
January __, 2000
1. The Plan. This Plan is the written multiple class plan for the INVESCO
Small Company Growth 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
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,
including different sales charges, sales charge waivers, purchase
and 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.
<PAGE>
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
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 Stock 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
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
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 Stock Funds, Inc. on January __, 2000.
------------------------
Glen A. Payne, Secretary
FORM OF
INVESCO VALUE EQUITY FUND PLAN PURSUANT TO RULE 18F-3
January __, 2000
1. The Plan. This Plan is the written multiple class plan for the INVESCO
Value Equity 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
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,
including different sales charges, sales charge waivers, purchase
and 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.
<PAGE>
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
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 Stock 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
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
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 Stock Funds, Inc. on January __, 2000.
------------------------
Glen A. Payne, Secretary