As filed on July 15, 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.51 X
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 X
Amendment No.25 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)
------------
Copies to:
Ronald M. Feiman, Esq.
Mayer, Brown & Platt
1675 Broadway
New York, New York 10019-5820
------------
Approximate Date of Proposed Public Offering: As soon as practicable after
this post-effective amendment becomes effective.
It is proposed that this filing will become effective (check appropriate box)
- --- immediately upon filing pursuant to paragraph (b)
- --- on , pursuant to paragraph (b)
- --- 60 days after filing pursuant to paragraph (a)(1)
X on August 31, 1999, pursuant to paragraph (a)(1)
- --- 75 days after filing pursuant to paragraph (a)(2)
- --- on _________, pursuant to paragraph (a)(2) of rule 485
If appropriate, check the following box:
- -- this post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
Page 1 of 123
Exhibit index is located at page 114
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PROSPECTUS | August 31, 1999
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YOU SHOULD KNOW WHAT INVESCO KNOWS (TM)
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INVESCO STOCK FUNDS, INC.
INVESCO BLUE CHIP GROWTH FUND
INVESCO DYNAMICS FUND
INVESCO ENDEAVOR FUND
INVESCO GROWTH & INCOME FUND
INVESCO SMALL COMPANY GROWTH FUND
INVESCO S&P 500 INDEX FUND -- CLASS II
INVESCO VALUE EQUITY FUND
SEVEN NO-LOAD MUTUAL FUNDS SEEKING LONG-TERM CAPITAL APPRECIATION AND, WITH
RESPECT TO BLUE CHIP GROWTH, GROWTH & INCOME AND VALUE EQUITY FUNDS, CURRENT
INCOME.
TABLE OF CONTENTS
Investment Goals And Strategies...................3
Fund Performance..................................6
Fees And Expenses.................................7
Investment Risks..................................9
Risks Associated With Particular Investments.....10
Temporary Defensive Positions....................18
Portfolio Turnover...............................18
Fund Management..................................18
Portfolio Managers...............................19
Potential Rewards................................21
Suitability For Investors........................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 & Potential Advantages
[INVESCO ICON] Working With INVESCO
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[KEY ICON] INVESTMENT GOALS AND STRATEGIES
FACTORS COMMON TO BLUE CHIP GROWTH, DYNAMICS, ENDEAVOR, GROWTH & INCOME AND
SMALL COMPANY GROWTH FUNDS
INVESCO Funds Group, Inc. ("INVESCO") is the investment adviser for the
Funds. Together with our affiliated companies, we at INVESCO control all aspects
of the management and sale of the Funds.
FOR MORE DETAILS ABOUT EACH FUND'S CURRENT INVESTMENTS AND MARKET OUTLOOK,
PLEASE SEE THE MOST RECENT ANNUAL OR SEMIANNUAL REPORT.
All of the Funds attempt to make your investment grow. The Funds (except for S&P
500 Index Fund) are aggressively managed. The Funds primarily invest 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 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.
[KEY ICON] BLUE CHIP GROWTH FUND
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
<PAGE>
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
This Fund attempts to make your investment grow. It primarily invests in
common stocks of mid-sized U.S. companies 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.
[KEY ICON] INVESCO ENDEAVOR FUND
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 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 intial 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
<PAGE>
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
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
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.
[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 S&P 500 INDEX FUND -- CLASS II
The Fund seeks price performance and income comparable to the Standard &
Poor's 500 Composite Stock Price Index ("S&P 500" or "Index"). The Fund invests
in the stocks that make up the Index, in approximately the same proportions.
The Fund is not sponsored, endorsed, sold or promoted by S&P. S&P makes no
representation or warranty, express or implied, to the shareholders or the
general public regarding the advisibility of investing in the Fund or the
ability of the S&P 500 to track general stock performance. S&P has no direct
relationship with the Fund other than the licensing of certain trademarks and
trade names of S&P and the S&P 500 Index which is composed by S&P without regard
to the Fund. 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
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of the equation by which Fund shares are to be converted in 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.
[ARROW ICON] The Fund is not actively managed; instead, the Fund seeks to
track the performance of the S&P 500. Therefore, when the S&P 500 drops, the
value of shares of the Fund drops accordingly. The Fund makes no effort to hedge
against price movements in the S&P 500. Due to purchases and sales of portfolio
securities to meet investor purchases and redemptions, the Fund will not have a
100% correlation to the performance of the Index. However, under normal
circumstances, the Fund expects to have at least a 95% correlation to the
composition of the S&P 500.
[KEY ICON] INVESCO VALUE EQUITY FUND
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.
[GRAPH ICON] FUND PERFORMANCE
The bar charts below shows the Blue Chip Growth, Dynamics, Small Company
Growth, S&P 500 Index - Class II and Value Equity Funds' actual yearly
performance for the years ended December 31 (commonly known as its "total
return") over the past decade. The Funds charge no sales loads that would affect
total return computation. However, total return computation for S&P 500 Index
Fund may be affected by the redemption or exchange fee retained by that Fund to
offset transaction costs and other expenses associated with short-term
redemptions and exchanges. A 1% fee is charged on redemptions or exchanges of
shares held three months or less. The table below shows average annual returns
for various periods ended December 31, 1998 for each Fund compared to the
following indexes: ___________________________________________ Indexes. The
information in these charts and table illustrates the variability of each Fund's
return and its performance compared to a broad measure of market performance.
The bar charts provide some indication of the risks of investing in a particular
Fund by showing changes in the year to year performance of each Fund. Remember,
past performance does not indicate how a Fund will perform in the future.(1)
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[INSERT FUND PERFORMANCE]
Fund performance information is not provided for Endeavor and Growth &
Income Funds, as such Funds did not commence investment operations until October
28, 1998 and July 1, 1998, respectively.
FEES AND EXPENSES
SHAREHOLDER FEES PAID DIRECTLY FROM YOUR ACCOUNT
This table describes the fees and expenses that you may pay if you buy and
hold shares of S&P 500 Index Fund:
Shareholder Fees (fees paid directly from your investment):
Redemption Fee (as a percentage of amount redeemed) 1.00%*
* S&P 500 Index Fund retains a fee to offset transaction costs and other
expenses associated with short-term redemptions and exchanges from the Fund. A
1% fee shall be imposed on redemptions or exchanges held three months or less.
This fee may be waived at the discretion of INVESCO.
ANNUAL FUND OPERATING EXPENSES THAT ARE DEDUCTED FROM FUND ASSETS
BLUE CHIP GROWTH FUND
Management Fees ____%
Distribution and Service (12b-1)Fees(1) 0.25%
Other Expenses(2)(3) ____%
Total Annual Fund Operating Expenses(2)(3) ____%
DYNAMICS FUND
Management Fees ____%
Distribution and Service (12b-1)Fees(1) 0.25%
Other Expenses (2)(3) ____%
Total Annual Fund Operating Expenses(2(3)(4) ____%
ENDEAVOR FUND
Management Fees ____%
Distribution and Service (12b-1)Fees(1) 0.25%
Other Expenses(2)(3) ____%
Total Annual Fund Operating Expenses (2)(3)(4) ____%
GROWTH & INCOME FUND
Management Fees ____%
Distribution and Service (12b-1)Fees (1) 0.25%
Other Expenses(2)(3) ____%
Total Annual Fund Operating Expenses (2)(3)(4) ____%
S&P 500 INDEX FUND - CLASS II
Management Fees ____%
Distribution and Service (12b-1)Fees (1) 0.25%
Other Expenses(2)(3) ____%
Total Annual Fund Operating Expenses(2)(3)(4) ____%
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SMALL COMPANY GROWTH FUND
Management Fees ____%
Distribution and Service (12b-1)Fees(1) 0.25%
Other Expenses(2)(3) ____%
Total Annual Fund Operating Expenses(2)(3)(4) ____%
VALUE EQUITY FUND
Management Fees ____%
Distribution and Service (12b-1)Fees(1) 0.25%
Other Expenses(2)(3) ____%
Total Annual Fund Operating Expenses(2)(3)(4) ____%
(1) Because the Funds pay 12b-1 distribution 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) Each Fund's Actual Total Annual Fund Operating Expenses were lower than
the figures shown, because their ______________________________ fees
were reduced under expense offset arrangements. Because of an SEC
requirement, the figures shown do not reflect these reductions.
(3) The expense information presented in the table has been restated to
reflect a change in the administration services fee.
(4) Certain expenses of Dynamics, Endeavor, Growth & Income, Small Company
Growth, S&P 500 Index Fund - Class II, and Value Equity Funds are being
absorbed voluntarily by INVESCO pursuant to a commitment to those
Funds. After absorption, Dynamics Fund's "Other Expenses" and "Total
Annual Fund Operating Expenses" were ____% and ____%, respectively,
Endeavor Fund's "Other Expenses" and "Total Annual Fund Operating
Expenses" were ____% and ____%, respectively, Growth & Income Fund's
"Other Expenses" and "Total Annual Fund Operating Expenses" were ___%
and ____%, respectively, Small Company Growth Fund's "Other Expenses" and
"Total Annual Fund Operating Expenses" were ___% and ___%,
respectively, S&P 500 Index Fund Class II's "Other Expenses" and "Total
Annual Fund Operating Expenses" were ____% and ____%, respectively, and
Value Equity Fund's "Other Expenses" and "Total Annual Fund Operating
Expenses" were ____% and ____%, respectively. This commitment may be
changed at any time following consultation with the board of directors.
INVESCO has agreed to voluntarily absorb certain expenses of Dynamics,
Endeavor and Growth & Income, Small Company Growth, S&P 500 Index - Class II and
Value Equity Funds, so that each Fund's total operating expenses (excluding
excess amounts that have been offset by the expense offset arrangements
described above) do not exceed 1.20% (1.21% prior to May 13, 1999), 1.50%,
1.50%, 1.50%, 0.60% (0.55% prior to May 13, 1999) and 1.30% (1.25% prior to May
13, 1999), respectively, of each Fund's average net assets. This commitment may
be changed at any time following consultation with the board of directors.
EXAMPLE
This Example is intended to help you compare the cost of investing in the
Funds to the cost of investing in other mutual funds.
The Example assumes that you invested $10,000 in a Fund for the time
periods indicated and redeemed all of your shares at the end of each period. The
Example also assumes that your investment had a hypothetical 5% return each
year, and assumes that a Fund's expenses remained the same. Although a Fund's
actual costs and performance may be higher or lower, based on these assumptions
your costs would have been:
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1 year 3 years 5 years 10 years
Blue Chip Growth Fund $_____ $_____ $_____ $_____
Dynamics Fund $_____ $_____ $_____ $_____
Endeavor Fund* $_____ N/A N/A N/A
Growth & Income Fund* $_____ N/A N/A N/A
Small Company Growth Fund $_____ $_____ $_____ $_____
S&P 500 Index Fund - Class II $_____ $_____ $_____ $_____
Value Equity Fund $_____ $_____ $_____ $_____
*Annualized
[ARROW ICON] INVESTMENT RISKS
BEFORE INVESTING IN A FUND, YOU SHOULD DETERMINE THE LEVEL OF RISK WITH
WHICH YOU ARE COMFORTABLE. TAKE INTO ACCOUNT FACTORS LIKE YOUR AGE, CAREER,
INCOME LEVEL, AND TIME HORIZON.
You should determine the level of risk with which you are comfortable
before you invest. The principal risks of investing in any mutual fund,
including these Funds, are:
NOT INSURED. Mutual funds are not insured by the Federal Deposit Insurance
Corporation ("FDIC") or any other agency, unlike bank deposits such as CDs or
savings accounts.
NO GUARANTEE. No mutual fund can guarantee that it will meet its investment
objectives.
POSSIBLE LOSS OF INVESTMENT. A mutual fund cannot guarantee its
performance, 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.
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.
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[ARROW ICON] RISKS ASSOCIATED WITH PARTICULAR INVESTMENTS
MARKET RISK
Equity stock prices vary and may fall, thus reducing the value of your
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.
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.
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 that 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.
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FOREIGN SECURITIES RISK
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.
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.
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 and bonds. 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.
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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.
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INVESTMENT RISKS BLUE CHIP GROWTH &
GROWTH DYNAMICS ENDEAVOR INCOME
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AMERICAN DEPOSITORY Market,
RECEIPTS (ADRS) Information,
These are securities Polit-
issued by U.S. banks ical,
that represent shares of Regula-
foreign corporations tory,
held by those banks. Dip- x x x x
Although traded in U.S. lomatic,
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.
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DEBT SECURITIES Market,
Securities issued by Credit,
private companies or Interest
governments representing Rate and x x x x
an obligation to pay Duration
interest and to repay Risks
principal when the
security matures.
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DELAYED DELIVERY OR Market
WHEN-ISSUED SECURITIES and
Ordinarily, the Fund Interest
purchases securities Rate Risks
and 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 x x x x
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>
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INVESTMENT RISKS BLUE CHIP GROWTH &
GROWTH DYNAMICS ENDEAVOR INCOME
- -------------------------------------------------------------------------------
FORWARD FOREIGN CURRENCY
CONTRACTS
A contract to Currency,
exchange an amount of Political,
currency on a date in Diplomatic
the future at an and Regula- x x x x
agreed-upon exchange tory Risks
rate might be used by
the Fund to hedge
against changes in
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 securities
decline.
- --------------------------------------------------------------------------------
FUTURES
A futures Market,
contract is an agree- Liquidity
ment to buy or sell a and Op-
specific amount of a tions and x x x x
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
Debt Securities Market,
that are rated BB or Credit,
lower by Standard & Interest x x x x
Poors or Ba or lower by Rate and
Moody's. Tend to pay Duration
higher interest rates Risk
than higher-rated debt
securities, but carry a
higher credit risk.
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
INVESTMENT RISKS BLUE CHIP GROWTH &
GROWTH DYNAMICS ENDEAVOR INCOME
- --------------------------------------------------------------------------------
OPTIONS Credit,
The obligation Informa-
or right to deliver or tion,
receive a security or Liquidity
other instrument, index and x x x x
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 Counter-
INSTRUMENTS party,
These may Credit,
include forward Currency,
contracts, swaps, caps, Interest
floors and collars. Rate, x x x x
They may be used to try Liquidity,
to manage the Fund's Market
foreign cur rency and Regu-
exposure and other latory
invest ment risks, which Risks
can cause its net asset
value to rise or fall.
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 Credit
A contract and
under which the seller Counter- x x x x
of a security agrees to party
buy it back at an Risks
agreed-upon price and
time in the future.
- --------------------------------------------------------------------------------
RULE 144A SECURITIES Liquidity
Securities that are Risk
not regis tered, but
which are bought and
sold solely by
institutional
investors. The Fund
considers many Rule x x x x
144A securities to be
"liquid," although the
market for such
securities typically is
less active than
the public securities
markets.
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
INVESTMENT RISKS SMALL S&P 500 VALUE
COMPANY INDEX EQUITY
GROWTH
- --------------------------------------------------------------------------------
AMERICAN DEPOSITORY Market,
RECEIPTS (ADRS) Informa-
These are securities tion,
issued by U.S. banks that Politi-
represent shares of foreign cal, x x
corporations held by those Regulatory,
banks. Although traded in Diplomatic,
U.S. securities markets and Liquidity
valued in U.S. dollars, and Cur-
ADRs carry most of the rency
risks of invest ing Risks
directly in foreign
securities.
- --------------------------------------------------------------------------------
DEBT SECURITIES Market,
Securities issued by Credit,
private com panies or Interest
governments representing an Rate and x x
obligation to pay interest Duration
and to repay principal Risks
when the security matures.
- --------------------------------------------------------------------------------
DELAYED DELIVERY OR
WHEN-ISSUED SECURITIES
Ordinarily, the Fund Market and
purchases securities Interest
and pays for them in Rate Risks
cash at the normal trade
settlement time. When
the Fund purchases a
delayed delivery or
when-issued security,
it promises to x x
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 SMALL S&P 500 VALUE
COMPANY INDEX EQUITY
GROWTH
- --------------------------------------------------------------------------------
FORWARD FOREIGN CURRENCY Currency,
CONTRACTS Political,
A contract to exchange Diplomatic
an amount of currency on and Regula-
a date in the future at tory Risks
an agreed-upon exchange
rate might be used by the
Fund to hedge against
changes in foreign currency x x
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 securities decline.
- --------------------------------------------------------------------------------
FUTURES Market,
A futures contract Liquidity
is an agreement to buy or and
sell a specific amount of a Options
financial instrument (such and x x x
as an index option) at a Futures
stated price on a stated Risks
date. The Fund may use
futures con tracts to
provide liquidity and to
hedge portfolio value.
- --------------------------------------------------------------------------------
JUNK BONDS
Debt Securities that Market,
are rated BB or lower by Credit,
Standard & Poors or Ba or Interst
lower by Moody's. Tend Rate and x
to pay higher interest Duration
rates than higher-rated Risks
debt securities, but carry
a higher credit risk.
- --------------------------------------------------------------------------------
OPTIONS
The obligation or Credit,
right to deliver or receive Informa-
a security or other instru tion, Liquid-
ment, index or commodity, ity and
or cash payment depending Options and
on the price of the Futures
underlying security or the Risks x x x
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.
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
INVESTMENT RISKS SMALL S&P 500 VALUE
COMPANY INDEX EQUITY
GROWTH
- --------------------------------------------------------------------------------
OTHER FINANCIAL INSTRUMENTS Counter-
These may include party,
forward con tracts, swaps, Credit,
caps, floors and collars. Currency,
They may be used to try to Interest
manage the Fund's foreign Rate,
currency exposure and other Liquidity,
investment risks, which can Market and
cause its net asset value Regulatory x x x
to rise or fall. The Fund Risks
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 Credit and
A contract under Counter-
which the seller of a party
security agrees to buy it Risks x x
back at an agreed-upon
price and time in the
future.
- --------------------------------------------------------------------------------
RULE 144A SECURITIES Liquidity
Securities that are not Risk
registered, but which are
bought and sold solely by
institutional investors.
The Fund considers many
Rule 144A securities to x x
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. 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
With the exception of S&P 500 Index Fund, 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 ____%
INVESCO Dynamics Fund ____%
INVESCO Endeavor Fund* ____%
INVESCO Growth & Income Fund* ____%
INVESCO Small Company Growth Fund ____%
INVESCO Value Equity Fund ____%
*Annualized
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, 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 43 INVESCO mutual funds.
INVESCO performs a wide variety of other services for the Funds, including
administration and transfer agency functions (the processing of purchases, sales
and exchanges of Fund shares).
<PAGE>
INVESCO IS A SUBSIDIARY OF AMVESCAP PLC, AN INTERNATIONAL INVESTMENT
MANAGEMENT COMPANY THAT MANAGES MORE THAN $___ BILLION IN ASSETS WORLDWIDE.
AMVESCAP IS BASED IN LONDON, WITH MONEY MANAGERS LOCATED IN EUROPE, NORTH AND
SOUTH AMERICA, AND THE FAR EAST.
World Asset Management ("World") , located at 255 Brown Street Centre, 2nd
Floor, Birmingham, Michigan, is the sub-adviser to S&P 500 Index Fund. INVESCO
Capital Management, Inc. ("ICM"), located at 1360 Peachtree Street, N.E., Suite
100, Atlanta, Georgia, is the sub-adviser to Value Equity Fund.
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. World is a general
partnerhsip organized by Munder Capital Management.
The following table shows the fees the Funds paid to INVESCO for its
advisory services in the period ended July 31, 1999:
- --------------------------------------------------------------------------------
ADVISORY FEE AS A PERCENTAGE OF
FUND AVERAGE ANNUAL ASSETS UNDER MANAGEMENT
- --------------------------------------------------------------------------------
INVESCO Blue Chip Growth Fund ____%
INVESCO Dynamics Fund ____%
INVESCO Endeavor Fund ____% (Annualized)
INVESCO Growth & Income Fund ____% (Annualized)
INVESCO Small Company Growth Fund ____%
INVESCO S&P 500 Index Fund - Class II ____%
INVESCO Value Equity Fund ____%
- --------------------------------------------------------------------------------
[INVESCO ICON] PORTFOLIO MANAGERS
S&P 500 Index Fund is managed by a team of World portfolio managers that is
collectively responsible for the investment decisions relating to the Fund.
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
Tom 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
S&P 500 Index World Asset Management
<PAGE>
TIMOTHY J. MILLER is the leader of INVESCO's Growth Team and the lead
portfolio manager of the 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.
STACIE COWELL is the lead portfolio manager of the 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 the Value Equity Fund and a
Chartered Financial Analyst who joined INVESCO Capital Management, Inc. in 1992.
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 the Value Equity Fund who
joined INVESCO Capital Management, Inc. in 1992. 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 the 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 the Blue Chip Growth
Fund who joined INVESCO in 1999. Douglas 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 the 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.
TOM WALD is the co-portfolio manager of the 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
offers the opportunity for current income. Like most mutual funds, each Fund
seeks to provide higher returns than 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 significant
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. New York 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.
<PAGE>
In this situation, the Funds would not calculate NAV on Thanksgiving Day
(and INVESCO would not buy, sell or 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.
[INVESCO ICON] HOW TO BUY SHARES
TO BUY SHARES AT THAT DAY'S CLOSING PRICE, YOU MUST CONTACT US BEFORE THE
CLOSE OF THE NYSE, NORMALLY 4:00 P.M. EASTERN TIME.
The following chart shows several convenient ways to invest in the Funds.
There is no charge to invest directly through INVESCO. With regard to all Funds,
except S&P 500 Index Fund, there is no charge to exchange or redeem shares when
you do so directly through INVESCO. However, with respect to S&P 500 Index Fund,
upon a redemption or an exchange of shares held three months or less (other than
shares acquired through reinvestment of dividends or other distributions), a fee
of 1% of the current net asset value of the shares being exchanged will be
assessed and retained by that Fund for the benefit of the remaining
shareholders. If you invest in a Fund through a securities broker, you may be
charged a commission or transaction fee for either purchases or sales of Fund
shares. For all new accounts, please send a completed application form, and
specify the fund or funds you wish to purchase.
INVESCO reserves the right to increase, reduce or waive each Fund's minimum
investment requirements in its sole discretion, if it determines this action is
in the best interests of that Fund's shareholders. INVESCO also reserves the
right in its sole discretion to reject any order to buy Fund shares, including
purchases by exchange.
MINIMUM INITIAL INVESTMENT. $1,000, which is waived for regular investment
plans, including EasiVest and Direct Payroll Purchase, and certain retirement
plans, including IRAs.
MINIMUM SUBSEQUENT INVESTMENT. $50 (Minimums are lower for certain
retirement plans.)
EXCHANGE POLICY. You may exchange your shares in any of the Funds for those
in another INVESCO mutual fund on the basis of their respective NAVs at the time
of the exchange.
FUND EXCHANGES CAN BE A CONVENIENT WAY FOR YOU TO DIVERSIFY YOUR INVESTMENTS OR
TO REALLOCATE YOUR INVESTMENTS WHEN YOUR OBJECTIVES CHANGE.
Before making any exchange, be sure to review the prospectuses of the funds
involved and consider the differences between the funds. Also, be certain that
you qualify to purchase certain classes of shares in the new fund. An exchange
is the sale of shares from one fund immediately followed by the purchase of
shares in another. Therefore, any gain or loss realized on the exchange is
recognizable for federal income tax purposes (unless, of course, you or your
account qualifies as tax-deferred under the Internal Revenue Code). If the
shares of the fund you are selling have gone up in value since you bought them,
the sale portion of an exchange may result in taxable income to you.
We have the following policies governing exchanges:
o Both fund accounts involved in the exchange must be registered in exactly
the same name(s) and Social Security or federal tax I.D. number(s).
o You may make up to four exchanges out of each Fund per year.
o Each Fund reserves the right to reject any exchange request, or to modify
or terminate the exchange policy, 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.
REDEMPTION FEE (S&P 500 INDEX FUND ONLY). If you exchange shares of S&P 500
Index Fund after holding them three months or less (other than shares acquired
through reinvestment of dividends or other distributions), a fee of 1% of the
current net asset value of the shares being exchanged will be assessed and
retained by the Fund for the benefit of the remaining shareholders. This fee is
intended to encourage long-term investment in S&P 500 Index Fund, to avoid
transaction and other expenses caused by early redemptions, and to facilitate
portfolio management. This fee may be waived at the discretion of INVESCO. This
fee is not a deferred sales charge, is not a commission paid to INVESCO and does
not benefit INVESCO in any way. The fee applies to redemptions from the Fund and
exchanges into any of the other no-load mutual funds which are also advised by
INVESCO and distributed by IDI. The S&P 500 Index Fund 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 three months,
the redemption/exchange fee will be assessed on the current net asset value of
those shares.
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).
Method Investment Minimum Please Remember
- --------------------------------------------------------------------------------
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 S&P 500 Index Fund
by overnight courier to: - $5,000 for
7800 E. Union Ave. regular accounts;
Denver, CO 80237. $2,000 for an IRA;
$1,000 minimum for
each subsequent
investment.
- --------------------------------------------------------------------------------
BY TELEPHONE OR WIRE $1,000. Payment must be
Call 1-800-525-8085 to S&P 500 Index Fund received within 3
request - $5,000 for business days, or the
your purchase. Then send regular accounts; transaction may be
your $2,000 for an IRA; cancelled.
check by overnight $1,000 minimum for
courier to our each subsequent
street address: 7800 E. investment.
Union Ave.,
Denver, CO 80237. Or you
may
send your payment by
bank wire (call INVESCO
for
instructions).
- --------------------------------------------------------------------------------
BY TELEPHONE WITH ACH $50.
Call 1-800-525-8085 to S&P 500 Index Fund
request your pur chase. - you must fulfill
INVESCO will move money the minimum
from your designated initial investment
bank/credit union check requirements
ing or savings account before using this
in order to purchase option
shares, upon your
telephone instructions,
whenever your wish.
- --------------------------------------------------------------------------------
<PAGE>
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 S&P 500 Index Fund price levels, consider
monthly basis - you must fulfill your financial abil-
allows you to buy more the mini mum ity to keep buying
shares when prices are initial investment through low
low and fewer shares require ments price levels. And
when prices are high. before using one remember that you will
This "dollar cost averag of these options. lose money if you
ing" may help offset redeem your shares
market fluctuations. when the market value
Over a period of time, of all your shares is
your average cost per less than their cost.
share may be less than
the actual aver age
price per share.
- --------------------------------------------------------------------------------
BY PAL(R) $1,000. (The Be sure to write down
Your "Personal Account exchange minimum the confirmation
Line" is is $1,000 for number provided by
available for subsequent purchases PAL(R). Payment must
purchases requested by be received within 3
and exchanges 24 hours a telephone.) business days, or the
day. transaction may be
Simply call cancelled.
1-800-525-8085.
- --------------------------------------------------------------------------------
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 minimum is $250
Web site at for exchanges
www.invesco.com. You requested by
may also establish an telephone.)
automatic S&P 500 Index Fund
monthly exchange service - $45,000 to open
between a new account;
two INVESCO funds; call $2,000 for IRAs;
us for further details $1,000 for written
and the correct form. requests to
purchase
additional
shares. (The
exchange minimum
is $1,000 for
purchases
requested by
telephone.)
DISTRIBUTION EXPENSES. We have adopted a Plan and Agreement of Distribution
(commonly known as a "12b-1 Plan") for the Funds. The 12b-1 fees paid by each
Fund are used to defray all or part of the cost of preparing and distributing
prospectuses and promotional materials, as well as to pay for certain
distribution-related and other services. These services include compensation to
third party brokers, financial advisers and financial services companies that
sell Fund shares and/or service shareholder accounts.
<PAGE>
Under the Plan, each Fund's payments are limited to an amount computed at
an annual rate of 0.25% of the Fund's average net assets. If distribution
expenses for a Fund exceed these computed amounts, INVESCO pays the difference.
[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
TO SELL SHARES AT THAT DAY'S CLOSING PRICE, YOU MUST CONTACT US BEFORE 4:00
P.M. EASTERN TIME.
The following chart shows several convenient ways to sell your Fund shares.
Shares of the Funds may be sold at any time at the next NAV calculated after
your request to sell in proper form is received by INVESCO. Depending on 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.
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.
REDEMPTION FEE (S&P 500 INDEX FUND ONLY). If you exchange or redeem shares
of S&P 500 Index Fund after holding them three months or less (other than shares
acquired through reinvestment of dividends or other distributions), a fee of 1%
of the current net asset value of the shares being exchanged or redeemed will be
assessed and retained by the Fund for the benefit of the remaining shareholders.
This fee is intended to encourage long-term investment in S&P 500 Index Fund, to
avoid transactions and other expenses caused by early redemptions, and to
facilitate portfolio management. This fee may be waived at the discretion of
INVESCO. This fee is not a deferred sales charge, is not a commission paid to
INVESCO, and does not benefit INVESCO in any way. The fee applies to redemptions
from the S&P 500 Index Fund and exchanges into any of the other no-load mutual
funds which are also advised by INVESCO and distributed by IDI. S&P 500 Index
Fund 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 three months, the redemption/ exchange fee will be assessed on the
current net asset value of those shares.
<PAGE>
- --------------------------------------------------------------------------------
Method Investment Minimum Please Remember
- --------------------------------------------------------------------------------
BY TELEPHONE $250 (or, if less, INVESCO's telephone
Call us toll-free at: full liquidation of redemption privileges
1-800-825-8085 the account) for a may be modified or
redemption check; terminated in the
$1,000 for a wire to future at INVESCO's
your bank of record. discretion.
The maximum amount
which may be redeemed
by telephone is
generally $25,000.
- --------------------------------------------------------------------------------
IN WRITING Any amount. The
Mail your request to redemption request
INVESCO Funds Group, must be 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
courier to 7800 E. records,
Union Ave., or to a bank
Denver, CO 80237. designated by you
in writing.
- --------------------------------------------------------------------------------
BY TELEPHONE WITH ACH $50.
Call 1-800-525-8085
to request your
redemption. INVESCO
will automatically
pay the proceeds into
your designated bank
account.
- --------------------------------------------------------------------------------
BY EXCHANGE $1,000 to open a new See "Exchange Policy."
Between two INVESCO account; $50 for
funds. Call written requests to
1-800-525-8085 for purchase additional
prospectuses of other shares for an
INVESCO funds. existing account.
Exchanges may be made (The exchange
by phone or at our minimum is $250 for
Web site at exchanges requested
www.invesco.com. You by telephone.)
may also establish an S&P 500 Index Fund -
automatic monthly $5,000 to open a new
exchange service account; $2,000 for
between two INVESCO IRAs; $1,000 for
funds; call us for written requests to
further details and purchase additional
the correct form. shares for an
existing account.
(The exchange minimum
is $1,000 for
purchases requested
by telephone.)
- --------------------------------------------------------------------------------
<PAGE>
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 with signature
Funds Group, Inc., guarantees from an
P.O. Box eligible guarantor
173706, Denver, CO financial
80217-3706. institution, such as
a commercial bank or
a recognized national
or regional securities
firm.
[GRAPH ICON] TAXES
TO AVOID BACKUP WITHHOLDING, BE SURE WE HAVE YOUR CORRECT SOCIAL SECURITY OR
TAXPAYER IDENTIFICATION NUMBER.
Everyone's tax status is unique. We encourage you to consult your own tax
adviser on the tax impact to you of investing in the Funds.
Each Fund 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
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).
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, S&P 500 Index and Value Equity
Funds, or at such other times as the Funds may elect.
A Fund also realizes capital gains and losses when it sells securities in its
portfolio for more or less than it 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.
Under present federal income tax laws, capital gains may be taxable at
different rates, depending on how long a Fund has held the underlying
<PAGE>
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 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,
you may wind up "buying a dividend." 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
(For a Fund Share Outstanding Throughout Each Period)
The following information has been audited by PricewaterhouseCoopers LLP,
independent accountants. This information should be read in conjunction with the
audited financial statements and the Report of Independent Accountants thereon
appearing in the Company's 1999 Annual Report to Shareholders. Both are
available without charge by contacting IDI at the address or telephone number on
the back cover of this Prospectus. The Annual Report also contains information
about the Funds' performance.
<TABLE>
<CAPTION>
PERIOD
ENDED
JULY 31 YEAR ENDED AUGUST 31
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
BLUE CHIP GROWTH FUND 1999(a) 1998 1997 1996 1995 1994
PER SHARE DATA $ 6.06 $ 5.44 $ 5.33 $ 5.34 $ 5.28
Net Asset Value
Beginning of Period
- ----------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT 0.02 0.01 0.03 0.05 0.03
OPERATIONS
Net Investment Income
Net Gains on Securities 0.69 1.39 0.95 0.49 0.11
(Both Realized and
Unrealized)
- ----------------------------------------------------------------------------------------------
TOTAL FROM INVESTMENT 0.71 1.40 0.98 0.54 0.14
OPERATIONS
- ----------------------------------------------------------------------------------------------
Less Distributions
Dividends from Net 0.02 0.01 0.03 0.05 0.03
Investment Income(b)
Distributions from 1.60 0.77 0.84 0.50 0.05
Capital Gains
- ----------------------------------------------------------------------------------------------
Total Distributions 1.62 0.78 0.87 0.55 0.08
- ----------------------------------------------------------------------------------------------
Net Asset Value End of $ 5.15 $ 6.06 $ 5.44 $ 5.33 $ 5.34
Period
==============================================================================================
TOTAL RETURN 13.42% 28.14% 20.23% 12.05% 2.52%
RATIOS
Net Assets - End of Period $747,739 $709,220 $596,726 $501,285 $488,411
($000 Omitted)
Ratio of Expenses to 1.04%(c) 1.07%(c) 1.05%(c) 1.06% 1.03%
Average Net Assets (b)
Ratio of Net Investment 0.37% 0.22% 0.64% 1.07% 0.47%
Income to Average Net Assets
Portfolio Turnover Rate 153% 286% 207% 111% 63%
(a) For the period September 1, 1998 through July 31, 1999.
(b) Distributions in excess of net investment income for the year ended August
31, 1995, aggregated less than $0.01 on a per share basis.
(c) Ratio is based on Total Expenses of the Fund, which is before any expense
offset arrangements.
</TABLE>
<PAGE>
FINANCIAL HIGHLIGHTS (CONTINUED)
(For a Fund Share Outstanding Throughout Each Period)
<TABLE>
<CAPTION>
PERIOD ENDED
JULY 31(a) YEAR ENDED APRIL 30
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
DYNAMICS FUND 1999 1999 1998 1997 1996 1995
PER SHARE DATA
Net Asset Value $16.41 $12.02 $13.61 $11.38 $10.15
Beginning of Period
- ----------------------------------------------------------------------------------------------
INCOME FROM
INVESTMENT OPERATIONS
Net Investment 0.00 (0.05) (0.04) 0.02 0.03
Income (Loss)(b)
Net Gains or Losses
on Securities
(Both Realized 3.04 6.39 (0.19) 3.94 1.34
and Unrealized)
- ----------------------------------------------------------------------------------------------
TOTAL FROM INVESTMENT 3.04 6.34 (0.23) 3.96 1.37
OPERATIONS
- ----------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS
Dividends from Net 0.00 0.00 0.00 0.02 0.03
Investment Income(c)
Distributions from 1.30 1.95 1.36 1.71 0.11
Capital Gains
- ----------------------------------------------------------------------------------------------
TOTAL DISTRIBUTIONS 1.30 1.95 1.36 1.73 0.14
- ----------------------------------------------------------------------------------------------
Net Asset Value - $18.15 $16.41 $12.02 $13.61 $11.38
End of Period
==============================================================================================
TOTAL RETURN 20.83% 56.42% (2.34%) 36.32% 13.57%
RATIOS
Net Assets - End of Period
($000 Omitted) $2,044,321 $1,340,299 $762,396 $778,416 $421,600
Ratio of Expenses to
Average Net Assets 1.05%(d) 1.08%(d) 1.16%(d) 1.14%(d) 1.20%(e)
Ratio of Net
Investment Income
(Loss) to Average (0.41%) (0.43%) (0.31%) 0.16% 0.33%(e)
Net Assets
Portfolio Turnover Rate 129% 178% 204% 196% 176%
(a) For the period May 1, 1999 through July 31, 1999.
(b) Net Investment Income (Loss) aggregated less than $0.01 on a per share basis
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) Ratio is based on Total Expenses of the Fund, which is before any expense
offset arrangements.
(e) Various expenses of the Fund were voluntarily absorbed by IFG 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%.
</TABLE>
<PAGE>
FINANCIAL HIGHLIGHTS (CONTINUED)
(For a Fund Share Outstanding Throughout Each Period)
PERIOD ENDED PERIOD ENDED
JULY 31, 1999(a) APRIL 30, 1999(b)
- --------------------------------------------------------------------------------
ENDEAVOR FUND
PER SHARE DATA $10.00
Net Asset Value - Beginning of
Period
- --------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS (0.03)
Net Investment Loss
Net Loss on Securities (Both 6.35
Realized and Unrealized)
- --------------------------------------------------------------------------------
TOTAL FROM INVESTMENT OPERATIONS 6.32
- --------------------------------------------------------------------------------
Net Asset Value End of Period $16.32
================================================================================
TOTAL RETURN 63.20%(c)
RATIOS
Net Assets - End of Period ($000 $72,592
Omitted)
Ratio of Expenses to Average Net 1.43%(e)
Assets(d)
Ratio of Net Investment Loss to (0.55%)(e)
Average Net Assets
Portfolio Turnover Rate 107%(e)
(a) For the period May 1, 1999 through July 31, 1999.
(b) From October 28, 1998, commencement of investment operations, to April 30,
1999.
(c) Based on operations for the period shown and, accordingly, is not
representative of a full year.
(d) Ratio is based on Total Expenses of the Fund, which is before any expense
offset arrangements.
(e) Annualized
<PAGE>
FINANCIAL HIGHLIGHTS (CONTINUED)
(For a Fund Share Outstanding Throughout Each Period)
PERIOD ENDED PERIOD ENDED
JULY 31, 1999(a) APRIL 30, 1999(b)
- --------------------------------------------------------------------------------
GROWTH & INCOME FUND
PER SHARE DATA $10.00
Net Asset Value - Beginning of
Period
- --------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
Net Investment Loss (c) 0.00
Net Gains on Securities (Both 5.22
Realized and Unrealized)
- --------------------------------------------------------------------------------
TOTAL FROM INVESTMENT OPERATIONS 5.22
- --------------------------------------------------------------------------------
Less Distributions
Distributions from Capital Gains 0.68
- --------------------------------------------------------------------------------
Net Asset Value - End of Period $14.54
================================================================================
TOTAL RETURN 53.07%(d)
RATIOS $53,994
Net Assets - End of Period ($000
Omitted)
Ratio of Expenses to Average Net Assets (e) (f) 1.52%(g)
Ratio of Net Investment Loss to Average
Net Assets (f) (0.25%)(g)
Portfolio Turnover Rate 121%(d)
(a) For the period May 1, 1999 through July 31, 1999.
(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
period ended 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
period ended April 30, 1999. If such expenses had not been
voluntarily absorbed, ratio of expenses to average net assets would
have been 1.71%(annulaized) and the ratio of net investment income to
average net assets would have been (0.44%) (annualized).
(g) Annualized
<PAGE>
FINANCIAL HIGHLIGHTS (CONTINUED)
(For a Fund Share Outstanding Throughout Each Period)
<TABLE>
<CAPTION>
PERIOD
ENDED
JULY 31 YEAR ENDED MAY 31
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1999(a) 1999 1998 1997 1996 1995
SMALL COMPANY GROWTH FUND
PER SHARE DATA $11.90 $12.82 $14.38 $9.37 $11.40
Net Asset Value -
Beginning of Period
- ---------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT
OPERATIONS
Net Investment Income 0.00 (0.06) (0.07) (0.06) 0.04
(Loss)(b)
Net Gains or (Losses) on 1.35 2.56 (0.96) 5.25 0.46
Securities (Both
Realized and Unrealized)
- ---------------------------------------------------------------------------------------------------------
TOTAL FROM INVESTMENT 1.35 2.50 (1.03) 5.19 0.50
OPERATIONS
- ---------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS
Dividends from Net 0.00 0.00 0.00 0.00 0.04
Investment Income
Distributions from 1.17 3.42 0.53 0.18 2.49
Capital Gains
- ---------------------------------------------------------------------------------------------------------
Total Distributions 1.17 3.42 0.53 0.18 2.53
- ---------------------------------------------------------------------------------------------------------
Net Asset Value - End of $12.08 $11.90 $12.82 $14.38 $9.37
Period
=========================================================================================================
TOTAL RETURN 12.91% 22.65% (7.08) 55.78% 4.98%
RATIOS
Net Assets - End of Period $318,109 $272,619 $294,259 $370,029 $153,727
($000 Omitted)
Ratio of Expenses to 1.51%(d) 1.48%(d) 1.52%(d) 1.48%(d 1.49%
Average Net Assets(c)
Ratio of Net Investment Income (0.58%) (0.42%) (0.55%) (0.78%) 0.41%
(Loss) to Average Net Assets
Portfolio Turnover Rate 203% 158% 216% 221% 228%
(a) For the period June 1, 1999 through July 31, 1999.
(b) Net investment income (loss) for the year ended May 31, 1999 aggregated less
than $0.01 on a per share basis.
(c) Various expenses of the Fund were voluntarily absorbed by INVESCO 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 1.59%, 1.54% and 1.52%, respectively, and ratio of net
investment income(loss) to average net assets would have been (0.66%),
(0.57%) and 0.38%, respectively.
(d) Ratio is based on Total Expenses of the Fund, less Expenses Absorbed by
Investment Adviser, if applicable, which is before any expense
offset arrangements.
</TABLE>
<PAGE>
FINANCIAL HIGHLIGHTS (CONTINUED)
(For a Fund Share Outstanding Throughout Each Period)
YEAR ENDED JULY 31, 1999 PERIOD ENDED JULY 31, 1998(a)
- --------------------------------------------------------------------------------
CLASS II CLASS II
S&P 500 INDEX FUND CLASS II
PER SHARE DATA $10.00
Net Asset Value -
Beginning of Period
- --------------------------------------------------------------------------------
INCOME FROM INVESTMENT
OPERATIONS
Net Investment Income 0.07
Net Gains on Securities 2.14
(Both Realized and Unrealized)
- --------------------------------------------------------------------------------
Total from Investment 2.21
Operations
- --------------------------------------------------------------------------------
LESS DISTRIBUTIONS FROM 0.07
NET INVESTMENT INCOME
- --------------------------------------------------------------------------------
Net Asset Value - End of $12.14
Period
================================================================================
TOTAL RETURN(b) 22.11%(c)
RATIOS
Net Assets - End of Period ($000 Omitted) $15,065
Ratio of Expenses to
Average Net Assets(d)(e) 0.62%(f)
Ratio of Net Investment
Income to Average Net Assets (e) 1.52%(f)
Portfolio Turnover Rate 0%(c)(g)
(a) From December 23, 1997, commencement of investment operations, to July 31,
1998.
(b) The applicable redemption fees are not included in the Total Return
calculation.
(c) Based on operations for the period shown and, accordingly, are not
representative of a full year.
(d) Ratio is based on Total Expenses of the Fund, less Expenses Absorbed by
Investment Adviser, which is before any expense offset arrangements.
(e) Various expenses of the Fund were voluntarily absorbed by INVESCO for the
period ended July 31, 1998. If such expenses had not been
voluntarily absorbed, Ratio of Expenses to Average Net Assets would
have been 1.71%(annualized) and Ratio of Net Investment Income (Loss) to
Average Net Assets would have been 0.42% (annualized).
(f) Annualized.
(g) Portfolio Turnover Rate calculated to less than 0.10% for the period ended
July 31, 1998.
<PAGE>
FINANCIAL HIGHLIGHTS (CONTINUED)
(For a Fund Share Outstanding Throughout Each Period)
<TABLE>
<CAPTION>
PERIOD
ENDED
JULY 31 YEAR ENDED AUGUST 31
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1999 1998 1997 1996 1995 1994
VALUE EQUITY FUND
PER SHARE DATA
- -----------------------------------------------------------------------------------------
Net Asset Value - $28.30 $22.24 $19.53 $18.12 $17.79
Beginning of Period
- -----------------------------------------------------------------------------------------
INCOME FROM INVESTMENT
OPERATIONS
Net Investment Income 0.26 0.35 0.35 0.39 0.36
Net Gains or (Losses) (0.43) 6.62 3.09 2.58 1.20
on Securities (Both
Realized and Unrealized)
- -----------------------------------------------------------------------------------------
TOTAL FROM INVESTMENT (0.17) 6.97 3.44 2.97 1.56
OPERATIONS
- -----------------------------------------------------------------------------------------
LESS DISTRIBUTIONS
Dividends from Net 0.26 0.35 0.35 0.39 0.31
Investment Income
In Excess of Net 0.00 0.00 0.00 0.00 0.04
Investment Income(c)
Distributions from 2.19 0.56 0.38 1.17 0.88
Capital Gains
- -----------------------------------------------------------------------------------------
TOTAL DISTRIBUTIONS 2.45 0.91 0.73 1.56 1.23
- -----------------------------------------------------------------------------------------
Net Asset Value - End of $25.68 $28.30 $22.24 $19.53 $18.12
Period
=========================================================================================
TOTAL RETURN (1.06%) 32.04% 17.77% 17.84% 9.09%
RATIOS
Net Assets - End of $349,984 $369,766 $200,046 $153,171 $111,850
Period ($000 Omitted)
Ratio of Expenses to 1.15%(b) 1.04%(b) 1.01%(b) 0.97% 1.01%
Average Net Assets(a)
Ratio of Net Investment 0.86% 1.35% 1.64% 2.17% 1.80%
Income to Average Net
Assets(a)
Portfolio Turnover Rate 48% 37% 27% 34% 53%
(a) Ratio is based on Total Expenses of the Fund, less Expenses Absorbed by
Investment Adviser, if applicable, which is before any expense
offset arrangements.
(b) Various expenses of the Fund were voluntarily absorbed by INVESCO 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 1.19%, and the Ratio of Net Investment Income to Average Net
Assets would have been 0.82%.
(c) Distributions of Excess of Net Investment Income for the year ended August
31, 1998, aggregated less than $0.01 on a per share basis.
</TABLE>
<PAGE>
August 31, 1999
INVESCO STOCK FUNDS, INC.
INVESCO BLUE CHIP GROWTH FUND
INVESCO DYNAMICS FUND
INVESCO ENDEAVOR FUND
INVESCO GROWTH & INCOME FUND
INVESCO SMALL COMPANY GROWTH FUND
INVESCO S&P 500 INDEX FUND - CLASS II
INVESCO VALUE EQUITY FUND
You may obtain additional information about the Funds from several sources:
FINANCIAL REPORTS. Although this Prospectus describes the Funds'
anticipated investments and operations, the Funds also prepare annual and
semiannual reports that detail the Funds' actual investments at the report date.
These reports include discussion of each Fund's recent performance, as well as
market and general economic trends affecting each Fund's performance. The annual
report also includes the report of the Funds' independent accountants.
STATEMENT OF ADDITIONAL INFORMATION. The SAI dated August 31, 1999 is a
supplement to this Prospectus and has detailed information about the Funds and
their investment policies and practices. A current SAI for the Funds is on file
with the Securities and Exchange Commission and is incorporated in this
Prospectus by reference; in other words, the SAI is legally a part of this
Prospectus, and you are considered to be aware of the contents of the SAI.
INTERNET. The current Prospectus of the Funds may be accessed through the
INVESCO Web site at www.invesco.com. In addition, the Prospectus, annual report,
semiannual report and SAI of the Funds are available on the SEC Web site at
www.sec.gov.
To obtain a free copy of the current annual report, semiannual report or
SAI, write to INVESCO Distributors, Inc., P.O. Box 173706, Denver, Colorado
80217-3706; or call 1-800-525-8085. Copies of these materials are also available
(with a copying charge) from the SEC's Public Reference Section at 450 Fifth
Street, N.W., Washington, D.C. Information on the Public Reference Section can
be obtained by calling 1-800-SEC-0330. The SEC file numbers for the Funds are
811-1474 and 002-26125.
811-1474
<PAGE>
PROSPECTUS | AUGUST 31, 1999
- -------------------------------------------------------------------------------
YOU SHOULD KNOW WHAT INVESCO KNOWS (TM)
- -------------------------------------------------------------------------------
INVESCO STOCK FUNDS, INC.
INVESCO S&P 500 INDEX FUND -- CLASS I
A NO-LOAD MUTUAL FUND SEEKING LONG-TERM CAPITAL APPRECIATION.
TABLE OF CONTENTS
Investment Goals And Strategies......................33
Fund Performance.....................................34
Fees And Expenses....................................34
Investment Risks.....................................35
Risks Associated With Particular Investments.........36
Temporary Defensive Positions........................38
Fund Management......................................38
Portfolio Managers...................................38
Potential Rewards....................................39
Share Price..........................................39
How To Buy Shares....................................40
Your Account Services................................42
How To Sell Shares...................................43
Taxes................................................45
Dividends And Capital Gain Distributions.............45
Financial Highlights.................................47
[INVESCO ICON]
INVESCO
The Securities and Exchange Commission has not approved or disapproved the
shares of the Fund. Likewise, the Commission has not determined if this
Prospectus is truthful or complete. Anyone who tells you otherwise is
committing a federal crime.
<PAGE>
THIS PROSPECTUS WILL TELL YOU MORE ABOUT:
[KEY ICON] Investment Objectives & Strategies
[ARROW ICON] Potential Investment Risks
[GRAPH ICON] Past Performance & Potential Advantages
[INVESCO ICON] Working With INVESCO
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[KEY ICON] INVESTMENT GOALS AND STRATEGIES
FOR MORE DETAILS ABOUT THE FUND'S CURRENT INVESTMENTS AND MARKET OUTLOOK, PLEASE
SEE THE MOST RECENT ANNUAL OR SEMIANNUAL REPORT.
INVESCO Funds Group, Inc. ("INVESCO") is the investment adviser for the
Fund. Together with our affiliated companies, we at INVESCO control all aspects
of the management and sale of the Fund.
The Fund seeks price performance and income comparable to the Standard &
Poor's 500 Composite Stock Price Index ("S&P 500" or "Index"). The Fund invests
in the stocks that make up the Index, in approximately the same proportions. The
Fund is not sponsored, endorsed, sold or promoted by S&P. S&P makes no
representation or warranty, express or implied, to the shareholders or the
general public regarding the advisibility of investing in the Fund or the
ability of the S&P 500 to track general stock performance. S&P has no direct
relationship with the Fund other than the licensing of certain trademarks and
trade names of S&P and the S&P 500 Index which is composed by S&P without regard
to the Fund. 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 in 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.
[ARROW ICON] The Fund is not actively managed; instead, the Fund seeks to
track the performance of the S&P 500. Therefore, when the S&P 500 drops, the
value of shares of the Fund drops accordingly. The Fund makes no effort to hedge
against price movements in the S&P 500. Due to purchases and sales of portfolio
securities to meet investor purchases and redemptions, the Fund will not have a
100% correlation to the performance of the performance of the Index. However,
under normal circumstances, the Fund expects to have at least a 95% correlation
to the composition of the S&P 500.
<PAGE>
[GRAPH ICON] FUND PERFORMANCE
The bar chart below shows the Fund's actual yearly performance for the
years ended December 31 (commonly known as its "total return") over the
past decade. The Fund charges no sales loads that would affect total return
computation. However, total return computation may be affected as a result
of the redemption or exchange fee retained by the Fund to offset
transactions costs and other expenses associated with short-term
redemptions and exchanges. A 1% fee is charged on redemptions or exchanges
of shares held three months or less. The table below shows average annual
returns for various periods ended December 31, 1998 for the Fund compared
to the ____________ Index. The information in the chart and table
illustrates the variability of the Fund's returns and how its performance
compared to a broad measure of market performance. The bar chart provides
some indication of the risks of investing in the Fund by showing changes in
the year to year performance of the Fund. Remember, past performance does
not indicate how the Fund will perform in the future.1
[INSERT FUND PERFORMANCE]
FEES AND EXPENSES
SHAREHOLDER FEES PAID DIRECTLY FROM YOUR ACCOUNT
This table describes the fees and expenses that you may pay if you buy
and hold shares of the Fund:
Shareholder Fees (fees paid directly from your investment)
Redemption Fee (as a percentage of amount redeemed) 1.00%*
* The Fund retains a fee to offset transaction costs and other expenses
associated with short-term redemptions and exchanges from the Fund. A 1% fee
shall be imposed on redemptions or exchanges held three months or less. This fee
may be waived at the discretion of INVESCO.
ANNUAL FUND OPERATING EXPENSES THAT ARE DEDUCTED FROM FUND ASSETS
S&P 500 INDEX FUND -- CLASS I
Management Fees ___%
Distribution and Service (12b-1) Fees None
Other Expenses(1)(2) ____%
Total Annual Fund Operating ____%
Expenses(1)(2)(3)
(1)The Fund's Actual Total Annual Fund Operating Expenses were lower than
the figures shown, because its ______________________________ fees were
reduced under expense offset arrangements. Because of an SEC
requirement, the figures shown do not reflect these reductions.
(2)The expense information presented in the table has been restated to
reflect a change in the administrative services fee.
(3)Certain expenses of the Fund are being absorbed by INVESCO pursuant to
a commitment to the Fund. After absorption, the Fund's "Other Expenses"
and "Total Annual Fund Operating Expenses" were ____% and ____%,
respectively. This commitment may be changed at any time following
consultation with the board of directors.
<PAGE>
INVESCO has agreed to voluntarily absorb certain expenses of S&P 500 Index
Fund Class I so that the Fund's total operating expenses (excluding excess
Amounts that have been offset by the expense offset arrangements described
above) do not exceed 0.35% of the Fund's average net assets (0.30% prior to May
13, 1999. This commitment may be changed at any time following consultation with
the board of directors.
EXAMPLE
This Example is intended to help you compare the cost of investing
in the Fund to the cost of investing in other mutual funds.
The Example assumes that you invested $10,000 in the Fund for the time
periods indicated and redeemed all of your shares at the end of each period. The
Example also assumes that your investment had a hypothetical 5% return each
year, and assumes that the Fund's expenses remained the same. Although the
Fund's actual costs and performance may be higher or lower, based on these
assumptions your costs would have been:
1 year 3 years 5 years 10 years
$----- $----- $----- $-----
[ARROW ICON] INVESTMENT RISKS
BEFORE INVESTING IN THE FUND, YOU SHOULD DETERMINE THE LEVEL OF RISK WITH WHICH
YOU ARE COMFORTABLE. TAKE INTO ACCOUNT FACTORS LIKE YOUR AGE, CAREER, INCOME
LEVEL, AND TIME HORIZON.
You should determine the level of risk with which you are comfortable
before you invest. The principal risks of investing in any mutual fund,
including the Fund, are:
NOT INSURED. Mutual funds are not insured by the Federal Deposit Insurance
Corporation ("FDIC") or any other agency, unlike bank deposits such as CDs or
savings accounts.
NO GUARANTEE. No mutual fund can guarantee that it will meet its investment
objectives.
POSSIBLE LOSS OF INVESTMENT. A mutual fund cannot guarantee its
performance, nor assure you that the market value of your investment will
increase. You may lose the money you invest, and the Fund 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 the Fund's underlying investments.
NOT A COMPLETE INVESTMENT PLAN. An investment in any mutual fund does not
constitute a complete investment plan. The Fund is designed to be only a
part of your personal investment plan.
YEAR 2000. Many computer systems in use today may not be able to recognize
any date after December 31, 1999. If these systems are not fixed by that
date, it is possible that they could generate erroneous information or fail
altogether. INVESCO has committed substantial resources in an effort to
make sure that its own major computer systems will continue to function on
and after January 1, 2000. Of course, INVESCO cannot fix systems that are
beyond its control. If INVESCO's own systems, or the systems of third
parties upon which it relies, do not perform properly after December 31,
1999, the Fund could be adversely affected.
<PAGE>
In addition, the markets for, or values of, securities in which the Fund
invests may possibly be hurt by computer failures affecting portfolio
investments or trading of securities beginning January 1, 2000. For example,
improperly functioning 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 Fund's 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
MARKET RISK
Equity stock prices vary and may fall, thus reducing the value of your Fund's
investments. Certain stocks included in the Fund's portfolio may decline in
value more than the overall stock market.
LIQUIDITY RISK
The 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.
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.
OPTIONS AND FUTURES RISK
Options and futures are common types of derivatives that the 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 that
transaction with the Fund.
<PAGE>
- -------------------------------------------------------------------
Investment Risks
- -------------------------------------------------------------------
FUTURES
A futures contract is an agreement to Market, Liquidity and
buy or sell a specific amount of a Options and Futures
financial instrument (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.
- -------------------------------------------------------------------
OPTIONS
The obligation or right to deliver or Credit, Information,
recieve a security or other instrument, Liquidity and Options
index or commodity, or cash payment and Futures Risks
depending on the price of the underlying
security or 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.
- -------------------------------------------------------------------
<PAGE>
[ARROW ICON] TEMPORARY DEFENSIVE POSITIONS
When securities markets or economic conditions are unfavorable or
unsettled, we might try to protect the assets of the 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. We have the right to invest up to 100% of the 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, the Fund's
performance could be comparatively lower if it concentrates in defensive
holdings.
[INVESCO ICON] FUND MANAGEMENT
INVESTMENT ADVISER
INVESCO IS A SUBSIDIARY OF AMVESCAP PLC, AN INTERNATIONAL INVESTMENT MANAGEMENT
COMPANY THAT MANAGES MORE THAN $___ 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 Fund. INVESCO was founded in 1932 and manages over
$_____ billion for more than _______ shareholders of 43 INVESCO mutual funds.
INVESCO performs a wide variety of other services for the Fund, including
administration and transfer agency functions (the processing of purchases, sales
and exchanges of Fund shares).
World Asset Management ("World"), located at 255 Brown Street Centre, 2nd
Floor, Birmingham, Michigan, is the sub-adviser to the Fund. A wholly owned
subsidiary of INVESCO, INVESCO Distributors, Inc. ("IDI") is the Fund's
distributor and is responsible for the sale of the Fund's shares.
INVESCO and IDI are subsidiaries of AMVESCAP PLC. World is a general partnership
organized by Munder Capital Management.
The Fund paid $____________ in advisory fees to INVESCO for its advisory
services in the period May 1, 1999 through July 31, 1999:
[INVESCO ICON] PORTFOLIO MANAGERS
The Fund is managed by a team of World portfolio managers that is
collectively responsible for the investment decisions relating to the Fund.
<PAGE>
[INVESCO ICON] POTENTIAL REWARDS
NO SINGLE FUND SHOULD REPRESENT YOUR COMPLETE INVESTMENT
PROGRAM NOR SHOULD YOU ATTEMPT TO USE THE FUND FOR SHORT-TERM TRADING PURPOSES.
The Fund is offered only to institutional investors and qualified retirement
plans. The Fund offers shareholders the potential to increase the value of their
capital over time. Like most mutual funds, the Fund seeks price performance and
income comparable to the Standard & Poor's 500 Composite Stock Price Index, but
cannot guarantee that performance. The Fund seeks to minimize risk by tracking
general stock performance.
SUITABILITY FOR INVESTORS
Only you can determine if an investment in the Fund is right for you based
upon your own economic situation, the risk level with which you are
comfortable and other factors. In general, the Fund is most suitable for
investors who:
o are willing to grow their capital over the long term
(at least five years).
o understand that shares of the Fund can, and likely
will, have significant 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 Fund 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 the 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. New York time). Therefore, shares of the Fund are not priced on days
when the NYSE is closed, which, generally, is on weekends and national holidays
in the U.S.
NAV is calculated by adding together the current market price of all of the
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 the 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.
<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.
This Fund is offered only to insitutional investors and qualified
retirement plans. This Fund is not available to retail investors.
The following chart shows several convenient ways to invest in the Fund. There
is no charge to invest when you make transactions directly through INVESCO.
There is generally no charge to exchange or redeem shares when you do so
directly through INVESCO. However, upon a redemption or an exchange of shares
held three months or less (other than shares acquired through reinvestment of
dividends or other distributions), a fee of 1% of the current net asset value of
the shares being exchanged will be assessed and retained by the Fund for the
benefit of the remaining shareholders. If you invest in the Fund through a
securities broker, you may be charged a commission or transaction fee for either
purchases or sales of Fund shares. For all new accounts, please send a completed
application form, and specify the fund or funds you wish to purchase.
INVESCO reserves the right to increase, reduce or waive the Fund's minimum
investment requirements in its sole discretion, if it determines this action is
in the best interests of the Fund's shareholders. INVESCO also reserves the
right in its sole discretion to reject any order to buy Fund shares, including
purchases by exchange.
MINIMUM INITIAL INVESTMENT. $250,000.
MINIMUM SUBSEQUENT INVESTMENT. $25,000.
EXCHANGE POLICY. You may exchange your shares in the Fund for those in
another INVESCO mutual fund on the basis of their respective NAVs at the time of
the exchange.
FUND EXCHANGES CAN BE A CONVENIENT WAY FOR YOU TO DIVERSIFY YOUR INVESTMENTS,
OR TO REALLOCATE YOUR INVESTMENTS WHEN YOUR OBJECTIVES CHANGE.
Before making any exchange, be sure to review the prospectuses of the funds
involved and consider the differences between the funds. Also, be certain 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 the Fund per year.
o The Fund reserves the right to reject any exchange request, or to modify
or terminate the exchange policy, 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.
REDEMPTION FEE . If you exchange shares of the Fund after holding them
three months or less (other than shares acquired through reinvestment of
dividends or other distributions), a fee of 1% of the current net asset value of
the shares being exchanged will be assessed and retained by the Fund for the
benefit of the remaining shareholders. This fee is intended to encourage
long-term investment in the Fund, to avoid transaction and other expenses caused
by early redemptions, and to facilitate portfolio management. This fee may be
waived at the discretion of INVESCO. This fee is not a deferred sales charge, is
not a commission paid to INVESCO and does not benefit INVESCO in any way. The
fee applies to redemptions from the Fund and exchanges into any of the other
no-load mutual funds which are also advised by INVESCO and distributed by IDI.
The Fund 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 three months, the redemption/exchange fee will be assessed
on the current net asset value of those shares.
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 the Fund or INVESCO. If
you are already an INVESCO funds shareholder, the Fund may seek reimbursement
for any loss from your existing account(s).
Method Investment Minimum Please Remember
- -------------------------------------------------------------------------------
BY CHECK $250,000 for
Mail to: regular accounts;
INVESCO Funds Group, $25,000 minimum
Inc., for each sub
P.O. Box 173706, sequent investment.
Denver, CO 80217-3706.
You may send your check
by overnight courier to:
7800 E. Union Ave.
Denver, CO 80237.
- -------------------------------------------------------------------------------
BY TELEPHONE OR WIRE $250,000; $25,000 Payment must be
Call 1-800-525-8085 to minimum for each received within 3
request your purchase. subsequent investment. business days, or the
Then send your check transaction may be
by overnight courier cancelled.
to our street address:
7800 E.Union Ave.,
Denver, CO 80237. Or you
may send your payment by
bank wire (call INVESCO
for instructions).
<PAGE>
Method Investment Minimum Please Remember
- -------------------------------------------------------------------------------
BY TELEPHONE WITH ACH $50.
Call 1-800-525-8085 to You must fulfill
request your pur chase. the minimum
INVESCO will move money initial investment
from your designated requirements
bank/credit union check before using this
ing or savings account option
in order to purchase
shares, upon your
telephone instructions,
whenever your wish.
- -------------------------------------------------------------------------------
REGULAR INVESTING WITH Not available to Like all regular
EASIVEST OR DIRECT Class I purchasers investment plans,
PAYROLL PURCHASE or shareholders. neither EasiVest nor
You may enroll on your Direct Payroll Purchase
fund application, ensures a profit
or call us for a or protects against
separate form and loss in a falling
more details. market. Because you'll
Investing the same invest continually,
amount on a monthly regardless of varying
basis allows you to price levels,
buy more shares when consider your financial
prices are low and ability to keep
fewer shares when buying through low
prices are high. This price levels. And
"dollar cost averaging" remember that you will
may help offset market lose money if you
fluctuations. Over redeem your shares
a period of time, your when the market value
average cost per share of all your shares is
may be less than the less than their cost.
actual average price
per share.
- -------------------------------------------------------------------------------
BY PAL(R) $25,000 Be sure to write down
Your "Personal Account the confirma tion
Line" is available number provided by
for subsequent PAL(R). Pay ment must
purchases and exchanges be received within 3
24 hours a day. business days, or the
Simply call transaction may be
1-800-525-8085. cancelled.
- -------------------------------------------------------------------------------
BY EXCHANGE $250,000 to open a See "Exchange Policy."
Between two INVESCO new account;
funds. Call $50,000 for
1-800-525-8085 for written requests
prospectuses of to purchase
other INVESCO funds. additional shares.
Exchanges (The exchange mini
may be made by phone or mum is $1,000 for
at our exchanges
Web site at requested by
www.invesco.com. You telephone.)
may also establish an
automatic
monthly exchange service
between
two INVESCO funds; call
us for further details
and the correct form.
<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 Fund does not issue share certificates.
QUARTERLY INVESTMENT SUMMARIES. Each calendar quarter, you receive a written
statement which consolidates and summarizes account activity and value at the
beginning and end of the period for each of your INVESCO funds.
TRANSACTION CONFIRMATIONS. You receive detailed confirmations of individual
purchases, exchanges and sales. If you choose certain recurring transaction
plans (for instance, EasiVest), your transactions are confirmed on your
quarterly Investment Summaries.
YOU CAN CONDUCT MOST TRANSACTIONS AND CHECK ON YOUR ACCOUNT THROUGH OUR
TOLL-FREE TELEPHONE NUMBER. YOU MAY ALSO ACCESS PERSONAL ACCOUNT INFORMATION AT
OUR WEB SITE, WWW.INVESCO.COM.
TELEPHONE TRANSACTIONS. You may buy, exchange and sell Fund shares by
telephone, unless you specifically decline these privileges when you fill out
the INVESCO new account application.
Unless you decline the telephone transaction privileges, when you fill out
and sign the new account Application, a Telephone Transaction Authorization
Form, or use your telephone transaction privileges, you lose certain rights if
someone gives fraudulent or unauthorized instructions to INVESCO that result in
a loss to you. In general, if INVESCO has followed reasonable procedures, such
as recording telephone instructions and sending written transaction
confirmations, INVESCO is not liable for following telephone instructions that
it believes to be genuine. Therefore, you have the risk of loss due to
unauthorized or fraudulent instructions.
IRAS AND OTHER RETIREMENT PLANS. Shares of any INVESCO mutual fund may be
purchased for IRAs and many other types of tax-deferred retirement plans. Please
call INVESCO for information and forms to establish or transfer your existing
retirement plan or account.
[INVESCO ICON] HOW TO SELL SHARES
TO SELL SHARES AT THAT DAY'S CLOSING PRICE, YOU MUST CONTACT US BEFORE 4:00 P.M.
EASTERN TIME.
The following chart shows several convenient ways to sell your Fund shares.
Shares of the Fund may be sold at any time at the next NAV calculated after your
request to sell in proper form is received by INVESCO. Depending on Fund
performance, the NAV at the time you sell your shares may be more or less than
the price you paid to purchase your shares.
If you own shares in more than one INVESCO fund, please specify the fund
whose shares you wish to sell. Remember that any sale or exchange of shares in a
non-retirement account will likely result in a taxable gain or loss. While
INVESCO attempts to process telephone redemptions promptly, there may be times
particularly in periods of severe economic or market disruption - when you may
experience delays in redeeming shares by phone.
INVESCO usually mails you the proceeds from the sale of fund shares within
seven days after we receive your request to sell in proper form. However,
payment may be postponed under unusual circumstances -- for instance, if normal
trading is not taking place on the NYSE, or during an emergency as defined by
the Securities and Exchange Commission. If your INVESCO fund shares were
purchased by a check which has not yet cleared, payment will be made promptly
when your purchase check does clear; that can take up to 15 days.
<PAGE>
REDEMPTION FEE. If you exchange or redeem shares of the Fund after holding
them three months or less (other than shares acquired through reinvestment of
dividends or other distributions), a fee of 1% of the current net asset value of
the shares being exchanged or redeemed will be assessed and retained by the Fund
for the benefit of the remaining shareholders. This fee is intended to encourage
long-term investment in the Fund, to avoid transactions and other expenses
caused by early redemptions, and to facilitate portfolio management. This fee
may be waived at the discretion of INVESCO. This fee is not a deferred sales
charge, is not a commission paid to INVESCO, and does not benefit INVESCO in any
way. The fee applies to redemptions from the Fund and exchanges into any of the
other no-load mutual funds which are also advised by INVESCO and distributed by
IDI. The Fund 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 three months, the redemption/exchange fee will be
assessed on the current net asset value of those shares.
METHOD INVESTMENT MINIMUM PLEASE REMEMBER
- -------------------------------------------------------------------------------
BY TELEPHONE $1,000 (or, if less, INVESCO's telephone
Call us toll-free at: full liquidation of redemption privileges
1-800-825-8085 the account) for a may be modified or
redemption check; terminated in the
$1,000 for a wire to future at INVESCO's
your bank of record. discretion.
- -------------------------------------------------------------------------------
IN WRITING Any amount. The
Mail your request to redemption request
INVESCO Funds Group, must be 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
courier to 7800 E. records, or to a
Union Ave., bank designated by you
Denver, CO 80237. in writing.
- -------------------------------------------------------------------------------
BY TELEPHONE WITH ACH $50.
Call 1-800-525-8085
to request your
redemption. INVESCO
will automatically
pay the proceeds into
your designated bank
account.
- -------------------------------------------------------------------------------
BY EXCHANGE $250,000 to open a See "Exchange Policy."
Between two INVESCO new account; $1,000
funds. Call to open a new account
1-800-525-8085 for in the other INVESCO
prospectuses of other funds; $1,000 for
INVESCO funds. written requests to
Exchanges may be made purchase additional
by phone or at our shares for an
Web site at existing account.
www.invesco.com. You (The exchange
may also establish an minimum is $250 for
automatic monthly exchanges requested
exchange service by telephone.)
between two INVESCO
funds; call us for
further details and
the correct form.
- -------------------------------------------------------------------------------
<PAGE>
METHOD INVESTMENT MINIMUM PLEASE REMEMBER
- -------------------------------------------------------------------------------
PERIODIC WITHDRAWAL This option is not .
PLAN available to
You may call us to shareholders of the
request the Fund.
appropriate form and
more information at
1-800-525-8085.
- -------------------------------------------------------------------------------
PAYMENT TO THIRD Any amount. All registered
PARTY account owners must
Mail your request to sign the request,
INVESCO with signature
Funds Group, Inc., guarantees from an
P.O. Box eligible guarantor
173706, Denver, CO financial institution,
80217-3706. such as a commercial
bank or a recognized
national or regional
securities firm.
[GRAPH ICON] TAXES
TO AVOID BACKUP WITHHOLDING, BE SURE WE HAVE YOUR CORRECT SOCIAL SECURITY OR
TAXPAYER IDENTIFICATION NUMBER.
Everyone's tax status is unique. We encourage you to consult your own tax
adviser on the tax impact to you of investing in the Fund.
The Fund 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 the Fund's shares that you own. These
distributions are required under federal tax laws governing mutual funds. It is
the policy of the Fund to distribute all investment company taxable income and
net capital gains. As a result of this policy and the Fund's qualification as a
regulated investment company, it is anticipated that the Fund will not pay any
federal income or excise taxes. Instead, the 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 the
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 the 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 or other INVESCO funds.
If you have not provided INVESCO with complete, correct tax information,
the Fund is required by law to withhold 31% of your distributions and any money
that you receive from the sale of shares of the Fund as a backup withholding
tax.
We will provide you with detailed information every year about your
dividends 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 Fund earns ordinary or investment income from dividends and interest on
its investments. The Fund expects to distribute substantially all of this
investment income, less Fund expenses, to shareholders quarterly, or at such
other times as the Fund may elect.
<PAGE>
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).
TAX-EXEMPT ACCOUNTS)
The Fund also realizes capital gains and losses when it sells securities in its
portfolio for more or less than it paid for them. If total gains on sales exceed
total losses (including losses carried forward from previous years), the Fund
has a net realized capital gain. Net realized capital gains, if any, are
distributed to shareholders at least annually, usually in December.
Under present federal income tax laws, capital gains may be taxable at
different rates, depending on how long the 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 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. The Fund's
NAV will drop by the amount of the distribution on the day the distribution is
made. If you buy shares of the Fund just before a distribution, you may wind up
"buying a dividend." 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 the 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
(For a Fund Share Outstanding Throughout Each Period)
The following information has been audited by PricewaterhouseCoopers LLP,
independent accountants. This information should be read in conjunction with the
audited financial statements and the Report of Independent Accountants thereon
appearing in the Company's 1999 Annual Report to Shareholders. Both are
available without charge by contacting IDI at the address or telephone number on
the back cover of this Prospectus. The Annual Report also contains information
about the Fund's performance
YEAR ENDED PERIOD ENDED
JULY 31, 1999 JULY 31, 1998(A)
- -------------------------------------------------------------------------------
S&P 500 INDEX -- CLASS I Class I
PER SHARE DATA
Net Asset Value Beginning of
Period $10.00
- -------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income 0.11
Net Gains on Securities (Both 1.98
Realized and Unrealized)
- -------------------------------------------------------------------------------
TOTAL FROM INVESTMENT OPERATIONS 2.09
- -------------------------------------------------------------------------------
Less Distributions from Net
Investment Income 0.08
- -------------------------------------------------------------------------------
Net Asset ValueEnd of Period $12.01
===============================================================================
TOTAL RETURN(b) 20.93%(c)
RATIOS
Net Assets End of Period ($000
Omitted) $3,259
Ratio of Expenses to Average Net
Assets(d) (e) 0.46%(f)
Ratio of Net Investment Income to
Average Net Assets (e) 1.96%(f)
Portfolio Turnover Rate 0%(c)(g)
(a) From December 23, 1997, commencement of operations, to July 31, 1998. (b)
The applicable redemption fees are not included in the Total Return
calculation.
(c) Based on operations for the period shown and, accordingly, are not
representative of a full year.
(d) Ratio is based on Total Expenses of the Fund, less Expenses Absorbed by
Investment Adviser, which is before any expense offset arrangements.
(e) Various expenses of the Fund were voluntarily absorbed by INVESCO for the
periods ended July 31, 1998. If such expenses had not been voluntarily
absorbed, Ratio of Expenses to Average Net Assets would have been ___% and
2.51% (annualized) and Ratio of Net Investment Income (Loss) to Average Net
Assets would have been ___% and (0.09%) (annualized).
(f) Annualized.
(g) Portfolio Turnover Rate calculated to less than 0.10% for the period ended
July 31, 1998.
<PAGE>
AUGUST 31, 1999
INVESCO STOCK FUNDS, INC.
INVESCO S&P 500 INDEX FUND - CLASS I
You may obtain additional information about the Fund from several sources:
FINANCIAL REPORTS. Although this Prospectus describes the Fund's
anticipated investments and operations, the Fund also prepares annual and
semiannual reports that detail the Fund's actual investments at the report date.
These reports include discussion of the Fund's recent performance, as well as
market and general economic trends affecting the Fund's performance. The annual
report also includes the report of the Fund's independent accountants.
STATEMENT OF ADDITIONAL INFORMATION. The SAI dated August 31, 1999 is a
supplement to this Prospectus and has detailed information about the Fund and
its investment policies and practices. A current SAI for the Fund is on file
with the Securities and Exchange Commission and is incorporated in this
Prospectus by reference; in other words, the SAI is legally a part of this
Prospectus, and you are considered to be aware of the contents of the SAI.
INTERNET. The Prospectus, annual report, semiannual report and SAI of the
Fund are available on the SEC Web site at www.sec.gov.
To obtain a free copy of the current annual report, semiannual report or
SAI, write to INVESCO Distributors, Inc., P.O. Box 173706, Denver, Colorado
80217-3706; or call 1-800-525-8085. Copies of these materials are also available
(with a copying charge) from the SEC's Public Reference Section at 450 Fifth
Street, N.W., Washington, D.C. Information on the Public Reference Section can
be obtained by calling 1-800-SEC-0330. The SEC file numbers for the Fund are
811-1474 and 002-26125.
811-1474
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
INVESCO STOCK FUNDS, INC.
INVESCO Blue Chip Growth Fund
INVESCO Dynamics Fund
INVESCO Endeavor Fund
INVESCO Growth & Income Fund
INVESCO Small Company Growth Fund
INVESCO S&P 500 Index Fund - Classes I and II
INVESCO Value Equity Fund
Address: Mailing Address:
7800 E. Union Ave., Denver, CO 80237 P.O. Box 173706, Denver, CO 80217-3706
Telephone:
In continental U.S., 1-800-525-8085
August 31, 1999
- ------------------------------------------------------------------------------
A Prospectus for INVESCO Blue Chip Growth, INVESCO Dynamics, INVESCO Endeavor,
INVESCO Growth & Income, INVESCO Small Company Growth, INVESCO S&P 500 Index -
Class II and INVESCO Value Equity Funds dated August 31, 1999, and a Prospectus
for INVESCO S&P 500 Index Fund Class I dated August 31, 1999, 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 semi-annual 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 , Dynamics,
Endeavor, Growth & Income, Small Company Growth, S&P 500 Index - Class II and
Value Equity Funds are also available through the INVESCO web site at
www.invesco.com.
<PAGE>
TABLE OF CONTENTS
The Company . . . . . . . . . . .........................57
Investments, Policies and Risks . . . . . . . . . . . . .57
Management of the Funds . . . . . . . . . . . . . . . . .74
Other Service Providers . . . . . . . . . . . . . . . . ..96
Brokerage Allocation and Other Practices . . . . . . . . .96
Capital Stock . . . . . . . . . . . . . . . . . . . . . ..98
Tax Consequences of Owning Shares of a Fund . . ... . . ..99
Performance . . . . . . . . . . . . . . . . . . .. . . .101
Financial Statements. . . . . . . . . . . . . . . . . . .102
Appendix A ..............................................103
<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 - Classes I and II, 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, no-load management investment company
currently consisting of seven portfolios of investments: INVESCO Blue Chip
Growth Fund, INVESCO Dynamics Fund, INVESCO Endeavor Fund, INVESCO Growth &
Income Fund, INVESCO Small Company Growth Fund, INVESCO S&P 500 Index Fund -
Classes I and II and INVESCO Value Equity Fund (the "Funds"). Additional funds
may be offered in the future.
"Open-end" means that each Fund issues an indefinite number of shares which it
continuously offers to redeem at net asset value per share ("NAV"). A
"management" investment company actively buys and sells securities for each
portfolio at the direction of a professional manager. Open-end management
investment companies (or one or more series of such companies, such as the
Funds) are commonly referred to as mutual funds. The Funds do not charge sales
fees to purchase their shares. However, the Funds, with the exception of S&P 500
Index Fund - Class I, do pay a 12b-1 distribution fee which is computed and paid
monthly at an annual rate of 0.25% of each Fund's average net assets.
INVESTMENT, POLICIES AND RISK
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 underlying foreign securities, ADRs generally have the
same risks as investing directly in the underlying foreign securities.
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. A
Fund's adviser will consider the creditworthiness of the institution issuing the
letter of credit, as well as the creditworthiness of the issuer of the
commercial paper, when purchasing paper enhanced by a letter of credit.
Commercial paper is sold either as interest-bearing or on a discounted basis,
with maturities not exceeding 270 days.
<PAGE>
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 Standard & Poor's ("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, each Fund's investment adviser will limit Fund investments to debt
securities which the adviser 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
market for lower-rated straight debt securities may not be as liquid as the
market for higher-rated straight debt securities. Therefore, a Fund's investment
adviser 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.
<PAGE>
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.
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.
<PAGE>
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
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 -- The Funds, except S&P 500 Index Fund, may invest in 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.
<PAGE>
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.
ILLIQUID SECURITIES -- The Funds, except S&P 500 Index Fund, may invest in
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 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 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.
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
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.
<PAGE>
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.
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.
FUTURES, OPTIONS AND OTHER FINANCIAL INSTURMENTS
GENERAL. As discussed in the Prospectus, 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 the Funds' 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.
<PAGE>
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 the Funds."
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.
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 the Funds. 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.
<PAGE>
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. The Funds 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 differences 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.
(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.
<PAGE>
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.
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, guarantee 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 of the transaction.
<PAGE>
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
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.
<PAGE>
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.
OTC Options. Unlike exchange-traded options, whixh 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 payments. 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.
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.
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.
<PAGE>
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.
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.
<PAGE>
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.
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.
<PAGE>
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.
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.
REITS -- Real Estate Investment Trusts are investment trusts that invest
primarily in real estate and securities of businesses connected to the real
estate industry.
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, treasury notes, and treasury bonds. Treasury bills have a maturity of one
year or less. Treasury notes generally have a maturity of one to ten years, and
treasury bonds generally have maturities of more than ten years.
U.S. government debt securities also include securities issued or guaranteed by
agencies or instrumentalities of the U.S. government. Some obligations of United
States government agencies, which are established under the authority of an act
of Congress, such as Government National Mortgage Association ("GNMA")
participation certificates, are supported by the full faith and credit of the
United States Treasury. GNMA Certificates are mortgage-backed securities
representing part ownership of a pool of mortgage loans. These loans -- issued
by lenders such as mortgage bankers, commercial banks and savings and loan
associations -- are either insured by the Federal Housing Administration or
guaranteed by the Veterans Administration. A "pool" or group of such mortgages
is assembled and, after being approved by GNMA, is offered to investors through
securities dealers. Once approved by GNMA, the timely payment of interest and
principal on each mortgage is guaranteed by GNMA and backed by the full faith
and credit of the U.S. government. The market value of GNMA Certificates is not
guaranteed. GNMA Certificates are different from bonds because principal is paid
back monthly by the borrower over the term of the loan rather than returned in a
lump sum at maturity, as is the case with a bond. GNMA Certifi
<PAGE>
cates are called "pass-through" securities because both interest and principal
payments (including prepayments) are passed through to the holder of the GNMA
Certificate.
Other United States government debt securities, such as securities of the
Federal Home Loan Banks, are supported by the right of the issuer to borrow from
the Treasury. Others, such as bonds issued by Fannie Mae, a federally chartered
private corporation, are supported only by the credit of the corporation. In the
case of securities not backed by the full faith and credit of the United States,
a Fund must look principally to the agency issuing or guaranteeing the
obligation in the event the agency or instrumentality does not meet its
commitments. A Fund will invest in securities of such instrumentalities only
when 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 Comapny 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. 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;
<PAGE>
4. borrow money, except that the Fund may borrow money in an amount not
exceeding 33 1/3% of its total assets (including the amount borrowed) less
liabilities (other than borrowings);
5. issue senior securities, except as permitted under the Investment Company Act
of 1940;
6. lend any security or make any loan if, as a result, more than 33 1/3% of its
total assets would be lent to other parties, but this limitation does not apply
to the purchase of debt securities or to repurchase agreements;
7. purchase or sell physical commodities; however, this policy shall not prevent
the Fund from purchasing and selling foreign currency, futures contracts,
options, forward contracts, swaps, caps, floors, collars and other financial
instruments; or
8. purchase or sell real estate unless acquired as a result of ownership of
securities or other instruments (but this shall not prevent the Fund from
investing in securities or other instruments backed by real estate or securities
of companies engaged in the real estate business).
9. Each Fund may, notwithstanding any other fundamental investment policy or
limitation, invest all of its assets in the securities of a single open-end
management investment company managed by INVESCO Funds Group, Inc. or an
affiliate or a successor thereof, with substantially the same fundamental
investment objective, policies and limitations as the Fund.
In addition, each Fund has the following non-fundamental policies, which may be
changed without shareholder approval:
A. The Fund may not sell securities short (unless it owns or has the right to
obtain securities equivalent in kind and amount to the securities sold short) or
purchase securities on margin, except that (i) this policy does not prevent the
Fund from entering into short positions in foreign currency, futures contracts,
options, forward contracts, swaps, caps, floors, collars and other financial
instruments, (ii) the Fund may obtain such short-term credits as are necessary
for the clearance of transactions, and (iii) the Fund may make margin payments
in connection with futures contracts, options, forward contracts, swaps, caps,
floors, collars and other financial instruments.
B. The Fund may borrow money only from a bank or from an open-end management
investment company managed by INVESCO Funds Group, Inc. or an affiliate or a
successor thereof for temporary or emergency purposes (not for leveraging or
investing) or by engaging in reverse repurchase agreements with any party
(reverse repurchase agreements will be treated as borrowings for purposes of
fundamental limitation (4)).
C. The Fund does not currently intend to purchase any security if, as a result,
more than 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:
<PAGE>
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 Funds Group, Inc., a Delaware corporation ("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.
INVESCO Sector Funds, Inc. (formerly, INVESCO Strategic Portfolios, Inc.)
INVESCO Specialty Funds, Inc.
INVESCO Stock Funds, Inc. (formerly, INVESCO Equity Funds, Inc.)
INVESCO Tax-Free Income Funds, Inc.
INVESCO Treasurer's Series Funds, Inc. (formerly, INVESCO Treasurer's
Series Trust)
INVESCO Variable Investment Funds, Inc.
As of July 31, 1999, INVESCO managed 10 mutual funds having combined assets of
$_____ billion, consisting of 43 separate portfolios, 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 $___ 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, through
INVESCO, complete transfer agency functions: correspondence, sub-accounting,
telephone communications and processing of distributions.
<PAGE>
INVESCO Capital Management, Inc., Atlanta, Georgia, manages institutional
investment portfolios, consisting primarily of discretionary employee
benefit plans for corporations and state and local governments, and
endowment funds.
INVESCO Management & Research, Inc., Boston, Massachusetts, primarily
manages pension and endowment accounts.
PRIMCO Capital Management, Inc., Louisville, Kentucky, specializes in
managing stable return investments, principally on behalf of Section 401(k)
retirement plans.
INVESCO Realty Advisors, Inc., Dallas, Texas, is responsible for providing
advisory services in the U.S. real estate markets for AMVESCAP PLC's clients
worldwide. Clients include corporate pension plans and public pension funds
as well as endowment and foundation accounts.
INVESCO (NY), Inc., New York, is an investment adviser for separately
managed accounts, such as corporate and municipal pension plans,
Taft-Hartley Plans, insurance companies, charitable institutions and private
individuals. INVESCO NY 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 ADIVISORY 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 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;
<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.
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% on each Fund's average net assets from $700 million;
o 0.45% on each Fund's average net assets from $2 billion;
o 0.40% on each Fund's average net assets from $4 billion;
<PAGE>
o 0.375% on each Fund's average net assets from $6 billion; and
o 0.35% on 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% on each Fund's average net assets from $1 billion;
o 0.45% on each Fund's average net assets from $2 billion;
o 0.40% on each Fund's average net assets from $4 billion;
o 0.375% on each Fund's average net assets from $6 billion; and
o 0.35% on 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% on the Fund's average net assets from $700 million;
o 0.45% on the Fund's average net assets from $2 billion;
o 0.40% on the Fund's average net assets from $4 billion;
o 0.375% on the Fund's average net assets from $6 billion; and
o 0.35% on the Fund's average net assets from $8 billion.
S&P 500 Index Fund
o 0.25% on all 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% on the Fund's average net assets from $1 billion;
o 0.45% on the Fund's average net assets from $2 billion;
o 0.40% on the Fund's average net assets from $4 billion;
o 0.375% on the Fund's average net assets from $6 billion; and
o 0.35% on the Fund's average net assets from $8 billion.
<PAGE>
During the period ended July 31, 1999 and the two most recent fiscal years of
each Fund, the Funds paid INVESCO advisory fees in the dollar amounts shown
below. If applicable, the advisory fees were offset by credits in the amounts
shown below, so that INVESCO's fees are not in excess of the expense limitations
shown below, which have been voluntarily agreed to by the Company and INVESCO.
Advisory Total Expense Total Expense
Fee Dollars Reimbursements Limitations
Blue Chip Growth Fund
July 31, 1999(a) $___________ $__________ ______%
August 31, 1998 $4,561,574 $__________ ______%
August 31, 1997 $3,922,981 $__________ ______%
Dynamics
July 31, 1999(b) $___________ $_________ 1.21%(c)
April 30, 1999 $7,750,919 $_________ 1.21%
April 30, 1998 $5,874,212 $_________ 1.21%
April 30, 1997 $4,550,303 $_________ 1.21%
Endeavor
July 31, 1999(b) $___________ $___________ _____%
April 30, 1999 $206,836 $4,275 1.50%
April 30, 1998 N/A N/A N/A
April 30, 1997 N/A N/A N/A
Growth & Income
July 31, 1999(b) $___________ $___________ _____%
April 30, 1999 $209,172 $61,565 1.50%
April 30, 1998 N/A N/A N/A
April 30, 1997 N/A N/A N/A
Small Company Growth
July 31, 1999(d) $___________ $___________ _____%
May 31, 1999 $1,973,393 $___________ _____%
May 31, 1998 $2,334,680 $___________ _____%
May 31, 1997 $2,029,312 $___________ _____%
S&P 500 Index - Class I
July 31, 1999(e) $___________ $___________ _____%
July 31, 1998 $___________ $___________ _____%
July 31, 1997 N/A N/A N/A
S&P 500 Index - Class II
July 31, 1999(e) $___________ $___________ _____%
July 31, 1998 $___________ $___________ _____%
July 31, 1997 N/A N/A N/A
Value Equity Fund
July 31, 1999(f) $___________ $___________ _____%
August 31, 1998 $3,080,351 $___________ _____%
August 31, 1997 $2,250,039 $___________ _____%
(a) For the period September 1, 1999 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
(f) For the period September 1, 1998 through July 31, 1999.
<PAGE>
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 Octobrer
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.
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;
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.
<PAGE>
ADMINSTATIVE 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 was for an initial term expiring in one
year and has been extended by action of the board of directors through May 15,
2000. The Administrative Services Agreement may be continued from year to year
as long as each such continuance is specifically approved by the board of
directors of the Company, including a majority of the Company's Independent
Directors. The Administrative Services Agreement may be terminated at any time
without penalty by INVESCO on sixty (60) days' written notice, or by the Funds
upon thirty (30) days' written notice, and ends automatically in the event of an
assignment unless the Company's board of directors, including a majority of the
Company's Independent Directors, approves such assignment.
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 pay INVESCO an annual fee
of $20.00 per shareholder account, or, where applicable, per participant in an
omnibus account. This fee is paid monthly at the rate of 1/12 of the annual fee
and is based upon the actual number of shareholder accounts and omnibus account
participants in each Fund at any time during each month.
FEES PAID TO INVESCO
For the periods outlined in the table below for each Fund, the Funds paid the
following fees to INVESCO (prior to the absorption of certain Fund expenses by
INVESCO):
Blue Chip Growth Fund
July 31, August 31
Type of Fee 1999(a) 1998 1997 1996
- --------------------------------------------------------------------------------
Advisory $_________ $4,561,574 $3,922,981 $3,196,929
Administrative Services $_________ 131,098 112,386 92,412
Transfer Agency $_________ 1,160,513 1,066,438 751,390
Dynamics Fund
July 31, April 30
Type of Fee 1999(b) 1999 1998 1997
- --------------------------------------------------------------------------------
Advisory $_________ $7,750,919 $5,874,212 $4,550,303
Administrative Services $_________ 226,800 170,476 130,696
Transfer Agency $_________ 2,693,081 2,156,766 1,964,970
<PAGE>
Endeavor Fund
July 31, April 30
Type of Fee 1999(b) 1999(c) 1998 1997
- --------------------------------------------------------------------------------
Advisory $_________ $206,836 N/A N/A
Administrative Services $_________ 9,217 N/A N/A
Transfer Agency $_________ 52,532 N/A N/A
Growth & Income Fund
July 31, April 30
Type of Fee 1999(b) 1999(d) 1998 1997
- --------------------------------------------------------------------------------
Advisory $_________ $209,172 N/A N/A
Administrative Services $_________ 12,517 N/A N/A
Transfer Agency $_________ 70,040 N/A N/A
Small Company Growth Fund
July 31, May 31
Type of Fee 1999(e) 1999 1998 1997
- --------------------------------------------------------------------------------
Advisory $_________ $1,973,393 $2,334,680 $2,029,312
Administrative Services $_________ 54,324 56,735 50,660
Transfer Agency $_________ 1,116,282 1,090,224 1,043,895
S&P 500 Index Fund - Class I
July 31,
Type of Fee 1999 1998 1997
- --------------------------------------------------------------------------------
Advisory $_________ $_________ N/A
Administrative Services $_________ $_________ N/A
Transfer Agency $_________ $_________ N/A
S&P 500 Index Fund - Class II
July 31,
Type of Fee 1999 1998 1997
- ------------------------------------------------------------------
Advisory $_________ $_________ N/A
Administrative Services $_________ $_________ N/A
Transfer Agency $_________ $_________ N/A
Value Trust Fund
July 31, August 31
Type of Fee 1999(f) 1998 1997
- ------------------------------------------------------------------------
Advisory $_________ $3,080,351 $2,250,039
Administrative Services $_________ 71,607 55,001
Transfer Agency $_________ 918,694 610,115
(a) For the period September 1, 1998 through July 31, 1999
(b) For the period May 1, 1999 through July 31, 1999
(c) For the period October 28, 1998 (commencement of operations) through April
30, 1999
(d) For the period July 1, 1998 (commencement of operations) through
April 30, 1999
(e) For the period June 1, 1999 through July 31, 1999
(f) For the period September 1, 1998 through July 31, 1999
<PAGE>
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 brokerage transactions by the Funds, and to
review policies and procedures of the Funds' adviser with respect to soft dollar
brokerage transactions. It reports on these matters to the Company's board of
directors.
The Company has a derivatives committee. The committee meets periodically to
review derivatives investments made by the Funds. It monitors derivatives usage
by the Funds and the procedures utilized by the Funds' adviser to ensure that
the use of such instruments follows the policies on such instruments adopted by
the Company's board of directors. It reports on these matters to the Company's
board of directors.
The officers of the Company, all of whom are officers and employees of INVESCO,
are responsible for the day-to-day administration of the Company and the Funds.
The officers of the Company receive no direct compensation from the Company or
the Funds for their services as officers. The investment adviser for the Funds
has the primary responsibility for making investment decisions on behalf of the
Funds. 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 Tax-Free Income Funds, Inc.
INVESCO Treasurer's Series Funds, Inc. (formerly, INVESCO Treasurer's
Series Trust)
INVESCO Variable Investment Funds, Inc.
<PAGE>
The table below provides information about each of the Company's directors and
officers. Unless otherwise indicated, the address of the directors and officers
is P.O. Box 173706, Denver, CO 80217-3706 . Their affiliations represent their
principal occupations.
Position(s) Held Principal
Name, Address, and Age With Company Occupation(s) During
Past Five Years
Charles W. Brady *+ Director and Chairman of the Board
1315 Peachtree St., N.E. Chairman of the Board of INVESCO Global
Atlanta, Georgia Health Sciences Fund;
Age: 63 Chief Executive Officer
and Director of AMVESCAP
PLC, London, England and
various subsidiaries of
AMVESCAP PLC.
Fred A. Deering +# Director and Vice Trustee of INVESCO Global
Security Life Center Chairman of the Board Health Sciences Fund;
1290 Broadway Denver, formerly, Chairman of the
Denver, Colorado Executive Committe 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 Execu
7800 E. Union Avenue Executive Officer tive Officer and
Denver, Colorado and Director Director of INVESCO
Age: 47 Distributors, Inc.;
President, Chief Executive
Officer and Director of
INVESCO Funds Group, Inc.;
President, Chief
Operating Officer and
Trustee of INVESCO Global
Health Sciences Fund;
formerly, Chairman and
Chief Executive Officer
of Nations Banc Advisors,
Inc.; formerly, Chairman
of NationsBanc
Investments, Inc.
Victor L. Andrews, Ph.D.**! Director Professor Emeritus,
Seawatch Drive Chairman Emeritus and
Savannah, Georgia Chairman of the CFO
Age: 68 Roundtable of the
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.
<PAGE>
Bob R. Baker +** Director President and Chief
AMC Cancer Research Center Executive Officer of
1600 Pierce Street AMC Cancer Research
Denver, Colorado Center, Denver, Colorado,
Age: 62 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: 68 President and Senior
Trust Officer of
InterFirst Bank,
Dallas, Texas.
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,
Independent Women's Forum,
International Republic
Institute, and the
Republican Women's Federal
Forum. Also, Member of
Board of Visitors, College
of Business Administration
University of Iowa, and
Member of Board of
Visitors, Center for Study
of Public Choice, George
Mason University.
<PAGE>
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 Suite 100 Vice Chairman of the
Atlanta, Georgia Board of Directors of
Age: 68 the Citizens and
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.
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>
Ronald L. Grooms Chief Accounting Senior Vice President
7800 E. Union Avenue Officer, Chief Finan and Treasurer of
Denver, Colorado cial 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
7800 E. Union Avenue of INVESCO Funds
Denver, Colorado Group, Inc.; Senior
Age: 43 Vice President of
INVESCO Distributors,
Inc.; formerly, Trust
Officer of INVESCO
Trust Company.
Pamela J. Piro Assistant Treasurer Vice President of
7800 E. Union Avenue INVESCO Funds Group,
Denver, Colorado Inc.; formerly,
Age: 38 Assistant Vice
President (1996 to
1997), Director -
Portfolio Accounting
(1994 to 1996),
Portfolio Account ing
Manager (1993 to 1994)
and Assistant
Accounting Manager
(1990 to 1993).
Alan I. Watson Assistant Secretary Vice President of
7800 E. Union Avenue INVESCO Funds Group,
Denver, Colorado Inc.; formerly, Trust
Age: 57 Officer of INVESCO
Trust Company.
Judy P. Wiese Assistant Treasurer Vice President of
7800 E. Union Avenue INVESCO Funds Group,
Denver, Colorado Inc.; formerly, Trust
Age: 51 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.
<PAGE>
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 for services rendered in their capacities
as directors or trustees during the year ended December 31, 1998. As of July 31,
1999, there were ___ funds in the INVESCO Complex.
- -------------------------------------------------------------------------------
Name of Aggregate Benefits Estimated Total Compensa-
Person and Compensation Accrued as Annual Benefits tion from
Position from Company(1) Part of Upon INVESCO Complex
Company Retirement(3) Paid To
Expenses(2) Directors(6)
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
Fred A. $ $ $ $103,700
Deering, Vice
Chairman of
the Board
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
Victor L. 80,350
Andrews
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
Bob R. Baker 84,000
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
Lawrence H. Bud- 79,350
ner
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
Daniel D. 70,000
Chabris(4)
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
Wendy L. Gramm 79,000
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
Kenneth T. King 77,050
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
John W. McIntyre 98,500
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
Larry Soll 96,000
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
Total 767,950
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
% of Net Assets
%(5) %(5) 0.0035%(6)
- -------------------------------------------------------------------------------
<PAGE>
(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 are closer to retirement and higher estimated
benefits for directors who are further from retirement. With the exception of
Drs. Soll and Gramm, each of these directors has served as a director of
one or more of the funds in the INVESCO Funds for the minimum five-year period
required to be eligible to participate in the Defined Benefit Deferred
Compensation Plan. Although Mr. McIntyre became eligible to participate in
the Defined Benefit Deferred Compensation Plan as of November 1, 1998,
he will not be included in the calculation of retirement benefits until
November 1, 1999.
(4) Mr. Chabris retired as a director of the Company on September 30, 1998.
(5) Totals as a percentage of the Company's net assets as of 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
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.
<PAGE>
The Independent Directors have contributed to a deferred compensation plan,
pursuant to which they have deferred receipt of a portion of the compensation
which they would otherwise have been paid as directors of certain of the INVESCO
Funds. The deferred amounts have been invested in the shares of certain INVESCO
Funds, except Funds offered by INVESCO Variable Investment Funds, Inc., in which
the directors are legally precluded from investing . Each Independent Director
may, therefore, be deemed to have an indirect interest in shares of each such
INVESCO Fund, in addition to any INVESCO Fund shares the Independent Director
may own either directly or beneficially.
CONTROL PERSONS AND PRINCIPAL SHARESHOLDERS
As of June 30, 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)
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
Charles Schwab & Co., Inc.
Special Custody Account for Record 5.24%
the Exclusive Benefit of
Customers
Attn: Mutual Funds
101 Montgomery St.
San Francisco, CA 94104-4122
- ----------------------------------------------------------------------------
Dynamics Fund
- ----------------------------------------------------------------------------
Name and Address Basis of Ownership
Percentage Owned
(Record/Beneficial)
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
Charles Schwab & Co., Inc.
Special Custody Account for Record 14.70%
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 30.64%
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 8.93%
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 13.80%
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 6.04%
One World Financial Center
200 Liberty Street, 5th Floor
Attn: Kate Recon
New York, NY 10281-1003
- ----------------------------------------------------------------------------
<PAGE>
Small Company Growth Fund
- ----------------------------------------------------------------------------
Name and Address Basis of Ownership
Percentage Owned
(Record/Beneficial)
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
Connecticut General Life Record 13.67%
Insurance
c/o Liz Pezda M-110
P.O. Box 2975 H 19 B
Hartford, CT 06104-2975
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
Charles Schwab & Co., Inc.
Special Custody Account for Record 9.71%
the Exclusive Benefit of
Customers
Attn: Mutual Funds
101 Montgomery St.
San Francisco, CA 94104-4122
- ----------------------------------------------------------------------------
S&P 500 Index Fund - Class I
- ----------------------------------------------------------------------------
Name and Address Basis of Ownership
Percentage Owned
(Record/Beneficial)
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
INVESCO Trust Company Record 38.86%
Right Choice Managed Care Inc.
Supp Exec Retirement Plan
1831 Chestnut Street
St. Louis, MO 63103-2231
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
INVESCO Trust Company Record 16.64%
Right Choice Managed Care Inc.
Exec Def Retirement Plan
1831 Chestnut Street
St. Louis, MO 63103-2231
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
INVESCO Trust Company Record 13.00%
Compass Group USA
Non-Qualified Plan IRPS
Attn: Kelly Allen
P.O. Box 1350
Winston-Salem, NC 27102-1350
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
David Backstrom Record 10.67%
P.O. Box 970
Bridgeton, MO 63044-0970
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
Ronald L. Grooms Record 10.33%
7800 East Union Avenue
Denver, CO 80237-2715
- ----------------------------------------------------------------------------
<PAGE>
S&P 500 Index Fund - Class II
- ----------------------------------------------------------------------------
Name and Address Basis of Ownership
Percentage Owned
(Record/Beneficial)
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
NONE
- ----------------------------------------------------------------------------
Value Equity Fund
- ----------------------------------------------------------------------------
Name and Address Basis of Ownership
Percentage Owned
(Record/Beneficial)
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
Charles Schwab & Co., Inc. Record 6.67%
Special Custody Account for
the Exclusive Benefit of
Customers
Attn: Mutual Funds
101 Montgomery St.
San Francisco, CA 94104-4122
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
INVESCO Trust Company Record 6.10%
Morris Communications Corp.
Employee's Profit Sharing
Retirement Plan
725 Broad Street
Augusta, GA 30901-1336
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
INVESCO Trust Company Record 5.48%
The Ritz Carlton Hotel
Company LLC
Special Reserve Plan DC
400 Colony Square Suite 2200
1201 Peachtree Street NE
Atlanta, GA 30361-3500
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
INVESCO Trust Company Record 5.00%
Carle Clinic Association
Profit Sharing Plan
602 West University Avenue
Urbana, IL 61801-2530
- ----------------------------------------------------------------------------
As of July 9, 1999, officers and directors of the Company, as a group,
beneficially owned less than 11% of any Fund's outstanding shares.
<PAGE>
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 plan of distribution which has been
adopted by each Fund pursuant to Rule 12b-1 under the 1940 Act.
The Company has adopted a Plan and Agreement of Distribution (the "Plan") which
provides that each Fund, with the exception of S&P 500 Index Fund - Class I,
will make monthly payments to IDI, a wholly-owned subsidiary of INVESCO,
computed at an annual rate no greater than 0.25% of a Fund's average net assets.
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 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.
A significant expenditure under the Plan is compensation paid to securities
companies and other financial institutions and organizations, which may include
INVESCO-affiliated companies, in order to obtain various distribution-related
and/or administrative services for the Funds. Each Fund is authorized by the
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.
During the period ended July 31, 1999, the Funds made payments to IDI under the
Plan in the amounts of $__________, $________, $_________, $______________,
$_______________, $______________ and $_________ for Blue Chip Growth, Dynamics,
Endeavor, Growth & Income, Small Company Growth, S&P 500 Index Class II and
Value Equity Funds, respectively. In addition, as of July 31, 1999, $______,
$______, $_______, $______, $______, $______ and $_______ of additional
distribution accruals had been incurred for Blue Chip Growth, Dynamics,
Endeavor, Growth & Income, Small Company Growth, S&P 500 Index - Class II and
Value Equity Funds, respectively, and will be paid during the fiscal year ended
July 31, 2000. For the fiscal year ended July 31, 1999, allocation of 12b-1
amounts paid by the Funds for the following categories of expenses were:
Blue Chip Growth Fund
Advertising--$___;
Sales literature, printing, and postage--$___;
Direct Mail--$___;
Public Relations/Promotion--$___;
Compensation to securities dealers and other organizations--$___; and Marketing
personnel--$___.
Dynamics Fund
Advertising--$___;
Sales literature, printing, and postage--$___;
Direct Mail--$___;
Public Relations/Promotion--$___;
Compensation to securities dealers and other organizations--$___; and Marketing
personnel--$___.
<PAGE>
Endeavor Fund
Advertising--$___;
Sales literature, printing, and postage--$___;
Direct Mail--$____;
Public Relations/Promotion--$___;
Compensation to securities dealers and other organizations--$____; and Marketing
personnel--$___.
Growth & Income Fund
Advertising--$___;
Sales literature, printing, and postage--$___;
Direct Mail--$___;
Public Relations/Promotion--$___;
Compensation to securities dealers and other organizations--$____; and Marketing
personnel--$____.
Small Company Growth Fund
Advertising--$___;
Sales literature, printing, and postage--$___;
Direct Mail--$___;
Public Relations/Promotion--$___;
Compensation to securities dealers and other organizations--$___; and Marketing
personnel--$___.
S&P 500 Index Fund - Class II
Advertising--$___;
Sales literature, printing, and postage--$___;
Direct Mail--$___;
Public Relations/Promotion--$___;
Compensation to securities dealers and other organizations--$___; and Marketing
personnel--$___.
Value Equity Fund
Advertising--$___;
Sales literature, printing, and postage--$___;
Direct Mail--$___;
Public Relations/Promotion--$___;
Compensation to securities dealers and other organizations--$___; and Marketing
personnel--$___.
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 Plan provides that it 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. The Plan can also be terminated at any time by a Fund,
without penalty, if a majority of the Independent Directors, or shareholders of
the Fund, vote to terminate the 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 volume of sales and redemptions of a Fund's shares.
The Plan may continue in effect and payments may be made under the 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.
<PAGE>
So long as the Plan is in effect, the selection and nomination of persons to
serve as independent directors of the Company shall be committed to the
Independent Directors then in office at the time of such selection or
nomination. The Plan may not be amended to increase the amount of a Fund's
payments under the Plan without approval of the shareholders of that Fund, and
all material amendments to the 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 the Plan in the event of its termination.
To the extent that the 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 the
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 Plan include the following:
o Enhanced marketing efforts, if successful, should result in an increase in
net assets through the sale of additional shares and afford greater
resources with which to pursue the investment objectives of the 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
breakpoints in an advisory fee schedule and allocating fixed expenses over
a larger asset base), thereby partially offsetting the costs of the 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.
<PAGE>
OTHER SERVICE PROVIDERS
INDEPENDENT ACCOUNTANTS
PricewaterhouseCoopers LLP, 950 Seventeenth Street, 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.
TRASFER AGENT
INVESCO Funds Group, Inc., 7800 E. Union Avenue, Denver, Colorado is the
Company's transfer agent, registrar, and dividend disbursing agent. Services
provided by INVESCO include the issuance, cancellation and transfer of shares of
the Funds, and the maintenance of records regarding the ownership of such
shares.
LEGAL COUNSEL
The firm of Kirkpatrick & Lockhart LLP, 1800 Massachusetts Avenue, N.W., 2nd
Floor, Washington, D.C., is legal counsel for the Company. The firm of Moye,
Giles, O'Keefe, Vermeire & Gorrell LLP, 1225 17th Street, Suite 2900, Denver,
Colorado, acts as special counsel to the Company.
BROKERAGE ALLOCATION AND OTHER PRACTICES
As the investment adviser to the Funds, INVESCO places orders for the purchase
and sale of securities with broker-dealers based upon an evaluation of the
financial responsibility of the brokers and 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 the best qualitative 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.
<PAGE>
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 best qualitative execution of a
Fund's transactions.
Portfolio transactions also may be effected through brokers and 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 brokers and 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 or dealer in selecting
among qualified broker-dealers.
The aggregate dollar amount of brokerage commissions paid by each Fund for the
periods ended July 31, 1999 and the two most recent fiscal year ends were:
Blue Chip Growth Fund
July 31, 1999 $________________
August 31, 1998 $________________
August 31, 1997 $________________
Dynamics Fund
July 31, 1999 $________________
April 30, 1999 $________________
April 30, 1998 $________________
Endeavor Fund
July 31, 1999 $________________
April 30, 1999 $________________
April 30, 1998 $________________
Growth & Income Fund
July 31, 1999 $________________
April 30, 1999 $________________
April 30, 1998 $________________
Small Company Growth Fund
July 31, 1999 $________________
May 31, 1998 $________________
May 31, 1997 $________________
S&P 500 Index Fund
July 31, 1999 $________________
July 31, 1998 $________________
July 31, 1998 $________________
Value Equity Fund
July 31, 1999 $________________
August 31, 1998 $________________
August 31, 1997 4________________
<PAGE>
For the fiscal year ended July 31, 1999, brokers providing research services
received $_________ in commissions on portfolio transactions effected for the
Funds. The aggregate dollar amount of such portfolio transactions was
$_____________. Commissions totaling $______________ 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:
- ---------------------------------------------------------------------
Broker or Dealer Value of Securities
Fund at July 31, 1999
- ---------------------------------------------------------------------
- ---------------------------------------------------------------------
Blue Chip Growth
- ---------------------------------------------------------------------
- ---------------------------------------------------------------------
Dynamics
- ---------------------------------------------------------------------
- ---------------------------------------------------------------------
Endeavor
- ---------------------------------------------------------------------
- ---------------------------------------------------------------------
Growth & Income
- ---------------------------------------------------------------------
- ---------------------------------------------------------------------
Small Company Growth
- ---------------------------------------------------------------------
- ---------------------------------------------------------------------
S&P 500 Index
- ---------------------------------------------------------------------
- ---------------------------------------------------------------------
Value Equity
- ---------------------------------------------------------------------
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 June 30, 1999, the following shares of each
Fund were outstanding:
Blue Chip Growth Fund 181,714,029
Dynamics Fund 120,603,674
Endeavor Fund 5,840,660
Growth & Income Fund 3,810,631
Small Company Growth Fund 32,799,832
S&P 500 Index Fund - Class I 312,827
S&P 500 Index Fund - Class II 4,282,034
Value Equity Fund 12,722,302
All shares of each Fund are of one class with equal rights as to voting,
dividends and liquidation. All shares issued and outstanding are, and all shares
offered hereby when issued will be, fully paid and nonassessable. The board of
directors has the authority to designate additional classes of common stock
without seeking the approval of shareholders and may classify and reclassify any
authorized but unissued shares.
Shares have no preemptive rights and are freely transferable on the books of
each Fund.
<PAGE>
All shares of the Company have equal voting rights based on one vote for each
share owned. The Company is not generally required and does not expect to hold
regular annual meetings of shareholders. However, when requested to do so in
writing by the holders of 10% or more of the outstanding shares of the Company
or as may be required by applicable law or the Company's Articles of
Incorporation, the board of directors will call special meetings of
shareholders.
Directors may be removed by action of the holders of a majority of the
outstanding shares of the Company. The Funds will assist shareholders in
communicating with other shareholders as required by the Investment Company Act
of 1940.
Fund shares have noncumulative voting rights, which means that the holders of a
majority of the shares of the Company voting for the election of directors of
the Company can elect 100% of the directors if they choose to do so. If that
occurs, the holders of the remaining shares voting for the election of directors
will not be able to elect any person or persons to the board of directors.
Directors may be removed by action of the holders of a majority of the
outstanding shares of the Company.
TAX CONSEQUENCES OF OWNING SHARES OF THE 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,
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.
<PAGE>
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.
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.
<PAGE>
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.
PERFOMANCE
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:
Name of Fund 1 Year 5 Year 10 Year
Blue Chip Growth Fund _____% _____% _____%
Dynamics Fund _____% _____% _____%
Endeavor Fund N/A N/A _____%*
Growth & Income Fund N/A N/A _____%#
Small Company Growth Fund _____% _____% _____%
S&P 500 Index Fund - Class I _____% N/A _____%
S&P 500 Index Fund - Class II _____% N/A _____%
Value Equity Fund _____% _____% _____%
* Since inception 10/28/98 (Annualized)
# Since inception 7/1/98 (Annualized)
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.
<PAGE>
In conjunction with performance reports, comparative data between a Fund's
performance for a given period and other types of investment vehicles, including
certificates of deposit, may be provided to prospective investors and
shareholders.
In conjunction with performance reports and/or analyses of shareholder services
for a Fund, comparative data between that Fund's performance for a given period
and recognized indices of investment results for the same period, and/or
assessments of the quality of shareholder service, may be provided to
shareholders. Such indices include indices provided by Dow Jones & Company,
Standard & Poor's, Lipper, Inc., Lehman Brothers, National Association of
Securities Dealers Automated Quotations, Frank Russell Company, Value Line
Investment Survey, the American Stock Exchange, Morgan Stanley Capital
International, Wilshire Associates, the Financial Times Stock Exchange, the New
York Stock Exchange, the Nikkei Stock Average and Deutcher Aktienindex, all of
which are unmanaged market indicators. In addition, rankings, ratings, and
comparisons of investment performance and/or assessments of the quality of
shareholder service made by independent sources may be used in advertisements,
sales literature or shareholder reports, including reprints of, or selections
from, editorials or articles about the Fund. These sources utilize information
compiled (i) internally; (ii) by Lipper Inc.; or (iii) by other recognized
analytical services. The Lipper Inc. mutual fund rankings and comparisons which
may be used by the Fund in performance reports will be drawn from the following
mutual fund groupings, in addition to the broad-based Lipper general fund
groupings:
Blue Chip Growth Fund Growth Funds
Dynamics Fund Capital Appreciation Funds
Endeavor Fund Growth Funds
Growth & Income Fund Growth and Income Funds
Small Company Growth Fund Small Company Growth Funds
S&P 500 Index Fund Large-Cap Funds and/or S&P 500 Indexes
Value Equity Fund Growth and Income 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
[TO BE INSERTED IN 485B FILING]
<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.
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.
<PAGE>
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)
(i) Articles of Amendment to Articles of Incorporation filed
June 26, 1997.(3)
(ii) Articles Supplementary to Articles of Incorporation filed
May 18, 1998.(5)
(iii) Articles of Amendment of Articles of Incorporation filed
August 28, 1998.(6)
(iv) Articles of Amendment to Articles of Incorporation filed
October 29, 1998.
(v) Articles of Amendment to Articles of Incorporation filed
May 24, 1999.(7)
(vi) Articles of Amendment to Articles of Incorporation filed
July 15, 1999
(b) Bylaws, as amended July 21, 1993.(2)
(c) Not applicable.
(d)(i) Investment Advisory Agreement dated February 28, 1997.(3)
(a) Amendment to Advisory Agreement
dated June 30, 1998.(4)
(b) Amendment to Advisory Agreement
dated September 18, 1998.
(e)(i) General Distribution Agreement dated February 28, 1997.(3)
(ii) Distribution Agreement between Registrant and INVESCO
Distributors, Inc. dated September 30, 1997.(4)
(f)(i) Defined Benefit Deferred Compensation Plan for
Non-Interested Directors and Trustees.(5)
(g) Custody Agreement between Registrant and State Street Bank
and Trust Company dated July 1, 1993.(1)
(i) Amendment to Custody Agreement dated October 25, 1995.(3)
(ii) Data Access Services Addendum.(4)
<PAGE>
(iii) Additional Fund Letter dated April 15, 1998.(4)
(iv) Additional Fund Letter dated August 27, 1998.
(h)(i) Transfer Agency Agreement dated February 28, 1997.(3)
(ii) Administrative Services Agreement between the Fund and
INVESCO Funds Group, Inc. dated February 28, 1997.(2)
(i)(i) Opinion and consent of counsel as to the legality of the
securities being registered, indicating whether they will, when
sold, be legally issued, fully paid and non-assessable dated
January 16, 1968.(4)
(ii) 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) (i) 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)Plan pursuant to rule 18f-3 under the Investment Company Act
of 1940 with respect to INVESCO S&P 500 Index Fund adopted May
16, 1997.
(1)Previously filed on EDGAR with Post-Effective Amendment No. 44 to the
Registration Statement on June 22, 1993, and incorporated by reference herein.
(2)Previously filed on EDGAR with Post-Effective Amendment No. 45 to the
Registration Statement on August 27, 1996 and incorporated by reference herein.
(3)Previously filed on EDGAR with Post-Effective Amendment No. 46 to the
Registration Statement on June 30, 1997, and incorporated by reference herein.
(4)Previously filed on EDGAR with Post-Effective Amendment No. 47 to the
Registration Statement on April 16, 1998, and incorporated by reference herein.
(5)Previously filed on EDGAR with Post-Effective Amendment No. 48 to the
Registration Statement on July 10, 1998, and incorporated by reference herein.
<PAGE>
(6)Previously filed on EDGAR with Post-Effective Amendment No. 49 to the
Registration Statement on August 28, 1998, and incorporated by reference herein.
(7)Previously filed on EDGAR with Post-Effective Amendment No. 50 to the
Registration Statement on July 14, 1999, and incorporated by reference herein.
Item 24. Persons Controlled by or Under Common Control with the Fund
No person is presently controlled by or under common control with the Fund.
Item 25. Indemnification
Indemnification provisions for officers, directors and employees of Registrant
are set forth in Article 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,
Fund directors and officers cannot be protected against liability to a Fund or
its shareholders to which they would be subject because of willful misfeasance,
bad faith, gross negligence or reckless disregard of the duties of their office.
Each Fund also maintains liability insurance policies covering its directors and
officers.
Item 26. Business and Other Connections of Investment Adviser
See "Fund Management" in the Funds' 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.
- --------------------------------------------------------------------------------
Name Position with Principal Occupation and
Adviser 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 Roy Cunningham Officer Senior Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
- --------------------------------------------------------------------------------
William J. Galvin, Jr. Officer Senior Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
- --------------------------------------------------------------------------------
Ronald L. Grooms Officer Senior Vice President & Treasurer
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
Richard W. Healey Officer Senior Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
- --------------------------------------------------------------------------------
William Ralph Keithler Officer Senior Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
- --------------------------------------------------------------------------------
Charles P. Mayer Officer & Senior Vice President
Director INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
- --------------------------------------------------------------------------------
Timothy J. Miller Officer Senior Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
- --------------------------------------------------------------------------------
Donovan J. (Jerry) Paul Officer Senior Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
- --------------------------------------------------------------------------------
Glen A. Payne Officer Senior Vice President, Secretary
& General Counsel
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
- --------------------------------------------------------------------------------
John R. Schroer, II Officer Senior Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
- --------------------------------------------------------------------------------
Marie E. Aro Officer Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
- --------------------------------------------------------------------------------
Ingeborg S. Cosby Officer Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
- --------------------------------------------------------------------------------
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
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
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
- --------------------------------------------------------------------------------
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
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
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
- --------------------------------------------------------------------------------
Anthony R. Rogers Officer Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
- --------------------------------------------------------------------------------
Gary L. Rulh Officer Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
- --------------------------------------------------------------------------------
James B. Sandidge Officer Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
- --------------------------------------------------------------------------------
John S. Segner Officer Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
- --------------------------------------------------------------------------------
Terri B. Smith Officer Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
- --------------------------------------------------------------------------------
Tane T. Tyler Officer Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
- --------------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
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
- --------------------------------------------------------------------------------
Michael D. Legoski Officer Assistant Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
- --------------------------------------------------------------------------------
Donald R. Paddack Officer Assistant Vice President
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
- --------------------------------------------------------------------------------
Kent T. Schmeckpeper Officer Assistant Vice President
Account Relationship Manager
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
- --------------------------------------------------------------------------------
Jeraldine E. Kraus Officer Assistant Secretary
INVESCO Funds Group, Inc.
7800 East Union Avenue
Denver, CO 80237
- --------------------------------------------------------------------------------
Item 27. a) Principal Underwriters
INVESCO Bond Funds, Inc.
INVESCO Combination Stock & Bond Funds, Inc.
INVESCO International Funds, Inc.
INVESCO Money Market Funds, Inc.
INVESCO Sector Funds, Inc.
INVESCO Specialty Funds, Inc.
INVESCO Stock Funds, Inc.
INVESCO Tax-Free Income Funds, Inc.
INVESCO Treasurer's Series Funds, Inc.
INVESCO Variable Investment Funds, Inc.
<PAGE>
b)
Positions and
Name and Principal Offices with Offices with
Business Address Underwriter the Company
- ------------------ ------------ -------------
William J. Galvin, Jr. Senior Vice
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
Charles P. Mayer Director
7800 E. Union Avenue
Denver, CO 80237
Timothy J. Miller Director
7800 E. Union Avenue
Denver, CO 80237
Glen A. Payne Senior Vice Secretary
7800 E. Union Avenue President,
Denver, CO 80237 Secretary &
General Counsel
Judy P. Wiese Vice President Asst. Secretary
7800 E. Union Avenue & Assistant
Denver, CO 80237 Treasurer
Mark H. Williamson Chairman of the Board, President,
7800 E. Union Avenue President, & Chief CEO & Director
Denver, CO 80237 Executive Officer
c)
Not applicable.
Item 28. LOCATION OF ACCOUNTS AND RECORDS
Mark H. Williamson
7800 E. Union Avenue
Denver, CO 80237
Item 29. MANAGEMENT SERVICES
Not applicable.
Item 30. UNDERTAKINGS
Not applicable.
<PAGE>
Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940, the Fund has duly caused this post-effective amendment to
be signed on its behalf by the undersigned, thereunto duly authorized, in the
City of Denver, County of Denver, and State of Colorado, on the 15th day of
July, 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(iv) 115
a(vi) 117
d(i)(b) 119
g(iv) 120
j 121
o 122
ARTICLES OF AMENDMENT
TO
ARTICLES OF INCORPORATION
OF
INVESCO EQUITY FUNDS, INC.
INVESCO Equity Funds, Inc., a corporation organized and existing under the
General Corporation Law of the State of Maryland (the "Company"), hereby
certifies to the State Department of Assessments and Taxation of Maryland that:
FIRST: Article I of the Articles of Incorporation of the Company is
hereby amended to read as follows:
ARTICLE I
NAME AND TERM
The name of the corporation is "INVESCO STOCK FUNDS, INC.," and it shall
have perpetual existence.
SECOND: The foregoing amendment, in accordance with the requirements of
Section 2-605 of the General Corporation Law of the State of Maryland, was
approved by a majority of the Board of Directors of the Company on October
11, 1998.
THIRD: The foregoing amendment was duly adopted in accordance with the
requirements of Section 2-408 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 Amendment, of which this paragraph is made
a part, hereby acknowledges, in the name and on behalf of the Company, the
foregoing Articles of Amendment 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 the penalties of perjury.
IN WITNESS WHEREOF, INVESCO Capital Appreciation Funds, Inc. has caused
these Articles of Amendment to be signed in its name and on its behalf by its
President and witnessed by its Secretary on the 28th day of October, 1998.
<PAGE>
These Articles of Amendment shall be effective upon acceptance by the
Maryland State Department of Assessments and Taxation.
INVESCO EQUITY FUNDS, INC.
By: /s/ Glen A. Payne
--------------------------------------
Glen A. Payne, Secretary
[SEAL]
WITNESSED:
By: /s/ Ronald L. Grooms
---------------------------
Ronald L. Grooms, Treasurer
CERTIFICATION
I, Michael T. Branstiter, a notary public in and for the City and County
of Denver and State of Colorado, do hereby certify that Glen A. Payne,
personally known to me to be the persons whose name is subscribed to the
foregoing Articles of Amendment, 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.
Given my hand and official seal this 28th day of October, 1998.
/s/ Michael T. Branstiter
------------------------------------
Notary Public
My Commission Expires: 03/14/2002
---------------
ARTICLES OF AMENDMENT
OF
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 (the "Company"), hereby
certifies to the State Department of Assessments and Taxation of Maryland that:
FIRST: Article III, Section 1 of the Articles of Incorporation of the
Company is hereby amended to read as follows:
ARTICLE III
CAPITALIZATION
Section 1. The aggregate number of shares of stock of all series
which the Company shall have the authority to issue is two billion
(2,000,000,000) 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 twenty million dollars ($20,000,000). Such stock may be issued as full
shares or as fractional shares.
In the exercise of powers granted to the board of directors pursuant
to Section 3 of this Article III, the board of directors designates eight
classes of shares of common stock of the Company to be designated as the
INVESCO Blue Chip Growth Fund, the INVESCO Dynamics Fund, the INVESCO
Endeavor Fund, the INVESCO Growth & Income Fund, the INVESCO Small Company
Growth Fund, the INVESCO S&P 500 Index Fund - Class I, the INVESCO S&P 500
Index Fund - Class II, and the INVESCO Value Equity Fund. Four hundred
million (400,000,000) shares are classified as and are allocated to the
INVESCO Blue Chip Growth Fund. Two hundred million (200,000,000) shares
are classified as and are allocated to the INVESCO Dynamics Fund. One
hundred million (100,000,000) shares are classified as and are allocated
to the INVESCO Growth & Income Fund. One hundred million (100,000,000)
shares are classified as and are allocated to the INVESCO Endeavor Fund.
Two hundred million (200,000,000) shares are classified as and are
allocated to the INVESCO Small Company Growth Fund. One hundred million
(100,000,000) shares are classified as and are allocated to the INVESCO
S&P 500 Index Fund - Class I. One hundred million (100,000,000) shares are
classified as and are allocated to the INVESCO S&P 500 Index Fund - Class
II. One hundred million (100,000,000) shares are classified as and are
allocated to the INVESCO Value Equity Fund.
Unless otherwise prohibited by law, so long as the corporation is
registered as an open-end investment company under the Investment Company
Act of 1940, as amended, the total number of shares which the corporation
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.
SECOND: Shares of each class have been duly authorized and classified by
the board of directors pursuant to authority and power contained in the Articles
of Incorporation of the Company.
THIRD: The foregoing amendment, in accordance with the requirements of
Section 2-605 of the General Corporation Law of the State of Maryland, was
unanimously approved by the board of directors of the Company on February 3,
1999.
<PAGE>
The undersigned, President of the Company, who is executing on behalf of
the Company the foregoing Articles of Amendment, of which this paragraph is made
a part, hereby acknowledges, in the name and on behalf of the Company, the
foregoing Articles of Amendment 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 the penalties of perjury.
IN WITNESS WHEREOF, INVESCO Stock Funds, Inc. has caused these Articles of
Amendment to be signed in its name and on its behalf by its President and
witnessed by its President on the 13th day of July, 1999.
These Articles of Amendment shall be effective as of the 15th day of July,
1999 by the Maryland State Department of Assessments and Taxation.
INVESCO STOCK FUNDS, INC.
By: /s/ Mark H. Williamson
---------------------------------------
Mark H. Williamson, President
WITNESSED:
By: /s/ Alan I. Watson
-----------------------
Alan I. Watson,
Assistant Secretary
CERTIFICATION
I, Ruth A. Christensen, a notary public in and for the City and County of
Denver, and 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 Amendment, 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.
Given my hand and official seal this 13th day of July, 1999.
/s/ Ruth A. Christensen
------------------------------------
Notary Public
My Commission Expires: March 16, 2002
Amendment to Investment Advisory Agreement
This is an Amendment to the Investment Advisory Agreement made and entered
into between INVESCO Equity Funds, Inc. (formerly, INVESCO Dynamics Fund, Inc.),
a Maryland corporation (the "Company") and INVESCO Funds Group, Inc., a Delaware
corporation ("IFG"), as of the 28th day of February, 1997 (the "Agreement").
WHEREAS, the Company desires to have IFG perform investment advisory,
statistical, research, and certain administrative and clerical services with
respect to management of the assets of the Company allocable to the INVESCO
Endeavor Fund, and IFG is willing and able to perform such services on the terms
an conditions set forth in the Agreement;
NOW, THEREFORE, in consideration of the premises and mutual covenants
contained in the Agreement, it is agreed that the terms and conditions of the
Agreement shall be applicable to the Company's assets allocable to the INVESCO
Endeavor Fund, to the same extent as if the INVESCO Endeavor Fund were to be
added to the definition of "Funds" as utilized in the Agreement, and that
INVESCO Endeavor Fund shall pay IFG a fee for services provided to them by IFG
under the Agreement as follows: 0.75% on the INVESCO Endeavor Fund's average net
assets.
IN WITNESS WHEREOF, the parties have executed this Agreement on this 18th
day of September, 1998.
INVESCO EQUITY FUNDS, INC.
By: /s/ Mark H. Williamson
-------------------------------
Mark H. Williamson,
President
ATTEST:
/s/ Glen A. Payne
- -----------------------------
Glen A. Payne, Secretary
INVESCO FUNDS GROUP, INC.
By: /s/ Ronald L. Grooms
-------------------------------
Ronald L. Grooms,
Senior Vice President
ATTEST:
/s/ Glen A. Payne
- -------------------------------
Glen A. Payne, Secretary
[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, 1998
Mr. Christopher J. Meyers
Assistant Vice President
State Street Bank and Trust Company
1776 Heritage Drive
North Quincy, Massachusetts 02171
Re: INVESCO Equity Funds, Inc. (formerly, INVESCO Capital
Appreciation Funds, Inc.)
Dear Chris:
This is to advise you that INVESCO Equity Funds, Inc. (the "Company") has
established a new series of shares to be known as INVESCO Endeavor Fund. In
accordance with the Additional Funds provision in Paragraph 17 of the Custodian
Contract dated October 20, 1993 between the Company and State Street Bank and
Trust Company, the Company hereby requests that you act as Custodian for the new
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/ Glen A. Payne
- ---------------------------
Glen A. Payne
Secretary
Agreed to this 31st day of August, 1998.
STATE STREET BANK AND TRUST COMPANY
By: /s/ Charles Whittemore
---------------------------
Vice President
Consent of Independent Accountants
We hereby consent to the reference to us under the heading "Financial
Highlights"in the Prospectuses and under the heading "Independent Accountants"
in the Statement of Additional Information constituting parts of this
Post-Effective Amendment No. 51 to the Registration Statement on Form N-1A of
INVESCO Stock Funds, Inc.
/s/ PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
Denver, Colorado
July 13, 1999
FORM OF
INVESCO S&P 500 INDEX FUND PLAN PURSUANT TO RULE 18G-3
___________, 1999
1. The Plan. This Plan is the written multiple class plan for the INVESCO
S&P 500 Index Fund (the "Fund") for INVESCO Funds Group, Inc., the
general distributor of shares of the Fund and the investment adviser of
the Fund ("INVESCO"). 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 ____________, 1999.
_______________________________________